Are our banks missing an opportunity? Why can’t bank accounts be like this?

Posted on : 31-10-2012 | By : richard.gale | In : Finance

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Banks are getting a bad press for a variety of reasons. We have a few thoughts on how banks can improve their customers’ experience and so gaining and maintaining a happier set of clients.

What if your bank could take some of the mundane tasks away from you and save you money? Sounds too good to be true – possibly – it will involve an increase in trust and also the sharing of more of your personal information but you could end up with something that is both better and cheaper than a traditional banking relationship. 

Many banks offer additional banking services such as sweep accounts but we think there is room for a truly integrated bank account. People already shop around for the best deals in home & car insurance, home fuels, loans, savings and other regular or large payment items why can’t this be part of your bank account service?
Your bank already holds a great deal of information about you – it knows your salary, your mortgage, your loans, your spending on car, clothing, holidays and pretty much everything else. It can infer how many children you have and what their sex/ages are, it can tell if you are an impulsive spender or a saver.

It probably knows you, financially at least, better than you! In fact the big four banks probably have more information about a large proportion of the population than anyone else, even the government (or Google….).

This can be seen as a negative and with ‘big brother’ potential and many safeguards are in place to protect your data but in the same way that many people embrace the sharing of their information (on Facebook, Google or Amazon) then allowing access to information may improve your financial well-being.

Utility bills are a good example where there is both a mechanism to enable people identify cheaper deals and change suppliers but with little take up (only a very small percentage of us switch suppliers each year). Why is that? Inertia, time, information, complexity and a lack of transparency all factor.

This is where we think the retail banks could help. Your bank know your spending history and if you give them access to your meter readings (manually now but smart meters very soon) then they could perform a similar task as and transfer you over to a better deal without you having to get involved.

Additional potential maybe in their ability to get a better deal through bulk buying; imagine the same principle applied to car insurance (you need to give them your car/driver details), mortgage & home insurance (house info). It could even check if you have a vehicle loan, when it expires and work out options (perhaps a little more interactivity) to re-finance/buy/sell your car.

Each month your bank statement could also list the savings it has made for you that month and also areas where you could have saved to encourage you to extend the services provided.

When saving money then this starts to make sense – even though the reputation of banks has been battered over the last few years they are still the guardians of our money (we’ve previously discussed the potential for tech/other companies entry into the market) and we already provide them with a great deal of information about ourselves and trust them to keep it safe. If they can be seen as our partners in improving our lives (saving money, freeing up time, improving our services) then it may just work.

These are just ideas and obviously there will need to be a whole host of safeguards in place covering data privacy, any conflicts of interest between the banks own and external competing products but we think, given some trust on both sides, then there could be big benefits – perhaps one of the new entrants to the market (Virgin? Metro Bank?) or one of the more innovative existing banks could bring this to market? Another group of FS firms we think could do it would be the mutually owned Building Societies – they have a good and improving reputation for customer trust and integrity?

Handing over the mundane tasks to your bank may be attractive but one thing you would still have to do you self is work out if you were getting the best deal from your bank – but we’re sure it wouldn’t be long before there would be new comparison sites set up for bank services….

Don’t forget to keep a handle on your “Technical Debt”

Posted on : 31-10-2012 | By : john.vincent | In : Finance

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Whilst catching up recently with a CIO after a technology briefing, I asked what topics he would like to see covered in future events? He responded fairly quickly with “How to measure Technical Debt within the organisation”.

This is an interesting topic. Whilst many use risk methodologies to quantify potential impacts, the monitoring and measurement of technical debt is typically given less focus. So first of all, what do we mean by “technical debt”?

Typically it refers to incomplete or avoided changes to an evolving software architecture/development which amount to a debt that needs to be paid off at some point in the future. Basically it is the gap between;

  • Making a change perfectly – preserving architectural integrity, standards and testing etc…
  • Making a change that works – ensuring it is functionally correct, implemented quickly with as few resources as possible

Debt can build up through lack of documentation, lack of coordination of parallel development resulting in multiple code branches, code quality, design deficiencies, time pressures for new functionality etc.. which means “Interest payments” are needed to remediate the situation at some point in the future.

However, we also believe that the term can be applied to other areas of technology, such as infrastructure, 0rganisation and processes. Operational systems need to be Fixed, Enhanced and Adapted…as do the processes and resources supporting them. They require constant modification in order to remain fit for purpose…and of course all this uses up scarce resources which is much more difficult to allocate in terms of ROI. Could some of the more public technology outages of 2012 be related to a build up of technical debt?

Measuring technical debt interest is difficult (there are several theories and computational algorithms out there if you’re interested).  However, taken simply, it is the cost of fixing the shortcuts taken during the release cycle to bring all components up to the same level, be that coding, documentation, infrastructure, design or whatever…

Note: it is generally accepted that a level of technical debt is unavoidable…indeed in some cases building up a degree of technical debt can be good in terms of time to market or to elicit quick feedback…but, this shouldn’t be confused with “cutting corners” and should always allow for the ability to payback in the future

However, it isn’t simple. In the development world there are platforms such as CAST which can measure architectural flaws and allow organisations to estimate technical debt from the results. However, there are many other factors as we touched on earlier, not least being subjective elements which cannot be mechanised and require a more creative approach – technical debt is not a science.

That said there are certain elements that should be monitored, tracked and in some cases measured. Some of these to keep an eye on are:

  • Time to market for new features. If routine enhancements or new features, that appear simple, turn out to be complex or cause seemingly unrelated components to break, that is a sign of too much technical debt. Unwieldy systems and software, or the feeling that support around them is a “black art”, is a key indicator of under investment in development rigor/maintenance.
  • Loss of stakeholder engagement. Easy to spot…we’ve all seen or been aware of systems which gradually lose interest/sponsorship, either from a development or support perspective. This can occur when staff move on, business revenues switch (such as Investment Banking vs Retail and the respective underlying systems), or cost efficiency pressures shift priorities elsewhere.
  • System performance degradation. Obvious maybe, but can sometimes get overlooked and not differentiated from capacity management. Potential impacts of technical debt can be found by conducting load testing, monitoring memory utilization, disk reads and writes, CPU usage, network activity, thread creation, etc. and measuring results/trends over time.
  • Communication breakdowns become more frequent. If people are forgetting to share information or keep the team informed of events that impact the project, they clearly have more important things on their minds.
  • Cost Efficiency Pressures. We are living through a difficult period in terms of declining revenues and subsequently increased focus on spend. Whilst discretionary budgets are cut to only mandatory projects, organisations still need to ensure that whilst seeking increased efficiency in underlying applications/infrastructure, shortcuts are not taken which store up future interest payment burdens which ultimately translate into stability issues.
  • Organisation. Likewise, staff are currently being asked to work harder than ever. However, if teams supporting certain applications are consistently in “fire fighting” mode then something isn’t right. An occasional burst of extra hours to meet a critical deadline is fine, or to deal with sporadic issues…if it becomes a trend it will lead to an increase in operational errors.
  • Monitoring team metrics. Even when teams measure their performance using something like velocity or earned value, they often ignore deteriorating performance. If you see dropping productivity and missed deadlines, it is likely only to get worse.

The point is that keeping a handle of technical debt across all areas of the operating model is very important – even more so when the economic pressures can encourage skipping a few payments…

What is “Gamification” and should I take it seriously?

Posted on : 26-10-2012 | By : jo.rose | In : Innovation

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Over recent months “gamification” has worked its way more and more into conversations with clients, companies and and events that we’ve attended. However, it was only very recently at a Fintech meetup that we started to take it more seriously and delve a bit deeper into its potential impact.

So what is gamification? Well, Wikipedia defines it as;

“…the use of game mechanics and game design techniques in non-game contexts. Typically gamification applies to non-game applications and processes, in order to encourage people to adopt them, or to influence how they are used.”

Fairly simple, and in reality, and not a new concept. Companies have been using game based techniques to drive marketing and customer loyalty for many years through things likes loyalty schemes. However, what has changed since the word gamification made it into common language in 2010, is;

  • The emergence of mainstream social media platforms within society, both at a consumer and more increasing at a business level
  • The exploitation of these platforms by new innovative startups utilizing game mechanics (think Zynga)
  • A change in the desire of particularly the younger generation to have a more rewarding and engaging experience from a marketing perspective

The mechanics of gamification are also quite straight forward. Gabe Zichermann, the CEO of categorizes them as;

  • Points: We come across points everywhere and they’re often used in non-game apps as a way to denote achievement. Points also measure the user’s achievements in relation to others and work to keep the user motivated for the next reward or level.
  • Badges: While badges have their origins in the physical world, Foursquare popularized the digital variety with its set of real-life merit badges that range from easy (badges awarded to users on their first checkin) to nearly-impossible to unlock.
  • Levels: Zynga uses levels to make the seemingly mundane tasks all the more enticing and encourages mobile users to level up and get better discounts for becoming more loyal patrons.
  • Leaderboards: Leaderboards rank users and work to motivate and encourage them to become players. Foursquare started with city-centric leaderboards, but now places the emphasis on ranking users against their friends.
  • Challenges: These range from the simple to complex and often involve communal activity or group play.

So what about real world examples? Those of us who have spent long careers in technology, particularly in financial services, can be cynical about the real value of this sort of stuff.

Well, it seems that there is significant traction in some areas and gamification is becoming a serious business.

A recent success story is that of True Office who use gamification techniques to improve the effectiveness of compliance and regulatory training within financial services. They were involved in the 2012 Fintech Innovation Lab run out of New York (now active in the UK…so get your submission in by November 1st!) and have subsequently been introduced into at least three banks. Their founder and CEO, Adam Sodowick says;

“By changing the way the training is delivered, employees are achieving higher retention and recall rates. There is a ton of research of how you retain information, and if you combine learning with a game and a story, the retention is much higher.”

There are an increasing number of organisations taking it seriously and new service providers bringing products to market. Supporting this, companies like Badgeville are providing complete gamification platforms as a service.

So, at the moment you could argue we are on the “hype curve”, but we believe that organizations that embrace gamification have the opportunity to develop a competitive edge in improving business processes and performance, whilst increasing employee satisfaction and retention.