February 2, 2018

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

  • Bitcoin spending for all to see, forevermore

It is heralded as the future of just about everything, but for many of us blockchain might be a step too far into our private lives. An interesting study by Qatar University shows how quickly and easily identities of many users who bought drugs on the dark web using Bitcoin can be found. In the future will it be as easy for businesses to see every transaction, and will our purchases haunt us forever? From Wired magazine, 26 January 2018

  • Shareholders wield their might

More investors are taking boards to task, with a focus on excessive remuneration. In an age where a social movement can take shape within hours, it might be that shareholders are the real instigators of societal and systemic change. From The Times, 29 January 2018

  • Active managers reap 16p for every £100 invested

As the asset management sector comes under pricing and transparency demand pressures, a new study has found that for every £100 invested into pension funds, fund managers are rewarding their clients with just 16p. As passive investment takes the limelight, more focus will likely be put on the worth of active managers and their charging structures. From The Financial Times, 28 January 2018

  • Investment industry urges us to think of the KIDs

The investment sector is calling on regulators to rethink rules around the marketing of Packaged Retail and Insurance-based Investment Products (PRIIPs). It argues that new rules are forcing investment houses to share excessively positive outlooks and misleading performance scenarios on Key Information Documents (KIDs) – which, in turn, could lead to investor backlash. From Professional Adviser, 25 January 2018

  • Interest-only mortgage communications must not be marketing, says FCA

The Financial Conduct Authority has warned mortgage lenders to improve engagement with the one in five borrowers on interest-only deals. The regulator says too much of the communications between lenders and borrowers is marketing driven, and more needs to be done to discuss maturing their deals. From Mortgage Introducer, 30 January 2018

Is social media advertising working?

Over the past five years, marketing budgets have been increasingly pushed towards online advertising – with the trend being inevitably driven by the likes of Google and Facebook. From a practical perspective, it makes sense. These digital adverts can reach millions of users and target key demographics. But are the cracks beginning to appear in this otherwise clean façade? And what could potential drawbacks mean for the future survival of online media platforms?

A report published this week found that Facebook might be over-inflating its user numbers. In fact, a recent exposé showed that the fake follower industry is alive and thriving, particularly in former communist states. So, it looks like the ‘real’ users social media outlets boast about might, in fact, not be quite so real. And this theory has potentially already been proved: Proctor & Gamble recently slashed its digital advertising by more than $100m in response to the lack of policing of hateful content posted to social media platforms, only to find that the cut had no affect on ROI.

Beyond non-existent audiences, though, there has also been a greater push to allow users to control the adverts they see displayed on their screens, led by the spectre of the GDPR and various privacy rules. Google recently added the ability to ‘mute’ some advertising, while Facebook is finally educating users on how to manage their own privacy settings. Also, Microsoft are leading the way to allow users to encrypt their own personal data. All this will result in limitations on advertisiers’ ability to pinpoint marketing targets.

Social media behemoths are being pressed to defend their money-making propositions but the veneer might be getting a little thin – perhaps online advertising in its current form is no longer fit for purpose.

From a financial services perspective these changes signal an important development to the £1.34bn UK digital marketing machine. A recent survey found that under-25 year olds are five times more likely to invest in something they have seen on social media. And so, having tighter controls on who sees what and when may soon become the jurisdiction of the regulator, rather than the social media platform itself.

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