The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘bankervision

Excellent Debate on P2P Lending across Blogs


If you are interested, there is an excellent debate on P2P Lending going on over a few blogs now. The general theme is whether P2P Lending (otherwise known as Social Lending) will make a difference to Banks.

It began here with this post at Zopa.

The problem is that unlike so many other far healthier industries, the banks have no effective competition. Microsoft is kept in check by Apple and increasingly Google. Warner, EMI and Sony are battling it out with the digital download phenomena. Tesco has to watch out for Sainsburys, M&S and Waitrose. Even the BBC has to keep something of an eye on ITV and Channel 4.

Banks don’t have the self-righting mechanism of genuine competition. It’s become a cosy club where customers are simply the supplier of money for banks to punt in their casino operations, politely called ‘investment banking’

Then James ex of Lloyds kicked in at Bankervision.

If Zopa were to have a material effect on bank lending, and its competitive differentiation is price, it will not win. It does not have pockets deep enough to win a price war with a major bank, let along the whole market. This much is simple market forces at play. The only reason this isn’t happening now is that, as Martin says, Zopa is not having a material effect on the market at present.

Then ‘always up for an argument’ Chris Skinner ratcheted up the volume here. [disclaimer – I am 100% with Chris on this one]

The real point is that, assuming there is a need for these new businesses which I believe there is, the only thing that undermines their business model is access to ongoing capital to get to the point of success. This is the challenge of any new business, and this is the real challenge to these new entrants: can they fund the business long enough to be successful?

Luckily there are plenty of financers out there who do believe in these new businesses however to fund them through their fledgling beginnings, including Red McCoombs for SmartyPig and Zopa’s investors range from Bessemer Venture Partners and Balderton Capital to the Rowland Family.

Even so, in Zopa’s case where they are creating a new market in P2P lending, the issue and challenge has always been getting enough people placing money into Zopa to enable them to meet the demands of those who want to borrow. Without funders, there is no marketplace.

So the challenge is to maintain investment and manage operating costs long enough during this start-up phase to get to the tipping point of growth. And, based upon a 40% increase in total loans just in the last year, maybe that tipping point has finally arrived.

And now the debate has made the FT blog

But what we at Money Matters want to know is whether UK individuals who have used Zopa have got a good deal. At the start of the year, Matthew Vincent wrote a piece about a new online auction site for fixed-term deposits – and although he found that online lending exchanges such as Zopa were offering higher rates of interest, he suggested that these rates could come down as the number of lenders using Zopa increased.

… and the House of Commons through Tom Watson MP blog.

I wrote to the Chancellor in front of me but essentially I suggested three things:

1. Change the tax regime so that people who make loans – investors – can aggregate their total ‘wins’ and ‘losses’ for the purposes of tax. So, if you make 10 loans and nine of them fail, you should be allowed to offset them again the tenth loan that made you money.
2. Consider allowing people to use P2P within their ISA allowances.
3. Bring P2P within the remit of the small loans guarantee scheme. It is this area that I think could have a great impact in the small business sector. If people are prepared to bet their own cash on a business, then they are likely to conduct as much, if not more due diligence on the company as any bank. And when the banks make silly, greedy, short term risk averse decisions, groups of small private investors can step in.

Relevance to Bankwatch:
Thats a lot of debate for something that doesn’t matter.

[another disclaimer; I am involved with CommunityLend in Canada, a P2P Lending company]

Written by Colin Henderson

August 24, 2009 at 20:14

Will Banks do social media?


One of the nice things about blogging is that you get to pick on friends as an example, so here goes with James. This is the comment I left on his post which rightly questions the validity of social media for banks as a marketing tactic.

I wanted to make some additional comments, and they follow, and I REALLY look forward to Ron’s views.

Why Banks won’t do social media | Bankervision

James – couldn’t disagree more – message here from the echo chamber.

This is social media.

Here is why banks (that survive) will do social media. I picked Lloyds Bank at random, and this link is a google search for this string “I love lloyds bank”

http://tinyurl.com/5sqp2h

Social media is not banner ads in FaceBook. That closed walled garden is all to often picked as the definition of social media but not so. Social media is probably the wrong word anyway – at issue is being where your customers are and having conversations with them.

How do we pick branch locations? We pick them because there are office buildings, residential density, new growth areas etc. Branch managers join the chamber of commerce, and other local associations to meet people and chat with them. This is classic banking 101 and build confidence and trust.

Social media is understanding this new location called internet that is not just essential, but fundamental to Gen X/Y as well as a few older fogies.

Back to the Google search. This simple example exemplifies the conversations about Lloyds Bank whether the employees choose to participate or not.

Relevance to Bankwatch:

I think the real point here is that peoples behaviors are shifting. That shift is not the shift from using one media to another. This is not (imho) on the same linear shift as from radio to TV to ….. Instead internet brings a new dimension and with it enormous social (small s) change and accompanying new behaviors. The addition of mobile applications beyond texting will only enhance and supplement this shift.

One outcome is a desire for greater personalisation in the sense of talking to and hearing from real people. Again web 2.0 tools supplement that. Cluetrain said in 1999 that “markets are conversations”.

– join the conversation

– join the conversation online

To me, social media means understanding consumer behaviour and adapting to that behaviour.

This implies a shift in focus for banks, away from traditional marketing, and towards conversations.

Written by Colin Henderson

November 30, 2008 at 19:25

My “email for Bankers” system


Every Banker needs to read James post here. This particular paragraph resonated for me, having lived this life for years, and now being in a position to re-orchestrate my day according to my schedule. I have some suggestions …. the back to back meeting day is the death of effectiveness.

BankerVision: Email bankrupt

A cultural oddity of the bank is that we do back-to-back meetings, probably most days. So our email keeps piling up, and so many of us have resorted to fitting email processing into odd slots of the day.

I have some cures for this ailment, before you follow the person James speaks of and eliminate email. Some hard hitting comments to follow, so don’t anyone take personally.

  1. Eliminate executive assistants. Their job is to slot meetings into the empty spaces in your calendar. They are your worst enemy. The better they are at their job, the worse your life will be. Eliminate them and do yourself. This is paramount. The rest of my suggestions are just window dressing. PS, you will also save the Bank money here.
  2. When someone requests a meeting, ask why?
  3. Manage the number of “Executive time” meetings where career advancement of the meeting requestor is the desired outcome. You cannot sponsor 90% of the upcoming stars in a 50,000 employee organisation. You are NOT superman.
  4. Schedule days (not hours, days) for yourself.
  5. Get an ipod, and earphones … best time management device ever invented … think about that!! Go here for help.
  6. If you use Outlook (poor you) set up a filter to place the cc’s in a cc folder, and eliminate from your inbox. Read the cc folder once a week, and only if you have to. Control that urge! Do NOT tell anyone you have done this.
  7. Use Xobni, and boggle at your own ineffectiveness

Thats it. My “email for Banks with 50,000 employees system”. Thanks James, for letting me reflect on years of falling into these traps.

Written by Colin Henderson

August 13, 2008 at 19:07

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