house of cards: how banks ran out of ideas – and talent

By in banking, management, products, strategy, uncategorized on Thursday, 18 August 2011

They must have made us buy millions of wallets. I’m talking about plastic cards. They became an obsession – even something we collected.
What's in your wallet - a lot less plastic, these days...
Colourful, pictorial, themed, silver, gold, platinum, even black. We had them all. Pushed by banks and card companies desperate to part us from whatever cash the Government hadn’t taxed us on, we let them cause our own credit crunch.

But finally, the tide is turning. Its not just consumers who are abandoning them. The banks can’t wait to get rid of their dried up cash-cow too.

Molten plastic – too hot to handle

In the US, Bank of America, one of the biggest card issuers and a central player in the banking collapse, has just had a card selling spree of a quite different kind. BofA has dropped its global credit card business like molten plastic.

Their icy touch reached here in the UK, too. Bank of America was behind MBNA, who’s irresponsible take-every-card-we-offer sales campaign was everywhere. MBNA forced easy credit into everyone’s wallet.

MBNA would sell in exhibitions, approach you on the high street and even in music venue bars. That’s my favourite. Sell to people when they were drunk. Sales techniques of the most despicable kind.

The buyer of MBNA’s toxic, dark pool of debt is none other than that pioneer of the plastic card, Barclays. They’ve acquired MBNA’s small business portfolio.

Barclays will have to tread carefully with that one – the spotlight’s very much on the SME business sector, seen as the UK economy’s salvation and our only hope in reducing unemployment and fostering enterprise and innovation.

Out of money – out of ideas?

Pre-credit-crunch life was easy for the banks. An endless supply of easy money and a market eager to buy status goods. They couldn’t print plastic fast enough. Talk about irresponsible banking.

Somehow, they managed to convince us – and they’re still trying to tell us today, that this required “talent” that deserved to be rewarded with huge bonuses.

The truth is, the real mark of talent is how a bad situation can be turned around, not how to exploit the good times. We’ve seen no evidence of any “talent”.

The Co-operative bank simply went into panic-mode. It took all its card portfolio and rather than attempt to manage them, just slashed all cardholder credit limits. Responsible banking or a talent-free zone – you decide.

Post-credit crunch banking – a talentless desert

The striking thing about post 2007 banking is there have been no striking things. Nothing new, nothing different, no step forward. In fact no strategy at all.

I can’t imagine any market sector so totally bereft of ideas yet feels justification in rewarding itself for doing nothing.

With a huge market still holding cards, I’m astonished banks see their only option to be disposal. Surely if they understood complex financial instruments they can understand how to manage a credit limit or two.

Perhaps we need to give Barclays chance to show their hand. Let’s wait and see. What rabbit will they pull out of this grubby hat?

Don’t show us the money – show us the talent!

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