Personal Finance. Money. Investing.

When my daughter was very young, she had a favourite dummy. One evening, just before bed, we were alarmed to discover the dummy was missing. As soon as we finally got her to sleep (no easy feat!) I grabbed my mobile, asked Alexa to find my daughter’s dummy, and immediately purchased two for next day delivery. I’m not sure who was happier—my daughter, who was reunited with her beloved dummy, or me, who was able to fix a problem easily, quickly, and painlessly, thanks to Amazon.

The problem with this scenario, of course, is that Amazon does much more than sell dummies. They’ve disrupted nearly every industry with the same level of speed, convenience and customer satisfaction, and now they’ve set their sights on the financial services industry.

If you’re not worried about this tech giant’s potential impact on financial services, you’re not paying attention. That said, there’s no reason to throw in the towel, hand over your bank and admit defeat. Rather, financial institutions can leverage their concern to drive innovation, focus on their strengths and fight back.

Let’s face it—Amazon is entering the banking space with many advantages. A massive pre-existing customer base, unlimited advertising space, and pre-built channels, such as Alexa, the Kindle, and, to name a few. Their biggest advantage, however, is their ability to innovate an experience. Look, for example, at the act of reading. Amazon transformed that experience by taking books, which they’d already mastered, and making them digital. What might they do with something like money, which is already an almost purely digital asset?

One misstep and Amazon could go the way of Facebook, which has spent years struggling with trust issues and data breaches.

Despite these benefits, Amazon faces some challenges. Although they’ve shown that they can mine my data to find the exact dummy I need quickly and efficiently, they have yet to prove they can be trusted with my bank account. One misstep and Amazon could go the way of Facebook, which has spent years struggling with trust issues and data breaches.

This is not to say that financial institutions don’t struggle with being seen as trustworthy by their customers. What this means for a bank, however, is different. Generally, people trust a bank to hold their money, but that trust is tested when they need to resolve a problem or avoid a fee. Trust also wavers by generation. According to a recent PwC survey, 72% of baby boomers trust their primary financial institution the most with their money, while only 53% of Generation Z felt similarly. Less trust means more opportunity for competitors like Amazon.

If banks want to stay ahead of Amazon, they must preserve the trust they have by improving on the things Amazon does well—operational efficiency, transparency, convenience, and a near maniacal focus on the customer.

First, financial institutions must put the right technology platform in place. Amazon is a pioneer of data-driven decision making. Everything from new products to new acquisitions is based on the stockpiles of data they’ve gathered from their customers. If financial institutions want to compete, they must be able to access and leverage their own stockpiles, rather than letting data sit in silos, inaccessible and unusable. To do this, banks must embrace both a single solution to store clean, ready to use data and a single platform that can actually deliver value from that data. Knowledge is power, but only if you know where to find that knowledge and how to use it.

Next, banks and credit unions must go digital. Today’s customers are used to a world with Amazon, Netflix and Uber, where they can get whatever they want, immediately and on-demand. Financial institutions must offer the same options by giving their customers a frictionless experience, whether in the branch or online. Remember, the customer should be at the centre of every interaction. If a process or system is cumbersome for the bank, you can guarantee the customer is going to suffer, too. Convenience is king, and nothing is more convenient than conducting your financial life whenever and wherever you want.

Financial institutions must design experiences for the customer.

At the same time, financial institutions should think innovatively about how they engage with their customers. If you have one platform, then digital isn’t a disjointed experience. You can easily transition from simple to complex products based on the customer’s needs. This means you can think like Amazon, and find ways to meet your customers where they are, in the channels they’re already using.

Finally, financial institutions must design experiences for the customer. You can be in all the right channels with the best platform in place, but if your journey is only designed to make it easier for the bank, it won't be very effective. If you look at FinTechs that have succeeded thus far, it's not because the product was cheaper. It's almost always because they gave their customers what they wanted faster. The biggest winners at this point are going to be those institutions whose maniacal focus on their customers leads to delightful experiences that don’t sacrifice the safety and soundness of the bank.

By tackling these challenges, embracing digital transformation and prioritising customer experience, financial institutions will be able to compete with Amazon and any other tech giants who may want to enter the banking sector. And if Amazon ends up losing sleep over their inability to take over the financial services industry, I’m happy to recommend a good dummy.

A study by City Index revealed the financial reports of the worlds biggest brands to reveal exactly how long it took each to make their first $1 billion, as well as how fast they make a billion today.

They compared this data to how fast it would take the world's biggest brands to make the average UK salary, and the results are mind-boggling:

1. Walmart – 2.16 seconds

Industry: Retail
Total Revenue: $500,343,000,000
First Billion:18 years
Latest Billion: 0.7 days
Did you know?
While McDonald’s recently announced plans to roll out more self-service pay kiosks, Walmart revealed plans to bring more cashiers back. The move came after reports that self-service checkouts hadn’t helped operating margins and left customers unsatisfied.

2. Apple – 4.32 seconds

Industry: Tech
Total Revenue: $265,595,000,000
First Billion: 14 years
Latest Billion: 1.4 days
Did you know?
In August 2018, Apple became the first public company in the world to hit the trillion-dollar mark after share prices rose to $207.05, sending the tech giant to all-new heights. This landmark moment came just 42 years after the company was founded.

3. Amazon – 6.48 seconds

Industry: Retail
Total Revenue: $177,866,000,000
First Billion: 5 years
Latest Billion: 2.1 days
Did you know?
In June 2018, Investopedia named America ‘the United States of Amazon’ as the company’s Prime memberships tipped over the 100m mark. Fast forward to September of the same year and the retail kings became the second $1 trillion company, just weeks after Apple became the first to hit this impressive milestone.

4. Walgreens - 8.64 seconds

Industry: Retail
Total Revenue: $131,537,000,000
First Billion: 110 years
Latest Billion: 2.8 days
Did you know?
Walgreens recently revealed it had spent $500 million on building, testing, and implementing new IT systems for its US stores, with plans to spend a further $500 million. This news came as the brand faced competition after CVS Heath bought out the country’s third largest health insurer and Amazon announced plans to enter the pharmacy market

5. Google - 10.19 seconds

Industry: Tech
Total Revenue: $110,855,000,000
First Billion: 5 years
Latest Billion: 3.3 days
Did you know?
Google was fined $2.7 billion for breaching European Union antitrust rules in June 2017 after it was found to be using its search engine to steer users to its own shopping platform. Luckily for the tech giants, this figure was dwarfed by its $110 billion revenue in the same year.

6. Microsoft - 10.19 seconds

Industry: Tech
Total Revenue: $110,360,000,000
First Billion: 15 years
Latest Billion: 3.3 days
Did you know?
In October 2018, Microsoft announced it had acquired coding platform GitHub for $7.5bn, expanding the brand’s developer tool and services offering. The deal is rumoured to have made GitHub’s three founders billionaires.

7. Target - 15.75 seconds

Industry: Retail
Total Revenue: $71,879,000,000
First Billion: 87 years
Latest Billion: 5.1 days
Did you know?
In a bid to fend off competition from Amazon and bring its business model up to date, Target purchased same-day delivery service Shipt in 2017 for $550 million. Target is hoping that its $99 annual Shipt membership ($20 cheaper than Amazon Prime) and commitment to delivering a wider range of products will see it eat into Amazon’s profits throughout 2019.

8. Walt Disney - 18.83 seconds

Industry: Entertainment
Total Revenue: $59,434,000,000
First Billion: 69 years
Latest Billion: 6.1 days
Did you know?
The bidding war to takeover 21st Century Fox isn’t the first time Disney and Comcast have come to blows. In 2004, Disney curbed Comcast’s unsolicited bid to take it over, which caused a huge rift between Disney CEO Bob Iger and Comcast CEO Brian L. Roberts.

9. Facebook – 27.79 seconds

Industry: Tech
Total Revenue: $40,653,000,000
First Billion: 6 years
Latest Billion: 9 days
Did you know?
Facebook shares were down 7% in March 2018 after a data scandal dominated the headlines around the world, equating to an estimated loss of $40 billion. Chief Strategy Officer of GBH Insights, Daniel Ives, commented that the social media channel could lose $5 billion in annual revenue if it failed to assure its users and government agencies.

10. Time Warner Inc – 36.12 seconds

Industry: Entertainment
Total Revenue: $31,271,000,000
First Billion: 7 years
Latest Billion: 11.7 days
Did you know?
With around 26,000 employees worldwide, Time Warner’s impressive entertainment property portfolio includes Warner Bros., HBO, New Line, and Cartoon Network. Blockbusters such as Wonder Woman, Dunkirk, and It contributed to the company’s $31.3 billion revenue in 2017.

“Potential for growth in today’s market is significantly greater than before”

Fiona Cincotta, a Senior Market Analyst at, said: “The markets have changed dramatically over the past 30 years, not just in composition, but also how quickly a firm can grow. From the data, the earlier the business was founded, the longer it took to reach its first billion in revenue.  

“While firms founded at the turn of the last century, such as Walgreens or Target, have taken over 100 years to hit the $1 billion mark, more recently founded companies such as Facebook or Amazon have hit the milestone in next to no time. Potential for growth in today’s market is significantly greater than before. 

“It also comes as no surprise that while tech firms and retailers are among the quickest companies to hit $1 billion in revenue, but traditional retailers are the slowest. This is yet another piece of evidence highlighting the struggles that more traditional retailers on the high street are up against as shopper’s habits move away from bricks and mortar stores to online shopping and technology."

(Source: City Index)

Finance Monthly delves into the potential impact of an ‘Amazon tax’ and the alternative solutions that can help the struggling British bricks-and-mortar retailers.  


With a series of high-profile collapses and CVAs, including the recent turbulences that House of Fraser is faced with, Britain has seen its fair share of high-street horror stories in 2018. Stores like Toys R Us UK, Maplin and Mothercare are all facing extinction, whilst online retailers such as Amazon are stronger than ever, cashing in $2.5bn per quarter and paying less and less corporation tax with Amazon’s UK tax bill falling about 40% in 2017, and it paying just £4.6 million ($5.6 million). In times like these, the UK retail industry has naturally called on the Government to review its outdated corporation tax system and take action to help the struggling high street. Chancellor Philip Hammond has in turn announced that he is considering a special retail tax on online business, dubbed the ‘Amazon tax’, in order to establish a “level-playing field” for online retailers and high-street shops. But is a new tax really the solution that will balance the market out? Will it be the solution that traditional trade needs? 

Is Amazon’s Existence the Biggest Problem?

Consumer habits are changing rapidly with the continued growth of online shopping, but the truth is that the extraordinary success of web traders is only one of the aspects to consider when looking for the reasons behind the decline in traditional retail. And even though a hike in the tax that Amazon pays may seem like a necessary and logical step, it will be nothing more than a minor distraction from the bigger issue and something that will mainly benefit the Treasury.

It is worth noting that the UK store chains that have collapsed recently did so due to not having the right products at the right prices, not staying up-to-date with consumer trends, not targeting the right customers or not investing enough in their businesses. Surely, online-only merchants have transformed the trade landscape and the UK tax system needs to be adjusted in order to reflect the current retail dynamics – especially when Amazon’s tax bill for 2017 was only £4.6 million on £2 billion of sales. But is the fact that the web giant is paying such a low amount of tax the reason for the collapse of a number of bricks-and-mortar retailers? I think not.

Moreover, as Bloomberg points out, an internet shopping tax could end up backfiring and hurting the bricks-and-mortar retailers it is intended to help. According to the British Retail Consortium, in 2017, more than 17% of sales were made online. Over half of them were with businesses that also have shops. Thus, retailers such as Next Plc, which has both online and offline businesses, could face “a double tax whammy”.


The Real Problem

Driving restrictions around city centres, increased parking charges by local councils and state demands such as minimum wage legislation and Sunday trading laws have had a negative impact on bricks-and-mortar retail. Then there is the main challenge in the face of sky-high business rates which have been the bane of countless entrepreneurs trying to establish a high-street presence. In an article for The Telegraph, Ruth Davidson wrote that the UK retail sector, which makes up 5% of the country’s economy, is paying “25% of all business rates, over £7 billion per year”. One might argue that in order to help bricks-and-mortar retailers and keep British town centres bustling with thriving commerce, politicians could perhaps work towards reducing the financial burden they’re faced with, before punishing web giants for offering an easy and convenient way to shop in this digital era. In order to keep up with their online competitors, traditional stores need to focus on technology innovation and redesigning the experience that the modern-day customer expects. But most importantly, they need the budget to do so and a reduction in business rates for high-street stores could be one way to provide them with some extra cash to invest in technology.

Another thing to consider, as Andrea Felsted suggests, could be raising business rates for offices and warehouses and cutting them for shops. That would “address the disparity between shopfront-heavy retailers and online-only businesses, which rely on distribution centres to serve their customers”.

A potential Amazon tax for all web-only retailers will not help bricks-and-mortar retail to innovate. Surely, it will level the playing field, but apart from that, all we can expect will be a slowdown in online shopping without doing anything to solve the current problems that traditional traders are struggling with.


Online research from Equifax reveals over half (51%) of Brits under 45 years old would be interested in banking products or services from technology giants like Apple, Amazon or Google. Of those, 45% said that products or services like loans, credit cards or current account from these technology companies would only appeal to them if they offered better value than their existing bank.

Across all age groups, the level of interest in banking products from leading technology firms falls to 40%, with over a quarter (27%) of Brits stating they would rather use their existing bank as they’re more familiar with them.

Jake Ranson, Banking and Financial Institution expert and CMO at Equifax Ltd, said, said: “The recent announcement that Apple is joining forces with Goldman Sachs to launch a consumer credit card highlights how tech companies plan to shake up the banking industry, creating products and services to compete against the big high street banking names as well as newer digital entrants.

“Although a sense of brand familiarity pins many people to their current bank, there’s an appetite for new products and a desire for alternatives that can offer something genuinely different. The tech giants have a loyal brand following in their own right, if they can combine this with a competitive product offering we’ll see an interesting shift in dynamics as the fight to attract customers heats up.”

(Source: Equifax)

Amazon was once a small business selling books on the internet. Now it’s at the top of its game, with its hands in a multitude of baskets. Surely there’s a wide variety of lessons we can learn from their dynamic strategies. Below, Karen Wheeler, Vice President and Country Manager UK at Affinion, presents Finance Monthly with a guide to Amazon’s operations through the eyes of financial organizations.

It’s rare to meet someone who has never used the world’s largest internet retailer, Amazon. Whether it’s conquering Christmas lists, watching boxsets through Prime or managing life admin through the intelligent personal assistant Alexa, its offerings are endless.

This extensive list of services and benefits that are all designed around user convenience, simplicity and enhanced customer experience is one of the biggest contributing factors to its success.

Financial organisations, however niche or specialist, can take a leaf out of Amazon’s book when it comes to engaging with customers and harnessing innovative solutions to continuously improve their offering.

Here are five lessons financial firms such as banks and insurance companies can learn from Amazon.

  1. Put the customer at the forefront of any business model

Listening to what the customer wants has been the driving force behind many of Amazon’s products and developments. McKinsey’s CEO guide to customer experience advises that the strategy “begins with considering the customer – not the organisation – at the centre of the exercise”.

This can often be quite a challenging ethos for the financial services sector to buy into, particularly for the more traditional bricks-and-mortar companies where the focus is often on the results of a new initiative, rather than the journey the company must take its customers on to get there.

It’s a case of convincing senior management that the initiative is a risk worth taking and just requires some patience. Amazon originally launched Prime as an experiment to gauge customers’ reactions of ‘Super Saver Shipping’ and it was predicted to flop. Nowadays it’s one of the world’s most popular membership programmes, generating $3.2bn (£2.3bn) in revenue in 2017, up 47 per cent from 2016.

  1. Don’t wait to follow a disruptive competitor

To stay ahead of the curve amidst the flurry of fintech start-ups, financial organisations need to come up with their own innovative customer experience solutions, rather than allow newcomers to do so first and then follow suit.

From the customer’s perspective, a proactive approach will always go down better than a reactive one. Amazon CEO Jeff Bezos has previously spoken about tech companies obsessing over their competitors and waiting for them launch something new so that they can ‘one-up’ it. He once wrote: “Many companies describe themselves as customer-focused, but few walk the walk. Most big technology companies are competitor focused. They see what others are doing, and then work to fast follow.”

What sets Amazon apart is listening to what the customer wants and prioritising them over competitors.

A great example in the insurance sector is US digital insurer Lemonade, who last year set a world record for the speed and ease of paying out on a claim of just three seconds. This was done through its AI virtual assistant ‘Jim’ and has helped to kickstart a new trend of using AI in the industry. Ultimately, Lemonade listened to the masses in that most of us see shopping around for insurance and filing claims as complicated and admin-heavy. A quick, simple, paperless alternative would no doubt result in increased customer loyalty and, in turn, increased profits.

  1. Analytics are key for personalisation

It’s no secret that Amazon is one of the leaders that has paved the way for analytics. It’s through the company recognising the need for them which has led to customers becoming accustomed to personalisation and expecting it as soon as they have had their first interaction with a business.

Financial organisations are no exception to this and, while it may seem like a scary commitment to more traditional firms, it doesn’t have to be complicated. A classic, simple example is Amazon storing customers’ shopping habits and sending them prompts for new products similar or related to those they have purchased in the past.

In the financial world, digital bank Monzo is leading the charge by monitoring customers’ spending habits to offer them financial advice to help them save money and budget responsibly. For example, its data once showed that 30,000 of its customers were using their debit cards to pay for transport in London – so Monzo can advise them they could save money if they invested in a year-long travel card, for instance.

There are endless things financial organisations can do using customer data to provide the customer with an experience unique to them, rather than continuing to make them feel like just another cog in the wheel. At Affinion we believe in ‘hyper-personalisation’, in that these days it’s no longer good enough to just know a customer’s history of transactions with a company and when their birthday is.

Customers are getting more tech-savvy by the day and are expecting real-time responses with a deep insight into their interactional behaviour – they won’t remain engaged if follow up contact is irrelevant and untargeted. Customer engagement has moved on from companies communicating to the masses, it’s about creating tailored, intuitive relationships with them on an individual basis.

  1. Venture out into new areas

The way we live as a society is forever changing and, as we get busier and busier, any small gesture to make life that little bit easier goes a long way. The consolidation of services such as banking, insurance, mobile phone networks, utilities and shopping is a great way to ensure customers remain loyal to a brand as it will – if done right – add value and reduce hassle to their lives.

As an expert at disrupting industries, Amazon has taken note of this growing need for convenience over the years and has expanded its offering for customers, allowing them to carry out multiple day-to-day tasks with one account. In the last few months alone, Amazon has hinted that it may acquire a bank to break into the financial industry and potentially start its own healthcare company.

Regardless of size, financial organisations should always be looking for new areas they could tap into to broaden their offering and show customers that their needs are at front of mind.

  1. Always go above and beyond

A rising factor in the way that customers align themselves to a brand is its stance on ethical issues and its contributions back into society. It’s a shift that seems to be most prominent with Generation Y, as the Chartered Institute of Marketing found that 81 per cent of millennials expect companies to make a public commitment to good corporate citizenship and nine in 10 would switch brands to one associated with a good cause.

Amazon has gone that one step further, with its AmazonSmile initiative that allows the customer to choose a charitable organisation that it will donate 0.5% of eligible purchases to. Not only does this show Amazon’s commitment to charitable causes, it gives the customer control of where their money ends up.

This is an easy win for the financial sector, given that one of its sole purposes is to look after money and move it around. For firms that target younger generations in particular, looking at ways to involve customers in charitable donations in a fun, transparent and seamless way is a no-brainer for increasing loyalty and advocacy.

Always a chore, never a pleasure

For many people, personal finance is perceived as a chore and often quite complicated. Improving the customer experience and building in programmes to engage them can help greatly with this and financial organisations need to adopt the ‘customer first’ ethos that Amazon showcases so effortlessly. With new fintech disruptors creeping into view, keeping customers loyal has never been so important.

Toys R Us has gone into administration, putting 3,000 UK jobs at risk. Equally, Maplin has come crashing down. In the past months more and more retail companies and big high-street names have hit the deck. Are these signs of an infected era in the retail sector? Is the retail infection a real fear at the moment? What are the prospects of more big chains failing?

This week Finance Monthly hears from a number of expert sources as we list Your Thoughts on the potential for a retail infection, the impact of online shopping on the high street, and the future we might see throughout the rest of 2018.

Dom Tribe, Retail Sector Specialist, Vendigital:

The collapse of Toys R Us is a clear example of the need for retailers to adapt to changing shopping habits if they are to survive. Despite losing significant market share to competitors such as Amazon and Argos, Toys R Us failed to implement an effective E-commerce model with expedited shipping options and also continued to rely on its large warehouses. Opened in the 1980s and 90s, these have proven highly costly to run, with difficulties around managing stock levels, and have been outperformed by its new smaller stores.

Toys R Us’ relationships with key suppliers also hit the headlines over the last year, with the chain demanding long payment terms and exclusivity on certain ranges despite no longer being the key player in the market.

Overall, this collapse emphasises the need for high street stores to continually take heed of customers’ changing shopping habits if they are to stay ahead of the curve and survive.

Mark Hinds, CEO, Polymatica:

Toys R Us and Maplin are both examples of businesses that, despite being deeply involved in technology, have simply been left behind by the fast-paced changes in retail in this decade. All the inventory, special offers and customer data in the world won’t help if you can’t combine them and act quickly to react to customers’ needs.

The sad fact is that we’re likely to see more retailers go this way until big-box stores can find a way to adapt to the changing habits of consumers. Understanding customer data will be critical for this – not only in understanding what will be the most effective strategy based on their existing resources, but also in having the speed and flexibility to adapt strategy in the field to ensure that what seems the best approach doesn’t turn out to be a dead-end. To do this, data needs to be put in the hands of those who actually need it – the executives, marketers and other operational staff who can build a new business. Data scientists have a valuable role to play, but there are so few of them available. Retailers need to make analytics available to people with specific business knowledge to help make data-driven decisions to navigate this changing retail environment.

Perry Krug, Principal Architect, Strategic Accounts, Couchbase:

The UK retail industry is undergoing huge upheavals, and Toys R Us and Maplin have found that out the hard way. It’s no secret that the environment in which massive physical stores like Toys R Us once thrived no longer exists: footfall and sales are down, rents and competition are up. Many retail parks and shopping centres are facing extinction and are a great example of the urgent need for revolution in retail. Stores like Toys R Us were among the first to recognise that customers want more choice than could be found on the average high street, creating sprawling estates in order to supersize the physical retail experience throughout the country. However, this now pales in comparison with ecommerce, which gives customers infinite-scale retail from the comfort of their own home – as well as newer developments such as Amazon Go.

All of the most successful retailer business models in 2020 will be digital-first or digital-only, it’s as simple as that. Ultimately retailers must meet the demands of the 24/7 global digital economy to guarantee faultless and reliable experience to customers, no matter what the scale or location. Physical stores have two roads ahead of them. Either they can continue doing what they’re doing, where further decline is the most likely outcome. Or they can try to function in parallel and support of ecommerce, by offering an omni-channel experience that merges online with offline experiences. For instance, this might mean being more boutique or acting as a showroom for big-ticket items that customers really need to try before they buy. Likewise, a business model like Amazon Go which successfully combines elements of physical and digital shopping experiences in one store may prove to be the blueprint for success in the years ahead, in which only the strongest and most innovative retailers will survive.

Charles Brook, Poppleton & Appleby Northern:

Even before the batteries have run down in the Christmas toys, people engaged in the retail market are already wondering which of the big high street and retail park brands are going to be the New Year insolvency story.

The only real surprise that Toys R Us and Maplins might be this year’s big story is the timing. I’d have expected this to happen a little sooner.

Both major on out-of-town retail park locations, both have considerable fixed overheads and both carry vast quantities of stock much of which relies upon significant discounting to carry them throughout the year between their peak sales period each Christmas.

With the New Year comes the first rent quarter and the largest VAT liability of the year and, whilst each business should have a healthy bank balance following peak season sales, they will also be facing the bills for all of the stock that they have hopefully shifted in the last quarter of the previous year. Together, these produce the retail equivalent of Thunder Snow.

This year it’s Toys R Us and Maplins, next year there will almost undoubtedly be someone else. We shouldn’t rush to assume that this is indicative of a particular trend in the current UK economy. Sure, Toys R Us has a high fixed cost base with significant retail properties with long-term commitments; it’s business model pre-dates internet shopping and arguably it has failed to move into that market as strongly as it should. Maplins operates in the most competitive sphere of internet sales yet it has expanded massively over recent years into retail parks and the high street; that is counter-intuitive and perhaps the strategy was misguided.

Whatever the outcome of any inquest into the failure of each company, what these cases remind us is that retailing is a highly volatile and sensitive business to be in. These retail leviathans are burdened by inertia and a lack of flexibility and when the economy turns against them they can find that it's near impossible to avoid a melt-down.

Phil Duffy, MD, Duff & Phelps:

Since 2011, the banks have paid out over £28 billion in compensation for mis-sold payment protection insurance. This has resulted in what some economists call “helicopter money”, large sums of cash distributed to the significant swathes of the population. Coinciding with the UK finally emerging from one of the toughest economic periods in living memory following the financial crash, it is easy to understand why people who were suddenly handed a large windfall may have had the confidence to spend it shopping for a treat for themselves, rather than saving it.

However, people do not exist in isolation from wider economic concerns. It is difficult to imagine now, but there was genuine economic optimism in the period from roughly 2012 – 2016. The economy was growing faster than almost any developed economy, the government’s strategy to recover from the financial crash seemed to be working and there were no major economic threats on the horizon. In this climate of optimism, and with interest rates at almost zero, it is easy to understand why people who were suddenly handed a large quantity of money may have had the confidence to spend it in a carefree manner.

The tide has turned. Brexit and its multitude of ramifications has caused a crisis in consumer and business confidence, with many now expecting economic turmoil approaching the level of the 2008 crash. This is causing many consumers to hold onto the little disposal income they have, resisting spending on all but essential items. This emerges clearly from the BRC’s Q4 2017 retail sales figures, which showed that sales of non-food items fell 3.7% on a total basis and 4.4% on a like-for-like basis. While wage growth has remained low since the financial crash, the compensation from the PPI mis-selling scandal was responsible for putting some money back into consumers’ pockets. With this now drying up, and a deadline for claims set at August 2019, retailers will be fearing a further softening in consumer demand and more hardship to come.

Leonie Brown, Customer Experience Strategist, Qualtrics:

Price is no longer a sustainable competitive advantage in retail - internet retailers have put pressure on the margins of traditional bricks and mortar stores and continuing to compete solely on cost is a dangerous game that has already claimed a number of high profile high street retailers.

In today's economic climate, experiences are the key differentiator. Consumers are willing to pay more for and be more loyal to brands that focus on experiences as the core selling point of their goods and services - to do that, brands really need to tap in to the emotions and behaviours of their customers.

Understanding what they expect, what drives them to spend more or return time and time again to the store lies at the heart of it. Retailers need to become more intelligent and understand their customers better than ever before and they need to act proactively on that intelligence. It's no use recognising that your sales figures are dropping if you can't understand why and then make changes to close that gap.

Rick Smith, MD, Forbes Burton:

The demise of Maplin and Toys R Us are both unfortunate but not wholly unexpected. We’re also seeing the likes of Marks & Spencer’s planning to close some of their stores to reduce costs and New Look also announced in February that a CVA may be on the cards as sales have fell but at least 10% of UK stores are at risk of being closed.

However, is the retail sector infected? Some may say yes but the problem is more about change and an inability to compete. There has been a huge shift in how and where transactions take place, moving from the high street to online.

Both Maplin and Toys R Us had online presences but they faced stiff competition from the likes of Amazon, who could offer the same goods for less due to a vastly different infrastructure and lower operating costs.

Another issue which won’t have helped is the current lower spending by consumers, people are still feeling the effects of wages not keeping up with inflation.

So what does the future hold in store for the retail sector? The future certainly looks uncertain, mainly due to millennials and their behaviour as these consumers will hold a trend for online shopping and social media for years to come.

Clothes stores may be spared as people still like to try before they buy. But, there are more online clothes stores springing up all the time that offer easy ‘try and return’ services which could cause real problems for clothing stores in the future.

We may also see more stores merging as they try to stay in business, similar to the Carphone Warehouse and Dixons group merger.

Retailers need to use this difficult period to shake up their operations and their stores in order to remain competitive in their industry, there is no room for firms that aren’t willing to change or become innovative – take advantage of the technology that we have these days to make their stores more of an experience for their customers because a good experience will keep them coming back.

Simon Willmett, Financial Director, Nucleus Commercial Finance:

The Woolworths administration was a decade ago and we seem to have been speaking about the demise of the high-street since then. Would I go as far as calling it an infected era? No. But, we are definitely facing challenging times.

The first quarter has historically seen companies that have stretched themselves financially succumb to poor Christmas trading. This, combined with lower January sales and VAT payments can be a death blow for business. With Maplin and Toys ‘R’ Us both going into administration on the same day, the weakness in their model is clearly highlighted and it has forced everyone to reconsider the market again.

The continuing growth of e-commerce, Amazon being the obvious example, but also larger supermarket chains expanding their product offerings has made the market very competitive. Chains will need to make sure their business model is suited to the invariable challenges that lie ahead.

Unfortunately, I don’t think the worst of it is over and there are a number of larger high profile chains that appear to be suffering various signs of distress. Whether these businesses will eventually fall into a formal insolvency process is unclear but what is certain is that they will all need some form of restructuring - whether that is formal (via a CVA for instance), or a refinancing, remains to be seen.

Alan Andrews, Marketing & HR Consultant, KIS Bridging Loans:

We believe that there’s a huge likelihood that the UK retail sector is being hit harder than ever by online retailers, particularly Amazon.

If you think of buying children’s toys, gadgets or electrical goods, what’s the first place you think of? Probably Amazon, not the shops that specialise in providing these products.

This is because they offer easy ordering, super-fast delivery and prices that are usually cheaper than anywhere else. This is great for your Christmas shopping, but not so great for the UK economy when we are ploughing our money into a company that sends most of its profits abroad.

Amazon are forever expanding their range of products and services, making themselves a competitor for most UK retailers. If they want to introduce a new product, they already have the website, the warehouses, the delivery services and the advertising to do so. This is near enough impossible for other businesses who want to provide similar services to compete with, when companies like Amazon can do it so much quicker and so much cheaper.

There was a time when Toys R Us was the new industry giant, closing down smaller independent toy shops itself. And now there’s something even bigger – threatening nearly every industry all in one go.

It’s sad to think that taking your children to a toy shop could be a thing of the past. I imagine that, in the future, the closest thing they’ll get to going to a toy shop is scrolling through an iPad.

We have to ask ourselves if this is what we want for the future. Are we our own worst enemy?

Saving a few pounds now could be very costly for the future. I believe that it’s very likely that more industry giants similar to Toys R Us and Maplin could start to close down as online retailers continue to grow and we put more and more of our money into them.

As these retailers start to close, thousands of jobs will be lost, as figures have already shown.

Prav Reddy, Partner, Charles Russell Speechlys:

The recent insolvencies across both the High Street and the casual dining sector indicate a steady acceleration in the number of retailers suffering financial difficulties.

As well as the administrations commenced by Toys R Us, Maplin and Jamie Oliver’s Barbecoa restaurant chain, we are also seeing an increase in the number of businesses in the ‘managed’ stages of insolvency such as House of Fraser, Mothercare, Byron, Prezzo and Jamie’s Italian. Generally, the downturn is being driven by reduced consumer spending, the continued penetration of online retail and food delivery companies and the depreciation in sterling which has increased the cost of imports for UK retailers.

It is very likely that there will be further insolvencies throughout 2018 in the retail sector (following a difficult 2017) and is fair to characterise the sector as being in an ‘infected era’. However, the extent to which this ‘infection’ spreads will ultimately depend on the ability of retailers to adapt to the challenges facing them (such as customer experience and retail locations) which would also include restructuring measures to address rising pension liabilities, expensive rents and embracing the changing retail habits of British consumers. As with any infection, businesses that are resilient to the challenges set out above and actively seek ways to protect themselves from the problems faced above are likely to fare better than those most exposed.

Simon Brennan, VP Sales Europe, Engage Hub:

These retailers failed to adapt to changing consumer demands. Other toy brands like Lego & Disney make a big effort to ensure that stores have a great in-store, interactive experience for children, encouraging them (and their parents) to visit the store. Pursuing a business model that saw little to no change in a decade, in the face of evolving consumer behaviour, left people with little reason to visit.

In research commissioned by Engage Hub to examine the fragility of the customer experience, over a fifth (22%) or consumers said that standards in customer experience had declined in the last year. This can partly be attributed to a stressful retail environment and a genuine decline in the same services that have always been offered. Equally though, it could be attributed to a rapidly changing consumer, that no longer perceives the standards or services of old as acceptable.

It’s widely accepted that traditional 'bricks & mortar' retailers, saddled with higher running costs and business rates, cannot possibly compete with Amazon et al by playing them at their own game. But the in-store experience and physical customer touch-points, are the obvious point of difference retailers need to exploit better.

It's not all doom and gloom though. Dixon's Carphone for example, the retailer that operates the Curry’s, PC World and Carphone Warehouse brands, reported a 4% rise in like-for-like sales over the past year. Having gone through their own growing pains, they invested heavily in the look and feel of their stores to compete with the likes of Apple. People still like to buy from people, and by offering aftersales support in the guise of Team Knowhow, the company is creating new revenue streams and human-centric services, suited to the modern consumer.

In fashion retail, the ability to try before you buy is as old as the trade itself, but online retailers like Missguided have shown what is now possible in store with their first forays into Bricks & Mortar. Blurring the lines between physical and digital, while creating two-way conversation with customers, Missguided use social media to engage a more tech-savvy demographic and retarget customers following service interactions.

The ability to combine online data with offline data to personalise offers and augment the instore experience is a lesson to more traditional competitors, as to what can be achieved with a data driven in-store strategy, rather than tinkering around the edges with store layout.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Richard Meirion-Williams, Head of Financial Services at BJSS discusses how banks can counteract the threat provided by Google, Apple, Facebook and Amazon (GAFA).

It wasn’t long ago that bank branches used to hold personal, trusted relationships with their local customers. However, since the rise of digital banking and the decline of the branch, relationships between bank provider and customer have weakened. While the financial institutions are under pressure to keep up with digital transformation, at the same time demand for a personalised customer experience is high on the banking agenda.

Google, Apple, Facebook and Amazon, the major technology power players, known as GAFA, are transforming the digital banking landscape as we know it. With a huge pool of customer data at their fingertips, GAFA’s move into financial services is simply a natural extension of their current offering. When you consider the vast amount of data that these tech giants can leverage across social media, mobile, customer purchase information and mapping data, GAFA has the ability to provide a highly personalised financial service experience.

For banks to remain central in the lives of consumers, they must provide consistent and fulfilling customer experiences across the digital and physical environment. It’s not just about having access to customers credit or debit accounts, but also a greater/wider insight into their individual customers.

But time is of the essence. Amazon, Apple, Google, Intuit and PayPal have already formed a coalition called Financial Innovation Now to enhance innovation in the financial industry to satisfy the customer need for convenience. The key for traditional financial providers is to act quickly and respond to emerging digital disruptors like GAFA. Banks need to focus on evolving their business models and developing new revenue streams.

4 steps to challenge the GAFA force

Client on-boarding: Banks need to maintain their competitive differentiation and make products available immediately. Recently banks have focused on improving the front-end process. But what about the back-end? By digitising the full spectrum banks can reap the rewards of full end-to-end capabilities. This will mean customers opening an account can get started up in minutes after completing an online application. Making changes to the digital process will also help improve the processes which co-exist in physical branches.

Personalised services and partnering for suppliers and customers: Customer centricity should be at the heart of every business. Banks need to create personalised services to deliver their products using an agile approach. This can be achieved either through the bank or a third-party.

To meet consumer demand for convenience and choice, banks should also look to offer customers “lifestyle” services that can adapt in real-time to fulfil the everyday needs of the banking user. Not only will this help multiply customer interactions but will also help generate new revenue streams.

Leverage Consumers data: Extrapolate customer insights from the vast amount of structured and unstructured customer data using Artificial Intelligence, NLP and cognitive computing. The customer financial information can be leveraged to create market intelligence and to generate new revenue streams.

Create an ecosystem: Banks should take advantage of open environments and create new ecosystems. This could be offering external or white-labelling banking services through open APIs and new partnership models with innovative fintechs or working alongside GAFA. Banks need to develop new products and services on distributed ledgers for transactional access on a continual basis and receive data and events from third parties like Amazon or Apple who can distribute and integrate their products in a broader business environment.

This approach will help counter the GAFA threat and create greater cross and upselling opportunities, along with building customer acquisition, retention and cost optimisation, transforming the cost-to-income ratio from the current average of 63% to hopefully less than 50%*. It is critical for banks to think innovatively and act quickly, otherwise they will become a victim of the GAFA dominance which has already infiltrated other industries.

*Calculation made based on reviewing the published accounts of a number of banks.

Interactive Investor, the online investment platform, has recently released its clients’ most traded investments, by number of trades, in September 2017.

Commenting on the results, Lee Wild, Head of Equity Strategy at Interactive Investor, said: “It was all about inflation, interest rates and tapering during September, so little wonder central banks dominated proceedings. US Federal Reserve chair Janet Yellen, who’ll begin slowly winding down the Fed’s $4.5 trillion balance sheet this month, prepped markets for a rate hike in December then another three in 2018.  Not to be left out, Bank of England governor Mark Carney turned hawk as inflation hit 2.9%, confirming that a first increase in UK borrowing costs for over a decade just got a whole lot closer.

“The obvious benefits of higher interest rates had the British pound up as much as 5% against the dollar and at a post-EU referendum high. Rate rises are typically good news for the banking sector, with lenders quicker to raise borrowing costs than they are to offer better deals to savers. It may not be great for consumers, but an improvement in bank margins should feed through to shareholders by way of bigger profits and dividends.

“It’s why investors’ favourite Lloyds Banking Group rallied 6% in September and remained the most popular blue-chip stock on the Interactive Investor platform last month. Vodafone blasted back into the Top Five. Apple’s launch of the iPhone 8 should get the tills ringing, and the fastest growing broadband operator in Europe offers an irresistible dividend yield of over 6%.

“As one would expect, there was plenty of excitement on AIM. Online fashion retailer is a member of AIM’s exclusive ten-bagger club, but the shares are hardly cheap, so tweaking margin guidance lower in its half-year results gave traders a scare. So did joint-CEO Carol Kane’s decision to sell £10.7 million of Boohoo shares in the aftermath.

“However, a 25% plunge in the share price always looked harsh given aggressive growth forecasts. It’s why trading volume more than tripled in September and buyers outnumbered sellers two-to-one.

More spectacular, however, was the explosion in activity at Frontera Resources. There are 13.4 billion shares in issue worth less than a penny each, but the £100 million company is no tiddler. Frontera’s liquidity, typified by tight spreads, volatility and an intriguing story make it a firm favourite among small-cap investors. At the beginning of September, the shares were worth just 0.1125p, but before the month was out it was 0.782p, an increase of 595%.

“There’s real excitement around Frontera’s Ud-2 well in Georgia because it sits in the Mtsare Khevi gas complex, where experts estimate a potential recoverable resource of 5.8 trillion cubic feet of gas. Following a series of progress reports, the number of trades on the Interactive Investor platform swelled twelvefold in September versus the previous month.”

Rebecca O’Keeffe, Head of Investment at Interactive Investor, adds: “Yet again, the big active funds of Fundsmith Equity, Woodford Income and Lindsell Train Global occupy the top three spots, with our investors continuing to prefer active management in the current environment. With currencies driving markets and sector moves more pronounced, there is greater potential for active managers to add value.

“Although the top three are all active, passive funds remain relatively popular and Vanguard 100 muscled its way back into the Top Five, knocking out Jupiter India in the process. Vanguard have taken over as the preferred option for many clients, with 15 Vanguard funds in the Top 100 most bought funds year-to-date. The compound effect of lower fees is significant and over the long term this can add tens of thousands to your portfolio value, making low-cost tracker funds highly attractive for investors.”

(Source: Interactive Investor)

Big technology brands are proving irresistible to today’s investors, data from award-winning investment game app Invstr has shown.

Experts from the innovative fintech company extracted investment game data from their users in more than 170 countries, and found that, in the six months up to July 31st, outside of silver and gold, familiar consumer-facing brands such as Amazon, Apple, Facebook and Samsung were the most traded instruments.

Looking further into the data, Invstr found that keeping hold of those big brands could prove a lucrative exercise; the top 10 instruments from the last six months have gone up in value by almost 15% on average.

Plus, the tech companies have been core to that group success. Facebook (27.04% increase), Samsung (23.21%), Amazon (18.67%) and Apple (15.52%) have all experienced hefty growth since February 1, 2017.

Invstr also looked at statistics for the last month (July 3-31) and three months (May 1-July 31), and found that Invstr users were still going strong on the markets with group growth of 8.72% and 4.17% across the top 10 instruments respectively. Tech stocks continued to feature strongly.

Kerim Derhalli, founder and CEO of Invstr, said: “It’s evident from the Invstr data that investors find comfort with the big brands they know and love. Whether it’s the last month, three months or six months, they’ve tended to dominate our top 10 most traded instruments – and it seems to be paying off over longer periods.

“However, everything can change and investors should make sure they are up to speed on the latest price changes and news. Even with growth over the last six months going well, the likes of Apple and Facebook dropped heavily in June before bouncing back in July.

“What we know for sure is that, by gaining more knowledge and understanding of the financial markets, investors can make much more informed decisions which will see their chances of investment success increase.”

Invstr’s top traded instruments

Instrument Performance (%)
Silver +4.03
Gold +4.05
Apple +3.64
Bitcoin > US Dollar +13.15
Facebook +14.03
Amazon +3.58
Netflix +24.28
Brent Crude Oil +5.98
Microsoft +6.65
Bitcoin > Euro +7.77


Instrument Performance (%)
Silver -0.18
Samsung Life Insurance +15.38
Agricultural Bank of China +2.53
Gold +1.04
Hyundai -3.97
Apple +1.47
Samsung +8.02
Facebook +11.01
Amazon +4.17
Brent Crude Oil +2.19


INVSTR MOST TRADED TOP 10 - 6 MONTHS (February-July 2017)
Instrument Performance (%)
Silver -4.17
Samsung Life Insurance +16.97
Agricultural Bank of China +11.28
Gold +4.44
Hyundai +3.94
Apple +15.52
Samsung +23.21
Facebook +27.04
Amazon +18.67
Netflix +29.04

(Source: Investr)

Everyone’s been saying for quite a while now that drones are going to take over, the technology will be used for flying cars and we’ll be delivering almost everything via drone, but is that really the case or are we too excited to see the obstacles ahead? William Sachiti, The Academy of Robotics explains to Finance Monthly that there is a more realistic perspective.

Drones are the future of home delivery! Or at least that is what I used to believe. They appear to be an efficient means of transporting items from one location to another. My mind ran wild, picturing a drone superhighway! I was keen to establish a dedicated airspace for drones to self-navigate, and to deliver packages to customers.

But… and there is a big but. Such a big one, I no longer believe drones are the future. The issue is not technical – it is social.

The Social challenges

The more I researched, I began to realise the safety defects of a cluttered airspace, peppered with flying machines, often controlled by amateur operators. Not to mention the cost of achieving this drone superhighway in the sky.

These issues have already been encountered by Amazon, which is currently leading the way with drone delivery. For example, the retail giant must house drones near to population centres in order to be more efficient than road-based delivery.

Now imagine your neighbour’s daily impulse-buys being delivered by a very loud drone, the novelty would fade fast. Imagine the sound of a washing machine spinner at full-belt during unpredictable hours of the day, waking up your kids and spooking your spaniel. Take it a step further and imagine living near a big retailer’s drone delivery centre. The noise and intrusion could be worse than living under the Heathrow flight path.

I had initially overlooked our roads – thinking of them as ‘the past’ and drones as ‘the future’ – but I no longer believe that to be the case. Ultimately, road-based delivery using driverless vehicles is far safer, quieter and more cost effective than the seemingly futuristic, yet comparably less-practical drone courier services.  It is easy to forget that we haven’t fully tapped the potential of our road networks – public, unmarked and residential. And autonomous vehicles present the opportunity to tap into and make better use of the infrastructure we already have.

So what form will deliveries of the future take?

Judging by early designs and models, autonomous delivery vehicles, will take diverse forms.

Italy’s Piaggio Fast Forward - a subsidiary of Vespa manufacturers, Piaggio - has invented a cylindrical luggage compartment capable of tailing its owner by a few metres, while holding up to 18km of cargo.  This clearly shows the value of wheels on the road.

Mole Solutions is ignoring both road and air for something completely different: below-ground freight capsules. Thrown into the delivery mix, such an invention could help to reduce road (and air) traffic congestion, as well as keeping out of sight.

Pelipod on the other hand, is seeking to cater specifically to businesses that need efficient, secure and direct delivery. Bypassing post offices, courier firms and depots, the firm is pioneering delivery pods that will travel straight to the destination. Integrated electronic systems will grant access to only authorised users, and provide proof of delivery.

And Kar-Go, the driverless delivery vehicle from my own Academy of Robotics, will autonomously navigate unmarked roads such as residential areas, and use an intelligent package management system to deliver packages to retail customers, day or night.

So, road vehicles will still be the primary force for delivering packages but they’ll come in all shapes and sizes.

Delivery beyond the physical

Looking beyond the first incarnations of autonomous vehicles and towards the far-future of delivery, I believe product delivery will be digital. Driverless vehicles, and smart devices in general, will benefit from 5G mobile technology. With so many devices feeding data into the Internet of Things (IoT), devices are able to communicate and act in unison.  Autonomous vehicles for instance, will be able to communicate with one another, and other road users.

Let’s put digital delivery into context. 25 years ago, the only way to send a document to someone was to have it physically delivered. With a little help from technology, the same document could, just a few years later, be sent via fax; scattered into bits of information, sent across the world and re-assembled in a matter of minutes.

As technology improved, sending a document moved from minutes, to seconds to an instant. So, if delivery of physical goods continues to incrementally improve over time, it’s not unrealistic to imagine that your latest smartphone could one day not be physically sent to you at all.

Instead, it could be purchased via a digital download and, through some 3D printer/fax machine-hybrid, be re-assembled in your living room. Of course, we can’t expect to see such an invention anytime soon. Technological advancements – despite accelerations in the digital age – are gradual.

And finally

With giants like Google, Tesla and Uber counted among the early adopters of self-driving cars, you can bet that the overwhelming majority of future vehicles, whether transporting people or packages, will be driverless.

When consumers are ordering compost from the garden centre, supermarket groceries or pretty much anything from the online superstores, you can bet that, regardless off the type of delivery vehicle, the driver will be digital.

Eseye and Amazon Web Services  announced the launch of a breakthrough in IoT Security, AnyNet Secure™.
Eseye, a leading global cellular machine-to-machine (M2M) connectivity provider for Internet of Things (IoT) devices, saw the culmination of many months working with AWS at the global corporation’s Re:Invent convention in Las Vegas.
Demonstrated live onstage, the new Eseye AnyNet Secure™ SIM was introduced as a new cellular connectivity solution integrated fully with the AWS Cloud management console and Cloud platform.

Eseye, the UK based IoT specialist, provides AWS IoT customers with enhanced security and connectivity features that enables IoT devices across the globe to remotely, automatically and securely activate, provision, authenticate and certify ‘things’, over-the-air, and to then ingest data into AWS customers’ clouds.

This innovative British technology delivers several IoT breakthroughs. It launches devices or ‘things’ securely onto the global AWS Cloud network without the need for any physical configuration; no manual passwords or onsite intervention is required; and the need for the release of third party security keys to manufacturers is also now removed. The potential reductions in risk and costs for AWS customer IoT deployments are significant.

Julian Hardy, CEO at Eseye, says: “This new technology will ultimately allow more and varied products to go to market and to succeed by offering AWS customers the chance to take much of the cost, risk and time out of M2M IoT deployments. Collectively, we create a globally-available ubiquitous service layer through which projects can be deployed at scale, in a more secure manner and way that was previously impossible for customers. AnyNet Secure removes the need to make long-term sacrifices on security or go through a painstaking deployment process of manual intervention, one device at a time.”

The new ‘plug-and-play’ or ‘zero touch’ SIM delivers increased efficiency thanks to its simple installation and remote management. Through the multi-IMSI technology embedded within the solution, the SIM allows organizations to deploy almost anywhere in the world, while establishing more robust levels of security.

Find out how it works here.


(Source: Eseye) 

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