Author: Ashton Wenborn

Macron pledges €700m to solar energy projects

Posted on by Ashton Wenborn

On March 11, President Emmanuel Macron announced that France will pledge €700m ($862m) to solar energy projects by 2022.

The announcement was made during his trip to India at the first ever summit of the International Solar Alliance, an intergovernmental organisation launched in 2015 by Indian Prime Minister Narendra Modi to promote the use of solar energy.

Macron promised to build on France’s existing €300m ($369m) contributions to the body, bringing country’s total donations up to €1bn ($1.23bn).

“This week-end we make Delhi the world capital of the sun,” said Macron via Twitter. “Through our presence we seal an alliance to make the energy of the sun accessible to everyone.”

The overarching goal of the alliance is to generate $1trn to fund solar research across 121 countries by 2030. It places special focus on those countries between the Tropics of Cancer and Capricorn, which receive large amounts of sunlight. So far, 60 countries are signatories to the alliance, with almost half of them having ratified the agreement.

The overarching goal of the alliance is to generate $1trn to fund solar research by 2030 across 121 countries

India, the world’s third-largest emitter of carbon dioxide, has seen rapid advancements in its renewable energy capacity over the last few years, and seeks to nearly triple its capacity to 175GW from non-fossil fuel sources by 2022. Since 2015, India’s renewable energy capacity has risen from 39GW to 63GW.

As part of his India trip, Macron accompanied Modi to the inauguration of the largest solar power plant in the northern Uttar Pradesh province. Costing approximately $76m and built by French energy firm ENGIE, the plant will be able to generate 75MW of energy. For comparison, 1MW could power 1,000 houses for an hour, although number will vary depending on weather conditions.

As with any emerging technology, funding is always a roadblock to implementation. A priority for member countries is to lower the cost of financing solar projects around the world, thereby promoting investment into renewable energy at all stages of the supply chain.

Wall Street’s bull market reaches ninth birthday

Posted on by Ashton Wenborn

The second-longest-running bull market on Wall Street turned nine years old on March 9, and is on track to beat the all-time record of nearly 10 years.

Bull markets have a life cycle, and this one is certainly reaching maturity, but with the fundamentals looking good, it is not ready to die yet.

The current bull began its life in March 2009, when stocks stopped dropping and began inching back up in the aftermath of the financial crisis.

A stock rally after a crisis is defined as a bull market when it rises by 20 percent relative to the low point. Conversely, they cease to exist when they fall by 20 percent relative to the high point.

Bull markets have a life cycle, and this one is certainly reaching maturity

If the current rally can go the next six months without seeing a 20 percent fall from its high point in January, it will break the record set by the ‘great bull’ that began in October 1990 an ended when the dotcom bubble burst in 2000.

Despite the bull’s lengthy existence, it is showing signs of slowing. The stock market, which has produced headline after headline of shattered records, has been aided by a very generous monetary policy that saw near-zero interest rates during the recovery.

Scheduled rate increases by the Federal Reserve are set to tame the stock market, but are not likely to be the source of a severe downturn.

The looming trade war brought on by President Trump’s tariff hikes has also caused jitters among investors, and could adversely impact stocks depending on how strong the retaliation from foreign governments is.

The success of this market is due in no small part to the pessimism that set in after the financial crisis, which prevented investors from paying too much for stocks.

Bull markets tend to die when shoppers, investors and businesses become too optimistic and begin overspending and over-borrowing.

However, this does not yet seem to be the case, and some have actually predicted that the rally could continue for years before disappearing.

Trump’s tariff proposal provokes global retaliation

Posted on by Ashton Wenborn

Donald Trump’s campaign promise to deliver tariffs on steel and aluminium imports came to fruition on March 1, causing markets to dwindle and igniting widespread international criticism.

The US President has threatened to impose a 25 percent tariff on steel and 10 percent on aluminium imports, which he claims will protect domestic industries against unfair competition from China and other countries. “This wave of globalisation has wiped out totally, totally our middle class,” Trump told voters in the Rust Belt town of Monessen, Pennsylvania.

An own goal
The IMF hit back following the tariff announcements, stating that the Trump administration’s intentions to protect domestic markets could do quite the opposite, raising costs of steel and aluminium. The negative impact could extend to the US manufacturing and construction sectors, major users of the materials.

Stephen Woolcock, Associate Professor at the London School of Economics agreed, adding: “Most job loss in older industries such as steel is due to productivity increases. This may in part be in response to increased international competition, but the current Trump administration’s position on trade appears to be driven more by domestic politics than any considered assessment of the impact on employment in US industry. As a number of commentators have pointed out, there will be increased costs for US steel and aluminium users that are likely to further undermine US competitiveness.”

The EU is considering responding with a 25 percent tariff on $3.5bn of imports from the US

In terms of domestic employment, the move would not significantly benefit the working class, a group that has supported Trump’s criticisms of trade agreements.

“The overall consequences would be a slight rise in employment in the US steel sector, but a larger loss of employment in other sectors,” argued Julius Sen from the Department of International Trade Policy Unit at the London School of Economics. A study published on March 5 outlined that the net impact on US jobs would negatively affect the services industry the most, including construction and trade and distribution.

Repeating history
This is not the first time steel trade has been threatened, however. During his second year in office, George Bush implemented foreign steel tariffs of eight to 30 percent. The move backfired, raising costs for steel users and drawing retaliatory tariffs from the EU, Japan, South Korea and others. This, along with a ruling of violation by the World Trade Organisation (WTO), drove Bush to withdraw the tariffs in late-2003.

The current administration doesn’t appear to have taken note of the WTO’s previous stance, a move that could cause significant problems. “If all WTO members did the same, the rules-based trading system would revert back to a power-based order. Trump seems to welcome this, but if each major WTO [member] determines what is fair it will mean reduced trade and a loss of world welfare. Small countries and developing economies will be especially vulnerable,” added Woolcock.

Retaliatory tariffs
According to Bloomberg, the EU is considering responding with a 25 percent tariff on $3.5bn of imports from the US. European Commission President Jean-Claude Juncker cautioned Trump with consequential tariffs on American products such as Harley-Davidsons, Levi’s jeans and Kentucky bourbon.

He called Trump’s tariffs “a blatant intervention to protect US domestic industry and not to be based on any national security justification”. German manufactures, which are the biggest EU-based exporters of steel to the US, annually exporting approximately 951,000 metric tonnes, could take a significant hit.

Canada and Brazil, which own the largest shares of steel imports to the US (16 percent and 13 percent respectively), are set to be hit hardest by the change.

Michael Plouffe, Lecturer in International Political Economy at the University of Central London, addressed the potential response from Canada and Mexico, which are involved in NAFTA talks with the US: “Both the unplanned announcement and unilateral nature of these potential tariffs are likely to lead to doubts on the part of the Canadian and Mexican teams that the US is negotiating NAFTA reforms in good faith.”

The global trading system could face challenges if the EU and China retaliate. “[They] would be hard-pressed to justify retaliation under WTO rules, so would either need to break these rules or step out of the system using national security prerogatives. Both would be extremely bad for the wider trading and political system,” Sen said.

The tariff could see the global trading system performing under tense conditions if Trump goes ahead. Given the immediate international and domestic backlash, plus lessons learnt from his predecessors, Trump may rethink the tariff, particularly if he deems it not worth the duties that could be imposed on American goods. This may be the case if a ‘fair’ NAFTA agreement is signed. Otherwise, ‘America First’ may leave the US in last place.

What PSD2 and open banking means for financial services in 2018

Posted on by Ashton Wenborn

In 2018, the financial services industry will undergo a transformation that will fundamentally change the relationship between consumers and retail banks. By giving consumers the choice of new direct-to-account payment methods and the ability to share their transaction data more freely with third parties, the EU’s Second Payment Services Directive (PSD2) and its UK implementation, ‘open banking’, will alter the structure of retail banking for good.

Although the received wisdom is that open banking will lead to a loss of market share for established players as they are forced to make data available to other companies – in particular fintech startups and digital specialists – forward-looking banks are thinking much more positively.

In fact, they see open banking as an opportunity to create new business models and revenue streams based on a real competitive advantage, built on long established trust and a large-scale customer base.

Seamless experiences
Open banking will certainly see the acceleration of digital innovation. Banks are rethinking their business models to go beyond just compliance with the new laws by expanding their digital offerings and creating a seamless customer experience in mobile and web.

Smarter digital identity systems will be essential to making digital banking part of a positive customer experience. Intelligent and contextual authentication processes – from the use of one-time passcodes to biometric identification – can be the key to creating the genuinely seamless and secure customer journeys that users expect.

A new payments business model will become available to banks once open banking takes effect. By opening up the traditional structures that have dominated financial services, open banking and PSD2 create opportunities to condense the payments value chain. This enables the in-app, one-click purchasing options that are threatening the dominance of card payments.

New payments initiation service providers will prompt innovation in the retail environment, enabling apps to connect directly with their customers’ bank accounts. This allows the customer to seamlessly make payments, with authentication options such as facial recognition and fingerprint sensors ensuring payments remain secure.

By opening up the traditional structures that have dominated financial services, open banking and PSD2 create opportunities to condense the payments value chain

This kind of low-friction, high-assurance experience will disrupt more traditional payment methods, especially as retailers keep an eye on in-store innovation from the likes of Amazon.

With the need for explicit consent from the consumer for such payments, there come opportunities to personalise the shopping experience with real-time contextual services and offers.

Providing consumers with dashboard options for managing their consent will be an early differentiator, showing respect for privacy whilst enabling access to a wider ecosystem of partners for loyalty, rewards and extended services.

Turning data into insight
Another new entity enabled by PSD2 and open banking is the account information service provider, which is focused on the vast potential of transaction data to provide real insights about customers. This offers an opportunity for a deeper level of customer engagement, delivering a different experience from the online bank statement and inviting customers to engage with their own financial wellbeing.

Among challenger banks there are already examples where real-time spending insights, saving goals and relevant offers are being presented to customers through a modern interface.

With such vast amounts of customer data in their possession, banks will not pass up on a new way to offer value, especially as this will increasingly be the focus of competition and differentiation.

The potential to collect data from accounts the customer holds at other banks and then provide the customer with a data dashboard for a 360-degree view of their financial status is a tremendous development.

Businesses have invested heavily into analytics capabilities to gain a better understanding of their customers’ needs and preferences. Technology platforms such as Facebook and Google are certainly dominating this market, but banks have a major advantage in that the data they hold concerns real-world purchasing behaviours.

As such, insights gleaned from this information can be acted upon more successfully than those gained from the non-specific data provided by likes and clicks. Of course, this raises very important issues concerning the acquisition and management of consent.

In 2018, two further laws will come into force: the Guide to the General Data Protection Regulation and ePrivacy Regulation – both designed to make digital life more human-centric through further use of consent.

Earning trust
In order to lay the groundwork for stronger, more trust-based customer relationships, banks should focus on convenience, choice and control.

Time wasting and duplication of effort need to be swapped out for convenience if organisations are to take advantage of open banking. It’s all about redesigning the customer journey and delivering a seamless, context-aware customer experience, enabled by secure methods of authentication, biometrics and authorisation. At every point, teams need to be asking how easy and secure the service is for the customer.

Choice is also vital. Open banking is designed to give customers greater flexibility. Banks should embrace this and use it to gain an edge over their competitors. This means not just complying with regulations at a surface level, but going beyond that and offering real value and choice to the consumer.

The development of new propositions and the positioning of new partnerships is well served by secure access to application programming interfaces, and banks have a distinct opportunity to extend identity assurance to a wider system that covers customers’ different life stages and needs.

Lastly, putting customers in control of their own finances is essential. Banks should establish a system and culture that treats customer data as a shared asset, giving users transparency and control over how and under what circumstances their information can be used.

Customers knowing they can turn their consent on and off at their convenience will build trust and result in more data being shared. It opens the door to new journeys that are contextually rich, based on location, activity and intention – all fundamental to personalisation.

Opportunities abound
Open banking and PSD2 will undoubtedly bring huge changes to the financial sector. However, these changes should not be viewed as a threat to banks and financial service providers.

Established players should face new compliance demands with agility, greater collaboration with partners and a firm focus on delivering a first-class digital experience.

The ambition of legislators is to put citizens firmly in control of their digital lives. In 2018, there is first-mover advantage to be gained by institutions that can securely leverage the decades of knowledge and trust they have built up and deliver greater value to customers.

BBVA Bancomer is using technology to keep pace in the changing banking landscape

Posted on by Ashton Wenborn

BBVA Bancomer’s efforts to secure its place in the digital banking sphere have taken several years, but an important breakthrough in 2014 saw it become the first Mexican financial institution to create an executive-level digital banking division. The new division was set up to provide the bank’s more than 18 million clients with a superior banking experience.

Over the last three years, BBVA Bancomer has been investing in hardware, technology and new working methods to develop a mobile app. The customer-centric solution gives clients access to the bank in the palm of their hand. By going mobile, the bank is able to support customers at all times, helping them make better financial decisions in their daily lives.

One of BBVA Bancomer’s key strategies when improving its digital banking capabilities has been the use of data analysis to cultivate in depth customer knowledge. By using new technology such as cloud computing and big data, the bank is able to analyse real-time information and offer solutions that are specific to each customer. The combination of insights from metadata and the bank’s long-standing financial experience, BBVA Bancomer’s services have shifted from transactional banking to relationship banking, allowing it to meet each client’s needs more accurately.

18 million

Total BBVA clients

5 million

Digital clients

4 million

Mobile clients

12.2 million

Bancomer Movil downloads

Today, peer banks are not BBVA Bancomer’s biggest competitors. Instead, young and agile fintech companies are benefitting from employees with a different skill set and a new approach to the market. These new players have been focusing on their clients’ behavioural and consumption patterns and, as such, are developing strategies that place great value on customer experience. In order to remain relevant in this climate, the BBVA Bancomer is developing innovative solutions centred on clients’ needs and quality customer experience.

Vertical solutions
BBVA Bancomer has maintained its leading position in the Mexican banking industry by listening to and understanding the new generation of customers. It has developed a series of digital products and services that meet the expectations of young, digitally native generations. The cornerstone of BBVA Bancomer’s digital services is Bancomer Movil, a multi-platform mobile banking app that offers multiple banking services in one place. This app enables efficient account management in a user-friendly environment. Clients can check their balance, transfer money and pay referral services.

The app also has ‘one click’ services such as Prestamos Disponibles (Available Credits), which shows the pre-approved credit loans available to customers based on their credit history and score. BBVA Bancomer also offers cardless withdrawals from its ATM network using a code sent directly to the customer’s phone. By developing these vertical solutions the company is able to take advantage of digital developments, keeping customer satisfaction in mind at all times.

As well as Bancomer Movil, BBVA Bancomer has produced the BBVA Send app, which allows clients to send money using the recipient’s phone number. Another app developed by the bank is BBVA Wallet, which lets clients make safe online purchases by creating a temporary digital account linked to the customer’s bankcard with a dynamic CVV number. Another vertical solution is BBVA Plan, which supports clients in creating personalised savings plans based on goals and timescales they can set.

One of BBVA Bancomer’s key strategies when improving its digital banking capabilities has been the use of data analysis to cultivate customer knowledge

Looking after customers
Bancomer Movil, the first digital banking app in the Mexican finance market, has improved financial inclusion in Mexcio as, no matter how isolated their location, customers can always access their accounts. Users can set up their account on the app without having to go to a branch. As such, the bank is able to reach a segment of the population that has historically been excluded from entering the formal financial system.

Another important feature of Bancomer Movil is CheckUp, which provides users with a log of their financial behaviour and an indication of the health of their finances. By making use of the 85 years’ experience BBVA Bancomer has accumulated, the bank is able to give sound financial advice to its customers so they can improve and maintain good credit scores.

The financial world evolves every day. Non-financial players are constantly offering new products that are better suited to people’s needs. However, BBVA Bancomer is not prepared to be overtaken by newcomers, and so the bank continues to strive to stay at the forefront of digital developments. By interacting with customers, being attentive to their needs, working side-by-side with other companies and keeping up-to-date with technological change, the bank will adapt to the new banking landscape.

Angola ditches dollar peg

Posted on by Ashton Wenborn

Angola’s central bank has announced that it will be scrapping its currency peg in favour of a more flexible exchange rate regime, as authorities grapple with fast-depleting foreign currency reserves and dollar shortages.

The move follows several years of economic disarray triggered by the commodity price slump of mid-2014, which brought growth rates to a standstill after a decade of oil-fuelled expansion. Since the oil crash, the official value of the kwanza has dropped by over 40 percent against the dollar, but is still overvalued compared to estimated exchange rates on the black market.

“We have an exchange rate that does not reflect the truth,” Governor José de Lima Massano told reporters in Luanda, as quoted in BusinessDay.

The shortage in hard currency has made it difficult for Angolans to pay foreign workers and overseas suppliers, while the overvalued exchange rate has dampened overseas investment.

The kwanza is expected to fall sharply once the peg is dropped, though the central bank plans to intervene if it moves outside upper and lower limits, which are yet to be set.

In a press release, the central bank stated: “After analysing the behaviour of the macroeconomic fundamentals of the Angolan economy, and particularly the decreasing trend of international reserves, and taking into account the current imbalance between supply and demand for foreign exchange, the CPM [Monetary Policy Committee] will define the maximum and minimum limits of the foreign exchange band.”

The change is part of a wider economic overhaul led by newly-inaugurated President João Lourenço, who has been in the job for less than four months, following the 38-year presidency of his predecessor, José Eduardo dos Santos.

Depreciation in the kwanza is likely to push inflation up, which is already around 30 percent. It will also exacerbate the country’s debt burden if debt-servicing costs rise, which is widely anticipated. The country’s finance minister, Archer Mangueira, has announced that the government will be looking to renegotiate Angola’s external debt, which currently sits at $40bn.

Top 5 fastest-growing cryptocurrencies of 2017

Posted on by Ashton Wenborn

Cryptocurrencies experienced a turning point in 2017. They moved from being a niche interest to an everyday talking point. But a lot has changed in one year: bitcoin’s market capitalisation grew 14-fold from $15bn to $221bn, while others, such as Swiscoin, all but disappeared. Meanwhile, a number of cryptocurrencies have far outpaced bitcoin’s growth.

Cryptocurrencies moved from being a niche interest to an everyday conversation point in 2017

Using data from CoinMarketCap, World Finance has compiled a list of the fastest-growing cryptocurrencies of last year, according to market capitalisation.

(Note: the list consists only of those that were already established at the start of the year, with a market capitalisation of over $10m.)

1. Ripple

XRP, the cryptocurrency behind Ripple, is now the second largest behind bitcoin, having surpassed Ethereum over the course of the year. It has seen its market capitalisation go up by 34,590 percent since the start of 2017 following a string of successes in the development of its payments infrastructure.

2. Stellar

Stellar is an open-source protocol for exchanging value. Its market capitalisation increased by 33,630 percent over the course of 2017, ending the year with a total value of over $5bn.

3. NEM

At the start of 2017, NEM was the world’s 11th-largest cryptocurrency, but reached 8th position by the end of the year. Its market capitalisation grew by 25,427 percent over the course of the year.

4. BitShares

BTS, the cryptocurrency behind the BitShares financial platform, has seen its market capitalisation jump from by 15,879 percent, ending the year with a worth of over $1.6bn in total.

5. Ardor

Ardor is a blockchain platform that enables businesses to make their own blockchains. While it is only the 25th-largest cryptocurrency, its market capitalisation grew by 15,215 percent during 2017.

Eurozone manufacturers hope to continue year-end growth into 2018

Posted on by Ashton Wenborn

A recent survey analysing the performance of the eurozone’s manufacturing sector revealed a strong end to 2017, with impressive growth reported across the 19-member bloc. December results for IHS Markit’s latest Purchasing Managers’ Index (PMI) report, published on January 2, returned the highest growth figures since the survey began in June 1997.

The positive results extended across the eurozone, with job growth accelerating in Austria, France and Ireland, while Greece delivered its strongest manufacturing performance since 2008. Italy’s PMI figure of 57.4 did fail to reach analysts’ predictions, but still represented growth in the sector.

Commenting on December’s PMI data, Chris Williamson, Chief Business Economist at IHS Markit, noted that the overall health of the eurozone would give manufacturers good reason to believe that growth could continue long into 2018.

In spite of record growth levels, inflation remains stubbornly below the target figure of two percent

“The eurozone manufacturing boom gained further momentum in December, rounding off the best year on record and setting the scene for a strong start to 2018,” Williamson said. “The final PMI was in line with the earlier flash number, confirming a record monthly improvement in business conditions at the end of 2017. Forward-looking indicators bode well for the New Year: new orders rose at a near-record pace, while purchasing growth hit a new peak as firms readied themselves for higher production. Meanwhile, job creation was maintained at November’s record pace.”

Perhaps, given the overall economic performance of the eurozone in 2017, record growth levels in the manufacturing sector should come as little surprise. The currency union became the success story of last year, with its economic performance outpacing that of its peers, including the US.

The only problem for the European Central Bank is that, in spite of record growth levels, inflation remains stubbornly below the target figure of two percent. However, the manufacturing sector appears to have balanced higher input prices with a strong overall performance, suggesting that upward price pressures may be returning.

Eurobank Cyprus leads the way for Cypriot banks

Posted on by Ashton Wenborn

In the aftermath of the 2008 financial crisis, Europe was hit by sovereign debt burdens. Following Greece, Ireland and Portugal, in 2013 Cyprus – which had adopted the euro just months before the crash – became the fourth country to receive a bailout from the European Commission, the European Central Bank and the IMF.

The Mediterranean island’s economy shrank, and its banking industry suffered a major collapse, with the two biggest banks taking or cutting their savers deposits. The system’s credibility had been substantially undermined.

Eurobank Cyprus not only resisted those tough days, but emerged stronger. Now, 10 years since the bank started operations in Nicosia, Antonis Houry, Manager of Strategy and Business Development for the bank’s wealth management department, reflects on the bank’s strategy during the crisis.

The bank has evolved a great deal over the past decade, and now plans to exploit the opportunities in the wholesale sector. Following a strong economic recovery in a relatively short period of time, the future seems brighter for the financial industry in Cyprus.

How has Eurobank evolved since it started its operations in Cyprus?
Eurobank started offering banking services in the country in 2007, after opening an office in Nicosia, the largest city in Cyprus. Just 10 years on, it has eight banking centres in the main cities of the island. With the focus on the wholesale sector, the bank has grown significantly over the last decade while maintaining healthy profitability, a solid capital base and strong liquidity.

Eurobank’s success is due to its commitment to relationship management, achieved by offering high-quality services and solutions along with innovative products.

How do you ensure that your clients all receive the best service?
Over the years, the bank has developed a model based on four pillars. The first is corporate banking, which provides companies with a set of comprehensive financing solutions and banking services, such as lending and deposit products. We customise our offers, taking into account the unique characteristics and needs of each organisation.

Second, we offer wealth management for individuals and institutions, including a wide range of investment options, in line with an increasingly sophisticated environment. The third pillar is focused on international business banking as a gateway for companies to find international success.

And finally, the bank provides access to a broad range of financial instruments, specialised products and integrated strategies through its division of treasury and global capital markets. This service allows clients to take advantage of opportunities in currency markets, fixed income securities, commodities and energy products.

How did Eurobank Cyprus manage to navigate the 2013 Cypriot financial crisis?
Of the challenges the bank has faced over the last few years, the crisis of 2013 – which saw the banking sector in the island suffer a major setback – was the biggest. While Eurobank was not hit as hard as other financial institutions, the turbulence that plagued the industry created a big challenge for the bank. However, the bank perfectly managed to weather the storm, not just retaining clients, but multiplying them.

Because Eurobank had adequate provisions in place for NPEs, its ratio is approximately 10 times lower than the country’s average

Since it was founded, the bank has performed strongly, with excess liquidity, low operational costs and a commitment to excellence and transparency that drove the institution through difficult times. Furthermore, long-term relationships with clients based on professionalism and trustworthiness have enhanced Eurobank’s growth.

What is the current burden of non-performing exposures?
Although many banks in Cyprus faced a high volume of non-performing exposures (NPEs), Eurobank’s model allowed it to maintain, at 5.5 percent, the lowest ratio in Cyprus. Because Eurobank had adequate provisions in place for NPEs, its ratio is approximately 10 times lower than the country’s average, which is a sound indicator of the bank’s responsible operations.

How is the bank supporting the Cypriot economy?
Eurobank is contributing to both economic and social development in the country. Apart from being a source of jobs, the bank is supporting companies in other economic sectors.

Our corporate department is committed to granting small businesses loans that will facilitate investment projects, thereby promoting economic growth in the country. For example, the bank is supporting the construction of new hotels, which are creating both temporary jobs and permanent positions.

What is the bank’s approach to good corporate governance?
Since it arrived in Cyprus, Eurobank has always maintained very strong corporate governance. For example, the majority of its directors are non-executive independent directors.

The role of these external directors is to make strategic contributions, as they are looking at the big picture, not the day-to-day running of the company. These directors are important to good corporate governance because they provide a neutral point of view. Each independent director at the bank chairs one of the committees that make up the bank’s corporate structure.

How does technology help the bank cater to its clients?
Our main goal is to provide excellent service to our clients. In order to achieve this ambition, we need to have clear and open communication to assist them. Technology has been the bridge to reach and serve our clients. This is the reason we invest heavily in tech and new systems.

What kind of digital tools does the bank offer and how do they benefit customers?
Our wealth management department is a good example of what clients can do with our digital tools. Through the bank’s website, we can fully customise services both for individuals and institutional customers. For instance, they can access and monitor their portfolio online. The toolkit for Eurobank’s clients also allows them to open accounts without visiting branches and to make electronic payments.

What new technology is the bank currently working on?
We have added more services to our mobile application so that our clients can satisfy even more of their banking needs on their devices. Keeping up to date with technology and new developments requires continuous work. We are dedicated to improving our current services and are particularly aware of the risks posed by cybercrime.

We are taking all the necessary measures to ensure that all the technological tools we use are secure. This represents an important part of Eurobank’s investment in technology.

What predictions do you have for the future of the industry?
Banking is facing a number of challenges. The biggest one has arisen as a consequence of the banking crisis in 2013. Regulatory demands have been multiplying since then, imposing greater costs on banks as more employees and extra work are needed to deal with additional legal processes. For example, banks have to produce more reports and follow ‘know your customer’ rules to prevent crimes and control risks.

Increased regulations will eventually drive a consolidation in the banking sector, with a rising number of mergers and acquisitions likely to happen in the short term.

What are Eurobank’s plans for the coming years?
Developments in digital technologies have brought more competitors to the industry. Fintech companies have come into play, disrupting the sector with new facilities and pushing banks to evolve. This has been a challenge for traditional banks, which have to keep up to date with new technology so as not to be left behind. This is why Eurobank is heavily investing in technology.

Besides digital expansion, is Eurobank opening new brick and mortar branches in the country?
Over the last 10 years, Eurobank has experienced organic growth, increasing the number of banking centres on the island. We will continue to expand following the same strategy of opening new branches gradually – one or two per year – to meet growing demand in the wholesale sector.

Specifically, we look forward to expanding our services for investment funds, which are a flourishing niche market in the country. Furthermore, we plan to take advantage of opportunities in wealth management and affluent banking.

BCI Mozambique is helping to restore Mozambique’s international credibility

Posted on by Ashton Wenborn

In 2007, the World Bank celebrated Mozambique’s “blistering pace of economic growth”. However, a recent slowdown now threatens to undermine the country’s progress. Higher-than-expected government borrowing has shaken confidence in Mozambique’s economic prospects, with foreign direct investment falling 20 percent in the past year.

There are, however, signs of improvement. The discovery of 20 billion barrels of natural gas in 2011 promises to transform the economy, but there are still many challenges that must be overcome if the country’s economy is to continue to develop.

In light of Mozambique’s recent economic troubles, World Finance spoke to Paulo Sousa, CEO at BCI Mozambique, about the company’s leading role in the domestic financial sector and how international partnerships could hold the key to a brighter future.

How has the banking industry in Mozambique fared in recent years?
Mozambique’s economy has contracted significantly over the past few years, owing to a drop in commodity prices and a significant reduction in international aid. This has been reflected in the sharp depreciation of Mozambique’s currency (the metical) and a fall in business revenues.

In the hope of avoiding a systemic crisis, the Bank of Mozambique has decided to intervene, taking over the management of one financial institution and liquidating another. Tighter regulations should also help to stabilise the currency market, increase the shareholder equity required of operators and enforce more demanding solvency ratios.

However, there were signs of economic recovery in the first half of 2017, with GDP growth standing at 2.9 percent and strong performances by extractive industries, financial services and trade. The metical, in response to the restrictive monetary policies adopted by the Bank of Mozambique, has also shown signs of stability. This has helped to reduce inflation in addition to increasing international reserves.

BCI Mozambique is strongly committed to exploring alternative financial channels, including the formation of partnerships with public and private institutions

The government of Mozambique has adopted more restrictive fiscal policies to repair its relationship with the IMF and resolve liquidity problems, but challenges continue to complicate recovery. Primarily, Mozambique must restore its international credibility in the eyes of investors. Negotiations with creditors, whether relating to the restructuring of foreign debt or the IMF’s financial aid programme, must also be tackled as a priority.

How are developments at BCI reflecting the market’s evolution?
BCI has been adapting to the country’s economic challenges by improving its analysis of credit risk, developing better management of foreign currency flows (particularly with regard to the US dollar) and implementing a raft of measures to assist customer debt servicing. The bank’s commitment to innovation is also evident in its adoption of digital technologies, particularly its mobile banking solutions.

As mentioned previously, BCI has been adjusting the structure of its shareholders’ equity with the aim of meeting new prudential regulations. With the support of our Portuguese shareholders Caixa Geral de Depósitos and Banco Português de Investimento, we have been adopting the best international practices at all levels of our activity.

We are also strongly committed to exploring alternative financial channels, including the formation of partnerships with public and private institutions. Providing financial services to major projects, such as those involving oil, gas and other locally sourced materials, is also one of our main objectives.

Why are partnerships like the one with American Express so important to BCI’s long-term strategy?
American Express is one of the largest financial services companies in the world, currently accounting for two thirds of the world market for corporate cards. Since 1997, the company has been entering into partnerships with a select group of banks and financial institutions.

BCI became a member of this exclusive group last March. In addition to the prestige involved, this partnership reinforces our own position as the largest card issuer in Mozambique. It also boosts our contribution to the development of Mozambique as a tourist destination, as many American Express cardholders are associated with the tourism and business sectors.

What else does BCI have planned for the future?
BCI will continue to be the benchmark operator in the domestic banking system by providing our customers with a first-class service and maintaining a focus on our ongoing staff training programme. Innovation will be a key concern, with particular attention being paid to our electronic services.

We will continue to adopt a customer-centric approach based on a vast network of sales outlets in both urban and rural areas. By endeavouring to achieve the highest levels of professionalism, while continuing to value ethics and transparency, we can ensure that we protect the interests of the bank, our customers and society in general.

RCBC understands the importance of making personal connection with customers

Posted on by Ashton Wenborn

The most effective brands are those that evoke an emotional connection or response. Banks, however, often lack a strong brand image or a connection with consumers. Nearly a decade after the global economic crisis, the banking industry’s reputation remains damaged. Yet, rather than excusing banks from working on their brand image, this should motivate them to improve how consumers view them.

Banks play a crucial role in modern life; they are a channel through which people can achieve their dreams, be it saving for a holiday or borrowing to start a business. By taking the time to assess how modern customers perceive banks, the Rizal Commercial Banking Corporation (RCBC) has uncovered an opportunity to connect with its customers on an emotional level.

Today’s customers want an approachable bank that not only responds to their needs, but also believes in the value of their dreams and aspirations

A meaningful connection
Recently, RCBC conducted market research into the way that customers perceive banks. Interestingly, the results showed that customers tend to notice very little difference between banks in terms of their overall service adaptability, trustworthiness, network size, access and uniqueness.

What stood out, however, is that those who bank with RCBC stated that they were proud customers of the brand. The findings also showed that RCBC ranks particularly highly when it comes to brand awareness, meaning that it is a recognised market leader.

This research made it clear that RCBC’s biggest challenge would be to convert those who are aware of the bank into actual clients. Hence, the rebranding campaign focused on making the step from awareness to patronage. It became clear that in order to achieve this, RCBC needed to forge meaningful relationships with its customers.

Through its efforts to understand its target market, RCBC discovered that today’s consumers want an approachable bank that not only responds to their needs, but also believes in the value of their dreams and aspirations.

With this in mind, the bank decided to shed its traditional image and create a more contemporary brand, while continuing to inspire trust among its customers. The brand reboot culminated in the launch of a new corporate logo and the tagline ‘we believe in you’.

A powerful message
The tagline does more than pledge to support to customers’ dreams and needs; the message also tells customers, ‘it’s not about RCBC, but what RCBC can do for you’.

RCBC’s rebrand presents banking as something that should be associated with optimism and aspiration. Stating ‘we believe in you’ shows the bank’s unwavering support of the indomitable Filipino spirit.

Furthermore, RCBC hopes that its new corporate focus will encourage Filipinos not just to dream, but to pursue their passions and turn their dreams into reality – whether that means travelling, venturing into a new business, or purchasing a house or car. This is particularly important in such a strong and growing economy (see Fig 1).

The brand relaunch was rapidly picked up by the press, and stories surrounding it found their way into key publications and TV stations, generating media coverage worth millions. What’s more, close to five million people were reached via Twitter, while organic views of the material on Facebook reached 50,000.

Supported by investments in people and technology, RCBC is fast expanding its reach. With its new philosophy, it is sending a clear message that it stands firm in its mission to help its clients achieve their dreams.

Bank of the West is bringing new ideas to a new world of banking

Posted on by Ashton Wenborn

In today’s complex and fast-changing business landscape, it is more challenging than ever to stay ahead of the curve. Many CEOs agree that we are living in a period of unprecedented flux that will have significant effects on the future of their companies.

KPMG’s 2017 Global CEO Outlook – a survey of nearly 1,300 CEOs in 10 of the world’s largest economies – highlights disruption and uncertainty as unavoidable realities all businesses must face today.

But the same survey reveals that 65 percent of corporate leaders view disruption as a business opportunity, not a threat. To identify opportunities early and minimise uncertainty, most CEOs are doing their best to stay attuned to shifts and trends, with 64 percent saying they are effective at sensing market signals.

In today’s market, businesses need to be more forward-thinking, vigilant and agile than competitors to stay ahead and plan for future growth. To do this, companies can benefit from working with an innovative commercial bank that has a vision for the future and will help them in three essential ways.

Thoughtful outreach
For some companies, key business functions are managed from a single headquarters with secondary support from local satellite branches. For others, that approach has shifted, as many business leaders see the importance of maintaining a balance between having both a clear global strategy and an appropriate on-the-ground regional presence or coordination.

This is becoming even more critical given foreign exchange rate volatility, interest rate variability, evolving compliance requirements, expanding counterparty risks and changing geopolitical risks.

An effective commercial banking partner should deliver practical support and intelligence to help an organisation identify and support the optimal geographic structure for its treasury function and financing strategy, which will enhance competitiveness today and fuel growth for tomorrow.

The majority of corporate leaders view disruption as a business opportunity, not a threat

A company’s approach should be consistent with the overall global business strategy as well as individual market strategies, tailored to economic and liquidity conditions and compliance developments.

A commercial banking organisation should serve as a thoughtful advisor to the treasury team, drawing on its experience, technology and knowledge of best practices to recommend the best treasury function system and supporting cash management solutions.

Doing so maximises a treasurer’s visibility and control, produces accurate reporting, and enables a team to establish internationally reliable treasury forecasts.

This includes deciding whether to centralise the treasury function in one location or decentralise it across regional hubs, considering a company’s business strategy and objectives, size, budgets and other key factors. A banking partner should always adapt to a business’ model and goals, not the other way around.

With BNP Paribas as our parent company, Bank of the West taps into an expansive global network and international cash management offering to help mid-sized and large companies set up an effective treasury footprint and supporting solutions around the world.

This includes: helping our clients increase control by unifying their treasury function and liquidity in the US and across the world; implementing cash management solutions across their global footprint; establishing a treasury centre in a particular region; or setting up an integrated treasury structure across a large group of countries.

For example, we worked with a leading global company that has a US headquarters and a presence in more than 40 countries, including 24 countries across Europe, the Middle East and Africa (EMEA).

In addition to helping our client control and secure its cash, our primary goal was to help them strategically pool its EMEA liquidity and manage one currency position in euros.

We helped the company centralise its EMEA liquidity in a single regional location and implement a multi-currency solution in one European market with all its EMEA entities participating.

Guarding against cyber threats
As companies focus more on innovation to gain a competitive edge, there is more emphasis on speed. Consumers want to obtain information, take action and receive products and services quickly.

This puts pressure on companies to speed up their processes in order to deliver products and services faster than their competitors.

We take a holistic approach to fraud prevention, maintaining open communication channels with law enforcement organisations so we stay aware of developing risks and educate our clients about them in real time.

Cybercriminals are trying to take advantage of this speed-focused business environment by finding gaps to access a company’s sensitive information and systems. It is a grim reality that a cyberattack is now a strong possibility for all businesses.

Executives understand this new reality. According to PwC’s 2017 20th CEO Survey, which polled 1,379 CEOs across 79 countries, 91 percent of corporate leaders believe cybersecurity breaches affecting business information or critical systems will have a negative impact on stakeholder trust levels in the next five years.

Furthermore, 61 percent believe cyber threats will pose dangers to their own organisation’s growth prospects.

An effective corporate banking partner should equip the leadership team with decision-making tools and information that enable a business to move quickly while staying as secure as possible.

This includes delivering treasury solutions that are transparent and time-effective, protecting a business’ cash flow, and individual transactions. In terms of payables, multi-level authentication and tools such as Positive Pay are essential protective measures to ensure not only the accuracy of the transactions, but also the accuracy of the settlement of those transactions.

Though these features add more steps to a treasury process, any trusted banking partner will recommend them as must-haves to guard against mounting cyber risks.

One specific trend that has been gathering steam is cybercriminals hacking into identities within the C-suite, posing as an executive through an email address that appears to be authentic but is really ‘masquerading’.

This can take many forms: criminals can hack into companies’ email systems or pretend to be senior executives or direct employees to make fraudulent financial transactions. They instruct the employee that these are important and create urgency around the request.

The employee may follow through using typical processes to initiate the fraudulent transaction. Criminals may also send a direct instruction to their bank partner with similar urgency, instructing them to go around defined processes such as multi-level authentication.

Bank of the West works with our clients to thwart such fraudulent attempts, training our entire support team on how to identify and protect against these threats.

Being a forward-thinking organisation
With so many businesses focused on innovation to capitalise on new trends and enhance competitiveness, an effective banking partner needs to be dedicated to delivering tools and data that help an entire organisation be more forward-thinking and proactive, not reactive.

This includes using a company’s historical data and industry information to do smart predictive modelling that more accurately predicts businesses’ future cash flow needs in an evolving landscape. The goal is to help treasurers plan more effectively by maximising the value of data.

Bank of the West takes a progressive approach. We are positioned in the heart of the tech industry, which offers insight into key market innovations. Our treasury team is constantly analysing these market innovations, industry benchmarks and segment-specific trends, and employing predictive modelling to offer the best financial solutions for growth.

We understand the significance of the client’s historical transactions, but to truly help our clients plan for the future, we also focus on the future: we present new solutions and strategies they can adopt to position their organisation more optimally for future growth and keep pace with industry changes.

For example, real-time payments with real-time settlement and information are emerging as a new payment type that is changing the dynamics of treasury management, enabling businesses and consumers to send and receive payments instantly and directly from their accounts at financial institutions.

As an owner bank of the Clearing House Association, Bank of the West is very involved in the real-time payments initiative currently in development. On the consumer side, Bank of the West also participated in this year’s pilot of Zelle, a new person-to-person payments network in the US that enables 86 million users to move funds in minutes.

We are now speaking with our commercial clients about whether real-time payments could benefit their business today, or in the future, so they can prepare for its arrival across their footprints.

Being part of the BNP Paribas network enables us to look at our clients’ operations in the US and around the world, and discuss how specific innovations can be applied across regions.

In a rapidly changing world, a strong commercial banking partner can serve as a company’s industry advisor, sharing and supporting the use of innovative solutions, keeping a business ahead of the curve.

Baiduri Bank is taking care of Brunei’s SMEs

Posted on by Ashton Wenborn

Brunei, a small South-East Asian nation on the coast of Borneo, is undergoing a massive shift in development and growth. This comes in light of continuing low prices for oil and gas, which are the country’s chief source of revenue. The low-price environment has affected GDP, which has fallen annually since the 2012 peak.

Fortunately, the country has other strengths. In 2007, the Sultan of Brunei announced the formation of a council for long-term development planning. This resulted in the creation of Brunei Vision 2035, known colloquially as Wawasan Brunei 2035 – the country’s long-term development plan, comprising 13 distinct strategies.

Faced with the current low oil and gas price environment, the government has intensified efforts towards diversification, as outlined in Brunei Vision 2035. Furthermore, in early 2016, with the objective of accelerating economic diversification and helping to build capacity for micro, small and medium-sized enterprises (MSMEs), the Brunei Government implemented another development plan – Darussalam Enterprise (DARe).

In support of these initiatives, Baiduri Bank offers a wide range of financial products and services specifically designed to help businesses. The bank is constantly looking for ways to improve its offerings and services, in order to support not just local businesses, but potential overseas investors too.

SME commitment
In the effort to create a healthy and financially sustainable nation, one of the key strategies is to expand business opportunities within Brunei through the promotion of foreign and domestic investment, both in downstream industries and in economic clusters beyond the oil and gas industry.

“We are eager to finance the short and long-term needs of companies in Brunei, be they new or well-established corporations,” said Pierre Imhof, CEO of Baiduri Bank. “With the creation of DARe and its assistance in the development of MSMEs, I hope to see the MSME market develop. In pursuit of this goal, we have introduced a variety of innovative products to cater to the sector.”

Among these innovations, Baiduri Bank has launched its MerchantSuite service. MerchantSuite allows very small businesses and individual sellers to issue invoices and receive payments online without setting up a website, which is often costly and beyond the reach of many start-ups.

“Given the rapid rise in the popularity of e-commerce in Brunei, particularly on social media sites such as Facebook, MerchantSuite is especially useful for businesses requiring a secure and reliable card payment channel, as well as other digital features to help manage billing and receivables,” said Imhof.

In further support of MSMEs, Baiduri Bank, through its relatively new business banking unit, launched its unique Micro Current Account. This account caters to small businesses that do not meet the requirements for a normal business account. It also enables MSMEs to subscribe to and reap the benefits of MerchantSuite.

Though MSMEs are a primary target, Baiduri’s focus is also on serving foreign direct investors. With Brunei having a strong banking system and the bank itself possessing a strong capital and liquidity position, as evidenced by its BBB+/A2 rating from Standard and Poor’s, Baiduri is able to assure foreign direct investors that the bank is able to support them. “We provide a wide range of products and services at an international standard which we feel will help boost investor confidence,” added Imhof.

The Brunei Government has made significant advances in terms of digital and online payment infrastructure

Technological forefront
The Brunei Government is also taking steps to make the nation more consumer-friendly and business-friendly by implementing projects such as the real-time gross settlement system, payment mechanisms based on newer technology such as the automated clearing house, and various other projects and initiatives from the e-Government National Centre (eGNC). The eGNC’s key purpose is to meet the challenges of globalisation by being more efficient and transparent.

The initiatives it offers will help to reduce the cost and difficulty of running a business in Brunei. What’s more, there have been significant advances in recent years in laying the foundations for modernising payment arrangements in Brunei. These developments are intended to facilitate better international integration and the ability to adapt to evolving payment instruments and methods.

With a growing customer information database, data protection is at the top of Baiduri’s priorities. “Our clients need to know that their data is protected and secured to an international standard,” said Imhof. “To date, Baiduri is the only bank in Brunei to obtain PCI-DSS certification.”

PCI-DSS is the payment card data security standard used internationally by entities that process, transmit or store cardholder data. Baiduri first received its PCI-DSS 2.0 certification in December 2014, and this was further upgraded to version 3.1 in November 2015.

Another achievement that demonstrates Baiduri’s commitment to innovation is the fast development of the payWave feature on Visa cards. The bank first introduced payWave in 2014 for Visa debit cards, but the service has since been rolled out to all tiers of Baiduri Visa credit and debit cards. With the payWave feature, small purchases do not require the buyer to sign or enter a PIN, but simply to wave a card over the contactless reader.

As well as saving time, this allows for lower transaction costs between buyer and seller. “The cost of handling cash for merchants can be quite high,” Imhof explained. “To address this, payWave encourages card utilisation as the preferred payment method, reducing both risks and costs for businesses.”

Baiduri Bank also offers an internet banking service and a smartphone application for customers wishing to carry out their banking needs on the move. “In light of the shifting trend towards more non-cash payments and the use of online platforms for an increasing number of banking services, we understand the importance for our customers to be able to manage their finances as and when they need,” said Imhof. “We offer an internet banking service for individuals, known as Personal i-Banking, and a service for businesses, known as Business i-Banking. Our Personal i-Banking service is also available as a mobile app, making it readily available for our customers.”

Product range
Finance is a key ingredient of long-term economic growth. History has shown that an expanded financial sector is linked with sharply increased growth in the early stages of credit and stock market development. For Brunei, therefore, with a stock market coming to fruition in the near future, financial development is crucial.

The Brunei Government, in its efforts towards improving the online payment landscape, has made significant advances in terms of digital and online payment infrastructure. “These initiatives are leading towards the smooth implementation of a stock exchange,” said Imhof. “Baiduri Bank, through its wholly owned subsidiary Baiduri Capital, is well equipped to handle this.”

Baiduri Capital was established in September 2015, and was set up to cater to clients looking to diversify their investment portfolios. “The objective is to create a bigger, more developed and, crucially, more diversified capital market environment. From what I understand, the authorities are making significant progress on the technical and infrastructural aspect of developing the stock exchange. This aspect is part of a more global approach to develop the exchange’s capital market activities,” Imhof explained.

Attracting the interest of companies, both local and international, is fundamental to the success of a stock exchange. Baiduri Bank is well positioned in this respect, and can help clients move towards a stock exchange listing thanks to a wide market reach and extensive local knowledge, coupled with international expertise.

“Through our online trading platform, our customers can already trade online on various international stock exchanges, such as those in Malaysia, Singapore, Hong Kong, China and the US,” said Imhof. Baiduri Capital can play an important role here, educating and building the Brunei population’s experience of stock trading in preparation for the establishment of the country’s own exchange.

The Baiduri Bank Group also includes Baiduri Finance, the company’s first wholly owned subsidiary. “Baiduri Finance is ranked as the leading finance company in Brunei, having acquired more than 65 percent of the local automobile finance market and covering a full range of products and services for our customers,” said Imhof.

Forward motion
Economic diversification is now one of the most important challenges facing Brunei and its financial industry, in light of the changing economic situation. Baiduri Bank, being the leading local conventional bank, is at the core of this effort, and is fully committed to helping the country achieve its aims.

The bank will face the coming challenges with a sense of responsibility befitting its leading position in the market. Baiduri’s main priority will be to remain at the forefront of innovation with regard to the retail market and in anticipation of the establishment of the stock market. With is strategic focus on developing MSMEs, Baiduri Bank will certainly be one to watch out for in the coming years.