September 14, 2018
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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.
Seven Figure Bonanza
A survey out this week showed that the number of £1m earners has surged by 25%. It also revealed that a third of these millionaires live in London, with Kensington and Chelsea being the preferred addresses for one in ten. However, many have raised concerns that these ‘’highly mobile’’ big earners could leave the UK in the event of a no-deal Brexit. (From The Guardian, 10 September 2018)
Fintech Overtakes Incumbent
This week, the market capitalisation of little-known Dutch fintech firm Adyen has overtaken that of 150 years-old financial institution Deutsche Bank. The decade-old payment company’s €20 billion valuation following its successful IPO earlier in the summer has placed it on many watch lists. This might be the signal to incumbents that their time of reckoning is here, as fintech firms are no longer small fish in a big pond. (From Quartz, 11 September 2018)
Are Coffee and Robots the Bank Branch Lifelines?
In the US, banks are trialling free coffee, wifi and even going as far as using dancing robots to try to keep attracting customers to their bricks-and-mortar branches, which are starting to look and feel more like Starbucks than traditional bank. The move marks the latest global trend where banks look for innovative ways to entice people to their branches, in an effort to stem the tide as many daily banking activities migrate onto new digital platforms. (From Reuters, 7 September 2018)
Passive Fund Frenzy
In July this year, assets under management in exchange traded funds (ETFs) reached $5.12tn – a new high since they burst onto the market five years ago. Some forecasts have put the value of ETFs globally at $7.6tn by 2020. Buoyed by factors such as low fees, a rise in digitalisation and low yields elsewhere, the frenzy is likely to intensify further. (From Financial Times, 10 September 2018)
Love Thy Pension
The Association of British Insurers’ (ABI) social media-focused advertising campaign urging millennial workers to “not work like a dog” and to “love their pension” illustrates the ways in which the financial services industry is seeking to engage with younger audiences around the subject of retirement planning and auto-enrolment into workplace pension schemes. The ABI advert will be promoted on Facebook and Instagram with the takeaway message being that you shouldn’t opt out from a pension while you’re young. (From FT Adviser, 11 September 2018)
Ten years after Lehman – memories from that fateful day
Ten years ago tomorrow on 15 September 2008, the financial world was rocked to its core as Lehman Brothers, then one of the world’s most prestigious investment banks, filed for one of the largest bankruptcies in history – bringing an end to 158 years of trading.
Many of us recall it vividly, and will remember reading unbelievable headlines every morning during the fallout from boom to bust. But what was it like to communicate those events on that fateful week? The Financial Times offers some insight not only on what reporters had to handle at the time in terms of newsflow, but also how editorial decisions were made, as more and more incredible news stories broke.
One (now ex-) reporter covering Lehman Brothers that day was our Account Director Lee Jones. In his previous role as a financial services hack, he had a front row seat to events and witnessed first-hand one of the biggest financial stories ever.
“We had been following the decline of the financial markets, and as our newsdesk’s mortgage beat writer, I was watching the disintegration of the residential mortgage market particularly closely. It was frenetic, and we were posting stories on an hourly basis.
“At lunchtime on 15 September 2008, we received a call from the press officers at PricewaterhouseCoopers (PwC) informing us that a news conference about the state of Lehman Brothers was happening in 90 minutes to coincide with an announcement from New York. No further details were provided. We knew many UK investment products and subprime mortgages originated from the bank so we needed to understand what its future was. I hastily made my way to Canary Wharf.
“I arrived with a few minutes to spare and rushed across the promenade outside Lehman’s building to get in. I was shocked at having to dodge my way past dozens of former employees carrying boxes of possessions out of the building. Many were in tears; all were despondent. A security person at the door was trying to separate out the journalists trying to get into the auditorium and the staff being led from the building – clearly concerned one of us would get a choice soundbite from an ex-employee with nothing left to lose.
“There were more than 100 media in the auditorium, with a dozen TV cameras at the foot of the stage. A hush fell over the whole room as a handful of PwC representatives came out and briefly outlined that Lehman Brothers had been put into administration, effective immediately. Much like in films, pandemonium ensued and a reporter near the front shouted “How bad is this?” A spokesperson uttered the chilling answer: “This is bigger than Enron”. That was our headline. We all jumped on our phones to get the news up and out. Amongst the noise, I remember shouting my headline and first paragraph down the phone to my editor as he dictated and posted the story. It went up, and the rest is history.
“That was the first of many stories we covered over the next couple of years as the financial crisis unravelled and decimated jobs, savings and homes. I’ll admit that as a young journalist with few responsibilities, it was a thrilling time. But, 10 years on, I’ll never forget the scores of people I rushed past who’d just lost their jobs. I can better empathise with them now I’m older and (possibly) wiser. They had to go home to their families that afternoon and try and work out how to pay their mortgage and bills, while wondering if they would find another job before Christmas. The sensational headlines got readers’ attention, but the human impact behind those stories must not be forgotten.”