Author: World Finance

Royal Forex: You have to be totally transparent with your clients

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The current volatility and fluctuation in global currencies have boosted the popularity of investing in the foreign exchange market. Ghassan Elias Kteily, AGM/Chief Growth Officer for Royal Forex Trading, discusses the opportunities for traders, and the challenges for brokers – as well as the likely trends that will emerge as Chinese growth slows.

World Finance: The current volatility and fluctuation in global currencies have boosted the popularity of investing in the foreign exchange market. 

With me to speak about how best to navigate this industry is Ghassan Elias Kteily, AGM/Chief Growth Officer for ROYAL Forex Trading.

Well Ghassan, the forex market. Tell me about the opportunities and indeed the challenges that represents?

Ghassan Elias Kteily:  The abundance, if you like, or the approachability of the foreign exchange market makes it easy to trade. And a factor that really adds to that and enhances trading, is the low margin – that’s the leverage. The low margin, which is as low as one percent, and sometimes a quarter of a percent or half of a percent, enables you to trade 200 times your money.

It gives the opportunity to speculators to trade with very little money, big amounts and volume of foreign exchange. However, it increases the risks and rewards – so this is an opportunity and it is a challenge at the same time.

Well ROYAL is a global financial trading brand and you offer your services through headquarters in both Beirut and Sydney but when it comes to trading and data security, how do you deal with different jurisdictions?

Ghassan Elias Kteily:  We chose to be fully regulated in both jurisdictions in Lebanon by the CMA, which is the Capital Markets Authority; and in Australia by ASIC, which is the Australian Securities and Investment Commission.

So when we talk about data security, we are talking about protection against cyber attacks. Companies like ROYAL through adhering to the requirements of the regulators – that is segregating the clients funds, putting in place proper risk management strategies, meeting with all the liquidity ratios – do guarantee that funds are secure, and that clients can worry about trading in the markets, not about their funds being secure or not with ROYAL and other companies.

World Finance: And those trading in the Middle Eastern markets differ from that of the west?

Ghassan Elias Kteily:  The Middle East’s investors are as sophisticated as they are in the rest of the world. However, eight countries in the GCC and in the Middle East have their currencies pegged to the dollar.

So for them, currencies are pegged, and there isn’t much uncertainty over there. People tend to trade commodities instead: oil, gold, silver and so on and so forth.

Trading commodities is more risky than trading currencies. And Middle Eastern investors work on a tactical, not a strategic basis. And that’s what makes their trading more short-term and abrupt: so, quick trade will come out. While with the European investor, you’ll find that they will take a strategic position, like with equities, and leave it for a longer-term.

World Finance: And when it comes to regulation, how stringent is your industry?

Ghassan Elias Kteily:  Very stringent. Regulators have opted for stipulating and dictating more rigid parameters and benchmarks that will regulate the industry. And accordingly, they have imposed higher margins, more capital requirements, higher ratio requirements, to ensure that companies stay on the safe side. Consequently, the investors, the clients, and their moneys are safer.

World Finance: Transparency is of course a huge issue, how do you approach this?

Ghassan Elias Kteily: Transparency relates to many aspects. There is trading transparency: that is, what you demonstrate on your website. You have to advertise and promote what you really do offer – you have to be totally transparent with clients regarding spreads, fees, commissions, the depth of the liquidity you have. And in volatile markets clients will be concerned very much about having their orders executed.

And this what you should be transparent about. Basically, advertising honestly and transparently how much you can help the client transact his transaction and his business through you as a company.

World Finance: Now finally, we have seen the Chinese stock market having quite an impact on markets worldwide, so what other trends do you foresee impacting your industry over the coming months?

Ghassan Elias Kteily: What I foresee is that moving forward for the next 18-24 months, emerging markets and developing countries that are the major partners to China, like Brazil and other Latin American countries and some east European countries, which basically export steel and copper and wood to China; as the Chinese economy slows down, they are bound to be affected.

Their currencies are going to be affected because if you export less, to the second largest economy in the world, that means you are earning less foreign currency.

Likewise, it will affect their capital markets because their borrowing power will be less, you have to borrow at a higher rate and that means spending more, and that means, your capital market locally will be affected adversely as well.

Hong Kong insurance finds growth in China’s developing middle class

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The Hong Kong insurance industry is operating in one of the world’s most challenging yet promising environments. Candy Yuen, CEO of HSBC’s insurance and pensions business in Hong Kong explains where the company is investing, how HSBC is growing its market share, and the four big themes that will affect the Hong Kong insurance sector over the next year.

World Finance: The Hong Kong insurance industry is operating one of the most challenging yet promising environments: with regulatory change, rapidly changing customer expectations, and subdued investment markets all influencing strategy. 

With me know is Candy Yuen from HSBC insurance Hong Kong to discuss. 

World Finance: Well Candy maybe you can start by telling me how has the insurance industry in Hong Kong developed over the past years?

Candy Yuen: Well, the insurance industry in Hong Kong has enjoyed good growth momentum over the past few years; we have been having double digit growth consistently for the past decade or so, especially on the life side.

For example, we just published the first half results and the new business premium grew by 25 percent and the long-term inflow premium grew by 15 percent, so it’s a growing industry.

As for HSBC, we are also enjoying the growth: we’ve been on the top of the market consistently. For example ever since the mandatory provident fund has been launched in 2000, we’ve been the number one in market share and we are also consistently in the top three on the life-side.

World Finance: And with changing customer expectations, how has this impacted products and services?

Candy Yuen: Before I answer your question maybe I’ll share with you the purpose of the HSBC, because I think that will help you to better understand how customer expectations impact our products and services.

The purpose of HSBC is to connect people to opportunities, enable businesses to thrive, economies to prosper, and help our people to achieve their ambitions and goals.

So we place everything about the customers’ needs in the centre of what we do. For example, we spend a lot of investment on doing customer research, understanding the customers’ priorities and preferences.

These kinds of studies give us great insight into what customers care about most, to create the products that actually meet the needs of the customers very well. And they’re very well received and have become our flagship products.

World Finance: How do you adapt your services to clients’ needs?

Candy Yuen: Well, we put the clients’ needs at the centre of everything we do. By asking questions, understanding the individuals’ financial circumstances, before we actually recommend the products for them and what is the required coverage for them. So this is all need-based.

And secondly, we provide our customers a lot of choices. So in this way, the customers can help to choose the way they prefer to interact and do business with us.

We invest a lot in our digital technology and infrastructure, again making it easier, better, and faster to do business with us.

World Finance: What strategies will HSBC adopt to capture the growing trend of digital engagement with regard to insurance sales?

Candy Yuen: Same as in any other medium, customer experience is of utmost importance to the success of any products or services that we offer. So we want to understand our customers and their online behaviour, so that we can deliver the best products, and the most appropriate services and offerings through them.

And we also understand a growing proportion of our customers are appreciating the convenience of buying products online, so we also keep adding new products that could be made available online. We also constantly update the look and feel of our website and mobile apps, so that it keeps improving, and the customers find it easier to navigate, and use our website and mobile apps.

World Finance: It is expected that there will be even closer economic collaboration and co-operation between Hong Kong and Mainland China, so how will this impact the life insurance market in Hong Kong?

Candy Yuen: Since CEPA became effective in 2004, more than 10 years ago now, there have been a number of liberalisation measures that have been introduced which benefit the insurance industry and provide good opportunities.

Earlier this year, our group has already announced that we have a lot of focus on Asia, China and the Pearl River Delta areas: heavily investing to help to capture the growth markets there, and also, to help the emerging affluence of the middle-class – to help them achieve their financial goals. And insurance definitely plays a critical role there.

World Finance: Finally, what trends do you foresee impacting the insurance industry in the coming 12 months?

Candy Yuen: Nowadays, you know, with the fluctuation and high volatility in the equity market, I believe insurance will become increasingly important, as a long-term investment vehicle option. Because I think customers are looking for longer term, more stable returns, and possibly even with some level of guarantee.

And secondly, I think well – even though there is recently a fluctuation in the renminbi currency – I believe, you know, over the medium long-term, I thing renminbi is still increasing demand, so I think policies with renminbi denomination will also be gaining popularity.

Third is regulatory changes. You know, especially in Hong Kong, we will be having an independent insurance authority. Worldwide, the trend on the financial side is, we are moving towards market consistence, economic capital framework, we are also having increasing regulatory requirements on managing counter-risk.

Fourthly, and you know, digital, technological, breakthrough, I think that can be easily be a game changer. And in fact the competition, you know, is becoming very blurred. So I believe it would not be surprising if there will be new players, you know, joining us; with some interesting innovations.

In general, we are take it as positively because, you know, even though that could pose potential challenges but that definitely pose new opportunities for us to better serve our clients.

World Finance: Candy, thank you.

Candy Yuen: My pleasure, thank you Jenny.

Viriyah: Technology is changing the face of Thai insurance

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The Thai insurance sector is growing from strength to strength, especially in the non-life sector. But a 33 percent drop in car sales in 2014 dramatically affected the motor insurance industry. Natdhanai Mankosol and Arthapas Cheuasangpun from Viriyah Insurance discuss the technological innovations that are helping Viriyah offer better services to their insurance customers.

World Finance: The Thai insurance sector is growing from strength to strength: especially in the non-life sector.

With me now is Natdhanai Mankosol and Arthapas Cheuasangpun from Viriyah Insurance one of the leading providers in the area to talk about how the sector is evolving.

Well Natdhanai if I might start with you let’s look at the economic and indeed the political situation at present in the country – how is that faring?

Natdhanai Mankosol: The political and economic situation in the past was not really that good. We got a new government, and the new government is trying to build a new system and economy; it’s trying to get rid of a lot of corruption and a lot of other problems.

The government is trying to create more new giant projects and invest money to help the economy grow more. There are a lot of projects going on. We are all – in Thailand – happy with our new government; we are getting better and we can see the light at the end of the tunnel.

World Finance: And Arthapas does this translate into a favourable environment for the non-life insurance sector?

Arthapas Cheuasangpun: Well, as predicted it will take a couple of years for the economy to fully recover. During that time the consumer market will decrease as households are spending less and saving more.

The automobile industry has also been affected by this – as you can see from the 33 percent drop in car sales last year. With 50 percent of non-life insurance premiums coming from this sector, it has caused a dramatic effect for the industry.

World Finance: This is a heavily competitive sector, how do you approach this?

Arthapas Cheuasangpun: We have 140 branches and claim service centres nationwide, operating 24/7, providing impeccable services for our customers.

We have the largest customer-base in Thailand, making us the leading Thai non-life insurer for the past few decades.

We are recognised as a trusted household name, and we pride ourselves in the satisfaction of our customers, especially now for our claim services.

Fairness is our policy, so we treat our customers fairly and honestly. We have further plans to enhance our services by incorporating new technology and innovation to maintain existing policyholders and to reach out for potential customers.

World Finance: Of course technology and innovation are changing the face of the insurance sector – so how do you see this developing? And how are you adapting alongside it?

Arthapas Cheuasangpun: Because we are embracing new technologies and innovation to increase the function and speed of our services, we’ve introduced three different projects this year.

The first – Viriyah Smart Claim, we call it VSC – which targets the convenient use of our customer. It provides a precise location of an accident for our nearest claim inspector to reach the scene within 20 minutes. This also provides us with valuable statistical information of frequent accidents, so we can have our staff stationed nearby for an even faster service.

The second, we call it Live Video Conference. This allows our claims staff to monitor repairs at different stages. With further development to allow our customer to monitor their vehicle personally.

Last is Fast Track Repair: this project is to ensure that all minor damages get repaired within 24 hours. With this technology and innovations that we’ve introduced, we are confident that we are adapting to the modern market.

World Finance: And finally Natdhanai, how do you see the insurance sector in the region developing in terms of needs and coverage; and how do you set to capitalise on this?

Natdhanai Mankosol: The AEC [ASEAN Economic Community] is coming really fast, it’s arriving early next year and we are going to see a lot of people travelling around the region, We’ve got to have our alliance in our neighbour countries, with their insurers.

We’re going to see many people travelling around and we can see it opens more opportunities for us to sell more travel insurance, or cargo, or what we call carrier liability insurance for both businesses and for people travelling around, especially in the future.

World Finance: Natdhanai and Arthapas, thank you.

Arthapas Cheuasangpun: Thank you.

Natdhanai Mankosol: Thank you very much.

Ivory Coast back in business with $1bn eurobond

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Côte d’Ivoire’s latest foray into the bond market ushered in a period of stability in 2014. Nialé Kaba, Minister to the Prime Minister for the Economy and Finance, discusses the changes in the Ivory Coast since its 2011 bond default, and the infrastructure improvements the new bond will deliver.

World Finance: Côte d’Ivoire’s latest foray into the bond market ushered in a period of stability last year. Here to share insight into this year’s issuance and its contribution to macroeconomic growth, Minister Nialé Kaba.

So of course your country has made deep structural reforms since the issuance of this last bond, right? So tell me about some of those, particularly in the energy sector.

Minister Kaba: In 2015, our energy production capacity was, 2000 megawatts a year, which we aim to increase to 4,000 megawatts a year. This will allow us to move from a coverage rate of 54 percent to approximately 95 percent in 2020 and the Eurobonds have allowed us to pursue the following important investments: the supply of a capacity of 110 megawatts for the CIPREL thermal power plant, continuing investments in the hydroelectric power station of Soubré, with a capacity of 275 megawatts, and we also have plans to produce a thermal power plant in the city of Grand-Bassam, which is a few dozen kilometres from Abidjan and which will have a capacity of 220 megawatts. Construction is scheduled to start in 2016.

World Finance: So what other structural reforms were you able to get off the ground since this bond issuance?

Minister Kaba: All sectors of our economy were covered by the reforms, and I would like to talk in particular about the reforms in the public finances sector, which consisted in stabilising the macroeconomic business climate through the correct management of public finances, by promoting transparency, by the speed with which the administrative procedures are applied, by improving the conditions under which public contracts are awarded.

We also did a great deal of work on the business climate; and in 2014 and 2015 the International Finance Corporation put us among the top 10 reforming countries in the world. We are continuing to improve our ranking and hope that eventually, in the not too distant future, we will be one of the top 50 countries for Doing Business.

World Finance: The re-payment schedule, of course, was staggered for this bond and its yield was hovering around the six percent mark – tell me how were you able to attract foreign interest given that, of course, your yield was lower than comparable equivalent securities, Zambia and Nigeria for instance.

Minister Kaba: Over the last three years, Côte d’Ivoire has had an average growth rate of nine percent, which is one of the best given the current international environment. Côte d’Ivoire has carried out a great number of reforms, as we have just explained, reforms to set our house in order, reforms also to allow investments to be carried out in the various sectors which drive our economy. In particular, we are currently living in an environment which has returned to normality on the social level and in an environment which offers excellent prospects.

It’s true that we went to the market for relatively large amounts, but all of these investments were carried out in a framework which was fully under control, as we make sure, in the framework we have with the International Monetary Fund, that the sustainability of our debt in particular is respected but also monitored, and that we keep an eye on our economy’s capacity to honour its commitments.

It has to be said that when we were doing the roadshow, many fund managers and many investors told us that the President of the Republic, who used to be Vice-President of the International Monetary Fund, Deputy Managing Director of the International Monetary Fund, reassured them as to his governance. I believe that it is all of these elements together that have allowed the international financial community to have confidence in us; and we intend to work to maintain and increase that level of trust.

World Finance: Of course your country has gone through a period of political stability since the last two bonds have been issued, but that wasn’t the case in 2011. So tell me what is different about the financial market today?

Minister Kaba: You need to understand that in 2011, the year you referred to, we were coming out of a deep post-electoral crisis. Fortunately, all of that was brought under control very quickly, allowing Côte d’Ivoire to resume its process of reconstruction and of growth. And in 2012, 2013 and up to the present day in 2015, we had years when we were able to build our return to peace, our return to social cohesion. And today, we are working towards peaceful and inclusive elections.

World Finance: Now in the years to come, tell me, how are you going to keep productivity at pace with growing debt?

Minister Kaba: The question of the debt is an interesting one, not only for the financiers but also for Côte d’Ivoire itself. We have ambitions to increase the national wealth and reduce the level of poverty, and eventually eradicate it from the country altogether.

We have to bear in mind, with regards to the debt, that we are already under a programme with the International Monetary Fund and the debts we have contracted are carried out in the framework of that programme. They are the subjects of a sustainability analysis, and whenever we come out, we have the authorisation, so to speak, of our partner, which analyses and looks at the potential of our economy with us.

Lastly, in the framework of the viability analysis of our debt, we forecast the creation of national wealth, which will itself generate resources to allow us to honour our commitments, and at the moment, the sustainability of the debt is certain. The share of the private sector in national investment is growing faster than that of the state; and we feel, we hope, that that will be the case more and more with the efforts we are undertaking with regards to Doing Business.

World Finance: Minister Kaba, thank you.

Minister Kaba: Merci Madame.

 

BankServe’s top tips for navigating marine insurance policies

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Peter Mellet, Managing Director of BankServe Insurance Services, explains how to navigate through the paperwork of mortgagee’s interest insurance and innocent owners insurance, and gives his top tips for potential buyers.

World Finance: Insurance can be complicated and getting the right one to fit your company is paramount, especially when it comes to niche industries such as marine, oil and gas.

With me now is Peter Mellet from Bankserve Insurance Services the market leader in a number of insurance markets, to explain how to navigate through the paperwork and various services.

Well Peter I want to start with mortgagee’s interest insurance and innocent owners insurance. What exactly are these?

Peter Mellet: What they are, are contingent covers to protect lenders and investors in the event that owners’ policies don’t pay. When a loan starts, during the life of that loan the owner would buy insurance for hull and war liabilities.

Now sometimes those policies don’t respond and the mortgagee’s interest covers and the innocent owners policies are a second line of defence. And they will step in when the underwriter of the owners policies say: ‘No, we are not going to pay, and we don’t think we have a liability.’ That’s what they do.

World Finance: And are there claims?

Peter Mellet: Yeah, there a lot – people don’t think they are. With any insurance it’s a piece of paper until you make a claim. Maybe it will help you sleep better at nights, but you’ve got to make sure it works. They aren’t as many claims on mortgagee’s interest insurance or innocent owners as there is another forms of cover.

Marine policies get claims all the time. But we have done 80 claims in the last 15 years. Now it doesn’t sound a lot, but that is. And we collected nearly all of the claims in the market during that period of time. Aggregate total is about $160m and we just collected the biggest one ever at just over $64m.

World Finance: What are the differences between the policy forms?

Peter Mellet: I think the differences in the policy forms you can buy are some of the most extreme in the market. Marine policies are fairly concentrated in the middle. But mortgagee’s interest insurance particularly varies. There are two ends of the spectrum: there is a market wording, which is written by underwriters for underwriters. And at the other end of the spectrum, we’ve got a very user-friendly form, which is as wide as we can get it, and also very user-friendly for the borrowers. So it helps everyone during the process.

And it is important to remember that. You are going out, you are not just buying a product from a shelf. You are not buying some hull insurance or war insurance or liability cover. You are buying a product, which has got varieties of form available. And it is important to buy the right one.

World Finance: And policy wording, how has that evolved during the years?

Peter Mellet: It has evolved through claims. I think insurance is a product which does evolve through the claims process. It’s only when you have claims and someone looking at the liability end, lawyers looking at policy wordings and asking themselves: well, does this work? What these words say? What does this do? Is this what we intended the policy to cover? And by people examining those issues you get to a position where suddenly you says: ‘Right, well maybe this is a problem now.’ And you settle and you compromise but next time you look at the wording and you change it to make sure that problem doesn’t come up again. And that is the way it evolves through the claims process.

And mortgagee’s interest insurance hasn’t evolved as quickly because there haven’t been a lot of claims. I said 80. That isn’t many compared to other types of cover. But at the same time, each claim we’ve learned from, and changed the wording to make it more user-friendly the next time.

World Finance: Why should financiers and investors use their own broker to arrange cover rather than let the owner buy it for them?

Peter Mellet: Privity, basically. If they use the owner or the owner’s broker, they will be fixed with the knowledge that the owner or the broker has. And the whole idea of these policies is to protect an innocent mortgagee or investor.

Now they go and buy their own cover, the have to disclose things to underwriters and the covers will work provided they are not aware of the problem which is invalidating the owner’s policy.

Now the owner will know what he is doing wrong – his broker will have information about the owner. Now if the bank doesn’t have that and they place their own cover – they are clean – their policy is untainted. If they use the owner, then they have problems. And I think if they use the owner or the owner’s broker the policy is devalued in its effectiveness by more than 50 percent.

World Finance: Well finally, are there things that people should look out for when they are buying mortgagee’s interest insurance or innocent owners insurance cover?

Peter Mellet: The main thing, one of the main words, is disclosure. You’ve got to tell people the right things; you’ve got to disclose to underwriters any information you have.

Now I know that sounds simple but I think in mortgagee’s interest insurance, it becomes more complicated. And, as soon as you have a claim, the first thing that happens is the underwriters will instruct a lawyer. He will ask for the loan repayment history. If underwriters haven’t been told that maybe the loan is in default; the owner’s missed payments: they will scream non-disclosure.

They’ll say we should have hard worn liability been told this, this is information we should have been provided. And non-disclosure is one of the hardest defences to overcome, to marine claims; it is a very subjective issue.

What would have influenced an underwriter’s decision-making process and that is something which immediately put you into compromise territory. So I think disclosure – and then I think; look at the policy forms. And going back to one of your previous questions, to look at who’s doing it.

Make sure the bank is buying their own cover. The owner buys his cover, the bank should buy theirs; and if you keep the two separate, then you should give yourself the best chance of making policies work when you need them.

World Finance: Peter, thank you.

Peter Mellet: A pleasure.

Does technology offer a lifeline to corporate treasurers flying blind?

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Today’s treasury landscape is developing rapidly, with new technological innovation changing the role of the corporate treasurer. Martin Bellin from BELLIN, a leading web-based treasury software company, explains the data-gathering challenges treasury managers face, and how new technology is improving workflows.

World Finance: Today’s treasury landscape is developing rapidly; especially with new technological innovation changing the traditional approach and the role of corporate treasurer is evolving as result.

With me now is Martin Bellin of BELLIN a leading web-based treasury software company. Well Martin let’s start with how the treasury landscape is evolving and the challenges it faces.

Martin Bellin: If you take a look back in time for a while, then you will see that treasury has become the centre of financial operations in many corporations now. In the former past it was more an extra to accounting and things like that, so it was not recognised as a very important topic.

Nowadays, treasury has become in the middle, and it’s getting more and more important for corporations. They became a department, they became a body in the corporate finance and it is going to raise attention in the meantime. Especially because treasury is not concerned about certain legal entities and divisions, they are concerned about groups, groups of companies.

So they are tearing down the walls between the different divisions and different departments and different legal entities by taking a look at global corporations and the global view. And that exactly, enables global business, and corporations are taking a closer look at global business more and more often and more and more intensively.

World Finance: And how does BELLIN fit into this?

Martin Bellin: When I started this company, I actually had that in mind already, so my idea, my problem actually at that time was, to build an environment, which could enable me to control the whole group of companies. To control not just my financing and my treasury business and my central treasury but around the whole operation – this couldn’t be fulfilled with any instruments available because it’s technology driven.

Technology is required to collect all the information in a global scale. So I developed and tried to develop – at least at the very beginning – I tried to develop a system environment, which enables me to get hold of all the data on the global level.

Now by having the data available at my fingertips, I am able to manage now, exactly what I am supposed to manage: the global financial impact, the global financial risk of my corporation.

World Finance: Treasurers are spending more and more time now on risk management, capital liquidity management and business strategy – what needs is this prompting and how do you approach this?

Martin Bellin: If you go back you’ll find a survey which has been made by Gardner and published by Gardner and I figured out, a couple of years ago, that 75 percent of the time of an average treasurer is spent on data collection.

Now imagine: none of these treasures have on their business cards a title ‘treasury data collector’ – they are all called treasury manager.

Now in the meantime, we do have systems available, which are helping me to collect all the data from the different subsidiaries together in one spot. Now if I can spend the time, which I have spent before on data collection, on management; I can exactly do what I am supposed to do; manage my risk, my liquidity, my positions, and what I am supposed to manage.

World Finance: And how is increased regulation impacting the industry?

Martin Bellin: Well treasurers are not accustomed to regulation because there was no regulation, actually, for corporate treasures in the past. Accountants are very used to regulation. Now as treasurers become more and more affected by regulations, we all know about Dodd Frank, about EMIR, which are affecting treasury business.

My concern is that corporations are starting to avoid or to change their risk management in a way that they are weakening their risk – because they do not want to follow the regulations, they cannot comply with the regulations. So there are coming more regulations in the future, we are all sure of that, because the financial industry is requiring regulation for different reasons, we all know about that. So and this is going to affect corporate treasurers as well. Now this is going to affect corporate treasurers that have to comply with regulations.

How do I comply with regulations? By implementing proper technology – which helps me to get rid of data collection again to build the reports, which are required and to do all these things, which are now regulated. We have to get used to that in corporate treasury as well, and we have to implement the systems, which are going to help me to comply with them.

World Finance: Looking at treasuries now from a global perspective and how important is it that they are connected?

Martin Bellin: Business is all about information, the more you know, the easier the business is. Just imagine a pilot – I flew in this morning to London, imagine the pilot wouldn’t have any instruments, wouldn’t have any sight were he is flying to, or a captain sailing the seas. If he would have no idea where he is going to go, then he will be in trouble very easily. Now that applies to treasury as well.

If the treasurer doesn’t have all the information at hand to manage the corporation – how could they? Now the question is, how does technology impact the future of treasury? I need systems, I need information – I need all the real-time information at hand to really do what I am supposed to do – to manage my risk for the corporation; for the benefit of the corporation.

World Finance: And finally, how do you see the industry evolving over the coming years and what trends you see impacting it?

Martin Bellin: Well, there are different trends I will say. First of all there are corporations, which have a professional treasury in place right now, so they reconsider their existing set up. They have the ability now to consolidate their existing landscape. They have implemented payment systems, risk management systems, planning systems, all these kind of things. Now there are systems available which can put all the things together in one, that’s one trend.

Another trend is that more and more corporations are going to come aware that treasury is really a core part of their financial set up – and they are just starting to implement and to run a treasury department at a professional level. That is the most important impact and the change in the future, because there are still too many companies that do not consider treasury a part of their financial set up.

And third, we do have a possibility now to increase our abilities in treasury – what does that mean? If you want to have a global set up in treasury you have to run global payments. That means you have to have one platform in place, which enables you to process all the payments from any subsidiary in the world through this one platform. Now this communication exists, more and more companies are implementing exactly this bank independent payment hub.

Now by having this payment hub available, you have the ability to communicate to banks in a professional level. Having this in same place, enables you to do much more than just payment processing – enables you to do deals conforming through finance dealings, and all kind of other deal types, that now can be processed through the same channels. So there is a bright future just in front of the professional treasuries to increase automation, SDP and efficiency in their operations, through the whole operation and whole corporation.

 

Luis Espínola: Technology will be main driver for Dominican Republic banking

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Banking in the Dominican Republic is a burgeoning and diverse sector – with technological innovation leading changes in the industry, and new financial inclusion initiatives driving growth. Banco Popular’s Luis Espínola talks about the latest trends in the Dominican Republic’s retail and corporate banking sectors.

World Finance: Banking in the Dominican Republic is a burgeoning and diverse sector – with technological innovation leading changes in the industry. 

With me now to speak about how the private equity sector is developing is Luis Espínola, executive vice-president of international business and private banking at Banco Popular Dominicano.

Well Luis, the banking landscape in the Dominican Republic has changed remarkably over the last decade. How does it stand today and how does BPD fit into this?

Luis Espínola: We had a bank crisis in 2003, one bank was liquidated and two more had to be sold since we had a small economy at the time, you know. That had a spill over – if you will – in the economy.

Soon after that, our country recovered extremely well. Our numbers within the Central American and Caribbean region are extraordinary, we are one of the strongest and fast growing economy of the region and Banco Popular plays a major role into that.

We cater to the needs of all banking segments: retail, middle market, corporate, tourism – you name it – we are there. And we’ll continue to strive to have a better understanding of the needs of our customers going forward and to provide those products and services accordingly.

World Finance: Of course technology is drastically impacting banking practices worldwide – how are you responding to this?

Luis Espínola: On all our online banking services to all our retail and private middle market and corporate customers, we offer what we feel is state of the art online banking, as well as new and fast technology at the point of sales: chip-based point of sales now, that can maintain the international standards that our customers are requiring.

Technology is going to be the main driver for the banking system, and for Banco Popular to be able to deliver – going forward – the products and services in a more efficient way. And to that extent we also offer new mobile services, in which we can reach our customers at the cellphone point of sale. And that way, they can do through their cellphones different transactions including: transfers, online payments – real-time online payments. So they can have a small branch at their fingertips.

World Finance: And in terms of cash management – how much importance is placed on this for the economy and what is your approach?

Luis Espínola: Extremely important, for our corporate and middle market customers – and why not – the small businesses; you know, this is important. So we are now providing products and services towards cash management among others.

There are remote cash deposits where customers handle their cash and deposit their cash in a more cost-effective channel with Banco Popular, which saves them roughly 60 percent of transportation cost that they currently incur. 

World Finance: In terms of financial inclusion now and how well covered is the Dominican Republic?

Luis Espínola: We are very excited in the financial inclusion side because there are a lot of initiatives towards continuing to expand financial inclusion.

We have been establishing a new service provider channel, which is the sub-agent bank network, which in our country permits us to partner with all the different town and provinces in the country: pharmacies, supermarkets, and any retail store. We partner with them, they are able to provide our different products and services, and thus they receive not only current but potential customers.

So we are very excited going forward of the penetration. And hopefully, we will be able to increase an important rate of financial inclusion within Banco Popular Dominicano.

World Finance: And how do you target the younger generation demographic?

Luis Espínola: We have different services and products that we provide to our youth, especially with different credit cards and through cards in general. We offer different accounts that cater to their needs. We are very active in Twitter, in Facebook, in Instagram, any social media; you name it, we are there. Trying to not only deliver our message on our products and services but also to try to understand and have our ears to the ground to what, our customers, especially the youth, are looking for.

World Finance: Finally, let’s look at your approach to the corporate sector and what trends are you seeing in this area?

Luis Espínola: As our economy has been opening up through the last few decades, so have our customers been in more contact, and they are now accustomed to other international standards. We have specialised business managers, we work together closely with our corporate customers, we understand their strategic plans. We understand their vision – going forward – and we ensure our capabilities as a banco, as a bank, as a leader bank, as a group within that strategy, to grow together with our customers.