Angela Knight, chief executive of the British Bankers Association (BBA) believes that “the blame game has gone on far too long and the time has come for a more measured and serious debate”.

“The industry does not duck its responsibility,” she said, “but with the economic problems of some countries that have been present for many years, though masked, now being so obviously displayed, it is clear to all that whilst we are part of the problem – we are by no means all of it.”

Speaking to delegates at the BBA Annual International Conference, Knight stressed: “The banking industry is responsible for banking. It does not run the regulator, it is not in charge of monetary policy and it is not responsible for public spending.”

Add value

Stephen Green, HSBC Holdings group chairman, argued that it is imperative for banks to demonstrate the value they can add to the economy and to society. “We need to focus on the raison d’etre of business and to turn our backs on short-term shareholder maximisation. More urgently, in the short term it is clear that strong banks will be needed to support recovery.”

Green confirmed that “often in the last two years, banks have been seen as being unwilling to meet customer demands, with all the consequent effects on our reputation”.

Green particularly welcomes the Bank of England’s creation of a Financial Policy Committee and its role of managing the overall supply of credit. “I believe,” he said, “that the use of such mechanisms as varying the capital requirements in the banking system, or administrative measures such as loan-to-value caps in key sectors, will be vital to support sustainable economic growth and reduce the probability of a further crisis.”

Far-reaching enquiry

The UK government has asked the Banking Commission (Commission) to undertake a far reaching enquiry into financial regulation. Its remit is wider than expected and will look into the state of competition in the industry and how customers can be sure of the best deal.

Andrew Tyrie MP, chairman of the government Treasury Select Committee, argued that the Commission, for its conclusions to be credible, will need to examine thoroughly all the main ideas on regulatory reform affecting capital and liquidity currently being aired.

Green sounded a warning regarding bank regulation. “It is a difficult path to tread,” he stressed. “Government and regulators need to calibrate carefully the impact of the various banking reform measures on our fragile Western economies. It is essential to recognise that it will take time for many banks to adapt, rebuild and reshape their balance sheets to meet the demands of the ‘new normal’. This means making some delicate judgments about both details and implementation timing of Basel III and Capital Requirements Directive III and IV if we are to avoid choking recovery and plunging into a new credit crunch.”

Tyrie stressed: “Regulation itself is a formidable barrier to entry into the financial services industry. The current, and probably justifiable, intensification of regulation seems likely to raise the barrier even higher, unless strenuous efforts are also made to promote competition.”

Tyrie wondered whether it was the complexity of Basel II rules which served to nullify their value. “If so, Basel III needs a thorough examination too,” he said.

Message from the US

Louis Susman, the US Ambassador suggested that, given that the US has lost some $7tr in stock-market wealth and $6tr in its housing market during the recession, regulation was inevitable.

“The US,” he explained, “is on the verge of passing the most comprehensive financial regulation reforms we have seen since the 1930s. The reforms are not perfect but we can’t let perfect get in the way of good. Along with these reforms we are working in parallel with G20 governments and international institutions, such as the Financial Stability Board, the Basel Committee on Banking Supervision and the IMF to improve the entire financial system.”

The new bill (the House and Senate have completed the conference committee stage of the bill and its now time for the final vote in the Senate) will provide greater scrutiny of large financial firms to prevent any one company from threatening the entire financial system. “If a big firm is failing, regulators will have the ability to shut it down and break it apart in a safe and orderly way without asking taxpayers to pay a dime,” said Susman.

Swans into ugly ducklings

Gordon Nixon, president and chief executive of Royal Bank of Canada, expressed similar concerns about Basel III. He said: “Basel III’s proposed rules are supposed to be a starting point for discussion. Ironically, these proposed rules, for all their good intentions, will negatively impact even the healthiest bank’s balance sheets in terms of capital, leverage ratios and liquidity and compromise economic growth. The proposals are so complex and onerous that we run the risk of an agreement that lacks transparency and integrity, or one that results in non-uniform implementation.”

Nixon added: “It has re-defined capital and risk assets, the effect of which is to turn swans into ugly ducklings”.

Canadian banks, for example, would be lifted from their position as well capitalised, liquid financial institutions – and recast as undercapitalised. “Banks that passed the ‘real life’ stress test may fail the theoretical one – a pretty good indication of flawed methodology,” he said.

Competition and transparency

Andrew Tyrie told BBA Conference delegates:  “Concern about inadequate competition in retail banking is widespread. So today I can announce that the Treasury Select Committee will begin an examination of the issue – competition in retail banking as well as the future of so-called free banking.”

He added: “Lack of competition within financial services has been a long-standing concern of mine, pre-dating the recent financial crisis. Examining competition within the sector is now more crucial than ever. The complaints, some justified, simply don’t go away.”

Tyrie also suggested that large bank bonuses are probably a consequence of inadequate competition in investment banking.

Another crucial ingredient is greater transparency. “Regulators are often needed to protect customers whenever there are complex products, whether in manufacturing or the service sector. And a crucial weapon in their armoury can be sunlight. Transparency, rather than heaps of further detailed regulation, can often curb concentrations of power, vested interest and provide better outcomes for consumers.”

Future resolutions

As the economic storm subsides, Gordon Nixon believes that strong banks will get stronger and weak banks will be pressured to re-structure.

“This suggests an era of opportunity for potential acquisitions but not until we have a clear line of sight on the true value of assets and clarity on regulation,” he explained. “As long as uncertainty and volatility remain, finding the right time to buy at the right price is like trying to catch a falling knife – but ultimately our industry will re-structure.”

Nixon forecast: “Banks will have to re-structure their business mix to ensure that capital is being deployed in the most efficient manner because neither the marketplace, nor regulators, will tolerate marginal returns on excess capital. The result will be re-structuring of balance sheets and assets and those that can adapt will benefit and those that are complacent and hope for a return to the ‘good old days’ will atrophy.”

Return of securitisation

Deven Sharma, president of Standard & Poor’s argued that securitisation may return in the near future. “As things stand,” he said, “regulatory uncertainty is likely a major factor behind the dearth of securitisation internationally. In Europe, about €30bn of securitised bonds have been sold this year compared with more than €500bn before the crisis – and some 95% has gone to central banks, not the private sector.”

He added: “Nobody expects a return to the levels or complexity of securitisation that we saw before 2007. But the comatose state of securitisation leaves a big hole in the pool of financing available to financial institutions and their customers. That in turn has a real impact on activity and jobs in the wider economy.”

Initiatives are underway, Sharma confirmed, to support a healthy and sustainable securitisation market for the future. More information about asset pools is being made available to investors, as well as ratings firms, to help them take a more informed view of credit risk. Industry bodies such as the European Securitisation Forum are seeking to bring greater transparency through standardised data reporting. “New structures are less leveraged, simpler and easier to understand,” he said.

Future vision

Stephen Green stressed that a sound banking system was imperative for the economic recovery.

“But we will never achieve this,” he said, “unless we can change the perception that financial services is an industry which is preoccupied with serving itself and its own short-term advantage into one where our primary objective is to service the needs of the wider economy.”

He added: “We have considerable work to do on this. We need to continue to show that we understand that parts of our industry behaved very badly in the run up to the crisis. We need to demonstrate that we recognise our obligations to behave responsibly to manage and understand risk and to create the sustainable value that the economy and wider society needs.”

Ambassador Susman concluded: “As an ex-banker I take great pride in the contribution of the financial industry in the past to the wealth and growth of the world economies. I have also felt the pain of the abuses of the past, which created hardships for so many and, quite frankly, let to populist anger against the industry.”

“However, I look to the future with optimism in that we have learned from the past. I am confident that whatever laws and regulations are passed will be appropriate, reasonable and not punishing to the financial sector, so that the banking industry will be allowed to remain the strong engine that leads the world to growth and recovery. We must constantly remember to retain the political will and the courage to do what is right for our employees, shareholders and for the people and communities we serve.”

Article contributed by Edward Peck – Asset Finance Europe

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Darren Evans, Manager at Islington-based pub The Trader, says: “England’s defeat is definitely going to have a big impact. I think that’s something that will be felt in both small independent pubs and large chains across the country.”

Owen James, economist at the Centre for Economics Business and Research, says the food and drink sectors would have been the biggest beneficiaries from an England victory. “The longer they’d stayed in the World Cup, the bigger the boost to sales [in these areas],” he says.

Howard Archer, economist at financial analysis firm IHS Global Insight, says: “No doubt England shirts, flags and general England World Cup merchandise are now being consigned to the reduced price baskets.

“But there could be a significant boost from the match for any potential suppliers of goal line technology among UK companies. Although knowing our luck, German businesses have probably cornered the market for that as well.”

However, Krisham Rama, spokesperson for the British Retail Consortium (BRC), says the overall loss to high street spending will be small. “It would have been a useful boost, but the majority of spending happened in the run-up to the World Cup. Consumer confidence is the most important factor and things like the VAT increase are likely to have a much bigger effect on spending patterns.”

According to the BRC, the previous World Cup tournament in Germany was worth £1.25 billion pounds to the UK economy.

Article contributed by smallbusiness.co.uk

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Almost 70 per cent of delegates polled at the Conference said their businesses were witnessing a recovery in trade compared with just 13 per cent that had seen no sign of an upturn.

The delegates painted a picture of the domestic and global economy being at a crossroads on the road to recovery.

While in excess of 24 per cent said demand in export markets had not reduced over the past 12 months, more than 23 per cent said it had – depending on which economic and geographic regions they were trading with.

In terms of the domestic economy, more than 46 per cent said demand for their products and services had not dropped over the year but 39 per cent said they had endured a fall in demand.

Delegates remained unsure about the Lib-Con coalition Government ahead of tax rises and public sector spending cuts in the emergency Budget on 22nd June. Almost 42 per cent thought the new administration would be positive for the UK business climate but almost 40 per cent remained undecided.

The poll produced evidence of businesses undertaking a cautionary stance to protect themselves against potentially damaging effects of the downturn – more than 58 per cent have strengthened their credit management in the past 12 months.

The conference at the Palace Hotel in Manchester was addressed by Dr Mohamed Djeddour, Head of International Business Programmes at Manchester Business School, who spoke on The UK Economy – exhaustion of the old model and prospects for a new growth path.

Other economists to speak were Juan Gomez, Head of Economic Strategy at Manchester’s Commission for the New Economy and Christine Altuzarra, an analyst in the Economic Studies and Country Risk Department of Coface in Paris, where she is primarily in charge of industrialised countries and sectors.

Christine Altuzarra said the worldwide economic crisis had been the worst and deepest since the first oil crisis of the mid-1970s and that cycle durations tend to be narrower and narrower.

She said growth had returned globally in 2010 with emerging economies outstripping that of industrialised nations and that nations in the eurozone are likely to endure a more painful and slower recovery than others outside the zone – highlighted by the crisis gripping Greece and concerns about the economies of Spain and Portugal.

Ms Altuzarra believes the UK will see growth of 1.3 per cent in 2010 -  as France – compared to her forecasts of 1.5 per cent for Germany and nearly 3 per cent for the United States.

Mr Gomez, whose speech was entitled ‘The North West Economy: Growth with Confidence?’ said the worst effects of the recession had passed and that the North West was set for a modest rate of growth.

Philip King, chief executive of the Institute of Credit Management (ICM), delivered a speech on ‘Out of Recession: Risk & Response’.

His speech supported the findings of the poll by showing how companies were beginning to benefit from an improvement in business as the nation emerged from recession.

It was the first time that Coface, a leading provider of country, sector and business climate ratings and a world leader in credit management services, had staged the conference outside of London.

Xavier Denecker, the managing director of Coface – UK & Ireland, acted as conference moderator and told delegates that Coface selected Manchester because it was home to the industrial revolution and had transformed itself into “one of the most important cities in the UK and has been able to reinvent itself into a dynamic metropolis, with an extensive presence from the service, finance and media sectors.”

The conference was attended by over 200 finance directors and credit management professionals, their advisers and those with an interest in country risk.

Contributed by Coface

The industry has seen remarkable growth across many markets; UK, Italy, China, US, Ireland, The Netherlands, Spain, France, Germany, Taiwan to name but a few. And there are many more in South America, eastern Europe and other regions around the world, following in their footsteps.

For the more mature markets such as the US, UK and Italy, life in the factoring world has become more competitive as the markets head towards maturity.  Increasing competition means lower margins, increased risk and a greater focus on marketing, new products and greater efficiency. As with any industry facing these conditions, companies are looking for ways of getting back to higher profits and distancing themselves from competitors.

One methodology that has recently caught the eye of some factoring executives is blue ocean strategy. Blue ocean strategy is the brainchild of W. Chan Kim and Renée Mauborgne, both professors of strategy and management at INSEAD, the international business school in France. In their best selling book, Blue Ocean Strategy*, Kim and Mauborne challenge the traditional management thinking of mature industry businesses of going head to head with competition in attempting to achieve sustained profitable growth.  They contend that fighting over competitive advantage, battling over market share and struggling to achieve differentiation only create what they call ‘bloody red oceans’ where rivals ‘fight over a shrinking profit pool’. Kim and Mauborne claim that this strategy is increasingly unlikely to create profitable growth in the future.

Instead, what Kim and Mauborne argue is that businesses would be far better off by creating ‘blue oceans’ in which uncontested market space is opened up, thereby making the competition irrelevant and creating a leap in value for customers. The way to do this they say is through ‘value innovation’, i.e. creating differentiation by increasing value and low cost simultaneously. The authors cite a large number of examples of companies that have successfully created blue oceans, from Cirque du Soleil to Ford motor company to Yellow Tail wine company. These companies have all looked hard at their existing highly competitive markets and sought to create something different that simultaneously creates a product or service of significantly higher value but at lower cost. In the case of Ford it was the Model T car, Yellow Tail created a completely new style of easy drinking, fruity flavoured wine and Cirque du Soleil sought to completely change the traditional circus experience by distancing themselves from the increasingly controversial use of animals and infusing theatre into the circus experience.

One senior factoring executive who has readily proclaimed the virtues of blue ocean strategy is Michiel Steeman, Head of International Factoring at ING Commercial Finance in The Netherlands. When asked how he came across blue ocean strategy, Steeman explained that ‘a number of management books come across my desk, but this one particularly caught my attention’. Using blue ocean strategy helps in redefining a market says Steeman. According to Steeman, ‘there are several trends affecting the factoring industry at the moment, two of which are supply chain finance solutions and the whole area of digitisation’. ‘There has also been a ‘huge trend for using the web and also track and trace facilities whereby knowing the location of products at any given time can help in managing risk’. Steeman added that the ‘starting point for all these is the invoice and more particularly the information that leads up to the creation of an invoice. The longer term trend says Steeman, is the use of open account in international trade – ‘companies are more comfortable with markets like China and India. Letters of credit, cash in advance etc are no longer needed. Companies are more interested in strategic partnerships’.

With all this going on, Steeman has found that using blue ocean strategy has really helped him in providing a structure for the organisation’s line of thinking and to get an understanding of what the position of a market is now, where it might be heading and what its potential could be if viewed very differently.

Of course, many would argue that blue ocean strategy is nothing new and is just another variant of long understood ‘thinking out of the box’ or ‘blue sky thinking’ methodologies. However, where blue ocean strategy really seems to score is in its structured and framework style of approach and excellent and plentiful case studies. Indeed, Steeman argues that this approach is where the key value in blue ocean strategy lies.

However Steeman warns that the book is not so strong in implementation strategies and for help on this he recommends one should look further afield.

Kim and Mauborne do not suggest that their publication will guarantee success and even if it does, that it will last. And perhaps this is another reason why the book compares well with other management best sellers. For example, in Peters and Waterman’s enormously successful In Search of Excellence (1982) the authors went to great lengths to identify eight points that they felt were central to business success. However, the subsequent demise of some of the ‘excellent companies’ that the book highlighted, identified a central weakness in suggesting that these points would apply indefinitely.

Many factoring industry visionaries, including Steeman are predicting that for large factors, factoring will become a commodity product and that ‘traditional’ style factoring will be pulled back to niche markets and smaller players. Steeman goes further and says that ING will focus on big players and any suppliers to large corporates anywhere in the world. And ‘where we have a strong, local network we will focus on smaller clients’ says Steeman.

It would seem that with Steeman for one, blue ocean strategy in factoring, is perhaps already in use.

*Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne, Harvard Business School Press.

Article contributed by Michael Bickers, BRC Factorscan

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Richard Wilcox, head of renewables at the Co-operative Bank, said the lender would be pumping £200m into the industry this year and was also looking to expand its 14-strong team of renewables experts.

The bank expects to use up the £400m of cash it ring-fenced in 2007 to fund renewable energy and carbon reduction projects, including onshore wind projects and combined heat and power systems.

Mr Wilcocx said it continued to be “inundated” with enquiries from community projects and smaller developers eager to utilise the new feed-in tariff regime brought in by the Government last month.

He said: “This will be the culmination of phase one of our commitment and in the next few months we are looking at plans to take us through 2011 and beyond. The feed-in tariff which came into force last month has created a long-term guarantee of exporting energy into the National Grid which has led to a real take off in these kind of projects.

“In other parts of the world these small micro-renewable projects are a major part of energy generation and while the UK maybe behind the game in a sense, we are running to catch up.”

He said that the way the feed-in tariff was “skewed” also opened up a huge opportunity for individual homeowners to produce their own power.

Mr Wilcox said: “In the past it would have taken nearly 30 years for the cost of a solar panel to pay back.

“Today it is nearer 10 years.”

Gerald Waterfield, senior corporate manager at the Co-operative’s Lancashire Corporate Banking Centre, said he had seen renewable energy become “increasingly attractive” due to the moves by the government.

The commitment made by the Co-operative yesterday coincided with an announcement from the North West Development Agency that it has £2m of grants available to develop carbon-reducing technologies.

Chief executive Steven Broomhead said it was working with Envirolink North West to fund companies working on waste treatment and recycling, water pollution, air pollution, land remediation and energy generation and efficiency.

Contributed by Lancashire Evening Post

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Fred Crawley and Brendan Malkin report on these overlaps in asset based lending and asset finance  and the opportunities they pose to finance companies.

Andrew Bullard hardly has a spare moment these days. Ever since he took up his position as head of business at Cashflow UK Limited, an invoice finance brokerage, he has spent much of his time travelling around Britain, meeting customers and catching up with business partners. On most weeks, he spends just two days at his offices in Eastbourne.

There is good reason for all this activity. As well as wanting to significantly increase the number of deals Cashflow UK brokers, he also wants his company to return to the number one spot it held in the factoring intermediary sector before it was bought by Bibby in May 2008.

One way he wants to achieve this is by sharing more business with asset finance brokers.

This works by what Bullard calls a process of “reciprocity”: Cashflow UK forwards leasing deals to leasing brokers, which in return pay Cashflow UK a commission for each deal assigned; in exchange, lessor brokers give Cashflow UK their factoring and invoice discounting deals.

Mark O’Neil, joint managing director of Vantis’ Commercial and Asset Finance division (VCAF), thinks that this is a good idea for the industry. VCAF introduces both invoice finance (IF) and asset finance (AF) business, and is aware of how different the two funding markets are.

Focusing on the differences

For a start, much more is going on in invoice finance – O’Neil says there are between 75 and 80 active funders in the market, with at least three new ones (Team Factors, Innovation Finance and Partnership Finance) emerging in the last six weeks alone.

In addition, without wanting to make the asset finance market look commoditised, variance between IF funders comes down to a lot more than rates.

IF is an “evergreen” product – where payout is continuous and the agreement has no fixed term – and according to O’Neil, “the wrong client matched up to the wrong funder can cause big problems later in the relationship”.

As such, deals are much more likely to satisfy both parties in the long run if they are introduced by a broker with a wide range of IF funder contacts.

Reciprocity schemes such as those operated by Cashflow UK mean that AF brokers can be sure of clients’ IF applications reaching appropriate funders, rather than all being fed through one or two invoice financiers that the broker happens to know.

Cashflow UK is not alone in being open to IF proposals from lease brokers, either.

Hilton-Baird (HB), the current leader of the invoice finance broker market, is a firm that is taking a greater and greater interest in asset finance.

HB managing director Evette Orams says that co-operation between AF and IF introducers is certain to increase in years to come, and HB has placed plenty of IF proposals sourced from asset finance brokers.

Orams reinforces the importance of getting the right funder for the right deal, and explains that HB’s standard practice is to introduce a proposal to two or more funders, in order to ensure the right fit.

Unlike most lease brokers, HB does not ‘package’ deals for underwriting – it simply introduces opportunities to lenders, making multiple introductions more feasible.

Interestingly, HB has also begun to pass on some asset finance requests from IF customers to funders it knows in the AF sector. Since these deals tend to be those for which HB cannot find an appropriate ABL solution, they tend to be fairly specialised, and thus placed with firms employing committee rather than “scorecard” underwriting.

Also, and interestingly as a potential source of commission to AF brokers, Orams says that HB can often find an ID or factoring solution to a customer request for asset finance.

This means that for brokers with equipment proposals that are difficult to place in today’s limited funding world, it might be worth speaking to an IF broker like HB to see if an “asset-based” resolution can be found instead.

Finding a new niche

Other brokers back in asset finance, meanwhile, have embarked upon a similar course of consolidating on the overlaps in the leasing and factoring markets.

However, rather than offloading deals that are not core to their business, these brokers instead are seeking to bring together finance products.

The reason for doing so is simple. While the recession, on the one hand, has meant companies are deferring their investment in capital expenditure, on the other it has given rise to a proliferation in refinancing requirements.

Structured products that might include a mix of asset finance and factoring can help fulfil these demands.

Some brokers have embarked on an aggressive push to attract these types of deals, and in doing so have effectively re-labelled themselves as turnaround specialists.

Norton Folgate, for example, has just launched an ABL offering, aimed specifically at restructuring situations.

Managed personally by managing director Robert Keep, the new product set is designed to bridge the gap between traditional asset finance and more complex corporate finance transactions involving equity as well as debt.

Among the tools Keep intends to deploy for this purpose are not just asset and invoice finance, but receivables finance, inventory and stock finance, debenture-backed term loans, commercial mortgages, chattel mortgages and access to a special “corporate rescue” fund.

Jumping on board

Bullard made clear that there are other brokers looking to enter the turnaround space.

“There are more Phil Betts-type people wanting to get into the marketplace,” said Bullard.

Bank-owned leasing companies have also not been blind to the benefits of bringing their asset finance and factoring businesses closer together.

Barclays did this some years ago when it formed Barclays Asset & Sales Finance, and ING Lease Group followed suit back in late 2007.

Last month, La Tribune, the French newspaper, reported that Credit Agricole was merging its leasing and factoring operations. Many others are doing the same.

Other brokers, too, are finding ways to capitalise in the new leasing-factoring revolution.

The leasing-factoring alliance, however, is still in its infancy, and there remains plenty of room for growth.

Bullard says around 10 percent of his business comes from sharing leasing deals with asset finance brokers, but he expects this to grow to 30 percent in the medium term.

“We’ve recently forwarded two vehicle deals and two hard asset deals to asset finance brokers, but there is plenty more we could be doing,” he says.

Article contributed by Fred Crawley – Senior Reporter, Leasing Life & Motor Finance

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The UK banking industry is set for a year of change in 2010, as several new banks from Tesco and Virgin to Metro Bank attempt to enter the sector. Traditionally a stronghold of the Big Four, these new movers and shakers will need to work extremely hard to make a significant impact on the UK retail banking landscape. However, there is a great opportunity for the new players to leapfrog the competition through the use of more sophisticated and agile technology. The ability to implement systems and processes with a technological ‘clean slate’ gives these banking start-ups a huge potential advantage – if they can capitalise on it.

So as these new banks come onto the scene, what do they need to consider from a technology infrastructure point of view?

The customer comes first
A priority for financial institutions must be on understanding their customers better. By setting up an environment that enables them to get a complete ‘customer view’, new banks will be better placed to track customer activity, prevent fraudulent transactions and encourage increased customer use and activation of bank products. In order to win the confidence of disaffected customers, institutions need to offer added-value, and if appropriate, tailored services to their customers to help build their relationships. New entrants from the retail space, such as Tesco, will have a highly developed understanding of these techniques. The industry will be watching with interest to see how they apply their existing customer knowledge to their retail banking offering.

For corporate customers,  better reporting of their payments from all channels and offering dashboards and trend analysis services will prove popular. On the retail banking side; there is much focus on innovative new technologies, such as contactless, NFC and mobile, but the number of transactions generated by these emerging channels is still low. It is the traditional card-based payments that continue to account for significant transaction volumes and revenues. While it is important that banks can use new technologies where relevant, they must also ensure that their current products remain competitive so that they bring in that important core payments revenue.

Back to the future
Most new banks will start off with relatively small UK operations, depending on how they have entered the market. However small they are to start with, it will be crucial to their future success that they build scalability into their processes to effectively future-proof their technology. For example, banks may initially choose to offer a limited selection of cards to their customers, with a view to extending this further down the line to include a wider offering and multi-application cards.

When making early technology choices, it is important to ensure that systems are agile enough to react to the changing market place. This will be particularly important to the brand new banks that are likely to adapt their plans over relatively short time frames as new opportunities become apparent.

Another consideration will be the increasing movement towards agile payment systems or more integrated systems that are capable of handling payments from any channel, whether consumer or corporate, from start to finish – with no redundancy of technology, or duplication of processes and labour. These agile systems will enable financial institutions to manage transactions quickly and effectively, with less need for manual intervention and costly interfaces between different systems.

Buyer beware
It is important to differentiate between those financial institutions that have chosen a strategy of organic growth, and those that have acquired smaller players to gain a foothold and the beginnings of a branch network in the UK.  For instance, in January 2010, Virgin announced the acquisition of Church House Trust to “provide the platform from which [to] develop a retail banking business in the UK offering a full range of products to consumers under the Virgin Money brand” (Times Online, 8 Jan 2010, ‘Virgin Money buys minnow for retail bank launch’). Banks that decide to take this strategy must carefully consider whether they should utilise and adapt existing technologies, or if it would be more effective to start from scratch from an IT perspective.

Conclusion
While the Big Four are likely to retain their dominance of the UK retail banking market in the short-term, any increase in competition will certainly cause concern for banks that are dealing with dissatisfied customers and public anger at recent scandals surrounding the financial crisis and bankers’ bonuses. These smaller, more reactive competitors could certainly shake things up through the use of innovative and agile technologies, and this in turn can only be beneficial for customers.

Andy Brown, ACI Worldwide

Article originally published by Financial World / ifs School of Finance

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“Its encouraging to see positive signs of possible economic recovery, with the latest ONS figures showing the unemployment rate has dropped to 7.8 per cent a decrease of 33,000 to 2.45m people.

“We know from reviewing the performance of a range of sectors in our latest Business Factors Index that small businesses in the UK have been hit hard by the recession, with one in four owners and managers reporting that they are struggling to survive – but these figures will give the economy a much-needed boost at a crucial point in the year.

“Looking ahead at a brighter future, it has never been more important that small businesses are well prepared to bring on new staff for an increase in business, and a rise in outgoing customer invoices. The issue of cash flow and survival are intrinsically linked and businesses will do well to invest now to ensure they have robust credit management systems in place.

“Alternative cash flow funding solutions, such as invoice finance, can plug the funding gap left by the banks by providing an immediate injection of cash into the business against the value of outstanding customer invoices and also ongoing funding as invoices are raised. This frees up vital cash flow to ensure companies have a healthy flow of funds and do not hit cash flow difficulties further down the line.”

Edward Rimmer, Chief Executive, Bibby Financial Services UK

Article submitted by Business Credit Management

The Report on Jobs (excerpt below), a monthly publication produced by Markit Economics and sponsored by the Recruitment and Employment Confederation and KPMG LLP shows:-

Stronger rise in demand for staff

The Report on Jobs Vacancies Index signalled an increase in overall demand for staff for the fifth month running in February. Moreover, the rate of growth accelerated to the strongest since July 2007. This was indicated by the Overall Staff Vacancies Index climbing from 61.5 to 62.4.

Permanent staff vacancies

Demand for permanent staff continued to rise during February. The Permanent Staff Vacancies Index recorded 62.7, up from 61.7 in January and its highest level for over two-and-a-half years.

Copies of the report are available on annual subscription from Markit. For subscription details please contact: economics@markit.com Tel: +44 1491 461000

Re-printed with kind permission of Markit