For all of us who have been tom tomming electronic money, digital payments and mobile payments, this report by the British Retail Consortium is a bucket of cold water splashed on our face! See http://www.brc.org.uk/details04.asp?id=1360
This report actually says that cash usage in UK has gone up and going strong! Reticent consumers; burnt by credit card and other debt, appear to be playing safe and sticking to 'jingle' payments. So, all our enthusiasm to write off cash and sneer at anything that isn't digital seems to be prematurely misplaced. If this is the scene in UK, you can imagine how much cash is required in emerging markets.
I also recommend this report by Mike Lee - CEO of ATMIA posted here -
http://www.epaynews.com/resources/hundredyearsofcash.pdf
Mike believes that cash will still dominate for at least another 100 years.
So, Cash even if not the King, will at least be a Princess courted by all of us!
Monday, April 28, 2008
Wednesday, April 9, 2008
Thought for food
Going by the events of the 10 days, it looks like Lady Subprime who has been grabbing all our attention has serious competition. The 'World Food Crisis' threatens to take us back to the basics and make us forget all about CDOs, Ninja loans, mortgage, etc. Many countries like India, China, Philippines, Thailand and most of Asia have taken extreme measures to curb the runaway inflation of food commodities. Most of them have banned export of rice and other food grains to curb rising prices and address shortages. The Middle East countries (GCC states) who have traditionally operated on 'oil for everything' model now face a converse scenario on food. They now look exactly as what the oil consuming countries face on fossil fuel.
This to me, looks like we are on a crisis of such fundamental nature that people will stop thinking about banks and financial market woes! Egypt witnessed the worst food riots in recent history. Ruling governments are all jittery over the mass demonstrations and protests over food prices. Much has been made of the effects of global warming, diversion of agricultural land to alternative fuel inputs, commodities trading and even GM foods.
So, we are going to see a mass movement of economists, analysts and social scientists to analyzing whether old Malthus has finally arrived on his theory. How is this going to affect the banking industry? The big S word - Stagflation promises to be the buzzword. Any hopes we had on emerging markets being decoupled from the US crisis is under question now. Emerging markets now find the very 'feel good' growth that was being hailed is a major cause of inflation.
The final irony may be in the US morphing into an attractive destination - with low prices and adequate food supply! The economic wheel may twist around to where we started.
This to me, looks like we are on a crisis of such fundamental nature that people will stop thinking about banks and financial market woes! Egypt witnessed the worst food riots in recent history. Ruling governments are all jittery over the mass demonstrations and protests over food prices. Much has been made of the effects of global warming, diversion of agricultural land to alternative fuel inputs, commodities trading and even GM foods.
So, we are going to see a mass movement of economists, analysts and social scientists to analyzing whether old Malthus has finally arrived on his theory. How is this going to affect the banking industry? The big S word - Stagflation promises to be the buzzword. Any hopes we had on emerging markets being decoupled from the US crisis is under question now. Emerging markets now find the very 'feel good' growth that was being hailed is a major cause of inflation.
The final irony may be in the US morphing into an attractive destination - with low prices and adequate food supply! The economic wheel may twist around to where we started.
Monday, March 24, 2008
Future Management V 2.018
Chartered Management Institute - UK has released an engrossing report on the what the workplace/ organisation will look like in 10 years. You can download the report and 'accessories' from;
http://www.managers.org.uk/client_files/user_files/Milburn_21/Management%20Futures%20Report%20Final.pdf
The report called 'Management Futures' outlines how our working world is going to look like when viewed through three prisms - 'World continued' - Probable, 'Unexpected Future' - alternative worlds and the 'Desired Future'.
The only gap I see in the report is lack of attention to the most basic human element - 'stupidity'. The recent events in the financial world (sub prime!) shows that humanity is still governed by the base values of greed and stupidity. Whatever happens, it is unlikely that we, as a human race, are going to display any fundamental change in our driving forces. I think we will continue to have equivalents of Enron, WorldCom, Subprime in varied forms or mutants.
------------------------------------
On another front, it was gratifying to note that 'Visa takes Life' through a bumper IPO. The Visa adv campaigns say 'Life takes Visa' - so we are happy to note that it holds true the other way around too! This was one IPO that the whole world collectively worked to make it a success. It is an irony of our times that a company sells itself on the tag line 'it does not offer any credit and hence runs no risk of default!'
But all said and done, our badly battered world needed some cheer!
http://www.managers.org.uk/client_files/user_files/Milburn_21/Management%20Futures%20Report%20Final.pdf
The report called 'Management Futures' outlines how our working world is going to look like when viewed through three prisms - 'World continued' - Probable, 'Unexpected Future' - alternative worlds and the 'Desired Future'.
The only gap I see in the report is lack of attention to the most basic human element - 'stupidity'. The recent events in the financial world (sub prime!) shows that humanity is still governed by the base values of greed and stupidity. Whatever happens, it is unlikely that we, as a human race, are going to display any fundamental change in our driving forces. I think we will continue to have equivalents of Enron, WorldCom, Subprime in varied forms or mutants.
------------------------------------
On another front, it was gratifying to note that 'Visa takes Life' through a bumper IPO. The Visa adv campaigns say 'Life takes Visa' - so we are happy to note that it holds true the other way around too! This was one IPO that the whole world collectively worked to make it a success. It is an irony of our times that a company sells itself on the tag line 'it does not offer any credit and hence runs no risk of default!'
But all said and done, our badly battered world needed some cheer!
Sunday, March 23, 2008
Card Fraud - truly globalized!
APACS released the latest figures on UK Card fraud - http://www.apacs.org.uk/2007Fraudfiguresrelease.html
It really shows how good criminals are in quickly exploiting 'systemic' loopholes. UK spent more than a billion pounds to implement chip and pin. Shows how truly globalized the criminals are! If ChipPin impedes my fraudulent activities in UK; no problem, I simply copy the magstripe and use it 'non' chip countries. Well, the biggest non EMV country is the US. Overall card fraud has increased 25% in 2007 over 2006. This is mainly driven by the 77% hike in overseas fraud. Online fraud rose 33%. I think these figures will look the same for all countries across the world.
Total card fraud losses stand at a mind numbing £535.2m. So, what do we infer from these figures?
-Whatever level of Chip / EMV security you put in a country, criminals will always find a way to clone magstripes and use them in places where EMV hasn't reached yet.
-Criminals will continue to thrive in the online world. With the surfeit of social networking and other areas for interaction, there is ample opportunity for criminals to indulge in 'social fraud'.
-As long as the US remains out of bounds on EMV, counterfeit fraud cannot be stamped off.
-With the economic downturn and heightened jobless levels, more vantage opportunities caused by desperation.
All in all, expect these figures to up further in 2008. There is nothing to suggest that criminals are getting dumber or restricted in any way. If anything, worsening economic conditions are going to lead to more power to card fraud and swelling in the ranks of fraudsters.
"Fraud is like electricity; it is shocking and follows the path of least resistance."
It really shows how good criminals are in quickly exploiting 'systemic' loopholes. UK spent more than a billion pounds to implement chip and pin. Shows how truly globalized the criminals are! If ChipPin impedes my fraudulent activities in UK; no problem, I simply copy the magstripe and use it 'non' chip countries. Well, the biggest non EMV country is the US. Overall card fraud has increased 25% in 2007 over 2006. This is mainly driven by the 77% hike in overseas fraud. Online fraud rose 33%. I think these figures will look the same for all countries across the world.
Total card fraud losses stand at a mind numbing £535.2m. So, what do we infer from these figures?
-Whatever level of Chip / EMV security you put in a country, criminals will always find a way to clone magstripes and use them in places where EMV hasn't reached yet.
-Criminals will continue to thrive in the online world. With the surfeit of social networking and other areas for interaction, there is ample opportunity for criminals to indulge in 'social fraud'.
-As long as the US remains out of bounds on EMV, counterfeit fraud cannot be stamped off.
-With the economic downturn and heightened jobless levels, more vantage opportunities caused by desperation.
All in all, expect these figures to up further in 2008. There is nothing to suggest that criminals are getting dumber or restricted in any way. If anything, worsening economic conditions are going to lead to more power to card fraud and swelling in the ranks of fraudsters.
"Fraud is like electricity; it is shocking and follows the path of least resistance."
Mobile phone - birthright of every world citizen!
In one of my earlier blogs, I laid out the opportunity of mobile numbers being used as 'citizen ID' and enabling access to credit to the huge mass of unbanked citizens of the world.
Well, I now go a step further - we need a 'Universal Declaration of Mobile Phone Rights'. I think it is about time the United Nations passed a resolution requiring every country to issue mobile phone to its citizens. All the global talk of identification, rights, cheap credit is meaningless without a global platform on which every world citizen can enjoy rights.
Companies like Mi phone are coming out with a $ 20 mobile phone. See www.mi-fone.mobi/
Very soon, a phone will be as affordable as a watch and it makes sense for the world to seize this opportunity and get the world 'mobile'.
As a popular advertisement by a MSP in India goes ; 'Air, Water, Food .... .. Network'.
Time to make mobile phone a basic human right.
Well, I now go a step further - we need a 'Universal Declaration of Mobile Phone Rights'. I think it is about time the United Nations passed a resolution requiring every country to issue mobile phone to its citizens. All the global talk of identification, rights, cheap credit is meaningless without a global platform on which every world citizen can enjoy rights.
Companies like Mi phone are coming out with a $ 20 mobile phone. See www.mi-fone.mobi/
Very soon, a phone will be as affordable as a watch and it makes sense for the world to seize this opportunity and get the world 'mobile'.
As a popular advertisement by a MSP in India goes ; 'Air, Water, Food .... .. Network'.
Time to make mobile phone a basic human right.
Regulations ahoy!
What is the most likely event to emanate from all the downslides in the financial market? Yes, the plethora of new laws and regulations. We saw Sarbanes-Oxeley in response to Enron and World Com. We had the Patriot Act after 9/11.
So, what do you expect from the subprime crisis - new laws, of course! The first salvo seems to be fired off by the US House Committee on Financial Services - see here http://www.house.gov/apps/list/press/financialsvcs_dem/press0320082.shtml
Congressman Barney Frank has called out for a 'systemic risk regulator' to obviate malpractices seen recently. He has also called out for reforming the regulatory system (yet again!), reassess capital, margin and reserve requirements, monitor auction/mortgage securities.
Will regulatory zeal curb the rising Tsunami of red ink splattering across various areas of the financial world? The Insurance industry has already sounded the alarm hooter. AIG announced its worst ever 4Q results last week and called it 'a bigger event than Katrina'. Other insurance companies are no better. Total write downs and credit losses have touched $ 38 B. The New York Times observed last week that the term CDOs appeared in the newspaper only thrice before 2005; but almost every week since the summer of 2007! Our lives are permanently scarred by sub prime.
So, you think that strict laws following bailouts will keep financial institutions wary of transgression? I am not so sure! Like for Y2K, Sar Box, Basel II, the IT consultants and solution providers will be off to the races.
From my perspective, I think the regulators should impose the 'common man's understanding' yardstick to all the investment banks. All products and offerings should be approved by a certain percentage of investors, bank customers that they have understood the products! This way, at least we will be saved from scratching our heads on CDOs, SDVs, hedges, etc and wondering how these complicated items take us down into the recessionary dumps. At the least, if we are going downhill, we should know why.
So, what do you expect from the subprime crisis - new laws, of course! The first salvo seems to be fired off by the US House Committee on Financial Services - see here http://www.house.gov/apps/list/press/financialsvcs_dem/press0320082.shtml
Congressman Barney Frank has called out for a 'systemic risk regulator' to obviate malpractices seen recently. He has also called out for reforming the regulatory system (yet again!), reassess capital, margin and reserve requirements, monitor auction/mortgage securities.
Will regulatory zeal curb the rising Tsunami of red ink splattering across various areas of the financial world? The Insurance industry has already sounded the alarm hooter. AIG announced its worst ever 4Q results last week and called it 'a bigger event than Katrina'. Other insurance companies are no better. Total write downs and credit losses have touched $ 38 B. The New York Times observed last week that the term CDOs appeared in the newspaper only thrice before 2005; but almost every week since the summer of 2007! Our lives are permanently scarred by sub prime.
So, you think that strict laws following bailouts will keep financial institutions wary of transgression? I am not so sure! Like for Y2K, Sar Box, Basel II, the IT consultants and solution providers will be off to the races.
From my perspective, I think the regulators should impose the 'common man's understanding' yardstick to all the investment banks. All products and offerings should be approved by a certain percentage of investors, bank customers that they have understood the products! This way, at least we will be saved from scratching our heads on CDOs, SDVs, hedges, etc and wondering how these complicated items take us down into the recessionary dumps. At the least, if we are going downhill, we should know why.
Tuesday, February 19, 2008
Debt and Fraud - the inescapable facts of life in 2008
"The two most common elements in the universe are hydrogen and stupidity", so goes a wise crack.
The way the world is going in 2008, it looks like Debt and Fraud are going to the two most common elements in our lives. Never in economic and social history have these subjects taken so much of our daily lives. Even my school going son has heard of 'sub-prime' - words that were the exclusive bastion of credit professionals. In my school days, we only knew about prime numbers in Maths!
Let us take debt first. Debt in all forms - mortage, credit card, loans, student, toxic, ninja ..... has permeated our daily lives. So much so, that debt is beating global warming as the greatest urban obsession. Never before have so many parts of our society looked at debt. I think more people now across the world are aware of the indebtedness of Americans and its likely implications on the rest of the world. A wonderful example of how much debt dominates our lives is indicated at the following event laid out in http://www.keepitinyourpants.org/. A video contest has been launched offering a top prize of $5,000 for the best student-made public service announcement regarding credit cards. A new contest for budding filmmakers is the growing problem of "Debt Disease" among young Americans. The first-place winner of the "Keep It In Your Pants" contest -- open to students 14 years of age and older enrolled in middle school, junior high, high school, college, or graduate school -- will receive a $5,000 scholarship for school-related expenses.
Another event indicating our love for debt -Leading U.S. and international scholars will gather to examine the phenomenon of debt at “A Debtor World: Interdisciplinary Academic Symposium on Debt,” sponsored by the American Bankruptcy Institute (ABI) and the University of Illinois College of Law. The symposium, scheduled for May 2-3, at the University of Illinois in Champaign, Ill., will feature a paper and presentation by each of the expert speakers on a topic related to the accumulation, psychological effects or resolution of debt. The purpose of the Debt Symposium is to take a scholarly examination of debt as a phenomenon, rather than as a problem or solution. It will feature leading U.S. and international scholars who have written about debt or issues related to debt in a wide range of academic disciplines such as sociology, psychology, history, philosophy, law, neuroscience, business, economics, finance, strategic management and organizational theory."
The other subject dominating our lives now is the F word - Fraud. KPMG's recently released Fraud Barometer - http://www.kpmg.co.uk/news/detail.cfm?pr=3028 confirms our worst fears on vulnerability - with record levels of fraud coming into the open in UK. I suspect that Fraud will continue to engage our attention. In a perverse way, Fraud is simply a follow up on Debt. The classical theory of Fraud states that for Fraud to thrive, it requires an incentive and circumstances. In the present debt driven times, stretched debtors have more than enough incentive and willing to take the risk; circumstances also present themselves! Organized gangs and phishers are going to find many ordinary people willing to be mules - with so many burdens. As a wise soul put it -"Fraud is like electricity; shocking and follows the path of least resistance".
On Fraud, do check out the latest release by the FTC on rank order of consumer complaints. ID Theft is right on top. http://www.ftc.gov/opa/2008/02/fraud.shtm
The way the world is going in 2008, it looks like Debt and Fraud are going to the two most common elements in our lives. Never in economic and social history have these subjects taken so much of our daily lives. Even my school going son has heard of 'sub-prime' - words that were the exclusive bastion of credit professionals. In my school days, we only knew about prime numbers in Maths!
Let us take debt first. Debt in all forms - mortage, credit card, loans, student, toxic, ninja ..... has permeated our daily lives. So much so, that debt is beating global warming as the greatest urban obsession. Never before have so many parts of our society looked at debt. I think more people now across the world are aware of the indebtedness of Americans and its likely implications on the rest of the world. A wonderful example of how much debt dominates our lives is indicated at the following event laid out in http://www.keepitinyourpants.org/. A video contest has been launched offering a top prize of $5,000 for the best student-made public service announcement regarding credit cards. A new contest for budding filmmakers is the growing problem of "Debt Disease" among young Americans. The first-place winner of the "Keep It In Your Pants" contest -- open to students 14 years of age and older enrolled in middle school, junior high, high school, college, or graduate school -- will receive a $5,000 scholarship for school-related expenses.
Another event indicating our love for debt -Leading U.S. and international scholars will gather to examine the phenomenon of debt at “A Debtor World: Interdisciplinary Academic Symposium on Debt,” sponsored by the American Bankruptcy Institute (ABI) and the University of Illinois College of Law. The symposium, scheduled for May 2-3, at the University of Illinois in Champaign, Ill., will feature a paper and presentation by each of the expert speakers on a topic related to the accumulation, psychological effects or resolution of debt. The purpose of the Debt Symposium is to take a scholarly examination of debt as a phenomenon, rather than as a problem or solution. It will feature leading U.S. and international scholars who have written about debt or issues related to debt in a wide range of academic disciplines such as sociology, psychology, history, philosophy, law, neuroscience, business, economics, finance, strategic management and organizational theory."
The other subject dominating our lives now is the F word - Fraud. KPMG's recently released Fraud Barometer - http://www.kpmg.co.uk/news/detail.cfm?pr=3028 confirms our worst fears on vulnerability - with record levels of fraud coming into the open in UK. I suspect that Fraud will continue to engage our attention. In a perverse way, Fraud is simply a follow up on Debt. The classical theory of Fraud states that for Fraud to thrive, it requires an incentive and circumstances. In the present debt driven times, stretched debtors have more than enough incentive and willing to take the risk; circumstances also present themselves! Organized gangs and phishers are going to find many ordinary people willing to be mules - with so many burdens. As a wise soul put it -"Fraud is like electricity; shocking and follows the path of least resistance".
On Fraud, do check out the latest release by the FTC on rank order of consumer complaints. ID Theft is right on top. http://www.ftc.gov/opa/2008/02/fraud.shtm
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