Credit Shift

Join us on our exploration of the psychological and behavioural aspects of financial services products, with a particular focus on debit and credit cards. Host Paul Sweeney and Dan Blagojevic, together with esteemed guest Sean O’Toole, discuss the utility and emotional value of these products. Drawing from Sean's extensive experience in the US financial services market, we compare how consumers in the US and UK perceive and use rewards cards, cashback cards, debit cards, and credit cards.

“One of the things that really built the AmEx franchise was AmEx was one of the few who would actually give a charge card to a young person coming out of college. The fact that you were catching that person at that point in time where they were the only person who would give you access to credit. Probably, if you look at those cohorts, the amount of people who stuck with AmEx over the years, that's probably a high retention rate.” – Sean O’Toole

Welcome to Credit Shift, brought to you by Webio.com

This week’s special guest is Sean O’Toole. Sean has been a leader at such companies as American Express, First Data, Western Union and Affirm. Sean started, built and sold his own company, Red Wage, back in 2014, which was early into the underserved and unserved market spaces.

In this episode, we navigate the dynamic world of financial institutions, examining the impact of their number in the US on the credit card space. We also touch on the rising popularity of 'buy now pay later' offers, discussing the psychology behind them and their appeal to younger consumers. Hear our thoughts on the evolving FinTech landscape, the potential shift in the UK's debit and credit card payments due to university fees, and the unique challenges faced by the US Neobank market.

Finally, listen in as we discuss the transformation in the banking landscape, specifically the shift in the prepaid cards market. We highlight how technologies like the iPhone and digital wallets have ushered in a new era of prepaid cards and examine how the proportion of unbanked individuals has changed over time. Our conversation also includes the potential and challenges of data-driven decision-making, the struggles enterprises face in incentivizing executives, and the importance of understanding customers in the credit and collections industry.

Main topics discussed in this episode:

• Psychology of debit and credit cards.

• The rise of buy now pay later.

• Changing FinTech and consumer banking landscape.

• The challenges of data-driven decision making.

• How Financial institutions attract and retain young customers.

• How to measure customer value in payments.

For more information

visit:

Webio

Optima Partners

This podcast is produced in partnership with Podlad.com

Could the rising fees from Visa and MasterCard be the catalyst that propels blockchain into the mainstream?

Join host Paul Sweeney and  Webio CEO Cormac O'Neill, to dissect this possibility and more while navigating the evolving landscape of the credit industry. We'll add our two cents on Visa's plan to utilize the Solana blockchain for USDC transactions and the implications this could spell for merchants and consumers alike. Plus, we talk about how a wider range of payment options may be the secret to cutting down transaction costs and why your customers could do with a little help in picking the most efficient one.

As we dive into the world of Amazon Pay, we'll share our thoughts on Shopify's recent decision to welcome Amazon into their network and closely examine how this move is stirring up the payments industry. We also look at the potential of AI to overhaul standard card payments infrastructure and opine on the growing need for consumer-first services. And, as self-service chatbots and voicebots gain prominence, we'll be unpacking the HR challenges that come with them, as well as the urgency for extensive training to handle increasingly complex queries. Join us for this rollercoaster ride through the world of credit and payments.

Sources:  

https://fortune.com/crypto/2023/09/05/visa-stablecoin-usdc-solana-worldpay-nuvei-merchants-payments/ 

https://thepaymentsassociation-25744204.hs-sites-eu1.com/pay360_infographic2024-0? 

https://www.ccma.org.uk/wp-content/uploads/2023/05/CCMA-Voice-of-the-Contact-Centre-Consumer-2023.pdf

For more information visit: Webio.com

This podcast is produced in partnership with Podlad.com

Join us this week as our co-host Cormac O'Neill, Webio's CEO, and I explore the recent trends and updates in the credit industry. We kick off with a discussion on FICO's latest credit card market report, examining the upward trend in spending and missed payments. We share our experiences with credit card usage and ponder over the implications for companies and consumers. The spotlight then turns to Klarna, as we discuss its 26% increase in gross merchandise value in the UK and 14% increase across Europe.

We continue our discussion by analyzing the future of e-commerce and financial responsibility. We explore Amazon's significant impact on both the e-business and finance markets, and how we're positioning ourselves to assist consumers in finding and purchasing products.

We touch upon the Financial Conduct Authority's Duty of Care legislation, its implications for payment providers and embedded services, and what it means for the 'buy now pay later' industry. Finally, we ponder over the AI industry and its future implications.

Lastly, we explore the challenges that financial institutions and large banks face in keeping up with technology advancements. We examine the possible risks these institutions might need to take and discuss the transformative potential of moving from code-based systems.

We then shift our focus to the impact of AI and Large Language Models (LLMs) on Business Process Outsourcing (BPOs) and enterprises, discussing the potential disruptions, opportunities, and threats. We conclude by considering the importance of closed-loop LLMs for enterprise adoption and the role of AI and BPOs in reshaping the outsourcing industry. Join us for an engaging and insightful discussion.

Sources:

https://www.fico.com/en/newsroom/fico-uk-credit-card-market-report-may-2023 

https://sytaylor.substack.com/p/fintech-food-from-outsourcing-to 

https://substack.com/inbox/post/136482896 

https://thepaypers.com/expert-opinion/unique-challenges-for-payments-firms-as-consumer-duty-goes-live--1263780 

For more information visit:

Webio.com

This podcast is produced in partnership with Podlad.com

This week, we have our co-host, Webio CEO Cormac O’Neill, back with us to explore recent news stories, events, reports, and trends in the credit industry. As we navigate the highs and lows of the credit industry.

Listen in as we unpack the impact of record-breaking wage growth in the UK, the surge in rental costs, and the worrying increase in tenants with only a month's worth of savings. We also analyse the repercussions of the year's energy cost surges and explore the UK government's initiative to ensure fee-free access to ATMs for all. Additionally, we discuss the importance of data for utility companies and delve into the world of embedded finance.

We explore the potential and risks of generative AI in organizations, drawing from research by McKinsey and highlighting companies already reaping its benefits. We also discuss the potential of co-piloting offers and the advantages of niche companies investing in generative AI.

The episode concludes with an insightful CEO perspective on the credit business, the current state of the industry, and an exciting sneak peek into our next guest interview. Tune in for this thought-provoking conversation that delves into the heart of the credit industry and its digital transformation.

Sources:

https://www.theguardian.com/money/2023/aug/22/third-of-working-tenants-in-england-lack-savings-to-pay-rent-if-they-lose-job

https://www.credit-connect.co.uk/news/13-million-homes-didnt-turn-on-heating-when-cold-last-winter/

https://www.creditstrategy.co.uk/latest-news/government-sets-out-free-access-to-cash-framework

The Paypers Embedded Finance and Banking as a Service Report 2023: https://thepaypers.com/reports/embedded-finance-and-banking-as-a-service-report-2023/r1263680

https://www.apple.com/newsroom/2023/08/apple-cards-savings-account-by-goldman-sachs-sees-over-10-billion-usd-in-deposits/

The State of AI in 2023: Generative AI’s Breakout Year:

https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai-in-2023-generative-ais-breakout-year

https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-ai-the-next-productivity-frontier#business-value

For more information visit:

Webio.com

This podcast is produced in partnership with Podlad.com

In this week's Credit Shift news update, we explore the rise in mortgage arrears and how the embedded finance revolution can offer solutions to those struggling to find financial help.

Our CEO, Cormac O'Neill, offers insightful commentary on the recent uptick in mortgage arrears and the increasing financial pressures homeowners and renters face. Together, we discuss how understanding the individual stories of customers can lead to tailored solutions and improved customer experiences. The episode also covers how the world of embedded finance can provide financial services right when and where people need them, making finance more accessible and inclusive.

We also consider the impact of AI on cost reduction and recruitment in the buy-to-let mortgage market. We assess how automation and AI can streamline processes, improve customer service, and explore the potential of AI co-pilots for training and employee retention. With Cormac, we discuss the crucial role of measuring AI outcomes and ensuring that long-term strategies also deliver short-term payoffs. The episode concludes with a discussion on the ethical deployment of AI, a concern shared by many CEOs as they integrate AI into their capital strategies. Tune in for an enlightening discussion on the intersections of finance, technology, and ethics.

Further Reading:

Deloitte Report: The ecosystem imperative

EY CEO Outlook Pulse Survey

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For more information, visit: Webio.com

This podcast is produced in partnership with Podlad.com

Brought to you by Webio.com, Paul Sweeney navigates the latest stories in the credit industry.

Unlock the intricate puzzles around credit invisibility and financial exclusion with us, as we shed light on alarming data revealed in a recent LexisNexis report. Get tuned in to the shocking reality of Northern Ireland's high percentage of 'credit invisibles', the surge in short-term loan applications and the unsettling rise in court judgements due to minor unexpected bills. The episode doesn't stop at revealing the darker edges of finance but also introduces you to the silver lining - the innovative venture capital financing, reshaping the future of short-term loans for SMEs.

But wait, there's more! Ever wondered about the critical strategic choices that financial institutions face between outsourcing and maintaining in-house services? Well, we unravel this and draw an interesting parallel to software strategies of bundling and unbundling. This comparison gives us a glimpse of how this dynamic could be a game-changer in the future of the financial services industry. Plus, stay tuned for a sneak peek into our fascinating lineup of upcoming interviews and news updates. This episode is an absolute treasure trove for those who are keen to grasp the complex intersections of finance, technology, and social impact. Don't miss out!

This podcast is produced in partnership with Podlad.com

The General Industry News

A Lexis Nexus Report from March caught my attention and I just wanted to revisit some of the findings from the it.

A new credit nexis report draws attention to the fact that younger people and recent immigrants don’t have a credit history. Over 637,000 people can be classified as credit invisibles or unscorables, making them impossible to credit score. I was surprised to see in this report that for Northern Ireland, over 22.9% of the population could be categorised as potentially financially excluded compared to the next highest which was Wales at 14.8%. Digging deeper into the analysis it doesn’t seem that this is related to straight forward income measures, but may reflect a lower rate of current accounts. Meanwhile regions of England that are associated with deprivation and social disadvantage rank relatively favourably on the exclusion measures. The report really makes a case for Local data for local people, and the benefits of data analysis at a regional, even a local authority level.

Short term loan applications made to cover essentials rose sharply, by 83 percent between April and June 2022. Young people, less financially secure, renting, is applying on average four times a year to borrow between 500 and £1000.

Relatively small unexpected bills can prove to be a tipping point into debt issues for those groups with little or no access to mainstream finance, with payment defaults leading to County Court Judgements (CCJ’s). Around 1.8m CCJ’s have been issued in the UK since Jan 2020, and the volume has more than doubled over the past two years from 2020 to 2022. Some of this rise could be due to pandemic backlogs.

FCA warns about Loan Fee Fraud… consumer pays a fee for a loan they never receive, typically resulting in a £260 loss, increase by 26%. The usual warnings to customers are watch out if you are Cold called or emailed, if there are upfront fees involved, or you are asked to pay quickly or with an unusually. My guess is that there is usually a sense of urgency involved in scams.

News on late Payments

The number of those missing essential payments has now risen to the levels seen last winter, going up to 2.4 million households. Of those that have missed a payment, 2/3’rds has missed more than one in the month of July. Of those that missed a payment, Water and energy were the most commonly missed household bills, with around half missing a water and energy bill, while four in ten missed a phone bill, and around a third a council tax payment. With the increasing cost of living crises, we are going to see more and more calls on companies to do more to help customers get a good deal, avoid unnecessary or unfair costs, and changes during the ecomomic crisis.

Some News from Venture Capital and Financing

Defacto a French based company that provides short term loans to small and medium enterprises via an embedded API first approach. 167m Euuro. Defacto wants to offer credit products using an api in the fintech products that you already use.

Offering financial services within your products seems to be a trend still on the up. A new report on Embedded Finance from Institute of International Finance and Deloitte August 2023

One of the key takeaways for me what that embedded finance creates new ecosystems and blur the boundaries between the retailer and financial services, and between what might have been traditionally seen as the financing and the marketing. Embedded finance is shifting the value web).

This is Credit Shift News Update, where host Paul Sweeney navigates the latest stories in the credit industry.

This week we closer look at the record high mortgage rates, wages and inflation in the UK, and how these are affecting consumers' ability to manage their debt. We explore the impact of these economic challenges on everything from car finance to student loans, and discuss the government's plan to launch a nationwide fuel finder scheme. We also delve into the measures banks are taking to protect themselves from an increase in arrears, and ponder whether people will opt for interest-free or interest-only mortgage repayments.

 We wrap up with an analysis of current economic news and how the government's efforts to reduce inflation are influencing various economic activities. We share our insights on protective buffers that might help prevent bad debt and late payments from becoming a problem. Plus, we reveal some exciting developments in AI and chat GPT, and discuss how they're transforming the world of credit. Listen in for this informative episode and get a better understanding of these pressing financial trends.

 The General Industry News

• The average two-year fixed deal has risen to 6.66% on Tuesday (11th July), up from 6.63% the previous day, leaving mortgage rates at their highest for 15 years.
• Commentators are betting that the central bank will push mortgage interest rates past 7% which would be a 25 year high.
• Wages in the UK are rising at a record rate, amid stubbornly high inflation at 8.7%. The office for national statistics said wages, excluding bonuses, rose buy 7.3% in the three months to May, matching the highest rate since 2001.
• With unemployment rates at record lows, workers have been able to secure some pay increases. The "soaring wage growth... gets us into the kind of wage price spiral dynamics that central banks absolutely hate and usually do anything to avoid" said Neil Wilson, chief Markets Analyst at Markets.com    
• Homeowners who are renting out properties will also be tempted to pass on their higher mortgage costs to tenants.
• Previously we reported that UK consumers were overcharged at the petrol pump to the tune of nearly a billion pounds, so the UK's Competition and Markets Authority (CMA) intends to establish a nationwide fuel finder scheme that would allow motorists to find the cheapest fuel locally. The government are bringing forth legislation that will force retailers to publish their prices to power the service.

Reporting from The Treasury Committee this week gave us a peek at future reporting of impairment from the big banks

• There hasn’t actually been a large increase in arrears, with Nationwide reporting them as relatively stable, with only one basis point (1%) increase in customers who are in three months of arrears in their repayments, and this is more pronounced among buy-to-let customers. But customers are also taking action to protect themselves from higher mortgage rates by over-paying or through term extensions.   
• Many people who took out two year mortgages during the stamp duty holiday in the pandemic, and soon need to remortgage. But as many people will have paid off some of the capital they borrowed, the amount they need to remortgage will have fallen. Many of these homeowners have also benefited from double digit house price growth in the pandemic so the equity in the homes has risen
• Mortgage arrears are particularly highly correlated with unemployment so while the unemployment levels are low, people will still have more options.  
• Will customers take up this new option to go on interest only mortgage payments? Some banks are unsure that customers will be attracted to this option as it still has financial impacts for the customer, and people are worried that it affect their credit score.

In other industry News

• The Bank of England says Mortgage payments will rise to at least £500 for nearly one million households by the end of 2026. Reporting that some mortgage holders may struggle with their replayments but said lenders are strong enough to withstand customers defaulting.  
• Stepchange is reporting a marked increase in the consumers with car finance debt seeking debt advice. It found that between January 2020 and March 2023 the proportion of clients accessing debt advice who had a car finance debt had riseny by 14.8% while the average balance of a clients car finance debt has increased by more than 20% from £8,077 to £9,705.
• In other news, UK Student Loan Statistics, currently 20bn a year is loaned to around 1.5m students in England each year. The value of oustanding loans at the end of March 2023, has reached £206bn. The Government forecasts the value of outstanding loans to be around £460bn by the mid 2040's.
• The Citizens Advice Scotland reveals that around 11% of people always run out of money before payday, with a further 14% saying that this happens to them "most of the time"... Hey that’s around a quarter of people in Scotland.

 The Company News

• Thames Water secured £750m from investors to save it from being nationalised, but it will require significant refunding right through to the end of the decade.
• Webio Raised a further £2.5m Venture Capital to bring it’s AI driven conversational vision to the market. This is timely for Webio in that the world has woken up to the power of technologies like chatGPT and AI is now widely seen as being the next platform shift.       
• As we see other technologies winning funding rounds to address the Credit space, we will bring you the word of them and give you our ear to the ground take on what they might indicate.

For more information visit:

Webio.com

This podcast is produced in partnership with Podlad.com

Are we on the brink of a transformative shift

in the credit and collections industry? This question sets the stage for our thought-provoking discussion with industry experts, Dan Blagojevic (Optima Partners) and Chris Warburton (ROStrategy).

“The only changes with AI is if you don't adopt it quickly, then customers will change loyalty to someone else. So you've got to be investing in this stuff now, listening to the customers, and if you're not there, then you're going to fall behind.” – Chris Warburton

Welcome to the first full episode of Credit Shift, brought to you by Webio.com

This conversation is hosted by Webio Chief Strategy Officer Paul Sweeney and explores the role of AI in this sector and the strategic challenges poised by its slow adoption.

We delve into the power of AI in credit and collections, underlining the importance of accurate data and advocating for a new perspective on credit and collections' role in a company's brand image. As we discuss the strategic implications of digitizing credit and collections, our guests underscore the necessity for businesses to adapt, re-architect their systems and face the challenges of speed and sustainability. We also engage in a critical dialogue around the balance of growth versus sustainability and its reception at the senior and board levels of companies.

We look at the transformative impact of automation in credit and collections, emphasizing the significance of robust data management processes and contingency plans to avoid over-reliance on a single technology. Be sure to join us in this insightful dialogue as we navigate the complex landscape of AI in the credit and collections industry.

“My biggest concern with this generative AI process is that customers will be individuals,

will be asking ChatGPT and the likes for advice. That will be driving customer behavior. That customer behavior will then feed us as another data asset into the pool of data on which generative AI is being retrained. So the danger is back to the point we were discussing earlier is that there is a big risk there that the generative AI will start learning from its own processes in its own way of thinking” – Dan Blagojevic

Main topics discussed in this episode:

· Has the Credit and Collections industry adopted to AI?

· Shift to Sustainable Growth With AI

· Industry Challenges and Adoption of AI

· Generative AI and Data Concerns

· The Transformational Impact of Conversational AI

For more information visit:

Webio

Optima Partners

ROStrategy

This podcast is produced

in partnership with Podlad.com

Welcome to Credit Shift, the podcast tailored for credit industry professionals in the digital era. Hosted by industry expert Paul Sweeney, Product Intergration Officer at Aryza. This podcast aims to tackle the high-level challenges faced by professionals in the credit industry. Brought to you by aryza.com, Credit Shift is your go-to resource for navigating the evolving landscape of the credit industry.

In each episode, Paul engages in thought-provoking discussions with credit industry leaders, exploring topics such as digital transformation, new business propositions, data strategy, and the forefront of artificial intelligence. Join us as we analyse the shifting competitive landscape in the hyperconnected market and delve into the convergence of chatbots, GPT (Generative Pre-trained Transformer), and customer service. Additionally, we contemplate the potential impact of widespread availability of "buy now, pay later" services across different geographies.

Credit Shift is designed to be your compass, guiding you through the intricacies of the modern credit industry. Whether you're seeking in-depth interviews with industry luminaries or concise news updates to keep you informed, this podcast has you covered. With the industry rapidly advancing, Paul ensures that you stay ahead of the game, enabling you to embrace the future of the credit industry. Join Paul Sweeney on this transformative journey as they help you navigate the ever-changing credit industry landscape.

Subscribe to Credit Shift today and be part of the conversation that shapes the future of the credit industry.

For more information visit aryza.com

Podcast production and editing by podlad.com