Blog post: The times for banks they are a-changin'

2013 was not great for financial institutions: The British Social Attitudes report revealed that only 19% of the UK population think that financial institutions are well run. This makes the banking sector bottom of the league and is a far cry from 1987 when public trust in banks was higher than 90%, writes Robert Roessler.

It is too simplified to blame Lehmann, Libor and PPI mis-selling alone. Regulators with a focus on increased competition have also created an environment for non-banks to enter financial markets. They connect people and enable them to conduct financial transactions directly with each other, with no more need for a bank to be involved.

There are many examples where this has happened. Leading UK payday lender Wonga has revolutionised access to money at short notice, and in 2012 the company lent £1.2 billion in four million loans, which generated profits of more than £1 million per week. Peer-to-peer lending platforms go one step further and cut out the middle-man completely by enabling individuals to lend money to other individuals. These platforms - the most popular ones in the UK are Zopa, Funding Circle and Rate Setter - have created a win-win situation: they offer better rates to borrowers than banks as well as attractive returns for lenders.

Traditionally, financing a project or business required asking one or a small number of banks for a large sum of money. Crowdfunding reverses the approach by asking a large number of people each for a small amount of money. Even though many projects fail to get funding, there are many success stories. In 2012 an estimated £200m was raised in the UK through crowdfunding, this is likely to increase many-fold this year and the years to come.

Peer-to-peer exchanges such as Kantox and Transferwise have similar positive growth prospects. They enable individuals and companies to buy or sell currencies to counterparts directly, without a central institution exchanging one currency into another before making a payment. They are highly attractive as they charge a fraction of banks' rates, which typically include commissions, transfer fees and receiver fees.

With rising interest in these services, the question is what the banking sector is going to do. Currently they are less concerned: Transferwise's 20-30 percent growth per month and daily transfers of £1 million is impressive, but with global currency markets exchanging trillions each day this is a small drop in a very large ocean. However, disrupting technologies in combination with regulation have the potential to change an industry for good: The EU's Payments Service Directive paved the way for non-banks to offer payments services, and enabled companies such as PayPal to rapidly gain a large share of the market.

The landscape will continue to change, but banks will not give up. They will focus on core areas such as private and investment banking, as well as services such as mobile banking which they will market aggressively to increase customer loyalty. But traditional banking areas such as lending and payments will see even more alternatives to banks. And ultimately the financial revolution will encroach on an area which is so inherently linked to banks that it is hard to believe it will ever be separated: money.

Published 14 January 2014, read the full article here: http://www.thedigitalbankingclub.com/blog/the-times-for-banks-they-are-a-changin/

Blog post: Twitter & American Express introduce “pay with a tweet”: the future of e-commerce?

The announcement that Twitter now offers a fully integrated payments service on its platform via American Express doesn’t come as a real surprise. The logical extension of both companies’ existing collaboration just makes sense, and is in fact good news.

The US card mogul started integrating with major social networks a while ago, including Facebook and Twitter. Amex’ Twitter Sync already allows customers to be eligible for discount deals when they tweet special offer #hashtags. To enable that service, users have to connect their Twitter account to their Amex credit card account.

Published 12 February 2013, read the full article here: http://www.whiteboardmag.com/twitter-is-now-offering-pay-with-a-tweet-for-real-what-that-means/

Blog post: Digital Currencies: No Threat to Their Real Counterparts - Yet, PYMNTS.COM

There has been much speculation about the fate of the Euro over recent months. Maybe a bit too much as it is difficult to predict (and tiring to hear) what will or will not happen to a currency which is still in its youth, in historical terms. These recent developments in the currency arena however have prompted a renewed focus on alternative currencies, so let’s take a look at these – their future may be easier to predict too, after all.

Published 24 April 2012, read the full article here:

https://www.pymnts.com/news/2012/digital-currencies-no-threat-to-their-real-counterparts-yet/

LinkedIn Discussion: Cloud Computing

"Cloud Computing and Financial Services - is that really a good match?

I've recently written a brief article about the (potential) role of cloud computing in financial services, and whether hedge funds are paving the way. What is your opinion - do you think that cloud computing is the way forward for financial institutions, or are you sceptical?"

See the comments in LinkedIn's "Banking and Finance Technologies" group here:

http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=94327430&gid=42854&commentID=70496358&trk=view_disc&ut=2YfWaGyTSZoR81

Blog post: "Financial Services in the Cloud: A match made in computing heaven?"

Talkin' 'bout a generation can be daunting. There’s Generation X and Y which kind of makes sense, but then Z is I or @ or Me. TheiPhone 4S is the 5th generation of the device which means that generation 6 will be the iPhone5. As confusing as this is already, technology generations last considerably shorter than family generations, and sometimes they are so short you barely mention their existence.

So I was quite interested when I was invited to a breakfast seminar on “Third generation Cloud Computing for Hedge Funds” as I had completely missed generation number 2. The idea is straight forward. Rather than outsourcing all IT services to a public or private cloud, the third generation is all about being hybrid and pushing a number of IT services into the cloud whilst keeping others within the direct reach of a hedge fund.

For me however the two never really seemed to be a good match, considering the financial services’ reluctance to give away control over any of their data. They have valid reasons for this. A regulator may question whether data is stored appropriately and safely. There’s no physical server room to show in case an interested investor pays a visit, and if an external provider goes down there is a knock-on effect on a number of funds which could be disastrous for the whole industry. In addition availability is key and any services in the cloud need to be easily and speedily accessible, at any time.

Having listened to a number of arguments, it made more sense to me why companies within the financial services industry - and hedge funds in particular - are amenable to the concept. Being active high-frequency traders, they use state-of-the art IT systems and consequently need to be forward-looking when it comes to embracing new technologies. Outsourcing IT services promises they can fully operate their business from anywhere with a very basic equipment such as Internet connection and laptop. This significantly reduces operating costs which can be £30,000 per month, music to fund managers’ ears who are always keen to increase their margins.

Hedge funds take a risk by speculating on specific market developments. That risk is assessed in strict due diligence procedures, and funds will only choose to put money where they expect to make a substantial profit. Likewise you would expect them to outsource parts of their business only if they’re absolutely certain this is the right thing to do. They will thoroughly check any provider’s longevity of clients, profitability and how they deal with outages. And they will check how much of the provider’s cash is re-invested in the architecture.

I’m still a bit sceptical, but given the mouth-watering incentive of lower costs I can see why hedge funds are attracted to Cloud Computing. As hedge funds are, in their own way, cutting edge in the financial services industry, they may well lead the way for many more players in the industry following suit. There are a few obstacles and it’s unclear how these can be surmounted, but first steps have been taken and with Cloud Computing having received the official EU seal of approval recently it will be even more exciting to see whether the hedge funds’ current IT gamble will pay off.

Appeared on MHP blog: http://www.mhpc.com/blog/financial-services-cloud-match-made-computing-heaven

Interview: "Should Banks Bother With Social Media?", PYMNTS.com

Should Banks Bother With Social Media?

An interview with me at PYMNTS.COM:

0

Despite concerns about regulation and loss of control, Robert Roessler of MHP Communications argues that social media initiatives are no longer an option for FIs – but a necessity. He shared with PYMNTS.com his views on the specific benefits social media – both for revenue and product innovation – and weighs in on the key debate: should your employees have access to social networking sites at work?
Published 9 December 2011, read the full article here:https://www.pymnts.com/news/2012/should-banks-bother-with-social-media//

Blog post: "Should banks really bother with social media?"

For banks, using social media is a relatively new and challenging concept. The industry is heavily regulated, and yet there is uncertainty how regulation actually affects financial institutions’ social media efforts. The FSA guidelines for example are – to say the least – brief and vague. The suitability of social media as a method of communication has therefore been heavily debated for many years, leading to a growing void between banks and other more social media-friendly corporations. In addition, the majority of banks ban social media platforms from office desktops.
However, banks have now started to realise that they have to embrace social media to catch up with other industries – despite unclear regulation and a perceived loss of control over stories. These are some of the key findings of our recent survey amongst heads of communications and PR managers at global banks. This increasing interest is not only for banks to engage with customers. Employees feel entitled to use and access social media in their professional lives. According to research by internet security company Clearswift 26% of employees would be de-motivated by a stricter policy on social networking introduced by their employers and 14% would try to work around the rules. 3% would even consider leaving (presumably having first tried scouring LinkedIn to find a new job).
This does not have to be the route for banks. There are now a range of successful and compelling examples of how they can benefit from opening up to social media and planning engagement programmes. First Direct’s Little Black Book project is one, Wells Fargo’s use of social media to improve customer service is another. Many more banks will follow their approach, and this will be a matter of time only. And, certainly, of clearer regulation.

Appeared on MHP blog: http://www.mhpc.com/blog/should-banks-really-bother-social-media

The bankers are back in town

Actually they were back in Amsterdam last week, where they attended SIBOS, the biggest global gathering of financial services providers. And SIBOS was in a happy mood this year. Officially, there were 8,700 participants (an impressive 3,200 more than in 2009 when SIBOS took place in Hong Kong), 209 exhibitors and 175 speakers. All of them were positive and upbeat, you could see a lot of new business coming through and media interest was lively, with more than 100 journalists in attendance. Everyone was keen to agree that cloud computing changes the way banks operate, Basel III actually means something this time and that the Germans should finally stop complaining about the European payments system Sepa because it's too late now.
SIBOS also was in an appy mood. You could see a number of onsite demos such as peterevans' Simply app, the UK's first self-execution stockbroking application, and quite a few people predict that this is just the start of a new era. And some were right in saying that when you see such amazing apps, all the non-virtual stuff is suddenly much less exciting. SIBOS 2010 also debuted its first dedicated panel on social networking. Needless to say the room was packed. As conservative as it is, the industry has started talking about new media at last, and it'll be interesting to see how things develop over the years to come.
You could say that SIBOS is an indicator of the health of the banking industry, and this year it appeared in rude health. According to official records, 4,518 full week passes were sold for SIBOS 2010. With each full week pass coming in at 2,800 EUR, this is some very nice revenue for SWIFT, the conference organiser. But we know it's worth it when you get something out of it. And everyone got something out of it indeed: participants got a feeling of optimism, exhibitors got plenty of leads, speakers got plenty of attention and cab drivers got away with their random pricing of fares.

Appeared on MHP blog: http://www.mhpc.com/blog/bankers-are-back-town