Archive for the ‘Banking’ Category

Barclays: “Robots” can automate 30% of our workforce

Friday, April 26th, 2013

Business Standard is reporting Barclays’ CEO, Antony Jenkins, telling investors that robotic automation, inspired by Japanese car manufacturing, could eliminate 30% of their workforce (40,000 employees) over the next ten years.

Controversial in many ways, but my personal opinion, as a bank customer (both personal and business), is that banks should be much more efficient and charge me less, whilst freeing up capital for investment in economic growth.

British energy retailers start to fight back

Monday, November 19th, 2012

Would you rather work in banking or energy retail? Bit like being an estate agent in the 1980s. Easy targets for the press, the public and the Government. But there is a bit more to the stories when you scratch under the surface. Despite recent scandals, much good is done by banks and energy cos that is overlooked in the furores. It seems one company has had enough of the bad press.

Following a staunch defence of British Gas profits last week, in an article in The Daily Telegraph today, the CEO and chairman of SSE, one of the “big six” British energy companies, both argue that their company needs to make profits to “employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs”.

My experience of retail energy suggests it focusses as hard on operational efficiency as any other industry I could name. Pricing is always a controversial topic as one imagines freezing cold pensioners on Christmas day contrasted with fat cat bosses sunning themselves on the Med. But the retailers are at the mercy of wholesale energy prices and, even if, as alleged, they had a hand in rigging the wholesale price, this hasn’t resulted in exceptional profits. I would prefer my pension fund to invest in non-energy stocks at the moment.

Stormy waters for UK banks – where’s the lifeboat?

Tuesday, July 3rd, 2012

Let’s be honest, banks, and especially British banks, are not having a great time right now. I doubt that Bob Diamond will be the last casualty of the LIBOR manipulation affair. Stephen Hester has his own problems, and I would imagine that whether he takes a bonus or not will be the last thing on his mind right now.

There is often little that can be done to correct problems of the past. No use crying over spilt milk, as the saying goes. But who clears up the mess when a BACS tape is wrongly processed? Who refunds bank charges when a software upgrade puts batch processing behind and wages don’t make it to customers’ accounts? When a regulator rules that a regulated product was mis-sold, who organises the refunds? Operations of course!

A great example of this is PPI. Banks were ruled to have sold inappropriate payment protection insurance policies alongside loans and other forms of credit. Now, certain UK banks have created and staffed specific divisions to handle the PPI complaints. A fundamentally simple process – read complaint, check PPI was sold, evaluate whether compensation due, calculate and issue refund, write to customer – is consuming hundreds of jobs. Whilst this is good for the Indian offshoring industry, enlightened banks are using technology, such as robotic software, to automate these rules based tasks so that refunds are evaluated more accurately and more quickly. This does more than reduce the number of onshore and offshore staff required. It enables regulator deadlines to be met, customers to be dealt with faster, balance sheet provisions to be more accurate.

How did banks’ IT get in such a mess?

Friday, August 27th, 2010

The Economist has an interesting article on UK banks and the problems of historic systems development causing a lack of co-ordinated, fully integrated, customer focussed IT.  Of course, it would be great (although pie in the sky) to migrate to a greenfield IT architecture, but only brand new companies (like Metro Bank) truly have that option.

The lack of integration in banking has been caused by a combination of build and buy, the need to address regulatory changes, the launch of new products (yes, I remember the launch of credit cards, never mind ISAs).  But you might assume that, because banks have been around since IT was invented, and have been perpetual early adopters, that it is only old industries that suffer this problem.

It got me thinking about newer industries, take Telecoms and Media for example.  Why didn’t they have the opportunity to greenfield their IT?  My take is that it is the opposite of the banking scenario.  That is, the industry exploded so fast the ability to keep up with the pace of change meant that systems had to be cobbled together on the fly.  To grow a company from almost nothing to £80Bn in a few years must put enormous pressure on the CIO.

So despite the provocative headline of this post, the mess is entirely understandable and it is difficult to envisage any other result than the one we have.  We now must learn how to live with it, both in the short term and the long term using a combination of strategic and tactical initiatives targeted at the nirvana offered to new entrants.  However, if Metro Bank experiences the sudden growth it expects, I wonder how long before it suffers the same integration problems as everyone else?

A tale of two banks…

Tuesday, February 19th, 2008

Barclays results out today show that the credit crunch is hitting different banks in different ways.  Profits were a whopping £7.08bn, only 1% down on last year’s record.  That doesn’t sound like an industry in crisis.  You might be thinking “what credit crunch?”

However, the Northern Rock fiasco, coupled with Bradford & Bingley’s grisly profit figures clearly continues to dampen the sector.

When you consider that so called mortgage banks, Northern Rock and B&B, have little exposure to the US housing market (which caused Barclays to write down $1.6Bn), you have to wonder whether it is in fact the British housing market that is in crisis.

I mentioned after the last Barclays trading update, increased confidence in the credit card operation and this seems to have been well placed with profits up by one fifth.  Perhaps the diversified banking model is the only one that can survive these turbulent times.  Is the role of the little guy, focussed on one specific banking niche, dead?  Is it necessary to have a balanced portfolio of businesses within a bank to ride the swings and roundabouts of outrageous misfortune?

Perhaps it is time for Barclays to bid for Bradford & Bingley, before one of the American banks steps in to get it on the cheap.

Darling between Rock and hard place

Sunday, February 17th, 2008

In a most unsatisfactory end to another Government shambles, it has been announced that stricken mortgage bank, Northern Rock, will be nationalised until market conditions improve, and the value of the bank increases, whereupon Darling dreams that bidders will flock back to repay the British taxpayer a handsome dividend.

In the meantime, I expect this to be the worst decision for bank employees, shareholders, customers, and the banking industry in general, not to mention taxpayers in the long run.

It is widely acknowledged that a new brand is required for Northern Rock if it is to survive, never mind thrive.  Is the government going to rebrand it “Brown and Darling”  – a secure home for your money?

The Government is badly placed and very inexperienced at running a bank.  I expect that value in Northern Rock will actually be eroded and the taxpayer will lose out again.  In the meantime, no doubt Northern Rock’s competitors will be considering their legal positions regarding the special Government assurances and protections that Northern Rock savers enjoy.

What a mess.

However, you have to be somewhat sympathetic to Darling’s dilemma.  The mistakes were made very early in the affair with the Bank of England, the FSA and not least Northern Rock management all carrying some responsibility.  It is easy to blame the Government when there have been many parents of this problem child.

Société Généreuse

Tuesday, January 29th, 2008

Whilst there is plenty of serious coverage of Jérôme Kerviel and his antics, I was amused to see French commentators renaming the stricken bank “Société Généreuse“.

The serious point to me is about governance.  Whether IT systems, banking processes, or capital management, there must always be governance, assurance, security surrounding human activity.  That is not say a lack of trust, far from it.  But there needs to be parameters within which people are allowed freedom to act, combined with systems that prevent them straying outside these, when to do so has such serious consequences on the organisation and its environment.

The larger the enterprise, the more this is so.

UK bank customers still like a smiling face

Friday, December 14th, 2007

Personally, I can’t think of a single reason why I might want to visit a branch of my bank (personal bank at any rate).  I much prefer to use the internet for transactional stuff and the telephone for problems and advice.

But it seems I may be in the minority because, after years of “consolidation” many UK banks are actually increasing the number of branches.  Abbey (part of Banco Santander), for example, are planning 300 new branches  with an Abbey spokesman quoted as saying that although internet and phone banking are available, many customers “prefer dealing with our staff face to face in a branch”.  In case you are wondering whether 300 branches is a big deal, it represents an increase of 43% on the existing Abbey estate.

It seems that HBOS and HSBC are making similar moves.  Maybe my dream of being able to run my life through my mobile phone is being hampered by the old fashioned attitude of the UK consumer.

The Banker: CIO of the year

Monday, December 3rd, 2007

I was idly leafing through my December copy of The Banker in which 2007 awards were liberally sprinkled upon the great and the good of the banking industry.  But for such an IT driven industry, I was amazed to find that only one award existed bearing any relation to technology.

José María Fuster of Grupo Santander won “CIO of the year”.  Even in the title, The Banker mistakenly named the award Chief Investment Officer of the year – oops!  I guess that getting some parts of the banking industry out of the old oak-panelled rooms and into the modern world will take another generation!

Meanwhile, no such delay for Grupo Santander whose SOA inspired “Alhambra” multi-channel core banking system (to replace the already successful “Partenon” platform) appears to be steaming ahead and if reports are to be believed, will be something of a kick up the banking industry’s behind.

Like HSBC, Santander’s reputation is to build rather than buy.  For Santander, this decision seems to be related to competitive advantage, not cost.  If one buys an external system, one benefits from all the experience that the vendor has gleaned from working with other organisations.  However, this can create a lowest common denominator.  This may be OK in non-core parts of an enterprise, if you just want to make sure that you are no worse than any of your competitors, and to do so at least cost.  This can free your corporate energy to focus on building competitive advantage at the front end, via marketing for example.

But if you are using your systems and processes as a route to competitive advantage then build is surely better.

Barclaycard “joined-up” thinking

Thursday, November 29th, 2007

There’s a mood of change at Barclaycard.  Once seen as the problem child of the Barclays Group, it appears to be much more loved these days.  A recent trading update advised of strong profit growth in the UK division and the US arm on course to make a profit in 2007.

It’s not just improvement in bad debt provisions.  A more independent focus and innovation (rare in financial services) is driving the brand forwards.

I criticised Barclaycard for lack of ambition when they launched the One Pulse card.  I feel absolutely certain that their recent decision to invest in mobile payment market testing, is a direct response to my post.  🙂

Of course, it is impossible for any organisation, no matter how large, to do this on their own.  But all the technologies already exist and it only takes some co-operation on the technical as well as commercial side between the different parties to make things work for the customer.  In this case the parties are Barclaycard (banking), Nokia (handset manufacturer), O2 (mobile network), TfL (Transport for London), Visa (card issuer), TranSys (consortium that runs the Oyster proximity payment system).

What a fabulous piece of joined up thinking!  I’d love to be one of the guinea pigs.  Furthermore, I am already a customer of every one of these organisations.  The bad news?  There are only 500 trial places available.  Anyone know how I can get on the list???