They would say that, wouldn't they?

I've got that Groundhog Day feeling. The banks make another round of  job cuts and the unions label them uncaring swines.

This time around, Unite has condemned 'brutal' job cuts at Lloyds Banking Group and RBS. The gruesome twosome are axing 1,300 and 464 jobs respectively. At Lloyds, 300 jobs are being sent abroad from IT whilst another 100 are being cut.

Have to say that the union has a point here. It doesn't look good when taxpayer supported institutions lay off staff at the lower end of their pay scales, particularly when it comes so soon after the massive bonuses handed out to their top dogs.

Depressing stuff.

Cards on the table

A few thoughts on the UK credit card, debit card and online banking fraud figures released this week by The UK Cards Association. 

Fraud losses on UK debit and credit cards fell seven per cent in 2011 to £341 million, an 11-year low. This has understandably made a lot of headlines in the last couple of days. But little attention has been paid to the sizeable increase in cheque and telephone banking losses last year.

The reduction in card fraud can be attributed to such initiatives as MasterCard SecureCode, Verified by Visa and American Express SafeKey; continued upgrading of the chips on UK cards; and increased roll-out of chip and PIN abroad. All of which have made the fraudster's life that little bit more difficult and sent him/her off to other areas. Hence the increase in cheque and telephone banking losses.

Online banking fraud losses dropped 24 per cent from £46.6 million in 2010, to £35.4 million in 2011. Factors contributing to this fall include: customers better protecting their own computers with up-to-date anti-virus software; banks’ use of sophisticated fraud detection systems; and banks providing customers with additional software and hand-held devices to log on to internet banking. The press release I received notes that this decrease has occurred despite a continuing rise in phishing attacks and attacks involving malware. Phishing attacks were up 80 per cent from 2010.

The rise of phishing shouldn't come as a surprise. Whilst we should welcome the fall in online banking fraud, we should also remember the increasing sophistication of cybercriminals. For many of them, it's not about what was taken in 2011 or indeed what they can get their hands on this year. They're playing the long game, stockpiling with an eye on two or three years from now.

Preparing for MiFID II

Guest blog post by Tony Virdi, VP and Head of Banking and Financial Services Practice for the UK and Ireland, Cognizant

Since the Markets in Financial Instruments Directive (MiFID) was enforced back in November 2007, the economic landscape has changed dramatically. Regulators and the G20 are now demanding better execution, greater transparency, risk management and regulation of more opaque markets. To meet these demands, the European Commission (EC) released MiFID II in October 2011.

MiFID II will involve the addition of previously unregulated organised trading facilities to the MiFID framework, new safeguards for algorithmic and high-frequency trading activity, additional supervision of derivatives markets, and more stringent portfolio management requirements. Moreover it will introduce measures to protect investors. 

While not yet passed as legislation, MIFID II will require significant change for financial services firms in terms of both internal infrastructure and day-today business processes. The EC’s own estimates for one-off compliance costs for MiFID range between €512 million – €732 million with on-going costs of between €312 million – €586 million.

In addition to the financial burden, companies need to ensure they are meeting quickly changing regulations. IT plays an essential role in allowing this to happen smoothly. Businesses must think carefully about how they work with their technology teams when implementing these adjustments across the enterprise. 

Regardless of any anticipated changes, the focus needs to be on enhancing the processes and systems for electronic trading, risk management, transparency and transaction reporting (across more asset classes), compliance and investor protection. Another consideration is around data consolidation and dissemination. The reporting, publication and consolidation of trade data needs to be addressed due to problems with its formatting, cost, quality and reliability, with many issues highlighted by the European Commission.

The sell-side firms in their capacity as liquidity providers arguably have one of the biggest challenges to overcome. They will need to reassess their service strategies in attracting buy-side clients and adapt their systems quickly in order to adhere to the transparency and reporting regulations. Also, since MiFID II’s focus is on breaking the vertical integration to increase competition, sell-side firms can no longer hope to sell exclusive, fully integrated investment services to clients, which could significantly change their business model.

The full impact of MiFID II can only be ascertained once the legislation is fully in place. Forward-thinking firms will use this opportunity to upgrade their IT infrastructure and ensure a flexible approach to take advantage of the market benefits MiFID II could bring. 

Your feedback please!

You have to hand it to first direct. At a time when many financial institutions are still umming and ahhing over social media, they have dived head first into the deep end.

The bank recently relaunched its customer website, www.firstdirect.com. It used its crowdsourcing venture, firstdirectLab, to gather the thoughts and opinions of the public on how the site could be improved. And post-launch, it has invited people to say how they have done on the design, layout and general feel.

So far, the new look site has received less than stellar customer reviews. At the last count, 849 people had left comments and there was an average rating of two stars (out of five). Feedback has included: 'This seems a backward step for FD. The site appears to have been design by an eleven year old!' and 'Horrid!! I can't see anything useful...hate black and white (have probs with sharp contrast - dyslexia eye condition (very common)...HATE IT!'

If I were a first direct customer, I would be thinking, it's great that these guys value my input and provide such good customer service. On the other hand, I can picture agitated members of senior management saying: "Gah! Why are we making it so easy for them to slag us off?" Ultimately, though, this makes the bank look transparent and streets ahead of its rivals. If it has to take a few hits along the way, then so be it. To quote Natalie Cowen, head of brand at first direct: "We wanted to create a space for our customers to take online banking beyond a purely transactional relationship and create more of a first direct community, in short, creating 'online banking with chemistry'."

Let's just hope this doesn't turn out to be a bold experiment halted after management get cold feet. 

The year of the contactless card?

A NatWest leaflet arrives in the post. "It's time for a change. Don't let cash slow you down," it says. The leaflet folds out into a snazzy contactless promo. There's no need for cash and it takes less than a second to pay (erm, hang on a minute, are you sure about that?)

The contactless camp are making much of the fact that, thanks to the sterling work of Visa, the London Olympics will be a cash free event. And on the back of that, contactless will finally take off in the UK and be embraced by retailers and consumers. Certainly, it has been given a boost by Transport for London's announcement that users of London's buses will be able to touch and pay in time for the start of the Games. The system will also this year be rolled out to the tube, Docklands Light Railway and overground network.

But let's face facts, in the context of the global cards and payments industry, the London Olympics is little more than a blip. It's a small sporting occasion being held in east London. One that will hopefully generate some good PR, but ultimately a niche event which will matter little in the grand scheme of things.

The NatWest leaflet also tells me that I can use my card to get instant coffee and fast food. McDonald's is one of the few retailers to have truly embraced contactless. Last year, it rolled the system out in all of its 1,200 UK stores. I'm reliably informed that it currently accounts for around 50 per cent of transactions in this country. Which sounds about right. Not enough retailers are getting onboard and many of those with terminals installed don't seem that interested. We've all been in an EAT or Pret and seen a queue of people waiting to pay with cash or debit/credit cards, whilst the contactless terminal sits there ignored and unloved. Or in the case of an EAT regularly frequented by your's truly, upside down and broken.

The banks should also shoulder some of the blame. Barclays/Barclaycard has lead the way in this area – almost all its credit and debit cards are now contactless – but others have been less keen. However, after a slow start I think the banks are now doing a good job in promoting this technology to their customers and in working with other parties to get it into the mainstream. Royal Bank of Scotland, for instance, is looking to increase the number of contactless debit and credit cards in issue during 2012, with an initial focus on London and the south east (hence the NatWest leaflet). 

The prospects for contactless have improved markedly in the last year but there is still some way to go before the 'no need for cash' boast becomes a reality. The Olympics will come and go but the same old issues will remain - poor user experiences, lack of consumer awareness, retailer apathy and the fact that many people still like and trust cash. In all likelihood, it will take the arrival of NFC-based mobile payments to make the contactless dream fly. 

Quora, what is it good for?

It arrived in a blaze of hype but it hasn't really happened for Quora, has it?

It had great pedigree (set up by former Facebook employees) and in 2010 received $11 million in funding from Benchmark Capital, valuing the start-up at $86 million. But as time went on it became clear that it wasn't any better than competing sites. A redesign last year underwhelmed. And I think the emergence of Google+ could be the death of it.

During my time as Editor of FStech's sister title, Retail Systems, I set up a presence for the title on Quora as I liked the idea of a Q&A social media site created, edited and organised by its community of users. Unfortunately, the layout was clunky, making it difficult to find information and ask the right questions and those running the site ruled with an iron fist. After putting my name as Retail Systems, I received a terse message, informing me that commercial entities were not allowed and ordering me to use my actual name. I struggled to attract followers and eventually lost interest, focusing my attention on Twitter instead.

Anyone else have a similar experience or do you think there is life in Quora yet?

What's that coming over the hill, is it a monster?

So, the proposed Misys/Temenos merger...If it were to go ahead, it would create a banking software behemoth, one of the leading companies in the financial services software industry or, if you will, a fintech monster.

But will it happen? The UK banking software outfit does appear to be edging closer to a merger with its Swiss rival, with the latter issuing a statement yesterday saying the two had reached agreement on several important items (more of that at the above link). But that hasn't stopped industry tongues from wagging, with speculation that Fidelity National Information Services (FIS) could come back to Misys with an improved offer. You'll remember that last August, Misys failed to reach a deal to be taken over by FIS. The US group walked away after its bid was said to be too low, but what price a last minute return to the fray?

Place your bets please...