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.
Why Can’t I Sort My On-Line Bank Statement?
Often at the end of the month, when my current account has too much money in it, I transfer the excess I won’t need to Zopa.
This morning, I wanted to check, that I had put all of these payments into my Excel spreadsheet, that tracks my Zopa lending and calculates the rate I get.
So I logged into my bank account and looked at the on-line statement. I could of course look at it on a page-by-page basis, but where was the feature to sort all of my bank statement entries to bring direct debits to Zopa together?
No-where that I could see! There isn’t a select either to just bring up the debits to Zopa.
It is just not good enough, in this day and age, where a good proportion of the general population is familiar with handling sets of dat in programs like Excel.
I remember in probably about 1990, I was talking to a senior programmer, at one of the big banks. They had made a proposal to senior management to enable customers to get their bank statements on floppy discs. It was technically feasible and they felt it would have been taken up by customers and professionals, who needed to get the data into their personal computers.
These days, it should be second nature for a bank to offer a simple download of your bank statement in an Excel format.
Why doesn’t my bank offer this facility to everybody?
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.
Sensible Banking Advice From Paul Lewis
Radio 4’s money expert, Paul Lewis, has just said this in the wake of more banking problems from RBS and Natworst.
Make sure your girlfriend or boyfriend uses a different bank to yourself.
Now there’s a question for on-line dating sites!
RBS Show Their Standard Of Customer Service Again
Yet again RBS and its subsidiary, NatWorst, have stopped customers from accessing their money, as is reported here on the BBC. They had a similar computer disaster last year.
I’m actually surprised that they’ve still got any customers left to annoy!
Peer-To-Peer Lending On The Up
This article from the Independent is a good summary of the state of the peer-to-peer lending market at the present time. This is the first couple of paragraphs.
Many people were sceptical about peer-to-peer lending and questioned whether it would ever take off in the UK, but with savings rates from banks and building societies suddenly hitting rock bottom this new sector is becoming increasingly popular.
With traditional savings rates having fallen by more than a third in the last six months, returns on offer from the peer-to-peer providers are looking even more attractive.
Compared with mainstream banking, this new breed of finance is still in its formative years, with Zopa launching as the UK’s first peer-to-peer marketplace in 2005.
But read it all, as there is some very useful information.
I suppose savers’ biggest question, is would you lend your money in an industry, that is just eight years old?
I’ve been on board Zopa, for around five years and can say it has been an enjoyable and profitable ride for myself.
Another Useless Piece Of Information From Nationwide
A couple of days ago, I paid a plasterer, who had done some work on my bathroom. I paid by direct transfer and by chance, his bank account was also with Nationwide.
This morning, when I checked my bank account, it was labelled as an Internal Transfer. Surely, their system could do better than that!
On-line bank statements could be a lot better and would probably lead to all kinds of good secondary effects if they were.
For instant this morning, if I didn’t know the plasterer, I might have to contact him to make sure he got the payment.
I’d give Nationwide’s on-line statements three out of five at most.
I sometimes think about changing, but all the banks are probably as useless as each other and how many would let me have an account for a month say to try them out?
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.
If Lloyds Can Do It Why Can’t RBS?
Lloyds Banking Group’s figures these days as reported by the BBC contrast strongly with those reported yesterday by the Royal Bank of UK Taxpayers.
How can Lloyds make a loss of only £570 million, whereas the state-owned dead parrot loses £5.2 billion?
It strikes me there are three reasons.
The first is the quality of the management in the two banks. I suspect, if you were one of the stars of RBS ten years ago, you have taken the money and ran. so all the bank is probably left with is dross and the world’s best collection of neck-enders.
Secondly, when did you ever here a financial commentator you trust, last recommend that you buy a financial product from RBS. Yesterday, the guy from MoneySaving Expert was recommending which credit card to use abroad. One of Lloyd’s products was mentioned, but RBS were only notable by their absence.
But I also think, that most of their customers, or at least the ones who can have moved their accounts elsewhere. After all, I’d never bank with a state-owned bank and I suspect many others wouldn’t either. You just can’t stop politicians from fiddling! It has been some time, since I’ve noticed anybody with an RBS bank account or credit card. I suspect, the only thing in their favour is that if you want to keep money in a bank deposit account, then RBS is as safe as any, as no government would let you lose your money. But you wouldn’t get paid much interest.
So all of today’s news just says that the sooner we liquidate the Royal Bank of UK Taxpayers, the better for all.
The Anonymous Widower 