The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Consumer trends’ Category

Goodbye Wesabe – now we will never know what could be developed

In what is the largest shock for me for a long time, Wesabe has shut down. I have long sung the praises of Wesabe and saw great potential for future expansion and delivery of innovative and useful services for people that no-one bank can ever offer. It appears they have run out of funding which I presume is because VC’s are not willing to support a competitor to Mint/ Intuit. This is shortsighted in my view but there we have the harsh reality of business.

Online Finance Startup Wesabe Heads To The Deadpool | Techcrunch

The startup’s homepage now consists of a letter to Wesabe users instructing them to download their account information by July 31, at which point nearly all of the service’s features will be taken offline and data deleted. 

And from the Wesabe home page:

In recent months Wesabe has been operating on a shoestring budget, with support from some of the developers and operations people who made up our core team. While the site has remained online and we continue to hear from people who find it helpful, we have not been able to provide the support people need to use it for something so central as financial management. I’ve felt especially terrible that some members have a good initial experience but then hit a problem, often after investing many hours, and aren’t able to get help with it. That’s obviously a bad experience, and not what we want to offer. Also, because Wesabe stores such highly sensitive data, continuing to operate the service with shoestring operations and security staff is not acceptable, and we do not want to continue accepting new accounts if we cannot guarantee the security level we believe our service requires.

Written by Colin Henderson

June 30, 2010 at 18:10

How Teenagers Consume Media | Morgan Stanley

This report has caused quite the stir after MS released it. No-one is seriously suggesting any statistical accuracy, but it is interesting in context of how teens use internet, and we know that generational change occurs based in some part on how teens grow up. Enjoy.

Media research note by ‘teenage scribbler’ causes City sensation | FT

A research note written by a 15-year-old, who was not born when former chancellor Nigel Lawson dismissed City analysts as ” teenage scribblers “, has become the talk of middle-aged media executives and investors.

Morgan Stanley’s European media analysts asked Matthew Robson, one of the bank’s interns from a London school, to describe his friends’ media habits. His report proved to be “one of the clearest and most thought-provoking insights we have seen. So we published it,” said Edward Hill-Wood, head of the team.

The response was enormous. “We’ve had dozens and dozens of fund managers, and several CEOs, e-mailing and calling all day,” said Mr Hill-Wood, 35, estimating that the note had generated five or six times more feedback than the team’s usual reports.

However, he made no claims for its statistical rigour.


Written by Colin Henderson

July 13, 2009 at 19:57

Posted in Consumer trends

Tagged with , ,

“The Fourth Turning” | demographics and predictable change

Demographics is an interesting science, and one that has real impacts on society over time that are really only apparent after the fact.  Mauldin recounts a conversation with Strauss and Howe on their book, “The Fourth Turning“.  The premise is that the US and the western world move in 80 year cycles, with four ‘seasons’ within each cycle.  As historians, they have looked back in time, and concluded the cycles are quite consistent.

Whether you buy that or not, the four cycles noted do describe the 20th century well, and place us firmly in the latter part of the third, or ‘unravelling’ cycle/ first part of the ‘crisis’ cycle.  We have been/ are in a period of high individualism and discredited institutions.  We are entering a period of tearing down, and re-building.  Following the logic, we will enter a period of renewal, collective optimism and willingness to work together and help each other soon.  We can always hope we do not need the full 20 years for the fourth ‘crisis’ cycle.  What do you think?

Outside the Box | Mauldin

The First Turning is referred to by Howe as a High. As this follows a period of crisis, one of the hallmarks of a First Turning is a heightened sense of community and collective optimism, driven in part by the fact that the society has just come through a difficult and challenging time. Consequently, during First Turnings, societal institutions tend to be strong while individualism is weak. The post-World War II “High” of the mid-1940s through early ’60s is the most recent example of a First Turning.

The Second Turning, called an Awakening, typically starts out feeling like the high tide of a High, with signs of progress and prosperity everywhere. But just as everything seems to be going along swimmingly, large swaths of society begin to chaff under the social conformity of the High, beginning to gravitate to more individualistic pursuits and demanding that their personal interests come first. You may recognize the “Consciousness Revolution” of the mid-1960s through early 1980s, correctly, as the Second Turning.

Next up, the Third Turning, which Howe calls an Unraveling, is much the opposite of a High. To wit, individualism dominates, while institutions are increasingly weak and discredited. Quoting Howe on the Unraveling…

“This is a time when social authority feels inconsequential, the culture feels exhausted, and people feel bewildered by the number of options available to them. It is a time of celebrity circuses and a tremendous amount of freedom and creativity in our personal lives, but very little sense of public purpose.

The most recent Third Turning began in the mid-’80s with Morning in America, and continued through the ’90s. Previous periods of Unraveling in American history were also decades of cynicism and bad manners. Think of the 1920s, the 1850s, the 1760s. And history teaches us that the Third Turnings inevitably end in Fourth Turnings.

Finally, there is the Fourth Turning, called a Crisis. The recent Third Turning appears to be winding down, and we are currently on the cusp of a Fourth Turning. This is a time of great turmoil, when society’s basic institutions are torn down and rebuilt, and seemingly insurmountable problems are addressed. During Fourth Turnings, America engages in a struggle for its very survival and redefines its identity as a nation. Large wars are often a part of this process. The American Revolution, Civil War, Great Depression, and World War II were all features of past Fourth Turnings.

Written by Colin Henderson

June 30, 2009 at 10:27

Consumer mindsets in North America have shifted permanently with regard to finances

After my last post, I thought it better to follow up with some facts to support my contention that this economic recovery is L shaped in Canada and US.  This is not meant to be an economic projection, and I leave that to the professional economists.  However in terms of planning, banks ought to consider the high probability of a scenario where the reduction in economic activity will level off but hardly see growth in the near future.  This will be driven by consumer confidence and frankly their financial circumstances.

If we go back to the root cause of the recession it remains this;   a dramatic drop in consumer asset values resulting in leverage that is too high.  Layer in the concern about job security, and the real increase in unemployment, we must look carefully at ability to manage the debt based on current income, and the effect of that on the business of banking.

Here is the ratio of debt to disposeable income in Canada and US at end of 2008. [source: CGA Association Canada & Federal Reserve Bank of San Francisco]

Canada              US

%                                  136.5%             130%

The first surprise is that Canadians are more highly levered than Americans.  The CGA report makes these points amongst others:

… prospects of improving households’ financial situation in the near future are low. A balanced approach to spending, saving and paying down debt may be a desirable feature of households financial behaviour in the near future.

Hardly earth shattering stuff but the consequences remain that strategies need to account for this new consumer mindset in North America for the next few years.

Written by Colin Henderson

June 22, 2009 at 14:47

If Planet Mars were banker to the world, this planets credit cards would be cut up

While this is an interesting article, the point of this post is only to capture the quotes that show the extent of the unreasonable and unsustainable runaway growth in various aspects of the financial markets, that have developed since the 1980’s.

Stock markets in the world are valued at a paltry $51 trillion compared to the $400 trillion in derivatives.

However the overall total of equities, bonds, and derivatives at $518 trillion was supported by a world economy of $49 trillion.  If Planet Mars were banker to the world, our credit cards would be cut up.

The emergence of an abstract, even absurd world—call it Planet Finance—where mathematical models ignored both history and human nature, and value had no meaning

This year we have lived through something more than a financial crisis. We have witnessed the death of a planet. Call it Planet Finance. Two years ago, in 2006, the measured economic output of the entire world was worth around $48.6 trillion. The total market capitalization of the world’s stock markets was $50.6 trillion, 4 percent larger. The total value of domestic and international bonds was $67.9 trillion, 40 percent larger. Planet Finance was beginning to dwarf Planet Earth.

Planet Finance seemed to spin faster, too. Every day $3.1 trillion changed hands on foreign-exchange markets. Every month $5.8 trillion changed hands on global stock markets. And all the time new financial life-forms were evolving. The total annual issuance of mortgage-backed securities, including fancy new “collateralized debt obligations” (C.D.O.’s), rose to more than $1 trillion. The volume of “derivatives”—contracts such as options and swaps—grew even faster, so that by the end of 2006 their notional value was just over $400 trillion. Before the 1980s, such things were virtually unknown. In the space of a few years their populations exploded. On Planet Finance, the securities outnumbered the people; the transactions outnumbered the relationships.

Written by Colin Henderson

November 7, 2008 at 02:37

Is your Bank properly aligned to the new competitive threats | Case Study – Microsoft

Many of us complain about Microsoft, but this Arrington post at TechCrunch caught my attention because it highlighted larger picture of the environment of the company that appears not to see the competitive forces surrounding them.

Microsoft Annual Report

To sustain the growth of our Server and Tools business amid competition from other vendors of both proprietary and open source software, our goal is to deliver products that provide the best platform for network computing – software that is easiest to deploy and manage, and that is most secure – with the lowest total cost of ownership.

# of mentions:

linux – 9

Open source – 1

Live™ – 22

Business Description:

Client – Operating Systems

Our operating system products compete effectively by delivering innovative software, a familiar, easy-to-use interface, compatibility with a broad range of hardware and software applications, and the largest support network for any operating system.

Server and Tools

We believe that our server products provide customers with advantages in innovation, performance, total costs of ownership, and productivity, by delivering superior applications development tools and development environment, compatibility with a broad base of hardware and software applications, security, and manageability.

Online Services Business – includes Search, Live, Hotmail

We believe that we can compete effectively across the breadth of our Internet services by providing users with software innovation in the form of information and communication services that help them find, discover, and experience what they want online and by providing merchants with effective advertising results through improved systems and sales support.

Microsoft Business Division – includes Office, Sharepoint

We believe our products compete effectively with these vendors based on our strategy of providing interoperable, adaptable solutions that work well with technologies our customers already have.

Entertainment and Devices division

We think the Xbox 360 is positioned well against competitive console products based on significant innovation in hardware architecture, new developer tools, expanded revenue sources, and continued strong exclusive content from our own game franchises such as Halo.

In reviewing the five business divisions and their comments on competition, a couple of things stood out:

  1. they do a good job at summarising the breadth of competitors
  2. the comments on Microsoft’s strengths relative to the competition (shown above) are less clear.

Relevance to Bankwatch:

The general assumption amongst commentators today is that Microsoft is not well placed in Browser, Search, Online Advertising and future shifts of enterprise office applications into cloud computing environments.  What struck me in this brief review is that challenge is spread across three divisions, Client (Browser), Online Services Business (Search, Advertising), and Microsoft Business Division (MS Office).  This may seem rational at first because the nature of search/ advertising is different than office applications … or is it? 

I look at Google Apps, and Gmail, for example, and search is a key component of both.  Yet the Microsoft Search team are in a different team than the Office group.  But the real stunning point is that the Internet Explorer Browser, the fundamental requirement for all the pieces is alone in the Operating System division! 

This is an organisation destined to fail, because the components for success are not aligned.  Why am I commenting on this here, apart from the fact I care about Microsoft?  How well is your Bank aligned for addressing the components of future success?  Lets look at some Banking examples to wrap this up:

In your Bank …

  1. who owns social media ?
  2. who owns advertising?
  3. who owns customer experience
  4. who owns the web site – public
  5. who owns online banking?

then .. in your Bank …

  1. who is thinking and planning social media ?
  2. who is thinking and planning advertising?
  3. who is thinking and planning customer experience
  4. who is thinking and planning the web site – public
  5. who is thinking and planning online banking?

In times of disruptive competition, its worth looking at the world as others see it, versus how the old organisation sees it.

Written by Colin Henderson

September 14, 2008 at 15:10

US banks continue to tighten lending

The credit crunch for consumers in North America is on for real now according to these statistics. / In depth – US banks continue to tighten lending

Moreover, banks continued to tighten credit standards on mortgages across the board, reducing the availability of funds to finance purchases of homes. About 62 per cent said they tightened standards on prime loans, while 76 per cent tightened standards on “non-traditional loans”.

A historically high proportion of banks said they were tightening terms on credit cards and other consumer loans, while many also pointed to reduced involvement in the student loan business.

Written by Colin Henderson

May 5, 2008 at 21:25

Posted in Consumer trends, US

Innovation happens at the edges | Banks: are you watching?

Mike Arrington is one opinionated blogger that I don’t refer to much, but he makes an excellent point here. He posted a complaint abut his ISP on Twitter, and immediately got a call from a Comcast executive.

Comcast, Twitter And The Chicken (trust me, I have a point)

And then I lost my cool, tearing into Comcast on Twitter. Jeff Jarvis and others picked up the story and blogged about it.

And this brings me to the point of this post. Within 20 minutes of my first Twitter message I got a call from a Comcast executive in Philadelphia who wanted to know how he could help. He said he monitors Twitter and blogs to get an understanding of what people are saying about Comcast, and so he saw the discussion break out around my messages.

There is much talk in blogging circles about ‘ the edge’. People refer to themselves as edglings. Innovation happens at the edge. Nice summary of recent thinking from JP here, and Stowe, one of the originators here.

Being on the edge is simply using new technologies to communicate faster, more real time, and in ways that are just plain, convenient. Its not for everyone, its a niche, but one quote from the JP post resonates …. “Innovation happens at edges”.

If in any doubt, here are examples of Banks being mentioned in Twitter, one edge tool. If you are in the PR dept and have not heard of or your dept is not actively monitoring this stuff, time to make changes.

Bank of Montreal
Bank of America

Some quotes from those searches:

stuartma : @kaleemux
BMO. & they may well have gouged me- I don’t know if I could’ve
gotten more elsewhere, but that US:C$ was exactly 1:1 was neat << (2008-03-22 17:53:25)
: Amazing how a valuing – not writing down ABCP – solved BMO’s problem.
If it’s so simple everyone should use this accounting fiction. << (2008-03-20 23:07:23)

pkedrosky : @stuartma giving a speech/talk/thing at a private event for bmo in toronto. << (2008-03-25 16:53:37)
reiver : “RBC thinks loonie is headed below 90 cents US” << (2008-04-04 10:57:38)
: my brother the systems guy working for RBC (really big company) does
not get this online stuff. He’s 50 and I’m older but not in chip yrs << (2008-04-02 16:12:57)
: would like to thank RBC Auto Insurance for rewarding good drivers
with increased rates, I always love paying into the because-we-can tax.
<< (2008-04-02 10:50:34
rawdrigo : f*****g bank of america jacked my apr like 20%. << (2008-04-06 15:09:13)
SpencerC : holy crap! in seconds, i got a new card shipped to me, how easy is that? i love bank of america coustomer service << (2008-04-04 22:15:52)

Written by Colin Henderson

April 7, 2008 at 00:09

Two years on | Which banks understand the web lifestyle?

When I started this particular blog, my impetus was the lack of creativity amongst Banks in getting beyond automation of traditional transactions, and sticking them online [online banking].

Introduction « The Bankwatch

Introduction Saturday, 28 January 2006

Welcome to Bankwatch. The purpose of this blog is to monitor banks around the world for their online capabilities, and the strategies they are adopting with online. Consumers are web savvy now, and most banks aren’t, so I will point those out, and I will also recognise best practices too.

It might be useful to just take a look and see what progress has been made in just over two years. My general sense is not much progress amongst Banks, but enormous progress amongst non banks challenging the status quo.

Whatever progress, is now laid against the backdrop of threatened new regulation in UK, North America and others to place a cost on the political consequnces of bailing out Banks, and in particular investment banks who until now have been largely left to live and die on their own sword.

Disruption within financial services will not happen simply. The topic of regulation is always controversial, being one that Governments immediately leap to because it offers the pretense that they are making things better, even though the current credit crisis that the Banks are sufferring is one that occurred despite existing regulation and accounting guidance on the topic of off-balance sheet lending.

Banks are running scared at the moment, lacking trust to lend to each other, and simultaneously being concerned about revenue and expense growth at precisely the time they need increases in the former, and decrease the latter.

Yet customers are evolving and will continue to expect more and better online self service from Banks. No amount of denial can alter that. More and better in quantity, and quality. Services and offers that are more engaging, and work the way customers want to work.

Nothing about this time offers promise for customers from Banks. There is much promise in new startups, and we have the regulation cloud right in the centre of this epic battle.

So which Banks [or Credit Unions] show signs of life, and look to break out of the pack? That’s my question de jour. As I develop this meme, what suggestions and examples of Banks that ‘get the web lifestyle’ can you offer? [In particular Europe & Asia where language makes it harder for me to source.]

Written by Colin Henderson

March 30, 2008 at 17:16

Consolidation of Banking: Danielson | Book review

Consolidation of Banking was a genuine surprise to me. I expected this to be dry and academic. However the opposite turned out to be the case.

The book covers the history and events in North American banking since the ’30’s and here is where the surprise came in. It details the changes and the reasons for the changes. It covers in some depth the impacts of foreign Banks, in the US and globally. The global aspect caught my attention, and this differs from the usual US centric view of the world in the US.

The result is a good view of the mechanics of what drives banking, ie shareholder value, and results of reaching a certain level within domestic markets that curtails growth opportunities, and leaves foreign expansion or break up as the only two available strategies to make a big difference.

Some somewhat random notes I took away. There are tons of stats and thinking behind every one of these:

  • 5 banks own 50% of the US market
  • European Banks got to that scale within their own markets earlier, because there were fewer of them within their relative markets
  • big 5 US names:
  • CitiBank
  • Bank of America
  • JP Morgan
  • Wachovia
  • Wells Fargo
  • Foreign Banks in the US
    • largest number of branches: Royal Bank of Scotland
    • largest asset base: HSBC
    • countries with largest Banks in the US: UK, Japan, Canada, Spain, Holland
  • drivers of success going forward:
    • demographics and acceptance of ‘remote banking’
    • increasing costs associated with large branch networks
    • large banks focussed on increased growth from own customer base
    • globalisation, and new thinking from foreign banks

    But the one takeaway from the ‘whats next’ conclusion section was this. The above factors are ongoing strategic drivers, but nothing drives change in banking more than economic bad times. The immediacy from bad times, leaves management no choice in the face of fickle and impatient investors.

    We are entering those times in a very special way in that all banks are affected by the credit crisis, and some severely. There will be recessionary impacts on customers too. We can expect big changes in Banking ownership, and it will likely have a global context. It will also have a distinctly remote banking (Danielsons expression) aspect. I read that as internet … yes ATM’s too, but some distinction using internet is expected. ING have promoted a whole industry around high interest, non branch savings accounts, but surely such a product design approach is limited in strategic value, particularly to the current players.

    Relevance to Bankwatch (my take):
    We are entering a perfect storm of converging influences:

    • economic crisis (losses) driving lower shareholder returns in Financial Services
    • permanent demographic shifts, bringing acceptance of internet, and web/ mobile lifestyle; translation – seeking something better
    • maturation of ‘industry strength’ web tools, and capabilities (web 2.0)
    • unlimited creativity of web based companies many of whom are increasingly seeing Financial Services as the next beachhead in industrial disruption

    An easy read, and valuable reference for every bankers office.

    [Note] I was fortunate enough to get a copy this book, courtesy of Carol at Danielson Capital. The Chairman is the author. Thanks Carol.

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    Written by Colin Henderson

    March 16, 2008 at 14:56

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