It seems that Brexit has had little impact on inward investment in the Fintech sector. What always amazes me is the way the press always seem surprised that this is happening and has been happening for years. There must be some underlying sentiment which perpetuates it. Perhaps I could make a few guesses at what underpins it. Firstly we have a tremendous advantage in the English language which we of course share with the USA and the rest of the English speaking world. Of course the business community predominantly use English but when you need programmers and analysts English as a first language is undoubtedly helpful. Secondly London in particular is a pretty cool place to live for most young upwardly mobile people who make up the IT community. Thirdly we have English law a non prescriptive and innovative mind set and pool of talent. Lastly in Fintech we Brits are pretty good at it. Finance flows in our veins.
Ok so we are going to see interest rated a little bit and there may well be a slowdown in the rate of house price inflation. The increase in UK house prices during January was 11% and nobody thinks that this can continue for too long. Lenders always anticipating and overreacting to the slightest nuances never seem to get a grip of the big picture. The supply side of UK housing has not kept up to demand for the past couple of decades so there is a built in inflationary expectation. Secondly the UK market for house building is controlled by very few players and when it seems like prices might fall they just reduce their activity. The shortage becomes critical and prices rise accordingly. Is this any way to run a market in a country that everyone in the world seemingly wants to live in? No is the answer but this situation has existed ever since 1945 and it isn’t going to change unless something absolutely drastic happens. Lenders need to play the long game.
Relationship managers at the Swiss lender are under fire for allegedly allowing clients to launder drug money. The amounts in question are substantial in retail terms but not life threatening but it is surprising how controversy seems to follow this bank like a bad smell. To add insult to injury the bank issued a profit warning yesterday because of rising legal fees? I tend to think that the risk training potential bank executives receive is inadequate across the globe. As I constantly point out credit is an art stepped in the understanding of human behaviour and backed up by analytics. A combination of both disciplines is necessary to the making of good decisions. Whenever the dominant risk factors are eclipsed by either a lack of diligence or reliance on dodgy number crunching skills then things seem to go wrong. They seem to be endemic to Credit Suisse these days.
Howard Tolman is a well-known banker, technologist and entrepreneur in London. We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information. For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.
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