Author: itsupport

Building a dynamic insurance company in the Philippines

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The world moves at an uncertain pace. Communities around the globe, having faced and overcome the challenges brought by the pandemic over the past two years, are a great demonstration of this. Transformations across different landscapes are picking up pace, pushing world leaders and businesses to guide the world towards innovative and effective solutions.

Recently rebranded BPI AIA Life Assurance Corporation (BPI AIA) has taken a dynamic and supportive role throughout the whole ordeal. In a rapidly changing business environment, it believes that adaptability and being quick to amend outdated ways are crucial to success and increasing customer confidence. Long before the health crisis, BPI AIA had already paved its path towards innovation and had committed itself to being quick and resilient in the face of grave challenges. Yet, when it unveiled its new brand in 2021, the insurance company proved that it can still further elevate its business.

Developing a dynamic environment
Two years into the pandemic, businesses are still continuously innovating and modifying their operational strategies. In addition to the health crisis, other factors like economic pressures, industry transformations, and changes in customer needs and preferences require businesses to be more flexible and agile.

Even the biggest organisations can be outcompeted by newcomers in the game, but the most successful ones know how to adapt to their market. As the world continues to accustom itself to the shifting norms, BPI AIA has developed a dynamic business environment to ensure that it can always rise above unprecedented challenges and take advantage of every opportunity. For the insurance company, implementing the right technology for the business is an essential component of its dynamism. Agility complements a digital mindset, and BPI AIA exhibits this best. Chief Executive Officer, Surendra Menon, told World Finance; “Our rebranding last year entailed an overall boost in our standards of doing business. There were significant improvements on all fronts of the business, springing from optimising our tech infrastructure.”

“We adopted advanced data analytics to help us create data-driven decisions in developing solutions that will help improve the lives of Filipinos. We also incorporated digital tools to ensure that these new solutions are executed well,” he continued.

Customers are the main reason the company is striving to continuously enhance operations. Looking at its offerings, efforts, and customer service, it is evident how much BPI AIA values its clientele. Specifically, BPI AIA worked closely with its bank partner Bank of the Philippine Islands (BPI) to develop a data-driven underwriting technology, MyData, that significantly reduces the time it normally takes for a customer to fill out an application form and answer underwriting questions on one hand, while helping the insurer determine the insurability of the applicant on the other.

“In addition to tech, our overall customer service was among the top improvements that came alongside our rebranding. We also increased the engagement between our people and our customers. As an insurance company, we earn our customers’ confidence in us by letting them know that our people are with them through every step of their journey.

We aim to bring insurance closer to every Filipino and make it more accessible to them

At BPI AIA, we believe that constantly evolving and innovating to meet their changing needs is the key to delivering the best customer experiences,” Menon added. The rebranding of BPI AIA came with a mission: to empower Filipinos by bolstering financial literacy in the country.

According to S&P’s 2014 Rating Services Global Financial Literacy Survey, the Philippines ranked in the bottom 30 out of 144 countries surveyed in terms of financial literacy. The study further revealed that only 25 percent of adult Filipinos are financially literate.

These numbers present a pressing nationwide issue that demands attention. Given this, BPI AIA made the commitment to heed the call and began proactively developing efforts to bring financial literacy even to the underserved Filipinos. “At present, insurance penetration in the Philippines is low.

There is a big protection gap that the insurance industry needs to commit to addressing together. Financial literacy has always been at the core of the AIA Group.

At BPI AIA, we aim to bring insurance closer to every Filipino and make it more accessible to them, regardless of what class they belong to,” said Menon.

Customer service was among the top improvements that came alongside our rebranding

BPI AIA and its holding company, AIA Philippines, work closely with the BPI Foundation in acting on this mission. Together with the foundation, the insurance company delivers financial education programmes to different parts of the country and raises awareness of the importance of becoming financially literate. In this initiative, the BPI Foundation and BPI AIA also provide Filipinos with the right skills and tools to be able to take charge of their own finances.

“A part of our effort to improve financial literacy is different solutions, like microinsurance, which has long been a part of our offered products and services, that reach even the underserved and unbanked areas of the country. We remain committed to this mission and we continue to work with more partners nationwide to expand the reach of our insurance products and related solutions,” claimed Menon.

A landmark product that BPI AIA rolled out this year, PamilyaProtect (translated as Family Protect), is an instant insurance product that can easily be availed of via Facebook Messenger, which is extremely popular and familiar to a tech-savvy nation such as the Philippines. It is a simple, affordable, and easy-to-purchase health, accident, and life insurance plan rolled into one, designed to secure the whole family in case of the unexpected.

Living with no uncertainty
A strategic alliance between two of the leading financial institutions in the Philippines, BPI and AIA Philippines (formerly AIA Philam Life), BPI AIA has efficiently guided its clients through the uncertainties of the pandemic. The company bears the responsibility for the lives of millions of Filipinos, and it understands that being adaptable to the changing needs of the world is crucial to delivering its promise of helping them live longer, healthier, and better lives. It does this through various products like its flagship AIA Vitality programme, a science-backed health and wellness initiative. The programme encourages millions of Filipinos to have a healthy lifestyle by rewarding customers for every healthy choice they make. The rewards are usually additional insurance coverage, as well as lifestyle perks such as discounts from different partner brands.

“We share our philosophy that when you live healthy, you live well. And when you have peace of mind because your insurance will take care of everything when the unthinkable happens, you have more courage to live your dreams,” Menon concluded.

A new centre for alternative investment

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Over the past decade Cyprus has significantly enhanced its fund legislation to position itself as a flexible and cost-effective jurisdiction for funds and fund managers within the European Union. The country remains committed to enhancing its competitiveness through regular upgrades of both products and services.

It has also positioned itself as a regional fund centre and a cost-effective investment platform into the EU, drawing on its strength of being a common law jurisdiction with a comprehensive tax treaty network and leveraging its comparative advantages in certain sectors such as the shipping and maritime industry.

The Cyprus RAIF
The success of the registered alternative investment fund (RAIF) in Cyprus has been a big step in the right direction and the jurisdiction continues to work hard to further enhance the reputation of the sector both domestically and internationally. A Cyprus RAIF is available for subscription from an unlimited number of professional or well-informed investors and is required to be externally managed by an authorised alternative investment fund manager (AIFM) that has its office in an EU member state and is fully compliant with AIFMD.

Setting up an AIFM is not a prerequisite and third-party AIFMs (independent management companies, or ManCos) are available, which can potentially offer a turnkey solution instead of setting up a proprietary AIFM. In addition to the AIFM, the appointment of a depositary, a fund administrator (a delegate of the AIFM) and an auditor are mandatory requirements for the RAIF.

Cyprus RAIFs are also not subject to licensing or an authorisation processes by the regulator, the Cyprus Securities and Exchange Commission (CySEC). CySEC only needs to be notified of the RAIF with a mandatory suite of documents and it maintains a special register for RAIFs that includes approved Cyprus RAIFs. Through the Cyprus RAIF, setting up a fund on the island is now significantly expedited (in principle, within one month).

An investment gateway
As noted above, Cyprus is positioning itself as a regional fund centre and a cost-effective investment platform into the EU. Moreover, Cyprus offers fund managers and promoters scalable and compliant substance solutions to meet the increasingly demanding, complex and evolving legal and regulatory dynamics of the European fund industry as demonstrated by the European Commission’s review of AIFMD in November 2021 and subsequent legislative proposals.

Brexit means the UK is no longer the logical choice for a cross-border European fund management company. For UK asset and fund managers looking to benefit from European passporting and needing to maintain access to the wider European market and cross-border investors, a more substantial part of their business will have to be created and managed in the EU over time. For example, in October 2020 the Central Bank of Ireland published its findings of the review of its fund management company guidance (commonly referred to as ‘CP86’) that inter alia stated that all fund management companies should have a minimum of three full-time employees (or equivalent to full-time employee) each of whom is suitably qualified and of appropriate seniority to fulfil the role. This number is only relevant for the smallest and simplest of entities. Other firms are expected to have a number of full-time employees as determined by the nature, scale and complexity of their operations.

At the height of Brexit uncertainty a few years ago, a number of asset managers set up their own ManCos/AIFMs

With respect to delegation, the aforementioned European Commission’s review of AIFMD in November 2021 also highlighted the need to strengthen the supervisory oversight of an AIFM’s delegation arrangements. It required AIFMs to provide additional information to national regulators on their delegation arrangements during the authorisation process including the extent of delegation and sub-delegation arrangements as well as detail on their personnel, systems, controls and procedures implemented to effectively monitor, supervise and control their delegates. The entire delegation structure will have to be justified based on objective reasons.

Cyprus offers fund managers the ability to domicile funds and establish new management companies in Cyprus in order to ensure continued, unfettered European market access. Fund distribution in the EU is an important consideration. Under AIFMD, a marketing passport is not granted to the investment fund product itself, but rather to the manager of it, meaning only authorised EU AIFMs can currently access the marketing passport.

One of the fundamental aims of AIFMD is to allow an AIFM authorised in one member state of the EU to ‘passport’ its authorisation to any other member state. Article 33 of AIFMD allows an authorised EU AIFM that wishes to manage an EU AIF in a different member state to passport in its licence from its home member state to the host member state where the AIF is domiciled. They can then manage that fund provided they are authorised to manage that type of AIF. Practically this means that a Cyprus AIFM could manage an Irish or Luxembourg AIF or vice versa.

Growing demand in Cyprus
With the growth in the RAIF product in Cyprus has come demand for alternative investment fund managers to manage them. While setting up a proprietary AIFM does offer advantages including the retention of maximum control over a fund structure, it is not a prerequisite and third party AIFMs (so called independent management companies, or third party ManCos) are available, which can potentially offer an alternative solution to setting up a proprietary AIFM. This development has also coincided with self-managed investment funds or self-managed investment companies (SMICs) becoming less popular. SMICs were traditionally popular and cost-effective with the board of directors of the fund responsible for all functions, but in practice most of these functions (investment management, fund administration, among others) were outsourced through contractual arrangements. The viability of SMICs is, however, now questionable given the increase in substance requirements as well as time commitments from directors in recent years. Regulatory pressure has made this fund management model the least robust in terms of substance demonstration and is increasingly expensive.

At the height of Brexit uncertainty a few years ago, a number of asset managers set up their own ManCos/AIFMs, mainly because they were uncomfortable with the lack of choice in the third-party market. However, this dynamic has changed over the past couple of years.

Institutional investors are increasingly comfortable with the third party AIFM management model that offers comfort with respect to governance. The third party AIFM is responsible, among other things, for the day-to-day management and oversight of the fund including current areas of particular regulatory focus such as liquidity risk management. The AIFM’s responsibility for risk management includes a wide range of risk areas, from investment risk to market risk to operational risks linked to the day-to-day operations of the AIF. The AIFM takes on liability for its role of ensuring that the AIF is managed in accordance with the fund documents and applicable rules and regulations and has a regulatory capital requirement that is linked to the size of its assets under management. While some degree of control, ostensibly, is lost to the third party AIFM, ultimate control typically resides with the fund board.

The model is also cost-effective given increasing regulatory focus on fees, the so-called value assessment of funds. The FCA in the UK for example has introduced rules requiring UK fund managers to assess the value that their Funds deliver to investors and to publish a summary of these assessments annually.

The third party AIFM management model also fits in well with the broader industry themes such as increasing regulatory and taxation pressures for fund management functions to be conducted within the same location as the Funds and SPVs. There is also the increased focus of the OECD BEP’s project on fund management activities requiring substantive fund management activities to be conducted in the same location where profit is derived with the goal of combating tax avoidance. In addition, FATF’s global focus on AML requires increased local oversight of AML/KYC functions in the jurisdiction of the fund that this fund management model satisfies. The model is also currently well-placed to satisfy the criteria of the anti-tax avoidance directive III (ATAD 3) that remains in a draft form.

Of course the regulatory landscape is always changing, but for investors looking for a cost-effective platform into the EU, they needn’t look much further than Cyprus.

Investing in the great energy transition

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The energy crisis that has hit Europe with runaway gas and electricity prices following the Russian invasion of Ukraine shows just how dependent on fossil fuels we still are. Even though Europe is at the forefront of the renewable energy expansion, we still get 71 percent of our energy from fossil fuels. At the beginning of the year, Europe imported 40 percent of its natural gas and 30 percent of its oil from Russia. Now that Russia is using gas as a geopolitical weapon, energy security has emerged as a catalyst to speed up the energy transition.

Via its Repower EU investment plan, the EU intends to phase out Russian oil and gas as rapidly as possible (by 2030 at the latest) and accelerate the pace of investment in renewable energy sources and energy savings. In an interesting turn, the EU Taxonomy now classifies nuclear energy and natural gas – from sources other than Russia – as sustainable during a transition period (to 2045 for nuclear and 2030 for gas). The energy transition is essential to attaining environmental and climate goals, but this takes time and the existing energy system cannot be dismantled before the new one is up and running. The investments that must be made are energy-intensive in and of themselves. Nuclear power is needed in the new system, as well as oil and gas during an extended switch-over period. If we stop investing in these energy sources while the global demand for energy continues to grow as forecast, there is risk that the current situation in Europe (with costly energy and high inflation) will become the new normal.

In the choice among fossil fuels, the largest possible coal component should be replaced by natural gas

The energy transition is the greatest challenge of our time, but also provides several interesting opportunities from an investment perspective. A lot of people associate the theme with solar, wind power and electric cars, but several other interesting verticals are driven by the same underlying trend. In previous reports, we have addressed areas such as batteries, ‘green’ metals, sustainable agriculture and smart materials. The valuations related to these aspects of the transition, which are at least equally important, are in many cases more attractive than the most obvious winners in the theme.

The conventional energy sector is another potential, perhaps a bit unexpected, winner. There is risk that the transition will be a period of structurally higher oil prices driven by limited capital investments. However, this combination does entail increased free cash flows that can be returned to energy company shareholders even as valuations remain low. We therefore believe that selected parts of the conventional energy sector also have a place in a wider portfolio within the energy transition and energy security theme.

Components of energy transition
Supply: Phasing out oil is a long-term proposition. Fossil fuels cannot be shut down overnight. According to current forecasts, demand for oil will not peak until 2030, after which it will slowly fall back to just below current levels by 2050. But not all fossil fuels are equally harmful to people and the climate – from this perspective, coal is worst by far. In the choice among fossil fuels, the largest possible coal component should be replaced by natural gas. A significant share of oil consumption comes from transportation. An electrified vehicle fleet can make a difference here to reduce demand.

Solar and wind power are going to grow further in the future. Costs have fallen dramatically in the last 10 years, which makes the switch from fossil fuels economical even without subsidies. Nevertheless, solar and wind cannot support a functioning energy system on their own, power provision has to be weather-independent, plannable base power. Right now, fossil fuels, nuclear power and stored hydropower serve that purpose. Gas and hydropower constitute regulating power that can be rapidly switched on and is dependent upon demand. In a new system, large elements of which are renewable, the hope is that energy storage – via batteries, hydrogen gas or hydropower (pumped storage) – will replace fossil fuels as base power. At present, storage capacity is unfortunately insufficient and relatively expensive. This is another reason why nuclear power is likely to play an important role in the new system as well.

Demand: Underinvestment. The energy transition is also happening on the demand side. Global demand for energy actually declined during the lockdowns in 2020, but we are on the way back to the earlier growth rate. Given the limited investments in fossil fuels in the last 10 years, there is risk that supply will not suffice to meet demand. This could result in a protracted period of high energy prices. The advantage to higher prices is that they increase incentives to save energy. As we illustrated in earlier theme articles, more efficient building materials and heating systems, smarter and lighter materials in industry and recycling can drastically lower consumption.

A diversified energy portfolio
The energy transition is a wide theme with numerous structural impetuses. Accordingly, an energy portfolio should contain a wide spectrum of exposures to renewable energy as well as selected segments of conventional energy. Such a universe would also include companies that are benefiting from increased electrification, have exposure to ‘green’ metals, or are in the business of improving energy efficiency.

Renewable energy and electrification: Most of us associate the energy transition with solar and wind energy, electric cars, batteries, biofuels and expansion of the electricity network. This is where we find the obvious beneficiaries of green initiatives, in companies that are often traded at fairly high valuation multiples. But interestingly, suppliers that are benefiting from the same trends but have more attractive valuations can be found a bit further down the value chain. Considering the strong structural tailwinds, the portfolio should have a strategic overweight against this segment. There are large differences in profitability and valuation among the companies, so selectivity is key.

There is huge potential for improvement in industry through process optimisation, smarter materials and more energy-efficient systems

Conventional energy: Demand for fossil fuels is expected to continue rising, but the current high oil price has not yet resulted in increased capital investments in line with the historical pattern. The problem is that long-term projects are associated with greater uncertainty than ever. Regardless of the forecasts, there is actually no way of knowing how rapidly the transition will proceed or what the political landscape will look like in the future. Numerous institutional investors have completely excluded conventional energy from their portfolios in response to new ESG mandates.

Remaining shareholders and private equity have instead prioritised better earnings and cash flows. Willingness to initiate risky projects may increase if the oil price remains high for a long time, but lead-times are long. We may therefore be facing a protracted period of structurally higher oil prices than we have had in the last decade.

Very little of this is reflected in company valuations. In spite of strong performance so far this year, the energy sector is still being traded well under the historical average relative to the market. Analysts are using fairly conservative estimates for the long-term oil price in their models, at about $60–70 per barrel, which is far below current levels (and even further from the upside scenario, where the oil price parks at above $100 per barrel for an extended period).

Alongside this, companies are generating high free cash flows that will (provided that they are not invested in new projects) be distributed to shareholders or used for share buybacks. Considering the uncertain future, these companies will probably have a higher risk premium than they have had in the past, but much of this is already priced in. In view of the large profits, there is no need for multiple expansion to recoup the investment.

Naturally, a recession that depresses short-term demand, high taxes and company-specific risks must also be considered. But this is supported by the valuation and we thus still recommend a tactical overweight in the conventional energy sector. For the longer term, we recommend greater selectivity, with exposure to the segments that will be needed during a long transition period. This applies to oil companies to an extent, but companies in natural gas and liquefied natural gas (LNG) above all. If Europe is serious about eliminating dependency on Russian gas, large volumes of natural gas will have to be imported from other sources, primarily in the form of LNG from the US. Increased production and a large-scale expansion of the LNG infrastructure, with new terminals, freight options, etc, will be required to meet higher demand for LNG. We avoid coal, oil sand and the most environmentally harmful segments of the conventional energy sector in our theme portfolio.

Tactical investments in a wide energy-sector ETF are a short-term option. For the long term, we recommend an active manager who takes selective exposure against the segments of the sector that are benefiting from the energy transition, and excludes coal and oil.

Nuclear: Nuclear power produces minimal carbon emissions, is a base power in the energy system and could replace coal power without significant difficulty. One problem has been the negative public opinion following the Fukushima disaster, as well as high costs. There have been recent signs of a turnaround not only in the US and parts of Europe but also in Japan, which is beginning to restart reactors. It is hoped that technical progress will soon make Small Modular Reactors (SMR) cost-competitive.

Opportunities to invest directly in nuclear power technology are unfortunately limited (most companies are unlisted). The remaining alternative is exposure via uranium, the fuel currently used in nuclear reactors. There are companies whose business model is to keep uranium in stock, and these provide indirect exposure to the uranium price, as do mining companies that extract uranium. After many years of low prices, however, few of the latter are profitable and risk in the sector is high. Factors indicating a higher uranium price are that few investments have been made in the last 10 years (post-Fukushima) and that lead-times for new projects are relatively long. If demand takes off, driven by new nuclear power expansion, a large uranium shortage could develop. Considering that uranium accounts for a marginal fraction of the operating costs of a nuclear power plant, the price could rise quite significantly without affecting demand. The potential upside is large but volatility is high and there is always a risk that public opinion will shift and become more negative if a new and serious accident occurs.

Energy efficiency: Reduced demand for energy is the other key part of the equation for attaining climate goals. As we explained before, energy consumption can be lowered by relatively simple means: better heating systems, optimised electricity consumption in buildings and more efficient building materials. There is huge potential for improvement in industry through process optimisation, smarter materials and more energy-efficient systems. Carbon disclosure and a higher price for CO2 (via emissions allowances) are accelerating factors here. Materials recycling is another important area.

Energy efficiency improvements have climbed higher on the agenda in the last year. The area plays a key role in the environmental programmes Repower EU and the US Inflation Reduction Act. Although Europe’s costly electricity is an obvious catalyst that is increasing the need for energy efficiency improvements, sales for many companies that are contributing energy efficiency solutions are linked to the general building cycle. Short-term economic anxiety has to an extent cast the long-term structural growth case in the shade. This is reflected in the valuations, which are starting to look attractive for several companies within the theme. As a result, we see an interesting position in which to increase this exposure going forward.

Portfolio mix: Growth and value
The combination of the above components produces a diversified energy portfolio where the transition is the underlying driver. Certain segments – such as renewable energy, electrification and batteries – stand out as growth investments that are benefiting from the huge investments that will be required for decades to attain climate goals. Valuations are higher here and profits are further away in the future. The situation is the opposite within conventional energy. The bulk of the profits is expected to be made in the near term and valuations are low. Reluctance to invest in the conventional sector has lowered company valuations across the entire value chain, even though we can expect continued growth in demand for some segments of the oil and gas sector over a long transition period. The ‘green’ metals are natural resources that we must use to an increasing extent in the new system, while it is hoped we can slow the growth rate on the demand side by means of energy efficiency improvements.

Transforming investing for the digital age

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People from all walks of life should be able to benefit from the capital markets. This hasn’t been the case until now, but here at KBC Asset Management we’re changing the programme. Our company motto is, ‘Everyone invested all the time.’ It’s a philosophy we live by, with employees at every rung of the ladder committed to achieving our dream of maximum investor participation. To that end we have removed many of the roadblocks to retail investing, from lowering threshold requirements to bringing in digitisation.

It’s not just a case of creating a welcoming environment for new investors. We then need to make these new retail customers familiar with investing – and to do that we’ve launched a number of new initiatives. Our virtual assistant, KATE, helps clients navigate investment options on digital channels – over half of KBC investment plans are now sold via these routes and we want to make the process as smooth as possible.

Then there’s our digital service ‘Investing your spare change.’ The principle is straightforward: each time the client pays for something with their debit card, KBC automatically rounds up the amount to the nearest euro. They therefore invest their spare change – amounts so small that they don’t miss them day-to-day, yet large enough when added up to make a real difference in a portfolio. Along the way the client gains invaluable investment experience without expending any effort. Our ‘Turn on the Turbo’ service – which can be activated and deactivated whenever a client chooses – allows them to accelerate their spare change investing by a factor of two or three, putting more money aside when times are good.

Investment pioneers
We want to be pioneers and always stay one step ahead of the competition. That’s why we are constantly striving for innovation and take every opportunity to introduce bold solutions to fit clients’ needs. We’ve known for a long time that artificial intelligence will play an increasingly important role in the future of investing. That’s why we were the first Belgian asset manager to launch a fund whose investment strategy is driven by AI.

As a next step we launched a smart advisory engine, also based on AI, which screens portfolios held by private and wealth clients on a daily basis. It performs a detailed analysis of each portfolio and proactively formulates personalised advice. It also takes into account clients’ personal investment preferences. Increasing computing power makes it possible to analyse data almost in real time and new technologies even make it possible for software to take part in investment decisions. This enables us to respond to market developments faster and more efficiently for our clients.

We are always on the hunt for innovative solutions to keep clients feeling comfortable when investing, no matter what the conditions are on the markets. Our KBC Private Partners Life Sciences fund-of-funds, an investment solution for the wealth office of KBC Private Banking, is a case in point. It offers the opportunity to make a diversified investment in promising unlisted companies active in life sciences through a set of carefully selected funds.

Investors today expect the countries and companies in which they invest to have a positive impact on our society and the environment

In addition to financial returns, investors today expect the countries and companies in which they invest to have a positive impact on our society and the environment. Responsible investing is more than just a trend. KBC is a pioneer in this area and has been adapting its sustainability policies to changing insights since 1992. Over the past five years in particular, KBC has systematically strengthened this stance, taking into account society’s constantly changing expectations and increasing awareness of how fossil fuel use impacts global warming.

KBC Asset Management can be rightly proud of its new investment policy for responsible funds, which presents an appropriate response to the new European regulations. EU Taxonomy and ‘ESG in MiFID’ and SFDR are just some of the challenges we face. Furthermore, all our responsible funds have been awarded the ‘Towards Sustainability’ label in Belgium, and all our eco-thematic and impact investing funds are invested 100 percent sustainably. These funds meet the strictest standards of the new European regulations, and therefore qualify as so-called ‘article 9’ funds.

No KBC fund invests in tobacco, thermal coal or controversial weapons. Controversial regimes and human rights abusers are also not permitted. Funds that invest responsibly are also subject to an additional screening. Products such as conventional weapons, fur and adult entertainment are also excluded. Finally, three types of positive screening are applied: responsible funds, eco-thematic and impact investing.

Credibility is a core value to us. Our ESG policy and criteria are therefore monitored by the Responsible Investing Advisory Board, which is fully independent of KBC. The board consists of leading academics from several universities, who are experts in fields like human rights, business ethics, biology and ecology. They challenge and inspire our policies and ensure that screening is complete, thorough and accurate.

The new approach is in line with the sustainability preferences that our clients have been able to express since August 2022, as part of the MiFID suitability checks. Investors can indicate the extent to which they expect advised financial products to be aligned with European standards. KBC then integrates this into the customer’s investor profile. And it does not stop here. Responsible investing is a fast-changing environment due to its growth, its variety of approaches and its changing regulatory landscape. We face these challenges head on.

Innovation in banking begins with creative tech leadership

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Three years ago, on stage at Grupo Financiero Banorte Forum, I chatted with Sophia the Robot, a social humanoid robot, about her views on automation and responsible artificial intelligence. Sophia told the crowd that robots springing from serious engineering could free up humans from mundane tasks, allowing them to focus on science and industry and to power a revolution of ingenuity – including in banking services. “Robots don’t compete with human intelligence,” she said.

“They complete human intelligence.” Her advice to those seeking to lead the way: Do not fear the digital frontier. At Banorte, we’ve long embraced that approach, supporting consumer-centric advances that have positioned our bank as a creative tech leader in the industry.

That was acutely tested amid the pandemic, which radically upended our way of living and working, bringing profound changes to the banking sector. Only those financial institutions operating with digital resiliency, such as Banorte, were able to serve customers efficiently in response to mobility restrictions and new purchasing habits. Banorte was the first bank to roll out a special loan relief programme to help our customers.

We also launched a full-digital account that was rapidly adopted, since it made it easier to open a bank account without the need to go to a branch, while promoting financial inclusion through digital services. Our commitment to the Mexican people has led us to accelerate our digital transformation to their benefit. It’s part of what we see as our key role in the sustainable recovery of the economy.

Tailor made
Hyper-personalisation is at the core of that strategic plan. It means offering customised solutions to match each personal circumstance by expanding our digital capabilities while placing the customer at the heart of the bank’s digital designs, transformation, and innovation. In May 2021 we established a digital partnership with Google Cloud to transform our banking services; this partnership includes personalising our customer services through artificial intelligence, promoting a culture of innovation among our employees, and strengthening cybersecurity processes.

The outcome is part of what’s called a ‘Bank in Minutes.’ It stems from Banorte’s technological overhaul seven years ago to focus on the customer’s experience, unifying platforms, data, and processes to create agile and personalised experiences. That architecture makes widespread use of reusable services and components, giving Banorte greater flexibility to generate fully digital cycles in minutes, through any of the physical or digital channels, for our higher demand and transactional offerings, all levered on the omnichannel experience.

Branches can now open personal accounts in just 15 minutes, 100 percent digitally, incorporating high-value features, while prioritising security for our customers. Credit cards and mutual funds are digitally available from the bank’s mobile app instantaneously. There’s also paperless processing of contracts through any of our channels and digital authentication to make it easier, quicker, and more secure for customers to access our services.

Reflecting the widespread digital adoption, in 2021 Banorte registered a 92 percent increase in mobile banking transactions, compared to the previous year. So far this year, digital customers have grown 21 percent, to 6.7 million, and our mobile banking customers have increased 25 percent, to five million.

We invest about 13 percent of our total income each year in transforming our bank to continuously improve our self-service channels and enhance our banking operations, as well as to leverage on data in the market to stay competitive.

In that sense, Banorte’s mobile app was transformed into a more intuitive, fast, and easy-to-use version, through which customers can acquire payroll loans, term promissory notes, insurance, and other products. In boosting its digital services for customers, Banorte has established strategic alliances with partners such as Rappi, a leading Latin-American super app, with more than 600,000 credit cards already delivered.

An innovation track record
This transformation has a long tail. In 2013, Banorte became the first bank to offer a digital payments card designed for e-commerce with a remarkable security feature, generating a digital card with a one-time password as a dual authentication factor. These both mitigated fraud risk and increased usage, resulting in five times more transactions with the digital card.

In 2018, Banorte became the only bank to offer credit line increases through digital banking. Thanks to these and many other efforts, we recently received a Google Cloud financial services customer award, honouring Banorte for innovative thinking, technical excellence and digital transformation.

Also, Maya – Banorte’s digital assistant that makes banking easier for our customers – was recognised as one of the best banking innovations worldwide in the 2021 Analytics and Artificial Intelligence category by the European Finance Management Association (EFMA) and Accenture.

Soon, we will be entering the neobank category with the launch of a cloud-based, 100 percent digital bank, with no legacy architecture, that will offer a personal, easy and secure experience to Mexican users, backed by Banorte’s more than 120 years of know-how. This initiative is also evidence of how Banorte is broadening the array of financial services through a 100 percent digital channel, making it easier for customers to do their banking.

While some customers continue to value the traditional banking experience, we believe we have found the right balance in our services. The goal is to seamlessly combine our branch-based services with our digital efforts. It ensures a flexible experience that works for all, whether a customer prefers to bank in-person or on their smartphone.

Banorte remains focused on four major technological bridges: the use of the cloud, artificial intelligence, data and biometrics identification. All target the creation of customised services. At Banorte, we’re not doing digital banking. We’re doing banking in a digital age. And that vision is what motivates us now and for years to come.

The evolving Phillipine economic landscape

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The year 2021 saw the Philippine government implementing a delicate balance between health and the economy. It rolled out the COVID-19 vaccination programme nationwide, enhancing the capacity of our health system while loosening pandemic restrictions, despite high COVID-19 cases in the National Capital Region. This allowed for intermittent lockdowns, gradually opening the economy, bolstering consumer confidence and domestic demand, and eventually leading to economic recovery.

This augured well for the Philippines, albeit belatedly across some sectors, as our economy grew at 7.8 percent GDP in the fourth quarter of 2021 and posted a 5.7 percent GDP for the whole year, a leap from the previous year’s negative 9.5 percent. Fourth quarter GDP was even more impressive considering that Typhoon Odette, the strongest typhoon to hit the Philippines in 2021, unleashed havoc across many areas of the country in December 2021.

Meanwhile, two of the Philippine economy’s biggest pillars, the inward remittance from overseas Filipino workers and the Business Process Outsourcing (BPO) industry, continued to contribute substantially to the country’s GDP, favourably impacting the country’s balance of payment and foreign exchange reserves. The BPO industry has been the biggest generator of jobs, an advocate of countryside development, and an enabler of support industries such as food, banking, real estate, hospitality and transportation, among other sectors.

The Philippine insurance industry remained resilient, posting 21.5 percent growth in net premiums written at PhP374.7bn ($6.73bn). The life insurance sector accounted for 82.8 percent of the total, the non-life sector 13.7 percent, and the mutual benefit association sector 3.5 percent. Clearly, the industry rode on the growth momentum of the economy, which has gained traction amid improved mobility and public sentiment.

This impressive growth, as our then finance secretary Carlos Dominguez III enthused, “mirrors the efficiency and swift action of the Insurance Commission (IC) in maximising the use of digital tools and other measures to ensure the resilience of this sector amid the pandemic”.

The IC fast-tracked the digitalisation efforts of the industry through the issuance of regulatory measures that encouraged optimisation of digital technology, thus providing the necessary support to enable industry stakeholders to operate effectively despite the lockdowns.

The industry heeded the call and adapted to the evolving business landscape during the continuing ‘new normal’. Some companies used artificial intelligence to enable them to customise their products and systems, allowing them to extend their services. With the collaboration of business ecosystems and initiatives, the insurance industry managed to thrive despite the pandemic-related challenges that continued through 2021, with relevant financial metrics posting positive growth.

Similarly, the non-life insurance sector recovered from the pandemic-induced business contractions, registering Php51.2bn (approximately $918m) net premiums for 3.82 percent growth, as compared to negative 16.7 percent in 2020. Based on total gross premiums written, 12.63 percent growth was registered versus the previous year’s negative 9.37 percent decline in business.

In the absence of a detailed sector breakdown of business, we can surmise that this growth came on the back of business recovery of the sector’s major growth drivers. These included new motorcar sales, which rose to 20 percent, versus the previous year’s negative 39.5 percent dive, and the ‘build, build, build’ infrastructure programme, which acted as a catalyst to the growth in property, construction and engineering insurance segments.

Steadfast and resilient
At Standard Insurance, we ensure that our customers have world-class protection. We remain committed to our vision and our mission, complemented by our corporate values – massive transformative purpose, to attain peace of mind for all mankind. We have ingrained these values in our DNA so that we are led by them through all aspects of our operations. Standard Insurance is resilient, riding on the performance of economic and industry drivers but primarily underpinned by its innovative solutions and its relevant, competitive and sustainable product lines.

As the government intermittently eased mobility restrictions in 2021, insurance drivers of the non-life insurance sector slowly recovered. Motorcar and other property sectors were revitalised and sales numbers spiralled upwards. Our sales teams muscled through the market, surpassing expectations. They have always been resilient, professionally pursuing more business and intermediaries, closing deals fairly but with sustained profitability.

Diversification of market coverage nationwide was key: expanding existing and new markets, intermediaries, dealership tie-ups, relationships and partnerships, among others. We highlighted our promptness, reliability and empathy in claims processing and payments through diverse payment platforms. We met the needs of our customers when they needed us the most.

One of the most important elements that made the company better prepared for this pandemic was having the foresight to explore new ways of creating technological solutions, specifically the decision to industrialise the company’s support centre. To this end, we borrowed the best practices from our BPO subsidiaries of transferring our systems to the cloud, long before the pandemic arrived.

The main objective of this exercise was to prevent an existential threat of complete systems failure at head office, should a devastating catastrophic event occur. That event did not come to pass but our actions prepared us well for the pandemic. We are, in fact, the first domestic insurer to be an Amazon Web Services partner.

This allowed our associates to continue working and accessing systems from anywhere even during the strictest community quarantine. Further, through an internally developed insurance office application (ISSI Office), our agents and branch associates can conveniently perform the whole insurance cycle using only a smartphone. ISSI Office covers our motorcar, travel and personal accident and, most recently, residential and pure office property lines.

To date, our Systems and Technology Group (STG) oversees the smooth operations of our IT infrastructure and ensures that all our systems and infrastructure are contemporary and benchmarked against the best in the world. Our STG systems management team expands and upgrades the functionalities of these systems as the need evolves. We use artificial intelligence and data science to enable a more in-depth analysis of huge databases as well as robotics for automating processes.

All technology efforts are ably supported by our cyber-security team.

These technological advancements are some of our responses to IC commissioner Dennis Funa’s call to “harness the breakthroughs in InsurTech for the local insurance industry.” Of course, planning and preparing is a continuous process, upskilling our associates as well as our intermediaries, and doing whatever it takes to face and withstand any future Black Swans.

Resiliency and human resources
The role and responsibility of each associate is a conscious decision, all working systematically together, forming a well-oiled machine, with the same goals, vision and culture. This is the most important asset that the company values – another key to resilience.

To quote Ernesto T. Echauz, our Group Chairman and Adviser to the Board of Directors: “In whatever we do, it should be to improve the quality of life of our people. We should make sure that they are respected in their communities and are able to pursue their career with the company. As we move along, let us continue to carry out our tasks with the same passion, excellence, competency, integrity and professionalism, both as individuals and as a team.”

He spoke those words many years before the pandemic but they remain relevant now. In line with this, management stood by its commitment at the start of the pandemic. All associates continued to receive their full salaries and bonuses, their benefits and everything they enjoyed pre-pandemic, regardless of the challenges that lay ahead. We continue to empower our associates, even our intermediaries, providing structured training programmes focused on retooling, upskilling and reskilling, as well as developing them to be dynamic and strong leaders now and for the future.

Human resources initiated the ‘You Are Not Alone’ programme, which encourages associates to work through emotional ups and downs by reaching out to trained facilitators or professional psychologists when needed. Corporate sales, meanwhile, initiated a 60-day module that covered both hard and soft skills, culminating in a graduation and awarding ceremony that gave all the sales associates a sense of fulfilment and empowerment. Following this success, the learning and development team is now doing a series of webinars, referred to as ‘Self and Team Empowerment Programme’. Spread across 50 sessions spanning four months, it aims to strengthen the quality of one’s professional and personal life.

Another major programme is the ‘Advanced Management Training Programme’ (AMTP), conducted with top management as both participants and lecturers. AMTP deepens and broadens executives’ technical knowledge and familiarises them with the end-to-end process of insurance and considerations outside their own expertise. Different divisions were grouped into clusters, who then shared their expertise and experiences.

In addition, our human resource team continues to deliver services during this extended health crisis with financial support for those afflicted with COVID-19, as well as facilitating annual physical check-ups, COVID-19 vaccines, medical consultations and shuttle services.

When Typhoon Odette devastated some parts of Visayas and Mindanao, the whole company reached out to our associates in those cities and provinces to help our own recover from this catastrophic event. As President Echauz said, when it comes to caring for each other, everything is personal at Standard Insurance. That is the very essence of our massive transformative purpose – ‘peace of mind for all mankind’ starts with our associates.

Our sustainability and longevity efforts
Standard Insurance actively supports sustainability initiatives in the following areas: education, environment, sports development, music and arts, and hunger and malnutrition. A big part of the company’s sustainability initiative is its lead role in the Philippine operation of the ‘Scaling Up Nutrition’ business network, a global movement whose main objective is to enjoin private companies in a collective effort to eliminate hunger and improve nutrition.

All these initiatives support the United Nation’s 17 sustainable development goals to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030. Beyond and above all these, we are fully committed to doing our share to make this a better world because our past affects our present and our present determines our future.

Innovating to feed the future

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Today, our food production systems are under immense pressure. According to the UN’s Food and Agriculture Organisation, last year, close to 200 million people in over 50 countries experienced acute food insecurity at crisis levels, or worse, caused mainly by economic shocks, extreme weather and conflict.

The war in Ukraine and the lingering impact of COVID-19 on economies around the world are exacerbating inequities in wealth and resources and adding to pressures on global food production. At the same time, wealthy nations need to recognise that food is much more than a mere commodity but an essential building block of our human culture and communities.

Against this backdrop, the world faces an urgent challenge to ensure we can produce enough good-quality food for a global population that’s predicted to reach 10 billion by 2050 – and do it sustainably. We will need to produce 70 percent more food than we do today – a momentous challenge. It will require a fundamental shift in how we think about food consumption and production, as individuals, as communities, as nations and as a global population.

Nutreco has an important role to play, as a research-driven, global leader in animal nutrition. We are passionate about our purpose of ‘Feeding the Future’ by helping customers produce more protein with less negative impact to the environment. To find new and better ways to do this, we invest an average of €34m each year in research and development. We have 65 scientists working across 12 research units, collaborating with over 200 research institutions worldwide. In addition, our NuFrontiers division invests in breakthrough innovation and our recently launched Nutreco Exploration unit (NutEx) explores novel ideas in phytogenics, biotechnologies and physical chemistry and its first innovative products are already in production.

The courage to innovate
We believe we can help farmers sustainably improve productivity by utilising technology and sharing expertise on new farming techniques, but also by exploring genuinely new science that unlocks novel nutritional solutions. Our teams are focused on finding novel and potentially disruptive solutions, while, at the same time, building on our existing capabilities and businesses.

For example, while we remain fully committed to supporting animal farmers, we know that to feed a growing population, our industry must maximise all sources of food protein. These include alternative proteins, which can be a great supplement to animal protein. In our view, it’s more a question of ‘and/and’ than ‘either/or.’

We have responded to this need by committing to long-term investments and partnerships to produce alternative proteins that help meet the growing demand for high-quality food protein and accommodate consumers’ increasingly varied diets. We have invested in plant-based proteins, cultured proteins and fungal fermentation.

Scientific discovery
Another challenge facing our ability to feed the future is the fact that raw material availability and sustainability concerns are driving our industry to source more animal feed ingredients that come from nature but fall outside of an animal’s typical diet, sometimes triggering new physiological challenges. It is crucial that we invest in scientific discovery to find new ways to manage challenges like this that face our entire food system.

We see a golden opportunity to further harness the tech-accelerated ‘big bang’ in biological sciences of the last 15 years

In particular, we want to unleash the potential of two important and complementary areas: phytotechnology and biotechnology. We see a golden opportunity to further harness the tech-accelerated ‘big bang’ in biological sciences of the last 15 years, which has already had a significant impact on the animal nutrition industry. Over the last two decades, phytotechnologies have been successfully exploited for their antimicrobial properties. But, at Nutreco, we are expanding our research to push the boundaries in exploring under-studied possibilities around what medicinal plants can deliver for enhanced animal nutrition.

Recent scientific progress has given us a better understanding of the mechanisms underpinning old, unresolved issues facing farm animals. It has redefined the role of feed and facilitated the creation of specific solutions that can improve production and welfare. Scientific discovery will be an essential part of how we approach innovation going forward, and we believe it can pave the way for a new and transformative approach to the complex issue of food production.

We know there is no single solution to resolving the long-term problems of hunger and food insecurity. It’s a global issue requiring urgent, coordinated action from stakeholders across the food chain and across national boundaries – private industry, governments, NGOs, and trade bodies to name a few. And the stakes are high – ensuring that we have enough nutritious food to feed our growing population in the years and generations to come.

Taxation of ‘super’ profits: Is taxation the answer to everything?

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Because of (or thanks to, depending on one’s point of view) the crisis born from the war between Russia and Ukraine, the companies involved in the energy sector have made higher profits than usual. A growing number of European countries (Greece, Romania, Hungary, Italy, Spain, the UK, Germany and France) have seen fit to introduce ‘exceptional’ taxes or contributions on these profits, curiously described by the French president as ‘undue.’ At the EU level, on October 6, 2022, the European Council adopted Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices, which introduces, among other rules, a Solidarity Levy for the fossil fuel sector on the profits of companies active in the crude oil, natural gas, coal and refining sectors.

This contribution, set at 33 percent, will be calculated on the basis of taxable profits as determined by the domestic legislation of each Member State, made in the fiscal year beginning in 2022 and/or 2023 and exceeding by more than 20 percent the average annual taxable profits since 2018. Alternatively, Member States may apply national measures already in force if they are compatible with the objectives of the regulation and generate at least comparable revenues. The stated aim is to provide Member States with the necessary means to support households and businesses and to mitigate the effects of high retail electricity prices.

It is certainly not the first time that a war has triggered tax initiatives – it will be remembered that it was on the occasion of the First World War that the income tax, as we know it today, was introduced.

The uncertainties and needs created on such an occasion make the moment propitious for ‘change,’ and therefore for the adoption of often unpopular measures, since solidarity prevails over political or ideological differences.

Tax and accounting laws do not distinguish between ‘large’ and ‘small’ profit: profit exists or it does not exist
Currently, in the complicated context that we know, the States are once again facing the same problem encountered during the health crisis: they must, with their ordinary resources, face extraordinary expenses. Between loans and advances to Ukraine in the framework of direct or macro-financial aid, several billions have been and will be borrowed, while at the same time, the rise in energy prices hit households and in general, the European economy hard – as evidenced by the trade deficit of August 2022 which was €65bn, compared to €5bn in August 2021.

In a context similar to that of the health crisis, it is therefore not surprising that proposals similar to those expressed at that time are appearing nowadays (where this time GAFAMs, large-scale distribution companies and even companies having benefited from the post-pandemic economic recovery, were targeted) and tending to introduce ‘exceptional’ taxes or contributions.

Definition of ‘super-profits’
Let’s first look at what is meant by windfall or ‘super’ profits (or surplus profits or additional value), a term of a political rather than economic nature, first mentioned – and this is already a reason to be cautious – by Karl Marx in Das Capital. It is a question of an enrichment considered to be superior to the normal (thus exceeding the average margin of the sector), due to circumstances external to the company and which, according to Professor Chiroleu-Assouline, makes the company earn money “without it having modified anything in its way of operating or its strategic decisions.”

Taxing a politically defined profit is in reality legally and economically complicated. The general idea is therefore that these companies, which would have “earned too much” should, in the words of the French Minister of the Economy, “return a part of their profits” to the citizens. However, today as in the past, the idea of an exceptional tax on super-profits seems questionable, in terms of principles of law and economics. Let us emphasise from the outset that with the concept of super-profit in the sense of excessive or worse, ‘undue,’ is incompatible with the concept of ‘company.’ Tax and accounting laws do not distinguish between ‘large’ and ‘small’ profit: profit exists or it does not exist. Taxing super-profit thus amounts to taxing, furthermore and retrospectively, a profit qualified as ‘super’ in the absence of any legal and previously determined criterion, which raises important legal questions, especially with regard to the risk of arbitrariness when determining the basis on which the tax or contribution will be calculated.

Handful of concerns
In addition, as mentioned above, a contribution on excess profits is likely to raise a number of problems. Firstly, from a legal point of view, we are witnessing a breach of the principle of equality which governs, in all countries, the relationship between taxpayers and the State. For example, today’s super-profits would be taxed, but not yesterday’s. Or, only the super-profits made by companies in the energy industry will be taxed and not those made by any other company active in another field, even if related to the energy sector. On top of the above, the system is disproportionate because if super-profits are taxed, it must be admitted that the States should in turn ‘contribute’ in the event that major losses occur in a specific sector. This is never done, and if, in the past, aid has been granted, it was not commensurate with the real losses.

Firstly, the ‘super’ part of the profit is not necessarily caused by the new economic situation, but may depend, albeit partly but importantly, on other factors. For example, a company may have changed its business strategy, entered into new agreements or, more often, made significant investments. It is therefore not accurate to assume that every extra euro earned comes from the current situation.

Secondly, the first experiences show that this kind of taxes did not bring the expected product, probably because very often the energy companies realise a large part of their turnover abroad.

Companies active in the energy sector have to invest in huge energy transition programmes, given their activities

In addition, it must be taken into consideration that, for the targeted companies, the contribution to be paid will be considered, in fact, as an additional cost, a cost that they will certainly pass on to their customers.

Thirdly, the issue must also be approached in terms of sustainability and ecology. It is now a known fact that companies active in the energy sector have to invest in huge energy transition programmes, given their activities. Depriving them of cash flow and resources will make these projects difficult to implement (unless governments intervene, in which case the money will only go back and forth) and the reduction of their environmental footprint will be delayed.

Moreover, one should not focus only on the ecological and sustainability issues: it is, in general, the investment capacity of companies that will be affected. Of course, the so-called Schmidt theorem (today’s profits are tomorrow’s investments and the jobs of the day after tomorrow) does not always hold true, but it does have the merit of reminding us that profits also serve other purposes than to enrich the shareholders.

Allow the market to balance itself
These are the main criticisms of this system, which, nevertheless, will be adopted by the EU Member States. It should be emphasised that the objections raised are not only based on theoretical principles that one could imagine being sacrificed on the altar of realism, in order to restore a certain economic balance. They are also based on the principles governing the management of economic crises by states, the most important of which is that one should never react ‘on the spot.’ France has done just that by announcing its withdrawal from the Energy Charter Treaty. In economics, it is important to avoid reacting on the basis of very short-term market fluctuations because markets are volatile, unlike the measures announced, which will have definitive effects on companies.

This is all the more the case in this instance, insofar as, at least at the European level, we have not worked on a ‘tax’ on ‘super profits’ but on a ‘contribution’ on ‘windfall profits,’ such as on exceptional and unexpected profits. The European Council is targeting profits made in 2022 ‘and/or’ 2023 but if the conflict continues beyond 2023, there is no doubt that these measures will be extended. In the end, the announced contribution will no longer be exceptional, since at least initially, the circumstances that justify it today will be the same in the future.

In the meantime, it is to be feared that despite the increase in demand, the aforesaid contribution will discourage suppliers since their profit will be significantly reduced, with the consequence of a further increase in prices and the need to obtain even more supplies from suppliers outside the EU, which would lead to the opposite of the expected result.

It would therefore have been wiser not to sacrifice fiscal stability on the altar of the sacrosanct principle of tax fairness and instead create a stable and competitive environment, which would have allowed companies to get by on their own and let the market rebalance by itself, knowing that, as in the case of the aids granted during the health crisis, the new aids will not be sufficient to restore, by themselves, the desired balance.

Taxation is actually not the adequate answer to any problem.

Beyond capital: Empowering 1,000 young entrepreneurs

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Since 2007 Aiducation International has been active in Kenya and the wider continent as an international for-impact organisation focusing on empowering underprivileged young and rising talent by providing merit- and purpose-based high school scholarships. In addition to this it provides access to coaching and mentoring, focusing on employability and entrepreneurship, and fostering corporate careers and start-ups. Altogether it has built a community of purpose-driven leaders to generate sustainable impact, directly contributing to seven of the 17 UN sustainable development goals (SDGs).

Our slogan ‘Building People. Building Nations’ emphasises that education is not limited to basic schooling but also empowerment of future leaders and entrepreneurs. The Start-Up Fund programme was built with this in mind so that entrepreneurs can advance their businesses while receiving continuous business education and professional mentorship.

Impact-driven partnership
To secure the success of our pilot programmes we are grateful to have teamed up with Swiss Re. Scoping the theme together helped to increase employee engagement towards social impact projects.

Even before the pilot, Swiss Re was already involved – COO James Shepherd generously hosted the 2017 start-up academy in Nairobi and continued to participate as a jury member in assessing individual applications. Of the pilot, Shepherd said “this truly is a programme in which all participants gain. As a sponsor, Swiss Re has gained so much from taking many of our mentors and supporters of the programme back to the foundations of business development, when you have to start without the resources of a big international company.”

The Start-Up Fund acts as the pre-seed capital injection into the entrepreneurs’ small-scale start-ups. Concluded in 2021, the lessons learned at this stage were brought into the next level in June 2022. The focus was narrowed to building a business model and scaling the investment for further customer and social value creation. The intention was to hire a core team, focus on product-to-market fit, and achieve market traction. Our approach was to perfect the qualification as well as to ensure the longevity of the business.

It is crucial to convey that the programme is not only about monetary value but also about mentoring and becoming part of our alumni, by providing mentorship from the application to jury pitching day. The Start-Up Fund maintains the business mentorship ensuring that their development is driving growth, as we deeply believe that there is a much higher chance of succeeding in a new environment if mentored continuously. This mentorship is two-fold: local mentors will provide their expertise on their day-to-day businesses, while global mentors provide a helicopter view, giving strategic consultancy to the candidates along with leadership skill development.

Another goal for the fund was to bring transparency to our own reporting by developing an impact reporting draft. We believe that it is important to quantify our value to society not only by fund access given but also the economic and environmental impact we create within society.

A driving purpose
We have chosen to focus on five main drivers of the SDGs and we expect that those chosen will further enable us to assess a start-up’s impact on the economy, environment, and society in the following years of being an active business.

The five winners identified from our pilot competition have had to qualify under a theme such as healthcare and environment with an aim to solve key issues in their communities, from water purification to waste segregation. Beatrice Kihara shared her perspective as a winner: “During the pandemic I was motivated to start my ex-UK bicycle business since everyone was locked in and looking for an outdoor activity. Cycling was the solution – I am passionate about the environment and see it as the future in reducing carbon emissions.

This truly is a programme in which all participants gain. As a sponsor, Swiss Re has gained so much

But it is a challenge to manage my full-time job and source the bikes, plus needing a huge investment. The Start-Up Fund has just made this possible. I applaud Aiducation and Swiss Re for assigning us global mentors from the first step as that has personally been of so much help. So far, the biggest reward is that I’m able to provide employment to two people who would be jobless otherwise. With the fund we are looking at scaling up and creating more employment.”

Ultimately, our goal for the Start-Up Fund is to create not only employment but also mentors for the upcoming generations. This guarantees economic growth coupled with sustainable business practices for their countries, closing the loop and contributing to a circular economy.

Portugal offers exciting opportunities for investors

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The Portugal Golden Visa programme was launched in 2012 as a residency by investment programme to regain economic strength after the financial crisis in 2008 and to encourage direct foreign investors to the country. This programme was a well-made decision that convinced thousands of HNWIs to choose Portugal as a safe destination for their investments while guaranteeing a backup plan for themselves and their loved ones.

The Golden Visa programme provides visa-free access to all 26 Schengen countries and it is the only programme that grants investors and their family members access to European Union Citizenship after five years. With no relocation required and with an investment starting at €280,000, applicants can enjoy easy travel, free education, access to high-quality healthcare and better work opportunities. The benefits of this programme have led to high demand and as a direct consequence there has been steady growth in Portugal’s real estate market.

The instability that we are witnessing all around the world due to recent events such as COVID-19 and the conflict between Ukraine and Russia has prompted many investors to consider the Portugal Golden Visa programme so that they can guarantee their families options for the future. Despite the travel restrictions due to the pandemic, the demand for the Golden Visa programme has only increased, which in turn has endorsed the importance and benefits of this residency by investment (RBI) programme. According to the Foreign Immigration Service (SEF) in Portugal, the country has been receiving more applications from investors than ever especially from countries such as India, US, China, Middle East and UK.

An unmissable opportunity
The real estate market of Portugal has been booming for the past decade. Demand is growing and is now much higher than unit supply. Despite a high appreciation of eight percent a year, Portugal still offers more affordable prices when compared to the rest of the western European countries. Portugal has proved its significant potential in the real estate market and investors are purchasing units due to the high returns they are able to get, both in capital appreciation as well as in rental income.

Portugal is well known for its stunning beaches and endless recreational options, which can also be found on the famous Madeira Island. Madeira is well served by the airports of the main capital cities and is therefore easily accessible. Appreciation of its real estate market is approaching 10 percent and investors from all over the world cannot ignore its potential.

Investors who would like to qualify for Portugal’s Golden Visa programme can either choose to invest in real estate or in a fund investment. Fund investment starts at €500,000 and these funds must have at least 60 percent of shares in Portugal-based companies.

Real estate options
Since the beginning of 2022, the government of Portugal has implemented changes for those investing in the real estate option. These changes are focused on removing the pressure from main areas of Portugal and therefore clients interested in residential units can invest only in the interior of Portugal. Capital district cities of interior regions like Beja and Guarda are enjoying huge demand due to the returns investors are getting. If investors are looking for options for investment in the main areas of coastline such as Lisbon and Porto, they can invest in commercial units with a minimum investment of €350,000.

Clients interested in higher investment can choose from brand new commercial units in the category of €500,000. We highly recommend that clients opt for units that offer title deed and not a share, since the safety of this kind of investment is at a higher stake of risk. Finding a property that is eligible for the Golden Visa programme is not an easy task. Clients should make sure that they are working only with experienced companies focused mainly on Portuguese RBI programmes since those tend to have a comprehensive knowledge of the market as well as an established professional network.

Apart from successful real estate market performance, Portugal offers to investors an attractive tax programme – non habitual resident (NHR), which grants tax optimisation. The NHR programme was introduced in 2009 and, just like the Golden Visa programme, the goal was to regain Portugal’s economic strength after the global financial crisis.

All the above facts are just some of the reasons why Portugal is a safe choice for HNWIs. Clients of the Golden Visa programme can keep on going with their lives without any obligation to relocate. And yet, future generations still have the option to study in the top universities and take advantage of better job opportunities. Portugal has a stable political situation, a high-quality health care system and is ranked as one of the safest countries in the world.

Marketing in an ever-changing fintech environment

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Driven by regulatory developments, rapidly advancing technology, ESG concerns and the continued consolidation of our sector, the financial services industry has undergone a rapid transformation in the last decade. While online trading and investing platforms continue to grow in popularity, marketeers working in the financial services industry are faced with a number of regulatory challenges when it comes to promoting leveraged investment products that carry an inherent level of risk.

Initially, it is important to remember that financial services marketing differs immensely from other product categories; as marketeers in our field are tasked with producing content that not only complies with a range of regulations covering product marketing and consumer rights, but that is also transparent, educational and insightful.

While working on an eye-catching multi-channel campaign in a highly regulated industry can feel restrictive to those who view compliance as ‘a necessary evil,’ successful fintech marketeers understand that compliance is not a hurdle to be overcome, but rather a vital component of financial marketing. Compliance regulations help maintain the integrity of the financial institutions we work for, provide transparency for investors, and ensure the viability of the broader sector.

The importance of ethical branding
The sheer number of participants, both established and new entrants, in the online retail forex arena renders it one of the most fiercely competitive markets to be in. Since most financial service providers put across a similar offering and aim at the same pool of potential clients, being able to stand out against this backdrop requires effective brand differentiation. That being said, brand awareness cannot be solely achieved by individual promotions or advertising efforts. Instead, experienced fintech marketeers understand that achieving ‘top of mind’ status for their brokerages requires a well-thought-out, omnichannel marketing strategy that includes inbound and outbound communications, targeted media-buying opportunities, paid and organic campaigns, product development, PR activities, and the list goes on.

Due to the often complex nature of online investment products, one of the main objectives of your financial marketing plan should be to get clients familiarised with the benefits and risks involved in online trading and how the products and conditions afforded by the broker can give clients a competitive advantage.

Strong, digestible branding paired with free access to financial literacy and education goes a long way toward easing that barrier of entry for new clients. This is an approach we have long championed at Orbex; we don’t just seek to promote a competitive, transparent, and fair trading environment through our marketing efforts, we also educate investors and potential clients by giving them access to essential, high-quality resources, and curated research. This has been a core part of our strategy.

A new generation of investors
While the rapid growth of the financial services sector has resulted in the renaissance of the retail investor, financial marketeers are now inadvertently faced with the task of catering to a younger, more diverse demographic. In fact, the average trader looks very different today compared to 15 years ago. Having led the retail investment revolution, Millennials and Gen Z are now a fast-growing force that embraces new investing services and tools.

These young investors also have access to far more information than any previous generation of investors, constituting a considerably more technologically advanced and demanding audience. Young investors are more likely to engage in their own research and pick their broker carefully, paying attention to commission rates, bid/ask spreads, and maintenance fees, all of which need to be accompanied by strong regulation that can safeguard their invested capital. In short, they expect a greater level of transparency, accountability, security, and performance, especially when it comes to their investments.

While marketing to these younger audiences can be challenging, investing in a positive and reputable brand image, through responsible and transparent marketing practices enables brokers to gain a major competitive advantage and ensures business growth by building brand credibility and maintaining strong client relationships.

Regulatory dexterity
As we’ve already established, the promotion of complex financial products through online distribution and advertising channels is more closely scrutinised by regulators and rightfully so. Compliance is an essential component of any financial team’s underlying operations, and this is especially true for marketing departments. Over the past few years and as regulators raise their standards and adjust regulations to ensure customer protection, the importance of maintaining regulatory dexterity is now more prominent than ever.

As regulations evolve, it is often up to the marketing and PR department to communicate how these changes will affect clients’ trading. A solid marketing strategy plan must therefore be dynamic, anticipating changes, and maintaining clear communication guidelines that can be quickly adapted as the regulatory environment evolves.

Reaching new markets
As industries around the world rise up to the challenge of globalisation, it has become crucial for financial services companies to internationalise their services to keep up with the changing landscape. The need for localisation has become even more pronounced for online brokers as the shift to digital services opened the financial markets to a more diverse set of traders from all around the globe. In a nutshell, localisation helps online financial services providers to grow at scale, reach new markets, and gain ground in previously uncharted territories.

With 75 percent of the world preferring content in languages that are not English, localisation has many tangible gains for financial marketing departments. That being said, localising financial information is a complex process – requiring the highest levels of quality, expertise, and security, while also ensuring compliance with local and global legal standards.

In a client-centric digital world, users have grown accustomed to digital experiences that anticipate their actions and are readily available across platforms and channels. Personalised, prediction-based, hyper-relevant client journeys are now becoming the norm, and while gathering client data is the first important step towards successful personalisation strategies, there are a number of important regulatory issues that marketeers need to be able to navigate.

One of these regulatory concerns became more prevalent in 2018 with the introduction of GDPR (General Data Protection Regulation) privacy rules that sought to give users more control over their data. While consumers have come to expect personalised messaging, they are simultaneously more concerned about their personal privacy. This means that financial marketeers now need to incorporate an ultra-transparent GDPR approach to collecting the information required to deliver these personalised experiences.

Working closely with their compliance departments, marketeers should draft their campaigns and communications in a manner that clearly discloses to the client what data is being collected and how it will be used with their consent. Consent is the key word here as transparent opt-in data collection methods that allow website visitors to authenticate the collection of their data, create a culture of trust between brands and consumers. In turn, businesses establishing trust are more likely to gain the information they seek from current and prospective clients, leading to higher brand value.

Responsible, data-driven growth
In order to make an impact in 2022 and beyond, brands are required to make responsible data-driven decisions, leverage first party insights, and deliver customised experiences. The key to successful personalisation and automation of the client journey is data. Ultimately, more data allows for more data-driven decisions. Recognising an individual’s needs at every touch point and delivering a custom experience to best serve those needs is a top-tier marketing strategy that can unlock more potential lifetime value than any hard-sell advertising.

With one of the most powerful applications of data-driven marketing being targeted advertising, collecting useful and high-quality data in a transparent and compliant manner ultimately enables financial marketeers to deliver propositions tailored to the individual, resulting in improved conversion rates. On their part, consumers tend to engage more often and more meaningfully with personalised marketing communications, making the contextualisation of interactions imperative to remaining competitive in today’s marketing landscape.

‘Data done right’ entails being able to effectively identify client profiles, communication channels and what messages to deliver, eliminating a lot of the guesswork from media planning and buying. What is more, targeted advertising can help generate positive feelings towards a brand, as consumers have grown to appreciate well-timed, non-intrusive content, and advertising that aligns with their personal interests and needs.

In short, ethically and strategically using data to deliver relevant client experiences is one of the key defining digital marketing skills that can determine which financial services brands are able to achieve long-term sustainable growth in the future. In an industry that is becoming increasingly competitive and heavily regulated, digital marketeers must be as inventive as the products and services they seek to promote if they wish to stay ahead of the curve. From consumer education and building trust to creating an advertising and communications plan permeated by transparency and compliance, the road to digital marketing success can be as exhilarating as it is challenging. By remaining vigilant of the changes within a rapidly evolving regulatory landscape and being able to quickly adapt to the latest trends in digital marketing, financial marketeers can build a powerful brand image that inspires long-term loyalty and trust.

About the author

With over a decade of experience in the financial services and fintech sector, Drosoula Hadjisavva has held critical leadership roles across several leading fintech/FX and Telecom firms.

Drosoula Hadjisavva, CMO at Orbex

As a certified Chartered Marketer with a Bachelor of Science degree in Computer Science and an MBA, Drosoula has a rounded experience in heading global marketing organizations, including high-performance digital marketing, corporate, brand, PR/media, as well as product marketing.

Drosoula currently serves as Chief Marketing Officer at Orbex, a multi-regulated financial services firm based in Cyprus since 2011, having previously held the position of Chief Marketing Officer at BDSwiss.

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