Finance Derivative

Today, customer expectations have been driven skyward by the advancements in consumer tech – the likes of Alexa, Siri, and a multitude of mobile apps, have made customers tech-savvy and expecting more from their favourite brands. This is especially true when it comes to the customer experience (CX) journey – they don’t just want to call a bank or their insurance provider on the phone anymore; they want to be able to reach them on social media, video calls or digital channels such as online chat.

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2022 Fintech Predictions and Reflections

 2021 was the year of recovery and opportunity for many, following months of disruption caused by the pandemic. But whilst many industries have struggled to bounce back from the disruption, many Fintechs have managed to thrive in a somewhat hostile economic climate as a result of innovation, digital disruption, lucrative funding and a vision for how products can change the lives of consumers whilst helping businesses grow.

 As we look forward into 2022 it’s important to consider the new emerging trends and movements set to shake up the industry and how as a business we can play our part in what is set to be another trailbrazing year.

Looking Ahead: 2022 Fintech Predictions and Reflections

 2021 was the year of recovery and opportunity for many, following months of disruption caused by the pandemic. But whilst many industries have struggled to bounce back from the disruption, many Fintechs have managed to thrive in a somewhat hostile economic climate as a result of innovation, digital disruption, lucrative funding and a vision for how products can change the lives of consumers whilst helping businesses grow.

  As we look forward into 2022 it’s important to consider the new emerging trends and movements set to shake up the industry and how as a business we can play our part in what is set to be another trailbrazing year.

By Will Marwick, CEO of IFX Payments 

 2021 was the year of recovery and opportunity for many, following months of disruption caused by the pandemic. But whilst many industries have struggled to bounce back from the disruption, many Fintechs have managed to thrive in a somewhat hostile economic climate as a result of innovation, digital disruption, lucrative funding and a vision for how products can change the lives of consumers whilst helping businesses grow.

From a personal perspective, it’s been wonderful to see that as an industry we have shown our continued resilience and ability to pivot to customer needs which has seen the likes of open banking and contactless payments boom in the wake of the pandemic. The agility and disruptive mindset of both established players and emerging disruptors meant that competition has only become fiercer, making everyone work harder and smarter which ultimately pushes the boundaries of what is possible.

Its therefore no surprise that UK FinTech funding more than doubled to $11.4 billion in H1 of 2021 alone, indicating investor confidence in the industry. This will pave way for further opportunities to innovate and disrupt financial services for the better.

2021 for IFX was one of the best years to date since our inception in 2015. We’ve expanded our capabilities, worked with new partners and bolstered our team with great success. All of which we aim to amplify even further this coming year.

As we look forward into 2022 it’s important to consider the new emerging trends and movements set to shake up the industry and how as a business we can play our part in what is set to be another trailbrazing year.

2022 Trends

1. Embracing Fintech Partnerships: In 2022 we’ll see greater collaborations between services providers across a host of industries. Being a collaborator, rather than a competitor, is key to being successful in this sector as we all look to identify a means of fitting into a modular ecosystem. As a starting point, every business has to recognise that success comes from leveraging the strengths of others to amplify their own.

 Businesses must admit that they can’t be best at everything and counter that by creating strategic partnerships that will reign supreme. Ultimately, collaborating with and embracing other specialists within the sector allows fintechs to expand their capabilities and set themselves apart from competitors. As the industry grows, to be the best in the field, means not offering the cheapest cost or the tightest margin, but integrating value-add propositions that make the product more appealing to its customer base.

 For instance, this year IFX have successfully partnered with Volt connecting IFX’s virtual IBANs with Volt Connect allowing UK and EU-based merchants to realise the full potential of open payments.

2. Changing Consumer Payment Habits via Open Banking : Open Banking has been a hot topic in 2021 and we know the work will continue in the space this year. Whilst the majority of the work in the last year around Open Banking was rather conceptual, it paved the way for some innovative ideas and an enhanced customer experience.

 Without doubt, there are many benefits of Open Banking, settlement is faster, and rails are cheaper and arguably safer for customers but now it faces the challenge of encouraging customer adoption by competing with the convenient and simple UX of card payments afforded by smart phones and computers. As such, I expect that changing the mould of how people make payments will dominate the majority of the conversation and work we do as an industry in the coming year.

3. Elevating Regulation: At IFX we always aim to set industry best practises through our regulatory expertise, and ultimately break the mould of malpractice that has blemished the FX industry historically. Whilst regulation has definitely taken centre stage, and took over most senior level discussions, I anticipate a greater focus on PSPs and EMIs with both safeguarding and operational resilience being tested to ensure customer funds are adequately protected.

Being stringent in terms of regulation is a way for payments and fintech companies to separate themselves from the pack. The FCA is also sure to take further regulatory action as they start to clear the covid backlogs, which in my opinion will be a welcome move to help combat some of the issues we have seen this year. Firms need to be sophisticated when it comes to making sure they’re compliant with regulations. Safeguarding client money correctly is a challenge which requires consistent attention so we’re likely to see this being an obligation that firms invest in significantly.

4. Introduction of the UK Central Bank Digital Currency: This is likely to be the door for many banks to embrace crypto-related technology. Blockchain infrastructure is an incredibly powerful tool that can revolutionise the industry through a host of features not limited to instant global settlement and transaction monitoring capabilities.

 The hesitancy to embrace this infrastructure, alongside a number of crypto assets, appears to come from the dark web usage of old, where assets were used for illicit purposes and money laundering; but then again, so is cash. Ultimately, we shouldn’t be afraid of the capabilities that this revolutionary development can carry due to the negative connotations. Instead the focus in 2022 should be on education and equipping our industry on understanding the power of the blockchain so that everyone can understand the good that it can do, the risks it carries and how to mitigate those.

So What Now?

2021 saw great innovative strides taken in the payments and fintech industry, but as we look ahead into 2022 it doesn’t look as if this cadence is likely to plateau.

The industry will continue to adapt and grow to cater to the changes in consumer and business habits, and we’ll see Partnerships, Open Banking, Regulation and Digital Currency as key strategic milestones across the board.

At IFX, we are constantly striving to be the best in our fields and through partnering with other brands, tightening our regulation processes, and constantly educating ourselves and others on developments in the industry, we look forward to experiencing even greater growth in 2022 and beyond.

We have seen a few failed M&A deals so far this year; Unilever’s bid for GSK, LV’s bid for Royal London, and Nvidia abandoning their bid for Arm. Nothing unusual in this as according to McKinsey about ten percent of all large M&A deals are abandoned before they reach the finish line. So, what leads to deals failing before closing, and how can you keep the momentum built up and avoid the organisation stagnating?

For finance and business related update, please visit,

For finance and business related update, please visit,

We have seen a few failed M&A deals so far this year; Unilever’s bid for GSK, LV’s bid for Royal London, and Nvidia abandoning their bid for Arm. Nothing unusual in this as according to McKinsey about ten percent of all large M&A deals are abandoned before they reach the finish line. So, what leads to deals failing before closing, and how can you keep the momentum built up and avoid the organisation stagnating?

For more details related to finance and business related update,please visit

We have seen a few failed M&A deals so far this year; Unilever’s bid for GSK, LV’s bid for Royal London, and Nvidia abandoning their bid for Arm. Nothing unusual in this as according to McKinsey about ten percent of all large M&A deals are abandoned before they reach the finish line. So, what leads to deals failing before closing, and how can you keep the momentum built up and avoid the organisation stagnating?

Mergers and acquisitions are complex processes, and as such, there is a lot that can go wrong. The longer negotiations stretch out, the more anxiety builds to complete the deal. There are several principal reasons for why buyers and sellers fall out of love with a deal and never make it to the altar.

Management may realise through due diligence that the synergy and value creation potential is not as strong as once thought, leading to a need to renegotiate the terms of the deal. These negotiations are sometimes successful and other times leads to the respective parties walking away. It is important to always have a walk away price and stick to it to deliver on your value creation case.

Culturally if it looks challenging, from an integration perspective, talks may also stall. What may first have appeared to be two similarly aligned cultures could sometimes be found to be quite different and will require significant post-merger integration time invested. This mismatch in culture could lead to friction, reduce team effectiveness, and mean synergies risk not being delivered on time. It is helpful to learn this in the negotiation phase and decide if insurmountable before the deal is done.

Regulatory challenges, political opposition, and even consumer or activist involvement can scupper a deal. This scrutiny is only likely to intensify not just for the impact on competition, but also for the benefit to broader society and stakeholder groups. Building deep analytic capability can help detect early warning signs, including where regulation is likely to emerge or develop in the future. Transactions can be slowed and stalled by the need to obtain regulatory approval particularly for deals which across multiple jurisdictions. In these cases, it is important to enter the deal with a realistic idea of timeframes. Failure to do so can cause negotiations to stall or break down completely.

The concentration of market power within certain sectors is also a key factor. In certain high-visibility industries such as technology, health care, and financial services, antitrust regulators are more likely to scrutinise proposed deals that occur in industries where market share or customer data is already concentrated with the few.

Deal breaker terms can also emerge. For example, there might be differences in desires for management retention, or the buyer could want a clause that the seller’s management team rejects. In these cases, the needs of one party or the other are denied by the terms proposed in the agreement, getting an automatic “no” and causing the deal to fall through.

Most challenging is when leadership egos get in the way, the deal leads the management team to turn inwards, jostle for position and not focus on building relationships and knitting in new colleagues. Meetings through due diligence can turn hostile and potential new colleagues may not feel welcomed.

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A systematic approach to stock selection - finnCap’s Slide Rule

  In the UK small/mid cap space, there are around 1,500 companies – far too many for a generalist fund manager to get to grips with.  No one broker covers them all, so the universe is very fragmented.

 Therefore, Raymond Greaves, Head of Research at finnCap, have developed a methodology which has a clear set of fundamental rules and tests and have been doing this for eight years. He calls it The Slide Rule. It is effectively equity research on a massive scale with computing doing all the leg work.

The UK’s Crypto and Digital Assets Group will be welcomed, but it needs to reach out to the industry

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Raymond Greaves, Head of Research at finnCap

As an engineer by background, I love data and using it to model complex systems.

I firmly believe this can be applied to stock selection too.  Many investors will say they do the same but too often it is focused on subjective analytical techniques and shrouded in non-financial considerations like quality of management or even gut instinct. Very few people in my experience have systematic ways of assessing businesses – Harry Nimmo, Head of Smaller Companies at Standard Life Investments, being a notable exception with his quantitative tool called the Matrix.

Data is non-subjective and is also increasingly available. Through improved investor tools like Factset, Capital IQ and Datastream, there is now a far greater democratisation of data.

In the UK small/mid cap space, there are around 1,500 companies – far too many for a generalist fund manager to get to grips with.  No one broker covers them all, so the universe is very fragmented.

Therefore, I have developed a methodology which has a clear set of fundamental rules and tests and have been doing this for eight years. I call it The Slide Rule. It is effectively equity research on a massive scale with computing doing all the leg work.

Firstly, the system only considers companies with revenues and profits. Therefore it instantly rules out early stage businesses. We also avoid banks and insurance companies as they have their own complexities. This leaves us with approximately 500 companies.

The Slide Rule then looks at 11 key metrics which fall under four categories: Quality (eg return on capital), Growth (eg EBIT growth), Value (eg P/E ratio) and Momentum (eg earnings revisions): QVGM.  The factors can then be combined and/or ranked in any way.  At its most basic, we can find the cheapest stocks in the universe, the highest quality, fastest growing or highest momentum.

We can then apply 12 ‘red flag’ tests which are designed to sift out companies which might have issues such as poor quality cashflow, limited dividend affordability, elevated levels of financial stress or any unusual movements on the balance sheet.

Our preferred approach to stock picking combines the Q, V, G and M metrics in a proprietary way but the weighting is towards Quality and Growth. We also apply the 12 ‘red flag’ tests. We select the top 30 companies and re-run the process on a quarterly basis. We call this portfolio of stocks QVGM+.

So, how successful is QVGM+?  The answer is: very. The methodology has delivered an annual compound 31% return (over 8 years, including dividends).  This compares to UK small/mid-cap which has grown by a measly 6% compound over the last eight years (also including dividends).

The Slide Rule has provided us with many fruitful ideas. One is the Ambition Nation Listed 50, a simplified version of The Slide Rule that attempts to identify the ‘best’ 50 quoted companies in the UK. The Slide Rule is recalibrated to find the companies with the best blend of quality and growth (valuation and momentum are not considered).  The other criteria are: they must be UK-based companies and range between £100m to £1 billion market cap and, of course, pass all the 12 red flag tests.

The outcome is an annual report and set of awards that acknowledge the best of the best in small and medium sized companies, celebrating the achievements and innovation of these businesses which are potentially the FTSE 250 companies of the future (indeed many have gone on to be so). They are not only the businesses of today, but the businesses of tomorrow. It is a celebration of the lifeblood of corporate Britain.  They are the top 50 small and medium listed companies across the UK that are driving the growth of the economy. They actually show what is good about the UK listed environment, reminding people of the benefits of being a listed company.

We recently announced the winners of the 2020/2021 Ambition Nation Listed 50. As a group, these 50 companies delivered an average return of +74.5% over the year to September 2021, outperforming the underlying market by 33% – a very satisfying outcome! The overall highest ranked business was City of London Investments and the best performing company overall was technology group Cerillion (+183%). If we look at the composition of winners and also those included in the new cohort (2021/2022 Ambition Nation Listed 50), a common underlying theme is that these companies are generally capital light businesses, lean and agile organisations, which have adapted well to the pandemic. The data would suggest these could be the businesses of the future.

by Jennifer Clarke of regtech CUBE

The advent of the Crypto and Digital Assets Group will be welcomed with open arms by the financial services industry, many of whom have been crying out for regulatory action in this space for some time.

Cryptocurrency and the innovation surrounding it marks an exciting step for the future of finance, but it is prone to gamification, turbulence, and financial crime which, at present, is difficult to contend with from a regulatory perspective. Many regulators have been getting creative with existing regulations or stretching their regulatory parameters in an attempt to tackle non-compliance.

However, in many instances this is a case of ‘square peg, round hole’, which is becoming untenable as crypto and digital assets evolve. The establishment of this new group marks a step in the right direction for future regulation, which will protect consumers and hopefully level out the market.

The newly formed group should first reach out to their counterparts in other jurisdictions to understand the move to crypto on a global scale, with a view to implementing a standardised regulatory framework for crypto, not a framework that exists solely in the context of the UK. Other countries are looking to regulate crypto, and this marks the perfect opportunity to create collaborative regulation, rather than regulating now and collaborating later.

We are long-term advocates for regulatory standards, and crypto seems like the perfect test ground for such a project. The cross border nature of cryptocurrencies and digital assets are both what make them so appealing, and what make them so challenging for regulators to manage.

Of course we welcome a regulatory framework for cryptocurrency, especially if it moves to combat financial crime. But it’s important that such a framework makes things easier to manage – not more complicated. Managing regulatory change is hugely challenging in today’s climate. Not only is regulatory change enacted at a pace and scale that is becoming humanly impossible to oversee, but the divergence between regulations – both in what they say and what they look like – means that global banks who do not utilise RegTech are expending huge amounts of time and resource to standardise regulations and implement them across borders.

As it stands, every jurisdiction is in the inception phase of regulating for crypto. It would be remiss of global regulators to create such regulations in silos, which would cause irregularity and difficulty down the line. Collaboration is key.