Andrew Durant, the head of the Forensic & Litigation Consulting team at FTI Consulting, offers Finance Monthly an analysis of the impending challenge to finance teams and advice on how they can overcome it.
Fraud was already shaping up as a big issue for businesses in 2020 before the COVID crisis struck. For instance, the Resilience Barometer 2020 research from my company, FTI Consulting (involving 2,000 senior executives) found that fraud was perceived as the number one financial crime, with 24% reporting being exposed to it.
This would mean that an enormous £28 billion was lost to fraud in 2019 alone by FTSE 350 businesses (based on an average loss on 5% of annual turnover - see 2018 ACFE Global Fraud Survey, Report to the Nations). Even at 1% of turnover, this would still be sizeable for victim businesses.
On top of this ongoing problem from fraud, in times of most global crises a spike in fraud typically follows. Sadly 2020 is going to be the worst year many of us will experience!
Why do more fraud cases appear after crises? A variety of reasons, such as an increased opportunity available to fraudsters with senior management teams rightly focused on other things, such as trying to keep their businesses afloat and their staff in jobs for a start.
Fraud was already shaping up as a big issue for businesses in 2020 before the COVID crisis struck.
What they will not be thinking about is the enemy within. And, in my experience, that is where the greatest risk lies. It is human nature to believe that threats arise from unknown individuals outside an organisation. However, it is more likely to be a fellow employee who knows the financial controls (and the weaknesses in them) and that you trust implicitly.
Crafty fraudsters will see 2020 as a ripe opportunity to pounce. In the current “lockdown” with increased home working, with corresponding less people at work overseeing finance, security and operations, fraudsters will have more opportunity, with less scrutiny, more freedom and fewer questions asked.
What can finance directors and their teams do to reduce the escalating risk of fraud? Here are three areas that seem simple but can actually make a huge difference to preventing and detecting frauds:
1. Encourage whistle-blowers to step forward
Most frauds are detected by tip-offs from employees, especially those who are involved in finance and procurement. Despite protections in place, whistle-blowers still fear that they will become the victim and either be exposed and/or lose their jobs. And, I don’t blame them. In many cases I have investigated, the immediate reaction of the company tended to be “who is the whistle-blower” or “they must have an axe to grind”, not “we need to investigate these allegations immediately and prevent further loss”.
2. Use of temps and contract staff should be monitored carefully
If a member of the finance department become unwell or need to take time off to care for a relative, it may be tempting to backfill with temporary or contract staff. Companies should ensure that they do not drop their guard and carry out fewer checks than normal. Fraudsters have been known in the past to target finance teams that have a higher propensity to rely on contract or temp staff.
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3. Be diligent in your transaction approval process
The lockdown now looks likely to continue in some form until at least September, so it is important that finance teams remain vigilant and check all transactions carefully, especially scrutinising carefully any:
- ’Urgent’ transaction requests – in a recent case this modus operandi was used to pay away $5 million to an offshore account;
- Transactions just below an authorisation limit especially if there are multiple payments to the same third party – if you spot this pattern, check back to the contract to see whether there are any “red flags” around the identity of the supplier, the tender process or the approval process ; and
- Journal entries that may be requested, particularly around month or other period ends. This is a frequent method to disguise transactions or to “boost” results.
Despite taking all the precautions listed above, organisations will still suffer fraud. Once discovered, taking the right steps quickly ensures a higher chance of recovering missing funds and a lower chance of losses continuing.
Do not make emotional or hasty decisions
Fraud involves a breach of trust and, therefore, as an employer you may feel betrayed by what has happened. As a result, you may be tempted to take immediate action which may ultimately compound the situation.
Therefore:
Keep an open mind
There may be a logical explanation for the discrepancy that may not be immediately obvious.
Discuss this with as few people as possible
You may be unwittingly tipping off someone involved in the fraud. If you do need to escalate or discuss your concerns, speak to the head of internal audit or legal department. Do not discuss it with a colleague, even if you trust them implicitly (see above regarding the enemy within).
Plan a course of action
The actions taken in the first hours and days after a suspect comes to light can ultimately affect the successful outcome of any action. As the finance director, you will likely have a fraud response plan in place. However, I wonder how many of them are collecting dust, probably also years out of date? Also ensure that senior management in each teams or location knows about the plan, have tested it (akin to a fire alarm, the plan needs to be tested to ensure everyone knows what to do and when).
Finally, I would advise finance directors and their teams not to ignore that “sixth sense”. If you start to feel uncomfortable about something, there is usually a reason.
Is it time to consider how recent changes to our working habits, previously thought of as radical, may have set the example for how we will work in future? As the supposed importance of 9-5 hours is eroded, and with World Productivity Day just around the corner on 20 June, it seems like now is the time to consider whether greater flexibility with our working hours will lead to a more productive workforce - even in the ‘round-the-clock’ world of financial services. Daniel Bailey, Vice President, EMEA at Zendesk describes how this can be made possible.
Embracing flexi-time all the time
With teams logging on and off at times that better suit their lives, how can financial service providers - whose industry operates across time zones and is based around set working days - be expected to become more productive?
When Microsoft trialled the four-day work week (with no reduction in pay) in Japan last year, productivity increased 40%. The reduced number of working days led employees to find ways to make meetings shorter and more effective, and subsequently, they felt happier and more motivated in their roles. Simply put, the change drove efficiency. Four-day working weeks aren’t going to become commonplace for everyone. Instead, employers can focus on making flexible hours the norm. This could mean allocating certain ‘core’ hours of work for your team, and allowing them to flex either side of this to accomodate the needs and demands of their personal lives. Offering employees this kind of flexibility can actually enhance efficiency and ensure your employees feel motivated.
When Microsoft trialled the four-day work week (with no reduction in pay) in Japan last year, productivity increased 40%.
Supporting team efficiency
If your staff are working flexibly, internal collaboration tools are one piece of the puzzle for making sure your teams are delegating and sharing work, as well as getting timely updates on progress across their disparate work hours. Financial services teams should implement intelligent tools. By doing so, clients receive advice more quickly, and without the hassle of being passed around departments. Requests received out-of-hours can be escalated if they are urgent, routed to staff who have chosen to work later or can flex their time back later on. As a result, even with fewer staff simultaneously online, communication doesn’t fall through the cracks.
Furthermore, these tools can pull data from inbound enquiries that offer insights into the work your employees spend most of their time on. Not only does this help to plan your teams’ time, but repetitive enquiries can be automated to provide round the clock, easily accessible support. A robust help desk can be built that helps your clients to find answers for themselves, providing a simpler experience for them and freeing up your employees time.
The human touch
In the financial services industry, clients want to know that their money is in safe hands. That requires personal connection, trusted account leads and employees who can demonstrate that they care about their customers. But moving to a more fluid workday doesn’t mean that this element of the client relationship is in jeopardy - it means that it must be central to what gets done in working hours.
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Considering the efficiencies mentioned above, enquiries now reach the right teams faster, and the repetitive requests are handled automatically. What remains are the most pressing concerns and queries of your customers, one where there is no alternative to human interaction to offer expertise and maintain trust.
A significant part of that trust is built on feeling valued and understood as a customer. A business equipped with the right tools can immediately see a history of the customer who has made contact, their previous issues and account information, to facilitate a genuinely helpful and personalised interaction. If multiple teams are involved in the customer’s account, it is quicker and simpler to share data from their interactions and teams, leading to timely resolutions and greater satisfaction - even in the flexible working day.
Outside of customer contact, the work time given back to your employees can be used for the creative and strategic work that boosts productivity and helps to grow the business, offering new services to your clients.
The flexible working week may sound like a pipe dream. But so did remote working at one point - yet in these unusual times, we’ve seen how resilient and capable employees can be, adapting to keep businesses running. When offered more control of their time, to focus on themselves and their personal and social commitments, and the promise of greater productivity and more rewarding work when they are in the office, working 9-5 could be the next relic from our lives before - dare we say it - the new normal.
Across the UK, lenders have approved nearly £27.5bn in government backed loans, through bounce back and business interruption loans, to more than 650,000 businesses affected by COVID-19.
This is an astronomical effort by all involved to keep businesses afloat, but it’s not been quick enough for many ailing businesses. The total amount of business loans available amounts to £330 billion, and businesses should be receiving these funds at a much faster pace then we currently are. Matt Cockayne, Chief Financial Officer at Yapily, explores how open banking may be the solution to these businesses' issues.
It’s clear lending will be needed throughout the year to help these businesses stay afloat as they reopen. And while lenders could be a lifeline for SMEs over the coming months, it’s thought that many believe that future lending or loans are too high risk, or that they just can’t tell what the future holds to lend to businesses. This is likely to cause further frustration for business owners who, until coronavirus happened, ran successful, growing businesses.
This has created a conundrum for the UK business landscape. As we emerge from the initial COVID-19 fallout, businesses need financial support to stay open and to ensure the economy bounces back, but lenders are either too slow or too wary of lending too much to businesses who are facing huge pressures to avoid going bust. To solve this problem, we have to look at new ways of accessing and sharing financial information to make quicker and better decisions. And in open banking, I believe we have a solution that answers these problems and more.
Speed, security and agility
The initial backlash in response to the government's three loan distribution schemes (BBL, CBIL and CLBIL) has centred around frustrations in the time it took to distribute essential funds. To keep up with this demand, lenders have to make faster decisions. But without the right information about the borrower they can’t make them consistently or fairly.
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It is normally standard for lenders to request three months' worth of financial statements, but through the CBILS scheme, lenders must now request six months. This can slow the process down for businesses, providing an added layer of friction in finding and sharing bank statements, and an added layer of delay with the lender having to review the statements manually. Through open banking, lenders can gain instant access to up-to-date financial information and can retrieve historical data in just seconds.
This means they can quickly onboard customers and determine lending limits, without needing to send documentation such as bank statements, ID or other documents back and forth as you would traditionally. By gaining instant access to bank statements and a secure verified source of income, lenders can quickly analyse credit decisions in real-time, and make better, more informed decisions, which is crucial as we begin to step into the new normal.
Lending in the new normal
Up until now, the government has relied on a panel of lenders - established banks and the likes of Funding Circle - to distribute the schemes. But as the crisis continues, more loans need to be disbursed, presenting an opportunity for smaller lenders to play their part to support SMEs too.
One of the biggest struggles of the schemes has been around lenders being unable to meet the demand for onboarding new customers. Some businesses have reported that it is taking longer than expected to open a new account and receive essential funds. However, if conducted through open banking, these processes could be sped up and enable more lenders to operate and offer their services to UK businesses.
One of the biggest struggles of the schemes has been around lenders being unable to meet the demand for onboarding new customers.
This isn’t just a benefit for lenders in terms of meeting soaring demand, it also means an added layer of trust and greater loan personalisation for customers. Lenders can make fairer and more accurate decisions, based on a customer's financial picture.
Fueling the economy post-pandemic
With lenders able to grant more loans quickly and efficiently through open banking, businesses will have faster access to the much-needed cash required to stimulate the economy; keeping companies running, people in jobs and ensuring spending continues across the country. Lenders will also have the opportunity to monitor the borrowers finances after the loan has been granted, with the borrowers consent of course, to offer continued support and create future offerings if required.
As more businesses across the UK seek government support, the role of lenders will continue to grow in importance. But rather than shut up shop due to the risks at play, they should utilise open banking to make better, informed choices to ensure the economy recovers quickly.
Many people have found that their personal finances are in a less healthy place as a result of the COVID-19 pandemic. So, it is natural to want to find a way to get your money back on track. Here we take a look at ways that you can stabilise your personal finances beyond COVID-19.
Don’t panic!
It can be natural to see the impact that COVID-19 has had on the economy – and, more specifically on your personal finances – and think that the right thing to do is to make drastic changes. Whether that means moving your investments or looking to sell property straight away, these sorts of changes can be tempting.
However, it is important to understand that many things will actually go on as normal. Once the markets are over the shock there has been the suggestion that dips in the economy will not be as bad as feared and the fall in house prices will not actually be too substantial – around 3% according to Knight Frank.
Consider equity release
Of course, it may be the case that, like many people, a large part of your finances is tied up in your property. This can be a very frustrating situation if you have a house that is worth a significant amount of money, but that you cannot access without selling it. Thankfully it is actually possible to get access to this money through equity release.
Equity release can be “a sensible and practical solution for financing your lifestyle, home improvements, education or general income”. It involves essentially taking out an amount of money from the value of a property, which is then paid back when you die.
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Make savings where you can
COVID-19 has left a world completely changed in its wake. For many people, this has caused a great deal of financial strain and challenges. However, it is important to note that there are also savings to be made that have arisen out of the situation.
For example, it may be the case that you are now able to work from home more often or perhaps that you no longer need to travel to work at all. If this is the case you may be able to actually save a significant amount of money. And there may be many different examples of this, where new circumstances have created a life that is cheaper for you.
Take advantage of government schemes
It is important to stay up to date with which government schemes are in operation. The UK government is well aware that this is an unprecedented crisis and that businesses and individuals need support in a way that would have been unheard of in the pre-COVID world. This will certainly be an evolving issue, and you will need to keep ahead of the game.
Of course, remember that the first port of call could be the government’s standard Universal Credit income support, which is always available. For anything else, it is wise to follow the government’s website.
Do not ignore payments
It is important to recognise that COVID-19 is not simply an opportunity to ignore your financial obligations. Whilst facing difficult financial circumstances is not something anyone wants to experience, it cannot be an option for you to ignore them and hope that they go away – they will not.
Do not delay making payments in the belief that you will have much more money in the future. If you do, then you can enjoy the benefit then, but for now, it is necessary to make the hard choices and keep up to date. This can help you avoid getting into further debt, incurring fines or damaging your credit rating.
Do not delay making payments in the belief that you will have much more money in the future.
Re-evaluate your budget
So, the solution, in this case, has to come from somewhere else – and this may have to involve re-examining your budget. As we have discussed above, COVID-19 has actually changed a great deal about the ways that we live and work, and it may be the case that you no longer need some of the more expensive aspects of your lifestyle.
Perhaps you and your partner have a car each, but it’s actually now extremely rare that you use both at the same time. This will vary from person to person, but it may be the case that you can save a significant amount of money simply by assessing exactly what you need to be spending money on.
The Bank of England (BoE) has announced plans to pump an additional £100 billion into the UK economy to aid the country’s recovery from the COVIID-19 crisis.
The Bank’s nine-member Monetary Policy Committee voted 8-1 on expanding its government bond-buying “quantitative easing” programme to £745 billion, up from £645 billion. The move was largely predicted by economists, who estimated an increase of £100-150 billion.
The MPC also voted unanimously to maintain interest rates, which currently stand at a record low of 0.1%.
In its statement on the new policy decisions, the Bank noted that there are reasons to be optimistic about the state of the UK economy amid the pandemic – particularly the lower-than-expected fall in GDP during Q2 of 2020 – though it added that the outlook for the UK and world economy remains “unusually uncertain”.
“There is a risk of higher and more persistent unemployment in the United Kingdom,” the statement reads. “Even with the relaxation of some Covid-related restrictions on economic activity, a degree of precautionary behaviour by households and businesses is likely to persist.”
“Inflation is well below the 2% target and is expected to fall further below it in coming quarters, largely reflecting the weakness of demand.”
Benjamin Franklin said it best: "If you fail to plan, you are planning to fail.” We all need goals and objectives. Some of these should be ambitious and fanciful. We all have our dream house or dream vacation — even if we know it may never truly come to pass.
But you need some real-world goals grounded in reality. Ultimately, these practical items are what should be populating your “bucket list.” Sure, always keep a few unlikely-to-achieve items in your back pocket. But you want to really focus on the ones that you know you can — and will — tick off.
And don’t procrastinate! Your bucket list is hopefully long and full of great experiences. There’s no time to waste letting them just sit there.
Yes, achieving some things will be more difficult for many people this year for a variety of reasons. But don’t use excuses and instead focus on the other goals that you still can attack. And if you need a little inspiration, set your sights on checking off the following three 2020 bucket list items.
1. Explore Professional Development
For every person, in every line of work, there is always some thing that you know will help you develop in your career. Maybe it’s learning a new skill, like becoming a spreadsheet or data wizard. Maybe it’s improving your communication ability, like mastering public speaking so you can get your ideas heard. Maybe it's finding a mentor who can help you see something that you keep missing. Or maybe it is sitting down and devising a new strategy or process to improve your company that will surely knock the socks off you boss and earn you that promotion. But no matter what it is, get started today.
2. Keep Your Mind on Your Money
We all need to improve our financial literacy, strategy, or discipline in one way or another. It’s time to stop hoping and start doing. Do you keep tapping into your savings for discretionary purchases? Are you failing to put away enough for retirement? Are you throwing away too much on interest payments? Or, God forbid, do you still not have a good budgeting tool that keeps you on task? Perhaps now more than ever, you need to work to get your financial life in order, and you should look at all the financial services tools out there to help you get it done.
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3. Splurge on Something for You
While being financially disciplined is great, that actually isn’t the problem for many people. Some are too stingy and fail to hit their bucket list items out of an overabundance of caution. If that’s you, maybe now is the time to splurge a little. Do so responsibly, but recognize that there are some great prices out there on toys and luxuries that you may have been eyeing for years. Maybe today is the perfect time to buy that RV you have always wanted and do some road trip traveling to dream locations. Along with good deals, you can also find fantastic credit financing options that offer perks and cash back rewards.
Rethinking Your 2020 Bucket List Goals
Achieving your lifelong goals is never easy. That goes double in a year like this. But there are always ways to look at your bucket list from a different angle and start checking off some key boxes no matter what.
It doesn’t have to be all skydiving and flights to Paris. There are other objectives you can pursue even today. Start exploring your professional development goals, work on hitting a key financial benchmark for you, and don’t forget to find creative ways to splurge on yourself — and even travel.
The world may be more complicated than ever — but it’s still your oyster. Even when everything is turned upside down, your life can still be whatever you make it.
UK banking start-up Monzo (formerly Mondo) has closed a funding round of £60 million with a valuation of £1.25 billion.
As of its last valuation in June 2019, Monzo was ranked as the UK’s second most valuable start-up at £2 billion, 40% up from its current status. This latest valuation brings the firm closer to levels seen in 2018.
Most investors who participated in the funding round, including Y Combinator, Accel, Goodwater Capital, General Catalyst, Thrive Capital, Orange Ventures and Passion Capital, were existing investors in Monzo. However, the round also drew funds from at least two new investors: Swiss fund Reference Capital and Vanderbilt University.
A second, smaller part of the funding round, which could see an additional £40 million invested in the business, is set to close in the coming months.
Earlier this month, Monzo told employees that it would cut up to 120 jobs, or 8% of its workforce, owing to the impact of the COVID-19 crisis. The company has also shut its Las Vegas office and furloughed 300 UK employees.
Even before the pandemic swept Europe and the Americas, however, Monzo was losing money. During the twelve months ending in February 2020, the company lost $57.3 million in a push to grow its number of account holders.
For the most part, the blockbuster film 'Back to the Future' was way off with its outlook on what society would look like in 2015; we don’t have flying cars or hoverboards. But Robert Zemeckis might have been onto something with his portrayal of ‘future’ payments. One of the common methods of payment in the film’s futuristic society was made by thumbprints, not a far cry from what many can already do with their smartphones. Ian Bradbury, CTO for Financial Services, Fujitsu UK, explores what the future of payment is being shaped in the real world.
Biometric payments are one part of a wider movement in society away from physical money. Credit and debit cards have been around since the middle of the twentieth century, but over the past decade, there has been a notable decline in the support for cash, with some retailers removing cash payments entirely. And that isn’t necessarily a bad thing.
While cash is important in maintaining the anonymity of payments, there is a lot to dislike about it. It’s easy to lose, steal and damage cash while also being expensive to produce, distribute and store. It is also a known carrier of infectious diseases, something that has been highlighted in the wake of the COVID-19 pandemic. But it is also clear that we cannot move to a cashless society until more is done to ensure the estimated 2.2 million Britons who rely on cash are not left behind.
There are ways that banks can help society transition seamlessly from physical cash to digital cash. Consumers will always adapt to changes in which we store value to trade, so we need to make sure we do it right.
Biometric payments are one part of a wider movement in society away from physical money.
The Digital Dilemma
Many banks are in a delicate position where most consumers now use some form of paperless payment – but not all. Meanwhile, over a third (36%) of consumers in the UK want their bank to be more innovative in their use of technology, showing an appetite amongst the public for more modern services.
But security remains a crucial aspect when considering a cashless society. One reason for cynicism is that going cashless would eliminate the anonymity of physical payments; the free and willing private transfer of value from one individual to another is considered by many to be a basic human right.
And over a quarter (26%) of consumers do not trust traditional banks to keep their data safe – a figure that rises up to a third with challenger banks. Therefore, there is no guarantee that digital-only payments would be universally accepted as there is not a unanimous trust in technology. That is arguably one of the biggest challenges we face in moving to a fully cashless society.
Time to Ditch the Paper
The western world has a historical love affair with plastic cards; they have been around for decades and we are used to them being the main form of cashless payment. But not every citizen is able to apply for a bank card. For example, one of the basic requirements for a bank account is a home address. However, for the homeless population of the UK, that is not possible. Therefore, if not considered, a cashless society could worsen the inequalities that some face.
There are ways to get around this. Some initiatives are being developed so you don’t need a bank account to receive and use digital cash. For example, you can receive a Mastercard prepaid card which you can use anywhere that accepts payments from the company. This eliminates the need for identity checks or registration and is inclusive to those who do not qualify for a bank account. Further investment in those initiatives will be key.
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Offline digital wallets can also store, manage and transfer digital currency while not connected to the internet – which is critical in replacing the ‘off-grid’ functionality of physical cash. Smartphones are often used as offline digital wallets and developing that technology would limit the need for further investment in infrastructure.
It’s also not implausible that ‘smartcards’ – bank cards that use biometric authentication – will become the norm in years to come. They can be designed with a low-cost e-ink display, which requires no power, that can show how much balance the user has. Not only would they enhance security in digital payments, but it would also eliminate the need to register for a bank account.
Seeking Digital Alternatives to Cash
There are clear challenges in moving to a cashless society. It requires certain investments so that no one loses out. At the same time, it must provide the anonymity that many consider being a basic right.
Yet if you consider measures such as offline digital wallets and smartcards, many of those challenges can be met. The technology needed to go cashless is already available – it now needs to be seamlessly integrated into everyday life.
Early trading on Monday saw mass stock sell-offs around the world, with investors’ appetite for risk newly dampened by a resurgence in confirmed COVID-19 cases. Markets in Europe, Asia and the US each saw broad losses.
In Europe, London’s FTSE 100 opened down 2.1%, while Frankfurt’s DAX and Paris’s CAC 40 shed 2.8% and 2.4% respectively.
US futures painted an equally gloomy picture, which was largely confirmed as trading opened. The Dow Jones Industrial Average fell by 2.4%, S&P 500 futures by 1.9%, and Nasdaq by 1.4% on Monday morning.
Overnight losses were also seen throughout Asia, with Japan’s Nikkei losing 3.4% and the Hong Kong Hang Seng falling by 2.1%. China’s markets saw comparatively slight losses; the Shanghai Composite fell by 1% and the Shenzen Component by 0.5%.
Analysts suggested that the market pull-back may be linked to a spike in cases in Beijing, which saw localised quarantine measures introduced as a response.
In a statement on the markets on Sunday, Ed Yardeni, president and chief investment strategist at Yardeni Research, commented: “Now that reopening is happening, there’s fear of suboptimal results: less social distancing triggering a second wave of the virus, followed by another round of lockdowns.”
There are no healthy people on a polluted planet. In particular, deforestation, the proximity between urban zones and wilderness, and the scarcity of certain animal species, are determining factors in the development of diseases that can be transmitted from animals to humans. As such, at a time of a pandemic requiring the confinement of half of humanity, it is appropriate to analyse this crisis through the lens of the 17 sustainable development goals of the United-Nations, which guide international efforts for a better and sustainable future for all.
Faced with the challenge of protecting the planet, and the effects of climate change in particular, it is essential to develop projects to restore and protect natural ecosystems. The goal is to rethink activities in the logic of a circular economy, to limit their negative impact on nature and to create sustainable wealth. The emergence of sustainable finance is vital for the transformation of the economy towards a low-carbon and inclusive model. Finance must become a tool for health, economic and social development. But how? Finance Monthly hears from Catherine Karyotis, Professor of Finance at France's NEOMA Business School and Anne-Claire Roux, Managing Director of Finance for Tomorrow.
Financial actors must re-invent their activity to support the projects and sectors of the ecological transition, serve the real economy, and preserve biodiversity for a sustainable planet. They must apply best practices to both anticipate transition risks and protect the value of assets, face new risks linked to the physical impacts of climate change, and adapt to regulatory changes. Ultimately, they must enable the transition of the economy to a low-carbon and inclusive model.
The ethics of an investor, a banker, a fund manager, or an insurer go beyond compliance: they have to know how to place their mission of in the present and future contexts, taking into account all economic, financial and ecological dimensions. They can take the opportunity to create wealth, or rather value. To this end, they must identify new sustainable opportunities and put a long-term perspective at the heart of their financing and investment strategies.
Financial actors must re-invent their activity to support the projects and sectors of the ecological transition, serve the real economy, and preserve biodiversity for a sustainable planet.
Already, the entire sector is developing its offers, practices and trade products. Actors are mobilising, initiatives are multiplying, and new professions specialised in sustainable finance are emerging within organizations. However, this paradigm shift will not be possible without expertise and new skills.
A financial analyst must master the accounting and extra-accounting instruments and documents to carry out a joint financial and extra-financial analysis, connecting one to the other and enabling financial policy decisions to be taken in the long term.
A risk manager must know how to assess financial risks in all their dimensions, ranging from credit risk to climate risk to health risk, to then cover them by using derivative markets for this objective, not aiming for speculative short-term gains.
As an asset manager must know how to "price" a bond. Why not do so for bonds labeled "green" or "sustainable"? Likewise, beyond socially responsible investing, how can ESG criteria be introduced into passive management, and how can we revise models by developing a green beta? If we talk about alternative investments, we can also integrate “green” or “adaptation” labels, as well as "green value" into wealth management and into particular real estate investments.
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France is at the forefront of green and sustainable finance. French financial players - whether private or public issuers, arrangers, or even extra-financial rating agencies - are the greatest specialists in "green bonds". They are pioneers in carbon accounting and the financing of natural capital. Collectively, the French financial sector constitutes a driving force for the development of sustainable finance internationally, through initiatives such as ‘Finance for Tomorrow’ and the ‘Climate Finance Day’, the ‘One Planet Summit’, or the ‘Network of Central Banks and Supervisors for Greening the Financial System’ (NGFS).
To strengthen this expertise and pass it on to the next generation of financial professionals, it is necessary to reinforce skills in sustainable finance. From an educational perspective, it is up to teachers and professionals in activity, to transmit to students the tools, which will allow them to reinvent the financial system for a secure, sustainable future.
In the aftermath of the COVID-19 pandemic more than ever, sustainable finance must become a tool for recovery and our students must become the future decision makers of a finance serving the real economy, society and the planet.
New figures released by the Office for National Statistics (ONS) found that the UK economy shrank by an unprecedented 20.4%, its largest monthly downturn in history.
The contraction was more than three times greater than March 2020’s shrinkage of 5.8%, the previous record-holder. Analysts had expected April’s figures to be the bleakest of the crisis, as UK-wide lockdown measures were imposed in late March and began to be eased in May.
Jonathan Athow, Deputy National Statistician at the ONS, outlined the scope of the contraction. “In April the economy was around 25% smaller than in February,” he said. “Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall.”
Some of the most significant falls were observed in the manufacturing and construction sectors, which declined by 24.3% and 40.1% respectively. The UK’s services sector, which makes up around 80% of the country’s economic output, plunged by 19% in April, while industrial output fell by 20.3%.
Morten Lund, an economist at Nordea Markets, remarked: “We've gotten used to really bad numbers, but this is breathtaking.” He also noted that the UK was “looking worse” when compared to its peers in the G7.
The new release follows predictions by OECD that the UK will be among the nations hardest hit by the economic impacts of COVID-19, with an estimated decline of 11.5% in GDP provided that a “second wave” of contagion does not occur.
Centrica Plc has announced plans to cut 5,000 jobs in a bid to streamline its operations and reduce overhead.
It is expected that half of the lost jobs will be from managerial positions, and Centrica has specified that half of its 40-strong senior leadership team will step down by September. The company has claimed that three layers of managers will be stripped out by this move.
Chris O’Shea, who became CEO of the company on 17 March, described the cuts as a “difficult decision” that was made in order to “arrest [Centrica’s] decline”. “Since becoming Chief Executive almost three months ago, I've focused on navigating the company through the [COVID-19] crisis and identifying what needs to change in Centrica,” he said, referring to the company’s structure.
“We have great people, strong brands that are trusted by millions and leading market positions, but the harsh reality is that we have lost over half of our earnings in recent years. Now we must bring focus by modernising and simplifying the way we do business.”
As part of a separate announcement, Centrica said that Sarwjit Sambhi, CEO of its consumer arm, and Richard Hookway, CEO of its business arm, will both step down with immediate effect and leave the firm in July as part of the restructuring efforts.
Centrica employs around 27,000 people, 20,000 of whom are based in the UK.
