Category: Business Models

Business Models

What does recovery mean for Banks?

Colin Henderson

Banks are at the centre of the economy.  Business and consumers conduct their day to day business using money and they do this through banks.  Stating the obvious you may say?  This is why I study the economy so closely and try to understand how it will look in the future, because that has a direct relation to how banks will look in that future. We are in a crisis of debt.  It is a debt crisis because consumers and businesses are over-leveraged.  Their debt is too high relative to todays asset values.  Asset values have decreased by 25 – … Continue reading What does recovery mean for Banks?

Business Models

RBC speak about convergence for EBPP and statements

Colin Henderson

The commentary here from Colin McKay, vice-president of e-business architecture RBC in this video interview, is refreshing to hear from a Bank. RBC discusses client reporting and customer statements | IT World Canada Some notes from the interview, then commentary and discussion: Old process had product and IT groups generating 18 separate statements in different formats but most ending up in print each statement feed was formatted specific to the output, eg, print or web each of the 18 had their own processes all 18 feeds have been directed to a common store, and stored as raw data the 18 … Continue reading RBC speak about convergence for EBPP and statements

Business Models

Risk of bank default is back to Sept 08 / Lehman failure levels

Colin Henderson

Following along on the theme of what to do with the top banks, this indicator tells us the work to date has failed.  All that money being placed in banks is not reducing the expected risk.  This is a serious matter and inappropriate methodology of use of government (US, Canada, UK and European) funds.  It points to nationalisation as one alternative option to the current use of funds. The cost of insuring against a bank default – that means a bank going out of business and this is for the top banks, Bank of America, UBS, Barclays, Lloyds etc, is … Continue reading Risk of bank default is back to Sept 08 / Lehman failure levels

Business Models, Economy2 Comments

The Great Unwinding | part 2 of 3: 2012 – 2020 of 3

Colin Henderson

Part 1 of this series was a dire assessment leaving doubts about of survival at all.  It was a broad brush assessment of the crisis to date and directions being taken.  However there will always be winners and losers.  The future is rarely linear, and out of this mess some will raise sooner, and in ways that are unexpected. The report, The Future of the Global Financial System deals with this unpredictable future by outlining four scenarios that encapsulate the broad sets of potential directions that will occur in the worlds banking ecosystem.  As with Part 1 the research used … Continue reading The Great Unwinding | part 2 of 3: 2012 – 2020 of 3

Business Models, Open Finance, Open Source Banking, P2P Lending, Social Lending4 Comments

Comment on “Beyond the age of leverage: new banks must arise” | Niall Ferguson

Colin Henderson

Niall Ferguson nails the ultimate irony in the world today.  Every government is set on increasing debt as a means to solve the current crisis, however the reality is that they are potentially sending good money after bad, and not addressing the core issue. (emphasis mine) Beyond the age of leverage: new banks must arise | ft.com Call it the Great Repression. The reality being repressed is that the western world is suffering a crisis of excessive indebtedness. Many governments are too highly leveraged, as are many corporations. More importantly, households are groaning under unprecedented debt burdens. Worst of all … Continue reading Comment on “Beyond the age of leverage: new banks must arise” | Niall Ferguson

Business Models

Reintermediation underway for banking, will offer some improved opportunities for banks

Colin Henderson

In this investment commentary, B. B. & T a $137 Bn bank based in the Carolina’s is quoted talking of the re-intermediation of banking deposits. In particular he speaks of the return of deposits back into the deposit system – deposits that had existed to mutual funds and other vehicles outside of normal banks.  he points out other non banks did not have the reserve requirements of banks so were able to undercut banks on rates, and he sees that situation returning to be in the Banks’ favour.  Its an interesting perspective on what has and is happening. Raymond James … Continue reading Reintermediation underway for banking, will offer some improved opportunities for banks

Business Models, Economy, regulation

banking 101 | All banks are vulnerable to runs

Colin Henderson

This is a fascinating and insightful paper by Willem Buiter and Anne Sibert on the failure of the Icelandic banking system, but with scary parallels to the UK system and others.  In particular though, and of interest to everyone possibly is section 2.1 copied below in full.  It defines the generic vulnerability that all banks’ have to “run a on the bank” even in good times. Thus the argument goes, accept reality, nationalise the banks, and treat basic banking as a utility, just like water and electricity, until a better model can be developed that would have a better chance … Continue reading banking 101 | All banks are vulnerable to runs

Business Models, Innovation2 Comments

Gen Y – change the generation, or change the strategy – which approach is most likely to succeed

Colin Henderson

I have long stated that understanding and building for Gen Y is an essential basic approach for online banking applications, and I refer you back to this post from 2 1/2 years ago which noted the view of Charlene Li while she was still at Forrester. Today I was pleased ot find this site yworking.com that is written by a Gen Y’r and snf focusses on Gen Y at work.  It is insightful. and much to learn from here. Relevance to Bankwatch: Many of the views will challenge existing thinking and help to force that ultimate question – do we … Continue reading Gen Y – change the generation, or change the strategy – which approach is most likely to succeed

Business Models, Economy5 Comments

The right idea for the times | UncrunchAmerica

Colin Henderson

The Canadian government, and governments in many countries remain concerned about consumer lending.  At the same time there is great concern about bank capital reserves, and ability to cover future loan losses that are expected to escalate.   This results in an impossible combination of mutually exclusive sets of activities.  Banks can either lend, or recapitalise, but its a fiction that they can do both.  This places banks in the position of being asked the impossible. What got me thinking about this was this site – uncrunchamerica.org which is listed here on change.org (and accepting votes too – feel free to vote). … Continue reading The right idea for the times | UncrunchAmerica

Business Models, Canada, Economy1 Comment

A new future based on a different revenue model is needed for banks

Colin Henderson

Something has been bothering me for some time, and now the planets are beginning to align.  One of the promises of Internet is a future which is more efficient.  This literally means less money changing hands to get things done.  hohoto.ca can occur with zero overt marketing costs, based on personal contribution of willing advocates.  Costs do not go to zero – it is not that simple – but costs are less than before by a considerable margin. The Spider and the Starfish touched on this point in 2006. “as industries become decentralised, overall profits decrease” My summary at that … Continue reading A new future based on a different revenue model is needed for banks