Everything evolves, constantly. Each new breakthrough poses heaps of new questions to which answers are yet to be discovered. One of these breakthroughs happened with fintech. Fintech, as a word, is what linguists would call a portmanteau – a combination of two separate words. In the case of fintech, those two words would be financial and technology. However, as a system or a sector, fintech is what experts would call the future.
Quite simply, when technology put its fingers in the financial services’ pie, fintech was born. We are talking about mobile payments, transfers, fundraising, cryptocurrencies; you name it. Even though fintech liberalized the whole financial system and put the power into people’s hands, the traditional financial sector felt threatened by it, and understandably so. To share our amazement with it, here are some incredible facts on the incredible growth of fintech in the last couple of decades.
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(Source: 16Best)
S&P Global Ratings does not see competition from large technology groups or "tech titans" as posing a short-term risk to its ratings on global banks, said a report titled "The Future of Banking: How Much Of A Threat Are Tech Titans To Global Banks?" recently published.
While the barriers to entry in the banking industry are high, tech titans like Facebook or Apple possess a competitive edge over new entrants and upstart financial technology companies.
"In our view, banks will feel limited short-term pressure on their transaction fee income as they look set to benefit from the good medium-term growth fundamentals of card-based payments. This is despite bank revenues coming under possible threat from the recent growth of e-wallets and alternative payment methods," said S&P Global Ratings' credit analyst, Paul Reille.
We expect that tech titans' lending activities will remain targeted to merchants operating on their platforms and to segments currently underserved by banks due to profitability and capital reasons. Similarly, we believe that regulation will limit tech titans' ability to compete meaningfully with banks over customer deposits. In the long term, regulation is likely to remain a key factor deterring tech titans' efforts to increasingly offer the full financial services suite currently provided by banks. That said, banks could feel the biggest competitive threat from tech titans for activities where barriers to entry are low--such as transaction revenues, which could constrain their margins.
"In the short term, we don't expect competition from tech titans to have an immediate impact on the banks that we rate. However, in the long term, we think that they are well-placed to potentially disrupt certain aspects of the traditional banking industry value chain," said Mr. Reille.
In our view, payments is the main area where tech titans could potentially disrupt global banks. Although these firms are not posing any meaningful short-term pressure on fee income, we believe that they could leverage their strong customer bases and networks to potentially constrain traditional banks' payment services revenues in the longer term. We do not consider tech groups to pose any short-term threat to banks' lending or depository activities in the US or EMEA. In the short term, we don't expect competition from tech titans to have an immediate impact on the banks that we rate, but see them as well-placed to disrupt banking in certain areas in the longer term.
(Source: S&P Global)
With the recent monthly purchasing managers index behind us, we can look forward to this week’s Bank of England meeting and quarterly inflation report. Below Adam Chester, Head of Economics at Lloyds Bank Commercial Banking, discusses what to expect on Thursday’s meeting.
When the Bank of England meets this week, it could prove to be one of the most important policy meetings of the year.
What makes tomorrow’s update of particular interest is that it includes the annual deep-dive into the supply side of the UK economy, which has important implications for the speed and extent of future interest rate changes.
By assessing how the economy is performing in relation to its potential, the Bank can form a judgement about how much slack remains - the greater the slack, the greater the scope for demand to rise without pushing up inflation, and vice versa.
The Bank will give its verdict on whether demand is above what the economy can sustainably produce – the so-called ‘output gap’ – as well as how quickly the economy’s supply potential can rise – the so-called ‘trend rate’ of growth.
Before the financial crisis, the UK’s trend rate was estimated to be around 2.5% a year, but by last year it had dropped to 1.5%, largely down to a fall in productivity which has been blamed on Brexit uncertainty.
The Bank will also need to make a crucial judgement on how much spare capacity, if any, remains in the labour market.
A lack of slack
In last year’s update, the Bank concluded that the weakness of pay growth at that time suggested the labour market was operating with a small degree of slack. This no longer looks the case.
Over the past year, total employment has risen by over 400,000 to a new high, and the unemployment rate has dropped further – from 4.8% to a forty-two year low of 4.3%.
The latter is now below the Bank’s previous estimate of the sustainable, or ‘equilibrium rate’ of unemployment, which it put at 4.5%.
It is possible that the Bank could lower this estimate further, but to do so would likely raise eyebrows, as regular pay growth has started to accelerate – rising from an annual rate of 1.8% to 2.4% since last spring.
The Bank will also revisit its assumptions for population growth, the participation rate (the percentage of the adult population in the workforce), and hours worked.
The ageing population, declining immigration and changes in taxation and benefits will all have a bearing on this.
Overall, the Bank faces a tricky balancing act.
Arguing the case
If it is to conclude that underlying inflation pressures are likely to be benign during 2018, it needs to argue that either (i) the supply side is improving, most obviously due to rises in productivity and/or an increase in the amount of available labour; or (ii) that, for the time being, the outlook for demand is sufficiently weak.
On both counts, we suspect the Bank could struggle.
Firstly, there are no obvious signs of an upturn in productivity growth and recent increases in wage growth suggest the tightening of the labour market is starting to bite.
Second, there is little sign of any significant weakness in demand, with recent indicators confirming the economy is holding up relatively well.
Given this, we suspect the Bank will conclude that any spare capacity in the economy is continuing to be eroded.
While it is likely to cite ongoing ‘Brexit uncertainty’ as an argument for maintaining a ‘gradualist approach’ to policy, the implication is clear.
In the absence of a clear slowdown in demand, the Bank may have to raise interest rates more quickly and more sharply than either we, or the financial markets, currently anticipate.
Bhupender Singh, CEO of Intelenet Global Services, explores the developments in automation and other technologies for financial services.
This year, the pressure is on for banks to keep up with the latest innovations in technology. The Second Payment Services Directive (PSD2), requires banks to have systems to share their customer data with competitors in place, and allow third party players to process payments. This comes as part of a wider Open Banking Initiative, to open up the financial services market to competition from innovative challengers and Fintech players.
The General Data Protection Regulation (GDPR) will also require huge technological preparedness as companies put in place new data management programmes to wipe customer data on request and detect data hacks within 72 hours.
So far this has proved difficult. Saturday 13th of January was the original deadline for UK banks to become compliant with PSD2. But five of the UK’s major banks do not have the correct technology in place to be ready in time, and have had to secure an extension from the Competition and Markets Authority (CMA).
And there is pressure coming from competitors, as well as regulators. New challenger banks and Fintechs have been growing in popularity and drawing away customers from traditional banks, service by service, through personalisation and agility.
PSD2 will only increase this challenge, allowing these challengers access to customer data, drawing tech giants such as Amazon and Facebook into play, and facilitating the aggregation of financial data on comparison sites. This will give customers a clear view of where they can get quicker service or make savings with other providers, so traditional banks will be looking to harness the latest technology to keep their services agile, user-friendly and inexpensive.
In response to this, many banks are investing in updating their processes to match the agility and tech capability of their challengers – but they are often hindered in doing this by clunky legacy systems, struggling to patch new technology onto existing infrastructure.
To solve this issue, financial providers are increasingly turning to the help of business process outsourcers. Shifting away from a cost-cutting mentality, BPOs are now driving innovation throughout the finance industry. In fact, the market for outsourcing in Banking and Financial Services is estimated to grow at a rate of 6.79 per cent annually until 2020, when it is forecast to be worth $4.9bn.
Outsourcers are leading the way by bringing innovation into banking processes to drive technology adoption. On a macro level, by migrating data to the cloud and using automation to create a connected financial data ecosystem, outsourcers can help generate a holistic overview of areas of performance. This makes data management simpler, so that GDPR compliance is easier. It also allows for more informed decision-making. Personnel can see the whole picture and draw further insight on decisions. This means that additional tools such as predictive analytics can drive businesses to focus on their growth and financial success.
As financial services providers face increasing competition from the agile service of challenger banks and Fintechs, the pressure is on to speed up and improve service. Automation allows traditional banks to compete on a granular level by improving the quality of each service. One example is the developments in mortgage approvals. Once requiring complicated systems of referral and human judgement, this administrative process can be thoroughly automated, linked up with the relevant data to radically reduce waiting time for the customer. With the help of an outsourcer, one leading UK bank was able to cut down approval times from 11 days to a matter of 48 hours.
New competitors have also been attracting traditional banks’ customers by offering an increasingly personalised service. But using outsourcers, banks can optimise the reach of their in-person service – an advantage against new, smaller challengers. Many are making use of voice-recognition software that recognises a specific customer, matching this to their personal data and, using AI programmes that make conclusions about the likely subject of their call, automatically forwards calls to the best place. This reduces the friction customers face when being passed manually between departments and points of contact.
As this reduces the need for a human operative to redirect calls, this instead enables staff to refocus their energies on more sophisticated customer service requests, managing relationships with consumers to promote business growth in an interpersonal way, to keep up with new competition.
Driven by outsourcers, automation tools are allowing finance teams to cut down the time taken to process complex transactions and administrative tasks. By streamlining front-end and back-end processes with these kinds of programmes, outsourcers are helping traditional banks and finance teams not only to save money, but to radically drive innovation, to compete for customers, comply with regulation, and offer an increasingly rapid and modern offering to their customers.
The UK’s Banking and Financial sector has ended the year on a positive note, with the growth of new companies up 18.56% to 5,775 and failures down by 37.89% to 59 compared to Q3, according to figures released in the quarterly Creditsafe Watchdog Report. The report tracks economic developments across the Banking and Financial sector and 11 other sectors (Farming & Agriculture, Construction, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports & Entertainment, Transport, Utilities and Wholesale).
In addition, sales were up marginally by 1.24% from Q3, and the number of active companies rose by 6.86% over the same period. Total employment fell by 4.39 in Q4.
The research shows a significant improvement in the financial health of the sector, with the volume of bad debt owed to the sector decreasing by 89.31% in Q4, and down by 81.35% since the same period a year ago. The average amount of debt owed to companies in the sector in Q4 came in at £28,686, which was an 88.35% drop on the previous quarter. There was a mixed picture for supplier bad debt, the volume owed by the sector, which saw a big decrease of 60.71% against Q3, but was up by 51.16% compared to Q4 2016.
Rachel Mainwaring, Operations Director at Creditsafe, commented: “Creditsafe's Watchdog Report shows a much-improved outlook for the UK’s Banking and Financial sector moving into 2018. Last quarter’s levels of bad debt were a serious cause for concern, so it’s extremely positive to see a huge drop in these figures in the final quarter of the year.
“It’s also exciting to see such an increase in the growth of new companies, pointing to an encouraging year ahead for the sector. It will be interesting to see how these new companies fare, and whether these positive figures continue throughout the next few quarters.”
(Source: Creditsafe)
Budgeting time is here, and you’re likely going to make some safe assumptions on the budgeting based on previous years, experience and forecast. But is are these backed by actual real data? Below John Orlando, CFO at Centage Corporation, talks Finance Monthly through data integration in budgeting, looking at specific trends we can expect in 2018.
At the present moment, the economic future looks good. Unemployment is dropping, inflation is manageable and both the House and Senate passed tax bills that will slash the corporate income tax rate, giving them added cash to grow. Over the past few months I’ve talked to many CFOs who say their companies are eager to expand and they’re actively building growth assumptions into their budgets.
However, even in the best of times, there are risks to growth since at any time some world event can affect economic conditions. Performance monitoring and forecasting are part and parcel to business success in a growth economy, and to the end, 2018 will see some positive data-driven trends emerge that will make it easy for executives to keep a watch over their businesses.
The data goldmine: CFOs and financial teams will look to the robust data-generated HR, CRM and other platforms to feed their budget models
Many mid-size companies have implemented third-party HR and CRM systems, platforms that generate robust datasets. For instance, PEO providers maintain detailed records on every type of employee or contractor who works with the company, as well as their benefit requirements. Salesforce.com tracks virtually any type of sales and metric important to the company. This data, much of it market-tested, offers a level of detail it would take an army to create. By entering or importing it into a budget model, finance teams can create highly detailed and robust budgets in a remarkably short time frame.
Organizations will be more assertive with their assumptions
With robust and accurate data from internal systems populating the budget, executive teams will have access to variance reporting that is far more accurate than ever before. Moreover, this level of specificity will prompt CFOs to be more assertive in their assumptions, as well as provide the confidence management teams need to execute on their growth plans.
Greater accountability in business decisions
Marketing pioneer John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” He wouldn’t say that if he were alive in 2018. The combination of robust data and better performance tracking will make it easier to assess the outcomes of virtually all business decisions (including advertising campaigns). The result will be greater accountability in business initiatives as CEOs obtain the tools to compare current results to the budget, forecasts and what occurred in the past.
With greater accountability comes greater learnings and more success
Armed with a better sense of what worked and what didn’t, business leaders will have keen insight into which activities, markets or initiatives are worth repeating. I can envision companies establishing new metrics with a greater degree of specificity than was possible in the past, supported by data-driven budgets and the ability to track budget versus the actual on a constant basis.
Forecasting will be the next big innovation in budgeting
Looking at the budget software market itself, I believe the next big innovation will be easy forecasting, driven by customer demand. CEOs in particular want streamlined and simple forecasting whether it be monthly, quarterly or half year, and will pressure their providers to deliver it.
I, of course, support this demand. As anyone responsible for a budget knows, within a few months of a budget’s completion, there’s a good chance some or all of it will be out of date. Benchmarks must be reset regularly as market or economic conditions change. If a particular product suddenly begins selling better than another, the company will no doubt want to rejigger resources in order to exploit the opportunity (or retrench in the face of disappointing sales). This is particularly true when companies are embarking on ambitious growth plans.
Growth opportunities and market conditions will move CFOs away from spreadsheets to budget models
Ten years ago, 90% of mid-size companies built their budgets in spreadsheets; today from what I see, it stands at 80%. As more and more executive teams realize the inherent power of a budget, I suspect that number will go down quickly, replaced by budgeting software that allows them to monitor performance much more frequently. But don’t expect a public mudslinging between budget-software providers. Growth in our market will come from first-time customers, rather than
From its inception Bitcoin has led the rise of crypto culture worldwide, creating quite a roller-coaster economy in the digital currency sphere. Below Founder and CEO of Chaineum, Laurent Leloup talks Finance Monthly through the yesterday, today and tomorrow of cryptocurrencies.
Founded in 2009, Bitcoin was born from the notion of creating a currency that was independent of any other authority, is transferable electronically instantaneously and has low transaction fees. In its early days, the cryptocurrency was somewhat of an unknown entity to mainstream audiences; attracting a small, but dedicated, following of techies and leading to the creation of similar currencies.
The Bitcoin evolution
Since its inception, Bitcoin has increased in value exponentially throughout the past few years, particularly in 2016 and 2017 as more and more people began accepting cryptocurrency as a credible form of currency and not just a buzzword for tech insiders.
2017 saw a record year for Bitcoin. Starting out at a value of $1,000 in January, the currency hit an all time high of $17,000, a 70% increase, in the first two weeks of December 2017.
Bitcoin’s growth can be down to a number of factors. Firstly, the cryptocurrency model itself enables project developers to bypass banks in order to gather funds. For merchants, there is the benefit of being able to expand to new markets where fraud rates are unacceptably high, or credit cards are simply not available. This creates net results of lower fees, fewer administrative costs and a wider reach across previously inaccessible markets.
The Bitcoin following: from a niche community to the mainstream stage
Bitcoin has always attracted somewhat of a dedicated following. However, this fanbase was often restricted to the crypto community which, although passionate about Bitcoin, was quite an exclusive, niche community largely misunderstood by mainstream audiences.
Social media has played a significant role in the growth of Bitcoin by giving the cryptocurrency community a platform to come together and share their thoughts on the marketplace. For instance, Twitter has a ‘Crypto Group’ where Bitcoin and cryptocurrency enthusiasts can interact and tweet; making it much more accessible for everyday users to become part of the cryptocurrency movement.
Rise of ICOs and cryptocurrencies
As Bitcoin’s presence within the mainstream increased, awareness around blockchain technology and cryptocurrency has grown. With this, the marketplace has seen more and more cryptocurrencies launch through the ICO (Initial Coin Offering) mechanism. Currently the industry is seeing at least three new ICOs launching every week as more investors and developers look to this new fundraising system as a viable way to fund their blockchain projects.
There are many benefits to ICOs which is perhaps why they have become the fastest growing fundraising mechanism in 2017 alone. For organisations who are looking to invest in a project , it is considered a much faster and easier fundraising method, as anyone can start one and is free from geographical restrictions.
Additionally, many people also take interest in the cryptocurrencies because of their liquidity. Rather than investing huge amounts of money in a startup which is locked up in equity of the company, they can offer the opportunity to see gains quicker and take profits out easily.
Nevertheless, whilst cryptocurrencies do offer opportunities to see considerably higher ROI than traditional investments, prices of tokens can be extremely volatile and can be a risky investment. Therefore, investing in these kind of projects should be sought after consulting an expert.
The future of cryptocurrencies
With more and more cryptocurrencies launching, commentators are weighing in on how this will impact the wider industry. Due to the rapid growth of the currency over such a short space of time some are comparing Bitcoin to the ‘dotcom bubble’ in the 90s and early 2000s in that it isn’t sustainable in the long term.
However, in 2017 alone, ICO projects were able to collectively raise over $3billion clearly demonstrating that their significance is only increasing. With more projects expected to launch in 2018 further increasing mainstream awareness around cryptocurrencies, it seems we can expect this trend to remain consistent for the foreseeable future.
What's more, as regulation continues to evolve, ICOs could become very different and we could see them serving many different purposes.
Some commentators have even stated there is a chance they could even replace IPOs and make a fairer and more equally distributed economy, where anyone could become an investor with little risk as a consequence. Tokenisation of capital which provides new levels of liquidity and transparency could become the future as we may end up seeing all kinds of organisations, including larger enterprises, begin to explore the ICO space.
In a recently published report, S&P Global Ratings said it sees political risk and international investor sentiment toward the UK as the key risks facing UK banks in 2018 (see UK Banks: What's On The Cards For 2018). This isn't new--the UK banking system has operated against a constant backdrop of elevated political risk since 2014 and during that period, they have made good progress toward improving their balance sheets. Achieving stronger returns on equity has proved more elusive, however.
As the Brexit talks rumble on, we expect them and the related parliamentary processes to dominate the newswires. The UK's minority government increases political risk, especially as the UK is unused to operating with a minority government. Our sovereign rating on the UK has a negative outlook and our economists forecast relatively low GDP growth of 1.0% in 2018. Nevertheless, we anticipate that economic and industry trends will be stable for the UK banking sector.
We see some possibility of unsupported group credit profiles (UGCPs) being revised upward in 2018, if balance sheet strength further improves and earnings prospects accelerate, but it is hard to imagine wholesale sector upgrades, given the political backdrop. Unless the political and economic environment deteriorates more sharply than expected, or banking groups experience management mishaps, we consider the likelihood of lower UGCPs to be limited.
Uncertainties related to Brexit negotiations, specifically regarding transitional arrangements, are likely to weigh on business confidence, while inflation is set to outpace pay growth for most of 2018. We forecast that the economy will grow more slowly in 2018 than in 2017 as these factors weigh on business investment and private consumption. In our baseline forecast, we expect that economic growth will moderately accelerate in 2019 and 2020 while the UK transitions to its new relationship with the EU in 2021.
Only a rating committee may determine a rating action and this report does not constitute a rating action.
(Source: S&P Global)
Last week, the FTSE 100 saw a late upward rush as it closed at a new record high of 7,724.22 points. This was after a fresh record high at the end of the year, spurred by a rally in mining stocks and a healthcare burst. But how will FTSE kick off the year and will it sustain its consistency in record highs throughout 2018?
According to some sources, the success of FTSE in 2018 will largely depend on the outcome of Brexit negotiations, although a rise in the pound may make it a mixed blessing. Below Finance Monthly has heard Your Thoughts, and listed several comments from top industry experts on this matter.
Jordan Hiscott, Chief Trader, ayondo markets:
I believe the FTSE 100 will go above 8,000 in 2018. In part, this is due to the current political turmoil we are experiencing, with the incumbent UK government looking increasingly unstable as each week passes, an economy that seems to be lagging behind Europe on a relative basis, and the ongoing turbulence from Brexit.
However, all these factors are already known to investors and traders and so far, the FTSE has performed well despite these fears. For 2018, I believe the Brexit turmoil will increase dramatically as negotiations with Europe continue down an incredibly fractious route.
Craig Erlam, Senior Market Analyst, OANDA:
Two key factors contributing to the performance of the FTSE this year will be the global economy and movements in the pound. The improving global economic environment was an important driver of equity market performance in 2017 and many expect that to continue in 2018, with some potential headwinds having subsided over the last year. The FTSE 100 contains a large number of stocks that are global facing, rather than domestically reliant, and so the global economy is an important factor in its performance. Stronger economic performance is also typically associated with stronger commodity prices and with the FTSE having large exposure to these stocks, I would expect this to benefit the index.
The global exposure of the index also makes the FTSE sensitive to movements in the pound. After the Brexit vote, the FTSE continued to perform well as a weaker pound was favourable for earnings generated in other currencies. The pound has since gradually recovered in line with positive progress in Brexit negotiations and a more resilient UK economy. Should negotiations continue to make positive progress this may create a headwind for the index and offset some of the gains mentioned above. A negative turn for the negotiations though would likely weaken sterling and provide an additional positive for the index.
While many people are confident about the economy, Brexit negotiations are more uncertain and will have a significant impact on the index’s performance, as we have seen over the last 18 months.
Sophie Kennedy, Head of Research, EQ Investors:
We believe that the synchronised global growth and continued easy monetary policy should support global risk assets going forward. As such, equities should deliver a reasonable return over the next year, which will be the starting point for FTSE performance.
The deviation of FTSE performance around global equity performance will likely be a function of a few factors:
- The level of sterling is extremely important. Many FTSE companies have very global revenue streams. As such, when sterling falls, foreign earnings are inflated. The level of sterling over the next year is likely to be a function of Brexit-negotiations, the result of which we are not attempting to forecast.
- There are a number of large commodity producers in the FTSE. Their profits and share prices tend to rise and fall with the price of commodities. The oil market looks more balanced than it has previously and strong global growth should boost global commodity demand. However, we have already had a large rally since the middle of 2017, so upside is likely to be more muted.
- The trajectory of the UK economy is also relevant, particularly for the smaller capitalisation parts of the market and sectors including housebuilders and utilities. We are not hugely positive on this point, on account of the real income squeeze and continued weak investment environment.
We feel that points 1 and 2 are neutral but point 3 is negative. As such, we expect the FTSE to deliver positive returns but likely underperform the MSCI World.
Tim Sambrook, Professor of Finance, Audencia Business School:
2017 ended the year strongly and is now around all-time highs. The 7% return and 4% dividend gain was better than most had hoped. But will this positive trend continue or will investors worry about the price?
The FTSE has performed strongly, because the global economy has done well. The FTSE is largely a collection of international conglomerates who happen to be based in the UK. The political mess has had little effect on the economic environment (fortunately!).
Strangely, a poor negotiation on Brexit will have a positive effect on the FTSE (if not the UK economy) as a large part of the earnings of the larger companies are overseas. Hence a fall in sterling will lead to a boost in earnings and hence push up the price of the FTSE.
Currently there is little reason to believe that the global economy, and hence corporate earnings, will not continue to do well in 2018. The current PE of the FTSE is not cheap at around the 18-20, and is without doubt above the long-term average of around 15-16. However, this is not excessive and could even support some negative surprises this year.
However, the underpinning of the current bull market has been dividend yields. The FTSE is currently offering 4% and is likely to increase over the coming year, with many of the large caps having excess liquidity. This is very attractive compared to other assets, particular as we shall be expecting higher rates in the future. The large number of income seekers are likely to increase the positions in the FTSE this year rather than reduce them.
Ron William, Senior Lecturer, London Academy of Trading:
The UK’s FTSE100 was reaching all-time record highs into the New Year, fuelled by a global wave of investor euphoria. 2018 was the best start to a year for S&P500 since 1999, marked by the Dow’s historic break above the psychological 25K handle.
All these technical new high breakouts are being supported by the highest level of upward earnings revisions since 2011, coupled with extreme levels of market optimism last seen at the peak of Black Monday 1987.
From a behavioural standpoint, it seems that analysts and investors are silencing tail-risk concerns in a precarious trade-off for fear of missing out on the party.
The “January Effect” is part of a tried and tested maxim that states “as the first week in January goes, so does the month”; and even more importantly, “as January goes, so does the year”. So our recommendation would be to see how January plays out as a potential barometer for the next 12 months.
However, keep in mind that we still live in known unknown times; some major markets have not even had a 5% setback in 16 months and the VIX index is at new record lows.
Back to the FTSE100, all eyes remain on the next glass ceiling: 8000. While there is an increasing probability that the market will achieve this historic price target, we must also apply prudent risk management as the asymmetric risk of a violent correction remains.
The long-term 200-day average, currently at 7422, is key. Only a sustained confirmation back under here would signal a major cliff-drop ahead from very high altitudes. Brexit tail risk will more than likely continue to weigh heavily on it.
We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!
More than nine in ten finance and accounting professionals (92%) are optimistic about increased automation in the profession, according to new research from Renaix.
The study, which questioned over 200 finance and accounting professionals, reveals that 81% are seeing their role impacted by emerging technologies, such as advanced data analytics (63%), cloud computing (42%), robotics (17%) and artificial intelligence (15%). This increases to more than nine in ten (94%) who believe these technologies will impact their role in the next five years.
Yet, despite the increasing role of technology, only 12% of those questioned believe their job will be completely automated within the next five years, with most seeing new tools as an opportunity rather than threat. Two thirds (69%) say automation will enable them to be more efficient, over half (59%) say it will allow them to add greater value to clients and 40% say it will reduce the amount of transactional work they’re involved in.
But that doesn’t mean there aren’t challenges, with more than half (59%) of respondents having to learn new skills to keep up with technological developments, with data analytics (54%), soft skills (54%) and working with new technologies (51%) coming top of the list.
Many are also worried about skills shortages over the coming years, particularly in data analytics (52%), STEM (science, technology, engineering and maths – 42%), and soft skills (31%). Furthermore, a quarter (25%) of those questioned say their employer still isn’t investing in upskilling the finance function to work with new technologies.
Paul Jarrett, Managing Director at Renaix, comments: “Emerging technologies are set to transform the finance and accounting sectors, with many professionals already feeling the impact on their day-to-day responsibilities. And it’s encouraging to see that, far from being intimidated or threatened by these new ways of working, the majority of professionals are excited and optimistic, believing automation will improve and expand their role in the coming years.
“Finance and accounting organisations have a fantastic opportunity to drive forward digital transformation, empowering all employees to play their part in developing and implementing new ways of working. However, to do so effectively, employers need to ensure they are equipping the workforce with the right skills, as well as investing in bringing in the right talent. While there will always be a need for traditional finance and accounting skills, we’re seeing a significant rise in demand for a broader range of backgrounds, particularly those with STEM qualifications. Businesses therefore need to plan their talent needs effectively, to ensure they stay ahead of the game.”
(Source: Renaix)
Bitcoin has since its inception, and especially during its 2017 growth spurt, become a bit of a culture, a religion almost. If you’ve heard about bitcoin from somehow, they likely sounded really passionate about it and excited to explain it to you. Below Fiona Cincotta, Senior Market Analyst at City Index, talks Finance Monthly through the bitcoin investment craze.
In 2009 when the bitcoin was invented, very few people thought it was worth a second thought. In June of 2009, a bitcoin was worth $0.0001. Even a year ago no one was really taking about bitcoin. It was a virtual currency that existed for those that were technologically advanced enough to understand it.
As humans, the feeling that we have been left behind or the feeling of missing out, is not one we relish. In many cases this is magnified when money is involved. Conversely, the feeling that we have jumped onboard the right ship is something we love to shout about, something that more and more bitcoin investors are doing. As the price of bitcoin continues to rise, the interest that followers pay to the virtual currency and the hype surrounding it grows exponentially. As the price goes up, so does the hype.
Bitcoin reached a staggering new all-time high on 20th November as the virtual currency broke through $8000 level for the first time, not just the first record high, but the third or fourth record high within so many weeks. Several new developments surrounding bitcoin have aided it’s 48% rally from $5500 just one week earlier.
Whilst the link between the rising price and growing following of bitcoin is indisputable, several recent developments have also increased its legitimacy. Firstly, CME Group plans to offer bitcoin futures from December 10th. Futures are a mechanism of agreeing to buy or sell an asset at a future date and the contracts can be used as a method of speculating on the assets price movement over time. CME’s support for the currency is giving it a legitimacy in the financial world that up until now it appeared to be lacking.
The move by the CME will also put more pressure on the big investment banks to join the party. So far, Goldman Sachs has suggested it could be open to the idea of a bitcoin desk, whilst JPMoragan have also expressed an interest in opening a bitcoin desk to serve clients’ needs. But could more legitimacy just encourage bitcoin followers to continue talking up what is starting to look like this generation’s dotcome bubble. Is the bitcoin a great example of investor enthusiasm driving to fever pitch, before it crashes?
Yet, the bitcoin religion is not just about an apparently phenomenal investment. To some of those involved, bitcoin is the future of money. It is not unheard of for bitcoin enthusiasts to compare where the bitcoin is now, to where the internet was in the 1990’s. One bitcoin investor said “bitcoin is one of the most important inventions of humanity. For the first time ever, anyone can send or receive money, with anyone, anywhere on the planet, conveniently and without restriction. It’s the dawn of a better free world.” Another claims that mankind “has never really owned their own money, it’s always been owned by their rulers. Bitcoin gives the ability for people to actually own their own money.” Here we can see that to some the bitcoin religion goes far beyond the investment itself and is the cusp of a social revolution.
Social revolution, new religion, or not, focusing on the bitcoin rather misses the point. More attention should be switched towards the blockchain, the technology behind the bitcoin. Whilst the technology is complicate the idea is simple, Blockchain technology enables us to sends money directly and safely from me to you, without going through a bank, paypal or credit card company. Blockchain technology has the potential to bring with it widespread change. Whilst JP Morgan CEO Dimon, called bitcoin a fraud, his bank has been using underlying blockchain technology to develop new processes. Blockchain technology is still some way off going mainstream, in fact the bitcoin bubble may have even popped before blockchain goes mainstream. Rather than the internet of information, the blockchain (rather than the bitcoin) could be the internet of value.
Here discussing the increased adoption of connected devices and sensors in banking and how IoT enables banks to respond in real-time to customer needs, is Neil Bramley, B2B Client Solutions Business Unit Director at Toshiba Northern Europe.
Internet of Things (IoT) technology is on the rise both at home and in the workplace, and will soon significantly impact and empower the way we live and work. To date, such solutions have arguably made a bigger splash in the consumer landscape than B2B, with connected fridges, cars and thermostats all resonating with the public. As consumers awareness of IoT grows, so too does their expectation that it will blend into their everyday consumer experience. No business is seeing this effect more than those in the financial industry as more IoT technology incorporates payment capabilities.
The case for financial organisations to introduce IoT into their internal infrastructure and consumer facing technology capabilities is gaining in strength, with solutions providers continuing to innovate and push the boundaries of what such technologies can achieve. The whole concept of IoT is that it can be anything organisations want and need it to be – all it takes is the right app or piece of code to be built around it. At this stage in its adoption, many IT managers in financial organisations don’t necessarily understand the potential of IoT. Given the personal, and often sensitive, nature of the data these organisations manage a fear of data and network security persists, particularly in the wake of recent global cyber-attacks. However, such concerns aren’t projected to hold the market back for long, with IDC research predicting that global spending on IoT technologies is forecast to reach nearly $1.4 trillion by 2021.
The scope of IoT solutions is evolving to fuel this demand. Whereas stationary M2M (machine to machine) solutions, such as sensors, kick-started the connected device market and remain popular, mobile IoT solutions provide vast opportunities across numerous sectors – helping to improve workflows, enhance interactions with staff and customers, and even improve the safety of workers. Key to this development is the introduction of peripherals to the workplace, which can be partnered with mobile gateway solutions to ensure cross-machine collaboration.
One natural example lies within banking. The increased adoption of connected devices and sensors will bring increasingly rich data to banks about their customers, allowing them to provide more personalised products and services, even enabling them to respond in real-time to customer needs. As connected technology becomes imbedded in our environments, and the connected home and smart city market matures, banks could provide real-time spending advice. For example if you have overspent on your budget that month your bank might suggest you avoid your usual Friday lunchtime treat.
Elsewhere, peripherals like smart glasses (wearable display technology) can ensure a hands-free solution to workers across a range of roles. Augmented Reality could give insurance sales teams a in-depth view of customers homes geographical locations and provide them with a better analysis of potential risks in order to give them a better deal, or provide a hands free look at a customers financial history enabling the creation of bespoke products and services.
Beyond devices themselves, operating systems will also play a crucial role in the progression of IoT in the financial services world. Currently the focus is very much on writing software for iOS and Android – a smartphone-onus which again signifies the advanced stage of the consumer market. Yet the natural progression is for solutions providers to expand their focus to incorporate Windows 10 – this will serve as a catalyst in creating a greater number of solutions designed for professional use, which in turn will inspire more financial organisations to turn their attention to developing IoT coding and apps to address different business needs.
It is only a matter of time until IoT becomes a major enabler for organisations across the finance industry – with such game-changing potential, it’s important for IT managers to get ahead of the curve to understand how these technologies can empower their business.
