Key features

Key features of this exciting new market study:

• Comprehensive assessment of the fast-evolving, high- growth  mobile payments space
• Must-read insight for mobile commerce  takeholders the world over
• Study growth  forecasts  and market sizing to 2016
• Digest worldwide, regional and country-level analysis
• Explore and identify opportunities in the exciting m-payments  market
• Analyse data  forecasts and commentary on Mobile Payment Users; Mobile Payment Volumes; NFC-capable Handsets;  NFC Payment Volumes; Mobile Ticketing and Coupon  Users and Volumes; Mobile In-app Payment Revenue; and Mobile Banking Users
• Understand the drivers and inhibitors within the m-payments ecosystem
• Review regional trends  (including UK and US case studies) and key developments
• Learn more about  key players like ViVOtech, Visa, SK Telecom, Square, Ericsson IPX, Bango, and Boku
• Read explanations of mobile wallet terminology and how Google Wallet works

All this and more in this must-have 119-page report

Contents

Summary contents -  click here to download full Contents listing, including over 60 Tables and Figures
Chapter  1:     Introduction
Chapter  2:     Mobile Commerce
Chapter  3:     Worldwide Mobile Market
Chapter 4:      Worldwide Mobile Money Market
Chapter  5:     Regional Trends
Chapter  6:     Case Studies – Key Players
Chapter  7:     Summary and Conclusions
Chapter  8:     Appendices

About Portio Research

Portio Research Ltd is an independent UK-based research company, focussed on providing high quality market studies.

For our large studies, we specialise in a tightly focussed niche within the mobile sector. We look at customers, I.E. mobile subscribers, and we look at network operators, and we focus mostly on the products and services that connect these two groups. We look at the relationships between operators, the products they sell and the people they sell them to, looking in particular at go-to-market strategies and how the products and services markets vary around the world. We cover all areas of the mobile space including network technologies, handsets and devices, but mobile content and non-voice mobile products, particularly messaging, are our core areas of expertise.

In addition to our highly-regarded off-the-shelf market research, we are also always looking to help clients with bespoke research requests, and we can turn around tailored research projects quickly and cost-effectively.

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Key features

Key features of this exciting new market study:
•    Explore the mobile apps market – one of the hottest topics within the mobile space
•    Benefit from detailed analysis
•    Review new growth forecasts for mobile app users, downloads and revenues to 2015; plus smartphone shipments
•    Understand what disruptive mobile apps and services are, and why you must care about them
•    Uncover the threats and opportunities that are posed by mobile video streaming, social networking, mobile VoIP, bulk messaging services, and mobile payments
•    Learn what goes into developing a successful mobile app
•    Gain insight into app development and monetisation: a gold rush or fool’s gold?
•    All this and more in this must-have 162 page report

Contents

  Click here to download full Contents listing, including 109 Tables and Figures
Summary contents
•    Introduction
•    Worldwide Mobile Market
•    Mobile Applications Market
•    Market Size
•    Value Chain
•    Popular Mobile Application Stores
•    Mobile Apps Development
•    App Development – Is there any money in it?
•    Disruptive Applications and Services – Opportunity or Threat to MNOs?
•    Mobile Video Streaming
•    Social Networking
•    Mobile VoIP
•    Bulk Messaging Services
•    Mobile Payments
•    Conclusions and Future Outlook
•    Appendices

With supporting case studies and profiles – including YouTube, MobiTV, Facebook, Twitter, Skype, Nimbuzz, SMS GupShup, Square, Bango, and Boku – this new market study fully assesses the threats and opportunities that these hugely popular disruptive mobile applications and services present to MNOs.

Companies mentioned

Click here to download the list of over 120 companies mentioned in this Report

About Portio Research

Portio Research Ltd is an independent UK-based research company, focussed on providing high quality market studies.

For our large studies, we specialise in a tightly focussed niche within the mobile sector. We look at customers, I.E. mobile subscribers, and we look at network operators, and we focus mostly on the products and services that connect these two groups. We look at the relationships between operators, the products they sell and the people they sell them to, looking in particular at go-to-market strategies and how the products and services markets vary around the world. We cover all areas of the mobile space including network technologies, handsets and devices, but mobile content and non-voice mobile products, particularly messaging, are our core areas of expertise.

In addition to our highly-regarded off-the-shelf market research, we are also always looking to help clients with bespoke research requests, and we can turn around tailored research projects quickly and cost-effectively.

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Key features

Key features of this essential new market study:
•    Determine mobile user preferences and behaviour across geographies
•    Understand trends in both developing and developed markets
•    Assess mobile data traffic and revenue forecasts for 2011-2015
•    Study six detailed case studies (UK, China, India, US, Chile, UAE)
•    Country-level analysis on monetisation of mobile services; popular mobile activities; smartphone users; Internet usage; mobile applications; and social networking
•    Features a Typical User Profile for each market analysed
•    Learn about the disparity between future data traffic and revenue growth
•    All this insight and more in this must-have 155 page report

Contents

Click here to download full Contents listing, including 153 Tables and Figures
Summary contents
This new market study thoroughly examines mobile data usage trends in eight fact-filled chapters.
•    Introduction
•    Worldwide Mobile Market
•    Mobile Data Services Market
•    Market Size
•    Case Studies – Regional Trends (The UK, China, India, The US, Chile, The UAE)
•    Managing Data Traffic Growth
•    Summary and Conclusions
•    Appendices

Companies mentioned

Click here to download the list of over 60 companies mentioned in this Report

About Portio Research

Portio Research Ltd is an independent UK-based research company, focussed on providing high quality market studies.

For our large studies, we specialise in a tightly focussed niche within the mobile sector. We look at customers, I.E. mobile subscribers, and we look at network operators, and we focus mostly on the products and services that connect these two groups. We look at the relationships between operators, the products they sell and the people they sell them to, looking in particular at go-to-market strategies and how the products and services markets vary around the world. We cover all areas of the mobile space including network technologies, handsets and devices, but mobile content and non-voice mobile products, particularly messaging, are our core areas of expertise.

In addition to our highly-regarded off-the-shelf market research, we are also always looking to help clients with bespoke research requests, and we can turn around tailored research projects quickly and cost-effectively.

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Report participants

MasterCard Europe
Visa Europe
Bank Zachodni WBK SA
PKO Bank Polski SA
Inteligo
Polbank EFG
Gemalto
Fenbrook Consulting
Żabka Polska SA
NOKIA,
mBank
Forrester Research

About POLASIK Research

POLASIK Research is a dynamic research and consulting company, specialising in electronic banking and payment systems.  Its principals have longstanding experience in conducting research into and analyses on this subject.

Our mission is to accumulate and create knowledge of electronic banking and payment systems and to deliver it effectively to market participants. Our goal is to support our partners in their pursuit to continually improve the effectiveness and quality of payment and banking services. We would like to use our knowledge to create conducive conditions to market innovative solutions and promote their public acceptance.

Our knowledge is based on market research, experience in conducting analyses, and specialist literature. Our aim is to both explore the functioning of markets and know the products thoroughly as well as to understand customer behaviour and preferences.

Report overview

Mobile payments is starting over.  When the Google Wallet launched on September 20, 2011, the first test of a remarkable new financial ecosystem began.  But despite the apparent success of traditional mobile payments products like M-PESA in Kenya and South Africa, Google and rival Isis have decided to rewrite the business model - and for good reason.  Actually, four good reasons:

•    Significant revenue is available from the advertising, retention and rewards programs, leaving the usual payments fees to the payments companies.
•    The payments ecosystem cannot afford new categories.  The-existing players are companies with considerable resources and the willingness to use their resources thwarting a new category of entrants.
•    Regulatory pressures are already pressuring known revenue streams, increasing the motivation for existing players in the payments ecosystem to protect position.
•    Cash is resilient to other tender types in developed worlds, not so in developing countries.

As a result, both Isis and the Google Wallet products are creating a simple strategy which lets the payment ecosystem continue to charge and earn as much as possible from the payments business.  The new revenue these companies seek to earn comes from two vulnerable industries: advertising and loyalty.  Google, with its extreme interest in data collection and distribution, will likely seek new revenue from that channel also.

A different breed of service that includes advertising and rewards programs as well as data services will vastly overshadow stand-alone mobile payments products.  These new services are called “mobile commerce.”

Mobile commerce does not exist as a functioning or mature industry. The form, function, features, benefits, roles, and players that will exist in the new mobile commerce industry have yet to be decided. This implies a dramatic change in the features, benefits, and operational structure of payments.  Many believe that the wallet format is the most likely industry to succeed the payments industry, as it exists today.
The Google Wallet, and its future competitors, are relying on a set of technology changes, namely:

•    JACC (Just Another Connected Computer);
•    NFC;
•     EMV (Europay, MasterCard, Visa, a global standard for inter-operation of integrated circuit cards);
•     TSM (Trusted Services Manager, a provisioning role); and
•     Smart phone operating systems.

In addition, the Google Wallet and its competitors will focus on several different elements of older business models:
•    Interchange;
•     Processing fees;
•     Loyalty/rewards account management fees;
•     Data mining;
•     Breakage;
•     Advertising and conversion.

The overriding conclusion is that the winning mobile commerce business model, inclusive of the mobile commerce players that will prevail in the long term, may be decided months or years before mobile commerce penetrates the general transaction volume by more than one half of 1% in developed markets.

Contents

Executive Summary
Summary of mobile commerce
Early consolidation
The winning combination

1  The current payments industry
1.1  Payments penetration in the US
1.2  Mobile Network Operator billing
1.3   No room for competition
1.4  Rewards and loyalty systems
1.5   Merchant tolerance
1.6  Conclusion of current system

2  Vulnerability of the current payments system
2.1  Case study

3  Elements of mobile commerce
3.1   Customer acquisition
3.2 Conversion
3.3  Transactions
3.4 Current state of mobile commerce
3.4.1 Japan and Korea  
3.4.2 Remittance
3.4.3 Information

4  Market changes enabling mobile commerce
4.1  NFC – Near Field Communications
4.2 JACC - Just Another Connected  Computer
4.3 TSM – Trusted Service Management
4.4 EMV – Europay, MasterCard, Visa
4.5 Mobile prepaid
4.6 Data mining

5 Market forecast
5.1   Phases of development: the timeline

Conclusion

List of Figures

Figure 1: Quote from Jim Stapleton, Head of Sales and Account Management, Isis.
Figure 2: Payment system diagram
Figure 3: US market penetration of general-purpose cards, 2002 to 2012
Figure 4: The rewards and loyalty accounts in the US
Figure 5: Merchants  support  ~8% as cost of a sale
Figure 6: The entire payments system - including loyalty and rewards
Figure 7: Case study of long-distance decline in ARPU
Figure 8: The elements of mobile commerce
Figure 9: NFC comparison to EMV and magnetic stripe
Figure 10: Brick-and-mortar sales volume versus Internet retailing
Figure 11: Starbucks reloadable prepaid
Figure 12: The Google Wallet – image of the Google prepaid card
Figure 13: Accounting 101 refresher
Figure 14: Breakage accounts for over $31 million at Starbucks, and $100 million at Best Buy
Figure 15: Forecast indicating that mobile commerce will be the form factor of 20% of all payments
in the United States by 2015

Author

David W. Schropfer is an international business leader with two decades of management experience ranging from telecommunications to payment systems. Mr. Schropfer is a Partner with the internationally recognized consulting firm, The Luciano Group, where he leads its Mobile Payment and Mobile Commerce practice. Earlier in his career, he was Senior Vice President with IDT Telecom, and a Business Development Officer for Capital One. He has served on the Board of Directors for multiple companies, and is a frequent speaker at industry conferences and trade shows.

After graduating Boston College, David earned an Executive MBA from the University of Miami.

Contents

Glossary/key terms used in this report
Executive summary
The significance of Visa’s acquisition of Fundamo and Monetise

1.    Introduction
No easy solutions
The smartphone question
M-PESA is not a totally Kenyan phenomenon
Summary

2.    Background
How M-PESA works
Front-end simplicity, back-end complexity
Transaction charges
Technical issues
Handsets
User interfaces
The roll-out of M-PESA beyond Kenya
Afghanistan
Tanzania
India
Egypt and South Africa

3.    The lessons from M-PESA
Demand-driven expansion
The lessons for developed markets
African banking market development
Agency banking
The unbanked sector
Mobile money is lucrative, but there are no quick wins
Managing the agent network
Cash movements
Key success factors
Product simplicity
Technology
Interoperability issues
Bank-led vs MNO-led models

4.    Will we see another M-PESA?
Transaction volume is critical
Why M-PESA was so successful in Kenya
Size of domestic remittances market
MNO dominance
Marketing expertise
The agent network
Cultural factors
Technology
Customer support
Regulatory support
Documentation
Adding value through new features
Geography and population
A repeat of what happened in the US in the late 50s / early 60s?
Interoperability
Moving from cash transactions
International remittances
Getting the app to the customer
SMS and the MNOs

5.    The mobile future
The argument for mobile
The end of cards?
Closed money systems
How is PAYG Solutions planning on leveraging all of this?
Mobile’s potential to change the developing world
Message to developing markets – what can be learnt from M-PESA?

Appendix 1: Technology overview
NSDT
NFC
What you need at the back end for mobile money

Appendix 2:     M-PESA and international remittances

Tables and Figures
Table 1: Comparison of mobile money transfer costs in East Africa (2009)
Figure 1: Diagram of M-PESA functionality when it was first implemented
Figure 2: Diagram of M-PESA functionality now

Reviews

''A unique insight from someone who has seen, from the inside, the history of m-payments in the making. Elizabeth pinpoints the critical success factors of Kenya's M-PESA and sheds light on the back-end complexity of the system. It is a must-read for anyone interested in the evolution of mobile banking.'' Michal Kisiel, Analyst at Bankier.pl

“Drawing from direct experience of delivering and supporting M-PESA whilst at Sagentia and PAYG Solutions, this report captures the technical, security, commercial, regulatory and logistical challenges of delivering money transfer services.” Dr Stella Wooder, Former Head of Managed Services, Sagentia Ltd.


“I couldn't agree more with your assessment of M-PESA’s key success factors.” Oscar Ahere, CEO, Flexus Technologies

“A well thought-out analysis of mobile payments for the unbanked.” Gareth Pateman,Senior Development Manager for M-PESA at Vodafone

Author

Elizabeth Galpin was a member of the original M-PESA development team, who has over 25 years’ experience in the IT industry and is the co-founder of PAYG Solutions Ltd., which uses mobile technologies combined with cloud computing in sectors including agriculture and microfinance to provide solutions for people at the bottom of the pyramid to save and earn money.

Key issues

Key strategic issues addressed by Risk, Regulation and Profitability: Reconciling Banking's Key Strategic Challenges include:

•    Corporate governance:  To what extent can the traditional elements of corporate governance, in particular boards of directors, play a role in mitigating future threats to banking stability? What has been the actual record of such governance in the recent crisis? Has banking become too complex and fast moving for these individuals?
•    New supervisory and regulatory measures:  How likely are such measures such as the new Basel III, coupled with national legislation such as Dodd-Frank in the US and the creation of new regional entities in the EU, to significantly improve the identification and resolution of individual bank and systemic problems?
•    Strategic measures being taken or considered by bank management to reduce risk:  For example, what might be the future profile of investment banking and other high-risk businesses in the light of the possible application of the Volcker rule and similar measures to separate them from those supported by taxpayers?
•    The outlook for reconciling loss mitigation and achieving satisfactory investor returns:  How confident is the industry regarding the future of risk mitigation, and what are the key variables in this effort? What are the major gaps or issues to be addressed in the loss mitigation effort? How likely is a satisfactory resolution of the investor/regulatory dialogue at a return on investment acceptable to both sides?
•    Case studies of success in bank risk management:  While considerable attention has been paid to failures in bank risk management, a number of banks have demonstrated sustained success in reconciling the regulatory and public interest in banking safety with investors’ need for earnings growth and satisfactory return on capital. The report examines in detail such success stories across a number of business models and geographies as well as the lessons to be drawn from them.

The report provides a balanced, composite view of the considerations involved in this strategic planning. In a rapidly evolving process of global re-regulation, it assesses the impact of what has been agreed, what is still to be agreed, and provides an indication of the likely future outcomes.

Contents

PREFACE

EXECUTIVE SUMMARY
The focus of this report
Corporate governance
New supervisory and regulatory measures
Strategic measures to reduce risk
Case studies of success in bank risk management
Views on the outlook for re-regulation
Report structure
Research participants

CHAPTER 1:  THE CORE ISSUES ADDRESSED BY RE-REGULATION
1.1  More – and ‘better’ – capital
1.2  The central importance of government support to failing banks
1.3  Creating an appropriate resolution regime to avoid taxpayer funding
1.4  Too Big To Fail
1.5  The issue of bank funding
1.6  A level bank playing field: super-equivalence and other global regulatory issues

CHAPTER 2: THE EFFECTIVENESS OF CORPORATE GOVERNANCE IN BANKING
2.1  The purpose of corporate governance
2.2  The effectiveness of governance in practice
2.3  Possible means of improving corporate governance
2.4  Summary of corporate governance

CHAPTER 3:  GLOBAL RE-REGULATION: A WORK IN PROGRESS
3.1  Global measures: capital adequacy and liquidity
3.1.1  Capital adequacy
3.1.2  Liquidity
3.2  National measures: resolution regimes
3.2.1  Resolution regimes: the ring-fencing solution
3.3  Summary of global re-regulatory measures

CHAPTER 4:  STRATEGIC RESPONSES TO DATE BY THE BANKS
4.1  Macro developments across the banking sector
4.2  The transformation of the investment banking business
4.3  Changes in retail banking
4.4  The role of banks versus non-banks  
4.5  Summary of strategic responses by the banks

Chapter 5:  SUCCESS STORIES IN RECONCILING INVESTOR EXPECTATIONS AND BANKING SAFETY
5.1  Introduction
5.2  BNP Paribas
5.2.1  Business model
5.2.2  Risk management
5.2.3  Strategy evaluation  
5.3  JPMorgan Chase
5.3.1  Business model
5.3.2  Risk management
5.3.3  Strategy evaluation  
5.4  Banco Santander
5.4.1  Business model
5.4.2  Risk management
5.4.3  Strategy evaluation  
5.5  Standard Chartered Bank
5.5.1  Business model
5.5.2  Risk management
5.5.3  Strategy evaluation  
5.6  Svenska Handelsbanken (SHB)
5.6.1  Business model
5.6.2  Risk management
5.6.3  Strategy evaluation  
5.7  Toronto Dominion Bank
5.7.1  Business model
5.7.2  Risk management
5.7.3  Strategy evaluation  
5.8  Wells Fargo
5.8.1  Business model
5.8.2  Risk management
5.8.3  Strategy evaluation  

CHAPTER 6: THE LIKELY EFFECTIVENESS OF THE NEW REGULATORY MEASURES
6.1  The value of more capital and new liquidity rules
6.2  The issue of regulatory uncertainty
6.3  Does re-regulation go too far?
6.4  Focus on adverse consequences
6.5  The new regulations don’t solve the basic problems
6.6  Summary of effectiveness of the new regulations

CHAPTER 7: OUTLOOK FOR THE FUTURE
7.1  It is too early in the re-regulation process to make many sound observations
7.2  The trend toward basic retail and commercial banking
7.3  Banking will lose its share of the overall financial sector to non-banks active in risk-taking
7.4  The ideal of a level regulatory playing field in banking is unrealistic
7.5  Differentiation of strategy and returns will be a feature of the new banking environment
7.6  Views for the future of banking

CHAPTER 8:  CONCLUSIONS
8.1  Increasing the effectiveness of corporate governance
8.2  The ‘new normal’ profitability of banking and its consequences for bank investors and bank strategies
8.3  Lessons from the case studies
8.4  The outcome of efforts to restructure banking
8.5  Effective supervision: the missing link

BIBLIOGRAPHY

LIST OF FIGURES

Figure 1.1:    The evolution of core capital
Figure 1.2:    Comparative default/failure rates, 1990–2009
Figure 1.3:    The three pillars of banking wisdom
Figure 1.4:    Growth in banking system assets relative to GDP, 1990 to date
Figure 1.5:    Funding: European bank senior bonds vs. non-financial corporates, 2005 to date
Figure 3.1:    Net stable funding ratio
Figure 3.2:    Net stable funding ratio by region (%)
Figure 3.3:    Ring-fencing – in the regulators dreams, and in reality
Figure 5.1:    BNP Paribas geographic and business profile
Figure 5.2:    JPMorgan 2010 net income against performance targets
Figure 5.3:    Breakdown of Santander profits by geographic market
Figure 5.4:    Standard Chartered’s earnings growth, 2001–10
Figure 5.5:    SHB’s annual growth in equity and dividends
Figure 5.6:    TD Bank’s superior return on risk-weighted assets
Figure 5.7:    Wells Fargo Tier 1 common equity ratio
Figure 8.1:    Projected ROEs in European banking

Research participants

Autonomous Research
Arrow Financial Corporation
Barclays Bank Espana
Barclays Capital
Graham Bishop
BlackRock Investment Management
BMCE Bank
BNY Mellon
Boston Consulting Group
Collins Stewart
Credit Suisse
DnB NOR
European Banking Authority
Financial Services Authority
Fitch Ratings
Freeman & Co.
KBC Bank
Keefe, Bruyette and Woods
Lloyds TSB
Loughborough University (Professor David Llewellyn)
Herschel Post
Promontory Financial Group
Risk and Regulation Consulting Ltd
State Street Bank
Stern School
UniCredit
University of North Wales (Professor Philip Molyneux)

Reviews

“Much has been written about the causes of the financial and banking crises.  In his new report ‘The Future of Banking: Reconciling Risk, Profitability and the Public Interest’ Steve Davis analyses some of the less frequently cited causes such as:deficient bank governance, regulatory shortcomings and the drive for unrealistic profitability. He uses these same factors to offer a view – as only he can and not always very comforting! – about the future and how bank managements, regulators and investors will need to respond”. Sir Win Bischoff, Chairman, Lloyds Banking Group

"An excellent, comprehensive, and highly readable report.  Steven Davis is an accomplished and internationally renowned analyst of bank trends bringing to the task a wealth of experience both as a banker and banking consultant. Davis considers the key dimensions of bank strategy, corporate governance, the evolving regulatory and supervisory regime, and risk management strategies, and offers a wealth of valuable insights.  The analysis is powerfully informed by a series of powerful case studies of banks which have been successful in risk management and strategy rather than, as with most previous studies, on what went wrong. This timely report gives an in-depth analysis of banks that have achieved success in their models over an extended period. In the process, the author considers the key issue of how to reconcile loss mitigating strategies whilst at the same time achieving satisfactory investor returns.  The penetrating discussion is also greatly informed by a series of structured interviews with bankers, analysts and supervisors.

This report is a tour de force and the analysis that Davis presents will be of real value to bankers, supervisors, bank analysts and academic scholars. It is a must-read."  Professor David T Llewellyn,oughborough University, and Vienna University of Economics and Business

.“Drawing on insight from senior industry managers, this report offers a compelling and comprehensive view of the post-crisis retail environment”  Roberto Nicastro, global retail head, UniCredit

"A fascinating analysis  - offers valuable insights and a thorough overview of current issues."
Yves Robert-Charrue, Member of the Executive Board, Head Investment Solutions Group, Bank Julius Baer & Co Ltd.

Author

Steven I Davis has spent his career in the banking and financial services sector as a senior executive, strategy consultant, author, analyst and teacher.  He is a graduate (magna cum laude) of Amherst College and of the Harvard Business School.

His 20-year career in international banking commenced at JPMorgan, where he managed a Paris-based research and M & A unit.  For Bankers Trust Company, he ran a venture capital subsidiary in New York and later the bank’s European businesses from a London headquarters.  Subsequently he set up and managed for six years the London-based merchant banking subsidiary of First International Bancshares of Dallas, Texas.

Since establishing Davis International Banking Consultants (DIBC) in 1980, he has managed several hundred strategy assignments for commercial and investment banks, global fund managers, insurers and other financial institutions.  In 1993, he headed a DIBC team which advised the Norwegian Ministry of Finance on the restructuring of the country’s banking sector during the Nordic banking crisis.  In addition, he and his colleagues have prepared over 60 research reports on the financial sector for publication by investment banks and other clients.

Mr. Davis is also the author of 14 books and reports published on best practice in the financial services sector.

Description

Retail Banking Strategies: the Critical Dimensions for Excellence identifies and analyses management excellence in key dimensions such as:

Business models: Is there one best business model?  Which ones have outperformed others? And why?  Is a pure retail bank a viable model?  If not, why not? How does the retail function interact with other units in the successful banks? How do the successful banks – especially those in diversified models – ensure that customer relationships are effectively managed? What is the culture of a successful retail model? How have once-successful retail models lost their effectiveness?

Product range. Priorities, range, evolution, breadth, profitability, pricing and other central elements.

Client base: With the enhanced importance of the customer post the financial crisis, four key dimensions of the customer base are examined: how the bank prioritises the segments of this base; views on their clients’ needs and behaviour; how performance in serving the client is measured; and the impact of new bank regulation, introduced since the crisis, largely to protect the customer.

Geographic scope: How the ‘back to basics’ theme from the banking crisis is echoed in the geographic scope of bank retail strategies.  

Retail distribution channels: How the four dimensions of channel management are reflected in bank strategies: the theoretical role of the branch and other channels; the challenge of integrating the channels; trends in channel management; and unresolved issues for the future.

Retail leadership and culture:  Is there a unique culture or leadership style in successful retail banks? How might it differ from other businesses?  What can we learn from the management style and culture of the case studies of excellence?  

Cost base and bank operating systems: What factors drive the wide difference in perceived bank cost/income ratios?  What is the relative importance of a bank’s core system in contrast to other factors, such as discipline in cost management?  How are banks attempting to reduce their cost base, and what might be the likely outcome?  What are the systems issues facing a bank’s management, and how might they be resolved?

Risk management and regulation: How bank decision-making structures have been impacted; and the future outlook; and how effectively bank management might deal with risk in the future.

The impact of the banking crisis on retail bank profitability: The drivers of future profitability; and the likely outcomes in terms of bottom line returns on equity.

Key findings

Key findings summary
•    A pure retail bank is unlikely to be viable because of lack of synergies with other businesses such as SMEs and wealth management.

•    A clear articulation of a retail bank’s culture and strategy as well as an understanding of the customer’s needs is vital. The product dimension is not as critical. The product focus is on cross-selling more products to the existing client base.

•    Management’s central focus must therefore be on the existing customer relationship. However, many banks lack an understanding of the needs and behaviour of individual clients. Best practice in the sector involves having a single customer view incorporating all services used by the client, but only a handful of leading banks have the systems capable of providing this view. It is widely assumed that a large proportion – if not the majority – of individual client relationships are unprofitable. Major efforts are being made to match customer needs with the preferred distribution channel.

•    In the geographic dimension, as a result of the crisis many retail banks are retreating to their core markets where they have a significant market share. On the other hand, leading banks in dynamic emerging markets such as India and Brazil are positioned to expand in their region.

•    The branch system is widely viewed as the key element of attracting and serving clients who demand advice, while direct channels are increasingly used to execute transactions. Achieving a seamless interface among channels is a challenge for many large and complex banks. Upgrading branch staff to provide advice and ‘customer experience’ is also a priority.

•    Leadership in retail banking is similar to that of other businesses, but successful retail leadership must identify with staff and clients as a ‘banker in retail’ and be totally focused on the business. The most successful retail banks are those with decades of management continuity.

•    While the critical metric of the cost/income ratio varies widely across the sector, it is extraordinarily difficult to evaluate the relative importance of such drivers as differential product profitability, efficiency of IT systems, successful people management, and credit problems in the loan portfolio, Yet it is clear that retail leaders in developed markets tend to have a cost/income ratio in the low 40s against one in the low 60s for less profitable entities.

•    A major impact of the banking crisis has been the increased cost of consumer protection mandated by the regulatory authorities. As this cost may have a disproportionate impact on the smaller, less profitable clients, such re-regulation may have the unintended consequence of banks giving priority to larger, more profitable relationships.

•    In terms of profitability, the immediate impact of the crisis has been to reduce typical retail ROE metrics from perhaps 20% or more toward the banks’ estimated cost of equity of perhaps 9–10%. There is an assumption, however, that a combination of re-pricing, improved asset quality, the disappearance of many non-bank competitors, and expanding the product line can raise ROE to perhaps 14–15% for the most successful institutions.

•    Future retail strategies will focus on deposit-gathering, cross-selling to existing clients rather than new client acquisition, and developing systems which enable management to track customer needs and relative profitability.

Research participants

Autonomous Research LLP
Barclays Capital
Bankinter
BlackRock Investment Management
Boston Consulting Group
Corporate Executive Board
Financial Institutions Consulting
Financial Services Authority
Fitch Ratings
HSBC
Keefe, Bruyette and Woods
Lloyds Banking Group
McKinsey & Co.
PricewaterhouseCoopers  LLP
Sandler O’Neill & Partners LP
The Toronto-Dominion Bank
UniCredit Group
Wells Fargo Bank

Contents

Preface
Executive summary
Chapter 1:  Introduction
The boundaries of retail banking
The banking crisis of 2007–09
Methodology
Report structure
Research participants
Institutions
Individuals

Chapter 2: The generic impact of the crisis on retail banking
The shift in retail strategy from lending to deposit gathering
The benefits of a strategic shift away from investment banking and trading
The massive hole in retail income from the loss of revenues from lending
Recourse to non-lending products such as asset management and insurance
The uncertain ultimate impact of the banking crisis on retail banking

Chapter 3: Business models in retail banking
General comments
The choice of model  
Achieving synergies in a diversified business model

Chapter 4: The product range
Priorities
Non-traditional products
Range of products
Evolution of the product range
Product pricing and profitability

Chapter 5:  The retail customer
Client segmentation and prioritisation
Insight into customer preferences and needs
Performance management
The impact of regulatory measures to protect consumers

Chapter 6: Geographic scope

Chapter 7: Retail distribution channels
The theoretical role of the different distribution channel
The challenge of channel integration
Trends in channel usage
Unresolved challenges
Viewpoint: Conflicting positions over customer service

Chapter 8: Retail leadership and culture

Chapter 9:  Costs and bank systems
The key drivers of cost/income differentials
Current issues in cost and systems management
The outlook for cost reduction

Chapter 10: Risk management and regulation
The impact on decision-making structures
Outlook for the future

Chapter 11: The outlook for retail bank profitability
Drivers of future profitability
The likely outcome for retail bank returns
Summary

Chapter 12: Case studies of retail banking success
Introduction
Wells Fargo
Business profile
Retail banking strategy
Evaluation of retail strategy
Banco Santander
Business model
Retail banking strategy
Evaluation of retail strategy
Itau Unibanco
Business profile
Retail banking strategy
Evaluation of retail strategy
Standard Chartered
Business profile
Retail banking strategy
Evaluation of retail strategy
Svenska Handelsbanken
Business strategy
Retail banking strategy
Evaluation of retail strategy
The Toronto-Dominion Bank
Business model
Retail banking strategy
Evaluation of retail strategy
HSBC
Business profile
Retail banking strategy
Evaluation of retail strategy
Bankinter
Business profile
Retail banking strategy
Evaluation of retail strategy
Lloyds Banking Group
Business profile
Retail banking strategy
Evaluation of retail strategy

Chapter 13: The outlook for retail banking
What will change and what will not
The key variables underpinning the forecasts

Chapter 14:  Conclusions
Business model
Product
The client
Geography
Distribution channels
Leadership and culture
Costs and systems
Risk management and regulation
The outlook for retail profitability
The case studies of retail success
The outlook as seen by our interviewees

List of Figures

Figure 1.1: Possible client segments in retail banking
Figure 11.1: Potential profitability improvement in retail banking after the crisis
Figure 12.1: Wells Fargo’s approach to excellence in execution
Figure 12.2: Breakdown of Santander’s geographic and line of business segments
Figure 12.3: Development of Toronto-Dominion’s US business
Figure 12.4: HSBC’s personal financial services global network
Figure 12.5: Bankinter’s segmentation strategy

Author

Steven I Davis has spent his career in the banking and financial services sector as a senior executive, strategy consultant, author, analyst and teacher.  He is a graduate (magna cum laude) of Amherst College and of the Harvard Business School.

His 20-year career in international banking commenced at JPMorgan, where he managed a Paris-based research and M & A unit.  For Bankers Trust Company, he ran a venture capital subsidiary in New York and later the bank’s European businesses from a London headquarters.  Subsequently he set up and managed for six years the London-based merchant banking subsidiary of First International Bancshares of Dallas, Texas.

Since establishing Davis International Banking Consultants (DIBC) in 1980, he has managed several hundred strategy assignments for commercial and investment banks, global fund managers, insurers and other financial institutions.  In 1993, he headed a DIBC team which advised the Norwegian Ministry of Finance on the restructuring of the country’s banking sector during the Nordic banking crisis.  In addition, he and his colleagues have prepared over 60 research reports on the financial sector for publication by investment banks and other clients.

Mr. Davis is also the author of 14 books and reports published on best practice in the financial services sector.

Contents

Each chapter starts with Key Questions for the CFO, Treasurer or Cash Manager and a Key Points Summary

 

Preface

Introduction

Managing cash flow

Banks create their own cash cushions

The move towards non-banks

 

1 The three levels of cash management

Introduction

Domestic cash management

Bank charges on the rise

Domestic cash management stages

Stage 1: Simple bank account

Stage 2: Bank account with technology

E-banking now the preferred approach

Smartphones

Stage 3:Bank account with investment rules

Stage 4: Bank account with overdraft facilities

Stage 5: Multiple banks with more than one bank account in the same currency

Complexity increases as company grows

Technology and processes

Competitive bidding for banking business

International cash management

Stage 6: International cash management  services with more than one currency account

Cash pooling to notional pooling

Cash pooling considerations

Notional pooling

Notional accounting

Payment infrastructure

Global cash management

Stage 7: Global cash management

Reducing transaction volumes

CLS

Geographic approach

Nordic region vs. eurozone

Rules on inter-company lending

The technology that makes cash management work at banks

The future

 

2 Compliance: new rules and regulations for bank accounts

Compliance started in earnest in 2001

Ongoing AML

Politically Exposed Persons

Due diligence by the corporate

Due diligence by the bank

High risk criteria

Documentation

Customer Due Diligence/Know Your Customer

Anti Money Laundering

The money laundering schematic

Risk-based assessment

Customer screening

Single view of the customer business within the bank (CRM)

Account monitoring

Bank applies compliance testing to bank accounts

Bank applies compliance to payment messages

Additional regulation

The future

 

3 Bank account structures

How safe is your bank balance?

Stability ratings and stress tests

Bank account fees

Electronic Bank Account Management (eBAM)

Extensible Markup Language (XML)

Banking mandates

Value dating

Credit attached to the bank account

Branch foreign exchange rates

Bank accounts for third party cash administrators

Client cash structure: today and tomorrow

Benefits of client cash

Bank – today (with little automation)

Bank with third party accounts (full automation, complete STP)

Intermediary – today

Intermediary with virtual accounts

Corporate employing third party accounts

The future

 

4 Liquidity management and cash cushions

Liquidity management

Intraday liquidity in clearing and settlement

Pricing intraday liquidity

Reduction in bank lending capacity

Credit scoring

Degrees of liquidity

Cash and the flight to safety

Cash cushions

Stress testing

The future

 

5 Putting cash to work

Earning interest

Islamic banking

Linking the savings module to the bank account

Outside investments

Forecasting cash flows

Predicting revenue and expenses

Making money on the money

The future

 

6 Risk and interest structures

The investment risk pyramid

Base level investments – no risk to principal and highly liquid

Appreciating cash investments – up to 15% market risk and highly liquid

A strong currency

Gold

Speculation – up to 50% market risk

Gold – the universal currency

The future

 

7 The credit ladder

Charges for credit facilities

Credit rating agencies

Banks and financial institutions’ scoring techniques

Intraday overdrafts

Large value payments

Other credit techniques

Asset based financing

Sale and leaseback

Leasing other assets

Loans against equity

Inventory financing

Government return financing

Financing via other collateral

Credit default swaps

The future

 

8 The investment pyramid versus the credit ladder

Net Interest Income (NII)

Comparing the pyramid with the ladder

The future

 

9 Payments

Creating harmonised payments

Float and timeframes

Same/next day funds transfers – urgent payments

Other payment methods

Cheques

Automated Clearing House (ACH) payments

ACH for non-urgent payments

Direct debit

SEPA Direct Debit (SDD)

Local direct debit schemes vs. SEPA

Payment solutions for corporates

E-payments

M-payments

Warehouse accounts

International payments for corporates

Correspondent banking payments

Other international payment options

The banking infrastructure for cross-border payments

Third party account managers

Payment fees

Real Time Gross Settlement (RTGS)

The credit card process cycle – key players

Sample transaction and stakeholders

Prepaid cards

Near Field Communication (NFC) payments

Reconciliation

The future

 

10 Foreign exchange

International cash management and FX

Managing foreign exchange options

Derivatives

e-options

Regulatory changes

Other options

Forwards

Interest rate swaps

Currency exposure

Buying and selling FX

Credit line from the bank

Spread and commission-based pricing

Continuous Linked Settlement (CLS)

Automated FX (e-trading)

FX roles

The administrator

The dealer

The trader

The customer

The compliance officer

The support team

Currency movements

Margin, or increased leverage

Comparing euro performance

Asian currencies and the RMB

The future

 

11 Supply chain management

The supply chain and liquidity

DPO

DSO

DIO

Supply chain management developments

SWIFT’s TSU

Forfaiting

Size of the supply chain

Top 20% of companies achieve efficiencies

The physical supply chain

The electronic financial supply chain

Technology creates efficiency

Logistics and the supply chain

Supply chains and the role of the financial services industry

Automation and standards

Invoice financing

E-invoicing

Global adoption of e-invoicing

Changing supplier and buyer processes

Rosettanet

Bill payment in the US

The future

 

12 Illiquid management

Bankruptcy

Liquidation in the UK

The winding-up process

Liquidation

Pre-pack administration

 

13 Case study: Nordea

Profile

Client base

Cash management products

Group accounts

Sweeping and topping

Zero balancing

SWIFT statements

Value dating and currencies

Direct debit

Same-day cross-border money

Inter-company payment

In-house bank for a Corporate Treasury

Netting

Mobile banking

e-invoices

Factoring

Re-invoicing

Working capital

Achievements and initiatives

Client case study –­ Tele2

Tele2’s treasury centre

 

14 Case study: Citibank

Profile

Cash management products

CitiDirect (e-banking)

CitiDirect BE Mobile

WorldLink

WorldLink Payment Services reporting and tracking online

Group accounts

Citibank Electronic Cheque Deposit (ECD) in the US

Payment

Notional pooling

Data aggregation  

Analytics  

Target balancing

Netting

Electronic supply chain

The Citibank Electronic Account

Citibank e-Billing

CityFXPro

Pricing on 130+ currency pairs

Outsourcing treasury functions

Online investment

Liquidity desks

Achievements and initiatives

 

15 Case study: HSBC

Profile

Cash management products

Exposure management

Receivables solutions

Currency dealings as and when

Actively managing the exposure

Interest rate offerings in other countries

Cash concentration and multi-currency receivables

Online banking – Direct Connect

HSBCnet

HSBCnet Mobile

Achievements and initiatives

Client case study – Korean Air

 

16 Case study: Wells Fargo/Wachovia

Profile

Cash management products

Inefficient manual processing

No real-time visibility

Inaccurate cash forecasting

Increased exposure to fraud

Services for multinational corporates (MNCs)

Cash management consulting for multinational corporations

ACH

Cash collection (USA)

Remote Deposit Capture (RDC) for cheques

Direct deposits

Pre-authorised payments (direct debit)

Sweep investments for corporates

Global cheque clearing

Lockbox – the collection of cheques

Client case study – Bumble Bee Foods

 

Tables and figures

Table 1.1: Features of UK bank accounts 2009, 2010

Table 1.2: EIU 2010 digital economy rankings and scores

Table 3.1: Deposit protection schemes

Table 5.1: Wells Fargo economic forecast 2011

Table 7.1: Charges for credit facilities

Table 7.2:  The credit ladder

Table 7.3:  Credit rating agencies ratings guide

Table 9.1: Payment systems comparison

Table 9.2: Multipurpose Pan-European Direct Debit

Table 9.3 Prepaid card fees

Table 9.4: The reconciliations process

Table 10.1: Example of currency option pricing based on basis point spread.

Table 10.2: Euro changes as reported by the European Central Bank

Table 13.1: Report for external sales less exchange rate fluctuations

 

Figure 1.1: Simple domestic cash management

Figure 1.2: Account opening process

Figure 1.3: Simple bank account – domestic

Figure 1.4: Simple bank account – international

Figure 1.5: More than one company bank account (single currency) – simple

Figure 1.6: More than one company bank account (single currency) – alternative  

Figure 1.7: International cash management

Figure 1.8: Cash pool with notional pooling

Figure 1.9: Bi-lateral netting

Figure 1.10: Multi-lateral netting

Figure 1.11: Bi-lateral and multi-lateral netting

Figure 1.12: Payment and core banking landscape

Figure 1.13: Core banking systems and payments landscape

Figure 2.1: Ongoing due diligence

Figure 3.1: eBAM - opening a bank account

Figure 3.2: eBAM – account maintenance

Figure 3.3: eBAM – account closure

Figure 3.4: Value dating

Figure 3.5: Value dated transactions

Figure 3.6: Branch foreign exchange rates

Figure 3.7: Virtual account model

Figure 3.8: Deposits to MFI by non-financial and other financial sectors

Figure 4.1: Liquidity management for a bank

Figure 4.2: Intraday money flows

Figure 4.3: 30-day cash outflows

Figure 5.1: Bank account with savings account

Figure 5.2: Outside investments

Figure 5.3: Company balance over time

Figure 5.4: Forecasting company balances going forward (1)

Figure 5.5: Forecasting company balances going forward (2)

Figure 5.6: Interest rates vs. time (UK, December 2011)

Figure 6.1: The investment pyramid

Figure 6.2: Gold – London PM fix 2000-2011

Figure 7.1: Sovereign credit default swaps January 2010– November 2011

Figure 8.1: The investment pyramid vs the credit ladder (1)

Figure 8.2: The investment pyramid vs the credit ladder (2)

Figure 8.3: The investment pyramid vs the credit ladder (3)

Figure 9.1: Cheque (paper) payment flow

Figure 9.2: ACH payment

Figure 9.3: Direct debit payment

Figure 9.4: SEPA Direct Debit

Figure 9.5: Banks’ payment solutions for corporates

Figure 9.6: Warehouse account process (1)

Figure 9.7:  Warehouse account process (2)

Figure 9.8: Foreign exchange payments

Figure 9.9: Options for international payments – independent domestic banks      

Figure 9.10: Options for international payments – domestic banks in an Association        

Figure 9.11: Options for international payments – international bank

Figure 9.12: Traditional cross-border payments

Figure 9.13: Direct debit to a virtual account

Figure 9.14: Direct debit from a virtual account

Figure 9.15: Real Time Gross Settlement process

Figure 9.16: The credit card process cycle

Figure 9.17: Integrated and hosted virtual account solutions

Figure 9.18: Corporates – the paper trail

Figure 9.19: Corporates automated using virtual accounts

Figure 11.1: Supply chain growth

Figure 11.2: Supply chain management

Figure 11.3: Sales days outstanding

Figure 11.4: Supply chain financing for large companies

Figure 11.5: Accounts receivable financing

Figure 11.6: Invoice factoring

Figure 11.7: Invoice discounting

Figure 11.8: Paper vs e-invoicing

Figure 15.1: Korean Air’s FX outsourcing solution

 

 

About John Bertrand

John's expertise in banking, cash management, payments and technology was gained over 30 years at Citibank, IBOS, ALLTEL, Misys and Admertec/Ceptum in the USA and UK.

 

In this time he created and implemented technology in front, middle and back offices of banks, in addition to developing electronic access options for the needs of corporations and retail customers.  This included redefining core banking for Misys  (300 banks), ensuring long-term revenue. He has provided and developed cash management consulting, netting schemes, third party cash management, pooling and foreign exchange.

 

John has been involved in mergers and acquisitions in more than 10 banking/software transactions that included cloud-based solutions. One transaction in the cloud now represents 9% of Misys profits.

John raised capital, added mezzanine financing, leasing and invoice factoring together to create Ceptum Limited, a potential bank, now with $10 million in profitable assets and with no debt.

He has worked with the UK (FSA) and Swedish (FI) banking and finance authorities to create a de nova bank.

Key conclusions

The reports make it clear that the market for retail banking services in the region is in need of more financial institutions to engage local populations, thus providing a means for people to move into the formal economy. As the market develops and larger regional and supranational institutions enter and expand across sub-Saharan Africa armed with lower operating costs, the viability of existing organisations’ business model rests squarely on a brand identity that offers a clear value proposition to customers. Product development and positioning and consumer price-to-cost ratio are also key to viability. Sustainability will depend on a continuous process of successfully combining top-line growth with bottom-line control. Growth is likely to be multi-dimensional, originating from three key sources: new product growth, new customer growth, and organic growth.

Contents

Indicative country volume contents

Executive Summary
Maris Strategy’s market perspective
Economic indicators
Strategic recommendations

1.    Introduction

2.    Methodology
2.1.    Living Standard Measures
2.2.    Linking socio-demographic profiles with competitive data on banking products and services

3.    Country Economic Analysis
3.1.    Key elements driving the banking sector
3.2.    Legal and regulatory framework
3.3.    Banking infrastructure statistics
3.4.    Demographic trends and customer behaviours with LSM analysis

4.    Competitive Analysis
4.1.    Analysis of product and services offerings
4.2.    Other market developments

5.    Value Proposition Analysis
5.1.    Setting strategic targets with value disciplines
5.2.    Mapping key players’ value propositions in the market

6.    Market and Segmentation Analysis
6.1    Segmentation variables
6.1.1. Demographic segmentation
6.1.2    Psychographic segmentation
6.1.3    Geographic segmentation
6.1.4    Product–benefit segmentation
6.1.5    Application of demographics
6.2.    Demographics combined with competitive data analysis
6.2.1    Banking market structure
6.2.1    Banking market strategy
6.3.    Products and market segmentation analysis

Tables and Figures
Table 3.1    LSM definitions
Table 3.2    Overall LSM analysis
Table 3.3    Deposits
Table 3.3    Lending
Table 3.4    Investments
Table 3.5    Insurance
Table 3.6    Preferred methods of payments
Table 3.6    Financial intermediaries
Table 4.1    Key players offerings overview
Table 4.2    Overview of competitor financials and key market segments
Table 5.1    Value proposition variables
Table 5.2    Perspective on value proposition
Table 6.1    Market segments
Table 6.2    Market share opportunities in country’s market segments
Table 6.3    Country’s direct banking channels
Table 6.4    Microfinance and microcredit products for the self-employed in unregistered businesses

Figure 3.1    Reasons for not having bank account
Figure 3.2    Socio-economic pyramid (population aged 16+)
Figure 4.1    Key player analysis by market share
Figure 4.2    Key player analysis by asset size
Figure 4.3    Key players market positions
Figure 6.1    Banked status of population (aged over 16)

Methodology

The key methodology employed is a combination of analyses of socio-demographic profiles in the country and examination of current banking products and services being offered to the customers. This approach is effective not only in identifying opportunities for offering new products and services, but also in providing critical information for measuring the performance of existing product offerings and fine-tuning the direction of existing strategic plans.

Maris Strategies consulted various primary sources to build a platform for extensive analyses. Demographic data has been acquired from four main sources: national statistical agencies, the World Bank, FinsScope (a comprehensive national household survey focused on financial services needs and usage facilitated by the FinMark Trust) and the Drumbeat Project, a pan-African Living Standard Measures (LSM) and profile database provided by Tendai Mhizha, University of Derby.
Living Standard (or Life Style) Measures have been used as a critical tool to understanding the patterns of customer behaviour and identify market segments that provide an opportunity. This approach also enables banking operators in the country to understand the size and composition of each market segment, and the nature of the banking relationships.

To help financial services providers operating (or planning to operate) in the region to identify the customers with the highest potential for their product and service offerings, Maris Strategies has analysed demographic data from various sources and identified groups of customers sharing the same or similar value criteria when choosing products and services. The key goal is to identify market segments that provide an opportunity for a financial institution to outperform the competition and quickly achieve its operative objectives.

A four-step process has been used to generate a projection for the potential target accounts available in the market and to estimate the number of accounts winnable given a value proposition on par with competitors.
Macro-economic data is analysed to provide a picture of potential growth. World Bank and IMF forecasts indicate that these regional economies will continue to grow at a vigorous rate and that there is huge growth capacity for financial services organisations in the region.

In order to assess target markets and identify opportunities in those markets, competitive analysis  examines competitors in order to evaluate their strengths and weaknesses in each market in order to identify opportunities to provide the same service with better delivery or link a target service to a complementary product offering.

Value proposition analysis is perfomed on a framework of three key elements of competitive advantage: Operational Excellence; Customer Intimacy; and Product Leadership in order to help institutions to choose their strategic focus.

Author

Maris Strategies Ltd

Founded by Joe DiVanna in the United States in 1998, with a UK-based operation since 2000, Maris Strategies is a research think-tank for financial services, government agencies, multinational corporations and technology providers. As a research and advisory group, our unique value proposition is based on five key concepts:

•    Measurable action-based business strategies
•    The applied use of technology to create value
•    Methodologies to produce break-through thinking
•    Finding unique solutions to global organizational challenges
•    Generating ideas in our idea factory

Key findings

Wealth management is a highly profitable and attractive business, either on its own or as part of a more diversified financial enterprise. It uses relatively little capital, it does not have the tail risk of other banking businesses like dealing or lending, the base of global wealth is growing,  and it generates remarkable pre-tax margins of some 30-40% on the revenue base and perhaps 40 basis points on assets managed. Many clients are locked into the provider due to trust deeds, and an ageing population may be looking for a new home for their wealth.

• On the other hand, there is a high degree of polarization in profitability between business segments and individual firms. A McKinsey & Co. study notes that one third of its broad sample of European firms experienced net funds outflows in the down year of 2008, while some 45% were net losers in the recovery year of 2009. Margins also differ widely between offshore and on-shore banking and between the units of global banking institutions. Finally, margins differ widely among geographic and product markets.
• Market volatility can create violent shifts in profitability. Whether the brokerage or ad valorem fee models are used as the basis for revenue generation, swings in market prices – in particular for equities – can create substantial shifts in profitability. Thus the meltdown of markets in 2008 was followed by an almost equal upward surge in 2009.  But with virtually no new funds inflows or cost adjustment, the net impact as indicated in  McKinsey’s research produced a 47% collapse in the overall European profit pool   from the peak boom year of 2007 to the recovery in 2009.
• Growing the pool of managed funds is a major challenge. While an estimated two thirds of the wealthy global population is prepared to pay fees for wealth management, there remains some $ 10 trillion in funds which are not. The total net new funds inflow for the sector has been nominal for the past few years. And the industry is highly concentrated, with the top 10 global providers holding an estimated 52% of the total market and the top 20 over 80%.
• Creating and capturing product trends has become increasingly difficult. Product innovation has increasingly become a critical success factor. In Europe, for example, research by Fitch Ratings indicates that 80% of mutual fund providers have experienced zero net sales in recent years. Demand has moved massively between products, and only a handful of providers have been able to capture the bulk of this demand.
• Improving productivity and client service both provide substantial challenges. Cost ratios have soared since 2007 as the fall in revenues has not been offset by increased productivity, and incremental costs such as new regulation directly impact the bottom line. As one of our interviewees notes,‘Private banking hasn’t been ‘industrialised’ yet like other banking businesses’.

Contents

Executive summary

Chapter 1:    Impact of the financial crisis on wealth management
Massive loss of trust in the provider
The explosion of regulation
Questioning the ultimate value added by wealth management.
Meeting customer needs
The stagnation of global AUM

Chapter 2:    The business model: winners and losers
Advice vs. product
Some problem models
Possible conflicts of interest
Conclusions

Chapter 3:    The client service model
The client profile
The client’s needs
Responses of wealth management providers
Evaluating potential for strategic success

Chapter 4:    The product dimension
Advice as the core product
The balance between in-house and outsourced products:
The performance challenge: rapid change in customer demand and few winners who capture it
Conflicting views on risk preference
Case study: Product selection

Chapter 5:    Reshaping the operating model
Reshaping the front office
Investment in systems: cutting costs and improving client service
Align client coverage and profitability: the segmentation issue
The cost of entering new markets

Chapter 6:    Risk and regulation
The financial/managerial dimension
The strategic impact of new regulation
Case study: Offshore banking

Chapter 7:    Success in international expansion
Key variables for a global strategy
Size and profile of the wealth pool
Prospects for growth in the wealth pool
Investment preferences
Patience and sustained investment
Openness to new financial relationships
Brand
An existing banking network or other non-wealth management sources of revenue
Building an international wealth management business
Case studies of international success
Future issues for international expansion

Chapter 8:  The profit profile
Wealth management’s profit potential
Polarisation of profitability among segments and individual firms
The impact of market volatility
The challenge from managed funds
Creating and capturing product trends
The challenge of improving productivity and client service

Chapter 9: Case studies of wealth management success
BNY Mellon:  Successful diversification across key wealth management businesses
Business model
Wealth management strategy
Strategy evaluation
Julius Baer Group: A Swiss private bank separates advice from product management and builds a successful global network
Business model
Wealth management strategy
Strategy evaluation
Credit Suisse:  One of the two Swiss global banks gains profitable new wealth advisory business and restructures its asset management function
Business model
Wealth and asset management strategy
Strategy evaluation
HSBC:  One of the world’s leading global banks invests in improved operating systems as well as third party compliance in its wealth management arm
Business model
Wealth and asset management strategy
Strategy evaluation
JP Morgan Chase:  A leading US bank leverages its strong brand, broad product strength and diversified client base to create sustained growth in wealth management
Business model
Wealth and asset management strategy
Strategy evaluation
Schroder PLC:  A UK asset manager builds a highly competitive global product range and diversifies successfully out of its home market
Business model
Wealth and asset management strategy
Strategy evaluation

Chapter 10: The outlook for wealth management
Regulation:
The need for scale and size
Geographic focus
Client focus
The product challenge
Cost management
Conclusions

Chapter 11: Conclusions
The business model:
The client service model
Product profile:
The operating model
Market expansion
Profitability
Outlook

List of Figures
Figure 1: Collapse of European profit pool in 2009
Figure 2: Wealth management transactions 2006–2010
Figure 3: ROA varies across business models
Figure 4: Geographic distribution of high net worth individuals by region
Figure 5: Criteria for client base segmentation
Figure 6: Breakdown of global wealth management sector by wealth band
Figure 7: Proportion of time spent by a relationship manager
Figure 8: Asset allocation 2004–2010
Figure 9: Differentials in frontline
Figure 10: Risk officer priorities: current and in two years’ time
Figure 11: Sources and destinations of offshore funds
Figure 12: Number and proportion of millionaire households
Figure 13: Interface between BNY Mellon’s asset and wealth management functions with other group units
Figure 14: Julius Baer’s global network
Figure 15: UHNWI sector in Credit Suisse combines superior growth and net profitability
Figure 16: Synergies between JPMorgan’s asset management function and other group units
Figure 17: Schroders regional net flow of investment

Reviews

"A fascinating analysis of the current state of the wealth management industry - offers valuable insights and a thorough overview of current issues and opportunities."
Yves Robert-Charrue, Member of the Executive Board, Head Investment Solutions Group, Bank Julius Baer & Co Ltd.

Author

Steven I Davis has spent his career in the banking and financial services sector as a senior executive, strategy consultant, author, analyst and teacher.  He is a graduate (magna cum laude) of Amherst College and of the Harvard Business School.

His 20-year career in international banking commenced at JPMorgan, where he managed a Paris-based research and M & A unit.  For Bankers Trust Company, he ran a venture capital subsidiary in New York and later the bank’s European businesses from a London headquarters.  Subsequently he set up and managed for six years the London-based merchant banking subsidiary of First International Bancshares of Dallas, Texas.

Since establishing Davis International Banking Consultants (DIBC) in 1980, he has managed several hundred strategy assignments for commercial and investment banks, global fund managers, insurers and other financial institutions.  In 1993, he headed a DIBC team which advised the Norwegian Ministry of Finance on the restructuring of the country’s banking sector during the Nordic banking crisis.  In addition, he and his colleagues have prepared over 60 research reports on the financial sector for publication by investment banks and other clients.

Mr. Davis is also the author of 14 books and reports published on best practice in the financial services sector.

Key findings

The report notes that Virgin and Tesco are not new to financial services. Both have been niche players for more than a decade, concentrating on a select range of products and operating through partnerships with existing banks. But they now plan to offer full-service retail banking, with both current accounts and mortgages being talked about. Tesco has bought out RBS’s stake in their financial services joint venture. Virgin Money is buying a small regional UK bank to expedite its acquisition of a banking licence and provide a platform for retail banking.

The report underlines the current small scale of Virgin’s and Tesco’s financial services operations. For example, were Tesco Bank a building society, it would rank only 10th between Principality and Newcastle. The only way for Virgin or Tesco to achieve scale quickly would be through a major acquisition. The planned sale of Northern Rock and divestments required by Lloyds and RBS may present opportunities. But the report underlines that acquisitions on this scale would carry significant integration risks for the non-banks.

The report sets out specific challenges that the likes of Virgin and Tesco face in building full-service banks:
•    Despite all the moves to facilitate account switching, consumers remain instinctively reluctant to change their current accounts.
•    Further, banks remain reliant on opaque and unpopular means of generating revenue from their current accounts, namely high overdraft charges and little or no interest paid on credit balances. Can Virgin and Tesco offer current accounts profitably without relying on these and so threatening their reputational advantage?
•    With much reduced access to wholesale funding following the crisis, Virgin and Tesco will need to build large deposit bases in order to offer mortgages. But they will face intense competition for retail deposits from existing banks and building societies.
•    Virgin Money and Tesco Bank have relied heavily on credit cards and consumer credit to drive their growth. However, in the wake of the crisis, prospects for consumer credit are bleak. And it is not clear which other banking segment offers an equivalent “growth engine” to support their push into full-service banking.

Contents

Introduction
  
1. The ’non-banks’    
1.1    Virgin Money    
1.1.1    Development to date
1.1.2    Business structure
1.1.3    Services offered
1.1.4    Financial performance
1.1.5    Expansion plans

1.2    Tesco Bank
1.2.1    Development to date
1.2.2    Business structure
1.2.3    Services offered
1.2.4    Financial performance
1.2.5    Expansion plans
Case study: ICA Banken in Sweden


2.   The retail banking market    
2.1  Market structure and shares    
2.1.1    The ’big four’ (Barclays, Lloyds, HSBC, RBS)
2.1.2    Banco Santander
2.1.3    Building societies
2.1.4    Other banks and financial services companies
Case study:  Northern Rock
Case study: Post Office Financial Services

2.2   Prospects for market segments  
2.2.1    Current accounts
Case study: The OFT case against unarranged overdraft charges
2.2.2    Mortgages
2.2.3    Credit cards and consumer credit
2.2.4    Deposits


3.    Analysis
3.1  SWOT framework        
3.2    Opportunities
Case study: Lloyds and RBS:    Divestments required to meet EC State Aid requirements
3.3    Threats
3.4    Strengths
Case study: Tesco Clubcard
3.5    Weaknesses
3.6    Conclusions

Author

Steve Worthington
Steve Worthington is Professor of Marketing at Monash University, Melbourne, Australia, in the Faculty of Business and Economics. He previously worked in the UK as Marketing Group Head within Co-op Brand, the own label of the Co-operative Wholesale Society (CWS). Prior to that he was Head of Marketing and Planning with the Co-operative Bank, a subsidiary of the CWS.

Steve has published widely, both in academic journals such as Journal of Marketing Management, Journal of Retailing and Consumer Services and the International Journal of Bank Marketing, and in more practitioner-focused publications such as the Financial
Times, European Card Review, and Cards International. He has also written a number of case studies concerning both bank and retailer provision of financial services. He is the author of Branding and Relationships in Plastic Cards, published by the Financial Times and The China Cards Market 2005/2006 published by VRL.

Peter Welch
The late Peter Welch was a widely respected independent consultant specialising in the banking and healthcare sectors.  Within banking, his main areas of work were market and competitor analyses, with a geographic focus on pan-European developments, and a sectoral focus on personal banking, cards and payments.  His reports include Inside Fraud, an analysis of payment card fraud trends across several European markets, published in late 2009 by PCM and sponsored by Visa Europe, and Rethinking Banking Efficiency, a study that challenges established approaches to the measurement of bank efficiency.

In Peter's memory, all revenues from the sale of this report will be donated to the charitable causes he supported.

Analytical approach

Measuring economic fundamentals in a consistent manner across countries and time can be a challenging exercise. Alternative studies on country risk pricing often use country credit ratings as a proxy for economic fundamentals. Credit ratings have not always been a timely or indeed accurate reflection of risk.  The commercial and operating models of the three key credit rating agencies leaves their analysis prone to distortion.   Moreover, research suggests that 80 percent of the variation in ratings can be explained by GDP per capita. We use JH&Co’s proprietary methodology, Quantitative Country Assessment, which is more effective at consistent comparison of economic fundamentals.

Quantitative Country Assessment (QCA) is a quantitatively driven analytical scoring system that measures a country’s ability to withstand external shock and recover through adopting a new growth model. QCA uses over 100 quantitative inputs sourced from official public such as the World Bank and IMF. It measures 17 critical factors, which in turn create three pillars. The 17 factors are made of 62 sub-factors. The average of these scores creates one country score, enabling us to rank countries based on their relative attractiveness. The pillars are:
1.    External adjustment capacity: a country’s ability to withstand an external financial shock.
2.    Institutional robustness:  measures the robustness of the country’s institutions to implement policy, including fiscal, banking sector institutions and governance by looking at whether governments have a track record of delivering good policy.
3.    Medium-term growth potential: the ability of the economy to grow and achieve a new growth path if necessary.

QCA is successful because it is:

• Effective - backtesting of QCA’s predictive qualities shows that it adds considerable value to government bond portfolio construction and emerging market equity portfolios.  QCA is also a good predictor of changes in country credit ratings.
• Rigorous – QCA has over 100 data inputs per country.  Its complex algorithms and recursive interaction distils the various data points into critical factor scores.
• Transparent and decomposable – QCA’s country score can be decomposed into three pillars, 17 factors and 62 sub factors
• Broad based and comparable – QCA covers 174 countries and its decomposable scores allow comparing across the full range of different QCA scores.

QCA was created in 2007 at the request of some of our sovereign wealth and private equity clients who wanted a quantitatively driven rigorous medium-term country analysis that allowed them to rank countries.  It forms the basis of the advice we give to our investor clients and allows them to make more informed decisions.  It is also used in the macroeconomic and policy advice we give our government clients.

Since numerous research studies have shown that most of the variation in markets’ risk perceptions (measured through either yields, yield spreads or CDS) are explained by short-term economic indicators, such as GDP growth, current account balance, fiscal deficit, inflation rate etc. In Part I of the report, Risk pricing versus fundamentals, we use Pillars I & II as reflecting a short- to medium-term measure of countries’ economic fundamentals. In Part II, East European Fundamentals in Detail, Pillar III is added and captures medium- to long-term resilience of the economies.

Contents

Abstract
Key findings
Introduction and overview
Analytical approach: Quantitative Country Assessment as a tool for measuring economic resilience

PART I. Risk pricing versus fundamentals
1.1.    Country risk in Eastern Europe
1.1.1.    Slovakia vs Czech Republic
1.1.2.     Slovakia vs Hungary
1.2.    Eastern Europe in a global context
1.2.1.    Intra-regional risk in Eastern Europe
1.2.2.    Global risk pricing
1.2.3.    Does risk pricing accurately reflect the fundamentals?

PART II. East European fundamentals in detail
2.1. Bird’s eye view on Eastern Europe and comparator regions
2.2. Intra-regional overall economic performance
2.3. External adjustment capacity
2.3.1 Macrofinancial adjustment capacity
2.3.2 Reserves
2.3.3 External indebtedness
2.3.4. Current account
2.3.5. Trade vulnerability
2.4. Robustness of institutions
2.4.1. Monetary policy/inflation
2.4.2. Fiscal policy and debt
2.4.3. Banking sector
2.5. Medium-term growth potential
Actual versus potential growth
I2.5.1. nnovation and technology
2.5.2. Demography and human resources
2.5.3. Business environment
I2.5.4. nfrastructure

LIST OF TABLES
Table 1. Selected economic indicators, the Czech Republic and Slovakia, 2007 and 2010
Table 2. Selected economic indicators, Hungary and Slovakia, 2007 and 2010
Table 3. Selected external flexibility-related economic indicators
Table 4. Fiscal stimulus measures in East European EU members, 2009 and 2010, % of GDP relative to 2008 baseline
Table 5. Selected institutional robustness-related indicators, 2007 and 2010.
Table 6. Selected medium-term growth related indicators, 2007 and 2010
Annex 1. QCA factor scores, 2007
Annex 2. QCA factor scores, June 2011

LIST OF FIGURES
Figure 1. Selected East European countries: yield on Euro-denominated sovereign debt and QCA score as of June 2011
Figure 2. CDS on $-denominated debt vs QCA ext. adjustment capacity and institutional robustness
Figure 3. Evolution of QCA score (average external adjustment capacity and institutional robustness) and yields, Czech Republic and Slovakia, 2007-2011
Figure 4. Hungary vs Slovakia, QCA vs Euro-debt yield, July 2011
Figure 5. Yield on Euro-denominated sovereign debt of selected East European countries, March 2006-February 2011

Figure 6. Yield on US$-denominated sovereign debt in selected regions, 2006-2011
Figure 7. Yield on Euro-denominated sovereign debt in selected regions, 2006-2011
Figure 8. Economic fundamentals vs yield on Euro-denominated sovereign debt, Eastern Europe, core EU and GIPS
Figure 9. Economic fundamentals vs yield on US$-denominated sovereign debt, Eastern Europe, Latin America and Southeast Asia
Figure 10. Overall QCA score: East European EU members, core EU, GIPS, Western Balkans, CIS-3, Latin America, South East Asia, June-2011 QCA scores
Figure 11. Regional comparison by three QCA pillars, June 2011 QCA scores
Figure 12. Overall QCA score, Eastern Europe, Core EU and GIPS, June 2011 QCA scores
Figure 13. Comparison by three QCA pillars, EE, Core EU and GIPS, June 2011 QCA scores
Figure 14. Cross-country comparison, 2007, 2009 and 2011 QCA scores
Figure 15. External adjustment capacity in Eastern Europe, core EU and GIPS, 2007 and 2011 QCA scores
Figure 16. Components of external adjustment capacity by comparator regions, QCA 2011 scores
Figure 17. Evolution of nominal exchange rates versus Euro in Eastern Europe, Jan-2007-Feb-2011, Jul-2007=1.
Figure 18. Robustness of institutions by comparator regions, 2011 QCA score
Figure 19. Robustness of institutions by individual East European countries, June 2011 QCA score
Figure 20. Components of institutional robustness by comparator regions, June 2011 QCA scores
Figure 21. Average inflation in selected regions, end-2003 to end-2010, year-on-year change
Figure 22. Market share of foreign-owned banks (% of total banking system assets, 2006)
Figure 23. Pillar III: Medium-term growth potential, EE, Core EU and GIPS, June 2011 average score
Figure 24. Performance of selected regions on Pillar III factors
Figure 25. Average regional scores on Pillar III: Medium-term growth potential, 2007 and 2011

About John Howell & Co

John Howell and Company Ltd brings together a group of professionals from banking, financial markets, energy, public administration and academia whose record of co-operation goes back to 1993. It provides research and consultancy services to public and private sector clients, offering support at strategic, operational and tactical level in the identification and attainment of business or policy goals. Our activities cover all stages of the policy cycle, from research and planning through development and implementation to monitoring and evaluation.  Our areas of expertise are economics and financial markets, strategic risk, investor relations, regulatory reform and compliance analysis.  By bringing together complementary areas of expertise we help our clients to understand the economic environment they are operate in, understand and mange financial risks and allocate resources where they are most needed.  Our clients include hedge funds, sovereign wealth funds, investment banks, supranational entities and private equity funds.

Contents

Introduction
European Comparisons
Nordic Card Statistics
Card Forecasting Model
Card Market Size Forecasts
Nordic Prepaid Market Assessment
Prepaid application descriptions
Benefits delivered by prepaid applications
Prepaid drivers and inhibitors of growth
Prepaid market size forecasts
Prepaid competitive landscape
Second E-money Directive
Prepaid 3rd Party Distribution
History
Third party channels
The closed loop business case
The open loop business case
Government Prepaid
Public sector prepaid.
Case study: Stuttgart FamilienCard
Case study: Nordea Municipality Cards
Risk Based Pricing
Differentiated APRs
Unsecured loans use risk-based pricing
Market saturation
Higher funding costs
Behavior Scoring
Behavior scoring vs. credit application scoring
Card Performance Optimization
Case study: Vanquis Bank
Mobile Payments
Defining mobile payments
Nordic countries versus Developing countries
The Challenger case
The Payment network case
The Merchant case
The Consumer case Mobile payments in a Sepa perspective
The Mobile Payments Ecosystem
Summary
Contactless Payments
Form factors
Chicken and egg
Contactless appeal
Consumer attitudes
Cash Back and Bonus Points
Cash back and point variants
Cash back levels
Rational consumers:The Banana Case
Opportunity: Cash back for business
Debit Card Innovation
Debit loyalty programs
Micro transactions
Affinity transactions
Opportunity: Choose your Affinity Opportunity: Tax funded cash back
P2P Lending
Predictions
Case study: TrustBuddy
Google, Apple, Amazon, PayPal and Facebook
Online payments
Proprietary payments
Redefining banking
Caveats of virtual currencies
Reality check
Case study: Facebook credits
Banking Apps and UX
Banking Apps
What can banks learn from Apple, Facebook etc?
Virtual Game Goods
Spending real money on virtual goods
Third party gaming services
Virtual goods - banking opportunity
Co-branded opportunity
Opportunity: Funcom
Appendix: Methodology notes and terminology

Author

MACAW research is an Oslo-based consulting company specialized in cards and payments intelligence. We have experience from projects in 20+ countries ranging from card performance optimization to card market forecasts and business development aid. Our clients are card issuers, card service providers and other payment industry stakeholders.

The author of the report is Jon Sederqvist Østmoe. Jon is the founder of MACAW research. Jon has extensive experience in payment cards research and analysis, he writes for international payment journals, and is a frequent speaker at payments conferences, workshops and board meetings for companies in the financial services sector.

Description

What works – and what doesn’t – in one of the most important and hotly debated aspects of the future of the financial system

A new and unique insider view of what actually works, what ought to work, what prevents it from working, and what needs to be done about it – industry experts who have to implement and work within regulatory systems give the real best practice picture

“… Required reading for anyone with a stake in strengthening the financial system – which is pretty much all of us."
Robert P. Kelly, Chairman and CEO, BNY Mellon

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The recent financial crisis has unleashed a flood of views on what happened, why it happened, and what new regulatory measures and structures might prevent or mitigate such crises in the future. Effective Bank Regulation and Supervision: Lessons from the Financial Crisis takes a different approach.  Based on in-depth interviews with more than 30 senior, experienced bankers, regulators and supervisors, academics, management consultants, ratings agencies and securities analysts, all deeply involved in the regulatory process, it seeks to answer two key questions:

Which bank regulators around the world have demonstrated relatively superior results in terms of regulatory outcomes? and

What lessons for the future can be drawn from their experience?

The result is a ground-breaking insight into the likely future success of bank regulation and the key factors which will determine such outcomes.

The role of regulation or supervision in the future stability of the global banking system has never been more important than now, and never has the conduct of banks and their regulators been under closer scrutiny. How can regulation work without effective supervision? And what about the virtues of principles-based, as opposed to rules-based regulation? Among the hundreds of bank regulators around the world are examples of what works and what doesn’t as the ‘new normal’ in bank regulation is introduced. By gathering as much evidence as possible of best regulatory practice under fire during the recent financial crisis, Effective Bank Regulation and Supervision: Lessons from the Financial Crisis provides some thoughtful insights and positive lessons for regulators and those responsible for the regulatory function – and to lay out clearly the conclusions from their collective experience.

 

Research participants include:
Institutions
APRA
Banca de Espana
Banca de Espana
Banca d’Italia
BNY Mellon
BaFin
Bankinter
Banque de France/Commission Bancaire
Boston Consulting Group
CBFA
Citibank
Deutsche Bank
Fitch Ratings
Financial Services Authority (UK)
Financial Supervisory Authority of Norway
HSBC
Lloyds Banking Group
Oliver Wyman
McKinsey & Co
OSFI
Office of the Comptroller of the Currency
Promontory Financial Group
Sandler O’Neill
State Street Bank
Swedbank

Individuals
Claudio Borio
Clive Briault
Professor James Barth
Larry Fish
Edward Ladd
Professor David Llewellyn

 

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Reviews

Praise for Effective Bank Regulation and Supervision: Lessons from the Financial Crisis
“… Required reading for anyone with a stake in strengthening the financial system – which is pretty much all of us."
Robert P. Kelly, Chairman and CEO, BNY Mellon

“Steve Davis has always been innovative in looking at the banking industry, and in writing about its challenges and opportunities.  Highlighting the various regulators’ roles, both in their benefits and shortcomings, will usefully inform the debate on the future shape of the industry.”
Sir Win Bischoff, Chairman, Lloyds Banking Group plc

“This is a tour de force of bank regulation. Steve Davis provides an excellent insight into bank regulatory systems, investigating the mechanics of who got it right and who failed in providing appropriate oversight of their banking systems over the crisis. A series of lucid and insightful bank regulator case studies reports the experiences of key players and highlights major areas for reform. A must-read for anyone interested in bank regulation pre- and post-crisis.”
Professor Philip Molyneux, Bangor University

Contents

 

 

Key topics:
Chapter 1    Introduction and overview
Chapter 2    Anatomy of the banking crisis
Chapter 3    The emerging new model of financial regulation
Chapter 4    Regulatory structure and policy
Chapter 5    The role of professional skills
Chapter 6    Politics and bank regulation
Chapter 7    Regulatory authority case studies
Chapter 8    Lessons from the past and the outlook for the future
Chapter 9    Conclusions

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Research participants

Institutions
APRA
Banca de Espana
Banca d’Italia
BNY Mellon
BaFin
Bankinter
Banque de France/
Commission Bancaire
Boston Consulting Group
CBFA
Citibank
Deutsche Bank
Fitch Ratings
Financial Services Authority (UK)
Financial Supervisory Authority of
Norway
HSBC
Lloyds Banking Group
Oliver Wyman
McKinsey & Co
OSFI
Office of the Comptroller of the
Currency
Promontory Financial Group
Sandler O’Neill
State Street Bank
Swedbank

Individuals
Claudio Borio
Clive Briault
Professor James Barth
Larry Fish
Edward Ladd
Professor David Llewellyn

Author

Steven I Davis has spent his career in the banking and financial services sector as a senior executive, strategy consultant, author, analyst and teacher.  He is a graduate (magna cum laude) of Amherst College and of the Harvard Business School.

His 20-year career in international banking commenced at JPMorgan, where he managed a Paris-based research and M & A unit.  For Bankers Trust Company, he ran a venture capital subsidiary in New York and later the bank’s European businesses from a London headquarters.  Subsequently he set up and managed for six years the London-based merchant banking subsidiary of First International Bancshares of Dallas, Texas.

Since establishing Davis International Banking Consultants (DIBC) in 1980, he has managed several hundred strategy assignments for commercial and investment banks, global fund managers, insurers and other financial institutions.  In 1993, he headed a DIBC team which advised the Norwegian Ministry of Finance on the restructuring of the country’s banking sector during the Nordic banking crisis.  In addition, he and his colleagues have prepared over 60 research reports on the financial sector for publication by investment banks and other clients.

Mr. Davis is also the author of 14 books and reports published on best practice in the financial services sector.

Contents

Preface 1

Chapter 1: Andy’s introduction
Hello
Why am I writing this book?
The monkey story
Finance, personal responsibility and blame
Emotions and money
How to make £100 into £1,000
R is for relief
Profits, losses and big bonuses
Sometimes predictions of the future are so spooky
Are we getting financially lazy?
A quick history lesson
It’s officially hot
Shopping and money
One very final point
The fiscally responsible parent
How I’ve organised this book
Don’t eat the marshmallow yet

Chapter 2: The condensed banker
The basics
What is a bank?
What is a bank account?
Why would you have a bank account?
Why doesn’t everyone have a bank account?
So why isn’t everyone banked?
Products
Fair, or not?
Do we take cards for granted?
There are as many gimmicks in the car world as there are in financial services
Q is for quality – easy to say, much more difficult to deliver
What we fail to teach our kids about money – voices from the City and finance

Chapter 3: Budgeting
Budgeting
Personal financial management programmes
All you ever need to know about budgeting
Basics
For advanced users
For even more advanced users
Ultra-advanced users

Chapter 4: Time, gentlemen, please
Compound interest
Inflation
Andy fights inflation
Some thoughts on the housing market
The facts about the UK housing market
To fix or not to fix, that is the question
Buy-to-let mortgage regulation – good or bad?
The housing market and first-time buyers
E is for
F is for the first-time buyers... again
One last word
Bar stool economics

Chapter 5: What happens when it all goes wrong?
D is for
Trouble meeting the mortgage?
Who can we trust?
Get personal with customer services
Bad options
Your credit rating
Guarding against online fraud
G is for Google Checkout
@CoffeeCurls
Dealing with debt – how I went from owing £36k to being back in the black
Debts
Learn from your mistakes
The want generation

Chapter 6: Is the 19th century the future?
Does mutuality still have meaning?
The United States
Japan
Kenya
Mobile money
N is for new money
And finally, Facebook
What we fail to teach our kids about money – comments from outside the UK

Chapter 7: Closing words, the bigger picture
Some sad truths
Dimension 4: family and peer relationships
Dimension 5: behaviours and risks
Dimension 6: subjective wellbeing
A spark of optimism
A modern paradox: why children need to experience failure
Prevention is better than cure

 

About Andy Golding

Andy Golding is a self-confessed addict of all things financial. He has over 25 years experience of working in the financial services industry and in that time has been a banker, a mortgage lender and a CEO of two mutuals.

 

Having spent time working with young enterprise groups and, for that matter, his own kids, he realised that the level of financial literacy among young people, and probably older people too ,was low. He believes that too many people are controlled by money and the organisations that provide financial products, but with a bit of knowledge and some basic rules, really thinks that people can take back that control and have a better relationship with the thing that can cause so much stress and worry.

 

About 'the Crowd'

'The Crowd' are the group of contributors who generously offered their stories, experience and opinions in support of the goal of wider financial literacy, particularly among the young. They are:

 

@CoffeeCurls
Adam Bennett
Ali Gill
Barry Hughes
Becky McCray
Bikash Matthur
Bob Ford
Chris Brooks
Claire Logie
Dave Birch
Bob Ford
Ian Holmes
Jacqui Taylor
Jagjit Chadha
Nersen Pillay
Naomi Stanford
Paul Lucraft
Robin Hesketh
Rupert Lee Browne
Sandy Vaci
Soni Putnis
Steven Spierer
Trevor Lee
Walter Marlowe
William Keegan

 

Description

Do you use a mobile phone?
Do you use credit cards or debit cards?

If so, you need to know that a revolution has started that will impact you sooner than you think, and this book will tell you  – the consumer – what you need to know now.

The reality is that a torrent of advertising and promotional marketing is heading your way to try to convince you to use new services on your SmartPhone at retail stores. Perhaps you have already seen some, or signed up for some.

These new services may seem novel, but this revolution is far more significant than that.  At stake is the future of the credit card system that moves over $11 trillion per year from consumers to retailers. Some of the largest companies in the world think this system should change, starting now. Other, equally large companies think everything should stay the same.

These two sides are already lining up on a battlefield, with you standing in the middle. And, if you are not careful, the first casualty will be your privacy.

Find out what is happening, how it may affect you, and what you can do about it. Read The SmartPhone Wallet – Understanding the Disruption Ahead.

 

 Click here for full contents

 

 Click here to download FREE SAMPLE CHAPTER

 

Contents

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Author

About David Schropfer

David W. Schropfer is an international business leader with two decades of management experience ranging from telecommunications to payment systems. Mr. Schropfer is a Partner with the internationally recognized consulting firm, The Luciano Group, where he leads its Mobile Payment and Mobile Commerce practice. Earlier in his career, he was Senior Vice President with IDT Telecom, and a Business Development Officer for Capital One. He has served on the Board of Directors for multiple companies, and is a frequent speaker at industry conferences and trade shows. After graduating Boston College, David earned an Executive MBA from the University of Miami.

 

 

Reviews

 

''You’re not a Computer Science Engineer or a payments expert but just like everyone else you have a mobile phone. You’re not a first adopter but you’re intrigued with your phone’s capabilities and you would not mind to use it for more than a phone call or text. You’re bombarded with information about mobile financial services that either expect you to know it all or treat you like a child. In other words, if you are like most of us then The SmartPhone Wallet is a book for you. The book will take you through the basics of payments, mobile networks, the intersection where they meet, and what this convergence can mean to you.'' Mirek Kula, Co-Founder and CEO, REC-ORDER, LLC

 

"I recommend David Schropfer's "The Smartphone Wallet". This book is fundamentally sound and it is easy to read. David's practical view on next generation banking / smartphones is innovating and realistic. The book starts with describing today's banking / consumer function and the innovating technological movement on the horizon. Individuals involved in wireless banking and or any technology background interest should read this book." Patrick Gartner, Director of PM and IT integration, Activu Corporation

 

 

"The Smartphone Wallet was a great read.  The writing style made it an easy read.  The content and perspective gave some very valuable insight into future trends of mobile payments.  I can't wait for the next book in this series."  Meg Collin, Global Telecom Procurement and Sourcing Expert

 

 

 

 

 

 

 

 

Description

But this is not just another book about the financial crisis.  This book is about the outcome. It tracks the markets from the day that Lehman Brothers collapsed, and before with Northern Rock, through the reactions of policymakers, politicians, regulators and markets.  It shows where the weaknesses were in hindsight, and where the pitfalls may be in foresight.  It tries to give the reader a chance to absorb and understand the key movements that created the crisis, and the explanation of why banks, bonuses and bosses are still at the trough feeding and greeding their way through the issues faced.

 

The Complete Banker series of books is based upon Chris Skinner’s influential blog.  The series provides the reader with all they need to know about banking and is split into key themes covering retail, commercial and investment banking and the way they are being changed by economics, politics, technology and society. For the amateur and the expert, the knowledgeable and those seeking knowledge, the economist and the politician, the banker and the banked, the Complete Banker series provides you with the truth about the banking.  Not just the truth, the whole truth and nothing but the truth ... but the Complete Truth.

 

 

Contents

 

 

Key topics:

Chapter 1         Anatomy of the crisis

Chapter 2        Governments in action

Chapter 3        Regulators’ reaction

Chapter 4        Banks’ inaction?

Chapter 5        Too big to fail?

Chapter 6        The bonus issue

Chapter 7        Solutions to the crisis – a personal view

 

Reviews

Praise for Chris Skinner

“Chris has both the intellectual acumen as well as the drive and dedication to his industry which is so sadly rare in the business world today.” Steve Edwards MBE, Head of Fraud,  eBay Europe

 

“Chris is uniquely skilled in articulately painting a clear picture of the dynamics impacting our future.”  Deborah L. Bianucci, President & CEO, BAI, USA

 

“Chris successfully captures the pulse of the financial services industry, not from a European or American, but from a truly global perspective.” Emmanuel Daniel, Founder, The Asian Banker, Asia

Author

About Chris Skinner

Chris has been providing independent, expert commentary on the key developments in banking for over a decade in his role as Chief Executive of Balatro and Chairman of the Financial Services Club.  He is now perhaps best known for his daily blog at www.thefinanser.com, and his writing for other media, such as The Banker magazine since 2004.  He is also a key commentator on banking for prime time news channels including the BBC, Sky and Bloomberg.  Prior to creating his independent entities, Chris had key roles at management and board levels covering insurance, retail and investment banking across a range of consulting and technology firms.

Description

If you think that money is important (and who doesn’t), then so is the ability to process money – in other words, payments. And that’s what this book is all about: from processing payments over the internet and on your mobile telephone; to payments via cards, cash and cheques; to massive international payments operations and the challenges faced by banks in these areas, including the continual vigilance needed to avoid money launderers and terrorists.
The Complete Banker series of books is based upon Chris Skinner’s influential blog.  The series provides the reader with all they need to know about banking and is split into key themes covering retail, commercial and investment banking and the way they are being changed by economics, politics, technology and society. For the amateur and the expert, the knowledgeable and those seeking knowledge, the economist and the politician, the banker and the banked, the Complete Banker series provides you with the truth about the banking.  Not just the truth, the whole truth and nothing but the truth ... but the Complete Truth.

Contents

Preface

Chapter 1    Payments innovation: the new frontiers
Introduction
Payments in the cloud (2009)
Innovation in payments (Part 1) (2009)
Innovation in payments (Part 2) (2009)
Payment innovation (Part 3) (2009)
A real-time global pulse (2009)
Fragmented payments in a connected world (2008)
Payments: the next generation (2006)

Chapter 2    Mobile payments: a vision of the future
Introduction
Mobile payments: the battleground of the future (2009)
Mobile money numbers (2009)
More about mobile money (2009)
First O2-RBS Visa Cards, now Nokia Obopay Money (2009)
Mobile payments in China (2009)
Mobile payment provider 'infuriates' banks (2009)
M-billing: a killer app? (2008)

Chapter 3    The Paypal story
Introduction
Why PayPal et al REALLY matter! (2010)
Why PayPal et al don’t matter (2010)
PayPal does have competition (2009)
PayPal not so pally (2009)
PayPal’s 10th anniversary (2008)
Celebrating PayPal’s Centenary (2007)
PayPal’s future

Chapter 4    Remittances: where the money’s at
Introduction
Remittances and the need for financial inclusion (2010)
More on remittances (2010)
Escape with Phones4U (2009)
More on remittances (2009)
A remittance strategy scribble (2009)
Remittances numbers (2009)

Chapter 5    Regulation: from SEPA to PSD, and beyond
Introduction
What happens to SEPA, Chi-x etc if the euro fails? (2010)
A new PSD-approved Payments Institution starts business (2010)
This house believes that SEPA does matter ... or does it? (2010)
Are you taking the PSD? (2010)
40 days of the PSD (2009)
Full amount principle and charging options
More on the SEPA DD launch (2009)
Today is SEPA day, wa-hey! (2009)
PSD and SEPA research results (2009)
The total view on SEPA and the PSD (2009)
Quantifying people's views on SEPA (2009)
The danger that SEPA may not happen (2009)
SEPA and the PSD aren't broken ... just irrelevant (2009)
So what is the cost benefit of SEPA? (2007)

Chapter 6    Fraud and security matters
Introduction
Why identity management is so complicated (2010)
Chip & PIN is broken (2010)
Eye, eye – the future of customer identity? (2010)
Forget payments, think value (2009)
We know who you are ... or do we? (2009)
How many cards are left in chip & PIN terminals every day? (2008)
This house believes our authentication and identification methods work (2008)
PINs and passwords: useful or useless? (2008)
Chip and PIN five years from now (2009)

Reviews

Praise for Chris Skinner

“Chris has both the intellectual acumen as well as the drive and dedication to his industry which is so sadly rare in the business world today.” Steve Edwards MBE, Head of Fraud,  eBay Europe

 

“Chris is uniquely skilled in articulately painting a clear picture of the dynamics impacting our future.”  Deborah L. Bianucci, President & CEO, BAI, USA

 

“Chris successfully captures the pulse of the financial services industry, not from a European or American, but from a truly global perspective.” Emmanuel Daniel, Founder, The Asian Banker, Asia

Author

About Chris Skinner

Chris has been providing independent, expert commentary on the key developments in banking for over a decade in his role as Chief Executive of Balatro and Chairman of the Financial Services Club.  He is now perhaps best known for his daily blog at www.thefinanser.com, and his writing for other media, such as The Banker magazine since 2004.  He is also a key commentator on banking for prime time news channels including the BBC, Sky and Bloomberg.  Prior to creating his independent entities, Chris had key roles at management and board levels covering insurance, retail and investment banking across a range of consulting and technology firms.

Description

Most banks are anti-social. They don’t engage with customers to ‘delight’ or ‘exceed their expectations’, mainly because customers don’t expect anything different. That doesn’t mean it cannot change. The social media revolution is rapidly turning this planet on its head. So, if you want to work out how to be a social bank and connect with your targeted communities of customers, this is a short guide as to how to do it.

 

The Complete Banker series of books is based upon Chris Skinner’s influential blog.  The series provides the reader with all they need to know about banking and is split into key themes covering retail, commercial and investment banking and the way they are being changed by economics, politics, technology and society. For the amateur and the expert, the knowledgeable and those seeking knowledge, the economist and the politician, the banker and the banked, the Complete Banker series provides you with the truth about the banking.  Not just the truth, the whole truth and nothing but the truth ... but the Complete Truth.

 

 

Contents

 

 

Key topics:

Chapter 1          The future of banking is social

Chapter 2          Social media’s challenges

Chapter 3          Twitter, Facebook and other social networks

Chapter 4          Social finance

Chapter 5          Social money and virtual worlds

Chapter 6          Social media in practice

 

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Reviews

Praise for Chris Skinner

“Chris has both the intellectual acumen as well as the drive and dedication to his industry which is so sadly rare in the business world today.” Steve Edwards MBE, Head of Fraud,  eBay Europe

 

“Chris is uniquely skilled in articulately painting a clear picture of the dynamics impacting our future.”  Deborah L. Bianucci, President & CEO, BAI, USA

 

“Chris successfully captures the pulse of the financial services industry, not from a European or American, but from a truly global perspective.” Emmanuel Daniel, Founder, The Asian Banker, Asia

Author

About Chris Skinner

Chris has been providing independent, expert commentary on the key developments in banking for over a decade in his role as Chief Executive of Balatro and Chairman of the Financial Services Club.  He is now perhaps best known for his daily blog at www.thefinanser.com, and his writing for other media, such as The Banker magazine since 2004.  He is also a key commentator on banking for prime time news channels including the BBC, Sky and Bloomberg.  Prior to creating his independent entities, Chris had key roles at management and board levels covering insurance, retail and investment banking across a range of consulting and technology firms.

Description

The future is uncertain.  However, if you could identify the most critical things likely to occur in the future today, then you could capitalise commercially upon the opportunities presented.  So that’s what this book is all about: what are the most critical things that will occur in banking tomorrow that, if you invest in them today, mean that you can make your fortune. A simple enough premise, and one that I hold to be very true. So, if you want to work out how to the most successful bank you can be during the next decade, then this is the book for you.

 

The Complete Banker series of books is based upon Chris Skinner’s influential blog.  The series provides the reader with all they need to know about banking and is split into key themes covering retail, commercial and investment banking and the way they are being changed by economics, politics, technology and society. For the amateur and the expert, the knowledgeable and those seeking knowledge, the economist and the politician, the banker and the banked, the Complete Banker series provides you with the truth about the banking.  Not just the truth, the whole truth and nothing but the truth ... but the Complete Truth.

 

 

Contents

 

 

Key topics:

Chapter 1          Facing the future: bank strategy in uncertain times

Chapter 2        The new economics of banking

Chapter 3          Banking technology

Chapter 4        The great channel debate

Chapter 5          The mobile future of banking

Chapter 6          Changing customer relationships

Chapter 7          Marketing in the new media age

Chapter 8        Long-term thinking

 

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Reviews

Praise for Chris Skinner

“Chris has both the intellectual acumen as well as the drive and dedication to his industry which is so sadly rare in the business world today.” Steve Edwards MBE, Head of Fraud,  eBay Europe

 

“Chris is uniquely skilled in articulately painting a clear picture of the dynamics impacting our future.”  Deborah L. Bianucci, President & CEO, BAI, USA

 

“Chris successfully captures the pulse of the financial services industry, not from a European or American, but from a truly global perspective.” Emmanuel Daniel, Founder, The Asian Banker, Asia

Author

About Chris Skinner

Chris has been providing independent, expert commentary on the key developments in banking for over a decade in his role as Chief Executive of Balatro and Chairman of the Financial Services Club.  He is now perhaps best known for his daily blog at www.thefinanser.com, and his writing for other media, such as The Banker magazine since 2004.  He is also a key commentator on banking for prime time news channels including the BBC, Sky and Bloomberg.  Prior to creating his independent entities, Chris had key roles at management and board levels covering insurance, retail and investment banking across a range of consulting and technology firms.

Description

Are the investment banks a dangerously out of control threat to the global financial system, or do they bring innovation and liquidity to the market and alpha returns to their investors? Whichever your view, the investment world is changing and you need to know which are the key trends to track. This book reviews all of these areas and more. So, if you want to understand capital markets and investment banking and just why they get those big bonuses, this is a short guide for you.

 

The Complete Banker series of books is based upon Chris Skinner’s influential blog.  The series provides the reader with all they need to know about banking and is split into key themes covering retail, commercial and investment banking and the way they are being changed by economics, politics, technology and society. For the amateur and the expert, the knowledgeable and those seeking knowledge, the economist and the politician, the banker and the banked, the Complete Banker series provides you with the truth about the banking.  Not just the truth, the whole truth and nothing but the truth ... but the Complete Truth.

 

 

Contents

 

 

Key topics:

Chapter 1          The future for investment and trading

Chapter 2          The impact of MiFID and other regulations

Chapter 3          The liquidity debate

Chapter 4        The trading infrastructure: latency, light speed and dark pools

Chapter 5          New trading venues and incumbent exchanges

Chapter 6          Clearing and settlement

 

Click here to download full contents in PDF format:  Not Every Bank is Goldman Sachs Contents.pdf

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Reviews

Praise for Chris Skinner

“Chris has both the intellectual acumen as well as the drive and dedication to his industry which is so sadly rare in the business world today.” Steve Edwards MBE, Head of Fraud,  eBay Europe

 

“Chris is uniquely skilled in articulately painting a clear picture of the dynamics impacting our future.”  Deborah L. Bianucci, President & CEO, BAI, USA

 

“Chris successfully captures the pulse of the financial services industry, not from a European or American, but from a truly global perspective.” Emmanuel Daniel, Founder, The Asian Banker, Asia

Author

About Chris Skinner

Chris has been providing independent, expert commentary on the key developments in banking for over a decade in his role as Chief Executive of Balatro and Chairman of the Financial Services Club.  He is now perhaps best known for his daily blog at www.thefinanser.com, and his writing for other media, such as The Banker magazine since 2004.  He is also a key commentator on banking for prime time news channels including the BBC, Sky and Bloomberg.  Prior to creating his independent entities, Chris had key roles at management and board levels covering insurance, retail and investment banking across a range of consulting and technology firms.

Contents

Chapter 1    Introduction
The creation of the cowardly state
What the cowardly state represents
The need for a Courageous State
Where markets go wrong
The cappuccino economy
Why this book needed to be written
A new economic model
The way to achieve our potential
An approach to poverty
The effect of money on well-being
The right of the state to intervene
Finding solutions to the challenges
Creating a state of hope

Part 1    Why we need the state

Chapter 2    The crisis of confidence in the state
The development of the cowardly state
The consequences of the cowardly state
How did we get a cowardly state?

Chapter 3    The economic myths
The fundamental flaws in neoliberal thinking
Putting this in context – or why we’re in a mess right now
Some excuses and some other flaws
The consequences

Chapter 4    The myth of the market
The role of the state
State regulation
The state as market overseer
The state as service provider
Accounting for externalities
The Courageous State and society

Chapter 5    The cappuccino economy
The ingredients
The correct mix
The final component
Assembling the mix
Getting the most out of the final product

Chapter 6  Where only the state may venture
Where the private sector does not always work best
Why markets are inefficient in practice
Why we can’t afford markets in essential services
Where the markets don’t meet needs
The pensions dilemma
Where the market failed
Market constraints
The need for real capital investment
The custodian of hope

Chapter 7  Financing government activity
The right to tax
The power of taxation
Redistribution of wealth

Part 2 The theory of the Courageous State

Chapter 8 A new economic model
The existing model
The basis for a new model
The economic dilemma
Recognising potential
Defining potential
Making sense of these ideas
Putting potential on the map
The limit to potential
Our different needs
Absolute poverty
Relative poverty
Achievement
Understanding the area of achievement
Working within our limits

Chapter 9  The problem is caused by other people
How to achieve our potential
Choosing what to achieve

Chapter 10 Cash ain’t king
The value of money
Money and the real economy
Over-consumption relative to capacity
The influence of advertising
Corporate motivation
Borrowing to fund current consumption
The consequences of borrowing
Borrowing for asset acquisition
The lender’s viewpoint
What happens when cash is king
Types of financial flow
The consequences of the cash relationships in society

Chapter 11 Delivering the Courageous State
Extremes of wealth and democracy are incompatible
The goal of social democratic government
So how is the courageous state delivered?
The role of tax in the economy
Empathy and redistribution
Tax and redistribution
The five Rs of taxation
Fiscal policy – and why it’s so much more useful than monetary policy
The other tools of macroeconomic management
The attributes of a good tax system
Capital controls

Chapter 12 – Summary of Part 2 arguments

Part 3

Chapter 13  Identifying the Courageous State
Recognising the Courageous State

Chapter 14 Constraining the world of feral finance
Create Financial Transaction Taxes
A Spahn tax
A ban on short selling
Loan of shares
Splitting banks
State ownership of the payment platforms used by clearing banks
Taxing banks
Stopping tax relief on the excess incomes of those speculating
Taming tax havens
Capital controls
Tax on investment income
Equal taxation of capital gains
Close the tax loopholes that encourage excess saving
Restrictions on buy-to-let speculation
Treasury Deposit Receipts

Chapter 15  Rebuilding the role of the state
Close the tax gap
Regulate business properly
Stop privatisation of natural monopolies
Create country-by-country reporting so multinational corporations are accountable
Only procure from companies with acceptable business policies
Create a Green Investment Bank
Funding the new economy

Chapter 16    Building a balanced, sustainable economy
Progressive taxation
Simpler taxation
Wealth taxes
Redistribution
Tax and interest
Taxes on advertising
Ban on advertising to children
Multiple rates of VAT
Promote repair and recycling
Increasing the minimum wage
Protecting union rights
Industry wages boards
Apprenticeships
Industrial training boards
Extra tax relief for employing people
Reorganising the structure of the workplace

Chapter 17    Supporting the broader goals of the Courageous State
Reforming education
Higher education should be free
Lifelong learning
Maximum working hours
Local democracy
Social housing
Health care
Pensions
Care for elderly
Youth services
Relocating work
 
Chapter 18    Cooperating internationally
Closing down tax havens    
Country-by-country reporting
International tax agreements – unitary taxation
Fair trade
Capital controls
Peace keeping – not war

Reviews

“Since the 2008 crash conventional economists have run out of ideas. But Richard Murphy abounds with them. He writes with electric clarity about what went wrong and what could be done to put things right. He is a new economic thinker, no mere theoretician but guided by a sharp and practical accountant's eye. He knows where the money is hidden, who has it and how to release it. Murphy is the closest thing to a one-man think tank and he is as courageous as he says our politicians should be." Polly Toynbee, The Guardian newspaper columnist and economics commentator

"Richard Murphy is a rare voice of sanity at a time of economic madness. We desperately need an alternative to austerity - and with a few more Murphys, we'll get it." Owen Jones, author of Chavs: the Demonisation of the Working Class

"Richard Murphy is an incendiary device thrown into the heart of the economic policy establishment. The Courageous State explodes off the page with a blistering critique of the status quo, a startling new take on economic theory and a set of recommendations which could improve our lives in very short order if only our politicians had the conviction to apply them." Howard Reed, founder of Landman Ecomomics, fomerly Chief Economist at the Instutute for Public Policy Research and the Institute of Fiscal Studies

"Rich individuals, corporations, well-funded special interest groups and much of Fleet Street is on one (the wrong) side and then there is Richard Murphy..the heroic figure. Tireless and forensic, driven by an admirable moral fervour, I take my hat off to a campaigner with Duracell batteries." Kevin Maguire, Sunday Mirror

About Richard Murphy

Richard Murphy is a chartered accountant and economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. Keven Maguire, associate editor of the Daily Mirror has said:

"We’ve got to take sides on tax. Rich individuals, corporations, well-funded special interest groups and much of Fleet Street is on one (the wrong) side and then there is Richard Murphy plus a few others, including yours truly. But it is Murphy who is the heroic figure. Tireless and forensic, driven by an admirable moral fervour, I take my hat off to a campaigner with Duracell batteries."

A graduate in Economics and Accountancy from Southampton University he was articled to Peat Marwick Mitchell & Co in London. He subsequently founded a firm of accountants in London which he and his partners sold in 2000. In parallel with his practice career Richard was chairman, chief executive or finance director of more than 10 SMEs.

Since 2003 Richard has been increasingly involved in economic and taxation policy issues. He was a founder of the Tax Justice Network and is director of Tax Research LLP which undertakes work on taxation policy, advocacy and research for aid agencies, unions, NGOs and others in the UK and abroad.

Richard Murphy has been responsible for introducing many new issues into debates on tax policy. In particular he created the entirely new accounting concept of Country-by-Country reporting that is now being considered for adoption by the European Union, Organisation for Economic Cooperation and Development, International Accounting Standards Board and others. Country-by-Country reporting  requires a multinational company to publish a proper loss account each and every jurisdiction in which it trades, without exception,  and is seen as as a mechanism for holding multinational corporations to account for their activities in developing countries, the extractive industries and tax havens.  It will also assist the monitoring of  corporate transfer mispricing  and is believed to cost developing countries tens and maybe hundreds of billions of dollars a year as well as corporate tax and governance risk  in multinational corporations.

As principal researcher of the Tax Justice Network from its inception until 2009 Richard helped put the tax haven issue on the international agenda as principal author of such works as ‘Tax Us If You Can’, ‘Closing the Floodgates’, ‘Creating Turmoil’ and the extensive analysis underpinning TJN’s Secrecy Jurisdictions website and its Financial Secrecy Index.  During the course of this work he defined  what a secrecy jurisdiction is and this term has as a result been widely used in  international dialogue on  tackling tax  abuse through  what were previously known as tax havens.  The practical consequences of this work can be seen in changes imposed upon the tax systems of locations such as Jersey, Guernsey and the Isle of Man, all resulting from his exposure of their failure to comply with international requirements.

Richard’s work for the TUC, PCS and others on the tax gap in the United Kingdom has also put this issue on the UK tax agenda.  It was not part of taxation debate until the TUC published his report ‘The Missing Billions’ in 2008. It is now the main priority of H M Revenue & Customs’ business plan.

Richard is also a principal author of many of the proposals made by the Green New Deal group in the UK, which has had a significant influence on political debate in the UK and beyond. He has written extensively on tackling the UK’s deficit without imposing cuts on the most vulnerable in society.

Richard has written widely, and blogs frequently. He has appeared in many radio and television documentaries on taxation issues.  He has also presented written and oral evidence to select committee committees of the House of Commons and House of Lords.

Richard has been a visiting fellow at Portsmouth University Business School, the Centre for Global Political Economy at the University of Sussex and at the Tax Research Institute, University of Nottingham.

Richard was voted the seventh most influential left wing thinker in 2010/11 in a Left Foot Forward poll, making him the highest ranked UK based economist on the list.

Contents

Introduction
The TANSTAAFL principle
What you will find in this book
A note on style

Chapter 1
WHAT ECOLOGICAL ECONOMICS IS ALL ABOUT
An Awareness of Threat
The Spaceship Earth
Ideology, Ecology, and the TANSTAAFL Principle

Chapter 1 Commentary
What has changed
The cost-benefit approach to environmental economics
What has not changed
The critique of productivism

Chapter 2
PRINCIPLES OF ECONOMICS IN ONE EASY LESSON
Marginalism and the Law of Supply and Demand
Efficiency and the Equimarginal Principle
The Invisible Hand

Chapter 2 Commentary
What has changed
What has not changed

Chapter 3
POLLUTION AND THE PRICE SYSTEM
The Invisible Hand Slips Up
How to Make Pollution Go Away

Chapter 3 Commentary
What has changed
Climate change moves to center stage
Experience with pay-for-pollution
What has not changed
Opposition from the right
Opposition from the left

Chapter 4
THE POLITICAL ECONOMY OF ECOLOGICAL ACTION
The Efficiency Paradox
Who Should Pay for the Cleanup?
Some Problems of Organizing Collective Action
Democracy and Collective Economic Action

Chapter 4 Commentary
What has changed
What has not changed

Chapter 5
COPING WITH THE POPULATION EXPLOSION
What Are We in For?
The Not-So-Simple Arithmetic of Population Growth
Is There an Optimal Population Size?

Chapter 5 Commentary
What has changed
What has not changed

Chapter 6
ENVIRONMENTAL PROBLEMS AND ECONOMIC DEVELOPMENT
Are We Exploiting the Third World?
Population, Loaves, and Fishes

Chapter 6 Commentary
What has changed
What has not changed

Chapter 7
PRESERVING THE WILDERNESS – PUBLIC INTEREST OR SPECIAL INTEREST?
On Good Economics and Good Government
Conservation and the Public Interest
A Positive Program for Preserving the Wilderness

Chapter 7 Commentary
What has changed
What has not changed

Chapter 8
TOWARD AN ECOLOGICALLY VIABLE ECONOMY

Chapter 8 Commentary
Choice and responsibility
The bottom line

Appendix
SCIENCE, PUBLIC POLICY, AND GLOBAL WARMING: RETHINKING THE MARKET-LIBERAL POSITION
Hayek on Liberalism, Conservatism, and Science
Climate Change and Property Rights: A Lockean Perspective
Applying the Lockean Framework
The Significance of Scientific Uncertainty
Conclusion

LIST OF TABLES AND FIGURES
Table 4.1: Hypothetical cost schedule for fume reduction
Figure 1.1: The throughput economy
Figure 1.2: The spaceship earth
Figure 3.1: Map
Figure 5.1: Hypothetical population growth curves
Figure 6.1: The demographic transition
Figure 7.1: Hypothetical distribution of the population with respect to their interest in wilderness preservation
Figure 7.2: Best land use over time
Figure 8.1: Detailed view of the spaceship earth

 

Reviews

"A model of clear thinking and fun writing. Enjoy!" Professor Bryan Caplan, George Mason University
 

 

Author

 

Professor Edwin G. Dolan

Edwin G. Dolan is an economist and educator with a Ph.D. from Yale University. Early in his career, he was a member of the economics faculty at Dartmouth College, the University of Chicago, and George Mason University. From 1990 to 2001, he taught in Moscow, Russia, where he and his wife founded the American Institute of Business and Economics (AIBEc), an independent, not-for-profit MBA program. Since 2001, he has taught at several universities in Europe, including Central European University in Budapest, the University of Economics in Prague, and the Stockholm School of Economics in Riga, where he has an ongoing annual visiting appointment. During a break in his teaching career, he worked in Washington, D.C. as an economist for the Antitrust Division of the Department of Justice and as a regulatory analyst for the Interstate Commerce Commission. There, he contributed to a successful drive for deregulation of  trucking and railroads, which reduced highway congestion and saved millions of gallons of fuel annually. When not lecturing abroad, he makes his home in Washington’s San Juan Islands.

 

Description

The end of the euro would be the end of Europe – only tough collective action from eurozone leaders can prevent financial meltdown. But do political leaders fully realise the enormous scale of what is required and the frightening consequence of failure, and that intense financial and economic pressures are forcing far-reaching political changes in the eurozone? This searching and timely new study examines the driving forces and potential outcomes of the eurozone debt crisis.

The eurozone debt crisis looks likely to take a dramatic turn for the worse – raising the intensity of the search for enduring solutions as the markets now price six states as ‘risky’.

The eurozone leaders have collectively affirmed “that they stand ready to do whatever is required to ensure the stability of the euro area as a whole. The euro is and will remain a central part of European integration.” Chancellor Merkel of Germany and President Sarkozy of France also sent New Year messages to their citizens that cast the issue in terms that were both stark and historic. It is increasingly clear that the eurozone will take tough collective action on the economic governance of its members. However, in The EU Fiscal Crisis: Forcing Eurozone Political Union in 2011?, Graham Bishop – a leading technical analyst of economic and structural developments in the financial markets of Europe – argues that the eurozone leaders have yet to truly grasp the huge challenges they face and the implications of failure. Furthermore, intense pressures from the interactions of financial markets, economics and politics are forcing the creation of a genuine eurozone political union.

The eurozone now faces several options for its future actions. Three scenarios are considered: an inflationary debt spiral; default; or the emergence of a collectively strong, federal eurozone. Graham convincingly argues that the visionary approach of the latter option is the only way forward for Europe.  In this scenario, the eurozone will have emerged from the financial crisis as a political federation – loose in some respects, but with tightly centralised economic governance at its heart. The proven commitment to fiscal probity may even make it attractive relative to alternative investments around the world. The conclusion is that, if the eurozone does indeed do “whatever is required”, then it will survive.

Contents

Preface

Introduction
Overview
Forcing eurozone political union: the EU financial crisis

Part I: The development of the single market in financial services in 2010 and the direction for 2011

Introduction
Financial regulation: completing the reform
The single market for capital and financial services
SEPA (Single Euro Payments Area)
Consumer protection
Accounting standards
The G20 and reform of financial regulations: the role of the EU
Declaration of the Summit on Financial Markets and the World Economy
Financial sector reforms
Conclusions on the impact of the single market

Part II: Integrating European economic governance: crisis as the driver in 2010 to providing a stronger structure in 2011

Background
The political response to the current crisis
Implementing the de Larosière proposals for supervisory reform: ensnared in both a constitutional and fiscal crisis?
May–October 2010: the European fiscal crisis erupts
Economic co-ordination
October–December 2010: the fiscal crisis deepens – becoming overtly a eurozone issue
Issues for holders of government bonds
Political evolution or revolution: collective decisions by the eurozone?
After the December 17 Summit: still waiting for the real decisions
Statement by the Heads of State or Government of the euro area and the EU institutions


Part III: Why financial integration will force political integration in 2011 and later

European government bonds in 2011
Economic governance of the eurozone
Proposal for a Regulation on enforcement measures to correct excessive macroeconomic imbalances in the Euro Area
A Regulation on enforcement measures to correct excessive macroeconomic imbalances in the Euro Area
How to make sanctions effective
Proposed Regulation amendments
The Role of the European Systemic Risk Board (ESRB)
European Financial Stability Fund (EFSF)
Moody’s rating rationale
Timetable for first half of 2011
Three scenarios for the future of the eurozone
Scenario I: inflationary debt spiral
Scenario II: default
Scenario III: a collectively strong, federal ‘Eurozone’ emerges

Appendix I: Market Discipline on Eurozone Public Debt – amend SGP Regulation and CRD IV

Appendix II: The Graham Bishop papers

Reviews

"In this important book, Graham Bishop sets out many of the key challenges and choices facing policy makers as we move towards a system of European economic governance. It provides a valuable and thought-provoking contribution to one of the most important debates on public policy in Europe today." Jerzy Buzek, President of the European Parliament

“Graham Bishop explains why failure of the Euro is not an option and why repairing flaws in a currency that serves 330 million people requires bold steps. Essential reading for Eurozone Finance Ministers!”
Sharon Bowles MEP – Chair of the Economic and Monetary Affairs Committee of the European Parliament

'Many British commentators make assertions about the Eurozone. Graham Bishop, by contrast, brings to the subject economic expertise, rigorous analysis and political insight. His book should bring the issue roaring back to the front burner of British policy making."
Sir Stephen Wall (UK Permanent Representative to the EU 1995/2000 and EU adviser to the Prime Minister 2000/04)

“The reaction of the EU heads of government to the euro crisis has been late, short term and inadequate. What is needed is a clear-headed convergence plan that installs proper EU economic government. Graham Bishop brings his great experience of EMU to plot the way forward and finds solutions which are financially stabilising and democratically acceptable." Andrew Duff MEP – Constitutional Affairs spokesman, ALDE

“Europe’s leaders are still thrashing about looking for a solution to the euro crisis. But Graham Bishop’s careful analysis points out that their response has already taken them quite a long way down the road to greater political integration. They must now recognise that reality and move decisively. ” Peter Sutherland, European Commissioner 1985/89, former Director General of GATT and Chairman of Goldman Sachs International

"I welcome Graham Bishop's book and his proposals. We should use the crisis as a chance to do what is necessary to advance Europe's position in the global arena. If we want to be seen as a player in the world that counts we have to deepen integration and make sure that the Euro as the most important political project succeeds. Europe is at a critical crossroad: not moving ahead means regression, not defending the status quo." Dr. Wolf Klinz, MEP -  Chairman of the Special Committee on the Financial, Economic and Social Crisis (CRIS) of the European Parliament

Author

Graham Bishop graduated from Sheffield University in 1972 with a degree in Jurisprudence. His publications, articles and speeches on the deregulation of Europe's financial markets provide an informed commentary from the practical perspective of a market participant, but with a political grounding.  

His City career encompasses Phillips & Drew, S G Warburg, and Salomon Brothers/Citigroup.  He founded GrahamBishop.com in 2000 to bring directly to his clients the insights that flow from his standing as a leading technical analyst of economic and structural developments in the financial markets of Europe, providing an informed commentary from the practical perspective of a market participant, but with a political grounding. He has worked extensively with both European and UK political authorities, including the European Commission, where he was a member of the Consultative Group on the Impact of the Euro on Capital Markets (the Giovaninni Group). He was also a member of the Commission's Strategy Group on Financial Services (1998 – creating the Financial Services Action Plan) and the Committee of Independent Experts on the preparation of the changeover to the single currency (1994–95). He was nominated by the European Parliament to be one of its two members of the first Inter-Institutional Monitoring Group, and was Rapporteur for the spring 2003 and November 2004 Reports. He was elected to the Board of the Kangaroo Group in November, 2005 and re-elected in 2007 and 2009.

In the UK’s House of Commons, Mr Bishop was a Special Advisor to the Treasury Select Committee in its examination in 2003 of the implications for United Kingdom membership of the Single Currency. He advised the Treasury Committee on the corresponding reports in 1998 and 1996. He was also a Specialist Adviser to the House of Lords Select Committee on the European Union in its 2003 inquiry into The Barriers to Competition in the Internal Market for Financial Services. He is a Council Member of the Federal Trust and a member of the European League for Economic Co-operation (ELEC). He frequently participates in studies and meetings of research institutes such as Centre for the Study of Financial Innovation (CSFI).

For more information, visit grahambishop.com; keep up to date with Graham Bishop’s news and views: register free for his weekly Headliner”

Description

1. Modern Britain's spending bubble has burst
   
   The Blair years appeared to mark a watershed in Britain's post-war economic history.
   
   The spectre of decline and deindustrialisation faded from view and in their place came a feeling of affluence based on easy and available credit, rising asset prices, the consumer benefits of a strong pound and a government intent on eradicating social inequalities.
   
   When the bubble burst in 2008, the harsh truth was left for all to see - the dependence on unsustainable government spending, de-marketised regions, widening skill gaps and the long-term demographic problems caused by an ageing population. The coalition government's controversial emergency budget were the first steps in tackling the UK's fiscal problems, but with growth remaining low and unsteady...what next?
   
   In this new book, Warwick Lightfoot uses the non-technical approach of the political economist to grapple with the economic problems of modern Britain and assesses:
   
   Why have huge increases in government spending failed to deliver significant improvement in social welfare?
   Why have thirty years of reform of government spending failed to deliver increased efficiency?
   Do large parts of the UK in fact more closely resemble the economics of the former GDR and Soviet Union than the tiger economies of East Asia?
   What are the steps needed to reform the UK economy?
   
   

 

 

Contents

 

 

Key topics:

Introduction

Part 1: Britain’s structural economic problem: Public expenditure and economic performance

Chapter 1: Britain’s supply-side challenge in the 21st century
Chapter 2: Britain’s fiscal problem
Chapter 3: How effective is fiscal policy in demand management terms?
Chapter 4: Can sovereign states go bust?
Chapter 5: Public sector efficiency in the UK
Chapter 6: The failure of public sector reform
Chapter 7: Britain’s regional problem: the caring hand that cripples?
Chapter 8: Centralised public sector pay bargaining and public sector pensions
Chapter 9: Social security transfer payments and age-related spending

Part 2: Capitalism, market limits, state failure and an over-expanded state

Chapter 10: Why markets generally deliver, sometimes fail, and why correcting market failures can create state failure
Chapter 11: The neo-classical analytical paradigm
Chapter 12: Sweden and the Nordic model
Conclusion

Click here for full contents in PDF format: Contents.pdf

See full contents below

Reviews

Praise for 'Sorry, We Have No Money'

"This book is a timely reminder of how little the UK's problems have to do with individual bank failures, recession and the business cycle.  Warwick Lightfoot provides a clear and balanced account of the last few decades' dilemmas, controversies and policy choices; and argues convincingly that we should revisit the analysts and analyses of the 1970s as a guide to future action ."
Professor Alison Wolf, Sir Roy Griffiths Professor of Public Sector Management, King's College, London

"This is an interesting and timely book. ... All main party politicians are signed up to Mr Lightfoot's direction of travel, so they should look at his book to understand a little more why it might be a good idea to cut the proportion of public spending."
Rt. Hon. John Redwood MP, Chairman of the Conservative Economic Affairs Committee

"This publication could hardly be better timed ... Lightfoot is especially persuasive on the damaging effect a large state has had on the economies of the UK's old industrial regions." David Cottle, Wall Street Journal

“The is as good an analysis as you will find of the need to reduce the level of Britain’s public expenditure, not just to solve the current debt crisis, but in the long term.” Ben Patterson, former MEP and Vice-Chair of the European Parliament’s Economic and Monetary Affairs Committee

"Thoughtful and well researched."
David Smith, Economics Editor, Sunday Times

"A very timely book with a wide perspective and good argument."

Author

About Warwick Lightfoot

Warwick Lightfoot is a professional economist with specialist interests in monetary policy, public expenditure, taxation and labour markets.

Formerly the economics editor of The European, he was for many years a frequent contributor to the Wall Street Journal and has written for the Financial Times, The Times, Sunday Times, the Daily Telegraph, Sunday Telegraph, and the Guardian. His articles on economics and public policy have also been published in specialist journals that range from Financial World, International Economy, and Investors Chronicle to the Times Literary Supplement and the Journal of Insolvency Practitioners.

Warwick worked in government as Special Adviser to the Chancellor of the Exchequer from 1989-92, initially appointed by Nigel Lawson and later reappointed by John Major and Norman Lamont. He was also Special Adviser to the Secretary of State for Employment, the  Rt Hon Norman Fowler MP. He is a Councillor for the Royal Borough of Kensington and Chelsea.

Contents

Lecture 1: Milestones in European Monetary Integration: 1945 – 2011

Part 1: Origins and objectives of the EU
1945 End of World War II
1946 Churchill In Zurich
1950 Schuman Declaration
1955 Messina Declaration
1957 Treaty of Rome
1986 Single European Act

Part 2: Creation of the single currency
1970 Werner Plan
Problems of the ERM
1989 The Delors Report
1991 Treaty of Maastricht
1999/02 Introduction of single currency

Part 3: Achievements relevant to financial services
1992 The single market - the "1992" programme
1999 FSAP - 1999 update of the single market

Part 4: Economic Governance
1979/2011 Development of the European Parliament
The Community method versus inter-governmentalism
2007 Treaty of Lisbon: Council and Parliament as co-legislators
2010 May: Effective decision for "political union"
2011 December: the International Agreement

 

Lecture 2: The Politics of EU Financial Services Regulatory Architecture    
Part 1: SEM and Financial Services
The single market : '1992' programme
FSAP - 1998 update of the Single Market

Part 2: Driving the FSAP reforms forward
Commissioner Monti 1995-1999
Commissioner Bolkestein 1999-2004
Commissioner McCreevy 2004-2010
Commissioner Barnier 2010-2014

Part 3: Lamfalussy Process: financial integration = political integration
The Wise Men's mandate
The "four level" process
CESR, CEBS, CEIOPS
Parliament and Council co-decision
Lisbon Treaty

Part 4: Current financial regulation architecture - the 2010 package
De Larosière Group report
Key regulatory powers to European level
ESMA, EBA, EIOPA

 

Lecture 3: The Global Financial Crisis of 2007 and Onwards: The Global and EU Responses

Part 1: The Rise of the G20
Washington -2008
London - 2009
Pittsburgh - 2009
Toronto - 2010
Seoul - 2010
Cannes - 2011

Part 2: Globalisation of Financial Regulation
BIS
BCBS
IOSCO
IASB
IAIS
CPSS
FSB

Part 3: EU Responses (as at Autumn 2011)
Commission response to G20
Key Events - 2010/11
AIFMD
CRA
CRD III
EMIR

 

Lecture 4: The 2010 regulatory reform package – implications

Part 1: Powers
Council and Parliament
Commission
The Meroni Judgement and Comitology
Authorities

Part 2: Regulations and Directives
What is a Directive?
What is a Regulation?
The original request to Lamfalussy
Transposition problems of Directives
Solution: more Regulations

Part 3: Current financial regulation architecture - the 2010 package
De Larosière Group report
Key regulatory powers to European level
ESMA, EBA, EIOPA

Part 4: Impact on national regulations e.g. UK
Primacy of EU-level legislation
National regulators freedom to act
Role of FSA

About Graham Bishop

GrahamBishop.com was founded in July 2000 to bring our clients the direct insights that flow from Graham’s position as a leading technical analyst of economic and structural developments in the financial markets of Europe.

GrahamBishop.com is engaged with the key participants in this rapidly changing environment: Investors, issuers (government and private), politicians, officials, central bankers, providers of the market infrastructure, academics, the media and other interested parties. Our contacts span the EU: at the European level, they include the Parliament, Commission and Central Bank as well as representative bodies and think tanks. In many Member States, contacts cover the same breadth of participants. Our aim is to bring our members into contact with others in these groups and, especially, the opinions that flow from participants with such different perspectives.

 

The proximity to the policy formation process stems from Graham’s standing with the European Commission, the European Central Bank and European Parliament. This enables us to interpret economic and political developments with authority and insight. Moreover, we have close links with many think tanks in London and Brussels and the Brussels for Breakfast meetings in many EU financial centres give a particular insight into the interaction of market participants and regulators around the EU.

Description

In a past of abundance, we had clean water to meet our demands for showers, pools, farms and rivers. Our laws and customs did not need to regulate or ration demand. Over time, our demand has grown, and scarcity has replaced abundance. We don't have as much clean water as we want. We can respond to the end of abundance with old ideas or adopt new tools specifically designed to address water scarcity.

In this book, David Zetland describes the impact of scarcity on our many water uses, how the institutions of abundance fail in scarcity, and how economic ideas and tools can help us direct water to its highest and best use. Written for non-academic readers, The End of Abundance provides examples, insights and ideas to anyone interested in the management of our most precious resource.

Contents

Prologue
The beginning of the end
Part I: Personal water choices
1    Water from the tap]
2    Dirty water
3    The liquid lifestyle
4    Water for profit
5    Food and water
6    Water for power for water
Part II: Social water choices
7    Managers and politicians
8    Dams, pipes and pumps
9    Water and the environment
10  Weather and climate change
11  A human right to water
12  Water wars

Afterword: What you can do
Acknowledgements
Glossary
Notes to the text
Works cited
Index

Reviews

“A joy to read, this book has a pragmatic focus. It looks for solutions to one of the world's biggest challenges - water scarcity. Read the contents page and then decide if you need to read more.” Mike Young, Professor and Executive Director, The Environment Institute,  The University of Adelaide, Australia


“Disruptive and provocative, Zetland is the Ben Franklin of water. He hurls common sense against professional aristocrats to ensure our priceless liquid asset belongs, democratically, to 7 billion amateurs like you and me. “ James Workman, Author
Heart of Dryness


“Incentives matter. Zetland provides engaging narratives on the interaction of rules, institutions and people that communicate economics ideas far better than mass media and popular culture do.” Jay Wetmore, P.E., past President, American Society of Civil Engineers (MN)


“With economics at the centre of present-day international water diplomacy of national governments, this book could hardly be more timely. David Zetland touches upon the current issues of water resources management and puts them in an economic context that sheds light beyond the obvious and well-trodden pathways towards sustainable development.” Michael van der Valk, Hydrologist and Scientific Secretary
The Netherlands National Committee IHP-HWRP (UNESCO & WMO)


“Bold, provocative and refreshing - Zetland brings common sense to the water scarcity discussion.” Spreck Rosekrans, Senior Analyst, Environmental Defense Fund


“With his straight-forward writing style and mastery of the subject, Dr. Zetland delivers an accessible interpretation of how economics can (or should) impact water policy.” Richard Rauschmeier, Financial Examiner, Division of Ratepayer Advocates, Water Branch, California Public Utilities Commission


“Incentives matter. David Zetland explains why in his plain-speaking tutorial book on water. It informed me, and I thought I knew all this stuff already. If you want to understand how water should be managed, read The End of Abundance.”John F. Raffensperger, Senior Lecturer , Mnagement Science, University of Canterbury


“This book is impressive! Zetland has been able to capture the complexity of water without confusing the reader. This is a clear cogent "reveal" of a very difficult economic topic and yet simultaneously quite easy to enjoy as a book. “Robert O'Donnell, General Manager, AquaNexus


“Water is the most precious commodity there is, and yet, most of us don't think much about it. It's availability in seemingly unlimited quantities, and at almost no cost, just by turning on the tap. But the age of water abundance is coming to an end, as David Zetland explains. Unlike many authors in this genre, Zetland does not try to terrify us with apocalyptic scenarios of water wars and mass starvation. Rather, writing in an engaging and informal style, he gives us a realistic assessment of the impending age of water scarcity and how we will need to change our ways to deal with it. Read this book - you'll never think the same way about water again!” John Quiggin, Australian Research Council Federation Fellow, University of Queensland


“David Zetland has written a very informative, accessible and necessary book which explains the reality of water scarcity and the imperative of applying sound economics and local control to what was previously the exclusive preserve of engineers and politicians. In fact, it is a book that every water engineer and local politician should read to their benefit and that of their customers and citizens.”  G. Tracy Mehan, III, former Assistant Administrator for Water, US Environmental Protection Agency


“One of the biggest challenges faced by the water industry is simply poor public understanding of the issues we face, and a paucity of effective public education vehicles regarding water availability and consumption. If more people better understood the actual challenges and issues of global water resource management, we would have fewer problems. David Zetland's book should be a significant contribution towards meeting this need - by carefully assessing, through the lens of economic theory, the water choices and actions that we all participate in every day.” Steve Maxwell, Managing Director, TechKNOWLEDGEy Strategic Group, Author of The Future of Water, Publisher of the annual Water Market Review


“At a time of growing concerns about the availability of fresh water world wide, markets can play an important role in more effective allocation and management of this scarce and valuable resource. David Zetland's End of Abundance introduces economics into everyday decision making about water in an original and engaging way. The material is valuable not only for policy makers, but for each of us in better understanding the challenges and potential solutions to a growing water crisis.” Gary D. Libecap, Donald Bren Distinguished Professor, Donald Bren School of Environmental Science & Management, Professor of Economics, University of California, Santa Barbara, Pitt Professor, Economics Faculty, Cambridge University
Research Associate, National Bureau of Economic Research, Sherm and Marge Telleen Research Fellow, Hoover Institution, Senior Fellow, Property and Environment Research Center


“A primer for talking about the fundamental elements of water management: Scarcity, Allocation, Value.” Paul W. Lander, PhD, LEED AP Lecturer, Geography & Sustainable Practices Program, University of Colorado, Chair, ASLA Water Conservation Network & AWWA WaterWiser Committees


“David Zetland understands and explains that efforts at sustainable water management are well-served by a no-nonsense economic analysis of overuse and pollution. Amid the commentary it is incentives that matter most.” Piet Klop, Senior Fellow
World Resources Institute


“Zetland writes with a lively, engaging style that conveys the urgency of thinking differently about water policies, and communicates both the efficiency and the humanity of market-based water policies and the innovations that such policies would encourage.” Lynne Kiesling, Distinguished Senior Lecturer, Northwestern University and Knowledge Problem


“There are plenty of articles and books on water scarcity but few offer the insight and economical framework that are necessary to understand and address this scarcity. The End of Abundance is a significant contribution to the contemporary discourse on water management and is a must-read by anyone who cares about water or wants to learn about the issues. The book is refreshing in its candor and irrespective of whether you agree with all of its prescriptions, it is informative, factual and a delight to read.” Shahram Javey, Ph.D, Founder and CEO of Aquacue, Inc.


“A thought-provoking challenge to many current water management and pricing practices, Dr. Zetland's book will catalyze the debate we need to have on the economic value of water. Required reading for water leaders throughout the world.” Kevin P. Hunt, P.E., General Manager, Municipal Water District of Orange County


“The End of Abundance is an enthralling and witty account of a serious warning for all of us. Either we accept paying more for the water we consume, or else we let politicians do the daunting of job of allocating scarce water resources. Blogger and economist Zetland poses the right choices and suggests how to turn wishful thinking into viable outcomes.”  Alberto Garrido, Director and Professor, Research Centre for the Management of Agricultural and Environmental Risks, Department of Agricultural Economics and Social Sciences, Universidad Politécnica de Madrid


“The book is full of interesting new considerations, sharp writing and innovative thinking. Although I do not agree with everything David says, I appreciate his straightforwardness in the debate on sustainable water use. Well worth reading to get David's perspective on the water world.” Carlo C. Galli, Technical & Strategic Adviser, Water Resources, Nestlé


“I've been in water since 1993 and have looked hard for an economist who really understands water and its markets. David Zetland is the find, and I'm so thankful that he continues his blog and his writing. We MUST move to smart market based management of our water or we will continue to have shortages. We now have solid real models that show that markets work and politics - so far as water management - do not.” Ric Davidge, MPA, Chairman, AQUEOUS International, Inc.


“David helped me understand the importance of applying market-based pricing to address water scarcity. Not an easy task, but he does so convincingly, and places it in the context of today’s complex social and political realities. An engaging read for anyone interested in water.” Terry A. Clark, AICP, PMP, Senior Consultant
Cardno ENTRIX


“An economist with a sense of humor examines the dark clouds of California's pending hydrological apocalypse and finds a silver lining.” Lloyd Carter, President
California Save Our Streams Council

“The most thoroughly-researched treatise on water economics I've ever read. The End of Abundance sets a precedent and creates a water/road map for world water managers. David manages to maintain a wry sense of humor inside a sobering exploration of population growth, waste ignorance, unbridled water withdrawal, pure greed, entitlement and blatant disregard for the very substance that makes up 80 percent of our bodies. Demand exceeds supply in many parts of the world, and it will here also unless we embrace aguanomics to intelligently use of our most precious resource. I'm making this mandatory reading for my staff... they need to get this.” Michael Christian, CEO and President, American Hydroponics


“This is an engaging and readable book on a topic of growing importance. It shows how simple economics can help solve our problems of growing water scarcity. I recommend it strongly.”  Martin Cave, BP Centennial Professor
London School of Economics


“If David Zetland's End of Abundance is like his aguanomics blog - witty, intelligent, iconoclastic, unrepentant, and provocative - then it's going to be quite a ride.”Michael E. Campana, Professor, Hydrogeology and Water Resources, Oregon State University


“This is not a text for those seeking a rehash of the standard "water wars" catechism. Zetland outlines a fresh, creative approach to allocating a valuable resource in regions with competing demands. Importantly, his vision does not entail an expensive and sluggish command-and-control bureaucracy coddling whatever class of water users happen to enjoy momentary political favor. Protecting our environment, growing our food, and supplying our cities has always required the ingenuity of a free people. It is time we realized that in managing our water.” Philip Bowles, President, Bowles Farming Company


“Seldom in my experience has any politician ever stood up and said "There is a principle here, and that principle is worth losing an election over." The End of Abundance offers principles on how to balance supply and demand in the provision of water to the world and suggests that voters will accept them. Now all we need are some brave politicians.” Max Borchardt, Australia Editor, Global Water Intelligence


“The End of Abundance is a unique and exemplary book. It is a treasure chest of economic insights on water scarcity - a vitally important policy problem. Economics is all about choices that people make under conditions of scarcity. This book is highly readable and well-informed, provides many real-world examples, suggests solutions, and clearly explains key concepts to non-economists. Policymakers, managers, engineers and concerned citizens should read it.” Eran Binenbaum, Lecturer
School of Economics, University of Adelaide


“Zetland is never traditional, usually informative, and always provocative. The End of Abundance is no exception. It will definitely open your mind to innovative approaches to close the gap between water supply and demand.” Dan Bena, Senior Director of Sustainable Development, PepsiCo, Inc.


“The End of Abundance is a healthily provocative wake up-call. The book challenges the status quo and the most entrenched preconceived ideas to lead us to the realization that water managers facing scarcity can no longer solely focus on ensuring water supply and system management but must create the dynamic leading to the actual management of water itself. David suggests a profound shift of perspective that brings a new dimension to the water world: economics.” Laurent Auguste, President and CEO, Veolia Water Americas

Author

David Zetland is a senior water economist in the Department of Environmental Economics and Natural Resources at Wageningen University in the Netherlands where he is working on an EU-funded project, "Evaluating Economic Policy Instruments for Sustainable Water Management in Europe." David received his PhD in Agricultural and Resource Economics from UC Davis in 2008. He was a S.v. Ciriacy-Wantrup Postdoctoral Fellow in Natural Resource Economics and Political Economy at UC Berkeley from 2008 to 2010. He blogs on water, economics and politics at aguanomics.com

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Description

Everything you ever wanted to know about social media in financial services ... but were afraid to ask

Web 2.0, Twitter, Facebook, YouTube, blogging, virtual worlds … is social media all a bit unfamiliar as a working tool? All a bit smoke and mirrors? Do people really want to interact with their financial services providers in cyberspace? What about the potential for reputational risk? And there’s no bottom-line impact, surely?  Best just leave it to the marketing people ….

WRONG! The benefits of leveraging social media go well beyond marketing. Blogs, YouTube, Twitter and Facebook have quickly became essential tools to manage reputation, foster innovation, develop new products, strengthen customer relationships and satisfaction, drive customer advocacy, aid recruitment, and increase market share.  Social media has increased expectations: now your customers expect you to show you listen to them – they want to be able to trust you. And word of mouth is increasingly powerful: it is critical to know who your key influencers, advocates and, yes, your detractors, are, and to find the best way to engage with them.

So, you need a complete social media strategy. And A Practical Guide to Social Media in Financial Services contains everything you need to get it.  It offers a pragmatic approach to social media in our heavily regulated financial services industry.  Its compelling theme is how to create an ever greater customer experience through engaging with them and rewarding them for their support.

 

A Practical Guide to Social Media in Financial Services is both a start-up guide for the social media novice and a best practice guide for the more experienced.  In it, you’ll find all you need to know about:

•    Judging and assessing your social media operation;
•    Proving the business case and ROI (get a copy for your Chief Financial Officer);
•    The commonly made mistakes (and how to avoid them);
•    Recruiting and managing talent, working with, not against, your social media team, improving worker relations, and breaking silos;
•    Best practice by banking market and segment;
•    The most comprehensive financial social media case book ever assembled;
•    Learning the lessons and assessing the contribution of those who didn’t execute their initiatives properly;
•    The more challenging questions you need to be asking a social media software vendor;
•    And, of course, a forecast of where the industry might go next.

The risk of not embracing or at the very least acknowledging social media is considerable. So … what are you going to do about it?

Contents

Summary contents
Chapter 1 Social Media: Understanding the opportunity…
Chapter 2 Leadership 2.0: yes, Senior Executives can tweet and blog too
Chapter 3 HR, Recruitment, and Personal Branding
Chapter 4 Reputation, Risk and Moderation
Chapter 5 Public Relations 2.0: Towards more engagement
Chapter 6 Loyalty & Voice Of the Customer: turning your customers into brand ambassadors
Chapter 7 Stories: connecting with emotions and experiences, not financial products
Chapter 8 Innovation: Crowdsourcing, Foursquare and Labs
Chapter 9 Promotion, Contests and REWARDS
Chapter 10 Facebook: benchmarking 800+ Pages in 70 countries
Chapter 11 Twitter: benchmarking 1,400+ accounts in 70 countries
Chapter 12 From KYC to KYF: Know Your Followers/Fans
Chapter 13 Building Successful Online Communities14 Other Social Media Initiatives: corporate blogging, personal finance management, enterprise 2.0, virtual worlds

Reviews

"Christophe has taken a comprehensive and well researched look at the emergence of social media in the retail financial services space. What is impressive, is the broad level of involvement he's had from industry players from such a wide geographical context.

If you're in banking or financial services and you're starting out, or you are looking to tweak your social media strategy with a few new tricks and strategies, then "A Practical Guide to Social Media in Financial Services" should be the first book on your to-read list.

The case studies are what make this book because they are real, actionable and are in place today!" Brett King, Author - BANK 2.0

“Christophe is an industry leader and a true visionary. I've been reading his work for some time and had the pleasure of working with him. His sharing of keen insight, opinion and direct connections to leading industry members was exceptionally valuable. If you want to stay on top of what is happening in this space, stay connected to Christophe and point your RSS reader to his blog.” Michael Neil, Vice President Online Strategy, Merrill Lynch

“Christophe has been a great sounding board and provided valuable encouragement for our social media activities at ubank.com.au. Christophe combines deep understanding of social media with a keen eye on commercial outcomes which is rare in this young space.” Gerd Schenkel, Managing Director, UBank (part of National Australia Bank)

“Christophe's blog, Visible Banking, is a source I refer to often in my quest to keep up with viewpoints on the future of banking. His insights are always helpful, and I value his feedback on our own social media marketing efforts.” Ed Terpening, VP Social Network Marketing, Wells Fargo

“Christophe has written a very valuable and in-depth analysis of the site Fortis launched for entrepreneurs, join2grow.biz. He maintains a superb site, visible-banking.com, where he educates us with real passion on Web 2.0 initiatives. It was a real pleasure to meet Christophe in real life, and I can recommend to everyone in the banking industry with plans to launch a web 2.0 site to contact Christophe to discuss their idea.” Catherine Ossemerct, Head of Media Channels, Fortis

“Christophe exceeds expectations in delivering innovative, top class insight with a hands on and actionable approach. If you need to get your social house in order, or just looking to redecorate, Christophe is your man.” Jonathan Elliott, Head of Web Analytics,UniCredit Group

Author

Christophe Langlois is a trusted advisor, an active blogger and business networker. He spent most of his career in banking and financial services covering the EMEA region.

In 2007 Christophe founded Visible-Banking.com, which quickly became the leading independent blog 100% focused on social media in banking, financial services and insurance.

In 2008 Christophe left his Senior Innovation Manager role at Lloyds TSB, one of the major banks in the UK, to set up Visible Media Ltd and help financial institutions to better understand and leverage social media.The Visible Banking Team now tracks over 2,400 initiatives from financial institutions in 70+ countries on twitter, facebook, youtube and blogs (April 2011).

We invite you to join the conversation on
•         The Visible Banking blog (http://Visible-Banking.com)
•         The Visible Banking facebook page (http://Facebook.com/VisibleBanking)
•         The Visible Banking twitter account (http://Twitter.com/Visible_Banking)

 

Description

How do I set up a sales agent network? How will I control it? How much time will it take to build? How should I layer functionalities across different electronic channels? How to design the best contract for brokers and alliance partners? Are there any templates I can trust to evaluate potential branch locations? What to ask for in terms of customer relationship management (CRM) to best integrate my sales channels? How should my service quality benchmarks change across channels? What works, and what does not, in ‘social media’ channels? What could be the next big thing in internet banking? What is ‘community banking’ and how can I use it to build my network? If you ever asked yourself questions like these, this book is for you. Channel Innovation in Financial Services: A Practitioner’s Guide to Development and Integration gives you a practical guide through the many different channel possibilities that exist today in financial services, with examples, implementation templates, case studies, ‘to dos’ and ‘watch out fors’.

Contents

Introduction

Chapter 1    Branches – the basics
Location selection
Macro criteria
Micro criteria
Macro scorecard
Examples
Comments
Micro scorecard
Premises
Results to be expected

Chapter 2    Branch agents – ‘near sourcing’ to local entrepreneurs
Definition
Different concepts
Benefits
Key benefits to banks
Benefits to agents
Consumer benefits
Control
Start-up support
Overview
New versus existing locations
Interest-free loan
Promotional budget
Rental subsidy
Training
Salary
Financial implications
Location
Premises
Size
Appearance
Layout
Products
Services
IT support
Organisation
Staging the introduction
Organisational level of agents
Integration and reporting
Support functions
Recruitment
Training
Risk management
Control and audit
Legal / regulatory
Contract
Overview
Duties and authorised activities
Exclusions
Remuneration
Scope of contract
Commission
General commission design
Commission structure
Key questions
Knock-out criteria
Sample commission structure
Financials
Comparisons
Implementation
Summary
Case study 1: Volksbank's Romanian branch agent (branch franchise) set-up  
Case study 2: Branch franchising and kiosk combination by ING
Case study 3: Community banking, using the agent banking model in Australia

Chapter 3    Sales agents – single-minded focus on acquisition efficiencies
Overview
Definition
Different concepts
Benefits
Case study 4: Limited promotional sales agent test
Case study 5: Ongoing national sales agent test
Products
Number of products
Types of products
Additional products
Product sales process
Services
IT support
Other support
Control, risk management, audit
Organisation
Roles and responsibilities
Career progression
Training
Start-up training
Ongoing training
Recruiting and dismissals
Recruiting process
Success factors
Dismissals
Contract
Remuneration
Starting up the commission system
Commission structures
Sales agent commissions
Team leader / senior leader commissions
Financials
Implementation
Summary
Appendix A – Sample prospect contact rules for sales agents
Appendix B – Sample sales agent contract
Attachment No.1
Attachment No.2
Attachment No.3
Attachment No.4
Attachment No.5
Appendix C – Sample list of content for sales agents' handbook

Chapter 4    Intermediary channels: maximising third-party relationships
Introduction
Basic principles
Case study 6: Example 1 – North America
Case study 7: Example 2 – Europe
Contracts – overview
Third-party types
Financial intermediaries
Retailers – point-of-sale (POS) sales finance
Other
Benefits
Benefits to partners
Watch-outs
Case study 8: Operational cost problems
Structures
Joint ventures
Revenue / cost / profit share
Straight commission system
Compensation
New sales versus portfolio
Commission plus incentives
Floor price approach
Other support
USPs
USPs for end-customers
USPs for intermediaries
Additional USP for both
Physical and process designs
Physical set-ups and integration
Retail POS finance
Process design
Sales generation
Direct sourcing
Broker sourcing
Retailer sourcing
Funds disbursement options
Loan repayment options
Customer ownership
Communicating through intermediaries
Partner selection
IT requirements

Chapter 5    Remote electronic channels: the limits of cost efficiency
Traditional electronic channels
Overview
Main types, roles and evolution
Telephone banking
Internet banking
ATMs
Kiosks
Challenges
Addressing the challenges
New types of electronic channels
Mobile banking
New internet developments
Virtual money
Virtual banking
Peer-to-peer banking
Social media-based channels

Chapter 6    Buying, managing and controlling your channels
Introduction
Mergers and acquisitions – buying your channels
Due diligence checklist
Overall business strategy fit
Marketing and sales review
Customer base
Prospect base
Intermediary contacts
Brand strength
Marketing infrastructure
Distribution and service channels
Credit risk management / lending products portfolio
Savings and deposits products portfolio
Personnel
Information technology, other
Customer relationship management – managing your channels
Definition
Key issues
Benefits
Alignments needed
Architecture
Case study 9: How things can go wrong with CRM implementation
Service quality – controlling your channels
Appendix A – M&A evaluation guidelines summary – a sales / marketing perspective
Reason
Components to review
Values to be assigned
Appendix B – CRM architecture – summary of basic business requirements
Marketing data mart
Contact management / sales force automation
Marketing planning
Appendix C – Service standards definition and measurement – sample outline for branches
Basic deliverables
SQ dimensions
Methods of measurement
Service standards (benchmarks, expectations)
Appendix D – Service standards definition and measurement – sample outline for call centres
Basic deliverables
SQ dimensions
Methods of measurement
Service standards (benchmarks, expectations)

LIST OF TABLES AND FIGURES

Table 1.1:    Branch break-even and payback benchmarks
Table 2.1:    Indicative cost models
Table 3.1:    Portfolio growth
Table 3.2:    Portfolio growth without sales agents
Table 3.3:    Bank sales network dynamics
Table 3.4:    Sales schedule for new sales agents
Table 4.1:    POS sales finance partner selection and approach checklist
Table 4.2:    Additional POS sales finance partner selection checklist
Table 4.3:    Sales expectations
Figure 3.1:    Organisational structure – integrating sales agents and their managers
Figure 3.2:    Sales agent recruitment process
Figure 4.1:    Personal loan sales and operations process design – retail store and direct sourced
Figure 5.1:    People completely or somewhat trusting forms of advertising (%)

 

Click here for full contents in PDF format: A_Practitioners_Guide_to_Channel_Innovation_Contents.pdf

 

Reviews

"If you want a true 'hands-on guide' to best practices in today's global retail banking, this book is for you.  Sandy Vaci never disappoints. His new book is full of practical advice – the kind banking professional everywhere can use to turbo-charge their sales activities. Highly recommended!"
Patrick Desmarès, Secretary General, EFMA (European Financial Management & Marketing Association)

"Channel development and integration are some of the toughest issues retail bankers face in all markets. Make your life easier. Buy this book and read it – for the best guidance you will ever get!"
Michael Lafferty, Chairman, Lafferty Group

"Clear, concise and focused on the challenging  role of building a retail presence under different models. I'm sure I would  have benefited had I had access to Sandy Vaci's insights when I was building networks earlier in my career."
Michael D. Weitzman - Group Executive, MasterCard Worlwide (Customer Delivery - US Markets)

 

"This book is an insider's guide to execution. The best practices, latest benchmarks and implementation templates are business secrets which your competitors would not want you to know."
David Lim, Vice President, AIG / AIU (China, Hong Kong, Taiwan) (2006-2009)

“Practical, comprehensive, insightful. Will definitely form part of my office library.”
Puneet Bahl, Head of Retail Banking, The Royal Bank of Scotland Group, India

"These books do what their titles promise. They deliver an easy-to-use, hands-on overview of best practices. The reader will find tips for selling and sales management, with concrete examples from the financial services industry. "
Noel Cramer, Citigroup Product Head - Divestitures, EMEA Region

 

"A remarkable reading and effective practical guide. It presents alternative channels – sales agents, intermediaries, electronic channels – as an integral part of a financial institution's sales process, discussed through practical examples and case studies."
Zoltan Major, Executive Vice President, UniCredit, Central Eastern Europe

"An exceptional, comprehensive and practical review of the pitfalls and opportunities inherent in building a channel strategy for your financial services organisation.  And who better to provide this than a man with decades of real-world experience including stints with several top-tier global banks?"
Perry Eisenschmid, Vice President, The Conference Board of Canada

 

Author

He is currently Senior Lecturer in Marketing and Sales at the Maastricht School of Management and the Business School of Central European University. He is also Chairman of the Supervisory Board of the Credit Bank of Moscow and advises a wide range of companies on global best practices. His client list includes Barclays Bank, UniCredit Group, Eureko Insurance, Unilever, and the National Commercial Bank of Jamaica.

As a true ‘global citizen’, Sandy has three home bases (Toronto, Vienna, Budapest) which he shares with his wife of 25 years, Judit.

Description

Financial services sales professionals need a practical guide to sales – something that summarises all the key elements of selling and sales management in their field and provides practical examples, case studies, benchmarks and implementation templates. Based on the distilled experience of the author’s 30 years in the business, it’s packed full of practical tips. Who cares about the strategic importance of selecting the best branch location if you don’t know how to do it in practice? What are the specific rules of cross-selling – what, to whom, when and why? How should you set up your organisation cross-border? How should you manage your sales team on a daily basis by leading indicators, to guarantee success? Sales and Sales Management in Financial Services: A Hands-On Guide to Global Best Practices answers these key questions and more.

Contents

Introduction            

Chapter 1    Branches – an integrated approach to boost sales efficiencies            
Location selection
Macro criteria
Micro criteria
Macro scorecard
Examples
Comments
Micro scorecard
Premises
Results to be expected
Alignments
Business objectives
Target segments
Overall annual department / division plans
Activity plans
Cross-functional sales processes
Cross-functional capacity planning
Case study 1: Medium-sized European bank
Components of ‘sales’
Organisation
Management
Processes
Skills
Integrated approach to boost sales efficiencies
Capacity planning
Definitions
Capacity measurement
Capacity reallocation
Training
Overview
Basic selling skills
Proactive selling
Sales management basics
Product knowledge
Management and people skills
Advanced training modules (on demand)
Sales planning and objective-setting
Sales planning within overall sales management
Planning the way to success
Leading indicators
Conversion efficiencies
Alternative approaches
Planning for objectives
Information collecting
SWOT analysis
Target segments
Agreeing objectives
Communicating goals
Sales management
Branch calendars, branch action plans
Individual sales action plans
Other elements
Sales meetings
Daily huddles
Weekly one-on-ones
Weekly branch meetings
Monthly branch meetings
Sales processes
Reactive sales processes
Proactive sales processes
Contact selection
Session preparation
Conduct session
Follow-up
Analysis
Cross-selling
Process differences by segment
Premium segment
Small businesses
Movement between segments
From core to premium
From micro to small, from small to medium…
Sales process closure – ‘watch outs’
Tracking and rewards
Tracking
Balanced scorecard components
Reward systems
Variable sales compensation
Case study 2: Eliminating objective-setting
Other enablers
Organisational set-up and management support
Operational processes and capacity
Marketing support
Channel integration
IT support
Case studies 3 and 4: Benchmarking – integrated branch sales boost tests
Case study 3: Test 1
Case study 4: Test 2
Business results
Customer satisfaction results
Employee satisfaction results
Appendix A – Simplified sales diagnostic kit
Appendix B – Sample activity tracking tool for capacity measurements
Appendix C – Sample list of SWOT analysis questions
Appendix D – Sample scenario design and scripting exercise
– proactive cross-selling call to a customer
Appendix E – Cross-selling overview and templates
Appendix F – Recommended areas to cover in balance sales scorecards

Chapter 2    Needs-based personal selling and the consultative approach        
Summary
The three Es principle
Consumer needs
Life needs versus financial needs, hidden needs versus obvious needs
Case study 5: Consumer needs assessment
Life cycle-based needs
Life cycle modifications: wealth, sophistication, ‘other’
Case study 6: Understanding consumer sophistication
Rational versus emotional needs
Time horizon dependence
Case study 7: Time horizon planning
What does research say?
Case study 8: Quality of service
From needs to sales – pulling it together
HNWI investment sales – the five-step process
Using it all – personal selling
Basic concepts
Key pointers
Advanced pointers
Getting the most
Closing techniques
Recap

Chapter 3    Global best practices – overview        
‘No-one is afraid of selling’
‘Everyone sells’
‘Everything is process-driven and focuses on building profit’
‘Branch staff have a clear focus on cross-selling and service quality and a plan to deliver them’
‘Doing it right is second nature’
Case study 9: Pulling it all together

Chapter 4    Promoting change – implementation guide for best practices        
Introduction
The proposal
Content
Background / overview – findings of Phase 0 (already completed)
Objectives / deliverables – benefits of Phase 1
Measuring success – decision framework
A)  Project execution
B)  Infrastructure implementation
C)  Business results
D) Payback and project efficiency
E) Residual benefits
Delivery options – timing, cost, methodology
Phase 1A
Timing
Cost
Methodology
Phase 1B
Phases 1C and 1D
Phase 2A
Phase 2B
Roles / responsibilities – supplier and client
Responsibilities of consultant / supplier
Responsibilities of client
Terms and conditions
Payments
Confidentiality
Engagement and cancellation
Other
Case study 10: Detailed implementation guide of best practices
Attachment 1: Project phases and options – Phases 0 and 1 (including Phase 1 options)
Comments / summary
Attachment 1 (continued): Project phases and options – Phase 2 options
Comments / summary
Attachment 2: Bank's resource requirements – Phase 1, Option A
Comments / summary
Attachment 3: Sales boost project – Phase 1A building blocks

Chapter 5    International sales organisations: moving cross-border        
Benefits for the bank
Benefits for the sales function
International set-ups
Segment reporting
Geographic reporting
Matrix structures
Matrix sales structures
Changing the structure
Some issues (and how to address them)
The speed of change may differ in a new market
Information taken for granted in the home market may not be available
People may not understand your offer
Your basic sales tools may not be available
Cover the downside well (better than at home)
Be ready to simplify, supplement or supply processes
Financial services regulations could be different
Target segments may be different
People define financial terms differently
Different overall regulatory frameworks drive different customer attitudes
Delivery channels develop at a different pace
Customers react differently to promotions and other offers

List of Tables
Table 1.1:    Branch break-even and payback benchmarks
Table 1.2:    Cross-functional sales process example
Table 1.3:    Sales capacity (% time) allocation between proactive and reactive sales staff
Table 1.4:    Conversion efficiency benchmarks
Table 1.5:    Setting objectives
Table 1.6:    Sample branch action plan
Table 1.7:    Sample branch activity calendar
Table 1.8:    Sample staff action plan
Table 1.9:    Sample tracking card
Table 1.10:    Sample contact follow-up chart
Table 1.11:    Percentage of total cash compensation earned as variable component
Table 1.12:    Tier-based reward system
Table 1.13:    Test 2 results from phase 1 and phase 2
Table 1.14:    Sales diagnostic template
Table 1.15:    Capacity measurement tool
Table 1.16:    Product-based cross-sell grid
Table 2.1:    Consumer needs differentiation
Table 2.2:    Consumer needs – overall vs. financial
Table 2.3:    Consumer needs – wealth versus age-based grid
Table 2.4:    Consumer needs – from rational to emotional
Table 2.5:    Research-based consumer needs – high level
Table 2.6:    Research-based consumer needs – specific
Table 2.7:    Never do cold calls!
Table 2.8:    Needs-based personal selling – main points
Table 3.1:    Sales basics of the best – 1
Table 3.2:    Sales basics of the best – 2
Table 3.3:    Building relationships in person
Table 3.4:    Cross-selling – three ‘Rules of 3s’
Table 3.5:    Why cross-selling? Why this way?
Table 3.6:    Cross-selling – a simple template
Table 3.7:    Customer service quality
Table 3.8:    Service quality – for customers
Table 3.9:    Service quality – for the bank
Table 3.10:    Service quality – three things I must always do
Table 3.11:    Seven steps to sales success
Table 3.12:    Case study 9 pilot test – outline
Table 3.13:    Case study 9 pilot test – results
Table 3.14:    Case study 9 pilot test – successes and failures
Table 3.15:    Case study 9 pilot test – evaluation
Table 3.16:    Case study 9 pilot test – lessons
Table 3.17:    Case study 9 second test – outline
Table 3.18:    Case study 9 second test – key components
Table 3.19:    Case study 9 second test – key enablers
Table 3.20:    Case study 9 second test – sales meetings structure
Table 3.21:    Case study 9 second test – sales planning
Table 3.22:    Case study 9 second test – efficiency ratios
Table 3.23:    Case study 9 – roll-out
Table 3.24:    Case study 9 roll-out – efficiencies
Table 3.25:    Case study 9 – lessons
Table 3.26:    Best sales practices summary
Table 5.1:    Benefits of a central sales function
Table 5.2:    Key matrix issues
Table 5.3:    Sales – key roles
Table 5.4:    Central sales – interaction with local sales
Table 5.5:    Four-step international sales structure review

List of Figures
Figure 1.1:    An integrated approach to boosting branch sales results
Figure 1.2:    The sales efficiency cycle
Figure 1.3:    The sales management cycle
Figure 1.4:    Components of exponential sales growth
Figure 1.5:    Two examples of methods to boost sales
Figure 1.6:    Planning your way to success
Figure 1.7:    Sample decision tree for intervention, tracking leading indicators and conversion efficiencies
Figure 1.8:    Results of starting with cross-selling, then using skills developed for later prospecting
Figure 1.9:    Sample scenario planning exercise
Figure 2.1:    Product needs-based life cycle map
Figure 2.2:    Consumer needs – time horizon dependence
Figure 3.1:    Case study 9 second test – concept
Figure 3.2:    Case study 9 second test – term deposit results 1
Figure 3.3:    Case study 9 second test – term deposit results 2
Figure 3.4:    Case study 9 second test – loan results 1
Figure 3.5:    Case study 9 second test – loan results 2
Figure 3.6:    Case study 9 second test – credit card results 1
Figure 3.7:    Case study 9 second test – credit card results 2
Figure 3.8:    Case study 9 second test – service quality results
Figure 3.9:    Case study 9 roll-out – credit card results 1
Figure 3.10:    Case study 9 roll-out – credit card results 2
Figure 3.11:    Case study 9 roll-out – cross-sell vs. prospecting
Figure 5.1:    Segment reporting structure
Figure 5.2:    Early Citi set-up
Figure 5.3:    Geographic reporting structure
Figure 5.4:    Early GE Finance set-up
Figure 5.5:    Sample matrixed sales organisation
Figure 5.6:    Speed of market contraction in CEE
Figure 5.7:    Selling in an ‘unprepared environment’
Figure 5.8:    SMEs in CEE – tax avoidance issues
Figure 5.9:    SMEs in CEE – business opacity issues  Click here for full contents in PDF format: A_Hands-On_Guide_to_Global_Best_Practice_Contents.pdf

Reviews

"If you want a true 'hands-on guide' to best practices in today's global retail banking, this book is for you. Sandy Vaci never disappoints. His new book is full of practical advice – the kind banking professional everywhere can use to turbo-charge their sales activities. Highly recommended!"
Patrick Desmarès, Secretary General, EFMA (European Financial Management & Marketing Association)

"Full of templates, benchmarks, best practices, practical examples. Read it today. You'll be using it by tomorrow."
Michael Lafferty, Chairman, Lafferty Group

 

"As a retail banker with 26 yrs experience in the  US and  internationally I found the  book to be thoughtful and well structured, providing solid grounding in the development of a retail presence. The Scorecard logic is sound and practical. This book will help novice and experienced distribution planners alike and ensure that they have covered their options."
Michael D. Weitzman - Group Executive, MasterCard Worlwide (Customer Delivery - US Markets)

 

"An insider's guide to retail banking and best practices that can come only from a seasoned professional. Get it before your competitors do."
David Lim, Vice President, AIG / AIU (China, Hong Kong, Taiwan) (2006-2009)

“A must-read for all retail bankers, if they’re serious about accelerating growth.”
Puneet Bahl, Head of Retail Banking, The Royal Bank of Scotland Group, India

"These books do what their titles promise. They deliver an easy-to-use, hands-on overview of best practices. The reader will find tips for selling and sales management, with concrete examples from the financial services industry. "
Noel Cramer, Citigroup Product Head - Divestitures, EMEA Region

 

“Important reading for today's sales professionals. It presents sales as an integrated process – rather than just a set of commercial activities – discussed through effective case studies and concrete examples. Highly recommended for financial services salesmen and marketeers."
Zoltan Major, Executive Vice President, UniCredit, Central Eastern Europe

"This is very thorough, hands-on guide to sales management in financial services. It seems like a daunting task to summarise over 30 years of sales experience and tips into one book but Sandy has managed to do it. I can't think of a question or situation he hasn't covered!"
Perry Eisenschmid, Vice President, The Conference Board of Canada