New regulations are set to come into force that will enable customers to choose the cheapest lender, after a review by the Competition and Markets Authority said consumers are paying more than they should be for banking.
From 2018, banks will have to share customers’ data with third parties who can then show how much could be saved by using other lenders. Several online ‘challenger banks’ have sprung up recently, offering prices far cheaper than those of the main “big four” lenders – Lloyds, RBS, HSBC and Barclays – but figures suggest that only 3 percent of consumers take advantage of these lower prices by changing bank.
As part of the new regulations, banks will also have to have a cap on monthly fees for unarranged overdrafts. However, reactions to the news have been less than positive; Alex Neill, director of policy and campaigns at consumer group Which? said, “it is questionable whether these measures will be enough.”
“It is disappointing that the monthly charge cap is not actually a cap and banks will be allowed to continue to charge exorbitant fees for so-called unauthorised overdrafts, rather than protect those customers that have been identified as among the most vulnerable.”
The CMA is hoping it will give a boost to the Fintech sector, powering growth in the area as investment falters post-Brexit. Jamie Campbell, Head of Customer Experience at Bud, a start-up allowing millennials to manage all their banking from one place, says Fintech is the “people’s champion” of finance. He agrees that Fintech companies are increasingly becoming the better way of banking, continuing, “all of this will lead to better products and services for individuals”.
FinTech is a sector that has grown up within the EU – in fact, it has never functioned without it. Within the climate of openness and cross-border investment cultivated by the European Union, London’s has become the EU’s undisputed Fintech capital. But after Brexit, is London likely to keep the top spot?
Rightly, many are worried about the effect Brexit will have on the city’s booming industry. London’s Fintech companies were strong remainers; a survey by Tech London Advocates, a body that represents about 2,700 of the British capital’s tech sector, found 87 percent of its members polled wanted to remain in the EU. London has been the most friendly climate towards start-ups, and fintech firms in particular; ex-mayor Boris Johnson, along with George Osborne, championed the development of the Silicon Roundabout area. But now all this is at risk – and many new firms are considering whether it would be better to move abroad.
‘Silicon Roundabout’ at Old St in LondonMarket access
One of the obvious benefits that the European Union brings the Silicon Roundabout is access to markets throughout Europe. For Fintech start-ups, this is key – EU rules mean that the UK has “passporting” priviledges, allowing a bank to operate in all European countries so long as it has a licence from an EU member state. Having the opportunity to operate in 28 countries is clearly invaluable to a start-up business.
Similarly, freedom of movement widens the pool of talent and allows fintech firms to hire the brightest developers from all over Europe. According to Innovate Finance, 30 percent of people employed in Fintech in the UK are from overseas; if the UK is facing a skills gap in areas that start-ups need, Europe is the best solution to the problem.
EU Investment
The European Investment Fund (EIF) is a huge source of investment for British businesses – last year, the UK benefited from £559 million from the fund. Once Britain formally leaves the EU, it seems unlikely that it will still be allowed to benefit.
In 2015, the British Fintech sector generated £6.6 billion in revenues and attracted £524 million in investment. According to a report from Accenture, in 2013 the UK and Ireland represented 53 percent of Europe’s rounds and two-thirds of the total raised by Fintech startups – investment that came from investors all over Europe, wanting to put their money into a leading Fintech firm. For them, London is the best bet – after Britain leaves the EU and loses the benefits of the single market, this may no longer be the case. Fintech firms in other European capitals are rapidly catching up with London – including Berlin, Dublin and Stockholm, who have all seen a growth in their Fintech sector over the last year – why would investors put money in British firms when other countries have the benefit of Europe on their side?
Until Article 50 is invoked and Britain agrees its terms for leaving the EU, investment is likely to be impacted by uncertainty.
So – a possible move to Europe?
Given the possible repercussions of Brexit on Fintech firms, many are considering moving their headquarters to Europe in order to maintain access to EU benefits. Just last month, a German sponsored truck rode the streets of London with a colourful placard reading “Dear startups, keep calm and move to Berlin”.
“Keep calm and move to Berlin” truck in London
Whilst this may sound like a laugh, moving business to Berlin is not. According to German senator Cornelia Yzer, more than 100 startup companies in London are looking into relocating to Germany’s capital. In fact, every time she speaks in the UK a number of start-up companies approach her with questions about the feasibility of relocating.
During a presentation at the financial technology industry’s conference London Fintech Week 2016, Senator Cornelia Yzer said every time she speaks publicly about Berlin post-Brexit, a number of startup companies approach her office about moving to Berlin.
“Not 10 or 20 or 30, more, over 100,” she said, according to International Business Times.
Just a week after the referendum the co-founder of TransferWise, Taavet Hinrikus, tweeted about the possibility of moving abroad:
Ireland, Switzerland, others reaching out and tempting @TransferWise to start/move operations there – competition between states is good 🙂
However, not all Fintech firms are worried. James Johnson, Group CEO of Nicoll Curtin, a global FinTech and Change recruitment agency, believes London’s sector will be largely unaffected: “Brexit will just accelerate the focus on technological solutions to problems. Technology crosses borders easier than people! This will increase tech hiring.”
He added, “Brexit could even accelerate the focus on and progress of London’s fintech sector because the solutions they’re creating could address some of the challenges of Brexit.”
Alex Crocombe, CFO or start-up Goji, has a similarly positive outlook despite experiencing some post-Brexit wobbles when looking for investment. He said, “initially, we thought it would be fatal to our business and the many other startups looking for funding, as investors evaluated the damage to their current Fintech investments and paused on marking new investments. Although there is still real uncertainty as to the medium to longer term effects Brexit will have on the UK and Global economy and our sector, we have actively seen investors return to the market and commit funds.”
Like so much of the UK post-Brexit, the outcome for London’s Fintech sector remains to be seen – with any luck, Silicon Roundabout’s success will continue to grow as Britain becomes an independent country.
The Pound fell to a new one-month low against the Dollar on Tuesday morning after UK manufacturing data on June missed estimates and ignited new worries about the strength of the UK economy.
UK manufacturing production in June miss estimates by 0.4%
National Statistics this morning reported that manufacturing production only grew by 0.9% in June compared to the same month last year. The figure represents a 0.6% decline from the measure recorded in May and missed estimates by 0.4%.
The institute also reported that compared to the previous month, manufacturing production fell by 0.3% in June. Although this measure halved the decline in manufacturing recorded in May, when the figure stood -0.6%, it missed estimates by 0.1%.
UK trade balance declines
Data on trade was similarly discouraging. The goods trade balance declined to -£12.409 billion in June. This represents a growth in the current account deficit of £883,000 million. Analysts previously estimated that the deficit would shrink to -£10 billion in June.
The trade balance with excluding European countries also declined by £599,000 million, to -£4.159 billion. The figure missed estimates by £1.659 billion, as analysts expected the deficit of non-European trade to decline to -£2.500 billion.
Worries about strength of UK economy prevail
The data showed that in the month of the UK referendum the country’s economy was not as strong as expected and the trade balance worsened instead of a predicted reduction in deficit. Such figures add to the worries about about the performance strength of the UK economy amid a growing volume of data suggests that the UK economy will suffer from economic uncertainty after the decision to leave the European Union. Investors in the FX market responded to the new data by pulling out of the Pound.
Pound fall on back of worse than expected UK data
In early morning trading the GBP fell to a new one-month low against the USD, dropping all the way to 1.29719. It managed a slight recovery in later hours.
At 10.58am the GBP/USD traded at 1.29806.
Legal & General saw shares sink over 5 percent on Tuesday, becoming the biggest loser in the FTSE 100 despite a healthy rise in pre-tax profits.
The group’s half year operating profit rose 10 percent to £822 million, coming in above analysts estimates, with the investment arm seeing assets under management rising 18 percent.
However, a 3 percent fall in operating profit hit share prices, causing LON:LGEN to sink 6.05 percent (1034GMT). The insurance arm of the business also saw operating profit drop by 26 percent.
Chief Financial Officer Mark Gregory commented on the results, saying, “it’s not a shoddy effort.” He confirmed that markets had been weak in the first half of the year, but he expected to see growth going forward to the end of 2016.
China factory-gate deflation eases further, relieving pressure on policy makers
China’s factory price deflation eased further in July, the latest in a string of evidence that China’s falling prices are beginning to pick up.
Factory-gate deflation moderated for the sixth month in a row, falling just 1.7 percent in July, up from a 2.6 percent drop in June. Increased demand for construction materials, higher commodity prices and pick-up in property sales have led to speculation that the Producer Price Index may well push into positive territory later this year.
The PPI rise will ease pressure on policy-makers in China, decreasing the necessity to cut rates and turning their focus to structural reforms allowing the deflation to ease further.
Warm July weather boosts retail sales
Retail sales rose 1.9 percent in July, according to the British Retail Consortium, alleviating fears of a post-Brexit slump.
The survey, carried out by the BRC and KPMG, cited warmer weather as the cause for the spending increase. David McCorquodale, head of retail at KPMG, said good weather had “boosted the UK feelgood factor”, showing consumers that “life goes on” post-Brexit.
Barclaycard also released a report this morning showing that spending in restaurants and pubs has also risen moving into summer.
China warns on Hinkley Point turnaround
The Chinese ambassador to the UK has warned British leaders about the repercussions failing to go ahead with the Hinkley Point nuclear plant may have on their trade relationship.
Since taking power, Prime Minister Theresa May has put the brakes on the £18 billion project after citing “security concerns”. She has pushed her final decision back to the autumn, to give her government another chance to scrutinise the deal.
However, Chinese ambassador Liu Xiaoming warned the UK that “mutual trust” could be in danger should Britain back out of the agreement, endangering the new relationship between the two countries.
The Canadian data-analysis company Greenlight Essentials has launched a Kickstarter campaign to fund the first feature film project, co-written by an artificial intelligence.
The company is seeking CA$30,000 (£17,300) on the world’s largest crowdfunding platform to produce the horror film “Impossible Things”.
The film project, five years in the making, produced a software which analyses success in the horror genre. It then utilise most successful plot points to create a script likely to appeal to the target audience.
Jack Zang, founder of Greenlight Essentials stated in a press release:
“A little over 85% of movies made today don’t make a profit [at the] box office, which is the result of a mismatch between the movies being produced and audiences’ tastes. […] We used [artificial intelligence] to generate the premise and the key plot points of the film. Before a single word was written, our AI told us that if we wanted to match audience taste, we needed to make a horror film that featured both ghost and family relationships, and that a piano scene and a bathtub scene would need to be used in the movie trailer to increase the likelihood that our target audience would like it.”
So far the project has already produced a finished script as well as a trailer making use of the software.
The script has been engineered to appeal to women under 25, a key customer segment for the horror film industry.
Its’ story line follows a couple with two children. The family decides to move to a secluded country house after the death of one of their twin-daughters. The mother, Madeline as well as her daughter begin to hear voices and experience violent visions which pit them against one another.
Film will be first of its’ kind, entering new depths of AI use in film making
Artificial intelligence has previously helped create the short film “Sunspring”, which received mixed reviews. “Impossible Things” will be the first feature length film partially written by a target engineered software.
Crowdfunding campaign raised close to 40% in first 1.5 weeks
So far the project’s Kickstarter Campaign has already raised CA$11,162 in the first one and a half weeks. Another 46 days remain to reach the target amount of CA$30,000.
Backers will be rewarded with a mention on the backer’s wall. Depending on contributed amount they will also receive extras such as a digital copy of the script and the film.
Donald Trump is set to outline an economic plan designed to appeal to working class Americans on Monday, despite the recent appointment of five of his wealthiest donors as economic advisors.
Trump’s PR team are no doubt hoping that the speech can help regain a little a credibility for the campaign, following a disastrous week in which Trump became embroiled in a fight with the Muslim parents of an American soldier killed in Iraq. Set to start at 12PM EDT at Detroit Economic Club, Trump is due to outline his plans for the US economy, including a freeze on new rules for banks and a repeal of the inheritance tax on estates larger than $5.45 million.
Trump appoints economic advisors
However, many will be watching the speech with a certain degree of scepticism – Trump’s speech will attempt to appeal to the working classes, despite simultaneously announcing a cut in corporate tax from the current rate of 35 percent to just 15 percent. With the appointment of five major donors – whose donations range between $339,400 and $449,400, and all of which are men – as his economic advisors, it seems unlikely that the working classes will get much of a look in.Trump v. Clinton
Donald Trump also plans to announce a moratorium on new financial regulations, as well as regulatory relief for small businesses. Trump has carefully chosen Detroit, the derelict home of the American car industry, in order to highlight the differences between his and Hillary Clinton’s economic policy:
She’s the candidate of the past and ours is the campaign of the future,” Trump will say, “Every policy that has failed Detroit has been fully supported by Hillary Clinton. The one common feature of every Hillary Clinton idea is that it punishes you from working and doing business in the United States.”
Finding the right mortgage provider can be a time-consuming and often fruitless search; conflicting advice, confusing options and a lack of clear knowledge makes finding a mortgage a difficult task. However Trussle, the new online mortgage service backed by Zoopla, is looking to mix up the market with its easy-to-use, hassle-free site.
Trussle makes it easier for first time buyers trying to secure the right mortgage, as well as helping homeowners looking to save money on their existing mortgage by offering a quick and easy tool to compare over 11,000 deals. After a mortgage has been secured through the site, Trussle then continues to monitor the mortgage and help you switch to a better deal later on – so you’re never paying more than you should.
Ishaan Malhi, Trussle founderTrussle was founded in August 2015 by Ishaan Malhi, who had experienced first-hand the difficulties of negotiating the mortgage market. Even with his background in finance – Malhi was previously a mortgages and real estate analyst at Bank Of America Merrill Lynch – the choice and advice was overwhelming and, ultimately, frustrating. With Trussle, the weight is lifted. Malhi said, “through technology, design and our expertise, we’re making a traditionally cumbersome process smarter, faster and more transparent than anything else, without charging you a penny.”Despite launching only 8 months ago, Trussle has really gained some traction. It raised £1.1 million in a funding round in January 2016, led by Robin and Saul Klein’s LocalGlobe, with others taking part including notable UK-based investors Ed Wray (co-founder of Betfair) and Ian Hogarth (co-founder and chairman of Songkick). Just one month later, in February 2016, high-profile housing site Zoopla announced a strategic long-term partnership and investment in Trussle.
For more information on Trussle and the services it offers, visit trussle.com
This morning’s publication of China’s continued drop in both exports and imports in June has sparked worry over the country’s industrial demand, which may weigh heavy on raw commodity suppliers. Lower figures on copper purchases of the world’s biggest consumer of the metal ring especially worrying for mining companies and lower pricing of the metal has largely affected the FTSE100 in the past.
Chinese exchange of goods and services continues to slide
The country this morning reported a 4.4% decrease in exports in July compared to the same month last year. The figure missed estimates by 1.4%.
Imports fell a total of 12.5% compared to a year ago, representing its largest decline in 6 months and the 21st consecutive slide in monthly import figures.
Lower than expected measures fuelled speculation that the country’s economic slowdown is worse than expected and will affect the country’s industrial demand of commodities. This may depress earnings of raw commodity suppliers and weigh heavily on stock prices.
Drop in China’s copper purchases weighs on the metal’s price
Most notably, copper purchases were down a total of 14.3%; worrying new for mining companies and the FTSE100. China is the world’s largest consumer of the metal and news of lower demand therefore has grave impact on its pricing.
Copper traded at its lowest since the 12th July hitting $4,783 a tonne on the London Metal Exchange on Friday. Monday saw a slight increase in price as Friday’s strong US job data helped spur positive economic sentiment. The metal was up 0.8% to $4,829 a tonne in morning trading. However, news of lower Chinese demand still managed to keep prices at a four week low.
In the past sliding copper prices have not only depressed share prices of all major mining companies but it can also be observed that the FTSE100 moves greatly in response to changes in the metals pricing.
Co-movement of FTSE100 and copper prices
Earlier this year, China’s lower-than-expected figures on exports and imports and especially lower demand for the red metal send mining shares downwards and caused a considerable drop in the FTSE100.
China’s export data weighed heavily in FTSE100 in March
On the 8th March Beijing reported a reduction of 13.8% in imports and a whopping 25.4% drop in exports.
Copper prices were in between the worst hit by the news, dropping as much as 2.4%.
In the aftermath, shares in global mining companies dropped greatly on the London Stock Exchange. Glencore (LSE:GLEN) fell 18 percent to 139.75p, also affected by news of a mining accident in the DRC. Anglo American (LSE:AAL) was down 15 percent. Antofagasta (LSE:ANTO), as well as Rio Tinto (NYSE, LSE:RIO), both lost more than 9 percent. The FTSE100 closed 1% down.
FTSE100 still unaffected by latest data release
In the aftermath of today’s data release the FTSE100 and mining companies’ shares have remained largely unaffected. This could be the result of low expectations of the figures.
However, if decreases in copper prices persist, they may come to show their effect on the FTSE100 and in particular the shares of mining companies.
Italy’s troubled banks are offering huge fees in order to arrange their rescue, with 500 year old Monte dei Paschi di Siena (MPS) set to pay millions if a private rescue deal goes ahead.
Underwriting fees in the deal orchestrated to save MPS will hit around €250 million, with investment banks who are involved having the potential to earn around €1 billion. The deal begun being brokered after the bank received the worst results in European stress tests; several other Italian banks, including the country’s largest lender UniCredit, also performed badly in the most recent audit.
The deal to save MPS will be the third time the bank has needed a cash injection, paying €130 million to a pool of banks for a €3bn cash call last year. The rescue plan, coordinated by JP Morgan and Italian bank Mediobanca, is still in the development stages but would see the MPS unload its bad loans into a special purpose vehicle (SPV).
The current banking crisis comes at a tricky time for Italy, just months before the referendum on constitutional reform taking place in October, on which the future of Prime Minister Matteo Renzi’s leadership rests.
