Shane Neagle offers Finance Monthly a rundown of the opportunities investors should be exploring in 2021.
2020 has been a wild ride for investors. The coronavirus pandemic and subsequent lockdowns spooked many investors, causing a selling spree that peaked on 16 March . Dubbed “Black Monday III,” 16 March saw global markets decline 12-13%. Nervous investors can hardly be blamed for overreacting, however, when you consider that many across the country were stockpiling toilet paper and canned goods in preparation for the pandemic.
Thankfully, it wasn’t long before the market turned bullish again and stocks began skyrocketing back to their normal levels — or higher. Savvy investors who bought stocks, bonds and commodities during the dip yielded massive returns in almost every sector.
Although we can’t replicate the amazing buying opportunity 2020 presented, we can look forward to other investments that will yield similar returns. Hopefully, 2021 will see the global economy head further into recovery and present unique buying opportunities of its own.
In this article, we will discuss five of the best investment opportunities for 2021.
Five Great Investment Opportunities in 2021
2020 was a unique year in that it brought investment opportunities outside the arena of traditional finance. Online trading became popularised and democratised through easy to use investment apps. For example, the aptly named Robinhood soared in popularity by enabling anyone to trade in the stock market — with a mere smartphone and bank account.
2020 was a unique year in that it brought investment opportunities outside the arena of traditional finance.
The rise of cryptocurrency, an enthusiastic topic among the tech-savvy and millennials, meant that financial opportunities presented themselves to those who might not normally have been interested in investing.
Perhaps indicative of new market-disrupting trends and the waning power of conventional wisdom, many investment gurus were proven wrong about their predictions in 2020. For example, Warren Buffet, the “Oracle of Omaha,” advised investors to dump airline stocks in one of the worst pieces of advice given to investors this year.
There’s no point rehashing 2020, however. Every good investor knows that profit is made only by looking forward. So, without further ado, here are our top 5 investment opportunities for 2021.
1. Retailers
Location-based retailers were hit hard by the pandemic, specifically those that hadn’t invested in an eCommerce platform. It’s easy to assume that most people will resume their online shopping habits even after the pandemic, especially when you consider the convenience of doing so. Business owners recognise this, which is why 74% of all organisations are actively involved in digitally transforming their businesses. That includes many brick-and-mortar retailers who are taking their stores online.
However, there are many purchases that must be seen before being bought. The increased use of vanity sizing and misleading eCommerce photos mean that many consumers won’t purchase clothes without trying them on first. Products like perfume and cosmetics are difficult to choose online. Investing in Nordstrom, Macy’s and similar companies can yield sizable returns.
Investing in stocks like Simon Property or other companies that hold retail spaces are another potential win. These investments are a little more stable when you consider that the companies actually own the real estate which the retail stores rent, which in the case of massive shutdowns of retail stores can be converted to another profitable use.
Investing in stocks like Simon Property or other companies that hold retail spaces are another potential win.
Home improvement retailers are also steadily on the incline, so buying early in 2021 is well-advised. As more people find themselves at home, interest in home renovations is at a record high. Stocks like Lowe’s or Home Depot are in this category.
2. Clean energy stocks
As the US prepares to enter a Biden presidency, it’s a sure bet that clean energy will be a focus of his administration. Investing in clean energy stocks or at least keeping abreast of American government developments in eco-friendly policies is a must for 2021.
The movement towards clean energy is a long-term focus for many governments and organisations around the globe. Due to the longevity behind it — and the sector’s significant impact — clean energy is a great candidate for those who favour passive stock investing.
The electric car mandate that was passed in California, which required that all vehicles sold in 15 years be emission free, is a harbinger of more to come. The United Kingdom recently approved a £40 billion investment in green energy. Consider adding energy stocks that offer above average dividends to help your portfolio balance out long-term stocks that might take longer to recovery.
3. Healthcare stocks (not involved in vaccine research)
A lot of investors looked to healthcare companies working on a vaccine during the pandemic for huge gains. However, many people neglected to consider the healthcare companies that were negatively affected by the pandemic and might yield large returns once a vaccine is rolled out.
Nearly half of all Americans had medical care delayed due to the pandemic. Pharma and life science companies that are focused on cures and treatments for diseases were put on the back burner as many investors sought out companies like Moderna and Pfizer.
Many people neglected to consider the healthcare companies that were negatively affected by the pandemic and might yield large returns once a vaccine is rolled out.
Companies that will benefit from an increase in elective surgeries are good investments for 2021. As hospitals have more room for patients other than those infected by COVID-19, there will be a need for different medical supplies and treatments for different ailments. Consider Intuitive Surgical, ARK Genomic Revolution or Danaher for your stock portfolio.
4 - Bitcoin/cryptocurrency
This year, the Fed printed money at levels never seen before, which will lead to global inflation in the coming years. Investors who are interested in finding a way to store their money without losing its value would do well to look into cryptocurrency, which relies on cryptography to encrypt financial transactions.
It’s largely for this reason that cryptocurrencies such as Bitcoin are an appealing investment option to so many people. In January of this year, Bitcoin was worth $7,000. As we end the year in December, Bitcoin is now worth a whopping $23,000 — a 228% increase in price.
Bitcoin shows no signs of slowing down in the future. According to Guggenheim’s Scott Minerd, Bitcoin should be worth closer to $400,000 due to its scarcity, the security of blockchain technology and its relative valuation. While you can never really know when it comes to emerging asset classes like cryptocurrencies, the fact that Bitcoin is getting institutional attention certainly says something. To take this a step further, whenever Bitcoin rises, it can act like a magnet — bringing other cryptocurrencies up with it.
5 - Travel Industry
Travel companies like airlines and hotels have no doubt been the hardest hit by the coronavirus pandemic. This presented excellent buying opportunities in 2020 which will continue into 2021.
Investing in travel companies must be part of a long-term strategy, however. Many experts predict that it will take a few years before the travel industry fully recovers. This isn’t necessarily because people won’t want to continue travelling after being vaccinated. Many businesses that were hard hit by the pandemic will cut back on corporate travel, which is the leading driver of travel in most countries.
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Conclusion
As we head towards the end of an unpredictable year, it’s hard to think about what may still lay around the corner. However, as every good investor knows, it’s important to be ahead of the curve in order to recognise good deals and investment opportunities when they come. 2021 will see the continued recovery of the global economy and will present many great investment opportunities for those who stay focused and informed.
Karoline Gore explores some of the latest developments in fintech and what they mean for the security of online payments.
The current health crisis has ushered in a new era of digitalisation, with a recent McKinsey report showing that COVID-19 has sped up the adoption of digital technologies by several years. The share of digital or digitally enabled products, the report found, has been accelerated by an impressive seven years in a matter of months. This means that, for most companies, online security has become of the essence so as to avoid losses and maintain a sound reputation in their respective industries. These are just a few technologies that are enabling companies to breathe easier in the knowledge that neither their nor their customers’ sensitive data will be exposed.
Real Time Payments
Deloitte identifies ‘real-time payment’ as a key technology enabling consumers to enjoy faster settlement periods, notifications, and consolidated reporting. This technology is key in an era in which ubiquitous connectivity and the boom in the use of smart devices mean that many consumers are using their phones to pay merchants and friends. There are many ‘faster payment’ programs, reports Deloitte, including the Interbanking Electronic Payment System (SPEI), which clears low value transactions every 20 seconds throughout the working day, and ‘multiple batch’ clearing, which operates similarly to traditional systems but takes place various times a day. The ability of payers to receive quick notifications made quickly enables them to identify any fraudulent payments made.
Dynamic Security Codes for Credit Cards
Identity theft is something both sellers and buyers can experience during online transactions. However, there are key differences between gateways for payment and merchant accounts, along with the type of fraud experienced by each party in a sales transaction. Merchants can suffer cybersecurity issues when unwittingly contracting the services of fraudulent providers, while customers can experience identity theft if the payment gateway (the link between their bank and the merchant account) is weak. Dynamic security significantly boosts the safety of payment gateways through dynamic codes. The latter replaced static CVV2s on the back of cards via a tiny LCD that displays dCVVs changes periodically. App-based dCVV2s, meanwhile, remove the need for cards with batteries and LCD, which pose a greater cost for consumers.
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Cloud-Based Payment Systems
Research firm Technavio predicts that global payment gateway systems are predicted to grow by $23.45 billion between 2020 and 2024. This can be attributed to cloud computing technologies being adopted in SMEs and the growing demand for cloud-based solutions to collect online payments. The cloud enables merchant services providers to rely on platform-as-a-service models.
The latter enable them to design, host, and release applications speedily, without having to run a personal server. As such, buyers can make payments through convenient mobile banking apps or by scanning QR codes. Cloud services allow for seamless integration between services like Apple Pay with electronic funds transfer at point of sale.
The boom in digitalisation and online sales models mean that greater security is key. The latter is being delivered by fintech innovations such as real time payments, dynamic security codes, and cloud-based payment systems. These technologies are working together to ensure security is quick, efficient, and informative in terms of real-time movements.
Sweden-based payment and shopping service Klarna has completed its latest equity funding round, raising $650 million and achieving a valuation of $10.65 billion – cementing it as the highest-valued private fintech company in Europe.
The funding round was led by Silver Lake Partners, Singapore’s sovereign wealth fund GIC, and funds managed by HMI Capital and BlackRock. Other current investors include Dragoneer, Bestseller, Sequoia Capital and Commonwealth Bank of Australia.
Klarna has announced its intention to use the funding to invest in its shopping service and expand its global presence, singling out the US as an opportunity for growth. The company already has more than 9 million customers in the US, and 90 million worldwide.
Founded in 2005, Klarna offers an app-based service allowing users to shop online and pay in interest-free instalments while Klarna pays the seller. It competes with other high-profile fintechs including Revolut and Checkout.
Klarna co-founder and CEO Sebastian Siemiatkowski said in the deal announcement that the company was at “a true inflection point in both retail and finance.”
“The shift to online retail is now truly supercharged and there is a very tangible change in the behaviour of consumers who are now actively seeking services which offer convenience, flexibility and control in how they pay and an overall superior shopping experience,” he said.
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Silver Lake heads Egon Durban and Jonathan Durham hailed Klarna’s business model in a joint statement. “Klarna is one of the most disruptive and promising fintech companies in the world, redefining the eCommerce experience for millions of consumers and global retailers, just as eCommerce growth is accelerating worldwide and rapidly shifting to mobile,” they said.
Klarna’s last funding round was completed in August 2019, raising $460 million and earning the company a $5.5 billion valuation. The company has surged in strength during 2020, as Siemiatkowski claimed in August that the value of transactions processed through its platform increased by 44% through the first six months of the year.
During the five-and-a-half-hour “Big Tech” hearing on 29 July, in which the House antitrust committee grilled CEOs of America’s four largest tech companies on their alleged anticompetitive and anti-consumer practices, Representative Jamie Raskin made a particular quip: “In the 19th century, we had the Robber Barons. In the 21st century, we’ve got the ‘Cyber Barons,’” he said.
Subcommittee chair David Cicilline was more succinct. “These companies as they exist today have monopoly power,” he said. “Some need to be broken up, all need to be properly regulated and held accountable.” He expressed concern that antitrust laws first penned more than a century ago might not hold in a digital age.
Cicilline was correct. US antitrust laws rely on the premise that consumers are being charged too much due to a company holding an almost monopolistic interest. A key difference between tech giants and the monopolies of old, however, is in their ability to turn a profit without overpricing. Much of Amazon’s dominance is owed to underselling its competitors; Google and Facebook provide their services for free. It is this accessibility that has allowed these relatively young companies to become ubiquitous.
With the addition of Microsoft, the companies that came under scrutiny in the hearing – Apple, Amazon, Facebook and Google parent Alphabet – represent the largest companies in the world by market capitalisation. The ‘Big Five’ hold a combined market cap of more than $4.9 trillion, greater than that of any single nation on Earth save for Japan, China and the United States. While not always overt, the influence of Silicon Valley has come to dominate almost every aspect of modern life.
The ‘Big Five’ hold a combined market cap of more than $4.9 trillion, greater than that of any single nation on Earth save for Japan, China and the United States.
The largest of the Big Five, Apple produces and sells the most popular smartphone in the US and Europe. By extension, it operates the most popular mobile app store. In a time when every member of the populace is all but required to own a smartphone, whether as a working adult or a social adolescent, Apple uses the App Store to touch the lives of billions; its apps are the middlemen when we share documents, chat with friends, sign in for work, browse the internet, track our fitness, play games and order food. The platform’s market dominance has enabled Apple to take a 30% commission from transactions made through the apps it hosts – a revenue stream worth hundreds of billions – which most app developers simply accept as the price of tapping into Apple’s world-spanning market.
The second-largest mobile app platform, the Google Play store, also scoops 30% of sales revenue from its hosted apps, but that is far from Alphabet Inc.’s primary source of income. The greater part of its influence is in the Google search engine, which commands a staggering 92% market share.
It is now well-documented that Google has built a global empire on the harvesting of data from its search engine users and the sale of that data to advertisers. This simple business model netted Alphabet $113.26 billion from ad sales in 2019 alone, and continues to shape the content that is presented to us when we use Google’s service – which is so omnipresent that it became a part of our language more than a decade ago.
Data-based dominance is also enjoyed by Facebook, which holds access to the personal lives of more than a third of the world population on an even more intimate level than Google. The social media giant’s reach is enhanced by its ownership of WhatsApp and Instagram, each boasting over a billion active monthly users continually sharing data with the parent company. As mundane as the concept of selling ad space might seem, Facebook’s grip on the global consciousness has magnified the power of targeted ads enormously; motivated actors can even affect national elections using its reach.
As mundane as the concept of selling ad space might seem, Facebook’s grip on the global consciousness has magnified the power of targeted ads enormously; motivated actors can even affect national elections using its reach.
Amazon is no stranger to the data trade; in fact, it earns more than its retail division. Its ownership of a 44% market share in US eCommerce, a staggering level of control over the world’s fastest-growing sales medium, fuels an even more profitable data collection vehicle and the growing digital presence of Amazon Web Services. While high street stores fade into obsolescence, those who take their business online are hard-pressed to compete with a titan that can one-up them on price and delivery speed – and which already knows exactly how to target their customer base.
Even in the face of a global pandemic that has brought multiple industries to their knees, the tech giants’ expansion has only accelerated. The western world now relies on the devices built by Apple and Microsoft to do their jobs, on Facebook’s social platforms to connect with absent family and the wider world, and on Amazon’s next-day delivery service to replace shuttered retailers. With restrictions placed on public transport and entertainment options, rising giants like Uber and Netflix have grown to fill the void. Profit margins for tech players have been stabilised or strengthened while the rest of the world has struggled to account for losses.
The changed state of society has given the monopolies a greater boon than a simple profit boost, however. The new reliance on access to technology has changed public attitudes towards their influence and notably curtailed enthusiasm for breaking up the tech monopolies. People enjoy the services that the likes of Amazon and Netflix provide when the COVID-19 pandemic has restricted their options for entertainment. The recently released FutureBrand Index showed Apple topping the list on internal and external perception. Even in the aftermath of the 29 July hearing, almost half of 18-to-34-year-olds who witnessed its coverage came away with a better opinion of the Big Tech companies being questioned; 63% reported using their products and services more often. Only 40% of those questioned believed that any of the companies should be broken up by the government, with 29% opposed to the idea and 30% unsure.
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In this tech-dominated climate, where the largest companies enjoy both market dominance and widespread customer approval, we are unlikely to see the Big Five fall to antitrust suits like Standard Oil. Given tech’s natural bent towards innovation, they are also not likely to be outpaced by smaller competitors like US Steel – they are more likely to add them to their portfolio, as Facebook added emerging rival Instagram.
We have yet to see what action Congress may take to stem the expansion of America’s tech monopolies. What is certain, however, is that in the meantime their influence in modern life will continue to grow ever more pervasive and ever more profitable.
Digital sales from outlets like Target enjoyed an unprecedented 275% growth in recent months, according to the US Census Bureau. It seems that this is not an isolated case as businesses, especially ecommerce companies, are experiencing the same growth. With global currencies having taken a hit during the pandemic, it was uncertain as to what direction fintech would take. As it turns out, the world is now sprinting toward financial inclusiveness and eCommerce diversity.
The Need for Financial Inclusiveness in the International Market
Prior to the pandemic hitting, online transactions with cash-on-delivery (COD) options were highly popular for consumers around the globe. This, however, is no longer feasible in places like India and China where COD options are now disabled in order to minimise risk moving forward. As such, new avenues were needed and fintech answered the call. Fintech has long been regarded as a great enabler of financial inclusion by providing a reimagining of business models and processes, according to the World Bank. They believe that it is through fintech that suitable alternatives to COD will be found like crowdfunding, cashless transactions, and even peer-to-peer lending options.
Fashion Ecommerce Embracing Diversity, Accessibility, and Inclusivity
While ecommerce is not a new concept in the fashion industry, consumers are now more discerning, especially about diversity and inclusivity. Nearly 34% of respondents in an Adobe survey said that they boycotted a brand due to a lack of diversity in advertising, while another 61% said diversity is the key to good advertising. This isn’t surprising, as high fashion brands have had their share of controversies like D&G’s “Eating with Chopsticks” or Gucci’s balaclava jumper. As such, fashion brands that are enlarging their ecommerce presence are actively reforming their advertising and marketing to emphasise inclusivity, accessibility, and diversity. One method that fashion eCommerce is trying out is redesigning their websites to be more accessible to a wider audience. Another is using a diverse sample of models for visual ads on their ecommerce platforms.
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Mobile Phone eCommerce Developments
A survey by Merchant Savvy found that nearly 70% of all eCommerce is conducted through mobile phones. While that number is high, retailers report that conversion rates vary as consumers still express concerns over security and user experience. In worst-case scenarios, not even 1 out of 10 successful transactions occurs via mobile phone. To combat this, brands are aiming to develop hybrid apps to work well with browsers as regular apps take up too much memory on devices. There is particular emphasis on making phones a universal digital wallet for frictionless and seamless transactions. This, however, requires better security, infrastructure, and devices capable of supporting the whole concept. As such, more mobile phone eCommerce development is being planned by large brands like Amazon, Apple, and others.
With the world impatient to move on from the effects of the pandemic, the fintech industry is striving to make sure that they have what it takes to meet demand. The upcoming months can expect a lot of additional emphasis on financial technology development. With eCommerce now the norm in transactions, it is exciting to see how else financial inclusiveness, diversity, and online transactions shall take root and bloom.
Do you want to start investing in cryptocurrency but are not sure where to begin? You are not alone; many people want to get started with cryptocurrency but do not have much knowledge about this relatively new and complex form of currency that seems to be everywhere this day and age. As with any type of investing, you must have a clear understanding of how it works so that you can be smart with your money and make the right decisions. Here is what you need to know to get started investing in cryptocurrency.
What Is It?
So, what exactly is cryptocurrency? This is, essentially, a digital asset designed to work as an online medium of exchange, which is secured by cryptography, which makes it practically impossible to forge or double-spend, and therefore is incredibly secure. Many are decentralised networks using blockchain technology and not issued by a central authority, so they are free from government interference.
The Market
As with any type of investing, it is essential to understand how the market moves before you get started. There are various coins to invest in, all of which affect one another, so it can be a complex marketplace. Some places are quite stable, such as LTC and Bitcoin, and these are a smart place to keep the majority of your holdings. You could then use a smaller percentage for coins with a higher reward potential but smaller market caps.
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Research and Watch the Markets
Again, as with any type of investing, research and patience will be helpful when investing in cryptocurrency. You should research the teams behind different coins and understand what their vision and goals are, which should help you to identify those that have good potential. It would be smart to then study the charts of the coins that you want to invest in for a few months - it can be extremely volatile, so you will want to have an idea of the price range and pick a good entry point.
Get Expert Guidance
Investing in cryptocurrency can be complicated and confusing, but there are a lot of helpful experts out there that can help you to make intelligent decisions with your money. You can receive live bitcoin trading signals from experts along with helpful tools that will help you to make the right decision at the right time to see your wealth grow.
Start Off Small
It is an idea to test the waters at first and to start off small. Everyone takes losses at some point, and this is how you learn how to be smarter with your investments, so starting off small, being patient, and making sure that you are learning as you go will be critical for future success in cryptocurrency investment.
Hopefully, this post will give you the information and confidence that you need to get started investing in cryptocurrency and to begin building your knowledge while finding some early success with trading.
Cloud computing is one of the most transformative digital technologies across all industries. Cloud services benefit businesses in so many ways, from the flexibility to scale server environments against demand in real-time, to disaster recovery, automatic updates, reduced cost, increased collaboration, global access, and even improved data security. Numerous financial institutions around the world are already reaping the benefits of cloud infrastructure to fit their technology needs today and help them scale up or down in the future as economies evolve. According to research by the Culture of Innovation Index, 92 per cent of corporate banks are already utilising cloud or planning to make further investments in the technology in the next year.
The Bank of England is the latest financial institution to announce it has opened bidding for a cloud partner to support its migration to the cloud. Craig Tavares, Head of Cloud at Aptum, explains the significance of the Bank's decision to Finance Monthly.
As the UK’s central bank seeks to move to a public cloud platform, IT decision makers are likely to encounter hurdles along the way. Figuring out the right partner will be half the battle for the Bank of England; it can be very difficult to identify and map out the broader migration and ongoing cloud infrastructure strategy.
The central bank’s cloud computing approach reflects an evolution in the way financial organisations are viewing data and the applications creating this data. The industry wide shift to viewing data as an infrastructural asset could have precipitated the Bank of England’s own move to the cloud. As such, the organisation should consider these four areas to determine their cloud strategy and partner -- performance, security, scalability and resiliency.
Figuring out the right partner will be half the battle for the Bank of England.
Performance
Traditionally, financial institutions are known for their risk aversion and have been hesitant to undertake digital transformation due to their reliance on legacy systems. Fraedom recently found that 46 per cent of bankers see this challenge as the biggest barrier to the growth of commercial banks. But due to issues surrounding compliance, moving completely away from legacy systems isn’t always an option. This is no different for the Bank of England which is looking to move to a public cloud platform in order to enhance the overall performance of customer payment systems in the new digital age.
Legacy IT systems can prove to be a challenge for financial organisations looking to move applications to the cloud. Outdated processes often lead to system failures, leaving customers unable to access services, resulting in increased customer loss. However, with public cloud it is crucial to find the right combination of cloud services by defining the proper metrics for application performance and storage of critical data.
Legacy IT systems will need to co-exist with new or refactored cloud-based applications. Because of this, the bank will need to consider different strategies using hybrid cloud and multi-cloud architectures to align performance and cost. And when it comes to time-to-revenue or time-to-value the bank will be looking at traditional IT methodologies while leveraging cloud native approaches. The cloud native approach will lead to adopting DevOps as a new culture and Continuous Integration and Continuous Delivery or Deployment (CI/CD) as a process. These practices automate the processes between software development and operational teams which as a result will allow the bank to deliver new features to customers in a quicker, more efficient manner.
Depending on the hybrid IT architecture being used and whether the approach is traditional IT or cloud native, there will be different ways to ensure the best application and data lake or data warehouse performance. In order to do this, the bank will need to partner with a technology expert who will be able to offer guidance on the different levels of technology stacks required during the cloud migration.
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Security
Central banks have traditionally kept close control of their IT systems and long expressed concern over the security of their customers’ information and financial transactions. As such, migrating to a public cloud platform and handing over to a cloud partner could heighten these worries. Global banks are expected to adhere to strict regulations to reduce the number of security issues within the financial sector and all new technology implementations must be compliant.
As complex regulatory requirements – such as the Markets in Financial Instruments Directive (MiFID) and Anti-Money Laundering rules (AML) - continue to cause a barrier to cloud adoption in the financial sector, the Bank of England should consider a partner that is able to adapt to high regulatory demands. As such, a three-way partnership should form between the Bank of England, cloud consultants and cloud service providers. This particularly applies if the UK central bank were to take on a multi-cloud approach – leveraging Amazon, Azure or both. This way, the three can be aligned and acknowledge the journey the bank has taken so far as well as the future of the financial organisation from a regulatory standpoint.
Adopting a partnership approach decreases the risk of security breaches which often cause client relationships to disintegrate. In the past, security was treated like a vendor-customer relationship rather than an important partnership from day 1. Data is a major focal point in this discussion - how the bank is protecting customer data or how they are managing financial data. Cooperation between partners ensures the configuration of every cloud service being used has the right security measures integrated into it from the start observing compliance requirements like GDRP, data sovereignty and data loss prevention.
Adopting a partnership approach decreases the risk of security breaches which often cause client relationships to disintegrate.
Scalability and Resiliency
With a growing abundance of data, The Bank of England will need a cloud platform that will allow them to scale up or down accordingly. Fuelling the growth of the bank’s data are its applications, which also need special scaling and resiliency considerations just like the data itself.
Keep in mind, cloud is not an all or nothing discussion. Not every application the Bank of England has needs to go to the hyperscale public cloud. For example, it may start with a progression to private cloud and then to a public cloud vendor agnostic framework based on the scaling and resiliency needs. The financial institution should understand which applications are best suited for the cloud at this time and which will be migrated at a future point. They should ensure that cloud is an enabler and not a detractor. It’s important to understand the cloud journey is an ever-changing process of evaluating business goals, operational efficiencies and adopting the right technologies to meet these outcomes at the right point in time based on ROI.
The UK central bank should consider moving to a container-based environment and cloud platform services (but as mentioned, in a hybrid cloud architecture), technologies that will enable an efficient process of building and releasing complex applications with the right scale in/out and uptime capabilities. The bank may incorporate Site Reliability Engineering (SRE). SRE is a discipline that leverages aspects of software engineering and applies them to infrastructure and operations challenges. The key goals of SRE are to create scalable and highly reliable software systems.
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The Bank of England has come to recognise the significant impact cloud can have on the business and the benefits cloud technology will bring to their customers. Banks will become leaders in setting the bar for other organisations and industries when it comes to moving to the cloud. However, when it comes to choosing the right collaborator, The Bank of England should seek a cloud partner who is able to meet their business objectives, understands both traditional IT and cloud native approaches, along with hybrid multi-cloud and the data challenge which includes performance, security, scalability and resiliency. Working with the right Managed Service Provider (MSP) partner can provide them with the necessary expertise and developing solutions that bridge the gap from where they are today, to where they want to go.
While it may sound obvious to conclude that the net profits of a business are the most important indicator with which to measure a company’s worth, the reality is that cash flow is just as important, and sometimes even more so. There are a lot of reasons for this – one would be that profits can be manipulated in the income statement more easily than cash on hand can. Net profits may be seen as a theoretical concept, while the cash that is accessible to the business is the more concrete way to see how an enterprise is actually doing.
Consider how profits can be determined largely in non-cash terms – they can be in the form of assets such as receivables. Some of these decrease in value over time, which limits the accuracy by which profits are measured. Some receivables can even be totally insignificant in the future – if for example a client pays too late, or worse, if they don’t even pay at all – then the asset that determines the value of the corresponding net profit decreases, which decreases net profit as well. This is the reality of business – that is why it is important to manage your cash flow wisely.
Cash flow measures the liquidity of an enterprise – and this is indicative of your overall paying capacity. The bigger the amount of cash the business has on hand, the more reliable they appear to their employees, suppliers, and other creditors – these entities can rest assured that they will be paid their due in a timely manner.
These are just some of the reasons why it is important to effectively manage the cash flow for your business. Here are some ways you could do that:
1. Collect your receivables as soon as possible.
If possible, have your customers pay immediately upon delivery or before they receive the goods or services they ordered from you. Prepayment is the best option, and it works – this is how most eCommerce businesses conduct their transactions. They usually ask for proof of payment before they deliver the items to their customers.
If possible, have your customers pay immediately upon delivery or before they receive the goods or services they ordered from you.
If prepayment is not possible, push for cash payments upon delivery. This is pretty reasonable for most retail-scale businesses.
For industry-scale trading, where the volume of goods and/or services and the corresponding amounts are considerably larger, do your best to get the shortest payment terms from your customers as possible.
Invoice them as early as you can. This will ensure that you have done your part in guaranteeing timely payments. It will also show your clients that you are taking your collections seriously. This is the best way to be professional about your intentions.
2. Get more flexibility in terms of your payables.
You can ask your suppliers to extend you credit terms, and you can attempt to make this as long as they will allow. This will let you be able to keep your cash in your hands for as long as possible, giving you leeway to pay for more pressing concerns. Just make sure that you don’t miss your deadlines, as some suppliers may charge interest rates for overdue payments. This is something you should avoid at all costs – as it will defeat the purpose of the exercise.
3. Consider selling your receivables in order to get cash up front.
If you have initially already extended credit terms to your clients, you may find yourself in need of reprieve in future situations. Some clients may also be unreliable in terms of meeting deadlines. You have the option to sell your receivables to get the cash you need immediately. For example, some staffing companies enroll in payroll funding, where the financing company purchases unpaid invoices from you, allowing you to have cash 24-48 hours after the invoice is presented for sale. Sometimes, you can even get your money within the same day if you request this specifically.
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This is a great way to manage your cash flow more reliably. If you have a long list of creditors, with receivables that won’t get settled any time soon, this may be a viable option for you.
4. Figure out ways to increase revenue.
You can get creative in terms of how to get more cash-based sales, so at least you have a steady flow of liquid assets. Offer discounts for cash on delivery or prepaid transactions; give incentives for customers who pay on time; and conversely, set minimal penalties for late payments, just so they’re encouraged to meet their deadlines, and be faithful to their terms.
These are just some of the preliminary guidelines that can help you manage your cash flow better. Remember that there are small ways you can tweak your cash flow to work in your favor, and explore workable options that will help lighten your load.
Below Christine Bailey, Chief Marketing Officer at international payment solutions company Valitor, explains for Finance Monthly the complexities of valuation and exactly how retailers can determine the value of their stores.
One look around our high streets or news website and you are met with empty stores and articles proclaiming the death of the high street. However, things are starting to change. So it’s time to reevaluate high street stores and put a new price on them.
Price wars with eCommerce
The reality that has existed for some time is that with higher overheads and a smaller inventory, bricks and mortar stores are at too big a disadvantage to compete with eCommerce on price and choice. Smartphones in hand, consumers are quickly comparing online and in-store prices and buying whatever is cheapest and most convenient. Things only get worse with large scale events such as Black Friday. In fact, nine in ten Heads of Commerce believe these sale events have devalued products in the minds of consumers, to the extent that they’re less likely to shop during non-discounted periods.
In order for brands and retailers to effectively revalue their stores, we need to understand what physical stores can offer and online cannot. Firstly, bricks and mortar have a clear lead with personalising the customer experience. By blending their online and offline setups together, omni-channel retailers can dramatically improve the customer experience
By blending their online and offline setups together, omni-channel retailers can dramatically improve the customer experience.
Offering more than quick sales
For instance, physical stores can benefit an omnichannel retailer via its unique strengths, including in-person support, simple returns, and the ease of payments. In fact, recent research found that almost one in five (19%) retail executives think the top hidden strength of the high street is its people. Assets like in-person support then should not be overlooked. Together, these strengths contribute to a robust in-store customer experience, which may not translate into a sale being made at the store itself, but can support online sales, or reinforce the brand.
Taking this further, there are other elements that omni-channel retailers also need to take advantage of. Embracing an experiential approach and putting customers at the centre of a physical brand experience is key to revaluing physical stores. Through shifting their focus from selling products to the people purchasing them, brands can connect with consumers on another level and start building long term relationships.
One great example and leader in this area is Nespresso. By focusing on consumer needs, Nespresso’s stores showcase its products in an immersive way, creating a multisensory experience. Staff add to this with expert knowledge and can take customers from the physical point of sale all the way to a personalised subscription plan which is then facilitated via its app. So although purchases are made via the app, the physical store has a major driver in securing the sale in the first place and providing an experience centre to push new products and flavours.
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Nespresso’s customers now no longer see its stores as just a place to make purchases. Instead, they have become destinations that they want to go, all of which helps build a positive connection with the brand and support the development of a long term relationship. This type of store usage can be replicated quickly and easily by other brands too. What is crucial is having a physical presence that aligned to customer needs.
In the future we may see innovative technologies such as VR and AR also being used, shifting shoppers’ experiences from simply browsing, to immersing themselves in a brand’s offering. But, retailers need to understand it before they invest in it. Crucially, brands also need to identify whether their customers are actually interested in it and see benefit in using it, prioritising their wants and needs.
In this high-pressure era of retail, stores should not be valued purely on revenue anymore. Instead, they should be viewed as a way to complete true end-to-end experiences from first engagement through to the next purchase. Ultimately, this will increase customer retention and the value of each transaction too. While revenue is an ever-important consideration, the ways customers make purchases has changed. This does not mean the value of stores has disappeared. Instead, brands and retailers need to look at how a physical stores advantage can be used to improve the omni-channel experience.
The European funds industry still has major concerns over Brexit and the fear and uncertainty that comes with it, according to new research with European fund managers.
More than half of respondents (55%) say that Brexit continues to be one of the biggest issues facing the funds industry in 2018. However, the study, conducted by online board portal provider eShare with delegates at the recent FundForum International event in Berlin, also revealed the funds industry was generally optimistic about prospects for the industry in 2018 and beyond - 82% believe that the funds market is generally buoyant despite political and economic affairs.
“The fund management industry has faced much pressure over the past few years, with new regulation intended to improve transparency adding many layers of complexity to governance and compliance programs,” said Camilla Braithwaite, Head of Communications, eShare. “But confidence amongst European fund managers remains high despite this, with Brexit the only main concern for many. However, with the major decisions over Brexit and its impact on financial services still to be made, fund managers are proceeding as normal until they know more and the industry is thriving because of it.”
The new regulations, such as GDPR and MiFID II, have undoubtedly affected the industry though, with fund managers increasingly aware of the risks that come with non-compliance. 84% of those surveyed felt that their organisation could improve the operations surrounding risk management and decision-making.
With fund managers facing tough decisions about compliance, investments and many other factors, the ability to be transparent about such matters was one of the most important things identified by survey respondents. 97% said that demonstrating transparency into decision-making is increasingly important for the industry.
As the pressure grows on fund managers to be compliant and well-governed, so the need for transparency increases too. 84% of respondents said that technology is the future for improving governance standards within the funds industry.
“Transparency is essential in modern fund management and demonstrating this is right at the top of the agenda for most fund managers, keen to reassure clients and regulators alike,” continued Camilla Braithwaite. “Technology can play a significant role in this, showing how decisions were reached and supporting governance and compliance requirements. The industry has woken up to the potential of technology to help in this way, and the research would suggest that the mood within fund management is positive.”
(Source: eShare)
Written by Paresh Davdra, CEO and Co-Founder of Xendpay & RationalFX
2017 is an exciting time to be alive. Along with the various socio-political developments, it is also a period heralding monumental strides in the human way of living. The bug has bitten the financial industry as well, which is now converging with the tech space to co-create what we see as the future of handling the world’s wallet and forex. Across payment gateways to remittances, we are being pushed to bring in an element of the ‘instant’ and ‘now’ – a fast and easy world of immediate money transfer and delivery. Markets are no longer convened by pockets; the change is multi-lateral and multi-layered. For instance, in the developed markets we are engaging on a platform of routing forex transaction buoyed by political uncertainty, while simultaneously upgrading the business models in developing markets to suit economic experiments such as the recent demonetisation drive in India.
The tsunami of tech inspired disruption that the payments industry has seen over the past few years has given birth to multiple business concepts and ideas like digital remittance services, e-wallets, digital payments and ecommerce have burst to envelope the current narrative. While the developed markets across the west and east have embraced new forms of ICT enabled currency handling, the developing markets hold immense potential as they begin to experience revolutionary changes in their systems. For example, China and India are the world’s largest cash economies which spend millions of dollars printing and minting physical currencies. In such markets, there is scope for bountiful improvements and value additions using ICT enabled services.
In the case of India, the government had all of a sudden on 8th November 2016, demonetised the 500 and 1000 rupee notes, taking them out of circulation and rendering them no longer valid legal tender within a window of 3 days. For a country with 86% of cash transactions, the ensuing confusion and panic nearly brought the country to a standstill for a week. However, necessity turned to opportunity, and during that period of cash crunch, e-wallets and payment gateways pushed themselves forward to recalibrate their business model to expand their offerings in a new cash deficit environment. About two months since the demonetisation exercise, a leading e-wallet company generated a huge market share and elevated its business operations to amass enough collateral to become a payment bank! While India is now onwards to digitalise its economy, countries such as Sweden and Norway operate their economies with less than 5% in cash; while Australia’s Citibank had very recently announced to stop accepting paper money altogether.
The past couple of years have been particularly interesting for the payments world, and if we look back at 2015 – around February is when the initial trend in payments start-ups became more pronounced. This period also saw a boom in other forms of payments than the conventional cash transactions, and with the development of a cashless economy, more protruding questions on the trust and security factors around e-payments started to solidify booming the frequency of use, creating a new market that gradually became its own bionetwork. One year later, we witnessed major progress in investments in the FinTech sector in the UK and Europe, which inundated the sector as insistent tech developments in the sector marched on and harvested gravity defying momentum. Trial, adoption and application entered the day-to-day routine in the industry and almost each passing day experienced a new breakthrough.
From then on, the focus shifted towards the consumer experience. Now, in 2017, we are bound to witness a thriving increment in the numbers of consumers whose lifestyle and purchasing parity will pave way for change, and witness more consumers gearing up to ride the technological wave their way. As digital payments have already become the norm in the developed world, the slow seepage of structure onto the eastern world will systematically affect how transfer of value is carried out – the incredibly fast pace at which new businesses and solutions are emerging has created a cat-mouse chase between innovators and regulatory sector. Consumers now have to keep pace with the movements in the tech sector. The sector is urging more technologies into the mainstream, especially protocols like the Blockchain technology.
More importantly, the FinTech developments are becoming more or less very disruptive and will continue to dent the establishments and empower the common man. For instance, the forex trade largely involves banks and corporates which act on market movements to operate on the remittance space.
When a customer wants to transfer money back home, they are bound for a three day wait as the bank or company explores for a favourable trade for themselves before completing the transfer. Companies such as ours are challenging this very lethargic and age old status-quo, to promote instant money transfer without implementing middlemen or brokers. We are truly empowering the end consumer with a fast and easy system on their fingertips. Why? Because it is 2017!
Besides these key points, transparency has been playing a pivotal role in consumer sentiment; as this generation of consumers have high expectations when it comes to flexibility and sharing of information and data. This factor encapsulates the trust element of an organization. Upcoming firms should take a note of this trend to focus on strategies that implement transparency and flexibility when it comes to communicating your value proposition to the customers.
This year will witness a world of instant digital payments with immediate validation, acknowledgement, and exchange of transaction data between the point of transaction and the seller’s ledger. This is against the 2016 idea of “near real time,” which pertains to accelerated sets that may range from minutes to hours or even more days, real time would be truly, absolutely instantaneous dispensation and processing of information. Lastly, it should be noted that payment systems are crucial to any economy considering their vital role to enable the intermediation process, a core requirement for financial stability. Upcoming technological applications and adoptions like the Blockchain protocol will most likely serve as a key factor in facilitating immediate intermediation, due to its seamless process automation capabilities to keep a ledger sound without human intervention.
