Sometimes, it can feel like the aims of the contemporary feminist movement are unduly focused in the cultural realm. While it is undoubtedly important for women to point out where other women are being unfairly depicted in movies, and where newspaper columnists are still furthering outdated stereotypes, there are also a number of more direct steps that can be taken to provide women with financial security, safety and justice.
That appears to be the current view of the UN Capital Development Fund (UNCDF), at least, which on International Women’s Day took the opportunity to outline their approach to promoting financial inclusion and equality for women around the world. The panel discussion that followed their statement was both lively and informative and revealed much about the international agency’s approach to financial inclusion. With a new generation of leaders emerging, what do these different approaches to promoting financial inclusion mean for the future of the feminist movement?
Support network
If the UNCDF’s approach to financial empowerment can be summed up in one word, it would be agency. Instead of providing women around the world with direct support, the organisation is largely focused on encouraging governments and corporations, providing them with the tools they need to help themselves. Their work, in other words, is always mediated by national and economic factors.
In some ways, this approach could be criticised for being too indirect. However, as an autonomous organisation with limited ability to make or enforce rules or economic mechanisms, it is somewhat inevitable that even the emerging generation of UN leaders see their mission in this way. And in fact, taking this indirect approach could be more beneficial in the long term.
Or, at least, that is the view of recent reports on promoting financial equality. According to a recent Women and Money report: “Money is the domain of men. Society doesn’t view it as a woman’s role to earn money, or her right to make financial decisions.” This anecdotal claim is also supported by hard numbers. Statistics from the United Nations show that there is a serious digital gap between men and women. For example, women are 35 percent less likely to have access to online services and 12 percent less likely to own a phone than men.
According to the UNCDF, this divide is largely the result of ‘gatekeepers’ barring women from free and equitable access to economic resources. They point out that there are 115 countries where the laws currently do not allow a woman to run her business in the same manner as a man can run his. Equally as concerning, the same report found that there are over 167 nations that have at least one regulation or law that severely restricts economic opportunity for women as well. Further, in many cultures, fathers, brothers, or husbands control finances on behalf of women. In this context, it’s becoming increasingly apparent that gender blindness is not a measure of workplace equality. Rather, instead of treating men and women as though they have the same level of economic agency, we need to actively support women who have been barred from it.
Promoting awareness
Granting increased financial and economic agency to women around the world will require a number of distinct strategies. One of these – and one of the most important for the team at the UNCDF – is simply pointing out that there is a problem (see Fig 1). That might sound obvious, but in many places around the world it can be difficult to challenge entrenched gender stereotypes, even for powerful international organisations like the UNCDF. Often it must work through indirect means in order to avoid directly challenging an entrenched – and often predominantly male – hierarchy.
As such, the organisations’ primary mechanism of action for much of the past decade has been to launch educational programmes for women in developing nations. One of the most recent of these, called the ‘Sprint4Women’ competition, allowed different digital finance providers to test out their business models in the field.
These models were then pitched to judges for formal review. Though the outcome of such programmes seems tiny in comparison to the scale of the problem – at first glance, little more than the launch of a new fintech brand – the UNCDF hopes that it will have knock-on effects on the role and power of women around the world. Indeed, they say, one of the reasons why countries have had such varying success in empowering women to take control of their own finances has been because some have overlooked the inherent link between education and empowerment.
Safety and security
Alongside the kind of educational programmes the organisation has been convening for more than a decade, the UNCDF is also keen to recognise the value and potential of technology when it comes to promoting financial inclusion for women. The rise of app-based banking and finance might lead to a huge shift in the way that women access and manage their financial lives. If, as the UNCDF points out, many women are barred from greater financial freedom by male gatekeepers, it might be possible for them to circumvent these obstacles by using contemporary technologies to directly access financial support.
There are 115 countries where the laws currently do not allow a woman to run her business in the same manner as a man can run his
There are risks involved with this approach, however. Though banks are shaking up the status quo when it comes to accessing finances, they are still reliant on a fairly outdated model of security. Financial fraud is still a huge problem around the world, and women are more likely to be victims of it than their male counterparts. Arguably tighter security measures are needed for comprehensive money management via smartphone apps. Instead, it may be preferable to allow women in developing countries to contribute to the development of financial mechanisms and technologies.
Only by including women at the macro-economic level are we likely to be able to make a real change in their lives. While such a focus runs counter, in some ways, to the UNCDF’s focus on empowering individual women, it may eventually be unavoidable if we are to realise actual change.
The bottom line
Ultimately, the focus on the emerging generation of UNCDF leaders is actually quite a ‘retro’ one. For much of the past 50 years and with the historical impact of the cold war, organisations like the UNCDF have been somewhat trapped by the ideological requirements of their backers. In the 1960s, for instance, it was difficult to point out the direct link between economic and cultural empowerment, because such an argument also lies at the heart of Marxist thought.
Now, it seems that a new generation has more freedom to express their views, and is less tied to the politics that inform them. They are able to simultaneously recognise the importance of corporate diversity and government-backed inclusion programmes. And this pragmatism might, in the end, be the most effective tool we have for empowering women around the world.
A relative upstart in the industry, the 17-year-old low-cost carrier opted to push on with an expansion plan while closely watching the pennies. First though, the team led by founder and chief executive József Váradi moved fast to take remedial action. “Wizz Air gave probably the most agile response to the pandemic-related loss of travel possibilities,” he told World Finance. These instant measures included the introduction of a strict hygiene code to keep customers and crew safe. In a confusing regulatory environment, an online travel map was developed so that passengers could keep up to date with official restrictions. And although Wizz Air had little experience in the freight business, it quickly built up a cargo operation to defray losses.
As some European airlines struggled for survival, bleeding billions, management conscientiously managed the bottom line. “Wizz Air continued to focus on strengthening market position and protecting liquidity during the third quarter of 2020 as sustained government restrictions severely obstructed air travel,” Váradi told shareholders in a briefing on performance. Every flight had to pay its way as best it could, or at least not lose too much. “We have a relentless discipline on cost and cash management while maximising cash returns on the flights we operate,” explains Váradi.
The result is that Wizz Air was able to boost per-passenger revenues under the vital measure of available seat kilometres (ASK), despite much lower loads. It was a classic lesson in management for turbulent times. “Wizz Air has ended up the biggest airline in Europe during the summer season with comparatively high load factors,” Váradi continued. “The airline managed to remain a resilient business while most of our peers suffered immediate financial issues.” It certainly helped that Váradi has a master’s degree in economics.
Unstoppable growth
Just before the pandemic hit, Wizz Air was on a seemingly unstoppable growth path. Within a decade of its first flight in 2004 – a hop from Katowice to London Luton – the airline had become the largest low-cost carrier in Central and Eastern Europe. In 2015, it was listed on the London Stock Exchange. In 2019, the airline’s 15th birthday, it carried its 200-millionth passenger and in 2020, Wizz Air was the first ever ultra-low cost carrier to be named ‘airline of the year’ by Air Transport World.
The airline was one of the few to provide customers with cash refunds and is emerging relatively unscathed from the chaos. Although ticket revenues in the third quarter collapsed by nearly 80 percent and ancillary revenues by 73 percent, leading inevitably to losses of over €114m, Wizz Air still retains €1.2bn in cash.
As other airlines shrank their operations as fast as they could, Wizz Air persevered with the development of new bases in Oslo, Bari, Catania, Palermo, Milan Malpensa, Rome, Sarajevo, Bourgas, Dortmund, Tirana, Lviv, St. Petersburg, Bacau, Larnaca, Doncaster Sheffield, London Gatwick and Cardiff while doubling the size of its base in Abu Dhabi to four aircraft.
And in a real coup, Wizz Air Abu Dhabi staged its inaugural flight to Athens on January 15, opening up a swathe of new routes. “Despite a distorted playing field, the performance of the new operating bases is in line with expectations,” reports Váradi. “Unlike other airlines, we have remained ambitious and continued to expand our geographical presence over the last year.”
As normality slowly returns, Wizz Air finds itself in a good position as it boosts liquidity simultaneously with tightening its belt. In January 2021 it successfully floated a €500m three-year bond issue on favourable terms that reflects a highly desirable investment-grade credit rating. “Wizz Air is even better positioned to deal with the uncertainties associated with COVID-19,” said the chief executive. “At a rate of 1.35 percent, the bond was issued significantly below the interest costs of competitor airlines.”
Looking ahead, Váradi is broadly optimistic. Feet firmly on the ground, he predicts that 2021 “will be a transition year out of the COVID-19 crisis” and that Wizz Air “will emerge as a structural winner” as passengers return. Wizz Air heads into the rest of 2021 with an updated, environmentally virtuous fleet.
The airline boasts 140 aircraft (see Fig 1) with an average age of 5.4 years, boosted by the addition late last year of five lean-burning Pratt & Whitney-powered Airbus Neos. With a highly flexible network in terms of regions, airports and countries, a robust balance sheet and travel-hungry passengers, Wizz Air is ready to fly. “Looking ahead, only the sky is our limit,” says Váradi.
Since Nigeria returned to democratic rule in 1999, the Republic has enjoyed enormous progress on account of democratic governance to varying degrees across all tiers of government. In Akwa Ibom State, it has been an admixture of accomplishments and a trailblazing catalogue of milestones in social, economic and political domains. This has made the State a genuine reference for the efficacy of experienced and focused leadership as well as a compelling destination for local and international investors and tourists.
Located in the coastal southern part of the Nigerian federation, Akwa Ibom has a GDP of $11.1bn, which is equal to the GDPs of Rwanda and Seychelles combined, and sits in the comity of Niger Republic, Benin Republic, Equatorial Guinea and several other African nation-states on the GDP index. Akwa Ibom’s historical, geographical, artistic, culinary, ethnographic and archaeological peculiarities make it an indisputably choice destination for business, leisure, cultural, faith and eco tourism. Lately, it has also been a destination for incentive and special interest tourism.
“With nature’s generous endowment, visionary leadership and a repository of smart-working people, Akwa Ibom has all the preconditions to blossom into a self-reliant, self-sufficient and self-sustaining state. The masterful collaboration of these factors is what has evolved the State into a prime destination for an assortment of people, businesses and interests,” Udom Gabriel Emmanuel, governor of Akwa Ibom, told World Finance.
A 2019 McKinsey Report titled ‘Nigeria at a crossroads; getting Nigeria where it belongs’ stated that emerging economies “that have been able to generate growth and raise prosperity, through poverty alleviation and the emergence of a new wave of middle and affluent classes” are regarded as outperformers. The outperforming benchmark touted by McKinsey was reached and surpassed in Akwa Ibom stimulated by tailwinds instigated by an enterprise outlook to administration and governance.
Until Udom Emmanuel assumed office as governor in 2015, the ‘civil-service state’ epithet was the State’s bane. The unfortunate narrative imposed an impropriety that leaned on a flawed understanding of the intricacies at play, and disparaged the myriad implications and losses from such progress-inhibiting dogma.
Compelling desire
From the outset, the mission was founded and still revolves around a compelling desire to transition Akwa Ibom into an inclusive enterprise State, through leveraging enormous material and qualitative human resource endowments to make the State an irresistible component across several value chains and productive partnerships that take into account the country’s inputs, advantages and idiosyncrasies.
Subsequently, the administration adopted a progressive pathway because of its strategic importance in giving orientation and focus to the growth and sustained advancement of the local economy. As a result, upending the appetite for either tagging along or playing catch-up in such a rapidly changing world is a cardinal policy imperative of the Akwa Ibom government. According to Udom, this is based on the realisation that “genuine progress is a function of our collective divergences, our shared identity, common priorities, and values that transcend our differences, amplify our uniqueness and enable us to build workable relationships and partnerships that align effectively and efficiently for all Akwabomites.”
The resolve to transition Akwa Ibom to an enterprise State was captured in a blueprint that offered an amenable roadmap for achieving renaissance along the routes of job creation, wealth creation, poverty alleviation, infrastructural consolidation and expansion and ecopolitical inclusion. Subsequently, upon assumption of office, Udom set up a remodelling committee to engender a social contract and a technical committee on foreign direct investments (FDI) to promote, midwife and enhance the flow of investments into Akwa Ibom.
The result is a horde of firms including the largest syringe manufacturing factory in Africa, an electrical-digital metering solutions manufacturing factory, rice mills, palm oil processing plants and flour mills to mention a few. Added to the volley of strategic partnerships is the emergence of hundreds of businesses and thousands of jobs that, with ripple and multiplier effects, phenomenally impact the livelihoods of Akwabomites and Nigerians.
With a business-inclined disposition and private-sector approach to governance, the governor began by aligning the measure of progress with economic indices and other relevant economic indicators, thereby thrusting his administration on an economic pivot largely bereft of the customary politically dictated metric. “As a first step, rather than establish a political fortress, I opted to build an economic infrastructure that bequeathed socio-economic power and ultimately political inclusion across all strata of the State. The intention was to engender a strong economy that would generate income, elicit productive partnerships, and create opportunities for local and foreign investments into Akwa Ibom,” Udom said.
As a direct outcome of the resulting paradigm shift, governance was re-engineered towards an enterprise orientation model away from the traditional receipt and distribution approach that sustains futile expending and stifles the strategic attitude towards stimulating and managing the smart administration of resources.
Udom and his team leveraged the State’s comparative advantages, the varying signature strengths of its people, to deconstruct and reinvent the approaches to citizenship and doing business in Akwa Ibom. To this end, the government created sets of possibilities for value chain creation in the areas of public sector job enhancement, private sector orientation, sociopolitical inclusiveness, sustainable infrastructure development, and entrepreneurship across sectors including the hospitality, creative, logistics and tourism industries. To propel and sustain the various outcomes therefrom, the State underlaid its unique and intrinsic advantages of excellent people, a peaceful environment and a supportive tradition at the base of all endeavours and engagements across the private and public sectors.
Creating sustainability
Earlier, there were talks about the dreadful implication of almost exclusively relying on a single source receipt status, to develop and make the State sustainable. The governor recalibrated his administration by transitioning the State into a business conglomerate. With thoughts enunciated in declarations like “horticulture must be supported to make a huge contribution to our GDP, logistics is an essential key to the future, knowledge and data are the new oil and our greatest asset is our people,” it was clear that he had his eyes on evolving a State with an enterprise-orientation.
Subsequent to this, Udom and his team chose an industrial policy pathway to deliver on the vision. They opted for that because of its big push approach and its strategic significance in giving gumption to the focus on the growth of the local economy by upending the appetite for exogenously induced growth in favour of internalising productive and positive externalities; a situation akin to import substitution and export promotion strategy.
According to the governor, the State requires development that is created beyond the precinct of subsistence agriculture and statutory allocation. He opined that while horticulture accounts for a great part of employment in the State, with strategic decoupling and increased productivity, its capacity to absorb more members of the population along the various value chains of the sector, from cultivation through processing to packaging are added elixir to the flurry of micro, small and medium enterprises.
An excellent aspect of the State’s industrial policy pathway is the awareness of the possibility of capsuling, which the administration reckons will happen regardless of an industrial policy. To this end, the Udom administration verbalised and practicalised protection and enablement via regulation and monitoring for firms in a manner that espouses genuine interest, unflinching commitment, partnership and collaboration. This is a classic instance of government facilitation with a visible impact on disabling bottlenecks at the infrastructural, policy and regulatory levels.
According to the governor, another aspect of the policy is the “responsive and cooperative ecosystem in the State partly represented by the supportive disposition of the people, peace and security in the State, the visible reduction in transaction costs through enhanced infrastructure and the annihilation of virtually all illegitimate taxes in a further bid to mitigate capsuling and freeing sources and resources.”
Evidently, the uniqueness of the investment environment of this enterprise State is that it also allows for the evolution of capsuling in some very capital-intensive industries that have either comparative advantage, absolute advantage or technological advantage. “This is principally to encourage FDI in some select sectors because in the administration’s understanding, if such flexibilities to secure and develop such sectors are not enthroned and monitored, capital and investments may not feel safe, and as a result, the rent-seeking activity would be inadvertently encouraged,” Udom said.
The inflection point
The ability to connect more deeply at all levels, to sense and stimulate reactions and desired interactions is at the heart of the purpose of the people and the State. In Akwa Ibom it is self-evident that progress is a function of unanimity of purpose, inclusion, harnessing extant diversities as much as it is a culture of shared identity, prioritisation and value enthronement. These values transcend variances, amplify uniqueness and enable the creation of sustainable relationships and partnerships that work together effectively and efficiently in the interest of the State and its citizens.
Udom’s excellent sense of judgement and business integrity was earned from long-term meritorious and untainted service in the corporate world, in which he was among the defining figures. His ambidexterity, as exemplified in the way he balanced autonomy and dependency, and his intrapreneurship fervour, are part of the vast capital and collateral that have helped investors’ confidence.
Rather than establish a political fortress, I opted to build an economic infrastructure that bequeathed socio-economic power
The resulting structure ushered in a feeling of ownership, a sense of urgency, of team spirit and established positive momentum as well as enthroning a supportive culture, all of which blended to checkmate prebendalism, lethargy and malfeasance in public service delivery. Just two years into the administration of governor Udom, the benefits of his enterprise approach to governance were evident. The Q3 report of the Nigerian Bureau of Statistics (NBS), the country’s apex institution for socioeconomic and development statistics, declared Akwa Ibom the second-best state for attracting FDI into Nigeria.
The PPP model
In Akwa Ibom, the functionality of the public private partnerships (PPP) model is palpable. The allure of PPP, which is hugely dependent on the predictability and steadiness of the socioeconomic and political environments of any ecosystem, finds comfort in the State, which is thought to be the most peaceful and accommodating State in Nigeria. The PPP model berthed a steady transformation of the local economy in a way that prioritised value creation, value addition and wealth creation as well as waste management in the context of enterprise orientation. The resultant enterprise State made for a shift to a culture of diversifying the State’s revenue portfolio and in the process bestowing alternative strategies that engendered economic activities that are revenue-generating and that create veritable grounds for taxation. The thoughtful establishment of a structure that nurtures the social, political, economic and institutional actions vital to precipitating the socioeconomic, ecological, and cultural wellbeing of business, governance and non-aligned interests, confirm the emergence of Akwa Ibom as an enterprise State.
Added to this is the secure and peaceful nature of the State. By the admission of the Nigeria Police, Akwa Ibom ranks as the State with the lowest crime index in Nigeria, as was affirmed by the Nigerian Army under the auspices of the General Officer Commanding the 6 Division who described the State as the “safest in Nigeria.”
All types of preneurs
In Akwa Ibom, it is commonplace to hear words like, ‘agripreneurs,’ ‘youthpreneurs’ and ‘ICTpreneurs,’ which are suggestive of the enterprise approach of the administration towards public sector governance, private-public-sector collaboration and economic management.
Regarding ‘youthpreneurs,’ Udom said that preparing young people for socioeconomic leadership through a systematic onboarding process is a manifest imperative. “We believe youths are the most dynamic asset of our community and this is evident around the world where youths have been credited for taking some countries to near double-digit growth as net contributors to the economy. Worthy of mention is the Nigerian Entertainment goldmine, which is worth about $10.5bn for which as an administration we are determined to encourage and support our youths to unleash their entrepreneurial and creative talents to tap into.”
In regard to ‘ICTpreneurs,’ Udom said that the main preoccupation of his administration is to create conditions that favour organisations and private individuals to innovate and create. “To this end, we have a focus on attracting investments to nurture talents in the digital industry where our vision is two-fold, consisting of investing in developing skills in areas including coding, application development, embedded programming and data analytics, and afterwards supporting the generation of ideas, and eventually wealth, by creating a hub for digital contents that would include production of digital solutions, animations and new media solutions.”
Preparing young people for socioeconomic leadership through a systematic onboarding process is a manifest imperative
These industries have grown exponentially in the last year, going from revenues of $23.1bn to $115bn and projected to continue growing.
Similarly, the initiative of ‘agripreneurs’ is targeted at farmers in the State to avail the benefits from new ideas, alliances and available incentives. “In this light, we are introducing an integrated agriculture and aquaculture model in addition to building platforms to scale up their engagements and facilitate selling their produce statewide and nationally. The focus here is on ensuring ample food supply, processing, storage and distribution and, equally important, wealth for the farmers,” Udom said.
A common thread that runs across all the ideas and initiatives is the wire and wave of knowledge and technology to make governance easy, accessible, cost-effective and process effective.
There is also ingrained in the system the need to create an ecosystem for fundamental innovation because of its enormous potential to bridge the disparities between socioeconomic groups. Udom elaborated: “I reckon that no object in nature is completely autonomous, and when this realisation of interdependence is applied deliberately and decisively, unity becomes an inevitable output. The kind of output that draws from the uniqueness of individuals and diversities of societies in a collaborative fashion. To this end, to unite with understanding by tolerating and accepting to work together in recognition of the uniqueness of others, and an appreciation of what they contribute to the common interest is non-negotiable.”
The Dakkada Tower
Inclusive politics
The major drivers of the State’s development revolve around supporting inclusive politics, based on transparent and predictable mechanisms that include and engage individuals or social groupings commonly marginalised or wholly excluded from political life as well as fostering resilient societies, chiefly by promoting robust state–society and society–society relations.
In the medical sector, the realisation that progress was limited by a fragmented and disoriented medicare system bereft of a reasonable understanding of the complexities of public healthcare and developments in the modern health care infrastructure and administration were addressed head on. Subsequently, the State struck a healthy balance between world-class technologically enabled medical facilities and best-in-class trained medical personnel to make the sub-sector one of the best in the entire West African sub-region. The intention was foremost to ensure that the medical needs of Akwabomites are met, graduating towards enhancing the facilities and personnel to the extent that Akwa Ibom becomes a destination for medical tourism.
Similarly, the State’s educational infrastructure has been restructured and realigned in favour of developing skills, proficiencies and abilities required across different job types and work settings to address present and future needs of the State and the businesses within its domain. This is based on the knowledge of the changing workplace and an appreciation of the declining influence of oil and gas. This is in addition to encouraging an entrepreneurial mindset for Akwa Ibom citizens, hopefully forging creators of employment opportunities instead of just potential employees.
The State sought and consummated partnerships especially within the private sector with the intent to create and develop sustainable synergies. For instance, the State partnered with all the oil giants operating within its domain and fulfilled part of its commitment by erecting a 20-storey state-of-the-art building to accommodate the oil firms and related institutions to enable the effectiveness and efficiency of their operations. This is complemented by the micro, small and medium scale enterprises framework, which is aligned around sectors that are either directly or indirectly related to services and offerings of these oil sector actors.
It is to the credit of the Udom-led administration that Akwa Ibom is no longer landlocked with the construction of over 2,000km of economic roads, no longer waterlocked with the ongoing work on the Ibom deep seaport project (IDSP) and certainly not airlocked to local air travel. With work nearing completion on the international airport service, the State is indeed emerging into a far-reaching hub in Nigeria and Africa.
All of these projects, in addition to the huge network of economic roads spread strategically around the State, have indeed opened up Akwa Ibom to investor and tourist traffic either by road, water or air and this is poised to elasticise with multiplier effects across markets, sectors and livelihoods.
Akwa Ibom International Stadium
Major socioeconomic drivers of the state
Complimented by other factors, the model in place in this enterprise State has resulted in a steady transformation of the ecosystem in a manner that prioritises wealth creation, value addition and inclusiveness within the framework of enterprise orientation. And in the words of the chief visioner, “this is one of our deliberate shifts in favour of a system that fuels the requisite social and economic advancements required to foster the participation and well-being of communities as a condition to evolving Akwa Ibom into an inclusive enterprise State,” Udom said.
Akwa Ibom is on its way to achieving absolute advantage in certain spheres from which there will be a lasting legacy
The resulting structure, its accompanying processes and approaches, combine deep insight into the dynamics of governance and administration with collaborations that ensure that through institutionalisation, Akwa Ibom is on its way to achieving absolute advantage in certain spheres, from which there will be a lasting legacy. There are other unrelated but enormously impacting activities in the state for which the governor said, “as a complement to other economic activities in the state, we are deliberate on evolving ‘agripreneurs,’ ‘youthpreneurs,’ ‘ICTpreneurs’ and ‘womenpreneurs’ as major drivers of the State’s overall development trajectory.” There is in place an evolving system that prepares citizens, especially young persons, irrespective of sex and gender, to meet and surmount challenges and achieve their dreams. In the governor’s words, “we are achieving through supporting inclusiveness based on transparent and predictable mechanisms, value creation protocols and by fostering resilient state–to-society and society–to-society relationships, as a first step. Escalating very productive relationships becomes a natural course of action.”
This is promoted through initiatives, involvements and engagements that accentuate social, ethical, emotional, physical and cognitive competencies in a manner that progresses their skills and prepares them for positive and productive impacts, for the short, medium and long term.
“In Akwa Ibom, it is self-evident that none of us is as impacting as all of us and this is from our understanding that in working together for the common good, we benefit Akwa Ibom State, Nigeria, mankind and by extension, ourselves. Herein lies the Akwa Ibomites Faith of Greatness enunciated in our creed,” Governor Udom concluded.
Since 2002, Access Bank has fully transformed from the lesser-known institution it was, then ranked 65th among 89 banks operating in the country, into a world-class African financial institution. Today, it is one of the three largest banks in Nigeria (in terms of assets, loans, deposits and branch networks), leading the way in at least three of these categories. This feat is due to a robust, long-term approach to client solutions.
Access Bank has leveraged its strength and success in the corporate, personal and business banking platforms after the acquisition of Nigeria’s Intercontinental Bank in 2012 and Diamond Bank in 2019. As part of its growth strategy, Access Bank focuses on mainstreaming sustainable business practices into its operations and strives to deliver sustainable economic growth that is profitable, environmentally responsible, and socially relevant. Through Access Bank, some of the biggest companies in Africa across construction, telecommunications, energy, oil, and gas sectors have recorded significant progress.
To take advantage of the African Continental Free Trade Area agreement (AfCFTA), Access Bank plans to establish its presence in 22 African countries. This will also enable the bank to diversify its earnings and take advantage of growth opportunities in Africa. The string of expansion efforts has commenced across Africa, including Cameroon (operating licence), Kenya (Transnational Bank), Zambia (Cavmont Bank), Botswana (BancABC Botswana), and most recently, South Africa (Grobank Limited).
Banks play a role in transforming their local and regional economies, ultimately making them inclusive, green, digital and sustainable
World Finance spoke to Herbert Wigwe, the CEO at Access Bank, “Our strategic actions in the past 12 months evidenced a strong focus on retail banking and financial inclusion, an African expansion strategy and a drive for scale and its economic benefits. We know there is a significant gap in achieving our vision to be the world’s most respected African bank. As such, we are very focused on closing this gap through strategic and disciplined expansion of our African footprint, leveraging robust technology platforms and exceptional customer service delivery.”
“Our geographical diversity is a core element of our business model, providing opportunities for growth in different economies and enhancing resilience. We have acquired the exceptional capacity to successfully execute mergers and acquisitions with speed and efficiency at minimal risk while delivering value to shareholders. The series of mergers and acquisitions we have undertaken since 2005 all bear testimony to this and have all been value accretive,” Wigwe said.
Global payment gateway
Africa has enormous potential with increased opportunities for an African bank such as Access Bank, which is well run, understands compliance, supports trade and has the appropriate technological infrastructure to support payments and remittances without taking incremental risks. The bank focuses on serving as an aggregator in Africa to build a global payment gateway, provide trade finance support and correspondent banking in key markets across the continent.
The retail franchise has also grown over time, contributing almost double to the franchise in four years on the back of a strong focus on consumer lending, payments, remittance, customer acquisition, and digitisation. This is demonstrated in the bank’s position as the largest issuer of Visa cards in Africa and the largest disburser of consumer loans in Nigeria. Access Bank’s retail banking aspiration is for one in every two Nigerians to bank with them by 2022. In 2020, it ranked number one in retail banking income in Nigeria with over N56.1bn ($136m) in fee income from its digital banking platforms and alternative channels. This performance is in keeping with its aspiration to be the number one retail bank by customer base and revenue.
Access Bank recently disclosed a plan to transition into a holding company (HoldCo) structure and has received the ‘approval-in-principle’ from the Central Bank of Nigeria for the restructuring. The HoldCo will consist of subsidiaries in the consumer lending market, the electronic payments industry, and the retail insurance market.
Upon completion of this process, the Access Bank Group will consist of African and international subsidiaries, while the payments subsidiary will leverage the assets of Access Bank. The resilience of Access Bank is reflected in its exceptional growth over the years. This is particularly evident in the bank’s financial performance in 2020 with significant increases in revenue and profitability, despite the challenges posed by the economic crisis triggered by the COVID-19 pandemic.
In the past decade, the bank has grown tremendously not only in its financial performance, but also in its social and environmental prowess. The effectiveness of the bank’s strategy to be the world’s most respected African bank, and indeed, Africa’s gateway to the world, is deeply rooted in its commitment to sustainability.
Sustainability credibility
In 2020, Access Bank continued to lead numerous efforts that propel both its sustainability targets and its African gateway strategic drive. The bank was granted a sustainability certification by the European Organisation for Sustainable Development (EOSD), under its Sustainability Standards and Certification Initiative (SSCI), on September 30, 2020, at the World Development Finance Forum (WDDF) in Karlsruhe.
It came as no surprise that Access Bank was the first commercial bank in Africa to achieve this. This certification is a reaffirmation of strong sustainability leadership and it is worth noting that only globally reputable financial institutions are pre-qualified for the SSCI certification program, and they are required to have a demonstrable commitment to sustainability. Access Bank signed up to SSCI in July 2018 as one of the carefully selected financial institutions to pioneer the implementation of the standards.
The institutions involved in the co-creation of the standards represented a broad spectrum of stakeholders in the financial services industry. Over the next 18 months from July 2018, the council met regularly to review the draft sustainability standards, and watch presentations from the applicant financial institutions about their implementation milestones and challenges, and provide feedback.
There are core principles that underpin these sustainability standards. The standards help banks play a role in transforming their local and regional economies, ultimately making them inclusive, green, digital and sustainable. Furthermore, the banks are to pursue profit alongside social responsibility and environmental protection.
The EOSD was also very useful in providing technical guidance to the banks between the in-person meetings before the pandemic hit in Q1 2020. Access Bank was also appointed as a member of the International Council for SSCI and contributed to the all-encompassing framework for holistic sustainability integration, the broad purpose of which is to drive innovation in the organisational culture of financial institutions.
In a congratulatory message, the EOSD affirmed that Access Bank “fulfilled the criteria of the first-ever holistic, robust, and locally-sensitive set of standards to make value-driven financial institutions more resilient and profitable. Financial institutions play crucial roles in implementing national development plans, the UN Sustainable Development Goals and protecting the natural environment in which they operate.”
Wigwe commented on the certification, saying, “Access Bank’s sustainability approach is driven by a desire to impact lives positively now and in the future. We are committed to ensuring community wellbeing and prosperity while fostering sustainable economies across Africa.”
Guiding role
Presenting to the diverse audience attending the WDFF before the ceremony for the SSCI certification, Omobolanle Victor-Laniyan, Access Bank’s Head of Sustainability, provided the highlights of the sustainability journey of Access Bank. This included the launch of the Access Bank sustainability strategy 13 years ago and its guiding role in creating the Nigerian Sustainable Banking Principles (NSBP), now a regulatory instrument of the Central Bank of Nigeria (CBN).
Access Bank is also an early adopter or co-creator of many international initiatives for sustainable banking, including the Equator Principles, GRI reporting, UN Global Compact, UN Principles for Responsible Investment, and UN Principles for Responsible Banking. The commitment and performance of Access Bank on sustainability have been reaffirmed unquestionably by its receipt of the Central Bank of Nigeria’s Most Sustainable Bank of the Year Award three years in a row since its inaugural edition in 2017.
Now, more than ever before, global finance inexorably steers towards sustainable finance. The SSCI is a practical tool for transforming banks in terms of organisational purpose and setting measurable high impact goals, which drive institutional governance, culture, and business models. It assists the support of institutional sustainability despite the constant evolution of the financial ecosystem. The Nigerian banking industry sees financial technology firms competing with the incumbent, traditional banks. Hence, all banks must embrace holistic sustainability to thrive in the current climate by renewing their social licence to operate and consider the overall wellbeing of the planet.
As a sustainability-certified organisation under the SSCI programme, Access Bank can uncover and harness new income streams and thrive for the long term in an ever-changing world. Access Bank pledges that it will continue to significantly manage its footprint and propel its customers and stakeholders towards a more sustainable path aligned with the UN Sustainable Development Goals (SDGs) and other global sustainability standards.
Environmental, social and governance (ESG) issues have gained space on the financial market’s agenda. Companies around the world have been reviewing their business models to integrate ESG commitments that go beyond the traditional agenda centred exclusively on shareholder value creation. The value of a company is now viewed on a broader approach – what the company brings to employees, clients, suppliers, investors, governments and to the society as a whole. The name of the game is the admirable profit – harmonising financial results with impact on the society and contribution to future generations.
That is not a new concept, and the acronym is widely known in the market. But why are we only now seeing it everywhere? It all started in Europe as a result of the actions of NGOs and think tanks related to these issues, and then it went to the individuals. Those individuals are also investors, and started to demand that money managers incorporate the broader approach to the investment decisions those make on their behalf.
Times have changed for good and for the benefit of the global society
The pandemic collaborated to expedite the process, given the growing concern about protecting people and the environment. Moreover, ESG aspects also started to be seen as risk factors. How well a company deals with those aspects may determine how economically sustainable the business is going to be in the future. That has a deep impact on valuations and on the analysis by fixed income investors of a company’s capacity to generate cash in the future to repay its debt obligations.
Meanwhile, consumer trends are also changing dramatically, for many reasons that include generational aspects. According to a study by Morgan Stanley, 86 percent of millennials are interested in sustainable investments, and those same individuals are also consumers.
According to a report by BoFA & McKinsey, it is estimated that 60 percent of millennials consume brands with strong social and environmental responsibility. We are dealing with a public that debates consumerism, condemns environmental degradation and increasingly fights for social justice. It is all related and integrated.
Good for the world
At Suzano, the world’s leading pulp producer, one of our cultural drivers states that ‘it’s only good for us if it’s good for the world.’ This concept is present in all our initiatives and determines how we practise ESG on a daily basis. We see the growing importance of ESG not only as the right thing to do, but also as a huge business opportunity for a company on the right side of the history, renewable raw materials, biodegradable and recyclable products are part of the solution.
The phenomenon is also present in financing activities. Last year we decided to launch our sustainability-linked bonds (SLBs) and became the second company in the world to go for that structure. The SLBs are debt instruments with the interest rate linked to the achievement of sustainability targets. We issued a total of $1.25bn, priced at Brazil’s lowest interest rate ever for a 10-year issue.
This means that, for the first time ever, investors were willing to accept lower interest rates for an instrument that potentially creates positive externalities (ESG goals). Today, 30 percent of Suzano’s debt is linked to ESG features (SLBs, sustainability linked loans, green bonds). In other words, there is a vast market to be explored, and the demand for these instruments represents one of the potential ways to monetise a robust ESG strategy.
Times have changed for good and for the benefit of the global society. Every company may have a role in that process that is bigger than the achievement of financial results. It is up to every one of us business leaders to find our own way to contribute.
Turning 30 feels, to many, like the start of something new. It is a moment to embrace a more mature outlook, to consider the past while looking to the future. This holds true for institutions, just as it does for individuals – or at least that’s the case for Bulgarian institution Postbank, this year celebrating three decades since it was founded.
It’s been a tumultuous 18 months, but Postbank has navigated the challenges of the pandemic thanks to its flexibility, commitment to personalised service and willingness to learn. Drawing on its 30 years in the international banking space, the institution is now looking to the next 30.
World Finance spoke to Petia Dimitrova, CEO and chairperson of the bank’s management board, about embracing digitalisation and supporting Bulgarian entrepreneurship going forwards.
In 2021, Postbank celebrated its 30th anniversary. How would you describe the past year?
In 30 years, Postbank has proven itself as one of the most successful banks in Bulgaria, an excellent partner, employer and socially responsible company. We have solidified our position as an institution that customers trust, having spent the last three decades opening up a universe of new opportunities to them.
Thanks to this shared trust we are third in terms of loan portfolio and the fourth largest bank in Bulgaria in terms of assets and deposits, with a market share of over 10 percent. We boast more than 200 branches nationwide and, over the last five years, we have received over 100 awards for our digital innovations and products, as well as for our services and social responsibility policy.
These digital solutions are extremely intuitive, making banking easy, pleasant and fast
The pandemic once again shows us that whatever plans we may make for the future we can never foresee what will happen in reality. Life does not stop – customers need immediate solutions, not ones that take weeks or months. Preparation is essential – we’ve learned that we need to have tailored solutions at the ready so that customers feel they are benefiting from a personal approach.
There is no doubt that now, a year and a half later, trust in the Bulgarian banking system is greater than ever before. All the indications point to the fact that, despite the difficulties we face together, the banking system is and will be an important factor in the post-crisis recovery period. Recent months have shown us that change is possible – in terms of how and where we work, shop, communicate and rest. I hope we can continue to learn lessons from the many examples of positive change we have seen since the pandemic began.
The COVID-19 crisis stimulated digitalisation. What special products and services have you offered your customers during this period?
Excellent customer experience remains a priority. Consumers expect and require us to support their plans even faster and via the most convenient channel – the digital one.
Following the increased active use of digital channels by the bank’s customers, the total share of transactions carried out online on an annual basis reached 78 percent at the end of 2020 versus 22 percent carried out in a branch. The growing trend in developing the bank’s digital channels is also confirmed by annual usage data, with the m-Postbank mobile app seeing the most significant increase in use. Over the last year, the number of active users of the app grew by 60 percent and the total number of transactions carried out increased by 50 percent compared to 2019.
What trends do you observe in terms of customer requests?
Our clients want a personal approach – they want to have access to their money at any time and in any place, to receive a personally developed offer and to feel special. We strive to know our customers as well as possible and offer them personalised services and products based on their behaviour and preferences.
As digital payment services continue to grow, most providers will be focusing their efforts on instant payments. This is a huge challenge for us all and one we are ready to face thanks to an exciting innovation we recently introduced – our digital wallet. I am certain it will be a new, unique and impeccable experience for customers seeking the best solution for managing their personal finances.
Customers transfer the contents of their physical wallet, digitally, to their mobile phone. They have the opportunity to add all of their cards, and the wide range of functions provides instant active access to their funds, meaning that they can manage them 24/7. These digital solutions are extremely intuitive, making banking easy, pleasant and fast. You save not only time but also money, since the fees for digital transactions are lower.
One of the biggest investments and innovations we’ve launched at Postbank is our digital self-service zones. These are areas within our branches where customers can carry out most of our main banking transactions themselves without having to be registered for online banking.
They simply use a debit or credit card to identify themselves. Digital zones are already functioning in 41 branches across 20 cities nationwide and more locations and service upgrades are yet to be unveiled. Already they are recognised as a preferred alternative to other in-branch services.
What lies ahead for Postbank in 2021?
Other than innovative digital products and services, we at Postbank continue focusing our efforts and funds in supporting projects with real added value for society. We believe that one of the greatest benefits we can bring will be building awareness of the need to change life for the better.
For the third year in a row we are participating in the ‘dare to scale’ project – a four-month programme for growth aimed at entrepreneurs and businesses already past their initial development stage and currently focusing on their activities. The programme is organised by the Bulgarian office of the global entrepreneurial network, Endeavor, with Postbank as the main partner.
It is extremely important for us to be part of this process, to support the ambitions of companies seeking to scale up their business and thus change the entire ecosystem. The current moment presents an abundance of challenges but it will be to our benefit if they can help improve our sustainability and nurture our ability to learn and grow.
We at Postbank will share the power of our experience and expertise to support them at the most important stage of their business’s development. By engaging in partnerships like these, we embrace innovation and foster improved opportunities in the ecosystem as a whole. Investment in entrepreneurship is part of the change that keeps us moving forward.
Portugal has a long history of bringing the world closer together. The country’s global maritime exploration in the 15th century, mapping the coasts of Africa, Canada, Asia and Brazil, linked continents and cultures as never before. Five hundred years since early explorers set off across the Atlantic, diversity remains a central part of our welcoming culture and unique hospitality. In 2021, the world is closer than it has ever been – and, if the coronavirus pandemic has taught us anything, it is the viability of remote, global living. Portugal’s rich history has made it one of Europe’s top tourist destinations.
Our delicious food, amazing beaches, golf courses and enviable Mediterranean climate attracted almost 28 million visitors to Portugal in 2019 alone. Colourful, thriving cities such as Porto and Lisbon – one of the oldest capital cities in Europe, second only to Athens – complement the rolling green hills of the rural inland, and, of course, the paradise of golden sand and blue sea along our Atlantic coast. So, it’s no surprise that Portugal is home to the World Travel Awards’ best island destination (Madeira), city break destination (Lisbon) and beach destination (the Algarve). The Iberian Peninsula truly has it all.
Despite the pandemic, the Portuguese economy actually grew by around two percent in 2020. Currency stability, high returns on real estate and local investment funds, and the opportunity to diversify portfolios make Portugal a very attractive market for foreign investors. The country has a very affordable cost of living, thought to be almost 30 percent lower than the UK, and between five and 10 percent lower than Spain, and English is widely spoken – around 60 percent of the population is proficient – making for smooth international communication.
Portugal’s golden visa programme
The Portuguese residence permit programme, also known as the golden visa, is a scheme that grants investors access to Portuguese residency and citizenship. It is the only scheme that allows foreign investors to claim citizenship for themselves, and their families, without relocation: only 14 days every two years must be spent in Portugal. After five years, investors are eligible to apply for citizenship. Not only does the scheme provide good returns on investment, it also allows investors to secure the future of their families for generations to come.
The Portuguese passport consistently ranks among the most powerful and travel-friendly, granting visa-free access to more than 170 countries. As Portugal is part of the Schengen area, a Portuguese residence permit grants investors freedom of movement from day one, as well as the opportunity to start businesses in 25 other European countries.
In addition, investors when approved on the residency permit programme immediately gain the use of Portugal’s public hospitals at no charge, as well as access to European universities and job markets. Applying for a Portuguese golden visa brings a wealth of opportunity – from exciting business prospects to long-term plans for retirement and the education and career of the next generation – to high-net-worth individuals currently facing the obstacles that come with a weak passport or political instability in their home countries.
Portugal has one of the most accessible residence permit schemes in Europe. The Portuguese golden visa programme invites investors to claim citizenship in fewer years than comparable schemes in Spain (10 years) and Greece (seven years), and without relocation to Portugal. The Portuguese golden visa is fast, flexible – and affordable.
Investment options: real estate
The most popular golden visa investment option is real estate. A minimum investment of €280,000 can be put towards properties in remote areas that are over 30 years old and require refurbishment, some offering guaranteed rental income, though they may not provide high capital appreciation. Better returns on investment come from property in one of Portugal’s major cities, such as Lisbon or Porto, where 30-year-old properties in need of refurbishment require a minimum investment of €350,000 to qualify for the golden visa.
These properties are often well-located residential apartments, with the potential for tourist-targeted short rental periods. High demand for this type of property is driving up prices by as much as 10 percent a year. Investors committed to returns on investment are advised to put their money into new properties or off-plan projects in major cities, where capital appreciation can increase by up to 15 percent a year, and rental income can reach five percent a year. The minimum investment required in a property such as this is €500,000.
Investment funds route
However, investment funds are also becoming popular as a tax-efficient route that allows diversification of investment, and has been bringing returns of around five percent to seven percent a year. The minimum investment in qualified closed mutual funds is €350,000. This route is for those that normally prefer investing in funds, and are interested in having professional fund managers investing their money and diversifying their investment, in several different projects instead of just one property.
New golden visa investment options
Ninety-eight percent of applicants have been approved through either real estate or investment funds. The Portuguese golden visa programme has no grey areas.
As of January 2022, it will no longer be an option to invest in real estate in main cities and coastal areas for residential purposes. Residential property investment will only qualify investors for a golden visa in inland areas of mainland Portugal and the islands (€500,000 minimum, or €350,000 plus refurbishment). Investors interested in having a residential property around one of the main cities or desirable coastal areas should proceed as quickly as possible, as demand is high.
Getting started
PTGoldenVisa is an integrated service provider for foreign investors in Portugal, offering a credible, confidential end-to-end service informed by our expertise in law, economics and international commerce. Our focus on the Portuguese programme sets us apart from other golden visa firms – we are not a marketing department promoting numerous residency programmes, but a team who assist clients for the entire five years till they are granted citizenship.
Portugal has one of the most accessible residence permit schemes in Europe
We are proud to have a 100 percent approval rate on all applications submitted – a testament to our comprehensive local knowledge. Our team will be your guide through everything from investment consultancy, legal support, tax optimisation and representation, to liaising with the Portuguese authorities regarding your residency visa, to offering advice regarding all aspects of your personal and corporate presence in Portugal. Whether you would like to open a bank account or are in need of property management services, you can trust our team to deliver with integrity and professionalism.
Our real estate investment service is itself comprehensive. We are a client-oriented real estate agency providing our investors with the most profitable and adequate investment opportunities that can range from luxury villas – gems of contemporary architecture with private pools in tourist hot spots – to modern apartments in the heart of Lisbon. All of your golden visa consultancy needs will be met, from legal requirements, banking services, tax optimisation and property management. The wide scope of our integrated services is what makes our business different – and special.
Global living in the new normal
At PTGoldenVisa, we have done everything in our power to tailor our services to the restrictions of the pandemic – and have been very pleased with the results. Usually operating in offices in both Portugal and Dubai, we have adapted the company structure to allow residency permit applications to be made remotely. We understand how important investment selection is, which is why providing as much information as possible to ensure that our clients feel safe and comfortable in their decision is our priority.
Clients have been able to evaluate potential property investments through detailed videos, 3D presentations, virtual tours, location and financial analysis, and live video streams from the property. For those applying through investment funds, we have co-ordinated liaison with fund managers. We also provide online legal services and can open bank accounts remotely, among many other means of assistance. In 2020, we assisted more than 150 clients successfully while fully remote. The pandemic has driven interest in holiday homes for investors’ use, particularly in the privacy and security that a villa can offer. PTGoldenVisa is assisting with an increase in off-plan luxury villas in the proximity of big cities. Low supply and high demand mean that these projects offer capital appreciation of 15 percent a year.
The COVID-19 pandemic has, above all, brought instability and uncertainty to both the economy and our social lives. More than ever, people are reconsidering the future, and looking at golden visas as a road to safety and security. Our golden visa programme is more popular than ever. Though the tourism industry worldwide has been affected by travel restrictions, the capital appreciation on real estate in Portugal’s cities – 14 percent in the first quarter of 2021 – means that the golden visa programme has remained a safe investment. Great returns, a fantastic culture and future security awaits. Portugal looks forward to welcoming you.
During the pandemic, the financial market has become increasingly volatile, and this has consequently escalated so that more people are now becoming involved with financial trading. Georgios Argytakis, executive director of Just2Trade, spoke to World Finance about how his international investment company has managed during the pandemic. He also gives advice on how to choose a broker right for you, and predicts what the future steps will be for Just2Trade’s industry.
What is the financial situation that Just2Trade is currently in?
Just2Trade currently has a market leading position in attracting customers from more than 20 countries in Europe and Asia. Our clients have invested more than $400m, and collectively they have more than $50bn in annual trading activity in equity, bonds and derivatives. These figures by themselves speak volumes regarding our current situation, and clearly display our continuing success, despite the pandemic. Just2Trade has continued to comply with strict EU laws regarding protection of client assets and best execution client orders, and we continue to be regulated by supervisory authorities of the European Union. Just2Trade is also a member of the Investor Compensation Fund.
What innovations do you have planned for 2021?
Due to COVID-19, the market has become more volatile, and therefore an increasingly large number of people have become involved with financial trading. As a result of this increase, the equities, FX, CFD, cryptocurrency and other markets have experienced a significant uptick in trading activity. In view of the constantly evolving environment, Just2Trade will focus on developing its technological infrastructure and enriching the product range offered to its clients even further.
The recent advances made in technology has allowed investors to trade like experts, and this has therefore offered them the opportunity to access a wider range of financial markets and instruments at even lower costs. There is consequently a strong interest shown from investors for technical investment platforms, and that is where we come in. As a result of the increased interest, Just2Trade is developing new intelligent platforms that use a large amount of data to run predictive models, which come with stock ratings based on technical and fundamental analysis.
More people are seeking out ways of securing their future, so that they are safe regardless of what events occur
Through further development of our current technological infrastructure, and trading platforms, we aim to further reduce our cost structure, and offer even more competitive prices to our clients, so we can support them at an affordable rate. Most of our competitors are hindered by outdated systems with significant gaps in their technology, which only adds to their complexity, increases their cost, and slows down operational stability. Unlike these competitors, Just2Trade has not fallen into this trap. This is because we continue to invest in new technologies and trading platforms, and most importantly, we invest in our staff, all of whom are highly skilled and qualified people.
How would you advise someone who is going through the process of choosing a broker?
When going through the process of choosing a broker to work with, there are a few questions that we would advise a prospective investor to ask. These questions would start with asking if the broker in question has a proven track record and a solid market reputation, so you can ensure their reliability and previous success. It is also important for the client to ask if the broker offers the products and services that the client wants, so they can ensure they will get the service they need.
Other questions that we would recommend asking would be whether or not the broker is licensed and regulated, and if yes, are they regulated by reputable financial authorities? Is the broker a member of any kind of investor’s compensation scheme that protects investors in case of broker default?
Lastly, it is important for the client to find out if the broker segregates client assets from its own assets, to ensure that the client money is not at risk in case of default of the broker. If an investor has the answers to these questions, then they will be able to decide which broker is the right one for them and which will provide them with the best service.
Has the pandemic changed the way you do business with clients?
The pandemic has not significantly changed the way we do business with our clients. Our staff has continued to provide personal attention to each and every one of our clients, as they did prior to the pandemic. They are always on hand and ready to give them the very best level of support. The quality of our service remains one of the highest in the industry, and our client-centric approach, and core values of continually delivering our high levels of service remain unchanged.
How has Just2Trade been affected economically by COVID-19?
As mentioned previously, the pandemic has substantially increased market volatility, prompting a significant number of people to get involved with trading in the international financial markets. This increased market volatility has affected nearly all asset classes, which has consequently increased their risk to return ratio, and thus has made them more attractive. Overall, we think that the impact of the COVID-19 pandemic has been positive to the brokerage industry. However, competition still remains high, and the sole way to succeed is the same as always; to offer the highest quality service at the best price.
Why should someone open an investment account with you?
People should open an investment account with Just2Trade because we satisfy even the most demanding of investors, and are keen to support our clients in any way we can. Our company has an unblemished track record, as well as a proven history of doing business in the brokerage market. On top of this, we continue to offer new products and service lines to clients at the most competitive rates out there.
Just2Trade is established within the EU, and is therefore governed by some of the strictest laws in the world with regard to protection of client assets, as well as the best execution of client orders. Just2Trade is also licensed and regulated by the European Securities and Markets Authority (ESMA) and the Cyprus Securities and Exchange Commission (CySEC).
In addition, the company is a member of the Investors Compensation Fund, which compensates investors in the event of default of a member broker, offering our clients the safety and security they deserve. We also hold our clients’ assets separately from our own, and as a result of this safekeeping, client money and securities are never put at risk by any actions that the company takes.
How do you see the pandemic impacting the international investment industry?
We believe that the pandemic and the resulting restrictions in people’s movement will urge more people to look for investment opportunities through online brokers. We also think that as a result of the unprecedented times we have had, more people are seeking out ways of securing their future, so that they are safe regardless of what events occur. In addition, the combination of both the increased market volatility in the majority of asset classes, and the higher expected returns, are strong incentives to encourage people who have not previously done so to start trading.
“Yesterday I was clever, so I wanted to change the world,” the Persian poet Rumi wrote. “Today I am wise, so I am changing myself.”
The banking industry would be wise to change, too, and quickly.
In April, 43 global banks, including Bank of the West’s parent company BNP Paribas, joined the industry-led and UN-convened Net-Zero Banking Alliance (NZBA), committing their investment and lending portfolios to reach net-zero emissions by 2050. The NZBA is important to help meet the Paris Agreement’s objectives by mobilising the entire financial system to address the threat of climate change. Yet, not all of the major US banks, some of whom are the largest funders of fossil fuels, joined this global effort to reduce and track emissions. We can’t solve the climate crisis without banks.
Our low-carbon future depends in part on banks not making the climate crisis worse by underwriting carbon-intensive industries
Even if greenhouse gas emissions stopped today, lingering carbon dioxide in the atmosphere would keep global temperatures from cooling anytime soon, according to the National Academy of Sciences and the Royal Society. This raises the urgency for banks – including those making pledges to protect the planet – to take more substantive steps regarding their portfolios. Research from the non-profit CDP finds that emissions attributed to banks’ investing and lending activities are 700 times larger than emissions from banks themselves.
Bank of the West took action years ago to ensure that what it does and doesn’t finance are in line with supporting the planet’s health. We don’t have all the answers, and we know there is more work ahead, but the lessons we’ve learned along the way may be helpful for others in our industry to effect change.
We must close the climate financing gap
Financing targeting the climate crisis grew in 2018 to $546bn, with the private sector providing the majority at $323bn, according to the Climate Policy Initiative (CPI). However, the UN says up to $3.8trn is needed annually until 2050 to prevent an irreversible rise in global warming. We need to close this financing gap and soon. Private-sector banks have an important role. In fact, banks doubled their share of climate finance between 2013 and 2018 (see table).
Motivations matter
In 2017, Bank of the West implemented policies that restrict or prohibit financing of certain environmentally harmful activities, such as fracking and Arctic drilling. And in 2018, the bank committed $1bn over five years to finance a renewable energy transition. Our policies are publicly available, and we are well on our way to meeting our financing goal.
As part of BNP Paribas, we were motivated to act because we believe the private sector has a global responsibility to proactively address the climate crisis. We were driven by purpose.
Global finance can be a game changer
A planetary crisis affects us all. With that in mind, Bank of the West has used its global reach for the betterment of our customers and the planet.
For example, we’re providing working capital to the US subsidiaries of major European energy companies, supporting the growth of renewable energy generation across North America. This is part of our three-pronged strategy focusing on the development of renewables, cleantech and sustainable finance across industries.
We’re also using our balance sheet to encourage corporate borrowers to meet more ambitious social and environmental goals. Building on the industry-leading expertise of BNP Paribas, Bank of the West launched its sustainability linked loans offer in April.
What isn’t financed makes a difference
What banks stand for and what they finance are critical. So is what they decide not to finance. Our low-carbon future depends in part on banks not making the climate crisis worse by underwriting carbon-intensive industries. We know restricting financing based on principles is not easy because we have been on this path for a while. And we stand with the 43 global members of the UN’s NZBA because we firmly believe it’s necessary for the planet.
I’m humbled by the immensity of the task before us to stop the climate crisis. I also believe our global industry, collectively, can make a significant difference.
As the biggest banking group in Central America, with operations throughout the region, it is unsurprising that BAC Credomatic would lead the way in digital penetration for banking in the area. With a key customer base of individuals and SMEs, however, COVID-19 hit the region with no less force than anywhere else, and while technology and innovation remained vital, so too was retaining the personal feel people also needed in the midst of a pandemic.
Say ‘digital banking’ and you will likely think of mobile and online banking platforms. In fact, digital banking requires a complete transformation of all activities, programmes and roles, the automatisation of all banking processes, and the digitalisation of middleware, in order to get the different tools and systems to exchange information. In the banking industry, the transformation from traditional towards digital banking has been shaped by new technologies such as the cloud, big data and artificial intelligence.
These new technologies have forced the industry to improve customer experience in order to retain clients while staying ahead of the game. This means creating high-value digital services, ensuring their viability, and optimising their efficiency and profitability. The risk of not doing so is to alienate a client base in a region that still has problems with financial inclusion and a high proportion of unbanked populations.
At BAC Credomatic, therefore, the focus has been on listening to customers, monitoring customer interaction through digital platforms, and pivoting and adjusting the customer experience in order to make it simpler and more accessible. These efforts to streamline internal processes and improve their platforms have allowed the company to make great leaps in its digital adoption indicators.
BAC Credomatic’s digital customer penetration grew by almost 10 percent between 2019 and 2020 (from 33 percent to 42 percent). Over 1.6 million customers access its services via digital platforms every month, and four out of five do so through its mobile platform. Of course, the unavailability of banking in-branch accelerated this adoption more than it would have if the pandemic had not struck, but BAC Credomatic always intended to develop and innovate in this way.
Customer-driven innovation
Constant innovation is a strategic priority for all forward-thinking banks, and in fact the journey towards a more digital and customer-centric organisation began in 2017. The aim is to offer solutions that although complex from a behind-the-scenes perspective, actually make the customer experience seamless and straightforward, driven by a strategy focused on what customers in the region actually need.
Its digital banking platforms are not simply a by-product of that digital transformation.
The bank also made great progress with its customer service channels, which ensured customer interactions were smooth and agile
Robust online and mobile banking platforms allow customers to carry out virtually any type of transaction, but the bank has also taken the digital transformation to its physical assets. This led to branches being redesigned to emphasise relational banking and create well-thought-out spaces for self-servicing, meaning customers still have a physical place to bank should they wish, but are given more autonomy and convenience while doing so. The bank also made great progress with its customer service channels, which ensured customer interactions were smooth and agile.
Once COVID-19 took hold, social distancing measures were implemented that put the new digital platforms to the test. Fortunately, some of the digital transformation efforts that had been ongoing for years were prioritised throughout the pandemic, allowing the bank to take immediate action. Like many other organisations worldwide, BAC Credomatic leaned heavily on WhatsApp, and although servicing through this platform was already in place, it predictably skyrocketed last year given its accessibility to customers.
BAC has your back
The pandemic is clearly having a significant impact on people’s spending, saving and credit usage in all regions, and Central America is no exception. As a socially responsible financial entity, BAC Credomatic has the duty to support their customers throughout the crisis that we face globally. For this reason, BAC Credomatic implemented several financial relief measures in all the countries where it operates. From Guatemala to Panama, these measures took into account each country’s individual situation, while safeguarding the local operations’ solvency, risk appetite, and business continuity. For individual clients, measures included delaying payment of instalments for personal and home loans for various months and delaying payment of credit card debt.
These measures were applied across the board, no questions asked. Additionally, the bank offered customers exclusive benefits for essential purchases such as those made in supermarkets, pharmacies, hospitals and clinics. Offering tailored relief measures for its personal and corporate banking customers based on each client’s particular situation as well as for specific countries’ needs allowed the bank to individualise its response to the pandemic while further securing its reputation as the region’s leading financial institution. The measures were communicated to clients directly via email, on the website, and through BAC’s customer service channels. Its chatbot was amended to make sure frequently asked questions regarding the COVID-19 relief measures were easily accessible to all customers.
Customer responses to the pandemic have been varied, but there was of course definite concern around financial wellbeing. Perhaps surprisingly in a year where unemployment rose worldwide, BAC Credomatic’s experience was that most people turned from using credit to using their debit cards. This creates a challenge for a bank trying to maintain its margins, and these changes in customer behaviour led it to build a personal finance manager (PFM) for its clients, which will be released shortly.
Even though these relief measures are substantial, the bank maintained all liquidity indicators within a desirable range. Needless to say, financial risk indicators are being monitored constantly to ensure that the bank can continue providing the support that its customers need during these trying times, while ensuring the solvency and continuity of its operations.
Instant engagement
Pioneering digital banking in a region with a growing middle class and against a backdrop of global connectivity and instant-access information requires agility and responsiveness. Brand awareness in a noisy online world is vital, and banks of all stripes have increasingly been engaging customers digitally and by other means to gain a competitive advantage in the market. At BAC Credomatic, this means actively listening to the needs of customers, using an experience management platform called Medallia.
This allows businesses to stay in tune with their brand strengths and weaknesses with regards to processes, products and services, and obtain feedback and opinions directly from the customers themselves. Having this platform allows BAC Credomatic to react to customer needs in a timely manner and to design solutions that are built with a customer-centric perspective. In addition, it allows it to develop strategic tools that add value and diversify its services and digital platforms in order to offer customers a seamless experience.
Understanding customer needs allows the bank to create new platforms that not only improve the customer experience with the bank, but also allows its corporate customers to grow their businesses in turn, generating a positive impact on the region as a whole. In the early 2000s, BAC Credomatic was the first financial entity in the region to offer a mobile banking app. It was also the first to offer NFC payments with tokenised credit cards through a banking app. Coupled with extraordinary contactless penetration within merchants of all sizes, BAC Credomatic offers completely cardless and contactless experiences.
Musical outreach
During the pandemic, various industries pivoted and adapted in order to not only retain but delight their clients, and BAC Credomatic implemented a number of innovations to do just this. One initiative that was mobilised in record time was a programme called ‘momentos online’: a series of concerts featuring local artists in five of the six countries where it operates, streamed live via Facebook and Instagram. Another successful initiative saw a webinar series targeted to supporting SMEs as they navigated the emergency situation and pivoted to keep their businesses afloat. These initiatives have been very well received by customers, with close to 6,000 social media mentions related to momentos online throughout the pandemic, 96 percent of which were positive comments.
As banking adapts to the new reality it faces throughout the world, BAC Credomatic will surely continue leveraging its regional scale in each of the six countries where it operates, promoting the use of digital channels but always prioritising the wellbeing of its clients and employees. Here is an organisation that is making every effort to keep its customers at the centre of every initiative it undertakes.
Constantly researching the markets means the bank understands its customers’ behaviour in order to find solutions that appeal to and resonate with them. Looking forward, the bank will resume sending a UX team out to the field on a weekly basis to get customers’ input on new products and prototypes, which will yield extremely valuable results.
These insights lead the bank to adjust its language to make its products crystal clear for all customers. The institution is excited to give its customers a voice to express their opinions, which will be added to the 40,000 customers regionally who already provide feedback every month. BAC Credomatic can use this information to improve the digital experience even further. Technology is an enabler, but the customer will always dictate the clearest path to follow.
Today’s world is one of increasing transparency and accountability plus social and environmental consciousness. We at Kaiser Partner Privatbank AG are more aware than ever of the heightened effect our actions – and investments – will have on employment, food and clean water supplies, social order, health, and education, both for those around us, and the generations after us. Since signing the UN PRI more than a decade ago, we have continued to incorporate ESG issues throughout our investment process.
Today, we offer a holistic approach for sustainable investment solutions that reflects client-specific goals and values. We will look at tailor-made solutions based on client preferences. In addition, we carefully monitor our ESG practices with regard to controversies, impact measurement and business involvement to ensure we meet our own high standards at all times.
Throughout its history, the principality of Liechtenstein has always stood for innovation, liberty and entrepreneurship
Our responsible investment offering covers all aspects of the investment chain – starting from a value-based onboarding process through to a comprehensive report disclosing the portfolio’s carbon footprint, its ESG rating distribution and to what degree the client’s personal portfolio contributes to achieving sustainable development goals.
When investing responsibly, our mission is to deliver competitive financial returns by mitigating the risks associated with ESG factors to protect value in the long-term. In doing so, our approach is fluid rather than dogmatic, taking into account traditional risk and return figures, and allowing us to manage portfolios that are sustainable while focusing on strong risk-adjusted performance.
In our view, ESG considerations can be incorporated without overly limiting individual investment options or how these options perform. In this sense, we are committed to an active ownership approach – meaning that we will engage constructively with companies and public policy rather than choosing ‘easy’ options like divestments or greenwashing. This fluid approach, with concomitant emphasis on providing innovative and tailor-made solutions, leaves us well placed to adapt not only to the priorities inherent in responsible investing, but also to be dynamic in the event of shifting market tectonics.
Adapting to negative interest rates
Times have changed, and for a growing number of investors, negative interest rates are becoming a real challenge as more and more banks in European countries are charging their clients interest on cash balances – starting from ever lower levels. This issue is especially prevalent with small to medium-sized companies, which usually carry relatively large cash positions of several million euros just to be able to act quickly when business opportunities arise – or simply preparing for unforeseen cash outlays. For clients like these, we offer an attractive solution.
Instead of holding large cash positions with a bank and paying negative interest rates, our clients can invest in a minimum volatility portfolio that yields an estimated 1.5 percent annual return while keeping drawdowns at a minimum. If short-term liquidity needs arise, instead of selling some assets we offer the client a Lombard loan collateralised by the securities in the minimum volatility portfolio. This way, they only have to pay interest when liquidity is actually needed, while always being invested in a liquid solution with the cash portion that would otherwise be subject to negative interest rates.
But it is not only negative interest rates set by the SNB and ECB that pose challenges. We also have to contend with the wider implications of the ‘lower for longer’ interest rate environment – resulting from a decade of expansionary monetary policy globally, and especially in Europe. As a result, government bond yields are negative in Switzerland and Germany; and even Italy – with its huge debt burden – can refinance at extremely cheap prices.
For an investor, there is not much to gain from safe bonds as they will often lock in a guaranteed negative return if they hold these securities until maturity. Not only are bonds with high credit quality zero-yielding assets, but they are also an increasing risk to investors’ portfolios as the potential for price increases is very limited while the downside – in the case of a rising interest rate environment – is huge. And while high-quality bonds have traditionally acted as a form of portfolio insurance – as they often cushioned stock price drawdowns in the past – this kind of hedging behaviour looks questionable going forward.
The corona crash in spring 2020, during which government bonds didn’t help much in stabilising a balanced portfolio, was a reminder that the good old days of the 60/40 portfolio may be over – both in terms of absolute performance and risk characteristics. Investors looking for good risk-adjusted returns in the future will have to show a bit more creativity, particularly when configuring the fixed-income part of an investment portfolio.
The demands on this safe portfolio component remain the same as before – it should earn a solid minimum return, and its correlation to stocks should be relatively low so that the overall portfolio stays stable during periods of crisis.
Sound investment alternatives
Inflation-protected bonds, insurance-linked bonds (catastrophe or ‘cat’ bonds) and microfinance bonds are asset classes that particularly meet the above requirements, in our view. Adding these interest-bearing alternatives to conventional government and corporate bonds, as well as high-yield and emerging-market bonds, and combining these fixed-income components with stocks to build a balanced portfolio allows us to continue generating attractive future returns.
The average annual expected return for our optimised (and diversified) investment portfolio stands at plus 4.7 percent for the next five years, according to our calculations, entailing slightly less risk when compared to a simple portfolio consisting of 50 percent bonds and 50 percent equities (expected to return only 3.4 percent). This clearly shows that a strategic asset allocation, which we review on an annual basis, adds value for our clients and reflects our mantra ‘Responsibility in Wealth.’
However, there’s no such thing as a free lunch. If you integrate interest-bearing alternatives into a portfolio, you get similarly good diversification properties and a better return than with conventional bonds, but the liquidity properties will not be as good. But since a balanced portfolio typically has a three-to five-year investment horizon, this ‘liquidity premium’ is acceptable. Investors should generally move away from the idea of maintaining daily liquidity for their long-term fixed-income investments or should at least be aware of the opportunity costs of doing so.
A positive five-year outlook
Today, almost every asset category that could be deemed ‘traditional’ is over-valued and yields on safe interest-bearing securities are ultralow – or even negative – due to years of ongoing inventiveness on the part of central banks. Hence, financial market participants should expect lower returns, especially from the traditional asset classes, namely bonds and equities. The formulation of capital market expectations is one of the key components of our annual strategic portfolio review.
This process ensures that the client assets under our management are constantly invested in line with a forward-looking, sustainable strategic asset allocation (SAA) in lockstep with the times. Our annual review process covers a number of elements – among them the determination of the relevant asset classes and the time horizon, for which return expectations are to be formulated. We focus here on a medium to long-term period of five years, allowing us to take longer-term valuation anomalies into account and at the same time take into account current micro and macroeconomic trends.
Next, a sound model is developed for each asset class and sub-category to derive five-year return expectations. The stability of the estimated parameters is a crucial cornerstone for later mean-variance optimisation. We therefore use a combination of multiple models wherever possible to derive return estimates in order to obtain results that are as broad-based as possible.
A number of ingredients come into play here. For government and corporate bonds, the starting yield explains a very high portion of the expected five-year return and is hence a key input to our assumptions. As for equities, we combine three different models: equity risk premium, a sector-based approach and historical equity returns for different regions.
Capital market investments over the next five years will involve fewer classic instruments in the portfolio – or feature alternative ones (see Fig 1). Equities continue to be the asset class with the highest expected returns, but with estimates of around five percent for US equities, as an example, these are clearly lower than what investors were able to earn in the last decade.
Our results also show that alternative asset classes like hedge funds and private equity will have to play a larger role in an investor’s asset allocation going forward if the aim is to generate a decent return in the next five to 10 years. The same applies to fixed-income alternatives like insurance-linked bonds, microfinance and other more innovative instruments like peer-to-peer lending. Investors will have to increase their allocation of these alternatives while reducing their exposure to the more classic fixed-income instruments like government and corporate bonds – where return expectations are around one percent in the US – and lower still, close to zero, even, in Europe and Switzerland.
Strategic location
Kaiser Partner Privatbank’s base in Liechtenstein comes with many benefits. This tiny country in the heart of Europe is the epitome of political continuity and stability. The principality boasts a triple-A sovereign credit rating and is debt-free. Moreover, it combines the best of two worlds – Liechtenstein is tied to Switzerland through a customs and monetary union and has direct access to both the European Economic Area (EEA) and Switzerland. This unique combination facilitates attractive growth prospects in many sectors including the financial services industry.
Throughout its history, the principality of Liechtenstein has always stood for innovation, liberty and entrepreneurship – and the same could be said for the family-owned Kaiser Partner Privatbank AG.
The International Monetary Fund (IMF) is never known to heap praise on countries, particularly developing nations. Yet in early May, the Bretton Woods institution was all over itself pouring accolades on the Dominican Republic. Following the conclusion of Article IV Consultation, the IMF team led by Esteban Vesperoni praised the country for being one of the most “dynamic economies” in Latin America.
The plaudits from the IMF were not farfetched. For over a decade, the Dominican Republic has sustained a robust growth averaging 5.8 percent. The impressive growth, coupled by macroeconomic stability and a sound external position, to use IMF’s words, has resulted in notable improvement in the standard of living for a majority of the country’s 11 million inhabitants. This is indisputable. In 2010, the country’s per capita income was $11,000. By the end of last year, it was around $19,000. Despite the ravages of COVID-19, the Dominican Republic’s economy has remained resilient and is projected to grow by 5.5 percent this year.
The financial services sector has been at the heart of the country’s stellar economic performance by supporting key sectors even during the pandemic. In this respect, Banco Popular Dominicano has emerged among banks that have been committed to supporting the economy. With its wide exposure across sectors like tourism, construction, agriculture, renewable energy, health, education, and SMEs among others, the bank has effectively played a key role in maintaining the economy’s dynamism particularly during the difficult periods.
In the process, the bank has achieved significant growth and today stands as one of the leading lenders in the Dominican Republic. In the financial year ended 2020, Banco Popular Dominicano’s total assets stood at $9.7bn, a 16.5 percent growth from the previous year. During the year, its net loan portfolio grew by eight percent to $5.9bn while total deposits increased by 14.4 percent.
Growth in all parameters has seen the bank rated highly. In May, rating agency Fitch Ratings ratified the bank with the AA + (dom) rating. This was awarded on the basis that Banco Popular Dominicano is “a safe haven bank” particularly in times of systemic stress. The primary reason for this is the bank’s sound business model, stable profitability, healthy portfolio quality, good capitalisation and adequate liquidity management. These factors are critical in ensuring the bank maintains its organic growth going into the future.
Being part of Grupo Popular, Banco Popular Dominicano boasts a rich history dating back over five decades. Over the years, the bank has managed to build a formidable financial institution anchored on innovation. Innovation has been a fundamental pillar that has characterised the bank’s service delivery and growth strategy. For the bank, new technologies and digital transformation have enabled it to continue developing new business models, products and services that have been central to its growth.
Purposeful innovation
For this to happen, Banco Popular Dominicano made a conscious decision to embed innovation as part of its strategic plan. The result has been years of significant investments in establishing a modern open technological architecture that encompasses technologies such as cloud computing, ‘machine learning’ and artificial intelligence. It has also adopted the discipline of digital user experience (DX). This makes it possible to generate solutions to customers’ needs, listen to them and invite them to participate in the proofs of concept, prototypes and pilots prior to launching any product or service.
Building a growth strategy anchored on innovations and digital transformation has brought about significant rewards for Banco Popular Dominicano
Technological investments have made Banco Popular Dominicano a pioneer in innovation. It was the first bank in the Dominican Republic to launch an online banking platform back in 2001. A decade later in 2011, it was the first to introduce an app for mobile devices. Other firsts include the introduction of credit cards, incorporation of chip cards for safer transactions, contactless card payments through near-field communication (NFC) technology, virtual wallets and QR code payments. With a wide network of nearly 200 branches and 1,121 multifunctional automated teller machines, Banco Popular Dominicano has adopted the ‘AGILE’ methodology that allows it to constantly launch new innovations and accelerate its digital transformation process. Though designed to ensure the bank maintains its market leadership, the bottom line of its aggressive innovation drive is customer satisfaction.
Building a growth strategy anchored on innovation and digital transformation has brought about significant rewards for Banco Popular Dominicano. Today, the bank is a reference point for financial innovation not only in the Dominican Republic but across the wider western hemisphere. More importantly, the bank takes pride in serving over two million happy customers due to its efficient and customer-centric model of service delivery.
For the bank, which has repeatedly been voted the best private bank in the Dominican Republic, providing customers with platforms and channels that facilitate seamless transactions and interactions has been nothing short of transformative in driving growth. Even more prodigious has been the customer receptivity. This is because the platforms and systems are designed to make the lives of customers easier and help them accomplish their financial goals.
Today, more than 87 percent of Banco Popular Dominicano’s operations are digital.
Customer confidence
Almost 1.4 million customers are using digital channels, a growth of 33 percent last year. Annually, the bank receives in excess of 38 million visits to its Popularenlinea website. The bank’s Popular app, the main mobile application in the market, boasts over 700,000 users, a 20 percent increase compared to 2019. In 2020, the app accounted for 24 million transactions, a 34 percent increase from the previous year.
Creating an environment where customers can transact digitally has been a masterstroke for Banco Popular Dominicano in many aspects. It has arguably proved most valuable during the COVID-19 disruptions, a period that has seen the use of digital channels increase substantially. In essence, the growth has been a testament to the customers’ trust in the bank’s technological infrastructure resulting in a swift migration to digital platforms. The migration, on a broader perspective, has helped contain the spread of the pandemic. As the IMF observed, the Dominican Republic has performed well in containing COVID-19. By mid-May, the country had fewer than 300,000 reported cases.
Digital platforms have been central in guaranteeing clients uninterrupted service during the pandemic. For Banco Popular Dominicano, they are also critical for financial inclusion. By taking advantage of the fact that 80 percent of Dominicans own a mobile phone, with about 50 percent of these being smartphones, the bank has simplified wallets and accounts. In effect, it has allowed the unbanked to enter the formal financial services sector easily and quickly. Additionally, through its network of subagents, the largest and most extensive in the country, the bank has brought services closer to most remote communities.
Though a majority of customers are already transacting digitally, Banco Popular Dominicano wants more customers on its digital platforms. This explains why the bank continues to introduce initiatives and incentives for even the most conservative clients, who may be reluctant to migrate. The incentives include not charging commissions on basic transactions such as transfers between accounts, payments to third parties and payments for products and services, among others. Clients also have the option of choosing accounts and products that have no commissions for sophisticated products and services.
Banco Popular Dominicano strongly believes that digital migration is an unstoppable train with more clients experiencing the benefits of digital banking every day. However, it doesn’t mean leaving behind a trail of frustrated traditionalist customers who only know banking in its personalised form in the enclave of bricks and mortar. While conservative customers have traditional channels at their disposal, the bank is constantly making improvements and optimisations to maximise the service experience. One way that the bank has managed to enhance operational efficiency has been through investment in robotic process automation.
In its digital transformation journey, Banco Popular Dominicano understands that customer confidence in security of systems is paramount. Security cuts across two aspects – a guarantee that accounts will not be compromised or breached, and system failures will not cripple the customer’s ability to carry out transactions. It is for these reasons that the bank has strong commitments on security.
Secure and safe
Last year, the bank continued to strengthen its information security and cyber security program incorporating Central Bank of the Dominican Republic regulations. On top of this, it was proactive in the development of technical and procedural capacities for the monitoring, detection and management of cyber security incidents, making use of AI and machine learning technologies. During the year, over 30,000 events were monitored per second. Internally, the measures have put the bank at the forefront of maintaining integrity of customers’ transactions and information. Externally, customer confidence is boosted by a unique electronic key or Popular Token assigned to them for the sole purpose of authenticating each operation. The bank has also set up a digital communication channel through which clients can report ‘phishing and spoofing’ attempts.
Despite achieving remarkable milestones on the digital front, Banco Popular Dominicano has no intention of slowing down or resting on its laurels. It goes without saying that with 17 commercial banks, the top five of which command about 80 percent of the market, the Dominican Republic’s banking industry remains highly competitive. For this reason, coupled with the desire to maintain a growth trajectory, the bank intends to continue innovating and providing clients with new cutting edge solutions that satisfy their needs and make their experience the best it can be.
Priorities for new solutions will be oriented towards the intensive use of advanced digital analytics to facilitate the creation of products, an adequate adoption of AI in banking services and continuing to develop the media. The bank also plans to continue along the road of digital banking in promoting customer convenience. It remains a priority for the bank to always listen to its customers and co-create with them. This will continue to be the underlying principle of its innovations.
Established in 1978, Jordan Islamic Bank (JIB) began as a public shareholding limited company, and the first branch began its work in late 1979. Since those early days, the bank has come a long way. Now with 108 branches and offices around Jordan, it strives not only to keep pace with technological innovation by employing modern technologies, but also aims to provide the best Islamic products and services clearly and transparently.
The bank presents services through 269 ATMs and provides banking phone services, online banking, 3D secure shopping, online bill payments and an e-wallet service through Islami mobile. These services are available during official holidays and outside normal operating hours through a number of branches and offices. In addition to this, the bank’s Facebook page, Al Islami Messenger service and call centre are all available 24/7. JIB’s founding aims have always been to meet the economic and social needs of citizens in the fields of banking, finance and investment in accordance with the principles of Islamic Sharia.
Transactions and contracts are subject to the supervision of a Sharia board composed of specialist Sharia scholars. To ensure our clients are aware of our commitment to Sharia principles, we recently overhauled our branding, prefixing the names of our electronic channels with the word ‘Islami,’ as in Islami internet.
JIB pushed forward with several projects aimed at modernising its service provision via new technologies
Our banking operations are regulated by the central bank of Jordan and the bank is continually working to deepen and develop the principles of corporate governance, develop risk management and apply the requirements of the Basel III regulatory framework.
Success, naturally, has followed. The bank has been honoured with many international awards over the years, including the Best Islamic Bank in Jordan and the Best Islamic financial institution from several prestigious international institutions and magazines. We have also obtained credit and Sharia ratings from international rating agencies, as well as a letter of appreciation from the International Organisation for Standardisation (ISO) for our participation and commitment to CSR.
JIB’s CSR commitments offer an example for national institutions and companies to follow when it comes to fulfilling their own duties towards the community, particularly disadvantaged groups, those with special needs and the poor. By contributing to sustainable development and enhancing financial inclusion through various charitable programmes, social, cultural and voluntary activities, donations, Qard Al-Hasan and mutual insurance funds, the bank works to ensure that Jordanian society and the nation’s financial security is always at the heart of what we do (see Fig 1).
Another way we engage in bolstering Jordan’s economic stability is through our participation in the national self-employment programme, a scheme designed to promote entrepreneurism among young people. Working with the central bank of Jordan, we finance projects that create long-term career opportunities and income streams for the young people involved.
Comprehensive service
These days the bank provides a wide array of services, accepting deposits in Jordanian Dinar and foreign currencies across numerous current and investment accounts. We invest funds according to permissible practices of Islamic finance, making use of arrangements such as Mudarabah, Musharakah, Murabaha Sale, Ijarah Mawsufah Fi Al-Dhimmah. We also work with funds and products to provide financing to cover the costs of pilgrimage, education, medical treatment, renewable energy systems and construction. Our specialist wedding package enables the families of brides and grooms to cover wedding costs via an installment plan.
JIB provides other banking services such as issuing instant money transfers via Western Union, renting of safety deposit boxes and issuing letters of guarantee, penning letters of credit, and buying and selling FX. We also act as agents in buying and selling shares and investment certificates, and as a broker on the Amman Stock Exchange through our subsidiary Sanabel Al-Khair for Financial Investments.
JIB issues several different banking cards for both Visa and Mastercard, including Sharia-compliant and prepaid products. Our security protocols, as you would expect, are second to none. The bank also issues a blind card for those with visual impairments with the aim of bringing about a more inclusive banking landscape, providing all groups of society with access to financial and banking services. All of the bank’s customers should be able to administer their financial affairs with complete freedom and complete privacy.
Moving with the times
JIB is continuously working to develop its services and increase its market share through the expansion and geographical distribution of ATMs to cover all regions in Jordan. We are continuously developing the number of services available via our ATMs as well as updating and reviewing security measures across the network, which now consists of 269 units.
Our customers also have access to approximately 1,700 third-party ATMs within Jordan and the Visa International network worldwide. The wide availability of service naturally reflects positively on customer satisfaction and further solidifies the bank’s interests, profitability and competitiveness. A review of this network of ATMs is conducted annually with a view to ensuring wide and fair distribution of the most up-to-date services and encouraging customers to use ATMs rather than branches.
During 2020 JIB pushed forward with several projects aimed at modernising its service provision via new technologies. In order to relieve the pressure on branches during the COVID-19 pandemic, we quickly rolled out or expanded services such as the Islami Mobile app, an updated website, self-service kiosks, and dedicated ATMs and an interpreting app for clients with disabilities.
From its inception, Jordan Islamic Bank has committed to becoming a leader in the Jordanian banking sector. We strictly abide by a unifying vision to provide modern banking services via the largest network of ATMs spread throughout the Hashemite Kingdom of Jordan, with the hope of meeting the needs and aspirations of our current and future customers.
As the second strongest economy globally, China has also publicly been one of the most adamant in striking down cryptocurrency. However, most bitcoin block miners reside and toil on Chinese territory. In April 2021, the deputy governor of the People’s Bank of China (PBOC), Li Bo, officially termed bitcoin an ‘investment alternative.’ This breakthrough came amid a significant pullback of bitcoin and the entire crypto market. The Chinese admission nonetheless parallels the development of a centralised ‘digital yuan,’ hinting at Beijing’s more pragmatic multi-faceted approach.
The US and bitcoin
At times, a clear separating line runs between the public and the private sector in assessing the impact that bitcoin has had on the US. The latter is on an adoption rampage of sorts: Corporate America is slowly but undoubtedly putting its seal of approval on bitcoin as a long-term credible investment asset. Elon Musk’s Tesla is just one prominent example. More importantly, keep in mind that even Goldman Sachs, which until very recently held bitcoin in low regard publicly and showed distaste for the opinion that cryptocurrency would be a powerful investment asset, repented. The influential multinational investment bank, having close ties to the most powerful governments in the world, announced in March 2021 a ‘full-spectrum’ cryptocurrency investment offer, including bitcoin, for its private clients. All the while, the narrative from US state bodies suggests a different approach.
Complete and centralised control of new financial technologies by governments and central banks remains the main objective
By her admission, US Treasury Secretary Janet Yellen is eager to crush the influence of cryptocurrencies by pushing International Monetary Fund (IMF) capacities further, which many financial experts consider being the future issuer of a new worldwide digital currency – centralised, of course. In the same month, the current Federal Reserve Chairman, Jerome Powell, stated to Congress that the FED is ‘looking carefully’ at issuing a ‘digital dollar,’ describing it as ‘a high priority project for us.’ It would seem akin to the high stakes his Chinese counterparts put into their digital yuan. The recent publication by multinational investment bank Citi, ‘Bitcoin: At the Tipping Point,’ contains a crucial afterthought: according to their analysis, bitcoin could very well turn into the currency of choice for international trade within just a few years.
Green deal sentiments
At times, bitcoin, flirting with $1trn market value, continues to be a genuine concern for central bankers globally, leading policymakers, like Yellen, to press the ‘green argument’ of ‘sustainability’ to attack bitcoin and its kind, saying it is ‘an extremely inefficient way to conduct transactions,’ since ‘the amount of energy consumed in processing those transactions is staggering.’
Yellen and her counterparts in other major countries are more than interested in transitioning from cash to digital tokens, though. This process will undoubtedly make use of the framework of the coming ‘Fourth Industrial Revolution’ as laid down by the influential World Economic Forum’s founder, Klaus Schwab, in his publications. The scepticism towards decentralised blockchain technology will not fade away anytime soon since complete and centralised control of new financial technologies by governments and central banks remains the main objective. Nevertheless, this publicly expressed hostility may be weaker than it appears.
Behind closed doors, the sentiment is much more composed and collaborative. The best illustration is to look at the blockchain partners of the World Economic Forum itself: Elastos, Stellar, Algorand and Ripple – all future candidates to shape the financial technologies to come.
Geopolitical considerations
April 2021 had an interesting turn of sentiments when Peter Thiel (co-founder of PayPal with Elon Musk, Palantir Technologies) gave a political warning regarding bitcoin ‘as a Chinese financial weapon against the US,’ further contributing to a heightened sense of urgency. Thiel usually presents himself as a bitcoin maximalist and prime angel investor on the crypto market. So if a venture capitalist of Thiel’s proportions puts out such explicit political alerts, the public should anticipate a culmination between Washington and Beijing in this crucial ‘arms race’ sometime soon.
A month before, Yellen announced to the international forum G20 that the US would support a new issuance of the IMF’s international reserve asset, known as the ‘Special Drawing Right’ (SDR). Ten years ago, the IMF went public with their serious contemplations of replacing the current world reserve currency (the US dollar) with the SDR.
Who are the new kids on the blockchain?
Decentralised finance (DeFi) and smart contract platforms on blockchain networks have many runner-ups: Ethereum is the most used network and the first of its kind. Incepted in 2015, it garners the highest daily transaction rate, now hovering above 1.5 million – even beating bitcoin’s current average of 200,000–300,000 a day. Lack of scalability and high transaction costs give Ethereum competitors a chance to contribute and capture some market share. Polkadot, Cardano, Cosmos, Harmony and a few others have the most significant potential to solve these issues.
Stablecoins are the bridges between the classical and the crypto-financial networks – USD Tether being the most prominent, with the highest market cap. A definitive stablecoin has yet to emerge since projects like Terra, xDai, and the USDC (widely used on the Coinbase exchange and the Ethereum blockchain as a whole) are still on the rise. Their use case is self-explanatory: digital coins, stably pegged to the US dollar but active on blockchain networks. Even Peter Thiel heavily invested in an anti-inflation crypto project called Reserve Protocol, which is already active with its stablecoin (RSV) in Latin America, gaining adoption and traction swiftly.
Blockchain technologies aiming high
The marketing slogan of ‘helping the masses of unbanked people’ in Africa, Asia, and South America is prevalent in the DeFi crypto sphere – for instance, some of the projects listed above and Celsius Network. It garners significant trust in these populations – and the West, to be frank – over classical banking institutions.
On April 14, 2021, Coinbase, as the most prevalent cryptocurrency exchange, was directly listed on the Nasdaq exchange. This move signifies even more convergence of both domains and implies a rising future influx of retail investors into crypto assets.
Long-awaited alchemy
No other asset in history could level or come near the resilient and durable use case of gold. Although much debate rages over whether bitcoin deserves the title of ‘digital gold’ just yet, the chart from 2009 until now (see Fig.1) is a clear indication of a monumental uptrend.
But is bitcoin beating gold in market capitalisation anytime soon? Ex-hedge fund billionaire Michael Novogratz says yes, as he spelt it out at the end of March on CNBC, “bitcoin is on an inevitable path to have the same market cap and then a higher market cap as gold.” Right now, the prime cryptocurrency’s market cap fluctuates around the $1trn mark – that’s one-tenth of gold. Historically, governments have had their fair share of administrative problems with gold, implementing extreme measures.
The most notable was Franklin D. Roosevelt’s US administration seizing all gold through Executive Order 6102, obliging US citizens to sell all of their precious metal at what was far below market rates. Soon after, the strategically placed Gold Reserve Act 1934 imposed a new official gold rate that was much higher. Ownership of it continued to be illegal in the US until the 1970s. In 1959 the Australian government followed suit with a similar law, which granted them authority to seize gold from their citizens. One of the official justifications was the protection of ‘the public credit of the Commonwealth’ and ‘the currency.’ In the following decade, the UK administration highly restricted gold ownership and barred private gold import into the country entirely.
This historical precedence with gold should yield caution regarding bitcoin’s mid-term fate with governments. How the governments’ actual banning, restricting, or confiscation of bitcoin could be implemented technologically is not clearly outlined.
A win-win for Forex
Regardless of the transition’s nature into this advanced future financial order, Forex brokers need to adapt to this new vibrant dichotomy. If they want to stay innovative, competitive, and relevant in the long term, that is. On the one hand, offering the most potent and powerful cryptocurrencies represents a progressive attitude towards decentralisation, which the crypto sphere offers. That means the broker always keeps doors open for new demographics. On the other hand, it’s crucial to stay with legacy currencies. Their centralised successors, which the IMF, FED and others already plan to launch as digital counterparts to their crypto challengers, should not be disregarded.
The worldwide financial system is ripe for significant paradigm shifts, which will probably ignite even greater competition between centralised and decentralised systems and their services. But Forex brokers, like OctaFX, are already taking on the innovative duty of being open to both systems, offering assets from both worlds, and are likely to capitalise on new opportunities to upgrade and revolutionise their financial services. There is simply no reason for Forex brokers to engage in an unnecessarily false dichotomy of choosing one system over the other. They can keep on offering the best of both worlds, building long-term trading relationships with their growing client base – with the best of conditions.
According to the IMF, the outcome for the global economy in the wake of COVID-19 during 2020 was a GDP contraction of about 3.5 percent. Vaccination has already begun worldwide, which will enable faster normalisation than expected. The IMF is projecting global growth of 5.5 percent in 2021, although this will depend on the speed of the vaccination rollout. Swift and substantial monetary and fiscal policy support has been an important and largely successful strategy during the pandemic. This was a lesson learnt during the earlier financial crisis. Several central banks and governments have also recently increased and extended the stimulus and relief programmes.
Although GDP may approach pre-pandemic levels in 2021, the trend is fragile. A dangerous virus mutation or policy error in which stimulus support is withdrawn too early and causes a large wave of bankruptcies and job losses would once again damage the economic outlook. At present, the trends are pointing in the opposite direction. At the same time, surprisingly swift vaccination programmes combined with continued and substantial economic stimulus and relief could generate faster recovery than expected.
The risks of overheating and rising inflation are further away, especially because the labour markets are soft, but long rates have begun to rise. The central banks are struggling to push up inflation, are giving no signs of austerity and are not forecasting rate hikes in 2021 or 2022. Additionally, inflation in Europe is very subdued.
Controlled restart
An upturn in long-term rates from record-low levels will not necessarily be a problem for the economy or the stock market, as long as it occurs under controlled conditions. In general, the Nordic economies have generally weathered the pandemic better than others, partly due to less drastic lockdowns and restrictions, and because our economies are more dependent upon exports and industry than on the service sector and tourism.
Industrial supply chains have not broken down, which was critical for keeping activity up. Strong public finances in the Nordic countries have provided good opportunities for fiscal policy support and economic stimulus. It is also a relief that there is now, four years after Brexit, an agreement between the EU and the United Kingdom, as the UK is an important trading partner for the Nordic countries.
The pandemic is accelerating existing megatrends like digitalisation, automation and climate and sustainability work. Remote working and digital communication have also taken giant steps forward, which is probably subduing business travel and has, by extension, also affected the structure of the real estate market. Global supply chains are being reviewed and if companies become more inclined to insource production, in spite of higher costs at home, this will further drive automation. There is much to indicate that retail stores, hotels, air travel and offices will recover. The big question is how far the pendulum will swing.
Sustainability and renewable energy are the really big and accelerating trends. They are driven not only by more urgent awareness of the climate situation, but also technological progress and cost advantages. This is especially true for the EU, which is an important market for the Nordic countries. The post-pandemic fiscal policy measures are to a great extent more future-oriented than those taken after the financial crisis, with investments in digitalisation and more sustainable societies, which is positive.
Transformation pressure on established companies is increasing, which is also creating fertile ground for new enterprises in areas including cleantech, gaming, technology, fintech and new energy. This is creating a need for growth financing and there is a lively IPO market on the Nordic stock exchanges for small and high-growth companies that has few equals in the rest of Europe. At the other end, the EU, US and China are pressuring the major platform companies on matters related to taxation and market dominating positions. Ultimately, this may lead to new regulations or to the forced break-up of large, dominant companies.
Perhaps most surprising of all, it seems like China is moving the fastest. These processes take time, but increased competition often promotes economic productivity and development. If new standards and regulations were to come, it could create entirely new opportunities and exciting changes like those happening in the banking system with fintech and the digitalisation of healthcare.
The green megatrend
ESG is the biggest trend going and it affects all investments. The pandemic has had a serious impact on how we live our lives and has given us new perspectives, which also apply to corporate executives and decision-makers. More importantly, we have realised that we can in fact change course and change our behaviour very quickly if we have to. The understanding that companies must have sustainable business models has grown during the pandemic. If you have a business model that is not currently sustainable, it will take profound change for the company to remain relevant to its customers in the future.
Focus on sustainability is a critical element of being a knowledge-driven bank and providing optimal advisory. To a great extent, ESG is about communication, information and education that equip people to make the right long-term decisions. There is much to be done, and through our sustainability expertise we can be involved and influence companies and investors – and really make a difference. It is important to us that our clients have access to the best available information so that they can make decisions that are socially sustainable in the long run. That is where we can help.
The pandemic is accelerating existing megatrends like digitalisation, automation and climate and sustainability work
As far as investments go, among both institutions and private clients, the focus is increasingly on the opportunities, rather than the risks. The point is no longer what one should avoid owning, but rather which companies and sectors will profit by a climate transformation and thus have a bright future ahead.
Carnegie has carried out an extensive project to determine where Nordic companies stand ahead of the new EU Taxonomy. The results of the analysis show that several companies that the market previously considered green did not perform as well, while others that had been overlooked suddenly became green darlings. This is due to the Taxonomy rewarding companies that are investing in the green transition, meaning that these companies earn high scores with their future-oriented initiatives.
We have been working actively with ESG in our advisory. Carnegie Private Banking became a signatory to the UN Principles for Responsible Investment (UNPRI) in 2020.
UNPRI is a well-known framework that results in greater transparency surrounding ESG efforts. Carnegie checks and evaluates all funds and fund managers that are included on the bank’s recommendation list and are the basis for discretionary management, combined with Carnegie’s own products.
We are working proactively in our wealth management to identify long-term, structural growth trends, which we translate into thematic investments. Our ambition is to either identify themes in an early phase or find niches within megatrends like healthcare, technology and the environment. We aim to look at the entire value chain rather than simply buy the biggest companies that the market already associates with the trend.
Is water the next big trend?
In recent years, the themes we have identified have included 5G, cyber security, robotisation and automation, artificial intelligence, biotech and the pharmaceuticals of the future. In the ESG segment, we see attractive investment opportunities in areas including renewable energy, sustainable food and water supply.
We have observed a distinct trend in the last year where the market has bumped up the value of companies that focus on ESG. In some cases, the flows have contributed to bubble valuations of companies that are clear winners in the environmental trend – especially in clean energy. The somewhat more defensive water companies are not such obvious winners and have been a little overlooked.
Investor focus on sustainability is a structural trend that will potentially benefit the water companies. Right now, everybody is talking about the carbon footprint, but the water footprint could be the next trend, for both companies and consumers.
Four billion people struggle with water shortages every day. The supply of fresh water is finite, unevenly distributed among geographical regions and shrinking due to pollution and climate change. Demand is rising in pace with population growth, urbanisation and growing prosperity – most rapidly where there are already water shortages. We are already seeing conflicts related to water.
In the western world, more resource-efficient management of fresh water would save money. In Africa, it would save lives. Drastic cuts to consumption would also be very attractive from a sustainability perspective. Resolving the water shortage problem will require major investments in infrastructure and new technology to secure access to water for the world population.
The widening gap between supply and demand is the most important driver of water as an investment theme. The global demand for water is growing twice as fast as the global population and is expected to double again in the next 15 years. The need for water is also being driven by urbanisation and higher consumption of goods that require a great deal of water in their production. India, China and other emerging countries in Asia will account for a large share of the demand growth until 2050, according to the OECD.
In short, nearly $500m a year needs to be invested to give all people access to clean water by 2030, and urbanisation and growing prosperity will further increase the need for water.
