Of Wire Strippers And Banking "Culture"

Perhaps one doesn't ordinarily associate Standard Chartered Bank with stripping, but the recent filing by the NY State Department for Financial Services makes fascinating reading. And in telling the story of SCB's U.S. dollar-related "wire stripping" activities through its own internal emails and operations manual, yet again a bank's "culture" is exposed as ultimately self-interested, regardless of the potential cost to society:

"Lest there be any doubt, SCB's obvious contempt for U.S. banking regulations was succinctly and unambiguously communicated by SCB's Group Executive Director in response. As quoted by an SCB New York branch officer, the Group Director caustically replied: “You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians.”"

Coming hot on the heels on the news of HSBC's sanction-busting activities, these revelations inevitably raise concerns about the practices of other banks.

"When will it all end?" I hear you ask.

It probably won't. 

Scandal after scandal after scandal after scandal related to numerous banks' dealings with their consumers, corporate clients and regulators, tells us that banking as we know it is culturally, socially and economically flawed.

It's high time the politicians focused on how to encourage new entrants and alternative models.

Dead Simple Financial Products

Little wonder that the UK Treasury is still trying in vain to persuade financial institutions to supply 'simple' financial services. The recent report shows that the government is relying on the same old players and the same old view of the marketplace to come up with the same old result. The challenge for new entrants will be whether they will be able to cut through the wall of spin and marketing noise to reach consumers with truly cost effective services that are adapted to their day-to-day activities.

The Simple Products Steering Group's recent interim report continues to view the financial services market through the lens of traditional products, providers and consumer segmentation. Its working groups are drawn exclusively from existing providers. The report refers to the so-called "mass market" and believes that simple products "should not be tailored to individual needs". It equates 'choice' with complexity. It seeks to balance “a fair deal” for consumers with “a viable commercial proposition for [existing] providers". Perhaps worst of all, for simple financial products to succeed the Steering Group believes “it is essential to improve the awareness and financial capability of UK consumers.” The report recommends two types of savings accounts (at-call and 30 days’ notice) and life cover. Apparently, millions of us will pile into these things on the basis of a little consumer education, a kite-mark, feel-good messaging and… certain choices embedded in default settings.

Hello?

If retail banks and life insurers were capable of delivering cost effective, useful financial services, there would be no need for the Simple Products Steering Group.

When will the authorities realise they’re flogging a dead horse?

As explained here, the route to simplicity and transparency lies in first understanding the complexity of the consumer problem being addressed, then figuring out the simplest, most consumable service that will solve it. That's the role of a facilitator. By contrast, those producing complex products are unlikely to be focused on the consumer's problem in the first place, let alone understand it - they're focused primarily on solving their own problems at consumers' expense. Trial and error, testing and learning, flexibility and adaptability are vital steps in this process. Yet our financial services framework is intolerant of them. A new service should be able to launch and undergo several iterations in the time it takes to get through today's authorisation process. Tiny factual differences have seismic regulatory implications in the type of permission or licence needed, and this adds to the time-lag and legal advice involved.

We must figure out how to make the process of decent innovation easier.

Image from Worth1000.

Of A 900 Year Old Dwarf, Trinkets And Baby Steps

Voda Yoda

How apt that Vodafone has settled on a film character from 1980 to advertise the ability to... [sound of trumpets]... charge your phone in a taxi in 2012, when we've been charging phones in our own cars for many years. No wonder the little fella appears a bit non-plussed. Sadly the TV version doesn't record why he fires up his lightsabre, but I'm guessing from all the inane chat that it might be to dispense with the cabbie.

Such trinkets as in-cab charging are perhaps a small sign that Vodafone recognises at least one of the day-to-day hassles associated with mobile phones usage. So let's acknowledge them for a baby step in the right direction. The fact that London's black cabs hadn't already provided a 'free' charging facility to passengers tells you how great that particular monopoly is working for the consumer. 

Yet I still can't download my mobile phone billing information from the virtually useless "My account" section of the Vodafone.co.uk website. In fact, despite numerous calls to customer service over the years - usually around tax time - the most they've been able to do is send me physical copies of my bills free-of-charge. So 1980.

Image from DigitalSpy.

Let's Play Piggy-In-The-Middle

On Saturday I got my Level 1 rugby coaching ticket, which means I can teach kids up to 12 to play rugby. I also get to wear a knee support for a few days, but that's another story. 

These days rugby is more about 'social and personal development' and getting the skills right than 'winning' or even 'participating'. That's because the International Rugby Board is not only keen to contrast the game from the many ugly aspects of football but is also listening to the harshest sports critics of all: children. So we value teamwork, respect, enjoyment, discipline and sportsmanship. 'Drills' have been replaced by 'small-sided games' built on age-old playground games which are active, purposeful, enjoyable and safe (and naturally promote balance, co-ordination, agility and speed). Coaches have responsibility for developing the 'whole person', with the emphasis on competence, confidence, connection, character and creativity. Gone are the old touch-line tirades. Now we ask the players to explain what's working and what isn't - and why. 

And it works.

 

So I got to thinking: if an institution as entrenched as the good ol' Rugby Football Union can change this much from the grassroots, why can't some of our other institutions?

 

I mean, the various peer-to-peer platforms have simply re-imagined retail banking as just a giant game of piggy-in-the-middle: savers, get your cash directly to those who need it without the 'piggy' bank intercepting it. Go!

We're Up $hit Creek: Invent Paddles

While it's fun picking over the bones of old financial scams and scandals, it's not really getting us anywhere, is it? After four years of it we're still up the proverbial creek without a paddle.

I'm not saying we should cease catechizing the cretinous crews of our crappy institutions. That's simply too much fun in a disgusting place that's short of laughs.

But when we're up Sh£t Creek without a paddle, clearly we need new paddles. 

Trouble is, the ordinary old paddles aren't much good in sh*t, so there's no point waiting for them to be magically delivered by the paddle-gods. We need to invent new ones. We need to experiment with different shapes and sizes. We need to make some howling errors in paddle design. Some canoes need to capsize - lots of little things must go wrong if we are to paddle our way down Sh€t creek to wherever it is you are when you're not up there.

Invent a paddle today!

Image from Truth Addict.