Why we should all embrace fintech

By Neil Patrick

If you ever read this blog, you’ll know that I am frequently pessimistic about the free for all which typifies business in the digital world. That’s because for every great leap forward, a new set of problems are created. And these problems are solved far too slowly or not at all by the institutions which are charged with the protection of citizens.

Social media has become a mind-numbing addiction for millions. Online bullying and hate makes life miserable for young people, minorities and even politicians.

Cybercriminals are targeting the vulnerable and law enforcement agencies are struggling to adapt to the new forms of crime which infest the internet.

Surveillance capitalism has spawned new business models which intrude into the very fabric of our private lives, directly turning our most personal desires and fears into profit opportunities.

Online gambling apps have put a betting shop into everyone's pocket with predictable consequences.

The disruption (actually destruction) of long-established businesses is displacing millions of people from their jobs, whilst simultaneously creating comparatively few specialised jobs for a new digital elite.

But there’s one technological revolution happening which excites and inspires me more than any other. It’s called fintech. This is shorthand for ‘financial technology’.

Sounds boring right? It’s anything but. It’s potentially the greatest force for good to emerge yet from the digital revolution. And it's growing fast:

Fintech is directly challenging the global dominance and exploitative practices of some of the world’s biggest and most disliked and distrusted businesses. The banks and big financial firms.

Granted, fintech didn’t have a promising start. One of the earliest financial sectors to leverage the online world was payday loans. An exploitative and immoral financial business which brought misery to millions. So I felt genuine joy when Wonga, the biggest of these firms in the UK, was finally put out of business last year. (My post about this is here).

But Wonga wasn’t really a true fintech business. It was a just an early mover online. Before Wonga, payday loans had been available offline for decades. Wonga was merely the first payday lender to use the internet to upscale fast.

True fintech businesses are a different matter. They are redesigning the financial world with a customer focus, more than a profit one. They are throwing away financial models which for decades have ensured that innovation and customer focus have been more or less absent. Models which through their universality, combined with customer inertia, have meant that just like casino owners, big financial firms could get and stay rich by doing not much at all apart from pretty much the same thing week in week out.

Fintech founders come from a different place completely. They start with a problem and seek to deliver a solution. And that problem is usually a consumer problem. Want to reduce your energy bills? There’s an app for that. Want to get the best return on your savings? There’s an app for that too. Want to avoid overdraft charges? …you get the drift.

But these are just the least innovative fintechs. The most ambitious are seeking to redesign the whole way in which people manage their money and delivering the tools to help them do it. They are rethinking and reshaping the relationships people have with the world of finance. They are taking away the complexity, tedium and difficulties that prevent most people make the most of their money.

Basically, everyone needs the same thing with their money. We want it to be secure. We want to save some, spend some, invest some, borrow some. This is where the problem starts because most people lack the time and specialist knowledge to do this effectively. And very few people want to spend their time learning how to manage the complexity that is involved. This has been true since the banking industry came into existence. So a whole global tribe of advisors and intermediaries sprang up to service this need. Some were good. Some were criminal. Most were pretty mediocre. All charged a lot for doing not much at all really.

To compete with the sleeping incumbents and financial giants, fintechs must do things better, faster and cheaper. And because fintech founders often have backgrounds in things other than banking, they bring a fresh and creative mindset to the questions of how to make money work better for people.

Regulators recognise this revolution is their opportunity to reshape the way banking and finance works. It delivers the sort of more open, transparent and competitive markets that they have been trying to create for decades, mainly through the imposition of regulations and punishment for their breach. The money police made plenty of arrests for sure, but they rarely accomplished much else.

And critically because fintechs are bound by exactly the same stringent regulations and controls that govern the whole financial sector, there’s almost no scope for fintechs to duck and cheat as we’ve seen in other fast growth online business sectors.

The final proof that fintechs are destined to become embedded in all our financial futures is that the biggest investors in the new kids on the block are the old school institutions. It’s not quite turkeys voting for Christmas, it’s more like passengers on the Titanic leaping for the lifeboats.

But fintechs are struggling to get through the mass of regulatory red tape. Instead of the digital free for all which has allowed the unscruplulous to take advantage, in fintech we have the opposite problem of stringent regulations killing many promising and transformational businesses before they even begin.

Regulators have one last chance to prove that they can police this without killing it. They want more transparency, more competition and fewer obstacles to consumer choice. Fintech can deliver all these things and more. But as usual, the fraudsters are lurking in the mass of legitimate innovators. The regulators need to skill up fast or watch their wishes for financial market transformation evaporate.

And since regulatory failures were at the very least an accessory to the 2008 financial meltdown, here's the chance for regulators to win back a good deal of the trust that was lost.

The great power of technology demands great responsibility

By Neil Patrick

Technology is not a panacea; who uses it for what end is what matters.

Two stories generated headlines in the UK media this week. Both involved the careers of British men who pursued entirely different paths to reaching their more or less simultaneous denouement.

One was a media celebrity and recognisable face to millions. The other virtually unknown and unlikely to recognised by anyone outside his immediate circle. The former was vilified; the latter applauded.

Jeremy Kyle at Radio Festival 2010
Photo Credit: James Cridland

The first is Jeremy Kyle. A sort of UK version of Jerry Springer. I say ‘sort of’ because while both used a similar show format, in comparison to Springer, Kyle comes off poorly.

"Jerry Springer was confrontational but had a charm to him that diffused some criticism," said TV commentator Cameron Yarde Jnr. "He was witty but never came across as sneering."

Kyle’s show was axed this week after it emerged that a show guest, Steve Dymond had committed suicide following his appearance when he failed a lie detector test. Today it’s being reported that two more deaths are being linked to his show.

Lie detector technology is old and crude. It’s cod-science. It can be gamed and even experts confess it's little more reliable than guessing. But its aura of science leads the public to believe it's infallible, when in fact it depends entirely on who is using it and for what purpose. When that purpose is sensationalism, it’s the devil’s own device.

Kyle’s show ran for fourteen years on ITV where he was both ringmaster and provocateur in a show which a judge once described as ‘human bear-baiting.’ District Judge Alan Berg made this comment in 2007 while sentencing one of the show's guests, who’d head-butted his love rival during filming.

Judges are not prone to exaggeration. Kyle’s show involved ‘guests’ who he’d bring on to his show to disclose their deepest and most troubling personal problems. The proposition to them was that Kyle would in some way ease their suffering and help resolve their problems.

Any normal person would be deeply dubious that appearing on national TV in front of a studio audience who regard you as scum could under any circumstances be genuinely helpful.

But these people are not normal. They exist in an impoverished parallel universe. They are educationally, economically and socially the least well-functioning members of society.

Guests would be chosen and then persuaded to appear on the basis of the shock value of their predicaments. Domestic abuse, gambling, drug and alcohol addiction, paternity, infidelity, incest, rape; all were grist to Kyle’s mill. The more sordid the better.

On The Jeremy Kyle Show, the host was "as confrontational as the audience". Kyle would adopt a scarcely merited position of moral superiority, switching between compassion and hostility as a pseudo-counsellor.

His program was carefully calculated to extract the ugliest and most shocking details of the lives of Britain’s underclass. And worse, to manipulate and goad them towards the inevitably violent outbursts which had to be restrained by the burly security types hovering sidestage.

The show used every lever available to find and persuade those in torment to air their darkest secrets and grievances to the nation. This would be traumatic enough in private counselling, but Kyle used a contrived environment calculated to extract maximum sensationalism for his sneering and jeering audience.

These lives are tragic enough without being used to generate ad revenue through the million or so daily viewers the show averaged. But there’s a market value to one million bored people with nothing better to do than delight in the life traumas of others. If any reality TV show revealed the ugly face of naked media capitalism, this was it.

If this proves to be Kyle’s career terminus then I’d suggest it could have been foreseen. We can tell a lot about a person from their CV.

Born in 1965, from 1986 to 1995, Kyle worked as a life insurance salesman, recruitment consultant, and radio advertising salesman before beginning his broadcasting career as a radio presenter in 1996.

These first nine years of his career were working in jobs which the goal was the achievement of sales targets. People are merely pawns to enable the sale. And they are controlled and manipulated with one goal only – making money from them.

Kyle’s show took this ideology (if it deserves such a title) to the big stage of national TV. And for years, no-one at ITV was in the slightest bit troubled by the dubious morality of the venture. Big ad revenues are a powerful way to diminish moral scruples after all.

I’m glad to see this monstrosity of television terminated, but beyond sad that it required someone’s death to bring it about.

But to end on a happier note, we should look at the other career story.

Julian Richer founded a business selling hi-fi in the 1970s. Today Richer Sounds has branches nationwide and around 500 employees.

Richer Sounds branch London Bridge
Photo credit: Richer Sounds

This week Richer, now aged 60, announced he would commence the transfer of ownership of his business to his employees. He put 60% of his shares in trust for this, as well as making a bonus payment of £1,000 for every year of work to each employee. The average staff bonus would be £8,000, but since many staff have worked there for 30 or more years, some will receive much more.

Julian Richer is the sort of entrepreneur and capitalist we need a lot more of today. And as a long-standing if infrequent customer of his shops, I have nothing but praise for the customer experience he and his people provide. If I have a retail hero, Julian Richer is it.

The way he treats his staff shows in surveys which report that 95% of them love working for him. His approach translates into tangible results: In 2012, his 53 stores produced profits of £6.9m from sales of £144.3m. No mean feat in an economy full of high street retail failure and depressed consumer spending.

Over four decades he has championed providing secure, well-paid jobs because he believes a happy workforce is key to business success. At a time when zero-hours contracts are blighting the labour market, he has been rewarded with loyalty from staff who worship him.

Just like Kyle, Richer’s career is a product of who he is and what he believes in.

When he was 14, during the energy crisis, he bought a case of candles for £3 and sold it for £15. That was followed by second-hand hi-fi equipment – he would do up turntables and sell them. By the time he was 17, he had three people working for him.

At 19, he opened his first Richer Sounds shop at London Bridge. He is devoted to what he calls "the biz". His parents worked for Marks & Spencer – a firm which famously also treated its staff well.

Richer has many parallel and philanthropic interests. He was the first patron of The Big Issue Foundation and an early director of the Prince of Wales's Duchy Originals. He's the founder of Acts 435, a charity launched by Archbishop John Sentamu to help those in need, and ASB Help, a charity to help the victims of antisocial behaviour.

"The biz" is his life's work and he sees it as only natural that those who have contributed to his company's success, the staff, should inherit it.

I don't think we should make the contrast between Jeremy Kyle and Julian Richer a binary one. Kyle is not an inherently bad person. He just made some bad judgements and probably lost sight that the net benevolence of his work was at best neutral and at worst negative. He possibly genuinely believed that he was doing good work, and chose not to reflect too hard on the basic morality of his business model.

Technology is inherently neither good nor bad. It's morally neutral, therefore, it demands that we provide the moral compass for it. Sound human judgement is needed to provide this.

Creators and users and their motives are what really matter. Perhaps we should care a little less about technological progress and a lot more about moral progress.

Fast fashion – British men to lead solution to a global problem

"This is nice - it will look perfect in landfill"

1 April 2019

By Neil Patrick

Clarkson, Clegg and Facebook unite to clean up... 

Fast fashion is a big problem. According to the latest news, on average, people wear clothes just two and a half times before throwing them out. I am still trying to figure out how you can wear something half a time, but I’ll let you know after I’ve carried out some experiments.

Anyway I must be a statistical outlier - if I throw something out, it is likely only because I have spilled creosote all over it and the stains look like something unspeakably horrible has happened to me.

Fashion has been getting faster and faster for years. The fashion industry has created ever shorter cycles - winter and summer seasons have been replaced with lines which change every week or so. The original fashion put-down of ‘that’s so last year’ has become ‘that’s so last week’.

This is all made possible through the outsourcing of manufacture to factories in the third world with low pay, child labour and terrible working conditions. And the insatiable fashion addiction of millions. Fast fashion is to the planet what fast food is to health.

The environmental impact of making just one T-shirt is frightening. It uses enough water for one person to drink for two and a half years. Manmade fabrics take 200 years to degrade in landfill.

The principal consumer culprits of this combined speeding offence and environmental catastrophe are young and female – or at least those whose wardrobes are overflowing with cheap clothes from the likes of H&M, Zara and New Look. I know this to be true because I have a daughter and apparently, it’s important to buy a new outfit for every climate change demonstration she attends.

So I was pleased this week to hear about a new initiative to tackle the problem once and for all. A combination of celebrity influencer power and technology have come to the rescue.

If fashion is just too fast, it needs to be slowed down. For possibly the last time in history, this job needs a man. Ideally an old and fashion-proof one.

Step forward the man whose expertise on fashion and speed needs no introduction; Jeremy Clarkson. Apart from driving cars fast, nearly always without crashing them and only ever slightly injuring a few people with his bare hands, his fashion credentials are impeccable.

After eco-crime accessories Trinny and Susannah praised Clarkson's style as resembling that of a market trader i.e. an authentic provincial homme du jour, he was persuaded to appear on their fashion makeover show What Not to Wear. Here he was awarded their all-time worst dressed person award. He responded to their attempts at restyling him with due distain. Clarkson said he would rather eat his own hair than appear on the show again.

This week, as well as fumbling about a bit with Brexit, the government announced Clarkson’s appointment as Britain’s first Fast Fashion Tsar. He’s tasked with creating and implementing a road map to put a stop to the environmental destruction wrought by fast fashion.

 Fast Fashion Tsar Clarkson arriving (late) for work yesterday 

Clarkson has already proven his green credentials on Top Gear and more recently The Grand Tour, where fuel economy is one of his top concerns:

"There's a gallon of fuel gone there, and another there...and yet another there. As a matter of fact, the only way this car could be less annoying to eco-mentalists is if its engine ran on sliced dolphin."

So his qualifications are pretty unquestionable. If young women addicted to fast fashion are the problem, the choice of antidote of an old man who wants everyone else to be slower and less stylish than him is inspired.

But one man, even one as accomplished and admired as Clarkson, cannot solve the problem alone. He needs technology. And this is where Facebook is stepping up to the challenge. Nick Clegg, former virtual deputy assistant prime minister and keen eco-mentalist himself, has spoken for the first time since his appointment in October 2018 as Vice-President, Global Affairs and Communications at Facebook. He’s announced that Facebook will launch a new app which monitors and reports the fashion speed of users. He said,

"Our new app FashBit, is definitely a good idea. I think. Yes it is a good idea um for sure. It gives users complete control over their fashion speed. So it’s like you know helping people which is a good thing.

Mark says it has digital stuff in it which is completely secure and which we only share with consent. Like location tracking that monitors the amount of time spent in fashion stores, and status updates to tell you if your fashion is getting dangerously fast. And it's free so everyone can use it. It’s a no brainer really."

Facebook Chief of Data Acquisition and Repurposing, Brent Beard said,

"We've gone granular on this. We're mega-passionate about the planet and all the things on it we can help leverage. FashBit is our ideation of high fiving the unicorns.

Our online fashion integration technology unpacks the number and fabric composition of clothing purchases. It gives fashion brands drill-downs to know who is shortfalling on clothing purchases, so they can buy more energy efficient and laser-targeted advertising to them. In the meanwhilst, Facebook users who are maxing out in the apparel vertical will have fashion ads replaced with environmental ads - pictures of cute animals and cool nature stuff encouraging them to buy smaller shoe sizes which enables smaller carbon footprints."

Asked about his new challenge, Clarkson was clearly ready to take up the gauntlet. He said,

"My message is simple – everyone who is not me should stop prattling on about it, roll their sleeves up and get busy saving the planet. I’ve been doing my bit for years.

I’ve been wearing these same jeans for over twenty years without a single malfunction and the boffins tell me that’s saved over 40 endangered species. Turtles are dying right now just so you can buy another bloody frock which doesn’t suit you anyway. Think about that while you’re browsing the interweb for your next outfit which will be in landfill faster than a Frenchman can drop his pants."

Fashion retailers and brands are yet to show unqualified support for this innovative approach, however. They believe self-regulation is adequate and have taken direct action by printing millions of T-Shirts with pictures of polar bears and slogans to help get the message across. Spokeshuman for the Clothing Retail Association of Producers (CRAP), Krystal Methany said:

"So, our members strive like endlessly to reduce their like footprint stuff yeah? They’re like so awesome you know and are like totally committed to sustainable, kind of inclusive business models? We print T-shirts with pictures of like elephants? And slogans which really make you stop and like um think? They've created like literally millions of jobs for poor and starving people who would otherwise have to eat uncool stuff like you know, soil? Yay! I should try that diet – no, no I’m only joking dot com. We hashtag adore them all."

Asked about the choice of Mr. Clarkson to lead this initiative, Ms. Methany said:

"Jeremy Clarkson said the exact car I have which is like a Mercedes sports car was ‘a pretty car for ugly people.’ That’s like literally a hate crime? So he’s you know like totally unadorable to me? He’s a gross old man who doesn’t get it that the fascist um fashion industry makes the world a more beautiful and peaceful place for sort of like everyone I know? You know?"