Month: December 2020

digital payment
ArticlesBankingFX and Payment

FICO UK Credit Market Report November 2020

digital payment

New Data Raises Concerns About Post-Christmas Payments as Consumers Raise Card Spending

Global analytics software provider FICO today released its analysis of UK card trends for November 2020, which reflects the mixed financial fortunes of UK consumers as well as highlighting the continuing debt waiting game.

“Our new data shows that despite the introduction of the second national lockdown, credit card spend increased in November, as Christmas shopping got underway, boosted by Black Friday,” explained Stacey West, principal consultant for FICO® Advisors.

“Spending on UK credit cards is now only 2.6 percent lower than a year ago; either consumers are feeling confident enough about their finances to increase their spending levels or they simply need the cheer of Christmas to counteract the continued gloom of COVID-19, whether they can afford it or not. The concern is that a proportion of spend is being funded by the current government financial support for those on furlough. Payment holidays on existing credit agreements are also probably taking the pressure off outgoings and giving some consumers a false sense of financial wellbeing.”

“There could be a real issue after Christmas as payment deferrals come to an end in early 2021 and furloughs at the end of April (unless they are once more extended). Christmas debts will be unmanageable for some. The sudden introduction of tier 4 and the anticipation that these measures will be in place for months means extra pressure and hardship on many businesses, especially at one of the most profitable times of year.”

 

Spend on UK cards increased and percentage of payments to balance dropped

Average spending on UK credit cards increased by £19 to £638 in November and is now only 2.6 percent lower year on year.

But the percentage of payments to balance fell for the first time since June. The percentage paying the minimum amount on their cards also increased for the first time since June and was especially noticeable for accounts opened less than a year.

 

Increase in missed payments

The one missed payment rates continue to be dynamic, reducing in November; for accounts open less than a year, the percentage of accounts missing one payment reached over a two-year low. However, the average balance on accounts missing one payment is now only £4 lower than a year ago.

Of greater concern is the percentage of accounts and balances with two missed payments, which increased for the fourth consecutive month. The average balance on these accounts grew to over a two-year high in November. Here too, there has been large annual growth in the average balance, which is now £252 higher than November 2019. For three missed payments it is £411 higher.

West added: “We are now starting to see that consumers missing payments have higher average balances. There are also signs that once a payment is missed, this is never recovered. A robust pre-delinquency process is, therefore, more important than ever to prevent the customer going down the collections route. Pre-collections treatment can open the dialogue on the sensitive subject of financial difficulties and help avoid negative actions and increased stress once payments start to be missed.”

Equity Crowdfunding
ArticlesEquityFunds

Research Says Equity Crowdfunding Makes Firms More Appealing to Future Investors

Successful equity crowdfunding campaigns make companies more appealing to future venture capital financing, reveals new research from Trinity Business School.

According to research from Dr Francesca Di Pietro, Assistant Professor in Business Strategy at Trinity Business School, firms that successfully obtain equity crowdfunding, in which people invest in a company in return for shares in that firm, are more likely to attract future venture capital financing.

The researchers suggest that this is because receiving equity crowdfunding signals an entrepreneurs’ quality, as well as the firms’ market appeal, making the company more appealing to venture capital investors.

In undertaking the study, the researchers used a dataset of 290 UK firms that had successfully fundraised using two prominent equity crowdfunding sites.

Di Pietro and her colleagues also analysed and compared how different shareholder structures impacted the likelihood of future venture capital investment, finding that firms who used the nominee shareholder structure (in which shares are held and managed by crowdfunding platforms in place of actual shareholders) were more likely to receive subsequent venture capital finance than companies using a direct shareholder structure.

The research adds to discussions around the entrepreneurship and signalling theory by recognising the role of crowdfunding as a mechanism for companies to signal their value using those who have already invested.

Dr Francesca Di Pietro, Assistant Professor in Business Strategy at Trinity Business School, says:

“For entrepreneurs: If you are thinking about launching an equity crowdfunding campaign, you may want to consider the “nominee shareholder structure”, i.e. one legal shareholder (i.e., the nominee/platform) that holds the shares on behalf of the crowd investors.”

This research was published in the Journal of Corporate Finance.
ArticlesMarkets

MarketFinance Lends £342m, End of Term Report Shows Trends and Insights

 

More loans, larger businesses and a regional shift – these are some of the trends and insights that fintech business lender MarketFinance observed during 2020.

 

Key insights
  • MarketFinance lent a total of £342.4m across all solutions, over the first 11 months of 2020. Representing a 3.4% increase in total lending over the same period in 2019 (£331.1m)

  • The profile of companies using invoice financing changed significantly during COVID-19. Those businesses using invoice financing were both larger than usual (an average turnover of £2.1m, compared to £1.3m in 2019, a 60% increase) and received 83% more financing on average than they did in 2019

  • Businesses in London, Hertfordshire, the East of England and the South West experienced the greatest drops in invoice financing year on year, with a 45% decrease in London alone. These geographies are hubs for the Support Services and Information & Communication industries, indicative of how hard these sectors have been hit by COVID-19

  • Demand for business loans soared with a 13-fold increase in loans between Q2 and Q3 2020. The majority of loans (60%) were made to businesses in Support Services, Wholesale & Retail Trade, Manufacturing and Construction.

 
Q1 and Q2 2020

The UK’s economic prospects showed signs of turning early in 2020, as Brexit-related uncertainty began to fade. Despite the promising start to the year at MarketFinance, with larger businesses borrowing, this upward turn halted suddenly when the COVID-19 pandemic arrived. The country and economy, effectively, went into lock down at the end of March. However, during this time when UK GDP crashed by 2.2% across Q1, it was also the first sign of the coming shift for many companies towards new alternative financial mechanisms.

As of Q2, 46% of businesses reported that income was down by 50% and so the number of companies using invoice finance dropped by 35%. However, while smaller companies with a narrow spectrum of business activity looked to other financial solutions, larger businesses with diversified workflows (and therefore revenue streams) were able to continue using invoice-backed facilities to boost their cash flow. The average revenue of these companies was over double what it had been during the same period the previous year, growing to £2.1m, an increase of 127%. In fact, while approved company applications for invoice finance went down, invoice values actually went up. The average size of an invoice being financed increased significantly in Q2 in comparison to the previous four quarters.

 

Q3 2020

MarketFinance became an accredited CBILS lender and so the quantity and concentration of loans advanced increased by a significant 13 times compared with Q2. Interestingly, over a third (36%) of all loans to manufacturing companies went to those based in the Midlands.

Anil Stocker, CEO of MarketFinance commented: “Small businesses will play the pivotal role in the UK’s economic recovery as we emerge from the pandemic, and we are confident that the bounce back will, with the right support, be swift. These linchpins of our economic fabric will require innovative, sustainable and tailored financial solutions that are fit for purpose in a post-pandemic world. It is up to all of us – accountants, brokers, business advisors, banks and lenders – to continue to step up to the plate and help these businesses survive and thrive.”

 

Q4 2020

Invoice finance was showing gradual growth as of mid-November 2020, suggesting some normalisation of business activity, despite the second UK lockdown. Although the number of companies using invoice finance per quarter dropped by 55% from Q1 to Q2, the figures for Q4 appear to be trending up on both Q2 and Q3. There’s some way to go before we see levels return to those of 2019, but there’s every sign of businesses recovering well as we move into 2021.

COVID-19 continues to affect global supply chains. Manufacturing, Wholesale & Retail Trade, and Construction companies have sought further funding to see them through the pandemic and beyond. Manufacturing companies received 19% of all MarketFinance loans across industries. 32% went to companies in the Midlands, 21% to companies in London and another 21% to companies in the South West, also continuing the trend from Q3. Facing significant challenges to both importing and exporting, Wholesale & Retail Trade companies received 15% of loans across industries, with 40% of these to companies in London.

Anil Stocker added: “Of course, the challenges and uncertainties that 2020 has presented won’t end come January. Businesses will have to navigate the aftermath of COVID-19 for months to come. However, although a lot of businesses have felt a negative impact over the past year, many have executed successful pivots and taken advantage of new opportunities that presented themselves. We’re hopeful that this strong comeback signals we’re already past the worst of the situation. We’ve also been incredibly proud of business support networks up and down the country. They’ve rallied together to support businesses throughout the year and we expect to see this support continue. We’re excited to carry on providing SMEs with the working capital they need to grow, innovate and build towards a successful future.”

Online shopping
ArticlesMarkets

Online Retail Sales Growth Shows Lockdown 2.0 killed the High Street’s Revival, Says ParcelHero

ParcelHero says today’s ONS retail figures show e-commerce devoured over 31% of early Christmas spending as the High Street shut up shop once again in November.
November’s retail sales estimates, released today by the Office for National Statistics (ONS), reveal the High Street’s loss was online’s gain. Online sales spiked by 74.7% in value as early-bird Christmas shoppers hit the internet in record numbers.
The home delivery specialist ParcelHero says that the closure of non-essential stores across England for the second time this year caused the value of overall retail sales to fall back in November -4.1% compared to the previous month. This had a devastating impact on town centre stores’ sales but created record sales online.
ParcelHero’s Head of Consumer Research, David Jinks MILT, says: ‘England’s High Streets became ghost towns once more, as shoppers hunkered down in the warmth and safety of their own homes to snap up thousands of early Christmas bargains. Black Friday had an epic lead-in this November and Brits made the most of it by snapping up online bargains at Amazon and their favourite stores. The boom in online sales was so strong that it dragged up the volume of all retail sales by 2.4% compared to November 2019.
“This was great news for online retailers but highly challenging for their delivery partners as the value of department stores,” online orders increased by 157.2% and household goods stores and non-food sites saw sales rise by 124.7%. The sheer volume of home deliveries will have had a knock-on effect as Christmas orders really kicked in early this month.
“It’s no coincidence that the second lockdown was topped and tailed by the failure of well-known names such as Edinburgh Woollen Mill at the beginning and Debenhams and Topshop at the end. This was a truly dark month for the High Street with names such as Peacocks, Jaeger and Burton also collapsing into administration. Clothing stores reported the sharpest decline in sales volumes in November with a monthly fall of -19.0%. Retailers said that, despite extensive online Black Friday promotions, the enforced closure of stores had affected sales. Clothing sales were still a whopping -30.5% below pre-pandemic levels seen in February.”
“However, many retailers have woken up and smelled the Christmas gingerbread-flavoured coffee. 86.9% of businesses remained trading during Lockdown 2.0 suggesting that, despite store closures, many were able to continue to trade online.”
“Both consumers and retailers need to proceed cautiously for what remains of this year to avoid the impact of still soaring online sales. The beginning of the week is being dubbed ‘Manic Monday’ as last-minute orders are expected to swamp courier networks. For more information on how retailers can reduce the impact of the second wave by comparing carriers,” prices and services, see ParcelHero’s updated guide at https://www.parcelhero.com/en-gb/uk-courier-services.
funds
ArticlesEquityFunds

UK Medicinal Cannabis Company Eco Equity Hits £18.3 Million Funding Target

funds
 
Company set on being a leading supplier in Europe as market opens up
UK-based medicinal cannabis company Eco Equity, owned by  private equity fund vehicle JPD Capital, has raised £18.3 million to enable it to become one of Europe’s leading suppliers of medicinal cannabis.
Eco Equity – founded in 2018 – is a London-based company with operational facilities in Zimbabwe, including a state-of-the-art greenhouse cultivation facility, having secured one of five licences to cultivate cannabis for medicinal purposes in Zimbabwe in late 2018. Cultivation was due to start as scheduled in the second quarter of 2020, however coronavirus has delayed that until the end of Q4 2020.
Eco Equity has been operating under the corporation structure of medicinal cannabis investment vehicle JPD Capital since its inception and recently closed round two of its fundraising, having reached the target of £18.3 million (US$24.3m).
Jon-Paul Doran, CEO of JPD Capital, said: “Research has shown that there are tremendous benefits from medicinal cannabis for people with illnesses such as epilepsy, arthritis and many more.”
He added: “We want to position ourselves as one of the leading pharmaceutical producers of medicinal cannabis. As a low-cost producer we believe we can bring the produce into the UK through the right channels at a price point which makes it accessible to people who desperately need it.”
Medicinal cannabis was legalised for prescription in the UK in 2018, joining the growing number of countries around the world have already legalised medical cannabis or are considering doing so.
Eco Equity is currently a private listing and was offering pre-IPO shares at £0.10p each at its inception in 2018, after a recent audit by Baker Tilly in 2020 Eco Equity was valued at US$210m (£163m) and shares valued at US$0.72 (£0.56p).
Eco Equity is now a fully funded entity within the JPD Capital portfolio and is now engaged in rapid scaling of its operation and infrastructure to achieve fully operational status. The company is expected to generate US$57.7 million (£43.3m) in gross revenues when fully operational, with EBT of nearly US$33.8 million (£25.4m).
Said Jon-Paul Doran: “We are thrilled to have been able to close our second round of funding for London based Eco Equity and see our first portfolio entity become fully funded.  Since launching over two years ago, our flagship operation with cultivation in Zimbabwe has grown from strength to strength and we are pleased to be able to reward our investors.”
Eco Equity’s Managing Director Tommy Doran in Zimbabwe said: “The coronavirus pandemic has caused issues for many organisations this year, and it is always particularly tough for new industries to avoid collapse. The medicinal cannabis industry has continued to show resilience in the face of adversity, and with the company set to begin cultivation at the beginning of 2021, we are looking forward to the year ahead, rather than looking back on what has been a difficult year across the globe.”
As part of its Q3 and Q4 2020 activities, which require the company to transition from fund raising activity into cultivation and supply for its wholesale customers. Eco Equity has negotiated significant off-take contracts, securing the sale of all produce and ensuring Eco Equity is cash flow positive in 2021, this will generate significant and scalable revenue as the company moves towards an IPO next year.
The third quarter of 2020 was also a period of strategic collaborations for both Eco Equity and JPD Capital. Eco Equity started a Research and Development collaboration with the Harare Institute of Technology (HIT) a Zimbabwe-based scientific institute dedicated to “technopreneurial” leadership. 
JPD Capital began its collaboration with the UK Conservative Drug Policy Reform Group (CDPRG) chaired by Crispin Blunt MP, who advocate evidence-based drug policy. The group exists to find and examine the evidence to support policymakers in reducing harm and securing the benefits of evidence-based drug policy.
JPD Capital has also announced its expansion into Europe, including the creation of medicinal cannabis company Íbero Botanica, a joint venture between Verdex Group and JPD Capital, with facilities in Almeria, Spain.  
Verdex Group is an EU licensed Spanish company for research, cultivation and production of cannabis for medicinal and therapeutic pharmaceutical medicine. Verdex Group owns and operates two greenhouse cultivation sites and over 100 hectares of outdoor sites across the Andalucía region in the south of Spain.
financial crime
ArticlesFinanceRisk Management

How businesses can prevent themselves from financial crime- an expert advises

financial crime

How businesses can prevent themselves from financial crime- an expert advises

Financial crime is a threat which every business faces. Companies have been warned to take more care this year as the increasing digitisation of business elements such as online banking may have increased their online security risk if preventative measures haven’t been taken.

Here, Andrew Davies, VP of Global Market Strategy, Financial Crime & Risk Management at Fiserv discusses the biggest challenges businesses can face and the best practices they can implement to prevent being a victim of financial crime.

1. What are the biggest challenges that corporates face when it comes to fraud management?

Money moves around the world faster now than ever before, and many electronic transfers are settled in real time. Most financial transactions are completed with no face-to-face interactions. These are good things; they facilitate global trade and keep the wheels of global commerce turning. However, these transformational capabilities come with risks that must be managed. Managing these risks effectively and doing so in a way that doesn’t introduce friction to business operations and the customer experience are the biggest challenges facing businesses when it comes to fraud management.

Fraud threats are evolving as quickly as money moves. Criminals are becoming more sophisticated and are singularly focused on exploiting any situation and any weakness. For example, according to the Federal Trade Commission in the United States, between 1st January and 22nd September this year, U.S. citizens have lost more than $145M to COVID-19 scams. In the U.K., during the first half of 2020, U.K. Finance tells us a total of £207.8 million has been lost to authorised push payment fraud.

Criminals leverage technology and are constantly refining their tactics to commit fraud and find new ways of hiding their activities. The rising use of mobile devices and contactless transactions have also opened more channels for cyberattacks. In this environment, corporates are challenged to balance expectations for instant, real-time and seamless services with the need for security.

 

2. How is automation playing a role in fraud and risk management?

Automation is enabling corporates to deliver better fraud and risk management systems and formulate effective prevention strategies.

The fuel powering intelligent automation is data. For example, intelligent automation technology, a combination of robotic processing automation (RPA) and artificial intelligence (AI), can act on and analyse large volumes of structured and unstructured data efficiently, leading to valuable, accurate insights that would be out of reach otherwise.

Automation can also help reduce operational costs and streamline workflows. Employees spend less time on manual, time-intensive tasks, and focus instead on the strategic aspects of fraud and risk management.

 

3. What technological and infrastructure investments do corporates need to make in order to keep ahead of criminals?

Keeping ahead of criminals is a never-ending race. Fraud prevention really is an area where up-to-date capabilities and techniques can make a difference. As fraud continues to evolve, so do financial crime prevention technologies. Therefore, it is vital for businesses to make the appropriate technological investments, not only to keep pace with current challenges, but also to stay ahead of any potential emerging threats. Corporates can take advantage of tools such as advanced analytics to detect characteristics that are indicative of previous attacks and uncover new attack vectors by identifying unusual behavior patterns. Intelligent automation and insightful data management systems can be utilised to optimise operations and results. With effective technology, corporates can maximise data assets to monitor, detect and combat emerging threats, as well as reduce false positives and minimise customer friction.

For all organisations nowadays, security is a differentiator. Everyone wants to do business with corporates that provide security and have integrity. Trusted providers can help advise, and implement, various tools to ensure that corporates have the appropriate and most up-to-update capabilities.

 

4. How can corporates formulate optimal “best practices” for fraud prevention and risk management?

Best practices consist of several key elements. As mentioned earlier, appropriate technology investment and implementation is considered a best practice. Sharing data with peers and creating a data consortium is another powerful best practice; it can improve data integrity and detection accuracy, allowing for better fraud prevention and management. Shared data insights drive increased collaboration between corporates, financial institutions, law enforcement and regulators, something all can benefit from. Common data usage can facilitate more effective fraud risk management while also assisting law enforcement.

Internal collaboration is also a best practice. Enterprises can share data, as well as use common technology and tools, such as alert and monitoring systems, across different business units, from corporate finance to sales departments. This enables corporates to generate more reliable data and gain a better overview of risk.

 

5. How can robust fraud prevention and risk management strategies be a differentiator for businesses?

Combatting financial crime and any associated activities is an increasing priority for corporates and their customers. Beyond the immediate effect on business, preventing fraud and countering money laundering support the moral imperative to limit the impact of crime on society. Fraud and money laundering are not victimless crimes – they are often conducted by the same organised crime groups that perpetrate human trafficking and drug trafficking, both predicate crimes for money laundering. With the access organisations have today to more innovative and advanced technologies, they can better defend their customers, and conduct business securely and seamlessly.

A robust fraud prevention and risk management strategy can be a key differentiator for organisations versus the competition. It enables corporates to retain customer trust, create better relationships with partners and regulators, and develop a better reputation amongst society.

office
ArticlesFamily OfficesWealth Management

Optimize Office for More Wealth

office
A personal workplace should act as a reflection of yourself and highlight your abilities professionally. You want your office to attract wealth and emphasize your talents. To do so, the space should be unique but well-equipped to handle new opportunities as they arise. In the room, you should feel confident and in-control of your future. To potential customers, your office puts them at ease and subconsciously reassures them of your professional abilities.
Here are five ways you can optimize your office for more wealth.

1. Organize Clutter

Clutter makes people feel stressed, while organization systems ease frustrations. It’s pretty simple to decide which would be better to implement in a home office. Takes some time to declutter, and encourage your employees to do the same.
You’ll experience a boost in productivity and potential clients will feel at ease knowing they are working with someone who is professional, organized and efficient.

 

2. Update Wall Design

Sleek new wall paneling adds an element of sophistication to any work setting. Your office should represent your personality without distracting customers from your work. Wood-paneling provides a sense of history, while providing a cozy and custom feel. You want to feel comfortable, while still working in a professional setting that emphasizes productivity.
Optimizing for more wealth means your office should be ready for new opportunities should the situation present itself. By updating your wall design, you’ve prepared a custom office space without compromising design or functionality. It will act as the perfect backdrop for your next client meeting or virtual conference.

 

3. Highlight Achievements

Your office is the perfect place to display your degrees, award and certifications. While working it will motivate you to strive for success. It will also highlight your accomplishments without seeming overly flashy. Reminding yourself and your clients of your achievements will attract wealth and confidence, helping you to reach your goals.
Remember to choose the awards and certifications you’re most proud of that also relate back to your industry. The goal is to look successful without making the space feel cluttered.

 

4. Prioritize Lighting

Lighting can make or break an office space. Natural lighting is proven to boost wellness and productivity, while poor lighting is related to drowsiness. Research also demonstrated a reduction in eyestrain and headaches when natural light was present in work-environments.
While you should prioritize natural lighting, it’s also important to have brightly lit interiors for when the sun begins to set. Aim to have a variety of personalized lighting on desks as well as overhead lighting that will reflect off of the walls and ceiling.

 

5. Emphasize Sophistication and Functionality

Find the balance between furniture that is sophisticated but also functional. You need to feel comfortable to work more efficiently. Look for products which are ergonomic and promote good posture. While you want your office to look fashionable, it’s crucial that your furniture and equipment remains practical.
Subconsciously people trust those who dress sharp and care about their image. As an extension of your professional self, a sophisticated office space will garner more respect than a mismatched room. With respect comes greater opportunities and a stronger reputation, allowing you to charger higher prices.

 

Act the Part

Use these five ways to optimize your office for more wealth. Remember, designing a classy and sophisticated workspace only gets you so far — you need to act the part too. Dress professionally and look well-groomed each day, whether you work from home or go into the office. When you look good, you feel more confident and it impacts your productivity and other’s perception of you.
ArticlesFinance

PayPal Will Soon Include Bitcoin on Its Platform — Is This Good News?

Blockchain tech is going mainstream as the traditional finance world begins to embrace its disruptive potential.

Bitcoin and Ethereum are the market leaders when it comes to cryptocurrency investment by institutions or consumers trading in retail markets. And it’s no secret that both digital assets have helped create many millionaires. But it’s the technology that undergirds it that has the power to change the world.

Blockchain has plenty of applications but centralised blockchains could help to ease the many problems that currently plague our international money-transfer system.

Slow, Expensive Transfers Remain a Major Pain Point

A big challenge for financial institutions is cross-border and cross-country transfers. This is because there is a heavy reliance upon correspondence banks and other middlemen. One of the early attempts to ease this problem came from blockchain company Ripple.

Ripple is better known for its payment network and protocol, rather than its currency (XRP). The project uses an open-source peer-to-peer decentralized platform that acts as an agnostic form of money transfer. It does this using RippleNet, a network of institutional payment providers like banks and money services businesses that leverage Ripple’s technology.

Ripple uses a network of “gateways” to serve as the link between two parties who want to make a transaction and provide liquidity to the system. This helps the company avoid the problems faced by traditional currencies. It also keeps transaction fees as low as $0.00001. Reportedly, one-third of the world’s major banks are already using the platform.

Traditional Fintech Companies Are Jumping on Blockchain

The success of Ripple hasn’t gone unnoticed. For some time now, a number of companies have been toying with blockchain technology. The most recent, and impactful, was the fintech giant PayPal. While there have been many other fintech companies adopting crypto, like Revolut, the news that PayPal was making it possible to buy and sell Bitcoin made big waves.

The company confirmed that users in the US would be able to trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash using their PayPal accounts. The service will be rolled out to Vemo and other geographical areas over the first half of 2021 and users will be able to use their cryptocurrency to purchase goods and products via PayPal.

Bitcoin and other cryptocurrencies saw a sudden price rise as many traders and investors learned the news. It was generally seen as a sign that cryptocurrency had taken another big step towards the mainstream.

But there is a problem. PayPal users will not be able to withdraw cryptocurrency from the company’s ecosystem and there is a good reason for it.

Bitcoin Isn’t Ready for the PayPal Effect

Bitcoin still suffers from a scalability problem. During any major rise in transaction volume, the waiting times for a single Bitcoin transaction increases significantly. This “PayPal effect” could have a disastrous impact on the reputation of cryptocurrency.

There are around 350 million users and 26 million vendors in the PayPal ecosystem, compared to Bitcoin’s estimated 190 million users. To understand the impact that this sudden influx of users could have, it is useful to look at how the DeFi craze impacted Ethereum in September.

As the number of DeFi apps exploded, the transaction costs on the network skyrocketed. In September, miners made over $160 million, a 39% increase from the month before. This was due to an increased number of transactions triggered by DeFi. Now imagine if Bitcoin suddenly gained 350 million more users, few of whom really understand how blockchains operate.

This would be a massive problem. Visa is able to process around 1,736 transactions a second. Currently, Bitcoin can guarantee less than 5 transactions per second. And as more transactions hit the blockchain, their costs will skyrocket. Until Bitcoin can move away from Proof of Work consensus, the PayPal effect remains a major threat.

It’s Not All Bad News

In order to combat this effect, PayPal has decided to make it possible to access cryptocurrency through their network, and not withdraw it. Other limitations will help to keep down the volume of cryptocurrency taken into the network and mitigate the impact — at least until second layers such as the lightning network are in place to reduce scalability problems.

The good news is that PayPal has opened up an easier way for people to become acquainted with using cryptocurrency. It has the potential to normalize the practice of paying for goods and services using it, something which is currently difficult to impossible except for niche purchases such as VPNs.

This change would have two important effects:

  • It makes it easier for vendors to justify accepting Bitcoin. As more vendors adopt cryptocurrency payments, the utility for Bitcoin and other cryptocurrencies will increase significantly, and more people will see it as a viable method of payment.

  • It might shock the crypto community into accelerating to make solutions more scalable, either by shifting towards Proof of Stake as Ethereum has. Or by adding in second-layer solutions.

While many crypto enthusiasts won’t be happy with PayPal’s closed garden, this is a positive step towards the mainstream. It will take time before PayPal is able to open up withdrawal features, but they likely will if regulations and scalability allow it.

Issues

Q4 2020

Welcome to the Q3 edition of Wealth & Finance International Magazine. As always, every issue we endeavour to provide fund managers, institutional and private investors with the very latest industry news in the traditional and alternative investment spheres.

This issue has a firm focus on providing an insight into recent developments in the wealth and finance industries – after all, you might be of the opinion that the world has been spinning its wheels, eager to start moving forward once more. But, as you’re about the find out, that has certainly not been the case. While many of us have been holed up at home, businesses around the world have been quietly making strides and driving advances -always moving forwards, even while in the midst of a pandemic.

As such, many of the issue’s inclusions have emerged from the situation stronger and more resilient than they were at the beginning of the year. Some have moved ahead with growth plans, launched new services, or entered new markets. Others are now gearing up for large marketing campaigns, ambitious and restless after the relative dormancy we’ve faced over the last 6 months.

So, do read on and enjoy the businesses that have showcased an exceptional ability to weather uncertainty and stay – always – on schedule with their achievements.

In the meantime, I hope you all stay safe and well.

gold
ArticlesWealth Management

Can You Use Precious Metals For Retirement?

gold

The appeal of precious metals, for many investors, is difficult to pass up, particularly gold bullion. It’s one of the most popular and sought-after investments in the entire world, especially since it can provide lucrative returns for any retirement account.

While investing in precious metals for retirement is a good idea for any investor, there are several essential things to keep in mind. For instance, most 401k retirement plans only allow for direct ownership of pure gold (such as gold coins), or else you risk being barred from investing. In most cases, this isn’t an issue for regular investors, but for those with a lot of money tied up in precious metals like gold, it can be a huge problem. Fortunately, there are more ways to invest in precious metals that don’t involve direct ownership of gold itself.

Buying Physical Precious Metals 

Many people wonder if buying physical precious metals for retirement is a good idea. The answer to this is that there are many reasons that physical precious metals are an excellent investment. It is, however, important to consider certain factors before investing in these precious metals so you’ll know if this is a good idea for you. Here are some of them:

  • To ensure that you’re getting the most out of investing in these precious metals for retirement, make sure that you’re realistic about the amount of money you can use to purchase because this will vary depending on your current lifestyle. You should also make sure you’re choosing a reliable precious metal investment dealer like Orion Metal Exchange that can help you with buying and selling such metals.

  • It’s also essential to think about the amount of money you’ve saved in the form of a 401k or other retirement account. While these accounts offer tax benefits, they’ll only be available to people over the age of 60. This means if you want to use the money in these accounts to purchase gold and silver, you would need to be able to come up with at least six to eight figures as a down payment on the gold and silver alone. 

If you want to find a way to increase your retirement income, then purchasing physical precious metals is a great way to do it. Buying these types of metals is also an excellent way to diversify your portfolio. If you’re not familiar with physical precious metals, you may want to talk to a financial advisor to help you choose which precious metals you should invest in.   

  • You can find a wide range of metals in the form of coins, bars, and even jewelry. Because of their value, when you sell them in the future, they’ll bring you more money than when you started. Bullion coins are also a great way to help protect your investment against inflation. These coins are also easy to sell when you need to get rid of a large amount of cash. Many gold and silver coins are available, and you sell them more than their worth because they’re more likely to increase in value than any other type of materials. 

Buying physical gold or silver for your retirement investment may seem like an unnecessary expense, but it can save you much in the long run. The benefits of buying physical precious metals for retirement are extremely strong. It’s easy to see why so many people decide to invest in these valuable pieces. 

Investing In Precious Metals Stocks 

Precious metals stocks work just like any other stocks—you invest in them, hoping that the company will succeed and that the value of the stocks you purchased will go up. In the case of precious metal stocks, however, the company in the equation refers to one that focuses on the mining, refining, selling, or any other aspect of precious metals production or distribution.

There are several types of precious metals stocks, including the following:

  • ETFS or exchange-traded fund stocks are a type of investment where you don’t really own actual precious metals. Instead, what you have are assets which are backed by these precious metals.

  • Mining stocks are shares issued by companies that mine precious metals. These prices of these stocks are often directly linked to the price of the precious metals themselves. Other factors that affect the price of mining stocks are political turmoil, economic fluctuations, the success of mining ventures, and even miners going on strike.

  • Precious metal certificates aren’t really considered as stocks, but they’re also a type of investment that doesn’t require holding actual precious metals. For instance, if you purchase a gold certificate, you’ll get a document that states you own this amount of gold. This is a less popular option nowadays, especially because of the company that issued the certificate goes under, the certificate is essentially worthless. 

One of the best benefits of investing in precious metals stocks for retirement is that it’s an investment tool designed to help people with limited investment funds better manage and preserve their wealth. They offer an excellent way to ensure that your money is protected against possible threats to your finances, such as losing your source of income, inflation, and even natural disasters.  

To take advantage of the benefits of investing in precious metals for retirement, you should understand the ins and outs of the investment, including the risks associated with this type of investment. It’s a good idea to contact your investment advisor or insurance broker to learn more about how you can maximize your retirement savings. With the right knowledge, investing in precious metals can prove very lucrative because you can get a great return on your money.  

Conclusion 

Now the answer to the question of whether precious metals can be an investment for retirement is yes. The two most popular ways to invest is by buying physical precious metals or getting stocks. When you buy physical precious metals, you can have gold coins or bullions that you can sell in the future. As for stocks, precious metals are known to withstand market fluctuations, so you can have higher chances of diversifying and growing your retirement portfolio.

Digital banking
ArticlesBanking

My Digital and Ecospend open up banking services for the Quantum Workforce

Digital banking

Accounting and payroll services for the temporary labour market transformed by Open Finance

Today Quantum Employment Design (QED) leader My Digital announces its collaboration with Ecospend Technologies Ltd, a pioneer in digital payment services and Open Finance. The new digital service will provide the disruptive innovation that UK accounting services need for the modern Quantum Workforce ushered in by the changing labour markets of the pandemic.

Powered by Ecospend’s Open Banking technology, My Digital will provide leading-edge accounting and payroll services to the temporary labour market by offering:

– Faster payments and instant receipt for work completed with strong authentication & authorisation of payments to heighten security

– Enriched financial data for umbrella companies, recruitment agencies and Professional Employer Organisations with AI-driven data analytics to improve relevance to clients

– Full GDPR compliance for data handling for My Digital’s clients, who will have complete access to their data and the ability to manage their consent in real-time

The gig economy, which has long been subject to outdated systems and methods, is ripe for dramatic change as Quantum Employment continues to rise, with one in seven workers in the UK on flexible contracts. Ecospend and My Digital’s collaboration is an early and compelling entrant to this exciting new marketplace which is driven by young people with high expectations of digital banking.

“We are very pleased to be helping My Digital bring authenticated account information rapidly and efficiently to its clients using our Open Banking infrastructure,” said Metin Erkman, founder and CEO of Ecospend. “We see My Digital’s platform leading the way in bringing the benefits of Open Banking to the business community,” Erkman added.

John Whelan, CEO of My Digital concluded, “Open Banking is a transformational change for businesses, and we are delighted to have partnered with Ecospend to deliver this banking service for those supporting the Quantum Workforce. Our aim is to accelerate the evolution of QED to match the needs of a growing sector which is increasingly digitally savvy. Our partnership with Ecospend means we are now moving into a higher gear and able to deliver on the expectations for digital banking.

The collaboration is fully operational. Ecospend and My Digital are looking forward to a long and fruitful partnership and leading the way in the temporary labour market of the financial services marketplace.”

Offshore banking
ArticlesBankingTransactional and Investment Banking

Advantages of offshore banks: What they have to offer millennials

Advantages of offshore banks: What they have to offer millennials


James Turner Headshot

Contrary to popular belief, offshore banking isn’t just for the super-rich, nor is it illegal. 

In reality, and with professional advice, the average person can open a perfectly legal offshore bank account within a matter of hours – ideal for busy, on-the-go millennials.

For the generation facing increasing financial challenges, it is more important than ever for millennials to acquire savings sooner, rather than later. With climbing house prices, higher relative costs of living, and the need to save more money for retirement, many millennials are planning their futures’ by setting up savings accounts in overseas institutions. But is this the most secure way of holding your hard-earned savings?

While the answer to this question is largely dependent on individual circumstance, there are many potential benefits to banking offshore; from earning higher interest rates and tax benefits, to having the ability to bank in foreign currencies. Offshore banking can be particularly beneficial for those who regularly travel overseas for work, as it allows you to receive multiple currencies without the need to pay for exchange fees. As such, there’s no risk of you losing out on exchange rate fluctuations.

Banking with confidence and having more security is a significant factor for people choosing to bank offshore. It can offer greater asset protection against possible future threats, such as divorce lawyers, creditors and legal action – which is essential for millennials with substantial amounts of money. This makes offshore banking a secure solution for managing your money well. However, it is worth noting that the security of your savings will depend on the regulations of where your bank is based.

For an added level of reassurance, many jurisdictions also offer strict, financial privacy and confidentiality agreements. This means that your personal information will not be passed on to any third parties, so your assets are shielded to safeguard your individual or company information.

At Turner Little, we offer privacy-assured banking to suit your bespoke needs. Whether you’re an individual or a business, our services include arranging bank accounts and credit cards with both UK and offshore institutions. So get in touch with us today and see how we can help you prepare for your future.

bitcoin transaction
ArticlesBankingTransactional and Investment Banking

Why Are Crypto Transaction Speeds So Important?

bitcoin transaction

Why Are Crypto Transaction Speeds So Important?

Would you wait five minutes to make a purchase in-store? Probably not. And this is why crypto transaction speeds remain the biggest roadblock to adoption.

Bitcoin credit cards, PayPal crypto purchases, DeFi apps for Ethereum. Mainstream cryptocurrency adoption seems closer than ever. But we’re still missing a piece of the puzzle. Slow transaction speeds and lack of scalability mean that cryptocurrencies are still unsuitable for day-to-day use and relegated to the world of traders and investors.

 

Transactions Need to Be Fast to Be Usable

The big challenge faced by the major cryptocurrencies is transaction speed and network load. Let’s put the scale of the challenge into context. Bitcoin can process just 5 transactions per second. Compare that to Visa’s 1,700 transactions per second.

Additionally, Bitcoin transactions need to wait for a new block to go through, which means it could be ten minutes before a transaction is actually verified.

Take a moment to imagine how you pay for your groceries. If you decide to pay with cash, it is instantaneous, free, and private. If you pay with a credit or debit card, it’s fast, low-cost, but not private in that it leaves a trail that can be used to determine your purchase. If you decided to pay with Bitcoin? It’s slow, high cost, but private.

Now let’s look at it from the merchant’s perspective. Cash can be processed as fast as the cashier can put it in the till and is effectively free. Visa is easy, eliminates the risk of employees stealing, and is cheap.

Bitcoin is slow, hard to liquidate, and could cost the company a lot of money in terms of wasted time and processing fees. At the moment there are simply very few reasons for large merchants to accept cryptocurrency.

Additionally, the price of Bitcoin and other cryptocurrencies fluctuates significantly. This can be good for companies like MicroStrategy that is estimated to have made over $100 million in profits on its Bitcoin holdings. However, difficulties assessing the true value of a transaction with a volatile asset could cause losses for a merchant, or open them up to accusations of overcharging if processing takes too long.

 

Proof of Work Consensus Is Part of the Problem

Another key problem is scalability. Even if merchants were to decide that cryptocurrency was worth their time, a sudden rush of new users would lead to Bitcoin, and any other Proof of Work (PoW) blockchain, facing significant congestion problems.

PoW requires networks of computers, or miners, to solve complicated equations in order to validate and secure blocks of transactions. Each block takes around 10 minutes to process and can hold around 500 transactions.

In order to ensure their transactions are added to a block, earlier users can offer miners an additional fee. As more users vie to use the network, increased fees are needed to speed up processing times. This creates high costs and significant bottlenecks.

As long as this problem persists, any attempts by merchants to adopt cryptocurrency will simply cause more problems, making it unsuitable for day-to-day use.

 

Second Layer Solutions Could Solve the Challenge

There are a number of proposed solutions to these problems. Setting aside the sea of altcoins that promise to fix the perceived problems with cryptocurrency, there are two main solutions being proposed: alternative forms of consensus and second layer solutions.

 

Proof of Stake

Ethereum, and the planned 2.0 update, is the first major attempt at integrating Proof of Stake (PoS) consensus methodology. Ethereum 2.0 will roll-out a new PoS compliant blockchain called Casper.

This will allow users to “stake” Ethereum in order to validate transactions. This will have two main effects. The first is that miners will no longer be necessary, making transaction times and costs more predictable. The second is that it will provide a way for users to monetize their Ethereum without liquidating, improving stability.

However, there are concerns about Proof of Stake. In particular, there are fears that it monopolizes power in the hands of crypto whales, undermining the decentralized nature of the network.

 

Second Layer

This is part of why most solutions for Bitcoin are focused on building a second layer that would remove the need for small transactions to be immediately recorded on the blockchain.

The most prominent proposal is the Lightning Network. This network would allow two users (for example a shop and card issuer) to open up a channel with each other. Thus they could redistribute funds between their new channel, which works as a shared wallet.

Once both parties want to confirm the transactions, they close the channel and the final balance is stored on the blockchain. This methodology is not dissimilar from the way small businesses often deliver cash to the bank at the end of the day. And it would be simple to implement with the right infrastructure.

 

To Become Currency, Crypto Needs to Be as Simple as Cash

In order for Bitcoin and other cryptocurrencies to supplant cash, developers need to think about why cash and credit cards work so well. Any crypto alternative needs to combine the privacy of cash with the ease of use of credit.

To do that cryptocurrency users will need to embrace alternative solutions like PoS or the Lightning Network. It will likely be some time until you can pay for your groceries with Bitcoin, but don’t discount that possibility just yet.