The personal financial services sector is concerned with mortgages, bank loans, credit cards, bank accounts, and related products. It is an area of increasing concern to the Government, because personal debt in the UK has reached unprecedented levels, putting many people in a position which makes them vulnerable to changes in personal circumstances and changes in the economy (the concern about a possible collapse in house prices is just one example of this). It is also, obviously, of central importance to individuals, and to the financial bodies concerned. Over the last 30 years there have been dramatic advances in the sorts of tools used to model risk in the financial markets, but quite different kinds of tools are needed in the personal financial services sector. The aim of this application is to stimulate the development of such tools by: (i) carrying out three core projects which develop novel kinds of tools; (ii) carrying out additional concurrent projects, funded from other sources; (iii) organising a workshop programme which will enable others, not involved in the three core projects, to take part; (iv) organising a visitor programme, allowing other researchers to visit the core sites and other relevant institutionsThe three core projects are:1) Current approaches to risk assessment and management in the retail sector use models which seek to predict likely outcome based on observed characteristics and previous behaviour. In fact, however, the aim is to use the model to guide appropriate choice of action (e.g. extend a loan repayment period; send a warning letter, etc.). Actions, of course, mean that the predictive data are no longer appropriate. We aim to build models, based on how customers behave, to predict the effect of such interventions.2) Current models for credit risk or portfolios of personal loans are based on variants of the models used for corporate loans. However, such models are inappropriate for personal loan portfolios (where, for example, cash flow is more important than det/asset ratio). Three approaches to building appropriate models will be explored, based on modifying the assumptions of structural models used in the corporate sector, building equivalents of the reduced form models used in the corporate sector, and using competing risk models to predict likely consumer default.3) The literature on how changes in the state of the economy influence consumer credit behaviour is limited. This project will explore various aspects of this, including incorporating time-varying economic factors into survival models, adjusting the default probability cutoff as economic conditions change, and including economic factors in early repayment models.

This project aims to establish the Enterprise and Diversity Alliance (EDA) as the United Kingdom's leading knowledge exchange network for entrepreneurship and minority businesses (that is, small enterprises owned by ethnic minorities, women and young people). It brings together researchers, corporations, the finance sector and professional bodies in order to pursue one central ambition: to 'make diversity and enterprise everyone's business'. The EDA is the culmination of extensive research and practitioner activity. It has had a successful first year, marked by growing interest from corporations and the development of innovative support initiatives for minority business owners. A further year's support from the ESRC would enable the EDA become: the 'go-to' body for guidance on research and practice on minority enterprise; larger in scale; and fully self-financing. It is also is well-placed to fill the policy vacuum that has arisen in the business support world. The profound changes to business support policy mean that the there is a real danger that the learning accumulated from previous initiatives to support minority enterprise will be lost. The EDA will guard against this possibility, and will ensure that insights from research and practice are applied to new initiatives. Three strands of work will be undertaken to ensure that knowledge on minority enterprise is shared widely with relevant stakeholders. First, two innovative peer mentoring initiatives with minority entrepreneurs will be launched. They build on the successful 12/8 network, and will be supported by A. F. Blakemore & Son Ltd and National Grid. Minority business owners will receive direct and high level support for their growth ambitions. Minority entrepreneurs across the UK will also be the target for a regular electronic newsletter on key developments and sources of business support. Second, the project will integrate knowledge on diversity and enterprise in the practices of large organisations. This activity will focus on the EDA's new members, A. F. Blakemore & Son Ltd., National Grid and Leicester City Council. The proposers will ensure that key initiatives (for example, the leadership development programmes of A. F. Blakemore & Son Ltd., National Grid, and procurement practices at Leicester City Council) apply the knowledge gained from EDA research and practice on diversity and enterprise. Finally, knowledge and insights from the implementation of the EDA project will be shared with the wider peer, professional and policy networks of partner organisations. In effect, EDA members will be ambassadors for diversity and enterprise amongst their peers. This provides an opportunity for the EDA to influence major national initiatives. For example, our finance sector partners will work with the British Bankers' Association to ensure that diversity issues are integrated in key areas, notably data-gathering and the implementation of the national mentoring proposition. Business in the Community will introduce its corporate members to the benefits of supporting peer mentoring networks with minority business owners. Good practice in relation to diversity and procurement will be promoted by CIPS and Leicester City Council. The 16th Annual Ethnic Minority Business Conference, scheduled for October 2012, will be dedicated to highlighting the impact of the EDA.

The financial services industry is at the forefront of the digital economy, and is crucial to the UK's, and especially London's, continuing social and economic prosperity. State-of-the-art Financial IT, Computational Finance and Financial Engineering (collectively Financial Computing) research is crucial to our international competitiveness in investment banking, investment funds or retail banking. Academically this DTC focuses on financial computing, as distinct from quantitative finance, already well resourced. Banks and funds view PhD students in science and engineering as an increasingly important and largely untapped talent pool; although one regrettably with little knowledge of finance. The Financial Services Skills Council notes that employers are placing increasing importance on high-level analytical skills, as well as their acute shortage, especially in the newly emerging areas that drive sector growth. This centre completely embraces the spirit of the Digital Economy programme. The proposed DTC is inherently multidisciplinary involving UCL Computer Science, one of the largest leading departments in its field in the UK, with LSE Finance and the London Business School; the two leading academic finance centres in the UK. Key to developing the financial services industry in the Digital Economy is the creation of a new cohort of researchers who have a strong research capability in IT and computation, but also understand finance and the needs of the wholesale financial services industry leading to early adoption of new financial information technology research.The research groups and centres that will participate in this DTC include worldclass groups at: UCL, such as the Software Systems Engineering Group and the Centre for Computational Statistics and Machine Learning, at LSE such as Financial Markets Group, and at the London Business School, including the Management Science and Operations and Finance Subject Areas. The total value of active grants currently held by the participating groups and centres exceeds 20 Million Pounds, and the number of currently registered PhD students exceeds 130. Collaborators in Statistics, Economics, Mathematics and Physics supplement the potential Supervisor pool.A great strength of this DTC proposal is our industry partners, which include: Abbey, Barclays, Barclays Capital, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Lloyds TSB, Man Investments, Merrill Lynch, Morgan Stanley, Nomura, RBS and Thomson Reuters. Regarding training and supervision, each DTC PhD student will follow a personally tailored programme of postgraduate courses drawn from the partners covering financial IT, networks & communications, HCI, computational finance, financial engineering and business, supplemented by lectures from our industry partners: * A tailored educational programme comprising graduate-level courses from UCL, LSE and LBS. * An academic supervisor (from UCL, LSE or LBS) and an industrial advisor (a partner bank, fund or Reuters), and a programme of research covered by an MOU. * A research project in financial IT, computational finance or financial engineering. * Training in industry software, such as Reuters 3000 Xtra, through UCL's virtual training floor.* A substantial period of industrial placement as agreed between the academic and industrial supervisors.* A short period at a leading foreign academic centre