The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Consumer trends’ Category

Banking predictions portend big change – Gartner

Tom Groenfeldt on highlights four predictions in a recent Gartner report, that are quite provocative. Taken together, they suggest mammoth changes to Banks as we know them.

Click through for Tom’s take on them. I expect I will do same later.

“By 2010, social-banking platforms will have captured 10% of the available market for retail lending and financial planning.”

“By 2010, 10 percent of banks’ revenue from retail payments will be supported by competitors such as PayPal.”

“By 2010, U.S. banks will start shutting down their full-service mobile-banking channels.”

“By 2011, centralized retail core banking applications will cease to exist in at least 20 percent of banks worldwide.”

Written by Colin Henderson

February 21, 2008 at 10:52

Posted in Consumer trends

Consumers getting financial advice for themselves and from friends and family

Fascinating research and conclusions picked up by Paul at Finextra. The implication is the shift towards greater self service by people for financial services that previously would have required advisors or brokers.

Winners are price comparison sites, and advice from friends and family.


But if consumers aren’t turning to their bank for financial advice, where are they going? Online price comparison Websites are one obvious source of information. The other is friends and family. This change in consumer attitudes helps explain the success of a new generation of non-bank social platforms such as those operated by Zopa and Prosper, and Finance 2.0 upstarts like Wesabe and Mint.

Written by Colin Henderson

February 21, 2008 at 03:01

Posted in Consumer trends

“Obama Surges, Online And Off” | TechCrunch

Its way to early for predictions, and my point is not politics

With that disclaimer, something I am watching is how Obama embraced internet early. Edwards tried but if was fake.  Clinton I would imagine has ‘people’ who do ‘that’.

Couple that with how the pundits and polls got Iowa wrong.  We could be observing the thin edge of a real change that traditional measurements are [again] missing.

Obama Surges, Online And Off

Senator Obama soundly beat Senator Clinton in the Iowa Caucuses last week. And he maintains an impressive lead in most online statistics as well. He has 212,000 MySpace friends, 50,000 more than any other candidate (and he’s added 5,000 more in the last day or so). He won the MySpace New Year’s Poll with 46% of the Democrat vote. Senator Clinton took second with just 31%. People who live in Iowa and New Hampshire are visiting Obama’s website more than any other candidate.

Written by Colin Henderson

January 5, 2008 at 16:42

BofA winner with iPhone compatible site

Jim does a nice review of iphone compatibility. 

iPhone Compatibility at the Largest U.S. Banks (NetBanker)

But the hands-down winner is Bank of America, the only top-20 U.S. bank with an iPhone-optimized homepage.

While the runners up probably work reasonably only because of smart design, BofA has optimised their site to recognise the iPhone and display appropriately.  This suggests they are thinking about target markets and taking that thinking into their internet channel.  Smart.

Written by Colin Henderson

January 5, 2008 at 11:35

Posted in Consumer trends

KeyPoint CU introduces account access via Facebook

In what I believe is a first, KeyPoint Credit Union, based in Silicon Valley introduces a new mobile service via FaceBook.  In effect, this uses FB as a single sign on vehicle.

Finextra: KeyPoint CU introduces account access via Facebook

KeyPoint CU – which serves technology companies including Apple and Google – is the first financial institution to launch account access via Facebook.

The application provides customers with secure, one-click access to online bank account information. The CU says all account information data is encrypted with a minimum of 128 bits and no user data is stored on the Facebook servers.

While I applaud the concept, sign on is as good as the weakest link, and FaceBook’s log in would be easily phished.  Time for caution on this until its better understood, or at least till I better understand.

Written by Colin Henderson

November 15, 2007 at 22:52

Leaving the Information Age | Joe Andrieu

Nice thoughtful read for the weekend. Joe talks about, and provides examples of how we are moving to new age, beyond the Information Age. » Blog Archive » Leaving the Information Age

We move from one great age to another when, as a Society, we let go of the trappings of the previous age and begin to define ourselves in new terms, absent the defining elements of yesteryear. We no longer think of ourselves as farmers or factory workers… the Information Age has knowledge workers, and we largely define ourselves by the information accessories in our lifestyle: our iPod, our MySpace page, our blog, when in previous ages it may have been our car, our company, or our home town, livestock or crop.

No-one ever asks are you online, whereas, 10 years ago that was a common question. No-one asks a business if they have a web site; they simply must.

Joe leaves it open as to what age we are moving towards, but suggests the clues like in information overload. O’Reilly Radar, suggests an expertise age, and readers largely debunk that view. Wikipedia defines the information age as one where information had value through scarcity. Information is no longer scarce, and is broadly speaking, free and transparent. We each seek ways to manage information, and contacts within our own context and needs.

One thing I would observe, is that rather than creating apparently isolated people staring at screens, the information age has, and continues to, dramatically redefine how we interact, and keep in touch. It has redefined friendship, acquaintances, colleagues, and business relationships, into networks as we each define them, giving us that horribly obtuse expression, ‘Social Graph‘, which it turns out is equivalent to Social Network. The Information Age has also broken down barriers, and borders; it has made the world smaller.

So if we are entering a new age, perhaps, it is something to do with personalisation of networks, allowing us to create our own exclusive view of the world, and how we choose to interact within it. Its kind of a, me age.

What do you think?

Technorati Tags: , , , ,

Written by Colin Henderson

September 22, 2007 at 13:13

Ostrich burger, and a medium mortgage to go …

Great article in this weeks Economist on algorithms.  The theme lies in the mind numbing amount of data avalable now, and how mathematics can help solve complex problems, varying from the UPS driver and plane scheduling to Tesco product targetting.

Algorithms | Business by numbers |

It works by assigning attributes to each of the products on Tesco’s shelves. These range from easy-to-cook to value-for-money, from adventurous to fresh. In order to give ratings for every dimension of a product, the rolling-ball algorithm starts at the extremes: ostrich burgers, say, would count as very adventurous. The algorithm then trawls through Tesco’s purchasing data to see what other products (staples such as milk and bread aside) tend to wind up in the same shopping baskets as ostrich burgers do.

Products that are strongly associated will score more highly on the adventurousness scale. As the associations between products become progressively weaker on one dimension, they start to get stronger on another. The ball has rolled from one attribute to another. With every product categorised and graded across every attribute, Dunnhumby is able to segment and cluster Tesco’s customers based on what they buy.

Relevance to Bankwatch:
Banks have enormous amounts of data, including transactions, merchant usage, and products used, both at their own bank and at other banks (from the transactional analysis).  Instead of the usual demographic analysis, analytics to solve for patterns within that data could be illuminating, particularly if it is shared with customers, to help them understand themselves, and their own behavioural implications.

Written by Colin Henderson

September 18, 2007 at 10:46

Credit card companies pursue subprime borrowers

Interesting subtext to the sub prime crisis, as credit card companies, target those same sub prime mortgage borrowers.

Credit card companies pursue subprime borrowers – International Herald Tribune

For credit card companies, the subprime market is a profitable one, analysts and consumer advocates say. Subprime customers, charged higher rates than those with better credit, are more likely to make minimum payments, maintaining balances that generate interest revenue for card issuers, consumer advocates said.

Written by Colin Henderson

September 7, 2007 at 01:04

Social retailing | van der Klein

This slide show from Raimo van der Klein is interesting as it tries to capture some of the trends in how people purchase things, and the response from the smart retailers.  The theme lies in the statement ‘give it away’, and shifting from pushing product to pulling customers, by working with them.  The slide from the deck captures the essence.

Written by Colin Henderson

September 1, 2007 at 13:31

Sub-prime crisis | Back to basics, and the promise of social lending

The always clear and succint Economist sums up the current financial crisis in next weeks leader here. I say crisis advisedly, because the markets are carefully saying nothing, or alternatively, focussing on the sub-prime market in the US, while the reality could be broader, and in any event a signal of a need to get back to basics.

First this from the Economist leader; as you read this, think derivatives and securitisation. The least understood methods, yet that which have largely been credited for the efficiency of global capital markets over the last 20 years. Incidentally, the correction we are seeing is a good thing for those markets, a good thing for social lending, and open source banking, but more on that later.

Risk and the new financial order | Surviving the markets |

But there is a price that is only now becoming apparent. Because lenders expected to be able to sell on the risk of default to someone else, they lent too easily. After all, they would not have to pick up the pieces. In theory, that risk should have been borne by the people best able to carry it. But with everybody having sold on the risk to everyone else—and the risk often being carved up, repackaged and sold again—nobody is sure where the losses are. The fear is that some risks ended up with those who least understood what they were getting into, and fear is a potent force in this disintermediated world. In the interbank market, every counterparty was potentially vulnerable. Even small amounts of bad credit can drive out good.

I posted the other day about ‘know your customer’. The world of derivatives and other financial vehicles take financial instruments, such as bonds, currencies, commodities, mortgages, and divide them into different components, then re-assemble them as financial contracts that are traded amongst Banks, and investment houses. The nature of that division, and re-assembly means that the original debtor, the final person who must pay that debt is lost in inter-bank transactions. Know your customer is lost.

In simple terms, thats what has happened with the example of sup-prime loans. BNP in France who froze three of their funds this week, own some component of mortgages in homes in the US. The fact that a Joe Homeowner, hypothetically, in Main Street, Witchita, Kansas, is three months overdue on their mortgage payment after their interest rate and monthly payments rose by 3% is transparent to BNP. All BNP know is that the debt instrument they purchased and rolled into their fund(s) is no longer worth what they expected it to be worth. Worse still, they do not know how many Joe Homeowners there are, to what extent they will default, to what extent the home value will cover the foreclosure, and how long that will take. BNP thought they purchased an income stream, but actually they purchased an overpriced bad debt.

Back to Basics

This will take some time to sort out. There will be short term improvements, but there will also be significant reluctance to purchase obscure instruments, where the underlying credit quality is not guaranteed, so that will result in tighter credit conditions that Banks impose on their mortgage and loan activities.

It is incumbent on all social lenders to watch this carefully, and appreciate there is an opportunity to provide a valid and financially sound alternative to borrowers and lenders. Social Lenders still use the common approach of credit ratings to signal likelihood of payback on a loan. But they have the added advantage of additional factors that can be brought into the mix, the secret sauce of social lending, that traditional Banks can never replicate. Social Lending is highly transparent, and hiding is much harder in the open. The quality of lending that can occur within a well run social lending operation can greatly transcend the ‘by the book’ transaction that occurs in a one on one application and approval process typical of Banks.

Incidentally, as as aside, recently Prosper have been having issues, bringing out phrases such as ‘lender revolt’ and Prosper need to get that under control, and eliminate the emotion. Their issues go back to problems embedded in their early offerring, of lending to people with poor credit. That have since been corrected, but long time Prosper lenders are bearing those costs associated with that lending. Such lending has been eliminated from Prosper since early 2007. They saw the problem, learned and eliminated it.

Social Lending by definition carries the promise of at least eliminating the problem that the financial markets experienced this week. A promise of a simpler financial process, one that is easily understood and explainable. It won’t replace the worlds capital markets, but if it can provide at least a small alternative to those who choose, then mission accomplished.


It is such a powerful piece, here, is the full leader from The Economist. I strongly recommend you buy it, and read the other related articles:

Risk and the new financial order

Read the rest of this entry »

Written by Colin Henderson

August 17, 2007 at 11:27

%d bloggers like this: