There are just six months left until Open Banking phase two begins, when customers will be able to digitally access and securely share their bank transaction data to get the most from their finances.

The initiative will encourage financial service providers to offer high quality, targeted services and in turn boost competition.

Roger Vincent, Head of Banking and Innovation at Equifax, comments: “The banking industry is set for a huge customer-centric shake-up with the implementation of Open Banking phase two in January 2018. This exciting development will dramatically change the customer banking experience, helping consumers and businesses to use their financial transaction data to access products more easily and better understand their finances.

“The initiative kicked off earlier this year with stage one, where the ‘CMA9’ (nine banks mandated by the Competition and Markets Authority) provided improved access to information such as ATM locations and product listings. The second stage is the real game changer, with bank transaction data made available digitally for consumers and businesses to share securely, and only with their agreed consent, via open application program interfaces (APIs). Through the open APIs the data can be used by authorised third parties to build new high quality and targeted services, including new digital offerings, facilitating a more competitive environment.

“The ability for transaction data to be used for automated creditworthiness and affordability assessments, fraud detection and product accessibility is endless. Customers will be able to control how their financial data is shared digitally and provide a deeper picture of the way they manage their money. This could mean a quicker, more secure and fully digital mortgage application process or faster access to finance for a new business venture. For those currently underserved by the market, for example young people or the self-employed, it could mean the start of a journey to better financial health.

“Over the next six months, banks need to embrace the move towards a more transparent banking world. To do this successfully, preparations must focus on meeting the long-term practical benefits of consumer empowered data sharing rather than approaching this change as a tick-box compliance activity.”

(Source: Equifax)

Cyberattacks have been widespread, common, and even expected now at firms worldwide. Many companies have been affected by cyber hacking, ransomware and threats, with reports emerging almost weekly about new attacks. It is now acceptable to be worrying about cybersecurity at a priority level, and if you aren’t, well you should be.

Finance Monthly, in this week’s Your Thoughts, asks what might be the long-term impact of cybersecurity attacks and similar cyber damage, not just to the individual firms and their pockets and operations, but to the markets they trade in, the economy of the countries they reside, and the overall global fluidity of markets.

Our guests this week answer questions such as: What are cyberattacks, the effects and impacts, doing to markets, the economy and our countries? How is trade affected in certain sectors? Do you have stats to show this? How do you think companies will react to cyber threats?

Dr Benjamin Silverstone, course leader for computing and quantitative business, Arden University:

The recent ransomware attacks have very publicly demonstrated vulnerabilities in business IT security. Firstly, the direct impact is that the business infrastructure is affected. Companies can be left unable to process orders, causing their operations to shut down, which directly affects their finances along with those of stakeholders. This leads to a second impact on business; consumer confidence.

A number of cyber-attacks in recent years have focused on obtaining personal details of customers and, where possible, defrauding them by pretending to be a familiar company. Rather than blaming the faceless cyber-criminals, consumers will increasingly turn to the company that is being impersonated to ask how this sort of thing could happen in the first place. The readiness to share details online, even with legitimate companies, is being affected and this will damage their business in the long term.

Ultimately, businesses need to consider the cost/benefit of investing in better security systems and changes in practice, to reduce the impact on their business-critical processes. Investment in these approaches may be seen as disproportionately high given the likely impact of an attack; but as we’ve seen successful attacks can, and do, negatively impact reputation in significant ways, and it is these intangibles that are hard to regain. Rather than an expense, improving security should be viewed as an investment, and insurance against brand damage to help ensure future longevity.

Oz Alashe, CEO, CybSafe:

When WannaCry struck in May, shares in cybersecurity and anti-virus companies surged. Once bitten, twice shy is the old adage, and being crippled by a cyber-attack makes for an uncomfortable AGM. The logical outcome from a global cyberattack is that companies invest in the latest cyber technology to prevent themselves being the next victim.

However, cyberattacks cover many facets. It can also include embarrassing phishing attacks that pranked the Morgan Stanley CEO, James Gormley, and the Bank of England’s Mark Carney recently. Phishing, albeit only one attack vector available to cyber criminals, is particularly noteworthy at present. A recent government survey suggested three-quarters of medium to large businesses in the UK had discovered at least one cybersecurity breach or attack, and a vast majority of these attacks were phishing emails or websites. The report also stated that a “sizeable proportion” of businesses didn’t have “basic protections” in place.

The National Crime Agency recently said that “many businesses failed to report attacks for fear of damaging their reputation.”

One of the biggest phishing incidents in recent history affected Google and Facebook, which both were scammed out of over $100 million in a sophisticated attack. This is concerning because it affects the supply chain and trade relationships. Trade is driven by trust, and if you can’t trust who you are trading with, it undermines the relationship.

What is the answer? Build trust; if you can equip staff with the skills to detect and prevent phishing and other cybercrime attempts you can empower everyone to be the first line of defence for cyberattacks.

Inga Beale, CEO, Lloyd’s:

Cyber-crime already costs an estimated $450 billion a year[1], and that figure is going to rise as more and more devices are connected to the internet and the sophistication of attackers grows.

This is having – and will continue to have – a huge impact on businesses. Lloyd’s new report on cyber risk, ‘Closing the Gap’, produced in association with KPMG and legal firm DAC Beachcroft, shows that as well as the immediate costs caused by cyber-attacks, slow-burn costs such as, litigation, loss of competitive edge and reputational damage can substantially increase the final bill. In today’s multi-media world, it can be the reputational fallout from a cyberbreach that kills modern businesses.

At the same time, more stringent regulations are being put in place, such as the EU’s General Data Protection Regulation – or GDPR – that will increase the penalty for companies that fail to protect European data from cyber threats. When this comes into force in 2018, the courts will be able to fine companies up to EUR20m or 4% of global turnover, whichever is higher, if they fail to comply with the new rules.

Despite these growing implications, it’s clear that many businesses are not facing cyber risk head-on. Recent Lloyd’s research shows that while 92% of respondents said their company had suffered a data breach in the past five years, only 42% are worried about suffering another breach in the future.

Nicola Whiting, COO, Titania:

The annual cost of cybercrime to the global economy is estimated to be between $375 billion and $575 billion (Mcafee, Net Losses - Estimating the global cost of cybercrime, June 2014) . Unsurprisingly the richest countries are hit hardest, with G20 nations suffering the bulk of losses. Low-income countries currently have smaller losses, partly due to their infrastructure and reliance on mobile Internet.  However, this may change as richer countries continue to invest more in their cyber security and as criminals find new ways to exploit mobile platforms.

The impact on countries is just as important when it comes to international relations. Just look at the hack of the Democratic party and the publication of confidential emails during the 2016 US presidential election, which elevated cyber security in the context of international affairs to a new level around the world.

Hackers will target any industry they can profit from, thus is highlighted by the wide range of nations and industries impacted by the ransomware attack last month. Aside from any financial loss the biggest impact can be on reputation and share price.

However, analysis shows that some sectors are potentially more at risk than others. For example, according to PricewaterhouseCoopers’ 2014 Global Economic Crime Survey, 39% of financial sector respondents said they had been victims of cyber-crime, compared with only 17% in other industries. Other research from Trend Micro assessed breaches that took place between 2005 and 2015 and showed health care as the most highly targeted industry for data breaches.

Any industry that stores customer information, such as credit card details, is a potential target. In 2015 Hilton Hotels, Starwood Hotels & Resorts, Mandarin Oriental and the Trump Collection all admitted that their payments systems had been compromised. Hilton and Starwood said guests’ personal details had been taken after hackers gained access via payment systems.  Hackers may have turned their attention to hotels after retailers began improving their security following a series of high-profile attacks on US chains in late 2013 and 2014, including breaches at Target and Home Depot. So any business that handles or stores sensitive data is at risk and once one sector builds its defences hackers will target another one they perceive to be weaker.

Most companies are not doing enough to secure the assets they’re creating. Large organisations can have incredibly complex networks and ‘border control’ issues as they can struggle to secure their IT infrastructure & supply chain. Smaller organisations find it easier to understand where their system borders are, but may lack resource and expertise to secure them.

In both there is inevitably more to be done in two key areas; reducing ‘human errors’ through security training and ensuring the ‘security basics’ are followed. The number of costly breaches that occur through basic training and security failures is astonishing – most of which could’ve been averted.

We’ve worked with everyone from the Department of Defence to small SME’s in creating tools to automate these security basics. Security automation is something all businesses should look at, humans beings make mistakes and when that inevitable ‘wrong click’ happens, it’s your next line of defence.

Patrick Martin, Cyber Security Specialist, RepKnight:

According to Forbes, Financial Services are in the Top-5 targeted by cyber-crime. This is borne out by the huge amount of data relating to the financial sector on the dark web. We put some of the UK’s leading financial services companies into BreachAlert, our software tool for searching and monitoring the dark web, and uncovered over 5,000 results. Each find contains thousands of pieces of information about financial services — most are as a result of a data breach one way or another.

Right now, cyber-criminals and bad actors are busy stealing data from within corporate networks and listing it for sale on the dark web. Most organisations neither know about it nor are they equipped to detect or do anything about it. Employee names, addresses, logins, and corporate credit card information is readily available, and companies carry on completely unaware of any illegal activity.

According to the 2017 IBM Ponemon report this year’s study suggests the global average cost of a data breach is down 10% over previous years to $3.62 million, due in large part to a strong US dollar. In the UK they assess £2.48 million to be the average total cost of a data breach. In addition, victims can suffer 5% drop in average stock price the day a breach is announced; 7% loss of customers and 31% of consumers discontinue the relationship. But things are about to get much worse next year when the EU enforces the General Data Protection Regulation (GDPR) with costs for organisations that suffer a data breach to be £20 million or 4% of their annual turnover, whatever figure is higher.

For most businesses, it can be next to impossible to find out if its information is on the dark web. So what can businesses can do to protect themselves? The key is for all businesses is to improve their understanding of how the dark web works, how criminals are using it to buy and sell their data and to put a plan in place to mitigate the damage once their data has been posted on the dark web.

The trick lies in acquiring advanced automated search technology and innovative data management processes. It’s vital for businesses to invest in this type of software that can monitor hundreds of dark web pages and filter and extract information based on things like card numbers and domain names. It’s even more essential to use software which can instantly alert you when your data is being shared or discussed on the dark web. The good news is that this type of software is already on the market and investing in it can save your business from receiving hefty fines from GDPR.

Pascal Geenens, EMEA security evangelist, Radware:

Today there are vibrant online marketplaces where just about anyone—even those with very limited technical knowhow—can buy tools to execute an attack. Cryptographic currencies enable untraceable digital payments, while old-fashioned economics is driving the growth of these marketplaces. Demand for services now outpaces supply, and DDoS-as-a-Service providers can bring in more than $100,000 annually.

Purchasing an attack can be surprisingly inexpensive. On the Clearnet, for as little as $19.99 a month, an attacker can run 20-minute bursts for 30 days utilising a number of attack vectors like DNS, SNMP, SYN and slow GET/POST application-layer DoS attacks. All an attacker has to do is create an account, select a plan, pay in Bitcoin and access the attack hub to target the victim by port, time and method. More advanced and larger botnets are also available for sale on the Darknet.

The motivation for people to pay for such attacks has different drivers, but profit is the most prevailing through the use of Ransom DDoS attack campaigns. The responses from nearly 600 enterprises world-wide confirm this through Radware’s annual ERT report: Ransom is the #1 motivation for cyber-attacks suffered by the respondents: 41% global average, 49% in Europe (half of the businesses!).

Recent trends such as cloud migration, digital transformation, automation (IoT, IoE) and serverless computing increase the number of targets for cyber-attacks. As our economies are becoming more dependent on these online technologies and dark marketplaces, dark marketplaces and economies will thrive on the potential of ransom DoS.

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

[1] http://www.cnbc.com/2017/02/07/cybercrime-costs-the-global-economy-450-billion-ceo.html

Frost & Sullivan expects automotive OEMs, start-ups, aerospace companies and other players to make significant investments in the flying cars market and showcase their prototypes in the next 10 years. Flying cars are poised to usher in a whole host of new business services by 2035, including aerial sightseeing services, air surveillance as a service, aerial critical aid delivery, air taxi pay-per-ride, and flying car corporate lease. The key to achieving mass commercialisation of flying cars and attracting more buyers will depend on increased safety features, optimal regulations, and affordable prices.

Start-ups across the globe which are actively involved in building a future flying car have been identified by Frost & Sullivan and will be presented at Frost & Sullivan's Intelligent Mobility event on the 29^th of June in London. The majority of these companies are based in the United States, however, there are participants from a whole host of countries including the UK, France, Germany, Russia, Slovakia, Israel, Russia and Japan. Among the companies expected to launch flying vehicles by 2022 are PAL-V, Terrafugia, Aeromobil, Ehang, E-Volo, Urban Aeronautics, Kitty Hawk and Lilium Aviation, have completed at least one test flight of their flying car prototypes. PAL-V has gone a step further and initiated the pre-sales of its Liberty Pioneer model flying car, which the company aims to deliver by the end 2018. This and other industry trends will be discussed at Frost & Sullivan's Intelligent Mobility event on the 29^th of June in London.

"It will be interesting to see the first applications of flying vehicles. Although the ultimate goal of manufacturers is to address the issue of personal mobility, commercial applications are expected to commence through recreational activities in the form of what could be termed as a single seater flying scooter," observes Sarwant Singh, Senior Partner Frost & Sullivan. "From flying vehicle rides in amusement parks, aerial sightseeing of landmarks, to a star attraction at events, the recreational potential of flying vehicles is limitless."

During its upcoming annual industry event ‘Intelligent Mobility’, taking place on 29^th of June 2017 at the Jumeirah Carlton Hotel in London, Frost & Sullivan will offer visionary insights into the future of mobility from leading OEMs and tier-one suppliers, prominent industry thinkers, policymakers and disruptors from companies like Jaguar Land Rover, Facebook, Renault–Nissan Alliance, MAN Trucks, the Financial Times, Mahindra & Mahindra, Transport for London, the Centre for Connected and Autonomous Vehicles, as well as PAL-V International B.V. and Mohyi Labs.

(Source: Frost & Sullivan)

On 18^th April 2017, the UK Prime Minister Theresa May announced today’s snap general election, 8^th June 2017. Three years earlier than scheduled, May’s official reason was to strengthen her hand in the Brexit negotiations, which she feared the other parties would try and frustrate.

With 650 parliamentary constituencies, the general public will elect one Member of Parliament (MP) to the House of Commons for each. The Conservatives currently hold 330 seats, with 326 seats needed for a majority.

If the Conservatives add to their seats at this week’s election we could quickly see an escalation to the sterling £; rallying to new year highs of up to $1.32/33. However, as we draw ever closer to Election Day and with it the almost daily release of new polls and surveys showing support for Labour, we are experiencing a few wobbles. Recently, Labour has closed the gap from 20% behind the Tories to just 7% over the campaign, according to the average of the last 8 polls. Significantly, 7% holds a lot of weight – it’s the lead the Conservatives had going into the last election. Anything less than this figure and they could see their majority reduce, not increase.

Markets were spooked by last year’s wrong predictions and false surveys over ‘BREXIT’ and

‘TRUMPIT’. As a consequence, I think any poll or survey needs to be taken with a pinch of salt! Indeed, the latest round of polls over the weekend were also inconclusive. The weekend polls put the Conservative lead at anything between 1% (Survation) and 12% (ICM) - even the pollsters can’t agree. - says Steve Long, Chief Risk Officer at Avem Capital.

A big factor will be the uncertainty of the young vote. Whilst young people are more likely to vote Corbyn, they are also less likely to get out and vote.

The sterling currency pair will be nervous up to Election Day as liquidity and volume dries up and HFT and Algos disappear for a few days.

One question we ask is why make a market to be 5% offside immediately?

Another factor to take into consideration during Election Day will be the timing of the result. The result will likely be announced around 4am, when most of the UK is asleep. Early indications however, may come as early as 10pm on Thursday, when the exit polls are announced. In recent times, these have been generally more reliable than the pre-election polls, with confirmation of their accuracy proving evident as the first results are announced from about 1am onwards.

Possible result outcomes could produce the following permutations:

• A Labour win: £ drops 5/10%
• A Conservative majority: £ increases +3%
• A hung parliament would probably see a 3/5% spike in a very short time…say 30

seconds, before dropping significantly!

Recently we have seen the FTSE benefit from being cheap. This has given exports a helping hand, however a stronger £ would hurt the FTSE especially the FTSE250 which has just topped 20000.

A Labour victory or hung parliament would immediately turn the markets negative. We would likely see scenes similar to the day Brexit was announced, i.e. a 10% drop in seconds. However, before the excitement of Election Day, we first have the ECB and Draghi to contend with. He has already stated that he will say something special!

Taking heed from the Cub Scouts motto, “Always Be Prepared” …you can be assured that at Avem Capital, we are, always! - adds Long.

(Source: Avem Capital)

Lack of trust and transparency as a result of ideological and military conflicts are undermining the international supply chains linking the world, according to the Q1 2017 CIPS Risk Index, powered by Dun & Bradstreet. Prolonged conflict is creating supply chain no-go areas, cutting off local businesses and consumers from global markets and potentially causing a scarcity of goods.

Military conflict

The conflict between Ukraine and separatist rebels in the east of the country continued to hinder both physical and digital supply chains this quarter. A power cut in Kiev in December 2016 is now widely believed to have been the result of a cyber-attack, while in March, Ukraine suspended all cargo from entering separatist-held territory. Despite this, Eastern Europe and Central Asia only contributed 7.6% of global supply chain risk this quarter, down from 8.5% in Q4 2016. The change is the result of an update to the trade weightings used in the Index as the fall in commodity prices has reduced the importance of the region's trade flows in global supply chains. Businesses have been busy re-routing supply chains away from the conflict area, while sanctions have discouraged businesses from dealing with Russia. This process has accelerated as a result of persistently low commodity prices which have seen the value of the region's exports fall.

Civil wars in Iraq, Libya, Syria and Yemen are also disrupting traditional land-based supply chains across the Middle East, curtailing the flow of goods from Jordan and Lebanon through Syria and Iraq, and in North Africa between Egypt, Tunisia and Algeria. The conflicts look likely to continue disrupting supply chains beyond 2017. As with Eastern Europe, international supply chains have largely insulated themselves from the Middle East. The region's trade weighting has been updated following the collapse in oil prices which reduced the value of trade flows from the Middle East, lessening its importance in the global supply chain. The region therefore contributed just 7.9% of global supply chain risk in Q1 2017, down from 9% last quarter.

Ideological conflict

Q1 2017 has also seen an escalation in the ideological conflict between globalisation and economic nationalism, with the British Prime Minister, Theresa May's, visit to the White House in January 2017 symbolic of the shift in emphasis from multilateral to bilateral trade deals. Despite President Donald Trump's decision not to pull out of the North American Free Trade Agreement (NAFTA) in April 2017, the future trading relationship between Canada, Mexico and the USA remains uncertain. As a result, North America's contribution to global supply chain risk rose from 8.1% in Q4 2016 to 8.6% in Q1 2017.

In France, Marine Le Pen's advance to the second round of the presidential election raised serious concerns for businesses with supply chains in the region. The failed candidate had promised to close French borders immediately, abandon free-trade deals, tax businesses with foreign employees and leave the European Union. Collectively these measures could have significantly hindered businesses that rely on French suppliers. The election of President Emmanuel Macron should dissipate these fears.

Elsewhere in Europe, the ideal of a borderless Europe looks increasingly secure. Whether Chancellor Angela Merkel, or her opponent Martin Schulz succeeds in Germany's parliamentary elections, the German government looks likely to retain a pro-EU outlook. Although temporary border controls have been extended in Germany and Sweden, they look likely to be abolished by the end of the year, helping to reduce delays at these crucial supply chain interchanges.

In China, meanwhile, exchange controls implemented in November 2016 have prevented foreign businesses from transferring cash outside of the country. The rules prevent overseas acquisitions of more than USD10bn and require banks to keep net cross-border Renminbi transfers balanced. The controls make routine activity such as royalty payments difficult and pose a significant risk to businesses with supply chains in the region.

National disruption

Localised conflicts have affected local supply chains in Q1 2017. In Chile a six week strike ending on 24^th March at La Escondida copper mine reduced global copper capacity by 5%. Terrorism also remains a risk for businesses working with suppliers in Chile. Fires destroying 238,000 hectares of forest are widely thought to have been caused deliberately, while a spate of bombings have continued in the capital, Santiago. Latin America's contribution to global supply chain risk has dropped however, from 7.5% in Q4 2016 to 7.15% in Q1 2017. The reduction is the result of falling commodity prices which have considerably reduced the value of the region's exports to the rest of the world.

The Indian Government's unexpected decision to withdraw 86% of the country's cash as part of a crackdown on the use of counterfeit money has left businesses struggling to pay suppliers and workers. Combined with prolonged congestion at major Indian ports, India has helped to push global supply chain risk upwards. Asia Pacific contributed 37.4% of supply chain risk in Q1 2017, up from 33% at the end of 2016. In the long-term, however, progress continues to be made to create a nationwide Indian customs union which would see local tariffs abolished and encourage investment in supply chain infrastructure across the country.

John Glen, CIPS Economist and Director of the Centre for Customised Executive Development at The Cranfield School of Management, said: "Supply chains are a shared resource between consumers, businesses and governments, with procurement and supply chain managers acting as the guardians. When these links are effective, businesses can benefit from lower prices, consumers from better choice and society from greater knowledge sharing. It is therefore crucial they are protected, made resilient and as effective as possible, particularly when faced with a barrage of challenges."

"Supply chain infrastructure can only function normally and efficiently when there is trust and collaboration between all nationalities and sections of society. Whether through military confrontation in the Middle East or political schism in Britain, supply chain infrastructure is one of the first casualties of conflict and the results can be devastating."

Bodhi Ganguli, Lead Economist, Dun & Bradstreet: "The improvement in the Global Risk Index (GRI) affirms that after a rather torrid start to the year, the global economy is settling down. The growth outlook is brightening, headwinds are diminishing, and forecasts generally point to better outcomes than we had expected a year ago. Yet, underlying this feel-good momentum, the global economy continues to face risks, both systemic and exogenous, that could flare up. From the fanning of protectionist inclinations by the rise of right-wing populism, to a one-off hit to supply chains from North Korean aggression, global supply chains and cross-border business strategies must remain cognisant of these risks, while utilising data and insights to take advantage of the opportunities created by the rising tide of global growth."

(Source: Dun & Bradstreet)

Bloomberg recently announced the Global Business Forum, a gathering in New York of global business and government leaders to discuss plans for growth and opportunity around the world. The one-day event will occur in New York City on Wednesday, September 20^th, 2017, in partnership with the Alibaba Group; Dangote Industries Limited; EXOR, the holding company controlled by the Agnelli family; and MiSK, the philanthropic foundation of Deputy Crown Prince Mohammed bin Salman of Saudi Arabia.

The Global Business Forum will convene heads of state, government ministers, CEOs and NGOs in constructive conversations on global business, serving as a platform for business and government across large and emerging economies that are expected to work together to inspire and support economic prosperity. Attendees are expected to represent every region in the world and all major global economies.

"This is a critical moment for the world's economy. Recent events around the world have challenged the principles that have governed commerce for the past several decades. In transitional times like these, I believe business and government must work together to solve the issues affecting us all," said Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies, and 108th Mayor of New York City.

Jack Ma, Executive Chairman of Alibaba Group, added: "Global trade has lifted hundreds of millions of people around the world out of poverty, but there's more that we can do. Alibaba is proud to partner with Bloomberg, Dangote Industries Limited, EXOR, and MiSK to help make globalization more inclusive, enabling young people, small businesses, and developing countries around the world to share in its benefits."

Aliko Dangote, President and Chief Executive of Dangote Industries Limited, stated: "As leaders across global business, it's critical that we come together to determine the future of the world's economic order and create an environment that reflects the new realities of globalization. We started this conversation at last year's U.S.-Africa Business Forum, and look forward to broadening the dialogue with Bloomberg, Alibaba Group, EXOR, and MiSK."

John Elkann, Chairman and CEO of EXOR, said: "These times of extraordinary political, cultural and technological change are also highly disruptive and unsettling for many. As long-term owners of major global businesses we at EXOR are optimistic about man's capacity to innovate to improve society for all. But this requires great clarity of vision and resolve. So we enthusiastically support the Global Business Forum that gathers leaders from many walks of life, from all around the world to identify smart, practical solutions to the great challenges of our time."

Bader Al Asaker, Secretary-General of the MiSK Foundation, said: "MiSK is a leading not-for-profit that develops practical programmes to empower our citizens to become active participants in the Saudi and wider global economy. We also work with global partners across the NGO, corporate and governmental sectors to help facilitate important forums such as these. Co-hosting this conference in New York will serve to strengthen global collaboration and the exchange of ideas on how to navigate the manifold challenges and opportunities in the rapidly changing global economy. We hope all participants will draw benefits from the event."

Topics for exploration include trade, the future of globalization and the emergence of new economic leadership on the global stage, the drivers of and threats to global growth, the role of business in a fragmented global economy, and minimizing global disruption from automation.

The event will occur at the Plaza Hotel in New York City. Additional details about the program and participants will be announced at a future date.

(Source: Bloomberg)

The latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants) released last week shows economic confidence rebounding in the first quarter of 2017, an improvement driven by the US where investors are hopeful that a combination of fiscal reform, increased investment in infrastructure and deregulation will provide a boost to economic growth.

The report is the largest regular economic survey of accountants around the world, and noted business conference at its highest level since the second quarter of 2015. Though driven by the US, the improvement in confidence was widespread, with most countries and regions, including Western Europe, Asia Pacific, and Central and Eastern Europe showing improvements.

The survey of finance professionals and business leaders worldwide noted that Q1 2017 displayed the fastest rate of growth in global trade since 2015. The survey found that the biggest concern for companies over the past three months was increased costs (a problem for 46% of respondents), consistent with rising headline inflation rates in many parts of the developed and developing worlds. Despite this there are significant improvements for employment and investment, with 22% of firms planning to create more jobs and raise capital expenditure (up from 16% and 14% respectively in Q4 2016).

"The rise in confidence, combined with strong economic hard data, offers genuinely encouraging signs for the global economy: with an increasingly optimistic mood in the US and a stimulus-led recovery in China driving prospects for world trade," said Faye Chua, head of business insights at ACCA. "This strong start to the year has taken place against a backdrop of potential threats facing the world economy at the start of 2017."

Added Raef Lawson, executive vice president at IMA: "The US economy has maintained an elevated level of confidence from Q4 in 2016, with 37% of firms feeling more confident, although there was no uplift from the previous quarter. An expectation of increased infrastructural spending and tax cuts has contributed to a buoyant business mood even though they are yet to materialise into policy."

However, Mr. Lawson continued: "Inflation and currency fluctuations, however, are a cause for concern. 43% of US firms are troubled by rising costs, and 22% by exchange rate movements. Despite the Fed's interest rate hikes, borrowing costs in the developing world remain low, and the dollar is likely to continue growing in value. That could pose a challenge to US firms' competitiveness, and the White House's determination to reduce the trade deficit."

The survey found that in the United States, confidence remained flat but elevated; in Q1 2017, 37% of respondents were more confident about the future, compared with 24% who were less confident. This buoyant overall level of confidence comes on the back of a surging stock market, which has risen to record highs on the back of confidence that a fiscal stimulus and wave of deregulation will provide a boost to economic growth.

US respondents reported confidence that a big increase in government spending is on the way. Other components of the GECS – government spending, capital spending, and employment – also rose in the first quarter. The main concern for US companies is rising costs—cited by 43% of respondents—which is consistent with a recent, sharp rise in inflation and wages as the US economy moves closer to full capacity.

The negative impact of exchange-rate movements (cited by 22% of respondents) was another concern. US interest rates are set to rise this year, but borrowing costs in the rest of the developed world are likely to remain very low, so, the survey noted, it's possible that the US dollar will appreciate in the coming months; this will erode the competitiveness of US-based companies.

GECS is the largest regular economic survey of accountants around the world. Fieldwork for the Q1 2017 GECS took place between February 24 and March 13, 2017 and attracted 1,334 responses from ACCA and IMA members around the world, including more than 150 CFOs.

(Source: ACCA)

Global IPO activity got off to a brisk start in the first quarter of 2017, led by market gains in Asia-Pacific and the US hosting the first two megadeals of the year. In the first three months of 2017, some 369 IPOs raised $33.7b, a 92% year-over-year increase in the global number of IPOs and a 146% increase in global proceeds. Moreover, Q1 2017 was the most active first quarter by global number of IPOs since Q1 2007 (with 399 IPOs raising $47.5b). These and other findings were published in the EY quarterly report, Global IPO Trends: Q1 2017.

Dr. Martin Steinbach, EY Global and EY EMEIA IPO Leader, says: "This is a promising start to global IPO activity this year. In the face of sustained global economic uncertainty, the first quarter of this year has set the stage for accelerated growth in 2017. Economic fundamentals are improving in the major developed economies. Equity index performance and valuations are trending upward, with several major indices reaching all-time highs. Concurrently, volatility is low, underpinning positive IPO sentiment, which is also supported by the successful US listing of a large technology unicorn."

Asia-Pacific dominates global IPOs

Asia-Pacific, led by Greater China, once again dominated global IPO activity in Q1 2017, accounting for 70% of the global number of IPOs and 48% by global proceeds. Greater China exchanges were the busiest, hosting 182 IPOs, with the Shenzhen and Shanghai exchanges being most active and accounting for 20% (73 IPOs) and 19% (70) of the global number of IPOs respectively. However, activity was spread across the region with a healthy set of listings on public markets in Japan (27), Australia (23), Southeast Asia (14) and South Korea (12). In the short-term, Greater China, and by extension Asia-Pacific, is expected to continue its dominance of the global IPO market as the China Securities Regulatory Commission (CSRC) is anticipated to clear an extensive backlog of listings by increasing the pace of IPO approvals throughout this year.

Ringo Choi, EY Asia-Pacific IPO Leader, says: "IPO activity in Asia-Pacific has been powering ahead due to the region's relative insulation from political uncertainty elsewhere in the world, ample liquidity in emerging markets and strengthening investor sentiment on the back of reduced volatility and steady stock market gains. While IPO activity is likely to increase on Mainland China and selected ASEAN exchanges during the second and third quarters, there may be a slowdown in new listings in other markets. Hence, this region may see a temporary drop in activity, but is expected to rebound in the final quarter of the year."

EMEIA IPO activity affected by geopolitical uncertainty

With growing geopolitical uncertainty, activity in the EMEIA region increased slightly by 8.5% YOY, ranking second behind Asia-Pacific by number of IPOs in Q1 2017, and accounting for 21% and 15% of global number of IPOs and proceeds respectively. Bolsa de Madrid, London Main and AIM, and Bombay Main Market and SME were the three most active markets by proceeds. India and the UK were the most active regional markets with 26 and 12 IPOs respectively, followed by Saudi Arabia, which listed seven deals on its new platform, "Nomu – Parallel Market," an alternative equity market with lighter listing requirements.

Steinbach says: "IPO activity in EMEIA was affected by heightened geopolitical uncertainty ahead of upcoming national elections and the build-up to the UK's declaration of Article 50, formalizing its intentions to exit the European Union. However, investor and business sentiment in EMEIA is rising as we continue to see regional equity indices at all-time highs, a growing IPO pipeline, a solid reporting season to date and strong economic fundamentals throughout the region. The key for companies looking to accelerate their growth this year while uncertainty stabilizes is to preserve optionality with a multitrack strategy approach."

US market returns to form

US IPO activity got off to a strong start in 2017, easily surpassing Q1 2016 levels in terms of both IPO numbers and proceeds. IPO proceeds for Q1 2017 are the highest since Q2 2015 (72 IPOs raising $14.3b). The quarter saw a total of 24 IPOs raising $10.8b, an increase of 1,380% in terms of proceeds and 200% by volume on Q1 2016. During Q1 2017, the US accounted for four of the top ten deals globally. The NYSE led IPO proceeds globally this quarter due its hosting of the only two $1b plus megadeals.

Jackie Kelley, EY Americas IPO Markets Leader, says: "The first quarter of 2017 was one of the strongest for the US IPO market and established a solid runway for more deals for the remainder of the year. This positive performance should attract more tech and unicorns to the public markets and further open the door for other sectors such as retail, energy, and real estate. With the market currently insulated from the political uncertainty, more companies are expected to enter the filing process."

2017 outlook is upbeat, despite mixed signals

The reaction to geopolitical events in the financial markets has been far more positive than many had predicted. Pent-up demand for public offerings suggests global IPOs will continue to rise in 2017, with pipelines full, particularly in Asia-Pacific.

Steinbach concludes: "Overall, global IPO markets had the best start with the highest first quarter by global number of IPOs since 2007. The upswing is buoyed by a strong desire for investors to generate returns and the positive momentum from a strong IPO activity in the fourth quarter 2016. However, ongoing uncertainty continues to define the global conversation, in spite of the market rallies seen in many main market indices after respective US presidential and Brexit votes."

(Source: EY)

Home ownership ambitions of millennials in the UK are still very much alive, despite the challenges of assembling a deposit for a house, according to HSBC’s first Beyond the Bricks study.

The study of more than 10,000 people across nine countries found that three-quarters (74%) of UK millennials expect to be property owners within the next five years, however, this is significantly below the global average of 83%.

Slow salary growth and house price inflation mean the British millennial generation face significant challenges compared to its global counterparts when it comes to housing affordability. The average property price in the UK increased by 7.5% in 2016, with official wage growth figures showing just a 1.9% growth.

Global statistics – millennial home ownership:

* China survey sample includes 85% urban, 14% rural and 1% rural respondents

According to Tracie Pearce, HSBC UK’s Head of Mortgages: “This study challenges the myth that the home ownership dream is dead for millennials in the UK. With three in ten already owning their own home, the dream of home ownership for millennials is definitely alive and kicking. In the UK, they face a two-pronged problem of rising house prices and slow salary growth meaning the dream of home ownership is a challenge but not unachievable.”

Financial support from parents can make all the difference when saving for a home, and over a quarter (27%) of millennials who bought their own home turned to the ‘Bank of Mum and Dad’ as a source of funding.

Despite the challenges, many UK millennials are willing to consider making sacrifices to afford their own home.  Almost half (47%) of those intending to buy would consider spending less on leisure and going out, 33% would be prepared to buy smaller than their dream home.

The report also finds that many millennials need to consider their financials when it comes to planning for their home purchase. Of millennial non-owners intending to buy a home in the next two years, more than 1 in 3 (40%) have no overall budget in mind and a further 48% have only set an approximate budget.

Therefore it is not surprising that over half (57%) of millennials who bought a home in the last two years ended up overspending their budget.

*Average national deposit based on current industry figures

HSBC’s research identified four actions that millennials can take to help make their home ownership dream a reality:

1. Plan early and don’t underestimate the deposit

Start planning early to make home ownership a reality sooner. Include saving for the deposit, usually the first payment you will need to make. Find a competitive mortgage to help make borrowing the rest more affordable.

1. Budget beyond the purchase price

Think about the extra things that will make the house you buy the home you want to live in, and make sure to include them in your home purchase budget.

1. Consider what cut backs you can make

Consider cutting back on your day-to-day spending. Think outside the box about what could help you to buy a home, such as buying with a family member or friend.

1. Get a full view of your finances

Think of your mortgage as part of your long-term financial plan, not as a one-off transaction. Different types of home loan suit different needs and situations. Seek professional financial advice if you need help to make the right choice.

[1] International Monetary Fund: Global Housing Watch November 2016   

[2] Korn Ferry Hay Group: 2017 Salary Forecast

(Source: HSBC)

Daniel Tannenbaum at Tudor Lodge Consultants talks us through the latest changes in the UK payday loan industry, including new FCA regulation and authorisation guidelines, and what that will mean for the industry. 

The UK’s payday loan industry has seen a huge transformation. The once thriving and highly profitable £2 billion sector has seen major changes to its regulatory framework, advertising and profit margins – causing payday giant Wonga to record losses of £80 million this year and further reverberations for the industry.

New regulation from the Financial Conduct Authority

The FCA began regulating the payday loan industry in April 2014, taking over from The Office of Fair Trading. Following 29,000-payday loan related complaints recorded by The Citizens Advice Bureau in 2014 and pressure from politicians and religious figures to contest usurious rates, and a tough stance was implemented.

The regulator reviewed the practices of the some of the biggest lenders, which inevitably led to £220 million fine for Wonga, £20 million for Cash Genie, £15.4 million for Dollar Financial, and £1.7 million for Quickquid. The fines were partly to the regulator and some amounts were required to refund customers that should not have been lent to in the first place.

To address the high rates of interest, the FCA introduced a price cap in January 2015. This limit on what lenders could charge was fixed to 0.8% per day and ensured that customers will never have to repay double what they have borrowed.

Other rules included a maximum default charge of £15 and no options for rollovers, which commonly caused customers to keep borrowing at high rates even if they were unable to repay their debts.

The enforcement of this price cap has caused much lower profit margins for payday lenders, which trickled down to all other brokers and introducers involved. Notably, the industry-leader Wonga reported a loss of £80 million in 2015.

Authorisation required to continue trading

The FCA required all companies wishing to participate in the payday industry to apply for formal authorization. Firms could apply for interim permission as a short-term solution with the long-term aim to receive full permission provided that the company’s procedures, staff and product had been fully approved by the regulator.

As firms were granted permission in Q1 of 2016, the most responsible lenders have prevailed whilst several lenders and brokers have been forced to exit due to not meeting the criteria or because they do not believe they can be profitable under the new regulation.

Google bans payday loan adverts

To put further pressure on the industry, Google made an announcement in May 2016 that they will be banning all paid adverts on their search engine for all payday loans related products. This includes any loan term that is less than 60 days or has an APR higher than 36%, including logbook loans and guarantor loan products. (Source: GuarantorLoanComparison)

This change will impact hundreds of payday loan lenders and introducers that pay for adverts on Google to generate leads. Instead, they will have to fight for the very limited positions on Google’s organic search listings, which can be tough to break into for new and old entrants.

The future of the industry

The measures that have been introduced are effectively removing the least compliant players from the industry, keeping the most responsible in the game and creating a barrier to entry.

Further adjustments might be made including tighter rules on Continuous Payment Authority, the automatic collection system used by lenders which might be replaced by a simple direct debit.

Other changes involve more loan companies providing long-term loans like Mr Lender and Wonga, that allow you to borrow for up to 6 months with the option to repay early. The FCA has also emphasised the importance of comparison sites to allow borrowers to compare the different costs and options before applying.

Over half (54%) of retail investors globally feel more confident about investment opportunities in the next 12 months than they did a year ago, according to the Schroders Global Investment Trends Survey 2015, released yesterday.

Nine-in-ten (91%) investors across the globe expect to see their investments grow over the next 12 months. Globally, retail investors are expecting a challenging average return of 12% over this period.

The study, commissioned by Schroders and conducted by 20,000 retail investors in 28 countries, shows an increasing appetite for financial investments compared to previous years. Half (50%) of those questioned intend to increase the amount they save or invest in the coming 12 months, compared to just 43% of those questioned in 2014 and 38% of those polled in 2013. On average, investors plan to increase the amount they save or invest by 8.5% over the next year.Overall, 87% of investors worldwide are looking to generate an income from their investments. Daily Telenor SMS packages are for one who doesn’t have needs of communication all the time. Like our elder ones who prefer not to be texting all the time. They only need it when they feel like messaging some important information. Also, peeps who don’t like texting, use these packages only whenever they need.

Almost nine-in-ten (88%) retail investors said they made a profit from their investments in the past 12 months, with average gains of 10%, while 5% reported a loss. In comparison, investors polled two years ago reported making an average loss of 4.6% since the recession. However, despite the high levels of confidence being reported this year and optimistic expectations of double-digit returns in the next 12 months, the Schroders survey reveals a significant disconnect between expected returns and the appetite that investors have for risk, with many favouring shorter-term and lower risk investments.

Massimo Tosato, Executive Vice Chairman, Schroders plc said: “It’s overwhelmingly clear that the demand for income is prevalent as retail investors seek to meet various objectives such as financing their children’s education, purchasing a first home, setting up new businesses, or supplementing their existing income in retirement. The necessity and challenge to generate income from investments is strong, particularly given the global low interest rate environment.

“However, our survey highlights a clear disconnect globally between retail investors’ return expectations and their attitudes to risk. Expecting double digit returns within the next 12 months, while only placing less than a quarter (21%) of their investment portfolio in higher risk assets suggests that investors are not taking a realistic approach to investing. It’s imperative that investors shape their portfolios to balance the risk profile with the returns they are seeking, and in most cases, that will require a level of professional advice.”

China’s economy will not suffer a hard landing even as it braces itself for a further slowdown this year, Li Keqiang, Premier of the People’s Republic of China, told delegates at the World Economic Forum in Davos, Switzerland, yesterday.

“The Chinese economy will face downward pressures in 2015,” Li said in a keynote speech at a special session of the Annual Meeting. “But the Chinese economy will not head for a hard landing.”

He added that the government will press on with structural reforms, which include liberalising its services sectors, promoting mass entrepreneurship and innovation, protecting intellectual property rights and deepening its capital markets. “We will move towards the path of reforms. This way we can shift gear without losing momentum and achieve medium- to high-speed growth, and medium- to high-level developments.”

Using the analogy of a skier at Davos, he promised that China will “go at the right speed, keep balance and be courageous”.

Premier Li’s address came a day after the country announced its slowest growth rate in 24 years, with full-year GDP at 7.4% in 2014. The government has prepared the nation to embrace the “new normal” as it focuses on quality rather than speed of growth, and shifts its focus from an export-investment led model to one that is more reliant on consumption and the services sector.

In his address, Li also suggested that China would eschew stimulus measures through monetary easing but instead step up investments in targeted areas, including health, clean energy and transport, as well as provide support to the country’s small and medium enterprises, create employment for young people and optimise income distribution.

The Premier said China’s economic slowdown reflects the profound adjustments in the global economy and is consistent with its larger economic base. A growth at 7%, he pointed out, produces annual increase of $800 billion (€690 billion) at current prices, larger than a 10% growth five years ago.

On the internationalisation of the renminbi, Li explained that as China’s international trade increases, more countries are demanding the use of the Chinese currency to settle trades and investments. The pool of offshore renminbi has gradually expanded in recent years. Li said China is committed to opening up to the world but the internationalisation of the renminbi is going to be a long-term process.