Pensions: The Biggest Social Challenge and The Biggest FinTech Opportunity

We continue with our FinTech series and today’s topic is pensions and the demographic time bomb.

It is widely acknowledged that the UK population is not saving enough and might have problems continuing to live comfortably in older age.  Increasing life expectancy means that people are spending more and more years in retirement and as birth rates decline, the overall ratio of non-workers to workers increases, putting an unmanageable strain on the government welfare system.  To rebalance the pension pot the government can 1) pay less to pensioners, 2) transfer a larger proportion of workers income to pensioners, 3) make people retire later.  But will it solve the problem in the long term?  The current state of affairs is that many of us will have a very poor life in retirement - unless something revolutionary occurs in the pension industry.

According to Chris Sier, Fintech Envoy for the Northern Powerhouse and pensions expert, Asset Management industry has not engaged with the consumer in a way the consumer wants to be engaged with, apart from offering some new asset classes such as equity crowdfunding.

I have seen people getting excited about 10 small investments on peer-to-peer platform, and yet would avoid the issue of doing their allocation to their pension fund. It is the biggest single asset you’ve got apart from your house. Why wouldn’t you care about your pension fund. But people don’t.

Millennials don’t buy any asset management products which have long-term time horizon.

Pensions and other annuity products are not cheap, and overall pension funds performance is hugely inhibited by the hidden costs of infrastructure, intermediation and administration.  According to Chris, “The costs of pension funds are not well understood, neither by consumers/beneficial owners of a pension fund, nor by many intermediaries in the pension fund industry chain. Shockingly, the providers of pension funds also have little idea of the total cost of ownership of a pension fund” (Source link).

There is a globally acknowledged cost of owning a pension fund: it should not exceed 30-50 basis points, but the actual costs go to up 500 basis points.  A huge proportion of these costs can be sorted out with technology.

According to Chris (see interview below), this is one of the biggest social challenges that needs solving, as well as being one of the best opportunities for FinTech companies, due to the unprecedented size of the pension market.  “Reducing cost of holding long-term assets by 2-5% will save consumers £300 billion a year”.   Watch full interview with Chris Sier:

So why are there not many FinTech companies fighting for this potentially huge reward? 

While we see a lot of innovation and investment in short-term financial products such as payments, crowdfunding, peer-to-peer lending, there are fewer developments in long-term finance such as pensions and mortgages. According to Rob Moffat from Balderton Capital, startups have tended to steer clear of long-term FinTech initiatives because pensions, mortgages, and investment are:

  1. highly regulated, require deep industry knowledge and the regulatory expertise to navigate protracted legal processes and to pass strenuous due diligence,

  2. capital intensive, often requiring long-term capital early on, to provide for the higher cost of customer acquisition and regulatory capital,

  3. offer returns over longer periods of time.

The current trend in long-term finance is that most FinTechs aim to take the place of brokers and advisors. Many work on creating a marketplace for financial products, while the actual products are still provided by traditional players. 

The recent government pension reforms gave a rise to a new wave of FinTechs providing pension auto-enrolment service.

Government Reforms - Pension Auto-Enrolment

To encourage workers to accumulate retirement savings the Government introduced the Pensions Act of 2008, which requires employers to enrol all eligible workers to workplace pension schemes.  In this way, eligible employees do not have to spend time searching for suitable pension schemes, but employers must enrol them automatically and administer paying contributions into the schemes.

Automatic enrolment began in 2012 and is rolled out in stages, starting from requiring the largest employers who employ over 250 workers to become compliant and is to be completed in October 2018, when even small and micro employers (between 1 and 49 workers) would have to comply. By February 2017 over 7 million workers had been automatically enrolled into pensions and over 340,000 employers had became compliant (Source link).

As the majority of incumbent pension providers were not ready to provide a low-cost service for vast volumes of SME auto-enrolments, the government has set up their own auto-enrolment company, NEST (National Employment Savings Trust), which is run as a non-profit organisation and is funded by the taxpayer.  NEST is currently the largest pension scheme for auto-enrolment, holding about 65% of the market. 

At the same time, the private sector has also come up with auto-enrolment solutions:  Smart Pension, Now: Pensions, Creative Auto Enrolment and the People Pension, to name a few.  As they have to compete with both the government and incumbents, the private sector companies are a lot more focussed on efficiencies and cost: ease of the set up process, low or no cost of set up, running the scheme for the employers, competitive pricing for the employees, no lock-ins, as well as reliable, safe and easy to use automated technology platforms.  We had an opportunity to talk to Will Wynne, the managing director and co-founder of Smart Pension, the leading private sector pension auto-enrolment business.  Watch this video to learn about the company’s operating model, their partnerships, competition, and plans for the future.

Smart Pension is a great example of how FinTech companies are transforming the financial services industry. This is done by introducing technology that dramatically reduces the cost of pension enrolment, set-up and maintenance, nonetheless this seems to touch only the tip of the iceberg.  Smart Pension is an enrolment business -  the actual pension products are provider by their strategic partner Legal & General.

This is already a good start as it makes some costs more transparent, and provides better financial inclusion and superior, cost-effective service to customers.  However, there is a lot more that can be done in FinTech space to reduce the costs of pension funds, including fund administration costs, asset management costs and custodian costs. 

Who knows what further efficiencies could have been achieved if the likes of the Smart Pensions looked further into optimising the pensions funds business.  Let’s keep a look out for who will the next big innovator in pensions.

FinTech Co Profile: PeerPay and their invoice trading platform FloFunder

Today, as part of our FinTech video series, we are having a deep dive into a young company PeerPay and their invoice trading platform FloFunder.

The Challenge of Working Capital Financing

SMEs are crucial for the UK economy: they represent 99.9% of private sector businesses, 60% of private sector employment and 85% of new job creation.  In order to achieve full business growth potential it is important for companies to have adequate access to financing.  Many SMEs don’t have enough credit history to borrow from banks, and if they do, banks are reluctant to lend at affordable rates.   Overall, bank financing has dramatically decreased since the crisis of 2008.

Only recently bank lending to SMEs has started growing again, but the volume of available traditional financing is still far off pre-crisis levels. Increasingly SMEs are turning to online alternative business finance sources such as P2P lending, debt -based securities and invoice trading. According to Nesta and the Cambridge Centre for Alternative Finance, over £2.2 billion of financing was raised through the above sources in 2015 providing capital to circa 20,000 SMEs

SMEs are frequently faced with the problem of late invoice payments, which cripple their businesses and can even force closure. Often these are large corporations who consistently delay payments to smaller firms as part of their financial management, imposing terms to withhold payments of up to 90 and sometimes even 120 days.  According to a recent report by Amicus Commercial Finance, more than half of UK SME submitted invoices are overdue and 16% of SME invoices are still outstanding after 90 days.

So businesses are increasingly looking elsewhere for alternative finance: crowd-funding, peer-to-peer lending and invoice financing.

Traditional Invoice Factoring and Invoice Discounting

Both invoice factoring and discounting allow companies to fund their growth and cash positions without taking on additional debt and incurring fixed interest rates, via cashing in typically 80-85% of an invoice value within 48 hours of the invoice submission, rather than waiting for over 30 days or more. A funder could be a bank, an invoice factoring company or an alternative financier.

Invoice discounting is usually used by larger companies where businesses seeking finance control their sales ledgers and collect payments themselves.  In the case ofinvoice factoring, the credit control function is outsourced to the financier and the customers could be asked to pay the factoring company directly, therefore leaving the clients with no control over their ledger.

Invoice factoring tends to be cheaper than invoice discounting. It could also be useful for one-off invoices, albeit more expensively than in the case of full factoring facilities.

Both traditional factoring and invoice discounting companies prefer to lock in long term relationships with individual businesses, often demanding whole ledger discounting, debentures and guarantees, lock-in periods, monthly service and arrangement fees and unilateral ability to change facility, concentration limits and exclusions.

Invoice Trading Auction Platforms

Online invoice trading reached £325 million in 2015 and is expected to show significant growth going forward (numbers for 2016 are expected to be published in May 2017).

In the last few years, a new type of hybrid invoice trading platforms has appeared, combining invoice finance and peer-to peer lending.  The most prominent players in the UK are MarketInvoice and Platform Black.

MarketInvoice was founded in 2010 and is the UK’s largest invoice trading platform. It has funded £1.2 billion of invoices advancing £930 million with average duration of 40 days.  MarketInvoice offers more flexibility, speed and convenience than traditional invoice financing:  businesses apply online to become a member and once approved can sell their invoices (from £1,000 to £1 million) to a pool of investors.  The platform verifies invoices electronically and prices them according to one of 8 risk categories, using various data sources, including company data, online profiling, credit references, etc.  Invoices are then sold to a group of investors. 

Investors set their investment criteria and can either invest using an autobid function into fractions of invoices to maintain diversification, or select invoices manually.  Funding can reach up to 90% of an invoice face value within 24-48 hours.  After the debtor pays their invoice the platform pays the company the remaining balance net of fees. 

MarketInvoice works with a broad range of industries, supplying large reputable/ blue chip customers often going through high growth phase. Investors on the platform are institutional investors, high net worth individuals, family offices and sophisticated investors. On average 75-85% of investors’ funds are invested at the same time. It is possible to fund invoices in GBP, USD and EUR.

New players – Community Based Matching Platforms

Despite the dominant position of MarketInvoice, new players are emerging, offering differentiated solutions to the same problem. 

At the recent FinTech conference in Leeds, Tania Ziegler, the Research Programme Manager at the Cambridge Center for Alternative Finance, stated that the latest trend is community based matching platforms. 

PeerPay is one of the new entrants that are challenging existing models and coming up with a fundamentally different approach, based on the idea that any accounting practice, financial advisor or even a trading association or a law firm could match their cash-rich clients with cash-poor clients.

We had the opportunity to interview David Ireson-Hughes, the Group Managing Director, about their new platform, FloFunder. 

In its current state, FloFunder is a matching engine within the closed environment of an accounting practice.  It matches invoice sellers and funders based on high/medium/low risk profiles that are calculated by an AI-driven algorithm.  The key difference in risk assessment is that the platform obtains a real-time feed from the accounting system, currently Xero, providing comprehensive information about the invoice seller and in some cases, the end debtor. 

Another differentiator is that FloFunder is not an auction.  The pricing is flat: funders’ monthly return on investment is 0.5% for A low risk fund, 1%  for medium, and 1.5% for high risk.  Accountants have an option of charging 0.25% per month (and it is free for them to join the platform and they have an option of using it under their own brand) and FloFunder charges 1%.  So the overall cost to the seller will be between 1.5% to 2.75%, undercutting the MarketInvoice fee of 3.5%.

With a minimum funding requirement of £2,500, FloFunder also gives the opportunity for smaller funders to invest their money, while most other platforms accept only institutional or qualified investors with a minimum funding requirement starting AT £50,000.

Additionally, FloFunder allows to settle up to 100% of the net invoice.  It also lets the invoice sellers keep confidentiality about their invoice trading activity.  While  sellers stay responsible for their credit management process, PeerPay might get involved in assisting them in chasing delinquent invoices.  Only in the event of default is anonymity removed and all parties become aware of the end debtor.

According to David, the current annual default ratio on the existing invoice trading platforms is low – only 0.7%, and he believes that it would be even lower on FloFunder, due to the due diligence of the seller and end debtor that is performed at the outset.

Finally, FloFunder allow for a lot of flexibility to invoice sellers, as they are not required to commit all their debtors’ ledger, but can use the platform for selected invoices when it is convenient for them, without on-going maintenance costs.

FloFunder was initially created as a tool for modern accountants who go beyond the role of a book-keeper, acting as trusted advisors for all the financial needs of their clients:   “We wanted to champion the accountants, make them heroes, and give them something as a unique selling point”, says Ireson-Hughes.

We want to do business with technology-savvy, forward thinking clients, who want to grow their practices and understand that the digital revolution in accounting is happening now.
— David Ireson-Hughes

As the platform develops, the founders are increasingly realising the potential of matching capabilities between different accounting practices and also expanding the platform to different types of clients.  The longer term plans include integrations with various accounting software platforms, as well as international expansion.

To learn more about FloFunder’s operating model, its limitations and potential, please watch the full interview with David Ireson-Hughes, the Group Managing Director of PeerPay or visit their website http://flofunder.com.

 

FinTech FiNexus Lab and why Leeds is an up-and-coming Financial Hub of Britain

Next in our video series of FinTech talks, we report on our  interview with Chris Sier, the FinTech envoy to the North of England and Director of FiNexus Lab in Leeds.

 

FiNexus Lab brings together a start-up incubator, a corporate sandbox and academic research.  It aims to be the first incubator going beyond the provision of space and mentoring to provide access to key technologies such as Blockchain, Cryptography, Internet of Things, Cyber-defence, etc.

The Lab’s users will have everything necessary to rapidly build a prototype or design a solution to a specific problem in an experimental fashion. 

For corporate teams it is an opportunity to get away from a traditional setting and bureaucracy.  Start-ups can access tools and expertise without giving away equity in their business.  

Chris is passionate about problem solving for the benefit of consumers and, he is not a fan of the equity model, which in his view might undermine the drive of the entrepreneur.  So the lab will operate on a fee-only and non-for-profit basis, and will provide the following: 1) contacts within the industry; 2) access to the key talent and 3) access to the FinTech tools/techniques and advice on how to use them.  Like in any incubator/accelerator environment, it will also give the zeitgeist of the like-minded people.

The FiNexus Lab aims to attract three groups of potential users:

1)   People who have a business idea, but are not technical and might not have worked with technology before.  They will benefit from the access to local talent and technology advice.

2)   Teams (whether these are start-ups or teams from larger corporates) who have a specific problem to solve and they need to test their idea by building prototype before making serious investment in technology and new product development within their own companies

3)   Companies or organisations who identified a problem, and want to invite other teams to help them to solve that by putting a tender through the lab. Chris has mentioned that he has already got some organisations that are ready to offer scholarships.

While the 6-storey high and carbon-positive lab building is still under construction, the FiNexus already has proof of concept – 2 projects in distributed ledger and one in data analytics.  It is expected that FiNexus Lab with full facilities will open its doors at the beginning of 2018. 


Choosing Leeds as a location was a non-brainer for Chris.  This region is already

the largest financial services centre outside London, with strong data and digital credentials, leading universities and an attractive cost base.  The Leeds infrastructure is undergoing a significant makeover with new transport links and new housing being built in anticipation of rapid economic growth. 

This month, Chris, among other speakers, will be presenting at the FinTech North 2017 conference, which aims to generate collaboration and knowledge sharing across the financial services and technology community, and to create tangible economic benefits for the North region.

As we see Leeds rising up as a new FinTech hub in the UK, London is about to host a number of FinTech events to showcase the sector’s successes, attract more investment into the country and share global regulatory expertise, among which are :

 

While Brexit raises lots of debates about potential advantages and disadvantages for the UK economy, the FinTech community strongly believes that Britain will stay a great place to do business.  The FiNexus Lab is a great example of why that may be the case.

 

 

UK Mobile Challenger Banks. Interview with Monzo CEO Tom Blomfield

The financial crisis of 2008 led to the banking sector being faced with a series of challenges: customers now view them as greedy, non-transparent and not customer-friendly. In 2013 the Bank of England responded to this with an easier process and lower capital requirements for setting up new banks. It aimed to bring in new competitors and to fill the gaps in the existing banking industry.

Since this time, new types of challenger banks that focus on customer needs have obtained licenses. They are built on new technologies, are entirely mobile, provide greater transparency and analytics, utilise AI, real-time balance information, predictive banking, free transfers, no or low fees, higher savings rates, and they listen to their customers.

The challenge for the new entrants is that they have to go beyond just creating an attractive app for their customers - they also need to create superior products. What is more, they have to be fully licensed, get FSCS protection, earn customers’ trust, be safe and reliable and convince customers to switch from existing providers.

As described by Tom Blomfield, the CEO of Monzo bank, the new digital banks are pursuing two types of strategy: the first is an ultra-efficient balance-sheet model, where banks attract deposits and lend them out through innovative and low-cost products. The second, is the creation of a marketplace or an aggregator bank, that offers a selection of products sourced from various financial institutions and FinTech companies via a single mobile application.

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It’s still early to know how these challenger banks are going to perform, but all the emerging players claim to have an answer and to create value for their customers. Let’s see who the current players are in the UK digital challenger bank market - we’ll look briefly at 4 banks: Atom, Starling, Monzo and Tandem.

In the last couple of weeks we have seen some exciting news coming from UK challenger banks:

-      Atom has completed another round of financing, raising £83 million

-      Starling has launched its current account in beta, announced a partnership with TransferWise and has become the first UK licensed bank to have a public, open API.

-      Tandem has lost its banking licence after failing to secure funding from a Chinese investor

-      Monzo raised £19.5 million from VC investors and closed its crowdfunding campaign having raised £12m five times oversubscribed.

The challenger banks are growing their customer base, but at this stage becoming a dominant player is still long way off. The question is, which one out of the 4 will be the fastest growing challenger bank of the future and which model will customers prefer?

Atom Bank

So far Atom has chosen to follow the first of the two strategies and to date has launched its Fixed Saver products, digital mortgages through selected independent advisers and business lending. It expects to follow up with current accounts, overdrafts, instant savings and debit cards sometime in 2017. According to Finextra, in the period between Atom’s opening in April of 2016 and the end of 2016, Atom has collected over £110 million in deposits via their fixed saver accounts. According to Techworld, Atom bank, unlike some of its competitors, has not built its own software, but has used existing systems from FIS as a basis for its infrastructure. Customers can log in to the app using voice and facial recognition, gaining access to 24/7 customer service, better savings rates and lower borrowing rates. The bank is planning further digitisation and use of artificial intelligence for its services. 

 

In contrast, Starling, Monzo and Tandem are pursuing a marketplace strategy, that would offer financial products from various providers within their apps.  

Starling Bank

Starling is the first UK licensed bank with a public open API and is a pioneer in Open Banking. On March 16 2017, it launched a beta of the app for its current account outside of private testers and has announced a partnership with Transferwise for international money transfers. Starling started with offering a current account where its customers could sign in to a bank account (via restricted license) where they were identified via biometric IDs, and could set up direct debits and make payments in and out of the account, including via the Faster Payments network. On top of that, the bank provides its customers with real-time notifications within the app, gives an option of turning its card on and off and interacting with customer service via chat or messaging. Starling has chosen to build a full-stack bank and created most of their IT systems from scratch.

Monzo Bank

Monzo (originally Mondo) is striving to build the “best current account in the world” via a mobile app. It would like to be the Facebook of banking, with millions of users worldwide and a “portfolio bank”, where in addition to the “best current account” it would be possible to obtain products from other financial services companies, such as Funding Circle, TransferWise, etc. It was granted a banking license by the FCA and PRA with restrictions in August 2016. It launched its app in public beta in March 2017 but won’t launch a current account until later in 2017. Its app is backed by a contactless pre-paid Mastercard, provides real-time notifications, zero fees, free transfers, 24/7 customer care and intelligent budgeting. Monzo is expecting to launch full UK free current accounts, overdrafts and will be covered by FSCS scheme later in 2017 after its license restrictions are fully lifted. It uses technology employed by Google and Amazon and is building its own systems from scratch.

Tandem Bank

Tandem was the second UK digital bank to be granted a license in June 2015. Tandem expects to gain customers’ trust by helping them manage their spending. The bank launched its app in beta in November 2016 and plans to offer credit cards some time in 2017. However, it has had to delay the launch of its accounts and loans services due to losing its banking license, which occurred because it failed to obtain the required capital committed earlier this year by House of Fraser. This in turn was due to capital restrictions from House of Fraser’s Chinese parent. Tandem plans to make money from a combination of interest margins on their own products and fees from helping customers to switch/choose products from other suppliers. Tandem has used off-the-shelf existing technology for its infrastructure rather than building a system from scratch, thus shortening its time to market.

 

The overall market share of challenger banks is still tiny. It is too early to talk about real disruption of incumbents, but challenger banks are certainly managing to attract attention of younger millennials and venture capitalists. 

If you are interested in finding out how they are doing this, please watch our full interview with Tom Blomfield, the CEO and co-founder of Monzo Bank.

Open Banking and PSD2 Implementation Challenges. Interview with Bob Lyddon

In this issue of our FinTech series, we invited Bob Lyddon, an expert in payments and cash management, to talk about Open Banking and Payments Services Directive 2.

Open Banking is a relatively new term related to initiatives that aim to improve customers’ banking experience by using open banking data, such as information about products and services and personal transactional data. The idea is that data can be securely shared using open APIs with third party providers. These in turn would build useful applications that will make financial management intuitive and easy.

New offerings might include better cash management, with the ability to easily move money between different accounts or make payments from accounts at several banks in one mobile app. New budgeting apps would give consumers better control of their spending and offer comparison and switching services to help them compare and identify the products best suited to them. Alternatively, apps could provide customers with a personalised service linked to their current financial situation. 

The key objectives of open banking are to boost competition, stimulate digital innovation, reduce costs to consumers and improve efficiency, without undermining customer data protection. 

There are two major regulatory pieces that are currently being implemented in the UK.

First is an order from the Competition and Markets Authority (CMA) which requires the nine largest current account providers to make the following data available to authorised third parties: 

•      Standardised product and reference data;

•      With customer consent, secure access to specific current accounts in order to read transaction data and initiate payments .

Further guidelines on how this could be achieved are provided by the Open Banking Standard, which was developed by the Open Banking Working Group, formed back in 2015 at the request of HM Treasury.

The second piece operates at the EU level - Payments Services Directive 2 (PSD 2). The main purpose of the PSD2 is to encourage new players to enter the payment market. It does this by mandating banks to “open up the bank account” to external parties, provided that the consumer gives explicit permission. The draft guidelines called Payment Services Regulations were published by the Treasury in February 2017 and are due for implementation in January 2018.

According to Bob Lyddon, these EU objectives are intended to prepare the EU for the digital economy, perfecting the single market in financial services, which also means underpinning the Euro, and making sure that the currency is fully embedded in all types of retail payments – card, direct debits, electronic payments, etc. The UK agenda, on the other hand, is intended to ensure that it will have coherence of law before and after Brexit. It is expected that EU regulations and directives will be enacted and retained after Brexit. Another objective is to open up banking here in the UK, particularly for consumers and SMEs, beyond what is called the stranglehold of the big 5 banks.

As defined by Bob, these initiatives aim to transform the payment business from being vertically integrated to horizontally integrated. Vertical integration means that big banks own the entire value chain, directly or through “puppet” organisations: they own the channel through which the customer interacts with the banks, the processing of payments, communication channels between the banks and clearing systems, and the clearing systems themselves. For example, the clearing infrastructure system is owned by Vocalink, the clearing systems schemes are owned by organisations such as BACS Payments Schemes Limited and Faster Payments Limited, the shareholders of which are all big banks. The aim, therefore, is to become a horizontally integrated system, where each layer is an area of competition in its own right. The only pieces that would remain the preserve of banks are those where prudential regulation is needed – deposit taking and final settlement of clearing. Everything else - the processing, the clearing systems - can be owned by non-banks. You can also have channels for customer to access the bank, which are operated by third parties rather than banks.

While technology companies are eagerly looking forward to the opportunities which open banking and PSD2 could allow them, implementation standards show that the data which would be available is rather fragmented and would not be as comprehensive as FinTech companies are hoping for. 

What is more, the incumbent players are not quite ready to enforce compliance. There is confusion about the scope and detail of the data to be shared and about what parts of these two regulations are mandatory or not. 

As yet, there is no message book designed to convey data which has never before been exchanged with third parties (neither in the SWIFT world nor in more recent standards such as ISO 20022).

There is an overall lack of market practice with regards to what would be reasonable operational demands for the data exchange (what data, how much, how often, etc). 

Many established players are burdened by legacy systems which just don’t provide the flexibility required, and which would be costly and time-consuming to configure for the new requirements. 

Furthermore, concerns about client data protection and questions around data ownership are at the top of the agenda, often used as a tool to lobby against Open Banking initiatives.

In addition, as our guest speaker Bob Lyddon highlighted, data protection is not just an issue for the incumbents: third parties, who would consume shared data, are probably not sufficiently concerned about the risks of mishandling client data, all of which could lead both to significant fines and irrevocable damage to their reputation.

Finally, the ironic thing about the PSD 2 regulation is that it does not make a distinction between incumbents and new entrants. There are a number of young organisations, such as e-money institutions, payment institutions and challenger banks, who are also subject to this regulation and who will also need to open up their data to other third data providers. 

While Open Banking and PSD 2 are facing implementation challenges, the most important question is whether consumers in the UK are ready to open their financial transactional data to third party providers. Will the benefits of new service propositions outweigh the loss of your privacy? 

A poll of over 2000 adults conducted by YouGov on behalf of the credit referencing agency Equifax revealed that 90% of Brits have not heard of the Open Banking initiative. When asked about sharing personal data through Open Banking, 60% of the poll said they would not consent to this. Consumers’ concerns about data being shared included security (67%), and that third parties would be able to contact them (62%). (source: FinExtra)

Only time will tell whether the brave new world of FinTech companies will be able to change this perception. Dedicated focus on innovation that solves consumers’ problems, rather than designing new push products, might do the trick. 

Watch our full interview with Bob Lyddon to learn more about these important initiatives.

 

 

FinTech Company Profile: Scalable Capital

As we continue with our FinTech business series we would like to present our first Company Profile Snapshot. At the end of February we had an opportunity to dive into the world of WealthTech with the founders of Scalable Capital: Adam French, Ella Rabener and Simon Miller.

Episode 1.  How Scalable Capital was started, what services they provide and who the clients are.

Episode 2.  Scalable Capital’s operating model, the composition and skills of their team, the governance processes, and partnerships.

Episode 3.  Three ways Scalable Capital differentiates from traditional asset managers.

Episode 4. Funding and performance of Scalable Capital.

Episode 5. The future of Scalable Capital and the future of the WealthTech industry.

Scalable Capital is a fast growing online investment manager which is truly living up to its name.  From day one scalability has been a key design principle, whether for a technological, administrative or operational aspect of the business. 

As a technology company, the use of cloud computing, APIs and automation of both client onboarding and service delivery gives an almost unlimited potential for business growth.  Forget the traditional Front, Middle and Back Office with thousands of people running the business.  The modern financial institution consists of a Front-End, APIs and Cloud Computing.  All components of the infrastructure talk to each other through APIs.  These APIs can perform rules-based communications securely and effectively, removing the need for a middle office and the front end is delivered online without the need for sales staff and advisors – clients can open an account or place a deposit with just a couple of clicks.  In addition, cloud technology enables calculations which humans would not be able to complete in a lifetime and the entire business model is built for scale. 

Scalable Capital opened their offices in Munich and London pretty much at the same time, aiming to be international right from the beginning.  When they obtained both the German BaFin and UK FCA licences, the founders joked that it would be their Brexit hedge, before knowing that Brexit would actually happen. The service is currently available to clients in Germany, Austria and the UK with plans to expand in Europe and eventually worldwide.   According to Simon Miller, UK COO, from day one they knew that they needed to be multi-custodian, multi-regulator, multi-currency and multi-language.  Building this into their operational model from the very beginning was challenging, but it certainly gave the company a competitive edge when it came to flexibility in moving across different jurisdictions. 

Scalable is a young business, but with a highly experienced team which is heavily skewed towards financial engineering and technology (they have 9 PhDs in econometrics and machine learning!).  After being operational for only a year and half, the company had already acquired 4000 clients, with an average investment of £40k. While Scalable's early adopters (and their current target clients) are mostly tech-savvy, well-paid, 40+ year-old professionals, already experienced in investing, the founders believe that their service has potential to be suitable to a much wider audience. This is mainly due to the user-friendly, engaging and cost-efficient design of their service. 

Compared to many investment managers that offer either expensive customised service with hand-picked investments, or access to “pick yourself” platforms where clients can select their funds, Scalable has decided to offer a different experience by taking away the pain of making decisions and managing investments.  First, they understand how much risk the client is prepared to take, and then they offer an end-to-end fiduciary service all the way through to investing and on-going management of the portfolio within agreed risk levels.

According to Ella Rabener, the CMO of Scalable, their service appeals to experienced investors who clearly understand Scalable’s business model and could probably manage their own investments, but do not have time or desire to do so. They also don’t want to be taken for a ride by a service provider and are looking for a service that can manage their investments in a truly intelligent way.

In addition, Scalable’s approach appeals to other, less sophisticated and/or risk-averse investors who just don’t feel confident enough in making investment decisions.  The company will do this for them and in a way that gives clients a very controlled investment process, with a risk management process that minimises volatility. In particular Ella stressed that Scalable’s service would be perfect for women, who compared to men, still shy away from investing. 

When you work in financial services you need to ask yourself “Would my mother buy this?” It is like a bellwether for whether it is a good financial product. I am happy to say that my mother does use our service. I think it is for everyone.
— Adam French, Co-founder of Scalable Capital

The flexibility and cost-effectiveness of the service is achieved not only through technology, but also the choice of investment vehicles.  If you want to build clients customised, globally diversified, low cost, highly liquid and very transparent portfolios, you need look no further than Exchange Traded Funds (ETFs).  Compared to mutual funds, ETFs are very flexible as you can trade them in and out every day. Nonetheless, even actively traded funds are not the best vehicle as they are very expensive and often underperform the market.  According to founders, Scalable stay completely independent from issuers in their analysis and selection of the best ETFs for their clients.   
Using ETFs is not quite the same thing as investing directly into underlying assets, but it is certainly operationally convenient tool for a lot of retail investors who are not concerned with the dividends or stock lending activity. 

Where Scalable Capital differentiates itself from traditional asset managers is in the fact that they don’t so much offer a product but a service. Their portfolio management service includes a sophisticated and highly automated risk management system. The founders decided to move on from the usual (and often meaningless) high/medium/low risk classification, and introduce more quantifiable and easily understandable “risk percentages”, based on a VaR (Value at Risk) concept. A scale of 3% to 25% indicates how much a client is prepared to loose in a really bad year, thus helping them make more accurate decision about their risk appetite.  The portfolio is then managed at this constant risk level agreed with the client, and the risk-reward profile is graphically displayed to the client with 5 and 30 years projection at any point in time.  

Keeping risk constant is another intentional deviation from traditional asset management.  Each individual portfolio is assessed on a daily basis and adjusted to reduce or increase risk depending on the current market situation. 
This approach is agnostic to the weights between asset classes (i.e. equity to bond ratio), being more concerned with the risk in the portfolio at any particular point of time.  Interestingly, such a service had previously only been available only to large sovereign wealth funds. Investment Banks would run this analysis on their mainframe computers - now Scalable can use the power of cloud computing to scale it up for the benefit of tens of thousands of retail customers. 

While some experts might be concerned that automated investing (often referred to as robo-advisng) might contribute to systemic risk, caused by  algorithms moving markets in the same direction, the evidence so far shows completely the opposite result. With sharp market movements, people tend to behave impulsively, remove their investment and wait until markets improve. However, by keeping the risk constant, this behaviour is eliminated because the portfolio does not undergo these sharp movements. Thus investors stay invested longer without further aggravating the situation in the markets.  

The intensive use of technology and a new digital operating model takes a lot of risk away, but new risks enter.  As an FCA-regulated business, Scalable Capital has to adhere to the same rules and codes of conduct as any other authorised firm, whether related to trading requirements, client on-boarding, management of client accounts, etc.  And this requires completely new skill-sets for compliance, legal and other control functions. There are no shortcuts for smaller companies in terms of regulation, but this is by no means reflected in the customer experience.

Compared to many tech start-ups, Scalable Capital is slightly unusual: they have not taken advantage of popular incubator/accelerator services, but instead have opted for an experienced team. Initially funded by the founder’s funds, they were quickly able to raise angel investment, then followed by ‎€11m of venture capital money.  They have achieved 100m AUM in their first year of operations, and are aiming to achieve multiple times of this number in the second year.  According to Ella Rabener, Scalable is not far from becoming profitable – potentially with the next round of funding.  In a world where many technology companies attract huge investment just on pure “potential” and receive massively inflated valuations before anyone can see any revenue, this is an achievement.

In the short term, Scalable is focussing on growing and improving its existing retail business and developing B2B services. For instance, last year they entered into a partnership with Siemens in Germany, where they power the financial products for their employee benefits programme. They will also work on developing partnerships with banks, advisors and bigger private wealth managers who might want to leverage their technology in order to reach out to the mass retail market.

The founders of Scalable also talked about their ambitious views for the future, where they see themselves as a leading personal financial advisor across multiple jurisdictions, offering anything from tax optimisation and social investing services to overall wealth optimisation and customised financial advice based on personal lifecycle. 

The Payments Services Directive 2 (PSD 2), which comes into force in 2018, is viewed as a ground-breaking development in the WealthTech market. Seeing the transactional data of clients and building up a picture of their overall wealth would enable the development of much more engaging and relevant services.  

I wish I had access to the data the banks have about their clients, so that I could build an intelligent, conceptual and engaging service around that data.
— Adam French, Co-founder of Scalable Capital

In future we will see further application of Artificial Intelligence (AI) and Machine Learning (ML) in Finance, where complicated algorithms, learnt independently by machines, will help people with financial planning.

While we are seeing a huge explosion of FinTech startups, many might not last.  On the other hand Scalable Capital, with its focus on great customer experience, the development of scalable smart technologies and solid business acumen of their founders, is definitely here to stay.

 

 

To find out more about Scalable Capital services go to https://uk.scalable.capital

If you are interested in video production services, please check out our prices at http://www.shortlisted-productions.com/pricing-for-video-services/

 

FinTech Driving Forces

FinTech is taking the world by storm and it is all inclusive – it doesn’t care what religion, gender or income you have – there are new solutions for all types of consumers and all types of businesses.

Here is the second episode in our business series "Demystifying FinTech" where we are talking about driving forces behind FinTech, including the rise of millennials, the impact of financial crisis, the inefficiencies in existing financial services infrastructure, as well as connectivity and availability of big data.

FinTech Disruption of the Financial Services Industry

By Julia Mariasova

As a financial services industry consultant and a filmmaker, it has been a while since I wanted to do my own video series on the subject in which I am personally interested. 

The Financial Services industry is undergoing a revolution called FinTech.  New technologies are disrupting the operations of traditional players and challenging their business models. FinTech startups are attracting billions in investment and offer the promise of more convenient, more affordable, more secure and increasingly more inclusive service propositions for consumers and businesses alike.  The financial ecosystem is experiencing a dramatic change, driven not only by regulation and major technological advances, but also by changing consumer preferences. 

Here is the first episode in our new business series "Demystifying FinTech", in which we are talking about why FinTech technologies are disrupting incumbent players. A new segment of tech startups challenge the traditional methods of financial business, in many cases offering consumers and businesses a way of completely bypassing the established banking system.    

If you have any feedback regarding the content or any requests on what we should cover in the next episodes, please comment below. 

We are also interested to invite speakers to make these videos not only educational for general public, but useful for professionals. 

Thinking about launching your own business video series or just want to produce a corporate video, please do get in touch and we can help you. 

Macroeconomic Analysis as a Cornerstone of Investment Decisions

As more and more professional services firms choose to use video to promote their services, it is no longer sufficient merely to have an explainer video on your website. Many sales people, researchers and analysts realise the huge benefits of an online visual presence that builds engagement with both existing and potential customers. One of our clients, the independent alternative advisory firm Alvine Capital, has recently revamped their website to enable broadcasting of their video content.

The chairman of Alvine’s investment committee, Stephen Isaacs, is a frequent speaker at investment conferences and in the media, including the Institutional Investor, Eurohedge, Bloomberg and CNBC.  

At the end of last year, while working with Alvine on the content for their website, we had the opportunity to interview Stephen about his role and listen to his advice to investors: 

“My role is to try to mould different traits of economics, politics and markets into a simple macroeconomic theme which our customers then can use. 

Getting the macroeconomic story right is the single most important issue the clients will face. If you choose the right fund, but in the wrong space, then even a very skilled manager will not necessary be successful. So understanding where interest rates are going, or where emerging markets are heading, or when the ETF or Index-tracking strategy will no longer be successful, are absolutely key issues that we are trying to challenge ourselves with, and then use this analysis to inform clients.  We can then move to the second phase, which allows to align strategies with managers and ultimately successful investment.

At the backend of 2016, it is clear to us that the bond market’s incredible run for over 30 years is coming to an end. Even central banks have realised that the policy of very low or even negative interest rates is destroying the savers’ incentive to spend their money, undermining confidence in the economy and destroying the financial sector.  

Our advice has been: for equity investors to move out from defensive utility-type stock, and favour cyclicals or financials. For bond investors, simply shorten their duration. For emerging markets investors, switch from debt into equity.  Even for alternatives, it is essential to analyse what the key drivers of your risk are.  Is it trade finance receivables, is it reinsurance? Each of these assets has a singular macroeconomics dynamic which we analyse and try to conclude what is the best for you”. 

 

If you are interested to learn more about Alvine Capital and their services, you can watch above the company’s introduction by the Founder and Director Thomas Raber, or go to their website http://alvinecapital.com and watch more advice and expert opinion from Stephen Isaacs.

 

Should you need assistance with production of business video content for your organisation, please contact us today.

 

Magic is a key ingredient in videos going viral - the evidence is overwhelming!

By Hamish Nichols

We decided to make a random check of our theory that using magic in storytelling is incredibly effective in capturing and retaining your audience’s attention. We therefore went to the Adage website and looked at the most viral corporate videos for the months of September and November 2016. It seems pretty conclusive that magic transformations, properties and characteristics, even in disguised and/or inverted form, dominate the lists of videos gone “viral”. Magic in storytelling is not enough, however - you also need wit, imagination and taste - we’ll explore what these are and what this means for your videos in our next article.

We have previously argued that literally putting magic elements into your video can be a crucial way in which it can connect with your audience and potentially “go viral”. We cited a few examples of recent hits (Harry Potter, Breaking Bad, Game of Thrones, any Superhero movie) where magic casts its spell on the viewer and keeps them glued to the screen. Three months after this article, let’s look more closely at some of the evidence, especially as regards corporate videos that are deemed to be viral.

Before we get down and dirty on the examples, let’s take a moment to recap briefly what we mean by magic in visual storytelling. We mean anything that transforms from one thing to another as if “by magic” - in particular humans who become animals (or vice-a-versa), machines that do the same, people who possess special “magic” powers, animals that behave like humans, objects thathave special powers or are especially desirable and that people fight (to death) over, goblins, sprites, spells, shape-changers, mentors and magic weapons, etc.

It is worth noting that these magical elements often exist as part of a larger heroic and/or fantasy narrative that is directly or indirectly alluded to in modern-day storytelling. Nowadays, science and technology (with their origins in the magical properties of alchemy) are often presented as magical in their ability to transform reality. Comedy is often an inversion of the “hero with magical powers” and modern-day celebrities occupy the arena of “special” people somehow endowed with magic powers that enable them to be successful and/or especially beautiful and alluring.

As part of our evidence-gathering for our thesis on magic, we went to the Adage website and looked at the top five corporate ads that have gone viral in September (http://adage.com/article/the-viral-video-chart/visible-measures-viral-video-chart-09-05-16/305735/ ) and November of 2016 (http://adage.com/article/the-viral-video-chart/apple-drake-goes-viral/306923/).

Of those ten videos, seven clearly use magic in the way we describe above and it could be argued that the other three do so in an inverted or indirect way. Do have a look at them as we go through some of the examples. 

mqdefault.jpg

Let’s start with the No.1 viral ad for November 2016, Shell’s “Make The Future”. This is a clear example of projecting science as having magical properties in its ability to “magically” transform the world - at one point, even fracking gets a magic makeover! 

Another example of science as magic is The Windows 10 Testimonialsfrom September 2016, though this is done in a more straightforwardway (it is boring old Microsoft, after all!). 

Now to the Rouge Dior ad from September 2016: we start with Nathalie Portman virtually in silhouette- she puts a coin into a machine (a photo booth, which is our magic machine), a bright light suddenly comes on and she is transformed into this Dior glamour goddess strutting the streets of Paris. The humble passport photo cabin is actually a special place where magic Dior lipstick can be applied and the shadowy, “plain” Nathalie Portman undergoes her transformation.

Next, The Heathrow Airport ad from November 2016 has teddy bears magically walking through the airport and then becoming human (sorry for the spoiler if you haven’t watched it yet) and then the Heisman House ad is an Alice in Wonderland “trip” through a dream-like, magic house.

The Google app Nougat ad from September is interesting, as it would appear too be very down-to-earth and non-magical. However, there are clear magical elements involved: cooking is essentially an act of alchemy, when ingredients are combined and transformed to produce a new, special product. The ad also makes reference to women needing to multitask better - this is definitely amagical thinking myth, as in reality it has been proven that women are no more capable of multi-tasking than men. 

Lastly we have Apple Music’s “Drake vs. Bench Press” ad, which clearly falls into the comic, reversal of “hero-with-magic-powers”/“product that gives hero magic powers” category: the audience is primed in the set-up to anticipate that Apple’s music playlist will give the performer magic powers to lift incredible weights, but in actual fact they just distract him and he hilariously falls off the bench under the weights he is trying to lift.

The point here (if you haven’t got it already) is that there is evidence-a-plenty for using magical transformation, or at least magical elements in visual storytelling. These are a brilliant way capture the attention and imagination of your audience and the best ads do this time and time again, even in disguised or inverted form. They do this so much, that it can (and frequently does) become a cliché. This is because magic has been used in stories since time immemorial to bamboozle audiences. You therefore need other elements within which to cloak your good old magic transformation/properties/traits/powers story through to a very media-saturated modern-day audience.These are the qualities of wit, imagination and taste.

Accordingly, our next article in these series, will attempt to expose what wit, imagination and taste in storytelling are and, what they plainly are not. The trend nowadays (and has been for some time) is that emotion is key to captivating your audience. We will argue that emotion in storytelling is cheap, facile and too easy to achieve and explains why so many “emotional” ads and other narrative forms are so unmemorable. Wit, imagination and taste and much harder to achieve (and more subjective) and it is on identifying and gaining these qualities that we will focus our next article - do look out for it!  And call us today if you need to add magic to your marketing video materials. 

 

Shooting cars on a budget? F**k Yeah!

When we were approached by a client asking to produce a commercial for the Nano Coating car products on a fairly small budget, our initial reaction was 'No way!'. Every filmmaker knows that shooting cars is a very specialised area, in many cases reserved for experienced and famous cinematographers. Carmakers spend millions on producing high-end commercials and filmmakers’ fees are not the main cost. Here are the reasons why shooting cars is difficult and expensive.

The key problem when working with cars is the reflections – cars are a bit like mirrors that reflect not only all the equipment, including lights, camera and grip, but also the film crew and everything else around it. This makes it extremely difficult to get a clean image of the car without seeing the film set. 

To deal with this issue, there are three main solutions, all of which require significant resources:

1)   FILMING A CAR IN A STUDIO SET WITH SPECIALLY DESIGNED CLEAN ENVIRONMENT AND LIGHTING. 

Purpose built lighting is either covered with muslins to avoid reflections, or specially erected to give the desired and carefully shaped streaks of light on cars. Both hiring a studio large enough to fit a car, and the purpose built lighting that it requires makes set design very expensive.

2) FILMING IN AN ISOLATED BEAUTIFUL LOCATION, PREFERABLY USING NATURAL LIGHT. 

When you see car commercials, you often see the vehicles from an eagle's eye perspective driving through beautiful desert landscape against beautiful sunset! 

These outdoor shoots often take place during the so-called "golden hours" (sunrise and sunset) allowing for a limited time window only and being very dependent on the weather and cloud composition. 

Depending on the location, you may require costly filming permission, which might also involve blocking roads for the shoot as well as adherence to strict health and safety regulations. On top of that, you will also need to use special equipment to enable suitable camera movements (i.e. attached to moving vehicles, filming from drones or helicopters) which further aggravates the cost of filming.

3) USING COMPUTER ANIMATED GRAPHICS, 3-D CAD WITH MOTION SIMULATION AND SPECIAL EFFECTS.

This type of imagery certainly can avoid reflections, but it is time-consuming and requires expensive skills.

 

The financial means of our client could not provide for any of the above options. However, after careful consideration and brainstorming we decided to take on this project just for the sake of a new challenge. And here is what we produced:

AND THIS IS HOW WE ACHIEVED THIS:

1) Filmed in an urban landscape using wide shots and allowing for the reflection of surroundings

2) Covered some of the garage interior with white screens

3) Heavily relied on closeups to produce the required images

4) Used a trial and error method to avoid filming the reflection of the crew and lights

 

Imagine what we could have produced if we had the average car manufacturer budget for this commercial! Perhaps we would save some of this budget to hire Jeremy Clarkson!

 

If you are thinking of producing a video for your products, please get in touch! We are happy to provide free consultation on all your communication and video marketing needs and will find a suitable solution that is right for your business and your budget.


If you have got interested in the car protection products advertised in our clip, you can order them from https://nanodrops.co.uk

How to grow your business with YouTube

Why should YOU care about YouTube as a business tool

Online presence and social media play a huge part in promoting and building awareness of a wide range of businesses. But how do you make your brand or product stand out in the online world?  We believe that YouTube is one of the main business tools that can help you.

1. Global Reach

YouTube is the world’s second largest search engine and third most visited site, after Google and Facebook. Over four billion videos are viewed a day and eight out of ten 18-49 year-olds watch YouTube in an average month.  According to YouTube’s own statistics, the site has launched local versions in more than 88 countries. It is possible to navigate YouTube in a total of 76 different languages and thanks to YouTube videos you can gain access to a worldwide audience. Therefore regularly created and uploaded videos can help you reach both local and international audience. 

2. Higher Search Rankings: 

YouTube will help you achieve higher ranking in Google searches. Regularly created and uploaded videos help increase search engine optimisation (SEO), as well boost the overall authority of your website. There are two reasons why embedding a YouTube video on your website increases the chances of a higher search ranking in Google: first, YouTube belongs to Google, so all YouTube videos get additional score by Google searches. Second, the video by itself becomes unique content that is highly valued by not only Google, but by any other search engines.

3. It is Free and it Drives Traffic to Your Website:

It is completely free to create a YouTube channel for your brand.  It is a convenient hosting platform for your videos and you can share and embed videos placed on YouTube anywhere else on the web, including your own website, social media and emails.  If you haven't got your channel yet, we have put together this Getting started with YouTube Guide.  In this guide you will learn how to create an account and how to how to link your videos to your website, so that it is easy for people to find your business once they’ve viewed your video.

YouTube channel can be relied upon as an important tool to make your business more visible and memorable.  

Choosing format of your videos

There are many ways you can leverage the YouTube potential, but you always need to keep in mind the business objectives behind your video content.  The format of your videos will be driven by what you want to achieve with your videos. 

We have identified four most popular types of YouTube videos which organisations use to grow their business: 

  1. Showcasing products and services: this type of video gives you the opportunity to introduce yourself and your business to your client base, to show your products in their best light and to explain their benefits. 

  2. Raising brand awareness:  videos that help raise awareness of your brand. This kind of video is usually focused on being entertaining, keeping viewers’ attention and getting viewers to share your video. Whether you choose to create a corporate video or an entertaining advert, it is very important here to make your audience enjoy and want to continue watching your video. Brand awareness videos help to show your authenticity and personify your business by highlighting company's values and introducing some of the people who are behind the brand.

  3. Informative videos and tutorials:  one of the most popular types of video on YouTube, this is where you demonstrate expertise in a particular subject. People frequently search the Internet for answers to a whole range of questions and here is where you can help them with advice, knowledge and even solving problems. These videos are about building authority for your brand by sharing your knowledge, experience and expertise in a particular sphere.  It is not unusual to create video tutorials for your customers, where you explain how to use your products, or how to do things closely related to your product which both attracts new customers and improves engagement with existing clients.

  4. Client Testimonials:  another way to build trust for your business is to make videos of customer testimonials. Filming your customers’ feedback will help show the professional quality of your work and the efficacy of your product or service. 

 

As you can see, YouTube is full of opportunities for your business marketing.

Download our FREE Getting started with YouTube Guide.

If you are looking to create high quality video content for your business, please do not hesitate to get in touch with us at http://www.shortlisted-productions.com/contact-us/

 

 

 

White Screens, Public Speaking Tips and Better Ways of Talking to Your Customers

So you’ve got a message you want to put out to your existing and future clients?  
Now it’s time to discuss what would be the best way to deliver it!

Six Blocks of the Communication Process

6 blocks communicaation strategy.jpg

Hopefully you understand who your target audience is and why you want to contact them.  This will also drive your choice of communication channels and what your audience will be asked to do when they see your communication.  If you are a more advanced marketer, you might also want to measure the success of your communication.

For example, you might want to inform your existing clients of the recent additions to your product portfolio and hopefully make them buy more.  In this case you might choose to use an email newsletter sent to your client list.  This email will offer a download of the latest product catalogue or the research paper discussing the benefits of your new product or service.  These offers will be placed on the landing pages of your website, where you can measure how many downloads you have had, and further on you can measure how many conversions (sales) you have made as a result of this communication.

Or you might want to increase your brand awareness and generate new leads for your business.  In this case you may want to choose Facebook or YouTube advertising services, where you can define what type of audience you want to target, including age, location, interests, etc.  Having some giveaways at your landing pages will be a must, as it encourages prospect clients to register their contact details with you.  Again, you can set up measurement metrics to understand which channel delivered more leads. 

Finally, we would like to talk about the packaging of your content:  there are many options available and by no means should you try them all -  bullet point articles with photography, infographics, banners and videos!  However we would like to talk about videos.  

Lots has been said about the benefits of video marketing [refer to our earlier article], but somehow a lot of businesses shy away from videos, mainly for two reasons:  1) fear of looking silly on camera; 2) fear of ending up with poor quality video.  Secretly we all want to achieve that polished and professional look with a clean, white background in our videos, as seen in the ads of big brands.  We want to look confident and professional in our video presentation.  Well, we have a solution for you.  Let’s talk about white screens and public speaking training.

One of our clients Lin Sagovsky, the founder of Play4Real, commissioned us to produce a Public Speaking video series with a clean look and which draws attention to body language, breathing techniques while leaving enough space for graphics and animation.  The solution was to film Lin against a white screen.  

White screens allow you to achieve great looking videos. Having a clear background gives superb clarity, de-clutters your video and leaves space to add images and text.   This removes any distractions from your message thus gives you a better chances of influencing your audience.

You can watch the first two videos we created for Play4Real here:

http://www.shortlisted-productions.com/our-projects-all/watch-your-feet-play4real 

If nothing else, you might enjoy Lin’s training in public speaking, which will help you look more confident in your videos. 

Filming with white screen requires certain skills and equipment.  If you get the lighting wrong, it will not work out as you intend it, so make sure that you choose filmmaker who has experience of working with green and white screens. 

And please don’t be shy to contact us to discuss your communication needs.  We would be happy to help you choose the best packaging for your message.

 

We have upgraded to 4K and S-Log. What does it mean for our clients?

Exciting news.  We have just upgraded our equipment.  From now on we have got 4K and various cinematic styles recording capabilities including S-Log, CINE4 and other picture profiles.  But what does it mean for our clients?

4K

Let’s look at 4K or Ultra High Definition (UHD) resolution first. Resolution of your video is based upon pixel size, the amount of tiny little dots that can be captured, and then sent to your screen.  Of course the higher quality you capture at source then the better the image will look to the human eye. Standard High Definition is 1920×1080, just under 2,000 pixels, but 4K images have a resolution of 4096 x 2160 pixels.  The videos with 4K resolution have more realistic colors and higher frame rates.  It is more expensive to produce such videos, but it gives broadcast quality to your film.   

If your videos are designed for online use only, such as social media, email marketing or website, you might think that there is not much benefit from 4K as web is HD at most. But filmographers often use 4K because they can crop down to HD without loss of quality when they need to stabilise a shot or use some other effect that involves cropping or manipulation of the image.

If you are planning to show your videos on large screens, for example, in a theatrical setting, or produce it for television broadcast, 4k is the way forward.

“4K means better quality of picture”

S-Log and Other Picture Profiles

Now, let’s talk about various picture profiles.  Picture profiles are one of the tools which, together with colour correction and colour calibration, allows you to achieve the desired look of your footage. 

S-Log is probably one of the most important picture profiles.  Log was originally a technology for digitizing movie film, which then was adopted by digital cinematography to record, as much as possible, information captured by the large-format sensor.  S-Log captures footage with a wider colour gamut, dynamic range, and tonal range than traditional recording formats do.  Because of this, it provides far more flexibility in post-production to create the specific look you require.

“S-Log and other picture profiles open up a new realm of possibilities for handling colour and gives more creative possibilities”.

S-Log - before colour grading

S-Log - before colour grading

Shot in S-Log - colour graded

Shot in S-Log - colour graded

We are excited about our upgraded capabilities and the opportunities to improve the image quality of our clients’ productions going forward.

For now, we just grabbed our new equipment and tested it on a typical London weather gloomy rainy day.  And the initial results are not bad.  Watch our quick test of Sony A7S mark II in 4 K and S-log:

 

On storytelling: Where's the magic in your marketing?

By Hamish Nichols

Think of two of the biggest film and TV (or any medium, come to think of it) successes of the last decade or so: Game of Thrones and Harry Potter. Think also of the most highly-regarded and popular TV series of recent years, Breaking Bad. What do they have in common? Magic. Harry Potter, evidently, is a story about a school for magicians and in the Game of Thrones, magic is a thing that people initially do not believe in anymore, but is shown to really exist and gain in importance as the series progresses. As for Breaking Bad, surely it cannot be argued that it is  about magic? Well, yes, if one sees that the main character is a figure possessing special powers that enable him to concoct a magic potion (a drug) that nobody else can make in such a pure form and that everyone wants and is prepared to kill for. There is also a running Sorcerer's Apprentice relationship between Walter White and Jesse that drives the plot line of many of the episodes. 

Magic has played a huge part in literature over centuries and continues to do so today, even in a disguised form. Think how often tales are concerned with magic powers that people can gain (Star Wars), magic animals (often talking), magic and desirable objects or weapons (rings, light sabres)  and magical transformations into other people or animals or even objects. Think of Walter White in Breaking Bad, who regularly transforms into his drug-making gangster figure, "Heisenberg".  Of course, the Superhero genre is based on people who have special "magical" powers. Even comedies, which apparently have nothing to do with "magical" narrative forms are often spoofs of those very forms or use the same magical tropes, sometimes inverting them. Heroes are cowards, do not possess special powers, are inept (Inspecteur Clouseau, etc) but can still exist in magical worlds, for example in Groundhog Day, where a marmot magically makes time repeat itself until the hapless protagonist finally gets his act together and achieves his goal.

So why do we love magical tales so much? One answer must come from our childhood love of magical stories, our belief in the magical properties of certain objects and even in the magical power of our parents to create a safe, warm, sometimes scary and sometimes exciting world for us. Another factor, in my view, is that as we now live in a secular society (I'm talking Western society here) all the considerable energy we used to invest in believing in the Bible (another magical tale if ever there was one) has now to be directed elsewhere. 

So my main point is, if we are wondering why our advert, short film, corporate video or documentary lacks that certain something, maybe we should consider this: where's the magic? -  Literally. Does your protagonist (or antagonist) have special powers, or at least be trying to attain them? Does the object you are trying to sell/promote seem to have magical and desirable properties that will make people fight (to the death) over it? Do you have mentors, spirits, goblins and spells, however well they are disguised in a modern, down-to-earth form? Are there magical transformations of people, animals or places in your story, however metaphorical? If not, maybe this is the magic you need to put in to be able to captivate that awe-struck and child-like lover of magical stories that we all still carry within. May the magic be with your stories.

Why you need video for your content marketing

Video is not the future of content marketing, it's the present. It's happening right here, right now.

Whatever research or forecasts you look at, there is a clear indication that video content is overtaking all other types of consumer internet traffic. There is simply no easier way to satisfy consumers' needs for information and entertainment.   And most well-established and new businesses alike are picking up on this trend.  

The vast majority of B2B organizations already use video in their marketing campaigns and will continue doing so, as it delivers a positive return on their investment.  

Whether you are an experienced marketer or a small business owner, you might have already allocated a budget to your digital advertising content.Now, let’s talk why you should use your budget wisely and invest it in video content.

1.  Reach and spread

In terms of its reach, video is peerless:    

  • It can be used across all digital advertising channels, including email marketing and social media. Video also remains one of the key tools to improve your SEO ranking.
  • YouTube, the second largest search engine, already receives more than one billion visitors every month - a phenomenon that cannot be ignored by business owners.    
  • Most social media platforms have realised the potential of video content and both Facebook and Twitter have extended their functionality to host videos.    
  • With the steadily rising  trend in mobile video consumption, video has unprecedented potential to reach any customer segment.    
  • Video sharing is becoming a huge part of most social channels and can be a hugely effective way to spread your brand message.

2. Cost 

With the latest developments in digital filming technology, production costs have fallen significantly, making high value video content more affordable. You can check out the pricing packages which we offer to our customers on our website.

3. Engagement and ROI    

  • Video advertising is perceived as less intrusive and more entertaining than other forms of digital content.  Research also shows that people trust information presented in videos more than other forms and that Internet users often find that video information is both more memorable and more helpful in their decision making process.
  • In addition, video content gives a lot of flexibility in getting your message across:  
    • you can project a sense of personality and authenticity, making your customers feel that they have got to know you.
    • you can use storytelling and music, provoking feelings which make your audience engage with you on an emotional level.    
  • If you are still not convinced, here are some other interesting facts you should know:
    • Entertaining videos increase not only brand awareness and brand association, but also purchase intent.
    • After viewing a video ad, users are more likely to take some sort of action, whether that is to check out a website, get more information or purchase your product or service.
    • Having a video on a landing page of your website increases conversion rates, and people spend more time on a site when there is a video.
    • Including video in your emails triples the click-through rate.
    • Combining video with written content also boosts client engagement.  Video content is effective.  It drives traffic to your site, it improves brand awareness, client engagement and conversion rates. It sells. 

So what are you waiting for? Showcase your expertise.  Explain your products. Tell your story! Engage your viewers visually and emotionally.  

Contact us to discuss your video production needs and get advice on your video marketing strategy.

London History and Art - SE16

I have recently discovered that my local pub occasionally hosts the local community meetings, so I popped in for a Christmas party, and that's how I started collaboration with "I live in SE16" website and magazine.  It is run by enthusiastic community builder and blogger Mark Parker and supported  by local businesses. 

SE16 covers Bermondsey, Canada Water, Surrey Quays & Rotherhithe areas which have been undergoing significant regeneration in the past few years, but they also have incredible historical heritage.  The latest January 2016 issue of the magazine covers local art and these are the teasers that I produced to promote the magazine.  

Learn about the new concert hall in the Brunel Museum, the iron Bermondsey Lion, Christopher Jones memorial, the monument to Dr Salter and his wife, who was the first woman councillor in London and the first Labour woman mayor in the British Isles.  Even more you can read in the magazine which is now available in the area.

Eversholt Rail Group Corporate Video Assignment Completed

The harder you work on a project, the sweeter the celebration of its completion.  I have just finished working on a project which took quite a few months to shape and agree with the client.  

It was almost a year ago when I had a first conversation with Katariina Jalas, the HR expert and Executive Coach,  about the possible need for a recruitment video for the Eversholt Rail Group, which could be shown at campus recruitment events, as part of employee induction process, and at their website.   As a newly appointed Head of HR, Katariina immediately saw the potential of utilising social media for staff recruitment and cutting expense on inefficient recruitment agencies. LinkedIn proved to be the right tool for that, and the newly released budget was re-assigned to more critical marketing needs, and, with a bit of persuasion, the company was ready to experiment with the video content.  This is how I got involved in producing Eversholt's first ever corporate video. 

First of all, I need to say thank you to Katariina for trusting me as she knew well that my background was in financial services, and filmmaking came in much later.  

Second, huge thanks to Tricia Hayes who supervised my work at Eversholt, and who really impressed me by her attention to detail and high delivery standards.  So far I have not had clients who had film production experience, and it was a nice surprise that Tricia, due to her prior experience with video production business in Ireland, was so involved in the whole process. 

Finally, special thanks to Valerio Cilo who assisted me with the shoot and also helped me to move around all the heavy equipment.  I am looking forward to doing more work with you.

The videos have been presented at the Eversholt Rail Group's offsite on the 24th September 2015 where the management team also launched a new corporate slogan "Great Trains, Great People and Great Future".

Please read my article on the topic and watch my video - CLICK HERE


The Allure of the Railway Industry. How to make Engineering Sexy Again

What I love about my job is that filmmaking opens the doors to new industries and new subjects. This time my new client Eversholt Rail Group took me on a journey about the UK railway industry.

According to the government sources, investment in the UK rail sector is at record levels. Network Rail, the owners and operators of the UK’s rail infrastructure, have committed £38 billion to spend on operating and expanding the network between 2014 and 2019,  and the UK government will spend a further £9 billion. Scottish Ministers have also committed to a £5 billion package of funding and investment in Scotland’s railways during the same period. This is the largest investment in the UK rail sector since the Victorian era!

Such investment gives a promise of stable jobs, career progression and variety of employment options - at least for the next few years.  You would have thought that this will make it a no-brainer for both young graduates and experienced professionals to apply for jobs in the UK rail industry.   However, it is not that simple.

First of all, the rail industry is not an obvious choice.  If you are a finance graduate, would you rather work for an investment bank, an oil company or a rail company?  Many wouldn't even consider rail.

Second, it is widely acknowledged that there is a shortage of qualified engineers in the UK, and there is stiff competition for the talent.  Given the lack of large-scale engineering initiatives for decades, the rail industry faces the problem of a "generation gap", when experienced engineers might retire before they transfer their skills and knowledge to a younger generation.  Further aggravation comes from the lack of any significant advance in the diversity or make-up of the sector, particularly the gender gap, despite numerous campaigning initiatives over the past 30 years.  Finally, there is an image problem - engineering jobs are still regarded as not very prestigious.

The 2015 report ‘The State of Engineering’ shows that the shortage skills could cost the UK economy up to £27bn a year if companies fail to hire 182,000 engineers annually until 2022.  However, the interesting paradox is that while the UK does not produce enough engineers to meet the demand, graduates complain about tough competition for available jobs.  How is this possible?  

The experts believe that there might be 3 potential explanations (source link):

  1. Engineering companies require highly specialised skills which graduates don't have, and many companies do not make an effort to design relevant training programmes which require additional effort and investment, whether this is internal training or collaboration with educational institutions. 
  2. The large, well-known firms have the brand names and marketing budgets to attract huge numbers of applications, leading many graduates to end up fighting over the same few jobs. The smaller companies, struggle to get enough applicants just to fill their roles, let alone compete for the best engineers.
  3. Finally, engineering firms don't sell themselves well enough compared to other employers that target graduates, such as financial and professional service firms. 

My client, the Eversholt Rail Group, is one of those companies that breaks the vicious circle by taking an innovative approach in their recruitment and marketing strategies, and more importantly, changes the landscape of railway industry by its all-inclusive and supportive corporate culture, where every job and every career path are equally valued.  

I had the pleasure of meeting the new generation of rail sector professionals who talked about their jobs with such excitement and pride it made me feel envious.

I am glad that I could make a small contribution by helping Eversholt with the production of videos which showcase the company's nurturing culture, where people, their well-being and their future are as important as the business itself.

Watch this video and please get in touch if you are interested in video production services at jmariasova@gmail.com.

CLICK HERE TO WATCH VIDEO