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.
Zopa Do Shorter Term Loans
Zopa’s minimum loan term has generally been three years, since I have used their web site to save and invest money.
They’ve just announced that they are now going to give shorter term loans of twelve months.
I’m not sure how this will work out for lenders, but it might attract those borrowers with good credit limits, who need tiding over. It might also attract a borrower, who has never used the system and only needs a small sum for a short time and is just trying it to see if borrowing from Zopa is for them.
I wonder if Zopa are going to allow shorter term loans to be effectively rolled on. I suppose the simplest thing to do, would be to pay off the first loan and then start another. But that would be two administration fees.
The Star That Is ARM
I am linking to this article, which has the full speech of ARM’s CEO’s statement giving the Q4 2012 Financial Results. It is a full nine pages long, so it won’t be an easy read. This statement from the first page is very telling.
So let’s start off with the highlights for Q4. Well, Q4 was a fantastic finish to 2012. We saw our continued momentum in licensing and sold 36 licenses in the last quarter. That’s another year of over 100 licenses in the full year.
As someone, who used to put his own intellectual property on someone else’s hardware designs, this number of licences is a significant number, as obviously, the more licences the company signs, the more money it will earn.
I don’t know anything about the technicalities of what ARM does, but judging by the company’s success, it must be pretty damn good. But to me, just as it was for Metier Management Systems with Artemis, when we owned the company, the managers have got the marketing and revenue model right.
In fact, I might argue, that getting that right is more important than getting the product to a hundred percent of your design aims. As obviously, if you are generating lots of money, it is easier to close that last gap in your designs.
So often, I’ve seen wonderful ideas fail, because their revenue model wasn’t designed well enough and doesn’t feed itself back strong enough into product development.
There is another thing that ARM and Metier had in common. ARM is and Metier was considered a almost a crusade or political movement by those that started the companies and those that worked there. The companies that I’ve dealt with or know of, that have had that zeal are hard to come by. My short list would include Apple, Dyson, Rolls-Royce and Zopa. Although, there are one or two architectural or construction companies, that in a few years time, might join them. And don’t underestimate other companies in all sorts of high-tech fields, using an ARM-style of cash-flow model, based on a group of individuals having a unique idea and the determination to see it through.
I can also think of several companies that had everything and then blew it! You could say we did that with Metier by selling out and a lot of other high-tech companies have done the same. And then there’s some that have just lost their way like IBM and Automony.
The Mess That Is RBS
Just reading this article from the Guardian shows the mess the wunch of bankers at RBS got themselves into. Here’s an extract.
Clear thinking and firm principles are Royal Bank of Scotland’s best defence as it tries to negotiate its Libor fine, which could end in UK taxpayers, in effect, dispatching £400m to American taxpayers. But, in the case of Hourican’s exit, it’s hard to know what point RBS is trying to make. On the one hand Hourican’s head (we are led to believe) will be offered up in acknowledgement of the seriousness of the Libor penalty. On the other hand RBS is likely to undermine the force of this resignation by saying that Hourican would have departed anyway because his investment banking unit is to be split in two with the new heads of each section – markets and international – reporting directly to the chief executive, Stephen Hester. Since there’s no suggestion that Hourican knew about attempted Libor manipulation in the ranks, he will keep the bonuses he earned in past years.
The Guardian says it’s a muddle and if everybody in these Isles have to give a few quid to American taxpayers, how about we all sue Prudence, who to protect his Scottish majority, didn’t do the humane thing with RBS and liquidate it. I feel slightly sorry for Mr. Hourican, as I suspect, he’ll suffer badly at the hands of the tabloids, although it would appear he’s done nothing wrong.
The Anonymous Widower 