Edward Vaughan, senior director at LexisNexis Risk Solutions, looks at the potential costs of buying or building a risk orchestration platform. 

The benefits of orchestration

Risk orchestration is gaining incredible traction in regulated sectors. The technology can help firms optimise multiple sources of data and screening and monitoring tools that are used to detect and prevent financial crime. Unlike some traditional risk management strategies, risk orchestration can synchronise disparate processes, resulting in unified outputs and risk scores.

It’s a welcome antidote to the duplication of effort, conflicts, and delays that can easily and regularly occur during financial crime screening. Customers can be authenticated and validated quickly with reduced levels of friction that otherwise negatively impact user experience.

As more firms strive to realise these benefits, there’s now a noticeable trend amongst firms to build risk orchestration platforms in-house. The belief is that it’s the cost-effective route, but our recent analysis suggests otherwise.

Expensive self-build

We looked at the typical self-build orchestration costs for a mid-tier UK bank onboarding around 100,000 customers and processing an average of two million transactions per year. 

For a bank of this size, build costs would be around £3.1 million in the first year, with about a third spent on a team of developers to build and test software. Creating an API that can bring together multiple different data sources and systems can be complex and time-consuming. The remaining budget will go on annual licence costs and data fees, covering Identity and Verification (IDV), document verification, transaction monitoring, application fraud and AML screening. 

In years two and three, self-build calculations include annual license renewal costs and data fees, as well as the not-insignificant costs of maintaining and developing a platform to grow and adapt with a business. 

So, even conservative estimates will put costs for year two and beyond at over £1.3 million per annum for a self-built platform. That’s an approximate investment of almost £6 million in the first three years. 

Risk Orchestration – the cost-effective approach

Given that specialist software developers are typically the most expensive part of a self-build approach, the alternative could be to work with an expert partner to integrate a plug-and-play risk orchestration platform via a no-code API.

A specialist partner can draw on industry-wide insight and experience to help develop a solution that evolves with an organisation’s growth and can adapt to changing financial crime threats. Such solutions are also scalable, meaning a small-to-midsize firm can procure an affordable, yet high-performing platform, without it weighing heavily on the balance sheet. Economies of scale across licence and data fee costs can also be realised. 

Specialist orchestration platforms provide an automated, end-to-end solution for customer onboarding and ongoing monitoring, incorporating anti-money laundering screening, transaction monitoring and case management. With support from multiple data source providers, firms are free to stick with the vendors they know and trust, or can swap them out for others, at the same time benefitting from simplified vendor management.

The easy set-up and integration of a risk orchestration platform like LexisNexis® RiskNarrative™ is complemented by an intuitive interface and the ability to drag and drop services and apps. It eliminates the need for costly IT-led operations and interventions, saving firms both time and money. 

Best of all, our analysis suggests all this is achievable at around a third of the cost of a self-built solution over the first three years, freeing up more than £3.5 million to invest back into a business.  

All financial services firms want to prevent more fraud. At the same time, most firms are also under pressure to reduce compliance costs. Risk orchestration is the perfect tool to achieve both these opposing goals – the only question remaining is whether to buy or build a platform.

Join a free webinar on Tuesday 28th November at 2 pm, when leading industry analysts and experts will explore the build versus buy dilemma and the many benefits of a risk orchestration platform. Click here to register now. 

The price per coin has so far been strong this year as traders and investors cheered the likes of Facebook and Apple showing interest in bitcoin, cryptocurrency and bitcoin's underlying blockchain technology. This weekend's drop was attributed to a lacklustre debut for the highly-anticipated Bakkt bitcoin and its cryptocurrency investment platform at the beginning of the week.

According to Forbes, the drop has caused panic among traders and investors who have been anticipated a drastic change for some months now. For the time being bullish Bitcoin traders are advising to buy as the markets look confused as ever, and there will be some results on the horizon. In addition, chief investment officer of Morgan Creek Capital, a US bitcoin and cryptocurrency investment company, suggests "buying the dip," clarifying that daily change sin the value of Bitcoin are rarely significant and should be ignored.

Daniele Mensi, CEO of Nexthash, the operating group of digital exchange platform Nexinter, commented on the price drop: "The volatility of cryptocurrencies is what makes them excellent conduits of growth for traders, investors, and growing businesses. What is important to remember is that Bitcoin is still up around 115% this year, so its short terms peaks and troughs are necessary to facilitate longer-term growth across the currency. It is important for new traders and investors to do their due diligence on each currency that they invest into to ensure that it is the right route for them, but institutional investors and high-growth companies will continue to look crypto and digital trading to facilitate international, fluid growth." 

Bunk looked at the cost of a rental deposit and the cost of renting for a decade. Bunk then compared this cost to the financial barrier of a mortgage deposit, and the cost of monthly mortgage payments over a 10-year fixed term at a rate of 2.58%.

Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120 – a total cost of £81,965 when including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58% would mean a total repayment of £231,798, a total of £254,478 including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680.

This means, that renting is £172,513 cheaper than owning a home over a 10-year period when it comes to the upfront and monthly costs, with the one big difference being the bricks and mortar investment secured at the end.

This saving is most notable in Cambridge with a difference of £341,090 over 10-years between renting and buying, with the saving in London also topping £316,247.

In Bournemouth, renting over 10-years is £183,376 cheaper than buying, with Bristol (£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617), Portsmouth (£137,240) and Plymouth (£128,480) all home to some of the biggest savings.

The lowest saving is in Glasgow where renting for 10-years is just £43,145 cheaper than buying in the city.

Co-founder of Bunk, Tom Woolard, commented: “Of course the big difference between renting and buying is that one leaves you with a sizable financial asset as a reward for your years of hard work making mortgage payments.

However, more and more of us are opting to rent long-term and what we wanted to highlight is that while the rental market is generally viewed in a negative light due to high rental costs, it is actually a considerably cheaper option when compared to homeownership, even with almost record low-interest rates. 

Not only this but those that feel resigned to renting due to the high financial barrier of buying actually have a much better opportunity to save compared to those paying a mortgage. Whether they choose to use this for a deposit further down the road or simply to enjoy a better quality of life is up to them.”

When the hypothetical family from number 28 parade the street in their new Mercedes GLE, doing somewhat of a victory lap, Google is just seconds away as we scout our next big purchase.

Driving the car of our dreams just isn’t a feasible option for many, due to the reality of things like family life and other important household costs. But, as John Paul Getty once remarked, “if it appreciates, buy it. If it depreciates, lease it.” Many throughout the UK have taken the once-oil tycoon’s advice and done just that.

It’s a well-known fact that the value of a new car is known to drop massively within the first year, and research from AA suggests that after three years, a car will have lost 60% of its original showroom price tag at an average of 10,000 miles per year. The first-year loss is definitely the worst, with a deduction of around 40% being made by the end of the first 365 days. Obviously, there are different ways of putting the brakes on depreciation. Keeping the car clean, regular servicing in accordance with manufacturer’s guidelines, and one eye on the mileage gauge, will all go a long way in reducing potential losses.

But could we be doing something different?

PCP

An impressive 78% of buyers nowadays opt for a personal contract purchase (PCP), proving itself as an increasingly popular finance option. Admittedly, it goes against everything our parents have told us to do, in regard to owning our own car, but if you can battle those initial demons, then we’re here to show you why this might be for you.

Cost

Some people take pride in saving up in advance to buy a new car, like the Mercedes A Class, but not all of us have the time (or or patience!). With PCP, the payment is broken down into three major chunks. Firstly, you’ve got the initial deposit which is usually 10% of the car’s showroom value. Secondly, the monthly payments which will include enough to cover the depreciation costs incurred throughout the contract. Finally — and this is where things change once the final payment of the contract has been made, you get the option to either return the car or take a new one on a new contract. Or, you can pay a balloon payment and then the car is yours.

The monthly repayments of a PCP contract are significantly less than the alternative finance deals available. The option then presents itself is to drive a car that you would initially have deemed to be significantly out of your price range. Therefore, if you don’t have a big deposit and want lower monthly repayments, then this might be exactly what you’re after.

Please check this for new and pre-owned cars in Dubai at https://exoticcars.ae.

Mileage

Heavy traffic, congestion charges and the worst culprit of all — parking. Three reasons many drivers in the UK have steered away from the daily commute in the car and opted for public transport. A decade ago, our decision when purchasing a car will have depended hugely on our day-to-day usage — but when that isn’t the same, why should the choice be?

On average the annual mileage of a car in the UK is 7,900. One drawback of renting your car through PCP is that is that when initially taking out the contract, you are given a mileage restriction and if you exceed this, you will be penalised. If, however, you would consider yourself to be one of those average UK drivers, then PCP offers no qualms. The opportunity to purchase a new contract once your current one is up means you aren’t going to have spent your days driving around in an old car with high mileage.

The freedom that comes with PCP means that if you wanted to, you could buy a weekend car — unless of course you are using it to commute every day. When purchasing a new car outright, you are restricted by the constant reminder that you will have this car for the foreseeable future. With PCP, you can buy the car that caters exactly to the needs of your evenings and weekends. For example, an SUV if you go camping with the kids most weekends throughout the summer, or a two-door roadster, if your Sundays are filled by coastal runs. And, if your circumstances do change, you can simply exchange the car.

PCP agreements have revitalised the UK car market, as budgets grow increasingly tighter and people are constantly on the lookout for a good deal. For the past three years, the number of new car sales in the UK has stayed above 2.5million units per year, in comparison to 2011 when it was only 1.9million.

Top tier brands such as Audi, Mercedes, BMW and Jaguar Land Rover have all performed well under the system. This is due to the fact these cars hold their value better, and therefore depreciation is less, ultimately benefiting both dealer and driver. Mercedes reported a 100% upturn in UK sales since 2010.

A typical customer could be paying anywhere in the region of £100 upwards for lifestyle costs such as their phone bill and gym membership, so if dealerships are able to offer a vehicle at £99 a month, then they are making the cost seem more realistic for their customers — it’s near enough a no brainer!

You can't compare rent to a mortgage payment. This way of thinking about the rent versus buy decision is extremely flawed. Comparing a mortgage payment to rent is not an apples to apples comparison. In order to properly assess the rent versus buy decision, we need to compare the total *unrecoverable costs* of renting to the total unrecoverable costs of owning.

That may sound like a complicated task, but I have boiled it down to a simple calculation.

Intrapay, a recently launched payments company within the Sappaya ecosystem, has announced the results of its new consumer survey into the consumer ecommerce experience and the demand for different payment methods provided through online retailers.

The results suggest that consumer demand for cryptocurrency, both now and in the future, falls well short of hype within the Bitcoin bubble. Consumers are currently more than seven times more likely to buy something online with a prepaid card than via cryptocurrency, and more than twice as many would like to use prepaid cards in the future, rather than the volatile digital currency.

Less than 2% of consumers have used cryptocurrencies and only 6.5% wish to use it to buy items online in the future. Meanwhile, as consumers become increasingly security-savvy, demand for prepaid cards almost doubles, from 9% currently to 17% who wish to use them online in the future.

Koen Vanpraet, CEO of Intrapay, commented: “Cryptocurrencies may have enjoyed plenty of hype over the last year, but are just not viable as a mass payment method in the current market. Retailers looking to grow must understand consumers and offer the payment options that will drive loyalty, engagement and conversion.

“This cannot come from forcing unwanted payment methods on them: it must come from listening to retailers and their consumers, meeting their needs with payment methods that truly engage the consumer and add value to the business.”

The survey of over 650 consumers also revealed:

• Consumers want payments to give them more control of their money: spreading the payments across the year; receiving real-time updates on the payment status; and receiving help with budgeting.
• Hidden delivery charges are the second-largest reason for abandoning a transaction – over 50% of respondents failed to complete a purchase when faced with unexpected extra charges.
• 50% of consumers have abandoned a transaction after being required to enter too many details into an online checkout.
• Direct debit, debit cards and credit cards remain the most popular method of purchasing goods online but demand is falling, in favour of alternative payments, including prepaid cards, bank transfers and mobile payments.

Almost 90% of respondents reported that security is one of the most important aspects of their online payment experience, while four in ten demand greater convenience, with an equal number highlighting speed of payment as one of the most significant factors.

Paul Winslow, Chief Marketing Officer at Intrapay, added, “Security versus convenience is still a significant driver in consumer behaviour online, but what our research shows is a shift to new, innovative alternatives, and greater transparency from merchants and their payment partners. At Intrapay, our ethos centres around the customer experience: if they demand it, we will build it. The consumer is in control of the payment and future ecommerce success will depending on listening to these voices, building the adaptive technology based on what consumers want, rather than what businesses tell them they want.”

(Source: Intrapay)

So here we are in 2018, year in which, if the deal-junkies at Citi are to be believed, portends to be a ‘monster year’ for M&A. Given the globally-synchronised economic upturn, continuing low interest rates, suppressed inflation and roaring capital markets, they could very well be right. Below Carlos Keener, Founding Partner at BTD Consulting, talks Finance Monthly through some of the most anticipated M&A activity of the year.

Indeed the deal frenzy has already begun, with the final half of 2017 witnessing GVC’s takeover of Ladbrokes Coral and the Standard Life/Aberdeen Asset Management merger among others. But a word of caution, at least for those considering acquisitions in the UK: Brexit – soft, hard, or otherwise, is now less than 13 months away, and still we’re without (at time of writing) any certainty on even the outline shape of our future relationship with Europe.

No doubt the lawyers and bankers will continue to talk up the Brexit boom, but the reality on the ground may be rather less clear. At a recent conference, a leading M&A professional representing a FTSE100 organisation disappointingly stated "I think someone in the company is looking into the likely impact of Brexit, I’m sure they’ll tell us if we need to do anything differently as soon they’re ready.” While we all can sympathise, that’s not nearly good enough.

Making a rational assessment of the likely risks UK firms may see over the coming years doesn’t require a crystal ball view of what form Brexit will ultimately take. A look at some upcoming or predicted deals for 2018 illustrates this well.

1. Prompted by its recent struggles, Capita, the outsourcing and professional services group, has just announced that it will be disposing of its less profitable and strategically-central assets and services. Firms heavily reliant on professional service revenue are typically the first to be hit hard in a downturn or in times of uncertainty, and even with a clear, decisive Brexit, lack of business certainty may extend for many years as post-Brexit regulatory and trade conditions – and how they are to be applied – crystallise and settle.

Divesting in an effort to return to core is a traditional approach when the future is relatively predictable and fairly speedy recovery is anticipated. But that’s not exactly the scenario ahead of us. Capita will need to prepare its balance sheet for an extended period of uncertainty while retaining sufficient service diversity and operational agility to accommodate new market demands, conditions, constraints (and yes, opportunities) as they emerge. It is adaptability and not strength which may win the day.

2. The global Pharma sector is likely to see significant M&A activity in 2018 as new drug pipelines soften and US corporate tax reductions take effect. One of the most prominent deals in recent years in this sector was the asset swap and joint venture creation between GlaxoSmithKline and Novartis. And last month GSK’s new CEO, Emma Walmsley, expressed an interest in acquiring Pfizer’s Consumer Health division, estimated to be valued at over $15bn.

Like any global manufacturing organisation with highly-complex supply chains in which materials may cross borders multiple times before reaching the market as a finished product, GSK will need to be extremely careful to scenario-plan the potential impact of new hard, soft or otherwise cross-border tariffs and associated regulations as they come into force.

Business cases that assumed free trade across the EU should be re-examined, and supply chains reviewed to minimise any potential increased cost. Acquisitions of EU-based manufacturing capabilities with the ability to serve local markets may help buffer the firm against any emerging trade barriers.

3. News appeared in January that Fox still wants full control of Sky, despite rejection of the deal by British regulators. The rejection shows the growing importance of political and economic nationalism which can trump investor returns, competition or corporate tax repatriation.

A report in October 2017 by Latham & Watkins describes governments and regulators taking an increasing interest in ’foreign’ acquisitions of nationally important companies in the name of national security. In a twist on this, at the time of writing GKN, the FTSE100 aerospace and automotive giant was fending off an unsolicited £7bn takeover bid by Melrose. While a ‘UK only’ deal, politicians including Vince Cable were commenting on the risk the deal may pose to the UK’s industrial strategy.

Economic nationalism begins at home. So, any UK business looking to buy or sell across borders will need to consider how the deal would look to the public and politicians, not just the shareholders.

4. One area in which everyone agrees change is upon us is FinTech. 2017 deals included Vantiv/Worldpay and JPMorgan Chase/WePay. Brexit’s impact on London’s financial sector will accelerate M&A in the coming years within a sector that’s evolving at warp speed. It will be more important than ever to predict the effects of changes. How will the financial regulatory landscape diverge between the UK and the EU post-Brexit? How will GDPR, data protection and safe haven legislation and practices impact market opportunities and operational challenges across borders? And more tactically – if the FinTech gravity moves or disperses (say to Paris), how will FinTech firms find and retain the top technical talent they need?

As ever, change provides an opportunity and a threat to businesses doing M&A. Size alone will not guarantee success. The successful organisation will pull ahead through a clear strategy and use M&A to expand or adapt their propositions and capabilities in the market. Whatever form Brexit takes, one thing is certain – interesting times lie ahead.

Following on from last year’s top 10 must read finance books, Tamir Davies, content writer and researcher for Savoy Stewart, advises Finance Monthly on the top 10 business books to look out for, with her own blurb on each and some advice on which reader they are best suited to.

The first month of 2018 is done, and as we continue into the next few months, many Brits will have set aspiring goals and achievements to mark off their bucket lists for the remainder of the year. Whether it be a personal or professional accomplishment, the new year marks a ‘new you’, with a never-ending list of books to read, websites to browse, knowledge to be attained and situations to be resolved. Whilst it’s incredibly easy in this modern world to turn our eye to the internet for a quick fix, we have become incredibly complacent to picking up a book. There is nothing quite like opening freshly printed books, with that lingering sweet smell resembling notes of vanilla flowers and almonds. And even the manufactured smell of new books can’t be mistaken for being better than the world wide web.

If you’re looking to build your collection and to learn something new in your professional field, albeit financial and or business related, here are the 10 most inspiring must-read business books.

1. Cryptocurrency: Advanced Strategies and Techniques to Learn and Understand the World of Cryptocurrency by James C. Anderson

Cryptocurrencies have most certainly made their financial mark on business, proving to be worthy investments for the future of currency. Considering how many Brits have become self-made millionaires after holding onto the currency, it’s no surprise that those investing in cryptocurrencies are looking to know more than just the basics. Perhaps you’re asking yourself more in-depth questions such as ‘why does it have any value?’. Cryptocurrency: Advanced strategies and techniques to learn and understand the world of Cryptocurrency will answer all your questions of interest, demonstrating how this new inventive currency will fit into the modern economy. The book assesses its effect on the economy, how it will grow and shape finance, and finally whether it is sustainable.

Read this book if: You’re bored of conventional strategies to make money and looking to help change the world that little bit more.

2. When to Jump: If the Job You Have Isn't the Life You Want by Mike Lewis

Mike Lewis, the founder of When to Jump, presents his book When to Jump: If the Job You Have Isn’t the Life You Want, for anyone who feels they have reached a career crossroad. Do you follow your dreams, or do you stick it out because you need the money, the security and longevity of a job that is in front of you? Mike Lewis goes through in detail the ‘Jump Curve’, what he describes are four steps to wholeheartedly pursue the career you have always dreamt about. The book is a beautiful collection of curated stories from like-minded people who share how they took a leap into the unknown. Mike Lewis recently won the Goldman Sachs accolade for ‘100 Most Intriguing Entrepreneurs’.

Read this book if: You’re sat at your office desk, reading this post and thinking ‘what am I doing here?’.

3. Crushing It! How Great Entrepreneurs Build Their Business and Influence-and How You Can, Too by Gary Vaynerchuk

Crushing It, explores how entrepreneurs and influencers who left their career path which had been somewhat mapped out for them, and went on to build thriving and highly successful businesses. The four-time New York Times bestselling author Gary Vaynerchuk hopes in his new book to inspire similar business men and women with dreams of doing what they love, by offering a unique perspective and lessons to be taken which would help with taking their career to a new level. Gary shares stories of those who have grown wealthier, by adopting principles discussed in his book. Gary dissects every social media platform to help anyone of any career field or title how to maximise and optimise their brand presence.

Read this if: You’re a lively individual, looking for something new to dabble in. Perhaps you’re not doing it for financial gains.

4. The Four: The Hidden DNA of Amazon, Apple, Facebook and Google by Scott Galloway

We all log into Facebook, purchase from Amazon, use software from Apple and search for what our heart desires from Google. But have you ever considered their ultimate power as giants of the 21^st century? Scott Galloway, in his new book The Four, asks fundamental questions, such as ‘how did the Four infiltrate our lives so completely that they’re almost impossible to avoid (or boycott). Scott Galloway is one of the world’s most celebrated and prolific business professors, and has deconstructed the methods and strategies used by these ‘Four’ giants, and shows you how you can apply the same measures and principles of their tenacity to your own business ventures.

Read this if: You love or loathe these giants of the world, but wish to replicate their deepest, darkest methods of success.

5. Business for Bohemians: Live Well, Make Money by Tom Hodgkinson

Tom Hogkinson, a renowned journalist has combined his wisdom for cash flow forecasts, tax returns, and anything business related, in his book Business for Bohemians, with practical advice and engaging anecdotes to create a refreshing outlook on how to create a greater level of freedom in our working careers. No matter your business dreams, this book will equip you with the skills to turn your talent into a profitable and enjoyable business. The book will navigate how to become a wizard of excel, a social media maven and the art of negotiating with clients, companies and friends, when business is just business.

Read this if: You fear losing your mogul personality when building your business.

Click to reveal the NEXT 5 must read business books of 2018!

[pag]