Category: Business Models

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?

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