The Only Thing that Counts is the Customer

Today the Dutch Government decided to take over the Dutch Activities of Fortis including ABN AMRO. The decision of the Government creates a very Different Position. The integration of Fortis (Netherlands) and ABN AMRO has turned into a takeover of Fortis by a state owned ABN AMRO. The history of Government intervention in Big Companies always shows the same pattern. It fails. The Customer is in Control and the Customer wants Security, Service and Cooperation.

 The Government is paying 16.8 billion Euros which is about 1000 Euros per inhabitant. I am sure they will never recover this amount. The enormous rise of the State Debt will create Inflation. This will speed up the Recession. When the Customers of the Government, The Voters, find out what is really happening they will be furious. The big problem is that they don’t know how to show their anger. The old-fashioned party system in the Netherlands is still in control. The new parties are playing the old card of racism, religiouss fanatism and nationalism. They will find a way to put the blame of the economic crisis on the Islam.

The action of the Government was triggered by a gigantic move of customers of ABN AMRO and Fortis to other banks. The RABO-bank, the most customer-friendly bank in the Netherlands, was unable to help all the people who wanted to move from ABN AMRO and Fortis to the RABO-Bank. There is a long waiting-list.

Many people have moved their savings to accounts outside Fortis and ABN AMRO. ABN AMRO and Fortis encountered a “Run on the Bank” but in a sophisticated way. People just moved their money to a secure place.

The Government wanted to restore the Confidence in Fortis. Confidence is not the only issue in Banking. A much more important issue is Service.

The first question you have to answer is will these people come back? I don’t think so.

Many people wanted to move from ABN AMRO to another bank for a long time. They did not do this because moving to another bank is not easy. They hesitated and accepted what was happening because “the other banks are not really different from the other banks“.

When people start to move it will be almost impossible to stop them moving! If this happens, and I am sure this will happen, the market share of Fortis/ABN AMRO will decrease. I have decided to move to RABO-Bank and I will proceed. I am sure I am not the only one.

According to Nout Wellink, President of the DNB, the Dutch Regulator, the integration of Fortis Netherlands and ABN AMRO has to speed up. I don’t think he has any experience with what is means to integrate two Banks under Pressure.

Again we have to question the two issues Culture and Technical Infrastructure.

The integration of the Technical Infrastructure will be a major burden. This problem remains independent of any solution that is chosen.

The Cultural Issue has changed a lot. Now we have to look at the effect of the mix of the Culture of the Dutch Government (the Owner), the ABN AMRO-culture and the Fortis Culture. The first thing that will be very clear is that the Fortis Culture will be the big loser. They are simply small in comparison to ABN AMRO. The next thing you have to know that the Management of ABN AMRO (especially ABN) has a “lot of friends” in the Dutch Government. The “old management” of ABN AMRO (or better ABN) will take over control. At the End of the Line the Merger of Fortis and ABN AMRO will not have any effect on the culture of ABN AMRO. If this is correct ABN AMRO will not become a “customer-friendly” bank at all. It will just go on the way it was! If this is true there will be no reason to move back.

So if my analysis is right the investment of 16.8 billion Euros (remember the Dutch Government already invested already a lot of money) will generate a gigantic loss.

What is the only solution?

The lessons that has been learnt a long time ago is that when the Market is restructuring the Government has to stay out of this process.

The Market is dominated by Customers and Customers simply move to the place where they are able find Service. They are constantly searching for a place to find Rest (Balance, Harmony). They want somebody who Takes Care of Them. Nothing More.

The Dutch Government has a long history of not-listening to the Customer. Many people have lost faith in Government and the Old Parties are losing their Voters for a long Time. The old parties block the entrance of the new parties (SP, the Socialistic Party!) in Government.

I am sure someday somebody will create the Bank of the Heart. I am sure the SP and many others want to reform the old banking system and move back to the “old cooparative structures”. The RABO is one of the last cooperative structures that are left in the Netherlands! I know how to recreate a Cooperative Bank. The Nice thing is that the Current Cooperative Technology is simply made to do this. I know how do this and many others know how to do this. It is time to Act.

Why I have Decided to Leave ABN AMRO

I am a customer of ABN AMRO for more than 40 years. Last Friday I received a letter from ABN AMRO. They told me that the local branch office of ABN AMRO will be closed and integrated into a local branch office of Fortis.

 One day later negotiations started to save Fortis from bankruptcy. Today I read that ABN AMRO has to be sold to another bank. This will not solve the problem at all. It will speed up the Process of Desintegration of the Banking Industry that has started ten years ago.

 Just one year ago I wrote three blogs about the Merger of Fortis and ABN AMRO. Based on my own experience with the Merger of ABN and AMRO I predicted a possible failure of this merger. I predicted a possible failure because I did not believe the Technical Infrastructure and the Culture of both banks could be easily matched. I was Right. The Credit Crunch was the Cause of the Downfall but the Culture and the IT-Systems were the real reason. The Aim of Management was to make Big Deals (to get Big Bonusses) and the Systems were unable to provide the Right Data.

I have been working in the Money Market for a long time. In my opinion the biggest problem in the Banking Industry is the relationship between the Accountable, Bookkeeping, Systems and the Activities of Dealers. A small part of the Dealers are and were taking Enormous Risks by creating very complicated financial constructions (Derivatives). The Auditors (and the Management) of Banks have lost Oversight a very long time ago. This problem increases in severity when banks are merged.

Every time when a New Technology is implemented the Quality of the ICT-systems deteriorates. This has happened so many times that nobody really understands what the IT-Systems are really doing. Every time when a merger is accomplished the financial data of a bank (or other company) deteriorate. Two of more deteriorated systems are connected creating a bigger mess. Every time when a merger is accomplished the people who have an understanding of the ICT-systems know less about the Systems.

When a Merger takes place the motivated and skillful employees leave the “sinking ship”. The people that remain become “apathic”. They perform their duty in a “nine to five”-mode. Innovation stops. External advisory companies (or worse) outside outsourcing companies take over the maintenance and the development of the software. The quality of the software deteriorates again. The problem increases when packages or software layers are implemented. This happened in every bank around the world.

When I worked with ABN AMRO the biggest mess in IT was always created in the US. The main reason was the “opportunistic” attitude of the Management or the entrepeneurs attitude of the Management. They experimented with everything they could find but never finished anything. The US Financial System was far behind the Dutch Financial System in terms of Products and Supervision. Everybody believed the US was the most innovative in everything but they were certainly not the most advanced in Banking and IT.

 ABN AMRO was one of the bad performers in the Consumer Banking Industry in the Netherlands. The personnel of the Bank were not motivated for a long time. The main reason was the Management. Everything was decided at the top in big Staff Departments. The Branches were forced to implement what they had designed.

 The Management of the Bank loved to do Big Deals with Big Companies. ABN and AMRO were Deal-Making companies and were forced to move into the Consumer Market when the employees of all the companies in the Netherlands were forced to open bank-accounts. The Customer was never priority number one.

The decision structure of the Bank was highly complex and changed all the time. Employees at the branches were not allowed to take initiative. When they had taken initiative it took a long time before the decision was made. Most of the time the answer was negative.

The forced merger with Fortis decreased the motivation of the employees. It increased the complexity of the IT-Systems and the decision structure.

Fortis needed money and many parts were sold to other banks. Every time the Organization and the ICT-systems of the bank had to be divided in many parts. Before this process was even settled a new split was announced. This process was repeated until today.

The Consumer Banking Division of ABN AMRO, the “beautiful pearl” Fortis was after, was carefully protected. The integration of this part with Fortis proceeded. Many people moved to Brussels to create and implement a plan. Many outside advisors earned a lot of money again. Nobody had any oversight. A few weeks ago somebody finally decided to merge the branch-offices. They created new organization structures, appointed new managers, talked with the employees and send an announcement to their customers. This announcement was received last Friday! Two days later all the projects have been stopped and the employees of Fortis are leaving ABN AMRO. Nobody knows what to do!

The financial people were constantly trying to understand what the Risks were. Everytime a new problem arose and the Board had to take action. The message to the outside world changed all the time and the investors lost their faith in Fortis. The End of the (Credit) Line was reached last Friday!

A few days ago somebody decided ABN AMRO had to be sold to another bank to create enough cash to pay the current debts. The process of integration has to be reversed and a new process of integration has to be started with another Bank.You don’t have to be an expert to understand what will happen. The end of this process will be Total Chaos.

I am not afraid I will lose my Savings. The Government will take care.

I am not afraid to lose my shares. I have sold them a long time ago.

I am not afraid the bookkeeping systems of the Bank will finally break down and ABN AMRO will deny I am a Customer or present completely different data about my savings-account.

I am sure many things will go wrong. During my time as a customer of ABN AMRO the amount of mistakes that were made increased. Most of the mistakes were small but some of them really cost me a lot of time and money.

I am afraid  nobody will be able to help me when things go wrong. I just want a little bit of Service. Nothing More. I have decided to leave ABN AMRO. I am moving to RABO-bank.

I hope they will not buy ABN AMRO or merge with another bank. If this happens I have to find another Bank but I really don’t know where to go. At that time I probably have to buy Gold or another Object that keeps its value a long time ago. I really don’t know what will be valuable in the future.

Perhaps I have to start a farm and grow my own food at a place that will not be affected by the rising of the sea-level or big tornado’s or big earthquakes or heavy rain or intense drought or intense cold when the Ice-Age starts.

LINKS

 About the Merger of Fortis and ABN AMRO (Culture)

About the Merger of Fortis and ABN AMRO (Software)

About the Merger of Fortis and ABN AMRO (The Bank of the Heart)

About the Crisis in IT (About Software Layers)

About the Crisis in IT (About Outsourcing)

 About the Crisis in IT (About ERP Packages)

About the Crisis in the Banking Industry (Avalanches)

About the Crisis in the Banking Industry (Fraud)

 

 

 

 

 

 

About Color and Music

kandinskyIn 1999 John Gage wrote the book Color and Culture, Practice and Meaning from Antiquity to Abstraction. The book explains the way people “think/sense” about Color in History.

I use the word think/sense because I believe there are many ways to look and a one of them is “to Look by Thinking“.

The Science that is trying to explain this phenomenon is called Phenomenology.

I know this sounds strange to you but there are many examples to prove that people don’t see something because their theory about the world is not able to explain what they are seeing.

anatomical lessonA very remarkable researcher who has discovered many phenomena is the Dutch Psychiatrist Jan Hendrik van den Berg .

I read his books when I was a student at the University.

One of his books called the Opened Body (Het geopende Lichaam 1959) is about the History of Anatomy.

In this book he shows that it took a very long time before it was accepted that the Heart was divided into two Chambers. Until that time The Heart was a Whole.

Long after the discovery of the two independent circulatory systems by William Harvey the heart was pierced (!) to show the interconnection between the chambers that was not there.

The Old Scientists simply adjusted reality to their theory and nobody complained about that.

John Cage shows the same things again and again. He shows that the experience of Colors changed because artists started to use pigments.

A Color became a mix of Basic colors. Colors changed into Parts that could be Combined.

At this moment almost nobody understands that Colors change by the influence of other Colors in their environment.

sunset2Before that time Color was a Field. Colors (and Images) were created by adding Layers.

When you see Colors as a Field you understand why Colors are influenced by other Colors. They look like Music and produce Overtones.

The strange thing is that when you start to experiment with Colors by doing a course in Painting (I did) you recognize immediately that there is something wrong with you’re Think/Sensing-system.

When you Paint with your Mind you will never create what you See. You have to Look without Thinking.

Imagine John Cage, Jan Van Den Berg, Husserl and Heidegger and many others are Right. There are many simple experiments to prove their point.

goethe color theoryWhen you want to do a very simple experiment just do what Goethe did. He wrote a book called Color Theory that contains all his experiments. Goethe used the German word “Schauen” to explain the difference between Seeing with the Mind and Seeing with the Intuition or the Consciousness. You could translate “Schauen”  in “Carefull Observation“.

If they are Right you could try to remove your Thinking (your theory about the outside world) when you Observe with Care.

If you do this you’re world will change. You will see Colors and Overtones in your Environment you have never seen before. The World will look much brighter.

Have a Try.

Why the Merger of ABN AMRO and Fortis will Fail (Part 2 Culture) if They Don’t Apply The Lessons Learned

In the first blog about the merger of ABN AMRO and Fortis I tried to show that the integration of the technical infrastructure of both banks will be very difficult. In this blog I want to talk about a much more important issue called Culture.

When the merger of ABN and AMRO was starting I was part of a management development course. The person behind the course was a very wise person. He told us what would happen the next years and he was right.

What he explained was that ABN was a very old bank that came out of a very long history. ABN was more or less the succeeder of the Dutch Trading Company VOC that was founded in 1602.

ABN was a deal-making bank. The culture of “deal-making” was very visible in everything we were doing. This was the reason why I could talk and “make a deal” with a senior manager at every level without any problem.

AMRO (Amsterdam Rotterdam Bank) has its history in the big harbors of Rotterdam and Amsterdam. It supported the people who were transporting cargo all over the world. The culture of AMRO was dominated by the Amsterdam culture. The culture of Amsterdam is one of the most difficult cultures to handle. People are always “playing games” and some of them are “dirty” or better “clever games” (practical jokes). Let’s call this culture “political” because politics is the game people of Amsterdam play the best. The political game is hidden behind the façade of the hierarchy.

The very wise person told us that the political game of the AMRO would finally kill the deal-making culture of ABN. This is what sadly enough really happened. It was the main reason why I left ABN AMRO. Many people were playing the finite game. They wanted to win and when you win there are always loosers and losses.

So to make it very clear what Fortis is buying is AMRO and not ABN. The ABN-part (deal making) was preserved in the International Network (bought by Santander) and Corporate Finance (bought by Royal Bank of Scotland). In my opinion Santander has  made the best deal!

The merger will only be a success when the Fortis-culture is able to cope with the “political (Amsterdam) culture” of ABN AMRO.

The Fortis culture is a combination of two Insurance Companies (Belgian and Dutch) and a bank VSB (Verenigde Spaarbanken) that originated out of a Cooperation (just like RABO). A insurance culture, a cooperative culture and a Belgian culture fit. At this moment Fortis can be best seen as a “Belgian Bank”.

Before the merger with ABN AMRO tried to merge with a big Belgian bank. This merger failed. The “Amsterdam culture” and the “Belgian” culture are completely opposite cultures. Belgians play the game of socializing. Everything happens behind closed doors and is arranged in restaurants. Belgian people enjoy food and wine. People in Amsterdam are also making fun but they make fun of each other.

Now let us have a look at what Fortis is really buying.

ABN and AMRO started to operate on the Retail market when the Dutch Companies around 1960 decided to pay the salary of their employees by a bank account. Before that time the employees were paid in cash. Both banks were more or less forced to move into the consumer market. Before that time both banks had really nothing to do with consumers. Consumers (Poor people) were served by the Postal Bank (now ING) and Cooperative banks like VSB.

Because “Consumer banking” was not part of the “essence” of ABN and AMRO were never (!) able to serve those customers. This is still the case. The Services of ABN AMRO are constantly valuated by their clients on the lowest level possible.

What Fortis buying is a part of ABN AMRO that is of a very different culture, operating with a very low service-level and supported by a very complicated technical infrastructure. Many customers of ABN AMRO are already very frustrated. They are not stupid and they know that the merger will not help to improve the service-level. The only thing that is stopping them is the burden of moving their accounts and the extreme low service-level of the competitors on the Dutch Market (ING is has moved to the first place in non-performing, ABN AMRO is now second).