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Editor’s n o t e

or this issue, we discuss the implications of ongoing tension between some of the world’s great powers—and what might be the outcome. Can those countries overcome the rising challenges? Will there be cogent arguments for them to progress toward an agreement?—are some of the big questions posited in our stories with commentaries from experts on the matter. Since the presidentship of Donald Trump, there has been significant changes to trade and industry. His authoritarian behaviour has led to a series of consequences on the global front. In retrospect, there are variations to his approach that opens a Pandora’s box of claims which seem to cause dissension between countries. On that note, the cover debates on the combustion of US-China trade war and how it is affecting the Japanese economy. Moreover, in our attempt to revisit his other political stances that reinstate crisis in diplomatic relationships, you might even find a compelling take on the nuclear treaty. The sticking point however at this time is the Brexit verdict. Britisth Prime Minister Theresa May has survived the no-confidence vote—and intends to see her plan through. The struggle is historic. Against this background, it is impossible to skip the political happenings prior to her next move. So, with Great Britain prophesying the expected and the unexpected, we entail how the world is perceiving the matter as we come closer to the Brexit day— and the change in dynamics until then. After all, the outcome, in part, is monumental to the global business ecosystem contributing to the GDP rise. But that’s not all. To give an edge to our reads, a section devotes itself to exclusive interviews and ideas that can change perceptions. There, the ideas are both intuitive and telling—enough for you to explore the progressive interaction between economy, technology, and business—past the playbook.

editor@ifinancemag.com www.internationalfinance.com


06 Is Japan going down with Trump’s trade war? The Japanese economy is struggling to move foward owing to the aggressive trade tension between the US and China. Yet, economists argue that ‘there is stable growth’ with ‘firm fundamentals’ in the long run


24 Recounting the Year in Brexit As Great Britain inches closer to the verdict—we spell out the impact, and the reality after March 29



The first-ever crypto multiwallet

The role of tech in legal services

In the age of cryptocurrency, the excitement about bitcoin and blockchain heightens with Nexus Global

In an interview with Jonathan Kim, partner at Cooley LLP, emphasises on the remarkable need to combine law with tech


Director & Publisher Sunil Bhat Editor Sindhuja Balaji

Theresa May—and fate of UK—projected


Editorial Adriana Coopens, Jessica Smith, Lacy De Schmidt, Sangeetha Deepak, Karan Negi Production Merlin Cruz

Startupreneur on Indian business ecosystem

Turkey lures long-term investor interest

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Demystifying Trump’s actions on nuclear treaty


VNPT strengthens digital economy in Vietnam


Design & Layout Jaison George Business Analysts Steve Lloyd, Sid Nathan, Christy John, Jane Paul, Mark Smith, Gwen Morgan, Sarah Jones, Ayesha Misba Business Development Manager Steve Martin Business Development Sunny Shah, Sid Jain, Ryan Cooper Accounts Angela Mathews, Jessina Varghese Registered Office INTERNATIONAL FINANCE is the trading name of INTERNATIONAL FINANCE Publications Ltd 843 Finchley Road, London, NW11 8NA Phone +44 (0) 208 123 9436 Fax +44 (0) 208 181 6550 Email info@ifinancemag.com Press Contact press@ifinancemag.com Associate Office Zredhi Solutions Pvt. Ltd. 5th Floor, Sai Complex, #114/1, M G Road, Bengaluru 560001 Ph: +91-80-409901144

What Japan might take from Trump’s trade war After major economic shifts marked by the pre-and-post-war years—again, the country’s trade alliance is affected by two great powers’ hostile impact on supply chain. Will it still make a great leap forward? Sangeetha Deepak



fter the Meiji restoration, Japan’s social and economic growth came into a sharp focus: when it became the world’s first ‘non-Western great power’, much influenced by the success of the West. Then, following the Second World War, the country recovered from the destruction and swiftly expanded to become the third largest economy behind the United States. Japan’s early post-war years were meaningfully capitalised on: Significant investments were made in chemicals, coal, steel and power. The education system was reinforced to achieve the world’s highest literacy rate. (Discipline was systematically encouraged in schools to form a potent workforce in the future.) Into these fervid economic conditions a carefully structured system was seen

coming together. This powerful transition was manifested to preserve the country’s political standing, which was loosely administered during the Edo period, as a result of isolation (or sakoku) from all foreign nations. Japan, then, re-emerged with a compelling history and a dominating economy. With an improved version of itself now—and amid ongoing trade tension between the United States and China, the question is: how will the Japanese economy be calibrated by economists in 2019? The Bloombergquint wrote: “2019 looks like a crunch year” for Japan. Toward the end of last year the International Monetary Fund report predicted the country’s global growth in 2019 might reach 3.7%—which is revised from its initial forecast of 3.9% growth. This means, “the recently announced trade measures,

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including the tariffs imposed on $200 billion of US imports from China,” is changing the economic dynamo for several Asian countries, including Japan, where they are “projected to experience somewhat weaker growth in 2019 in the aftermath of the recently announced trade measures.” Upon such sentiment, Japan will reflect a 0.9 percent drop in its economic growth because the “medium-term prospects are impeded by unfavourable demographics and a trend decline in the labour force,” the report explained. Last year, Reuters’ poll of economists worried that the Japanese economy might hurt as a result of this political hysteria. When the economists were asked to identify a potent contributor to Japan’s possible economic flux in 2019—16 of them voted “US-China trade friction,” 10 suggested “China’s economic slowdown,” and eight said “New Japan-US trade negotiations.” Trump’s trade war is undoubtedly a distinct drawback for Japan. More so, because the manufacturers in China vastly use parts and equipments from Japan to assemble smartphones and computers—and in the same way the Japanese factories in China ship goods to the United States. What’s more important is, “American duties lodged against China have hit some of the machine tools that Mitsubishi Electric exports to the US from the mainland,” suggesting that they have no choice but to relocate their production center or change suppliers. Against this background, Mitsubishi Electric now manufactures machine tools for the United States in Japan. For Trump, the chain reaction of diplomatic disagreements seem normal as he made no mention of the matter with regret. It’s perhaps complex, and


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certainly more political, for Japan to neglect the consequences of the trade war on its economic activities. While high tariffs on Chinese exports is impairing China’s diversification in global supply chain—“potentially the biggest risk from intensified US-China trade tension is the indirect impact on corporate sentiment and capital expenditures,” Hiroshi Ugai, chief economist at JPMorgan Securities Japan, said. What’s clear is that nearly 60% of Japanese companies can expect their annual earnings to sink, reported Nikki Asian Review last year. The poll found that “top executives from 11.4% of the responding companies see definite harm to earnings, while 49.1% report a likely negative impact,” with “no respondent forecast receiving any benefit from the trade disputes.” After all, “there are no winners in reciprocal tariff levies that stem from protectionism,” Hitoshi Ochi, president of Mitsubishi Chemical Holdings, said. This probably explains why Japan is heading towards successive risks from the warfare, but the repercussions of it might not persist forever. For onlookers, to describe Japan’s ceremonious rising in its post-war years, and the unwanted backlash it’s facing from the trade war is disturbing. On the face of it, some economists argue that Trump’s trade war with China might predate Japan’s economic growth, while others remain positive about its expanse in the long run. Atsushi Takeda, an economist at Itochu Corp. in Tokyo, told Bloomberg: “There’s no change to the fact that we’re seeing fairly stable growth.” “In the long term the fundamentals are still firm.” editor@ifinancemag.com

Brexit—from an industry standpoint Director General of EISA Mark Brownridge and CEO of IW Capital Luke Davis talk about the polarising effects on businesses in the country to the Brexit day and after. IFM Correspondent

Brexit day is coming up in March. So, can small businesses grow in the short and medium term? Luke: Short and medium-term growth is often

challenging for small businesses, especially

when intensified by such uncertainty over Brexit. Understanding the value of an internationally scalable business model at grass-roots is vital. In pre-Brexit, domestic strategies were still viable in investors’ eyes, whereas a postBrexit approach needs to be both Brexit resilient and global-ready. This is true to most modern businesses with an exception to those that


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focus entirely on domestic customers and aren’t looking to export products or services. Further to this, uncertainty—if harnessed correctly—can be used to the advantage of many growing business. The key is confidence in your approach. Many of the successful entrepreneurs we’re coming across are leveraging Brexit as an opportunity to expand trade options, piggy-back off the media rhetoric and diversify product/service offerings with an expanded audience in mind. It’s also important to not get too caught up in Brexit’s bark, as invariably, it may very well be worse than its bite.


How will small business funding be affected post-March 2019? Small businesses have long relied on alternative routes for their growth finance as banks are increasingly unwilling to lend to SMEs, meaning the landscape for these very businesses are likely continue in this vein post-Brexit. Uncertainty has undoubtedly contributed to banks’ reticence to lend—much like the financial crisis of 2008/9.

Will IP rich but asset poor tech companies still be able to raise capital

within the Brexit leaving period? IP rich, asset poor tech companies are exactly the kind of SMEs that already struggle to secure funding from banks and traditional lenders. This is where alternative finance routes such as those we provide at IW Capital are vitally important for the development of our futurefacing, globally competitive private sector. Government-backed schemes such as EIS will mean that they will still be able to raise growth capital regardless of the Brexit transition period. Equally, investor sentiment is buoyant toward SMEs throughout seismic events as

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they hold great faith in our nation’s innovators and entrepreneurs.

Can you suggest some viable alternatives to small business funding, especially in politically volatile countries? Brexit—if executed efficiently— should open up a number of trade and investment opportunities for investors in the UK and abroad. These opportunities will include the chance to invest in developing markets as the government begins to secure trade deals and incentives that counter a potential impact on trade with the EU.

What Does the Brexit deal means for small business in the UK?

Mark Brownridge

Director General of EISA

Luke Davis

CEO of IW Capital

Mark: Brexit could be a great opportunity for small businesses in the UK, precisely because of the fact that they are more nimble, adaptable and open to change. The one thing that small businesses are looking for is certainty. When a business knows what is going to happen in the future, whether that be a deal, no-deal or a second vote, they can put preparations in place and change to suit the climate. The UK is positioning itself as one of the world’s leading entrepreneurial hubs. With a large number of individuals and entrepreneurs looking to start businesses in the UK, the government is working on building the infrastructure to support these small businesses.

How do you think the government might respond to ensure SMEs can continue to grow post-Brexit? The UK is positioning itself as one of the world’s leading entrepreneurial hubs. With a large number of entrepreneurs looking to start businesses in the UK, the government is working on building the infrastructure to support these small businesses.

One of the key things post-Brexit is the ability the government should have to be able to focus on tackling the issues that small businesses are facing. Currently, we are seeing the majority of resources going into Brexit discussions, perhaps rightly at this point in time, but after March we are hopeful to see more time spent on SME issues. The government is already doing good work with the patient capital review to try to find ways to encourage investment into the earliest stages of new business. This is currently a bit of a problem for the UK’s smallest of start-ups, with investors often reluctant to leave their capital with these businesses for such a long period of time before seeing any returns. The other key stage of small business growth that the government is looking to address is series A and series B funding, with a number of fantastic companies being lost overseas to investors with deeper pockets and funds, such as those in the US. 

What is the importance of schemes such as EIS for growing small business as well as the impact on the SME arena that the deal might have? EIS is hugely important for growing small businesses and in recent years we have seen a shift in focus toward technology, growth and innovation. This encompasses AI, fintech, cyber-security, driverless cars, and a whole range of other market disruptors. It’s likely that these kinds of companies are going to be the ones that will benefit the most post-Brexit.


The changing face of business Millennials are hard to crack. How to appeal to a younger demographic and retain their attention for a longer span is a challenge that needs to be reacquainted. Chris Parnham


he discussion of alienated and apathetic millennials has fuelled a debate on their relationship with the global business landscape. To some, millennials are seen as highly motivated and driven individuals, grateful to have begun escaping their looming student debt with a long overdue steady income. On the other side of the ‘coin’, there are those who brand them as lazy, drifters, and entitled as they lack the drive to get to where they want to be. Somewhat ironically, it is those businesses with a negative outlook on young people that struggle to appeal to both: younger audience and retain employees who walked out the door. With a great depth of world-renowned universities, the UK is undeniably a haven for employers seeking highlyskilled and economically active young people. Naturally, this should lend to employers an unbelievable opportunity to ‘cherry pick’ those individuals


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most suited to their company culture and future job requirements—from a diverse and well sourced labour pool. In other words, the UK market is primed for businesses recruiting skilled


graduates. Therefore, the issue is not significant to the relationship millennials have with the business world. It is the relationship businesses have with the millennials within. Since my acquisition of Absolute Corporate Events (ACE) in 2013, I have ensured to develop a business strategy based upon people, rather than just numbers which makes ACE home to some of UK’s leading event

industry professionals with a visible growth of 400%. Below, I note three vital themes to consider when questioning the relationship your business will have with its staff, in particular while recruiting and retaining young employees.

Trust your Investment Trust is not something to be taken lightly by any means. It is important to trust your new hires to perform to the standards set by your business. This might require a certain level of training before a graduate can be prepared to face the client or attend new business pitches. However, it is absolutely important to provide opportunities that will allow them to prove themselves and have some legitimate responsibility in their work—without which they might begin to feel undervalued. And once they feel undervalued, the prospect of working somewhere else is not only more

Chris Parnham | Managing

Director, Absolute Corporate Events

appealing but also feasible. Too often, we see businesses becoming complacent about their workforce—and in turn, this results in businesses being ‘lazy, drifters and entitled’. If you don’t take your employees for granted, they’re not so likely to take their job for granted.

Offer Career Progression As fun as it may be, millennials are not taking on anywhere upward of £35,000 debt just to be part of a stigma and have a three-plus year party. In fact, for the most part, they are highly ambitious and charismatic individuals in search of opportunities that will take them to the next level. Creating a work culture that encompasses training and opportunity, in my experience, has encouraged young hires to stay within the industry

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for a long time. Millennials are not ignorant of the fact that they need training. Universities certainly help them to develop social skills, but the theoretical matter learned is rarely applicable to the demands of their ‘adult job’. Therefore, having a clearly defined and invigorated training and promotion scheme can be a valuable asset to employers of young people reporting into them. It is important to exercise training to develop employee potential, offer promotions to incentivise this training and sustain the access to further promotions as a form of intrinsic motivation. Promotions don’t necessarily have to be based on an increased salary, and more often than not, it is seen as the only means of retaining employees. The reality, however, is that businesses should also be able to sell their employees better work conditions. Growing responsibilities and job title changes are highly effective ways of rewarding your employees. It can also serve as


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a valuable indication to clients: trusting your employees and wanting to retain them because of the confidence they show is a useful tool in encouraging clients to reciprocate their behaviour. Reward and recognition is another valued structure than promotion or advancement as carefully positioned meaningful rewards show employees that you truly care about them and their contribution. This in turn will encourage them to become more productive.

Be Transparent It is worth taking note that when businesses make assumptions of what’s appealing to graduates, they make a fool of both themselves and their potential hires. Brightly coloured walls, pingpong tables and sleeping pods are not always effective forms of enticement for ‘top’ employees. And by top, it refers to those who have come to get the most out of themselves and the most out of their work.

By all means, encourage flexible working locations and a glass of fizz with an early wrap on a Friday—but being kept as informed as more senior co-workers is a far greater attraction to most young employees. It reaffirms the business’ commitment toward their employees and lays emphasises on the culture of trust and career progression. Moreover, actively seeking counsel of new hires when making informed decisions is an easy win-win for employers. This means, incorporating and empowering teams—at no extra cost. Not just that, but employers also have no obligation to act upon the recruit’s cousel; it simply creates a positive perception of the business and encourages growth and career development.


Is the UK fintech sold off too early? As soon as a company in the UK peaks to £1 billion valuation, it becomes a target for potential buyers. No wonder they prefer to be acquired.


he UK fintech industry is alive and kicking–if Visa’s recent acquisition of Earthport is anything to go by. The £198 million deal which came through 18 months after MasterCard bought Vocalink for £700 million gave Earthport a value that was four times the stock’s closing price at the time of the deal. With the rapid growth of the Internet, and with cross-border e-commerce transactions, customers have come to expect a simple, instant multichannel experience, wherever they are making their purchases from. Therefore, schemes are looking at ways to innovate, diversify and


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Peter Keenan at the same time, strengthen their core payment rails. The Earthport acquisition strengthened Visa’s position in the digital currency ecosystem while MasterCard accelerated its move into ACHbased (Automated Clearing House) real-time payments. The Earthport and Vocalink acquisitions have shown the importance of having a globally connected ecosystem and the value placed on such deals by payment providers. So, there is a certain curiosity as to why these innovative fintech companies allow themselves to be acquired rather than scaling themselves.

Fintech’s glass ceiling In order to successfully scale in the payments industry, one needs to have substantial networks and deep pockets to build and fund the business—given the time it takes to achieve this. And while these companies may have impressive technology, creating a global ecosystem fast enough to be profitable in a timeframe, enough to keep traditional investors happy, isn’t really a reality. MasterCard and Visa’s ecosystems effectively started in the 1950’s and early 60’s, and it’s taken them around 70 years to get to where they are today. The fintech industry has been


There are a lot of global businesses that want to deal with providers who can handle their entire payment requirements to help with the growth around for less than 10 years, but investors can have unrealistic expectations around how quickly an ecosystem can be built. Let’s not forget that banks are notoriously slow to move and implement change: it takes many years for volumes to grow enough before an ecosystem can be fully established in the market.

The demand for globally connected ecosystems There are a lot of global businesses that want to deal with providers who can handle their entire payment requirements to help with the growth. It’s not effective to deal with a partner that can only help in one market. The growing trend is to have one partner consolidate global payment providers into a single integration point—as well as provide the flexibility to build

perfect the system. This facilitates access to local acquirers, offering solutions better suited to local markets which reduce costs of processing and dramatically boost conversion rates. Businesses are then ready to accept payments from the moment of integration and face no barriers that prevent fast, sustainable growth in the industry.

Selling too early? Looking at the VC market in the US: it’s more mature and a lot of tech companies have been born on the West Coast. But they also benefit from the luxury of seasoned VC companies born there and not afraid to back them. For example, Uber had a $50-60 billion valuation before the business had even entered into the market. The company has now been told by banks that it could be worth $120 billion when it goes public this year, although ultimately, it will be the investors who will decide the company’s valuation. However, the UK market is very different. As soon as a company gets to unicorn status, or a £1 billion valuation, everyone wants to buy it. Achieving a unicorn status out of London means: if your company is backed by a bigger firm, it is possible to become a £10-£20 billion player in the next five to 10 years. For founders, it’s hard to resist a deal, after having gone through the ebbs and flows of getting to £1 billion. This means, the effort that is required to get to the next stage will be less amenable; so a lot of investors will decide to sell or move on.

The next 12 months

Peter Keenan | CEO, APEXX increasingly cashless society with more banks disappearing from the High Street, we’ll undoubtedly see more acquisitions from traditional players looking toward the fintech industry for inspiration and innovation. So, the big companies will be asking themselves: does the value proposition bring something over and above what we can offer? And does the business bring something new and innovative that can be sold to existing customers? While some could argue it’s a shame that all those innovative companies are being acquired, it’s really a win-win situation for customers and businesses. For fintech businesses the opportunity is enormous: to create an innovative solution that improves customer experience, and big players like Visa, MasterCard, Paypal, or Google, have no choice but to pay out in the face of pressure from rapidly advancing customer expectations.


As we move towards an

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Nexus Global—the first-ever crypto multiwallet the world has seen When there is an ecosystem built to hold all currencies in a single wallet which is ‘truly quantum resistant’— the outcome is something else. IFM Correspondent


n a series of conversation, Alex El-Nemer, executive director and board of director for the Nexus Embassy UK talks about Nexus Global and its revolution in the industry.

Can you tell us more about Nexus Global? Nexus is ultimately an open source blockchain technology and digital currency. The definition of Nexus means a connection of two or more things and that’s what we symbolise as an organisation. Our technology connects businesses and individuals without the need for interference from any third party, a true peer-to-peer network. Our goal is to provide a platform that allows everyone to build a future they desire, no matter their background. Whether the user is a financial services specialist, a charity, a public sector organisation, or an individual wishing to control their

own finances, our offering enables faster transactions and more accountability, which ultimately builds trust. We believe that education around this new technology is a key driver in allowing cryptocurrency to benefit all and are committed to providing a service that can be used easily by everyone.

What is a Nexus Coin and how it works? Nexus or NXS is the native cryptocurrency of the Nexus Blockchain which is maintained and deployed by The Nexus Embassy and the development community. We are unique to the other platforms available because Nexus is the only truly quantum resistant blockchain, meaning that it has levels of security beyond any digital currency out there. NXS can be transferred peerto-peer to anyone at any time

with no fee limitation and is cleared in real-time, representing a significant improvement on both traditional systems and other cryptos available. Nexus was mined into existence and thus never held an ICO—much like the popular bitcoin—making it one of the few truly distributed and decentralised projects out there.

How is Nexus Coin different from bitcoin and other first-generation cryptocurrencies? NXS is unique in a huge number of ways. Our hybrid Proof of Work and Proof of Stake consensus mechanisms increase the security of NXS and reduce the threat of an attack on the network. It also has a familiar model of growth to that of stable inflators such as gold. This is due to NXS having a capped inflation of three percent which is a proven to be a stable level of long term inflation whilst still supporting

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term inflation whilst still supporting growth. Our Quantum resistant keys and hashes are engineered to be longer in length which works to reduce the threat of attack—making us one of the most secure digital currencies. Major currencies like bitcoin and ethereum (and others that use their code) have a huge threat from Quantum computing which we believe is a near term threat. As well as this, we have a completely unique code base so we aren’t copying it from another blockchain. It has been designed in a way in which we can optimise every level of the technology stack from the interface layer, down to the network layer. We also provide a hybrid blockchain model, which allows businesses to utilise the benefits of a public blockchain—namely heightened security—whilst also having the benefits of a private blockchain system— this is something we’re really excited for the future about.

Nexus offers the world’s first real crypto multiwallet in the field of multilevel marketing. What does this mean to the industry? The ability to trade and hold a number of cryptocurrencies in one place is incredibly important to allow the industry to grow as a whole. This ecosystem thrives of collective contributions and


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collaboration, with no single currency remaining on top. Nexus in every sense of the meaning provides the platform for all to collaborate in the most beneficial way for all stakeholders.

Why should digital currency investors consider Nexus’ multiwallet, especially since it’s a long-term investment? What are the benefits? Nexus is far more than just a wallet. It’s an entire ecosystem whereby the ability to hold all your currencies in a single wallet is highly beneficial, eventually providing the ability to trade these in a truly decentralised manor. As mentioned previously, the major standouts for Nexus are: • PoW and PoS combination for security • Quantum resistant technology • Completely unique code—addressing the entire tech stack • Hybrid blockchain model • Easy to integrate through APIs. Turning any web developer into a blockchain developer • Long term satellite network through our partner VECTOR • Global system with real world potential blockchain applications


A report reads “Nexus is attempting to realise Satoshi’s dream of decentralisation.” Can you explain? A lot of what we believe was initially envisioned by Satoshi (the creator of bitcoin) has been lost. The key focus of blockchain and digital currency was, and for Nexus has always been, to provide a platform to create a new world, one in which people had more control over their finances, data and the freedom to create a future they desire. Nexus was not made to simply be another technology to fit into existing models. Everything we do at Nexus is to create a new world, whether that is for business to design the business model they always dreamed of, or if it’s an individual who wants to be able to send money with no interference or control over what information is passed to whom—luxuries that are rare to establish these days.

What is the key advice you would like to share with investors before they invest in Nexus? As with any investment there are two absolute essentials: 1. Do your own research. Never rely entirely on information or advice that has been given to you. Read as much as you possibly can, contact the team or management if you’re interested to learn more. We are always happy to discuss our technology with those who ask, as should any reliable organisation. 2. Never go beyond your means. Only invest money that you can risk. Investing always has an element of risk and this industry in particular is a new and volatile market. Specific to Nexus, there are a number of elements that make us truly unique from other blockchain and crypto providers out there. Our differentiations make for good reason to be involved in the Nexus ecosystem and joining us on our journey.

From an industry perspective, how will developments in cryptocurrency contribute to global GDP? Cryptocurrencies are a completely new and relatively an unknown phenomenon. As you can imagine, when I studied economics at university there was no discussion of blockchain, cryptocurrencies and the impact that it would have on global economic models. The potential impact is unknown and very difficult to predict because it changes the impact of a number of key variables in traditional economic models. I strongly believe that that’s what makes this industry so

Alex El-Nemer | Executive Director & Board of Director, Nexus Embassy UK exciting and gives it the greatest potential to genuinely change the world as we know it—for the better. I think that greater freedom and insight into spending both on a governmental and an individual level can only be for the better. It can expose wrongdoing and thus reduce corruption which is known to greatly affect a country’s GDP. In addition, some cases have shown it can contribute to the wealth effect. As reported in Japan, whereby it was suggested that a 0.3% increase in their economy was a result of the growth of bitcoin and other cryptocurrencies in the country. Overall, I believe the future of cryptocurrencies and blockchain is very exciting and has the potential to impact our world in an incredibly positive way.


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Why Brexit is hard to digest Britain leaving the European Union is majorly linked with uncertainty— a condition that seems to stoke interest for its seasoned watchers, but certainly not for the rest. Sangeetha Deepak



reat Britain has compelled itself into serious trouble. It all started in the summer of 2016, when the United Kingdom voted to extricate itself from the European Union—a miscalculated decision with an untold consequence, perhaps. But the risk here stretches far beyond what the Brexit impact might be on the country: The possibility of severing formal ties with the European Union would push global markets into a state of paranoia. By that definition, three years ago the immediate effects of Theresa May’s Brexit proposal on the domestic economy was sensed in two ways. First: The pound fell sharp by 7.6%, which in itself was a disturbing economic shift for the country since 1985. Second: Investors had started to sell stocks in order to choose a less volatile market investment which nearly resulted in a loss of $3 trillion on a two-day record. Both these consequences seemed daunting, then. While the domestic market is forced to face what will happen in the country or the European Union—the global markets are recoiling at the very thought. Quilter Investors Head of Investments, Anthony Gillham, said: “For long-term investors it is crucial to take stock of the big picture, however. While uncertainty is clearly a concern for business leaders, the fate of UK listed firms is not totally reliant on the domestic economy. [The] UK large cap companies derive a huge share of their revenues from overseas operations, and many have in fact benefitted from Sterling weakness, which may boost their competitiveness.” Although this might be true, for International companies that

decided to headquarter in the UK for the sake of easy access into the European marketers, there could be an inevitable array of drop in profits. But on the bright side, “risk events with an unknown outcome such as this are a perfect example of the importance of diversification and a global outlook for investors. When one region or asset class faces a period of uncertainty, diversification is an investor’s built-in defence,” Gillham added. British businesses have earnestly requested politicians to end the disagreement over Brexit and settle for a smooth withdrawal from the European Union. It is imperative to realise that “the lesson here is that UK businesses are going to have to make their own luck after Brexit,” by expanding their vision and ensuring “their finance will stay in the boat with them through Brexit.” There is reason for businesses in the UK to fear the Brexit spiral, as it complicates the withdrawal which is not expected to conclude anytime soon. Fiona Cincotta, senior market analyst, said: “The FTSE is trading higher after another turbulent Brexit night when MPs voted against extending the deadline for Britain’s exit from the EU and broadly supported Prime Minister Theresa May’s Brexit Plan B. The pound’s reaction was swift: dropping to $1.30 against the dollar from $1.319 earlier Tuesday and helping some FTSE constituents gather steam this morning. But in the meantime sentiment has shifted in favour of sterling which has been trading at $1.31 this morning. “...on closer inspection it becomes clear that she [Theresa May] may not be able to actually deliver on the changes she is proposing. Brussels has immediately slammed the door in the face of a renegotiation with the

EC’s President Donald Tusk saying that the EU would not renegotiate the deal.” Markets don’t appreciate this kind of uncertainty. “It means that numerous permutations still remain, with no clarity about which is most likely. This is not a fork in the road for Brexit, but a spaghetti junction. “With no reassurance that a stable resolution can be reached, asset prices will continue to reflect the extreme uncertainty that prevails in UK politics. Sterling will remain sensitive to changing rhetoric over the coming days and weeks, and markets will be watching today’s confidence vote very closely indeed. “On the basis that up until now ‘no deal’ has been treated as a relatively unlikely prospect, the coming weeks could prompt significant shifts in UK asset prices. If the likelihood of a no deal is seen to increase significantly— many analysts were predicting just a 5-10% likelihood of a no deal outcome—then it could move markets,” Gillham said. “‘Risk events with an unknown outcome such as this are a perfect example of the importance of diversification and a global outlook for investors. When one region or asset class faces a period of uncertainty, diversification is an investor’s built-in defence.” With this, some suggest that “economic players and investors” are looking to restructure their global business plans and uproot jobs from the UK. This is not positive. In fact, the no-confidence vote “is a blow to Prime Minister Theresa May and although she has asserted her conviction that she can still get a deal through Parliament, the path ahead remains extremely unclear.”’ editor@ifinancemag.com

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A Business is ‘most vulnerable’ during sucCession Rochelle Clarke, global strategist and business succession expert spells out the dynamics of a family business during transition from one generation to the next. IFM Correspondent

In your expertise, how often do you see members successfully expand their family business? The statistical success rates for family business transitions have not been encouraging—with a mere 30% of family-owned businesses making it to the second generation and about half of these making it to the third. However, those who engage the help of a third party advisor have seen much higher rates of success.


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What are the common reasons found responsible for the decrease in longevity of family business? Can you state an example? Family businesses are most vulnerable during the succession or transition from one generation to another. The reasons for this are numerous; but one common contributing factor is poor or ineffective communication resulting in failed successions. Another is failure to plan for succession. Common


complaints that have their roots in communication include: unwillingness or inability to have key business conversations; lack of accountability among family members; and lack of boundaries (business taking over family life).

What is the chief knowledge that families must possess to ensure smooth ownership from one generation to the next? Families need to know what their succession journey should look like and where their potential succession issues are along that journey: what could potentially be standing in their way: be it lack of an identified successor, absence of a transition plan, or some other factor.

How important is it for a generation to Restructure its family business after transition? It is important as it is needed for the business’ survival. Businesses need to be flexible in order to remain relevant. The longest existing family-owned businesses have had to reinvent elements of their operation as technologies have advanced: ways of working has changed and the needs of their customers have evolved. A generation with a finger on the pulse of the industry will make the changes that are necessary for the survival of the business.

is coaching SIGNIFICANT TO THIS? Why?

Rochelle Clarke | Founder, Succession Strength in their succession efforts via our assessment survey. With knowledge of their potential challenges via the resulting report, owners or their successors could either take action via the self-help approach by selecting a Succession Strength product that best fits their needs; or by engaging with us for more involved coaching.

A number of factors determine whether the guidance required will be significant. For example: the number of persons requiring guidance; how far along the business is in the transition process; and the level of preparation of the incoming generation.

How does your venture play a key role in Family Business?

For example: if the incoming family member has

Communication: Establishing dialogue between one generation and the next is the key to success in transition. One barrier to smooth succession would be the key conversations that are avoided or mishandled for one reason or another. We not only highlight the key succession conversations that should be had, but we also work with firms by providing in-depth help with communication issues—general communication guidance (so they can have better, more productive conversations); and conflict management/resolution and continuity planning.

already spent a significant amount of time working in the business, the level of anticipated disruption and need for coaching may be minimal. If there are a few family members, or if the business is at the beginning of the transition process, the amount of guidance needed may not be as much as that required for a business with many family members or a business that is trying to fix a problematic transition.

Can you define Succession Strength’s business model? We aim to help businesses identify potential hurdles

We help family-owned businesses prepare for the future by providing solutions for major problem areas such as communication and succession.

Succession: It is the fruit of healthy communication. Our philosophy is that planning for a business

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continuity should go beyond just planning for succession. It identifies the critical elements in any transition and formulates a concrete plan for wading into the inevitable complexity of change. Through it all, we work hard to ensure that the owners’ vision is never lost in the shuffle. Our business continuity plans help businesses protect their current operations while also taking succession into consideration.

On what parameters do you assess a family business as on borderline risk? We assess businesses based on the strength of their communication, preparation efforts, and then, execution. We find that communication is the common factor that could result in issues in the preparation and execution phases—so we really focus on this.

Can you elaborate on your products and key offerings? Our Succession Strength™ assessment is an online survey that helps business owners and successors identify their transition hurdles. The resulting detailed report analyses their succession readiness in three dimensions: communication, preparation, and execution. The 5 Critical Succession Conversations: A


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Comprehensive Guide for the Family Business, is a book on difficult business succession conversations. In this book, we identify the most challenging conversations surrounding succession. A series on detailed step-by-step conversation guides crafted by our organisational psychologist help businesses overcome specific scenarios that could be causing tension and pave the way for a smooth transition. Business continuity template helps businesses distill key processes and functions into a comprehensive continuity plan that will ensure the doors remain open on the family business long after a key business member is gone.

So far, what has been the clientele feedback? Our clientele feedback has been positive so far. Clients like the amount of detail provided in the survey report and had good things to say about the accuracy. They also seem to appreciate the self-help approach of having a conversation guide that targets the situation they are facing.


DEEP LEARNING IN FINANCE SUMMIT LONDON • 19 & 20 MARCH 2019 At the 4th annual Deep Learning Summit in London, discover the latest advancements in deep learning tools and techniques from the world’s leading innovators cross industry, research, startups and the financial sector.


Manuel Proissl

Emiliano Sanchez

Head of Predictive Senior Engineer Analytics BBVA Innovation Labs



Hamaad Shah

Huma Lodhi

Stefan Zohren

Vice President Lead Data Scientist

Principal Data Scientist

Associate Professor (Research)

Deutsche Bank

Direct Line Group

University of Oxford

Panel Discussion: Assessing Data, Ethics & Regulation & DL Development in Finance This panel aims to discuss the key considerations for implementing and working with AI & DL in the Financial sector including the best practices for sourcing, manipulating and using data as well as the ethical and regulatory implications e.g. GDPR involved with these practices. Join the discussion with industry experts:

Use discount code IFM20 for 20% off tickets! Visit bit.ly/REWORK-iFinance19 for more information


lockchain and bitcoin are new technology concepts to many people in Kenya, the rest of Africa, and other parts of the developing world. Against this backdrop, interesting and exciting sentiments and thoughts radiated from a group of panelists during the official launch of ‘Chainworks Africa’ in Nairobi on October 29 2018. Chainworks Africa is a joint initiative by Compulynx of Kenya, and Chainworks, based in Illinois, Chicago. The panelists included Rohit Tandon, founder & CEO of Chainworks; Bitange Ndemo, chair of Kenya Government’s Blockchain Technical Committee and Sailesh Savani founder & CEO of Compulynx Limited, a Kenyan-based ICT firm. The discussion was moderated by Harry Hare, publisher and chairman of CIO Magazine, and Demo Africa. According to the presenters, Chainworks Africa will enhance better understanding of blockchain and cryptocurrencies such as bitcoin among other applications in Kenya and Africa. The book ‘‘Blockchain applications—A hands-


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on approach’ reads: “Blockchain is a distributed and public ledger which maintains records of all transactions. A blockchain network is a truly peer-topeer network which does not require a trusted central authority or intermediaries to authenticate or settle the transactions or to control the network infrastructure.” Sailesh described blockchain as a futuristic technology with capabilities to build efficiency and emphasised on the need to develop local blockchain technology locally. “It is critical to sensitise the private sector on how blockchain could be used to enhance business. The education sector, for instance, could use blockchain to enhance and streamline curriculum and seamlessly share it,” he suggested. According to the famous Doyen, who speaks at various global blockchain forums and has worked with Oracle in the past to analyse big data before going on to build a blockchain-bitcoin exchange in India in 2013, PwC has also centralised its technology through blockchain. Tandon, on his part, was excited that blockchain has eventually and formally launched in Kenya:

Blockchain in Africa

‘Chainworks Africa’ launched in Nairobi A joint initiative by Compulynx and Chainworks to reinforce blockchain for better economic and social welfare in the African region. John NDUNG’U

“Blockchain is critical for Africa as it shall improve logistics and supply chain among other areas in the continent,” he said during his introductory remarks. Ndemo likened blockchain to the 4th industrial revolution that will be powered by ICT. “This disruption must happen given that blockchain is part of emerging technology whose effects are irreversible. This is our golden chance to leap-frog to greater heights,” he observed. According to him, the 3rd industrial revolution rode on ICT to remove costs of efficiencies such as the long time use in clearing cheques. He asserted that blockchain will work handin-hand with AI: “for instance, AI is enabling translation of local languages to international ones and even assisting one to construct sentences by anticipating what one would normally write in successive statements. It is also allowing tracing and tracking of products and is bound to create more opportunities for people especially in rural areas to stop rural-urban migration,” he added. Ndemo affirmed that AI enables prediction of

seasons and natural happenings such as hurricanes in the USA as it improves meteorology services. “In 2017, those involved with AI in Kenya predicted that there would be a maize deluge leading to lower prices,” he said, observing that AI will boost evolution of data analytics making predictions from patterns such as of weather among others easier. This means, AI machines would remember patterns and improve supply chain among other sectors. Further, the discussions described blockchain as an attempt to automate digital operations faster and become ‘the new Internet’ or ‘Internet 2’. For governments, it will provide a trusted identity such as a biometric system. In improving supply chain, it can, for instance, remove middlemen who exploit farmers— and in the education sector digitisation will prevent cheating during examinations, and provide faster systems. Owing to the assured trust in blockchain, bitcoin tends to use blockchain. Essentially, bitcoin is an application of blockchain and while the Internet holds

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ChainWorks Founder and CEO Rohit Tandon

Compulynx CEO Sailesh Savani


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peoples’ data in hidden, distant points such as servers, this needs to be removed given that blockchain data is undeletable. According to Tandon, blockchain enables the inscription of new data on old data in multiple layers of records—thanks to the application that makes it more secure. Blockchain’s use will be determined by different user needs like it happens with the Internet leading to greater appreciation and understanding by keen and frequent users. In essence, “Blockchain is a monumental piece of work akin to a railway line which networks such as crypotocurrency shall use to produce immense socio-political good,” the panelists affirmed emphasising on the commendable transparency that is evident in its use and application. The transparency is expected to avert corruption and related vices. Ndemo affirmed that blockchain technology is applicable for Kenya’s current Big four agendas viz. agriculture for food security, affordable housing, manufacturing for more jobs & value addition and universal health provision. “In food security, for instance, blockchain shall help in identifying overuse of fertilizers and toxins in cereal crops such as maize and in turn help in tracking and tracing the cereals sources in the sector. This technology is also able to track drugs from manufacturing plants to clinics and dispensaries stopping pilferage and making manufacturers accountable if drugs are found to be substandard. Together with AI, it can help in assessing X-rays and conducting multiple scans to track stages and progress of diseases among other procedures,”Ndemo added. In manufacturing, the technology shall enable remote ‘managerization’ of production

Blockchain in Africa

Dr. Bitange Ndemo at the launch of ChainWorks Africa plants leading to ‘distributed manufacturing’ and redistribution of jobs to rural/local areas. In housing, affordable and new technology could be easily shared allowing for faster and easier construction of low-cost housing. According to Tandon, institutions could easily receive feedback from clientele and efficiently run loyalty programs for them. Innovative and efficient banking models that require no physical collateral for financing could promote transparent lending and growth of entrepreneurship. In the insurance industry, shared data ledgers and instant access to transparent and related information will fuel positive growth in the industry. “In health matters as well, AI is essentially able to help and understand autistic children , for instance, by being able to repeat words and phrases until the children catch up the names and phrases. AI never

lies,” he asserts. The Technical Committee headed by Ndemo has given drastic recommendations to the Kenya government. It seems, for instance, the government should stop printing currency notes given that almost every citizen is using mobile money. Ndemo also feels that people should surrender their farms, especially the smaller parcels, so that government or private entities could amalgamate the same and practice commercial farming for food or cash crops to increase productivity and fight food insecurity and poverty respectively. “Farmers who cede their farms should become shareholders in the larger entities and be paid dividends or earnings according to the shares ceded. On the same note, people should cease burying their dead in farms and opt for public/private cemeteries to free land for agriculture,” he observed.

According to him, land could become a digital asset that can earn better profits from the benefits of economies of scale. The Committee has also urged the government to continue building more robust and extensive digital frameworks. Tandon said on-going research efforts will make blockchain interoperable in future and urged firms to digitise business operations fully including in website functions. “Current cleaning hovers, for instance, use general intelligence but once upgraded to use AI shall be able to sense when the need for cleaning is due. Power banks are today using AI to power themselves on once they are connected to mobile phones and to switch off once the batteries are fully charged reducing risk of battery damage from overcharge,” he explained. According to him, the world is increasingly moving toward singularity in many operations. He likened blockchain to be a continuation of a huge machine game play worth of over US$150 billion currently. At the end of the discussion, the consensus seemed to be that though machines, digitisation, and AI are increasingly moving the world toward singularity, some human activities and abilities can never be replaced by machines. Machines might not be able to take over certain inborn talents such as poetry writing, painting, and other forms of art.


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Why 2019 might be the year for financial institutions to focus on what really matters According to a Capgemini report, companies pacing slowly in the financial sector will be challenged up to losing 35% of the total market share to their digital peers. Matt Phillips


inancial institutions know that they need to invest in new technology and new ways of connecting with their customers. In fact, according to a Capgemini report, digital laggards in the financial services industry are in danger of losing up to 35% of their total market share to digital pure-plays. So, from upgrading ATMs to giving them iPad-esq interfaces to making mortgage applications possible from a smartphone, we have seen a mass of new innovations from traditional banks this year.


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But this hasn’t been an easy process. While some financial institutions have been slow to adapt, others have attempted such a myriad of new innovations to the point that they’ve been at the risk of trying to achieve too much change at once. This year we might witness a new approach. It will be the year for financial institutions to hone their technological capabilities in the right direction. Many of them will pick one key area to focus on, and they’ll do it really well. Here’s a look at why and what else is in store for the industry in 2019.


Moving on from pilot schemes From Natwest’s Cora to the National Bank of Canada’s experiments with blockchain, we have already seen banks implement many different forms of new technology in pilot schemes. In 2019 however, the onus will be put on getting a return on investment, which is likely to involve taking a focused approach to new innovations.

Honing home-grown talent With the political climate having the potential to impact the free movement of tech skills across borders, some businesses are predicted to go into ‘supply shock’. They must therefore nurture and develop their own talented employees.

Getting the pace right While millennial and Gen Z customers might leap towards the latest technology, some baby boomers would rather crawl before they can walk. One of the key challenges for banks in 2019 will therefore be to develop their technology strategy at a rate that suits multiple demographics within their customer base.

The end of gimmicks We’ve all got excited by next generation apps and banking assistant robots that have been announced this year. In 2019, banks will concentrate on making their new innovations count from a customer journey point of view.

Open banking opportunities PSD2 was set to be the game-changer for 2018, with many in the industry seeing the legislation as a threat, as well as an opportunity.This year we can expect the legislation to start to impact consumer trends.

New branch formats Branch formats have been refined over the last few years, with many banks adjusting their portfolios to include flagship stores in high footfall areas, and a consolidated number of smaller stores, supported by transaction-heavy pop up or mobile branches in convenient locations. It has been a time of change and 2019 will see these new branch portfolios mature and get results.

Matt Phillips | VP, Head of Financial Services, Diebold Nixdorf UK/I consumerisation of technology like this makes it much more comfortable for banking customers to use, so we can expect to see a growing amount of technology such as biometrics in banking.

Adding value with analytics As a globe we are creating a mind-blowing 2.5 quintillion bytes of data each day. For banks, the challenge is to put data to work. In 2019, we will start to see banks use data more intelligent across different platforms to improve the customer journey, personalise the experience and predict how the customer will need to interact next.

‘As a service’ on the rise The ‘as-a-service’ economy is well underway in the UK, with analysts expecting the XaaS market to grow 38% by 2020. Banks looking to make a better use of their internal teams in a competitive environment can be expected to jump on this trend to boost their internal agility.


Comfortable consumers In 2014, 19% of consumers had biometrics on their smartphones. By 2018, this had risen to 7-in-10. The

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One Family wants to secure the insurance landscape—and create a cutting-edge experience The company’s digital transformation will benefit both: the insurers and their clients against cybercrime and the like. Kevin J. Smith



hen individuals or organisations purchase insurance, they firmly believe in buying a promise. This promise states that if something is bound to happen to a business, a car, a family house or even an individual, the insurance company will protect the person, their family or the business against financial loss. Insurance is so critical because it steps in when the worst happens. So, customers expect and need their providers to be able to offer the highest level of reliability.

Understanding the Insurance Technology Landscape There are a multiplicity of factors that can prevent any business from being able to offer 100% reliability, and in our contemporary landscape, many of these factors are rooted in technology. Technology is evolving at a rapid pace, and organisations are under immense pressure to keep up so as to provide their customers with excellent service, whilst ensuring their employees have the right technology to perform tasks. As users become more tech-literate, and as technology evolves in the consumer sphere, there is an expectation that they will receive a cutting-edge experience from business technology that reflects the service they receive from their own devices. A large part of this is that people want to be able to engage with new technologies and clear any technological boundaries without any involvement from IT. This is called self-service. Another issue that could hugely affect the reliability of any business is the ever-increasing

threat of cybercrime—an issue that is evolving at the same pace as technology, if not faster. Recent findings from the UK’s Office of National Statistics (ONS) found that despite an overall decrease in fraud and computer misuse in 2017, incidents involving malware against businesses have increased. 56% of fraud incidents in 2017 were cyber related, with 3.2 million fraud incidents being reported in the UK alone. Business cybercrime as a whole in the UK went up 63% in 2017. The insurance industry is one of the

many verticals in direct contact with cyberattacks, particularly while embracing digital channels. Deloitte has identified that insurers possessing large amount of personal information about their customers, such as credit card and payment data is one specific reason for the increasing number of attacks.

OneFamily: Using Modernisation to Ensure Reliable Service Customers Trust OneFamily is one of UK’s largest modern mutual insurers, serving over two million UK customers (10% of UK families) with financial services products, including life insurance, savings, mortgages, bonds and ISAs. There are 550 end-user devices within the organisation, ranging from desktops to laptops to mobile devices, which are running on a mixture of Windows, iOS and Android operating systems. All in all, this makes for a complicated environment for OneFamily to manage, and keep secure against cyberattacks. As businesses are moving further into the digital age, the IT department’s time is increasingly

Kevin J. Smith | Senior Vice President, Ivanti

in demand and staff members are overstretched. Organisations need to do everything they can to optimise functionality. Previously, OneFamily was supporting users and devices through an in-house IT service management system, however as they grew, the number of devices routing queries for assistance was becoming a congestion point. With IT service desk wait times and pressure on staff rapidly increasing, the service management system had quickly become a major bottleneck on productivity. Embracing the opportunity for change and modernisation to cope with dynamically changing infrastructure, the IT team explored the option of a solution with fully featured integrated IT systems management. When operational, this system would offer OneFamily, a complete IT service desk management, endpoint (device) management, patching, reporting, and ongoing change management.

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This meant that they would be able to cope and grow with the rapidly evolving technological landscape, while being able to identify security vulnerabilities in the system to defend against cyberthreat. Another part of OneFamily’s digital transformation strategy is that they wanted to facilitate self-service IT for their users. This hinged on the proposed new system having built-in intelligence to recognise and route users’ queries to the appropriate resource within IT. Having used other Ivanti software solutions within the estate, the team commenced evaluation of Ivanti’s IT Service Management capabilities for change and problem management, alongside patch and software management for full endpoint management. OneFamily concluded its stress testing and opted to install the solution from Ivanti in a phased, three-month rollout. Four years into adoption, the IT team remains


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firmly in the driver’s seat with users accessing Ivanti’s IT Service Management capabilities for requests and service incident updates. Users happily selfserve, creating incidents and adding extra information fields when prompted. Ivanti’s IT Service Management solution then automatically classifies what level of service is required, then categorises each request into different issue categories so that they can be handled quickly and efficiently. The solution both empowers the user and helps to streamline IT. Patch management was another notable achievement in the solution module rollout. OneFamily needed a simple, dynamic process to manage ongoing updates required for applications and devices. Using Ivanti’s Unified Endpoint Management capabilities, the IT team was first able to “discover” all of the endpoint devices in usage.

Then, OneFamily could locate and identify which endpoints required patch updates andautomatically install and run them. By continuing with patch management on an ongoing basis, OneFamily are able to keep track of vulnerabilities and secure them quickly, thus protecting the organisation against attack. OneFamily used digital transformation to their advantage, to both allow users to enjoy a cutting-edge technology experience and to defend against the evolving cybercrime threat. These results all fit within insurers wider responsibility of reliability for their customers.


India prepares for an economic uplift—with Brexit Ironically, India’s erstwhile colonial master is mired in crisis as a result of the most-awaited Brexit verdict. This predicts Britain to move behind India and France on the ‘global GDP league table’ with just 1.6% rise this year. Sangeetha Deepak


he practical implications of Brexit on the UK are not at all desirable: the World Economic Forum in its annual index said the Brexit outcome with the EU is ‘likely to further undermine the country’s competitiveness’ in future. Indeed, this critical forecast is a cause for grave concerns. Very broadly speaking, the Forum’s previous attempts to warn the UK about Brexit’s short and long-term disappointments went futile, and any changes to the country moving in an isolationist direction is likely to face a backlash again. That, the Forum thinks, will set in an increase in the cost of trade, labour and investment, all of which are powerful prerequisites to drive its economic efficiency. “But a long-term view is crucial for planning for issues like pensions, healthcare, energy and climate change, housing, transport and other infrastructure investment. By looking beyond unpredictable short-term economic and political cycles


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and focusing on fundamentals, long-term growth projections can actually be more reliable than short-term forecasts,” John Hawksworth, chief economist at PwC, said. “Developing successful trade and investment links with faster-growing emerging economies and recruiting workforce talent wherever in the world it can be found, are essential to achieving this growth and to offset probable weaker trade links with the EU after Brexit.” The borderline uncertainty on Brexit verdict is already reflecting harsh consequences. At least for now the UK citizens still have the right to move freely in other European countries without being refrained. But there will be no guarantee to their freedom of movement if Brexit comes through. By this example, any negative turnaround might be a potent one for the UK to recover from, especially considering how Europe is showing “cautious signs of recovery” after a decade from its financial crisis. Yet. “Our relatively positive

long-term growth projection for the UK reflects favourable demographic factors and a relatively flexible economy, even by European standards,” Hawksworth explained. So, even if the residual effects of the Brexit cycle settle over time; what about the country’s economic scope for growth, put behind China, India and other developing nations? Largely, a country’s global ranking is rested on its economic size. At present, the order of ranking has the United States followed by China, Japan, Germany and the United Kingdom. The United States and China are regarded multi-trillion dollar economies, whereas India is a $2.6 trillion economy. Experts estimate India to rise to fifth position from seventh, and France will remain sixth. To second To second this, a recent PwC prediction found that Britain might move behind India and France on the GDP front with just 1.6% rise in 2019, whereas India is expected to grow by 7.6%; and France by 1.7%.


One way to look at this is that France and Britain have ‘regularly alternated in having the larger economy’, but the latter’s slowdown from last year is diminishing its economic primacy. However, the Indian economy was found to be $15 billion bigger than the French economy in 2017. So, the versatility of India a hundred years since to now has uniquely changed—and will continue to progress upon its own

establishments: it seems, “India is the fastest growing large economy in the world, with an enormous population, favourable demographics and high catch-up potential due to low initial GDP per head. It is therefore all but certain to continue to rise in the global GDP league table in the coming decades.”


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Is Theresa May mired in a game of negotiation— or what?

The British Prime Minister finds herself in a deadlock once again after receiving a mandate from the Parliament stating “If you remove the backstop, we will approve your deal.” But the only problem is, according to the EU—the negotiations are over.


he big question is: Has the Prime Minister set herself up to fail or will the EU be willing to reopen talks in fear of a no-deal? Since 2016, Brexit has been one of the most nuanced topics throughout the country. With a 52/48 split, it was never going to be an easy task for anyone. However, it is slowly looking like the end is in sight with the Parliament finally


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Neil Clothier

agreeing on a ‘deal in principle’: If Theresa May can amend the backstop by either including an option to unilaterally leave or remove it altogether, the United Kingdom will be one step closer to departing the EU. So, why won’t the EU reopen negotiation talks? Is the backstop really non-negotiable? And what happens when the UK pushes for a reopen, and the EU declines? Are there strategic and beneficial

actions taking place behind the scenes? The concerns regarding the final outcome is endless.

Deal or No Deal? There is less than two months until the UK leaves the EU which puts a lot of pressure on the government to secure a deal before the Brexit day. However, if the government fails to achieve the expected result,


the next option by default will be a no deal, leaving businesses and politicians in a state of frenzy. So, May’s main aim will be to reopen the talks that both Michel Barnier and Donald Tusk have said are firmly closed. To do this, she will have to offer something to the EU that is attractive enough for them to want to reopen talks about removing the backstop. The divorce bill could come into play here, with the UK government offering £39 billion to the EU in order to leave. This was agreed before any negotiations took place, setting the money in stone rather than in principle before the two parties even entered discussions about what was included in the scope that warranted such a huge payment. Sensibly, the £39 billion should have been offered for the full scope of the deal and the price of the divorce bill should reflect

to ensure that businesses won’t be faced with hefty tariffs overnight. In order to remove this safety feature without bringing up the divorce bill, May might have to agree that the UK will stay a member of the customs union and single market. (Something that she previously said will be nonnegotiable.)

any negotiation. The backstop is in place to ensure that businesses aren’t left hanging over the cliff edge when it comes to the end of the implementation period. If a trade deal has been reached, it won’t be necessary, however, with no deal the backstop will come into play

With May now having a Parliamentary majority over this, there is a possibility for her to go back to the EU and explain that the only way to progress with a deal or a no deal is to negotiate the opportunities with careful and strategic techniques.

Keys to a successful negotiation The key thing would be for both May and the EU to reconsider their approach toward negotiations and head back to the basics. This could be to reassess what both parties are looking to achieve when it comes to the backstop and what impact it might have on the island of Ireland. Negotiations are about achieving a compromise and focusing on what is mutually beneficial to both parties.

Neil Clothier | Head of Negotiations, Huthwaite International

May’s next steps May will have to sell the planned concessions she makes to the Conservative members—with many MPs still being wary of the deal and unsure whether the backstop is enough. The most crucial time for any negotiation is when they’re close to being agreed and is when both parties will try and last-minute rule in their favour, hoping that the looming deadline will encourage the other party to agree as well. May must remain strong when it comes to the UK’s interests and not try to change the deal in the very last minute. After all, successful negotiations are only built on a diplomatic and a strategic approach. And whether this will happen or not–only time will tell.


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Brickendon spells out the chief trends IN new-age business It’s hard to keep up with the corporate rat race. That said, nothing is impossible when technology is harnessed in the right way. Chris Burke


usinesses need to embrace technological advancements and integrate them into their core operations in order to thrive in today’s ever-evolving and increasingly competitive market. As predicted, GDPR and Brexit have been at the heart of global dominance in 2018 with trends such as data analytics,


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digitalisation and automation taking a backseat. This issues a call for change. This year, the focus will lay on technology, and businesses will have to look for new disruptive ways to staying relevant in an increasingly competitive market.

Artificial Intelligence and Machine Learning Embracing and utilising AI is now

crucial for businesses that are looking to innovate and grow. More and more businesses are adopting this technology and are already experiencing significant positive results. Data regulation has the potential to impact machine learning—but with smart implementation AI has the capability to significantly reduce costs, free-up internal resources and increase revenues.


Looking Beyond Data While data will continue to dominate, the emphasis on innovation is expected to increase. 2019 will see a move beyond decoding data, using analysis and understanding algorithms to provide context around predictions. Going forward, the key will be explainability and insight, along with algorithms and technology that focus on solution-based production activities. As it stands, data science has numerous proof-of-concepts in silos, but the emphasis will now shift to how to turn those concepts into scalable solutions. Businesses will need to focus on developing sophisticated software house capabilities while they work towards meeting their goals.

The Role of Financial Regulation Mistakes and misconduct from financial institutions have prompted the need for many regulations to streamline processes, and some may argue that regulationas a whole has become somewhat excessive. However, it is important to understand that such regulations have also played a major role in bringing misconduct into the spotlight and businesses that evaded these regulations previously are now facing repercussions. In order to work around regulations, businesses will have to look for innovative ways to adapt emerging technology. Offering updated core assets will not only give these brands first-hand advantage but also distinguish them from their competitors. In 2019, the impact of regulators on the financial services sector is set to decrease with the regulatory agenda taking on a

more business-as-usual form and focusing on ongoing conduct. Regulators are expected to take a proactive approach and apply their experiences to some of the as-of-yet relatively untapped business areas.

Impact of Brexit on the business ecosystem While the big question remains over whether there is progress being made in the overall context, Brexit will continue to dominate the agendas and minds of business on all sides of the Atlantic. The biggest risk to any business is uncertainty and the longer the process takes, the more likely it is for firms to look for jurisdictions where they can make longterm decisions with confidence. Businesses, especially those in financial services, should be not just be prepared for multiple scenarios and ongoing change, but also learn to survive any potential crises caused by major uncertainties which may arise as a result of the Brexit verdict.

Future of the Workforce With AI and machine learning revolutionising the way businesses operate, the workforce will go through enormous transition to prepare for the future. This year will see more automation through machine learning and robotics, changing the need in the workforce from repetitive and predictable tasks to more strategic and value-adding roles. This is not to say that we will see a significant reduction in the workforce with AI and robotic process automation (RPA), but there will be a proportion increase in expectations from customers, regulators and agents. As a result, 2019 may bring financial services and technology firms closer as they work in

Chris Burke | CEO, Brickendon tandem to add more value to the service they provide.

2019—what’s next? While data analytics and regulation will continue to stay relevant in shaping the future of businesses in the UK, firms will need to be prepared to do things differently and place innovation at their core to sustain growth and market position in the turbulent markets. How things will play out precisely remains to be seen, but there is no doubt that businesses globally will need to embrace innovations—if they are to succeed and gain first mover advantage in what is becoming an increasingly tight and competitive marketplace.


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This startup wants the Indian ecosystem to think like the West Startupreneur says it educates students and early-stage entrepreneurs through a creation of boot camps, virtual interface and networking. A breakthrough in India’s startup culture. IFM Correspondent


country like the UK has swiftly created a progressive environment that forever shifts its economic dynamism by spurring innovation. Global startups such as Amazon and Uber believe the world is your oyster. For India to join this path, it has to fulfil the global startup vision. Co-founders Akarsh Naidu and Adhikar Naidu talk about the loopholes in the ecosystem—and the company’s new business models inspired by their academic exposure in the West.

How different is the startup culture in India from the UK? Studying at the London School of Economics, Department of Management, we both have gained an insider’s view of the UK startup culture, and it’s certainly very different from India. Indian startups are still young in their progress; and the key factors such


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as incubators and accelerators are yet to mature. On the contrary, the UK landscape is shaped well in terms of incubator presence across each sector. This means, the startups in the country are leveraged in so many ways. However, the UK is focused on fintechs, while India is a lot more diverse—adding an edge to domestic businesses. Ten years ago, our country was premature in understanding the startup ecosystem—and is now changing.

What is the starving change startups in India need to move ahead of the curve? Startups in the West such as Uber and Amazon have a global vision. They are not confined to a single region or market. On the contrary, Indian startups are yet to fully change their perspective. But, select startups such as Oyo are signalling a progression in the industry by penetrating into the Chinese market.


What are your company’s latest product offerings? Our first is a boot camp model that students can sign up for. We are also in the phase of developing a virtual/online interface which will assist students and potential entrepreneurs with internships and relevant courses. So far, we have conducted pilots and reached out to more than 3,000 students through these initiatives.

you both are creating business models that balance profits with ethical reasoning. How is the feedback?

Aakarsh Naidu | CEO, Startuprenuer

The interaction we have with students across India tells us that they are passionate about starting a venture with a social impact. It will take time to orient themselves in terms of business and profits. For now, they are more inclined toward opportunities in waste management, edutech and healthcare. So, the

What is the vision behind Startupreneur? Our experience and exposure in the global startup ecosystem has helped us to identify the challenges in India, especially for early-stage entrepreneurs. There is substantive work to support existing startups, but potential entrepreneurs with fascinating ideas lack mentorship. And we wanted to resolve this issue. My understanding of the ecosystem coupled with Adhikar’s academic knowledge in technology is the driving force behind this venture. We hope to become an end-to-end provider for anyone with a vision to build a startup.

What is your company’s nature of work? We have understood that most management institutions have incubators, who are not fully functional. In order to bridge this gap, we tie up with various educational institutions and develop activities around entrepreneurships. So, one of the models we have devised is how to activate E Cells in a manner that they can connect with alumni from their own institutions. In addition, we also mentor students on emerging technologies, business models, funding, teamwork and the like. It is important to give the students an insight into the realistic aspects of being an entrepreneur. In future, we hope to work with governments to uplift the startup culture in smaller states. For example: The government of Uttarakhand has appointed us to conceptualise on an idea to create a startup ecosystem that is relevant to their state.

Adhikar Naidu | CEO, Startuprenuer

question is: how do we channel their ideas into a meaningful business strategy—without being heavily reliant on external factors. For example: A student from Christ University had conceived an idea to develop an app that will help ambulances to swiftly navigate in traffic and reach the destination on time. We helped him to connect with hospitals in the city, and capitalise on the idea.


International Finance


US sanctions against Iran will bring endless turmoil Businesses trading with both economies witness an inevitable struggle against the backdrop of the President’s re-imposed trade sanctions. What next? Neil Clothier



rading on a global scale has become increasingly complex for businesses, not least when trade sanctions have been imposed by world super powers such as the US. The President’s decision to re-impose trade sanctions on the Iranian state proves a real hurdle for global businesses with vested interests in both countries. Trump has stated openly that trading with Iran jeopardises opportunities to also deal with the US, and this is understandably making the corporate world nervous. For businesses trading with

both economies, this can prove to be costly and logistically challenging. So, what can the corporate world do to negotiate and overcome such hurdles? Do they heed the US warnings or continue to trade despite the apparent risks? There have been numerous global stances suggesting that businesses and investors have negated the US threats by continuing to trade with Iran. The UK government, for example, has encouraged Britain’s businesses and investors to continue with trade agreements in the state. However, the reassurances of one

government, don’t necessarily reduce the risks. Ultimately, Trump administration’s maximum pressure campaign against Iran is aimed at its banking, energy and shipping sectors, and by proxy, those companies around the world operating in those sectors. For global businesses, this means one of two things; consider the advantages of less people investing in the Iranian state, or conversely, the disadvantages if businesses are blocked from trading with the US. Many businesses that have a greater interest in keeping the

International Finance



The President’s decision to re-impose trade sanctions on the Iranian state proves a real hurdle for global businesses with vested interests in both countries

US on their side are also confronted with the fear of breaking the EU law by accepting the US sanctions. And whilst EUbased investors or companies are not necessarily obligated to follow the US demands, there is fear amongst professionals that a second wave of embargos could be on the horizon for those not complying, further impacting trading opportunity with the US. In short, businesses with a vested interest in both countries are caught between a rock and a hard place. This means, follow the EU law and risk losing out on major US deals, or acknowledge the sanctions and risk breaking the EU law.

So, is there a way for businesses to negotiate these choppy waters? First and foremost, it’s worth


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considering what a successful negotiation looks like: a winwin for both parties. In this case, however, this outcome seems unlikely, especially given Trump’s aggressive rhetoric, with him appearing to take an extremely autocratic stance to the sanctions. For those businesses weighing up these risks, and trying to work out Trump’s next move, it is worth considering his previous approach to negotiation since his presidency. In many cases he applies the so-called ‘mad-man’ tactics, so beloved of Nixon; imposing aggressive and headline-grabbing demands. In many cases these aren’t followed through with, but rather they are used to emphasise his initial stance, before settling on a lesser, but related demand. The type of trading relationship that individual businesses have with the US is also important. The question is: Are they essential suppliers (for example, providing crucial infrastructure services) or non-essential suppliers (for example, supplying readily available goods or services)? With this it is clear that businesses holding essential trading relationships with the US will be in a much stronger position than those without. Their US counterparts will have a vested interest in keeping the trading arrangement alive, regardless of the supplier’s relationship with Iran, or other vetoed countries. This approach can be used to mitigate risk for those planning to continue trading with both countries. There is also precedence for the US to compromise in this way, not least when the President granted concessions with eight countries allowing them to continue dealing with Iran over the supply of Iranian oil. Finally, for those businesses continuing to trade with Iran, the perceived risk of losing their US relationships, in some cases,

could be used to strengthen their hand and improve existing deals. Consider this: there are few stronger signs of commitment to a trading relationship than taking significant risk in other areas of a business. If you simply cannot justify the risk of losing trade with the US, it is important to remember that obeying American sanctions in itself is illegal under the EU rules. So, firms opting to bow to the US must focus on the rationale for ceasing trade. Examples of this can be derived from British Airways and Air France. Both companies have ceased flying to Tehran. The position they’ve taken “issues around commercial viability.” Before embarking on this process, businesses must seek legal advice. It is a complex road and one that must be adhered to. In a hypothetical context, if they fail to do so, there will be risks in terms of significant losses in potential deals and legal damages. It is therefore impossible to look at the best path for businesses—especially without an objective viewpoint. To survive, they must weigh on the odds, and then invest their efforts in reducing the anticipated risks.


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The Turkish economy explained Despite the sharp depreciation of lira, Turkey continues to lure long-term investor interest by providing an easy access into the European markets.


istorically, Turkey’s geographical position has been considered an ideal trading hub by also facilitating access to Europe, Asia, the Middle East and Russia. After decades of remarkable economic performance, the Turkish economy slowed down during 2018—and the lira fell by almost a third against the dollar. Despite this, international investors are now


MARCH 2019

Seray Özsoy

seeing the real value in Turkey— precisely because of the newly depreciated lira. The World Bank predicts continued Turkish economic growth into 2019, albeit, at a lower annual rate of 2.3% down from 7.4% in 2017. Yet, Turkey’s open economy and its youthful and increasinglyaffluent population of 80 million mean that investors will still see long-term opportunity in the country: Being in a customs union

with the EU provides investors with an easy market access into other European countries. The World Bank notes that impressive macroeconomic and fiscal stability were at the heart of Turkey’s economic performance since 2000. As a candidate for the EU membership, Turkey has aligned with many of the EU standards and regulations. These high regulatory standards, combined with investment


incentives, make Turkey an attractive place to do business. Labour costs remain competitive and the government has incentives for investment in industries such as electronics, telecommunications, shipbuilding and services such as health and education. In 2016, a Tl200 billion (or $37 billion) sovereign wealth fund was created to finance investment in infrastructure. There are also particular incentives for investment in various regions, especially in the east of Turkey. Being a leader in renewable energy, there are also incentives for investment in renewable energy generation in the country. New oil and gas fields have also been discovered in the Black Sea and in Anatolia—and the country already has a modern pipeline network which delivers oil and gas rapidly and efficiently to its Mediterranean ports. 2018 saw the opening of the 1,850 kilometer Trans-Anatolian (TANAP) pipeline which means oil can now be pumped directly from the Caspian to Turkey. The pipeline has been dubbed the “Silk Road of Energy” as it brings vital energy supplies from Asia to Europe’s very door. We are working with a company which built TANAP and will connect it directly to continental Europe by 2020. This remarkable project’s completion has been welcomed by both the EU, which is actively seeking to diversify its energy sources. While Turkey welcomes foreign investment, there are a number of regulatory and legal issues which investors need to be mindful of. The Turkish Commercial Code, adopted in 2012, created modern and transparent commercial legislation, compatible with the EU’s Acquis Communautaire. There are generally no restrictions on foreign ownership of Turkish companies. However, in particular

industries such as civil aviation and media, there can be some restrictions on foreign shareholders. The most common way to acquire a Turkish company is by means of a share purchase. Although share purchases are generally unrestricted, in certain regulated sectors such as banking, capital markets and energy, regulatory authority approval may be required. An alternative way to acquire a company is by means of an asset or business purchase. This approach is slightly more complex procedurally, but it does have an advantage to a purchaser: the seller and the purchaser remain jointly liable for certain liabilities relating to the asset or business for two years after the purchase are notified. In a share purchase, all the company’s existing liabilities are acquired once the purchase is completed. In either case, the new owners will automatically take over all existing employment contracts. Tax considerations will be relevant in deciding whether to acquire by share purchase or by way of asset or business purchase. In certain cases, clearance from the Turkish Competition Authority may be required. The authority must be notified of a proposed merger or acquisition if certain turnover thresholds are met. The threshold most relevant for foreign investors is that if an investor’s worldwide annual turnover exceeds Tl500 million (or $93 million) and the asset or business being required has a Turkish annual turnover above Tl30 million (or $5.6 million)— the transaction must be notified to the authority. The authority’s competition board will then assess whether the business has a dominant position and if the

Seray Özsoy | Partner, Kılınç Law & Consulting transaction will affect competition in Turkey. The transaction is put on hold until clearance is given. Turkey has been on a strong upward economic trajectory for decades. It is a land of opportunity for foreign investors. Turkey’s developed regulatory and legislative regime, in part, is what makes it attractive, yet investors must be mindful of the compliance issues involved when acquiring or merging with Turkish companies.


International Finance


Will Trump save the nuclear treaty? There’s a case to be made. But in order to see progress the Trump administration will have to remain diplomatic—unlike in the past.


or 32-years a treaty has been in place with the intention of limiting two of the most powerful countries in the world with their intermediate range weapons. However, American politicians have claimed that throughout the treaty, Russia has continued to violate the terms of the deal with no consequence. But recently, President Trump announced that the US will withdraw from the nuclear-weapons treaty, triggering a 6-month expiration period that both parties could—in theory— spend negotiating to save the arrangement.


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Neil Clothier So, does President Donald Trump have an ulterior motive in scrapping the treaty? And what are the chances of Putin and Trump re-negotiating a deal within the six-month window? The effects of those questions are priceless to debate on—and they largely speak of Trump’s miscarried attempts on international affairs.

Demystifying Trump’s negotiation techniques First, it is utmost important to understand Trump’s negotiation techniques since the time of his Presidentship. So far, his persistent problems with China, North Korea,

Russia, and the majority of Europe is quite evident. Implying a nuclear war could be possible with North Korea because of his successive outbursts, such as “My [nuclear weapon] button is bigger than yours” and calling leader, Kim Jong Un a “little rocket man” we know that Trump has an aggressive form of negotiating. In fact, it’s a well-trodden technique known as the ‘mad man’ approach, also used by President Nixon the 1960’s and 1970’s, which is aimed at emphasising (or overemphasising in this context) an initial stance, to help pave the way for a lesser, but related, demand.


And is it effective? That depends on where you sit politically, but, in the case of North Korea, it has arguably helped him to become the first US President to meet the country’s head of state.

A new treaty? In this case, Trump’s threat that if a new treaty isn’t negotiated, America will out spend and out innovate other countries is arguably designed to frighten Russia and other countries, like China, into negotiating a new treaty before the six-month withdrawal period. Whether he intends to carry out his threat or not, this stands as a classic case of leverage—or an implied leverage—aimed at giving Trump one upmanship over the matter. So, following this thought if Trump’s main aim is to open talks with Russia and China to create a new treaty that all countries will abide to—and result in a series of consequences if disturbed—then we can expect to see America bring great incentives to the table in the interest of all parties. This could include a shared security intelligence or even an allied relationship.

Keys to a successful negotiation Just like many of his manoeuvres, this approach is undoubtedly risky, especially when dealing with a similar ‘strong man’ counterpart like Putin. In business—and in the wider political sense—effective negotiation is about reaching a compromise and securing a winwin for both parties. However with Russia refusing to stop its missiles manufacture, it doesn’t exactly lay the most productive foundations

for negotiation. To effectively move forward, the key thing would be for both Trump and Putin to reconsider their approach to negotiations and head back to the original treaty as a starting point. It is vital to ensure that their language and verbal behaviour from here on remain nuanced, open and flexible in order to create a positive climate for a successful negotiation. Trump should be acutely aware that Russia can play ‘dirty negotiation tricks’ from the start such as delaying negotiation talks until the very end of the treaty so America would be more willing to concede on points with a looming deadline. However, given there is no declaration from Russia that they would be interested in negotiating a new treaty to begin with.

Trump’s next steps Trump has said that America is willing to negotiate a new treaty. With this, the next step is to get Russia and other major countries like China, to the table swiftly. There is only six months left

until the current treaty will be abandoned and both countries will make weapons with no consequences. This calls for an urgency talk to prevent a global arms race. To be able to implement a new treaty in time, the next few weeks will be vital—in terms of offering insights into what the other countries’ stances might be while considering a new treaty. More importantly, this could encourage Trump to increase pressure on countries by effectively selling the benefits of joining a treaty and promoting the consequences of not having one in place. This will be a new development, considering Trump will have to remain reserved on many accounts. These negotiations will be built on a diplomatic and strategic approach. Whether this will happen or not—only time will tell—but for Trump and the global politics, the repercussions of getting it wrong could be devastating.


International Finance



ONPEX to initiate seamless multi-currency crossborder payments The partnership with Wirexend will enable customers to access accounts with SWIFT and SEPA transfer capabilities.


ith the possibility to facilitate international transfers, Wirexend will be made bankable through ONPEX. Stas Lobkowicz, CEO of Wirexend said: “We decided to partner with ONPEX due to its ability to offer our customers direct access to cross-border payments and to enter the European market. Thanks to our partnership with ONPEX, we plan on expanding our client base ten times by the end of 2019. We believe Banking-asa-Service providers like ONPEX


MARCH 2019

will play a key role in what we can offer our customers now and in the future.” Wirexend is integrating ONPEX’ Banking-as-a-Service (BaaS) platform via flexible ApplicationProgram-Interface (API) to ensure automated access to international payments. The Canadian financial institution also benefits from ONPEX’ multi-currency IBAN accounts and foreign exchange (FX) capabilities. These banking and payment features will enable customers to convert funds within their account and make payments

in multiple currencies, including: Euro (EUR), Pound Sterling (GBP), Chinese Yuan (CNY), and many more. In addition to multicurrency management, attaching IBANs to Wirexend’s accounts will make the sending and receiving of funds more secure and easier to reconcile. Christoph Tutsch, CEO of ONPEX, explained: “Partnering with Wirexend has helped ONPEX expand the global reach of its growing platform. It is the first step in our 2019 expansion plans, which will help businesses like Wirexend provide seamless and automated cross-border payments in the competitive financial services industry. ONPEX is happy to be providing these banking and payment services so that Wirexend can meet and exceed customer needs.” Over the next couple of months thousands of Wirexend customers will receive access to the new accounts with SWIFT and SEPA services provided by the partnership.




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Ever wondered what the code on a credit card identifies? Growing demand for secure and convenient payment is driving interest in alternatives to the 16-digit credit card code as means of verification. Gareth Twist


Our plastic past Credit cards have revolutionised the process of paying for goods and services when they were introduced in the 1950s—and the cards’ attraction was convenience and enabling payments without the need for cash or cheques. Portable, cashless and with added security, credit cards also offered customers more time to pay their bills, prompting a whole new wave of purchase behaviour. The Diners Club Card was the first credit card to enjoy a widespread use, essentially acting as a charge card where the bill will be paid in full at the end of each month. American Express soon followed suit and achieved high adoption rates around the world, serving one million customers at over 85,000 merchants by the mid-1960s. Today, credit cards have become ubiquitous in the western world, with an estimated 364 million open credit card accounts in the US, and 59 million in the UK. Each credit card contains a number of identifiers, the most obvious one of which is plastered across the front of every card: the 16-digit code. Ever wondered what those numbers actually mean? Each card begins with a singledigit major industry identifier. For example: Five indicates banking or financial company, like MasterCard; four indicates Visa card; one and two indicate airlines; and seven indicates petroleum business. Then follows a six-digit issuer identifier number that helps to confirm the specific issuing institution and whether it is a credit, debit or premier card. Next (typically digits 7-15) comes the individual account identifier number—unique to the person and allocated by the card issuer. The final single digit is known

as the checksum. This number is there to verify if the credit

card number has been entered

correctly. Using the Luhn algorithm, developed by German computer scientist Hans Peter Luhn in 1954, simple mathematics is used to confirm if all the card details match up. In a nutshell, it is

doubling the value of alternate

digits in the credit card number. (So, for example, 4 becomes 8), beginning with the second digit from the right of the 16-digit

number. For any number that contains double digits when

doubled (i.e. 8 becomes 16) two

individual digits should be added

together (i.e. 16 becomes 1+6=7).

Then by adding all of these singledigit numbers together and if

the total from this ends in a zero

(i.e. 40, 50, 60, etc.), the account number will be validated.

Yet confused? Well, these

numbers were never meant to be used by the consumer; they have been embossed on credit cards

for decades so the networks can

transfer the payments swiftly and correctly. The problem is that in

the digital age, the numbers have to be transposed into form after

form in order to enable issuers to

identify the user online, enabling a fully secure payment.

eMarketer forecasts that in 2019

approximately 1.92 billion people or 63% of internet users will be digital buyers. E-commerce has become the first place that shoppers turn

to, whether it is for gaming, travel, technology and much more. But

one thing has remained the same: most people rely on numbers on the little plastic card carried in

purses and wallets. In addition to

the 16-digit card number, the user

also requires to enter other details such as CVV and expiration date. Surely the payments industry should have made life easier by now.

Gareth Twist | Vice President of Alternative Solutions, Intrapay Papering over the cracks The question is especially pertinent when we consider that Amazon implemented its 1-Click as far back as 1999. Until recently, it was patented (they did OK out of it) and there are other technologies that have been developed to help us manage this process a little easier. Auto-fill technologies, for example, have flooded the market, automatically entering card numbers into forms simply by taking a picture of the card’s front. It is also possible to use handy options available on web browsers to save passwords that entered previously: these might be convenient, but they are not completely trusted. So perhaps, one might think biometrics is the answer. As fingerprint scanning technology becomes a standard feature on many smartphones, one can expect to see greater synchronicity between a shopping experience and a mobile handset, verifying payments via a pocket device. Biometrics and other new processes will allow faster payments and even instant

International Finance



payments—provided the data is secure andand assuming consumers have no issue storing payment details in digital wallets or other media such as mobile banking apps. Then there is tokenisation. This is where a third party stores the sensitive card information and the cardholder uses a ‘token’ associated with their card to verify the transaction, rather than entering the full card number to make the payment. But more often than not we find ourselves requiring all the details again when we use a site and this high-level of information required for online transactions could be a contributor to the conversion crisis some retailers are seeing. Research conducted by Experian has found that more than half of online transactions are abandoned before the checkout is completed. One of the main reasons cited for this high level of abandonment is that too much information is required for new account setup.

A question of fraud By removing unnecessary steps in the process and making the interface faster and more userfriendly, merchants hope to put more revenue into their balance sheet. The hard part then is to retain the trust of the customer by providing more confidence in the payment process. Payment card fraud accounts for 58% of fraud losses in the UK, according to UK Finance, with 1.4 million of the country’s 1.9 million incidents coming via Card Not Present (i.e. online) fraud. Card issuers have had a stranglehold on the payments market for decades, which has held back innovation. For example, when security issues arise, the card companies’ response is to patch these vulnerabilities rather


MARCH 2019

than look at solutions that reduce customers’ exposure to fraud. However, this has changed in recent years and there are now around 150 alternative payment methods in use across the world, with new solutions being introduced all the time; many of which are more user-friendly than card payments. One solution to making payments more trustworthy is to use a direct bank transfer payment method that allows customers to quickly and easily transfer funds directly from their

bank account to the merchant using their standard log-in details. This solution can be built into the merchant’s website with transactions confirmed via the customer’s bank using their existing standard security protocols, facilitating real-time transactions and a better user experience. Direct bank transfer virtually eliminates chargebacks, repudiation claims, and reduces the cost of accepting payments from customers outside the merchant’s home market. Payouts are available individually or as batch payments, reducing complexity and internal costs. Many consumers perceive credit and debit cards to be a secure option for making payments, but the security protocols around cards cannot compare with receiving a onetime PIN on a mobile device.

Otherworldly payments Customers and merchants are also looking for services that can be used in different countries around the world, whereas cards are often limited to use in the country where they were issued. Aconsumer would not be able to use a Brazilian credit card to make certain payments in Spain,

for instance. In China, WeChat (owned by social media giant Tencent) and Alipay (ultimately owned by retail behemoth Alibaba), enable customers to make payments within chat apps, using P2P transfers, bank account, credit cards and other payment methods. In the West, users are more accustomed to Apple Pay, Google’s Android Pay, and Samsung Pay, provided by the international technology titans. The power NFC-enabled payments from mobile devices for in-store purchases and can increasingly be used for in-app purchases. These alternative payments still depend on payment/loyalty cards being registered to the apps, but then, offer more convenient ways to pay for digital (and arguably physical) purchases. The ubiquity of mobile phones could effectively render the 16-digit number obsolete by storing information securely and enabling the user to wipe sensitive data if the phone is lost or stolen. So, while cards are not going to become obsolete any time soon, and with more secure payment options for making payments entering into the market all the time, we predict the number will eventually be up from the 16-digit code.


Why tech matters to legal experts Industry practitioners should understand how new tech is reshaping the financial institutions—and who regulates it. This is especially important to stay relevant. IFM Correspondent

Interview s


onathan Kim has worked with some of the world’s largest financial institutions prior to Cooley LLP, and holds a significant position advising Wall Street clients today.

This interview explores his opportunities at the firm—and his broad views on the interplay between legal, technology and financial services.

How will your prior experience in financial services litigation fit in with Cooley’s expansion plans? There’s a convergence happening between technology and the financial services industry that’s unprecedented. From lending to payment systems to online deposits to trading, asset transfers, custody, wealth management and beyond—virtually every area of financial services is being revolutionised by technology. I believe Cooley will be in the middle of this convergence, both from the emerging company, Fintech side and the large financial institution side, on the transactional and litigation fronts. In this way, I can bring immediate value twofold. First is my general familiarity with the financial services space. I’ve worked for more than a decade as lawyer at Goldman Sachs—since the beginning of the financial crisis—and have seen a wide variety of businesses and activities through a lens that gives me deep insight into what has been and what could be coming. Second would be my experience as a litigator and regulatory enforcement lawyer. Nascent technology companies are constantly pushing the envelope, while large financial institutions face some of the most complex webs of civil and regulatory risks in the world. When you combine the two, clients (large and small) require lawyers who have the judgment and experience to navigate these risks in a dynamic way.

What’s your take on the global expansion of financial services and technology from a legal standpoint? New technology always gives rise to new legal issues, it’s inevitable. Technology does not eliminate risk, it exchanges certain risks for other risks, in a way that is (hopefully) beneficial to the system. And of course, “technology” is not a monolithic concept—the legalities surrounding different technologies lead to their own set of challenges. Here are a few examples: Over time, blockchain will revolutionise how we view ownership and move assets digitally. Now that the ICO buzz has quieted down, I believe the next progression will be toward security tokens. Blockchain

Jonathan Kim | Partner, Cooley LLP permits private securities to be issued and traded on a digitalised ledger at speeds and with ease we have never seen before. There are many great companies tackling this space, one of the best being my own client Harbor. But with this new technology comes risk. How do you ensure private offerings comply with Rule 506(c) of Regulation D, for example? Or that unregistered securities trade consistently with Rule 144 or Section 4(a) (7)? Or that the private company stays under the 2000 shareholder limit under Rule 12(g)? How will AML/KYC considerations be addressed, given the relative ease and anonymity that one can open a token wallet? Given blockchain has no physical boundaries, which jurisdiction’s laws will apply? Artificial intelligence is another example. Trading desks and investment advisers are using AI to buttress or even replace their trading algorithms. Together with new powerful computing, such as quantum computing, intelligent systems will be able to perform trading functions at scales unimaginable today, communicating across 5G and 6G networks through mobile IoT platforms. What are the legal risks there? How does one assess securities liabilities to an AI based system designed to learn on its own? Will an AI singularity trading system ever be reached? Can

International Finance



AI be accused of insider trading? Can it become so prescient that it is deemed to possess material nonpublic information, and if so, how will all that work? Cyber data privacy is yet another example. With the advent of technology, banks are processing more and more data than ever before, globally, across multiple jurisdictions. This brings a panoply of risks that probably are too numerous to be described properly here.

In emerging markets, what kind of legal opportunities do you foresee opening up the financial services? Thoughtful regulators and civil regimes are always balancing innovation with the protection of their constituents, so when I look at how different regimes express that balance, I look at red, yellow and green light jurisdictions. Do regulators understand the business and technology in a thoughtful way? Or are they being reflexively risk adverse without understanding what is happening? Do they follow universally recognised principles of law recognised across mature jurisdictions (such as disclosure, fraud protection, contract law, consumer protection)? Since we no longer can practice in jurisdictional silos, legal practitioners need to make these global assessments and then make legal expertise connections within the relevant jurisdictions that makes sense there for their clients.

With the growth of advanced tech in finance, how does the law evolve along with new, unexplored challenges? The law is always catching up. That lag is never more


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evident than in with fast-changing technology, and the financial industry is no exception. Oftentimes, as a lawyer, you are faced with uncertain regulatory and civil liabilities meant to address an older regime, and you are left to guess— applying judgment and expertise—on how it might apply to the new one. So the first questions I ask about a new technology are: what is it doing and how is it changing what already exists? What risk is this new technology replacing, and what new risks is it creating? As the technology takes hold, law will always catch up and clarify. But until it does, you will always be asking these questions.

Are legal experts world over equipped to handle tech at the pace it’s moving? Just like the law, all lawyers and law firms will eventually catch up. The issue, however, is which experts have the vision to see where things are today, and more importantly, see what’s coming down the pike years from today. Law firms that are catching up to tomorrow’s technology will always be behind. At Cooley, it’s in our DNA to be forward-looking—to see things before others do so that our clients can be provided with the most advance and predictive legal advice in the world. Here, we understand the law, we understand the tech, we understand the industry, and we have the vision. It’s something we’re proud of, and something we’ve managed to accomplish for our clients across their entire lifecycle: from when they are baby companies all the way through to mature, public companies—and many of whom are the world’s very largest companies today.



Technology’s infiltration into wealth management might present cyber risks Wealth managers should use technology to grow assets under management, but must remain astute to provide consumer protection against cyberattacks.


lobal Data, a leading data and analytics company, has found in its recent report: 2019: Trends to Watch in Global Wealth Management four main trends to come in this year: • In the wake of CRS, non-participating countries such as the US will continue to grow as offshore centers • Volatility will require a rethink of diversification • As use of technology increases, wealth managers will have to take more serious action towards cybersecurity • New client demographics will become more prevalent As technological change is accelerating in the wealth management industry, the threat of cyberattacks and data breaches are an increasing concern. Sergel Woldemichael, Wealth Management Analyst at GlobalData, said: “Only 43% of wealth managers are concerned about the effect of data breaches on their brand*, which is a relatively nonchalant approach by wealth managers towards cybersecurity that needs to change.” Technology is growing at a rapid pace, and the risk

of cyber-attacks will only grow with it. Furthermore, investors themselves are seeing data breaches regarding other aspects of their life such as social media heightening sensitivity. Wealth managers should have a contingency plan in place to reduce dampening profits and damage to brand image. “The typically paper-based and male-dominated wealth industry is beginning to experience client demand for technology and demographic changes. Technology has helped bridge the gap between the HNW and the masses, regarding wealth management services.” It seems 62.1% of wealth managers believe digital channels will be more important to the next generation than the present, so it is in wealth manager’s best interest to adapt as soon as possible to thrive and grow AUM. “The historically male dominated industry is beginning to see more women enter the trade. Not to mention the wealth of women is growing. Wealth managers should not remain stuck in their ways as it will only damage profits—remaining adaptive and forward-thinking will be key for growth,” he said. editor@ifinancemag.com

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An overview of SASCO— and its vision in the long run Being a renowned establishment in the Kingdom of Saudi Arabia, the company actively supports “allowing women driving” campaign and seeks to increase customer satisfaction through a range of integrated services.



audi Automotive Services Co. (SASCO) is one of the many premier establishments operating in the retail sector, serving commuters and travellers throughout the Kingdom of Saudi Arabia. SASCO was established in 1402H (1982), according to specific operating standards that set a priority for customer satisfaction. The company’s activities are represented in car service centers, motels, restaurants, transportation, import and sale of equipment, as well as provision of beverages supplied using modern and well-maintained equipment. SASCO’s vision is to be the lead company in terms of quality and integration—and set an example to the rest in the field of automotive services. The mission is to provide a range of integrated services to motorists and travellers—always ensuring customer satisfaction with an emphasis on added value.

SASCO achievements during 2018 - Launching a franchise program for SASCO station and it’s convenience store “SASCO Palm” - Supporting Saudi women driving decision - Developing and increasing the number of stations across the Kingdom of Saudi Arabia - Becoming an “environment friendly station” and implementing the afforestation campaign that aims to increase the afforestation rate in SASCO stations—and doubling the number of trees - Launching the new “payment solution services” under the name of “Control” which provides RFID chips and fuel cards for both corporates and individuals - Launching self-service in the stations

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SASCO franchise

SASCO launched the franchise program on October 9 2018 in the presence of the company’s Chairman Mr. Ibrahim Al-Hudaithi, and the CEO of Francorp company which is considered as one of the world’s leaders in franchise development. SASCO’s franchise program aims to create new investment opportunities for the company and increase its revenues and profitability by granting the franchise to other operators to run the brand.

SASCO has implemented the ‘Women’s Driving‘ campaign through these steps:

Supporting women’s driving

Increasing the number of stations

In line with “allowing women driving in Saudi Arabia” decision, SASCO has been one of the companies that supported this decision in two phases: Pre launching campaign: At first, SASCO showed its support by transferring the colour of the company logo from “green” to “pink” for a couple of days; designing and executing a competition dedicated to women by posting some of the road signs and asking them what those signs mean; and those with the correct answer were awarded with a free fuel coupons from SASCO.

In 2018, SASCO had been working on increasing and developing 11 gas stations from its new stations in various parts of the Kingdom and building up a new 3station. It included major cities and regional roads, including high-speed road stations, which were opened and operated in accordance with the criteria set by the Ministry of Municipal and Rural Affairs to achieve the aspirations of travellers on the roads of Saudi Arabia. The company has also signed a contract with a number of leading international companies in the field of restaurants and cafes including McDonald’s,

Launching time (First day of women driving):


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a) Publishing “welcome messages” to our female clients b) Filming advertising videos and publishing them on social media c) Roses and free fuel were given to the first 37 women who arrived at one of SASCO stations


Burger king, Starbucks, Buffalo Wild Wings, Domino’s Pizza, KFC, Dunkin Donuts, and others—chosen carefully to ensure the provision of meals are suitable for customers from different nationalities. Additionally, the company wants to offer a range of integrated services for car captains and passengers according to the highest local and international standards to ensure customer satisfaction.

Implementing afforestation in SASCO stations

SASCO has launched the afforestation campaign in its stations during the month of November 2018. This came in support of “Al-Riyadh Development Authority” campaign which aims to encourage citizens and companies to protect the environment by planting trees at their houses and facilities. SASCO’s main objective of this campaign is to increase the afforestation rate in all stations and double the number of trees in order to: - Reduce air pollution in the stations caused by fuel and diesel engines containing sulfuric acid - Increase the proportion of oxygen in the air and purify it - Reduce heat temperature during summer - Reduce noises and clutters

Launching new payment solution “Control” In line with the vision of the Kingdom 2030 which contributes to the development of society by relying on digital payments, SASCO has developed innovative and advanced payment solution services under the name of “Control”: a smart and sophisticated service for filling fuel from SASCO stations without the need to pay by cash or card. These services are:

Control “RFID” chip: SASCO’s new service “RFID” chips help in facilitating management for corporate fleets and retail fueling stations. Our customers are able to use RFID chips that help to increase visibility into numerous operational functions such

as monitoring and controlling costs; accurate billing; and identifying and authorising unique vehicles to dispense fuel from dedicated fueling stations. • RFID features: 1. Easy to manage employers’ cars and calculate each one of their filling process 2. Gives the ability to know the vehicle information and determine how many liters of gasoline for each car 3. Ability to control gasoline costs for each car

4. Ability to report in case of a malfunction in the chip 5. Ability to manage the cost of fuel accounts with invoices automatically 6. Protection from manipulation

Control cards service: • Prepaid cards: Prepaid cards are designed to improve the experience of customers at SASCO stations and provide multiple payment options that help them especially in the absence of money during filling at the stations; and they can be recharged again through the company headquarters or through one of SASCO stations by end of the balance. • Postpaid cards: Post-paid control cards are designed specifically for corporate owners to better manage and control the fuel bills and cost for their employees’ vehicles, and to determine the quantity of the fuel’s liters per card and recharge later.

Automation SASCO announced the implementation of “selfservice system” across its stations. This strategy aims to introduce advanced and automated refuelling facilities; to familiarise the public with the selfservice concept; and contribute to the settlement of employment opportunities. editor@ifinancemag.com

International Finance


What are the trials and tribulations of SFO? Following a tumultuous 2018 for the Serious Fraud Office, the story is a deep-dive into the agency’s recent investigations and issues surrounding corporate criminal liability. Iskander Fernandez


he Serious Fraud Office (SFO) suffered a troubling 2018: The collapse of its highprofile investigation into two former Tesco executives in December, after allegations that the retailer overstated profits by sums into the millions, followed the judge’s decision that “the prosecution was so


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weak it should not be left for a jury’s consideration”.The SFO’s investigation is said to have cost an estimated £10 million. The SFO has also since scaled back a probe into its investigation of bribery and corruption allegations at RollsRoyce. Inquiries into a number of individuals have been dropped, two years after a deferred

prosecution agreement (DPA) was approved by Southwark Crown Court. A DPA defers the prosecution of a company in exchange for the company complying with financial and non-financial conditions. SFO supporters argue that the scaling back of the RollsRoyce investigation is only right if the evidence is not sufficient


to provide a realistic prospect of a conviction; critics on the other hand point to the earlier troubles surrounding the SFO’s Tesco investigation which also involved a DPA. In an earlier blow, a fiveyear investigation into Barclays, concerning a 2008 $3 billion loan made to Qatar was dismissed by Southwark Crown Court in May. The loan, linked to Qatari investment in the bank was alleged to have enabled Barclays to avoid a government bailout at the height of the financial crisis. Barclays was charged with conspiracy to commit fraud and unlawful financial assistance under the Companies Act 1985. After the initial charge was dismissed by Southwark Crown Court, the SFO made an application to the High Court to reinstate these charges—a highly unusual move which the High Court rejected in October. Despite its failure in prosecuting Barclays as an entity, the SFO is proceeding with the trials of four former executives: its ex-CEO being among the defendants. The court case commenced in early January, with the executives implicated in the rescue package investigation. They face charges of conspiracy to commit fraud and have all pleaded not guilty. However, as the court case begins, questions remain about whether the agency is properly equipped financially and if it has the right personnel to pursue complex cases. That said, if the SFO is successful in its prosecution of the senior bankers the result would be a coup for the agency. The end of 2018 saw a change at the helm at the SFO with Sir David Green’s six-year term coming to anend andthe arrival of Lisa Osofsky, anex-Deputy General Counsel and Ethics Officer

for the FBI. Osofsky has pledged to improve cross-border cooperation, increase the use of technology and to continue using DPAs to encourage corporate engagement with investigations; on this issue particularly, Osofsky has been firm that companies wanting to accept a DPA should co-operate with the agency from the start. Many see Osofsky as bringing new energy to the SFO, and ahead of her first full year in office, she already appears to be revitalising the SFO’s operations. The former US federal prosecutor quickly got to grips with criticisms that the agency was “too slow” in conducting investigations and bringing individuals to trial. Reporting to the Justice Select Committee in December and days after the collapse of the Tesco trial, Osofsky stated she had begun holding all senior staff to account on why its 70 cases were not progressing faster. Though speeding up individual charges would put the criticisms of being “too slow” to bed, the SFO still faces the challenge of prosecuting corporates. Osofsky also lamented the ‘controlling mind’ principle which has hampered previous corporate investigations. Bringing a corporate to account and proving its “guilt” is challenging. The law on corporate liability in the UK dictates that a corporate can only be found criminally liable if it can be proved that an offence was committed by an “individual [who] is sufficiently senior… [and is] the ‘controlling mind and will’ of the company.” Given that the SFO investigates companies with often complex management structures such as Barclays pierce the corporate veil to establish criminal liability is no easy task, and very different to what is involved when prosecuting individuals. Keeping

Iskander Fernandez | Partner, BLM

this in mind, at the parliamentary hearing Osofsky called for new “failure to prevent” offences which could cover economic crimes, and overcome the ‘directing mind and will’ hurdle. With new leadership at the helm and the Barclays trial looming, the time may well benigh for the SFO to secure a significant victory. As to the message this signals to corporates, a hungry SFO will spell tighter oversight of governance and financial compliance. If corporates are to come under greater scrutiny, now is the time to review compliance strategies and transparently resolve any issues.


International Finance


When the ‘high carbon GRowth story’ ends With the most feared effects of climate change, the world wants to reduce carbon emission for the greater good. What this means to its economies. Sangeetha Deepak



n 2018, British economist and academic Nicholas Stern at the Global Climate Action Summit persuaded the gathering to think big. He said: “Our civilisation has arisen in just the last 10,000 years, when temperatures varying by plus or minus one degree Celsius (1.8 degrees Fahrenheit). “Continuing down the path we are on would see an increase— within a century or so—of 3ºC or 4ºC (5.4 ºF to 7.2 ºF), something Earth hasn’t known for three million years. “Coastal areas would be under water, deserts will have expanded, hurricanes would become much more intense.

Many parts of the world would becomeuninhabitable. Hundreds of millions would have to move, perhaps billions. The risk of serious conflict would be high.” This means, the world is changing. Even if humans realise every single pledge made in the Paris Agreement, there is still a fat chance that not all economies

in the world might survive this catastrophic risk because he added, “the Paris target is ‘well below’ 2ºC. But even at 1ºC, we are experiencing very severe effects. This will add to the pressure.” With the economic power losing grip to possible worse climatic conditions, there has to be a coping mechanism, depending on how the world is willing to act upon. The answer is simple: ‘negative emissions’ (or ‘carbon dioxide removal’). However, this will not just happen. But when it does, will low carbon persuade economies to restructure and grow? Or, will it be too close for comfort?

Actually, the persuasion is already taking place—and there explanation to it. In 2017, two developing countries Georgia and Armenia were target of observation by researchers for the World Bank’s study. The focus of the study was to assess their ‘feasibility of a clean energy transition that would not cause economic harm’. It seemed that

researchers found ‘these countries do see GDP growth after investing in low-carbon energy sources’. Armenia’s GDP could reach as much as one percent and Georgia as much as 0.2 percent while removing four percent of carbon by 2050. Although the growth is slow, it is still apparent. It could have been much different, if countries had acted more responsibly from the start. There is more benefit these countries can experience beyond GDP: where there will be an increase in domestic energy capacity in the fight against climate change. For the past few years, countries are turning proactive: The Pan- Canadian Framework on Clean Growth and Climate Change endorses a national plan to address climate change— with

the promise of “green growth.” For this reason, the economic power that exist in carbon-intense sectors including transport, technology, building and industries will have to tread carefully, and that countries might not be willing to let go. According to The Atlantic, Philip Drost, an officer at UN Environment, said: “We have new evidence that countries are not doing enough.” Last year, the United States’ economic growth was seriously driven by a large demand for

International Finance



Last year, the United States’ economic growth was seriously driven by a large demand for ‘energy, trucking and air travel, and industrial activity’. A lot of companies were speeding up their manufacturing rate for commodities, including steel, chemicals and cement, which meanwhile, did not offset its carbon emissions. Senior Fellow of the World Resources Institute Nate Aden said the United States has become 28% richer, but only six percent cleaner since 2000. So, one way to look at it is these sectors encourage the growing economy. But at what cost? This question has already stimulated a wave of strategies by organisations vested in climate change—and there is still a fragment of hope left. “Who would have thought then that renewables with storage would already be out-competing fossil fuels in the marketplace, even without a price on carbon?


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“And who would have thought that the heads of the major car companies would all be agreeing that the era of the internal combustion engine is coming to an end? “And there is so much more in the pipeline. This is the growth story of the 21st century,” Stern added. There is more optimism knowing that another world’s highest emitter China is sustaining the low carbon transition. Oil and gas burning in China still continues, but it is counterbalanced with a major decline in the use of coal and other energy-heavy industries. With a decarbonisation rate of 5.2%, the country has ‘retained its leading position’ amidst the G20, which signifies a 41% reduction in carbon intensity over the last ten years. This was made possible by “growth in services, high-tech and equipment manufacturing as well as technological upgrading, while

investment in energy intensive industries fell, thereby making growth greener.” So, the is hope that ‘no longrun high carbon growth story’ will prosper in the future. That said, carbon has become a way of life for growing economies, and so, will speeding activities that encourage negative emission shrink the global GDP? There is basically one thought to this argument: ’degrowth’ is imperative to a cleaner planet that will transcend beyond material prosperity. By definition, it is the “equitable downscaling of production and consumption that increases human well-being and enhances ecological conditions at the local and global level,” which means there will be some fundamental changes to economic activities that may impact the GDP.



Prestige Funds finance £14 million biogas plant in Kent The finance will aid in expansion of Anaerobic Digestion plant network to source alternative energy in the UK.


he deal is the latest in a long series of financing agreements to fund anaerobic digestion facilities in the UK, which are helping farms and food business to process waste into energy. The latest project which is being managed by dedicated Finance Arranger and Project Manager Privilege Finance, part of the Prestige group of companies, is designed to generate up to 500m3/hr CH4 Gas to Grid (G2G). This new plant will take approximately 16 months to build. “A large area of our focus in the private debt market has been on lending to farmers and to the agricultural business sector,” Prestige Funds founder Craig Reeves said. “With many banks retreating from non-core areas of lending over the last 10 years,

private finance sources have become essential for farms, food and agri groups that want to introduce green energy projects.” Rising electricity prices in the UK and higher taxes on landfill are causing businesses to turn to green energy projects as a source of on-farm energy, utilising existing waste. The UK government also needs to source more clean energy to meet its Paris Climate Change Agreement. In January 2019 the government announced plans to organise dedicated food waste distribution nationwide for the first time. Much of this will be used to power local anaerobic digestion plants. Reeves adds: “The search by investors for non-correlated investments that help them to finance projects that meet their ESG criteria is leading many to

Prestige Funds. We hosted a record number of internationally based, institutional investor visits in the UK in 2018 and expect many more this year.” There has been dramatic growth in the number of Anaerobic Digestion plants operating in the country over the past six years. According to the Anaerobic Digestion and Biogas Association, 1.2 million homes in the UK now benefit from power generated by those planslants—with an estimated increase of Anaerobic Digestion-sourced generating capacity of 20% over 2017.


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The quiet heroism of Robotic Process Automation Most finance enterprises want to be a part of this digital revolution and embrace technology to unleash productivity gains. Dean McGlone


ccording to Advanced’s latest Trends Report, technology will become a business spending priority over the next 12 months for 55% of finance professionals. So what kind of technology are we talking about here? Perhaps unsurprisingly, predictive analytics and business intelligence tools come out top. But the same survey also reveals that Robotic Process Automation (RPA) is making headway. Two-thirds of finance professionals say they would be happy to work alongside robotic technology if it meant less manual processes in their day-to-day roles. RPA isn’t new but it is certainly going to climb in popularity over the next 12 months and, eventually, become ubiquitous among businesses. It can relieve teams from mundane and repetitive work to focus on higher-value and strategic activities. Moreover, the technology is easier to access, expand and scale than other technologies like Artificial Intelligence (AI).


One very simple function that can benefit from RPA is Accounts Payable (AP). The responsibilities here are to get invoices in, processed and ensure they get paid at the right time. Traditionally, this task is laborious, prone to error and expensive. Finance teams are inundated with documents, and their time is taken up with sorting and routing the invoices, data entry, chasing budget holders for approval, printing and photocopying, resolving queries and locating associated paperwork. RPA can automate these manual and usually administrative heavy processes, meaning finance teams will see increased productivity and efficiency levels. They’ll work smarter, not harder. It’s not just about productivity either. RPA gives finance professionals increased visibility into the entire organisation and better data for reporting to the board. The data generated can be used for strategic work, management reporting, financial forecasting and trend analysis. RPA can help with a host of other external factors too. With the General Data Protection Regulation (GDPR) now in place, it will help the finance department (and indeed other areas of the business) get their data in order. RPA is a good starting point for GDPR compliance as businesses can store, manage and track electronic documents and electronic images of paper-based information in one place and in real-time. This ensures compliance requirements by providing traceability on all documents. For whatever reason finance teams will adopt RPA, there will need to be a change in culture among the workforce. Automation technologies will only be effective if the people using them understand how they work, appreciate their true potential and recognise the value they bring rather than fearing them. Arguably, investing thousands of pounds on technologies such as RPA when users simply don’t believe in them is wasted, suggesting a robust upskilling and training programme is necessary to ensure future digital success. RPA isn’t the only technology that organisations will prioritise in 2019. We will start to see a sharp focus on AI and how it can be combined with RPA. With a combination of right technology, such as AI handling decisions and chatbots managing customer queries, completely unmanned AP is achievable by 2020 as a result of invoice automation. For now though, many businesses will be implementing RPA to reap the immediate productivity benefits and to test the water for AI in the future. Planning and testing automation software to see the impact it has on their operations and staff is a great

Dean McGlone | Director, V1 indicator of the benefits large-scale AI deployment could bring in the future. Any business looking to use RPAin 2019 and beyond should take the following steps: • Audit your processes and identify which involve low-skills, manual and repetitive tasks, such as many of the core yet daily finance functions of invoice processes—those that are most ripe for automation • Determine the key technologies your business needs to become more agile, competitive and productive. Decisions must be made based on need, not hype • Understand which new technologies are best placed to modernise or integrate with your organisation’s existing legacy systems • Ask yourself what the potential benefits of RPA are to your finance team. Understand employees’ pain points before deciding which digital tools will help • Appoint a digital pioneer—someone that will drive positive technology change and that has the backing of your CEO and the rest of the C-Suite • Engage with your younger workforce. Typically, they are more digitally savvy and open to change. Find out what technologies they think will make a real difference So there’s one clear trend for 2019—and that’s RPA. Done right, it will change the face of finance for the better. editor@ifinancemag.com

International Finance


VNPT Group is actively contributing to boost Vietnam’s digital economy

Being the country’s leading telecommunications provider, the company has invested efforts to sustain a modern, synchronous and widespread national communication infrastructure for the Vietnamese residents.



ietnam is stepping into the next phase of having the most powerful integration and globalisation, where telecommunications and IT have met significant changes in the past. Being the leading IT and telecommunications group in Vietnam, the company has been making positive contributions to the construction of the Government and the country’s digital economy. The Prime Minister of Vietnam Nguyen Xuan Phuc at the WEF ASEAN Meeting in Hanoi 2018 said: “Vietnam identified digital economy as one of the essential pillars with an important role for economic growth in the context that the world is entering into the 4th industrial revolution. The Government of Vietnam is making efforts to create a favorable environment ready to test new business models on the basis of digital technology application.


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The Government encourages the promotion of digital technology in all areas of socio-economic life, especially in aspects with great potentials, such as e-commerce, agricultural management, and processing industry. For administrative reforms, the Government of Vietnam highly focuses on building toward the Government, the digital economy and the digital society by closely linking the reform process with IT applications.” As a major provider of telecommunications and IT services, VNPT is aware of its role and opportunity in the development of Vietnam’s digital economy. Therefore, the company has built-up its vision, mission and strategic objectives in this new period—with a goal to lead the digital transformation trends in the country. Accordingly, the company has carried out the mission of developing and providing digital

platforms and digital services at a global level for the Government, the businesses, and the society. Seizing the opportunity, thanks to the advantages of existing infrastructure and services ecosystem provided to customers, VNPT aims to build a digital solutions and services driven ecosystem based on platforms built by VNPT. such as media, e-Government, smart city integration and IoT. The development of service platforms will help to supply endto-end solutions to customers with personalised experience. Until now, in Vietnam, VNPT has been at the forefront of developing ecosystems for ICT products in many fields such as e-Government, health, education, smart city, smart tourism, and much more. According to VNPT Group CEO Group Pham Duc Long, who plays an important role in leading the company in the


process of digital transformation: “Digital transformation is a great opportunity for Vietnam in general, and telecom and IT companies in particular. So far, it has been very expensive to provide a big data solution, or a smart city. However, the recent development of technologies allows us to do all these things at a much cheaper cost. This opens up opportunities big enough for all businesses to join hands to grow digital transformation in the Vietnamese economy. “As for VNPT, in 2018, we also signed cooperation agreements with dozens of provinces, ministries, corporations on the implementation of digital transformation. In 2018, the digital services achieved highest growth rate against other services provided by VNPT. This is a clear evidence for the wide and effective participation of VNPT in this area.” Before the wave of industrial 4.0 was going strong, VNPT had begun to study the core technologies of this revolution. The company has cooperated with major technology companies in the world to build research labs on AI, blockchain, IoT, cybersecurity and cloud computing. It has also

mastered technologies and is now focusing on the development of specific applications and solutions suitable to actual needs of Vietnam—as well as introducing those technologies into its existing solutions in order to meet customers’ requirements. In addition to achieving the goal of leading digital trends in Vietnam, the VNPT Group is also an enterprise that is focused on achieving sustainable development. Against the backdrop of Vietnam’s fiercely competitive ICT market with many challenges, 2018 has been the 5th consecutive year for VNPT’s achievement in profit growth of over 20% with VND 6,445 billion, up 25% compared to 2017. VNPT’s return on equity is 10.2%, an increase of 23% compared to 2017. The company has 34 million telephone subscribers, of which 31.3 million are Vinaphone mobile subscribers; and the total number of broadband Internet subscribers is 5.2 million. With the role of being the leading ICT provider in the country, in the past years, the company has made efforts to build a modern, synchronous and widespread national communication

infrastructure—making positive contributions to promoting the socio-economic development and bringing modern ICT services to the Vietnamese people. Along with that, VNPT has been contributing to the development of the community by participating in the promotion fund for education and training by means of encouraging the education sector and sponsoring social security programs. With VNPT, that is an important responsibility for the development of the community. Keeping up with the trends of the digital era, VNPT has transformed itself from a traditional service provider to a digital service provider with a vision to become the leading provider of digital services in Vietnam in 2025—and the Digital Transaction Hub in Asia in 2030. For this reason, the company will continue to promote digital transformation in the country and provide high-end digital services to its customers in the coming years. editor@ifinancemag.com

International Finance


The rising challenges and opportunities of cross-border trade In a nutshell, it is important for merchants to fully understand the factors driving frictionless cross-border trade in order for them to capitalise on the moment. Mario Shiliashki


rictionless trade across borders is integral to the growth and development of today’s global economy. Recent estimates suggest that cross border trade will grow from $401 billion in 2016 to $994 billion in 2020. Of this growth, nearly two thirds will come from high growth markets such as Latin America and Asia. Clearly there is a huge opportunity here, but it comes with challenges. Barriers such as cumbersome payment infrastructures and a lack of


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local market knowledge must be overcome for merchants to fully capitalise on the cross-border opportunities. To see true success, they need to operate in a world where borderless, frictionless cross-border payments are a reality.

The impact of consumer demand At the heart of cross-border trade sits the consumer. Consumers are demanding the instantaneous connectivity and one click

convenience that they’ve become accustomed to through the use of always-on, anytime devices. Most consumers have already experienced the online shopping experience with immediate, frictionless, payments, and they are not prepared to settle for anything less. In short, they are not prepared to tolerate a service that doesn’t deliver this type of experience. If services do not match expectations, the consumer will simply move their custom elsewhere. And in an increasingly


globalised world, this does not just mean just within their country, but internationally.

The bigger picture: why collaboration is key One of the greatest challenges that stands in the way of creating a world free from financial borders where cross-border shopping can flourish, is protectionism and trade wars amongst governments. This type of backward mentality is harmful to commerce, e-commerce and international expansion. Ultimately, it will impact innovation and the scaling of this innovation. There is increasing pressure from both merchants and consumers who want to transact in a world without trade barriers or financial borders. As a collective body, governments and participants in the payments industry have a role to play in building a world without financial borders where everyone can prosper. This sort of cross-sector collaboration will prove key to building a world without complex trade tariffs and red tape for transacting across borders.

The importance of local market expertise in a globalised world Another challenge hindering cross-border trade is the disparity between consumer payment and shopping trends in different countries. Each market is unique, with local merchants and consumers requiring different things from their payments providers. Herein lies the challenge. Payment service providers must enable their merchant partners to offer relevant local payment methods and retain a strong local footprint with the best consumer experience possible, while–at the same time competing with other

local merchants and cross-border competitors. In other words, they need to operate locally and internationally in perfect unbroken unison. This challenge is exacerbated in high-growth emerging markets, where generally, traditional financial services and payment tools have not yet developed as much as those in more established markets like the US or the UK. The prevalence of alternative payment methods, such as payments made using something other than a credit or debit card stands as a barrier to the seamless consumer shopping experience—and merchants face the frustrating inability to integrate solutions tailored to local markets. In markets like Asia and Latin America, these alternative payment methods still represent as much as two-thirds of all payments made. Brazil is the largest e-commerce market and the strongest economy in Latin America, yet only 32% of Brazilians have credit cards, with most favouring bank transfers, cash vouchers and local cards. Another example is real-time bank transfers called ‘pay-by-links’ are the most popular payment method in Poland, used by 62% of Polish e-consumers. If merchants can only offer card transactions to Polish consumers, they will inadvertently be directing many potential customers to their competitors. If merchants are able to offer alternative payment methods, consumers can choose to pay in a way that’s most convenient to them. However, for multinational merchants trying to operate at a global level, catering to local payments preferences creates a layer of complexity. And so, there arises the need for a payments platform to remove the

Mario Shiliashki | CEO, PayU complexities for merchants and provide the seamless experience that online shoppers have come to expect.

What next? The developments of frictionless cross border payments will create unprecedented opportunities for merchants looking to expand beyond their local market. Those merchants that find the right payment service provider to partner with, offering not only firstclass technology, but also local market knowledge and expertise, will be the ones to successfully capture the growth. To capitalise on the increasingly globalised consumer, merchants need to work with partners who enable strong customer experience through local expertise and excellent service levels, especially when transacting across borders.


International Finance


Banks can navel-gaze at Silicon Valley—but won’t find answers to their tech problems Investment bankers are seeking technology to troubleshoot real-time trading errors, just like their counterparts. What do tech behemoths have to say? John Marks



instriped suits in the boardroom vs.skinny jeans on a beanbag. One would think the trendy techies of Silicon Valley and city slickers of Wall Street have very little in common. So why, with the two culturally worlds apart, are we seeing some of the best and the brightest tech minds across investment banking seek inspiration from the likes of Facebook and Google? For a while now, technology goliaths have been trying to solve underlying technology problems centred around scale as more people continue to buy and sell online. Understandably, major financial institutions have looked at the vast infrastructure underpinning Facebook and Google, and thought: “we can learn from this!” Unfortunately, it isnot that simple. With millions of users browsing the web every day, it is not a financial catastrophe if Facebook fails to load ‘more posts’. In contrast, a transaction failing could cost the financial market in millions. These days, with electronic market makers ruling the roost, real-time is now of the essence. When traders’ click on buy, that is the exact price they want to execute at. A millisecond later that price could have moved in the wrong direction. Therefore, unlike the tech behemoths concerned with scaling up to meet customer demand, in financial markets the primary focus should be around consistently maintaining flawless accuracy in a short and predictable time period. Unfortunately, until now, banks have been more focused on updating their trading platforms to handle volumes. With volumes on Deutsche Börse cash market up

John Marks | CCO, Adaptive 20% compared to the same period last year, it is not hard to see why. But while it may make sense to look at Facebook and Google architectures for answers, the reality is that this is not the way to address the specific problems facing trading. Take the numerous geopolitical events triggering mass sell-offs in equity markets of late. The only way to profit from these short bouts of volatility is to ensure every execution request is processed as quickly and efficiently as possible. This gets to the heart of why real-time is so important. But here lies the problem: banks can’t hope to achieve 21st century real-time trading environment with 20th century technology architecture. Therein lies the problem. A bank may currently be looking to replace its two-decade old matching engine or order management system (OMS). It could well be working just fine, only for the head of desk to anticipate that the system will not have the sophistication to quickly process a higher throughput of transactions in the future. Investment banking needs to find a way to manage resilience

With millions of users browsing the web every day, it is not a financial catastrophe if Facebook fails to load ‘more posts’

while operating in real-time, as opposed to focusing on scale. The truth is the sector can look to consumer tech brands to solve parts of the problem, with business agility being one of the many. Ultimately, they need to rethink, adapt and go beyond the issues of scaling in order to solve specific institutional trading problems. Until this is realised, it won’t just be cultural differences that set Silicon Valley and Wall Street apart from each other.


International Finance


How social media impacts financial services The rising progress in social media engagement has crafted a path brimming with new possibilities— and yet, poses a threat to those oblivious to its developments. Scott Walker


n the rapidly changing world of digital communication there are innovators, followers and laggards, the slowest of which run the risk of being completely left behind. For banks and other financial services the development of social media customer engagement has opened up a whole world of possibilities, but it also presents a threat to those which fail to suitably grasp this opportunity. While many within the sector pride themselves on their investment in social media, how many are using it in an effective manner that really engages their stakeholders and ultimately contributes to the success of their business? There’s no doubt that the use of social media and other forms of digital engagement with customers has become common but, for some institutions, you really have to question the effectiveness of their approach in reaching out to their customers. While some of the bigger financial services brands are doing it well, there is evidence that smaller, disruptor companies are proving to be much more proficient at it. As many financial institutions are learning, digital communication is not as simple as setting up a social media account, investing funds, and posting some content that loosely represents a bank or a bank or a savings account. For


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these and indeed all organisations wishing to really engage with people (and ultimately generate a commercial benefit in doing so), a mere social media presence isn’t enough. Today’s audience is increasingly looking for actual substance behind the content being posted which demonstrates how an organisation is being socially aware and responsible. In developing their social media presence, banks and other financial institutions need to respond to these changing demographics if they want to remain relevant. By next year, 50% of Americans will be millennials or generation Z’s—what Adam Petrick, global director of brand and marketing at sportswear company Puma, refers to as Generation Hustle. These are digitally sophisticated people who have little trust in governments or big corporates and tend to support brands that they believe are making the world a better place to live. This growing demographic will protect the reputation of brands they identify with and shun those which go against their values. It is therefore increasingly important for all businesses, particularly those in sectors like financial services which have a direct bearing on people’s lives and the communities round them to ensure they are not only operating with strong values and a commitment to social responsibility, but also communicating this to their audience in a way that is impactful. In the world of banking, many of the bigger established corporate players are now facing a challenge from tech-infused organisations such as Monzo, Atoms, Vantiks and Pleos which have built their entire business model around the values of their

customers and engage with them accordingly. Looking at the success of the likes of Monzo, the emerging ‘smartphone’ bank, in how they intercat with customers. The 51,000 tweets they have posted since opening for business have received 26,100 likes and an impressive 51% level of engagement. Compare this to RBS which has posted 71,500 tweets on their customer-support social channels with only 50 likes, less than one percent engagement! While these are entirely different businesses with different levels of complexity, these numbers certainly tell a story. Then, how do financial institutions ensure their social media activity will hit the mark and be relevant as well as interesting and engaging? Using great images as part of social media content is a good starting point. According to marketing software producers HubSpot, visual content is more than 40 times more likely to get shared on social media than other types of content. It is important to personalise the stories that are told through social media. For financial services companies this could include highlighting how a customer overcame adversity, the role it played in supporting a business or individual and the impact this had on their lives and their local community. Getting back to the point about reflecting an organisation’s values, it is important for financial services companies to take a stand on the issues that matter to their customers. This may spark fear in larger institutions concerned about alienating a wider customer base, but standing up for social justice can actually make good commercial sense: one of Bank

Scott Walker | Creative Director,


of America’s most successful Instagram posts was in support of Pride Month. To successfully engage with their customers and attract new ones, banks and other financial services businesses need to remember that social media needs to be just that: ‘social.’ Using it as a platform that services those who spend the most money on it will ultimately fail. It should be used to promote how a brand’s values connect with those of their customers and reinforce the human side of the financial services sector which consumers increasingly want to see.


International Finance



The importance of unified visibility to reduce the risk of IT outages

In the age of being “always-on, always connected,” financial institutions are expected to modernise services across the digital landscape. Mike Walton


e have seen the pace of change rapidly increase over the last two years based on a report compiled by PwC: 77% of financial institutions are increasing efforts to innovate. However, while business transformation brings significant opportunities, it also pushes to the fore the challenge of IT infrastructure not beingappropriately aligned or configured to support technological change which threatens innovation, destroys customer satisfaction and causes business disruption. Between January and October 2018, the Financial Conduct Authority reported a 138% rise in in technology failures, and in Q2 2018 alone Britain’s five largest banks, HSBC, Santander, RBS, Barclays, and Lloyds Banking Group, reported that they had suffered 64 payment outages. Examples of IT failures such as The Lloyds Banking Group IT outage in January this year, and the TSB incident in 2018 where 1.9 billion customers were locked out of their

accounts for days. This only emphasises that despite increased investment in digital solutions, underperforming technology and a lack of visibility across the entire IT infrastructure is a significant industry problem. These incidents, no matter how small, can cause extensive damage to businesses and thus, more must be done to ensure that organisations are implementing strategies to futureproof themselves against this type of threat.

The drip-drip effect—Why IT outages are unacceptable IT outages can have a drip-drip effect on brand reputation and the potential loss of trust from customers is difficult to reverse. This is because just a few minutes of downtime can completely destroy the customer experience and if organisations fail to deliver exceptional customer service in today’s fast-moving world, competition will waste no time trying to steal customers and swallow market share. IT outages are also financially detrimental. Gartner recently sent shockwaves through

International Finance



processes that don’t communicate with each other, and they frequently fail. This is dangerous for IT teams as it means that they run the risk of not being alerted to faults across the network as they only have a fragmented view of the IT infrastructure. This is only made worse by the siloed nature of Mike Walton | Founder & CEO, Opsview IT departments, which limits cross departmental communication. the industry when it estimated that IT downtime costs $300,000 Visibility through a single per hour. While this may seem like pane of glass a huge amount, it is far from a theoretical risk: British Airways lost With so much at stake, the only £170 million off its market value way for financial institutions to after a 2017 IT outage caused anticipate problems and quickly 75,000 passengers to be stranded. deal with them before they A similar outage at US airline become outages, is to increase Southwest due to router failure, led visibility into its IT systems. Yet to over 2000 cancelled flights and gaining that insight is a persistent an estimated cost of $54 million to challenge. It could be because $82 million in lost revenue. the tools being used were The question is, why do designed only to monitor static, these incidents keep occurring? on-premise infrastructure of the In this digital age, businesses past, rather than the modern, are increasingly defining their dynamic, cloud and virtual-based success by innovative digital digital systems of the present. implementations. In fact, IDC But more commonly, it’s because predicts that global spending organisations are using multiple on digital transformation will be tools, producing multiple versions approaching the $2 trillion mark of the truth for siloed IT teams. by 2022, with 30% of the top Research from analyst firm global 2000 business allocating Enterprise Management Associates 10% of their revenue stream to has indicated that a vast number digital investment by 2020. In of organisations have more than order to remain competitive, ten different monitoring tools organisations are therefore and that it can take businesses rushing to adopt digital. However, between three-six hours to find the result is a heterogeneous mix the source of an IT performance of decentralised systems and issue—this is clearly unsustainable.


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Only by unifying IT operations and monitoring under a single pane of glass can an organisation hope to get a holistic view of what’s going on. A centralised view ensures that there is only a single version of the truth and will help bring siloed teams together, avoid duplication of effort and more importantly ensure that monitoring finally fulfils its promise to improve service performance, availability, and the user experience. There are times when outagescan occur suddenly and without warning. In such cases, it’s vital to detect the failure quickly, and know the impacted systems. Once identified, organisations should have processes in place to rapidly mitigate the issue—reducing downtime and lost revenue. An outage may well be an IT responsibility, but in today’s environment, it is perceived as an indictment of the brand as a whole. Organisations lose revenue from outages not just from immediate lack of business, but also from degraded consumer trust. Consumers are often unforgiving, and simply have too much choice and flexibility to be understanding of prolonged outages online, which is all the more reason for companies to invest heavily in managing their processes during a critical situation.












JUNE 29-30, 2019. BALI. 20% DISCOUNT COUPON:


If you’re running a remote team or serious about starting one, this is the conference for you. Running Remote is carefully curated to teach you next-level, actionable strategies and tactics you can utilize the very next day to build & scale your remote team.

Meet the Experts. Grow Your Team. Explore Bali.

a MOVEMENT TO ENCOURAGE REMOTE WORK Co-founder & CMO of TimeDoctor Liam Martin says the conference “is to build a playbook of best practices on assembling remote teams.� IFM Correspondent

What is the vision behind Running Remote Conference? We found that there were a lot of people talking about how to become a digital nomad or an individual freelancer, but there were no conferences discussing how to build and scale a remote business. Our software companies TimeDoctor and Staff.com are both completely remote, and we wanted to get the


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playbook to 100, 1000 or more employees; so we decided to start a conference on just that.

What is the key topic you will be addressing at the conference? We will be going as in-depth as humanly possible on how to build and scale remote teams. Shopify is discussing how they manage their remote support

Running Remote Conference

team of 1500+ reps all over the world. Doist and Help Scout will discuss asynchronous vs. synchronous communication. We will have a panel on remote first friendly VC firms. We focus on how to legally hire remotely; how to build a design team, a dev team remotely, and a dozen other talks.

Can you tell us more about your firm TimeDoctor? TimeDoctor is a company focused on empowering people to work wherever and whenever they want. We build conferences like Running Remote and our TimeDoctor software measures how productively remote employees work.

Do you encourage remote work culture at your firm? How efficient is it? Yes we do, remote work is literally our only way of working and we wouldn’t have it any other way. Outside of the obvious cost savings, the impact on employee happiness is so high that even if we had to pay more for talent we would still have a faster team.

Liam Martin | Co-Founder & CMO, TimeDoctor

What are the advantages behind enabling remote work for both employees and the organisation?

the conference to get their head around this new way to work which makes me very hopeful for the adoption of remote work.

Organisations have the ability to save on costs and improve retention to employee happiness. Employees have increased freedom of movement and in a lot of cases better work life balance than their onpremise counterparts.

From your standpoint, what is the kind of impact conferences such as Running Remote can have on the industry?

What are your broad views on the future of remote work? Last year approximately 2% of the US workforce was working full time remotely and almost 55% were working remotely some of the time. I believe that the corporate world is currently experimenting with remote work and in 20 years you’ll see the majority of the work force work remotely.

The goal of the conference is to build a playbook of best practices on assembling remote teams. We need a few more of these types of events to really enable remote work as the normal way to work. So at this point our impact is small but I’m hopeful our conference will inspire others to develop the movement.


How supportive are organisations to remote workers? It really depends on the organisation. It appears as if the tech industry has adopted remote work and the rest of the world is a few years behind; but at Running Remote we have fortune 1000 companies attending

International Finance


Retail Bonds: A return with a difference In short, there are solutions for complex financial situations based on past retail bonds investments, current opportunities and risks involved with investing in them. Daniel Terry


onds have always been an investment opportunity for those who are looking for a long term, high return option with recent market forces. However, it is retail bonds that seemed to have captured the imagination of those wanting a return with the difference. From beer to chocolate to education to sport, there is a retail bond option available. Many investors already know the


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return on investing in bonds in companies such as John Lewis where there is a good cash flow from their investment in the £50 million scheme that offers up to £10,000 per investor for a return of 4.5% annual dividend and a further two percent in John Lewis or Waitrose vouchers. High street retailer Tesco followed suit and exceeded expectations with a massive £50 million to £100 million. After this, The University of Cambridge offered a historic bond

in October 2012 that rose over £1.5 billion to help research and accommodation at the University. With a 40 year maturity and a 3.75% payback over its life, the bond that was initially set out to raise £350 million was massively oversubscribed with everyone wanting their “little bit of history.” Next, we saw gourmet chocolate retailer Hotel Chocolat announce a second issue of its retail bond in 2014, with returns paid out to investors in chocolate instead


of cash. With the aim to raise a further £10 million in development capital from its first issuance that made through a Hotel Chocolat card or monthly box of chocolates rather than cash. Also, The Jockey Club launched its first ever retail bond that raised £24.7 million last May for the redevelopment of Cheltenham racecourse. With a lower maturity period of five years, it paid 7.75% per year return on investment, split between 4.75% in cash and 3% in “Rewards4Racing” loyalty points that could be redeemed at 15 racecourses nationwide on a refreshments, hospitality and membership fees. At IntaCapital Swiss we are

still seeing retail bonds being a popular option for investors globally. However, we believe there are a number of points to consider before deciding if they will be the right choice of investment. Retail bonds can be a good addition to an investor’s portfolio, especially for those who have funds that they want long term returns on, rather than a quick cash machine. Therefore investors should ensure to take robust advice and use a broker they can trust rather than being attracted by a brand name, its marketing and the appeal of “added value” perks like vouchers or free products.

Daniel Terry | Senior Financier, Intacapital Swiss

Do you understand how the bond works? As we have seen in the examples above retail bonds can differ significantly in their benefits and interest. Talking to a professional broker like IntaCaptial Swiss will help you really understand the opportunities and risk fully before committing.

How much can you afford to lose? As with all investments there is always a risk. As many retail bonds are not protected by the Financial Services Compensation scheme, if the company was to go bust, your initial investment would be lost. This is particularly key at times when some well known retailers who were seen to be stalwarts of our high street are struggling to keep their financial heads above water.

How long can you afford to invest? Retail bonds tend to be mid to long term investments that can mature in five, ten years or even longer in the future. Think about your future financial position rather than how your finances are today as once committed your money could be tied up for the foreseeable future.

Is the bond listed? Retail bonds come in two types–retail and mini. Retail bonds are listed on London Stock Exchange and therefore you can sell before the bond matures. Mini bonds cannot be sold on before their maturity and often offer higher risk but higher return.

What do you know about the company you are investing in? How much do you know about the company? Even if the company has a good name, ensure you have a good broker who undertakes due diligence about the company you are investing in. It is not only the retailer’s current state of affairs to be considered but its future state.


International Finance


Let your business strive to become an integral part of the community— and grow sustainably

In the pursuit of a trending ideology in new-age business—It is imperative to remember the key points that will enable growth with profits. Suranga Herath


Introducing Prajāva Prajāva means community; and the idea of a community has never been more important to a business than it is now. Prajāva in a business is about the change in mindset, where a business goes from believing itself to be a part of the community to actually being posited in the center.

Who’s in your Prajāva? A Prajāva mindset means understanding the elements that form the community, and how every decision you make can have an impact on each one of them. A community includes everyone from customers to suppliers to employees to their families. It can also include investors and factor in intangible elements such as the environment. In short, a business community is much bigger than many businesses appreciate. And this gives businesses a huge power to affect change when harnessed correctly.

The benefits of Prajāva When a business looks after its community, there are higher chances that the community will reciprocate. So by considering the interests of customers, employees, suppliers’ et al. stronger and more fruitful relationships are formed. This is not about quick wins but a long-term strategy that puts sustainable relationships at its core. There is mounting evidence to suggest that sustainable businesses grow quickly. A recent survey by a leading sustainability accreditation B Corp. revealed that purpose-led businesses

grow 28 times faster than normal businesses.

Why now? It’s no secret that consumers love sustainability, and now, there is an even bigger appetite for brands willing to do things differently. The key thing is to make sure the strategy is long-term, and take into consideration the community as a whole. A good example of this is from the tea industry where there has been a big move toward compostable tea bags, often produced using genetically modified corn. This move can benefit the community in so many ways: by addressing plastic issues, and the like. However, it can potentially create problems for others. So, while it’s often easier to think short-term, it is important for businesses to use the Prajāva mindset in order to find solutions and create long-term strategies that are good for all members of the community.

Getting started There are seven steps to installing a Prajāva mindset to your business: 1. Put a long-term plan in place: Visualise your end goal and outline steps that will help to achieve it 2. Map your community: Connect the dots between different groups in your community. Identifying the size of your community will set your business apart and position it for uncapped growth 3. Make a list of ways to help individual parts of your community

Suranga Herath | CEO, English Tea Shop

4. Focus first on projects which also most help your business: Focus on creating win-win situations. This ultimately drives employee engagement, and increases our productivity too 5. Recognise that you can’t help everyone all the time, but every little helps 6. Reinforce a sustainable culture: Create a practical guideline for members of your community who can independently implement sustainable means of working in their day to day 7. Set targets and measure efficiency: The only way to track results and impact of new approaches is through setting measurable outcomes. Therefore, it is necessary to list KPIs and stay motivated in achieving them


International Finance


When brands work in harmony with retailers The ongoing battle between the two is apparently futile—because they share a common goal: customer retention. This means, them working closely might surface greater co-marketing opportunities.


rands vs. retailers are a battle that has rumbled on throughout several ages. They’ve competed for our attention, money and loyalty from the High Street boom of the 1860s through to the golden age of the 1960s. The contest is even more magnified now in the digital age with the Internet playing host to online discount retailers as consumers look for the cheapest bargains, fuelled by the rise of price comparison sites.


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Steve Martin Retailers embrace shopping change It would appear that retailers are leading the way when it comes to winning customers. Once upon a time, consumers would buy into a brand’s message, style and values, but the tables have turned now. Millennials have embraced a DIY approach to shopping, with a wealth of choice and information at their fingertips, especially peer reviews which are increasingly powerful drivers of purchase decisions. Recent research has

shown that only seven percent of millennials identify themselves as brand loyalists, while 75% are influenced to shop during a retail sale or promotion. Arguably, brand loyalty is dying a slow death as it heads toward the canvas. So, what can be done from a brand’s perspective to ensure it can remain relevant in today’s volatile climate? After all, the most common debate is that retailers need brands to survive because without which they won’t have products to promote and sell.


Data is king One big topic that harmonises the two is data. We already know the power it can give both brands and retailers in terms of insights on customer behaviour and purchase patterns. The rise of online shopping combined with the social media boom has opened up a host of new channels and platforms for brands and retailers to promote their message, which in return, leaves them with a mountain of actionable customer data. Making sense of this data and acting upon it has proved to be a blessing and a curse for marketers. Done right, data can help to retain new customers, target and convert new ones, and ultimately boost sales. Otherwise, it might lead to customer dissatisfaction, resulting in a displeased word of mouth. Still worse, if data is not handled correctly following the introduction of the General Data Protection Regulations (GDPR) earlier this year, there will be a huge fine imposed on brands or retailers. There is a greater responsibility on data use,and it will have a bearing on people-based marketing. Data partners will need to know where the data is coming from and how it was consented.

A second-party strategy So if retailers and brands have the same end goal—winning and retaining customers, then why can’t they operate together to help achieve this? Surely, the combination of the two sets of data on a single customer is better than one? So how can brands and retailers set about doing this? The answer lies in what is known as second-party data. Second-party data is essentially data that customers don’t provide directly, but is obtained via a relationship with

another entity. For example: Take any supermarket and CocaCola. The brand (Coca-Cola) is responsible for developing the product, but arguably knows very little about the end-user given that the majority of sales come through the retailer (the supermarket). It is therefore within the interests of the brand to work with the retailer to obtain customer data that enables them to tailor their product marketing for current audience. For example, targeting paid media to lapsed buyers and measuring the in-store sales impact of that paid media. In addition to a potential new revenue stream, the benefit for the retailer is a more engaged brand that invests more in paid media and brandfunded promotions.

CO-MARKETING OPPORTUNITIES In addition to brand-retailer second-party use cases, brands can also explore brand-retailerbrand opportunities. Imagine, a world where brands can instantly understand how users buy their products associated with a given retailer. This opens up the opportunity for non-competitive brands to identify partners to drive co-marketing opportunities without costly market research. For example: a soft drink brand may identify which alcoholic beverage brand they can approach to develop a coupon discount partnership. Brands working together in this way could even create combined audiences for paid media targeting and measurement.

Steve Martin | Managing Director, LiveRamp

phenomenon is always just around the corner and ready to shake up the industry once again. With this in mind, instead of competing against each other, like they have historically, brands and retailers need to recognise that they can actually overcome hurdles in the landscape, especially if they forget their differences and work together. Second-party data is a powerful tool if handled and actioned correctly. It largely depends on how brands and retailers can work in harmony to build relationships with their customers to ultimately remain relevant and profitable.


A long-lasting relationship As shopping patterns and behaviours continue to evolve, the future will always remain somewhat uncertain for both brands and retailers. The next big

International Finance


5 tips for fintechs in 2019 The tips pronounce the companies need to stay focused on their long-term global vision and continue to move ahead of the learning curve.


Viktoria Ruubel

018 was a year of significant developments for fintech worldwide with new players on the scene, major fundraising rounds and exciting new technological innovations from biometrics to virtual assistants. 2019 looks to be even more exciting, but with the pace of digital disruption growing ever faster, it’s important that fintechs don’t lose sight of their purpose and make firm commitments to responsible activity and continued growth in many cases. This can be achieved learning from their past mistakes. Keeping this in mind, here are our 5 new year’s resolutions for fintech companies.


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Don’t just challenge, collaborate The adjectives used to describe fintechs, such as disruptors, challengers, upstarts can often sound misleading, assuming incumbents and start-ups can’t collaborate. And too often a false distinction is made between traditional banks and the emerging digital lenders. In 2019 and beyond, it will be increasingly important for challengers and traditional financial institutions to work together. Traditional banks face an existential challenge in adapting with enough speed to keep up with the digital revolution and fintechs are well placed to help


them overcome these difficulties. Meanwhile, they offer younger businesses a pool of experience to make informed decisions, and can be valuable collaborative partners for new start-ups who don’t have the strategic resources or deep pockets to support the next stage of growth.

Prioritise data security Both traditional banks and the new kids on the block have faced problems in recent years with the vulnerability oftheir digital infrastructure and data security. For the industry, it is of critical importance that both established, and startup-up lenders keep the trust of the customers by prioritising data security as the key strategic topic on their agenda. If one or another fails, it hits the whole industry. Fintechs should therefore prioritise data security above all, and make sure their systems are resilient againstcyber threats. They should also make sure that their securtech matches up to the latest advances, so that the consumer experience is free from worry, and so more people can benefit without difficulty from the digital revolution in finance.

Advocate for financial inclusion With the advance of mobile banking, more people than are able to participate in the global financial ecosystem, whether they are served by traditional banks or challenger fintech companies. There are still huge untapped markets, particularly in less economically developed markets, which old-school financial institutions are too conservative or too sluggish to want to approach. Fintech challengers have the means, and the willpower to access these potentially lucrative and underserved markets. Digital lenders must take a stand for equality and inclusion, abiding by ethical corporate governance and lending models as they welcome more and more people to the global financial system.

Celebrate your workforce Innovation should never be taken for granted, and it is important that as the new year comes around that challengers are focused on their workforce. Recruiting the best, maintaining a constructive and safe environment where new ideas are rewarded, and a healthy balance of work and play is valued, and always striving for a more diverse workforce should be the top priorities for any fintech. It is only when challengers have this attitude that they can succeed. Valuing diversity of thought and approach allows them to distinguish themselves from

Viktoria Ruubel | Chief Product Officer, IPF Digital traditional banks, drives the innovation which is the lifeblood of any disruptor, and supports the inclusion which should be the aim of those fintechs reaching out to untapped markets.

Keep on being fearless Fintech companies, including consumer lenders have a reputation for being at the forefront of change in the financial industry, and they should endeavor to maintain this attitude in 2019. When faced with new technology like biometric identification for mobile banking, or AI-driven home loans and spending plans, there may be a temptation for digital disruptors to shy away from the next leap forward in tech. Fintechs should resist this temptation. They should seize every new technology with both hands. Either the tech will be a success for the business, and the company will go from strength to strength, or it won’t, in which case valuable lessons will be learned and the company will be strengthened from its experience.


International Finance


Fadhili Homes provides care for Kenya’s seniors The project is a gated estate that supports Kenya’s aged population with better living conditions and customised services.


rbanisation and modernisation in Kenya, like in many other countries have presented new and unique challenges. In the family setting, for instance, a gap has been created with elderly parents lacking someone to help them meet their everyday needs and activities. While physiological needs at this time often require specialised attention, most physical activities need additional caution. People who emigrate to urban centers young mostly tend to settle in their new places, disconnecting any relationship


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John NDUNG’U with rural areas and relatives; This, in turn, brings a challenge to receive care in any form. Still, many conservative Africans consider taking parents to old age homes further complicating the situation. In this context, the recently launched Fadhili Homecare, the first purpose-built assisted-living complex in Kenya within a gated community is a development that promises some relief. Fadhili (In translation: the Kiswahili word for compassion or kindness) encapsulates Fadhili Care model which will essentially provide comprehensive and customised

care all-round to senior citizens aged 60 and above. Fadhili Care is specially designed to ensure comfort, safety, security and well being of its residents. It has been developed by Superior Homes Limited. The project also responds to needs of Kenya’s rising aged population. According to the Kenya Population & Housing Census 2009 (the next census is scheduled for this year, 2019), the population of elderly people was 1.9 million of the then total population of 38.6 (4.9 percent). This is projected to increase tremendously by 2020. The National Policy on


Elderly & Aging Persons (2009) also advocated for recognition, empowerment and facilitation of the elderly to enable them to participate fully in society in order to enjoy their rights, freedom and dignity. “At Superior Homes our continuing research has shown that culture is gradually changing with a fast paced life style leaving many elderly people almost neglected by their children and relatives. Moreover, people who have always lived in urban areas are not always comfortable and welcome in rural areas where rural dwellers often tend to be non-accommodative to them. The increasing elderly population and rising incidence of chronic oldage and lifestyle diseases calls for

specialised care which we shall provide at Fadhili Care,” explained Ian Henderson, Superior Homes MD at Fadhili Care official launch in November 2018. He affirmed that Fadhili shall provide personalised care and termed it as the first ever purpose-built assisted-living facility in Kenya. According to Henderson, Fadhili will provide better living conditions, peace of mind and long-term tranquility for the elderly in a gated community concept with ample security for its residents. The first phase (12 units) of the project is already under construction with two houses ready for display and the rest of the houses due for completion in March 2019. “The remaining 29 units shall be completed in the next two years,”

explained Nicholus Muguthu, Fadhili Care Sales & Marketing Manager. The 41 houses (19 onebedroom and 29 two-bedroom) will surround a communal club house to ensure easy access and a lively ambience for all. “There is ample parking, well-paved walk paths, security lighting, adequate water supply supplemented by a borehole and a secure perimeter wall. Security officers will also be on duty day and night,” he affirmed. Sizes of the well designed and ventilated buildings shall be 73 M2 and 100 M2 for the one and two bedroom houses respectively. Fadhili will be served by full-time nursing care staff available every day of the week to provide any needed care, support and medical attention

International Finance



Fadhili Homecare, the first purposebuilt assistedliving complex in Kenya within a gated community is a development that promises some relief including referring to doctors and specialists. “Each house has wider doors (at least 1.2 metres) in contrast to conventional doors; has no steps or stairs but instead has access ramps which allow for easier walking or movement of people in wheelchairs, and also has larger wardrobes with sliding doors,” Muguthu added. Other amenities include walk-in showers, bathtubs and seat or squat toilets with mobility aids and easily reachable panic buttons for alert in case of any emergency needs. Emergency response systems and mechanisms including an ambulance service will also be provided. “The one and two bedroom bungalow cottages at Fadhili are sited in a 5-acre landscaped piece of space within the Green Park gated estate developed by superior Homes. Superior Homes is in seven clusters in 163 acres of land at Athi Stoney off the Nairobi-Mombasa highway some 50 km from Nairobi CBD,” Muguthu outlined. He expounded


MARCH 2019

that the Green Park gated estate was launched in 2006 and the first occupation was realised in 2008. Currently, the estate is 75% complete with 550 different-sized units complete and some already sold. Among its other unique amenities are two schools (a kindergarten and primary school), a hotel, shops and a fully equipped clubhouse (the Sundowner). By 2021, Superior Homes, which is also currently developing the Lake Elementaita Mountain Lodge (in Nakuru County) and the Vipingo Ridge (at the Kenya Coast) will have completed the 700 units that comprise the whole project. The one-bedroom Fadhili bungalow cottages will sell at Sh10 million apiece while the two-bedroom bungalows shall cost Sh12 million each. “We also have monthly rental options with the one-bedroom rent and twobedroom rent being Sh62,000 and Sh76,000 respectively,” Henderson further explained. A monthly service charge for the two categories of bungalow cottages is chargeable. “We shall be responsible for all maintenance works/repairs, landscaping and security including for CCTV camera and at the gates and perimeter walls,” he added. Fadhili Care nurse in-charge Dorcas Bett averred that the assisted-care model has worked in different parts of the world but mainly where care is provided in individual people’s homes. “At Fadhili, the houses are customised and we shall promote a community of the elderly who shall be friendly and supportive of each other,” she promised. According to her specialised care at Fadhili will include counseling among other psycho-social care services and doctors on call. Additional services to be provided on request and at a fee will include housekeeping, home-

delivery for groceries and personal laundry services to complement the weekly laundry service offered by Fadhili. “Our elderly clients shall also get additional home help if need be, physiotherapy sessions and be taken out on different excursions to ensure bonding,” Bett added. According to her the Sundowner Club next to Fadhili offers space for recreation activities or relaxation among Fadhili residents and visitors including next of kin and relatives. Henderson urged people keen to invest in the comfort,

good health, safety and security of their aging relatives or even for themselves to visit Fadhili for further discussions. “The houses can be customised following one-on-one discussions and completion of expression of interest forms. We urge those interested to visit the facility,” he added. Dorcas Mwalenge of the Kenya Ministry of Labour & Social Protection attended the launch. According to her, Kenya Constitution Article 47 outlines the rights to protection for the elderly. “Nowadays, people are living longer and hence the need for specialised care at old age. Yet neglect and abuse of the elderly is a rising challenge,” she said. She affirmed that Guidelines for Housing the Aged & Elderly were launched in April 2018 with a Bill on the same currently in the design process. “Guidelines on care for the aged & elderly are already in place. We highly commend Fadhili Care for taking this initiative forward,” Mwalenge added. She averred that research on the aged & elderly is on-going in the country with Kenya leading in Sub-Saharan Africa (SSA) in this endeavour.


For more information please call 06 5200400 or 080022111 or visit our website www.hbtf.com

Housing Bank for Trade and Finance


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