Wednesday 23 January 2013

2013 FStech Awards: shortlist announced

Barclays, RBS, Lloyds Banking Group, Credit Suisse, Temenos, Monitise and BT are among the companies in the running for the 2013 FStech Awards.

Congratulations to all the shortlisted companies. It's a really strong shortlist. As always, there are many great examples of cutting edge technology suppliers and financial institutions making innovative and effective use of technology in such areas as social media, mobile banking, payments, retail banking and data governance.

Next up, the judging day and then the big night on Thursday, 17 April at the London Lancaster Hotel.

You can view the shortlist here.

Monday 14 January 2013

The Bank of Facebook and the future of payments

Guest blog post by Sascha Breite, managing director, SIX Payment Services

As the way consumers interact with one another is changing, so too are the rules of commerce. Social networking is becoming the prevalent form of communication and, consequently, the likes of Facebook and Pinterest are becoming primary outlets for businesses to reach their customers.

Increasingly, however, these social platforms with large networks are also enabling members to make purchases for a wide variety of goods from games to clothing.  By facilitating compelling shopping experiences and transaction capabilities, social networking sites could have the potential to overthrow the existing market power houses and transform the payments industry as we know it. Just how real is the possibility of a Bank of Facebook and what does this mean for traditional payment players?

Social networking sites typically boast networks consisting of millions of people and so the advantage of doing commerce through these platforms is the reach to a much wider and willing customer base; businesses can easily, and at a relatively low cost, reach their target audience. It is unsurprising then that we are witnessing a move to social commerce. However, as social networks gain users, who spend increasing amounts of their time on these sites, inevitably consumer confidence and trust in these channels is growing. Whilst to date this has opened opportunities for businesses looking to procure their goods via this platform, this also opens the gate for social networking sites to shake up the traditional payments model.

Traditional card schemes currently cannot offer an affordable solution for low value payment acceptance and so allow social platforms - Facebook in particular - to exploit this gap in the market by providing merchants with an alternative and more viable micropayments system through its virtual currency, Facebook credits. In an interesting turn Facebook recently announced that they are abandoning Facebook Credits in favour of local currency pricing. Unsurprisingly, this has caused many to suggest that Facebook payments could be the future of micropayments.

However, before we get ahead of ourselves, it is worth mentioning that Facebook and its counterparts do not have the security credentials that the traditional card schemes can claim. Even one of the most eager adopters of F-commerce, the online fashion retailer Asos, handles payments by redirecting users to an Asos site within Facebook – and reiterates that fact that the company does not then share details with Facebook, clearly illustrating their belief that any issues around security and trust could slow consumer adoption rates.  

The fact remains that Facebook and its kind have yet to suggest that payments servicing is an area they are interested in moving into. At the moment, especially for Facebook, the bulk of revenue comes from advertising space and payments is not a core competency in which they have years of experience. Nevertheless, Facebook has proven it has the capability to move into the payments space. The likes of Facebook are a force to be reckoned with and the payments industry needs to innovate to ensure its future existence.

Wednesday 2 January 2013

Same old, same old in 2013?

Happy New Year to one and all! Hope you all had a great festive break.

Just in case you missed them, here are some FS-related stories that broke over the Christmas/New Year period... 

Former FSA chief executive Hector Sants was knighted in the New Year Honours list. Yes, they gave a knighthood to the guy who was part of a system that failed spectacularly. Words. Fail. Me.

A computer systems crash at Lloyds Banking Group left New Year revellers unable to withdraw cash. Customers took to Twitter to vent spleen at being unable to make cash machine withdrawals and use their debit cards. Some also claimed that credit in their accounts had been wiped out. You can read The Daily Mail's typically understated report here.

Wonga (the payday lender behind those comedy OAP puppet ads we all know and hate) ran into further controversy when it launched a new “buy now, pay later” service via retailers’ websites. In November, the company got into a spot of bother when it was accused of “legal loan sharking” by MP Stella Creasy. It was forced to apologise to Creasy after one of its employees used an anonymous Twitter account to attack her, calling her mentally unstable.

Of its new offering, Michael Ossei, personal finance expert at uSwitch.com, comments: "Short-term lending at rates of seven per cent may seem like a great way to ease the burden of a purchase, but there are cheaper ways to fund your shopping. And as well as the overall cost of using Wonga’s new service being relatively uncompetitive compared to some credit card deals on the market, there is a bigger cause for concern  - what happens if consumers can’t pay off their bills in time? Unfortunately, there have been a number of worrying incidents in the past where vulnerable customers have been subject to heavy-handed debt chasing practices. The worry is that this could become more widespread as Wonga expands its offering and becomes more readily available, especially if customers aren’t fully aware that it’s Wonga who they are borrowing from in the first place."

"Although some retailers might believe the service helps their customers – by giving them another way to help pay for things – it could lead to confusion if Wonga’s terms and conditions aren’t clearly stated upfront. Consumers need to make sure they know exactly what they’re signing up to. There is a real risk of mis-selling and unless retailers are careful, they could end up attracting the attention of the OFT," he added.