Friday, July 11, 2008

O (nline) Canada

Canada ranks number one worldwide in online banking adoption, according to ComScore’s survey of 37 countries. In April 2008, 67.1 percent of Canadian Internet users banked online, compared to 49.5 percent in the UK, 44.4 percent in the U.S. and 41.7 percent in Australia.

Of the nearly 24 million Canadian Internet users, 15.5 million visited a banking Website in April 2008.

Canadians aged 45-54 were the most frequent users of online banking in April 2008, ComScore says. The reason is because this age group often has to deal with financial challenges such as retirement planning and paying for their children’s university education.

ComScore says it sees the greatest potential for growth among light users of online banking services. “These users represent an opportune target for banks seeking new customers,” the US-based Internet usage measurement firm says.

Banks could use incentive offers to entice light users of online banking to switch brands. By comparison, heavier users of online banking are likely to be more committed and loyal to their banks, ComScore says
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Latin America eCommerce to Surpass $16 Billion This Year

Retail e-commerce in Latin America, including travel and tourism, rose to nearly $11 billion in 2007, up from about $5 billion in 2005 and $7.78 billion in 2006, and is expected to surpass $16 billion this year and reach nearly $30 billion by 2010, Visa Inc. says in a new study, “B2C Electronic Commerce in Latin America and the Caribbean: Beating All Odds.”

The study, using figures from America Economia Intelligence, notes that Brazil was the largest retail e-commerce market last year with $4.9 billion in online sales, followed by Mexico, $1.38 billion. Venezuela showed the sharpest growth last year, with retail e-commerce sales rising 68% to $821 million from $490 million in 2006.

Following are the retail e-commerce sales figures for leading Latin American markets, with sales in millions of dollars for 2007, 2006 and the percent change:

Brazil, 4,899; 3,541; 38%
Mexico, 1,377; 868; 59%
Venezuela, 821; 490; 68%
Caribbean (except Puerto Rico), 818; 585; 45%
Argentina, 739; 619; 19%
Chile, 687; 472; 46%
Central America, 499; 360; 39%
Puerto Rico, 445; 384; 16%
Peru, 218; 145; 50%
Columbia, 201; 175; 15%
Others, 203; 165; 23%

Although the study doesn’t break out e-commerce sales by product category, it includes aggregated responses from consumers regarding which categories they shop online. Following are the categories cited by consumers, with the percentage of consumers saying they shop each category:

Books, music, movies, 21.4%
Tourism and travel, 16.9%
Electronics, 13.9%
Software, 12.3%
Appliances, 9.1%
Services, 7.7%
Flowers, gifts, 6.7%
Food, 4.3%
Games, 3.1%
Spare parts, 2.8%
Furniture, 1.8%

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Breaking News: IndyMac Closed by OTS

I know this has nothing to do with either PIN Debit, HomeATM or eCommerce, but nonetheless, I found this "financial industry news" to be worthy of being posted on the blog.

I thought the worst was over with Bear Stearns. Is Freddie next? Fannie? They say they have "plenty of cash" Last time I heard that very same line it came out of the laste Bear Stearns CEO's mouth. I certainly hope this is the last of it. Here's the story:

OTS Blames Schumer for Thrift Failure American Banker Jul 11 Free with Registration
Collapse is one of costliest of all time

Regulators took over $32 billion-asset Indymac late Friday, the largest thrift failure in history and the second largest collapse of any insured institution. Here's the press release from the OTS:

OTS Closes IndyMac Bank and Transfers Operations to FDIC

Washington, D.C. — The Office of Thrift Supervision (OTS) today closed the $32 billion IndyMac Bank, headquartered in Pasadena, California, and transferred operations to the Federal Deposit Insurance Corporation (FDIC).

A successor institution, IndyMac Federal Bank, FSB, will open for business on Monday and be run by the FDIC. Depositors will have no access to banking services online and by telephone this weekend, but will continue to have access to their funds this weekend by ATM, through other debit card transactions and by writing checks. Online banking and phone banking services will be available again on Monday. The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors’ demands in the normal course of business and is therefore in an unsafe and unsound condition.

The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac’s viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts. "This institution failed today due to a liquidity crisis," OTS Director John Reich said. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."

IndyMac is the largest OTS-regulated thrift ever to fail and, according to FDIC data, the second largest financial institution to close in U.S. history.

IndyMac had been in a precarious financial situation that was caused, in part, by an unprecedented stress in the residential real estate market, combined with the evaporation of the non-agency secondary mortgage market in August of 2007. The OTS had significant concerns with the bank’s funding strategy, had directed appropriate changes and was finalizing a new set of enforcement actions to address its numerous problems.

As a result of an OTS examination that began in January 2008, the OTS deemed IndyMac to be in troubled condition. An overwhelming majority of problem institutions are able to
successfully modify their operations and business plans, work closely with their regulator and eventually return to a healthy condition.

IndyMac had reacted to market conditions and OTS concerns in November 2007 by changing its operations and business plan to build a foundation for recovery. IndyMac was actively seeking to arrange a significant capital infusion or find a buyer. The recent release of the senator’s letter undermined the public confidence essential for a financial institution and took away the time IndyMac needed to pursue a recovery.

With no viable alternatives and insufficient liquidity, IndyMac was placed into receivership. The OTS has appointed the FDIC as conservator of the newly chartered successor institution and will transfer most of the assets and liabilities of IndyMac to the new thrift. IndyMac specialized in making and selling so-called Alt-A mortgage loans, a category of loans to consumers more credit worthy than subprime borrowers but typically without the complete documentation of income or assets necessary to receive a prime-rate loan.

Depositors’ accounts at IndyMac are insured by the FDIC’s Deposit Insurance Fund up to the statutory limits. Customer questions regarding the institution, including questions about federal deposit insurance coverage, should be directed to the FDIC at 1 (866) 806-5919. This toll-free number will be available during the following hours:

Friday, July 11 – 3:00 to 9:00 p.m., PDT
Saturday, July 12 – 8:00 a.m. to 8:00 p.m., PDT
Sunday, July 13 – 8:00 a.m. to 6:00 p.m., PDT
Thereafter: 8:00 a.m. to 8:00 p.m., PDT

First Data, Frontier Airlines Have Much Better Approach This Time

Well, if I do say so myself here's one "Jim Dandy" of a it's First Data to the Rescue! Back in April, Frontier Airlines blamed First Data for it's bankruptcy petition on account of how First Data announced it would withhold 100% of Frontiers credit card receipts starting May 1st, earlier this year. (See the post entitled: Mayday! MayDay! MayDay! of which there is a link below)

Today I read that First Data has now decided to provide Frontier with 100% of it's credit card revenue. In addition, Frontier Airlines will get an infusion of funds from an agreement struck with First Data Corp of Greenwood Village, according to court documents filed on Wednesday.

Good for you First Data! And've earned you're wings!

If' you'll pardon a few of my pun(z) which I have flying around here, this sounds like the kind of approach that avoids a vicious crash landing for Frontier. Helping always seems to result in happy landings for all involved.

Besides...It is also a much better branding and exponentially better "PR strategy" as well. It almost seems as if there was the old FD and now we have the new "improved" FD. (Along with their change of heart I had to ponder the coincidental timing of the release of their new logo. (also much nicer!)

Payments News reports that Denver-based Frontier, which is operating under Chapter 11 bankruptcy protection, has reached an amended agreement with First Data, its credit-card processor, and is asking the presiding judge for approval. Frontier, and subsidiary Lynx Airlines, filed Chapter 11 in New York in April after First Data told the airline it planned to increase the revenue held in reserve until Frontier customers completed their flights, a credit-risk-mitigation technique commonly called "holdback."

The effect, according to a motion filed with the court by Frontier, will be an "immediate incremental liquidity." According to BizJournals "In exchange for passing the funds on to Frontier, First Data will have a lien on some of Frontier's ground service equipment."

Like the majority of airlines, Frontier and Lynx get most of their revenue from credit card receipts, according to court papers. MasterCard and Visa brought in 70 percent of Frontier's $1.35 billion in revenue during the 12 months ended March 31. Since I was rather hard on First Data (or they on themselves) I thought I'd show their "softer" side with this followup to my previous posts on the subject.

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Chinese internet users "huge potential e-commerce market"

Chinese internet users spend about 570 million hours online per day, making the country a huge potential market for e-commerce, the Boston Consulting Group (BCG) said in a report released in Beijing on Wednesday.
BCG calculated the number by assuming that 210 million-plus internet users went online for 2.7 hours per day on average last year. "China has a large number of mobile and internet users.

However, the penetration rate is still low," David Michael, BCG's Greater China head, said.In 2007, the report said 615 million Chinese, or 47 percent of the population, used digital devices such as mobile phones and personal computers. In 2015, the figure was estimated to reach 1.2 billion, or more than 87 percent, the report said. The market scale of the digital service and equipment market stood at 580 billion yuan ($84 billion) in 2007.
It was expected to triple to 1.8 trillion yuan in 2015.Eight years from now, online advertising was expected to surge eight times to reach 85 billion yuan, the report said. "We can't estimate what percentage online advertising will account for in the whole advertising industry, but now it takes only a small portion and so does online advertising revenue.
Our estimate is conservative," BCG's managing director, Michael Meyer, said.Chinese internet users' habits differed from those of Westerners, he said. "Chinese use online chats and text messages much more than Western people, who use e-mail as their major means of online communication."Yet only 28 percent of Chinese were willing to shop online, compared with 71 percent in the United States. Most Chinese consumers were reluctant to shop online, as they were concerned about product quality, vendors' reliability and the possible loss of personal information. The survey also found that only a small number of people would "definitely" shop online in the next two to three years, while the majority said they "might" do so.
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Internet to Account for 50% of Retail by Year of Hindsight?

According to UK eCommerce Trade Association, Interactive Media in Retail Group, internet sales growth is strong through the the year 2020... Javelin says 30%, so let's go with 40% for now until we can look back with "2020" Hindsight.

The web will account for 50% of retail sales—including tickets and travel—and influence another 40% by 2020, James Roper, chief executive of UK e-commerce trade association Interactive Media in Retail Group, told attendees today at The Future of Retail conference in London.

While e-commerce has been growing at a 50% rate in the UK in recent years, that has slowed to 30% in the last two months as the economy weakened. Roper noted that package delivery companies are reporting only about a 5% increase in deliveries, and attributes that difference with e-commerce growth in part to consumers ordering online for in-store pickup, a service more UK retailers are offering. “It’s a very exciting and dynamic time,” Roper said.

At the very same conference, Javelin predicted Internet Retail would be 30% by 2020 (but excluded travel and ticketing).  Here's some information presented by Javelin Strategy and Research:

Annual online spending per broadband household is expected to grow from EUR 1,298 today in the UK to EUR 2,840 by 2012, data indicates. Germany is expected to register a growth from EUR 694 in 2008 to EUR 1,222 in 2012, while France from EUR 663 to EUR 1,167.

5.4 percent of UK retail sales occur online today, but the figures are expected to reach 12.6 percent by 2012 and 30 percent by 2020. The figures exclude ticketing and travel.

UK retail chains are ahead of those in other European countries when it comes to embracing e-commerce. The UK is also one of the leaders among major European countries in terms of broadband penetration, at 57 percent of households, compared with 50 percent in Germany, 45 percent in France and 39 percent in Spain. The Netherlands tops the list with 67 percent.

However on a world scale, South Korea is the leader with broadband internet in 92.7 percent of all households. Data was presented by Tony Stockil, CEO of UK consultancy Javelin Group at The Future of Retail conference in London.

For your amusement, I have included American Express' "Hindsight is 20/20 video starring Superman and Jerry Seinfeld.  (although many think so, no they are not one and the same as this video clearly shows.)

HomeATM Has Powerful Potential!

Here's an interesting release from Gemalto regarding the success of their "PINsentry" device in the U.K.

I consider this to be a very strong "Proof Of Concept" as one may easily draw a direct analogy between the PINsentry device and HomeATM's Wedgie. Both are peripheral devices and uptake seems to be going much better (30% better) than projections, with over 1 million devices being used by Barclay's bank customers for online banking.

While a sentry stands guard, HomeATM's device puts a "wedge" between the fraudster and the consumer. Either way, the PINsentry device experienced ZERO FRAUD according to Gemalto's press release:

Define Wedge:

1. "something solid that is usable as an inclined plane that can be pushed between two things to separate them...(as in "consumers and fraudsters"!) And to think that all those years leading up to my experience with HomeATM, I had thought a Wedgie was something to do with pulling someone else's underwear up to their ears from behind!

2. A wedge decodes "read" data (i.e. bar codes, credit cards) and communicates that information through a keyboard port on a computer. The keyboard plugs into the wedge and the wedge device plugs into the computer where the keyboard was. Sophisticated wedges can accept a few different peripheral devices. I think the second definition was the basis for the name, but's the press release:

Gemalto has announced that over one million Barclays Bank customers in the UK are using its cryptographic smart card reader, called PINsentry by Barclays, to provide stronger authentication for online banking.

Here's their release:

According to Gemalto, "the bank started deploying its strong authentication program in July 2007 and not one PINsentry online customer has suffered fraud since then. User feedback has proven extremely positive and Barclays observed that customer acceptance was higher than anticipated by 30 percent.

Editor's Note: ONE MILLION in ONE YEAR with ONE bank...with 30% higher adoption rates than anticipated... and ZERO FRAUD! ..."thanks for the pilot!" This data should eradicate any hesitancy as to whether consumers would adopt a peripheral to enhance their private data and security.

"With PINsentry, not only do Barclays customers easily generate one-time passwords to authenticate themselves at login, but they also use it to sign transactions, which provides a much higher level of security than just authentication using static credentials. All that they need to do is insert their usual chip-enabled bankcard into the PINsentry reader from Gemalto and type in their card Personal Identification Number (PIN) code. They carry the devices with them and can perform these secure online transactions from any personal computer.

PINsentry is convenient and remarkably easy to use, as evidenced by a recent Barclays usability study undertaken by Foviance, the digital customer experience consultancy. As part of the program, Barclays is now offering additional services to its online customers. The maximum amount for personal online transactions has risen from an initial £1,000 to £10,000 and plans are in place to offer international payment for the purpose of funds transfer worldwide in the near future.

Introduction of these new services demonstrates the high level of trust Barclays places in the system. “Our goal was to provide our online customers with an easy-to-use, highly secure product to protect them against fraud,” commented Sean Gilchrist, digital banking director, Barclays.

“Adoption of the PINsentry reader by one million cardholders in one year is a clear demonstration that we made the right choice.” "Making personal digital interactions more secure and enjoyable is second nature to Gemalto,” added Jacques Seneca, president of the security business unit at Gemalto. “The success of the deployment of our strong authentication and signature solution at Barclays rewards the effort we are putting forth in making life easier for online customers.”

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Most Brits Shop Online

Direct Traffic Media, UK -
Microsoft Live SearchMicrosoft's new Live Search CashBack program originators will be happy to hear that 72 per cent of respondents have turned to e-commerce to look for particular items...
Editors Note: With gas at $9 per gallon in the U.K., I'd be willing to bet that most of them purchase online as well and the trend is not going to be limited to the U.K.Click here to read the story from Direct Traffic Media
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