International Finance - October 2025

EDITOR’S NOTE

Rewriting the rules of care

Like its Gulf peers, Oman is undergoing a pivotal economic transformation. The Sultanate is preparing to introduce the region’s first personal income tax, has reclaimed its investment-grade credit rating, and is witnessing record-breaking real estate transactions. Its ports are also experiencing unprecedented levels of maritime traffic. Together, these developments reflect a broader strategy to strengthen fiscal sustainability and accelerate economic diversification under Oman’s “Vision 2040” blueprint.

At the same time, a troubling trend is taking shape: subscription fatigue. A model once celebrated for delivering predictable, recurring revenue is now revealing its downside, as consumers grow increasingly reluctant to manage an everexpanding list of monthly payments for products and services, particularly as digital offerings multiply across entertainment, lifestyle, and productivity platforms.

Meanwhile, the online gaming platform Roblox—which allows users to create and play games built by themselves or others—has rolled out new safety-focused features for minors. Its updated tiered system introduces “Connections” and “Trusted Connections,” categories designed specifically for people players know personally and can trust, further strengthening user protection as the platform continues expanding its global community of young creators.

The cover story of the October 2025 edition of International Finance features Almamoon Insurance Broker, one of Saudi Arabia’s pioneering companies in the insurance sector. Specialising in comprehensive solutions for businesses and partnering with leading providers, Almamoon delivers tailored and cost-effective coverage options, including property, liability, and employee benefits insurance. As the Kingdom accelerates its transformation toward a diversified socio-economic landscape under “Vision 2030,” Almamoon is poised to play a leading role in reshaping the insurance industry.

OCTOBER 2025

VOLUME 53

ISSUE 25

editor@ifinancemag.com www.internationalfinance.com

INSIDE

REWRITING THE RULES OF CARE

Almamoon Insurance Broker offers tailored insurance and risk management strategies that meet the unique needs of its clients

AVERTING THE IMPENDING GLOBAL DEBT CRISIS

About 60% of low-income countries are now either in debt distress or risks facing it

MINING THE ABYSS: A DANGEROUS GAMBLE?

What makes deep-sea mining alarming is our poor knowledge on the ecological danger

STUBBORN INFLATION WEIGHS ON UK'S ECONOMY

The British economy is beset by stagnant growth, stubborn inflation, and high debt

IS ROBLOX SAFE ENOUGH FOR YOUNG PLAYERS?

Roblox has already established itself as one of the largest video games in the world

IN CONVERSATION

‘TAX EFFICIENCY QUIETLY BUILDS WEALTH’

Wealth management is a dynamic process that continually evolves alongside all key life stages

FEATURES

30 Sri Lanka’s comeback: Sampath Bank leading the way

56 Oman sets stage for economic transformation

76 Sustainability: Profitable for the planet

100 Stability AI rewrites Hollywood’s rulebook

BUSINESS DOSSIER

44 Gulaid Holding reinvents finance with AI

64 Damanat: Transforming homeownership in Saudi Arabia

84 CBFS powers Qatar’s capital market growth

Individual consumers will no longer be able to

Director & Publisher Sunil Bhat

Editorial

Prajwal Wele, Agnivesh Harshan, CL Ramakrishnan, Prabuddha Ghosh

Production Merlin Cruz

Design & Layout Vikas Kapoor

Technical Team

Prashanth V Acharya, Bharath Kumar

Business Analysts

Alice Parker, Indra Kala, Stallone Edward, Jessica Smith, Harry Wilson, Susan Lee, Mark Pinto, Richard Samuel, Merl John

Business Development Managers

Christy John, Alex Carter, Gwen Morgan, Janet George

Business Development Directors Sid Jain, Sarah Jones, Sid Nathan

Head of Operations Ryan Cooper

Accounts Angela Mathews

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# TRENDING

OpenAI’s web browser targets Google

Sam Altman-led OpenAI recently launched its new Atlas web browser, as the ChatGPT creator now wants to become a direct competitor of search engine giant Google. Talking about the product, Altman remarked, “We think AI represents a rare, once-a-decade opportunity to rethink what a browser can be. In the same way that, for the previous way people used the internet, the URL bar and the search box were a great analogue, what we’re starting to see is that the chat experience and the web browser can be a quick analogue." OpenAI further commented, "Atlas is also available in beta for Business, and if enabled by their plan administrator, for Enterprise and Edu users. Experiences for Windows, iOS, and Android are coming soon."

Barclays starts $670M buyback

British banking giant Barclays has announced a surprise share buyback, as the venture upgraded a key profitability target for the year, with confidence in its income and cost-cutting progress outweighing fresh provisions and underperformance in its investment bank. The business has also set aside another 235 million pounds to cover a motor finance mis-selling scandal and said it had taken a 110-million-pound charge on the collapse of American firm Tricolor, one of several bankruptcies that triggered wider concerns about banks' exposure to private credit markets.

SA energy shift gets $13.3B backing

The European Union (EU) will be investing €11.5 billion ($13.3 billion) in South Africa's clean energy and infrastructure projects. While the investment aims to accelerate the country's shift to renewables through new power-generation capacity, grid upgrades, energy storage and green hydrogen, the news comes at a time when Africa's biggest economy is facing slow growth and high unemployment, with US tariffs further complicating things. The EU's investment pledge also mentioned the crucial Coega Green Ammonia Project.

Samsung Galaxy XR features premium glass with 109-degree horizontal and 100-degree vertical FOV, and a 4K Micro-OLED display with 3,552 x 3,840p resolution, 27 million pixels, 6.3 micron pixel pitch, supports 60Hz/72Hz (default) and up to 90Hz refresh rate and plays UHD 8K (7680 x 4320) and 60 frames per second (fps), powered by Qualcomm's Snapdragon XR2+ Gen 2 chipset with Hexagon NPU, the product delivers a clear visual experience to run high-end gen AI applications.

Source: Sinopec

ECONOMY

Bahrain, Saudi sign crucial trade deal

Bahrain and Saudi Arabia have agreed on facilitating the origin certification procedures for the industrial exports under 'Phase Two' of the 'In-Country Value Certificate' (Takamul) initiative, a project of the Saudi-Bahraini Coordination Council. Abdullah bin Adel Fakhro, Minister of Industry and Commerce, and Naif bin Bandar Al Sudairi, Ambassador of Saudi Arabia to Bahrain, attended the signing of the agreement, which was signed by Eman

Ahmed Al Doseri, Undersecretary of the Ministry of Industry and Commerce, representing Bahrain, and Al Bader bin Adel Fouda, Acting Undersecretary of Development and Supervisor of the Empowerment Agency at the Saudi Ministry of Industry and Mineral Resources. The agreement will enhance the smooth flow of national goods between the two Kingdoms as a strategic step towards advanced Gulf economic and industrial integration.

Ones to Watch

LUBNA OLAYAN

DEPUTY CHAIRPERSON, OLAYAN FINANCING COMPANY

The veteran entrepreneur, who chairs the Olayan Group, was named co-chair of the US-Saudi Business Council representing Saudi Arabia, partnering with Jane Fraser of Citigroup as the US counterpart

ADRIAN CHENG

FORMER EXECUTIVE DIRECTOR OF CHOW TAI FOOK ENTERPRISES

He recently resigned from his board role at New World Development as non-executive director and vice-chairman and has launched a new firm, Almad Group, focusing on digital assets

MANUEL PANGILINAN

PRESIDENT OF PLDT

The Filipino businessman projected AI as a transformative force, urging his country’s firms to embrace it, while his company MPIC reported strong earnings and remains active in infra front

Under the deal, Archer will deploy its Midnight eVTOL for multiple applications and use cases, starting with government applications

The data from the SMMT shows that the five-week shutdown of JLR factories drove car production down by over a quarter in September

Archer inks Korean Air eVTOL deal IN THE NEWS

California-based eVTOL (electric vertical take-off and landing) player Archer Aviation announced a partnership with Korean Air to commercialise its electric air taxis in South Korea, with the option to buy up to 100 aircraft. The deal reflects a growing competition among eVTOL developers to secure regulatory approvals, airline partners, and to transition from prototypes to paid service.

While the sector faces certification challenges, infrastructure build-out, and uncertain profitability timelines, startups and aerospace incumbents alike are pitching short urban hops and airport transfers as faster, lower-emission alternatives to congested ground transport.

Under the deal, Archer will deploy its Midnight eVTOL for "multiple applications and use cases," starting with government applications. The aircraft is designed for 10- to 20-minute flights, and in September 2025, it completed a series of performance test flights, including two of the highest-altitude flights to date.

However, the venture, backed by Boeing and Stellantis, is at a tight financial spot, as it reported

an adjusted EBITDA loss of $110 million to $130 million in Q3 2025, wider than 2024's $93 million loss. Archer is currently producing six aircraft at two US plants.

Archer has over 1,000 patent assets, with an expanded portfolio from a bid won recently to acquire about 300 advanced air mobility patent assets from rival Lilium for 18 million euros ($21 million).

As per the analysts, this deal can be a game-changer for the California-based company, as Lilium's portfolio spans high voltage systems, battery management, advanced aircraft design, flight controls, electric engines, propellers, and ducted fan technologies, which could unlock future advances in light sport aircraft and regional air mobility.

With commercial launches still years away, eVTOL industry experts say further consolidation may be inevitable as firms race to secure regulatory approvals, bolster supplier networks and bring aircraft to market, driven by demand for faster, cleaner urban transport. Also, American air taxi firms are expected to benefit from the Donald Trump administration's push to speed deployment through executive orders and a pilot programme announced recently.

JLR hack costs UK economy $2.5B

A hack of Tata Motors-owned Jaguar Land Rover cost the British economy an estimated 1.9 billion pounds ($2.55 billion) and impacted more than 5,000 organisations, according to a report published by the Cyber Monitoring Centre, an independent, not-for-profit organisation made up of industry specialists, including the former head of Britain's National Cyber Security Centre.

The report stated that losses could be higher if there were unexpected delays in restoring production at the vehicle manufacturer to pre-hack levels in August. It added that the incident appears to be the most economically damaging cyber event to hit the UK, with most of the financial impact stemming from the loss of manufacturing output at JLR and its suppliers.

On its website, the company said it will report its financial results in November. The luxury carmaker resumed manufacturing in early October after a nearly six-week shutdown caused by the hack, and its three British factories have the capacity to produce around 1,000 cars per day.

The hack was one of several notable incidents to affect British companies in 2025, including re -

tailer Marks & Spencer, which lost around 300 million pounds (about $400 million) in April when a breach took its online services down for two months.

JLR, which analysts estimated was losing around 50 million pounds per week from the shutdown, was given a 1.5-billion-pound loan guarantee by the British government in September to help it assist suppliers.

The CMC, which is funded by the insurance industry and categorises the financial impact of major cybersecurity incidents affecting British businesses, ranked the JLR hack as a Category 3 systemic event, out of a scale of five.

"The CMC's estimate reflects the substantial disruption to JLR's manufacturing, to its multi-tier manufacturing supply chain, and to downstream organisations including dealerships," the report said.

The data from the Society of Motor Manufacturers and Traders (SMMT) shows that the five-week shutdown of JLR factories drove car production down by more than a quarter in September.

The majority of vehicles made in the UK are shipped overseas, and in another headache, exports in September also slumped by 24.5%.

Materials was the most active sector throughout 2025 at $32.6 billion, accounting for 57% of MENA target M&A by value

The second tranche is a 12-year conventional bond, with IPTs in the 7% area and a maturity of October 2037

Goldman leads MENA M&A

In the MENA region, American financial services giant Goldman Sachs has maintained its status as the top dealmaker so far in 2025. As per the LSEG Deals Intelligence M&A league table, the venture has pulled off 24 deals valued at $104 billion. Driving this growth were the region's national champions, which dominated the top 10 deals with "significant growth objectives" and government-backed "approved strategies," according to Jassim AlSane, Co-head of Investment Banking in the Middle East & North Africa, Goldman Sachs. Materials was the most active sector throughout 2025 at $32.6 billion, accounting for 57% of MENA target M&A by value.

Riyad Capital, SAR launch fund

Riyad Capital, one of the Kingdom's largest asset managers and a leader in real estate investment, will partner with the Saudi Railway Company (SAR) to create a real estate fund to develop a mixeduse project based on the global concept of Transit Oriented Development (TOD), a concept that aims to create urban communities around public transport stations. The mixed-use project will be developed in Al Rusifah district near the Haramain High-Speed Railway Station in Makkah at an investment of up to SAR6 billion ($1.6 billion). This collaboration aligns with Riyad Capital's support for major development projects in the holy cities.

Bahrain joins GCC debt rush

Bahrain has joined the Gulf Cooperation Council (GCC) states, tapping international debt markets, with a two-part bond sale, adding to a hectic few weeks during which Kuwait, Abu Dhabi and Saudi Arabia have raised sovereign debt. The first part is a dollar-denominated, senior unsecured Reg S sukuk with an eight-year tenor, issued by the CBB International Sukuk Programme Company, with initial price thoughts in the 6.25% area and a maturity of February 2034. The second tranche is a 12-year conventional bond, issued through Bahrain's Ministry of Finance and National Economy, with IPTs in the 7% area and a maturity of October 2037. 2023

DP World launches shipping route

DP World has announced the opening of a new strategic route between Jebel Ali Port in the UAE and Berbera Port in Somaliland. This service strengthens DP World's global network and reinforces Berbera's position as a key maritime gateway and logistics hub in East Africa. The new route provides faster maritime access into Somaliland, with scheduled stops at Aden and Djibouti to provide additional connectivity to key port cities and support greater access to markets across the Horn of Africa. From Berbera, cargo can connect onwards to inland destinations such as Ethiopia, providing an alternative to traditional logistics chains that rely on Djibouti Port.

BANKING AND FINANCE

By 2024, the total value of publicly offered and listed bonds in Macao reached about $100 billion

Bonds power Macao’s growth story

IF CORESPONDENT

Macao’s skyline is evolving, with modern financial institutions (like the ICBC building in the centre) now prominent. The city’s bond market is becoming a cornerstone of its economic expansion.

Historically known for its casinos, Macao is accelerating economic diversification by turning to modern finance, particularly its fast-growing bond market, as a strategic pillar of growth. Over the past few years, isolated financial initiatives have coalesced into a robust bond market that connects Macao with international capital flows.

Today, the financial sector, led by banking and insurance, alongside bonds, funds, and other services, has grown into Macao’s second-largest industry

Strategic expansion

Macao’s government prioritised “modern finance” in 2020 to address an unbalanced industrial structure overly reliant on gaming. By 2022, it formalised a diversification blueprint known as the “one plus four” strategy.

Under this plan, the “one” refers to Macao’s traditional integrated tourism and leisure industry, while the “four” denotes four new pillars: healthcare, modern financial services, high technology, and a cluster of industries spanning conventions, exhibitions, trade, culture, and sports. This policy shift signalled that finance, and specifically the

bond market, would play a central role in Macao’s next chapter.

Today, the financial sector, led by banking and insurance, alongside bonds, funds, and other services, has grown into Macao’s second-largest industry. The city’s bond market journey began only in 2018, yet progress has been swift. By 2021, Macao had established a Central Securities Depository (CSD) system to facilitate bond trading and custody.

In recent years, the government has improved issuance mechanisms, expanded financial infrastructure, updated regulations, and strengthened collaboration with Mainland China and Hong Kong, all to support the bond market’s growth.

This groundwork has attracted major bond issuers. The Ministry of Finance of China, the Guangdong provincial government, and leading banks and corporations have floated bonds in Macao.

Notably, bonds in Macao are issued in multiple currencies: Chinese yuan, US dollars, Hong Kong dollars, and the local Macanese pataca. By 2024, the total value of publicly offered and listed bonds in Macao reached about $100 billion, a remarkable feat for a market that barely existed a few years ago.

The bond boom

As a leading commercial bank in the territory and the chair of the Securities and Funds Industry Association of Macao, ICBC (Macau) plays multiple roles in bond deals.

It serves as an issuer, an institutional investor, an underwriter, a clearing and settlement bank, an agent bank, and a trustee administrator, covering the entire bond market value chain. The bank also provides one-stop services for bonds from issuance to trading.

Over the past few years, ICBC (Macau) has spearheaded many of Macao’s key bond transactions. It has issued over $1 billion in bonds annually for four consecutive years, making it the most active and diversified bond issuer among local players. The bank has also pioneered various innovative offshore bond products, often with colourful nicknames.

These include “Kung Fu bonds,” “Dim Sum bonds,” “Lotus bonds,” “Pearl bonds,” and “Yulan bonds,” among others. Each term refers to a specific category of offshore bond tailored to different investor markets or currencies. By creating this multi-market, multi-product portfolio, ICBC (Macau) has helped put Macao on the map for global bond investors. Leveraging the advantage of its full banking license, the bank actively invests across various bond markets, further linking Macao’s capital market with the world.

As one of Macao’s leading banks, ICBC (Macau) has positioned itself at the heart of the bond market’s development, in line with the government’s push to diversify the city’s casino-heavy economy through modern finance.

The bank’s deep involvement is helping transform Macao from a one-industry town into a budding financial hub, with the total value of listed bonds in the city surging to around $100 billion by 2024.

ICBC (Macau)’s Macao headquartered building serves the entire bond market value chain, from issuance and underwriting to clearing and investment. As a major local institution, ICBC (Macau) is the chair of Macao’s Securities and Funds Industry Association, and it plays multiple roles across the bond market value chain.

The bank wears many hats. It acts as a bond issuer, an institutional investor buying bonds, an underwriter helping other entities issue debt, performs technical functions like clearing and settlement, and serves as an agency bank and trustee administrator for bond offerings.

This all-in-one participation has made ICBC (Macau) one of the bond market’s most pivotal players. Over the past few years, the bank has spearheaded

Macao’s bond market evolution

many of Macao’s landmark bond deals and consistently led in issuance volume.

Since 2020, ICBC (Macau) has issued bonds in the local market for four consecutive years, raising more than MOP 8 billion (around $1 billion). That track record makes it the most active and diversified bond issuer among Macao’s banks.

In January 2025, for example, ICBC (Macau) launched a $250 million three-year bond as part of its global medium-term note programme. The notable deal was listed on Macao’s exchange (MOX) and was among the first to benefit from a new Hong Kong–Macao bond clearing link that opened the market to a wider pool of investors. ICBC (Macau) is steadily boosting the market’s scale and liquidity by issuing sizable bonds and attracting outside investors.

Beyond volume, ICBC (Macau) has also been a leader in innovation within the bond sector. It has pioneered a range of niche bond products with catchy nicknames that underscore Macao’s international connectivity. These include offshore renminbi bonds known as “Dim Sum bonds” (a term for RMB-denominated bonds issued outside Mainland China) and Macao’s very own “Lotus bonds,” the local label for RMB bonds issued in the territory.

The bank’s underwriting portfolio spans multiple markets and currencies, from “Kung Fu bonds” (international bonds by Chinese issuers) to “Pearl” and “Yulan” bonds, indicating a breadth of expertise in both Chinese and global bond markets. By bringing such

Macao’s gross domestic product from 2016 to 2023

(In Billion US Dollars) Source: worldometers.info

products to Macao, ICBC (Macau) has expanded the city’s bond offerings beyond vanilla debt, giving issuers and investors more options and tying Macao’s market into regional trends.

All of this reinforces Macao’s ambitions to become a modern financial centre. ICBC (Macau)’s

comprehensive involvement in the bond ecosystem has been instrumental in turning the government’s vision of economic diversification into reality. Each role the bank plays, whether helping a local firm issue its first bond, investing in a public infrastructure bond, or streamlining cross-border settlement, builds confidence in Macao’s financial infrastructure.

The bank’s support for innovative bonds, like green and “Belt and Road” themed issues, also signals that Macao can be a platform for financing projects far beyond its shores. In short, ICBC (Macau) is not only driving deals, it is helping to anchor Macao as a credible finance hub in the Greater Bay Area and beyond.

Unique advantages fuelling growth

Geographically, Macao serves as a strategic gateway between mainland China, Portuguese-speaking countries, and markets involved in China’s Belt and Road Initiative. The city enjoys free-port status and an independent customs regime, while being an integral part of the

Guangdong-Hong Kong-Macao Greater Bay Area (GBA). In the context of China’s continued opening-up, this position gives Macao a prominent edge as a regional financial hub connecting East and West.

Equally important is Macao’s business-friendly financial environment. The city boasts abundant fiscal reserves and private wealth, and adheres to internationally recognised standards of confidentiality in finance. Tax rates are competitive, lower than those in many global financial centres, which attracts businesses and investors.

Macao’s financial regulators maintain an open, pragmatic stance that supports innovation while ensuring stability. Thanks to these factors, the banking sector in Macao is highly internationalised; by the end of 2024, international assets made up 83.4% of total banking assets in the territory. In other words, a large share of Macao’s banking business connects to overseas capital, reflecting the city’s global reach.

Supportive policy from the broader region also plays a key role. Macao is one of four core cities in the Greater Bay Area, a dynamic eco-

nomic zone in southern China with a combined GDP of around $1.8 trillion. Being part of this region means Macao can tap into a vast market and diverse financial service needs nearby, which helps propel the growth of its nascent finance sector.

Furthermore, Macao’s deepening integration with its mainland neighbour, Hengqin (an island in Guangdong province), provides extra room and resources for development. A special Guangdong-Macao cooperation zone in Hengqin allows Macao’s financial industry to leverage Hengqin’s land, infrastructure, and client base while using Macao’s own global connections. As of the end of 2024, fund companies in this Hengqin cooperation zone managed around $600 billion in assets, highlighting the scale of opportunities being unlocked by regional integration.

Having successfully established a bond market “from zero to existence,” Macao is now looking to go “from existence to excellence,” as officials put it. The roadmap involves further opening and innovating to enhance the market’s competitiveness and cement Macao’s status as a modern finance hub. Key initiatives shaping Macao’s bond market future include making the market more liquid.

This means developing a more active secondary market for bonds and providing supporting services like better pricing (valuation), trading platforms, and funding options for investors. Embracing financial technology is part of this effort, as is introducing new investment products to keep the market dynamic. Strengthening these areas will enable investors to enter and exit po-

sitions more freely, which attracts greater participation.

Macao aims to broaden its international reach by deepening ties with mainland China and Portuguese-speaking countries. Given the city's cultural and historical links, it's uniquely positioned to bridge these markets. Officials are promoting cross-border collaboration, resource sharing, and complementary partnerships with institutions in these regions.

By integrating Macao’s strengths (such as its open market and bilingual heritage) with the vast resources of its partners, the goal is to create synergies that increase cross-border investment and financing. This would boost the scale and appeal of Macao’s bond market at home and abroad.

Macao is aligning its financial growth with global sustainability trends and fintech developments. The focus is on attracting green and sustainable bond issuers and investors, aligning with worldwide environmental finance initiatives.

Macao’s rapid progress in developing its bond market shows real determination to move beyond its reliance on casinos. The city has built a solid base for modern finance in just a few years, which is impressive. Macao could become a true financial hub if it continues to innovate, attract global investors, and strengthen ties with neighbouring regions. Its focus on sustainability and technology suggests a smart, forward-looking approach to longterm economic growth.

editor@ifinancemag.com

According to the IMF, about 60% of low-income countries are now either in debt distress or at high risk of debt distress

Averting the global debt crisis

IF CORRESPONDENT

Despite a succession of major shocks since 2020, ranging from a global pandemic to war and supply disruptions, the world economy has, so far, proved more resilient than many feared. But this resilience has come at the cost of an unprecedented buildup in debt, which has left the margin for error perilously thin. Total global debt has surged to record levels, standing roughly 25% higher than it was on the eve of the COVID-19 pandemic.

In absolute terms, global debt exceeded $324 trillion in early 2025, up from around $255 trillion in 2019. This massive debt overhang threatens to undercut every economy’s ability to withstand the latest headwinds, including a return to protectionism in the form of higher trade tariffs. Without urgent course correction, the world could be headed toward a widespread debt crisis with lasting economic and social repercussions.

Global debt overhang and its risks

World Bank Chief Economist Indermit Gill notes that debt is a powerful tool for growth and stability, yet it is also “a form of deferred taxation."

By borrowing instead of immediately raising taxes, governments can finance long-term investments that benefit future generations or support incomes during a downturn when austerity would be counterproductive.

This strategy makes sense as long as economic growth outpaces the cost of borrowing. Eventually, however, the piper must be paid. If a country’s income does not grow faster than its interest payments, taxes, or inflation, it will inevitably have to increase to service the debt.

In other words, today’s debt is simply tomorrow’s taxes by another name. Persistently high debt, without commensurate growth, thus becomes a drag on development, a barrier to economic progress that grows taller with each passing year of heavy borrowing.

That barrier has seldom been higher than it is now. Over the past 15 years, developing countries have become hooked on debt, accumulating liabilities at a record pace of roughly six percentage points of GDP per year. This debt binge was fuelled by years of ultra-low global interest rates and often justified by optimistic growth projections.

History shows that such rapid debt build-ups often end in tears. Indeed, research indicates that about half of large debt booms in emerging and developing economies have been followed by financial crises. In effect, the odds that the recent developing-country debt surge will trigger a crisis somewhere are roughly 50-50.

With global debt levels at all-time highs, the world is precariously balanced on what Gill calls a “debt time bomb.” Each additional shock, whether economic, geopolitical, or climatic, increases the chances of a detonation.

In May 2025, the International Mon-

etary Fund (IMF) stated that the global public debt could increase to 100% of global GDP by the end of the decade if current trends continue.

According to the IMF report, "The rising ratio of public debt to GDP reflects renewed economic pressures as well as the consequences of pandemic-related fiscal support."

"This trend raises fresh concerns about long-term fiscal sustainability as many countries face rising budget challenges," the global monetary body remarked.

The report indicated that approximately one-third of countries, representing 80% of global GDP, now have public debt levels exceeding those recorded prior to the COVID-19 pandemic and are increasing at a faster rate. More than two-thirds of the 175 economies examined in the IMF's study are carrying heavier public debt burdens compared to the period before the pandemic began in 2020.

In March 2025, the United Nations Trade and Development (UNCTAD) noted soaring interest payments were squeezing budgets, forcing governments to choose between repaying creditors and funding essential services.

"Developing countries are sinking deeper into a debt-driven development crisis. Their external debt, money owed to foreign creditors, has quadrupled in two decades to a record $11.4 trillion in 2023, equivalent to 99% of their export earnings. A mix of factors has fuelled this surge, including increased borrowing for development projects, volatile commodity prices, and widening public deficits. The COVID-19 pandemic worsened the situation, as countries borrowed heavily to offset the economic fallout and fund public health measures," UNCTAD added.

While debt can be a vital tool for economic growth and development, it becomes a problem when repayment costs outpace a country’s capacity to pay. That is now the case for two-thirds of developing countries. Debt distress now looms over more than half of the 68 low-income countries eligible for the IMF’s Poverty Reduction and Growth Trust, more than double the number in 2015.

Rising interest rates

Exacerbating the danger, the latest debt surge has been accompanied by the fastest increase in global interest rates in four decades. After a long era of cheap money, central banks worldwide applied the monetary brakes in 2022 and 2023 to combat inflation.

The result has been a sharp spike in borrowing costs, as interest rates

Top 10 countries by debt-to-GDP ratio as of 2025

jumped multiple percentage points within months, the steepest rise since the early 1980s. For about half of all developing economies, debt servicing costs have essentially doubled in a short span. On average, the interest payments on government debt in developing countries rose from under 9% of government revenues in 2007 to about 20% of revenues by 2024.

Such a surge in debt service burdens would be daunting even in good times. Amid today’s challenges, it verges on the catastrophic. By 2024, many governments were spending one-fifth of their budgets just to pay interest, resources no longer available for public investments or essential services.

Although the world has so far averted a systemic financial meltdown of the kind seen in 2008 and 2009, too

many developing countries are now caught in a “doom loop” of debt and underinvestment. To service their loans, governments are cutting back on the very spending that would boost future growth, slashing funding for education, healthcare, and infrastructure.

This self-defeating cycle undermines human development and erodes the productive capacity needed to escape from debt. Alarmingly, this is not a problem confined to a few outliers; it has become a widespread phenomenon.

Almost half of humanity, about 3.3 billion people, now live in countries that spend more on interest payments than on health or education. In low-income countries, especially, scarce fiscal resources that should be used to build schools, clinics, or roads are instead absorbed by creditors. It is a vicious circle:

high debt forces spending cuts, which strangulate growth, which in turn makes the debt even harder to bear.

Debt threat to future workforce

Nowhere is this doom loop more troubling than in the world’s poorest nations. Some 78 low-income countries eligible to borrow from the World Bank’s International Development Association (IDA) are teetering on the brink of a debt disaster. These countries are home to roughly one-quarter of the world’s population, and include a large share of the 1.2 billion young people poised to enter the global workforce in the next 10 to 15 years.

The future of the global labour market, and of these nations’ development, depends on whether this youth bulge can be educated, healthy, and productively

employed. Yet high debt threatens to derail that potential. Saddled with onerous debt service, many of these countries cannot invest adequately in their burgeoning young populations.

The result could be a lost generation, where millions of youths are deprived of quality schooling, healthcare, and jobs, sowing the seeds for frustration and instability down the line.

Policymakers, unfortunately, have so far responded with complacency or denial. In what Gill describes as “another triumph of hope over experience,” many governments are effectively gambling that a favourable global environment will somehow rescue them from the debt trap. They bank on global growth suddenly accelerating and interest rates falling just enough to defuse the debt bomb. But counting on a lucky break is a perilous strategy.

In reality, most of these countries are already in deep trouble by any objective measure. According to the IMF, about 60% of low-income countries are now either in debt distress or at high risk of debt distress.

Several have already defaulted or are seeking restructuring of their debts in the wake of the pandemic and other shocks. The world cannot afford another decade of drift and denial on this issue, as the costs in foregone development and human suffering would be staggering.

Low growth, high borrowing costs

If anything, the broader global outlook is making debt burdens harder to manage. Escalating geopolitical tensions and current trade wars, marked by increased tariffs and protectionist measures, have further darkened the economic outlook. Business confidence has been undermined by record levels of policy uncer-

The World Bank projects a significant growth slowdown in 2025 compared to prior estimates. Slower growth directly translates into lower revenues for governments and fewer job opportunities, making it even harder for heavily indebted countries to grow their way out of debt

tainty in international trade.

At the start of 2025, private economists expected about 2.6% global GDP growth for the year, but as new data and conflicts emerged, the consensus forecast was downgraded to roughly 2.2%. That is nearly one-third below the average growth rate of the 2010s.

The World Bank likewise projects a significant growth slowdown in 2025 compared to prior estimates. Slower growth directly translates into lower revenues for governments and fewer job opportunities, making it even harder for heavily indebted countries to grow their way out of debt.

At the same time, borrowing costs are expected to remain far higher than they were in the last decade. In advanced

economies, central banks have indicated that policy interest rates will average around 3.4% in 2025 and 2026, a level more than five times the ultra-low average that prevailed from 2010 to 2019.

In the United States, for example, the Federal Reserve raised its benchmark rate by over five percentage points in 14 months, the most aggressive tightening in over 40 years. Such moves, echoed by other major central banks, have ended the era of near-zero rates.

For developing economies, the consequences are painful, as higher global rates push up the cost of new financing and often strengthen the US dollar, making dollar-denominated debts harder to repay. In an era of scarce public resources, boosting growth and

development will require mobilising private investment, yet foreign capital is unlikely to flow into countries perceived as debt-crippled and low-growth.

Prioritising debt reduction

Given these realities, reducing debt levels is an urgent priority, especially for developing economies with chronically high debt-to-GDP ratios. This must start with responsible national policies, as governments should rein in excessive borrowing and improve their fiscal balances where possible to stabilise debt dynamics.

Some may need to make painful but necessary adjustments to curb non-essential spending and boost domestic revenue. However, the challenge is too large for individual countries to solve alone, especially when many are already insolvent or nearly so.

What is needed is a systemic solution. The global financial community must come together to upgrade the apparatus for assessing debt sustainability and handling debt distress. The current international system for sovereign debt restructuring is widely seen as inadequate, being too slow, too fragmented, and too biased toward kicking the can down the road.

All too often, official lenders and institutions opt to extend new “bridge” loans to tide countries over, when in fact many low-income countries require outright debt write-offs to restore solvency. Procrastination through serial lending ultimately serves neither debtor nor creditor if a country’s debt is unsustainable.

Recent trends underscore the scale of the problem. The number of countries facing high debt levels has jumped dramatically, from 22 countries in 2011 to 59 countries in 2022. As of last count, 52 developing countries, nearly 40% of the

developing world, are in serious debt trouble, meaning they either are already in default or face severe financial stress.

Yet progress on mechanisms such as the G20 Common Framework for debt treatment has been disappointingly slow, hampered by coordination problems among traditional creditors, newer lenders, and private bondholders.

To prevent a lost decade for development, the world needs a more streamlined and swifter process for restructuring unsustainable debts. This could involve tougher assessments to distinguish liquidity problems from true insolvency, and bolder action to write down debts that cannot reasonably be repaid without strangling a country’s future.

Returning to prudent debt levels

As the saying goes, when you find yourself in a hole, the first step is to stop digging. The world’s borrowing binge must come to an end. The era of extraordinarily low interest rates that once tempted many countries to live beyond their means is over.

Over the last five years, a series of unprecedented crises, both natural and man-made, made heavy borrowing unavoidable in some cases, as governments acted to cushion their people from harm. Now, however, a return to prudence is essential. Policymakers should re-embrace clear fiscal limits and revert to earlier norms of what constitutes excessive sovereign debt.

One sensible guideline is what Gill calls the “40-60 maximum,” roughly 40% of GDP as an upper debt limit for low-income countries, and 60% of GDP for high-income countries. Middle-income economies would fall somewhere in between those benchmarks.

While these ratios are not necessar-

ily strict thresholds, they hark back tolong-standing debt targets, for example, the 60% debt-to-GDP limit in the European Union’s fiscal rules, which were associated with greater stability. Adhering to such limits would give countries more fiscal space to handle shocks and invest in development, instead of constantly teetering on the edge of default.

The looming global debt disaster is not inevitable. It is a man-made crisis, and it can be solved with decisive action. Reining in debt and reigniting growth are difficult tasks, but the alternative is far worse. Without corrective measures, persistently high debt will continue to stall economic progress and heighten the risk of financial crises.

By contrast, a combination of debt relief, sound fiscal management, and growth-enhancing reforms can gradually defuse the debt bomb. The world has arrived at a critical juncture. Having deferred the costs of debt for years, governments and international institutions must now confront them.

The next generation’s prosperity depends on choices made today, on the willingness to restore fiscal discipline, revamp the global debt architecture, and unleash the productive potential of open markets and private enterprise.

The window to act is narrowing, but with clarity of purpose and collective resolve, a global debt disaster can be averted. The lesson of recent years is clear. We can no longer afford another decade of denial and delay on sovereign debt. The time to pay the piper, and to chart a sustainable path forward, is now.

editor@ifinancemag.com

Almamoon Insurance Broker

Rewriting the rules of care

Almamoon Insurance Broker offers tailored insurance and risk management strategies that meet the unique needs of its clients across various industries

IF CORRESPONDENT

Saudi Arabia’s healthcare and insurance industries are in the middle of their most transformative chapter in decades. The national push towards fulfilling the ambitious diversification strategy "Vision 2030" is reshaping how people receive care, how employers support employee health, and how technology integrates into every step. In this evolving landscape, the insurance broker's role is being redefined. No longer just a middleman, today’s broker is also expected to be a strategic partner who understands regulation, manages complex benefits, leverages technology, and delivers a human experience.

The Kingdom’s insurance sector is poised for rapid expansion, with health coverage and regulatory reforms driving record growth across the market. The health insurance market is projected to nearly double by 2030,

with premiums expected to rise from SAR 42 billion in 2024 to SAR 83 billion, according to the Saudi Insurance Sector Review 2024 from Bupa Arabia for Cooperative Insurance.

The surge is driven by diversification initiatives, regulatory reforms, digital transformation, and expanding healthcare infrastructure. Health insurance accounts for 55% of the market, and mandatory coverage is being extended to new groups, including domestic workers and gig economy employees, potentially adding SAR 9.4 billion in GWP (Gross Written Premiums).

Tourism is also expected to boost premiums by SAR 4.5 billion as Saudi Arabia targets 150 million visitors annually by 2030.

FEATURE

The sector has tripled over the past decade, growing from SAR 21.3 billion in 2012. Post-pandemic, insurers adopted digital platforms such as the InsurTech Sandbox, Nafis platform, and the “Virtual Hospital,” helping the sector maintain growth at a 22% compound annual growth rate (CAGR). The establishment of the Insurance Authority (IA) in the Kingdom has marked another chapter of fundamental development, aligning with "Vision 2030" and the "Financial Sector Development Programme." This regulatory overhaul also aims to create a robust, stable, and dynamic insurance sector, fostering clearer regulations, enhanced supervision, and increased opportunities for innovation and expansion. Considering this context, Almamoon Insurance Broker has established itself as a market leader.

Since receiving its operating license in 2008, Almamoon Insurance Broker has established itself as one of the pioneering Saudi companies in the insurance sector, specialising in providing comprehensive solutions for businesses. Partnering with leading insurance providers, Almamoon offers various coverage options, including property, liability, and employee benefits insurance. With a focus on understanding the unique needs of each business, Almamoon ensures that companies receive customised, cost-effective insurance solutions to protect their assets and operations. Recently, the company was named "Most Innovative Health Insurance Broker – Saudi Arabia 2025" by International Finance, further cementing its transformation from a transactional service provider into a value-driven health partner.

In addition to winning the International Finance Award, Almamoon marked another significant milestone in 2024 by obtaining an electronic insurance brokerage license. The company also received Sharia Certification from Sharia Review House LLC, affirming its strict compliance with Islamic Sharia principles in all operations. Further underscoring its commitment to excellence, Almamoon earned both ISO 9001 and ISO 10002 certifications, reflecting its dedication to quality management and outstanding customer service.

In an exclusive interview with International Finance, Almamoon Insurance Broker CEO Mamdouh Tantawi said, "Heath Lambert was our joint venture partner operating in Saudi Arabia in 2001. After Almamoon's management acquired its license in Saudi Arabia, we

established our brokerage, Almamoon Broker, in 2005, further strengthening our commitment to delivering reliable insurance services tailored to the local market."

Building trust before technology

Almamoon leadership understood one truth early: innovation without trust is fragile. In an industry where lives and livelihoods are at stake, credibility is the currency that buys permission to innovate. Based on that reality, Almamoon made the task of delivering excellence in insurance brokerage its main mission.

"To provide exceptional insurance brokerage services by combining our expertise, integrity, and dedication, we are committed to achieving the best outcomes for our clients, ensuring their financial well-being and peace of mind in every transaction. We aspire to be the most trusted partner for our clients, guiding them through the complexities of the insurance landscape with innovative solutions. Our goal is to build a legacy of trust and empowerment, ensuring our clients’ financial security and success for generations," Mamdouh Tantawi noted.

Before building apps or integrating APIs, the company invested heavily in people, governance, and compliance. Every operational layer has now been aligned with national regulations and Sharia principles. Data is hosted securely within the Kingdom, and transparent audit trails ensure accountability for every action. The company’s ISO 9001 certification signals a commitment to quality management, while ISO 10002 reflects a structured approach to handling feedback and resolving customer concerns. This strong compliance foundation has safeguarded clients and empowered Almamoon to innovate without compromising ethics or legal standards.

"At Almamoon Broker, our mission is simple yet profound: to empower you to achieve your financial goals and aspirations. We understand that navigating the complexities of the financial markets can be daunting, which is why we are committed to providing our clients with the guidance, expertise, and support they need to make in-

"We are committed to providing our clients with the guidance, expertise, and support they need to make informed decisions and seize opportunities"

formed decisions and seize opportunities. Our success is measured not only by the returns on their investments, but also by the strength of the relationships we build. Client satisfaction and success are our top priorities, and we are dedicated to exceeding expectations at every turn," the CEO added.

Almamoon provides tailored insurance and risk management strategies that meet the unique needs of its clients across various industries. With extensive local and international experience, the insurance broker combines global expertise with a deep understanding of Saudi market dynamics.

"Our experienced team provides proactive, consultative advice, leveraging deep market knowledge to deliver the best possible outcomes for each client’s business. The team manages every aspect of the client's insurance needs—from placement to claims management—ensuring efficient, effective, and timely solutions. We prioritise

BANKING AND FINANCE

FEATURE ALMAMOON SAUDI INSURANCE

each client’s unique requirements, offering personalised services that align with their business objectives and risk profile. Our strong relationships with top-rated insurance carriers enable the firm to secure competitive pricing and superior coverage for the clients," Mamdouh Tantawi asserted.

Technology designed for humans

After securing its compliance foundation, Almamoon shifted its focus to technology, ensuring that every innovation served a defined purpose and resulted in a measurable outcome. Every digital solution has been built to solve real client challenges, not just to look impressive in a product brochure.

Almamoon's proprietary digital platform now brings together services that once required multiple

calls, emails, and paper forms. Real-time policy viewing, instant account statements, and an integrated ticketing system for service requests ensure seamless communication. Secure API integrations connect directly to leading insurers, reducing turnaround times and errors. Meanwhile, Microsoft Power BI dashboards transform raw claims data into visual insights, enabling HR and finance teams to make informed, data-driven decisions. In practice, an HR manager can log in, check every employee’s claim status, analyse cost trends, and even request policy adjustments, all within minutes, without the back-and-forth traditionally associated with brokers.

Saudi Arabia’s economic diversification has resulted in the most diverse workforce the King-

"Large enterprises benefit from integrated wellness and chronic disease management programmes, SMEs get affordable plans with meaningful benefits, financial institutions receive compliance-driven coverage, and government or semigovernment clients are offered fully Sharia-compliant policies"

dom has ever seen. Employers range from multinational corporations and semi-government bodies to fast-growing SMEs and family-owned businesses. Almamoon recognised that a onesize-fits-all approach fails in such a varied environment. Instead, it developed the expertise to create customised health insurance solutions tailored to each segment.

"Large enterprises benefit from integrated wellness and chronic disease management programmes, SMEs get affordable plans with meaningful benefits, financial institutions receive compliance-driven coverage, and government or semi-government clients are offered fully Sharia-compliant policies. These solutions are not theoretical. They are built

after careful analysis of workforce demographics, claims history, and utilisation patterns, ensuring that coverage is relevant, cost-effective, and sustainable," he added.

Putting people at the centre

While many brokers focus on digital transformation, Almamoon emphasises human transformation, improving the way people experience insurance. Its multi-channel service model reflects modern communication habits: mobile apps for tech-savvy users, WhatsApp for quick interactions, and a dedicated health desk for those who prefer human contact. The company has also redesigned processes like outpatient reimbursements for speed and clarity. Policyholders now receive reimbursements faster,

with fewer requests for extra documentation, making health insurance feel like a genuine benefit rather than a bureaucratic task.

Among its core services, Almamoon offers comprehensive insurance risk assessment and management, developing tailored mitigation strategies for its clients. In addition to consulting on cost management, savings, and negotiating better rates, the company has built a strong reputation for exceptional customer service and responsiveness. Through its insurance placement and coverage services, Almamoon helps clients secure suitable policies while customising coverage to meet their specific needs. Under its policy review and optimisation programme, clients receive regular policy evaluations along with expert recommendations for coverage adjustments.

Almamoon also provides the Saudi Arabian market with multiple policy options, making it easier to select the best coverage, even during renewal periods. Additional essential services include claims assistance and advocacy, specialised insurance solutions, and compliance and regulatory guidance.

A culture of rapid innovation

Almamoon’s working culture is built on short feedback loops and rapid prototyping. Ideas are tested in real-world conditions, refined based on results, and rolled out without delay, which is a stark contrast to the slower cycles that dominate the industry. Recent

innovations by the venture include AI-powered chatbots that provide policy details on demand, interactive wellness programmes that encourage healthy living, and a smart renewal engine that anticipates client needs and simplifies annual updates. Innovation here isn’t a department; it’s a daily habit shared by claims specialists, software engineers, and many others.

Talking about Almamoon’s innovative insurance services, a special mention must be made of the cutting-edge "New Leasing Platform" developed by the venture to comply with IA (Saudi Insurance Authority) regulations and ensure seamless operations for banks and auto-leasing finance partners. In addition to ensuring regulatory compliance, the user-friendly platform is recognised for its fast processing speed, interactive dashboards, and seamless API integration.

Almamoon has established its strong presence across the insurance industry verticals. Be it marine (inland transit, marine cargo, marine hull and machinery insurance), motor (motor comprehensive insurance, motor third-party liability insurance, and motor trade insurance), industrial and energy (boilers and pressure vessel insurance), or aviation (aviation insurance and airport operations liability), Almamoon has its tailored products and services lined up for the industry players.

In the financial field, Almamoon's solutions cover domains like indemnity, directors and officers’ liability, cybercrime, bankers' blanket bond, trade credit insurance, and group creditor insurance. For working professionals, the company offers group personal accident insurance, group medical insurance, group life insurance, and a group savings plan.

Growth with a purpose

Almamoon established its main office in 2005, laying the foundation for its regional presence. In alignment with the Kingdom’s Vision 2030, the company inaugurated its Riyadh office in 2019 under the patronage of His Highness Crown Prince Mohammed bin Salman. Almamoon strategically launched a second branch in Riyadh to support the expanding needs of Saudi enterprises, particularly within the emerging government and semi-government sectors, and to accommodate the influx of international companies entering the Kingdom.

Also, opening a new branch in Alkhobar strengthens Almamoon’s presence in the Eastern Province, bringing services closer to clients in one of the country’s most dynamic business hubs. Strategic partnerships with insurers enable Almamoon to offer bundled solutions that combine health coverage with auto and life insurance,

streamlining procurement for corporate clients.

Since 2022, Almamoon’s approach has driven double-digit annual growth in Gross Written Premium (GWP). However, the company views growth as a means to an end. Its goal is to extend high-quality, client-focused service to more organisations and individuals across the Kingdom.

"Transformation at Almamoon isn’t just about headline-grabbing strategies. It’s about hundreds of micro-decisions made every week. A claims specialist finds a way to cut processing time in half. A developer refines a mobile app feature after observing user behaviour. A regional manager pilots a new onboarding system that later becomes company-wide policy. These small, consistent improvements accumulate into the large-scale changes that win industry recognition and client loyalty," Mamdouh Tantawi added.

Another shining example of Almamoon's innovation is the "Prestige Programme," which takes care of the healthcare needs of the Saudi market. The programme covers chronic disease management, global assistance, maternity protocol programme, and home child vaccination.

What's next for Almamoon?

The future of Almamoon is focused on deepening transparency, efficiency, and client empowerment. The next wave of innovation includes a self-service employer dashboard for total policy control, automated claims pre-authorisation to speed up approvals, and enhanced smart renewal tools to simplify policy management. These initiatives are designed to remove friction from the health insurance process, allowing clients to spend less time navigating benefits and more time focusing on their core business and employees’ well-being.

The strength of the Almamoon model lies in its balance. Regulatory discipline builds trust. Technological efficiency streamlines operations. Human-centred service creates long-term relationships. In a traditionally slow and opaque industry, Almamoon proves that brokerage can be fast, transparent, and super supportive. By reshaping health insurance brokerage, Almamoon isn’t just adapting to change—it’s leading it. This mindset shows that in Saudi Arabia and beyond, the future of insurance brokerage will be built on trust, strengthened by technology, and guided by a focus on people.

editor@ifinancemag.com

Sampath Bank has continually aligned its priorities and innovations to support the wider economy’s growth and needs

Sri Lanka’s comeback: Sampath Bank leading the way

IF CORRESPONDENT

Sri Lanka’s economic recovery gained significant momentum in 2024, underpinned by a return to political stability and consistent policy implementation. After going through a severe financial crisis in 2022, which saw abnormally high inflation, interest rates, and sharp currency depreciation, the country has started to turn the corner.

It recorded its first quarter of economic growth in Q3 2023, following six consecutive quarters of contraction, and maintained a positive trajectory into 2024 with a GDP growth rate of about 5% (albeit from a low base).

Crucially, the presidential and parliamentary elections in 2024 unfolded with a smooth transition of power, reinforcing confidence in the nation’s stability. The new government’s steady policies helped tame the once runaway inflation and stabilise interest and exchange rates by late 2023. At the same time, exports, tourism, and worker remittances have rebounded, boosting foreign currency inflows and supporting the recovery.

This improving macroeconomic landscape has been bolstered by important fiscal and monetary measures. The restructuring of Sri Lanka’s international sovereign bonds, alongside the International Monetary Fund’s Extended Fund Facility (EFF) programme, which released its third tranche of funds in late 2024, strengthened the economy’s fundamentals.

By the end of 2024, gross official reserves had risen to cover about 3.9 months of imports, marking an improvement from the precarious lows. Rating agencies responded by revising the country’s default rating upwards, signalling a gradual restoration of creditworthiness and renewed optimism among businesses and the public.

Continuing its comeback, the island country's economy expanded by 4.9% in Q2

2025. According to the Department of Census and Statistics, GDP at constant 2015 prices reached Rs. 2,883 billion, compared with Rs. 2,749 billion in 2024. Growth was driven by a 5.8% rise in industry, a 3.9% expansion in services, and a 2% increase in agriculture.

However, the World Bank stated in October that, although Sri Lanka's recent economic performance has been strong, the recovery remains incomplete.

to trade and investment, improving the business environment, and modernising tax administration and regulations related to land and labour markets, and must ensure inclusive development that benefits the most vulnerable.

Source: IMF BANKING AND

The global financial institution further commented, "With growth still below pre-crisis levels and poverty significantly elevated, strengthening the recovery will require continued macroeconomic stability, urgent structural reforms, and more efficient, better-targeted public spending."

The World Bank also projects Sri Lanka's economy to grow by 4.6% in 2025, supported by a modest rebound in industry and steady growth in services, before slowing to 3.5% in 2026.

According to David Sislen, World Bank Division Director for Maldives, Nepal, and Sri Lanka, "To build a stronger, fairer economy that benefits all households in a fiscally constrained environment, Sri Lanka needs the private sector to invest, create jobs, and ensure that every rupee of public money is well spent."

Despite strong recent growth, low inflation, and robust external inflows, food prices remain high, and reserve accumulation has slowed. Economic output is still below 2018 levels, and although poverty is declining, it remains twice as high as in 2019. To support long-term growth and reduce poverty amid fiscal constraints, the World Bank advocates for a broad package of reforms aimed at enabling private sector-led growth.

The South Asian nation must focus on priority areas such as easing barriers

While Sri Lanka is indeed a comeback story in the making, one that economists are closely monitoring, it still has some way to go on the road to full recovery. In this context, Sampath Bank has played a key role in supporting the national resurgence, aligning its strategy to bolster the country’s revival and drive much-needed innovation in the banking sector.

The financial inclusion goal

From its inception in 1986, Sampath Bank has been an innovator in Sri Lanka’s banking industry, using technology and novel products to promote financial inclusion. A concept that had not even been coined at the time. As early as 1988, the bank became the first in Sri Lanka to operate a multi-point network of automated teller machines (ATMs), bringing 24/7 banking convenience to customers.

It was also the first in South Asia to introduce debit cards, launching them in 1997 when cashless payments were still a rarity in the region. Through these pioneering moves, Sampath Bank sought to democratise access to banking, making financial services more accessible and affordable for the broader population.

These early technological advancements laid the groundwork for what we recognise as financial inclusion, which refers to the principle of extending banking services to all segments of society. Staying true to this legacy, Sampath Bank has continually aligned its priorities and innovations to support the wider economy’s growth and needs.

growth rate for Sri Lanka from 2025 to 2030

One recent example of this commitment is the bank’s focus on reviving struggling businesses due to Sri Lanka’s downturn. Recognising that small and mid-sized enterprises were especially hard-hit by the crisis, Sampath Bank established a dedicated Business Revival Unit to provide hands-on financial advice and management tools to companies facing cash flow constraints. Rather than simply classifying such loans as non-performing, the bank proactively worked with borrowers to nurse these ventures back to health.

The impact has been tangible. Over 74 businesses were rescued and stabilised, successfully graduating from the bank’s watch-list of high-risk loans (the Stage Two and Stage Three loan portfolios, in banking parlance) back into performing status.

These enterprises have since returned to stability, benefitting from improved management practices and practical repayment plans with sufficient breathing room for growth. The

success of this initiative speaks to its effectiveness in safeguarding the bank’s assets and preserving jobs and economic value in the community.

Another pillar of Sampath Bank’s recovery-era strategy has been to stimulate economic activity by expanding lending in sectors with high growth potential. In 2024, the bank’s loan book grew by 10%, a sharp turnaround from the 4.7% contraction recorded the year before. This expansion was no accident; it was driven

by targeted support to key active sectors of the Sri Lankan economy.

Notably, the bank directed credit to the rejuvenated tourism industry, which is bouncing back strongly after pandemic-related setbacks. It also increased lending to the information and communication technology (ICT) sector, an area that holds promise for export earnings and high-skilled employment as Sri Lanka seeks to become a regional tech hub.

Healthcare was another focus, with financing provided for medical services and pharma companies, recognising the critical importance of health infrastructure, especially after the lessons of COVID-19. By directing credit to these vital sectors, Sampath Bank spurred its own growth and helped stimulate broader economic recovery.

In parallel, Sampath Bank leveraged its strengths in foreign currency services to support the national recovery. The

SRI LANKA SAMPATH BANK

bank retained its market leadership in worker remittances, a lifeline of foreign exchange for Sri Lanka’s economy. By reimagining its remittance offerings with customer-friendly benefits and extending its global reach, the bank made it easier and more rewarding for Sri Lankan's diaspora to send money home.

This included developing more convenient digital remittance channels and forging partnerships abroad to widen its network, steps that assisted a growing migrant workforce in supporting their families back in Sri Lanka.

Additionally, Sampath Bank doubled down on its legacy of technological innovation to promote financial inclusion in the modern era. The volume and value of digital transactions handled by the bank have continued to surge as more Sri Lankans embrace online and mobile banking for their daily finances.

By investing in user-friendly digital platforms and services, the bank has been integrating Sri Lankans into the digital economy and ensuring they can access opportunities and financial services anytime, anywhere. In effect, the bank’s digital drive is the contemporary extension of its original mission to democratise banking, using the latest technology to broaden access and convenience for all.

Targeted sustainability initiatives

Even as Sampath Bank pursues financial growth, it continues to enhance the sustainability of its business model and invest in the country's future. In fact, a cornerstone of the bank’s philosophy is that long-term financial success goes hand in hand with environmental stewardship and social responsibility. To this end, the bank has implemented several targeted sustainability initiatives that integrate with its core operations. BANKING

One key step has been institutionalising an Environmental and Social Management System (ESMS) to rigorously assess the potential environmental and social impacts of any large loan projects the bank finances. Under this system, every proposed loan above Rs 100 million is screened for environmental footprint, community impact, and compliance with social safeguards.

By embedding these checks into the credit approval process, Sampath Bank ensures that its lending supports sustainable development and does not inadvertently fund harmful practices. In essence, growth is pursued with mindfulness of ethical and environmental standards.

Complementing this, the bank actively promotes financial inclusion through many programmes and subsidiary Siyapatha Finance, which helps extend financial services to underserved segments and rural communities. For example, Siyapatha Finance and the bank can cater to micro-entrepreneurs or provide leasing facilities to individuals who might not qualify for traditional bank loans.

Additionally, Sampath Bank is preparing to adopt the new Sri Lanka Financial Reporting Standards (SLFRS) sustainability reporting framework in 2025. By aligning with these standards, which are on par with emerging global norms, the bank is committed to ensuring that its sustainability reporting is as rigorous as its financial reporting, with robust controls and transparency. This move will allow stakeholders to objectively verify the bank’s environmental, social, and governance (ESG) performance using reliable data, just as they do its financial results.

On the environmental front, Sampath Bank has taken concrete action to

reduce its carbon footprint. The bank has significantly cut Scope One and Scope Two emissions (direct emissions and those from purchased energy) by investing in renewable energy installations on its properties.

It has expanded in-house solar power generation capacity, which produced 664.6 MWh of clean electricity in 2024. This is a substantial amount of energy, sufficient to power several branches and offices, and it directly offsets what the bank would otherwise draw from fossil-fuel-generated grid power.

By greening its energy consumption in this way, Sampath Bank is lowering operating costs over the long run and setting an example in Sri Lanka’s corporate sector for transitioning to renewable energy.

Moreover, the bank has been greening its loan book by financing sustainable projects. In 2024 alone, it lent Rs 1,440 million (about $4.9 million) to renewable energy ventures, supporting projects with a total installed capacity of 10 MW.

This means the bank is helping fund

Ajantha de Vas Gunasekara, Sampath Bank’s Executive Director and CFO

SRI LANKA SAMPATH BANK

new solar, wind, or small hydropower plants that add 10 megawatts of clean energy to the national grid, contributing to the reduction of Scope Three emissions (which are indirect emissions in its value chain) by enabling cleaner power generation for the country. Alongside energy initiatives, Sampath Bank has introduced measures to minimise and manage waste.

This includes reducing paper use through digital banking solutions, encouraging recycling in its offices, and ensuring proper e-waste disposal. By transforming internal workflows to be more sustainable, for instance, by moving customers to e-statements and digital forms instead of paper, the bank reduces waste and creates awareness among employees and customers about eco-friendly practices. These internal changes are reinforced by awareness campaigns and training, ensuring that everyone in the organisation understands the importance of collective action on sustainability.

Sampath Bank’s sustainability efforts

are strategic in nature, designed to nurture environmental and social ecosystems that ultimately support each other and the bank’s long-term viability. A shining example is the bank’s flagship corporate social responsibility (CSR) programme: Wewata Jeewayak (a Sinhala phrase meaning “Life to Tanks”). This initiative, now in its 24th year, is dedicated to rehabilitating and rebuilding Sri Lanka’s ancient irrigation reservoirs (locally known as “tanks”), which are crucial for agriculture and rural livelihoods.

Over the decades, Wewata Jeewayak has restored 30 reservoirs across the country. These irrigation tanks are vital for the country’s food production, as they store rainwater and supply it to paddy fields and villages, particularly in Sri Lanka’s dry zones.

By reviving these water bodies, the bank’s programme has supported the livelihoods of more than 3,700 farming families, enabling them to cultivate their lands and sustain their communities. In 2024, Wewata Jeewayak achieved a record milestone by com-

pleting the restoration of nine tanks in a single year, the highest number of reservoirs rejuvenated in any given year since the project’s inception.

The impact of this work is profound. Collectively, these reservoirs irrigate roughly 3,400 acres of paddy fields, which means farmers in those areas can now grow two cultivation seasons instead of one each year, thanks to a reliable water supply. The increased agricultural yield boosts farmers’ incomes and contributes to the nation’s food security.

Additionally, restoring the tanks has positive ripple effects on local ecosystems, as the revived reservoirs and their surrounding wetlands help rejuvenate flora and fauna, restoring biodiversity that had dwindled when the tanks were silted up or broken.

What makes Wewata Jeewayak particularly noteworthy is its holistic approach. The programme does not stop at brick-and-mortar renovation of irrigation systems; it actively involves community partners and experts to broaden its scope.

Through these partnerships, the initiative has been extended to promote financial inclusion, for example, by educating farmers about savings and providing them access to microloans, encouraging entrepreneurship development in farming communities, such as training on food processing or marketing techniques, and disseminating good agricultural practices, including efficient water usage and sustainable farming methods.

Beyond freshwater conservation, Sampath Bank has also launched initiatives to preserve Sri Lanka’s marine and forest environments, recognising that sustainability has many fronts. One such initiative is ‘A Breath to the Ocean,’ which focuses on protecting and rejuve-

Tharaka Ranwala, Senior Deputy General Manager, Marketing & Customer Care of Sampath Bank, opens the sluice gates of Ratmale reservoir, which were restored under the ‘Wewata Jeewayak’ programme

Images: Sampath Bank

nating marine ecosystems. Through this programme, the bank supports activities such as mangrove restoration along coastal lagoons, coral reef replanting in damaged reef areas, and turtle conservation efforts on nesting beaches.

Mangroves are a key focus because they act as natural buffers against coastline erosion and are excellent carbon sinks, while also serving as nurseries for fish and other marine life. Coral replanting helps revive coral reefs that have been bleached or harmed, thereby preserving marine biodiversity and supporting fisheries and tourism.

Turtle conservation activities, such as protecting turtle nests or conducting rescue efforts, ensure that endangered sea turtles, which are part of Sri Lanka’s natural heritage, have a better chance of survival. Meanwhile, the bank’s ‘Gasai Mamai Pubudu Pothai’ programme, which translates to “The Tree, Me and My Savings Book,” takes a creative approach to instilling environmental consciousness in the next generation. This initiative typically engages school children, encouraging them to plant and nurture trees while cultivating the habit of saving money.

By linking tree planting with the idea of a savings book, the programme teaches youngsters two valuable lessons: the importance of caring for the environment and the benefits of financial responsibility. Participants often receive a tree sapling to plant and a children’s savings account or a savings booklet, symbolically tying together the growth of their tree with the growth of their savings.

It is an innovative way to educate youth about sustainability, both ecological and financial, in a manner that is hands-on and memorable. In addition to these, Sampath Bank has been involved

in forest restoration projects. Notably, it has undertaken reforestation efforts in the Kanneliya Forest Reserve, one of Sri Lanka’s biodiversity-rich rainforests, and in areas around Udawalawe, as well as a Mangrove Restoration Project in the Anawilundawa Wetland, which is a protected Ramsar wetland of international importance.

These CSR projects typically involve planting indigenous trees to expand forest cover, removing invasive species, and working with local environmental groups to ensure the long-term survival of the saplings. The restoration of Anawilundawa’s mangroves, in particular, helps protect a critical wetland habitat that is home to numerous bird species and aquatic life, underscoring the bank’s commitment to safeguarding diverse ecosystems.

Investing in the future

Sustainable banking is not only about external projects or green initiatives; it is also about investing in the people who drive the bank’s success. Sampath Bank understands that its employees are its greatest asset, especially in a service-driven industry like finance. As such, the bank continues to invest heavily in its people, supporting their career progression through focused training and ensuring their health and well-being are looked after.

In 2024, a renewed emphasis was placed on staff development and welfare, recognising that a motivated, skilled workforce will be the engine of the bank’s growth. Over 16 different programmes were implemented during the year to promote employees’ health and wellness, ranging from physical health initiatives such as medical check-ups, fitness and sports activities, to mental health support such as stress

Sustainable banking is not only about external projects or green initiatives; it is also about investing in the people who drive the bank’s success

management workshops and counselling services.

These programmes reached more than 23% of the bank’s employees in this initial roll-out, and the bank aims to expand its coverage in the coming years so that an even greater share of staff can benefit.

Looking ahead, Sri Lanka entered 2025 on an optimistic note, and Sampath Bank is poised to be both a beneficiary and an enabler of the next chapter of growth. A convergence of positive factors has created a favourable outlook, as the country enjoys ongoing political

stability, a recently improved sovereign credit rating, and continued growth in key inflows such as trade exports, tourism, and remittances.

Forecasts indicate that business confidence is rising, positioning Sri Lanka to achieve around 5% GDP growth by 2025. The banking sector is expected to play a catalytic role in this scenario, since banks will provide the financing for new investments and consumption that drive GDP, while also reaping the rewards of increased economic activity in the form of higher credit demand, transaction volumes, and financial inflows.

Sampath Bank's current multi-faceted growth strategy will guide its direction within this landscape. The initiatives described above, ranging from the five-pillar focus to the digital transformation and sustainability agenda, will guide the bank’s quest to become the best bank in the country. Its approach is confident and purposeful.

Indeed, with a revitalised economy, a clear strategic roadmap, and an empowered workforce, Sampath Bank’s blueprint for sustainable banking appears well-positioned to deliver enduring value to its shareholders, customers, and Sri Lanka.

Ajantha de Vas Gunasekara, Sampath Bank’s Executive Director and CFO, said, "We remain confident about realising our aspirations as we build on solid foundations with a motivated team." editor@ifinancemag.com

SRI LANKA SAMPATH BANK

IN CONVERSATION

KAPIL SHARMA THE CONTINENTAL GROUP

Wealth management is a dynamic process that evolves alongside life stages

'Tax efficiency builds wealth'

CL RAMAKRISHNAN

As the UAE’s wealth management sector flourishes amid its rise as a global financial hub, The Continental Group has been empowering clients with customised strategies, innovative solutions, and long-term financial guidance to build, protect, and preserve their wealth across generations.

At the forefront of this client-centric approach is the firm’s Senior Vice President – Sales, Kapil Sharma, who brings over two decades of experience in financial advisory and wealth management to help clients achieve financial security and long-term prosperity. He specialises in personal protection, retirement strategies, estate planning, and cross-border wealth solutions.

Kapil's expertise spans Business and Investment Solutions, including corporate insurance, portfolio bonds, property investments, and structured products, as well as Specialised Financial Solutions such as inheritance tax planning, group pension schemes, and UK pension transfers. He focuses on empowering individuals, families, and businesses to grow their wealth strategically, efficiently, and with lasting confidence.

In an exclusive interview with International Finance, Kapil Sharma, Senior VP – Sales at The Continental Group, shares his client-centric approach to wealth management, emphasising tailored strategies, risk management, sustainable investing, and technology-driven insights to balance short-term goals with long-term wealth preservation and legacy planning.

IF: Can you walk me through your overall approach to wealth management and how you tailor it to meet individual financial goals?

Kapil Sharma: My approach to wealth management is rooted in a deep understanding of each client’s unique financial landscape. I believe that wealth

management is not merely about managing assets, but also managing aspirations. Every client’s journey is distinct, shaped by their life goals, values, and circumstances. My first step is always to listen and understand their priorities, tolerance for risk, and long-term vision, including their current provisions to meet their future financial goals.

Once this foundation is built, I design a tailored wealth strategy that aligns with both short-term liquidity needs and long-term capital preservation. I integrate traditional investment principles with modern financial analytics, ensuring that portfolios are both resilient and adaptable to changing market dynamics. The ultimate goal is to create enduring value, helping clients not just grow wealth, but preserve and transfer it across generations.

What is your process for evaluating a client’s current financial situation and understanding their long-term goals?

Evaluation begins with a comprehensive financial discovery session. I assess the client’s income sources, liabilities, existing investments, tax exposures and estate structures. This forms the baseline for the analysis. From there, I conduct a detailed goal-setting

exercise to understand not just what clients want to achieve, but why those goals matter to them—whether it’s financial independence, legacy creation, or philanthropic impact.

This combination of quantitative assessment and qualitative understanding allows me to translate life goals into measurable financial milestones. Regular reviews and recalibrations ensure that our strategy evolves alongside changes in life circumstances, regulatory environments, and market conditions.

How do you determine the appropriate asset allocation and investment strategy for clients with varying risk tolerances?

Asset allocation is the cornerstone of a sound investment strategy. I use a structured, data-driven approach supported by risk-profiling tools that quantify a client’s capacity and willingness to take risk. Beyond metrics, I focus on emotional risk tolerance, which is their reaction to volatility or downturns.

Based on this insight, portfolios are diversified across asset classes, geographies and sectors. For conservative investors, I emphasise capital preservation through fixed income and defensive equities with dividend-paying instruments. For growth-oriented

IN CONVERSATION KAPIL SHARMA THE CONTINENTAL GROUP

The most powerful element in wealth creation is time, and consistency magnifies its effect. New investors should focus on building a diversified foundation clients, I adopt a more dynamic approach incorporating thematic investments, alternative assets and tactical opportunities. Each allocation is designed to balance return potential with downside protection.

How do you stay updated on market trends, economic changes, and new investment opportunities that could affect a client’s portfolio?

Remaining ahead of market developments is central to delivering informed advice in the current world. I maintain a disciplined routine of reviewing global economic reports, monetary policy updates, and geopolitical trends, while also attending international investment forums to gain forward-looking insights.

My approach is built on staying informed, interpreting data in context, and translating insights into strategic action. Continuous learning and adaptability remain central to my practice because the ability to anticipate, rather than react, defines true advisory excellence.

What strategies do you use to manage the potential risks in a client’s portfolio, particularly in times of market volatility or economic downturns?

Risk management is an integral part of every portfolio design. I employ a multi-layered approach, starting with strategic diversification and periodic stress testing.

During periods of volatility, I focus on maintaining liquidity and avoiding emotional decision-making. My philosophy is to prepare clients for uncertainty, not react to it. I believe disciplined rebalancing and prudent cash allocation often prove more effective than drastic market timing. Protecting capital in downturns ensures clients remain positioned to capture recovery when markets stabilise.

How do you balance short-term financial goals like saving for a house or funding education with long-term

goals like retirement or legacy planning?

Balancing multiple objectives requires a layered financial architecture. I segment wealth into distinct “buckets” based on time horizons such as short-, medium- and long-term. Each segment has a defined liquidity profile and risk exposure.

For short-term goals, I prioritise stability and accessibility through low-volatility instruments. Long-term objectives, such as retirement and legacy planning, are aligned with growth assets that compound value over time. This approach ensures that short-term needs are met without compromising the long-term compounding journey.

What is your approach to tax planning, and how do you ensure that a client's portfolio is tax-efficient throughout different stages of life?

Tax efficiency is a silent driver of wealth accumulation. My approach integrates tax planning within every investment decision rather than treating it as a separate exercise. My emphasis is on designing structures that minimise liabilities through asset location strategies, optimised withdrawals, and efficient succession planning.

As clients progress through different life stages, I reassess the tax implications of changing income patterns, investment holdings, and estate considerations. A well-structured, tax-efficient portfolio enhances returns and also provides flexibility in wealth transfer and retirement planning.

How do you incorporate sustainable or socially responsible investing (SRI) strategies into a client’s portfolio?

Sustainable investing has become an imperative. Many clients, particularly in the GCC and Middle East, are increasingly conscious of aligning their wealth with purpose. I integrate ESG (Environmental, Social, and Governance) principles into portfolio construction by identifying financial plans and solutions that demonstrate strong ethical and sustainability practices. Responsible investing is, in my view, the future of wealth management.

What is your philosophy on balancing growth versus preservation of wealth, and how do you adjust that

balance as clients age or change financial goals?

Wealth management is a dynamic process that evolves alongside life stages. In the accumulation phase, I prioritise growth through calculated exposure to equities and alternative investments. As clients move into preservation and distribution phases, the focus gradually shifts toward capital protection and income generation.

The balance between growth and preservation is continuously reviewed through life events such as retirement, inheritance, or business exits. Flexibility is key. Recalibrating strategies ensures that portfolios remain aligned with evolving objectives and risk profiles.

How do you handle market downturns or financial crises, and what steps do you take to protect clients' assets during uncertain times?

In times of crisis, clarity and communication are paramount. My first step is to reassure clients through transparent discussions that explain market realities, and then reaffirm the long-term strategy. Panic-driven decisions can be more damaging than volatility itself.

I emphasise diversification, liquidity buffers, and quality holdings that can weather downturns. During crises, opportunities often emerge, and disciplined investors who stay the course are best positioned to benefit from recoveries. My role is to help clients navigate uncertainty with confidence and resilience.

What tools or technology do you use to analyse and manage client portfolios, and how do you ensure

In May 2022, The Chimera ETFs traded a total of AED 62.7 million in the secondary market, the second-highest total this year and the third-highest since the launch of Chimera’s

transparency in tracking performance?

At Continental, technology plays a key part in enhancing the teams' and advisors' capabilities to serve our clients efficiently and accurately. We use advanced portfolio management tools combined with real-time analytics, performance reporting, and risk metrics to enable clients with insight and tools that provide clear visibility into asset allocation, returns, and benchmarks at any given moment. Technology has elevated the client-advisor relationship from transactional to collaborative. We combine digital insights with human judgement to ensure that decisions remain both data-driven and personalised.

What advice would you give someone just starting out with wealth management to ensure long-term financial success?

Start early, stay disciplined, and think long term. The most powerful element in wealth creation is time, and consistency magnifies its effect. New investors should focus on building a diversified foundation, understanding their risk appetite, and avoiding impulsive decisions driven by short-term market movements. Equally important is seeking professional guidance early on. A well-structured plan, reviewed regularly, can turn financial goals into tangible achievements. Wealth management should not be skewed to chasing returns. It's about building security, legacy, and peace of mind over a lifetime.

editor@ifinancemag.com

Banks must go beyond transactional roles to become enablers of sustainable, inclusive growth THOUGHT

DOLPHY JOSE EXECUTIVE DIRECTOR, SOUTH INDIAN BANK

Reviving the true mission of banks

For generations, banks have been an integral part of our socio-economic fabric by acting as custodians of our wealth and financial assets. Moreover, as credit creators, they have consistently powered economic activity. However, as economic dynamics worldwide change, even the role of banks has moved beyond mere credit creation and wealth stimulation.

The world has woken up to challenges such as climate change, widening inequality, and accelerating technological disruption. Society today expects banks to play a more inclusive role in the economy. Banks are expected to enable sustainable and inclusive growth to drive real change across economies and communities.

Evolving from task to transformation

Historically, banks followed a transactional model, where profitability was the primary compass, and capital naturally gravitated towards models offering the safest and quickest returns. Often, the model was found to be wanting in terms of serving the segments that needed credit the most. Built on volumes, margins, and efficiency, this model is reaching its saturation, and there is widespread opinion that a different model — one that enables sustainable and inclusive growth is needed.

Traditional credit frameworks, anchored in historical cash flows and collateral, tend to exclude small entrepreneurs, farmers, wom-

en-led enterprises, and startups that drive innovation and local employment. Apart from disallowing the bridging of the gap in society between income levels, it also stifles innovation and ingenuity. Banks need to move beyond their traditional roles as passive intermediaries and focus on funding segments with potential but that need more financial support.

Secondly, banks have to reimagine how they define and manage risk. Environmental, social, and governance (ESG) considerations must move to the core of risk assessment from the current periphery. Climate resilience, social inclusion, and ethical governance are not “soft” factors — they are material to long-term value creation. Integrating ESG analytics, stress-testing for climate risk, and evaluating the social impact of lending can help banks build portfolios that are both resilient and forward-looking.

Also, banks must rethink their products and business models to serve a broader developmental agenda. For instance, about $2,570 million has been committed by various banks and financial institutions to renewable energy projects. More such initiatives, especially through innovative structures, including blended finance, outcome-linked loans, and green bonds, can redirect private capital into projects that yield social and environmental dividends. Likewise, digital credit and alter-

native data analytics can open access for micro- and nano-enterprises that remain invisible to traditional banking systems.

Finally, banks must reinvest in relationships with communities, local ecosystems, and partners across the financial and development landscape. Beyond delivering financial services, branch networks, local correspondents, and technology platforms can empower communities when utilised strategically. By working with government agencies, fintech firms, cooperatives, and impact investors, banks can help co-create local solutions—from climate adaptation in rural areas to skill development and entrepreneurship financing in urban clusters.

The shift to a more inclusive model of banking also makes strategic and financial sense. Climate and social vulnerabilities are now financial risks — ignoring them exposes banks to asset write-downs, credit losses, and regulatory penalties. Likewise, since trust is a key aspect in financial transactions, purpose-driven banking can spawn brand loyalty and create a loyal customer base. It can also unlock access to new markets and give rise to diversified revenue streams. Regulators and investors are already rewarding those institutions that

prioritise governance and sustainability. By deploying capital with conscience and vision, banks can drive economic resilience, social mobility, and environmental stewardship — creating value that endures beyond quarterly earnings. Banks have been trusted partners to societies, communities and economies when it comes to safeguarding wealth and deploying collective capital. Now, more than ever, banks have to adopt a transformative role that keeps them at the centre of societal change. They need to utilise their expertise in managing collective capital to deploy it for a wide-reaching and positive impact. When banks embrace this transformative role, they not only strengthen their own foundations but also lay the groundwork for a more equitable and resilient economy.

Dolphy Jose has been serving as the Executive Director of South Indian Bank since 2024, bringing over 25 years of experience in the financial sector. His expertise spans retail and commercial banking, branch operations, P&L management, and strategic partnerships. Before joining South Indian Bank, he held senior leadership roles in Kotak Mahindra Bank and Karur Vysya Bank

editor@ifinancemag.com

Gulaid Holding reinvents finance with AI

To maximise the benefits of the GH Gateway, Gulaid Holding introduced mobile access, bringing flexibility and speed to users on the go

Three years ago, Gulaid Holding Group and its subsidiaries embarked on a bold mission to reshape a traditional finance department into a powerhouse, driving innovation through technology to not only support their own growth but also play a pivotal role under the Kingdom's ambitious "Vision 2030" economic diversification strategy.

While traditional finance departments in the Gulf regions limit themselves to day-to-day tasks, thereby earning stereotypes like bookkeepers and processors, Gulaid Holding and its subsidiaries are working aggressively to break these moulds.

During an exclusive interaction with International Finance, Gulaid Holding CFO Chandan Dabeedeen said, "With the rapid growth of the company and its subsidiaries,

overwhelming paperwork meant more bureaucracy and inefficiencies. Our first leap to address this was the launch of Gulaid Holding Payment Gateway, a fully digital and webbased payment portal to mitigate the impact of delays attached to bureaucracy in our fast-paced environment. The innovation also allowed increased transparency and accountability for all stakeholders through its numerous features, such as a direct link to Accounts Payable from our ERP and HR-related functions from our HRM systems."

To maximise the benefits of the GH Gateway, Gulaid Holding introduced mobile access, bringing flexibility and speed to users on the go. The impact has been clear: over 7,000 paperless transactions and an 80% reduction in P2P processes. With "Vision 2030" as a guiding objective and rapid growth across the region, the move toward automation was not just strategic; it was inevitable.

Gulaid Holding took the game to the next level by introducing artificial intelligence (AI) in its day-to-day finance activities.

"The three-step verification reconciliation of PO, GRN, Invoice at such a high volume is prone to human errors, over and above being time-consuming. Our AI bot now handles this process seamlessly and with no need for human intervention. A further step was to enable our AI bot to post transactions into our ERP systems. This results in countless

Chandan Dabeedeen

Gulaid Holding CFO

saved man-hours for the finance department, which could then be shifted to other areas of innovation and improvement," CFO Chandan Dabeedeen remarked.

The need for quick executive decision-making is critical to sustain any growth. Access to live information is a key element, and thus the "Gulaid Holding Executive Dashboard" was put in place. The company's executives now have access to live information related to its projects, KPI tracking, finance, and financing-related data.

"At the start of our journey, we agreed not to limit ourselves to finance tasks only. With 2,000-plus employees, our team identified the need for centralised information. Gulaid Holding Vision Connect, an internal digital hub, was thus developed and successfully implemented. This platform provides our employees with up-to-date information on events happening

throughout the group, policies, procedures, and workflows. At its centre is FORTE, a custom-built AI chatbot trained to answer any company-related enquiry in real time," the CFO noted.

As part of its active role in digital transformation, Gulaid Holding's finance department initiated the launch of "Gulaid Holding HrConnect" in close collaboration with the company's systems and HR teams. This AI-powered CV management platform has redefined how candidate data is handled.

"Every CV sent to the company’s recruitment email is automatically stored and categorised in a centralised database. Candidates receive instant, automated replies with clear next steps. Internally, HR has real-time access to dashboards showing total CVs, candidates in process, and open roles. A dynamic search function enables faster, smarter shortlisting, removing

guesswork from hiring," he added.

This ecosystem of tools (GH Gateway, GH Dashboard, GH Vision Connect, Aggranda AI, GH HrConnect) has transformed how decisions are made, how work gets done, and how Gulaid Holding's finance team supports every corner of the company.

"This transformation aligns with Saudi Arabia’s Vision 2030, supporting a smarter, digital-first private sector. It shows what’s possible when finance leads with purpose, not just policy. Our role is no longer just about processing. We are enabling real transformation and change. Rome was not built in one day; every step mattered," said CFO Chandan Dabeedeen, while adding, "We redefined the role of finance, making it digital, collaborative, and transformational. Gulaid Holding’s finance team now stands as a leading group in Saudi Arabia."

The subscription model was celebrated as a sign of forwardthinking business acumen

Subscription fatigue: The next trend?

IF CORRESPONDENT

When we talk about 21st-century global commerce, one of the few important terms is the "subscription model." This is a business strategy where customers pay a recurring fee (usually monthly or annually) to continuously access a product or service.

Has the subscription economy peaked, or is this merely a necessary recalibration in a maturing market?

For over a decade, the model has carved out its own niche. From streaming giants like Netflix, Amazon Prime Video, Disney+, Hulu, and HBO Max (now Max) to SaaS (software-as-a-service) startups and direct-to-consumer services, recurring revenue has become a winning formula for businesses.

Very few business models that benefit both parties, such as the subscription model, have emerged so far. For customers, all they need to do is pay a set fee at regular intervals to gain ongoing access to the product or service, which is tailored by industry and offering, ranging from physical goods and digital content to software and services.

For service providers, the subscription model provides a consistent revenue stream that can thrive during prosperous economic times. Additionally, it enhances customer retention by offering more tailored services.

However, the trend points out that subscription

fatigue is setting in. The term refers to consumers’ growing reluctance to engage with an ever-expanding roster of recurring payments, and this is fast becoming a concern for business leaders and investors.

With consumers re-evaluating their digital wallets and churn rates rising, it is time to ask: Has the subscription economy peaked, or is this merely a necessary recalibration in a maturing market?

Saturation fatigue kicking in?

A phenomenon called "subscription fatigue" occurs when consumers feel overwhelmed and frustrated by the increasing number of subscription services and products available. While this phenomenon is particularly prevalent in the media and entertainment industry, it has now spread to other sectors like FMCG (fast-moving consumer goods) and software.

The proliferation of subscription offerings can burden consumers with multiple monthly fees and the complexity of managing numerous accounts. Also, the variety of subscriptions makes it more challenging to keep track of expenses and fully utilise the services or products. This can lead users to question the value they are getting from their subscriptions, potentially causing disengagement.

The subscription model was celebrated as a sign of forward-thinking business strategy. The model delivered steady income streams, customer loyalty, and higher lifetime value. It transformed product

categories, turning everything from software and entertainment to pet food and razors into services.

According to data from Zuora’s Subscription Economy Index, between 2012 and 2022, the subscription economy grew by more than 435%. SaaS companies like Salesforce and Adobe became household names. The craze was so high that even carmakers began experimenting with subscription-based access to vehicle features.

It’s not that the model is crumbling. It’s just that cracks have started appearing as the business model scales. A MarketWatch survey indicates a growing trend of subscription fatigue among consumers. Of the 1,000 surveyed Americans who pay for subscription services, 22% felt they weren’t getting their money’s worth.

When respondents were asked about their current subscriptions and spending habits, Mar-

ketWatch found that the median subscriber has four subscriptions and spends about $60 per month ($720 annually). Some reported much higher spending habits, with monthly costs reaching $250 ($3,000 annually) or more for subscription services. One in five (19.9%) even admitted they didn’t know exactly how many subscriptions they were paying for.

What drives the fatigue?

A recent academic paper published in the Proceedings of the Third International Conference on Optimisation Techniques in the Field of Engineering (ICOFE–2024) took a deep dive into the subscription phenomenon. Titled "Statistical Analysis of Subscription Fatigue: A Growing Consumer Phenomenon," the study investigated the psychological and behavioural triggers behind subscription fatigue.

The report identified three key drivers: lack of

perceived value, hidden or unpredictable fees, and loss of control. As more companies adopt subscriptions, the uniqueness of the model has eroded. Many users now feel they are paying regularly for content or services that deliver little incremental benefit. Consumers are increasingly frustrated with tiered pricing, automatic renewals, and freemium models that lead to unexpected charges.

Finally, the inability to seamlessly manage or track multiple subscriptions is contributing to a growing sense of overwhelm, leading to attrition. Combined, these factors are eroding loyalty and trust, two foundational elements of the subscription promise.

In Deloitte's "2025 Digital Media Trends Survey" of 3,595 American consumers, 41% stated that the content available on streaming video services isn’t worth the price. This marked a 5% increase from 2024, indicating growing frustration with subscription services’ offerings.

In comparison, 22% of respondents in MarketWatch's subscription fatigue survey felt they weren’t getting their money’s worth. In 2024, 40.3% said they had cancelled a subscription service. The most commonly cancelled service was video streaming (54.5%), followed by music streaming services (22.9%).

"We also asked respondents which subscription service they’d keep if they could only keep one— 45.2% said they’d keep their video streaming account over other subscription services. Specifically, when asked which subscriptions they’d keep, 20.6% said Netflix,

16.2% said Amazon Prime, and 5.7% said Hulu. According to our survey, two primary reasons people cited for cancelling a subscription were cost and quality. The most common reason for cancellation Top reasons why subscribers cancel their subscriptions

Many Ads

Source: marketwatch.com

was overall budget cuts, suggesting that subscriptions aren’t the only area where consumers are reducing expenses. However, 50.5% of customers reported resubscribing to services they’d previously cancelled, indicating most cancellations aren’t permanent," the report noted.

Nearly 55% said they would cancel a subscription if the service dropped in quality, while only 35.5% said they’d cancel if it increased the number of ads. Also, 36.8% of subscribers would cancel if the service’s monthly price increased by $6–$10.

Numbers behind the trend

While full-scale subscriber withdrawal is unlikely, things are clearly entering a more mature, and arguably more volatile, phase. A 2024 report from Antenna, a subscription market analytics firm, revealed that churn rates for video-on-demand services reached an all-time high of 44% in Q4. SaaS businesses are also facing rising customer acquisition costs and declining net revenue retention, a double hit that undermines the long-term profitability of the model.

Consumer surveys tell a similar story. According to the UK’s Department for Business and Trade, which has launched a consultation on measures to crack down on what they call "subscription traps," nearly 10 million of the 155 million active subscriptions in the country are unwanted, costing consumers £1.6 billion annually.

Deloitte’s 19th annual "Digital Media Trends" report found that consumers are increasingly dissatisfied with the value of paid

streaming services. Even though 53% of consumers surveyed say they use streaming video-on-demand services most frequently, nearly half (47%) believe they pay too much for these services, and 41% think the content offered isn’t worth the price (up 5% from 2024). A price hike of $5 would likely prompt 60% of consumers to cancel their favourite service.

However, not all subscription businesses are experiencing the same levels of fatigue. Some have weathered the storm better than others. The difference lies in how well the service aligns with customer value and how flexible the business is in responding to changing expectations.

Services that are genuinely essential to day-to-day living, like high-engagement entertainment platforms like Spotify or Disney+, productivity tools like Microsoft 365 and Dropbox, or health and wellness platforms like Strava, typically have higher retention rates. These businesses have made significant investments in individualised features or content, frequent, obvious product changes, and transparent pricing and cancellation procedures. Most importantly, they make it simple for clients to comprehend what they are purchasing and why it is worthwhile.

Still, many niche services or companies with little product differentiation are struggling. Despite having 45 million subscribers, Apple TV+, for example, reportedly incurs over $1 billion in annual losses. The platform captures less than 1% of the total American streaming viewership, lagging behind competitors like Netflix. High

production costs and limited audience engagement have contributed to this subscription model’s financial struggles.

In short, the era of "everythingas-a-subscription", from digital fitness classes to premium recipe apps, is now being curtailed by consumer pragmatism. Similarly, businesses that rely on passive engagement (the assumption that users will forget to cancel) are seeing this strategy backfire. With fintech tools and banking apps now offering subscription tracking and cancellation features, one can see that the days of accidental renewals are becoming a thing of the past.

End of the road?

The golden era of subscriptions was driven by novelty and investor enthusiasm. But, like all financial trends, the hype curve has eventually levelled off. And now, there is also a need for quality and sustainable economics.

Once fixated on monthly recurring revenue, investors are now paying more attention to unit economics. How much does it really cost to get and keep a subscriber? How much time does it take to get the money back? In the absence of aggressive discounting, is the model still feasible?

Subscription businesses globally are now facing the challenge of evolving. In many cases, that means offering hybrid models that combine one-time purchases with added subscription perks and creating modular pricing tiers that better reflect real usage patterns. Rather than chasing pure subscriber volume, companies are increas-

ingly focusing on metrics like net retention and user engagement. The digital economy is adopting a more resilient approach to long-term success, rather than sticking with a growth-at-all-costs mentality.

The ramifications are substantial for corporate strategists and financial experts. Today's subscription-based companies must decide if their business model is supported by customer inertia or if it actually reflects actual consumer value. They also need to think about the measures that are in place to guard against churn shocks, especially when the economy is struggling. Making quick changes to pricing and packaging is essential, as is making sure that dashboards and KPIs track retention quality rather than just subscriber count. Additionally, it is time to review valuation models. Stability is still provided by recurring revenue, but the premium investors place on the model might need to be adjusted. Having subscribers is no longer sufficient; you need subscribers who stick around.

While the subscription model has revolutionised many industries, the rise of subscription fatigue signals a shift in consumer behaviour. Businesses must adapt by offering better value, transparency, and flexible pricing to retain loyal customers in an increasingly competitive market.

editor@ifinancemag.com

Stubborn inflation weighs on UK's economy

IF CORRESPONDENT

The British economy is beset by stagnant growth, stubborn inflation, and high debt, a fragile mix that has sparked chatter of an IMF rescue

Since Labour took office over a year ago, Britain’s economy has delivered mixed signals. Growth briefly surged early in 2025 but has since stalled, inflation remains stubbornly high, and government debt has soared to near-record levels. Domestic demand is soft, while external shocks weigh on trade.

Debt-to-GDP hovers around 100%, among the highest in the developed world, and borrowing has reached record monthly highs. In this context, newspapers and analysts have begun warning of a potential crisis reminiscent of the 1970s, even speculating about the possibility of an IMF rescue. Official voices and independent observers caution that while risks are real, an IMF bailout is not imminent as long as fiscal and economic reforms stay on track.

GDP stalls as inflation persists

Economic growth has been modest under the Keir Starmer government. After a strong start to the year (GDP rose 0.7% in Q1 2025), activity slowed sharply, with real GDP just 0.3% higher in Q2. This beat analysts’ forecasts (0.3% vs 0.1% expected), but firms and the government built up stockpiles and boosted spending ahead of known shocks. For example, businesses ramped production to avoid incoming American tariffs, and public sector outlays rose 1.2% in Q2. In contrast, private investment and consumer spending languished. Business investment fell 4% in Q2, and household spending was hardly up.

The Confederation of British Industry (CBI) warns that recent tax increases (higher national insurance and a higher minimum wage) have dampened firms’ hiring and investment plans, meaning growth is likely to remain subdued. Official forecasts now target only about 1-1.3% annual expansion in 2025-26, little up from the 1.2% and 1.4% predicted by the IMF. In short, the economy is no longer contracting, but growth is anaemic, leaving the United Kingdom the “joint-second” fastest grower in the G7 in Q2, alongside France.

Inflation remains elevated. Consumer prices (CPI) climbed 3.8% year-onyear in July 2025, the highest rate in the G7. Much of this reflects base effects (e.g. energy prices and airfares) and recent food cost rises, but the broader picture is worrying.

Wages are rising (regular pay growth around 5% in mid-2025), and corporate costs are up, while housing and transport prices are volatile. Critics note that stubborn price rises, coupled with a shrinking workforce, make it hard for inflation to fall to the Bank of England’s 2% goal. BoE Governor Andrew Bailey has flagged this “sticky” inflation as a chief concern.

Labour market, debt strains, and reforms

Signs of weakness also appear in the labour market. Official data show payrolled employment has been falling for months, and though wages still rise faster than inflation, slack is growing. The jobless rate ticked up to 4.7% in Q2 2025, and analysis by the Resolution Foundation suggests unemployment may hit around 5% this autumn. The number of people claiming jobless benefits has climbed sharply since Labour’s victory, reaching a record 6.5 million by mid-2025.

A particularly troubling aspect is the low labour-force participation, with 21% of prime-age Britons neither working nor seeking work, well above the pre-pandemic level. Governor Bailey and other officials point out that a falling workforce and ageing demographics are structural headwinds. Bailey warned at Jackson Hole that Britain now lags other advanced economies on workforce participation and must boost productivity to grow. This mismatch partly explains why UK inflation (at 3.8% in July) remains the highest among peer countries. Behind these problems lie the public finances. Debt has ballooned, as the

net government debt stands around 100-104% of GDP, near all-time highs. In January 2025, the UK ran the largest-ever monthly deficit (outside the pandemic), over £21 billion. This debt burden magnifies any shock. The IMF and the OBR warn that, at current trends, debt will rise sharply in the coming decades unless policymakers act. Labour’s early budgets reflect this pressure.

Chancellor Rachel Reeves has restored sound fiscal rules, raised taxes (for example, reversing a Tory cut in employers’ national insurance), and cut some spending (notably disability benefits) to trim the deficit. The IMF noted

in July 2025 that these measures have “enhanced the credibility” of British fiscal policy, even as it cautioned that limited headroom means small shocks could breach the deficit target.

In practice, this has meant tight constraints, with many departments facing cuts or stagnation, while capital investment (in infrastructure, net-zero and innovation) has been prioritised. In effect, Treasury has chosen to “hold spending steady while targeting new investment on growth areas.”

After more than a year in power, the Starmer government has launched several initiatives. It made large capital

commitments. For example, the 2025 Spending Review increased infrastructure, energy and defence investment substantially, even as day-to-day budgets were squeezed. Taxes have risen (e.g. overturning the NI cut, freezing personal allowances), and certain welfare payments have been trimmed to keep to fiscal targets.

On the growth front, the government has prioritised technology and industry. In January 2025, the Prime Minister unveiled an AI-focused growth plan, backing all 50 recommendations of the “AI Opportunities” review. This included new “AI Growth Zones” (fast-tracked planning for tech campuses) and a massive commitment to data centres.

It means that by that day, three firms had already pledged £14 billion in British AI data infrastructure and 13,250 jobs. For example, Vantage Data Centres announced a £12 billion expansion to build one of Europe’s largest campuses (11,500 jobs).

A new national supercomputer and an “AI Energy Council” were also proposed, tying digital strategy to industrial policy. In short, Whitehall is explicitly betting on AI, data centres and the socalled “digital economy” to drive future growth.

The government has also revived industrial strategy measures. It completed a free-trade deal with India and inked a preliminary “Economic Prosperity Deal” with the United States on limited tariff cuts. A UK-US full FTA remains under negotiation, but the May 2025 pact eliminated tariffs on aerospace and set a quota for car exports (100,000 vehicles per year, roughly equal to recent British output).

Domestic plans include a “Growth Mission” focusing on housing, childcare, and “green” industries. Labour has also

promised to protect core services against drastic cuts, even as spending elsewhere is pared back.

Despite this activity, critics say hard reforms have lagged. Planned measures to improve labour supply have been watered down amid political resistance, and productivity-boosting reforms are slow to roll out.

As one analysis notes, Reeves’ early fiscal changes were “relatively modest,” leaving only small room for slack in the rules.

The budget and spending announcements have largely kept the promise of higher living standards, but only over a multi-year horizon, with actual disposable incomes still squeezed in the near term. In sum, the government is delivering on long-term industrial strategy and stabilising the public finances, but many promised reforms are still only beginning to materialise.

Trade deals with US and India

The UK recently secured two headline trade agreements, with mixed impacts. In May 2025, London and Washington signed the so-called “Economic Prosperity Deal.” This quasi-deal is not yet a full free-trade treaty, but it pledges mutual tariff reductions and opens a path to further talks. Crucially, the US agreed to scrap tariffs on British aerospace parts and cut auto tariffs to 10% (from 27.5%) on up to 100,000 British-made cars per year.

In return, London committed to the quota system. However, Trump’s administration kept the existing 25% duties on British steel and aluminium in place. The deal is legally non-binding, and many details remain unresolved (for example, American law permits higher 10% “baseline” tariffs on cars even after the deal).

In practice, the immediate benefits seem limited, as direct UK exports to the United States account for only about 7% of overall British exports, and the tariffs on metals are effectively unchanged until a future quota system is set up. In the long run, a deeper UK-US FTA could boost investment and consumer choice, but for now, analysts caution that trade barriers remain mostly intact.

Even more transformative is the UK-India free trade agreement signed in July 2025. After three and a half years of talks, Prime Minister Starmer and India’s Narendra Modi hailed a “historic” deal. Official estimates project it could add about £4.8 billion a year to UK GDP and attract £6 billion in bi-directional investment.

Key elements include steep cuts in tariffs, as on average, British exporters will see duties on their goods fall from 15% to around 3%. For example, UK whisky and spirits face half the tariff immediately, with further cuts later; the auto, food and garment sectors also gain improved market access. This opens up India’s 1.4 billion consumers to British products.

However, experts caution that the deal has big gaps. It contains virtually no new liberalisation for UK services or finance and lacks binding provisions on environmental and labour standards. Critics note that India’s average tariff (13%) is still much higher than the United Kingdom’s (1.5%), so the principal gains may be for goods exporters. The agreement will only take effect after parliamentary ratification, so benefits lie ahead.

In the longer run, openness to Indian markets could help sectors like whisky, pharmaceuticals, and automotive parts. But because underlying structural issues remain, any boost may be gradual. In

sum, the deals with the United States and India promise targeted export growth but are unlikely to be a panacea for the economy’s deep problems. As OECD notes, trade openness helps, but “very thin fiscal buffers” and global uncertainties mean growth will stay weak unless domestic reforms keep pace.

Ambitious AI action plan

A centrepiece of the government’s strategy is boosting high-tech capacity at home, especially data centres and semiconductors. The Labour administration has deliberately courted large tech projects. The AI Action Plan and Digital Strategy have helped secure about £25 billion in data centre investment since last summer.

That includes Vantage Data Centres’ £12 billion Welsh campus and Nscale’s multi-billion-pound AI data campus in Essex. These projects will certainly create some high-skilled jobs and upgrade the UK's digital infrastructure.

But experts warn the net benefits may be overstated. Data centres consume enormous amounts of electricity and water. As one analysis starkly put it, “They suck up energy and water and don’t employ many people, but the UK economy really needs more data centres.”

In other words, the environmental cost is high, and the direct job creation is modest, especially compared to heavy industries.

Even the Treasury’s own AI plan acknowledges the need to manage the energy demand (it set up an “AI Energy Council” to tackle that challenge). Some analysts fear we may end up with beautiful tech parks that boost nominal GDP but leave local economies little better off.

Thus, while the government’s data-centre push aligns with its AI ambitions, observers note that sustainability and genuine productivity gains

Gross domestic product in current prices of the United Kingdom from 2017 to 2024 2017 2682.38 2018 2875.02 2019 2853.07 2020 2698.71 2021 3144.08 2022 3125.40 2023 3371.12 2024 3644.64

(In Billion US Dollars) Source: Statista

must be assured if it is to pay off in the broader economy.

The semiconductor sector is seen similarly as a future growth area. The United Kingdom launched a National Semiconductor Strategy (in May 2024), aiming to capture a slice of the global chip market, particularly niche fields like compound semiconductors (advanced materials for 5G, lidar and power electronics).

The government pledged in its last term to invest £1 billion in chips and set up a Semiconductor Advisory Panel. However, the new government has been noncommittal on those headline targets, and as reported in mid-2024, ministers declined to guarantee the full £1 billion, focusing instead on leveraging private capital.

Analysts and bank views: The diagnosis

What do experts say is ailing the economy? Across the board, the consensus is that Britain faces weak productivity and structural weakness more than any single shock. Bank of England chief Andrew Bailey calls the situation “an acute challenge,” citing slow growth and falling labour participation after the COVID-19 pandemic. His worry, echoed by many, is that chronic factors are dragging growth down.

In Bailey’s view, the economy is “well at the bottom of the league table” on key metrics of workforce and output. He and other BoE officials stress boosting productivity via technology and reform, rather than relying solely on low inter-

est rates. Indeed, Bank staff told Reuters they expect more monetary easing only if inflation falls decisively; for now, the July inflation surprise was deemed temporary.

International bodies echo this. The IMF’s mid-2025 review applauds the government’s “good balance” of supporting growth while reducing deficits and projects 1.2-1.4% growth as easing continues. But it warns of “significant risks,” such as volatile markets, rigid public finances, and little fiscal headroom, meaning any shock could force belt-tightening or expose the United Kingdom to higher debt dynamics.

The OECD similarly downgraded the British growth forecasts (to 1% for 2026) and noted that very thin fiscal buffers leave the UK exposed. In private, one

IMF economist reportedly told The Telegraph that policy uncertainty and debt could make the situation “as perilous as 1976.” Publicly, however, Fund staff have emphasised that a bailout is not on the table as long as the government sticks to its plans.

Heading for a bailout?

Strong warnings have appeared in the press, with one commentator even claiming the UK is “teetering on the brink” of a 1970s-style crisis. Such views usually reference the high debt ratio and tight markets. But so far, both the government and global institutions reject the bailout narrative.

Chancellor Reeves repeatedly says the United Kingdom has no reason to seek IMF aid, and has not signalled any such need. Unlike in 1976, today’s policymakers have set clear fiscal targets and are credibly pursuing them, which keeps the public debt trajectory only gradually rising (the OBR forecasts net debt barely above 100% of GDP in 2026).

The British economy is beset by stagnant growth, stubborn inflation, and high debt, a fragile mix that has sparked chatter of an IMF rescue. So far, however, Labour has taken steps to address the situation by raising taxes and cutting spending to meet strict fiscal rules, while launching ambitious investments in infrastructure and technology.

Chief economists and officials stress that these moves have improved credibility, even if the progress is just beginning. Critics say the government must go further, but there is no sign of an immediate crisis. Whether that remains true will depend on whether growth can firm up and borrowing falls back once the temporary shocks pass.

editor@ifinancemag.com

Oman sets stage for economic transformation

IF CORRESPONDENT

Moody’s highlighted that Oman recorded a budget surplus of 2.8% of GDP in 2024, alongside low inflation and a current-account surplus

Long reliant on oil revenues, Oman is undergoing a pivotal economic transformation in the mid-2020s. In a series of unprecedented moves, the Sultanate is rolling out the Gulf’s first personal income tax, earning back an investment-grade credit rating, and witnessing record-breaking real estate deals.

Oman’s ports are bustling with new highs in ship and cargo traffic, and a new salary law is reshaping workplace dynamics. These developments highlight a broader strategy to secure fiscal sustainability and drive diversification under Oman’s “Vision 2040” blueprint. The following section examines each of these shifts in turn and their implications for Oman’s economic outlook.

Gulf’s first income tax on its way

In a historic step for the region, Oman has decided to introduce a personal income tax on high earners, becoming the first Gulf Cooperation Council country to tax individual incomes. On June 22, 2025, a royal decree established a 5% flat tax on personal income above an annual threshold of OMR 42,000. The tax will take effect on January 1, 2028, giving a multi-year lead time for businesses and households to prepare.

According to the Oman Tax Authority, with a very high exemption threshold, approximately 99% of Oman’s population will not be subject to the tax. In practice, only 1% of residents will pay, making this a socially targeted levy aimed at equity and fiscal gain without burdening middle- and low-income groups.

Oman’s move follows years of economic stress from volatile oil prices and the COVID-19 shock, which highlighted the need for more sustainable revenue streams. Oil still influences up to 85% of Oman’s public revenue, a vulnerability the government is keen to reduce. The personal income tax is the latest piece in a broader fiscal reform puzzle that already included a 5% value-added tax, excise taxes, and corporate income tax. By “completing Oman’s tax system,” officials expect the new tax to shore up state finances and fund social programmes. Importantly, the tax aligns with

Oman’s Vision 2040 goals to diversify income sources, strengthen the social safety net, and reduce hydrocarbon dependence.

Minister of Economy Said Al-Saqri noted that the measure will “strengthen fiscal resilience and reduce exposure to oil price volatility,” which currently sways the majority of public revenue.

The law will formally come into force in 2028, with executive regulations expected by 2026 to clarify implementation details. Oman’s Tax Authority has been preparing administrative and IT systems to ensure a smooth launch when the time comes. Notably, no other GCC state imposes personal income tax, relying instead on indirect taxes or fees to raise revenue.

Oman’s decision thus breaks a regional taboo, setting a possible precedent as the Gulf grapples with fiscal reform. By limiting the tax to individuals and keeping the rate low, Oman hopes to avoid denting its investment appeal. Foreign investors will see no corporate impact, and the tax’s narrow scope seeks to balance much-needed revenue diversification with the Sultanate’s traditional tax-free allure for expatriates and entrepreneurs.

The introduction of income tax signals both opportunity and adjustment. For Omani society, it marks a cultural shift: citizens and residents will, for the first time, directly contribute part of their salary to the state. The government has built in generous deductions and exemp-

tions to cushion the impact, and framed the tax as a contribution toward the public good.

Businesses, on the other hand, must gear up for payroll withholding and compliance. Companies will need to upgrade payroll systems and contracts to handle employee tax deductions. Many firms are already reviewing compensation packages and talent strategies, knowing that tax-free salaries were a longstanding draw for expatriate workers.

Still, the impact should be limited: with only high-income staff affected, most employers will see little to no change for the bulk of their workforce. And for the broader economy, experts view the tax as a fiscal safety valve providing a steady revenue stream that can

help finance development projects and social services even when oil prices dip.

In short, Oman’s bold tax experiment is a bet on long-term stability. A carefully calibrated sacrifice by the wealthy few today to secure the country’s finances for tomorrow.

Moody’s gives Oman an upgrade

Another vote of confidence in Oman’s economic management came in mid2025 when Moody’s Investors Service upgraded Oman’s credit rating to investment grade for the first time in years. In July 2025, Moody’s lifted Oman’s longterm sovereign rating from Ba1 to Baa3 (investment grade), citing stronger debt metrics and fiscal reforms. This upgrade reflects a remarkable turnaround from the debt-laden days of the mid-2010s.

“We expect Oman’s debt metrics to remain robust and consistent with a Baa3 rating even under scenarios where oil prices moderate below our $65/barrel assumption,” Moody’s noted, emphasising improved resilience to oil price swings.

The agency changed the outlook to “stable,” acknowledging that despite progress, Oman’s finances are still exposed to oil market volatility, given a heavy reliance on hydrocarbons.

Moody’s decision lauded Oman’s significantly improved fiscal position and reform efforts. Oman’s public finances have been shored up by a combination of high oil revenues in 2022–2023 and disciplined government measures.

According to Oman’s Ministry of Finance, government expenditure has been pared down to 29% of GDP, from an average of over 41% during 2016–2020, indicating much tighter spending control. Oil windfalls were wisely used to pay down debt.

Public debt fell from 37.5% of GDP at the end of 2023 to 35.5% by the end of

2024, and is projected to continue declining. As a result, Oman’s debt-servicing costs have eased (interest payments now 7.2% of revenue, down from 9% in 2021). The fiscal breakeven oil price has dropped below $70, down from about $84 just a few years ago. These metrics point to a more resilient budget that can weather moderate oil downturns.

Moody’s also highlighted that Oman recorded a budget surplus of 2.8% of GDP in 2024, alongside low inflation and a current-account surplus.

Non-oil reforms are beginning to pay off as well. Initiatives to boost non-hydrocarbon revenues (like VAT and soon income tax), the development of a green hydrogen industry, and plans to expand liquefied natural gas capacity by 2030 all signal a strategic pivot to a more diverse economic base. In short, Oman has demonstrated that it can bring its finances back under control through a mix of austerity and forward-looking investments.

Regaining investment-grade status is more than just a gold star for policymakers. First, the upgrade enhances Oman’s attractiveness to global investors. Many institutional investors and funds have mandates that prevent them from buying “junk”-rated bonds; Oman’s Baa3 rating clears that hurdle.

The government should face lower borrowing costs going forward, saving money on any new international loans or bond issuances. A stable outlook from Moody’s also reassures investors that Oman’s progress is likely to hold. Indeed, the rating agency noted that improved fiscal health gives the government “greater fiscal space and time to implement structural reforms” to further reduce oil dependence.

The upgrade can thus feed a virtuous cycle. Cheaper financing and increased investor confidence will help Oman fund

its diversification projects and infrastructure, which in turn support longterm growth and creditworthiness.

Domestically, the vote of confidence boosts economic sentiment. Omani authorities touted Moody’s decision as validation of the Sultanate’s reform programme and of the “Vision 2040” path. It’s worth noting that other agencies have echoed this positive trend. S&P Global upgraded Oman to BBB in late 2024, and Fitch has also improved its outlook.

The overarching message is that Oman has escaped the debt trap that loomed in the last decade. However, as Moody’s warned, the job isn’t done and reducing the still-heavy oil reliance remains critical to avoid slipping back if oil markets weaken. For now, though, Oman can celebrate a milestone.

Property sector inspires investor confidence

Oman’s economic upswing is perhaps most visible in its booming real estate sector, which has recently notched record highs in both activity and headline-grabbing deals. After a pandemic-era slowdown, Omani real estate has come roaring back, reflecting renewed investor confidence in the country’s prospects.

Property transactions hit all-time highs in 2024, with the total value of real estate deals surging nearly 30% that year to reach OMR 3.3 billion. This marked one of the strongest performances on record, driven by a mix of foreign investment inflows and government-led market reforms. Oman eased rules on foreign property ownership and rolled out new incentives, encouraging Gulf and international investors to enter the market.

By mid-2025, the Sultanate recorded OMR 613 million in real estate sales contracts in the first half (roughly $1.6 billion), up 12.4% compared to the same

period a year prior. Although there were signs of slight cooling in early 2025, the broader trend remains robust.

High-value deals and new developments are grabbing headlines, indicating sustained optimism. In fact, Oman saw its most expensive home sale ever in 2025 — a luxury penthouse in the new Sustainable City — sold for over OMR 2 million, setting a national price record.

The demand for this property was so strong that the project’s Phase 1 sold over OMR 10 million worth of units in its early launch, even before the official sales kickoff. The fact that local and international buyers are willing to pay top dollar for Omani real estate, especially in sustainable and tourism-oriented projects, signals confidence in the country’s future.

Several factors are fuelling Oman’s real estate resurgence. Economic recovery and the credit rating upgrade have improved local sentiment and purchasing power, while wealthy regional investors increasingly view Oman as an attractive, stable market relative to pricier neighbours. Oman’s government has also actively catalysed the sector. It launched a long-term “Investor Residency” visa to encourage foreign buyers of property, and it allows 100% full foreign ownership in designated integrated tourism complexes. Additionally, low inflation and interest rates under 1% have made financing large property purchases more appealing.

The real estate boom has broad implications for Oman’s diversification story. Rising property values and construction activity mean more jobs in construction, real estate, and tourism, helping absorb the growing young workforce. Government revenue also benefits from higher transaction fees and stamp duties. Moreover, big-ticket investments like the “Yiti Sustainable City” align with Vision

Growth of the real gross domestic product in Oman from 2015 to 2024

Source: Statista

2040’s goals of balanced regional development and sustainability.

Yiti, for example, is envisioned as Oman’s first net-zero community, a “green city” flagship that provides housing and tourism attractions and exemplifies Oman’s pivot to environmentally conscious growth. The strong demand for such projects suggests that Oman can position itself as a niche market for sustainable luxury living in the Gulf.

Perhaps most importantly, the confidence driving real estate is self-reinforcing. Of course, prudent eyes will watch for any overheating risk, but so far, the growth appears to be on solid footing,

backed by genuine end-user demand and long-term investment interest rather than speculative frenzy. For Oman, the real estate record-breakers of 2024–2025 have become visible symbols of an economy shaking off stagnation and moving into a new growth phase.

Oman: A trade and logistics hub

Activity at Oman’s seaports has reached unprecedented levels, highlighting the Sultanate’s emergence as a regional logistics hub. Ship traffic and cargo throughput have hit new highs, buoyed by heavy investment in port infrastructure and Oman’s strategic location on

global trade routes. In the first half of 2025, the number of vessels calling at Omani ports jumped by 11.1% year-onyear to 6,586 ships.

Major gateways such as Salalah (a transhipment hub on the Indian Ocean), Sohar (an industrial port near the Strait of Hormuz), and even smaller ports like Shinas all saw upticks in arrivals. This builds on a trend from 2024, when total vessel calls across Oman exceeded 12,000 for the first time.

Alongside more ships, cargo volumes have swelled. Oman’s ports handled 70.1 million tonnes of goods in H1 2025, up 5.2% from 66.6 million tonnes in H1

2024. Container traffic is booming in particular. At the three main container ports (Salalah, Sohar, Duqm), combined throughput reached about 2.43 million TEUs (twenty-foot equivalent units) in the first six months of 2025. It was an 11.7% jump over the previous year. Such double-digit growth in container handling underscores the efficiency gains and expanded capacity resulting from recent upgrades.

Oman’s ports also play a crucial role in importing vehicles, food, and livestock for the nation. For instance, in just six months, they facilitated the import of over 50,000 cars and 2.7 million head of

livestock, underscoring their importance to domestic commerce and food security.

Oman’s push to become a logistics powerhouse is rooted in its advantageous geography and heavy state investment aligned with Vision 2040. Unlike some Gulf neighbours, Oman’s coastline opens directly onto the Arabian Sea and Indian Ocean, allowing ships to bypass the choke point of the Strait of Hormuz. The government has capitalised on this by modernising ports and developing free zones.

Duqm Port is a brand-new deep-sea port and special economic zone carved out of the desert, and is a centrepiece of this strategy, attracting international projects and handling growing volumes each quarter. Meanwhile, Port of Salalah has expanded its container terminal and remains one of the region’s busiest transhipment hubs due to its prime location on east-west shipping lanes. Sohar Port, developed in partnership with the Port of Rotterdam, has grown into a major industrial and bulk goods port, serving not just Oman but also acting as an alternative entry point to the nearby UAE.

Government figures attribute the recent performance to infrastructure projects by the Ministry of Transport and Communications; investments in new quays, deeper drafts, cargo equipment, and digital systems are boosting capacity and turnaround speeds. For example, authorities in 2025 commissioned designs for further port expansions (like the Khour Gramma project and upgrades at Shannah and Masirah ports) to keep pace with rising demand.

Additionally, partnerships with private operators, such as Shinas Port’s new fuel storage facility under a public-private deal, are expanding the range of services available at Omani ports.

The booming port metrics are a posi-

tive bellwether for Oman’s non-oil economy. Growing throughput means more business for Omani logistics firms, port operators, and associated industries (warehousing, trucking, manufacturing), contributing to GDP and job creation outside the oil sector.

It also cements Oman’s reputation as a reliable trade corridor. At a time when global supply chains are being reshuffled and Gulf states are vying to be logistics gateways, Oman’s performance shows it can compete with the region’s larger ports.

Officials note that these achievements “highlight Oman’s growing competitiveness in the logistics sector and reinforce

its ambition to become a leading regional hub for maritime transport.”

Companies are already choosing Omani ports because of their efficiency and strategic location. For instance, some shippers find Salalah port a convenient redistribution point for East Africa and the Indian subcontinent.

The ports’ rise also feeds into Vision 2040’s aim of leveraging Oman’s geography for diversification. A modern logistics sector reduces the economic reliance on oil and integrates Oman more deeply into global trade networks. Challenges remain (global shipping is cyclical, and competition from Gulf neighbours is in-

tense), but the trend is clear.

Oman’s bet on ports and logistics is paying off, turning its harbours into engines of growth. In the long run, this positions the country to capture a larger share of commerce flowing through the region, anchoring one pillar of its post-oil economy.

Balancing oil and opportunity

As these various threads weave together, Oman’s economic outlook in the latter half of the 2020s appears cautiously optimistic and focused on the long game of “Vision 2040.” The developments of 2024–2025 suggest that Oman is gaining

economic momentum.

Growth forecasts are positive. The IMF estimates Oman’s real GDP growth will accelerate from 1.7% in 2024 to about 2.4% in 2025 and 3.7% by 2026, buoyed by diversification and an expected easing of OPEC oil production cuts. Notably, the recent growth has been driven mainly by non-oil sectors. This marks a significant shift, and the economy is gradually tilting away from the oil dependency that once defined it.

That said, oil and gas will remain integral in the near term. Oman is a substantial oil producer (around one million barrels per day in recent years) and a

rising liquefied natural gas exporter. Hydrocarbons still account for the majority of government revenue and export earnings in 2025. The challenge facing Oman is to use the current period of stability to future-proof the economy before the global energy transition catches up. “Vision 2040,” the national development masterplan, explicitly calls for a “diversified and sustainable economy, less reliant on oil.”

editor@ifinancemag.com

Transforming homeownership in Saudi Arabia Damanat

Damanat has issued over 151,000 mortgage guarantees, with a strong focus on semi-bankable individuals, low-income households, and segments traditionally underserved by the financial sector

Osama Abdullatif Al-Othman Damanat CEO

To support Saudi Arabia's Vision 2030 objective of increasing homeownership, the Saudi Mortgage Guarantees Services Company – Damanat has become a crucial national facilitator. By offering innovative and customised mortgage guarantee solutions, Damanat is now empowering broader segments of Saudi citizens, especially low- and mid-income households, to access suitable housing through easier access to mortgage financing.

Founded in 2023 as a fully owned subsidiary of the Real Estate Development Fund (REDF) and licensed by the Insurance Authority, Damanat builds on strategic groundwork laid under the Housing Programme. Backed by SAR 18.6 billion in capital, the venture was established to bridge financing gaps and support the growth of a dynamic, inclusive housing market.

"Our activities include mortgage guarantee products for individuals through our partners, off-plan real estate development, and insurance products. These products are designed to enhance the securities market, which will help provide financial instruments targeted to attract foreign capital inflows. This is in line with the objectives of Vision 2030 toward increasing homeownership in the Kingdom," Damanat told International Finance.

Since its launch, Damanat has issued over 151,000 mortgage guarantees, with a strong focus on semi-bankable individuals, lowincome households, and segments traditionally underserved by the financial sector. These efforts reflect the company’s commitment to enabling access for citizens with limited borrowing capabilities or formal banking relationships.

Empowering a broader market

Damanat is led by CEO Osama Abdullatif Al-Othman, who brings over 30 years of expertise in project finance, real estate, and private equity investments. Before joining Damanat, he held executive roles at Aseer Investment (a PIF subsidiary) and Abu Dhabi Future Energy - Masdar (a Mubadala subsidiary), along with various other leadership positions nationally and internationally.

Al-Othman holds a BSc in Industrial Management from King Fahd University of Petroleum and Minerals (KFUPM) and has completed executive education at Harvard University. At Damanat, he drives strategic growth, operational excellence, and innovative programmes that expand homeownership and support the national housing agenda under Saudi Vision 2030.

Damanat prides itself on values like innovation, transparency, and collaboration, which guide its work with partners, customers, and stakeholders. The company offers a wide range of guaranteed solutions for individual homebuyers and real estate developers. It also features robust risk assessment models and flexible guarantee frameworks

that have built trust among lenders and facilitated financing for a wider spectrum of the population.

Its flagship offerings for individuals include the Mortgage Guarantee Product (MGS), which supports the purchase of ready housing units or self-construction projects, and the Off-Plan Guarantee (OPG), which facilitates the purchase of off-plan units by providing assurance to lenders and easing access to mortgage finance.

For developers, Damanat provides the Off-Plan Development Guarantee (OPD), branded as “Tawer,” which mitigates financing risks and enables developers to secure funding more efficiently. These products accelerate housing delivery and address demand across various income segments.

By developing solutions that address supply and demand in the housing market, Damanat facilitates financial inclusion, encourages innovation in real estate financing, and supports the broader goals of the Kingdom’s housing strategy under the "Vision 2030" economic diversification agenda.

In an interview with International Finance, Damanat CEO Osama Abdullatif Al-Othman said, "Our vision is centred on enabling

wider access to mortgage finance and empowering more citizens to become homeowners. By working across the ecosystem with developers, financial institutions, and government stakeholders, we contribute directly to Vision 2030’s housing and economic development goals."

Strengthening the secondary market

Recognising the importance of liquidity and long-term capital in housing finance, Damanat is also actively involved in supporting the secondary mortgage market. Through structured guarantees and targeted initiatives, Damanat helps build a more resilient financial ecosystem that attracts institutional investment, increases housing supply, and ensures longterm affordability.

Looking ahead, Damanat remains focused on expanding its offerings, enhancing digital accessibility, and fostering longterm partnerships with key actors in the housing value chain. Its role extends far beyond guarantees. Damanat acts as a strategic catalyst for sustainable housing development, contributing to the Kingdom's social and economic stability.

Shaheen Suliman

FWA is a broadband service designed for homes and businesses, delivered via a cellular network

FWA: The future of Internet access

IF CORRESPONDENT

Fixed Wireless Access (FWA) is emerging as a breakthrough solution to extend high-speed broadband beyond the reach of cables and fibres. It uses 4G/5G mobile radio networks to deliver internet to homes and businesses via a dedicated outdoor or indoor receiver, without the need for wires to be run to every house.

5G supports much higher speeds and lower latency, it can deliver performance comparable to fibre optics, making it a true alternative even in cities

With an estimated onethird of the world’s population (about 2.6 billion people) still offline, predominantly in rural and low-income areas, FWA offers a fast, cost-effective way to reach the “last mile.” Unlike plugging a smartphone into a router, FWA uses specialised customer-premises equipment, along with spectrum licenses, to provide stable, high-speed links.

Its portability and lower construction costs make it ideal for areas where laying fibre is prohibitively expensive or slow.

In short, FWA brings fibre-like speeds to underserved areas in weeks or months, rather than years, helping to close the digital divide while opening new business opportunities for investors.

What is fixed wireless access?

Fixed Wireless Access is a broadband service designed for homes and businesses, delivered via a cellular network. As Ericsson explains, “FWA is a wireless connection that provides broadband access to a specific location, such as a home or enterprise premises. It enables high-speed internet via radio signal, without the need for physical cables.”

It typically involves a small antenna (customer premises equipment or CPE) mounted on the outside (or inside) of a building, which communicates with a nearby 4G/5G base station. While FWA can run on existing 4G LTE networks, 5G FWA offers much greater capacity. Because 5G supports much higher speeds and lower latency, it can deliver performance comparable to fibre optics, making it a true alternative even in cities.

FWA differs from personal hotspots or “tethering” in that the receiver is stationary and dedicated, which allows for unlimited data plans and guaranteed performance. In a way, FWA treats each home like a 5G customer, but fixed so that operators can offer symmetrical, high-capacity links similar to wired broadband.

As one telecom strategist put it, fixed wireless has moved from a niche solution to a “primary growth driver” for broadband expansion. The technology works best when homes stay in roughly the same location (no driving off with the router) and ideally have some line of sight to the cell

tower. However, new equipment and the use of spectrum are extending the range and overcoming obstacles, widening FWA’s reach.

FWA and the digital divide

Worldwide, connectivity gaps are stark. In high-income countries, roughly 93% of people are online, but in low-income countries, only about 27% have internet access. Rural areas lag even further. Globally, 83% of urban dwellers are online versus only 48% in rural communities. In fact, of the 2.6 billion people still offline in 2024, 1.8 billion live in rural areas. This digital divide is not just statistics; it translates into missed opportunities in education, healthcare, commerce, and more. Providing affordable broadband to underserved populations could be transformative for emerging economies.

In this context, FWA is being embraced as a key bridging technology. Its low infrastructure cost, with no need to dig trenches for cable, can cut deployment expenses by roughly half in hard-towire areas.

Deploying FWA involves installing towers and dishes, which is much faster than stringing fibre across mountains or forests. Samsung’s network experts note that FWA “can reach the last mile” and is often “easy and fast to deploy,” making it ideal for unserved markets.

The cost savings also tend to be passed on to customers; for example, rural home internet plans over 4G/5G are often cheaper than legacy DSL or fibre services, aiding adoption in price-sensitive communities.

In remote regions of the United States and elsewhere, towers like this one are being equipped with 5G radios to serve fixed wireless customers. For instance, UScellular, in partnership with Ericsson, launched 5G millimetre-wave FWA service targeting rural and suburban homes.

In April 2022, the company began offering home internet speeds of several hundred Mbps in ten cities. Within months, nearly 180,000 households were able to access the service. Upgrading antenna technology has expanded its FWA coverage area by roughly 40 times, delivering speeds of up to 300 Mbps in areas previously too remote for cable.

Similar efforts are underway at other US carriers; a recent Accenture/CTIA study finds that 5G FWA could economically serve 8.4 million rural US households, which is nearly half of all rural homes, with high-speed broadband. In the US, billions of dollars in federal subsidies are also being directed toward new FWA-friendly deployments, recognising it as a fast path to connect the hardest-toreach communities.

Across the globe, governments and telecom companies are promoting FWA as a digital inclusion tool. In Bangladesh, for instance, regulators recently authorised mobile carriers to offer fixed wireless broadband to homes and offices. Under the new 5G guidelines, operators can now use their wireless spectrum to extend coverage into rural villages and urban edge areas where wired infrastructure is sparse.

One local newspaper noted that this move will “extend broadband coverage efficiently, especially in areas with limited wired infrastructure.” In India, Reliance Jio is already deploying FWA on its nationwide 5G network; Jio’s 5G “AirFiber” plans are reaching remote districts and fuelling explosive growth.

A June 2025 report notes that Jio’s FWA subscriber base has ballooned to 6.88 million, slightly surpassing the 6.85 million fixed-wireless users of US-based T-Mobile, making Jio poised to become the world’s largest FWA provider. In many parts of Sub-Saharan Africa, wireless broadband is often the only realistic option.

Tarana Wireless, for example, is working with Microsoft’s Airband initiative to deploy “next-generation FWA” in several African countries.

In some regions of Africa, fewer than 30% of people have reliable internet today. Such efforts, using FWA radios capable of handling non-line-of-sight signals and interference, could rapidly improve connectivity for schools, clinics, and homes, even in rugged terrain.

In Latin America and the Caribbean, both governments and multilateral banks recognise significant opportunities. Currently, over 240 million people in Latin America lack internet access, which represents about one-third of the population.

Analysts from Ericsson note that many countries are beginning 5G rollouts with FWA use cases in mind because “FWA is ideal for places that are difficult to access with traditional fixed broadband.”

The Inter-American Development Bank even estimates that closing the region’s digital gap could boost GDP by up to 7.7% and create over 15 million jobs, which is a significant boost to economic growth, gains to which rapidly expanding broadband (whether wired or wireless) would contribute. In practice, some Latin operators have trialled 5G FWA in rural Peru and Brazil, and big carriers like Claro (America Movil) have signalled interest in using 5G home internet to reach unserved areas.

Overall, the message is clear: the areas hardest to wire tend to be exactly where digital connectivity is needed most for development,

Source: ABI Research Global Fixed Wireless Access connections from 2019 to 2024

and FWA offers a practical way to bring broadband to those communities. By delivering multi-hundred-megabit service over the air, FWA can connect remote schools, telemedicine outposts, and low-income neighbourhoods that have fallen off the fibre map. It is already reshaping market dynamics.

For example, in 2023, over 90% of new broadband subscribers at Tier-1 carriers in the US came via FWA rather than fibre or cable. Operators everywhere are taking note. Even smaller regional ISPs and rural cooperatives see fixed wireless as a growth engine, and hardware vendors report that virtually every operator is now planning or deploying FWA networks.

Investment and market trends

FWA is also a bright spot for investors and equipment makers. The global market for fixed wireless broadband is booming. A recent industry forecast values the FWA market at about $36.5 billion in 2024, with projected growth to

roughly $127.6 billion by 2032, which reflects a 17 % CAGR. This rapid growth is primarily fueled by the need for connectivity in rural and underserved areas. The report notes that “growing demand for broadband in underserved and rural areas is driving market growth.”

Unsurprisingly, most of the early deployments have been in North America, which currently holds the highest share of the FWA market, but Asia-Pacific is expected to grow the fastest, thanks to initiatives in India, China, and Southeast Asia.

Major industry players are positioning themselves accordingly. Traditional telecom giants like Verizon, T-Mobile, AT&T (all in the US) and equipment vendors like Nokia and Ericsson are highlighted as top FWA players.

Indeed, each of the “big three” US wireless carriers has already launched 4G/5G home internet products and is investing in FWA-capable radio sites. On the

vendor side, Nokia and Ericsson have boosted their FWA product lines in recent years. Nokia’s 5G AirScale and Lightspan products, and Ericsson’s FWA CPE and small-cell portfolios, are being sold into markets worldwide.

Even traditionally mobile-focused equipment makers are touting FWA. For example, Samsung has made statements about how its 5G radios can be used to cost-effectively extend broadband under US government subsidy programmes.

There is also a surge of private investment and partnerships in this space. United States-based startup Tarana Wireless, which makes so-called “next-generation FWA” gear optimised for NLoS rural use, has attracted over $400 million in R&D and capital to date.

In 2023, Tarana raised an additional $50 million from Digital Alpha, a digital infrastructure investor, to scale its deployments. Digital Alpha’s thesis is centred on funding wireless internet service providers that rely on FWA, rec-

ognising that this technology can “fundamentally change network performance and operator economics” for rural ISPs. Tarana’s C1 (Gigabit 1) platform is now used by hundreds of small ISPs in 21 countries, and its success stories have piqued investor interest.

Despite its promise, FWA also faces challenges. Many regions still lack sufficient mid-band 5G frequencies or the regulatory approvals for using them in fixed services. Without mid-band spectrum, operators may rely on crowded sub6GHz or limited mmWave bands, affecting coverage or penetration.

FWA can claim to offer fibre-like speeds, but real-world throughput may vary based on distance, interference, and whether customers share a cell. Some early fixed wireless plans experienced speed fluctuations or data caps that limited user experience. Emerging “next-gen” FWA systems aim to reduce these issues, but rollout and operator expertise are still catching up with the technology hype.

Finally, bridging the digital divide is not just a technology problem but also involves local education and support. In some regions, even when high-speed internet is available, adoption is low due to affordability, digital literacy, or competing priorities. Effective FWA initiatives often pair network buildout with programmes for subsidised service, community training, or partnerships with schools and clinics.

editor@ifinancemag.com

Mining the abyss: A

dangerous gamble?

What makes the prospect of deep-sea mining especially alarming is how little we know about the environments poised to be disturbed

SEABED DEEP-SEA MINING

Imagine descending into the deep blue expanse of the Pacific Ocean, hundreds of miles from land.

Sunlight fades to darkness at just a few hundred metres, and by 3,000 feet (about 900 metres), the blackness is complete. By the time you reach 12,000 feet (over 3,600 metres), you have arrived at the abyssal seafloor.

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The vast Clarion-Clipperton Zone (CCZ) lies here, an underwater plain that stretches across approximately 1.7 million square miles (around 4.5 million km²) between Hawaii and Mexico. It’s an alien world where life has adapted to crushing pressure and eternal night. In fact, recent research catalogued over 5,500 species living in the CCZ, with an astonishing 88–92% of them new to science.

This zone is not alone in its significance. Scientists estimate that millions of species, perhaps up to 10 million, may inhabit the deep ocean below 200 metres. Yet as rich and mysterious as this marine biodiversity is, these same deepsea floors are also home to something else of extraordinary value: untapped stores of critical minerals.

According to some estimates, a single swath of the CCZ contains more nickel, manganese, and cobalt than all known terrestrial reserves combined. Potato-sized black rocks called polymetallic nodules litter the seabed here.

First noted by 19th-century ocean expeditions, these nodules are rich in metals vital for modern technology, from copper and nickel for electric vehicle batteries to cobalt and manganese for renewable energy systems. For decades, the idea of harvesting this deep-sea mineral treasure was confined to theory.

With advancing underwater mining technology, that vision is hurtling toward reality. The year 2025 could mark a turning point. Dozens of exploratory

missions have already probed the deep, and full-fledged commercial seabed mining looms on the horizon.

Treasures of the deep

In an era obsessed with smartphones, electric cars, and clean energy, these deep-sea minerals are often described as the “new oil” powering the global economy. Demand for critical raw materials is surging, and policymakers argue they are indispensable for the green transition.

Polymetallic nodules, which form over eons in the abyssal muck, are packed with these high-value elements. In fact, a study by the United States Geological Survey found that Clarion-Clipperton Fracture Zone could hold more nickel, manganese, and cobalt than all land-based reserves worldwide. One consulting firm even valued the CCZ’s metal bounty at roughly $18 trillion.

Commercial interest in these “rocks” has been growing since at least the 1970s, but it accelerated after the International Seabed Authority (ISA) was established in 1994. The ISA, a body affiliated with the United Nations, is tasked with regulating mineral activities in international waters. To date, the ISA has issued 31 exploration contracts covering more than 1.5 million square kilometres of seabed—an area roughly four times the size of Germany.

Major economies like China, Russia, and South Korea are among those sponsoring deep-sea exploration ventures. Private companies have also entered the fray. A Canadian firm, The Metals Company, successfully tested a robotic nodule collector in 2022, proving that harvesting these seabed minerals is technically feasible. All signs point to the race to the ocean bottom now truly underway.

Global investment in the deep-sea mining sector from 2018-2025

Proponents of deep-sea mining argue that it could relieve pressure on terrestrial mines, potentially sparing rainforests and communities from the ravages of surface extraction. However, this optimism glosses over a critical fact. Mining is destructive, no matter where it’s done.

On land, digging up minerals means clear-cutting forests, blasting open pits, and generating toxic waste. It leads to habitat loss, polluted waterways, and greenhouse gas emissions from energy-intensive processing.

If surface mining is any indication, doing it in the deep sea, an environment even more delicate and completely unspoiled by humans until now, could be catastrophic. Heavy machines would churn up seabed sediments and vacuum up nodules by the ton, disrupting a world that has existed in silence for millions of years.

Source: MarketsandMarkets

Crucially, polymetallic nodules are not just inert rocks; they are a habitat. Some deep-sea creatures live on or around them, and even use them to lay eggs (scientists recently observed the “ghost octopus” breeding on these nodules in the CCZ). Removing the nodules is akin to ripping out the foundations of an ecosystem.

Life finds a way

What makes the prospect of deep-sea mining especially alarming is how little we know about the environments poised to be disturbed. The deep ocean is Earth’s largest ecosystem, comprising roughly 90% of the total volume of our oceans. Yet it remains mostly unexplored. By some estimates, 80% of our oceans have never been mapped or observed by humans.

In the past century, scientists have made one staggering discovery after

another, revealing that life thrives even in the most extreme depths. In 1977, researchers diving near the Galapagos Islands found hydrothermal vents teeming with bizarre organisms, from giant tubeworms to clams the size of dinner plates. These creatures survive not through photosynthesis, but chemosynthesis, harnessing chemical energy from the vent fluids, an entirely new paradigm of life independent of sunlight.

Since then, numerous expeditions have catalogued countless oddities of the deep. Fish with transparent heads, crustaceans that withstand immense pressure, and corals that form forests in perpetual darkness are among them.

As new species are discovered on virtually every deep-sea expedition, scientists now believe the deep ocean’s biodiversity may rival or exceed that of shallow waters. Yet, these extraordinary creatures are equally fragile. Hav-

ing evolved in an environment of constant conditions, even slight changes in temperature, chemical makeup, or light can be devastating.

Unlike surface ecosystems that might rebound after disturbances, deep-sea life often grows and reproduces slowly. A coral colony in the abyss might be hundreds or thousands of years old, and a disturbed nodule field might never recover at all in human terms.

The threats from seabed mining are manifold. Directly on the seafloor, bulldozing through sediment will smother organisms and eliminate habitats. But the impacts won’t be confined to the deep. Mining ships at the surface will shine bright lights into waters that have been dark for millennia, potentially disorienting animals adapted to near-total darkness.

The operation of machinery will introduce intense noise pollution, adding

to the cacophony that marine mammals already struggle with. Whales and dolphins, which rely on sound to navigate and find food, could be gravely affected by the continuous roar of seafloor mining equipment.

Moreover, grinding up the seabed will create vast plumes of fine sediment that can drift for dozens of miles, clouding the water and clogging the gills and feeding apparatus of fish and filter-feeders far from the mining site.

Crossing the Rubicon

In April 2025, US President Donald Trump signed a controversial executive order aimed at fast-tracking deepsea mining in American waters and international high seas. The order directed American agencies to expedite permits for seabed mining and even asserted American intent to allow mining “beyond national jurisdiction,” effectively thumbing its nose at international oversight.

This move is unprecedented. The United States is the only major economy that hasn’t ratified the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and thus isn’t a member of the ISA. By unilaterally authorising seabed exploitation outside its exclusive economic zone, the United States is bypassing the ISA’s long-running effort to develop a global mining code for the oceans.

By creating its own parallel system for granting mining rights, the US has crossed a diplomatic Rubicon, clashing with global consensus and raising the spectre of a free-for-all scramble on the high seas.

This American stance comes at a time when much of the world is pumping the brakes on deep-sea mining. In late 2024, Norway’s government agreed

Polymetallic Nodules

to pause its plans for the first commercial deep-sea mining licenses after an outcry from environmentalists and a small support party in Parliament.

The decision halted what would have been the world’s first large-scale mining of the Arctic seabed. Likewise, a coalition of over 30 countries, including Germany, France, Spain, Canada, the United Kingdom, and many Pacific Island nations, has called for a moratorium of at least 10 years on all deep-sea mining.

Several major global corporations like BMW, Volvo, Google, and Samsung have pledged not to use any deepsea minerals in their products until rigorous scientific studies demonstrate that mining would not harm ocean environments.

These companies, alongside environmental groups like the WWF, support a precautionary pause, noting that with so much of the deep ocean unexplored, forging ahead now would be “recklessly short-sighted.”

Even within the mining and metals sector, some executives quietly admit that the optics and risks of deep-sea extraction are troubling. Many have begun investing in improved recycling and terrestrial alternatives instead.

Need or greed?

Supporters of deep-sea mining insist they are driven by necessity, not greed. The narrative goes like this: The world’s appetite for metals is skyrocketing, and we will soon face critical shortages that could derail the clean energy revolution.

By some oft-cited projections, demand for minerals could increase by nearly 500% by 2040 as electric vehicles, solar panels, and batteries proliferate. “We have no choice,” say mining advocates. To meet climate goals and maintain supply chains, one must find INDUSTRY FEATURE

new sources of metals, and the deep sea is our best option.

However, a closer look at market realities paints a far less dire picture. In fact, recent years have seen gluts and price collapses in several key minerals, calling into question the inevitability of shortages. The global production of lithium hit a record high in 2024. And instead of a shortage, the result was a surplus of roughly 154,000 tonnes of lithium (measured in lithium carbonate equivalent) that year.

Weaker-than-expected electric vehicle sales contributed to this oversupply, sending lithium prices plummeting by nearly 80% from their 2022 peak. Similarly, a massive expansion of nickel mining in Indonesia has flooded the market.

Indonesia now produces over 60% of the world’s nickel, and the surge in supply has led to three consecutive years of oversupply, driving benchmark nickel prices down to nearly half of what they were in early 2022.

Cobalt, another battery metal, is also in a state of excess. Record-high cobalt output (thanks in part to major producers in the Congo and China) has so outpaced demand that cobalt prices plunged to their lowest levels since 2016.

And even copper, often touted as the most crucial green transition metal, is currently abundant. Global copper inventories in mid-2024 reached their highest level in four years, reflecting the biggest glut in the copper market in at least four years.

In short, the doomsday supply crunch that proponents of seabed mining warn about has yet to materialise. Metals markets are cyclical and notoriously difficult to forecast. Demand forecasts can be wildly off the mark, swinging with new technologies, economic shifts, and policy changes.

For example, battery makers are already adapting to material concerns. Tesla, the world’s leading electric car maker, revealed that by early 2022, nearly half of its new vehicles were built with cobalt-free batteries (using lithium-iron-phosphate chemistry instead).

Other automakers and tech companies are investing in reducing reliance on rare minerals, from developing nickel- and cobalt-free batteries to improving designs for recyclability. Meanwhile, recycling programmes are ramping up for existing electronics and EV batteries.

According to the International Energy Agency, a major scale-up in critical mineral recycling could cut the need for new mining by 25–40% by 2050. In the face of such innovations, the rationale for an urgent dive into seabed mining starts to look shaky.

All of this begs the question: Is deepsea mining truly about meeting an unavoidable need, or is it about opportunism and profit? The skeptics argue it’s the latter. They point out that many companies involved are junior mining firms and investors looking for the next frontier, hyping the deep sea as a trillion-dollar opportunity to boost their stock values. Governments, for their part, may be invoking “resource security” to justify power plays in regions beyond their sovereignty.

The Trump administration projected that domestic deep-sea mining could add $300 billion to US GDP over a decade and create 100,000 jobs, lofty numbers that critics say gloss over the likely colossal environmental cost. As one prominent marine policy expert noted, the economic merits of deep-sea mining are still far from clear. What is

clear is that once the seabed is torn up, the damage cannot be easily undone.

The ocean floor

The push to mine the ocean floor cannot be separated from the broader context of international competition. Nowhere is this clearer than in the rivalry between the United States and China. For the past two decades, China has methodically cornered the market on critical minerals.

It accounts for about 61% of global rare earth element production and an overwhelming 92% of rare earth processing, essentially a near-monopoly on turning those raw oxides into usable materials.

“While the Middle East has oil, China has rare earths,” Chinese leader Deng Xiaoping famously quipped in the 1980s.

That statement has proved prophetic. Through heavy state investment and strategic partnerships, China built a dominant supply chain. Today, it effectively controls which countries or companies receive many crucial minerals, using this power as a geopolitical tool.

Potential exploitation

Our oceans produce most of the oxygen we breathe, regulate the climate, and sustain millions of people with food and livelihoods. And yet, they remain one of the least understood frontiers. Every deep-sea expedition yields new wonders, species and ecosystems we didn’t even know existed.

To disturb these habitats irreversibly before we’ve even documented them would not only be tragic, but it would be foolish. As one marine conservation group bluntly put it, the decision to mine the deep sea is “not just an economic question, it is an existential one.”

Companies and a handful of nations are ready to take the plunge. Giant machines sit poised to descend and crawl upon the abyssal plains. The regulatory net that should restrain them is frayed and incomplete. The ISA has been debating a mining code for years, with meetings in 2023 and 2024 struggling to finalise environmental safeguards.

However, with the two-year trigger rule invoked by one small nation (Nauru) in 2021, the ISA faces pressure to allow mining even without comprehensive rules in place. The governance gaps and loopholes are large enough for a mining vessel to sail through. If powerful countries now start ignoring the ISA entirely, the notion of collective stewardship of the “common heritage” could collapse overnight.

editor@ifinancemag.com

Swedish furniture giant IKEA, long associated with affordable home goods, has taken significant strides toward sustainability

Sustainability: Profitable for the planet

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As global temperatures continue to rise and consumers become increasingly conscious of their footprint, companies across the board are ramping up their sustainability measures.

In 2024, the world recorded its first calendar year where average global temperatures exceeded 1.5°C above pre-industrial levels. Climate experts caution that this development brings us closer to surpassing the long-term 1.5°C limit established by the 2015 Paris Agreement.

“We must exit this road to ruin, and we have no time to lose,” urged United Nations Secretary-General Antonio Guterres in his 2025 New Year’s message, describing the past decade, which included the ten hottest years on record, as “climate breakdown.”

This barrage of record heat doesn’t mean all is lost, but it is a deafening wake-up call for countries and corporations to act swiftly. Many businesses are stepping up for their bottom line as much as for the planet. Consumers are demanding genuine sustainability and accountability, and as Gen Z and Millennials continue to gain spending power, brands that fail to take real action risk being left behind.

Multiple surveys underscore this generational shift. One study found that 62% of Gen Z shoppers prefer to buy from sustainable brands (and 73% are willing to pay more for sustainable products). Another study found that virtually all Millennial and Gen Z investors are interested in sustainable investing.

“Both Gen Z and Millennials expect sustainability to be part of the baseline – not just a brand add-on,” explains Philippa Cross, founder and CEO of Marshall Sustainability.

She further clarifies, “Research also shows the vast majority of Millennials and Gen Z want to work for companies with strong environmental values.”

With those cohorts projected to make up 74% of the global workforce by 2030,

businesses must adapt if they want to attract the next generation of talent.

More companies are setting net-zero targets, greening their offices, and engaging employees in eco-initiatives.

“Companies excel at handling cyber, geopolitical, and operational risks; sustainability should be no different. To win with Gen Z, companies need to understand the risk of inaction or inauthentic action, weigh that against the risk of lost market share, and lean into ESG and sustainable values hard, all underpinned by transparency,” notes Adriel Lubarsky, founder of the climate start-up Beehive Climate.

Token gestures and greenwashing that once sufficed will no longer cut it.

Regulators and stakeholders are also turning up the heat. Frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD) are forcing greater transparency and accountability from businesses.

“As sustainability matures, the focus is shifting from glossy commitments to real delivery, especially at the product and service level,” Cross said.

She emphasises that true credibility comes from tackling core impacts (like sourcing raw materials responsibly), not just from peripheral tweaks such as

recyclable packaging.

How are companies around the globe meeting this challenge? From Patagonia to Apple, several big-name brands are taking concrete steps to reduce their carbon footprints, embrace circular economy principles, and build environmental responsibility into their operations.

Patagonia: Woven in purpose

US-based Patagonia’s retail stores reflect the brand’s ethos of repairing, reusing, and recycling outdoor apparel to extend product life. Patagonia, the adventure clothing brand and certified B-Corp, has been a sustainability trailblazer since

1973. The company, under renowned rock climber and environmentalist Yvon Chouinard, began donating 1% of its sales to environmental causes in 1985.

Chouinard even co-founded the “1% for the Planet” network to encourage other businesses to follow suit, a global movement that now has roughly 5,000 member companies contributing a portion of their revenue to green initiatives.

Over the decades, Patagonia has contributed more than $140 million to grassroots environmental groups, while implementing numerous eco-friendly practices in-house. The company uses only “preferred materials”, such as or-

ganic cotton, recycled polyester and nylon, in its products, and it powers 100% of its own retail stores and offices with renewable energy.

The brand actively advocates for a circular economy approach. Its Worn Wear programme invites customers to trade in used Patagonia gear for resale (keeping clothing out of landfills), and its Patagonia Action Works platform connects people with environmental causes.

Patagonia hasn’t shied away from activism either; in 2017, it even joined a lawsuit against the US government to help protect Native American lands

(fighting the reduction of Bears Ears National Monument).

Then, in 2022, came perhaps the boldest move: Chouinard transferred ownership of the $3 billion company into a trust and a nonprofit organisation called the Holdfast Collective, ensuring that all Patagonia’s future profits (around $100 million per year) are devoted to fighting climate change and protecting nature.

"We are going to give away the maximum amount of money to people who are actively working on saving this planet. I never wanted to be a businessman… Now I could die tomorrow, and the company is going to continue doing the right thing for the next 50 years, and I don’t have to be around,” Chouinard told The New York Times about the decision.

Patagonia stands as a shining example of aligning profit with purpose, and its approach has clearly resonated with consumers. The company’s revenue reportedly surpassed $1 billion in 2024, showing that a deep commitment to the planet can go hand in hand with business success.

IKEA: Conscious living made truly accessible

IKEA is investing heavily in renewable energy, from massive rooftop solar arrays to wind farms, as it strives to become climate positive. Swedish furniture giant IKEA, long associated with affordable (and often disposable) home goods, has taken significant strides toward sustainability. Circularity is central to many of its initiatives. For example, IKEA’s buy-back and resell programme lets customers return used IKEA furniture for store credit, giving furnishings a second life rather than sending them to the landfill.

The company is also investing heav-

ily in clean energy. By 2024, 75% of IKEA’s global operations were powered by renewable electricity, and its Ingka Investments arm has committed a total of €7.5 billion to wind and solar projects to power the business.

IKEA is electrifying its delivery fleet as well, rolling out electric vehicles for home deliveries to cut emissions. These efforts support the retailer’s broader climate goals, including a 50% reduction in greenhouse gas emissions across its value chain by 2030 (relative to 2016 levels) and reaching net-zero emissions by 2050.

Engaging with local communities is another priority. “In 2024, IKEA supported over 81,000 people through community programmes and expanded efforts in refugee employment and biodiversity,” notes Karen Pflug, IKEA’s Chief Sustainability Officer, in an interview with World Finance.

In the United States, IKEA even designed and donated a small sustainable home to a community village in Texas for vulnerable residents, using “trauma-informed design” principles to make it supportive and welcoming.

Experts often cite IKEA as a leader in corporate sustainability.

“They don’t shy away from the tough conversations, including the role that affordable goods play in driving overconsumption. Instead, they tackle it head-on with initiatives like sourcing FSC-certified wood, improving product durability, and experimenting with circular models. I also appreciate their transparency: they openly share the challenges they face and invite feedback, which is key to building trust and real progress,” Cross said.

A key focus for IKEA is now making sustainable living easy and affordable for customers.

“We know people want to take more climate action, but often face barriers like cost and convenience. We are focused on making sustainable living more accessible, through services like buy-back and resell, and by improving how we bring products and solutions that help people live more sustainably every day,” Pflug said.

In the coming years, IKEA looks poised to continue forging a more sustainable path, proving that even a global retailer known for low-cost convenience can embrace green innovation.

Renault: Reinventing mobility with purpose

At Renault’s iconic Refactory facility in France, used vehicles are repaired, retrofitted, and recycled as part of a circular

approach to automotive manufacturing. French automaker Renault is working to reconcile cars and sustainability. In 2021, it opened the Refactory in Flins, Europe’s first circular economy factory dedicated to mobility.

This facility focuses on extending vehicle lifespans through what Renault calls a “retrofit, re-energy, recycle and restart” programme. At the Refactory, Renault repairs and refurbishes used cars and electric vehicle batteries, retrofits older vehicles with electric drivetrains, and recycles materials, creating a closed-loop system to reduce waste.

Renault has also set ambitious climate goals: achieving carbon neutrality in Europe by 2040 (and globally by 2050). A big part of this is electrification; the company expects 90% of its

vehicle sales in Europe to be electric by 2030. Progress is underway: Renault’s overall carbon footprint fell by 28% between 2010 and 2023. In 2022, it launched The Future is NEUTRAL, an initiative to expand recycling and reuse across the industry as part of a push toward “resource neutrality.”

Renault is steadily increasing recycled content in its new models as well. The electric Scenic E-Tech SUV introduced in 2024 contains about 25% recycled materials in its parts, and overall, 90% of the vehicle’s mass is designed to be recyclable. The upcoming Renault 5 E-Tech city car, launching in 2025, is engineered to have a 35% lower carbon footprint in manufacturing than its predecessor (the Renault Zoe) by 2030.

Even biodiversity is on Renault’s ra-

dar. The company has a project in Thailand (with its tyre supplier Michelin), training local farmers in agroforestry to reduce the impact of rubber production on forests. While the auto industry as a whole has a long road ahead to reach true sustainability, Renault is demonstrating how a legacy carmaker can begin to drive change through innovation and circular thinking.

Apple: Carbon neutral by design

Apple’s latest “Apple Watch” models include the company’s first carbon-neutral products, identified by a special green logo on their packaging. Consumer electronics giant Apple, not historically known for its eco-friendliness, is now making significant moves toward sustainability.

In April 2025, Apple announced it had slashed its overall greenhouse gas emissions by over 60% compared to 2015 levels, marking major progress toward its pledge to be carbon neutral across its business (including its supply chain) by 2030.

Apple introduced its first fully carbon-neutral products in 2023, several models of the Apple Watch, by cutting product emissions roughly 75% and offsetting the rest with high-quality carbon credits, which are invested in forest conservation. Later in 2023, Apple released a carbon-neutral version of its Mac Mini computer (built with over 50% recycled content), and in early 2025, it unveiled a new MacBook Air made with over 55% recycled content.

The tech company has aggressively pushed the use of recycled and responsibly sourced materials. All Apple-designed batteries now use 99% recycled cobalt, reducing reliance on newly mined minerals. To keep old devices out of landfills, the Apple Trade In pro-

gramme offers consumers credit for turning in used devices, which Apple then refurbishes or recycles.

Apple’s latest Environmental Progress Report highlights other milestones: every Apple facility worldwide has been powered by 100% renewable energy since 2018, and that commitment is spreading to suppliers. Apple’s suppliers have brought 17.8 gigawatts of clean energy online around the world to power their operations.

Apple is also investing in clean energy projects to match the electricity that customers use to charge their devices, through its Power for Impact programme supporting renewable energy in communities from the Philippines and Thailand to South Africa.

The company is likewise backing natural carbon removal through its Restore Fund, which finances projects like reforestation of the Atlantic Forest in Brazil, now filled with native tree species that might otherwise have been lost.

Apple is also tackling waste and water in its supply chain: in 2024 alone, suppliers diverted around 600,000 metric tons of waste from landfills, and since 2013, the Supplier Clean Water Programme has saved over 90 billion gallons of water through recycling.

There is more work ahead, but Apple’s progress shows how innovation can drive sustainability even in a resource-intensive industry, all while the company continues to thrive. Notably, Apple’s revenue grew by more than 65% during the same period that its emissions were reduced by 60%, illustrating that profitability and sustainability can go hand in hand.

As Gen Z and younger consumers increasingly make purchase decisions based on their values, the efforts of companies like Apple, IKEA, and Patagonia

to put the planet alongside profit may well become the new standard for longterm business success.

A new paradigm for corporate responsibility

The case studies of Patagonia, IKEA, Renault, and Apple offer a compelling narrative: a new business paradigm is taking root. This shift is neither cosmetic nor performative; it is structural, intentional, and increasingly non-negotiable. In an era where global temperatures are rising and resource depletion is accelerating, sustainability is no longer a competitive advantage; it is a baseline expectation.

What differentiates the brands highlighted in this article is not merely that they are reducing harm, but that they are redesigning their models to actively regenerate, restore, and rethink what responsible capitalism can look like.

This shift is underpinned by three interlocking forces: rising consumer consciousness, tightening regulatory frameworks, and the changing values of the emerging workforce. Gen Z and Millennials don’t just speak out about climate issues; they use their buying power, social media influence, and job choices to support companies that take real action.

The fact that 73% of Gen Z is willing to pay more for sustainable products is not just a trend; it’s an inflexion point. These generations will soon dominate both market demand and global employment, creating a feedback loop that reinforces sustainability as a core business imperative.

Regulators, too, are sharpening their focus. Frameworks such as the European Union’s Corporate Sustainability Reporting Directive (CSRD) are setting higher standards for accountability.

Investments in energy transition technologies worldwide from 2015 to 2024 (In Billion US Dollars) 2015 383 2016 426 2017 456 2018 518

576

929 2021 1177 2022 1517 2023 1881 2024 2083

Source: Statista

Voluntary ESG pledges are giving way to mandatory disclosures and legally enforceable targets.

This ensures that sustainability is no longer the domain of well-meaning corporate social responsibility teams but of CEOs, CFOs, and boards who are being held financially and reputationally accountable for long-term environmental impact.

Equally significant is the cultural shift occurring within many of these companies. For years, sustainability was treated as a marketing concern, external-facing and often limited to optics. That has changed. Today, the brands leading the charge are embedding sustainability into their supply chains, innovation pipelines, employee incentives, and financial planning.

IKEA’s resale programmes, Patagonia’s activist ownership model, Re-

nault’s circular economy factories, and Apple’s green product design aren’t isolated acts; they’re ecosystemic. They demonstrate a commitment to transforming not just products, but the very processes and philosophies that underpin their existence.

There is also a growing recognition that solving the climate crisis requires collective intelligence and cross-sector collaboration. Apple partnering with forestry initiatives in Brazil, IKEA engaging refugee communities, or Renault working with Michelin in Thailand on agroforestry. These are not charity projects, but investments in system resilience. They show a more mature approach to business, where environmental and social issues are closely connected to financial success.

However, challenges continue to persist. Greenwashing is still preva-

lent, particularly in industries where accountability is lacking and consumer education is insufficient. The real risk is in performative sustainability—branding that overstates its environmental efforts and carbon offsets that disguise rather than actually reduce emissions. Consumers, regulators, and watchdogs must continue to scrutinise such claims. Transparency, third-party verification, and measurable impact are critical in maintaining credibility.

Additionally, there are structural contradictions that companies must grapple with. Can a business model built on selling ever more products truly be sustainable? How do we reconcile economic growth with planetary boundaries? While circularity, carbon-neutral goals, and renewable energy use are important steps, deeper questions about consumption, inequality, and ecological regeneration remain. It is

here that the next frontier of corporate sustainability lies.

Looking forward, we are likely to see three major developments: integrated value accounting, stakeholder governance, and decentralised innovation.

Companies will move beyond quarterly profits to account for their environmental and social externalities. Metrics like biodiversity impact, water usage, and material circularity will become part of mainstream reporting, supported by tools such as the Science-Based Targets initiative (SBTi) and the Taskforce on Nature-related Financial Disclosures (TNFD).

Shareholder primacy will continue to be challenged by models that emphasise stakeholder value. Employee ownership, along with community investment and long-term stewardship, as seen in Patagonia’s ownership structure, will become more prevalent, especially as activist investors and ESG-oriented funds gain influence.

As climate risks become more localised, companies will adopt region-specific sustainability strategies. This means empowering local teams, decentralising supply chains, and partnering with indigenous knowledge systems to co-create solutions that are both effective and equitable.

As this shift gathers pace, it will be remembered not just as a response to climate catastrophe, but as the dawn of a more conscious, connected, and courageous form of commerce. A new chapter in capitalism is being written, one where responsibility is not a burden but a source of innovation, resilience, and ultimately, relevance.

editor@ifinancemag.com

CBFS powers Qatar’s capital market growth

Advancing Qatar’s financial landscape is a top priority at Commercial Bank Financial Services

As Qatar’s financial sector continues attracting regional and global interest, Commercial Bank Financial Services LLC (CBFS) stands out as a driving force in the country’s capital market development. A fully licensed brokerage house and a 100% owned subsidiary of Commercial Bank, CBFS offers a full-fledged suite of services, including stock execution, market making, asset management, and a recently introduced research unit.

International Finance recently spoke with Shahnawaz Rashid, Chairman of the CBFS Board, Executive General Manager, and Head of Retail Banking at Commercial Bank, and Hamad Al Shahri, General Manager at Commercial Bank Financial Services.

In the conversation, Shahnawaz Rashid and Hamad Al Shahri highlighted CBFS's top priority: advancing Qatar’s financial landscape, and shared how the institution is actively working toward that goal. They

also provided insights into CB Waseet, one of Qatar’s leading trading apps.

CBFS operates across several key functions. How would you describe your core mission?

Shahnawaz Rashid: Advancing Qatar’s financial landscape is a top priority at CBFS. We have geared all our efforts to drive the sector forward by empowering investors and supporting their growth. In line with our mission, we have introduced world-class solutions that encompass stock execution, asset management, and market intelligence. We strive to remain at the forefront of the financial services industry, and we have the scalability, resources, and foresight to introduce state-of-the-art solutions in the market.

Market making is not a widely understood concept in the region. Can you explain your role in that space?

Shahnawaz Rashid: Market making involves continuously

providing buy-and-sell prices for selected listed stocks to enhance liquidity and price efficiency. CBFS is among the licensed market makers, and we work closely with the Qatar Stock Exchange. Our role is to instill investor confidence and ensure tighter spreads, as they are essential in a healthy and active market.

Question: How do you support retail and institutional investors in their investment journey?

Shahnawaz Rashid: We offer a suite of tailored financial solutions to retail and institutional investors. For retail clients, our mobile

Shahnawaz Rashid Chairman, CBFS Board

trading platform, CB Waseet, offers user-friendly access to live market data, fast order execution, and real-time portfolio tracking. For our institutional clients, we provide a high-touch service, research-driven insights, and block tracking capabilities. Our solutions have been designed to facilitate everyday life while enabling our customers to achieve their goals.

Question: Speaking of CB Waseet, what makes it one of Qatar’s top trading apps?

Hamad Al Shahri: When designing CB Waseet, our top priority was to create a user-

Hamad Al Shahri General Manager, CBFS

friendly and reliable experience, and that’s exactly what we delivered. The app successfully bridges convenience with functionality while offering advanced features like technical analysis tools, multilingual support, and instant notifications. This creates a secure and responsive space for modern investors. CB Waseet is a gateway for seamless trading experiences.

Question: How will your recently introduced research division add value for investors?

Hamad Al Shahri: Staying relevant nowadays takes a village. Staying on track with the evolving landscape and growing needs of investors is necessary if you want to be at the forefront. At CBFS, we continuously ask ourselves: What kind of support do investors need? How can we integrate advanced tools to elevate their trading experiences? How can we empower them to achieve their goals? We conduct

research around these questions, and through the insights we get, we deliver exceptional services that enable clients to make wellinformed and confident decisions. Our added value for investors is transparency, financial knowledge, and round-the-clock support.

Question: What’s ahead for CBFS in the coming years?

Hamad Al Shahri: Our plans include expanding our digital services, introducing more innovative investment products, and further positioning CBFS as a key player in market development. As Qatar’s capital markets mature, we will continue to drive growth and innovation.

For investors navigating the evolving landscape, CBFS is more than just a brokerage – it’s a long-term financial partner with a relentless commitment to market integrity and innovative solutions. With a solid reputation and trusted expertise, CBFS remains fundamental in Qatar’s financial ecosystem.

Meituan leveraged its army of scooter drivers to offer near-immediate delivery from local warehouses and supermarkets

ANALYSIS MEITUAN GROUP-BUYING

China’s group-buying boom faces a bust

IF CORRESPONDENT

In late June 2025, residents across China were jolted by an unexpected notification on Meituan, the nation’s food delivery giant, announcing that it was abruptly shutting down its grocery group-buying operations in all but four provinces.

At its peak, community group buying attracted billions in investment and millions of users, promising to revolutionise how lessaffluent communities shopped

The decision, which surprised many customers and even suppliers, marked a dramatic turning point for one of China’s hottest pandemic-era shopping trends. Just a few months earlier, in March, Alibaba Group had quietly closed its own community group-buying arm, Taocaicai.

Xingsheng Youxuan, a startup that pioneered the model nationally, scaled back to operating in only three provinces, down from 18, a startling fall for a company valued at $5 billion at its funding peak in early 2021. Today, Pinduoduo’s Duoduo Maicai is the last major platform still offering group-buy grocery deals across China. This wave of exits by heavyweights like Meituan and Alibaba underlines the rapid rise and fall of community group buying. During the height of the COVID-19 pandemic, a unique kind of online shopping emerged as the darling of China’s tech industry. Dubbed “community group buying,” the model

was essentially Groupon-meets-Instacart, where neighbours or friends pooled their orders for everything from apples to iPhones to get bulk discounts and cheaper delivery.

By consolidating dozens of grocery orders and dropping them at a single pickup point, platforms hoped to crack the conundrum of low-margin online grocery sales. The approach proved especially popular for daily necessities like produce and rice, allowing bargain-hungry consumers to save a few yuan on each item.

At its peak, community group buying attracted billions in investment and millions of users, promising to revolutionise how less-affluent communities shopped. However, now these platforms are vanishing one by one, casualties of shifting consumer habits, intense competition, and unsustainable economics.

From lifeline to obsolete model

The COVID-19 pandemic was the crucible in which community group buying truly took off. Starting in 2020, as Chinese cities cycled through strict lockdowns, going to the local wet market or supermarket became impossible for weeks at a time.

Tech companies seized the opportunity to digitise everyday necessities. In metropolises, well-heeled residents could pay for on-demand grocery delivery to their doorstep. But in less-developed regions and smaller cities, millions found a lifeline in pooling grocery orders with neighbours for next-day pickup.

Joining a WeChat group chat run by a local “tuanzhang” (group leader), residents could browse daily deals on vegetables, eggs, or even toys, place orders collectively, and then wait for a bulk delivery to arrive at a nearby garage or convenience store. It was a socially driven solution to last-mile logistics: cheaper than standard delivery and a convenient alternative when venturing out was risky.

Rather than dispatching individual couriers to thousands of scattered homes, companies could deliver in bulk to one location, cutting costs to a fraction of normal last-mile fees. In early 2020, as interest surged, nearly every tech titan piled in.

Meituan launched Meituan Youxuan (Select) and rapidly expanded to hundreds of cities. The Meituan Select app offered discounted groceries for next-day pickup. Pinduoduo shifted a sixth of its employees into its new Duoduo Maicai division to fend off upstart rivals. Didi Chuxing, the ride-hailing firm, tried its hand with Chengxin Youxuan, and JD.com spun

up Jingxi Pinpin to chase the trend.

By late 2020, recruitment ads for group-buying operations were everywhere, and venture capital flowed freely into the sector. One leading platform, Hunan-based Xingsheng Youxuan, even attracted investments from Tencent and others, reaching a valuation of about $5 billion amid the frenzy.

Yet the very forces that enabled this boom sowed the seeds of its decline. By 2023, China’s pandemic restrictions had lifted, and daily life was reverting to normal. At the same time, the major players had built dense courier networks and “instant delivery” services that promised groceries at your door in under 30 minutes.

Meituan, for instance, leveraged its army of scooter drivers to offer near-immediate delivery from local warehouses and supermarkets. Once consumers got a taste of that convenience, the idea of waiting until the next day and walking to a pickup point lost its appeal.

“Now, instant retail is also coming to the lower-tier cities. People could get groceries for maybe the same

price as community group-buying, but within an hour, instead of waiting a day and having to pick them up from a community group leader. We have arrived at a time when it is almost an old model,” observes Ed Sander, a China tech analyst at Tech Buzz China.

In other words, the very audience that group buying brought online, including older shoppers who prized thrift, was being lured away by faster, easier options. The day it announced its group-buy drawdown, Meituan pointedly stated it would double down on its 30-minute instant delivery grocery business. In just a few years, an innovation born out of lockdown necessity became largely obsolete, replaced by a more convenient evolution in online retail.

Online grocery’s rise & fall

One of the most intriguing aspects of the group-buying craze was the rise of the community group leaders, or tuanzhang. These were the on-theground organisers who made the whole system work. Often a neighbourhood busybody, a small shop owner, or a stay-at-home mom looking for extra income, the tuanzhang acted as the human bridge between tech platforms and residents. The term literally means “regimental commander,” a tongue-in-cheek reference to marshalling one’s neighbours for collective action.

Companies recruited thousands of such community leaders, enticing them with small commissions and flexible hours to promote group buys in their area. Armed with a smartphone app and plenty of personal connections, a tuanzhang would rally residents to place or-

ders, often by posting daily deals in WeChat groups or handing out flyers. In exchange, they earned a cut of the sales, usually a few per cent, and sometimes perks like free produce for hitting volume targets.

Beyond the political and social critiques, the lack of financial sustainability was the fundamental challenge that doomed community group buying. Even on paper, selling produce and staples is a low-margin game; add the costs of handling and delivery, and margins slim down further. Group-buying promised to solve this by aggregating orders, but in practice, it introduced a host of new costs and complications. For one, relying on thousands of loosely affiliated community leaders made it hard to control service quality or standardise operations. Vegetables sometimes spoiled in the summer heat, waiting on a volunteer’s porch; orders got mixed up by overworked group leaders; customer complaints piled up.

Moreover, to grab market share, companies engaged in a subsidy arms race, pouring money into discounts for customers and generous commissions for group leaders, effectively trading short-term losses for user growth.

By late 2021, the combined gross merchandise value (GMV) of Meituan Select, Duoduo Maicai, and Taocaicai had reached an impressive ¥220 billion. Yet that amounted to less than 0.5% of China’s total retail sales, a tiny slice of the market considering the scale of investment. The truth was that group buying, while popular in pockets, never became a dominant mode of shopping, and the costs to run it far outweighed the revenues.

Meituan's annual revenue from 2015 to 2022

Even deep-pocketed tech titans found these economics untenable. Startups in this sector burned cash at a blistering pace, and many fizzled out despite backing from bigname investors. Didi’s Chengxin Youxuan folded after failing to turn a profit. JD.com’s Jingxi Pinpin was drastically scaled back by 2022. Alibaba’s Taocaicai and Meituan’s Youxuan each reportedly lost billions of yuan attempting to conquer the grocery scene.

Meituan never broke out the separate financials for its group-buying unit, instead folding it under the 'New Initiatives' category in earnings reports. But that segment alone swallowed nearly $1 billion in losses in 2024. Ultimately, no amount of volume could make ultra-cheap cabbage and eggs profitable when layered with delivery costs and commissions, at least not under the model of the past few years.

For the frontline tuanzhang who

(In Billion Yuan) | Source: Meituan

hustled to make group buying work, the downturn has been palpable.

“Our customer pool has gotten so much smaller, and the commissions just aren’t what they used to be,” says Lingluo, who runs a small print shop in Guangdong province and has been moonlighting as a community group leader since 2022.

At the peak of the craze in 20222023, she had nearly 500 neighbours actively ordering through her, earning about ¥4,000 a month (around $600) in extra income. But now, in mid-2025, her WeChat ordering group has only 280 members left, and on a typical day, merely 10 or so place orders. The real blow came in May 2025 when Meituan slashed the commission structure for group leaders in an effort to stem losses.

Disheartened by the meagre pay, Lingluo has largely stopped promoting orders and keeps her store closed most of the time, choosing to conserve her energy.

The only reason she hasn’t quit being a group leader entirely, she admits, is to maintain access to cheap groceries for her own household, a motivation many remaining tuanzhang share. As long as she stays registered, she can buy staple foods at the platform’s low prices even if customer demand has dried up.

In the meantime, China’s digital retail landscape has evolved. Meituan and other tech firms have pivoted their attention to premium on-demand grocery delivery, pouring funds into coupons and promotions to entice customers into using their 30-minute services.

Why wait until tomorrow for a bulk order, they argue, when you can have fresh produce on your doorstep by the time you finish watching an episode of TV? The bet is that once consumers grow accustomed to the instant gratification of near-immediate delivery, few will want to return to the old ways.

It’s a bet that seems to be paying off in the post-pandemic era. China’s shoppers, even those in smaller cities, are rapidly coming to expect convenience alongside low prices. And the tech companies, after the bruising price wars of group buying, are now in a race to win on service and speed.

In fact, the habit of buying daily necessities online has only deepened. Consumers who first learnt to shop for food via group purchases during lockdowns have moved on to other digital grocery channels rather than reverting to traditional markets.

Even elderly shoppers, once intimidated by e-commerce, have embraced the convenience. Some now order groceries on on-demand apps three times a day so that each meal’s ingredients are fresh. It’s a remarkable shift in consumer behaviour that few could have imagined pre-pandemic.

editor@ifinancemag.com

Individual consumers will no longer be able to see or compare the prices that corporations offer

AI pricing: A threat to consumer fairness

IF CORRESPONDENT

Glen Hauenstein, the president of Delta, told investors in July that the airline would expand its artificial intelligence (AI) pilot programme to optimise costs for individual customers. This has led to greater attention to the possibility of sellers setting custom prices based on each customer's personal information.

Delta has since maintained that AI is only used to enhance its long-standing dynamic pricing system, which allows it to adjust fares to generally balance supply and demand, rather than setting individual fares. It is difficult to understand how AI could be applied to improve those traditional market pricing metrics to the extent that Hauenstein suggested.

Concerns about AI-driven pricing models that favour sellers over consumers continue to exist. To address the massive information gap between buyers and sellers that facilitates this invasive practice, it is essential to confront the lack of consumer privacy protections in United States law. Additionally, consumers must be empowered to defend themselves.

Why bespoke pricing is problematic

With advancements in digital technology and unrestricted collection of customer personal data, sellers can now exploit sophisticated algorithms to violate customer privacy and profit from the outcome. Each customer can have a personal profile that sellers can use to determine whether they are willing and able to pay more than what the traditional supply and demand curves would indicate.

For over a century, sellers have posted their products' list prices. These prices are uniformly available to all customers, who are anonymous to the seller at the time of posting. To assess demand and adjust the price accordingly, sellers have used market research.

Economists call this 'consumer surplus' — the benefit customers gain when they would have been willing to pay more than the list price. The seller reverses the customer’s role by offering custom prices. Individual consumers will no longer be able to see or compare the prices that corporations offer. However, some customers are not offered lower prices by sellers out of altruism. Sellers want to

Source: Statista

increase sales and reduce excess inventory to boost overall profit. Historically, they have achieved this through sales. But when the current price is available to all, customers can plan their purchases, look for discounts, and compare prices.

With this strategy, customers who would be willing to pay more but wait for or find a lower price can take advantage of the consumer surplus. By eliminating this option, bespoke pricing allows the seller to keep the excess money from customers.

For decades, airlines have used their market knowledge to develop distinct seat categories at varying prices based on factors like class, time of year, and time of purchase. They expect demand to rise during the holidays or during significant events, and assume that families and individuals are likely to make the majority of their purchases well in advance.

AI-powered ‘invisible hand’

Of course, customised pricing isn’t always unfair. Completed sales in medieval bazaars came from negotiations, where a buyer could evaluate a seller

and vice versa. This is still how many large purchases, such as homes and cars, are made.

However, for a modern industrialised economy, individual negotiations generally proved ineffective. List prices, set before sellers knew who would be purchasing, were posted and advertised starting in the 1880s. For consumers, the price tag provided anonymity.

The advent of online commerce gave consumers hope that it would increase their purchasing power by facilitating the comparison of prices and finding desired goods and services. This was true, and it did just that. However, the rise of custom pricing threatens that optimism. A new market for consumer data was created by online commerce, and it has since been gathered, organised, shared, sold, and cross-referenced on a massive scale.

How can consumers avoid giving up control of their personal information? One option is to persuade the government to restrict the use of custom pricing, which the Federal Trade Commission explored in 2024. Congress and state legislatures are currently considering legislation at various stages.

Artificial intelligence adoption and trust in workplaces in 2025 (In Percentage by Income Group)

Income Group Adoption (%) Trust (%)

Growth of the AI market worldwide from 2021 to 2025

A crucial first step is enacting stricter data privacy legislation. In the absence of legal restrictions, consumers may also choose to address the issue on their own by hiding their identities and limiting seller profiling. For instance, they might use a virtual private network (VPN) to shop online. It will be difficult to return some of the power consumers once had due to bespoke pricing.

The industry’s vastly superior financial, technological, and lobbying resources hinder consumers and their advocates. However, for the online marketplace to continue to serve consumers, addressing bespoke pricing in some form is essential.

In addition to individual actions like using VPNs and legislative changes, raising public awareness and promoting digital literacy are equally important in addressing the challenges of custom pricing. Customers often don’t realise that every click, search, and cart abandonment leaves a trail of data that algorithms use to predict and control their purchasing habits.

This lack of transparency exacerbates the power imbalance between buyers and sellers. Public education about the collection, analysis, and monetisation of personal data is crucial. People can only

demand greater accountability from businesses profiting from their data and make informed decisions about the tools and platforms they use if they have this knowledge.

Additionally, governments, civil society, and the private sector must work together to create ethical AI frameworks. In automated pricing models, these should prioritise non-discrimination, fairness, and transparency.

The same stringent regulations that apply to food and drug companies because of their potential effects on human health should also apply to businesses using AI in commerce to safeguard economic well-being. Independent audits of algorithmic pricing tools, transparency reports, and unambiguous opt-out procedures should be standard practices, not optional features.

Although the concept of "algorithmic fairness" is gaining traction worldwide, it is still not widely applied in practice. To enforce compliance in this rapidly evolving field, regulatory bodies must have both technical expertise and authority.

Furthermore, businesses that use data ethically and implement fair pricing practices should be rewarded, whether through financial incentives,

Estimated worldwide spending on artificial intelligence-centric systems in 2023, by industry

Billion

Billion

Billion

Billion

$6.7 Billion

$44.6 Billion

public recognition, or trust ratings. In the digital economy, fairness will be redefined to benefit consumers, turning it into a competitive advantage rather than an afterthought.

If AI-enabled custom pricing is allowed to continue, it could gradually undermine decades of efforts to create consumer protections. Now is the time to act before custom pricing becomes so deeply ingrained in online sales that its effects are nearly impossible to reverse. Fair pricing should be protected for everyone in the online marketplace, not just the wealthy and powerful.

Experts from Northeastern University in Massachusetts have raised alarms about the risks to consumers. According to Kate Ashley, an associate teaching professor of supply chain and information management at Northeastern, AI flight pricing could reduce transparency, enable discrimination, and give companies too much power over what individuals pay, potentially exploiting travellers without their knowledge.

This observation comes as Delta Air Lines faces scrutiny after revealing plans to use AI to set ticket prices. Critics are questioning whether such technology could lead to personalised pricing that tar-

Government artificial intelligence readiness index rankings worldwide in 2024, by country (In AI Readiness Index Score)

editor@ifinancemag.com United

Source: Statista

gets consumers based on their data.

Along with Ashley and her Northeastern colleagues, lawmakers have raised concerns as well. Democratic Senators Ruben Gallego, Mark Warner, and Richard Blumenthal asked whether Delta was using AI to set prices based on personal data. If so, they warned, it could lead to fare increases tailored to each customer’s personal “pain point.”

Christo Wilson, a Northeastern professor of computer science and founding member of the university’s Cybersecurity and Privacy Institute, made it clear with these words: "It very much sounded like this was being used for personalised, individual pricing. This is the kind of thing that gets people very upset. It doesn’t sound good."

AI-driven pricing might make sense for businesses, but it risks taking advantage of consumers who don’t even know it’s happening. When companies use personal data to decide what each person should pay, fairness disappears. Ultimately, Prices should reflect value, not how much someone can be squeezed for. After all, we need rules that protect everyone, not just profits.

for young players?

rolling out new features aimed at making it safer for minors, including a revamped friend system, privacy tools, and age-verification services that users can submit via a video selfie.

In Roblox’s old friend system, players had no distinction between people they knew casually or online and those they considered close friends. The platform’s new tiered system introduces "Connections" and "Trusted Connections," specifically for people players know and trust. To access "Trusted Connections" and its benefits, users must first complete age verification, which requires submitting a video selfie. Once they’ve submitted their video, it will be compared against an AI-driven “diverse dataset” to estimate their age. If the user appears to be under 13, they will automatically lose access to any features not deemed age-appropriate.

Teen users who pass the age check will be

cluding inappropriate language and personally identifiable information—on party voice and text chats for users 13 and up.

These communications remain subject to Roblox’s community standards and moderation, but the company hopes removing filters will keep users on its platform instead of moving to spaces like Discord. By keeping players within Roblox, the company can monitor their activity. Users whose ages cannot be determined with 'high confidence' will have their age remain unconfirmed and will need to use ID verification to proceed.

The company says it will allow for parental consent in the future; biometric data is deleted after 30 days, except where required by a warrant or subpoena. As WIRED raised the issue of 13-year-olds not having government-issued IDs to chief safety officer Matt Kaufman, he replied, “That is a problem. In North America, or maybe

TECHNOLOGY

the United States in particular, that’s not common. In other parts of the world, it is much more common to have a photo ID."

If a child is unable to obtain verification due to a lack of ID, they can get verified on the gaming platform through their parents. If their parents are unable to do so for any reason, kids won’t be able to use "Trusted Connections."

The latest move comes amid increasing state-level demands in the US for age verification on online platforms. Identity verification company Persona has provided the age-screening technology. Several American states, including Utah, have recently implemented laws requiring app store owners like Apple and Google to verify the age of their users. Social media companies such as Meta, X (formerly Twitter), and Snap have already agreed that app store operators are responsible for age verification. However, Apple and Google have expressed differing views on this issue.

Source: Roblox FEATURE ROBLOX GAMING PRIVACY

Roblox's average daily active users from 2015 to 2024 2015 12 Million 2016 20 Million 2017 30 Million 2018 40 Million 2019 50 Million 2020 150 Million 2021 202 Million

230 Million 2023 250 Million 2024 300 Million

Reform comes after controversy

Until now, private messages on Roblox were filtered to block profanity and other flagged content. As per Kaufman, age-screened access to unfiltered chats could allow teens and adults to continue using the platform for open communication rather than turning to external apps. Roblox will still monitor conversations for potential risks.

Users who have already verified their age using ID will not need to complete the facial analysis process. The company said the age-estimation software is “optional,” and teens can alternatively verify their age using a government-issued ID or, in the future, parental consent.

Roblox also introduced new tools focused on privacy and well-being, including daily time limits, online status

controls, a “do not disturb” mode, and a summary of time spent on the platform. With teen permission, parents can link accounts to view activity, trusted connections, and spending insights.

The reform comes after a row, as an undercover investigation into the gaming platform exposed serious lapses in child safety. The study from CCN.com found that despite parental controls and public reassurances, children as young as five were being exposed to explicit content, interacting with adults, and bypassing weak verification systems.

The report, compiled by digital behaviour experts called "Revealing Reality," which came out in April this year, discovered that "despite the safety features in place, adults and children can easily interact in the same virtual spaces, with no effective age verification or separation.”

Roblox has already established itself as one of the largest video games in the world, averaging over 80 million play-

ers per day in 2024, with roughly 40% of them being under the age of 13. As part of their investigation, "Revealing Reality" researchers created multiple fake Roblox accounts using people as young as five, nine, ten, thirteen, and over forty. They found that the account registered as a 10-year-old could “freely access highly suggestive environments.”

These included virtual hotels with private rooms where characters wore sexually suggestive outfits. Within these spaces, children could engage in conversations “that often strayed into adult themes.” In fact, a video posted by Revealing Reality showed a character

encountering avatars making indecent noises and actions. The 10-year-old account also entered a virtual dance club, where avatars were seen in scenarios not fit for a child's upbringing.

However, Kaufman, responding to the report, said, “At Roblox, trust and safety are at the core of everything we do. We continually evolve our policies, technologies, and moderation efforts to protect our community, especially young people. In 2024 alone, we added more than 40 new safety enhancements, and we remain fully committed to going further to make Roblox a safe and civil place for everyone.”

Another Roblox spokesperson told CCN that Revealing Reality’s investiga-

tion “omits important contextual facts that are essential to an accurate understanding of safety on our platform.”

However, this year, Florida Attorney General James Uthmeier issued a subpoena to Roblox regarding its marketing to children. He stated that his office had received numerous reports about children being exposed to "graphic or harmful material on the gaming platform, as well as predatory adults being able to message minors freely."

“As a father and Attorney General, children’s safety and protection are a top priority. There are concerning reports that this gaming platform, which is popular among children, is exposing

them to harmful content and bad actors. We are issuing a subpoena to Roblox to uncover how this platform is marketing to children and to see what policies they are implementing, if any, to avoid interactions with predators,” he stated.

There have been claims by former Meta employee Kelly Stonelake that the tech giant knowingly allowed children under 13 access to its virtual reality platform, Horizon Worlds, not just Roblox. Stonelake, who submitted her whistleblower statement through a complaint filed by the non-profit Fairplay, alleged that Meta permitted underage users to register using adult accounts, enabling the company to collect data on them

without proper parental consent.

In response, Meta directed the media to the company's policy, which suggests that parents should have control over accounts registered by children aged 10 to 12 on the Quest headset for accessing Horizon Worlds. The same regulation also mandates Meta to report users suspected of being underage, followed by the removal of such accounts if they are confirmed to belong to pre-teens.

Despite Roblox announcing new safety features for its underage users, while giving parents more control over what their children can access, Damon De Ionno, Research Director at Revealing Reality, said, “The new safety features announced by Roblox don’t go far enough. Children can still chat with strangers who aren’t on their friends list. With six million experiences on the platform, many with inaccurate descriptions or ratings, how can parents realistically moderate what their kids are doing?"

Kaufman highlighted that Roblox boasts approximately 98 million users across 180 countries and is especially popular among teenagers, with over 60% of its users over the age of 13. However, the company has faced significant challenges regarding the safety of minors and issues related to predators on the platform.

According to a 2024 Bloomberg report, police have arrested at least two dozen people who’ve used Roblox as a platform for grooming, abuse, or abduction. Roblox has also been the subject of several lawsuits. These include a class-action lawsuit alleging the company harvests user data, including that of minors, and a federal lawsuit alleging a 13-year-old girl was exploited and sexually groomed via Roblox and Discord.

Credibility still an issue

Kaufman called Roblox “one of the saf-

est places online for people to come together and spend time with their friends and their family.”

However, Kirra Pendergast, founder and CEO of Safe on Social, an online safety organisation operating worldwide, said that Roblox’s latest safety measures are largely opt-in, therefore putting “responsibility on minors to identify and manage risks, something that contradicts everything we know about grooming dynamics.”

"Features like machine-learning age-estimation tools, for example, can incorrectly categorise users as older or younger; in-person code scanning assumes that in-person QR code scanning is inherently safe," she told.

“Predators frequently use real-world grooming tactics. A QR scan doesn’t verify a trusted relationship. A predator could build trust online, then manipulate the child into scanning a QR code offline, thus validating a ‘Trusted Connection’ in Roblox’s system. Real protection would require guardian

co-verification of any connections, not child-initiated permissions,” Pendergast added.

Furthermore, "Trusted Connections" applies only to chat, which leaves “large surface areas exposed, making it a brittle barrier at best.”

When asked how an in-person QR code keeps minors safe from real-world grooming tactics, Kaufman echoed a press briefing comment that there is no “silver bullet.”

He continued, "It’s many systems working together. Those systems begin with our policies, our community standards."

“It’s our product, which does automated monitoring of things; it’s our partnerships; it’s people behind the scenes. So, we have a whole suite of things in place to keep people safe. It is not just a QR code, or it is not just age estimation, it’s all of these things acting in concert," he added.

As per Kaufman, Roblox is “going farther” than other platforms by not

“If parents decide what’s appropriate for their kid, it may not match the decisions that we might make or I might make for my own family. But that’s OK, and we respect that difference"

- Matt Kaufman

allowing kids ages 13 to 17 to have unfiltered communication without going through Trusted Connections.

“We feel that we’re really setting the standard for the world in what it means to have safe, open communication for a teen audience,” he noted.

According to Roblox’s briefing, the updates are part of Roblox’s typical development process and haven’t been “influenced by any particular event” or feedback.

Commitment to online safety

Kaufman, while informing WIRED that the heightened scrutiny and discussion of the game so far didn’t have a dramatic impact on the company’s plans, remarked, “What we’re doing with this announcement is also trying to set the bar for what we think is appropriate for kids.”

Looking at technology like generative AI, he said, “The technology may have changed, but the principles are still the same. We also look at AI as a real op-

portunity to scale some of the things we do in safety, especially moderation. AI is central to that.”

He also said Roblox believes it’s important for parents and guardians to “build a dialogue” with their kids about online safety. “It’s about having discussions about where they’re spending time online, who their friends are, and what they’re doing. That discussion is probably the most important thing to do to keep people safe, and we’re investing in the tools to make that happen,” Kaufman said.

Kaufman, while adding that Roblox is aware that families have different expectations of what’s appropriate online behaviour, also noted, “If parents decide what’s appropriate for their kid, it may not match the decisions that we might make or I might make for my own family. But that’s OK, and we respect that difference."

Dina Lamdany, who leads product for user settings and parental controls, said in that briefing that as teenagers experiment with their independence, “It’s really a moment where they need to learn the skills they need to be safe online. Teen users can grant dashboard access to their parents, which gives parents the ability to see who their child’s trusted connections are. We won’t be notifying parents proactively right now."

Online safety, especially for minors, is an evolving problem in game spaces. Nintendo recently introduced GameChat with the Switch 2, a social feature that allows players to connect with friends without leaving the platform. For younger users, it relies heavily on parental controls, while adults are expected to be proactive about who they chat with.

So how does "Switch 2" work? Users can communicate with their friends and family while playing a game via a

microphone built into the console itself, while a separate camera also allows for video chat.

On Nintendo's official GameChat page, an instruction reads, "Mobile phone number registration required to use GameChat." On the same page, the company states that, as an "additional security measure," text message verification is required to set up GameChat."

It further states that text message verification for children "wanting to make the most of the Switch 2's GameChat feature" will need to use a number registered to a parent or guardian's account to get access.

The system’s privacy policy further warns about possible monitoring of video and audio interactions between users. However, some are concerned whether it amounts to surveillance. Kaufman, jumping the gun, said that Roblox takes privacy seriously.

Pendergast, however, seemed unimpressed with Roblox's claims, saying that if the online gaming portal wants to lead the way in safety, it has to take harder stances.

“It must stop relying on children and parents to manage their own protection and start building environments where trust is not optional but is instead engineered as safety by design. Age estimation, parental dashboards, and AI behavioural monitoring must be default, not optional, creating a baseline of systemic defence, not user-managed or user-guardian-managed risk. Otherwise, parents and children are left to do the heavy lifting, often without the digital and online safety literacy required," she concluded.

editor@ifinancemag.com

Stability AI can take solace in the fact that the taboo on studios acknowledging their embrace of AI seems to be softening

Stability AI rewrites Hollywood’s rulebook

IF CORRESPONDENT

Back in February 2024, something happened at a party co-hosted by Lady Gaga in the American singer's greenhouse. She was at the event along with Sean Parker, the billionaire founder of Napster and the first president of Facebook. At the same event, Prem Akkaraju, the current CEO of Stability AI, was present. The two men had known each other since Parker was at Facebook and Akkaraju was in the music industry. Over the years, they’d tried unsuccessfully to launch a movie streaming platform together and had, much more successfully, taken over a renowned visual effects company.

That evening at Gaga’s, Akkaraju found himself sitting next to an investor in Stability AI, the company that launched the wildly popular text-to-image generator "Stable Diffusion" in 2022. Despite its early success, Stability AI came precariously close to the situation of being shut down. The unnamed investor told Akkaraju: 'You should take Stability and make it into the Hollywood-friendly AI model.'

In 2022, Hollywood was facing headwinds: the number of films and TV shows produced in the United States had dropped by about 40%, due to ballooning production costs, competition from overseas, and widespread labour disputes.

AI promised to bring the numbers back up by speeding production and slashing costs, while letting computers automate the grunt work of translating dialogue, adding visual effects frame by frame, and editing boom microphones out of a zillion shots.

But then came another fear: What if AI starts writing scripts and maybe ends up acting as well? And this "what if" led to two of the industry’s biggest unions conducting strikes to obtain assurances that generative AI wouldn’t replace union jobs in the near term.

In May 2023, the Hollywood writers' strike over pay broke out, but the bigger issue was the refusal of studios like Netflix and Disney to rule out AI replacing human scribes in the future. The Writers Guild of America (WGA) asked for binding agreements to regulate AI's use.

The association's proposal was as follows: nothing written by AI could be considered "literary" or "source" material, which are industry terms that decide who gets royalties, and scripts written by WGA members cannot "be used to train AI."

However, studios rejected it and allegedly countered with an offer merely to meet once a year to "discuss advancements in technology."

WGA members further felt that Hollywood executives, where Silicon Valley companies have upended many traditional practices such as long-term contracts for writers, may seek to cut costs further by getting computers to write their next hit shows.

OpenAI’s release of ChatGPT 3.5 at the end of 2022 not only disrupted the tech sector and the broader economy but also captured the public’s attention by excelling at precisely the kinds of non-routine skills (including creative tasks) long considered quintessentially “human.”

And Hollywood writers became the first and most visible face of the resistance to generative AI, speaking volumes about the nature of the new technology and the kinds of livelihoods that it will impact most.

Their victory in 2024, in securing first-of-their-kind protections, now offers important lessons for other unions and professional organisations, policymakers, and workers across a range of occupations who may face similar disruptions to their careers.

After the writers, it was the turn of the Hollywood actors, whose union SAG-AFTRA in August 2024 signed a deal with online talent marketplace Narrativ that enables actors to sell advertisers' rights to replicate their voices with AI.

The concern arose from the fear that AI could commonly misuse artists' likenesses. The new agreement now seeks to ensure actors derive income from the technology and have control over how and when their voice replicas are used. Narrativ is known for connecting advertisers and ad agencies with actors to create audio ads using AI.

As of 2025, AI is becoming the new normal in Hollywood, with Stability AI, once in a precarious position, rewriting the industry's "creativity rulebook" through its innovative solutions.

Stability AI almost floundered

Major studios and streaming services are currently competing to develop their own "AI Strategies." Since 2022, several startups, including Luma, Runway, and Asteria, have begun creating tools to support these efforts. Akkaraju, back in 2024, saw the opportunity in front of him. Stability AI had the technology. It just needed a Hollywood finish. As far as he could tell, there was

Hollywood writers became the first and most visible face of the resistance to generative AI, speaking volumes about the nature of the new technology and the kinds of livelihoods that it will impact most

only one problem. Didn’t the company already have a CEO?

When Emad Mostaque, a former hedge fund manager, founded Stability AI in 2020, the company’s mission was to “build systems that make a real difference” in solving society's toughest problems. By 2022, the system Mostaque felt he needed to build was a cloud supercomputer powerful enough to run a generative AI model. OpenAI was gaining traction with its closedsource models, and as per the American tech journalist Zoe Schiffer, Mo-

staque wanted to make an open-source alternative—“like Linux to Windows."

"He offered up the supercomputer to a group of academic researchers working on an open-source system where you could type words to generate an image. The researchers weren’t going to say no. In August of that year, they launched Stable Diffusion in partnership with Mostaque’s company," the scribe recollected.

The text-to-image generator was a breakout hit, garnering 10 million users in two months.

“It was fairly close to state-of-theart. It allowed researchers to essentially extend the model, fine-tune it, and it spurred a whole community into action in terms of creating enhancements and add-ons,” said Maneesh Agrawala, a computer science professor at Stanford University, while noting that openness was core to the model’s success.

By October 2022, Stability AI had only 77 employees, but with thousands of times that many people in the wider Stable Diffusion community, it could compete with its bigger rivals. Mostaque

raised $101 million in a seed round from venture capital firms and hedge funds, including Coatue and Lightspeed (the final million, he tells me, was for good luck). The company became a unicorn.

Former Stability AI employees describe Mostaque as a visionary. He spoke eloquently about the need for a democratic AI. In the not-too-distant future, Mostaque told employees, the company would solve complex biomedical problems and generate season eight of Game of Thrones.

However, Mostaque was way over

his head. “I was brand-new to this. With my Aspergers and ADHD, I was like, what’s going on? Mostaque talks fast, his tone matter-of-fact: On the research side, we did really good things. The other side I was not so good at, which was the management side," said a former employee. Mostaque didn’t think deeply about building a marketable product. His fascination was with building AI models.

"The company’s success brought heightened scrutiny—particularly around how the models were built. Like many text-to-image models, Stable Diffusion 1.5 was trained on LAION-5B, an open-source dataset linked to 5.8 billion images scraped from the web, including child sexual exploitation material and copyrighted work. In January 2023, Getty Images sued Stability AI in London’s High Court for allegedly training its models on 12 million proprietary photographs. The company filed a similar suit in the US weeks later. In the stateside complaint, Getty accused the AI firm of brazen theft and freeriding," Schiffer said.

In June 2023, Forbes published a story alleging that Mostaque had inflated his credentials and misrepresented the business in pitch decks to his investors. The article also claimed that Mostaque had received only a bachelor’s degree from Oxford, not a master’s. What’s more, Stability AI reportedly owed millions of dollars to Amazon Web Services, which provided the computing power for its model. Though Mostaque had spoken of a partnership, Stability AI’s spokesperson acknowledged to Forbes that it was, in fact, a run-of-themill cloud services agreement with a standard discount.

And the article resulted in investors losing confidence. VCs from both Coatue

and Lightspeed left the board of directors, followed by the departures of the company’s head of research, chief operating officer, general counsel, head of human resources and the prominent researchers. Mostaque finally left the company on March 22, 2024, just a few weeks after Lady Gaga’s greenhouse soiree.

Akkaraju and Parker saw opportunity

Akkaraju and Parker joined Stability AI, taking over as CEO and chairman

of the company’s board. However, industry competition was fiercer, with another startup, Runway, signing the AI industry’s first big deal with a movie studio. Runway would get access to Lionsgate’s proprietary catalogue of movies as training data and develop tools for the studio.

Early on in his tenure, Akkaraju decided that Stability AI would no longer compete with OpenAI and Google on building frontier models. Instead, it would create apps that sat on top of

those models, thereby freeing the company from enormous computing costs.

Akkaraju negotiated a new deal with Stability AI’s cloud computing vendors, wiping away the company’s massive debt. Asked for specifics on how this came about, Akkaraju, through a spokesperson, demurred. Investors, however, came flocking back.

Whereas Mostaque painted a picture of AI solving the world’s most difficult problems, Akkaraju is building Stability AI as a software-as-a-service company

Hollywood box office revenue from 2015 to 2024

watch new releases at home for $50 on the same day they came out in theatres.

Cameron reportedly told a crowd at CinemaCon that he was “committed to the theatre experience.” In the years that followed, none of the major studios publicly announced deals with the Screening Room, and in 2020, the company rebranded as SR Labs.

Billion 2020

Billion 2021

Billion 2022

2023

2024

Billion

Billion

Billion

Source: The Numbers

for Hollywood. The goal is not to generate films, but to use AI to augment the tools that filmmakers already use.

“I really do think that our differentiation is having the creator in the centre. I don't see any other AI company that has James Cameron on its board,” Akkaraju said.

Yes, the same legendary director, who was leading Hollywood’s charge against the technology. He didn’t appreciate the premise of the streaming platform, the "Screening Room," which let people

That same year, Akkaraju and Parker took over Weta Digital, the visual effects studio behind blockbusters such as The Lord of the Rings, Game of Thrones, and Cameron’s Avatar movies. Weta developed virtual cameras that let Cameron see a real-time rendering of the artificial environment through a viewfinder, as if he were filming on location in the fictional world of Pandora.

Then came the meeting between Cameron, Akkaraju, and Parker over dinner, where they discussed how technology was changing the film industry.

“The tequila was flowing. A friendship formed. Any tension that had existed over the Screening Room melted away,” Cameron recalled.

“I never really talked with him about it. He knew, and I knew. It was very funny,” Akkaraju told WIRED, while continuing, "So Cameron is on the board, but is the creator in the centre? When I spoke with Parker, he emphasised the importance of using open-source models and spoke of respect for creators and respect for IP. That sounds potentially kind of rich, coming from me, given my past association with Napster and early social media. But it is a lesson learnt.”

Challenges lie ahead

In June 2025, the company scored a major win when Getty dropped its copyright infringement claims from a broader lawsuit as the trial neared a close in the United Kingdom. The US trial is ongoing.

Akkaraju said the company “sources data from publicly available and licensed datasets for training and fine-tuning,” and that when “creating solutions for a client”, it “fine-tunes using the dataset provided by the client.”

When Schiffer asked Akkaraju if the company trained exclusively on licensed data, he responded, “Well, that’s the majority of what we’re using, for sure.”

Even those who are bullish on AI admit that, for the most part, the technology isn’t ready for the big screen. Text-to-image generators might work for marketing agencies, but they often lack the quality required for a feature film.

“I worked on one film for Netflix and tried to use a single shot. The AI-generated footage got bounced back from quality control because it wasn’t 4K resolution,” said an anonymous filmmaker, not wanting to discuss the use of AI publicly.

Another problem with Stability AI's solution is the issue with consistency. Filmmakers need to be able to tweak a scene in minute ways, but that’s not possible with most of the image and video generators on the market. Enter the same prompt into a chatbot 10 times, and you will likely get 10 different responses.

“That doesn't work at all in a VFX workflow. We need higher resolution; we need higher repeatability. We need controllability at levels that aren't quite there yet,” Cameron noted.

"That hasn’t stopped filmmakers from experimenting. Almost every person I spoke with for this story said that AI is already a core part of the previz process, where scenes are mapped out before a shoot. The process can create new inefficiencies," Schiffer remarked.

"The inefficiency in the old system was really the information gap be-

tween what I see and what I imagine I want moving forward. With AI, the inefficiency becomes ‘Here's a version, here's another version, here's another version,” said Luisa Huang, cofounder of Toonstar, a tech-forward animation company.

One of the first people in Hollywood to admit to using generative AI in the final frame is Jon Irwin, the director and producer of Amazon’s biblical epic House of David. He became interested in the technology while shooting the first season of the show in Greece.

“I noticed that my production design-

er was able to visualise ideas almost in real time. I was like, tell me exactly how you’re doing what you’re doing. What are you using, magician?” he recalled.

Irwin started playing around with the tools himself and ended up making a presentation for Amazon outlining how he wanted to use generative AI in his production. The company was supportive.

“We film everything we can for real—it still takes hundreds of people. But we’re able to do it at about a third of the budget of some of these bigger shows in our same genre, and we’re able to do it twice as fast,” he told WIRED.

Prem Akkaraju

Sean Parker

in the gaps, estimating depth (how far away the hedge is from the rose bush, the tree from the window) and other missing elements to make the scene feel immersive. Basse can replicate camera moves by selecting from a drop-down menu: zoom in or out, pan up or pan down, or spiral.

“Instead of spending hours or days or weeks building a virtual environment and rehearsing your shots, the idea here is actually that you can just take a single image and generate a concept,” Basse says.

However, the company admits that its offerings are still in their early days and need perfection.

“I hear artists at VFX companies say, Hey, I don't want to get replaced. Of course, you don't want to get replaced! If you guys are going to lose your jobs, you're going to lose your jobs over the work drying up versus getting bumped aside by these GenAI models,” Cameron said.

Akkaraju and Parker, too, believe that as movies become cheaper to produce, more films will get made and overall employment will rise.

A burning-forest scene in "House of David" (historical web series depicting the rise of the biblical figure David) would have been too expensive to do with practical effects. So, AI stepped in.

Despite Irwin showing interest in Stability AI's tools, he has not been able to use the solutions successfully on a show at scale. Schiffer believes that Stability AI’s text-to-image generators need to cross a few hard yards before Hollywood starts using them professionally.

However, Stability AI can take solace in the fact that the taboo on studios acknowledging their embrace of AI

seems to be softening. In July 2025, Netflix co-CEO Ted Sarandos told investors the company had allowed “gen AI final footage” to appear in one of its original series for the first time. He said the decision sped up production tenfold and dramatically cut costs.

Hanno Basse, Stability AI’s chief technology officer, showed Schiffer an image of his backyard in Los Angeles: a grassy lawn surrounded by high hedges, rose bushes crowding a bay window, and a tree in the far left-hand corner. Suddenly, the 2D image unfurled into 3D.

The AI revolution is here and already transforming Hollywood. That collapsing building, that burning forest, that crowd of people the audience sees when streaming a show or going to the movie theatre will be created using a keyboard. Technology will be a creator's ally to give a project the "larger than life" elevation it deserves, without hurting the purse much.

A generative AI model has filled editor@ifinancemag.com