From Davos to Digital Transformation: The Key Trends that Will Define the Global Financial Services Sector in 2024

World leaders gathered at the Davos World Economic Forum in January and told us what we already know – that the global economy is still highly volatile. Geopolitical conflicts, disruption to Red Sea trade routes, high-profile elections, energy price hikes and the ongoing climate crisis were just a few of the factors cited by policymakers and thought leaders as contributing to the current sense of unpredictability and fragility.

[caption id="attachment_26633" align="alignright" width="224"] Author: Alessandro Hatami[/caption]

Christine Lagarde, president of the European Central Bank, summed up the sentiment in Davos when she said that the post-pandemic period has been "strange, extraordinary and difficult to analyse". While the consensus at the Forum was that consumption, trade and inflation began to stabilise in 2023, Lagarde warned delegates:"It is not normality that we are heading to" in 2024.

For the financial services sector, all of the above developments have an inevitable and immediate impact on their businesses. The Red Sea crisis alone, for example, could drive goods inflation up by 2% - forcing banks to delay interest rate cuts.

The re-election of Donald Trump as US president would also probably redefine the US's relationship with Europe and the rest of the world. But such seismic shifts only tell part of the story. For banks and fintechs, the pursuit of a ‘new normal' is not just defined by the Davos 2024 headlines but also by the technological revolution unfolding in parallel.

Sometimes, these two strands overlap – with macroeconomic factors determining how much investment and attention financial services companies can give to digital transformation. But other times, the advancing technology seems like an unpredictable and unavoidable force for change – driving deep-rooted disruption that needs to be embraced to survive.

Either way, financial services companies mustn't get dazzled by the Davos agenda and neglect the 24/7 job of business transformation. So, looking ahead, what are the key tech-powered trends likely to define the next 12 months?

Fintech fallout on its way: Thanks to the current VC desert, fintechs that rely on equity investment to grow have seen their financial muscle wither like bodybuilders coming off steroids. With growth grinding to a halt, many will not be able to meet the targets they set out in the previous rounds - resulting in flat and down rounds. Depending on how long the lack of VC investment runs, some fintechs may even fail in 2024 – as their finances dwindle. The ones that secure investment will be profitable or able to demonstrate a clear trajectory towards profitability and returns (not just growth for growth's sake). A case in point is Starling Bank, which saw a sixfold increase in profits in 2023.

 Opportunist and strategic M&A activity to increase: Some fintechs continue to be transformative and sustainable businesses – but have seen market valuations slide because of the downturn. Klarna is a high-profile example. As a result of these bargain basement valuations, some will become the focus of private equity and corporate investments. PEs will see cut-price fintechs as a tactical financial opportunity, expecting valuations to pick up post-crisis. Corporate investors, meanwhile, will spy an opportunity to accelerate transformation by integrating acquisitions with existing business capabilities. Not to be overlooked, big tech may view M&A as a way to secure entry into financial services. PwC expects wealth management, insurance and payments to be hot targets for M&A and states that 47% of financial services CEOs are planning to make acquisitions in the next three years.

 Incumbent banks could prosper: It hasn't been a great few years for incumbent banks, which have tended to be characterised as slow to change and poor on customer experience. But with a reduced threat from fintech rivals, established businesses could do very well in the new financial climate. Aside from the neutered fintech challenge, banks can look forward to customer deposits earning them more. If their risk models function effectively, an increase in borrowing from employed cash-strapped individuals will increase their headline profits. Of course, banks won't want to brag about their profits – for fear of politicians imposing a windfall tax.

 Mobile Banking becomes a key battleground: Last year, the banking industry shed 60,000 jobs and closed hundreds of high street branches. More brick-and-mortar banks will shut in 2024 as banks seek to reduce costs. Instead, banks increasingly rely on getting customers to sign up for mobile apps – but this reduces their differentiation from fintechs and neobanks like Monzo, Revolut and Starling. It has also created a window of opportunity for companies like JP Morgan Chase. This transformation became very real for the 1600 Lloyds banking Group branch staff to be laid off in the coming months - the bank said this move was driven by the fact that only 8 percent of its 21 million customers rely on branches alone for their banking needs. With the tipping point reached in real life vs digital banking, expect traditional banks to ramp up their efforts to win mobile banking customers – with improved CX and incentives.

 The normalisation of crypto: Despite all the scandals, smoke and mirrors, the crypto economy is not going away. In fact, it is moving towards the mainstream - as evidenced by former chancellor George Osborne joining cryptocurrency exchange Coinbase as an adviser. Banks and governments know that there is a lot of money in crypto, but the sector remains anarchic and opaque. So, regulation will accelerate. In parallel, countries will seek to legitimise the crypto sector by introducing Central Bank Digital Currencies (CBDCs). At this stage, the Eurozone looks ahead of the pack in this regard – though the Bank of England is moving forward slowly. With tighter regulation and the introduction of CBDCs, consumer confidence (and investment) in crypto will return. In a few years, the FTX debacle will be seen as a turning point in crypto’s fortunes. And the regulators are getting serious: the FT calculated that in 2023, crypto and fintech groups were fined $5.8bn in a global crackdown on illicit financial practices.

 Increased investment in banking resilience: In the year to June 2023, the UK financial services sector experienced 640 cybersecurity breaches – up from 187 the year before. At a global level, Fastly recently released a report stating that businesses lost, on average, 9% of their revenue over the last 12 months due to the cyber attacks they experienced. This figure rises to 11% for UK firms. Based on responses from almost 1500 IT decision-makers, the research revealed that financial services firms suffered more than any other sector – with respondents reporting an average of 50 attacks in the last year. Nearly one-third (29%) saw customer accounts compromised. Against this backdrop, expect greater attention to banking resilience. In the EU, t<a href="https://www.pwc.co.uk/industries/financial-services/insights/dora-and-its-impact-on-uk-financial-entities-and-ict-service-providers.htmlIn%20the%20EU%20The%20Digital%20Operational%20Resilience%20Act%20(Dora)%20came%20into%20force%20on%20January%2016,%202023%20but%20organisations%20have%20until%20January%202025%20to%20become%20compliant.%20Dora%20aims%20to%20introduce%20a%20comprehensive%20framework%20on%20digital%20operational%20resilience%20for%20European%20financial%20institutions.%20This%20will%20change%20the%20way%20many%20bank%20boards%20think%20of%20tech%20resilience.">he Digital Operational Resilience Act (Dora) came into force on January 16, 2023, but organisations have until January 2025 to become compliant. Dora aims to introduce a comprehensive framework for digital operational resilience for European financial institutions. This will change the way many bank boards think about tech resilience.

 Banking as a Service pioneers to take AI initiative: You won't find a 'future trends' article that doesn't reference AI, so profound is the anticipated impact of this technological revolution. Indeed, it was a key talking point at Davos, with leading economists predicting generative AI will "increase productivity and innovation". Of course, not everyone will benefit to the same degree – so financial services firms need to get the building blocks in place that will secure them a competitive advantage. The key to being a serious player in generative AI is control of data – not just linear transactional data. Leadership in gen AI will go to players with access to the richest array of data about usage, timing, patterns, goals, etc. This puts specialised banking-as-a-service platforms in pole position because they are collating data from banks, consumers and businesses in a way that can unlock game-changing insights. Key areas where this is gaining significance include personal financial management.

Final Thought: Investment in Talent Is Key

One high-profile theme at Davos was the issue of skills, with “investments in jobs, skills and people” a key talking point. Across numerous sessions, Davos explored “creating good jobs and giving people the skills necessary for the future economy”. Recent research from FDM Group has highlighted that this is a key issue for the financial services sector, particularly regarding digital capabilities. The future may be all about AI, crypto, cybersecurity and mobile apps, but countries and companies that don't provide the necessary investment and incentives in talent will fall behind.

By Alessandro Hatami, managing partner of strategic consultancy Pacemakers.

World leaders gathered at the Davos World Economic Forum in January and told us what we already know – that the global economy is still highly volatile. Geopolitical conflicts, disruption to Red Sea trade routes, high-profile elections, energy price hikes and the ongoing climate crisis were just a few of the factors cited by policymakers and thought leaders as contributing to the current sense of unpredictability and fragility.

[caption id="attachment_26633" align="alignright" width="224"] Author: Alessandro Hatami[/caption]
Christine Lagarde, president of the European Central Bank, summed up the sentiment in Davos when she said that the post-pandemic period has been "strange, extraordinary and difficult to analyse". While the consensus at the Forum was that consumption, trade and inflation began to stabilise in 2023, Lagarde warned delegates:"It is not normality that we are heading to" in 2024.

For the financial services sector, all of the above developments have an inevitable and immediate impact on their businesses. The Red Sea crisis alone, for example, could drive goods inflation up by 2% - forcing banks to delay interest rate cuts.

The re-election of Donald Trump as US president would also probably redefine the US's relationship with Europe and the rest of the world. But such seismic shifts only tell part of the story. For banks and fintechs, the pursuit of a ‘new normal' is not just defined by the Davos 2024 headlines but also by the technological revolution unfolding in parallel.

Sometimes, these two strands overlap – with macroeconomic factors determining how much investment and attention financial services companies can give to digital transformation. But other times, the advancing technology seems like an unpredictable and unavoidable force for change – driving deep-rooted disruption that needs to be embraced to survive.

Either way, financial services companies mustn't get dazzled by the Davos agenda and neglect the 24/7 job of business transformation. So, looking ahead, what are the key tech-powered trends likely to define the next 12 months?

Fintech fallout on its way: Thanks to the current VC desert, fintechs that rely on equity investment to grow have seen their financial muscle wither like bodybuilders coming off steroids. With growth grinding to a halt, many will not be able to meet the targets they set out in the previous rounds - resulting in flat and down rounds. Depending on how long the lack of VC investment runs, some fintechs may even fail in 2024 – as their finances dwindle. The ones that secure investment will be profitable or able to demonstrate a clear trajectory towards profitability and returns (not just growth for growth's sake). A case in point is Starling Bank, which saw a sixfold increase in profits in 2023.

Opportunist and strategic M&A activity to increase: Some fintechs continue to be transformative and sustainable businesses – but have seen market valuations slide because of the downturn. Klarna is a high-profile example. As a result of these bargain basement valuations, some will become the focus of private equity and corporate investments. PEs will see cut-price fintechs as a tactical financial opportunity, expecting valuations to pick up post-crisis. Corporate investors, meanwhile, will spy an opportunity to accelerate transformation by integrating acquisitions with existing business capabilities. Not to be overlooked, big tech may view M&A as a way to secure entry into financial services. PwC expects wealth management, insurance and payments to be hot targets for M&A and states that 47% of financial services CEOs are planning to make acquisitions in the next three years.

Incumbent banks could prosper: It hasn't been a great few years for incumbent banks, which have tended to be characterised as slow to change and poor on customer experience. But with a reduced threat from fintech rivals, established businesses could do very well in the new financial climate. Aside from the neutered fintech challenge, banks can look forward to customer deposits earning them more. If their risk models function effectively, an increase in borrowing from employed cash-strapped individuals will increase their headline profits. Of course, banks won't want to brag about their profits – for fear of politicians imposing a windfall tax.

Mobile Banking becomes a key battleground: Last year, the banking industry shed 60,000 jobs and closed hundreds of high street branches. More brick-and-mortar banks will shut in 2024 as banks seek to reduce costs. Instead, banks increasingly rely on getting customers to sign up for mobile apps – but this reduces their differentiation from fintechs and neobanks like Monzo, Revolut and Starling. It has also created a window of opportunity for companies like JP Morgan Chase. This transformation became very real for the 1600 Lloyds banking Group branch staff to be laid off in the coming months - the bank said this move was driven by the fact that only 8 percent of its 21 million customers rely on branches alone for their banking needs. With the tipping point reached in real life vs digital banking, expect traditional banks to ramp up their efforts to win mobile banking customers – with improved CX and incentives.

The normalisation of crypto: Despite all the scandals, smoke and mirrors, the crypto economy is not going away. In fact, it is moving towards the mainstream - as evidenced by former chancellor George Osborne joining cryptocurrency exchange Coinbase as an adviser. Banks and governments know that there is a lot of money in crypto, but the sector remains anarchic and opaque. So, regulation will accelerate. In parallel, countries will seek to legitimise the crypto sector by introducing Central Bank Digital Currencies (CBDCs). At this stage, the Eurozone looks ahead of the pack in this regard – though the Bank of England is moving forward slowly. With tighter regulation and the introduction of CBDCs, consumer confidence (and investment) in crypto will return. In a few years, the FTX debacle will be seen as a turning point in crypto’s fortunes. And the regulators are getting serious: the FT calculated that in 2023, crypto and fintech groups were fined $5.8bn in a global crackdown on illicit financial practices.

Increased investment in banking resilience: In the year to June 2023, the UK financial services sector experienced 640 cybersecurity breaches – up from 187 the year before. At a global level, Fastly recently released a report stating that businesses lost, on average, 9% of their revenue over the last 12 months due to the cyber attacks they experienced. This figure rises to 11% for UK firms. Based on responses from almost 1500 IT decision-makers, the research revealed that financial services firms suffered more than any other sector – with respondents reporting an average of 50 attacks in the last year. Nearly one-third (29%) saw customer accounts compromised. Against this backdrop, expect greater attention to banking resilience. In the EU, the Digital Operational Resilience Act (Dora) came into force on January 16, 2023, but organisations have until January 2025 to become compliant. Dora aims to introduce a comprehensive framework for digital operational resilience for European financial institutions. This will change the way many bank boards think about tech resilience.

Banking as a Service pioneers to take AI initiative: You won't find a 'future trends' article that doesn't reference AI, so profound is the anticipated impact of this technological revolution. Indeed, it was a key talking point at Davos, with leading economists predicting generative AI will "increase productivity and innovation". Of course, not everyone will benefit to the same degree – so financial services firms need to get the building blocks in place that will secure them a competitive advantage. The key to being a serious player in generative AI is control of data – not just linear transactional data. Leadership in gen AI will go to players with access to the richest array of data about usage, timing, patterns, goals, etc. This puts specialised banking-as-a-service platforms in pole position because they are collating data from banks, consumers and businesses in a way that can unlock game-changing insights. Key areas where this is gaining significance include personal financial management.

Final Thought: Investment in Talent Is Key

One high-profile theme at Davos was the issue of skills, with “investments in jobs, skills and people” a key talking point. Across numerous sessions, Davos explored “creating good jobs and giving people the skills necessary for the future economy”. Recent research from FDM Group has highlighted that this is a key issue for the financial services sector, particularly regarding digital capabilities. The future may be all about AI, crypto, cybersecurity and mobile apps, but countries and companies that don't provide the necessary investment and incentives in talent will fall behind.

By Alessandro Hatami, managing partner of strategic consultancy Pacemakers.


The Women’s Brain Project Takes the World Economic Forum 2024 Stage

The Women’s Brain Project (WBP) announces the creation of its new Foundation to support the world’s first Research Institute for Sex and Gender Precision Medicine.

It takes a global stage to discuss a major global research endeavour, and at the recent World Economic Forum 2024, in Davos, Switzerland, the Women’s Brain Project (WBP) did just that: WBP announced the creation of its new Foundation to support the world’s first Research Institute for Sex and Gender Precision Medicine.

[caption id="attachment_26644" align="aligncenter" width="624"] Dr Antonella Santuccione Chadha (left) at the World Economic Forum 2024[/caption]

The new Institute will engage experts from various specialties to collaborate on innovation and research. Its objective is to incorporate considerations of sex and gender in the advancement of precision medicine. Additionally, WBP has initiated a fundraising campaign to support the establishment of the Research Institute, with further details available here.

WEF 2024 was the perfect venue to make this announcement, considering numerous conversations held over the five-day event concerned women’s health. Dr Antonella Santuccione Chadha, co-founder and CEO of WBP, participated in a number of these critical conversations.

The Davos Alzheimer’s Collaborative (DAC), along with WBP, hosted an important discussion on Alzheimer’s disease. The attendees, including Dr Santuccione Chadha, discussed creation of a global Brain Health Ambassadors network to promote inclusion of brain health at the primary care level and the prevention of Alzheimer’s and related dementias.

“Today, we better understand what enables brain resilience and what can prevent Alzheimer’s,” said George Vradenburg, founding chair of the Collaborative. “Using that knowledge to foster brain health across the lifespan is pivotal to stopping Alzheimer’s.

Dr Santuccione Chadha said evidence shows that differences between men and women with regard to Alzheimer’s disease–how the disease presents; the speed, or lack thereof, as to when men and women are diagnosed; and efficacy of treatments–differ significantly.

As women are better communicators, the disease is picked up easier in men than women. “The scales are different,” she said.

Men, she said, might present with more aggression, whereas women appear more depressed. Women are generally diagnosed almost a year later than men, because they are told by their physicians that they are depressed and/or stressed, are subscribed antidepressants, and advised to return many months later.

The latest treatments for Alzheimer’s work better in men than women, she said. “We need to understand why because it is biology. In the end, it is about the right drug for the right patient at the right time,” because such specific treatments will save money.

Arguments about the difficulty in studying women, including female animals in the preclinical setting, are moot, she said. What about the hormonal cycles of males? It is as complex as the women’s.”

DAC also announced the formation of a global network of brain health ambassadors from various specialties who will work with healthcare providers at the primary care level to identify patients at risk or in the early stages of Alzheimer’s disease and other dementias. One in three people globally has a brain disorder. In May 2023, in a Lancet Neurology editorial announcing the WBP-commissioned Economist Impact White Paper, it was highlighted that in the US and Europe alone, the annual cost of neurological disorders amounts to USD $1.7 trillion.

At another event, “Redesigning healthcare with women in mind”; hosted by Kearney, the Life Sciences consultancy, WBP and Kearney signed an open letter aimed to address the world’s female health gap. So far, the letter has garnered nearly 60 signatures. Another discussion in which Dr Santuccione Chadha was titled “A roadmap to sustainable health and better wellbeing in the workforce and society”. This was a joint University of Sankt Gallen Executive School and Forbes Women event on accelerating achievement of the UN’s Sustainable Development Goals (SDG) and specifically SDG 3 for worldwide health and wellbeing.

Since 2017, when the Women’s Brain Project Association was founded by Dr Santuccione Chadha alongside other neuroscientists, WBP has published irrefutable evidence as to why some neurological disorders present, are diagnosed, progress and respond differently to treatments differently in men and women. Since its founding, WBP’s work has appeared in more than 100 scientific and policy publications, and it has formed numerous collaborations with researchers and policymakers around the world.

World leaders are now prioritising women’s health. At WEF 2024, the McKinsey Health Institute released a report about the need to close the women’s health gap, focusing on women’s health in general but also citing the huge financial cost of ignoring such a closure.

In response, WEF has launched a Global Alliance for Women’s Health. The WBP is excited and grateful to see world leaders taking commitment forward.

The WBP is very concerned about the serious lack of sex-based data in clinical trials. While the vast number of clinical trials –85.5%– include men and women, the vast majority –73.5%– do not include sex-based analysis.i A meta-analysis carried out by WBP on Alzheimer’s disease trials that appeared in JAMA Network Open found that only seven studies reported sex-stratified information, out of 56 randomised controlled trials.ii In reality, two out of three Alzheimer’s patients are women – hardly a true representation in these trials.iii One consequence of this bias is the notion that neurological drugs work the same way in both sexes. This is not the case. Women are twice as likely to experience side effects compared to men.iv

Women live longer than men; a new study shows that the now nearly six-year gap between the sexes is the longest it’s been in 27 years. However, women also live more years in ill health and disability than men do. This is known as the morbidity-mortality paradox (that is, women are sicker but tend to live longer). As WBP has reported, age and the incidence of brain disorders increase in lockstep.

Sex- and gender-based differences have been too long neglected; this neglect has negatively impacted access to health and clinical development. Join us in making a difference, it’s time to change this narrative towards a more inclusive and diverse research and healthcare system for all.

About the WBP

The Women’s Brain Project, founded by internationally renowned neuroscientists in 2017, is dedicated to discerning the evidence-based neurological differences between sexes and genders. Over the past six years, the Project has published work showing the biological, societal, and economic differences that exist, and the possible ramifications of these differences. The Women’s Brain Foundation, expected to be operational in Q1 2024, will oversee the first-of-its-kind Research Institute for Sex and Gender Precision Medicine. Follow us on LinkedIn, X (formerly Twitter), Instagram, Tik-Tok, YouTube and Facebook.

Research Institute fundraising campaign: Redesigning medicine with the sex & gender lens

By Dr Antonella Santuccione Chadha Co-founder and CEO of WBP & Christine Bahls Communications and Content Lead of WBP

References

i Mamlouk GM, Dorris DM, Barrett LR, et al. Sex bias and omission in neuroscience research is influenced by research model and journal, but not reported NIH funding. Front Neuroendocrinol. 2020;57:100835.

ii Martinkova J, Quevenco F, Karcher H, et al. Proportion of Women and Reporting of Outcomes by Sex in Clinical Trials for Alzheimer Disease: A Systematic Review and Meta-analysis. JAMA Netw Open. 2021;4(9):e2124124. doi:10.1001/jamanetworkopen.2021.24124

iii Martinkova J, Quevenco F, Karcher H, et al. Proportion of Women and Reporting of Outcomes by Sex in Clinical Trials for Alzheimer Disease: A Systematic Review and Meta-analysis. JAMA Netw Open. 2021;4(9):e2124124. doi:10.1001/jamanetworkopen.2021.24124

iv Zucker I, Prendergast BJ. Sex differences in pharmacokinetics predict adverse drug reactions in women. Biol Sex Differ. 2020;11(1):32


Co-ordinates ... Co-ordination ... Action!

Asia-bound: London-based N51 is taking a City philosophy on an Eastern adventure… Building the Future of Finance!

N51 is a private investment holding company that knows where it’s going — and where it all began.

The name refers to the co-ordinates of N51’s original stamping ground: the City of London — 51.5074° North, 0.1278° West. But big moves are afoot for the company, so pop this one into Google Maps: 1° 17' 24.9720'' North and 103° 51' 7.0524'' East.

That takes you to Singapore: the next N51 destination. With a global business portfolio under its belt, and soon to enter the FinTech Regulatory Sandbox with the  Monetary Authority of Singapore MAS, N51 is focusing on enhancing the adoption of technology and regulation.

The penchant for GPS co-ordinates “encapsulates how we use our global expertise to maximise the skills of the founders we work with”, says CEO Thomas Edwardson.

“We chose Singapore as the ideal location to expand our investment opportunities and diversify our portfolio,” he says. “It’s one of the strongest financial centres in Asia — and we’ve established relationships with local companies.” The core focus will be to bridge the gap between defi and traditional finance in sectors including venture capital, technology metals, finance, and Bitcoin mining.

The firm’s knack for spotting opportunities in a crisis-ridden world has won it the attention of investors, including the Unity Group of Companies and Tech Invest Capital. “A lot of people are looking for well-managed risks,” notes Edwardson. Partners include Fireblocks, for tokenisation, and Kroll for regulatory and cross-border guidance.

N51 is “focused on riding the wave of the digital transition” with straightforward equity investing and added transparency. It hasn’t finished seeking new longitude and latitude co-ordinates to explore, either. After the Singapore launch, the aim is to establish a presence in the UAE and US.


Strategy, Inclusion, Compliance and Customer-Centricity: MauBank Has All of Its Priorities Firmly In Place

CFI.co in discussion with Vishuene Vydelingum, Chief Executive Officer of MauBank.

[caption id="attachment_26670" align="alignright" width="252"] CEO: Vishuene Vydelingum[/caption]

MauBank is licensed as a commercial bank by the Bank of Mauritius, the country's central bank and the nation's banking regulator.

MauBank is headquartered in Ebene CyberCity on the Indian Ocean island, and is the third-largest bank in Mauritius.

CFI.co: What are your hopes for the future of your business, and for the industry as a whole?

Vishuene Vydelingum: My hopes revolve around sustained growth, innovation, and continued commitment to our customers. I want to see MauBank on a path of sustainable growth, in terms of financial performance as well as expanding our customer base and market presence, locally and internationally. This should be driven by prudent risk management, strategic investments, and a focus on customer satisfaction.

I look forward to an era of technological innovation. Embracing fintech advancements, AI and digital transformation will keep us competitive, improve operational efficiency, and meet evolving customer needs.

A key objective is contributing to financial inclusion and making a positive impact on the lives of individuals, families, and businesses. By developing and offering inclusive financial products and services, we aim to empower them, giving a broader segment of society access to the financial tools they need.

I also envision our bank playing a responsible role in societal and environmental matters. Sustainable and socially responsible banking practices will benefit the community and enhance our services.

Building strong partnerships with other industry players, fintech companies, and governmental institutions is crucial for addressing common challenges and fostering a collaborative environment. This can lead to shared insights, joint initiatives, and a more robust financial ecosystem.

In essence, my vision is to position our bank as a leader in the financial industry, known for innovation, customer-centricity, and a commitment to positive societal impact.

Can you pinpoint any pitfalls to help newcomers to the industry?

Newcomers to any industry face unique challenges, and the financial industry — rapidly evolving and having faced recent crises — is no exception.

Economic downturns or fluctuations impact the industry. Newcomers may face challenges in maintaining stability during uncertain economic periods. There is a need to put contingency plans in place, diversify services to minimise risk, and maintain a strong financial position.

By proactively addressing these issues, newcomers can increase their chances of success. Adaptability, strategic planning, and a customer-centric approach are crucial to establishing a strong foothold.

Financial institutions are prime targets for cyberattacks. Inadequate security measures can lead to data breaches, financial loss, and damage to customer trust. It is essential to prioritise cybersecurity, implement encryption technologies, conduct regular security audits, and educate employees on best practice.

Keeping up with rapid tech advances can be challenging, and outdated or inefficient technology can hinder competitiveness. Investing in scalable and adaptable technologies, collaborating with fintech partners, and prioritising ongoing technological updates come at a cost, but are imperative.

Consumer preferences and behaviours change rapidly, and failure to adapt can lead to a loss of relevance. New entrants need to stay abreast of industry trends, gather customer feedback, and be agile in adjusting products and services.

We’ve observed an exodus of talent across the industry. Attracting and retaining skilled professionals in the financial sector is competitive. A lack of talent impacts business operations, so developing a strong employer brand, investing in training and development, and creating a positive workplace culture should be central to the strategy.

Do you have any anecdotes to illustrate your progress over the years?

MauBank has undergone remarkable recent growth, tripling its profit in two years, with 42 percent growth in 2022/23 compared to the previous year. This has brought us recognition in the form of the CFI.co awards. (Best Growth Strategy in Banking, Mauritius, 2022, and Most Promising Bank, Mauritius, 2023.)

The recipe for success includes crafting the correct strategy, understanding customer needs, and developing products and services adapted to their requirements. It also means constantly improving operational efficiency and customer experience, while containing our cost base.

Our customer-centric approach favours proximity and solid relationships. This has been a determining factor in our ability to develop bespoke products. Recent crises have affected businesses in different ways, depending on the sector. Solutions have to be developed according to specific needs.

The decentralisation of SME services across our network of business centres across Mauritius has provided greater accessibility and inclusion for start-ups and expanding small enterprises — and it’s been instrumental in strengthening our portfolio.

The extensive support schemes MauBank put in place to support customers during the pandemic allowed them to weather the storm. Our customers are bouncing back with resilience, and have trust in the bank as a strong partner for their future ventures.

Our constant drive to improve the customer journey — by way of quick turnaround time, personalised service and digital transformation — has revolutionised service delivery and customer satisfaction.

How do ESG parameters and sustainability principles affect the way your industry is run?

They’ve become integral to the banking sector. ESG considerations influence our operations in a number of ways.

We assess and manage environmental risks to ensure resilience against climate-related challenges. This includes evaluating exposure to industries vulnerable to climate change and incorporating climate-risk assessments into our lending and investment decisions.

We seek out investment opportunities that align with ESG principles. This involves evaluating environmental impact, social responsibility, and governance practices to create a portfolio to reflect that commitment.

We engage with local communities via our CSR programme to understand their needs and concerns. By maintaining open communication channels, we contribute to the communities where we operate and address any social or environmental issues that may arise.

ESG principles guide our corporate governance. This includes ensuring transparency, accountability, and ethical behaviour at all levels. Structures are in place to safeguard stakeholder interests.

We integrate ESG considerations into the development of our financial products and services. This means offering products that support sustainable initiatives, such as green financing, and aligning our offerings with the principles of responsible banking.

We provide training and awareness programmes for our employees to ensure they understand the importance of ESG. This fosters a culture of responsibility and sustainability.

So, ESG parameters and sustainability principles have a profound impact on our decision-making processes, risk management strategies, and overall business model.

What is the single most important requirement to become a global business?

MauBank is active in the global business front and the expansion of this segment is a core strategy.

For any banking institution aiming to be a key global player, the most important requirements revolve around regulatory compliance and risk management.

It’s challenging to navigate, and comply with, a complex web of regulations. Staying abreast of these and ensuring strict compliance are of paramount importance.

Effective risk management is these areas is crucial. This includes assessing and mitigating financial, operational, and compliance risks. Robust AML and KYC practices to prevent money laundering and other financial crimes must be in place, with stringent due diligence on customers to maintain regulatory compliance.

As cyberthreats evolve, banks need to invest in cutting-edge countermeasures. Protecting customer data, financial transactions, and maintaining operational continuity are vital.

Managing cross-border transactions requires expertise in currency exchange and international trade compliance. These issues, too, are essential for international banking operations.

Regular stress-testing and ensuring adequate capital reserves are also vital. These ensure the bank can withstand economic downturns, market fluctuations, and other financial stressors.

Establishing and maintaining transparent communication channels with regional regulators is essential. While other factors are important for global banking success, regulatory compliance and risk management serve as the foundation. Without a solid regulatory framework, a bank may face legal challenges, reputational damage, and increased financial risks.

What motivates and enthuses you?

To make a positive impact for individuals, families,  businesses, communities, and the economy. We serve individuals and businesses so that they can achieve their full financial potential.

Speaking as CEO, several aspects keep me enthusiastic and engaged. Banking plays a pivotal role in driving economic growth by providing financial services that enable businesses to thrive. Contributing to the overall economic wellbeing of the community — and supporting financial inclusion — are highly motivating aspects of the business.

The industry is undergoing a significant transformation, driven by technological advances. Embracing innovation and digitalisation to enhance customer experiences and operational efficiency can be exciting, as well as rewarding. We help customers to achieve their financial objectives, and empower them to make informed decisions. Building lasting relationships with customers and being a trusted financial partner are in themselves highly motivating. The industry presents various challenges, and navigating them requires strategic thinking, adaptability, and problem-solving skills — all of which I find stimulating.

Nurturing a talented and diverse workforce, providing opportunities for professional growth, and fostering a positive workplace culture contribute to the success of the organisation. Seeing employees thrive and contribute to the bank's success is fulfilling for me. And I firmly believe that “happy colleagues make happy customers” — and that ultimately leads to happy shareholders.

The multifaceted nature of the banking business presents a dynamic and stimulating environment. The ability to make a positive impact, coupled with challenges that demand strategic thinking, is also motivating.

What are the key strengths of your team?

A young labour force brings an eagerness to learn, build experience on the job, and apply new skills. Our team is highly motivated, enthusiastic about bringing forward-trending product solutions onboard, and gearing up for the next phase of MauBank’s growth.  Senior colleagues deploy their banking and leadership skills to coach and mentor their juniors.

Ultimately, whether part of sales, support, control staff, or front-, middle- or back-office teams, we deliver as one.

What is the most important question people should ask about your business?

"How is MauBank ensuring that it stays relevant?" This question emphasises the importance of our ability to remain agile, innovative, and customer-centric in a rapidly changing landscape.

It runs through the bank's digital transformation initiatives, including the adoption of technologies such as AI, blockchain, and data analytics to streamline operations.

The bank prioritises its response to customer needs, and its commitment to developing innovative products and services. It collaborates with fintech partners or start-ups to leverage external expertise and stay at the forefront of industry innovation, for instance in efforts to integrate with e-commerce platforms or other financial service providers.

Customers and stakeholders seek assurance that the bank is forward-thinking, adaptable, and committed to embracing positive changes and maintain relevance in the dynamic financial landscape.


Finding the Inside Track to Sustainable Investment — it’s a ThirdWay Speciality

ThirdWay Partners, with offices in Kenya, London, Mozambique, South Africa and Spain, and expanding its presence in Argentina this year, is an impact investment and advisory firm that maintains a steady focus on creating inclusive sustainable development and impact.

[caption id="attachment_26638" align="alignright" width="357"] CEO: Gonçalo Neves-Correia[/caption]

The firm combines advisory services and principal investments, generating development finance and impact investment opportunities via sustainable development.

CFI.co in conversation with ThirdWay Partners CEO Gonçalo Neves-Correia...

CFI.co: What are your hopes for ThirdWay, and the future of the sustainability/impact sector as a whole?

GNC: Our vision is for ThirdWay to establish itself as a globally recognised firm, and a prominent brand at the crossroads of impact and business. This aligns with the evolving landscape, where sustainability has become integral to the operational fabric of businesses worldwide.

What are the mid to long-term challenges you face?

One for the mid- to long term is effectively managing opportunities that come our way. As we navigate growth and demand increases for our services, maintaining a balance and ensuring strategic alignment will be crucial.

How do you see as the short- to mid-term prospects for the sector?

We're optimistic for 2024, especially with the anticipated upswing in climate investing, driven by the positive outcomes of COP 28.

What motivates and enthuses you?

ThirdWay’s rapid growth, and our position at the forefront of significant developments in sustainable capitalism. Equally motivating are the exceptional individuals in our team, as well as our strong relationships with clients and partners. This collective passion, professionally and on a personal level, fuels our enthusiasm.

What are the key strengths of the team?

Its dedication and diversity, mirroring our strategic investments in the markets we operate in. Our team embodies professionalism, meticulousness when it comes to quality, and a collaborative spirit. We foster a culture of excellence.

How important is your support team?

It’s crucial. ThirdWay has a history of driving growth and ambition through entrepreneurial thinking. The support team plays a key role in turning these goals into actionable plans, and ongoing success. They are invaluable, streamlining and boosting our efficiency and effectiveness.

What are the top priorities — for ThirdWay Partners, for the business world, and regarding sustainability in general?

For ThirdWay and the broader business world, we focus on the future of work, and our collective efforts to address climate change. We anticipate a fundamental shift in the value of talent and work methodologies over the next five years — and we emphasise the need for significant investment. Failure to achieve and develop that could widen the gap between developed and less-developed labour markets. There is also an urgent need for a reduction in carbon-intensive habits at the corporate and society levels.


Embracing Disruption: The Path to 'Insurance for All' by 2047 - by IRDAI Chief Debasish Panda

IRDAI Chairman Debasish Panda stressed the need for insurers to adapt to disruptions and aim for 'insurance for all' by 2047.

In a recent address at a global actuaries conference, IRDAI Chairman Debasish Panda highlighted the imperative for insurance companies to innovate and adapt in the face of technological disruptions. With India's digital footprint expanding rapidly, Panda emphasized the need for leveraging data to provide personalized experiences, underlining the shift away from traditional 'one-size-fits-all' policies.

He pointed out the critical role of actuaries in this transformation, urging the sector to adopt agility and dynamism. Technologies like blockchain, AI, and machine learning are not just altering the landscape; they're setting new standards for efficiency, fraud detection, and customer engagement.

Panda's vision for 2047 is not just a goal but a roadmap for insurers to thrive by predicting and meeting customer needs through innovative products and channels. This new era demands that insurance players not only anticipate change but become architects of it, ensuring that the journey towards 'insurance for all' is not just aspirational but achievable.

[caption id="attachment_26678" align="aligncenter" width="725"] Insurance 2047: Artivatic Innovating as Enabler for Insurance 2047 for All[/caption]

Read Article here published by Economic Times.

Beyond the Traditional: As Panda emphasized, the "one-size-fits-all" approach is fading rapidly. India's massive digital footprint, boasting over 850 million internet users and 750 million smartphone users, generates a wealth of data waiting to be tapped. Customers readily share this information, seeking personalized experiences in return. Insurers who cling to traditional methods risk irrelevance, unable to predict needs and deliver tailored offerings through the right channels.

Embracing Dynamic Change: Panda urges insurers to move beyond their "conventional roles" and embrace dynamism and agility. This requires viewing the sector through a new lens, one that welcomes innovation and disruption.

The Actuarial Role in a Disruptive World: Recognizing the crucial role of actuaries in navigating these changes, Panda highlights their responsibility in designing future-proof insurance products and driving industry growth. They must break free from traditional models and embrace new data sources and analysis methods to accurately assess risk and design relevant products.

Technology as a Disruptive Force: Emerging technologies like blockchain and AI are already transforming the industry. Blockchain-enabled smart contracts are streamlining claim settlements, while AI and data analytics enhance fraud detection. The Internet of Things (IoT) holds immense potential, allowing for real-time risk assessment and personalized coverage based on individual behavior.

The Urgency of Adaptation: Panda's message is clear: adapt or risk extinction. Those who fail to "underwrite disruptions" will struggle to survive against agile competitors who predict customer needs and deliver the right product through the right channel.

The Road Ahead: The journey towards "insurance for all" demands a fundamental shift in mindset. Insurers must actively collaborate with technology companies, embrace new risk assessment models, and develop innovative products tailored to diverse customer segments. By harnessing the power of disruption, the industry can unlock its potential to offer financial security and peace of mind to every individual.

This article merely scratches the surface of the exciting transformations underway in the insurance industry. As technological advancements accelerate, the conversation will continue to evolve, demanding continuous adaptation and innovation from all stakeholders. The ultimate prize is a future where everyone has access to the protection and peace of mind offered by insurance, a future truly realized through embracing the power of disruption.

It recognizes the necessity of leveraging technological advancements to democratize insurance access, enhance customer experiences, and streamline operations.

Artivatic.ai: Spearheading Innovation

Artivatic.ai stands at the forefront of this transformation, embodying the shift towards data-driven and customer-centric solutions. Their work spans various critical areas, including:

Artivatic Further Revolutionizing Insurance: Embracing Clinical Data for Personalized Product Design and Underwriting: Smart personalized underwriting in insurance utilizes advanced analytics and diverse data sets, including alternative and location data, to tailor policies to individual risk profiles. This approach leverages information such as lifestyle habits, health records, and geographical data to offer customized insurance products. By integrating these data sources, insurers can more accurately assess risks, leading to optimized pricing, enhanced customer satisfaction, and improved risk management. This innovation marks a shift towards more dynamic, data-driven strategies in the insurance industry, ensuring policies are more aligned with the specific needs and risks of each customer.

Intelligent & augmented Onboarding platform: The policy buying journey for a customer in today's digital age involves a streamlined and interactive process. Initially, customers research and compare different insurance policies online, leveraging tools and platforms that provide comprehensive policy comparisons and reviews. Once a suitable policy is identified, the customer often undergoes a digital onboarding process, which may include providing personal information, undergoing risk assessments, and receiving personalized quotes. Advanced technologies such as AI and data analytics enable a more customized and efficient experience, guiding customers through the selection of add-ons or adjustments to coverage based on their specific needs. Finally, the purchase is completed online, with digital documentation and immediate policy activation, enhancing convenience and accessibility for the customer.

AI Sales Enablement and Intelligence: By utilizing AI and data analytics, Artivatic.ai enhances sales strategies, enabling insurers to identify and capitalize on emerging market opportunities more effectively. Artivatic.ai's MiO Platform, an AI Sales Engine, revolutionizes sales enablement and intelligence for insurers by integrating advanced AI, data analytics, ML, speech recognition, OCR, and India Stack. It automates sales processes, CRM, and communication, offering product recommendations and enhancing sales strategies. This platform enables effective identification of market opportunities, improving sales conversion, analytics, and agent-to-customer interaction. Connected technologies such as ABDM, IIB, and account aggregation tools further streamline the sales ecosystem, making it more efficient and customer-centric.

AI Fraud Intelligence: Leveraging advanced algorithms and machine learning, Artivatic.ai significantly improves the capability of insurance companies to detect and prevent fraudulent activities.

Data-Driven Product Design & Pricing: Tailoring insurance products and pricing models based on comprehensive data analysis ensures more accurate risk assessment and customer-centric offerings.

Adapting to Change: Artivatic's No-Code Rule Configurator for Dynamic Insurance Products: Artivatic's dynamic/no-code rule configurator is designed to cater to the ever-evolving needs of products and customers. This tool enables insurers to swiftly adapt and update their offerings without requiring extensive coding knowledge. By simplifying the customization of rules and processes, Artivatic ensures that insurance products can be quickly aligned with changing market demands and individual customer preferences, significantly enhancing the responsiveness and flexibility of insurance services.

Claims Experience Improvement: Streamlining the claims process not only enhances operational efficiency but also significantly improves customer satisfaction. Improving the claims experience involves integrating systems like NHCX/IndiaStack with advanced AI technologies, such as GenAI, to streamline and personalize the claims process. This approach enhances efficiency, accuracy, and customer satisfaction by leveraging real-time data, automating assessments, and providing tailored support throughout the claims journey.

Customer Reach and Top-Line Growth: Innovative strategies powered by Artivatic.ai's technologies facilitate broader customer outreach and engagement, contributing to revenue growth.

Low-Cost Insurance Delivery Technologies: By optimizing operations and leveraging digital platforms, Artivatic.ai enables insurers to reduce costs and offer more affordable products. Artivatic.ai's strategy for low-cost insurance delivery focuses on utilizing digital technologies and optimizing operations to streamline the insurance process. By integrating AI and machine learning, operational efficiencies are significantly enhanced, allowing for the automation of underwriting, claims processing, and customer service. This not only reduces operational costs but also improves the accuracy and speed of service delivery. Digital platforms facilitate direct engagement with consumers, further reducing overheads associated with traditional distribution channels. The result is more affordable, accessible insurance products tailored to meet the diverse needs of consumers, enabling insurers to expand their market reach and provide value to a broader audience.

Healthcare and Wellness Recommendations: Integrating healthcare data allows for personalized health recommendations, promoting preventive care and wellness. Integrating healthcare data for personalized health recommendations is at the core of Artivatic.ai's NiO health app. This platform aims to revolutionize health advocacy by offering a suite of features including health recommendations, a health locker for secure data storage, health consent management, OPD services, personalized health insights, and wellness programs. By leveraging AI and machine learning, NiO intends to deliver a comprehensive health and wellness ecosystem tailored to individual needs, encouraging preventive care and fostering a proactive approach to health management.

Data Augmentation and Product Recommendation: Enhanced data analytics capabilities enable more accurate customer profiling and product recommendations, aligning offerings with individual customer needs.

Facial Recognition and Partnership Enhancements: Technologies like facial recognition not only improve security but also streamline onboarding processes, while digital tools foster stronger partnerships and collaborations.

Insurance in a BOX - Connected Insurance : The PRODX Distribution "Insurance in a Box" revolutionizes how insurance products are offered, integrating a single API to distribute across platforms like fintechs, banks, and brokers, and planning for future Bima Sugam connectivity. It extends to embedded insurance, allowing seamless, relevant coverage within customer journeys, enhancing convenience and value. This unified solution facilitates connections for risk management, underwriting, claims, servicing, and utilizes data intelligence, making it a holistic tool for modern insurance distribution and embedded insurance offerings.

Artivatic.ai's core innovation lies in its utilization of data intelligence, marking a paradigm shift in how insurance and healthcare services are designed, delivered, and experienced. This approach not only addresses current challenges but also anticipates future needs, ensuring the industry remains resilient, responsive, and relevant.

Bima Sugam is envisioned as a dynamic transaction and connected platform, designed to revolutionize the insurance sector in India. It aims to streamline the insurance buying and selling process, making it more accessible, efficient, and transparent for consumers and providers. By integrating various stakeholders on a single platform, Bima Sugam facilitates easier policy management, claims processing, and provides a consolidated marketplace for insurance products, enhancing the overall customer experience in the insurance ecosystem.

The synergy between visionary leadership and cutting-edge innovation, as demonstrated by Debasish Panda's goals and Artivatic.ai's initiatives, underscores a transformative era for the insurance industry. By embracing these disruptions, the sector can ensure it not only meets the ambitious target of "insurance for all" by 2047 but also sets a global standard for innovation, inclusivity, and customer empowerment in the digital age.

Interested to know more about Artivatic and its offering /innovations for Insurance & healthcare to make vision for 2047, write to contact@artivatic.ai


Berenberg: Strategic Asset Allocation in a Higher Interest Rate Environment

For the first time in many years, interest rates have risen noticeably in 2022 and 2023, and as a result, conditions on bond markets have changed rapidly since then. What some are calling a regime change is, in fact, a return to normality. This means that fixed income (public & private) is becoming much more attractive again. But will the asset class be able to offer the stabilising characteristics that investors were accustomed to in the past? For the strategic asset allocation (SAA), there are many new aspects to consider that require a professional analysis and implementation.

Long Term Trend of Falling Interest Rates

[caption id="attachment_26682" align="alignright" width="300"] Director, Head of Investment Consulting: Michael Kreibich, CFA, CAIA[/caption]

Until the end of 2021, European bonds delivered above-average risk-adjusted returns for an extended period of time. This was due to artificially low volatility caused by the European Central Bank's (ECB) expansionary monetary policy in the aftermath of the global financial crisis. After the impact of further interest rate cuts had become minimal in 2014, the central bank focused on its key bond-buying programmes, which helped stabilise inflation towards the ECB's target of around 2%. However, efforts to gradually exit this policy were put on hold by the COVID-19 pandemic in early 2020, as inflation surged while at the same time the central bank was forced to launch a new emergency programme to stabilise capital markets by injecting billions more in liquidity.

Investors Shifted Into Riskier Asset Classes

As a result, the trend of falling rates intensified, resulting in notably low, and even negative, yield levels in the European bond market. The 10-year German government bond yield for example reached its ultimate historic low at -0.86% in early March 2020. The consequent limited potential for further significant declines in yields and associated gains in bond prices prompted many investors over the past years to gradually reduce their allocation to fixed income securities. Instead, investors shifted their allocation towards more opportunistic asset classes, which was especially beneficial for private markets. Depending on what regulation, if any, was in place, SAA shares in asset classes such as real estate, private debt, and private equity – and in some cases public equities – increased noticeably. Successively, the risks of the underlying portfolios rose significantly, especially when these were realistically modelled for the private markets segment.

About Berenberg

Berenberg was founded in 1590 and is today one of Europe's leading private banks with its Wealth and Asset Management, Investment Bank and Corporate Banking divisions. The Hamburg-based bank is managed by personally liable partners and has a strong presence in the financial centres of Frankfurt, London and New York.

2022 – The Perfect Storm on the Capital Markets

The year 2022 finally marked the turning point of falling yields, followed by a rapid rise in rates. The significantly increased inflation rates in the Eurozone – mostly driven by higher energy and food prices – forced the ECB to reverse its interest rate policy. However, despite historical precedents of interest rate increases of a similar magnitude and speed (1989/1990 and 1994), the resulting drawdown in the bond market was unmatched in its extent: the price of a 10-year German government bond, for instance, lost more than 12% over the course of the year. While there was a positive carry in the more distant past that could counteract interest rate increases, this component was negative at -0.18% by the end of 2021.

Simultaneously, the war between Russia and Ukraine began in Europe, which weighted heavily on market sentiment. Moreover, an economic slowdown became increasingly evident, causing riskier assets (especially equities) to also experience significant losses. The resulting absence of diversification effects created the perfect storm for multi-asset investors in 2022. Besides the US dollar and direct or indirect commodity exposure, hardly any liquid asset class did not record a substantial price decline during that year.

Investors who had allocated shares of their SAA to private markets investments certainly performed better. The valuation of private debt in the senior/super senior segment remained largely stable and even the real estate market as well as private equity investments did not show significant declines in value. However, it must be mentioned that transactions were also absent in these last two segments and therefore developments should be cautiously analysed with regards to the significantly increased cost for real estate loans and the possible impact of the multiple contraction of public equities.

Bonds Deliver a Noticeable Return Contribution to the Overall Portfolio Again

[caption id="attachment_26684" align="alignright" width="300"] Associate, Investment Consulting: Dr Adrian Presse[/caption]

The good news is that fixed income securities are now priced at a fairer valuation and that the asset class offers a significant contribution to the overall portfolio performance again. This is, however, no regime change but rather a return to normality, which makes the asset class for investors far more attractive again for the upcoming years – at least at first glance.

The question remains whether the long-term correlation characteristics of bonds will return and if they will provide (again) stabilisation effects on overall portfolio risk, especially during periods of increased uncertainty. One answer to this will be revealed through the further development of inflation rates, as historically, in periods of high inflation, bonds have shown a stronger correlation with equities and vice versa.

The Investment Success Depends Significantly on the Strategic Asset Allocation

In terms of the SAA, the effects of recent developments are diverse. Higher expected returns alone do not necessarily result in a higher portfolio allocation. The associated risks and changing correlations as well as the developments of the risk/return profiles of all other investable assets need to be considered. A professional analysis and implementation of the SAA is therefore highly complex and must be treated individually. It is essential to model different historical and forward-looking market scenarios to thoroughly understand the risk/return characteristics of the allocation and, as a result, make adjustments where necessary. Additionally, the benefits of a risk overlay need also to be analysed.

Due to the increasing level of complexity, experienced investment consultants are increasingly involved to determine the optimal portfolio allocation and interpret the results for the investor as part of a comprehensive consulting process. When applied professionally, the SAA can influence up to 90% of the investment success. Long-standing experience, the use of robust estimation parameters for risk, return and correlations, as well as a realistic and accurate modelling of illiquid asset classes such as real estate or private debt are crucial factors for the level of professionalism and, hence, the long-term success of the investment strategy.

By Michael Kreibich Head of Investment Consulting at Berenberg & Dr Adrian Presse Investment Consulting at Berenberg


Banco Société Générale Moçambique: Established, Respected, Clear on Priorities, and Transparent in All its Dealings

Mozambique institution has a major European player as a shareholder — and an A rating from S&P...

With a presence in the country since 2015, Banco Société Générale Moçambique is a member of the Société Générale Group, one of the major players in the European Financial Sector.

[caption id="attachment_26692" align="aligncenter" width="900"] SGM Team[/caption]

The bank has achieved a coveted A rating from S&P, and is part of one of the three largest international groups present in Africa. The deep knowledge and specialist expertise acquired over more than a century on the continent has made BSGM the first choice to serve corporate, SME and individual sectors.

The commercial banking model developed by Banco Société Générale Moçambique is based on a foundation of excellent service to its clients, the specialisation of its advisors — and efficiency in day-to-day transactional banking, with a competitive edge and swift execution in international trades.

Established in year 1999 as União Comercial de Bancos Moçambique SARL (UCB), and later renamed Mauritius Commercial Bank Mozambique, Société Générale Group acquired the bank in October 2015. Société Générale, which holds the majority 65 percent stake, chose the new title: Banco Société Générale Moçambique.

The bank embarked on a process of transformation and expansion, growing resource and development units to create a fully-fledged SG subsidiary.

Clear Vision

Building and growing with its clients and customers, BSGM has developed innovative solutions for sustainable and inclusive growth in Mozambique. It prides itself on offering an excellent customer experience, reliability, expertise — and benefits from the solid backing of the established international reputation of the Société Générale Group.

"The bank has achieved a coveted A rating from S&P, and is part of one of the three largest international groups present in Africa."

With more than 150 years behind it, the group has built on solid values: Innovation, commitment, responsibility, and team spirit. The Banco Société Générale Moçambique team has taken on these values, using them to create its foundation. It has worked well for all concerned, building innovative and sustainable relationships and solutions for the development of Mozambique, working side-by-side with the client base and partners.

The man at the helm of Banco Société Générale Moçambique is chief executive Ridha Tekaïa. He is a multinational expert in the financial sector, having held many senior positions over the past 30 years. He held the CEO post at Reunion, Mayotte, in Moldova, and in Algeria. He was also commercial head director at the Czechia office, and the head of corporate affairs in Cameroon.

Tekaïa was named CEO of Société Générale Bank in July 2022, and is supported by a strong and dedicated management team.


ESG Leadership Trends, from ‘Woke Capitalism’ to ‘Quiet Sustainability’

This is no time to get distracted, argues Fabrizio Ferraro — sustainable impact will bring the lasting change we need...

As world leaders and business titans gathered at Davos this year for the annual World Economic Forum, ESG was at the top of the agenda — albeit framed within the theme of “Rebuilding Trust”.

[caption id="attachment_26695" align="aligncenter" width="900"] Author: Professor Fabrizio Ferraro[/caption]

The title is a nod to a challenging global landscape that includes a growing backlash to social and sustainable indicators across the financial sphere. Even as WEF members made the case for a “green, digital and inclusive economy”, Republicans in New Hampshire were proposing a ban on using ESG criteria to attract state investment. Critics in Europe, meanwhile, have cast doubt on the viability of fair regulatory ESG metrics. Blackrock, in a departure from Larry Fink’s usual championing of ESG, intends to emphasise “financial resilience” in its talks with companies. Barclays has announced a Sustainable Banking Group, combining teams from the Sustainable Capital Markets and ESG divisions.

From political resistance to emerging EU regulation, the debate around the deployment of ESG responsibilities remains febrile. As the business world continues to face the fallout, four trends are likely to influence ESG leadership.

New EU Disclosure Laws

With the EU’s Corporate Sustainability Reporting Directive coming into play in 2025, a broader range of corporates and SMEs will have transparency thrust upon them. This should narrow the gap between sustainability leaders and slackers.

It will also provide structure for norms on sustainability reporting to reign-in greenwashing. The introduction of the EU Sustainable Finance Disclosure Regulation in 2021 has sparked a decarbonisation of investment portfolios. EU funds claim to make investment decisions based on sustainability criteria.

Quiet ESG

This is a response to politicisation. From US Republicans pulling $1bn from BlackRock over ESG investing concerns to the legal feud between Florida Governor Ron DeSantis and Disney, multinational corporations are finding themselves in the crossfire of a Right-wing backlash against so-called “woke” capitalism. This is likely to continue until the US presidential elections.

But this distracting wave of anti-ESG sentiment won’t move the needle at a time of such seismic change. Climate change continues to be the most common reason for portfolio exclusions. Despite stellar profits due to the Russian invasion of Ukraine, fossil fuels are increasingly being shunned.

Nonetheless, anti-ESG noise has prompted a more discreet approach from those asset managers inclined to use ESG as a ruse to market funds.

Decarbonisation

Corporations will be stepping-up their game up here. Major players are re-organising their core business around decarbonisation, and the need for a positive societal impact.

Schneider Electric has undergone such a transformation. It began life in 1836 as an armaments company — and has been reborn as a world-leader in sustainability and efficiency management. Finland-based Neste has moved from oil giant status to the world’s largest producer of renewable aviation fuels. Even Amazon, with its contentious track record on labour issues, is ahead of schedule on its plans to operate with 100 percent renewable energy by 2025.

UN Blueprint

ESG champions will increasingly align with the UN's 17 Sustainable Development Goals (SDGs). Danish biotech Novozymes was one of the first to do so, amid increased demand for sustainable bio-solutions. Madrid-based Acciona Energia is leading a call to repower Europe’s ageing wind farms. It, too, is on the SDG path, declaring that “social progress, environmental balance and economic growth go hand-in-hand”.

It's a policy that allows companies to resist short-term temptations. The SDGs provide them with a North Star in troubled times.

As the Davos elite are no doubt aware, there are no quick fixes in the realm of ESG. Against the backdrop of a competitive and divided market, personal interests are naturally protected — regardless of the greater good. But the WEF highlighted the need for open, transparent conversations as a path away from crisis-driven dynamics.

With the fight to keep global warming below the 1.5°C mark reaching a critical stage, businesses and investors must double-down on ESG commitments. This is no time to get distracted. Let’s co-operate and use sustainable impact as a lever for lasting, positive change.

Professor Fabrizio Ferraro is head of the Strategic Management Department at IESE Business School, and academic director of IESE’s Institute for Sustainability Leadership.


Byblos Bank Europe (BBE): A Niche Bank Getting Bigger and Better

Belgium’s BBE has old-school values and a modern take on operational excellence.

In the global arena of international finance, always aspiring to broader reach, there exist beacons of expertise spreading the light of operational excellence, speed, convenience and availability.

[caption id="attachment_26699" align="aligncenter" width="900"] Byblos Bank Europe (BBE)[/caption]

Founded in 1976, Byblos Bank Europe (BBE) achieves all this via a profound understanding of its client base — and an enviable position among the niche banks in Europe’s emerging markets. It has built on a heritage of international trade finance, differentiating itself from the competition by its intercontinental experience.

BBE connects organisations seeking local insights with specialist knowledge of the ever-changing dynamics of international commerce. With banking licences to operate in Belgium, France and the UK, BBE considers its international team its most vital asset. This makes it feel “at home” in the markets it operates in, facilitating personal dialogue and continuing its role as a “listening ear for the needs of its clients and network”.

Trade finance is at the core of BBE operations, an integral component of its business. Local knowledge cultivated by BBE over the years has served its clients well across Europe. The bank takes rightful pride in that.

“Being recognised as the Best International Trade Finance Bank in Europe for two consecutive years (2022 and 2023) is testament to our unwavering commitment to our clients and our mission,” says CEO and MD Victor van der Kwast. “The heritage we carry is not just due to the passage of time. We have made our bank’s name synonymous with reliability and proficiency in London, Paris and Brussels.”

"Hard work has brought BBE to its present position, braced for growth with a focus on day-to-day operations, actions, and delivery. The core pillars of BBE are client-centricity, striving for growth via solid governance and management, and fostering a culture of innovation."

BBE saw 2023 as a pivotal year, taking many strides. The primary focus is investment in optimisation, structure and digitalisation in Europe, positioning BBE on the international map for digitally driven products and services — combined with the personal touch. BBE is building on its efficiency, the proximity to its network, profitability, and scale.

The bank maintains momentum by leveraging the "digital, yet personal” concept to its greatest advantage. The official mantra: "Get it right — first time, every time.”

Hard work has brought BBE to its present position, braced for growth with a focus on day-to-day operations, actions, and delivery. The core pillars of BBE are client-centricity, striving for growth via solid governance and management, and fostering a culture of innovation. The DNA is visible in the creative way BBE integrates the digital aspect of its personal- and proximity-based solutions into the client base.

The bank continues to diversify through expansion and focus; BBE’s comparatively modest size does not allow it to be all things to all people. “We are selective and focused,” says van der Kwast. “BBE positions itself as a focused financial institution bucking the prevailing trend of extensive de-risking and stepping away from emerging markets.

“BBE’s strategic focus is on being a bridge with European and emerging markets,” the chief executive says, “with a defined risk-appetite for clients and parties in various countries. This allows us to fill the need for a European-based bank in Asia, the Middle East and Africa.”

BBE believes that its position can provide benefits that extend beyond growth and client satisfaction. Integrating ESG considerations into operations has put it at the forefront of its priority areas, underscoring a focus on long-term value creation and responsible business conduct. “BBE has started to reflect on its business activities and its impact in the markets it operates,” says van der Kwast “We help businesses to conduct their trade activities. This drives our responsibility to facilitate counterparties' activities by providing internationally acceptable services.”

This includes engaging with countries in a manner that goes beyond the transactional, fostering sustainable and responsible relationships. “Filling that gap is what BBE has achieved, while adding value to it.” This is especially true as BBE engages in short-term deals and is mostly focused on consumer goods and essential food and agriculture products, and relevant services in its trade-finance operations.


BBE’s CEO & MD Victor van der Kwast: AI is Certainly Coming to Banking Sector — It’s All About Integration

BBE’s CEO and managing director Victor van der Kwast initiated an all-encompassing, digitally focused transformation journey in 2020.

It has been challenging and intense for BBE at times, but the trajectory has been marked by impressive impacts on efficiency and growth across its three branches.

[caption id="attachment_26702" align="aligncenter" width="900"] BBE’s CEO & Manading Director: Victor van der Kwast[/caption]

Despite a wealth of traditional banking experience, van der Kwast identifies as an entrepreneur — and one who knows how to heed his clients and address the needs of his organisation. His day-to-day role is infused with an almost “start-up spirit”, and an unlimited mindset to help navigate the path.

The chief executive remains dedicated to steering a course towards steady transformation.

Reflecting on the markets that BBE chooses to work with, van der Kwast admits that the bank is only now netting the results — embracing the transformational trend of the digital world. The emergence of AI technologies can definitely be beneficial for a bank and fits BBE as a way to pursuit its efficiency and innovation, the CEO says.

“I am immersed in the realm of AI-backed tools, witnessing the impactful and revolutionary changes they bring to the everyday activity of the workforce.”

“But,” he adds, “I believe there are inherent limitations to the technology.” While harnessing AI can be beneficial, it must be integrated into daily routines. “The limitations touch those aspects of the business that create value by maintaining the human connection,” says van der Kwast.

“Building meaningful networks and connections with digital tools is not new, but it can’t yet replace the real ‘classic’ conversation or face-to-face interactions. This is a strategic opportunity that organisations need to consider when deciding where and how best to incorporate AI into their everyday.”


Wilhelm Celeda: Charting the Future — with Clients at the Very Centre of Our Universe

Wilhelm Celeda, chief executive of Kathrein Privatbank, on the forces and values galvanising change at the institution.

In an era defined by digital transformation, staying ahead requires continuous innovation and a keen understanding of evolving customer needs.

[caption id="attachment_26705" align="aligncenter" width="900"] CEO: Wilhelm Celeda[/caption]

At Kathrein Privatbank, we’ve taken major strides to revolutionise and streamline the banking experience — and our clients are at the centre of any transformative advance.

Digitalisation is the cornerstone of a superior customer experience, and we’ve long been committed to that. Our focus has been on developing tools and services to provide our clients with cutting-edge solutions. In response to the changing financial services landscape, we offer smooth and efficient digital securities trading. Our CommuniKATE platform has become integral to this.

Active Asset Management

In times of poly-crises, the benefits of active asset management swiftly become evident. Kathrein Privatbank constantly adapts strategies to navigate emerging complexities and uncertainties, ensuring resilience and responsiveness. Since mid-2023, our relationship managers (RMs) employ a state-of-the-art portfolio analysis tool: PIA.

PIA simplifies complex calculations, allowing for the building, optimisation, and comparison of portfolios. It facilitates real-time portfolio checks, identifying weaknesses — and opportunities. In client interactions, PIA enables RMs to respond promptly to spontaneous input, ensuring our advice is perfectly aligned with each client's risk profile.

We’ve enhanced our product offerings with a new dividend strategy on an individual securities basis. This combines criteria focused on dividend potential and quality, emphasising broad diversification — even in more defensive equity strategies. Our commitment to innovation extends to the Kathrein Private Markets Platform, allowing clients to effortlessly, digitally, and flexibly invest in global private equity markets.

With exclusive access to a curated selection of international funds, the platform brings to bear a rigorous selection process conducted by our expert private equity team and our partner, Moonfare.

Holistic Wealth Management

With Family Konsult, we consolidate our expertise in succession planning, family and entrepreneurial wealth, and foundations. Our holistic consulting approach aids clients in structuring, passing on, or dedicating their wealth to philanthropic causes. The recently extended Family Konsult team combines discretion, expertise and experience to give clients comprehensive support and peace-of-mind.

Talking of our holistic approach, we must make mention of our ongoing commitment to sustainability. That is unwavering, and this year, we’re proud to offer clients the opportunity to acquire LBMA-certified sustainable gold — without additional charges. Kathrein Privatbank is one of the first private banks to provide such a service, aligning with the growing demand for environmentally conscious investment options. Above and beyond that, we’ve expanded the already strict ESG standards that apply to more than half of all Kathrein Investment Funds.

Kathrein Privatbank's journey of continuous evolution has been guided by a commitment to excellence, sustainability, and client-centric solutions. We remain dedicated to providing unparalleled financial services.


Raise Your Glasses, Investors: Your Profits Could Follow

Whisky is emerging as a neat (sorry) alternative investment; 373 percent over 11 years, anyone? Aaron Damiano Sparkes reports...

The whisky sector in 2022 saw the sort of result more traditional investment sectors can only dream of.

It saw double-digit growth. But how does the golden tipple measure up against “less alternative alternatives” such as gold, fine art or crypto?

Rising interest rates, surging inflation, and a lingering cost-of-living crisis have all contributed to volatile global markets. Unsurprising, then, that savvy investors are turning from the stock exchange to seek more unusual targets. Scotch whisky has been remarkably resistant to the economic downtown — and continues to outperform traditional investments, say experts.

The market does appear in rude health. The Global Whisky Market Overview 2023-2028 found that sales are on track to reach £99.48bn by 2028, from £69bn in 2022.

Alternative Investments

This term essentially covers everything that doesn’t fall into traditional categories: stocks, bonds, or cash. By definition, the assets are varied in nature; they can include real estate, commodities, and collectibles — often referred to as “passion investments”. Think art, antiques, vintage cars and motorcycles — and, of course, Scotch.

The reasons people choose to invest in alternative assets are as diverse as the assets themselves. Some are looking to diversify their portfolio; others are seeking to balance traditional investments with tangible commodities. Others still are excited about an emerging sector, and keen to get their foot on the ladder.

"Scotch whisky has been remarkably resistant to the economic downtown — and continues to outperform traditional investments, say experts."

All investors hope for strong returns, and sometimes, they get them. In 2022, a cask of Ardbeg whisky sold at auction for a tidy £16m — a record. And while cask investment is typically viewed as a long-term asset, knowledge and experience are prerequisites before getting involved.

Investors have a slew of opportunities to shape their portfolios according to budget, timeline, and interests. Regardless of the current economic landscape, some investments are riskier than others. Gold has seen wild fluctuations throughout the year, sometimes almost daily. Cryptocurrencies have been up and down in the past 12 months, leading to a degree of investor caution. Non-fungible tokens (NFTs) have had a dramatic fall since their inception in 2021.

Even the fine art market, traditionally a solid choice for the ultra-wealthy, has witnessed erratic shifts. Damien Hirst, one of the most successful living artists, has seen the price index for his works fall by 60 percent since their peak.
Scotch whisky, meanwhile, has continued an upward trajectory — worldwide. The latest Knight Frank Luxury Investments Index shows that rare bottles of Scotch continued to be the 10-year leader of investments-of-passion — with 373 percent growth since 2012. That’s 91 percent more than fine art over the same period.

The Scotch Whisky Association reported that global exports of Scotch exceeded £6bn for the first time in 2022. That’s 53 bottles exported every second. And while these eye-watering stats refer only to bottles of the spirit, they are historically linked to “the spirit of the cask” from which it came.

This is one of the key advantages of investing in a cask, because the contents continue to age, and the shape and size of a cask, and what it was made from, have a profound effect on the maturing liquid within.
And this is just the beginning, according to the BC20 Whisky Cask Index. Casks have “significantly outperformed all the traditional investment options in recent years”, it says, with the market predicted to grow by 14.95 percent in 2022.

Demographic Changes

Another factor to be considered is the changing demographic of cask investors. The perception that whisky investing is for gentlemen “of a certain age” is outdated. Millennials and Gen Z now make up more than 36 percent of cask buyers — and women comprise 7.14 percent.

This fresh optimism, coupled with the surging popularity of Scotch across international markets, has established cask investment as a top-performing alternative asset. It’s also one that’s expected to become even more desirable in coming years.

By Aaron Damiano Sparkes Founder and Managing Director of Whisky 1901


Vector Casa de Bolsa: Five Decades Driving the Growth of the Mexican Economy

As Vector Casa de Bolsa approaches its 50th anniversary, it is time to reflect on the company’s remarkable journey and enduring impact on the country’s economy. Vector Casa de Bolsa has consistently demonstrated its commitment to excellence, innovation, and collaboration, helping shape the financial landscape of Mexico and contribute to economic growth.

[caption id="attachment_26714" align="aligncenter" width="900"] President & CEO: Edgardo Cantú[/caption]

A Legacy of Trust

Established in 1974, Vector Casa de Bolsa quickly made a name for itself as a leading player in the Mexican financial sector, earning a reputation for high standards of service and providing clients with comprehensive financial solutions. The company’s strong financials, diversified business model, and experienced management team have consistently attracted investors, helping to boost economic activity and promote market stability.

At the heart of Vector Casa de Bolsa’s success lies its diversified business model, which encompasses a range of services catering to the needs of institutional and retail investors. Vector Casa de Bolsa, the only 100 percent Mexican financial institution, operates in 11 countries.

Its brokerage arm provides access to a wide array of financial instruments, while its investment banking division facilitates mergers and acquisitions, underwriting, and other transactions that drive economic growth. Vector Casa de Bolsa’s asset management arm offers a variety of products tailored to various risk profiles and investment objectives, helping individuals and institutions achieve their long-term financial goals.

A Commitment to Innovation & Collaboration

Vector Casa de Bolsa has always been at the forefront of technological innovation, embracing new technologies to enhance its services and provide a superior client experience. The company has invested heavily in cutting-edge platforms and applications that provide real-time market data, trading tools, and investment analysis: empowering clients to make informed decisions and manage their portfolios effectively.

Vector Casa de Bolsa is the only brokerage firm to have an open innovation ecosystem comprising 6,000 fintech companies from 32 countries across four continents.  The goal of the ecosystem is to develop partnerships that accelerate digital business.

Significantly, this is the only brokerage firm to have developed its own metaverse as a meeting point for the world’s top innovators.

Vector Casa de Bolsa has a strong focus on Artificial Intelligence, its initial product being SofIA, the first virtual assistant fully developed with generative AI in the LatAm brokerage sector.

Vector Casa de Bolsa has also played a pivotal role in fostering collaboration and partnership within the Mexican financial community. The company has actively participated in industry initiatives and associations, working alongside regulators, other financial institutions, and all participants to promote market development, enhance transparency, and protect investor interests.

Advancing Corporate Social Responsibility

PCR Verum considers that Vector observes ESG factors at a level above average, highlighting that year after year it seeks to increase its positive impact on society. Favorably, over the past eighteen months, the brokerage firm has already consolidated the formation of an ESG leadership team with the aim of fully incorporating these principles at the institutional level, seeking to impact favorably all stakeholders related to the company (primarily its employees and clients). This leadership team, made up of members representing all areas of the brokerage firm, has generated a materiality study that allowed it to establish 12 priority topics to strengthen the Vector25 institutional strategy.

While the ESG leadership team works hand in hand with the Brokerage Firm's Management Committee to communicate everything related to the ESG topic, it also collaborates with the planning area to define ESG KPIs and thus keep a precise track of the organization's progress towards integrating these topics.

On the other hand, Vector Asset Management, responsible for the management and commercialization of institutional investment strategies (funds and investment portfolios), is currently a member of the Green Finance Advisory Council (CCFV) in order to promote the professionalization of participants in the financial system in green finance topics.

A Driving Force for Economic Growth

Throughout its 50-year history, Vector Casa de Bolsa has played a significant role in driving the growth of the Mexican economy. The company’s expertise in investment banking and asset management has also helped to attract foreign investment, and channel funds into the country, thus creating jobs and stimulating economic activity. Vector Casa de Bolsa’s commitment to providing dependable financial advice and guidance to businesses and individuals has also contributed to improved decision-making, increased investment, and overall prosperity.

A Symbol of Stability and Resilience

When Mexico faced economic challenges and periods of uncertainty, Vector Casa de Bolsa demonstrated its resilience and commitment to provide stability and support to financial markets. The company’s strong financial position, experienced management team, and focus on innovation have allowed it to navigate difficult times and emerge stronger, continuing to play a vital role in supporting the Mexican economy.

Industry Recognition

The many domestic, regional, and global awards made to Vector Casa de Bolsa reflect its powerful industry standing. Tributes over the years include those from Bloomberg, Thompson Reuters, Mundo Ejecutivo, and Consensus Economics, Morning Star. In 2023, Vector Casa de Bolsa was named Most Innovative Financial Broker Mexico by Capital Finance International.

A Legacy of Growth

As Vector Casa de Bolsa embarks on its next 50 years, it is poised to build on its legacy of growth and innovation, driving economic development and contributing to the continued well-being of Mexico. With its unwavering commitment to excellence, its dedication to clients, and its wholehearted support of the national economy, Vector Casa de Bolsa is well-positioned to play a major role in shaping the financial landscape of Mexico for another five decades and more.

The origin of Vector began in 1974 with the founding of the brokerage firm "Sociedad Bursátil Mexicana" (then known as Soburmex). Fourteen years after its founding, investors from Monterrey led by Alfonso Romo acquired the company in 1987, thus evolving into Vector Casa de Bolsa, a concept that indicates direction, meaning, and magnitude. Vector's presence in the country began strongly in the 1990s, with very positive results in its performance and forming the foundations and values that the brokerage firm represents today, through a solid network of wealth promoters and collaborators committed to the country's economic growth.

Facing the new millennium and the challenges and opportunities it posed for the company, Edgardo Cantú Delgado was appointed CEO by Alfonso Romo in 2003 and upon entering, he designed a strengthening plan. Under Edgardo Cantú's leadership, Vector increased its performance, strengthened its stock market operations, and restructured its corporate operations at the national level. In addition, Vector focused on international growth and the mission of becoming a global company.

In its early days, Vector was a compact company, with around 40 people on its payroll, consisting of the General Management, a small Promotion network, the IT area, and Human Capital; today, Vector has more than 1,000 employees nationwide and internationally, operates in 11 countries, its custodial assets exceed $15 billions USD in a consolidated manner, and represent the investments of more than 60,000 clients in 20 countries around the world.