Podcast ¦ Credit Shift: News Update Insurance Companies’ Duty of Care, Barclays & Tesco Bank Merger, Fintech and AI News

Summary

In this podcast episode, Paul Sweeney, Co-Founder and Chief Strategy Officer at Webroot, and Cormac O’Neill, CEO and Co-Founder, discuss recent news stories and trends in the credit industry. They cover topics such as discretionary commission arrangements, the pausing of guaranteed asset protection insurance sales, Barclays taking over Tesco Bank, buy now pay later companies, card processing fees, embedded finance opportunities for payment providers, the high number of cardholder disputes, and the rise of marketplaces in global e-commerce sales.

Key Points

• Discretionary commission arrangements (DCAs) where brokers increase their own level of commission by altering the interest on products or services sold have resulted in numerous complaints.
• The Financial Conduct Authority found that only 6% of premiums paid in guaranteed asset protection insurance claims were ever paid out, leading to a pause in its sales.
• Barclays’ takeover of Tesco Bank presents an opportunity to leverage data sources and offer loans while managing loan risks.
• Affirm, a buy now pay later player, reported strong results with increased card volume and number of active users. Delinquencies were flat, indicating responsible usage.
• UK retailers spent over £1.2 billion on card processing fees in 2023, leading to calls for fixed fees on larger transactions.
• 82% of merchants would change payment providers if their software vendors or internet service providers offered similar solutions, indicating low brand loyalty.
• An average of 5.7 disputes are raised by each customer every year in the USA, highlighting the need for better payment and returns processes.
• 35% of global e-commerce sales now go through marketplaces, demonstrating their growing significance and the need for retailers to manage multiple platforms.
• The adoption of open banking has been slow, with only 11% of British consumers being active users, despite its potential benefits.
• Open banking payments are increasing, but the overall number is still relatively low, hindering open banking’s transformative impact.

Key Statistics

• Over 260,000 complaints were registered due to discretionary commission arrangements (BBC program)
• Only 6% of premiums paid in guaranteed asset protection insurance claims were paid out (FCA)
• Barclays’ takeover of Tesco Bank affects over 5 million customers and 2,800 employees
• Affirm reported a 24% increase in transactions per customer (Q4 2023)
• UK retailers spent £1.27 billion on card processing fees in 2023 (British Retail Consortium)
• 82% of merchants would change payment providers if offered similar solutions by other vendors (Air Wallach survey)
• An average of 5.7 disputes are raised by each customer every year in the USA (Chargeback 911)
• 35% of global e-commerce sales now go through marketplaces (Retail X)
• 11% of British consumers are active users of open banking, up from 4% (Podcast)

Key Takeaways

• Discretionary commission arrangements can incentivize brokers to prioritize their own commission over the interests of buyers.
• The pausing of guaranteed asset protection insurance sales indicates the need for fairness and value in financial products.
• Barclays’ takeover of Tesco Bank presents opportunities for leveraging data and expanding loan and deposit offerings.
• Buy now pay later companies like Affirm are experiencing growth, but responsible usage and managing delinquencies are key.
• Card processing fees continue to rise, prompting calls for alternative pricing structures.
• Merchants show low brand loyalty to payment providers, signaling the importance of customer-centric solutions.
• Disputes raised by customers highlight the need for improved payment and returns processes.
• Marketplaces are significant players in global e-commerce sales, requiring retailers to effectively manage multiple platforms.
• Open banking adoption has been slow, hindering its potential benefits for data sharing and transaction costs.