How to climb a mountain – a step at a time

Posted on January 23, 2021 by Chris Warburton

This week, the general stupor from the holidays seemed to lift and we all found ourselves standing in bright sunshine, staring at each other. It dawned, maybe, just how high the mountain of work for 2021 is. A sense of urgency has returned.

So it was a burst of activity on the current challenges on the horizon.

Breathing Space. This new consumer regulation is due to go live in May. Although this was being discussed last year, for January we have started off seeing more activity. Likely an issue, especially for large lenders, with multiple products, systems and complexity. We should expect even more as we get closer to the deadline.

Bounce Back Loans. Another issue from 2020 becoming a hotter topic now. An interesting discussion hosted by CharterBanker this week clearly laid out some of the issues; moral hazards embedded within the UK scheme, the strategies to best approach collections for these loans. The CSA, as the industry trade association, provided guidance to try to move this conversation forward too. With expected peak delinquencies to occur in July/August, the sense was now is the time to prepare.

Declining spending and declining balances. Data this week showed how we have all been spending less on clothes, amongst other things. As for lending, we have also seen declining balances on credit cards, as people who can afford to, have used this as an opportunity to reduce amounts owed. With COVID the economic cycle of borrow and spend, seems to be faltering a little, at least for now. All of this could have some significant knock-on effects for the economy, and the banking and lending industry in general reducing profitability. We know there is pent up demand to lend, but without demand more business transformation may be needed. One for the radar.

Negative interest rates. In a talk last week, the Bank of England, reignited talk of negative interest rates in the UK. This of course would mean that there would be a charge for keeping money on deposit, and low cost lending for borrowers. How this would be achieved systematically, given it has not been done before, has shades of Y2K behind it. It does sound like this is coming back as a discussion.

Brexit and data. I am not quite ready to discuss this topic on here just yet, although was on a bruising guidance call discussing some of the new implications and regulations now required for export. However still on the horizon is the UK getting a data adequacy decision. We have a bridging agreement for now, but a decision is needed (or an extension), by 30 April 2021. If not data transfer and data infrastructure will become incrementally more difficult. Definitely, one to watch.

The year is now well and truly up and running. Have a good weekend everyone.

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New Year – Déjà Vu

Posted on January 17, 2021 by Chris Warburton

Another week gone and definitely back into the lockdown routine… Not going out, not meeting folks, and lots of tea with biscuits; my excitement this weekend… defrosting the freezer. Roll-on spring, longer days, and the vaccine… at this point I think we all need it.

Still the observations for this week.

  • I was out in the car this week, for the weekly grocery shop again, click and collect. Interesting how quickly driving can feel rusty… fortunately not many cars out so all was good.
  • Lockdown can be a good time to learn new skills… at the end of a long day sitting inside, somehow this is never that easy. I am just not feeling the flush of extra time this time around… all my efforts are currently on trying to avoid new season box sets on TV… ‘this is the way’!
  • Workwise, there are definite trends to shorter calls. Less are standard 30min or 1hr blocks it seems. More are quick check-ins, also across multiple locations… are new, digital, ways of working now becoming more normalised… maybe?

Everyone stay safe, and cheerful… better days are around the corner…

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Moving on and moving on up…

Posted on January 15, 2021 by Chris Warburton

Two weeks into the year and a couple of themes are already emerging.

Complexities: Rising complexities with trade, increased COVID levels, with new variants, is all leading to a real sense of unease on the economy and going forward more generally.

Different but the same: Back at the start of last year, all of this was new and everything felt unusual. However, this time around it has changed. Although the news is not great, we are now normalising it and are moving on. A sense of a can-do attitude maybe, the will to move on and move ahead.

I not would say there is a sense of optimism, there is not.

However, there is a desire to make the best of it and to move ahead… I suspect this may set the tone for the year.

With all of this in mind there were a couple of stories that caught my attention this week.

  • All eyes on stamp duty, the impact on house prices and lending. I suspect this will get extended. It is probably creating some price inflation for now and may pop any market exuberance if not.
  • 66% of bank customers still don’t trust online. This figure surprised me as it was so high. It does however illustrate a problem for those banks that need to provide a universal service for everyone. Even with lockdown and the great migration to digital, the journey to create new digital habits is still important.
  • Digital processes for back end collections processes have been agreed. Zoom is now allowed to be used for enforcement visits. COVID is accelerating modern ways of working in many areas.
  • Buy-now-pay-later. More pressure for greater regulation on this sector. There are concerns as to whether this could be building up problem borrowing for some consumers and it is all starting to sound very familiar. Porting ideas and experience from other sectors in financial services will no doubt be invaluable here.
  • The importance of psychology in user experience. There is quite a bit of progress in using techniques to drive positive outcomes for customers. This can be in terms of behavior science (nudge) or thinking in the customer’s shoes, it is all very interesting to see this flow through.
  • Lastly, I had a very interesting conversation on simultaneous equations! Not that these are particularly fascinating, but what was interesting was whether we know the equations we are actually solving for (ie. the business problems). These solutions may be different for different parties and how to navigate this is the challenge we all face.

Is it undoubtedly going to be an interesting year…. have a good weekend all.

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