Finance

Keith Hart from the Open Antropology Cooperative is an Antropologist interested on the study of the impact mobile technology on poor people´s access to the market. I find his work of outmost interest, thus I enclose a note on his recent writtings on Africa. Hart explains that the Maurer’s Institute for Money, Technology and Financial Inclusion at UC Irvine has received a grant from the Gates Foundation to explore, among other things, the impact of mobile telephony on poor people’s access to and use of money. The focus region is East Africa, and Kenya in particular, recently emerged as place for world’s leading innovation in this area. While Africans largely missed out on the infrastructure of electricity grids, they have leaped forward on mobile phones. These might easily have a built-in payment system whose potential has been blocked in more advanced economies by entrenched financial interests.

“At a time when the hardware manufacturers in the rich countries are wondering how to sell more and fancier computers in a sated market, Kenyans have taken the lead in adapting cheap old machines for use by the world’s poor masses“, explains Hart. Nowhere else has the use of mobile phones for banking, commercial and administrative purposes been taken further than there. The history of development in this area has not been long: M-PESA (short for mobile money in Swahili) was launched by the Kenyan affiliate of Vodafone  in March 2007. It quickly captured a share of the market for cash transfers and grew very rapidly, with 6.5 million subscribers by May 2009 and 2 million daily transactions in Kenya alone. In December 2008, a group of banks successfully lobbied for an audit of M-PESA, in an attempt to slow down its growth; but the audit found that the service was robust.

Keith Hart explians other aspects to this technological advancement: “There is a lot more to this revolution than just banking. Instead of walking to a distant town and queuing to pay taxes and fees, often unsuccessfully, people can now pay them instantly with their mobile phones. Relatives of the victims of road accidents in remote areas can buy blood to be sent from a regional hospital in time to save lives. Farmers can check market prices around the country before deciding when and where to send their produce for sale. Families dispersed by migration can keep in touch by phone, using highly sophisticated methods at little or no cost. Now this is a financial revolution that anthropologists ought to have plenty to say about. And not just because it is in an exotic part of the world.”

A través de Scribd he tenído acceso a un documento excelente preparado por Solutions-Insights para conceptualizar los  beneficios de estrategias colaborativas para las empresas y business to business.

En particular los cuadros y tablas que incluye el documento son de muy buena calidad y pueden enriquecerse con otros ejemplos conocidos. Recomiendo su análisis y agradezco que si tienes aportaciones o referencias que sirvan para aumentar la productividad mediante herramientas web 2.0 en cualquier sector las compartas a través de tus comentarios a esta entrada.

¿Cómo han logrado los bancos 2.0 miles de clientes? La primera pregunta del moderador queda en el aire porque no queda claro tras la sesión que los bancos estén logrando miles de clientes a través de herramientas 2.0. Sin embargo se introduce una idea interesante: el que la inteligencia colectiva y el concepto de la reputación digital (Ashoka es ejemplo) pueden complementar el modelo de riesgo estadístico. Las escasas fotos que tomé en FICOD están disponibles aquí.

En la mesa redonda sobre Banca 2.0. participaron Nicolás Oriol, CEO y fundador de Unience, junto a Arturo Cervera, Co-fundador y director general de Comunitae; Daniel Pérez, responsable de BBVA Tú Cuentas; Fernando Egido, director de Negocio Digital, Área de Innovación e Implantación Estratégica de Caja Navarra; Marcos Gómez, subdirector de e-Confianza de la oficina estatal INTECO, y Soumitra Dutta, catedrático Roland Berger. Decano en tecnología y educación electrónica en Insead.

Este post se centra en dos de las intervenciones, la de Nicolás Oriol, de Unience y a de Sumitra Dutta, si bien Comunitae, empresa de préstamos entre personas merecería un post especial en profundidad. (more…)

The London-based world’s leading band valuation consultant, Brand Finance, published the Top 500 Global Banking Brands for 2009 last month. TopForeignStocks.com has published an abstract and gives access to the full report.

What follows below is the Top 500 Global Banking post on the subject matter, which interest me as I am starting to work on new ideas for the Annual Report in 2009. Questions to be raised are: shall I consider the top 5 or go down to the top 10? what about testing the reporting of these blessed ones against those in other sectors that were doing a magnificent work before the crisis arose? Your comments are most welcomed on this.

“Brand Finance has published this annual report since 2006 in partnership with The Banker magazine, entailing a list released annually and based on data from the world’s largest stock exchanges. Each brand is assigned a ” brand rating: a benchmarking study of the strength, risk and future potential of a brand relative to its competitor set as well as a brand value: a summary measure of the financial strength of the brand”.

Brand Names – Why are they important?

According to Brand Finance:

“Brands are the most valuable intangible assets in business today. They drive demand, motivate staff,secure business partners and reassure financial markets. Leading edge organisations recognise the need to understand brand equity and brand value when making strategic decisions.”

The following table lists the Top 20 Global Banking Brands for 2009:

Note: AAA = Extremely Strong, AA = Very Strong, A = Strong

Key points from this year’s report:

1.Chinese bank brands are becoming powerful as two of these brands are in the list above.

2. The brand value of developed market banks have fallen more than other banks. US and UK banks have lost 40% and 15% of their brand value respectively.

3. The total number of US banks in the top 500 list has dropped to 95 banks this year.Seven US banks are in the top 20 list which is very interesting since the credit crisis started here many more banks have been shutdown by regulators than any other country.

4. HSBC (HBC) received the highest ranking with a brand value estimate of $25.3 billion and the highest brand rating of AAA+. As the “World’s Local Bank”, HSBC provides customized high quality services in its retail division tailored to each region where it operates. After holding up relatively well compared to other British banks, HBC last week announced a cut in dividend payout by 29% for the year and a rights issue.

5.The only emerging markets bank in the top 20 is Banco Bradesco (BBD) from Brazil other than the two Chinese banks.

6.Spanish bank Santander(STD) will become the 3rd largest private sector bank in Brazil after merging its operations with Banco Real.

7. Financial institutions such as American Express(AXP), Citibank(C), Bank of America (BAC) still have high brand premiums though their market capitalizations have reduced significantly.”

Madrid, January 21th at Fundación Rafael del Pino, and Story starts by saying that the current crisis is opened to many interpretations on causes and remedies. Since venues of interpretation are so far apart,  getting close to a solution is difficult.

In the most pessimistic scenario of several analyzed by Jonathan Story, he envisions a problem of trust on institutions: Agents may become conservative and decide to invest on real state, withdrawing liquidity from the financial system. Why so? The poacher has also been the gate keeper (i.e. people ask themselves how has Madoff been able to get money as well
as being at the regulator, the FDIC?)

Story believes there is room for optimism. Historically he recalls cases in the 1970s, when governments at either side of the spectrum in Spain, UK and USA opted for acting. They did so with a recycling policy (such as subsidizing housing), transferring funds to less favoured. He also states that people are keeping their money in deposits.

The US is still the key state in the global system, although with much less room of manoeuvre. This has implications for the new scenario under a severe economic crisis. However, locally, the US has a very fragmented financial and regulatory system, which Story sees as a problem.

In Europe he sees the problem of leadership, and somehow lack of ambition. Story belives that the United States may afford to have an insulae approach to global problems. It is a country big enough, and key in the global system. Europe, however is not developing an European pride (education is a main cause). European countries have a real problem acting as insulae.

Story pinpoints some long term shifts:
1. In Italy, current labor cost are 30 per cent above those in Germany. Spain is in the middle. Germany has excelled (at managing in detail all the outsourcing (to eastern Europe), three times per capita than EU number two, becoming a manufacturing champion). In no way Latin countries are catching up with this. Manufacturing is (terrible) in Spain.

What to do for Spain? Very little. Easing the labour law will panic workers. If anything, massive investment program at the EU level, but through direct involvement of the heads of government, not through European institutions. Serious leadership and not provincial mass is needed. For Spain there is a tough test lying ahead for the monetary union. He see the
way out in Spain is promoting big programs  at the EU level.

2. Europe needs leadership: it is heavily underperforming playing prestige. Europe is more than it believes of itself (just count on the Olympic medals for Europe, close to two thousand, but not sold as European).

3. Russia has become European. Russia prefers Germany to China. Russia is scared of China for two main reasons: Siberia is the key asset of Russia -close to China- and the demographic implosion of the frontiers with China. China is the American friend, and beside, China´s economic implosion in the last 20 years.

4. The United States will not be able to pull apart from global problems, as it did from the 70s, but Story stresses that Obama´s plan is to get back to the USA as an exporting nation, and less focus on the global financial system as a source of growth. The message is: nations should rely more on themselves since the American yard will not be the consumer place the world has been used to.

He concludes that fear is what is moving the tectonic plaques right now. And fear is based upon greed, (not a good world to live in, he concludes).

Hace escasamente un mes, Xavier Mena compartía su visión sobre: “Hacia donde va la economía mundial” (ESADE-Madrid, 17-06-08), con reflexiones interesantes sobre la energía  “nuestro modelo energético no lo vamos a cambiar en dos días… la inversión va rezagada en extracción de nuevas prospecciones”. Avanzó un mapa mundial de ganadores y perdedores de la coyuntura actual, relacionado en el medio plazo con el acceso a la energía y con el agua: “El problema del agua es fundamental”, y pronostica grandes hambrunas en China e India (en este mismo sentido, consulta si estás interesado las opiniones de Jeffrey Sachs, sobre agua y energía en España, en su visita reciente a Madrid).

Según Mena, asistimos a un cambio en el sistema financiero mundial de la transcendencia del que supuso la crisis del 1929. Datos relevantes, que apoyan la tesis del profesor de ESADE:

•  En USA los valores nominales de las viviendas han bajado (2 millones de familias han devuelto las llaves de sus viviendas, -algo imposible en España, donde el derecho hipotecario obliga a responder con los bienes propios de las deudas contraidas). Algunas estimaciones arrojaban la cifra de que podrían estar afectadas 21 millones de familias.

• La petición de los bancos centrales de que se publiquen las depreciaciones de activos tratan de evitar los problemas que tuvo Japón en los 1990s.

• Novedad: la entrada de los fondos soberanos en los capitales de los bancos. Mena plantea la reflexión ¿Es inversión o invasión?

• Sobre los riesgos en los bancos USA: En marzo 2008 la FED transgrede todas las normas de su estatuto: Abre la ventanilla de la liquidez a los bancos de inversión, que acceden a liquidez sin cumplimiento de coeficientes ni supervisión. La competencia, que no ha acudido a la ventanilla, y los bancos comerciales, levantan la voz, les parece tratamiento asimétrico. Una parte de las subidas en los mercados de commodities mundiales podría explicarse por esta razón: como no hay supervisión, los bancos de inversión podrían haber ido a los mercados especulativos para obtener ganancias. Las consecuencias las conocemos: de los desequilibrios de precios en las commodities, a las hambrunas.

• El banco central europeo esta haciendo de mercado efectivo, y ha alargado el plazo de los prestamos.            

Mena habla de un cambio de modelo bancario en el mercado estadounidense (insiste en que no en España), y utiliza una metáfora: “Los cambios son comparables a los producidos por la caída de los meteoritos en la época de los dinosaurios”. ¿En qué consisten los cambios? La posibilidad de titulizar en títulos opacos en USA se acaba. Las agencias de rating van a separar por imperativo regulatorio areas en las que existe conflicto de interés. El modelo de “separación en la originación” crediticia se va a reducir drásticamente. La banca tendrá que recapitalizar, desapalancar y restringir el crédito. Apuesta por que la FED probablemente no va a seguir bajando los tipos: comenzará a preocuparse de la inflación. Nos deja con un mensaje optimista: La economía americana va a sanear el próximo año, para eso son tan prácticos y tienen flexibilidad en el mercado de trabajo. ¿Nos preocupa Europa? Mena dice sobre Europa que los tipos son sensibles a las expectativas de inflación, por lo que no van a bajar. El hecho de que a largo plazo estén en el 4%, significa que los inversores creen en las posibilidades de control de la inflación del BCE. ¿España? Entrábamos en el agotamiento claro del modelo basado en consumo familiar+construcción –Mena dixit hace un mes. 

Las perspectivas son mas halagueñas para América Latina, que en crisis anteriores sufría fugas de capital inmensas. Ahora exporta masivamente materias primas, hay países con clase media, y sin déficit públicos. Incluso hay países como Brasil y Colombia, que han comenzado a emitir deuda en moneda nacional porque tienen demanda y superávit de balanza. Mena destaca que el riesgo país no tiene comparación con datos de crisis anteriores, que los tipos de cambio se esta apreciando. En definitiva “aunque sufrirá, LATAM será de las regiones que menos sufran”.

¿Quieres profundizar sobre las reacciones a la crisis energética en Europa (política comercial y sectores económicos)? Consulta el análisis de iwwi, y si conoces un análisis similar publicado para España, te agradezco que lo compartas y nos des tu opinión.

On April 2008 The Banker publishes and excellent article on the opportunities of on line banking.

The Banker affirms that online banking is struggling to keep pace with web trends and losing the lucrative social networking market as a result. But some players could be on the verge of a breakthrough.

Dr Thomas Meyer, an economist at Deutsche Bank Research in Frankfurt, has studied the impact of Web 2.0 technologies on the financial services industry and he notes that the new generation of online users (dubbed the ‘millennials’) form their loyalties at an ever-earlier stage. He advocates the importance of ensuring a unique customer experience, driven by innovation in the underlying online banking technology capability itself, as the way in which the banks can attempt to develop “a kind of connection to the customer”.

Wall Street-based consultancy Celent reported in its 2007 survey of US college students, that 60% of respondents said they would maintain their present banking relationship into their working lives –a 12% increase on the same survey in 2003.

Javelin Strategy & Research estimates that the “millennial” generation’s total income during the course of the next decade will outstrip that of their baby-boomer parents, hitting about $3480bn.

First Direct, explored the world of Web 2.0 outside the online banking firewall, with the creation of a number of rich content features, such as podcasts and RSS (really simple syndication) feeds, which push information to the user. (See more on: www.interactive.firstdirect.com/podcast.html).

Infosys, found that several big names – including Wells Fargo, American Express, HSBC and AMEX – scored very highly on collaborative features and content.

Dr Jai Ganesh, who leads the Web 2.0 research lab at Infosys, believes it is still early to know where and how banks might be able to integrate Web 2.0 technologies into the online banking piece itself to deliver a unique experience, using the customer’s personal financial data.

Among the handful of intrepid banks and financial services providers addressing the challenge:

1. US-based online brokerage and bank E*Trade Financial, an early pioneer in the online space, is exploring and has developed prototypes of mashups and widgets (new tools and services created with content from multiple sources) that would use data from customers’ portfolios and accounts. These tools would allow customers to make a seamless comparison of data from their own portfolio against streams of live data provided by other websites, so they could monitor their portfolio’s performance more effectively (see more: https://us.etrade.com/e/t/home). E*Trade’s interest in such Web 2.0 technology lies in the ongoing personalisation of its customers’ accounts. To this end, it has also made considerable efforts to integrate all of its online account offerings.

2. Banks must begin to examine where else in the online realm they might begin to integrate their service offering: Paul Halpern, executive vice-president at E*Trade, believes “website integration will not be sufficient to meet customers’ needs in the future. At some point you don’t need a website: you just need to position your functionality right where the customer needs it”.

Executives at Citibank online, bank Egg, coincide: “confining the bank’s online development to the build-out of its own website could prove a self-limiting strategy”. Ken Woghiren, head of architecture and innovation at Egg, has overseen some research into the evolution of the bank’s customer behaviour: “The research that we have done has shown that our customers are interacting with us in different ways, and that trends around technology are beginning to have a marked impact:”

- The rise of social networks:  the phenomenon has a direct impact on the amount of time consumers spend browsing banks’ websites, he says. “the type of customer that we deal with is ‘cash-rich, time-poor’. They would have a few minutes sitting at their desk, and interacting with our website. Now they are spending those cracks in the day on their social networks. We need to show up in the place where people are spending their time.”

Facebook, the US-based website founded in 2004 by a Harvard Business School student, is one such social network. With more than 68 million active users globally, Facebook is the sixth most trafficked site in the US. Facebook and its chief competitor MySpace have sparked controversy in the US and UK press, largely because they have reached a point of critical mass never before seen in either the online or physical realm.

“We have been looking at a few innovative payment propositions, using the Facebook infrastructure for example,” says Mr Woghiren, from Bank Egg.

Egg has managed to convert its own e-mail-based person-to-person payment facility to operate with the Facebook messaging system, “with minimal effort”, says Mr Woghiren. It is not yet a proposition that the bank has taken to market but “it is one of the things we are considering”.

E*Trade is “already looking to do some things along those lines” says Mr Halpern. “[Customers] should not necessarily have to log on to our site to buy a stock or make a payment, and take action against their portfolio.” “We will have to see how that plays out.”

The Banker has also learned that a major UK-based high street bank is “seriously” considering the Facebook proposition. “It’s a quick route to market,” observes a senior manager at the bank.

With the under 25s serving as the site’s fastest growing demographic, and boasting an 85% share of the social networking market of the US’s major universities, Facebook serves as the young, tech-savvy and affluent, ready-made sweet-spot. “As a bank, how do you read those demographics? It’s well known that Facebook has a higher net worth,” he adds. “The payment is the more commercial point of sale, but [using] Facebook would also allow the bank targeted advertising. And if you understand more about the customer from their Facebook account, you can better cross-sell to them.”

Facebook has already moved into a number of e-commerce activities through its open application programming interface (API), which allows independent, third-party developers to create extendible widgets for use on Facebook pages. Hundreds of such widgets have been created, among them a range of personal finance features. These include: a peer-2-peer lending facility, The Lending Club; BillTrack, which allows Facebook users to keep track of their bills through their Facebook profile; and MyMoney, an online home banking application that takes information from a number of banking institutions. Its functionality includes viewing account balances and money transfer between accounts.

In November 2007, KeyPoint Credit Union, a small US-based member-owned financial co-operative, became the first financial institution to offer fully fledged account access through Facebook. Using a mobile banking platform, powered by mShift, a mobile banking solution provider, Facebook members are able to view their KeyPoint online account balance within their Facebook account without any additional login required.

Juli Anne Callis, the chief operating officer of KeyPoint and an expert in demographics, has noticed some instructive trends in the adoption of KeyPoint’s Facebook application. She says that it is not just about young people:  All “people want to be in touch with their money any way they want”.

Web 2.0 banking experience is also operated by Google. Google told The Banker that a number of European and US banks have approached it regarding the integration of its software-as-a-service (software that is delivered over the web rather than deployed in-house) suite into their online banking and brokerage account platforms. Of particular interest to these banks is the integration of the search giant’s Google Apps suite, in which a number of applications, including e-mail, documents, calendars and talk capability, are offered as a bundled service. The suite was originally created as a free consumer tool but its functionality and ease of use has propelled Google into the enterprise market.

One idea that has been mooted, Mr Armstrong reveals, involves the use of the Google Apps suite to create a centralised, fully integrated hosted platform for interacting, at least in the first instance, with high-net-worth client accounts. “We would envisage the service and the data to be supplied by Google. The bank and customer would then interact in a particular domain. It would appear as a personalised web page”.

The integration of business intelligence software has also been discussed. If Google were to integrate some of the capability and knowledge it enjoys as the world’s largest custodian of online human behaviour with the customer bank account, it would be able to develop an in-depth profile of the online banking user as a three-dimensional individual.

The conjunction of Google and the online bank is not yet a “fully baked” proposition, says Mr Armstrong. The discussions outlined nonetheless signal a tangible shift in the way US, European and UK banks are thinking about the entire online banking paradigm. Egg, for example, is exploring the use of the iGoogle launch pad – a web page on which the user can arrange a number of information feeds and Google Gadgets – to allow its customers to aggregate their various accounts in a personalised way.

When consumer technology of this kind is so familiar, easy to use and ubiquitous, it seems increasingly likely that a third-party provider specialising in the online consumer experience will eventually dominate the next generation of online banking functionality.

The Banker writes that entering the world of Web 2.0, challenges include privacy, information security and avoiding losing online customers to the branch or to younger and nimbler alternative providers.