The future of finance - as imagined by Ryanair

No frills finance is taking off - and while many have an opinion on allocated seating, printing your own boarding pass and paying for food on-board, the model remains simple but thrilling.

When Easyjet, Ryanair and Jet2 launched they shook up an airline industry dominated by high prices and package holidays. They were able to offer a direct and simple way to get a better rate on your seat using the internet. They offered a new way to travel, giving people unprecedented access to air travel on a scale never seen before. While many have an opinion on allocated seating, printing your own boarding pass or paying for food on-board, the model was simple but thrilling – give the customer a low-cost, destination rich, frill-free option and see if it flies. It did, and became the new normal.

Fast forward 20 or so years, and something similar is happening in finance. While a few canny and charismatic entrepreneurs drove the adoption of low cost flying, it is a combination of people power and the latest technology that is revolutionising finance in this digital age - taking the frills out of finance but putting great rates back in. An example of this would be the peer-to-peer finance industry, which innovation specialists Nesta calculate to be currently worth a staggering £482 million in 2013 alone. Not enough to topple High Street banking yet, but certainly enough for mainstream customers to take notice. Peer-to-peer lending businesses have taken a very old model in banking, which is essentially lending and borrowing, and modernised it through online platforms to offer a more direct, open and transparent way to lend and borrow. It is a product that offers reward balanced against risk as platforms aim to diversify the risk, only lend to most credit worthy borrowers and some platforms even have safeguard funds in place in case of a default. There is also a social element as many lenders appreciate the community spirit involved as they are helping people finance a new car or home improvement or supporting a business to grow through a business loan. The return for enabling this is personal, and provides a financial incentive which currently offers returns two or three times higher than the rate of inflation. Meanwhile, high street banks offer savings rates so low that in real terms its costing people to save money.

In October 2013 the industry warmly welcomed the draft measure outlined by the Financial Conduct Authority (FCA) for regulating peer-to-peer lending. Put simply, regulation will help improve trust in an industry that is still growing and open it up to a whole new consumer audience. How they are regulated is one of the most common questions asked of peer-to-peer lending platforms, as there is an added level of perceived safety that regulation seems to bring to any industry. Some have speculated that regulation may stifle the creativity of those currently operating in the sector, but the majority believe it will normalise and legitimise these more democratic forms of finance.

With all businesses more accountable and connected to their customers than ever before, repairing the damage caused by the financial crisis is proving tough for traditional financial institutions. While there will always be a desire to have a transaction based relationship with banks, the increasing popularity of alternative finance options cannot be ignored. Startling growth rates of 200 per cent year-on-year have been predicted for the peer-to-peer lending platforms over the next few years, helped on by regulation and other benefits that this allows like tax free savings in ISAs. The take-off of peer-to-peer lending has been steep but it’s for many that regulation will bring about a smooth landing, with higher volumes of passenger numbers in 2014.

Giles Andrews is CEO and Co-Founder of Zopa

Could the principals of budget aviation be applied to finance? Photograph: Getty Images.
Giles Andrews is CEO and Co-Founder of Zopa
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Does it matter that Westminster journalists have a WhatsApp group?

Well yes, a little.

“#WESTMINSTERBUBBLE JOURNOS CHAT ON #WHATSAPP. NOW THAT’S INTERESTING,” writes the alt-left site Skwawkbox.

Its story refers to the fact that Westminster journalists have a WhatsApp group chat. The site finds this sinister, suggesting the chat could be used to “swap info, co-ordinate stories and narratives”:

“It’s a technology that worries Home Secretary Amber Rudd, in case terrorists use it – but its use by the Establishment for 1984-style message co-ordination would worry many people just as much.”

Skwawkbox’s shock was mocked by lobby journalists and spinners:


Your mole, who has sniffed around the lobby in its day, also finds the suggestion of journalists using the app for terrorist-style collusion a little hard to swallow. Like every other industry, journos are using WhatsApp because it’s the latest easy technology to have group chats on – and it’s less risky than bitching and whining in a Twitter DM thread, or on email, which your employers can access.

But my fellow moles in the Skwawkbox burrow have hit on something, even if they’ve hyped it up with the language of conspiracy. There is a problem with the way lobby journalists of different publications decide what the top lines of stories are every day, having been to the same briefings, and had the same chats.

It’s not that there’s a secret shady agreement to take a particular line about a certain party or individual – it’s that working together in such an environment fosters groupthink. They ask questions of government and opposition spokespeople as a group, they dismiss their responses as a group, and they decide the real story as a group.

As your mole’s former colleague Rafael Behr wrote in 2012:

“At the end [of a briefing], the assembled hacks feel they have established some underlying truth about what really happened, which, in the arch idiom of the trade, is generally agreed to have been revealed in what wasn’t said.”

Plus, filing a different story to what all your fellow reporters at rival papers have written could get you in trouble with your editor. The columnist David Aaronovitch wrote a piece in 2002, entitled “The lobby system poisons political journalism”, arguing that rather than pursuing new stories, often this ends up with lobby journalists repeating the same line:

“They display a "rush to story", in which they create between them an orthodoxy about a story – which then becomes impossible to dislodge.”

This tendency for stories to become stifled even led to the Independent and others boycotting the lobby in the Eighties, he notes.

Of course, colleagues in all industries have always communicated for work, social and organisational reasons in some way, and using WhatsApp is no different. But while Skwawkbox’s “revelation” might seem laughable to insiders, most people don’t know how political journalism works behind-the-scenes. It touches on a truth about how Westminster journalists operate – even if it’s wrong about their motive.

I'm a mole, innit.