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MAY 2018 ISSUE

UK RETAIL BANKER w www.rfigroup.com t twitter.com/RFiMediaGRB

David Judic

Head of Customer Innovation, CYBG RFi INTERVIEW 15

RFi GROUP INSIGHT

SAVINGS & CURRENT ACC

LENDING

08 Budgeting for financial management tools

20 Tandem Bank launches new fixed savings account

27 The first digitally signed mortgage completed by Coventry Building Society


CONTENTS

08 16

12 20

23 RFi GROUP INSIGHT

INTERVIEW

SME & COMMERCIAL

08 Budgeting for financial management tools

16

23 Tandem Bank launches new fixed savings account 24 TSB launches lending market place for SMEs 25 NatWest strengthens fraud protection for business

PODCAST 12 Becoming a unicorn - Investment advice for emerging FinTechs 2 RFi MEDIA

David Judic, Head of Customer Innovation, CYBG

SAVINGS & CURRENT ACCOUNTS 20

Tandem Bank launches new fixed savings account


CONTENTS

27 30

33 LENDING

CARDS & PAYMENTS

FINTECH

27 The first digitally signed mortgage completed by Coventry Building Society

30 Virgin Money launches new credit card

33 Revolut launches new feature where users can save spare change

32 Wirecard allows customers to pay through Fitbit

34 Monzo users sign up for current account as prepaid cards are discontinued

28 New interest-only buy-to-let mortgages released by Bluestone Mortgages

UK RETAIL BANKER 3


RFi GROUP MAY STAT TEN SELECTED STATISTICS FROM DAILY STATS ON RFi GROUP WEBSITE (www.rďŹ group.com)

UK

CANADA

29% of UK consum

51% The majority of

strongly agree (4+/5 that they would use mobile wallets more frequently if there we rewards for doing so

Canadian SME business (51%) are very willing (8+/10) to apply for a Business Credit Card online

US

38% of US

consumers find PFM/ budgeting tools highly appealing (8+/10)

04 RFi MEDIA

FRANCE

38%

of consumers in France would be willing to conduct at least one banking task via the messaging services they use


ATISTICS

#RFiGroupDailyStat

HONG KONG

mers 5) e e ere

CHINA

17% of consumers in

China have used facial recognition to access their bank’s internet/ mobile banking

A third of

consumers in Hong Kong have sent/ received funds internationally in the last 12 months

TAIWAN

21% of consumers in

Taiwan have made a contactless payment in store via smartphone in the last 12 months

NZ

3 in 5

New Zealand personal loan holders did not conduct any research prior to taking out their most recent loan

EGYPT

33% Of consumers in Egypt

unlikely (0-5/10) to switch their main banking relationship, 33% state that better customer service could encourage them to do so in the next 12 moths

AUSTRALIA

1 in 2

Australian mortgage holders are open to ‘Comprehensive Credit Reporting’ by financial institutions

UK RETAIL BANKER 05


GLOBAL DIGITAL BANKING CONFERENCE SERIES 2018 EUROPE EDITION

REGISTER NOW FOR EARLY BIRD RATES

The Grange City Hotel 8-14 COOPER’S ROW | LONDON | EC3N 2BQ

Featuring the following speakers:

Marieke Flament, CMO, Circle

Daniel Kjellen, CEO and Founder, Tink

Maha El Dimachki, Head of Payments, Financial Conduct Authority

David Judic, Head of Customer Innovation, CYBG

Pascal Nizri, Global Head of Transformation, HSBC and Founder & CEO, Chekk


Welcome to the May edition of the UK Retail Banker, a newsletter designed to give you an update on news and trends within the UK retail and commercial banking market, contextualised by RFi Group data. Digital money management, or to use the old-hat term, PFM, is the main focus of this month’s edition, with a look at why it has become a hot topic again in the industry. Our Insight Piece explores how much of a unique play this is for banks, and potential impacts on customer acquisition, retention and ultimate profitability for the bank. The thought leader interview comes from a banking executive who is celebrating two years of ‘B’, CYBG’s digital-only proposition with a strong focus on money management.

David Judic, Head of Customer Innovation for CYBG, shares insights on the development of B, where it is going next, and the wider context around the reemergence of PFM tools. We are pleased to be featured at some fantastic events in June, including Money 2020 Europe and MONEYCONF in Dublin. We hope to see many of you there! I hope you enjoy the issue. Kind regards,

Sarah Hollinshead Editor UK Retail Banker shollinshead@rfigroup.com


RFi GROUP INSIGHT

BUDGETING FOR FINANCIAL MANAGEMENT TOOLS WORDS ADAM BOTTLE

8 RFi MEDIA


RFi GROUP INSIGHT

This demand is already flowing through to product choice, with 38% of Millennial savings account holders considering budgeting tools very important to their choice of a savings account.

F

or many consumers, managing their finances such as budgeting and tracking spending has long been a time consuming and tedious task, so much so that 40% of consumers don’t bother at all, according to RFi Group data. Among those that do take steps to manage their finances, 71% still rely on tools such as pen and paper or excel to do this. With personal financial management either avoided or done using tools that seem almost archaic in the digital age, it is not surprising that several FinTechs, such as Bean, Yolt, and Moneyhub, have developed tools to help consumers manage their finances. These Personal Financial Management (PFM) tools, tend to be either web or app-based services and offer a range of features that help consumers manage their finances, such as the ability to create and track budgets, set savings goals, and categorise spending. So, the question becomes, what role, if any, should traditional financial institutions play in the PFM revolution? RFi Group data shows that PFM tools represent a huge opportunity for traditional financial services providers, with consumers interested in such tools, and preferring them to be provided by existing financial institutions. These factors, along with the beginning of the open banking revolution, mean the time is now for traditional financial institutions to act and begin offering PFM tools. The first reason traditional financial institutions should be considering offering PFM tools is that consumers are starting to demand them. RFi Group data from the UK Digital Banking

Council shows that almost 1 in 5 consumers find the idea of a PFM tool extremely appealing (8+/10 on a scale of 1 to 10), with this increasing to 29% among Millennials (those aged 18-34). This demand is already flowing through to product choice, with 38% of Millennial savings account holders considering budgeting tools very important to their choice of a savings account. The interest in PFM tools seems to be driven by the fact Millennials are struggling to get on top of their finances, with 1 in 10 Millennial savings account holders saying they are unable to meet their savings goals because they have trouble budgeting. With consumers, particularly younger consumers, showing signs they are struggling to manage their finances and showing a willingness to use PFM tools, developing such tools would allow existing financial institutions to offer a valuable service that simplifies consumers lives. These tools would be particularly well received if they enable consumers to create budgets for different spending categories, set and track progress towards savings goals, or if they can make suggestions on where consumers could cut back spending, with these PFM tool features the most appealing to Millennials. Traditional financial institutions are in a unique position as consumer demand is targeted more towards them. Seventy five per cent of those who find the idea of a PFM tool appealing would want such tools to be offered by their main bank, compared to only 10% who would prefer the service to be offered by a new third-party provider. This is largely due to

UK RETAIL BANKER 9


JOIN US AT THESE EVENTS IN JUNE

Speaking:

Sarah Hollinshead Group Head of Content, RFi Group

RFi Group is proud to be represented at these brilliant conferences across Europe this month. We hope to see you there! Victoria Bateman, Managing Director, EMEA, RFi Group

Money 2020 Europe, 4-6 June, Amsterdam

ATM Customer Experience & Security Summit (ACESS) 12-13 June, London

MONEYCONF 11-13 June, Dublin

10 RFi MEDIA


RFi GROUP INSIGHT

trust, with 68% of consumers trusting that banks can keep their personal information secure, compared to only 28% for new technology companies. Banks and other existing financial service providers therefore have a massive opportunity to use this trust advantage to offer PFM tools and play an even more integral role in consumers financial lives, deepening customer relationships. Offering these tools could also have the added advantage of preventing consumers from going outside their existing providers for PFM services and reduce the risk that new FinTech’s will be able to disintermediate traditional providers. Offering PFM tools will also help traditional financial services providers assist consumers who find themselves in financial difficulty by assisting them to save, budget, or manage their spending. This could could help reduce loan defaults and help satisfy regulators that financial institutions are lending responsibly and taking steps to support those in financial stress.

Offering PFM tools will also help traditional financial services providers assist consumers who find themselves in financial difficulty by assisting them to save, budget, or manage their spending.

Finally, the introduction of the new open banking regulation means PFM tools can now offer better service and functionality than ever before. What once would have required consumers to input their own data can now be done using APIs linked to various accounts, simplifying the process of financial management for consumers. RFi Group data shows that 27% of consumers find aggregator tools that combine information for financial products held across institutions appealing, with this appeal increasing to 37% among Millennials, a much higher level of appeal than currently exists for PFM tools. This shows that tools that help consumers manage their finances will increase in popularity once they start making use of open banking, and traditional financial institutions should be at the forefront of this development. As can be seen, consumers are showing strong demand for these products and want the providers they are currently using to offer these tools. At the same time, open banking regulation means PFM tools can be more valuable to consumers than ever before. When these factors are considered along with the potential benefits to financial institutions of offering PFM tools, including deepening customer relationships, helping consumers in financial stress, and defending against new FinTech providers, it is clear that traditional financial institutions should be focused on offering PFM tools.

UK RETAIL BANKER 11


GLOBAL DIGITAL BANKER PODCAST

Global Digital Banker Podcast PRODUCED ADELLE GRISAFFE

12 RFi MEDIA


GLOBAL DIGITAL BANKER PODCAST

EPISODE 11

Becoming a unicorn – investment advice for emerging fintech’s 2 MAY | 24MIN

Guests: : Cristina Alba Ochoa, CFO, OakNorth and Toby Heap, Founding Partner, H2 Ventures This episode shares advice and examples from both sides on the fence when it comes to seeking investment within fintech. From a fintech perspective we have Cristina Alba Ochoa, CFO from OakNorth (the first Fin Tech Unicorn), and from the investor perspective we have Toby Heap, Founding Partner at H2 Ventures. Sarah Hollinshead, our Group Head of Content caught up with Christina Alba Ochoa who shared her unique perspective from the CFO point of view on securing investment, the key

If there is an idea that you start and it is not working, then test it, stop it, and start a new one Cristina Alba Ochoa, OakNorth

reasons behind their success within their first year and some honest advice to other Fintech’s who have recently launched. Chloe James our Group Media Director sat down with Toby Heap to discuss some big trends within Fintech at the moment, how Fintech owners can seek external investment and Toby’s two key ingredients for achieving business success. START LISTENING HERE

UK RETAIL BANKER 13


GLOBAL DIGITAL BANKER PODCAST

EPISODE 10

Lendit Fintech USA special

17 APR | 40 MIN

Guests: Nicolas Kopp, U.S. CEO, N26, Cyrielle Chiron, Managing Director - North & Latin America, RFi Group, Ray Peloso, Principal & CEO, Katabat and Ankush Tewari, Senior Director, Market Planning, LexisNexis Risk Solutions The episode this week highlights some of the key take-outs from the Lendit Fintech USA event held in San Francisco earlier this month. Eleanor Page, RFi Group Commercial Director caught up with a few of the key speakers from across the two days to discuss the current state of play in the market, the growing importance of financial inclusion and to take a deeper look into artificial intelligence beyond the buzz words. Our guests include: Nicolas Kopp, U.S. CEO, N26 • Technologies, processes and functionality that underpin a great digital customer experience • Simplicity & personalisation • Partnerships & building ecosystems • Building consumer cultures

Cyrielle Chiron, Managing Director - North & Latin America, RFi Group • Personalised offerings and the importance of interacting with different customers in different ways • Global technological trends around digital banking Ankush Tewari, Senior Director, Market Planning, LexisNexis Risk Solutions • Financial inclusion in the US • Serving the underserved and the benefits of alternative data for equal credit access • Overcoming the barriers from traditional credit reporting Ray Peloso, Principal & CEO, Katabat • Busting the jargon surrounding AI • The current maturity of the financial services industry when it comes to AI • Improving customer experience through AI

START LISTENING HERE

14 RFi MEDIA


GLOBAL DIGITAL BANKER PODCAST

EPISODE 9

Driving daily digital engagement - A global perspective on personal finance management tools 17 APR | 40 MIN

Guests: Gerald Ferguson, GM - Asia Pacfic, RFi Group; David Judic, Head of Customer Innovation, CYBG and Bosco Tan, Founder & COO, Pocketbook. The episode this week focuses on driving daily engagement from consumers through offering personal finance management tools, the consumer data behind these and case studies from both the northern and southern hemispheres. Our guests include Gerald Ferguson, GM – Asia Pacific at RFi Group, David Judic, head of customer innovation at CYBG and Bosco Tan, Founder & COO at Pocketbook. Chloe James our Group Media Director sat down with Gerald Ferguson to unravel current usage globally, the demographic and geographic breakdown of this usage and what features consumers want most when using PFM tools. Sarah Hollinshead, our Group Head of Content caught up with David Judic to discuss the unique play from CYBG in launching

a challenger digital bank proposition known as B, how the ecosystem has evolved from when they launched 2 years ago and how they have used customer feedback to continue to develop their offering Chloe James our Group Media Director spoke with Bosco Tan to find out the catalyst behind creating Pocketbook, the changes in consumer behaviour from users of pocketbook and their partnership and expansion plans for the future.

30% of consumers globally are still using pen and paper to manage their finances.

START LISTENING HERE

NEVER MISS AN EPISODE! SUBSCRIBE & LISTEN TO THE PODCAST ON ANY OF THE BELOW PLATFORMS: iTunes

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globaldigitalbanker.com

For up to the minute email notifiications, please subscribe here If you are interested in being a part of the show or would like to let us know your feedback, contact us at: gdbpodcast@rfigroup.com

UK RETAIL BANKER 15


THOUGHT LEADER INTERVIEW

David Judic Head of Customer Innovation, CYBG WORDS SARAH HOLLINSHEAD

16 RFi MEDIA


THOUGHT LEADER INTERVIEW

W

ith the FinTech world bustling with increased personal finance management (PFM) tools, the big challenge becomes standing out from the crowd and encouraging switching and retention. Similarly, around the world, incumbent banks have begun playing in this space, leveraging that position of trust and customer recognition. A pioneer in the space, and straddling both sectors, is CYBG’s digital- first brand B. RFi Group’s Sarah Hollinshead caught up with David Judic, Head of Customer Innovation, CYBG at Studio B, B’s high street innovation lab to discuss experiences of B over the last 2 years and how it can build on its success.

THE MOST IMPORTANT THING FOR US IS HOW CUSTOMERS ARE ACTUALLY USING B. WE FIND THAT MOST OF THE CUSTOMERS USE IT AS THEIR MAIN BANKING SERVICE, WHICH MEANS THAT THOSE CUSTOMER NUMBERS ARE REAL CUSTOMERS, THEY’RE REALLY ENGAGING WITH OUR SERVICE.

UK RETAIL BANKER 17


THOUGHT LEADER INTERVIEW

B has proved to be an incredible success for CYBG. It was launched to attract a younger, more digitally native demographic, and was co-created with those target customers. As the benefits of that approach are clear, beyond just being a service that customers “try out” once or have in addition to their main banking service, this offering is the customer’s first choice, for example the average current account balance of over £2k and deposit balance of over £7k. “The most important thing for us is how customers are actually using B. We find that most of the customers use it as their main banking service, which means that those customer numbers are real customers, they’re really engaging with our service.” This of course presents a much longer-term gain for the business model, with customer feedback being more meaningful.

“Our customers are really helping us to develop our service and over time, the engagement and the positivity that they give off around the proposition and the brand will help us to maintain this really game changing approach that we have brought to market.” “Our customers are really helping us to develop our service and over time, the engagement and the positivity that they give off around the proposition and the brand will help us to maintain this really game changing approach that we have brought to market.”

18 RFi MEDIA

B is all about helping customers to engage with their money in a positive way, removing the fear and negativity, and helping customers to get “financially fit”. A fantastic example of this in real terms is the “B-tox” campaign. “We want to help educate people and to have fun with the money that they have got, rather than to worry about it. There was one story about a father in the army, and a wife at home with 2 children that is remarkable and makes this seem really worthwhile. Prompted by B-tox and the budgeting and saving pots features of B, the family put £1 for every day that their Dad was away on a placement into family day savings pots to use when the Dad is back. All the pots are for different days out, which is much more motivating than a non-descript savings account.” PFM tools have been discussed by the industry for a number of years, however they are only now starting to truly resonate with customers, and the number of players in the market is increasing. David shared his view on this shifting paradigm. “I think the first reason behind the slow progress is that it has never been that easy to do in a way that is meaningful for customers. We were inspired at the start by the likes of Mint in the US, but the regulatory environment in the US is quite different to that over in Europe. Now with the likes of PSD2 coming along, customers are becoming more open to tools which help them safely and securely manage across their finances. There is no surprise that PFM has become more pronounced.” Changing regulation is playing a major part in the possibilities of PFM tools, having access to more data allowing for a more personalised approach. “No one wants generic information, nobody wants information a day after they needed it and I think PFM has struggled a little bit from that in the past. The opening of APIs between banks and non-banks promises to make that a much easier real-time process.”

When considering the specific success of B, David highlights the unique position of the app as being both digitallyled but supported by a fully service financial institution.

The most important thing in banking is trust, and despite everything in the last 10 years, there is value and trust in banks that they will look after customers data and rightly so. Banks are heavily regulated and look after that data very well. If you have to give that data to a third party to have an effective PFM solution, it makes people nervous “The most important thing in banking is trust, and despite everything in the last 10 years, there is value and trust in banks that they will look after customers data and rightly so. Banks are heavily regulated and look after that data very well. If you have to give that data to a third party to have an effective PFM solution, it makes people nervous.” “We have seen a lot of propositions come to market, grow quite quickly in the early stages and then hit a ceiling when the volume of early adopters who are willing to share their data runs out. Then you hit the mainstream who want to keep their data close to their chest.” With this, the challenge becomes for FinTechs and banks alike to balance that customer experience with maintaining that trust.


THOUGHT LEADER INTERVIEW

“We have got to be really careful not to rush into super exciting things which may appeal to a small segment of customers, but which will actually amplify fear in a broader segment of customers. Once you lose trust, it’s so difficult to get it back.” In this unique position, David went on to explain the additional benefits of B to the wider CYBG banking proposition, an interesting consideration given many other UK banks are looking to launch their own digital-only banks. “B has been so important for CYBG, I cannot understate it. We floated as an entity just at the point that B was about to go live. We had been a subsidiary of National Australia Group and having B, both the platform and the brand, was something really exciting that helped to galvanise a huge amount of support from our investors and galvanise our staff. That support continues to this day.” With technology consistently evolving, and becoming more open, B has some

exciting times ahead. Unsurprisingly, an aggregation tool is amongst the new developments, and David explains he believes this will be emulated across the ecosystem. “Banking aggregation is a pretty obvious next step for a PFM tool within a bank, so that is going to be going live relatively soon. I expect every bank and FS provider to underpin their offer with some form of aggregation, so it’s going to become a hygiene factor very quickly.” Another significant move is into the business banking space, with an SME offering build around the same core principles of B. “There are a whole heap of exciting SME focused developments which are going to start to go live later in the year, introducing B into our business customer base. And because we invested in a new platform for B, some of these developments could then quickly be offered to Retail

customers. A real benefit of being one of the only banks in the UK that have both offerings sat on the same platform.” This kind of innovation and opportunities afforded by being a full scale, full-service banking entity really separates B from the FinTechs, and also from the banks, who are potentially less able to deliver this quickly. And with B celebrating its second birthday, it is already in a much more developed state than many other digital-only platforms coming to the market. It has certainly set the tone for PFM tools of the future and continues to be a force to be reckoned with. __________________________________ To read more interviews by RFi Media in all past UK Retail Banker editions, follow @RFiMediaGRB on Twitter or feel free to visit the archive centre on our website: www.rfigroup.com/rfi-media/magazines

UK RETAIL BANKER 19


SAVINGS & CURRENT ACCOUNTS

Savings & Current Accounts WORDS MARIA URENA

Tandem Bank launches new fixed savings account

T

andem bank, the digital challenger, has launched three fixed saver accounts, enabling customers to increase their savings over one, two or three years.

The new accounts have been through various testing phases which have been carried out by members of the Tandem Bank team, along with their family and friends, and the group of cofounders. As of Mid-April, all Tandem Bank customers will have the opportunity to gain access to the savings accounts via their Tandem Bank app. The new savers account comes with a fixed annual interest rate of up to 2.30%. Customers who take up one of these saver accounts will need to initially deposit a minimum of £1,000 into any of the three new savings accounts. The money deposited will be locked, with no withdrawals allowed until the product term ends. The new saver accounts aim to help customers better manage and save money, with Daniel Goodwin the Product Manager at Tandem Bank saying, “Tandem is a bank that helps customers better manage their money, and these savings accounts are a way for people to see guaranteed returns on their cash.”

20 RFi MEDIA


SAVINGS & CURRENT ACCOUNTS

Starling and Monzo partner up with Moneyhub Challenger banks Starling Bank and Monzo have integrated with Moneyhub, a personal financial management app, to offer the services of the app to any of their customers in the UK. Moneyhub will use Starling Bank and Monzo’s APIs to provide an aggregation service, where consumers can link up their current accounts, savings accounts, credit cards, pensions, loans, mortgages, investments and more to the Moneyhub platform. With this linkage of accounts, consumers can manage each of these accounts in the app, as well as get insights into their spending habits through the platform’s Spending Analysis feature, which categorises the customer’s spending habits. They can also set goals through the Spending Goals feature, get advice or spending tips, as well as being able to find better deals for the products linked through their Nudges. RFi Group data shows that 18% of retail banking customers find personal financial management tools extremely appealing, while a further 19% find them appealing to some extent, suggesting the potential customer uptake this integration could take. Both Monzo and Starling Bank wish to offer their customers a safe and controlled environment through which they can manage their banking products, and by partnering with Moneyhub, both CEO’s of the companies believe they are doing just that.

HOW APPEALING ARE PERSONAL FINANCIAL MANAGEMENT TOOLS?

100% 18%

80%

Unappealing (3-4) 19%

60% 19%

40% 20%

Very unappealing (0-2)

11%

Neutral (5) Appealing (6-7) Extremely appealing (8-10)

32%

0% Source: UKDBC 18Q1

UK RETAIL BANKER 21


SAVINGS & CURRENT ACCOUNTS

Halifax makes new offer on savings account for children WORDS MARIA URENA Halifax has launched their Halifax Kids’ Monthly Saver account, which is available for all parents who want to set money aside for their children aged 15 or under. This account offers a fixed rate interest of 4.5% and allows the parents to save £10-£100 a month by standing order. Once the account has been active for 12 months, the money saved will be transferred to a Halifax Kids’ Saver account, which offers a 2% variable rate on balances for up to £5,000. Once this money is transferred, customers can keep on saving into the Kids’ Monthly Saver account. Meanwhile, having the Kid’s Saver account gives parents the ability to withdraw money at any time they want as well. Once the child reaches 16 years old, the Kids’ Saver account will become an Everyday Saver, which has a rate of 0.2%.

22 RFi MEDIA

Once the child reaches 16 years old, the Kids’ Saver account will become an Everyday Saver, which has a rate of 0.2%.


SME & COMMERCIAL

SME & Commercial WORDS JOSEPH SHARANGPARNI

CivilisedBank relinquish banking license

T

HAVE YOU HEARD OF CIVILISED BANK? % yes, by revenue

he UK based challenger bank, CivilisedBank, has chosen to relinquish its banking license to develop its IT infrastructure in preparation for a full launch.

Aimed at providing SMEs with a personalised, one-to-one banking relationship, CivilisedBank has made this decision to prevent rushing through the developmental process; a decision supported by both the Financial Conduct Authority and the Prudential Regulation Authority.

CivilisedBank Chairman, Chris Jolly explains the decision to release the banking license, stating that “For us, it is essential that we can deliver an optimal customer offering so we prefer to delay this stage of our development and have more time to get it right”. Although CivilisedBank are still in the developmental stage, RFi Group data demonstrates that there is a fair amount of awareness of the provider amongst SMEs (businesses with an annual revenue of between £0-£10m), particularly for those with between £500k-£1m in annual revenue. Within this group, 1 in 5 have heard of Civilised Bank, whilst only 6% of SMEs with under £500k in annual revenue have heard of the bank.

25% 21%

20%

17%

17%

15% 10%

8% 12%

5% 0%

Less than ₤500,000

₤500,000 ₤1 million

₤1 million ₤4 million

₤4 million ₤10 million

Total

Source: 17H2 UK Small and Medium Enterprise Council

UK RETAIL BANKER 23


SME & COMMERCIAL

TSB launches lending marketplace for SMEs WORDS JOSEPH SHARANGPARNI Last month, TSB launched a service named ‘Business Marketplace’, which enables SMEs to compare financing options across the entire market in one place. The service aims to help small businesses access funding and bring more competition to the marketplace. TSB states that SMEs primarily approach the largest UK banks for financing, and further claims that a substantial amount of applications for business loans are rejected. Among start-ups borrowing for the first time, the rate of rejection is approximately 50%. The service will enable SMEs to compare offers from a host of different providers and compare them against TSB’s own offerings. According to TSB, they are the only provider who currently offer such a service. In addition to this, TSB also plans to launch a currently unnamed digital lending platform which will allow SMEs to receive credit checks instantly and apply for loans online.

24 RFi MEDIA

The service will enable SMEs to compare offers from a host of different providers and compare them against TSB’s own offerings


SME & COMMERCIAL

NatWest strengthens fraud protection for businesses NatWest have partnered with Vocalink Analytics, who work with businesses to improve their performance and efficiency by analysing payments data, to bolster its fraud protection systems for corporate businesses. The system specifically looks at invoice redirection fraud. This is a type of fraud resulting in businesses paying money into a fraudulent account rather than the intended recipient.

The system designates transactions as suspicious by analysing vast amounts of non-real time payments, and comparing them to historically fraudulent payments .

The system, named ‘Corporate Fraud Insights’, uses machine-learning and artificial intelligence to identify any payments which are deemed as suspicious. The system designates transactions as suspicious by analysing vast amounts of non-real time payments, and comparing them to historically fraudulent payments. As of yet, there is no indication about whether the process will be expanded to real-time payments. NatWest states that it has already saved its corporate clients over ÂŁ7 million during the testing and development phase.

UK RETAIL BANKER 25


LENDING

26 RFi MEDIA


LENDING

Lending WORDS SACHIN VISAVADIA

The first digitally signed mortgage completed by Coventry Building Society

C

oventry Building Society is the first provider to have a mortgage deed signed digitally, with the first signature of this kind occurring for a house in London. The digital mortgage service “Sign Your Mortgage Deed” has been developed and tested by HM Land Registry; a non-ministerial department of the Government, and has been trialled by Coventry Building Society and Enact Conveyancing for many months. The new service starts with the remortgaging process and is expected to roll out nationally. The digital service uses the official GOV.UK verification platform which allows borrowers to verify themselves before they sign their mortgage deed online. HM Land Registry have worked on this service in the hope to save time and be more secure than the traditional method of physically signing a deed in front of a witness for homeowners, lenders and conveyancers.

By working with partners in the industry, we have secured a simpler and faster service for the benefit of homeowners.

Graham Farrant, the Chief Executive and Chief Land Registrar at HM Land Registry commented, “By working with partners in the industry, we have secured a simpler and faster service for the benefit of homeowners.”

UK RETAIL BANKER 27


LENDING

RFi Group data shows that when current landlords choose a buy-to-let mortgage, 37% of them state that having an interest-only option is their top ranked attribute

New interest-only buy-to-let mortgages released by Bluestone Mortgages WORDS SACHIN VISAVADIA Bluestone Mortgages, a specialist mortgage lender has revamped its buy-to-let mortgage range to now incorporate an interest-only option targeting borrowers who wish to reduce monthly servicing fees. The new interest-only buy-to-let mortgage is accessible to existing customers who are on Bluestone’s ‘Clear’ or ‘AAA’ products with a maximum loan-to-value rate of 80%. The updated mortgage will also be available to first-time landlords investing in a buy-to let property and first-time buyers. To be eligible for this product, a full expenditure and income calculation will be undertaken on both a capital and interest basis. RFi Group data shows that when current landlords choose a buy-to-let mortgage, 37% of them state that having an interest-only option is their top ranked attribute. Bluestone Mortgages could therefore be in a strong position to capture market share with its new product offering.

28 RFi MEDIA

WHAT DO YOU SEE AS THE TOP FIVE FACTORS IN CHOOSING THE RIGHT BUY-TO-LET MORTGAGE Buy to let mortgage holders

Straight forward application process

45% 43%

Fees attached to loan

41%

The loan-to-value ratio Interest only option

37%

Recommendation by an IFA/BROKER

37%

0%

20%

Source: UK Mortgage Council, 2018 Q1

40%

60%


LENDING

‘Green mortgages’ launched by Barclays WORDS SACHIN VISAVADIA In April, Barclays launched a new mortgage, known as ‘Green mortgages’ that offer cheaper mortgage rates for borrowers who buy more energy efficient homes. The product is available to customers purchasing a new built house made by a group of five partner homebuilders, and offers cheaper mortgage rates to those who are buying new build homes with an A or B Grade Energy Performance Certification (EPC) rating. The five partner housebuilders are Barratt Homes, Berkeley Group, Countryside Properties, Crest Nicholson and Redrow Homes. The new deal offers homeowners the benefit of lower interest rates on both two and five year mortgages and is available to those who deposit as little as 10%. It’s also accessible to those on a Help to Buy mortgage with a deposit of at least 25%. The cheaper rates give a discount of 0.1% off the corresponding traditional Barclays mortgages, and when combined with the additional savings from reduced energy bills from running a more efficient house, customers on a mortgage of £150,000

could see savings of up to £1,335 over a period of five-years according to Barclays. Barclays plan to extend these new lower interest rates to all new build homes built by all homebuilders by the end of the year.

The new deal offers homeowners the benefit of lower interest rates on both two and five year mortgages and is available to those who deposit as little as 10%.

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CARDS & PAYMENTS

Cards & Payments WORDS MARIA URENA

Virgin Money launches new credit cards

V

irgin Money has recently launched its new Virgin Atlantic credit cards, the Reward credit card and the Reward+ credit card. These products allow the customer to earn air miles for the Virgin Atlantic Flying Club with every purchase the customer makes. With the Reward card, the customer earns 5,000 air miles with their first purchase, 0.75 miles with every £1 spent on purchases and when the cardholder spends £20,000 in a year, they unlock benefits such as upgrades or companion flights. It has a representative APR of 22.9%, and no annual fee is required. The Reward+ credit card gives 15,000 air miles with the first purchase, the ability to earn 1.5 miles with every £1 spent on purchases, and when the customer spends £10,000, the card also unlocks benefits such as upgrades or companion flights. It comes with a higher representative APR of 63.9% and a £160 annual fee is required for this product. Both cards also offer 0% on balance and money transfers for the first six months of having the product and access to Virgin Money air lounges and offers exclusive to the Virgin Group.

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CARDS & PAYMENTS

These products allow the customer to earn air miles for the Virgin Atlantic Flying Club with every purchase the customer makes.

UK RETAIL BANKER 31


CARDS & PAYMENTS

Wirecard allows customers to pay through Fitbit WORDS MARIA URENA Digital payments specialist, Wirecard, offers a mobile payment method called ‘boon’ that can be used along with a FitBit. Customers who have this digital card will now be able to use a FitBit wearable to pay for their purchases at the point of sale (POS) using their FitBit Wallet and FitBit Pay features. This feature will be available in the UK, as well as several European countries: Italy, Ireland, Spain and Switzerland. By adding the digital boon card details to their FitBit Wallet, users can make contactless payments any place where Mastercard is accepted, without the need to carry other belongings, such as a wallet or mobile phone. To make a purchase, customers simply have to press a button until their card details are seen on the screen of their wearable and hold it against a contactless terminal. According to RFi Group data, this partnership is likely to generate appeal in the market, as 20% of retail banking customers find the idea of using their wearables when purchasing goods extremely appealing. Wirecard claims that by offering this to its customers, the payments specialist aims to provide them with the flexibility and freedom to pay with any device they wish and make them less worried about carrying their belongings when doing a sports activity.

Thomas Cook launches new prepaid holiday travel card WORDS MARIA URENA Thomas Cook has extended its new prepaid card offering that is meant to replace the company’s existing Cash Passport travel card offer. The card is called Lyk, which was previously launched in November 2017 but it was only available online. The card is now being offered both online and in Thomas Cook branches. The card now features Apple Pay compatibility, and when a customer tops up money to the card, they will get free Wi-Fi access through the hotspot Boingo for 3 months after opening the account. It has no exchange or foreign currency top up fees, as well as the ability to move currencies within the card for up to 10 countries and a freezing feature in case the card is lost or stolen.

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THERE ARE WEARABLES THAT CAN NOW BE USED TO MAKE PAYMENTS FOR GOODS AND SERVICES BY TAPPING THE WEARABLE AGAINST A READER AT THE POINT OF SALE. HOW APPEALING DOYOU FIND THIS CONCEPT?

100% 20%

80% 15%

60%

11% 10%

(0-2) Very unappealing (3-4) Unappealing (5) Neutral (6-7) Appealing (8-10) Extremely appealing

40% 20%

44%

0% Biometric Payments

UK Payments & Innovation Council – 2018 H1.


FINTECH

FinTech WORDS LAUREN D’COSTA

Revolut launches new feature where users can save spare change

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in any of its 25 supported currencies, in addition to popular cryptocurrencies such as Bitcoin, Litecoin and Ether.

K digital bank, Revolut, has launched a new savings feature called Vaults to help its users save spare change from over 15 million everyday purchases that are currently made each month. The launch of the new app has come from popular demand from Revolut users.

The new feature will enhance Revolut’s customer service on their current account which includes features such as sending free international money transfers and receiving instant spending analytics. According to RFi Group data, personal financial management such as savings goals are in the top 10 valued mobile banking app features for retail banking consumers, while almost 1 in 10 consumers would include ‘being able to round up purchases and deposit ‘spare change’ into savings’ in their top 3 most valued features.

The feature works by allowing change from a purchase to be added to a ‘Savings Vault’ which can then be withdrawn instantly if needed. In terms of how users deposit the spare money, it can vary from one-off or regular payments. In addition, settings can be changed within the app allowing the user to save more or less at any stage. The app works

WHICH OF THE FOLLOWING MOBILE BANKING APP FEATURES WOULD YOU MOST VALUE IF MADE AVAILABLE FOR YOU By top 10 most valued factors 40% 30% 23%

22%

22%

20%

17%

16%

16%

16%

14%

13%

12%

10% 0% View balances without loggin in

Finger print login

4 digit PIN login

Change your card PIN

Manage your card

Send Use code to payments withdraw without using cash from account ATM without details card

Notify Notifications Personal provider of on updates financial travel abroad on spending management

Source: UK Digital Banking Council 18Q1

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FINTECH

Monzo users sign up for current account as prepaid cards are discontinued WORDS LAUREN D’COSTA Monzo has shut down its prepaid beta program this April as 94% of active users of the prepaid card migrate to a full current account. Originally, prepaid card holders could use this product as a secondary account to their initial current account. For customers who do not want to upgrade, Monzo has started issuing refunds remaining on the prepaid cards as of the 12th April. Currently, 98,000 customers of Monzo’s 500,000+ customer base have not upgraded, preventing them from using Monzo’s services. The prepaid card was launched in 2015 and allowed users to top up the card through the Monzo app. It offered features such as instant spending notifications and spending insights such as budgeting, customer support and the ability to freeze the card in the app instantly if it was lost or stolen. Moreover, it offered free transactions abroad as well as free ATM withdrawals before January 2018, where customers are limited to withdrawing up to £200 a month for free.

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The Monzo current account still shares similar features as the pre-paid card. However, unlike the prepaid program, it allows the digital bank to lend money against deposits, while also protecting funds up to £85,000 through the Financial Services Compensation Scheme (FSCS).

Currently, 98,000 customers of Monzo’s 500,000+ customer base have not upgraded, preventing them from using Monzo’s services.


FINTECH

By stimulating competition and innovation, we anticipate increased diversity and risk-reducing payment technologies will reinforce financial stability while enhance customer service.

BoE payment system welcomes access to first FinTech; TransferWise WORDS LAUREN D’COSTA International money transfer service, TransferWise, has gained direct access to the Bank of England’s (BoE) interbank systems, becoming the first FinTech to do so. Before this, only established commercial banks were granted access to the BoE’s interbank systems. This allows the non-bank to hold an account in the BoE’s ‘Real Time Gross Settlement’ system, enabling payments to be processed instantly without going through a bank or third party. The news comes on the back of the new General Data Protection Regulation (GDPR) legislations and BoE plans outlined last summer which aim to widen access to its

payment systems. According to the BoE Governor, Mark Carney, “by stimulating competition and innovation, we anticipate increased diversity and risk-reducing payment technologies will reinforce financial stability while enhance customer service”. Benefits of TransferWise joining the BoE payments includes increasing the cost efficiency and speed of money transfers, and being able to settle transactions directly. In addition, Kristo Käärmann, TransferWise Chief Executive says that ultimately customers will receive fee reductions in lieu of the BoE move. UK RETAIL BANKER 35


ABOUT RFi GROUP

RFi Group is a global intelligence and digital media provider focusing exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our aim is to combine global intelligence and local knowledge to provide insightful, valuable and actionable recommendations, with a core focus on the provision of exceptional client service. OUR BRANDS

Covering 44 key global markets with regional offices in San Francisco, Toronto, London, Singapore, Hong Kong and Sydney, RFi Group consistently provides clients with tailored advice and independent intelligence relevant to their specific markets and business needs. EXCLUSIVE FOCUS ON BANKING AND FINANCE RFi Group’s expertise and deep understanding of the banking and finance sector delivers high-value outcomes. Our areas of expertise include: Retail Banking Mortgages Transaction Accounts Savings Accounts Consumer Lending Cards and Payments

For any advertisement enquiries, please contact your regional RFi office or email your enquiry to Sarah Hollinshead at: shollinshead@rfigroup.com For more information, visit: www.rfigroup.com www.globalretailbanker.com

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Our markets include Australia, Argentina, Belgium, Brazil, Canada, Chile, China, Colombia, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Kuwait, Lebanon, Malaysia, Mexico, Netherlands, New Zealand, Nigeria, Peru, Philippines, Poland, Qatar, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Switzerland, Taiwan, Thailand, Turkey, UAE, UK, Uruguay, USA and Vietnam.

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RFi Group’s syndicated research RFi Group is a global intelligence and media provider focused exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our syndicated research is delivered via our Financial Councils model. Upcoming UK Financial Council research includes:

RESULTS OUT NOW UK Savings Council – 2018 Q1 UK Mortgage Council – 2018 Q1 UK Digital Banking Council – 2018 Q2 UK SME Banking Council – 2018 H1

COMING SOON UK Priority & Retail Banking Council – 2018 H1 UK Merchant Acquiring Council – 2018 H1 UK Travel Council – 2018 H1

UK Commercial Banking Council – 2018 H1 UK Payment & Innovation Council – 2018 H1

Find out how you can access RFi Group’s latest business intelligence! For further information, contact Olivia Cosgrove on ocosgrove@rfigroup.com or +44 (0) 203 862 2166

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UK Retail Banker - May 2018 Edition  

An RFi Group Publication

UK Retail Banker - May 2018 Edition  

An RFi Group Publication