What the Finance

"Money makes the world go round"… all around the world.

October 10, 2014

The Future of Payday Loans in the Wake of Wonga

Payday loansWe have all heard about payday loan company, Wonga, being forced to write off £220million worth of loans as well as scrapping the interest and charges for a further 45,000 customers.

The question is: do payday loans have a future?  From the end of 2014, the FCA (Financial Conduct Authority) will implement new regulations that may make running this type of business less attractive. For a start, they will cap interest rates to 0.8% a day to stop companies like Wonga charging terrifying APRs in excess of 5000%. They will also allow default fees of no more than £15 and restrict the total cost of the loan to no more than 100% of the original amount.

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July 10, 2014

The Threat of Cyber-Crime

Banks are becoming increasingly worried about the threat of cyber-crime. Last month, the Bank of England launched a new framework to access the risk to financial systems, by replicating threats being used by criminals, called CBEST. Why are they so worried and what exactly are they worried about are questions that will be addressed.Cybercrime

Andrew Gracie, Executive Director, Special Resolution Unit, Bank of England, gave a speech recently where he stated that, “low-level attacks are now not isolated events but continuous.” He, amongst others, fears that a large co-ordinated attack by computer hackers could cause the financial sector serious problems. Other members of the banking industry have warned that the risk of criminals accessing the computer systems, changing details, transferring money and deleting accounts is very real and could cause huge repercussions across the whole financial world if a large bank was to be seriously attacked in this way.

On 12th November 2013, a group of banks rehearsed this type of scenario with an operation they called ‘Waking Shark 2′ where they simulated the UK financial sector coming under attack from a hostile nation-state. They were generally pleased with the outcome as the various institutions involved shared information efficiently enough to prevent a disaster. However, some commentators were not impressed. Experts in the IT world stated that these sorts of tests should be carried out more often and that they should prepare for more covert attacks. In 2012, computer security firm, Trustwave, conducted some research that showed that, on average, it took firms around 210 days to realise that they had been the victims of a cyber-attack. The frequency and variety of these attacks has frightened the banks into being more vigilant and prepared to deal with these threats.

Cyber-attacks on banks come in many forms. The main ones which were worrying banks last year were DDoS attacks, spear phishing, ransomware, mobile malware, insider threat, cyberwarfare and retailer breaches.

DDoS (distributed denial-of-service) Attacks
This type of attack involves criminals stopping a machine or network from working for the desired users. One of the uses for this technique is to shut down internet banking services and use the distraction and problems this creates to make information seeking calls to the already overstretched call centres.

Spear Phishing
By sending emails from the accounts of trusted members of staff or departments in a company, the ‘spear phishers’ can ask the employees and/or customers for their login details to access restricted areas of the network.

A piece of software is used to restrict access to a computer or network until a ransom is paid.

Mobile Malware
The increased use of mobile phone banking has added to the number of channels criminals can attack from and putting malware on mobile phones is a way they do it.

Insider Threat
Cyber-threats don’t just come from external sources, they also come from employees or ex-employees of the banks. These people may have passwords and access to privileged information.

Retailer Breaches
Banks are finding now that retailer transactions at the point of sale are vulnerable to attack, especially small retailers, because of weaker security systems. These channels are another way criminals can use to access the banks.

Increasingly, threats are coming from self-proclaimed ‘hacktivists’ and nation-states rather than criminals who want to steal money. It is these large co-ordinated attacks that cause banks the most concern.

When cyber-attackers use more than one method to attack a bank at the same time it is called a ‘cross-channel’ attack and these are becoming more frequent. Experts in the industry have suggested that analysing large amounts of data across the whole of the banking industry will help to weed out this type of tactic and that is what the Bank of England is attempting with its new framework which it hopes will be widely used across the industry.

June 16, 2014

Meeting the World’s Growing Energy Needs with Renewables

oilrunoutIf you were asked to explain the benefits of renewable energy production, chances are you would first say the obvious thing – it is renewable! Aside from the many other benefits, it is the fact that you have an inexhaustible supply that makes renewable energy such an attractive proposition, and in the coming years, this is one benefit that will become much more relevant to the energy-hungry world.

The world is quickly running out of oil. Oil is harder to find and extract with each passing day, and new oil field discoveries are an increasingly rare occurrence. It is estimated that there is enough oil in the ground to last 40 years, and that by 2040 production levels will only be 20% of what we consume today. This problem is compounded by the fact that the global energy demand is likely to rise by 35% by 2040.

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March 30, 2014

The Pros and Cons of Bitcoin

BitcoinWith political goings on destabilising economies around the world and currencies rising and falling because of that, is Bitcoin the way forward in a global market? This software based form of online payment is growing in popularity with more and more businesses accepting it as a form of payment. Companies like Virgin Galactic, WordPress and Overstock.com are already accepting Bitcoins and there is talk of eBay and PayPal supporting Bitcoin transactions too which all sounds very promising for this new online currency. However, some people still have reservations about its usefulness.

The Advantages of Bitcoin

One of the main reasons people are attracted to accepting Bitcoin payments is simply that the transaction fees are lower than for processing credit card payments. There is also the benefit that the value is the same all over the world so there are no currency conversion complications involved and no need to go through the banks. In addition, the fact that Bitcoin is not affected by the valuation fluctuations of national currencies makes it a safer option in some ways.

The Disadvantages of Bitcoin

Although, as stated above, Bitcoin is not affected by currency fluctuations, its value is affected by the level of demand. Obviously, the higher the demand for Bitcoins, the more they are worth so a sudden influx of Bitcoins into the market could significantly devalue them overnight. Researchers at Stanford University also point out that, if a person is solely using Bitcoins as a form of payment, they are going to find things difficult as it is still a limited number of businesses that are accepting them. There are countries in the world that do not even recognise Bitcoins as a currency.

People are also worried about possible technical glitches that could result in Bitcoins being lost through computers crashing or contracting viruses. Security is also an issue in the way that it is very difficult to recall Bitcoin payments if products/services are not delivered as promised. These concerns are, perhaps, making people unwilling to invest in Bitcoins at this time.

The Future of BitcoinBitcoin ATM

Some people may have reservations about using Bitcoins as a major form of payment at the moment but it is entirely possible that this situation could change in the future. As an increasing number of businesses accept Bitcoin payments and the accessibility and reliability of Bitcoins improve for the average consumer it is likely that its use will become more widespread. There is already talk about Bitcoin ATMs that will allow users to take out local currency all over the world from their Bitcoin accounts without needing a card or worrying about bank charges or exchange rates. With developments of these kinds it seems likely that Bitcoins usage will increase in the future.

February 11, 2014

Paypal’s President’s Credit Card Used In Shopping Spree

credit card fraud, PayPalPayPal President’s credit card details were stolen, his card was cloned and consequently used to finance a shopping spree.

Irony was not lost on David Marcus as president of PayPal -the online secure payment service- who said that his credit card was probably ‘skimmed’ at the UK hotel he was staying at or at a merchant he visited during his stay in the UK.

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January 6, 2014

Personal Finance: Best Fixed Rate ISAs 2014

imagesIn the UK anyone over the age of 16 can save money in an ISA and pay no tax for the interest accrued. In 2014 the tax-free allowance limit is £5,760.

There are two main forms of ISA:

  • the Cash ISA lets you withdraw money at any time,
  • while the Fixed Rate ISA is for those who do not mind locking their money away.

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December 23, 2013

Credit Card Traps and How to Avoid Them

Credit Card Traps, Predatory LendingCredit cards give us the freedom to purchase things whenever we desire. They often come with a range of attractive benefits and rewards that encourage us to spend, and the “buy now, pay later” incentive makes them very tempting to use – even if we have the cash to pay outright.

When used properly, credit cards provide significant financial freedom, but as this guide shows, there are a number of traps that are all too easy to fall victim to. If you want your credit card to work for you and not against you, make sure to avoid these traps.

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October 29, 2013

Fed Examiner Fired Over Her Goldman Sachs Findings

segarra v Fed over Goldman's malpractices

The back story of the most recent Wall Street scandal is as follows: In October 2011, the Federal Reserve Bank of New York hired a senior examiner, namely Carmen M. Segarra, to review the Legal and Compliance Division of Goldman Sachs.

As her audit proceeded, Segarra concluded that Goldman Sachs had failed to address conflicts of interest when advising clients. The patchwork of policies that Goldman Sachs allegedly had in place was pointless and fell short of the Fed’s requirements.

Moreover, Segarra later found that Goldman Sachs fabricated information about performing due diligence on a number of transactions.

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October 3, 2013

The Investec Hot 100 results are in

Investec Hot 100The Investec Hot 100 is turning up the heat this year. Perhaps most startling is the widening of the north-south divide, with even more of the UK’s fastest-growing companies based on their average growth in profitable sales coming from the south east of England.

The top spot is taken by a social enterprise, Potensial, which supports adults with learning difficulties. It was founded in 1989 by the married couple John and Rachel Farragher, who now own 42 care homes throughout the north of England and Wales. In the last four years their profits have gone from £169,000 to £2.4 million.

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September 2, 2013

Economy Latest News: UK Banks cut 189k jobs

job-cuts-2913RBS, HSBC, Lloyds and Barclays have announced that they will employ just over 600k people worldwide by the end of 2013, however, this is a sign of the times since this is 24% less than their peak in 2008 – just 5 years ago.

Due to the European debt crisis, investors are increasing the pressure on banks to reduce fixed costs as they continue to post lower revenue rates each year. Recently the banks went through a phase of making bigger, more significant redundancies, but these new figures show that this phase has not quite finished yet.

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