Author: Helen

Top 5 tax scandals

Posted on by Helen

IRS, HMRC, FTS or CRA: whatever you like to call him, there’s no hiding from the taxman. No individual or institution is immune from the annual tax deadline, although many aim to reduce what they pay as much as possible through loopholes and profit redistribution schemes.

When that tips over into illegal territory, though, it becomes a major problem. The IMF estimates that over $600bn is lost every year due to tax avoidance, with the US, China and Japan named as the greatest culprits. World Finance investigates the top tax scandals across the globe in recent years, and who was behind them.

1 – Panama Papers
The leak of 11.5 million compromising documents sent shockwaves across the globe in 2016. Taken from the archives of Panamanian law firm and corporate service provider Mossack Fonseca, the documents detailed the financial information of nearly 215,000 offshore entities, implicating more than 40,000 private and corporate clients.

Although it’s not illegal to run an offshore business entity, the Panama Papers revealed that many shell corporations set up by Mossack Fonseca were used for illegal activities such as tax evasion and bypassing international sanctions.

The IMF estimates that over $600bn is lost every year due to tax avoidance, with the US, China and Japan named as the greatest culprits

All in all, 12 current or former world leaders, 128 public officials and politicians and thousands of other celebrities and business people were implicated in the leak. These include former British Prime Minister David Cameron, former Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson, French banker Éric de Rothschild, and former CEO of Citigroup Sanford I Weill. As of June 2018, more than $700m of fines and back taxes have been reclaimed.

2 – Ex/cum trades
It was revealed in 2017 that the German state had lost at least €31.8bn ($36.8bn) since 2001 as a result of ‘cum/cum’ and ‘ex/cum’ banking and broker practices. Cum/cum trades work by exploiting a loophole in German law that allows domestic investors to claim tax credit on dividends from private companies. Under this scheme, German banks would ‘borrow’ the shares belonging to a foreign investor just before a dividend payment, allowing that investor to escape paying tax.

Cum/ex trades allow institutions to apply for multiple refunds on capital gains taxes that were only paid once to tax authorities.

Both practices were outlawed in 2012 and 2016 respectively, but continue to be exploited by a criminal network based in London. Frankfurt prosecutors charged six investment bankers and lawyers in May 2018for their role in the scheme. Professor Christoph Spengel at Mannheim University initially revealed the scheme, calling it “the biggest tax scandal in the history of the Federal Republic of Germany”.

3 – Big tech
Multinational technology companies including Google, Apple and Amazon have been slapped with multiple allegations in recent years regarding non-payment of taxes in Europe. In 2016, Google was accused of using two regulatory loopholes, nicknamed the ‘double Irish’ and ‘Dutch sandwich’, allowing it to pay just six percent corporation tax rather than the required 19.3 percent.  The same year, Apple was ordered to pay $15.4bn in back taxes to Ireland after it was revealed that the company paid just one percent tax on its European profits in 2003, down to 0.005 percent in 2014.

UK politicians also called for a boycott of Amazon in 2014 when it was revealed the company had paid just £4.2m ($5.6m) in tax on sales of £4.3bn ($5.7bn). It was able to do this by funnelling payments made in the EU through a subsidiary based in Luxembourg.

The e-commerce giant claims it has since cleaned up its act, but in 2018 it paid just £4.6m ($6.1m) in tax, despite profits hitting a £72.3m ($95.5m) high.

4 – South Africa
The “biggest political scandal since the Apartheid era” raged in South Africa during Jacob Zuma’s rule between 2009 and February 2018, engulfing the president himself, the billionaire Gupta family and a number of corporations including McKinsey and KPMG. Allegations of corruption and cronyism were rampant during Zuma’s reign due to his relationship with the Guptas, who were accused of having undue influence over the president. Both parties have repeatedly denied any wrongdoing.

In 2017, eight senior KPMG officials were dismissed after it was revealed that the company had missed a number of red flags when auditing the Guptas’ financial records. These included the relabeling of payments worth millions of South African rand so that they could be tax deductible, and an understatement of tax payable. This allowed the family to avoid paying ZAR 2.05m ($145,000) of tax on a singular transaction.

5 – Trump family
The incumbent US president and his family have been embroiled in a number of tax scandals in recent months. On October 2 this year, The New York Times revealed the results of an 18-month-long investigation into Trump’s tax records, and his father’s before him, alleging that both men had engaged in a number of “dubious tax schemes” and “outright fraud”. Such incidents included the establishment of a sham corporation for the president and his siblings to avoid the 55 percent tax rate on gifts from their parents, and undervaluing family properties to reduce the tax bill by hundreds of millions of dollars.

On October 13, The New York Times also alleged that Jared Kushner, Trump’s son-in-law and senior advisor, paid little to no federal income tax between 2009 and 2016. He achieved this by utilising a tax benefit known as ‘depreciation’, which allows property investors deduct a portion of the cost of their buildings from their taxable income every year. Although this practice is not technically illegal, it raises ethical concerns, especially as Kushner has profiteered to the tune of $324m. When asked for comment by The New York Times, a spokesperson for Kushner’s attorney said Kushner “properly filed and paid all taxes due under the law”.

Mohammed bin Rashid inaugurates first project of third phase of Dubai’s solar park

Posted on by Helen

On May 1, 2018, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, inaugurated the 200MW first stage of the 800MW third phase of the Mohammed bin Rashid Al Maktoum Solar Park.

The project is the first in a three-stage phase by Dubai Electricity and Water Authority (DEWA), in collaboration with multiple energy partners. The second stage of this phase will be finished in 2019, with the third stage completed in 2020.

The plant boasts 800,000 self-cleaning solar cells, and will power 60,000 residences

Speaking at the inauguration ceremony, His Excellency Saeed Mohammed Al Tayer, MD and CEO of DEWA, said that this phase of the solar park installation is “a key milestone and shows our strong belief in the role of clean energy in shaping a sustainable future”.

A shifting economy
In recent years, Dubai has taken huge steps towards making the UAE a more sustainable destination. Organisations like DEWA have been greatly responsible for propelling the region towards this goal.

The new solar plant comes complete with an advanced solar tracking system, as well as an array of specialist technologies. It boasts 800,000 self-cleaning solar cells, and the completed project will power 60,000 residences, as well as reduce carbon emissions in the emirate by 270,000 tonnes per year. The Mohammed bin Rashid Al Maktoum Solar Park is the largest single-site solar park in the world and is based on the independent power producer model.

Speaking at the inauguration ceremony, His Excellency Dr Sultan Ahmed Al Jaber, UAE Minister of State and Chairman of Masdar, said: “The UAE’s impressive progress in the field of renewable energy would not have been achieved without the vision of its leadership, [which has strengthened] the energy security of the country by building on the foundation of its hydrocarbon sector to create a diverse mix, including conventional energy, renewables and nuclear energy.”

He also spoke about the work of DEWA, which has played a crucial role in implementing cost-effective renewable energy solutions in Dubai. DEWA is known especially for its attention to cutting-edge technologies, and its ability to use these to further the UAE’s quest towards sustainable growth.

Large-scale projects are not only good for the environment capacity of the UAE; they also stimulate job creation and innovation. The work of DEWA, along with its energy partners, has immeasurably boosted the UAE’s prosperity.

CYBG purchases Virgin Money for £1.7bn

Posted on by Helen

On June 18, it was revealed that Clydesdale and Yorkshire Bank Group (CYBG) has purchased Virgin Money in a £1.7bn ($2.25bn) deal. As a result of the transaction, the joint entity will become the sixth-largest bank in the UK.

The deal is set to save Virgin Money and CYBG a total of £120m ($159m) each year by 2021.

CYBG has agreed to pay Virgin Money a minimum royalty of £12m ($16m) in the first year after the deal is completed, which will then rise to £15m ($20m) per year over four years. It will also pay an added annual royalty from the revenue produced in the fifth year. In addition, Virgin Money customers will be gradually transferred to CYBG over the next three years.

The deal will cause the loss of around 1,500 jobs at both Virgin Money and CYBG, as well as an expected but unconfirmed number of branch closures

According to the BBC, this deal will cause the loss of around 1,500 jobs at both Virgin Money and CYBG, as well as an expected but unconfirmed closure of a number of Virgin and CYBG’s 250 branches across the UK. CYBG hopes to achieve this by “natural attrition”.

Virgin Money shareholders will receive 1.2125 CYBG shares for every share they own. Virgin Group, being Virgin Money’s biggest shareholder with a 34.8 percent stake in the business, will receive a stake of 42.195 percent of CYBG.

CYBG is formed by the two banks: Clydesdale Bank, which was established in 1838 in Glasgow and is now one of Scotland’s largest banks, and Yorkshire Bank, which was established in 1859 in Halifax, West Yorkshire by Colonel Edward Akroyd.

Sir Richard Branson founded Virgin Money in March 1995; he now owns 35 percent of the company and stands to make a large profit from its sale.

This deal has brought together the UK’s two largest challenger banks to form “the first true national competitor” to the ‘big five’ banks, according to CYBG. Jayne-Anne Gadhia, CEO of Virgin Money, has described the transaction as a “compelling deal”.

ProInversión leads Peru’s $10.8bn infrastructure development drive

Posted on by Helen

Although Peru is one of Latin America’s largest and fastest-growing economies, it suffers from a significant infrastructure gap that could hinder its continued development. This was seen just last year, when devastating floods further exacerbated the existing problem, collapsing some 260 bridges and closing more than 3,000km of roadways. To address the situation, the government is now undertaking a major initiative to develop numerous areas of its infrastructure and public services.

Peru’s growth prospects mean that the government-backed projects present international investors with a unique opportunity to gain higher returns than they typically would in mature markets – for example, in Europe.

More than 100 public-private partnership (PPP) projects have already been awarded in Peru over the past decade alone. This is in large part due to Peru being one of the most investment-friendly environments in Latin America; the country is ranked second in the region in the World Bank’s 2018 Ease of Doing Business index. It is the easiest nation in the region in which to register property, and also ranks highly in the protection of minority investors, obtaining credit and enforcing contracts.

Peru’s growth prospects mean that the government-backed projects present international investors with a unique opportunity

Project plans
Over the coming years, projects planned include a $2.05bn road in the capital, which will stretch 33.2km and link two important highways. Another potential project is the much-needed improvement of the iconic 1,000km Longitudinal de la Sierra highway that stretches along the Andes mountain range, which will come at an estimated cost of $464m. Further, three specialised hospitals will be built as part of two projects in Lima, Piura and Chimbote.

The most significant infrastructure developments are in water and sanitation. These include a $600m plan to build and operate major parts of Lima’s potable waterworks, a $304m wastewater treatment system in the Lake Titicaca basin, and a $90m wastewater treatment plant in central Peru. At present, the Titicaca project is estimated to be awarded in the next two years, unless another party decides to bid for the project. If this is the case, ProInversión will activate a bidding process.

Investment types
Most transportation and healthcare projects are co-financed government initiatives, meaning the contractor will not assume the full cost or risk for the development. The concession period for the projects ranges from 25 to 30 years, thus allowing investors ample time to recover their initial investment. And, in addition to the vast improvements they will create for the Peruvian public, planned mining and telecommunications projects are expected to be especially useful to investors as they are all asset transfer projects.

In collaboration with ProInversión, Peru’s private investment promotion agency, the Peruvian ambassadors to China and South Korea have invited investors to attend road show events taking place in Seoul on May 16 and in Beijing on May 18. These events follow the bilateral meetings that took place in Tokyo on May 14. Each of these proceedings will outline the range of investment opportunities in Peru over the coming years, and will feature talks from the respective Peruvian ambassadors, financial leaders and ProInversión representatives.

To find out more about more about ProInversión’s project portfolio, click here

A new frontier for female investors

Posted on by Helen

The amount of wealth held by women is increasing. According to Boston Consulting Group, private wealth held by females grew from $34trn to $51trn between 2010 and 2015, with that figure set to rise to $72trn by 2020.

More than ever, the number of women in well-paid jobs is increasing. They also receive more inheritance from Baby Boomer parents, who have begun splitting their finances equally between sons and daughters, and have greater financial resources at their fingertips than ever before. Given this, it is no surprise that women are taking a greater proportion of the world’s wealth as they progress through the 21st century.

But what does this shift mean for the financial services sector, and how can the industry ensure it is best placed to cater to and benefit from a more gender-balanced market in the future?

Hargreaves Lansdown revealed that its female customers consistently outperformed their male counterparts by an average of 0.48 percent a year between 2015 and 2017

Savvy investment
Data from Hargreaves Lansdown, a leading online investment platform, has revealed that its female customers consistently outperformed their male counterparts by an average of 0.48 percent a year between 2015 and 2017. The comparison found that 44 percent of women had most or all of their portfolios held in funds, compared with 38 percent of men. By diversifying their holdings via a fund women were able to manage risk and experience less overall volatility in their portfolios.

The analysis also found that females typically adopt ‘buy and hold’ investment strategies, enabling them to profit from long-term gains instead of trying to make a quick buck. They also tend to avoid smaller, more volatile AIM-listed stocks. This more risk-averse approach frequently employed by women is starkly different to those used by their male counterparts, whose top investment goal is more likely to be about purely outperforming the market.

The ability to cater to different risk appetites and effectively communicate the various investment options available to both male and female customers is crucial to attracting investors at both ends of the spectrum. Furthermore, transparency, use of balanced language and avoiding jargon are all key to prevent alienating either side of the market.

Building confidence
Despite the numerous signs pointing to the strength of female investors, it is clear that a large proportion of women lack confidence when it comes to the stock market.

According to a recent poll by Boring Money, only 23 percent of women hold some sort of investment product, compared with 35 percent of men. Meanwhile, the ratio of male to female customers at the top 10 DIY investment platforms is more than two thirds male.

Many women cite lack of confidence, uncertainty and risk aversion as the top factors causing them to avoid the stock market. Additionally, while many are open to the prospect of using a financial advisor to guide and educate them, most wealth managers admit to having male-dominated client bases.

The lack of diversity within such firms is a hindrance to attracting a more balanced investor base, given the highly personal nature of the client-advisor relationship. Women want to feel represented and understood within investment firms – a fact some have begun to cotton onto as they improve gender imbalance in the workforce. Some have even set up specialist teams to focus on female clients.

Many women cite lack of confidence, uncertainty and risk aversion as the top factors causing them to avoid the stock market

However, more must be done to communicate these initiatives externally. Businesses that are improving diversity in the boardroom or taking action against their gender pay gap should actively promote such activity.

Prospective clients will be encouraged by such developments, and any momentum in this space will only chivvy along others in the sector to do the same.

Appeal to your audience
Like Millennials, many wealthy women are keen to invest their money ethically by looking at options that offer both social or environmental returns, as well as financial gain.

A relatively new introduction to the sector has been a so-called investment ‘gender lens’. This strategy enables clients to invest in businesses that support females, whether that be through backing ventures that help less-advantaged women or by engaging with funds that only hold companies with a gender-balanced board.

Ultimately, an investor’s priorities and risk appetite are determined by a nuanced set of personal characteristics and goals, and cannot be defined solely by their gender. However, it is clear that the investor pool is evolving, and businesses must be able to respond to the changing face of their client base as it develops.

Catering to alternative investor profiles through both product and service is crucial, but it will be the effective communication of these strategies that sets the champions in the sector apart from their peers. Those who are able to adapt and appeal to the growing base of female investors must not only instigate change internally, but should shout about their accomplishments in order to attract a new pool of clients and encourage wider change across the industry.

For more information, visit www.instinctif.com

How data portability is transforming the financial services industry

Posted on by Helen

We live in a world of data and regulations, so it is not surprising that the two are having a large impact on one other. It is equally unsurprising that the two have fundamentally changed – and will continue to change – the financial services landscape.

Imagine a day in the not-so-distant future: you are on the train on your way to work, and you check an app on your phone that shows your spending patterns aggregated from all of your bank accounts. The dashboard identifies that you are spending too much on entertainment and are falling short of your savings goal.

Fast-forward a couple of hours, and on your commute home you learn from a social media alert that another bank has a much higher interest rate on savings accounts than your current one. You therefore use your mobile phone to go online and transfer your details and money in a matter of minutes to take advantage of the better deal.

This is data portability at its best. But how will it impact the financial services sector, and how can we take advantage of this?

Competition in the banking industry is severely hindered by the difficulties consumers experience when trying to take advantage of competitors’ offers

The changing face of data portability
In the banking world, data portability is a concept that completely changes its appeal in accordance with which hat you are wearing. From a client perspective, it opens a brave new world of services that don’t yet exist, as well as the opportunity to seamlessly switch to a service provider with the most attractive offer.

For fintech companies – which are agile and innovative by definition, but are still operating in the shadow of large corporate financial services organisations – it offers a window of opportunity to gain access to an enormous pool of historic data which they can then apply specific algorithms to, giving insight into individual customers and services and ultimately enabling them to provide a more competitive service.

By contrast, for large financial services corporations, data portability is a can of worms that goes against everything the industry stands for: client data security before everything, Chinese walls, and complete isolation of data from the outside world.

Impact of regulation
These contradictions are the result of a host of ambiguities regarding what exactly data portability is, how it is supposed to be implemented, and the ultimate issue of what client data is and who owns it.

Such questions are rapidly moving from the philosophical realm into the real world, as new data protection legislation – the EU General Data Protection Regulation (GDPR) – is due to come into force in May 2018. GDPR clearly defines client data as data that helps to directly or indirectly identify a client, and swings the debate of ownership in a client’s favour. GDPR also mentions data portability as an individual’s right, but falls short of indicating exactly what it is and how it should be implemented.

Improved access to data will stimulate competition in the banking sector. Reports commissioned by HM Treasury and the Financial Conduct Authority have been unanimous in saying that competition in the banking industry is severely hindered by the difficulties consumers experience when trying to take advantage of competitors’ offers. Data portability offers a solution to this issue, giving consumers the choice over who has access to their data.

By embracing data portability early, firms become a preferred destination when clients start hopping from one bank to another

Innovation is crucial
Another question that has arisen is what big banks (and other organisations that sit on mountains of valuable client data) need to do to prevent such data from being snatched and used by competitors.

At Brickendon, our experience of working with a diverse range of clients over the years has shown us that innovation is the key to staying ahead of the curve. The situation is the same for the adoption of data portability: embrace it early, and become the preferred destination when clients start hopping from one bank to another.

Organisations should be innovative in the way they mine data and come up with new services to offer clients. They should become agile to the extent that they can quickly replicate and adopt appropriate innovations brought to the market by their competitors, and should review their data models, untangle data infrastructure and update governance policies to clearly separate client data from proprietary data owned by the bank.

The goal should be to make it as easy as possible for clients to choose who they bank with, but ensure they are not bound for life by that choice. This a very important aspect of the customer experience, and will allow new and former clients to join (or re-join) the bank and be integrated easily into their system.

Back to the future
In the mid-1990s, Bill Gates was quoted as saying: “Banking is necessary. Banks are not.” There may have been more truth to this comment than anticipated.

The role banks play in the future of banking remains ambiguous and, to some extent, in their own hands. What’s more, the complexity of the road ahead is in effect a call to arms before the data portability issue officially hits the banking market with a tremendous surge of disruptive power.

Going forward, banks will need to employ top talent in areas such as regulation, data science and agile transformation. It will ultimately be an exercise of working side-by-side with the client to produce a uniquely tailored approach in order for the bank to become a top performer in an exciting – but ruthless and ever-more competitive – industry.

Aquashield Oil and Marine Services protects Nigeria’s waters against criminal activity

Posted on by Helen

The ongoing crisis scenario that plagues Nigeria’s territorial waters has prompted a dramatic transformation of the offshore security industry in the region. The industry was previously focused on unregulated fishing and other low-level issues, but has now evolved to tackle combative security threats such as illegal bunkering, the vandalism of oil and gas installations, piracy, sea robbery, militancy and kidnapping.

Behind this shift is a destructive bout of youth restlessness in the Niger Delta region. The predicament has dealt a serious blow to the oil and gas industry, leading to reduced revenues for international companies that operate in the region. Similarly, its effects have also been damaging to the insurance companies that cover assets in the area. World Finance spoke to Nasir M Saulawa, CEO of Aquashield Oil and Marine Services, to discuss the rising demand for offshore security services and discover how security companies are evolving to meet such challenges.

Could you describe current trends in the offshore security industry?
As a consequence of the current threat levels in the Niger Delta, offshore companies are facing potentially costly downtime and rising insurance premiums. This has led to a growing demand for services to safeguard offshore assets, which has ultimately paved the way for the establishment of a wide-reaching security services industry.

Issues of illegal bunkering, the vandalism of oil and gas installations, piracy, sea robbery, militancy and kidnapping all remain rife in Nigerian territorial waters. The escalation of these issues means that many companies that previously did not require security services are now actively seeking out ways to better protect their assets and employees. To further gauge a sense of the current climate, it is useful to look at the way companies are judging their threat levels. Companies operating offshore use a colouration system to classify the level of security threat, with the colour red signifying the highest threat level. At present, the majority of companies operating within Nigeria’s territorial waters classify the threat level as red.

As threat levels intensify, various stakeholders in Nigeria’s offshore security industry have collaborated to develop new strategies

Another important trend is the increase in demand for the relevant security vessels and hardware. Out of those in need of security services, most companies require state-of-the-art security boats that can reach speeds as high as 20 knots. They also need tracking devices, communication equipment, monitoring equipment and ballistic protection in order to ensure that the security vessel can adequately protect their assets.

As the demand for offshore security services increases, so does the demand for a broad range of high-end vessels and technology. Indeed, the need to obtain the right vessels has led to an extensive effort by maritime security companies to collaborate with relevant stakeholders to ensure that vessels of this class are available at all times.

What changes have occurred in the offshore security industry over the past five to 10 years?
As threat levels intensify, various stakeholders in Nigeria’s offshore security industry have collaborated in order to develop new strategies aimed at combatting both real and perceived threats. Consequently, offshore security architecture as a whole has undergone a fundamental transformation.

For instance, it became apparent a few years ago that there was an urgent need to coordinate the activities of the already existing private maritime security companies (PMSCs) to effectively deliver on their mandate of providing efficient offshore security services. This prompted the Nigerian Navy to establish standard operating procedures for the PMSCs operating within the country’s territorial waters.

The result of this was a ‘memorandum of understanding’ (MOU), signed by the Nigerian Navy in 2012. The agreement established a standardised licence for PMSCs, which all security companies must now possess in order to provide security services within Nigeria’s territorial waters. Consequently, the activities of all PMSCs are now far better monitored and regulated than they were previously.

How many firms are there in Nigeria’s offshore security sector, and how does Aquashield Oil and Marine Services stand out from the others?
There are currently 20 PMSCs that hold an MOU signed by the Nigeria Navy. Owing to our excellent fleet and highly trained staff, Aquashield Oil and Marine Services is able to stand out as a pioneering company among this group.

In order to meet the needs of clients, our fleet has several state-of-the-art, ballistic-protected intervention vessels that are fast and fuel-efficient. Furthermore, our team of field staff are both highly trained and experienced. They receive round-the-clock support from staff situated in our operations room, which is equipped with modern surveillance and remote monitoring tools. As a result, we have been able to consistently provide robust offshore security services for several international oil companies, with many companies relying on our services.

What kind of offshore security services do you provide, and which services are most popular at the moment?
Our offering covers a broad range of services, including offshore oilfield protection, armed security escort duties, harbour terminal security surveillance, search and rescue, safe marine transportation of materials and crew, and covert intelligence gathering. At present, the most popular services are offshore oilfield protection and armed security escort duties.

Aside from our security capabilities, we also conduct related services, such as the provision of tugs, diving support vessels, work barges, survey vessels, pipe laying barges, shallow draft vessels, platforms support vessels and crude oil tank vessels. These services are not in high demand at present due to low oil prices.

What factors shape the quality level of offshore security services?
When it comes to offshore security services, there are several factors that shape the overall level of quality, with much depending on the client in question. One major factor is the importance of providing the right class of vessel, with the necessary gadgets on board to deliver on a specific type of operation.

Another fundamental factor is the importance of having experienced staff, both on the water and onshore. Ultimately, inexperienced and incompetent staff cannot be counted on to adequately deliver services, even if they have the right vessel and equipment at their disposal.

What key developments are driving the demand for offshore security services in Nigeria?
The threats that are driving the demand for offshore security services are piracy, kidnappings, sea robbery, militancy, illegal bunkering and outright destruction of oil and gas assets. While threat levels are always fluctuating, a recent bout of destructive behaviour by certain militant groups led to the destruction of various oil and gas assets just over a year ago. Once again, this resurgence of violence has increased the demand for offshore security services in Nigeria.

The developments driving the demand for offshore security services are intrinsically linked to ongoing issues within the Niger Delta region. Even when they subside temporarily, the possibility that they could re-emerge is very real. As such, it seems clear that these services will continue to be sought after as a necessary precaution.

How is Aquashield Oil and Marine Services adapting to changes in the industry?
To meet increased demand, we have been busy acquiring new state-of-the-art security vessels. On top of this, the company has entered into several technical agreements with internationally recognised engineering and technical service providers. These ensure that our vessels are constantly kept in top shape. Furthermore, our staff members are continually trained on the latest changes in the offshore security industry, so they are kept abreast of current trends and noteworthy developments.

At Aquashield Oil and Marine Services, what is your strategy for success?
Our strategy to succeed is to continuously provide cutting-edge security services on a foundation of honesty, integrity, hard work and commitment. It is these values that will ensure we can continue to deliver for clients.

In practical terms, this will require a strict focus on sustaining our periodic maintenance schedules and upholding the standards that are enshrined in our safety monitoring system. On top of this, we remain committed to sustaining the provisions of the MOU with the Nigerian Navy. On a strategic level, it is important that we take actions to meet the increase in demand for our services. To this end, we will be looking to acquire even more modern security vessels in the near future.

World Finance Global Insurance Awards 2017

Posted on by Helen

The insurance sector has always played a crucial social and economic function in covering the risks of individuals and businesses. This familiar role dates back to the first millennium BC, when groups of merchants in Rhodes conceived a ‘general average’ that consisted of premiums to protect those whose goods didn’t make it through a voyage.

In the present setting, the role of insurers has undergone a rapid transformation over a remarkably short period of time. A key factor is a sharp change in the kinds of risks that people are facing: while cybercrime is on the up, autonomous vehicles could dramatically reduce vehicle-related risks. Meanwhile, products are becoming increasingly personalised and efficient, while simultaneously expanding to fulfil new functions. Notably, technological advancements like big data, smartphone usage and the Internet of Things are shifting the foundations of the industry, while social and economic changes are driving new opportunities for growth.

The pace of transformation was neatly summarised in Deloitte’s 2017 Insurance Outlook: “Nimble will be the new normal in 2017 as insurance companies confront a marketplace that is changing more drastically than perhaps ever before. In addition to macroeconomic, social and regulatory changes likely to impact the industry, insurers are coping with longer-term, game-changing trends.”

According to PwC, insurance is the industry that has been most severely impacted by disruptive change, based on the percentage of CEOs who are “extremely concerned about the threats to their growth prospects from the speed of technological change, changing customer behaviour, and competition from new market entrants”.

As ever, success will come to those who are readily equipped to adapt to the wider social, economic and technological trends that are driving the market. Against this backdrop, World Finance has carefully selected the most impressive companies from across the industry for the 2017 edition of the Global Insurance Awards.

The commoditisation of insurance is revving up price competition and forcing companies to drive down costs by turning to digitalisation and technology-based solutions

Macro trends
While the economic recovery in the US and EU is increasingly convincing, global growth continues to be littered with uncertainties and potential setbacks. As a result, insurers today are facing the ongoing challenge of considerable uncertainty in the global economy, coupled with the burden of various regulatory pressures. Another important issue facing insurers is the continued low-interest-rate environment, which is putting pressure on investment income.

Deloitte’s report notes that, while the industry as a whole started 2017 with a strong financial base, profitability is being undermined by excess capacity. This can be illustrated by a downward trend in net income and a lower return on average equity. Furthermore, this problem of high capacity is unlikely to shift anytime soon given stiff competition from new and existing players and a background of slow growth.

One stark change facing insurers today is that customer loyalty is an entirely different game to what it once was. Online customers now approach insurance decisions with the helping hand of an array of new aggregators and digital comparison tools, and their choices are driven more than ever by price. This was put into focus by Accenture’s 2017 global distribution and marketing consumer study, which questioned 32,715 insurance customers across 18 markets to get to the bottom of what is driving their choices. According to the study, 52 percent of vehicle insurance customers say that competitive pricing is their number one driver of loyalty, though this dipped slightly to 50 percent for home insurance customers and 38 percent for life insurance customers.

Inevitably, the commoditisation of insurance is revving up price competition and forcing companies to drive down costs by turning to digitalisation and technology-based solutions. This is leading to increases in the use of automation for applications such as data collection, analytics and online customer interactions.

Growth areas
Notably, this shift in the notion of loyalty is also creating new opportunities and growth areas. In order to woo customers, insurers are moving towards more personalised services and modern tools of big data, mobile phones and advanced analytics to tailor the customer experience. This has led to an emerging market for usage-based insurance, which has scope to expand from vehicle insurance into home and business insurance.

Illustratively, around a third of insurance customers interviewed by Accenture indicated that they were interested in receiving vehicle insurance that adjusted to individual usage. Meanwhile, 44 percent of insurance customers conveyed that it was important to them for insurers to provide personalised health advice. The logic to be derived from this survey data is that those companies offering novel ways to engage customers will be able to retain some loyalty and escape the relentless race to the bottom.

Modern menaces
Another key development in the insurance sector is the growing threat of the cyberattack, which looks set to stimulate a large quantity of new business. Over the course of last year, notorious cyber disasters like WannaCry and Petya have ensured that companies and individuals are fast waking up to the potential for loss and inconvenience. Smaller-scale cyberattacks are also becoming increasingly common. A government survey of businesses in the UK found that 66 percent of medium-sized businesses claimed they had experienced a cybersecurity breach or attack over the course of the past year.

This is relatively unknown territory, however, and the numbers that insurers are grappling with are largely unfamiliar. For instance, questions around severity, financial loss and reoccurrence risks are still difficult to quantify.

One report, which was co-written by Lloyds of London and risk modelling firm Cyence, has sought to identify just how devastating a cyberattack might be. In exploring the potential for damage, the report modelled a hypothetical hack of a cloud services provider. It ultimately found that such an attack would result in drastic economic losses ranging from $4.6bn to $53bn, while in the most extreme cases, losses could rise as high as $121bn. At the top end, these losses would be on par with those inflicted by some of the most extreme natural disasters.

Ironically, the very same trend will also be a danger to insurance companies, as they inevitably face the task of building their own defences against cyber risk, particularly if they find themselves sitting on large quantities of usage-tracking data. Meanwhile, Deloitte also warns of a creeping “existential threat” facing insurers: self-driving cars. Autonomous vehicles could feasibly result in tens of millions of people eschewing the need for car insurance, which would of course be devastating for the industry.

As ever, technology is both friend and foe: it is forcing change while also simultaneously creating an arena for certain firms to stand out more than ever. The World Finance Global Insurance awards aim to celebrate those that have stood out as clear industry leaders over the course of 2017 by remaining agile even in the face of rapid change.

World Finance Global Insurance Awards 2017

Argentina
General – Caja de Seguros
Life – BNP Paribas Cardif

Australia
General – Insurance Australia Group
Life – BT Financial Group

Austria
General – UNIQA Insurance Group
Life – Sparkassen Versicherung

Bahrain
General – Gulf Union Insurance and Reinsurance
Life – Bahrain National Life Assurance Company

Bangladesh
General – Nitol Insurance
Life- Popular Life Insurance Company

Belgium
General – Ethias
Life – ING

Brazil
General – Allianz
Life – Brasilprev

Bulgaria
General – Armeec Insurance
Life – SiVZK (TUMICO)

Canada
General – Intact
Life – BMO

Caribbean
General – National Commercial Bank
Life – ScotiaLife

Chile
General – ACE Group
Life – Seguros de Vida Sura

China
General – China Pacific Insurance
Life – Ping An Life Insurance

Colombia
General – Liberty Seguros
Life – Bolivars

Costa Rica
General – ASSA Compañía de Seguros
Life – ADISA

Cyprus
General – Royal Crown Insurance
Life – CNP Cyprialife

Czech Republic
General – Komerční banka
Life – Allianz pojišt’ovna

Denmark
General – Topdanmark
Life – Danica Pension

Egypt
General – Allianz Egypt
Life – Allianz Egypt

Finland
General – OP Financial Group
Life – Nordea Life Assurance

France
General – Covéa
Life – AXA

Georgia
General – Aldagi
Life – Aldagi

Greece
General – INTERAMERICA
Life – NN Hellas

Hong Kong
General – China Taiping Insurance
Life – Habib Bank Zurich Hong Kong

Hungary
General – Allianz Hungaria
Life – Magyar Posta Életbiztosító

Jordan
General – Middle East Insurance Company
Life – Arab Orient Insurance Company

India
General – ICICI Lombard
Life – Max Life Insurance Company

Indonesia
General – PT Asuransi Jasa Indonesia
Life – Jiwasraya

Israel
General – Harel Insurance
Life – Clal Life

Italy
General – UnipolSai Assicurazioni
Life – Poste Vita

Kazakhstan
General – Nomad Insurance
Life – JSC Kazkommerts Life

Kenya
General – CIC Insurance Group
Life – Britam

Kuwait
General – Kuwait Insurance Company
Life – Al Ahleia Insurance

Lebanon
General – AXA Middle East
Life – Bancassurance sal

Luxembourg
General – AXA Assurance
Life – Swiss Life

Malaysia
General – Etiqa Insurance and Takaful
Life – Hong Leong Assurance Berhad

Malta
General – GasanMamo Insurance
Life – HSBC Life Assurance Malta

Mexico
General – GNP
Life – Seguros Monterrey New York Life

Netherlands
General – Achmea
Life – ING

New Zealand
General – Tower Insurance
Life – Asteron Life

Nigeria
General – Zenith Insurance
Life – FBNInsurance

Norway
General – SpareBank 1
Life – Nordea Liv

Oman
General – Oman United Insurance
Life – Dhofar Insurance

Pakistan
General – Adamjee Insurance
Life – EFU Life

Panama
General – ASSA Compañía de Segurous
Life – Pan-American Life

Peru
General – RIMAC Seguros
Life – MAPFRE

Philippines
General – Standard Insurance
Life – BPI-Philam Life Assurance

Poland
General – UNIQA
Life – MetLife

Portugal
General – Allianz Seguros
Life – Ocidental

Qatar
General – Qatar General Insurance
Life – Q Life and Medical Insurance Company

Romania
General – ERGO Asigurari
Life – Allianz-Tiriac

Russia
General – AlfaStrakhovanie
Life – Renaissance Zhizn Insurance Company

Saudi Arabia
General – Al Rajhi Takaful
Life – Medgulf

Serbia
General – Generali Osiguranje Srbija
Life – Generali Osiguranje Srbija

Singapore
General – United Overseas Insurance
Life – Great Eastern Life Assurance

South Korea
General – Samsung Life Insurance
Life – Hanwha Life

Spain
General – Direct Seguros
Life – VidaCaixa

Sri Lanka
General – Sri Lanka Insurance
Life – Ceylinco Life Insurance

Sweden
General – Trygg-Hansa
Life – Nordea Liv

Switzerland
General – Helvetia
Life – Swiss Life Group

Taiwan
General – Cathay Century Insurance
Life – Fubon Life Insurance

Thailand
General – Viriyah Insurance
Life – Thai Life Insurance

Turkey
General – Zurich Sigorta
Life – Anadolu Hayat Emeklilik

UAE
General – ADNIC
Life – ADNIC

UK
General – AXA UK
Life – Legal & General

US
General – Progressive
Life – Lincoln Financial Group

Uzbekistan
General – Uzagrosugurta
Life – O’zbekinvest Hayot

Vietnam
General – PVI
Life – Bao Viet Life

World Finance Oil & Gas Awards 2017

Posted on by Helen

If 2016 was the year of “tough decisions”, 2017 was the year of “the slow road back”. The words in Deloitte’s outlook report for the sector, written by the company’s US Energy and Resources Leader John England, summarise the present state of the petroleum industry.

England referred to the Organisation of the Petroleum Exporting Countries’ (OPEC’s) move in November 2016, when members of the cartel reached an agreement on production cuts aimed at balancing supply and demand in the oil market. It was the first time the organisation had taken such a drastic measure since the financial crisis in 2008.

Since the deal took effect in January 2017, oil prices have recovered amid stronger global economic growth. However, high volatility and fluctuations have got in the way, and challenges have remained at a moment when new threats lie ahead, such as the transformation of fuel cars into electric models. While it works tirelessly addressing the current issues, the oil industry is also anticipating what is to come.
The World Finance Oil and Gas Awards 2017 recognise the prominent companies in the sector that have managed to succeed despite the challenges, and today continue to forge ahead.

Step by step
Oil is the world’s leading fuel. According to the latest statistical review by BP, it accounted for one third of global energy consumption in 2016, increasing its market share among other types of energy for the second year in a row.

But prices have been depressed. The move by OPEC at the end of 2016, which was subscribed by a large group of non-OPEC countries shortly after and led by Russia, was a consequence of a rapid downfall in the oil market over the past few years. Producers saw prices collapse from a peak of $115 per barrel in June 2014 to around $30 in 2016. Among other reasons, the decline was due to concerns about slowing growth in China and other emerging markets.

For the first time in a decade, economies around the world are expanding simultaneously; oil prices are part of the virtuous circle of an increasing demand

Consequently, the industry’s leaders decided to curb production to almost 1.8 million barrels a day – or around two percent of the global output – for six months. However, the measure aimed at pushing the prices up was just the beginning of a longer-lasting strategy revalidated in May 2017. In a new meeting, the oil cartel and its allies decided to extend the effort until at least the end of the first quarter of 2018.

Since the output cut began, the group of 21 nations that are part of the deal haven’t been strictly successful in achieving their cut targets. According to data analysed by Bloomberg, OPEC nations only met their cutback goals in the three months from March to May 2017, while the non-OPEC countries were only effective in August and September 2017.

Nevertheless, attempts to roll back an oversupplied market have impacted prices. From a market perspective, the effect has been positive, but not enough; prices have been volatile, failing to provide a significant and steady upward trend in the value of the commodity.

Indeed, after the first half of 2017, prices started to show stronger figures. In December 2017, oil prices reached their highest levels in more than two years, with the price of Brent Crude – the global reference price – breaking $65 a barrel.

Experts attributed the gains to current global economic growth: for the first time in a decade, economies around the world are expanding simultaneously, The Wall Street Journal reported. This comes together with stronger industrial activity demanding more diesel, an increase in international trade, and consumers being empowered by higher employment rates. As a result, oil prices are part of the virtuous circle of an increasing demand.

Time to rebalance
With its members holding more than 80 percent of the world’s proven crude oil reserves, OPEC has considerable influence on the market.

In the presentation of its latest World Oil Outlook in November 2017, OPEC’s Secretary General Mohmmad Sanusi Barkindo said: “The past year has been a historic one for OPEC and the global oil industry.” He recognised that, since November 2016, “it has been a period when the rebalancing of the global oil market has gathered vital momentum”.

Looking ahead, OPEC is cautious. According to the group, global demand for oil won’t peak in the period to 2040, but growth will soon decelerate. In line with these expectations, the largest companies in the sector predict demand will hit a peak and decline in the years ahead because of new technologies and electric vehicles. For example, Royal Dutch Shell and Norway’s Statoil forecast the highest point of demand will be reached between 2025 and 2030.

One of the threats the industry is weighing is the car industry’s transformation, based on initiatives to tackle climate change, such as the Paris Agreement. Despite this, OPEC believes its business won’t suffer any strong impact – at least, not in the next two decades. “The car fleet is anticipated to change smoothly over the forecast period. In the passenger car segment, electric vehicles are estimated to represent 12 percent of the car fleet by 2040,” the OPEC report explained. “Oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period.”

The International Energy Agency (IEA) shared this view in its latest outlook: “While the much-discussed growth in the electric vehicles fleet is a very important longer-term issue for oil demand, by 2022 we estimate that only limited volumes of global transport fuel demand will be lost to [electric vehicles] from conventional fuels.”

In regards to where the demand will be originated, both OPEC and the IEA expect driving forces to come from emerging economies.

Among those, the IEA’s outlook named one of the world’s fastest-growing economies: “India, particularly, is gradually becoming the focus of attention as Chinese demand growth slows. Twenty years of strong demand growth in China, fuelled by rapid industrialisation and infrastructure spending, is giving way to a slower pace as the Chinese economy moves towards a services and consumer-led structure,” the report explained.

In numbers, even though Indian per capita oil consumption represents less than half that of the Chinese, at 1.2 barrels per year, the IEA focused on the potential: “There is clearly still plenty of growth to come from India.” In the next five years, the country’s per capita oil consumption is expected to reach 1.5 barrels.

Gas: a globalised market
Compared with coal and oil, natural gas is a less harmful fuel. Under the analysis of the IEA, the gas market is transforming from a regional to a globalised system, with increasingly interdependent markets. At present, the main drivers are “the availability of shale gas and the rising supplies of liquefied natural gas”, the IEA said.

But this, it warned, has brought about a risk. “The security of natural gas supplies cannot be taken for granted even with the current low-price environment and oversupplied market,” said Executive Director of the IEA Fatih Birol. “From cold spells in Southern Europe, to hurricanes in the Gulf of Mexico, to diplomatic tensions among Gulf countries, energy security is impossible to ignore.”

The IEA’s latest forecast on natural gas predicts that global demand will grow by 1.6 percent a year for the next five years, with consumption reaching around four trillion cubic metres.

According to the predictions, China will be the main driver on the demand side, while the US will provide most of the additional supply thanks to the sharp growth in its domestic shale industry.

Despite the ongoing clean energy revolution, forecasts on fossil fuels are still upbeat about the near future for oil and gas. Now, with the tail wind of global economic growth, both seem to have an opportunity to gain further momentum, especially those at the forefront. These leading figures can be found among the winners of the World Finance Oil and Gas Awards 2017.

World Finance Oil & Gas Awards 2017

Best Fully Integrated Company
Africa: Oando
Asia: PTT
Middle East: Aramco
Eastern Europe: Gazprom
Western Europe: Repsol
Latin America: YPF
North America: ExxonMobil

Best Independent Company
Africa: Oando
Asia: Conrad Petroleum
Middle East: Genel Energy
Eastern Europe: Irkutsk Oil Company
Western Europe: Perenco
Latin America: PetroRio
North America: Diamondback Energy

Best Exploration & Production Company
Africa: Sonatrach
Asia: PTTEP
Middle East: Aramco
Eastern Europe: Rosneft
Western Europe: Independent Oil & Gas
Latin America: PetroRio
North America: OXY

Best Downstream Company
Africa: Vivo Energy
Asia: Thaioil
Middle East: KNPC
Eastern Europe: Oscar Downstream
Western Europe: Varo Energy
Latin America: Ecopetrol
North America: Andeavor

Best Upstream Service & Solutions Company
Africa: Nigerdock
Asia: Sapura Energy
Middle East: Saipem
Eastern Europe: Rusneftegaz
Western Europe: Wood Group
Latin America: Weatherford
North America: Schlumberger

Best Downstream Service & Solutions Company
Africa: Puma Energy
Asia: Petronas
Middle East: ORPIC
Eastern Europe: PKN Orlen
Western Europe: Repsol
Latin America: Enargas
North America: Kinder Morgan

Best Drilling Contractor
Africa: Pacific Drilling
Asia: PV Drilling & Well Services Corporation
Middle East: ADNOC Driling
Eastern Europe: CROSCO
Western Europe: Noble Corporation
Latin America: San Antonio Internacional
North America: Helmerich & Payne

Best Investment Company
Africa: Helios Investment Company
Asia: Kerogen Capital
Middle East: IPIC
Eastern Europe: Gazprombank
Western Europe: Blue Water Energy
Latin America: Riverstone Holdings
North America: Denham Capital

Best EPC Service & Solutions Company
Africa: Nigerdock
Asia: Chiytoda Corporation
Middle East: NPCC
Eastern Europe: ZAVKOM
Western Europe: Wood Group
Latin America: CFPS Engenharia e Projetos
North America: SNC Lavalin

Best Sustainability Company
Africa: Engen
Asia: PTT
Middle East: ENOC
Eastern Europe: Irkutsk Oil Company
Western Europe: Galp Energia
Latin America: Pemex
North America: Sunoco

Best CEO
Africa: Aidan Heavey, Tullow Oil
Asia: Tevin Vongvanich, PTT PCL
Middle East: Amin H. Nasser, Aramco
Eastern Europe: Alexey Miller, Gazprom
Western Europe: Josu Jon Imaz, Repsol
Latin America: José Antonio González Anaya, Pemex
North America: Vicki Holllub, OXY

Best Oil & Gas Law Firm
Africa: ENS Africa
Asia: Baker Botts
Middle East: Amereller
Eastern Europe: CMS Warsaw
Western Europe: Dentons
Latin America: Canales Auty
North America: Baker Botts

World Finance Digital Banking Awards 2017

Posted on by Helen

Long gone are the days when IT was confined to siloed divisions within a bank. Today, digitalisation impacts every branch, at every level and across all departments of any financial institution worth its salt. As the past year has demonstrated, banks have little choice but to embrace the digital revolution wholeheartedly. An ongoing transformation is the result, while those that continue to be slow to adapt are now suffering the consequences.

Nowadays, consumers demand the utmost in convenience. They can purchase pretty much anything online at the touch of a button, at any time – day or night – and they expect no less from their financial service provider. But with this mammoth rush in online banking comes the pressing and growing need for security. Recent years have demonstrated the danger of the cloud’s double-edged sword, and everyday consumers are all too aware of the ease with which organisations can be hacked. Consequently, in 2017, we saw major advances in banking security, with the use of biometric authentication and iris recognition providing a much-needed additional level of security for customers. That said, despite their importance in today’s digital world, such developments are not yet ubiquitous.

Over the past year, the continued march of banking’s digital transformation has forced many to rise to associated challenges and evolve with the times, while others gradually fade away, soon to be forgotten in the brick-and-mortar branches they seem so reluctant to leave behind. In this year’s World Finance Digital Banking Awards, we celebrate those that lead the way with digitalisation, while meeting consumer demands and mitigating against accompanying risks along the way.

Rise of the cryptocurrency
Fintech firms are continuously finding new and innovative ways to make managing, investing and spending money easier than ever before. In this vein, perhaps the biggest change that we have seen in the past 12 months has been the rising popularity of digital currencies. In 2017, we witnessed something that few would have predicted just a few years ago: cryptocurrencies going mainstream.

The continued march of banking’s digital transformation has forced many to rise to associated challenges and evolve with the times, while others gradually fade away

While bitcoin remains the most well-known cryptocurrency, a growing number of rivals are proliferating at an astonishing rate. The second in popularity is Ethereum, while others following closely include Litecoin, Zcash, Dash and Ripple. Aptly demonstrating the current trend is their growth in value witnessed over the past year. For instance, in the months from January to July 2017, Ethereum increased its value fiftyfold to $300 a coin. By August, Litecoin reached just above $64.20 per coin, exploding in value by almost 1,383 percent from the start of the year, when it was trading at just $4.33.

Unsurprisingly, amid such news, bitcoin had its biggest ever year in 2017, reaching over $15,000 per coin in December. Meanwhile, the volume of daily bitcoin transactions took off in May, from an average of $200m in the months prior to more than $700m being common for the rest of the year.

Against this backdrop, big banks have started to act, all too aware that they could easily miss a beat that could one day make them obsolete. By the summer, Ashok Vaswani, Chief Executive Officer for Personal and Corporate Banking at Barclays, revealed that discussions were underway with British regulators to introduce digital currencies.

“We have been talking to a couple of fintech companies and have actually gone with them to the [Financial Conduct Authority] to talk about how we could bring an equivalent cryptocurrency, not necessarily bitcoin, into play,” Vaswani told CNBC at a fintech conference in Denmark.

Barclays is not alone in this endeavour; central banks throughout Asia and Europe are also exploring digital-only currencies. Denmark’s central bank has been deliberating a digital-only e-krone for over a year now, while the People’s Bank of China has already run trials on its own currency. Meanwhile, in June, tech giant IBM announced a new deal to construct a digital trade platform with the Digital Trade Chain Consortium, a group of European banks comprising Societe Generale, Deutsche Bank, KBC, Rabobank, Natixis, Unicredit and HSBC.

As such snippets – which are by no means indicative of the whole story – show, 2017 has been a monumental year for digital currencies. And it seems this is only the start: financial institutions all over the world are now scrambling to latch onto the trend, something we can expect to see long into 2018 as well.

New players
While in 2016 we witnessed the rise of small and nimble fintech firms, along with the start of a movement that saw them team up with traditional banks, throughout 2017, we have seen a growing incidence of partnerships with big tech firms. Aside from the mammoth IBM and Digital Trade Chain Consortium alliance, there are also several others highlighted in the World Economic Forum’s (WEF’s) Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services report, which was published in August 2017 and alludes to a major disruption that could well be underway.

The report lists artificial intelligence, cloud computing and big data analytics as the main three areas that have become critical to maintaining competitiveness in the financial sector. Interestingly, it is these capabilities that the giants of the tech world already have deep levels of experience and expertise in, far exceeding their financial counterparts. Embracing such solutions is proving to be difficult for the banks trying to play catch-up, with more institutions turning to the likes of Google, Facebook and Amazon.

Among the most notable examples given by the WEF is Amazon Web Services’ partnership with numerous finance companies, including Nasdaq, Aon, Carlyle and Pacific Life. There is also Banco Bradesco’s partnership with Facebook, which enables customers to carry out their daily banking activities on the social media platform. This uses Facebook’s highly sophisticated data analytics to better target existing and potential customers. Meanwhile, Amazon’s Alexa solution is now provided to Capital One and Liberty Mutual, enabling customers to pay bills and track their spending through voice-activated devices.

Although such cooperation is facilitating and encouraging innovation in the sector, the report notes that it could also pose a risk in the event that big tech players decide to enter into the financial services game themselves, placing them in direct competition with banks, but with a massive technological advantage.

“Tech giants would be able to pick and choose their points of entry into financial services; maximising their strengths like rich datasets and strong brands, while taking advantage of incumbent institutions’ dependence on them,” said Jesse McWaters, lead author of the report, on the WEF’s website.

There has been a lot of change over the past year, with financial institutions proving to be more willing to adapt, implement new technology and partner up. But what 2017 has also indicated is that the game is becoming fiercely competitive, and new rivals may not just be limited to the small fintech players that banks had previously come to terms with. As such changes continue to rain down on the industry, flexibility and forward-thinking is more important than ever. Those who stand tall in the face of such challenges, while embracing the new and unknown, are commended in the latest edition of the World Finance Digital Banking Awards.

World Finance Digital Banking Awards 2017

Best Digital Banks
Andorra: MoraBanc
Brunei: Bank Islam Brunei Darussalam
Bulgaria: UniCredit Bulbank
Canada: CIBC
Chile: Bci
Costa Rica: BAC Credomatic
Dominican Republic: Banco Popular Dominicano
El Salvador: BAC Credomatic
France: Citi
Germany: Fidor Bank
India: ICICI Bank
Jordan: InvestBank
Kuwait: Gulf Bank
Latvia: Citadele Banka
Malaysia: Maybank
Mexico: BBVA Bancomer
Mozambique: MozaBank
Myanmar: CB Bank
Nigeria: Wema Bank
Panama: BAC Credomatic
Portugal: Activo Bank
Romania: Banca Comercialaˇ Românaˇ
South Korea: Shinhan
Sri Lanka: Commercial Bank of Ceylon
Turkey: Garanti Bank
UAE: Mashreq Bank
UK: Monzo Bank
US: Citi

Best Mobile Banking Apps
Andorra: MoraBanc – MoraBanc App
Brunei: Bank Islam Brunei Darussalam – BIBD Mobile
Bulgaria: UniCredit Bulbank – Bulbank Mobile
Canada: CIBC – CIBC Mobile Banking
Chile: Bci – Bci Movil
Costa Rica: BAC Credomatic – Banca Móvil
Dominican Republic: Banco Popular Dominicano – Banco Popular Dominicano
El Salvador: BAC Credomatic – Banca Móvil
France: Citi – Citi Mobile
Germany: Fidor Bank – Fidor Bank
India: ICICI Bank – iMobile by ICICI
Jordan: InvestBank – iBank
Kuwait: Gulf Bank – Gulf Bank Mobile Banking
Latvia: Citadele Banka – Citadele
Malaysia: Maybank – Maybank
Mexico: BBVA Bancomer – Bancomer móvil
Mozambique: MozaBank – Moza Mobile
Myanmar: CB Bank – CB Bank Mobile Banking
Nigeria: Wema Bank – ALAT
Panama: BAC Credomatic – Banca Móvil
Portugal: Activo Bank – ActivoBank
Romania: Banca Comercialã Românã – Touch 24 Banking BCR
South Korea: Shinhan – Shinhan Global S Bank
Sri Lanka: Commercial Bank of Ceylon – ComBank
Turkey: Garanti Bank – Garanti Mobile Banking
UAE: Mashreq Bank – Snapp
UK: Monzo Bank – Monzo Bank
US: Citi – Citi Mobile

 

Top 5 trends that will drive Africa’s private equity market in 2018

Posted on by Helen

For a general view on the likely global trends in the private equity market in 2018, we need look no further than the developments of the past few years. As growth rates around the world declined, Africa and other emerging markets took on ever-greater significance, and are now pivotal in global private equity activity.

According to Quantum Global’s Africa Investment Index, in 2015, the top five African investment destinations – including Botswana, Morocco, South Africa and Zambia – collectively attracted foreign direct investment of $13.6bn. This was a testament to international players’ growing interest in the continent.

It is true that some of the world’s developed markets will return to growth in 2018, and private equity investors will turn their attention towards them once more. However, Africa’s long-term growth and increasingly transparent and stable geopolitical and economic landscape will continue to support the expansion of private equity across the region.

Private equity has taken on a greater share of public sector financing in developing markets such as Africa

Private equity has also taken on a greater share of public sector financing in developing markets. Some of Africa’s largest economies have ventured into their first ever public-private partnerships (PPPs), and interest from limited partners and general partners has grown significantly over recent years.

However, the importance of private equity in Africa’s economic development is underpinned by an annual funding gap of around $100bn in the region, along with a soaring youth population. Private equity has also helped to drive much-needed development of the region’s capital markets, which are slowly maturing.

Here we consider the five key trends that are most likely to occur in Africa’s private equity space in 2018.

1 – Increased deal flow
Despite political uncertainty in countries such as Zimbabwe and South Africa, there is significant deal appetite and interest in quality assets in Africa. Further north and west, democratic elections have passed in multiple countries, including Angola, which saw its first transfer of power to the opposition party since peacetime in 2002. This should provide investors in those countries with much greater confidence than in previous years.

Deal flow remains high and, given the region’s economic growth, is likely to remain so in 2018. The challenge is one of quality and bankability: management in Africa remains complex for financial, structural and political reasons. These complexities are inherent in all developing markets and will continue in 2018 and beyond. Growth trends in 2018 will demand that general partners deploy highly specialised teams with expertise in specific sectors, in addition to a deep understanding of African markets.

2 – Economic recovery in West Africa
Improvements in commodity prices combined with the region’s expected economic recovery will drive further investment in West Africa. Nigeria and Angola will benefit from analysts’ forecasts that oil prices will rise to around $58 per barrel in 2018, easing public expenditure pressures. Private equity investors and other state players, such as China, will also benefit from a potential uptick in public sector spending on important infrastructure works, and we may see greater appetite for PPPs and general private capital in government-led projects.

GDP figures also recovered across most of West Africa in 2017, and in some cases are forecast to surge in 2018. The IMF’s most recent World Economic Outlook (released in Q3 2017) has projected growth of almost nine percent for Ghana in 2018, with an overall rise of around 3.4 percent for sub-Saharan Africa. 

3 – Improved global liquidity conditions
With projected higher oil production and oil prices predicted to rise throughout 2018, foreign exchange liquidity rates are also expected to grow globally. Private equity in Africa will therefore offer a much higher rate of return compared with cash and fixed income assets.

Around the world, borrowing rates and inflation remained stable throughout 2017. This was also the case in many parts of Africa – even in countries that struggled with low forex reserves and the slump in oil prices. Some of the region’s biggest economies, such as Angola and Nigeria, have reined in spending and demonstrated fiscal restraint, including introducing currency controls. These measures have contributed to greater liquidity.

4 – Nigeria attracting more investments
With the value of Nigeria’s economy projected to grow to $650bn by 2022, medium to long-term prospects look optimistic, with solid fundamentals underpinning growth expectations, particularly in the non-oil sectors of the economy. However, the country also faces an $878bn infrastructure investment gap between now and 2040. This figure (which pertains only to infrastructure) is based on forecasts of an annual GDP rise of 4.1 percent and a population that is rising by 2.4 percent per year at current trends.

5 – Chinese asset diversification
The slowdown in China’s economy is likely to lead to Chinese investors further exploring opportunities in emerging markets like Africa. Such investors are also likely to pursue increased collaboration with credible private companies and institutions. China has a track record of investing across diverse asset classes in Africa, particularly in infrastructure: as far back as the 1970s, China helped to build one of Africa’s longest railways, the 1,860km TAZARA Railway from Tanzania to Zambia. China is already investing heavily in diverse asset classes across the continent, including Angola’s first ever PPP. The inherent Chinese appetite for diverse assets in Africa spells good news for African governments, many of which have redoubled their efforts towards major infrastructure works over recent years.

 

As we look ahead to 2018, there is clear evidence that the global economy is improving, even though there are new geopolitical issues on the horizon: namely Brexit, the Chinese slowdown and Middle Eastern security concerns. Despite these issues, Africa faces a year of growth, and will continue to act as a promising destination for private equity investors.

Top 5 impacts of GDPR on the European financial services industry

Posted on by Helen

Amid growing concerns surrounding the safety of personal data from identity theft, cyberattacks, hacking or unethical usage, the EU has introduced new legislation to safeguard its citizens. The EU General Data Protection Regulation (GDPR) aims to standardise data privacy laws and mechanisms across industries, regardless of the nature or type of operations.

Most importantly, GDPR aims to empower EU citizens by making them aware of the kind of data held by institutions and the rights of the individual to protect their personal information. All organisations must ensure compliance by May 25, 2018.

While banks and other financial firms are no strangers to regulation, adhering to these guidelines requires the collection of large amounts of customer data, which is then collated and used for various activities, such as client or customer onboarding, relationship management, trade-booking and accounting. During these processes, customer data is exposed to a large number of different people at different stages – and this is where GDPR comes in.

So, what does the introduction of GDPR actually mean for financial institutions, and which areas should they be focusing on? Brickendon’s data experts take a look at five key areas of the GDPR legislation that will have the biggest impact on the sector.

  1. Client consent

Under the terms of GDPR, personal data refers to anything that could be used to identify an individual, such as a name, email address, IP address, social media profile or social security number. By explicitly mandating firms to gain consent from customers about the personal data that is gathered – with no automatic opt-in option – individuals know what information organisations are holding.

Also, in the consent system, firms must clearly outline the purpose for which the data was collected and seek additional consent if firms want to share the information with third parties. In short, the aim of GDPR is to ensure customers retain the rights over their own data.

  1. Right to data erasure

GDPR empowers every EU citizen with the right to data privacy. Under the terms, individuals can request access to, or the removal of, their own personal data from banks without the need for any outside authorisation. This is known as data portability. Financial institutions may keep some data to ensure compliance with other regulations, but in all other circumstances where there is no valid justification, the individual’s right to be forgotten applies.

  1. Consequences of a breach

Previously, firms were able to adopt their own protocols in the event of a data breach. Now, however, GDPR mandates that data protection officers report any data breach to the supervisory authority of personal data within 72 hours. The notification should contain details regarding the nature of the breach, the categories and approximate number of individuals impacted, and the contact information of the data protection officer. Notification of the breach, the likely outcomes and the remediation must also be sent to the impacted customer without undue delays.

Liability in the event of any breach is significant. For serious violations, such as failing to gain consent to process data or a breach of privacy by design, companies will be fined up to €20m ($23m) or four percent of their global turnover – whichever is greater. Lesser violations, such as records not being in order or failure to notify the supervisory authorities, will incur fines of two percent of global turnover. These financial penalties are in addition to potential reputational damage and loss of future business.

  1. Vendor management

IT systems form the backbone of every financial firm, with client data continually passing through multiple IT applications. Since GDPR is associated with client personal data, firms need to understand all data flows across their various systems. The increased trend towards outsourcing development and support functions means that personal client data is often accessed by external vendors, which significantly increases the data’s net exposure. Under GDPR, vendors cannot disassociate themselves from obligations towards data access. Similarly, non-EU organisations working in collaboration with EU banks or serving EU citizens need to ensure vigilance while sharing data across borders. In effect, GDPR imposes end-to-end accountability to ensure client data stays well protected; it does this by compelling not only the bank but also its support functions to embrace compliance.

  1. Pseudonymisation

GDPR applies to all potential client data wherever it is found – whether it is in a live production environment, during the development process, or in the middle of a testing programme. It is quite common to mask data across non-production environments to hide sensitive client data. Under GDPR, data must also be pseudonymised into artificial identifiers in the live production environment. These data masking or pseudonymisation rules aim to ensure the data access stays within the realms of the ‘need to know’ obligations.

 

Given the wide reach of the GDPR legislation, there is no doubt that financial organisations need to re-model their existing systems or create newer systems with the concept of Privacy by Design embedded into their operating ideologies. With the close proximity of the compliance deadline, firms must do this now.

There are three steps that companies must now embark on: identify client data access and capture points; collaborate with clients to gain consent for justified usage of personal data; and remediate data access breach issues. Failure to do at least one of these now not only cause financial pain in the long run, but will also erode client confidence.

A study published earlier this year by Close Brothers UK found that an alarming 82 percent of the UK’s small and medium businesses were unaware of GDPR. Recognising the importance of GDPR and acting on it is therefore the need of the hour.