Yesterday saw Chancellor Phillip Hammond deliver his second budget.  While the abolition of Stamp Duty, several tax revisions, freezes on several duties, increased investment in AI and Technology and a £3 billion investment into the NHS all came as welcome additions they could not prevent a sharp drop in the UK Growth Forecast following the budget.

So with many experts labelling it a ‘make or break’ moment for Hammond and a somewhat beleaguered Government, we spoke to the industry experts to see what the Autumn budget really means for the Financial Sector in a special extended Your Thoughts: Autumn Budget 2017

Choose your sector below or scroll through to read all the insight.

FinTech & Digital
UK Growth, Investment & Forex
Tax
Healthcare & Retail
Property & Real Estate

FinTech & Digital

Abe Smith, CEO and Founder at Dealflo

London has been a world-leading financial centre since the 19th century, but low growth forecasts and the lack of clarity around Brexit are unsettling for businesses. The Chancellor has had to work hard to ensure that the UK remains an attractive place to invest and innovate post-Brexit. The new National Investment Fund means that even after Brexit, the UK will remain a hub for FinTech innovation and will attract fast-growing tech companies.

Niels Turfboer, Managing Director of UK & Benelux, Spotcap:

The FinTech industry is going from strength to strength and the UK Government can play an important part in enabling FinTechs to continue to thrive.

We therefore welcome Philip Hammond’s promise to invest over £500m in numerous technology initiatives, including artificial intelligence and regulatory innovation, as well as unlock over £20bn of new investment in UK scale-up businesses.

With this assurance, the government has shown a strong commitment to the FinTech sector, which will hopefully help tech companies all around the UK to flourish and grow.

World Economic Forum member Jane Zavalishina, CEO of Yandex Data Factory

The reality is that it is not the scientific development of AI that will be game-changing in the next few years, but instead the more prosaic, practical application of AI across many different sectors.

While AI is too often associated with self-driving cars and robots, the truth is the most significant AI applications that are of most significance to businesses, are actually the least visually exciting. AI that improves decision-making, optimises existing processes and delivers more accurate demand prediction will boost productivity far more powerfully than in all sectors.

But it’s not just productivity that will be significantly impacted – business revenue will also benefit. The beauty of AI lies in its ability to be applied with no capital investments – making it an affordable innovation for businesses to adopt. Unlike what is commonly thought, applying AI does not require infrastructure changes – in many processes cases we already have automated process control, so adding AI on top would require no investment at all. Instead, companies will see ROI within just a few months.

Martin Port, Founder and CEO BigChange:

We welcome this announcement and support for tech businesses from the Chancellor. Financial backing and stability is a huge hurdle facing all start-ups, so I am pleased to see the government pledge more than £20 billion of new investment. I just hope this funding is easy to access and readily available for those who need it, rather than being hidden among reams of red tape.

Leon Deakin, Partner in the technology team at Coffin Mew:

As a firm with a growing technology sector and client base in this area we are obviously delighted to see specific investment in the technology sector, particularly in AI and driverless vehicles.

Doom mongers have long been predicting that the UK and its tech hubs will be hit hard by Brexit and there have been numerous reports of rival cities within the EU which have sought to position themselves as alternative options. However, we are yet to see this materialise and incentives and commitments such as those announced by the Chancellor in these innovative but essential areas have to be great news for the economy, the sector and those who advise businesses in it.

Of course, creating the next unicorn is no easy task but a serious level of investment of the magnitude announced should at least ensure those businesses with promise have the best chance to scale up even if they don’t reach the $1billion level. Likewise, there is little point developing these new technologies if the infrastructure and support is then not there to utilise them properly

Matthew Adam, Chief Executive Officer of We Are Digital:

With the UK economy now expected to grow by 1.5% in 2017, a downgrade from the 2% forecast made in March, coupled with the challenges of Brexit, the need for the UK to sit at the forefront of digital skills and inclusion is more pressing than ever. We need to be able to grasp, with both hands, the digital opportunities that present themselves to us in order to make us a true global digital force.

The reality is that we simply cannot afford not to. Independent analysis shows that getting the UK online and understanding how to use digital tools could add between £63 billion - £92 billion to UK Plc’s annual GDP. Indeed, it is my belief that economies which focus strongly on getting its citizens online are also more productive.

The Chancellor has said that a new high-tech business is founded in the UK every hour, which he wants to increase to every half hour. It is imperative we support this growth through the announced £500m investment in artificial intelligence, to 5G and full-fibre broadband. However, to bridge the need for the 1.2 million new technical and digitally skilled people which are required by 2022, we must create and support retraining opportunities across society to make the UK truly digital.

Technology improvements are causing widespread changes in every market and the public sector should be no exception, especially as it often faces the biggest social problems to solve. I’m glad the government is waking up to the fact that the latest technological advances don’t need to be assigned only to the private sector, but can do a lot of good to the community at large. We know from our direct work with the Home Office that every government and council department is moving its processes online. Whether it’s chatbots to automate processes, or solving how people engage with Universal Credit, there is so much we can do here with ‘Gov -tech’

I therefore welcome the Chancellor’s digital announcements today and consider this budget as not so much a leap in the right digital direction, but more a necessary conservative step.

UK Growth, Forex & Investment

Owain Walters, CEO of Frontierpay:

The Chancellor’s efforts to win younger voters from Labour by abolishing stamp relief for first-time buyers on homes up to £300,000, and on the first £300,000 of properties up to £500,000, come as no surprise. The potential for such an announcement has been a hot media topic in recent weeks and as such, we don’t expect to see any significant impact on the value of the pound.

“In the wake of this Budget, any real movement from the pound will be caused either by developments in the Brexit negotiations or the potential for a further interest rate rise. I would therefore advise any businesses that want to stay on top of turbulence in the currency markets to keep a close eye on inflation data.

Markus Kuger, Senior Economist, Dun & Bradstreet

It’s not surprising that the Chancellor opened this year’s statement with a focus on Brexit; even as businesses absorb the implications of the Budget, they have a close eye to the ongoing negotiations and any likely trade agreement, which is likely to profoundly impact their future. The government’s move to provide a £3bn fund in the event of a no-deal outcome is designed to increase business confidence. In the meantime the business environment remains challenging, and Dun & Bradstreet forecasts that real GDP growth in 2018 will slow to 1.3% (from 1.8% in 2016). Businesses should continue to follow the Brexit negotiations closely and consider that operating conditions could change dramatically over the next 18 months as the Brexit settlement is clarified.”

 Damian Kimmelman, CEO of Duedil

We welcome the government’s announcement that the Enterprise Investment Schemes’ (EIS) investment limit, for knowledge intensive scale-ups has been doubled.

The EIS has been great for attracting investment for small businesses, however we need to ensure investment through the scheme is not being used for capital preservation purposes, but instead to encourage the growth of companies.

The key to increasing investment in ‘higher risk’ growth companies through the EIS scheme, is to eliminate information friction. With more data, investors can price risk effectively, so they can lend to support the small businesses forming the backbone of the economy, driving growth, and creating jobs.

Lee Wild, Head of Equity Strategy at Interactive Investor:

This budget was always going to be especially tricky for the chancellor. Hitting fiscal targets amid wide divisions over Brexit, while also spending more on populist policies to distract voters from Conservative party infighting and dysfunctional cabinet, was a big ask.  Hammond wasn’t fibbing when he promised a balanced budget. Once tax giveaways, downgrades to growth forecasts, billions more for the NHS and the rest are put through the mincer, both the FTSE 100 and sterling are unchanged.

Given Britain’s housing crisis was an obvious target for the chancellor, he really needed something substantial to make his aim of 300,000 new homes built every year anything more than a pipe dream.  Committing to at least £44 billion of capital funding, loans and guarantees to support the housing market will go a long way to achieving the chancellor’s ambitious target. Abolishing stamp duty for first-time buyer purchases up to £300,000 is a tiny saving, however, and buyers, especially in London, will still require a huge deposit to get a foot on the housing ladder.

The market hung on Hammond’s every word, causing a comical yo-yo effect as the chancellor slowly revealed his strategy.  A threat to use compulsory purchase powers where builders are believed to be holding land for commercial reasons, could cause sleepless nights.

Overall, Hammond’s ideas are sound, but probably not enough of a catalyst to get sector share prices rising significantly near-term, given mixed results in the run-up to this budget.

Mihir Kapadia – CEO and Founder of Sun Global Investments:

The Autumn budget statement from Chancellor Phillip Hammond was as expected, with a few pleasant surprises. While Mr Hammond set out his policy proposals with a "vision for post-Brexit Britain", he also acknowledged that his Budget was "about much more than Brexit".  With the Conservatives struggling in the polls, the Chancellor was under pressure to regain support for his party, which is currently in a fragile coalition.

The expected announcements include the decision to abolish stamp duty for first time buyers on properties up to £300,000, addressing the housing crisis, an immediate injection of £3.75 billion into the NHS, investments into infrastructure (transport and network), freezing duty on fuel, alcohol and air travel, and finally a Brexit contingency budget of £3 billion.

While today’s budget was populist and aimed at the electorate, it has to be noted that the Office for Budget Responsibility (OBR) sharply downgraded both Britain's productivity and growth forecasts, as well as its business investment forecasts, meaning the UK's finances look set to worsen over the coming years. This does not factor the possibility of a Brexit-related downturn or a wider global recession, which has already been seen as overdue by many forecasters.

We expect the abolition of stamp duty for first time buyers on properties up to £300,000 will draw extra attention and headlines from much of today’s announcements. It is vital that we acknowledge the warnings from the Office for Budget Responsibility.

Angus Dent, CEO, ArchOver:

The UK’s productivity growth continues to decrease and we’re looking in the wrong place for answers. It’s not just a case of everyone working a bit harder. Investment in public infrastructure and fiscal policy will be the defining factors that help the UK catch up, while real growth will come from our SME sector.

Britain is known as a nation of entrepreneurs. Yet we’re in real danger of not giving our SMEs the support they need to thrive. We need a bottom-up approach where small businesses with bright ideas have access to the finance and advice they need to grow. Only then will we have the firm economic foundation we need to build our productivity post-Brexit.

The expansion of the National Investment Fund in today’s Budget is a good start, but too many SMEs still have to pay their way with personal savings or put their houses on the line as security if they turn to the big banks for help.

We need to inspire a new culture. We know there is an army of willing investors out there who want to support British business - lending across P2P platforms is on course to rise by 20 per cent by the end of this year according to data from 4thWay.

However, we need to raise awareness among SMEs of the different options available to help them finance their growth. SMEs need to take control of their own destiny. With the right finance in place, they can drive the whole country forward to new heights of productivity. We can’t just leave it to government – small businesses must be given the power and the cash to fulfil their potential.

Tax

Paul Falvey, tax partner at BDO:

It’s clear that the headline grabbing news revolved around the Chancellor’s decision to abolish stamp duty for first time buyers on properties purchased up to 300,000, at a cost of £600m a year to the tax man. Whilst this is important for people getting on the property ladder, there were other key assertions.

Firstly, HMRC will start to charge more tax on royalties relating to UK sales when those royalties are paid to a low tax jurisdiction.  Although this is only set to raise approximately £200m a year, it sets a precedent that tax avoidance will continue to be on the governments agenda. Implementing the OECD policies is a tactic we expected.

Furthermore, companies will pay additional tax on the increase in value of their capital assets from January 2018. The expected abolition of indexation allowance will mean that, despite falling tax rates, companies will be taxed on higher profits. By 2022/2023 this is expected to raise over £525m.

62% of the businesses we polled before the Budget said they will be willing to pay more taxes in return for a simpler system. Yet, once again, the government has done nothing to tackle the issue of tax complexity. It is a huge obstacle to growth and businesses will be disappointed that there was no commitment to setting out a coherent tax strategy.

Craig Harman is a Tax Specialist at Perrys Chartered Accountants:

Although it was widely anticipated beforehand, the only real rabbit out of the hat moment for the Chancellor was confirming the abolishment of stamp duty for first time buyers. This equates to quite a generous tax incentive for those able to benefit resulting in a £5,000 saving on a £300,000 property purchase.

The Chancellor has also stood by his previous promises, by raising the personal allowance to £11,850, and the higher rate threshold to £43,650. This is in line with the commitment to raise them to £12,500 and £50,000 respectively by the end of parliament.

Small business owners will be pleased to note that speculation regarding a decrease in the VAT registration threshold did not come to fruition. It was anticipated the Chancellor would look to bring the UK in line with other EU countries, however this will be consulted on instead and may result in changes over the next couple of years. Any decrease in the threshold could place a significant tax and compliance burden on the smallest businesses.

Ed Molyneux, CEO and co-founder of FreeAgent

I don’t believe that this is a particularly positive Budget for the micro-business sector. Rather than actually offering real support or meaningful legislation to people running their own businesses in Britain, the Chancellor has simply kept the status quo.

While it’s pleasing to see that the VAT threshold has not been lowered - which would have added a significant new administrative burden to millions of UK business owners - this is hardly cause for celebration. Neither is the exemption of ‘white van men’ from diesel charges, which is the very least that the Government could have done to protect the country’s army of self-employed tradespeople.

It’s also disappointing that there are still a number of issues including digital tax that have not been expanded in this Budget. I would have preferred to see the Chancellor provide clarity on those issues, as well as introducing new legislation to curb the culture of late payment that is plaguing the micro-business sector and further simplifying National Insurance, VAT and other business taxes.

Rob Marchant, Partner, Crowe Clark Whitehill

The Chancellor announced that the VAT registration threshold will not be changed for the next two years while a review is carried out of the implications of changing this (either up or down).

Having a high threshold is often regarded as creating a ‘cliff edge’ for businesses that grow to the point of crossing that line. However, keeping a significant number of small businesses away from the obligations of being VAT registered allows them to focus on running their operations without additional worry. Many small businesses will welcome the retention of the threshold.

The consultation should look at ways to help smooth the effect of the “cliff edge”, while continuing to reduce administrative obligations for small businesses.

Jane Mackay, Head of Tax, Crowe Clark Whitehill

The tax avoidance debate has centred around large multinationals and their corporate tax bills. High profile cases have eroded public trust in how we tax companies. By maintaining the UK’s low corporate tax rate, currently 19%, and reducing it to 17% from 2020, the Chancellor accepts that corporate tax is only of limited relevance in our UK economy. It accounted for around just 7% of UK tax revenues last year.

The Budget announces changes to extend the scope of UK withholding taxes to tax royalty payments in connection with UK sales, even if there is no UK taxable presence. There will be computational and reporting challenges, but this measure may pacify those who feel the UK is not getting enough tax from international digital corporates which generate substantial sales revenues from the UK

Healthcare & Retail

Hitesh Dodhi,Superintendent Pharmacist at PharmacyOutlet.co.uk

With a focus on Brexit, housing and investment into digital infrastructure, it was disappointing to see a many healthcare issues overlooked in today’s Budget. The additional £2.8 billion of funding for the NHS in 2018-19 is a undoubtedly a step in the right direction, but it falls short of the extra £4 billion NHS chief executive Simon Stevens says the organisation requires.

What’s more, the Budget lacked substance and specifics; it did little to progress digitalisation in the healthcare sector – an absolute must – while the opportunity to promote pharmacy to play a greater role in delivering front-line services to alleviate the burden on GPs and hospitals was also overlooked. These are both items that should feature prominently on the Government’s health agenda, but the Chancellor did little to address either in today’s announcement.

Jeremy Cooper, Head of Retail Crowe Clark Whitehill:

There is little in this Budget to bring cheer to the struggling retail sector.

The changes to bring future increases in business rates into line with the Consumer Price Index in 2018, two years earlier than previously proposed, is welcome, but is it enough for hard-stretched shop owners?

The National Living Wage will increase for workers of all ages, including apprentices, which is excellent news for lower paid employees. Retailers would not begrudge them this increase, but retail tends to have a higher proportion of lower paid employees and the impact on store profitability and hurdle rates for new stores should not be underestimated.

There is more positive news for DIY, home furnishings and related retailers in the form of the abolition of Stamp Duty Land Tax (SDLT) for first time house buyers. This should help stimulate the first time buyer market and free up the wider housing market which in turn should boost retail sales for DIY and home furnishings retailers from buyers decorating and furnishing their new homes.

Property & Real Estate

Paresh Raja, CEO of bridging specialist MFS

After an underwhelming Spring Budget that completely overlooked the property market, this time around the Chancellor has at least announced some reforms that will benefit homebuyers. While stamp duty has been cut for first-time homebuyers, the amount of money this will save prospective buyers is in reality still limited – the average first-time buyer spends £200,000 on a property; abolishing stamp duty for them will save them just £1,500.

Importantly, homeowners looking to upgrade to another property still face the heavy financial burden of stamp duty, which will ultimately deter them from moving house. I fear this will have significant implications in the longer term, decreasing the number of people moving from their first property purchase, and thereby reducing the number of properties available for first-time homebuyers, and reducing movement in the market as a whole.

Fareed Nabir, CEO and founder of LetBritain

“Having acknowledged the growing number of Brits stuck in rental accommodation, it’s pleasing to see the Government deliver a Budget heavily geared towards the lettings market. With 7.2 million households likely to be in the rental market by 2025, the Chancellor has seized the opportunity to continue with the recent wave of reforms by offering tax incentives for landlords guaranteeing tenancies of at least 12 months. This should hopefully have a trickle-down effect on rental prices, offering more financial manoeuvrability for tenants saving to buy their own house – something the Chancellor has made easier – while also providing additional security for renters.”

Richard Godmon, tax partner at Menzies LLP

We should to see house price increases almost immediately on the back of this announcement. His commitment to building an extra 300,000 homes a year is not going to happen until 2020s, so this measure could lead to market overheating in the meantime.

The removal of indexation allowance will come as a further blow to buy-to-let landlords, many of whom have been transferring their portfolios into companies since interest the restriction rules were introduced. This will mean paying more tax on the future sale of properties.

Now that all sales of UK investment property by non-residents after April 2019 will be subject to UK tax, it effectively means one of the incentives to invest in UK property by non-residents has been removed.

Jason Harris-Cohen, founder of Open Property Group 

There was a lot of speculation before the Budget that the Chancellor would reduce or temporarily suspend stamp duty for first-time buyers, in a bid to help young people get on the property ladder. What we got was the complete abolishment of the tax on first-time house purchases of up to £300,000, effective from today, and in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by first-time buyers will be exempt from stamp duty. This is arguably the biggest talking point of today’s announcement and as the Chancellor says will go a long was to "reviving the dream of home ownership".

It was equally refreshing to hear that the Government is committed to increasing the housing supply by boosting construction skills and they envisage building 300,000 net additional homes a year on average by the mid-2020s. However, I was surprised that local authorities will be able to charge 100% premium on council tax on empty properties, though I appreciate that this is a further stimulus to free up properties sitting empty and bring them back to the open market to increase supply. Conversely this could result in falling house prices if there is further supply and lower demand following a period of political and economic uncertainty.

What was disappointing, however, was the absence of any mention to reverse the stamp duty change that were introduced in 2016 for buy-to-let and second homes, which is currently deterring people from investing in the private rented sector. The longer it is around the more of a knock on effect it will have on the growing homelessness crisis, a problem the Government plans to eliminate by 2027 - a bold statement from Mr Hammond!

We’d love to hear more of Your Thoughts on Phillip Hammond’s Autumn Budget.  Will it benefit Britain and will the reduced growth forecasts have an impact?  Let us know by commenting below.

Against the backdrop of transformative technologies and the latest regulations, Graham Lloyd, Director and Industry Principal of Financial Services at Pegasystems, identifies for Finance Monthly what types of challenges financial services will have to navigate in their journey through 2018.

Successful social media – The growing discrediting of social media content and its practices comes at an awkward time for banks. The last thing they need is association with anything that could contribute more mistrust to their profile, but they cannot afford to ignore a powerful channel with such reach and strong links to here-and-now impact. It will be interesting to see how banks learn to handle social media with success.

Evolving customer engagement – Social media is just one element of customer engagement and there are far bigger issues on the horizon – digestibility, cost and effectiveness. Data mining is now so huge and its outputs so great that we should perhaps be referring to ‘big insights’ as there are so many of them. For most players, the problem is how to work out which insights to leverage within whatever time and budget constraints prevail.

Time to tackle trade finance – With trade finance risk-weighting kicking in properly in March 2019, we are entering the home straight for finalising the necessary business changes. Most players will presumably look to offset some of the costs of introducing capital requirements in this hitherto largely unweighted portfolio by seeking greater productivity/process efficiencies.

The truth is out about challengers! – Thus far, challengers and Fintechs have been portrayed as somewhere between a benediction and a panacea. The great generic USP – “we’re not a traditional bank” – has helped them weather all sorts of issues from low take-up to sub-optimal IT to almost-but-not-quite products, with scarcely a hard question asked. But the honeymoon period may be drawing to a close, and even in combination, they have still to take any serious market share away from big/traditional banks.

Possibilities of PSD2 – In the final run up to PSD2, there are sizeable revenue opportunities for a bank positioning itself as the ‘destination of choice’ for PISPs (Payment Initiation Service Providers). These new players will gravitate towards the banks offering a higher service standard and the least hassle, as the effects will flow through to the PISPs’ own customers and their expectations of security, certainty and convenience. Banks stand to recapture not only some of their own lost transactions, but also some which have flowed out of their competitors.

With just six months until GDPR hits Europe hard, Finance Monthly has heard from Nigel Edwards, SVP of Insurance Europe & Head of UK at EXL Service, on the threat GDPR poses to emerging technologies, fintech, regtech and so forth.

For insurers, the General Data Protection Regulation (GDPR) promises to be a difficult hurdle to overcome without the right strategic approach and expertise. Businesses in the insurance industry are some of the most vulnerable to being caught wrong-footed by the incoming GDPR rules because of the data rich environment they naturally operate in. The widespread use of third party administrators means that data flows can be difficult to control in a way that keeps firms compliant with the new regulation. Another question that is high up on the agenda for industry decision-makers is the effect that GDPR will have on future technology adoption.

In recent years, the insurance sector has undergone an unparalleled degree of technological disruption. Telematics technology, for example, has dramatically changed how insurers price policies by gathering data on individuals’ driving habits and behaviour. The use of social media analytics is making the claims process more straight forward and the use of technologies such as geo-location is creating better conditions for underwriters to evaluate pools of risk. One thing that these technologies have in common is their reliance on large amounts of collected customer data to function effectively. Will these techniques be hamstrung by the demands placed on companies under the GDPR regime?

Assessing the data ecosystem

For the most part, GDPR will not force insurers to curtail technology adoption, so long as precautionary steps are taken to better manage the data inputs and outputs on which new technologies rely. All of the existing InsurTech solutions that are on the market or close to arriving will remain options for brokers and underwriters to incorporate into their strategic spend - but only if the underlying infrastructure is in place to enable the rigorous management of client data.

Perhaps one of the most onerous demands placed on businesses due to GDPR is the so-called ‘right to be forgotten,’ which will grant EU residents the right in some places to request a full removal of their personal details from any company’s systems. For many insurance firms, of which a large proportion will have been trading since the start of the age of digitisation, large caches of over 30 years’ worth of client data have been accumulated. This is data which may not be in a single standardised format and spread across siloes in multiple locations – posing a considerable challenge when it comes to compliance to right to be forgotten guidelines.

Aligning with a long-term strategy

For new technologies to remain viable, steps must be taken to ensure that the core infrastructure upon which data is stored and transferred is responsive to frequent requests for deletion or transfer. This may result in the overhaul of legacy IT systems which are not fit for purpose and a more selective retention of customer information, as opposed to a policy which swallows up large pools of data indiscriminately.

Whilst this may entail some capital outlay, the decision to update legacy systems should be taken in the context of a new stance towards regulatory compliance. The GDPR is just one regulatory hurdle that must be overcome by insurers next year, but it can serve as a starting block for a more agile approach to data handling – especially for firms who have historically neglected the task. In the long term, laying the foundations for new technology adoption will not only facilitate better business agility but also a more intuitive approach when interacting with clients and their data.

Below Kathleen Brook, Research Director at City Index, talks Finance Monthly through the current markets environment, referencing US stock, bonds, tech, crypto and oil.

As we reach the middle of the week, there are a few signs that stocks could have a harder climb from here. After reaching record highs earlier on Tuesday, the S&P 500 closed the day lower. Advancers vs. decliners were pretty even on the day, with 243 advancers compared with 255 declining stocks, the biggest loser was Tripadvisor, which sunk on the back of growth concerns. The most striking thing about the US stock market today is not the individual movers, but instead the lead indicators and the bond market.

Lead indicators head lower

The two classic lead indicators for US stocks include the Dow Jones Transport Average and the small cap Russell 2000. The Dow Jones Transport index peaked on 13^th October and has been falling since then, it fell through its 50-day moving average on Tuesday, which is a bearish sign and could signal further losses ahead. The decline in the Russell 2000 hasn’t been as steep, but it peaked on October 5^th and sold off sharply on Tuesday as investors seemed to rush to ditch small cap stocks after yet another record high was reached.

These two lead indicators have not been able to muster enough strength to recoup recent losses, which could be a sign of investor fatigue further down the pipeline. If the selloff in these two indices continues then it is hard to see how the blue chip indices can sustain momentum as we move through November.

The bond market: a health check for stocks

The other warning sign could be coming from the 10-year bond yield. It has fallen more than 15 basis points since peaking towards the end of October. This is in contrast with the 2-year yield, which has been climbing over the same period and is up some 5 basis ponts so far this month. This has pushed the 2-10-year yield curve up to its highest level since 2007, which is typical in a market where the Fed has embarked on a rate hiking cycle, even this mild one that Janet Yellen started in 2015. Rising yields tends to mean woe for stocks, hence investors may now try to book profit instead of instigating fresh long positions as we move to the end of the year.

However, we believe that it is not as simple as rising yields spooking the market. The decline in the 10-year yield could also be relevant for stock investors, especially if it is a sign that the bond market has lowered its expectations for Trump’s tax plan and thus reduced long term growth expectations. If 10-year yields keep falling – and they are testing key support at 2.31% which is the 200-day sma – then it is hard to see how the stock market won’t follow suit and sell off on the back of tax reform stalemate in Congress. Thus, the Trump tax premium could come and bite markets on the proverbial.

Is tech the canary in the coalmine?

Tech is worth watching at this junction after massive gains so far this year. Already bond prices have started to fall for some of the major tech players including Apple, as more supply has weighed on bond yields. Is this a sign that the market could, finally, be falling out of love with tech?

What can the Vix and Bitcoin tell us about markets?

Before predicting market Armageddon, the Vix still remains below 10. Although it doesn’t usually stay low indefinitely, we want to see it move higher before confirming our fears about global risk appetite. Bitcoin is also worth watching. Before anyone can call it a safe haven we need to see how it performs in a sharp market sell off. So far this week it is down nearly $550, so if you are looking for volatility, bitcoin is the place to find it. It is hard to pinpoint the reason for the decline, maybe the market is getting nervous ahead of the upcoming fork later this month? Or maybe the market sees Bitcoin becoming mass market, both the CME and the CBOE are readying themselves for the arrival of Bitcoin futures, as a threat to its price gains? Who knows, but if traditional stock markets sell off, I will be watching to see how Bitcoin reacts and if it has any traits of a safe haven (recent price performance suggests not.)

What next for the oil price?

This week appears to be oil’s chance to steal the limelight. After surging to a high of $64.65 at one point on Tuesday, Brent crude lost $1 by session close as the market re-assessed the geopolitical risks that have propelled the oil price higher, while the fundamental picture remains unchanged. While we acknowledge that the price of oil cannot simply rise on the back of the Saudi anti-corruption crackdown, we still think that there could be some gas in the tank that could send Brent towards $70 – a key technical level - after all, the sharp increase in the price of Brent crude actually began in early October, well before talk of Opec production cut extensions and Saudi corruption purges.

Ahead today, economic data is thin on the ground, so we expect price action to take centre stage. On Thursday Brexit talks resume, this could lend some volatility to GBP, which has been one of the top performers in the G10 FX space so far this week.

By Simon Black, CEO, PPRO Group

If we suddenly learnt that the world would end tomorrow, someone would make money from the discovery. At very least, to quote Tom Lehrer^[1], Lloyds of London would be loaded when they go.

No matter what happens, someone somewhere finds a way to turn a profit. The trick is, being that someone. With Brexit, so much focus has been on the negatives that we think that there’s a danger that opportunities will be missed.

Here’s our guide to having a good Brexit.

E-commerce and cross-border lead generation

The exchange-rate for sterling has fallen so low, that the pound is almost at parity with the euro. For cross-border e-shoppers from the rest of the EU, that turns Britain into a massive bargain store.

With even a minimal effort at promotion, UK merchants can attract price-conscious EU consumers. In fact, UK SMEs saw their international sales rise by an incredible 34% in the last six months of 2016, three times the increase in the first half of the year^[2], due to the exchange rate. If ever there was a time to feature the Union Jack accompanied by the words (suitably localised) ‘Brexit bargains’, in your promotions, it’s now.

That’s great, as far as it goes. Everyone wants extra trade even if we’re effectively selling at a discount. But it’s not sustainable and its continuation cannot, in any case, be taken for granted. At some point the pound will rebound or bargain hunters will revert to their previous shopping habits.

So, what to do?

Turn today’s cross-border bargain hunters into loyal repeat shoppers. Invest now in data collection, strategic planning and customer-experience improvements. Use the data you gather on your new customers to engage them and migrate them to localised version of your site. For now, keep them coming back with price-led promotions but over the next year, try to deepen customer relationship, learn their other purchase motivators and give them reasons other than price to keep coming back.

There is no sign of the Eurozone recovery slowing down; in fact, it’s quite the opposite, with the Eurozone economy growing twice as fast as the UK in recent months^[3]. And there are already signs, particularly from the automotive sector, that this is releasing pent-up demand. In theory, there’s no reason why UK retailers can’t benefit by servicing this pent-up demand. Successfully doing so — particularly in the face of, for instance, uncertainty over customs arrangements after Brexit — is going to take nerve, commitment, and impeccable customer focus. But it is possible.

FinTech, the City, and a country that loves to borrow, spend, and invest

Brexit threatens a sizable chunk of the UK financial-services industry. Much of the business conducted by UK financial services, most obviously the Euro-clearing markets, relies on access to EU markets. That’s a fact. We can’t wish it away.

But neither Brexit nor the EU are everything. To take a couple of examples, London trades nearly twice as much foreign currency as New York^[4], its nearest rival. This trade does not depend on EU markets. Around 60% of the world’s Eurobonds are traded in London^[5]. Despite the name, these have nothing to do with the EU and the trade is not fundamentally threatened by Brexit. Similarly, the £60 billion-a-year London market for commercial insurance draws a third of its clients from North America, a third from the UK and Ireland, and a third from the rest of the world put together, including the EU^[6].

The UK FinTech scene has the world’s biggest financial centre at its disposal. And if Brexit threatens to erect barriers that will hinder UK firms trading on the continent, the same is true in reverse. UK FinTech s will enjoy privileged access, in geographical and regulatory terms, to the enormous b2b market that the City of London gives them access to.

They will also have privileged access to the UK’s highly competitive retail finance market, worth £58 - £67 billion a year^[7]. And there are signs that leaving the EU could help invigorate at least some segments of that market. A recent article in the FT^[8] — not by any means a Brexit cheerleader — reported that small-to-medium UK providers of retail banking services are actively looking forward to Brexit in the hope that it will free them from onerous EU regulations designed for huge ‘too large to fail’ banks but now applied to all financial institutions, even smaller ones.

Taken together — along with the ready availability of investment for FinTech start-ups in London, and the UK’s sympathetic regulatory environment — these facts clearly signpost a potential future for the UK as a global B2B and B2C FinTech incubator.

But this won’t happen by itself. Right now, we’re still faced with the threat of a FinTech exodus. To make sure the UK’s FinTech  motor doesn’t stall, the British government must work out a transition deal with the EU27 that gives London-based FinTech firms an incentive to keep at least some of their businesses here for long enough to see what opportunities Brexit and a post-Brexit UK could bring.

And as an industry, we need to lobby as hard for that transition as we have for a PSD2 that’s fit for purpose. Recognising that there are profound risks associated with Brexit does not stop us also looking for opportunity in it. Why should it? For as long as the world hasn’t ended, there is still business to be done.

Website: https://www.ppro.com/

[1] https://www.youtube.com/watch?v=frAEmhqdLFs

[2] https://www.paypal.com/stories/uk/open-for-business-paypal-reveals-online-exports-boom?categoryId=company-news

[3] http://ec.europa.eu/eurostat/documents/2995521/8122505/2-01082017-AP-EN.pdf/940abad8-436d-4758-b9d2-2156173a2c77

[5] https://www.lseg.com/sites/default/files/content/documents/20170105%20Dim%20Sum%20Bond%20Presentation_0.pdf

[7] http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/587384/IPOL_BRI(2016)587384_EN.pdf - Page 4 of 12

[8] https://www.ft.com/content/4e2967a4-8991-11e7-bf50-e1c239b45787

Now that CMOs have a seat at the revenue table, there is also pressure to prove ROI. Since the only true measure of ROI is sales, it’s imperative that the marketing and sales leaders are aligned around key objectives and goals to truly prove their contributions to the bottom line. Here Rishi Dave, CMO at Dun & Bradstreet, talks Finance Monthly through the matter.

While sales and marketing teams have made great strides in recent years to better align their outreach to customers, there is still a huge disconnect between the teams and, more importantly, between sales and marketing and the customer. Our recent study showed that, despite increases in new technologies and a proliferation of data and insights, 57% of marketers still find their biggest challenge to be identifying their target customer and the average sales person spends over two hours researching a prospect before making contact. Why are those numbers not improving in lock step with the growth of sales and marketing enablement technologies?

One reason could be the lack of alignment between the sales and marketing departments. And I don’t just mean the age-old disagreement of what’s a good lead and what is considered an opportunity. While those things are important, businesses in this digital world really have to consider aligning around the most foundational element the companies have – and that’s data.

Especially in an environment like Fintech, where we’re dealing with a vast, untapped or underserved community of small businesses, it’s crucial that marketing and sales are aligned on the definition of the B2B prospect – who are our best customers, and where will we find more of them. It’s not just a lead list of businesses and locations: it’s crucial to understand the key factors that will drive a positive sales and marketing engagement, and increase the chance of sales conversion. Factors such as:

• Target profile (age, size, line of business);
• Risk / credit worthiness;
• Changes in behavior (growth, decline, event triggers, etc.);
• Business family relationships.

In the best of circumstances, using analytics, existing customer profiles based on known behaviour, and unknown behaviour from alternative data sources, all brought together to the business entity level, can be used to create advanced marketing models that will target best prospects with precision.

Businesses can also ensure alignment by implementing a master data strategy across the organisation. This may sound daunting, but all it really means is making sure the data you have is structured, cleansed and connected across the company so that insights can be surfaced to the right people at the right time in order to make better business decisions. And, you can start easily by cleaning one app, like CRM, and growing from there.

With a connected view of all customers and prospects, sales and marketing teams are able to make better holistic decisions about each account- decisions which can lead to revenue growth – the ultimate proof of ROI.

77% of UK businesses are aware of fintech products and services and two-thirds (65%) have adopted at least one fintech application, with a fifth (19%) taking on four. These adopters reported saving (on average) over £5,500 a year as result of using the fintech products and services.

Interestingly, a tenth (11%) reported using bitcoins or other cryptocurrencies at some point in the past year in processing payments. Whilst the clear majority (89%) have not used cryptocurrencies, a fifth (21%) of these businesses expect these currencies to feature in their payment transactions over the next 12 months.

Businesses reported using fintech products and services for banking transactions (23%) and foreign exchange services (16%). Meanwhile, one in four (24%) reported using cloud-based software for their accountancy functions and a third (32%) used online lenders for business loans or invoice finance. Only 2% of businesses are using insurtech (insurance technology) services.

Bobby Lane, partner at accountancy firm SSH LLP, commented: “Most of our clients are now using cloud-based solutions and automating many of their routine processes. This means that I have more time to focus on advising my clients on strategic matters. Also, it’s now far easier for us to use fintech services because the ability to integrate with these new systems has opened up huge opportunities for improving processes.”

Business leaders are drawn to fintech because it saves time and money (56%) whilst a third (34%) were impressed by the user experience. Interestingly, a quarter (23%) said fintech’s were more transparent on fees and provided a better customer service.

Jerry Anderson, Managing Director at wedding rings company Allied Gold Ltd, commented: We’re a third-generation family business, I have adopted fintech across the business from our accounting to our banking services. The user experience and service is far superior to what is available on the high street.”

Anil Stocker, CEO and co-founder of MarketInvoice commented: “The expansion of tech-driven digital services has been remarkable over the past 5 years. We know that consumers have been adopting tech applications into all parts of their lives, but our research shows that now UK businesses are also becoming tech-savvy.”

“Fintech applications are revolutionising the way business is being done from how employees report their expenses to the way businesses report their financial performance. Entrepreneurs always seek out the best means to drive their businesses and clearly fintech products and services are becoming a stable part of this approach.”

It’s not only business processes that are benefitting from fintech adoption. Companies are using fintech to engage staff. 62% of businesses use fintech adoptions for staff to report expenses (i.e. Expensify) and for payslips automation. A further 23% are using online pre-paid cards (i.e. Revolut) in allocating budgets to teams.

1 Based on FSB statistics show there are 5.5m businesses in the UK, of which 1.3m are employing businesses. The £4.6b is achieved by multiplying 65% of 1.3m businesses by £5,500 (the average annual savings by adopting fintech services).

2 Results are from a MarketInvoice survey of 3,482 UK businesses conducted in August/September 2017. Respondents were manager, director and C-level post holders. The survey was conducted online and by e-mail.

(Source: MarketInvoice)

You’re hearing more and more news about bitcoin, the blockchain and cyrptocurrencies, but the big question floating around is whether bitcoin is the new gold, or just a fad. Richard Tall, Partner and Head of Financial Services at DWF, here provides Finance Monthly with an insight into the answers.

Economic history has delivered many assets, which, for seemingly little reason, deliver huge surges in value. Dutch tulips, the South Sea bubble, railway shares and the dot com boom are all examples of these surges, most of them driven by what the objective observer operating with 20/20 vision would categorise, using modern parlance, as "FOMO".

And with the advent of Bitcoin and other cryptocurrencies, many have claimed that the next "FOMO" driven asset surge is already taking place.

Cryptocurrencies arise from the solving of a complex series of arithmetical equations. Mankind has been solving arithmetical equations from the dawn of time, but with the exception of the development of an industrial or commercial purpose, has any intrinsic value been attributed to the simple solution of arithmetical problems? The value of any asset is a matter of perception of a variety of factors; why is gold any more valuable than iron, other than it looks nicer and there is less of it? While gold has been around longer, is it inherently more valuable than bitcoin simply on the basis that it has been around for longer and mined from the ground rather than a machine?

Had one been around for the first gold market, would market conditions have fluctuated more or less than the bitcoin market? In 2017 alone, Bitcoin has seen a rise in value of 700%. Its banning, along with other cryptocurrencies, by one of the world's most significant financial regulators, and a slamming by the CEO of one of the world's largest investment banks, have caused its price to swing significantly too, having touched both $5,000 and $3,000 in the three weeks prior to this article being written. Did gold do that?

Much news was generated by the entrepreneur and Baroness Michelle Mone being linked to a disposal of units in a residential development, where payment would be accepted in bitcoin. Cutting-edge, but had Mone accepted bitcoin at $5,000 per bitcoin two weeks ago, she would be sitting on a loss. As with all of these things, it is possible for parties to agree to trade any asset for any other asset, in ancient times this was simply a barter system, but it still exists in many forms today. The first gold market would have been a barter market, the premise being that gold looks nicer than a sheep, albeit you cannot eat gold. The market would have arisen because a hungry person met a person who fancied a nice necklace. By definition, a number of factors, such as the supply of sheep and the acceptability of bling in the ancient world would have affected the barter price. Gold too (and no doubt sheep) would have had its naysayers.

So what is the future for cryptocurrencies? Or, should the real question be, what is the future for distributable ledger technology? The latter has implications for trade and payment systems which humankind is only beginning to fathom. What we have to come to terms with, is whether the value lies in the instrument which is created when a cryptocurrency is born, or if it lies in the service which it facilitates or delivers. By definition, the value has to be in the service facilitated or delivered, as without those, as has been pointed out by Jamie Dimon, all there is is a currency invented "out of thin air."

So where now for cryptocurrencies? This depends on whether they remain as tools of speculation or the means of delivery for a service. The latter will flatten values, with the value being inherent in the service or the entity controlling the service. The former will maintain the status quo, but with huge volatility being driven by the most unpredictable variable of all; sentiment.

Keith Bedell-Pearce, Chairman of 4D Data Centres, here looks at what’s hot in savings and investment FinTech and makes six forecasts for the future.

Financial technology, an ugly duckling with modest beginnings in the back offices of fund management and insurance companies, has now emerged as the black swan called FinTech.

Covering everything financial from pay-as-you-drive insurance (and, scarier, pay-how-you-drive) to crypto-currencies, FinTech is now one of the hottest properties for VCs from Silicon Valley to Shoreditch’s Tech City.

FinTech is not just a single disruptive technology but an entire range of digital processes that are set to transform the historically staid world of financial services.

There are three aspects of FinTech that promise to be disruptive game changers in the UK savings and investment market. Here’s an overview of what that market looks like:

Because of regulation that somewhat ironically came in on the heels of the deregulation of UK financial markets known as Big Bang 30 years ago, there are now high barriers to entry into the UK savings and investment market in terms of increasingly tough and rigorous regulation of the conduct of financial services businesses. This is coupled with equally rigorous capital adequacy requirements.

Big Bang brought about enormous change in how business in the City was done but in an area where God has always been on the side of the big battalions, after some innovation in the late 80s and early 90s, in the last 20 years there has been little real innovation. Product-driven marketing is still the rule in practice despite every provider protesting that the customer comes first. All this is now going to change.

Big players collaborate with FinTech start-ups

The first driver for change is the realisation of incumbent players that almost everything in their store cupboards is past its sell-by date. The nearly complete adoption of digital technology by everyone who has money to save and invest (and lots of people who don't but would like to) means that if the incumbents don't adopt a new approach, they will lose their share of the most profitable sector of the UK economy. The next generation of savers, today’s Millennials, don't have the money to save but when they do, they will expect to manage their money on a hand-held device and will naturally gravitate to the providers who will give them the app to do this.

Although they wouldn’t admit it publicly, many of the big players in the savings and investment market now recognise that they have neither the in-house culture nor the expertise to drive the revolution in the way they run their businesses required to continue to be a market leader in the FinTech digital age.

The answer for the more innovative of these big players is to enter into collaborative arrangements with FinTech start-ups and specialist FinTech consultancies that do have the vision of innovative, low operational cost, customer-focused offerings. Examples are BNP Paribas linking its own Luxembourg-based incubator with ecosystem players Partech Shaker and Paris-based NUMA. Deutsche Bank has a partnership with startupbootcamp FinTech in New York. This is a trend with growing momentum. There seems to be more start-up link-ups and partnerships involving product providers in continental Europe and the US than here in the UK even though many of the start-ups and specialist FinTech consultancies involved are based in the UK.

For the start-up, such partnerships offer a slice of the main action which would be out of reach because of a lack of capital and regulatory know-how.

Blockchain morphs into DLT

The second major driver for change is the almost universal attempts of the world's major banks to harness the huge potential of blockchain technology. Except they no longer call it “blockchain” (presumably because of its association with crypto-currencies) but the much more respectable name of “Distributed Ledger Technology” or “DLT”. Such is the interest in the revolutionary potential of DLT, a global consortium of major banks has been formed in what is called the R3 DLT initiative.

Leaving on one side bitcoin, the original key application for DLT in FinTech was seen as so-called “smart contracts” focused on the front end of transactions in securities markets but it soon became clear that DLT could have relevance to the entire delivery chain of both conventional banking and the savings and investment market. For example, slow and inefficient back office functionality could be replaced by DLT- based processes resulting in major reductions in cost. This applies to fund management businesses as well as banks.

The defining characteristic of DLT is its inherent security of its self-reconciling, immutable distributed databases which also counters targeted cyberattacks and fraud on centralised digital ledgers. Another plus point is it operates in near-real time.

As well as the R3 DLT initiative, most of the major banks in the developed economies have major DLT projects. Some are now moving from the proof of concept phase to practical implementation. Examples are Calastone, a global funds transaction network, with its first phase proof of concept completed in June 2017 and BBVA who claims “first real life implementation” of Ripple’s DLT system.

DLT has the potential to bring about a revolution in the savings and investment market and many other areas of commercial activity as significant as the invention of the world wide web.

Open API the engine of change

The third FinTech driver for change is the Linux-based open Application Programming Interface, generally known as “Open API”, which enables third-party access to banks’ customer data. For the banks, this could be an opportunity to monetise their customer data although there is resistance from some banks, particularly in the US, on the grounds of security and confidentiality.

The technology will enable potential customers to access third-party services within the banking ecosystem. There would also be an opportunity for banks to provide white label offerings to third-party product providers and distributors to access the banks’ customer data.

A UK Open Banking Working Group has been created to facilitate open API. The Treasury is apparently supportive of this innovation and said it would legislate “if necessary”. The working group states “Open Banking will mean reliable, personalised financial advice, tailored to your particular circumstances, delivered securely and confidentially”. At present, giving advice with these characteristics involves long (and therefore costly) fact-finds and this process in practice is a major barrier in the UK to the seamless delivery of online savings, investment and pensions products. If Open Banking delivers what it promises, the effect on both product design and delivery will be as far reaching as the impact of Big Bang on the City 30 years ago.

These are already some implemented examples of open API such as (perhaps not surprisingly) Silicon Valley Bank’s open banking platform “Banking as a Service” and the German online bank, Fidor. There are a lot more known to be in the pipeline and for once, this a technology where Europe might have the edge on the US.

Six forecasts for the future

Our forecasts about the impact of FinTech on the savings and investment market are:

1. Core savings products for asset accumulation and income streaming will continue to evolve slowly until Open ABI goes mainstream.
2. Platforms will continue to play key role in selection of products and client retention with DLT progressively, enhancing speed and security.
3. Advice is key bottleneck in digital delivery; chatbots and robo-advice is likely to appeal to Millennials but they are not yet in the savings groove. Once they are in the groove, the killer app will be on a hand-held device.
4. Technological innovation with most front-end impact will be Open ABI but full implementation is probably at least 5 years away.
5. Open ABI once implemented will be a major catalyst for savings’ product innovation.
6. DLT will have very significant impact on back office costs, security and customer experience and be at a bank or fund manager near to you soon.

One final bit of advice, for those who are involved in savings and investments products, marketing or distribution, now is the time to start networking with the FinTech geeks. They hold the key to the future of this fundamentally important part of the UK economy.

By Paresh Davdra, Co-founder & CEO of RationalFX & Xendpay

The rise of FinTech has significantly altered the financial industry in the last decade. The disruptive nature of FinTech stems from the fact that its unique selling point is the use of innovative technology to enhance the lives of its customers. From mobile payments to crowdfunding platforms to new e-commerce systems, FinTech companies reflect the needs of a new generation of consumers who are looking for an easy to use service whether they are at home or on the move. It is perhaps not surprising then to note the incredible opportunity that exists for FinTech companies that allows them to pursue more than profit, and look to social responsibility as a key part of their model.

 The importance of social responsibility for FinTech is intimately connected to the relationship between their audience – a new generation spanning millennials in their twenties and early thirties, and the students that will succeed them- aligned with their social conscience. This is a generation that has grown up with an awareness of issues for sustainability, social responsibility and the desire to make consumer decisions based on values. As a result, it is essential for FinTech companies to align themselves with their socially responsible audience.

This commitment to social responsibility is often reflected in the way that FinTech companies are able to do business. One sector in which this is most clear is in the payments industry. Payments have become instantaneous with the advancement of technologies; with industries such as online international payments having been able to emerge with the growth of FinTech. Whilst the business and consumer application has been a clear success with the proliferation of companies within the sector, a socially responsible aspect has also appeared through the way remittances are sent.

Remittances and the transfer of money between communities across the world has benefitted immensely from the FinTech revolution, with the number of remittances to developing countries growing by 51% to $445billion between 2007 and 2016.[1] It is clear that the availability of improved financial technology has contributed a great deal to this, with accessible mobile wallets and payment systems, such as allowing families in developing countries to receive funds from their loved ones faster than ever.

For the companies that offer these services, a sense of social responsibility is essential for the running of the business – they need to have an awareness of the needs and resources of communities in the developing countries they are serving. That is why apps will often be low cost and offer simplified functionality, designed to run on phones without access to super-fast connectivity. Furthermore, socially responsible FinTech has enabled the democratisation of remittances, allowing users to lessen the financial impact of heavy taxation in place when using money transfer services in certain countries or unreliable methods of transfer, and ensure that as much money as possible reaches its intended recipient.  Some payment companies have even built their business model around the concept of responsibility and sustainability, waiving mandatory fees or commission to make sure communities benefit the most from transfers.

Xendpay is one such FinTech company, which has used its socially responsible ethos to offer families free money transfers around the pay-day period. By eliminating extraneous fees and commissions that are typically part of the service that high street agents offer, FinTech companies such as XendPay are directly impacting on the development of these societies – with more money available for the recipients of remittances, there is more money available to go back into the economy of a developing nation, rather than into private hands.

Social responsibility has become a symbol of the disruptive power of FinTech, at a time when traditional banking systems are slower to innovate. It is how an industry of imaginative FinTech companies operating within remote and developing communities have been able to evolve and provide customers with a service that works for them. Recent developments have even seen FinTech companies expand beyond simply providing mobile apps for customers, as socially responsible and ethical investing are increasingly an important aspect for modern business.

Traditional businesses looking to emulate the disruptive success of FinTech should look to the value-based ethos of the companies as a template. The FinTech industry has many examples of the future of business – ethical initiatives with a strong sense of social responsibility to the customers and communities they serve. FinTech companies have been able to capture the lucrative millennial market not only because they offer convenient and accessible services, but because of the key role that social responsibility plays in their corporate identity.

FinTech businesses realise the power that strong values have to play in bringing them closer to their audience and that they have a responsibility to align themselves with charitable and good causes, social development and issues that both the business and their customers are passionate about. This is an ethos that businesses across all sectors can learn from.

Websites:

https://www.xendpay.com/

https://www.rationalfx.com/

[1] Sending Money Home: Contributing to the SDGs, one family at a time,  IFAD, 2017

Finance Monthly has partnered with FinTech Connect Live to give away 50 free Conference Passes to their popular event held in London this December.

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In a move seen by many as one friend loaning another some money to help them through troubled times and garner favours, Google has paid $1.1 billion to smartphone manufacturer HTC to expand their Smartphone business. HTC, once a major player in the market have visibly struggled in the face of huge growth by competitors such as Apple, Samsung and more recently, Huawei.

The injection of cash is believed to be focused on the development of Google’s Pixel range of smartphones currently developed by HTC with the Californian company acquiring the team who develop the hardware and securing a non-exclusive licence on HTC’s intellectual property.

Google Focus on Hardware

The deal is further proof that Google are investing heavily in the hardware market to ensure a strong future for Android and its own status within the smartphone hardware market.  "We think this is a very important step for Google in our hardware efforts," Rick Osterloh, Google's senior vice president of hardware, said. "We've been focusing on building our core capabilities. But with this agreement, we're taking a very large leap forward."

The move is an attempt to prevent Google from being left out of the loop in the smartphone industry as current Android devices can easily be adapted to bypass Google's services altogether. It appears that Google are attempting to take a leaf out of Apple’s book by ensuring smooth rollouts of their mobile operating system, such as the recent IOS 11 update, combined with a boost to their own Pixel handsets. Pixel arrived with great fanfare, but has not yet made significant in-roads to displacing either Apple or Samsung. In purchasing the HTC team who have developed it, Google are clearly hoping that will change.

Google will retain some caution however, given that they have attempted to enter the market before with their 2011 purchase of Motorola Mobility for $12.5 billion. That move was both disastrous and relatively short-lived with Google off-loading the business for just $3 billion in 2014.

The deal is yet to be ratified by the regulatory bodies, but caught many industry experts by surprise with the majority believing the deal would constitute a full takeover. Rumours were so abundant that Google purchasing HTC outright was imminent that the Taiwanese stock market suspended trading on HTC on Tuesday.

The move comes with several risks for the Californian tech giant, with the major one being the possibility of alienating Samsung who currently run Android on their popular range of smartphones. But what is clear is that the big winner from this deal is HTC, the struggling Taiwanese company who have now not only strengthened ties with an important ally, but crucially have acquired a much-needed cash injection which will allow them to concentrate on the further development of smartphones and also on their Virtual Reality headset, Vive, which is not only favoured by Google, but is also outselling the Facebook owned Oculus Rift by almost double.

What is certain is that this deal will be watched closely by several hardware developers wary of Google’s manoeuvres in a very lucrative market and the potential for added competition.

photo credit: Karlis Dambrans