News & numbers “People have been worrying about inflation for a very long time. I’m looking at
robust economic growth. And by the way, those fears have been unfounded.” Boris Johnson
As pandemic eases,
UK inflation rises From energy shortages to empty shelves, it can sometimes seem like the UK’s economy is sliding into the abyss. Watchers of the bad old days are unlikely to be reassured by another trend: the rise of inflation. According to data published by the Office of National Statistics (ONS), the consumer price index surged by 3.2% in the 12 months to August 2021 – shocking insiders used to low rates for over a decade. The ONS, for its part, blamed the rise on government policies during the pandemic. “In August 2020, many prices in restaurants and cafes were discounted because of the government’s Eat Out to Help Out scheme, which offered customers half-price food and drink to eat or drink in (up to the value of £10) between Mondays and Wednesdays,” the ONS said in a statement. Experts are divided on whether this recent rise represents a broader trend. Though some insiders expect inflation to drop by the end of the year, others are less certain. Huw Pill, the new chief economist at the Bank of England, recently said he thought inflation could top 5% – a situation he described as “very uncomfortable”.
BBVA promotes
sustainable start-ups The banking sector has long been under pressure to boost sustainability – but elegant press releases mean little without concrete changes in investing behaviour. Yet there is some evidence that institutions are beginning to take their responsibilities seriously, with BBVA the latest bank to throw its hat into the ring. Signing an agreement with 500 Global, a venture capital group, the Spanish giant has vowed to develop an ‘intelligence platform’ capable of spotting new start-ups, technologies and trends that could ultimately support the planet, as well as BBVA’s accounts. “With the BBVA-500 Intelligence Platform, we will have a front-row seat to the launch of new companies and disruptive trends in priority areas of BBVA’s strategy, such as sustainability. Innovation is needed now more than ever before to accelerate the transition to decarbonisation and combat climate change,” said Javier Rodríguez Soler, global head of sustainability of BBVA.
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Italian banks struggle after Monte Paschi purchase fails
Long a thorn in the side of Italy’s government, Banca Monte dei Paschi seems destined to remain there – after Rome failed to agree a deal returning the ailing Tuscan institution to private hands. It had been hoped that Monte dei Paschi, founded in the fifteenth century and one of the world’s oldest banking houses, could be sold to UniCredit. But in late October, officials announced they’d failed to overcome a multibillion- euro valuation gap between buyer and seller.
“Despite the effort from both sides, negotiations pertaining to the potential acquisition of a defined perimeter of Banca Monte dei Paschi di Siena will no longer continue,” UniCredit and the government said in a joint statement.
That leaves Italy unable to complete the restructuring of its banking system – which began six years ago. Not that the deal is totally dead. Eager to bring UniCredit back to the negotiating table, Italy is likely to overhaul Monte dei Paschi’s leadership and transfer bad loans to a state-owned manager.
Banking sector warns of fraud surge across UK
From the pandemic to competition from neobanks, the UK’s banking sector has been through the wars lately. Now it seems another threat is on the horizon: fraud. That’s the headline of a new warning by UK Finance, the industry’s lobby group, which has claimed in a new report that criminal gangs have become a ‘national security threat’ for consumers and Treasury officials alike.
The figures are striking: according to UK Finance, criminals stole £754m through bank frauds in the first half of 2021, up 30% on the
same period in 2020. In particular, UK Finance highlights authorised push payment (APP) fraud, where a criminal tricks their victim into paying them, which jumped by 71% during the early part of this year. Given the scale of the challenge, UK Finance is unsurprisingly pushing for the government to take a tougher stance on keeping consumers safe. “The level of fraud in the UK is such that it is now a national security threat,” said Katy Worobec, managing director for economic crime at UK Finance. “The banking sector cannot solve this on its own.”
New markets embrace innovation
Until recently, digital innovation in banking was strictly the preserve of developed economies: Scandinavia and the Baltics out front, with the rest of western Europe and the US not far behind. But according to McKinsey’s new report, this traditional pecking order could soon be history, with banks in emerging economies adopting digital innovation. And as McKinsey explains, this trend is clear in East Asia. Between 2017 and 2021, the share of consumers in Asia-Pacific emerging markets
actively using digital banking increased from just 54% in 2017 to 88% this year. The pandemic has accelerated these trends. McKinsey’s results suggest the record of digital engagement during Covid- 19 is unlikely to drop as the pandemic eases. Furthermore, this has serious consequences for banks looking to get ahead. With wealthy consumers across the region claiming they’d move up to 36% of their portfolio to a digital bank, their traditional rivals obviously have much to reflect on.
Future Banking /
www.nsbanking.com
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