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October 12, 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.

Spell the past away

Sir Howard Davies, chairman of Royal Bank of Scotland (RBS), announced the bank is currently considering whether to change its name. He noted the RBS moniker continues to be synonymous with all the ills of failed banks and government bailouts that defined the financial crisis. Could the RBS brand join HBOS, Northern Rock et al as the latest victim of the decade-old crisis? (From The Times, 8 October 2018)

Open-ended domino

A recent announcement by the Financial Conduct Authority will see open-ended funds invested in illiquid assets automatically suspend trading when valuation uncertainties hit 20% or more of the portfolio. This follows concerns about the suspension of trading in several open-ended property funds in the wake of the UK’s Brexit vote two years ago. (From Portfolio Adviser, 8 October 2018)

Insurance Who-Am-I?

Can tweaking your job title save you money? A new investigation has compared identical motor insurance applications with variations of the same job title. While policy holders are not permitted to lie, tweaking their job title a little can save certain professions over £100 on their premiums. (From Daily Telegraph, 8 October 2018)

FAANG Fear

We’re told that millennials love Silicon Valley’s biggest disruptor brands. But does brand loyalty translate into a sound investment strategy? Facebook, Apple, Amazon, Netflix and Google (FAANG) stocks are growing ever more popular, helped by young people’s appetite to buy shares in their favourite tech brands. But investing all your savings into one asset class leaves you overexposed to market risk – and talk of a bubble is nigh. (From Daily Telegraph, 9 October 2018)

Israel Builds Instant ETF Market

Israel is trying to build an exchanged-traded funds (ETFs) market with impressive speed. Almost overnight, the country is converting US$30 billion of exchanged-traded notes (ETNs) into ETFs, as the latter are infinitely more popular globally. The nation is already one of the world’s largest exchange-traded markets thanks to its ETNs, but will it help push the inexorable global rise of the mighty ETFs? (From Bloomberg, 4 October 2018)

Financial services becomes coding’s biggest champion

This week it was revealed that hundreds of bankers and asset managers at JP Morgan are being told they must take coding lessons. Citibank now also requires junior staff to have coding knowledge.

As ‘fin’ and ‘tech’ come ever closer together, it seems financial services is quickly becoming a champion of IT qualifications.

It’s no surprise the industry is putting a lot of onus on computer skills. Goldman Sachs had 600 cash equities sales traders manning its phones in 2000now it has two. One quarter – around 9,000 – of Goldman’s staff are now computer engineers.

In fact, a huge proportion of the financial services industry is driven and manned by computer programmers. JP Morgan says only 10% of stock picking is done by people today.

Many financial veterans are looking to retrain or expand their knowledge base to be more valuable in a world where decades-old jobs are being replaced by clever black boxes. Aspiring financial services professionals are increasingly recommended to learn a little code to better work with the programmers.

Many financial services firms are going a step further and starting early in their pursuit of the best coding talent. For example, Lloyds, Santander and RBS have all focused some of their Corporate and Social Responsibility efforts to support coding classes for children around the country. Teaching girls to code is also seen as a way of reducing the gender gap in tech-led industries.

The direction of travel makes it inevitable that even more focus will be placed on finding the best and brightest in tech to deliver the financial services of the future. Those firms who want to be the best and brightest won’t limit themselves to extolling the virtues of coding; they are already finding ways to lead the upskilling charge.

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