Zopa Goes Automatic
Zopa has introduced a product called Safeguard. Read what Which says about it here. Here’s the first paragraph.
Zopa, the UK’s leading peer-to-peer (P2P) site, has today announced it has created a ‘safeguard’ to pay out to lenders even if a borrower defaults on the money owed.
Having just put some money into the new product, it would appear that the process is now totally add money and accumulate the interest.
The most interesting thing about this product, is why if an independent company can give a rate of return of 5% or so, why can’t the banks?
Go figure!
The Co-Op Gives Up On The Lloyds Branches
Buying bank branches, is a bit like going down Covent Garden Market at the close of business and buying all the fruit and vegetables that has not been sold.
So in some ways the news this morning as reported on the BBC, that the Co-Op Bank isn’t buying the branches Lloyds must divest itself of, is no surprise to me.
Let’s face it branch banking is dead and those that still need a branch, use one that is convenient to them and won’t like being transferred. So perhaps, many have already put their business elsewhere and the Co-op would be buying a few worthless empty shells.
The Co-op’s Chief Executive has said this.
After detailed and thorough consideration of all aspects of the Verde transaction, we have decided, at this time, that it is not in the best interests of our members to proceed with the transaction.
Against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk.
So although he’s saying it’s not for the Co-op and giving reasoned views, it would be interesting to see the figures underneath it all.
I also wonder with all the publicity that this proposed deal has generated, if it has sent a message to many bank customers, that the Co-op Bank is a serious alternative and people have moved their accounts accordingly.
So has the deal got the Co-op what it wanted, without any risk whatsoever?
Let’s hope the fallout from this deal, gives us a few new iconic bars and restaurants in those redundant prime locations!
So What Is M-Pesa?
In the post on the Scottish currency, I mentioned M-Pesa. So what is it? I started by reading the Wikipedia entry. Here’s the initial paragraph.
In April 2007, following a student software development project from Kenya, Safaricom launched a new mobile phone based payment and money transfer service, known as M-Pesa. The service allows users to deposit money into an account stored on their cell phones, to send balances using SMS technology to other users (including sellers of goods and services), and to redeem deposits for regular money. Users are charged a small fee for sending and withdrawing money using the service. M-Pesa has spread quickly, and has become the most successful mobile phone based financial service in the developing world. By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya.
The initial work of developing the product was given to a product and technology development company known as Sagentia. Development and second line support responsibilities were transferred to IBM in September of 2009, to where most of the original Sagentia team transferred.
It sounds a lot more sophisticated than anything we’ve got here! Especially, as it works on the humblest of Nokia mobile phones!
It’s developments like this, that will empower individuals and kill off the unnecessary wunch, that some still call bankers.
The Scottish Currency Question
If I could have ten pence for every politician, who’s put forward his view on the question of what currency Scotland has if they vote for independence, i wouldn’t be just a rich man, but a very rich man.
Surely, the amount of energy expended by politicians, would power a reasonably-sized city like Glasgow.
All of these politicians are flying in the face of the new reality, which is starting to sweep the world. Just read this article on the web site; SmallBusiness.co.uk about the future of banking. Here’s the first paragraph.
I was recently invited onto Evan Davis’ BBC radio and TV show ‘The Bottom Line’ for a discussion on alternative finance. Alongside me was Zopa founder Giles Andrews, the founder of Zopa – a UK peer-to-peer lending platform, and Michael Joseph, the former CEO of Safaricom, which set up M-Pesa, a mobile payment system, in Kenya.
It is the last bit that is the most significant. It also says this about banking and particularly M-Pesa.
The day-to-day of banking is changing world-wide and banks are not the ones driving the innovation. For instance, by some measures, Starbucks is among the 200 largest banks by deposits in the US, having $3 billion on their in-store card in 2012. Both Google and Amazon are also talking about providing finance to users of their marketplaces. At the other end of the economic spectrum, 31 per cent of Kenyan GDP now flows through M-Pesa, which is so simple it can be operated on a very modest Nokia phone and has no physical bank branch presence.
So does it matter about whether an individual or a company has their bank account in pounds, dollars, euros, thistles or beans? It only matters to the individual concerned. As someone living in and spending most of his money in the UK, I would probably keep my account in pounds! Although switching to euros, should be just a choice on the account.
Unfortunately, this transparent and convenient system would be unacceptable to the banks, as they make so much money on currency conversion.
I do wonder, if my new-found liking for cash, may be a personal reaction to the greed of the banks. If I pay by cash in Carluccio’s, I can leave a tip easily. It also seems to get good service, as the staff in many restaurants know me and have the gluten-free menu ready immediately I walk in. It’s also faster to settle up and there is nothing worse than waiting to get away, whilst a dim waitress struggles with a credit card terminal.
So to me, in a few years time, the Scottish currency question will be irrelevant to most people and companies in Scotland. They will pay their taxes in whatever currency the Scottish government uses or is forced to use and keep their bank account in whatever is convenient for their lifestyle or business.
So let’s get going on research to capture all that hot air being spoken to generate lots of electricity.
We Shouldn’t live Near Petrochemical Plants
In my three years at ICI in the late 1960s, I went over several chemical plants. I have heard so many stories about how supposedly safe plants have exploded killing numbers of people.
On one plant, I heard a tale of an instrument being installed to analyse the gases in a burner. The instrument found that the gases were in such a composition that they might explode. The plant manager immediately shut the plant down and they worked out a strategy to run the plant in a safe manner. They informed the European chemical company from whom they had licensed the design of the plant of what they had found and were politely told that it wasn’t possible to build an instrument that could measure the composition of the gases. A few months later, the European company’s plant buried itself in a hillside.
And then there was the Flixborough disaster in 1974. I had left ICI by that date, but I was in contact with some of my former colleagues and also some other chemical engineers. From somewhere I heard the rumour that one of the problems at Flixborough was that the plant had originally been designed in metric units and then to build it, these had been converted to Imperial. So when they bypassed a reactor, they got the calculations wrong.
Remember that ICI went fully metric in about 1955 for chemical plant design. Safety was one of the reasons they stated!
Now these all go to show, that no matter how careful you are, mistakes will get made. Mistakes you can’t afford to make, when dealing with dangerous chemicals.
Therefore every chemical or petrochemical plant should be assessed for danger and an appropriate exclusion zone declared around it, where no houses, offices or other dangerous plants are allowed.
It would appear that in the latest explosion in Texas, that there were houses too near to the plant that exploded.
Leopards Don’t Change Their Spots
I’ve just had some spam, trying to get me to sign up to Coral Bookmakers.
As I have a betting shop near me and an on-line account, I don’t need another.
So who is the Chief Executive of Coral? None other than Andy Hornby, who is one of the HBOS Three.
Some people never learn, how to run a business!
The HBOS Three Should Be Banned
This story on the BBC’s web site, says that the Banking Standards Committee has recommended that three at the top of HBOS, should be banned from working in the City, after the failure of the bank in 2008.
I agree, as not only did they ruin HBOS, but they ruined Lloyds as well and not forgetting all of the small shareholders and businesses they damaged.
As with RBS, HBOS should have been allowed to go bust.
We’d all be in a much better state, if they had!
David’s Golden Rules And Cyprus
I’ve mentioned my late friend and bank manager, David’s rules before, so how would they apply to the Cyprus bail-out and the problems it has created.
Things have changed since he died six years ago, but the two principles he gave me still apply.
If you a UK citizen or resident, he would never have advised anybody to use a bank that was head-quartered outside of the UK, as you don’t know what external factors will apply in that country.
The second principle, was never to bank with a small bank, that has the possibility of being taken over by a man with a large ego for his own purposes. He said this, when I got an offer from Bank of Scotland, in probably the 1990s. I know that they didn’t have the Fred the Shred problem, but he felt that given the changes that would happen in banking, it might be something I would regret.
Incidentally, he was not against smaller building societies and credit unions, and once told me that he believed the latter would be strong in the future. He was wrong on that, but I think he underestimated the conservatism of the average bank account customer, who are reluctant to change banks.
So if we look at the last few years, his rules would have ruled out banking with the Icelandics, RBS and probably Bank of Scotland too!
I didn’t bank with any of them!
So what would he have thought about Cyprus. He would probably have had a very juicy tale about one of the Cypriot Banks ans of course they do break both golden rules, in that they aren’t in the UK and are two small. They may be OK, if you need a local bank account, but these days, with electronic transfers, you could probably manage it all through the Internet. I don’t know for sure, as I’ve only ever been to Cyprus as a tourist for enjoyment. Nothing in the world, would encourage me to live outside of the UK anyway!
But making account holders in Cyprus take a haircut is something, that will happen elsewhere in the eurozone, as the precedent has now been set.
In fact, if I was George Osborne, I might be having a quiet chuckle, as the Cyprus haircut, might be one of the better things that happen to the UK financially this year. Will those, EU citizens with a dodgy banking system in their country, look even more seriously at the UK as a more benign place to live?
I think too, we’ll see more innovative financial products coming out of the City of London, designed to appeal to those with money in other parts of the European Union. If you’re very rich, these products already exist, but will we see products for say the German engineer or doctor of comfortable means, who wants his money safe, to work for him and give him a comfortable retirement.
A Very Good Marketing Idea
The Guardian describes them in this article as a St. Patrick’s day novelty, but surely shamrock-flavoured crisps are a superb marketing idea.
I wish Tom Keogh the best of luck with the crisps. But I suspect he won’t need it, as nothing succeeds like an idea that tickles everybody’s fancy.
I can’t find out if the crisps are suitable for coeliacs.
The Banking Sector Is A Turd
Not my words, but those of Simon Walker, the head of the Institute of Directors, as reported in The Times and also here in the Guardian.
He should know given his position.
The Anonymous Widower 