Lloyds Banking Group will be required to refund customers due to violation of rules on communicating with PPI customers, the UK’s Competition and Markets Authority (CMA) announced on Wednesday.
A total of £975,000 in refunds has been secured for Lloyds’ payment protection insurance customers in the last year for breaching regulations, with the latest refunds amounting to £17,000. These new refunds come after Lloyds self-reported three breaches affecting “8,800 people who were sent incorrect information in annual reminders to mortgage PPI customers”, according to the CMA.
PPI was conceived as a form of insurance that would help customers maintain loan repayments if their financial circumstances worsened. After aggressive marketing of the insurance by banks in the 1990s and 2000s, a 2011 court case ended the practice and allowed a wave of consumer compensation claims to be issued.
All PPI providers are required under UK law to send annual reminders to customers that set out clearly the cost of their policy, the type of cover they have and remind them of their right to cancel.
In two of Lloyds’ latest breaches of the CMA’s order, the monthly amount PPI policyholders could claim was displayed in the incorrect section of their reminders. In the third, the figure quoted in the reminders was incorrect.
Lloyds has informed the CMA that it broke the order 18 times over an 8-year period.
The FCA said last year that that PPI claims have become “the largest consumer redress exercise in the UK’s history”, with UK banks having paid £38 billion for PPI mis-selling between 2011 and 2020.
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“It’s a real concern that PPI providers are still breaking the rules by sending inaccurate PPI reminders despite a clear, well-established Order from the CMA,” said Adam Land, the CMA’s Senior Director of Remedies, Business and Financial Analysis. “These failures can mean people end up paying for insurance they no longer need.”
Many business owners who rent a commercial space are struggling or refusing to pay the rent. If this describes your tenants, you may be wondering if you can sue the insurance company to cover your costs.
So far, the pandemic has lasted for over a year, and there’s no end in sight. Eating a loss for months on end is not sustainable. After all, you may be depending on rent to pay your own mortgages. Read on to learn how some property owners are trying to get repaid for lost income due to the pandemic.
Many states are ordering shutdowns of businesses that have been deemed non-essential. Most businesses can not afford to go weeks without income. This is making companies try to back out of their rent. Some are claiming the virus as an act of God, which allows them to back out of the contract. Others are suing their commercial insurance provider.
Insurance companies are also denying coverage in many cases. They are saying the situation with the pandemic is out of their control. Others are saying that the damages are not physical. The way insurance companies make money is by avoiding large payouts. It is natural they are going to fight in court to avoid being sued by everyone.
Business owners and landlords feel their business insurance should cover their losses. Some have business interruption clauses in their contracts that should cover this. Insurance companies counter that the damages for COVID-19 are not their fault. They also claim the damages are too hard to calculate. This has resulted in a growing number of legal battles.
At this time, no landlord is known to have won a business interruption case that is related to the pandemic. Some legal advisors are recommending that business owners sue the tenant. Others are saying to work out a settlement or other arrangement. With so many small businesses closing due to the pandemic, you’ll have to consider the fact that it may not be so easy to get new tenants.
At this time, no landlord is known to have won a business interruption case that is related to the pandemic.
The failure or success of many lawsuits will depend on the states they are filed in. A court in Texas may rule differently than a court in New York. Experts say there are already lawsuits worth billions in courts.
These cases are being fought in state and federal courts. Some are claiming bad faith upon the insurer. Others have more creative legal strategies. There are promising cases in states like:
There have been thousands of cases filed since the pandemic began. Insurers are playing hardball and seeking dismissals. Most of the cases are being dismissed by judges.
A few cases brought against insurers seem to be winning in court, though they haven’t officially been settled at this time. Some plaintiffs may have found a strategy that is working in court. Only time will tell.
The insurance companies are claiming their policies never stated they include viruses. Some insurance contracts have provisions called "all-risks" policies. Some businesses in Western Missouri made it to a jury trial. The judge ruled the physical presence of the virus met the requirements for physical loss and damage.
The key in these cases is to point out how ambiguous the language in the contracts are. Another strong strategy is citing the government orders as the damage. These are more tangible in a court's eyes than a virus.
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A judge in New Jersey ruled that New Jersey state law didn't need physical damages. Plaintiffs cited an earlier case where dangerous gas made a packaging plant unsafe. They also cited a case where a downed power grid interrupted a grocery store.
Closure orders by the governor also helped them get a favorable ruling. Dangerous conditions that interrupted operations were enough to satisfy the court. There was a similar ruling in a North Carolina case. It ruled that being unable to physically access the property was a physical loss. This will be another way landlords and other businesses will likely take.
This is a newer battlefield in litigation. Business interruption insurance is one of the main ways to sue insurance companies. Others may cite bad faith by the insurer.
Some cases are being won against insurers by other business types. Landlords should cite these as precedents, and read through as much information about legal options for businesses affected by COVID-19 as possible. The key to winning these cases seems to be citing ambiguous contracts, state law, and government mandates. These are the main ways cases have made progress in court.
Mat Megans, CEO at Hyperjar, examines current patterns of debt and spending and discusses how the status quo might be changed.
COVID-19 has impacted everyone in different ways. On an economic level, it was the tipping point that burst the bubble of expansion that started after the Great Recession ended in 2009. Now we are in a new recession caused by deliberate, but necessary, actions to try and prevent the rapid spread of the virus. Actions which have hammered the economy. Central banks around the world had to drop interest rates, often to as close to zero as makes no odds, to try and stimulate demand. The average UK consumer is facing this grim situation whilst sitting on a pile of debt even larger than the previous peak in 2008.
The Great Recession was a crisis of our own making that almost took down the global financial system. It caused such a scare that governments around the world implemented various regulations to try and prevent a repeat ever happening again. In the UK, one such regulation was ring-fencing, the set of rules that apply only to UK banks with more than £25 billion of core deposits. The main objective is to separate essential banking services from riskier lending activities – to try and avoid key banks dabbling in esoteric products like CDO-squareds and sub-prime mortgage securitisations. These indirectly led to people lining up in the street outside Northern Rock asking for their deposits back. Ring-fencing has definitely succeeded in making these deposits safer, but has also made it more difficult for many banks to earn attractive returns on capital.
This creates two side effects:
Ring-fencing has definitely succeeded in making these deposits safer, but has also made it more difficult for many banks to earn attractive returns on capital.
I believe these conditions contribute to a number of trends seen over the past decade. Unsecured consumer debt has risen to all-time highs. Consumers are bombarded with offers for credit to buy almost anything, in almost every way imaginable – on social media, at the checkout till or online basket, in the post, at the ATM, on television. Fintech has also participated in driving innovation to make accessing credit easier and more prevalent with a strong increase in Buy Now Pay Later services at checkout.
The net result of this mountain of unsecured debt? Many people find themselves in very difficult situations as the expansion ends and recession sets in, leading to higher unemployment and increased personal financial difficulty.
Yes, we have a heavily indebted consumer. But debt isn’t always bad. In fact, some debt is a tool that creates significant happiness and wealth, for example: mortgages. A small deposit can help buy a house, and even modest levels of price appreciation over the long term can net attractive returns, or allow for mortgage repayments which are lower than the rent for an equivalent property. I call this good debt, debt used to generate positive returns and outcomes. Then you have other forms of good debt which arise through unplanned necessity, for example debt used to buy a car that’s essential for work, or a broken boiler that needs to be repaired.
Bad debt is none of this. It’s debt used to buy depreciating assets such as a nice pair of shoes or the latest gadgets that do not generate real, absolute or relative financial returns. Problems can often arise as bad debt accumulates, sometimes on top of necessary good debt. What inevitably happens is those with the smallest financial buffer have the worst debt, and this means they suffer more in a recession.
It’s not all dark and gloomy. We can do a lot. It has become a cliché, but in this case, we really can build back better, and not just as a political slogan. Perhaps we can rewire society’s relationship with spending and debt:
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These factors set up an opportunity to reset and to think about fintech business models which are designed around savings, not around debt. At HyperJar we are working with a group of forward-thinking retailers to offer attractive rewards to consumers who can commit funds that will be spent with them in the future. The funds are safely held at the Bank of England until our customers are ready to spend it. On top of the rewards, which grow dynamically over time when money is allocated, you’re less tempted to spend on things you don’t need. A win-win between shoppers and the places where they shop. That’s a future we think is possible and worth trying to build.
Tradelines or AU tradelines are credit accounts that appear on your credit report. Credit agencies use the information within those tradelines, such as their payment history, balance, activity, and creditor’s name, to form your credit score.
Your credit score is a figure that measures how credit-worthy you are. If you have made payments on time, have been responsible with credit, and kept your balances low, then you may have a high credit score. Banks and lenders may then be more likely to look favorably at you for lending. However, if you have too many tradelines open or haven’t made the best decisions regarding your credit, your credit score may be low.
To combat a low credit score or build a positive payment history, you may decide to purchase tradelines. These can improve a low credit score and allow you to build up a payment history. As common as this practice is, it’s easy to make some of the following mistakes.
You may have heard that tradelines can improve your credit score. If you don’t know a lot more than that, it can be easy to purchase too many tradelines, the wrong ones, or be led into making tradeline purchases that aren’t in your best interests.
When you add an authorised user tradeline to your account, you may think your credit score will immediately increase. You may then put plans in place to secure a mortgage or take out a loan. Tradelines are not instant. Instead, when you purchase an authorised tradeline, it can take up to 30 days to see an improvement, as long as you’ve selected one that can improve your credit score.
Many people don’t understand their credit score. Sometimes, it’s only when you go to take out a loan that you come to realise it’s not as high as you expected it to be. If your credit score is surprisingly low, a tradeline is not a way to repair it. Instead, it’s a way to add information to your credit report to potentially increase your score. If you have a low credit score and you’re unsure why, you have the right to question it. You may be able to correct anything that appears to be wrong and subsequently lift your score.
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If a credit bureau has put a fraud alert or credit freeze on your account, any tradelines you purchase will not be posted to your credit report. Before you go down the tradelines route, contact the associated credit bureau to have those alerts removed.
Each tradeline is going to have a different effect on each person’s credit report. Its power will depend on what your credit report already outlines. The goal is to choose a tradeline that has better features than what you already have. For example, if your accounts’ average age is eight years, a five-year-old tradeline is not going to benefit you as much as one that has an average age of 10 years.
When the time comes to request a loan or a mortgage, it helps to understand as much about your credit report as possible. You can then learn about ways to improve it, repair it, and use it to your advantage.
Tiffany Carpenter, Head of Customer Intelligence at SAS UK & Ireland, offers her thoughts on how established banks can offer customers a better remote service.
Businesses have faced numerous challenges as a result of COVID-19; perhaps the greatest they have ever had to contend with. However, from a customer experience point of view, there have also been some new opportunities. Across the private sector, SAS research shows that the number of digital users grew 10% during lockdown, with 58% of those intending to continue usage. This represents a whole new dataset of customers with a digital footprint, offering the chance for businesses to engage with them in a more personalised way.
It seems that many businesses have been taking advantage of this already. Across the board, a quarter of customers noted an improvement in customer experience over lockdown. Yet, in the banking and finance industries, 12% of customers claimed that their customer experience had diminished, which was more than the average for the private sector.
What makes this particularly concerning for banks is that, as an industry, they are one of the most digitally mature. Of all the industries, they had the highest number of pre-existing digital users, with 58% of customers using an app or digital service prior to lockdown. So, the question is: why did the most digitally mature industry struggle to support all its customers through digital channels during the pandemic?
As demonstrated by the sheer number of customers using their digital services and apps, the banking industry hasn’t struggled to get its customers to go digital. However, it has clearly struggled to support all of its customers during the pandemic.
While more customers noted an improvement in the customer experience over lockdown (27%), 12% still felt that it had got worse. Branch closures and lengthy call waiting times to speak to an advisor by telephone won’t have helped. In this age of digital transformation, customers were unable to access immediate support or advice through digital channels and were forced to pick up the phone or fill out paperwork to complete an action. Many businesses applying for bounce back loans found themselves in error-riddled, drawn-out processes, often waiting weeks with no status update, while customers wanting advice on payment holidays found their bank’s digital communication channels offered no support at all.
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Since the scheme was introduced there have been over 1.9 million mortgage payment holidays granted in the UK and, with stricter lockdown measures reintroduced, this number could rise even further.
The problem for banks and customers alike is that much of the decision-making process is manual, such as determining a customer’s eligibility. Automating these decisions would enable banks to deliver support and decisions in real-time to customer applications across their websites and mobile apps, eliminating manual back-end processing tasks and reducing the need for phone calls, paperwork or in-branch communication.
What’s more, automated decisioning does not require a complete overhaul of legacy infrastructure. Cloud-based intelligent decisioning applications allow banks to rapidly deploy solutions that can analyse customer data and behaviours in real time, determine customer intent and needs and arbitrate next best actions across digital channels without the need to rip and replace the current architecture.
While the pandemic remains part of our everyday life, it’s likely that banks will have to contend with sporadic branch closures and/or customers unwilling to either come in-branch for appointments or spend a long time waiting to speak to someone over the phone. Customer feedback has demonstrated that banks have the correct building blocks in place to deal with this effectively. However, they’re still struggling to support their entire customer base. If banks are to compete and succeed both in the short and long term, it’s essential that they complete the ‘last mile’ of their digital transformation.
The average UK home sold for more than £250,000 last month, marking the first time the average has crested a quarter of a million pounds.
New data was released in Halifax’s latest House Price Index, a leading authority that gauges the state of the UK property market, showing that prices rose 7.5% higher in October than their average during the same period in 2019 – reaching as high as £250,547. The increase also marks the highest rate of annual growth since the middle of 2016.
The increase follows a surge in house prices in September, with a combination of the stamp duty holiday and a pent up demand from the initial lockdown period pushing the price of the average UK home up to £249,879.
Halifax managing director Russell Galley credited the continuing effects of the pandemic for creating “clear headwinds” for the UK property market. He added that stamp duty cuts and rising interest in moving “supercharged” demand and pushed prices higher.
“Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses,” Galley said, adding: "The country's struggle with COVID-19 is far from over.”
While Halifax’s new index showed year-on-year growth to be strong, the rate of monthly price gains appeared to be slowing sharply. Prices rose by 0.3% between September and October, a notable decrease from the 1.5% rise seen a month earlier and 1.7% in the previous two months.
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Halifax warned that economic fallout from the COVID-19 pandemic, likely to arrive in early 2021, would put “downward pressure” on home prices.
David Gwyther, Business Development Director at Butterfield Mortgages Limited, explores how trust can be built with HNWIs in the "new normal", and why tech alone may not cut it.
The financial services sector is undergoing an important – and what some might say “long overdue” – transformation. The sudden onset of COVID-19 has forced high street banks through to specialist mortgage providers and alternative lenders to adapt to a new set of circumstances few would have anticipated.
Social distancing measures have forced the majority of these organisations to work remotely and this has provided its own set of challenges. In one respect, they have had to ensure the appropriate systems and processes are in place so that their employees can carry out their same roles and functions outside of the office. This has meant putting new systems and processes in place, including the adoption of digital tools.
As part of adapting to the “new normal”, another ongoing challenge has been reactively responding to the needs of their existing clients and the wider market. Again, this has proved difficult for some. Recent research by Butterfield Mortgages Limited (BML) revealed that 19% of homeowners had “lost faith” in their bank due to “poor support” it provided during the coronavirus. On top of this, one in four (25%) feel as though their banks have not been proactive in providing financial advice.
With the UK tightening lockdown measures in a bid to contain a spike in coronavirus infections, it is clear that remote working and social distancing will remain the norm for the foreseeable future. Naturally, the financial services sector will need to question whether they methods they are currently relying upon to engage with their customers will be effective in the long term.
While COVID-19 has had a positive impact in so far as forcing large institutions to review traditional (and outdated) practices, there has been an assumption that technology naturally provides the answer. In some respects, I do agree with this proposition. However, when it comes to engaging with certain types of clients and networks, I believe that relying on digital adoption too much could in fact damage relationships.
Naturally, the financial services sector will need to question whether they methods they are currently relying upon to engage with their customers will be effective in the long term.
Working in the UK’s prime property market, I regularly deal with the needs and interests of high net worth individuals (HNWIs) interested in high-end real estate. The profile of this client can range from a non-UK resident seeking a property in prime central London (PCL) as a buy-to-let investment to a domestic buyer seeking a primary residence.
As someone who has worked closely with HNWIs and the brokers who represent them, it is clear to me that there is a certain way of engaging with this type of client. Given the size of the financial portfolios, their unique income structures and wealth management needs, HNWIs will only work with financial service providers they trust. Establishing this trust and confidence is a long-term outcome that requires effective client engagement. In other words, financial providers need to demonstrate their expertise and ability to effectively cater to the needs of HNWIs, all the while developing a personal and transparent relationship.
In my mind, this is the ultimate objective of any organisation seeking to engage with the wealth and ultra-wealthy. Before the COVID-19 pandemic, professional and social networking events, conferences and physical meetings proved to be the most effective avenues of communication. As we all know, the coronavirus means the majority of these events have been put on hold. Some have been held online and while they have proved to be a useful solution, I only see this as a temporary measure.
A similar observation can be made when it comes to video conferencing. While no doubt an effective measure in overcoming the obstacles posed by social distancing, this is not likely to totally replace physical interactions with clients. Many in my sector agree that there is something vitally important when physically engaging with HNWIs. Building trust and in turn future client networks is not something that can be achieved by digital communication. That’s why we should not see technology as a tool to be used to build effective relationships.
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Drawing from the aforementioned BML survey, there was another interesting finding worth mentioning. We found that 31% of homebuyers and homeowners were frustrated by the ways their banks depend on chatbots and automated services. What this shows is that while tech is important, the financial services sector should not overlook the value of physical interactions with their clients.
These are important observations that need to be fully appreciated by the sector so that it can manage the current and future needs of the market. After all, once the COVID-19 pandemic finally subsides, we should expect to see the return of professional networking events and physical meetings.
Yes, there will be a greater reliance on technology to carry out certain communication roles. However, those based place to meet the future demands of the market will be those who have integrated technology as part of a client engagement strategy focused on building trust, confidence and longstanding relationships. This is extremely vital when dealing with the needs of HNWIs.
Karoline Gore gives Finance Monthly an overview of promising Candian fintechs to look out for.
With the rest of the world sprinting toward the inclusivity and diversity of fintech, Canada is catching up swiftly. It is the inclusivity of cashless transactions and peer-to-peer lending, in particular, that are catching the attention of the Canadian market. So it isn’t surprising that Canadian fintech is now attracting a rather diverse age demographic with 46% of them being over the age of 40, according to TransUnion Canada.
In response to this growing demographic, Canadian fintech companies are rolling out some very exciting developments. So which companies are making a splash, and how?
Two Canadian fintech companies are front and center in Holt FinTech Accelerator’s 2020 Cohort list. Talem Health Analytics, based in Nova Scotia, has helped insurers streamline data and empowered them to detect and avoid fraudulent attempts through their AI injury causation tool. They also help insurance firms map out rather accurate recovery trajectories so they can better develop plans to suit their clients. The Calgary-based Ownest Financial that cut down the internal processing time of their partner lenders by 90%. They partnered up with 125 Canadian lender companies to give consumers an easier time to shop around for mortgages, personal loans, and even car financing, to mention a few. They also boast that their clients need about 70% less paperwork, making the whole lending experience swifter and less complicated.
Surprisingly, only 45% of consumers feel confident that they can spot and identify errors in financial statements before turning them into reports, according to the Association of Certified Fraud Examiners. The Canadian fintech MindBridge has developed an AI that rapidly scans and identifies anomalies in financial statements and reports. This helps organizations and consumers reduce their financial risk and avoid damaging credit scores. MindBridge’s AI is effectively transforming how accounting can be done, streamlining the auditing process, and improving financial management for businesses and their owners, and private consumers.
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The Canadian fintech AptPay is making a splash in the UK. They’ve partnered up with Mastercard to facilitate an accelerated cash disbursement processing for businesses in various industries and sectors. It is through AptPay’s Application Programming Interface (API), that companies and businesses can integrate Mastercard Send to start payouts. Through AptPay’s compliance services, businesses and their employees can be assured that their transactions are secure and are compliant with the rules set for their particular industries. The API will also enable real-time digital payments that can be linked to banks. The best feature is that payments can be rejected, approved, and reversed by recipients—so they are not simply inert in the whole process.
As consumers and businesses are fully realizing the convenience, inclusivity, and safety of cashless transactions, it is the job of fintech companies to provide better services and processes. Thankfully, Canadian fintech is paying attention and is setting its own trends through its developments and initiatives. The coming months will be a truly exciting time for Canadian fintech and consumers should pay attention.
The Financial Conduct Authority (FCA) has announced that it will extend payment holidays on credit cards, personal loans, pawnbroking and motor finance to support borrowers affected by the COVID-19 pandemic.
Consumer credit customers who have not yet had a payment deferral under the FCA’s July guidance may request one that will last for up to six months, the UK regulator said in its release. At the same time, borrowers who have already had one deferral will be allowed to apply for a second.
“We will work with trade bodies and lenders on how to implement these proposals as quickly as possible, and will make another announcement shortly,” the FCA said, adding that lenders would soon provide further information on what this will mean, and that consumer credit customers should not contact their lenders yet.
Mortgage payment holidays, which had been slated to end in the UK on 31 October, will also be extended under much the same conditions. Borrowers who have not yet had a payment deferral will be allowed to request one that will last for up to six months. Borrowers who already have a deferral can extend it to a maximum of six months.
The FCA warned: “It may also be in the interests of mortgage borrowers who expect to have long-term financial difficulties to agree other forms of tailored support with their lender.”
The regulator’s new guidance comes ahead of an England-wide lockdown that will come into effect on Thursday and last for a month, ending on 2 December, in an effort to curtail the second wave of COVID-19 infections. Non-essential retailers and hospitality services will be closed, and travel will be subjected to further restrictions.
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However, educational facilities such as schools and colleges will be kept open.
“We’re not going back to the full-scale lockdown of March and April. The measures that I’ve outlined are far less primitive and less restrictive,” said prime minister Boris Johnson on Saturday. “Though, I’m afraid, from Thursday, the basic message is the same: Stay at home, protect the NHS, and save lives.”
Alpa Bhakta, CEO of Butterfield Mortgages Limited, explores how large and small banks have responded to the disruption caused by the pandemic and how it is likely to shape the future of the sector.
No business or sector is immune to the impact COVID-19 has been having on society. Not only are there the immediate health implications to deal with; the introduction of lockdown measures and social distancing has completely transformed the way businesses, investors and consumers interact with one another.
There is a general acceptance that, regardless of how or when the COVID-19 pandemic is effectively contained, the changes brought about by the virus will be permanent. From flexible working patterns to the adoption of digital processes that reduce the need for physical interactions, businesses are slowly transitioning to what is now being termed as the “new normal”.
Of all the sectors adapting to the new normal, one could argue the financial services sector faces some of the biggest obstacles. Historically, large financial institutions have naturally relied on traditional practices and have been slow to embrace change. This is partly due to their size and the natural time it takes to reorganise teams, install new systems and pass the necessary due diligence checks.
The sudden rise of COVID-19 cases caught many of these organisations by surprise. When lockdown measures were announced by the UK Government back in March 2020, these companies were faced with the following challenges.
The first was overcoming the logistical hurdles involved in managing a company when the vast majority of employees were working from home. Unlike small, specialised businesses who were able to adapt to this new environment, big banks had to ensure the necessary systems and protocols were in place in order to continue operating whilst managing risks appropriately.
The second challenge was reviewing the current products and services on offer and deciding which needed to be temporarily withdrawn from the market. If we look at mortgages, the majority of high street banks decided to stop offering high LTV products. Others refused to process new applications, with stringent application checks put in place.
Unlike small, specialised businesses who were able to adapt to this new environment, big banks had to ensure the necessary systems and protocols were in place in order to continue operating whilst managing risks appropriately.
The decision to pull certain mortgage products from the market makes sense, particularly at a time when it was not known when social distancing would be eased. However, this also had a significant impact on homebuyers.
A survey of 1,300 homeowners and prospective homebuyers by Butterfield Mortgages Limited (BML) in late May revealed that over half of homebuyers had been denied a mortgage this year. This is despite having agreements in principle. Of those we surveyed, three in ten, or 31%, said they had lost their deposit due to delays in securing a mortgage as a result of the coronavirus.
These statistics are startling and bring me to the third and final challenge banks are indeed continuing to face. That is effectively engaging and supporting their clients so that these customers are in a position to confidently manage their finances and make significant investment decisions.
Banks cannot afford to overlook the importance of effective customer engagement. After all, it is in these uncertain times that people are eagerly looking for advice and support. And based on separate research conducted by BML in the summer, it is apparent that some are not satisfied with their banks handling of the pandemic.
Indeed, some 19% of homeowners have lost faith in their banks this year because of the lack of financial support available during the pandemic. This is a concerning statistic and could signal the beginning of a bigger confidence crisis if not effectively addressed. What’s more, just under a third (31%) of customers said they were frustrated by their banks’ dependence on chatbots and automated services.
This is an interesting finding. At a time when people are more inclined to use digital services, it shows that banks cannot simply rely on a chatbot to meet demands for financial advice. In other words, banks need to see technology as an instrument that can be creatively leveraged to engage with their clients and networks. It is not a solution in of itself; rather a tool that will only be effective if part of a larger communication strategy.
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Over six months since lockdown measures were first introduced, it looks as though the country could be facing a new wave of social distancing regulations. This is without doubt a frustrating development. The UK Government has been actively trying to encourage spending and investment activity through targeted policies, and banks have been slowly putting products back on the market.
Regardless of what lies on the horizon, banks need to ensure they are doing everything possible to engage with their clients. This means creatively adapting to the new normal and not letting the other challenges they face overshadow their customer engagement. Failing this, they could risk losing customers in the long-term.
JPMorgan Chase & Co announced on Thursday that it would commit $30 billion to address racial wealth disparity in the US over the next five years, marking one of the largest corporate pledges towards racial equality since the death of George Floyd earlier this year.
The bank’s new initiative aims to provide $8 billion in new mortgages for Black and Latino borrowers, $14 billion in loans and investments to drive affordable housing projects, $2 billion in small business loans and $2 billion in philanthropy. It will also dedicate another $4 billion towards helping 20,000 Black and Latino customers lower their mortgage payments, which will involve grants for down payments and closing costs.
JPMorgan will also spend an additional $750 million with its Black and Latino suppliers and commit to opening branches in low-to-moderate income communities, giving a further 1 million people in underserved areas access to low-cost bank accounts.
“Systemic racism is a tragic part of America's history," said JPMorgan CEO Jamie Dimon in a statement. "We can do more and do better to break down systems that have propagated racism and widespread economic inequality, especially for Black and Latinx people. It's long past time that society addresses racial inequities in a more tangible, meaningful way."
To address racial inequality in its own 250,000-strong workforce, JPMorgan has stated that it will incorporate diversity targets into compensation decisions for managers.
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Organisations across the financial services sector have made pledges to furthering racial equity after the death of George Floyd in police custody sparked widespread protests in the US. Last month, Mastercard committed $500 million to a range of initiatives aimed at increasing financial inclusion among black communities in America. Bank of America and Citigroup have made pledges of their own, totalling around $1 billion each.
JPMorgan is the largest US bank by assets and made a profit of $36.4 billion in 2019.
UK property prices jumped by 7.3% year-on-year during September, with lender Halifax also reporting in its latest House Price Index that mortgage applications have reached a 12-year high.
Halifax’s figures showed that the average price of a residential home reached £249,870 in September, a 1.6% rise from August. This brought the annual growth rate to 7.3%, the fastest observed since June 2016, beating analysts’ predictions of 0.6% monthly growth.
“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May,” said Russell Galley, managing director at Halifax. “Across the last three months, we have received more mortgage applications from both first-time buyers and home movers than anytime since 2008.”
However, Galley also warned of “significant downward pressure” that would be placed on house prices in the months to come as the housing market will eventually be dampened by the UK’s economic downturn.
“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane,” he said.
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The “pent up demand” of prospective house buyers has been widely credited for the resurgence of property sales since March and April, when house viewings and moves were banned under COVID-19 lockdown measures.
It is likely that the housing boom will be weakened by the reimposition of strict lockdown rules in several parts of the UK, and by the ending of several of the government’s employment support measures at the end of October.
