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 Banks Dismal Record On Innovation
I’ve worked on and off with senior banking professionals and those that think about their banking since the early 1970s.
In that time, I doubt, I’ve seen much really good clever innovation, that would have been to the benefit of either the banks or their customers.
I’ll start with a classic from the Midland Bank.
I was putting together a finance company in the late 1980s and the Midland Bank were keen to be a source of bulk money. We of course, had a beautiful little spreadsheet in the format of the time, Lotus 1-2-3.
The guy we were dealing with at the Bank, then said that he had no in-house facilities to examine the data. In their wisdom, the bank had provided those with a multi-user system based on a PDP-11, so they could run their own spreadsheets. Unfortunately, there was no way of uploading your data to their system. The guy we were dealing with had actually bought himself an Amstrad PC so that he could run them at home. Needless to say, we didn’t deal with Midland Bank. But what idiot in the bank, decided that PCs were a fad, when virtually all of their customers were thinking of or actually using them to run their own businesses.
The second is from the same time and applies to all of the banks.
My accountant at the time was pretty good and for years, he’d felt that one of the banes of his life was the lack of connection between the banks and small business accounting. His ideas, were that you could put a two digit code on all of your cheques in a space by the numbers along the bottom. You might put 67 for electricity, 68 for gas etc. These would then appear on your statement, so all the accountant would have needed to do was split everything down in his accounting software, especially if it was possible to get the statement in a simple electronic format.
He felt that any bank enhancing their service in this way, would have been very profitable to themselves, as they could have offered a simple accounting service. He did of course realise it would have lost accountants like him a lot of business.
But banks have done nothing to move into this area, which would have seen them offering a simple and much-needed service.
And then there was Lloyds Bank and their Cashpoints.
I was still doing my management accounting work for Lloyds as I was writing Artemis and someone there, asked how the bank could use a system like Artemis. As they were installing Cashpoints here, there and everywhere at the time, I said Artemis would be an ideal system to plan the roll out of the terminals. I did suggest, Artemis might be used to predict the cash flow and generate the budgets for the program.
I was then told that banks didn’t have cash flow problems as they used customers money and anyway, all of the Cashpoints they needed for the several year program, had already been delivered and were sitting in a warehouse somewhere. How about that for good management thinking?
The Management Accounting software I wrote for Lloyds wasn’t revolutionary in its own right, as any decent programmer could have written it, but the methods under it were far from conservative. An outsider, who had been the Chief Accountant of a major company had been recruited to try to get a hand on the bank’s costs.
It was truly innovative, but it never got beyond a trial, which seemed to end, when most of Lloyds’ staff were moved to Bristol.
One day, I’ll write up more on that work, which probably had a major effect on the design of some of the parts of Artemis.
The Giraffe Web-Site Has Crashed
Tesco have taken over the Giraffe restaurant chain, as is reported here in the Guardian. This paragraph explains their strategy.
For a retailer that accounts for more than one in every £8 spent in UK shops, with UK sales of £47.3bn, the deal is pocket change. But added to the grocer’s recent 49% investment in artisan coffee shop Harris + Hoole, the group’s Dobbies garden centre business, and a stake in the embryonic, luxury bakery Euphorium, and the beginnings of a bold strategic shift begin to emerge.
I also wanted to look something up on the restaurant’s web site and got this message.
Due to today’s Tesco announcement we are experiencing extremely high volumes of traffic to our website.
We are currently working to accommodate the extra demand and will be back online later this evening. We apologise for any inconvenience.
I wonder if the wags will come up with jokes about Tesco swapping horse-meat for giraffe-meat.
Is This The Next Antibiotic?
Read any paper or web site this morning and the doom-sayers are saying that growing resistance to antibiotics is a big risk to us all. Read about it here on the BBC web site.
The BBC News tonight did talk about a company called Phico. I looked at their web site and although I know little of pharmaceuticals, I do feel that this company may have the look of another success out of Cambridge.
Let’s hope that for everyone’s sake, they’ve got it right!
Note that, because of the backing of the Wellcome Trust, they shouldn’t be lacking in resources.
Car Leasing Spam
I’ve been in Liverpool for a couple of days, and in those days, I must have got about ten e-mails trying to lease me a car or a van.
I keep telling the bastards I don’t drive and unsubscribe, but still they keep coming.
I would think that they have a very bad conversion rate.
A Clever Funding Route From Huddersfield University
Huddersfield University has teamed up with peer-to-peer lender; Funding Circle to create an interesting route to finance and develop small businesses. It is described in this article. These paragraphs sum up the essence of the scheme.
Known as the Business Lending Partnership, Funding Circle’s recently-announced scheme alongside the University of Huddersfield has set a precedent for commercial and alternative lenders to start providing capital for non-traditional institutions.
Using Funding Circle, the university will lend an initial tranche of £100,000 to small businesses across the UK. The initiative seeks to support SME pioneers of the present and future, with all interest earned by the university’s investments to be put towards student scholarships for the University’s ‘Enterprise Development’ degree. Over the next five years, it is expected that more than 200 students from socially deprived backgrounds will gain access to the course.
Both Funding Circle and the university will also develop a series of seminars and internship opportunities with borrowers to ensure that the upcoming generation of business leaders can gain hands-on experience with flourishing British businesses as part of their degrees.
Obviously, not all partnerships will use the same model, but Huddersfield University and Funding Circle have used a clever model that can be cloned and/or adapted for other partnerships.
It will be interesting to see the nature of partnerships that develop in the next few years.
Innocent Sell Out
Innocent smoothies have sold out to Coca-Cola and you can read about it here in the Guardian.
In some ways it’s rather sad.
But in some ways, it’s due to the culture that says you can’t be small and create a global brand. Although, over the last few years, some global British companies like ARM and Brompton have done just that.
I won’t stop having the odd smoothie, but I do think that in the UK, their sell-out may have opened up the market for a new brand to move into the hole. After all, look how we’ve all fallen out of love with Starbucks, if the morgue in Islington is anything to go by.
The Guy From Iceland Has A Point
In this article on the BBC web site, the boss of the Iceland chain, blames councils for forcing down meat quality and prices.
Local councils are to blame for driving down food quality with cheap food contracts for schools and hospitals, the boss of Iceland has said.
Speaking on the BBC’s Andrew Marr show, Malcolm Walker said the “problem really lies” with councils buying food from the poorly supplied catering industry.
He may not be totally right, but I do think he has a point.
I must admit, that I have met several individuals, who through their farm or company have supplied the big supermarkets for a number of years and from their comments, dealing with the supermarkets isn’t always as difficult, as the press would have us believe. But then saying the supermarkets are honest and good, doesn’t sell newspapers.
The Anonymous Widower 