virtualeconomics

Don't get into a market where your customers want to hit you

According to a Mintel report quoted today in the Economist, "Britons are far more satisfied with the service they get from their supermarkets than from their banks". The Economist draws from this the lesson that Tesco should get deeper into retail banking, competing to offer current accounts.

Of course the opposite is the case.

It's not that supermarkets are good at customer service and retail banks are bad, so that for example Tesco will be able to magically do well something at which Barclays and HSBC are failing (in fact, HSBC's First Direct won a top award for customer service only last year). It's that dealing with a retail bank, like dealing with broadband providers, public transport or most branches of the government, is unavoidably infuriating for many customers.

First Direct really is a startlingly good bank

Having moved my banking to First Direct a few months ago I am increasingly not merely impressed but astonished at how good they are. Today I rang them up to work out how much they had - quite rightly - charged me in overdraft fees when my credit card company incorrectly took an extra thousand pounds out of my current account. Rather than tell me how much the fee was so I could go and claim it back from the credit card company, they simply agreed to waive this not inconsiderable sum to save me the trouble. If you're based in the UK and don't already bank with them (and don't have any unusual personal finance issues that means you need a specialist bank) I recommend you move your banking over to them. Try ringing them up - unlike every other bank I've ever dealt with they'll simply answer the phone, another big point in their favour.

(Do I even have a point about media strategy? I hear you wonder, since that's what Virtual Economics is allegedly about. And yes, of course I do. If you've heard about prosumption but never actually seen it in action before, this is what it looks like. In a world of connected consumers who all have their own publishing tools your brand is the quality of your product and customer service and your marketing is what happens when people like your brand enough to shout about it.)

Debt2.0

Paul Sweeney looks today at the story (via Lifehacker) of Tricia, a woman who put his credit card debt up for sale on peer-to-peer lending site Prosper (the US Zopa). Credit card debt - 13% APR. Loan from Zopa - 9.9% APR. Peer-to-peer is (self-evidently) cheaper for a lot of people that expensive institutional credit card debt.

This is why everyone makes such a big deal about online reputation management (and why eBay banned Rapleaf - a portable rep management solution is the holy grail of the identity web and eBay wasn't about to help a competitor scale one). In a wired world, your market value is a function of your ability to carry your reputation with you - and Tricia just proved it. 

Finance networks fortnight

Mashable carries news of two "financial MySpace" launches from major media players in as many weeks: one from Microsoft and one from Reuters. Dow Jones and IAC getting together (BrandRepublic) to build a "community driven finance brand" makes three. That's a lot of big hitters, in the finance and media spaces both, going after a financial MySpace in the course of a fortnight.

Equity trading ex machina

When in August Thomson Financial developed (FT) a computer algorithm that automatically generated financial news, I noted (Journalism.co.uk) that the weak link in that trading chain was now the equity trader at the bank's end. And I predicted that soon we'd see systems developed that automated not only the writing of the news but also the execution of trades based upon it. Today, Reuters launches two products that offer that very service.

Newscope Real-time "lets Reuters clients use Reuters live news content to drive automated trading and respond to market-moving events as they occur. Each news item is “meta tagged” electronically to identify sectors, individual companies, stories or specific items of data to assist automated trading."

If you don't need anything as slow and expensive as people to write the news, the last thing you want is slow, expensive people to interpret it. That said, the caveat remains the same - GAAP and Sarbanes-Oxley have made reporting a lot more formulaic, but there's still nuances and pro forma events that will make a nonsense of many trades executed automatically on the basis of the official figures.

HT: Journalism.co.uk