Our Weekly Newsletter

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.

News you can use

Banks to go ahead with raising overdraft rates

Banks are set to raise overdraft rates to nearly 50%, despite the increased risk of customers going overdrawn as a result of the ongoing coronavirus crisis. The new changes, which are expected to come into effect on April 6, have received criticism from consumer experts, who are calling on banks to delay the move to decrease the financial strain facing consumers during the ongoing crisis. (From The Daily Mail, 23 March 2020)

Goldman Sachs spends $1.9bn to shore up two money market funds

Goldman Sachs has injected close to $1.9bn into two of its prime money market funds as the coronavirus triggered a rush of selling by institutional investors. Last week saw the funds shrink by $7.1bn and $1.6bn respectively, with regulatory filings showing that Goldman paid $1.5bn to buy securities from its Square Money Market Fund (SMMF) and another $390m to buy assets from its Square Prime Obligations Fund (SPOF). People familiar with the situation emphasise that Goldman acted in response to an “exceptional climate” for money market funds amid the ongoing pandemic. (From Financial Times, 23 March 2020)

Houseparty – the pandemic-induced sensation

As millions have been told they need to stay home to help slow the spread of Coronavirus, the viral video chat app “Houseparty” has taken off. Houseparty became an overnight sensation — not only among social-distancing millennials and Generation Z teenagers — but also their parents and grandparents. The app focused on enabling what it calls “shared experiences”, offering in-app games such as trivia or screen-sharing services. Last week alone the app raked in 2 million downloads worldwide, compared with around 130,000 the same week a month ago. It currently ranks at number one in the Apple app store in 17 countries including the United Kingdom, Spain and Italy.  In the longer term, Houseparty, like the other video chat apps, will battle to prove that they are not a pandemic-induced craze but part of a lasting shift in how we communicate. For now, though, it is offering light relief to millions. (From Financial Times, 27 March 2020)

Banks pull mortgage lending, Gove tells home-buyers “don’t exchange contracts”

Mortgage lenders have been responding to the unfolding crisis in a variety of ways. HSBC was the latest lender to announce it was to withdraw tracker products while Barclays have set a limit on how many mortgage applications it can deal with on a daily basis and Virgin Money has put all valuations on hold The government is urging people not to move homes as Michael Gove tells people that “if it is possible, pause.” (From Mail Online, 25 March 2020)

“Buy now, pay later” business models face testing times

Australia has become a global hub for ‘Buy now, pay later’ companies, with Zip, Sezzle, Splitit, Openpay and Afterpay all listing on the ASX and attracting investment for ambitious overseas expansions. However, in recent times, regulators have started tightening rules in the sector and the coronavirus crisis threatens to unleash a credit crunch that could put some of the companies’ survival at risk. The business models of these companies are being put to the test, as credit markets tighten, retailers close their doors and many of the Melbourne-based fintech’s millennial customers face job losses in the coming recession.  (From Financial Times, 23 March 2020)