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
Blockchain can futureproof the financial services industry
Hinrich Pfeifer, General Secretary of the blockchain platform Cardano Foundation, claims that blockchain technology is the main tool financial service providers can use to keep up with the accelerating shift towards technology. Among its benefits, Pfiefer notes that using this kind of technology could enable easier and faster transactions with low fees, irrespective of the transaction value. In addition, the adoption of blockchain-based digital identities has been cited as improving the security of data handling while also offering a more seamless and standardised process for onboarding news customers. (From City AM, 11th August 2020)
Interest sparking in sustainable investing post-Covid-19
According to the Great British Sustainable Savers Census survey from financial website Boring Money, 40% of advisers and consumers have reported a higher interest in sustainable investing following the Covid-19 pandemic. In addition, the results showed that nearly nine in 10 of those aged 18-44 said it was important that a fund manager offers sustainable investment options. More than 19,000 advisers and 5,000 consumers participated in the survey, and the findings highlighted that customer and client values are increasingly playing a part in their investment decisions. (From Professional Adviser, 11th August 2020)
Underwriters benefit from SPACS’ popularity
Growing investor interest in special purpose acquisition companies’ (SPACS) has helped propel them from a nascent part of equity markets, to become a popular alternative route to public markets. These vehicles raise money from investors with the aim of finding a private company to buy. Underwriters have benefitted from sharp rises in fee income as a result of leading growing SPACS activity in equity markets, while several investment banks have reallocated their equities teams in an attempt to capitalise on the trend. (From the Financial Times, 11 August 2020)
House price falls provide little respite for first-time buyers
New research from the Resolution Foundation reveals that house price falls across the UK over the next 12 months due to reduced demand will not make it easier for first-time buyers to get on the property ladder. Lenders easing their risk appetite by imposing tighter credit conditions – in an attempt to reduce their exposure to borrowers possibly experiencing falls in income – are likely to create a barrier to entry for first-time buyers. The study suggests that even if average prices collapse by more than 20%, first-time buyers will still have a harder time buying a property than before the coronavirus crisis. (From BBC News, 13 August 2020)
Financial services cuts incentives amid sharp fall in profits
Private equity, asset management, hedge funds, and advisory investment banking could see staff incentives drop by up to 15% in 2020. The fall comes as the coronavirus pandemic has had a severe impact on financial services businesses’ profits. Firms are likely to react to this hit by restricting their incentive schemes in order to conserve capital to help weather the economic downturn caused by Covid-19 and the measures to stop the spread of the virus. (From Private Equity News, 11 August 2020)