Second life Of Online Banks Part.I

In their early days, online banks were intended to attract a large clientele by proposing a new model of bank: Account Management possible at any time and from any computer connected to the Internet, with an offer "discount". Using the Internet as the only interface between the bank and the customer had in fact enable substantial savings, both in terms of personnel but also capital assets. Thus, online banks offer rates were very aggressive on a range of services equivalent to that of a traditional bank. However, they failed to offer prices low enough to stand out, to forget the absence of physical relationship between the customer and the banker, and succeed in capturing some of the customers used to a classical model.

Weakened by the explosion of the Internet bubble in 2000, online banks could not withstand the intensity of competition in the banking sector, especially as traditional banks, although lagging behind the banks line, developed or acquired equivalent services. The interest of a pure player in online banking has therefore been questioned since it was possible to combine customer relationship in a network, and maximum flexibility via the Internet. The only entities that have managed to sustain their existence are those that are backed by a bank, maintaining an independent identity. This allowed them to diversify their services, taking advantage of operational know-how and organizational parent companies and thus offer very attractive prices.

Back testing and Benchmarking Part.II

Used properly, they can calibrate (or recalibrate) rating models and thus risk tools for the granting of products or assessing customer behavior, in particular by responding to the following problems:

* Expectations of risk of the entity are they consistent with the materialization of this risk (making)? This article seeks to back test the risk parameter ex post with the estimated parameter ( back testing, diagram below).
* What is the position of the entity namely entities instead?
* Expectations of risk of the entity they are consistent with those instead? Benchmarking of the estimated internally with the external reference system can respond to this question (benchmarking model).
* Achievement of risk is they consistent with those instead? (Benchmarking loss or damage).
Answering these questions provides a comprehensive framework for monitoring and supervision mechanism of risk.

If the qualitative interpretation and the decision process can be automated, the industrialization of data flow and processing (collection, data storage and consolidation of often disparate information from divergent SI) should allow an optimal analysis results and a realization of recurrent exercises. The aim is to produce a more reliable and suitable reporting activity and minimizing its cost both in terms of budget and time.

In the context of benchmarking, the nomenclature of internal data is a priori different from the external data device, comparing the risk parameters on a common nomenclature is essential. The mapping is then to map data sources through the adoption of strict rules and documented. In practice we retain the system that will optimize the granularity of the correspondence between the two sources to minimize the loss of information.

Element's overarching Back testing and benchmarking, performance feedback must meet three key points:

* Restitution little difficult in terms of statistics and mathematics, to make operational results and convert analyzes corrective actions;
* Flexibility in handling, in reviewing and reading the results;
* Annexes detailing the key elements of the analysis.

Back testing a draft and / or transverse Benchmarking is because it requires the participation of several entities of the bank. Indeed, to be valid, corrective action affecting a parameter of risk must be decided collectively between committees at the central management of risks, crafts, commercial and financial management.

The challenge of such a project is not only to ensure the accuracy and consistency of rating systems and procedures and the estimation of risk factors, but also to develop and propose a real risk management tool and decision support.

Activity Based Costing or Management

Back testing and Benchmarking Understanding the mechanisms of formation costs to identify areas for improvement in profitability is the primary purpose of the ABC / ABM (Activity Based Costing / Activity Based Management). It is indeed a powerful analytical tool which allows to decompose and analyze the costs of products and services sold (to customers both internal and external clients).

Policymakers have through this method of indicators structured to enable them to consider changes and simulate their impact in terms of costs and therefore profitability. By the adaptation of the process, creating a new product, the projection of a new organization are guidelines that can be accurately valued using the ABC model. Officials thus have elements that accompany in their projections and decision making.

The method is now developing rapidly in Financial Services, with a view to constantly improving the profitability of operations. The factoring industry is no exception to this trend in a context of shrinking margins, among others. It is now necessary to drive a very thin cost of each activity and each service. Furthermore, the implementation of this approach is the opportunity to industrialize its processes (if not already) and to induce a change in the behavior of internal company departments (development policy consumption of resources and activities, awareness of the concept of internal customers requiring a relationship and level of service as professional as the end customers).

The objective of this is to illustrate the development and gains of the method applied in the context of factoring.

The euro is still down because of the Greek debt

The euro is still down penalized and remains under 1.44 dollars. This decrease is due to contamination of the single currency by the debt crisis that has invaded Greece and continues to do its thing. An urgent solution is needed!

After the decline experienced by the euro last Friday, the Euro has not had his best performance this Monday either. It seems that money is slow to find its stability. The Arab Spring, revolts in Spain and Portugal are to blame.

The Euro went back a bit against the Japanese currency to 115.44 yen against 115.22 yen Friday. The dollar was in recovery against the yen at 80.48 yen 80.31 yen against Friday night.

Rising interest rates and expectations of an increase in reinforcing the attractiveness of a currency, especially against the dollar, which offers a yield close to zero since the outbreak of the financial crisis in 2008.

However, investors seem to focus again on the lack of compromise in Europe to offer financial support for Greece which is in great economic difficulty.

Germany's persistence that private creditors share in the cost of the subsequent plan projected aid for Greece is about to be discussed by the working group in charge of the euro area to achieve a coherent plan.

European currencies have also affected from unsatisfactory level indicators of industrialized manufacturing in the euro area than in the UK but also in Sweden.

Adoption of the Directive ISA, Was it a compromise? Part.IV

The burden of proof is reversed, the depositary and will be responsible for loss of assets under custody unless he can prove that the loss is the result of an external event, beyond its reasonable control and the inevitable consequences. The proposal adopted, which evokes a "reasonable control" of custodian, is less severe than the original text. The depository will retain the option of using the sub-delegation, initially excluded, to transfer its contractual responsibilities, which will be accompanied by due diligence work and reporting to the authorities further.

The lobbying industry seems to have paid to alleviate the new obligations. The profession can still expect some changes coming about the chain of responsibility, because it seems that the Commission expected the adoption of the Directive before opening the ISA site clarifying the responsibilities of the holders of UCITS, and this is likely to make changes at least as demanding.


The vote by the European Parliament Directive ISA shows how the negotiations were laboring among the proponents of a regulatory status quo and those seeking tighter control of the financial industry. As usual all the European players have found a compromise of the confession of all is a "lesser evil". But unlike the UCITS IV Directive which was carried by the entire profession, this directive was made reluctantly ISA and its scope is thereby limited. While hedge funds are going to have a regulatory framework in Europe but it is relatively flexible. Nevertheless, the establishment of ESMA is a breakthrough that will require the supervisor to give the EU means to realize its ambitions to acquire a globally recognized authority. The problematic status of depositories is idle and this will invite themselves to the agenda of the future Directive UCITS V. The vote of the Directive ISA is a first step and the path is far from complete.