December 2019

Posted by Anton Murray Consulting on . Posted in 2019

2019: Year In Review

As 2019 draws to a close, we take a quick look at some of the big, global stories affecting financial services this year.

Hong Kong Protests

Hong Kong has been marred by many months of protests this year, which have grown ever more violent and detrimental to retail, tourism and commercial sectors. Hotel occupancy rates for October were an estimated 40% less than the same time last year. Protesters have called on police to be held accountable through an independent inquiry and also for Hong Kong SAR CEO Carrie Lam to resign. But the police have also documented the use of Molotov cocktails, bows and arrows and other dangerous weapons directed at them.

With Hong Kong now in a recession, businesses have been affected greatly by the chaos. Many firms are asking staff to work remotely or reduce their time in the city. As the situation becomes more tenuous and a resolution seems unlikely in the near term, many global companies will invariably look to other regions such as Singapore for economic and political stability.

US-China Trade War

In a political and economic power show of yesteryear, the US and China have been ‘shirt fronting’ each other for most of 2019. They have engaged in a trade war and an economic tussle that a number of commentators have feared could turn to military conflict. Thankfully this seems fairly unlikely given the mutually assured economic and physical destruction that would be inflicted on both countries, and the rest of the world. But tensions in Hong Kong have further amplified conflict between the two powers with the US showing support for protestors, and desiring a swift, fair solution to the turmoil.

Another component of the trade war is the growing artificial intelligence battle. Both governments are utilising AI and collecting data for their own means, but more importantly is the growth of this technology in the private sector. Much has been written about Huawei and its potential links with the Chinese government. Huawei is at the forefront of 5G technology globally, but has faced backlash from the US and Australian governments who have banned the company from taking any part in the roll out of 5G.


The United Kingdom has been trying to leave the European Union for what seems like an eternity. The original deadline of 29 March 2019 has come and gone, as has Theresa May’s prime ministership. Ms. May fell on her own sword after her deal, which included a backstop to restrict border barriers between Northern Ireland and the Republic of Ireland, failed to pass through Parliament.

New British Prime Minister Boris Johnson (a staunch ‘Leave’ supporter) has insisted he will have the UK out of the EU even without a deal. Johnson’s amended deal, which includes some goods tariffs between Northern Ireland and the Republic of Ireland, and largely unchanged content, was set for Parliament on 19 October. The PM managed to secure an early election, where he will seek to gain further seats to support the passing of legislation needed to allow the Brexit deal to proceed. The saga has caused widespread political and economic instability in the UK and Europe. The UK does a huge amount of trade with countries in the EU and the continued uncertainty has been detrimental to the flow of capital investment, people and goods. Mr Johnson will be keenly awaiting the general election result so he can implement a swift exit.

Australian Financial Services Royal Commission

The 2019 Financial Services Royal Commission revealed both improper behaviour and a profit-over-customer mentality that has consumed the financial services industry in Australia. The Royal Commission also highlighted the ineffectiveness of the current regulatory framework and enforcement regime. In his findings from earlier in the year, Commissioner Hayne stressed the cultural toxicity of the industry and many of its participants stating, “Providing a service to customers was relegated to second place. Sales became all important”.

In response to the Royal Commission, the government stated it will be expanding the Federal Court’s jurisdiction to criminal corporate crime as well as increase funding to ASIC to improve the regulatory body’s ability to enforce and prosecute. In recent months Westpac has become one of the most prominent players to disclose the mounting cost of remediation, compliance costs and possible fines that will affect its business into the future. They recently added a $340 million post-tax cost related to a potential AUSTRAC penalty that pushed the total cost of its alleged misconduct to nearly $2 billion since 2017.

From everyone at Anton Murray Consulting, we wish you a very happy and safe festive season. As always, please reach out to a member of our team if we can be of any assistance over the Christmas break, and keep an eye on LinkedIn, Twitter andFacebook for updates on career opportunities and industry news during the holidays.

November 2019

Posted by Anton Murray Consulting on . Posted in 2019

Afterpay has enjoyed a stellar ride this year both in terms of share price and customer acquisition. However, a recent slump in performance, increased competition, and scrutiny from regulators like AUSTRAC, are changing the outlook for Afterpay.

Beyond these market and business factors, a growing move towards the ‘buy now, pay later’ model has also played its part. Whilst it is true that ‘layby’ and other such concepts have operated for some time, Afterpay has been at the forefront of formalising the idea into a saleable and scaleable business.

Part of the negativity towards ‘buy now, pay later’ (BNPL) services is that they encourage spending behaviour beyond the means of the individual. Australians hold large amounts of personal credit card debt, but at least there’s a fairly robust process that goes into applying for, and receiving, a credit card. Services like Afterpay allow users to pay in instalments over time with a certain limit set on specific purchases. Canstar has warned that even if consumers purchase within their limit, the repayments can be similar to large credit card debt or a personal loan for an item like a car. This doesn’t take into account the extra costs associated with missing payments, which can certainly increase the pain for GenY consumers for whom the service is seemingly targeted.

Afterpay has had to field the most scrutiny as the first mover within the BNPL model, and they now also face increased pressure from new entrants such as HummSezzlezipPay and FlexiPay. We’ve also recently seen big players such as Visa and MasterCard starting to join in. This could prove important to Afterpay who began their US expansion this year. America is where the consumers are and of there’s a big pay day for the business that navigates that terrain the best. Added to this is the power the big players have in the market already with brand recognition and incentivised credit card schemes that might dissuade consumers to switch to a new platform.

There is certainly more to play out in the BNPL space, particularly in the US. Afterpay have truly disrupted the solid credit card market in Australia. It will be interesting to watch how regulators continue to monitor this area, and just how big ‘paying later’ will become.

October 2019

Posted by Anton Murray Consulting on . Posted in 2019

On 4 October the Reserve Bank of Australia released their biannual Financial Stability Review, a report which evaluates the state of the domestic and global economy, considering various risks and providing a detailed analysis of various topics. One of the key areas of focus for the October Review was climate change and the risks to financial stability that it carries. The RBA highlighted three key risk types: physical, transitional and liability risks.

Physical risks will be felt the most by insurers and lenders. Insurers have already seen a marked increase in insurance claims for natural disasters with inflation-adjusted claims more than doubling compared to the last decade. Crop, health and life insurance policies will be required to adjust to new risks, many of which are difficult to quantify. Lenders are exposed to physical risk when the collateral they lend against is compromised by climate change. If assets or household wealth that are reliant on agricultural or tourism-related income start to falter, these loans may become unserviceable.

Transitional risks are broader in their impact. Carbon-intensive industries such as mining and power generation, and the financial instructions exposed to them, face transition risk. Beyond institutions, retail customers with investments in firms that are energy-intensive in their production processes and operations assume aspects of the risks faced by those companies, should market sentiment shift suddenly. There are further unpredictable risks posed by regulatory changes. Market shifts could also be governed by consumer preference, with more and more individuals, as well as investors, favouring environmentally-friendly firms.

Liability risk refers to financial institutions’ potential reputational damage if their response to climate change is deemed inadequate. Firms may also experience damage to their reputations if they are seen to be contributing to climate change or failing to manage risk to the climate.

There are obviously a number of issues with managing and offsetting these risks. Data and research on the area is limited, making it more difficult for firms to protect themselves. It’s also not an easy task to measure the effect of climate change on asset prices. The impact of climate change on the Australian and global economy will be felt broadly. APRA and ASIC are working to manage the risks, but each individual and firm also holds a responsibility to mitigate the potential damage.

September 2019

Posted by Anton Murray Consulting on . Posted in 2019

Amidst the myriad of quality Chinese and other Asian style cuisines on offer, Hong Kong is also a great location to try out international and local craft beer and demolish a tasty burger. Here are three great spots to find a decent craft beer and a burger next time you’re in Hong Kong.

The Roundhouse – Chicken + Beer (Amoy Street, Wan Chai) is a cozy craft beer bar that also makes high quality southern fried chicken and other fairs. The Roundhouse has a vast selection of craft beers (up to 25 on tap) from all over the world, and some classic local brews from the growing selection of Hong Kong-based brewers. Beyond the great beers, the fried chicken is pretty special. An evening at The Roundhouse is always a fun one. It has friendly staff that are always helpful and you will always find someone to have a conversation with, if you are there solo.

Honbo Burger (Sun Street, Wan Chai) is basically a hole-in-the-wall burger joint that produces some classics. Perfectly sized burgers, all made fresh to traditional American-style burger parameters. The best thing about Honbo is the uncomplicated menu. When you go to a burger shop, most of the time you just want a burger. Honbo understands this, and they produce results. A short simple menu with a few traditional classics, a vegetarian option, a chicken option and amazing fries, that’s it.

The Globe (Graham Street, Central) is one of Hong Kong’s classic watering holes. It is a classic English style pub with an extensive selection of geographically diverse beers. The Globe is also well known for its quality pub food and old English fare. Their menu features classics like fish & chips, a pie special and English pork sausages and mash. Their beer selection is also more diverse than other venues with many Belgian, German and other old European varieties as well as the modern cult classics of Pale Ales, XPA’s and IPA’s from the newer global brewers.

August 2019

Posted by Anton Murray Consulting on . Posted in 2019

Environmental, Social and Corporate Governance (ESG) is gaining traction as an important and necessary part of investors’ portfolios. Superannuation funds are fielding increased enquiries and pressure from members to be transparent as to how their money is invested around ESG matters. ESG has evolved from mere acknowledgement now to the specific demand for positive social investment outcomes such as investment in health infrastructure and climate change mitigation technology.

Giles Gunesekera, CEO of Global Impact Initiative, indicated that “ESG has been implemented and integrated into the investment process in Europe. They are now moving to deliberate investible impact themes aligned with the values of their investors.”

ESG raises moral questions around comparative value. Certain ESG considerations are absolute, for example the use of child labour. Whereas the lines are more blurred in coal production where thousands are employed. The world agrees that we should be moving towards a greener future, but a good example of where that has got complicated is the recent Australian federal election where the state of Queensland swung away from the Labor party who had a stronger environmental policy, in favour of the Liberals who were keener to support mining.

There has been some debate as to how ESG data can be quantified to be understood in a way that allows investment managers to make informed decisions? Man Group, like many other asset managers, has taken steps towards this goal and have built a proprietary analytics tool that takes ESG data from a number of sources and creates scores for Man’s portfolio managers to assess ESG risk. It seems paradoxical that social, environmental and governance issues could be broken down to numerical signals, given they are almost exclusively issues related to human action and interaction with each other and with the environment. However, as ESG becomes more mainstream in the investment industry, wider and more robust data sets will probably become available making an analytical tool such as Man Group’s more effective.

The simple point is that ESG is not going away. As data becomes more available and more easily analysed, ESG outcomes should gradually become more acceptable. Giles Gunesekera notes, “We’ve already got quite a lot of European interest in ESG. The Europeans don’t need as much convincing that this is possible, whereas Australian investors are conservative.”

July 2019

Posted by Anton Murray Consulting on . Posted in 2019

Australian banks have been digitising for decades now, with branches becoming almost obsolete, and every major bank offering a mobile app. Neobanks take digital banking one step further. Neobanks are 100% digital and look more like a tech company than a bank to many. Capitalising on the low level of trust Australians have in the big banks since the Royal Commission, Neobanks are looking to disrupt the industry and increase competition – and it seems to be working.

There are a few key players in the Australian Neobank industry: Xinja, Volt, Douugh and Revolut. Their models are similar – no branches means low overheads, so they can offer lower interest rates. Neobanks also market themselves to younger, tech-savvy consumers as well as those running small businesses, who have arguably been somewhat overlooked by the big banks. Significantly, Volt was made an Authorised Deposit-Taking Institution (ADI) license in January and Douugh is planning on being the first Neobank to list on the ASX later this month.

It’s a similar story in Hong Kong, with virtual banking licenses becoming more commonplace. The Hong Kong Monetary Authority issued three licenses in March and suggested that more are expected to be granted later this year. As recently as May this year, Singapore’s MAS was reviewing allowing neobanks into The Lion City.

Whether or not Neobanks will really take off in Asia-Pacific remains to be seen. While some consumers will no doubt jump on board, traditional banks will likely still hold a large proportion of business for the moment. This is where the approach of ‘coopetition’ will be key to the success of Neobanks. The more prominent Neobanks have agreed to avoid poaching customers from each other, as this will do little to assist them in making a dent in the market. This favoured approach is a united front against big banks to allow more players to enter the game. It’s definitely an area to watch.

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