The Return Of Manual "Banking"?

There is no such consumer activity as "banking". Fiddling around with bank accounts is just something we do in the course of paying a bill, making a purchase, reimbursing a friend, investing etc. - an interim step in a much longer process. "Banking" is what retail banks think we're doing, because they only view the world, and how to make money, through the lens of their own products. Which are designed to make money for the bank, not to benefit the customer, as recent coverage of the PPI mis-selling scandal has highlighted.

Here's a little story.

In 2005 I opened a savings account that had recently been launched by the ill-fated Halifax plc. The only way they allowed you to access the funds was using a passbook, even though the Internet had been fully operational for a decade. So it was pretty clear they wanted me to shove my money in and forget about it.

The last time I'd had a passbook was in Australia in the '70s, so I was a bit nonplussed to be given one in 2005. But at least the Halifax IT system enabled the teller to complete all the little bits of paper they seemed to need each time you wanted to move money. You'd say what you wanted to happen, the teller would feed bits of paper into a printer, tap some keys, hand you the paper to sign, tap some more keys, and you could get the hell out of there. In my case, with a banker's draft - a cheque, for Christ's sake - that I had to then mail to a discount stockbroker before finally investing the funds. It was a miserable pilgrimage. And, sure enough, it declined in frequency from quarterly to annual. The bank did in fact get to hold onto my money for longer.

Cut to 2009, when Gordon Brown and I think one, maybe two other people thought it wise for the ill-fated Lloyds Banking Group to buy the ill-fated HBOS plc, the owner of Halifax. Then cut to this morning, when a Halifax teller patiently explained to me that, as a result of the recent transfer of my Halifax savings accounts onto the Lloyds Bank IT system, I must now complete all the bank's requsite bits of paper myself, by hand.

In other words, not content with the destruction of two financial conglomerates, mis-selling billions worth of products and becoming a drag on the country's finances, these people have spent the last 6 years removing any vestige of consumer-friendly automation from the process of accessing my money.

In fairness, the teller did explain that I can now sign-up for [trumpets] internet banking, to access these accounts. But I'm not convinced that would be a satisfying experience. I'd probably be expected to bring my laptop into the branch just to log-in.

Bad Data In...

The IMF seems to be having a bad year. First it was accused of 'groupthink'. Then it was rumoured (again) to be considering Gordon Brown as its leader.

Now it's The Economist's turn to sink the slipper. It points out that the IMF's forecast of China's current-account surplus assumes a steadily depreciating yuan, and a widening surplus. That provides ammunition for protectionists to impose tariffs on Chinese goods. Yet China's current-account surplus has actually declined since 2006.

But let's not just pick on the IMF. In "Botox and Beancounting", The Economist also points out the cosmetic effect of US official measures of government debt, productivity and economic growth compared to European measures. "The snag comes if investors fail to grasp that official national figures can show the American economy in an overly flattering light."

Of course, none of these is an isolated incident. There are also fundamental problems in comparing corporate financial data, for instance, given differing accounting standards.

And we live in a world where auditors are still trying to figure out what "scepticism" means...

But we don't have a problem detecting bad data. Plenty of people warned others about what Madoff's fraud, for example, and investment analysts routinely uncover issues such as The Economist has reported. Short-sellers make this their business. No, as David Einhorn elucidated in "Fooling Some of the People All of the Time", the problem is how to give the same weight of publicity to the prudent interpretation of the data as is given to the release of the data itself.

The media and social media clearly play a significant role. But even if we create an Office of the Devil's Advocate, ultimately each of us must accept responsibility for thinking critically about the data we're given if we're to avoid making some big mistakes.

Image from TraceyNolte.

Localisation

I've often berated the European Commission's vain attempts to catalyse cross-border markets using Directives. The law follows commerce. And recent sociolinguistic research has shown that the way language evolves locally has not been altered by, say, the global distribution of Hollywood films, immigration or mass-market travel. So it was interesting to see Schumpeter put "the case against globaloney" based on World 3.0, the new book by Pankaj Ghemawat that demonstrates how thin the evidence is that globalisation has really taken hold - a must-read for Eurocrats.

Image from Translation-corner.

Of Canaries and Turkeys

What drink would be "Wild Canary"?

I'm on holiday, which means being asked to explain whether there are canaries in the Canary Islands, or turkeys in Turkey. I'm giving you the benefit of my research, should you have similar need of it.

"Canary", as in the Islands, is derived from the Latin for 'dog' (canus, cani) on account of dogs (or sea lions, which apparently look like dogs to sailors) once found on the islands; while the English word for the country "Turkey" is derived from medieval Latin "Turchia", though "Turk" is also at the core of many other languages' reference to that area.

There are wild canaries in the Canaries (though not that I've seen), but the bird was named after the islands, not the other way around. It's a similar story with the turkey, though it was misnamed when mistaken for guineafowl, who were once called 'turkey fowl', being from Turkey, but get away scot-free every Thanksgiving.

Scot-free comes from the Old English for "exempt from royal tax" [that's enough etymology. Ed].

ID Theft Insurance: Bonfire Of The Gullible

I guess it started out as a reasonable idea - provide card customers with comfort that someone else will help if your credit card is stolen and your card issuer let's you down.

But your card issuer isn't allowed to let you down, unless you do that yourself through fraud or negligence - in which case why would an insurer help? Slow as they are, it's very much in the legal and financial interests of card issuers to invest in anti-fraud protection. And they're usually 'first-on-the-scene' in a card fraud scenario, as you'll be aware if you've ever been called to confirm you weren't standing at a point of sale in both Brazil and Bulgaria in the past few hours.

If you're an ID theft policyholder and you don't agree, are you are among the 0.5% who've actually made a claim?

Cue the FSA probe into CPP, purveyor of fine ID theft protection at £80 a year. The investigation was prompted by Which? who have campaigned against this rort for some time. A glance at the fund managers who backed the IPO tells you all you need to know. Those people have no right to complain. Either they knew the drill or they were gullible enough to think this product had a real future.

As for the attitude of the card issuers: the FT cites at least one analyst's view that:

"You could argue that half the companies on the high street shouldn't exist because the things they sell are vulgar, tasteless or tacky... Which may be true, but it's irrelevant. The point is, there's demand there."

Demand or gullibility?