Founder, Chairman and Co-Chief Investment Officer of Bridgewater Associates Ray Dalio talks to Julia La Roche in 2018 of Yahoo Finance about the value of savings and investing.

The festive season is the time of year when consumers may have spent a little more than they intended, prompting many to head into the first few months of the new year with plans to bring finances into line.  Understanding their credit score can help consumers get to grips with their finances, however the latest research from Equifax reveals that over half of Brits have never checked their credit score with a credit reference agency.

Londoners are most content with their credit scores, with a third (33%) saying they were happy the last time they checked, closely followed by the South East (31%) and the South West (28%.)  Those living in the East of England are the unhappiest, with 11% saying they were not impressed the last time their checked their score. 1 in 10 of those living in the North West came in a close second when it comes to being unhappy with their credit score.

However, Equifax analysis of average credit scores across the UK seems to suggest a disconnect between consumers’ level of happiness or unhappiness with their credit score and their actual score.

Average Equifax Credit Scores by Region

This new infographic from Equifax can show individual’s how their area’s Equifax Credit Score compares with the rest of the UK.

“It is clear from our latest research that a significant number of individuals have never checked their credit score, which means that are not putting themselves in the best position when it comes to applying for credit” said Lisa Hardstaff, credit information expert at Equifax. “Not only should people get to grips with their credit scores, but they should also check their credit reports to understand what information is influencing their score. 

“The new year is always a time for new plans and potentially new financial applications. If individuals are planning on making an application for credit, they should check their credit report and score in advance. The credit report will give a record of their borrowing history, which could help them decide whether they need to improve or keep up their borrowing habits. And knowing their score and what range it falls in can help to give an indication of how lenders may view their creditworthiness.”

(Source: Equifax)

Video streaming services such as Netflix and Amazon Prime have now been reported to have more subscribers than traditional pay-per-view TV services in the UK, according to new figures released by Ofcom. This of course also applies on a global scale, in the US and beyond.

This week Finance Monthly asked experts in the media industry, communications sector and markets experts what they thought of the proliferation of online streaming services and their impact on traditional TV.

Luke McDowell, Context Public Relations:

Netflix is a brilliant example of a business that adapted and reinvented itself to become not only a giant of the streaming world, but the television and film industry as a whole. It is of no surprise that streaming service subscribers now outnumber the traditional pay TV subscribers.

British television has lagged behind the streaming services for a while now, it’s no longer enough to make your programming available on catch-up, you must now realise the market need for ‘binge-watching’; as this is where Netflix and Amazon Prime have cut their teeth. Users want to be able to experience a whole series in a matter of days or even hours, and as attention spans dwindle, so do the returning viewers on typical week-by-week scripted programming. I think the next big trend we will see is studios closing the gap between seasons, so we may even see one or two seasons of a show in the same year, in order to offset the inevitable audience number drop.

We have already seen some of the traditional broadcasters sell programming to streaming giants, either after the initial air date or in other non-native territories, which has been a step in the right direction. However, in order to future-proof themselves, traditional pay TV providers must cater to a new generation who want to watch content whenever and wherever they are, without the arduous wait for the next episode.

This generation also want the ability to pick and choose subscriptions, with one individual possibly having accounts with multiple services. In my experience of working with streaming services over recent years, this is something that was recognised by early contenders such as Roku who created a set-top box built for streaming that was smaller, more portable and more user-friendly than your typical offering, and offered compatibility across a range of services. Offerings such as TVPlayer have also started to bridge the gap between streaming and traditional British television by bringing live TV to younger, more mobile generations through their app; this is something traditional pay TV institutions should take note of.

John Phillips, Managing Director, Zuora:

It’s no secret that the media industry has changed. A few years back, it was in crisis. The shift towards digital meant advertising spend was predominately diverted to the tech powerhouses such as Google and Yahoo!, resulting in a widespread fear that consumers would never again pay for online content.

A few years later, we started to see a few media houses take control and implement basic paywalls in order to access premium content. This slight adjustment jumpstarted revenue, and for the first time since the crisis, brought growth in through their respective subscriber basis.

Since then, the wider media industry has caught on and subscription services have evolved tenfold. Today’s subscription services have morphed into flexible and adjustable models, where media brands have the power to create unique, effective and profitable plans.

From the standard rate plans for weekly, monthly or quarterly subscriptions, to flexible charge models - per article or per download - the ability to adjust has allowed media leaders to test and try what clicks with their subscribers. As a result, they’ve created a successful and reliable revenue model independent from advertising.

David Ciccarelli, CEO and Co-Founder, Voices.com:

Before I got married, we cut the cord to the TV. This was likely predicated by growing up in a household where there was a one hour limit on the amount of television we could watch. When considering starting a family of our own, my wife and I agreed that books and the Internet would be the primary source of news and knowledge entering the home. Since then, we’ve never been a cable subscriber, and I think I know why.

What Netflix does well is facilitating the act of discovery. First, by allowing viewers to create their own profiles, the platform recalls the shows that you watched, but also those in progress that you likely want to finish. By analysing the viewing habits of the individual, Netflix can make recommendations seemingly tailored to your unique preferences.

While recommendations are a good means of discovering new content, it’s equally enjoyable to navigate the categories of both movies and TV series’ in hopes of finding something new. Surely, TV networks could better organize their content using a similar structure. Let’s move beyond the timeline and give the viewer alternative paths for discovering what’s on right now, and in the future.

It’s well understood that TV is advertiser-supported. However, perhaps it’s time to innovate beyond standard ad formats, the ubiquitous 15 and 30-second spot. Shorter spots may be one option, or subtle overlays may welcome new advertisers looking to reach audiences in fresh new ways. While I certainly don’t claim to have the answer on this one, I’d like to encourage broadcasters to consider this space ripe for innovation.

Both Netflix and the movie theatre experience are very immersive. In our household -- and I’ve heard of others doing the same -- sitting down for a show on Netflix, even one as short as a single episode, involves getting snacks, drinks, and blankets on a cold day. When visiting others, I have yet to see or hear of a similar ritual when flipping through the channels on TV for an indefinite period of time. Live sports may be the rare exception. Nonetheless, programming could be designed in such a way for the viewer to suspend their disbelief. Constant interruptions ruin the flow of the experience. Networks should consider new ways to keep the viewer watching and engaged.

Chris Wood, CTO, Spicy Mango:

British TV will have to change the way it operates if it wants to compete with internet giants such as Amazon and Netflix. OTT providers are under still under no obligation to adhere to the usual broadcast guidelines, giving consumers access to content whenever they want it. On the other hand, the linear world is still heavily regulated, particularly around watershed, and this essentially positions OTT at an advantage and has allowed those businesses to innovate faster.

Increased regulation, processes and rules are proven factors of reducing innovation, which the Broadcast sector has seen a lot of in current years. When boundaries are allowed to be pushed, technology has space to innovate and becomes more attractive to different businesses. The fact is, that internet giants free from regulation have completely captured the market and audience today and consequently the traditional broadcasters have been left behind. But how could we introduce regulations that apply to all and how would it work? How would a watershed rule be enforced in catch-up OTT? Would it require credit card verification to prove age? Is PIN enforcement enough? Or should it be enforced at all? Rather than locking everyone in, why don’t we open the doors?

Providers like the BBC need to be freed from constraints like this in order to innovate. With less and less Millennials tuning into live TV and more opting for paid for streaming services like Netflix on a device of their choosing, there is little value for this demographic in their TV license fee if they are only going to watch odd World Cup match or the news. OTT products and services have grown rapidly – primarily because of the flexible nature of viewing that is offered. For British TV to grow its user base and capitalise on these benefits – it’s time to remove the shackles.

The result would give viewers more platform choices and enable content developers to create more relevant programmes for their audiences.

Chris Lawrence, Head of UK Communications, Media and Technology Consulting, Cognizant:

In many ways, we are living a golden age for television. Technology giants, like Netflix, have raised the bar, spending more than ever before on high quality shows. It has become clear that to keep up, broadcasters need to make sure that they are investing more money on producing shows and films that draw in audiences. But in order to spend additional budget on production, cost savings need to be made elsewhere.

That is why broadcasters are using technology to streamline back-end operating costs. Automating back-end operations is a crucial step towards greater agility, enabling broadcasters to maximise revenue from content. A good example of this is UKTV’s investment in a new broadcast management system to provide greater flexibility to schedule and manage content across its channel brands and support Video on Demand viewing.

Broadcasters also have a chance of winning back customer loyalty through providing a slick customer experience and reducing any friction along the customer journey. Reacting to this challenge, last year the BBC announced it would be using artificial intelligence (AI) to “better understand what audiences want from the BBC". The initiative, launched in partnership with eight UK universities, will take the learnings and directly apply them to the BBC’s UK operations. The use of AI to boost the customer experience and streamline services will crucially enable broadcasters to invest more heavily in the front of screen services. Because ultimately, content is king.

James Gray, Director, Graystone Strategy:

As technology has changed so have subscription models and hence we now have a shift towards Amazon Prime and Netflix from pay TV. There was a time when TV content was consumed by a family with one subscription per household and only one device - a TV - in the house to watch it on.

Now individuals consumers have multiple content subscriptions and many different devices so they can access programmes on the bus, in the park, at the station, by the pool on holiday, and in a different room to another family member. Smart phones and tablets have enabled this, as well as the availability of wifi and more recently better rates for data and data roaming.

 But there are some real polar differences as to which customers take which TV service. Graystone segmentation analysis shows that older customers “Settled Seniors” have the lowest take up of Pay TV, with 53% having Pay TV like Sky or Virgin and only 17% taking internet TV models like Netflix or Amazon. Unsurprisingly the Technology Trailblazer segment, which is much younger, has the highest adoption rates - 65% and 56% showing that they are taking multiple subscriptions. It’s a clear indicator of where the market is going and where providers need to place their bets.

The younger segments are also far more transactional, so for example if a show moves from Prime to Netflix they will move too. Amazon’s move into football will no doubt cause some ripples in the market. It illustrates that as well as offering convenience, the content has to be right too. You must know what your customers like and provide more of it - Netlfix is very good at producing original drama for this reason.

What fascinates me is where the subscription economy is going. I can pay for shaving products, gin, dog food even socks on a monthly subscription. We can’t be far away from a time when all subscriptions can be managed under one mega bundle - TV, mobile, broadband, gas, electric, gin, socks, car access, and who knows what else.

As millennials care less about ownership and more about experience and access, we will see more and more subscription models managed via smart phone apps. And for companies that has to be a great thing, particularly if consumers manage their subscriptions like my gym subscription - 36 monthly payments to date and just 5 visits! (But next month I am definitely going more regularly!)

Alistair Thom, Managing Director, Freesat:

With a raft of new entrants in the market and increasing choice for consumers driving change in viewing habits, there’s no argument that TV services in the UK and elsewhere are facing tough challenges.  Whether that’s competing for content rights against global companies with huge budgets or facing up to new distribution opportunities offered by online services.

Yet from a Freesat perspective, we believe that Ofcom’s report suggests that new entrants offer a great opportunity for subscription free platforms like ourselves. While On Demand services offer new choice and flexibility for customers, they do not offer all of the content customers want, nor can they offer the same level of shared experience as the “appointment to view” TV moments found on traditional broadcast TV; whether that’s amazing sporting events like the World Cup, global spectacles like the Royal Wedding or this summer’s “OMG TV” in Love Island.

Our research^[1] has shown, that the most watched programmes are consistently those available on free channels, even in homes signed up to a pay TV subscription. These pay platforms must now face up to the additional challenge to their business models offered by new entrants with lower monthly fees and no long-term contracts.

I strongly believe that the UK has the best free-to-air TV in the world and while methods of entertainment consumption are clearly evolving, especially amongst younger viewers, there will still be a place for more traditional viewing in the changing media landscape for many years to come.

[1] Freesat carried out omnibus research with OnePoll in May 2017, surveying 2,000 TV subscribers on their TV habits.

For spontaneous spenders, the word “budgeting” can cause alarm bells, with the thought of having money left over at the end of the month seeming unattainable. People often think budgeting means having to cut back on the things that they enjoy. Being money smart doesn’t have to mean you miss out.

It was recently reported that in their lifetime, a British person will spend on average £144,000 on impulse shopping. This can include anything from the chocolate bar that you grab as you get to the till and other small purchases which soon add up, to regularly splashing out on new clothes.

There’s nothing wrong with treating yourself every once in a while, who doesn’t deserve a little retail therapy. However, if this is happening a little too often and you’re in need of looking after the pounds, there are a number of changes you can make.

The experts at PIWoP, a price drop alert tool, know how important the value is of every pound that you save. They offer five ways that people can create healthier spending habits and become money savvy.

1. Are you more attracted to the sale or the item?
   

   It can be tempting to pick up a product because the discount on it seems too good to miss, sometimes this appeals to consumers even more than the item itself. If this is the case, think about if you really need it, if it’s the money off label that’s caught your attention rather than the actual product, leave it on the shelf and save yourself money. That way, when you see something that you really want, even if it’s at full price, you’re more likely to have the extra money available to buy it.

2. Budget and prioritise
   

   Some expenses come out every month, write down what these are and then work out what you have left over. Then factor in things which are bound to occur, such as meeting friends for dinner or needing new school shoes for the kids. Prioritise these additional outgoings, certain things will need budgeting for, a weekly takeaway pizza is unfortunately not one of them! Cutting out spending that isn’t a priority could leave you with considerably more money at the end of the month.

3. Why are you spending?

   Treating yourself to a new outfit so you feel confident at an upcoming event or rewarding yourself after a lot of hard work is of course okay. However, if this happens on a regular basis and your bank account is suffering for it, it might be time to change your spending habits. Consider why you are spending and how productive it is. For example, if you spend when you are stressed or bored, there are other ways to blow off some steam that are considerably cheaper. Spending is often used as a short-term fix to feeling better, as soon as you remind yourself of this, you’ll be less tempted to overspend.

4. Do you need the item now?
   

   Finding a product that you really like or can imagine yourself needing for your next holiday or when the house is redecorated can make it easy to buy it right away. However, think about if you really need the item right now. If you’re moving house next year, although those lamps or expensive armchair might get you feeling excited, it might be better to wait for any upcoming end of season sales. Technology is helping consumers to do this by taking price comparison services one step further, such as the PIWoP tool. It allows consumers who have the tool installed on their computer, tablet or phone and see an item they like, to use it to enter the price they want to pay for it and the tool then alerts them if that item does go to or more likely below their PIWoP (Price I Want to Pay). Even waiting until the next day can make you realise that you don’t really need it, or that your money could be better spent elsewhere.

5. Set goals
   

   If you’re a real foodie who enjoys going out to eat, creating healthier spending habits doesn’t mean you have to stop doing what you enjoy. Or you might be interested in fashion and are eager to keep up with what’s new this season. Set yourself goals such as only eating at a restaurant one or two times a month (or however much you can afford without overspending) or allow yourself a couple of treats a month when it comes to clothes. Saving money while still allowing yourself a few luxuries will feel much more satisfying than regularly spending and then feeling stressed a few weeks after.

In support of the tenth annual My Money Week last week, Equifax partnered with Young Enterprise in order to equip young people to grow-up with the life skills, knowledge and confidence they need to successfully earn and manage money.

Underlining the need for broader awareness amongst young people of the cost of the things they want – and how they might be financed - the credit information provider has released research which reveals that a third of parents admitted feeling pressured by their child to buy them the latest technology, and 35% felt pressured to buy fashionable clothing for their children.

“Our findings suggest that some parents are feeling under pressure to spend on their children when they may already be financially stretched,” explains David Stiffler, Vice President of Global Corporate Social Responsibility at Equifax. “As well as spending money on technology, nearly a quarter of parents said they have been put under pressure to keep up with the latest gaming devices and online apps, and a further 29% said their child pressured them to buy the latest toy craze.

“More than ever before, Equifax is committed to making a difference to the communities in which we live and work and My Money Week is a fantastic opportunity to encourage both parents and schools to help the younger generation appreciate financial values. The right attitude about money management starts at home so it is very encouraging to see a campaign that will teach children more about managing money in a way that is practical and relevant to them.”

The Equifax research also highlights how 11% of parents will spend between £51-£100 just on technology such as tablets, laptops and smart phones, for their child every school year. A further 10% admit to spending between £151- £200.

Russell Winnard, Head of Educator Facing Programme and Services at Young Enterprise, said: “It is important to have the right foundations from an early age to ensure that young people continue to manage their money well throughout their life. The aim of My Money Week is to improve financial capability for young people in primary and secondary schools. It’s all about teachers and parents inspiring young people to be financially literate, and the statistics from Equifax demonstrate just how important it is to learn about finances from an early age.”

To help parents keep control of their budget, Equifax has added an interactive Equifax Budget Planner to the tools on its website.

(Source: Equifax)

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)

The world of banking and financial services is still seen as one of the more conservative sectors of the economy today but if organisations operating across these marketplaces want to drive competitive edge and business advantage in the future, they can no longer afford to ignore the consumer-driven pull towards the use of artificial intelligence (AI). Finance Monthly hears from Russell Bennett, chief technology officer at Fraedom, on the past and future of |AIs journey from consumer to the commercial world.

People are used to these technologies in their everyday lives. They are used to smart software telling them what they want to buy next even before they realise it themselves.

Today, it’s increasingly vital that banks, financial services organisations and financial departments within enterprises are all in touch with these trends. They need to start looking at the benefits that analytics and other predictive technologies can bring them. Their employees and customers will expect them to do so.

The good news is we are starting to see the use of AI growing in the commercial finance environment now. So far, use cases have mainly been around streamlining operational processes.

Take the introduction of digital expenses platforms and integrated payments tools, both of which have the potential to significantly improve a business’s approach to how it manages cash flow. By having an immediate oversight, through live reporting of all spending from business cards and invoice payments, as well as balances and credit limits across departments and individuals, businesses can foresee potential problems more quickly and react accordingly – and they can go beyond this too. All these services become even more powerful when combined with technologies like machine learning, data analytics and task automation.

We are also seeing growing instances of AI and automation being used to streamline payment processes in banks. Cards can be cancelled, or at least suspended, quickly and easily and without the need to contact the issuing bank, while invoices can also be automated, to streamline business payments. This means businesses can effectively keep hold of money longer and at the same time pay creditors more quickly. Moving beyond straightforward invoice processing, intelligent payments systems can be deployed to maximise this use of company credit lines automatically.

Looking ahead, we see a raft of applications for AI in the payments management field around analysing data with the end objective of spotting anomalies in it. With the short and frequent batches of payments data used within most enterprises today, it is unlikely that even the best trained administrator would be able to spot transactions that were out of the normal pattern. The latest AI technology could be used here to tease out anomalies and pinpoint unusual patterns or trends in spending that could then be investigated and addressed.

They also have the potential to shape the way that payments are made in the future. One of the hottest topics currently under discussion across the commercial payments sector is the thorny issue of integrated intelligent payments. How can enterprises use the latest available artificial intelligence technology to work out the best possible payment option for each individual transaction?

Accounts payable teams will soon need to be able use payments platforms to assess not only how much working capital they have on their corporate cards and what rates they have on their purchasing cards but also what the most sensible choice for payment method would be for each every payment, be it BACs, wire, cheques or even just old-fashioned accounts payable.

Indeed, there is likely to soon be a case for this kind of technology to effectively ‘fit in’, in process terms, between the accounts payable department, and the payment itself, helping the business decide what makes best sense for them as a payment methodology based on the business rules and existing deals that they have in place today.

Future Prospects

We also see a raft of applications for AI in the payments management field around analysing data with the end objective of spotting anomalies in it. With the short and frequent batches of payments data used within most enterprises today, it is unlikely that even the best trained administrator would be able to spot transactions that were out of the normal pattern. The latest AI technology could be used here to tease out anomalies and pinpoint unusual patterns or trends in spending that could then be investigated and addressed.

While this area remains in its infancy within the banking and financial services sector, with technology advancing, financial services organisations and the enterprise customers they deal with will in the future will be well placed to make active use of AI that will help clients track not just what they have been spending historically but also to predict what they are likely to spend in the future.

AI will ultimately enable businesses to move from reactive historical reporting to proactive anticipation of likely future trends. We are entering an exciting new age.

New rules to be introduced by the Payment Systems Regulator will in future make banks and financial services liable for payment scams and consequent reimbursement. Andy Barratt, UK Managing Director at Coalfire, explains more for Finance Monthly.

During the first six months of this year, victims of Authorised Push Payment (APP) scams were conned out of a shocking £100 million. These simplistic but sophisticated cons have tricked thousands of customers into unwittingly authorising payments in response to fake emails or persuasive phone calls.

Currently, it is most often the victim – the customer – that picks up the tab and any compensation awarded to them is generally qualified as an act of good will, not an admission of responsibility.

But a new contingent reimbursement model being introduced by the Payment Systems Regulator (PSR) in September 2018 will likely shift the responsibility for preventing APP on to banks and payment services providers. Organisations may be obligated to pay out in circumstances where it can be proved they didn’t have adequate security procedures in place or follow best practice.

Though the exact contents of the model is yet to be ironed out, PSR’s focus on redressing the balance between customer and company emphasises the increasing importance for the financial services sector to have its house in order when it comes to protecting its customers from fraud, particularly online.

Legislatory or voluntary?

Whatever the PSR’s judgement, the resulting regulation will likely take one of two forms.

The Government could legislate, based on recommendations from the PSR, for transactional scam protection, which would be underwritten by the Treasury. This would be much like the protection given to individuals and businesses that hold deposits in banks that fail, who are entitled to compensation of up to £85,000.

The government would, of course, be within its rights to recoup these costs from organisations that authorised the fraudulent payment in the first place.

Alternatively, a voluntary system overseen by the PSR could require member institutions to contribute to a collective insurance pot to protect victims.

Both approaches would likely mean greater costs for banks and payment services providers, intensifying the onus on these firms to demonstrate that their defence against APP is as robust as possible.

Preparing for the reimbursement model

It must be said that many financial institutions, and particularly the big retail banks, are working hard to be good corporate citizens.

But across the sector, particularly among smaller lenders or those with more automated service models, a variety of steps could be put in place with reasonable ease that would make organisations far better able to protect customers from APP and less likely to lose money to compensating them.

In the credit industry, for example, a five-day cooling off period is applied to all credit agreements. This allows time for the source and recipient of any payment to be verified. Similar principles could be introduced to other forms of banking. Even in the case of customer-to-customer transactions such as direct debits, payments over a certain value threshold could be held until their legitimacy is confirmed.

Banks with branch networks can also use the personal contact staff have with customers as a way of verifying the identity of a payor or payee. Staff training and awareness days can be used to teach employees how to spot transactions that may be fraudulent.

Alongside this human element, artificial intelligence will play an increasingly key role in helping businesses to detect fraud.

The reimbursement model will necessitate banks and payment services providers to prove they have robust mechanisms in place to monitor consumer behaviour more meticulously and identify and block suspicious transactions effectively.

AI can be used to detect incongruous payments among many millions of transactions – a needle in a haystack for mere mortals. These suspicious payments can then be paused, with the funds placed in temporary escrow, and the customer contacted to confirm authenticity.

This stops the theft from ever taking place, circumventing the debate over who is liable altogether.

Plan ahead

The contingent reimbursement model may not have the wide-ranging, cross-sector implications of other new regulations such as GDPR and PSD2. But one thing it does have in common with these more talked-about directives is the potential to be financially damaging for the organisations that fall foul of it.

The PSR recognises that there is no single measure that will stop APP scams altogether, but impresses on the financial sector the importance of doing everything it can to guard against this form of fraud.

The sector should stay abreast of new developments concerning the contingent reimbursement model and take steps, some examples of which are highlighted above, to ensure they are ready when the regulation takes its full form next September.

Traditional banks are lagging behind when it comes to technology and we are increasingly seeing non-financial services companies, like Facebook and Orange moving in into the territory of traditional banks. Below Daniel Kjellén, Co-Founder and CEO of Swedish fintech unicorn Tink, looks at how Facebook is currently adding P2P payments to their services.

You would have to have your head in the sand not to notice that huge change is afoot across the banking and personal finance sectors. Earlier this month, Facebook announced that it was making its first foray into finance in the UK, with the launch of a new service which will allow users to transfer cash with just a message.

Facebook is not the only tech giant moving in on the territory of traditional banks, with Apple also set to launch its own virtual cash payments system and telecoms behemoth Orange recently announcing the launch of its online banking platform. This is just the tip of the iceberg. Fintech firms like Mint, Moneybox and Tink are taking this concept beyond payments, creating a sophisticated consumer led money management ecosystem.

So why is this happening? The launch of Facebook’s P2P payments service is evidence of the wave of technological and legislative driven disruption sweeping toward the retail banking market that change the shape of the sector beyond recognition. Consumers in 2017 are platform agnostic and don’t care whether they manage their money through their bank or their phone company or social media account.

Across the world, we are witnessing a move to the model of ‘open banking’ which will blow open the retail banking sector and create competition in the form of tech firms, who are already making a play for the territory traditionally held by banks. This hasn’t happened in a vacuum, it is just one symptom of the enormous transformation the industry is undergoing.

The fintech invasion

The current wave of tech companies offering in-app personal finance capabilities is just the beginning. The success of fintechs such as Monzo and Transferwise has demonstrated beyond doubt that today’s consumers are looking beyond their bank to manage their finances.

Until recently, banks have enjoyed a monopoly over their customers’ data and have operated in a market which by design, discourages competition and transparency. The result has been a mismatch between people and products, with consumers having to settle for high cost, low quality financial services. It’s not surprising that nimble tech companies are moving in on the space previously occupied by the banks. So long as their investments in fintech yield results, these ambitious and visionary companies will continue to pioneer new solutions that transform our relationship with money.

Banks who don’t innovate and create customer led products, will risk losing their customers who, through tech solutions will automatically be filtered towards a smorgoesboard of banking products which suit their needs. Third party platforms will become the main interface for money management, regardless of who the consumer actually banks with.

A nudge in the right direction

Facebook’s mobile payments feature will be supported by M Suggestions, a virtual assistant which monitors Messenger chats and nudges consumers to use the payments feature whenever the subject of sending money comes up in conversation, aiming for a seamless integration between social interaction and finance. The smart technology which underpins Facebook’s virtual assistant is a glimpse of the future of personal money management.

Today’s apps are nudging consumers in their day-to-day choices, encouraging them to save a little every month, offering tailored advice based on their economic habits, pointing them towards better deals and products, helping them to prepare for life’s big financial commitments - all with the aim of improving users’ financial happiness.

Money on autopilot

Facebook’s payments service aims to remove friction from the transaction - friction in this case being the need to leave Messenger. We are witnessing increasing numbers of tech companies offering these in app capabilities, the ultimate aim of which is to allow users to do everything in one place.

PSD2, which comes into force in January, will open the floodgates for third parties to build financial services apps which aggregate, enabling consumers to do everything in-app from paying their bills to comparing how much they are paying for access to financial products like credit and mortgages.

Technology is ushering in a new era where money management is frictionless and simple. Many people today have a difficult or distant relationship with their finances. There is often a mismatch between people’s needs and the product they are offered by their bank. This means money management can often feel like a chore rather than a choice.

In-app personal finance services such as those offered by Facebook, Tink and Apple, will offer consumers the ability to effortlessly manage their personal finances while going about their daily business. People’s relationship with their money will become a lifestyle choice, with financial decisions being akin to the choices they make about their health or their hobbies. Eventually, money will be on autopilot.

A bank by any other name

Today it is rare to find an individual who is loyal to their bank. With the ties between consumers and their bank becoming increasingly weak, smartphones will become the interface between people and their money. The entity sitting behind this engagement will become little more than an afterthought.

Tech companies who have built a strong consumer facing brand - underpinned by best in class technology - are waking up to the opportunity and are planting their roots in the fertile ground left wide open by the traditional banks. As the line between banks, fintech, social media and telecoms becomes blurred, the banking market as we know it will soon be unrecognisable. The banks who will survive and thrive are those who embrace the disruption and invest in the power to innovate through technology.

The holidays are upon us, and that means consumers are limbering up their mouse-clicking fingers in preparation to go shopping online. Online shopping is now mainstream and consumers are expected to spend more than £600 billion online this year, up 14% from a year ago. More than three-quarters of mid-sized to large retailers now sell goods and services over the web.

In the wake of the many recent and prominent cyberattacks, it’s reasonable to be concerned about how safe your online shopping experience really is. To check, we analysed a dozen of the UK's largest online retail sites to evaluate their policies and procedures regarding privacy, security and information sharing. The good news: all have good security practices when conducting transactions. The not-so-good news: password policies, information sharing and general disclosure practices are all over the map.

Here are some things to look for, based upon our research.

Secure browsing

HTTPS is a version of the standard HTTP protocol that adds an extra layer of security by encrypting traffic between your device and the server. Some organizations, including Google and the Electronic Frontier Foundation have been pushing website owners to adopt HTTPS for all communications. In light of that fact, it’s surprising how many of the sites we visited don’t use this more secure standard for casual browsing. To be clear, all employ HTTPS for secure checkout, but several don’t make the switch until the customer logs into an account or heads for the checkout aisle.

There are reasons for this. Not all browsers support HTTPS, so requiring its use for simple viewing may lock some customers out of the site. However, the volume of non-HTTPS-compliant browsers is shrinking and the benefits of secure browsing are compelling enough that it’s worth checking when you visit the site. It’s easy to do; simply look at the URL in the address bar. If you see “http://” or nothing at all before the address, then HTTPS isn’t being used. That means that someone who can tap into your communications can see pages you are viewing or information you’re sending. Pay particular note, if you are accessing a shopping site over a public Wi-Fi network.

Privacy policy

Online retailers are required to post privacy policies by law. However, that doesn’t mean all policies are the same. That’s likely to change next May, when the General Data Protection Regulation goes into effect. Those are the rules that define how organizations operating within the EU must store and protect personal information about EU citizens. Enactment of GDPR should create a more level playing field, but in the meantime there are variances in details about the use of your personal data to look for.

A good privacy policy should be easy to find, easy to navigate and written in clear language. We found considerable variations between retailers in this area. Some bury sections of their policies in dense, nested menus or use legalese like Asda’s "By letting us have any sensitive personal data, you expressly consent to us using and telling others about any of your sensitive personal data so we can provide you with the goods or services requested by you in the way set out in this Privacy Policy.” Huh?

Others take time and care to craft a policy that is visually attractive and easy to navigate. Particularly notable is John Lewis, whose security policy amounts to a mini tutorial on good password practices. It even has advice on malware and phishing protection. Tesco also has an outstanding privacy center, with advice on how to protect against social media scams and even keep your gadgets safe.

Information sharing

Most e-tailers pledge not to use your contact information for anything unrelated to a transaction or a related service. However, some will contact you for market research studies or to get your feedback on their services or the website. Look, in particular, for language like "carefully selected third parties may use the information we collect to inform you about offers, products and services.” This means your contact information is being shared with companies or list services other than the one you’re doing business with, most likely for marketing purposes. Most retailers will let you opt out of such communications, but the responsibility to do so is yours.

A variation on this practice is to share information within a family of companies. For example, Marks and Spencer plc also runs its own bank and energy businesses and shares customer information between them. Retailers must disclose these practices in their privacy statements. If you’re uncomfortable with having a company that sells you clothes also pitch you on mortgages, opt out of the deal.

Speaking of opt out, practices also differ on email contact. Most retailers opt you into their email marketing programs and leave it up to you to withdraw. In some cases, you can opt out at the point of payment or registration, but others require you to go into your personal profile and change your preferences, or to unsubscribe once the pitches start arriving.

Payment information

Policies also differ on retention of credit card information. Some companies keep payment number by default, while others ask your permission. This information should be laid out in the privacy policy or stated on the registration page.

The convenience of saving your credit card on a retailer’s website is undeniable, but there’s also a risk involved, as evidenced by the many breaches of prominent brands. A safer course of action is to use a password manager that also stores payment information so that you can control access to this sensitive information. For one-off transactions with retailers you don’t know very well, we recommend against permitting payment information to be stored at all.

Password policies

Retailers love it when you become a member because it open new avenues to market their goods and services. While there are many benefits to membership, be wary of how much information you give up upon joining. We recommend you limit yourself to providing only that which you would be okay with exposing in the case of a breach.

Pay particular attention to password security. Our research found the greatest variation between websites in that area. For example, BooHoo requires only that passwords be at least five characters, despite the fact that the site offers to store payment information. This is unacceptably weak security, in our view. Most sites specify a minimum of six to eight characters with a combination of upper- and lower-case letters and symbols, which is considerably more secure. A few offer strength meters, which assess the security of your password as you type. The more guidance the site offers the better. No matter what the requirement, use at least an eight-character password and avoid easily guessed substitutions, such a “1” for “l.”

Checkout

All the retailers we visited provide secure checkout using the SSL protocol. Most also list multiple secure certifications on their payments page, such as Verified by Visa, MasterCard Secure Code and American Express SafeKey. The more of these badges you see the better.

Some retailers offer to save your payment information at the point of sale. As noted above, we recommend against this practice. Some also use checkout to try to sign you up for their mailing lists or third party offers. If you already receive enough marketing messages, keep an eye out for this practice, since most retailers automatically opt you in and require you to make the effort to remove your name.

Summary

The profusion of recent security breaches should have every retailer on high alert to safeguard customer information. While all the sites we visited do a good job of covering the basics, we found significant variation in attention to detail. That doesn’t mean the more attentive sites are necessarily more secure, but if given the choice, we prefer to spend our money with companies that give protection of our personal data more than just lip service. Enjoy the online shopping season, but be careful to give up no more information than is really needed.

(Source: Keeper Security)

According to recent figures recorded by HIS Markit for Visa, the UK is to expect a 0.1% dip in spending this Christmas period, during the key shopping months of November and December.

Physical store spending is expected to drop 2.1% on the high streets, while in contrast, online sales are expected to rise 3.6%. Online spending for the same period will also account for a record share of the shopping spend, as for every £5 spent, £2 would account for online sales.

Over the past few years, shrinking figures for high streets shops in the Christmas period have been attributed to rising personal debts, interest rate rises, static or lower wages in the face of increasing inflation, and the current weak phase of the pound.

Rob Meakin, Managing Director at Loyalty Pro had this to say for Finance Monthly: “Consumer spending always fluctuates over the calendar year, but the news that Brits could spend less on Christmas for the first time since 2012 is a grim wake-up call for retailers as they approach their busiest and most profitable period. With consumer confidence already low, retailers will have to claw back the attention of their audience and change the overall sentiment that looks set to discourage shoppers by offering their customers rewards for their loyalty. Regular Christmas deals are no longer enough with rising prices and inflation set to impact customers’ appetite. Retailers, if they haven’t already, need to understand the ‘membership economy’; consumers want to feel part of an exclusive club and with fewer pounds to be spent, consumers will be looking at the best deals from the retailers that understand them best. Loyalty is under threat, but a personalised and reliable strategy will trump most other approaches.

“Putting personalisation at the heart of everything on offer will instantly add value to the customer experience. Loyalty schemes are another sure-fire way to extend the customer’s journey and build a long-standing relationship that encourages growth through periods of uncertainty. It’s also the exact reason why high-street vendors such as Boots and Sainsbury’s prosper during high-pressure peak periods; Boots constantly sends its customers exclusive offers tailored to their shopping habits, while Nectar points organically drive shoppers to the grocer. The one truth in all of this is that customers will not wait around for the best service, they will demand it. And a mix of personalised bargains and loyalty solutions could be the differentiator between a successful or unsuccessful Christmas.”

Word on the horizon is that credit card interest ‘could be waived’ for those with longstanding debt on their shoulders. The Financial Conduct Authority (FCA) recently published papers proposing that in order to tackle long term amassing debt, credit card companies could cancel interest or charges in extreme cases.

The FCA defines such credit card debt as when a person has paid more in interest and charges than they have repaid of their actual borrowing over a period of 18 months, and according to the BBC says that "customers in persistent debt are profitable for credit card firms, who do not routinely intervene to help them."

We reached out to Finance Monthly readers this week and heard Your Thoughts on the potential waiver and how it might or might not help tackle consumer debt.

Angela Clements, CEO, Fair for You:

It has been 2 years since the Financial Conduct Authority (FCA) gained additional powers to address competition issues in the consumer credit industry. There has been progress but the agile operators in the high cost credit sector mutate around regulatory change - from doorstep credit and rent-to-own stores to sub-prime credit cards. The FCA refers to such unintended consequences as the ‘waterbed effect’. However, the burning question is why do we continue to see so few real alternatives to counter the growth of high cost credit?

Fair for You is a new Community Interest Company wholly owned by a charity, which is the first national, mainstream challenge to the high cost credit sector. We provide lower cost credit to ‘just about managing’ households to enable them to buy essential items like washing machines from our online store. This typically saves each customer over £500 per item compared to major rent-to-own stores.

The credit search data we examine for all loan applications reveals worrying levels of so-called ‘zombie debt’ from credit cards which are being sold on the basis that the customer need barely service the interest and without adequate affordability checks. After trading for 15 months it’s really clear that this is about more than just the price of the credit. Credit for lower income households needs to be better designed to meet their needs.

Alleviating debt is not just a financial issue. Independent research by the Centre for Responsible Credit shows that half of our customers say they are less stressed, depressed or anxious as a direct result of using our service, with a third saying their children’s health and wellbeing has improved. The report’s author calculates the benefits to poorer households and wider UK of scaling up alternative credit could be as high as £18bn.

Surprisingly, personal credit remains one of few sectors that does not attract social investment tax relief. Fair for You has been fortunate to have had the backing of some of the largest family trusts in the UK. That hardly matches the funding and marketing budgets of big brands like Provident, BrightHouse and The Money Shop. The creation of challengers needs more than supportive regulators fulfilling their competition remit. That’s why Fair for You is in active dialogue with the Government, local authorities, debt management advisors and the social investment community to work around this problem quickly.

Mike Smith, Director, Jameson Smith & Co Limited:

The FCA’s proposals are a great idea and I support them fully. Anything that tackles Consumer debt can only be a good thing. As someone who deals with banks and financial institutions daily it’s important to understand bad debts can be profitable for these institutions. The point is there is no incentive for the banks or the financial institutions to break what can be a vicious cycle of debt for some.

UK Consumer debt has risen by 9.3% taking it to pre-crisis levels of 2005 and a recent BBC article reported that every UK household owes just under £13,000 that’s a staggering £1.52 trillion.

So how did this Consumer debt get so large?

There are lots of obvious reasons, car sales were at an all-time high at 536,337 in March and the bulk of these would be on personal finance. With an average new sale price of around £27,000 that adds another £14.5billion. According to Barclays Card services we are also spending more on entertainment for ourselves.

From my perspective, personal debts are not always about funding a lavish lifestyle or being irresponsible. In the last quarter of 2016 the governments’ own statistics show a staggering 146,987 new companies were registered. Bear in mind this does not take into account sole traders or partnerships.

The down side to these figures of course is that around 40% will fail in the first year. Many will have supported their businesses and dreams with personal loans and credit cards not business overdrafts. Why? The answer is simple Banks will not lend to a start-up company without personal security and or assets.

It follows that a portion of this Consumer debt will have been created by well-intentioned individuals who simply wanted a better life. These statistics are not easily identified but common sense dictates that a portion of these Consumer debts started life as business funding. It’s estimated that around 46% of businesses use their own personal cash when starting up.

The FCA rules will apply pressure in the right area that is, reassessing adding interest to bad debts after 18 months. However well-intentioned my experience tells me if there is an incentive for something to happen it most assuredly will.

My concern is that some banks and financial institutions may try to play ‘hard ball’ early on in the debt life cycle to get as much as they can prior to the 18-month proposed deadline, or any deadline. My suggestion is there should be some counter measure, some safeguard to protect Consumers too, no matter how that debt arose.

Jane Asscher, CEO and Founding Partner, 23red:

The FCA’s proposals and the 2015 credit card report underpinning them are a stark reminder of the challenging situation faced by those with unmanageable debt.

But we should view it as symptomatic of a situation where 1 in 3 UK adults is described as having low financial capability.

Debt charities have questioned if the proposals go far enough. Still, the move would undoubtedly be a step in the right direction in helping people out of long-term debt. It would force the hand of all credit card providers to help the 3.3 million currently stuck in a spiral of debt. Customers would have to acknowledge their situation and be supported to take the necessary actions to start to manage it.

The OBR forecasts, as a nation, we’ll be spending more than we earn well into the 2020’s. Against this backdrop, where borrowing will continue to fund purchases (be it essentials or relative luxuries) the finance industry must consider the preventative measures it can implement to start to address the reasons why some people fail to manage their finances.

Last week Lloyds Banking Group released its latest Consumer Index, which tracks the digital and financial capability of the British public. The report identifies that over 16 million people lack the necessary levels of financial awareness to best manage their money. It becomes clear that by building money management skills, people can make better financial decisions for their circumstances including spending, borrowing and repayment levels.

What role can the proposals play here? It can only be a positive thing if the regulator can change market conditions to where it’s no longer preferable (i.e. as profitable) for credit card companies to have large numbers of customers in persistent debt. It may start paving the way for customer financial wellbeing to be prioritised.

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