Things seemed to slow this week. Maybe it was because it was half term at school or maybe we are just more in a rhythm. Mind you in the wider world there were still a few stories that caught the eye.

Bitcoin

First was the eye-watering increase in the price of Cryptocurrency in general and Bitcoin in particular, reaching over $50,000 last week. This has been a 5 fold increase in the last year alone.

Opinion seemed divided between those who thought that this was the dawn of a new age, the new precious asset and those that thought it is in fact a fools gold, a bubble only to crash in price, all ending in tears.

Seemingly Visa and Mastercard, together with Elon Musk and other corporate business appear to be now on board, and the drums of FOMO (fear of missing out) seem to be beating hard.

However, with only 7-10 transactions per second (for Bitcoin) some constraints on growth do seem to be mathematically built-in, although in a world of quantitive easing, there is undoubtedly some allure to an asset that cannot be indefinitely expanded… time will tell no doubt. As for Bitcoin lending, like ‘gold’ lending not something I have heard of much yet… so bitcoin lending a bit off yet I think.

Bank results

This week the bank reporting season was upon us again. It seemed the outlook for loans remains looking fairly grim, with Barclays expecting £4.8bn in unpaid loans due to COVID. Natwest is in a similar position, also announcing that it would close down Ulster bank too.

All of this is happening whilst much of impact of the ground still feels quite muted due to government support. A big crunch still seems on the horizon.

Part of these government support schemes are both CBILS and BBLS (BounceBack loan) programmes. The later was in the news this week. BBLS has a 100% government guarenteed for lenders, and new measures for borrowers were annouced this week, allowing businesses to extend payments in order to “pay as you grow”.

However despite further extensions, payments are due to start in May 2021. It is now starting to become real, and that means at somepoint, likely the summer we will see collections impacts.

In anticipation the Banks, together with UK finance, had discussed setting up a joint collections approach, in order to pool resources and minimise costs. This week this seemed to fall apart, with a couple of banks leaving the scheme.

The pressue is still on cost and cost to process, loans provided on a self certification process upfront and high likelihood of default. This no doubt still causing some concerns and a line from the article this week nicely illustrates the challenge…”Government has provided “recoveries protocols”, which set its expectations for how banks should behave while recovering loans”… the how, which influences the cost, is still being worked on.

Lockdown halftime?

So like just like half term, we seem to be at a hiatus.

Future impacts developments and impacts are coming into clearer view, just not quite arrived yet…. all the more reason to continue to watch closely.

Have a good weekend everyone.

With the move of much of our lives online, digital interaction has now become almost everyday. Development and configuration does take time however and this week I seem to have mainly spent setting up some digital infrastructure behind the scenes here.

What particularly struck me however, and spending time with the detail, is the level of information and tracking now available.

Much of this is in contrast to the typical data used common customer journeys, especially in the debt collection and recoveries space. Yes, it is being used by headline fintech giants, but for the average accounts receivable process, not so much.

But, this is where the power lies and using the data for good can really help in creating more positive customer outcomes.

Expanded data

Messages sent, opened, timing, geolocation, actions, on-site behavior, journey flow, outcomes are all now routinely collected. Matching these with existing account attributes is incredibly powerful – there are benefits in flagging vulnerable customers earlier or helping folks with problem debt before it gets too large. It is the future we are standing on the precipice of.

Of course, it is not to say this is not being looked at already. Some are already thinking in these terms. However as much as there are complexities involved, the real challenge seems to be as much changing our perspective, thinking more like a fintech and building this into our processes.

Creating change

On a related note, change is a foot. Change management that is.

Regarding the pandemic, much of the reaction we have seen so far has been society coming to terms with and progressing down the change curve.

Blame, Confusion, Acceptance, Problem Solving, Moving on

Different of course by the individual, but in general we dont seem to be moving much, largely stuck and not making it much past confusion.

It as pointed out this week, we need to start to accept and move on. With new virus strains, we may be in this situation for a while. Staying still will mean we just continue to live, Blame and Confusion, on repeat which does not feel particularly healthy.

Maybe then this is the time to relook and reinvent all our processes and gain a fresh perspective. Not one based on what has gone before, but what will need to be, for the current reality. We may be here for some time.

Other stories of note

• Soaring debt levels reported by businesses in the UK. All of this debt will need to be collected. In the background, we also have the prospect of zombie firms, some of which are being propped up by government support schemes which were also extended this week.
• The is a growing trend of new FCA licensing and portfolio consolidation in the industry, a couple more this week alone… this is a trend to watch and one that may continue as the economic impacts play out.
• On fintech, an interesting story on Barclays rolling out digital receipts. This sounds similar to extended data that was available in closed-loop networks such as Amex in years of old, however, it really underlines the importance there is today in capturing data. It is also interesting how there is now perceived to be a consumer market for this type of information now. We have all become very much more data-savvy it seems.
• Lending wise, the latest data is still showing softness in motor finance and second mortgage markets, although clearly there is an expectation of pent up demand in the background. Interestingly average balances for accounts in arrears also seems to be increasing. This could of course be due to a change in the mix; those in arrears in a worse situation than before, whereas others, better off, with less casual arrears, this would fit the pattern seen elsewhere.
• There is also definitely a sense of lockdown fatigue setting in. This seemed to be supported with data showing an increase in shop footfall. There were also some reports on pressure for employees in places to be back in the office too.
• Lastly, on UK economic data. ONS data this week showed a record shrinking of GDP by 9.9% last year. There was also a good comment by Duncan Weldon from the Economist “But just as extraordinary as the scale in the fall of GDP has been the extent of government support: £60bn on furlough, £25bn in tax cuts and grants to firms, £2bn of tax deferrals, over £85bn of government-backed cheap loans to firms. Plus the automatic stabilisers”… we still have some challenges ahead it seems.

So enough doom and gloom for now, it is cold out, but still sunny, so not so bad really…. have a good weekend everyone.