Category: Banking

digital tax
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The importance of Making Tax Digital to the UK mid-market

The importance of Making Tax Digital to the UK mid-market

Written by Steve Lane, CTO at Access Group

With UK Government’s Making Tax Digital (MTD) deadline less than two months away, the race is on for UK organisations to understand the impact of MTD on their business. MTD could mean a significant shift in operations for some organisations, which means they need to act now in order to get themselves in order for the impending deadline.  


What MTD requires

The Making Tax Digital programme will require UK businesses with annual turnovers above the VAT threshold of £85,000 to keep digital records for VAT and submit their returns digitally. The points-based penalty system means business taxpayers gather points with each late submission of an MTD report, those with multiple businesses must submit tax reports for each of their businesses. To ease the transition process, HMRC is allowing the use of ‘bridging software’ to support the digitised submission and account information retrieval from spreadsheets. However, those without it in place risk not being able to carry out their business as usual.

While all respondents in Access Group’s survey use some type of electronic system for financial management, 96 percent of mid-market businesses still process a portion of their tax returns manually, for example performing off-system calculations, which could be problematic come 1st April if businesses fail to use bridging software to support the digital submission of their VAT returns. Which begs the question, why do some organisations still rely heavily on manually calculating? A large proportion of the finance professionals surveyed explained that they haven’t transitioned to 100 percent digital processes due to a lack of knowledge and training (26 percent) while others said it’s the fact that multiple legal entities are involved in VAT registration (23 percent).


Putting off MTD is no longer an option

Manually entering VAT is inefficient and opens businesses up to human error. Under the new regulations, mid-market businesses could stand to lose not only money in fines, but credibility within their field. Putting off making the necessary technical changes to your business is no longer an option.  

There are certain things that businesses simply cannot afford to ignore, for instance:  


Transformation

Deploying new business software isn’t always an easy decision. Especially when there are multiple ways to ensure your organisation remains compliant with government regulations. Considerations need to be made for either full business software transformation or a single solution update i.e. bridging software, to support. Given the impending deadline, businesses must act now, to ensure they’ve put in place measures that abide by the regulations.


Accreditations

When deciding to begin a digital transformation project, particularly with digitising financial systems, choosing a partner that has the proper government accreditations is vital. Acronyms like ISO or IL are ones to look out for.


Productivity

Digitising financial systems offers the business not only a more efficient, and free of human error way of working, but a more productive way as well. Entrusting admin-heavy tasks to intelligent software can free up time elsewhere to focus on innovation, business development and growth ambitions.

Whilst it’s important that businesses’ financial systems are all set for the 1st of April deadline, to think about Making Tax Digital solely in terms of tax compliance would be to miss the point. It’s the perfect opportunity for UK business’ senior management teams to take a broader perspective – one that turns this regulatory burden to the business’ advantage. The organisations who act now are the ones who will see greater efficiency and productivity, driving both business growth and profitability. It’s good practice to update your operational processes at any moment in time, the MTD deadline provides a good excuse for companies to do just that. Given the pressures coming from Government organisations to digitise and the complexities that go into technology investment, mid-market businesses need to ensure their finance teams’ house is in order to remain compliant and avoid fines in the new era of digital tax.

Corporate Finance and M&A/DealsSustainable FinanceTransactional and Investment Banking

The growth of the wind energy sector both in the UK and abroad

Greener initiatives are being utilised more and more across the globe, as Earth’s citizens try to safeguard the planet’s resources. We may have relied a lot on fossil fuels like gas and coal in the past, but due to these sources not being sustainable we’re now ambitious about developing practices which are more environmentally friendly.

The market for renewable energy now includes everything from wind turbines to wave power. Wind power is proving particularly popular, with the amount of energy generated across windfarms in just 2016 found to have exceeded the amount created via coal power plants in the UK for the first time ever. In fact, over 40 per cent of all the energy generated on Christmas Day 2016 was as a result of renewable sources and 75 per cent of that sum was from wind turbines.

As coal-fuelled electricity has dipped to its lowest output for 80 years, the future certainly looks bright for the renewables market and, in particular, the wind energy sector. Join joint integrity software experts HTL Group as they explore just how much potential this industry holds…

What we can expect in the near future

The wind energy sector had to reconsolidate record-breaking growth for the years between 2014 and 2016. In total, the global installed capacity at the end of 2016 was 486,790 MW — an impressive figure by anyone’s standards.

Growth is expected to pick-up once more in the years ahead though. In fact, there are predictions which expects the global installed capacity to rise to 546,100 MW. This year, this figure was anticipated to hit 607,000 MW before reaching 817,000 MW by 2021. Although the rate of growth is anticipated to slow, it’s clear that wind power will continue to occupy a large energy share on a global scale.

How is each area of the world performing? Asia, North America and Europe are expected to remain the dominant wind power markets. By 2021, it’s anticipated that Asia will create 357,100 GW of energy from wind turbines. Europe is expected to hit 234,800 GW, while North America is likely to generate 159,100 GW.

What’s more, emerging markets are predicted to continue their development. For example, Latin America will grow to 40,200 GW by 2021 — up from 15,300 GW in 2016 — while the Middle East and Africa will more than quadruple their output, growing from 3,900 GW in 2016 to 16,100 GW in 2021.

Investments to expect in the years ahead

Additional investments will obviously be required in order for the sector’s continued growth to be supported. In 2016, €43 billion was spent across Europe on constructing new wind farms, refinancing, fundraising and project acquisitions — an increase of €8 billion compared to 2015.

Offshore windfarms appear to be getting more attention than sites found onshore. Investments onshore dropped by 5%, while offshore reached a record-breaking €18.2 billion. Impressively, the UK is leading the way, raising €12.7 billion for new wind energy projects. This more than overshadows the country in second place, Germany, with €5.3 billion.

The total investment may be lower then. However, it’s clear that wind energy will remain vital to the global movement towards greener, more sustainable energy both now and in the future.

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TOP RANKINGS FOR ASHFORDS LLP IN PITCHBOOK’S GLOBAL LEAGUE TABLES

Ashfords has again been ranked as one of the most active law firms globally in venture capital. The firm has been ranked 2nd in Europe for 2018 by PitchBook, which provides a comprehensive ranking of private equity and venture capital activity worldwide.

Ashfords is the only independent UK law firm to appear in the top five most active firms in Europe and has been placed in the top 5 in each of the past eight quarters.

PitchBook’s global review details top investors by region, firm headquarters, as well as the most active advisers and acquirers of PE-backed and VC-backed companies.

Chris Dyson, Partner and Head of Ashfords’ technology sector, commented: “Ashfords’ recognition in this prestigious league table confirms the team’s position as a leading venture capital practice in Europe. The team has deep expertise in this area and are very proud to work alongside many leading investment funds and growth companies.”

Deals the firm completed globally in 2018 include advising:

Notion Capital, Eden Ventures and BGF Ventures on the $350m sale of NewVoiceMedia to Vonage

Form3 on its investment from Draper Esprit, Barclays and Angel CoFund

Fluidly on its investment from Nyca Partners and Octopus

Anthemis on its investment in Realyse

Simply Cook on its investment from Octopus

WhiteHat on its investment from Lightspeed, Village Global, Anil Aggarwal, and Wendy Tan White

Mobius Motors on its investment from Pan-African Investment Company, Playfair Capital, VestedWorld and others

Local Globe on its investment in StatusToday

Holtzbrinck Ventures and Notion Capital on the sale of Dealflo to OneSpan

BGF on its investment in Ruroc.


Ashfords LLP
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Tail expands portfolio driven by significant investment

Tail Offers Ltd is pleased to announce that Quantum Financial Holdings, a Fintech and security investment Group, has made an investment of £500,000 into the business. In addition to the financial investment Quantum has made, Tail will benefit from a suite of backoffice, infrastructure and value-added functions provided by the Quantum Group which will accelerate Tail’s significant growth to date.

“I am delighted to have been able to secure a deal with Tail which will enable them to invest in critical systems and further develop their amazing offering, driven by their exceptionally talented team,” says Floyd Woodrow, Chairman of Quantum Financial Holdings. “As well as financial investment, Quantum prides itself on bringing additional value to those companies we have an involvement in, through expertise and the streamlining of business support functions which free up key drivers in Fintech organisations to do what they do best – innovate.” 

“Open Banking will change the way consumers and retailers interact and we want to be at the forefront of facilitating that change,” says Philipp Keller, CEO of Tail Offers Ltd. “We are already focused on expanding our offering to a national audience and this will be accelerated through Quantum’s involvement.” 

“As our offer portfolio expands, we will continue to deliver a readymade white label rewards solution to corporate and financial institutions which will, in turn, enhance their own customer propositions. We are excited to embark on the next step of our journey with a partner that not only provides us with capital but, more importantly, with the right network and infrastructure to use it effectively,” Keller concludes. 

Part of the inaugural Tech Nation Fintech programme, Tail is one of the leading cashback solution providers for Open Banking. Already available for Monzo and Starling customers, its most recent addition includes Volopa, a London-based card provider active in the corporate and private banking sector. 

The Tail app integrates directly with a user’s bank account to provide tailored, high-value offers and cashback rewards in the most convenient way possible. Via its industry-first, cashback, self-serve platform, Tail enables hyperlocal, local and national merchants to use a tailored, data-driven rewards solution to engage directly with customers. 

For further information, please email [email protected] 

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Mayflex forms a Distribution Agreement with Global Invacom

Mayflex, the distributor of Converged IP Solutions, announces it has formed a distribution agreement with Global Invacom. The deal will see Mayflex and Global Invacom targeting Multi-Dwelling Unit projects by liaising with System Integrators, Consultants and End Users.

Global Invacom, the global provider of satellite communications equipment, specialises in Fibre Integrated Reception System (“FibreIRS”), delivering Satellite TV reception. Global Invacom’s vision is to increase the awareness of the advantages of FibreIRS and to work alongside Mayflex to help specify FibreIRS alongside cabling, data and CCTV Security.

Aaron Ghera, Sales Manager at Global Invacom, commented on the alliance: “Having seen interest from a number of organisations, we’re delighted to form a distribution agreement with Mayflex, who we believe have the resources, industry knowledge and proficiency to support our strategies.”

He continued, “Our plan is to minimise the amount of contacts required for a single project. For instance, rather than approaching four different supplies for your data, security, cabling and Satellite TV, Mayflex will supply all four services from one point of contact. By providing an integrated system solution, we can add more value to our customers and develop relationships that will see similar integrated systems across the UK.”

Ross McLetchie, Director of Sales, commented, “I am delighted to welcome Global Invacom on board with Mayflex. Incorporating this brand into our existing product portfolio will open up a host of new customer opportunities.”

Ross continued, “It is an exciting start to the year for Mayflex, as this agreement comes just shortly after the launch of Excel’s new Passive Optical Networks (PON) Solution.”

Similar in concept to PON infrastructure, FibreIRS technology is a new method of carrying satellite signals via fibre rather than coax. There are various advantages of using fibre such as reduction in signal loss, increased distance capacity, scalability and improved cost efficacy.

Ross concluded, “New customers to Mayflex can be assured of a first rate, knowledgeable team of sales and technical personnel. Partners will be provided with dedicated account management and the support needed to ensure the correct solution is specified and delivered on a project by project basis. I am confident that Excel’s new PON Solution and the Global Invacom range will become a staple part of our product portfolio and look forward to working with all parties involved.”

The FibreIRS technology itself was developed and manufactured by Global Invacom with the intention of revolutionising the satellite tv market. Over the years we’ve seen the development of similar products throughout the industry, however Global Invacom is determined to be at the forefront of the satellite industry and Mayflex are enthusiastic to support this drive.

The range of Global Invacom products will be widely available to purchase from Mayflex from February 2019. Global Invacom will also be sponsoring the upcoming Excel Partner Briefing events, taking place across the country in Birmingham, Manchester, Glasgow and London. There will be presentations on both the Excel PON Solution and Global Invacom’s FibreIRS Technology, as well as representatives available in the exhibition areas to discuss any requirements. Visit www.mayflex.com for further details or speak to the sales team on 0800 75 75 65.


BankingFinanceTransactional and Investment Banking

Investors prefer ‘disruptive’ start-ups, but give them less money

Entrepreneurs pitching ‘disruptive’ start-ups are 22% more likely to get funding, but receive 24% less investment than less risky ventures, according to new research from Rotterdam School of Management, Erasmus University (RSM).

A disruptive start-up, breaking away from existing products, services and business models, can potentially bring colossal returns for investors. But these ventures are also risky, with a considerable possibility of failure, says Timo van Balen, a researcher at RSM.

Timo analysed data of 918 start-ups from Start-Up Nation Central, a private non-profit organisation that has collected data on all Israeli start-ups since 2013. He compared the characteristics of each profile’s vision statement, aimed at investors, with how much funding the venture secured.

Alongside fellow researchers, Murat Tarakci of RSM and Ashish Sood of the University of California Riverside, he discovered that increasing the communication of a start-up’s disruptive vision improved the odds of receiving funding by an average of 22%. But it cut the amount invested by an average of 24%. This amounted to $87,000 less in the first investment round and $361,000 less in the second investment round.

Timo says: “Entrepreneurs increasingly talk about ‘disruption’, framing their products, technologies and ventures in this way to secure financial capital. We found that emphasising this image of a venture’s potential market disruption does increase the odds of receiving first-round funding. This is because the promise of being a ‘game-changer’ fosters investors’ expectations of extraordinary returns on their money. However, a highly disruptive venture’s future success is often uncertain, which deters investors from making large speculative investments into it.”

The research suggests that entrepreneurs can craft the communication of their vision to help achieve their funding goals.

Timo says: “Despite the temptation to pitch a venture as disruptive, entrepreneurs should be judicious with the ways they attempt to secure funding. If getting an investment of any size is very important, pitching a highly disruptive vision might be key to grabbing the right people’s attention. But if it’s more important to attract bigger investments, it might be smart to avoid communicating a disruptive vision of the effect of your start-up.”

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The fragile line between financial returns and social good – how much can, and should, personal values influence a portfolio and asset allocation

By Charlotte Filsell – Head of Client Relationship Management at Sandaire.

In many industries no two clients are the same. In Family Offices this is particularly evident. Every family, and every individual within that family, is entirely unique and is continually growing, evolving and shifting their needs and priorities.

This is a fascinating and complex journey to help families navigate. Where this is especially pertinent, is finding the delicate balance between financial returns and social good. As such, it’s incredibly important that families have access to delicate guidance and careful stewardship, so they can find the right balance to match both their values and their long-term needs – and to match their individual and familial priorities.

As families navigate a generational wealth transfer to the younger generations, social good and impact investing becomes more apparent. There is undoubtedly an increasing trend from the younger generation, to go beyond a simple financial transaction or donation to worthy causes. When it comes to using their wealth, millennials tend to be more concerned about making their money go further, making a larger impact, and are interested in finding sustainable interventions and solutions. Differences certainly exist across generations, but what unites family members, is the motivation to make the world a better place.

In philanthropy, this can be reflected in a desire to learn about an issue and understand the nuances in order to direct effort and resources as effectively as possible. To achieve this effectively, it’s crucial to work closely with clients to assist with their philanthropic endeavours, including helping to find causes that are important to them and guiding on how they might be able to make a positive contribution. In addition to this, connecting clients to other families in the same situation, or perhaps further along the philanthropy journey, allows them to share ideas and experiences, and apply these to their own particular investment desires.

In no small part because this is such a personal yet complex issue, families are increasingly looking for advisers who not only understand the intricacies of the financial and investment landscape, but who have a thorough grasp on the values and philanthropic intentions of the client. This can make a huge difference. It’s incredibly important to provide thoughtful guidance and careful stewardship to help families strike the right balance. This can take many forms – an effective family office must shift with the needs of the families it serves and take on the role that’s required – whether that’s a leader, a partner, a facilitator, or a mediator.

The trend towards Socially Responsible Investment (SRI) has led to the integration of environmental, social and governance (ESG) factors into investment decisions. The development of SRI and impact investment is offering the prospect of achieving returns measured in more than merely financial terms; it is embedding values and responsibility into investment decisions. While many businesses may have long been delivering more than financial returns, social and impact investing is bringing intention to the fore in investment selection and outcome measurement into the evaluation of success.

The crucial role of the family office is to help steer the families we serve through this fascinating and complex process, developing a successful wealth plan that futureproofs their wealth, whilst satisfying their philanthropic interests and passions. Although a fragile line, we believe that a portfolio can satisfy both financial return objectives and positive social impact that reflects a client’s personal values, acknowledging that a balance will need to be struck depending on the needs of each individual client.  

BankingCash Management

ETS Corporate Business Brokers Sell Coffee shop London within 24 Hours!

Tram Coffee Shop in Richmond sold to a new business. ETS Corporate business brokers sell cafe London in record time!

Manuel and his wife Anna Conceicao contacted Zach Dogar of ETS Corporate Business Brokers after they had a sudden medical emergency. Anna required urgent treatment which was to start in 5 weeks and they could no longer operate the business.

They had only opened the business in October 2018 with an investment of over £35,000. ETS Corporate placed the business on the market on the 12th November 2018 and within 24 hours had secured a non-refundable deposit of £5,000 from the Buyers. The sale was concluded on the 22nd December 2018, at record speed thanks to ETS Corporate associations with a good team of lawyers and the determination and initiative from the Owners. It was sold for the full asking price of £34,995, ensuring the medical treatment was administered on time and the Clients were able to recoup their investment.

This case demonstrated that ETS Corporate is very quick, efficient and have excellent industry knowledge. They know where to pitch the sale price to get the result for the client whilst obtaining the best price. Their [lockout fee|(a non-refundable deposit paid by the Buyer when a sale is agreed) ensured that the buyer was serious and genuine and they know what information to place on the marketing to get the most effective result. They also work with a diligent team to get the job done for the Client.


This very new coffee house business was being sold due to illness. It has been operating since October 2018 with a husband and wife team.

The goal of the business was to be the artisan coffee house of choice for the local community in Richmond, the address being 226 Upper Richmond Road West, East Sheen, Richmond SW14 8AH. It attracted shoppers, downtown business workers, tourists who visit the city, and students, by providing a higher quality experience than any competitor.

The coffee bar was an independent family run coffee house that offered residents, visitors and the business community a different, more personal style of artisan coffee house by providing a uniquely flavorful coffee and cakes as well as a comfortable environment to socialise, relax or work. It had huge potential in the short time it has been open.

It offered some individual and unique foods as all cakes, salads, toasties, and baguettes are hand made in house on demand. They also offered a warm, trendy and light atmosphere as well as a personalised welcome and service to all their customers.

The Owners had planned to obtain a drinks licence and open later from Thursday to Saturday in order to serve cold meats and cheese platers as well as other Mediterranean foods accompanied by wine/beer. In addition, they wanted to apply for an A3 licence so that they could extend their menu by including hot food options. This change of use was already contemplated in the current lease.


The Owner contacted many business brokers and decided to use ETS Corporate for many reasons. They were able to place the business on the market within 24 hours and offered a personal and professional service. Further, ETS Corporate did not charge upfront fees and was therefore motivated to sell and results focused, as they pay for each client’s marketing upfront themselves; a majority of agents charge upfront fees. The valuation was realistic and Anna and Miguel were confident in ETS Corporate abilities.

If the Owners had not sold the business, they were going to lose all their investment and still be liable for rent under the lease. It was imperative that the business was sold within 4-5 weeks before Anna’s treatment started.

The owner was initially referred from Daltons Business, with whom ETS Corporate have a long-standing relationship.


ETS Corporate first of all obtained all the information from the Owners and was on the market within 24 hours of instruction. This was after a valuation was done within hours of being contacted and all paperwork was signed electronically. ETS Corporate have a very automated system, which is largely internet based and therefore are able to move very quickly and without the need to send salespeople to clients. All valuations and the whole process is handled by Zach Dogar, who has over 22 years experience in the industry.


ETS Corporate was able to find a suitable Buyer for the Owners within 24 hours including securing a £5,000 lockout fee and complete the sale within just over 5 weeks of instruction.

For the Clients, they were able to sell and get their investment back and get on with the treatment which was starting after only one month.

The Buyer’s Roya and Amir Fanaie were very keen on the site which is extremely busy and on a prominent corner plot. They wanted to offer authentic and traditional Iranian dishes that are not available locally.

They re-named the business Neeman after their two sons and as well as coffee and tea, they offer healthy drinks and smoothies. They also provide pomegranate Juice, which is very popular in Iran.

They are planning to introduce other dishes such as:

Haleem for which Roya has her own recipe;
Various home-made Iranian soups again from an old family recipe; and
Shirin Pollo which is a sweet Iranian dish

All the dishes will be slightly adapted for the British palate.

Amir found the service ETS Corporate offered to be “very good and particularly good was the punctuality, politeness and honesty. We were very happy with the time scale. We were first-time Buyers and you helped a lot.”

Roya said “to be honest, the service was very reliable and friendly. “When we paid the non-refundable deposit of £5,000, you emailed us back in 10 minutes to let us know you have it I can trust you and your company” The non-refundable deposit or lockout fee is very important as it ties the Buyer to committing to Buy the business at the agreed price and this stops Buyers taking advantage of the situation by threatening to pull out in an attempt to reduce the price.


Read the full case study here

For a free e-book “How to sell a cafe” click here

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TrueLayer launches one of Europe’s first Open Banking based Payments API

TrueLayer, Europe’s leading provider of Open Banking and financial APIs, has launched one of the first Open Banking and PSD2 based Payments API. 

 

The API, which is in public Beta, offers a new way for businesses and consumers to pay for goods and services or transfer money. It is an alternative to credit and debit card payments, bank transfers and traditional payments processors. 

 

By using the payment initiation process created by PSD2 – the European Directive that oversees ‘Open Banking’ in the EU – the API confers a number of benefits:

 

  • Immediate settlement – cleared funds are received in few minutes (during business hours) – in contrast to the several days experienced by most businesses
  • Secure and fraud-proof – the API requires active bank authentication before any money can leave the account. This means high security and extremely low fraud rates
  • Cheaper – as there is no credit extended and fraud is highly unlikely payments do not have the high fees of card transactions
  • Streamlined – customers do not need to manually type in a business’s bank account number to transfer money to a business

 

The API works with all major UK banks, and more specifically, the CMA9. TrueLayer, which was one of the first companies in Europe to be approved as an Authorised Payment Institution with PSD2 permissions – Account Information Services and Payment Initiation Services, believes this API marks a major milestone in the development of Open Banking in the UK and the liberalisation of financial services.

 

Francesco Simoneschi, CEO and co-Founder of TrueLayer, said: “Companies often throw out cliches such as ‘game-changing’ or ‘disruptive’ when they launch a new product, but in this instance we are looking at a very meaningful and very important innovation. It puts the banks back at the centre of the payment process, allowing them to create competitive and differentiated payment experiences as well as enabling entirely new opportunities for deeper purchase flows into the banks’ mainstream digital channels. For fintech applications and merchants, payments initiation fills a huge gap in the European payments market for use cases that are currently largely underserved by traditional payments products. 

 

“The fraud prevention aspect of the API alone would have made a huge impact, however, it is just one of a range of benefits. Near instant transactions, low fees and a streamlined process are all significant and tangible improvements for businesses and consumers. 

 

“When Open Banking was launched this was the development many people in the financial industry were waiting for. It is a new form of online payments that will add much needed competition and open the door to range of innovative applications. Our entire team has worked incredibly hard to develop it and the most exciting aspect is that it’s only the beginning.”

 

The Payments API began beta testing with a dozen companies including digital wealth manager Moneyfarm and ‘build your own fintech’ platform Wealth Kernel. 

 

Giovanni Dapra, CEO and co-Founder of Moneyfarm, said: “We firmly believe that technology has the capacity to radically improve customer experiences in the financial services industry and, ultimately, help people realise their financial goals.

 

“This is why we’re delighted that TrueLayer has launched an Open Banking Payments API. Its potential to ease a lot of pain points by improving the security, speed and availability of transactions is very exciting. We have been anticipating a breakthrough like this from Open Banking which will directly benefit our clients and encourage further innovation in this space.”

 

Joe Campbell CTO of WealthKernel, said: “TrueLayer’s new API will enable our clients to quickly build products and services that offer a highly secure fully integrated payments experience. Not only does it greatly reduce our operational costs and risks, it also improves conversions and provides a great user experience. 

 

“This is an incredibly important step in the realisation of Open Banking’s potential. It provides a vehicle for a host of new applications to enter the market which will vastly improve how financial services work for businesses and consumers. We’re very impressed by the Payments API and excited to see the innovative ways it will be used.”

 

TrueLayer expects to launch an updated Payments API later in 2019 which will add features such as future dated payments, standing orders and batch payments.

 

The Payments API launch follows last month’s extension of TrueLayer’s Data API to Germany. Over the last year it has secured a series of major partnerships with companies including Zopa, ClearScore, CreditLadder, Canopy, Plum, BitBond, Emma, Anorak. It also has a number of undisclosed partnerships in the pipeline with major companies in the consumer and financial space that will go live in the next 12 months. 

Cash ManagementMarketsRisk ManagementTax

Top tips when it comes to completing your self-assessment tax return

The time of year is almost upon us where millions will have to complete their self-assessment tax return. Whether that’s as a sole trader, a freelancer, a contractor or running your own businesses, anyone who works for themselves will have to complete their forms before the annual January 31 deadline. For many, it can seem like a daunting task, so is there anything you can do to make the process easier?

 

 

James Foster, Commercial Manager at specialist accountancy provider Nixon Williams

At Nixon Williams, we manage a large client base of small businesses, contractors and self-employed individuals, which means we complete thousands of tax returns each year. This experience has provided us with an in-depth knowledge of the process and how to maximise efficiency when it comes to completing a self-assessment tax return submission.

 

The majority of the working population have their tax deducted at source from the company that they work for, however, anyone that is self-employed has to complete a self-assessment tax return in order to be taxed appropriately on their earnings by Her Majesty’s Revenue and Customs (HMRC).

 

When you start working for yourself, your workload includes everything that you might need to do to make your business a success – from marketing and advertising to admin and ordering stationery. You may find that managing your finances is more complex than you might have expected as you will need to keep records of all the money you spend in the running of your business, as well as how much you earn. Many people decide to use the services of a professional accountancy firm like ours to help them through the process, but some decide to manage everything themselves. Either way, there are some simple things you can do to make the process as straightforward as possible, so here are my top five tips:

 

  • Get organised – compiling all your invoices and receipts ahead of time is the best way to alleviate last minute stress when it comes to self-assessment forms. Ideally, you’ll have kept some form of spreadsheet or an online portal up to date throughout the year of your accounts, and you can use that to finalise your tax return. But if that’s not the case, don’t wait until the very end of January to get started. There are often missing pieces of information you’ll need to track down, so give yourself plenty of time to work through everything. And don’t forget – if it’s your first time completing your Self-Assessment Tax Return, make sure you’re registered with HMRC in time.    

 

  • Know the key dates for completion – If you decide to complete your tax return online then the deadline for this is any point up until the 31st January, whereas a paper tax return needs to arrive with HMRC by the 31st October the previous year. If you haven’t sent an online tax return before then you will need to register and HMRC advises you to do this no less than 20 working days before the deadline.

 

  • Separate your work and personal bank account – a number of self-employed people operate with just one bank account for personal and business use, but this can make it hard to separate out your business expenses from your personal expenses. It’s often easier to identify which costs are related to your business by having a separate business bank account. This will not only help you keep a track of your business expenditure throughout the year, but it will make your life a lot easier when it comes to your tax return.
  • Know the expenses and tax reliefs that you can claim – if you are a sole trader, for example, make sure that you know the expenses that you can claim in your tax return, as there may be some items you might forget about such as business mileage and expenses relating to working from home. It’s also beneficial to know about other tax reliefs that you are entitled to such as personal pension and gift aid payments.

 

  • Tax returns can be complex so use an accountant – having professional support can be really beneficial because an accountant should not only assist with the compliance side of things (i.e. helping you to file your tax return on time) but they will also give you pro-active advice where appropriate.  Tax returns are something most accountancy practices deal with on a daily basis from April to January, alleviating a lot of the financial stress away from clients and helping them to focus on what they do best – making a success of their business.

 

Running your own business and managing the many tasks that come with it can often push your tax return submission to the bottom of your ever-growing pile of work to do – but help is always available from professionals with the right experience and knowledge of the latest legislation. You can find further information on completing your self-assessment tax return on the Nixon Williams website here.

Cash ManagementForeign Direct InvestmentPrivate FundsStock MarketsTransactional and Investment Banking

Can You Predict The Future Price of Bitcoin?

You can’t spend five minutes reading about cryptocurrencies without stumbling across at least one prediction for the future price of Bitcoin.

Across forums, social media, newsletters, blogs, news sites and every other corner of the internet — financial analysts, expert investors, bankers, tech icons, and new enthusiasts offer up their views.

Some cite careful analysis, some base it on past trends. While others are guessing or acting on their ‘intuition.’ Their predictions are varied, ranging from a plummet to zero, to millions.

With all this noise surrounding the Bitcoin price, you might be wondering whom to believe. Or if you should believe anyone at all. Is it possible to predict the future?

Investing begins with education, not buying. So it’s important to think about the information you base your buying decisions on.

How do people make price predictions?

There are two types of analysis used for predictions: fundamental and technical.

They’re used for everything from the stock market to Bitcoin. While other types of analysis do exist, these are the main ones.

Fundamental analysis

Fundamental analysis is all about intrinsic value. You look at the factors that give something value, then decide if it’s under or overvalued. Publicly traded companies release lots of information to help with this. So, for a stock you might look at a company’s:

  • Revenue (how much money it’s making)
  • Profit margins (how much of the revenue is profit)
  • Growth potential (how much money it could make in the future)
  • Management (how competent the people in charge are)

Some of these factors can be defined in numbers. Others come down to the judgement of the analyst.

For a cryptocurrency, you might look at its:

  • Price growth (how the price has grown over time)
  • Scalability (if it has the potential to keep growing)
  • Security (if the network is secure and safe from attacks

​Technical analysis

Technical analysis is different as it focuses on an asset’s price, not the asset itself. Maybe you’ve heard the phrase ‘past performance is not an indicator of future performance.’ But technical analysis bases future predictions on the past. This can be based on a short time frame (hours or even minutes) or long (months or years.)

To do this, you look for patterns and trends in price charts, such as:

  • The average price over a chosen time span
  • The price at which a lot of investors start buying
  • The price at which a lot of investors start selling
  • The overall price trend

Do fundamental and technical analyses work?

There’s no straightforward answer to that question. Both techniques can be useful, but they also have their limitations for cryptocurrencies.

Fundamental analysis works when investors base their decisions on fundamentals. This isn’t always the case for Bitcoin. Many investors base their decisions on the decisions they expect others to make.

Technical analysis assumes that a market follows rational rules and patterns. It’s less useful for cryptocurrencies because the market is still young. There isn’t as much past data to analyse. Cryptocurrencies also have less liquidity than something like stocks.

Self-defeating and self-fulfilling prophecies

When we talk about price predictions, we run into an important concept: self-defeating and self-fulfilling prophecies.

Making a prediction about the future can end up changing what actually happens.

The prediction about the future creates the future.

This isn’t the case when we talk about a system like the weather because we can’t change it.

But when you make predictions for a system involving people, it’s different.

Hearing predictions can cause people to change their behaviour.

Sometimes this happens in a way that prevents the prediction from coming true — a self-defeating prophecy — or it can cause the prediction to come true — a self-fulfilling prophecy.

Predictions about cryptocurrency prices have the power to influence how investors act. If it’s predicted the Bitcoin price will increase, this encourages more people to buy. This can drive up the price, and vice versa.

That brings us to incentives.

The issue of intentions

Incentives are what motivate people to do what they do. It’s an important concept in investing. Financial gain is a powerful driving force.

Most investors understandably want to do whatever will make them the most money. This can include making predictions that benefit them.

Let’s say you come across an article where the author claims Bitcoin will be worth $100,000 by December 1st 2019. Rather than taking that at face value, it’s important to ask: why are they saying this? If they know for certain, why don’t they put all their money into Bitcoin, and make a huge profit? Why are they sharing that information?

Likewise, if someone claims Bitcoin will drop, you might wonder why they’re saying that. If they know for certain, why don’t they keep quiet, short it, and make a big profit?

In both cases, we need to consider the underlying incentives.

If someone stands to profit from the Bitcoin price increasing, it’s natural they’ll predict it’s going to do that. They’re hoping this will turn into a self-fulfilling prophecy. If someone stands to benefit from it decreasing or to suffer if it increases, it’s not unexpected that they’ll predict it’s going to decrease.

Luck and probability

But if no one can predict the future, how come some people do make correct predictions?

Maybe you heard that your brother’s roommate’s cousin’s coworker’s uncle correctly predicted the price of Bitcoin. Or you’ve seen someone on Youtube who seems to always get it right.

The fact that no one can predict the future doesn’t mean no one can make correct predictions.

It comes down to luck, probabilities, and information asymmetries.

First, luck. Every day, thousands of people make predictions about Bitcoin prices. It’s inevitable that some of them will be correct by luck.

As they say, even a stopped clock is right twice a day. With so many people making predictions, it’s likely a percentage of them will be correct.

When professional forecasters make predictions, they usually base them on probabilities. What’s the most likely outcome? A weather forecaster might say it’s going to rain tomorrow because there’s a 62% probability. They don’t know it for sure. It’s just more likely than not.

Then there’s insider information. If you know something most investors don’t, you have a big advantage. For example, if you have insider information that Apple is about to release a new product, it’s reasonable to expect the stock will go up. But other investors buying Apple stock aren’t aware of that information, so they can’t predict it.

Insider information is less meaningful for cryptocurrencies. There’s a less direct link between fundamentals and prices. Events that seem like they should cause an increase or decrease can do the opposite or nothing.

Conclusion

The next time you look at a cryptocurrency price chart, imagine a crowd of people in a stadium, all moving at different times but appearing to create an organised rippling motion. Because that’s what you’re seeing: the combined actions of many people.

There’s no mystical, secret order to it. There’s just lots of people making decisions based on the information they receive.

Cash ManagementFundsRisk ManagementWealth Management

Samuel Knight International on track to continue major growth following investment

Samuel Knight International, the global recruitment and project man-power specialist headquartered in Newcastle, has announced significant investment from Gresham House Ventures. Samuel Knight, which was established in 2014 and has offices in London and Bristol, provides skills and energy solutions to the energy and rail sectors on a permanent, contract and temporary basis.

The company has demonstrated impressive growth since its formation. Last year, it achieved £13m turnover and took home ‘Team of the Year’ at the Great British Entrepreneur awards. 2018 also saw Samuel Knight securing major new client contracts in more than 30 countries, boosting headcount and expanding the business to accommodate business growth.

The growth capital investment from Gresham House Ventures, using funds from the Baronsmead Venture Capital Trusts, will fund Samuel Knight’s near-term growth plans. These include increasing headcount at the offices in Bristol and London and adding local talent to the Newcastle team, from entry level graduates to experienced consultants. The company is also planning international expansion with the potential acquisition of two sites abroad.

The recruitment drive is geared up to support expansion across the energy and rail space given increasing demand from clients and candidates. Samuel Knight is focusing on achieving greater market share and boosting awareness of the brand through targeted marketing and business development. The investment will also allow Samuel Knight to further invest in technology to continue innovation within the business.

Steven Rawlingson, CEO at Samuel Knight said: “We have a clear vision of what we want to achieve with the investment, and how this will help us to support commercial goals. We are delighted to have secured the funding from Gresham House Ventures, who share in our ambition and vision to grow the business. The investment will enable us to strengthen our global offer, expansion plans and team growth.”

Paul Kaiser, Katy Lamb and Michael McCulloch from UNW LLP provided financial advice to Samuel Knight International.

Katy Lamb, Senior Corporate Finance Manager at UNW who led the transaction said: “Having worked with the business since late 2017, helping management prepare for the investment, we were delighted to advise on the finance raise and have enjoyed working with such a dynamic, fast-growing business. It’s also great to see investment into the North East.”

Steve Cordiner, Director at Gresham House said: “Steven and the Samuel Knight team have done a fantastic job in growing the business so rapidly in such a short time period and we are proud to be partnering with such an ambitious team. There is huge scope for Samuel Knight to expand globally and we look forward to supporting the business on this phase of its journey.”

Anthony Evans, Adam Rayner and Harry Hobson from Muckle LLP provided legal advice to Samuel Knight International.

Shoosmiths LLP provided legal advice to Gresham House and Dow Schofield Watts provided the financial due diligence.
The Gresham House Ventures team invests equity of up to £5m in growth businesses, supporting founders with bold ambitions for the future, whilst providing transformational capital and expertise to accelerate business potential.

Cash ManagementFundsPrivate Funds

Underestimating the digital wealth start-up threat

A recent report from GlobalData found that only 10% of wealth managers perceive robo-advisors as an immediate threat.  With the entire financial industry racing towards widespread digital adoption, it begs the question – shouldn’t they be more worried?John Wise, CEO, Co-Founder and Chairman of InvestCloud investigates.

The biggest mistake wealth managers are making is holding on to the long-standing belief that robo-advisors will only serve the lower retail market. This is the same mistake ‘brick and mortar’ stores made in sizing up Amazon as a threat; they fail to appreciate the competitive advantage a digital platform has.

Many high earners are turning to robo-advisors and digital processes for a better return on their portfolio. A recent survey from InvestCloud found that 49% of investors are using mobile apps to manage their wealth. A further 48% are using a firm’s digital offerings as a key differentiator when choosing their manager. As investors continue to be more digitally savvy, this will certainly increase.

As things stand, digital can feel like the enemy to traditional wealth managers.

The need for hybrid wealth management

What many wealth management firms are failing to recognise is that it doesn’t have to be one or the other. By deploying a hybrid model of digital and traditional services, these firms can compete successfully in this changing digital environment.  

Traditional ‘brick and mortar’ wealth managers are faced with two key challenges today. The first of these is the well-documented fee compression. The second is the transfer of wealth from aging boomers to younger, more tech savvy and less financially educated generations – Generation X, Millennials and – soon – Generation Z.

At this inflection point, everyone has one question on their mind: How are firms going to attract new clients and retain existing ones in a cost-effective manner? 

The hybrid model of human and digital advice means advisers can use cost-effective technology from the robo space and combine it with differentiated and engaging client experience. This will be key to serving younger demographics. Hybrid advisors will be able to scale like a robo-adviser, being able to serve more clients, while ensuring continued engagement with existing clients through face to face interactions and digital empathy tools.

This change is already happening. Those who can see it as an opportunity and not as a threat will have the upper hand.

Creating a truly personailsed digital service

 

While automation plays a critical role in increasing a firm’s profitability, it is only one side of the equation. Clients will measure the quality of a service by what they see, so continually improving the quality of their digital experience is critical.

When an adviser cannot speak and interact with clients face-to-face, it can often be difficult to create and maintain a strong relationship that keeps a client sticking with your business. Instead, advisers need to create the same level of service online. Financial institutions instead need to build digital relationships, where each client can be engaged on their own terms.

This is why the digital experience is so important. It is not just about providing online services – wealth management clients also require a truly personalised, beautifully designed, intuitive and easy-to-work-with platform that caters to all their individual needs.

But this should not be one-sided. The client and adviser portals need to be directly linked, so the adviser can see what the client is looking at, or even influence the dialogue remotely using chat, video or direct messaging. This way, advisers can deliver complete personalisation.

The importance of data

Firms can not solely focus on the client-facing aspects of their business. Looking behind the scenes is equally important.

Getting information correct and accessible is key to success when operating at scale. Adopting a data warehouse is the most important aspect of any digital strategy. Information is power – but only if it is correct, gathered in one place, and is in a structured format.

Many traditional firms fail to appreciate how information from correctly managed data can be leveraged to better serve their customers. To use the Amazon analogy again – the amount of client information they can use from customer profiles is something brick and mortar stores can only dream of.

Using the right digital platform, wealth managers can collect client data, but also monitor how this information changes. For example, they can see which demographic pays closest attention to market changes, or how a client’s investment objective or risk tolerance changes over time.

Those using the right digital platforms can access deep behavioral analytics, which in turn helps them support more clients with less resources. Data in today’s digital environment goes beyond ‘csv’ files to include text, chat, documents, and pictures. Imagine an advisor on a call where the client is asking about a recent capital call transaction. Centralised platforms enable advisors to access all relevant client information, including primary documents from the custodian or fund administrator.  

The last piece of the puzzle is adoption. How are digital platforms helping wealth management firms increase adoption and retain existing clients?

Behavioral science functions combine unique and customisable digital personas. The right platform will allow financial institutions to connect with all their clients, despite vast differences in wealth, age, outlooks, and all the numerous facets that make them unique. Digital engagement requires human empathy, and personalised platforms can make each user feel  that their financial concerns are understood, whether they are Baby Boomers, Generation X or Millennials.

These elements are what constitutes a great overall digital strategy in 2019. Armed with the right tools, advisers will have an advantage over the robo advisers.

This is the holy grail of hybrid wealth management: Automated digital processes combined with the advantage of human insight. Being able to undertake ad hoc tasks for clients or difficult-to-do exercises that are a challenge, can now be automated with the click of a button. Digital empathy – expressed through the right tools – will set you apart. Longer retention, higher AUM growth and improved quality and operational efficiency all await.

With the right digital strategy, robo advisers have nothing on you.

ArticlesCash ManagementWealth Management

The 5th Money Laundering Directive; mandating the use of electronic verification

Money launderers using increasingly sophisticated methods of moving illegally-earned cash through criminal networks. In response, anti-money laundering (AML) law is constantly evolving, and successive legislative updates reflect the EU’s determination to keep pace.

Following the Panama Papers, Paris and Brussels terrorist attacks, the 5th Money Laundering Directive – published in the European Journal in June 2018 – made some important amendments in an attempt to counteract terrorist financing and increase the transparency of financial transactions.

One of the biggest changes was the stipulation that electronic verification is used when undertaking Customer Due Diligence and Know Your Customer procedures.

Member states will have until late 2019 to implement the 5th Money Laundering Directive. As we know, the UK is due to leave the EU on March 29, but the UK Government has already committed to implementing the Directive to ensure its position as a major international financial player.

Electronic verification must be used where possible

Regulated businesses have always been able to use electronic verification as either an alternative or supplementary to traditional documents such as passports, driving licences and utility bills. But with the 5th Directive now stipulating that electronic verification is used where possible, regtech has been thrust into the spotlight.

The preamble to the Directive reads: “Accurate identification and verification of data of natural and legal persons are essential for fighting money laundering or terrorist financing. The latest technical developments in the digitalisation of transactions and payments enable a secure remote or electronic identification”.

It then goes on to state the following “Those means of identification as set out in Regulation (EU) No 910/2014 of the European Parliament and of the Council should be taken into account, in particular with regard to notified electronic identification schemes and ways of ensuring cross-border legal recognition, which offer high-level secure tools and provide a benchmark against which the identification methods set up at national level may be checked. In addition, other secure remote or electronic identification processes, regulated, recognised, approved or accepted at national level by the national competent authority may be taken into account”.

While not all European countries have electronic identification solutions, the UK has a long-standing acceptance of such methods of identification and as a result, leads Europe in terms of regtech. In fact Of the 60 European companies on the RegTech 100 list, half were from the UK, up from 26 last year, which shows just how dominant the UK is in this sector and how much it is growing.

Commercial PEP and Sections solutions needed

The Directive also requires member states to produce lists of politically exposed persons (PEP). However, these lists will not give specific names, just the position of these individuals, which means there will still be the need for commercial PEP and sanctions platforms that collate and maintain these databases.

New Central Registers of Beneficial Owners

The UK has always tended to “gold plate” the money laundering directives when enacting them into legislation, but this has not been the case with many other European members; under the 5th Directive, this will have to change. Following the 5th directive, member states must create central registers of beneficial owners and must allow a clear rule of public access so that third parties can establish who the beneficial owners of corporate and other legal entities are.  

Art dealers now come under AML regulations

Another interesting change under the 5th Directive brings in new business sectors for the first time including art dealers dealing with transactions over 10,000 EUR, all forms of tax advisory services and estate/letting agents where the monthly rent is 10,000 EUR or more.

Tougher rules on Virtual Currency Exchange Platforms and Custodian Wallet Providers

One of the ‘increasingly sophisticated’ methods launders use to facilitate terrorist financing and money laundering is virtual currencies.

In response, the 5th Directive stipulated that virtual currency exchange platforms (VCEP) and custodian wallet providers (CWP) will now have to register with national authorities, undertake customer due diligence, monitor transactions and report suspicious transactions.

It is hoped that as a result of these new regulations FIUs will be able to monitor and detect terrorist financing and money laundering through virtual currencies

The 5th Directive also calls for member states to create central databases comprised of virtual currency users’ identities and wallet addresses.

What happens next?

Member states have to amend their existing legislation or create new laws to bring the 5th Directive changes into force, which in the UK, this means the Government will need to amend the 2017 money laundering regulation which came into force last year or create a whole new piece of legislation.

All regulated firms – those that are regulated now and will be following the changes in the 5th directive – should be aware of these changes and what they mean in terms of their own compliance. SmartSearch can provide a one-stop shop for electronic verification checks – PEP, KYC and sanctions -giving firms the peace of mind that they are meeting all their money laundering regulations.

By Martin Cheek, MD, SmartSearch
BankingCash ManagementFX and Payment

MILLIONS OF BRITS MISSING OUT ON THE BENEFITS OF OPEN BANKING REVOLUTION

Out of control spenders want to save but research reveals that Open Banking revolution is passing them by

 

12 months after the launch of Open Banking in the UK, awareness of it and understanding of what it means is desperately low, despite Brits’ desire to get hold of their finances.

 

  • Just 9% of the survey group, which was representative of all GB adults (aged 18+) used Open Banking services.
    • In fact, what understanding there is about Open Banking services is non-existent, or simplistic and confused.
  • Fewer than 1 in 4 people – 22% – have heard of it; 4 in 5 don’t know what it means or entails.

 

The findings appear in a new report from Splendid Unlimited, the company helping retailers and the big banks design & build new digital platforms. Splendid Unlimited’s findings are taken from the Unlimited Group Omnibus and also use online community methodology.

 

A nation Scouring and Saving

In a nationally representative omnibus survey, it is revealed that:

  • One third (29%) of Brits feel they lost some control of their spending over the Christmas period
  • Fewer than 4 in 10 (39%) were able to save for the Christmas festivities
  • Unsurprisingly more than half (57%) of Brits are now scouring the internet, friends and the media for money saving tips – rising to three-quarters (73%) of tech-savvy 18-24 year olds
  • Half of Brits (48%) are looking to save in January.

 

Innovation can help the nation

Overall, the findings clearly demonstrated widespread interest in and the demand for simple, reliable and independent financial advice. Yet there was a disconnect between this need and consumers’ knowledge of the many ways Open Banking applications can save you money, which include:

 

  • Automatic savings programmes, with algorithms on apps such as HSBC’s Connected Money and Chip allowing Brits to save small amounts that can be measured from time to time against specific goals – like a once-in-a-lifetime trip
  • “Quick Switch” from Bean which alerts consumers if they are on overly expensive recurring contracts and points you towards a better deal
  • Automatically generated bills calendars from apps like Yolt, which take the guesswork out of financial planning.

 

Asked to describe Open Banking in their own words, the top two definitions were: banks sharing your information (26%) and all accounts in one place (15%). Beyond this was little clarity – comments included “it’s online banking”, “it’s data sharing” and “it’s easier”.

 

Despite these impressive initiatives, first impressions of Open Banking were mainly negative – demonstrating a clear communications failure. When participants were offered further information, however, second impressions were far more positive – highlighting the apparent opportunity Open Banking service providers are yet to harness.

 

The research also highlighted that there is some dissatisfaction with a number of aspects common amongst Open Banking services and, also, some criticism of specific apps – suggesting a need for Open Banking service providers to re-think and refine their product offerings in order to make the most of the legislative change.

 

Participants saw pros and cons across all apps tested. They positively rated Yolt for the ability to see all accounts in one place, spend breakdown and transparency; Chip for the same, and its perceived independence; and Consents. Online for the proposition of security and privacy.

 

Although HSBC’s Connected Money came out on top, participants questioned whether their own financial situation was complicated enough to warrant using this app and expressed concern about Chip siphoning off money for investing, even if overdrawn and for AI “managing my money”; Bean for possible bias; and Consents. Online for complexity – especially, its use of complex language.

 

Clarity, transparency and simplicity are key attractors. AI, bias and complexity are key dissuaders. Overall, the findings show that trust was a key issue. At a time when trust in financial institutions has stalled[i] and public concern about data breaches and data security have never been higher[ii], it seems there is a perception that the ‘open’ in Open Banking infers a lack of security.

 

Paul Bishop, Founder and MD of Splendid Unlimited, the company helping retailers and the big banks build these new digital platforms, said:

 

“Open Banking providers are failing to address the lack of trust, privacy and security concerns, and ignorance of the benefits of using their products that have limited uptake of their services to a mere 9%.

 

“These findings highlight a number of key challenges Open Banking service providers must now address.

 

“But they also offer key lessons for the effective and successful roll-out of other new technology-driven service innovations – notably, the further and more widespread introduction of blockchain technology – both in the financial services sector, and beyond.”

 

ABOUT THE RESEARCH

 

Splendid Unlimited transforms businesses digitally, making the customer experience of interacting with the brand on and offline, simple and seamless.

 

Splendid Unlimited’s findings are taken from the Unlimited Group Omnibus and also uses online community methodology.

 

The Unlimited Group Omnibus is a nationally representative omnibus survey of 2,005 adults from across Great Britain, between September 28 and October 5 2018. The figures have been weighted and are representative of all GB adults (aged 18+).

 

Survey results on Christmas & January are drawn from a nationally representative, weighted survey of 2,053 adults across Britain between 19th and 21st December 2018, conducted by Walnut Omnibus.

 

Twenty-four people were also interviewed via an online community over the course of four days. The aim was to interview 24 people who used Open Banking initiatives but this was challenging, so participants all had an account with a challenger bank and were a mix of ages, gender and socio-economic background.

Cash ManagementRisk ManagementWealth Management

YOTHA LAUNCHES WORLDWIDE INNOVATIVE NEW PLATFORM WILL MAKE YACHT CHARTERING SIMPLER, FASTER AND FAIRER

YOTHA, the new digital yacht charter platform connecting owners, charterers and yachting professionals, has launched worldwide with a promise to bring trust and transparency to the yachting market.

YOTHA’s digital technology will make yacht chartering faster, simpler and more straightforward and www.yotha.com will become an invaluable tool for everyone involved in the industry.

YOTHA offers a unique chartering experience, allowing customers to negotiate directly with the owner’s representative, book their trip online and then benefit from a free concierge service which helps them to create their own bespoke itinerary.

More than 100 of the world’s finest luxury yachts are available for charter on the platform, which has launched worldwide for the 2019 season after a beta version was successfully tested last summer. Hundreds more yachts from the global charter fleet will be added to the platform in the coming months.

YOTHA was founded by Philippe Bacou, who has owned and chartered luxury yachts for more than 15 years. Frustrated by his own experiences as an owner, he decided to create a unique digital platform that would enrich the charter experience, shaking up the market in the same way that Booking.com has revolutionised the hotel industry.

By making chartering easier, YOTHA will expand the market and attract a new generation of charterers. Its unique features include:

  • A facility to negotiate the charter price online, supervised by a 24/7 customer care service
  • Substantially reduced commissions – YOTHA takes an 8% commission if a yacht is booked directly through the platform, or 4% if the booking is made through a broker, compared to the standard industry commissions of 15% to the broker and an additional 5% to the central agent
  • A simple, fair electronic charter contract balancing the interests of charterers, owners and professionals
  • All financial transactions secured and guaranteed under the supervision of FINMA, the Swiss banking regulator
  • Partnerships with luxury brands, including award-winning concierge service Quintessentially Switzerland, and leading yacht service providers

YOTHA will encourage more owners to charter their yachts because they will have greater flexibility, including shorter charters and more off-season deals. It will empower their captains, allowing them to connect with charterers through the YOTHA app in advance of their trip to plan the perfect itinerary whilst providing all their favourite food and drink on board.

Amongst the 114 yachts currently registered for charter on the online platform are some of the best-known super yachts in the global fleet, including the 90m Lauren L, the award-winning 50m Vertige and the 55m Mustique. Smaller motor yachts and sailing boats are also available on the platform. Yachts are available for the end of the Winter season in the Caribbean and the upcoming Summer season in the Mediterranean.

Philippe Bacou, Owner and Founder of YOTHA says:

“I am excited that YOTHA now opens the way for the digital transformation of the luxury yachting industry. Our ambition is that our innovative new solution for chartering will improve the customer experience, offer new services and help attract new customers to luxury yachting. We are keen to explore fresh ways of expanding the charter business and want to form partnerships with investors, brokers and other key industry players.”

“At YOTHA, we hope to increase the size of the market both in charter volume and services through in-depth industry co-operation”

“It is an exciting time to be involved in the Yacht charter industry and we hope to improve the experience for everyone involved in the industry: charterers, brokers, agents, captains, crews and owners.”

BankingHedgeMarkets

Alternative SME finance provider Capify secures £75 million credit facility from Goldman Sachs

Capify, a leading alternative SME finance provider in the UK, has secured a £75 million credit facility from Goldman Sachs Private Capital (“Goldman Sachs”) to support its future growth plans and provide working capital to thousands of British SMEs over the coming years.

 

The Greater Manchester-based fintech company will use the new facility to accelerate the growth of its lending business to UK SMEs through its merchant cash advance (MCA) and business loan products. 

 

Capify has been active in the UK since 2008, executing over 9,000 transactions for UK SMEs seeking working capital for their business. Since inception, Capify has helped deliver £150 million in business loans and merchant cash advances in the UK.

 

“This is a landmark achievement for Capify and we are very pleased that we have secured this financing with Goldman Sachs, one of the premiere capital providers in the world,” said David Goldin, Founder and CEO of Capify.

 

“This new multi-year credit facility allows us to deliver on our own growth plans, whilst providing much needed access to capital for UK SMEs to help them to grow, to boost the economy and to create jobs.”

 

“The credit facility validates our company as a leader in the marketplace and underlines the strength of our business model to provide simple, affordable and smart financial options to UK SMEs.”

 

Pankaj Soni, Executive Director at Goldman Sachs Private Capital, said: “Capify is one of the leading SME finance providers in the UK. We have been impressed with the management team, business model and innovative finance solutions for SMEs. We look forward to supporting their growth in the years ahead.”

 

“We are extremely excited about our future relationship with Goldman Sachs,” added John Rozenbroek, Chief Financial Officer at Capify. “The credit facility will enable us to continue on our growth trajectory while offering even more attractive and innovative solutions to thousands of small businesses in need of capital.”

 

David Goldin, Founder and CEO of Capify.

BankingCash ManagementMarketsRisk Management

FISCAL TECHNOLOGIES LAUNCHES NEXT GENERATION PURCHASE-TO-PAY RISK MANAGEMENT PLATFORM

FISCAL Technologies, a world leading provider of forensic financial solutions and services, today announced the launch of NXG Forensics®, the next generation Purchase-to-Pay (P2P) risk management platform.

NXG Forensics is forged from FISCAL’s 15 years of experience protecting organisational spend and combines a comprehensive range of industry-recognised tests with Machine Learning to deliver unparalleled risk protection. It is designed specifically for Finance, P2P, Shared Services and AP teams and sits securely in the cloud, to reduce payment risks, fraud and compliances issues.

The powerful user interface and diagnostic reporting elevates finance teams away from transaction processing to strengthening internal controls that reduce costs, protect working capital and drive process improvements.

Protects organisational spend

NXG Forensics integrates into all major ERP systems and delivers constant protection and monitoring with the highest possible risk detection rate. By using a platform of continually evolving detection methods and machine learning, new fraud tests are regularly added to keep organisations ahead of emerging threats.

Delivers immediate and tangible cost savings

NXG Forensics provides unique daily forensic insights about payment risks before they impact working capital or damage reputation. The comprehensive reporting centre provides detailed and powerful diagnostics to quickly identify and understand exceptions and enable corrective actions to be taken.

Drives process improvement

The forensic analysis engine in NXG Forensics improves supplier risk profiling and identifies more high-risk transaction exceptions than ever before, whilst radically reducing the number of false positives. This generates actionable insights for root cause analysis, leading to faster resolution and creating time efficiencies.

David Griffiths, CEO at FISCAL Technologies comments “Organisations are facing an unprecedented rise in geo-political risks to their Purchase-to-Pay supply chains. Changing regulations along with the increasing speed and complexity of transaction processing all add to the challenge of protecting against payment risk, fraud and compliance breaches. NXG Forensics provides the most effective way to manage this risk and optimise financial performance both in the short and long-term.”

The next generation NXG Forensics platform is available immediately to empower finance teams to continually protect organisational spend with a continuous preventative approach. Implementation is fast and efficient, supported by a proactive customer success programme, built on strong relationships and a supportive knowledge-sharing environment to ensure maximum benefit is achieved.

Dr Alfred Pilgrim, CTO at FISCAL Technologies concludes “We are committed to making our forensic analysis platform the best-in-class and enabling our customers to protect effectively their Purchase-to-Pay cycle against risk and fraud. NXG Forensics demonstrates our continued focus on innovation and desire to offer the best risk prevention framework. It will empower organisations to be increasingly responsive to increasing complexity and changing regulations.”
For more information please visit www.fiscaltec.com

ArticlesBankingFinanceSecurities

Tiso outdoor pursuits retailer chooses Eurostop connected retail systems to support business growth

Scotland’s leading outdoor pursuits retailer invests in Eurostop stock management and EPOS systems for faster and more accurate management of stock replenishment and promotions

Eurostop has announced that Tiso, Scotland’s leading outdoor clothing & equipment retailer, has selected Eurostop connected stock management and EPOS systems for over 13 stores. Tiso chose Eurostop e-rmis, its stock system, e-pos touch and the business intelligence module, e-cubes, to provide the detailed stock management and replenishment that it requires to manage the variety of items sold in store and online. Over recent years Tiso has increased both its number of outlets and product range, stocking a wide variety of clothing, footwear and equipment for adventurer sports, including alpine biking, climbing, skiing and general outdoor pursuits. The recent investment in Eurostop retail systems supports further expansion plans.

Tiso selected Eurostop’s e-rmis system to enable tracking of items from warehouse to store in detail. Eurostop’s system manages the entire replenishment process, from when items are picked using a wireless scanner, to packing and delivering to stores. Integration with the stock system provides head office with up-to-date sales data of all product lines across all store and online channels. In addition, detailed business insights from sales data using Eurostop’s e-cubes module aids merchandise planning.

Chris Tiso, Chief Executive of Tiso Stores said; “The replenishment facility within e rmis was exactly what we were looking for. It gives us far greater control of store replenishment, so we have an accurate view of the business.
“Customised reporting gives us a handle on the stores’ performance, especially with our expansion plans. Our new Aviemore store will have even greater floor space for customers to try out products and investing in Eurostop systems provides us with the technology in store to provide an even better customer experience from trial to purchase.”

As part of the connected systems for stock management, Tiso has installed Eurostop’s new e-pos touch, with added functionality to manage promotions and offers at the till point.
Eurostop’s e-rmis also enables Tiso to load products easily onto the system in bulk from one spreadsheet, with SKU, colours and sizes. Purchase orders can also be created in the same way, by importing a spreadsheet with supplier details, items, cost prices and quantity saving time and reducing errors in re-keying.

Phillip Moylan, Sales Manager at Eurostop said; “Retailers like Tiso have built successful businesses by staying true to their founding principles of loving the products that they sell and providing great customer service. Eurostop’s connected retail systems have been developed to underpin a retailer’s operations with accurate stock management to support sales and buyersE. Having the information at their fingertips enables them to react to customer demand and provide a great service.”

MarketsTransactional and Investment Banking

Luxury lifestyle title Tempus Magazine joins new publisher Vantage Media Group

Tempus will be the flagship title of newly formed publishing and content agency Vantage Media Group

Luxury lifestyle title Tempus has been acquired by newly formed Mayfair-based publisher and content agency Vantage Media Group, marking a new phase of growth for the award-nominated publication. Tempus undertook an extensive rebrand in 2017, transforming from a niche watch title to a coffee table book-style magazine specialising in luxury lifestyle and supported by the UK’s first dedicated daily luxury news website, tempusmagazine.co.uk.

Vantage Media Group will see core members of the brand’s editorial and events team continue to grow Tempus through 2019, while also offering its expertise to Vantage’s clients via contract publishing projects, digital content creation and luxury brand events.

“Team Tempus is delighted to join Vantage Media Group and launch this new company,” said editor Rachel Ingram. “It’s an exciting opportunity not just to continue creating this quality magazine for the luxury sector, but also to steer the creative vision of Vantage Media Group from the very beginning. We look forward to bringing our team’s expertise to our present and future clients.”

The move follows months of negotiation, with the deal closing just weeks after the publishing industry’s prestigious annual BSME Awards at which Tempus received two nominations – for Editor of the Year and Art Editor of the Year in the independent category – for the first time in its history.

“We’re delighted to have Tempus Magazine and its talented team on board to head up the launch of Vantage Media Group,” said chairman Floyd Woodrow. “We look forward to working on a range of projects that will benefit from their expert knowledge, rich industry contacts, attention to detail and creative flair.”

As part of Vantage Media Group’s portfolio, Tempus Magazine will publish six issues in 2019, starting with its annual Travel Edition in late January.

“It’s been a challenging year for the publishing industry as a whole but we’re confident that there is extraordinary potential in bespoke content creation, particularly in the luxury sector,” said Ingram. “With the support of our new parent company, Tempus will be able to maintain the exceptional quality of its print and digital products, while continuing to push the boundaries of our expert editorial focus.” https://www.tempusmagazine.co.uk/

FundsGlobal ComplianceTransactional and Investment Banking

The rise of renewable energy

You can’t deny that businesses around the world have taken a greater focus on sustainability — and although this has been damaging for some companies, it has been a great shift for others. One prime example of this is the renewable energy sector; while traditional energy markets are faltering and facing a challenging road ahead, the renewables sector is breaking records.

Although a lot of markets rely on natural resources to operate, the renewables industry use resources that naturally replenish. Collected under the umbrella term of renewables is solar, wind and wave power, alongside biomass and biofuels.

As the market continues to grow, HTL Group, specialists in controlled bolting for the wind energy sector, analyses where the renewables sector is at now:

The market’s performance

The recent years have been successful for the renewables sector. In 2016, 138 gigawatts (GW) of renewable capacity was created, showing an 8% increase on 2015, when 128 GW was added.

Occupying 55% market share and using 138 GW of power, the renewable energy sector is in the lead. Following in second place, coal created 54 GW of power-generating capacity, while gas created 37 GW and nuclear created 10 GW.

Renewables’ huge contribution to the global power-generating capacity accounted for 55% of 2016’s electricity generation capacity and 17% of the total global power capacity, increasing from 15% in 2015.

Research released by the UNEP highlighted that the renewable sector prevented 1.7 billion tonnes of CO2 in 2016 alone. Based on the 39.9 billion tonnes of CO2 that was released in 2016, the figure would have been 4% higher without the availability of renewable energy sources.

Renewable market investment

Regardless of the continued growth of the sector, investments actually decreased in 2016. In 2016, $242 billion was invested in the sector, showing a 23% decrease on 2015’s figures. This reduction can largely be attributed to the falling cost of technology in each sector.

However, this could be down to the alterations made to markets on a country-specific basis. In 2016, Europe was the only region to see an increase in investment in the renewables sector, rising 3% on 2015’s figures to reach $60 billion. This performance is largely driven by the region’s offshore wind projects, which accounted for $26 billion of the total, increasing by over 50% on 2015’s figures.

Across Norway, Sweden, Denmark and Belgium, investment seems to be strong. UK investment slipped by 1% on the previous year, while Germany’s investment dropped by 14%.

Believe it or not, investments made from China decreased from 2015’s $78 billion to $37 billion. Investment from developing nations also dropped in 2016 to a total of $117 billion, down from $167 billion in 2015. In 2016, investment had almost levelled out between developed and developing countries ($125 billion vs $117 billion).

What does the future look like?

With greater developments, the future looks bright for the renewable sector. From the falling cost of technology to societal shifts like the 2040 ban to prevent the sale of new petrol- and diesel-fuelled cars, the future certainly looks positive for the sector — even if investment has declined in the past year.

In the future, it is inevitable that the sector will overtake more traditional markets on a global scale, revolutionising how we generate and consume energy.

This article was provided by HTL Group, hydraulic torque wrench suppliers.

Cash ManagementRisk Management

Why Are Investor Relations So Important?

Following the implementation of GDPR, consumers, investors and businesses around the world are becoming increasingly aware of every communication they receive from a company.

As such, compliance, in all its forms, is now even more important to businesses than ever before, and in the financial and investment space this is as vital as it always has been, if not more so. Whilst it has always been crucial to success in the investment market, now compliance, and assuring investors of compliance, has been bought to the fore.

For example, the recent announcement that the UK Government is suspending its Tier-One Investment Visa Programme, with a view to making important changes to this to combat the risk of money laundering. Bruno L’ecuyer, Chief Executive Officer of the Investment Migration Council, made the below comment on the changes and how these would affect investors.

“The UK government may not have much influence with the European Parliament these days, but it has provided an object lesson in how to manage investor migration sensibly and for the benefit of its citizens.

“According to reports, potential investors will have to agree to undergoing a thorough audit of their financial assets, proving they have control of the required capital for at least two years, and will require audits to be undertaken by suitably regulated UK firms.

“Most notably, it appears the UK government recognises the value of investment migration and desires any investment made by individuals to have a greater impact on the UK economy, which is why it is apparently looking at scrapping its own government bond option in favour of directing investment into active and trading UK companies.”

As Bruno highlights, the importance of audits and transparency in this space is as vital as ever, and firms need to be able to prove to both their investors and the authorities that they are acting properly and are fully compliant with all relevant regulations to ensure their continued success.

This is why investor relations have, over recent years, become a vital aspect of any company, fund or asset manager. Many multinational companies, such as Hitachi, Etsy and the Coca Cola Company all operate their own investor relations departments, showcasing the increasing focus companies are putting on the role.

After all, as client satisfaction and feedback become buzzwords within the corporate space, it makes sense that investor relations should also increase in importance, and many companies and investors are now embracing this side of their business. Through strong communication and specialist support, companies, investors and fund managers can ensure that their investors remain on-side and that they understand that their money is in safe hands.

Cash ManagementFinanceFunds of FundsHedgeWealth Management

BUY YOURSELF A HORSE WITH BITCOIN

Equinox Racing is a London based horse racing syndicate like no other. Focused on delivering immersive experience to its members, Equinox Racing recently opened its horse’s shares to cryptocurrency. From now on, you can use your Bitcoins to buy yourself the thrill of horse racing and the privilege of horse ownership.

 

Rob Edwards, co-founder of Equinox Racing, commented: “There is a huge amount of capital in the crypto world, and not too many tangible opportunities out there. A lot of the people who invested in crypto, particularly in the early days, are punters. They are our kind of people!” 

 

Equinox Racing believes horse racing should not be limited to the chosen few but made available to enthusiasts and new audiences on a wider scale. Having nine horses and about 100 club members and owners to date, Equinox Racing offers a range of exciting experiences. Visit your horse at the stables, speak with the trainer and the jockey, follow his evolution on social media and support him at the race!

 

D Millard from Norwich, Norfolk (horse owner), commented: “Equinox Racing delivers fantastic days out, real prize money winning opportunities, and its stable of horses just continues to grow.” 

 

For the equivalent of £34,99 per month in crypto, which is the average price for gym memberships, Equinox Racing enables you to be part of something greater than a pair of weights. And ownership is available from £150 pounds (in crypto as well)! Thrill, suspense, joy, grace, excitement, exclusivity, are the words that describe the emotions experienced during a horse race.

 

J MacLeod from Ayr (horse owner) commented: “Simply amazing.  My passion for racing has grown now that I have affordable ownership.  I never thought I would be able to own any part of a horse with such a stunning pedigree.” 

 

Equinox Racing is currently expanding its horse’s portfolio and looking at new acquisitions. It is now the perfect time to get involved!

 

More information on: https://equinox-racing.co.uk

BankingFinanceFundsWealth Management

WisdomTree launches Artificial Intelligence ETF (WTAI)

WisdomTree, the exchange traded fund (“ETF”) and exchange traded product (“ETP”) sponsor, has partnered with Nasdaq and the Consumer Technology Association (CTA) to launch an ETF providing unique exposure to the Artificial Intelligence (AI) sector. The WisdomTree Artificial Intelligence UCITS ETF listed on the London Stock Exchange today, with a total expense ratio (TER) of 0.40%.

 

The ETF will provide investors with liquid and cost-effective access to this exponential technology megatrend that is driving efficiencies and new business capabilities across all industries globally and redefining the way we live and work.

 

Christopher Gannatti, WisdomTree Head of Research in Europe says, “We are delighted to partner with Nasdaq and CTA, who are experts in AI and technology markets. We have worked together, leveraging our combined expertise, to re-define the AI investment landscape.”

 

“To capture the full economic value of AI we place companies in three categories; Engagers, Enablers and Enhancers*. When investors think of what this can bring to a portfolio, they should be thinking over a long time horizon and about how advances like autonomously driven cars, a digital workforce, mass facial recognition and other applications of intelligent machines could change the world,” Gannatti added.

 

Rafi Aviav, WisdomTree Head of Product Development in Europe comments, “AI is a revolutionary technology and the market for AI products and services is expected to more than triple over the next three years[1]. This fund offers a unique approach to capturing this expected growth, which is the result of a year-long collaboration between WisdomTree, Nasdaq and CTA.”

 

“The fund broadly represents the upstream[2] and midstream[3] parts of the AI value chain and so balances diversification with a focused exposure on those parts of the AI value chain that stand to gain the most from growth in the AI market,” Aviav added.

 

There is no commonly used classification system that allows one to automatically choose companies engaged in the emerging AI space, so the research for the selection of index portfolio companies is conducted by experts with deep familiarity of the AI value chain and the technology markets more broadly. This ensures the portfolio remains focused on AI opportunities rather than becoming just another broad tech fund.

 

We believe the fund’s unique approach offers the best of both the active and passive investment worlds in accessing the AI megatrend. The fund’s portfolio companies are already capitalising on the AI opportunity across industries and are well positioned for AI’s growth,” Aviav commented.

 

“AI is one of the key ‘ingredient technologies’ over the next decade – deployed everywhere from factory floors and retail stores to banks and insurance offices, creating new opportunities,” said Jack Cutts, senior director of business intelligence and research, CTA. “We’ll see this play out in January at CES® 2019 – the most influential tech event in the world – where AI will be a dominant theme, showcasing the massive potential AI has to change our lives for the better. We’re excited to partner with Nasdaq and WisdomTree to make AI investible.”

 

“Artificial Intelligence is at an inflection point to drive further economic growth and create new areas of opportunity,” said Dave Gedeon, Vice President and Head of Research and Development for Nasdaq Global Indexes.  “The Nasdaq CTA Artificial Intelligence Index serves as an important benchmark for tracking the adoption of AI across a broad range of economic sectors as this influential technology hastens advancements in productivity and capacity.”

 

WisdomTree Artificial Intelligence UCITS ETF: Under the hood

The WisdomTree Artificial Intelligence UCITS ETF tracks the Nasdaq CTA Artificial Intelligence Index.  This enables investors to gain diversified exposure which is focused on companies that stand to gain the most from growth in AI adoption and performance. The index can evolve as new AI trends and companies come on stream through a semi-annual update. The Index is currently comprised of 52 constituents globally with stringent eligibility criteria:

  • Define Universe: Companies must be listed on a set of recognized global stock exchanges and satisfy minimum liquidity criteria and market capitalization criteria to be included in the index.
  • Identify and Classify: Companies are identified as belonging to the AI value

chain and classified into the following categories: Enhancers, Enables and Engagers (see below for definitions.)

  • Determine AI Exposure: The AI exposure for each individual stock is investigated and scored.
  • Top Selection: Only companies with the top 15 scores in each category (Enhancers, Enablers and Engagers) are selected for inclusion, and their weight is allocated evenly in each category.
  • Allocate Weight: In total Engagers comprise 50% of index exposure, Enablers comprise 40%, and Enhancers comprise 10% of index exposure.

*Engagers: Companies whose focus is providing AI-powered products & services.

Enablers: Companies who are key players in this space, with some of their core products and services enabling AI. They include component manufacturers (including relevant CPUs, GPUs etc.), and platform and algorithm providers that power the development and running of AI processes.

Enhancers: Companies who are a prominent force in AI but whose relevant product or service is not currently a core part of their revenue. They include chip manufacturers, and platform and algorithm providers that power the development and running of AI-powered products & services.

 

Share Class Name

TER

Exchange

Trading Ccy

Exchange Code

ISIN

WisdomTree Artificial Intelligence UCITS ETF – USD Acc

0.40%

 

LSE

USD

WTAI

IE00BDVPNG13

WisdomTree Artificial Intelligence UCITS ETF – USD Acc

0.40%

 

LSE

GBx

INTL

IE00BDVPNG13

ArticlesBankingFinanceFundsMarkets

Finding finance from start-up to listing

Mark Brownridge, Director General of the Enterprise Investment Scheme Association:

Securing funding as a start-up is often one of the biggest challenges that new businesses face in the primary stages of set-up. Not only is it often difficult to secure the funding itself, it is even more so when trying to get the right kind of funding for what the specific needs of the business are. Having structures in place to make it as easy as possible for innovative ideas to flourish and become fully-fledged is not only to the advantage of entrepreneurs and innovators.

 

One of the routes that allows this to happen in the UK is through the Seed Enterprise Investment Scheme, which offers investors tax reliefs in order to offset the higher risks involved in investing capital into start-ups. SEIS represents an alternative to start-ups from traditional finance routes such as banks that may not be willing to lend. This is especially useful for those of the small businesses that base their proposition on intellectual property as opposed to physical assets or products. These IP rich companies often have trouble finding support without physical collateral to offer as security.

 

Individuals looking to invest through SEIS can then make decisions based upon individual cases and potential rather than being held back by regulation or corporate policy. Of course, the risk still exists but with tax and loss reliefs, it is much more likely that the risk will be seen to be worth it in the eyes of an investor. Getting ideas off the ground is arguably the most important part of encouraging new businesses and creating new jobs as they grow and expand.

Luke Davis, CEO and Founder of IW Capital: Growing a business from start-up to listing is a hugely challenging proposition at each and every stage of the process. One of the most important points of this is growing and scaling the business from start-up level into a more fully-fledged entity. This jump can seem daunting for even the most prepared of start-ups and this is in no small part due to the challenges in securing funding for expansion.

Knowledge-intensive SMEs that struggle to secure funding without assets to use as collateral for loans, can benefit from schemes such as SEIS and EIS. With an industrial focus on research and development this will be key moving forward with the Governments plans to grow the tech industry. This is reflected in the increased EIS limit for knowledge-intensive companies of £2 million per year, this change has been introduced to provide further encouragement to investors to support IP-rich businesses.

Clearly supporting SMEs is hugely important for the UK economy as they represent the employment of around 16 million people, depending on who you ask, in the UK with this number currently growing at a rate that is three times faster than for big corporations. Fuelling this growth will be key moving into a post-EU economic landscape that will rely even more heavily on domestic business and job creation.

Jonathan Schneider, Executive Chairman of Capital Step: According to a nationwide study titled – A State of the Nation – The UK Family Business Sector 2017-18- family-run businesses account for 88% of all UK firms. They operate in every industrial sector across all of the UK’s regions, employing almost half of the UK’s private-sector workforce. In no small part, the UK’s family and regional businesses represent a significant proportion of Britain’s bottom line.

Family-run and regional businesses form the life-blood of the UK’s entrepreneurial landscape, and to see so many believe that the Government is not looking after this vital sector of the UK’s business community is concerning. Equally – it is apparent that the funding options available to established family-run enterprise seem to be eclipsed – in local communities – by corporate entities who have greater exposure to the most appropriate funding options. The role of the family enterprise, community SMEs and bricks and mortar productivity across the length and breadth of the British Isles must be considered a firm priority for the UK government – deal or no deal.

As both investors and entrepreneurs, we have witnessed countless examples of business owners having to give up control of their companies in exchange for funding. In many instances, even successful founders end up with a disproportionately small reward for their hard work upon exit as a result of having sacrificed too much ownership and control along the way. The Capital Step model is specifically designed to address this issue, by providing flexible capital solutions without existing shareholders having to give up ownership or independence in exchange.

Jenny Tooth, CEO of the UK Business Angel Association: We as trade bodies, policy makers and commentators bear a significant responsibility to assist UK SMEs in what will be one of the most critical periods in their business life, ensuring contingency plans, scalability options, growth strategies and immediate resilience responses to ensure their successful navigation of the seismic impact of Brexit

The UK possesses multiple geographical regions that have blooming industries outside of the capital city, something which makes the UK incredibly unique. In spite of this, a lack of accessibility to and education surrounding finance and opportunities outside of London is creating a gap between what these regions are capable of and how much they’re utilised. As 63% of all Angel Investors within the UK are based in London and the South East, it is undeniable that there is a geographically skewed funding deficit that is hindering the growth of SMEs who are positioned outside of the capital. While potential investors of differing regional demographics may feel isolated from the investing arena, the repercussions for regional SMEs reliant on this kind of funding may limit innovation and employment growth outside of the capital.
 
The UKBAA has focused a significant amount of attention on increasing regional investment, with the implementation of many angel hubs throughout the UK, especially in Northern regions. However, there is still a long way to go to fully utilise the untapped potential found within these areas. This can only be done when it is popularly recognised that there are significant investment opportunities outside of London. 

ArticlesBankingFinance

Fast growing asset based finance sector presents clear opportunities for challenger banks

Author: Kevin Day, CEO, HPD LendScape

ABF sector is growing fast

Asset Based Finance (ABF) has seen record levels of lending in recent years, with more firms than ever choosing to use this funding option. This trend is a sign of how ABF is increasingly taken seriously as a viable source of finance, which is becoming more widely accepted among businesses. Driving this growth in ABF are the larger, more established banks, but they have been increasingly focusing on large corporates. This provides an opportunity for challenger banks to expand their operations into the mid-market, and although the varying quality of credit among SMEs means it’s an exercise they should do with care, the potential returns are well worth it.

Funding record set last year

Last year set a lending record for the ABF, which largely comprises invoice financing and asset-based lending (ABL), with funding reaching £22.2 billion, an increase of around 5% compared to 2016, itself a previous record. The total number of businesses accessing ABF was 40,333 in 2017, while the number of clients with a turnover of more than £10 million increased to over 5,000, up 7% on last year. In total ABF finance now supports companies with total turnover of around £300bn.

Big banks freeing up the mid-market

Catalysts for the growth of the sector are the big lenders, major banking groups and other established financial institutions. However, a feature of their expansion is that they are moving up the credit scale, with a shift of focus to those companies with a more secure, conservative financial profiles. Many of the big banks are no longer willing, or perhaps even able, given the capital requirements, to lend to small and mid-cap size firms. But the move of these mainstream lenders up the credit quality spectrum has not reduced the needs of SMEs, many of which have limited financing options for common growth challenges, such as the need for investment into new products or moves into new markets.  

Clear opportunity for challenger banks….

Some challenger banks are already active in the ABL sector. For instance, asset finance accounts for over 20% of Aldermore’s lending portfolio, with a further around 4% accounted for by invoice financing. Secure Trust is another challenger that has been building its business in the ABL sector. However, the retreat from providing ABL to SMEs, gives challenger banks an opportunity to target the corporate mid-market and further accelerate their expansion in ABF.

…But they should proceed with care

Although the prospects are promising for challenger banks to boost ABF to SMEs, they should proceed with care. Credit quality is more variable in the mid-market and companies’ revenues, cash flow and costs can be a little more unpredictable as they are more sensitive to changes in market direction or client losses. So challenger banks should be sure that their due diligence and research on businesses looking for ABF is rigorous, including closely examining the credit quality of the accounts receivables, sales concentration and the aging of the accounts receivables.

Private equity-backed businesses offer further potential

Another area challenger banks and other alternative lenders should consider targeting are private equity backed companies. The flexibility that asset-based lending provides to a private equity borrower, such as scalability, works well for acquisitions. Additionally, what ABF can offer which is compelling for those needing finance as well as financial sponsors, such as private equity, is the flexible but limited covenant structure, greater debt capacity, and often a lower price. In the private equity arena, innovative transaction structures involving ABF have the potential to provide sponsors with an alternative to more typical and complex approaches, such as those involving Revolving Credit Facilities.

SMEs seeking to refinance from new lenders

Typically, businesses already using ABF as part of their funding strategy would typically refinance using the same lender. However, in the last few years there has been a trend for borrowers to turn away from their incumbent lenders and explore alternative options, including challenger banks, which can often offer more sophisticated and attractive financing terms. Challenger banks should capitalise on this trend by SMEs to consider a greater variety of re-financing options to further expand their ABF operations.

Technology can play a key role

For both challenger banks and other boutique financial institutions seeking to enter the market, as well as SMEs looking to access ABF, the influx of new technologies is a definite plus. These new technology options mean ABF is increasingly accessible for even the smallest SMEs as increased speed of service allows companies to receive the funds they need quickly due to sophisticated data capture and analysis techniques. For institutions such as challenger banks solutions such as the HPD LendScape® platform help to automate and streamline ABF processes, making it easier for banks to lend and enabling businesses to manage their loans and provide their collateral data for analysis via a single platform, making the process easier to manage for resource-pressed SMEs.

ABF market in the UK is evolving 

ABF is maturing fast in the UK, both in terms of invoice financing and asset based lending and this is likely to continue. An increasing range of companies are seeking to access the funding, while an ever expanding range of lenders is targeting the sector. Challenger banks could play a key role in this trend, with their more innovative, flexible tech-driven approach. With 33% of UK GDP coming from SMEs, if challengers were to significantly expand their ABF finance that would give a considerable funding boost for businesses and a growth uplift for the economy.

 

Website: https://www.hpdsoftware.com/

ArticlesTransactional and Investment Banking

The rise of ‘quantamental’ investing: where man and machine meet

Asset managers adopt new approach in era defined by automation, algorithms and big data

As soon as the financial crisis started to recede, Jordi Visser knew something had to change. Algorithms were starting to rule markets, and hedge funds like the one he managed were confronting a tougher era. 

So Mr Visser, chief investment officer of Weiss Multi-Strategy Advisers, started to rethink how the $1.7bn hedge fund could survive in a less hospitable environment. The solution was to evolve and meld man and machine. “We are competing against computers these days, so we had to become more efficient,” Mr Visser said. Mr Visser and Weiss are not the only ones making some adjustments— with varying degrees of gusto — to a new investing era defined more by automation, algorithms and big data.

Analysts have dubbed marrying quantitative and fundamental investing “quantamental”, an admittedly ugly phrase, but one that many think will define the future of the asset management industry. These initiatives are proliferating across the investing world, from small boutiques to sprawling asset management empires. In January, JPMorgan’s $1.7tn investment arm set up a new data lab in its “intelligent digital solutions” division to try to improve its portfolio managers, rather than replace them entirely with algorithms. “It augments existing expertise. We don’t just . . . try to come up with strategies out of thin air,” said Ravit Mandell, JPMorgan Asset Management’s chief data scientist. “There’s stuff that happens in the human brain that is so hard to replicate.”

The 18-strong unit focuses on everything from automating and improving humdrum tasks such as pitch books and digital tools for customers, to more high-end demands such as product creation and improving JPMorgan’s investing prowess. The data unit has already used a form of artificial intelligence known as a neural network to analyse years of corporate earnings call transcripts to identify which words are particularly sensitive for markets, or might augur trouble.

That frequent uses of “great” and “congratulations” are generally good for a stock price, and talk of debt covenants and inventory overhangs are bad, might be obvious to any human fund manager, but they can only listen to or read a limited number of transcripts. A machine can scour thousands.
JPMorgan Asset Management’s data scientists are creating an alert system that will ping its portfolio managers whenever transcripts are particularly positive or negative, and voice analytics that mean they can even detect worrying signals in someone’s intonation.

Some investment groups are starting to use technology to spot well-known behavioural biases. For example, Essentia Analytics crunches individual trading data and looks for common foibles, such as fund managers’ tendency to over-trade when on a losing streak, or hang on to poor investments for too long to avoid crystallising losses. When that happens, fund managers get sent an automated but personalised email signed “your future self” reminding them to be aware of these pitfalls.

“A computer can remind you to follow your own process,” said Clare Flynn Levy, Essentia’s founder. “It’s like a little light on your car dashboard flickering to remind you you’re running out of oil.” Weiss’s chief data scientist Charles Crow has built something similar for the hedge fund: a digital “baseball card” system that analyses and ranks its portfolio managers according to 17 parameters, such as stale positions or movements in correlations, and alerts them to any issues.
In parallel, Weiss’s top managers have a dashboard to allocate money to various teams, showing which ones are good at timing, but poorer at portfolio construction, or are expert stockpickers but have sectoral biases. This helps Mr Visser monitor for hints of crowded trades. There are plenty of “quantamental” sceptics. Many pure quants are doubtful that traditional asset managers can master anything but the rudimentary, commoditised parts of their craft. Meanwhile, many traditional investors argue that it is an overhyped fad that is feeding shorttermism.

Recommended 

Even fans admit that the cultural shift needed to fully embrace these new techniques by largely middle-aged investors is so significant that it could take years before the full potential of “quantamental” investing is realised.

“Behavioural change is the hardest part,” said Ms Flynn Levy, herself a former money manager. “I think an entire generation of fund managers have to age out of the industry before we really see big changes.”

Nonetheless, few money management executives doubt that technology will play an everincreasing role, and many are hopeful about the potential to invigorate the industry’s often patchy investment results.

For example, it appears to have helped Weiss last month, when many hedge funds were clobbered after having been sucked into technology stocks. Mr Visser declined to comment on performance, but an investor document seen by the Financial Times indicates that Weiss’s main fund sidestepped most of October’s torrid markets, and is up 6.3 per cent so far this year.

Mr Visser admitted that not all the hedge fund’s portfolio managers were thrilled at the new measurements, tools and expectations, but argued that the quantitative tools were fair, objective and necessary. “They either want to get better and embrace it, or they fight it,” he said. “But it’s a case of adapt or die.”

Copyright The Financial Times Limited 2018. All rights reserved 

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BORROWING £50 MORE FOR A CAR LOAN COULD SAVE YOU UP TO £1600 IN INTEREST

Borrowing more for a car loan could save you money, according to research by What Car? 

 

 

Borrowing just £50 more for a new car loan can make it cheaper than taking out a smaller loan according to new research by What Car?, the UK’s leading consumer advice champion.

Analysis of the UK’s leading high street lenders suggests that borrowing the extra amount could save motorists up to £1600 over the course of the repayment period.*

Loans of £5000 typically have lower interest rates than smaller loans. For example, the repayment total of a £5000 loan from TSB over four years comes in around £1300 cheaper than the repayment of a £4950 loan over the same period.

Similarly, at Lloyds the repayment on a £7500 loan over four years is £1601 less than the repayment for borrowing £7450.

What Car? editor Steve Huntingford said: “We would always recommend borrowing as little as possible, but where the loan amount is close to the threshold for a lower interest rate, borrowing as little as £50 extra could save you 10 times that amount, so borrowers should do their homework.”

This trend was most commonly seen when analysing borrowing of amounts between £4500 and £8000.

Research shows that UK motorists are increasingly using finance options to aid with the purchase of cars. Within the first six months of 2018 there was a rise of 8% in car finance lending, with it topping £10 billion.**

However, while taking out a slightly bigger loan can save you money, there is a cut-off point, with loans of more than £8000 costing the borrower more the more they borrow.Savvy shoppers are able to capitalise on these trends by not only borrowing smartly, but by using the What Car? Target Price on What Car? New Car Buying to ensure they get the best deal. 

Car finance top tips: 

Shop around – compare the types of finance available and choose the best option available to you

Don’t stretch yourself – only borrow within your means, making sure you can afford the repayments

Additional charges – be aware of additional charges and always read the small print of your loan to be sure you don’t end up with any nasty surprises

ArticlesCash ManagementFX and PaymentLegalStock Markets

Keeping your Payment options open, by Anderson Zaks

EPOS, MobilePOS, Pin on Glass, Pin on Mobile – there’s a lot to choose from for today’s merchant. Adina Ahmed, Chief Technology Officer at Anderson Zaks explains some of the latest options.

“In many emerging economies, people are by-passing traditional bank and card accounts altogether and adopting mobile payments”

Mobile phones have revolutionalised the way we live today. The way we communicate, watch TV and other online entertainment, and, the way we shop. The next obvious step, is the way that we manage our money and pay for goods and services. But these days, it isn’t just settling the bill in a restaurant, or buying something enticing in the sales, with contactless people are paying for their morning coffee, and with PSD2 and the associated deregulation, they will soon be able to make direct payments to each other. In many emerging economies, people are by-passing traditional bank and card accounts altogether and adopting mobile payments in much the same way that they have missed out broadband landlines – it’s a whole layer of infrastructure that they simply don’t need. 

The payment market in China is a prime example where most people don’t have a credit or debit card, or plastic of any kind. They have leapfrogged straight to mobile apps and user friendly ecosystems that seamlessly blend social media, ecommerce, payment and other finance functions. Consumers in China now rarely carry a wallet or cash, and even buskers display a QR code so that people can leave tips. 

Consumers in the UK, particularly younger people that are now coming into the workplace (millennials) expect to pay for everything contactless, many don’t carry cash. This presents a problem for the smaller retailer or merchant. How do they take payments without a full blown EPOS system? There are a whole range of options now opening up to merchants in the UK, and as evidenced in China, they don’t need a heavy IT implementation with all its associated costs, nor are they tied into long contracts with banks or card providers. 

PIN on Glass (POG) solutions are already available in the UK. As the name suggests, PIN on Glass has evolved from the traditional PIN pad so that merchants can now use a touchscreen device to capture the PIN. There are a range of versatile devices, referred to as SmartPOS, that have been designed for this very purpose. Typically run on Android, they have additional security features baked in, a scanner for bar codes and QR codes, and can print receipts. The beauty of these devices is that they can run with a user-friendly app, enabling smaller merchants to operate using the device as a standalone solution, without the need to have a full blown EPOS solution.

These purpose built POG terminals connect directly to a bank, to accept payment. They are sleek and modern, and the apps that run on them are intuitive and easy to use for both staff and the consumer. The devices run with all current card technologies including swipe and contactless, providing an all in one solution so that the merchant doesn’t need a computer in the shop or at whatever location they need to take payments. 

For independent software vendors (ISV), POG devices enable them to migrate their existing POS solutions to a smaller, portable device, opening up the market to much smaller merchants than they might have otherwise targeted. 

At Anderson Zaks we are already working with several ISVs to incorporate our payment platform into their PIN on Glass solution. 

data quality
Banking

Tackling the Challenge of TRIM

Tackling the Challenge of TRIM – How Banks Can Make Sure their Data Quality Processes are up to Scratch

by Martijn Groot, VP of Product Management, Asset Control

The Targeted Review of Internal Models (TRIM) is underway and banks across the eurozone will already be feeling the effects. Supervised by the European Central Bank (ECB) and first launched in 2017, the initiative is designed to assess whether the internal risk assessment models used by banks meet regulatory requirements and whether their results are reliable and comparable.


What is TRIM?
As part of the programme, the ECB is reviewing the banks’ models, providing them with ‘homework’ to improve their processes, and then returning to inspect. In carrying out this process, however, the ECB understands that detailed discussions with banks about their risk assessment models will be of limited value if they can’t trust the data being fed into them.

TRIM builds on the results of the Basel Committee for Banking Supervision’s BCBS 239 document, published in 2013. While BCBS 239 laid out 14 risk data aggregation principles for banks to abide by, it was quite generic. TRIM is more specific – especially around data quality aspects and measurements.

In fact, TRIM provides a range of governance principles for developing a data quality framework that covers relevant data quality dimensions including timeliness, completeness, accuracy, consistency and traceability. 


The Principles of TRIM
In order to comply with TRIM, banks need to demonstrate they can trace the price they have used historically for a model or for a financial instrument valuation through the data supply chain back to original sources. They also need to know what processes have been carried out on the data, including checks that have been conducted, what the sources are, what were the original parameters and data quality rules, and have they been changed over time? Traceability is the term used to describe this in the TRIM document but data lineage, effectively the data lifecycle that includes the data’s origins and where it moves over time, is the broader term more widely employed in data management.

TRIM also contains important reporting guidelines –  including that banks will need to report on how often they have proxied their market data inputs or risk calculations. 

Doing this also defines a process for how the bank has derived and validated this proxy. Is it really a comparable instrument? Does it behave similarly to the original instrument?

In other words, in line with the focus on data quality in TRIM, it is important that banks are regularly validating their proxies. Finally, to ensure they have a better grasp of the quality of the market data they use in risk calculations, they also need to ensure they have a handle on how much data is stale per asset class.

Typically, today most banks would struggle to comply with many of the data quality guidelines TRIM lays down. Most have no data quality or control frameworks in place or, at best, assess quality in different isolated silos. As such, they don’t have the ability to report daily on key data and metrics. They may have implemented checks and controls but generally they have little real insight into data across the whole chain.  Very few have a full audit trail in place that describes how data flows from sources through quality checks and workflows into the financial models, and that does not just track data values but also the rules and the rule parameters acted on it.


Achieving TRIM Compliance
So how can banks meet the TRIM guidelines? Banks first need to get the basic processes right. That means putting a robust data governance and data quality framework in place. To do that, they need to document their data management principles and policies. They also need to agree on a common data dictionary and understand more clearly exactly what they are measuring, including how they define financial products across the group and the control model for the whole lifecycle. 

The next stage will see banks putting the technology that enables them to achieve this in place. Organisations first need a data management system that has the end-to-end capability to gather, integrate and master key data, derive risk factors and publish them to different groups. That should provide banks with a single funnel and consistent set of data and data quality metrics that support TRIM compliance.

For banks that are able to achieve all this, TRIM compliance is just one of the benefits they can expect to see. In fact, some of the remediation they will have to do to comply will also be required for key regulations, including the Fundamental Review of the Trading Book. However, for many, TRIM is their current focus and with the programme expected to run until 2020, banks know there is still work to do to meet its guidelines.

Bond Investment
Transactional and Investment Banking

Bonds remain firm fixture in portfolios moving into 2019

Bonds remain firm fixture in portfolios moving into 2019

  • Nearly three quarters of advisers are either looking to write more bond business in the next year 
  • The majority of financial advisers (55%) believe onshore bonds play an important role in the advice they give to clients
  • Financial advisers are recognising the benefits of writing bonds, with three in five (61%) stating they are more useful than most advisers believe

Nearly three quarters (73%) of financial advisers said they were either considering or planning to increase the amount of bonds they write for clients in the next year, with exactly a quarter (25%) stating they would definitely increase the amount they write, according to new research from Canada Life.

 

Richard Priestley, Executive Director of Canada Life UK, commented: “Despite the complex, rapidly evolving landscape, the popularity of bonds with advisers shows no signs of slowing. Bonds continue to remain a firm fixture in portfolios, with many advisers recognising the importance and usefulness they hold as a defensive investment option for their clients.

 

“It is unsurprising that more financial advisers are recognising the benefits of bonds, such as top slicing relief, compared to a year ago. However, with 2019 on the horizon, advisers who have yet to consider writing more bond business for their clients in the next twelve months would be wise to consider this option.”

 

The majority of financial advisers (55%) believe onshore bonds play an important role in the advice they give to clients. While three fifths (61%) say bonds are more useful than most advisers believe, a slight increase from 2017 (60%). The number of advisers recommending international bonds to their clients has also risen slightly year-on-year, up from 17% in 2017 to 18% in 2018.

 

Financial advisers are also increasingly recognising the benefits and value of bonds, compared to twelve months ago.

 

Over two thirds (67%) of financial advisers cite tax deferral options as an advantage of using bonds, up significantly from just under half (49%) last year. Meanwhile, over three in five advisers (62%) say top slicing relief is one of the main advantages of writing bonds, a substantial increase from 48% in 2017.

 

Of those planning to write more bonds in the next twelve months, two in five (40%) advisers plan to write a mixture of both onshore and offshore, while over two fifths (42%) intend to only write more onshore bonds.

 

banking brands
Banking

Bet on emotion in the battle of the banking brands

Bet on emotion in the battle of the banking brands

Yelena Gaufman, Strategy Partner, Fold7

The ongoing disruption of banking is a well-documented process, and depending on who you ask the outcome is a foregone conclusion. Though the likes of Monzo, Revolut and Starling offering compelling new visions of financial services, there’s more to these brands’ success than innovation alone.

With an Accenture report released earlier this year suggesting U.K consumer trust in banks is at its highest level since 2012, challenger banks are themselves challenged to prove their credibility and value proposition to a wider audience. Where traditional bank brands appeared to have been outmanoeuvred by digital-first rivals, they may yet steal a march on their disruptors by capitalising on a deeper emotional connection.

 

Building on trusted foundations

Where money is concerned, trust in the authority handling it is critical. Despite nimbler challengers and their ability to jump-start innovation quickly, it’s here that incumbents have the advantage. Their legacy of the brand and the institution behind it stands them in good stead as authorities to trust.

From this trust springs opportunity as existing bank brands can leverage the services they already offer to create walled-garden eco-systems that provide value to a range of customers. When banks really start to make use of the data sharing opportunities presented by legislation such as PSD2, they could leverage an array of services and partnerships to add more value to their customers.

So perhaps the battle isn’t as one-sided as it may have first seemed. But, for both sides, fully harnessing the potential of innovation means first figuring out who they want to be, and who they should be trusted by.

What makes people commit to one brand over another, and can override commodity and convenience? Emotional connection.

 

Branding for growth

Neobanks gained an early lead for the freshness and range of utilities they provide. But being feature-led throws up a new challenge: what defines their work, above and beyond the new and the useful?

As new banking and fintech brands hustle to engage new audiences, they must consider a deeper story to tell than of innovation alone. We need to know what their innovations are for – who are they serving? What role do they fulfil in our lives? The art of defining that story is in tying together the operations of a business with its product or service and a sense of purpose to the wider world.

For banking brands, a compelling brand story becomes a tool for showing new customers what they might want to buy into, but it is also useful for the business itself. Done properly, a well-formed brand becomes a strategic prism through which future business decisions can be understood. Is it right to implement feature X versus Y, based on what you stand for and the customers you choose to serve? Or in a crisis, how do you respond to customers and seek to make things right?

These answers should always come back to your brand and the emotional relationship you wish to maintain with your customers. It’s rarely a one-size-fits-all formula.

 

Demonstrating your worth

But how do you prove brand and purpose? It starts with understanding the context of your offering in the lives of your audience.

The 2000’s were a boom period for web start-ups which used increasing user connectivity to supply a new range of internet-powered services we’d never encountered before. So all manner of sites cropped up offering comparison, aggregation, ecommerce, community, entertainment and much more.

 

But as a highly competitive marketplace emerged for each of these kinds of websites, functionality on its own wasn’t a compelling means of distinguishing one from another. So the businesses behind these services had to think differently about the way they operated.

 

Fast forward to today and the vast field of nascent web 2.0 consumer businesses has shrunk massively. Those which thrive today managed to redefine their role to users, embedding the brand and its offering more deeply in our lives through emotional relationships over and above utility.

 

Rightmove’s recent ‘When life moves’ campaign (disclosure: created by Fold7), demonstrates one means of doing this. The campaign is all about our needs and desires, which change with our life stages, and how our dream of a perfect home changes alongside them. Rightmove tapped into the universal need to embrace change and sought to support its customers in that process as an active collaborator.

So RightMove successfully turned its suite of tools into a means of facilitating the hopes and dreams of its users. The result is a brand which is not just relevant to so many of us, but which we feel comforted and empowered by when we turn to it.

This is a fascinating juncture for both incumbent banks and their newer rivals, as the financial services industry opens up with new opportunity. While older brands have scale on their side and a legacy to leverage, start-ups founded on utility are arguably closer to their customer needs. If they can apply the right brand lens to their work today, we may be looking at a radically different banking landscape in the years to come.

Robotics and AI
Banking

Future-Proof Your Portfolio with Robotics and AI

Future-Proof Your Portfolio with Robotics and AI

By Travis Briggs, CEO, ROBO Global

Robotics, automation, and artificial intelligence—or RAAI—is one of the most fascinating sectors today. After all, who doesn’t get excited when talking about real-life robots and how they are transforming how we live, work and play in our everyday lives? But for investors, RAAI is much more than just a fantastical, childlike look into the future of robots. Just as computers and the Internet created a digital revolution that has transformed nearly every aspect of our lives, RAAI is bringing about a robotics revolution that promises to be even larger and drive even greater change. That’s why, at a time when every investor is seeking ways to help mitigate market risk and help drive the potential for long-term returns, many are looking to robotics and AI to help future-proof their portfolios.

 

What makes RAAI particularly promising from an investor’s perspective is that its applications and technologies are fundamental to the growth of nearly every industry and every geography around the world. Here are just a few examples of how RAAI is transforming ‘business as usual’ while rewarding investors:

 

  • Cybersecurity (+45% in 12 months)

With the rise of the digital age has come a parallel rise in cybercrime—and a fast-growing need for cybersecurity. Today, companies specialize in a vast menu of applications and technologies that use AI to help battle cybercrime such as ransomware, fileless malware, and nation-state attacks. Facebook’s data breach is just the most recent in a long string of major, highly publicized breaches that put users’ personal information in the hands of cybercriminals and resulted in serious financial consequences for the companies that have been hit. Because preventing cyberattacks is a top priority for companies of every size, demand for security solutions is driving up stock prices across this growing sector.

 

  • Healthcare (+28% in 12 months)

Innovations in healthcare robotics have helped drive up and sustain stock prices and investor returns. While the numbers are certainly making investors happy, patients are clearly the biggest winners. Healthcare robotics are making it possible to identify, invent, investigate, and implement technologies that deliver the right treatment to the right patient at the right time—and at the right cost. The wheels are already in motion to use robotics to take patients from symptom to diagnosis to treatment in a single day. Today, a surgical robot can slice a tiny grape into four perfect quadrants, peel the grape to remove precisely 1/100th of a centimeter of skin, and leave the rest of the grape perfectly in tact. This level of sub-millimeter accuracy was unthinkable just a decade ago. Handheld, intelligent computers are being used to sense, compute and record a patient’s health status. At this rate of innovation, the benefits for patients and investors alike are expected to continue to increase.

 

  • Logistics Automation (+22% in 12 months)

Amazon continues to make headlines for its innovations on the warehouse floor, but it’s certainly not alone in its quest to automate logistics processes to help drive down costs and drive up service. Logistics automation has not only had a major impact on customer expectations, but it has also rewritten the list of winners and losers in the retail space. Retailers who are investing in solutions to automate and rethink logistics in the warehouse and across the supply chain are winning market share at a rapid pace. Because logistics automation is expected to dictate tomorrow’s market leaders, the demand for new solutions is on the rise, and the industry as a whole is continuing to push the boundaries of innovation.

 

RAAI is driving fundamental change in unexpected areas as well. Agricultural robots can now determine when an individual plant needs a specific nutrient, is fighting a disease, or is battling an infestation, and can then determine what action to take (such as adding a nutrient to the water for a single plant). They can even be taught how to pick and pack even the most delicate fruits and vegetables with less damage than a human worker. Japan’s robotic caretakers are now being used to support Japan’s overburdened healthcare workforce by helping to manage medical adherence, providing much-needed entertainment and companionship, leading exercise and rehabilitation programs, and more.

 

Artificial intelligence is using the recent flood of Big Data to fuel its own renaissance. Netflix uses AI-generated algorithms to deliver search results that are matched to each user’s viewing habits, driving up sales and saving the company billions of dollars in potential lost revenue. Google relies on AI to translate the massive amounts of data it collects from the posts, comments, and search queries of its more than 1 billion users. From entertainment to insurance to self-driving cars, AI and Big Data are playing a growing and vital role.

 

While many investors are aware of robotics and AI as a market sector, only those who are aware of how deeply these fundamental technologies extend into every area of our world understand the potential it presents from an investment perspective. That reach can’t be overstated. For investors, that makes investing in RAAI an attractive strategy to capitalize on the potential for growth while helping to manage risk and provide attractive, risk-adjusted returns. The result: a portfolio that is truly future-proof by taking advantage of all the future has to offer.

private banking
Banking

How the changing world of financial services is affecting private banking

How deeper and broader relationships can help private banking to thrive in the changing world of financial services

Alex Cheatle, Ten Lifestyle Group, CEO

Private banking in the modern financial services world must continue to engage with its customers by giving them a unique, human experience. But in the information age what does that look like? How do banks make sure they don’t become commoditised in the eyes of their clients? How do they build human relationships as powerful as those created by the great private bankers of the past?

First of all, recognising that customers are not a collection of product buying decisions; not just the person who buys credit cards, invests in the stock market and has a mortgage is crucial. They are individuals that do not relate to their financial services on a product by product basis, nor do they relate to their bank on a product by product basis, unless the relationship is already commoditised. Rather, the uniqueness of each customer means that banks can take a holistic approach, wider than financial services alone, as to how they view and how they treat their clients and their propositions.

Building trust in the information age

In the debate around the state of private banking in the modern world of financial services, some seem to be foreseeing the decline of personalised private banking as we know it. However, in reality, the modern era provides excellent opportunities for private banking that it often shied away from in the past. When many private banks’ unique selling point was secrecy their ability to be wide-ranging about helping their clients was a practical impossibility, given that this made the client relationship with the bank more public and porous. Now, that this has changed, and secrecy is less central to the proposition for most banks, financial organisations are able to offer a wider range of services to their customers that they would have in the past.

One of the main advantages private banks enjoyed was the consistent and immediate human connection, created when the traditional private banker would engage with the client and their family on a personal basis. This created a recognisable connection for clients to their bank and the brand as individuals. Today, when information about banking and investment products and transactional services are just a tap away, people can end up talking to their private banker less and less. The challenge for banks is to find a way to maintain the personalised touch that was previously provided by regular and direct interaction. This can be done in ways that keeps the client interested, and that creates a new way for them to talk to and about their bank, and for their bank to build a trusted relationship with them.

As CEO of the leading lifestyle concierge service that works with HSBC, Coutts and several other leading private banks around the world, I have seen the extraordinary impact that offering non-financial services, both digitally and high-touch, can have on the commercials of private banks and wealth managers.

Being able to be more than just a bank and adding value to client’s lives in the moments that matter most to them creates a deeper emotional engagement that builds the advocacy and the trust that drives the most important commercial metrics from assets under management to client acquisition and retention – and even helps manage difficult ’next generation’ challenges. 

How do you take banking out of the bank and into a social, non-financial setting?

As humans we don’t tend to talk a great deal about our financial services. Most of us can’t remember when anyone they know asked about mortgages or wanted to discuss who their investment advisor was – it’s just not what we do. What we do talk about are our social events with family and friends.  This is where private banking can make headway and create vital personal relationships and advocacy.

Put simply, if I take my friends out for dinner at a restaurant for their birthday and it is a restaurant notoriously difficult to get a table at, my friends will ask me how I got it. Or, if I am able to get tickets for my daughter and her friends to see a concert, and the tickets are being sold at astronomical prices, but I can get them at face value, their parents will ask how I did it. In response, I will say it was thanks to the service offered to me by my bank.  This creates advocacy amongst my peers, friends and family. 

By creating a relationship where the bank knows me well enough to give me this kind of benefit, these services give me invaluable personal and social credit. As a client, I feel happy that I have been listened to by my bank, my trust in them grows because they have been able to get me exactly what I was asking for and I feel proud for being able to provide and share these experiences with my family, friends and colleagues. So, subconsciously I will be advocating for and creating a deeper bond with my bank.

In this way the bank is able to create a trusting relationship with its clients and the client is happy to advocate for the quality of the bank. It has also been shown that a bank that is able to organise a client’s private and social life becomes more trusted in the financial realm too. This leads to growth in assets under management, higher advocacy for the bank and an increase in client retention for the bank, even through the generations.

Forging emotional bonds through to the next generation

 A well-known challenge for private banking in the modern world of financial services is the next generation wealth transfer. This is obviously not a new phenomenon. The next generation have often seen the previous private banker or wealth manager as traditionally Mum or Dad’s bank. Typically, a relationship will pass on to the next generation who have never felt the individual advisor was their banker, there was no emotional connection to them or to the bank and they felt under invested personally in the relationship. By using the information that has been collected about lifestyle services and non-financial benefits provided to the next generations in the family, banks are able to understand the next generation better. The next generation can also be invited to use the banks lifestyle service before they become the main financial decision maker. This builds an emotional connection to the brand, which leads to the next generation being much more likely to stay with the bank.

Though the modern world of financial services is changing for private banking the opportunities are there to be taken advantage of. By using a holistic approach banks can maintain the human and emotional relationship that has always been vital. And, with the modern era of personalised banking and information sharing there is even more opportunity to find out about the next generation and build the brand through them.

For further information about Ten Lifestyle Group Plc, please go to: https://www.tengroup.com/.

policy makers
Transactional and Investment Banking

Developed World Policymakers Place Their Bets

By, Graham Bishop, Investment Director at Heartwood Investment Management

In a busy period for monetary policy news, three of the world’s major central banks held their formal committee meetings this month. What did this mean for investment markets? Graham Bishop, Investment Director at Heartwood Investment Management, the asset management arm of Handelsbanken in the UK, talks us through it. 

Bank of England: A surprise reaction to unsurprising news

The announcement that the Bank of England (BoE) would raise its base interest rate from 0.5 to 0.75% came as little surprise to investment markets, which had almost fully priced in the move. The Bank’s committee members voted unanimously for the UK’s second rate rise since the financial crisis. The committee also agreed to maintain its current levels of corporate and government bond issuances at (£10bn and £435bn respectively), contrary to some earlier media speculation over the potential for quantitative tightening.  

Given that the BoE did exactly as anticipated, and that Carney’s tone at the ensuing press conference was mildly hawkish, the only slight surprise has been the immediate market reaction – a fall in sterling and gilt yields.  While the precise reasons for this response are as yet unclear, it seems that investors were given fresh insight into the BoE’s thought process, with Governor Carney referencing 2-3% as the bank’s estimated neutral rate (i.e. the rate neither accommodative nor restrictive to economic growth). The market’s reaction suggests that it may not entirely agree with these figures. 

Perhaps this is unsurprising, given the lack of visibility ahead for the UK economy. The BoE has also just released its quarterly Inflation Report, in which it claims that CPI inflation is projected to decline towards its 2% target over the next three years. And while a downward trend is a point of general commonality across the BoE’s range of projections, the wide range of potential outcomes put forward means that there is little scope for certainty.

US: Business as usual for the Fed, but fiscal deficits are growing

In another rather predictable announcement, the US Federal Reserve (Fed) held rates steady at its committee meeting earlier this month, while sending a clear message that more rate hikes would be on the way. Amid a rising inflationary environment, in the wake of seven previous hikes, and with presidential tax cuts adding fuel to the fire, the Fed had little to do this time around. Nonetheless, another two rate hikes are expected in 2018.  At only the midpoint of the Fed’s expected rate rise path (according to the committee’s own predictions), the Fed is already close to its neutral policy rate.  

This month also saw the announcement of the US Treasury Department’s debt issuance for the second half of the year, which came in above previous estimates (and with the largest jump since the financial crisis). The Treasury is financing a widening fiscal budget gap on the heels of tax cuts and spending increases, as the government’s deficit blows out towards as possible $1 trillion by 2020. At the same time, the Fed has begun the process of reducing its balance sheet, adding more supply to the Treasury market; while its pace so far has been very gradual, this is expected to pick up. 

US monetary policy on the brink of entering restrictive territory and a rapidly expanding fiscal deficit give us pause for thought should growth falter ahead. For now, the situation is encouraging, but as things evolve we need to think carefully about US equities and related high beta plays.

Bank of Japan: The rebel without a change

The Bank of Japan (BoJ) opted to effectively maintain its current policy on Tuesday, in that it left its benchmark interest rate unchanged. But the BoJ also announced changes to the allocation of its ETF purchases (now favouring the market cap weighted Topix index rather than the price-weighted Nikkei index) as well as slight adjustments allowing greater movement around the 10-year bond yield (20bps either side of zero, as opposed to 10bp). In the latter, markets may have witnessed a small act of monetary tightening by another name. 

The yield on Japan’s 10-year government bonds initially fell following the announcement, but markets changed their mind overnight and yields leapt up to 12bps on Wednesday – their largest jump since August 2016. Equally haphazard was the market reaction to banking stocks – initially negative but with a swift change of heart, as investors seemingly realised the benefits of a move away from a lower yield environment. Further Japanese currency weakness against the dollar was also positive for both Topix and Nikkei indices. This is good news for our portfolios, which slightly favour Japanese equities.

 
Why Direct Lending is so Attractive to Investors
Transactional and Investment Banking

Why Direct Lending is so Attractive to Investors

At a time when investment and wealth preservation is as challenging as ever, direct lending offers an alternative for asset managers looking to invest.

There is a growing trend for non-bank lenders to loan money to companies, cutting out the middleman. Indeed, institutional investment is now the direct lending in the UK as it has been seen as a way to source alternative finance and funding for a variety of industries.

Direct lending started in the UK in 2005 with consumers borrowing from other consumers. Today, borrowers have increased and widened across many asset classes and the types of lenders have also expanded.

Direct lending is often now used to describe P2P lending and this reflects the growing number of diverse lenders keeping up with the high demand from borrowers.

Direct lending offers an attractive investment opportunity, gaining:

– Higher returns than a savings account could
– Lower volatility than stock markets

Likewise, borrowers are attracted by the lower rates and quick loan decisions.

Why direct lend?

Other investment options aren’t as reliable as they used to be so it has become prudent to invest elsewhere.

Stock markets remain volatile and therefore now difficult to find a safe-haven for money.

Add to this the decreasing yields on the usual ‘go to’ investment products and savings accounts that now offer little return.

Furthermore, Q4 2017 saw inflation rise to 3.0% – with the ever threat of increasing inflation. 

Direct lending is also attractive when compared to other credit-grade investment choices:

A gap in the market was seized

Traditional banks have cut back on business lending in recent times, especially to SMEs, as tighter regulations have changed the post-financial lending culture. These tighter regulations aim to reinforce bank capital requirements and reduce leverage.

This has created an opportunity for alternative lenders and this gap in the market is being seized by investors who are offering loans to mid-market companies as an answer to low-yield problems.

Direct lenders can work under more favourable circumstances, therefore taking on the companies with high leverage simply because they don’t have to adhere to capital requirement guidelines. This results in more attractive returns for the investor.

Direct lending isn’t a passing fad

Direct lending was relatively untapped until recently, but research by the Alternative Credit Council (ACC) has led them to predict that global lending is expected to break the US $1 trillion mark by 2020.

The UK direct lending market is substantial and has grown considerably in recent years – with plenty of room for direct lending to continue to grow further.

The UK direct lending market accounted for £4.5 billion of lending in 2017 – this is an increase of 21% in a year.

Europe is catching up

In 2017, European direct lending grew to around US $22bn, alongside the growth of mergers and acquisitions amongst SMEs. With SMEs seeking alternative ways to finance this growth the two are intrinsically linked.

Institutional lenders now account for more than half of the direct lending in the UK – yet the UK media still remain skeptical about the industry. One of the reasons for this is that direct lending is often mistakenly confused with equity crowdfunding in the media.

Direct lending is much more established in the US and Asia and Europe is set to follow. In fact, shrewd P2P investment is helping clients who may not be able to get finance from banks and this in turn is injecting sluggish economies.

The borrowers benefit from loans that are secured and have straightforward and open arrangement fees from the start.

In turn, investors have the potential for attractive yields, low volatility and low correlation compared to other asset classes:

European direct lenders are teaming up to chase bigger deals and more high-profile firms. For example Zenith Group Holdings Ltd and Non-Standard Finance Plc used direct lenders to meet their financial needs.

An increasing number of investors

Direct lending started with asset managers lending to mid-market companies and therefore filling in the gaps left by the banks. Now other types of companies such as P2P platforms are joining in and taking up the market for smaller loans, while the asset managers have the expertise for the larger loans – creating an even more prosperous and thriving investment climate.

In fact, in 2017 there were more than one hundred direct lending platforms facilitating more than £4.5 billion of lending.

In turn, fund managers can offer bigger loans as the money flows, making direct lending more attractive with potential for returning clients.

Untapped potential

There is plenty of untapped potential from retail gatekeepers who have yet to wholly embrace direct lending:

Are there any downsides to direct lending?

The extra leverage that makes direct loans more attractive to a borrower, is also a higher risk to take if the economy takes a dive.

The need for direct loans grew from the banks refusing businesses simply due to tightening of restrictions – these were safe and dependable businesses that were suddenly cut off when previously they wouldn’t have had a problem. However, due to a more competitive and growing direct lending market, a growing number of direct lenders seek out the higher-risk financing to companies in trouble.

What does the future hold?

The rate of growth in the direct lending market is slowing, but this is all for the greater good as a ‘flight to quality’ is predicted as better lending platforms outperform weaker or less scrupulous ones.

However – there is still plenty of room for growth long term as reflected in the forecasting statistics.

In 2018, there will likely be an increase in collaboration between direct lenders and traditional lenders – they will complement each other – with banks seeing direct lending as a source of capital.

Another factor will be the concept of open banking which is spreading with a ripple effect across the financial world. For example, the UK’s Open Banking Initiative promotes the use of open application programming interfaces (APIs) to provide access to bank customers’ transaction data. This is certainly something to watch in the future with regard to how direct lenders can use this valuable data.

Direct lending will certainly experience change as it evolves in the coming years, but it is here to stay as an alternative investment opportunity which offers good returns – and ultimately it is uncorrelated and relatively liquid in comparison to other classes.