Connect with us

Banking

HOW CAN BANKS EARN THEIR RIGHT TO MILLENNIAL MONEY?

Published

on

HOW CAN BANKS EARN THEIR RIGHT TO MILLENNIAL MONEY?

Rob Manning,Group Strategy Director and US Vice President,Jacob Bailey

Five years after the 2008 financial crash, the Bank of England sought to kick start industry-wide innovation by introducing simplified entry conditions. New challenger brands with exotic names like Atom, Starling and Tandem emerged to entice consumers who were now unhappy handing their purse strings to traditional banks that had let them down.

As many of these new market entrants have matured, becoming fully-licenced banks, they have been hailed as an antidote to their fusty FTSE peers. Their core fan base is tech-savvy millennials who are drawn to brands that get the new consumer landscape, can provide tailored services and make ease of use, whether that’s payment through Twitter or online expenditure tracking, their core mission.

Is it any surprise that young people are making the switch? Traditional banks can’t even speak their language. We only need to glance at the Financial Times’ now infamous tweet, implying millennials were simply too lazy to save £800 a month towards retirement, to see why young people are getting turned off. This is one of just many face palm moments.

However, embarrassing fumblings with social media aside, the problem many traditional banks face is often about perception. In reality, all bank brands can earn their right to millennial money if they took the time to understand how this consumer group operates.

Gaining trust

In Millennials and Money: The Unfiltered Journey, a study by Facebook, only one in ten of the 21-34 year olds surveyeds aid they trusted banking institutions. Having grown up in a landscape marred by crises and inflated banker bonuses, alongside freer access to information about businesses,young people have become privy to the culture of smoke and mirrors perpetuated by old school banks.

This awareness is something challenger banks have cottoned onto. In seeking to remedy ailing trust via easy-to-use digital services, they also discovered that these digital natives not only understand the value exchange but are willing to share their personal information if it means receiving a better service. What this means is millennials don’t just judge value against a bank’s product offering. Why else would Monzo have customers queuing down the street for a pre-paid card, something that is already offered by a multitude of other more established banks? By focusing on lifestyle enhancement, rather than purely the product itself, Monzo drew attention to the added benefits.

This attitude filters right throughout the digital bank’s communications strategy. Founded by millennials, Monzo is fluent in the needs of its peer group. During a service outage that lasted a full day in March this year, for instance, the brand exemplified how a human approach to customer interactions can overcome a crisis situation. With a series of informative and honest messages sent out via the brand’s app and across social media, the brand keptits customers clearly informed of its progress in getting things fixed. In contrast to this, when Barclay’s suffered a similar service outage, it merely sent a solitary tweet to its 20,000 followers.Understandably, its customers were less than impressed.

Whether food, beauty or fashion, many other sectors are not just realising but responding to the millennial mentality: people want transparency. They want to know the calories in their sandwich, the ingredients in their shampoo, and the factory in which their clothes are made. Brands often offer this information freely (take Unilever, which has just voluntarily begun releasing the exact ingredients in its products). However, for banks, to win back the trust of this hugely influential age group, it is paramount.

Banks need to create meaning. Just as MasterCard repositioned itself as a technology company, banks should reassess what they stand for, the role they can play in people’s lives and the tools they have to achieve it. For example, they have practically unparalleled access to people’s data, but aren’t using it in smart ways to tailor and personalise services. If a Lloyds customer was an avid cinema-goer, the bank should be providing rewards that fuel their passion. If a young couple came to NatWest for a mortgage, then couldn’t the bank be pre-empting the patter of tiny feet and preparing them for this next big moment?

One of the most effective ways to understand millennial customers is to directly collaborate with them. Tandem involved its target consumers from the very early development stages. In exchange for a £75 share in the company, the bank channelled the feedback and insight of over 11,000 consumers into the invention and implementation of its brand,dubbing each partaking member a“co-founder”. Having 11,000 co-founders might seem outlandish to some, yet it’s helped Tandem build a bank that people truly require. By channelling its customer feedback back into the brand, it can constantly make tweaks to ensure the customer journey suits its target market. Brands should look to involve customers in the brand DNA, solidifying their relationship with ongoing opportunities for involvement.

If bank brands are going to find their way into the pockets of millennials, they need to take stock. Young people today want engagement, advice, longevity and, above all, real value. It’s time to start thinking beyond transactions, instead becoming long-term lifestyle solutions.

Banking

UK’s Co-op Bank cuts losses despite pandemic hit

Published

on

UK's Co-op Bank cuts losses despite pandemic hit 1

LONDON (Reuters) – Britain’s Co-op Bank cut its annual losses in 2020 despite a 22 million pound hit from expected loan defaults due to the coronavirus pandemic.

The bank on Thursday reported pretax losses of 103.7 million pounds, down from 152.1 million pounds the previous year.

Co-op Bank has been labouring to turn around its finances since its near-collapse and rescue by a group of U.S. hedge funds in 2017.

Talks between the bank’s backers and potential buyer investment firm Cerberus collapsed in December without agreement.

“We will have (takeover) interest coming into our shareholders… I think it’s a fact for this bank with the shareholders we have,” Co-op Bank chief executive Nick Slape said.

“I’m just focused on running the bank and getting us profitable. These are distractions that happen every now and again.”

The lender expects to return to “sustainable profitability” from 2021 onwards, despite underlying losses tripling to 64 million pounds last year as the pandemic crunched the lender’s income.

Slape said growth in mortgage lending to take advantage of a housebuying boom and lower costs would help the bank to achieve its target.

Co-op Bank cut around 350 jobs and closed 18 branches last year to reduce costs.

The bank’s core capital buffer – a key measure of financial resilience – was 19.2%.

The lender also said it would link part of executive pay to environmental and social targets from 2022 onwards.

(Reporting by Iain Withers; Editing by Rachel Armstrong and Jane Merriman)

Continue Reading

Banking

StanChart profit falls 57% as COVID-19 inflates bad loans

Published

on

StanChart profit falls 57% as COVID-19 inflates bad loans 2

By Alun John and Lawrence White

HONG KONG/LONDON (Reuters) – Standard Chartered PLC (StanChart) on Thursday posted a 57% fall in annual profit, missing analyst estimates, on higher credit impairments due to the COVID-19 pandemic.

StanChart, which earns the bulk of its revenue in Asia, posted a pretax profit of $1.61 billion. That compared with $3.71 billion in 2019 and the $1.85 billion average of analyst forecasts compiled by the bank.

Credit impairments last year more than doubled compared with a year earlier to $2.3 billion because of the pandemic, the bank said, but noted the majority of these took place in the first half of the year.

The London-headquartered lender said it would return capital to investors via a 9 cents per share dividend and $254 million buyback, with the total payout being the maximum permitted under temporary ‘guardrails’ set by the Bank of England.

The central bank last year told Britain’s largest lenders to suspend dividend payments and share buybacks for 2020 to help them maintain capital buffers against an expected hit to loan books from the pandemic.

“Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10% return on tangible equity,” Jose Vinals, Standard Chartered’s chairman, said in the exchange filing.

The bank said its return on tangible equity, a key profit metric, would climb from 3% to 7% by 2023.

It also said overall income in 2021 is likely to be similar to 2020’s because of the impact of global interest rate cuts.

(Reporting by Lawrence White and Alun John; Editing by Christopher Cushing)

Continue Reading

Banking

Reasons Why You Should Be Opening an Offshore Savings Account Today

Published

on

Reasons Why You Should Be Opening an Offshore Savings Account Today 3

By Luigi Wewege, Senior Vice President, and Head of Private Banking of Belize based Caye International Bank

No one has to convince you that savings accounts are a bad idea. As a safe investment, this approach is hard to beat. It also has the benefit of allowing you to set aside funds for all sorts of purposes while you earn a little interest.

While this can be done with a domestic account, there are compelling reasons to consider opening an offshore savings account. How can you eventually use those funds, and why would it be better to house them in an offshore setting? Here are some ideas to consider.

1. Setting Aside Funding for a Short-Term Goal

You have a specific financial goal that you want to reach in five or ten years. It could be saving the money for a down payment on a home or possibly buying real estate. Any such goal requires dedicating a part of your income to reach it. Placing funds in an interest-bearing account in the interim is a good option. That’s where an offshore savings account comes in handy.

The temptation to withdraw money from an offshore account is less likely. While doing so would be easy, it’s not unusual for people to turn toward the balances in their domestic accounts before pulling money from offshore ones. The result is that you’re more likely to consistently make progress toward building the funds needed to reach your goals successfully.

2. Creating a Contingency Fund

No matter what your life circumstances happen to be, it’s a safe bet that you’ll need emergency funds at some point. Think of what it would mean to have six months to a year’s worth of cash to carry you over if your company went out of business or if you lost your job. Even if it took some time to find another full-time position, the money in a contingency fund allows you to maintain a reasonable standard of living while you’re in search of opportunities.

Using an offshore account to house your contingency fund works well because you are less likely to withdraw funds until the need is significant. By opting to set up recurring funds transfers from a domestic account to your offshore account, you can add to those emergency funds without having to give the process much thought. When the day comes when you need the money, it will be easy to transfer the funds back to a domestic account or use the debit card supplied by your offshore bank.

3. Building Assets for Retirement

As many people learned during the last recession, employer-provided pension funds may or may not be around by the time you retire. If the investments made with the retirement contributions tank, there goes all or at least most of the money you planned on using to live after leaving the workforce. Establishing your resources for retirement, and diversifying them, protect your financial future.

An offshore savings account can be one of those solutions. A time deposit account lets you build more reserves for retirement. Since the account is not tied to your employment status or to the investments used to shore up your pension fund, it will be there when you need it.

4. Growing an Education Fund for the Kids

Perhaps the plan is not so much about investing in your financial future. Education for your children may be what’s driving you right now. Knowing how much a college education costs these days, you realize that now is the time to start saving. Even if the kids can secure scholarships that cover much of the expense, there will still be costs that need attention.

An offshore savings account provides an excellent means of setting aside funds for education. Let the balances roll over from year to year and earn more interest. Take advantage of offshore accounts that provide higher rates of interest when the balances exceed specific amounts. This strategy will make funding college a lot simpler.

5. Building Reserves for Purchasing a Vacation Property

You’re reaching a point in your life when having a second property to use for vacations sounds appealing. Now is the time to start setting aside funds that will aid in the purchase. An offshore account can be the means of growing the balance a little faster. The result is that when you’re ready to buy that second property, there will be considerably less that needs financing.

This solution also makes the process of transferring funds for purchasing international real estate easier. For example, you decide to buy a vacation home in the same country where your offshore account is based. Your bank can make withdrawing the funds and remitting the money to the seller much simpler.

6. Protecting Some Assets Just in Case

You don’t have to work in a high-profile field to be sued. What would you do if things didn’t go your way? The court could order most of your domestic assets seized to settle the judgment. How would you get by then?

Here’s something that you may not know about the money in offshore accounts – domestic courts can’t order a seizure of the account balances. Even if a lawsuit means every asset you have at home is taken away, there is still the money in your offshore savings account to help you rebuild. It may also be the way that you keep a roof over your head and food on the table while you decide how to go about rebuilding.

7. Taking Advantage of Higher Interest Rates
If you compare the interest rates offered in many international settings with what you can command at home, the difference is immediately evident. It’s possible to open an offshore savings account with a relatively low balance and gradually add to the balance. Over time, you reach a balance level that allows you to earn some of the best rates found around the globe.

When the plan is to place money in an account to accrue interest for over many years, an offshore savings account is the way to go. Once the day arrives when you want to use those funds, the balance will be noticeably more than if you had invested the same proportion in a domestic account. Think of how good you’ll feel knowing that your money was able to grow simply because you chose the right offshore location for the account.

8. Enjoying Peace of Mind

At times, it seems increasingly difficult to find peace of mind in today’s tumultuous world. With money placed in an offshore savings account, it’s possible to secure a little bit of tranquility even when everything else is upside down.

By establishing an account in a politically stable country, offers excellent returns in the form of interest, and is protected from any domestic court action, you know there will be assets to draw on no matter what. That’s a good feeling.

Get Help Setting Up an Offshore Savings Account

These are just a few reasons why opening an offshore savings account is a smart financial move. There is no better time to start than now, and an excellent offshore location to choose is Belize.

Caye International Bank, located on Ambergris Caye island in Belize, Central America has helped thousands of people establish offshore financial accounts. We can help you, too, in determining which offshore accounts work best based on your goals. You’ll find that setting up an account is a lot simpler than you anticipated.

 

This is a Sponsored Feature.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Latest Articles

Newsletters with Secrets & Analysis. Subscribe Now