The 2019 ISA season is now in full swing, and it's as good a time as any to focus on financial planning - and, within that, looking ahead to your retirement years to ensure financial security.
How tech start-ups are driving cross-sector collaboration
The word ‘disruption’ is often associated with fintech, and sporting a positive connotation to boot. Although fintech and financial services are not exclusively responsible for the rapidly-changing marketplaces we see today, these sectors are highly conducive to technology start-ups. And this, coupled with the fact that services in the UK (in which financial services plays a big role) account for roughly 80 per cent of UK GDP, means that fintech wields a growing level of clout.
At the heart of the fintech revolution are challenger banks, who are grabbing more and more market share from the old guard on the high street; along with peer-to-peer lending platforms. Indeed, the fintech sector as a whole is now worth roughly £7 billion to the UK, with employment created for 60,000 people. Growth prospects look very positive too, and it is increasingly establishing itself within the mainstream of UK financial services.
Disrupting the landscape
At a broader level, it is the explosive growth of tech start-ups which is even more captivating. Indeed, £6.7 billion was invested into these sorts of companies in 2016, according to data from London & Partners. That’s more than any country in Europe, which obviously bears extra significance given the Brexit vote.
To underline their influence on the business landscape, research from McKinsey found that the average lifespan of the largest corporations in the world has plummeted to just 18 years; compared with roughly 100 years back in 1930. The firm also anticipates that this figure will drop further to just a decade by 2025.
And this trend isn’t just at company level: product lifecycles are radically shortening too. The days of big companies complacently churning out the same old product or service they’ve delivered for years are numbered, and the battle to keep pace with innovation is intensifying.
An uptick in cross-sector partnerships
With all these headwinds in the face of the established Brick and Mortars, many have realised that investment in R&D alone is insufficient, and there has been a surge in the number of “David and Goliath” cross-sector partnerships. Such a mutual embrace of apparent misfits may seem counter-intuitive, but the rigidity of processes and operations associated with big corporates does not create fertile ground for innovation. By taking on board the ideas and concepts of more-agile tech start-ups, such barriers can be overcome. Conversely, for tech start-ups, resources and investment tend to be the biggest obstacles to growth, so they in turn benefit from improved financial muscle with respect to product development.
There are challenges to making such relationships work. Protection of intellectual property, a clash of cultures, mixed brand messaging, contrasting decision/process cycles, understanding respective roles, and a general power imbalance are all part of the teething problems involved.
It’s precisely why the growth in cross-sector partnerships hasn’t just been limited to big and small companies. A good example of this was Lending Works’ partnering with challenger brand Revolut in March, enabling customers using the Revolut app to enjoy instant credit to their Revolut account when their loan is approved. Such a facility is the first of its kind.
Achieving more together
Such ventures have broadly been identified as the key to breaking new ground, and it’s fascinating to see companies across the board embrace the advent of tech start-ups, and collaborating with entities from unrelated sectors – or even potential rivals – in order to be greater than the sum of their parts. For start-up CEOs - or ‘’techpreneurs’, as they are sometimes called – it may not have been the original objective when they launched their brainchild. And I’m sure many established behemoths might wish that the age of disruption had never happened.
But, like it or lump it, many parties appear to be coming together in a marriage of convenience to augment the very best in product innovation. Of course, the beneficiary at the end of it all is the consumer, who gains from ever-improving levels of efficiency, quality and convenience when it comes to product/service delivery. And that, surely, is unequivocally a positive thing for our consumption-driven society.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
There is barely a week to go until the conclusion of the 2017/18 financial year, which means that, as ISA season begins to hot up, time is running out to take advantage of your ISA allowance.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.