Internet Changes Everything

May 06, 2005

The online ad attack

Economist.com | Internet advertising

Apr 28th 2005
From The Economist print edition

Google's new advertising service could make the internet an even more valuable marketing medium

THIS year the combined advertising revenues of Google and Yahoo! will rival the combined prime-time ad revenues of America's three big television networks, ABC, CBS and NBC, predicts Advertising Age. It will, says the trade magazine, represent a “watershed moment” in the evolution of the internet as an advertising medium. A 30-second prime-time TV ad was once considered the most effective form of advertising. But that was before the internet got going. This week, online advertising made another leap forward.

This latest innovation comes from Google, which has begun testing a new auction-based service for the more sophisticated advertising of brands, rather than of just individual products. Both Google and Yahoo! make most of their money from advertising. Auctioning keyword search-terms, which deliver, along with their own search results, sponsored links to advertisers' websites, has proved to be very lucrative. Advertisers like these links because, unlike with TV ads, they pay only for directly measurable results. They are charged when someone clicks through to their own website.

Both Google and Yahoo!, along with search-site rivals such as Microsoft's MSN and Ask Jeeves (recently bought by Barry Diller's InterActiveCorp), are developing much broader ranges of marketing services. Google, for instance, already provides a service called AdSense. This works rather like an advertising agency, automatically placing sponsored links and other ads on third-party websites. Google then splits the revenue with the owners of those websites, who can range from multinationals to individuals publishing blogs, as online journals are known.

Google's new service extends AdSense in three ways. Instead of Google's software analysing third-party websites to determine from their content what relevant ads to place on them, advertisers will instead be able to select the specific sites where they want their ads to appear. This provides both more flexibility and more precision, says Patrick Keane, Google's head of sales strategy. Firms trying to raise awareness of a brand often want a high level of control over where their ads appear.

The second change involves pricing. Potential advertisers must bid for their ad to appear on a “cost-per-thousand” (known as CPM) basis. This is similar to TV commercials, where advertisers pay according to the number of people who are supposed to see the ad. But the Google system delivers a twist: CPM bids will also have to compete against rival bids for the same ad space from those wanting to pay on a “cost-per-click” basis, the way search terms are presently sold. Google already calculates likely CPM values for the ads that it places on other people's websites.

Advertisers promoting a brand sometimes only want to get a name and an image in front of consumers, and not necessarily have them click through to a website. Moreover, click-through marketing tends to be aimed at people who already know they want to buy something and are searching for product and price information. Brand, or “display”, advertising is more often used to persuade people to buy things in the first instance.

The third change is that Google will now offer animated ads—but nothing too flashy or annoying, insists Mr Keane. Google has long been extremely conservative about the use of advertising; it still plans to use only small, text-based ads on its own search sites. But many of its AdSense partners might well be tempted by the prospect of earning a share of revenue for display and animated ads too, especially as such ads are likely to be more appealing to some of the big-brand advertisers.

With the spread of broadband providing faster connections, so called “rich-media” ads, which can contain animation, video and sound, are already becoming more widespread. And these are just the sort of ads favoured by companies trying to build their brands.

This could fuel online ad growth even further. As overall advertising spending continues to recover from the slump that began in 2001 after the bursting of the technology bubble, the internet has become the fastest growing advertising medium. Worldwide ad revenue on the internet grew by 21% in 2004 to $13.4 billion, and it is expected to continue at that pace for the next few years, says ZenithOptimedia, a research firm (see chart). Google and Yahoo!, the two most widely visited sites, are reaping many of the rewards. Google recently announced a net profit of $369m in its first quarter from revenue that soared to $1.3 billion, up 93% compared with the same period a year earlier. Yahoo!'s first-quarter net profits more than doubled to $205m on revenue of $1.2 billion, up 55% from a year earlier.

Terry Semel, Yahoo!'s boss, believes there is a lot more growth to come as firms become even more familiar with online advertising. He happily points out that many big firms still allocate only 2-4% of their marketing budgets to the internet, although it represents about 15% of consumers' media consumption—and is growing. Many young people already spend more time online than they do watching TV.

If Google can prove that bidding for display ads works, then its rivals are bound to follow with similar services. This could shake the industry up even more. DoubleClick, an online-marketing specialist which helped pioneer the delivery of simple banner ads to websites, was sold this week in a deal worth more than $1 billion to a private-equity firm, Hellman & Friedman. Even though its prospects recently brightened, DoubleClick put itself up for sale after facing fierce competition.

Other innovations in online marketing are said to be in the pipeline. Local search and its associated advertising opportunities are one huge growth area. Sites such as eBay, the leading online auctioneer, and Craigslist, which hosts local sites, are soaking up large amounts of classified advertising for everything from used cars to job vacancies that once might have gone to newspapers. Yahoo! is expanding rapidly into entertainment, with film and video clips providing another avenue of advertising. This week, Yahoo! appointed another top executive to its media group, fuelling speculation that the website may start to produce its own entertainment content. That should seriously worry TV broadcasters, who are already losing viewers and ad revenue to the internet.

May 6, 2005 at 12:29 PM in Online Marketing | Permalink | TrackBack (84) | Top of page | Blog Home

Consumer security fears weakening resistance to biometrics

Finextra: Consumer security fears weakening resistance to biometrics

One in three UK citizens would like banks to introduce biometric security to help combat card fraud, according to research commissioned by Fujitsu Services.

The IT management services company claims that growing fears over the security of online banking services is breaking down traditional consumer resistance to the use of biometrics.

The Bank of Tokyo-Mitsubishi in Japan is preparing to deploy a biometric security system based on vein-pattern recognition technology from Fujitsu. From October, the bank will start issuing Visa credit cards with embedded integrated circuits that contain customer vein pattern information. The cards function as cash cards, credit cards and as electronic money and are read whenever cardholders use ATMs or make transactions at bank counters.

Ann Hosford, business development manager for financial services at Fujitsu Services, says banks need to draw on the experience of other financial institutions around the world if card fraud is to be reduced.

"Biometric security can be used to build customer confidence and to reduce PIN theft," she comments.

Fujistsu's survey of 1000 UK adults additionally found that 29% of people are fearful of using online banking services due to security worries.

May 6, 2005 at 07:46 AM in Security | Permalink | TrackBack (10) | Top of page | Blog Home

Banks to launch debit for online shopping

TheStar.com - Banks to launch debit for online shopping

Big five to introduce Interac service at Internet retailers
Safeguards allow customers to avoid credit-card risks

TYLER HAMILTON
TECHNOLOGY REPORTER

Canada's major banks are readying a service that would allow debit-card style payments at the most popular Web retailers, giving teenagers without credit cards and other credit-wary consumers another way to participate in the online economy

The service, called Interac Online, will make it possible for Internet consumers to purchase their favourite goods and services by transferring money directly out of their online bank accounts during the course of a transaction.

One might call them "Webit" transactions. At a Web retailer's virtual checkout counter, customers simply click on an "Interac Online" option and are directed to their existing online banking account, where they'll be asked to log in to the bank's secure site.

After confirming details and finally approving the transaction, customers are sent back to the Web retailer's site where the product purchase is acknowledged as complete. The retailer collects no personal information from the customer during the process, meaning less risk of privacy leaks or abuses.

The Royal Bank of Canada, which is currently testing the Interac Online system, is expected to be the first bank to offer the service to its online customers, likely toward the end of this month. The Bank of Nova Scotia and Bank of Montreal are expected to follow in June and July, respectively.

Toronto Dominion Bank will join later in the year and the Canadian Imperial Bank of Commerce is slated to be added to the group in early 2006.

Sara Feldman, vice-president of marketing at the Interac Association, said it's likely the first time in the world that a country's major banks have come together to launch a debit-style online payment system.

"This is a multi-bank option with multiple merchants, and it offers broad access (to online consumers)," Feldman said. "In that sense, we think we are a first, though there may be other variations elsewhere in the world."

Canada has a long history of retail banking firsts, and Canadian consumers are well recognized as leaders in online banking and debit-card use. More recently, Canadian banks led the world when they introduced email money transfers, allowing individuals and small businesses to move money through email.

It's estimated that at least three out of 10 Canadians do their banking online. According to a survey by Toronto-based The Strategic Counsel, more than 22 million Canadians used their banking card to perform a debit transaction in 2004.

Furthermore, more than a quarter of Canadians said they performed five or more debit transactions each week, contributing to a total of 2.7 billion transactions in 2004.

"Debit on the Web sounds really cool, given our propensity to adopt debit cards," said Jamie Sharp, a financial services analyst with IDC Canada Ltd. in Toronto. "The nice thing about it, from a parent and risk liability point of view, is you can basically draw down just what's in the account, whereas with a credit card you've got that whole credit limit to play with."

Feldman said consumers tend to use their debit cards when purchases range from $10 to $75. Beyond $100 the credit card becomes a preferred choice of payment. But in the online world, credit cards are the most popular and usually only option.

Kevin Tait, a spokesperson for Moneris Solutions Inc., said the cost of the service to online retailers will be "in line" with other types of retail and online transaction services.

Canadians should start seeing the country's leading retailers offering the option "within the next few weeks," he said.

Additional articles by Tyler Hamilton

May 6, 2005 at 07:46 AM in Financial Services | Permalink | TrackBack (36) | Top of page | Blog Home

May 05, 2005

2004 Internet Ad Rev Surpasses Dotcom Boom Levels

2004 Internet Ad Rev Surpasses Dotcom Boom Levels - Yahoo! News

Thu Apr 28, 2:10 PM ET

NEW YORK (Reuters) - U.S. Internet advertising surged 33 percent in 2004 to a record $9.6 billion, surpassing levels seen during the early Web boom, and will grow at a similar rate in 2005, according to data released on Thursday.

The figures bolster reports from individual advertisers who say they are moving more of their marketing budgets online as consumers devote more time to the Internet and fewer hours to television and other media.

The data also underscores breakaway earnings results for major Internet media companies and search engines like Yahoo Inc.(Nasdaq:YHOO - news) and Google Inc.(Nasdaq:GOOG - news) , as well as the digital divisions of traditional media companies like the New York Times Co (NYSE:NYT - news).

"Interactive advertising has clearly become a mainstream medium and one that can no longer be ignored," said Greg Stuart, president of the Interactive Advertising Bureau (IAB).

The IAB said that Internet ad revenue of $9.6 billion in 2004 compared with ad revenue in 2003 of $7.27 billion and exceeded the previous revenue record of 2000 by nearly 20 percent. Fourth-quarter revenue grew to $2.69 billion, the highest level for a three-month period. The data was compiled by the IAB and PricewaterhouseCoopers.

Looking ahead, research firm eMarketer predicted online ad growth of 33.7 percent in 2005 to $12.7 billion, raising a previous estimate of $11.5 billion for the year. eMarketer had estimated 2004 ad revenue at $9.5 billion.

"The reported results from Yahoo and Google showed I was being too conservative" with regard to the Web search advertising those companies have popularized, said eMarketer senior analyst David Hallerman.

He said eMarketer's new 2005 forecast assumes revenue from Web search advertising, also known as paid search, to grow 40 percent year-on-year to $5.4 billion. His previous forecast had been $4.7 billion.

Industry experts say the growth of high-speed Internet in the United States, now estimated to be used by over 50 percent of homes connected to the Web, will further boost the medium in years to come as marketers can deliver more sophisticated video or pay-per-view content.

By category, paid search listing revenue jumped 40 percent to $3.9 billion, display advertising such as banners rose 19 percent to $1.8 billion and rich media such as video ads grew 10 percent to just under $1 billion, according to the IAB.

Online classified ads grew 18 percent to $1.7 billion, representing a growing challenge to traditional newspaper classifieds.

Consumer goods companies accounted for nearly half of all online ad spending in 2004, while financial services firms made up 17 percent of the total revenue.

(Additional reporting by Lisa Baertlein in San Francisco)

May 5, 2005 at 04:33 PM in Online Marketing | Permalink | TrackBack (16) | Top of page | Blog Home

Silicon Insider: The Great Hidden Tech Boom (future of blogs)

ABC News: Silicon Insider: The Great Hidden Tech Boom

Blogs -- the New Tech Boom, Zeitgeist of the Future?
Commentary by MICHAEL S. MALONE

May. 5, 2005 - Having declared newspapers (and most of the rest of the mainstream media) dead, what do we do now?

This isn't an idle question to be bounced around the blogosphere, but a very real and immediate concern that could have a profound impact on how all of us get the news, the reliability of that news, and ultimately, the First Amendment and the freedom of the press.

A few months back I noted that the greatest challenge facing blogs and related Web sites is the lack of an effective revenue model. Even the most popular blogs are still light on advertising -- and what advertising they do have is pretty low-grade stuff like political T-shirts, books and exercise programs. Most of this advertising isn't even up to the grade of late-night cable, despite the fact that many blogs enjoy readerships larger than some major metropolitan newspapers.

Because of that, I also predicted at the time that the search for revenues would have two effects over the next couple years. First, the majority of the world's millions of blogs would fade away, as their authors either abandon their entrepreneurial dreams of turning weblogging into a new career, get distracted by job and life changes, or just get tired of writing copy to a miniscule audience. Hundreds of thousands will remain -- mostly people who blog for their own reasons, like modern day diarists -- and hundreds of thousands of new bloggers will arrive, late to the scene … and interestingly, because they've learned from the failures of their predecessors, they will have a greater chance of success. But the bloom will be off the first blog revolution.

Meanwhile, a second cohort, much smaller than the first, will survive, and even thrive. We already have a pretty good idea who they are -- you've no doubt bookmarked many of them -- and we can expect a few more to appear in the months ahead. Nevertheless, the search for real revenues, I suggested, would force many of these popular sites to begin to consolidate in hopes of finding economies of scale, interested mainstream advertisers and, ultimately, investors, employees and infrastructure.

It is interesting to note, then, that this prediction is already coming true. The talk of the blogosphere this week was the announcement, by blogger/mystery writer Roger L. Simon, Little Green Footballs, and others, of the creation of the Pajama Media, an aggregation of blogs from around the world designed specifically with the goal of attracting advertising. The response has apparently been extraordinary, with more than 200 blogs from everywhere on the planet already signed.up. There are other aggregators out there as well, from the comparatively venerable Tech Central Station to the new Hollywood-based site put together by Arianna Huffington to the still hush-hush citizens' reporting project for which noted tech columnist Dan Gilmor quit the San Jose Mercury-News.

Does all of this seem familiar? It certainly does to me -- and I feel a bit of fool for not noticing it before. Ever since the dotcom bubble popped, we in the tech industry have been awaiting the next boom. Two years ago, when I first returned to writing this column, I confidently predicted that we would see just such a boom right about … now. So where is it? I can assure you that everybody in Silicon Valley has been looking for the next breakout for months. For a while we thought it would be PDAs, then desktop game machines, then the next generation of cellphones, and most recently, the iPod/MP3 breakout. The most imaginative predicted something out-there like nanotech or biochips.

Some of these new businesses have been big, others just fizzled. But none (except perhaps for music downloads) have had that kind of deep impact, culturally transforming, smell-the-Zeitgeist effect of a true technological boom. And yet, even as we have been peering towards the horizon, scanning for the Next Big Thing, it may be peaking right under our feet, right now. The blogosphere is not just a media revolution, but the tech boom of our time.

So why haven't we noticed? Because it came disguised as a cultural trend, not an industry. We've become accustomed to tech booms following the paradigmatic model of minicomputers, microprocessors, calculators, PCs and even iPods. That is, a small number of start-up companies chase a new technology, and in the process develop an important new product. That product, in turn, so perfectly fits the needs of customers that it becomes a phenomenon. The skyrocketing growth of the industry this product creates -- and the huge wealth earned by the pioneering companies -- quickly draws armies of competitors, backed by mountains of venture capital money.

For a brief period, every one of the competitors in this new industry enjoys impressive growth -- and even more impressive valuations. A few manage to go public, making their founders unbelievably rich -- and thus stirring even greater competition. A bubble forms, the market cannot hold that many competitors … and pops, almost overnight killing hundreds of companies and depositing thousands of people on the street. The stock markets slump, awaiting the next boom.

That's the standard model, and you can see it working through the usual cycle right now in MP3 players. But what if it isn't the only model? After all, the other great trend of the last half-century is the increasing democratization of high-tech entrepreneurship. You had to be physicist to start a semiconductor company in the 1950s, a technologist to build a computer company in the 1960s, and a marketing genius to start a PC company in the 1970s. What made the dot-com boom of the Roaring '90s interesting was that, for the first time, you didn't even have to be a businessperson to start a Web content company. The dot-com boom was run by people who had likely never met a payroll, had no real product, and little prospect of ever seeing profits. And if the shakeout was bloody, with perhaps a 95 percent fatality rate, in retrospect we have to say that it worked. The dot-com world is bigger than ever, producing immense revenues and profits, and filled with billion-dollar companies.

So, why can't the next (or more accurately, the current) tech boom be Internet diaries? Why can't the user base precede the business model? We all laughed when Amazon went quarter after quarter, growing its customer rolls, but never showing a profit. Like the old joke, Jeff Bezos seemed to be claiming that, while he was losing money on every sale, he would make it up in volume. We aren't laughing now.

So, let's say the blogosphere is the tech boom we've been waiting for. If true, we can probably assume that most of the larger trends that affect all tech booms will obtain here.

One of these is the 80:20 rule. That is, 80 percent of all blogs out there will likely die in the next 18 months. Of the 20 percent that remain, the 80:20 rule will again apply, with just 20 percent actually becoming viable, profitable businesses, while the others limp along. I'll go one step further: of that 20 percent, only 20 percent will survive as stand-alone enterprises, while the majority will merge into a handful of consolidated enterprises. Do the math: if there are an estimated 10 million blogs in the world, only 2 million will be around a couple years from now. Of those, 400,000 will become real businesses; and of those 80,000 will become viable businesses. I'll go even further: of those, 16,000 will survive the next 10 years; 3,200 will become corporations with annual revenues of $100 million or more, and -- and I'm really getting out there now, 100-200 will someday go public. Of those much-evolved blogs that do one day go public, many will have been among the first to start down the path -- booms really do confer advantages on first movers.

If all that sounds nuts -- I mean, we're talking about blogs here -- you weren't around for the early meetings of the Homebrew Computer Club. Andrew Sullivan, Glenn Reynolds and Kos have a lot more going for them than those nerds clutching homemade motherboards in 1976.

But the crucial first step is finding the money. New structures like the Pajama Media are interesting, but they are still missing something. Take it from a guy who used to run an 800,000 circulation magazine: the advertising agencies for Johnson & Johnson, Ford and Heineken are only marginally interested in raw numbers. What they want are "qualified" potential customers. It's not enough to announce that you have 100,000 unique visitors each week to your blog; you have to characterize them. What do they buy, how old are they, where do they live, how much money do they make? Real advertisers want real results.

Getting that information will require asking blog readers to give up some of their anonymity. It will also take money -- the kind of money that only comes with a business plan, spreadsheets, a hearty handshake with a venture capitalist, and betting everything you've got.

Are the leaders of the blogosphere ready to take that risk? [As long as I'm on the subject, I've been helping Oxford University, Forbes, Yahoo Search, and the Financial Times (among others) put together a summit on business and the blogosphere this autumn in New York City. If you'd like to learn more, visit http://www.oxford-york.com.]

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor at large of Forbes ASAP magazine. He has covered Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years, and in 2001, a 16-part interview series called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books. His latest book, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight."

Copyright © 2005 ABC News Internet Ventures

May 5, 2005 at 04:29 PM in Blogging & feeds | Permalink | TrackBack (3) | Top of page | Blog Home

May 04, 2005

E-banking: get your money anytime, anywhere

Emirates Bank Group

Mohammed A. Al-Jallaf, senior manager, e-banking services, Emirates Bank Group

The Middle East bank customer is in the midst of a significant transition. Now, we go to the bank or the ATM to conduct our business transactions and it has not been easy for us. But it won't be long before banks decide to come to us. We will be able to bank anytime, anywhere. The era of Internet banking has arrived.

E-banking only holds value when a customer can conduct "serious" e-finance, i.e. financial transactions such as fund transfers to accounts worldwide, payment of utility bills, and mortgages and loans from the convenience of your home. Such services have become the norm worldwide. And although, the Middle East region has been slow on the uptake, some banks have moved forward aggressively to deploy such services.

A survey conducted in June 2001 by technology consultants Accenture shows that of the 85 banks interviewed in the GCC countries, 27% had already introduced serious e-finance services; 12% of the respondents had no plans to introduce such services; 2% were unspecified and the rest planned to deploy the same within a maximum time limit of 24 months. Three countries in the region that have exceeded the US ratio of 17% e-Banking registrants to Internet users is Bahrain (17%), UAE (21%) and Kuwait (29%). Banks in these countries also offer some of the most sophisticated e-banking services currently available in the region.

One bank that has thought ahead of other regional banks is Emirates Bank Group (www.emiratesbank.ae). Through a brick-and-click concept called meBANK, it has extended e-banking services to people who do not have computers or Internet connectivity in their homes. This is important to the region because Internet penetration is as low as 12% in some of the Middle East's most advanced countries.

Golnar Mahmoudi, head of e-business, National bank of Kuwait

meBANK is an online channel developed by EBG to allow meBANK customers to conduct financial transactions online from anywhere at anytime. The only difference, however, from other Internet banking services is that if you don't have access to the Internet, you can go to one of its nine branches in Dubai where several computers are installed, log on to www.emiratesbank.ae/mebank and carry out your transactions. Additionally, ATMs are also installed at most of these locations to facilitate cash deposit and withdrawal.

To open an account at meBANK, you have to apply online. When your application is submitted, you will automatically be pre-approved for a credit card and a loan based on your salary status. Your presence is required physically only once—to sign the application form. "It is like another fully operational bank but it is actually just another channel we have opened," says Naushad Kermalli, group systems manager, EBG. As a special incentive, those who register with MeBANK do not need to maintain a minimum balance. Through this channel, Emirates Bank hopes to rope in young customers, for whom online banking will be the norm, and people who do not have the relevant infrastructure.

Accenture survey report

But meBANK is not to be confused with Internet banking services offered by Emirates Bank to its own clientele. Although the services and channels are similar, EBG has kept them separate to address the needs of different customers. People who have an account with Emirates Bank would have to go to www.emiratesbank.ae to avail of its Internet banking services.

Customers using EBG's Internet banking facilities "can do everything online that they can do at our branch except deposit and withdraw cash physically," says Kermalli. As the first bank in the region to have offered dialup banking in the region in 1996 and again, the first, to open Internet services in 1997, the bank has had the time to pay more attention to improving its backend services to ensure better integration.

Mohammed A. Al-Jallaf, senior manager, e-banking services, EBG, who has been with the bank since 1995, and is responsible for the development and deployment of its Internet services, explains the challenge that the bank undertook. "We endeavoured on a mission through advanced technologies to have all customer-facing areas of the bank (i.e. the branch network, the Internet and the call centre) integrated, so that we can better understand and serve customers, depending on their needs and the channel through which they would like to do their banking." As a UAE-based bank, EBG has a personal stake in the region and has more reason to develop better infrastructure and services for the region's customers than foreign banks.

Reza Habib, joint president, Habib Bank AG Zurich

The same applies to the National Bank of Dubai (www.nbd.co.ae). NBD has also provided customer interactive terminals (CIT) at its automated branches and in branch lobbies for customers who do not have a PC with an Internet connection. But it is not a separate service like meBANK. The services are for NBD's corporate and retail customers. Its Internet banking services include balance enquiries and statement history for personal accounts and credit cards, transaction extract in excel, quicken & money format, inter-account transfers, utility bill payments, outward remittances, standing instructions, cheque book requests, applications for L/C and guarantees and salary payment. "Currently, only 10% of our customers use this service. But that is expected to rise within the next six months," says Abdul Sharaf, divisional head of Cards Business, NBD. Meanwhile, the bank is working on enabling inter-currency transfer

Another bank in the region that has offered online financial services as far back as 1997 is the National Bank of Kuwait (www.nbk.ae). This has given it ample time to fine tune normal financial transactions and introduce new services as well. In the year 1999, it launched the first Visa Internet-only credit card in the region to promote e-commerce. In 2000, it launched an online brokerage service that enabled its customers to trade stocks on the US stock exchanges. "Customers could see where the market was moving and could transfer funds accordingly to their trading accounts within minutes," says Golnar Mahmoudi, head of e-business, NBK, who adds that the service currently has over 3000 "heavy traders."

Early last year, NBK enabled customers to tap into a service called Watani Online through WAP-enabled phones. "Our WAP banking service has attracted customers who have never accessed Watani Online on a PC but are doing so on their mobile phones. To date, we have a total of 2000 registered WAP users and we plan on positioning mobile banking as a premium service over time," explains Mahmoudi. She also adds that the bank is considering new services such as margin trading, streamers and after hours trading for online brokerage customers. NBK is currently the only bank in Kuwait offering a payment gateway for e-commerce since 2000.

A bank that offers similar sophisticated services is Habib Bank AG Zurich (www.habibbank.ae). By its own admission, it operates on a more conservative level but has also reaped huge profits. Habib Bank AG Zurich has a story to tell. Its IT operations worldwide are handled by a small IT team of 15 from its Dubai branch. Seven years ago, this team developed the bank's IT system from scratch on a java platform. A year ago, the bank shifted to Linux because the operating system was stable and java-friendly. That decision kept their costs down because they did not need to enter into licensing issues with software vendors. Moreover, building everything from scratch may have been a lot of hard work initially but it has ensured that all departments of the bank are seamlessly integrated. This helped when the bank decided to offer its services online.

"For us, the Web was just another channel. We did not incur any integration costs like most other banks. The only thing that we were concerned about and cost us money was security," says Reza Habib, joint president, Habib Bank AG Zurich.

ES Venkat, vice president, regional product manager, Citibank Middle East and Pakistan

Integration also helped Habib bank give its customers what Habib calls "ownership of data." According to him, a bank's biggest challenge is to get in real-time a snapshot view of a client's transactions. "This is important when we are processing requests for loans. And we have been able to get that snapshot view only because all our departments are integrated. Now, we have extended that to our customers so that they can see online every leaf level of the transactions they have conducted over the last seven years," says Habib proudly. In most other banks, only one year's bank statements are stored and less is available to the customer for online viewing. Another place where Habib bank has scored a first is in giving customers the facility to connect to its e-banking services through GPRS (General Packet Radio Service).

More common services extended by the bank to its corporate and retail clients include fund transfers, cheque book requests, bill payments, money transfer from accounts to credit cards, shipping and delivery payments and credit card payments. As a result, 41% of Habib Bank's credit portfolio customers use its Internet banking facilities. Usage by retail clientele is, currently, only 10%.

A more recent arrival on the Internet banking scene is Mashreq Bank, which launched its online banking applications in May, 2001. But having come recently hasn't stopped Mashreq Bank (www.mashreqbank.ae) from offering its "customers access to their full relationship with the bank," according to Nada Khater, vice president, marketing services and e-business, Mashreq Bank. She believes that each bank in the region today is aiming to provide more distinguishing financial services, which she terms "killer applications". And the faster such services are available on the Web to customers, the better.

For now, however, MashreqOnline's customers can inquire about their account balances and loans, review up-to-date credit card information, pay their utility bills online, transfer money between their accounts or worldwide, and open new accounts and subscribe to new services. More unique services are coming, she promises.

All the banks above are either regional ventures or their IT infrastructure is being handled from within the region. Judging by the sophisticated services they have up on offer for their customers, it does seem that they are holding their own against foreign banks such as Citibank.

Citibank in the Middle East region (www.citibank.ae) has had it a little easy. Its regional Internet banking service was launched in November 2000. "Since we are a global bank, we already had an implementation strategy in place. We manage the content of the Web site, fine tune its look and feel to cater to the local market; but for the backbone, we rely on our global infrastructure and tools," says ES Venkat, vice president, regional product manager, Citibank Middle East and Pakistan.

Like all other banks, Citibank has special sections to service its retail and corporate customers. Customers of Citibank can pay their utility bills online, trade in mutual funds, redeem credit card points online, transfer money across 50 different currencies and avail of other financial services that are common to most other banks. "In fact, every quarter we announce a new service or upgrade an existing service based on what the business demands," says Venkat.

On an average, 12 to 14% of Citibank's financial transactions are conducted online. "But our goal is to take it to 25% by the end of the year," says Venkat. To do this and migrate customers from expensive traditional delivery channels like ATMs and branch counters to the Internet, Citibank is offering customers who use their e-banking services special concessional rates.

Security has been a key concern for each of these banks as they deployed Internet banking services. Apart from having 128-bit encryption, which is the highest security standard commercially available, each of these banks also have other personalised measures in place to guarantee their customers more security. Citibank, for instance, has PIN (Personal Identification numbers) and Automated time out. Others like Habib Bank allow their corporate customers to have customised security checks in place for each person in the company who logs in. The type and amount of data that can be viewed by each person in a company who logs into the system is determined by the administrator.

Another key challenge that banks have faced in the region is integrating the systems in their different departments. Venkat of Citibank explains that each bank has its legacy systems. For instance, credit cards are based on a different platform, normal accounts on another. "There is a felt need to coordinate all these systems because the customer may have a credit card and an account with the same bank. Internally, both these are two different processes. But he must be viewed as one customer and the systems must be able to talk to each other," he says.

Each bank claims to have achieved this integration to various degrees. But Habib explains why 100% integration may not have been possible in most banks. "The fundamental problem with banks is that every department feels that it needs the best-of-breed technology for each of its departments. And while each of these systems may be good individually, each operates on different philosophies. So, the IT department spends a good amount of its time integrating this defragmented system and there is a limit to which they will meet. This raises the cost a great deal," he says.

Indeed, the capital invested in offering Internet banking services has been very high. Just the hardware and software based on an ASP model is likely to cost a bank between US$ three and four million and annual maintenance should take, at least, $ one million, according to Venkat, who admits it is a conservative estimate. But the money now invested by these banks is well spent. Although, the number of consumers using Internet banking is currently very low, it is projected to accelerate by the next quarter. And the Accenture E-fnance report supports that view: "By the end of year 2001, only 3.6% of customers are expected to transact online, rising to 15.3% by 2004. By 2006, 35.5% of banking clientele will have switched to online services."

Jawad Abbassi, president, Arab Advisors Group

The report is a clear indication that the Middle East market will be ready for e-banking services in the next couple of years. By then, regulatory banks will also be under pressure to buck up and amend the law to allow for new concepts such as digital signature. Governments will have to take steps like Dubai recently did and pass e-commerce facilitation laws to govern commercial activity on the Internet.

Banks that fail to offer Internet banking services will be at a disadvantage over those who do. Perhaps Jawad Abbassi, president of the Jordan-based market research agency Arab Advisors Group explains its best. "In the ATM era, banks that offered ATM services had a competitive advantage over the rest. But the ATM function moved rapidly from being a competitive function to being a mass user service by definition. That is what is going to happen with Internet banking. Today, only some banks have it and it gives them an edge over the rest. But tomorrow, it will become a prerequisite and those who don't have it will lose their customers." In the long run, Internet banking will be a win-win situation for the bank and the customer. Banks would have come to the customer with their services and it would cost them less to do so.

Reported on: www.itp.net
Reported on: 13.03.2002

May 4, 2005 at 01:06 PM in Financial Services | Permalink | TrackBack (19) | Top of page | Blog Home

May 02, 2005

Atomic lab chief feels power of blog

TheStar.com - Atomic lab chief feels power of blog

Complaints go public at top-secret site
Outside experts say tactic having effect

WILLIAM J. BROAD
NEW YORK TIMES

A blog rebellion among scientists and engineers at Los Alamos, N.M., the U.S. government's premier nuclear weapons laboratory, is threatening to end the tenure of its director, Peter Nanos.

JAKE SCHOELLKOPF/AP
Los Alamos National Laboratory computer scientist Doug Roberts, seen here posing at his home in Nambe, N.M., in February, launched his Web blog after an online publication for employees stopped accepting submissions critical of the secret lab, except for trivial issues.

Four months of jeers, denunciations and defences of Nanos' management recently culminated in dozens of signed and anonymous messages concluding that his days were numbered. The postings to a public Web log conveyed a mood of self-congratulation tempered with sober discussion of what comes next.

"Some here will celebrate that they have been able to run the sheriff out of Dodge," Gary Stradling, a veteran Los Alamos scientist who is a staunch defender of Nanos, wrote Tuesday on the blog.

"It might be a good idea," he added, "to shut down the celebration and form a work party to clean up Dodge City, because the new sheriff will if we do not.''

The blogging comes at a delicate moment in the 60-year history of Los Alamos. The University of California, which has helped run the lab for the federal government since the days of the Manhattan Project, faces close scrutiny in Washington as to whether its contract should be renewed. And resignations and fears of an exodus have recently roiled the waters. Some analysts believe that now, given the public outcry, the university will have to abandon Nanos in order to make a tenable bid to keep its contract.

Nanos would not comment. A spokesman for Los Alamos, Kevin Roark, said false rumours of the director's resignation had circulated for months. Roark added Nanos was extraordinarily proud of what he had accomplished at Los Alamos, which employs 14,000 people on an annual budget of $2.2 billion. He called the vitriolic blogging unrepresentative of the majority of employees and said it often had the tone of a sophomoric Halloween prank.

"Everybody, I think, was a little surprised at how mean it got," Roark said.

Several outside experts said that the director's quick departure was inevitable and that the blog's attacks were playing a significant role.

"Nanos is leaving," said Greg Mello, director of the Los Alamos Study Group, a private organization in Albuquerque that monitors weapons laboratories. "The blog changed the climate, giving people an outlet they didn't have before.''

Blogs seem to be everywhere. But this one is unusual, in that the Los Alamos National Laboratory, isolated in the mountains of New Mexico, has a long history of maintaining the highest level of federal secrecy. The lab's very existence was once classified. Today, barbed wire rings many of its buildings, federal agents monitor its communications, and its employees are constantly reminded that loose lips sink ships.

The blog (http://www.lanl-the-real-story.blogspot.com) went public in January and since then has registered more than 100,000 visits, with over half a million pages viewed and more than 5,000 comments. Discussions run on a variety of topics, from the sanctity of retirement benefits to the likely identity of the next contractor who will run Los Alamos.

Since most messages are anonymous, there is no way to know how many lab employees contribute to the blog. Even so, from the sheer volume, detail and differing styles of the messages, the number is clearly many more than a handful. The language, often studded with obscure acronyms, suggests that the authors have a deep knowledge of the lab's exotic culture.

Furious debate centres on Nanos, a retired vice admiral of the U.S. Navy who holds a doctorate in physics from Princeton and became the lab's director two years ago. Many bloggers criticize his decision to shut down most of the laboratory last July, when he cited "egregious" safety and security violations after two computer disks with secret information were reported missing and an intern working with a laser suffered an eye injury.

The security alarm turned out to be a clerical error — the disks, in fact, never existed. Still, Nanos kept many lab areas closed for seven months, until late January. During that time, lab personnel worked on improving safety and security.

Dr. Thomas Meyer, a distinguished chemist and a member of the National Academy of Sciences who oversaw 2,000 employees as head of the lab's strategic research, resigned in October during the shutdown and afterward filed a long critique of the episode and the director's acts.

"He chose to transfer blame and intimidate individuals even with a staff that was often attempting to implement difficult and complex safety processes," Meyer said in his critique, which was posted on the blog. He called the director's treatment of lab employees "vindictive and abusive.''

A banner atop the blog site sets the tone, asserting that the shutdown cost American taxpayers "approximately $850 million, an exodus of highly talented staff members, and the loss of untold millions of dollars of funding from customers who have taken their business elsewhere.''

Lab officials say the shutdown probably cost $120 million (all figures U.S. dollars) and federal officials recently put the figure at $370 million.

Roark, the Los Alamos spokesman, acknowledged that the lab was worried about a recent spike in retirement inquiries.

"We're not anticipating a mass exodus," he said. "But that doesn't mean we're not concerned about the possibility. We are.''

The blog's creator is Doug Roberts, a computer scientist who is a 20-year lab veteran. In an interview, he said he was inspired to start the blog when he and his colleagues had their critical submissions to a forum on the lab's online newspaper rejected. Roberts said it was impossible to know how many lab personnel contributed to the blog, since it was set up to protect their identity, if so desired. He estimated the vocal population at 200 to 500 employees.

The blog runs a petition for Nanos' removal; it has garnered more than 100 signers, although most have concealed their names.

One who signed openly in February was Dr. Brad Lee Holian, a theoretical physicist who worked at the lab for 32 years. He retired a month later.

"People were feeling like they were in a pressure cooker,'' Holian said in a recent interview. "Nanos is so abusive, not just to the general staff, but his underlings. People were afraid to say anything. On the blog they could vent without fear of reprisal.''

Jeff Jarvis, who publishes BuzzMachine, a blog that focuses on media issues, said the Los Alamos site showed "a new ethic of transparency" that has come with the explosion of electronic self-publishing.

"It's not just the power of the blog," Jarvis said, "it's the power of the citizen.''

May 2, 2005 at 07:51 AM in Blogging & feeds | Permalink | TrackBack (30) | Top of page | Blog Home

May 01, 2005

Coldplay's new single breaks sound barrier

Britain, UK news from The Times and The Sunday Times - Times Online

By Adam Sherwin, Media Reporter

THE rock group Coldplay have secured an international first for British music after their new single became the world’s fastest-selling download

Speed of Sound is available only in digital form, but already it has broken chart records held by the Beatles. The song entered the US Billboard Hot 100 at No 8, the first British group to debut inside the Top Ten since the Beatles in 1968.

Speed of Sound shot to No 1 on its day of release in all 15 worldwide Apple iTunes stores, achieving almost 100,000 sales last week.

The song is the first preview of the quartet’s hotly anticipated album X&Y, which is tipped to sell ten million copies.

However, the song is barred from tomorrow’s British singles chart. Although downloads now count in the Top 40, a song is ineligible if no physical version is available in stores.

The rule is designed to prevent established retailers from being frozen out of the singles market. Speed of Sound is not released as a British CD until May 23, when its combined sales will count.

Coldplay tonight will seal their status as the “new U2” when they headline the Coachella Valley Festival in the California desert, playing to 80,000 fans. The bill is dominated by British artists, including Keane, Snow Patrol, Razorlight, Jamie Cullum and even the million-selling Radio 2 favourite Katie Melua.

Coldplay have invited Franz Ferdinand to join them on a “best of British” summer tour of American arenas.

While Coldplay are happy to enjoy the benefits of paid downloads, EMI, their record company, is paranoid about the album leaking on to the internet before its June release.

Reviewers may preview X&Y only via an iPod locked in a glass case and surrounded by security guards. EMI Group shares fell 16 per cent in February after it blamed delays in releasing the Coldplay and Gorillaz albums for lower-than-expected profits.

Paul Richards, an analyst with Numis Securities, said: “This is the high-stakes album of the year for EMI. All eyes will be on the performance of X&Y.”

The pressure is intense on Chris Martin, the perfectionist Coldplay singer, whose marriage to Gwyneth Paltrow has placed his life under even greater scrutiny.

He called the making of the band’s third album “one of the most difficult experiences of my life” and even suggested that it may be Coldplay’s last.

EMI has planned a 12-month strategy for the band, which will see them playing to 150,000 British fans this summer, plus tours of Asia, Australasia, Latin America and a return to the US next year.

Coldplay have some way to go before they can truly equal the Beatles. When Lady Madonna reached No 4 in the Billboard chart in 1968, it sold one million vinyl singles. During the first week of April 1964, the Beatles held the top five positions on the Billboard singles chart and the Lennon/McCartney team were responsible for 32 No 1 singles.

Speed of Sound needed just 44,000 downloads to enter the US Top Ten, which is combined from downloads and radio airplay. Record companies have largely abandoned CD singles in the US.

# Tony Christie, the resurgent crooner, will join Franz Ferdinand, Scissor Sisters and Kaiser Chiefs at this summer’s V Festival. Christie, 62, has been added to the Chelmsford and Staffordshire rock festival after the million-selling reissue of (Is This The Way To) Amarillo.

COLD FACTS
# Chris Martin, Jonny Buckland, Guy Berryman and Will Champion met at University College London in 1996

# Parachutes (2000) sold 2 million copies. A Rush of Blood to the Head (2002) sold 10 million

# 2003 North American tour grossed £4.3 million

# David Martin, the singer’s uncle, is the Conservative candidate for Bristol West

May 1, 2005 at 09:37 AM in Business Models | Permalink | TrackBack (88) | Top of page | Blog Home