Author: itsupport

Rise of the robots

Posted on by itsupport

In November 2022, artificial intelligence company OpenAI released ChatGPT – a language-processing chatbot that can do everything from coding and creating webpages to writing sonnets, raps and dissertations – in eerily human-like words. Less than two months later, Microsoft had announced plans to invest $10bn in the company. The development sent ripples through almost every industry, becoming the fastest-growing consumer app in history; according to estimates by UBS, it had racked up 100 million monthly active users by late January – an achievement that took nine months for TikTok and over four years for Facebook. It’s now widely conceived as one of the most advanced AI developments to date. “ChatGPT is scary good,” Elon Musk tweeted in December. “We are not far from dangerously strong AI.”

Researchers and analysts have since been investigating the potential impact on jobs in everything from computer programming to writing and marketing, while some have speculated it could be the downfall of search engines; Gmail developer Paul Buchheit tweeted in December that “Google may be only a year or two away from total disruption. AI will eliminate the search engine result page, which is where they make most of their money.” In response, Google released AI chatbot rival Bard – one of at least 20 AI-powered products set to be showcased for its search engine this year (among them an image generation tool and an app-developing assistant). Meta meanwhile established a new generative AI team, as Zuckerberg declared that the company’s “single largest investment was in advancing AI and building it into every one of its products.”

Recent advancements
These developments signify a notable step forward in the march of AI, and a clear advancement on the likes of Siri, Alexa and other tools that have already become part of our everyday lives. They aren’t the only recent advancements, of course. In the past few years, we’ve seen rapid progress in AI-powered machines, from robots working on Tesla’s assembly lines to Sophia the humanoid – the realistic bot by Hong Kong company Hanson Robotics that can have conversations, mimic human facial expressions and adapt to new situations using machine learning.

Last year, Google’s DeepMind technology meanwhile managed to predict the structure of nearly every protein known to biology (200 million in total). AI-powered self-driving cars by General Motors’ Cruise firm and Google-owned Waymo have been tested on the roads of San Francisco and other US cities, while developments in deep learning and computer vision are creating ever more human-like capabilities; AI can now recognise objects and people, and some can even recognise emotions or tell if someone is lying.

Revolutionising the workforce
The advantages of these developments are already being seen, of course; in healthcare, AI algorithms can create personalised treatment plans and diagnose diseases, while in agriculture, the technology can help reduce waste and optimise farming practices. It could have other environmental benefits, too; research by the Boston Consulting Group found AI could cut global emissions by up to 10 percent by 2030. In the finance sector, algorithmic trading, automated investing and AI anti-fraud defences are already common practice.

The likes of ChatGPT, Bard and DALL-E, OpenAI’s image generation tool, are now bringing AI to the creative industries, speeding up tasks previously only accomplishable by humans. The obvious perks of this include boosting efficiency, cutting costs for businesses and enhancing the workforce as a whole (see Fig 1).

A study by MIT economists Shakked Noy and Whitney Zhang, Experimental Evidence on the Productivity Effects of Generative Artificial Intelligence, found using ChatGPT reduced the time for writing assignments by almost half.

Another study, The Impact of AI on Developer Productivity: Evidence from GitHub Copilot, looked at the impact of using AI coding assistant Copilot for programme developers, and found it sped up the job by 55.8 percent.

The tech could also help less experienced developers get a foot in the door, according to Sida Peng, co-author of the study and a PhD student in Computer Science at Zhejiang University. “Developers of all levels are experiencing productivity gains,” he says. “But when we looked at percentage increase in productivity, we saw stronger effects with less experienced developers. We see it as lowering barriers and levelling the playing field. This points to a promising future where AI tools help raise the floor on human performance and help more people transition into careers in software development.”

Robot jobs
But while so far these tools are only being used to assist humans – ChatGPT is known to give wrong answers so needs real people to fact-check, while Copilot needs a human developer to work it – some believe AI could soon start to eat into the jobs market. A World Economic Forum report in 2020 already predicted the loss of 85 million human roles to machines by 2025. Recent advancements might just have sped that up.

Pengcheng Shi, Associate Dean in the Department of Computing and Information Sciences at Rochester Institute of Technology, believes we’ll start to see major changes in the coming years. “Just like those revolutionary technologies of the past, AI will make some job functions obsolete,” he told World Finance.

“Computer programming jobs have already been impacted. In many cases, 80 percent of the code has already been written by Copilot or other AI tools,” he says. “If you’re a programmer for Microsoft or Google or Meta, your job skills will need to be far more than coding. For big tech, I’d foresee that ‘basic programmers’ will play diminishing roles over the next five to seven years.”

Some have linked the wave of tech redundancies (see Fig 2) to firms wanting to invest more in AI. Google CEO Sundar Pichai said the company’s strategy in making its layoffs was to “direct our talent and capital to our highest priorities,” and has since described AI as “the most profound technology in human history.” Zuckerberg’s announcement for Meta’s plans to invest in AI meanwhile came right in the middle of its own wave of redundancies, the same day OpenAI announced the release of GPT-4.

It’s not only programmers likely to feel the impact, of course. A research paper, How will Language Modellers like ChatGPT Affect Occupations and Industries?, looked at which sectors and roles were most likely to be impacted by the new apps; it found that telemarketers and post-secondary school teachers were among the jobs most exposed, with legal services, securities, commodities and investments among the key industries highlighted. It’s not hard to imagine how the likes of journalism and copywriting could be affected, too, while OpenAI’s DALL-E – able to create images from language descriptions, along with similar tools such as Craiyon and Midjourney – could expose those in the design industries.

A new economic sector
Michael Osborne, Professor of Machine Learning at the University of Oxford, believes roles with “a deep understanding of human beings” won’t be going anywhere just yet, though. “As a broad framework, you can expect tasks that involve routine, repetitive labour and revolve on low-level decision making to be automated very quickly,” he said in a UK government hearing on AI in January.

“For tasks that involve a deep understanding of human beings, such as the ones that are involved in all of your jobs – leadership, mentoring, negotiation or persuasion – AI is unlikely to be a competitor to humans for at least some time to come,” he told the committee. “Timelines are difficult, but I am confident in making that assessment for at least the next five years.”

AI regulation would help curb some of these risks, and governments are starting to take action

And rather than spelling the end for the human workforce, optimists say the AI sector will bring about a whole raft of new jobs. The World Economic Forum report predicted it could create 97 million new roles – outweighing the 85 million lost to machines.

“We’re already seeing new specialties like prompt engineering emerge as companies look for people who can effectively engage with AI models,” says Peng. Google’s much-publicised job advert for a prompt engineer, able to initiate the best responses from chatbots for $250,000–$335,000 a year plus equity (no computer science degree required), might just be a sign of things to come.

“I believe imaginative people who can use AI – and other technologies – to solve societal challenges will be in demand,” says Shi. And he believes businesses getting on board now will likely be the ones to win. “I don’t think that every company needs an AI expert, but I do believe that every reasonably-sized business needs to have people who can bridge AI with their core business,” he says. “The fight for such talent will be fierce, but organisations cannot afford not to act quickly. They will need to rethink the strengths and weaknesses of their business models and talent pool, and hire the right people to adopt the technology to maintain competitive advantages.”

Dangers and deepfakes
Of course, as all of this tech develops, so too do the risks – and the need for regulation. Biases and inaccuracies have already been seen in the likes of ChatGPT, while Bard’s reputation was dented by a factual error in its launch demo (Google parent company Alphabet lost $100bn in market value afterwards). It’s easy to imagine the impact if we start to rely too heavily on the new technology.

“One of the key challenges that’s probably the hurdle for AI’s wide adoption in mission-critical applications such as the medical sector and intelligence, is its trustworthiness,” says Shi. Deepfakes, which use AI to synthetically create or alter an image, video or audio recording of someone (often creating fake speech), are already an area of concern. While there are some genuine use cases, including digital effects in films, there are a slew of dangers, too – not least around political propaganda, fake news, video scams and illegally created pornographic videos and images.

After the Russian invasion of Ukraine last year, a deepfake video of Ukrainian president Volodymyr Zelensky telling people to surrender circulated online. A deepfake video of Elon Musk shilling a cryptocurrency scam meanwhile went viral last year. In 2020, fraudsters in the UAE even cloned the voice of a company director asking a Hong Kong bank to make $35m in transfers.

While not all deepfakes are advanced enough to go undetected, some are already convincing – and it’s not hard to comprehend the ramifications if the tech gets more advanced. “What this technology is going to do is, it’s just going to fill our world with imperceptible falsehoods,” Professor Michael Wooldridge, director of foundational AI research at the Turing Institute, told Business Insider. “That makes it very hard to distinguish truth from fiction.”

An existential threat?
It’s not only around deepfakes that AI poses risks, of course. Right now, we’re still in the era of Artificial Narrow Intelligence, or ‘Weak AI’ – where technologies and bots perform pre-defined functions without thinking capabilities. The likes of ChatGPT feel one step closer to ‘Strong AI’, or AGI (Artificial General Intelligence), where machines would be able to think for themselves and make decisions.

It’s easy to foresee the dangers these further developments could present. “I anticipate that AI systems will improve drastically, very fast,” says Shi. “It’s hard to imagine what may happen if, more likely when, the line between human creativity and machine generation is blurred or even indistinguishable,” he says. “We are in the era of AI working for humans, and probably will reasonably soon enter the next era of AI and humans working together. Hopefully humans will never work for AI.”

It isn’t only Shi expressing caution. Elon Musk has notoriously spoken about the dangers of superhuman AI – intelligence that surpasses that of humans – and has called for regulation. “What happens when something vastly smarter than the smartest person comes along in silicon form?” he said in a recent interview with Fox News. “It’s very difficult to predict what will happen in that circumstance,” he said, citing “civilisational destruction. I think we should be cautious with AI and I think there should be some government oversight because it is a danger to the public,” he said.

Back in 2014, Stephen Hawking took it a step further, telling a BBC interviewer that “I think the development of full artificial intelligence could spell the end of the human race. Once humans develop artificial intelligence, it would take off on its own, and re-design itself at an ever-increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete and would be superseded.”

At the UK government hearing in January, University of Oxford researchers voiced a similar warning. “With superhuman AI, there is a particular risk that is of a different sort of class, which is that it could kill everyone,” Michael Cohen, a doctoral candidate in Engineering Science, told the Science and Technology Committee.

Cohen said he believes the appearance of superhuman AI at some point is inevitable “on our current track. There certainly isn’t any reason to think that AI couldn’t get to our level, and there is also no reason to think that we are the pinnacle of intelligence,” he said.

Professor Michael Osborne, also at the hearing, agrees with the bleak, if dramatic, possibility. “AI is attempting to bottle what makes humans special – what has led to humans completely changing the face of the earth,” he said. “If we are able to capture that in a technology, of course it will pose just as much risk to us as we have posed to other species, such as the dodo.”

Proceeding with caution
This might sound hyperbolic, but it’s not just a few voicing concerns; in a recent survey by Stanford University’s Institute for Human-Centred AI, more than a third of researchers asked said they believed decisions made by AI could lead to ‘nuclear-level catastrophe.’

For these reasons, many have highlighted the need to implement regulation before the machines get too advanced. “The global community must agree how and when we use AI,” Sulabh Soral, chief AI officer at Deloitte, said in a recent statement. “Should we ban AI research into certain areas or ban AI in certain weapons? The danger is a little research leads to one thing and then another and before we know it, it’s out of our hands, either with a bad actor, or, worse, in its own hands,” he wrote. “With a clear global consensus and rigorous regulations, we can sidestep the worst-case scenario.”

Cohen likewise believes it’s crucial to develop laws that prevent “dangerous AI” and “certain algorithms” from developing, “while leaving open an enormous set of economically valuable forms of AI.” Osborne even believes we need regulations comparable to those on nuclear weapons. “If we are all able to gain an understanding of advanced AI as being of comparable danger to nuclear weapons, perhaps we could arrive at similar frameworks for governing it,” he said at the government hearing, emphasising the importance of avoiding an ‘arms race’ between different countries and tech companies – something already being seen between the US and China.

“There seems to be this willingness to throw safety and caution out the window and just race as fast as possible to the most performant and advanced AI,” he said. “I think we should absolutely rule those dynamics out as soon as possible, in that we really need to adopt the precautionary principle and try to play for as much time as we can.”

But tech firms don’t appear to be doing that. In January, Google stated publicly that it would recalibrate the level of risk it was prepared to take on so as to speed up AI development, according to a presentation reviewed by The Times. Chief Executive Sundar Pichai reportedly said the company had created a ‘Green Lane’ fast-track review process to accelerate development and get review approvals quicker. “What they are saying is that the big tech firms see AI as something that is very, very valuable, and they are willing to throw away some of the safeguards that they have historically assumed and to take a much more ‘move fast and break things’ perspective on AI, which brings with it enormous risks,” said Osborne.

Global regulatory action
AI regulation would help curb some of these risks, and governments are starting to take action. In March, the UK government published an AI regulatory framework targeting language modellers such as ChatGPT and image-generating tools including Midjourney AI. The EU has outlined an AI strategy but hasn’t yet enacted legislation. In the US, regulation is still nascent.

One country setting a precedent is China; last March, the government introduced a regulation governing how tech companies can use recommendation algorithms. Then in January, the country implemented legislation around deep synthesis technologies, with the aim of combating malicious deepfakes; these include banning deep synthesis services from disseminating fake news. In April, the Cyberspace Administration of China (CAC) meanwhile drew up a draft for managing generative artificial intelligence services like ChatGPT.

These types of regulation could set a precedent for other nations to follow – but there’s a thin line to tread between curbing risks and not restricting innovation, according to Professor Robert Seamans, Director of the Centre for the Future of Management at New York University’s Stern School of Business. “Any regulation needs to balance two things: one, safeguarding against potential harms, and two, not overly limiting advancement of technology,” he says. “Too often, the discourse on this topic buckets people into one camp or the other. I’d like to see more engagement and discussion around the pros and cons of different types of regulation of AI.”

Experts point to other challenges in creating universal standards for AI. “Ethical principles can be hard to implement consistently, since context matters and there are countless potential scenarios at play,” Jessica Brandt, policy director for the Artificial Intelligence and Emerging Technology Initiative at the Brookings Institution, told VOA News.

“They can be hard to enforce, too. Who would take on that role? How? And of course, before you can implement or enforce a set of principles, you need broad agreement on what they are.”

Future challenges
Shi believes it’s not only regulation around the technology itself that governments will need to tackle, though. “The disparities in wealth and power generated by an AI-enabled economy would be something we have never seen, or even imagined,” he says. “Alongside the ethical and legal boundaries of AI and what it can and cannot do, we need policy to tackle this, and to address the cultural shock many people may face – what is the worth of our work now much of it can be done by machines?”

What happens when something vastly smarter than the smartest person comes along in silicon form?

He believes if these areas can be addressed, the huge, positive potential of AI can be harnessed. “As a researcher, I am optimistic by nature, and have great hope that AI will overall make our lives better,” he says. “Even though I do not see that AI will become evil on its own as many people have feared, I do see that human flaws in ourselves may lead us down that path – hence the necessity of these three, ideally universally agreed upon, accords.”

It remains to be seen how exactly things will develop, of course. “We are just at the beginning of the age of AI,” says Seamans. “I suspect there will be some incredibly innovative use cases that emerge that change the way our economy and society work, much in the way that steam engines and electricity changed economies and societies. We are yet to see what those use cases are.”

Indeed, if governments and tech firms can strike the right balance between implementing regulation without stalling innovation, the world stands plenty to gain. If they don’t get it right, only time will tell what the ramifications might be – and whether the scientists’ bleak forecasts ring true. Let’s hope we never get to find out.

Bringing sustainable banking to Islamic finance

Posted on by itsupport

In a challenging year that included global inflation threatening to run out of control, post-Covid caution by the business community and client concerns about the near future, Jordan Islamic Bank once again managed to post improving results across all its main activities.

In short, the institution kept faith with its long-term goals of prudent expansion in a difficult environment.

The numbers tell a story of steadfast growth through thick and thin. In the 2022 financial year JIB, as the bank is popularly known, achieved net profits after tax of $86.2m, with a growth rate of 3.5 percent compared, with 2021. Joint investment profits amounted to $316.1m, with a growth rate of 4.5 percent.

Total assets including certain investment accounts and wakala (investment) portfolios increased to $8.73bn, up by $335m for a growth rate of about four percent. And in one of the bank’s primary roles of providing credit to clients, funds granted to customers jumped to $7.33bn, up by a hefty $645m for a growth rate of 9.6 percent, an impressive figure in the middle of a largely shrinking global economy that reflects not only the faith that the bank has in its clients but also in the fundamental strength of Islamic banking.

And mirroring JIB’s focus on building a robust foundation for the future, customers showed their faith in the institution – now in its 45th year – by boosting deposits including wakala accounts by $353m, up by an impressive 4.7 percent in otherwise challenging circumstances. The directors felt more than justified in approving cash dividends to shareholders at a rate of 25 for a total amount of $70.5m.

As chief executive Dr. Hussein Said explains: “This confirms the bank’s maintenance of a strong capital base and a solid financial position. The bank also continued to maintain the quality of its credit portfolio, as non-performing finances (NPFs) reached 2.68 percent.” However in another example of JIB’S policy of prudence, the NPFs were fully covered by contingency financing.

JIB does not stand still, literally. The bank opened two banking offices in 2022, moving one branch to a new location already owned by the bank. It also converted five banking offices into mini branches that are purpose-designed to service customers in a more accessible way, deploying the latest technology.

Overall JIB’s expanding network now stands at 111 branches and offices spread out in strategic locations throughout Jordan. It is an axiom of good banking that the institution goes where it is most needed.

The ‘digital corners’
Reflecting the global trend towards the provision of seamless, client-friendly banking, JIB opened its second ‘digital corner,’ this one being centrally located in the Pavilion Mall office of the Capital Governorate. It is a place where clients can access a wide range of self-banking services. In addition to this latest one, the bank now boasts three digital corners in Amman, in its offices located on Wasfi Al-Tal Street, in Pavilion Mall and in Areefa Mall.

These new digital corners further the bank’s ambition of increasing financial inclusion. Nothing if not comprehensive in terms of the services they provide, these facilities allow clients to open accounts, update personal information, obtain ATM cards immediately, request cheque books, enquire about the details of financing and financial transfers, and manage beneficiaries, among other transactions. And meeting the demand for instant, street-side services, JIB has now built up a 318-strong network of ATMs spread all over Jordan, ranking it first of all the country’s banks in terms of street-side accessibility.

Simultaneously, true to its philosophy, JIB continues to grow its range of Islamic digital banking services such as Islami Mobile, Islami Internet, Islami ATM and banking cards of all kinds. The culmination of these developments was JIB’s winning of the highly prestigious award as the best and safest Islamic bank and financial institution in Jordan for 2022.

It is an axiom of good banking that the institution goes where it is most needed

But banking is not just about money, as JIB has always recognised. It not only continued to provide food support throughout the year for the most needy families, especially during Ramadan, but a number of the bank’s employees also volunteered to distribute monthly food parcels arranged by the bank to families benefiting from the programmes run by Tkiyet Um Ali in the capital Amman.

Originally, JIB was established to practise investment banking business in accordance with the provisions and principles of Islamic Sharia, and the first branch opened in late 1979. True to the original principles, the bank’s transactions and contracts continue to be subject to the supervision of a Sharia board composed of specialised scholars. As JIB grew, it aimed to meet the economic and social needs of citizens in the fields of banking, financing and investment in accordance with the provisions and principles of Islamic Sharia while, in a continually evolving banking environment, keeping pace with modern banking technologies, for instance in the form of the ‘digital corners.’

Other digital products deployed in recent years have included 3D Secure for safe online shopping, bill payments, e-wallets and CLiQ for instant transfer services. And recognising clients’ growing requirement for year-round services, banking services are available during official holidays, Saturdays and evenings.

Honouring founding principles
That original commitment to Islamic financing and Sharia services has never wavered, as measured not only by the number of clients, but by recognition from prestigious publications such as The Banker and EMEA Finance, and by the obtaining of credit and Sharia ratings from several international rating agencies including Standard & Poors and Islamic International Rating.

The bank’s current charitable work also reflects an ongoing commitment to the cultural and social life of the kingdom. It is proud that its credit-lending provides the essential growth finance for professionals, craftsmen and small-to-medium enterprises that are the foundation of Jordan’s economy. The list of endeavours supported by the bank is too long to define in full, but JIB has long backed conferences, education, safety and occupational health, sponsorship of matters related to the Holy Quran, arts, literature, heritage, energy, environment and water integrity.

Not even the founders of Jordan Islamic Bank would have thought in the late 1970s that their creation would grow to the extent that it had by the end of 2022. Now with over 2,440 employees, JIB’s paid-up capital stands at $282.1m. Total assets under management are about $8.73bn. Total deposits including restricted investment accounts reached $7.80bn. Total financing and investment is about $7.33bn. And profits after tax hit $86.2m. As the bank has long recognised, prosperity is based on prudence.

Harnessing fintech for the next gen of Islamic finance

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Tech is punching down the walls, floor joists and windows of finance all about us. But in the rebuilding how relevant is artificial and business intelligence to Islamic finance in 2023 – and beyond? Can a population of two billion Muslims meaningfully harness this tech for good? How big a deal is it and what are the risks as well as the benefits? The combination of Islamic fintech and data science has made huge strides, attracting millions of new customers.

Whatever their religious background, banking consumers want speed, efficiency and privacy. In other words, a smarter banking experience. The scope of fintech is widening, as is the market for its own services and products. It’s getting competitive, but credible transactions need to be handled with much care.

So how does Shariah compliance work in this space now? Who are the main beneficiaries – and when will they see the benefits for real? World Finance gets startling, innovative responses from company managing director Robert Hazboun in an exclusive interview on the cutting-edge direction and speed of Islamic finance in 2023 and beyond.

Where are the new boundaries as far as digital change goes for Islamic finance in 2023? How hard are they being pushed – and how much progress is being made?
Overall I would say that new frontiers and boundaries for digital change in Islamic finance are being pushed very hard, and the pandemic accelerated this trend. Much progress has been made, from blockchain to AI and digital, or neo banks. All of which are being adapted into Shariah-compliance for digital touch points and to extend financial inclusion in the more devout segments of the market.

If Islamic fintech offers consumers and business more control and choice, its popularity may – reasonably – rise, from touch points to scalability. Where are the ‘sticking points’?
There are complexities with Shariah compliance that may slow the full potential of the Islamic fintech experience, even when it clearly offers value and control to consumers and especially with the more subtle regulatory distinctions for each Islamic ideology. This could delay its inclusion in these technologies. Another point is a lack of awareness of its value among customers, especially in non-Muslim countries. Addressing these challenges needs meaningful collaboration between industry players, regulators, scholars and experts in Islamic finance to create an environment that is conducive to the growth and scalability of Islamic fintech solutions. The will is there.

Where do improvements in artificial intelligence (AI) and business intelligence (BI) lie? Are these opportunities – and risks – better understood by clients (banks)?
AI and BI can help Islamic banks to comply with Shariah law, by analysing data, identifying patterns, and highlighting areas of possible improvements to different channels and touch points.

This can help reduce the risk of non-compliance and improve the quality of Islamic banking services and enhance business operations, decision-making processes, as well as customer experiences. However, risks from depending on AI and machine learning in Islamic finance also loom, namely in financing cases that have no precedents in Shariah law.

This can cause confusion, complexity, and prolonged processes to find and interpret the relevant religious texts with regulatory bodies. So it’s complicated. Clients have to prioritise their own continuous learning, collaboration and foster a more data-driven decision-making culture within their own organisations to gain the understanding of the opportunities and risks presented by AI and BI. We’re here to support this.

Given so much AI and BI change, how much ‘future-proofing’ concern is there? How should this be planned and anticipated?
Future-proofing concerns for banking systems with the rise of AI and BI are centred around data security, compliance, customer privacy, bias and fairness. Also talent acquisition and change management. It’s a lot. Continuously future-proofing is an ongoing endeavour, not one undertaking. A flexible mindset is needed. So adaptability is a priority for handling and strategising the ever-changing realm of AI and BI, absolutely. We are always exploring possibilities to adapt machine learning and AI to Shariah-compliance.

Many Muslims in the West are young, especially in the under-30 age group. This brings challenges as well as opportunity. How well realised is this by yourself?
It’s absolutely realised. The younger Muslim population, especially in the west, is drawn to banking services offering Islamic financing through digital channels which fits into their tech-savvy, on-the-go lifestyle. They’re dependent on them to help them manage their lives. To support this ICS BANKS Islamic Banking is our own customer-centric platform. It’s built from the ground up with decades of tech evolution poured into it offering digital banking products and services such as mobile banking apps and Islamic digital financing platforms. The latest AI, blockchain and digital wallet tech are fully integrated. This keeps Islamic banks and financial institutions relevant for this vitally important demographic, no question about it.

How do your own technology solutions help customers with data-driven pressures – your own and theirs?
Our banking solutions offer tools for data-driven pressures, ethical considerations and data privacy with its own scalable architecture including several reporting methods such as Omnichannel KYC, spending analysis and regulatory reports. These support banks, financial institutions and customers by analysing massive amounts of financial data, detecting trends and patterns, mitigating risk, such as identifying fraudulent activities. We believe this helps banks and financial institutions learn more about their own risk profile, their own distinct customer base, resulting in more personalised and bespoke products – that’s important. This in turn helps customers make better financial decisions. Our products are totally central to their better decision-making process.

Is more personalisation and bespoke product planning part of the broader Islamic fintech landscape? Or is growth slower because of more manual processes to anticipate and plan for?
While some growth rates for Islamic fintechs may have been slow, digital innovation is making it easier to adapt Shariah-compliant products faster. But as Islamic finance evolves and expands globally, there might be variations in interpretation and implementation of Shariah principles across different jurisdictions. This creates complexities and manual processes in anticipating and planning personalised products that comply with the specific requirements of each market – we’re very well aware of this.

How much demand from Western banking business for an Islamic ‘window’ is there? Is demand up?
It is and there are several reasons why. One reason is the growing Muslim population in Western countries, which has led to more demand for Shariah-compliant products and services. Non-Muslim customers are also showing interest in Islamic banking due to its ethical nature, especially in the aftermath of the global financial crisis, which eroded trust in conventional banking systems. While the demand for Islamic banking windows from Western banking businesses is not yet at the same level as in Muslim-majority countries, it is growing and very likely to continue to do so in future.

Where does ICS Financial Systems sit between cloud-based solutions versus traditional banking and personal interaction? Is this less of a tension than in the past?
We totally recognise the need for balance between cloud-based solutions and personal interaction.

Both approaches offer distinct advantages and both, we say, must be integrated thoughtfully for a seamless experience. The ideal equilibrium? It depends, as we must take into account the specific needs and preferences of our customer base, as well as the strategic objectives and resources available to the bank. It’s always a bespoke approach, fundamentally.

An interconnected Islamic global finance ecosystem is still some way off – what’s the timeline, in your view?
The timeline for such an ecosystem is challenging to predict accurately depending on the pace of tech, the level of regulatory support, and a willingness of financial institutions to collaborate and standardise operations. Nonetheless, more investment in Islamic banking software suites and other tech solutions play an important role in supporting the growth and development of the Islamic finance industry. Watch this space, I say.

Might hybrid-type digital products be worth pursuing longer term, which join the best of both banking ‘worlds’? Is this realistic?
In the long run, it’s well worthwhile to pursue hybrid-type digital products that blend the advantages of traditional banking and digital banking. These aim to provide a comprehensive banking experience by integrating in-person service with digital convenience, harnessing emerging technologies. Although there are obstacles like investing in technology infrastructure and adapting to new processes, numerous financial institutions are actively exploring hybrid models.

Consequently, we feel it is reasonable to anticipate a higher prevalence of these models in the future. We’re very optimistic about achieving the right balance when it comes to this.

The digital transformation of Dominican banking

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Dominican multiple banking has made notable progress in innovation and technology in the last two decades by incorporating digital tools and decentralising its services through alternative channels. Banco Popular Dominicano stays at the vanguard of digital transformation with innovative technologies that make life easier for customers, improve process efficiency and expand the reach of its promise of value to society.

The Multiple Bank Association of the Dominican Republic (ABA, according to its acronym in Spanish) recently detailed that the Dominican banking sector registered a total of 5.1 million Internet banking users in 2022, which means an increase of 3.4 million in absolute terms and 302 percent in relative terms since 2015.

Banco Popular Dominicano, the first private capital bank in the Dominican Republic, has been moving forward on improving the efficiency of its operations and consolidating its leadership at the forefront of the digital and technological transformation of Dominican financial services, accelerating the innovation process to expand its transactional capacity and support the bank’s future growth.

Digital adoption
Banco Popular Dominicano was recognised as the most digital and sustainable bank of 2022, and its mobile application, the ‘Popular App,’ is the best in its segment, according to World Finance. In 2022, the bank started the creation of a modern ecosystem of applications that would allow it to penetrate niches of the market with a high potential for banking, such as remittance recipients, SMEs, and the youth segment, thus fostering its efforts to expand financial inclusion to the population.

There has been an increase in users of mobile applications and online banking

Currently, 59 percent of the bank’s customers use ‘Popular App,’ a channel through which more than 45 million transactions were carried out last year, representing an increase of 33 percent compared to 2021.

Of the transactions carried out via Internet banking and the ‘Popular App’, 71 percent were conducted through the application. Overall, 86.9 percent of all Banco Popular’s transactions are carried out through digital channels. Its network of ATMs, which exceed 70 million transactions per year, is advancing in its modernisation with 70 new units, which allow commercial deposits, accept coins and a larger number of bills, and provide greater convenience and speed, especially for its business clients. For these clients, the bank also began the phased launch of a new ‘Popular Empresas App’, which will have a more up-to-date and intelligent approval and product management flow, more advanced functionality for digital check deposits, and more straightforward and intuitive interaction.

On the other hand, to continue promoting responsible control of their finances by the clients themselves, it launched the ‘+Control’ tool on its Internet banking site, which has been widely accepted. It allows users to set consumption limits on their credit cards by hours and days of use, location, types of commerce, and amounts of consumption, online or in-person transactions, among other benefits. Banco Popular completed a vital initiative to transform the commercial management model in its branches, aiming to optimise service and maximise the customer experience, boosting sales and freeing up the operational load.

Thanks to this project, waiting time in the branches was reduced by more than 50 percent, customer satisfaction increased by 60 points, and the productivity of business officers increased by 33 percent. Banco Popular had, at the end of 2022, more than 1.3 million digital customers.

A new way of banking
According to the Superintendence of Banks of the Dominican Republic, the adoption of new technologies has been reflected in the services offered by Financial Intermediation Entities, allowing access to products and services in a wholly digital way during 2022. This advance in digital services has caused branch use to drop from 41.5 percent in 2021 to 35 percent in 2022 in a variety of transactions in different banks. As for mobile applications, these not only strengthen the ties that banks have with their customers but also aid in selling products and services. With these advances already materialising across the banking sector, there has been an increase in users of mobile applications and online banking. The Financial Intermediation Entities have strengthened the rights of these users since more than 50 percent of those surveyed consider claims easy to file through those channels.

Responsible banking
As part of its sustainable vision, last year, the bank expanded the coverage of energy consumption with renewable energy, contracting clean energy for the Torre Popular complex, in addition to the installed capacity of 22,300 solar panels in our branches across the country.

This covers an average of 80 percent of all the energy consumed in the 56 photovoltaic branches and all the buildings that make up the Torre Popular complex and contributes to reducing the emission of 9,258 tons of CO2 into the atmosphere each year.

As an organisation certified internationally as carbon neutral, in 2022, the National Council for Climate Change and Clean Development Mechanism (CNCCMDL) recognised the bank for maintaining carbon neutrality in its operations. This distinction was granted within the framework of Climate Week for Latin America and the Caribbean, which the Dominican Republic hosted in 2022.

The bank’s set of initiatives in favour of environmental sustainability ‘Hazte Eco’ also received international recognition: in Spain, by the Corresponsables Foundation, and in London, by the International Business Awards (IBA), which awarded it a Silver Stevie in the category of Corporate Social Responsibility Programme of the Year in Mexico, the Caribbean, Central, and South America.

This green finance portfolio was expanded in 2022 with three new products to promote sustainability in Dominican society: the ‘Extrahogar Eco’ and ‘ExtraEco’ revolving loans and the ‘HipotEco’ mortgage loan for the purchase of sustainable homes. In addition, as part of its commitments to environmental sustainability, last year, Banco Popular surpassed the milestone of planting more than one million trees in different areas of the country, thus advancing the realisation of a promise the bank had made for 2030.

Regarding financial education and inclusion, Banco Popular continues to expand the offer of digital and face-to-face courses from the ‘Finances with Purpose Academy,’ which has already trained more than 154,000 people. In addition, the ‘Subagente Popular’ network, the largest in the country, has allowed access for 550,000 users to carry out their financial operations, with more than 4.4 million transactions, in the 2,997 affiliated businesses.

Supporting SMEs
For its SME clients, Banco Popular Dominicano created the SME Service Centre, which provides small business owners with detailed assistance, thus prioritising their financial needs. In the same sense of support for SMEs and entrepreneurship, more than 400 clients enrolled in the ‘Impulsa Popular’ online platform and used the tools provided to expand their business plans. At the same time, entrepreneurs took advantage of the benefits of the ‘Emprende Popular’ platform, with specific products, such as the ‘Emprendedores Naranja’ loan, designed for entrepreneurs in cultural and creative industries, which offers, in addition to financial facilities, entrepreneurship workshops for these types of businesses.

As a mechanism to promote the development of the productive sectors and project the country in international markets, our ‘Impulsa Forum’ and the export platform, ‘ProExporta,’ encouraged small, medium, and large-sized Dominican companies to consider export and enjoy the benefits of entering foreign trade. Its ‘Impulsa Popular’ web portal is a pioneering platform in the country, offering free tools to facilitate business management for entrepreneurs. It has over 3,200 articles and videos on finance, marketing, management, and sustainable leadership.

To elevate its digital leadership, the bank signed a strategic alliance with Microsoft to promote the digital transformation of small and medium-sized companies (SMEs) and young entrepreneurs. Through its SME Business Strengthening programme, 1,400 SME entrepreneurs have participated in training and educational opportunities with its allies: the Association of Industrialists of the Northern Region (AIREN), Barna Management School, and the Loyola Specialised Institute of Higher Studies. Additionally, through the ‘Impulsa Popular Franchise’ programme, 61 SMEs have become franchisees.

Tourism sector
The bank continues to lead in the sector as the ‘Bank of Tourism,’ by strengthening its leadership regarding the total volume of loans granted to its hotel clients and the broad value chain that are part of this crucial activity to the Dominican development model. Banco Popular represents almost half of the tourism financing portfolio of all Dominican banks, exceeding $209m in 2022.

To elevate its digital leadership, the bank signed a strategic alliance with Microsoft

Banco Popular’s financial support for tourism is distributed among nearly 800 clients. In 2022, the bank participated again in the International Tourism Fair (FITUR) in Madrid, Spain, of which the Dominican Republic was a partner country that year. This reiterates the bank’s role in supporting tourism, one of the main driving forces for the country’s recovery after the global pandemic.

The bank continues its commitment to the sustainable development of Dominican tourism and the region. It arranged a strategic financing agreement with Grupo Piñero of up to $200m together with BID Invest for the development and growth of tourism in its hotels in the Dominican Republic and Jamaica. This agreement is set to revitalise tourism activity with a sustainable approach in its three aspects: economic, social and environmental, preserving and generating jobs, betting on local suppliers, and reducing the carbon footprint by 60 percent before 2030.

Together with the Ministry of Tourism, it launched the campaign ‘Tourism in every corner’ to promote integration and mobility within the national geography, to diversify Dominican tourism options and to facilitate the creation of new, sustainable projects that allow the inclusion of communities.

Cybersecurity
Within the framework of Cybersecurity Awareness Month, Banco Popular Dominicano held three virtual seminars aimed at companies, young people, and adults over 55 years of age, respectively, with educational content on cybersecurity, part of its permanent education initiative ‘Pistas de Seguridad’ (Security Tips).

In addition, its employees are certified annually in the best and most up-to-date cybersecurity practices. Similarly, the bank reinforces its clients’ cybersecurity thanks to the advanced Security Operations Centre (SOC), which complies with international best practices, intense monitoring, and investigation to curb threats to technological infrastructure. Furthermore, its Network Operations Centre (NOC) constantly monitors its platforms and channels, ensuring the systems’ stability every day of the year.

Making the right investment calls in a turbulent economy

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Since 2008, a series of global events has made us question most of our preconceptions about the world we live in: economic and environmental crises; a pandemic that slowed down the whole economy; and, most recently, geopolitical crises and even wars that have altered energy markets as strategic as the European one. All of it came with harsh consequences not just for the global markets, but at a personal level.

Our future offers more questions than answers. However, the only way to improve our reality is to understand how it changes, and from that perspective, make the right decisions that allow us to move forward. After all, we stand where we are today because of the decisions that we all took in the past.

This was the case for BBK Banking Foundation since it started its activity in 2014. It is worth remembering that the Savings Banks and Banking Foundations Act of 26/2013 clearly defined a series of conditions for banking foundations that maintained a shareholding equal to or greater than 50 percent of their respective financial institutions. That is indeed the case of the BBK Banking Foundation, with respect to Kutxabank, as it controls 57 percent of its shares.

All entities in such a situation are required to present a reinforced financial plan that includes its forecasts in terms of investment diversification and risk management. This requirement seeks to minimise the financial dependence of banking foundations on the investor credit institutions they support. Furthermore, those foundations interested in maintaining their majority positions have to set up a reserve fund to meet any future needs that the investor might face that could jeopardise its solvency. The alternative is to sell stakes in the bank until it reaches a threshold below the control position, either through an IPO or with a different transaction.

Making the right call
From the very beginning, BBK was committed to opt for the endowment of the reserve fund, being well aware of both the disincentives to retaining its majority position and the financial dimensions that the fund required; €231m at the end of 2022. And its commitment emerged from its understanding of Kutxabank as a strategic contributor to the Basque economy, its unquestionable institutional relevance, and its need of a stability provider that could manage its growth without a dependence on cyclical factors.

We stand where we are today because of the decisions that we all took in the past

BBK made the right call: this investment is generating a moderate but stable return regardless of the many crises that economies all around the world have been facing. This decision was also essential as it allowed Kutxabank not to become a listed company, which has also been proven as the best fit for the context of the operation. Those savings banks that chose to become publicly traded companies have not performed as well as expected. Meanwhile, a study conducted by Deusto Business School last year concluded that not being a listed company avoided about €2bn in losses.

What could have happened if the company had instead chosen to let go and turn Kutxabank into a listed firm? In our opinion, the bank would have suffered greatly and the successes we have realised would have been that much harder to achieve. BBK recently managed to fill its reserve fund two years earlier than expected. This was despite very complex economic contexts, namely the drastic reduction in income experienced during the pandemic and the uncertainty generated by the health crisis in the absence of dividends.

The milestone of the early endowment of this fund allows the BBK Banking Foundation to strengthen the strategic horizon of our activity, which is none other than to guarantee, reinforce and promote the activity of our social work, the largest per capita in Spain. This is our raison d’être. And to achieve it through a prudent management model that focuses on diversification and minimising risk, as demanded by the law since its enactment. So it’s a model that adapts its course to make it sustainable over time and one that enhances the financial solvency of the entity and energetically defends the roots of its activity in the province of Bizkaia. With this model in place, we can make decisions with the goal of meeting the strategic objectives set.

Although we acknowledge that our approach is not always the fastest, the most striking or the noisiest, we do not know any other way. The measure of our success can be seen in the steps we have taken since we began our journey nine years ago and it proves that as a banking firm, we are without doubt, a success story.

Antigua and Barbuda’s sustainable development

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The Antigua and Barbuda Citizenship by Investment Programme (CIP) has experienced transformative changes in recent years, propelling it to the forefront of the investment migration industry. These changes have not only enhanced the programme’s appeal to global investors, but also brought about significant economic and social transformations within the jurisdiction. In this article, we will delve into the key transformative changes in the Antigua and Barbuda CIP and their impact on the country’s future.

Expansion of investment options
The expansion of investment options within the Antigua and Barbuda CIP has been a significant development, offering potential investors a wider range of avenues to choose from. This expansion has not only diversified the programme but has also attracted a broader spectrum of investors, catering to their unique preferences and investment goals. One notable sector that has witnessed substantial growth is real estate.

The CIP has approved a variety of real estate development projects that focus on sustainable development and responsible tourism. By investing in these projects, individuals not only contribute to the country’s economic growth but also actively participate in preserving its natural beauty. These projects adhere to strict criteria, ensuring that they have a positive impact on the environment and promote responsible tourism practices.

The Antigua and Barbuda CIP has opened doors for investors with diverse interests and investment goals

The emphasis on sustainable development aligns with global efforts to mitigate the environmental impact of development projects while creating economic opportunities.

In addition to the real estate sector, the introduction of business investments has played a pivotal role in stimulating entrepreneurial activity within Antigua and Barbuda. The CIP allows investors to invest in businesses that have been approved by the Citizenship by Investment Unit (CIU). This has resulted in job creation and economic diversification, as investors inject capital into new or existing businesses.

By encouraging business investments, the CIP has created an environment conducive to innovation and enterprise, fostering a more vibrant and resilient economy. The entrepreneurial opportunities provided through the CIP contribute to the long-term sustainability and prosperity of Antigua and Barbuda. By expanding investment options beyond real estate and including business investments, contributions to the National Development Fund (NDF), and investments in the University of the West Indies (UWI), the Antigua and Barbuda CIP has opened doors for investors with diverse interests and investment goals.

This flexibility allows individuals to choose the avenue that best aligns with their preferences, risk appetite, and long-term objectives. It enables investors to tailor their investment strategy to their specific needs, promoting a more personalised and beneficial experience.

Strengthening due diligence measures
Recognising the significance of upholding the integrity of the Antigua and Barbuda CIP, the jurisdiction has implemented robust due diligence measures. These measures are designed to ensure that only individuals who genuinely have an interest in the country and possess a clean background are granted citizenship. By partnering with reputable due diligence firms, Antigua and Barbuda has set a high standard for transparency and security, instilling confidence in both investors and the local community.

The CIP has created an environment conducive to innovation and enterprise

The implementation of stringent due diligence measures is crucial in safeguarding the programme against potential risks such as money laundering, fraud, or security threats. By conducting thorough background checks on applicants, including verification of their financial history, criminal records, and political affiliations, Antigua and Barbuda can effectively assess the suitability of individuals for citizenship. This process not only protects the interests of the jurisdiction but also ensures the safety and well-being of its citizens.

It is essential for Antigua and Barbuda to continuously enhance its due diligence practices to address emerging risks and evolving global standards. The landscape of financial crime and security threats is ever-changing, requiring jurisdictions to remain proactive and adaptable. By staying at the forefront of due diligence procedures, Antigua and Barbuda can effectively identify and mitigate potential risks, ensuring the long-term sustainability and reputation of the CIP.

Emphasis on sustainable development
Antigua and Barbuda’s commitment to sustainable development is a noteworthy aspect of the transformative changes in the CIP. The programme actively encourages investments in projects that prioritise environmental stewardship and social responsibility. The country has invested in renewable energy projects, sustainable infrastructure development, and educational initiatives. This emphasis on sustainability not only attracts socially conscious investors but also ensures long-term benefits for the environment and local communities.

To further drive sustainable development, Antigua and Barbuda can explore partnerships with international organisations and experts to identify innovative solutions and best practices in areas such as renewable energy, waste management, and conservation efforts. By leveraging these partnerships, the country can position itself as a global leader in sustainable development.

Focus on economic diversification
The Antigua and Barbuda CIP has played a vital role in promoting economic diversification within the country. By attracting investments across multiple sectors, the programme has reduced dependence on traditional industries such as tourism and created new opportunities for economic growth. Investments in sectors such as technology, agriculture, and healthcare have not only generated employment but have also strengthened the overall resilience of the economy.

To sustain this momentum, the government will continue to support entrepreneurship and innovation, providing incentives and infrastructure for emerging industries. This focus on economic diversification will contribute to the long-term sustainability and stability of the country’s economy.

Social impact and community progress
The transformative changes in the Antigua and Barbuda CIP have extended beyond economic growth to address social needs and community development. The programme has allocated funds for education, healthcare, and infrastructure projects, benefiting both citizens and investors. By prioritising social impact, the programme ensures that the benefits of investment migration are shared equitably and contribute to the overall well-being of the society.

The Antigua and Barbuda CIP has experienced transformative changes that have reshaped the programme’s landscape and propelled the jurisdiction to new heights. To capitalise on these changes and address future challenges, ongoing collaboration between the government, investors, and stakeholders is crucial. By fostering an environment of innovation, transparency, and sustainability, Antigua and Barbuda can continue to thrive as a leading destination for investment migration, creating a brighter future for its citizens and investors alike.

Investment banking for positive impact and sustainability

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Since its inception in 2005, Alpen Capital has helped businesses across the GCC region and beyond access finance, grow their long-term value and achieve their strategic objectives. Now the company is expanding and consolidating its place in both established and developing markets while also ensuring its transactions make the right environmental and social impact, particularly in supporting agribusinesses, empowering women, and providing access to finance for small businesses and unbanked populations.

What message would you want to give to our readers who might be unfamiliar with your organisation? What sort of customers are you hoping to attract?
Alpen Capital is an investment banking advisory firm specialising in providing customised solutions in the areas of debt, M&A and equity to institutional and corporate clients. Our deep local know-how and regional expertise has enabled us to execute transactions for leading business conglomerates and financial institutions across the GCC, South Asia, Levant and Africa. With offices in Dubai, Abu Dhabi, Doha, Muscat and New Delhi and an operational footprint in 36 countries, our vast network of international investors and funders gives us the ability to structure unique and innovative solutions for our clients.

We strive to work with clients who want to grow the long-term value of their business across various sectors such as retail, healthcare, insurance, hospitality, education and food. We are committed to partnering with companies that focus on environmental social governance and renewable/green energy. We are especially interested in African countries and developing countries too. We also aim to engage with financial institutions that have a green lending book and support in achieving the Sustainable Development Goals (SDGs) outlined by the United Nations.

What is Alpen Capital’s key focus right now in terms of new business development and areas for growth?
Currently, Alpen Capital’s focus is on consolidating its position in its operating markets and at the same time looking for opportunities to venture into new markets, particularly Africa and Southeast Asia. In recent years we have successfully completed numerous transactions in emerging markets like Kenya, Cameroon, Nigeria, Jordan, Bangladesh and Sri Lanka and we are keen to enhance our presence in these regions. We are particularly interested in advising organisations in Vietnam, Indonesia, Uzbekistan, Egypt and Jordan, given the interest from our funding partners in these countries.

To further strengthen our capabilities, we have recently entered into a strategic partnership with IMAP – International M&A Partners, to become its exclusive partner for M&A activities in the GCC. This collaboration will enable us to leverage IMAP’s vast network of over 450 M&A professionals in more than 40 countries. It will further expand our reach, giving us the platform to source and execute transactions in collaboration with other IMAP partner firms worldwide.

Could you describe some recent deals that were especially interesting?
Over the past few years, we have closed several interesting deals in the M&A space. One such deal involved advising Multi-Specialty Healthcare Partners Holding (MSH), a young organisation, in divesting 60 percent of its stake to Gulf Finance House, a prominent regional investor. The transaction included the acquisition of about 21 specialised healthcare clinics based in Abu Dhabi.

Although MSH had witnessed significant growth in its initial three years, the company faced challenges in terms of standardising its systems and processes, which made it difficult to present a consolidated picture to potential investors.

We strive to make a positive impact on the communities and environment we operate in

Alpen Capital worked closely with the shareholders and management to prepare for a private placement of equity, which included creating proforma consolidated financials, preparation for a detailed diligence exercise and structuring the business and operations under a Holdco structure. As a result, the desired equity value was secured and favourable working terms for the owner with the incoming investor were achieved.

In addition to this, we also concluded our first deal in the fintech space where we advised Monument Bank, a leading neobank focused on the ‘mass-affluent’ segment in the UK, to raise funding for its Series B round. Our network of strong relationships with investors across the region helped the bank secure an anchor investment from Dubai Investments, one of the largest investment companies in the GCC. This deal provided a GCC-based investor with a unique opportunity to enter the digital banking space in one of the most advanced and regulated markets at an early stage.

What is Alpen Capital’s highest priority in terms of sustainability, and how do you progress this when assessing the suitability of a potential new deal?
We strive to make a positive impact on the communities and environment we operate in. Our focus has been on working with emerging market clients that support financial inclusion, women’s empowerment, and agribusiness as well as the food and water segments. We partner with Development Financial Institutions (DFIs) and Impact Investing Funds (IIFs) to raise funding for these clients. This in turn supports the SDGs and makes a socio-economic impact in emerging markets.

How did you approach your landmark CSR report, and did you map this against the UN Sustainable Development Goals?
Our CSR report entitled ‘Sound Impact’ has been segmented into four quadrants – marketplace, workplace, community and environment. The marketplace quadrant showcases around 30 transactions that we have executed with financial institutions, DFIs and IIFs and maps them against the SDGs outlined by the United Nations. The remaining quadrants highlight our CSR activities and initiatives.

Development institutions and impact funds invest in sustainable businesses that create socio-economic impact and support in achieving the SDGs. In our report, we have compiled information about all our sustainable finance transactions to present the impact story behind each deal. We have highlighted the SDGs that were supported by the successful completion of the transaction and through our deals we have supported at least nine different SDGs.

Can you give an example of a deal that is particularly notable in terms of its sustainability and impact in a developing market?
Our transaction with Tata International Limited (TIL) is a great example of creating a notable impact across multiple countries in Africa. TIL, the primary trading arm of the Tata Group, has a significant presence in Africa with operations in more than 19 countries. In addition to the trading business, TIL is also a distributor of automobiles, commercial vehicles and agriculture and farm equipment. Traditionally, Micro, Small and Medium Enterprises (MSMEs), farmers and other unbanked populations face difficulty in securing finance from local banks. TIL supports them by offering direct credit and short-term financing solutions to buy commercial vehicles.

Alpen Capital put together a unique funding structure for TIL for on-lending to MSMEs, first-time users, and unbanked populations across Africa facilitating purchase of commercial vehicles distributed by them. The increased sale of commercial vehicles and farm equipment is expected to support local entrepreneurs, farmers and MSMEs in expanding their business, and create economic development at a local level across the African continent. In addition, this is likely to contribute to the replacement of old vehicles, leading to a reduction in carbon emissions.

Why is it important to Alpen Capital to support agribusiness in the regions where you are most active? What sort of deal showcases the type of transactions you have successfully closed in this area?
The development of the agri sector is crucial for reducing poverty, promoting economic growth, and providing employment opportunities for rural communities in underdeveloped and developing countries.

Alpen Capital acted as a strategic advisor to Sahyadri Farmers Producer Company (Sahyadri FPC) and its subsidiary Sahyadri Farms Post Harvest Care (SFPHCL) for over four years. Sahyadri FPC is a prime example of rural entrepreneurship, providing end-to-end solutions to small and marginal farmers.

In 2010, a group of 10 farmers began collectively producing and exporting fresh grapes to Europe, and this initiative has since grown into a leading fruits and vegetable export and processing company that Sahyadri FPC is today.

We have helped Sahyadri FPC secure financing for constructing collection and distribution centres, expanding their production plant and launching retail stores in urban areas. These infrastructure enhancements are expected to boost the agricultural and food processing operations of Sahyadri FPC.

Furthermore, we assisted their subsidiary SFPHCL in obtaining equity growth capital to expand its processing capacity for fruits and vegetables-based products, establish a biomass plant to generate electricity from process waste, and upgrade its infrastructure.

Financial inclusion and female empowerment are also recognised by Alpen Capital as crucial markets not only ripe for investment, but also for having positive knock-on effects when sustainably supported. Is there a notable deal in this area you would like to highlight?
Providing financial access to women can boost entrepreneurship and broaden the scope of financial inclusion in the unbanked sectors of developing countries. Alpen Capital has played a part in this by helping IndusInd Bank raise funding for its Microfinance Division, which provides loans to small groups of women borrowers working mainly in livestock and small trade sectors. IndusInd Bank has a wide presence across India and offers a range of products and services to individuals and corporates.

The financing raised by Alpen Capital for IndusInd Bank’s Microfinance Division is expected to enable the bank to increase the number of microcredits allocated to women entrepreneurs in severely poor rural areas in India. This is expected to provide access to microcredit for approximately 250,000 women, contributing to the development of women’s entrepreneurship and financial inclusion in some of India’s most vulnerable regions.

Creating a sustainable framework using low-carbon strategies

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Fubon Life Insurance – the second biggest insurer in Taiwan – offers a full range of life protection, savings, annuity, accident and health insurance for customers. Authorised to conduct long-term insurance business in Hong Kong in 2016, through our strategic partnership with banks and independent financial advisors, we are committed to helping customers in protection, financial planning and the environment and society through our environmental, social and governance (ESG) initiatives.

In recent years, global investment in ESG has grown exponentially. Threats relating to climate change and ageing populations are real, prompting increased action from financiers and banks around the world. As a leading Asian economic centre, Taiwan is part of this trend. In 2020, socially responsible investment in the country grew 32.6 percent year-on-year to NT$17.6trn ($635bn), with its proportion in total assets under management hitting 37 percent, up from 30.2 percent in 2019, according to a report by National Taipei University. With a March 2023 net profit of NT$4.8bn ($156m) and cumulative net profit of NT$7.2bn ($235m), Fubon Life Insurance is in a strong position to invest in its ESG programme.

Insurance policy for the environment
As part of our ESG framework, we pursue a programme of sustainability using four key low-carbon strategies: green procurement, a friendly workplace, paperless services, and environmental protection charity efforts. All of these are in line with the United Nations’ Sustainable Development Goals (SDGs). We use our influence to promote green concepts and hope to achieve our vision of a low-carbon lifestyle and environmental sustainability through encouraging our customers’ participation.

We led the industry with the first ‘Work for Green’ initiative

Carbon saving and environmental sustainability are no longer just slogans. Fubon Life Insurance takes practical action to promote reforestation and protect water sources, and to bring people closer to Taiwan’s rich ecology. In 2022, we collaborated with the Tse-Xin Organic Agriculture Foundation to select tree planting sites with the goal of restoring the natural ecology. We led the industry with the first ‘Work for Green’ initiative, linking green sustainability to performance by pledging to plant a tree every time a tied agent met their target.

Our green finance strategies have now been adopted by more than 460 sales agencies and 20,000 tied agents across Taiwan and we have planted tens of thousands of trees alongside other ecological conservation and environmental sustainability groups in the country. In response to our parent company’s ‘Run for Green’ initiative, Fubon Life Insurance is promoting coastal windbreak reforestation. In 2022, we called on our employees and the public to plant 85,000 trees in order to make our insurance business a driving force for environmental sustainability.

Tackling river waste
We are also instrumental in promoting river conservation in Taiwan, recognising the crucial role of water resources in our health, safety, biodiversity, and sustainable development. In 2021 we began work with the Society of Wilderness (SOW) to lead Taiwan’s enterprises in launching a three-year continuous quick screening survey of river waste.

Over the past two years, Fubon Life Insurance has helped SOW conduct surveys of important watersheds in Taiwan’s central and northern regions. A watershed is a land area that channels rainfall and snowmelt to creeks, streams and rivers, and eventually to outflow points such as reservoirs, bays and the ocean. Supported by the River Management Office of Water Resource Agency under the Ministry of Economic Affairs, the project has convened a cross-agency coordination platform to discuss waste disposal strategies, demonstrate the value of the surveys, and showcase the benefits of public-private cooperation. The project plans to expand the survey to all major watersheds in Taiwan to increase its impact.

Recently, we collaborated with Taiwan’s Commonwealth magazine to publish the River Conservation White Paper. This includes highlights of the waste screening surveys from important watersheds in Taiwan’s central and northern regions, as well as perspectives from various stakeholders in government, industry, and academia. By turning survey data into sustainable action plans, we hope to raise public awareness about the severity of river waste issues, enhance sustainable consciousness, and connect relevant public agencies, local schools, and communities to work together to help the waterways.

Plastic pollution
According to the SOW survey, disposable plastic products are the most common waste in rivers and streams. In addition to continuing to advocate the core concept of ‘reducing plastic at source and stopping river waste from entering the sea,’ the new edition of the White Paper also introduces the perspective of environmental molecular science for the first time, focusing on the relevance of river waste to the overall environment and human health.

Professor and Director of the Institute of Analytical and Environmental Sciences at Tsinghua University, Chou Hsiu-Tsun, said that the bottom sediment pollutants of river waste will cause water and soil contamination, and these invisible harmful factors will return to the human body through the biological chain. Research data also pointed out that the reduction of male fertility is most likely related to the pollution of the water environment. Human power is national power, and the issue of river waste urgently needs the participation of everyone to improve.

Protecting society
We also acknowledge the societal aspect of ESG – Fubon Life Insurance pays increasing attention to Taiwan’s ageing population. Taiwan is facing serious challenges: while the birth rate has been declining for decades, in 2020 deaths outnumbered births for the first time. It seems inevitable that Taiwan will soon join nations such as Japan, Germany and Italy, where more than one in five of the population is aged 65 or older.

Fubon Life Insurance is in a strong position to invest in its ESG programme

In response, Fubon Life Insurance is proactively helping the public to prepare for a potential ‘dementia tsunami’ by strengthening our protection offering against the risk of disability and long-term care, as advised in the Ministry of Health and Welfare’s Long-term Care 2.0 Plan. This plan was promoted by the government in response to Taiwan’s ageing population and has achieved major breakthroughs with regard to raising budgets, increasing care service locations, and upgrading services.

We recognise that the ‘global dementia clock’ is ticking ever faster: in Taiwan, every 40 minutes one more person is diagnosed with this cruel disease. Our cross-generational exchange platform aims to connect ‘Green and Silver’ – the young and the elderly – creating engagement between generations. And, for seven consecutive years, we have supported the Federation for the Welfare of the Elderly, the largest elderly welfare organisation in Taiwan, by promoting its ‘Love Bracelet’ programme, designed to prevent elderly people from getting lost. Together with over 100 medical institutions in Taiwan, Fubon Life has implemented a service of giving away a free bracelet with any doctor’s diagnosis of dementia.

The bracelet helps wearers contact a helpdesk if they get lost; healthcare professionals have been able to track down 100 percent of people thus far. In addition, Fubon Life Insurance sponsors specialised support groups for families caring for a family member with early signs of dementia. The support consists of sharing experiences, expert knowledge, and breathing and relaxation exercises, as well as raising awareness of the disease among the general public. We also promote corporate-wide guardian angel programmes.

In 2022, Fubon Life Insurance introduced the Social Return on Investment (SROI) assessment to highlight the effectiveness of the Love Bracelet programme and its social contributions.

Tech for society
We are also committed to developing the latest search and rescue equipment and promoting dementia recognition and education. By integrating digital technology, we hope to help reduce the risk of elderly people with dementia wandering off. Furthermore, the company has invited a leading Japanese dementia expert to share unique clinical perspectives, creating a platform for cross-border dementia prevention and care experiences, and leading Taiwan towards becoming a dementia-friendly and inclusive society.

For Fubon Life Insurance, the United Nations’ Sustainable Development Goals and ESG are not just popular buzzwords, but policies that require action and real effort. Fubon Life advocates for environmental sustainability and care for the elderly with dementia. We work with industry, government, academia, and related organisations to expand care efforts and uphold our brand spirit of positive influence. We will continuously strive for societal balance in economic development, environment and culture, and create more possibilities through our actions and our promotion of sustainable insurance and financial values.

Branching out to bring banking to the people

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After more than 81 years as a catalyst for the Dominican economy, Banco de Reservas de la República Dominicana is now taking firm steps towards internationalisation. The opening of our first representative office in Madrid, Spain, last January represented a milestone; this year the largest bank in the Dominican Republic, Caribbean and Central America plans to further expand with an additional two international offices, in Florida and New York.

The representative offices are information and processing units whose main objective is to reach clients with economic interests in the Dominican Republic residing in other countries. By linking these individuals into the Dominican banking system, we are providing banking services to the Dominican diaspora, which totals more than two million migrants and their descendants born abroad, who have strong links to their parents’ and grandparents’ country of origin. These offices will also provide support to the exports of large, small and medium-sized companies.

The Spanish and American offices will replicate all the banking services offered by other banks in the places where they operate, but the financial transactions themselves will be carried out in the Dominican Republic. This will enable and expedite banking procedures in their country for Dominicans residing abroad.

This expansion by Banreservas is the first time that a Dominican bank has appeared before the Central Bank of Spain to request its approval to be part of the Spanish banking system. The office in Madrid is located on Paseo de la Castellana, one of the Spanish capital’s major thoroughfares, giving our institution a strong, bold presence in the city. Numbering over 45,000 residents, Dominicans make up just one percent of Madrid’s population, but seven percent of the population of foreigners in the city.

Our objective is to bring our services as close as possible to where the majority of Dominicans reside

During this first stage of the bank’s internationalisation process, Dominicans will be able to apply for mortgages, acquire housing and other properties in the Dominican Republic, and open new accounts and financial instruments. The Banreservas office in Madrid is also making agreements with construction companies in the Dominican Republic to promote housing projects. The office affirms Banreservas’ position as a facilitator to attract foreign investment to the Dominican Republic.

Customers in Madrid will also be able to manage their insurance needs, with Banreservas acting as a second-tier bank for procedures with other affiliates of the Reservas family, such as Inversiones y Reservas, and Seguros Reservas.

The second representative office will be located in Miami, Florida, across the street from the Dominican Consulate on Brickell Avenue, one of the most illustrious addresses in the state. Around 72,000 Dominicans reside in the Miami-Fort Lauderdale-West Palm Beach metropolitan area, the largest concentration in the US, aside from New York-Newark-Jersey City with 641,000 and Boston-Cambridge-Newton with 81,000. The office in New York will be in Washington Heights, Upper Manhattan, where Dominicans account for some 60 percent of the immigrant population, with a local population of over 48,000. With these choices of location, our objective is to bring our services as close as possible to where the majority of Dominicans reside. Both US offices will open in the second semester of 2023.

Business opportunities
This business strategy can bring the Dominican diaspora in the US, which numbers some 1.4 million US residents either born in the US or reporting Dominican heritage, even closer to the Dominican Republic. This will result in better investment opportunities in businesses with capital produced by Dominicans abroad and facilitate the transfer of social security and medical pension benefits back home. We will also offer processing facilities for banking services in the Dominican Republic, such as accounts and credit services.

We plan to develop mortgage programmes to enable property purchases in the Dominican Republic, with services to formalise procedures available within the Banreservas offices. Hitherto, these sorts of transactions have required travelling to the Dominican Republic in person or empowering a third party to act on your behalf, so our services will save customers both time and money. Given that Dominicans in the US have lower median household incomes than both foreign-born and native populations, the arrival of such services could have a significant impact for the community.

The Dominican diaspora, from residents to business owners and from community leaders to campaigners, has been clamouring for a way to maintain investment links with and send money back to the home country for a long time now. The internationalisation of Banreservas will satisfy that need, bringing convenience, peace of mind and wealth-making opportunities to our communities in Spain, the US and here at home in the Dominican Republic.

A revolution in retirement planning for the Philippines

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Almost everyone has a clear idea on what they will be doing after retirement from work. Unfortunately, most have not taken any concrete steps to prepare for retirement. As is often the case, planning for retirement takes a backseat compared to taking care of other members of the family and even the extended family. Filipinos tend not to actively prepare for eventual retirement and greatly depend on either the mandatory company retirement payout or through the state-sponsored retirement systems, the Social Security Services (SSS) for private citizens or the Government Service Insurance System (GSIS) for government employees. A good number depend on their children to help them with their finances upon retirement. Unfortunately, dependence on any one, or even all three, methods is not sustainable in the long run.

In a recent survey, Filipinos believe that savings equivalent to 2.1 years’ worth of personal income is enough for their retirement, which is way below the regional average of 2.9 years. If you consider that the average current life expectancy of Filipinos is 72 and the standard retirement age is 60, retirement savings could be short by up to 10 years, maybe more.

The lack of retirement planning is exacerbated by the general gaps in financial knowledge among Filipinos to manage their retirement finance. Either the funds are left in savings accounts, which produce near zero income, or they are depleted due to bad business decisions or spent on unnecessary extravagance. The lack of financial literacy, discipline and annuity type of pension payout can contribute to early depletion of retirement funds.

The state of pension funds
The Philippine Institute for Development Studies conducted a study in 2018 showing that the Philippines will be an aging population by 2032, when at least seven percent of its population will be 65 years and older. This only means that more people will be relying on pension benefits, whether through private or public pension systems. The Philippines, unfortunately, has much to improve upon when it comes to retirement systems. According to Mercer CFA Institution Global Pension Index, the Philippines has the second worst retirement income system among 44 nations.

Today, the Philippines has around 7.6 million Filipinos aged 60 and above. The SSS provides a monthly pension of approximately PHP 5,000–18,000 ($90–$320) to retirees. Considering the increasing cost of living, expected medical costs and other lifestyle expenses, it is safe to say that the pension provided by the state is insufficient.

Republic Act Nos. 4917 and 7641 enacted a corporate pension system for the private sector, designed to augment SSS benefits. Under the law, private companies can establish their own retirement plans that enjoy certain tax benefits including exemptions from investment income and compensation taxes. Currently however, the creation of a retirement fund is not mandatory and oftentimes only the large companies establish such retirement plans for the benefit of their employees. Most SMEs or traditional family-owned corporations still use the ‘pay as you go’ scheme to provide retirement pay as their employees retire.

Considering that these payments are not pre-funded, it places employees’ retirement pay at risk during difficult times for businesses where many employers are in financial straits. Simply put, the current state-sponsored and private pension plans are oftentimes not adequate to provide for 10 years’ worth of living expenses for retirement especially if additional income is lacking.

Revolutionising pension funds
Both the government and private sector have acknowledged that there are serious flaws in the current pension system that need to be addressed. For one, current corporate pension funds are not portable, leaving the burden of retirement planning solely to the last employer. As funding of corporate retirement funds is not mandatory, the majority of companies just provide the minimum mandatory retirement pay on a ‘pay as you go’ basis or in some cases no retirement payments are made. Many companies cite cumbersome and expensive processes to establish formal retirement plans, thus negating the tax benefits granted to formally established retirement programmes. The result is companies fall back to these ‘pay as you go’ schemes. The unfortunate consequence is that retirees are forced to either continue working for additional income, change their lifestyle to reduce their expenses, or depend on family members to finance their retirement years. The worst-case scenario is when retirees are unable to fund their expenses and fall into poverty.

The Capital Markets Development Act of 2021 aims to change all that. The bill has already passed Congress and is currently awaiting the Senate’s approval. If passed, the law will help improve private pension plans and compel companies to redesign current retirement systems to adapt to the law. The objective of the bill is to establish a private retirement and pension system that is fully funded, portable, and more actuarially fair for employees.

One significant change is that the responsibility of deciding and funding for the employee’s retirement benefit will now be shared by both the employer and the employee. Currently, investment decisions and pension payouts are decided and shouldered solely by the employer whether the pension is based on the mandatory retirement pay or based on a defined benefit arrangement. The pending bill allows for the creation of a mandatory, fully funded and portable Employee Pension and Retirement Income (EPRI) account under the name of the employee, created at the start of employment. The EPRI account shall be permanent, owned and managed by the employee regardless of changes in employment or transfer of employer until their eventual retirement. As a benefit of establishing EPRI, employer contributions are allowed as a deductible expense and shall not be considered as part of the employee’s compensation subject to income tax. In addition, all income and gains earned from investments of the EPRI assets, and all benefits and distributions received by the employee upon his retirement shall be exempt from all taxes.

Given the great shift in the age of the population, the corporate pension law as well as the retirement mindset of Filipinos, much more thought must be given to this. Not only do employers need to prepare for and study how to transform their existing retirement plans, but it is just as important to include the beneficiaries of their retirement plan, their employees, in the transformation process.

Finding ways to redefine retirement
We at BDO have been finding ways of reimagining retirement plans in the country. BDO believes in a holistic approach to attain sustainable retirement plans by supplementing corporate retirement programmes with a personal stake in one’s own retirement journey.

BDO is redefining corporate retirement planning through an integrated retirement plan solution, Pension 360. It is designed to assist companies to fulfil their retirement obligations more efficiently, while helping it attract and retain the best talent. Pension 360 combines our core pension services with personal wealth-building programmes to offer a comprehensive approach. Pension 360 consists of four main services: Corporate Pension Programme, Employee Education Programme, Personal Pension Plan, and Personal Annuity Plan.

Corporate Pension Programme: Companies can fulfil their retirement benefit obligations without the complexities of planning and intricacies of day-to-day administration with our Corporate Pension Programme. BDO helps companies design and optimise their retirement plan, whether it’s defined benefit, defined contribution or hybrid plan, to deliver long-term value with prudent governance management for their business.

Employee Education Programme: To empower employees to take charge of their retirement future, BDO provides complimentary financial literacy seminars to employees. The goal is to equip employees with knowledge, information and insights through learning modules designed to help them manage their finances and grow their wealth through investments. Employee education is a crucial step in improving the long-term sustainable financial wellbeing of Filipinos especially in preparation for their eventual retirement. There are currently four financial education modules that match the employees’ level of investment knowledge. One of the four modules is dedicated to retirement planning. A team of professional trainers is assigned to fulfil this notable task.

Personal Pension Plan: Empower employees to take charge of their finances through wealth-building programmes such as the Easy Investment Plan (EIP) and Personal Equity and Retirement Account (PERA). The EIP helps individuals get into the twin habits of regular saving and investing automatically and regularly in various investment funds. PERA, on the other hand, is a long-term voluntary tax-exempt retirement programme provided by law to encourage Filipinos to invest towards their own retirement. Either employees, employers or both can contribute to an employees’ PERA. Moreover, there are tax advantages which are only available with PERA such as exemption from taxes on investments, estate taxes, and five percent tax credits from the annual PERA contribution. Employees can start their investment journey for as low as PHP 1,000 (approx $18) or $500 for dollar-denominated investment funds.

Personal Annuity Plan: Lastly, upon retirement, assure employees’ peace of mind with an income payout scheme with Easy Pension Pay. The plan lets retirees enjoy the fruits of their hard work with proper management and disbursements of their funds as if the retirees are still receiving regular semi-monthly salaries. With this, the retired employees’ retirement funds are safeguarded against unnecessary expenditures and are made productive by investing to earn investment income. Pension 360 includes employees as an integral part of the programme and not just as beneficiaries of the company’s pension plan, thus enabling a truly sustainable retirement programme.

Reaching the retirement goal
For individual clients who have decided to plan for their retirement ahead of time, BDO offers a fiduciary service that allows clients to dedicate a specific investment portfolio for a defined need. The Money Manager is a personal management trust arrangement that allows clients to set amounts for each life goal, such as retirement, and define specific dispositive conditions unique to each client and portfolio. Having a dedicated portfolio for each life goal, whether for retirement, education or wealth accumulation, helps clients deliberately plan for its achievement in the long term.

By allocating funds for life goals, it sets the path for the achievement of such purpose. In addition, the ability to create dispositive clauses under a personal management trust makes this trust arrangement unique and personalised, thus able to address the very specific needs of the client and/or their beneficiaries. The Money Manager is available to clients with different risk profiles and asset allocations. Clients can invest in either Philippine Peso or US Dollars, giving clients the flexibility to invest in local or global assets.

Now more than ever, planning for one’s own retirement must be a deliberate endeavour and a personal engagement. A carefully crafted long-term plan is key to ensuring a comfortable retirement in the future. With the availability of information at one’s fingertips, there are many options and routes to achieve a comfortable retirement, but one must take action to arm themselves with knowledge and tools to help chart the best course of action.

Corporate retirement plans and the government-sponsored pension are good to have, but these should not be the only source of funds at retirement. BDO’s goal is to help build, design and execute a sustainable retirement fund both at the corporate and personal level. We don’t always know what the future will bring, but to paraphrase the poet William Ernest Henley, we must each be the master of our fate and the captain of our soul.

Investing in food production for a sustainable future

Posted on by itsupport

Russia’s invasion of Ukraine in February 2022 highlighted the weaknesses in Europe’s energy system and made energy security a significant issue. After the outbreak of war, energy prices initially rose sharply, and volatility increased – but food prices also rushed to record levels. The consequences were particularly severe in the poorer parts of the world. The UN’s sustainability goal of achieving zero hunger before 2030 has become more distant.

Agriculture and our way of producing and consuming food is, like the energy system, in need of a comprehensive adjustment, both from a sustainability and health point of view. Sustainable food is an interesting investment theme, since food production accounts for around 25 percent of global greenhouse gas emissions. In recent years, we have witnessed a series of disruptions in the global food system from factors such as Covid-19, war, and extreme weather.

Today, we are fully aware of how vulnerable the sector is from a security perspective. In several aspects, we have created an effective but fragile system, which leads to poorer health, increased environmental destruction, water shortages, and reduced biodiversity. These negative externalities risk getting worse without change. As with energy, restructuring the food system requires large investments in the coming years.

Everything is energy
The availability of food has shaped human history and development. It has determined which societies and countries have dominated, often triggering revolutions and shifts in power. Thanks to the innovations of modern agriculture (fertilisers, pesticides, genetic modification, etc), the global population has increased by nearly six billion people in the last 100 years. We have put Malthus pessimism behind us, as agricultural productivity has improved enormously. The most important explanation is access to cheap energy in the form of fossil fuels, which power the machines of modern agriculture and are used as raw materials in the production of artificial fertilisers and pesticides. About half of all food production today is made possible by nitrogen-based fertilisers. Producing these requires large amounts of natural gas, which is why the increase in gas prices after the outbreak of war in Ukraine also made fertilisers more expensive.

The food chain also generates greenhouse gases in many other ways. Restructuring the food system is therefore an important part of the larger energy transition away from fossil fuels. This is not an easy task in agriculture either – the transition takes time and requires a new, sustainable but at the same time efficient system. A complete return to organic farming, without artificial fertilisers and pesticides, is impossible if production is to feed eight billion people (as recent experience in Sri Lanka has shown). In addition, the population on earth is growing and people’s living standards are improving – which will lead to an increased demand for food by more than 50 percent up to 2050.

The fragile system
Agriculture has succeeded in increasing the yield of several crops, and thus also food production. However, productivity in the world varies greatly. Large parts of Africa have significantly worse agricultural productivity than North America and Europe. Just like global manufacturing chains, agriculture has made use of increased specialisation and efficiency. Harvests are maximised by focusing on a few standard varieties that are grown where the conditions are best.

It creates an efficient but highly fragile system, which has made more and more countries dependent on imported food. The uniformity of agriculture is also due to the diet becoming more similar in different parts of the world. The processed industrial food of the West – cheap to produce but rich in sugar, fat and carbohydrates with lower nutritional value – has become increasingly widespread. Overweight and obesity-related diseases are increasing rapidly. Over the years, humans have grown 6,000 different crops, but today more than half of all calories come from rice, wheat, and corn.

Specialisation and import dependence make the system vulnerable if the export of important crops, or fertilisers, fails. The invasion of Ukraine broke the supply chain from a region that accounts for nearly a quarter of the world’s wheat exports. At the same time, sanctions against Russia, the world’s largest fertiliser exporter, contributed to rising fertiliser prices. The chain effect resulted in rising food prices globally during the first half of 2022. Some 20 countries responded with export restrictions on certain crops, for example wheat in India and palm oil in Indonesia. Today’s deglobalisation trend makes such ‘food nationalism’ an increased risk for import-dependent countries, especially in poorer parts of the world.

Another risk is climate change with increased occurrence of extreme weather that causes drought, fires, and floods. It can destroy individual crops, but above all lead to the erosion of fertile agricultural land, with poorer crop yields and reduced food production in the longer term. In the UN’s worst-case scenario, the crop yield could fall by 30 percent while demand increases by 50 percent. Already today, productivity growth in agriculture is levelling off in many parts of the world. It is also common to use too much fertiliser and pesticides, which can damage the environment in other ways.

Climate refugees are a politically charged issue. Africa will account for most of the population growth expected over the next 50 years. Many African countries already have a difficult food situation today, with inefficient agriculture and food shortages. If countries’ population growth exceeds resource availability and countries do not build up a better and more sustainable domestic agriculture, climate refugees will become a more common phenomenon. Europe is the geographically closest destination – and we already witness a series of negative political consequences from the refugee flows of recent years. Climate factors could force 216 million people in the world to live in poverty by 2050, the World Bank has predicted.

Modern agriculture has extensive environmental costs. Deforestation, overconsumption of fresh water and overuse of fertilisers and chemicals damage water and land. Agriculture is one of the sectors that has the biggest negative impact on biodiversity. At the same time, agriculture’s future harvests are based on functioning ecosystems with biological diversity.

A large part of food production requires pollination by insects. Studies show that 75 percent of all insects have disappeared in the last 30 years, and according to the UN, 40 percent of all insect species are at risk of extinction within a few decades. Three quarters of all crops that depend on pollination are at risk, corresponding to 35 percent of total food production. We are likely in a sixth mass extinction, where one million animal and plant species could disappear, according to the UN.

World food production now derives from fewer than 200 species, of which nine crops account for two-thirds of total food production. If disease knocks out the harvest for any of these, crisis is a fact.

Investment opportunities
Several catalysts, such as the EU taxonomy, the Kunming-Montreal Biodiversity Framework and increased consumer interest, all point towards investing in the transition to a more sustainable food system. There are several verticals with interesting investment opportunities. Let’s look at five of them.

Foodtech: This area includes everything from vegetarian meat and dairy alternatives to health food, products that improve animal and plant health and natural enzymes, probiotics, and additives. In recent years, a large investment bubble arose in the sector, where many companies had difficulty finding a clear path to profitability. We are therefore very selective in our investments in this segment and prefer exposure to agriculture-related companies in areas such as agritech and fertilisers where valuations are lower.

Agritech: New technology takes on a key role in realising agriculture’s great efficiency potential. Already today, growers could reduce their emissions by nearly 30 percent if everyone behaved like the 10 percent most efficient farms. Efficient and environmentally friendly use of fertilisers is key since agriculture today overuses fertilisers by an average of 40 percent. Precision technology can optimise the amount of fertiliser considering soil conditions, weather forecasts and the current needs of the plants. Agritech includes everything from software that analyses weather and soil data to precision tools for planting, spraying and irrigation.

Fertilisers: Producing nitrogen-based fertilisers is an energy-intensive process and both phosphorus and potassium are limited resources and hence, important to preserve. Despite negative environmental consequences, today it is impossible to feed the world’s population without these raw materials. However, it is possible to use them more wisely and find alternative processes with a smaller climate footprint. If the demand for food continues to increase, however, there is a structural demand for fertilisers. We prefer companies with focus on phosphorus and potassium, where the supply of raw materials is limited.

Biodiversity and circular economy: Improving biodiversity is important for securing our future food supply. There is a shortage of investable companies that focus entirely on biodiversity. However, another sustainable opportunity is the transition from linear to circular production to reduce waste and pollution. Often it is about designing products for easier recycling and a longer shelf life. Both areas are prioritised in the EU taxonomy, and interest from investors is likely to increase in the future.

Agricultural land: Increased demand for food in combination with more uncertain harvests because of climate change and degraded soil mean that there may be a shortage of fertile agricultural land in the future. Private investments in a portfolio with such real assets can be an interesting way to increase diversification.

Facing the markets head-on

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As CEO of the well-established, global brand HYCM International, Stavros Lambouris leads a firm with offices in the world’s leading financial centres, providing forex and CFD trading via a group of individual entities in different jurisdictions. Boasting access to over 45 years’ cumulative operational experience, the group is known as one of the most reputable and trusted experts in the industry, with its UK entity being regulated by the FCA since 1998. Lambouris spoke to World Finance about the state of the US economy, the impact of the recent banking crisis and the prospects for the cryptocurrency market in the wake of the collapse of FTX.

What has been the dominant theme in the markets this year and how is HYCM positioned to serve traders as these themes change?
In the first quarter of 2023 we saw a reversal of last year’s equity story, which was big tech down and energy stocks up. This year, tech is the best performing sector to date with almost 90 percent of the gains in US equities coming from the top 10 stocks. Meanwhile, the energy sector is trading roughly where it was back at the beginning of the year.

This is all taking place against a backdrop of uncertainty regarding whether the US is sliding into a recession. We are also much closer to the end of the Fed’s tightening cycle, which is why the question of hard-landing, soft-landing or no-landing has been so prevalent in recent months.

Inflation is still high; the Federal Reserve is indicating that it plans to stay the course, but market expectations have become disconnected from this reality. Markets not only appear to expect a pause but a pivot to looser monetary policy before the year is out. This uncertainty can be seen in the outperformance of technology stocks but also in the price action of assets like gold, oil and bitcoin.

HYCM aims to be a single trusted venue for investors to gain exposure to all the markets they require. The recent launch of our mobile app, HYCM Trader, is a step in this direction as now our products and services are accessible through a modern, easy-to-use mobile interface.

What do you make of the recent banking crisis, and how has it figured in the market trends you describe?
Recent banking turmoil has heightened fears that monetary policy has become too tight. While these fears have eased recently, there is still concern that the Fed will overtighten, causing something else to break, and then have to quickly reverse policy as it has done in the past.

Tech stocks seem to be anticipating lower rates ahead. Oil appears to be pricing in a reduction in economic activity with OPEC’s recent output cut, perhaps in an attempt to keep prices from sliding lower. Bitcoin surged as regional US banks were failing, which is unsurprising considering it was created as a hedge against the existing banking system. Also, appetites for gold at this time are being driven by this uncertainty, having recently attracted capital both as inflation hedge and safe-haven play. HYCM’s investors appear to have anticipated this dynamic, with gold having been one of our most traded symbols in 2022.

Generally, if 2022 was about markets adapting to the reality of higher rates, then 2023’s narrative has yet to properly emerge because there’s still so much uncertainty regarding the path ahead.

However, I will say that technology is a big theme running through the recent banking turmoil.

Fintech developments over the past decade or so have put us in a completely different world. The speed at which capital can move nowadays is just a few taps on a screen. This appears to have come as a surprise to the US banking system when it came under stress recently. Also, recall that bitcoin hardly existed during the 2008 financial crisis, and today it’s a $500bn alternative.

At HYCM, we are very conscious of being a big part of this movement towards the democratisation of financial access, and the frictionless movement of capital. But we’re also very aware of the risks involved, so it is very important to choose a trusted and regulated provider.

What are your thoughts regarding the possibility of a US recession, and how does this affect HYCM’s plans going forward?
A fight against inflation is also a fight against economic activity. Federal Reserve chair Jerome Powell has probably been the most clear about this fact among his central banking peers. The goal may not explicitly be to cause a recession, but it’s certainly one of the possible outcomes of the fight against inflation. And while inflation remains elevated, the data do suggest some signs that the US economy is deteriorating.

We have recently seen the third biggest miss on record for job openings, according to the US Bureau of Labour Statistics. Unemployment claims have surprised to the upside, and both services and manufacturing PMIs are in contraction, having surprised to the downside. This is all occurring as lending standards tighten, which Powell has acknowledged as effectively a form of tightening in its own right. You also have OPEC’s recent actions, which are inflationary, and likely to make the central bank’s job even harder. It’s important to pay attention to whether the Fed remains resolute regarding inflation as its primary concern, or whether its priorities appear to shift in the coming months.

The upcoming earnings season should also provide more clarity. If there is to be a repricing of equities lower, then disappointing earnings, as well as forward guidance from CEOs to prepare investors for slower growth ahead, could be a catalyst for recession.

At HYCM, we plan to expand our product portfolio and add the possibility of trading stocks with zero commission. This will allow investors to trade within the broader stock market trend by gaining access to individual companies from a diversity of sectors. It also comes at the perfect time: with stocks off their highs, there’s more of an opportunity for our investors to do their research and allocate to the right sectors in advance of the next trend change.

What are your thoughts on the prospects of cryptocurrency markets, and does crypto feature in HYCM’s plans?
Crypto was probably the worst performing asset class of 2022, punished by its correlation to risk assets in a higher rate environment. It also suffered a great deal of negative publicity following the collapse of FTX. Recent activity does suggest that sentiment among crypto investors is warming, but it’s uncertain whether this can be sustained in the current market environment.

Recent rallies have been underwhelming in terms of volumes, suggesting that not much new capital is currently entering the space. Despite bitcoin’s recent performance, it’s difficult to imagine a scenario where US equities make new lows, while cryptocurrency prices remain elevated. This is especially the case given how tightly correlated the two asset classes have been. So it appears that the Fed is in the driving seat here too.

The excesses of the previous bull market, which include several prominent failures including the FTX scandal, have also put the asset class under the spotlight of regulators. The current US administration has generally taken a hostile stance towards the entire market, which will act as a ceiling on its potential growth, at least in the short-to-medium term.

HYCM’s strategy regarding crypto has been to offer exposure to a select group of names that we have vetted. The sheer size of the market in terms of individual symbols makes such an approach necessary. As the cryptocurrency market grows and continues to evolve, we will continue adding standout names to our crypto offering that are sufficiently liquid to suit the preferences of our investors.

We also understand that appetites for crypto derivatives are growing, and that CFD providers like HYCM could be uniquely positioned to provide this access in a secure environment.

Finally, how do you view the prospects of the online trading industry as a whole?
We’re in a new world since the pandemic: a more financially literate general public and more demanding demographics. The goal we have always had, of making investing a lifestyle product that’s available to everyone, is closer to being a reality than ever before.

Our aim now is to continue building HYCM as a trusted single point of access for the world’s markets in a safe and regulated way. We are also focusing on innovation, ensuring that however the global macro picture develops, modern investors can have the right technology and products to position themselves appropriately in the market with a reliable provider that is here to support them.

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71 percent of retail investor accounts lose money when trading CFDs with this provider. Cryptocurrencies and zero-commission stocks are not available for trading under HYCM (Europe) Limited and HYCM Capital Markets (UK) Ltd.

Reforming Peru’s pension industry

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Between 2020 and 2022, nearly $24m was withdrawn early from Peru’s private pension system, resulting in a significant reduction of pension funds for millions of affiliates. Early withdrawals can have a detrimental effect on fund performance, and part of our commitment is to provide transparency regarding the amount of pension that affiliates will receive in the future. Currently, more than two million affiliates have no funds remaining for their retirement. Moreover, affiliates who still maintain a fund but have made partial withdrawals run the risk of not having a minimum pension for their retirement.

These issues are among the reasons Credicorp – the leading financial services holding company in Peru, to which Prima AFP belongs – is calling for reform. We believe the current model needs to be readjusted to adapt to the needs and demands of each individual, and we believe it’s our duty to put forward ways to improve the system and ensure its sustainability in the future. Alongside efforts to boost financial inclusion and address the gender gap, it’s one of several actions we’re taking to help support the private pensions system in Peru.

Proposed reform
Our proposal for reform is based on three main pillars, and our aim is to achieve a fairer, more flexible pension system. We want to reformulate how funds are saved and managed, and encourage more voluntary contributions from informal and formal workers. For informal workers, we propose a matched contribution scheme.

Simply put, for every S/1 ($0.27) contributed by the informal worker, the state would also contribute S/1. For formal workers, we propose deductions of up to four UIT in voluntary contributions, applied to their work income (UIT, or Unidad Impositiva Tributaria, is the reference unit set each year by the Peruvian Ministry of Economy, equivalent to S/4,950 ($1,350) in 2023).

We believe the system should be flexible, allowing public and private entities to be permitted to offer the fund management service, under the same regulatory conditions. We’re also calling for a shared risk pension system, in which the fund manager gets paid when returns are generated. These payments would have a fixed component to guarantee the quality of operations and investments, as well as a variable component to provide an incentive for fund profitability.

Financial inclusion: an ongoing obstacle
Action needs to go beyond just addressing the pension system itself, however. Financial inclusion remains a key obstacle in Peru, and we believe the private sector and government need to work together to enhance understanding of, and participation in, the financial system. Unfortunately, a significant number of Peruvians lack awareness about their financial situation and have limited understanding of financial management.

This lack of knowledge contributes to a low level of interest in financial products and services among the population, with the pension system being one of the areas least understood. As a result, fewer Peruvians are able to benefit from access to financial products and services, hindering their ability to achieve their financial goals. The country has made some improvements compared to last year’s figures, but it still lags behind the regional average in terms of access to financial products and services.

In Credicorp’s 2022 Index of Financial Inclusion, the country ranked sixth among the seven Latin American countries surveyed. According to the Financial Inclusion Index in Peru IIF 2022, seven out of 10 Peruvians do not have a credit product, and 43 percent do not have any financial product for savings. The findings also show that three-quarters of Peruvians face barriers when trying to obtain financial products.

The pandemic further highlighted these issues; as a result of the ensuing economic crisis, 73 percent of Peruvians did not save last year, according to the 2021 Credicorp survey. During the crisis, the government provided financial support to hundreds of thousands of people in the form of subsidies for low-income families, but the low level of participation in the banking system made these efforts challenging.

While the financial sector has implemented initiatives to improve access over the years, one of the main challenges lies in the informal nature of the Peruvian labour market; according to data from the National Institute of Statistics and Informatics, the informal employment rate in Peru stands at 76.1 percent of the employed population. This poses a significant obstacle to financial inclusion, while rising inflation and the current economic crisis have also compounded the issues.

Taking action
At Prima AFP, we believe we have a role to play in helping to improve financial inclusion, and in strengthening the financial knowledge of both clients and non-clients. Providing education on the country’s private pension system is a key aspect of our sustainability pillars, and over the years we’ve collaborated with various platforms to achieve this.

One example is ‘El Depa’ – a web series on financial and pension education that we introduced six years ago. Made up of 27 episodes, the series has garnered more than 80 million views on social networks and covers various topics, from fund types to profitability, in a light-hearted way. We also recently launched a new website, ‘Ahorando a Fondo’, designed to inform users about pension basics, address common doubts, dispel myths around the private pension system and provide access to training courses and free workshops.

Promoting gender equality
Financial inclusion differs considerably between urban and rural areas and different socioeconomic levels and age groups – and there’s also a gender gap. Although there has been improvement over time, men still have higher levels of financial inclusion than women. According to the latest Credicorp Financial Inclusion Index, 21 percent of men in Peru have reached a level of financial inclusion, compared to only 14 percent of women.

It’s not only around financial inclusion that this gender gap exists – it’s seen in pension savings too. A recent study by the Pontificia Universidad Católica del Perú revealed a 37 percent gender gap in pensions. This issue is not unique to Peru; research published in 2021 found that women over the age of 65 in OECD member countries received on average 26 percent less retirement income than men, indicating a global trend.

These disparities reflect the broader gender inequality present in the Peruvian labour market, where women earn nearly a third less than men for performing similar work. Addressing these gender gaps and promoting financial inclusion for women is crucial for achieving greater equality and empowering women economically.

Prima AFP is dedicated to promoting gender equality and has taken significant steps to address the gender gap and combat sexual harassment in the workplace. Among the key initiatives is our Equality Now programme, designed to ensure our recruitment processes are as fair as possible and promote diversity within the organisation.

We have also partnered with the ELSA programme, a digital project developed by GenderLab with the support of the Inter-American Development Bank. This is targeted at preventing and addressing sexual harassment in the workplace. We’re also committed to addressing the gender pay gap, actively working to ensure roles and responsibilities are appropriately valued and compensated, irrespective of gender.

Investing responsibly
Our social responsibility efforts extend to wider issues, too – not least climate change. Since 2016, we have been strengthening our commitment to the Sustainable Development Goals (SDGs) and integrating environmental, social and corporate governance (ESG) criteria into our investment processes.

We implemented a climate change policy designed to measure the impact of climate change on our portfolio. These are aligned with the recommendations provided by the Task Force on Climate-Related Financial Disclosures (TCFD) – a working group established by the Financial Stability Board that gives recommendations on climate-related information that companies should disclose to their stakeholders.

We have been strengthening our commitment to the Sustainable Development Goals

We have also implemented a Responsible Investment Policy, which applies to all assets under management. This involves four key tenets: negative screening (not investing in certain activities in order to avoid incurring unnecessary risks in the portfolio); integration, referring to our analysis of ESG factors in our investment decisions; impact investments; and active engagement. By the end of 2021, 62 percent of our portfolio had undergone ESG analysis, which increased to 97 percent by the end of 2022. Our target is to have 100 percent of our portfolio undergo ESG analysis by the end of 2023.

Additionally, we have been actively working on incorporating climate change into our risk analysis through the implementation of a dedicated policy. Separately from this, we also implemented a Relationship Policy, designed to enhance our relationships with companies in which we invest; and a Voting Guidelines Policy, established in 2019 to encourage active engagement from stakeholders.

A global vision
Since 2016, we have also been part of the Responsible Investment Programme (PIR), which seeks to promote responsible investment practices, contributing to the sustainable development of Peru and the wider region. We also became signatories to the Principles for Responsible Investment (PRI) in January 2019 – an international network of investors backed by the United Nations that aims to understand the impact that ESG issues have on investment, and encourage integration of these issues into the investment decisions of its signatories. As signatories, we are obliged to report on our fund management annually; in 2020, we received the highest rating for our integration process in governance and strategy.

In January 2020, we became members of the Carbon Disclosure Project (CDP), a non-profit organisation that seeks to promote the disclosure of information on the impact of climate change, water management and forest management. And in 2021, we joined the Sustainable Development Goals Advisory Committee (SDG Advisory Committee), which provides advice on issues related to investment aligned with the Sustainable Development Goals.

Through these efforts, we hope to not only create resilience in our portfolios and boost our long-term financial performance, but also do our bit for the planet and build on our efforts to support society at large – setting a positive example for others to follow both in Peru and beyond.

The perfect blend for building brands

Posted on by itsupport

This year I celebrate 25 years at Wilfa, with the last five as its chief executive. It has been a bumpy ride at times but with each new challenge the company has picked itself up and returned stronger than ever. Most recently we have been attacking export markets with gusto, starting Wilfa Germany in 2020, and opening up distributors in multiple territories including the UK, the Netherlands and Spain in recent years.

I joined Wilfa after graduating from the Norwegian School of Economics and the University of Trier. From working as a controller in Hong Kong, learning how the factories operated that made the products Wilfa sold, I returned to Norway, taking on a string of roles including product manager, key account manager and marketing manager.

This breadth of experience has given me a complete understanding of the whole company, which I have used to create business where others have been unable to recognise opportunities. Tuning into the needs of consumers, retailers and our factory partners, I have been able to find new categories, develop products at a quicker pace and give confidence to our retailers that we are the experts to be listened to.

Those skills have come in very handy not just in the good times, but also during difficult periods when a couple of our market-leading brands that we’d built up decided to go it alone. We’ve had a bumpy ride, with some years of strong profits and others with heavy losses, but we’ve come back each time, more resilient in the face of future challenges.

As part of that, we decided to focus on building our own brands, launching E-way electric scooters, a full assortment of kitchen knives and pots and pans under the name of EGO, and a host of other new Wilfa products. Our strategy now is not to have too much risk in foreign brands, only taking them on in categories we can’t do ourselves. But these relationships have given us a good understanding of the market, knowledge we can implement in our own practices, combining the positives of larger companies with the flexibility of smaller ones.

I am a leader who is very much involved across the organisation, especially in recent years, as the team has grown to help us achieve our goals. By sharing both our strategic aims and the challenges facing the business with every staff member we ensure that everyone is clear on their contribution and therefore able to pull together most effectively for the good of the company.

Making better coffee
Wilfa has an extreme focus on customer experience. While most of our competitors are just making another coffee maker, we ask ourselves, ‘How can we help consumers make better coffee?’ Less focused on cost than we are on finding the right solution for customers, we often end up with a more upscale product, but this strategy has paid off: in 2022 we won 32 ‘best-in-test’ awards.

Our focus on the environmental sustainability of our products is another way in which we stand out from our competitors

Wilfa still sources and distributes products made by other firms but are doing so less and less. With Chinese factories going direct to market, such a strategy is becoming unsustainable. For those products we do import, we strive to challenge the market leaders within each category, whether that’s Oral-B on electric toothbrushes or Kenwood on kitchen machines, to bring consumers the best possible product. Wilfa is already the market leader in many categories, from waffle makers – nine years in a row – to coffee grinders, blenders and humidifiers.

Our focus on the environmental sustainability of our products is another way in which we stand out from our competitors. We implemented FSC paper on all our instruction manuals, gift boxes and cartons, improved our products so as to be able to offer five-year guarantees and removed 18 tonnes of polystyrene. We are also doing life-cycle analysis on our products in an attempt to become CO2-neutral by 2025.

There are many challenges currently facing the global economy: freight costs are extremely high, raw materials are getting more expensive and the current situation in Ukraine is putting pressure on energy and petrol prices. Even so, I’m optimistic about the future of our business. In 2021, we had a turnover of €55m and our target for 2025 is to reach €100m. This growth will be driven mainly by new markets, new categories and taking market share by launching more products. We will also move many of our products over from mechanical products to app-based products with a consumer-friendly solution. Even after 25 years at Wilfa, I can’t imagine a better place to be.

Financial inclusion in a digital world

Posted on by itsupport

The fintech revolution is promoting financial inclusion and democratising access to global markets by providing users with cutting-edge trading tools. According to the World Bank, digital payments saw significant growth in 2020, particularly in emerging markets and developing economies, where the volume of transactions is growing at an impressive rate. Sub-Saharan Africa emerged as a leader in mobile money transactions, fuelled by non-bank entities like fintechs, brokers and more.

As users transition from basic phones to smartphones, app-based financial companies are replacing older interfaces, offering enhanced functionality, speed and convenience. This rapid expansion of digital finance is making global financial markets more accessible to individuals from diverse backgrounds, fostering financial inclusion and democratising opportunities for wealth creation.

However, this financial inclusion also brings with it certain risks and challenges, both for the financial system as a whole and for individual users. While easier and faster access as well as lower costs all benefit users, it is essential to address potential issues such as security, privacy and financial literacy. In this article, we will explore the advantages and challenges associated with the growth of financial inclusion driven by digital finance and examine ways of harnessing its potential while mitigating the risks involved.

Financial inclusion for a global economy
Traditionally, participating in global financial markets has been the exclusive privilege of institutional investors and high-net-worth individuals. However, advancements in technology have made it possible for the average person to access these markets, increasing financial inclusion and levelling the playing field.

The rise of digital currencies and blockchain technology has opened new doors for financial inclusion

In this new environment, the democratisation of financial services and education is crucial in fostering financial literacy and responsible investment practices. An OECD survey from 2020 reveals significant variations in financial competencies across economies and groups. Low levels of financial literacy and high financial stress highlight the importance of integrating educational elements into fintech services.

By developing comprehensive educational resources such as webinars, articles and video tutorials, fintech companies can help users build a strong foundation of financial knowledge, empowering them to make informed decisions and take control of their financial future. By making these resources accessible to a broader audience, fintech firms are helping to create a more financially inclusive and equitable global economy, allowing individuals from all backgrounds to seize the opportunities presented by global markets.

At Olymp Trade, we’re creating a platform that caters to both experienced traders and newcomers. Our research on users in South-East Asia and Latin America showed that a majority of them want to achieve additional income through trading. Even though most of these people estimate their income as average, trading expenses account for a significant portion of their budget.

A failure in trading can have dire consequences for such households, so they must be aware of the risks associated with being active in the financial markets. That’s why we believe it’s essential to maintain a robust educational resource centre while promoting risk management and mindful trading.

Even though there’s already a wealth of information online about common trading mistakes and position sizing, traders still suffer from reckless decision-making and overconfidence. That’s why trading platforms should engage users in financial education. We are constantly working on new innovations, such as trade analysers and in-app tips, so our users can more easily gain the knowledge required for trading safely. As a result, we ensure that as barriers to entering the financial market break down, people get guidance that helps them explore and use this new world to their advantage.

Harnessing the power of AI
The evolution of trading analysis has come a long way since the days when individuals relied on printed or hand-drawn charts to interpret market trends. As technology has advanced over the years, computer-based indicators have revolutionised the way traders analyse data, by streamlining the process and providing more accurate insights. Now, we have entered the era of artificial intelligence (AI), which is transforming the trading landscape once again. Harnessing the power of AI has the potential to optimise trading strategies, enhance decision-making and improve the overall efficiency of financial markets.

In today’s fast-paced financial landscape, access to real-time data and analysis is crucial for making informed trading decisions. Innovative platforms are already taking advantage of AI and machine learning to provide users with advanced analytical tools and insights that can help them stay ahead of market trends. For instance, AI-driven sentiment analysis evaluates news articles, social media posts and other data sources to gauge market sentiment and predict price movements.

Beyond delivering real-time market insights, AI is also revolutionising the way investors manage their portfolios. By leveraging AI-driven algorithms, fintech companies are offering users access to robo-advisory services and automated trading solutions.

These tools can evaluate large datasets, identify patterns, and develop tailored investment strategies based on an individual’s financial goals and risk tolerance. This level of personalisation and automation not only saves time and effort for users but also helps minimise the impact of emotional biases on trading decisions. As a result, investors can enjoy a more efficient and objective approach to navigating the complex and ever-changing financial markets.

By incorporating AI-powered features, companies like Olymp Trade ensure that users receive timely and relevant market analyses that can enhance the performance of their trading strategies. Additionally, these platforms offer customisable risk management tools, enabling traders to minimise potential losses while maximising their potential gains.

As AI technology advances, the boundaries of autonomy may widen, allowing for more sophisticated trading strategies. Along with these successes, however, come potential issues. For example, AI trading machines are trained on past data and may lack a broader perspective.

In addition, the algorithms may evolve so much that human developers can only partially understand them. Finally, regulatory challenges will undoubtedly arise as lawmakers step into uncharted territory. As a result, it is essential to recognise and respect the limitations of AI, ensuring that human oversight and understanding remain integral parts of the trading process.

Embracing digital currencies
Digital currencies and blockchain technology are benefiting individuals from all socioeconomic backgrounds, including those with limited financial resources, by providing access to essential financial services and opportunities. Faster, more affordable and accessible remittance services enabled by digital currencies are particularly important for low-income individuals relying on remittances from abroad.

Blockchain technology allows for the creation of decentralised finance platforms that remove intermediaries like banks and lower costs and barriers to entry. This democratisation of access enables people with limited resources to participate in saving, lending and borrowing programmes, which were previously restricted to those with traditional banking access. Digital currencies also offer financial privacy and autonomy, empowering individuals to manage their finances without third-party involvement, and providing an alternative store of value and means of exchange for those in countries with unstable financial systems or high inflation rates.

The rise of digital currencies and blockchain technology has opened new doors for financial inclusion, allowing people from all walks of life to participate in the global economy. Fintech companies are increasingly embracing these innovations, offering traders and investors access to a wide range of digital assets and decentralised financial services with lower financial barriers for entry.

We have entered the era of AI, which is transforming the trading landscape

They are staying ahead of the curve by continuously expanding their offerings to include popular digital currencies and incorporating blockchain technology into their infrastructure. As a result, users can diversify their portfolios and tap into the growing potential of this emerging market. With Olymp Trade, for example, it’s possible to make deposits and withdrawals in cryptocurrency as well as trade some of the most popular crypto assets.

Overall, it is essential to acknowledge the challenges that blockchain technology faces, such as scalability, energy consumption, security, complexity and interoperability. Addressing these problems is vital to ensuring that blockchain can fulfil its potential as a game-changing technology. By understanding and working towards resolving these issues, fintech companies can contribute to creating a more sustainable and efficient financial landscape for all users.

The future of financial inclusion
As fintech continues to revolutionise the financial industry, more and more people will have the opportunity to access and participate in global financial markets. Companies like Olymp Trade are setting the stage for a more inclusive and democratised financial ecosystem, paving the way for a brighter and more financially empowered future for individuals across the globe.

By embracing the latest innovations and focusing on user-centric services, fintech companies are transforming the world of finance, breaking down barriers, and giving more people the tools they need to create wealth and achieve financial freedom. It is important to note that there is still a significant way to go, as a considerable portion of the global population — 35.6 percent as of January 2023 — still lacks access to the Internet.

Addressing this digital divide is essential to ensuring that the benefits of fintech innovations can reach all individuals, regardless of their location or socioeconomic status. By working towards bridging this gap, fintech companies can play a crucial role in fostering financial inclusion and democratising opportunities for wealth creation worldwide.