Happy Friday, all.
This may be remembered as the week Donald Trump headlined at Davos (speech this lunchtime), but it’s also the week that Facebook created a new unit of time – a Flick – to help VR developers deal with delays between frames, and Nigel Farage suggested that disgraced successor Henry Bolton emulate Jeremy Corbyn, in order to “win the day”.
Have lovely weekends when you get there.
1. Going skiing? Revolut launches geolocation travel insurance… And John Lewis starts offering loans
From as little as £1 a day, Revolut will give you medical and dental cover worldwide – and you just pay for the days you’re away. Its geolocation technology will work out where you are and charge you accordingly. I for one was delighted, because I saw its email announcing the product just as I was booking a last-minute ski trip. (I haven’t been for over a decade, so may well need to claim!)
We should expect to see more and more nifty products like this from the digital-only banks in coming months. It’s a race to get as many customers inside their walled gardens and using them for any financial-related service. You see this across the venture world: pump money into young startups and acquire customers at any price (i.e. for free if you have to). It doesn’t matter if the customer acquisition cost is very high because, once that customer is within your ecosystem, their lifetime value should make up for what was initially forked out. The winners will be the companies that achieve high lifetime value at scale. Losers won’t just be smaller versions; they’ll be wiped out.
While we’re on new financial products, this week, John Lewis announced it was branching out into loans. Customers can now borrow between £1,000 and £25,000, over one to five years, with a representative interest rate of 2.9 percent on loans between £7,000 and £15,000.
2. Are you paying 85% more in fees than you realised? New research shows that more than half of the 20 top funds are charging much more than investors think
Consulting firm Lang Cat has done some research into the “hidden charges” of the bestselling investment funds. Out of 20, 13 were charging as much as 85 percent more in extra transaction fees than had previously been disclosed to investors.
On average, investors were paying 30 percent more than they realised. The data refers to the top selling funds of 2016, but offenders include Neil Woodford’s equity income fund and the JP Morgan Global Macro Opportunities fund, which has an extra 0.66 percent in transaction costs on to of the ongoing charges figure.
The OFF3R team are working on an exciting project to throw a spotlight on these fees and make life a lot easier for investors to learn about all forms of investing. To find out more about the company’s exciting plans for this year, get in touch with Lily to join our community and help shape the future of investing.
3. IFISA and secondary markets take off, and the impact of bitcoin on alternative investments – what does the OFF3R Index tell us about 2017?
The yearly OFF3R Index, which tracks the activity of the alternative finance market, showed that, despite the media falling quiet on the sector, £86.4m more was raised by equity crowdfunding platforms in 2017 than in 2016, and £1.1bn more by marketplace lenders like Funding Circle and Market Invoice.
Much of the growth in the P2P space can be put down to the advent of the Innovative Finance ISA (IFISA), which enables investors to receive the tax benefits of an Isa while lending money via platforms. Meanwhile, Crowdcube and Seedrs launched secondary markets, which has started to bring much-needed liquidity to the equity crowdfunding sector.
The suggestion that the sector has seen more activity because of the enormous growth of initial coin offering (ICOs) probably holds some truth simply because ICOs are a form of crowdfunding that have raised far more than equity crowdfunding in far less time, so attention there is likely to have led to exposure of other forms of fundraising. But the alternative finance market continues to do well in its own right, with many platforms continuing to deliver above-average returns, and more institutional money insuring borrowers are satisfied.
Read more about the report here.
CAUGHT OUR EYE
Company – Netflix bags loads more subscribers than anyone predicted, which pushed its valuation well past $100bn
Shows like The Crown and Stranger Things enticed 8.33m new subscribers to Netflix in the last three months of 2017. The firm hopes to get 6.35m new users in the first quarter of this year, even in the face of stiff competition from tech firms like Facebook and Apple, and improving streaming services from the likes of Disney. Netflix said that “the market for entertainment time is vast and can support many successful services.” And that seems plausible: unlike a bank account, a solicitor or a gym, you’re pretty likely to have several entertainment providers and, crucially, subscriptions. The market can support many players.
And a nice piece of trivia: collectively, Netflix’s 109m users across the world watch over 140m hours of shows and films a day – and that’s just what we’re watching on Netflix!
For a close look at how much cash has to be burnt through to hit those numbers, and what it would do to the firm’s growth trajectory if that capital was limited, here’s a decent piece from Bloomberg.
Person – The man imagining a meat-free world
Hot off the press is Clean Meat: How Eating Meat Without Animals Will Revolutionize Dinner and the World, by vegan and lab-meat-eater Paul Shapiro. I haven’t read it yet but am interested in what the (perhaps inevitable?) demise of the meat industry will mean for the global economy, and how my grandchildren will view my meat-eating. Here’s Fast Company on the book.
Technology – What’s it like inside Amazon’s first checkout-free supermarket?
This week, Amazon opened its first checkout-free store in Seattle, Amazon Go. The BBC has made a video of what it’s like inside, and it’s exactly as you might imagine: you scan a QR code on your phone when you enter, pick up the goods you want, then leave. Sensors and cameras do the rest, and Amazon then sends a receipt straight to your phone.
Everyone can see the benefits here and, aside from a nostalgia for the chat with the person on the checkout, the only issue people appear to have is with the level of tracking the company will be doing to ensure a smooth experience. The AI tech Amazon is using can associate who you are with what you are buying. If you pick up a chocolate bar, then put it back two minutes later, it needs to log that, and then learn from it. Should that bother us? How much do we care about handing over data for better customer experience?
WHAT DO YOU THINK?
Are inequality and improving quality of life mutually inclusive?
There has been some hoo-hah this week about just how political (read: very red) Oxfam’s inequality report is. I’ll save going into that, but thought I’d leave you with a remark from Paul Graham, a venture capitalist and one of the founders of prestigious startup incubator Y Combinator: “You can’t prevent great variations in wealth without preventing people from getting rich… and you can’t do that without preventing them from starting startups.” And if you prevent people from innovating, you prevent any improvement in people’s lives.