Posted by: charlestontelles | September 15, 2012

Banks, share market and Blogging – a success combo

As you know I am IT consultant, and I make my salary working hard in that role. But we all dream to make something more to gain some extra money. My passion since my teenager phase is the share market, making money trading always fascinated me. I am not a great trader and I have to confess I only trade for hobby, I’ve never made real money from share market, but it still putting a lot of time on it.

If you never played with share market before be careful from this point, because I will provide some information that can lead you to a no return trip. If you are not familiar with the terms I am using here, start from this website.

 Why am I talking about stock market and trading? Well, my post this week aims to help  the Banking sector with external blogging strategies and, as you know the majority of banks have three main sectors: Banking (obviously), Insurance and Investments. My focus is the investment sector, which normally is responsible for only 10% of the total profit of the organization. However, after the online trading approval in early 2000 the number of traders increased by 260% world wide.

1 – How banks make profit in the Investment Sector?

All Australian big banks (suncorp, westpac, commonwealth, nab, anz) operates as a broker. A broker is a bridge between the investor and the Stock Market (in Australia called ASX – Australian Security Exchange). And they make their profit from the trades, which is a transaction between the customer and ASX. In the end bank don’t care if the customer win of loss money in the ASX (of course they prefer success to keep the investor active). In the end the important to banks is keep the customer buying and selling. The customer can also delegate all the investment process to banks but that is not fun and that is not the focus for my blogging strategy.

2 – How keep investors always active?

As a trader I have to read a lot about companies operating in the share market. Information is always the key. For example if I am investing in the airline company QANTAS I need information about how company is going and any impact that  may have in their stock price.

If the investor is not comfortable enough he will not trade (sell/buy) and consequently the bank as a broker will not receive payments.

3 – External blogging strategy to increase the number of online traders:

(A)  Contacting successful traders to blog about the market. There are thousands of excellent traders blogging for free in the internet, and as a junior trader I am always reading the blog of those stock market gurus (here is a sample list of this blogs). If the bank contact them and pay for blogging in the name of bank, I am sure the bank will increase the number of traders.

(B) Using web2.0 features such as RSS, tagging and Feeding to classify information about specific companies in the share market will help customer to easily feel comfortable to trade based on that information. Consequently the bank’s revenue increases.

(C) Traders can easily identify the best bloggers for their goal using the number of visitors per blogger.

4- Conclusion

In a quick visit to the big five banks’ online brokers websites(suncorp, westpac, commonwealth, nab, anz) I can’t see any manifestation towards stock market blogging and in my opinion that’s a fantastic area to be explored.
Is that make sense? Can you see that opportunity to be explored by our banks? Perhaps not only for banks but ASX itself is not even using RSS to enable customers to subscribe to share market’s information.

References:

http://www.asx.com.au/trading_services/trading-services.htm

http://online-stock-trading-review.toptenreviews.com/

http://dailyreckoning.com/the-best-investing-blogs/

http://www.onlineschools.org/study-hall/100-best-blogs-for-future-investors/


Responses

  1. It’s a good stategy, the banks could connect more closely with a community of influencers as well as investors to build their brand. Given the risks for financial institutions, eg they must not been seen to give personal advice except under stictly defined circumstances, perhaps a key part to enacting this strategy is to have clearly defined guidelines for staff participating in interacting with blogs such as the ones you’ve listed. i like yahoo’s guideline for their staff although guidelines for employees of a financial institution would need to address apra and asic requirements. Really interesting idea!

    • Hi Amanda.
      I totally agree. Giving investment advice must have well defined policies and that must be very clear to the customers the financial institution is not the only source of true. Share market is a high risk market, and banks already have guidelines related to investments, therefore there will be no additional cost defining new guidelines.

  2. I don’t know much about stock trading but this strategy it might not be as good as you said. It is true that information is indeed the only weapon you can use to determine what/when you should buy and sell. However, these information about the company is not something they want to share with people. How can the bank get information from the company? Isn’t it because the company is a customer of the bank? Giving people about your customer information is not good right? Even when people get more information, it won’t change much also. When people want to sell stock it is because they feel insecure. When people buy stock it is because they think they can make profit. With enough information, there might be more people who want to hold their stock so that will resulted in less trade. This is just my opinion and I’m not really good in this field so if I make mistake please correct me.
    I agree with the part that having successful stock traders to blog will help the trading. More people in the business will surely increase the number of trades.

    Cheers,

    Prapat W.

    • Hi Prapat
      Thank you for your comment.
      I am glad someone outside the share market raised a possible risk.
      However, your point is not really a risk. Share market advice is not based on confidential information, share market advice is based on public domain information (see http://www.guardian.co.uk/money/2006/dec/19/moneyinvestments.shares).
      I will give one example, in 2004 there was a movement indicating a merge between BEA and Oracle, that’s was a public domain information, and the share market knew that if the fusion really happens the Oracle’s share were supposed to go up, and that was exactly what happened (and many traders made money from that fusion). In other words, the well informed traders knew that was a good time to trade(sell/buy) BEA and Oracle shares. On the other hand, non-informed traders (like me) didn’t trade and didn’t make money.
      To sum up, trading advice is based on the public domain information, and there is no connection between the bank and the companies offering the share. The connection here is between the bank and ASX.

      Is that more clear now, or have I complicated it?

      • Yes thank you Charles, so that would be a very good idea to try then. Perhaps they can persuade more people to do stock trading.

        Prapat W.

      • Great.
        Yes, perhaps they can persuade more traders, because currently banks have been losing traders for private brokers such as stockbrokers

  3. [...] b)      External Blogging Strategy [...]

  4. Hey Charles,

    that was a great post as usual coming from you!
    Thank you for sharing that. I was not even aware that there are actually traders who blog for free on the internet.

    Thinking about that, those traders who blog, and who are selected and paid by the big banks, they will definitely do a great job of boasting the banks’ name and reputation.

    However, the downside, is what if, another bank offers them a higher amount, and in turn, they talk bad about the first bank, which is actually the rival bank of the latter? That would not be a good thing definitely.

  5. [...] External blogging [...]

  6. [...] with, it’s the comments and discussions that add value to blog posts. Employees could be encouraged to participate, and given guidelines for how they should represent themselves when commenting on their [...]

  7. hi Yvonne.
    That’s true. There will always be a risk of another bank offering a better deal to bloggers. But that’s how the market works, competition always take place. And that’s when the contract policies must have clear statements about the information property.
    In the end, that sort of competition is not new, and I am sure banks know very well how to deal with it. Don’t you think?

  8. Hey Charles :-)

    It’s obviously a great idea about having successful traders to blog about the banks to get more marketing benefits from it. However, as a (not very good) web designer, a lot of researches indicate that when browsing through the web pages, users tend to automatically ignore the parts which look like advertisements. Same does the marketing related post, if the author doesn’t declare clearly that the post is made under the request of certain company, the customers might find it difficult to trust what the blogger has wrote about.
    I think it fairly important to keep being neutral for a successful blogger, otherwise it is needed to be clearly addressed that the article is for marketing purpose.

    Sure the advertisers will still benefit from it, if their products and services indeed have competitive advantages than others. :-)

    • Hi Eddie
      One point that I didn’t make clear in my post was related to providing blog access to the readers.
      The idea here is that only bank’s customers will be able to read blog posts, that way they can trust in the information provided.
      Usually, banks already provide a market summary to traders when they are logged in the online broker module, but that’s one in blog format and it’s hard to filter the information you need. Therefore, the strategy here is transformating the current “market summary information” in a blog format summary. In addition the bloggers will be invited by banks based on their influence already existent among traders.
      I hope the idea is more clear now.

  9. I think it is a great suggestion in general, but need to be implementation may need to be thought through to maximize the benefits. There can be different level of blog information presented.

    For example:
    a) Blog posts to help newbie understand and get into the share market
    b) A forum for expert traders to share their observations and analysis

    Of course, there need to be a disclaimer from the bank that information provided are just opinions of the blogger. I hate to see investors who make a loss based on the advise come back and take legal actions.

    • Hi Karen.
      Thank you for your comment. I am glad to hear diffent opinions and points of view.
      Usually banks already have internal advicers to help begginers in the share market. Indeed that can be improved via blog posts targeting novices.
      However, the advicers that I am suggesting here are those already very know in the share market. They are people specialised in the market analysis, they know what market transactions can impact the share market (e.g. companies fusion or merge, new companies starting in the share market, companies in trouble, etc). A good amount of them are already bloggers, others make money giving professional advice. My suggestion is to bring both (alredy bloggers and professional advicers) to work with the bank in a blogging format advicing. The result will be a increase in the number of traders and the outcome will be a increased revenue through banking’s trade fees.

      Perhaps that sort of blogging service will make more sense for intermediate traders. Anyone involved in the share market for a while would you like to give a opinion?

  10. Hello Charleston, as always great content covered in your blog post.

    You have some great strategies and suggestions for banks and the share market. I wouldn’t mind a sticky thread on their website to show their new users the basics and maybe a wiki page explaining the share market in-depth? Not only can this strategy be used but if they outsource blogging they need to make sure they have a social media policy or a set of T&C’s in place for the bloggers so they don’t say anything that will ruin the banks reputation nor question the banks authenticity.

    Feel free to check out my blog at http://vatsalqutinb346.wordpress.com/

    • Hi Vatsan.
      Thank you for the participation and for sharing your point of view.
      Absolutely, a policy we be mandatory to be applied in order to guarantee the bank’s reputation and confidentiality.
      Well, if we think better, banks already provide investment advice to customers, and they are very clear about market risk, specially when it comes to share market. Actually, any investor has to signup a contract with the bank with statements about investments. Also, bank advicers, as employees, also signup a contract with strict terms.
      Therefore, I am assuming the effort to adjust the already existent policies to the blogosphere will not be that hard.
      Do you have investments with your bank? did you receive any advice from them? Are you able to share some points in your contract with us?
      I checked my contract and I can tell you all the terms there would apply to advicing via blog as well.

      • No, I don’t have investments with my bank but I do plan to have some in the near future.

        that’s great! I look forward to your future posts!

      • All right. I checked the terms and conditions from my HSBC bank account. And I can confirm they already have policies related to “Information Providers”. I’ve added a new post about that to help the clarification, when you have chance please have a look.
        Cheers,

  11. [...] Strategies for external blogging by Charleston [...]

  12. Think opening the door to bankers creating posts that influence a wider community of investors is a risky slope. They could in effect use it to manipulate stocks that they have there own position in, I could understand perhaps paying a fee to subscribe to a feed that you pay a monthly cost to perhaps otherwise the validity of what there pushing could have too many angles.

    • Hi Kris.
      Actually, banks are only “brokers” between the trader and the ASX. They can’t influence the share market at all.
      I do agree the terms and conditions for this service must very clear in relation to bank’s position.
      To help my clarification about the service I am sugesting here I’ve posted a new case study from HSBC.
      I hope that helps to make the scenario more clear.

      • I realise this but “If the bank contact them and pay for blogging in the name of bank, I am sure the bank will increase the number of traders.” I took this to mean the banks paying bloggers to blog about there services, the market etc.

        I then took that a step further and thought of the possible risks behind this. Forgive me but we all know banks aren’t the most moral and ethical of businesses out there, the various news stories that have come out recently in regards to Libor, Euibor HSBC and Standard Chartered Bank Money Laundering etc. Not to mention the actions of a few banks that led to the AIG going under in 2008. With the established practice of generating money at potentially any cost I thought whats to stop banks from pushing the envelope. Hence the risky slope, if the people they influence have enough readers and they have there fingers in enough pies then it is possible to create a stronger position for themselves. It would only take a snow ball from one blogger to start up a cascading effect. *shrug* That’s just how I read it :)

      • Hi Kris.
        I totally agree when you said “banks aren’t the most moral and ethical of businesses out there”.
        However, when a blogger work as a “information provider“, he is only sharing his opinion and point of view. He is not defending any bank’s interest or trying to influence traders. The idea is only provide a base to make traders confortable about the investment risk, and it’s up to them to decide invest or not invest.
        Bank’s here are only brokers between traders and ASX, maybe my latest post can help to clarify that idea.
        Cheers,

  13. Hi charlestontelles …Nice post

    ‘My passion since my teenager phase is the share market’

    Well, me too. And from someone who is been in the market for a while. I agree with you ….Strategy Is the Key buddy. However, it is not enough that you have a goal, capital, and a good broker. You need something like a ‘Backup strategy’ and for that you need to build good knowledge about the stock market your targeting (historical knowledge as well …local & global)…

    I can go on and on about this subject, ….

    Cheers

    http://arifiabdul.wordpress.com/

    • Hi Abdul.
      That’s great! I knew someone involved with share market could add an excelent contribution here.
      I agree, as traders we always need a “backup strategy” and also we need to define our “risk appetite”.
      In addition, as traders we are always reading success cases (and also big errors) from experient traders. I am sure you have some blogs about share market in your favorite list. Most of those blogger do that for hobby, so why not inviting them to work as “information providers” in parternship with some broker?
      Cheers,

      • That’s a good question..but don’t you think they need to have some sort of financial qualifications or professional certification to do that. in fact, I know a friend who is possessed by the stock Market and he always keep track of stock’s news ,press release … he even know how to use charts to predict ………but he is an architect and has no professional certification in the stock market ..It was all self-study because he run his own and some of his friends capitals.
        Cheers

      • As fas as I concern there is not legal implication on provinding financial advice as long as you make very clear it’s only your personal opinion. So, in theory you can provide financial advice even though you have not financial background or certification at all. In my view, your friend will be absolutely fine working as “information provider” based on his experience.
        Historically talking, the list of best traders ever has a mix between people with economic/financial background and people with no qualification at all.
        I usually follow traders/bloggers for a while, then a compare their comments with what really happened and based on the I decide who are my information providers. That technique works 80% of the time for me, but we got to remember we are talking about share market and that’s all about uncertities/probabilities :)


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