Rethinking the Role of a Bank

Can banks transform themselves to remain relevant both in the financial economy and for the network economy?

Traditionally, the role of the banks have been to be collect money from people who have money, aggregate the same and loan out the money to people who needed it. The banks were needed as there was no way that people who had money could know about other people who needed the money. Also, banks could assess the risks associated with the loans and cover the risk by way of lower, but guaranteed returns on income for people who deposited cash with the bank.

That condition has changed with the emergence of technology. This has been proven by companies like kickstarter where the people who need money set-up online profiles and people who have money can find the people whom they would like to give away or in some cases lend their money for something in return (could be cash or kind).

Still banks are acting as if their environment hasn’t changed.

Now, in order for the bank to provide guaranteed returns to the customers, the banks generally avoid giving out unsecured or medium to high risk loans.

Now if the banks can create an online platform where, all the loan applications that the bank wants to refuse are listed, with all the relevant information. Access to this platform is provided to any customer who wants to be an investor. These investors can then see these loan applications, access the risk potential and then decide if they would like to take the risks and approve the loan. If they do, the bank then charges the amount from the investor and provides the loan to the applicant and on what terms (rate of interest, duration of the loan, collaterals, etc).  The contract could be between the investor and the loan applicant, where the bank becomes a mediator. The bank can charge a fee to the applicant and the investor for providing this service.

This will help everyone involved. The investors have the potential to earn a much higher return for their savings in the bank; loan applicants who are willing to pay a higher interest in return to a loan that is made available to them (which otherwise they cant get) and the bank my derisking their portfolio and at the same time increasing their profitability.

The banks can also start creating credit ratings for both investors and the loan applicants which they can then use for subsequent transactions.

Also, if the product or service is successful, the bank can start doing this for all loan applications and hence totally de-risk their business while continuing to be profitable.

The banks can also enable commerce between their customers. They can build a platform where their customers can buy and sell their products/services and charge a small percentage of the transaction value as a service charge. They already have a huge list of businesses transacting with them. This platform only enables connections between these businesses.

Both these ideas are meant to transform banks from just managing money to connecting people and enabling commerce. This is exactly what the networked economy model rewards.

Do you think these are feasible ideas? Do share your thoughts so that we can discuss this further.

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New Business Model from Very Unlikely of Places #Publishing

I stumbled upon The New Enquiry by chance and was totally blown away, both by their content and their business mdoel.

They are an Ad-Free online magazine & survive by the way of subscriptions (2$ per month) & donations. And they don’t have a firewall.

So, for all practical purposes, they create and share content that is free for anyone to consume but still people are willing to pay subscription to receive the same content but in coherent, thematic clusters, which is more intuitive and easy to read.

In an interview given to “Columbia Journalism Review“, the founders claim that they recieve 30 to 50 new subscribers every week.

They also serve a very niche audience, the one’s that want to be at the intersection of culture, arts and politics.

They describe themselves on their about page as below:

The New Inquiry is a space for discussion that aspires to enrich cultural and public life by putting all available resources—both digital and material—toward the promotion and exploration of ideas.

Though these are early days for them, I am sure that they will find ways to not only survive in this hyper-competitive world, but will also become more and more relevant to thier tribes (as Seth would describe their subscribers).

This also reminds me of the TED talk by Amanda Palmer where she talks about her exeprience with her fans. She talks about the art of asking. Can this be a valid pricing model?

Both Amanda and TNI have identified their niche audience and have sought their support successfully.

Their story also make me realize that we strive to find complex solutions for problems, while simple and easy solutions to the same problems could exist right infront of our eyes.

Almost every one complains about advertising and advertisors, the disruption in the advertising & publishing industry;  they just went ahead and eliminated advertisements altogether. What an idea!

How many such things do we complain about can be removed? A wise man once shared his wisdom about solving problems:

• Connect the un-connected & vice versa
• Bundle the seperate and unbundle the bundled
• Turn a product to a service and a service to a product

The best way to solve a problem is to “SKIP IT” and I think this is exactly what these folks did.

The question that you need to answer yourself is the following:

What problem or challenge are we struggling with and one that you would be better off SKIPPING? What product are you going to turn into a service?

Do join in the conversation by sharing your thoughts by commenting below.

You can connect with me at Twitter, LinkedIn or Facebook.

PS: Pay as you want pricing model has been around for a long time now. More information @ http://en.wikipedia.org/wiki/Pay_what_you_want. What happens when the newspaper industry adopts this model?

Why are We Unable to Solve Large Complex Challenges

Recently, Dan Burrus wrote a blog post about a new technology that has the potential to have a big impact on the future of energy. Though, this is good news, I am disturbed with the trend that this represents.

All of us look to solve these big challenges with break through innovation. At times this works, but a lot of times, they don’t. Even when they work, these are very expensive solutions and need systemic changes for them to be successful.

Though, I don’t argue with this approach, what is not acceptable for me is to only look for such breakthroughs to solve these  big challenges.

Can we not at the same time look for smaller steps that can go a long way in solving these challenges? I had written in a prior post about a couple of ideas to manage peak demand for electricity.

If we start thinking about solving complex problems within our own means with no large investments, I am sure that there can be a lot of such small hacks that can go a long way in solving the energy crisis.

Maybe the solution to the energy crisis is not in producing more energy, nor in storing the energy longer. Maybe the solution could also be in how we use the energy that we already produce. But I guess, the trouble is that we are keyed to think that big complex problems require big complex innovations to solve.

What do you think? Can you think of hacks that can solve the energy crisis but don’t require large investments in changing the infrastructure and that we could implement right away? Do share your ideas here and we could discuss & develop this further.

Also, what do you think about this need to develop complex solutions to complex challenges?

Future of The NewsPaper Industry

Jeff Bezos has stirred up a lot of interest in the News Paper Industry by acquiring “The Washington Post” in his individual capacity. There are a lot of expectations now from him and Washington Post to define the future of this industry. If he succeeds to turn-around the loss making paper, that could pave the way for the other players in the industry to follow suit. If he fails to turn this around, people think that it could very well signal the end of an era.

As part of an experiment, I thought what would make me love my newspaper again and I came up with the following description of the newspaper of the future.

• The newspaper is not more than 10 pages long.
• It is personalized based on my preferences (which I can set-up online or through the app). I only receive the news that I want to know about (except for may be the first and last page).
• It is in color, has a lot of pictures, infographics and is a treat to watch and read.
• It also provides me an option to go online (could use QR Codes which I could scan using the app to dive deep).
• It also provide me an opportunity to interact with the colomnists and other readers with similar taste as mine (could be through apps or physical in-person meet-ups)
• Gives me an option to go ad-free (at an additional cost) or only opt for specific kind of ads based on my current interests.
• I get an option of the frequency of the paper (once or twice a day)

Now, to achieve this, there are many assumptions that need to be questioned and re-looked at:

1. Newspapers can’t be personalized as they need to be printed at centralized print facility and distributed
2. The control of what gets printed rests with the editor
3. We can only have daily, weekly or fortnightly editions
4. The layout of the newspaper changes depending upon the news stories, almost every day and which requires a team of people who could do that.
5. The medium is only 2-dimensional (Text and Pictures)

Assuming this vision is brought to reality, both the newspapers and the advertisors whom they serve will benefit hugely.

This is of course if profitability is the main goal of running a newspaper. There could be other reasons to run a newspaper, Shaping public opinion, being one of them. In which case, we need to re-look at the content strategy of the paper.

Currently, there are some interesting developments in the industry that would be worth following:

• Jacek Otko has been quietly leading the revolution of changing the design of the newspapers, to make them more interesting and pleasing to read.
• Times of India has an app (Alive) which we can use to watch videos and link to websites that we might want to explore if we want to dive deeper.
• There are others who are becoming more local and cover their local communities and depend on them for survival.
• Some like NYTimes charge the readers for online access.
• Almost all the newspapers have a digital version.

Another interesting dimension to this entire discussion is the future of advertising itself. The advertising industry itself is going through a fundamental shift and since advertisements constitute almost 70 – 80% of revenues for the newspapers, the shape that the advertising industry takes will have a big impact on the newspaper industry as well.

These are my thoughts. What do you think? Do you think that the vision that I have painted for the newspaper of the future is feasible, desirable? Please share your thoughts by commenting on the blog or by tweeting to me at @rmukeshgupta.

PS: Another thing that can really disrupt the entire industry and take it to a totally different direction is the availability of a smart material that could replace paper as the medium to be used for print.

TED Talk of Jacek Utko – Can Design Save News Papers

 

 

3 Inspiring Videos

First video is an inspiring tale of someone who turned what many would assume to be a handicap into her strength and shows that if you really want to achieve something and are willing to pay the price, you can achieve anything in life.

Second video is about a teacher who talks about the fact that every kid in this world needs someone who believes in the kid and what he/she can achieve. I believe this is true not only for the kids in school but for each of us at every stage in life.

Third video is about how two people in Australia were able to create a movement to topple the incumbent president of their country and went on to enable other groups of people create massive change. They embody the principle that each one of us has what it takes to “make a dent in the world”.

Hope you enjoy the videos as much as I did. I also hope that you do the following once you have watched these videos:

– Share any of the videos to your friends and family who might enjoy them
– Identify one person in your life today, who believes in you and your dream and thank them for doing so.
– Identify one person in your life today, to whom you become the champion for.
– Identify one thing in yourself that you think is holding you back and start to think of how you can turn this very thing into something that becomes your strength.

Do you know of any other inspiring videos? Do share them in the comments below so that we can inspire each other and stay inspired.

First Step in the Journey Towards Becoming a Real-time Business

There is a lot of talk about Real-time data and how real-time data can provide organizations to be able to respond in near real-time to business events.

However, to realize such a vision, there is a lot that needs to change in the way we do business. One of the most basic thing that needs to change is how we run our business itself.

Most organizations currently operate in the mode where the decision making sits at the top of the hierarchy. We have a C-Suite where we have the Chief Executives, who decide the strategy and roll-it out for others in the organization to execute.

• The strategy is designed by the C-suite and cascaded down for execution.
• The KPI’s are defined (annually, in most cases) and cascaded down.
• Bonus structures are defined (annually, in most cases) and cascaded down.

What this means is that there are multiple layers of management (depending on how big an organization is) before any true decisions are being made.

In a vision of a real-time enterprise, this needs to change completely.

The front-line employees, people who are interacting with your customers, partners, suppliers,

• the sales executive who sells your products and competes with your competitor or
• the support executive who supports your customers when something breaks down or
• the engineer or product/service developer who designs and produces the products

are the one’s who get to know if something in your business environment has changed. They are the one’s who need to respond to these changes.

In order to realize the vision of a real-time enterprise, we need to be able to spend time training these people to identify such shifts and provide them the real-time information that organizations are capable of in a way that they can make sense out of the data and respond appropriately, without having to go through a series of approvals, et al.

What would help organizations become real-time would be:

• Move from a pyramid shaped organization structure to a concentric circles shaped organization, where, the customer is at the core of the organization, surrounded by the customer facing employees (sales execs, support engineers, product development folks, etc). Each outward circle represents a layer of people who shall support these customer facing employees in serving the customers needs in the best way possible.
• The core employees are trained in identifying trends and insights and create the strategy with the guidance from the other execs in the organizations.

This more like improv theater. Just like in a theater performance, the actors (in front of the customer) are the most important people when it comes to the audience (as they execute the vision of the writer and the director). Every one else is there to enhance or complete the experience.

So should organizations realize that the true heroes or stars for your customers are the folks who perform in front of them. The role of the others is of support cast and need to find, train the best actors and put them in the spotlight.

Also allowing the actors to improvise (if needed) has the potential to improve the overall experience for the audience substantially, similarly empowering your front line employees to improvise can improve the ability of the organization to adapt to any situation that they can come up with.

This will be the first step that an organization can take to move towards becoming a real-time enterprise.

This is not easy, but as people say – “Simple, but not easy”

PS: The best improv show that I have seen – “Whose Line is It Anyway”

 

Something that Facebook, Twitter and Google have all missed

Of late, I have realized that I the time I spend on G+ or FaceBook or Twitter’s site has gone down drastically. However, my activity on these networks has substantially increased.

I have done this by using FlipBoard where I am able to not only stream all my social network in one place but am also able to cross share across the different mediums seamlessly.

Though, twitter and Google+ allow you to share content via email apart from sharing within their platforms, that is not enough.

As a user, I want to be able to share my content seamlessly across platform. I spoke to a few of my other friends who are active on the social media have also indicated similar need.

By not enabling cross-platform sharing capabilities, the platforms are only inhibiting the time that people like me on their sites.

In this way, Youtube has done really well by enabling cross-platform sharing across the different platforms. I guess, this is also one reason why the average time spent on YouTube is on the increase and that on FaceBook, Twitter or G+ on the decline..

Hope that they realize this strong need and enable this soon. Till then the aggregators like FlipBoard will rule ;-
)

Is there any thing else that these social media behemoths have missed ? Do share your thoughts by commenting below or tweeting me  @rmukeshgupta.

Ideas for Budget Free Training and Development for Your Employees

Today, all organizations are under constant stress to reduce costs and maintain profitability. One of the casualties is the training budgets to train your employees.

What might we do to continually improve the learning and development activities of the employees without much budgetary support?

1. Free Training: As a team, decide what skills need to be developed. Then scout for an online course on platforms like coursera or VentureLab and participate in the learning activity as a team (most of these are free and hence no budget limitations). Alternately, create teams and assign each team to attend specific courses and then get them to teach each other the topics they learnt. As they say,  learning crystallizes when you teach to others.
2. Mentoring: Identify a mentor inside your organization or in your industry who can help you acquire the skills. Then use the different ways to learn from the mentor – shadowing, questions, discussions, discourses, etc. Share the learning with the team.
3. Use Youtube: Identify an expert in an area that you want to develop. Search if there are videos on YouTube of the expert presenting his subject (Could be on platforms like TED(x) or as a keynote to an event or at a university). Watch the video together and have a debate within the team with someone who will speak for the expert and someone who will present counter-argument. You will be surprised at how much you can learn just by doing this.
4. Use the Library: Identify books that have potentially interesting ideas that you can learn from. Create teams to study the books and present their understanding or the key concepts to the entire team. Have a Q&A followed by a discussion on how can they implement some of the concepts in their work.
5. Use Technology: Use technology to invite authors or thought leaders in a space that you want to explore or learn more about and discuss. You could do that via a twitter chat or a google Hangout  or a Skype conference call or on Facebook chat, etc.
6. Follow MIX: Follow sites like MIX or other such sites to stay on top of what is happening elsewhere in the world.

These are just some ideas that I can think of to exponentially increase the ability for you to enable learning and development in your team without having to spend any money.

What other ideas do you have to enable team learning without much budgets? Do share your thoughts by commenting below or tweeting them to me @rmukeshgupta.

 

How Children From a School Inspired a Nation (Video)

I came across the TED video of Kiran Bir Sethi, founder of the RiverSide School in Ahmedabad and her work with the children in her school.

If those children can do what they have done, there is no reason for us to complain about things that we can change.

We need to get up and change what we do not want! I CAN

Enjoy the video!

Crowd Funding Platforms and Banks

There has been a consistent growth in the number of Crowd-funding platforms all around the world. This is quite understandable given that they address a niche segment of the market that no other financial system has been able to address well.

Some of these crowd funding platforms are now moving from crowd-funding (in lieu of kind & merchandise) to becoming crowd investing platform (in lieu of equity).

What surprises me is the fact that banking institutions have not led the way and adopted this model so far but look at these as competition or threat.

If I were leading a digital channel for a banking institution, I would have already launched my own version of the crowd-funding platform.

As a bank, I already have access to

• Customers who have cash and could be potential investors (depositors)
• Prospective customers who want money (Seeking loans)
• I have access to a lot of cash which i could invest as well.

By launching the crowd-funding or crowd investing platform, some of the things that the bank could do are:

• Use the platform for all lending below a specific thresh-hold.
• Open up the non-secure lending market by routing all such requests via this platform.
  • The bank could either use the “Wisdom of crowds” to decide which projects get funded and which don’t.
  • We could even go to the extent that the bank commits to fund an amount equal to the amount that the project secures from the other investors.

This could potentially spread the risk on such investments and open up a new large market for the bank.

• As a bank, it would be easier for us in terms of regulatory approvals in place, so that the entire model could scale much faster than it has so far.

I am sure that the first bank that is able to introduce this and scale fast would definitely enjoy the first mover advantage and open up a big market.

The precedence is already set by Volksbank Bühl, one of the 1,100 cooperative Raiffeisen banks, when it became the first German bank to offer their customers a regional crowd-funding platform.

Now the question is if any of the larger banks would take this up and launch their own crowd-funding platforms or acquire any of the existing platforms.

What do you think? Would you go ahead on this route if you were heading the digital channel of a large bank? I am very much interested to know your thoughts. Please share them by commenting below or by tweeting them to me @rmukeshgupta.