Sir Christopher Kelly's review of the Co-operative Bank's near-collapse blamed the 2009 Britannia merger, citing pre-existing problems in both organizations. The merger exacerbated issues like Britannia's £3.7bn commercial property loan book and the Co-op Bank's risky lending, contributing to a £300m IT project shortfall. The bank also faced PPI mis-selling costs and was impacted by the 2008 financial crisis and subsequent regulatory changes. The Co-op Bank reported a £1.3bn loss in 2013 and required a £1.5bn rescue deal, resulting in US hedge funds taking a 70% stake. Further financial issues emerged, including a £400m black hole, leading to additional share issuance and potential dilution of the Co-operative Group's remaining 30% stake. The Co-operative Group itself faced a £2bn loss and leadership changes, with CEO Euan Sutherland departing.

The Co-operative Bank’s IT failures, particularly the failed replatforming project, significantly contributed to its capital shortfall and overall difficulties. The bank’s decision to embark on an ambitious IT transformation project without adequate expertise and resources, coupled with poor program management, led to significant cost escalations and ultimately the project's failure. This failure hindered the integration of the bank with Britannia Building Society and resulted in substantial impairment charges, further weakening the bank's financial position. The IT failures also highlighted broader issues with the bank’s culture and decision-making processes, including a lack of challenge and a tendency to underestimate risks.

The Top 10 Findings on IT Failures

1️⃣ Failure of the IT Replatforming Project: The Co-operative Bank's ambitious project to replace its core banking system and upgrade other IT applications ultimately failed, contributing almost £300 million to the capital shortfall.   

2️⃣ Underestimation of Replatforming Complexity: The bank underestimated the complexity and risks involved in the replatforming project, particularly in light of the simultaneous merger with Britannia Building Society.   

3️⃣ Lack of Expertise and Resources: The bank lacked the necessary expertise and resources to successfully execute such a complex IT transformation program.   

4️⃣ Poor Program Management: The replatforming program suffered from unstable leadership, poor coordination, and inadequate planning.   

5️⃣ Impact on Integration Efforts: The failure of the replatforming project hindered the integration of Britannia and the Co-operative Bank, as many integration tasks were dependent on the new IT platform.   

6️⃣ Lack of Contingency Plans: The bank did not have adequate contingency plans in place in case the replatforming project failed, which left it with limited options when the project ultimately did not succeed.   

7️⃣ Underinvestment in Legacy Systems: The bank underinvested in its legacy IT systems while waiting for the replatforming project to be completed, which left it with outdated and inefficient systems.   

8️⃣ Impairment Charges: The failure of the replatforming project resulted in significant impairment charges, further contributing to the bank's capital shortfall.   

9️⃣ Missed Opportunities: The bank missed opportunities to improve its IT systems through less ambitious alternatives, such as remediation of its legacy systems.   

🔟 Culture and Decision-Making: The bank's culture and decision-making processes contributed to the IT failures, as there was a lack of challenge and a tendency to underestimate risks.   

#megaprojects #banking #itproject #failure 

http://www.FrankSchwab.de

Kaspi Bank, headquartered in Almaty, Kazakhstan, has positioned itself as a leader in digital banking through its innovative Super App ecosystem. The bank integrates financial services, e-commerce, and payments, creating a comprehensive platform that caters to both consumers and merchants. This two-sided model includes the Kaspi.kz Super App for individuals and the Kaspi Pay Super App for businesses, transforming everyday financial and commercial transactions in Kazakhstan. Recognized as the "Best Digital Bank in Central Asia" by Global Finance in 2022, Kaspi Bank has achieved rapid financial growth, with its balance sheet expanding from USD 3.8 billion in 2018 to USD 16.8 billion by Q3 2024. Net profits have similarly soared, growing from USD 245 million in 2018 to USD 1.8 billion by 2023, reflecting a robust compound annual growth rate (CAGR) of 50%.

The bank's revenue model has evolved significantly, with its payments and marketplace segments now driving a substantial portion of its income alongside fintech services. Kaspi.kz has maintained a strong net interest margin (NIM), with the payments segment improving from 25% in 2018 to 65% in 2023. The bank's cost-to-income ratio (CIR) has declined from 70.4% in 2018 to 55.6% in 2023, showcasing operational efficiency through technological advancements and automation. Additionally, asset quality remains high, with the non-performing loan (NPL) ratio improving from 8.3% in 2018 to 5.5% in 2023, backed by a provision coverage ratio of 99%.

Kaspi Bank has expanded its digital ecosystem to include bill payments, peer-to-peer (P2P) transactions, mobile commerce, a shopping club, and a rewards program, making its Super App an integral part of consumers' daily lives. Its marketplace platform, Shop on Kaspi.kz, provides an extensive e-commerce experience, while Kaspi Pay facilitates digital transactions for businesses. The bank has successfully leveraged its extensive data analytics capabilities to drive product development, improve risk management, and enhance customer engagement. The introduction of artificial intelligence-driven financial tools and biometric-based security measures further streamlines operations.

Kaspi's fintech platform remains a key revenue driver, providing instant consumer loans, business financing, and buy-now-pay-later (BNPL) services. Deposits in Kaspi Bank have grown significantly, with an annual increase of 32%, reaching KZT 5,959 billion by Q3 2024. The bank has also extended its reach into government services, allowing users to access digital documents, register businesses, and handle tax payments through its Super App. Its logistics services, including Kaspi Delivery and Kaspi Postomats, enhance customer convenience and marketplace efficiency.

A crucial factor in Kaspi Bank's success is its deep integration of technology into all facets of its operations. The bank has invested in advanced data centers, AI-driven customer support, and automated self-service solutions, such as the Kaspi Kartomat, which issues debit cards in under a minute. This strategic focus on automation has contributed to an increase in productivity, with revenue per employee rising fivefold from 2018 to 2023. The bank has successfully reduced its reliance on physical branches, achieving higher operational efficiency while maintaining strong customer satisfaction.

Kaspi’s financial resilience is evident in its consistent revenue growth, with fintech, marketplace, and payments now contributing almost equally to the bank's net income. The payments segment, initially a smaller contributor, has grown to account for 37% of net income, while the marketplace and fintech segments contribute 31% and 32%, respectively. This balanced revenue mix ensures stability and long-term sustainability. The bank’s capital adequacy ratios have remained strong, providing a buffer against economic fluctuations.

Kazakhstan's economic environment has played a crucial role in Kaspi’s growth. The bank's balance sheet expansion significantly outpaced national GDP and banking sector growth rates. While Kazakhstan's GDP grew at an average rate of 4.1% between 2018 and 2023, Kaspi’s assets grew at a CAGR of over 30%, demonstrating its ability to capitalize on economic opportunities. The bank’s success in deposit mobilization, even during economic downturns, highlights strong customer trust and a well-executed liquidity management strategy.

Kaspi Bank's competitive strengths include its proprietary technology infrastructure, extensive data analytics capabilities, and a deeply embedded Super App ecosystem. With 14 million monthly active users and 732,000 active merchants by Q3 2024, the bank benefits from strong network effects that drive user engagement and business growth. Its strategic focus on customer satisfaction, as reflected in high net promoter scores (NPS), has enabled sustained market leadership. By continuously refining its offerings, Kaspi has built a business model that is both scalable and profitable.

Looking ahead, Kaspi Bank aims to expand its regional presence beyond Kazakhstan, leveraging its scalable Super App model. Recent acquisitions in Uzbekistan and Azerbaijan signal the company’s intent to penetrate new markets. The bank is also exploring opportunities in Central and Eastern Europe, aiming to serve over 100 million users in the coming years. Future growth initiatives include the expansion of B2B services, an enhanced advertising platform, and deeper integration into logistics and e-commerce.

Kaspi’s journey underscores the importance of a customer-centric approach, continuous innovation, and strategic ecosystem development. By prioritizing digitalization and seamless user experiences, the bank has not only revolutionized banking in Kazakhstan but has also set a global benchmark for digital financial services. Its success serves as a valuable blueprint for banks looking to embrace technology and redefine financial services in emerging markets.

Demokratie lebt von Mitbestimmung – und Deine Stimme macht den Unterschied! Gehe wählen und stärke damit unsere Freiheit, unsere Demokratie und unser Europa.

Nur ein starkes Deutschland kann ein starkes Europa mitgestalten. Gemeinsam stehen wir für Frieden, Stabilität und eine Zukunft, in der wir international bestehen können.

Lass Deine Stimme nicht ungenutzt – entscheide mit über die Zukunft! Wählen gehen! Jede Stimme zählt! 🇩🇪🇪🇺

Democracy thrives on participation – and your vote makes the difference! Go vote and strengthen our freedom, our democracy, and our Europe.

Only a strong Germany can help shape a strong Europe. Together, we stand for peace, stability, and a future in which we can succeed internationally.

Don't let your voice go unheard – have a say in the future! Go vote! Every vote counts!🇩🇪🇪🇺

#vote #democracy #germany #Europe 

#SundayThoughts 

FrankSchwab.de

Every winter evening, I used to open my bedroom window, hoping for a breath of crisp, clean air before sleep. It was a simple ritual, meant to refresh the room. Now, however, that simple act has become a frustrating reminder of the disconnect between our collective sustainability goals and the realities of individual choices. Instead of invigorating freshness, I'm often met with the acrid smell of wood smoke, a clear indication that my neighbors are fueling their homes with fireplaces. It's a small thing, perhaps, but it strikes me as utterly absurd, especially given the constant barrage of discussions surrounding sustainability, CO2 reduction, and the urgent need to protect our environment.

This personal frustration is amplified by my professional life. As a member of bank supervisory boards, I'm deeply involved in implementing increasingly stringent ESG (Environmental, Social, and Governance) rules and regulations. These regulations, often driven by political mandates and supervisory authorities, are designed to push large corporations towards more sustainable practices. Yet, the smoke drifting in through my bedroom window feels like a direct contradiction, a symbol of how difficult it is to translate these top-down mandates into tangible changes at the individual level. It feels doubly frustrating to be tasked with enforcing these rules while witnessing such a blatant disregard for environmental concerns in my own neighborhood.   

I've been passionate about sustainability for a long time. Even back in my student days as a business informatics major at the University of Mannheim, I was actively involved in "Wirtschaft und Umwelt," a student organization focused on environmental and economic issues. So, the concept of sustainable living isn't new to me. What's become painfully clear, though, is that rules and regulations, while necessary, are simply not enough. They can only be effective if they're supported by a widespread commitment to sustainable practices at every level, from large corporations to individual households.

Our own home, thankfully, stands as a small counterpoint to the wood-burning trend. For the past 16 years, we've heated and powered our house with geothermal and solar energy. Sustainable alternatives exist and are viable. It's not about grand gestures; it's about making conscious choices in our daily lives.

The smoke in my bedroom isn't just an annoyance; it's a metaphor for the challenge we face. We need a more holistic approach to sustainability, one that bridges the gap between lofty policy goals and the everyday actions of individuals. Until we address this disconnect, the dream of a truly sustainable future will remain just that – a dream.

#esg #sustainability #dream 

#SundayThoughts 

FrankSchwab.de