Enterprise headaches need extra strength tablets

Over recent months we have become used to every new solution to a financial sector issue including the key elements of cloud, social media and mobile. Regular readers will remember our analysis on financial sector clouds and will be well aware of many of the growing uses of social media. However, we are now seeing a change in the mobile aspect of this fashionable troika with the move from the use of smartphones to the ubiquitous adoption of the tablet touch based computer. As with the adoption of the cloud, the widespread use of tablets started in the consumer space as successfully pioneered by the iPad and the late Steve Jobs. Even non-Apple fans must admit that the iPad does a very slick job of delivering entertainment and personal functionality in an attractive format, but just as the iPhone has not taken over the corporate smartphone world, is the iPad up to serious corporate business use? Well if you scan the iTunes app store, then undoubtedly there are a larger number of iPad business apps available. However, many of these can be categorised as document or media browsers providing a convenient way to find and view public domain/web available content on the tablet. This is probably the case as the use of retail targeted devices for corporate presents challenges for the user, business and technology alike, as there are multiple operating systems, formats and also that retail users are less willing to pay for heavyweight business necessary features such as strong security.

So it was with interest that I saw this month the announcement from ConvergEx  that it has made its order management system, the Eze OMS accessible through an iPad. To do this, they have had to employ specific software techniques to overcome security issues with this retail device e.g. automatically wiping sensitive data. They say, firms will be able to control how often these automated data wipes occur and will also have the ability to remotely disable users. Other more device oriented approaches are also emerging for example the Cisco Cius tablet  which provides an enhanced Android operating system based device with support for full business strength security, connectivity and supportability coupled with built in Cisco industry standard video, webex and collaboration/social media functionality. Having had a “hands on” demo of this device recently it is impressive and it has all the features and pedigree to succeed, but as other tablet platforms (e.g. HP) have found, the application providers and user take up will be key to its success.

FSA goes all anti-social

Whether it is on a TV advert, a finance company website or in the small print on a bank’s brochure we have all seen, but potentially not read, the warnings and disclaimers that sensible regulators mandate. For more traditional media, even websites, this makes sense but when you look at channels such as text and twitter with their restrictions on message size these warnings are difficult, if not impossible, to incorporate. The FSA has spotted this potential issue recently e.g. in the mortgage market. So what is the FSA’s solution – ban the use of Twitter for any financial product? This gives rise to an image of King Canute sitting on the beach commanding the waves to stop coming in on the tide. There are some things you can regulate and some things you just need to get used to.

Always listen to the anthropologist

I am a fan of BBC Radio 4 and was listening to their morning news and current affairs programme as I drove to the office the other day. One of the items was by an anthropologist, Joris Luyendijk, working for the Guardian who had been doing a study of UK financial services. It makes interesting listening about the different tribes in the City and to hear more, you can find the original programme on the BBC iPlayer (the particular article starts around 2 hours and 45 minutes in) or a short version on AudioBoo. One particular comment he made struck me as being absolutely spot on: to paraphrase him slightly, he said “banking is diverse, so no one, silver regulatory bullet will work”. If politicians don’t want to listen to “the Bankers” then maybe they should listen to the anthropologist.

Our survey shows growth of Commission Sharing Agreements accelerates and takes on a more strategic, global role in 2011/12

The results of the MPI Europe survey of directors and staff in financial institutions on the usage and trends in commission management in 2011 have been published today. Following an even greater response than the previous year, with more than 50 firms contributing, the overall view was that growth of Commission Sharing Agreements (CSA) continues to accelerate and they now are taking on a more strategic, global role. CSAs continue to fulfil a clear market function and their efficient management by firms contributes to the overall effectiveness of their investment process.

In addition, the MPI survey found that:

• 83 % of Asset Managers believe that market usage of CSA’s will increase over the next 12 months.
• 53 % of European respondents indicated that they had 25 or more CSA agreements already in place.
• 67% of Brokers believe greater market standardisation of CSA agreements would have a “significant impact” on their investment process – underlining the need for many brokers to accommodate differing types of agreement and data interfaces.

This shows that the appetite for leading firms to make the most of CSAs as a way of improving the effectiveness of their investment process continues to grow, in spite of, or possibly because of, the current market conditions. To maximise these gains, leading firms are moving away from manual or restrictive processes and looking to increase automation and also to support and leverage global CSA relationships.

Importance of global agreements

Over half of all respondents indicated there would be a material effect if they could operate a global CSA effectively. It was not clear from the responses whether issues with global agreements were due to system, organisational or external market factors, however at MPI, we have seen the number of global clients we work with in this area increase over recent years – providing further evidence of this trend. We have frequently been involved where an institution has been looking to put global CSA business and systems processes in place that also allow them to provide a level of customisation to local requirements.

You can also find more background information on commission sharing/unbundling arrangements on our website at http://www.mpi-europe.com/newmarketmodel.asp

Methodology

MPI surveyed a range of financial sector firms to understand the key trends, challenges and opportunities in the use of commission sharing agreements. The survey was conducted during a 5 week period in July/August 2011 and gained responses from over 50 asset managers, brokers and research providers.

How much change is good for you?

There is almost universal agreement, given the recent financial crisis, that banking and indeed banking regulation needs to change. However, the other clear message from the financial crisis is that the role banks play is vital to our economic prospects and the need, to use a medical analogy, to keep the patient awake and working, even during surgery. Taking the medical theme further, it is not necessarily advisable to put the patient through every medical procedure at the same time. This concept, known as absorbability by change professionals, looks to assess and control the amount of change to be undertaken within an organisation so that “business as usual” can continue alongside the implementation of the change. So how is banking doing on this absorbability scale?

To assess this, I carried out the following exercise. By setting out the key regulations that will impact UK/European financial services organisations over the next few years, I was able to very quickly fill a page with the names and abbreviations of the major regulatory initiatives that we have mentioned in this bulletin over recent months (e.g. RDR, MiFID 2, Basel III) and also a few new ones (e.g. PRIPS, FATCA). Then I added organisational changes, such as the splitting of the UK regulator the FSA and the anticipated ICB/Vickers proposals, and then the various market, technology and economic challenges. Lastly, I drew out the connections between the items whether they represented new challenges, complexities or indeed solutions. It did not take long for a spider’s web of interrelationships to emerge. Not only did this reaffirm the MPI strategy of concentrating our efforts in these areas, but also that the banking sector must be very near, if not already over, the maximum amount of interlinked change that it can safely absorb.

Before I get accused of going soft on banks, it is worth remembering that having a healthy, self-supporting banking sector is not just an abstract concept, but is essential if the taxpayers who are currently propping up several major banks are to get our money back. So, the suggestion would be to limit additional change and, for example, allow more time for the implementation of new regulatory regimes – it is a time for prioritisation and judgement rather than retribution.

Our mates acquire a sponge

There has been lots of childish humour in the MPI office today (okay mostly from me) with the news that our long time mates at Kurtosys have acquired a Sponge (more precisely a company called GetSponge) but the more serious message is that our smart chums from Wimbledon have spotted the convergence in financial services of information and access with social media. The days when clients just expected a one way flow of rigidly pre-packed information are fast disappearing. There is increasing emphasis on interaction and flexibility as a way of both providing better customer service and improving brand image in an increasingly web and digitally driven age.

Efficient but not necessarily effective

It was entertaining to listen to a less than serious conversation between two ‘lean efficiency’ experts at a client the other day, discussing how more efficient their bank call centre could be if they could only enrol customers with short names. By only having short names, this allowed the opening conversations between caller and operator to be shorter and would require fewer key strokes, and shorter calls means more efficient and cheaper call centres.

They came up with some inventive ways of imposing this short name policy such as offering only 10 character long fields for entering the clients name when setting up an account. However, they did not come up with a solution for the commercial issue that customer profitability is in no way related to the length of someones name. However, this conversation playfully illustrated that true business effectiveness and pure technical efficiency do not always work together, and that the use of the clipboard, stopwatch and generic process consulting without a strong understanding of the underlying business is unlikely to yield the right results.