A renewable energy transition is on the horizon

Around the world, momentum is growing behind the renewable energy movement. Nations are searching for solutions to power a cleaner, greener future, and bold plans are being set out to reduce carbon dioxide (CO2) emissions. The race is on to transition to a net zero energy system by 2050, and thus avert the crisis of global warming by limiting the world’s temperature rise to 1.5 degrees Celsius, as set out at the Paris Agreement.

Yet while countries around the globe look to put a stop to rampant CO2 emissions, energy demand is expected to tick ever higher as economies demand more power to facilitate their continued growth and development. The International Energy Agency (IEA) predicts energy demand will rise between 25 and 30 percent in the years to 2040.

Reaching the net zero milestone in a matter of decades while energy use continues to rise will require businesses to innovate and seek out sustainable solutions that are both accessible and efficient. One of them could be hydrogen.

A progressive fuel
Solutions for the renewable energy transition can often be found in plain sight in the natural world. Take solar, wind or hydropower. Hydrogen is the most abundant chemical element and as such is found throughout the earth. Its atoms make up water, plants, animals and humans, and in its rarer gas form it is an incredibly valuable fuel. Just take into account hydrogen is always in a compound form.

Today, green hydrogen is used as a cleaner alternative to high-polluting fuels, offering a critical tool in countries’ net zero journeys. While fossil fuels like oil, coal and natural gas cause damaging greenhouse gases when burnt, the only waste product created by hydrogen is water vapour. As a universal, light and highly reactive fuel, its place in the energy mix is key. For years, hydrogen has been heralded as a commodity with the power to revolutionise the energy industry.

A key step in decarbonising the planet will involve decarbonising the hydrogen industry

But obtaining hydrogen is not cheap, and high costs have restricted its growth. With hydrogen’s green credentials calling the attention of global investors, however, this is finally changing. The Hydrogen Council expects at least $300bn to be invested globally in green hydrogen over the next decade. Meanwhile, the global demand for hydrogen for use as feedstock (in the fabrication of ammonia or its inclusion in chemical processes in refineries or industry) has tripled since 1975 to reach 70 million tonnes a year in 2018, according to the IEA.

Its popularity is no wonder, but its environmental impact is not so clear cut. When fossil fuels are used to create hydrogen, carbon dioxide emissions find their way into the atmosphere despite hydrogen’s clean credentials. Currently, hydrogen is almost entirely supplied from fossil fuels, with six percent of global natural gas and two percent of global coal going directly into hydrogen production. This makes hydrogen responsible for more than two percent of total global CO2 emissions, which is equal to the carbon emissions produced by the UK and Indonesia combined.

That’s why renewable energy champions like Iberdrola believe a key step in decarbonising the planet will involve decarbonising the hydrogen industry. Creating green hydrogen, a version that stems from renewable energy, will slash carbon dioxide emissions and create a truly revolutionary material that will help decarbonise other high-polluting sectors, offer more security to renewable energy and avert a climate crisis.

Renewable technology
Hydrogen generated from natural gas, or methane, is also known as grey hydrogen, and it is the form of the fuel that is most commonly produced today. Blue hydrogen is created when the carbon generated by obtaining hydrogen is captured and stored underground through carbon capture and storage (CCS) before it can pollute the atmosphere, although carbon capture is an expensive and not yet commercially viable technology.

Green hydrogen is the cleanest version of hydrogen available, and it is produced when renewable electricity, created by solar or wind power, is used in a chemical process called electrolysis, which sees the hydrogen atoms that make up water (H2O) being split from the oxygen atoms. Green hydrogen is a small but growing segment of the energy market, currently making up just 0.1 percent of overall hydrogen production, according to the IEA.

The World Hydrogen Council predicts that production costs for green hydrogen will drop by 50 percent by 2030, opening the floodgates for green hydrogen to power the future. As the decarbonisation of the economy progresses around the world – a process that is well in motion – and companies continue to build the necessary infrastructure, renewable energy will become cheaper, thus lowering the cost of green hydrogen and making it more widely available. In the longer term, green hydrogen will be important in niche areas that cannot be electrified, such as shipping, aviation, long-distance freight and steelmaking.

Realising its potential
Barriers persist, however. Iberdrola itself has invested in renewables for nearly two decades, but further progress is needed. Replacing all the grey hydrogen in the world will require a whopping 3,000 terawatt hours per year (TWh/year) from new renewables, equal to the current demand of Europe.

The shift will be critical for creating a cleaner energy system, as producing green hydrogen that emits no carbon dioxide into the atmosphere would slash the 830 million tonnes of CO2 that is emitted annually by obtaining grey hydrogen through traditional fossil fuels.

For green hydrogen to replace dirtier, polluting fuels, it must be produced at scale. Until the cost of renewables falls, green hydrogen will remain expensive to generate. Electrolyser farms, fuel cells, and other equipment that is used to obtain and manage green hydrogen, will all see their costs fall from mass manufacturing.

Another aspect to bear in mind is the added safety requirements needed when using hydrogen. Hydrogen is a highly volatile and flammable element, so extensive safety measures must be put in place to prevent leakages and explosions. While these hurdles cannot be overlooked, the benefits of hydrogen extend well beyond its sustainable status.

Hydrogen is also transportable and versatile, as it can be transformed into electricity to power a wide variety of industries, as well as ships, and planes. What’s more, hydrogen could be stored, allowing it to solve some of the mismatches between supply and demand, an issue that is often at the heart of the renewables debate. While prices for new solar and wind power are falling, batteries or other storage solutions are needed for the days when the wind doesn’t blow, or the sun is hidden behind clouds. Hydrogen, which can be obtained through renewables and then stored and used after it is produced, as well as being mixed with other energy sources, offers a flexible solution. Hydrogen can also be transported from renewable-energy-rich countries to areas with less access to green forms of energy, or manufactured in situ if the renewable electricity is transported using the electrical networks up to the consumption areas.

A long-standing relationship with industry has also proved beneficial to hydrogen. Having been used to fuel cars, airships and spaceships since the beginning of the 19th century, today, hydrogen fuel cells are increasingly common for vehicles. Scaling green hydrogen in industries such as the production of fertilisers, steel, shipping and aviation is crucial to hydrogen’s contribution to a clean energy future (see Fig 1).
The electrification of the economy using renewable energy is the world’s best bet at decarbonisation, but decarbonised materials like green hydrogen have an important role to play in sectors where electrification is not yet competitive or technically possible, like steelmaking, shipping or aviation.

A promising future
Iberdrola, a longtime pioneer in renewables, is a leading force in the development of green hydrogen today. Having already fronted projects to transform sectors like the ammonia industry with green hydrogen, the group has announced plans to launch a large-scale green hydrogen project based on photovoltaic energy starting its initial phase in Puertollano, Spain. By 2030, Iberdrola is set to produce 85,000 tonnes of green hydrogen.

Now is the time to act on the vast opportunities presented by green hydrogen. Iberdrola’s investments in green hydrogen technology are driving down costs and committing resources to a greener, cleaner future. For example, the business has spearheaded new developments as part of a broader €150bn investment plan that will fuel the growth of green hydrogen, as well as launching a new business unit solely focused on green hydrogen. By investing in the revolutionary technology of green hydrogen, Iberdrola is making a promise to the future that a cleaner energy industry is indeed on the horizon.

The ethical dilemma created by leaking confidential docs

Swiss Leaks, LuxLeaks, Paradise Papers, Panama Papers and now the Pandora Papers: 12 million confidential documents from the archives of firms specialising in the creation of offshore companies in so-called tax havens. The phenomenon of the papers and leaks is in full swing and causing strong reactions among the public and major upheavals among the political class; however, some aspects of this ‘practice’ raise substantial ethical and legal questions.

Tax evasion is illegal and therefore legally and socially unacceptable; it can neither be condoned nor advised. It is obvious that exposing patterns of fraud can be useful for the authorities, in order to know the scale of the problem and the methods used by fraudsters and their advisers, whose names are also exposed.

This allows authorities to undertake all necessary steps to counteract these illegal schemes, whether national, European or international, mainly at the OECD level, where the committee on fiscal affairs is ensuring the urgent implementation of the main base erosion and tax shifting (BEPS) actions in this area. These actions aim to neutralise the effects of hybrid mismatch arrangements, design effective controlled foreign company rules, limit base erosion through interest deductions and establish financial payments and mandatory disclosure rules. While the explanation of fraud schemes may be of educational interest, the publication of the names of the beneficiaries of offshore companies can only be of theoretical interest to the ordinary citizen.

Total (while uncontrolled) disclosure
As previously said, this way to proceed poses many problems on legal, ethical and social levels. It should be emphasised from the outset that the facts are presented to a largely non-specialised public, which has difficulty distinguishing between tax fraud (an illegal practice) and tax avoidance (a perfectly legal practice).

Political statements exacerbate this confusion, such as the recent statement by the Belgian minister of finance: “Avoiding tax through off-shore constructions is fraud.” This statement must of course be tempered.

Tax justice demanded by the public is interpreted in a peculiar way: people do not ask to pay less tax, but rather that others pay more

Firstly, it is obvious that an offshore company (like any other structure or company, wherever it is established) is nothing more than an instrument. And like any instrument, the offshore company is not legal or illegal in itself: it is its use that may or may not be. An offshore company is therefore not necessarily an instrument of tax fraud.

Subjected to a multitude of media and political statements, and lacking the technical skills to understand the situation properly, the average citizen thus loses sight of another important issue: the fact that they are being very heavily taxed. Thus, curiously, public opprobrium is directed against those who have tried to escape, even legally, from heavy taxation, rather than against governments that constantly increase the tax burden to cover their excessive public spending. In this way, the ‘tax justice’ demanded by the public is interpreted in a peculiar way: people do not ask to pay less tax, but rather that others pay more. This is a curious attitude, since the state’s argument that increasing the tax base (notably by combating tax avoidance) would allow the average citizen to pay less in taxes has never been verified in reality: tax revenues increase over time but taxes never decrease.

An attempt on human rights
On an ethical level, it is unacceptable to put fraudsters and people who use an offshore company in a perfectly legal manner on the same footing. The latter are subjected to an unprecedented attack on their privacy for absolutely no reason, especially since, at the time these documents are revealed to the general public, no one knows whether the beneficiaries of such structures have acted improperly or not. Moreover, while the revelation of such information is always widely publicised, the results of the ensuing investigations are rarely known, so much so that the proportion of fraudsters among those whose private lives have been exposed to the public is unknown.

Some of the practices denounced are common in everyday life. For example, a former political leader was accused of having acquired a company that owned a building, rather than the building itself. This very common transaction is stigmatised on the grounds that the company in question was established in a tax haven, but it has not been argued that if it had been a local company, he would not have made the same saving. After the right to privacy, it is therefore the principle of proportionality that falls victim to the lack of nuance in this way of communicating: starting from the incorrect assumption that the offshore company is an instrument of fraud, it is deduced that anyone who uses an offshore company is necessarily a fraudster and that, in general, the use of offshore companies is to be banned. However, it is also true that a large number of people defraud by means of structures established in their own country, but no one has ever suggested banning their use. To ban (the use of) a tool on the grounds that some people may misuse it makes no sense.

Finally, this phenomenon raises important legal issues. The problem of violation of privacy has already been mentioned above. Article 8 of the European Convention on Human Rights proclaims the right of everyone to respect for “their private and family life, their home and their correspondence.” Admittedly, restrictions exist when they are “prescribed by law” and are “necessary in a democratic society.” It is difficult to see, though, how dumping millions of non-anonymised documents on the internet, in bulk and without any prior filtering, could be considered as an attitude prescribed by any law, in a democratic society. Moreover, once published, these documents are subsequently examined by national authorities and serve as a starting point for tax audits, criminal investigations, and sometimes as a basis for tax adjustments and criminal prosecutions.

These documents and the information they contain are, legally, the result of a theft, often in violation of the professional secrecy obligations of their holder, and their disclosure constitutes a violation of the right to privacy and the secrecy of correspondence. It is difficult not to notice the singularity of this approach, which has been frequently validated by the courts, and which consists of fighting, in the name of legality, fraud by means of data illegally obtained by a third party.

The principle thus overrides an exception that is not as exceptional as it should be, and therefore the property and privacy rights of the beneficiary of an offshore company give way to the ‘necessities of a democratic society’ (be it freedom of expression or the duty of the state to prosecute violations of the law), making the publication and use of illegally obtained data legitimate, whether directly or indirectly.

A quest for proportionality and balance
Is this acceptable? Opinions differ on the subject, but it cannot be denied that the use of stolen information by the authorities to achieve their ends is shocking in principle and in most cases, making unfiltered and non-anonymised data public constitutes a disproportionate step with regard to the right to privacy and the presumption of innocence.

In the future, even if this practice should be deemed legally or morally acceptable, the release of such data should at least be regulated to protect the rights of the citizens concerned (many of whom are beyond reproach). In the middle ages, only the names of the convicts were called out and shamed by town criers. These days, the European Court of Human Rights, to the detriment of human rights, considers that states have an obligation to regulate the exercise of freedom of expression to ensure adequate protection of the privacy and reputation of citizens. As for the press, it must assess the repercussions of its publications, which are supposed to generate a ‘debate of general interest.’ While the issue of the use of offshore companies may well be the subject of a general interest debate, it is doubtful that the disclosure of the names of the beneficiaries (especially those whose actions are not of general or even public interest) can be of any interest in the context of such a debate.

This is in fact the whole problem with these leaks: it leads to confusion and very often results in a disproportionate infringement of the rights of beneficiaries. Tax avoidance is equated with tax fraud and the beneficiary of an offshore company with the fraudster, while at the same time, the use of stolen documents appears to be acceptable in order to achieve a ‘higher’ goal, even if nobody knows whether the proportion of fraudsters among the beneficiaries justifies such a breach of the legal rules.

Furthermore, the personal data and assets of thousands of people are subject to uncontrolled publicity, often with disastrous consequences on both personal and economic levels, even though they often have nothing to blame themselves for.

In this highly media-driven context, public and governments often disregard the fact that proportionality is also essential in a democratic society, especially when it comes to reconciling values of equal strength that are on a collision course.

Driving change with financial inclusion in the Philippines

2020 was quite a challenging year for all of us. Lives and businesses were severely disrupted due to the pandemic. As we crossed over to 2021, there was cautious optimism that this would be a year of recovery and rebuilding. We were right to be cautious as the second wave of the pandemic hit. The Delta variant of the COVID-19 virus caused havoc to local and global economies alike, enforcing another round of lockdowns and slowing economic activity in the process. Fortunately, the vaccine rollout in the Philippines has also progressed throughout the year and we saw more Filipinos get fully vaccinated, which consequently led to the gradual reopening of the economy.

The ‘We Find Ways’ mentality
Similar to 2020, BDO Trust and Investments Group (BDO Trust) has constantly been on hand to assure clients that it is in full control of their investments, transitioning from being defensive to counter market volatility to becoming opportunistic to gear investment portfolios in preparation for recovery and growth.

BDO Trust continues to service clients by embodying the ‘We Find Ways’ mentality, ensuring that clients get access to investment opportunities despite the challenges of community lockdowns. Digital technology, through email and mobile messaging systems, is highly utilised to share investment ideas that can help to manage investment funds, encourage investment opportunities or simply to reassure.

Video conferencing and collaboration tools are used to execute initiatives such as our investment teleconsultation service, Market Sense and the Practical Investor webinar series. The BDO Invest Hotline and BDO Invest Online provide safe alternatives for clients to carry on with their investment transactions even if most bank branches are already open. These measures not only allowed us to increase wallet share from our existing client base, but the same communication tools were also used to acquire new markets that successfully brought in fresh funds.

For our institutional clients, we now offer a holistic approach to retirement fund management services, which is truly unique in the industry. We believe that it is important not only to provide adequate returns for the company’s retirement funds but also address the needs of the ultimate beneficiaries – the employees.

Through the BDO Pension 360, companies can empower their employees in augmenting their funds for retirement through the BDO Easy Investment Plan and the Personal Equity and Retirement Account, and provide them with a facility to responsibly manage their regular retirement payout through BDO easy pension pay. As a testament to BDO Trust’s ability to remain nimble and adapt despite the disruptions of the pandemic, clients invested more in 2020 and continue to do so in 2021, increasing BDO Trust’s leadership in the trust and investments space in the country with a 24 percent market share with trust assets under management of PHP1.183trn ($23.66bn) as of August 31, 2021.

Preparing for the future
The ongoing pandemic has helped accelerate the use of technology among Filipinos. For the past year and a half, digital transactions have massively increased. Groceries, supplies, discretionary purchases, and banking have seen a surge in digital traffic. Investing is no different. BDO Trust’s invest online facility allowed clients to invest in the BDO UITFs from the safety of their own home.

Increased transparency through BDO Invest Online reassured clients that their money was still safe during the pandemic. Moreover, having the means to continue transacting has allowed clients to take advantage of opportunities during this period of economic recovery. BDO Invest Online’s end-to-end investment process, from account opening to transaction fulfillment, places it at a competitive advantage to its competitors, most of whom require a visit to the branch. This same straight-through digital process is also available for its programmed investments, the BDO Easy Investment Plan. Currently, only BDO Trust has the capability to show both the client’s segregated portfolio via an investment management or trust account and a UITF account in the same online portal, providing the client with a full 360-degree view of their investment portfolio.

BDO Trust is the only Personal Equity and Retirement Account (PERA) administrator and PERA product provider that allows investors to open an account and invest in PERA products fully online, digitising an otherwise 30-minute face-to-face process, revolutionising the onboarding experience and making it more accessible to the intended market who are the overseas Filipino workers. PERA is a voluntary retirement account that is meant to supplement a Filipino’s social (GSIS or SSS) and/or corporate pension benefits. It provides tax exemption benefits to contributions of a yearly maximum of PHP100,000 ($2,000) to encourage long-term retirement savings.

BDO Trust continues to invest for the future to better serve digitally savvy investors and to provide more value to customers. Enhancements to its digital channels are already ongoing for a seamless and consistent customer experience through multiple channels.

The pandemic has proven that financial inclusion can be accelerated through a robust digital infrastructure. The digital roadmap for BDO Trust takes this into account to further contribute to the achievement of financial stability and economic development. What this translates to, for our customers, is convenient asset accumulation. To our country, it increases economic participation. To our institution, it is a cost-effective means of achieving market growth and business sustainability.

Focus on sustainability
Another aspect of business sustainability is being able to provide relevant products to customers. BDO Trust has always been an advocate of socially responsible investing. Since 2015, it has made available the BDO ESG Equity Fund, which invests in companies that exhibit exemplary environmental, social and governance attributes. The BDO ESG Equity Fund subscribes to the specific guidelines set by the International Finance Corporation (IFC) for ESG investing. The fund does not invest in companies with the primary business of selling alcohol, tobacco or those purely engaged in gaming or mining.

While the fund is still relatively small, it has the potential to grow exponentially in size and importance as more investors start to see value in socially responsible investing. Clients are beginning to favour companies that manage their environmental and social risks and practise good governance, creating a positive contribution to society. Schools, foundations, religious organisations, associations, and other non-profit organisations, in particular, generally seek a long-term investment portfolio that is consistent with their values and purposes. For these clients, BDO Trust offers a values-driven investment strategy that upholds their own environmental, social and governance principles.

Advocating financial wellness
BDO Trust continues to support sustainable strategies through the advocacy of financially inclusive growth. The pandemic clearly demonstrated the importance of financial wellness as Filipinos were blindsided by the sudden economic downturn. This presented a golden opportunity for BDO Trust to direct the market’s attention to greater financial literacy by continuing its investor education programmes digitally, providing fresh content and modules that take into account where the target audience is in terms of their customer journey.

Supporting this strategy is a dedicated team that provides free financial education programmes to clients. The courses, which cover proper budgeting, wise investing habits and retirement planning, are open to different audiences – clients, bank branch personnel, employees, teachers, and blue-collar workers to name a few. Throughout 2020 and 2021, BDO Trust has conducted numerous webinars to sustain its training and educational activities despite limited mobility.

The pandemic has proven that financial inclusion can be accelerated through a robust digital infrastructure

At the heart of these financial wellness sessions is the BDO Easy Investment Plan or EIP, which is the clients’ tool to successfully and automatically execute their wealth creation plans. EIP allows clients to invest in the BDO UITFs for a minimum investment amount of PHP 1,000 ($20) for peso-denominated funds and $200 for US dollar-denominated funds. Through the EIP, more Filipinos are able to invest for their emergency fund, children’s education fund, retirement and other financial goals easily, affordably and regularly without the need to go to a branch for every transaction. EIP effectively democratises investing for the mass market – allowing easier conversion of savers to investors.

BDO Trust also offers the Personal Equity and Retirement Account (PERA) to help Filipinos augment their retirement pay and plan for a comfortable retirement. PERA lets clients invest a maximum of PHP 100,000 ($2,000) yearly – or PHP 200,000 ($4,000) yearly for overseas Filipino workers (OFWs) – and take advantage of tax-free investment income to encourage long-term savings.

Making Filipinos global investors
In support of its push for improving financial literacy of Filipinos, BDO Trust not only aims to make Filipinos transition from being savers to investors, but also to turn Filipinos into global investors as well. Understanding both the benefits as well as the risks inherent to investing is fundamental to becoming a savvy investor. In addition, learning how local and global economies develop and grow can also help Filipinos appreciate investing more, knowing that diversifying into other markets can help grow their investment portfolio.

Through the BDO global feeder funds, retail and institutional investors alike can conveniently access global assets for as low as $500. Available through BDO Invest Online and BDO branches, these funds allow clients to invest in stocks that are traded in the US, Europe, China, and other developed and emerging markets. BDO Trust partners with the biggest names in the global asset management industry, such as BlackRock, Nomura Asset Management, Wells Fargo Asset Management and Citigroup to leverage on their expertise and experience in global markets. This strategy allows our clients to grow and diversify their investment portfolio as well as take advantage of investment opportunities both locally and globally.

With our advocacy for both financial wellness and sustainable investing and our adherence to the ‘We Find Ways’ mentality, we believe that our clients can easily take advantage of opportunities in the domestic investment environment as well as confidently venture into possibilities outside the Philippines.

A digital transformation is taking place in Andorra

It was Philip Kotler, the father of modern marketing, who observed that the adoption of new technologies alone cannot transform an organisation. Add a lot of new tech to an old organisation and all you get is an old organisation that costs a lot more to run. If it’s real transformation you want, then new technologies are just one piece of the puzzle.

MoraBanc is an old organisation. Today one of the largest banking groups in the European principality of Andorra, it dates back to 1938, when its founder, Bonaventura Mora, opened the exchange bureau Comptoir Andorran de Change.

In 1952, it became a bank proper, part of a nascent banking sector that grew up in response to Andorra’s changing fortunes in the wake of the Second World War. There have been plenty of changes at MoraBanc in the nearly 70 years since it became a bank but those of the last six – heralding the organisation’s transition to digital – have been arguably the most significant.

Digital transformation – a process that began six years ago when MoraBanc successfully implemented a technological platform to revolutionise client relations in Andorra, and continues today – has never been about adopting new technologies alone. It is about leveraging these new technologies to transform business models, the client experience, operational processes, organisational culture and the way teams are led. Digital transformation is about much more than technology.

People are the key
You can incorporate new technologies, from big data to artificial intelligence to cloud computing – but unless they are used effectively by people with the talent to develop them, people ready to prioritise client experience, true transformation will remain elusive.

In the turbulent world of modern finance, banks cannot afford to ignore digital transformation in its broad sense, incorporating not just technology and processes but business models, new markets and client experience. People, of course, are central to every one of these. There is no room for complacency in the competitive world of Andorran banking – those who cannot adapt will be left behind. Banks must adapt to clients’ needs, demands and expectations in an environment that is volatile, uncertain, complex and ambiguous. It is a difficult journey, but one full of opportunities for those organisations able to use the full potential of digital environments, creating differentiated value propositions and seeking alliances with new players, from fintech to proptech.

Real differential value will be found in the people who understand what digital is and are able to anticipate clients’ new needs

Banks must shift from being mere providers of traditional financial services to taking on a much more relevant role in their clients’ daily lives. They must lead a strategy focused on client engagement and loyalty through digital ecosystems far beyond financial products, in a context of ongoing personalised interaction.

There are many challenges that financial institutions have to face in order to digitally transform themselves. Agility is key and this can be achieved by implementing a digital culture internally, one led by a management team that drives this change through the acquisition of new digital skills and agile ways of working.

New technologies must be incorporated as a key strategic element – this technology must go far beyond simple business support and enable new digital business models to be defined. It can’t be done without acquiring new digital talent, bringing entrepreneurs and those passionate about the digital world into the organisational fold. This is because the real differential value will be found in the people who understand what digital is and are able to anticipate clients’ new needs and consumption habits.

The challenge of change
Banks will have to explore the frontiers of their business and redefine themselves, seeking new digital business models that generate new sources of income and increase their profitability. This is everything from the monetisation of client knowledge to offering digital non-banking services to creating open technology platforms.

At the same time, banks must increase the productivity of their existing digital channels: this isn’t just about keeping costs down but rather taking advantage of the large number of digital interactions with their clients to sell more and gain better leverage on digital marketing and client intelligence tools. Alongside all this, banks can’t just leave their physical distribution network to stagnate while developing their digital infrastructure – efficiencies can and must be achieved throughout the business.

For a small country such as Andorra (population 77,543), digital transformation comes with both opportunities and challenges. According to a study on the digital maturity of the Andorran companies that MoraBanc works with, 83 percent are at a basic stage of digital transformation and their employees have a long way to go in improving their digital skills.

To boost the digital capacities of the country’s businesses and public administration agencies, in July 2021 the government of Andorra presented a wide-ranging digital transformation project that will run until 2024. Examples of adaptations to the current regulatory framework include the implementation of a law on digital assets, a law regulating e-sports and a new digital economy law intended to encourage innovation and the diversification of the country’s economy in order to attract talent and investment.

A profound transformation of the bank in the wake of regulatory and market changes has set the pace for the bank’s strategy. MoraBanc’s strategic plans have focused on digitalisation, efficiency and quality of customer service and have led to the growth of client benefits and assets under management, profitability, solvency and efficiency in the Andorran banking sector over the last four years. MoraBanc opted to place key people with digital talent at the forefront of its digital transformation project. Transformational leadership at management level, driven by a clear vision of the digital path the organisation must follow, was key. As was the ability of leaders to inspire their teams to put clients’ needs at the heart of the MoraBanc experience, whatever channel they engage with.

The reputation of banking is badly damaged. We need to win back clients’ trust, improving the client experience in every interaction. Each client’s experience with the brand is unique and this has always been the case, but the advent of digital banking ups the ante in terms of the options institutions are able to offer their customers. The effective use of technology has the potential to make banking significantly more convenient, as clients are able to access the products and services they need whenever and however they need them. The potential for personalised approaches is huge, providing banks are able to turn client data – their personal behaviour, preferences and circumstances – into value.

A long-term vision
Achieving this transformation wasn’t just a matter of a few new hires. The success of digital transformation lies primarily with people; it required a sea change in organisational culture, building a community where people are at the centre of the business and establish quality relationships based on a willingness to share a common, long-term vision. The result was MoraBanc Digital. This digital ecosystem, approved by the board of directors at the end of 2014, included the launch of a new website, iOS and Android apps and a state-of-the-art online broker. Clients were able to reach us via new routes, such as a chat function, appointment system and MoraBanc Direct, a fully virtual client branch office.

It was worth the hard work. Between 2017 and 2020, MoraBanc Digital’s usage figures increased by 112 percent in platform access growth, 80 percent in the number of monthly unique users and 154 percent in transaction volume. And it wasn’t just clients that were impressed – MoraBanc recently won World Finance magazine’s award for Best Digital Bank and Best Banking App in Andorra for the fifth consecutive year.

At MoraBanc we are committed to digital transformation, innovation and ongoing improvement in order to be the best bank for our clients, the best company for our employees and the go-to bank in the markets where we offer our services.

Addressing the climate crisis in the infrastructure sector

Choosing climate action as the theme of my ICE presidency was an obvious choice. I’m an engineer, having trained first as a geographer. My background is infrastructure, people, planet and places. So climate change – with a focus on net zero carbon and climate resilience – is a priority topic, both personally and professionally. Yet until very recently, the infrastructure sectors (energy and also transport, buildings, digital, water and waste) have been able to ignore climate impacts or treat them, at best, as an add-on. We have had far greater focus on economic growth and gain as a primary outcome, at the expense of social and environmental aspects. This mindset is now the cause of massive problems worldwide. But it’s the way public infrastructure and the environment is planned and built that must change – we must change. That means engineers, city and municipal planners, construction professionals – all of us have to adapt in order to make a major difference in the years ahead.

Commitment is overdue
To reach a net zero balance by 2050, we must cut the total carbon emissions connected with today’s infrastructure systems in half by 2030. This gives us a chance to slow the pace of climate change. Though even if we achieve this, we can expect decades of a worsening climate ahead of us, so in parallel we must build in better resilience to cope with more frequent extreme weather events across the world: storms, floods, fires, droughts and more.

The key now is turning climate worry and climate talk into climate action

This is urgent. Our existing infrastructure systems remain highly carbon intensive, as they are used and relied upon by billions of people every day. Today’s decisions about whether we build, what we build, where we build and how we build are key to build-stage carbon impact, but we must also take into account the carbon emissions linked to the existence, operation and use of infrastructure over many generations. We already have some of the right tools, ideas and know-how to start to address the climate crisis. The key now is turning climate worry and climate talk into climate action.

And I say none of these things from an activist mindset. It’s simply the most responsible thing to do, given the scale of our collective challenge. You only have to spend time with your own children, or their friends, for a sense of how they see the future. We have to listen to the next generation – and to 70 years of climate science that already lies behind us. So our job now, as engineers, is to influence and bring about the slashing of carbon, to deliver the art of the possible. And there is no time to waste.

New carbon ‘lens’ needed
We have to rethink how we approach infrastructure design to be more ‘carbon conscious’ in everything. For some clients this is a fairly new lens to look through, alongside other crucial drivers that remain, such as quality, cost, safety, productivity and social inclusivity. Fundamentally, the earlier in a project lifecycle carbon awareness starts, the greater the chance to build value through longer-term carbon savings, often without additional cost or risk. We need to ask the difficult questions about whether ‘new-builds’ are required or whether existing assets can have an extended life. We need to design with carbon firmly in mind, so that quantities of materials such as traditional concrete and steel can be reduced for the benefit of both cost and carbon dioxide. In time, we must aim to eliminate carbon emissions altogether, but in practice we will need to get into the habit of quantifying and then minimising whole life carbon emissions, before mitigating or offsetting any residual impact.

This last piece is evolving fast – it’s also widely misunderstood – but it’s crucial. Just as we mitigate other impacts in everyday technical design practice, we have to embrace and design in offsets directly and accurately. The good news is there’s a range of nature-based solutions that work with carbon capture tech that will become more commonplace, boosting credibility around net zero client work.

Generational pressure is a good thing
The generation coming into the workplace has grown up with climate change so there’s no uncertainty phase that held earlier generations back. There are pent-up frustrations from this group that we – as today’s responsible adults – still haven’t addressed climate change with real urgency, underpinned by fairness and social justice. Young and emerging professionals, whatever their role, must use their influence, knowledge and power to keep pushing the carbon infrastructure agenda to the top, for all our sakes. I am, personally, hopeful that it will succeed. But there’s no more time to waste. We must start now and not allow ourselves to slip back.

Leveraging a unique network to help you find your next role

The pandemic has seen massive fluctuations in the jobs market, affecting a wide range of industries, disciplines and territories. At the senior end of the market, however, there has been surprisingly continuous demand across both industry and geography, for top talent.

It’s not quite business as usual. In this post-pandemic world, corporates want and need to expand their top talent to turn around, recover and continue the growth of their organisations. Companies like InterExec, a London-based consultancy working with C-suite senior executives across all major business sectors, are ideally placed to help.

The transition from one organisation to another brings with it significant prospects of both short and long-term benefit, but demands focus and commitment to achieve the best result. InterExec facilitates that process, working with clients to make crucial decisions about their goals, when and how to move role, and how best to present themselves to the marketplace. Typically, a senior executive seeking a new role will have limited access to sufficient senior contacts in the recruitment market. It might seem straightforward to find roles at the bottom end of the executive market through selective channels such as advertisements, job boards and websites, as well as via their own personal networking. It’s much trickier at the top end – for roles with salaries in excess of £200,000 – where the market is unadvertised and where personal introductions and contacts are essential. In this ‘hidden’ market, it is almost impossible for executives to get a comprehensive view of relevant opportunities and an unbiased view of their prospects.

We specialise in assisting busily employed senior executives who want to make a move but do not have the time or market access to conduct an effective search. Future Choice, a system we developed over the last 30 years, enables the individual to identify their needs and skills. This way, drawing on our extensive knowledge of the market, we can work together to identify the positions that meet these prerequisites, whether they are financial in nature, or relate more broadly to job satisfaction.

With a global network of leading search consultants and over four decades’ experience, we are well placed to ensure that clients are presented with a strong range of options, whatever their field. InterExec staff – a combination of former company directors and executive search consultants – have daily access to thousands of the most influential people in the senior executive market, providing up-to-the-minute intelligence that allows them to plug into up to 90,000 unadvertised vacancies a year. We are regularly adding to this network, broadening the reach of our searches to encompass roles in nations around the globe, across multiple disciplines and sectors.

Market knowledge
The entire consultation process can be completed in little more than four hours, with search consultants working at a time to suit the client wherever they are in the world. By keeping the process as streamlined as possible and minimising interruption to normal workflows, we enable executives to stay focused on their current role while setting the stage for the next phase of their career. We then use our market knowledge to identify the people to whom confidential approaches can be made, to source relevant unadvertised opportunities. For executives seeking their next new challenge, confidentiality is crucial. The aim is always to minimise unnecessary market exposure while maximising a client’s range of options when it comes to changing roles. The world is small at the highest levels of business and executives must tread carefully. Our processes guarantee absolute discretion.

Whether the client is seeking full-time executive employment, interim management, non-executive, consultancy/portfolio roles or employment in a PE/VC environment, the channels to market are very similar. In our talks to the marketplace on behalf of the client, we work hard to fully brief those working on behalf of prospective employers so as to minimise the amount of time the client might need to spend at interview.

Some people have a very clear idea of their objectives in a job transition and some are more open-minded as to where they should best go for the future. Either way it is crucial that the client’s target roles be achievable, based upon their expertise and prior experience, and that the way we present the client to employers enhances their prospects. Standard procedure includes verifying clients’ qualifications, references, identity, skills, achievements and entitlements – because all this information is set out in advance of our conversations with those looking to fill particular roles, time is saved for all involved and the best result can be achieved. The unique InterExec process and network has proven to be a powerful asset to senior executives seeking their next challenge.

Olymp Trade reviews market trends of the new normal

When the virus came, the lockdowns, travel bans, and restrictions in response to it, decimated the global economy. To reduce the damage, state authorities put anti-virus and economic recovery measures in motion. Now, the global economy is slowly trying to recover, but the damage is reflected in the markets where the effects of supportive economic activities continue to alter the landscape.

For many traders, it can be hard to orient oneself in such a changing environment. This article was created to help them. It observes and structures the main economic trends. Also, it provides some specific trading strategy recommendations and helps traders better understand the changing global economic environment. As a result, their trades may be better planned and aligned with the current market trends, and their overall ‘survival’ ratio may possibly increase.

Response to the pandemic
The pandemic and resulting lockdowns severely impacted the global economy. Activity in the manufacturing sector, a core element of economic growth, sharply declined at the peak of the pandemic response. According to IHS Markit, in May 2020, the US PMI fell to a record low of 36.1. In the EU, the same indicator was at 33.4. Against this backdrop, stock markets began to slide. The Dow Jones fell more than 35 percent, and the Euro Stoxx 50 dropped more than 40 percent. To fix the situation, developed states put in place extensive supportive campaigns to restart their economies. Primarily, their central banks significantly reduced interest rates. Also, they launched emergency stimulus programmes, effectively printing more money.

As a result, the money supply in the EU and the US jumped to record highs. In the US, the M1 money supply almost tripled. The American economy has never seen such a growth rate in all its history. The supportive campaigns worked. Together with the loose monetary policy, the stimulus made the dollar fall. The central banks jump-started the stock market and their economies.

Inflation as a side effect
Central banks across the world printed nearly $9trn in 2020 to support economies. They managed to revive the economies, but their measures have led to inflation growth. In the US, it is now 200 basis points above the target value. Other developed states are suffering a similar side effect. In the meantime, the demand for international trade and domestic consumption is at historic lows. US retail sales haven’t grown by one percent yet. August saw a weak growth rate of 0.7 percent, and the second quarter of 2021 had –1.8 percent. China has a similar problem. Moreover, the world may fall into another recession from weakening demand for Chinese products. This problem plagued Europe in 2019 before the pandemic. If it happens again, Europe and Japan will suffer because their economies are export-oriented and have tight trade bonds with China. Also, unlike other G7 countries, their central banks are unlikely to stop the economic stimulus as their GDP growth has only recently surpassed zero. Therefore, while central banks’ actions aided the economies, they are now struggling to find a solution for the side effects for these measures, and inflation is just one of them.

The energy sector crisis
Energy prices are rising, and this issue moves parallel to the inflation problem. In Europe, gas reserves have been significantly depleted partly due to the unusual summer heat and low winter temperatures of 2020. On the other hand, the ECB’s push towards green energy doesn’t help the EU reduce its total energy demand. As a consequence, the EU’s current energy shortage has not been seen since the previous decade. Therefore, it is under pressure to get back to traditional energy such as coal, with Russia as its first supplier to consider.

Russia is now directing most of its coal to Asia under contractual agreements. It simply doesn’t have enough spare to provide to Europe. Furthermore, even if Russia was able to do it, the railway system’s physical limitations wouldn’t allow it to effectively distribute the supplies. As a result, Europe is stuck between the green movement and the effects of 2020, and its energy demand is left unfulfilled. In China, new resistant virus strains have disrupted the normal functioning of the country’s energy systems. The government has imposed restrictions on energy consumption, and businesses lack access to energy inside the country to meet production needs. This is pushing the Chinese state authorities to look for more energy on the global market.

These facts suggest that the global energy demand is increasing. In the oil sector, however, OPEC+ isn’t planning to meet it immediately. On the contrary, its member countries have recently agreed to incrementally increase oil output in the near future. The cartel wants to support energy prices to extract the most profit from them. Recently, natural gas prices exceeded $1,500 per 1,000 cubic meters. Brent crude has crossed $80 against the $60–70 range it had in the summer and is likely to keep going up. October 2018 was the last time Brent was as high. Even after the drone strike on Saudi Arabia’s ARAMCO refineries in 2019, oil prices didn’t leap that much. In the near future, observers expect the oil price to exceed $100.

Partly due to the strong energy demand and progressing economic recovery, the mining and exploration companies are now doing fairly well. The Dow Jones Oil & Gas index reached 470 points, and EuroStoxx Oil & Gas is testing 290 points. Based on these dynamics, we believe most energy stocks may grow through the end of the year. In the meantime, while developed states are trying to move towards green energy, the high carbon energy sector is attracting less global investment and losing appeal to retail traders. That’s why many brokerage companies now educate traders about the cost of missed opportunities while expanding their financial literacy.

How to trade when the stimulus ends
Positive dynamics may not be as likely for the other market sectors. The US Federal Reserve, European Central Bank, Bank of England, and other state financial authorities are about to move from supportive to restrictive monetary policies. Recently, the US Fed Chairman, Jerome Powell, hinted that quantitative easing (QE) will soon be phased out as the US economy is recovering well. When the cutting back of QE is announced, the US dollar will likely go up. In fact, it is already growing on the expectation of the end of stimulus. In the meantime, stocks have an inverse correlation with the US dollar.

Historically, every time the Fed cuts back the QE programme, stock prices mostly drop. In August 2021, the Fed indicated that a shift to the ‘normalisation’ of monetary policy was coming. In response to that, the stock market began to reverse. The impending end of the US Fed’s support is the main reason for the firming US dollar and the decline of blue-chip stocks. Yet, stocks may receive the full hit when the US Fed stops supporting the economy. The asset volume on the balance sheet of the Fed is around $8.36trn. They are currently buying $120bn in treasury bonds and mortgage-backed securities a month. This process fuels interest and prices in various asset groups. But when it stops, a huge void may form. To avoid its impact on asset prices, traders need to select their trade instruments well.

To benefit from the changing market environment, traders and investors need to be aware of its trends and the opportunities it offers

A possible way to do that is to wait until the market correction ends. While waiting, cash may be a safe place to keep funds, but eventually, traders may be able to form new portfolios by buying financial instruments at lower prices. Another way is to buy the so-called ‘defense’ stocks. This refers to those with low or negative beta. It may be American Tower from the financial sector or Bristol Myers from the medical technology sector. Colgate-Palmolive, Procter & Gamble, or PepsiCo from the non-durable consumer goods sector may also do.

These stocks have a fairly low beta. Comparative analysis shows that their capitalisation is undervalued against the industry average. At the same time, these companies have high average profitability and promising revenue and net profit growth dynamics. Alternatively, traders can open short positions on stocks that are in the risk zone upon moving to restrictive monetary policy.

A tactical solution from Olymp Trade
To benefit from the changing market environment, traders and investors need to be aware of its trends and the opportunities it offers. Focusing on the right asset at the right time is key. That, in turn, may be easier with a broker that offers a solid educational base and keeps traders well informed on what’s happening in the market. This is Olymp Trade’s commitment.

Olymp Trade is a trading platform that provides a practical knowledge base through its help centre, made available right from inside the app. It contains various kinds of educational materials from video guides to textual explanations of how Forex trading works.

Traders may apply their knowledge to various types of assets, from Brent to crypto. Moreover, they can do that in various trading modes such as Forex or stock price trades. Equipped with various trading tools ranging from price alerts to market news, they get a trading environment that is as flexible as it is comfortable. Both qualities help traders to effectively orient themselves in the rapidly changing Forex world and reach their financial goals.

Sights set firmly on the future with digitalisation processes

The Bulgarian institution, Postbank, this year celebrated three decades since it was founded. Despite the challenging year with the effects of the pandemic still being felt, Postbank has managed to navigate itself through 2021 thanks to its flexibility, commitment to personalised service and willingness to learn. Drawing on its 30 years in the international banking space, the institution is now looking to the next 30. World Finance spoke to Petia Dimitrova, CEO and chairperson of the bank’s management board, about embracing digitalisation and supporting Bulgarian entrepreneurship going forwards.

How has Postbank responded to the COVID-19 pandemic and the need for digitalisation?
Everything that happened over the past year and a half posed many challenges for all of us. It was a test of our capability to adequately respond to a change the scale of which could not easily be foreseen or controlled. These recent times have allowed us to get to know the situation we are living in and to efficiently organise internal processes. Bulgarian banks responded to this situation very well and once again showed that they are resilient and stable institutions. Results show that the banking system has been through minimal stress during this critical period. And although the pandemic has had an effect on the way we work with multiple restrictions, the Bulgarian banking sector remains stable and profitable, with high levels of capital adequacy and liquidity. The future of banking is undoubtedly digital, with more advantages and benefits for our customers, providing what is most important – a speedy, time-saving service.

We started digitalisation processes at Postbank a few years ago, when we created a special unit dedicated entirely to that mission. This team developed the overall strategy and its implementation, set priority fields for investment in creating new products with one main aim – digitalisation. This is why in 2020 we were ready, reacted quickly and responded to our customers’ expectations. That we are on the right track was proven by the data, which show that for yet another year in a row Postbank scored a significant increase in customers who now choose to use the digital channels of the bank. Now more than 70 percent of transactions are being carried out online.

What are the benefits of digitalisation?
The pandemic was not only a catalyst for digitalising banks but was also a stimulus for financial literacy among customers after successfully transforming attitudes that we would have otherwise waited for years to change under normal circumstances. The months spent in isolation helped many Bulgarians discover the benefits of digital banking channels and the speed and security with which they can manage their funds online. Naturally, this is a process, so we expect it to continue, and we will be by our customers’ side, responding to all their specific expectations for faster and more convenient banking. As a modern bank working towards protecting the environment, we were among the first to introduce an innovative way to confirm payment documents with a digital signature. Thanks to this, we decreased the use of paper by 43 percent.

What are the leading trends you expect to see in the banking sector in Bulgaria for the next year?
We are currently focused on instant payments, which allow for funds to be transferred to a counterparty in seconds. Postbank, together with BORICA, a company providing technology infrastructure to the Bulgarian payment industry, has been working hard to implement this product and we expect it to be available to our customers by the end of the year. Banks are starting to pay much more attention to online customer experience and are introducing entirely digital processes. I believe these are processes that eventually will benefit customers, since with healthy competition in our industry we manage to further contribute by adding new products and services to e-channels.

Along with this, our mission is to adequately participate in the development of Bulgarian society and as a leading financial institution, to assist with projects in the major spheres of social life, such as education, culture, sports and environmental protection. Our mission is motivated by the deep and genuine concern for the most valuable asset of our bank, people.

This year, Postbank celebrated its 30th anniversary as one of the leading banks in Bulgaria. Can you tell us about the products you have launched to mark the occasion?
We offered our customers our unique new generation mobile wallet, ONE Wallet, with which customers can perform even more banking services through their phones. They can have practically instant contactless access to main banking services as they transfer their physical wallet onto their mobile phone. They can add all their cards into this new wallet and freely and efficiently manage them thanks to the rich range of functionalities set in the app. There is support for contactless POS payments through the phone, managing cards in the mobile wallet by setting limits for different channels (POS, ATM, online payments), opportunities for adding loyalty cards from various merchants, discount vouchers for partners and much more. Our customers have active and flexible control over their funds 24/7, which is certainly a convenience nowadays. This is why I am sure that ONE Wallet will become an irreplaceable application in everyday payments for each of us.

Our mission is motivated by the deep and genuine concern for the most valuable asset of our bank, people

Another major innovation we carried out at Postbank was the introduction of our express banking digital zones that were immediately recognised as a preferred alternative to banking at a counter. Thanks to the intuitive devices in these zones, customers can easily and quickly carry out a major part of main banking transactions after identifying themselves with their debit or credit card, with no need to be registered for the bank’s online banking. Digital zones are already functioning in 75 branches in 32 towns across the country and we will be unveiling more locations and upgrading the service.

Our customers’ needs are of greatest importance to us, and we will therefore continue offering new solutions for managing their finances. One of our main goals in this process is to create high-quality products providing them with the necessary security of the investment. A few months ago, we became the first bank in Bulgaria to start offering a new-generation metal credit card.

Once again, we demonstrated our position as an innovator in the sector and succeeded in offering our customers something different, modern and valuable in order to meet their highest demands and expectations. We are happy that our customers appreciated this modern product that gave them even more flexibility and confidence, completely in line with their style.

We are pleased to be the first bank in Bulgaria to offer an easy and convenient solution for contactless payments for any merchant. The innovative service, which contributes to mobility, holds the key to the effective development of many industries, and is attractive to both small and niche businesses, as well as large corporate clients. Smart POS by Postbank aims to upgrade the established POS business model and make contactless payments much more accessible and convenient for merchants. This, in turn, will expand access to contactless payments for end customers, which is not only convenient but also especially important during a pandemic.

What further goals are you working towards with Postbank?
Other than our innovative digital products and services, here at Postbank, we continue focusing our efforts and funds in support of projects with real added value for society and we believe that one of the great effects will be building self-awareness that will change our lives for the better. For the third year in a row, we are participating in the ‘dare to scale’ project – a four-month growth programme, aimed at entrepreneurs and businesses that are already past the initial phase of development and want to scale up their activity. The programme is organised by the Bulgarian office of the global entrepreneurship network, Endeavor, with Postbank as the main partner.

It is extremely important to us to be part of this process, to support the ambitions of companies seeking to upscale their businesses and thus change the entire ecosystem. I am positive that this is the right path and the right attitude to lead us forward. The times we live in provide numerous challenges, but they will be overcome with resilience and our capacity to learn and grow. We at Postbank will share with entrepreneurs our experience and expertise in order to support them in the most important stages of their businesses’ development and become part of their growth. We will seek the potential of successful partnership allowing us to innovate and create opportunities in the ecosystem. To us, this is an investment in the future and a chance to be part of the change moving us ahead.

Vertex tax technology: Introducing SAP chain flow accelerator

Managing tax across Europe has become increasingly complex: with new VAT regulations, migrating to the cloud, multiple financial systems, faster data speeds, and urgent reporting deadlines.

For companies with cross-border supply chains, ensuring consistent VAT treatment across all legs of transaction requires tedious manipulation of data in the ERP system. The process is manual, error-prone, and usually requires significant support from IT.

Errors in the interpretation of which data is relevant for VAT determination can mean errors in VAT payments and accruals which affect the bottom line.

Vertex offers a visualisation tool to streamline chain flow data mapping for improved VAT determination. Using the chain flow accelerator, the user can map data inside SAP ECC or SAP S/4HANA to Vertex VAT fields – and perform an interpretation of the data before it’s sent to the Vertex tax engine for VAT determination.

To perform this data mapping, Vertex offers a unique visualisation tool to streamline the data mapping and improve accuracy. Tax professionals can use the tool without IT intervention, connecting up to 80 data elements and documents in a chain, to ensure consistent VAT treatment across the transaction.

The streamlined chain flow data mapping is not only available in S/4HANA, but also in ECC. SAP customers who implement the tool now in ECC can streamline their migration to S/4HANA, since the VAT data mapping can be easily transferred.

Add the Vertex Chain Flow Accelerator to SAP ECC or SAP S/4HANA today – to improve VAT accuracy and spend less time recouping VAT overpayments, reduce IT support, increase tax department efficiency, and improve audit performance.

Vertex tax technology: Why add a tax engine for VAT determination

Today’s multinational businesses face constant changes that affect global tax determination. Not just the ongoing regulatory changes, but business changes: including market expansion, M&A, new financial systems, and new product offerings.

With these constant changes, the process of manual tax research and updating every financial system can be a significant cause of VAT error, and a strain on in-house tax and IT. Even if the tax content is up-to-date, the native functionality in these systems often doesn’t meet the needs of a complex multinational, leaving them exposed at audit time.

Adding a tax engine to your ERP and financial systems improves your VAT process in multiple ways. A tax engine takes away the burden and cost of continuous in-house tax research, since tax content is maintained by the tax engine provider. Adding a tax engine improves VAT determination accuracy, since more relevant data elements are considered than in a native ERP calculation.

With a tax engine, there’s less IT support needed to implement VAT changes, since this can be managed by the tax specialists themselves. Using a tax engine, you can introduce consistent tax coding for a reliable, repeatable accounts payable process. You can conduct adequate real-time reporting, since the tax engine ensures VAT is calculated accurately the first time. A tax engine centralises your VAT controls, allowing for a more agile tax organisation that can scale quickly with business growth.

Adding a tax engine can reduce the overall cost of global VAT management. Integrating a tax engine with your financial systems is essential to stay ahead in today’s tax landscape. You’ll improve your end-to-end VAT processes, making it more efficient, agile, and scalable.

Vertex tax technology: Why add a tax engine for procurement

Today’s tax departments continually look for ways to streamline their operations and reduce audit risk. That focus is not just on the sales side of the business, but on the procurement side as well.

Regardless of whether you’re using your ERP system or implementing a new procurement platform, managing tax in the procure-to-pay process requires constant collaboration between tax, IT, procurement, and accounts payable teams. Without this partnership, it will significantly increase audit risk and inefficiencies within AP.

The manual process of tax research and updating financial systems can strain in-house tax and IT resources, and lead to tax errors. Even when these systems are updated with the latest tax content, their native tax functionality is usually not granular enough for today’s complex tax landscape.

At the same time, tax coding decisions on purchase orders and supplier invoices are being made in the AP department instead of the tax department; and all this is happening at a time when tax authorities are increasing audit activity.

Integrating a tax engine automates sales, use, and value-added tax determination to improve the accuracy of taxes paid and accrued. It uses rules-based calculations instead of human decisions. It applies the same tax logic across the procure-to-pay process: at the requisition and purchase order stage, and at the invoice reconciliation and approval stage.

Adding a tax engine for your procurement process brings benefits across tax, IT, and purchasing. It reduces the burden and cost of continuous in-house tax research, since tax content is maintained by the tax engine provider. There’s less IT support needed to implement tax changes, since this can be managed by the tax specialists themselves. It improves tax accuracy since the functionality is more robust than native ERP or procurement systems.

You can introduce consistent tax coding for reliable, repeatable accounts payable process, where tax own tax decisions. And you can integrate a single tax engine to all your financial systems across sales and purchasing, for centralisation and scalability.

Add a tax engine to your procurement process today to improve tax accuracy, reduce IT support, increase efficiency, increase scalability, and improve audit performance.

Vertex tax technology: How Siemens sought (and found) a tax calculation engine built for growth

“When you’re processing 20-25,000 tax returns and 146 audits a year, it’s extremely important to have a partner like Vertex that you can rely on,” says Sandra Blair, Head of Indirect Tax for Siemens in the US.

Sandra Blair: I’m head of indirect tax for Siemens in the US. We are a global conglomerate in the top 50 throughout the world. We have locations in every country in the world.

We were seeking a new tax calculation engine provider. In conjunction with the Vertex consultants, the DMA alliance partner, we were able to move seven SAP systems off of our previous provider, onto the new Vertex tax calculation engine. Move 3.5 million tax exemption certificates, and set up our use-tax accrual program in less than six months.

After a bit of stabilisation, we then moved our Oracle system in three weeks from our previous provider, onto the Vertex solution.

One of the big benefits that we have been able to obtain from Vertex is putting our destiny in our control. We are no longer having to reach out to IT to make changes once a configuration is identified, or an overpayment, or an over-accrual on the use tax, we’re immediately able to go into Vertex, test our solution, correct it, and get it rolled into production. So a five to six month process has now been taken down to a day, if needed. So it’s been a huge benefit, cost reduction, savings.

We have also had a report customised, so any of these changes that we have made because of Vertex, we were able to identify down to the penny how much we’ve been able to save. So it’s setting us up to take us into the future, into the digitalisation environment and economy. And Vertex, with their content, has given us a broader range to handle our conglomerate and all the service lines that we sell.

When you’re processing 20-25,000 tax returns a year, and 146 audits a year, it’s extremely important to have a partner through, like Vertex, that you can rely on. Their tax calculations, you know they’re right. That provides the right answer when it comes back in to your system.

Working with Vertex has enabled my shared service organisation to take on additional work without additional headcount. It has allowed us to increase our accuracy on our consumers use-tax filing, our accuracy on our customer billings, which has led to helping us increase our customer satisfaction scores from a tax department perspective: making sure that everything is compliant, and that we’re responding in the most efficient and effective manner.

Vertex tax technology: Global tax determination at speed and scale

Tax and IT departments today face an uphill battle, with constantly evolving tax rules and business changes. A Vertex tax engine provides a powerful solution to automate, streamline, and centralise indirect tax, so companies can reduce risk and increase scalability.

Vertex takes tax determination out of each individual transaction system, and puts it in a single global tax engine to support the sales and purchasing side of your business. No matter how many financial systems you use.

With Vertex, indirect tax is managed in one place – but leveraged across all of your business units around the world.
A Vertex tax engine delivers robust capabilities for the end-to-end tax process.

Continually updated tax content, maintained by the Vertex research team, supports sales, use, and value-added tax; plus industry-specific content for retail, leasing, food and beverage, and communications services.

Configurable tax rules let you configure your system to support your specific products and complex business needs.

Real-time address cleansing and precise jurisdiction assignment improve tax accuracy, regardless of where the transaction takes place.

Robust integrations seamlessly pass transaction details and tax calculations between Vertex and your financial systems in real-time.

Integrated tools to help you collect, track, and store exemption certificates. Reporting and data to automate compliance and support audit management. And options to let you deploy the tax engine in whatever way meets your business and IT requirements: in the cloud, on premise, or a hybrid approach that combines the benefits of both.

Find out how a Vertex tax engine can help you: reduce audit exposure, improve compliance, improve global scalability, centralise tax management, and increase productivity.

Integrate Vertex with your financial systems today, to make your end-to-end tax processes more efficient, agile, and scalable. Contact Vertex today to learn more or schedule a demonstration.

Vertex tax technology: Data intelligence for tax

All tax departments collect data. But are you using it in an intelligent and insightful way?

Tax has access to one of the largest, most detailed datasets in the company: sales, purchases, expenses, payroll, and more. But many use that goldmine of information merely to support the monthly compliance process. You use data to generate and validate the monthly returns.

A truly value-driven tax function uses that data for more than just compliance. It leverages data intelligence tools to not only improve the accuracy of the returns, but unlock time, capacity, and insight, to become a more strategic tax function and drive better business outcomes.

You’ll reduce the time spent on compliance and focus more on higher value functions: like audit defence and planning to support the business.

Data Intelligence leverages every data point that already exists in various business systems, and turns it into insight for the tax function to enhance business outcomes.

Data Intelligence tools gives you insight about your customers, your vendors, your taxes collected and paid. Your newly released products and services. Your new selling and buying locations.

You can easily identify changes and trends; and pinpoint areas of risk that you can address more proactively, to impact the business sooner.

Data Intelligence turns raw data into insight; insight you can use immediately, to not only optimise tax performance, but to model, predict, and influence business decision-making to drive business growth.

It’s the key to moving your tax department out in front of the business, and becoming a profit centre; rather than just a cost centre that handles regulatory reporting.

With Data Intelligence, you’ll use tax data to identify new business opportunities, and influence business growth strategy beyond the tax department. You’ll become more proactive, not just reactive. You’ll measure the value contributed, not just the tasks executed.

Vertex tax technology: Introducing Vertex Cloud VAT compliance

A manual spreadsheet approach to VAT reporting is labour-intensive, error-prone, and costly. Keeping up with the latest regulatory changes is challenging at best; and the effort required to support business expansion can hinder a company’s agility to respond to market opportunity.

Vertex offers a cloud-based VAT-reporting solution to reduce risk, automate and improve process efficiency, improve data quality, and keep the business in line with the latest regulatory changes.

Import tax data from multiple ERPs, a tax determination engine, and all other financial systems – even Excel files.
Perform data quality checks and make necessary enhancements.

Map data easily to generate signature-ready, multi-language VAT/GST returns, reports, and AP/AR ledgers. E-file right in the application.

Access workflow tools, dashboards and reports, designed to let tax preparers and managers alike track progress across the end-to-end compliance process: from filing preparation, to approvals, to submissions.

And support audits with drill-down capability to detail transaction data and complete audit logs.

Vertex Cloud VAT Compliance enables multinational corporations to support business growth without additional VAT/GST process burden.

Built-in up-to-date tax content ensures you keep pace with the latest return forms and regulatory changes.
And efficient cloud access reduces the need for IT infrastructure and maintenance, accelerates deployment, and scales easily to support business growth.

Leverage a robust, multi-country VAT-reporting solution across the enterprise: ideal for decentralised tax departments and shared service centres.

Add Vertex Cloud VAT Compliance to your tax operations today, to: streamline process efficiency and reduce manual error, enhance data accuracy and transparency, improve audit performance, and accelerate scalability.