Category: Business Models

Business Models, Innovation2 Comments

A Sure Sign that we are at a Turning Point in Mobility and Use of Internet

Colin Henderson

I noticed an ad on CNN this afternoon, that really shows the gap that lies between old business and new business. The topic here is personal use of technology – how individual managers and executives use it. This reflects personal,and therefore institutional effectiveness. It reflects the difference in things happening over days, versus over months. The ad was for GotoMyPC that “allows you to access your PC from anywhere in the word”. Its a funny ad that begins with a travelling executive who realises the information he needs is on his PC back at the home office, so he sends … Continue reading A Sure Sign that we are at a Turning Point in Mobility and Use of Internet

Business Models, Profitability

Mullenweg’s Safe Bank Could not just Survive but it could Prosper

Colin Henderson

When Matt wrote his post the other day about starting a bank it got me thinking about the effect of what he is saying relative to profitability when we introduce a policy to be safe and carry capital reserves of 2 – 3 times more than todays banks. Assumptions: – demand deposits = demand loans – GIC (CD) = Mortgages – incremental investment in higher returning mortgages is funded from cash Relevance to Bankwatch: A $4 increase in gross profit results in a 15% higher Return on Equity when a lower capital ratio of 10% is accepted.  Note the stock … Continue reading Mullenweg’s Safe Bank Could not just Survive but it could Prosper

Business Models1 Comment

Conservatives propose radical changes to banking regulation in UK

Colin Henderson

There are some dramatic proposals contained in the upcoming white paper from the Conservatrive opposition [UK] this week. They make sense and go to the core of the flexibility that allowed banks to become too speculative. They address leverage, and the investment banking/ retail banking integration challenge. The Conservatives are larely expected to win the next election, sometime in the next 12 months. Tories say break up the big banks | The Times He will be clear, however, that the Bank should have powers to order banks and other financial institutions to hold more capital when times are good, so … Continue reading Conservatives propose radical changes to banking regulation in UK

Business Models

Bank directors to receive formal training and capability assessment

Colin Henderson

It appears bank boards will be required to go beyond figure head status under upcoming regulation changes in UK. Sir David Walker to shake up bank boards The City grandee tasked with reforming corporate governance standards at Britain’s banks will this week set out plans for directors to receive formal training and annual re-election to the boards of financial institutions. They will also address boardroom composition by stressing that boards need to have a proper balance of experience and understanding of a company’s risk strategy, and suggest that risk committees should be established alongside audit committees to aid risk management … Continue reading Bank directors to receive formal training and capability assessment

Business Models, Innovation, Social networks2 Comments

Collaboration (1) vs Beaurocracy (0) | Wikipedia & CIA Factbook example

Colin Henderson

Here is a striking example of the power of collaborative ‘wisdom of crowds’ approach to information preparation, versus traditional top down beaurocratic approach. I was reading the Obama speech in Ghana, and his references to the current and previous governments, including Jerry Rawlings which rang a history bell for me, so thought I would read up.  First off I checked what used to be my old favourite the CIA factbook, and it has not been updated since sometime before Dec 2008 [note highlight]. On the other hand a quick visit to Wikipedia had more than enough detail being up to … Continue reading Collaboration (1) vs Beaurocracy (0) | Wikipedia & CIA Factbook example

Business Models2 Comments

“Instead of extracting value, they create it” | Haque

Colin Henderson

Umair continually presses us to think about new types of corporations that are creating genuine value.  The definition is evolving, and you can check back with his earlier posts about the companies mentioned, but the final sentence in this paragraph is a great objective. An Open Letter to 20th Century Business | Umair Haque Who are some of those innovators? We’ve discussed lots of them – Apple, Google, Tata, Threadless. What makes them different is simple. They are more profitable and valuable than rivals because, well, they do stuff that counts. Instead of extracting value, they create it. Continue reading “Instead of extracting value, they create it” | Haque

Business Models

“Even though we were in and looking you still couldn’t see [where the bottom was]” | KKR

Colin Henderson

Listening to this interview is interesting and sobering for banks. The highlighted quote below tells all. Henry Kravis and George Roberts (KKR) | FT Interview FT: How do you see the opportunities that have been thrown up by this incredible dislocation? Is the government a good partner for KKR? HK: We looked at quite a few of the banks over time and we turned them down because we couldn’t see what was in the banks. Even though we were in and looking you still couldn’t see [where the bottom was]. I think there may be some programmes where it will … Continue reading “Even though we were in and looking you still couldn’t see [where the bottom was]” | KKR

Business Models

We will not hear about bricks and clicks after this recession

Colin Henderson

Deloitte pick up on an interesting characteristic of banks here. Cost cutting occurs during downturns, but its spend spend spend when things are looking good. Banks rarely get to the point of incremental efficiencies that they note here. Citi are a classic example as noted in the FT this morning. This fits with the view that this change we are undergoing is not just another blip before we return to business as usual. There is no business as usual coming. The future is smaller, framed in different business models, contains a greater mix of small business, and smaller companies and … Continue reading We will not hear about bricks and clicks after this recession

Business Models, Japan

Implications for banks and the degree of restructure required

Colin Henderson

Japan continues to lead in terms of making changes to accommodate the current economic climate.  While the English story here is March, the other is dated today. This is significant for the West in terms of understanding this economic situation is not going to be cured overnight, and when we speak of recovery, its important to consider what recovery means, and how long it might be before we get to return to anything like the economic levels of 2007. Toyota Cuts Exec Pay, Eliminates Bonuses AP) Toyota Motor Corp. is reacting to the slump in U.S. auto sales by further … Continue reading Implications for banks and the degree of restructure required

Business Models, Innovation1 Comment

Where are the bank visionaries when we need them?

Colin Henderson

As we watch for bank stress test results in the US and other countries efforts to deal with Banks’ asset valuation and capital levels, its useful to keep a track on the economic back drop, and assess the bank’s efforts to address their real problem, which is over-valued assets. The US stress tests specifically address the impact on banks under certain sets of future assumptions for economic growth and stability. Spring forecasts 2009-2010 | European commission The Commission forecasts a sharp contraction of the EU economy by 4% in 2009 (relative to a positive growth of 0.8% in 2008). Almost … Continue reading Where are the bank visionaries when we need them?