itsupport | World Finance

Morocco welcomes back visitors – and investors

Posted on July 4, 2022July 4, 2022 by itsupport

Over the past two decades, tourism has become one of Morocco’s main assets. It represents a major component of the country’s economy and generates an average of seven percent of the national GDP. Before COVID-19, Morocco was the leading destination in Africa and was in the top 30 of world destinations. The pandemic hit the Moroccan tourism economy hard. Various measures and mechanisms have been put in place by the Moroccan government to support a quick relaunch of both tourism and investment to help it return stronger than it was before the pandemic.

What kind of mechanisms will help relaunch the tourism investment sector in Morocco and how will the Moroccan Agency for Tourism Development (SMIT) support them?
The government has put in place an emergency plan of €200m to aid the revival of tourism, with €100m set aside to help hotels upgrade their product and quality. This emergency programme is a decisive lever for boosting investment. As the sector has been hit by a considerable drop in hotel occupancy rates, this financial mechanism will allow investors to participate in its revival. To improve the quality of service, it will be necessary to quickly bring hotels up to standard by re-considering the structural loads, training qualified staff, and carrying out digital transformation.

SMIT is a government body with expertise in tourism investment and hospitality. It encourages and coordinates the development of the Moroccan tourism industry so that it benefits all stakeholders. To reboot tourism, SMIT will assist hotels who have expressed their interest in being supported by financing improvements including renovations, maintenance of equipment and spaces, training, upgrading of standards (international, environmental, safety, hygiene, etc), and digital transformation.

SMIT is playing an essential role in the tourism sector’s recovery, continually mobilising to adapt its solutions. Its challenge for the year is to accelerate the implementation of structural projects with high added value for the tourism ecosystem, to amplify actions to promote national and international investments, and to boost the development of emerging regions and territories. Also, a wide range of incentive measures are planned through financial support initiatives, state subsidies and investment agreements.

How will SMIT actively participate in improving the business environment in Morocco and what kind of tourist investment incentives are there?
Located at the crossroad of cultures, an African hub with more than 40 connections to the continent and less than three hours’ flight from the main European capitals, Morocco is a safe, stable and secure destination with a GDP averaging 3.6 percent growth since 2010.

Morocco has numerous qualities that make it appealing to investors and visitors alike: solid infrastructures, an ideal climate all year long, a rich and diverse culture, and stunning landscapes. As such, the tourism sector has long been a crucial economic driver in the country.

Tourism generates significant employment opportunities, particularly for young people. The sector is also a valuable foreign exchange provider for Morocco’s trade balance. The Moroccan government has long recognised and prioritised tourism as a key sector. As a result, the industry benefits from various government incentives, both in terms of financial contributions and administrative support. The chief aim of these policies is to help ensure that tourism growth delivers broad and equitable social, economic and environmental benefits for the population. Morocco is an investment-friendly kingdom. In fact, it is easy to set up a business in Morocco even as a foreigner: there is no restriction on capital investment; no restrictions on repatriation of capital and profits; no restrictions on land ownership; and ease in terms of staff recruitment.

The tourism sector is a government priority with benefits such as prime location government land at an attractive price; private land purchase support; support for project expenses; total exemption on custom duties; and co-investment with Morocco senior partners. There is also a fund guaranteeing medium and long-term bank loans intended for the financing of accommodation and/or tourist projects that can cover up to 60 percent of the nominal value of the loan.
In addition, attractive investment incentives are in place, such as total VAT exemption on capital expenditure (for all goods, equipment and tooling acquired both in Morocco or those imported); total corporate tax exemption for the portion of the turnover denominated in foreign currency, for a period of five years from the start of the company’s operations; a reduced corporate tax for the portion of the turnover denominated in foreign currency for an unlimited period after the five years from the launch of operations (versus a standard corporate tax); and a reduced VAT rate of 10 percent (on all hotel accommodation sales for an unlimited period).

The government has also simplified all the prerequisites to enter the Moroccan market by creating dedicated institutions to assist investors in all aspect of their projects. These include SMIT, whose role is to promote the destination in terms of tourism investment and support the investors during the investment process. In fact, SMIT orients investments towards high added value projects for both the investors and region, creating sustainable and inclusive tourism components.

Tell us about the origins of the tourism support programme. How will it strengthen the capacities of existing companies and support new project leaders?
As well as its strong impact on the national economy, the pandemic led to persistent social consequences, especially in terms of tourism employment. To limit the effects, it is essential to support the private sector to maintain an investment dynamic, particularly for VSMEs. To this end, there have been moves to make VSMEs a lever for economic development. A support programme for SMEs has been set up as part of a partnership between the Departments of Tourism and Finance and SMIT.

The programme is being developed as a pilot in the Agadir region, to support the profitability of existing SMEs by creating rich, sustainable and diverse experiences. Its objective is to strengthen the tourism entertainment offer, to improve tourism consumption and to improve the attractiveness of the Agadir region (Souss Massa). It is intended for existing SMEs as well as new projects in various tourism fields. However, the focus in this pilot region will be entertainment and innovative projects with the aim of diversifying and increasing them. The programme’s impact on boosting tourism investment will help the socio-economic development of the region through the attraction of 250 new SME investors and the creation of almost 800 direct jobs for the local young population.

What kind of promotional activities has SMIT created to promote the kingdom and its tourism investment opportunities? Have they been successful so far? What do you have planned for the future?
The objective is to showcase Morocco investment potential as well as existing opportunities. Our main goal is to make the destination more attractive to investors and keep the attention of world-class brands. To achieve this, our promotional activities include attending the most prestigious global gatherings of tourism investment and hospitality forums, a specific and tailored communication campaign, the organisation of international events and webinars with high-profile participants, as well as international business meetings, roadshows and inviting guests.

Our main goal is to make the destination more attractive to investors and keep the attention of world-class brands

SMIT’s role is to develop projects that fit within the kingdom’s overall tourism development strategy: to make it internationally attractive by adapting products to each destination to meet tourism trends and needs, as well as those of the investors. These changes must benefit all stakeholders, attracting customers while encouraging investors to optimise their investments. Our promotional activities make the kingdom visible at the international scale. In the years to come we want to maintain the interest of international investors and hotel brands towards the destination.

Our short-term objective is a quick exit of the sector from the fallout of the pandemic. SMIT’s challenge for the future is to accelerate the implementation of structural projects with high added value for the tourism ecosystem, to amplify actions to promote national and international investments, and to boost the development of emerging regions and territories.

Also, Morocco is actively working to become a more attractive destination, through investments in infrastructure and the creation of assets such as an airport, train station, malls, and so on. We want to become one of the leading African and Mediterranean tourism investment destinations, with the goal of recovering market share from investors by offering tourists differentiated products.

Which parts of SMIT are you looking to digitise? How will you make this happen?
We were looking at accelerating digitisation even before the pandemic, with the aim of improving the support level of all stakeholders in the tourism investment process. We want to streamline exchanges, share insights, increase responsiveness, ensure the transparency of operations, disseminate and initiate good practices, and develop operational efficiency. Becoming digital has tremendous advantages such as increasing commitment, obtaining better collective intelligence and gaining in efficiency and decision-making.

This transformation positively affects SMIT’s operating systems and mechanisms, including interactions with stakeholders in internal and external investment, the strengthening of tools with the latest management technology, and the monitoring of investment files. We also plan to create an innovation LAB to monitor, develop and continue the digitalisation of tourism investment. These improvements will help our coworkers be more efficient, work in total transparency and place the investment process and investors at the heart of our concerns.

A bright future for pensions in Mexico

Posted on July 4, 2022July 4, 2022 by itsupport

Home to 130 million people and covering just shy of two million square kilometres, Mexico is a vast nation with tremendous economic potential. For decades, the country has been hotly tipped as an economy ready to boom, with experts predicting that Mexico could emerge as a global powerhouse as far back as the 1980s. Boasting abundant natural resources, a young labour force and enjoying a strategic location that is integrated with North America, Mexico is certainly ripe with economic opportunity. Its 3,000-kilometre border with the US means that it enjoys a lucrative trade relationship with its northern neighbour – worth over $650bn each year – while its impressive manufacturing capabilities make it the sixth biggest car producer in the world. In terms of sheer size, Mexico is among the 15 largest economies in the world, and ranks as the second largest economy in Latin America. So, if Mexico is such a force to be reckoned with, why does its economy continue to underachieve?

Over the past four decades, Mexico has struggled to achieve the levels of growth that economists had once excitedly predicted. Between 1990 and 2019, growth averaged just 2.4 percent per year – less than half of the expected rate for fast-growing developing economies.

“There are a number of deep-rooted and knotty issues that had prevented Mexico from achieving its full growth potential,” explained David Razú Aznar, CEO of Afore XXI Banorte. “From low productivity to a pervasive inequality and the prevalence of a large informal sector, the current administration has been forced to try innovative solutions to a long-standing history of socioeconomic challenges.”

And that’s without mentioning the impact of Covid-19. After decades of lacklustre growth and a pandemic-induced crash, it is safe to say that Mexico is at something of an economic crossroads. But if it chooses to be bold in its Covid-19 economic recovery plan – prioritising financial inclusion, sustainable investments and a strengthened social security net – Mexico will be well positioned for a remarkable post-pandemic transformation.

The Mexican miracle
Over the course of the past century, Mexico’s economy has been largely defined by periods of boom and bust. In the decades after World War II, Mexico pursued an ambitious programme of import-substitution and rapid industrialisation. Seeking to reduce its foreign dependency by boosting domestic production, the government adopted an inward-looking development strategy, introducing high protective import tariffs while launching tax incentives for products aimed at the home market.

This shift towards an industrialised, manufacturing-based economy ushered in a period of robust economic growth, known as the ‘Mexican miracle.’ Between 1950 and 1973, the nation’s economy grew by an average of 6.5 percent, prompting international economists to exalt Mexico as a model for emerging market development. On closer inspection, however, Mexico’s boom may have been more myth than miracle. While investors and business owners profited nicely from the country’s focus on domestic production, Mexico’s average workers didn’t feel the same benefits. Income growth was concentrated among the top 10 percent of households, widening the gap between the country’s rich and poor. By the early 1970s, inflation was rising rapidly, as was the public debt pile. Mexico’s mounting problems came to a head in 1982, when the economy crashed. With its foreign debt then standing at over $80bn and inflation approaching nearly 100 percent, Mexico was forced to turn to the IMF and the US Federal reserve for assistance.

This historic crash prompted Mexico to re-evaluate its stance on trade, shifting away from its previous inward-looking approach and instead taking steps to reduce tariffs and open itself up to international markets. In the late 1980s, Mexico entered into a series of free-trade agreements with other Latin American countries, and joined the North Atlantic Free Trade Agreement (NAFTA) in 1994, signalling that it was open for business. The agreement marked the beginning of what was to be a strong, long-lasting trade relationship between Mexico and the US.

In these times of severe economic hardship, the issue of financial security has never been more important for Mexico and its citizens

By 2003, 80 percent of Mexican exports were destined for the US, showing the significant economic ties that had quickly emerged between the two nations. While this trade relationship proved beneficial to Mexico through the late 1990s and the turn of the millennium, when the financial crisis gripped the US economy in 2008, Mexico’s reliance on its northern neighbour as an export market left it vulnerable to the knock-on effects of the US economic crash. Its dependence on the US market saw Mexico’s GDP contract by 6.6 percent in 2009 – the worst decline of any Latin American economy during the financial crisis. While its GDP has rebounded since the darkest days of the global financial crisis, growth has remained below its potential over the past decade, and despite some efforts to address its vulnerability, the nation’s economic activity has remained largely tied to external forces. But, as almost every nation around the world came to note in 2020, even the most careful and forward-thinking economic planning couldn’t have accounted for a global crisis on an unprecedented scale.

Time for action
We are now over two years on from the first Covid-19 lockdowns, and while many countries are now thankfully entering an endemic phase, the psychological and socioeconomic scars of the pandemic are still being felt worldwide – and will be for some time to come.

“The Covid-19 pandemic produced a global economic and health crisis and Mexico was no exception,” said Razú Aznar. “The health crisis unfortunately generated the loss of human lives, unemployment and a significant economic shock, which made the country face great challenges in the last two years.”

Under President Andrés Manuel López Obrador, Mexico had expanded social protection programmes even before the Covid-19 crisis: the non-contributory pensions for the elderly had reached a roster of eight million people that was expanded to 10 million in 2021 when the age to receive it was reduced from 68 to 65 years old; additionally a comprehensive programme of scholarships for the young was created, reaching a coverage of almost 10 million students in 2021. And several other new programmes benefitted other disadvantaged groups, like rural families who receive support for sowing several species of trees in rural areas. As a result, public social expenditure grew at a real annual rate of 7.4 percent during 2019–21, above its 2013–18 average of 5.7 percent. More importantly, all these supports were kept during the Covid-19 pandemic and, in fact, the payments of several of them were frontloaded, to avoid vulnerable people going out during the most contagious stages of the outbreaks.

We can expect to see a ‘greening’ of pension investments in the years to come

Given that social support programmes were already introduced in the federal budget, Mexico was able to maintain a good fiscal balance during the Covid-19 crisis, which distinguishes it among emerging markets now and constitutes a strength ahead in an era of global financial volatility and high interest rates. Total federal government and public enterprise debt amounts to 53.8 percent of GDP, when several Latin American emerging markets average over 70 percent.

In these times of severe economic hardship, the issue of financial security has never been more important for Mexico and its citizens. In a working paper entitled Mexico Needs a Fiscal Twist: Response to Covid-19 and Beyond, the IMF recommended that Mexico look to strengthen its social safety net as it rebuilds from the pandemic. In order to create a financially secure future for its citizens, the nation urgently needs to tackle its pervasive inequalities and long-standing economic challenges. The pandemic has exposed some of the remaining gaps in Mexico’s existing social safety net, and the dangers for those who end up slipping through the cracks. Now is the time for bold, decisive action – and there are some early signs that Mexico could be learning its lessons from the pandemic and stepping into a more equal and inclusive future.

A fresh approach
In December 2020, President López Obrador signed off on changes to the nation’s pension system, ushering in the most comprehensive reforms to the state pension law in 25 years. Aiming to increase retirement benefits to eligible workers and to boost contribution amounts to levels in line with the OECD average, the reforms should allow pensions plans to become flexible, while also ensuring greater returns for recipients.

“Under the new system, the average Mexican citizen will be required to work fewer weeks over the course of their working life in order to receive their guaranteed pension from the government, which was also increased for low wage workers” explained Razú Aznar. “This is in recognition of the current labour market structure, which sees many workers transition between formal and informal employment during their lifetime.”

“The employer contribution rate to the pension was raised for high wage workers and the government contribution was re-focused towards low wage workers, for whom it was indeed raised,” added Razú Aznar. “It is estimated that under these adjustments of the pension reform the assets managed by the Afores will reach around 56 percent of Mexico’s GDP in 2040. This ratio, already a strong source of internal savings, is currently 18.6 percent and in a scenario without the reform, the assets would only represent 35 percent of GDP by 2040.”

A gender-balanced team of Afore XXI Banorte executive officers

Far-reaching and ambitious, the sweeping changes will seek to address many of the most pressing issues with the outgoing pensions system – with old age poverty one of the most urgent concerns. One of the main recommendations to emerge from the 2016 OECD Pension Review of Mexico was to significantly expand safety nets for the elderly, in recognition of the nation’s high levels of income poverty among older people. Mexico has one of the highest rates of old age poverty in the OECD, and many citizens are forced to work into later life as they lack any formal retirement plan. While barriers to boosting pension coverage certainly still remain – the ever-prevalent informal economy being the most significant – the reforms represent a significant step in expanding Mexico’s social safety net and boosting financial security for the most vulnerable.

Indeed, just as these extensive reforms set out a long-term approach to strengthening financial protections for the elderly, the pensions sector also played a crucial role in the short-term response to the Covid-19 crisis. As mentioned, the Mexican government did take the decision to frontload non-contributory social pension payments for eight months, while workers were also given the option to make partial withdrawals from existing retirement accounts to alleviate loss of income during the pandemic. These withdrawals from private social security pension accounts were carefully monitored by the country’s pension fund managers, known as Afores, to ensure that workers’ assets were not put at risk.

“As Mexico’s largest pension fund, Afore XXI Banorte is proud to have led the delivery of this crucial aid withdrawal scheme,” said Razú Aznar. “It ultimately supported over 448,000 citizens between January 2020 and January 2022, giving them access to vital funds during the most difficult days of the pandemic.”

In the short, medium and long-term, the pensions industry will have a significant part to play in tackling some of the country’s most pressing socioeconomic issues. From pandemic-related loss of income to old age poverty and the challenges of a largely informal labour market, the nation’s pension funds have the potential to be a real force for good when it comes to addressing these urgent issues.

Challenges ahead
The factors behind Mexico’s underperforming growth – while often debated – are complex. Underpinning many of its socioeconomic woes, though, is the pervasive and far-reaching informal economy. According to another OECD economic report on Mexico, approximately 60 percent of the nation’s citizens work or have worked in the informal sector, with many moving between formal and informal jobs over the course of their lifetime. Others, however, will spend their entire working lives in informal jobs – meaning that they will lack access to several branches of social security, will not be entitled to maternity or paternity leave, and will not make pension contributions. This absence of vital workplace benefits, coupled with routinely low wages in the informal sector, leaves informal workers financially vulnerable – particularly as they approach later life.

López Obrador’s government also enacted a reform to the labour codes in order to fight outsourcing practices to elude the payment of full social security contributions. As a result, in 2021 2.7 million outsourced workers were migrated to jobs legally within the firms where they actually performed their tasks, with an average increase of 12 percent of their contributory wage.

“Informality is the main obstacle to achieving a truly inclusive pension system in Mexico,” said Razú Aznar. “While the recent reforms have proven effective in tackling the problem, as pension fund providers we must do our part by recognising the realities of the Mexican labour market, so we need to be able to offer alternative savings for different types of workers. Moreover, we must take advantage of the momentum created by the new universal non-contributory pension policy to think of solutions for enabling the pension industry to partake in it and maximise the economic and social benefits it can bring about to the Mexican workers and labour market as a whole.”

While access to the pensions system isn’t exclusive to salaried workers – and the recent reforms will extend coverage further – it can be more difficult for independent workers to begin making voluntary contributions on a regular basis.

“Financial literacy and awareness are absolutely integral to creating a more inclusive pensions system and enabling informal workers to unlock the benefits of making voluntary contributions to their retirement pot,” explained Razú Aznar. “That’s why, at Afore XXI Banorte, we have implemented a comprehensive strategy that aims at boosting financial literacy and at promoting sensible saving habits from an early age.”

Alongside its specialised blog on financial literacy and its eye-catching and informative posts on social media, Afore XXI Banorte also offers a savings option for children and teenagers called ‘PrimerAFORE,’ and manages close to 60,000 voluntary child pension accounts, demonstrating a commitment to promoting healthy financial choices from an early age.

The prevalence of the informal sector is not just a social security issue, but also a challenge to achieving true gender equality. Women tend to be overrepresented in the informal sector, particularly in fields such as domestic work, where an estimated 99.2 percent of workers do not have a written contract setting out their working hours, benefits, or holidays. What’s more, only 45 percent of working-age women are part of the labour force – far below the OECD average – and just 31 percent currently own a pension fund. Taking on a greater responsibility for childcare and domestic labour – up to 38 hours per week more than men, according to the World Bank, women are likely to have spent fewer years of their working life engaged in the formal workforce, often leaving them without any form of guaranteed income as they approach retirement age.

While the recent pension and outsourcing reforms are certainly a step in the right direction for improving pensions access, it is vital that the nation’s pension providers task themselves with helping to resolve the gender pensions gap, through a long-term commitment to furthering financial education and tackling bias wherever it exists.

A force for good
“It is clear that the pensions industry has a vital role to play in Mexico’s long-term vision. Not only a force for financial inclusion, social security and potential poverty reduction, the pensions sector is also able to effectively drive growth and propel the economy forward,” says Razú Aznar. Pension funds provide significant capital for investment – and not just in stocks, bonds and real estate, as one might typically expect. Alternative investments are becoming ever more popular, and funds are increasingly being invested along environmental, social and governance (ESG) principles. In 2020, Morningstar data showed that ESG-related funds saw $350bn in global investment, compared with just $165bn in 2019. With the pandemic and COP26 both shining a light on the pressing issue of climate change, we can expect to see a ‘greening’ of pension investments in the years to come.

“As Mexico’s leading pension fund, and with more than $52bn in assets under management, which places us also as the largest pension fund in Latin America, Afore XXI Banorte is well positioned to drive the industry towards a more stable and sustainable future,” said Razú Aznar. “In alignment with the objectives of our stakeholders, IMSS and Banorte, we are one of the main promoters of ESG investments in Mexico, committed to contributing to the country’s economic development by providing financing for companies in socially and environmentally-responsible industries. Whether that involves investment in companies that promote the creation of formal jobs for Mexican workers, or providing backing to firms that demonstrate exemplary corporate practices and ESG commitments, Afore XXI Banorte seeks to use its position to make a positive impact on Mexican society.”

When it comes to green investments, Afore XXI Banorte is something of a pioneer. By investing in projects focused on renewable energy and the optimisation of natural resources, Afore XXI Banorte enabled savings of over 410 billion litres of water, benefitting over 935,000 families across Mexico. In the same spirit, its investments in sustainable electricity production have generated more than 137,000MW per year – the equivalent of 3.3 percent of Mexico’s total installed energy capacity. Located in the centre of the world’s ‘sunbelt,’ Mexico has tremendous potential for solar power generation, and Afore XXI Banorte is keen to explore investment options in this exciting, high-growth sector.

Along with prioritising sustainable investments, Afore XXI Banorte is also deeply committed to helping to grow the Mexican economy and improving the lives of its citizens.

“As the front-runner pension fund management company in Latin America, we want to set an example to our peers,” explains Razú Aznar. “Over 7.7 million Mexicans have entrusted us with their retirement savings, and we want to do right by our customers. This means lending our support to vital and valuable causes that will make a real difference to the lives of Mexican citizens.”

In recent years, the fund manager has made substantial investments in local infrastructure projects, including the construction of new toll roads, seaports and airports, and the building of state-of-the-art telecommunications systems. It has supported the creation of new homes and hospitals, while its investments in agricultural and food production companies have resulted in the harvesting of 17,065 tonnes of food – enough to feed an average of 4,250 families each year. By investing in companies committed to the creation of formal jobs, Afore XXI Banorte has also enabled the creation of 3.5 million jobs throughout Mexico, in addition to generating employment opportunities for nearly 426,000 women.

“Through these strategic investments in sustainable and socially-conscious projects, companies and industries, Afore XXI Banorte is using its position to help address social and economic challenges where it can,” said Razú Aznar. “These prudent investments not only align with our ESG principles, but they also consider long-term results for our customers, ultimately helping them to feel more secure in their investments as they approach later life.”

The positive steps made by Mexico’s Afores – coupled with the far-reaching reforms to the nation’s pensions system – have helped to grow the social security net for many. If this momentum continues, and Mexico commits to prioritising financial inclusion in its post-Covid recovery plan, the country could be on its way to a fairer, more equal future – with the pensions industry helping to propel this change forward.

Leading on sustainability in the Dominican Republic

Posted on July 1, 2022June 24, 2022 by itsupport

The Dominican Republic is witnessing the emergence of a banking industry that is increasingly dynamic. Instead of the traditional blanket market focus, the industry now has specialised players whose strategies are geared towards capturing specific segments of the market and pursuing dominance. Going by the configuration of the country’s economy, the emergence of specialisation in the banking industry has meant one thing – intense competition on the doorstep of leading banks.

Despite the emerging dynamics, Banco Popular Dominicano is unfazed. The bank has remained steadfast on its institutional values that have guided its growth over the years. Thus, by implementing strategies anchored on anticipation, innovation and supporting the country’s sustainable development, the bank continues to grow its market share and command leadership. This is evident after the bank increased its market share to 24.9 percent last year. Total assets surged to $10.9bn with earnings increasing by 40 percent. The impressive performance saw rating agency Fitch reaffirm the bank’s rating at AA+ in March this year.

A market leader
In the span of about six decades, the bank has risen to become the main private financial institution in the Dominican Republic. Today, the bank is a market leader in nearly all businesses and customer segments. The bank has managed to achieve this feat by adhering to its mission of democratising financial services in the country. It has also stayed true to its vision of promoting initiatives and involving the Dominican society in socio-economic development, with a keen emphasis on sustainability. Digital transformation has been at the core of its growth. In fact, leadership in the digital sphere has been instrumental in facilitating the financial inclusion of thousands of Dominicans.

Having managed to sustain strong market leadership amid the emerging dynamics and COVID-19 disruptions, Banco Popular Dominicano is poised for the next phase of growth. In the immediate and mid-term future, the bank intends to continue with its innovation-driven strategic approach.

This entails implementing new technologies for the modernisation of financial services, offering solutions that expand its portfolio of products and increasing the efficiency of the processes that generate more value for its over two million customers.

Luckily for the bank, the economic fundamentals are ideal. The Dominican Republic was badly ravaged by the COVID-19 pandemic with gross domestic product (GDP) contracting by 6.7 percent in 2020, according to the World Bank.

Recovery, however, has been swift and strong. In 2021, GDP rebounded by 12.3 percent. This was supported by a solid policy response to the pandemic including fiscal, macroprudential and supervisory policies and monetary easing.

Key sectors like tourism, remittances, foreign direct investment, mining revenues, free-trade zones and telecommunications have made the Dominican Republic the second fastest growing economy in Latin America and the Caribbean region over the last decade, with the economy expanding by an average of 5.3 percent from 2000 to 2019. Prior to the pandemic disruptions the country was on track to realise its ambition of achieving high-income status by 2030.

Driving tourism
Banco Popular Dominicano has been a major facilitator of economic development in the Dominican Republic. The bank’s huge exposure in tourism, for instance, has been instrumental in the sector’s splendid growth and performance. Government data show that tourism represents 8.4 percent of the country’s GDP. If ancillary services are factored in, the sector’s true impact is estimated in the region of 30 percent.

The bank’s innovation-centric culture has set the pace for digital transformation in the Dominican Republic

Banco Popular Dominicano’s support for the tourism sector dates back 25 years when it became the first banking entity to understand the paramount importance of developing the industry for the stability and growth of the country. The bank created a business unit specialised in promoting and invigorating the sector. Riding on its historical leadership in financing the sector, the bank has been one of the leading promoters of its recovery from the COVID-19 devastation.

Today, the bank contributes almost half of the volume of loans that banks in the country grant to the tourism sector. In 2021, its credit portfolio to the sector stood at $1bn, a 10 percent increase compared to 2020. The bank’s financing to the sector represents around 15 percent of its loan portfolio annually. Over the last seven years, the bank has granted financing of more than $1.4bn, of which $716m, approximately 50 percent, has been given for the construction and renovation of some 13,600 hotel rooms. The bank’s financial support for tourist activity is distributed among nearly 800 clients, including leading foreign hotel groups.

For Banco Popular Dominicano, becoming a leader not only in the tourism sector but also in financing other sectors of the economy has not come by default. Rather, it is by offering customers expertise in personal, commercial and corporate banking services through innovative products and high value-added solutions. This has been made possible by the bank’s belief in constant innovation, strong corporate governance and ethical principles and values.

In particular, the bank’s innovation-centric culture has set the pace for digital transformation in the Dominican Republic. In fact, putting digital transformation at the core of operations has brought about high levels of efficiency and robustness not only for client services but also as a driver for growth. Last year, Banco Popular Dominicano was named as the banking entity with the highest level of digitisation in the national financial system consisting of 17 banks. The bank obtained a score of 9.83 out of 10 in the Ranking of Digitisation of Dominican Banks carried out by the Superintendence of Banks.

The ranking was an affirmation of the bank’s deeply entrenched digital strategy. This is because in general, 85.5 percent of the bank’s operations were already being carried out electronically through the bank’s different digital channels with 13 percent done manually and 1.5 percent through the Subagente Popular network. In the last five years, the bank’s manual transactions have been reduced by half, giving way to electronic transactions.

Digital dominance
In October last year, Banco Popular Dominicano demonstrated its leadership in the digital space after App Popular, its financial application for mobile phones, exceeded one million affiliated clients. This represented a growth of 52 percent compared to the same period in 2020. In essence, it means 26 percent of the bank’s transactions will now be carried out on the platform. This is quantified in a total of 565,000 operations every day and 23,545 per hour. Apart from the app, which can allow anyone to ‘become a customer,’ the bank boasts of a retinue of other digital offerings that enable customers to carry out various transactions with the convenience and comfort of their digital devices.

As part of its technology and innovation strategy, the bank signed a strategic agreement with Microsoft designed to expand its consulting services and technological products for small and medium enterprises (SMEs), including offering them cloud storage solutions and capacity building. The bank understands the importance of SMEs not only in driving economic growth but mainly in job creation. In 2020, micro enterprises accounted for nearly 80 percent of all enterprises in the Dominican Republic. Although medium enterprises accounted for only 2.6 percent of the total, they employed 10.2 percent of the workforce. Over the past seven years, Banco Popular Dominicano has been using the Impulsa Forums to empower SMEs, managing to reach over 14,200 entrepreneurs.

Democratising finance
For customers without smartphones and access to the internet, the bank has an alliance to offer tPago, a service based on USSD technology. Although 80 percent of Dominicans own a mobile phone, half of the population do not have smartphones. The tPago service is able to link bank accounts and credit cards to customers’ cell phones to enable them to make payments, transfers, purchases, top-ups, queries and disbursements without consuming minutes or data. The service is among the bank’s proactive strategies to drive financial inclusion in the country. Another strategy is through the Academia Finanzas con Propósito, an innovative web platform with educational content on personal, family and business finances. The bank created the platform to extend financial education with the aim of educating more than 150,000 Dominicans by 2030.

Notably, the strategy is part of Banco Popular Dominicano’s commitment to the United Nations Principles for Responsible Banking. As a financial entity that believes in the tenets of sustainability, the bank is a founding signatory to the UN Principles. Being a signatory enables the bank to respond to the demands of society and the challenges of climate change. With the Dominican Republic among the countries that are most vulnerable to climate change, the ultimate goal is to align financing to sectors that help in adaptation and mitigation. The key focus is renewable energy across photovoltaic, wind and biomass parks. The bank is currently a financier and collateral agent at seven extensive facilities and sustainable energy companies with a portfolio amounting to $2.8m.

A sustainable future
The bank has also created a portfolio of products and services with preferential conditions dubbed Hazte Eco in order to promote greater use of sustainable mobility and clean energy in homes and businesses. Hazte Eco, the largest and most convenient green finance portfolio, had a value of $21.5m as of March 2022, distributed in loans, green leasing and personal and business lines of credit that are offered at lower interest rates compared to those in the market. The financing enables customers to acquire hybrid and electric vehicles, charging stations, vehicles without motors, solar panels and efficient appliances, among others. Through the facility, the bank has granted more than $14.6m in financing for electric and hybrid vehicles alone. Banco Popular Dominicano’s strong credentials on sustainability also saw it act as the underwriter for the $100m Larimar Trust, an investment vehicle that is completely new to the Dominican securities market and that promotes sustainable development in the country.

Democratising trading with cutting-edge copy trading

Posted on July 1, 2022June 24, 2022 by itsupport

Financial innovators have long sung the praises of fintech’s ability to democratise modern finance by making it more affordable and accessible for the average consumer. The key caveat made by leading practitioners, however, is that fintech development must incorporate first-hand human experience in order to best fulfil its potential in terms of real world applications.

The best forms of financial innovation involve the merging of the latest technological developments with the time-honed knowledge and insight of human beings. One area of fintech which embodies this notion is copy trading, which has seen the creation of automated platforms and algorithms that enable investors to emulate the performance of successful human traders.

The birth of copy trading
Copy trading first emerged around 2005 as an offshoot of mirror trading. As the name implies, mirror trading entails the ‘mirroring’ of strategies implemented by human traders, and the development of algorithms based upon their history of market decision-making.

Where copy trading differs from mirror trading however, is that it precisely follows the actions of the traders that are being emulated on a proportional basis, as opposed to just implementing their specific strategies. Online brokers now offer a range of copy trading software that permits investors to perfectly replicate the positions of other traders that have successful track records. This software covers a variety of asset classes including stocks, commodities and even crypto, but is most frequently utilised with forex markets due to their vast size and liquidity.

I have been there in the trenches so I know the mistakes that traders make, whether quantitative or emotional

Some may view copy trading as a form of time-saving automation that outsources the investment decision-making process to algorithms, for the purpose of reducing or even removing the need for direct human action. The development of effective copy trading technology nonetheless remains heavily dependent upon judgement and decision-making by humans, that is based upon the accumulation of real world experience. This is not just because copy trading itself involves the emulation of skilled human traders with proven track records. It is also because the screening and selection of these traders is a process in which human judgement and experience can play an essential role.

Developing copy trading innovations
Michael Berman, the former CEO of Ditto Trade and now Head of Products at FXTRADING.com following its acquisition of Ditto, spoke to World Finance. He attests to the importance of combining practical trading experience with technical expertise in the development of successful copy trading platforms.
Berman, who has more than two decades of experience in the financial sector, points out that while it’s easy to enlist academic experts to develop the algorithms for a copy trading platform, without real-world knowledge of markets they will struggle to create breakthrough innovations. “Any broker who thinks they can just get a PhD fresh out of graduate school to create a scoring system is unlikely to develop something meaningful and industry-changing,” he said.

“This is not something that can be developed in a day, or even several years – it takes decades.” In Berman’s case, his background as a trader and fund manager would turn out to be essential in the development of cutting-edge copy trading innovations. Berman first commenced his career in investment banking and commercial property asset management, before accumulating years of experience in both prop trading and hedge fund management. This lengthy spell in the trenches gave Berman a deep, first-hand understanding of trading and financial markets, which would prove invaluable in his subsequent move towards the development of copy trading technology.

Traders know traders best
In 2012, Berman made his first major foray into copy trading with the creation of RAPA (Risk and Profit Analyser) Cap Intro – an online portal that matches trading talent with emerging manager capital. RAPA employed a highly quantitative approach, which saw the year-long development of an advanced scoring algorithm for measuring the trading skill of candidates. In addition to software innovations however, RAPA also required advanced human capabilities for the recruitment of the first-rate trading talent that would lay the foundations for its success. To this end, Berman booked a round-the-globe trip in order to recruit the best traders that the world then had on offer. According to Berman a key factor in any successful effort to recruit this top-flight talent lay in his background as a trader himself. “I wasn’t just an academic who came out of a laboratory or university and didn’t really understand them,” he said.

“I have on-the-ground experience – I speak their language, I understand what they are doing and their pain points.” Before long Berman managed to persuade 10 of the world’s leading traders to join the undertaking, enabling RAPA to take off with a flying start.

Scoring trader performance
In 2015 Berman co-founded PsyQuation with Vladimir Krouglov, as a cloud-based software platform that provides automated performance, risk and behavioural advice to traders. This next stage in Berman’s journey as a copy trading innovator took the opposite tack to RAPA, adopting a bottom-up instead of a top-down approach to identifying trading talent.

Instead of focusing on the recruitment of traders already renowned for their talent, PsyQuation involved the use of technology to coach and train better traders, while also identifying undiscovered talent.

“PsyQuation was intended to be the world’s first behavioural-based robo-trading coach,” Berman continued. “People make mistakes, which are costly as traders, so if you can help people to avoid those mistakes you will help them to make more money.” As with RAPA, Berman’s background as a trader played a critical role in the successful development and application of the technology.

“I have been there in the trenches so I know the mistakes that traders make, whether quantitative or emotional,” said Berman. Over the years Berman built up one of the world’s biggest retail trading databases, which provided the basis for validating theories about trading errors using a combination of behavioural science as well as finance, mathematics and computer science. In addition to aiding the development and maturation of emerging traders by warning them of their errors, PsyQuation also resulted in the creation of an ecosystem for identifying trading talent.

Berman then further honed his skills for the identification and management of trading talent by successfully running the AxiSelect programme for more than three years.

Rigorous screening
Berman’s efforts to create the ultimate copy trading platform have since culminated in the founding in July 2021 of Ditto, which has since been acquired by FXTrading.com and rebranded as FXTHub.com. Ditto was developed as a smart investment and multi-asset trading platform, capitalising upon Berman’s considerable experience in the incubation of emerging traders and his loyal team of longstanding collaborators, to provide investors with smarter ways to copy trades. As compared with other copy trading platforms, the big point of difference with Ditto is the robustness of the screening process, as well as the ongoing monitoring and management of the traders that clients will copy. “Ditto differentiates itself from everyone else in that you need to pass far more stringent tests than what is typically required in the copy trading industry,” said Berman.

“You first need to satisfy a bunch of criteria including a two year track-record, a Sharpe ratio of one, and managing a minimum of $2m. Traders that pass through this initial screening are then further analysed quantitatively and qualitatively by an investment committee of seasoned experts, before they finally receive the thumbs up,” Berman explained to World Finance.

Berman typically interviews applying traders to acquire a sense of who and what they are about, bringing a critical qualitative perspective to bear upon the selection process. While Berman’s years of copy trading innovation have long involved quantitative approaches that make extensive use of maths, behavioural science and computer science, it’s this qualitative approach based on personal experience that gives Ditto’s selection process the edge.

Democratising finance
For Berman, copy trading platforms can play a critical role in the democratisation of finance, by granting the average investor access to powerful knowledge and tools that are typically the exclusive preserve of the big institutions.

By thoroughly screening and selecting only the best talent available, FXTHub grants investors access to some of the world’s greatest traders at an affordable cost. Prior to the emergence of affordable copy trading, investors would need to pony up millions of dollars to tap comparable trading talent. “We are democratising finance by giving people not just tools, but access to the best talent available as well,” said Berman.

“We are offering our client base access to the highest-quality traders, giving people who use the platform a far better chance of making money than other platforms that don’t have the guard rails of strict talent screening in place,” Berman concluded.

Macao: modern finance and a diversified economy

Posted on June 30, 2022June 30, 2022 by itsupport

In this post-Covid transition period, there is a great opportunity for Macao to achieve success in economic diversification and sustainable development, as well as to strengthen its status and function in the nation’s economic development and opening to the world. This policy has also served as a fundamental approach to solving the problem of Macao’s limited space, and exploring new development directions.

The Chinese Central Government attaches great importance to the diversified economic development in Macao. Additionally the Macao Special Administrative Region (SAR) Government has emphasised the construction of a modern financial services industry as its key policy objective.

The Policy Address for the Fiscal Year 2022, published by the Macao SAR Government, highlighted the importance of persevering with Macao’s integration into the overall national development plan. This is to make progress with deepening regional cooperation, and focusing on the establishment of the Guangdong-Macao In-depth Cooperation Zone in Hengqin, along with expediting adequate economic diversification and fostering and facilitating the development of nascent industries and modern finance.

The Chief Executive of Macao SAR, Ho Iat-Seng, reiterated that the moderately diversified economy is key to Macao’s success. Through regional cooperation, and especially with the development of Hengqin Island, Macao will be able to create better conditions and fresh opportunities to foster a moderate diversification of its economy. Macao will fully utilise its roles as a separate customs territory and a commercial and trade co-operation service platform between China and Portuguese-speaking countries, and also its connection with other places, to combine the city’s advantages with Hengqin’s land resources in order to reinforce the region’s opening-up. Such efforts would aid in cooperation between mainland China and the countries and regions covered by the ‘Belt and Road’ initiative, especially Portuguese-speaking countries and Latin American countries.

With these efforts, Macao is determined to support the country’s full opening-up. While providing services to and building connections with all sectors of society, Macao’s banking industry will continue to play a crucial part in both the regional and national development process.

Promoting economic diversification
Continued outbreaks of the COVID-19 pandemic have dealt a major blow to Macao’s economic and social development. Modern finance, with its high added value, has now become the most important support for Macao’s diversified economy. With joint efforts of the industry and support from local government, Macao’s financial industry is expanding in a digital and green direction with more offshore and cross-border business. In the foreseeable future, and with a profound development of modern finance in Macao, the prosperity of low-carbon emerging industry is all but guaranteed, along with the enhancement in financial market integration and commodities trading services, active transactions in the securities market and the e-commerce industry, as well as more convenient e-payment methods.

Modern finance, with its high added value, has now become the most important support for Macao’s diversified economy

As a result, the bond between local and international financial markets will be strengthened. Macao’s banking industry has become an important growth point of the local economy, with its total asset value soaring by 20.7 percent and the proportion of total GDP increasing by three percent in 2021. Meanwhile, the second five-year plan of Macao, released in 2021, has introduced comprehensive arrangements for the construction of modern finance, providing instructions on financial infrastructure, related laws and regulations, and the protection of talent. With joint effort and concrete action within the industry, Macao is expected to advance its building of modern finance.

Innovative financial services
With a unique geographical location, the Hengqin In-depth Cooperation Zone is involved in both domestic and international circulation, and enjoys the combined advantage of policies from four special areas, including the Guangdong-Hong Kong-Macao Greater Bay Area, the Hong Kong and Macao Special Administrative Regions, Free Trade Zones nearby, and the In-depth Cooperation Zone itself. It is designed to innovatively combine two institutions, with aims to promote the bidirectional opening-up of China, and the development of diversified economy and modern finance in Macao.

The Hengqin In-depth Cooperation Zone has divided its future development into three periods by the year 2024, 2029 and 2035. To fully perform its responsibility within each timescale, Macao will need to utilise policies of the Hengqin In-depth Cooperation Zone, to develop a globally recognised financial system, focused on the interconnectivity of people, logistics, capital and information flows through institutional innovations and offshore market development. The realisation of this requires the whole industry to join hands together, break with convention and create comparative advantages within Macao. On the one hand, we need to adapt the current legal system and provide a legal basis for developing the offshore economy. On the other hand, we need to seek policy support from the central government to improve the opening-up of cross-border investment and financing, capital facilitation, and financial regulation.

Broadening financial cooperation
The cross-border wealth management connect service has marked the central government’s substantial support for the Guangdong-Hong Kong-Macao Greater Bay Area, and also the successful cooperation of mainland China, Hong Kong and Macao. ICBC (Macau) was among the first group in Macao to provide all five services of cross-border wealth management connect in October 2021. With over 500 accounts opened on the first day, it is a well-launched and fully-implemented cross-border banking service in Macao. It also marks an important attempt to extend the opening-up and cooperation level of Macao’s finance, to promote the internationalisation of the renminbi, and to enhance the communication of funds.

Moreover, it indicates further room for wider investment amounts, more investible products, and a larger market. However, with a shared cross-border banking quota by Hong Kong and Macao, the cross-border wealth management connect service requires improvements to Macao’s financial market, especially its capability to provide competitive products and services, and at the same time, a progressive realisation of cross-border capital interconnectivity.

Improving financial infrastructure
There is still room for improvement within Macao’s capital market, especially when compared to neighbouring areas. Recent years have seen the building of Macao’s securities market from scratch, with a full range of breakthroughs including the launch of the Central Securities Depository (CSD), which was a landmark moment and helped supplement Macao’s deficiency of financial infrastructure.

In 2021, the volume of securities issued and listed in Macao has respectively increased year-on-year by 795 percent and 80 percent. And the total number of securities issued and listed in the year accounted was 63, surging by 142 percent compared with the previous year. Considering its advantages in capital amounts, the tax system, financial regulations and other aspects, Macao can upgrade its competitiveness by developing a bond market with green senior bonds, and improving the freedom of its offshore financial market.

In terms of related legislation, Macao will look to provide convenience for global investors in tax preference, entity establishment, and the application of laws, and at the same time, work to construct a bond exchange centre adapted to local circumstances. Moreover, on condition that the Hengqin In-depth Cooperation Zone releases an industrial classification, the development of Macao’s securities market will be accelerated, and an increasing number of investors from the securities market will be attracted to the Hengqin In-depth Cooperation Zone.

Local economic development
As the largest locally registered financial institution with the widest range of services in Macao, ICBC (Macau), with full bank license, plays an important role in local development of modern finance. It ranks first among the industry in the scale of underwriting and issuing bonds, and is the first member of the International Capital Market Association (ICMA) in Macao, which promotes its connection to the international market.

In 2021, it took the lead to initiate and establish the Securities and Funds Industry Association of Macao, with the vision to promote the building of modern finance through joint ventures and further self-regulation of the entire industry. Looking to the future, ICBC (Macau) will work with the Securities and Funds Industry Association of Macao to provide advice for the industry, and improve the financial market ecology by attracting institutions of securities, funds and assets management to the local market. With all these endeavours, ICBC (Macau) will continue to make its contribution to Macao stepping forward into a diversified economy and a modern finance future.

The energy sector’s next frontier

Posted on June 30, 2022June 30, 2022 by itsupport

Our world today faces multiple, often conflicting challenges regarding energy security and climate change. On one hand, economies around the world are facing an energy price crisis that shows a clear need to eliminate the volatility associated with fossil fuels. On the other hand, the looming climate emergency offers a much more existential threat to the energy sector – and our planet. In the short term, there are several methods that can help the industry overcome price volatility, but shifting investments to clean power technology is the only true path to managing climate change effectively in the long run.

Thankfully, the past few years marked an inflection point where the world began to ‘walk the walk’ with regards to climate change. Ambitious emissions targets are being set across the globe and businesses are beginning to confront the scale of the climate emergency with emission reduction commitments. Alongside this, initiatives are emerging to support building a new world order for energy. But despite growing ambition and funding for renewable energy, some experts are actually forecasting an increase in fossil fuel investments for 2022. According to these experts, a meaningful shift from traditional oil and gas exploration and production to clean power technology will only take place when there are enough cleantech opportunities for investors.

From the viewpoint of energy giant Iberdrola, these opportunities already exist in the ever-evolving wind power industry. With 93 gigawatts (GW) of global capacity added in 2020 alone – up a whopping 53 percent from the previous year – one thing is abundantly clear: wind delivers the energy society wants, and it will be the backbone of the new energy transition.

An evolving technology
Although wind delivers a form of energy that society wants – one that is rightly lauded for its clean, renewable status and unlimited potential – this wasn’t always the case.

The sector had to overcome numerous challenges to gain the clout that it enjoys today. Beyond regulatory red tape and permitting woes, wind power first experienced adversity from heavy industries because of the high energy costs associated with wind versus fossil fuels. Then came the Nimbys (Not-in-my-backyard) who fought tooth and nail to ensure the views around their homes remained free of turbines.

Fast-forward to today, and the evolving nature of wind power has largely eliminated these concerns. Heavy industries like steel and cement are now some of the wind industry’s biggest supporters thanks to their need to explore options for industrial electrification. Meanwhile, the Nimby roadblock resulted in a pivotal innovation for the energy sector: moving farms out of those backyards and into the seabed.

Unlimited potential
The move offshore was a game-changer for the wind power industry. Wind resources are so abundant offshore that they are practically unlimited. Thanks to a lack of barriers on the high seas, wind reaches higher and more constant speeds than on land, meaning offshore wind farms can produce up to twice as much power as onshore facilities.

Not only this, but the reduced visual and acoustic impacts also mean it is possible to create larger farm plots.

Offshore wind farms are located in shallow waters, up to 60 metres deep, away from the coast, marine traffic routes, naval installations and spaces of ecological importance. They are governed by strict safety requirements, and environmental impacts are a significant consideration for the offshore wind industry. Rigorous studies are conducted in the years leading up to the start of a new project, including analysis of the wind farm’s compatibility with local marine fauna, birds, migratory routes and more. Iberdrola uses cutting-edge technology such as advanced noise mitigation systems while building offshore wind farms to protect marine mammals from being affected during construction.

Although offshore structures and their maintenance are more complex, transporting components needed to build the mega-structures that capture this abundant, non-polluting energy source is much easier via marine routes. This has enabled turbines to reach vastly larger capacities and sizes compared to their onshore counterparts. For example, turbines with unit power of more than 10 megawatts (MW), and up to 15 MW, are possible offshore, whereas on land where transportation of these components is more difficult, unit power typically sits around five megawatts.

The combination of vast resources and bigger constructions has spurred an ongoing evolution to wind power technology that saw turbine capacity offshore increase by 102 percent between 2007 and 2017, according to the WindEurope report, Offshore wind in Europe: trends and key statistics 2018. The UK makes up the lion’s share of installed capacity in Europe, with a total of 44 percent of all offshore wind energy installations in megawatts, followed by Germany with 34 percent.

Iberdrola’s portfolio of offshore wind projects across Europe and further afield exemplifies the stepwise evolution of offshore wind turbines over the past decade. These advances invite optimism, yet they are only the beginning. The introduction of floating structures is creating tremendous new opportunities even further offshore.

The next frontier
Floating offshore wind (FOW) is a rapidly maturing technology with huge potential to accelerate the energy transition, particularly in Europe and the US. Until recently, offshore wind farms relied on fixed structures to support turbines. Structures with fixed foundations are installed into a support structure on the seabed up to 60 metres below the surface, and they rendered deep-water installations economically unfeasible.

With the advent of floating structures, wind turbines can be installed in very deep or complex seabed locations via flexible anchors, chains, or steel cables. The floating bases make it possible to harness the huge potential of the wind in large offshore areas where standard fixed structures would be unfeasible. These systems open the door to sites further offshore – and their higher wind capacity – by allowing the deployment of wind turbines in larger and deeper offshore areas, reaching hundreds of metres below sea level. Nearly 80 percent of potential wind energy is located in these types of conditions, thus FOW offers the possibility to use vast areas of the ocean for power generation and overcome a stumbling block to providing clean, inexhaustible and non-polluting energy for a more sustainable planet.

FLAGSHIP is a project supported by the European Commission’s Horizon 2020 research and innovation funding programme. It aims to reduce the Levelised Cost of Energy (LCOE) for floating offshore wind to the €40 to €60 per megawatt hour range by 2030. The initiative will develop and fabricate the first 10 MW floating offshore wind turbine assembled on a floating semi-submersible concrete structure in the Norwegian North Sea.

Floating wind is still a relatively new technology, however, with only 80 MW of total installed capacity in 2021. Despite its infancy, experts agree it will be a key element in the renewables mix if it can overcome its initial hurdles. And it has plenty of hurdles to contend with: a difficult permitting regime, a non-developed supply chain and high commodity prices, just to name a few. These barriers are holding up the growth of offshore wind and holding back energy security for the world.

Unleashing potential
Two key things must happen to tap into the full potential of offshore wind: more capital and more partnerships. Despite the record-breaking increases to capacity in 2020, a further step-change in the industry is needed. Investments must at least triple over the next decade to meet climate targets and minimise the impacts of the climate emergency. Community partnership and advocacy are also crucial elements of building consent and support for the wind economy.

Iberdrola is a world leader in the development of offshore wind, with an operational capacity, pipeline and early-stage developments of approximately 30,000 MW. Looking ahead, the company is focused on building on this by striking new partnerships in the offshore wind power business – both fixed and floating – focusing on countries with ambitious targets. By 2030, the company expects to have 12,000 MW of offshore wind energy in operation.

Can the Fed orchestrate a soft landing?

Posted on June 29, 2022June 29, 2022 by itsupport

Inflation has returned to haunt the global economy. The fiscal and monetary firepower deployed during the pandemic to prevent a deeper crisis was a powerful elixir for demand, but the real rocket fuel for inflationary forces was the absolute chaos on the supply side of the equation. Companies spent several decades ‘optimising’ supply chains, spreading them thin around the world to reduce costs, which ultimately left them quite vulnerable to shocks. It started with port congestions and chip shortages, before the invasion of Ukraine sent energy and food prices spiralling higher. The draconian lockdowns of Chinese cities in recent months dealt the knockout blow.

Central banks cannot fix supply shocks. Interest rates are the only tool at their disposal and that instrument only affects demand. Even so, with the US labour market having almost returned to full employment and wage growth firing up, the demand side of the economy is overheating too. Policymakers are worried this could lead to a vicious feedback loop between wages and prices that keeps feeding inflation, so they feel compelled to act.

Therefore, the Federal Reserve has embarked on a series of rapid-fire rate increases to combat inflation. Its goal is to cool the US economy without causing significant damage to the labour market or sparking a recession. This soft landing is a very delicate manoeuvre that has only been achieved a handful of times. It requires both skill and good fortune. The question is; can this Fed pull it off?

History is not kind
The finest example of a soft landing in recent history was the 1994–95 experience. Back then, the Fed, led by Alan Greenspan, raised interest rates with brute force and managed to tame inflation while avoiding a recession. However, even this ‘successful’ episode had some unintended consequences, most notably sending Orange County in California into bankruptcy and sparking a currency crisis in neighbouring Mexico.

There are two other examples over the past century when the Fed raised rates without breaking the economy, in 1965 and 1984, yet neither case is very relevant to today. Inflation was running below two percent in 1965, which means very little tightening was needed. Meanwhile in 1984, a crisis was averted because the Fed reversed course and started cutting rates to avoid suffering a third recession in four years. The common characteristic in all three episodes was that the Fed was trying to prevent inflation from moving higher. That’s a completely different situation than now, when it is actively trying to bring it down. The economy is much stronger today and as such, tapping lightly on the brakes probably won’t be enough.

Every other instance has ended with a contraction. The classic pattern is that the Fed tightens until something breaks and drags the economy down with it – whether it is the bond market, the housing market, or the stock market. On the bright side, most of these crises were ‘plain vanilla’ in the sense that the economic downturn was relatively mild and short-lived.

Bond market on alert
With inflation soaring to four-decade highs, markets expect the Fed to raise interest rates to almost three percent by the end of this year and simultaneously shrink its enormous balance sheet, reducing accommodation even further. Since the rate increases have largely been priced in, the tightening process has started and that is already reflected in skyrocketing mortgage rates. This will inevitably slow the economy, both by cooling the scorching-hot housing market and by tightening financial conditions. Whether the impact will be powerful enough to cause a slump cannot be known in advance. That said, the bond market is flashing warning signals.

This soft landing is a very delicate manoeuvre that has only been achieved a handful of times

The most popular indicator that a recession is imminent is when long-term Treasury yields cross below shorter-term ones. This demonstrates that investors are betting on a severe slowdown in economic growth and it has preceded recessions with terrifying accuracy over the past five decades, usually with a lag of several months.

Which measure is the most significant has been the subject of debate among economists for a long time but traders in financial markets generally look at the difference between two and 10-year yields, which inverted earlier this year. Of course, this doesn’t mean a slump is inevitable. Rather, this is the bond market saying that the distribution of outcomes has shifted in this direction.

Swimming in leverage
A downturn may not be inevitable, but it is looking increasingly likely. The surge in inflation is currently outpacing wage growth, eating into people’s real incomes. At some point this negative real wage growth will inevitably hit consumption, which makes up two-thirds of the US economy.

It’s not a local story either. The European and Chinese economies are arguably in even worse shape. Europe has been brought to its knees by its dependence on imported energy, whereas Chinese authorities remain committed to ‘zero Covid’ policies and strict lockdowns that will ultimately kneecap economic growth. If the other two largest economic regions in the world are struggling, it becomes even harder for America to achieve this elusive soft landing.

Leverage is another issue. The total debt across the US economy, both in the public and private sectors, is estimated at almost 380 percent of GDP in 2022. It has been rising steadily for decades. All else being equal, this factor limits how high the Fed can push interest rates before something ‘breaks,’ causing a credit event or something of similar nature. Financial markets are much more fragile nowadays compared to past tightening cycles and are unlikely to be able to withstand significantly higher borrowing costs. Look no further than 2018, when the Fed raised rates to only 2.5 percent and the wheels started coming off the equity market, forcing the central bank to turn around and start cutting rates again a few months later.

Probability of recession
Estimating the probability of recession is guesswork in the best of times, even when done by professionals. The New York Fed has a model that uses the difference between three-month and 10-year Treasury yields as a predictor of a recession over the next year. This model currently implies a very low probability of the economy tanking, less than 10 percent in fact.

However, prominent economists like former Treasury Secretary Larry Summers are not so sanguine. Summers stressed that since 1955, there has never been an instance when inflation was above four percent and the unemployment rate was below five percent that was not followed by a recession within the next two years. The US economy has already overshot both metrics by a mile. This view was echoed by former Fed Vice Chairman Roger Ferguson, who highlighted that a recession “is almost inevitable.” Even Jamie Dimon – the CEO of JPMorgan Chase – pegged the probability of a soft landing at only 33 percent, giving the Fed a slim chance of pulling it off.

The good news
Taking a step back, it’s fruitful to remember that a recession is not necessarily Armageddon. Including the pandemic, there have been 13 of them since the end of World War II, most of them brief and shallow. Many people don’t see it that way because an entire generation has built its perception around what a recession feels like by the decade-long hangover following the 2008 financial crisis. That was an extreme outlier, not the blueprint.

A couple of quarters of slightly negative GDP growth wouldn’t be the end of the world, even though that is the definition of a technical recession. Economic growth in the US already turned negative in the first quarter of the year – does the economy feel like it’s tanking?

Ultimately the focus around a soft landing may be missing the point. The true essence is to avoid a landing where the plane crashes and burns. The US economy is certainly strong enough to handle slightly higher interest rates, although the question is whether the same is true for financial markets. Historically, the Fed has reversed course at the first sign of trouble. Is this time different?

Flor de Caña: raising the bar for sustainability in the spirits industry

Posted on June 29, 2022June 29, 2022 by itsupport

The story of Flor de Caña began back in 1875, when Alfredo Francisco Pellas Canessa, a young Italian visionary, decided to travel to the exotic and tropical country of Nicaragua in search of adventure. In 1890, he came across the most fertile lands at the base of the country’s tallest and most active volcano, San Cristóbal, and decided it was the perfect location to establish a rum distillery, marking the beginning of Flor de Caña.

The distillery has been modernised, but remains in the same place where it was originally founded. Today, Flor de Caña rums are present in over 70 countries around the world and the brand has earned top industry distinctions, including being named ‘Global Rum Producer of the Year’ by the International Wine and Spirits Competition in 2017. Sustainability has always been a core value of Flor de Caña, being passed down through the five family generations who have led the company during its 130 years of existence. The focus on sustainability has shaped how the company produces rum, does business and interacts with consumers around the world.

Producing rum in harmony with nature
Flor de Caña is a single estate rum, which means the company owns and controls every step of the production process, from field to bottle. While this is a huge challenge, it is also a great opportunity to make sure sustainable practices are in place in every step of the process.

The sugar cane is sustainably sourced from fields that are both Bonsucro and Fair Trade certified, which ensure the highest production standards in the industry, in terms of proper and safe working conditions for employees and in terms of protecting the environment with sound agricultural practices. The sugar cane is then crushed to obtain molasses and this byproduct is then fermented with water and yeast cultivated in house in order to produce alcohol.

During this fermentation process, all CO2 emissions are captured and recycled, making sure they aren’t released into the atmosphere. The alcohol is then distilled five times in multiple-effect column distillation stills. This entire process is powered with 100 percent renewable energy by using bagasse (the fibrous material that remains after crushing sugar cane) as biomass.

Once the rum is distilled, it is stored in hand-assembled bourbon barrels without artificial ingredients or additives of any type. The barrels are then kept in naturally ventilated warehouses where the rum will be aged for up to 30 years. The result is an exquisitely smooth, amber-coloured, ultra premium rum that has zero sugar content, is gluten free and Kosher certified.

Third-party sustainability certifications
In addition to a sustainable production process, the brand also has several programmes to benefit its employees and the community. Since 1913, the brand has offered employees and their families free education and health services at the company-owned school and the company-owned hospital. The brand is also a strong supporter of non-profits in Nicaragua, such as APROQUEN, which has provided over 600,000 free medical services to child burn victims since 1991.

Flor de Caña is also the main corporate donor of ANF, which has a series of social programmes aimed at alleviating poverty among the country’s most vulnerable populations.

It is because of programmes like this that Flor de Caña is proud to be the world’s only spirit to be both Carbon Neutral and Fair Trade certified. The Carbon Neutral certification, issued by Carbon Trust in the UK, assures consumers that Flor de Caña offsets all carbon emissions during the entire lifecycle of the rum, from field to market. Additionally, the Fair Trade certification, issued by Fair Trade USA, verifies that the rum is sustainably produced in compliance with over 300 rigorous labour, social and environmental standards.

Sharing the value of sustainability
Not satisfied with having industry-leading sustainability practices internally, Flor de Caña has developed a series of programmes aimed at sharing and promoting the value of sustainability with the trade and rum enthusiasts around the globe, allowing them to be a part of a movement to ensure a greener future for everyone.

In 2021, Flor de Caña announced a pledge to plant one million trees by 2025. Through its own annual reforestation programme, Flor de Caña has planted nearly 800,000 trees since 2005, and the brand has partnered with environmental charity One Tree Planted to launch a global reforestation campaign.
Through this partnership, both organisations work together to raise awareness of the importance of reforestation and to inspire consumers, bartenders and the general public to donate through the One Tree Planted platform. The charity guarantees that one tree will be planted for every dollar received. In turn, Flor de Caña will match all donations received in order to have a greater impact.

There is a saying that really captures Flor de Caña’s vision on sustainability: the Earth is not an inheritance from our parents, but a loan from our children

Another signature campaign is Zero Waste Cocktails, a global initiative that invites eco-conscious bars, restaurants and consumers around the world to join forces to reduce food waste, one sustainable cocktail at a time. The brand worked with over 400 bars around the world to create sustainable cocktails made with Flor de Caña rum and with ingredients derived from repurposed food scraps or leftovers from the local community. In 2021, this campaign helped reduce over 10 tons of food waste.

The initiative is supported by Food Made Good, a global non-profit that promotes sustainability within the food service industry, which has helped participating venues design their zero waste cocktails and adopt meaningful sustainable practices in their everyday operations. In 2021, Flor de Caña also organised the global final of its Sustainable Cocktail Challenge, a competition the objective of which is to inspire the bartending community to become sustainability champions and build a greener future together by creating spectacular cocktails using sustainable ingredients, techniques and Flor de Caña rum.

Manachain Monaghan from the UK was crowned the first Global Champion after competing with 30 top bartenders from around the world to create the most spectacular sustainable cocktail. Monaghan, owner of Below Stairs Bar, took the competition’s top position with his sustainable cocktail ‘Steamship,’ a zero-water-waste cocktail prepared with fully sustainable ingredients.

The competition was judged by renowned industry personalities such as Salvatore Calabrese, ‘The Maestro’ from The Donovan Bar in London; Julio Cabrera from Café La Trova in Miami; and Hannah Sharman-Cox and Siobhan Payne, co-owners and organisers of London Cocktail Week. Each cocktail was evaluated based on four criteria: sustainability component, flavour and appearance, creativity and its backstory and inspiration.

A spirit with purpose
There is a saying that really captures Flor de Caña’s vision on sustainability: the Earth is not an inheritance from our parents, but a loan from our children. That’s why we strive to be a brand with purpose, a brand that not only produces an award-winning product, but that is also focused on leaving a better future for generations to come.

We’ll continue raising the bar on ourselves and looking for ways to do things better and to positively impact our employees, the community and the environment, one Flor de Caña rum bottle at a time.

The secret of great customer service in the forex market

Posted on June 28, 2022June 29, 2022 by itsupport

In today’s financial world, customers want a personalised, fast, seamless, immersive, cross-channel digital experience that satisfies, and even anticipates, their needs. This is especially true of millennials, a generation quickly becoming the dominant demographic. If we combine millennials’ expectations with their fundamentally different banking and investing habits, then it’s clear why modern brokers are changing their approach to address these challenges.

The financial services industry is in full transformation mode in response to changing customer expectations and government regulations, but the road is steep and the competition fierce. Stricter consumer privacy regulations add layers of complexity to digital initiatives. Today’s customers expect near-instant gratification and resolution. Just2Trade provides intuitive platforms and apps, self-service capabilities and click-to-call/chat communication, among other innovations.

Our goal is to deliver personalised customer support services of the highest standard to all of our clients. At Just2Trade, customer service has gone well beyond the call centre operations of the past to become a veritable ecosystem of digital and human assistants. Customer representatives still remain incredibly important in the customer’s journey. However, their role is shifting to providing more specialised financial customer service rather than simply administrative assistance functions.

The strength of our customer service impacts our bottom line and affects how our company is viewed by the world

Financial matters are highly personal – approaching every customer with the same generic set of questions and offering them the same set of financial solutions would make us seem more like a machine than a client-centric institution.

So to meet the increased expectations of our clients we have built a team of proactive client support representatives who understand their customers and possess the skills to effectively address their problems.

We understand the importance of trust in financial services. Solving problems requires a tactical approach involving both technology and interpersonal skills. An empathetic customer relationship is especially important. People must be able to trust those in charge of their finances. Building trust means showing the customer that they are being heard.

We believe in being transparent with our clients. A lot of mistrust comes from the idea that information is being withheld. Due to the nature of financial services, there are certain things you simply won’t be able to say. Though you may not purposefully be opaque, if you’re not mindful it could easily appear that way to a client. We strive to be empathetic in all our customer interactions.

Most consumers (individuals and small businesses) see financial institutions as large, non-human entities that do not care about their individual problems. This is particularly relevant for millennials, who want convenience along with a personal touch. Studies have found that millennials consider financial institutions to be among the most unlikeable of brands. Attracting this demographic therefore poses a huge challenge, but one that we are rising to at Just2Trade by combining technology with human expertise to engage millennial customers and optimise their experience.

Training for success
The first steps are education and industry training. Money is a sensitive topic for everyone, so having frontline employees with exceptional interpersonal skills and a high standard of education is an asset for any financial institution. This is why we have invested in training our employees to have them ready to navigate all possible scenarios. All our customer-facing employees receive extensive training so that they are aware of the full range of services we offer. They are also well versed with industry trends and best practices, enabling them to suggest what will work best for each of our clients.

We have eliminated slow service delivery and long wait times, an area where many financial institutions fall down. Many financial institutions rely on outsourcing customer support to third-party service providers to cater to customers’ requests and problems. In our view, however, adding a layer of outsourcing only adds more hurdles and delays to a client’s service process. More often than not, when a customer calls for assistance, they have to navigate through lengthy interactive voice response systems (IVRs) and then wait in a queue to get connected to a customer service representative. These customer service reps might then need to route your query back to the IVR or to a specialised department, which only adds to customers’ wait time and frustration.

To avoid losing customers via this route, instead of outsourcing, we have leveraged technology and automation to scale customer service and control costs. We service our clients directly. Even with in-house customer service teams, however, there’s the risk of delays occurring when employees are prevented from actioning solutions due to company procedures and regulations. To get around this problem, we empower our advisors to solve problems on the spot, making decisions that resolve issues without having to get a manager’s permission first. Our internal policies and procedures give them this freedom but still keep them accountable for the quality of the service they offer to our clients.

It may seem like the cost of training risks eating away at the company’s bottom line, but this will be made good by customers who stick with us because of our exemplary customer service. Investing in our workforce in this way is fundamental to the successful running of the business.

The other side of the customer service coin is, of course, effective use of technology. Artificial intelligence solutions allow us to ensure the constant availability of our services and quickly detect and resolve usability issues or malicious activity against the company’s applications and systems. Monitoring solutions, for example, provide early fraud detection, helping to reduce false positives and improve the accuracy of identifying actual fraud cases. Employing such strategies enables us to work more efficiently to protect our customers’ sensitive data, providing a service that is reassuring yet doesn’t place undue stress on the customer, as we deal with fraud behind the scenes.

Technology is also a boon when it comes to client on-boarding. Opening a brokerage account has historically been a time-consuming and complex undertaking, and one that required meeting in person. By integrating artificial intelligence solutions in our client on-boarding procedures – authenticating the validity of IDs, auto-populating form fields and performing live face recognition, for example – the process of account opening can take as little as 10 minutes as opposed to days or even weeks.

The value of feedback
“It takes 20 years to build a reputation and five minutes to ruin it.” This classic Warren Buffett quotation has only become more relevant since the dawn of the digital age. It’s certainly a motto we live by at Just2Trade, where the strength of our customer service impacts our bottom line and affects how our company is viewed by the world.

We strive to continuously improve both the human and technological elements of the Just2Trade customer service experience, and feedback is key in this endeavour, critical in our understanding of customer satisfaction. We analyse customer service data like ticket reopen rates and time-to-resolution as a matter of course, as well as monitoring certain Key Performance Indicators (KPIs). These KPIs – which include growth in client assets; customer retention rates; average resolution times; and volume of client complaints – provide a look behind the scenes at how we interact with our customers. Using this information enables us to make better decisions for our customers who, seeing their specific needs met, are inclined not only to continue to work with us, but also to become corporate brand advocates.

But KPIs alone are not enough. This data, as well as that gleaned from our customer relationship management and helpdesk tool, can only tell part of the story. No one can anticipate customer needs better than customers themselves, so we also solicit customer feedback directly via online surveys. By doing so we gain valuable insights into whether customers’ needs are being met, what financial products or services they’re interested in, their financial goals for the future, how their customer experience can be improved, and more.

It’s these insights that enable us to stay nimble, responding to customer need with new services and products, trouble-shooting existing ones, and making our customers feel valued. It is unsurprising therefore, that we’ve seen impressive growth in the level of client assets invested in recent years (see Fig 1), a trend that we believe will continue as new and existing clients recognise the importance of excellence in customer support services.

Just2Trade looks to the future with confidence and optimism. Our substantial investment in customer support services has paid off and will continue to do so. Financial services are changing, and we are ready for this new world.

The airline with a clear strategy for sustainability

Posted on June 28, 2022July 1, 2022 by itsupport

Our journey began on May 20, 1933 with five aircraft and fewer than 30 employees. From these humble beginnings, Turkish Airlines has grown to become the carrier that flies to more countries around the world than any other. Our flexible and dynamic structure, experienced and devoted employees, unique airport hub located in Istanbul, modern fleet and network capability make us one of the strongest players in aviation industry.

Accurate capacity management
Sustainability is central to our strategy for growth and profitability as we aim to keep adding value for our stakeholders while enhancing our products and services. In the 10 years leading up to the COVID-19 pandemic we saw growth two to three times higher than the global average in terms of passenger numbers, averaging at 11.5 percent per year. In the face of the challenges posed by the pandemic we set ourselves apart from the rest of the aviation industry in terms of traffic and financial results during this period, achieving revenue of $10.7bn in 2021 through a 48 percent increase in cargo income and a 69 percent increase in passenger income.

As we continue to grow with our progress keenly watched by the rest of the global aviation industry, we are determined to make sustainability a key element of our operations, led by both our core sustainability principles and the work of our Sustainability Committee. Established in 2021 this committee, made up of Turkish Airlines senior executives, determines, reviews and continuously improves our sustainability management strategy, sustainability policy, short, medium and long-term sustainability targets, and decides on improvement projects that will increase the sustainability performance of Turkish Airlines. Important issues are reported to senior management and top management by the Sustainability Committee, with a view to making important sustainability issues and fundamentals a natural part of our business and operations.

By making passenger aircraft suitable for cargo operations – a process we pioneered in the aviation industry and first implemented in 2020 – we’ve catered to the increasing demand for air cargo. By implementing efficient capacity management, we performed successfully throughout 2021. During the pandemic we played an active role transporting vaccines, medicine, medical supplies, humanitarian aid and food all over the globe. By the end of 2021 Turkish Cargo was responsible for one in 20 air cargo flights, putting us first among European network carriers and in the top five internationally.

On top of this, we became the first air cargo airline to concurrently achieve all three certifications (CEIV Pharma, CEIV Fresh, and CEIV Live Animals), under the International Air Transport Association’s (IATA) CEIV (Centre of Excellence for Independent Validators) programme. Looking forwards, we aim to be one of the top three brands in the world in air cargo transportation by boosting the strong growth trend of Turkish Cargo through the investments we are making at Istanbul Airport.

When it comes to the other side of the business, recent restructuring means that we now also have access to the low-cost passenger market via our Anadolu Jet brand. Anadolu Jet boosts our competitiveness and strengthens the effectiveness of the overall Turkish Airlines brand by popularising air travel in this segment of the market. We already operate in 46 destinations worldwide with Anadolu Jet broadening our offer to customers in the regions in which it operates: Northern Cyprus, Europe and the Middle East.

Managing the crisis
The pandemic was a time of upheaval for the entire airline industry, but Turkish Airlines managed to limit its operational losses during this period thanks to a series of measures that cut costs while increasing efficiencies. By adding new destinations to our flight network and cancelling and postponing orders for new aircraft due to be delivered between 2021 and 2023, we saved $7bn. This strong financial management enabled us to achieve $959m net after-tax profit in 2021. Having Istanbul as a hub for our network was a major advantage during this period. Serving as a bridge between east and west, Istanbul is a gateway for up to 40 percent of narrow-body international air traffic. The flexibility it offered our flight network meant that we were able to use our capacity highly effectively.

With our wide network of 336 destinations in 128 countries on five continents we contribute to local socio-economic development in the regions where we operate. Twenty-five countries we fly to appear on the 2021 United Nations list of least developed nations – our engagement provides valuable employment and enables these countries to develop crucial economic and social relationships with the rest of the world.

Sustainable operations
We have one of the youngest fleets in the world, averaging out at just 8.7 years across our 376 aircraft. In 2021, we added 21 new generation aircraft to the fleet, aircraft which offer an average of 15 percent fuel savings compared to their more traditional equivalents.

We aim to further lessen our environmental impact by continuing to grow our new generation fleet in 2022. In addition to these environmentally friendly aircraft, our fuel saving policy is at the heart of our strategy to reduce our greenhouse gas emissions.

Since 2008 we have commenced more than 100 operational optimisation projects to reduce our carbon footprint, and we are continuing to implement these projects today. These fuel efficiency projects saved 37,082 tonnes of fuel in 2021, equivalent to a reduction of 116,809 tonnes of greenhouse gases.
In 2021 the airline industry came together under the banner of industry group IATA, to adopt a global target of net-zero carbon emissions by 2050. Sustainable aviation fuel (SAF), which is responsible for up to 80 percent fewer GHG emissions compared to traditional kerosene fuel, will be one of the key tools for meeting that ambitious goal.

Aware of the important role that SAF will play, we launched our first SAF flight on our Istanbul to Paris route on February 2, 2022. Since then we have rolled it out to destinations including Oslo, Gothenburg, Copenhagen, Paris, London and Stockholm. More destinations and more frequent use of SAF is planned in the future. Though using SAF is a milestone for us, our aim is to produce this fuel rather than just use it.

To this end, we’ve been working with scientists at Bog˘aziçi University in Istanbul on the Microalgae based Sustainable Bio-Jet Fuel Project (MICRO-JET), which is supported by TUBITAK (The Scientific and Technological Research Council of Turkey). In addition to our current usage of SAF, we aim to use synthetic bio-kerosene, which is produced from microalgae, instead of traditional jet fuel, on our flights as soon as possible after the completion of engine tests by Turkish Technic in 2022. When we achieve this goal, Turkish Airlines will be one of just a handful of companies that can produce and use the cleanest type of biofuel accepted by IATA.

Offsetting emissions
Another area of research regarding emission reductions is the Voluntary Carbon Offsetting Project. Slated for 2022, this project will offer our passengers the option of offsetting emissions from their flights. As part of the project, we will also be offsetting the emissions of Turkish Airlines employees, including those who fly as part of their roles.

In addition to our current usage of SAF, We aim to use synthetic bio-kerosene, which is produced from microalgae, instead of traditional jet fuel, on
our flights as soon as possible

In line with our principle of ‘continuous improvement,’ we have recently reinforced our commitment to ISO 14001, the global standard for Environmental Management Systems. We have been implementing the standard since 2013, and we strengthen this with our participation in the IATA Environmental Assessment (IEnvA) programme, which helps airlines independently assess and improve their environmental impact. We were the first airline to directly receive a Stage 2 certificate, which represents the highest level of IEnvA compliance and requires an airline to demonstrate ongoing environmental performance improvement.

As a result of the passenger feedback gathered and evaluated by the Airline Passenger Experience Association (APEX) – a body regarded as one of the most reliable aviation organisations in the world – we were recognised as a ‘Five Star Global Airline.’ In addition, following a series of independent audits carried out by APEX into health and safety, service quality and sustainability, we also received the ‘World Class Award,’ which was presented for the first time in 2022. Turkish Airlines was one of only seven carriers deemed worthy of this prestigious accolade.

Going forwards, we aim to maintain and further develop our sustainability efforts in accordance with the United Nations Sustainable Development Goals. Taking into account the expectations of our stakeholders and related parties, we will be integrating sustainability into every field in which we operate, working day in, day out in line with the vision, mission and general strategy of our airline.

Creating the world’s first AI assisted voice bank in Spain

Posted on June 27, 2022June 27, 2022 by itsupport

Established in 2012, Spanish player EVO Banco is a pioneering financial force disrupting the industry with a wholly digital banking model. But don’t mistake ‘digital’ as ‘faceless’ – EVO Banco takes a highly personal approach when dealing with customers, using technological innovation to optimise every aspect of its products and services. Here, Eduardo Ozaita, CEO of EVO Banco, explains to World Finance how the bank merges traditional values with digital innovation to meet customers’ needs and modernise the banking sector further.

EVO Banco prides itself on being born on a purely digital platform. How does this affect your operations and the way you connect with customers, particularly compared to more traditional banks?
EVO Banco is one of the largest, most innovative and complete digital banks in the Spanish market. EVO Banco was born in 2012 as a quality digital alternative to traditional banking, and it was the first newly created financial institution to emerge after the financial crisis. We anticipated before anyone else the great technological transformation that would spread across the whole sector.

We are adept at explaining to customers what these innovations are about and how they function

A decade later, and there are no banks that aren’t operating digitally. What we do have in the industry are different degrees of technological maturity and different ways of offering financial services.

There are traditional banks that are making great efforts to modernise their structures, and alongside these, new players have emerged that are developing tailored solutions in a very specific field. And then there are entities like EVO Banco that combine the best of these two worlds: the breadth and service capacity of the banking sector, and the user experience of the fintech environment.

This native digital vision has allowed us to go beyond what is expected of a bank. We are not satisfied with just digitising what was previously analogue – we are striving to establish an evolved experience that allows users to take advantage of the new opportunities that technology offers.

The use of cutting-edge technology is an integral part of your processes, but you must bring customers with you. How do you make sure users are up to date with what you offer?
The best way to connect with customers is by offering them what they need when they need it. Thanks to the advanced use of data, we understand what is happening with our customers in a hyper-personalised way, in real time and in an omnichannel manner. This is important when reacting to a problem at the exact moment it occurs, and when guiding clients towards a service that we at EVO Banco know will add value.

For example, if a customer needs to withdraw money from an ATM and the attempt fails, we can send them a notification with the geolocation of the nearest ATM and a commission would not be charged. If an unusual spend shows up on their account, meanwhile, we are able to notify them so they can review this potential problem immediately. And moreover, if there is a shortage of funds in their account at the end of the month, we can offer financing for three, six, nine, 12 or 18 months. These are practical day-to-day examples, but, above all, we can provide our clients with answers to all the various financial needs that might arise during their lives – and we do it in a way that is clear, efficient and useful.

EVO Banco’s innovative spirit has given rise to a series of new concepts. Are there any services that have been more difficult to launch successfully than others, and how have you overcome these teething problems?
EVO Banco has been a pioneer in the development of multiple services that have later been standardised throughout the sector. For example, we were pioneers in Spain in the creation of the world’s first voice bank – it operates through artificial intelligence, and it’s in Spanish. We were also the first to offer clients the opportunity to choose and make investments via robo-advisor technology. Additionally, we were first out facilitating the contracting of products with a one-click philosophy, as well as in creating the first 100 percent digital mortgage on the market.

Being pioneers gives us a competitive advantage, but also a double challenge. We are developing innovations for which there are no precedents in the market, and which might not yet be sufficiently mature or massively in-demand. On the other hand, we are adept at explaining to customers what these innovations are about and how they function. We are there to support our customers in the adoption of new technologies and banking services that will be useful for the management of their finances, but, like anything new, this requires a period of adaptation.

Do you think that EVO Banco promotes behavioural changes among consumers in terms of managing their finances, or is it the other way around?
Digital evolution works in both directions. At EVO Banco we have developed a ‘smart banking’ proposal that uses technology to simplify and facilitate people’s relationship with their money. Take, for example, financial health. Thanks to artificial intelligence and the advanced use of big data, our clients have access to their finances in a simple, organised and clear way.

And, thanks to this information and the comparison with similar profiles, we can guide our customers and help them identify their strengths and weaknesses – as well as the most convenient strategies to their financial goals.

If we reverse the scenario – as per your question – from the customer’s perspective, we have also seen a greater interest from users to understand and improve their financial management, which for us is a source of knowledge that we can in turn use to improve our services. For example, our intelligent assistant, EVO Assistant, is specially adapted to identify and respond to the most frequent or sensitive queries that our customers send us, which facilitates a maximum level of success and satisfaction.

You have a 100 percent digital mortgage application system that can be completed in just 20 minutes. How does EVO Banco minimise risk in this context – for both bank and client?
Our 100 percent digital mortgage is a success story of process reengineering – and one that has improved the customer’s experience in what is one of the most complex and tedious banking products. The goal is to create an ‘Amazon’ experience so that a person knows, in real time, what stage their request is at, and can access all the related procedures in a single place.

It also incorporates intelligent solutions in the risk engine to reduce waiting times. But one aspect we haven’t changed is our risk analysis strategy, which follows highly rigorous and prudent controls. In fact, EVO Banco is one of the entities with the lowest delinquency ratio in Spain. It scored 0.89 percent at the end of last year, and as for the mortgage portfolio ending March 31, 2022, it stands at 0.41 percent.

The digital environment facilitates the possibility of a much closer relationship between companies and their customers. How do you think voice biometrics fits into this concept?
Voice biometrics is a natural step for EVO Banco within the ‘voice bank’ strategy. This was promoted by us with the launch of the world’s first intelligent assistant in Spanish. We have been able to simplify a person’s relationship with their bank with the help of the assistant, and with biometrics we shield our cybersecurity when it comes to verifying the identity of users – and preventing unauthorised access to services and operations. Our adoption of voice technology has enabled a really positive improvement – you could even say transformation – in our client relationships.

The main advantage of voice biometrics is that it will end passwords as we know them. Customers no longer have to choose between security and experience – thanks to this technology they can validate their operations by pronouncing a simple phrase ‘In EVO, my voice is my password.’ This phrase allows us to identify a unique biometric fingerprint via thousands of personal and unique physiological characteristics, as inimitable as each of our customers.

World Finance Corporate Governance Awards 2022

Posted on June 27, 2022June 28, 2022 by itsupport

The uncertainty and disruption caused by the pandemic has played havoc with the governance processes that companies typically put in place to support them. Strong corporate governance relies on a number of factors, including but not limited to: capable leadership, flexible risk management, strong financing facilities, and a strong relationship with shareholders and employees. In its Corporate Governance awards, World Finance celebrates those who have become masters of best practice, leading them to stellar business performance in a difficult economic climate.

World Finance Corporate Governance Awards 2022

Algeria
Wintershall dea

Angola
Banco Keve

Colombia
BBVA Colombia

Denmark
Maersk

Dominican Republic
Banreservas

Finland
Nokia

France
Carrefour

Germany
Allianz

Ghana
GCB Bank

Greece
Ellaktor

Hungary
Gattyán Group

India
IDFC FIRST Bank

Italy
Generali Group

Jordan
Jordan Islamic Bank

Kuwait
Zain Group

Mexico
Banorte

Myanmar
Yoma Group

Netherlands
Heineken

Nigeria
Zenith Bank

Norway
Viessmann Refrigeration Systems

Poland
Jerónimo Martins Polska

Saudi Arabia
STC Saudi Telecom Company

South Africa
Standard Bank

Spain
Iberdrola

Sweden
Spotify

Tunisia
Banque Internationale Arabe de Tunisie

Turkey
Enka Insaat ve Sanayi

UAE
Agthia

US
Chesapeake Utilities Corporation

Vietnam
TTC Sugar (SBT)

World Finance Pension Fund Awards 2022

Posted on June 27, 2022June 27, 2022 by itsupport

Although the rebound of the markets from the pandemic has helped portfolios, pension fund managers are under increasing pressure to invest responsibly, while also driving innovation. According to Michael Borawski of Deloitte this means there is a ‘need for an agile and consolidated operating model’ and that ‘leading pension funds rely on a core technology platform that facilitates nimble and diverse investment strategies, fully supported by sophisticated risk management, scenario analyses and stress testing capabilities.’ In the World Finance Pension Fund Awards, we recognise those who have not only weathered the economic downturn well, but who continue to demonstrate an innovative and dynamic approach as the economy recovers.

A list of the companies awarded in the World Finance Pension Fund awards 2022 can be seen below.

World Finance Pension Fund Awards 2022

Armenia
Ampega Asset Management

Australia
AustralianSuper

Austria
VBV Group

Belgium
Pensioenfonds KBC

Bolivia
BISA Seguros y Reaseguros

Brazil
Bradesco Seguros

Canada
OMERS

Caribbean
NCB Insurance

Chile
AFP Plan Vital

Colombia
Grupo Sura

Croatia
PBZ Croatia Osiguranje

Czech Republic
CSOB

Denmark
PensionDanmark

Estonia
Swedbank

Finland
Elo

France
ERAFP

Germany
HVB Trust Pensionsfonds

Ghana
Pensions Alliance Trust

Greece
Piraeus Asset Management

Iceland
Almenni Pension Fund

Indonesia
BNI

Ireland
CWPS

Italy
Fondo Pensione Nazionale BCC/CRA

Jamaica
JMMB Fund Managers

Macedonia
Sava Penzisko

Malaysia
Gibraltar BSN

Mexico
Afore XXI-Banorte

Mozambique
Moçambique Previdente

Netherlands
Pensioenfonds Zorg en Welzijn

Nigeria
Fidelity Pension Managers

Norway
KLP

Peru
Prima AFP

Poland
Pocztylion-Arka

Portugal
Santander

Serbia
Dunav Voluntary Pension Fund

South Korea
National Pension Service

Spain
GM Pensiones

Sweden
Fjärde AP-fonden (AP4)

Switzerland
Pensionskasse Bosch Schweiz

Thailand
Kasikorn Asset Management

Turkey
TEB Asset Management

US
NYC Board of Education Pension Fund

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World Finance Forex Awards 2022

Posted on June 27, 2022November 30, 2022 by itsupport

In the 2022 Credit Suisse FX Survey report entitled Assessment of exchange rate developments they cite supply bottlenecks impacting industrial businesses, lasting change caused by the pandemic and rising inflationary pressures as just a few of the factors currently throttling global recovery and creating a volatile landscape in the FX market. In its Forex Awards, World Finance recognises the leading brokers and platforms this year, those helping their clients to take advantage of the very best tools, education and expert advice available.

A list of the companies awarded in the World Finance Forex awards 2022 can be seen below.

World Finance Forex Awards 2022

Best Customer Service
Just2Trade Online

Best Trading Platform
Think Markets

Best Partnership Program
HY Affiliates

Best Social Trading Platform
FirewoodFX

Best FX Research & Education Provider
Orbex

Best Gold CFD Provider
Think Markets

Best Crypto Broker
Stormgain

Best STP Broker Legacy
FX

Best CFD Broker
FXTRADING.com

Most Transparent Broker
M4Markets

Best FX Mobile Trading App
Think Markets

Best FX Broker (India)
OctaFX

Best FX Broker (Europe)
XM

Best FX Broker (Australasia)
XM

Best FX Broker (Middle East)
XM

Best FX Broker (Latin America)
XM

Posted in 2022, World Finance AwardsLeave a comment

World Finance Sustainability Awards 2022

Posted on June 27, 2022July 12, 2022 by itsupport

In the foreword to Microsoft’s 2021 Environmental Sustainability Report, Brad Smith, President and Vice Chair and Dr, Lucas Joppa, Chief Environmental Officer write: “Climate change presents environmental, social, and economic crises on a whole new level. For nearly two millennia humans have been carbonising our planet and we need to act together to decarbonise”. The selected winners of the World Finance Sustainability Awards are those who have shown true commitment to cutting emissions across their company’s entire value chain.

Automotive Product Supplier
Volkswagen Group

Brokerage and Trading
Interactive Brokers

Building Products Supplier
CEMEX

Coffee Processing
NuZee

Data Centre
Stack Infrastructure (DigiPlex)

Digital Currency
Amber Group

Education
Grand Canyon Education

Electric Services
Avangrid

Energy and Chemical
Saudi Aramco

Engineering
WSP Global

Financial Services
Boursa Kuwait

FinTech
Finastra

Flag Carrier Airline
Turkish Airlines

Food Products Supplier
McCain Foods

Footwear
CCC

Freight Forwarding
C.H. Robinson

Glass
BA Glass

Healthcare
Manises Hospital

Investment
KBC Asset Management

Low-Cost Airline
Wizz Air

Major Airline
JetBlue

Packaging
RDM Group

Pulp and Paper
Asia Pulp and Paper

Semiconductor
ONSEMI

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