Oh what a time to be alive. As the whole world is shaken by the news about Russia’s full-scale invasion of Ukraine and it somehow feels like the world as we knew it continues to crumble, we present you Finance Monthly’s latest collection of articles covering the hottest topics in the world of finance right now. Here are some of our favourite stories from Finance Monthly’s March 2022 edition: All of this and so much more - I hope you enjoy the content in our third issue for 2022! And let us hope for peace. For more financial news and commentary, please visit our website to stay up-to-date on industry news as it happens, join the conversation on our Twitter (@Finance_Monthly), like our Facebook page and follow us on LinkedIn and Instagram (@FinanceMonthly). Best wishes, Katina Hristova Editor email@example.com Copyright 2022 Published by Universal Media Ltd The views expressed in the articles within Finance Monthly are the contributors’ own, nothing within the announcements or articles should be construed as a profit forecast. All rights reserved. Material contained within this publication is not to be reproduced in whole or part without the prior permission of Finance Monthly. Circulation details can be found at www.finance-monthly.com Universal Media Ltd PO Box 17858, Tamworth, B77 9QG United Kingdom 0044 (0) 1543 255 537 Follow us on Instagram Financemonthly Find us on Facebook Finance Monthly Stay Connected www.linkedin.com/finance-monthly Tweet us @Finance_Monthly Monthly Finance Finance Monthly. Ed i t or ’ s No t e 3 Hello and welcome to the March 2022 issue of Finance Monthly Magazine! 28. Overcoming the Gender Investment Gap Interview with NatWest Group 48. Why Sustainability Will be the Main Investment Theme for 2022 What Have Deal Volumes Been Like in the Tech Sector Over the Last Year? 16. 12. Meta Moving Fast and… Broken?
4 Finance Monthly. Con t en t s CONTENTS 12. META Moving Fast and… Broken? THE MONTHLY ROUND-UP News You Can’t Afford to Miss 8. BUSINESS & ECONOMY Meta Moving Fast and… Broken? What Have Deal Volumes Been Like in the Tech Sector Over the Last Year? How to Solve the Energy Crisis How Finance Directors Can Nurture Productivity in Their Team 16. 20. 12. 24.
5 Finance Monthly. Con t en t s 20. How to Solve the Energy Crisis 42. 3 Trends Shaping ESG Reporting in Finance in 2022 54. TRANSACTION REPORTS Immofinanz’ Acquisition of ENS DEVELOPMENT Migross Acquires 8 Cash & Carry Points of Sale 60. 61. BANKING & FINANCIAL SERVICES Overcoming the Gender Investment Gap An Interview with NatWest Group Top Insuretech Trends for 2022 Difference Card: Changing the Health Insurance Industry 3 Trends Shaping ESG Reporting in Finance in 2022 28. 32. 38. 42. INVESTMENT Here’s Why Sustainability Will be the Main Investment Theme for 2022 48. FINANCIAL INNOVATION & FINTECH ESG & FinTechs: Technology Enables Impact Goals 54. ESG & FinTechs: Technology Enables Impact Goals
Finance Monthly. Con t en t s 6 Contact us today to find out more. Visit www.infotrack.co.uk/REVEAL or call 0207 186 8090 Analysing company information and identifying links with individuals is time consuming. REVEAL interprets data from trusted sources including Companies House Direct and Companies House Beta and turns it into an interactive workspace making it faster and simpler to analyse. At the touch of a button, REVEAL makes analysis beautifully simple, reducing the process by hours. REVEAL: corporate structures simplified, beautifully. Company Shareholder Director
7 Legal Awards2022 FM VOTING NOW OPEN Click here or visit www.finance-monthly.com to cast your vote Recognising and rewarding the firms and consultants who have demonstrated tangible successes across a number of industries and sectors. Monthly Finance
8 Finance Monthly. THE MONTHLY ROUND-UP News You Can’ t Af ford to Mi ss The Mon t h l y Round -Up Inflation in the United States is already at its highest level in 40 years, but Russia’s full-scale invasion of Ukraine could see it driven even higher. The Russia-Ukraine conflict has already sent oil prices above $100 per barrel for the first time since 2014. On Thursday 24th February, some prices soared as high as $105 following Russia’s Russia-Ukraine Conflict Could Drive US Inflation to 10% launch of a broad offensive against Ukraine. In the early hours of the morning, explosions were heard near major Ukrainian cities, including the country’s capital, Kyiv. Following the attack, Brent crude oil — the global benchmark — jumped by more than 8%, reaching $105.50 early Thursday. Meanwhile, US oil prices climbed to over $99. RSM chief economist Joe Brusuelas warns that the war between Russia and Ukraine could ultimately lead to oil prices surging as much as 20% to $110 per barrel. This would cause consumer prices in the US to surge above 10% on an annual basis. This is the highest figure since October 1981. “The price of oil has almost doubled since the start of last year and, given current tensions, is poised to move higher. The potential for a broader energy shock to the global and U.S. economies should Russia invade Ukraine has added to a combustible mix of factors that is causing inflation to accelerate in the United States and abroad,” said Brusuelas. “That risk carries with it the potential to slow down growth.”
9 Finance Monthly. The Mon t h l y Round -Up In 2021, criminals held $11 billion worth of cryptocurrency with known illicit sources, a substantial increase from the $3 billion at the end of 2020. According to Chainalysis, stolen funds made up 93% of all criminal balances at $9.8 billion in 2021. Darknet market funds came in at $448 million, while scams totalled at $192 million, fraud shops at $66 million, and ransomware at $30 million. In its crypto crime report, Chainalysis also stated that more than 4,000 criminal whales have a total of $25 billion worth of crypto as a group. Chainanalysis defines a criminal whale as a private wallet with at least $1 million of crypto that has received over 10% of its funds from illicit addresses. 2021 is now the highest year on record for crypto-based crime, as the continuation of the coronavirus pandemic encouraged an increased number of online transactions and investments. Chainanalysis’ report follows on from the US Department of Justice seizing around $2 million worth of crypto from the DarkSide ransomware operators behind the attack on Colonial Pipeline. Meanwhile, in the UK, London’s Metropolitan Police Service made its largest-ever seizure of cryptocurrency, taking $180 million worth from a suspected money launderer. Crypto Crime: $11 Billion Amassed in 2021 The UK tax department, HM Revenue and Customs has seized three non-fungible tokens (NFTs) as part of a probe into a suspected VAT fraud scheme involving 250 fabricated firms. HM Revenue and Customs said it had seized the NFTs and had placed three people under arrest on suspicion of attempting to defraud it out of £1.4 million. This is the first time an NFT has been seized by UK law enforcement. NFTs, which first surfaced in 2014, are unique digital tokens that can be bought and sold in cryptocurrency or traditional currencies that have no tangible form of their own. “Our first seizure of a Non-Fungible Token serves as a warning to anyone who thinks they can use crypto-assets to hide money from HMRC,” said Nick Sharp, HMRC’s Deputy Director Economic Crime. “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.” Three digital artwork NFTs as well as other crypto assets worth approximately £5,000 have been seized after the HMRC successfully secured a court order. According to HMRC, the three suspects are thought to have used “sophisticated methods to try to hide their identities including false and stolen identities.” NFTs Seized for the First Time Amid Suspected £1.4 Million Fraud
Business Economy. 12. Meta Moving Fast and… Broken? What Have Deal Volumes Been Like in the Tech Sector Over the Last Year? How to Solve the Energy Crisis How Finance Directors Can Nurture Productivity in Their Team 16. 20. 24.
Moving Fast and… Broken? Bill Blain Market Strategist at Shard Capital Bus i ne s s & Economy 12 Finance Monthly.
Mark Zuckerberg coined a famous motto: “Move fast and break things. Unless you are breaking things you are not moving fast enough.” Things are certainly moving fast for Meta, the parent of Facebook – but not in a good way. It very much looks broken. Behind its mega-stock status and flash offices, Meta faces unprecedented threats from its unravelling business model, crashing advertising revenues, product obsolescence, regulatory threats, and from the unknowns of trying to reinvent itself at the centre of where Zuckerberg sees himself dominating next; the “Metaverse”. Whatever that might turn out to be. Finance Monthly. Bus i ne s s & Economy 13
uckerberg has a massive problem. His existing brands Facebook, Instagram and WhatsApp are under the cosh. They are, essentially, advertising companies under competitive and evolutionary threat. They remain dominant brands in social media advertising, but their user bases are not as sticky as once assumed, and they no longer have a monopoly as social media breaks and fragments into multiple players and themes. They are under enormous regulatory and technical threat. Things started to get bad last year when Apple gave users of its IOS operating system the option to stop trackers – meaning every keystroke on your iPhone is no longer an invitation for resellers to target and sell you cheap tawdry crap you don’t need or particularly want. Google is doing the same with Android. The result is Meta’s advertising income stream is drying up. It’s not going to get better. Advertisers have more exciting places to go. The reason the name changed from Facebook to Meta was a tacit acknowledgement of the inevitable – Facebook is no longer the new, new, exciting thing. Meta lost 20% of its value on a single day in January when Zuckerberg broke the cardinal rule of tech and told the truth: admitting Facebook has lost ground to newer, more hip, cool rivals like Tik Tok. If you want to know where it’s headed, look up Friends Reunited. Who knew competition and evolution are real? Tech evolves and old firms get eaten up for lunch by new firms… My kids think Facebook is for grandparents and the truth is It is. As the platforms close tracking windows, Zuck was forced to admit it’s difficult to make money “where less data is available to deliver personal ads”. In a world where it’s being outcompeted, and regulators are establishing the primacy of personal data… Facebook’s model of milking that data looks doomed. Of course, these are only the visible tips of a much larger iceberg – regulation. Facebook is the megavillain when it comes to all the ills of the internet social media connected age. When it comes to the evils of fake news, we need a witch to burn, and the unlikable Zuckerberg is just the kind of scapegoat that will burn nicely. This is why professional politician Nick Clegg, former deputy prime minister and one-time leader of the UK Liberal Party, is going to replace Zuckerberg as the face of Meta. Clegg will “lead our company on all our policy matters,” said Zuck. That is either another massive sell signal for the beleaguered stock, or it’s a stroke of political genius. Clegg was never a top tier politician. He was the buggins-turn leader of the 3rd party in a political duopoly. He got famous because David Cameron didn’t win a majority. Suddenly he was catapulted to power in a coalition, bet let himself and his party become the Tories’ stooges to be wiped out at the next election. He was a loser, but a kind, earnest and boring chap who looked like he at least cared. Perhaps that makes him the perfect face to defend the undefendable? Meta’s response to the approaching death of Facebook is to reinvent itself, springing its new concept, the Metaverse, upon us. Zuckerberg has the previous form as something of a congenital acquisitive hoarder of the future – just ask the Winklevoss twins. He clearly wants to own whatever this new “metaverse” is with the intention of monetising it. The question, and future value of Meta, ultimately lies in how well he achieves that. So, just what is the Metaverse? What kind of opportunity does it represent? Is it, as so many fantabulous things in this wonderful world are, yet another digital solution in search of a problem? Is it hype or a genuine new trend? The Metaverse concept is not new. It was first described and named by Science Fiction writer Neal Bus i ne s s & Economy 14 Finance Monthly.
Stephenson in the very early days of the internet revolution. Way back in 1992 he presented a vision of human avatars inter-reacting in a 3D digital space. He pretty much nailed it – establishing digital life alongside concepts like “proof of work” leading inevitably to the concept of digital currencies, the genesis of Bitcoin, the Blockchain and even Non-Fungible Tokens. Today, the Metaverse is being “imagined” as ripe with opportunities; as some kind of Internet version 2.1 – describing how we will all integrate digitally. It will offer a more immersive world of deeper engagement into virtual and augmented reality – once the technology catches up with the promises. “Digital Visionaries” are talking about how natural it will become to do everything from shopping, business and living a social life online in the form of single or multiple digital avatars… It informs the world of “Ready Player One” and raises fears about a “Matrix-like” future. The thing is – whatever Zuckerberg is telling us – it’s already happening and has been for some time. Meta is not the leader – it’s just a follower. The global gaming sector is now infinitely larger than the film industry at over $100 billion per annum. Zuck is trying to paint the Metaverse as a Meta creation where he intends to own as a virtual environment where “you can be present with people in digital spaces”, an “embodied internet”, and how it’s going to “succeed the mobile internet”. It’s an opportunity for him to monetise Facebook’s investment in things like the Oculus VR set and to diversify his earnings from pure (yet risky) advertising to actually selling hard and soft stuff in the Metaverse. Will he succeed in making Meta the dominant venue in the Metaverse? Don’t underestimate the potential for monetisation in the Metaverse. Last year 17-year-old artist, Fewocious, sold 600 digital sneakers in NFT format through an online auction for…. $3.08 million. There is now a whole digital fashion universe selling unique NFT apparel gamers can wear online. As yet there isn’t a way of being able to dress across the net (enabling digital avatars to wear the same gear across multiple games and in multiple venues) but I’m assured it’s going to happen. There are now a host of earnest fashion designers exclusively focused on digital fashion. There clearly are also real and valuable applications for the metaverse in terms of virtual reality business and education. Effectively, education went virtual last year when millions of school kids zoomed an academic year because of COVID. Imagine a future where kids can attend any school they want as digital avatars – interesting and horrific in terms of real social interaction, not to mention the health consequences of living online. Zuckerberg is a smart fellow who sees potential. He knows Facebook is a risk business – the declining numbers of young people using it isn’t compensated for by the ones using Instagram. The dominant younger generation platform is TikTok, which is now part China Government-owned after it took an ownership stake in Bytedance. As the Facebook brand inevitably fades, its advertising revenues will plummet. Therefore, he is staking the next stage of his brand’s development on his company’s 3D universe. Zuckerberg will find new ways to monetise whatever data Meta can find in its virtual and augmented reality universe – which is not without associated risks to consumers and therefore the company. And that’s where the jury is out – can he make Meta as much of a monopoly as Facebook once was? If not, and I suspect it’s going to be a very crowded space, then Meta’s future is debatable longterm. So how does this end or Meta? What happens next will likely start to happen quickly – fast and broken. Meta is already in trouble for inhouse bullying and whistleblowers about its rotten corporate culture. As the stock tumbles and belief wanes, it will suffer key staff defections. The stock price will spike up and down. The firm will miss deliverables, and while trying to fix Facebook, lose focus on Meta. The stock will probably stage a buy-the-dip rally, but like any mainsequence star towards the end of its life, it’s burnt all its hydrogen fuel of imagination, inventiveness and innovation. It won’t go supernova, but as it collapses inwards and atoms fuse into heavier elements, first helium and down the sequence and it will briefly become a red-giant burning brightly in the financial media-sphere for months before it contracts into its white-dwarf long drawn out slow-burnout into nothingness…. Ouch… but not a bad metaphor if I say it myself. Finance Monthly. Bus i ne s s & Economy 15
16 Finance Monthly. Bus i ne s s & Economy Graham Pearce Partner, Head of TMT, Corporate Finance KPMG UK
17 Finance Monthly. Bus i ne s s & Economy 2021 was an incredibly active year for technology deals. The widespread adoption of remote working and the impact of lockdowns speeding up the process of digital transformation across many sectors led to a sustained investment in businesses in the technology, media and telecommunications (TMT) sector, with these industries seeing around 65% uplift on deal activity versus the prior year. Admittedly, 2020 was the year when the early pandemic lockdowns prevented a lot of deal activity, but it is certainly true that deals in the TMT sector have rebounded to beyond the levels they were even before the very first lockdown. In terms of mergers and acquisitions (trade, PE, IPO, and earlystage investment), the TMT sector represented roughly a quarter of all 2021 deals in the UK, the biggest single sector. KPMG’s TMT Corporate Finance team advised on a record number of transactions throughout the year – 21 in total. We hear more about them from Graham Pearce – Partner and Head of TMT, Corporate Finance at KPMG UK. Deal Volumes What Have “The launch of SuiteBanking marks the first unified suite to embed FinTech into cloud ERP, giving our customers full visibility over their cash flow and bringing intuitive automation.” Been Like in the Tech Sector Over the Last Year?
18 Finance Monthly. Bus i ne s s & Economy How has the pandemic impacted the enterprise technology market? The range of digital technologies that we came to depend on so much during the pandemic, especially those designed to improve remote working and collaboration, are now completely ingrained within the world of work. We may settle into a hybrid-style way of working going forward, but those collaborative tools are all here to stay as part of that. Indeed, technology requirements have gone beyond these initial use cases to cover other areas including improved cloud integration and enterprise software tools to support the needs of a hybrid workforce; customer engagement; better oversight and control of complex supply chains as well as seamless mobile technology and edge computing. How active has private equity been in fuelling recent transactions? In 2021, private equity (PE) firms continued to show significant interest towards tech firms, given the sector’s resilience and the enhanced demand for digital and SaaS solutions from the enterprise through to everyday lives. Tech businesses are typically fastmoving, and often have significant needs for investment early in their lifecycle. As is common in many sectors, entrepreneurs and owners can be open-minded to receiving external investment to either scale, de-risk, or both. As such, PE has been a very active player in the TMT deals arena. The tech sector in the UK is decentralised – there is a large presence in London (like most sectors) but equally, there are many other established tech hubs in places like Manchester, Leeds, Cambridge and Glasgow, to name a few. These cities act as magnets for institutional investment, and we have seen a significant amount of private equity-sponsored deal activity outside of London. Has there been strong investment from the US? In terms of transactions involving software and technology companies that came to market in 2021, private equity was an extremely active participant. As part of that, more and more in the UK, US PE acquirers are becoming more active and bidding aggressively for high-quality assets, even those that would previously have been deemed too small to garner interest from across the Atlantic. I saw this happen in many of our processes last year, and about a quarter of our deals last year in the sector drew significant minority or majority investment from American investment houses. Are there any particular sub-sectors of enterprise software that have been especially active in terms of deals? Drilling down into the subverticals of enterprise software, we are observing record levels of activity in areas including accounting and financial software, such as the acquisition of asset finance software provider White Clarke Group by Thoma Bravobacked IDS and the acquisition of process automation player Xceptor by Astorg and Corsair Capital. We are also seeing architecture, engineering, construction (AEC) software prove particularly attractive for investors, with deals including the acquisition of NBS by Byggfakta Group and the acquisition of Causeway Technologies by Five Arrows. Other sub-sectors where there have been marked increases in deal activity in the software space include supply chain, logistics and workforce management. My view is that all these areas are where inefficiencies – brought to the fore by the pandemic, Brexit or wider economic factors – have led to an increase in digital transformation and innovation to solve complex issues. Our own experience mirrors these trends; we advised on deals in all these sub-verticals last year.
19 Finance Monthly. Bus i ne s s & Economy Will demand for enterprise software continue its current trajectory? As institutional appetite to invest right across the enterprise software sector has skyrocketed, this has had the knock-on effect of increasing valuationmultiples. We can see similar evidence in the public markets, where global listed SaaS businesses have seen their own valuations increase significantly from historic averages of around 10x revenues to mid-to-high teens. It is impossible to say with any certainty what the future will hold around valuations, but I believe it is a symptom of the structural shift of many advanced economies, such as the UK, towards creative and digital sectors that has driven a lot of this activity and that is unlikely to change. Furthermore, digital transformation going right through established sectors and being used to chase efficiencies across the supply chain is also more anecdotal evidence that the demand, and therefore price, of software businesses will continue to increase. “As institutional appetite to invest right across the enterprise software sector has skyrocketed, this has had the knockon effect of increasing valuation multiples.”
Bus i ne s s & Economy 20 Finance Monthly.
Finance Monthly. Bus i ne s s & Economy 21 Energy Crisis How to Solve the Matt Hay Founder and CEO of Bulbshare History repeats itself - but rarely in a way that we’d like. Everyone hoped that the 2020s would be a lot like the 1920s. After COVID, the world was in for an ecstasy of economic activity. It would be fine tailoring, well-mixed drinks and a second Jazz Age.
Except it hasn’t been like that. Not even a little. The UK is in the midst of its “weakest decade for pay growth since the 1930s”, according to a report by the Resolution Foundation, a think tank. Meanwhile, the cost of living in the UK is at its highest since September 2011, according to the Office for National Statistics (ONS). Then there’s inflation. This almost hit a 30-year high of 5.4% in December. But the great compounder of peoples’ travails is the energy crisis. In 2021, a typical home was paying around £1042 for gas and electricity per year, in April – when the price cap changes – that figure is likely to increase to £2000. Crises require collaboration People are hoping that governments, central banks and energy companies will step in with measures to alleviate the spate of issues facing households. The chancellor’s announcement to provide a repayable £200 discount on bills and a further £150 council tax rebate for most homes in England will serve as some comfort, but the majority will still face a shortfall. Is the right solution for people to quietly struggle? Of course not. As the situation worsens, we might anticipate a wave of radical creativity and activity from citizens. We know from experience that catastrophes are mobilising moments, they spark new thinking, collaboration, and help knit society together. Consider the pandemic – a single emergency inspired 436,000 people to join the NHS Volunteer Responders Programme. The service reckons these people carried out about 2-million COVID-associated tasks. Then there was all the clapping and banging of saucepans in the street to celebrate the efforts “The UK is in the midst of its “weakest decade for pay growth since the 1930s”, according to a report by the Resolution Foundation, a think tank. Meanwhile, the cost of living in the UK is at its highest since September 2011, according to the Office for National Statistics (ONS).” Bus i ne s s & Economy 22 Finance Monthly.
of health workers – crises are traumatic, but they unite. Take the power back It’s easy to see how citizens might mobilise in response to COVID – delivering essentials to quarantining neighbours, staffing a vaccine centre, or just being conscientious when it comes to handwashing and mask-wearing. But the issues at hand require more thought. What can people do in response to soaring energy prices and inflation? The answer might lie in the rise of a consumer-centric energy market. We are currently seeing the first phase of this with a year-on-year increase in solar panel installations. There is room for growth, as of 2020, 970,000 UK homes are using them, according to government figures – that’s only 3.3% of the country. Further along, it’s possible that citizens will tire of paying huge prices to huge companies and opt for creating energy themselves. This could see the birth of localised power co-operatives, where energy is produced peer-topeer. New, low-cost and easy to use technologies will be key to making this revolution happen in the coming years. In the short term, the UK is staring down the worst set of circumstances since the financial crash of 2008. But if government inaction and industry stagnation lead to an era when people are more conscious of their own collective power for social change, the twenties might roar at last. “It’s possible that citizens will tire of paying huge prices to huge companies and opt for creating energy themselves. This could see the birth of localised power co-operatives, where energy is produced peerto-peer.” Finance Monthly. Bus i ne s s & Economy 23
Successful Finance Directors are always looking for ways to get more from their finance teams - and a huge part of this is improving levels of productivity. The common misconception about productivity is that it relates to staff apathy, but this is not what productivity measures. Instead, productivity improvements are created through investment in technology, supporting staff and considering new ways of working. Here, we take a look at some of the things that Finance Directors can do to boost productivity. Annie Button Can Nurture Productivity in Their Team Finance Directors How Bus i ne s s & Economy 24 Finance Monthly.
Process Automation Business process automation is becoming one of the most popular and important forms of digitisation. The simple premise behind process automation is taking business procedures that take a lot of repetitive manual effort from human staff and transferring those tasks to software and other technology. Naturally, there are a number of simple and repetitive tasks that take a lot of effort from finance department workers. So the move to automate these processes can save staff a significant amount of time. This frees them up to take on tasks that are more functionally valuable and productive for the company as a whole. Artificial Intelligence While process automation is one form of digitisation that has become important to the finance department – it is also crucial to look at emerging technologies and possibilities. One area that Finance Directors really need to be investigating is artificial intelligence. Transformative technologies such as machinelearning algorithms and natural language tools can not be easily implemented. One overlooked area in terms of finance is the power of AI chatbots. These can save members of the team a great deal of time in explaining concepts and simple details to people who have questions. Of course, when the chatbots aren’t able to answer a question it can be passed on to a member of the team. But for simple queries, it can save a lot of time and boost productivity. Invest In Cybersecurity The finance team can be at risk from something known as Business Email Compromise (BEC) attacks. BEC attacks are often designed to trick members of the finance team and therefore disrupt processes. “BEC is a specialist type of phishing attack that is becoming increasingly prevalent,” says Simon Monahan of cybersecurity specialists Redscan, “BEC attacks are designed to impersonate senior executives and trick employees, customers or vendors into wiring payment for goods or services to alternate bank accounts.” As well as being frustrating to deal with, the threat of this type of attack can significantly reduce productivity, as members of the team have to confirm identities even before processing payments from familiar people. Investing in cybersecurity can minimise this risk and free up valuable staff time. Focus on Morale It is often underestimated just how important morale is to a finance department’s efficiency and productivity. The world has gone through the Covid-19 pandemic and come out of the other side with many things changed. Finance Directors must recognise this and accept that they might need to do something to help refocus and improve the morale of staff. It is no controversy to say that when staff are happy and feel good about what they are doing, they can be more productive and efficient. This could be something as simple as ensuring more regular meetings between members of staff, overhauling how the department works, and ensuring that staff feel comfortable with any changes. Embrace Remote Working With finance departments operating remotely now as the newnorm, many businesses are finding that their productivity levels have increased. With flexible working patterns, employees enjoy the balance of hybrid working. Some companies choose not to move in that direction, preferring staff to work at the office wherever possible. If you are in this position, it is important to recognise the benefits of promoting remote working. It is necessary not only to invest in technology and software to help finance teams become more productive but also to thoroughly consider processes and adapt well to new ways of working. Many businesses evolve their finance processes not through striving for perfection, but simply because things need to get done. Examine your finance team’s procedures and look for opportunities to improve. Finance Monthly. Bus i ne s s & Economy 25
Deal Maker Awards2022 FM COMING SOON Click here or visit www.finance-monthly.com to cast your vote Recognising and celebrating the most impressive transactions in M&A, capital raising, corporate bonds, infrastructure, project finance, equities and restructuring. The Deal Maker Awards also celebrate excellence in M&A expertise in corporate, private equity, investment banking and legal fields. Monthly Finance
Banking Financial Services 38. 32. 28. Overcoming the Gender Investment Gap An Interview with NatWest Group Top Insuretech Trends for 2022 Difference Card: Chaning the Health Insurance Industry 3 Trends Shaping ESG Reporting in Finance in 2022 42.
28 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s
29 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s Overcoming the GENDER INVESTMENT An Interview with NatWest Group GAP Findings from research firm Kantar (2018) suggest that the value of investments held by women aged between 21 and 53 is just half that of men in the same age group. “If women are less likely to invest, they could face further disadvantages in the long term,” says NatWest. “They may find it harder to be financially independent and could be more likely to face financial difficulty in old age because their pension savings are lower than men’s.” Finance Monthly speaks to Camilla Stowell, Head of Client Coverage for Coutts, part of the NatWest Group, about the reasons behind the gender investment gap, the benefits women are missing out on, and how NatWest Group is helping to close the gap.
30 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s There are undoubtedly many factors at play but, ultimately, why are women less likely to invest? The wealth industry has not normalised investing for women, who are more likely to talk about money with friends and family instead of financial institutions. Findings from The Wisdom Council (March 2021) show that women now earn the same or more than their male partner in almost 30% of households in the UK, yet men are 10% more likely to hold an investment product than women in the UK according to the OECD. Boring Money also finds that only 13% of British women have a stocks and shares ISA. These findings show that the investment gap goes beyond financial issues, and is inherently tied to women’s choice, freedom and security. That’s why it’s more important than ever to address the gender savings, advice and wealth gap, with financial institutions taking responsibility to engage with women in a way that is relevant to them.
31 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s What benefits are women missing out on by not investing? The main benefits women are missing out on are financial. Women continue to live longer than men, and yet have pensions provisions that are less than half of those of men on average. It’s also about financial confidence. Life events such as divorce and bereavement are stressful enough without having to worry about money, which can add to the stress. On average, 51% of the financial advice sought in the UK by women was post-divorce. Women are also missing out on the opportunity to support the causes that are important to them. Women tend to use money to look after everyone else before themselves, and to be interested in the wider community and environment for the next generation. Through investing responsibly they can use their capital to have a positive impact on the wider environment. What is NatWest Group doing to close the gender investment gap? NatWest Group has identified ‘improving financial capability’ as a focus area and is looking to address the savings and investment gap in two ways. This includes supporting female entrepreneurs to promote wealth creation and identifying to help with Financial Health Checks to review their personal finances. At Coutts, we do this as a matter of course through annual client reviews which helps establish our relationship with clients. We’re working hard to make sure that we talk to customers in a way that works for them, meaning we’re more inclusive and accessible and can help support financial goals. This has helped us gain a 185% increase in female investors in Personal Banking, a 20% growth in Premier Banking, and an 81% growth in Coutts, year on year. We’re also keen to support our female colleagues, running a series of events through our Wealth Gender Network. How can women make the most of their investments? The main recommendation is to start now. However much or little you can afford, it all adds up. Make sure you’re enrolled on your workplace pension or consider starting a small private pension if you’re not eligible for a workplace pension. And, lastly, don’t be scared to talk about money with your partner. Whilst it might feel uncomfortable, it’s essential to understand how your finances are being used and how to manage them. Camilla Stowell Head of Client Coverage Coutts “Women tend to use money to look after everyone else before themselves, and to be interested in the wider community and environment for the next generation.”
Laurie Pierman Amerisure Vice President, Claims Operations and Shared Services Bank i ng & F i nanc i a l Se r v i ce s 32 Finance Monthly.
WespeakwithLauriePierman - VicePresident of Claim Operations and Shared Services at Amerisure, an industry-leading property and casualty insurance provider, about all things innovation, insuretech and trends within the industry. Insuretech Top Trends for 2022 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 33
34 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s You believe that innovation is not just for the big industry players. Can you elaborate on this? There are many opportunities and solutions available with insuretechs, and they run the gamut of what’s of interest to the big industry players as well as what might be of interest to someone smaller. A lot of insuretechs and innovators out there are looking to partner with someone a little smaller, with whom they can get their foot in the door and learn from in a more focused way. Utilising the “software as a service” model also allows for flexibility in pricing, and this can enable smaller companies to become involved in the insuretech space and innovate at scale. What are the benefits of partnering with an insuretech? One of the biggest benefits of partnering with an insuretech is that, depending on where they are in their journey, they’re open to feedback from customers along their roadmap. Becoming involved with insuretechs has allowed us to partner and identify avenues of innovation we can pursue to bring collective value. It also allows us to influence where insuretechs are spending their time and resources and enables both organisations to learn as we go. We’ve built strong relationships with our insuretech partners: they appreciate companies that took a risk on them in the early days and want to truly partner and make changes or adjustments that would bring value. Insuretechs can help insurance carriers think differently— sometimes we get stuck in our traditional ways of thinking and are risk-averse. Insuretechs can push you to realise what’s possible. The relationship provides benefits and opportunities for both parties: many insuretechs are just starting out, and it’s easier for them to get in and focus with a smaller regional carrier who can help them learn and grow as they go along and provide immediate feedback on what works and doesn’t. The biggest challenge when exploring insuretechs can be deciding where to focus your time and efforts. I spend a lot of time looking at potential solutions through the lens of 1) what’s the problem to solve, 2) what’s the constituency that will benefit from this (such as our customers and their journey, or our claims staff by automating processes so that they have more time), and 3) how will it improve outcomes. At Amerisure, when we began exploring opportunities, we established a roadmap that determined where we wanted to focus and where were the solutions we wanted to look at; conducted evaluations with consultants; and focused on “moments of truth” in our claims journey, with the bookends of claims submission and resolution. We spent a lot of time focusing on those areas; now we can focus on additional enhancements in the journey to help everyone. To keep learning about the benefits of insuretechs, I leverage industry events such as webinars, conferences and expositions, as well as vendor demonstrations (I am excited in-person events should be starting up again in the second half of 2022, as they are very valuable to help us determine who we may want to move forward with). “Insuretechs can help insurance carriers think differently — sometimes we get stuck in our traditional ways of thinking and are risk-averse. Insuretechs can push you to realise what’s possible.”
35 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s Tell us a little bit more about Amerisure and the services you offer. Amerisure is a leading provider of commercial property and casualty insurance solutions for US-based construction, manufacturing and healthcare businesses. Licensed in all fifty states and available through an exclusive network of elite independent agents, the company upholds an “A” (Excellent) financial strength rating, industryleading service scores, and multiple awards for innovation. Amerisure has been in business for more than 100 years and is consistently named among the best places to work in the industry and throughout the nation. In what ways has the COVID-19 pandemic affected your work? The COVID-19 pandemic allowed us to think about technology differently and enabled us to — out of necessity in some cases — innovate. It allowed us to identify vulnerabilities and showed us the “old way” of doing things is not always as efficient. COVID provided us with a timely reason to explore innovation — in general, customers realised that because they were going through it themselves, we must also do things differently. We found that with so many people working remotely, everyone is more patient and understanding of these situations than they would have been before. In a lot of ways, we all became much more flexible and have learned to roll with the punches. What are the key lessons it has taught you so far? My philosophy in life is: out of any negative situation, seek to find the positives and silver linings. There have been a lot of negatives with COVID, and while we can’t change the negatives, I always like to reflect on: “What are some of the things I can see as a positive?” COVID has taught us how important it is to keep in touch and that relationships are truly sacred. At Amerisure, we started to look at how tomaintain those connections in this situation, including increased communication with our staff, especially as we move into a hybrid work environment. We used to believe we needed to be face-to-face with customers and now have found that virtual meetings can sometimes be more efficient, eliminating travel time and in-person technological challenges. The entire experience provides lessons in leveraging technology and finding a balance so that there is a nice blend of communication methodologies. What trends do you expect to see industry-wide in the next 12 months? There will be many trends focusing on the customer experience and digital journey. Especially because of COVID, the pendulum settles into a sweet spot where not all experiences are electronic, and yet not all are manual such as it was before. This balance will continue to be a conversation in our industry as carriers respond to what their customers need and where they want to conduct
36 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s business, whether it’s through a digital channel, over the phone, or a little of both — especially when it comes to claims. It’s important in claims to always consider the empathy piece, as there is likely a traumatic event happening in someone’s life, and it can be emotional. Flexibility for people to opt in and out of digital channels depending on the circumstances is something we’ll continue to see. There will be a lot more that happens around artificial intelligence (AI) and machine learning (ML) this year. This technologywill continue tobecome more seamless, enhancing software already in existence to identify sentiment. The next version of analytics will also be a significant trend: There’s a lot of work being done around predictive analytics and prescriptive analytics, which not only tells you that “X” is going to happen, but it also tells you what actions will have the most benefit. Another trend we’ll hear more about is how innovation can be achieved easier, faster, and cheaper. There will be technology available that doesn’t require as much maintenance from an IT perspective, and even more opportunities in the insuretech space for companies to leverage software across multiple areas throughout an organisation. For example, I may be talking to a vendor about their claims product, and they also have a capability that’s perfect for underwriting or other areas of the organisation. That synergy allows you to learn from the technology you’ve already implemented, making it faster and easier to enhance usage, and also allows for less maintenance and technological debt to manage. That’s an opportunity we’re going to see going forward: more insuretechs are looking at how to broaden their focus to address problems from multiple organisational areas. Many core systems in the insurance space are looking to expand and make it easier for carriers to innovate, exploring and identifying opportunities already part of licenses within the software to achieve solutions easier and cheaper than before. Core systems functioning outside of a silo make it easier for carriers to innovate and allow the insuretech to integrate with them easily and seamlessly. What is Amerisure working on in 2022? One of the largest initiatives we’re working on is the modernisation and upgrading of our core applications. While we’ve been on a modern claims system since 2015, it’s been an upgrade process to move the entire claims core system to the cloud. Having all major core systems on a modern platform will allow us to innovate and move forward at a much faster rate. Our claims systems will be in the cloud this year; moving our policy and billing systems to the cloud is a multi-year journey. As an organisation, we’ve made tremendous strides in how to approach the experience we want our customers to have, whether internal or external and focus on the customer journey. We’ve created multiple roles focused on the customer experience, and we’ve added a user experience group within IT to help us focus from a tech perspective, making sure it’s consistent and seamless. The teams will focus and look at opportunities from that perspective and help us feel cohesive and consistent across applications customers interact with. I’m excited to make tremendous strides here in 2022. One of the things I am most impressed with within our industry is, yes, there’s competition among carriers, as we are all trying to be successful and grow business — but we also are trying to help each other and are always looking to find ways to share information to help others be successful. I feel that it’s important to impart lessons to my industry peers that may help them. As I have looked at technologies, I’ve learned a lot from other companies, and it’s helped me identify how and where to focus. I’m very proud of how we all continue to help each other as an industry, and how so many industry leaders are working to pay it forward and share lessons learned.
37 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s
38 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s Ashley Dube Northeast Market Director The Difference Card
39 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s HEALTH INSURANCE Difference Card: Changing the We sat down with Ashley Dube, Northeast Market Director at The Difference Card, on making a difference in the health insurance field. How is The Difference Card making a “difference” in the health insurance industry? Prior to my tenure here, I worked on the insurance carrier side selling ancillary benefits such as dental, vision, life & disability insurance. I was trapped in the mindset that insurance premiums were supposed to increase greater than inflation year over year. When delivering these increases to our clients, I put myself in the business owner’s shoes. The increase in costs led to a game of musical chairs reallocating assets from one line item to another trying to absorb the increase. Health insurance is typically the second biggest line item behind payroll. This makes it difficult to run a profitable business with a standard 9%+ increase in costs each year. I was passionate about making changes in an industry that had been stagnant for 30+ years. By chance, I stumbled upon The Difference Card, whose goal was to challenge the status quo. How has the pandemic affected the company, your services and the insurance industry as a whole? Being nimble and adapting to change allowed us to not skip a beat when the pandemic hit. We seamlessly transitioned to working remotely for all employees. Our key performance indicators improved drastically. I was truly proud to work for a company that was recognised as an industry Industry
40 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s leader offering the best-in-class service to our clients given a global pandemic. From a revenue standpoint, we had the most profitable year in the company’s 20 history during the pandemic. We distribute our product through insurance brokers who we helped win over $100 million in new client revenue in 2020 by offering our solution. Our seasoned sales team actively pursued new prospects and adapted to selling virtually. Our Leadership Team vetted the best technology platforms to give our new business and retention team the tools they needed to succeed. When looking at our accomplishments throughout the pandemic, from a new business sales perspective we evaluated our wins as well as our losses. We noticed that our prospects fell on two opposite ends of the spectrum: those needing our strategy to reduce healthcare costs, and those who were resistant to change. For those companies whose bottom line was hurting, it was attractive to them that our clients were saving 18% on average off their healthcare spend without reducing plan benefits. Traditionally when companies think of “savings” with their insurance plans they mitigate costs through changing insurance carriers, revamping plan designs, or increasing employee contributions. Our solution allowed them to keep their doors open when their businesses were struggling financially. For those companies who did not want to make any sudden changes, they continued to absorb double-digit increases to their medical insurance. Many decided to place decisions on hold until the pandemic was over. Initially, I was disappointed we did not win the business on the first attempt, but I am confident these prospects will re-evaluate options as the world returns to a new sense of normalcy. The health insurance industry has certainly had its ebbs and flows during the pandemic as well. According to a recent Kaiser Family Foundation Study, the cost of US health insurance premiums has almost doubled in the past decade. By comparison, wages have only increased by 27% over the last 10 years. Health insurance premiums have increased 55%, with the cost of a family’s health plan estimated at $21,342 in premium. The high costs of healthcare are preventing Americans from accessing necessary services. Insurance companies realised a reduction in claims as members were postponing elective surgeries and doctor’s appointments. As care continues to be deferred, this leads to more advanced and complex illnesses, which could have been detected earlier with routine preventative care. This will lead to a domino effect where insurers will increase healthcare premiums as claims continue to rise and affect their profitability. How have you navigated this? Now more than ever companies are evaluating their benefits packages given the “Great Resignation”. A robust benefits package can be another tool to attract and retain employees, and is one of the first impressions to an interviewee. We give our clients the ability to offer enhanced benefits