By Jon Deane, CEO of InfiniGold.
Data shows that Gold prices have risen 12% since the beginning of the year as it continues to be a safe haven asset while global economies are suffering. A safe haven asset in essence, is something that is stable and uncorrelated to risk assets during periods of stress and heightened volatility. As market participants started switching quickly out of growth assets at the start of the pandemic, they started allocating to gold which is experiencing more than a seven-year high in USD terms, and all time highs in a number of non-USD currencies.
As the economic damage, exacerbated by decades of over-leverage continues to unfold, gold’s investment thesis continues to improve. Particularly as we start to see the market absorb the impact of the global central banks’ unprecedented stimulus packages (as well as the policy response) coupled with the change in sentiment around globalisation, and the resulting effect on potential inflation. Gold is a consensus trade right now, with the majority of Investment Banks and Hedge Funds starting to see the yellow metal as a core part of an investors portfolio. This, more than likely, means we’ll witness some short term volatility in the asset however it is clear that in the medium term the direction is north.
The Gold Rush As many look to heed advice to add gold to their portfolios in preparation of a global recession, if not a depression, gold-buying apps that allow customers to buy and use the precious metal for investment and everyday spending, are seeing record volumes.
British-based startup Glint Pay Services, which operates in the U.S., the U.K. and continental Europe, said it had seen a 718% increase in clients purchasing gold over the last five weeks.
Similarly, the Australian-based Perth Mint has also witnessed a significant uptick on both volume and clientele. Regarded as one of the largest gold refineries in the world, The Perth Mint offers both physical and digital gold via the GoldPass app.
This increase in demand is also encouraging further extra-industry participation, with digital wallet providers like Uphold and FCA-regulated Moneybrain rushing to add a gold trading element to their offering. Following in the footsteps of Revolut who joined the gold rush in March, allowing customers with certain types of accounts to access gold through its app as well.
Revolut’s new premium feature enables subscription users direct access to the gold markets. Users can purchase and trade gold, based on live market-performance data, obtained and assured through its trusted gold-services partners.
Gold exposure can be transferred from one Revolut user to another via the Revolut app, or converted instantly into cryptocurrency or into e-money for purchases.
This is a game changer for the asset class that continues to evolve even in the toughest of times. Integrating Gold Whilst technology has helped the industry make tremendous strides in terms of accessibility, investors do need to check the fine print and understand what it is they are actually buying. Digital gold is real gold. However rather than holding the asset in a papered format you are buying gold via digital contracts. This enables faster transactions as well as the ability to transfer peer-to-peer. It’s important to understand who the provider is behind the underlying asset and whether you are buying actual gold or a derivative of it.
In the case of Revolut, buyers aren’t actually buying physical gold, but something more akin to a share in physical gold, or even a derivative. In other words, it is technically “backed” by bullion stored in the LBMA vaults, and there’s no way users can truly get their hands on it, or transfer it outside of the Revolut ecosystem.
“In the unlikely event of Revolut’s insolvency, all Precious Metals holdings will be sold and proceeds will be credited to your e-money account,” reads the fineprint, in essence, you’ll have to trust them.
But gold is available in various formats today. Some financial institutions are opting to work directly with a Mint, rather than using a trusted gold partner—cutting out often restrictive intermediaries or opaque reserve management. Skipping straight to the source opens up unreserved access to an untapped supply of bullion that comes with additional security measures too, such as transparent reserve management, government-guarantees and AA+ ratings.
Gold digitalization through challenger banks such as Revolut, or via software solutions like The Perth Mint’s GoldPass, or even via technologies such as blockchain, have highlighted that frontier technologies are enabling and disrupting the traditional channels for buying, selling, and storing physical metals. All that’s really required is a suitable partnership with a gold provider that can lead to changing investor and consumer behaviour towards digital assets.
Financial institutions can similarly facilitate gold offerings by issuing digital certificates linked to physical gold. In this way, gold purchases can be tracked and verified autonomously by almost anyone around the world—expanding the market’s reach to a global demographic. Traditional banks: Left in the dust It’s innovations such as these that truly highlight the coming obsolescence of traditional financial institutions. In 2019, the international monetary fund (IMF)published a paper stating that conventional banks will be “left behind” unless they evolve. The paper was initially issued to explore the role that tech companies and digital currency will play in the financial system. It was concluded that due to mounting competition from challenger banks, traditional institutions must adapt or die. Traditional financial institutions will inevitably have to start adopting, and or partnering, with these technology providers to maintain market share as well as evolve with changing investor behaviour.
According to statistics from Finder, almost a quarter (23%) of British adults have opened an account with a digital-only bank, equating to 12 million people. For the most part, convenience is cited as the main reason for switching from incumbent accounts.
However, ultimately, it’s the innovation—such as offering opportunities to gain exposure to gold—that conventional institutions just can’t keep pace with. Taking new technologies and incorporating them into complex and historical technology stacks, is like servicing an A380 mid-flight.
New digital first bank – Monument – announces its key technology providers
- Monument selects Mambu, Salesforce, Amazon Web Services, Persistent Systems and Accenture as key providers for its technology build
- Monument is the first challenger bank in the UK to service the unmet demands of more than 3.5 million mass affluent clients: professionals, property investors and entrepreneurs
- It is building a modern, unique, lego-like technology platform which takes best of breed SaaS providers and integrates them in a cloud based microservices architecture
- This will deliver an exceptional client experience and enable Monument to innovate and to introduce new components on a frequent basis
- Monument today announces that Mambu will be the central core banking engine in the platform alongside Salesforce for CRM, and AWS for cloud services
- Monument has also engaged Persistent Systems and Accenture Interactive to support the platform build
Following receipt of its banking licence with restriction on 6 October 2020, Monument has now signed agreements with a number of key technology providers to enable the build of its bespoke technology platform.
Monument wants to deliver exceptional client experiences by using technology solutions that are modern, flexible, easy to integrate and ultimately, if necessary, able to be replaced should the need arise. The design of its lego-like technology platform is Monument’s solution to the huge challenges faced by the legacy systems of established banks. Having assessed the market over many months, Monument concluded that no appropriate single solution existed in the market for the products and services that Monument will launch in 2021.
In addition, Monument only wishes to develop its own technology where it can deliver significant competitive advantage, for example in the mobile and web services to be used by clients. Much of the technology platform is therefore based on best of breed solutions from modern, cloud-based providers.
Mambu has developed the leading cloud banking engine which is an excellent fit for the platform that Monument is building. Similarly, Salesforce provides an industry leading CRM (customer relationship management) solution which can easily be integrated with Mambu and other solutions. AWS, as a leading provider of cloud-based infrastructure, provides a range of components to ensure the platform is reliable, scalable, secure and flexible.
To support Monument in building and integrating a platform with more than 18 different components/providers, Monument has chosen to work with Persistent Systems, a leading global solutions provider specializing in digital with extensive experience in software as a service (SaaS) solutions. To support Monument in rapidly building its mobile app and web-based channels, Monument has chosen to work with Accenture Interactive, which has significant expertise in building innovative digital experiences in both the financial and non-financial sectors.
Steve Britain, Monument’s Chief Operating Officer said:
“We have been working closely with our chosen providers for some months now, to lay the foundations for the build of our platform. We are delighted at how much we have already achieved, particularly as much of the work has been done by a highly distributed team because of COVID-19. We are now focused on completing the work to build a unique configuration of best in class software components that will make us highly flexible for the future and deliver market leading client service.”
More announcements will be made shortly as other key components of the architecture are confirmed.
Sudip Dasgupta, Monument’s Chief Technology Officer added:
“It was essential to me that we selected the strongest providers available. Those that offer us modern technology solutions with the best degree of integration that we need, together with flexibility for the future and proven operational reliability. In Mambu, Salesforce and AWS we have certainly achieved that objective and we are excited about our future engagement with them. Equally, as we rapidly build our platform for launching with clients in early 2021, we wanted support from providers who have been on this journey before and in Persistent and Accenture Interactive, I am delighted to say we have found that.”
Monument will be the only bank to offer its clients an entirely digital journey for buy-to-let and property investment lending of up to £2million. It will offer market leading, top quartile savings rates and its model is designed to reward loyalty. So, if a saver deposits money for a subsequent fixed term, they will get a better rate than a new customer. And a borrower who renews their loan will also be offered a favourable rate.
UKRSIBBANK, part of BNP Paribas Group, announces a strategic partnership with financial wellbeing startup Dreams, to enhance the digital user experience of its 2 million customers in Ukraine
- The technology powering popular consumer app, Dreams – which has helped 460,000 users save over 440M EUR – will be made available to UKRSIBBANK’s users in Ukraine.
- Through the integration of the Dreams platform within UKRSIBBANK’s own digital tools, customers of the bank can set and achieve money-saving goals, track and improve their financial lives.
Dreams (https://www.getdreams.com/en/b2b/), the Stockholm-born fintech empowering millennials to save and feel better about their money, today announces a strategic partnership with Ukrainian commercial bank UKRSIBBANK, a subsidiary of French international bank BNP Paribas Group.
This partnership follows the announcement earlier this year of Dreams’ first enterprise partnership with banking software provider Silverlake Symmetri, and the recent unveiling of a new department in Stockholm dedicated to the development of Dreams’ B2B partnerships. The announcement marks an expansion of the company’s business model as it consolidates its B2B offering and evolves its services as a provider of white label solutions for financial institutions.
Through the integration within UKRSIBBANK’s own digital tools of the Dreams Platform – which is rooted in scientific principles – customers can set and achieve money-saving goals through clever, automated saving features, in addition to nudges and saving hacks.
The Dreams Platform will be included as part of UKRSIBBANK’s digital banking offering for its 2 million+ customers, and is set to grant millions of potential consumers across Ukraine access to products which will help keep their finances on track and improve their financial lives.
The rise in digital self-help tools has long been anticipated by Dreams and forward-thinking financial institutions. The current global economic uncertainty brought about by the COVID-19 pandemic has also placed significant strains on people’s finances, and the demand for better personal finance tools has only accelerated. The partnership with Dreams is welcomed by UKRSIBBANK which is currently striving to equip its customers with the best possible banking solutions whilst helping them achieve a more sustainable lifestyle.
Dreams is firmly established as an authority in its industry, having launched its consumer-facing app in its native Sweden in 2016 and Norway in 2018 – where it has already achieved a 16% market share of all 20-39 year olds.
Henrik Rosvall, CEO and founder of Dreams, comments: “It’s a true honour to be partnering with UKRSIBBANK and BNP Paribas Group, and we’re incredibly excited to be introducing the Dreams solution to UKRSIBBANK’s customers and the wider Ukrainian market.
“Dreams and UKRSIBBANK can now lead the charge, with BNP Paribas Group’s corporate strategy having shifted in recent years to focus on guiding customers towards responsible consumption and sustainable personal finance management. I’m confident that our mission of helping millennials save more and feel better about their money makes us the ideal partners.
“Our financial wellbeing platform – which is built upon behavioural science and personal finance management principles – will provide the perfect tool for UKRSIBBANK to help its customers make better financial choices and become more sustainable in the way they handle their finances. This partnership will also help UKRSIBBANK safeguard the loyalty of its customers and futureproof its digital banking offering against a growing number of challenger banks and fintechs.”
Konstantin Lezhnin, Head of Retail at UKRSIBBANK BNP Paribas Group, comments: “I believe that banks have a role to improve their customers’ lives. Planning and saving for important life events improves our quality of life by reducing stress levels, and we wish to make our customers feel more confident and in-control of their lives.
“UKRSIBBANK has always applied innovative ways to assist our customers in financial planning, so we are very happy to now be working with Dreams, the best European player in behavioural savings. They have an extremely solid track record in Sweden and Norway based on scientific research, so we are confident that this partnership will work positively for our customers in Ukraine. This also demonstrates our strategy to cooperate with startups and innovative companies that seek ways to expand their operations.”
Three times as many SMEs are satisfied than dissatisfied with COVID-19 support from their bank or building society
- More SMEs are satisfied (38%) than dissatisfied (13%) with their COVID-19 banking support
- Decline in SMEs using personal current accounts for business banking as more seek access to the Government-backed lending scheme
- Fewer SMEs believe nearby branches are important when choosing a bank or building society
- 15% of SMEs use mobile or online banking more often than before the COVID-19 pandemic
- When SMEs do look to switch, low or no charges for business banking remains the most important factor (47%) in selecting a new account
Three times as many SMEs have been satisfied than dissatisfied with the COVID-19 support available from their bank or building society, according to YouGov research commissioned by the Current Account Switch Service.
Overall, four in ten SMEs (38%) were satisfied with the support they received from their business current account provider since the pandemic began. This contrasts with one in ten SMEs (13%) who were dissatisfied. In general, more than half of SMEs (55%) are satisfied with their current business bank account, compared to 8% who are dissatisfied. However, inertia remains a problem as half of SMEs (50%) said they would not look to switch business accounts even if they were dissatisfied with their current bank or building society.
When SMEs do look to switch, low or no charges for business banking remains the most important factor (47%) in selecting a new account. Advanced digital features (35%), good interest rates (34%), and a personal connection through a relationship manager (33%) also mattered.
The SME banking research was conducted both in February and in September 2020. It also reveals that since the start of the pandemic, the proportion of SMEs using business current accounts has increased from 69% in February to 74% in September as firms are required to have a business account to receive access to the Government-backed lending schemes.
However, one in five SMEs (20%) still use a personal current account for their business banking needs, despite the risk that tax liabilities get confused, and calculations are made incorrectly. These businesses are also missing out on a range of business-only banking benefits such as integrated accounting software or invoicing tools offered by different providers.
In addition, the research shows the importance of branches to SMEs has declined over the seven months. When asked in February, more than a fifth of SMEs (22%) said the availability of nearby bank branches was important when selecting their bank or building society, compared to 17% in September. However, the Post Office could be fulfilling the role of branches in some areas.
The declining importance of nearby branches was most noticeable in the North East region where 35% of SMEs believed branches were important in February, falling to 18% in September. The importance of nearby branches also varies between industries. One in ten IT companies (11%) said nearby branches were an important factor compared to nearly three in ten (29%) leisure and hospitality businesses.
While branches are less important, digital banking use has increased for some SMEs. Several firms have started to use online banking for the first time as 15% of SMEs say they use mobile or online banking more often than before the social distancing measures were introduced.
Maha El Dimachki, Chief Payments Officer of Pay.UK, owner and operator of the Current Account Switch Service, said: “Across the country, banks and building societies have been working hard in difficult circumstances to meet customer needs. Thanks to that work, small and medium-sized enterprises are more likely to say they are satisfied than dissatisfied with the support they received from their business account provider since the pandemic started. But lockdown has changed small business behaviour dramatically, in a way that points to significant changes to their banking needs both now and in future.
“It’s encouraging to see many small businesses are generally satisfied with their business bank accounts. However, even when businesses are unhappy with their bank, some don’t consider switching as an option, despite the many benefits available. We’ll continue to raise awareness of the benefits of switching among small businesses to help them get the most from their bank account.”
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