Global Banking and Finance Review Issue 12

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Issue 12


Desjardins Private Wealth Management Private Wealth Done Differently Alain Goulet, Regional Vice-President and Gilbert Arsenault, Regional Vice-President

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EM E A | A sia | A mer ic as

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Chairman and CEO Varun Sash Editor Wanda Rich email:



Editorial Coordinator Sachin MR Web Development and Maintenance Anand Giri Head of Distribution & Production Robert Mathew Head of Operations Sreejith Nair Project Managers Megan Sash, Amanda Walker Video Production and Journalist Phil Fothergill Graphic Designer Jessica Weisman-Pitts Business Consultants Monika Umakanth, Rick Saikia, Stefy Abraham, Sara Mathew, Amy Johnson, Raaj Sebastian, Yeshwanth Rao, Neha Business Analysts Rhea Augustine, Samuel Joseph, Peter Pereira Market Research Analyst Varshitha K R Accounts Joy Cantlon, Quynh Quan Advertising Phone: +44 (0) 208 144 3511 GBAF Publications Ltd Kemp House, Unit 2, 7 Tarves Way, London, SE10 9JP. United Kingdom Fax: +44 (0) 871 2664 964 Email:

I am pleased to present Issue 12 of Global Banking & Finance Review. For those of you that are reading us for the first time, welcome.

In our cover story this issue Alain Goulet, Regional Vice-President and Gilbert Arsenault, Regional Vice-President at Desjardins Private Wealth Management provide us with a look at the ways Desjardins does private wealth differently. In this edition you will also find engaging interviews with leaders from the financial community and insightful commentary from industry experts. We discuss the importance of social responsibility and BNPs commitment with Anjuli Pandit, Head of UK Corporate Sustainability, BNP Paribas. We talk about innovative and sustainable banking in Africa with Seyi Kumapayi, Chief Financial Officer at Access Bank and take a look at the investment landscape in Kuwait with Hamad Ahmed Al-Ameeri, Chairman, National Investments Company. We strive to capture the breaking news about the world's economy, financial events, and banking game changers from prominent leaders in the industry and public viewpoints with an intention to serve a holistic outlook. We have gone that extra mile to ensure we give you the best from the world of finance. Send us your thoughts on how we can continue to improve and what you’d like to see in the future. Happy reading!

Global Banking & Finance Review is the trading name of GBAF Publications LTD Company Registration Number: 7403411 VAT Number: GB 112 5966 21 ISSN 2396-717X. Printed in the UK by The Magazine Printing Company The information contained in this publication has been obtained from sources the publishers believe to be correct. The publisher wishes to stress that the information contained herein may be subject to varying international, federal, state and/or local laws or regulations. The purchaser or reader of this publication assumes all responsibility for the use of these materials and information. However, the publisher assumes no responsibility for errors, omissions, or contrary interpretations of the subject matter contained herein no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the publisher Image credits:

pg 82-83 Ratnakorn Piyasirisorost/Moment/Getty Images” pg84 pixelfi/E+/Getty Images”

Wanda Rich Editor


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inside... BANKING


Are commercial banks ready for the future? Russell Bennett, Chief Technology Officer at Fraedom.


Using AI to Grow Relationship Businesses in Banking

Greg Michaelson, VP, General Manager of Banking, DataRobot


Mobile Video Banking: Bridging the Gap From Brick & Mortar to Digital

Gene Pranger, CEO of POPin Video Banking Collaboration


Why Banks Are Lagging On Open Banking Jo Howes , Commercial Director, CREALOGIX Group



The Rise of the Robot - how to supercharge your skills to outsmart AI Carol Gaskell, Managing Director of Full Potential Group


3 Ways That Brands Can Leverage Live Engagement on Social Media Priya Iyer, Chairman & CEO, Vee24


Office Design for Millennials


The Far-Reaching Consequences of GDPR

Ian Brough, Managing Director, Building Interiors

Nathan Snyder, US Partner, Brickendon



Counting the cost of expenses


Automated Reconciliation is a Stepping Stone to the Digital Financial Future

Johnny Vowles, CEO and co-founder, Expend


Legal Opinions – it is time to break the cycle of remediation


Ten Biggest Legal Mistakes Tech Start-ups Make

Akber Datoo , Managing Partner, D2 Legal Technology Michael Wood and Annie Bradwell, Senior Consultants, D2 Legal Technology

Karen Holden is Founder of A City Law Firm

Renata Sheyner, Senior Product Manager, Fiserv


Exploring new frontiers: how payment certainty propels businesses across borders

Sean Norris, Executive Vice President EMEA & APAC, Accuity Meredith Wisniewski, Portfolio Marketing Manager, Accuity

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The Transaction Security Landscape: New Mandates, New Challenges

Ilya Dubinsky, Head of the CTO at Credorax



INVESTMENT Harnessing the Power of AI to Predict Market Sentiment


Oliver Bertold, Yukka Lab,Chief Business Development & Co-Founder at YUKKA Lab

Common Misconceptions Regarding Preferred Stock Create Risk of Costly Mistakes


Gardner Davis, Partner, Foley & Lardner LLP Danielle Whitley, Partner, Foley & Lardner LLP


Michael Hinton, Chief Strategy and Customer Officer at Allegro Development Corp.

Re-Thinking Intergenerational Support




Managing LNG Portfolio Risk in a Diverse Global Energy Market


Sarah Paton, Associate and Tax Expert, Irwin Mitchell Private Wealth

Enhancing the Effectiveness of P&C Claims Organisations in the Digital Era Bertrand Lavayssiere, Managing Partner at International Financial Management Consultancy, zeb



Digital identity: The foundation for trusted transactions in financial services Benjamin Jessel, Fintech Advisor, Capco


Top tips for securing your financial institution Colin Williams, Chief Technologist, Networking and Security, Computacenter



The global financial industry needs to speed up its fraud detection through analytics Guy Muller, VIP Engineering, RSD S.A.



Trade Opportunities in Asia


Argentina returns to square one. Where to now?

Siddharth Shankar, CEO, Trails Trading

Juan Manuel Pazos, Head Strategist, Puente


MiFID II – A hidden sales opportunity?

James Cusack, Global Head of Sales, Caplin Systems



Trading made simple with EGE Investment

Filip Adler, CEO of EGE Investment provides an inside look at EGE Trading Academy and the training options available.


Trade digitisation could trigger economic diversity in the MENA region Ian Kerr, CEO Bolero International.

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inside... THE INVESTMENT LANDSCAPE IN KUWAIT 120 Hamad Ahmed Al-Ameeri, Chairman, National Investments Company (NIC)

120 WORLDWIDE SOCIAL RESPONSIBILITY 84 Anjuli Pandit, Head of UK Corporate Sustainability, BNP Paribas

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INNOVATIVE AND SUSTAINABLE BANKING IN AFRICA 106 Seyi Kumapayi, Chief Financial Officer, Access Bank


PRIVATE WEALTH DONE DIFFERENTLY DESJARDINS PRIVATE WEALTH MANAGEMENT 34 Alain Goulet, Regional VicePresident, Desjardins Private Wealth Management Gilbert Arsenault, Regional VicePresident, Desjardins Private Wealth Management

Cover Story

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Digital identity: The foundation for trusted transactions in financial services

The fintech revolution has been a boon to consumers, who have benefited from increased access to financial services, lower transaction costs, and far less friction than they would have encountered in visiting a physical bank branch or even calling a customer service hotline. But, even with this wave of fintech innovation, the identity problem remains. That is, how can financial institutions assert with confidence that an individual or organisation they are transacting with is who they claim to be? That enduring question is at the foundation of trusted transactions in financial services.

THE NEED FOR DIGITAL IDENTITY In a world where the majority of financial transactions are moving to a digital channel, digital identity will have enormous consequences. The ability to confirm that a counterparty really is who they claim to be is a primary component of transaction legitimacy. Even in today’s digital economy, however, a consumer looking to open a bank account or apply for a mortgage often must provide physical documents in order to verify their identity and create a record with their financial institution.

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These legacy verification procedures are often expensive for service providers, inconvenient for users, and timeconsuming for all involved. This is particularly true for markets in which traditional identity documents and credentials are hard to come by. Verification is also, in many cases, repetitive and localised to a particular service. That is, a customer must often undergo repeated checks of the same information, often requiring in-person appearances with physical documents to access different services. By the same token, financial services providers are left with the burden of secure storage or destruction of “personally identifiable information” (PII), presenting additional potential security and compliance issues. This enduring reliance on physical identity verification also presents an especially targeted challenge for emerging fintechs. These organisations typically do not have a physical branch network and are aiming to deliver a direct-to-consumer online- or mobileonly experience, highlighting the urgent need for effective identity verification in digital channels. Financial institutions also rely upon effective identity processes to establish counterparty trust. Confirming trustworthiness establishes a level of confidence that a customer or partner organisation will actually carry out their obligations as mutually agreed in a given transaction. When counterparty trust is low or difficult to confirm, some form of recourse (either legal or through holding collateral) can

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provide protection in the case that one of the parties does not follow through on their obligations. Either way, an accurate evaluation of counterparty trust is contingent upon an accurate understanding of counterparty identity. IDENTITY CHALLENGES FOR FINANCIAL INSTITUTIONS •

Despite the unprecedented technological development and innovation in the financial services sector, financial institutions still face a number of considerable challenges in integrating digital identities into their services. Digital identity issues in the financial services space fall into a few major categories:

Administrative costs, including manual verification, legacy record storage, and customer service costs.

Service delivery challenges, including inability to tailor service offerings, inaccurate pricing, and customer exclusion.

Risk and compliance challenges, including escalating KYC and AML costs as well as navigating new regulatory regimes like the E.U.’s General Data Protection Regulation (GDPR) and revised Payment Services Directive (PSD2).

Theft and fraud, including escalating new account fraud, account takeover, and synthetic identity fraud.


However, there are opportunities to address each of these challenges through effective identity ecosystem development. Consider that under the current systems, customers must reshare the same identity information every time they want to do something as basic as opening a bank account or applying for a credit card. As improvements in digital identity become more universal, these additional steps should become a thing of the past, as banks gain access to decentralised and verifiable forms of identity that allow them to accept each other’s approvals. IDENTITY AND TRUST IN FINANCIAL INSTITUTIONS Beyond the direct revenue, compliance, and fraud considerations driving financial institutions to implement digital identity processes, identity is also a foundational component of trust and safety. Connected customers, fatigued by 2017’s unprecedented personal data breaches and able to select from a growing array of innovative financial products, make their choices based on trust. For traditional financial institutions, this means that trust is a core product offering – as quantifiable and impactful as any credit vehicle. Effective digital identity processes underpin the building of trust with two distinct constituencies: customers and regulators. With customers, effective digital identity processes have the potential to minimise friction in user experience and

enhance data security, both key pillars of trust and safety.1 For example, new research indicates that customers are more likely to trust financial institutions that use advanced technology like biometrics for identity verification and authentication.2 In fact, over 40% of consumers would refuse to use a digital financial service that is not secured by some sort of biometric authentication.3 Also, improving user experience and security through reliable and frictionless digital identity creation, verification, and authentication procedures can itself be a differentiator in the increasingly crowded market for digital financial services. Building trust with regulators is a related, but substantially more complex process. 2018 may prove to be a turning point for the regulation of personal data in markets around the world, and financial institutions must be proactive in building their identity data stewardship infrastructure to avoid crippling fines or sanctions under GDPR, PSD2, the Chinese Cybersecurity Law, or any of the other emerging data governance regimes under which they may fall. Each of these statutes requires financial institutions to have thorough knowledge of the personal identity data they collect, the business processes for which it is used, and the manner in which it is stored. FINANCIAL INSTITUTIONS AND THE FUTURE OF DIGITAL IDENTITY For trusted transactions to take place in the digital economy, institutions must invest in constructing effective digital identity infrastructure throughout the customer identity lifecycle. While this will require significant attention to mitigating

the identity challenges outlined above, it also means that financial institutions are uniquely positioned to support the development of digital identity ecosystems across sectors. Traditionally, the financial institutions have been a key component of an identity architecture from the perspective of enabling merchants and customers to confirm that they are who they say they are. For example, in credit card networks, both merchants and customers are validated by banks. However, the financial services landscape is increasingly moving toward a less tightly-bound ecosystem. For instance, the frequency of cross-border transactions is increasing, involving customers and client organisations who are members of non-domestic banks with different verification standards. Peer-to-peer lending organisations and non-depository payment providers are proliferating, such that there may be no traditional banks involved in a financial transaction. Gaps in the existing digital identity structure are becoming a significant constraint, particularly as fintech organisations continue to enter and disrupt the market. This is where financial institutions have a potential role to play. These institutions are trusted with processing large amounts of personal data and have been performing an identity broker role in some form for some significant time. Financial institutions, therefore, have the opportunity to offer identity verification, authentication, and federation services to organisations both within the financial services sector, and even in cross-sector use cases.

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Indeed, in some markets, new nationwide identity infrastructure layers are being constructed, driven primarily by financial institution participation. The U.K.’s GOV.UK Verify system, for example, allows users to access public sector services online after their identity is verified by a private company of the user’s choice, like Barclay’s or Experian. Institutional liability and trust risks remain, however, as this business model continues to mature. If Bank A relies on Bank B’s attestation of a customer’s identity, for example, and that initial attestation is later determined to have been insufficiently thorough, Bank A could feasibly have recourse to pursue damages for any fraud committed in some jurisdictions. At a time when financial institutions are receiving unprecedented fines for lax customer due diligence, this could be an area in which some organisations have a low appetite for risk.

Effective digital identity systems are necessary for institutional survival. In today’s digital economy, trust in traditional financial institutions is falling, and customers are less likely to perceive differentiation between banks based on product offerings alone. A more educated generation of financial consumers will choose to interact with financial institutions they trust. Robust digital identity processes build trust and safety with users and regulators by enhancing user experience and security. Both will be required for banks to stay relevant.

With new regulatory regimes, data access is no longer a competitive advantage, but trusted identity services can be. 2018 will be a year of fundamental shifts in the regulatory landscape. Barriers to entry for innovative fintechs are falling, but the standards for collecting, sharing, and storing identity data are more stringent than ever. Banks are no longer the sole custodians of customers’ economic destiny. Establishing trust through frictionless and secure digital identity processes will be key for customer retention.

Financial institutions are uniquely positioned to underpin the digital identity ecosystem. As developing identity ecosystems like those in the U.K., have demonstrated, financial institutions are uniquely positioned to drive the development of digital identity ecosystems that extend across the public and private sectors. Demand for effective digital identities is growing in nearly every consumerfacing industry, and financial institutions can play a key role in providing the identity services as the foundation of trusted transactions for years to come.

LOOKING AHEAD A few core lessons will help financial institutions adapt to the reality of the connected economy and lead the evolution of digital identity: •

Legacy, paper-based identity processes are expensive and unreliable. Traditional identity creation, verification, and authentication procedures in particular are costing financial institutions not just money, but also time, trust, and competitive edge. Innovative identity solutions, including advanced authentication mechanisms like biometrics and behavioural analytics, improved internal data stewardship, and enhanced digital and mobile service offerings, can significantly reduce administrative costs, bolster security, and improve customer engagement.

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Without effective identity processes, clients and regulators lose trust, financial institutions lose money, and legacy institutions lose out to the alternative financial services players emerging as part of the fintech wave. But, within the identity challenge lies an immense opportunity for financial institutions to build the infrastructure for future crosssector digital identity ecosystems.


Benjamin Jessel Fintech Advisor Capco

1 OWI, 2018, “Five pillars of trust and safety,” One World Identity, January 5,

2 Sposito, S., 2018, “Two-factor authentication: even Google

struggles to enroll users,” Javelin Strategy, February 5, http://

3 Security, 2017, “Consumers trust biometrics for mobile banking and payments,” May 6,

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Harnessing the Power of AI to Predict Market Sentiment Effectively using AI requires adventurous leadership AI is the buzzword on everyone's lips right now and with good reason—according to a recent survey by Finextra/OpenText of financial industry professionals, more than half of the responders felt that AI was mainstream now or would be within two years. AI is already in use in many areas of finance from bank apps to fraud detection, but these are a fraction of the possible applications we can foresee and there are many we haven't imagined yet. If we're going to make the leap to using AI effectively in the financial business sector, executive sponsorship is going to play an important role; in the same survey, 39% of responders put it in the first or second position. As leaders, it's time to do more than talk about AI; it's time to understand AI and some of its applications. While we still don't know the full potential of AI, we seem to be well aware of its pitfalls. AI triggers our fears that as people, we are going to be replaced by machines that will not only tell us what is best, but also do it for us without asking. Let's take a step back and remember that there's a big difference between automating tasks—even enormous ones that people could not accomplish in a lifetime— and applying intelligence to complex situations. Simply using computers to

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process huge amounts of data is not artificial intelligence. When a computer is programmed to learn from a process and adapt, then we can consider it to be venturing into the realm of intelligence. Computers can't do that by themselves, though, they have to be programmed by people to do it. For results to be applied proactively or profitably, people need to oversee the process, the data, and the decision-making. AI functions most potently as a tool to enhance people's performances capabilities. It's not likely that anyone reading this can imagine life without cars. We take cars for granted as tools that move us from one place to another, at higher speeds than we are capable of by foot or by bicycle. It might be hard to believe now, but when cars first appeared, there were numerous concerns about adopting these new vehicles. The accuracy of drivers was questioned; horse-drawn carriages relied not only on a driver, but also on the horses' innate abilities to avert danger. Speed was a concern; so much so, that cars were limited to lower speeds per hour than even bicycles. All new technologies trigger both excitement and fear until

we have adapted to the benefits and mitigated the downsides. Instead of feeling threatened by the power of AI, we can embrace the possibilities of a new method of managing the copious data we accumulate and acting on that data in ways that augment our capabilities. How can AI be used in quantifying market sentiment? Understanding market sentiment can be a key element of investing; the ability to read it in real time and see the long view can give you an edge in a competitive market. Sentiment is often viewed as emotional, or as a contrarian indicator, so it might seem counterintuitive to apply machine learning to get a clearer picture of it. This is precisely why AI is useful—it removes the emotional and reactionary filters humans can use when trying to read market sentiment, while still engaging the largest possible representative sample of available data. Unlike people, AI is not humiliated by making mistakes, but adapts instantly to feedback on outcomes: it learns, applies and delivers improvements on results.


Information overload is a major challenge for financial professionals, one that might be insurmountable without the benefits of artificial intelligence and machine or deep learning. Instead of looking at the anecdotal evidence of just a few advisors or trend-predictors or the statistics in several articles from a few sources, we can use AI to find and process all the available data—in the financial news sector, this can be up to 200,000 articles per day—in a constantly updating cycle, giving us an instant and thorough picture of where market sentiment lies. In a market driven by information flow, having the ability to process and analyse that much information to get a strong picture of sentiment and act on what you see is invaluable. Augmented Language Intelligence (ALI) is the term we have developed to describe the process of integrating natural-language processing (NLP) and machine learning to cull and sort the available data and augment our abilities to analyse key factors in sentiment including global and local events, shifts in government policy, leadership changes, accidents and other reported variables. Using ALI to process financial

news yields a here-to-fore impossible overview of the market and allows drilling down into specific news events, regions, time periods, and companies. By design, ALI strives to increase people's capacity for command over information. ALI does not replace our involvement in decision-making but allows informed decision-making that accesses the broadest possible range of data for financial professionals to interpret and use in their market engagement. It may even be possible that ALI will uncover new applications of sentiment or new ways of using trends that we have not had access to previously, due to data overload or our inability to comprehensively analyse the information available. Test-driving AI in the financial sector makes good sense. We don't have to go straight from horse-drawn carriages to driverless cars; we can ease this technology in as we get up to speed with its benefits and learn how to protect against any downsides. Imagine what our use of AI will look like in a hundred years—with strong engagement, innovation and decision-making, that's what we can start building now.

Oliver Bertold Chief Business Development & Co-Founder YUKKA Lab

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Are Commercial Banks ready for the Future? Commercial banks are facing an ever changing, more consumer-focused banking landscape. This is because commercial customers are digital banking native – 85% of all commercial banking customers use digital banking services in their personal lives. It is, therefore, natural that these customers are starting to demand similar, if not the same, experiences from their business financial services. Customers have come to expect seamless, digital access and immediacy when dealing with financial institutions - whether it’s for personal or business purposes. This has left some banks seeming like they are on the back foot as they are weighed down by siloed departments and the lack of interoperability of legacy technologies and software across the business. To survive, commercial banks must find a way to adapt to this new world of finance and compete with the nimbleness of the challenger banks. So, if digitalisation is the key to survival, where do we begin?

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1. Biometrics and Security - When adopting new payment methodologies, banks must strike a balance between ease-of-use, easeof-access, and the need to maintain stringent security. We’re already seeing consumer payment methods using biometric authentication, like facial and fingerprint recognition, entering the mainstream, so it is unlikely to be long before corporate clients are expecting to see the same. Extending this functionality into the corporate card arena can make commercial payments more seamless and secure. While challenges remain before this becomes a reality, mobile wallets that defer to the individual’s personal attributes to make secure payments on these cards, whether authenticated by phone or by “selfie”, offer an opportunity for banks. 2. Artificial intelligence (AI) Commercial clients want more than just transactional facilities. Automation has dramatically increased the number of financial transactions in an organisation and, while it can track and store more processes than humans can – and more accurately – it can’t provide the service levels many clients expect of their financial partners: planning and modelling.1

AI is rapidly establishing itself as the missing piece of the puzzle. It can bring together the various data flows created by automated transactions to discover patterns. All this is very important to commercial banks because patterns in spending and efficiency can deliver valuable insights to clients on ways to improve their financial health. 3. APIs - Customers’ demands, and expectations are moving as rapidly as the leading-edge technology they are exposed to. As a result, there is growing pressure on the banking industry to provide new, easy-to-use, frictionless digital services fast. Application Programming Interfaces (APIs) are a key enabler for banks, facilitating use of third party technology to deliver value-adding services of their own. Creating new applications using APIs as building blocks is now seen as the best way to keep up with the innovation challenges facing the financial industry.


To keep pace, banks must either invest heavily to develop this technology themselves or partner with fintechs in a bid to be more effective and efficient.2 By working together and taking advantage of APIs, banks and fintech firms can leverage their complementary strengths, enhancing the customer experience much more than either entity could do on its own. 4. ePayables - Corporate clients can’t understand why payments are still a laborious process of raising invoices and purchase orders, requesting printed cheques or bank transfers and creating lengthy payment terms. Instead, the immediacy of a card – real, virtual or embedded in an app – ties all the above elements together. It gives unsurpassed traceability and is easy to add to financial management software. Using payment cards as a substitute for invoice terms makes them a useful tool, not only to enhance a company’s working capital positions, but also to improve traceability, security and the level of control that can be placed on business spend.

5 Expense Management Systems (EMS) - Expense Management Systems are just one of many tools that can be brought together into a single financial view, helping businesses gain greater control and visibility over expenditure. Unlike written expense policies and separate transactional management software, an EMS embeds expense policies into the technology, allowing real-time reconciliation and approvals to take place. Employees adhere effortlessly to company policy while requesting the need for spend, submitting card or cash claims, all at the touch of a button. The march of the consumers in commercial banking market is inevitable. The demand for the same benefits consumers get from digital-first retail banking experiences is there and will grow - no commercial bank can afford to be left behind. Investment in new technologies gives long and short term benefits - improved adaptability to changing markets, improved customer experience and greater brand loyalty.

Russell Bennett Chief Technology Officer Fraedom

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Top tips for securing your financial institution As anyone working in the financial services sector will know, customer demographics are changing and with that, there’s a complex set of expectations and indeed demands for digital services emerging that allow greater flexibility in accessing accounts, services and information. Where retail and other service sectors have long embraced digital channels in their customer relations both to attract and retain new business, banks and other financial businesses have been slow to adopt modern platforms, and most would admit that this is largely due to concerns about security. However, just as IT and Digital Transformation have proven to be instrumental in establishing a competitive advantage in the enterprise market – financial organisations are beginning to realise that they are not exempt from the digital revolution. Rising demand for omni-channel approaches and optimal digital experiences across the financial services sector are driving adoption of modern technologies. Whilst this will allow for greater accessibility, agility, scalability and ultimately customer satisfaction – realising greater performance across the business – it will also introduce some significant security challenges. For financial business leaders therefore, it’s important to understand that cyber-security is now a key business enabler, rather than simply a part of the overall IT strategy.

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The nature of the beast The proliferation of modern connected technologies has made cyber-security a complex and admittedly, daunting prospect for business leaders and in just under 20 years, the finance industry has transitioned from brick and mortar fortresses to virtual vaults. In the old world, short of physically robbing a bank, criminals had few choices in terms of theft and leveraging ransoms. Today, however, thieves can theoretically empty a vault from the comfort of their armchair, at much lower risk. The threat is exacerbated by the fact that direct theft and ransom demands are no longer the only, or even greatest concern for financial organisations. With increasing regulations, banks and financial service businesses cannot afford to be lax on security, as hacks or data leaks could cost them dearly in immediate fines and the loss of customer confidence. The introduction of GDPR and MiFID II has provided additional incentives for financial services to secure their networks and avoid hefty fines. However, with so many new requirements, the complexity around compliance can result in enterprises investing in solutions which may seem interesting on the surface, but don’t adequately meet security needs or enable the business to harness the full power of their digital footprint.


Keep it simple and secure To successfully navigate the complexity of the environment, whilst ensuring effective protection for the whole IT ecosystem, financial businesses should consider the five key infrastructure areas involved in cyber-security and digital trust: •

Endpoint Options – Modern financial services businesses rely upon a wide variety of device endpoints to ensure that they deliver the best quality services to customers and as these touch points increase, the attack surface of the organisation grows. To achieve optimal security, businesses require consistent, cost-effective and compliant solutions that can detect vulnerabilities and defend against known and emerging attacks, whilst providing a flexible, multi-layered approach that empowers users to work and collaborate effectively, thereby driving productivity.

Infrastructure Security – Today’s businesses often rely on complex hybrid IT infrastructures that offer enhanced operational capabilities, but can expose an increased level of vulnerability. By transforming existing infrastructures, optimising security platforms and implementing dynamic and intelligent defences, it’s possible to mobilise the workforce and wider digitisation of the business whilst maintaining effective infrastructure security. For those businesses without the capabilities to manage IT security in-house, managed services can offer an alternative operational approach, whilst effectively safeguarding business continuity and compliance to reassure customers that their data is in safe hands.

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CyberSecurity – The current threat landscape has evolved beyond reactive protection and today’s businesses require proactive security solutions that identify and close the gaps that expose the business and its users to risk. By taking a holistic view of the IT ecosystem and applying comprehensive security measures covering the network, the data center and the cloud, it’s possible to safeguard critical infrastructures to ensure maximum uptime. With proactive artificial intelligence (AI) and machine learning (ML) cyberthreat platforms, financial services providers can achieve protection through actionable intelligence, thereby staying one step ahead of known and even emerging threats. In a saturated cyber-security solutions market, IT leaders can

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draw on the experience of trusted security partners to reduce the time and complexity associated with planning and implementation, whilst remaining confident that their solutions are effective and tailored to the needs of their business. •

I​ nformation Protection – In light of GDPR, security policy around data governance is now of primary importance to all businesses, not least financial organisations. Whether standalone or as part of a managed services contract, Information Security Management Services must be led by a businessdriven information security policy that is aligned with industry best practice and covers all vendors and operational outcomes – from the data center, to the internal

network, and then on into the cloud. Businesses can also realise benefits from automation to simplify and streamline compliance to ensure adherence to international information security regulations whilst simplifying implementation and ongoing management. •

Identity and access management (IAM) – With more device endpoints and increasing evidence1 that attackers are opting for usertargeted attack vectors, IAM has never been more important in mitigating cyber-attacks. From single sign-on and federated identities, to multi-factor authentication, least privilege and public key infrastructures, it’s imperative that only authorised users can access corporate data,


wherever it's stored. Critically, IAMs don’t just safeguard the user; they safeguard the entire business. With user group identification assessments to facilitate policy matching and simplified administration of user identities with effective password management, directory services and process automation, financial services businesses can be confident that user-related vulnerabilities are kept to an absolute minimum.

Security as a strategic business enabler In an increasingly digitised society, the allure of new technologies will prove impossible to resist for financial organisations, as they attempt to establish competitive differentiation and attract more customers. As IT footprints continue to grow in size and importance, cybercrime will be the number one threat to businesses, and will only become more prominent as hackers develop new tools and approaches to achieve their goals.

In a complex and increasingly dangerous online environment, organisations need simple and effective strategies to protect their IT ecosystems and customer data. This is a multi-faceted process, which requires both modern security technologies capable of attack prevention, and active threat identification and management, as well as the promotion of best practice amongst employees and customers and effective planning in the case of a successful attack. The five key areas of IT security infrastructure provide financial organisations with a simple framework that can help them to maintain compliant infrastructures, which protect their key assets and minimise vulnerabilities across the business. In addition, by recognising this framework as a business enabler – unlocking greater agility and productivity whilst delivering a whole new experience to customers – they can realise more effective strategies for driving growth and increased trust amongst new and existing customers

Colin Williams Chief Technologist, Networking and Security, Computacenter

1 us-en/_acnmedia/PDF-61/Accenture-2017CostCyberCrimeStudy.pdf

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Trade Opportunities in Asia New figures released by the Department for International Trade show UK exports to Asian countries such as India and China growing significantly in the year to March 2018 (up by 31.8% and 15.3% respectively). Notwithstanding the stutter in growth triggered by the US-China trade war, Asian countries are boasting rapid economic and population growth. So, what new opportunities are there for UK businesses in Asia and how can these be exploited? The UK government has been working hard to pave the way - strengthening trade ties and putting greater incentives in place. Over the period JulyOctober 2018 ministers from the Department of International Trade will visit South Korea, Vietnam, Japan and China. This comes after a succession of visits in the first half of the year. In April, for example, UK Trade Minister Dr Liam Fox touched down in Bangkok on a mission to strengthen links with South East Asia's second largest economy. It’s the first time in fifteen years such a visit has been made. Simultaneously, the UKEF announced it would double finance available for British businesses exporting to Thailand to £4.5 billion.

Exporting to Asia is also becoming more straightforward – making it a more appealing proposition for UK businesses. The fast-improving infrastructure in many Asian countries, coupled with the cheap warehousing and logistical costs mean that it’s becoming more feasible to trade there. The lower cost of labour in Asia also allows western businesses to operate in these markets at a reduced cost – minimising the risk normally associated with entering a new export market. Adoption of IFRS and Corporate governance codes by many countries across Asia is also making the process easier.

It's easy to see why this has become a priority for the government. Within Asia’s booming population, increasing salaries mean there is a rising middle class – the fastest growing in the world. The highest number of billionaires and millionaires on any continent are also located in Asia. As a result, Asia’s population has an increasingly disposable income and the demand for products and brands is at an all-time high. Health-care spending alone is expected to exceed $3.5 trillion by 2020. Collectively, Asia now represents 60% of the total buying power of the world. The good news for UK businesses is that the specific demand for highquality British-made goods – from whiskey to chocolate – is particularly strong. Indeed, research from Barclays Corporate Banking1 found that 64% of consumers in India, 57% in China, and 48% in the UAE were prepared to pay more for goods made in the UK, because they perceive the quality as higher.

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ASIA TRADING There are big differences between the different regions in Asia though, so it’s worth taking a close look at the potential of specific nations and areas for individual businesses and sectors. Essentially, Asia is made up of fifty countries, categorised as five major markets – namely China, the Indian Subcontinent, ASEAN countries, the Middle-east (GCC) and East Asia. •

China has immense potential for British businesses. The UK already has a good image there for trade and education relationships.

India has a population almost equal to that of China but a GDP growth rate of over 7.5% - which is almost double that of China.

East Asia is a large and wealthy society with high consumption rates. Japan is the world’s third largest economy and already considers the UK an ally, based on long-standing cultural and economic ties. Korea has one of the world’s fastest growing economies – larger than Russia’s, with a third of the population.

The ASEAN Region – the Association of South-East Asian Nations, including Singapore, Malaysia, Thailand, Vietnam and Indonesia – has a combined population of 640 million people and an economy worth over $2.8 trillion, with increasingly open internal trade. Of the ten members of ASEAN, four are former British colonies and three of those are members of the Commonwealth. Its aggregate economy is forecast to grow this year and next by five percent. The ASEAN region is fast changing from a low-cost manufacturing destination to a pillar of strength of Asian GDP. This area also is a major trade route for global business. The process of regional cooperation and integration is already evident there.

It's also worth noting that more than half (54%) of CEOs in Asia Pacific are planning new strategic alliances or joint ventures to drive growth and profitability this year, according to PwC’s latest annual CEO Survey2. A further 42% are seeking new mergers or acquisitions. This presents significant opportunities for UK businesses looking to expand overseas. Africa-Asia partnerships also offer new economic opportunities. There are opportunities within a wide variety of sectors in Asia – from healthcare products to food to tech. Governments are also aiming to shift 60% of Asia’s population to urban areas by 2025. This creates demand in urban infrastructure – with a continued need for both trade and investment. The governments have also signalled that foreign investment will have a significant role to play in this process. In all, Asia is a market that gives UK businesses access to a population of 4.6 billion people – 75% of the world’s population. And, with Brexit fast approaching, this is an ideal time for more UK businesses to begin exploiting these opportunities.

Siddharth Shankar CEO Trails Trading


Brand Britain. (n.d.). Retrieved from https://www.


P. (n.d.). 21st CEO Survey - PwC Global. Retrieved from https://

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Using AI to Grow Relationship Businesses in Banking Banks have been using machine learning longer than pretty much anyone else, and for good reason. Identifying the lowest risk borrowers, pricing loans, and forecasting losses all require the use of predictive models. Sometimes these models are simple scorecards. Other times, they are highly complex machine learning models. Many banks have at least some of these core models built, with a process in place for monitoring and maintaining them, but outside the handful of core models, the need for embedding artificial intelligence (AI) and machine learning at a deeper level is an unfulfilled need at most banks. At least part of this deficiency in AI and machine learning can be explained by the capacity of data scientists and availability of data. Traditionally, data science teams have had their hands full building and maintaining the core models of the bank. Add to that the challenges involved with managing, cataloging, and assembling data, along with the obstacles associated with implementing these models into production, and it’s no wonder that progress has been so slow.

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To complicate matters, the number of players in the banking sector has increased dramatically in the last several years. Fintech companies are hard at work gobbling up bits of market share, and they’re doing it by means of innovation and AI. Banks still have the advantage in terms of data and expertise, but that advantage won’t last if bankers don’t start innovating. When it comes to AI, some of the lowest hanging fruit in banks today are the so-called relationship businesses. These are typically high-touch, highprofit, complex relationships that have dedicated relationship managers and generate a mountain of revenue for banks. Business banking and corporate banking businesses along with wealth management teams are good examples of this type of relationship business. Several years ago, I was at a sale offsite for a Fortune 100 company. The attendees were relationship managers that were all compensated on sales. The first half of the day was set aside for discussing prospecting strategies. Salesperson after salesperson stood

up and told about the newest event that they had hosted that was really “working” for them. Box seats at sporting events, breakfast meetings, cold calling, and many other in-person events were touted as “the way” that was going to produce results. At the time, I remember being struck by how unscientific it was. I even made a comment about collecting data to see what was actually working. I was quickly reprimanded: “This is a relationship business,” one experienced salesman told me. I’ve heard that same sentiment many times since then. “This loan is too complex for a pricing model.” “This relationship is too unique to be lumped into a dataset and learned from.” “This account is much too important to be driven by your models.” Fast forward a few years, and these relationship-driven businesses are beginning to change their tune. Businesses, who are impacted by ultra-low interest rates and increased competition, are now open to exploring new strategies to grow and deepen their relationships. The opportunity to do so is huge.


The use cases All sales teams use CRM tools to track leads, opportunities, and accounts. That means that all sales teams have incredibly valuable data that tracks where they’ve been successful and where they haven’t. This data is the foundation of building an AI solution to grow a business. Prospecting for the best new customers In the world of sales, prospect lists abound, driven by inbound leads, cold calls, and third-party data sources. Sorting through it all to know who to contact, and who to focus on, can be bewildering -- particularly if you don’t have access to any reporting or analysis showing what has been effective (and what hasn’t). Building an AI solution for prospecting involves first identifying what a “good” prospect looks like. The most obvious definition of a good prospect is anyone that is likely to buy what you’re selling, but that’s far from the only example.

Bankers might want to try to predict the credit quality of prospects based on publicly available data to identify the clients where they want to spend their energy. Or perhaps they might want to predict which clients are likely to produce the most value for their business, either by growing in the future or by their needs for a wide variety of products. In any case, once a good customer is defined, then it’s just a matter of matching up external prospect data with a bank’s existing client base to build a training dataset. For example, I might take the data I have available for my prospects (my features) and match them up to my current clients where I know the target value; e.g., risk rating or profitability (my prediction target). I might try to predict profitability, product appetite, or margin. Once the models are built, I can then score my list of prospects in order to rank them for potential sales efforts.

Deepening relationships with your current customers The number of products and services that a customer needs is strongly correlated with how profitable that customer is. AI can improve the effectiveness of relationship managers by identifying particular customers that are in need of particular products. If a relationship manager can reach out with a specific product to the right customer (and not reach out with the wrong products), then that customer will be happier, sales will be higher, and the relationship will grow stronger. Fortunately, if the bank utilises a CRM system, the data needed for this project has probably already been captured. It’s a simple matter of identifying which customers were offered which products and whether or not they bought them. Which customer and product attributes will be predictive of purchasing likelihood will depend on the product.

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ASIA BANKING Once I have my models in place, it’s relatively straightforward to identify the best prospects for a marketing campaign or to have an offer in the “back-pocket” for every customer interaction.

Pitfalls to avoid These are just a couple of examples of ways that AI can increase the effectiveness of sales teams. Building the solutions is not complex from a technical perspective and deploying them is also pretty straightforward. That said there are a few blockers that you will want to avoid as you build these solutions. Don’t fail to record information about lost sales. Salespeople hate data entry (doesn’t everyone?). They especially hate entering data about deals that they’ve lost. Capturing data about lost deals, though, is just as important as capturing data about won deals. Machine learning requires data that the machine can learn from. That means positive and negative examples. In order to build models to predict customer behavior, all the possible outcomes have to be captured.

Don’t expect it to work perfectly the first time. These solutions, even though straightforward, take some iteration. I worked with a sales team at a large bank to predict which clients were most likely to need a foreign exchange (FX) product to lock in conversion rates for cross-border payments. It took us six iterations to get to a good model, but when we finally did, we increased the conversion rate from 2% to 10%, which meant a $10M+ increase in sales for the organisation. Prospecting and deepening models are two ways most banks can start exploring how AI can impact a your organisation. These use cases are low risk, quick to build, easy to implement, and have a high ROI, and advanced tools like automated machine learning now make developing these solutions accessible without the huge upfront cost required in the past; e.g., massive time investment, hiring and retaining large data science teams, tricky manual deployments, etc. Whether you’re a large bank or a credit union, with sizeable complex deals or simple term loans, AI can provide a straightforward way to be more targeted in your sales efforts.

Don’t wait until your data is perfect. Everyone has data issues, but it’s pretty rare to come across a data set-up that is so bad that nothing can be done. Starting with the data that’s currently available is the only way to get started with AI. Waiting until everything is perfect means never getting started at all.

Greg Michaelson VP, General Manager of Banking DataRobot

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Private Wealth Done Differently Desjardins Private Wealth Management The face of the High Net Worth market is gradually changing. Over the past decade, the market has undergone a significant change in terms of the key features of its future clients and their expectations. Private wealth management firms will soon face this new generation: a young, wealthy, intelligent, independent and educated clientele. Its need for useful and relevant information and its rejection of hype are marked features. This phenomenon is due to education and especially to access to information available on the Internet. These clients are therefore more knowledgeable and seek, from their financial institution, a validation of their assumptions rather than hard and fast advice.

This clientele is also looking for authenticity in its dealings with its private banker as well as active participation in the discussion. Whereas the grandfather sought expert advice from his banker a few times a year, his grandchild, who is connected 24 hours a day, who studied abroad, who is himself an expert in finance, marketing or management and who moves relatively often, will rather seek confirmation or invalidation from his private banker. His time is precious and he usually refuses a rigid framework and preprogrammed activities. As in any industry, it's good to have to adapt to changes in our customer segment. But how to satisfy a connected client who wants human contact but is eager to get his information "around the clock" without going through a robot advisor?

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At Desjardins Private Wealth Management, we believe that this transition requires an avant-garde and completely dematerialized client experience. In order to offer a unique experience, it’s important to have a clear vision of the path we want to take. This path will be key to the success of the relationship with our clients, adapting to their pace of life and their aspirations, according to their personal or professional situation. Each of our clients is unique; their needs are too, so we have to provide a flexible and accessible experience. Our goal is to build a plan, to achieve a dream, by accompanying our client at each stage of the process. The human relationship remains in the forefront, and becomes simplified by the available technologies. It’s important that this experience allow for a connection between the client and his banker and facilitate the collection or retention of information. No more paper forms; instead, a heartfelt welcome to the management of digital content for the benefit of the client experience, where clients can consult their information at any time. Assistance will now go well beyond financial advice; our experts will be able to educate their clients on the various fields of wealth management involved in their projects and thus ensure their understanding of the various stages. Our work is just beginning; this synergy must take into account the constraints of human reality and the complexities of dealing with dematerialization. However, we are hopeful that by making this change we will stay connected with the next generation so that we can dream together for a long time to come!

Alain Goulet Regional Vice-President Desjardins Private Wealth Management

Gilbert Arsenault Regional Vice-President Desjardins Private Wealth Management

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Mobile Video Banking:

Bridging the Gap From Brick & Mortar to Digital 21 Reasons Why Financial Institutions Need Mobile Video On Their Side Banking is definitely becoming more digital, but that doesn’t mean it has to become less human. Around the world, time-starved consumers are increasingly turning to digital channels. Branch visits in the UK, for example, continue to decline as the average consumer makes only five visits per year. Meanwhile, on the digital side, banking apps recorded a 13 percent increase in log-ins last year, reaching a whopping 5.5 billion.

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Trailblazing financial institutions are responding to these dramatic shifts in consumer behavior by offering cutting edge solutions. Mobile video banking, in particular, allows consumers to interact with banking experts via personal devices at their convenience, while maximizing resources and resolving many major branch limitations for financial institutions. Today, four out of five bank and credit unions either already offer or plan to offer video banking. Through this technology, banks and credit unions can not only serve larger geographical territories at lower costs, but vastly improve the customer experience.

Benefits even appear to be more robust than originally thought. Credit unions in the U.S. already partnered with POPin VIdeo Banking Collaboration, the industry’s first interactive video solution, report higher close rates on loans, surprisingly high usage among the elderly, increased access to multilingual personnel, and reduced stress for busy customers and employees alike. “If you don’t have a strong digital and mobile strategy, I don’t know if you’re going to be around,” says Lisa Huertas, Chief eXperience Officer at Texas Tech Federal Credit Union, which adopted


POPin last year. “I don’t say that to be a doomsday person. Right now, today, you’ve got to be building those bridges between the physical and digital experience.” Mobile Video’s Expected & Verified Strategic Benefits When first developing the concept of mobile video banking, POPin knew there were logical and strategic reasons why human interaction over digital channels made perfect sense. But as the numbers and success stories rolled in from realworld client case studies, one thing became clear—mobile video is literally changing the face of banking. Consider some of the expected and verified strategic benefits of mobile video banking: 1. Maximized Human Resources: By consolidating employees into a centralized video call center environment, financial institutions can make their best and brightest employees available to more members, regardless of their physical locations. In fact, South Bay Credit Union in Los Angeles, California, has found that members using its mobile video app often develop such a strong bond with their employees that they request to speak with their favorite representatives. 2. Lowered Costs: The U.S. banking industry closed 1,700 branches in the 12 months ending last June, according to a report in The Wall Street Journal. This represented the largest one-year decrease ever. Consulting firm PwC went on to project the number of bank branches in the U.S. will shrink 20 percent by 2020.

Following this trend, Texas-based Southwest Financial Federal Credit Union managed to slash operating costs by closing its brick-andmortar branch in Houston, even as it continued to grow and serve members in that area through a new digital branch powered by mobile video banking. “Since they’re not able to walk into the branch, we don’t have a big physical footprint,” says Luke Campbell, Southwest Financial’s Vice President of Sales and Service. “But we feel that our digital footprint is huge and there are no limits to what we can do with that.” 3. Enhanced Retail Geography: Brickand-mortar branches continue to lose cachet with customers, now ranking as only the third most important consideration when choosing a financial institution (behind online/mobile banking and no ATM foreign fees). Historically, branch location was the primary driver of perceived convenience, so its fall to No. 3 on the list of customer priorities indicates how dramatically expectations are shifting. Southwest Financial took notice of this trend as well. The credit union covers a vast territory across Texas and Louisiana with just one physical branch in Dallas, making the strategic business decision to expand its coverage area by increasing its digital footprint while shrinking its physical footprint. 4. Connection with Younger Generations: While a broad range of demographics use mobile technology, financial institutions are reporting surging adoption by younger generations. In fact, Federal Reserve Board research shows more than two-thirds of millennials are already using mobile banking.

As these rising generations become comfortable video chatting their friends, parents, college professors, etc., it’s natural for them to prefer to communicate with financial advisors via mobile video as well, whether to ask a quick question or apply for a more complex car loan. 5. Greater Convenience: Standard hours won’t cut it for today’s consumers. Convenience is king, especially when it comes to financial services. With mobile video, financial institutions can offer extraordinary opportunities for engagement at customers’ convenience to win their loyalty and trust. Take, for example, Pioneer Federal Credit Union of Mountain Home, Idaho, which was able to significantly extend its hours with the help of its mobile video banking app. Pioneer now fields video calls from 7 a.m. to 7 p.m., Monday through Saturday, enabling members to change PINs, transfer money and more at their convenience. 6. Attraction of New Customers: Self-service has its perks, but abandonment rates for online banking applications are at an alltime high of 97.5 percent. Through a collaborative video banking platform like POPin, financial institutions can chat with customers and collect everything they need to open a new account in one sitting, including photo IDs, signatures and more. Such capabilities are transformative for the banking industry, as customers no longer have to visit a branch to set up an account—which is especially beneficial for attracting new customers and Select Employee Group (SEG) customers who choose financial institutions through their employers but don’t live close to a branch.

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Bridging the Gap between Traditional to Digital Banking

Hello, How may we Assisate you?

Start Video Call 7. Remote Services: Financial institutions can service almost any customer request over mobile video except for dispensing cash—and even that capability may be possible in the near future. Customers can check account balances, sign documents, and report lost or stolen cards, even when they are working overseas or on vacation in another state. Added conveniences like these are why 93 percent of bankers believe interactive video technology increases consumer satisfaction, according to Efma research. 8. Multilingual Access: After Pioneer Federal Credit Union’s adoption of POPin, staff quickly discovered they could refer Spanish-speaking members to the video call center for immediate assistance when no multilingual branch representative was on duty.

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The ability to provide multilingual support on an anywhere, anytime basis offers a huge logistical advantage for staffing and scheduling. Within the European Union, there are 23 officially recognized languages and more than 60 indigenous regional and minority languages. Even a sizable segment of the U.S. population—21 percent, or roughly 61 million people—speak a language other than English (with Spanish topping that list at about 38 million). 9. Brand Differentiation: In most markets, a myriad of financial options compete for customers, all providing similar products. Whether you’ll stand out usually boils down to customer experience. According to The Financial Brand, the No. 1 benefit cited by banks and credit unions offering video banking solutions was positioning their institution as innovative.

Texas Tech Federal Credit Union in Lubbock, Texas, is differentiating itself in the minds of its young customer base by adding mobile video banking to its digital suite, prompting local media to proclaim this innovative credit union “breaks the mold when it comes to banking.” South Bay Credit Union is also setting itself apart in the crowded Los Angeles market by providing a video service that maintains the personal touch of face-to-face interaction and allows members to do their banking from home (and avoid nightmarish traffic). 10. Standardized Workflow: Maintaining a standardized workflow ensures every customer receives the same experience. A robust video banking platform allows financial institutions to develop and customize these workflows across product lines to best support representatives in providing superior service to customers.


11. Streamlined Digital Collection of Documents: With a patented platform like POPin, within these standardized workflows financial institutions have the ability to collect and store all customer conversations and documents in a single location. The entire digital interaction (video, chat and voice) can be recorded and stored for future feedback. “[The employee] is getting a loan signed right then and there, where in the past we were faxing it to the member and they were faxing it back and there is a lot that can go wrong,” says Southwest Financial’s Luke Campbell. 12. Inclusive Experience: During due diligence phases, representatives often need to collect signatures from multiple parties (e.g., husband and wife, or son/daughter and parent). A collaborative mobile video banking app can easily obtain signatures from multiple individuals, whether during the live video chat by connecting another call into the conversation or offline at a time more convenient for the second individual. 13. Collaboration vs. FaceTime: Skype, FaceTime and Cisco have mastered the art of face-toface communication that has brought video exchanges into the mainstream. As a result, far and wide, millennials and rising generations are using video-based platforms as their preferred method of communication. In the world of commerce, however, bare-bones video chat isn’t sufficient to transact business. Consumers need to exchange information, documents and signatures both in real-time and offline, completing entire applications and processes while working with representatives—just as they would in person.

When asked what the Pioneer Federal Credit Union team misses via mobile video banking, Vice President of Operations Tracey Miller declared, “There is nothing we can’t do short of dispensing cash ... [The experience is] just as they were meeting face to face inside a branch.” Mobile Video’s Unexpected & Surprising Operational Benefits As POPin beta-tested its platform with a dozen financial institutions, client feedback was used to adjust and fine-tune the technology to create a financial-centric solution for banks, credit unions and their customers. Findings conclusively determined that mobile video delivers the expected strategic results. But in addition to these anticipated advantages, several unexpected operational benefits arose as well. 14. Loan Retention: Before Southwest Financial implemented mobile video banking, loan applicants often forgot to email, or fax required documents, leaving a frustrating pile of abandoned applications. The credit union now reports significantly reduced loan loss by improving its loan officers’ ability to capture necessary documents while in video calls to complete these transactions. “I want to unplug the fax machine,” says Southwest Financial’s Luke Campbell. “I don’t want to use it anymore. ... Having [the ability to get a] guaranteed signature has been the benefit. Our employees are saying their loan numbers go up because they’re not losing loans anymore.” 15. Fraud Verification: Customers suspecting fraud on their accounts don’t have time to drive to a branch to resolve the issue—they need immediate assistance. With mobile video banking, help is just a click

away via members’ smartphones and tablets. Conducting the call over video also adds an additional element of security, as employees can verify they are speaking to account holders through visual identification. Jennifer Oliver, President and CEO at South Bay Credit Union, says her employees use their video banking platform to verify wire transfers rather than over the phone or making the customer visit the branch. “That was an unexpected benefit of deploying this type of platform,” she says, noting that it resolves a growing business problem nearly all financial institutions experience. 16. Adopted by All Demographics: Initially, many banking executives assumed millennials would be quick to adopt mobile video banking because of their familiarity with communication technologies such as FaceTime—and that assumption has proven true. However, many financial institutions have been surprised to discover all customer demographics use mobile video for the convenience it provides. Elderly members with limited mobility often prefer to conduct their banking over a video connection from home. This option saves them from needing to request or arrange transportation to a physical branch. As previously mentioned, Spanish-speaking members appreciate the opportunity to communicate face to face with a teller in their own language. Mothers of young children also appreciate being able to use a video app rather than transport their kids to the branch. And military members can now stay connected to trusted faces in their hometown even when they are deployed overseas.

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17. Reduction in Physical Branch Hours: Financial institutions can save costs by closing during slow branch times without inconveniencing customers. It’s easy to refer members who need assistance during those hours to the video call center. “We use POPin Video Banking to replace our Saturday hours,” says Jennifer Oliver of South Bay Credit Union. 18. Maintained Relationships with Relocated Customers: According to the U.S. Census, between 2013 and 2014, one in nine people moved residences. Of those, 9.7 percent moved due to job transfers. Losing customers and accounts due to job transfers used to feel unavoidable. In the past, members simply felt they couldn’t take their

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financial institution with them when they moved too far away from a branch. That’s no longer the case— according to Southwest Financial, the credit union can now service all Kroger (SEG) employees no matter their geographic location or where they may relocate in the future. 19. Unplugging Antiquated Technology (Fax Machines): When I first started my professional career, fax machines were a wonder of efficiency. They were quick, convenient, and inexpensive. A fax was the expected standard in delivering written communication at the speed of an “analog data connection.” Fast forward to 2018, and fax machines are rarely used. The vast majority of millennials don’t even know how to send a fax. As one popular blogger observed, “As

a millennial myself, I think I have only ever used a fax machine once (and that was to send something to my father).” Luke Campbell at Southwest Financial said it best when he stated his goal to unplug all the fax machines in his organization. There is simply no need to have antiquated technology in the branch when the process can be simplified and streamlined through a digital platform. 20. Integrations NOT Necessary: Aside from a backlog of projects as a barrier to implementing new programs, the second reason financial institutions give for delaying or killing new projects generally involves integrations with existing providers and platforms. However, those adopting mobile video banking report no integration is required to get started and is


even unnecessary as they roll out the solution in tandem with other providers. Some banking executives wonder whether their customers who already use their digital banking apps will also download and use a standalone mobile video app. Financial institutions that have implemented this new technology have indicated that standalone video apps do not create barriers or confusion and therefore do not hurt customer adoption. 21. Customer Response—The WOW Factor: Pioneer Federal Credit Union recently passed the 1,000 call threshold since releasing their myPioneer Personal Assistant APP. Its numbers continue to climb week after week, providing the strongest evidence yet of widespread adoption as customers recognize the convenience it brings. Jennifer Oliver of South Bay Credit Union says early users of mobile video banking are thrilled, and she expects usage to continue to climb. “Right now it’s a wow factor,” she says. “People think it’s cool. Down the road, I think they’ll start to think of video first rather than getting in the car and driving to us. And when that happens, that’s when we’re superconvenient.” Without a targeted approach to building out the digital branch, consumers expectations might not get met—and they’ll start to look elsewhere. A 2018 study of more than 1,600 digital banking users revealed that 68 percent of Americans who have used digital banking in the past year have been frustrated by their experience. And a full one-third are willing to switch financial institutions for a better digital experience.

Mobile video can easily provide the wow factor they’re looking for.

Consumers Want Time-Saving Technologies Busy consumers are searching for time-saving technologies in all areas of their lives. Banking is no exception. This dramatic shift in consumer behavior is driving adoption of digital banking like never before. Mobile video is the missing piece for many financial institutions that will allow them to bridge the gap between declining brick-and-mortar branches and rapidly rising digital and mobile apps. In fact, mobile video banking has been proven to increase the adoption of self-serve options because it enables customers to find quick answers to technical questions. “If you don’t like change, you’re going to like irrelevance even less” seems to be a mantra of the modern era. As customers’ expectations change, financial institutions can harness the power of digital technologies to meet their needs. Two-thirds of banks and credit unions now anticipate offering both in-store video systems and mobile video platforms in the near future, according to a 2018 study of financial services professionals. As more enhance their digital branches with mobile video capabilities, a growing number of customers will demand access to this technology—and the convenience it brings.

Gene Pranger CEO POPin Video Banking Collaboration After helping build 500+ branches across 20+ years, Gene Pranger is among the foremost experts on video banking technology. Pranger created the original video banking platform, the Interactive Teller Machine (ITM), with uGenius, which sold to NCR Corporation in 2012. He then harnessed mobile video with his latest venture, POPin Video Banking Collaboration, for banks and credit unions, which finally places a virtual branch in everyone’s pocket.

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The Global Financial Industry needs to speed up its fraud detection through analytics Fraud and data theft is, unsurprisingly a significant headache for organizations, and particularly so for banks and insurance companies. Since 2005, there have been over 10 billion data records compromised in 8,000 breaches1 in the USA alone, that’s the equivalent of 1-2 a day. While a major positive for many consumers and organizations around the world, the Internet has also created opportunities for fraudsters and data thieves, who work hard to steal from financial institutions. The answer seemingly would be for these organizations to simply put in place measures to spot and stop the fraudsters as they’re attacking. However, that is not always possible In 2017 alone, intrusion attempts increased by 45% versus the previous year, and between 2012 and 2016 such attacks rose by 240%. The astronomical growth in these attacks demonstrates not only the need to identify them, but to shut them down and stop future cases occurring.

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However, the problem doesn’t just lie in the theft of the data itself, but in what the criminals do with it, namely cloning identities. With access to such large amounts of stolen personal information, fraudsters are able to adopt personas and attempt to carry out illegal transactions, including taking control of bank accounts that aren’t theirs. But, in today’s hyper-connected world, consumers demand instant access to their accounts and insurance policies, and those financial institutions that don’t offer it will lose out on valuable revenue, despite the multitude of channels it also creates that thieves can exploit. As a result of what is effectively a series of open doors, it’s difficult to accurately assess the costs associated with these fraudulent activities, though they are known to be extensive. It’s therefore imperative that the institutions make use of their full arsenal to fight the fraudsters to protect themselves and their customers. One way of doing this is by using analytics

and business intelligence solutions that can help teams to identify activity that doesn’t look right. In organizations that are 100% cloud-based, accessing the data is easier and helps stop the criminals in their tracks. However, given that 70% of Fortune 500 companies, 92 of 100 of the largest banks and all top 10 of the largest insurance organizations rely on legacy mainframe systems, access to data on these systems ideally needs to be just as fast so they can respond to threats quickly. But that’s generally not possible. The reason for this is that, while incredibly powerful and highly secure platforms, mainframes are purposefully built as silos that are not connected with the rest of the IT infrastructure, and mainframe specialists and data scientists don’t speak the same language. With the data that’s required to identify these threats stored on the mainframe, the logical option would be for the BI services to be as well, but that is often counterproductive. By extracting the data from the mainframe’s closed


architecture, and performing analytics from outside alongside other data sources, BI teams can build more comprehensive and accurate models that give them a true picture of any potential fraudulent activities. A solution is to use technical offerings that enable the transfer of mission critical data without impacting either the security or the quality of service of the mainframe applications. The latest solutions capture data from any mainframe application and use the SMF logging mechanism to transfer the data to an open system (for example Linux). This data is then made available as a JSON file, a format that can be utilized by any BI solutions. This three-stage mechanism of capture, transfer, and extraction has many advantages, the most obvious being that, by delivering the data into a service that analyst teams already use, anyone in the fraud team can work with the files to spot and stop the fraudsters. An additional bonus is that, once set

up, its maintenance requires only very limited mainframe skills, a definite advantage because the pool of seasoned professionals of this architecture is getting smaller and smaller as experts retire without new entrants to match. And finally, this type of solution does not generate a mainframe overhead by only capturing and transferring the required data to the BI platforms. By having such access available quickly and efficiently, financial institutions have an opportunity to potentially tap into the mainframe at will, meaning they’re much more likely to halt fraudsters in their tracks. With fraud and data access becoming a higher priority amongst consumers, particularly in the context of GDPR coming into effect in Europe, every organization around the world needs to take their data security seriously, and that has to include having fast and secure access to their critical information. Those that fail to do so will not only fall foul of the criminals, but the law courts and their customers too.

Guy Muller VP Engineering RSD S.A.


U.S. data breaches and exposed records 2017 | Statistic. (n.d.). Retrieved from data-breaches-recorded-in-the-united-states-by-number-ofbreaches-and-records-exposed/

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Common Misconceptions Regarding Preferred Stock Create Risk of Costly Mistakes Preferred stock is commonly used for venture capital and private equity investments. It gives the investor the ability to convert to common stock if the deal succeeds, and also includes protection of the liquidation preference if things go poorly. Preferred stock also often provides the holder with the right to designate a director on the corporation’s board, giving him visibility and input regarding the corporation’s activities and direction. However, common misconceptions about the security of preferred stock and the benefits from designating a director may lead to costly mistakes. Many investors believe the mandatory redemption date for preferred stock is the equivalent of a loan maturity date. Many also believe the corporation is unconditionally obligated to repurchase the preferred shares. They are wrong on both counts. Preferred stock provides no guaranteed right of payment, and its redemption obligation is treated neither as debt nor as a current liability. Under Delaware law, a wide range of statutes and legal doctrines restrict the corporation’s ability to use funds to redeem preferred shares, rendering them not “legally available.” Among these, Delaware common law has long restricted a corporation from redeeming its shares when it is insolvent or would be rendered insolvent by the redemption. Consequently, a corporation easily may have funds but still find they are not legally available.

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Corporate directors have substantially more discretion than many assume regarding whether, when and how to raise additional funds to finance the redemption of preferred stock. The directors’ fiduciary duty is to maximize the enterprise value for the long-term benefit of the common stockholders. In a recent Delaware case, Frederick Hsu Living Trust v. ODN Holding Corp 1., No. 12108-VCL, 2017 WL 1437308 (Del. Ch. Apr. 24, 2017), the Chancery Court sided with the common stockholders, who claimed that the preferred stockholder and the board of directors violated their fiduciary duty to the common stockholders by taking extraordinary steps to raise funds to finance the mandatory redemption. The ODN Holding complaint alleges that the preferred stockholder caused the corporation to alter its business plan by shifting its focus away from growth which benefitted common stockholders to raise cash that could be used for the redemption. The corporation sold three of its four lines of business in their entirety and divested the principal economic driver for the fourth line of business. Vice Chancellor J. Travis Laster explained in ODN Holding that the existence of a mandatory redemption right, even one that is ripened, does not convert the holder of preferred stock into a creditor. A redemption right does not give the holder the absolute, unfettered ability to force the corporation to redeem its shares under any circumstances. The case law establishes limitations on the ability of preferred stockholders to force redemption. The board of directors of a Delaware corporation must, within the limits of its legal discretion, treat common stockholder welfare as the only end, considering other interests only to the extent that doing so is rationally related to common stockholder welfare.

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Vice Chancellor Laster found that “a board does not owe fiduciary duties to preferred stockholders when considering whether or not to take corporate action that might trigger or circumvent the preferred stockholders’ contractual rights.” The ODN Holding complaint asserts that the board acted disloyally by selling businesses to raise cash to satisfy a future redemption obligation before there was any contractual obligation to redeem the stock. The plaintiffs contend that if the board had retained those businesses, they would have generated greater value for the benefit of the common stockholders. According to Vice Chancellor Laster, the plaintiff correctly observes that if the corporation lacked legally available funds when the redemption provisions of the preferred stock came into play, then the corporation would not have been able or obligated to redeem the preferred stock. At that point, the board could have continued to manage the corporation for the benefit of the common stockholders without having to make a massive redemption payment. All that the preferred stockholder possessed and could enforce was a contractual right to require the corporation to redeem the preferred stock to the extent the corporation had legally available funds. But the redemption provisions do not foreclose a claim by the common stockholders that the directors breached their fiduciary duties by generating legally available funds. The terms of preferred stock frequently provide the stockholder the right to appoint directors to the board of the corporation. Many investors wrongly assume the preferred-designated director will act to protect the preferred stockholder’s economic interests. The law doesn’t recognize a special duty held by directors to any special class electing them. Although the director nominated by the preferred


stockholder may have a natural affinity for the preferred stockholder’s economic interests, a director owes a fiduciary duty exclusively to the common stockholders, not to holders of preferred stock. Directors nominated by preferred stockholders are then put in the difficult situation of putting the common stockholders’ interests ahead of the preferred stockholder. The board has no fiduciary duty to maximize the preferred stockholder’s return or facilitate the preferred stockholder’s exit. The preferred stockholder risks being drawn into stockholder litigation under the theory that the stockholder “aided and abetted” the breach of fiduciary duty by its designee directors. This litigation is more difficult to defend than garden-variety claims against corporate directors because the business judgment rule, a judicial presumption which protects directors from liability for good faith mistakes, does not apply in the conflict of interest context. Corporations also can’t indemnify directors against personal liability for breach of the duty of loyalty under Delaware law.

Gardner Davis Partner Foley & Lardner LLP Gardner Davis is a partner and corporate lawyer with Foley & Lardner LLP in Jacksonville, Florida. He frequently represents buyers and sellers in M&A transactions and advises boards of directors and special committees in regard to fiduciary duty issues in various contexts.

Danielle Whitley Partner Foley & Lardner LLP Danielle Whitley is a partner in Foley & Lardner’s Finance & Financial Institutions practice. She focuses her practice in the areas of mergers and acquisitions, finance and general corporate law.

In short, investors must realize that the contractual protections granted to holders of preferred stock may be overridden by restrictions on the corporation’s ability to only redeem shares from legally available funds. The protections may also be overridden by directors’ fiduciary duties to common stockholders to manage the corporation’s legally available funds to prevent situations that are not in the best interests of those stockholders. 1 aspx?id=255860

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Counting the cost of expenses

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As I sat on a Google Hangout with colleagues all in different locations the other week, I thought to myself, it’s baffling how far innovation has evolved how we work and yet there are some aspects of the working world that for many have painfully not evolved in the slightest. Expenses remain a headache for business owners, accountants and employees alike, yet fear of an additional migraine prevents changing archaic processes in place. In workplaces up and down the country, the practice of manually printing off excel sheets and attaching receipts probably has been in place long before many of the current employees began working there. It’s slow, ineffective and tedious – yet it remains, despite there being simpler options available. “This is the way things have always been done” – the common reason for not changing the expenses process, though this doesn’t mean a better solution to the problem isn’t available. There is also a more important point to consider in that not only is this process not working optimally, it’s actually costing businesses money. The plight of the Financial Controller As a financial decision maker within a business you might be tasked with several responsibilities such as ensuring each department has the necessary amount of budget to work effectively, assessing the return on investment of purchases and balancing wages for hiring talented staff with reinvesting

into the growth of the business. The problem of expenses often gets pushed to the back of the queue, but even when completed late will remain a drain on the business in terms of lost man hours every single month across the whole organisation. Even qualified accountants that we have spoken to have admitted they take hours filing their own personal expenses, so clearly this is an issue even the experts struggle with. When processing expenses, the finance department can also struggle to efficiently turn around claims that are inaccurate when submitted or chase up employees to file their expenses on time. This is valuable time that should be rather spent on more important tasks to the business. Hoarding of receipts is also a massive issue, not just for the employee who has to file a massive batch of receipts, but for the financial director in charge of the company’s cash flow. At the end of the tax year, some employees might have amassed a year’s worth of receipts that they file in one go, which could amount to thousands of pounds. In smaller businesses, the administrative headache tends to fall on the business owner, whose time would be better spent creating better products or winning new business. We spoke to one financial controller at a major international firm who said that the beginning of every year after the Christmas holidays is a particularly trying period. Despite the best planning, he still receives a deluge of expenses from employees claiming back money for business lunches and Christmas hospitality from the end of the year before, and this significantly hinders his ability to plan spend for the business.

Headaches all round For some smaller organisations, the financial impact of many employees claiming expenses at the same time can significantly disrupt cash flow. This could make the difference between the company remaining in the black or needing to take out a business loan to keep the company afloat. From the perspective of the business’ clients, they are unlikely to be very happy if they receive a glut of expenses recharged to them in one go, which could impact on retaining their business over the long term. For accountants, expenses form a burgeoning proportion of their work, made more difficult by having to scrutinise each claim before submitting into their systems. Delays and inefficiencies are inevitable when accountants are using several incompatible systems, often having to duplicate the entry of information across manually. However, even the most well-defined and structured expense claim processes are subject to human error, meaning time is wasted querying or rejecting claims until they are right. This is before we even consider the fact that some expenses are being made fraudulently. All the above means expenses can quickly become a huge time-waster for all parties concerned, so greater control is needed so that companies, accountants and employees can benefit from a more streamlined process.

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Streamlining efficiencies and cash flow Businesses have a vested interest in streamlining expenses processes as the automation of these tasks frees up time (which is popularly known to equal money), increases productivity and, in many cases, makes cash-flow more efficient for the organisation. A desire to automate the expense claim process has long been a priority for accountants and business owners, but now it is achievable thanks, largely, to smartphones and the advent of cloud delivered services. The first step of automation was receipt scanning software, but expenses have a number of different considerations that technology is now finding solutions for as it becomes more sophisticated. For example, prompting employees to log expenses at the point of purchase and managing international exchange rates in real time so that expenses repaid always match the amount of the purchase.

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Cards can also now be allocated to employees specifically for expenses that have a set limit each month, ensuring employees are never out of pocket and that the business retains full control over company funds. By linking a company card to a mobile app, companies can set up expenses flexibly, choosing between just simply digitally logging all expenses, pre-loading cards with set limits for expenses or approving each individual expense before it is processed. Back at the office the person responsible for accounts can approve payments immediately, request more information or reject a claim through a cloud-based dashboard in real time, which in turn links to existing accounting packages. For accountants, automation now means they can spend less time compiling receipts and correcting mistakes and can put this time toward their core business or acquiring new clients. For

the financial decision maker, expenses can become just another process in the business and stop being something which needs dedicated hours to complete every month. Similar to the automation of office IT years before, automation of expenses can now take the pain points from the expenses process while delivering all of the benefits to the organisation. Expenses are almost as old as businesses themselves, but now is the time to take expenses out of the dark ages and into the present day. Modernising expenses doesn’t need to be a hassle and the time and money saved can actually give a competitive edge to the business, so there is no longer any reason not to embrace automation to benefit your business. Â


Johnny Vowles CEO and Co-Founder Expend

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Committed to bonds for over 90 years

Ranked among the top 10 bond trustees in the U.S.1 While many banks have exited this line of business, MUFG Union Bank, N.A., has remained dedicated to bonds and the complexities of bond administration for nearly a century. Our relationship managers have an average of 18 years of in-depth experience in corporate trust, escrow, and project finance. Ongoing education to strengthen this knowledge enables our specialists to provide insights into industry trends. Whether it’s making timely interest payments to bondholders or providing comprehensive recordkeeping, you can count on our support for the life of the issue. MUFG Union Bank, N.A., was named Best Corporate Trust Bank in the U.S. for five out of the last seven years.2 MUFG (Mitsubishi UFJ Financial Group) is one of the world’s leading financial groups. The global MUFG network encompasses 1,800 locations in more than 50 countries. MUFG provides access to corporate banking, trust banking, securities, credit cards, consumer banking and finance, asset management, and leasing. Learn more at

Corporate Trust Services James George Director Southern California 213-236-7150 Dean Levitt Director Northern California and Pacific Northwest 415-705-5020 Julie B. Good Director Mid-West and Texas 714-336-4230 Nils Dahl Director Eastern U.S. 646-452-2115 Rafael Diaz Director Asia and Latin America 646-452-2014

MUFG Union Bank, N.A.

A member of MUFG, a global financial group As of March 31, 2018 Thomson Reuters Financial.


2012, 2013, 2014, 2016, and 2018 Global Banking & Finance Review. ©2018 Mitsubishi UFJ Financial Group, Inc. All rights reserved. The MUFG logo and name is a service mark of Mitsubishi UFJ Financial Group, Inc., and is used by MUFG Union Bank, N.A., with permission. Member FDIC. 2


The Rise of the Robot

- how to supercharge your skills to outsmart AI According to recent global reports the financial sector is one of the top ‘at risk’ professions threatened by advances in big data and machine learning. Accountants are being replaced by algorithms capable of analysing financial data and completing tax returns, computers are being used to make stock trades faster and even predict how the market will react, and even automated systems are under development to potentially replace high level bankers. But research1 by the McKinsey Global Institute has found that humans still have the edge over AI in many areas including skills prevalent in the finance sector such as pattern recognition and matching, logical reasoning, creativity and innovation, complex problem solving, emotional intelligence and negotiation skills. The key is knowing how to build and leverage that super human brain power that AI can’t replicate. This is where neuroscience can help by using certain techniques to improve your brain fitness. The healthier your brain, the more agile it becomes, making it easier to adapt to change and to learn new skills, creating future leaders that can outthink, out-create and out-perform the competition – in this case, AI. Human brain v robots The human brain is very different from AI. Both have unique strengths and completely different functions and so should not be compared.

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survive, but also thrive in a financial world of continuous disruptive change. Individuals that can learn from experience is also ever more important as organisations become more complex and dynamic.

Instead, employers should focus on developing the strengths of humans and leave AI to focus on the tasks that they’re naturally better at so human and robot can work side by side. The fear of humans losing their jobs to AI in the future is only valid if humans are trying to do what AI is best at. Focusing on the tasks that require a more emotional, logical and creative approach such as financial strategy, anticipating clients’ future investment needs, creating forward thinking, innovative financial products, and pulling together agile teams, the areas where financial professionals can excel beyond AI, leaving AI with the more repetitive, process driven jobs. Robots then becomes an accelerator of what man wants to achieve - to work smarter and faster than ever before. As Paul Daugherty, chief information and innovation officer of Accenture said on a panel at the Dreamforce learning event in San Francisco, in the future there is “going to be a fusion of both: in essence giving people super powers to do more. Yes, there’ll be jobs that are eliminated, but there’ll be tremendous opportunity for humans to do new things in new creative ways – work that’s more creative, fulfilling and meaningful.2

Humans can also continuously develop their own learning agility by continuously being curious, experimenting with ideas, approaching problems from new angles and getting results under tougher conditions. The six drivers to boost brain agility However, humans aren’t born with brain agility. It’s something we have to learn and develop. There are six drivers that boost brain agility, which are brain fitness; pro-active stress coping skills; sleep; movement; mindset/attitude and nutrition. These drivers significantly affect our brain health, memory, focus, cognition and energy, thereby impacting our ability to perform at work including reducing stress and accidents and increasing engagement and wellbeing.


Learning gives humans the advantage Learning is the DNA of the mind but also the DNA of any progressive and competitive organisation, and it’s what gives humans an advantage over AI. Robots can’t compete against man’s natural ability to recognize complex problems and patterns and engage various modes of thinking to create innovative solutions for that problem. Being learning agile means being able to learn and re-learn quickly from experience so you can continuously adapt and adjust to new systems, strategies, structures and technology, fast and easy – a skill that will not only help finance professionals

Brain fitness – average brain fitness is only 48%, the ideal is 80% or more, and it’s the degree to which we fully integrate and flex between all areas of our brain. Our brains are divided into two halves. The right side for big picture thinking and the left for logic, facts and detail. We all have a dominant hemisphere. Typically, we use each hemisphere alternately. Using your whole brain underpins its ability to be brain fit. It means our brains are in-flow, learning fast and effectively, committing as little human error as possible and being able to concentrate while engaging the whole brain effortlessly during cognitive processes like learning and thinking. To boost brain performance, encourage greater

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flexibility between the hemispheres through mental activities like chess, crosswords, playing a musical instrument or exercises that require crossing of the body’s midline such as martial arts, swimming and dancing.

Nutrition – our eating habits impact our brain health, as essential brain chemicals – neurotransmitters - need a protein rich diet along with good hydration to thrive. Fruit and vegetables, seeds, nuts, natural oils, fish, chicken and lots of water all help.

Movement and exercise – the more we move, the more we secrete positive neurotransmitters, increasing concentration and reducing stress. Exercise also increases dendritic growth, so our brain cells receive more information from other neurons. Try stretching at your desk, have meetings standing up, and go for a walk at lunchtime.

Attitude – maintaining a positive outlook at work is also crucial for brain health because positive thoughts stimulate the secretion of neuro-transmitters which boost quality thinking and creativity. But if we respond to stress with negative thoughts, we’ll secrete inhibitor chemicals which block or limit the flow of electrochemical impulses and reduce brain performance.

Stress – stress is the brain’s worst enemy. The inhibitor chemicals it produces immediately compromise brain performance. Our less-dominant brain hemisphere ‘switches off’ immediately under stress, so we only have access to half of our normal brain functionality. To overcome the negative impact of stress, develop stress coping skills such as exercise and breathing. Recognise your stress triggers and take action before they take hold of your mental wellbeing including breaking things down into bitesize pieces so they’re more manageable.

So, consider the environment in which you work. What changes could be made to improve your brain fitness and performance and are there also some lifestyle choices you could make to help improve your health and wellbeing? By creating a workplace that encourages neuro-agility, finance organisations will develop and future proof their talent, improve performance and reduce risk for human error, significantly increasing a company’s return on its human workforce investment.

Sleep - just one night of sleep deprivation affects our ability to retain new information. Our brainwaves slow to alpha frequency as we rest, theta frequency when we feel drowsy, then delta waves in dreaming and deep sleep so ensure to get at least five hours of deep sleep a night to keep your brain fit and agile.

Carol Gaskell Managing Director Full Potential Group By Carol Gaskell, Managing Director at Full Potential Group, a top leadership and talent development firm and specialist in neuro-agility.


Marr, B. (2016, April 25). Surprisingly, These 10 Professional Jobs Are Under Threat From Big Data. Retrieved from https://


Manyika, J., Chui, M., Miremadi, M., Bughin, J., George, K., Willmott, P., & Dewhurst, M. (n.d.). Harnessing automation for a future that works. Retrieved from featured-insights/digital-disruption/harnessing-automationfor-a-future-that-works

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3 Ways That Brands Can Leverage Live Engagement on Social Media

Nearly 2.62 billion people have active social media accounts today. The finance industry has long understood that targeted ads and social media campaigns are powerful tools for driving brand awareness and sales. However, despite the fact that social media drives more traffic to a website than organic search, conversion rates for social are still extremely low. In fact, according to AdWeek, social media traffic has an average conversion rate of 0.71 percent, with organic search converting at 1.95 percent and email at 3.19 percent.

Live Engagement with customers is helping banks, asset managers and insurance companies to do just that. Companies who offer some form of live engagement from their websites are seeing that live chat facilities are significantly increasing conversions and helping to build strong relationships with customers.

Some companies offering financial services are very successful in creating communities and developing a strong following on their social media accounts, and this is definitely the first step to increasing conversion. But how do you use these communities to build customer loyalty and increase sales conversion rates?

1. Timely engagement is key: Social media is providing the perfect vehicle for unhappy customers to voice their complaints. Proactively managing the response to unhappy customers in a timely manner is a great way to build a great relationship. Use text chat to respond to the individual’s post but rather than continuing this conversation publicly, take the conversation private.

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Here are just three simple ways in which live customer engagement can help you achieve higher conversions across your social media platforms:

An empathetic response with an invitation to a private conversation through a live link, which will expire in a specific time period, shows that you are attentive and responsive. If your customer engages, you have an opportunity to solve their issue and immediately improve the relationship they have with your brand. At the end of the engagement, ask for a post back to the same social channel with their positive feedback. We all think more positively about a brand that is seen to deal quickly and respectfully with negative feedback. Your engagements with consumers on social media should also be with customers that are reacting positively to your content or asking questions about your products. The most important thing is timing. Social media is all ‘in the moment’, and you don’t want to lose the opportunity to build a relationship with a consumer.


Priya Iyer Chairman & CEO Vee24

2. Ward off those abandonments: Get more out of your social media ads and paid search with live engagement links. Most web banner ads and paid search results drive customers to a landing page, which then leads to your website and conversion pages. At each of these stages, there’s a chance that your customer will drop off the page or abandon their purchasing decision. You can prevent this by engaging live directly from paid search or your social media ads. For highly targeted search keywords or social ads, use an embedded live engagement deep link to immediately start a text or video conversation with the prospective customer, before they even get to your website. 3. Yes, do the BOT: Build a market place on Facebook using ChatBOTs. This can be the same ChatBOT that you deploy on your website. Your ChatBOT can engage in a conversation with your customer on Facebook Messenger or any other social media account. Based on the customers’ interests, it can suggest relevant

products to purchase. With built-in integrations to your order processing system, your ChatBOT can conveniently enable the completion of a purchase right within your social media site. That's a win-win experience for both your customer and your business! Live customer engagement allows you to add a human element to your brand and create a personalized and timely experience for the customer, which is the key to driving conversion rate. Get more out of your marketing spend by providing text or video chat opportunities with 24/7 ChatBOTs on every highly targeted marketing touch point, whether it be email campaigns, paid search, web and social media ads, or social media communities. Live engagement features have been proven to increase online conversion rate by 10x or more. It’s a good time to investigate what it could do for your own business.

With over 25 years of diverse international experience in nearly every facet of software, Priya is a proven, high-growth entrepreneurial CEO with a leadership philosophy centered on engaging clients and employees to build industry leading SaaS software platforms and delivering exceptional stakeholder value to achieve sustainable competitive differentiation. Demonstrated success in developing and scaling a strong entrepreneurial and innovative culture, attracting and retaining top talent, cultivating a sense of ownership throughout the organization, and leading successful teams. Priya was awarded New England Entrepreneur of the Year in 2014 and ranked on the 2015 top 100 Entrepreneur list by the Boston Globe. Prior to Vee24, Priya was most recently Chairman & CEO of Anaqua, Inc. which she founded in October 2004 and grew into a global SaaS solutions provider for Intellectual Asset Management. Prior to Anaqua, Priya headed Operations at Steelpoint Technologies, a legal software provider for Fortune 500 companies and global law firms, where she drove the company from the red to profitable quarter-after-quarter growth. Prior to Steelpoint, Priya was Managing Partner at AGENCY.COM where she founded and grew a financial services practice to $250 million in less than 5 years. Priya has also held senior positions at Bell Labs and Foxboro Systems. Priya holds a bachelors and masters in Computer Science and an MBA from the Sloan Fellows program at MIT Sloan School of Management. She serves on several boards, women executive panels, and is a regular guest speaker at various business schools in the Greater Boston area.

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Office Design for Millennials Ian Brough at Building Interiors talks about some of the design practices organisations can use to ensure their office environment works for millennials

Below, I share some of my top tips on how to design your office for millennials while also ensuring the environment is compatible for other types of worker.

In an era where companies are welcoming the freshest young talent alongside three other generations of workers, smart office design is key for creating a positive working environment that suits everyone’s needs and requirements.

Look at the Modern Trends in Interior Design

Recent studies suggest that by 2020, millennials will make up half of an organisation’s workforce; a stat that holds incredible power and pressure for companies seeking to employ the very best candidates of this generation. Millennials bring an entrepreneurial flare and a digitally-focussed mindset – two characteristics that should inform the layout and design of your office space. But with different preferences and requirements, businesses of all shapes and sizes should be conscientious about altering the style of their workplace to ensure it accommodates everyone.

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You can tap into this love of style and fashion by monitoring the latest interior design trends, particularly when it comes to colours, materials, and furniture. Experimenting with modern interiors allows your business to create a trademark and personality of its own.

There’s no denying that a dull office space can be uninspiring for staff and prevent employees from achieving their full potential. In fact, a report titled ‘High Performance Buildings’ by Carnegie Mellon found that overall productivity and performance can improve as much as 12.5% in a style-conscious, forwardthinking office.

So, whether you position yourself as bold and colourful, sleek and stylish, or minimalist and industrial, you need to make sure your office has the right feel and flow. Tying together a solid brand proposition with help from your interiors won’t go unnoticed among millennials.

When looking to entice the best talent among millennials, you need to keep in mind that the generation is especially fashion-focussed, from the clothes they wear to the restaurants and bars they visit and the spaces they choose to socialise or live in.

Having grown up in a digital era, millennials are usually heavily reliant on technology in their day-to-day lives, from using their smartphone to communicate with friends and listen to music, to ordering food, booking holidays, and arranging a taxi at the tap of a button.

Install the Latest Technology

AMERICAS BUSINESS As such, you don’t want to turn away potential young talent by operating a ‘technophobe’ office. Simple features such as high-speed WiFi, ample charging facilities, and good computers (not the bulky old monitors of the ‘90s) should be a given. In contrast, having portable office tech (including laptops and tablets) that allows employees to take their work with them around the space is a nice touch that will certainly appeal to the way millennials like to work. Create Spaces that Encourage Collaboration The workforce is evolving at such a rapid pace and gone are the days of closed-off office spaces and the ‘every-man-forhimself’ mentality.

encouraged, and break-out zones are also popular among the younger generation. Just look to the offices of digital giants2 such as Facebook and Apple for inspiration when it comes to collaborative working spaces. Introducing ‘chill-out’ zones complete with bean bags or comfy chairs can act as the perfect spot for employees to channel their creative thoughts by listening to some music. Alternatively, desk spaces are a good idea for allowing people to work together on projects. Or you could introduce a coffee bar area complete with a Nespresso machine for that much-needed caffeine fix and socialising break. Bring Nature Indoors

Today, working practices are more about openness and collaboration. In fact, a recent study found that 86% of workers1 blame a lack of collaboration and communication for workplace failures.

Whilst plants may look pretty in an office, they can also ramp up the productivity levels of employees. A paper by Harvard University3 found that the performance of people working in ‘green’ offices was double that of those working in conventional environments.

Designing your office space to promote collaboration doesn’t need to be hard. Open-plan work environments are

So, it’s well worth bringing nature indoors in the form of leafy pot-plants, and incorporating design elements

that focus on bright spaces with lots of natural light. For millennials, outdoor areas hold a big appeal, again tapping into the style-conscious personality of this generation.. Facilitate an Active Workforce One final element to keep in mind are practical facilities such as lockers and storage. Most millennials are unlikely to drive to work, and might not even own a car. Instead, they’ll walk, run or cycle into the office every day; as such, they’ll expect to be able to safely store any equipment once they arrive. Adding in shower and changing facilities is also a must if your office is to appeal to millennials.

Ian Brough Managing Director Building Interiors


Arcari, M. (n.d.). Press Release. Retrieved from https://


World's Coolest Offices of 2017. (n.d.). Retrieved from https://

3 Green office environments linked with higher cognitive function scores. (2018, June 22). Retrieved from https://www.hsph.

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Automated Reconciliation is a Stepping Stone to the Digital Financial Future In today’s world of rapid innovation, almost all industries are undergoing some degree of digital transformation, including the transformation of financial processes. Due to their very nature, it is not always practical to leap directly to a full digital overhaul of these processes, but this is not an all or nothing situation. Organizations can benefit significantly by identifying specific areas in which to cut inefficiencies and streamline workflows. One such area is reconciliation. Automating this timeconsuming and error-prone process can make a significant impact on the bottom line and reduce the risk of compliance misses and mistakes. Getting the Numbers Right For organizations with millions of transactions, closing the books is no easy feat. Quarterly, half-year and annual financial reports — along with other forms required by regulatory agencies — keep the accounting team working to meet deadlines year-round. Financial statements face external scrutiny from regulatory agencies in every country in which the company operates. Additionally, there are shareholders, boards of directors and in-house audit and compliance teams analyzing the numbers. There is great pressure to avoid mistakes, and no one feels that pressure quite like the CFO who signs off on the books. By attesting to their veracity, he or she assumes a great deal of personal liability.

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But manual reconciliation processes used by many companies today provide no audit trail showing how the balance sheet was derived. As a result, executives must certify the data without visibility into how the numbers were achieved. And once financial leaders sign off, there isn’t an easy way to backtrack and gain visibility into the data they approved. Without an automated process, reconciling items such as payments, disbursements, commissions, and bank accounts at the transaction level is a labor-intensive and error-prone process. In addition, due to the lack of an audit trail, companies often write off unresolved exceptions because they cannot trace an error back to the source — raising the question of possible fraud. Exacerbating the problem are the large stores of disparate data that must be taken into account during the reconciliation process. Data can come from internal departments or third-parties; in the form of text files, spreadsheets or PDFs; it can involve multiple currencies; and it can refer to a payment, customer information or a myriad of other data. Different sources and different structures of data make manual reconciliation difficult. Automated reconciliation can enable companies managing high volumes of transactions to track, match and archive all incoming data, and connect that data processing directly to certification. Reducing the risk of error could save companies thousands of dollars in noncompliance fines and protect the company’s reputation among customers, peers and regulators.


Seeing the Full Picture By bringing the full range of transaction-level and balance-level data together into a single system and automating the entire reconciliation process, from data acquisition and matching through period-end approvals and reviews, companies can form a complete account reconciliation picture. This enhances visibility into exceptions, helps eliminate manual interventions and facilitates rapid, cost-effective resolutions. Automated checks help ensure compliance with corporate and regulatory controls.

Centralizing data in one place and integrating automated reconciliation and certification processes allows the data to be traced to its source throughout the entire financial close lifecycle — from data ingestion through matching, exception management, reconciliation, certification and signoff. It becomes trackable and transparent.

A data-agnostic tool can pull in massive amounts of disparate data related to payment and disbursement statuses and more, and funnel it through an automated matching system to pair the right data with the right transaction. This can lead to an overall 75 percent reduction in write-offs (based on results from organizations that use an endto-end reconciliation solution).

Integration of data and matching transactions using an automated process can cut the risk of error by as much as 50 percent (based on results from organizations that use an endto-end reconciliation solution). Built-in audit controls can also help ensure that regulated financial standards are met.

Increasing Efficiency and Reducing Costs

A centralized view of transactions and the overall reconciliation lifecycle also makes it easier to mitigate the risks of fraud and write-offs related to unexplained exceptions. End-to-end reconciliation automation, combined with data agnosticism, facilitates the identification and resolution of exceptions.

By minimizing the need for manual research or interventions during the reconciliation process, companies can achieve significant efficiency improvements and lower operational costs while enabling staff to perform more value-added work. Reducing manual tasks and implementing automated reconciliation can lead to a 60–80 percent gain in efficiency (based on results from organizations that use an automated reconciliation solution). Further, it can reduce the time it takes to close the books by two to four days.

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Your support keeps pushing us to the top.

BMO has been named Best Forex Provider – North America/China* for the eighth straight year. You can count on our team of experts for winning solutions that help you achieve your FX goals.

*Global Banking and Finance Review Awards, 2011-2018. BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A. (member FDIC), Bank of Montreal Ireland p.l.c, and Bank of Montreal (China) Co. Ltd and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC) in the U.S., and BMO Capital Markets Limited (authorised and regulated by the Financial Conduct Authority) in Europe and Australia. “BMO (M-Bar roundel symbol)” is a registered trademark of Bank of Montreal, used under license. ® Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. ™ Trademark of Bank of Montreal in the United States and Canada.


Here are some of the potential savings:

Working Smarter, Not Harder

Reducing audit costs by 25 percent by providing electronic access to accounts and required approvals

Eliminating document storage fees and printing costs

Eliminating cost of compliance deadline misses and potential fines

Reallocating staff to higher-value activities

Finance teams have been evolving to act as strategic partners in their organizations, helping to drive business results. They should be working with tools that can do some of the numbercrunching for them, allowing them to focus on the tasks that provide the most value for the bottom line, like exception investigations and other strategic projects such as mergers and acquisitions and transformation initiatives.

Reducing write-offs

In addition to realizing savings, organizations also gain greater visibility and confidence in the accuracy of financial reporting, which helps lower compliance and reputational risks.

A fully automated and integrated end-to-end reconciliation solution can ease the pain of financial preparation while facilitating speed, accuracy and efficiency. It can reduce risk and positively impact the bottom line while also freeing up staff to focus their efforts on more strategic projects. Stronger compliance, decreased costs and enhanced efficiency are the promises of digital transformation that automated reconciliation can bring to companies today.

Renata Sheyner Senior Product Manager Fiserv As the Senior Product Manager for Financial Control Solutions at Fiserv, Renata Sheyner engages with clients across industries to understand their internal compliance, risk management and financial control needs to drive strategic innovation.

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The Far-Reaching Consequences of GDPR In the run-up to the General Data Protection Regulation (GDPR), which came in to effect on May 25, 2018, most businesses failed to recognise that GDPR’s reach spreads well beyond the borders of the EU.1 Most multinational companies, and of course EU-based companies that deal with EU customer data need to comply with the legislation. However, during the lengthy and somewhat confusing countdown, the majority of businesses only considered GDPR’s implications within EU boundaries; assuming that the legislation was something that US companies need not worry about. This is simply not the case and failing to recognise this can severely hinder the chances of businesses operating successfully across international markets.

Unbundling GDPR The European Union introduced GDPR to safeguard its citizens amidst growing concerns around the safety of personal data. GDPR aims to protect the ‘personal data’ of EU citizens, by giving greater rights to individuals over how their data is used

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by institutions. The definition of personal data has been expanded beyond an individual’s name and address to include all other types of data including IP addresses, system IDs and cookies. Even the account mnemonics more specific to financial companies are now included. In a nutshell, the legislation also aims to standardise data privacy laws and mechanisms across industries, regardless of the nature or type of operations.

Transatlantic Reach For businesses that operate from outside the EU, the questions to consider are the extent of GDPR’s impact, as well as how we can distinguish businesses that do need to comply from those that don’t. The answer to that simply comes down to the reach of GDPR. While GDPR is the most significant change to European data privacy and security we’ve seen in over 20 years, it’s also a major change to US data privacy security. A large percentage of US-based companies will therefore fall well within GDPR’s reach, one way or another. Any business that operates

in the EU or with people in the EU (even if the company itself is not located there) may be subject to GDPR compliance. Additionally, if a US business uses data collected from people in EU member states for the purpose of targeted advertising, they are subject to GDPR. Similarly, if a US business conducts e-commerce and accepts money in the currency of an EU member state, they are also subject to GDPR.

Compliance in Practice For a US company to be compliant, at the very least, the company’s website should have a consent check box where the default acceptance value is null (not defaulted to being checked). The key here lies in the territorial aspect of GDPR, which is different from the 1995 EU Data Protection Directive in that if the US company has collected data on individuals while they are located in the EU then they must comply with GDPR. Conversely, if an EU citizen is in the US and uses a website which is designed to be in the US, then GDPR does not apply.


Also, if a website is considered global and does not use the language of, or accept the currency of, an EU member state, then GDPR will likely not apply.

In Summary As a result of GDPR’s international reach, organisations cannot simply avoid the regulation because they are outside the jurisdiction of the EU. Even the collection of personal data for something as simple as a marketing survey is subject to GDPR’s compliance rules. It’s therefore imperative that businesses based on the other side of the Atlantic and further afield ensure they comply by gaining an understanding of the impact of GDPR, evaluate exposure and take the steps necessary to overcome it.

But, as with any legislative change, the key is to see complying with GDPR as an opportunity to make the way you handle data a selling point. Organisations should see GDPR compliance as a strong platform to grow and evolve in today’s data-driven world. There are also benefits to ensuring your firm complies with the new legislation wherever it is based. These benefits include lower admin costs, consistency, compliance, and client satisfaction, and have the potential to transform into increased revenue for financial services firms. Becoming compliant is as much about the journey as it is about the destination.

Nathan Snyder US Partner Brickendon


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Managing LNG Portfolio Risk in a Diverse Global Energy Market The LNG market today is vastly different than it was just a few years ago, and it will continue its upward swing into becoming a large portion of the world energy mix. In fact, according to the 2018 BP Energy Outlook1, LNG trade is growing seven times faster than pipeline gas, and by 2035, it will account for around half of all globally traded gas. While expanding into the LNG global export market can be profitable, proper LNG portfolio management represents a series of major, ongoing challenges. The trading lifecycle of LNG involves a large number of players responsible for a host of functions – natural gas suppliers, liquefaction plants, transport operators, terminal operators, regasification plants, storage facilities, pipeline operators, and natural gas utilities. With these functions comes the natural gas production, liquefaction, loading transportation, unloading, storage, regasification, and distribution, along with the management of the many associated financial processes. All these functions and processes make an LNG business a complicated undertaking.

A traditional domestic gas supplier will see LNG cash cycles lengthen due to the time and logistics required for LNG global transportation. Throughout these cash cycles, energy companies have to keep top of mind the price fluctuations in natural gas, credit risk on foreign entities, currency exchanges, and other factors when executing trades and managing assets. The ability to accurately track all of the aforementioned variables can seem impossible, and many large energy companies have still not mastered this abilitiy. Increased market competition and oversupply is shrinking trade margins and amplifying risk

Global LNG exports are creating more opportunity and adding more complexity

In the US alone, LNG exports quadrupled last year, and in the next 5 years, is projected to become the number two supplier of LNG. With gas production rising, domestic gas prices have fallen, creating a competitive advantage for US companies to export LNG to global buyers. “This business can be thought of as an arbitrage between low domestic prices and high global prices, although it is not an inexpensive opportunity to exploit.” –U.S. Commodity Futures Trading Commission (CFTC) 2.

Now that the United States has been ramping up its LNG exports and the balance of natural gas supply and demand worldwide has shifted drastically, the traditional global supplier and customer relationships in this market are rapidly changing. With this shift in the global supply and demand comes vast opportunities, but also adds even more complexity to the portfolio management of energy companies that sell and purchase on a global scale.

In response to the evolving market, traders across the world are expanding their LNG businesses to gain efficiencies in logistics and operations in order to maintain margins. However, as presence in the LNG market increases, risk increases as global exports require a much more complex logistics chain and longer pay cycles, which means these companies require more hedging and credit risk analysis capabilities.

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AMERICAS INVESTMENT Additional optionality can improve margins. Or not. Charif Souki, Chairman at US LNG developer Tellurian Inc3. said that in the next two years, some 20 cargoes would be available every day on the spot market, or 5,000 cargoes a year. "You're never very far from a cargo.� Having options can be a good thing, right? For those in the energy market, trading and logistics options come with a price: increased risk exposure. With operating expenses, fuel/raw materials and deductions all impacting the bottom line, producers and traders are having to also take into account the many transportation and storage options that are now tied to each global trade. Alternatively, if domestic gas prices become too volatile, natural gas utilities and natural gas generators will find it possible to supplement or replace their natural gas supplies with LNG imports. Because of energy market volatility, the tricky part for buyers is knowing when to purchase, how much to purchase, and who they should purchase assets from.

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LNG trading contract changes are forcing producers and buyers to renegotiate

battle for producers as lower spot prices for global oversupply will continue to result in more contract revisions.

S&P Global Platts 4 and other leading industry experts have projected that continued growth in global LNG exports will mean more competition in the market, resulting in more shortterm options for buyers who decide to renegotiate or completely do away with long-term contracts. Customers of existing long-term contracts that are reacting to oversupply conditions largely fall into two groups: those that are seeking to re-negotiate pricing and those that do not have enough demand to meet their contractual commitments. That said, producers and buyers are reconsidering and renegotiating their traditional sales purchase agreements (SPAs).Â

Many market participants are now contracting under an LNG master sales and purchase agreement (MSA), specifically intended for use with spot and short term agreements with substantial flexibility for the buyer and seller to customize the agreement to their needs. The rise in short-term contracts has led to a significant increase in the number of participants in the LNG derivatives market, which will enhance optionality, but add long-term market exposure, which adds yet another layer of complexity to global energy portfolio management.

Reuters5Â is reporting that Indian gas utility Gail has switched its LNG purchasing focus to short-term and spot deals in order to meet rising demand and they are making greater use of hedging against price volatility. Other companies have followed suit, signaling an uphill

These industry changes have not only altered the nature of how LNG contracts are structured, but also has affected spot pricing and trade margins, resulting in a shift away from the traditional producer and consumer relationships to a more competitive trading market. Additionally, the development of a deep and competitive LNG market is likely to cause long-term gas contracts to be increasingly indexed to spot LNG prices.

AMERICAS INVESTMENT The need for a sophisticated, modern commodity trading platform The already complex natural gas and LNG portfolio value chain continues to become even more complicated as the global export market grows, market competition increases, oversupply outweighs demand, and LNG contracts shift to spot or short-term agreements. Depending on how proactive industry participants are, these market changes can either provide businesses with growth opportunities or spell out a recipe for disaster. It is important now, more than ever, that industry participants are prepared for drastic changes in portfolio management and supporting software infrastructures. LNG producers, LNG traders, LNG transporters, natural gas utilities, and natural gas generators who lack strategic insights and responsive technology are limited in their ability to see the full picture and portfolio exposure. This increases the potential for risk as positions and inventories aren’t being optimally managed. In addition, insight into the true underlying exposure to pricing markets is hidden. As a result, decisions might be made without the best possible information, leading to not only increased operational risk, but also missed growth opportunities. In order to effectively manage portfolio risk and take advantage of opportunities created in a constantly evolving energy market, companies require an enterprise software platform that not only provides full value chain management, but also advanced quantitative risk analytic capabilities that can aid in valuing, modelling, and hedging of physical assets and derivatives. A comprehensive commodity management software (also known in the industry as CTRM or ETRM software), such as Allegro Horizon, will further address energy market opportunities and risks by integrating all physical and financial aspects to manage the entire LNG lifecycle, from production of the natural gas, through liquefaction of natural gas to LNG and transportation of LNG, to the re-gasification of LNG back to natural and consumption and distribution of the natural gas.

Michael Hinton Chief Strategy and Customer Officer Allegro Development Corp. Michael W. Hinton is the Chief Strategy and Customer Officer at Allegro Development Corp., a Dallas-based developer of commodity trading and risk management software for companies who buy, sell, produce or consume commodities. For more than 30 years, Allegro has delivered position visibility, risk management, comprehensive controls and regulatory compliance through a forwardcompatible, next-generation architecture that is built for your business. Headquartered in Dallas, Texas, Allegro has offices in Calgary, Houston, Jakarta, London, Singapore and Zurich, along with a global network of partners. Visit Allegro's website at 1

2 3 4 Industry casts doubt over future of long-term LNG supply contracts. (2018, May 16).

Retrieved from

5 India's GAIL turns to spot and short-term LNG deals. (2018, May 24). Retrieved from https://

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Argentina returns to square one. Where to now?

The first half of 2018 has not been kind on Argentina’s government, its assets or its investor base. At the core of the problem is that a change in the government’s economic policy priorities cracked investors’ confidence at the same time as the international context became less constructive along a stronger Dollar and higher US rates. In a nutshell, the Macri Administration, which during its first two years had decided to lower inflation, bringing it to a more normal level at the cost of an overvaluation of the currency, changed tack and became more tolerant of inflation seeking a more competitive FX rate.

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This change in priorities had deep consequences on local currency assets. Their valuations had been primed over the two previous years by hawkish rates and low FX-volatility. That changed in December 2017. The announcement of higher inflation targets in an attempt to push the Central Bank into lowering rates triggered an exit from local currency assets in particular and a drop in demand for Argy risk. With lower appetite for Argentine assets, the government decided to go to turn to the IMF for support. The ensuing program brings Argentina’s macro rebalancing to square one. The program takes care of the central government’s funding through 2019, while setting the conditions for the country to return to voluntary markets by 2020.

AMERICAS TRADING In our view, a successful program will need to be both economically and politically feasible. The first side of the equation means that the program has to accelerate the country’s fiscal rebalancing and improve fundamentals significantly over the next 18 months. We believe that the program has good chances of accomplishing this. Under the agreed terms, the government will slash the primary deficit, balancing the books by 2020. Additionally, the government has agreed to end monetary financing of the fiscal gap. The political side looks less clear cut, though the fiscal targets for 2018-19 incorporate an increase in welfare spending to keep the social situation from derailing the government’s chances of reelection. Where we feel the IMF program is less clear is in the monetary policy-inflation-FX rate tandem. From the program’s targets it appears that this will be a sequential program, in which the government will begin by clearing the Central Bank’s balance sheet from low-quality assets parked there by the Treasury over the past decade. The second step will be to stabilize demand for real money balances in order to normalize rates, which currently exceed 40% to contain retail investors from dollarizing their savings. During these first two stages, the program will be more tolerant of inflation, which is expected to end 2018 in the 30%

range. Starting by clearing the BCRA’s balance sheet makes sense from a theoretical point of view. Since its introduction two years ago, the Central Bank’s monetary policy framework has been encumbered by the obligation to finance the Treasury, the desire to moderate FX volatility and the need to roll-over the growing Central Bank debt burden. Focusing on lowering the inflation rate is almost impossible under such conditions. By eliminating monetary financing, imposing strict limitations to Central Bank FX market interventions and lowering the BCRA’s debt, the IMF program will free the BCRA to concentrate on its inflation mandate starting in 2019. The challenge is navigating through the second half of 2018. Unwinding the Central Bank debt is akin to lowering money demand. Lower rates will not contribute to sustain appetite for local currency assets. A policy stance more tolerant to inflation will do little to anchor expectations. In this context, despite the prospect of a steady flow of Dollars from the IMF to prime the FX-market supply, we believe that the risk of volatility episodes in the rest of 2018 remain high. Looking beyond the second half of 2018, however, we have a constructive view of the outlook for Argentina, with an economy that will begin to recover in early 2019 and a decelerating path for inflation.

Juan Manuel Pazos Head Strategist Puente

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Exploring new frontiers: How payment certainty propels businesses across borders

Operating in a global landscape In today’s competitive and globalised business landscape, companies are increasingly seeking new frontiers for expansion. In a recent piece of Accuity research, 69% of business leaders revealed that their companies will be branching into new geographies within the next year1.* While the aspiration of international expansion may be compelling, it is important to take into consideration that doing it successfully requires more than just ambition and a popular product. Conducting business abroad entails onboarding new clients, vendors, suppliers, and contractors. It requires building local rapport, adapting to new cultures, and establishing a unique brand in diverse contexts. Conducting business internationally also demands completing timely, accurate payments to local companies and understanding foreign regulations and payment processes. Many of the same organisations that wish to expand their global footprint struggle with crossborder payment challenges.

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In the same 2017 study, an overwhelming majority of executives felt that delivering accurate, timely payments presents a challenge to their plans of global expansion. Specifically, 61% stated that new business opportunities could not be taken because payment processing is too challenging. 81% acknowledged that payment inaccuracy has a direct effect on success and growth. Unsurprisingly, then, the study reported that 64% of corporate professionals want to improve the efficiency of their payment operations.

Processing global payments is surprisingly complex. While businesses can learn to navigate domestic systems over time, to accomplish the same globally is an entirely different task. There are three key challenges involved in completing international payments, and the degree of complexity increases at each level: •

Payment protocols differ by location. Diverse regional regulations guide payment processes, and a number of countries even require information in local languages.

Within any one region, various clearing and settlement systems may exist. For example, in India, the Real Time Gross Settlement (RTGS) system is used for gross settlements, while the Electronic Clearing Services (ECS Credit and ECS Debit), the National Electronic Fund Transfer (NEFT) system, and Immediate Payment Service can be used for net settlements.

Any one payment transaction requires different codes to successfully complete the transfer. These may include IBAN, SWIFT/ BIC, and local system codes.

The hidden complexity of payments In a world in which Amazon can promise same-day deliveries of even the most obscure consumer goods, it may come as a surprise to some that electronic money transfers are not entirely automated and not always successful. On the contrary, as the survey has confirmed, ensuring accurate, timely payments remains a substantial obstacle to many businesses. Despite the clarity of the survey results, it is not immediately obvious why payment processing is so difficult, and in fact, some of the toughest challenges may not even be evident to corporations themselves.


A price too high to pay Corporations consider payment processing as a major obstacle to conducting business internationally because transaction failures come at a high cost.

To ensure payments are timely and accurate, companies must master all of these facets. Thus, navigating the payments arena can seem almost impossible without expert knowledge, especially when companies are focusing on growth. To add to the challenge, national and regional payment codes undergo occasional changes as a result of mergers and acquisitions, bank or branch closures, revisions in regulation, and administration changes. These adjustments to payment systems or codes can be difficult to predict and keeping up to date can often feel like a tireless manual task. For example, in Western Sahara, financial institutions use the Moroccan local clearing system, while in Rwanda, the Central Bank recently decided to replace three-digit payment codes with five-digit codes. In either case, if a business was not aware of these changes, payments into these regions could be delayed. For firms considering expansion, even understanding basic payment protocols and the use of various payment systems can be challenging — so acquiring and maintaining accurate codes and navigating diverse and complex payment routes is a daunting task.

There are immediate, monetary consequences of failed payments, including considerable rejection and repair fees. Payment failures can cost $5-$50 per transfer, and each reconciliation may require 20-30 minutes’ administrative work. Often, extended delays result in additional fees and higher research costs. Treasurers, operations personnel, and master data managers must devote considerable time to resolving these complications, thus limiting their capacity to focus on other pressing tasks. Other consequences are indirect. In terms of treasury operations, delayed or missing payments can affect liquidity management by lowering cash visibility. Poor management can in turn negatively affect an organisation’s bottom-line. Moreover, because companies are often unaware that a payment has failed until the issue has already manifested into a serious problem, these difficulties are further exacerbated.

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Some companies may choose to dismiss these monetary charges as overhead or ‘just the cost of doing business’. Yet, there are other side effects that businesses cannot ignore. Failed payments can cause irremediable supply-chain disruptions. For example, imagine a major consumer retailer places a bulk order for shopping carts before a new store opening. Imagine that the payment failed, but no one discovered the transaction was incomplete until the night before the grand opening. The next day, there are no shopping carts for customers. Such a disaster would significantly damage the retailer’s relationship with its cart vendor as well as the location’s reputation with its customers.

Corporations should follow two best practice steps to become more equipped to handle the challenges of payments processing:

Most importantly, companies need to recognise that establishing global relationships that depend on accurate payments comes with high reputational risk.

Businesses of all sizes must strive towards fast, timely payments as a standard. As customers (as well as vendors, suppliers, and contractors) are often unware of the difficulties involved in processing payments, a history of failed payments can lead them to doubt a company’s operational efficiency as well as its ability to deliver on its promises in other areas. Best practice steps to payment success Despite the numerous challenges discussed, ensuring accurate, timely payments can be simple. By investing in proper data management systems and implementing standardised protocols for payment processing, companies can significantly mitigate the risk of bearing heavy financial and reputational costs.

Improve the company’s payments data. This means understanding the types of data required and creating a standardised method of organising existing data and collecting new information. Companies should also draft procedures for conducting research and repairs, so as to save both time and money. With these standards in place, businesses will be far more prepared to face the myriad of challenges that exist in the payments arena.

Sean Norris Executive Vice President EMEA & APAC Accuity

Integrate the data into an Enterprise Resource Planning (ERP) system and automate the payment process. Smooth integration and full automation will enable faster payments and streamline the onboarding process for new customers, vendors, suppliers, and contractors. Success in this area will provide businesses with the groundwork to build lasting relationships.

By overcoming the obstacles, businesses will be able to enter new geographies and feel confident that they have the ability to successfully complete transactions with any regional counterparty.

Meredith Wisniewski Portfolio Marketing Manager Accuity


* In early 2017, Accuity conducted a survey study to investigate the priorities, goals, and pressing challenges of Multinational Corporations (MNCs) in the realm of payments. Researchers canvassed 95 senior professionals from the corporate sector—mainly Treasurers and Chief Financial Officers (CFOs)—and discovered a common intent among corporate leaders to bring their businesses abroad.

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Jules Ngankam, Deputy Chief Executive Officer and Chief Finance Officer, African Guarantee Fund

Gerardo Garcia, CEO of Barents Re

Ms. Đuc Thị Minh Tran , Vice-President of Operation Division, VietinBank

Anjuli Pandit, Head of UK Corporate Sustainability, BNP Paribas

Anwanda Divine A., Country Treasurer, EcoBank Malawi

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EMEA 82 Issue 12


Worldwide Social Responsibility Every day BNP uses skills, insight, and experience to support their clients this expertise combined with a strong brand, diversified offering and a commitment to social responsibility that distinguishes it from other international banks. Global Banking & Finance Reviews Philip Fothergill recently met with Anjuli Pandit, Head of UK Corporate Sustainability, BNP Paribas to discuss the groups strong commitment to corporate social responsibility. Well let’s talk a little bit about CSR. First of all, in 2017 you launched your new business development plan for 2020 which is excellent. What would you say the key components of that plan are? Yeah so you know BNP Paribas we’re really proud of our diversified and integrated business model and we want to leverage that strength in this business plan but what we understand and, in this world, where all of our clients are

having to deal with so many things who are that are changing, the industry is having to deal with this changing world we can't just have a financial transformation it has to be a digital and a sustainable transformation. When I say digital, I mean these are client experiences and turning that into a digital experience into agile working and more collaborative work offices for our employees and from a sustainability concept it's you know the two biggest global agendas in the world today are the COP 21 agreement on a lowcarbon world and the United Nations sustainable development goals and we understand that if we want to prosper and if we want to help the market and the economy prosper we need to be part of that transformation and we need to be leading it.

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Well we'll talk a little bit about climate and the issues that raises a little bit later on. What initiatives or development plans will be taking place regarding your corporate social responsibility? I think we look at our impact in social responsibility from a sort of four levels. One is the industry impact. What can we as a as a large international multinational bank be doing to sort of move the dial on making sure the capital that's required to solve these large issues like poverty and climate change. You know what is our role in that? And so, we work a lot with our clients and with market leaders on this. Then when I look at our Community Impact we're really trying to understand. We're based all over the world and in each location, what are the specific local issues that they're dealing with and then how can we get our employees to engage with them either from a finance perspective or from a personal volunteering, you know so everyone has a diverse set of skills that they can bring also to those issues. We're really focused on environment. At home. we look at our carbon footprint and we try to manage our operations in that way. We offset our carbon. what we cannot manage to reduce but also the energy transition at large as I've mentioned before. Finally, we want to be a great place to work. If we

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want to be able to bring that kind of energy to our clients that we require to help them achieve their goals, we need to have that kind of positive energy in the office. So, we do a lot of social mobility, we have a lot of networks that look at diversity inclusion to make sure that our workplace is really a happy place to be. That's excellent, can I ask you then a little bit more about how as an organization you actually finance the community in an ethical way? I think we take a two-pronged approach, we have a sustainable finance and investment program it's across the group of BNP Paribas and the goal of this program is to bring together the experts we have in-house and to work with our clients and innovate what are those products and solutions and services that they're going to need in order for their own sustainability transformations and how can we be a partner and accompany them on their sustainability transformation. So, in those kinds of areas we're looking at specifically how do we make sure we're investing in the energy transition? So, we have a 15-billion-euro target for investment in energy and renewable energies by 2020, for example. 16.5 % of our loan book last year went towards directly impacting

EMEA INTERVIEW the sustainable development goals, so we're really trying to seek out those opportunities to if you don't mind me saying so, to put our money where our mouth is in that perspective. We're quite cognizant that we need to think about how we invest and where we choose to put our money as well, and we've made certain decisions to restrict our business activity voluntarily on this domain. For example, not financing coal-fired power plants as a public health decision we have ceased financing and investment in tobacco companies. We have certain policies on how we're going to work with the utility sector based on whether or not they're demonstrating that oil sands and tar sands are not their future and that they're diversifying and looking at alternatives and looking at lower carbon decisions, so we have these policies in place that sort of tell us what kind of business we will and will not do as well. Well you obviously are extremely proactive, and you mentioned earlier on about it being a great place to work as well. How do you actually see employee development being part of your social responsibility? I think that's an excellent question because I feel so many companies are grappling with this. You know, either the message is coming from the top or the message is coming from the bottom and how do you make sure that everybody is on the same kind of journey with you? To really bring sustainable and digital solutions to clients and to do so especially when you're looking at these huge global issues. Like when I look at the sustainable development goals the first one is no poverty, the second one zero hunger, I mean as an employee even if you are really proud of your work and you have interesting clients you’re thinking how am I going to impact that? We need them to feel empowered, so we have a campaign we call “What's my impact?” and we really kind of ask everyone to bring it down to something simple as what could your impact be on the sustainable development goals? And that could mean when you go speak to your clients are you talking to your clients about what they're thinking about, how they're mapping themselves the sustainable development goals? Could that mean that you're switching to a reusable cup instead of using a paper cup? Are you engaging for example in London

with the no straw campaign? You know the city are you looking at homelessness issues are you volunteering and offering skills to youth? So, we kind of try to help them see that some of these big problems you know, there's a way that as a finance person you can be part of it. Or if you're in the functions there's a way that you could look at your own skillset and be part of it but also as an individual and that's kind of how we're trying to get employees to really feel like they can be solution providers. We have this really fun exhibition that's coming up next week for us at our offices in London in Marylebone which is called “Everyday Heroes” and it's about all across the United Kingdom how BNP Paribas sees the people who are working on the energy transition and calling them everyday heroes because we kind of want to bring that culture also into the bank, that all of us can be an everyday hero.

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That's a great thought I wish I could be one. Indeed, as a global financier of the energy sector then you obviously have a responsibility there you mentioned carbon footprints etc. a moment ago. How much do you see that as being a very important part of issues that's protecting the environment? Thank you for asking that. I think for us that is one of our most important pillars in our sustainability journey. We see ourselves that if we want to be a bank in the 21st century we have to be a bank that is committed to ensuring the energy transition and for us we have we have a series of commitments, I mentioned the 15 billion euros by 2020, but beyond that we are specifically working with every single one of our clients and we want to be the bridge between investors and corporates to ensure that the capital is moving towards the future technologies that are going to solve this issue as well as to the companies who are really demonstrating that they want to take the leadership in changing business models to fit the energy transition. We're really proud of our work with some of our clients who have completely revolutionized the way that they manage their energy to demonstrate what we need to achieve to get ourselves to this lowcarbon world. What what kind of climate initiative do you actually have? For the climate initiative that's a project by the BNP Paribas foundation because increasingly we work with scientists and experts on the climate change agenda and we understand that the more data that we have about climate risks the more that we can make decisions as governments, as companies on what are those technologies going to be and one of the policies in the regulation of the future. We actually have about six million euros that we have funded over the next couple years and eight research projects and these research projects range from looking at governance structures and emerging economies about climate change to understanding issues about ice quality in Antarctica.

It's always a challenge to try and improve society wherever you are whether you're a government or a business organization such as yourself. Tell us more about the bank's commitment to actually serving the community better and actually improving the lifestyle. As a bank we understand that there is a section of community which is harder for us to bank to and so to do that we go through microfinance institutions. I think we have about three hundred nine thousand or more beneficiaries that have come from our microfinance funding and support and I think that's probably one of our strengths, are these funds that we help to get finance solutions out to different groups of people in France and also in the rest of the world, in Asia and in Africa as well. We also see ourselves as a community of individuals with a lot of talent and skills to offer and so we have a pretty strong volunteer program which is now running across the world. We have a target to give a million hours of volunteering to the community and as much as possible skill-based volunteering. So, you give you a lot back to society in the community. Do you feel that you achieve that successfully? I am really proud of where BNP Paribas is today on sustainability. I think every single company in the world is kind of in this transition zone and I think we can proudly say that from the top we are completely convinced that this is our projection. We have lots of employees engaged with our sustainability programs and energized to bring sustainability to their clients trying to find new angles and innovate in different ways and there's an energy I believe and a sort of your resurgence of purpose that has come into BNP Paribas as a bank which I think is going to drive us forward and make us even better partners with our clients. Well you are obviously extremely busy, and you've achieved a great deal so congratulations and thank you so much for coming to talk to us.

Anjuli Pandit Head of UK Corporate Sustainability BNP Paribas

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Legal Opinions – it is time to break the cycle of remediation

With the wave of post-crisis regulatory changes, from EMIR to MiFID II, to Margin Requirements for Uncleared Derivatives and Liquidity Reporting now in place, regulators are placing increasing scrutiny on the way institutions conduct business – and with the significant implications on regulatory capital relief and an IMM Waiver, growing attention is being placed on just how well organisations understand counterparty positions and the ability to treat exposures as net rather than gross. Is the close-out netting and the treatment of collateral against those exposures supported by robust legal opinions? Are they current and is the correct relief being taken? Annual attestations to regulators are not only more detailed, they are being ever more rigorously scrutinised and a few too many prudentially regulated firms are falling short of expectations. With too many organisations lacking the ability to correctly link counterparty exposures to legal agreement data, and no processes in place to identify those legal opinions that need to be refreshed, the remediation demands continue to escalate. With firms stuck in a remediate, ignore, remediate again cycle, D2 Legal Technology’s Managing Partner Akber Datoo and Senior Consultants Michael Wood and Annie Bradwell ask just why financial institutions are still not treating the management and refresh of legal opinions as an essential business as usual function.

Introduction Many of the remediation exercises that have occurred recently stem from regulators asking auditors to investigate and to report back on the processes being used by banks as part of the regulatory capital calculations, with a focus on close-out netting legal opinions. And this focus will only increase with the focus on the balance sheet and leverage and liquidity ratios, and the impact close-out netting has on them. In addition to the immediate impact on the balance sheet, if the regulator is not happy about the way legal opinions are used by the institution for capital relief purposes, such failure will also raise concerns for the regulator that the business is simply not being run properly, prompting further, deeper investigation. Certainly, the remediation work being undertaken by a number of institutions should be raising questions as to the way the legal opinion process is managed. Indeed, under current regulation, institutions are required to review close-out netting and collateral enforceability opinions as frequently as necessary to ensure continuing enforceability. Yet according to a survey conducted by D2 Legal Technology of sixteen leading investment banks, 42% of institutions had no policy regarding the frequency of legal opinion renewal and two thirds were unable to point to a formally

approved and detailed process in relation to the management of legal opinions and associated data. Institutions are stuck in a cycle of poorly managed remediation, ignore, remediate again. It simply is not sustainable to continue with poorly defined processes that are not adequately supported by internal systems or data.

Poor process Where is the Business as Usual (BAU) process for this critical influence on the balance sheet? Of more concern: do those involved in netting decisions fully recognise and understand the BAU significance? The fact that the decision to net on an agreement is a regulatory determinant that affects the overall balance sheet of the organisation is rarely recognised across the full end-to-end process. This is not just a matter for client on-boarding, nor a legal department, nor middle office or regulatory capital financial and accounting. It is a fundamental process impacting risk, finance and treasury functions. Given its significance to the process, legal opinion management and renewal should, if not already in place, become a BAU function considered across the full end to end counterparty management lifecycle; and that means organisations need to start factoring in opinion refreshes as part and parcel of both BAU function and cost.

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AUB Reaps the Rewards of Innovative Banking and Excellent Service

Best Retail Bank Kuwait 2018

Best Retail Marketing Kuwait 2018


Of course, this is easier said than done. Netting and collateral opinions typically cut across the multiple front office product segments, creating difficult ownership and cost allocation discussions. Furthermore, while some organisations have just a few hundred legal opinions, others have many more, in some cases up to 2,000, creating a huge task and substantial staffing resource to keep them all refreshed.

Data consistency However, there is also a massive gap between those organisations with good legal agreement, opinion and trade linkage data visibility and those without. Institutions with poor or inadequate data in this area have to undertake a huge manual task to identify what netting flags have been set against what opinion – and what therefore needs updating. In contrast, institutions with good systems in place and good legal opinion data capture, know what they are netting on and can immediately pick up any flags, identify the affected opinions and make the necessary changes. Despite the BCBS 239 regulation mandating data accuracy and lineage for such key netting data, it simply doesn’t exist at many firms. This is nothing but sensible – an institution should be able to look at all agreements, see what opinions are in force, in what jurisdiction and for which counterparty types and products. If there have been any changes, for example to the automatic early termination provisions in an opinion or recovery and resolution regulatory change within that region, by simply polling all agreements it is easy to identify those that need remediation. But for institutions that have not done the systematic data capture transformation, it is an enormously difficult job - and one that far too often is still at the bottom of the pile.

While clearly institutions need to prioritise this activity, and ideally make it a BAU process, respondents in the D2LT survey raised concerns about a lack of industry standards that can be supported by detailed policies, procedures and systems for legal opinion management, especially regarding the determination of counterparty types and products, and problems with a lack of jurisdictionbased taxonomies. This is a fundamental need prior to any automation and move to a sustainable industry approach, perhaps underpinned by the ISDA Common Domain Model initiative. There are signs of a move towards standardising counterparty types across jurisdictions, which will help in the initial data capture aspect of legal opinions. Certainly, agreements are well mapped, and content is more readily available now in systems than it was ten years ago. Questions such as: ‘What branches are on the agreement?’ ‘Is automatic early termination applicable?’ ‘What counterparty type am I dealing with?’ can all be quickly answered – the key now is to integrate the relevant systems and data flows to the legal opinion and to productionise the entire process through technology and automation. Understanding liability Of course, this cannot be done overnight. Institutions need to have tough conversations regarding costing and priorities. But with regulators providing very clear demands regarding the basis of opinion review, simply ensuring industry opinion records are updated in a more process friendly manner would cover a huge portion of the balance sheet.

But the most fundamental step is to acknowledge there is a requirement to improve the current state of affairs and recognise accountability in the end to end process. In today’s regulatory environment someone within an institution is accountable for the closeout netting and collateral decisions. If a lawyer signs off on the legal opinions that are being relied upon for the IMM waiver, that is a personal liability. If that individual does not understand whether the data representation of the legal opinions is correct, whether all opinions are still current, or that there may be opinions with conditions attached that have changed, how can that individual stand by that decision? Repeated remediation is not a sustainable strategy. From both a corporate and personal standpoint, it is becoming imperative to satisfy the regulator that netting and collateral opinions are in order and that the proper processes for refresh are in place. Managing and refreshing legal opinions has to become BAU.

Akber Datoo Managing Partner D2 Legal Technology

Michael Wood and Annie Bradwell Senior Consultants D2 Legal Technology (Not Pictured)

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Why Banks Are Lagging On Open Banking 92 | Issue 12

The world of consumer banking is becoming more democratic, as the old banking powers begin to lose their grip and their monopolies.

Driving Competition and Innovation The latest Open Banking regulations have signalled a subtle shift in the world of consumer banking. New competitors are being allowed to compete in a marketplace long dominated by a select few financial giants. These aptly named challenger banks - such as Monzo and Starling - are but the forerunners of a host of other fintech providers that now have a greater capability to deliver financial services direct to consumers, outside of the traditional banking framework. Open Banking is also the path towards more novel financial solutions, with an emphasis on those that aren’t being offered by the big banks. Moneybox for example gives customers the chance to invest their small change. Yolt allows its users to see a full analysis of spending for easy budgeting. The Open Banking Initiative and PSD2 are opening up opportunities for fintech firms in the spaces which have been missed by the bureaucracies of the traditional banks.


The rationale behind the Open Banking movement was to enable greater competition, with the view that it would prompt consumer banking services to better cater for customers. It’s now common for people to own more than one bank account, across a number of providers. Gone is the era where customers stuck with one bank from adolescence to the grave. Challenger banks and start-ups are slowly but surely raising the bar of what consumers now expect from their bank. The bricks and mortar banks need to up their game in the face of this significant increase in the variety of products and services. With ever more innovation on the horizon, banks can no longer rely on customer loyalty.

still have been sceptical of the intentions of the challenger banks. So why is the Open Banking initiative failing to make a significant impact?

online wallet). The room for innovation here is massive in terms of what this new breed of banks and service providers can achieve together.

The most prominent explanation is that consumers don’t know what Open Banking is. The Crealogix Group carried out an independent study which showed that 85 per cent of UK consumers are either unaware of Open Banking or don’t understand it. The fault of this lies partially with banks who have failed in their duty to communicate this information to their customers. Less than a quarter of the few who had heard about Open Banking had received this information directly from their bank.

Seemingly it has been left to start-ups to drive innovation, otherwise little difference will be made anytime soon, and the prospect of a one billion pound boost to the UK economy will be lost due to inertia. To illustrate this, the first traditional banking app designed to compete with the new challenger banks is headed by HSBC and won’t be available until later this month. In comparison, Yolt, Monzo, Moneybox and many more have been live for quite some time.

CMA Regulation and PSD2

Collaborative Success

For the Open Banking initiative to flourish, customers need to be properly informed and be willing to share their financial data with alternative financial providers and services. Understandably, people may be apprehensive about the security of their financial information. Before recent regulation came into force, ‘screenscraping’ was one solution, in which customers gave third parties their login details for online banking to apps like Yolt and Chip.

The key to Open Banking’s success is uptake. If enough people search out the services of third party providers, then these companies will create for themselves a space in the market that had once been the preserve of traditional banks. Proper education about Open Banking is vital for it to make a significant change to the consumer banking market and the fintech space. Almost half of consumers (45.5 per cent) are concerned about the security of Open Banking. Sharing banking details in this new way is of course a big first in the banking world, but with the initiative and regulations in place, consumers should feel secure.

In January this year, the Competition and Markets Authority began the Open Banking initiative, coinciding with the EU Directive PSD2 (Revised Payment Service Directive). Alongside introducing more competition into a stagnant market, it would provide a common payment framework for fintech providers to build on. Together these regulations stipulated that the nine biggest banks in the UK would be obliged to grant customers the right to give access to “read only” copies of their bank statements to third parties. There is obviously huge potential here. These regulations have forced banks to underwrite the safety of customers’ bank accounts that have been shared with third party providers (many of which are competitors with those very banks), providing a crucial layer of reassurance for customers who may

Proper Education Will Determine Open Banking Success On paper, Open Banking should be a hit with customers. They have access to better money management tools, budgeting services, and will have a better understanding overall of their finances. The benefits are endless and everyone wants to save more money. The real challenge is educating consumers about these benefits, and from there, allowing them to make informed choices about how they want to take control of their finances.

The innovation is indicative of a fintech space that is able to move with more agility and creativity than ever before. The likes of Monzo and Starling are able to swiftly roll out services simply on account of their smaller size, the absence of bureaucracy and the culture that they foster within their company. These firms act more in concert than they do in competition. The recent regulatory moves has made the prospect of collaboration between fintech startups with banks (both challenger and established) all the more possible. For instance, Starling bank have been able to partner up with the likes of Flux (an app that collate loyalty cards into a single

Jo Howes Commercial Director CREALOGIX Group

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A hidden sales opportunity?

By viewing the greater transparency demanded by MiFID II as an opportunity to create more intelligent relationships with their FX clients, I believe banks can win more business with leaner sales teams. It is understandable that some market participants have viewed the implementation of the MiFID II rules with trepidation given that they are required to provide a greater degree of detail around their trade execution. It used to be the case in a dealing room that a client would phone a sales person and ask them for a price. The sales person would then stand up and say ‘I have client X on the line looking to do five million euro to dollar – what is the price?’ Now the majority of requests have to be anonymous and the price is based on the size of the trade rather than the identity of the client. In reality, if a large client

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calls a sales person they will still make sure the trader gives them the very best possible price, but there are now pre-agreed parameters via which the price is constructed based on the client profile and the type of trade they are doing. For example, for a hedge fund that is speculatively buying and selling currency the trader will need to add a layer of spread to ensure that as and when the hedge fund rings the other banks on its list to do that trade elsewhere, the trader is covered in the market. It is understandable that traders want to see the same level of transparency in FX that they see in equity or fixed income trading, even though as a primarily over-the-counter or OTC market, FX lacks the inherent transparency of a centralised market.


Technology has a role to play in improving accountability. For example, the rates received by the traders who use smart trading systems are based on prices from across the market so they can see how the spread has been calculated.

This is significant because banks are facing unprecedented pressure on costs. Margins are shrinking and as a result headcount is falling, so it is vitally important for FX sales desks to be able to justify their existence.

This is important because FX traders typically have multiple tiers of clients and could at some future point be asked to justify the spread applied to each of these client groups. If a regulator were to ask years later why a particular quote was priced as it was, the trader could show where the market was and how the sales spread was calculated.

The FX market has moved towards a self-service, electronic model, which has been accelerated by the poor behaviour of some sales and trading staff in the past,

As mentioned above, smart trading systems do not prevent sales people from offering certain clients better prices – they simply ensure that pricing is tracked and recorded and enable the sales person to include an explanation of why they changed the spread.

The majority of trades that go through in banks now are auto-quoted by the trading desk by an algorithm, autoquoted by the sales desk to the client and confirmed, executed and settled without anyone in the back office even seeing it.

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As there is less human involvement in the trade life cycle, banks don’t need so many sales staff. Those that remain are more akin to quants in that they have opinions on where the market is going and can back up those opinions based on research. They are contacting clients rather than waiting for clients to contact them and smart trading systems support this by enabling sales staff to schedule activity. They can then ask clients whether rather than doing their trade as a spot deal or a vanilla forward, they might want to talk to the bank’s derivatives desk about currency options. More intense hedging strategies still tend to be discussed with a sale specialist over the phone, who might be one of only a handful of people fulfilling this role in each bank. One of the most effective means of underlining the importance of these sales people is to improve efficiency. This can be achieved by getting clients to self-serve but having a management information system to demonstrate value and proactivity in increasing margin/wallet share.

Trading systems used to be only for deal capture – the users would have separate risk analytics, credit and management information platforms. By moving elements of all these functions into a single trading system, when the client calls the sales team a high-level decision support window will pop up and show the average deal size of the client, the last five trades they completed and their profitability. This gives the sales person the information to make an informed decision on where they should price the client. When a sales person looks at a credit system, most of the time all they are checking is whether they have enough credit to do the trade. Smart trading systems raise a flag when the client is close to reaching their limit in one of their currency accounts or their overall credit limit, enabling the sales person to discuss strategies that could be used to reduce their outstanding balance in credit. These developments enable client trades to be attributed even if they are done on a self-service basis, increasing the visibility of eFX across the investment banking arm by highlighting the profitability of the sales desk relative to its more modest headcount.

cost. However, intelligent institutions are overcoming budgetary constraints by using the compliance budgets allocated to MiFID II to re-tool existing systems to the overall benefit of the user. In conjunction with the Global Code of Conduct, MiFID II has created a more level playing field within the FX industry. The ability to demonstrate full compliance is vital to maintaining market credibility and will also serve to limit the impact of firms who have used technology to distort the market.

James Cusack Global Head of Sales Caplin Systems

Compliance with MiFID II comes at a

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Trading made simple with EGE Investment Filip Adler, CEO of EGE Investment S.r.l provides an inside look at EGE Trading Academy and the training options available. What led to the creation of EGE Investment S.r.l? In 2016 I had this idea of creating a company that would offer traders a transparent educational service, after many years of trading and losing money with many scams I knew that the market would appreciate a wellprepared and high-quality academy that would offer professional education at low prices, this is the idea behind EGE Trading Academy

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In your opinion, what is the most efficient method for new traders to learn? I believe the most efficient way of learning how to trade is the application of knowledge, there are many companies that offer trading courses, but only with EGE Trading Academy you receive a high number of one to one lessons with each course that we offer, in this way the trader not only studies the theory but also understands how to use their knowledge on the market

What are some the different types of trading you provide courses on? EGE Trading Academy expands each day the wide variety of courses that we offer, starting from the most common such as forex trading, technical analysis, risk management and the new crypto trading course, we also offer an algorithmic trading course which is more complexed and offered to more professional traders as it is a higher level of trading.


Can you tell us about your Signals System, how it works and the benefits?

How do you assist traders in developing their trading portfolio?

Signals System is an online trading signals subscription which helps the client understand better the market and where to invest, this not only helps the trader gain profits using our advanced technical analysis but also helps him gain the confidence to trade real lots with a real trading account, this is the idea behind signals system, helping the trader not only with valuable information but also with the psychological part of trading. How can new traders decide which type of trading is best for them?

We help traders adjust their trading strategy with our professional technical analysis methods and we also help them adjust their investments to their lifestyle, a person who invests each day all day long needs a different strategy than a trader who has to do various tasks during the day, we help traders adjust their investments to their lifestyles, we help them with their techniques to get better results from trading. At present, who are your services designed for?

The first thing we do with a client at EGE Trading Academy is to create a profile of the client to understand their needs, we take in consideration family, behavior, environment, lifestyle and preparation level, after this consultation process we can advise a client with one of our courses or create a course ad-hoc, for example by joining multiple courses or creating an easier one with fewer hours of live trade or a more complex one with a full trading educational process. What are the advantages of learning trading techniques from a professional?

The trading academy is mostly for beginners, but we also offer courses for professional traders, the services we sell mostly to professional traders are the strategic planning or signals system, but we mainly concentrate on beginner traders that are interested in the financial markets. What are your plans for further development?

The advantages of learning trading techniques from a professional trader are based on their experience, this allows a beginner trader to understand the essential points in trading and overcome the errors that they could make while trading with no knowledge or experience. We help the beginner trader to adjust their strategy to their profile. Learning from a professional in any sector has its benefits, especially in trading where the psychology is an essential part of a traders work and strategy.

EGE Trading Academy is planning to open new offices in London, Tokyo, Warsaw and Madrid all this before 2020, EGE Investment itself is expanding in other sectors of investments such as luxury goods, real estate, research and financial business advisory. The project we are developing now is an online intelligent technical analysis software for beginners, the clients will be able to personalize the platform and the software itself will adapt to the usage of the user and his knowledge level.

Filip Adler CEO EGE Investment S.r.l

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Ten Biggest Legal Mistakes Tech Start-ups Make This month my company (A City Law Firm) marked our ten-year anniversary, which has made me think back to our first year, how we started and some of the early mistakes we made. For one thing, within a year of our launch, we had to restructure the entire business and there were so many hurdles we had to overcome – in the early days it really was about survival. What’s fascinating is many of the mistakes we made back in 2008 are the same mistakes that many tech start-ups make time and time again. I know this because over the past decade we have represented hundreds of tech businesses – from start-ups to big businesses – and I find that time and time again the same issues crop up.

So, what are they? 1. Not having a strong shareholders agreement – or discussing, formulating and documenting the business plan with co-founders I intended to found my business with three others, however, I soon realised that our goals and objectives were sadly not aligned; our work ethics were very different and our long-term motivations out of sync. Luckily, I had drafted a very good partnership agreement so managed to break free from what would have been a disastrous relationship. Luckily this enabled me to continue with A City Law Firm with just me at the helm, but not all businesses I have encountered can say the same. Not only do you have to be careful to choose the right partners, but you need to clearly document your goals in a shareholder’s agreements. This means that as founders you can build upon the platform you have created together, but if it goes wrong you have a means to address the problem not just having to wind up the company. The key is choosing the right partners, talking candidly and asking the tough questions at the beginning.

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2. Having poor contracts or no contracts – hitting your cash flow You need to understand your marketplace, your competitors and what you need financially to be able to grow. Cash is king. Be realistic with budgets and prices and ensure your contracts protect you - not only with clients but with employees, suppliers and contractors. It is fundamental that you closely monitor payment timescales with clients, especially if you are working on large projects. Corporate clients may expect 60 – 90-day payment terms but your sub-contractors will not. It’s also important you pay yourself a reasonable salary, especially when you are seeking investment, otherwise, if the founder is distracted, the business is not going to progress. Any investor will want to see this factored into any business plans and financial models.


3. Not having good staff contracts or options to incentivise them A large part of any company’s budget will be put towards recruitment, training and retention of its employees. Despite this, there is a real risk that those key people could walk out of the door leaving you without the requisite skill pool you need, but worse yet, there is a real possibility that they may also take all of their knowledge of your business and pass it to a competitor. Many businesses focus on many things but staff retention and protection against staff competition is often neglected. This is especially key in the tech world as the opportunities for work are so great. From a legal standpoint, it is important to: • Have tight employment, contractor, consultancy and sub-contractor contracts in order to protect your IP and confidentiality. It is also important to have restrictive covenants to avoid staff taking your know-how in terms of clients, IP or staff to a competitor or setting up on their own.

• Consider EMI options as they can give staff the feeling of being part of the fabric of the business and as you succeed so do they in terms of profit sharing without actual cost in the short term to you. This also can attract more specialist experts to the team where cash is not readily available; Overall though the key is to find ways to incentivise and look after your team. If you can communicate your vision to the team so that they are working side by side with you, this inspires loyalty and dedication as you are all working from the same plan with the same goal.

4. Intellectual Property & the mistake of that ‘handshake deal’ IP ownership can only be granted or transferred (“assigned”) in writing. As such, if your freelance coder or developer has no contract with your business then they could actually own the IP that they have helped design, not you.

If there is a dispute, then they could hold this to ransom causing a costly dispute or loss of your code or design. You need to ensure you have checked these contracts carefully and that you actually have one carefully drafted in your favour. Many tech companies work with friends and often make arrangements based on goodwill, but when a dispute arises without a contract you are at the mercy of the designer. If you are bringing your designing or coding in-house, then it is especially key to convince an investor you have secured long-term staff and that the IP ownership will effectively transfer to you. Many businesses fail to check that their proposed company name or branding is free to trademark. This should be carefully checked before a large budget (or large budget relative to the size of your business) is set aside for branding and marketing as otherwise, you may find yourself having to start all over again.

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EMEA BUSINESS 5. Rushing to Investment and giving up equity in the company I managed to self-finance my business throughout without taking in partners or investors. I did consider these at points along the way and even had offers of mergers and partners coming into the business but having carried out checks into these entities, I often found hidden skeletons and things I was too anxious to continue to explore. If you are seeking investment, which is often a necessity for tech companies scaling up, it is vital that you carry out your due diligence on what’s available, what the risks are and who the investor actually is. - Do they understand your sector? - Have they got the resources to add more money at a later date if that’s what you need? - Can you approach them if things go wrong? - Do they have competing interests in the marketplace? - What is your exit plan for them? - Have you also explored grants available for tech, innovation offerings, R & D credits and other means of funding? Many people are often dazzled by the cheque and sign a contract… but that’s just the start of the journey. It is important that you consider whether you want to get involved unless you are certain you have aligned goals, exit plan and can handle a crisis together.

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6. Not being investor ready When start-ups do find the right investor, a common pitfall is they are not investor ready because they haven’t got their house in order. For example, they have not allocated and issued shares correctly. Their articles do not reflect the workings of the company. If an investor picks this up, it can make tech founders look careless and could scare off the investor. More broadly other things that put investors off include inaccurate statements that have been put in writing… such as: - “This is unique to the market, no one else is doing this”. This is often a bold statement that just isn’t upheld or accurate; - “I don’t need a salary for 1-2 years; I can use 100% investment on the business”; wrong! No one will invest in someone who can’t eat and pay their bills! - “My business is valued at £10 million because it’s going to be worth that in two years when we build our technology”. Can you support that with figures and market research? Be realistic and able to evidence all assertions. 7. Not understanding how markets are regulated Many businesses, especially those in disruptive markets, need to be regulated or are covered by additional regulations or laws.

Many fintech or ICO companies need to be regulated and choose to risk investment or token raises prior to taking proper advice or considering the proper process exposing you to an FCA investigation. This is not an issue which only affects those in financial markets but includes among many others those in advertising, legal services/legal tech, recruitment, packaged holidays etc. Knowing your marketplace, sector and taking advice is essential prior to any public offering. 8. Not taking experienced advice and creating an ecosystem Tech developers are necessarily geared to be financial directors or HR managers yet running a business these roles become fundamental. Not getting good advisors on board early enough is a common mistake. A good lawyer, accountant and tax advisor saves you money and pain at a later stage, especially if they can secure you EIS or another favourable structuring. A good FD helps secure investment and cash flow by managing the budgets and financial forecasts, they also add the commercial know-how into your passionate pitch deck. Downloading templates; googling advice I appreciate happens because of the costs involved, but if you want your business to succeed you need tailored, personal advice and support. I know this is something I have benefited from greatly as I brought in consultants to help me and train me in my areas of weakness. Admitting these gaps in my knowledge and bringing experts in has helped me scale up.


9. Not having skin in the game & asking too little If you are seeking investment for your tech business, you need to start with securing some capital yourself or through your contacts. This shows investors you have faith in your offering, which then means they are more likely to match. This is something I hear frequently from equity investors, so try friends and family first. Another common mistake is asking for too little which cannot be sustained and then you have to go back to the platform or investor for money which could result in them losing faith in your financial model. You need to forecast and present realistic figures, so you don’t ask for too much or too little. 10. Don’t let the cat out of the bag If you don’t have a signed NDA and if you discuss a potential or pending patent you could lose the rights. Discuss the details of your tech, design or offering in as much detail as you can to secure an investor or client, but where possible secure an NDA to protect your confidential trade secrets or ideas or Patents. They may be hard to enforce, often a concern of many so they don’t bother, but it’s a deterrent; it protects you Patents and it’s a good starting point for an injunction if someone tries to reproduce your tech.

Karen Holden Founder A City Law Firm

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“Becoming lean, nimble and efficient, requires banks to innovate. With technological innovation comes quicker and less expensive ways to serve customers. Given the right innovative technology tailored to the markets, banks can forge blue oceans in the retail segment.� - Seyi Kumapayi

Innovative and Sustainable Banking in Africa Global Banking & Finance Review spoke with Seyi Kumapayi, General Manager and Chief Financial Officer at Access Bank about the current outlook for banking in Africa and how Access Bank is using sustainable business practices to provide innovative solutions to customers and supporting the communities they serve. What is the current outlook for banking in Africa? Response: The future of banking in Africa lies in the yet untapped retail sector which is expected to grow in revenue by $18 billion to $53 billion by 2022, from $35 billion in 20171. However, to deepen retail footprint, African banks need to innovate in a way that delivers products and services that are inclusive yet cost effective. Also, banks need to understand the dynamics of the retail sector in order to fully explore the opportunities therein. According to Mckinsey, the bulk of growth in future revenues will come from the middle and core middle segments, accounting for 69 percent of future revenues between 2017 and 2022. The core middle and middle segments are also characterised by their use of technology, therefore digital banking services with customization will be of great appeal. The Mass affluent segment currently accounts for 13 percent of revenue but is set to significantly increase the population of banked by 150 million customers by 2022. For this segment, the use of feature phones and USSD enabled devices will continue to draw appeal, due to their

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What challenges are facing the banking sector in Africa and how will Access Bank contribute towards the growth and progress of the industry?

lower income levels. Overall, there seems to be significant growth opportunities across the retail segments for borrowing, saving, and investing. Mcki/nsey estimates fewer than 20 percent of African banking customers access lending, deposits, insurance, and investments, most likely on account of the barriers to financial inclusion such as access to cheap data. Banks must be willing to address these barriers with services and the right technology fit for each segment. The African financial sector is currently sitting on a hotbed of innovation which is driving access to digital developments. With more focus and collaboration with fintech companies, there can be more tailored services which will cut through the barriers and achieve optimal retail market penetration.

Response: Africa’s financial industry is noted as the second most profitable among regions in the world, after Latin America and nearly twice as profitable as the global average, with an average return on equity (ROE) of almost 15 per cent in 2017 alone2. This and much of the continent’s strong growth prospect is attributed to the retail sector. In recent years, the sector has grown exponentially and provides strong catalysts for economic diversification and development. However, at 38 percent of GDP, the continent’s retail penetration is noted to be at half the global average for emerging markets, making this largely unpenetrated sector a huge fodder for significant growth. To effectively tap into the sector, banks need to overcome several prevalent challenges pertinent to the African economies. These include heavy dependence on cash, inadequate credit bureau coverage, and limited branch and ATM networks. For example, In Nigeria, where approximately 95 percent of businesses are SMEs, credit funding is at only 3 percent to this sector compared to other African countries in the same growth bucket. This is as a result of the unstructured nature of the businesses which impacts governance and leads to a weak credit history. With inherent risks in mind, banks limit financing to only a few.

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Another major impediment to the banking sector is access to financial services. In Nigeria, only circa 25 percent of the population have bank accounts. A few barriers to financial inclusion are low and irregular income due to unemployment, low branch penetration owning to few access points, as a result of poor infrastructure. Lastly, banks in Africa carry the second largest cost of risk ratio of 3.6 percent, after Latin America. This is largely a result of belabored back office functions and manual processes leading to lower operational efficiency. Whilst effectively masked by higher margins, in the long term, margins may fall, hence it is expedient for banks to maximize productivity whilst it can. Becoming lean, nimble and efficient, requires banks to innovate. With technological innovation comes quicker and less expensive ways to serve customers. Given the right innovative technology tailored to the markets, banks can forge blue oceans in the retail segment. At Access Bank, we take pride in being at the forefront of innovation by leading the disruption specifically in the banking industry. As such, we invest in digital and technological capabilities in order to become nimble and competitive. We have over the years consistently focused on developing convenient banking solutions, in a bid to make banking services more simple, flexible and accessible.

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Part of the bank’s vision is to see inclusive economic development from the SMEs sector, recognizing that small businesses are key enablers of economic growth. Our SME tool kit and ‘W’ initiative provides financing for specific sectors (women in business, etc.), promoting economic empowerment and providing the requisite tools for enablement. Our Anchor Borrower scheme provides small scale farmers access to lending, whilst Agency Banking focuses on providing financial services to regions with little or no access. Furthermore, Access Bank has sought intrapreneurial ways to improve financial inclusion through corporate social responsibility. In this regard, we have partnered with several Not-ForProfit organizations to tackle extreme poverty through a specifically designed mobile money application. With this, we have recently partnered the World Food Programme (WFP) to disburse $1.2bn to internally displaced persons in Nigeria. Access Bank recently launched a fiveyear strategic growth plan and intrinsic to the strategy is the role of innovation and technological appendages in realizing our growth objectives. Thus, our quest for digital innovation has led to collaborations with Fintech startups. Through this, we hope to develop a pipeline of cutting-edge innovation which will harness disruption, sustain bottom line growth, and benefit the Nigerian as well as African economies in which we operate.


Based on your research how are consumer behaviors impacting the way banks operate in Africa? Response: Technology has changed the way consumers view banking products and services. Research conducted by Mckinsey indicates that the leading factors in determining what and who to bank with are price, convenience and service respectively. Consumer trends show more affinity towards lifestyle products that are fast, secure and agnostic. The consumer opportunity in Africa rests on five key groups: rise of the middle class, exponential population growth, dominance of youth, rapid urbanization, and fast adoption of digital technologies and technology provides the connection between these groups. Therefore, to effectively remain competitive, banks need to innovate and specialize. The use of big data, AI, advanced analytics and cognitive computing

will come in especially handy in determining bespoke services through the life cycle of the customer. However, banks cannot do it alone. Strategic partnerships with fintech companies or investments in accelerator programs such as the Africa Fintech Foundry by Access Bank, will ensure banks remain forward thinking and sustainable. Access Bank is committed to providing clients with the best services possible. Can you talk to us about some of the innovative products and services you have created? Response: At Access Bank, we are driven by innovation with a lot invested daily in technology to make banking seamless in all the markets we operate. We also have the capacity to bring partners together to create new things and are deeply excited about the opportunities to create for the future. In positioning itself as a centre for innovation and commercialization of technology, the Bank through strategic partnership with a software company’s

e-payment platform, introduced Payday Loan, an instant loan solution which requires no collateral or guarantor, enabling customers to obtain loans in the comfort of their homes without visiting the bank. Payday Loan enables customers to meet their urgent financial needs before with no documentation and collateral required for up to 31 days. The instant loan solution was also launched via USSD code and made accessible via the Bank’s ATMs. Another banking platform specifically targeted towards the youth is Ondigo, an application that enables users carry out a range of transactions from easy airtime top up, to secure online shopping. A unique feature of this product is the ability to create virtual cards which users can gift to their loved ones. It also gives users opportunity to create a savings account that allows them to meet their financial goals. For cross border transactions, we developed Access Collect, which enables in-branch cross border transfers across our subsidiary network, to ease the complexities of international transactions. It is a fast and reliable way to send and receive money across Africa (from Access Bank’s African countries of presence – Nigeria, Ghana, Sierra Leone, The Gambia, Democratic Republic of Congo, Rwanda and Zambia). Can you tell us about the Omni Channel banking services and how it improves customer experience? In alignment with its five-year strategy, Access Bank sought to achieve service automation by digitizing core customer experiences and providing an omnichannel experience across platforms.

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The Omni Channel Service provided just the platform to deliver this by providing basic banking transactions to the fingertips of the customer at the convenience of their smart phones and devices. In partnership with a leading self-service banking software provider, CR2 and BankWorld omnichannel suite, the Omnichannel solution was integrated with the Bank’s existing mobile banking application to deliver an end to end view of all financial and value-added services (VAS) to customers, with a seamless and consistent customer experience across multiple devices/ channels. It is a fully-integrated, secure web based electronic platform which gives customers one-point access to a comprehensive suite of banking solutions. Key benefits of the service include: (a)Increase customer satisfaction by providing innovative, personalized, convenient and consistent customer experience across all channels through enhanced customer segmentation

and targeted offerings per segment; (b) Boost cross-selling and upselling opportunities by leveraging the inherent campaign management functionality of the BankWorld solution; (c) Allow for on-the-spot product acceptance by all customers; (d) Optimize Operational and IT Costs by enhancing in-house management and support of channel platforms. What advantage does the continued upgrade and investment in technology offer to shareholders and customers? Response: Customer expectations are evolving rapidly, as such, the bank relies on innovation in technology and digital solutions to expand choice, increase convenience and provide consistent experience across all delivery channels. We believe that a continuous approach to technology as well as digital innovation would help achieve business operational efficiency, and greater insight into customer behavior, enabling the enhancement of the quality and range of products and services. We are equally mindful of the importance of technology in supporting our strategy to be the World’s Most

Respected African Bank. With over nine million customers, technology enables the bank stay competitive and highly flexible to market changes. Innovation leads to technological breakthroughs which unlock new revenue streams. Access Bank’s *901# is one such. A simplified short code mobile messaging service which enables unbanked or underbanked customers without smartphones carry out simple transactions, easing the burden of branch banking particularly in areas with limited branch network. Continued investment in innovation and technology also allows the Bank to maintain operational costs to a sustainable level. This would naturally trickle down to the bottom line hereby creating value for the shareholders. How do you ensure service quality for new and existing customers? Response: Access Bank is a well-recognised and trusted brand in Nigeria, which has been fostered by adhering to its core values of leadership, excellence, empowered employees, passion for customers, professionalism and innovation. We conduct business with a focus on long-term relationships, adding value and giving individuals the power of banking. Our mantra of speed, service and security, is a tripartite proposition and the hallmark of our brand. The unique combination gives customers a clear reason to choose and remain with Access Bank as we drive new innovations in the banking sector, provide world class customer experience and deliver safe and uncompromised banking service.

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We will continue respond and adapt to an ever-changing business landscape with dynamism and creativity, anticipating customer needs and exceeding customer expectations. Access Bank strives to nurture future customers, shareholders, and employees. What are some of the programs and policies you have put in place to achieve this objective? On speed, customer journeys and processes are automated, hereby, creating standardized value propositions to customers that will improve effectiveness, turnaround time and product efficiency. O n S er vic e , our se r v ic e touc h poi nts are e quippe d with in- app and online c ha t suppor t, adva nc e d anal yti cs, m a ss c ustom iz a tion, automation a nd straight through processing f or high spe e d transac tions, a ll to e nsure the bank goe s beyond the se c ond l eve l of c ustom e r se r v ic e . The B ank will a lso e nsure tha t its orga niz a tiona l struc ture , staf f ing a nd suppor t mode l a nd te a ms evolve to re f le c t its f oc us on the c ustom e r. On Security, the Bank ensures that it will innovate to ensure continuous improvement of systems security globally in order to counter the threat of cybersecurity and fraud.

Response: Our customers are at the heart of the business, this consciousness is the bedrock of our strategy and for them we strive to create value through innovation and technology. We believe therefore, that a continuous approach to innovation and the attendant technological development is key to achieving greater insight into products and services that suit the lifestyle and needs through the life cycle of the customer. Our investors value our commitment to transparency as well as our relentless focus on performance and shareholder value. From the outset, we challenged ourselves to operate to the highest global standards and to earn the trust of the international markets. To maintain this trust, we ensure the sustainability of the business is not compromised. The combination of a strong capital and liquidity position, proactive robust management and optimal market positioning, buoyed by enhanced IT and e-platforms and led by an experienced management team, ensure this sustainability.

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The ratings upgrade by Fitch Ratings reflect the Bank’s solid financial metrics and strategic intent to adopt best global practices in all aspects of our business. It also attests to our consistency over the years in delivering superior value to our stakeholders in line with our vision to be the world’s most respected African bank.

For our over four thousand employees, Access Bank strives to ensure they achieve their professional goals, as they help build the World’s Most Respected African Bank. We align training, reward and recognition programs to our strategic imperatives, thereby enabling a culture of diversity and collaboration of ideas. At all times, we strive to create an environment that respects the contributions of every employee and provides opportunities for their growth and development. We believe our commitment to the right values produces desired results from our employees, thereby creating shared value for customers and shareholders. Our employees also participate in a shared vision of community development and harness this collective desire as a vehicle to advance social development in the communities they serve. Collectively, our employees have contributed ideas, skills and resources in our Employee Volunteering Scheme (EVS) to address social issues, whilst gaining hands-on experience and fulfilment as positive role models in the society. Through this scheme, the bank has positively and significantly impacted the wider community. In February of this year Access Bank received an upgrade on its National Long-Term Rating to 'A+ from 'A. from Fitch Rating, what does this rating mean for the bank? Response: Credit ratings affect the cost of borrowing which translates that the Bank’s bonds will carry lower yields. Access Bank’s Issuer Default Ratings (IDRs) are driven by the Bank's intrinsic creditworthiness as defined by its Viability Rating (VR).

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By the ratings, the Bank’s asset quality metrics compare especially well with its immediate peers. The ratings agency also regards Access Bank’s resilient asset quality as a reflection of the Bank’s solid corporate banking franchise and management stability, which includes a robust risk management framework. 2017 saw the end of Access Banks 2013-2017 banking plan. Can you tell us about the challenges and the success the bank had in achieving their goals? Response: In 2013, the Bank launched its 5-year strategy shortly after the acquisition of Intercontinental Bank in 2012. The acquisition gave the Bank the much-desired increase in scale and was perfectly in alignment with its key focus on establishing a retail banking business, whilst deepening its strength in wholesale banking. Embedded in the strategy was the expansion of our African footprint to the most attractive markets, being the preferred African bank in the U.K. by setting up a multi-channel bank running an industrialized global operating model and providing the best- in-class technology platform in Africa.


At the end of the five years, the Bank recorded asset growth at a CAGR of 18%, gross earnings growth by a CAGR of 23%, and profit before tax growth by a CAGR of 26%. Total shareholder returns from 2013 to November 2017 was 90%. Customer base grew from 4 million in 2012 to over 8 million in 2017, with service in 351 branches. Other key achievements at the end of the five-year period are the bank’s improved customer service ranking of 2nd and 5th in SME and Retail banking respectively. The bank also achieved 13% contribution to PBT by subsidiaries with more than 98% uptime of the bank’s business platforms. Challenges during the five-year period revolved largely on the back of an unstable operating environment and the attendant impact of regulatory tightening on the industry at large. However, the strict implementation of our robust risk management framework ensured we remained strong in terms of liquidity as well as capital adequacy.

Also, fundamental to the bank’s strong performance during the five-year period was our ability to achieve strong asset quality ratios in the difficult operating environment. Our disciplined approach to risk management enabled us to embed within our operations, mechanisms to anticipate impending macro uncertainties and adequately respond to the evolving market conditions. As such, we carefully managed our exposures in risky sectors particularly affected by the challenging macro-economic conditions. This prudent action placed us in a strategic position to maximize shareholder value during those vulnerable times.

considerations. Also, in the larger community, Access bank took the lead in the industry, engaging peers, competitors and stakeholders to drive change, raise standards, create innovative and sustainable initiatives that facilitate an enabling environment. Our commitment to sustainable business practices were consistently rewarded by accolades through the review period including the Most Outstanding Business Sustainability Award by Karlsruhe Sustainable Finance Awards (twice consecutively), Most Sustainable Bank of the Year Award by the World Finance and several other accolades for each of the ESG principles.

Furthermore, our 2013-2017 strategy, as in previous strategic cycles, was anchored on sustainability with the aim to drive profitable, ethical economic growth that is also environmentally responsible and socially relevant. Our mission statement, policies and decision-making processes incorporated Environmental, Social and Governance(ESG)

What is the bank's strategy going forward? Response: Access Bank rolled-out its next five years (2018 - 2022) strategy with intent to become Africa’s Gateway to the world which is in addition to its vision to be the world’s most respected African Bank. The Bank aims to be the no. 1 bank in Nigeria by rapidly growing its retail customer base, SME client base, and by dominating the top 100 Nigerian corporates. Internationally it will develop an integrated global franchise by growing its presence in key African markets, global financial gateways including London and New York, and trade hubs such as Dubai and China.

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The strategy is based on six key levers: (1) Retail banking growth and consolidation in wholesale markets; (2) Customer-focused; (3) Digital led; (4) Analytics driven, with robust risk management; (5) Global collaboration and Universal Payments Gateway, and:(6) Creation of a universal payments gateway. This would see its retail bank adopting a customer segment focus, driven by digital and payments solutions, and the corporate bank building deep sector expertise and global relationship management. Subsidiaries will be organized around strategic clusters, with strong collaboration between them to secure trade finance and correspondent banking.

Seyi Ku mapayi Chief Financial Officer Access Bank

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Enhancing the Effectiveness of P&C Claims Organisations in the Digital Era New levers to control indemnity spend A combination of a change in customer behaviour, influenced by their experiences in other industries, as well as advances in technology, has seen the introduction of new levers to enhance the performance of claims organisations. The traditional tradeoff between efficiency, effectiveness, and customer satisfaction can be mitigated through technology, and the subsequent transformation of a claims business today promises significant benefits. Our accumulated client experiences have shown, for example, that the combination of chat bots and Artificial Intelligence (AI) driven claims triage can allow for cost reductions of around 24% through a steep increase in straight-through processing, all the while enabling real-time customer service and better accessibility. With ample opportunities available to enhance claims efficiency, effectiveness and customer satisfaction, the control of indemnity spend will remain at the core of UK P&C insurers’ claims transformations, as up to 80% of average total premiums1 are still being consumed by claims cost. This benchmarked against its European counterparts, the level of indemnity spend in the UK is quite astonishing. Coming in at a staggering £9.2 billion in 2016, the UK

insurance market currently suffers from one of the highest claims costs, with UK insurers overall spending 63% more towards total claims comparatively. As the main reasons for this are to be found in the variety of participants within the structure of the UK claims market, as well as the high level of – mainly 3rd party – fraud, it raises the question of how much of these costs can be controlled by an individual insurer? In a robust system, where commissions and inducements are a large contributor to overall profitability, it is hard for one party to decide to break that mould and become, as some would say, more ethical and customer-focused. However, with the Financial Conduct Authority currently looking closely into the UK Private Motor Claims Market, these inefficiencies are likely to change in the near future. In order to prepare for the changes ahead, insurers need to internally optimise the effectiveness of claims organisations and focus on leakage reduction even more. As fraud alone costs the industry an estimated £3.4 billion per year, around £50 per premium 2, and as we have seen, incumbents suffer from claims leakage of well above 20%, it is irrefutable that accurate assessments of claims severity and validity are a crucial lever

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for optimising the economic performance for many insurers. Against this backdrop, new technological levers are increasingly addressing the need for more accurate claims assessments and better fraud detection, thus fashioning new key competitive factors in the industry. Indeed, our accumulated experience shows the leverage of technology along the claims process can help insurers to increase the accuracy of indemnity spend by 20-30% through better fraud detection, better control of costs incurred at fulfilment stage, as well as a reduction in legal actions:

Opportunities along the claims value chain FNOL. Today, FNOLs are mostly received over the phone and the evidence is then submitted in various unstructured formats, such as letters, pictures, and emails. Unfortunately, more often than not, insurers still store the information in an unstructured way, making it difficult to search through and link the collected claims data. As a consequence, claims adjusters will have to form decisions subjectively based on their training and experience, using past claims in their practice groups as reference. The reliance on manual claims intake and assessment, however, renders human error, subjectivity, and, ultimately, claims leakage unavoidable. To tackle that problem, claims information needs to be translated and stored in a structured way – for example, by means of deploying digital FNOL tools, translating letters with the help of optical character recognition, or recording, transcribing, and storing phone calls. Once claims data is prepared for digital processing, an array of opportunities to

increase effectiveness will arise, most notably, the automation of fraud detection. Here, Machine-Learning (ML) algorithms are becoming increasingly powerful at detecting otherwise obscure patterns that human claims handlers might not, especially given the increasing quantity of data available beyond the basic claims information, with external data sources opening up possibilities to garner more and better insights into consumer behaviour and profile. Indeed, applications to crossreference different databases in order to filter out claimants that are prone to fraudulent behaviour are proving to be especially useful. Other applications of deep learning algorithms in fraud detection range from lexical analysis for ‘hit words’ and photo alteration detection, to facial recognition and voice analysis. The automation of fraud detection is especially important in order to secure straightthrough processing rates without losing control of indemnity spend.

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Loss assessment. Similar to the automated detection of fraud at FNOL stage, larger available volumes of (external) data paired with MLalgorithms can be increasingly leveraged to analyse and cross-reference claims information in all formats, including pictures and videos, and to ultimately generate an initial estimation of claims costs. Solutions for this, however, are often still premature, and the accuracy of ML-driven assessments depends on the level of training and the amount of data fed into the machine. Therefore, the deployment of ML-driven estimations will be restricted to serve as a support for manual processes at the beginning. For example, they could be leveraged in order to provide an objective reference as a basis for claims handlers’ manual assessments or could be forwarded to repair shops as a cost estimate, who could then add or adjust costs. However, we believe that ML-systems will be able to outperform human adjusters in the near future, rendering their deployment a key competitive factor. Fulfilment and repair. Especially in the UK, the interactions with a vast range of suppliers and entities, e.g. third-party administrators, repair shops, engineers, materials suppliers, pharmaceutical reimbursement managers, and defence counsels, result in avoidable expenses due to costly referral systems. For example, zeb research shows that UK insurers currently pay on average up to 50% more for vehicle repairs compared to French insurers. A possibility to increase competitive price pressure on suppliers would be to introduce repair service auction systems. However, these have occasionally been met with strong resistance, as providers felt they were directly agitating the competitive balance within their trade. With digital, real-time tracking of transactions, insurers can still benefit from the transparent cost control and integrated price comparison, without

explicitly provoking the competitive equilibrium between repair providers. These solutions do not only comprise comprehensive supplier management portals that allow for enhanced information sharing (e.g. digital transfer of documents, functionality to track vendor information and repair progress, integration with supplier scheduling tools), but also functionality to support the control of vendor performance (e.g. tracking of performance and costs, scoring mechanisms to rate and rank vendors). Whilst the digitalisation of vendor relationships allows for an increase in accuracy through reduced frictions in communication and collaboration, the digitalisation of invoices can significantly improve the understanding of cost structures and the speed of validation, with first solution providers also offering integrated databases of historical invoices, fees, and costs of spare parts in order to help insurers better assess invoices. Settlement and closure. As improvement of claims leakage protects customers against underpayment, it will in turn result in a reduction of litigation potential and by that, reduce litigation costs. What’s more, insights garnered from data-driven claims handling can be leveraged to automate reserve setting processes and increase control; with a greater degree of automation allowing for multiple benefits, for example running the full reserving process flexibly whenever required, removing human subjectivity from the process and easily updating statistical models (e.g. reflecting variables like changed jurisdictions, wage adjustments, changes in the mix of business). Likewise, enhanced predictive models could potentially help in detecting otherwise obscure trends and correlations across underwriting or accident years.

Taking advantage of the opportunity Overall, the application of technologies in assessing and processing claims opens up the opportunity to reduce leakage and increase the control of indemnity spend without adding complexity for claimants to the claims process, mitigating the traditional trade-off between claims effectiveness and customersatisfaction. In order to leverage these opportunities, the challenge remains to digitise claims information and to start applying intelligence to the process of claims assessment and fraud detection. However, even a small improvement to the control of claims indemnity expenses can have a significant impact on an insurer’s end result. The void between As-Is models and saving potentials is far too great to ignore, rendering the need to review claims procedures and assessing them for optimisation potentials paramount for future profitability.

Bertrand Lavayssiere Managing Partner at International Financial Management Consultancy zeb


Insurance Europe, European Motor Insurance Markets, 2015; Insurance Europe, European Motor Insurance Markets Addendum, 2016; Milliman, Driving for Profit, A view of the UK private and commercial motor insurance markets 2015, 2016; Fédération Francaise de l’Assurance, Chiffres clés, 2014

2 Association of British Insurers, Insurance Fraud Taskforce, 2016

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The Investment

Landscape in Kuwait

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For over 30 years, National Investments Company has focused on creating value for its clients. We spoke to Mr. Hamad Ahmed Al-Ameeri the Chairman of National Investments Company (NIC) about the landmark Kuwait Food Company (Americana) deal which NIC played a major role in and the investment landscape in Kuwait. National Investments Company played a major role in the success of the landmark Kuwait Food Company (Americana) deal. Can you tell us more about the significance of this transaction? Adeptio’s Mandatory Acquisition of Americana shares was considered an enormous success. Said acquisition went through many phases after Boursa Kuwait announced the block trade phase of Americana shares, whereby 66.79% of total issued shares (KWD711,515,842) were bought by Adeptio AD Investments from Al Khair National for Stocks and Real Estate. The sizeable purchase deal was signed on October 20th, 2016 whereby National Investments Company represented both the buyer and the seller in the transaction. During the Mandatory Acquisition Phase, which lasted 30 calendar days, the total number of collected Americana shares has reached 107,071,177 shares equaling 26.634% of the issued share capital (KWD283,738,619,050). This represents 87.29% of the available target shares amounting to 122,657,505 shares. It is worthy to note that 191 individual and institutional shareholders from inside

and outside Kuwait have provided NIC with their Offer Acceptance applications during the collection period.

(KBRC) and Gulf Holding Company) as the selling partners. Al Khair National for Stocks and Real Estate Company sold its stake in Zain to Group of Oman What preparations and initiatives did you Telecommunications (Oztel Holdings undertake to ensure success? SPC Limited). The deal closing date National Investments Company spared was on 12th of November 2017 in no effort in planning and executing all accordance with Boursa Kuwait’s and logistic and technical arrangements the Kuwaiti Capital Markets Authority’s needed. NIC’s unwavering teamwork and (CMA) rules and regulations. The shares tenacity had a pivotal role in achieving were sold on behalf of Al Khair and its this. To that end, NIC revamped its subsidiaries which represented 12.06% website allowing it to be a user-friendly of Zain’s issued and paid-up capital at platform where all announcements and 521,975,416 shares. The price for the information about this deal in both Arabic sale auction was 0.781 Kuwaiti fils per and English were added to the website. share. The total value of this deal was The offer document and all supporting approximately KWD407 million. deal documents were also included on the website to allow all Americana National Investments Company (NIC) is shareholders easy and immediate access an active participant in several sectors to information. NIC has further put of the local, Arab and International together a professional well-trained team Market. What factors have led your in order to properly answer all incoming Investment performance in recent years? calls and inquiries. NIC being one of the leading investment What are some of the deals you are houses in the region, has always valued most proud of? their investments with caution. Our in-depth knowledge and know-how of We are proud of all our deals. However, the local and regional market, highly if we had to highlight the most experienced investment managers, significant ones we would have to well informed in-house research team mention the Americana and Zain deals. has always led us to achieve higher As mentioned above, the Americana returns for our investments and our transaction represented a marvelous clients. We invest in companies with accomplishment for NIC. strong fundamentals, operational profits, stable growth, attractive P/E and which In the Zain deal, NIC played a great role are well managed in our portfolios. in the completion of the Auction Process Our investment strategy is to look for on Zain’s shares as it represented opportunities in the GCC markets and Al Khair Group (Al Khair National for beyond that provide appealing riskStocks and Real Estate Company, adjusted returns. Kuwait British Readymix Company

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Despite mixed performance in the GCC market for 2017, we at NIC have been able to maintain superior performance for our investment funds outperforming benchmark indices. Our conventional Wataniya Investment Fund which invests in Kuwait listed equities posted an annual return of 9.3% compared to its benchmark return of 5.6%, Al Mada Investment Fund, which invests in GCC Shariah listed equity posted a return of 1.6% outperforming its benchmark index of 3.9%, to quote a

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few. NIC also booked a profit of KWD10 million in 2017. Undoubtedly, this is notable and a great achievement by the company’s management during this challenging and volatile market environment. We are convinced that our investment approach and strategy will continue to provide us desirable performance in the coming years. What trends have you seen dominating your investment performance in recent years?

Recession years have witnessed a slowdown in economic activity especially in the financial market. Nevertheless, recent years have shown a recovery in trading activity due to return of investor confidence and optimism. In the last two years, the GCC market has seen many reforms in the capital market, recovery and stability in oil prices due to OPEC’s decision to cut production leading to an increase in revenue and reduction in budget deficit, increase in public spending, announcement of development


plans and a number of regulatory changes during the year keeping the momentum and the index performance on track. Further efforts were made by regulatory bodies with many reforms on capital market to qualify for the emerging market status especially in Kuwait and Saudi Arabia. Positive sentiments of upgrading of Kuwait and Saudi Arabia to global indices like FTSE and MSCI have given a boost to local markets and attracted foreign interest in the region subsequently increasing the trading activity and particularly in Kuwait which witnessed a doubling of trading value. Furthermore, many policy changes also paved way to a positive economic outlook boosting investment activity which provided support to economic and market growth. NIC believes this trend will continue in 2018 and thereafter, but in a moderate form due to the geopolitical tensions in the region and concerns on effective implementation and execution of planned development plans and reforms. Where do you see the potential for further development of the investment sector in? Boursa Kuwait has massive potential for growth and development. Just recently, Boursa Kuwait became part of the FTSE Worldwide Index and labeled it as a Frontier Developing Market. There still remain integral actions needed for the market to become fully developed. Nevertheless, significant steps have been taken to enhance the market such as the introduction of the Capital Markets Authority to act as regulator for listed Companies in Kuwait. The introduction of derivatives and alternative investments will upgrade the market significantly. Implementing derivatives will enhance liquidity levels massively in the market due to instruments such futures and options where investors can hedge their investments and balance price movements of stocks. Furthermore, the introduction of instruments such as ETFs and REITS will allow useful alternatives for passive investors willing to take long-term positions. A key objective at NIC is to support the economic growth in Kuwait. What opportunities do you see for Foreign Direct Investment into the Kuwait market? The upside potential for foreign investors in Kuwait is potentially very rewarding. Kuwait has one of the most adequately capitalised Banking sectors in the region, with high levels of liquidity and successful investments in both Islamic and conventional segments. E-commerce and Technology are yet untapped markets. Technological advances from Developed Markets can be introduced in the Country, benefiting the foreign investor and the local consumer. Infrastructure development is also

a significant market to enter into currently due to government plans to build major economic cities around the country such as Silk City. The government has been focusing on regulation and reduction of corruption lately to entice foreign investors. There have been steps taken to enhance Kuwait equity market. Boursa Kuwait has been segmented into three categories recently to remedy certain inherent problems. The categories are the Premier, Main, and Auction markets. Companies are segmented based on liquidity, market capitalization, price to par ratio, years of operation, and compliance with terms and conditions of listing. The Premier market includes the best companies that fall under these categories and the Auction market represents the less attractive companies. The Premier market is subject to increased scrutiny and annual reviews to prove its worthiness in this segment. The segmentations are changeable and can be delisted in one category to be listed in another. In effect, this will organise the sectors and develop the markets efficiently. Foreign investors now face less uncertainty when entering the Kuwaiti market due to further regulation and increased transparency. What are some of the ways you help clients achieve their investment goals and enhance shareholder value? We maintain a continuous dialogue with our clients to discern their objectives and deploy our firm’s resources effectively in their best interests. This is achieved by thinking outside the box to find the optimal financial solutions for them. Our proven track record and long-term client relationships underscore our ability to do so. Our research team provides valuable guidance on investment outlook, current market obstacles and attractive riskadjusted opportunities. Research has always been an essential component of your asset and investment activities. What advantage does this provide your managers with? The Research and Studies Department at NIC directly plays an integral role in the asset and investment activities’ decision-making process by offering research services, hence indirectly contributing to the success of the Company. It is designated to service the asset managers with extensive research analysis and valuation services. Such input ranges from macroeconomic analysis to specific equity analysis. This allows the Department to achieve autonomy, credibility, and accountability. NIC believes the Department should have full autonomy when servicing the asset management departments, in order to enhance and innovate research methods.

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Can you tell us about the NIC 50? NIC 50 is an index developed by the Department to offer an alternative performance measure to Kuwait Boursa. NIC developed the index in December 1996 and it tracks the 50 most traded companies by value listed on Boursa Kuwait. NIC identified that the market indices, both Price and Market weighted, may be have some biases when trying to accurately reflect the market movement/performance to investors. Thus, we introduced NIC 50 to take into account price, liquidity, and market capitalization of the stocks listed.

NIC seeks to be an active community player in other areas such as teaming up with organizations with a good social cause such as blood banks. To that end, NIC seeks to identify the most worthy projects, in which to participate which will have the most positive impact on the community. We believe that such activities contribute to increasing public awareness for NIC as a national organization; and place a big emphasis on giving back to the community. We aim to mentor university students about the principles of investment, and reach out to women groups to empower them to make informed investment and financial decisions.

What role if any does CSR play at NIC?

What is your long-term strategy for continued growth?

At NIC, Corporate Social Responsibility is integrated into our business model. NIC seeks to identify a set of activities that are geared towards furthering some social good, beyond the interests of the company. NIC aims to increase long-term profits and shareholder trust through positive public relations and high ethical standards to reduce business and legal risk by taking responsibility for corporate actions. Our chosen CSR strategies encourage NIC to make a positive impact on the Kuwaiti community. Special emphasis is placed on supporting and sponsoring events geared towards empowering young Kuwaitis to make informed career choices, and to encourage creativity. On-the-job internships are high on NIC’s priority list as those represent the first building block for a rewarding career.

At NIC, we fixate on providing our clients with quality investment products and exceptional service. We have a pioneering approach to Investment Management, and offer innovative products and solutions directly or by partnering with best in class global asset managers. We have an inherent belief that such focus will grow our Assets Under Management and platform.

Hamad Ahmed Al-Ameeri Chairman National Investments Company (NIC)

Mr. Hamad Al-Ameeri has been the Chairman of NIC since 2013 till to date. He has held several leadership positions at NIC from 1999 until 2013. He has worked in a number of investment companies including as Manager of the Local & Arab Investment Department at Wafra International Investment Company and Deputy Manager for Local Investments at the Kuwait Foreign Trading Contracting & Investment Company. Mr. Hamad also serves as a Board Member in various companies including Kuwait Syrian Holding Company, Gulf Cement Company, Seera Investment Co. , Gulf Investment Properties, and the Union of Investment Companies. Previously, Mr. Hamad was a member of the Board of Directors for Kuwait Finance House, Coast Investment & Development Company, Al-Khalijia Investment Company (KSA), National Real Estate Company, National Waste Management Company, MADA Communications Company, and Fujaira Cement (Fujaira - UAE )

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Trade digitisation could trigger economic diversity in the MENA region Anyone spending time in the Middle East and North Africa (MENA) realises that digitisation is very high on the agenda for significant organisations in trade, finance and government. Optimists quote double-digit predictions for the rate at which the region’s market for digital transformation will expand, as the Gulf states in particular try to use their oil-wealth to reorient their economies towards a more broadbased future. Large parts of the region enjoy near 100 per cent rates of smartphone-use, and the consequences of this enthusiasm for digital devices translates into business and trade, where younger executives and government leaders understand the opportunities that arise when trade infrastructures are integrated into the wider digital world. Digital strategies are already in place With ever-growing emphasis on the

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importance of reducing dependency on oil export revenues, the Gulf states in particular have responded by compiling digital strategies, setting themselves ambitious targets. Saudi Arabia and Qatar, for example, have Vision 2030 masterplans, while the UAE has Vision 2021. Egypt and Jordan too have their digital strategies. Dubai and the UAE are generally thought to be at the forefront of digitisation, showing considerable interest in smart city technologies, artificial intelligence and semiconductors. The aim in Dubai is for all government transactions, where possible, to be digital by 2020. Saudi Arabia’s vision includes the National Transformation Program, which places digital transformation as one of the Kingdom’s four main objectives. It may be true that these countries’ digital economies remain proportionately very small when set against the G7 nations, but the Gulf states are not hampered by inadequate broadband connectivity or lack of ICT talent.


They also have some forward-looking regulators in the trade and finance sector, who not only understand the challenges, but are backed up by a robust legal system and a willingness to enforce rules. The MENA could be poised to leap forward into trade digitisation It makes the MENA region ideally placed to take advantage of the benefits of digitising trade transactions and documentation, removing all the very costly disadvantages of using slow and insecure paper-based processes. They have the opportunity to leapfrog ahead of many other regions where natural conservatism and lack of consensus often mean processing of trade documents takes days or weeks instead of the few hours now possible. Not only do paper processes open up all kinds of problems in relation to fraud and accuracy, they are easily lost and very expensive to administer.

The enthusiasm for digitisation is evident at major events

Organisations are digitising on a caseby-case basis

The enthusiasm for trade digitisation is evident at big gatherings such as GTR MENA Trade & Export Finance Week in Dubai, which is a major event attended by 600 delegates from 30 countries, including many key people from corporates and banks. The energy flowing around the whole digitisation question is unmistakeable when significant market players get together.

Many of the MENA region’s decisionmakers in international trade have started to adopt digital platforms to benefit from huge gains in speed, security and efficiency. SABB (Saudi British Bank), for example is now bringing electronic trade document solutions to corporate clients, slashing transaction times and delivering major efficiency gains to all parties.

Hardly surprising when growing wealth has generated such a surge of import activity that covers everything from materials for massive infrastructure projects to every kind of manufactured product, including luxury goods and vehicles.

SABB’s move to a digital platform last year was a first for trade digitisation in the Kingdom and remains a significant cornerstone of what will be a much larger structure, since the bank is pre-eminent in the country’s trade finance. In fact, all the banks in the MENA area are increasingly adopting an open-minded approach to the digitisation of trade finance.

That is not to say this a headlong rush. The move to digitisation is being taken step by step with full evaluation of each use case.

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Electronic bills of lading are already widely used Given the changes in attitude sweeping across the region, it was no accident that so many of the conversations at GTR MENA were about electronic bills of lading and digital presentations. Electronic document presentation, including bills of lading, has already been adopted as far afield as South America, India and Asia, with readilyrecognised organisations such as BHP and Rio Tinto using the technology to accelerate secure and trusted execution of transactions in the Far East. Change could be about to occur on a major scale, making the trading operations of banks and corporates in the MENA countries part of a “network of networks”. This will bring them all the huge benefits of integration with the ‘Internet of Things’ and similarly far-reaching technological developments that are shaping trade. Wider digitisation requires a push from MENA governments but trade could be a trigger

governments across the Middle East actually do to stimulate digitisation. As global management consultants McKinsey pointed out, continued organic growth in this region will not be enough to transform it into one of the world’s major digital economies. They went on to say: “Unlocking the full potential of digitisation will require comprehensive, concrete, collaborative action – and it must begin immediately.” That was in 2016, so the time is ripe for all trade transactions to be conducted in the MENA region at the touch of a screen, rather than by couriering old-fashioned paper documents around the world for weeks at a time, where they may be lost, stolen or forged. Moving to a tried and tested digital trade platform could be a major trigger in the wider digital transformation of the entire region.

The pace of change, will however, depend very largely on what

Ian Kerr CEO Bolero International

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Re-Thinking Intergenerational Support Historically, the intergenerational contract has been one of the cornerstones of our society. Each generation does what they can to pave the way for the next generation to come through stronger and more successful. The young are looked after by their elders until they, in turn, need to be looked after – this is the circle of life and, until recently, this contract has worked. The Intergenerational Commission’s report, launched on 2 May, highlights many key issues which are concerning families across the UK. This circle is now under threat and the issues referred to in the report need to be addressed if the current intergenerational differences are to be stopped from creating more profound intra-generational gaps in the future. The report is not all negative however and mentions many areas of positive progress from which the millennial generation will benefit, such as low unemployment, better access to technology and travel and more opportunities for women, ethnic minorities and LGBTQ people. There is still a great deal of work to be done but it cannot be denied that progress has been made in these areas. ‘An Englishman’s home is his castle’ Home ownership has always been viewed within the UK as an indicator of success. For the baby boomers and generation X young people would start work, save a deposit and purchase a property. Due to rising house prices and weak pay growth this traditional goal is considered to be unobtainable by many millennials. Research carried out by the Institute of Fiscal Studies has found that home ownership among 25-35 year olds has ‘collapsed’. Instead, these young people are renting privately and spending, on average, 25% of their income on housing. Not only are they

spending more than previous generations but crucially they are spending more to get less. This vicious cycle means that millennials are less able to save a deposit and, as a result, their dreams of purchasing a property inch further and further away. In fact, many are giving up this dream altogether in favour of enjoying a more exciting life in the short term. This can be seen in the increase in spending of young people (18 – 35) on exotic holidays to places such as Asia, South America and New Zealand. Travel firm Contiki carried out a survey last year which indicated that spending on holidays within this age group increased by 10% in 2017 compared with 2016. The introduction of the various Help to Buy initiatives and the abolition of stamp duty land tax (SDLT) for the majority of first-time buyers has helped some young people to take the first step onto the property ladder but many people argue that these initiatives are helping the large property developers and those homeowners far more. The Intergenerational Commission’s report recommends an overhaul of the private renting sector to ensure that tenants have more secure tenancies and rent increases are limited to inflation. Perhaps more dramatically, the report also suggests that council tax should be abolished in favour of a progressive property tax and that there should be a time limited reduction in capital gains tax (CGT) payable on sales to first-time buyers. The combined impact of these two recommendations could be exactly the incentive needed to encourage owners of multiple properties to make sales to firsttime buyers. In our experience, the current high rates of capital gains tax which are applicable to gains on residential property are simply encouraging landlords to hold onto these properties thereby reducing the number of properties available.

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‘Bank of Mum and Dad’ Far from being a new concept, the ‘Bank of Mum and Dad’ has been an integral part of the intergenerational contract for many years and for many families. It is often only as a result of parental generosity that young people are able to purchase a property. However, we are seeing a decrease in parents wanting to give money outright to their children and the main reason for this is usually a concern about the child’s relationship status. Research carried out by Investec Wealth & Investment last year found that one in three parents are reluctant to provide financial support to their married children because they are concerned that the money may be taken into account in the event of a divorce. Instead, parents are either not gifting as much (proportionally) as previous generations or are looking to use trusts or loan notes to protect assets for the long term benefit of their children and grandchildren. This reluctance to interact with their children about finances is creating a generation whose understanding of the financial world is sorely lacking. Children are becoming young adults with little understanding of the importance of a monthly budget or the tax efficiency of an ISA. This attitude is a cause for concern because the millennial generation are not only failing to accumulate wealth in the form of assets such as property but, if they have been to university, they are starting their working life in debt as high as £50,000 in some cases. This early exposure to substantial debt gives young people an unhealthy attitude towards borrowing and the issue is compounded by the abundance of ‘student’ or ‘graduate’ credit cards available. Spending becomes all too easy and accumulation of wealth is not a focus. The wealth bubble of the baby boomers and generation X and their reluctance to share this with the next generation is disrupting the ‘normal’ intergenerational contract which assumes that wealth will be shared between the generations.

Clearly this generational divide needs to be addressed. The proposal made in the Intergenerational Commission’s report to replace inheritance tax with a lifetime ‘recipient’s tax’ is a drastic one, but one which could revolutionise the way in which the older generations think about sharing wealth. There would still be a place for structured tax planning, perhaps even more so than there is now. Prioritising asset protection does not have to mean that wealth is not shared. This proposal has been welcomed by most critics. However, the suggestion that a ‘citizen’s inheritance’ is introduced has been more widely criticised. What would effectively be a cash windfall of £10,000 for 25-yearolds has been described by the Institute of Economic Affairs as a ‘short term bribe’ rather than a true redistribution of wealth. The indiscriminate distribution of £10,000 to any and all 25-year-olds is nonsensical. Even millennials are not convinced with many responding that £10,000 would be a drop in the ocean when it comes to saving a house deposit or paying for further education. Let’s hope that this headline-grabbing proposal does not detract from the other very interesting suggestions put forward. The start of something new? The report has been talked about a great deal and its recommendations long awaited, but the devil is in the detail and, in UK politics, the approach by most political parties which is to pass the buck. Watch this space! There are a number of interesting suggestions made in the report and families have already begun to adjust the way in which they think in order to deal with the challenges of the 21st century; society cannot be far behind. The question on everyone’s lips however is whether it will be too little too late for the millennial generation.

Sarah Paton Associate and Tax Expert Irwin Mitchell Private Wealth

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The Transaction Security Landscape: New Mandates, New Challenges As consumer adoption of mobile and online commerce channels continues to grow, fraud losses in this space are becoming a major pain point for mature markets. To address this security challenge, Strong Customer Authentication will become mandatory in the European Union. However, even without regulatory mandates, the problem is significant enough for providers to take proactive steps to improve transaction security. The market trends to monitor will encompass security, stronger customer authentication, PSD2, 3D Secure 2.0, card-not-present fraud, mobile experience issues, and shopping cart abandonment concerns. To give some context around these trends, it is beneficial to review each area with regards to how fraud has had an impact.

PSD2 and a Stronger Need to Reduce Fraud

Mandated Strong Customer Authentication

Several trends will affect how online stores will secure their checkout process while battling shopping cart abandonment. Besides the overall explosive growth of mCommerce, measures to reduce fraud in cardpresent scenarios cause an increase of fraud in the card-not-present environment. The EU PSD2 Strong Customer Authentication regulation mandates a form of authentication for all intra-European payments from September 2019, while providing exemptions for payment providers with low fraud rates. EMV® 3-D Secure Protocol, also known as “3D Secure 2.0”, lays a foundation to address these challenges and is likely to be mandated by card schemes.

The Evolution of Card Fraud in Europe 2016 research by the Fair Isaac Corp. reported card-not-present fraud accounted for 70% of total card fraud in the European Union, reaching €1,231 billion in 2016. While the total fraud in the EMEA region grows at 4.4% CAGR, total volumes of card fraud were expected to exceed €2 billion by 2019 according to our research. What ensued were actions prompted by the regulators, and so, as part of the PSD2 (Payment Services Directive 2), the EU lawmakers mandated Strong Customer Authentication to be part of any remote electronic payment, including all payments processed by a European institution and performed using credit or debit cards.

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The details of Strong Customer Authentication are covered by European Banking Authority’s Regulatory Technical Standard, which was officially adopted by the European Commission on March 13th, 2018, to become applicable 18 months later, which means it will be effective from September 14th, 2019. The changes in regulations will force all payment service providers that operate in the EU to combat fraud by means of enforcing mandatory Strong Customer Authentication on a large share of online transactions, or, alternatively, by implementing substantial fraud monitoring and prevention measures that would entitle providers to further exemptions from the mandate.

Card-Not-Present Fraud Expected to Skyrocket Payment card fraud dates back to embossed plastic and imprinters, and as making payments has become easier with the evolution of technology, fraud in card payments has become more sophisticated, leading to increased checkout complexity. This was true for card-present, brick-and-mortar transactions and is even more so with card-not-present transactions in eCommerce and especially mCommerce environments. Even Visa/US Chamber of Commerce’s “Cardholder Data Security and Fraud Prevention” reported that not only 67% of cardholders are becoming more cautious about their future credit card use but also acknowledge that raised awareness can’t prevent data breaches. In fact, data breaches are reportedly increasing to 44.7% according to the Identity Theft Resource Center’s “2017 Annual Data Breach Year-End Review”. As a result, card schemes, concerned about establishing and preserving their brand reputations as reliable methods of payment, have invested in

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the development and rollout of multiple technological solutions designed to reduce or eliminate fraud, and in particular, the use of counterfeit cards. In the card-present environment, this was achieved to an extent by implementing EMV ICC technology, with the later addition of EMV Contactless and, further down the line, mobile card tokenization (ApplePay™, SamsungPay™, and others). However, the process of transition to this new fraud-resistant technology is still ongoing in some of the more mature markets such as the United States, where only about half of in-store payments are currently done with EMV according to BI Intelligence. Furthermore, even after full-grade EMV transactions become the overwhelming majority, payment card fraud will not completely disappear. While counterfeit card-present losses in the USA are expected to decrease from $3,615 billion in 2015 to $1,771 billion in 2018 according to the Aite Group, card-not-present card losses are expected to more than double from $3.1 billion to $6.4 billion in the same timeframe. In Europe, card-not-present fraud is a major driver behind the annual growth of fraud in general. While implementation of EMV has reduced fraud in ATMs and POSs, overall losses from fraud in 2016 are estimated at €1.759 billion, having grown with a CAGR of 5% during the last five years, with card-not-present fraud constituting 70% of the volume, growing at a CAGR of 9%. (See Figure 1.) In France alone, the annual losses due to fraud


doubled in 10 years, increasing from €252.6 million to €548.3 million, while in Sweden, annual card-not-present fraud jumped from 94.1 million SEK to 142.4 million SEK (51% YoY), according to FICO. Figure 1. European Card-Present and CardNot-Present Fraud Losses (source: FICO by Fair Isaac, Euromonitor International)

Mobile Experience Issues, Abandonment a Challenge, Security a Concern The smartphone user base continues to expand rapidly and is expected to reach 2.87 billion global users by 2020 according to eMarketer, with over 55% of total mobile phone users utilizing a smartphone by that time. This will have a profound impact on consumer shopping habits, while driving the growth of mCommerce in absolute and relative terms as well as being the driver behind the growth of eCommerce as a whole. The mCommerce market in the United States according to eMarketer is projected to reach $284 billion, or 45% of the total USA eCommerce of $630 billion, by 2020, up from $35.2 billion or 11% in 2014. And during the 2017 holiday season, 36% of USA consumers planned to use a mobile payment app. At the same time the PayPal Mobile Research 2014/2015 Global Snapshot showed the estimated CAGR of mobile commerce in Europe is 42%, in comparison with the eCommerce CAGR of 13%. PayPal continued with showing

these figures as being even higher in Nordic countries, where the aggregated growth rate of mCommerce is projected to exceed 50%. However, while customers express growing interest and genuine intent to shop via their browsers and mobile devices, retaining a customer throughout the checkout process remains a significant challenge. The rate of abandoned shopping carts on desktops is over 70%, and even higher on mobile devices according to Adobe Insights (See Figure 2.), and about 1 in 3 smartphone users will immediately switch to another application or site if they feel their needs are not instantly satisfied. Figure 2. Shopping Cart Abandonment Rates per Channel

While true that about 25% of consumers cited by PayPal Mobile Research show that mobile payment security concerns (and not checkout issues) as a barrier to shopping via mobile device more often, the introduction of additional authentication processes will hardly increase checkout speed and improve consumer experience.

A Key Solution to Address Fraud EMV® 3-D Secure can help, if handled with care. For instance, card schemes have offered a solution for improved security of online payments since 1999, in the form of the Verified by Visa™ program, also known as “3-D Secure 1.0”. The solution has reduced fraud significantly, with fully authenticated transactions being around three times less likely to be fraudulent. On the other hand, it has contributed to consumer drop-out, which has reached doubledigit figures according to Visa and Cardinal Commerce.

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To address these challenges, card schemes have cooperated via the EMVCo standards body to deliver the EMV® 3-D Secure standard which became known as “3-D Secure 2.0”. The standard allows a front-end application to retain full control over user experience, outlines rules for riskbased authentication (the so-called ‘frictionless flow’), introduces a number of alternative authentication methods including device biometrics, and, among its other advantages, is considered by card schemes to be the technological answer to the SCA regulation in Europe.

AI-based Fraud Prevention Despite the directive not specifically mentioning machine learning methods, this set of requirements – including the analysis of individual cardholder spending patterns and anomalies – demands analysis of vast arrays of data for each cardholder, with identification of individual behavior patterns. Unless the processor (or the merchant) only handles recurring transactions with small numbers of customers, no team of analysts can realistically process and compute the baseline spending pattern function for each cardholder that utilizes payment services. This means that, in reality, in order to meet this set of rules, deployment of a machine learning solution is unavoidable.

The Bottom Line Both sharp increases in rates of cardnot-present fraud, and the regulatory response to it, inhibit growth and can reduce the revenue of online merchants. Fraud causes direct damage to merchants, while government regulations that mandate strict authentication cause an increase in shopping cart abandonment. Furthermore, existing mechanisms for strong consumer authentication such as Verified By Visa™ (also known as 3D Secure 1.0) are ill-suited for mobile channels, harm customer experience, and further contribute to abandoned orders. While mobile commerce drives online commerce growth and the ability to prevent fraud contributes directly to the bottom line, providing better security (but not necessarily stronger authentication), improving consumer confidence in mobile devices as a shopping channel will, in the end, have a positive impact. The best strategy is to implement an AI-based fraud prevention solution, deploy a full card-on-file solution, including account updater services and provisions for cardholder authentication. In addition, it is recommended to implement 3D Secure 2.0 as soon as possible, combined with an authentication advisor solution.

Ilya Dubinsky Head of the CTO Credorax Ilya Dubinsky is Head of CTO Office for Credorax ( He has over 15 years of experience and in-depth knowledge in a wide spectre of technologies across several industries, in both start-ups and large enterprises. In his current position, he defines the technology roadmap for Credorax, manages its IP portfolio and teaches students as part of an academic cooperation program. Prior to assuming this role, Ilya had defined, procured, implemented and launched Credorax's core acquiring platform.

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Award-winning, year after year


2017 2018

Desjardins Private Wealth Management named Best Private Wealth Management Company in Canada in 2018 Winning this award for a third year straight is a nod to the top-quality service our professionals provide. Desjardins Wealth Management Private Wealth Management is a trade name used by Desjardins Investment Management Inc. and Desjardins Trust Inc. Discretionary portfolio management services are provided by Desjardins Investment Management Inc., registered as a portfolio manager and as an investment fund manager. Trust services are provided by Desjardins Trust Inc., federal trust and financial planning firm.