Simon Deane-Johns was first to contribute, appropriate enough as he is Chair of the Editorial Advisory Board for SCL, and he leads out our predictions blog posts for this year
From Simon Deane-Johns, Consultant Solicitor at Keystone Law
Below was my SCL prediction for 2008, which has held up pretty well. Personally, I took on a consulting role at Amazon.com early in 2008 and spent the next three years helping on various EU payment services including getting their e-money authorization in Luxembourg. The next 18 months were spent helping wrench WorldPay from RBS’s cold, dead hand (that business then floated and has been sold again). Since 2012 I’ve been back in private practice full-time, advising mainly on e-payments and P2P lending, which itself became FCA-regulated in 2014 and is forecast to produce nearly £5bn in loans for 2017. Small business finance has also opened up more widely, with those recalcitrant banks having to be legally obliged to share their declined small business loan applications with ‘designated finance platforms’ and provide access to their credit data on SMEs. A competition investigation into the markets for personal and business current accounts has exposed the banks to further competition for payments functionality from non-banks. In 2018, the second Payment Services Directive introduces the new “account information services” and “payment initiation services” which involve non-bank access to payment accounts via new Open Banking APIs. Meanwhile, the rise of ‘Big Data’, algorithms and distributed ledger technology are also combining to continue the relegation of retail banks into the back-office of Financial Services 3.0…
From Simon Deane-Johns, General Counsel and Company Secretary of Zopa:
[In 2008] Economic conditions will deteriorate further in the financial services industry. Downward pressure on revenue and the cost of funding, marketing and distributing financial services to consumers and small businesses will force institutions to compete on innovation and service quality. But not being organised to provide either, these incumbents will fail to resist the entry of facilitators that have built trust and loyalty by empowering consumers to get the product that is right for them personally in other retail markets. Banks will be the back office service providers, not the front, for Financial Services 2.0.