Points transfers from banks into frequent flyer schemes are accelerating and trending ahead of airline passenger recovery
US points transfer activity already exceeding pre-pandemic level by 30%
Yesterday Ascenda, the technology company that makes banking rewarding, revealed consumer confidence in travel is returning quickly according to leading indicators from its bank solution TransferConnect, the world’s largest global exchange for frequent traveller miles and points.
TransferConnect facilitates the exchange of rewards currencies between financial services brands and a broad set of major airlines, hotel chains, super apps and retailers worldwide. The network enables banks across 40 markets to connect with 50 major merchants and delivers access to real-time points transfers for 1.2 billion consumers worldwide.
The newly published data is the first of its kind ever released in the industry and showcases how rewards currency exchange volume from banks into frequent flyer schemes has compared against airline Revenue Passenger Kilometers (RPKs) over the past 18 months. The analysis provides unique insight into how the multi-billion dollar bank rewards value chain has been impacted by the pandemic and where travel recovery is heading in coming months.
When COVID-19 first brought global travel to a standstill in March 2020, bank consumers naturally ceased to transfer their accumulated points into frequent flyer miles. Both RPKs and rewards transfers plummeted more than 80% during a 60-day period.
However, customers continued to earn bank rewards unabated on their everyday card spend as the pandemic unfolded, with growing points balances waiting to be redeemed. The year 2021 then brought the turning point, as news of global vaccination progress unleashed pent up travel aspirations and prompted a reinvigoration of bank point conversions into frequent flyer schemes. Since March 2021, that transfer activity has accelerated its recovery materially ahead of passengers carried. The effect is consistent across geographies and especially pronounced in the US market, where the volume of bank points exchanged into frequent flyer miles has actually surpassed pre-pandemic levels from April 2021 onward and is still continuing its upward trajectory.
In addition to these strong signals of returning consumer confidence in air travel, the analysis also reveals that hotel chains have capitalized on the pandemic to sustainably grow their share of global rewards currency transfers. Following the onset of the crisis, transfers into hotel points had naturally gained relative share as consumers were forced to opt for local vacations. Hotel points represented less than 10% of currency transfer volume in 2019, increasing three-fold in March 2020 to 30%. What’s most remarkable, however, is that the behavior change has persisted into 2021, even during the recent months of recovery, indicating that the chains have sustainably grown their level of engagement with loyalty program members.
Sebastian Grobys, Chief Commercial Officer at Ascenda, said: “As the pandemic unfolded, the world’s eyes were glued to plummeting operating statistics published by airlines and travel industry bodies across the world. Since then, there have been many attempts to analyse the slope of the recovery curve and make predictions about the future, for example looking at forward booking patterns. Today we’re excited to contribute a new and unique source of data that shows frequent flier mile transfers are rising significantly in a strong signal of accelerating recovery.”
By Abdullo Kurbanov and Zuhursho Rahmatulloev, co-founders of Alif
When we think about the markets driving the financial technology (fintech) revolution, London, New York and San Francisco immediately spring to mind. In many ways, it makes sense for these cities to be at the forefront of fintech innovations. Each of these cities accommodate diverse pools of financial and professional service specialists, attract significant investment, and boast world-leading digital infrastructure.
Since 2015, challenger banks and fintech companies have launched in these locations, offering new products and services that seek to transform consumer finance and retail investment. In doing so, they are collectively helping to empower society through digital solutions.
While it is important to acknowledge the fintech ecosystems in advanced economies, we should not let these overshadow some of the exciting developments currently on display in emerging markets. Regions like Central Asia are on the brink of what we deem to be a “fintech revolution”, led by a new generation of fintech companies. Importantly, these companies are taking an agile approach by addressing localised issues through the creative deployment of technology.
Tajikistan is one such country in the middle of a profound digital transformation. With the aim of achieving better financial efficiency and inclusion gains, the country’s fintech industry is helping to digitally empower its citizens. Moreover, at the regional level, by applying tech to address the current banking challenges faced by people based in Central Asia, such as remittance payments and Sharia-compliant fintech platforms, the Central Asian region is set to become a global leader in Shariah compliant fintech.
Admittedly, a core driver of economic development in the Central Asia region is remittances. Over the years, the mass migration of people to Russia from Tajikistan, Uzbekistan, Kyrgyzstan and some other former Soviet Union countries has resulted in economies that rely on remittances as one of the core contributors to GDP. According to the World Bank, remittances accounted for 33% of Tajikistan’s GDP in 2019 – equating to $2.5 billion. In Uzbekistan, personal remittances received in 2019 totalled 14.75% of GDP.
Remittances do play an important role in supporting domestic households and ensuring countries are positioned to achieve the Sustainable Development Goals. However, the complexity and costs involved in arranging these payments can lead to people paying extremely high fees. Banks and money transfer operators (MTOs) are typically responsible for managing such payments. The costs arise when these operators need to engage with several intermediaries, not to mention the margin on the exchange rate.
Research by the World Bank concluded that COVID-19 has led to a decline in remittance payments in Europe and Central Asia; a consequence of weak economic growth, currency depreciation and unemployment in migrant host countries.
It is here that fintech models can drastically reduce the costs involved in such transfers while also providing greater transparency over how the payment is managed. It is estimated that if every remittance payment made in 2018 to the Europe and Central Asia region had been facilitated through Fintech models, consumers could have collectively saved US$1.59 billion.
These cost savings arise from the lower transfer costs and fees when compared to traditional operators. The payments can also be arranged instantaneously, which ultimately reduces the chances of individuals looking to informal, high-risk avenues of transferring finance.
Evidently, fintech can have important distributional effects by supporting those who rely on remittances. By making the process cost-efficient and transparent, consumers can significantly reduce the amount of fees and costs paid for any type of remittance transfer.
Empowering the region with Islamic fintech
With most people in Central Asia identifying as practicing Muslims, the region is ripe for the growth of modern, technologically enhanced Islamic banking. At the core, Islamic finance is based on the principle that money does not have an inherent value. Instead, it is seen as an instrument used to exchange products and services – things that do have value. Islamic finance also prohibits interest payments. In other words, people should not be able to make money from money.
However, there is so much more to Islamic fintech than simply ensuring the core beliefs of Islamic finance are integrated into fintech platforms. Considering the sustainability and development goals of Central Asia, the fact Islamic finance promotes risk sharing, encourages financial inclusion, and is focused on social welfare outcomes, ensures it can play a positive role supporting the economic progression of the region. The provision of Sharia-compliant banking through fintech solutions not only improves the digital capabilities of the region but contributes to broader social and economic goals.
Creating a digital ecosystem in Central Asia
Digital connectivity is a key enabler of economic productivity, growth and market innovation. As more and more services are offered online, there is a need to ensure that everyone around the world is digitally enabled. Despite this, the World Bank estimates that nearly half of all people in Central Asia are not digitally connected. This is a concerning figure, highlighting the need for a long-term strategy which directs investment into the infrastructure and skills needed for the region to have internet access.
Private and public sector cooperation is needed to facilitate this digital transformation. For example through ongoing consultations and meetings between public bodies, and local companies at the helm of digital innovation. A digital ecosystem needs to be created, and fintech companies can assist in two practical ways.
The first is through the practical deployment of accessible technologies that assist with people’s daily financial needs. From consumer and retail financing, such as buy now pay later (BNPL), point-of-sale financing through to transparent online channels that facilitate cross-border currency transfers, fintech companies are ensuring the development and proliferation of technology that practically address the common needs of those based in the region.
The second way is through education, skills and training. Digital literacy empowers individuals, and this can only be achieved if people are encouraged to pursue education that betters their understanding of technology, particularly when it comes to finance. For growing fintech companies in the region, it makes sense to implement academy programmes to create a skilled workforce. Such education programmes will also provide the inspiration needed to support a new generation of tech entrepreneurs keen to learn how to programme, thereby reducing the factors that might tempt younger generations to move outside of the region.
Fuelling growth and innovation through tech
Fintech is naturally positioned to help empower Central Asia and support the digital transformation of the region. From offering an easier and more accessible way of managing remittance payments through to the provision of Sharia-compliant services and financial education, fintech will be integral to the economic advancement of Central Asia. Importantly, fintech companies are heeding the call with companies like Alif applying the latest technology to ultimately improve the way people can manage their finances.
Based on what we are seeing unfold now, Central Asia could establish itself as competitive global hub in fintech innovation through the release of platforms, products and services that support issues typical to the region, particularly when it comes to Islamic finance. For these reasons, we are optimistic about the future prospects of fintech in digitally transforming Central Asia in the coming years.
Managing business cash flow can be difficult. It involves more than looking at profits and losses. It’s also about looking at revenue streams as a whole and the factors affecting them. Sometimes, an enterprise will have to wait for a few weeks for payments, and this can negatively impact your operational expenses on a daily basis.
Luckily, invoice factoring may be an option for organizations that want to quickly ensure steady cash flow. Under this scheme, you can raise funds to cover regular expenses such as fuel, rentals, taxes, and employees’ salaries.
If you think your business can benefit from giving invoice factoring a try, read on for more information about this particular financial method. In this article, you’ll discover how invoice factoring can improve your cash flow while you’re waiting to be paid by your customers.
What Is Invoice Factoring?
This involves a business ‘selling’ its unpaid invoices to factoring businesses. In return, the latter pays a portion of the invoice values and returns the rest after the customer has paid. Some businesses may be discouraged from turning to invoice factoring since it can significantly reduce your profit margins. However, if you prefer to have a steady cash flow without resorting to loans—which may hurt your finances further with their exorbitant interest rates—this may be a good option to consider.
Besides, in selling your accounts receivables to a factoring company, you may still get up to 98% of your invoices’ total value. Most factoring companies take charge of the billing and collections, saving you time from chasing after customers and minimizing the risk of incurring bad debt.
Why Is Cash Flow Management Important For Your Business?
Without steady income, a business can’t operate smoothly. Relying solely on customers for cash inflow can cause several problems. Your employees won’t be able to work properly if they’re not paid. Government offices will run after your business for not paying taxes on time. Simply put, your business can’t grow.
Proper cash flow management is crucial in any business organization. What many don’t understand is that it isn’t limited to earnings and losses. Cash flow covers all aspects of your business income streams along with the factors influencing them: expenses, debts, payables, receivables, and inventory.
How Does Invoice Factoring Improve Your Business Cash Flow?
Having a steady cash flow is crucial in business sustainability and growth. Enterprises should aim for more cash inflows and shouldn’t have to wait for customer payments to finance operations. Invoice factoring improves business cash flow in the following ways:
This method allows you to meet your financial obligations on time, preventing your business from incurring penalty fees and overdue charges.
Instead of getting loans that require collateral plus out-of-pocket application costs and come with high interest rates, your business can save cash with invoice factoring. The money you save from loan-related fees may not be substantial, but it can still help improve your cash flow.
Being free from chasing non-paying customers, your finance department can perform other important tasks and increase productivity.
Paid on time and working in great conditions, your marketing staff will be able to focus on your company’s promotional strategies and attract more customers, increasing your income potential.
Because your business will no longer suffer from delays and shortages due to limited cash flow, you can take in more customers and, consequently, see your profits rise.
With enough money on your hands, you can consider expanding your business. Consider buying new assets or pieces of equipment to make your business more efficient.
Having extra cash at your disposal allows you to prepare for contingency. Reliability increases your brand reputation, and more customers are inclined to transact with you as a result.
As your brand reputation increases, an increasing number of customers would be willing to purchase your offerings.
A steadier cash inflow allows your business to take on more projects, including expansions and partnerships, which in turn would allow your business to have a more stable financial standing.
Invoice factoring is an attractive prospect for businesses without a credit score or even those with poor credit scores. Banks and lending institutions look at a borrower’s credit score before deciding whether to approve or reject an application. Comparatively, factoring companies don’t look at your business’ credit scores but rather those of your customers, who now owe them money.
Additionally, some invoice factoring companies offer longer payment terms, which may work to your advantage. Check out this article if you want to learn more about invoice factoring and its benefits.
On the other hand, invoice factoring may have hidden costs, so taking this route is more costly than choosing government-backed financial programs. What’s more, your business may still be held liable if your customers default on their payments.
In choosing the best factoring company, a good rule of thumb is to carefully look into their terms and conditions. Make sure there are no hidden fees, and they should have a dispute resolution system.
Invoice factoring can be an attractive option for businesses that need immediate cash flow. If you’re struggling to collect payments, consider invoice factoring in order to finance your daily business operations. Just make sure that your customers are able to pay promptly in order to avoid headaches.
When used properly, this alternative business financing method can help enhance your business cash flow without pushing your business into a financial sinkhole.
While the changes in the Fintech Payments industry, brought on by the pandemic, were seen across all markets, Fast-growing and Emerging economies have experienced the biggest shift. Increased use of mobile payments have put them at the forefront of the new payment technologies adoption.
It is now clear that the coronavirus pandemic served as a significant catalyst for growth in the Fintech Payments industry. The changes in consumer behavior the pandemic imposed, alongside the massive expansion of e-commerce, brought new consumers into the market, increased the volume and variety of purchases, and promoted new payment methods. While the changes were felt across all markets, Fast-growing and Emerging economies have had to adapt the most, and seems to be leading the way in the adoption of new payment technologies.
The coronavirus pandemic has had a significant impact on how buyers shop online. In the developed countries, the volume of online purchases increased—amounting to $4.28 trillion —as has their scope. Consumers started shopping online for a wider range of goods, including bulky ones such as furniture and tools alongside groceries.
‘Instant delivery’ services pair with contactless payments
The share of goods traded across borders increased, both regionally and globally. More shopping is now conducted through “instant delivery” services, which deliver goods within minutes rather than days. Contactless payment options became more popular, as cash and card machines were identified as a pandemic risk. With such changes, new user groups have entered the market as well, especially the older generation, which long resisted the shift to Fintech.
Rise of online purchases in Emerging Markets
While generally trends differ from continent to continent, Emerging markets saw some of the same trends as the Mature markets. Online purchases were on the rise, as was the demand for international goods and services. There was also a significant increase in the number of people that purchased online. For example, 68% of South Africans were spending more time shopping online than prior to the pandemic—most common items bought through e-commerce platforms in 2020 were clothing and groceries.
“The pandemic has caused a behavior change that will be difficult to undo,” notes Frank Breuss, co-founder of Nikulipe, a fintech company connecting Fast-Growing and Emerging Markets with the global payments industry. “These changes are not localized or specific for a number of countries, as it usually is. Once people have made the shift to more convenient payment methods, they are unlikely to go back, and we are seeing this happen for more than a year now.”
Mobile payment—key to e-commerce success
The move to new payment methods gave rise to the trend of the increasing popularity in local payment methods (LPMs), such as the various mobile payment systems operated by national telecom companies. Breuss singles out two main reasons why mobile payments are becoming that much more popular: many buyers in Emerging markets, like in Mature economies, still wish to keep the physical contact to a minimum—and will continue to do so; buyers are also without access to credit cards, which makes mobile payments more widely accessible.
Such and similar technologies allow them to deposit money on their account and send it to anyone else on the network, including merchants. That is why LMPs are being called the key to e-commerce success in Emerging markets.
Pandemic-influenced trends are here to stay
Breuss identifies the development of multinational LMPs as a key opportunity in the industry, as cross-border payments are growing rapidly.
“It is critical that Fintech firms seize the momentum and continue to push for new and better technology,” explains Breuss. ”Interestingly enough, Emerging markets seem to be leading the way with mobile payment systems that are much more ‘instant’ than what we have in Europe or the U.S. It’s something worth keeping an eye on, as businesses seem to be slowly moving back to normal.”
The coronavirus pandemic has brought significant changes to consumer behavior and what has been thought of as trends, set in motion by the pandemic, seem to be truly global, affecting the markets worldwide. As consumers in both Mature and Emerging markets get used to more convenient means of payment, the continuity of such behavior could stay much longer than anticipated.
Millions of Brits provide financial support to their families overseas, with an average of £7.7 billion being sent from people in the UK to support loved ones each year.
With money transfer apps becoming the new norm, it is now easier than ever to send money to family and friends back home. People can make payments from the comfort of their homes or on-the-go without having to enter a physical store or bank.
However, as with any modern apps, there are a few things to bear in mind in terms of online security whilst sending or receiving money from abroad. The experts at global cross-border payments company WorldRemit have compiled some top tips for any first-time sender.
1. Secure your email address
Most companies require an email address to set up an account, therefore it’s important that you ensure that your email is protected with a strong password to prevent anyone from gaining access to not only your emails, but any apps you use via this address.
Strong passwords include a combination of lower and uppercase letters, numbers, and symbols, it’s also important to ensure that you don’t use the same password for multiple applications.
2. Avoid public wi-fi
Although it seems convenient to connect to a public wi-fi to make a quick money transfer, the open access can be a security threat, allowing unauthorised users to intercept your sensitive personal information or gain access to your device.
It is recommended to avoid logging into online banking or money transfer apps, or managing your mobile wallet using a public network.
Instead, either waiting until a secure wi-fi network is available, or using mobile data, is the safest way to use money transfer apps while you’re out and about.
3. Research the app you’re downloading
Before you download a money transfer mobile app, try to find more information about the company online. If there is little to no online presence, stay away from it. On social media, always look for the verified “blue tick” next to the business name. Last year, WorldRemit launched a Transfer Tracker App which allows recipients of money transfers to track their funds. The app is free to download through the Google app store in a number of countries including India and Nigeria.
4. Keep your operating system up to date
Whenever your smartphone’s operating system, internet browser or applications notify you that there are updates available, be sure to install them as soon as possible.
Many of these updates are fixing bugs or weaknesses in order to help you stay safe online.
5. Use a pricing comparison tool to get the best deal
The cost of sending money abroad takes numerous factors into account, for example, the exchange rate as well as any sending fees.
Be sure to use a pricing comparison tool to ensure you’re getting the best deal ahead of making the commitment and sending the funds.
A spokesperson from WorldRemit added: “Sending money overseas for the first time may seem like a daunting task, but it’s actually easier now than ever before.
“With WorldRemit, you can send in 70 currencies to more than 130 countries worldwide, in a safe and secure manner, and it can be done within minutes – it’s as easy as sending a text message.
“If it is your first time sending money to your loved ones overseas, we have customer service advisers available to help 24/7, to make your money transfer journey as seamless as possible.”
New British Business Bank campaign encourages people thinking about their career options to start their own business and become their own boss via the Start Up Loans scheme
The majority of unemployed people (54%) who have become entrepreneurs through Start Up Loans since 2012 are millennials
Start Up Loans, part of the British Business Bank, today sets out its commitment to unlock the talent of thousands more people across the UK by helping them to start their own business.
The disruptive impact of Coronavirus on the UK’s economy and traditional working patterns has catalysed many to reconsider their careers, whether because of additional time to reflect during lockdown, furlough or a change in employment status.
Of the 80,000+ Start Up Loans recipients since 2012, a third (31%) were unemployed at the time of application. Start Up Loans data also indicates that the scheme is particularly effective in enabling young entrepreneurs to start up a business, with millennials representing more than half (54%) of all previously unemployed loan recipients since 2012.
The Start Up Loans scheme has also seen this trend continue with the youngest generation of entrepreneurs, with double the number of Gen Z (18-24 year old) applicants using the scheme as a route out of unemployment in 2020 compared to 2019.
The Start Up Loans scheme was initially set up as the UK economy was recovering from the 2008 credit crisis, with a mission to make business ownership a viable career for individuals who would struggle to raise finance. Building on a nine-year track record of success, the scheme is set to play a vital role as our economy starts to rebuild after the impact of Covid-19, providing both funding and wider support for people starting up their own business for the first time.
Richard Bearman, Managing Director, Start Up Loans said: “Start Up Loans is uniquely positioned to drive the nation’s investment in creative, entrepreneurial talent of any age, thanks to our extensive network of delivery partners and support services. As well as a loan, we support individuals with the practical steps they need to take to begin their own enterprise from writing business plans, accounting and marketing, as well as access to learning with partners such as The Open University.
“It is paramount that we do everything to empower the next generation of young working talent, who have an important part to play in unlocking the UK’s economic recovery, by giving them every chance to succeed, whatever their circumstances. Unemployment can have a catastrophic impact on an individual’s financial security, self-confidence and ability to apply for finance from lenders, and the support provided by Start Up Loans can be of particular use to younger, less experienced business owners.”
Small Business Minister Paul Scully said: “The Government’s Start Up Loans programme has a phenomenal track record of backing budding entrepreneurs across the UK, having helped more than 80,000 people to start their own business.
“Anyone out there looking to strike out, seize opportunities and build something new can benefit from the funding and support which the programme provides. This campaign will be pivotal to our ambition of making the UK the best place in the world to start and grow a business and help us build back better from the pandemic.”
James Talbot, Co-Founder of Pobi Bakery, said: “At the start of the pandemic my partner, Jake, was made redundant and we decided that it was time to start working for ourselves. We took out a loan of £20,000 from Start Up Loans in September 2020 and have never looked back.
“The process of becoming unemployed is stressful and full of uncertainties, but the fact that everyone in the UK has access to schemes like Start Up Loans should be cause for optimism in the current economic environment. Despite all the challenges thrown at the retail industry throughout the last year, we have managed to employ 3 members of staff, open a second site, and are forecasting a turnover of £250,000 in the next financial year. It’s been a huge journey for both of us.”
The Start Up Loans programme provides finance and support for businesses and aspiring entrepreneurs who struggle to access other forms of finance, working with a national network of Delivery Partners based across England, Wales, Scotland and Northern Ireland.
Andy Fishburn, Managing Director of Start Up Loans Delivery Partner, Virgin StartUp said: “Virgin StartUp exists to help founders in the UK to start and scale early stage businesses. We’re proud to be working with the British Business Bank to deliver the Start Up Loans scheme to ensure that applicants receive the right combination of funding and support, to not only start up and survive, but thrive. Small businesses have such a vitally important role to play as we look to rebuild communities, the economy and the world more broadly. We look forward to continuing to work with future founders, in our shared mission to inspire entrepreneurs around the UK.”
Investment totaling £33m has been used to develop an SME mobile banking app, deliver new onboarding functionality and enhanced authentication tools.
The Bank has also launched new value add options for customers such as its Business Concierge service and a preferred Business Insurance provider.
Two years on from its successful £15m award of funding from the Capability and Innovation Fund, The Co-operative Bank has delivered on its commitments to launch value added services such as a preferred Business Insurance provider and a mobile banking app for its SME customers. The Bank is also attracting a higher volume of new customers as the number of business accounts opened was 62% more in 2020 compared with 2019. To date, the bank has also doubled its target of acquiring customers through the Business Banking Switch scheme (achieved 12% against a target of 6%).
With an additional £18m investment from The Co-operative Bank to transformation its SME online banking services, enhancements have been made to products and services that have improved the customer banking experience, this includes a new onboarding process for sole traders and single director limited companies and a more innovative approach to authentication with the use of a soft token app developed in partnership with HID Global.
Key to the delivery of the technological improvements made by the Bank are its collaboration with eight fintechs and specialist partners that have aided the building of its new digital infrastructure. The relationship with fellow Manchester based fintech, BankiFi has been especially valuable as the Bank has worked with BankiFi to deliver two important projects. The main focus of the work between the Bank and BankiFi was the creation of The Co-operative Bank’s new SME mobile app which offers customers a more agile way to bank and supports SMEs who want a more accessible banking service. The app launched on April 13 2021 and has already been downloaded by 14% of its customers. The second project is a new and innovative app based payment solution that will help customers to manage their invoices, receive payments and keep their cash flow moving.
Commenting on the success of the Co-operative Bank’s transformation plan, Director of SME Banking Catherine Douglas said:
“Two years ago we set about transforming our SME Banking Business with ambitious targets for customer growth and committed to a significant investment in our digital capabilities. We’re seeing the successes of that programme as the number of accounts we opened during 2020 was 62% higher when compared with accounts opened in 2019. Our longstanding customers are telling us that the addition of a mobile banking app and improved digital banking experience are really making a difference to how they bank with us day to day.
“We know that the majority of our customers banked with us as we had strong environmental credentials and shared a lot of the same values and ethics that underpin how we do business, but now we are also offering them products and value added services with improved digital functionality that really support their business needs.
“The growth in our customer base in the last year especially has shown that the work we’ve done has genuinely established us as a challenger to the larger SME banking providers and that we are the digital and ESG-led bank of choice for those looking for an alternative to the other UK high street banks.”
Mark Hartley, Founder and CEO of BankiFi said: “As entrepreneurs we lived and experienced how (too) much time is spent on admin tasks, invoicing, chasing payments while still not having an accurate overview of where the business stands. This new Co-operative Bank SME mobile app offers convenience and overview in one single place. We were enthusiastic to work with The Co-operative Bank because of its DNA which is rooted in society and supporting SMEs which are the backbone of UK industry, they are the best launching partner we could have wished for, and as we add functionality, the Bank’s business customers will benefit too.”
Working in work in partnership with innovative fintech businesses such as BankiFi has enabled the Bank to deliver enhancement to its products and services at pace for customers and this collaborative and co-operative way of working has been pivotal to in this process. The success of this approach to working was a key driver to The Co-operative Bank being a signatory of ‘The Fintech Pledge’ and why it will continue to look for other opportunities to work with innovative partners in the future.
As well as forming new connections in the fintech world the Bank launched two of its new propositions by working with established brands Assurant and AXA Insurance. The bank’s Business Concierge in partnership with Assurant offers a market leading package or services such as HR and legal support for businesses, and the Bank also recommends AXA Business Insurance as its preferred provider to customers as it offers cover that can be tailored to meet specific business needs.
Whilst the Bank has had success in working collaboratively with others, it has also invested and grown its internal talent and resource that supports its transformation programme, including significant focus on its dedicated Relationship Management team. The demand from new customers meant the Bank went above and beyond its 2020 recruitment target (achieving 114% of recruitment) and has increased its SME banking support teams by recruiting based mostly around its North West heartland.
As a participant in the Business Banking Switch scheme the Bank has grown its customer base with more than 8,000 former NatWest customers joining the Bank since the start of the scheme, with this number set to grow further as the switching deadline approaches at the end of June 2021. This is ahead of the Bank’s original expectations and shows that the Bank’s unique brand and strong proposition is attractive and stands out to UK SMEs looking for an ethical banking alternative.
Catherine Douglas continues:
“We are committed to continually listening to the feedback from the businesses that bank with us and although we’ve made such significant progress so far, this is still the beginning of what we know we can offer our customers, especially with the continued influence of the innovative fintechs and other specialist partners we are working with.
”We want to continue to grow and especially attract more charity and community led organisations as well as truly establishing ourselves as the bank of choice for co-operative businesses. We are continuing to challenge ourselves to have stronger and bolder ESG commitments that stand us apart as the ‘go to’ ethical bank for UK SMEs.”
Overall, from 44 police forces in UK, there were 25,717 cases of cheque, plastic card, and online bank account fraud from April 2020 to March 2021
From the 25,717 cases, the accumulative financial loss victims suffered was an astonishing £161,221,800 million
Metropolitan Police had the highest number of cheque, plastic card, and online bank account fraud cases between April 2020 – March 2021, at 4,224
Greater Manchester Police had the next highest amount of incidences at 1,332 and those who fell prey to the crime in Greater Manchester incurred a collective financial loss of £14.3 million
For many of us, online banking and credit/debit cards are an essential part of our everyday lives as they allow us to pay for a multitude of necessities such as food and utility bills. Despite this, they are vulnerable to opportunistic criminals who may defraud an online bank account or use a payment card/cheque that is stolen/forged/cloned by them.
Interested in financial security, MoneyTransfers.com analysed the latest data from the National Fraud Intelligence Bureau on 44 police forces/constabularies to establish which areas of the UK have experienced the most cheque, plastic card* and online bank account fraud causes from April 2020 to March 2021 (i.e. the financial year of 2020-21).
Cheque, Plastic Card and Online Bank Account Fraud Cases in 2020-21: Overall Findings
MoneyTransfers.com found that there were 25,717 cases of cheque, plastic card and online bank account fraud recorded by 44 police forces between April 2020 to March 2021. During this period, July 2020 (2,349 cases) was the worst month, followed by November 2020 (2,341). Whilst April 2020 saw the least number of cases at 1,851.
Additionally, from the 25,717 cases, the collective financial loss that victims suffered was an astronomical £161,221,800 – that equates to a financial loss of £6,269 per case!
Cheque, Plastic Card and Online Bank Account Fraud Cases in 2020-21: Breakdown by Police Force
Metropolitan Police had the highest number of cheque, plastic card and online bank account fraud cases from April 2020 to March 2021, at a shocking 4,224 reports, the equivalent of 12 incidents per day in the capital. From the 4,224 cases, the accumulative financial loss victims incurred was a colossal £32.3 million.
In second position is Greater Manchester Police with 1,332 incidences of cheque, plastic card and online bank account fraud between April 2020 – March 2021. Victims who fell prey to the crime in Greater Manchester experienced an overall monetary downfall of £14.3 million.
West Midlands Police are in third place as they received 1,265 reported cases of cheque, plastic card and online bank account fraud from April 2020 to March 2021 and from those who were targeted, the financial loss equated to £10.3 million; that is comparable to a personal loss of £8,142 for each individual case.
Thames Valley Police (971), Kent Police (896) and West Yorkshire Police (873) are among the other police forces which recorded over 800 cases of cheque, plastic card and online bank account fraud from April 2020 to March 2021, respectively ranking in fourth, fifth and sixth place.
On the other end in 44th position is Cleveland Police who had only 124 cases of cheque, plastic card, and online bank account fraud.
Slightly above Cleveland Police in 43rd spot is Dyfed-Powys Police, with the Welsh police force reporting 146 occurrences of cheque, plastic card, and online bank account fraud. Despite having a low sum of incidents, the amassed financial loss the 146 victims experienced was still a hefty £558,100k.
MoneyTransfers.com’s top four tips on how individuals can safeguard themselves from cheque, plastic card, and online bank account fraud:
1.) Stay Vigilant
Even though it may feel taxing, it is a good idea to keep a close eye on your monthly bank statement(s) to make sure there is no unusual activity and if there is, report it immediately to your respective bank(s). Likewise, opt to shred any financial documents you intend not to keep.
2.) Avoid Public Wi-Fi Hotspots
Do not use public Wi-Fi hotspots such as those in coffee shops and libraries to access online banking or carry out financial transactions as you cannot be certain how your personal information is being tracked and logged by their respective networks.
3.) Take Online Banking Precautions
Only access online banking via your bank providers official website and not by means such as clicking on a link provided in an email. Likewise, when it comes to mobile banking, only use your bank providers official app and keep the app updated for the latest and strongest security protection.
4.) Have Strong Credentials
Make the password for your online banking as sophisticated as possible – this includes using a combination of numbers, special characters, uppercase and lowercase letters. When it comes to the pin for your bank card, don’t make it very obvious such as the current year (e.g. 2021) or a combination of credentials from your date of birth (e.g. dd/mm, mm/yr etc).
By Tim Wright, Managing Director of Invar Systems
Chancellor Rishi Sunak’s Budget announcement of a capital allowance ‘super-deduction’ could be a game-changer for many warehouse owners and operators.
The super-deduction, which will apply for two years, allows firms to claim 130% of their expenditure on approved plant and machinery against their tax liability. There is no list of qualifying expenditure, but just about any equipment that one might install in a warehouse or distribution centre appears to be covered and, importantly, ancillary expenditure such as building alterations and electrical system upgrades to allow equipment installation are specifically included.
The Chancellor’s aim, beyond kick-starting the post-Covid recovery, is to address the UK’s chronic underperformance in productivity growth, which was less than stellar even before the 2008/9 financial crisis (2.3% per annum), and since then has essentially flatlined at 0.4% per annum. Discussing the validity and meaning of productivity data notoriously starts heated discussions amongst economists but in the warehousing sector the issues are very real and quantifiable.
The gorilla in the room is of course the inexorable rise of e-commerce, currently representing 30% or more of trade in many retail sectors, and with similar expectations for on-demand fulfilment of orders increasingly seen in business and industrial purchasing. Clearly, fulfilling two dozen orders for individual items is immensely more laborious than serving the same volume by shipping whole cases or pallets – by a factor of 15 according to one US study – inevitably driving down productivity per hour worked.
E-commerce has also driven up product variety, and, critically, the volume of returns to be handled. Yet this comes at a time when securing and deploying warehouse staff is becoming increasingly problematic: many businesses have been heavily dependent upon European labour, which is unlikely to be earning enough to qualify to work in the UK post-Brexit, while creating Covid-safe working in labour-intensive areas is a major challenge. Along with rises in the minimum wage, this is pushing labour rates up.
In addition, increasing capacity by adding more space is not an easy option – e-commerce operators, and businesses hedging against supply chain disruption are snapping up all the available space in what is generally agreed to be an ‘under-warehoused’ country.
These challenges, although increasing, are not new and nor is the obvious solution – automation. But apart from the ‘marquee brands’ such as Amazon and Ocado, who have been able to invest large sums in green-field developments, the warehousing sector has been slow to adopt automation, and where it has, the tendency has been to create unintegrated ‘islands of automation’ at particular pain points.
However, for real productivity improvement a warehouse or fulfilment centre needs to address all its many interdependent activities simultaneously: KPIs in receiving, in put-away, in picking, in packing, labelling and dispatch, as well as, in health and safety.
Importantly, this means a complete rethink of how the warehouse operates. A particular focus will be a move towards ‘goods-to-person’ operations, rather than having people spending most of their time walking unproductively between locations.
It’s easy to understand why many businesses have been reluctant to commit to change. Until quite recently, warehouse automation was ‘hard engineering’ – it involved not only major investment all in one go, but installation caused disruption, even complete shutdown, and was considered inflexible. Any change in requirements could only be accommodated by further significant investment and upheaval.
Happily, these constraints no longer apply. The development of autonomous mobile robots (AMRs) in particular has been a game changer, as has been the creation of easily reconfigurable sortation systems, re-locatable or even fully mobile pick faces, smart automated packing stations, and a raft of supporting technologies such as pick-to-light, along with Warehouse Management Systems that are becoming ever more capable, yet easier to adapt and use.
Such solutions are scalable and can be introduced flexibly, as funds allow. What’s more, they can be readily reconfigured to integrate with subsequent investments, largely off-line through the software, rather than by disruptive re-engineering that requires shutdown. They are also genuinely scalable – in many cases, simply adding more AMRs to the system can accommodate future growth or extension.
Rishi Sunak’s ‘super-deduction’ capital allowance offers the logistics sector a golden opportunity to invest in performance enhancing automation, giving fulfilment operations the boost to productivity needed to cope with the surge in ecommerce orders. It’s an opportunity not to be missed.
How to start your investment journey and increase your income
Looking to save money for a down payment on your first house? Not sure how to invest that new inheritance? Or perhaps living through a global pandemic has inspired you to start an emergency fund?
There is never a “perfect time” to begin investing. While diversifying your assets may be the last thing on your mind this year, the good thing is that all you have to do is start. Let’s explore some ideas that will inspire you to begin your investment journey, no matter how much money you have in the bank.
Open A High-Interest Savings Account
If you have extra cash you are not using for your immediate expenses or that stimulus check is starting to burn a hole in your pocket, you may consider opening a high-yield savings account. With a high-yield savings account, you can start investing with any amount and still have the option to access the cash quickly in the event of an emergency.
There are many banks that offer options for high-yield savings accounts online that still allow access to cash if needed. Opening a savings account is a risk-free way to begin your investment journey, and there’s no better time than now to get started, no matter your age. Thanks to compound interest, your money will grow much faster than if it were sitting in your checking account, and you’ll be less tempted to spend it!
Invest In Real Estate
If you’re looking to diversify your assets, investing in real estate is a low-risk and lucrative alternative to investing in the stock market. When you invest in real estate, you are purchasing a house, condo, or apartment with the intent to find tenants and collect the rent as a profit each month.
Many investors prefer real estate as it provides a tangible, physical asset that can be accounted for and controlled. Real estate also has the potential to appreciate over time as your property’s value goes up, allowing for an additional profit upon eventual sale. If you are considering flipping a house to sell for a profit or investing in a rental property to diversify your assets, consider getting an investment property loan to get started. Just be sure that if you’re investing in a property to become a vacation rental property, you also invest in a luxurious interior to increase your return even more!
While this seems like a no-brainer investment option, there are risks involved with real estate as well. This is less of a casual investment, as you’ll need to do quite a bit of research to get started, and rental properties cannot be quickly liquidated if you need extra cash. You also need to consider additional costs such as hiring a contractor for repairs or a property manager to handle the upkeep of your building, not to mention the potential headache of dealing with renters. Despite all this, the stream of passive income and the advantage of owning a tangible asset that can only appreciate over time, make a real estate investment well worth the risk.
Invest In The Stock Market
Many would recommend you invest your hard-earned money in stocks, and experts predict the stock market has the ability to give you the highest potential return over time. When you buy stocks, you are essentially buying a tiny piece of a given company, and the stock market gives an average of 10% annual return on investments according to the S&P 500.
A benefit to investing in stocks is that you can choose to get as involved as you want or stay hands-off in your investment strategy. If you are interested in the stock market and have the confidence to make your own judgments, it can become a fun pastime choosing where to invest your money. If you aren’t confident yet in your knowledge of the stock market, it’s easy to get started with a beginner-friendly app like Fidelity or SoFi.
The downside in this investment option is that there is some risk involved; the value of stocks can decline over time, and making an unlucky investment can actually cost you, which is the opposite of what we want! If you like the excitement of a little risk or prefer a hands-on investment approach, the ebb and flow of investing in the stock market may be for you.
There are so many options when it comes to investing your money, and the first step is knowing what type of investment is right for you. Start exploring one of these ideas to increase your income and begin your investment journey today!
Gregory Perdon is co-Chief Investment Officer at Private and commercial Banking, Arbuthnot Latham
The world’s central banks (US Federal Reserve, Bank of England, Bank of Japan and the European Central Bank) play a crucial role in the global economy. Broadly speaking, they serve as both policy maker and lender of last resort and their objective is to help keep their respective economies in balance.
Central banks monitor carefully the economy and the financial system and pay particular attention to the speed and temperament of growth. What do they want to see? Monetary officials like when the temperature of inflation and the economy is not too cold nor not too hot, think of it like goldilocks, namely ‘just right’. But when growth begins to overheat, that’s often when they jump into action to help cool things down. Equally when crisis hits, central bankers tend to be the first we call upon to help put out any financial fires.
How central banks manage the economy?
Well, they don’t really manage the economy; businesses and consumers do that through their buying and selling; banks do so via their lending decisions – but monetary officials still maintain a tremendous amount of influence over the economy. One way they exert control is by setting interest rates. For example, when central banks lower borrowing costs, businesses and individuals tend to ‘feel richer’ and can divert capital they would have allocated to servicing debt into investments, hiring and spending (or at least in theory).
Central bankers can also allow lenders to increase their leverage levels, meaning banks can lend more money – which can free up the balance sheet to make more profit (assuming there is demand for lending).
Finally, through communicating (what central bankers call forward guidance), they can telegraph to the markets their intentions, enabling businesses, lenders and traders time to prepare and position.
Central banks and Quantitative Easing (QE)
What tools are left in the toolbox after interest rates have been cut to zero and capital ratios relaxed? Well when the conventional is exhausted, they go unconventional – and that’s exactly what the Fed did after the global financial crisis in 2008 – they took it to the next level via large scale bond buying programmes, otherwise known as quantitative easing (QE).
That’s money printing, right? Wrong, that’s a myth. QE is but a maturity transformation exercise during which the central bank buy bonds (taking them out of circulation) and replace them with cash.
This floods the market with liquidity, pushing the price of bonds higher and the yield lower (a condition market participants refer to as financial suppression). This can drive investors into other higher yielding assets such as corporate bonds, listed stocks and property – thus creating demand for financial assets which in turn inflates their prices (or at least stabilises them). But it can also lead to the hoarding of cash.
And the Fed didn’t stop there, during the financial crisis and in their coronavirus pandemic response they also bought (and continue to buy) residential mortgage bonds. Are they interested in building a portfolio of properties and/or foreclosing? Of course not, they do this to ensure mortgage rates stay low – which creates a sense of confidence and encourages home ownership by making housing more ‘affordable’. And it has worked, look no further than the housing market data from sales to starts to prices to sentiment, it’s been a healthy market.
If central banks aren’t printing money, who is?
It’s the commercial/private banks (and shadow lenders) who perform the alchemy of money creation, not government. Every time a bank issues a new loan, one must think about it like a leveraged deposit. When one bank issues a loan, it becomes the deposit of another financial institution and it’s this multiplier which in essence creates new money. And of course, they also control the destruction of money – when loans are retired and credit contracts.
But it’s not so simple, there needs to be lending opportunities in the markets and confidence in the system in order for banks to have the appetite to lend and the pricing needs to be perceived by the borrowers as attractive in order for businesses to accept the terms.
The role of governments
Coming back to crisis fighting, monetary policies can only take us so far but if we want to go the full distance, we need fiscal support. Fiscal policy is the domain of governments, elected politicians, those individuals and committees who control taxation and spending.
Government bodies also set regulations and employment laws which can have a significant impact on the daily decisions made by businesses around the country. For example, if a government wants to orchestrate a short-term boom, they can deregulate and slash taxes (but pay the price of potential environmental damage, social unrest and/or higher government debt later).
But what happens when central banks run out of ammo, governments become desperate to foster growth, banks can’t lend and/or businesses don’t want to borrow?
Can Helicopter Money save the economy?
If conditions get bad enough, central banks and governments can throw out the rule book, circumvent the private sector, take to helicopters and go ‘all-in’. We have all heard about helicopter money, but what is it? Heli-money is fundamentally different to QE in that there is no exchange of assets. It is merely a one-way forgivable transfer (unlike QE which is a two-way exchange [but not forgiven]). In a stylised example, the government issues bonds which the central banks buy and then cancel, in turn allowing the government to issue cheques that could then be deposited into bank accounts for citizens to spend.
The attraction of implementing Heli-money is high, because it can, in theory, be used by politicians to potentially ‘address’ growing inequality. Helicopter money can appear to help a broader base of family income statements in a very ‘democratic’ fashion whereas QE has appeared to only help those having a big balance sheet. BUT it’s only optical.
Helicopter money isn’t the answer to our financial woes
The reason why QE is not a free lunch is because the money ends up back in the form of reserves, and central banks (such as the Fed) end up paying interest on reserves and excess reserves (to preserve the floor in rates), so it’s not really free.
Secondly, once the bonds are paid for and then ‘written-off’, the central bank may have its equity wiped out. Don’t forget a central bank has a balance sheet just like any other financial institution.
Finally, it may just not be legal nor is it clear who decides the size of the ‘one-off offering’ thereby putting the independence of the monetary authority in question. In order to promote financial stability and a well-functioning economy, we need to ensure central banks remain strong, solvent and independent.
Alternative investment assets like collectibles, art, cryptocurrency and loans are attracting an increasing number of retail investors by offering low buy-in, high returns and efficient diversification options
Every few years the line between traditional and alternative investment opinions is re-drawn, as many alternative investment options become more and more mainstream. Everything outside the traditional investment options that are typically accessed through traditional financial institutions – falls into the category of alternative investments. They do not include, what is now considered traditional investment options: ETFs, gold, bonds, pension funds, and others.
Alternatives category may include both physical and virtual assets, spanning real estate, art, fine wines and aged alcohol, rare items, cryptocurrency, loans, private company debt or ownership, and collectibles. There is no limit to collectible investments, as value can be found in designer sneakers, baseball cards, or even Barbie dolls.
Alternative investments can create both long-term appreciation and immediate income streams. One of the most active investor groups in alternative investing is retail investors – in other words individual investors, who want to take an active role in propelling their own financial success. One of the most active groups, drawn to alternative investments is a millennial cohort, who exert skepticism about the power of pensions to really secure their retirement, as well as a propensity to learn to operate an alternative portfolio. Technology now allows to ensure sufficient diversification with only a few clicks, and to branch out into immediate passive income or short-term high-return opportunities.
Five most popular alternative asset classes
1. Real estate. Part of the real estate investment market can be considered a traditional asset class – after all, even banks own real estate and hold on to it as a long term investment strategy. It’s an all-time classic to store value and a potential tool to expand earnings during positive market cycles. The biggest disadvantage of real estate are the big upfront costs and relatively low liquidity, if ownership is outright. That said, the modern – alternative investment options have become available in the real estate market, including real estate investment trust (REIT) and partial or fractional ownership ventures. Retail investors can now invest in various real estate projects by owning a part of its development and then receiving interest once it is developed.
2. Art, valuables, and collectibles. Once again, just like property ownership, some collectibles like fine wine or paintings are quite traditional – accessible to exclusive investor circles, with very high-buy in cost. The alternatives that are accessible to a wider audience, like baseball cards, or designer sneakers are easily researched on online marketplaces, like eBay. Some items can be owned outright in physical form, requiring some care and protection. But it is also possible to fractionally own any of the collectibles, including in-game items and virtual goods with residual value. This asset class has unpredictable returns with relatively difficult average appreciation, but can outperform other asset classes as an insurance. Companies like Masterworks and Otis are allowing retail investors to purchase shares in fine art pieces or unique collectibles.
3. Crypto-assets. A hot and highly volatile asset class, which allows for both passive buy-and-hold strategies, and for trading. The chief advantage of cryptocurrencies is the relatively easy entry, with the potential to operate and hold the assets in a personally protected wallet, instead of relying on brokers or other third parties. Challenger banks, like Revolut, or payment platforms like Paypal have integrated digital asset trading on their platforms – making it even more accessible. With recent cryptocurrency popularity, a new alternative investment asset class became popular – NFTs (Non-fungible tokens) – which are centered around collectibles, such as digital artwork, sports cards, and rarities. One trending platform would be NBA Top Shot, a place to collect non-fungible tokenized NBA moments in a digital card form.
4. Loans. Interest-bearing investments in packaged loans can bring transparent, predictable returns that outperform traditional investments. While investing in loans gives short-term returns, loans should be viewed as long-term investments. This asset class has a low entry point, while some platforms, like Mintos also sort potential investment in loans with a risk tolerance profile. It is important to diversify investment in this asset class in order to achieve stable income over time. Investing in loans is also accessible to multiple economic areas.
5. Private company investments. Private equity and company loans are asset classes sometimes reserved for accredited investors. Because of the risky nature of private companies, some of the investments are only available to accredited buyers. Private equity is also off-limits to most retail buyers, due to its riskier nature and the higher barrier to entry. Loan investments can sometimes circumvent this limitation, by offering business loans for partial ownership and relatively low sums. More accessible option, albeit not very liquid, would again be fractional investment, or crowdfunding, which is available through platforms like Crowdcube.
Alternatives are bound to grow. Research by Prequin shows robust growth of alternative investments, to as high as $14 trillion in 2023. The Prequin report covers private wealth managers, but alternative investments are also open to retail owners, due to their variety and enhanced technological access.
The growth potential of the alternative investor sector also means adequate liquidity and price discovery will happen as more buyers join in. Fees are one of the hurdles that diminish the real returns of investment, but the more apps and investment hubs pop up, the more competition to offer low fees, increase service quality benchmark and attract investors.
We are used to reading about U.S. businesses expanding to Europe. We often overlook the growing trend of E.U. based businesses expanding to the U.S. There are many good reasons a U.K. company, in particular, would be interested in expanding to a location across the pond. Those reasons include, but are not limited to the following:
Virtually no language barrier
Similarity between currencies
Relatively stable and predictable political system
Robust economy relative to other places
Although the U.S. is a mess right now relative to more stable periods from the past, it is still a viable capitalistic republic with a functional economy ripe for a strong rebound. Coronavirus is not just a U.S. phenomenon. We are in a pandemic. Everyone is having to deal with it at some level. There is also political unrest in much of the world. The U.K. is still unpacking what it means to no longer be a part of the E.U. 2020 was a reality for everyone. The real emphasis is on how we recover worldwide. U.K. businesses and U.S. consumers can benefit each other in the recovery process. When looking for a U.S. expansion city, here are a few things to consider:
A Livable City
Before looking too closely at any single metric, what you need is a livability assessment. Is the city the kind of place where your potential customers would want to live? If expanding to New Jersey, you wouldn’t just look at the housing market in Jersey City. You would assess the overall reality of living in Jersey City.
Livability scores are based on a variety of factors. Two of the most important factors to consider are crime and housing prices. Boston, NYC, and San Francisco are not the most livable solely on the basis of stratospheric housing costs. But a place like Jersey City would still be in the running because of the high safety index and reasonable cost of living. Obviously, there is more to consider. When you are opening in a new city, you have to consider more than your market. You also have to consider your workforce. Your employees might not be able to afford to live in a city where the cost of living is too high. When you move your business to a city, you become a part of that city and that community. Pick a city where you wouldn’t mind calling home.
A Stable Economy
One of the markers of a stable economy is a survey of foreclosures in the area. It is clearly a bad sign when the foreclosure rate is moving in the wrong direction. You can also look at the price range of properties in foreclosure. If the upper end of the housing market is suffering high foreclosure rates, that is a much bigger problem than foreclosure at the lower end of the range. That is where most foreclosures would be anyway.
You also need to look at economic markers over time. A place where things are great one year but horrible the next will not be a good location on which to base the economic future of your company. It is better to expand to a place that has slightly less money, but is more stable and predictable.
What is the average commute time for workers in that city? Long commute times indicate poor transportation and housing options. Commute times would be shorter if people could live closer to work. If people are commuting from two cities away, that says something about livability.
It also has indications for retail success. Ease of moving about in a city affects who can shop at your stores. If it is hard to get to, it will be hard to attract customers. Look for a place where there is good public transportation and walkable neighborhoods.
There are many good reasons to consider expanding your business to the U.S. Just be sure to pick a city that is highly livable, economically stable, and easily navigable.
There’s a common misconception that credit doesn’t matter until you’re applying for a mortgage, credit card, or personal loan. Truthfully, most people don’t even review their credit history until they need to borrow money or a line of credit. Although having a good financial record does apply in these circumstances, it’s just the tip of the iceberg. Ultimately, a consumer’s credit is used in many different areas of their lives.
Character, Risk Level, And Financial Responsibility
Creditors, lenders, retailers, and service providers use credit reports to assess potential customers. There are risks involved in loaning money, credit, products, or services. If consumers don’t repay their balances in a timely fashion, these establishments suffer a loss. As such, getting a general idea of a person’s creditworthiness helps businesses to make an informed decision.
Whether you know it or not, your credit score and history tell a lot about how you handle your finances. It showcases your level of character and financial responsibility, which dictates your risk level. If your credit is less than satisfactory, it can have a significant impact on your everyday life. Continue reading to learn more.
Renting An Apartment
A good credit report is indeed necessary to acquire a home loan. However, did you know that it can also affect your ability to rent an apartment? Though you’re not borrowing any money to secure a property lease, you are making a promise to pay your rent on time. Landlords rely on rental payments to maintain the mortgage, keep the property intact, and cover other expenses. If you don’t pay, this puts them in a bind. If your credit check shows that you don’t pay your bills on time, it could backfire. Some applicants are rejected and unable to find a suitable place to live. Others are required to pay a higher deposit as a means of security for landlords.
Water, electricity, and gas are some of the basic necessities of everyday life. However, you may not know that your credit history has a significant impact on your ability to get utility services in your home or apartment. Utility companies need to know that you’re going to pay for these services. So, they review your credit report for more information. If you have a low score, past due balances, and collection accounts, this sends up red flags. If you’re not turned down for services altogether, chances are you’ll be required to pay a sizable deposit to get started. The utility company holds the deposit in an account that’s used if you fall behind on the bill.
Loan And Credit Card Interest
Your credit score doesn’t just help determine if you get approved for a loan or credit card; it’s also a determining factor in how much you’ll pay in interest. The higher the interest rate, the more expensive it is for you to borrow money. Over the lifetime of the loan or credit card account, consumers can spend extra hundreds if not thousands of dollars in interest alone. How much more money you’ll pay, is determined by your creditworthiness. Someone with a credit score of 650 is going to pay more for a mortgage, student loan, or credit card than someone with a score of 750 or higher.
Getting Things In Order
As you can see, your credit impacts a lot more than you think. Whether you’re trying to rent an apartment or get utility services setup, your credit is evaluated to determine your character, risk level, and financial responsibility. Essentially, a person with poor credit will have a difficult time acquiring things they need. Even if they do, chances are they’re going to pay a lot more. That’s why consumers are encouraged to use financial management practices and resources like no credit check online loans to improve their credit.
Life is already challenging enough. Why make things harder if you don’t have to? Now that you have a clearer understanding of how your credit impacts everyday life, you can take steps to turn things around for the better.
The relevance of international money transfer companies is growing fast. It’s because slow and expensive bank wire transfers are a big problem for many people. Businesses need cheaper transfers for making and accepting payments. International investors need them as much as small business owners. Losing up to 3% on each transaction (bank transfer cost) can make their investments unviable. Most of all, migrant workers need these transfers as the cost of remittances matters a great deal for them and the global economy. There are also international travelers and other people who mostly use these services for convenience.
All in all, the demand in this market is high and it’s no surprise that dozens of money transfer providers sprung up all over the world. However, not all of them are equally good and trustworthy. As this industry is not well-regulated yet, it’s essential that you choose a provider with extreme care. The following International Money Transfer Top 10 list will help you find the best provider based on your needs. Bear in mind that while there are many great companies that offer affordable transfers, they also have specializations. Therefore, you should consider the type of transfers you need in order to choose the best company for you.
Top 10 International Money Transfer Companies to Fit Every Customer
Western Union is, possibly, the most well-known yet most disliked money transfer provider worldwide. No matter negativity surrounding this company, it deserves a place on any top list for international money transfer companies because no other company can reach this far. In fact, for many migrant workers Western Union is the only available option.
This is a money transfer provider focused on remittances and it has an unmatched network of offices worldwide. The company supports 145 different currencies and offers in-person cash pickups even in the most remote places. Literally, there are Western Union money transfers in areas where no other international money transfer companies operate and even banking is severely limited.
That said, Western Union transfers are very expensive. They are the most expensive in the industry. The level of customer service and overall customer support is also not very good. The company has thousands of negative reviews on platforms like Consumer Affairs and BBB Customer Complaints.
The exact cost of the transfer depends on the currency, destination, and transfer amount. The company itself is highly trustworthy and regulated by multiple authorities. Western Union has been in business since 1851. It remains one of the most reputed names in the industry despite high transfer costs.
MoneyGram is another reputed and remittances-oriented veteran in the money transfer industry. This company was founded in 1940 and it keeps growing and improving even through the current crisis. MoneyGram transfers are also quite expensive. However, it’s on the top 10 international money transfer companies list due to its wide global reach. The company offers cash pickups and supports 58 currencies for online transfers. Note that more currencies are supported if you make a physical transfer through a shop.
There is no minimum transfer amount, so MoneyGram is well-suited for small remittances. But transfer fees and currency exchange rates offered by the company are rather unfavorable. The cost of a transfer can reach 10% to some more remote destinations, like Ethiopia. Also, MoneyGram has multiple negative customer reviews.
It’s important to note that MoneyGram is a licensed and one of the most reliable international money transfer companies. It’s also regulated by multiple financial authorities, like the FCA. Therefore, for all that these transfers aren’t cheap, you can be sure they are 100% safe.
Xoom is another great money transfer provider for remittances. It allows you to send transfers, no matter how small, to 131 countries and supports 79 currencies. Xoom earned its place on the top 10 international money transfer companies list due to the fact that it offers cheaper remittances. It also has a very good mobile app and is generally a user-friendly service.
However, at the moment Xoom allows you to send money only from Canada and the USA. Within those countries it’s also a very popular service for small personal transfers. These transactions are very cheap and fast. International money transfers through Xoom will cost more as the transfer amount increases. That’s why it’s a good service for remittances but not the best choice for large investment or business transfers.
TransferWise is currently the biggest among the “new generation” of international money transfer companies. It’s valued at $5 billion, which means it’s grown by about $1,5 billion in the last year alone. This company offers the cheapest international small transfers you can find today. Due to its fixed currency exchange margin and the minimum transfer amount of $1 it’s perfect for remittances and other small personal transfers. However, note that TransferWise doesn’t offer discounts for high-volume transactions.
The company is innovative and growing fast, including its global coverage. It’s also transparent in its pricing and highly safe. It’s regulated by multiple financial authorities, including the FCA. It’s also one of the few licensed to work in the US.
The level of customer satisfaction for TransferWise is very high. The mobile app and online transfers are very user-friendly.
Notably, TransferWise offers some of the lowest foreign currency exchange rates for international money transfers. These rates are unmatched for small transfers. The only reason it’s not currently the leader of the top 10 international money transfer companies list is that TransferWise’s global reach is not yet as wide as Western Union. However, considering its rate of growth and popularity, this might change soon.
OFX is one of the most notable international money transfer companies today due to the high versatility of its services. This is an online-based company with 10 offices worldwide and 115 bank accounts. Due to this, OFX can offer cheap and fast international money transfers to both businesses and individuals.
The minimum transfer amount with OFX is $100 and the company offers rather low exchange rates and fees. This is why it’s well-suited for small transfers. But most importantly for businesses and investors, OFX has flexible margins. Therefore, the larger is your transfer, the cheaper it will be.
Moreover, the company has a corporate desk and offers very helpful services for businesses and investors. This includes hedging and dedicated currency guidance.
Customer satisfaction rate for OFX is high and the company is regulated by the FCA and other relevant authorities. All transfers are available at zero fees and the company is transparent and traded publicly. Its yearly turnover is around $20 billion. As online international transfer companies are, in essence, currency wholesalers, the large volume is what allows them to keep FX rates low.
One small issue that customers report with OFX is that waiting times for support can be long.
Payoneer is somewhat limited in its functionality and types of transfers you can make through it. However, it offers such a great balance of price and ease of use that it deserves a place among the top 10 international money transfer companies. It also must be noted that the company is constantly growing and improving. Just recently it announced a $3.3 billion deal with SPAC: Betsy and it’s going public. Already Payoneer offers very fair currency exchange rates and transfer fees. The new announcement shows that we can expect it to get even better soon.
Payoneer money transfers have a huge global reach and the comp-any is popular with online merchants, expats, travelers, etc. There are no good high-volume discounts. That’s why it’s not the best for large transfers. However, it’s an excellent solution for quick and cheap small-to-medium transfers. 5 million people are using Payoneer already and the majority of customer reviews are positive.
One of the best Payoneer features is that it allows freelancers to easily withdraw payments they accept from clients through a Mastercard. The solution is also a good choice for SMEs that need to accept payments from multiple countries.
AirWallex is one of the international money transfer companies targeting the eCommerce sector. This company offers secure and reasonably affordable transfers and is rather popular worldwide. Please note that one cannot use AirWallex as a private client to make small transfers. However, online merchants can benefit from this service greatly as it’s secure and regulated by many authorities, including FINTRAC, FCA, ASIC, and HK Customs and Excise Department. Exchange rates offered by the company are very good.
At the moment, AirWallex supports 50 currencies. It’s open for business clients from Europe, Singapore, Hong Kong, Australia, and China. There is no minimum transfer amount and fees are very low.
There aren’t many customer reviews of this company available online. However, those that exist are mostly positive. AirWallex was founded only in 2015. But it managed to build a solid reputation of reliability within its niche. It’s also known to have a very good app. The company is growing steadily and already has eight offices worldwide and over 300 employees. Its turnover has reached $3 billion a year and it currently plans expanding to the US market.
WorldFirst is one of the online money transfer industry veterans. Recently this company has undergone a major overhaul. It was purchased by Alibaba Group and with this huge influx of funding it managed to rise fast. Today WorldFirst offers the best FX margins in the entire industry. It’s one of the best solutions for making large transfers at a fixed margin. Due to its close association with Alibaba, the company also offers a wide range of useful services for eCommerce merchants.
All in all, WorldFirst is near the top 10 international money transfer companies because it’s nearly impossible to find a cheaper and more reliable solution for businesses and independent investors. It’s not the best option for small transactions because the minimum transfer size is $1000.
The company is transparent in its pricing and supports over 130 currencies. It has multiple offices worldwide and accepts clients from all over the world, except for the USA. Customers usually praise low rates as well as great service. WorldFirst is rather innovative and its apps are highly advanced but easy to use.
In fact, using WorldFirst international money transfers is so easy you can make a transaction in a few minutes. The registration process takes less than a minute. The company’s global reach is unmatched by any of its direct competitors (Currencies Direct, Moneycorp, TorFX).
Moneycorp is among those international money transfer companies that are rapidly growing and improving today. Just recently it announced joining Shortlist to provide simple and affordable payments for freelancers. This is a good reminder that despite being an industry veteran (founded in 1962) the company thrives on innovation. Its annual turnover is near $40 billion now and Moneycorp prides itself on working with high-wealth clients.
This is one of the top 10 international money transfer companies that are perfect for investors and businesses. The company offers lower rates for large transfers and many additional services, including guidance from currency experts. Note that Moneycorp has won numerous awards and has the highest D&B rating in the industry.
The minimum transfer is only $50, which makes it possible to use Moneycorp for small private transfers as well. However, the provider has the best rates saved for customers who make high-volume transactions. The company has offices in several European countries, the US, the UAE, Hong Kong, Brazil, and Australia. It’s regulated by multiple authorities, such as the FCA, ACPR, and FINCEN. It supports 120 currencies and over 90% of all customer reviews are positive.
Currencies Direct is another of international money transfer companies that work primarily with high-wealth clients. It offers many helpful services for investors and business owners. This includes offering expertise on global real estate investments.
The company has a $7.5 billion annual turnover and 22 offices in different countries. It offers some of the best exchange rates for high-volume transfers. It also offers a very efficient and friendly multi-lingual customer support service.
The minimum transfer with Currencies Direct is $100 and the company charges no transfer fees. It’s regulated by the FCA, SARB, FINTRAC, and FinCEN. It also has a Level 1 D&B rating and supports 39 currencies.
Bottom Line: International Money Transfer Companies Are Changing the World
As globalization is growing billions need to be transferred worldwide every year for business and personal purposes. Money transfer companies with their cheaper and more efficient transactions are going to become the new norm for international payments. This means that we can expect more competition in the industry, which will prompt even better offers.
One of the most fundamental concepts of generating wealth is knowing how to save money. When you master the art of stretching your earnings further, you have more resources to invest and save towards a more secure future. While shopping around for the best price, using coupons, and other common savings tactics are ideal, other strategies go overlooked, costing you hundreds of dollars each year. Continue reading to learn more.
Skip ATM Fees
When you need access to cash, the ATM is the fastest way to retrieve it. It saves you from standing in long lines at the bank and allows you to get money 24/7. Be that as it may, you incur a fee when you use ATMs outside of your bank’s network. The fee might only be $2-5, but when you calculate that over the number of times you use the ATM in a month, it adds up. Not to mention, most banks charge an additional fee for using out-of-network ATMs. You can save several dollars every year by merely using no-fee ATMs or making purchases using the debit card linked to your bank account.
Even the most financially organized person can overlook a bank transaction. You forget that your cell phone bill is on automatic withdrawal. The funds aren’t available in your checking account. The payment gets returned, and you’re left with a $25-$35 fee to cover. While setting reminders can reduce the chances of overdraft fees, there’s another solution – overdraft protection. This is an “insurance” policy offered by banks where transactions totaling more than your available balance are honored or paid using a linked savings account, saving you hundreds in fees each month.
Using coupons or taking advantage of sales when making a purchase are common ways to save money, but they’re not the only solutions. Most people tend to overlook rebate opportunities. Though not applied at the time of purchase, rebates can quickly add up. If you frequently shop online, applying for an Amazon rebate could save you hundreds of dollars on everyday purchases. Believe it or not, there are several cashback and rebate programs you can sign up for to save on everything from groceries to apparel.
As a consumer, you’ll always pay for the brand’s name and reputation, from your medications to your clothes. For example, a pair of athletic shoes from Payless shoe store will cost you less than a pair you purchase from Nike. Since Nike is the more popular brand, it will always be more expensive than a generic brand from your local retailer. However, if you dig deeper, you’ll learn that these shoes are made in the same factories using the same materials, ultimately providing you with the same quality. So, it’s safe to say that you would save yourself hundreds if not thousands of dollars by being open-minded about generic or lesser-known brands.
When it comes to wasting money, timeliness is a huge factor. When you don’t pay your bills in a timely manner, you incur late fees, penalties, and sometimes added interest. Depending on how frequently you practice this behavior, you could be watching hundreds of thousands of dollars go down the drain. You can remedy this problem by ensuring that you pay your bills on time. Set up automatic payment plans or set reminders to ensure that you have the available funds to cover the bill. If you’re having difficulty keeping up with the due dates, talking with service providers about making adjustments is recommended.
As the saying goes, “A penny saved is a penny earned.” On the surface, these habits may not seem like much. Incurring a $2 ATM or $35 overdraft fee, spending more on a popular brand, or missing the deadline for a utility or credit card bill seems minuscule, but if you were to add it up over the course of a month or year, chances are you’d be surprised. Keep more of your money in your pocket by developing better financial habits and taking advantage of the resources available to help you save more each day.
Women make up about 50% of the population while controlling only 30% of the wealth. This is the worldwide statistic that is set to dramatically change in the right direction over the course of the next decade. As bad as the numbers appear, they actually represent good news. This is a big improvement that is set to continue. Women’s growing wealth prompts the need for changes in the banking sector. That said, it is not all good news. MSN goes on to say:
“Although a third of the world’s wealth is under women’s control today, four in ten wealthy women are currently not involved in the management of their family finances compared to only one in ten men.”
Dramatic change is afoot. And that foot will be wearing Prada. More women are bursting through the glass ceiling, as well as the glass walls and glass doors. You want to be on the right side of history, as well as the right side of your growing female clientele. Here is hot to make sure they do business with you as opposed to your competition:
Speak Directly to Women
It is never the right thing to address someone indirectly. If you have a question for a woman, don’t ask her male partner or associate. Speak to her directly. Advertisers often make this mistake. Your marketing does not need to talk down to women. It needs to talk directly to women.
If your healthcare services include women’s health issues, you need to make sure you are speaking to that target audience. If you don’t know how to do that, bring in a healthcare public relations firm that can. If you want to target investment products to women, you are in luck. You have an audience that is rapidly growing. They already want to do more investing. You just have to craft your message so that you are making a direct appeal to the customers you want to attract.
One of the best ways to draw and not repel women investors is to put women in charge of the sales and marketing efforts. Men are used to talking to other men in ways that would be counterproductive when talking to women. The best way to speak directly to women is to let a woman do the speaking.
Go Where the Market is Ready
Gender egalitarianism is not alive and well in many parts of the world. Change is happening everywhere. But that change is much slower in some places as opposed to others. If you want to attract more women to your investment platforms, start in the places where more women are empowered to respond to your message.
Women investors in loans rose by 43% in Europe in 2020. Europe has a long history of empowered women. It is a good place to find women investors. The U.S. requires a bit more nuanced effort. Women control a great deal of wealth in the States. 20201 saw the swearing in of the first female vice president. It is overcoming a checkered past with regard to women’s rights. But the market for women investors is set to explode as millions of women become more empowered. Go where the market is ready to reap the greatest rewards.
Provide More Offerings Suitable for Women
One of the best things Apple did with Apple Watch was to make two sizes. They never marketed the smaller watch for women. But since women tend to have smaller wrists, it is a sensible option. It is a product useful for women without it being festooned with pink flowers.
When possible, design products to be unisex. When not possible, include an option suitable for the other 50% of the market. If you want women to invest in your company, make it a company that offers something for everyone.
Women are 50% of the population. It will not be long before they are at least 50% of the controlling influence of wealth. Their investing power is here, and growing. You can partner with this new generation of investors by appealing directly to them, being there when the market is ready, and giving them a reason to invest in your company by having offerings suitable for everyone.
As the largest commercial bank in Afghanistan, it may have also proven difficult for Azizi Bank to simultaneously ascertain the title of best commercial bank. Yet, that is exactly what this outstanding financial institution has done, and has rightfully been awarded that title of 2020’s Best Commercial Bank, Afghanistan in this quarter’s issue of Wealth & Finance International Magazine. Join us as we find out more about what the bank has to offer, what makes it so unique, and why it is deserving of this international recognition.
Azizi Bank is the largest commercial bank in Afghanistan, and it has been maintaining that position since its inception in 2006. Being the country’s largest banking group, there is a Pan-Afghanistan presence that stretches across more than thirty provinces and a headquartered office in Ankara Square in Kabul. The work of Azizi Bank started with the professional and entrepreneurial commitment of its founder, Mr Mirwais Azizi of the Azizi Hotak Group & Family and is presently under the leadership of a young and dynamic Chief Executive Officer Dr. Prof. Mohammad Salem Omaid. What makes Azizi Bank unique is the fact that its professional customer service and the sense of belonging that every client and customer has. Each and every employee carries with them this sense of welcoming and belonging, and strives to ensure that all interactions with customers are done so in a way that makes them feel like they are a part of the family feel that the bank presents. In addition to this, there is a wealth of digital innovation and product excellence on show here also. Azizi Bank has invested significant time, money, and manpower into ensuring that every product is designed to suit a client requirement, and this commitment distinguishes the bank to be the most distinctive and superior bank across Afghanistan.
For almost fifteen years, Azizi Bank has been managed under the governance of a very competent and effective Board of Supervisors, who brings a vast repertoire of knowledge and experience in their various fields, and are internationally acclaimed in their respective work. At the management level, there is a brilliant mix of youth and experience, which leads to both innovation and stability across the board. Today, Azizi Bank has more than fifteen hundred employees, and with a fifteen percent female work force, it is playing a quietly effective role in women’s emancipation and empowerment across Afghanistan. Aside from Azizi Bank, there are another eleven banks in the country, including two banks from Pakistan. The total banking deposit is approximately USD 3.2 billion, with all assets totalling approximately five billion USD.
As a country, Afghanistan has witnessed strong economic growth and developing in banking systems when compared to the previous two decades. Growth in the financial sector, specifically within the banking sector itself, was considerable. Thus, national income increased, and there was massive promotion in many of the other macroeconomic factors, including exchange rates, inflation, balance of payments, government revenues, investment, international trade, industrial production, and employment levels. Azizi Bank has always played a pivotal role towards each and every reform of the Central Bank of the country, and has marked itself out as a pioneering force of financial inclusion programs and branchless banking. Recently, in a bid to further bolster these initiatives, Azizi Bank has signed an MOU with the Afghan Postal Service to provide branchless banking through their more than four hundred and fifty post offices covering the country and some of its most remote locations.
The team at Azizi Bank is also made up of the bankers of choice for some of the major UN agencies, such as UNICEF, WHO, and WFP, who are present and working in Afghanistan. Azizi Bank is all about enabling these agencies to make their payments and disbursements to the far and rural areas of the country. Furthermore, this outstanding bank is the only bank in the country to have a mobile wallet solution, called AZIPAY, for all types of payments, including paying utility bills, education fees, groceries, and airline tickets. There is even excellence with the more comprehensive financial inclusion initiatives, with Azizi Bank having converted one of its subsidiary banks into a full-fledged Islamic Bank in the country. This is the first and only full services Islamic Bank in the country to date. With Afghanistan having more than 99% of its population being Muslims, such a change will definitely pave the way for more people coming into the banking fraternity, thereby improving the financial inclusion ratio of the country.
Since its inception, there have been several core founding values that have been the focal point of the bank and its championing of sustained financial growth in Afghanistan. Azizi Bank has always believed in innovations, and has never stepped back away from investing in innovative technological initiatives. The bank also has the best in class management board and senior management in the country, comprising of experienced bankers with an averages of more than two decades’ experience from the United States, India, Pakistan, Africa, and Europe. Azizi Bank has also always believed in the learning and development initiatives towards capacity building, and have built a comprehensive policy on the same. These structural reforms have brought in change within the bank to a large extent, and have always made it unique compared with other peer banks working in the country.
As has already been conveyed above, Azizi Bank prides itself on being a technology-driven back that makes full use of some of the latest technological innovations from across the world. With society moving towards more digitalization than ever before, the customer’s perceptions have changed on what they can access and want from their banking services. Afghanistan in particular is a country where more than half of population has a smart phone, and there is greater opportunity for banks to invest more into technology than ever before. Azizi Bank has foreseen this opportunity prior to its competitors and peers, and is now in a position where it can adapt to the ever-changing present and future. One of the ways in which the bank has taken the initiative and seized the day regarding innovative technology is by being a prominent voice on several developmental projects aimed at meeting financial customers’ expectation all across Afghanistan.
Providing technologically-savvy services banking services is the goal for many institutions, especially now that the world is moving towards an increasingly digital society. With the gradual transition towards advanced digital banking, there comes a greater need for traditional banks to keep up with modern systems and innovative ways of doing things. Azizi Bank has also initiated different tailor-made products for both deposits and advances meant for different levels of society, including accounts for children, students, women, senior citizens, retail businesses, small and medium enterprises, and entrepreneurs to name just a few. Despite the wealth of innovation on show at Azizi Bank, there have also been challenges presented by the COVID-19 pandemic.
The arrival of the pandemic meant that Afghanistan, which is a predominantly import-driven economy, witnessed a surge in the cost of commodities, thereby affected the normalcy of life and common people. Industries of all sectors and types were affected, and so was the fate of the financial sector as well. In essence, the economy and economic growth of the whole country took a massive hit. There has been some impact on Azizi Bank amidst the pandemic, which has sustained itself almost a year and still counting. With the initial lockdown in place for the first few months of 2020, business was seriously hampered, though there was no significant decline for deposits. Where Azizi Bank really was affected was new business. Overall trade finance and the recovery of loans has been another key area affected by the pandemic, although the Central Bank of Afghanistan did come out with a detailed recovery plan to aid the situation and get the country back on its feet as soon as possible.
Pandemic or otherwise, Azizi Bank did have a strategic business plan in place, as well as a disaster recovery plan considering the geography of operation. The bank is always prepared and ready to face any sort of adverse situation, including this current crisis. As a bank, Azizi Bank also took steps and made plans even before the government made any sort of official announcement in terms of business contingency, staff contingency, and operational contingency initiatives and operations. Azizi Bank took immediate steps to ensure total safety and stability for itself and its staff, even before the lockdown was announced. All mediums of communication were used to reach staff and the public, and the bank stopped all meetings, conferences, customer gatherings, and training. In the immediate aftermath of the announcements made by many world governments, including Afghanistan, Azizi Bank formed a committee to analyse and make plans to curve this emergency situation.
Safety precautions including complete sanitization, thermal meters, face masks and gloves, and more were initiated at all the branches for both customers and staff alike, whilst plans were also made to rotate the staff so as to avoid close proximities. Expatriate staff members were also encouraged to work from home where possible, thereby minimising the risk of transmission and infection. Armed with these various safety measures and initiatives, life will eventually return to normality for Azizi Bank. However, with the ongoing political uncertainty still prevailing and international donors reluctant to pump in additional funds, this latest COVID-19 scare will definitely affect the overall growth of the Afghanistan economy. Stability will take time, but Azizi Bank will see it through.
Outside of the financial work carried out by Azizi Bank, there is also a deep-rooted and ever-present commitment to charity work and community-based initiatives. Azizi Bank is the only banking institution in Afghanistan that has a sustained CSR Policy and Responsible Banking. For the team, they consider CSR as one of the most important aspects of growth, and the institution also supports the important cause of the government in terms of sustainability initiatives. Supporting society as a whole is equally important, and there are a great many ways in which Azizi Bank does this too. The bank’s involvement on CSR initiatives has made a great impact across society and for the brand of Azizi Bank.
In working on these initiatives, the bank has been quite active for the last five years on various initiatives across the country and has therefore received considerable amounts of appreciation from the government and wider society. From a community service perspective, Azizi Bank has supported multiple hospitals and homes in terms of providing medicines, essential utilities, infrastructure development, food materials, stationeries, and organising blood donation camps. The team at Azizi Bank have also focused their time on various environmentally sustainable and green initiatives. Working in this area, the bank has endeavoured to stand out by starting a green initiative that involved planting thousands of trees across Afghanistan. Alongside this, there are also campaigns on saving water and pollution control, two of the most prominent environmental sustainability issues faced by many all over the world.
Azizi Bank has recently partnered with the National Environmental Protection Agency (NEPA) of the government of Afghanistan, and this partnership will surely lead to collaborative work on various other initiatives aimed at increasing environmental sustainability. Finally, the last core area that Azizi Bank works in outside of its own four walls is that of community support. Azizi Bank has always sought to provide free training sessions to local college graduates and management students alike, with topics ranging from banking and finance, to the inner workings of an economy, and much more. Whilst this is a community support initiative aimed at giving finance students the best possible knowledge around, it also doubles as the perfect recruitment opportunity. Qualifications is one thing, but Azizi Bank also encourages fresh graduates to push their way to the forefront of the industry and make an impression with their dedication and commitment to understanding finance.
Ultimately, Azizi Bank is far more than just an exceptional institute of finance. Rather, it everything a country could possibly want from a bank that seeks to be innovative, be a unifying force that invests in the future, and delivers outstanding financial services to everyone in the country. Azizi Bank is constantly redefining its own success, and is fully deserving of this latest success from Wealth & Finance International Magazine as being recognized as 2020’s Best Commercial Bank in Afghanistan.
Few Words about the bank’s CEO – Dr. Prof. Mohammad Salem Omaid
A result oriented proficient starting his professional journey with Azizi Bank in 2006 as a Finance Officer and successfully ascending the steps to become the President and CEO. In his career span of more than 14 years, Dr. Omaid handled diverse roles having rich & extensive experience in Finance & Accounting, Corporate Accounts Trade Finance, Corporate Credit Financing, Operational Banking, Investment Banking and Retail Banking. Initiated several measures, Bank Products, Technological products aimed at promoting the bank and its objectives. Dr. Omaid’s contribution towards refining the banking structure in the country earned him appreciations & accolades not only from the Govt. & Public body within the country but also from the international agencies worldwide.
Dr. Omaid’s experience and knowledge for a sustainable growth earned him several international accreditations and he is also the only afghan conferred with the honorary professorship of Academics, Oxford. He is also the Member of the Europe Business Assembly, UK, The World Confederation of Businesses, USA and an active member of BAFT, USA. He is also associated with the ICC, Banking Commission, Afghanistan and is the Chairman of the Afghanistan Banks Association.
He is also the recipient of the Asian Banker “Young Banker” Award in 2017, being the only one from the Central Asian Region till date. In 2020, Dr. Omaid is conferred with the Professional Doctorate by the European International University, Paris for his endurance, commitment and leadership in shaping a bank in Afghanistan as per international standards.
A visionary leader and a highly respected citizen in the Islamic Republic of Afghanistan.
For more information, please contact Samrat Dutta at www.azizibank.af
People say that money makes the world go round, but the truth is that good credit provides you with the most opportunities. Building credit can be a challenge if you don’t have any previous history. However, it’s an essential part of life and can simplify many situations.
Keep reading to learn three methods of building credit the right way.
1. Open a Credit Card
Most people know that opening a credit card will influence their overall score and history. However, they don’t know how to maximize it for their own benefit. Here are three factors to consider.
Choosing a Secure Credit Card
There are many credit cards available on the market, but it’s essential to know the difference between secured and unsecured cards. Simply put, secured cards require an upfront deposit that minimizes the risk for the issuer. With a secured card, you can build your credit without risking going into debt. They’re typically much easier to obtain an unsecured card — making them a good option for anyone with limited credit history. The only downside is that your deposit creates a cap for your spending limit.
Getting a Co-Signer
If you’d like to have an unsecured card and don’t have a credit history, you can consider getting a co-signer. This person would agree to take on your debt if you default on paying. If they have good credit, then you’re more likely to get approved. The downside is that most major credit card companies do not allow for co-signers. You’ll need to research your options if you’d like to take this approach.
Making Regular Payments
To build good credit, you’ll want to make regular payments regardless of the card type. It’s always best to pay off the debt in full. Keep in mind that late payments can cause additional interest and penalty charges to accrue. Additionally, your payment timeliness influences your score.
2. Apply for a Loan
When the situation calls for it, loans are extremely beneficial. They typically have lower interest rates than credit cards and can allow an individual to purchase something outside of their savings range. Many loans are also known as good debt because they help a person pursue investments that improve their life. They also influence credit and can help build a long-standing history.
From this standpoint, it would be worthwhile to make a significant purchase or investment using a loan. These purchases encourage natural credit building. Keep in mind that you should only borrow as much money as your feel comfortable paying back. Defaulting on a loan will damage your score, so it’s worth setting up an automatic repayment program.
3. Become an Authorized User
One of the easiest ways to build safe credit is by becoming an authorized user on another’s account. When added, you gain access to their available funds and earn a credit history without liability. Unlike co-signing, if the other person stops paying, you are not responsible for covering their fees. However, it’s beneficial to choose someone who pays their bills on time and is financially stable, so their account does not negatively affect your score.
You can use these three ways to grow your credit and check the results using annual score reports. Good scores allow you to get lower interest rates on future loans and credit cards and improves your chances of getting approved. Building credit takes time, but it pays off in the long run.
Mintos, the largest marketplace for investing in loans in Europe, saw a stable increase among women investors in the EU, with the sharpest growth in Estonia, where women constituted 36% of all newly registered Estonian investors. Meanwhile, Germany led the way with the highest number of women investors overall.
Despite the COVID-19 pandemic, Mintos, the leading alternative investment marketplace for investing in loans in Europe, has reported an increase in women investors in 2020. The company, which holds 40% of the market share in the EU, saw women investors increase by 43% over the course of 2020. Women constituted 15% of the total 363,312 investors on the marketplace that houses the majority of women retail investors in Europe.
The most active women investors in loans last year were based in the Baltic region, most notable when looking at the proportion of investment activity by gender in a county by country comparison. In Estonia, women made up 36% of all the country’s newly registered investors last year, while in Latvia and Lithuania the number was 25% and 18%, respectively.
In terms of total number of women investors, Germany led the way with 3160 women investors, who constituted 13% of all investors. In Estonia, there were 2129 new women investors, while in Spain—1442.
“The fact that an increasing number of women consider and actually start investing is a victory to everyone, knowing how underrepresented this group of investors is,” said Martins Sulte, CEO and Co-founder of Mintos. “It also shows that alternative investments, especially loans, are an attractive asset class for women investors.”
The demographic breakdown also shows that the average amount of first investment among women investors, who chose to invest on the marketplace ranged from €20 to €1300. Women investors who chose their first investment amount on Mintos in the range from €0-50 were from countries such as Germany, Denmark, Finland, Andorra, Serbia, Monaco. Investors from Austria, Estonia, Spain, Czech Republic, Poland, Portugal, Lithuania, Switzerland, Bulgaria, Italy, Romania, Belgium, Slovakia, Hungary, Greece, Sweden, Luxembourg, Malta, Norway and the Netherlands chose from €50 to €200, while Irish, Icelandic and Albanian investors leaned towards the €200-1300 investment level.
The company also reports that an average woman investor had an outstanding balance of €2,028 at the end of the last year, compared to €4,164 at the end of 2019. The company links this to women investors being more cautious last year due to the impacts of the pandemic, even though the total number of women investors increased. In January 2021 the investment volumes steadily increased, yet it is too early to make any projections at this moment in time.
The total interest earned among all women investors on Mintos at the end of the year was €11.5 million, with the average amount of interest earned per woman investor depending on the country and start date. In Germany, the average interest earned by the end of 2020 was €929, while in the Baltic countries of Latvia, Estonia and Lithuania it was €315, €727 and €849, respectively.
The overall interest in alternative investments among women has been an encouraging trend globally. With more women joining the workforce earlier and staying longer, women now control about $72 trillion of the world’s investable wealth, a number expected to grow as years pass.
£61bn of CBILS & BBLS loands handed out to SMEs
Alternative lender market vital for SMEs looking to grow in 2021
The outstanding value of non-emergency lending by banks to SMEs has dropped by 10% from £168bn in December 2019 to £152bn in December 2020, shows new research from ACP Altenburg Advisory, the debt advisory specialist.
ACP Altenburg Advisory says the research shows that once CBILS and BBLS loan schemes come to an end, SME businesses are likely to struggle to obtain finance from banks which is not partly or fully underwritten by the Government.
Total CBILS and BBLS lending to SMEs has ballooned from £4bn in April 2020, to a total of nearly £61bn that has been lent by December 2020*.
Once the CBILS and BBLS schemes come to an end, ACP Altenburg Advisory says banks may have limited appetite to lend and increase their exposure to the SME sector any further, given the significant increase in overall SME lending over the past 12 months when including the emergency lending.
Many banks are already reducing non-emergency lending to new to bank business customers. As CBILS and BBLS loans are underwritten by the Government, banks have been able to offer better terms for those loans than for ‘business as usual’ lends, which do not provide lenders with the same safety net.
ACP Altenburg Advisory says, therefore, alternative lenders are likely to be sought after in the coming months as SMEs find it more difficult to obtain finance from traditional lenders.
Will Senbanjo, Partner at ACP Altenburg Advisory, says: “CBILS and BBLS loans have dominated banks’ lending activities to such an extent that they have limited capacity to write normal loans to SMEs. This means that businesses looking to grow may struggle to obtain the funds they need.”
“SMEs looking to raise additional funds for growth in the months ahead may need to look at the alternative options, such as asset-based lending or alternative lender funding. Alternative lenders are open for business and are keen to deploy capital to well-managed businesses that have strong growth potential.”
Debt advisers can be crucial in helping a business to obtain the right funding package to fit their business needs. Advisers can help a business understand and explore the various funding options open to them, and then help them present their business to the most appropriate lenders in the right way.
*Based on data from the Bank of England and the British Business Bank. SMEs are defined as businesses with less than £25m turnover.
Gold is one of the safest investments available, apart from a savings account. This is because of its stability, even in uncertain times. In the past, owning gold was quite controversial because of the worries surrounding its price fluctuation and potential instability. Now, however, more people choose to invest in gold as part of their overall assets because of its many benefits. For one, investing in precious metals is a good way to protect your savings.
When you hear about the benefits of investing in gold or buying gold products, most people associate it with investing in jewelry. While this is certainly a key component to any well-rounded portfolio, gold itself is a much broader asset. Gold can be used to buy or trade almost anything – bonds, mutual funds, stocks, commodities, and even estate. If you’re looking for a way to diversify your portfolio but are worried about your investments in gold being exposed to more risk than other assets, then look into investing in precious metals as a part of your portfolio.
Here’s why people are turning to gold as one of their investment options:
1. You Can Start Even With Only A Small Amount
One of the greatest advantages of investing in gold like Oxford Gold is that you don’t need to have a substantial amount of money to start. You can begin, even with only a small amount. Hence making it a very accessible option even for those with limited funds to start with at the moment.
Even if you start small, the key is for you to slowly increase your investment, so you can stabilize it in the long run.
2. It’s A Very Safe Investment
Gold is considered to be a safe investment. As an investment, it won’t lose its value unlike other stocks and bonds, which are very susceptible to the volatile market.
It’s highly unlikely that you’ll encounter any problem with the value of this precious metal. You can easily earn a lot of money with your gold investment and even increase your wealth within a short time.
3. It’s A Stable Hedge Against An Unstable Market
Gold is one of the most stable assets that you can choose to invest in. Even when the stock market goes down, gold continues to retain its value. Therefore, you can consider it as a very safe investment choice.
The thing with gold is that it’s a very limited asset because it’s a precious metal. This stays the same, even if the demand does increase. Because of this, the price continues to go up. This situation makes it a very stable hedge against an unstable market.
4. It Gives You A Good Return On Investment
One of the other reasons why gold is also becoming a very popular investment form is that it guarantees a very good return on investment.
There are several factors that influence the rate of return that a precious piece of metal can offer. First, it’s very easy to mine and sell the metal. Second, it doesn’t require too much investment capital to start off with. You can simply start selling jewelry and coins to get started.
With these two factors alone, you can rely on a faster ROI. This means you can start paying back whatever capital you spent on your gold. The profits will also come in faster than expected. It can bring your financial status a sense of security.
5. It Protects Against Inflation And Economic Fluctuations
If there’s a dip in the value of currencies around the world, owning precious metals such as gold or silver is a great way to protect yourself against the fluctuations in the value of money.
Because of its value being tied to the U.S. dollar, precious metals are usually the safest investments out there. They don’t depreciate like other assets. This protects you against inflation, as you know the value of your gold investments stays stable, at least.
This makes gold a good form of long-term investment. You don’t have to worry about it losing its value over time. It’s something that can keep increasing in value on a regular basis, so you have great security in knowing they are protecting your wealth.
It also increases the likelihood that if you do sell your assets, you will receive a high enough amount to cover your losses, if you incur any. This can also help provide economic stability for you, particularly when you’re going through big changes, such as newly starting a business, for example.
6. It’s Easy To Diversify
The last benefit to investing in gold, in particular, is that they’re easy to diversify. There are so many different investments you can make with them. You can invest in fine gold jewelry, gold coins, ETFs, gold bars, bullion, and coins, for instance.
Gold bars are smaller than bullion coins and are less susceptible to theft. If you want a simple, low-risk investment, invest in gold bars. You can purchase them at banks or from online brokers, and you can store them in safety like a safety deposit box or a bank safe.
Diversification is a great way to increase the value of your investments and protect yourself in case of a crash. Investing in just one gold investment can diversify your portfolio significantly, and you don’t have to sell your holdings to take advantage of these diversified investments.
In the past, investors used to get along just fine without diversifying their portfolios. However, the world’s economy has changed, and most investors have had to deal with the global recession. It’s thereby imperative for investors to start diversifying their portfolios to protect themselves from these negative indicators.
Investing in gold is a very good choice for you, even if you’re a newbie investor. These reasons above are precisely why so many have gotten into investing in gold as their choice. The key is for you to just learn more about it and make sure that you understand everything there is for you to know about gold investing. You can learn so much more about it and comprehend it in totality, depending on your risk tolerance, liquidity, and risk level. In doing so, you know that you’re on the right path towards the proper way of investing in gold.
Do you dream of pursuing a career in investing but are unsure where to start?
Lets start with the basics
Investments. A broad term that can be used to describe the purchase of a large form of collateral, such as a house or other class of asset. Or smaller item investments can also be used to describe a luxury watch, a prime example of this is when an Air Force Vet purchased a ‘Cosmograph Daytona Oyster Rolex’ back in 1974 for $350, later to find out the exact model is now worth $700,000 in 2020.
However big or small you want to start your investment journey, as long as you’re prepared to make a long-term commitment your life goals are achievable.
Although investing can increase your wealth whilst staying ahead of inflation, there are always risks involved with ANY investment – which is why it’s important to diversify your portfolio.
Putting this in simpler terms: increase your chances by dividing your capital into various opportunities covering diverse and alternative markets.
Do you need a minimum amount to invest with?
To become a retail investor you can start out with under £1000, which you can build on over time. Although most private equity or pre-IPO opportunities have a required minimum investment amount. The offering entity also have to ensure they have enough assets under management (AUM) to achieve their investment goals and cover overheads.
Broaden your horizons
If you’re a seasoned or more experienced investor, you may feel passionate about stocks and bonds, but have you considered private equity investment opportunities? These have outperformed the traditional investment asset classes this year.
In a FundRise report titled “Why Private Markets Outperform Traditional Publicly-Traded Stocks and Bonds” it concludes how the evidence strongly supports the view that an allocation of 15% or more of a portfolio to private [investments] leads to higher returns and should be taken seriously by all investors.
Be prepared for risk
All investments involve some degree of risk. If you intend to purchase securities – such as stocks, bonds, or mutual funds – it’s important that you understand before you invest that you could lose some or all of your money. … The reward for taking on risk is the potential for a greater investment return.
Don’t sell at the first sign of profits!
It’s a wise tactic to allow your investments time to mature as they will likely continue to increase. It is however advised to exit a trade in decline as soon as you can. If you follow this rule, the money you make on your positive investments will far outpace any failed opportunities.
Keep your finger on the pulse
If you’re going to pursue a full-time career in investing you will need to access analytical industry insights and keep informed regarding new opportunities or evolving market conditions. Platforms such as Investopedia, Forbes, Bloomberg to name a few will keep you well informed.
The more you learn, the more you earn…
Not only can you interact with digital platforms and even turn on your notifications to receive regular updates… reading some world-renowned books that feature some of the most successful entrepreneurs will help. Investment books are a key element of your personal development and can develop a money-making mindset.
Some of the most popular books for a guide to investment:
Rich Dad Poor Dad (1997) by Robert Kiyosaki
The Essays of Warren Buffett: Lessons for Corporate America
Beating the Street (1993) by Peter Lynch
The Intelligent Investor (1949) by Benjamin Graham
Think and Grow Rich (1937) by Napoleon Hill
If you want to invest, educating yourself is a key part of that process. To conclude, anyone can become an investor, starting small and begin progressing into new markets is always a good place to start.
Retail investors have made quite an impact on the stock market recently, although several seasoned investors deem them as amateurs set to make wrong decisions and lose their wealth. Other experts believe modern investors are becoming a force to be reckoned with.
There is a lot of focus on addressing the modern investors, who are mostly millennials and became a more visible investor group in 2020 by investing heavily in tech stock, seeing the opportunity to hedge against the potential inflation and at the same time exploring alternative investment asset classes. Some seasoned investors are saying the modern investors are just chasing a trend and playing with fire, while others believe the cohort should be taken seriously.
Who is the modern investor?
Modern investors are predominantly millennials, both in age and spirit. Though most of them, especially in the US, have yet to acquire more wealth than their predecessors, baby-boomers, millennials are a growing power in the investment world, already influencing the current industry.
The driving force behind modern investors’ ability to change the industry is technology. From robo-advisors to gamification, tech-savvy investors are increasingly relying on and using apps and the internet. When once investing was a privilege accessible only to well-off citizens, now technology has made it only a few clicks away, presenting a plethora of opportunities to invest not only in the traditional assets like stocks or bonds, but also alternatives like arts, wine, loans, and others.
Contrary to the general view, modern investors are well-informed. A survey by Accenture revealed that 90% of financial advisors believe their millennial clients are more aware about their investing options than they were five years ago, indicating that the interest and engagement in investing is nevertheless growing.
Alternative investments – crucial part of modern portfolio
Blackstone research on new investor behaviour also shows that alternative investments are rising in popularity as investors are seeking alternative investments to find yield, some for higher returns, or protection from rising rates, or a haven against market volatility.
As modern investment portfolio changes, adapting to potential market changes may require a search for new sources of funding. One of the growing alternative investment asset classes— popular with millennial investors—is investment in loans. Their biggest advantage is higher returns in comparison to passive income instruments, in addition to being a more predictable alternative to growth stocks. As a debt-based product, investment in loans is also less volatile.
“Modern investors have shown everyone in the past year that they are a force that needs to be taken seriously,” said Martins Sulte, CEO and Co-founder of Mintos, the leading alternative investment platform for investing in loans in Europe. “We have worked closely with this investor segment, with over 370 000 retail investors on our platform, who give us feedback that they turn to alternative investments, and investing in loans in particular, as a means to manage their savings or create them.”
Mr Sulte also added that modern investors are more prudent than the industry might think, seeing diversification and alternatives as a way to future-proof their portfolios.
“We see a trend towards diversification even within our platform, which indicates that modern investors are not reckless as some make it out to be,” he said. “With pensions funds or bank accounts offering low savings rates, we see people search for better options and find passive investing as a solution for higher returns. While we cannot compare investing in loans to savings accounts at a bank due to both being entirely different forms of financial service and risks involved in any form of investing, we do understand and lately witness in greater amounts the interest for making money work much more for oneself.”
For many modern investors, especially those using trading apps, a retail portfolio may include a rather random selection of assets. That said, the retail investors are quick learners and are not as naive as some observers deem them to be. Undoubtedly, there are those that follow the trend, but the modern investors are making their moves and the market is responding accordingly.
44% of investors are now looking to back UK-based companies rather than global firms – 9,629,000
45% of investors feel their ‘risk-appetite’ has increased due to Covid-19, as traditionally safe investments in big companies are no longer viable – 6,942,000
27% of investors are looking to invest in sectors created by the Covid-19 pandemic, such as PPE, social distancing equipment and virtual solutions – 5,674,000
19% of investors believe the coronavirus pandemic has opened more investment opportunities than it has closed – 6,278,000
Investing was one of the most unpredictable aspects of 2020 for anyone concerned with the market, whether that be a sophisticated portfolio or just a workplace pension. The stock market crash at the start of the lockdown and continued economic disruption has left many wondering what the future will hold, while soaring tech stocks have added further complexity to an ever changing market. But what has the Covid pandemic taught investors?
The overall effect of this period has led investors to reconsider what they are doing with their investable assets. To understand this shift, SME investment specialist IW Capital has conducted nationally representative research to uncover the sentiments of the UK’s investors.
Look beyond the panic
Each period of disruption, like that felt last year, offers opportunity for companies to adapt quickly to the changing times and although there has been a lot of worry and negativity surrounding the new lockdown restrictions, we have to look to the positives with one of them being the roll out of the Covid vaccines. Working with both entrepreneurs and investors, there is a clear desire from the small business community for growth investment and to take a big step growth-wise this year. With a 12% increase in new businesses starting up during 2020 compared to 2019, 2021 is set to create some exciting investment opportunities for investors throughout the country.
The unexpected happens
This year has taught us that the unexpected does happen. Investors need to look to the future and prepare for the unexpected to improve financial resilience. This could be by having liquid assets or a rainy-day fund you can use if investment values fall, which is particularly important if you’re drawing an income from investments. Having options for when the unexpected does occur should be part of any investors financial plan and is something that has been brought to the forefront for many as a result of the pandemic.
Maintain a diverse portfolio
The Covid pandemic has had a far-reaching impact across a variety of sectors, however some industries have been affected far more than others, with travel and hospitality being forced to close for months at a time and unable to trade. In contrast, the pandemic has created opportunities for some sectors too, such as manufacturing and biotech. While a diverse portfolio will still have suffered volatility, it can help lessen the impact. Investing in a range of assets, industries and locations can help spread the risk. When one investment falls, another may perform better helping to create balance.
Don’t overreact to market volatility
When the pandemic first hit and the stock market plummeted, many investors began to panic and looked to sell shares in order to avoid potential future losses, but when investing, a long-term time frame and goal is so important. Short-term volatility is often smoothed out once you look at investment performance over a longer time frame. It can be frustrating to see that investment values fell in 2020, but when you look at performance over the last five years, for example, you’ll probably still see an upward trend.
Luke Davis, CEO of IW Capital:
“Investing and investing wisely has never been easy by any stretch but this year has been particularly difficult for investors at every level. 2020 demonstrated the value of long term investing and future planning. The stock market crash in March triggered a real halt in investment, and although the market hasn’t fully recovered, there has been strong growth since November and in places in the US share indexes are actually higher than the last year.
“There have been winners and losers from each stage of the pandemic with sectors like travel feeling the true impact of the pandemic and others like online solutions seeing growth and opportunity in a time of financial turmoil. But, this is true of any world event and has forced investors to look to be more future facing.”
•69% of people, overall, could not correctly define what an APR is an what it’s used for.
•68% of credit card holders do not know what an APR is.
•66% of mortgage holders do not know what an APR is.
According to KIS Finance’s financial survey, only 31% of adults in the UK could correctly identify what an APR (Annual Percentage Rate) is, including its purpose and how it should be used.
Even more worryingly – a massive 68% of credit card holders don’t know what an APR is, bearing in mind that the APR is undoubtedly one of the most important factors when comparing unsecured financial products like credit cards and personal loans.
The two most common believed definitions of APR were:
•The interest rate alone, without any fees or costs
•The maximum amount that a lender is allowed to charge
How do the figures look when split by age group?
Percentage of people in each age group who could not correctly define what an APR is:
18 – 24: 87.5%
25 – 34: 63%
35 – 44: 77%
45 – 54: 71%
55 – 64: 60%
Only 12.5% of those aged between 18 and 24 know what an APR is
The lack of basic financial knowledge in the 18 to 24 age group is worrying. Having a basic understanding of everyday financial terminology, plus general money and debt management, is an essential life skill.
This leads to the question of whether more financial education should be taught in schools as a key life skill.
Financial education was introduced to the UK’s National Curriculum in 2014, however, findings from The London Institute of Banking & Finance’s Young Persons’ Money Index 2019 backs up our data as it revealed that students still say they are not getting enough access to financial education and they worry about money. Only 17% of students said they had access to financial education within the last year, and just 4% are taught financial education as a separate subject.
Holly Andrews, Managing Director of KIS Finance says:
“Financial education is clearly needed based on these recent findings and financial advisors must take steps to ensure applicants do have a clear understanding of the commitment they are entering in to.
We have long been an advocate of these, and other similar matters, being covered as part of the high school curriculum to ensure everyone has this knowledge when they leave school. From the age of 18, people will be offered unsecured borrowing and it’s essential that they understand all the key points of what they are taking on.”
The largest group of credit card holders struggle to define what an APR is
Another main concern is that 60% of 55-64 year olds couldn’t say what an APR is. And according to KIS Finance’s survey, this is the age group with the largest percentage of people who currently have a credit card. Given the often high costs associated with credit cards, it’s worrying that so many people are not aware of the right way to make sure they’re getting the best deal.
So, why is it important to understand APRs?
Holly Andrews continues to describe the importance of understanding APRs and the dangers of not doing so.
“Whenever you apply for an unsecured personal loan or credit card you will be quoted the APR. This is very important to understand because the APR tells you what the lender will charge you for borrowing the money over a one year period.
The APR takes into account the interest charges plus any other fees or costs charged in setting up the loan. The APR therefore represents the ‘true price’ of your loan.
The APR is essential for you to be able to plan exactly how much you will have to repay on a loan or credit card. Credit cards are a little different however as you’re only charged interest if you don’t repay the balance in full every month.
APRs are a very useful tool for comparing financial products on a like-for-like basis and will allow you to make more informed decisions. It can be tempting to simply go for the product with the lowest interest rate, but the APR will give you a better idea of what the loan will cost overall.
Even if the interest rate is higher on one product, if the APR is lower, this will be the more cost effective option over the course of a year.
The findings of this survey are worrying because the majority of people cannot be choosing the cheapest products, and those working in the finance industry use the term ‘APR’ freely assuming it’s well understood.
What is a representative or typical APR?
“It’s also important to understand the difference between representative APRs and the actual APR you’ll be charged. Lenders can’t show an exact figure for what you’ll be charged on a product without knowing your individual financial circumstances, so on promotional content they will display a ‘representative’ or ‘typical’ APR.
The ‘representative’ or ‘typical’ APR is the rate that at least 51% of the company’s customers must be able to obtain for the finance facility being advertised. Companies can’t advertise APRs that barely anyone can qualify for. You may not be in this 51%, that’s why you may be charged a different rate when it comes to actually applying for the product and after the lender has looked at your credit history and your current financial situation. This could mean that the rate you actually receive may be higher or lower than the one advertised.”
What are the dangers of not understanding APRs?
“If you don’t understand what the APR is on the financial products you’re taking out, you could end up being charged a lot more than you were expecting or budgeting for. If this is the case and you can’t meet the required repayments on your loan or credit card, you could see yourself winding up in a lot of debt and seriously damaging your credit rating. Not to mention the stress that being in debt can cause, so making sure you understand the true cost of borrowing is really important to make sure you get the best deal possible, and you don’t wind up over committing yourself financially.”
The Co-operative Bank has committed an additional £400,000 to support The Hive – a programme to help new and existing co-operatives delivered by Co-operatives UK
The Co-operative Bank’s customer-led Ethical Policy outlines its commitment to nurture and support the co-operative sector, having previously invested £1.3 million in this programme since 2016
Rose Marley, Co-operatives UK’s new CEO anticipates ‘a new wave of entrepreneurs responding to a need to do things differently’
The Co-operative Bank has announced it has renewed its partnership with The Hive, a support programme for the UK’s co-operatives, delivered by Co-operatives UK.
The Hive, which The Co-operative Bank has supported with a total investment of £1.7 million since 2016, has helped over 1,000 co-operatives and groups with support including direct business advice, workshops, training and mentoring. Part of the funding from The Co-operative Bank has also helped develop a digital registration service for co-op start-ups – a first for the sector. As part of this process, new co-ops will also be able to access free business banking from The Co-operative Bank.
Since the launch of The Hive in 2016 some of the key achievements over the last four years include:
Over 1,000 groups have received support worth in excess of £600,000.
50 free introductory sessions facilitated across the UK, attended by more than 500 groups, looking to start a co-operative or wanting to learn more.
Over 80 new co-operatives have been incorporated.
40 ‘Community Shares’ support packages provided, raising more than £6 million of community investment in the development of co-operatives and their communities
The support has impacted more than 20,000 volunteers, members and employees as well as their wider communities.
Supporting co-ops throughout Covid-19, helping them navigate the various business support schemes, working through business forecasting and cost saving opportunities and helping businesses ‘pivot’ to online trading.
This news follows Co-operatives UK research which suggested co-operatives may be far more resilient to economic shocks and significantly more likely to survive compared with other businesses. After their first five years, 76% of co-operatives are more likely to succeed when compared with other businesses (42%). Co-operatives contribute £38 billion to the UK economy and the UK’s 7,063 independent co-ops employ 241,714 people with over 14 million members who own and have a say in how they operate.
Nick Slape, Chief Executive Officer, The Co-operative Bank said “As a bank built on co-operative values and ethics we remain committed to supporting the co-operative sector, giving like-minded people, innovators and groups the support they need to succeed when UK businesses face unprecedented challenges during this extremely difficult time. We hope that through our ongoing support of The Hive and partnership with Co-operatives UK, we can make a real difference to people running or looking to start a co-operative.”
Rose Marley, Chief Executive, Co-operatives UK said “The pandemic has really made people think about their business and working lives. As more and more people are looking at how they might improve their future working lives for themselves, their families and the communities they are based in, we are delighted that The Co-operative Bank is supporting new and existing co-operatives to do just this.
“Our research demonstrates that co-operatives are almost twice as likely to survive the early years of business compared to traditional business models, and workers are looking for fairer and more equitable ways to do business and challenge the status quo.
“Leeds Bread Co-op is a brilliant example of how The Hive has supported businesses through the pandemic. And with continued support from The Co-operative Bank, The Hive will continue to create more robust and resilient business that will make a real difference to the communities they are rooted in.”
Leeds Bread Co-op is an independent artisan bakery and workers’ co-operative. They received support from The Hive to help them adapt in the wake of the Covid-19 pandemic.
Lizzie, a Worker Owner at Leeds Bread Co-op said “We had a massive drop in sales from our wholesale customers who had to close because of government restrictions in the spring. We decided to cease trading temporarily for the safety of our staff and local community and to give ourselves some breathing space whilst we worked with an advisor from The Hive on urgent financial modelling and collective decision-making about our priorities. This was in addition to financial support from The Co-operative Bank as part of the Bounce Back Loans Scheme (BBLS). We’re now back open, with social distancing measures in place as well as a new click and collect service and home deliveries, meaning we can still continue to trade in these challenging times. Support from the Hive was a lifeline at a critical time.”
In addition to supporting co-operatives through The Hive, The Co-operative Bank also provides tailored accounts specifically for community and co-operative businesses. The Community Directplus Current Account gives registered charities, community interest companies, co-operatives and credit unions an ethical way to bank for free. Community Directplus customers also have the opportunity to apply for up to £1,000 for project funding from the Co-operative Bank’s Customer Donation Fund which helps support special projects and fundraising opportunities.
PixelPlex, a global provider of blockchain-powered solutions, has announced the successful launch of a crypto arbitrage platform. The new application is designed to provide cryptocurrency traders with an effective tool with which they can grab the most beneficial deal.
PixelPlex developers have pointed out that one of the most important features of their platform is the built-in arbitrage bot, as it does crypto trading itself and helps users to make a profit.
The engineering team has also explained how it works. The bot simultaneously buys and sells the same amount of bitcoins (or any other cryptocurrency) from two different exchanges. Meanwhile, their equivalent amount in fiat is different, so the trader makes money on the difference in currency rates.
The PixelPlex bitcoin trading platform contains a data collection mechanism, an algorithm for finding profitable deals, a tool for handling cryptocurrency volatility, and the ability to exchange cryptocurrencies for fiat money and vice versa.
The company’s team of experts have commented on more details of their solution. They have mentioned several major risks usually associated with crypto arbitrage, such as a halt in trading caused by the accumulation of all funds on one exchange and high transaction fees that lead to zero profit or even financial losses. To prevent and eliminate these issues, a graph theory-based optimal search algorithm was developed.
The algorithm receives data from leading exchanges like Binance, Bittrex, Kraken, and others, then it selects the best trading deal and executes the transaction before the market changes and the trader passes the opportunity.
As noted by PixelPlex, their platform is capable of making instant decisions, thereby allowing traders to rest and check their account balance once in a while. They claim that their arbitrage software includes all the features every trader needs: the ability to set thresholds for trades and profits, trade directly or through a minor pair, and access investment strategies that are typically not available when using conventional methods.
Another feature that may not be immediately noticeable, but equally important, is the intuitive user interface. The PixelPlex designers and developers have placed opening and closing deals buttons a few clicks apart and included a built-in set of options to let users customize the solution. Copy-trading and all the information in the app are presented in graphs and charts.
In the end, PixelPlex representatives have noted that their crypto arbitrage solution is easy to integrate and carry over to any business environment.
The number of Brits with a digital-only bank account has gone up by a percentage increase of 16%
Almost 1 in 6 Brits (17%) plan to open a digital bank account over the next 5 years
The top reason for opening an account was the convenience of banking online for the third year running
However, 16% of traditional banking customers who aren’t planning to switch said their bank had been helpful during the COVID pandemic
Currently over a quarter of Brits (27%) say they have at least one bank account with a digital-only bank, according to personal finance comparison site finder.com.
This is a percentage increase of 16% from last year when 23% of Brits said they had an account with a digital bank. It is also over 3 times the amount of Brits who had one in January 2019 (9%).
Finder’s 2019 research found that 24% of Brits intended to have a digital-only account by 2024. However with 27% now having an account, Brits have gone digital 3 years earlier than expected.
A further 17% of Brits intend to join them over the next 5 years, with 11% planning to do so over the next year. This could mean that 44% of Brits could have an account with a digital bank by 2026. If this percentage were applied to the UK adult population, it would equal almost 23 million people.
The top reason for opening an account continues to be convenience that digital-only banks provide, for the third year running (26%). The second most common reason was that users needed an additional account and setting up a digital account seemed to be the easiest option (20%). Customers also wanted to transfer money more easily (19%), making this the third biggest priority.
People wanting a trendy card is still driving signups as well, with 1 in 10 (10%) existing, or future, customers citing this as a reason to get an account.
Despite the increase in digital-only banking customers, the numbers who aren’t considering one have actually risen. Last year, 23% of respondents said they aren’t considering a digital-only bank account, but this has risen substantially to 42% in the latest survey.
This is likely a result of increased customer loyalty, 58% of those without a digital bank account said they felt as though their incumbent bank had treated them well and therefore had no desire to open a digital bank account. Additionally, 16% felt as though their incumbent bank had performed particularly well during the pandemic.
Over a third (36%) of those without a digital bank account said they had not decided to bank with digital providers because they preferred to be able to speak to someone in branch.
Digital banks are still most popular with younger generations, 46% of gen Z say they currently have a digital bank account, with a further 28% intending to get one over the next 5 years. This would mean that by 2026 just under three quarters of gen Z (73%) could have a digital bank account.
Commenting on the findings, Matt Boyle, banking specialist at finder.com said:
“This research shows that digital-only banks are here to stay, with the number of users in the UK rising for 3 years straight. On top of this, Starling and Revolut announced this year that they have made a profit for the first time, really demonstrating that digital banks are starting to become a serious part of the banking furniture.
“The pandemic has also played a role in the rapid digitalisation of the banking industry, with those who had never experienced online banking having no other choice but to take their finances online. It seems that Brits are starting to realise the convenience that can come with digital banking and this is reflected in our research.”
To see the research in full visit: https://www.finder.com/uk/digital-banking-adoption
Investment headwinds will “still exceed the tailwinds” in 2021 – but there could be more “major opportunities now than in perhaps the last 10 years” if you know where to look.
This is the bold and, given 2020, perhaps surprisingly optimistic forecast from Nigel Green, chief executive and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.
It comes as investors around the world focus on rebalancing portfolios for 2021, after a year no-one expected.
Mr Green says: “2020 was a year for which nobody had planned.
“This included investors, many of whom were caught spectacularly off-guard by not having properly diversified portfolios, which left them open to untold financial risks.
“Looking ahead to 2021, it is likely that investment headwinds will still exceed the tailwinds – but, I believe, that there are also more major investment opportunities to be had in the next year than perhaps in the last decade.”
‘Headwinds’ are the factors that likely weigh on growth and returns, and ‘tailwinds’ are those that can be expected to boost growth and help drive positive returns.
He continues: “The major long-term headwind from the fallout of 2020 is unemployment, which will hit demand, growth and investment.
“There’s also the roll-out of a mass global vaccination agenda which will be a lengthy process and logistical minefield, plus there are the ‘vaccine sceptic’ concerns to address.
“Meanwhile there are geopolitical issues that could impact on investor returns. These include the significant readjustment that will need to happen following Brexit, U.S.-China trade relations which are likely to become increasingly competitive especially in the tech sector, and the rising border tensions between India and China, amongst others.”
However, despite the significant headwinds, the deVere CEO flags three major investment tailwinds in 2021.
“First, the rollout of the Covid vaccines which means economies can be expected to begin solid recoveries,” he says.
“Second, President-elect Joe Biden will enter office and his administration promises a more predictable approach to trade and foreign affairs – and the markets like certainty.
“And third, it is likely that governments will continue to offer fiscal support packages as their economies recover from the pandemic, offering a ‘floor’ for markets.”
Mr Green goes on to add: “To quote Einstein, ‘In the midst of every crisis, lies great opportunity.’
“This is why, after such a monumental crisis, I believe that if you know where to look and act appropriately to build your wealth, there could be plenty of key opportunities to come.
“The pandemic has accelerated history, speeding up and exacerbating major trends in just a few months, that ordinarily might have taken decades to be fully realised.”
He maintains that the global economy, how we live, do business and interact remains fundamentally changed. “It is doubtful the world will go back exactly to how it was pre-Covid – there are many aspects of the ‘new normal’ which people like and support, just a home working. As such, some of the major shifts are unlikely to be reversed,” he notes.
“As such, investors need to look for the lower entry points of quality companies to top-up their portfolios and, critically, they need to bear in mind how the world has changed.
“Their portfolios must reflect the future, not the past.”
Mr Green concludes: “Headwinds will surpass tailwinds in 2021 as the world readjusts, but it’s essential that investors stay invested. As we know, history has shown us that stock markets tend to go up over the long-term.
“But as the world moves ahead to a post-pandemic era, it’s crucial that investors ensure their portfolios are suitably diversified across asset classes, sectors, currencies and regions, so as to make the most of the considerable opportunities that will inevitably present themselves.”
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.”
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.”
Advantages of offshore banks: What they have to offer millennials
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.
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.
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.
It has been a turbulent year for the economy as a result of Covid-19, so it is no surprise that interest in gold has risen sharply within the investment world. The financial shock caused by the pandemic has left currencies and markets across the globe in vulnerable and unpredictable positions. With that in mind, more investors are turning to gold as an alternative way of strengthening their investment portfolio.
However, with the price of gold continuing to rise alongside its popularity, what is the best way to invest in the precious metal and how can new investors take a leap into the world of gold for the first time?
Gold, a safer option?
Gold has been synonymous with wealth and prosperity for hundreds of years. Coins were first introduced in 550 BC and quickly became the global currency before paper money came into existence. Ever since then, the precious metal has been an integral part of the globe’s wealth portfolio. During times of economic instability, gold is often looked at as somewhat of an oasis, compared with other investment options. With a history of retaining its value even when currencies and markets are in flux, gold remains a favoured asset as a result of its fundamental, intrinsic value anywhere around the world.
Despite the uncertainty the pandemic has caused, gold’s price continues to rise, potentially heading towards $3,000 per ounce in the near future. Now, with increasing numbers of people seeking a stake in this safe haven asset, the demand and the value for the precious metal will likely continue to rise in months to come.
Understanding gold investment
When investing in gold, it is important to note that it should only make up a portion of an investment portfolio, rather than the entirety. However, whilst signposting about ways to invest in other financial products, such as ISAs or premium bonds, is clear, there are multiple ways to invest gold, many of which aren’t often discussed.
A popular way that investors choose to own gold is through a mutual fund or Exchange Traded Fund (ETF). An ETF requires customers to pass their money over to a fund that will then pool it together with other investors’ money to buy a specific amount of gold, storing it in a high security vault. Although both mutual funds and ETFs work in a similar manner, mutual funds invest in gold mining companies, unlike ETFs, which invest in physical gold bullion. It is important to note that with both ETFs and mutual funds, investors do not own physical gold and are therefore more exposed to market fluctuations. Some ETFs, despite being described as ‘physically-backed’, are also not backed by physical gold, which can also be a risk to investors.
For some, investing in gold mining stocks through a mutual fund may be a better option than an ETF. A mutual fund will invest in a company that mines, however as investments will be contingent on the success of the company, rather than the value of the gold itself, investors will be exposed to any stock market turbulence or changes within the company that could affect this. Anyone investing in gold mining stocks should be prepared to carry out extensive research into the right gold mining companies, before selecting one to invest in.
Some investors may wish to own physical gold bullion and could therefore consider buying gold coins or bars. Whilst buying directly from dealers requires customers to ensure the gold is of a high purity level, and to ensure that they arrange suitable storage, tech platforms, such as Minted, make the process much more straightforward. Minted’s customers can choose how much money they want to invest as part of a regular savings plan, and the gold is stored in a high security London vault. Once enough has been saved for a gold bar, there is the option to either keep it in storage, or to withdraw it and have it delivered.
Unlike the other methods of investing in gold, owning gold bullion gives people complete control over their investment. With the opportunity to sell gold either back to a dealer or via the market, owning bullion is a relatively easy method of buying and investing in gold.
So, should you invest?
The pandemic has sent ripples through the financial world, that will no doubt leave scars for years to come. This being said, the value of gold remains particularly strong, and many first timers are looking to invest.
Simply put, there is no set way to invest in gold; it depends on individual situations, appetite for risk, and long-term goals. For those seeking potentially higher returns in the shorter term, buying gold mining stocks or gold ETFs may be the better choice. However, for those looking to have more control over their investment, buying gold bullion could be the best choice. The price of investments cannot be influenced by bankers or politicians, has value all over the world, and can be stored and sold however customers choose.