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HSBC has today confirmed that it will no longer provide project finance for new tar sands projects including the construction of any tar sands pipelines. This policy would exclude HSBC from providing project financing for the Keystone XL and Line 3 Expansion pipelines. HSBC also stated that its overall exposure to tar sands will reduce over time.

HSBC’s move, disclosed in its new Energy Policy, is the most recent in a series of decisions by international financiers to distance themselves from the controversial pipelines in North America. French banks BNP Paribas and Natixis, and insurance and investment giant Axa, as well as Dutch bank ING, and Sweden’s largest pension fund, AP7, all made similar announcements in 2017. [1]

Greenpeace is now calling on Barclays, the only other major UK-based bank providing loans for tar sands pipelines, to rule out financing new tar sands pipelines in North America.

Oil from tar sands is one of the most carbon-intensive fuels on the planet because of the large amount of energy needed to extract it. The proposed pipelines are key to the expansion of the tar sands fields in Alberta, Canada. Estimates show Keystone XL alone could potentially add nearly a million barrels of oil per day to current capacity, as well as an estimated 175 million additional tonnes of CO2 per year. [2]

Commenting on the announcement, John Sauven, Executive Director of Greenpeace UK said: "This latest vote of no-confidence from a major financial institution shows that tar sands are becoming an increasingly toxic business proposition. It makes no sense to expand production of one of the most polluting fossil fuels if we are serious about dealing with climate change in a post-Paris world. HSBC has got the message. Now Barclays need to decide if it wants to be the only UK bank offering project finance to tar sands pipelines.”

Annie Leonard, Executive Director of Greenpeace US, said: “The world has changed dramatically since these controversial tar sands projects were first proposed. In the US, we’ve seen record floods, hurricanes and wildfires super-charged by climate change. We’ve also seen a powerful, diverse, and growing movement step up to stop new fossil fuel infrastructure like the Keystone XL pipeline. This move by HSBC is the most recent indication that the financial community has begun to see the increasing risk in funding pipelines. We now expect banks like the US giant JPMorgan Chase and Barclays, who have backed tar sands pipelines in the past, to cease their funding of these dirty projects.”

HSBC has previously participated in revolving credit facilities for TransCanada (the company building KXL) and Enbridge the company building the Line 3 expansion.

HSBC has also ruled out funding new coal fired power stations all around the world with the exception of three countries - Bangladesh, Indonesia and Vietnam where funding may continue until 2023.

Hindun Mulaika of Greenpeace South East Asia said: "By ruling out new coal funding by the end of 2019 in many countries, HSBC has taken a step in the right direction. However, by singling out Indonesia, Vietnam and Bangladesh as exceptions to their coal policy, they are creating a loophole in the countries that are most aggressive in their coal power planning and condemning their citizens to a lifetime of air pollution impacts. HSBC must close this loophole as soon as possible and turn their financial support to accelerating a transition to clean energy.”

  1. BNP Paribas In October 2017 announced a decision to no longer finance “pipelines that primarily carry oil and gas from shale and/or oil from tar sands,” and will sever “business relations with companies that derive the majority of their revenue from these activities.” Dutch bank ING confirmed in June that its oil sands policy excludes financing tar sands pipelines. Sweden’s largest pension fund, AP7, announced that it will divest from TransCanada on the grounds that its proposed pipelines in Canada and the US were incompatible with the Paris Agreement. In December 2017 Natixis pledged to no longer fund “exploration and production projects concerning oil extracted from tar sands; infrastructure projects (pipelines, terminals and others) primarily devoted to transporting or exporting oil extracted from tar sands or companies whose business primarily relies on exploiting oil extracted from tar sands”, and insurance and investment giant Axa announced the “divestment of over Euro 700 million from the main oil sands producers and associated pipelines, and the discontinuation of further investments in these businesses” and no longer providing insurance to tar sands or associated pipeline businesses.
  2. Greenpeace has published a report for banks and their shareholders outlining the financial and reputation risks that banks could face in arranging and providing finance for companies intending to build tar sands pipelines. See Figure 1 on page 3 for estimated additional greenhouse gas emissions per year resulting from proposed tar sands pipelines.
  3. On Wednesday, the controversy over Justin Trudeau’s support for tar sands pipelines followed him to the Commonwealth Heads of Government meeting in London, where the Canadian High Commission was rebranded ‘Crudeau Oil HQ’ and blockaded with a 30m pipeline. Since March, weeks of ongoing peaceful direct actions in British Columbia against the Trans Mountain Expansion tar sands pipeline have resulted in the arrests of about 200 people.

(Source: Greenpeace)

Six out of 10 people with currently no exposure to cryptocurrencies would consider including cryptocurrencies like Bitcoin into their investment portfolios, reveals a new global poll.

Meanwhile, seven out of 10 people who do hold cryptocurrencies are planning to increase their exposure in the next 12 months.

In the survey carried out by deVere Group, 62% of those who do not have any cryptocurrency said ‘yes’, 26% ‘no’, and 12% ‘do not know’ when asked: “Would you consider, or are you considering, including at least one cryptocurrency into your investment portfolio?”

71% of investors who do currently have cryptocurrencies as part of their portfolio said that they are looking to increase this exposure over the next year, 25% said that they would not, and 4% cited that they did not know.

The 800-plus respondents of this poll are deVere clients who currently reside in the US, the UK, Australia, the UAE, Qatar, Switzerland, Hong Kong, Spain, France, Germany and South Africa.

Of the survey, deVere Group’s founder and CEO, Nigel Green, comments: “The fact that more than 60% of people with currently no exposure to cryptocurrencies would consider including them into their investment portfolios is striking.

“It underscores how, despite what many financial traditionalists have opined, that a majority of investors are now open to consider the opportunities that the likes of Bitcoin, Ethereum and Ripple could present.

“An increasing general awareness of cryptocurrencies and how they work, plus a growing sense that cryptocurrency regulation is now inevitable, are perhaps the main reasons why such a high percentage of people are now open to looking at the possibilities of crypto for their portfolios.”

He continues: “The survey also highlights that the majority of those who do currently hold some cryptocurrency as part of their investment portfolio believe that despite ongoing volatility, the potential rewards will outweigh the potential risks.

“It suggests that these investors expect good returns in 2018 from cryptocurrencies, view them as a good longer-term investment, and that the market will eventually stabilise.”

The deVere CEO concludes: “Cryptocurrencies remain a gamble – they are very much ‘unchartered waters’ assets and caution must be exercised.  However, that said, I do believe that in today’s digital world, there is a need for digital currencies.  One or two of the existing ones will succeed, whether it’s Bitcoin, Ethereum, Ripple, Litecoin, Dash, or any of the others, or not, of course remains to be seen.”

(Source: deVere Group)

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

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

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

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

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

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

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

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

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

  1. Don’t wait to follow a disruptive competitor

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

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

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

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

  1. Analytics are key for personalisation

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

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

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

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

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

  1. Venture out into new areas

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

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

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

  1. Always go above and beyond

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

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

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

Always a chore, never a pleasure

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

Within every business, there will be those who suffer in silence to the point that control is lost and the very act of getting out of bed becomes utterly overwhelming. Statistics show that employees in the finance sector suffer more than most when it comes to mental health.

Employees are still reluctant to share mental health information with their managers or bosses, seemingly for good reason. The stigma associated with mental health, being treated unfairly, becoming the subject of office gossip or compromising their employment terms are all legitimate fears.

To tackle this global workforce issue, Instant Offices encourage businesses to support their teams to speak about and prioritise mental health, promote a healthy work-life balance, reduce the stigma attached to mental health issues and introduce initiatives to support and encourage staff who choose to speak up.

Mental Health and Work in the UK

Studies from Manpower Group suggest that millennials display the highest levels of anxiety, depression and thoughts of suicide of any generation, considering they are also simultaneously on the cusp of becoming the largest global workforce by 2020.

According to Deloitte, the average person spends 90,000 hours of their life working, and poor employee mental health can be due to factors internal or external to the workplace. Without effective management, this can have a serious impact on physical health, productivity and more.

In the modern workplace, smart employers are placing workplace wellness at the core of their business by recognising the importance of their staff. They are going beyond protocol, processes and profits to ensure individuals feel valued and supported. Wellness and workplace health initiatives are varied but include everything from serious interventions and counselling services to mindfulness training, flexible working and even options like yoga, time off and massages at work.

That said, an alarming number of companies are still avoiding the topic of mental health in the workplace. A report by the Centre for Mental Health revealed that absence due to mental health cost the UK economy £34.9 billion last year. Additionally, the economy lost:

It’s Time to Prioritise Wellbeing at Work

Of the 5 million people being signed off from work every year, data from NHS showed an alarming 31% are taking time out due to mental health, with a shocking 14% rise in doctor’s notes relating to anxiety and stress in one year. This is why the NHS has called on businesses to wake up to the reality of mental health and its dire effects on the wellbeing of its employees and on overall workplace success.

Here’s what employers can do:

  1. Minimise the stigma: A study from Business in the Community shows, only 53% of employees feel comfortable talking about mental health issues like depression and anxiety at work. Instead of making employees feel like liabilities or burdens, employers need to take active steps to encourage conversations around these issues. Taking a mental health day or asking for support around mental health issues should not impact an employee’s reputation and how they are treated at work.
  2. Pay attention: Around 91% of managers agree that their actions affect their staff’s wellbeing, however, only 24% of managers have received any training in mental health. This lack of training and sensitivity only works to perpetuate the culture of silence around mental health and wellbeing at work. Companies should be working to combat this by monitoring employee stress, encouraging communication and taking active steps to increase knowledge around the issue.
  3. Be more flexible: There are several ways to boost employee engagement and happiness in the modern workplace. Around 70% of employees want a say in when and how they work, and a growth in flexible working shows more businesses are responding. Introducing a flexible working option is one of the ways businesses can prioritise their employees’ personal needs while benefitting from their productivity boost, too. Data from LSBF shows nearly half of employees advocate for flexible working hours as a way to reduce workplace stress and anxiety, increase productivity, and to improve morale and engagement.
  4. Introduce mental health initiatives: It is crucial to increase employee awareness of mental health at work, support employees at risk and take steps to support those suffering from mental health problems. Education is key, and strategies need to be tailor-made to suit each business and its needs. Aside from increasing workplace happiness with perks, time off and better communication, businesses need to look at long-term policies which advocate for better treatment for at-risk employees from every tier of the organisation.
  5. Manage via a coaching approach: Historically, tyrannical managers focused on ‘the numbers’ or ‘getting the job done’ have been the norm, but fortunately, the modern workplace has changed. Today, the manager who adopts a more holistic approach by focusing on the growth and development of their team, personally and professionally, will see greater results and engagement. Investing in a coaching approach has shown clear improvements across all areas and improved trust between managers and employees. Getting this balance right enables employees to speak about their levels of stress, their worries about their role and more.

Placing health and wellbeing at the heart of business can help employers attract and retain talent, improve productivity and happiness, and positively impact the bottom line.

Educating the workforce on the availability of such programmes where they can find support in a confidential and respectful manner, will help to address personal challenges before they become overwhelming.

There's no doubt that these are strange times in the digital age. Whilst the advent of technological innovation has made it easier than ever for individuals to access products and launch businesses, for example, stagnant economic growth and global, geopolitical tumult has prevented some from maximising the opportunities at their disposal.

Make no mistake; however, the so-called “Internet of Value” has the potential to change this and create a genuine equilibrium in the financial and economic space. In this article, we'll explore this concept in further detail and ask how this will impact on consumers and businesses alike.

tellhco.com

So what is the internet of value and how will it change things?

In simple terms, the Internet of Value refers to an online space in which individuals can instantly transfer value between each other, negating the need for middleman and eliminating all third-party costs. In theory, anything that holds monetary or social value can be transferred between parties, including currency, property shares and even a vote in an election.

From a technical perspective, the Internet of Value is underpinned by blockchain, which is the evolutionary technology that currently supports digital currency. This technology has already disrupted businesses in the financial services and entertainment sectors, while it is now evolving to impact on industries such as real estate and e-commerce.

What impact will the Internet of Value on the markets that its disrupts?

In short, it will create a more even playing field between brands, consumers and financial lenders, as even high value transactions will no longer have to pass through costly, third-party intermediaries to secure validation. This is because blockchain serves as a transparent and decentralised ledger, which is not managed by a single authority and accessible to all.

This allows for instant transactions of value, while it also negates the impact of third-party and intermediary costs.

What will this mean for customers and businesses?

From a consumer perspective, the Internet of Value represents the next iteration of the digital age and has the potential to minimise the power of banks, financial lenders and large corporations. In the financial services sector, the Internet of value will build on the foundations laid in the wake of the great recession, when accessible, short-term lenders filled the financing void that was left after banks choose to tighten their criteria.

Businesses and service providers will most likely view the Internet of Value in a different light, however, as this evolution provides significant challenges in terms of optimising profit margins and retaining their existing market share. After all, it's fair to surmise that some service providers (think of brokers, for example) would become increasingly irrelevant in the age of blockchain, while intermediaries that did survive would need to seek out new revenue streams.

The precise impact of the Internet of Value has yet to be seen, of course, but there's no doubt that this evolution will shake up numerous industries and marketplaces in the longer-term.

The international community’s anti-money laundering watchdog is on UK soil putting the country through its paces.

Inspections of Britain’s defences against terrorists and money launderers by the Financial Action Task Force (FATF) are relatively rare but hugely important. The last evaluation was in June 2007 and negative findings can severely impact the country’s reputation in the war on terrorist financing and the laundering of criminal proceeds.

During the two-week visit, the UK has to prove to officials from some of the other 36 participating FATF countries that it has a framework in place to protect the financial system from abuse. The top secret inspectors have an “elaborate assessment methodology” but those involved are not allowed to talk publicly about the visit. The results of the inspection will be presented at an FATF Plenary session in October.

Julian Dixon, CEO of specialist Anti-Money Laundering (AML) and Big Data firm Fortytwo Data, comments: “AML supervisors are going to be on high alert this week because it’s not just public sector bodies who are inspected, but private organisations too.

“It’s also extremely timely, given the recent poisoning of ex-Russian spy Sergei Skripal, his daughter Yuliain and a policeman who came to their aid.

Tellhco

“The UK has been accused of being a soft touch for gangsters, politically exposed persons (PEPs) and criminal gangs, a theme that recently entered the popular imagination because of the TV series McMafia, written by journalist Misha Glenny.

“It’s unclear if this still holds true in the UK today, and that’s what the FATF are here to find out.

“It is up to the country being inspected to prove they have the right laws, systems and enforcement in place and the potential for reputational damage is high.

“After a recent inspection of Pakistan, FATF gave the country three months to prove it is doing enough to stay off an international watch list of those failing to curb the financing of terror groups.”

(Source: Fortytwo Data)

Various expert Partners at Crowe Clark Whitehill, a leading audit, tax and advisory firm, share their expectations below ahead of the UK Chancellor Phillip Hammond's Spring Statement tomorrow.

Dinesh Jangra, Partner, Head of Global Mobility Solutions, calls for measures to help the UK retain and attract talent and investment: “Let there be no doubt, UK PLC will benefit immensely from the world’s best talent being here. The question is what role can the UK tax system play in encouraging this?

Regardless of what is announced in the Spring Statement, Brexit looming in the background and this is causing concerns around the UK’s attractiveness for talent and investment. With that in mind, I would like to see the UK tax system in the area of mobility (expatriate tax breaks) being reviewed to enhance UK attractiveness. The tax effectiveness of non-domicile status has been eroded over time and while we have overseas workday relief and temporary workplace relief, I question if they are enough to continue to attract the best talent to the UK. Often, employers take on the UK income taxes due in respect of employees under tax equalisation arrangements so more UK tax breaks can reduce overall employer tax costs.”

Stacy Eden, Head of Property and Construction, calls for a stamp duty cut and a freeing up of Green Belt land to reinvigorate housebuilding: “An SDLT reduction would free-up liquidity in the market, which will ultimately increase housing transactions and sales, which are currently at extremely low levels. We may even find that it raises more money. There is a broader concern that our tax system is not favourable to property investors and developers, which is not surprising given we have one of the highest property taxes amongst OECD countries.”

“I’m looking out for the Chancellor’s approach to simplifying the planning process. He could reinvigorate UK housebuilding by freeing up more areas of Green Belt land. Investing in planning departments to try and get closer to housebuilding targets is of great importance. We are currently well short of targets and this is contributing to higher house prices in certain areas.”

Rob Marchant, VAT Partner, calls for VAT reform to stimulate the residential build-to-rent market: “It may be an ambitious ask, but I would like VAT changes to encourage the residential build-to-rent market. If rental income were treated as zero-rated rather than VAT exempt, it would allow landlords to reclaim VAT on running, management and repair costs.”

Matteo Timpani, Partner, Corporate Finance, calls for Entrepreneurs Relief to be expanded: “I would like to see the government retain and even expand the reach of Entrepreneurs’ Relief (ER) and other tax reliefs, aimed at rewarding enterprise for UK entrepreneurs.

Recent soundings around restrictions to Enterprise Investment Scheme (EIS) relief and other reliefs designed to foster growth in the UK economy can cause uncertainty among a community of risk accepting entrepreneurs, the success of which, in the mid-market, drives our economy.

The government should be careful not to underestimate how much of an incentive ER is for business owners to drive growth and ultimately create wealth and jobs for the UK economy as a whole.”

Johnathan Dudley, Partner, Head of Manufacturing, calls for clarity around pensions for SMEs: “With Brexit on the horizon and the possibility of yet another general election, what businesses really need is a period of stability and for politicians to provide some certainty.

Provided this ‘certainty’ is forthcoming, I would expect to see further changes to pensions provisions, aid for businesses to strengthen their international trade capabilities and the tightening of provisions to IR35 and tax evasion rules around employment and self-employment.

Many SMEs have invested time and effort into dealing with pension auto-enrolment duties and a relief for these businesses around payroll provision would be welcomed and well deserved.”

Caroline Harwood, Partner, Head of Share Plans and Reward, calls for clarity about remuneration in light of the Rangers EBT case: “During 2017 we saw the introduction of yet more measures to tackle remuneration structures designed to avoid tax, including a charge on all outstanding ‘disguised remuneration loans’ made to employees by Employee Benefit Trusts (EBT) or other third parties, as well as the new ‘close company gateway’.

The Supreme Court decision to favour HMRC in the ‘big tax case’ against Rangers FC brought the ‘redirection principle’ into the foreground, in ruling that payments via EBTs qualified as taxable income. Initially, the interaction between this new case law, the disguised remuneration rules and arranging such salary sacrifice into a pension scheme, was unclear.

HMRC have made statements as to how they expect these rules to interact in certain cases in the future, but formal clarification in the Spring Statement would be welcomed.”

Financial professional and Founder of Texas-based Hybrid Financial Rocky Campbell established his company to offer premier retirement services and believes in doing business with integrity. Below, he discusses the financial services that his company offers, as well as his tips for a well-organized retirement plan.

 

Please tell us a little about the financial services that you help clients with.

While Americans are presented with an ever-changing financial marketplace, making the right financial decisions at the right time can be critical to achieving their financial security and accomplishing financial objectives. Hybrid Financial will guide the process of identifying financial goals, account organization, risk analysis, and problem solving to help their clients accomplish their financial goals safely and simply.

 

What would you say are the specific challenges of assisting clients with financial solutions?

Not every client is a right fit us and realising that from the start will save both of us time. I’m not the jack of all trades I’m a specialist. Specifically, a specialist in safe money solutions and income producing retirement strategies. I’m real - I don’t tell people what they want to hear. I stick to a single message - safety of principal. I’m a hardworking and straightforward person I believe that if you do the right thing for people, things will work out for you.

 

What are the most important aspects that need to be ironed out in order to achieve satisfactory result and a well-organized retirement plan for your clients?

We form a strategy that will best fit the client’s needs and will help them feel confident about their financial future.

 

How do you assist clients with finding out if they are compliant with federal requirements applicable to retirement?

Compliance is important. Our compliance officer will ensure that as the world changes around us, we change with it and notify our clients of any regulations that need to be adhered to.

 

How can your clients ensure that as much of their estate goes to their family on their death?

We use beneficiary driven products that bypass probate and go directly to the named beneficiary. We believe that all money should go to the family. A living will, or trust can also assist in providing clarity during time of death.

 

What’s Hybrid Financial’s philosophy?

I don’t do things that I don’t really, really believe in. And something I believe in is the message of the tortes and the hare. Now the hare was fast, but the tortes won the race. Slow and steady wins the race. If we can prevent our clients from going backwards and losing any of their assets to fees and stock market declines, they have more power to win the money game. That’s what I do - I help people slowly and steadily win their financial race, one person at a time.

With more businesses looking to finance the next chapter in their expansion and meeting dead ends, is it time to consider a different method.  Whilst traditional lending can help, more and more business are using Peer-to-Peer lending to ensure that when they need to take the next step of their growth they can do so without the constraints that can come with conventional lending.

This month, Finance Monthly had the privilege of speaking with Angus Dent, CEO and Jerry Gilbert, Commercial Director at strongly growing peer-to-peer (P2P) business lending platform ArchOver. Founded by Angus, together with COO Ian Anderson, in 2014, to date the company has facilitated over £60million in total lending and is fully FCA-authorised. Angus is responsible for developing the overall policy and strategy of the business and ensuring its delivery by the management team. On a day-to-day basis, he is also engaged with borrowers, high-value lenders and strategic partners. Jerry joined ArchOver in September 2017, to provide strategy and structure around ArchOver’s growing commercial activities.

Here they tell us about the optimistic atmosphere surrounding the company at the moment and the significant appetite for the way ArchOver lends.

 

Typically, what do companies use the finance raised through ArchOver for?

Angus: Our borrowers use the finance raised through our platform for a wide variety of things – no two businesses are alike, after all. They might need a cash injection to fund a bigger office, or to service a major new contract they’ve just won. Or they might be looking to refinance after finding that their existing facility isn’t willing to grow and change with them – we can help them to pay off their existing commitments and secure additional finance to fund their next stage of growth. For some companies, it’s used as day-to-day working capital, freeing up other funds for growth activities.

Jerry: The key point is that SMEs can’t achieve their full potential without the right financing.

For many of the companies that make it out of the start-up phase, financing can be hard to come by.

Many waste months or even years chasing down a single angel investor or debating back and forth with the big banks. SMEs’ great strength lies in their agility, and they need agile funding to match that. The P2P model makes the funding process shorter and simpler, and helps companies get on with the business of growing.

 

What are the risks of peer-to-peer lending?

Angus: It’s probably best to think about it in terms of the security provided rather than the risks involved. When you’re selecting a peer-to-peer investment or loan to make, you’d naturally want to know about that security that’s provided with it. At ArchOver, when we consider levels of security, we typically look at trade debtors and contracted recurring revenue, both of which are assets that offer good security, since both of them provide cash from which a loan can be repaid. In my opinion, when evaluating security, people would want to look at an asset that is designed to turn into cash - because this means that there’s a flow of cash, which will guarantee the repayment of their loan.

An asset such as property in contrast, is a very liquid asset and would not be as secure, since it could take years to sell a property and there’s not necessarily any cash that flows from it. It’s vital to evaluate how security fits with your objectives and with what you find acceptable.

Jerry: It’s also worth mentioning that ArchOver is quite unusual in looking at those two parts of the business. Many of our competitors in the peer-to-peer space and the traditional lending space will achieve their security from a personal guarantee which is in most instances attached to the company director’s property and has all sorts of connotations.

Angus: This should then make you question whether it provides any security at all - you’re lending to the business. Either the business can afford and service the loan or it can’t. What value does bringing additional assets into play have?

 

How do you evaluate the ability of a business to fulfil its repayment commitments?

Jerry: Evaluating a business’ ability to fulfil its repayment commitments is not a simple, one-off job. Here at ArchOver, the process covers the entire lifecycle of the borrower, from the moment they are in touch with our Commercial team, to when the loan is fully repaid.

Every prospective borrower must pass through our extensive Credit Analysis before their loan is made available to lenders on the ArchOver platform. The Credit team invests a considerable amount of time – on average four days – to fully review the potential borrower. Should the borrower be approved by the Team, the Credit Committee will review, and make the final decision. Once the loan has funded on the ArchOver platform, we monitor monthly both the asset value and the management accounts against forecast throughout the loan term. We also perform multiple on-site visits before and throughout the loan term. This allows us to get to know the business intimately – its challenges, its strengths and its weaknesses. We can continuously assess the borrower’s position, so we can identify and handle any new risks as (or preferably before) they arise within the borrower’s business. We believe we are the only P2P lender to conduct this kind of monthly monitoring.

Angus: We employ a traditional ‘Five C’ approach: Character, Capital, Capacity, Conditions and Collateral. Understanding a business is a complex, multi-dimensional challenge and we employ both quantitative and qualitative elements when reaching judgments. We have a detailed process we follow to deliver a number of key metrics so that our Credit Committee can take an authoritative decision on which companies should make it onto the platform.

 

Angus, how was the idea about ArchOver born?

Angus: Through our own experiences as entrepreneurs and directors, we realised how difficult it was to raise working capital in the range of £100,000 to £5 million. We also saw that those with cash were earning next to nothing in interest and that, for those potential investors, security was imperative. Our first thoughts of how to overcome these issues became the founding principles of ArchOver, and so we set out to support UK businesses and UK investors alike in a fair and innovative way.

 

What makes you different to other P2P lenders?

Jerry: In short, what makes us different is our human-touch. There is always someone available for you to speak to. Whether you are a borrower or a lender, we want to listen and engage with you so we can be as helpful as possible. Providing a personal service is at the heart of what we do.

More specifically, on the borrower side, we seek to facilitate lending in a way that is business-driven, business-focused and business-friendly.

Our loans are fixed amount, meaning there is no unpredictable facility fluctuation, and they are fixed-term and fixed-rate, allowing the borrower to plan ahead. Many of our borrowers have sought an ArchOver loan to help them exit an expensive and time-consuming invoice discounting facility, because we appreciate that a loan should be there to support a business, not to sap its resources. Similarly, we do not take personal guarantees, allowing directors to keep their business separate from their personal life.

Angus: On the lender side, we prioritise security without compromising interest rates. Our Credit Analysis is one of the most thorough in the sector, and we are the only platform to monthly monitor the business and security throughout the loan term. With the exception of our Research

In a time when interest rates are skimming along the bottom of the graph, we know how important it is to make your money work for you. ArchOver lenders can receive between 6 – 9%p.a., and on average earn a return of 7.3% p.a.

 

What are the company’s mission and values?

Jerry: Put simply, ArchOver exists to help businesses access the funding they need to grow, and to help investors make a secure, worthwhile return on their money.

We are committed to treating UK businesses and investors fairly. If a business has the assets to sustain borrowing, we want to give them the chance to get up and running quickly. We also believe that investors should be able to secure favourable returns without having to take on unnecessary risk.

We believe in transparency throughout the entire process. Our borrowers are never left in the dark (which is sadly a common occurrence with the banks) and our lenders have access to information sufficient to allow them to make an informed decision on which loans they want to invest in.

Last and most certainly not least, we are helpful, focused and flexible. We are here to help you achieve your business or investment goals.

 

Have your values changed over the past 4 years?

Angus: No. What has changed is the way in which we do things, not our ethos. We expanded our offering to lenders and borrowers by introducing our ‘Secured & Assigned’ model in January 2017, and have also introduced our ‘Bespoke’ model.

This means we can offer our funding solutions to a greater range of UK businesses, while maintaining security for lenders. For lenders, we are looking to introduce an IFISA early this year, alongside some other services. Watch this space!

Chatbots are quickly becoming the interface of choice for many organisations. In fact, a recent survey conducted by Oracle revealed that 80% of businesses want chatbots by 2020. While the advances in Artificial Intelligence (AI) and mobile technology have created a new set of tools for brands to communicate with, the technology itself has yet to reach a mature state, and is consequently strongly vulnerable to cyberattacks. This is according to Simon Bain, the cybersecurity expert and CEO of BOHH Labs.

Current bot solutions are not entirely secure and can create open passages for cyber criminals to access the data flowing through chatbot’s interface. In essence, this gives cyber attackers direct access to an organisations’ network, applications and databases.

Bain explains: “While bot technology has improved drastically in recent years, for maximum security, chatbot communication should be encrypted and chatbots should be deployed only on encrypted channels. This can be easily set up on an organisation’s own website, but for brands that use chatbots through third-party platforms such as Facebook, the security features are decided by the third party’s own security branch, which means the organization does not have as much control over the security features on the chatbot. Until public platforms offer end-to-end encryption in their chatbots, businesses should remain cautious.

“One of the biggest advantages in using chatbots is that they are a cheaper solution to customer service. They can serve and reach customers in a way that would otherwise require a tremendous amount of time and resources. This is an area where chatbots are gaining momentum, but instead of bots replacing entire customer service teams, organisations are working with them in tandem to improve customer satisfaction. However, as chatbots collect information from users, the information that is stored and the metadata must be properly secured. When running a chatbot, organisations must consider how the information is stored, how long it’s stored for, how it’s used, and who has access to it. This is especially important for highly regulated industries, such as finance, that will deal with sensitive customer information.”

“While there are clear advantages to integrating chatbot technology as a new communication tool, if companies aren’t made aware of the potential security risks, confidential data will be accessible by any determined hacker. Additionally, attackers may be able to repurpose chatbots to harvest sensitive data from unsuspecting customers.” Bain concludes.

(Source: BOHH Labs)

New research commissioned by Oddsmonkey reveals that Brits are using side hustles to help cover the cost of living.

As the annual inflation rate doubled from 1.2% to 3.1% in the past year, the average monthly wage of £1538.97 is not enough to cover the cost of living for almost a quarter of Brits (24%).

Because of this, 25% of working employees have resorted to a side hustle to earn extra money with 36% of those having 3 or more ways of making extra cash.

The study also found that while some Brits take up side hustles to help with living costs, many take them up to fulfil their passions with over a third (34%) finding their sources of additional income more fulfilling than their full-time job, and almost four in ten (39%) of Brits admitting that they wish their side hustle could be their main job.

Brits earn nearly £3000 a year renting out a spare room or blogging for extra cash

The matched betting experts polled 2,000 Brits on their additional sources of income, to discover the side hustles Brits are taking up to become more financially secure.

The study discovered the majority of Brits are concerned with being unable to cover the cost of their bills (48%) and their rent/mortgage (28%), and therefore adopt a side hustle to earn extra cash.

68% of Brits sell their unwanted items on eBay and Facebook marketplace this side to earn an average of £165 a month, making it the most popular side hustle adopted by Brits.

Most popular Side Hustles % of Brits that do this Average monthly earnings
Making crafts and selling them on 46% £163
Baking and selling goods 37% £183
Rent out a spare room 35% £241
Rent out a driveway 33% £217
Sell second-hand items 68% £165
Blog 35% £231
Sell beauty products 33% £249

Despite not being the most profitable side hustles, making crafts and baking were found to be the most enjoyable – showing that while Brits want to earn more money, they want their additional sources of income to be something they enjoy doing.

Selling beauty products through direct selling companies such as Avon was found to be the most lucrative side hustle, with the third of Brits taking this up, earning an average of £249 commission a month.  Renting out a spare bedroom and blogging were also found to be lucrative side hustles with Brits raking in an average of £241 and £231 per month respectively.

More than 1 in 3 Brits with a side hustle don’t declare their extra earnings

Those with a side hustle are earning nearly £3,000 a year on top of their yearly salary and many admitted to dodging tax.

Despite earning over the £1,000 annual allowance, 34% of those with a side hustle confessed to not declaring their extra earnings.

The research also revealed that it’s not only those in full-time employment who have side hustles, students are also taking advantage of side hustle to cover the increasing cost of living in the UK.

Earning on average £895 a month and not receiving any help from their parents (47%), 1 in 3 students have taken up a side hustle to earn extra cash and are interestingly making more money than the average Brit.

Younger Brits earn £78 more a month than the average Brits from making and selling crafts (£241), £69 more for blogging (£300), and £17 more a month for baking (£200).

Peter Watton, spokesman for Oddsmonkey comments on the research: “With the constantly increasing cost of living, we were hardly surprised that Brits are having to take up side hustles in order to earn themselves some extra cash. While it is great that Brits are using their passions to earn extra income, it is important to remember to declare any income over £1000 to ensure you don’t get in trouble with the tax man!”

(Source: Oddsmonkey)

Far from taking human jobs in future, Artificial Intelligence (AI) and Machine Learning (ML) technologies are going to free up finance professionals from spending too much time on monotonous tasks and allow them to focus on more strategic tasks of higher value to the business. Does this mean that finance roles will mostly be driven by robots? Below Tim Wakeford, VP of financials product strategy EMEA at Workday, discusses with Finance Monthly.

A recent EY study revealed that the majority (65%) of finance leaders said that having standardised and automated processes—with agility and quality built into those processes—was a significant priority when it came to investing in emerging AI and other technologies. And, following on from this, 67% of finance leaders said that improving the relationship between finance and the wider business strategy was also a key priority.

Again, this is an area where automation and AI technologies are helping free up time for finance to spend more time working with other teams within the business. This enables them to figure out where to go next as opposed to looking backwards and dealing with unproductive and time-consuming legacy finance systems.

Freeing up talent to focus on high-value tasks

Freeing people up from repetitive jobs to enable them to focus on high-value tasks is the opposite of the oft-cited “robots putting people out of work” narrative.

Indeed, automation is a huge opportunity to reduce the unnecessary burden and pressure that’s put on finance professionals, particularly around traditional tasks such as transaction processing, and audit and compliance.

The adoption of AI applications within finance enables forward-thinking executives to move info far more strategic business advisory roles. This means that they can focus less on number crunching and more on financial analytics and forecasting, strategic risk and resilience, and compliance and control. This shift to data-driven financial management delivers a much wider benefit across the business.

The Rise of the robots: AI in finance

Computer systems performing tasks that previously required human intelligence is the definition of AI, with experts viewing AI and automation as viable solutions to efficiently deal with compliance and risk challenges across different sectors.

With the rise of the ‘big data’ era comes a parallel growth in the need to analyse data for financial executives to be able to properly manage compliance and risk.

This is another reason why finance teams cannot ignore the opportunities that embracing AI technologies offers them. It allows them to process vast amounts of data faster and easier than large teams of humans can.

Individuals are then able to make better strategic decisions based on the information that AI is able to rapidly extract from what were previously time-consuming and repetitive and monotonous tasks such as transaction processing.

Jobs least likely to go to robots

Forward-thinking and highly-skilled financial executives are happily embracing AI, as they see the clear opportunity it presents to play a more valuable and strategic role within their organisation.

“The challenge for managers will be to identify where automation could transform their organisations, and then figure out where to unlock value, given the cost of replacing human labour with machines and the complexity of adapting business processes to a changed workplace.” This is how writers James Manyika, Michael Chui and Mehdi Miremadi so fittingly describe the process in their book These Are the Jobs Least Likely to Go to Robots.

“Most benefits may come not from reducing labour costs but from raising productivity through fewer errors, higher output, and improved quality, safety, and speed.”

AI and automation in finance has to be about reducing repetitive manual tasks and raising overall productivity through data-driven business strategy. The bottom line is this: any technology that can reduce manual input and the associated human errors for transaction processing and governance, risk, and control (GRC) will free up finance professionals for more strategic work.

Any organisation’s most important asset is its people. And finding out which emergent AI technologies and applications are the best for a business and its people is going to be key for the future of finance.

Giving skilled finance staff the autonomy and opportunity to move into far more strategic data interpretation roles and letting the machines take on the grunt work is a necessary shift in the finance function.

As well as automating a large part of the finance function, AI technology will also help skilled finance executives to make a far more sophisticated analysis of complex data sets and to provide genuinely valuable insight to drive the business forward.

There is very little doubt that the future of finance will be one that embraces technological innovations to improve effectiveness, increase efficiency, and enhance insight.

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