Technology & Finance

Thursday, July 29, 2010

JP Morgan Ramps up for International Trade Growth

Looks like JP Morgan expects the global economy will bounce back in the next couple of years. The bank has announced that under the leadership of Global Trade Executive Daniel Cotti, J.P. Morgan is expanding the bank’s award-winning Global Trade organization, hiring several new senior managers for key positions and adding nearly 100 trade and supply chain professionals.

“J.P. Morgan is positioning itself for unprecedented growth in its Global Trade business,” said Cotti. “By adding key personnel and redesigning our business to more quickly meet clients’ needs, we aim to increase our traditional trade market share and expand our supply chain management and structured trade finance businesses.”

Among the new senior management positions are:

Pravin Advani, MD,, Global Trade Executive for Asia where most of JP Morgan’s clients remain very active and tremendous growth opportunity exists.
Andrew Betts, MD, Global Head of Supply Chain.  In this new Global Trade position, Andrew Betts and his global team will deliver modular, integrated solutions to address clients’ financing and regulatory needs across the entire supply chain. The organization incorporates the existing Logistics practice globally. 
David Conroy, Regional Trade Executive for North America and Global Trade Sales Head; Andrea Leonel, Regional Trade Sales and Advisory Head, Latin America; Kao Fang Ming, Trade Head for China.  Ming assumes this newly created position with responsibility for partnering with the Global Corporate Bank to lead Global Trade’s business and growth in this important market.  Also announced is Prashant Pillai, Trade Head for India and South Asia. 

Reg E -- Screw Customers or Offer Mobile Overdraft Alerts?

In response to new regulations in the US restricting overdraft fees, banks have the choice of trying to preserve the fees or use mobile alerts to allow consumers to move funds and avoid overdraft fees, according to Javelin Strategy & Research report on Reg E.
Almost twice as many overdraft violators – consumers who have paid at least one overdraft charge in the past year – use mobile banking as do consumers overall and they want to be alerted before an overdraft occurs, said the research firm.
“Many consumers see financial regulations as a victory and feel they now have greater say over what fees to pay,” said Mary Monahan, research director. “FIs can transform their image from adversary to partner by being more transparent about the fees they charge and by giving their customers the control they want – such as being able to respond to a mobile alert before incurring an overdraft fee.”

The Reg E and Overdrafts report gives an overview of Reg E and its existing fee structure and covers how banks and credit unions can reposition themselves and revamp their business models to recoup lost fees due to Reg E – and what certain FIs are doing already. It also discusses who overdraft violators are, the behavior of overdraft violators and how they should be targeted, how consumers are impacted and their options post Reg E and how mobile can be used as a solution for both banks and customers.

Selected Key Report Findings – Reg E and Overdrafts
• Mobile banking can play a key role in enabling financial institutions to communicate more effectively with their customers by delivering relevant information and notifications in real time whenever customers want it, wherever they are located and through a lower cost channel.
• The mobile alert that both overdraft violators and all consumers most want is a warning that an overdraft is about to occur.
• Young consumers and the newly banked – consumers who opened their first checking account in the past three months – are the most likely to incur overdraft fees due to their inexperience with banking.
• Consumers cite ‘too many fees’ as the No. 1 reason they leave their financial institution.

“The last thing a bank should do is alienate a new – and especially an inexperienced – customer by automatically imposing a hefty fee when they have overdrafted on a one-time debit card transaction or at their ATM,” said Mark Schwanhausser, senior analyst, multi-channel financial services.  “Instead, the bank can send them a mobile alert, which empowers the consumer to choose what action to take to avoid overdrafting such as transferring funds from another account or paying in cash. By working with the consumer, the FI can reap the added benefits of reducing fraud costs, creating future cross-selling opportunities, and building customer loyalty.”

Haircuts for Creditors as a Solution to Too Big to Fail?

Gillian Tett in the FT recently wrote about a concept she describes as a “bail-in”, rather than a “bail-out” for systemically important banks.

“This idea, mooted by Credit Suisse in an essay this year, argues that in essence the best way to handle a crisis at a large, systemically important bank is to force creditors – not taxpayers – to swallow losses if disaster strikes; and, more importantly, to do this while the bank is still operating as a going concern, so it does not collapse – and cause Lehman-style havoc.”

Unlike contingency capital, or cocos, this would not occur when certain triggers are reached but would be undertaken by regulators.

That would thus prevent banks from trying to game complex triggers, and investors from endlessly speculating about when triggers might be activated. 
The U.S. financial reform should be seen as a first step. Now that some of the big items are agreed, it is time to look at some of the big issues that were sidestepped, such as Too Big To Fail.

Mantara Offers Variable Cost Structure for High-Freq Trading

Mantara, a provider of advanced technology solutions for high-frequency trading, has launched a new trading entity, MantaraX, which allows sponsoring broker-dealer clients to apply variable costs to their trading technology based on the volume of commission dollars generated from trade executions generated through Mantara’s expressWay. The company has received broker-dealer registration approval from FINRA for the new entity. 

MantaraX was established as a ‘non-executing’ broker-dealer to provide Mantara’s sponsoring broker-dealer clients with a technology business model that directly supports tighter alignment of trade execution costs and associated revenue streams.  It reduces the broker-dealer’s exposure to fixed upfront expenditures and monthly fees that may not be supported by commission revenue generated by their sponsored clients.

John Power, CFO of Mantara and CEO of MantaraX, said, “We are delighted to provide our sponsoring broker-dealer clients with the ability to custom-structure their participation with Mantara for a solution that best fits their usage model and provides their high-frequency trading clients with seamless access to expressWay’s leading edge execution software.  It is innovative approaches such as these that place Mantara at the forefront of the technology providers in our space.”

MantaraX offers clients an additional channel through which to optimize order flow and to benefit from Mantara’s innovative next-generation execution system.  More info through
. 

Monday, July 19, 2010

National Bank of Australia Markets by Events with Teradata

Use your credit card from National Bank of Australia at a DIY store and you might, within a few weeks, get a friendly checkup call from a banker just asking how things are going, if you might need any additional banking services. He will probably suggest one or two products which the bank’s information suggests will match some need of the customer’s.

“The credit card is one of the most powerful pieces of information to trigger event-based messages,” said Brock Lynch, Director of Strategic Marketing for National Australia Bank. “It could mean they are doing some home renovations.” On the other hand, the bank knows a little knowledge can be a dangerous thing. Just because someone used a credit card to buy baby clothes doesn’t necessarily mean he is pregnant.

“It just gives extra nuances.”

An unusually large deposit, which could indicate a customer has sold a car or left a job, can also be a trigger for an outbound call. Signs of potential defection can also trigger outbound calls.

This is event-triggered marketing which the bank uses across all its channels, from call centers to the Internet. Many of the conversations with customers occur on in-bound calls, added Lynch.  The bank uses Siebel for customer relationship management and a Teradata data warehouse for customer analytics to develop conversations for bankers to have with clients.

“We have a centralized inbound pool, so customers who call in, often when something has gone wrong.” For bankers, who know how much customers dislike being called at home during dinner, the inbound problem calls offer an opening to sell. NBA provides scripts to the call center reps or basic customer information they can use to develop their own conversations.

“We think it enables us to deliver a message to a customer on their terms, rather than us ringing and bothering them. We are testing that hypothesis that we are more likely to have a good conversation when they are calling us rather than our contacting them.”
The bank is improving its context strategy to make sure it is contacting the right people with the right products.

“We are working to make sure our program is not product led but customer led.”

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