By Neil McCluskey, Head of Corporates, Barclays, Jersey
By all accounts, 2016 was the year that defied prediction. Across the world the public has defied pollsters by voting for change, whereas corporates have been much more cautious.
This is a trend that I think will continue through 2017. The public is keen to embrace change, particularly in the form of new technologies, but corporates are more reluctant, given the current global macro-economic uncertainty, to take on new challenges or risk in order to grow.
This trend manifests itself in both retail and corporate banking. In retail, we must keep pace with our customers’ desire to pay for everything quickly, to have instant access to information about their finances and to do everything possible on their smartphone.
In the UK, money spent by contactless customers has increased significantly in the past year, in part thanks to the increase in the limit from £20 to £30.
Silver spenders
What's perhaps more surprising is who is leading the charge in this spending. It’s not, as you might imagine, young people, who are traditionally more at home with new technology.
The take-up of ‘touch and go’ continues to be highest among Britons over 60 – the 'silver spenders' – with the number of users up 114 per cent, more than any other age group. Usage is climbing so quickly in this group that the number using the technology is now greater than those aged 18-25.
While the Channel Islands typically lag behind the UK in the uptake of services such as this, I predict that 2017 will be the year in which all businesses see the benefits of contactless banking technology, including the latest trend for payment options via wearables.
In the corporate world, the pace of change is slower. My view is that in 2016 many corporates held onto what they had in the face of huge uncertainty. In the Channel Islands there has been uncertainty surrounding the impact of the EU referendum result.
However, as this uncertainty decreases in 2017, I predict that more businesses will actively seek finance for growth projects. As a result, we will see considerably more lending from banks as this demand increases.
Last year there were further increases in the amount of deposits held in the Channel Islands – more than £209.7bn is currently held in the islands' banks. With 29 banks licensed in Guernsey and 32 in Jersey, the market is well served with options.
If, as predicted, there is more appetite for growth from companies doing business in the islands, we will likely see the level of deposits continue to increase.
Despite uncertainty in the global markets, the islands’ position as safe and secure jurisdictions should ensure that there isn’t a great deal of change in the number of banks present in the islands.
There’s always the possibility that some banks will seek to consolidate their operations, as we have seen some do early last year. However, the trend I believe we will see become more prevalent is for banks to invest in the islands, including through job creation.
Cyber security
This year will bring serious challenges too. Cybersecurity has been a growing threat to the global finance industry in recent years, and in 2017 it will become the primary threat to business. All businesses will need to address it and the banking sector is, in many ways, leading the field.
I predict that we will see more attacks in 2017 and that these attacks will increase in sophistication. Preventing cyber fraud in 2017 will be a team effort. As information and finance is now primarily transferred digitally, everyone involved in your business, and across your supply chain, will need to be aware of the risks and the right ways to minimise them.
Data security is one of the Channel Islands’ greatest assets. Any information leak could have an impact on the islands’ reputation in the eyes of international finance industry professionals and undermine one of our key selling points.
It is for this reason that in 2017 we will see banks being more proactive in the business community, forming partnerships with government – and with organisations such as Digital Jersey and the Digital Greenhouse – to promote cyber fraud awareness and support entrepreneurs and businesses looking to grow, expand and diversify.
These partnerships, such as the new Barclays Eagle Lab at the Jersey Library, will become hubs for entrepreneurship in the islands and give banks the opportunities to lend more and help our economies grow.