10 Questions with Colin Henderson from The Bankwatch Blog
October 3, 2008
By Mukesh Chatter
Occasionally, I will use this blog as a forum for interviewing members of the banking and finance community as a means of getting new and fresh perspectives on the monetary issues facing all of us.
Colin Henderson maintains the excellent blog, The Bankwatch.
1. Please provide a short overview of The Bankwatch.
The Bankwatch began as a simple way to express what I saw in banking that needed to get fixed. My tagline “which Banks understand the web lifestyle?” seems kind of dated now, but in 2003 when I began blogging, banks knew little about the Web. Today, well, there has been some improvement, but still a long way to go.
2. You've been involved with the banking industry for many years. Please describe some of your career highlights.
I was with the Bank of Scotland for 8 years, in branches and securities in Scotland and in London. Then Bank of Montreal for 30 years. There I was in branches, local headquarters and national headquarters. I saw everything from far north, farming country to small towns and large cities. The roles included area management, covering retail and commercial business. The best parts were when we were covering a small geographic area with full accountability for everything that happened in that area. Good times. Then, even better times when we opened mbanx, the first North American direct bank in 1996. mbanx was a lot of fun, and rooted much of my belief in what works and does not work in banking and online banking.
3. You recently founded CommunityLend, a Canadian peer-to-peer lending community. How do you see the Internet impacting the retail banking industry in the coming months and years?
Great question. I see three basic issues that suggest to me that the banking model is flawed, and it’s probably not what people expect. 1.) Banks’ capacity to scale their information about customers is limited by their history, and technology set-up. 2.) Banks’ brand model is broken, and not adaptable to Web 2.0 land. 3.) Disintermediation of services and elimination of the middleman is a reality for financial services now.
4. The recent financial market downturn has put the spotlight on the concept of safer investing. What are some of the best saving and investment choices for consumers in today's uncertain economy?
That’s a tough one. Criteria of investment safety is a personal objective, and I would strongly advise anyone with this question to seek professional advice. The situation today is volatile. My mother in Scotland had a panic last week when Bank of Scotland, which accounts for 20% of all UK bank accounts, almost went under. If you worry about your money, then keep within the government insurance limit for any one Bank.
5. Please outline potential consequences of the U.S. government's $700 billion bailout plan for Wall Street -- for both consumers and banks?
I have a review of the bailout plan here. Short version: Banks are undercapitalized and the plan misses that point. I think we are in for rough weather the next few weeks.
6. Recent dynamic changes in the financial services community include investment banks Morgan Stanley and Goldman Sachs converting to bank holding companies and crowding an already competitive retail banking market. How will these changes impact banks and consumers?
This is a red herring. Investment Banks have no direct impact on real people. They do have an impact on the economy in the long term, though, as a result of the Glass Steagal Act, and the shift to being banks is a good thing imho.
7. Turmoil on Wall Street has left consumers understandably wary of the financial services industry. What steps can banks take to regain consumer trust?
Recapitalize. Develop financial strength, and prove they are better than the system. Fire the investment bankers. Get back to basics. Listen to customers. Get into Facebook, Twitter, blogging but not as advertising. Talk to people in those vehicles. Get into conversations. Have patience. These are all things Banks find really hard. The better ones, such as Wells Fargo, could be the ones to get the mix right.
8. What should consumers look for in a bank when determining where to park their hard-earned money? How have these requirements changed since the recent crisis?
Another tough call. Ask the Bank what they feel, and find out if they have an opinion. Never lose sight of the government guarantee, as long as banks are undercapitalized, this is essential.
9. What advice do you have for consumers struggling to save (and make) money in this tough economy?
Focus on saving, not on credit. It’s that simple. Hard to do, and often requires a change in lifestyle, but will pay dividends when they hit 55 years old.
10. Is there anything else you'd like to add that we didn't cover?
Great questions. I would add this. While I believe banking is broken, it's also not going to happen overnight. We are in a period of transition and disruption. Such periods are only defined in retrospect. In 2030 when we look back all will be clear. In the meantime we will experience messy situations, and frankly, consumer problems. We are in the midst of an epoch ... a shift in how things work, and banks/financial services will look very different in 2030. Until then, consumers ought to consider how to shift their financial services and watch for new opportunities and services that are not confined to traditional banks.
Thanks for the time to communicate with our readers, Colin.
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