Archive | Uncategorized RSS feed for this section

Business model innovation – Clayton Christensen article in MIT Sloan Review

7 Oct


Good piece by Clayton Christensen and others on this – see Includes  a useful business model descriptor and a life cycle of business models which reflects Michael Porter’s great chapter in Competitive Strategy on the transition to industry maturity.

MasterCard purchase of VocaLink

30 Aug

An interesting interview in Fortune with a MasterCard exec (Michael Miebach) on why they are doing the VocaLink deal – interesting in two ways. First, the writer of the Fortune piece doesn’t appear to have heard the interview, as he focuses on P2P payments, which isn’t the focus of what Miebach was talking about. Second, in the interview itself, Miebach explains that, while they have a great position in cards, they don’t know much about ACH (viz interbank) payments, and think they should. No doubt the growth of near real time payments globally and the associated apps possibilities (like Zapp) are stirring MasterCard’s interest. Worth a listen! –

Hope for a post-Brexit world?

18 Jul

Oxford Spires

‘Remainers’ have been somewhat short of hope post the 23rd June referendum – chortling at the collapse of the leadership ambitions ‘the Oxford set’ (Johnson, Gove) not withstanding. But now an Oxford man has come forward with an intelligent way out of our self-induced morass . George Yarrow (Hertford College and the Regulatory Policy Institute) has called attention to the potential to use the European Economic Area as a way of retaining the benefits of the single market while using its safeguarding provisions to deal with immigration pressures (see

There are strong similarities between his approach and elements of ‘Flexcit’, which Richard North et al have been advocating (see, or the Youtube movies –, but skip the first 8 minutes).

Whilst tempted to write a longer post on the technicalities, I will forebear. It’s the sunniest day of the year so far, and I didn’t create this mess (stand forward D Cameron plus the Eurocrats pushing for ‘A Country called Europe’). So read the pieces, see the movie, and pray that the new occupant of 10 Downing Street is doing the same!

The EU Referendum – a guide for the perplexed

16 Jun

So here’s a paper written originally for my children trying to explain what the EU is all about and why we need to remain:EU Referendum – A Guide for the Perplexed v2 I’m sharing it here as there is clearly a lotto misinformation out there from, inter alia, the Murdoch press.

Brexit – are there any economists left in favour?

27 May

OECD Brexit Cover

I have just finished reading the OECD’s report on the the economic consequences of Brexit (see It’s a damning piece of work for anyone who believes Brexit won’t damage the economy or who follows the line ‘well, we can just negotiate our own trade deals can’t we?’ Not surprisingly, it chimes in closely with what the head of the World Trade Organisation (WTO) has said about the difficulties of the UK trying to ‘go it alone’ in seeking new trade agreements (see

The OCED report also provides a useful summary of other studies done (see Table 5, p36 of the OECD Report). All show big negative effects of Brexit – larger for the UK, but significant also for the remaining EU members.

A key Brexit argument against these studies seems to be that they are just produced by an ‘elite’ group of economists who failed to forecast our last recession. In fact, the main institutions weighing in against Brexit – the IMF, the OECD, the WTO – are the bodies set up after 1945 to ensure we never had to endure again the ‘began my neighbour’ trade wars and competitive devaluations of the 1930s. They have played a major role, whatever their mistakes, in creating the postwar prosperity many of us enjoy.

A more reasoned challenge would be to say that aggregate figures can hide important distributional impacts. If we vote to remain, as I hope, we need to look more carefully at this, and the impact of net EU migration on specific communities. If there are gains from remaining in the EU, the gainers can afford to compensate the losers, and should so so.

So to return to the title – have we any economists left who favour Brexit?

Bank-based mobile payments

5 Apr

Looks as if there is lot of interesting stuff happening in Copenhagen at the Money 20/20 conference – #Money 2020Europe on Twitter. Auka (formerly mCASH) for example has an interesting White Paper out on bank-based mobile payments (see for your copy).

Auka’s cloud-based solution is offering banks a white label variant of Paym and ZAPP in the UK –  P2P smartphone payments and an alternative for merchants to card payments and PayPal. It will be interesting to see how they (and their competitors) fare. Customer and merchant uptake will be the problem – why would customers use this rather than Apple Pay (or the Android alternative when it lands in Europe)?



Time to rejoin some old colleagues

23 Oct


In case you are wondering why you have seen fewer posts of late…

Since March this year I have been working on a couple of payments-related projects with CEPA (see, now added to the blogroll on the right). The projects have gone well, and I’ve enjoyed the interaction with the CEPA team. So I’m now joining them (on a part time basis) as a Senior Adviser to develop their work in financial services.

One of the great aspects of CEPA is their recruitment of ‘bright young things’ with up to date economics and quant skills. So there is a trade to be done – they can keep us up to date on the latest thinking in economics while we pass on some of our painfully-acquired knowledge of how management consulting works.

Cash is King in Waterloo!

10 May

It had really been a very pleasant meal. A number of old colleagues from PwC and IBM days had gathered together to celebrate a colleague’s retirement anniversary – he’d retired 5 years ago and very sensibly thought one celebration wasn’t enough.

But time had passed and carriages had to be summoned – so the time had come to pay the bill for the food (Trevor, our host and the quinquennial retiree, was stumping up for the wine).

Now I should explain, in the light of what follows, that this was a highly educated and analytical group of people – a high proportion of Oxbridge, a couple who were running or had run a software business, a senior guy from IBM’s Analytics offering, and a futurologist. By way of parenthesis, I should also say that the futurologist had spent part of the meal explaining to us why his prediction that ‘internet shopping would never take off’ had been so far off the mark.

Anyway back to the bill. This seemed to be a classic situation to try using Paym, the UK’s new mobile payment application available to most people with a bank account and a mobile phone, which allows you to make payments via your mobile.

‘Why don’t we use Paym?’ I said

‘What’s that?’ ‘Never heard of it’ ‘No need, I’ve got the cash here’ were the remarks that followed – a rather deathly combination of zero awareness and zero interest when the concept was explained.

Undaunted, I ploughed on. I might add I’d registered for Paym with my bank, HSBC, when it was launched a year ago, and had been on the lookout for an opportunity to use it.

I had Trevor’s number on my mobile. So I logged into the HSBC website, pressed the Paym button, and put in the details. I pressed ‘Confirm’ – the screen cogitated for a few moments and generated an error message. It had some zeros and an eight in it – which I assumed meant Trevor wasn’t a Paym user.

Meanwhile the twenty pound notes were whizzing round. I could fondly imagine that if the bill (£35 a head plus tip, so two twenties did the trick) had been for an odd amount Paym might have been of use – but somehow I doubt it.

Paym’s issue of course is ubiquity – like the spread of the mobile phone, it’s only useful to you if the chap you want to pay has Paym installed. Mobiles have taken off because of the lack of a close substitute. Paym’s problem appear to be – cash!

50p tax rate? – perhaps the Bundesbank has a better idea

29 Jan

IFS analysis of 50p tax rate

Labour’s pledge to reintroduce the 50p tax rate for those on incomes of over £150,000 a year has met with a hostile business press. Mind you, as it is mainly the captains of industry, investment bankers and senior partners in legal and accounting firms who will be paying it, that’s not perhaps surprising.

What has surprised me, as I have read into some of the background policy analysis, is how difficult it is to estimate the impact on the deficit. What HMRC calls the “static costing” is straightforward enough – reducing the rate, in 2012 from 50p to 45p was estimated to cost £3bn or so. But the net effect depends on how successful top rate taxpayers would be in shifting income otherwise liable to the 50p rate elsewhere – to another year, to another country, or to a form of income taxed less highly – say dividends or (even better) capital gains. HMRC ‘s exhaustive (and exhausting) analysis reckoned this would reduce the net cost from £3bn to roughly £100m in a full year – a staggering level of behavioural response (see diagram above, from IFS). Indeed, hidden in the small print of the HMRC analysis is the giveaway sentence:

“the estimated revenue-maximising rate of tax for those with incomes over £150,000 is between 45 per cent and 50 per cent” 

– in other words, at some point between a 45p tax rate and a 50p rate, an increase will actually reduce the tax tax. So, if you are going to “tax the rich till the pips squeak”, you had better stop somewhere between 45 and 50p.

Now in many countries the response would be “well, that’s what the Tories have paid HMRC to say”. But having waded through the document, I can confirm that, in this instance at least, the Northcote/Trevelyan reforms are holding good and it seems a pukka piece of analysis.

Labour’s problem is that there are just too many distortions in the tax system and too many opportunities for wealthy individuals to legally avoid tax. Part of this is related to globalisation – but part is the differential rates of tax in the UK between taxes on employment income and taxes on being self-employed or on dividends from a small business. Plus what are still generous treatments of capital gains versus earned income – differences which Venture Capital Trust allowances and their like amplify.

It is interesting that, while the 50p debate has been going on in the UK, across in Germany the Bundesbank was suggesting a wealth tax/capital levy could be a helpful device for countries [think Italy] seeking to reduce their deficits (see for the FT summary). Labour might find it more worthwhile, if less electorally popular, to delve into the mechanics of why so much income can be shifted in the UK, the taxation of wealth, and how, in a globalised world, “the rich” can be encouraged to pay “their fair share”.

Seasons greetings and thanks

22 Dec


to my loyal band of followers – and trusting that you are all the later model, post-ghosts versions of Scrooge this Christmas! (NB – you may need to zoom in to read the captions.)