Fintech Insider Podcast by 11:FS
00:01:27 · Pranav Sood, Ross Gallagher, Valentina Kristensen
[00:01:27] S2: Extremely. I can hardly contain my excitement. [00:01:30] S0: Oh, okay. We'll see if you're saying that at the end. And making welcome return visit, we have Valentina Christensen, director of growth and comms at Oak North. Welcome back, Val. [00:01:40] S3: Thanks. Thanks for having me back. [00:01:41] S0: It's great to have you as always. Okay. Let's get started. So our first story today comes from AltFi and concerned RBS offering funding and mortgage breaks to address the coronavirus. So as the illness ravages the global economy, the bank has announced plans to mitigate its impacts. Customers affected by the virus will be eligible to take a three month holiday from their mortgage or close their fixed savings accounts early. Other banks are expected to roll out similar mortgage policies soon. And in addition, NatWest has opened a £5,000,000,000 fund to provide SMEs with emergency loans and and repayment breaks. So there's so much to unpack here, I think, particularly around coronavirus, it's such a rapidly evolving story. But this seems like a good move, something we can get on board with, and I think RBS getting out in front.
00:02:35 · Sarah Kocianski
[00:02:35] S1: Yeah. Well, do you I'll take mortgages and you take SMEs, Val. How does that sound? Sounds good. Yeah. No. I was just gonna say it does sound like a good a good thing, but you've gotta bear in mind that most of these banks already had a three month holiday for mortgages for anybody affected by Storm Dennis. So they're just expanding that policy. I think it's also worth pointing out that with the current rates, the interest rates being as they are, it's not really that big of a deal for the banks to be offering these holidays anyway. They're not going to be losing that much. More interesting to me is the the kind of the other stuff they're doing. So Lloyd's is giving customers emergency access to fixed term savings accounts, which we mentioned. But it's also deferring loan payments. It's waiving fees on missed credit card payments. It's allowing customers to deposit larger checks online for digital scanning to take up larger amounts of cash. So it's a really holistic policy, which we have to applaud because it's doing amazing things for people's... I don't think it's doing amazing things for people's finance. I think it's doing amazing things for people's presence of mind. There's so much anxiety out there. There is so much kind of worry. If you can just take the idea of the mortgage repayment away from that, it's gonna make people, you know, feel... Even if it's a tiny bit better, that's that's gotta help right now. The one thing that is interesting is it says, you know, a lot of these things are said, if they if they are affected by it or if they cannot get to a branch. Now with Storm Dennis, it was quite clear who had been affected by it. But I don't know if Lloyd's is gonna require you to hand in a GP's note before they give you these breaks. That would be interesting.
00:03:59 · Valentina Kristensen, Sarah Kocianski, Ross Gallagher, Pranav Sood
[00:03:59] S3: I mean, I think, you know, it's... If you think about what they said yesterday in the budget. Right? So with Thursday today, the budget was yesterday. As you say, Russ, it's sort of evolving every single day, so who knows where it'll be by by Monday when when the show comes out. But, I mean, I think if you look at, you know, what they said, so, you know, you... If you if you think you've got coronavirus, you're working in retail or leisure, which there's not really an option to sort of work from home. You know, you have to go on to statutory sick pay, is £94.25 a week, right? Which you can't really pay a mortgage on that in in most cases, I imagine. So, you know, there's also a need to kind of recognize that and then sort of address that on on that side. On the SME side, I mean, look, I think, again, yesterday, the the chancellor laid out a number of really good initiatives to to support small businesses, everything from sort of business rates, freezing, you know, the tax on all of the wonderful alcohol we're drinking. And Why [00:04:55] S1: does that affect SMEs? [00:04:56] S3: Well, so if you think about, like, you know, small businesses like pubs and things like that, I mean I mean, I guess people would be more inclined to go to the pub now, you know. I just [00:05:04] S0: don't know if that's the the behavior we're trying to encourage at the moment, is it? [00:05:07] S1: On on a... Sorry. [00:05:08] S2: Was gonna say there's actually a special relief for small pubs that he announced yesterday as [00:05:11] S3: well. That is... Yeah. True. That's From one
00:05:11 · Valentina Kristensen, Pranav Sood, Sarah Kocianski, Ross Gallagher
[00:05:11] S3: well. That is... Yeah. True. That's From one [00:05:13] S2: of of the... One of the many highlights of the budget that we [00:05:16] S1: had to call out. Ignore the fact they did a fintech... They announced a fintech review. We're all focusing on the alcohol in the pubs. That's what's important right now, people. [00:05:22] S0: Welcome to fintech... [00:05:23] S3: And the embossagement of the the tampon tax finally. That that was great, as well. Not not necessarily affecting SMEs. But, but then also, obviously, the the the sort of, emergency coronavirus, loan scheme, so kind of loans up to about 1,250,000 to cover working capital, another 200,000,000 to the British Business Bank to support scale ups. I think the kind of key thing here is just making sure that these processes come into effect, you know, well, because if it's sort of weeks and weeks until they they actually have a proper process aligned for how banks can actually benefit from these things and how they can then start implementing them to do loans, then by that point, you know, coronavirus could have kind of come and gone and and the damage has been done. So really, really important that these things come into effect as quickly as possible.
00:06:10 · Pranav Sood, Ross Gallagher
[00:06:10] S2: Sorry, I was gonna say, think in ordinary circumstances, SMBs live on the edge. I think every year roughly 50,000 go bust just because of late payments. I think I saw a number that said around 50 of small businesses are cash flow positive every month in a normal year. And having a shock like this impacts them in so many ways. The revenue hit, the productivity hit, the costs Val was talking about as well, sick leave, parental leave, all these things that you don't factor in. And going back to the actual story, I think it's fantastic to see the banks taking some action. But I think Val's point is really the salient one which is it needs to happen fast because rate cuts and all the stuff that you do at the economy wide level, it takes time to filter down and I think that's not really what small businesses have got right now and so [00:06:55] S0: Well, I think my worry on that is that, you know, what we've seen in terms of the rate cut and the types of measures that we've just described, I don't necessarily think that they're going to have the impact in terms of shaping behavior in the short term because people are panicked, it goes back to Sarah's original point around anxiety, and people are going to act into that. I think what we're probably doing now is sort of laying the the groundwork, at least with the base rate cut, building a bit of resilience into the economy so that once the virus has peaked, it can bounce back about a little bit quicker.
00:07:25 · Sarah Kocianski
[00:07:25] S1: I just I mean, be honest with you, I just I just don't think it's enough. I mean, it's bad enough if you're an SMB, you know, unless you're making toilet roll, in which case, I suspect you're fine. Or hand sanitizer. Or hand sanitizer. But if particularly if you are in, you know, hospitality or travel industries, imagine you're running a small cafe or a restaurant, we end up with a situation like, you know, God forbid, like Italy and everything has to close. I'm I'm just not sure it'll be enough. And and the bigger point, I think is, yes, my concern is for people and for small businesses. But with the markets the way they are, where are the banks finding this money? How are they going to be able to, you know, what impact is it going to have on the banks in the long term in the fact that, know, Lloyd's is stumped up, what is it, billion? NatWest has got 5,000,000,000. Yes. Some of that money is coming from the government, but the bank's capital reserves have been rinsed over the last week. So I wonder that's not it's not the concern for right now. The concern for right now is individual people. But with the looming fears of like crashes and Black Mondays in 2008 in the back of my head, I wonder how sustainable it is for the banks and how resilient they can be.