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Archive for the ‘Crazy world of banking’ Category

Why falling stocks might make your ears ring

Thursday, December 4th, 2014

The question is not if there will be wearable banking but rather when it will arrive in the mass market. While wearable activity trackers already observe every step of an increasing number of people, the use of wearable mobile devices (other than smart phones or tablets) for financial matters is still in its early stages. But there are a few financial services apps already out there for Google Glass and smart watches. Just check here, here and here. These are the early movers but there is no doubt that others will follow soon.

It’s not clear yet which apps and which devices will ultimately be successful: It could be devices like Google Glass, smart watches, or even bracelets for taking the role of contactless payment tools. Even more far-fetched ideas might ultimately come to the market. Why not a partnership between a big fashion house and a stock broker. Earrings, which discretely start to vibrate when stocks fall below a certain level certainly could find their buyers. Therefore, continuous research among its client base, rapid prototyping and closely watching its competition should be on every bank’s critical path to their next breakthrough mobile app.


Social networks offering payment solution: What will banks do?

Wednesday, November 19th, 2014

News about the release of Snapcash surely came as no surprise to us at Myprivatebanking Research. The integration of social media and payment systems is successfully growing and clearly challenging traditional payment players like banks, credit card providers, and older online providers like PayPal. Whereas rumors have made rounds for the last months about Facebook’s plans for a mobile payments system using its Facebook Messenger iPhone app, another popular social messenger provider has stolen the thunder: Snapcash, the product of the recent collaboration between Snapchat and Square Cash (a mobile payments company headed by Twitter co-founder Jack Dorsey), is the latest mobile payment option that allows users to send money to friends via the app by simply typing dollar amounts into new “Snapcash” messages. For now, Snapcash is available to Snapchatters in the United States who have a debit card and are 18 or older.

Trying to keep up the pace with consumers’ increasing demand for highly innovative and convenient products, successful offers like Snapcash or Applepay challenge the banking industry to come up with similar or better solutions. It is true that banks must deal with stricter regulatory guidelines but they should also be aware that consumers have more choices than ever and won’t wait for banks to catch up. But banks – across the globe – seem not to have a strategic response. Will they get frozen out of the online payments markets like music labels have failed to conquer the online music business and traditional book stores never were able to challenge Amazon in online book selling?

Very few banks have already invested in convenient mobile payment solutions aimed at improving the customer experience. Barclays’ Pingit app is one exception. Users can send and receive money via the app without sharing bank account details and even send gifts to friends. But Barclays is the exception and not the rule in the banking industry. Will they finally give up this market to the tech players?


How Spielberg’s AI is becoming real already

Friday, August 29th, 2014

What began as a lunatic idea years ago is entering our pockets today. Cyborgs, intelligent assistants, robots – they have many names but research labs and start-ups all over the world are working on the same idea: combining human and artificial components to end up with efficiency.

These days you cannot surf the internet without coming across several articles on artificial intelligence. This one really caught my attention as it reveals what is going on behind the doors of the labs of Viv, a start-up led by the inventors of Siri.

The crux on which they are currently working is the linking of multiple queries based on a cloud system working like a ‘global brain’. The objective of this kind of knowledge net is that the intelligent assistant should be able to actively learn from the incoming queries and even become able to predict what its user needs next.

Just try to imagine the impact this revolution will have on the finance industry – for instance, an investor could ask his smartphone “How can I build a portfolio with lowest possible fees limiting my expected maximum loss to 10% per year?” instead of meeting with his advisor. Along with an increasingly self-determined client, these changes draw a dire picture of the industry’s future and it will be up to the wealth managers and banks to find new ways for becoming indispensable.


3 Key-Take-Aways from the M-days in Frankfurt

Wednesday, May 14th, 2014

1. Innovative mobile payment solutions lack backing of strong trustworthy names. I just listened to an interesting panel discussion about mobile payments. There are now tons of interesting and great innovative solutions (examples are Apple’s iBeacon based and  NFC based solutions from various innovative start-ups like barcoo or netsize) but they are still lacking the backing of the big financial players. And this is the only way the consumer will accept new payment solutions. So start-ups - get the big banks and financial players involved!

2. Experience first: customers download apps for testing them - when they don’t fulfill customer’s expectations, the apps will be dropped. The implication here is simple: first, attract your clients by an excellent app description in the app store, screenshots and a strong marketing strategy and second, bind your customers through cool features, really helpful tools and a great user experience. This sounds simple - but many banks fail on it as our latest report testifies.

3. Mobile websites and responsive design gain momentum: the development of native apps is expensive and time-consuming. Testing is required as well as integrating feedback from the users. The advantages of responsive design are numerous. Besides enhancing SEO and ensuring a unified look and feel across multiple devices, there is no hurdle for potential customers to use the mobile websites of a bank since no apps need to be downloaded. It’s easy and flexible without requiring huge investments. Will browser based mobile solutions beat native apps in the short run? No, definitely not. Will it be a serious option in the longer run? Definitely yes, particularly for mobile solutions that do not require great design and all the bells & whistles of an expensive native app.


JP Morgan’s Dimon in Last Ditch Fight to Save Undeserved Bonus

Monday, September 12th, 2011

Jamie Dimon, the CEO of  JP Morgan Chase considers the Basel III accords as “anti-American”. He suggests that the US should pull out of these international agreements. Basel III requires bank to hold more equity. The biggest banks - like JP Morgan - would be required to hold 9.5% of their risk weighted assets as so-called core-tier-1-capital.

Felix Salmon gives a clear answer to Dimon. Nothing to be added…


Labor Unions and Wealth Managers Team Up

Thursday, January 20th, 2011

The German minister for consumer protection has announced to send under cover investigators to banks’  wealth advisors to check whether their advice is following the rules and to identify possible weak spots. This latest government measure to protect consumers comes after repeated reports of banks who are  often pushing products with heavy commissions (kick-backs) into the portfolios of their private clients.

All this has lead now to a coalition between wealth managers and the biggest German service employees union. According to reports by the SPIEGEL the union has already collected 60′000 signatures against the new measure to protect bank clients. The report is here (German only).

I think this is great: greedy bankers and leftist unions unite to keep exploiting the consumer. If only Karl Marx knew about this, he would roll over in his grave…


“It will never be about you and us…

Tuesday, August 24th, 2010

…It will always be about your money” . Private bank Hyposwiss is running an advertisement making fun of the UBS claim “You and Us” . Unfortunately, UBS has just changed the ad claim to “We Will Not Rest” making the Hyposwiss joke look a bit yesterday…


Deutsche Bank´s Wheel of Misfortune

Friday, July 16th, 2010

Deutsche Bank set another prime example on how to push dubious investment products in their client portfolios without taking on any risk, but charging absurd commissions.  In 2006 Deutsche Bank promoted a fund in Ferris Wheels called Global View. However, so far not ferris wheel has been built, but nevertheless the fund spend up €208 million for property purchases, banking fees and dubious project development costs. So it looks like the average  investors will incur huge losses, but how about the sponsor and sales arm of the fund Deutsche Bank ?

“For Deutsche Bank, though, the Ferris wheel project turned out to be very good business. The Frankfurt-based bank earned €19.2 million through Global View thanks to its client advisors, who drew in €160 million from the bank’s customers within the space of 10 weeks, primarily from German small investors like Schmidt. The bank itself, however, never invested in the fund. Global View used the bank Delbrück Bethmann Maffei (DBM) instead. Deutsche Bank preferred not to invest its own money in the project, for example through loans. Even when that money was badly needed, the bank declined on the basis of a “market risk” that couldn’t “be assessed and covered by the bank. [...]

The letters and e-mails raise suspicions that Deutsche Bank not only insisted on unusually high commission rates that were meant to be concealed from investors, but even doubted the project’s chance of success. From the beginning, the bank calculated using an “equity commission of 12 percent. The sales brochure was only supposed to show 10 percent, which called for a creative solution. One Deutsche Bank employee suggested in writing that the excess commission simply “no longer be shown in the brochure”.

To me that looks less like a creative but more like a criminal solution !


Our Favourite Group Postings (March)

Thursday, April 1st, 2010

Group discussions in March covered a broad range of topics. As always we and other members are grateful for information on how much one pays its wealth managers and we got several new postings, the latest on all-in fees (”Fixed income €2.000.000: 0,6% all in Equities and options €2.000.000: 0,8% all in”) by CDrewing. Still the differences between the providers are very high and we congratulate 7chiffres for his excellent negotiations skills: For currency exchanges exceeding USD 20k he pays only 10 basis points on transactions. A number we have so far only seen for amount of USD 100k and more.

7chiffres is not only a good negotiator, but also follows a sound strategy and has a good reasoning on why he manages his assets himself.

“(..) It helps to remember you don’t have to give 1% or more every year to some 3rd party, and will most likely end up with better returns. If, like me you made your money yourself (vs. inherit), it also helps to remember that in comparison with the effort to earn the money, the effort to preserve it (my goal is preservation with moderate growth) is really not that big. Another way to think about it if you have built a business yourself, is this: would you just give control of that business to someone else based on a few meetings and no public track record and then stay away from that business hoping for the best? Probably not” (read full post)

It is worthwhile to also read his other post on his experience and usage of wealth managers and as well investment strategy,

Talking about avoiding the pitfalls and hidden cost of investment vehicles. Our member Obsidian gave other members an excellent recommendation on how to design a contract so that an investments does not only pay-off for the Private Equity Company, but also the investors.

“Always build a minimum floor return exclusive of fees, costs and commissions. If you deposit a substantial principal amount, normally in excess of $3M, your fund manager will agree to a floor. This is normally never discussed but it is available to the savvy investor. Remember the fund agreement is merely the starting point of your negotiation and engagement with your fund manager. In a market where cash is king you have more negotiating leverage than you can imagine. (read full post)

Our very active member Solarcell brought to the attention the harsh consequences new US regulations have on investors. Thanks! In fact we also felt that these changes in regulation deserve a far higher publicity than they got so far and published our analysis and opinion on the site.

While the interest and inflation rates are still close to record lows our members are rightly looking ahead and continue to discuss ways on how to avoid the negative effect of future inflation on their wealth. Our member Pedro was so kind to share his strategy:

“(..) I bought some real return bonds, paid down my mortgage and actualized future projected consumptions (major renovations on our principal residence, and I am planning to be purchasing land for a possible future second home as soon as the renovations are over). Some wrote about investment real estate, I would be careful about that because of its inherent negative carry. If it procures you some positive marginal utility then go for it, but if you are only going to worry about it and do not enjoy having to maintain it (like I would) then I would not do that.” (read full post)

Thanks to all of you for sharing your experiences and insights ! Every post helps fellow members to gain transparency in the rather opaque wealth management market.


Too Big To Fail

Friday, March 5th, 2010

I just finished the bestseller “Too big too fail”, delivering a behind-the scenes and moment-by-moment account of the months between the fire sale of Bear Sterns in spring 2008 and the announcement of the biggest bailout in history in October 2008. Drawing on hundreds of hours of interviews with the key players the Author Andrew Sorkin of the New York Times was able to write a kind of real-life thriller on the struggle of overpaid bankers and overwhelmed politicans to save the financial systems, there companies, jobs and even more so their egos. A gripping book one reads with disbelief on the lack of self-awareness and competence of main players, but also a lot of amusements on how the “big” world of finance and business comes down to surreal realities in the face of disaster.

One of these hard to belive events is a check over USD 9 billion! that literally saved Morgan Stanley and the jobs of its 45.000 employees in the very last minute. Hand delivered by a Japanese delegation and picked up by a banker wearing flip-flops….check