More on Bitcoins….

Posted on : 31-01-2014 | By : richard.gale | In : Finance, Innovation

Tags: , , , , , , , ,


Our article last year on the future of virtual currencies provoked a great deal of interest (“Bitcoins: when will they crash and what is coming next?“). One area we didn’t touch on was the threat to banks and other payment systems. Transaction costs for payment systems are very high and Bitcoin may offer sellers a much cheaper way to transact.

We are using Bitcoins as an example but it could be applicable to any virtual currency out there.

Obviously the internet has revolutionised the way we buy and sell products and services. New payment firms such as Paypal have emerged through clever technology, become massively successful and then bought for huge amounts of money.

The issue is with Paypal and other transaction systems such as Visa/Mastercard is the charge to the retailer can be excessive. If a company is working in a high margin space then this is less of an issue but a the majority of internet companies rely on a large number of low margin transactions. With Paypal & Visa generally charging between 1 & 3% of total cost this can reduce and almost eliminate any profits. If multi-currency exchange rates are then applied then profit can disappear altogether.

It is generally accepted that Bitcoins transactions costs are insignificant compared to Paypal, Visa etc –  there is some debate around the actual costs (Bloomberg’s Matt Levine thinks transaction costs are on a par or higher than Visa)  but transaction cost of using Bitcoins is around 0.1-0.2%.

Another potential advantage of Bitcoins or alternative currencies generally (Altcoins?) is that the exchange rate transaction can be controlled and may not be needed at all. Money can be held in Bitcoins and so if an individual or company buys and sells in Bitcoins it can be used as a common currency (like having a consolidated FX bank account) so eliminating expensive foreign exchange transfers.  Unless Bitcoins replace all existing currencies then at some point some money would have to be transferred but it would the net difference after buying and selling rather than a ‘tax’ on each transaction.

The success of Bitcoins, as with any currency or payment method, depend on a wide enough acceptance (with associated trust etc) to make transactions viable and easy. Bitcoins have a long way to go for general acceptance but more and more places both virtual and real are starting to accept them.

Obviously there are other important factors including general acceptance, volatility & reputation that may impact the acceptance of the alternative payment methods but it should make sense for etailing firms and will be keeping Paypal Executives awake at night. An obvious way for them to fight the risk could be to reduce their transaction costs. Paypal is immensely profitable and their model would probably still work with a lower margin, we are not so sure in regard to Visa & Mastercard with heavyweight organisational structures and legacy processes & systems.

If nothing else the rise of the virtual currency will provide some competition and lower costs for retailers and so hopefully buyers too!


Data Analytics – Big in 2013…Bigger in 2014

Posted on : 31-01-2014 | By : john.vincent | In : Data

Tags: , , , , , , , , , , ,


We didn’t produce our annual predictions this year, but as we approach the end of January we thought the topic of data analytics trends deserved some attention. So, we’ve listed the Top 5 trends in this space that we believe will be prominent, or emerge stronger, during 2014. We strongly believe that the data analytics theme and driving decisions and future strategies will be at the forefront (see our other article on moving from hype to execution).

As always, we are interested in your thoughts!

1) More emphasis on Predictive Analytics

Looking back on past performance, peer groups and trends has been the traditional way of shaping and product and service strategies. However, with the improvement in predictive analytics, both from an infrastructure perspective with products like Hadoop managing unstructured data inputs, tools and a new breed of Data Scientists, technology leaders can now work closely with the business to drive decision making.

2) The Mobile Data surge continues

Seems that consumers can’t operate now with their trusty smartphone or tablet. Indeed, it is estimated that in 2014 mobile internet traffic will overtake desktop usage. With the amount of data that consumers download (and tariff limits increasing accordingly), the possibilities of companies using this information to analyse customer behaviour and adapt accordingly is huge.

3) Wearables and the “Internet of Things” revolution

For the first time we are seeing this whole subject make its way onto the CIO agenda. In 2013 we saw some activity, with the release of watches from Samsung and Sony (and the continued speculation of iWatch in 2014), smart health monitors, telematics devices and so on. For this year, expect the pace to pick up with organisations looking at new products and how to tailor the data to differentiated service offerings (such as insurance premiums).

4) Data Visualisation – Part of Business as Usual

The ability of business users to take more control of the organisational data, drive “what if” scenarios and visualise through dashboards have really taken off in the last few years. Once the data was transported out of the rigidity and control of central IT departments through to the users for agile manipulation, products like Qlikview, Tableau, Board and the like have really taken off. We expect this to become an expected part of the end user toolkit in 2014 and also see some consolidation/acquisition in the provider market.

5) On-Demand Analytics develops further

Cloud computing made great steps in 2013, with Microsoft Azure, Amazon Web Services and other providers extending the infrastructure, product sets, security and pricing to a level that is starting to entice customers away from build to buy.  We expect a further increase in shifting from on-premise infrastructure to running data compute analytics and business intelligence in the Cloud in 2014.



Big Data: forget the hype and realise the possibilities

Posted on : 31-01-2014 | By : john.vincent | In : Data

Tags: , , , , , , , , ,


The last couple of years have been dominated by the whole data discussion. First we labelled it “Big”, then defined it in terms of Volume, Velocity and Variety, and are now trying to work out the next steps from a company perspective. How do we get our arms round what we have? Make consistent? …and most importantly, differentiate?

Organisations have installed CDO’s (either “Chief Data Officer” or “Chief Digital Officer”) with a responsibilities to tackle getting value from the often vast amounts of data they have under custody.

The first issue around consistency takes some sorting out. Over the years we have built up numerous point solutions to support new business products which has often taken data in from source systems and transformed it. We’ve been involved looking at the underlying application “plumbing” for clients and how data is managed – there are many instances where depending on where you ask the question, you’ll get very different answers (when applying this in financial services, this inconsistency tends to upset regulators!).

Back in 2012 we saw a number of organisations initiate “Big Data” projects to tackle this. Problem is, many went along the technology path as a resolution…”We’re building an internal Hadoop service to have all our key data in one place…”. Right…piling all the inconsistencies into one larger problem. Smart.

Subsequently, companies are looking at tacking the problem of quality first so remove contradictions, overlaps, naming and structural conflicts to ensure that any analytics are applied against a Golden Source (and, at the same time looking to jettison unused/not useful data).

At this point, the question about how to use the data to differentiate propositions or client offerings becomes relevant.

In todays digital world, customers leave “footprints” (or “shadows”) through every interaction. This could be as simple as demographics through to more detailed information about behaviour, preferences and even emotions. When analysed, this data can help organisations manage both their customer experience and tailor products/services to stay ahead of the competition. Hence the clamour to harness this and build strategic advantage.

For most, however, the journey is just beginning. Customers interact increasingly through a multitude of channels, from the web, social media, call centres, email and so on, which brings a number of challenges.

The main one of these is that the sheer number of touch points means that data becomes silo’d or fragmented “at the edges”. This brings with it real difficulty in being able to maintain consistency and consolidate into “A single view of the client”. If we look at the challenge that industry has with just Know Your Client (KYC), such as in financial services from a compliance perspective, then taking this to the next level in terms of Engage Your Client can be daunting.

As yet, it seems that few organisations are really using their data to enhance or transform the customer experience. There are great opportunities. One example of this is through combining traditional/historical client data with new channels, such as what Ticketmaster do with allowing purchasers to see the seating preferences of friends and family they are connected to through Facebook, and select their accordingly.

You can take this further by analysing these preferences in terms of feedback, either online (commentary, Likes etc.) or if the person calls in by using speech analytics to determine satisfaction, emotions, cross-selling opportunities and the like.

David Mathison, founder of the CDO Club, a networking group for leaders involved in data/digital, recognises that a deep understanding of data analysis techniques and implementation is a key skill for anyone leading their organisational agenda in this space. He says:

“There are plenty of data out there and not enough insight – and that’s broadly true across companies, non-profit organisations and government agencies.”

Lastly, another question that we need to consider is how we ensure that we don’t use the actually discriminate? It’s a point which lies at the heart of corporate and business ethics. As we improve our underlying data insight of customer behaviour patterns, how do we ensure that the increased transparency and knowledge doesn’t drive a discrimination approach? One for a follow up article.