Archive for the 'banking' Category

Refounding Finance

After the shock that the crisis created and the quick – but not cheap – measures that were passed, it seems that the debate is currently moving on the terms of a longer term solution (see posts in Javelin Strategy or The Bankwatch for example). And there, things do not look good either.

It is obvious that free market created a lot of wealth (that has not been equally distributed), but was unable to stabilize the deep imbalances it generated. Furthermore, it’s now obvious that the wrong mix of regulation and laissez-faire created serious flaws in the incentive mechanisms. Regulation prevented competition to come and erase unfair rents that some actors were extracting. Laissez-faire meant than no-one had the authority to correct these undeserved appropriation.

But going back blindly to regulation is certainly the wrong answer. It is interesting to see that people who considered Alan Greenspan as a genious, treat him now as the villain who made all this possible. The truth is simpler: Alan Greenspan is certainly a very smart man, but there’s no single human being on this planet who can master a complex evolving system like the financial system. So regulation is not the answer in itself.

I think we should think of the problem in deeper and wider terms. It’s a real refoundation of significant part of our financial system that we must address. And to do this, I don’t believe that tinkering the current system through new regulations will do. We must get back to the roots of this industry which aims at providing a service to people looking for an opportunity to save and to people looking for means to get access to current resources.

We will be discussing this subject – and many others – in London on Feb 14, 2009 at BarCampBankLondon2 and in San-Francisco on Apr 25, 2009 at BarCampBank SF2. Anyone interested in putting back innovation as a solution and not a problem to the current financial woes should certainly consider joining us.

BarCampBank as an open incubator for breakthroughs

There is a recurring question about BarCampBanks and what you get there beyond meeting great people, exchanging business cards with them and feeling the dopamine running through your veins hearing what they have to say. If that’s not enough for you, I’d say that in my view there is even more: a powerful accelerator of ideas maturation and pre-innovation incubation.

I’ve been doing the pitch on a couple of occasions and I thought it may be good to write this on paper because it may sound counter-intuitive to some: it’s by sharing your ideas that you get a better chance of implementing them.

First point of the pitch is that “an idea has not value in itself”. I don’t want to run into the debate that it often starts, but just bear with me and take for granted that if you do not implement the idea, you’ll never see any value come out of it; and that for the community, it’s better that an idea is implemented by a good executioner than put in practice by a less able orginator who would have supposedly conceived the breakthrough out of the blue.

Second point is that if you try explaining your idea, you just realize that usually everything does not come out so oderly that you thought it was structured in your head. That people have sometimes intelligent counter-points that you did not think off; and that finally it helped you refine your understanding, opened new horizons and all-in-all accelarated your thinking process.

Third point is that thanks to the BarCamp format and its emergent approach to subject selection, you end up speaking with people who have at the same time very similar interests than those you’re just pursuing, and slightly different as well. Confronting your ideas with them help you understanding in what sense what you think is definitely unique, but also at time how complementary it is to the others’ points.

Finally, I point to the image of conceiving discussions at a BarCampBank like a way for everyone to bring their own pieces of the puzzle, of putting them on a table, of trying for a couple of hours to compare and trying to adjust them together. Then letting everyone go back with a still incomplete picture, but certainly slightly larger and more focused than everyone had when entering the room.

So what’s the deal? For me it is because execution is the real test that you should not spend unnecessary energy in producing ideas on your own. It is much better to speed up the process of idea creation by contributing to a common pool, then let the best implementers bring the result to reality.

There is also the question of knowing if this does not entice a free-ridder attitude: just listen to others’ ideas without giving yours. While everyone is perfectly free to adopt this behavior, I’d say that there are probably those that will get the least out of the deal. I have rarely seen people understanding perfectly what the others say without asking questions, plus I also think that you get the best explanations when you really give the context of your question and you let the train of thoughts run full speed.

Then there is the finaly question if this mechanism is equally interesting for big organizations and entrepreneurs, and if one side should not be wary of having the other one stealing their ideas. And here, people often think of entrepreneurs seeing their great ideas stolen by big organizations. My answer to this is first from the macro level on one-side: if an idea has every chance of better be implemented by a big organization, the community should spare the cost of seeing an entrepreneur duplicate capacities to just do what the big organization could provide at once; plus, if this is really the case, it is more than probable that the above entrepreneur will get squashed by the big organization when it realize that he/she has discovered a lucrative market. Then my answer is on the micro-level on the other side: there are ideas that can better be implemented by big organizations, then there are those that cannot – these are innovations called disruptive because they cannot be carried by current organization the way are operating.

So anyone, from a startup or a big organization, should find interest in participating in a BarCampBank if they are attracted by innovation and the creation of new business models in the world of banking and finance. I hope that I made my point in explaining why in my view the more they bring to it, the more they’ll get out of it.

BarCampBank London was great!

Last Saturday happened the first BarCampBank London. I shared earlier my excitement of participating to this first English BarCampBank and I must say that I’ve not been disapointed. BCBL was just great!

First we had an interesting mix of participants with

Second, the different workshops were really great and covered diverse subjects like biometrics in fi-services, innovation and regulation, near money, open banking,.. This all showed that the European ecosystem in financial services is currently full of vibrance.

I disclosed earlier the different projects I’m working on. At BCBL, I had the opportunity to expose in more details the piece about FundCamp FinTech. From the reactions to the discussion and because of the general atmosphere during this BarCampBank, I feel that we should definitely move forward. Anyone interested in this intiative, please do not hesitate to contact me.

My bank money is too sticky!

Like the vast majority of people I think, I have only two places where I hoard money.

The first one is my physical wallet The amount is not significant, but I could not do without it, yet. Money in it is not sticky, in the sense that it’s flowing efficiently and rapidly out of my wallet, sometimes too rapidly. So cash is nice, except for one thing, it’s reach is rather limited, I have to hand-out cash to make a payment and be physically connected. So I turn to this storage of money for standard use, buying bread, paying taxis,… When I want to replenish my physical wallet, I turn to my second pile of money: my bank account.

My bank account is indeed the second place wher I store money. The amount is more significant and certainly too high from a pure financial consideration. While replenishing my physical wallet by going to an ATM is a bit of drag, it’s all-in-all quite ok. Money is flowing relatively well between the two. In fact, most of the flow out of my bank account is done for standard payments like grocery, electronics,.. and is done via a debit card. There again things are not that bad and; at this point money is not too sticky.

But then, there are all this other flows or non-existing flows which show that my bank money can be very sticky.

In the category of existing flows where money is a pain moving, I’d put things like buying financial assets, making payments to a foreign friend. If you want to buy a financial asset that is not offered by your bank, you then see how sticky money is, you have to make multiple operations to complete your transaction. Sure, banks have a interest in making your money sticky, they would rather having you buy financial assets they provide. But even there, money is not flowing swiftly: what’s the point of raising customer satisfaction when your money is captive anyway. Concerning payments to a foreign friend, we reach the ridiculous: you don’t see money flowing, but evaporating through fees and time delays. Before we had PayPal, transfering money to a friend in another country was close to the non-existant category.

Which leads to the category of non-existant flows, or at least not existing yet. And here, I’ll turn again to my P2PMoney pet project. Leaving in a global world, with many interactions with a growing community of contacts, I think we will have more and more a desire to see our money freely and swiftly being pooled, spent and redistributed among varying groups we belong to. And for these workflows, bank money is flowing like a rock.

So we have now Telecom operators coming with the concept of a M-Wallet. While I don’t know how fast I’ll turn to this third type wallet, there’s one thing I’m sure: I don’t want my M-money to be sticky. And being not sticky does not mean money flows swiftly for transactions that are in the operators best interest, it means it flows swiftly for thing I want to do!

Heading to San Francisco for first BarCampBank of the Year

I’m packing my things to be ready Wednesday morning when I fly to San Francisco. Next week-end there will be BarCampBank San Francisco, first BarCampBank of the year, and quite an unsual event because of the wealth of startups that will be represented there: Wesabe, Mint, Zoppa, Zecco, just to name a few who confirmed their presence here, and I hope a lot more will drop-in to join the mind-shaking debates we can anticipate.

I will use the opportunity to discuss with all the brilliant people there a couple of projects I’m currently working on:

1) creating a virtual incubator for FI-startups

In the spirit of P2PVenture, I think there is an opportunity to create a virtual space where entrepreneurs, professionals and investors can mingle and co-develop projects up to the point where some of the professionals can join the project and investors finance it

2) creating a FI angel investors network

One of the components of the previous space could be a virtual angel investors club dedicated to the FI-business. I’m thinking of maybe setting up such a club in a near future

3) organizing a FundCamp FinTech

While launching FundCamp is one of the main action of P2PVenture.org right now. I’m also thinking of organizing a FundCamp dedicated to FinTech. I also see this as an opportunity to boot-strap the 2 previous points.

4) setting up a FinTech venture fund

This is a rather longer term project. There are not so many venture funds dedicated to FinTech and I believe there could be an opportunity to offer real value along the money a dedicated FinTech venture fund would invest in FI-startups.

As you see, quite a lot of things to discuss and get feedback on. Hopefully, critical mass could be assembled on a couple of these subjects and we could see something taking off in a not too distant future.

Will we soon see a BarCampBank happening in Australia?

Just discovered this post on The Bank Channel suggesting the idea of organizing a BarCampBank in Melbourne or Sydney. There will be soon a BarCampBank in Seattle on July 21 & 22, I think it will perfect sense to get contributions from the southern hemisphere as well. I hope that the idea will gather critical mass over there and that we will soon get access to the innovations that are cooking up in Australia.

Virgin acquires majority stake in CircleLending

The announcement of Virgin’s acquisitive move is interesting on two fronts.

First, with a major household name like Virgin, peer-to-peer lending is gaining respectability (funny indeed).

Second, Richard Branson – even if categorize has a respectable lord – has always been a hell of a disruptor; so acquisition should be hinting the diehards that there’s definitely something cooking up.