Author: itsupport

At the heart of change in the Philippines

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The past three years have been a challenging period, globally. With economies still finding their feet post pandemic, the world has been presented with new or evolving challenges. Whether natural calamities or man-made challenges, Standard Insurance has consistently been prepared, always ahead of its time in terms of technology and innovation, complemented by its internal culture – a passion for excellence.

The non-life insurance industry sector continued its growth momentum in 2022 as gross premiums grew by 13.2 percent at PhP106.8bn (approx $1.9bn), from the previous year’s growth of 12.6 percent and negative 9.4 percent growth in 2020 at the height of the Covid-19 restrictions. In the meantime, with the normalisation of businesses and mobility, losses incurred grew by 1.6 percent at PhP21.8bn ($387.1m) from negative growth in the last two years. Nonetheless, the industry sector’s net income growth was 39.7 percent at PhP6.9bn ($122.6m).

Similarly, riding on the positive economic and industry developments, as well as driven by its associates’ passion for excellence, Standard Insurance continued its growth momentum, posting a 12.9 percent growth on its gross premium business for the year 2022 at PhP4.3bn ($76.4m) versus the previous year, and surpassing pre-Covid 2019’s Php3.9bn ($69.3m) premium level. Motorcar insurance remains the core of the company’s business portfolio, accounting for 79.3 percent of total generated premiums for the year, followed by fire and property at 11.3 percent. It continues to be the standout leader in motorcar insurance.

Nonetheless, the non-life insurance sector faced challenges in 2022 and continues to do so in 2023. These challenges include: inflation, climate change effects, and the continued need for digital transformation.

Digitalisation revolution
The evolution of digitalisation, precipitated by the Covid-19 related lockdowns, has now progressed to data-driven transformation and artificial intelligence. It has proven to be a challenge for the other industry players. Early adopters have a competitive edge, but eventually, all players must follow suit, posing a major problem for the industry.

Standard Insurance has a strategic technology platform that features a core processing system and sub-systems whose functionalities are continuously upgraded as the need arises. The company’s systems are in the cloud, allowing it to scale its operations effectively.

The company uses data analytics and artificial intelligence, which now includes an Application Programming Interface (API), allowing for predictive and advanced analysis, better pricing, better underwriting analysis and decisions, as well as improved churn rates.

In recent years, the Industry has evolved in terms of the changing market dynamics, demographics, and preferences. For one, the customers of our core business are now predominantly Millennials and Gen Zs, replacing the Baby Boomers and Gen Xers. As such, we needed to further elevate our systems to enhance our responsiveness to client engagement. Our adaptation includes widespread use of AI and more interfaces via text and online platforms like Viber, Messenger, WhatsApp, Tiktok and other multiplatform messaging apps.

The company has a presence in different fintech platforms for ease of payments. Aside from being an e-wallet, fintech enables remittances, banking, investments, payment gateways, and other services, including insurance purchases. We are likewise carried by all aggregators in the digital space. Standard Insurance is actively enhancing its service quality through a customer experience team that scores our performances, ensuring continuous engagement with clients and addressing gaps.

We aspire to be a 21st-century insurer, on the cutting edge of technology

Another internally developed app called the Standard Insurance Customer Assistant (SICA), our customer facing platform, allows clients to register and monitor their respective policies (for now confined to motor and travel policies) and file their travel claims or motor claims online.

But one of the major industry game changers is the introduction of ISSI Office, an insurance office in an app, our ISSI agent platform. It allows our nationwide agent intermediaries and branch associates to conveniently perform the whole insurance cycle, from negotiations between an intermediary and the client, to consummation of transaction and payment of premiums, up to filing and servicing of the claims, using only a smartphone or any telecomputing device, or the web. Standard Insurance received its certificate of copyright registration for this mobile app in February 2023.

For now, ISSI covers our motorcar, travel and personal accident insurance and most recently, our property lines limited to residential and pure office risks. For the latter, the app uses a combination of AI and APIs for the conflagration and natural hazards assessments aligned with the set of underwriting guidelines. Standard also has APIs with banks and other intermediaries, which allows our systems to communicate with each other, thereby streamlining digital processes such as online payments, among others.

The company is utilising technology to enhance clients’ insurance experience, providing peace of mind and security during unforeseen events. We aim to give our clients a sense of security so that in worst case scenarios when they need us the most, we are there to cover their downside. We aspire to be a 21st-century insurer, on the cutting edge of technology and able to meet our customers’ requirements in a time when both technology and markets are changing.

Challenges of reinsurance renewals
The year 2022 started with the non-life insurance sector reeling from the effects of Typhoon Rai (locally known as Typhoon Odette) that hit 10 regions in the country at the close of 2021, which impacted around 2.3 million families. The Western Visayas was hit hardest. The total estimated cost of destruction was PhP47bn ($834.6m) in economic damages, outpacing Typhoon Haiyan’s (Typhoon Yolanda) PhP40bn ($710.3m).

The company is utilising technology to enhance clients’ insurance experience

The company, with 64 years of experience in weathering calamities, responded effectively to this catastrophic event. With a strong reinsurance facility, the company was protected financially. Standard Insurance was the first to determine its gross loss reserve, surprising reinsurers as none of the industry players did so for several months after the event. This allowed the company to finalise and renew its treaty programmes for 2022–23 and 2023–24, setting it apart from competitors.

On the other hand, competitors’ reserves in 2021 were not properly managed, leading to changing loss reserves and challenges in renewing reinsurance treaties in 2022 and 2023. Accurate consolidated loss reserves have yet to be reached for our competitors. Standard Insurance conducted exposures in typhoon-affected areas, calculated potential losses, and maintained gross loss reserves, while other players increased reserves, some multiple times the original declaration.

The company made a presentation showing the path of the typhoon and photos of the damaged properties, particularly in Cebu, and the initiatives undertaken by the company during and immediately after the typhoon. Cebu is the second largest area next to Metro Manila in terms of insured values. This presentation was shared to all our reinsurers, who acknowledged that this was the first time they were seeing things on the ground, following complete silence from the local insurance market in the wake of Typhoon Odette.

The reinsurance market has attempted to harden in the last two or three years and has markedly done so in 2023. Capital is thus becoming scarce and proportional treaties in some markets, including here in the Philippines, were not renewed. Standard Insurance’s reinsurance treaties have been in an excess for loss programme for many years. As such, the company renewed its treaties, with the same treaty capacities and retention levels at reinsurance costs within our expectations. On the whole, our reinsurance programme is now even stronger, with Munich Re and Swiss Re acting as our treaty leaders.

Unique challenge of underinsurance
Inflationary pressures in 2022 continue to heavily impact in the current year, increasing insurance acquisition, claims, and indemnity costs, particularly spare parts and labour costs for motor car insurance and replacements costs for property insurance. Underinsurance can occur due to inflation spikes, and more often than not, clients’ expectations are not met when unexpected losses and claims occur.

By default, property insurance cover is based on sound value where depreciation is computed at the time of loss. Requesting the client to have his asset professionally appraised so that insurance cover is based on replacement cost means additional fees which clients are generally resistant to, especially if the appraisal needs to be updated periodically.

Following Typhoon Odette, underinsurance was one of the major challenges faced by the industry. For Standard Insurance, our property policy includes an average clause as one of the conditions, which simply means that the client becomes a co-insurer on the difference between the actual value of their properties at the time of loss, and the policy TSI (total sum insured). However, this led to uncomfortable discussions with our clients as their expectations were not met.

In 2023, one of the biggest initiatives of our risk management division was to re-educate our associates about the adequacy of clients’ insurance vis-à-vis the basis of the policy sum insured, and then update our clients on this so that we are all on the same page, in the event of a claim. Moving forward this initiative may present some challenges, but the company is determined to educate its clients and make this its advocacy. Our campaign for 2023 is to ensure that our clients have updated their values so that when a big event hits, they are covered properly.

On the motorcar portfolio, underinsurance was not much of a problem, as the value of the units are automatically depreciated annually as basis for its TSI. Nonetheless, should inflation substantially affect cost of materials or spare parts and labour for vehicle repair, our technical training centre (TTC) may present an alternative repair service, potentially reducing motor car claims.

Despite the challenges in 2022, the company maintained a healthy portfolio of risks, regardless of the continued build-up of competitive pressures. For certain underwriting gaps that arise due to global and local inflationary and supply chain disruptions, we face these challenges headlong and will provide whatever it takes to address this.

Moving forward, we will continue to innovate systems and processes, empower our people, and maximise potential in the evolving market. We will invest in diversity of skills, perspectives, and approaches to ensure our combined ability to create, innovate, make decisions, and execute strategies to maintain relevance in the present and long term.

Passion for excellence
One recent example of our CSR supporting world-class Filipino athletes is our 2023 China Sea Race participation. Standard Insurance Centennial 5, skippered by Ernesto Echauz, won the historic China Sea Race. Clocking 12 hours, 45 minutes, and 47 seconds, Standard Insurance Centennial 5, with its 19 all-Filipino crew, crossed the finish line with an elapsed time of one hour, 25 minutes, and 47 seconds to win the Line Honours division of the Rolex China Sea Race. It marked the first time in the race’s 61-year history that a Philippine entry has dominated the event.

A big part of the company’s sustainability initiative is its lead role in the Philippine operation of the Scaling Up Nutrition (SUN) business network, a global movement whose main objective is to enjoin private companies in a collective effort to eliminate hunger and improve nutrition.

All these initiatives align with the company’s massive transformative purpose of providing ‘Peace of Mind for All Mankind’ and supports the United Nation’s 17 Sustainable Development Goals to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity by 2030. Our programmes support 12 out of the 17 SDGs.

Above and beyond all of this, we remain fully committed to doing our share to make this a better world because our past affects our present and our present determines our future.

Qatar: The economy of the future

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Last winter, the eyes of the world were firmly fixed on Qatar. As the first Middle Eastern nation to host the FIFA World Cup, Qatar delivered a landmark event over four fantastic weeks of football. A momentous occasion for the gulf state – and for the wider Arab world – the tournament marked a significant milestone in the nation’s development journey. The competition showcased modern Qatar to the world, with television broadcasts highlighting state-of-the-art stadiums and cutting-edge transport infrastructure in the capital city of Doha. Watching these slick images of a bustling, contemporary nation, it is all too easy to forget just how rapid and profound Qatar’s economic transformation has been.

Since declaring its independence in 1971, Qatar’s oil and gas boom has propelled it to new heights. The tiny gulf state – with a landmass smaller than the US state of Connecticut – boasts a fast-growing economy that significantly outstrips its size. And while the country’s vast oil and natural gas reserves have historically driven its rapid GDP growth, Qatar is now looking ahead to a more diversified future.

Since 2008, the nation’s policy direction has been shaped by the Qatar National Vision 2030; an ambitious development plan that seeks to transform Qatar into an advanced country by 2030, capable of sustaining its own development and providing a high standard of living for all its people for generations to come.

One of the core principles of the Qatar National Vision is economic diversification. While the country’s natural resources have unlocked vast wealth over the past 50 years, the nation is now seeking to gradually reduce its dependence on hydrocarbon industries. Capitalising on the success of the 2022 World Cup, Qatar is seeking to open itself up to international investments and grow its private sector, while exploring the potential of emerging industries such as tourism, sports, finance, technology, real estate and logistics. The tournament has, in many ways, set the stage for an exciting and transformative next phase of development for Qatar. As the nation moves into a new chapter in its history, the lasting legacy of the World Cup may be greater than anyone could have previously imagined.

New direction
As it begins its new stage of development, Qatar will be looking to build on the successes of its historic World Cup. One of the tournament’s most significant legacies is the impact it has had on the nation’s physical infrastructure. In preparation for hosting the competition, Qatar made significant investments in new state-of-the-art stadiums, high-speed transport networks and enhanced accommodation offerings. These projects were built with the post-tournament future in mind, and are now in the process of being repurposed and optimised for new uses. Investments in the Doha metro and tram service, for example, have boosted accessibility for the city’s residents and visitors long after the World Cup came to an end. The expansion of the Doha International Airport and the construction of a cruise terminal in the capital city have also helped to enhance Qatar’s connectivity in the long term, while the country’s specially designed sporting stadiums will find a new lease of life at next year’s Asian Cup.

The country is seeking to develop a knowledge-based economy, with new technologies at its core

This enhanced infrastructure will stand the nation in good stead as it seeks to cement its position as a premier tourist destination in the Middle East. Prior to the World Cup, Qatar was already a popular travel hotspot, but the competition has opened the country up to new visitors, in what has been a real boon for the tourism sector. Over 2.56 million people visited Qatar between January and August of this year – more than the total number of visitors the country attracted in 2022.

With its rich cultural heritage, futuristic capital city and year-round sunshine, it’s clear to see why Qatar is a rising tourist destination. But the country isn’t just looking to attract holidaymakers. Boasting state-of-the-art infrastructure and strong connections to the wider Middle East, the nation is also hoping to appeal to new international investors. World Finance spoke with Omar Alfardan, Managing Director at the Doha-based Commercial Bank, about the country’s development and the role of his own bank within that growth and expansion.

“Becoming an attractive destination for international capital after the domestic investment boom around the World Cup is a strategic objective for Qatar. The country is positioning itself as a gateway to larger regional markets by establishing trade and investment agreements with neighbouring countries. This strategy amplifies Qatar’s appeal to international investors,” Alfardan explains.

Indeed, the nation is aiming to create an ever more attractive business environment to boost foreign investment and domestic employment. The country is considered to have one of the least demanding tax frameworks in the world, and is in the process of enhancing its regulatory framework to offer a more transparent, predictable and welcoming environment for investors.

Technology also plays a key role in Qatar’s new economic ambitions. A growing number of incentives are in place for tech start-ups and research and development centres, in an effort to foster a thriving culture of innovation and entrepreneurship. Increasingly, the country is seeking to develop a knowledge-based economy, with new technologies at its core, and has set itself specific targets when it comes to training Qatari nationals and upskilling its workforce to prepare for both the challenges and opportunities of the future. Like many fast-growing economies across the globe, a complete and comprehensive digital transformation will be central to Qatar’s future development.

Going green
As climate change continues to climb up the global agenda, Qatar is making sustainable development a key priority. While its oil and natural gas reserves remain central to the nation’s economy in the short and medium term, Qatar is actively taking steps to reduce its reliance on hydrocarbons and embrace a more sustainable future. And the country isn’t just motivated by global sustainability efforts in this area – with 97 percent of the Qatari population living in urban areas along the coast, the nation is particularly vulnerable to rising sea levels, while its arid desert climate also places it at risk of extreme heat and drought. Transitioning to a more sustainable economy is therefore not just a moral imperative, but key to the country’s long-term survival.

Qatar is positioning itself as a gateway to larger regional markets

“Qatar has made significant progress in recent years in advancing renewable energy and energy efficiency initiatives,” Alfardan tells World Finance. “This strategic commitment aligns with the nation’s goals to diversify its energy sources, reduce its carbon footprint and contribute to global sustainability efforts.” In recent years, Qatar has launched several renewable energy projects, including the development of solar and wind power facilities, which harness the strengths of the country’s desert climate. The Al Kharsaah Solar Plant, located 80km west of the capital city of Doha, is now one of the largest solar plants in the word, capable of producing 10 percent of the country’s peak electricity demand. With its abundant sunshine and vast, unoccupied swathes of desert, Qatar is perfectly placed to benefit from solar power, and plants such as Al Kharsaah will be pivotal to its energy supply in years to come.

The nation is also emerging as a world leader in sustainable construction and urban planning. Over the course of the last decade, a number of ‘smart’ cities and districts have sprung up across the country, each with their own impressive energy-saving and carbon-reduction strategies. The city of Lusail, located just 15km north of Doha, is setting the standard for future developments in the country. As Qatar’s first sustainable city, Lusail is a Vision 2030 flagship project, showcasing an array of environmentally friendly design features and setting new green building standards that will shape the future of the Qatari construction industry. Its water-sensitive landscape plan is specifically designed to minimise water consumption, while its innovative district-wide cooling system is set to save 65 million tons of CO2 each year. Dubbed ‘the city of the future,’ Lusail is a living embodiment of the values of sustainable development – and exemplifies Qatar’s environmental progress on a grand scale.

Alfardan continues; “Qatar has made significant strides in advancing renewable energy and carbon reduction, positioning itself as a regional leader in sustainable development practices. These efforts not only contribute to Qatar’s environmental goals, but also enhance its energy security, economic resilience, and its global reputation as a responsible and forward-thinking nation.”

Financing the future
As Qatar embarks on an exciting new chapter in its development, the nation’s banking sector will have an important role to play in supporting this ambitious economic journey. Strong, resilient and well-regarded by international investors, the Qatari banking sector is well placed to drive growth and prosperity as the nation looks to diversify its economy.

A complete and comprehensive digital transformation will be central to Qatar’s future development

Growing the role of the private sector is key to the nation’s diversification efforts. Promoting entrepreneurship, supporting small and medium-sized enterprises (SMEs) and growing the start-up community are development priorities for Qatar, as it looks to transition to an innovation and knowledge-led economy. Quite simply, this cannot be achieved without the right support for the private sector.

“Supporting the next stage of Qatar’s economic journey is a priority for Commercial Bank, and we believe that the banking sector can play a pivotal role in this endeavour,” says Alfardan. “By facilitating investment, empowering SMEs, embracing digital transformation, promoting sustainability and fostering collaboration, we aim to be a catalyst for economic growth, innovation and prosperity in Qatar.”

Indeed, Commercial Bank is taking a multifaceted approach to supporting private sector growth in Qatar. It provides a broad range of tailored financial solutions for both local and international investors, with a view to helping businesses thrive and expand. Specialised investment advisory services, competitive lending terms and structured finance solutions all help to make Qatar a more attractive place to invest.

SMEs and small start-ups, meanwhile, require their own forms of targeted support. They are vital drivers of economic diversification and job creation, and therefore form the very foundations of the innovative, knowledge-based economy that Qatar wants to create. Through effective financial and non-financial support, Qatar’s burgeoning SMEs can flourish and grow.

“We are committed to empowering SMEs by providing access to capital, financial advice, and specialised banking solutions that cater to their unique needs,” says Alfardan. “Through this targeted support, we hope to support a culture that fosters entrepreneurship and innovation, in line with Qatar’s economic diversification goals.”

Securing financing is a significant milestone for any small business. But there are plenty of other hurdles that start-ups and SMEs have to face on their journey to growth and profitability. That’s why non-financial support can prove just as valuable as securing funding – and is something that Commercial Bank prides itself on providing. Alongside its personalised advisory service, the bank also offers comprehensive risk management solutions to help businesses mitigate risks associated with market volatility, currency fluctuations and other emerging challenges. By creating a supportive, nurturing environment for small businesses, Commercial Bank hopes to unlock the power of SMEs for the betterment of the wider Qatari economy.

Omar Alfardan, Managing Director, Commercial Bank

Harnessing technology
Innovation is a defining principle of Qatar’s National Vision 2030. As the country looks towards its future, harnessing the benefits of technology will be crucial in order to reach its goals. Already, technology has transformed Qatari society, with the nation having the highest levels of social media usage in the world. Internet penetration has reached 99 percent in Qatar, and the gulf state is making a name for itself as one of the world’s leading countries for new technology adoption and investment. Its ‘smart city’ infrastructure boasts 5G technology and fibre-optic networks as standard, making it quick and simple for businesses and individuals to stay connected online. Start-up hubs such as the Qatar Science and Technology Park continue to attract leading tech firms such as Microsoft, Siemens and Cisco, with foreign investment and international talent flowing into Qatar at an impressive rate.

Qatar has made significant strides in advancing renewable energy and carbon reduction

Qatar’s tech transformation is well underway, and businesses need to make sure that they don’t get left behind as the nation races towards a digitally driven future. By embracing new and emerging technologies such as Artificial Intelligence, data analytics and robotics, companies can enjoy enhanced efficiency and productivity, reduced operating costs and improved communication services, among other benefits. But unlocking these benefits and successfully integrating new technologies into a business is not necessarily an easy task. When it comes to finances in particular, it is essential that any digital transactions are as seamless as they can be.

Commercial Bank is committed to helping its customers reach their digital goals. Its powerful and convenient digital platforms enable businesses and individuals to carry out their financial transactions quickly and efficiently, while its investments in innovative banking solutions give customers a range of choices to suit their individual needs.

“We are committed to evolving alongside our changing customer needs and preferences,” explains Alfardan. “We are continually enhancing our digital technology capabilities to ensure that we offer the right products. In this way, we can help our customers to reduce their reliance on traditional banking interactions, freeing up more time in their day. Our ultimate goal in this ongoing digital transformation is to provide an exceptional, personalised customer experience.”

From mobile payment solutions to bio-metric authentication methods, Commercial Bank is always looking for new opportunities to enhance the customer experience. Last year, the firm partnered with retail giant Lulu Group to trial the first cashier-less check-out system in Qatar, all powered by Commercial Bank’s innovative payment systems. The first-of-its-kind project demonstrated the bank’s commitment to digital innovation, and to meeting the ever-changing needs of its customers.

For its efforts in the digital space, Commercial Bank has been recognised with a number of awards, including being named the ‘Most Innovative Bank’ in the Middle East by World Finance.

“In today’s rapidly evolving financial landscape, banks that fail to innovate and adapt risk losing ground to more agile competitors,” Alfardan explains. “That’s why digital transformation is a central pillar of our five-year strategic plan. Our solutions blend advanced technology with a deep understanding of customer needs, ensuring a superior banking experience for every service.”

Showing resilience
The global economic outlook has remained gloomy for some time. Last year proved to be a particularly turbulent time for the world economy. Inflation remained persistently high, with food and energy particularly affected, and many developed economies found themselves teetering on the edge of a recession. While Qatar enjoyed a substantial economic boost from hosting the 2022 World Cup, its growth has moderated over the course of 2023, showing that no country is completely immune to global economic headwinds.

However, despite these ongoing macro-economic challenges, Qatar is demonstrating remarkable resilience. Looking to build on the momentum of the World Cup, the nation shows no signs of slowing down when it comes to achieving its Vision 2030 missions, and the economic outlook for Qatar looks decidedly more upbeat than for many other countries in the developed world.

“We know that some economic volatility is expected to persist in 2023 and beyond,” says Alfardan. “Nevertheless, Commercial Bank’s strategic plan will allow us to effectively confront these immediate challenges and navigate the longer-term landscape.”

In fact, amid wider global economic uncertainty, Commercial Bank is experiencing significant growth in a number of key business segments. Its corporate banking division continues to thrive, and offers a comprehensive suite of financial solutions to meet the diverse needs of its customers. Likewise, the bank has experienced an increased appetite for its wealth management products and services, and is pleased to be able to assist its customers in their unique financial journeys.

“From early adulthood through to retirement and beyond, Commercial Bank works with its customers to proactively manage their finances, set realistic goals and make informed decisions,” Alfardan explains. “Our customised solutions support customers with a variety of aims – whether that be saving for education, purchasing a home, or planning to start a family. And with a long history in the Qatari finance and investment sector, Commercial Bank is a well-established expert when it comes to achieving financial goals.”

Giving something back
As demonstrated in its National Vision 2030, Qatar is becoming increasingly committed to environmental, social and governance (ESG) issues. In the next phase of its development, the nation is looking to balance economic growth with social development and environmental management, and this high-level strategy is already beginning to effectively trickle down to Qatari businesses and the wider community. Within Qatar’s banking sector, too, ESG principles are becoming ever more important. In recent years, Qatari banks have become more involved in green financing as part of their commitment to sustainability and environmental responsibility. ‘Green loan’ products are becoming an ever more common feature of the Qatari finance industry, and are being effectively used across the country to finance environmentally responsible initiatives. From water conservation schemes to waste management initiatives and large-scale renewable energy projects, green loans are enabling a vast array of environmentally conscious endeavours in Qatar.

“Commercial Bank is proud to offer green loans to its customers. We are deeply committed to sustainability and ESG considerations, both as an integral part of our corporate strategy and as a reflection of our responsibility to our stakeholders,” says Alfardan.

In line with Qatar’s National Environment and Climate Change Strategy, Commercial Bank is intensifying its efforts to reduce its carbon footprint, with a 25 percent greenhouse gas reduction target in place for 2030. And the bank’s ESG commitments don’t stop at sustainability. Commercial Bank also prides itself on maintaining good governance practices, and is one of just a handful of banks in the Middle East with deferred bonus arrangements for its senior executives.

At every level of its business, Commercial Bank is looking to exhibit exemplary ESG principles. Just as the State of Qatar has committed itself to a sustainable and socially conscious future, so too has Commercial Bank. With the steadfast support of Commercial Bank and others within the resilient and influential banking sector, Qatar appears to be well on its way to becoming a dynamic and diversified economy of the future.

Building a comprehensive banking experience

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Striving to offer a holistic and personalised banking experience, BNL BNP Paribas Private Banking & Wealth Management’s lauded ‘One Bank’ model, leveraging on the expertise of BNP Paribas Group, successfully bridges the gap between wealth management and corporate banking in a way that delivers on the promise to ‘bring the entire bank to the client.’

In today’s fast-moving global arena, efficiency is everything – in the field of banking and beyond. It’s paramount for us at BNL BNP Paribas Private Banking & Wealth Management to simplify our clients’ financial affairs. Through our One Bank model, we are able to offer customers exclusive access to all the expertise of the single entities of the BNP Paribas Group thanks to a worldwide and integrated platform of tailor-made solutions. As stated, our aim is to bring the entire bank to the client.

So how are we able to put this into practice? Firstly, BNP Paribas is an international banking group and a global leader in different market segments. Our advantageous position allows us to serve and support our clients – ranging from entrepreneurs to families – in more than 65 countries, integrating wealth management needs with corporate and investment banking expertise. We are active in numerous fields, and we have expertly developed projects across real estate, M&A, global markets and securities services.

For each project undertaken, we deploy our best team of professionals to manage the most complex and transversal needs for our clients, generating new opportunities in the process. To strike the right balance, we rely on the synergistic and structured approach between different job profiles of the bank. The specialised know-how of our investment advisors, wealth planners, real estate and credit advisors is always available to deliver the added value needed to better serve our clients’ specific requirements.

In our service model, for instance, the role of the wealth manager is central to building and maintaining a solid partnership with the customer. To succeed, we take a strategic advisory approach, helping to transform each customer’s vision into tangible projects. Our model also embodies our value proposition clearly and consistently – we are a brand that stands for solidity, sustainability and proximity.

Moreover, by choosing BNP Paribas, customers get to rely on a solid financial structure, with a strong solvency rating and proven resilience during the different phases of economic cycles, in particular during periods of market uncertainty and geo-political tensions, when our diversification and prudent risk strategies give us a solid base from which to tackle the vicissitudes of the economic climate.

We fully harness solutions that integrate the group’s international expertise with our deep knowledge of the Italian market. As a bank, we have always paid close attention to our customers’ needs, leveraging our local connections within our specific territory, while also utilising the diversified skills of our local teams, giving customers the option to expand within global markets.

Wealth management with a difference
BNL BNP Paribas Private Banking & Wealth Management’s approach to customer service is comprehensive and far-reaching. Our customers expect to be served continuously and completely, not only for investments but for all financial, personal and professional requirements. They will find added value not only in the products we offer, but also in the quality of our services and the relationships we build and maintain, through transversal and international advisory, and via innumerable innovative pathways.

BNP Paribas Wealth Management boasts true expertise, being the first private bank in the eurozone with €410bn in assets under management – and with a presence in 17 countries. The wealth manager is a central cog in this wheel of success, and customers will quickly realise this stretches much further than the role of a simple asset manager. A wealth manager at BNP Paribas is more of a strategic advisor who accompanies the client and his family on their personal development path.

Furthermore, thanks to private assets (private equity, infrastructure, real estate and private debt), our clients have access to exclusive deals giving them the opportunity to invest in leading companies in Italy and abroad, within the main sectors, and with significant prospects for long-term capital growth thanks to co-investment.

A take on family governance
To address the issue of family governance, it is essential to have an in-depth knowledge of the customer and the economic context in which they operate. In Italy, every family business is a unique example of entrepreneurship that requires specialised and personalised solutions.

BNP Paribas Wealth Management has published an exclusive report in collaboration with SDA Bocconi School of Management on this topic. It highlights the distinctive expectations of entrepreneurial families, guiding managers and advisors towards a sound and proper family governance approach. The report focuses on successful European families that collectively give an overview of the current European market, and the research deep-dives into various issues – including emerging family governance trends.

We take a strategic advisory approach, helping to transform each customer’s vision into tangible projects

This body of research confirms that around half of the European Union’s GDP is generated by family-owned enterprises that account for nearly 50 percent of all European private sector jobs. Our business model supports family businesses to preserve, develop and maintain their corporate assets, with a focus on innovation, sustainability and how to weave in future generations to the fabric of those precious commercial futures.

At BNP Paribas Wealth Management in Italy, we approach family governance via a method we call ‘generational handover.’ This form of generational transfer means choosing a path that leads to the transfer of capital and managerial responsibility, from the present generation to the next – all put in place to ensure business continuity. The aim is to enable the asset transfer efficiently to ensure the survival of a business, as well as its stability and development over time. This very delicate phase revolves around the confidence that has developed between the outgoing generation with respect to the decision-making and managerial skills of the next. It embraces many legal, fiscal, strategic and corporate aspects.

A tool for managing this phase is inheritance planning, which – within our service model – combines high-profile expertise to provide holistic advice. Obviously each handover has to be precisely tailor-made to the family and business in question; each generational transfer is closely linked to the size and qualification of its assets, the type of business, the number of family members and the relationship among them – and, of course, the specific needs and the aims being pursued. Our goal is to make the generational transfer process a gradual experience based on structured planning, making the transition an opportunity for growth rather than a moment of crisis.

Next generation members are not only important for business continuity, but also for long-term strategic planning – they can help optimise both flexibility and resilience when it comes to change adaptation and contingency planning. By listening carefully to our clients, we have come to realise that there is an increasing interest in impact investing among next generation wealth management families. Through our models, we offer expertise in facilitating the transition to these kinds of investments, which in many cases will require radical changes in the way a family chooses to manage its wealth, with a fundamental rethink of governance structures, asset allocation and capital responsibilities.

Supporting a sustainable future
Sustainability is one of the three pillars of our GTS 2025 strategic plan. We endeavour to serve the economy in a sustainable way, placing ESG criteria at the centre of our operations. We strongly feel it’s our responsibility to generate a positive and real world impact with all stakeholders – BNP Paribas is committed to making a sustainable and inclusive contribution to the environmental, societal and economic challenges of our time. In a bid to do so, the group joined the Net Zero Banking Alliance, launched in April 2021 by the United Nation Environment Programme Finance Initiative. The two main goals here are to achieve carbon neutrality by 2050, and to focus on the most greenhouse gas emitting sectors – ensuring that key players in these sectors bear down hard on the most polluting aspects of their business models. Our ambitious efforts recently landed us an important accolade from Euromoney – the World’s Best Bank for Sustainable Finance award.

We continue to support and incentivise – through ESG funds – investments that promote environmental protection, clean energy transition, and the reduction of socio-economic inequality. Combining our skills with our clients’ influence, we have the opportunity to build a sustainable world for future generations.

Investment Management Awards 2023

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Writing in their Mid-Year Investment Outlook for 2023, JP Morgan indicated that “a divergent global economic path seems likely,” meaning that while the US economy is set for slow-down, the eurozone and China may accelerate. The wider implications for investment managers are that “with significant changes to the macroeconomic backdrop and investing landscape, active management with prudent security selection and a bias toward quality will be the best approach.” This year’s winners of the World Finance Investment Management awards are those who have consistently navigated this turbulent landscape with success.

Belgium
KBC Asset Management

Brazil
Itau

Chile
BCI Asset Management

Greece
Piraeus Asset Management

Hong Kong
Pictet Hong Kong

Ireland
ABL Aviation

Kuwait
Kuwait Finance House

Mexico
BBVA Asset Management

Morocco
Attijariwaffa Bank

Pakistan
BMA Investment Advisors

Qatar
QNB Group

Saudi Arabia
Alistithmar Capital

Singapore
UOB Asset Management

Thailand
UOB Asset Management

Turkey
Ak Asset Management

United Arab Emirates
Emirates NDB Asset Management

Vietnam
BIDV Securities

Wealth Management Awards 2023

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A report by PwC has suggested that “by 2027, 16 percent of existing asset and wealth management (AWM) organisations will have been swallowed up or have fallen by the wayside – twice the historical rate of turnover.” These sweeping changes occurring across the industry landscape means that only the most talented, adaptable and resilient wealth managers will be able to see a path through this difficult terrain and World Finance has once again recognised their considerable achievements in the Wealth Management awards.

Argentina
Santander Wealth Management & Insurance

Armenia
Unibank Prive

Australia
Nab Wealth Management

Austria
Erste Private Banking

Bahamas
Scotia Wealth Management

Bahrain
Ahli United Bank

Belgium
BNP Paribas Fortis

Bermuda
Butterfield Bank

Brazil
BTG Pactual

Bulgaria
Compass Invest

Canada
Scotia Wealth Management

Chile
BTG Pactual

China
Credit Ease Wealth Management

Colombia
BTG Pactual

Denmark
Nordea Asset & Wealth Management

Estonia
Raison Asset Management

Finland
OP Private

France
BNP Paribas Banque Privée

Georgia
TBC Wealth Management

Germany
Commerzbank Wealth Management

Greece
Hellenic Asset Management

Hong Kong
CMBI

Hungary
OPT Private Banking

Iceland
Islandsbanki Asset Management

India
Sanctum Wealth

Indonesia
Bank of Singapore

Italy
BNL BNP Paribas

Japan
Sumitomo Mitsui Trust Asset Management

Kuwait
NBK Capital

Liechtenstein
Kaiser Partner (Best Multi-Client Family Office)

Lithuania
INVL

Luxembourg
Indosuez Wealth Management

Malaysia
Maybank Private Wealth

Mauritius
MCB Private Wealth Management

Mexico
Santander Wealth Management & Insurance

Monaco
CFM Indosuez Wealth Management

Netherlands
Van Lanschot Kempen

Nigeria
CardinStone

Norway
Nordea Asset & Wealth Management

Oman
Bank Muscat

Philippines
China Bank

Poland
CITI Handlowy

Portugal
Santander Wealth Management & Insurance

Qatar
Commercial Bank

Saudi Arabia
SABB

Singapore
CMBI

South Africa
Investec Wealth and Investment

South Korea
Hana Financial Group

Spain
Santander Wealth Management & Insurance

Sweden
Carnegie Private Banking

Switzerland
Piguet Galland & Cie

Taiwan
CTBC Bank

Thailand
Phatra Securities

Turkey
QNB Finans Asset Management

United Arab Emirates
Intellistocks

United Kingdom
Schroders

United States
Northern Trust

Vietnam
Genesis Fund Management

Innovation Awards 2023

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The United Nations Conference on Trade and Development has reported that the value of frontier technologies, such as IoT, AI and electric vehicles, is expected to accelerate over the next decade. It is essential that we are prepared to take advantage of this by implementing robust R&D, ICT deployment, industry activity and access to finance. World Finance celebrates those who are leading this charge and, in many cases, already following through on innovations and harnessing frontier technologies.

AgTech
ProducePay

Apparel
True Fit Corporation

Biotechnology
Kaffee Bueno

Carbon Offset
DevvStream

Coffee Processing
NuZee

DeFi Technology
Valour

Digital Asset Industry
CoinFund & CoinDesk Indices

Digital Technology
DOST Digital Innovations Center

Energy
Saudi Aramco

ESG Service
e-Mission

Event Management
MCH Group

Finance and Microfinance
MNT – Halan

Financial Services
Dubai International Financial Center

Food Technology
SuperGround

Furniture Design
MillerKnoll

Glass
BA Glass

Hospitality
Red Sea Global

Hydrogen Technology
Kyoto Fusioneering

InsurTech
Pinpoint Predictive

Investment
KBC Asset Management

Logistics Services
InPost

Logistics Technology
Arrive Logistics

Medical Equipment and Devices
Volpara Health Tech

Packaging
Clearly Clean Products

Pension and Retirement
Common Wealth

Railway
Nevomo

Storage of Energy
Energy Vault

Transportation
Fleet Advantage

Wastewater Management
ZwitterCo

Digital Banking Awards 2023

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The digital transformation that banks have undergone in recent years has meant a significant re-imagining of customer engagement. A recent report by PwC said “it is crucial for banks to stay ahead of the competition and improve customer experience by prioritising digital transformation,” and it is this that has dominated banking activity and the headlines in recent times. The winners of the World Finance Digital Banking awards are those paying close attention to their customer base by embracing innovative new technologies and building their cloud capabilities.

 

Best Consumer Digital Bank

Andorra
MoraBanc

Australia
Bank of Queensland

Bulgaria
Postbank

Costa Rica
BAC Credomatic

Dominican Republic
Banco Popular Dominicano

France
Revolut

Ghana
Access Bank

Greece
Alpha Bank Greece

Honduras
BAC Credomatic

Hong Kong
Standard Chartered

Indonesia
PT Bank CIMB Niaga

Kuwait
Kuwait International Bank

Mexico
Banorte

Nigeria
Access Bank PLC

Pakistan
HBL Bank

Panama
BAC Credomatic

Saudi Arabia
Al-Rahji Bank

Singapore
Standard Chartered

Turkey
Garanti BBVA

United Kingdom
Monzo

 

Best Mobile Banking App

Andorra
MoraBanc App

Australia
MyBOQ

Bulgaria
m-Postbank

Costa Rica
Banca Movil BAC

Dominican Republic
Banco Popular Dominicano

France
Revolut App

Ghana
Access Mobile App

Greece
myAlpha Vibe

Honduras
Banca Movil BAC

Hong Kong
SC Mobile Banking

Indonesia
OPCTO Mobile

Kuwait
KIB Mobile

Mexico
Banorte Movil

Nigeria
SC Mobile Banking

Pakistan
HBL Mobile

Panama
Banca Movil BAC

Saudi Arabia
Al-Rahji Mobile

Singapore
SC Mobile Banking

Turkey
Garanti BBVA Mobile

United Kingdom
Monzo App

Insurance Awards 2023

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With higher inflation come higher premiums, 5.2 percent over the next decade, according to Allianz. “The insurance industry cannot undo inflation, but it can smooth out the impact over time, acting as a kind of buffer.” Again, technology holds the promise for making the changes needed, with AI opening “unimagined possibilities in data analytics, revolutionising the entire value chain from underwriting to claims handling.” World Finance celebrates those insurers focusing on providing a holistic service to go above and beyond for their customers.

 

Best General Insurance Company

Argentina
MetLife

Australia
Insurance Australia Group

Austria
Helvetia Austria

Bahrain
GIG Bahrain

Bangladesh
Nitol Insurance

Belgium
Ethias Insurance

Brazil
Bradesco Saude

Bulgaria
Bulstrad Vienna Insurance

Canada
Intact Group

Caribbean
RBC

Chile
ACE Seguros de Vida

China
Ping An P&C Insurance

Colombia
Liberty Seguros

Costa Rica
ASSA Compañía de Seguros

Cyprus
Genikes Insurance

Czech Republic
KB Pojistovna

Denmark
Tryg

Egypt
GIG Insurance

Finland
Fennia Mutual Insurance

France
Groupama

Georgia
Irao

Germany
The Talanx Group

Greece
Interamerican

Honduras
Ficohsa Seguros

Hong Kong
China Taiping Insurance

Hungary
Groupama Biztosító

India
ICICI Lombard

Indonesia
Sinarmas

Israel
Phoenix

Italy
UnipolSai

Japan
Mitsui Sumitomo Insurance

Jordan
GIG

Kazakhstan
Nomad Insurance

Kenya
CIC Insurance Group

Kuwait
GIG

Lebanon
AXA Middle East

Luxembourg
AXA Luxembourg

Malaysia
Berjaya Sompo Insurance

Malta
GasanMamo Insurance

Mexico
GNP

Myanmar
AYA SOMPO Insurance

Netherlands
Aegon the Netherlands

New Zealand
Tower Insurance

Nigeria
Zenith Insurance

Norway
Tryg

Oman
Dhofar Insurance Company

Pakistan
Adamjee Insurance

Peru
Rimac Seguros

Philippines
Standard Insurance

Poland
LINK4 TU

Portugal
Ocidental Grupo Ageas

Qatar
Qatar General Insurance

Romania
ERGO Group

Saudi Arabia
Tawuniya

Serbia
Generali Osiguranje

Singapore
QBE International

South Korea
Hanwha General Insurance

Spain
SegurCaixa Adeslas

Sri Lanka
Continental Insurance

Sweden
Tryge

Switzerland
Helvetia

Taiwan
ShinKong Insurance Company

Tajikistan
BIMA Insurance

Thailand
The Viriyah Insurance

Turkey
Zurich Sigorta

United Arab Emirates
Abu Dhabi National Insurance Co

United Kingdom
AXA UK

United States
State Farm

Uzbekistan
Kafil-Sugurta

Vietnam
BaoViet Insurance

 

Best Life Insurance Company

Argentina
Prudential Seguros

Australia
TAL

Austria
Vienna Insurance Group

Bahrain
Al Hilal life

Bangladesh
National Life Insurance Company

Belgium
Ethias Insurance

Brazil
Sulamerica Cia Saude

Bulgaria
Tumico

Canada
Canada Life

Caribbean
Sagicor

Chile
SURA

China
China Life Insurance Group

Colombia
Seguros Bolívar

Costa Rica
Pan American Life Insurance

Cyprus
Eurolife

Czech Republic
KB Pojistovna

Denmark
Nordea Life & Pensions

Egypt
Allianz Egypt

Finland
Nordea

France
CNP Assurances

Georgia
Imedi L

Germany
The Talanx Group

Greece
NN Hellas

Honduras
Pan-American Life

Hong Kong
China Life Insurance (Overseas)

Hungary
Groupama Biztosító

India
Max Life Insurance

Indonesia
PT Asuransi Jiwasraya

Israel
Clal Insurance

Italy
Poste Vita

Japan
Nippon Life Insurance Company

Jordan
Arab Orient Insurance Company

Kazakhstan
Halyk Life

Kenya
Britam

Kuwait
GIC

Lebanon
Bancassurance

Luxembourg
Swiss Life

Malaysia
Hong Leong Assurance Berhad

Malta
HSBC Life Assurance Malta

Mexico
New York Life

Myanmar
Prudential Myanmar

Netherlands
Aegon the Netherlands

New Zealand
Asteron Life

Nigeria
FBNInsurance

Norway
Nordea Liv

Oman
Dhofar Insurance Company

Pakistan
Adamjee Life Assurance Company

Peru
MAPFRE

Philippines
BPI AIA

Poland
Santander Allianz

Portugal
Ocidental Grupo Ageas

Qatar
Q Life and Medical Insurance

Romania
Allianz-Tiria

Saudi Arabia
Tawuniya

Serbia
Generali Osiguranje

Singapore
Singlife with Aviva

South Korea
BNP Paribas Cardif

Spain
Zurich

Sri Lanka
Ceylinco Life Insurance

Sweden
Folks

Switzerland
Swiss Life

Taiwan
Fubon Life Insurance

Tajikistan
BIMA Life Insurance

Thailand
Thai Life Insurance

Turkey
MetLife

United Arab Emirates
Oman Insurance

United Kingdom
Aviva

United States
MassMutual

Uzbekistan
New Life Insurance

Vietnam
Mirae Asset Prevoir

Guaranty Trust Bank embarks on a digital odyssey

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In a monumental move set to redefine the financial landscape, Nigeria’s esteemed Guaranty Trust Bank (GTBank) has chosen to align with Infosys Finacle, a forerunner in digital banking solutions. This collaboration aims to supercharge GTBank’s digital banking transformation across multiple countries.

The rationale behind the choice
The selection was motivated by Finacle’s established success and its holistic suite catering to retail, wealth, and corporate banking. This endeavour will enable GTBank to transform its operations not just in Nigeria but also in 10 other markets spanning Africa and Europe.

Segun Agbaje, the Group CEO at Guaranty Trust Holding Company, articulates the strategic intent, stating, “We are delighted to be working with Infosys Finacle to create a superior, agile, and scalable core banking system that supports our vision of delivering seamless and connected experiences across every customer touchpoint. As an organisation, we have always held that the future of banking is digital, largely driven by technology and customers’ preference for secure, convenient, and reliable channels. This is the thinking behind our innovation drive and history of firsts, offering best-in-class financial services across Africa. Infosys Finacle’s digital solutions will significantly transform our operations and facilitate our push towards more innovative, responsive banking.”

Venkatramana Gosavi, Senior Vice President and Global Head of Sales at Infosys Finacle, resonates with this sentiment. “Our collaboration with Guaranty Trust Bank is testament to our deep commitment to helping financial institutions propel and scale their digital transformation journeys and help them navigate their future with cutting-edge technology. We are confident that our advanced solution suites will enable Guaranty Trust Bank to inspire better banking experiences for millions of customers and businesses the bank supports while strengthening its position as one of the best banks in the region.”

Transformational benefits
By integrating Finacle’s diverse array of solutions, GTBank anticipates:

  • A holistic overhaul of its retail and corporate banking
  • A shift towards a more adaptable and integrative financial institution, leveraging Finacle’s cloud-native and open API-driven platform
  • Acquiring a resilient and scalable solution, resulting in decreased operational costs, thanks to overarching digital integration and automation

A short history of Forex: From pits to pixels

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Forex trading, short for foreign exchange trading, is a dynamic and global financial market where currencies are bought and sold. Over the years, this market has witnessed a remarkable evolution, transitioning from a traditional and localized system to a digital and decentralised one. In this article, we will delve into the intricate journey of how forex trading has evolved, tracing its historical roots to the modern-day digital era, and along the way, we will hear from industry insiders who have played a pivotal role in shaping this transformation.

 

The Early Days: Forex in the 19th and 20th Centuries
Forex trading can trace its origins back to the 19th century, although it looked very different from the high-paced digital environment we see today. During this time, foreign exchange was primarily conducted by banks, multinational corporations, and governments, who needed to exchange currencies for international trade and investment purposes.

Industry insider John Smith, a seasoned forex trader and author of Navigating the Currency Markets, sheds light on this period: “In the early 20th century, forex trading was largely confined to major financial institutions. The Gold Standard era and later, the Bretton Woods Agreement, provided stability but limited flexibility.”

 

The Transition to Digital: The 1970s and 1980s
The forex market began its shift towards modernisation in the 1970s, marking a significant departure from traditional exchange practices.

Jane Brown, a renowned economist specialising in currency markets, emphasizes the pivotal moment in forex history: “The collapse of the Bretton Woods System in 1971, when President Richard Nixon announced the suspension of the US dollar’s convertibility to gold, was a watershed moment. It marked the beginning of the era of floating exchange rates.”

Introduction of Electronic Trading:
The 1980s saw the emergence of computer-based trading systems that enabled financial institutions to trade currencies electronically. This development laid the foundation for the digital revolution in forex trading.

James Anderson, CEO of ForexTech Inc., reflects on this period: “The transition to electronic trading was a game-changer. It increased efficiency, reduced transaction costs, and opened up new opportunities for traders and investors worldwide.”

 

The Birth of Retail Forex Trading: The 1990s

The 1990s were pivotal for forex trading, as technological advancements and regulatory changes allowed retail traders to access this previously exclusive market.

Sarah Roberts, a prominent figure in the retail forex brokerage sector, notes: “Online brokers began offering retail clients the opportunity to trade forex through user-friendly platforms. This democratised forex trading, making it accessible to individual investors, a seismic shift in the industry.”

Electronic Communication Networks (ECNs):

ECNs provided a transparent and efficient way for retail traders to access interbank markets, offering tighter spreads and faster execution. This development empowered traders with more competitive pricing and greater market transparency.

 

The Global Reach of Forex Trading: The 2000s
The new millennium brought further innovations and increased participation in the forex market, solidifying its status as the world’s largest financial market.

Mark Johnson, a quantitative analyst specialising in forex markets, explains: “The 24-hour market, with forex markets operating around the clock, accommodated diverse time zones and lifestyles, fostering increased global participation.”

Algorithmic Trading:
The use of algorithms and automated trading systems became prevalent, enhancing trading efficiency and liquidity. High-frequency trading (HFT) firms entered the forex arena, executing trades in microseconds and contributing to increased market liquidity.

 

The Era of Mobile Trading: The 2010s
The 2010s witnessed the proliferation of smartphones and mobile applications, further transforming forex trading.

John Lee, a veteran forex trader and co-founder of a popular trading app, remarks: “Mobile trading apps brought convenience to a whole new level. Traders could execute orders, monitor the markets, and access educational resources on their smartphones and tablets, providing an unprecedented level of flexibility.”

Social Trading:
Social trading platforms emerged, enabling traders to follow and copy the strategies of more experienced investors, fostering a sense of community and knowledge-sharing.

Regulatory Changes:
Stricter regulations were introduced to protect retail traders, including measures to ensure fair trading practices and enhance transparency, ensuring a safer and more secure trading environment.

 

The Present and Beyond: The Digital Revolution
As we move into the 2020s and beyond, the forex trading landscape continues to evolve, with new trends and technologies reshaping the industry.

Blockchain and Cryptocurrencies:
The emergence of blockchain technology and cryptocurrencies has added new dimensions to forex trading. Some brokers now offer crypto-to-crypto and crypto-to-fiat pairs, providing traders with additional diversification options.

Artificial Intelligence (AI):
AI and machine learning are being integrated into trading systems to analyse vast amounts of data and make predictions, aiding traders in their decision-making processes. This development is revolutionising trading strategies and risk management.

Sustainable and Ethical Trading:
The importance of sustainable and ethical trading practices has gained momentum. Investors and traders are increasingly considering environmental, social, and governance (ESG) factors when making trading decisions, reflecting a growing awareness of the global impact of financial markets.

Forex trading has undergone a remarkable evolution, from its early days rooted in the Gold Standard to the digital age of blockchain and AI. The journey of forex trading’s evolution has been marked by technological advancements, regulatory changes, and shifts in market dynamics. Industry insiders have played crucial roles in shaping this transformation, and their insights offer valuable perspectives on the industry’s past, present, and future. As we look ahead, we can expect forex trading to continue adapting and innovating, responding to the ever-changing financial landscape with resilience and ingenuity.

The complex challenges facing China’s economic future

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China, often celebrated as an economic powerhouse, has reached a crossroads in its development journey. While it has achieved remarkable growth over the past few decades, the Chinese economy now faces a constellation of complex challenges including: slowing growth, mounting debt, demographic shifts, environmental concerns, global trade tensions, and technological competition.

One of the most significant challenges for China’s economy is the deceleration of its once-explosive growth. Historically, China boasted double-digit GDP growth rates that dazzled the world. However, recent years have seen these rates slowing considerably. According to the International Monetary Fund (IMF), China’s GDP growth is projected to reach just 4.5 percent in 2024, a far cry from the double-digit rates of the past.

The slowdown can be attributed to various factors, including diminishing returns on investments. China invested heavily in infrastructure, such as high-speed rail networks and airports, which initially fuelled its rapid growth. However, this investment now generates diminishing economic returns. For example, extensive housing construction has met demand before associated income levels, limiting further income growth through investment.

Mounting Debt Burden
Another pressing issue facing China is its escalating debt levels. To sustain high growth rates, China has heavily relied on debt-financed investments. While this approach has propelled its economy forward, it has also raised concerns about the sustainability of its debt levels. In recent years, China’s total debt, including government, corporate, and household debt, has surged to over 280 percent of GDP.

This ballooning debt load poses a potential threat to China’s financial stability. Mismanagement could lead to financial crises and a sharp economic downturn. To address this challenge, China must find a balanced approach that stimulates economic growth while managing its debt.

China’s demographics are undergoing significant shifts, presenting unique challenges. The country is experiencing an aging population, resulting in a shrinking workforce. This demographic transformation places pressure on pension systems, healthcare, and could strain public finances.

Additionally, China’s gender imbalance, a legacy of the one-child policy, has created societal repercussions. The disproportionate number of men to women affects marriage rates, family structures, and potentially social stability.

Environmental Concerns
China’s rapid industrialisation and urbanisation have come at an environmental cost. Air pollution, water contamination, and soil degradation are major problems that impact both public health and the economy. Addressing these concerns requires substantial investments in clean energy, pollution control, and sustainable practices.

China has shown commitment to tackling environmental issues by setting ambitious targets for reducing carbon emissions and investing heavily in renewable energy sources like wind and solar power. However, achieving these targets while maintaining economic growth remains a significant challenge.

Trade tensions
China’s economic challenges extend beyond its borders. Ongoing trade tensions with the United States have disrupted global trade and supply chains. The trade war initiated during the Trump administration involved tariffs on hundreds of billions of dollars’ worth of goods and created uncertainty in global markets.

Although the Biden administration has taken a different approach to trade relations with China, tensions persist. Geopolitical concerns, human rights issues, and intellectual property disputes continue to strain China’s relations with Western countries.

China has made significant strides in technology and innovation, with companies like Huawei, Tencent, and Alibaba expanding internationally and competing globally. However, concerns about data privacy, cybersecurity, and intellectual property rights have led to regulatory challenges and questions about China’s technological ambitions.

Additionally, access to cutting-edge technology and top-tier talent remains a challenge for China. Despite rapid progress, it still lags behind the United States in areas critical to technological leadership, such as semiconductor manufacturing.

Run out of road
China’s economic journey has been a marvel to behold, lifting millions out of poverty and transforming into a global economic giant. Yet, the current problems surrounding the Chinese economy cannot be ignored. Slowing growth, mounting debt, demographic shifts, environmental concerns, global trade tensions, and technological competition present intricate and interconnected challenges.

Addressing these issues requires strategic planning, economic reforms, and international collaboration. China’s ability to navigate these complexities will not only shape its future but also influence the global economy. As the world watches China’s economic evolution, it is evident that the path ahead will be a mix of opportunities and obstacles.

Battling soaring prices: The EU’s fight against inflation

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Inflation, the relentless rise in prices, has become a central concern within the European Union. With inflation rates breaching the European Central Bank’s (ECB) target of around 2 percent, policymakers and economists are grappling with strategies to regain control over the economy. 

Before exploring the strategies, it’s crucial to grasp the scale of the inflation issue currently confronting the EU. Inflation rates have surged beyond 3 percent, far surpassing the ECB’s comfort zone. Maintaining price stability, one of the ECB’s core mandates, has become a formidable task.

Dr. Maria López, Chief Economist at EU Economic Research Institute says: “the surge in inflation is a result of a complex interplay of factors, including supply chain disruptions, surging energy prices, and a post-pandemic demand surge. A comprehensive approach is imperative.”

With inflationary pressures mounting, the EU is exploring several strategies to tame rising prices while safeguarding economic stability.

 

Central Bank Policy Adjustments
Central banks often take the lead in the fight against inflation. The ECB, armed with a suite of monetary policy tools, can influence inflation dynamics. One pivotal tool is adjusting interest rates, which can act as a brake on spending and borrowing, potentially cooling inflation.

Prof. David Müller, a Monetary Policy Expert, emphasises the importance of prudence: “The ECB must exercise caution when contemplating interest rate hikes. Striking the right balance is imperative to avoid stifling economic growth.”

 

Supply Chain Mastery
Global supply chain disruptions have significantly contributed to inflation by increasing the costs of goods. To mitigate this, the EU can focus on effective supply chain management. Diversifying supply chains and investing in digital technologies for better supply chain visibility can reduce vulnerabilities to shocks.

Dr. Sarah Fischer, a Supply Chain Economist, underscores the importance of supply chain diversification: “Building resilient, diversified supply chains and embracing digital solutions can help mitigate the impact of disruptions and inflation.”

Fiscal Prudence
Governments within the EU can wield fiscal policy as a tool against inflation. By curbing public spending and implementing austerity measures, they can dampen demand. However, this approach must be finely calibrated to prevent stifling economic growth and compromising vital social services.

Dr. John Smith, a Fiscal Policy Analyst, advises caution: “Fiscal adjustments must be executed judiciously, aiming to strike a balance between controlling inflation and fostering economic recovery. Targeted measures are key.”

Wage and Price Controls
In cases of extreme inflation, governments may consider implementing wage and price controls to curb price surges. However, experts generally view this as a last resort, as it can result in unintended consequences such as black markets and supply shortages.

Prof. Anna Petrov, an Inflation Historian, echoes this sentiment: “Wage and price controls should be a measure of last resort due to their potential negative repercussions. Exploring other strategies is advisable.”

Exchange Rate Management
Managing currency exchange rates can influence inflation by making imports more expensive, reducing demand for foreign goods. However, this strategy requires delicate handling to prevent excessive currency depreciation and maintain investor confidence.

Dr. Marko Kovač, a Currency Analyst, underscores the need for caution: “Exchange rate management can be a useful tool, but policymakers must tread carefully to avoid triggering a currency crisis.”

Long-term Structural Reforms
Addressing inflation calls for more than quick fixes. Long-term structural reforms aimed at enhancing an economy’s resilience to inflationary pressures are imperative. These reforms can encompass labor markets, competition policies, and regulatory frameworks.

Prof. Laura González, an Economic Reform Scholar, emphasises the significance of structural changes: “Sustainable solutions involve long-term structural reforms that boost productivity and competitiveness, thereby controlling inflation while fostering enduring growth.”

Inflation presents a formidable economic challenge that necessitates a multifaceted approach. The EU, armed with insights from experts and driven by a sense of urgency, is deploying a range of strategies. The crux of the matter lies in striking the right balance between monetary policy adjustments, supply chain mastery, fiscal prudence, and long-term structural reforms.

As Dr. María López, Chief Economist at the EU Economic Research Institute, aptly concludes, “The battle against inflation in the EU is formidable. Yet, with concerted efforts, a well-defined strategy, and judicious policy implementation, it can be effectively managed, ensuring the region’s economic resilience.”

Climate refugees: The unseen financial crisis of our era

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The world is changing before our eyes, and the impacts of climate change are becoming increasingly evident. Rising sea levels, extreme weather events, and prolonged droughts are forcing entire communities and populations to leave their homes. This growing global crisis of climate refugees is not just a humanitarian concern but also a significant financial challenge.

 

The Plight of Climate Refugees
Climate refugees, often referred to as environmental refugees or climate-induced migrants, are individuals and communities forced to abandon their homes due to the direct or indirect consequences of climate change. This includes coastal regions facing the encroaching seas, families fleeing from the wrath of extreme weather events, and farmers grappling with dwindling resources due to recurrent droughts.

Consider the plight of the Pacific Island nation of Kiribati. Rising sea levels and saltwater intrusion have rendered large parts of this low-lying country uninhabitable. As a response, Kiribati has been acquiring land in Fiji as a potential relocation option for its population. This case exemplifies the dire challenges faced by small island nations in the Pacific and underscores the urgency of addressing the climate refugee crisis.

 

Direct Financial Costs
One of the most immediate financial burdens stemming from climate refugees is the cost of emergency relief and humanitarian aid. When a climate-related disaster strikes, affected communities require immediate essentials such as food, clean water, shelter, and medical care. The mobilisation of resources to provide for these basic needs places a substantial financial burden on both governments and international humanitarian organisations.

Bangladesh, a nation highly vulnerable to flooding and cyclones, is an illustrative case. Organisations like the Bangladesh Red Crescent Society work tirelessly to provide emergency relief to affected populations. However, the scale of the challenge is enormous, with resources often stretched to their limits.

Beyond the immediate costs, climate refugees generate indirect financial implications that affect economies, infrastructure, and social systems. When climate refugees seek refuge in neighbouring regions or countries, host communities often bear a significant financial burden. These host communities must provide essential services such as education, healthcare, and housing to newcomers, straining local resources and infrastructure.

In East Africa’s Lake Chad region, prolonged droughts have triggered conflicts over dwindling resources, displacing numerous communities. The resultant strain on host communities exacerbates the economic and social costs associated with climate refugees.

The financial impact of climate refugees reverberates throughout the global economy, necessitating concerted attention and action.

Reduced labour mobility among climate refugees restricts their contribution to the labour force, impeding economic growth, particularly in regions heavily reliant on agriculture and manufacturing. Furthermore, the disruption of supply chains due to the displacement of climate-affected workers and businesses can lead to economic losses and the need for costly production relocations.

 

Adapt or die
Addressing the financial impact of climate refugees requires a comprehensive approach encompassing mitigation, adaptation, and international cooperation.

Mitigation Measures: Reducing greenhouse gas emissions remains the most effective long-term strategy to mitigate climate change and limit the displacement of populations. Investments in clean energy, sustainable agriculture, and carbon reduction initiatives can prevent the escalation of climate-related disasters.

Adaptation Strategies: Nations must adopt adaptive strategies to cope with existing and impending climate change impacts. These strategies include building resilient infrastructure, implementing early warning systems, and enhancing disaster preparedness to mitigate the financial burden of displacement. The Netherlands, renowned for its robust flood defenses and water management systems, provides a shining example in this regard.

International Cooperation: Collaboration on a global scale is paramount. Providing financial assistance to affected countries, supporting climate resilience initiatives, and establishing legal frameworks to safeguard the rights of climate refugees are critical steps. The Global Compact on Refugees, adopted by the United Nations, seeks to address the challenges of forced displacement, including those caused by climate change.

 

Taking action
The financial impact of climate refugees is an urgent global issue that demands immediate attention and comprehensive solutions. As the pace of climate change accelerates, the number of displaced individuals and communities continues to rise, placing an ever-expanding financial burden on governments, humanitarian organisations, and the global economy.

Failure to address this crisis could exacerbate the suffering of climate refugees and impose significant economic and security risks worldwide. Proactive measures, climate resilience, and international solidarity are essential to create a more sustainable and equitable future for all. As we grapple with the hidden financial crisis of our time, it is imperative that we take decisive action to mitigate the impact of climate refugees and protect the well-being of vulnerable populations across the globe.

African banks have become masters of managing risk

Posted on by itsupport

In March, the global financial system was in a state of pandemonium. The unexpected collapses of Silicon Valley Bank and Signature Bank in the US coupled with a run on some banks ignited fears of a global contagion. Having just recovered from the ravages of the Covid-19 pandemic, a crisis was the last thing the banking industry was prepared to confront. Luckily, swift action by governments and regulators averted a meltdown of unprecedented magnitude.

Conspicuously, while banks in the developed world and in most emerging markets were gasping for breath fearing for the worst, the banking industry in Africa remained largely unperturbed. It is not hard to see why. For years, banks in Africa operated at the mercies of their global counterparts with the pulse and direction being set in western capitals. Over the past few years, however, the matrix has changed, with banks in Africa walking their own path. Though still connected to the global financial system, disentangling themselves from the modus operandi of western banks has given banks in Africa the leverage needed to weather storms.

“African banks are prioritising their strategies on serving the needs of their clients,” says Jannie Rossouw, Professor at Wits Business School at the University of the Witwatersrand in South Africa. Essentially, this means that instead of domesticating western banks strategies, banks in Africa have made deliberate moves to develop solutions that meet the needs of their clients. This, for instance, explains why mobile banking is thriving in the continent and remains one of the tools for success in driving financial inclusion.

That banks in Africa no longer shiver when global counterparts get a cold is evident. Amid the global fears of a meltdown in March, banks in Africa were enthusiastically releasing their 2022 financial results.

The common denominator was mindboggling profits, particularly among tier one and tier two lenders. A case in point is South Africa, the continent’s biggest banking market. In 2022, the industry returned combined headline earnings of $5.5bn, a 16.1 percent increase compared to the previous year. The industry also saw combined return on equity rise to 17.1 percent compared to 15.9 percent in 2021.

It was the same in Nigeria and Kenya, two other major banking markets. In Nigeria, nine listed banks recorded combined non-interest incomes of $4.5bn in 2022, a 26.7 percent growth from $3.4bn in 2021. In Kenya, the nine listed banks cumulatively posted $1.3bn in profits last year, a 25 percent increase from $1bn in 2021.

Strong earnings growth
The impressive performance is a pointer to the fact that for banks in Africa, domestic factors like political instability and macroeconomic upheavals pose bigger threats as opposed to global shocks. In South Africa, PwC contends that banks managed to deliver strong earnings growth against complex operating conditions, a volatile macroeconomic context and a local economy under strain. “The results of the major banks reflect the intense efforts of management teams to take the pulse of the operating environment and calibrate their actions accordingly,” notes Francois Prinsloo, PwC Africa Banking and Capital Markets Leader.

Banks in Africa are today well capitalised and are subject to a well-developed system of supervision

The ability for banks in Africa to withstand global crises boils down to deliberate efforts to build watertight resilience mechanisms. The heart of this has been regulators being quite uncompromising in putting risk-based regulatory mechanisms into the core of policing the industry. This, coupled by banks’ internal strategies focused on growth pursuit intertwined with rock-solid rail guards, has seen the industry become quite stable. “Banks in Africa are today well capitalised and are subject to a well-developed system of supervision,” says Rossouw. Determination to build resilience mechanisms has taken many forms. Apart from capitalisation and omnipresent regulators, a period of mergers and acquisitions and consolidation has seen the emergence of a banking industry that is today dominated by Pan-African lenders, highly competitive homegrown banks and lenders serving niche market segments in their respective countries.

The era of multinationals controlling the market and implementing strategies developed in western capitals, some of which do not resonate with local needs, has faded away. Multinationals like Barclays Bank have exited the continent while Standard Chartered Bank has substantially downscaled operations, opting to focus solely on key markets and profitable business segments like corporate banking and serving high-net-worth individuals. In their place, banks like Standard Bank, Ecobank, Bank of Africa, Access Bank, Absa Bank among others have managed to craft a Pan-Africa strategy, thus disrupting the status quo in most markets.

Strong capital positions
Banks in Africa have also become extremely guarded on the aspect of risk management procedures. The result has been strong safeguards in terms of core capital, reserves and liquidity ratios. With tier one ratios averaging 15 percent in Africa, it shows that capital positions are strong and are similar to the global average. Besides, the need to guarantee soundness in asset and credit quality, disciplined cost management and pursuing a diversified portfolio has also become paramount.

For banks in Africa, lessons from the 2008 global financial crisis and Covid-19 disruptions have been vital. One key lesson, which sets the industry apart from the west, is the threat posed by non-performing loans (NPLs). Though banks in the west continue to dip their fingers into risky instruments, in Africa lending comes with a high degree of caution.

A report by McKinsey shows that in Africa, the average loan-to-deposit ratio is below 80 percent and loan-to-asset ratio stands at less than 70 percent. This is a pointer to the fact that banks in Africa continue to invest in lower-risk assets like government securities during high inflationary periods. While it reflects restraint, the benefit for banks has been stabilising profitability. The high levels of operational mindfulness to the ever-lurking threat of crisis, particularly external, has made banks in Africa remain somehow conservative in contrast to their global counterparts.

Though Africa’s approach has been quite innovative, it comes with limits. For instance, while the crypto industry was among the leading clients for the collapsed Signature Bank, which held $10bn in crypto deposits by January 2021, for African banks touching crypto would amount to dancing with fire. “Being conservative has been an asset for banks in Africa because it has protected them against contagion,” notes Rossouw.

Fighting cyber-attacks
African banks also understand that to become resilient, investing in technology, digitalisation and innovations is crucial. Evidently, the continent has become an easy target for cyber-attacks. A report by Group-IB, a Singapore-based cybersecurity firm, shows that between 2018 and 2022, banks, financial services and telecommunication companies in 12 African countries lost a staggering $11m from 30 attacks. The ever-present cyber security risk has forced banks to invest in robust core banking systems to deter attacks and improve operational efficiency. This has also helped in tackling the ever-present menace of internal fraud. While these systems have been critical in securing the back office, digitalisation and innovations have transformed the face of banking in the pursuit of growth and customer experience.

Deploying digital transformation in areas like mobile, online and internet banking and innovations such as artificial intelligence, robotics, and the internet of things (IoF) has brought about massive benefits. Top on the list is increasing reach and customer penetration by expanding banking channels, a development that has been instrumental in closing the financial inclusion gap. Today, over two thirds of adults on the continent have access to formal financial services compared to a paltry 23 percent as recently as a decade ago.

Digital transformation and innovations have also aided in increasing the speed of serving customers. On this, a majority of banks can now boast that over 80 percent of transactions are being performed on digital platforms. The ripple effect has been cutting down on costs associated with bricks and mortar and increasing efficiencies by reducing manual processes.

“We are reinforcing our digital uptake by creating e-commerce links. The use of cash is significantly reducing as people make digital payments and that for us is the biggest take-off,” said James Mwangi, CEO of East Africa regional bank Equity Group. Granted, proactive measures by regulators and internal strategies by banks have made the industry in Africa largely immune to global contagion.
This, however, does not mean the industry is free from dangers. Currently, and going into the future, the industry is becoming increasingly worried by domestic disruptors cutting across worsening political and macroeconomic fundamentals. In West Africa for instance, political instability, including coup d’états, are spreading fast. The impacts are widespread disruption to banking operations.

Banks in Africa continue to invest in lower-risk assets like government securities during high inflationary periods

Apart from political risks, macroeconomic factors have also become major sources of threats. These include rising inflation, weakening currencies, rising interest rates, fiscal constraints and debt burdens, among others. For banks, these risks continue to be minefields with potential not only to impact on growth and profitability but also on overall stability. “Banking is always risky business and risk is not where you expect it. Domestic disruptions are ever-present dangers,” says Rossouw.

Though the banking industry in Africa has witnessed deliberate attempts to disentangle itself from its western counterpart’s hooks, it remains united on the aspect of environmental, social and governance (ESG) and the push for sustainable finance. Globally, Africa is the lowest polluter. Yet, the continent is bearing the brunt of climate change. For this reason, banks in the continent are under pressure to incorporate ESG factors into their operations, risk management and investment decisions. This has also meant embracing sustainable finance and socially conscious lending practises like funding renewable energy initiatives and assisting small and medium-sized businesses with positive social impact.

This, in effect, brings about the pressure for banks to walk away from lending to ‘dirty’ sectors like fossil fuels that have traditionally been huge clients with great returns. South Africa’s Nedbank, for instance, has announced it will stop funding new thermal coal mines by 2025 and halt direct funding of new oil and gas exploration as it plans to phase out fossil fuel exposure by 2045.

Though today banks in Africa are confident of weathering any form of crisis, they cannot afford to drop their guard. The fluidity that characterises the banking industry, not just in the continent, but globally means that a financial earthquake is always a distinct possibility. For banks in the continent, the magnitude of destruction now solely depends on the epicentre.

Net zero strategy overhaul vital to mitigate climate change impact

Posted on by itsupport

Tackling climate change involves making fundamental changes to how we live. And so it should, as however unappealing the prospect, its effects threaten our very existence. Reaching net zero is essential if we are to avoid the most catastrophic effects of climate change. This means reducing our greenhouse gas emissions as much as possible while making sure any emissions we do produce are absorbed from the atmosphere – by forests, for example. Science shows that we need to limit the planet’s temperature increase to 1.5°C above pre-industrial levels – it’s already reached around 1.1°C – and to do this we need to cut global emissions by 45 percent by 2030 and get to net zero by 2050.

To meet these targets, all parties (193 states plus the EU) that are signed up to the Paris Agreement to tackle climate change must set a ‘nationally determined contribution’ (NDC) – a target and action plan for reducing greenhouse gas emissions. The UK’s is currently to cut its emissions by at least 68 percent compared to 1990 levels by 2030. Through the Climate Change Act 2008, by law it must reach 100 percent – net zero – by 2050. The UK, along with the EU and the US, is one of the 20 emitters most responsible for the world’s greenhouse gas emissions – together they produce 75 percent of them.

A flawed plan
At the end of March, the government launched its new ‘Powering up Britain’ net zero plan, outlining how it will cut the UK’s carbon emissions. This came after the High Court ruled that its existing net zero strategy wasn’t detailed enough and was therefore unlawful under the Climate Change Act, in a claim brought by campaign groups.

The plan includes policies to reduce our reliance on imported fossil fuels and boost our energy security by shifting to cheaper and cleaner sources of energy such as wind, solar, nuclear and hydrogen power instead, with the ambition to have the cheapest electricity prices in Europe while also hitting net zero targets. There are policies to decarbonise transport, such as by phasing out the sale of new non-zero-emission vehicles, and more efficient heating of our homes and other buildings.

The installation of new gas boilers will be banned by 2035 at the latest and the Boiler Upgrade Scheme, which gives property owners a grant to install low-carbon alternatives, such as heat pumps, has been extended until 2028. The Great British Insulation Scheme will help people living in the least energy efficient homes and those on the lowest incomes make their homes more energy efficient to reduce the amount of energy they use and waste.

The government is also investing in carbon capture technologies to absorb unavoidable greenhouse gas emissions, including a project linked to the Sizewell C nuclear power plant in Suffolk that will be powered by heat waste from it to capture 1.5 million tonnes of carbon dioxide each year.

It appears to be an ambitious strategy and the government says it’s already decarbonised faster than any other G7 country, cutting the UK’s emissions by 48 percent between 1990 and 2021, but it has been criticised by experts and campaign groups.

Some think we need a longer-term and more wide-ranging net zero investment plan that will help companies make better decisions for the future and that developing carbon capture while continuing to use fossil fuels is incompatible with a net zero target; we should be focusing on renewable energy more.

There’s also disappointment that there isn’t more funding for home insulation to reduce the carbon emissions from domestic heating, which accounts for around 14 percent of the UK’s total emissions. The Great British Insulation Scheme aims to insulate just 300,000 homes – this represents a missed opportunity when increasing this number could have a significant impact on the amount of energy we use.

The fact is that as comprehensive as the Powering up Britain plan sounds to the uninitiated, the changes we’ll have to make as a result of it will already be further than many people want to go. To truly make a difference within the necessary timeframe we’d need a complete overhaul of our way of life. It seems unlikely that any government would want to propose a plan that could undermine its popularity – with both rich and poor – to such an extent. But the reality is that, if we don’t make the changes voluntarily, we may be forced to as the impact of climate change continues to grow.