77% of UK businesses are aware of fintech products and services and two-thirds (65%) have adopted at least one fintech application, with a fifth (19%) taking on four. These adopters reported saving (on average) over £5,500 a year as result of using the fintech products and services.

Interestingly, a tenth (11%) reported using bitcoins or other cryptocurrencies at some point in the past year in processing payments. Whilst the clear majority (89%) have not used cryptocurrencies, a fifth (21%) of these businesses expect these currencies to feature in their payment transactions over the next 12 months.

Businesses reported using fintech products and services for banking transactions (23%) and foreign exchange services (16%). Meanwhile, one in four (24%) reported using cloud-based software for their accountancy functions and a third (32%) used online lenders for business loans or invoice finance. Only 2% of businesses are using insurtech (insurance technology) services.

Bobby Lane, partner at accountancy firm SSH LLP, commented: “Most of our clients are now using cloud-based solutions and automating many of their routine processes. This means that I have more time to focus on advising my clients on strategic matters. Also, it’s now far easier for us to use fintech services because the ability to integrate with these new systems has opened up huge opportunities for improving processes.”

Business leaders are drawn to fintech because it saves time and money (56%) whilst a third (34%) were impressed by the user experience. Interestingly, a quarter (23%) said fintech’s were more transparent on fees and provided a better customer service.

Jerry Anderson, Managing Director at wedding rings company Allied Gold Ltd, commented: We’re a third-generation family business, I have adopted fintech across the business from our accounting to our banking services. The user experience and service is far superior to what is available on the high street.”

Anil Stocker, CEO and co-founder of MarketInvoice commented: “The expansion of tech-driven digital services has been remarkable over the past 5 years. We know that consumers have been adopting tech applications into all parts of their lives, but our research shows that now UK businesses are also becoming tech-savvy.”

“Fintech applications are revolutionising the way business is being done from how employees report their expenses to the way businesses report their financial performance. Entrepreneurs always seek out the best means to drive their businesses and clearly fintech products and services are becoming a stable part of this approach.”

It’s not only business processes that are benefitting from fintech adoption. Companies are using fintech to engage staff. 62% of businesses use fintech adoptions for staff to report expenses (i.e. Expensify) and for payslips automation. A further 23% are using online pre-paid cards (i.e. Revolut) in allocating budgets to teams.

1 Based on FSB statistics show there are 5.5m businesses in the UK, of which 1.3m are employing businesses. The £4.6b is achieved by multiplying 65% of 1.3m businesses by £5,500 (the average annual savings by adopting fintech services).

2 Results are from a MarketInvoice survey of 3,482 UK businesses conducted in August/September 2017. Respondents were manager, director and C-level post holders. The survey was conducted online and by e-mail.

(Source: MarketInvoice)

As you may already know, MiFID II is just around the corner and some firms are already well on their way to compliance, however others remain either oblivious, unprepared or facing the many challenges in establishing steps towards compliance. Here Fabrice Bouland, CEO of Alphametry, explains for Finance Monthly what some of these challenges may be and what lies ahead for firms, in particular dealing with the different approaches regulators are taking in respect to the implementation of investment research unbundling.

On 3^rd January 2018, new EU legislation comes into practice, part of which stipulates that investment research will have to be paid for separately. This marks an end to the historic model whereby much of it has appeared to be provided free of charge, or at least bundled in with other costs such as trading commission. Firms are now in a scrabble to the finish line as they put new processes in place and make decisions about how research will be sourced and paid for. Few, if any, are fully MiFID II-compliant and ready for January’s deadline. Yet as the clock ticks down, and daily stories emerge from buy and sell-side firms announcing their research pricing and budgeting plans, one fundamental question is often overlooked – how are asset managers and analysts determining the value of their research to ensure maximum value is generated from whatever approach they have decided upon.

Many asset managers have said they will be footing the bill for external research out of their own pockets. Most recently, BlackRock has joined the growing queue of firms which have decided to take this approach. Its announcement was quickly followed by a number of firms, including Schroders, Janus Henderson Investors, Union Investment and Invesco, backtracking on earlier decisions to pass research costs on to investors – all have now said they will be absorbing the costs themselves. Of course, bearing the cost internally will be much harder for smaller and mid-tier firms, many of which will have to reduce the volume and breadth of external research they have access too.

When it comes to pricing, we’ve seen some eye-wateringly high figures. Barclays outlined a system of tiered packages, starting at £30,000 for a ‘read only’ subscription to European research, rising to £350,000 for its ‘Gold’ package. The larger investment banks will, of course, charge more than their smaller rivals. Canaccord Genuity Group’s sell side unit in the UK released a figure of £75,000 a year for full access to the firm’s investment research and analysts, including dedicated sales and analyst calls and customised research requests. Similarly Alliance Bernstein LP’s is quoting firms around $150,000 a year for access to equity analyst reports and other services.

So what’s missing in this brief overview of the market and regulatory landscape? Better evaluation of research must undoubtedly play a role in how firms consume research in an unbundled world, especially for smaller managers with reduced budgets. Technology has a key role to play in accurately assessing and pricing investment research, as well as demonstrating full transparency in order to meet regulatory requirements. In many ways, this is a market crying out for innovation given that only 1% of research notes sent out are read by the buy-side, according to Quinlan & Associates.

In a digital, data-reliant world, traditional voting systems for research are slow and inaccurate. Evaluation must be bottom-up and data driven if firms are going to establish where reduced budgets need to be focused, and which providers deliver the best ROI. New research platform generation provide an opportunity for managers to better understand what they consume, as well as helping providers hone in on providing the most valuable and relevant content. There now exists a huge opportunity for asset managers to integrate innovative knowledge management solutions so that research can be targeted directly into the heart of firms’ investment process, giving them the best data from global sources, as well as supporting budgeting and payment decisions in a more detailed way

Clearly, there remains a lot to do over the next four months, and into 2018, to ensure firms are ready and compliant with MiFID II. The price discovery process continues to be very painful, not to mention the challenges asset managers face deciphering the varying nuances and interpretations of the legislation by different regulators, and how MiFID II will work globally.

People are paying more for their homes around the world, with average house prices up 6.5% in the last 12 months.

But, where have house prices grown faster than the average income?

Assured Removalists have combined data on average annual salary, income tax and house prices to produce a ratio that shows the measure of housing affordability around the world. The higher the ratio is, the less affordable the houses are.

How does your country compare? You can view the full data set here.

The UK outsourcing market recorded its strongest half year performance since 2012 between January and June as financial services companies ramped up activity, according to the Arvato UK Outsourcing Index.

The research, compiled by outsourcing provider Arvato and industry analyst NelsonHall, revealed outsourcing deals worth £5.2 billion were agreed in the first six months of the year, with financial services accounting for 55 % of the total contract value at £2.9 billion.

The sector’s investment in outsourcing services was behind a steep increase in spending by UK businesses, according to the findings. Companies signed contracts worth £4.5 billion between January and June, representing a 95 % year-on-year rise. The latest figures follow a particularly strong first quarter, which saw firms agree deals worth £2.5 billion - the strongest quarterly private sector spend since the last three months of 2011 (£6.4 billion).

IT outsourcing (ITO) contracts accounted for the majority of private sector procurement in H1, with deals agreed worth £3.8 billion, up from £1.2 billion in the first six months of 2016. Application management and hosting were the most popular service lines procured by the private sector, as businesses focused on digital transformation.

The overall value of UK outsourcing contracts signed in the first six months of 2017 represents the largest half year spend since H1 2012 (£5.6 billion), and a 23 % year-on-year rise.

Debra Maxwell, CEO, CRM Solutions UK & Ireland, Arvato, said: “It’s clear from the research findings that we are yet to see any impact of Brexit on the sector as businesses continue to invest in new technology and transforming their services.”

Security concerns drive outsourcing spend in financial services

Financial services businesses signed outsourcing contracts worth £2.9 billion in the first half of the year, a steep rise from the £428 million agreed in the first six months of 2016.

An increased demand for outsourcing IT services, specifically network infrastructure, security architecture and cloud computing, was behind the rise, according to the findings. The sector accounted for 62 % of total ITO spend in H1 2017, compared to just five % over the same period last year.

Patrick Quinn, CEO of Arvato Financial Solutions UK & Ireland, said: “Strengthening security and data protection are top of the agenda for the sector and businesses are increasingly turning to partners to deliver resilient infrastructure and architecture in the wake of high profile cyber-attacks and to prepare for the new data privacy legislation.”

Improving customer service drives growth in energy and utilities sector

The number of deals agreed by energy and utilities businesses over the first six months of 2017 rose by 20 cent year-on-year, according to the latest Index findings.

Companies signed outsourcing contracts worth £268 million over the period, up 10 % on the value of deals agreed between January and June 2016.

The research reveals an increase in BPO spend is behind the rise, specifically investment in customer services and collections. Energy and utilities firms spent £164 million improving customer experience in H1 2017, compared to the £4 million invested by the sector on BPO during the same period in 2016.

The Arvato UK Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm Nelson Hall, in partnership with Arvato UK. The research is based on an analysis of all outsourcing contracts procured in the UK market during H1 2017.

Other headlines from the H1 2017 Index include:

Overall, 87 % of spend came from the private sector, with government bodies accounting for the remaining 13 %.

A total of £882 million was spent on business process outsourcing (BPO) deals, representing 17 % of the overall UK outsourcing spend.

The value of ITO contracts accounted for 83 % of the UK market, with contracts signed worth £4.2 billion.

(Source: Arvato UK & Ireland)

Robo-advice has become one of the more popular and prominent financial technology innovations of the last few years, and it’s easy to see why. However, Lester Petch, CEO at FinchTech, reckons there’s cause for concern, and below talks Finance Monthly through five reasons robo-advice may not turn out to be all it’s promised without confronting some hard-hitting issues.

In theory these platforms offer expanded access to financial advice and fill a widening RDR gap, at a lower cost and with superior ease of use. Citigroup estimates that assets managed by robo-advisors could reach a collective value of $5 trillion over the course of the next decade - and that is certainly something to aim for.

Excitement and optimism should always be tempered with pragmatism however, and practically speaking, there are reasons to be concerned. Many available and in build platforms promise innovation, efficiency, and accuracy, but have some major potential hurdles to overcome.

1. Build cost and overspending on customer acquisition

Robo-advice start-ups are often unknown quantities, and must therefore build from scratch. Many rely on digital and social marketing campaigns, alongside referrals, o generate revenue. The problem is that these campaigns are often expensive - sometimes hideously so. Nutmeg, for example, posted a pre-tax loss of £9 million in the last fiscal year, even as marketing and staff costs hit £10.8 million.

It’s not altogether surprising that when cost of acquisition (CAC) for clients exceeds overall lifetime value (LTV), firms lose money. The assumption is that these expensive omni-channel campaigns will of course be successful, and eventually skew the CAC to LTV ratio back in the company’s favour. This is however a precarious position for any business to find itself in, even one with fantastic technology. Deep pockets are required.

In some cases the aim might perhaps be for the business to accumulate enough assets under management to enable a sale or exit, however this is also a risky strategy. Recent 2016 research by SCM Direct, a UK wealth manager, suggested most UK robo-advisers “will go bust before acquiring the sizeable assets under management to ensure their sustainability”.

2. No real performance history

Sophisticated software is no substitute for experience. Many robo-advice platforms haven’t weathered any serious economic storms. Many have little performance history at all and rely on back testing. How much can you trust in a technology that has never been truly tested in the heat of battle, or weathered an event such as a recession or cataclysmic sell off?

3. Limited suitability

Robo-advice platforms may be at risk of not always accurately assessing risk tolerance – which can cause serious problems in an economic downturn. Recent research from FinaMetrica found that 21.2% of the firm’s 100,000 customers incorrectly estimated their true risk tolerance by a significant margin, when using a psychometric risk test. Platforms could be vulnerable to recommend investments that are beyond or below the client’s capacity for risk, especially in the event that the markets exhibit extreme volatility.

4. Reliance on algorithms

In an age of sophisticated and improving technology, reliance on this tech has led some to treat algorithms with an almost mystical reverence. Many are truly impressive, but can clients truly understand them? No algorithm is perfect, and many are unproven and untested in reality. They’re theoretically created to take human error or preference out of the equation, but human error can be a factor in their design and development. Could a mistake lead to catastrophic consequences for clients and do they know what they are buying into?

5. Lack of differentiation

For all the talk of the market’s innovation and creativity, it’s often hard to tell one robo-advisor from another. The major differences tend to be cosmetic, a technological bell here, a branding whistle there, and little differentiating focus on the client’s needs and priorities.

Those robo-advice platforms that enter the market in the near future with more niche or specialised offerings aimed at specific market segments such as cultural groups or different age brackets, are more likely to gain traction, as well as potentially spend less on client acquisition

In conclusion, robo-advisors will need to overcome these problems and more to achieve long-term viability. This isn’t to say that the technology isn’t exciting, the need isn’t there or that it doesn’t have huge potential. The right platforms could potentially redefine the market, and digital investment management is a step in the right direction. If digital investment management platforms can iron out the kinks and focus on what works for their own business model, and more importantly their customers, there is a bright future ahead of them.

The answer is that they are so much more. In a study released today, Dun & Bradstreet revealed data that uncovers the changing role finance leaders play in stewarding their organisation’s customer experience, a mandate traditionally viewed as one of the chief marketing officer. Because positive business results are often fuelled by great customer experiences, chief financial officers are increasingly using data and analytics to become customer-obsessed to ensure their organisation’s customer strategy is rooted in insights that will drive favourable outcomes.

The Customer-Obsessed Finance Leader, a study commissioned by Dun & Bradstreet and conducted by Forrester Consulting, found:

• 36% of company finance executives surveyed were identified as customer-obsessed Leaders, making customer-focused initiatives a top priority this year and reporting increases in customer acquisition, retention, and satisfaction.
• Customer-obsessed finance Leaders reported year-over-year increases in revenue, profitability, and cash-flow at a rate of 10 to 30%age points greater than their less advanced peers.
• Data and insights-driven companies are 39% more likely to report year-over-year revenue growth of 15% or more.
• 79% of customer-obsessed Leaders indicated that their organisation will likely increase spending on technology applications to support customer engagement.
• Implementation of a customer-obsessed strategy requires mastery of seven data competencies that must be aligned across people, processes, and technologies.

CFOs, with their leadership position, cross-organisational perspective, and ability to understand complex sets of data, are uniquely positioned to implement insights-driven behaviours and processes within their organisations. Investing in the right tools and technology, as well as augmenting internal data with third-party data and analytics are some of the key actions leading finance executives are taking.

Challenges to becoming truly customer-obsessed persist; disconnected strategies within the organisation, disparate data, inconsistent metrics, and a lack of investment in technology are among respondents’ most cited obstacles.

The study further outlines seven critical data competencies to master, qualities and resulting metrics that set customer-obsessed finance leaders and followers apart, and how-to strategies to focus efforts around using data and analytics to become a customer-obsessed organisation.

The survey, fielded within North America, Europe, and Asia Pacific in February 2017, included feedback from 250 finance executives (CFOs or EVPs of finance) from companies in multiple industries generating $150 million or more in revenue.

(Source: Dun & Bradstreet)

An Interview with:

·     Marc Vollenweider, Co-founder and Chief Strategist

·     Ashutosh Gupta, Co-CEO and Global Business Unit Head for Financial Services

·     Ravi Mehrotra, Co-CEO and Global Business Unit Head for Corporates and Professional Services

 Founded as a start-up in 2001, Evalueserve is a global professional services provider offering research, analytics, and data management services. The company is powered by mind+machine – a unique combination of human expertise and best-in-class technologies that use smart algorithms to simplify and automate key tasks. This approach enables Evalueserve to design and manage processes that can generate and harness insights on a large scale, significantly cutting costs and timescales and helping businesses to overtake the competition. The company works with clients across a wide range of industries and business functions, helping them to make better decisions faster, reach new levels of efficiency and effectiveness, and see a tangible impact on their top and bottom line.

This month, Finance Monthly had the privilege of speaking to Marc Vollenweider - Co-founder and Chief Strategist, as well as the company’s new Co-CEOs - Ashutosh Gupta and Ravi Mehrotra, who tell us all about the mind+machine concept and Evalueserve’s mission.

Marc, you have recently shifted your role from the being CEO to becoming Evalueserve’s Chief Strategist, can you tell us a bit more about this transition?

Marc: After spending about 16 years as Evalueserve’s CEO, I decided that it was time for the next generation to get involved in running the business, from an operational point of view. We decided to go with a Co-CEO structure, by splitting the role between Ashutosh and Ravi, while I shifted to a full-time board role, which allows me to concentrate on innovation-related projects. I am still strongly involved in the company, but instead of dealing with the day-to-day operations, I focus on proposing strategies and examining our next steps for the future.

Tell us about the experience of writing a book while running a global business? How have mind+machine and the book influenced Evalueserve and its business?

Marc: As soon as the idea about the book came about, it was clear that I wouldn’t be able to combine writing a book with my full-time CEO role. Thus, I took some time off, between March and June 2016, and wrote the book, while Ashutosh and Ravi got to practice running the business on their own. The experience of authoring a book on its own was extremely rewarding and I am proud of the final result.

The mind+machine concept is something that we started working towards 5 years ago, realising that a people-only approach was becoming too slow and too costly. We saw an opportunity for automating tasks and processes, and using machines to run repetitive tasks. We started coming up with workflow platforms, productivity tools, analytic engines, better knowledge management, etc. and fully rebranded the business. If we compare Evalueserve today to the company it was 5 years ago, I’d say that we have reached a productivity increase of about 30-40% on a per head basis. Mind+machine makes us faster - it makes the quality of our work better, and it gives our clients new capabilities to work with.

In today’s world, clients want to see innovation, so developing mind+machine has been essential for Evalueserve.

What are the benefits of a dual CEO-structure?

Ashutosh: At Evalueserve, we are very client-centric and also serve a variety of different industries. The fact that I have previously worked within financial services, while Ravi comes from a more corporate and consulting-oriented background, allows us to focus on these very different client segments. It also provides us with two different points of view and diverse ideas when it comes to dealing with common areas like HR, policies, marketing, etc. So the Co-CEO structure actually works really well for us.

Ravi:  Given the scope and scale of Evalueserve, being a very large and complex business, we want to make sure that we divide the different areas of the business and responsibilities between each other.

Additionally, the dual CEO structure, although not new, is still very rare and unusual. One of the reasons why it works for us is because, before embarking on this, we already had a very strong working relationship, with both of us having spent over 6 years in Evalueserve.

What are the main challenges that decision makers are facing today? How can mind+machine help overcome these challenges?

Marc: There are millions of decisions that need to be made in a company on a daily basis. And I’m not talking only about the decisions that the executive board makes; at Evalueserve we’re looking at decision makers at various levels of the company - from the CEO to the service technician. So for these millions of decisions, naturally, there’s a very large number of analytic use cases.

The problem of decision-making includes the logistics of having the right data at the right location, at the right time.  Then, these decisions must be transferred into a workflow where they get converted into actions and create impact. How does mind+machine help with all of this?

Unfortunately, when you look at how many decisions are being made within an organisation today, you’ll still see a lot of manual work. There are a few workflows, which make the life of decision-makers significantly easier. Mind+machine provides the client with the ability to crack the analytic use cases and then put a system or a machine in place to get them done on a recurring basis, as well as a platform that has all the necessary data feeds and analytics, and most importantly, links multiple end users and decision-makers in a collaborative way. This results in fast and efficient decision-making processes, with the knowledge management being done within the platform, so it doesn’t have to be redone every time.

Why do analytics matter for almost all types of businesses?

Marc: In today’s world, analytics are critical, solely because a lot of decisions within an organisation depend on diverse and complex data, which wasn’t so much the case up until 15 years ago. When it comes to decision-making, we need data that has been prepared, analysed and converted into insights and decision-ready output.

Today, every business needs an increasing amount of analytics because they improve the return on investment of many processes – it’s as simple as that.

How can one set up the use-case thinking in the company?

Marc:  Use cases have a number of implications for the whole company. Currently organisations tend to mingle everything together in a big pot - they set up central data scientist teams and large data lakes from where the teams try to come up with analytic output. However, this approach frequently leads to White Elephants not serving the end users’ needs well, often with negative Return on Investment (RoI). Companies should move to a culture of individual-focused analytic use cases.

A use case is not just an analysis; it comprises the data flow, the analytic engine, the UX (User Experience), the knowledge management for improving re-use, and the link to the overall workflow. Only in this way can the end users get what they need and achieve positive RoI.

It is my belief that this cultural change needs to be driven by the C-Suite, including the Chief Data Officer, who should jointly agree on putting this philosophy in place. Setting up the use-case thinking in a company should start with an agreement between the highest level executives, who should then drive it into individual units, so everyone gets into this mode of thinking over time.

How does Evalueserve use use cases to help its clients with decision-making?

Ashutosh: At Evalueserve, we have a whole collection of analytic use cases that are well-documented. Thus, when a new client comes to us with a business problem, we can easily leverage our database where we’ve cracked similar use cases before and come up with a specific solution, while saving our client a lot of time and money.

Ravi: Additionally, our use case hub is also helpful when it comes to showing our clients what mind+machine means. We’ve gathered all of these concepts that we are developing into a product, and have created a collection of use cases that we’re able to demonstrate to our clients at all times. The use case hub also enables the Chief Data and Chief Analytics officers to scale up their analytics capabilities by harnessing the knowledge, ensuring consistency and carefully selecting use cases for wider deployment and investment, based on the RoI.

What is your advice for successful leaders in the modern tech-focused world?

Marc: If we look at this from a ‘what lies beyond the horizon’ perspective, my advice is to get your feet wet - look into potential trends and then take well-informed, but still risky decisions. People nowadays are myopic when it comes to considering competition and future client needs and often get stuck in their current views. Being open to change and innovation and having a portfolio of new initiatives to play with is a critical element of strategy in today’s tech-focused world.

Ashutosh: Nowadays, it can be very difficult to stay on top of and respond to the changing technology trends, while running the business. So while it’s important to have a good technology strategy, it is also very important to communicate that strategy to your clients and throughout your organisation, so everyone shares the same goals and feels they can contribute to its success.

Ravi: The two things that I’d like to add are to firstly, be comfortable with uncertainty – we live in a very dynamic world and things change all the time. Leaders need to be flexible and always prepared for change.

Secondly, nowadays, it’s very easy to get so fascinated by the technology aspect; so my piece of advice is to not forget about the basics when it comes to leadership. i.e., technology and analytics are enablers to serve the broader business goals, and not the other way around.

Read more about mind+machine at: http://blog.evalueserve.com/ 

While the threat of cybercrime is at the forefront of SME owners’ minds, ‘cyber recovery’ is not, according to a new study, The Business of Cyber Recovery, by PolicyBee. Five hundred UK SMEs were asked about their preparedness for cybercrime and its aftermath: one in three believe that a cyber-attack on their business is a matter of ‘when’ not ‘if’, and quarter believe an attack is ‘likely’.

However:

• 74% have not put any budget aside to deal with the aftermath.
• 43% will react if and when a cyber-attack happens and have absolutely no plans in place.
• Just 14% of all SMEs have a detailed plan which covers all bases and crucially have tested that plan.

Sarah Adams, cyber insurance expert, who commissioned the study for PolicyBee, said: “Large corporates will all have a ‘what if’ plan in place that has been stress tested via a crisis simulation or role play exercise. They will know exactly what to do in the event of a cyber-attack. However, small businesses seem to be chancing their luck and despite expecting to be hacked, aren’t preparing to be prepared.

“The difference between a large and small company is that at least in the short term, no single individual will lose their income in a big business - but in a small business, their day to day livelihood could be altered dramatically within a scarily short space of time.”

Businesses in denial

Younger respondents seem more aware of potential cyber risks - as business owners get older they think a cyber-attack is less likely: 22% of 18-34 year olds think a cyber-attack is unlikely; 41% of 35-54 year olds and 56% of 55+ year olds.

Business in the South West and East of England are most in denial of a cyber-attack - those in London and the NE are the most switched on.

Similarly, sole traders believe they are least at risk from a cyber-attack: 71% say it is unlikely; 32% of businesses with 10-49 employees and one in five of businesses with 50-249 employees.

Adams continued: “More mature sole traders in the South West and East Anglia seem to be in the most potentially vulnerable group. If you are one of these people, it would be well worth looking at your business’s potential to become the next cyber victim, and how you’d continue to operate afterwards.”

IT and management consultant firms more switched on to cyber recovery

Interestingly, SMEs operating in the IT and management consultancy sectors had a much more realistic attitude to cyber-attacks:

• only 24% of IT businesses say an attack is unlikely (48% say likely)
• 16% of Management Consultants say an attack in unlikely (51% say likely)

SMEs not ostriches

According to PolicyBee, who provides cyber insurance and other business insurance to freelancers and small businesses, the study highlights the fact that SMEs are simply too busy running their day-to-day operations.

Adams concluded: “It’s not the usual case that all SME owner-managers are burying their heads in the sand, as the study shows some awareness of the possibility of an attack amongst some groups. It’s more that these busy owner-managers haven’t prioritised any time to deal with the aftermath of an attack. We’re all familiar with the terms cybercrime; cyber-attack; and hackers; but we need to make ‘cyber recovery’ part of the general discussion now too.”

(Source: PolicyBee)

PwC's head of research and analysis of fintech, Aaron Schwartz shares his views on what areas are more likely to attract investors' attention in the future. He talks to The Banker's Silvia Pavoni during Swift Business Forum New York.

According to new research released this week by Dreyfus, a pioneer in US investing, half of individual investors (49%) have indicated they have yet to take any action to reevaluate their investment approach in light of the possibility of a shifting investment landscape, as we head into the eighth year of the economic recovery.

"As long-term risk/return expectations have shifted with an increase in inflation, the rise of US nationalism and record-low volatility, investors would be well-served to reevaluate their portfolios in light of changed circumstances to determine if they will continue to meet their investment objectives," said Mark Santero, Chief Executive Officer, The Dreyfus Corporation, a BNY Mellon company.

The "Helping Meet Investor Challenges Study" surveyed 1,250 investors with $50,000 or more in investable assets on their approach to investing. This is the first release of survey data that explores all elements of the group's investing lives, including engagement with investment professionals, portfolio allocations and appetite for risk. The study also surveyed 200 independent and institutionally-based advisors regarding the investing relationship between advisors and clients.

Older Investors Ignoring Past Market Precedents in Adjusting Portfolios

Older investors have had an opportunity to weather a variety of stock market highs, such as the bull markets from 1987-2000 and 2009 to the present, and lows, such as the savings and loan crisis in the 1980s, the stock market crash in 1987 and most recently the financial crisis of 2008. Yet, even with this past knowledge in the rearview mirror, the survey reveals:

• Sixty-one percent of investors aged 55+ indicated they have not or will not reevaluate their investment approach in today's existing investing environment.

In comparison, younger investors who experienced the 2008 market meltdown and who began their savings efforts in the earlier part of their careers demonstrated a forward-thinking approach to reevaluating their portfolios. This generation of investors between the ages of 21 and 34 indicated the following:

• Sixty-five percent had already evaluated their investment approach, compared to just 51% of those aged 35-54 and 39% of those aged 55+.
• A greater percentage of younger investors between 21-34 (63%) also indicated they had worked with an advisor in reevaluating their investments, while only a third (38%) of those 55+ had evaluated their investments with an advisor.

"Our survey revealed that younger investors have demonstrated in greater numbers a more proactive approach to reassessing their portfolios and seeking out their advisors for counsel, some of whom might lack the historical market experience and accumulated wealth of older investors," said Mark Santero.

Mass Affluent Investors Slow to Take Action on Their Portfolios

The survey also looked at the investment actions taken by mass affluent investors, those who had investable income between $250k and $2.5 million. The survey found nearly half of this audience had work to do in reviewing their portfolios and how more than a third had decided to do nothing with their portfolios:

• Forty-three percent of the total mass affluent investor audience had not reevaluated their investment approach in this new investment environment.
• Thirty-nine percent of mass affluent investors working with an advisor had not reevaluated their investment approach.

Investors Look to Advisors in Navigating the Way

Despite the last eight years of a US bull market, uncertainty is very much a reality in U.S. and global markets.

Yet a majority of investors remained on the sidelines, the survey found:

• Six in ten investors (60%) without a financial advisor are most likely to put off their plans to address today's market challenges, with only one-quarter (24%) saying that they plan to address challenges they face at some point in 2017.
• Seventeen percent said they don't have any plans to reevaluate their investment approach.

Santero added, "We believe investors who don't work with a professional advisor could greatly benefit from the insights an advisor can provide in tailoring a goals-based approach for their individual circumstances against today's investing environment of uneven economic growth. Options might include diversifying their US exposure with global fixed income and equities or considering dividend or alternative investing strategies."

Those individual investors who worked with an advisor had a greater likelihood of adjusting their portfolios. The findings revealed that:

• Almost three-quarters (65%) indicated they had reevaluated their investment approach, compared to two in five (40%) who had not worked with an advisor.
• Nearly three-quarters (73%) of advisors' clients changed their approach as a result of advice.

(Source: Dreyfus)

Latest research from the Association of Investment Companies (AIC) using Matrix Financial Clarity has revealed purchases of investment companies by advisers and wealth managers on adviser platforms hit a record level over the 12 months to end of March 2017 at £777m. This is 11% higher than in the year to December 2015 (£698m), which was the previous record for a 12-month period.

In Q1 2017 adviser and wealth manager purchases reached £246m, the second highest quarterly figure on record. This is 85% higher than the same quarter last year (£133m) and an increase of 25% on Q4 2016 (£196m). The figure for Q1 2017 fell just 10% below the highest ever level of purchases in Q2 2015 (£273.9m), which was boosted by the launch of Woodford Patient Capital Trust.

For the first time, Sector Specialist: Debt was the most popular investment company sector, accounting for 14% of all purchases in Q1 2017. Property Direct – UK, the top sector for the past two quarters, was the second most popular sector with 13% of purchases.

Commenting on the results, Ian Sayers, Chief Executive of the Association of Investment Companies (AIC) said: “It is very positive to see adviser purchases of investment companies at a record level over the last 12 months and demand for training is stronger than ever.

“The Property Direct – UK sector was the most popular investment company sector for the previous two quarters – no doubt due largely to the problems of open-ended property funds last year but it’s interesting to see that the specialist debt sector, which focuses on illiquid debt, has taken the top spot for Q1 2017. It seems that buyers on adviser platforms are becoming increasingly aware of the strength of the closed-ended structure for accessing illiquid assets.”

Additional findings

Following Sector Specialist: Debt and Property Direct – UK as the most popular investment company sectors for adviser purchases were: Global (12%), UK Equity Income (10%), Sector Specialist – Infrastructure (5%) and Private Equity (5%).

Total adviser purchases of investment companies on platforms were £219m in 2012, £400m in 2013, £481m in 2014, £698m in 2015 and £663m in 2016. This equates to growth in total purchases of 202% between 2012 (pre-RDR) and 2016. The slight fall in purchases between 2015 and 2016 is accounted for by the spike in purchases in Q2 2015, when Woodford Patient Capital was launched.

For Q1 2017, Transact remains the most used platform for adviser purchases of investment companies, with a 34% market share, followed by Alliance Trust Savings (23%), which has had a strong quarter, Raymond James (11%), Ascentric (11%) and FundsNetwork (9%).

(Source: The Association of Investment Companies)

The ‘TDX Group Consumer Debt Report 2017’ from the UK’s leading provider of data and technology-driven debt solutions for businesses, reveals that over a quarter (28%) of Brits fear they may not be able to keep up with repayments on their personal debt.

The online survey, conducted by YouGov, also found that unsecured debt now tops average monthly earnings¹, with more than one in four (28%) owing in excess of £2,000. Almost half in debt (49%) owe money to more than one organisation. In addition, one in four (25%) are concerned they could lose their job, while almost one in five (18%) are worried their pay might fall back.

With little to no savings buffer, many (43%) are planning to cope by changing job or taking on a second job. This makes it harder than ever for creditors to gain a comprehensive view of their customers’ financial circumstances in order to responsibly recover money owed.

Although less than one in 10 (8%) would seek help from a company/lender they owe money to if they needed financial help, the report revealed that consumers are looking for businesses to be supportive and offer practical solutions to any financial difficulties they encounter, such as a reduction in repayment costs (cited by 41% of people surveyed), a reduction or break in interest being added to their debt (37%) or a part write-off of their debt (29%).

The cost of getting it wrong could be substantial to businesses with 46% of consumers saying they would not deal with a company again if it provided poor service at a time they were suffering financial difficulties, or if they failed to provide solutions that might help improve their situation. A third (33%) would share such bad experiences by advising friends and family to steer clear of a company that behaved in such a way.

Richard Haymes, Head of Financial Difficulties at TDX Group, said: “Our research shows that creditors need to act now to plan for a spike in problem debt. Many individuals are growing anxious about their ability to stay on top of their personal finances and some have already begun to run into trouble. We can expect to see an increasing number of ‘new’ customers entering collections and recoveries who are unused to dealing with arrears.

“We’re also seeing a change in the mix of creditors who are owed money, reflecting a growth in non-traditional credit default. Over time, this will change the payment hierarchy, and with the profile and payment decisions of those who owe money changing, the need to understand the customer is more critical than ever.

“In the coming months it will be major issues like the fallout from the General Election and Brexit, rather than micro industry challenges, that will have the most impact on collections and recoveries. The key focus will be to maintain flexibility around strategy and suppliers, while also building capacity to deal with an overall increase in delinquency and default. Companies must respond now to limit their exposure to rising bad debt levels.”

(Source: TDX Group)