Archive | April, 2013

Bank 3.0 – if branches are so yesterday, why are they so full?

25 Apr

So I’m sitting in the sun actually reading Brett King’s Bank 3.0 (rather than just blogging it’s arrived). It’s a good read – I’m on Chapter 3 – Can the branch be saved?- which rather begs the question as to whether you would want to.

I find all the arguments about the need for banking but not for banks very persuasive, and Brett has sourced his evidence well. But perhaps the sunny day helps me to drift off, & I remember a day a couple of years ago when I was in a bank branch (RBS) on a Saturday morning in a market town near us (Chelmsford UK, pop. 100,000).

I was there because there was a cock-up on arranging “floats” for a plant sale I run once a year. There are ten or so stalls, and the turnover on the day is about £2k – about half in cheques and half in cash. There was a new treasurer for the event, and he hadn’t arranged any cash floats for the stallholders, and couldn’t be reached on the phone. So off I went to the nearest market town to see what I could do.

To save you the unbearable suspense, I can tell you that it worked fine. After a rather exasperated counter guy had asked why I hadn’t arranged it in advance, & I had grovelled appropriately, the bags of coins and crisp £5 notes were duly handed over for a wad of cash I had extracted from the ATM. RBS went up several points in my estimation (albeit from a very low base – but that’s a different story).

But the real thing that surprised me was how full the branch was on a sunny Saturday morning of a bank holiday weekend in early May. I knew why I was there – but they couldn’t all be running competing plant sales with similar float cock-ups – could they? It seemed unlikely. Nor were they elderly pensioners unable to cope with new technology – it looked like a pretty representative cross-section of Chelmsford humanity. And it included some digital natives – at least one guy was playing with his i-Phone while standing in the counter queue.

I suppose my experience (admittedly two years ago) may have been atypical, but in my infrequent visits to my own bank branches (HSBC), there still seem to be plenty of people milling about.

So is this irrational behaviour?  Given the stats, the majority of the people I see in branches will have smartphones and/or tablets plus internet access at home & work. However, I’m not sure this makes their behaviour irrational. Like me, they may be dealing with the grubbier end of money transmission – cheques and cash, which, while on the decline, ain’t dying anytime soon. Witness the UK Payments Council’s (wise) decision to back off from announcing the death of the cheque. Or perhaps they were passing & popped in to check something (as I did recently).

Or perhaps they were attracted by the “store makeover” of may retail branches? This is the bit I just don’t believe. Brett has a good section on bank execs trying to remake their stores a la Apple. But if the parallel to a new game on a shiny new retina display is a flexible mortgage or special 1% bonuses on savings (Gosh! – a whole £10 on my £1,000 savings!) I think we can forget it. The trouble with banking is that it’s just too boring.

Brett quotes Chris Skinner’s phrase with approval – less branch banking rather than branchless banking. And how much less will depend on finding cost-effective substitutes for cash and cheques – for SMEs as well as individuals. Or (horror of horrors) a better alignment of prices for money transmission with the true costs.

The other change required is in the mental models bankers use – so they embrace the use of other channels (telephone/Skype/internet/mobile) as a substitute for face to face advice. And, as Brett recommends, realign their budgets so they address the security issues around these channels rather than simply saying they can’t be used.

Salz Review of Barclays – and you thought management consultancy was expensive?

5 Apr

Salz review

There has been some excellent press commentary on this since it was published yesterday. The FT, in particular, has excelled itself – Jonathan Guthrie in Lombard had a spoof sermon from Rev Salz – the visiting preacher at St Barcalys Beyond the Pale ( see and Lex has an excellent video (Q from Stuart Kirk, Head of Lex – “Is it simply a statement of the “bleedin’ obvious” – A from Oliver Ralf of Lex – “Yes”; see for more).

So I will confine myself to two points. One is cost – where the first figure I saw reported was £14.5m, which then rose mysteriously to £17m – presumably the VAT-inclusive price. Now as Anthony Salz’ firm (Rothschild) was “only” paid £1.5m in lieu of his services, that leaves a whole £13m unaccounted for. Comparable consultancy fees from a strategy boutique? Running the slide rule over it, I reckon about £2m should do it. So if I were a shareholder I would be asking some questions – a good starting point might be to get the non-execs over the period covered by Salz to pay for it, since he is basically commenting on their weaknesses.

The second point is not unique to Barclays, and is about changing the rules of the game. As you read through the report, you realise that, over the period from 2005 to 2012, the rules of the game changed – it was as if, coming out after half time, Barclays was faced with an Alice in Wonderland world where the goalposts were smaller and someone had abolished the offside rule. HMRC’s attitude to tax was a good example (see chapter 6). Barclays failed to adapt in time. Businesses need monitoring systems which tell them not only what their competitors are up to but also when the mindset of key stakeholders such as regulators undergo a sea change.

An Easter present for everyone who likes change management

1 Apr

A great set of cartoons for all the actors in the change management drama – plus some useful videos which you can use in your own presentations. And (so far) for free. Enjoy! – here is the weblink  – cartoons