What the Digital Operational Resilience Act means for board members and CEOs

In our recent report, Decoding DORA, Accenture’s Fabio Colombo explains that “the executive board, inclusive of the Chief Executive Officer, are required to possess the requisite expertise and competencies to effectively evaluate the looming threat of cybersecurity risks.” In this video he explains why this is so important, and the kinds of training that will be necessary for CEOs and board members to properly engage and comply with the regulation.

Watch more videos from this interview: Finding DORA: How financial institutions must develop digital operational resilience, and What the Digital Operational Resilience Act means for third party ICT providers

World Finance: I wanted to pick up on what DORA means for executive board members and CEOs, who need to be able to make good judgements about managing these changing risks. Can you speak to the training that’s needed?

Fabio Colombo: Yes – one goal of the regulation is to bring enough level of accountability in the financial institution. So starting with the board of directors, down to the CEO and then to the c-suite.

Because IT is evolving and technology is evolving so quickly. The problem is more difficult to manage for the board, for the risk officer. This is why the board of directors and c-suite and the CEO need to be trained. Need to be exercised. In order to manage cyber crisis.

So it’s not only training by studying content, it’s not only an awareness. But it’s a sort of muscular memory, that you need to exercise. And you can do that by having these two different forms of exercise. One is tabletop exercise, simulating a crisis that is started as a cyber incident, and the second one is by participating as the white team in the threat-led penetration testing that is a pillar of DORA regulation.

What the Digital Operational Resilience Act means for third party ICT providers

DORA, the Digital Operational Resilience Act, regulates how financial services providers manage their ICT risks. But those risks are not necessary wholly contained within the financial institutions – but can be found throughout the supply chain, in third and even fourth parties that provide and support ICT services. Fabio Colombo, Global Financial Services Security Lead for Accenture explains what ICT services providers need to know, and how to start getting to grips with their new responsibilities and obligations.

Watch more videos from this interview: What the Digital Operational Resilience Act means for board members and CEOs, and Finding DORA: How financial institutions must develop digital operational resilience

World Finance: I’m with Fabio Colombo from Accenture, and we are discussing the Digital Operational Resilience Act – which, although targeted at financial services companies, Fabio, has a broader impact, particularly on ICT providers?

Fabio Colombo: Yeah, ICT providers are one of the, say, big topics for this regulation, because ICT risk is not only in the financial institution, but is in the supply chain and the broader third and fourth parties that support these type of services.

So the idea is to have all these parties in scope of the regulation.

World Finance: So what does DORA mean for ICT providers, what do they need to know?

Fabio Colombo: It’s not something really different, there are already regulations from ECB in terms of how you need to manage these types of outsourcings. But it’s wider in scope.

So for an ICT provider, they will have an obligation in terms of the type of information that they need to give to the financial institution. They will also need to gather information from their suppliers – so what we call fourth parties – to be sure that you don’t have weak chain in your supply chain.

This will be a sort of, new golden rule for the financial institutions. So please expect banks and financial institutions will ask you: what are you doing to comply with DORA?

It’s not a certification, but if you think of DORA in terms of a new level of good practice, good management. By being compliant with DORA, I will be chosen as one of the best ICT providers, because by doing that I will set up good rules in terms of consistently going to reduce risk and to increase cyber and operational resilience in the market.

World Finance: Accenture is one such provider; what are you doing? How are you preparing?

Fabio Colombo: Yes, we are preparing with an internal project – we started some months ago.

We studied the DORA regulation, the RTS, the ITS, did a gap analysis because we already have a good set of standards and procedures. But we need to understand if there is any gap or any good practice that we need to put in place.

We need to understand if there are new obligations that we need to put in place in our contractual agreements, both with subcontractors and with the financial institutions.

So it’s a complex project but we started in the right timeframe, and now we have one year in terms of putting in place the right additional countermeasures to comply with this complex regulation.

Finding DORA: How financial institutions must develop digital operational resilience

DORA, the Digital Operational Resilience Act, is the new European regulation created to ensure financial services providers across Europe develop and maintain a robust defence against ever-changing threats to their IT capabilities. Our recent report, Decoding DORA, explored this new regulatory framework and its implications for the financial services industry and beyond – in this video we invited the report’s author, Fabio Colombo, to dive deeper into what it means to comply with the principle-based regulation in time for its January 2025 deadline.

Watch more videos from this interview: What the Digital Operational Resilience Act means for third party ICT providers, and What the Digital Operational Resilience Act means for board members and CEOs

World Finance: Fabio, earlier this week we published an article you wrote exploring DORA, and I want to dive deeper into a few of the topics you discussed there, starting with the fact that this regulation is fundamentally different from those that came before.

Fabio Colombo: Yeah, the idea is that the regulation is a principle based regulation. So it’s not setting any specific technical requirements, but it sets the principles that you need to follow. So if you think how fast is evolving technology with GenAI, or post-quantum cryptography, these are topics that you need to manage in your risk universe and your risk framework.

So you need to stay at pace with what’s happening – you cannot rely on a standardised list of threats. Threats need to be evaluated each year, each quarter, to be sure that you’re managing correctly your perimeter.

So you need to have a good framework to manage the risks, that starts by identifying the threats, analysing these threats, analysing what countermeasures you have, defining the risk appetite framework that you need to use, and the level that you want to achieve.

And you need to follow this in a circle. In this way you can stay at pace with the new threats and new technologies, by having a good lifecycle of your risk management.

World Finance: Now obviously financial institutions aren’t new to managing technology risks, but this does change the framework, it changes the model for them to do that.

Fabio Colombo: Yeah, financial services providers, they have already a set of regulations that set a good starting point. But DORA aims to bring this as a full exercise that you need to put in place every year, every quarter, to stay in line with what’s happening.

Financial institutions are one of the most critical infrastructures, so DORA sits in the wide NIS2 directive, and sets the requirement for financial institutions. By doing that, this will enable a faster and safe digitalisation of the entire financial area. Without letting the threats coming from geopolitical tension, increased level of cyber activists, increased level of cyber threats, without having this impacting our financial institutions.

World Finance: Now, more of the detail on DORA is still being published – first of all, can you tell me about these publications: who are they for, what can you learn from them? And second, isn’t this putting a lot of time pressure on? The deadline for compliance is January 2025.

Fabio Colombo: Yeah, deadline now is one year from now, so, really close. If you think about the budget to put in place anything, you have only one budget cycle.

RTS and ITS are definitions that came more in detail on what you need to do. The first batch has been published some months ago, the second one has been published in December, in consultation. So my suggestion is please take a look a very detailed look at the RTS.

When we analyse the RTS compared to the DORA regulation, I think that the RTS set the a good ambition in terms of how you need to raise your posture and your maturity.

Malta: The Mediterranean gateway to Europe for innovators and entrepreneurs

The Malta Startup Residence Programme, an official government programme that offers three-year residence permits to non-EU business founders, co-founders, core employees, and their families, has released a new brand video.

The scheme is intended to attract highly innovative start-ups in key industries – including manufacturing, software development, biotechnology, and the blue and green economy – to the islands of Malta.

The video showcases the many benefits of the programme, alongside Malta’s beautiful countryside and historic cities:

For businesses, Malta offers a strong economy characterised by continuous growth, a strategic Mediterranean location with easy access to EU, African, and Middle Eastern markets, and a multi-lingual population with English as an official language – and the language of doing business.

For prospective residents, Malta offers an enviable island lifestyle with 3,000 hours of sunshine a year, access to world-class healthcare and educational institutions, security in one of the world’s safest countries, and of course access to the EU, with visa-free travel to the Schengen area 90 out of every 180 days.

Successful applicants receive a residency card valid for three years. If the business maintains a good trajectory after this initial period, and the applicants continue to meet the programme’s eligibility criteria, founders and co-founders can renew their permits for an additional five years, while core employees may renew for an extra three years (families are eligible for the same renewal period as the primary applicant).

After living in Malta for five years under the programme, residents become eligible to apply for long-term residency.

To qualify for the programme, a minimum investment of €25,000 in tangible assets or paid-up share capital is required; accepted applicants must establish a physical presence in Malta and fulfill local tax obligations.

Click or tap the links to learn more about the Malta Startup Residence Programme and start-up initiatives and funding from Malta Enterprise.

Banorte: Nearshoring trend could gain $168bn for Mexico over the next five years

Businesses around the world have been responding to recent supply chain disruption by bringing offshored production closer to home. Mexico has been a huge beneficiary of this ‘nearshoring’ trend – Grupo Financiero Banorte Chairman Carlos Hank Gonzalez discusses its economic potential for Mexico, how Banorte is positioning itself to enable a non-oil export boom, and how the country as a whole can work together to maximise the potential benefits of nearshoring.

World Finance: Carlos, tell us about Banorte’s role in this recent development.

Carlos Hank Gonzalez: Absolutely, Banorte is the bank of nearshoring. It has already begun preparing for the future.

We have recently published a research note that shows that the potential gains of nearshoring for Mexico could reach up to $168bn of additional non-oil exports in the next five years. Our focus is on serving commercial segments, SMEs, and retail customers, by providing a comprehensive range of financial services. With our strong footprint in Mexico, we are committed to supporting this economic shift.

World Finance: How is Banorte preparing for the growing opportunities presented by nearshoring?

Carlos Hank Gonzalez: Preparation is key for us. Our research department has identified the industries that are most likely to grow due to nearshoring, including agriculture, machinery, and electronics, to name a few. We’re adding 1,200 jobs to specifically support these growing industries. Additionally, we’re building technological capabilities to create fully digital environments that will serve the needs of newly established companies in Mexico.

World Finance: What advantages does Mexico offer for companies considering nearshoring, and how is Banorte positioned to capitalise on this?

Carlos Hank Gonzalez: Nearshoring is an exceptional opportunity for Mexico, specifically for the north and centre, as many of these new opportunities are located in these regions. Banorte has strategically positioned itself in these regions, boasting a strong presence.

Mexico has a geographical proximity to the United States, a significant population of working age, and existing economies of scale. These factors make it a prime destination for nearshoring. Banorte has strategically placed itself in regions with high export rates to the United States, like Chihuahua and Nuevo León. We have a strong presence in these areas and are well-aligned with their potential for economic growth.

World Finance: Now in the report you referenced earlier, you describe a ‘four helix’ model, could you expand on this?

Carlos Hank Gonzalez: The ‘four-helix’ model is an integrated approach involving the government, private sector, educational institutions, and society. These entities need to work together to maximise the potential benefits of nearshoring. From improving public infrastructure to fostering policies that incentivise investments, the ‘four-helix’ model aims to bring comprehensive development to Mexico. Banorte is deeply committed to contributing to this collaborative effort.

Banco Popular: Caring for the aspirations of the Dominican Republic

“As the most important private bank in the Dominican Republic, we touch tens of thousands of people’s lives every single day,” says Francisco García, Vice President of Investment Banking and Leasing for Banco Popular Dominicano. In this remotely-filmed interview he explains how Banco Popular supports local industry, provides nearly half the financing behind the Dominican Republic’s vitally important tourism sector, and is endeavouring to promote the country’s socioeconomic, sustainable, development.

Francisco García: As the most important private bank in the Dominican Republic, we touch tens of thousands of people’s lives every single day. We are committed to the wellbeing of present and future generations of Dominicans. So, as well as supporting individuals with their investment needs and personal aspirations, we look after their business ventures and the entrepreneurial spirit of the Dominican Republic.

Therefore, digital transformation through innovative technologies is in front of all of our decisions to make life easier for our customers, improve process efficiency, and expand the reach of our promise of value to society.

Francisco García: Supporting our local industry is particularly important to us, because they are a main source of employment and development for the DR, and we have different financing solutions for them.

One product that stands out is Leasing Popular, which facilitates the acquisition of vehicles, generators, construction and medical equipment, computers and other fixed assets our clients need.

We also have Leasing Popular Verde, which helps our customers purchase solar panels and electric vehicles.

Tourism is the most important industry for the Dominican economy, and we’re proud that Banco Popular provides nearly half of the financing in that sector of the country. We launched, alongside with the Ministry of Tourism, the campaign ‘Tourism in Every Corner’, which encourages foreign and domestic tourists to explore the entire the island – not just the usual destinations. Through this campaign we seek to care for our cultural and natural resources: generating economic growth and stable jobs with the involvement of local communities and a sustainable approach.

Francisco García: Commitment to sustainability has always been part of our core values at Banco Popular. In 2019, we became the first and only bank in the Dominican Republic and the Caribbean to join the United Nations Environment Programme Finance Initiative, and their Principles for Responsible Banking, which is meant to mobilise the financial sector for sustainable development.

In 2020, Banco Popular launched Hazte Eco, being the first financial institution to have a green portfolio of financing solutions, which has grown every year since.

Our goal is to reduce our environmental footprint, with additional initiatives such as the installation of solar panels in more than 50 of our branches throughout the country, and more efficient light and water control systems, eco efficiency and culture recycling programmes for our employees and clients, and carbon footprint measurements.

Francisco García: Sustainable financing is in the forefront of our business model. Banco Popular has participated in the financing of renewable energy projects for approximately $380 million, which translates into more than 400 MW of renewable energy in the Dominican Republic, where Banco Popular act as lender, administrative agent, or collateral agent. By year end 2023, we expect to have increased this portfolio to more than 1,000 MW, and a total of 18 projects.

Additionally, we understand that education is the engine that leads society towards the development of a sustainable economic model. Therefore we have the largest scholarship programme of the Dominican financial sector – Excelencia Popular, with interest in supporting STEM-related careers.

Francisco García: We want to make all our customers’ aspirations come true, help to promote the country’s socioeconomic development, and do it all with clear dedication to sustainability. So, moving forward, we will continue to listen to our customers, bringing them the latest innovations to keep them competitive – both on the island and internationally – and grow alongside them. Because when our customers and the DR are successful, we are as well.

Zenith Bank is ‘at the forefront of encouraging Nigeria’s upcoming digital economy’

A bonus edit from our interview with Dr Ebenezer Onyeagwu, Group Managing Director and CEO of Nigeria’s Zenith Bank. What are the challenges that face recently inaugurated President Tinubu? What’s Zenith’s view on the fast-growing tech hub in Lagos? And how should international investors approach Nigeria?

World Finance: I’m back with Zenith Bank’s Dr Ebenezer Onyeagwu to discuss Nigeria’s current economic landscape, starting with recently inaugurated President Tinubu, who faces a whole host of challenges?

Dr Ebenezer Onyeagwu: Yes, the president duly acknowledged the challenges of the economy. A few of them I may mention will be the issue of the multiple exchange rates, the issue of the fuel subsidy, the issue of inadequate power supply, high inflationary environment leading to high costs of doing business.

He also communicated his determination to deal with these challenges head on. And I will say even in the early days, he’s been bold and audacious to take some decisions – unifying the exchange rate, and also stopping the fuel subsidy. These are painful decisions, but what I think the president has just done is say, look: Nigerians, we find ourselves in a hole. Let’s stop digging.

But above all he requires the cooperation of all, all the stakeholders, to succeed. It’s about every one of us collectively working to solve, supporting the government. We have to have some discipline, it’s a question of saying, it’s going to get a bit tough and rough before it starts getting better.

World Finance: Now Lagos has been positioning itself as a fast-growing tech hub; what’s your view on this emerging industry?

Dr Ebenezer Onyeagwu: Lagos is the commercial nerve centre of the country, so you see about 80-90 percent of the tech entrepreneurs are out of Lagos, and there are well over 200 tech companies that are coming up, looking at several segments of the economy and developing very interesting and exciting digital products to deal with such human endeavours.

And we at Zenith are at the forefront of encouraging this upcoming digital economy. Since 2019 we started having the annual tech fair, and what we do is we provide opportunity for upcoming tech entrepreneurs to showcase their products.

We also organise a hackathon, where at the end we give cash prizes and we also put the finalists into an incubation programme to commercialise their ideas.

So tech is something that we are monitoring closely, and we expect to be the main driver and advocate for that.

World Finance: And what other industries are showing strong growth?

Dr Ebenezer Onyeagwu: The non-oil export, that cuts across different sectors. We also have the gas business. We have agriculture – you fly around the country, you see farming in Nigeria is largely subsistency. We need to mechanise it! Nigeria has the potential of becoming the organic food basket of the world.

Of course FMCG, by virtue of the size of the economy, remains a very very viable sector.

World Finance: Finally, for international investors looking at Nigeria’s growth potential, what are the most important things for them to know?

Dr Ebenezer Onyeagwu: The first thing I always tell them is, don’t come in to Nigeria at lunchtime and expect to go back at dinner time. When you come in, just stay for the long haul.

We go through cycles, but, you know, we hardly have huge bubbles and busts. So anybody coming into Nigeria, have a view of being long in Nigeria. When you are short in Nigeria, it’s no good for anybody, it creates unnecessary volatility.

Zenith is a valuable to partner with investors, so we look forward to welcoming them and helping them to navigate. Ease of doing business is being improved upon. Labour is readily available. If you need funding Zenith will be there to provide funding for you. So we would like to welcome investors and say that, know your area of preference but Nigeria is a huge opportunity. I see it like the treasure pot of Africa.

From zero to hero: with support for SMEs to MNCs, Zenith is unlocking Nigeria’s potential

In Nigeria, small and medium enterprises contribute 48 percent to GDP, and account for 80 percent of employment and self-employment – and Zenith Bank, the leading non-oil export bank in the country, is very deliberate in its support for those businesses. Group Managing Director and CEO Dr Ebenezer Onyeagwu discusses the many support programmes Zenith offers SMEs – from getting them off the ground with IT offerings and training workshops, to growing into a thriving export business.

World Finance: Ebenezer, how does Zenith support SMEs?

Dr Ebenezer Onyeagwu: We are very deliberate in terms of our support for SMEs. We developed a product that we call SME Grow My Business to provide opportunities for them to leverage on our digital licences that we have with the major OEMs and IT companies, to expose their products digitally.

We also have SME Hustle Academy, targeted at teaching SMEs on specific digital applications and knowledge that they require to run their business.

We also have the monthly SME Training Series, where we focus on the key problems and challenges that face SMEs.

We also provide loans for SMEs at discounted interest rates, and to enable us to address women in business we created Z-Woman, which gives loans at subsidised rates to women.

In the export space we created another product we call From Zero To Hero – it provides opportunities for SMEs who have never done export before to be exposed to the rudiments of doing export business. Starting from how to source the export products, how to do the documentation for export, and also helping them to develop export markets abroad and financing.

World Finance: Of course it’s not just about supporting businesses; in order to completely unlock Nigeria’s economic potential, you need to bring the whole population into the banking system.

Dr Ebenezer Onyeagwu: Yes, that’s very important. We do that under the financial inclusion agenda, through collaboration with the central bank. We have our financial literacy campaign, where we engage different sectors of the society, the underserved and the unbanked.

We also have youth engagement where we go to schools and secondary schools, creating awareness on the use of banking products and services.

We have a product for schoolchildren – Zenith Children Education account. We also have another product for those teenagers at university, we call it Zenith Aspire account. So we engage all of them to learn financial literacy, the rudiments of investment, and in our own way we think the advocacy is paying off.

World Finance: Finally, what do you see as Nigeria’s economic potential? And what role should Zenith play in unlocking it?

Dr Ebenezer Onyeagwu: So Nigeria is a huge market. Whichever sector you look at – are you talking about the gas reserves that we have untapped? Are you talking about agriculture? Manufacturing? Non-oil exports? Every part of the country, every state, has at least two exportable items.

Look at the recently released statistics that show that Nigeria still remains the biggest economy in Africa – yet we are not as productive. So we need to increase the productive base of the country.

Zenith has been very very audacious in terms of addressing some of this potential that has made us the leading non-oil export bank in the country. Zenith is also supporting SMEs, where we are not shy about lending to them. And major projects that are making impact in the country, you are going to find Zenith as a number one or number two bank.

So in every sector it depends on who comes, and what your business proposal is – you’ll be sure to find partnership with Zenith.

Releasing the tiger: How Zenith Bank overcame Nigeria’s Naira redesign

Last time World Finance interviewed Dr Ebenezer Onyeagwu, Group Managing Director and CEO of Zenith Bank, the bank was celebrating 10 percent growth in gross earnings. This year, that number is 24 percent – in a year when the Nigerian Central Bank announced a complete redesign of the Naira, leading to huge cash shortages. Dr Onyeagwu explains how the bank was already on course to overcome that challenge with its Project Tiger; how the values, culture and ethos of the bank drive its business; and Zenith’s plans to expand into Francophone Africa in the next five years.

World Finance: When we spoke last year the bank was celebrating 10 percent growth in gross earnings; this year that number is 24 percent. Ebenezer, how are you achieving this?

Dr Ebenezer Onyeagwu: What distinguishes us from the market is that we see things differently, we do things differently. That’s coming from the kind of values, cultures and ethos that drive our business.

You see this evident in the quality of staff we have – not only are they the best talent, they are creatively expressive. So we are able to get opportunities quicker, interpet the trends in the market very quickly than others.

Then speaking to the number itself, you’ll find out that in all the key markets where we compete, we are a strong number one, or a very close number two. The key projects and key development driving business and the economy – you see Zenith being the partner bank.

If you look at the non-oil export space in the last one year, Zenith has been able to demonstrate leadership, where we control about 50 percent of that business.

We’ve also made very significant progress in our retail and digital banking. You see a lot of creativity in terms of our product offering, you also see our staff very bold and audacious. So I would say that what is driving us really is the strong ethos, the culture of the business: don’t just do work, be productive, be innovative, be creative to do something different.

World Finance: Now, one particular challenge you faced this year was the redesign of the Naira, which forced the bank to replace every single piece of cash for its customers – can you tell me how you tackled this?

Dr Ebenezer Onyeagwu: Oh, Paul – that was a most difficult moment! The announcement was made in November, and the deadline was the end of January – the timeframe was too short.

Two, there was an underestimation of the amount of cash in the informal sector. We didn’t have a corresponding amount of money in the new notes coming in – so that created scarcity.

The scheme was supposed to also lead us into the cashless payment – making use of digital payment. But what became evident was that banks in Nigeria need to upgrade their infrastructure.

In our own case, we already started the upgrade of our infrastructure about 18 months ago. We had to accelerate the completion of our Project Tiger – a completely new enterprise framework putting all the subsidiaries in the same enterprise environment. What that does for us is that we can harmonise our IT talent and resources. We’ll be able to support our various channels so that we can take on a larger volume of transactions, be able to consume a lot more API.

So I would say that in a way we are ahead of the curve in terms of building brand new architecture fit for purpose for a digital environment.

World Finance: And what is your vision for the next five years of the bank? How is that culture and creativity going to move you forward?

Dr Ebenezer Onyeagwu: First is that our Project Tiger will have been completed. Project Tiger will give us the opportunity to create very massive dexterity in our platforms, so in the next five years we’re going to be leveraging very strong IT capability to extend our franchise, build a lot of products to address different verticals in the business space.

Next five years we also want to expand our franchise – currently we are processing our licence for a presence in France that will see us getting one or two presence in Francophone African markets. We expect that retail and digital banking, in the next five years, should almost be 50/50 with our corporate commercial banking business.

We see a lot of opportunities, we see a lot of heavy lifting to be done in the next five years. Where we need to compete we’re not scared to compete; where we need to collaborate, we will collaborate.

Baiduri Bank: Our digitisation journey means upskilling and reskilling our people

Baiduri Bank has long been at the forefront of financial services in Brunei, delivering technological firsts and innovative solutions in response to ever-evolving consumer behaviour. Baiduri CEO Ti Eng Hui explains how the bank’s digital transformation is improving the customer experience, which technologies are being deployed behind the scenes, and how Baiduri is upskilling and reskilling its workforce to meet the new challenges of the digital-first banking era.

World Finance: How has your digital transformation been delivering improved customer experiences?

Ti Eng Hui: We believe that genuine human connection is at the core of excellent customer experience. It is therefore essential for us to have a hybrid approach – leveraging technology while providing the best banking experience for our clients.

And we have enhanced so far our digital banking platforms for both retail and business customers. The app that we have launched incorporates optional biometric login as well as financial calculators and risk profiling tools to provide a better customer experience.

More recently, we have launched new offerings such as Baiduri Qpay, that allows our customers to pay via QR code.

We continue to improve digital engagements through our industry-first AI chatbot, Emmi. At the same time, we are reconfiguring our branch design and service model to offer a better overall experience that combines both online and offline interactions. So our branches are now focusing less on transaction processing, and more on providing quality financial consultations to our customers.

World Finance: And how have you been transforming Baiduri’s internal workflows and infrastructure?

Ti Eng Hui: Yeah, we need to ensure that internally, the organisation is ready to support our digitisation aspirations. For that reason, we kickstarted our digital transformation with our HR function. We are using cloud-based solution SAP SuccessFactors, and through this platform, most of our human resources and talent management processes are now done digitally.

We are actively deploying modern technologies including artificial intelligence, machine learning, Robotic Process Automation and new microservices to automate existing workflows.

Baiduri Bank will be the first bank in Brunei to migrate and operate our core banking platform to a new cloud-based system under the SaaS model. This will enable us to offer superior customer propositions with personalised offerings when we go live in the middle of next year.

We are also the first bank in Brunei to modernize our credit risk management using artificial intelligence – through this, we are developing and deploying high quality credit scorecards at a fraction of the time and cost – with reduced credit risk, improved efficiency and greater agility for retail and SME businesses.

World Finance: Now, is there a risk that on your transformation journey, you could lose good staff along the road?

Ti Eng Hui: This digitalisation journey will undoubtedly bring about shifts in the way that we work – and that is why it is important for us to be a learning organisation that focuses on reskilling and upskilling our people – identifying technical competencies needed to support our journey and building in-house digital capabilities.

The bank’s newly established Organisational Development and Learning Unit is tasked with upskilling and reskilling the bank’s workforce – offering leadership courses, Employee Wellness initiatives, Change Management, transformational workshops, and on the job training to identify gaps in skills and competencies.

A great example of this is that over 30 employees from different business lines and key support functions across the whole Baiduri Bank Group underwent the RPA Citizen Developers certification. They will act as RPA champions to help further Robotic Process Automation within the group.

World Finance: And what does the future hold for Baiduri Bank? With these twin digital and people transformation strategies, what do you hope to achieve?

Ti Eng Hui: So as a 100 percent owned local bank, our focus for the time being is very much on the Brunei market; Baiduri Bank has continued to grow significantly, thanks to the great support received from our customers and all the stakeholders. Since we already hold a prominent position in the local banking industry, the only way to grow further is venturing beyond Brunei.

At the moment we are focusing a lot on capacity building, especially from the people side of it, technology and organisational perspective. We need to evolve our business model, reaching a high-performing level of operations and execution of our strategies.

Once we have a strong foundation, it will be time for us to consider a diversification plan beyond Brunei.

More than ‘a gambling token’: Could stablecoins be crypto’s legitimate future?

We got David Barrett, CEO of EBC Financial Group, into the studio to discuss the impact of rising interest rates on liquidity and on the derivatives market – but in our pre-interview chat, we asked about an issue the company had experienced when it had been incorrectly associated with a crypto trading platform. That’s how we found out what David really thinks about tokens and coins, why EBC doesn’t touch crypto – yet – and how stablecoins could transform transaction settlement.

World Finance: Now David, before we started filming, we were discussing crypto and you said, ‘All coins are the best marketing scam that’s ever been invented’ – I wonder if you could expand on that view a little bit?

David Barrett: I don’t think crypto as a sector is all bad – I think there are parts of it that are going to be very influential on the way that markets develop.

Tokens and coins – I just don’t get.

I’ve read the white papers, I’ve been to seminars, I’ve listened to people that are converts, and I don’t understand it.

Buffett calls them gambling tokens, and I really think that’s a pretty good summary of what they are. I think if you look at how the crypto market developed, it came to the fore at a time when we’ve got more polarised politics that we’ve ever had, we have a greater wealth gap than we’ve ever had, we have more people that are disenfranchised from the system than we’ve ever had. So selling something new that’s going to solve all those problems?

Crypto coins and tokens, NFTs, are a fantastic example of how to sell something. But I think the quality of what they’re selling – personally I don’t think has enough of a real world impact that they’re anything other than just a gambling token.

World Finance: EBC itself doesn’t touch crypto at all – is it purely because of this view?

David Barrett: No no, not at all! EBC is there to provide products for its clients, and client demand – and regulatory acceptance! – will obviously allow that.

The problem with crypto as a UK-based broker – the first one is the regulatory side. So the FCA, I kind of feel has been hampered by the government in terms of how they regulate it, and formulating a good regulatory environment.

That will come, but at the moment I think it’s kind of piecemeal.

I think the actual volumes that brokerages are seeing in crypto – the tokens and the coins – is much less than anybody would like to admit.

And I think probably the most important thing for us – outside of regulation – is banking. Banks don’t like it! We are lucky enough to bank with a tier one banking institution, we have full corporate banking, and we are very, very aware of what they do and don’t like. And being involved in crypto, being involved in the exchanges, paying, receiving from them – they’re very, very sensitive to. And that makes it very difficult for us as a regulated broker to jump in with both feet without thinking.

World Finance: But putting coins and tokens aside, you do see potential in crypto?

David Barrett: I’m a massive believer that the true gift of the crypto market is stablecoins. Their ability to impact things like settlement, credit risk, on the ledger custodial type businesses, can be immense.

Rather than when we say T+2, that’s trade date plus two days, which is the normal settlement period in something like FX – there’s no reason with the application of ledger and stablecoins and instant transfer that you can’t bring that down to what we would call T+0, which means it’s near instant.

We probably need the central banks to come up with central bank digital coins, because the legitimacy that they bring will help a lot. But I think as soon as you get those digital coins from the central banks in place, what you should be able to do is evolve a system where it’s almost instantaneous.

And the beauty of doing that is that you significantly reduce your credit exposure to other institutions, to your clients. But also the ability to make that market more efficient by making it more fluid and safer is a much better place for everybody to be.

World Finance: David Barrett, thank you very much.

David Barrett: You’re welcome.

Higher rates spell an end to suppressed volatility – so check your leverage

David Barrett is CEO of EBC Financial Group; the award-winning liquidity provider for institutional and professional traders. After discussing how interest rate increases are affecting the markets in general, he focused on derivatives: how liquidity providers are becoming more cautious about liquidity and leverage, the probable return of greater volatility after a decade of artificially suppressed rates, and how traders need to be more circumspect about what they’re actually trading. You can also watch the final part of our interview with David, where he discusses his views on the crypto sector.

World Finance: David, we’ve spoken about the impact of rising interest rates on the market generally; how is it affecting derivatives specifically?

David Barrett: If you look at the market in general, you could argue on the surface that not a lot has changed. But I think if you dig a little deeper, I think that’s not true.

I think the fallout particularly in say, the banking sector in the US, the regulator has heightened its approach, and it’s heightened its scrutiny of what’s going on. Only recently the US has launched more stringent capital and reserve rules, based around what happened to the three regional banks earlier in the year.

I think regulators in general are being more circumspect about what’s going on with companies within their industries’ balance sheets. We’re regulated by the FCA in the UK – I’ve worked for regulated companies for 30 years, and I’ve never seen so much introspection on the financial resources and how you manage those resources.

I think liquidity providers are being a little bit more cautious about liquidity – in terms of the leverage that they’re offering. And I think, you know, there’s no doubt that the depth of liquidity when the market picks up pockets of volatility is a lot less than it would normally be. And I think that tends to be a fallout of the previous instances of pain that we’ve seen in the markets.

World Finance: Any advice you can offer to traders in this new environment?

David Barrett: I think you’ve got to accept that the way that the market is functioning has changed somewhat. So, whereas people would broadly be bullish on certain parts of the market – let’s say stock markets. Indices have been a very acceptable way of reflecting your opinion of what the market’s doing.

I think we are coming much more into a stock picker’s market. I think you have to appreciate the state of a company’s balance sheet, its liquidity, and its ability to get through times of stress much more now than before.

I think leverage should be reduced, because I do believe that volatility has been supressed for so long, that we’re getting to a point where that could easily change.

Historically interest rate differentials have been a big driver in FX, because everything’s been homogenised to a very low level, then we’ve had very low realised volatility in FX. And that’s just starting to change. And you can see – the dollar/yen’s moved significantly over the last 12 months or so. That’s mainly driven by an interest rate differential, because the Bank of Japan is pretty much the only central bank that’s not gone the same rate hikes of everybody else.

So I think people need to be more cautious, with less leverage. I think they need to be more circumspect about what they’re actually trading.

And I think they should be aware of heightened volatility and what it does.

Markets have very much mean-reverted over the past two or three years, and I suspect if we start to get trends in markets, they may keep going more than they have done.

World Finance: And how about regulators? Would you recommend any changes, or do you forsee them making any?

David Barrett: I think the regulator is becoming much better at appreciating how the market works. I mean, if you look at brokerage, which is what we do, their appreciation of how the sector works, how it makes its money, how that impacts on the end user – it’s much better than it’s been, ever.

So the UK FCA are just about to bring in a consumer duty package, which is there to heighten people that are selling financial products and their impact on their clients to the firms that are doing that.

And I think that kind of deep dive and circumspect pressure will continue from regulators all over the world.

There will be a lot more pressure for clarity of: what you’re doing, how you’re offering it, and how it impacts the end user.

‘Interest rates now aren’t high… the reality is we’ve had it incredibly easy’ says EBC CEO

David Barrett is CEO of EBC Financial Group; the award-winning liquidity provider for institutional and professional traders. In the latest issue of World Finance he said that interest rate increases are the most significant trend affecting liquidity today – he joined us in the studio to talk more about how the rapid hikes are affecting the market, why the change is long overdue, and how actors who are already calling a top on interest rates are tempting a second round of inflation. David also discusses the effect of rising interest rates on derivatives, and his view on the crypto sector.

World Finance: David, you said in the latest issue of World Finance that interest rate increases are the most significant trend affecting liquidity today – could you tell me more about that.

David Barrett: Yeah, I think in a year where we’ve had an awful lot going on: AI has been a predominant headline, if you look at what’s gone on in crypto, you look at what’s gone on in world markets in general – you know, the US had three bank failures in March. There’s been a lot going on, but I think the predominant driver and influencer on all of those things has been US rates.

We’ve had a significant increase over the last 12 months, and even last night we had another increase from the Fed, although many people think that that’s probably enough. Rates have influenced and dominated the movement in pretty much every corner of the market, I think.

World Finance: We’ve had a decade of near-zero rates – what kind of behaviours became normal in this incredibly long period of time?

David Barrett: Yeah, it was a long period of time! And I think if you look at why it came about, it was perfectly justified. I think the authorities at the time of the crash in 2007-8 – I actually think they did a fantastic job!

I worked at an institution that was in the middle of that, and it was clear to all of us there just how poor the conditions in the market were. But I think it went on for too long. The biggest problem the world has had is that it’s decided that low rates are the new normal and it would carry on forever – and that’s clearly not true!

I mean, rates now aren’t high. Rates are more like what we would consider an average over the past few decades. But compared to where a lot of industry has grown up in the last 10 or 15 years and has really developed and survived in an environment of low rates, it’s come as a very big shock.

World Finance: So it’s not really that we’re entering a new normal – we’re entering the old normal again.

David Barrett: Yeah, I think it depends on who you ask. If you ask me, this is normal! Where we are now is much more like the normal that I could express as normal. I don’t think having artificially supressed interest rates is a normal environment.

I think it’s politically expedient! But it’s just not justifiable. And when you get something like inflation come along, lower rates create a huge problem, and solving them, you have a pretty blunt toolbox.

You know, higher rates will work against inflation, it will solve it. Being a blunt tool it tends to break a few eggs as it’s going along, and we’re seeing that now.

The consumer has been hit, but not perhaps as hard as you would think.

You know, always it’s the lower end of the economic stack that gets hurt most. And if you look at the way that inflation has taken hold and you look at the things that are being affected by it, consumer confidence is only one of those things.

I personally don’t think inflation will go away quickly – if anything I think we’re actually clueing ourselves up to maybe a second round of inflation. And that would be very damaging for markets, because they’re already trying to call a top on interest rates, they’re already predicting that the Fed’s going to start cutting at some point.

I personally am in the higher for longer and beware if we get more, camp.

The causes of inflation this time are different, and I think that the solutions and the time it takes to get rid of it is going to be a lot harder than people want it to be.

The reality is that we’ve had it incredibly easy for a long while, and it’s not as easy. And I think part of the problem for people in general is accepting that things have changed – particularly if they change for the worse, and not for the better.

Standard Insurance: ‘It’s our life purpose to really be there for you when we’re needed’

When COVID hit the Philippines, the islands shut down. The country instituted one of the world’s longest and strictest lockdowns, resulting in a GDP contraction of 9.6 percent in 2020. But for Standard Insurance it was – uncomfortably – one of their most profitable years. Patricia Chilip, chairman and CEO of Standard Insurance, explains how the company has been performing since the country reopened, how Standard is channelling that growth back into the local community, and how it is leveraging technology to be there for its customers through difficult times for another 65 years.

In the first half of this interview Patricia explains how Standard takes on the challenge of Filipino NatCat.

Patricia Chilip: I don’t think anyone was ready for COVID. Nobody knew what was going to happen the next year, or the next day. Our first response was really to make sure that the employees were okay, make sure that everyone wasn’t sick, or if they were to get them to the hospitals.

But actually, my brother, who was running the company at that time, had a year before put all the systems on the cloud. Which meant we could issue policies, and deal with claims. So in that sense, we were actually ready.

World Finance: When COVID hit the Philippines, the islands shut down. The country instituted one of the world’s longest and strictest lockdowns – meaning that in 2020, the Philippines’ GDP contracted 9.6 percent. Nobody was going anywhere or doing anything – so for the non-life insurance sector, sales plummeted – but so did claims. For Standard Insurance, it was – uncomfortably – one of their most profitable years. I met with Chairman and CEO Patricia Chilip to find out how the company has been performing since the country re-opened.

Patricia Chilip: From 2022 we’ve been seeing like double digit growth, 15 percent, sometimes 20 percent. You know, there’s like pent-up demand because nobody bought anything during COVID. So now like, people are buying new cars, and people are travelling again because they haven’t travelled in two years. So it’s a surge of growth, and we’re using technology to keep up with it.

What’s exciting for us now is all the AI. We’ve been using that for our claims. We’re using chatbots to be able to answer frequently asked questions, ocular character recognition to be able to read receipts,. As well as doing some things for our value based adjudication of our claims.

Customers also engage with us now through fintech. So, we meet them digitally and we like to be present in all those platforms, whether it’s through fintech payment systems or online banking – we try to be at every touchpoint.

World Finance: When you’re seeing the kinds of success you’ve described, how important is it that you put some of that growth back into the community?

Patricia Chilip: Well it’s very important to us, you know. We are a Filipino company, and our customers are Filipino, and we want to give back to the Philippines.

We have a lot of advocacies. Our group chairman, my father, is a big supporter of the Philippine coastguard. We’ve donated speedboats to be able to patrol the Manila Bay, as well as make sure that the coast is clean.

We support a lot of scholars, young violinists. We make sure that they are educated in the best schools, like Giuliard, or in Vienna.

We’ve also supported nutrition for children and mothers. We’ve supported kindergartens for kids from three to five – that’s my favourite one, because that’s really when the brains of the kids are sponges, so we partner with MoveEd, and they teach as well as feed the kids at the schools.

For me personally because I care about the environment, I love that we planted 12,000 trees for our 60th, and we hope to plant more now that we’re 65. You know, you plant a tree… it’ll benefit the generation after us. So that’s what’s important for me. But everything we do is really for the development of the Philippines.

One of the values of Standard Insurance is really a passion for excellence. So all our advocacies make sure that the community has what they need to be able to have that passion, so you have to have the right nutrition, the right education, the right avenues, if you want to grow and excel. So that is really our passion, to bring Philippine excellence to the world.

World Finance: Finally, 2023 marks Standard Insurance’s 65th anniversary – how are you working to ensure that the company enjoys another successful 65 years?

Patricia Chilip: I’m happy to be here. Helming a company that has been of service to the Filipino for 65 years. And I’m just grateful for the officers and for the employees who have taken us this far. Really they are the heart and soul of this company.

Our people really have a compassion to help, you know. It’s tireless service. every day they wake up, Respond to claims, respond to clients in need. They make sure our systems are all working. And now it’s 24 hours, I mean service is 24 hours. So they really are there for you, they’ll pick up your call when you’re like stuck in Madrid, or you’ve freaking had a heart attack, we will pick up the phone and take care of you. Really somebody got hit by a bus in Italy, and I swear this team didn’t sleep for like two weeks, to make sure that she came back to Manila okay. So that’s really how we do it.

It’s our life purpose to really be there for you when we’re needed. we’re here in difficult times, whether it’s typhoons, catastrophes, or whether you had a medical emergency abroad, I’m proud to be working with employees who will pick up the phone at any time at night to help a customer in need. And if we keep doing this for 65 years then, then our company will evolve and change and still be a relevant one that responds to all the customers needs.

So that is really what we’re here for.

Peace of mind for all mankind: How Standard Insurance takes on the challenge of Filipino NatCat

‘The Philippines gets about 18-24 typhoons a year. We sit at the Pacific ring of fire, so we also have earthquakes. We have flooding. And with climate change, they’re more and more frequent,’ says Patricia Chilip, chairman and CEO of Standard Insurance, one of the Philippines’ leading non-life insurance companies. She explains how the business manages all that built-in risk, balancing customer needs with shareholder expectations, and how the company is working to become one of the world’s top 10 general insurers.

In the second half of this interview she explains how Standard Insurance is channelling its growth back into the community, to help bring Philippine excellence to the world.

Patricia Chilip: The Philippines gets about 18-24 typhoons a year. We sit at the Pacific ring of fire, so we also have earthquakes. We have flooding. And with climate change, they’re more and more frequent.

On the ground that feels like a lot of, sort of, distress, when the event happens. You know, life can come to a standstill.

It happens every year, so, we’re kind of used to it. But you just want to be able to sleep at night knowing that someone’s got your back.

It’s really our life purpose to be there for them, when they need us the most.

World Finance: Patricia Chilip is Chairman and CEO of Standard Insurance – a leading general insurance company in the Philippines, with a mission to bring peace of mind to all mankind. But what does that mean in practice?

Patricia Chilip: Peace of mind for all mankind is really our hope for everybody, what we wish for everyone: happiness, a sense of contentment, a sense of security. We really want to make sure that our clients can sleep well at night knowing that their assets are covered properly, that they have what they need. That’s what we hope for everyone.

Our job is really to be on the ground, to answer those calls when they need us. We have branches in 65 provinces nationwide, so we have somebody on the ground to help you tow your car, or help you assess your damages, or just pick up the phone and answer all your questions. Because we want them to sleep well at night knowing that they’re covered with us.

One of the challenges we face is that when an event does hit, they realise they haven’t updated their values in 10 years. Even three years ago – you know, after COVID, construction costs have gone up 30 percent, 40 percent.

So it’s so important to update your values, because if you haven’t updated your values then it’s going to be a struggle when you make a claim. Because even if you get totally paid out, you’re like: oh, it’s not enough to reconstruct my house.

That’s our campaign for 2023, to make sure that our clients have updated their values that their property’s insured for, so that when a big event hits, they’re really covered properly.

World Finance: That must be incredibly challenging as a business – taking on and managing all that risk.

Patricia Chilip: Well you know we have a really good team of underwriters. We also have all the technology behind us – we have a catastrophe risk monitoring system, a CRMS, which, you know, you can plot a GPS point and it gives you whether a place is high risk for a typhoon or flood or earthquake, and it helps us advise our clients as well, in terms of how to rebuild or mitigate their risk.

Of course we have excellent reinsurers. We have a couple of decades of relationship with them, and they know our underwriting, and they always respond so quickly. We have some of the best ones in the world. So, that kind of helps us respond to Philippine cat.

World Finance: So how do you find that balance between your customers’ needs and your shareholders’ expectations? How do you grow a successful, sustainable business?

Patricia Chilip: Well, we grow organically with our partners. We’re happy to be partners with the biggest banks in the Philippines, and the biggest automotive companies in the Philippines. And because we share a customer base, if they grow we grow.

So we’re grateful that people have approached us for partnerships, like travel regionally, pet health globally, and now we have a new partnership for automotive collision in the US. So we’re very excited about all these like, global initiatives.

You know, we find that if we put one foot in front of the other then things will take care of themselves. We do our best every day, and we find that if we do a small job well, bigger jobs come.

People in the Philippines are big on social media, so if you do a good job everyone knows. And if you do a bad job everyone knows as well. So it keeps us on our toes. And it aligns our customer expectations with our shareholder expectations. If the customer is happy, the shareholders are happy.

World Finance: Your vision for 2035 is to become one of the world’s top 10 finest general insurers. How do you earn that position and acclaim?

Patricia Chilip: You know, the customer experience has to be great. Our customers are millennials and Gen Z. And they want everything faster, everything digital. Everything seamless. So we want to be a 21st century insurer, on the cutting edge of technology, able to respond to customers’ needs. Because they need us constantly.

We want to be part of their lives. We want to be someone who makes life less stressful. And if – God forbid – a typhoon happens, we want to be there for them as well.

Our vision for the Philippines is to see a country that is prosperous, a country that is abundant, a country that is resilient from all of these nat cats. And everything we do is working towards that. Being there, to help our countrymen build and rebuild.

By taking care of them, and taking of their needs, we will find our way to becoming one of the world’s finest insurers.