Since 2007 Aiducation International has been active in Kenya and the wider continent as an international for-impact organisation focusing on empowering underprivileged young and rising talent by providing merit- and purpose-based high school scholarships. In addition to this it provides access to coaching and mentoring, focusing on employability and entrepreneurship, and fostering corporate careers and start-ups. Altogether it has built a community of purpose-driven leaders to generate sustainable impact, directly contributing to seven of the 17 UN sustainable development goals (SDGs).
Our slogan ‘Building People. Building Nations’ emphasises that education is not limited to basic schooling but also empowerment of future leaders and entrepreneurs. The Start-Up Fund programme was built with this in mind so that entrepreneurs can advance their businesses while receiving continuous business education and professional mentorship.
Impact-driven partnership
To secure the success of our pilot programmes we are grateful to have teamed up with Swiss Re. Scoping the theme together helped to increase employee engagement towards social impact projects.
Even before the pilot, Swiss Re was already involved – COO James Shepherd generously hosted the 2017 start-up academy in Nairobi and continued to participate as a jury member in assessing individual applications. Of the pilot, Shepherd said “this truly is a programme in which all participants gain. As a sponsor, Swiss Re has gained so much from taking many of our mentors and supporters of the programme back to the foundations of business development, when you have to start without the resources of a big international company.”
The Start-Up Fund acts as the pre-seed capital injection into the entrepreneurs’ small-scale start-ups. Concluded in 2021, the lessons learned at this stage were brought into the next level in June 2022. The focus was narrowed to building a business model and scaling the investment for further customer and social value creation. The intention was to hire a core team, focus on product-to-market fit, and achieve market traction. Our approach was to perfect the qualification as well as to ensure the longevity of the business.
It is crucial to convey that the programme is not only about monetary value but also about mentoring and becoming part of our alumni, by providing mentorship from the application to jury pitching day. The Start-Up Fund maintains the business mentorship ensuring that their development is driving growth, as we deeply believe that there is a much higher chance of succeeding in a new environment if mentored continuously. This mentorship is two-fold: local mentors will provide their expertise on their day-to-day businesses, while global mentors provide a helicopter view, giving strategic consultancy to the candidates along with leadership skill development.
Another goal for the fund was to bring transparency to our own reporting by developing an impact reporting draft. We believe that it is important to quantify our value to society not only by fund access given but also the economic and environmental impact we create within society.
A driving purpose
We have chosen to focus on five main drivers of the SDGs and we expect that those chosen will further enable us to assess a start-up’s impact on the economy, environment, and society in the following years of being an active business.
The five winners identified from our pilot competition have had to qualify under a theme such as healthcare and environment with an aim to solve key issues in their communities, from water purification to waste segregation. Beatrice Kihara shared her perspective as a winner: “During the pandemic I was motivated to start my ex-UK bicycle business since everyone was locked in and looking for an outdoor activity. Cycling was the solution – I am passionate about the environment and see it as the future in reducing carbon emissions.
This truly is a programme in which all participants gain. As a sponsor, Swiss Re has gained so much
But it is a challenge to manage my full-time job and source the bikes, plus needing a huge investment. The Start-Up Fund has just made this possible. I applaud Aiducation and Swiss Re for assigning us global mentors from the first step as that has personally been of so much help. So far, the biggest reward is that I’m able to provide employment to two people who would be jobless otherwise. With the fund we are looking at scaling up and creating more employment.”
Ultimately, our goal for the Start-Up Fund is to create not only employment but also mentors for the upcoming generations. This guarantees economic growth coupled with sustainable business practices for their countries, closing the loop and contributing to a circular economy.
The Portugal Golden Visa programme was launched in 2012 as a residency by investment programme to regain economic strength after the financial crisis in 2008 and to encourage direct foreign investors to the country. This programme was a well-made decision that convinced thousands of HNWIs to choose Portugal as a safe destination for their investments while guaranteeing a backup plan for themselves and their loved ones.
The Golden Visa programme provides visa-free access to all 26 Schengen countries and it is the only programme that grants investors and their family members access to European Union Citizenship after five years. With no relocation required and with an investment starting at €280,000, applicants can enjoy easy travel, free education, access to high-quality healthcare and better work opportunities. The benefits of this programme have led to high demand and as a direct consequence there has been steady growth in Portugal’s real estate market.
The instability that we are witnessing all around the world due to recent events such as COVID-19 and the conflict between Ukraine and Russia has prompted many investors to consider the Portugal Golden Visa programme so that they can guarantee their families options for the future. Despite the travel restrictions due to the pandemic, the demand for the Golden Visa programme has only increased, which in turn has endorsed the importance and benefits of this residency by investment (RBI) programme. According to the Foreign Immigration Service (SEF) in Portugal, the country has been receiving more applications from investors than ever especially from countries such as India, US, China, Middle East and UK.
An unmissable opportunity
The real estate market of Portugal has been booming for the past decade. Demand is growing and is now much higher than unit supply. Despite a high appreciation of eight percent a year, Portugal still offers more affordable prices when compared to the rest of the western European countries. Portugal has proved its significant potential in the real estate market and investors are purchasing units due to the high returns they are able to get, both in capital appreciation as well as in rental income.
Portugal is well known for its stunning beaches and endless recreational options, which can also be found on the famous Madeira Island. Madeira is well served by the airports of the main capital cities and is therefore easily accessible. Appreciation of its real estate market is approaching 10 percent and investors from all over the world cannot ignore its potential.
Investors who would like to qualify for Portugal’s Golden Visa programme can either choose to invest in real estate or in a fund investment. Fund investment starts at €500,000 and these funds must have at least 60 percent of shares in Portugal-based companies.
Real estate options
Since the beginning of 2022, the government of Portugal has implemented changes for those investing in the real estate option. These changes are focused on removing the pressure from main areas of Portugal and therefore clients interested in residential units can invest only in the interior of Portugal. Capital district cities of interior regions like Beja and Guarda are enjoying huge demand due to the returns investors are getting. If investors are looking for options for investment in the main areas of coastline such as Lisbon and Porto, they can invest in commercial units with a minimum investment of €350,000.
Clients interested in higher investment can choose from brand new commercial units in the category of €500,000. We highly recommend that clients opt for units that offer title deed and not a share, since the safety of this kind of investment is at a higher stake of risk. Finding a property that is eligible for the Golden Visa programme is not an easy task. Clients should make sure that they are working only with experienced companies focused mainly on Portuguese RBI programmes since those tend to have a comprehensive knowledge of the market as well as an established professional network.
Apart from successful real estate market performance, Portugal offers to investors an attractive tax programme – non habitual resident (NHR), which grants tax optimisation. The NHR programme was introduced in 2009 and, just like the Golden Visa programme, the goal was to regain Portugal’s economic strength after the global financial crisis.
All the above facts are just some of the reasons why Portugal is a safe choice for HNWIs. Clients of the Golden Visa programme can keep on going with their lives without any obligation to relocate. And yet, future generations still have the option to study in the top universities and take advantage of better job opportunities. Portugal has a stable political situation, a high-quality health care system and is ranked as one of the safest countries in the world.
Driven by regulatory developments, rapidly advancing technology, ESG concerns and the continued consolidation of our sector, the financial services industry has undergone a rapid transformation in the last decade. While online trading and investing platforms continue to grow in popularity, marketeers working in the financial services industry are faced with a number of regulatory challenges when it comes to promoting leveraged investment products that carry an inherent level of risk.
Initially, it is important to remember that financial services marketing differs immensely from other product categories; as marketeers in our field are tasked with producing content that not only complies with a range of regulations covering product marketing and consumer rights, but that is also transparent, educational and insightful.
While working on an eye-catching multi-channel campaign in a highly regulated industry can feel restrictive to those who view compliance as ‘a necessary evil,’ successful fintech marketeers understand that compliance is not a hurdle to be overcome, but rather a vital component of financial marketing. Compliance regulations help maintain the integrity of the financial institutions we work for, provide transparency for investors, and ensure the viability of the broader sector.
The importance of ethical branding
The sheer number of participants, both established and new entrants, in the online retail forex arena renders it one of the most fiercely competitive markets to be in. Since most financial service providers put across a similar offering and aim at the same pool of potential clients, being able to stand out against this backdrop requires effective brand differentiation. That being said, brand awareness cannot be solely achieved by individual promotions or advertising efforts. Instead, experienced fintech marketeers understand that achieving ‘top of mind’ status for their brokerages requires a well-thought-out, omnichannel marketing strategy that includes inbound and outbound communications, targeted media-buying opportunities, paid and organic campaigns, product development, PR activities, and the list goes on.
Due to the often complex nature of online investment products, one of the main objectives of your financial marketing plan should be to get clients familiarised with the benefits and risks involved in online trading and how the products and conditions afforded by the broker can give clients a competitive advantage.
Strong, digestible branding paired with free access to financial literacy and education goes a long way toward easing that barrier of entry for new clients. This is an approach we have long championed at Orbex; we don’t just seek to promote a competitive, transparent, and fair trading environment through our marketing efforts, we also educate investors and potential clients by giving them access to essential, high-quality resources, and curated research. This has been a core part of our strategy.
A new generation of investors
While the rapid growth of the financial services sector has resulted in the renaissance of the retail investor, financial marketeers are now inadvertently faced with the task of catering to a younger, more diverse demographic. In fact, the average trader looks very different today compared to 15 years ago. Having led the retail investment revolution, Millennials and Gen Z are now a fast-growing force that embraces new investing services and tools.
These young investors also have access to far more information than any previous generation of investors, constituting a considerably more technologically advanced and demanding audience. Young investors are more likely to engage in their own research and pick their broker carefully, paying attention to commission rates, bid/ask spreads, and maintenance fees, all of which need to be accompanied by strong regulation that can safeguard their invested capital. In short, they expect a greater level of transparency, accountability, security, and performance, especially when it comes to their investments.
While marketing to these younger audiences can be challenging, investing in a positive and reputable brand image, through responsible and transparent marketing practices enables brokers to gain a major competitive advantage and ensures business growth by building brand credibility and maintaining strong client relationships.
Regulatory dexterity
As we’ve already established, the promotion of complex financial products through online distribution and advertising channels is more closely scrutinised by regulators and rightfully so. Compliance is an essential component of any financial team’s underlying operations, and this is especially true for marketing departments. Over the past few years and as regulators raise their standards and adjust regulations to ensure customer protection, the importance of maintaining regulatory dexterity is now more prominent than ever.
As regulations evolve, it is often up to the marketing and PR department to communicate how these changes will affect clients’ trading. A solid marketing strategy plan must therefore be dynamic, anticipating changes, and maintaining clear communication guidelines that can be quickly adapted as the regulatory environment evolves.
Reaching new markets
As industries around the world rise up to the challenge of globalisation, it has become crucial for financial services companies to internationalise their services to keep up with the changing landscape. The need for localisation has become even more pronounced for online brokers as the shift to digital services opened the financial markets to a more diverse set of traders from all around the globe. In a nutshell, localisation helps online financial services providers to grow at scale, reach new markets, and gain ground in previously uncharted territories.
With 75 percent of the world preferring content in languages that are not English, localisation has many tangible gains for financial marketing departments. That being said, localising financial information is a complex process – requiring the highest levels of quality, expertise, and security, while also ensuring compliance with local and global legal standards.
In a client-centric digital world, users have grown accustomed to digital experiences that anticipate their actions and are readily available across platforms and channels. Personalised, prediction-based, hyper-relevant client journeys are now becoming the norm, and while gathering client data is the first important step towards successful personalisation strategies, there are a number of important regulatory issues that marketeers need to be able to navigate.
One of these regulatory concerns became more prevalent in 2018 with the introduction of GDPR (General Data Protection Regulation) privacy rules that sought to give users more control over their data. While consumers have come to expect personalised messaging, they are simultaneously more concerned about their personal privacy. This means that financial marketeers now need to incorporate an ultra-transparent GDPR approach to collecting the information required to deliver these personalised experiences.
Working closely with their compliance departments, marketeers should draft their campaigns and communications in a manner that clearly discloses to the client what data is being collected and how it will be used with their consent. Consent is the key word here as transparent opt-in data collection methods that allow website visitors to authenticate the collection of their data, create a culture of trust between brands and consumers. In turn, businesses establishing trust are more likely to gain the information they seek from current and prospective clients, leading to higher brand value.
Responsible, data-driven growth
In order to make an impact in 2022 and beyond, brands are required to make responsible data-driven decisions, leverage first party insights, and deliver customised experiences. The key to successful personalisation and automation of the client journey is data. Ultimately, more data allows for more data-driven decisions. Recognising an individual’s needs at every touch point and delivering a custom experience to best serve those needs is a top-tier marketing strategy that can unlock more potential lifetime value than any hard-sell advertising.
With one of the most powerful applications of data-driven marketing being targeted advertising, collecting useful and high-quality data in a transparent and compliant manner ultimately enables financial marketeers to deliver propositions tailored to the individual, resulting in improved conversion rates. On their part, consumers tend to engage more often and more meaningfully with personalised marketing communications, making the contextualisation of interactions imperative to remaining competitive in today’s marketing landscape.
‘Data done right’ entails being able to effectively identify client profiles, communication channels and what messages to deliver, eliminating a lot of the guesswork from media planning and buying. What is more, targeted advertising can help generate positive feelings towards a brand, as consumers have grown to appreciate well-timed, non-intrusive content, and advertising that aligns with their personal interests and needs.
In short, ethically and strategically using data to deliver relevant client experiences is one of the key defining digital marketing skills that can determine which financial services brands are able to achieve long-term sustainable growth in the future. In an industry that is becoming increasingly competitive and heavily regulated, digital marketeers must be as inventive as the products and services they seek to promote if they wish to stay ahead of the curve. From consumer education and building trust to creating an advertising and communications plan permeated by transparency and compliance, the road to digital marketing success can be as exhilarating as it is challenging. By remaining vigilant of the changes within a rapidly evolving regulatory landscape and being able to quickly adapt to the latest trends in digital marketing, financial marketeers can build a powerful brand image that inspires long-term loyalty and trust.
About the author
With over a decade of experience in the financial services and fintech sector, Drosoula Hadjisavva has held critical leadership roles across several leading fintech/FX and Telecom firms.
Drosoula Hadjisavva, CMO at Orbex
As a certified Chartered Marketer with a Bachelor of Science degree in Computer Science and an MBA, Drosoula has a rounded experience in heading global marketing organizations, including high-performance digital marketing, corporate, brand, PR/media, as well as product marketing.
Drosoula currently serves as Chief Marketing Officer at Orbex, a multi-regulated financial services firm based in Cyprus since 2011, having previously held the position of Chief Marketing Officer at BDSwiss.
Despite growing awareness around the environmental perils of plastic, the payments sector still relies too heavily on the material. Research from Finder has found that six billion new plastic cards are produced and issued each year, with the majority made from PVC. This form of plastic is harmful during its production, use and disposal, as PVC’s chlorine and dioxin components release huge amounts of toxic chemicals into the environment.
On top of this, 5.7 million tonnes of plastic cards end up in landfills every year. Over time, these break down into microplastics that can be inadvertently consumed by humans and wildlife, causing significant health issues. Plastic cards can also end up in the ocean, damaging marine ecosystems and food chains. Because of these problems, moving towards digital payments is imperative. Referring to any kind of electronic payment, these remove the need for physical cards entirely. Here are three digital payment methods for consumers and businesses to begin embracing today.
1) Digital wallets A digital wallet works as a virtual card that sits in your smartphone, enabling you to make purchases out and about by tapping it just as you would for a contactless card payment. Almost every mobile comes with its own wallet that’s ready to be used – for example, the iPhone has Apple Pay, Samsung has Samsung Pay, and other Androids have Google Pay. The great thing about mobile wallets from a business perspective is that they are easy to accept, as most in-person POS systems that allow contactless payments will also accept mobile wallet payments.
The ease of use for consumers and simplicity to set up for businesses has led to a huge rise in the use of digital wallets. According to IT service management company Marqeta, 75 percent of consumers are now embracing digital wallets to pay for their purchases, with 60 percent of people saying that they’d now feel comfortable leaving the house with just their phone and not their wallet.
2) Peer-to-peer payments Digital peer-to-peer (P2P) payment solutions enable users to search for one another and perform online transactions, with high-profile examples including PayPal and Venmo. These link the payer and payee’s bank accounts and enable you to make a payment without requiring the other person’s bank details, helping to keep them private. All you need is their email address or phone number.
This is not always the most viable option for larger companies, but for those running a market stall or a small business service, for instance, P2P payments is a useful way of accepting payments to start off with.
Research shows that there are just under 150 million P2P mobile payment users in the US, which makes up almost 62 percent of smartphone owners. By 2026, this number is expected to grow to over 180 million. In addition, the value of P2P payments is around $550bn, a figure that is expected to rise by 10.5 percent to $612bn in 2023.
3) Social media payments Many social media platforms now allow businesses to accept payments from goods and services from within their apps, including the likes of Facebook, Instagram and Pinterest. For example, Facebook Pay is a payment method open to all Facebook users that’s free for both businesses and consumers. All users need to do is add their bank details and they’re able to send and receive money from the click of a button. Such payments are inexpensive with minimal processing fees.
Over 50 percent of consumers have purchased something on a social media platform, with Facebook and Instagram by far the most popular. And, with 88 percent of 18 to 29-year-olds and 78 percent of 30 to 49-year-olds using social media every day, it’s clear that offering social media payments can be incredibly useful for businesses.
Just as the stock market offers its clients a clear and transparent operation reaching back centuries, the new forex market is similarly unique and full of exciting possibilities. Although it is new, it has still managed to emerge as the largest and the most liquid financial market across the globe. Especially with the advent of internet marketing, real-time forex trading has become a very common concept among brokers and people interested in investing money. Millions of investors have shifted stocks from traditional markets to forex. But how the brokers have convinced them to do so is still a pertinent query.
Almost every broker in recent times aims to provide their customers with a variety of investment options. Customers who are unwilling to trade on their own are the key target market for such brokers. These customers need customised services to address their monetary needs. Brokers have found the best customisable trading robots in Forex which allow these customers to fine tune how trades are executed on their accounts while allowing them to make profit with a hassle-free, hands-off approach.
Another method employed is the utilisation of do-call managed accounts which follow a specific strategy while calculating the risks associated. Below we’ll discuss the distinctions between PAMM, and Copy trading systems, and how brokers make them worth a try for investors across the globe. Although there has been a lot of ambiguity associated with the context they are used in, brokers use them widely as the most suitable and futuristic money management options.
So how is Forex PAMM and Copy trading employed for managed investment?
Forex PAMM
PAMM (Percentage Allocation Money Management) is the most suitable and widely accredited method used to carry out the automation and management of your trades and money. The major benefit of PAMM is the distribution of transaction volumes on the basis of the percentage across everyone participating on the platform. The allocations of the transactions are mostly decided and calculated on the basis of the investor’s balances or equity.
It is worth mentioning that the entire balance of the investor is replicated on the account of the Broker or the Money manager. This also includes combined balances of all interconnected accounts. This infers that the master doesn’t possess any money of his own; as an alternative, the master possesses a virtual balance which is equal to the balances of investment accounts.
As soon as any transaction is carried out from the master account, it is quickly and proportionally divided in all the investor accounts at similar pricing to the master account.
Certain PAMMs are nation equipped with features of displaying the individual transactions on investor trading accounts. However, they take care of the own back office where the trade-based P&L is apportioned. This technique is not particularly appreciated by consumers since they prefer to see all of their transactions being carried out on their trading accounts. A few PAMMs also offer leaderboards for master accounts, which grant the investors a chance to evaluate their performance before promising to avail their services.
One of the most important details to know as an investor is that you cannot trade independently on investor accounts linked to PAMM. The major logic behind this restriction is that it would endanger the percentage allocation on all accounts. Normally, you can delink the investor account from the Master any time you want. However, the transparency of this method is what makes it a bit questionable among investors.
Copy trading
Copy trading, sometimes referred to as Social trading, is the most transparent and flawless method of money management. There are specified platforms which grant traders a chance to incorporate a copy trading solution with the brokerage company of the investor. Alongside that, they offer their personal database of established signal providers, with an assortment of other information for each of them. It is a major advantage in comparison to Forex PAMM since the broker does not need to source steadfast money managers on their own. Furthermore, it’s important to highlight that the MT4 and MT5 servers offer their own copy trading service as well. It comes with a substantial number of providers who are reachable through the MQL5 website.
Clients mostly track the signal providers who have a specific presence and following on the social trading platforms. These clients can subscribe to multiple suppliers who work on a single trading account – which is unfeasible for PAMM. Concurrently, clients are permitted to trade on all of these accounts or liquidate positions as provided by the signal providers. In the case of the investor account, the results are not deeply linked with signal providers as the investor manages their own money.
Providers are specifically answerable for the results generated on their own accounts, and granted signals may be utilised and manipulated in many ways by an individual investor and different investors. A few platforms even grant the capital of signal providers’ transactions. Most platforms allow the client to directly get in touch with providers by asking queries based on their operations, or they can even start an online discussion with them. Most online platforms take membership and subscription fees to give customers access to signal provider’s services.
It is quite apparent that there are multiple alternatives which your brokerage can use in order to offer managed account services. The method which is most suitable for your money management is solely dependent on the trading platform that you are using and your personal preferences from the options available. Due to the intensity of the competition in the market, brokers will have a fair opportunity to get the required solution for you at an affordable price. It will undeniably aid your organisation in getting a competitive edge.
For the past decade, Peter Bakker has led the World Business Council for Sustainable Development (WBCSD) based in Geneva, Switzerland; the premier global, CEO-led community of over 200 of the world’s leading sustainable businesses. WBCSD is a membership organisation that considers business a critically important driver in leading the transformation needed to ensure over nine billion people are living well, within planetary boundaries by 2050 – a net-zero, nature-positive and equitable future. But business alone will not be able to ensure the scale of transformation needed. WBCSD’s list of members includes many of the world’s most famous brands and household names, including some who have been accused in the past of doing harm to the environment. Bakker spoke to World Finance about creating change from within.
Is it for businesses to lead the way on climate change and self-regulate, or is it for governments to take a harsh line and force change via policies? How realistic is either proposition and how does WBCSD see the way forward?
A combination of policy and regulation as well as leadership from business to keep driving forward change is needed. Our member companies come from all business sectors and all major economies, representing a combined revenue of more than $8.5trn and 19 million employees. Together their actions can be truly transformational and we need to start with those value chains where it is most needed and that have the highest impact.
Let’s take energy for example. Energy powers the economy and enables people to live the lives they aspire to. A sustainable energy system will need to provide reliable and affordable net-zero carbon energy for all. The speed at which the energy system will be decarbonised will critically influence our ability to limit the rise in global temperatures to 1.5 degrees Celsius.
Decarbonisation and transition will only happen if forward-thinking companies within the energy space work together to design a net-zero carbon, nature positive and equitable energy transformation as well as scale innovative business models for low-carbon energy solutions. We need to bring new innovative thinking together with the scale and reach needed to drive and implement change.
You talk about ‘reinventing capitalism’ to reward true value creation, not value extraction – what exactly does that look like?
The starting point is rethinking capitalism, and not in an ideological way. In the world today there are three severe crises in sustainability: climate instability, loss of nature, and mounting inequality. In our current model of capitalism, we only measure financial performance; we don’t integrate environmental or social performance. That means that when we do damage, there is no penalty that anyone pays. We need to start integrating the environmental and social impacts that governments and businesses have.
Then we get to a value creation model – if you reduce the environmental impact on people and improve their lives, you create social value and by measuring that as well as ESG disclosures, capital markets will begin to value that performance. Twelve months ago, we published Vision 2050 – Time to transform. The cornerstone of that vision was reinventing capitalism. It has been signed off by 44 companies who helped us create it. WBCSD has transformed its strategy to align with this vision and it was taken to vote in October 2021.
Given the growing propensity towards ‘greenwashing,’ there are those who may feel that they have lost trust in businesses’ self-selected green propositions. Why is it important that businesses in the very sectors known for high-impact carbon emissions (oil and gas, banking, ‘big food’ etc) are on board and taking action?
We are fortunate in that our membership is just that – a membership and entirely voluntary – but there are a number of criteria that members have to adhere to in deciding to be a member. Our philosophy is that it is better for big, impactful companies to be in the tent rather than outside the tent. There are plenty of organisations and individuals who don’t believe that and who judge, but our role is to bring companies into the tent and work with them on how to decarbonise, become nature positive, and be more equitable.
In our current model of capitalism, we only measure financial performance; we don’t integrate environmental or social performance
We still see that business has a trust deficit in the eyes of many – oil and gas companies are in that camp, for example. Only by taking real action and being transparent about what is your target and whether you are making progress can you rebuild the trust; it is a journey. You need to set a target aligned with science, and then through ESG disclosure and reporting, you need to be very transparent on progress.
There is a lot of pressure on companies now because of competition, activism, and consumers asking for a different solution. McDonalds joined us eight or nine months ago, which was after Vision 2050, and after our new membership criteria. They walked in with their eyes open and we wouldn’t have let them join had they not understood the membership criteria. Companies come to us as they get real support on how to decarbonise.
Do you really manage to get 200 CEOs of some of the largest businesses in the world in the same room at the same time?
We have a council meeting once a year and invite CEOs as council members. We have never had all of them at the same time, but there are always more than 100 over one or two days. We host roundtables bringing people together over similar themes and shared knowledge. But more important than that is for the teams of the CEOs and the CFOs to really make progress. It is not a talk shop, it is a bringing together to figure out how to turn decisions into action, identify projects to move forward, then progress reporting for CEOs and mobilise teams to do more.
One of the major challenges you tackle is mounting inequality. How can business leaders approach this meaningfully and avoid failure of sustainability efforts? Why are the two interlinked?
As business leaders we must ask ourselves – are we truly committed to a more sustainable world? And if the answer is yes, we must accept that it cannot be a pick and mix approach to sustainability. Reducing our emissions will not be enough; committing to a circular economy will not be enough. We must take urgent action to create a more equitable world where everyone has access to opportunity, justice, and income regardless of their race, gender, or background. It is only by achieving this that the world has the possibility to transform. Inequality has become a systemic risk – a risk that is threatening not only individual companies or communities, but entire economies and societies.
Wide disparities in income, wealth, and overall wellbeing, underpinned by deep, structural differences in the opportunities people have to achieve those outcomes, are fuelling widespread dissatisfaction and disillusionment. This, in turn, is contributing to a cascade of consequences with dire implications for our societies and for businesses around the world: eroding social cohesion, diminishing trust in key institutions, fuelling civil and political conflict, and undermining our collective capacity to tackle complex challenges. It will not be possible to arrest climate change, for example, without addressing inequality. Meanwhile, a number of major trends and developments are making the situation worse. Climate change, technological disruption, and the COVID-19 pandemic, for example, are all hitting the most vulnerable the hardest.
Do you liaise with direct action groups such as Greenpeace and Extinction Rebellion? How would you describe the interplay between the two types of organisations?
Activism, if applied honestly, has a useful role in moving people’s minds. We have had projects engaging with other players like Greenpeace but structurally our organisations have different roles to play. In terms of our membership, I always describe WBCSD as the ‘challenging friend’ of the business – constantly trying to help them do better, faster. We are there to help them, sharing best practices and redefining value terms. We have now got a network of over 50 Chief Financial Officers to work jointly as well. As a bridge between the corporate world and the capital markets, CFOs are uniquely positioned to set the agenda and trajectory of market transformations as they begin to take shape.
Ultimately, the agenda and end goal of our organisation compared to activist ones is no different, but our messages are. Across the world, corporate sustainability performance is top of mind for investors and consumers alike. Global financial reporting standard-setters are quickly paving the way towards alignment of sustainability disclosure frameworks, with new regulatory requirements for ESG and climate disclosure on the horizon. Business is entering a next phase of ESG performance, transparency and accountability.
To realise a world in which over nine billion people can live well, within planetary boundaries, over the next decade we need to unlock change in a way – and at a rate – that has so far eluded us. It is not enough to know what needs to be done. We need to accept that radical shifts in all parts of society will be required, including business. Leading companies need to prepare now.
The automotive and transport industries are continuously evolving, and today’s real challenge is the ability to create value in the context of these changes. Many parts of life as we knew it were irreversibly altered when the pandemic struck, and while the transition to a circular and greener economy had already begun, the recovery from COVID-19 should serve as a catalyst for change in the automotive and long-haul trucking industry. The sector’s growth prospective will highly depend on the strong commitment to leading the change to a more sustainable future and increasing the focus on technology and innovation.
Leading the transition
Climate change and the race to net zero are arguably among the greatest challenges that the automotive and transport industries have ever faced. As a whole, the UN’s Intergovernmental Panel on Climate Change (IPCC) estimates that these industries are responsible for approximately 23 percent of total energy-related CO2 emissions.
The solutions devised to ensure the achievement of sustainable logistics are diverse in their nature and scope – from fuel-efficient vehicles, and cleaner fuels, to alternative driveline technologies such as electric cars and trucks. Additionally, in order to increase the autonomy of vehicles and to create more sustainable transport solutions, it is essential to explore other solutions towards net zero emissions in a broader perspective, such as bio-methane.
Technology: the key pillar of growth
Innovation and sustainability go hand in hand as the use of technology is essential for reducing emissions and preserving the environment. The sector has responded to the pandemic by focusing more heavily on innovation as it is fundamental to respond to the evolving needs of the automotive market to ensure the industry’s transformation and adapt to a changing world. Currently, we are in an industrial revolution with exponential innovation everywhere. The key to success in this disruptive environment is to accelerate the introduction of new technologies through a new way of working, leveraging on a vast variety of different competencies inside a broader ecosystem of players and partners, as this will be the most important competitive advantage.
We don’t fight the change, rather we will use its energy and momentum to transform our sector
With the fundamental and profound shifts in technology taking place, our objective is clear: embracing powerful market trends and anticipating the products and services that customers need. We don’t fight the change, rather we will use its energy and momentum to transform our sector – as well as our whole economic system – for a sustainable future.
An important factor to be aware of is the changing mobility needs of people and goods. European and global fleets are setting ambitious decarbonisation targets, and continued investments in research and development will open the door to unlimited possibilities. R&D is also the answer to advancing technology and analytics in business models, offering innovative solutions for vehicles and powertrains.
Fully integrated
There is another big transformation underway linked to product connectivity and the internet of things. We are going to see more and more trucks and commercial vehicles fully integrated into a broader, connected ecosystem, and this will enable vehicle-to-vehicle and vehicle-to-infrastructure communication. It will also foster green, and in some cases autonomous, transport solutions that offer clear benefits for the entire value chain in terms of efficiency.
Energy transition, vehicle connectivity and digitalisation, and autonomous driving are the key areas of the technological roadmap we should keep in mind and leverage on. All these innovations in the wider automotive industry represent a unique opportunity for the trucking sector to confirm and solidify its central position in the global trade ecosystem.
Our ambition is to make them merge and interact together in order to offer sustainable and connected transport solutions, while transforming business models. This approach will help to not only increase the share in the multi-billion-euro profit pool of commercial vehicles worldwide, but also to step up our offering. Only by leveraging on the opportunities offered by new technologies will we be able to secure a long, prosperous and sustainable future for our sector.
When Jared Bibler visited Iceland for the first time in 2002, he couldn’t imagine that one day he would become an Icelander himself. A native of Massachusetts in the US, he was working for an Icelandic bank when in the autumn of 2008 the country’s financial sector hit an iceberg. His stint as investigator at the Financial Supervisory Authority (FME), the regulator that sent some of the main culprits to prison, helped him discover how a country of reticent fishermen became a global banking powerhouse and then lost everything. In Iceland’s Secret: The untold story of the world’s biggest con, a mix of personal diary, travelogue and financial thriller, Bibler narrates with gusto the Scandinavian saga of a nation that briefly went mad. He tells World Finance’s Alex Katsomitros how Icelandic banks collapsed, why he left the country disappointed and what’s the next bubble that may crash.
What went wrong in Iceland? Was it the system or the people who were responsible for the crisis?
A bit of each. Surely there was naiveté on the part of the people. Money was a relatively new idea there – they started using it a few generations ago. Before that, money was something the Danish overlords had and Icelanders didn’t. So having money in itself is already exciting in Iceland. We spend it with almost adolescent exuberance. Bars and clubs are full at the first and last weekend of the month when everyone gets paid. People spend what they get each month. But maybe that makes sense, given the high inflation history of the country.
Did the fact that it’s a small society play a role?
I didn’t write the book to pick on Iceland. It’s a much bigger story. There is, however, something I did not like. In every country conflicts of interest can arise in business, but in Iceland people use the small-society argument as an excuse to run towards conflicts of interest instead of avoiding them. It’s like “there are so few of us, so I have to give my cousin a discount.” There’s a level of person-to-person corruption. People love to get around the system, which is human nature, but in this case the system is a small society, so you are just cheating your neighbours. But Icelanders don’t see it that way.
The other piece you can’t ignore is the role of big global creditors pushing money into the country. Early on mainly German banks, but later from all over the world; Japanese housewives had ISK investment funds. The economy could not handle the amount of liquidity. In a place where people were not used to having money, suddenly they could borrow as much as they liked. Many went crazy, buying cars they didn’t need with foreign currency loans.
The biggest crime was happening inside the banks. Ordinary people did benefit, but in the end they paid the price. People often say to me: “But Iceland came back.” But nobody gave me my house back. Macroeconomically things look good, but individually, many people like me lost a lot. It set me back for my whole life. My retirement savings were zeroed out in my mid-30s.
It’s clear that you fell in love with Iceland and became an Icelander yourself, but you don’t hesitate to be critical of the culture. For example, you criticise the financial regulator. You argue that they did 10 percent of what they could have done and currently they are understaffed and not independent anymore. Some of the regulators were even involved in scandals. Would it be right to assume that you left Iceland with a bittersweet taste in your mouth?
I’m glad that that my disappointment came through in the book. Some readers told me that it wasn’t the market manipulation that shocked them the most. It was what happened at the regulator. It shocked me too. I think the regulator completely fell down on its obligations, because under Icelandic law only the regulator was authorised to originate criminal cases of market crimes, not the state prosecutor or the police. But they didn’t. What the regulator did at the end of 2011 was to effectively shut down the investigation team, reassigning its members or not restaffing when people resigned. Then they gave a triumphant press conference, saying that all cases from the crisis were investigated and closed.
That’s completely untrue, because I had a huge list of investigations that we hadn’t even opened yet. Those investigations usually take six months to a year each. There’s no way that they could have opened and resolved all of these. I don’t know where the pressure came from, but there was pressure to move on. I sometimes hear the criticism that my motivations are to punish people, but that’s not the case. What I want to see is due process. If there’s a potential crime, it needs to be investigated. Most of the people involved in the crisis got away with it.
I was quite bitter at the way the regulatory team was dismantled, because the regulator was left without an enforcement capacity, which most regulators have. A regulator needs a special team that’s set aside from the day-to-day tasks, taking up potential criminal or civil cases against market participants. You can’t have the person who’s calling every month to get a loan spreadsheet be the same one who’s investigating potential misconduct, because the majority of regulatory employees have to be on good terms with the people they oversee. A special team is required for this. Iceland never had such a special team and after we established what could have become that, it got dismantled. And today the regulator has become part of the central bank, which is cause for concern because they have even less independence.
What about European regulators?
They did try to act, but it was too late. In 2006 there was a mini crisis in Iceland, which was the beginning of the real crisis. The IMF came in and had some very strong words about Iceland’s overheating economy. In the summer of 2008 a meeting of central bankers was held in Basel and the Icelandic central bank governor got lectured by European central bankers to clean things up. Icelandic banks collapsed a few months later.
The world’s financial system is so piecemeal that there are always ways around prudence. The incentives of Icelandic banks to borrow as much as they could were fantastic for their executives. But there’s no incentive for prudence for the people lending to them.
The incentives for Icelandic banks to borrow as much as they could were fantastic for their executives
A big piece of this is ratings. Icelandic banks in early 2007 were briefly rated as AAA, as though they were the Icelandic government, which was always in good shape financially. This was not a sovereign debt crisis like Greece. But private banks grew to become eleven times the size of the economy in just a few years. They were highly-rated because of the government’s rating. That meant that international pension funds could buy their debt and it was deemed safe, like holding gold, which is horrendously irresponsible on the part of rating agencies.
The whole rating agency system is a case of badly aligned incentives. Even today, the issuer of debt pays for their own debt to be rated. The incentive for the rating system is to give high grades, because you have capital requirements for banks based around ratings. If it’s AAA rated, you can hold as much as you like. When Basel II came into effect it meant that these ratings mattered for banks, so if they are holding a certain level of AAA debt, it’s like holding cash. That created regulatory arbitrage: a demand, especially by European banks, to hold AAA bonds. Some of the subprime US stuff was actually packaging up junk in a way that could be rated AAA, so that German and French banks could put it on their books, and earn more yield than they would get from government bonds. That was an incentive to create more subprime junk. That’s a broken angle in the system.
Why didn’t alarm bells ring when Icelandic banks started providing consumer banking services in the UK and the Netherlands?
Iceland is an EEA (but not an EU) member, so it passes a lot of EU law into domestic law. So it has access to the EU passporting system, which is still active today.
This means that a French bank can open a branch in Germany and its activities would be regulated in France. It’s set up to help banks expand, but banks like Landsbanki, my former employer, used this rule to open up branches on the Continent.
They did this because they were running low on funding after the 2006 crisis and needed new sources of deposits. Previously, they had been criticised for growing entirely on wholesale funding and not taking deposits. So they said ‘ok, we’ll take deposits’ and opened Icesave. They were operating under the EU framework, so there wasn’t much concern over legal issues.
In early 2008, the British government began to pressure Iceland to force Landsbanki to create a separate company in the UK, regulated by the UK as a bank, and put Icesave into it.
But even the Icesave marketing material said ‘Icesave’ brand and only the small print mentioned ‘part of Landsbanki, Reykjavik, Iceland’. So the British people who were putting money into these accounts were actually funding a branch of an Icelandic bank that just happened to be situated in the UK! The collapse of Icesave should have been a wake-up call for the EU to do something about passporting, but I don’t believe they ever closed this loophole.
The UK government famously listed the whole country and its central bank as terrorists.
That was brutal. There is a theory about a link to Scottish independence. Gordon Brown and Alastair Darling were both Scottish Unionists. Scottish nationalists were comparing Scotland to the Nordics and arguing that it could be a successful Nordic country. So they {Brown and Darling} may have done it for that reason.
How come Icelandic media didn’t suspect that something was going wrong, since there were early warnings? Were they too close to the banks? Perhaps they didn’t have the necessary resources or expertise?
The two big newspapers are Morgunblaðið and Fréttablaðið. The former is the mouthpiece of the centre-right Independence Party, the most powerful one in Iceland. Traditionally, they are the nexus of business and political power. Davíð Oddsson, still the most powerful guy in the country, is currently Morgunblaðið’s editor. But he was also the prime minister who privatised the banks. The critical 2006 IMF report was published just three years after full privatisation, so there wasn’t much interest in Morgunblaðið to talk about the risks because it was too recent, and their party was still in the government.
Fréttablaðið was part of Iceland’s biggest media company, controlled by Iceland’s leading businessmen, who also owned a large piece Íslandsbanki, the third biggest bank. So there probably wasn’t much appetite to criticise the banks there either. When I describe who controlled the newspapers, people sometimes scoff at this as an example of Iceland’s provincial nature. But on the contrary: Iceland is really the larger world in microcosm. These kinds of conflicts of ownership hamstring media organisations all over the West, it’s just more easy to see these patterns in a smaller economy.
What’s really striking is that most people got away with it. One convicted politician later became an ambassador to the US
He’s the only one ever convicted of a crime against the Icelandic state in the country’s history. And still he was rehabilitated. Many of these guys, even those who were jailed, rehabilitated themselves. They kept a lot of money offshore, hired PR people in Iceland and abroad, and cleaned up their image.
The dominant narrative now is that Iceland had a great banking system and finance was the future of the country. Then Lehman Brothers collapsed, and took Iceland down. There are even rightwing politicians today who question whether there was a crash at all.
So should we be holding up Iceland as a success story?
It’s a success story insofar as we got some criminal convictions. That we briefly had the resources to do that can be seen as a mark of the public’s rage. It can’t be overstated how bad things were for a few months, especially after the banks collapsed and the UK terrorism law was enacted. We were frozen out of our savings and we were losing our houses and cars. That dark mood of struggle persisted for four years. The darkest times were the first six months, but it was an unfolding tragedy that just kept rolling. We couldn’t go on vacations or to a restaurant anymore.
Our lives became really hemmed in and very close to the bone. There were ads on TV telling people to only buy locally made products and showing how the stacks of coins would stay in the country. It was like we had become an agrarian society, a throwback to the 19th century. Because of that desperation, there was a movement to go after people. Whenever I told people at social gatherings that I was investigating banks, they would say ‘go get them’. The man on the street was sure that he had been swindled by a group of criminals. And he was right.
Have things improved now?
This March (2022) the government sold a 22.5 percent stake in Íslandsbank to a secret list of 207 bidders through an auction. Bidders got their shares at a discount of four percent to the market price. Oddsson’s successor and protégé Bjarni Benediktsson, oversaw this process as finance minister, although they created another agency at an arm’s length from the ministry to carry out the privatisation. They wanted to keep this process secret and said that the bidders were professional investors: hedge funds and pension funds. But then it came out that some bank employees were in on the deal as well.
So there was pressure to publish the list and eventually the finance ministry relented. It turned out that one of the successful bidders was the finance minister’s father! These bidders got a four percent discount and flipped their shares over the following days, basically printing money for themselves. There were foreign and domestic investment funds on the list who asked to participate and their emails were never answered. And the list of buyers includes many old names from the 2008 collapse, including people who went to prison.
So they’re still on it.
I think nothing has changed.
You said that there was a lot of anger, because people lost their money and jobs. How come there was no populism, an Icelandic version of Trumpism or Brexit?
This was 2009, so before those forces were unleashed. There’s more of that happening in Iceland now. And in 2008 it was obvious to most of us who the culprits were: the Independence Party that had run the country for decades and had privatised the banks, and even after the collapse refused to step down. That party was symbolic of the Icelandic elite. Davíð Oddsson had been the prime minister and then was made head of the Central Bank as a retirement gift and made some questionable decisions in the run up to and during the crisis. Trumpism and Brexit were anti-elite movements. In Iceland it was Oddsson, the Independence Party and the central bank that represented the elite.
But they were reluctant to let go of their power. Oddsson did not step down as central bank governor until six months after the crash. This was the biggest financial collapse in Western history, and the guy in charge was still there! There were people outside the parliament every day all winter long, banging on pots and pans. They wanted a new election. And we got one, as well as new parties in government. The Independence Party was kicked out of power, but only for a few years.
They came back in power along with their little brothers, the Progressive Party, as a coalition in 2013. They said that the last four years had been really hard not because they had run the country into the ground in 2008, but because of these other parties. So they promised debt relief on mortgages and came back in.
You are a ‘bubble expert’ now. Is there another bubble in the global economy that you think we should be worried about?
We have a huge bubble of global debt: the highest global debt-to-GDP ratio ever. That needs to be unwound somehow and that’s going to be a programme of probably 10–20 years, perhaps the rest of our professional lives. We are also seeing the beginnings of a new monetary system. The US dollar sanctions on the Russian central bank were a wake-up call for other central banks that their dollar assets are political footballs that can be frozen by the West. So there are moves away from the dollar. Asian countries are talking about a commodity-linked basket of currencies they could transact in. So with the pandemic and Russia sanctions we are seeing a shift in the global monetary order. I don’t know how all that will shake out, but current global debt levels are very worrying. It’s like the whole world is Iceland now.
For a long time, banks ran every part of their services. Then, once the world became more digitalised, most wrote and ran their own core banking software. Each bank’s core banking was entirely bespoke. Then companies like Avaloq emerged and standardised core banking software. Then, in the 2010s, firms like Mambu or Thought Machine arrived. Core banking was suddenly broken up into its individual components, an API for every financial service. Bespoke and standard at the same time.
What I am saying is that what’s going on in embedded finance and banking-as-a-service (BaaS) has been slowly happening since banking first digitalised. This is natural progress. It only feels so seismic because the possibilities are so vast and it’s happening much faster with the advancement of technology.
This next stage is going to transform financial services in the same way the original core banking software did, perhaps even more so. Now integrators, such as AAZZUR, can pull all those standardised APIs into one ecosystem of financial products, so financial service providers – and I don’t just mean banks or fintechs by the way – can create a truly tailored offering. How financial service providers adopt this next stage will be key to how they scale and survive. Here’s why.
A future of embedded finance
Andreessen Horowitz’s Angela Strange was right when she said, “every company will be a fintech company.” Embedded finance allows any digital business to offer services like loans, investment advice and insurance at the point of sale or need. Offering financial services is now simply a case of plug and play. This is a huge value-add for digital businesses and many are already getting involved – just think about the last time you didn’t see Klarna at checkout. This might sound like a big threat to financial service providers – but really it’s a huge opportunity. The market just got a lot bigger, and someone has to provide those services. For those who look to integrate and offer their services via APIs to retail businesses or other fintechs, scalability and profit beckons.
For those who look to integrate and offer their services via APIs to retail businesses or other fintechs, scalability and profit beckons
Despite there being around 250 challenger banks in the world, only five percent have broken even. Embedded finance is changing this. Now challenger banks can make commission from embedding financial services from fellow fintechs into their systems – or by embedding theirs elsewhere. They have the infrastructure to easily integrate them and the data to create triggers to cross sell useful products right at the point of need.
For example, if a customer purchases a flight or a hotel, they can then be offered travel insurance or foreign exchange. I foresee a tough time for single-focus fintechs. The profit potential of BaaS and embedded finance is only going to shift momentum towards those built to integrate.
As we go about our lives using our debit and credit cards, we’re leaving a footprint, creating a digital persona just like we do on Google or Netflix. With this data, fintechs, challenger banks and digital businesses can create hyper-personalised customer experiences that offer financial add-ons customers genuinely need, when they need them.
From the most specific insurance types to wealth management, from travel money to carbon offsetting, they are all triggered by specific transactions and spending patterns. Hyper-personalisation in banking is getting a lot of coverage right now, with a recent Deloitte report suggesting banks that “deliver true end-to-end hyper-personalised products and services will create a significant advantage over their competitors.” Financial service providers that want to take advantage of this just need to ask one question: ‘do we build or integrate?’
A collaborative endeavour
Like I’ve said, APIs now allow providers to integrate their services into other systems and vice versa. Finding ways for these services to work with each other is what I find so exciting about being in embedded finance. Think of a car that pays its own parking tickets. A digital ski-pass merchant that offers its own short-term extreme sport insurance. Airlines and hotels that offer travel money or budgeting tools. Wealth management services triggered by high value purchases.
Those are just a few of the possibilities. Some estimate that embedded finance could be worth €6.3trn over the next 10 years and the savvier fintechs have realised that’s a big enough market to share. However, those thinking about collaborating should act fast – everyone’s generosity has limits.