Capital Markets Corporate

January 17, 2020

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.

Year in Monzo: the least fun breakdown of your past 12 months?

An engaging initiative from Monzo this week meant brave customers were able to view how they had spent, saved and shared money in 2019. #YearInMonzo demonstrates how the company understands its customer base by not only providing analysis of their spending habits but also that they’re happy to share this information online -so much so the hashtag was trending. For a bank favoured by millennials, it was interesting to see the data showed cardholders preferred place to shop in 2019 was Marks and Spencer, a retailer usually associated with the middle-aged. (From Trusted Reviews, 14 January 2020)

Public health insurance to cover gambling addictions in Japan

Starting from April this year, Japan’s Ministry of Health, Labour and Welfare will be covering gambling addiction as part of public health insurance. The government are looking to establish treatment facilities all over Japan, though initially, it will provide group therapy in designated cities, wherein addicts discuss their experiences. This move has been met with criticism, as public health insurance is covered by public expenses and insurance premiums, calling for an addiction to be handled by the individual themselves. (From IAG, 14 January 2020).

Social media influencers named as stock market listing risk factor

Mattress-maker Casper has warned public investors of social media influencers’ power as a key stock market listing risk factor. The company emerged as an internet sensation when Kylie Jenner showed off pictures of her mattress. Casper has warned investors that the inability to control messaging by such influencers could put their money at risk and change a company’s reputation. Social media influencers are also becoming a legal risk for companies as US and UK regulators issue guidelines that call on influencers to disclose their relationships with brands. Influencer marketing has expanded into an $8bn business as influencers charge thousands to promote products. (From Financial Times, 11 January 2020)

Fintech: a silver bullet for the UK’s unbanked?

A new report shows fintech could provide the silver bullet to increasing financial inclusion. Through their use of advanced algorithms and new data services, Fintech companies can provide alternative credit scores for the poorest, potentially bringing down the cost of lending for millions. Traditional banks have struggled to generate revenues from these customers, though fintech companies have a commercial incentive to serve them. The report also calls for the government to introduce ‘Help to save Schemes’ and banking vouchers for those reliant on Universal Credit. (From City AM, 15 January 2020)

Uncertainty clouds access to advice

Research from the financial advice network Openwork suggests around a third of adults are uncertain about where to access financial advice, despite growing demand. Women are more impacted than men, with younger generations finding it most difficult to track down support. Technology is often presented as a potential solution, yet the research also suggests that despite the growing shift towards technology, the majority of adults continue to prefer face-to-face advice. (From FT Adviser, 17 January 2020)

Financial Services aims to become invisible in the 2020s

In 2020, one of the primary goals for financial services firms will be to…vanish. By entwining banking and financial activity into other everyday activities, firms hope to use technology to get more people borrowing, investing and saving without thinking about it. But will users be thankful, or could efforts feel like a violation?

One area where banks plan to fade into the background is during the payment process. With more than half of UK transactions now contactless, more Britons are choosing to use their devices to make payments rather than getting out their card. The new Apple credit card is an illustration of how vital devices have become as part of the payment process. Now one of the biggest credit card providers in the world – Mastercard – has dropped its name from its brand, we could be seeing the beginning of the end of our flexible friends.

But it might be that 2020 starts to see transactions become even more seamless. More than 800 million devices will have facial recognition abilities within the next four years. With trials of facial recognition-only payments already underway, it is more likely that soon all we will need to do is show our faces to complete a payment.  If that wasn’t enough, wearable payments is also in the ascendency. Payments made by tech-sewn into clothes are set to quadruple by 2026.

It’s not just our shirts that will make payments for us – cars are now being digitised and put onto the blockchain so as to make road toll payments automatically. You can also ask Alexa to pay for your petrol.

And, as bank branches close, the sector is looking for ways to continue to sell to customers, unseen. The UK chief of one of the world’s biggest ATM operators recently noted that his machines will soon be dispensing loan and mortgage offers as well as cash by 2025.

Financial services providers are also seeking to get into our homes through the growing prevalence of home assistants. Google Home devices now allow you to execute simple banking activity, Siri will now make payments on your behalf and you can get an update on your pension’s status by asking Alexa.

The ultimate goal for financial services firms is to interact with every facet of your daily digital life. The growth of auto-saving apps that ‘nudge’ you to save and invest is set to continue to grow in 2020. Some are designed to keep certain savings and investment goals top of mind when you’re spending, while others help push money into ethical investment funds as you go about your business. Some apps go further and will question spending decisions in real-time.

The benefits of financial services becoming ‘invisible’ are clear. Spending, borrowing and saving decisions may become easier if they are tied into our day-to-day life, and as the likes of Amazon have found, making the customer experience seamless only helps business.

But financial services firms must be cautious when entwining themselves into our devices and lives. Users may expect some breathing space between them and their finances – and could be turned off if their finances are always turned on.

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