35_European_Business_Magazine_Autumn_2019 by European Business Magazine

europeanbusinessmagazine.com

AUTUMN EDITION | 2019

EUROPEAN BUSINESS

MAGAZINE Graham Bright

of Euroexim bank talks blockchain, smart banks, the Ripple community and the impact of Brexit The Fourth Industrial Revolution - The Brexit Fog - Neuromarketing - Iowa - Germany’s Economy - AI and Smartphones - Kaiserwetter - Cannabis Industry - Future of Finance

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Table of Contents 78

Kaiserwetter: Harnessing the power of big data and artificial intelligence to drive investment into renewables

News

The Billion Dollar Fintech Company That You Probably Haven’t Heard Of

Helping Our Early Tech Start ups To Expand Globally

European Business magazine catches up with Debi Durham

Germany’s Economy – Is It Holding Strong or Is It Going into Recession?

Google Is in Trouble Yet Again: US Tech Giant Accused of “Exploiting Personal Data”

We caught up with Thomas Dunstan

CEO Movers and Shakers

Latest Technological Gadgets 2019

10 22

The World’s Favourite Airline Faces a Record Fine

European Start-ups Challenge Silicone Valley: The Rivalry Is Real

Understanding a Company within a Company: What You Need to Know about Google and Alphabet Inc

Britain: Recession or No Recession

The Fourth Industrial Revolution and the Internet of Things: What Is Happening Next?

Greenland Has a Clear Message for D. Trump: There Are Some Things That Money Can’t Buy

The Brexit Fog: Chilling Effect on UK’s Economy and Businesses

How the Cannabis Industry is Saving Small Towns Across America

European Business Magazine talks to Graham Bright

EB-5: The Controversial Golden Visa Programme Faces Significant Changes

We caught up with Jean Marc Menahem

Why AI and Smartphones Are the Future

100

Malta: The Best Gateway for Business

102

A Newly Ordered World Jewellery from the Napoleonic Era

All aboard: Why Companies Choose the Caribbean Islands to Register Their Aircraft

Neuromarketing How to Read Your Customers Thoughts and How to Turn Them Into Profit

Stealing Ideas Prevention is Better than Cure

103

CTICC: The ripple effect

80 Startling Startup Statistics

106

How has tech changed the way we give and receive gifts?

The Future of Finance

108

Forget to do cyber due diligence and you might as well forget the deal

3 Elements Of VR Development Every VR Studio Has To Master

110

Leaving Fines and Scandals Behind - But Is Deutsche Bank Ready to Rise from the Ashes Once Again?

No More Coal: Renewables are Booming – Big Numbers and Big Names

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EUROPEAN BUSINESS

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MAGAZINE

Publishers Note

Publisher Nick Staunton

rexit – whether you voted Leave or Remain – has le a permanent mark on corporate discourse and con nues to take up the column inches, but if there’s one thing we can all agree on in these conflict-ridden poli cal mes, it is that Brexit has created significant divisions in our communi es. Read on to find out more about the Brexit Fog and the uncertain es that remain for business. And moving into 2020 that’s not all we need to worry about… With US manufacturing taking its worst hit since the Great Recession, signs of a global economic downturn are hard to ignore, and the global economy is undergoing a daun ng slowdown. The last quarter was not a pre y one with numerous countries including Hong Kong, Germany and the UK on the brink of recession. European Business Magazine explores what is in store and whether Britain is on the verge of another slump. Furthermore, companies aiming to be carbon neutral are snowballing and the EU is nearing its goal of becoming the world’s first climate-neutral con nent, as incoming European Commission President Ursula von der Leyen finalises her trillion-euro Green Deal for Europe. Also, Spain has oﬀered to host the COP25 UN climate conference in December a er protests forced the Chilean government to cancel the global environmental mee ng and next month’s Apec trade summit. However, one sector that seems crystal clear on its future

is the cannabis industry. Read more about this burgeoning industry in this autumn issue. We cover why AI and smartphones are high on the agenda, and how AI is taking centre stage, going far beyond applica ons like digital assistants. And, have you ever wanted to read your customers minds? Look no further. In our Neuromarke ng – How to Read Your Customers Thoughts and How to Turn Them into Profit feature, we examine just that. Graham Bright, Compliance and Opera ons at Euro Exim Bank Ltd., talks to European Business Magazine about the banks growing fintech strategy, its blockchain technology and its ability to facilitate global trade, amongst its other services. Addi onally, as Iowa installs its first solar storage peak-shaving power plant, we speak to Iowa director of Finance Debi Durham. Other features include Europe versus Silicon Valley start-up scenes, the future of finance and many more. As always, we hope you enjoy.

Editor Katie Winearls Deputy Editor Anthony Gill Associate Publisher Brad Adams Features Editor Patricia Cullen Head of Production Paul Rogers Head of Design Vladimir Mladenovski Subscriptions Manager Rebecca Hill Head of Business Development Paul Matthews Advertising Sales Brad Adams Tara Duckworth Advertising Sales Tara Duckworth, Mike Ray, Andy Ellis, Mark Holburn Contributing writers Patricia Cullen, Richard Fitzpatrick, Bala Murali Krishna, Shilpa Meen, Argee Laraya, Aimee Ni Mhaolcraibhe, Gordana Ristic, Jonathan Hooker, Jose Ignacio Latorre Head of Digital Stephen Scott Photographer Ben Fisher

Nick Staunton Publisher

NST Publishing Ltd, 19 Leamington Spa (studio 1) Leamington Spa,Cv324tf, UK The information contained has been contained from sources the proprietor believes to be wholly correct however no legal liability can be accepted for any errors. No part of this publication can be reproduced without consent of the publisher.

CEO MOVERS AND SHAKERS

European Business Magazine gives the low down on some of the recent reshuffles amongst the highbrow in the business world Joost Farwerck has been named the new CEO and Chairman of the Board of Management for KPN. Farwerck has been the COO for the company since 2014. He has also been a member of the Board since 2013. While Farwerck will be taking over as CEO immediately, the company has indicated they will appoint him to the Board for a four-year term on December 1st

Eric de Montgolfier

Eric de Montgolfier is taking over as CEO of Invest Europe. He will take on his new role with the association of private capital providers and investors before the end of the year. De Montgolfier will be leaving his role as the partner and head of Gimv France where he was responsible for overseeing investment and developing group strategy. Prior to his work with Gimv, de Montgolfier worked for 11 years at Edmond de Rothschild Capital Partners. He was the co-founding managing partner and COO at the company. He has also gained industry experience from his work at Astorg, where he was named a founding partner in 1998. De Montgolfier earned his Masters in Management from ESCP Europe. Invest Europe’s former CEO, Michael Collins, left his role in August. He had been with the organization for six years.

Lucia Morselli

8 europeanbusinessmagazine.com

Kjell Johan Nordgard

Cecilia Thorn will take over from Ad Kok as the CEO of the European Actuarial Associaon. Thorn joins the organizaon from her previous role leading interna onal rela ons for the UK’s Financial Repor ng Council. She has 16 years of experience in interna onal and EU public aﬀairs/policy. Kok announced his re rement in August.

Joost Farwerck

Kjell Johan Nordgard has been named as the new CEO of Central Europe for Axxsys Consulting. Nordgard has held several senior posi ons with SimCorp over the last 20 years. These roles include managing director for SimCorp UK and head of global market support. He has also served as global head of systems and data at Norges Bank Investment Management. Cecilia Thorn

ArcelorMi all Italia has named Lucia Morselli as their next CEO and Chairman of the Board as of Oct. 15. She has been praised as a “highly experienced business leader.” Morselli has worked in an execu ve role at many companies including Acciai Speciali, Terni SPA, Berco Group, BioEra S.p.A, Mikado S.p.A, Tecnosystemi S.p.A, Stream (Sky) S.p.A and Telepiu Group. Her career began at Olive then moved to Accenture and then to Finmeccanica. She is also a member of the board of directors at Essilor-Luxo ca, Telecom Italia SPA and ST microelectronics. Morselli earned a mathematics degree from Pisa University (summa cum laude), a PhD in mathema cal physics from the University of Rome and a masters in business administraon degree from the University of Turin and a master of European public administra on from the University of Milan. Morselli replaces Ma hieu Jehl who will remain with the compa.

Latest Technological Gadgets 2019 Waterproof speaker Sony showed oﬀ its water-resistant speaker that is equipped with Google Assistant. The device is also dustproof, has 16 hours of ba ery life and includes mulcolored lights. There is also an extra bass feature. The speaker went on sale in October and costs US$300 (£232.62 GBP).

goTenna Mesh Stay connected no ma er where you are. goTenna Mesh is a small device that relies on Bluetooth-LE to keep Android and iOS devices connected even when there is no cellular service. Users are able to share messages, loca on informa on and more. This device is an upgrade to their original goTenna and permits users to have private or group chats. It is available now for US$179 (£131.90GBP).

Polaroid OneStep+ The look and feel of the tradi onal analogue Polaroid camera, but with the high-tech connec vity to mobile phones. With the OneStep you can take an instant photo, connect to your phone for the editing process and share it online. The device also comes with a portrait lens, flash and rechargeable ba ery. The OneStep is available now for US$160 (£124.08GBP).

Sennheiser’s Momentum True Wireless earbuds

If you are looking for truly wireless earbuds with a great sound, this German product may be just the thing. Sennheiser’s buds can be used with voice assistants like Google Assistant or Siri. They are also water-resistant and have about four hours of ba ery life. The earbuds can be charged inside their case. Momentum True Wireless earbuds will be available in November and cost US$299 (£232.11GBP) europeanbusinessmagazine.com 9

Chrono24 The Worlds Leading Online Marketplace Attracts a Further 43 Million EUR to Fuel Growth Chrono24, the world's leading online marketplace for luxury watches, has brought in new investors. In the most recent financing round, 43 million euros were invested in the German company. While the opera onal business is profitable, company founder and co-CEO Tim Stracke is looking forward to an exci ng future. Tim Stracke, Chrono24 founder and co-CEO Tim Stracke: "Con nuous growth without taking major losses has always been an essen al component of our growth strategy. With over fi een years of experience in the industry, we feel closer to our users than ever before and are familiar with what makes them ck. We will use this new capital to be er address the needs of dealers, private users, and manufacturers. Our focus is on improving the customer experience while remaining open to further business expansion. We look forward to playing an integral role in shaping the future of the online luxury watch industry." Chrono24's new shareholders are united by their shared professional passions: online marketplaces, luxury goods, and watches. Henrik Persson, a partner at Sprints Capital, leader of this round created one of the largest and most successful online por olios in Europe - including companies such as Zalando, Avito, and Rocket Internet - for his former employer, Kinnevik. Pierre Siri, also of Sprints Capital, has joined the board of Chrono24. Siri has helped build many online marketplaces as CEO and CTO, among them what would become the billion-dollar French business LeBonCoin. Gianni Serazzi, a former director at Richemont, adds another luxury goods expert to the company. Moreover, many exis ng shareholders have taken this opportunity to increase their stake in Chrono24. This notably includes Insight Partners from New York and some Asian funds that have made substan al 10 europeanbusinessmagazine.com

co-investments. Chrono24's managing director and co-CEO, Holger Felgner, who has been at the company for three years, also par cipated in this round of financing. In the last five years, over 80 million euros have been invested in Chrono24, which is s ll led by its founders. "We're thrilled to have shareholders with a wide range of exper se, from watches and luxury to online marketplaces and in-depth knowledge of the Asian market. Together, we'll be able to significantly accelerate Chrono24's growth using this investment capital and our combined know-how." As the leading marketplace for luxury watches, Chrono24 connects watch enthusiasts from around the globe. Users can look for their dream watch among more than 400,000 watch lis ngs from over 100 countries and make secure purchases across currencies and interna onal borders. Chrono24's free Escrow Service makes transac ons on their pla orm par cularly secure and appealing. In addi on to being able to search and compare models and conduct business on a global scale, Chrono24 oﬀers customers a wide range of services that invite enthusiasts to fully explore their passion for luxury watches. The "Watch Collec on" tool allows users to keep track of the performance of their watches over me. There's also the Chrono24 "Virtual Showroom," which shows 3D models of select luxury watches on the user's wrist with the help of a smartphone - any me, anywhere. Finally, the Chrono24 magazine publishes interes ng ar cles and guides about all aspects of the watch industry. This service portfolio clearly has Chrono24 heading in the right direcon: The marketplace saw a 30% increase in both transac on volume and users in 2018. That translates to 1.3 billion euros worth of annual watch transac ons and over 7 million unique visitors every month. One in

every three watch enthusiasts now uses Chrono24. About Chrono24 GmbH: Chrono24 - The World's Watch Market is the number one online marketplace for luxury watches. Every month, around 7 million unique visitors have access to some 400,000 watches from over 3,000 dealers in more than 100 countries, as well as approximately 20,000 private sellers (as of January 2019). In 2018, Chrono24 generated a transac on volume of 1.3 billion euros. The marketplace combines the largest collecon of new, pre-owned, and vintage watches with a comprehensive set of services that allows both buyers and sellers to process their transac ons in a trustworthy environment. Their global support team offers assistance via email or telephone in 15 different languages. Chrono24 was founded in 2003 and has more than 250 employees in offices in Karlsruhe, Berlin, New York, and Hong Kong.

Germany To Ban Glyphosate Weedkiller By 2023 As Bayer Woes Deepen The European Commission, the E.U.’s rules and regulaons body, in 2017 renewed the license for glyphosate in the bloc through the end of 2022.Germany’s environment Minister, Svenja Schulze, framed the new move as necessary to protect biodiversity, and said that “a world without insects is not worth living in”.“What harms insects also harms people,” Schulze said at a press conference. “What we need is more humming and buzzing.”Glyphosate is no longer exclusive to Monsanto’s Roundup, as it “is now oﬀ-patent and marketed worldwide by dozens of other chemical groups including Dow Agrosciences and Germany’s BASF,” as Reuters noted. That’s despite the World Health Organiza on’s Internaonal Agency for Research on Cancer’s 2015 designaon of glyphosate as a “probable carcinogen,” increasing concerns over its health eﬀects, and moun ng legal woes

for Bayer, which acquired Monsanto last year, as mul ple juries have found Roundup to have been a factor in plainﬀs’ cancers. Such concerns prompted Austria to become the first E.U. country to ban glyphosate, a step it took in July.Erwin Preiner, a member of the Austrian parliament who worked on the ban, said at the me, “We want to be a role model for other countries in the E.U. and the world.”

Cannabis Companies Focusing Heavily On THC -Gummies For Future Revenue

While cannabis edibles are a hot topic in Canada these days, there are supposed to be strict regula ons in place to dissuade youngsters from trying them. But those rules don’t necessarily apply south of the border.

Having legalized cannabis for recrea onal purposes last year, the final piece of the puzzle is the delicate area of THC edibles, gummies in par cular. While such edibles will officially become legal in Canada on October 17th, they cannot be “appealing to young persons.” The finer details of the regula ons are yet to be announced by Health Canada. Despite the lack of clarity, many cannabis companies are focusing their me, efforts, and resources on crea ng and manufacturing cannabis gummy bears. One licensed Canadian producer, Zenabis Ltd. told reporters that they are “priori zing the gummies‘ category of edibles because of its demonstrated and growing appeal south of the border,” said the company’s program manager of food and beverage services, Kyrsten Dewinetz, according to a CTV News report. “It’s popular with many different demographics, so we’re probably going to forge ahead a li le bit more quickly in this category,” she added. It’s also no secret that the company intends to launch its THC gummy bear range within a few months. The inten on of many companies to promote edible cannabis products is in line with a recent Deloi e survey which showed that most people prefer cannabis in gummy bears over things like brownies and cookies. The survey also found that cannabis edibles are increasingly popular as they are very portable, stealthy, and a comfortable and clean way of taking cannabis. europeanbusinessmagazine.com 11

Fintech mega-deals lead to record-breaking $120 billion transaction value in First half of 2019

· Fintech M&A deal volume reaches three-year high with 198 deals in 1H 2019, up from 164 in 2H2018 · Global venture capital investment in fintech achieves record-level in Q2 2019 with $10.9 billion raised [1] Ant Financial deal of June 2018, Q2 2019 recorded the most fintech fundraising ever with $10.9 billion raised. All this confirms that, while they seem to be gradually mulplying in number, fintech funding rounds in North America and Europe are becoming larger. However, Asia is not currently sharing the same level of fundraising success, with fundraise count and value stagna ng.

Enterprise financial software

London - August 2019 - Three fintech mega-deals totalling $87 billion set the scene for a record-breaking $120 billion in disclosed transac on value for the sector in a ‘white-hot’ first half of 2019, reveals Hampleton Partners, in its latest global Fintech M&A Market Report. Hampleton Partners, which specialises in interna onal technology M&A and corporate finance, noted that all three of the top transac ons were in the payments processing segment: Fidelity Na onal Informa on Services acquired Worldpay for $43.6bn; Fiserv acquired First Data for $22bn and Global Payments acquired Total System Services for $21.2bn. Hampleton’s report pointed to a revitalised M&A market since the slump in 2H2018, as well as an overall trend for larger deal sizes: 65 per cent of deals exceeded $100 million in 1H2019, compared to only 54 per cent in 2018 (disclosed deal values). Jonathan Simne , director and fintech specialist, Hampleton Partners, said: “The fintech M&A market is white-hot in Europe and North America. Financial businesses and ins tu ons are increasingly open to adop ng large-scale fintech in transac on processing or enterprise financial so ware, and as the financial services industry re-structures, compe on for game-changing assets is increasing.”

Fintech fundraising continues to break records Fundraising in fintech con nues its record-breaking course. With 818 fundraises so far in 2019, the an cipated annualised figure of 1,636 would set a new annual record, narrowly bea ng those figures recorded in 2017 (1,632) and in 2016 (1,633). Furthermore, excluding the 12 europeanbusinessmagazine.com

Excluding the three mega-deals in payments processing, enterprise financial so ware remained the largest fintech sub-sector, with over 75 per cent of remaining disclosed deal value and just under 50 per cent of all deal volume - 98 deals. Significant deals in enterprise financial so ware included Thoma Bravo’s acquisi on of Ellie Mae, a provider of mortgage loan origina on, for $3.7 billion, making it the fourth largest transac on of 1H2019, at 7.5x EV/S.

Key trends in fintech As challengers use their agility to a ract new customers, legacy players are forced to acquire the necessary technology to compete. Investors and acquirers will tend towards targets that focus on automa on via disrup ve technology, such as realme payment processing technology; AI chatbots (expected to save banks $7.3 billion annually by 2023); and mobile banking, as in-person branch visits are set to fall 36 per cent between 2017 and 2021. Challenger banks like Chime, OakNorth or N26 will also con nue to grow, whilst regtech is on the rise, allowing firms to stay compliant through cloud-based pla orms and machine learning. Meanwhile, blockchain u lisa on con nues to spread through collabora ve pla orms like Bitpay with Visa.

The future of fintech fundraising Jonathan Simne concluded: “The heat is being applied to fundraising, auguring well for future large-scale fintech exits. 2Q2019 proved to be the largest quarter ever for fintech fundraising, with Europe already exceeding its 2018 annual record. As Europe and North America power ahead of the currently moribund Asian fintech fundraising market, we expect this to yield several large-scale fintech M&A transac ons in the future.” [1] Excluding Ant Financial’s €14 billion round in June 2018

Gibraltar September 2019 on 12th of September – Her Majesty’s Government of Gibraltar this week announced the launch of its business development campaign in London, ThinkGibraltar (thinkgibraltar.gi). ThinkGibraltar marks the beginning of a wider campaign to increase awareness of and a ract new businesses to Gibraltar. It highlights the opportuni es to passport into the UK post Brexit and reaﬃrms the close es Gibraltar enjoys with the United Kingdom. For the dura on of the campaign over the next two months, ThinkGibraltar adver sing will be displayed on the side of some 300 taxis, 100 busses and in 40 key commuter staons in the City of London and the West End including London Bridge, Liverpool Street and Waterloo. The campaign will increase awareness of Gibraltar in those areas and directs members of the public to visit the central hub for the campaign, the ThinkGibraltar.gi website. The Website focuses on five main industries: Insurance, Distributed Ledger Technology (DLT), Gaming, Funds and Private Client. These are the industries where Gibraltar excels and has created world leading business environments and frameworks. Simultaneously, a digital marke ng campaign will also be managed on social media where we have also launched the @ThinkGibraltar Instagram account and ThinkGibraltar Facebook and LinkedIn page. We are asking members of the public who see the campaign to take photos and use the #ThinkGibraltar hashtag. The social channels will also be used to push addi onal informa on, photos and videos of Gibraltar landmarks, industries and life on the Rock. As a part of this campaign, HM Government of Gibraltar will be hos ng five financial services events in London as part of the ongoing ThinkGibraltar campaign during Gibraltar Day in London. The events will focus on Financial Services, Insurance, Private Clients, Funds and DLT and will be supported by both the private and public sector to help drive awareness and inform the rest of the world about the advances in these industries. Albert Isola, Minister for Commerce at HM Government of Gibraltar said: “Gibraltarians are some of the most adaptable and resilient people in the world. As the Chief Minister has men oned on numerous occasions, we are a world class jurisdic on with world class talent. This campaign is intended to highlight that and show the world that Gibraltar is open for business. “It is no secret that as a na on over 95% of us voted to Remain, however we have a fiercely loyal and close relaonship with the UK and have we have adapted our oﬀering to posi on ourselves to be one of the leading financial environments in the world regardless of the Brexit outcome. Our track record and results are proven not promised. We are the smart op on.” For press enquiries please contact Lewis Stagne o at Lewis@stagpr.com For further enquiries about Gibraltar please email info@ thinkgibaltar.gi or call +350 200 50011

About Gibraltar Gibraltar is a fully self-governing and fully self-financing Bri sh Overseas Territory to which the Trea es establishing the European Union apply, with only certain excep ons. We are within the EU single market for the purposes of the free movement of persons, the freedom to provide services and the free movement of capital. We are not within the Common Customs Union and we do not have to apply a VAT regime. Our status applies un l the United Kingdom formally exits the European Union. We will con nue to have access to the United Kingdom in all financial services areas that are covered by cross border Direc ves. EU Regula ons apply directly and EU Direc ves are transposed by Gibraltar’s Parliament. This includes all measures on financial supervision and regula on, direct taxaon and an -money laundering. Our corpora on tax rate is 10% and we have a maximum eﬀec ve rate on personal tax of 25%. Our taxa on regime is subject to European Union scru ny. For more informa on please visit h p://www.gibraltarfinance.gi/en/home

About The Hon Albert Isola MP The Honorable Albert Isola MP is Gibraltar’s Minister for Commerce with the primary responsibility of raising Gibraltar’s profile as an established onshore, mainstream, well-regulated financial services centre. Working closely with the financial services regulator, the Financial Services Commission, he is responsible for financial services policy, product development, and responding to interna onal ini a ves such as interna onal tax compliance. Minister Isola played a leading role in the establishment of the Gibraltar Interna onal Bank, a first for Gibraltar as a home-grown full-service credit ins tu on. europeanbusinessmagazine.com 13

Travelex unveils new APIled B2B fintech platform ‘Travelex Business’ London, 17th September 2019 - Travelex, a Finablr company and a market leading independent foreign exchange specialist, has today unveiled its new B2B fintech platform, Travelex Business. Travelex Business allows the company’s partners including banks, credit unions, retailers and digital technology companies, to access a broad range of payments and foreign exchange services in one place. The launch of the Travelex Business pla orm follows a four-year digital transforma on project. Travelex Business leverages the strengths of Finablr’s network and capabili es and combines it with a state-of-theart cloud-based, API-led pla orm. The pla orm provides a seamless way for customers across mature and emerging markets to move money around the world. From cash management to cross border payments and retail currency conversion via APIs, Travelex Business addresses a wide range of enterprise and consumer needs with its omni-channel, mul -currency capabili es. For digital technology companies wan ng to offer cross border payments services to their customers, services can be delivered as a white-label offering. Travelex Business builds on Finablr’s global capabili es and includes three core product suites underpinned by a developer centre which allows customers to explore Travelex services Travelex Business Cash is a technology driven solu on that allows end users to quickly and securely receive cash, by working with large banks, financial ins tu ons and retailers. This solu on features Cash Network and Cash Services, comprising a range of related white-label cash products, from travel money to wholesale banknotes. Travelex Business Pay is a cross-border payment pla orm serving enterprise customers including financial ins tu ons and digital technology companies. It offers two modules, Pay Banking for banks and other financial services providers, and Pay Direct which serves consumers and organisaons that need to transfer large amounts of money across borders quickly. Both offer a suite of APIs that enable seamless interna onal money transfer for end customers. Travelex Business Cloud is the ideal solu on for any business that offers foreign currency services to internaonal customers. It provides a new way for business to financially benefit from interna onal transac ons made through mobile apps, ecommerce websites, Point of Sale terminals or ATMs. It includes advanced and flexible Mul-Currency-Processing, and Dynamic Currency Conversion, underpinned by a market leading Dynamic Exchange Rate Engine. Travelex Business Digital is a developer pla orm, that provides access to Travelex Business APIs so partners can embed capabili es and processes into their products and services. Gareth Williams, Chief Product and Innova on Officer at Travelex comments: 14 europeanbusinessmagazine.com

“The pla orm is the culmina on of years of hard work by Travelex and collabora on across the Finablr network. By revolu onising how we work, the technology we use, and the partners we work with, we have combined four decades of experience with a new microservices architecture to build a market-leading global fintech pla orm. Cri cally, working with Finablr, we have adopted a modern engineering culture with self-organising teams in order to create and iterate on a new and innova ve suite of services. “Not only does this allow Travelex to con nually innovate and improve its products and services, but it gives our customers the services they need within one solu on—and the developer centre means that our customers and prospects can experiment with our capabili es at their own convenience. Travelex Business ensures companies get to market quicker, increase revenues and boost customer value with agile services available at the click of a bu on.”

About Travelex Headquartered in London, Travelex has a 140-year heritage in foreign currency, pioneering the travellers’ cheques of the past and the digital payments of the future. With a presence in over 70 countries, and over 1,200 stores at both on-airport and oﬀ-airport loca ons around the world, Travelex has dis lled its exper se and experience into a pla orm that reinvents physical and digital cross-border money movement globally to ensure its clients remain one step ahead of the compe on. The platform provides financial ins tu ons with a trusted, eﬃcient and accurate interna onal money transfer service, plus secure and reliable banknote delivery of both major and exo c currencies. A market leading independent foreign exchange specialist, the business covers the en re value chain of the retail foreign exchange industry. Travelex Group is also ac ve in the remi ances and payments space enabling physical and digital cross-border money movement for consumers and financial ins tu ons. Travelex is part of Finablr, a global pla orm for Payments and Foreign Exchange solu ons. With deep regulatory know-how, technology exper se and industry leading partnerships, Finablr companies provide a broad array of tailored and trusted financial solu ons for consumers and businesses. With a global reach spanning 170+ countries, Finablr companies processed over 150 million transac ons in 2018, managing nearly USD 115 billion for customers.

London Executive Offices (LEO) relaunches as The Argyll Club and unveils range of new business memberships

London Execu ve Offices (LEO) in early Sep launched The Argyll Club and unveiling a suite of new business memberships, which will provide busy professionals exclusive access to a host of its business clubs across London. A well-respected player in the London office market for over 20 years, The Argyll Club is embarking upon the next stage of its evolu on and plans to double its size in just five years. The ambi ous growth plan will be achieved by extending its range of services, expanding both its owned and leased real estate, and partnering with some of London’s most presgious landlords. As part of the ini a ve, the business is inves ng an eight-figure sum to upgrade its exis ng por olio, including restora on work on one of Mayfair’s very few Grade 1 listed office buildings. With addresses such as 1 Cornhill, 33 St James’s Square and 78-79 Pall Mall, The Argyll Club boasts a 38-strong por olio of some

of the most interes ng and impressive buildings in London. Beth Hampson, Commercial Director comments: “As a business we have evolved and we now offer everything from premium offices to elegant lounges and deligh ul meeting spaces, all delivered with concierge service. The quality of both the environment and service we provide is much more akin to a members’ club and we wanted our name to reflect that.” The new Portfolio Membership provides access to seven of London’s finest loca ons, from Mayfair to the City, with discreet lounges, hot-desking facilities and business concierge services. They are designed for both exis ng members who want addi onal flexible space to complement their exis ng office network, and new members who want access to premium working environments and business support services but don’t necessarily need permanent office space.

From today, Members can also access an array of updated digital services, including a new website, app, online booking system and customer portal. These will streamline the member experience, making it easier to book mee ng rooms across London. Func onality will increase as a host of new features come online over the next 12 months. Conal O’Hara, Chief Operating Officer concludes: “The way we all work is changing and the office environments we use need to reflect that. Our new memberships provide a fresh way for individuals to access the calm, professional, grown-up business spaces we’ve become known for. Flexible workspace currently accounts for around 6.3% of office space in London[1]. We expect that figure to grow significantly. Our marriage of prime loca ons and concierge service is unlike anything else in the market and we’re well placed to meet the ever-increasing demand for sophis cated working environments.” europeanbusinessmagazine.com 15

Nets and KPMG Partner to Launch AI-Powered Payment Fraud Prevention Solution Nets Fraud Ensemble uses machine learning to reduce fraudulent transactions by up to 40%

18th September 2019 – Nets, a leader in the European payments industry, has collaborated with mulna onal professional services provider, KPMG, to develop Nets Fraud Ensemble, a next-genera on fraud monitoring and preven on solu on. As the total annual value of fraudulent transac ons across Europe hits €1.8 billion, the need to step up fraud preven on, par cularly in card not present (CNP) transac ons, has never been greater. Reducing transac on fraud is an increasingly convoluted and nuanced business, however, as factors such as the mass adop on of e-commerce, increasing cross-border payments, and the growing popularity of new digital payment methods combine to add new layers of complexity. Nets Fraud Ensemble is an AI powered an -fraud engine that assists fraud preven on teams to navigate this ever-changing landscape in real time. By deploying true machine learning (i.e. a system that iden fies emerging fraud indicators as well as established pa erns), it represents a significant step forward from the rules-based models that are 16 europeanbusinessmagazine.com

currently in use across the internaonal banking industry. Sune Gabelgård, Head of Digital Fraud, Intelligence & Research, Nets, comments: “Although ini aves such as 3D-Secure have done much to make it more secure for people to shop online across Europe, the industry s ll faces challenges. Many issuing banks have focused on fraud preven on through consumer educa on, but the industry must also tackle the problem where it starts and where it is orchestrated by organised criminal enterprises: on the internet. “Nets has significant and proven capabilities in fraud monitoring and preven on, and has been u lising AI in this area for several years. Nets Fraud Ensemble takes this to the next level. It brings security and value to issuers, merchants and cardholders by blocking fraudulent card-present and card-not-present transac ons in real me, creating a real societal benefit by keeping illegally obtained funds out of the hands of criminals. We look forward to our con nued collabora on with KPMG to stay ahead of the curve

and prevent fraud throughout the value chain.” The ‘brain’ of Nets Fraud Ensemble consists of mul ple models working together to analyse each individual transac on within ten milliseconds – the me frame in which a transac on can be safely blocked. The solu on learns from the results of its analysis and adjusts accordingly, meaning the longer that it is opera onal the more fraudulent transac ons are blocked, and the fewer false posi ves are granted. In ini al pilot programmes, it reduced fraudulent payments by 25% within weeks and up to 40% in the long-term. The benefits to issuers extend beyond achieving significant reducons in fraud. Nets Fraud Ensemble also decreases opera ng costs and chargebacks, crea ng an improved cardholder experience. Furthermore, to balance accuracy with customer convenience, issuers can implement customised decision thresholds to minimise false declines. Bent Dalager, Nordic Head of NewTech and Financial Services, KPMG, adds: “In terms of tangible reduction of fraudulent transactions, Nets Fraud Ensemble is surpassing all other products currently available. The development of Fraud Ensemble and its state-of-the-art algorithms is the result of Nets’ and KPMG's combined innova on capabili es, AI experience and fraud monitoring and preven on experse. It's a big step forward in the use of AI to fight fraud." To learn more about Nets Fraud Ensemble, please visit Nets’ website. For more informa on on KPMG Denmark, please visit the website. To learn more about the current payments fraud landscape, The European Fraud Report - Payments Industry Challenges is available to download free of charge from the Nets website and an accompanying webinar is available to watch on demand.

New ‘Brexit Index’ reveals UK-EU economic relationship has already declined by 12% since referendum Significant drops in flow of inward investment and people from EU to UK

A new ‘Brexit Index’ that measures the strength of the economic rela onship between the EU and UK - based on the movement of people, goods, services and investment – has dropped 12% before Brexit has even happened, according to global independent advisory firm, Accuracy. The ‘Brexit Index’ by Accuracy tracks trends in the flows between the UK and EU under each of the four freedoms of the European Single Market (full methodology below). Each of the four measures of the UK/European economic rela onship were at an all- me high shortly prior to the EU referendum. Accuracy’s Brexit Index stood at 88 at the end of the first quarter of 2019, down from a base of 100 at the end of the second quarter of 2016, just a er the EU referendum. This decline has been driven in large part by a significant fall in Foreign Direct Investment (FDI) into the UK from the EU since the referendum. The value of FDI from EU investors into the UK has fallen to 6.6% of EU GDP in March 2019, down from 7.6% of EU GDP in June 2016. Accuracy says that uncertainty over the UK’s trading relaonships worsened in recent months as the prospect of a no-deal Brexit grew. Concern among investors over increased customs barriers and tariﬀs leading to reduced return on investment is likely to have turned some more cau ous on inves ng in the UK. The decline in the UK-EU economic rela onship has also in part been driven by a decreased flow of people from the EU to the UK. Net migra on of European ci zens to the UK has dropped since the June 2016 vote, from 189,000 per year in March 2016 to 59,000 per year by March 2019.

Accuracy says that migra on flows are partly affected by people’s long-term decisions concerning the socio-economic prospects of the des na on country. The decline in migra on reveals a lack of confidence in the Bri sh economy, with a weak pound making the UK less a rac ve to foreign workers. Some European workers are also likely to be concerned about their visa status in the UK in the coming years, incen vising them to leave the country for other countries with more stable immigra on regimes. Daniel Nassar, Associate at Accuracy, comments: “Before Brexit has actually taken place, the UK-EU economic relaonship has already sustained significant damage.” “These figures show that the impact of Brexit on the UK economy is not just specula on. The effects are already apparent.” Charles Mazé, Analyst at Accuracy, adds: “While the trading rela onships between the UK, EU and the rest of the world have not actually changed yet, the effect of Brexit on investor sen ment has already seen FDI decline sharply.” The full report for Accuracy’s Brexit Index is available to download at our website

Methodology for the Brexit Index: • Trade in goods: imports and exports of goods between the UK and the EU, as a percentage of EU GDP excluding the UK • Trade in services: imports and exports of services between the UK and the EU, as a percentage of EU GDP excluding the UK • Direct foreign investment: DFI stocks held by EU agents in the UK, as a percentage of EU GDP excluding the UK • Migra on flows: immigra on of European ci zens to the UK as a percentage of total migra on flows entering the UK

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French NGOs Demand Moratorium on 5G Due to Its “Out of Control” Consequences On Society

Telecom Industry execu ves have admi ed they have NO scien fic evidence that 5G is safe. Many doctors and scien sts say it isn’t (see 1, 2, 3, 4). People and their pets are already becoming sick where it’s installed (see 1, 2, 3). Engineers, environmentalists, meteorologists, NASA, NOAA, U.S. Navy, security experts and more are also warning that 5G isn’t worth ALL the risks associated with it (see 1, 2, 3, 4). Opposi on is increasing worldwide. So are lawsuits and legisla on against forced installa on. French NGOs are now asking for a moratorium on 5G at least un l there can be a public debate on it. NGOs including Agir Pour l’Environnement and Priartém-Electrosensibles de France have come out against the new technology, saying that its use will lead to physical and mental health problems, environmental issues, and could even nega vely impact social freedom.

From the Connexion In France, 5G was oﬃcially announced on July 15 this year, with businesses in large towns and ci es set to receive the coverage by the end of 2020, and 18 europeanbusinessmagazine.com

two-thirds of individuals expected to be covered by 2026. But in a statement, the NGOs said that introducing the technology could “push the planet and our society into a world with out-of-control consequences”. It said: “Digital wireless communica on technology has already had impacts that are not virtual: risks for our physical and mental health, hyperconnec on with the world of work, and among young people; impact on the soil, landscapes and ecosystems, a growing energy bill, was ng of resources, risks from big data on our freedoms, lobbying weight on science and public polics…” The statement said that 5G would “irrefutably aggravate these facts”. The group is now calling for a halt to 5G development and rollout in France, at least un l a public debate can be held on its use. It said: “Developing a system that will cause las ng changes to the electromagne c environment of our planet, to interac ons between people and machines, and the wider workings of our society cannot be possible without deep considera on and debate from ci zens.”

The possible impact of 5G on certain health condi ons has been acknowledged by health authori es including French health and environmental agency (Agence Na onale de Sécurité Sanitaire de l’Alimenta on, de l’Environnement et du Travail) Anses. In 2016, it found that the radio frequencies of technology such as 5G could cause problems – for certain people – with memory, a en on, and coordina on. At the me, Anses recommended that young people limit their exposure to portable devices, tablets, and internet-connected toys. In 2018, the agency also recognised that some people were repor ng health problems linked to electromagne c fields and waves, although it did add that this did not prove that there was a real link. And this year, a group of 170 sciensts raised concerns about the possible eﬀects of 5G – and the higher frequencies it requires to work, which may be up to ten mes’ higher than those used now – to the European Union. In France, tests on 5G have already been rolled out in towns and ci es including Bordeaux, Grenoble, Lille, Lyon, Marseille, Nantes, and Toulouse.

Portuguese CBD Expansion Plans For U.K. Market Leader One of the largest cannabis companies in the U.K. has expanded its overseas footprint with the announcement of a major investment into a new Portuguese extrac on facility. Ini ally concentra ng on its domesc Home Oﬃce-approved cul vaon for extrac on in its U.K facili es, Bri sh Cannabis has shi ed its focus overseas recently. Now with a network of cannabis farms in Lithuania its proposed new 10,750sq extracon facility, near Lisbon, will sit next to its privately-owned cannabis farm, said the company in a press release.

brand is undoubtedly one of the leaders in the U.K. market place with an innova ve product range. Canabidol CEO Tom Whe em is a founding member of the U.K-based industry and lobbying body the Cannabis Trades Associa on. He has played a key role in in talks between the U.K. and European authori es over the regula ons regarding CBD products in recent years.

European Cannabis Focus

He says that Bri sh Cannabis and Canabidol are both determined to ensure they are able to provide fully compliant products of ‘U.K. and European provenance’. He contends that the compliance issues highlighted in recent findings such as the Centre for Medicinal Cannabis report can be the result ‘non-compliant CBD produce coming into Europe from other con nents’.

The company describes itself as the ‘largest producer, manufacturer, and distributor of legal cannabis-derived products in the U.K.’. Its Canabidol

He added: “We hear businesses and consumers calling for a company that can provide cannabis extracts and end-user products, made right here in

Bri sh Cannabis says the new facility will allow it to treble its annual output leading to a ‘step-change its scale and ability to innovate’.

Europe, that can be relied on for accuracy, quality and legal compliance.”

CBD Skin Rescue Cream Canabidol range includes CBD oils, oral capsules, sublingual tablets, vape liquids and what it describes the UK’s first clinically proven cannabis cosme c. Earlier this year it launched the Canabidol CBD Rescue Cream one of the few CBD products for which the U.K. authori es allow medical claims to be made. Mr Whe em explained that a er putng this rescue cream through a clinical study, it can now say this CBD cream is ‘clinically proven eﬀec ve to soothe, relieve and repair your skin’. He said in a company blog: “A er passing with flying colours, we are delighted to be the first ever company to say that our cannabis cosme c is the only one proven to relieve, soothe and repair your skin, with all the natural power of the cannabis plant!” “As the ini al results came in we were quite literally blown away. Nearly 100% of the par cipants in the study reported the same results that we had expected, backing up our claims almost unanimously.” europeanbusinessmagazine.com 19

Unconscious buying decisions: New research on how consumers’ favourite brands meet their psychological needs

• Missed opportunity for marketers playing it safe with older consumers • Brands appealing to individuality fall flat with all but the youngest audiences • Findings include how to appeal to customers over a life me A major new study reveals the a ributes that UK consumers subconsciously associate with their favourite brands and how these tap into psychological needs. Based on a version of the Harvard Implicit Associa on Test, involving 1,000 na onally representa ve UK consumers, The Oracle: Bringing emotional reality to dataled marke ng is released today by Brilliant Noise. This research reveals how consumers are using their favourite brands to tap into four basic human needs; “enjoyment”, “individuality”, “security” and “social inclusion”, recognised by psychologists as constant across all cultures and historical me. While the demographic comparisons call into ques on marketers’ assump ons about how consumers will respond best to brands at each stage of their lives. Taking the UK popula on as a whole, brands mee ng consumers’ needs for 20 europeanbusinessmagazine.com

social inclusion or security, by being subconsciously seen as “relevant” and “popular”, or “caring” and “predictable” performed highly. Whereas those appealing to individuality by posi oning themselves as “rebellious” or “innova ve” scored poorly. This is par cularly relevant to brands who are trying to appeal to ageing, core and new younger audiences simultaneously. Brands that tap into the human need for social inclusion rank highly with consumers aged 55 and over, with those unconsciously associated with being “popular”, “inspiring” or “sexy” making their favourites. In fact, brands implicitly seen as sexy score higher with this demographic than any other, sugges ng an untapped opportunity for marketers playing it safe with older audiences. Does this mean Saga needs more frisson while M&S are ge ng it right in their use of Alexa Chung, Twiggy and Helen Mirren? More predictably the research found this older group also look to brands to fulfil their needs for security, with those seen to be “authen c”, “secure” and “tradi onal” doing well. Appealing to the psychological need for individuality only proves a compelling tactic for brands targeting

consumers aged 18-34, according to the data. This younger demographic is more than twice as likely to be drawn to brands with a ributes such as “unique” or “crea ve” than their elders. Meanwhile, those aged 35-54 favour brands catering to their needs for security and enjoyment, subconsciously seeing their favourites as “honest” or “responsible”, and “relaxing” or “amusing”. In comparison to both younger and older consumers, this middle group is much less likely to use brands to fulfil their needs for social inclusion. This confirms many marketers’ suspicion that the trend for overly familiar, informal messaging and in-jokes is o en cynically received by this group. Antony Mayfield, CEO of Brilliant Noise comments: “Great creative brand work requires an emo onal chain reac on: moving from a crea ve team through produc on and ac va on to the brains and nervous systems of real-life customers. Marketers may have data on what’s working, but do they know why? “Purchasing decisions are influenced by subconscious as well as conscious considera ons, so finding out what customers want isn’t as simple as asking. Brands are exploring new datadriven methods, with insight at the centre, yet this has failed to deliver a leap forward in understanding what wins customers’ love, or their loyalty. “To inspire marke ng strategies and crea ve that works in the real world, brands need to connect with the emo ons of their customers on a deeper level, beyond cold, hard data points.” Mel Stanley, Head of Marke ng and Brand at EDF Energy adds: “Digital communica ons have created trackable, measurable, one to one experiences, which makes it easier to understand who your customers are and how they behave. There’s depth and richness that wasn’t possible before, but you need to be relentlessly curious about what sits behind the data.” Brilliant Noise commissioned this research as part of regular insight-gathering to inform their ata-led marke ng strategies and persona-based campaigns.

N EW RE S I DE NCY PR O GR AMME S N OW AVA I L A B L E

SELECTANGUILLA.COM

³ƺǼƺƬɎ ȇǕɖǣǼǼƏ ǣɀ Ə ǕȒɮƺȸȇȅƺȇɎƏǼ ƏǕƺȇƬɵ ɯǝǣƬǝ ȵȸȒȅȒɎƺɀ ƏȇƳ ɀɖȵȵȒȸɎɀ ȸƺǼȒƬƏɎǣȒȇ ɎȒ ȇǕɖǣǼǼƏ ǔȒȸ ȵƺȸɀȒȇƏǼً ƫɖɀǣȇƺɀɀ Ȓȸ ˡɀƬƏǼ ȒȵɎǣȅǣɿƏɎǣȒȇ ȵɖȸȵȒɀƺɀِ ǼǼ ƏƳɮǣƬƺ ǣɀ ƬȒȇˡƳƺȇɎǣƏǼ ƏȇƳ ȵȸȒɮǣƳƺƳ ǔȸƺƺ Ȓǔ ƬǝƏȸǕƺ ɎȒ ǣȇƳǣɮǣƳɖƏǼɀِ

Guillaume Pousaz, founder and CEO OF Checkout.com

The Billion Dollar Fintech Company That You Probably Haven’t Heard Of

evolut, Monzo, Transferwise – you will have undoubtedly heard of these successful FinTech start-ups, which have been making headlines for quite some me now. However, there’s one more player in this game. Just a few months ago, Checkout.com – a li le-known UK FinTech company – broke European funding records, raising a $230 million funding round and giving the company a valua on of $2 billion. It was the largest Series A early-stage venture capital deal of its kind in Europe, and the third largest anywhere in the world. Commen ng on the recent investment, Guillaume Pousaz, founder and CEO of the company, noted that,

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“Life has changed for the be er – no ques on. I think the way we look at it is that we know we worked super hard for this – probably a full decade from when we started in the beginning – and of course, the profile has raised a lot, but we’re the exact same people we were six months ago.” The payments processing company offers an online payment pla orm that focuses on accep ng more transacons, currencies and payment methods through one integra on, providing absolute transparency across the en re payment value chain. To be more specific, it offers a onestop shop for processing 150 currencies, with transac on speeds of 200 milliseconds – compared to MasterCard’s 400 milliseconds – and despite the s ff compe on, it already has some big-name clients to boast of, including Samsung, Transferwise, Adidas and Virgin. If you’re wondering why you haven’t heard about Checkout.com before, the answer is simple: the company is a silent partner behind their merchants, and is happy to work this way. “We’re not like PayPal, which is consumer-facing. We’re truly B2B. Merchants have a love/hate rela onship with PayPal because it owns the rela onship with the customer rather than the merchant,” says the Swiss entrepreneur. Interes ngly, Pousaz didn’t originally plan on working with payments. As he says, “I didn’t find payments, payments found me.” Born and raised in Switzerland, Pousaz studied mathema cal engineering for a few years, before deciding that business was a be er fit for him. During his third year of Economics studies at HEC Lausanne, his father was diagnosed with terminal pancrea c cancer, and Pousaz was forced to do some soul-searching.

He stopped his studies, failed his finals, and never returned to complete his degree. Instead, he went to California, wan ng to be close to the ocean and to indulge his passion for surfing. There, he got a job at a payments company called Interna onal Payment Consultants. It was not easy – he worked 70–80 hours per week and had to learn about the payments industry from scratch. However, it was during that me that Pousaz realised that there was more poten al in the payments industry. “I spent two years as an employee,” explained the entrepreneur, “le – with the Head of Sales – and started my first business.”And this is how, in 2007, NetMerchant – a company which specialised in selling European currencies to US merchants – was created. “Obviously, we had nearly no capital and no technology and were ‘white label’ of another technology company. We didn’t own anything. We were purely contract sellers,” remembers Pousaz, “We were selling contracts to banks. Merchants were interested in payment processing, but at that me, I did not own the technology. I did not own anything.” Although at that me the fundamental business model of NetMerchant was truly unique – making complex cross-border transac ons and interna onal selling for US merchants as easy as possible – Pousaz and his partner ran the company for just two years, un l 2009. Unable to agree on the same vision and direction regarding NetMerchant’s future, the colleagues decided to part ways. Pousaz wanted to invest in the business and build his own payment getaway: “I saw that things were changing in the world around us and felt this was a business opportunity that I

needed to double-down on. I felt this was an amazing opportunity for payments.” That same year, in 2009, the entrepreneur discovered a small company in Mauri us. It was perfect – a team of ten people had built a payment getaway, had technology and PCI experience, but had no idea of how to improve its user experience. Pousaz bought the company, telling them “You know how to code the payment gateway, but I know how to drive business. If you give me the code, I will guarantee to pay you three years’ salary. We’ll sign a contract and I will put the money in a bank account. I will fund the company, but I want everything for free.” It worked, and in 2012, Checkout. com was founded. It started with a simple vision: to create a payments company that used all its own technology rather than working with any middlemen. That same year Checkout.com became licensed by the FCA, and shortly a er, in 2013, MasterCard and Visa gave it a principal membership. However, there was one li le problem. They had the payment getaway and the acquiring bank, but were missing the last piece of technology – the payment processor. “Nobody wanted to work with us,” explains Pousaz, “I guess because

we didn’t raise money or because we didn’t have enough money – and from there we decided to build the whole payment processing pla orm ourselves, which for most people was completely crazy.” Fast-forward to 2016, a er three years of nothing but hard work, and Pousaz decided to relaunch the company. Which he reflects as being the turning point: “We relaunch everything, and from there on its mostly exponen al growth.” A er se ng up the company’s first headquarters in London, the entrepreneur decided to move with his family to Dubai, thinking that the Middle East might oﬀer more business opportuni es at that me. It turns out that his gut ins ncts were right – in Dubai, Pousaz made a deal and started to work with Deliveroo, a mul na onal food-delivery start-up, which was looking to expand in the area but didn’t have a local payments provider. And this was just a beginning. Soon a er this deal, other big clients were following suit: Transferwise, Virgin, Adidas, Samsung, EasyGroup, Ge y Images Inc., to name just a few. Today, Checkout.com is “solving complex payment problems for some of the biggest merchants in the world”, and has already opened eight oﬃces across Europe, the Middle East, the US and Asia Pacific.

Currently, the company has 380 employees, but its CEO noted that it would be tripling its headcount over the next three years, as it pushes into more product areas and new markets, outside of the US, Europe and the Middle East. The entrepreneur says that the company managed to grow its business organically and steadily, and this was possible mainly because they had no investors and no par cular pressure. “Other payments companies, especially in the US, have been forced to go for the land grab. But we’ve been able to focus on our product,” he says. The strategy has paid oﬀ. Clients are consistently impressed by the speed and efficiency of Checkout.com’s pla orm, and the company can be proud of an impressive 99% client reten on rate. And as for the future: Guillaume Pousaz has a clear vision, and wants to become a major player in global finance. “We plan to become the bank of the future. Today we’re trying to reinvent certain interac ons in financial services,” he explains, adding that company’s most important launch will happen next year. Right now, the company is building a new product that will enable marketplace customers to use its infrastructure to accept payments and comply with regula ons – all in the blink of an eye. europeanbusinessmagazine.com 23

The World’s Favourite Airline Faces a Record Fine

he message is clear. Today you have to treat your customers’ data with the utmost care and privacy! If something unexpectedly goes wrong – be prepared to pay the price. Last year, the Informa on Commissioner’s Oﬃce (ICO) fined Facebook $626,000 over the Cambridge Analy ca scandal. It was a record at the me, based on the maximum fine allowed before GDPR came into force, seriously shaking things up in the data privacy sec on. Just one year later, and Bri sh Airways – “the world’s favourite airline” – faces a record $230million fine a er a website failure compromised the personal details of 500,000 customers. The sum is equivalent to 1.5% of the company’s annual turnover. The ICO acknowledged that it was the biggest penalty it has handed out, and the first to be made public under the new rules. The incident happened in June 2018. Users booking flights through the Bri sh Airways (BA) app or website were directed, for three months, to a fake website that proceeded to steal their personal details. The ICO confirmed that the hackers – a group called Magecart – managed to access the informa on of the half a million users thanks to a vulnerability in third-party Javascript used on the website. Magecart had secreted 22 lines of code that diverted crucial details around payments to a separate website controlled by the criminals. Interes ngly, Andrew Dwyer, a cybersecurity researcher at the University of Oxford, noted that a simple fix could have actually prevented these problems for BA altogether. The third-party piece of Javascript, called Modernizr, sent data to baways.

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com – a similar sounding website to the official BA site. However, as BA was familiar with Modernizr’s vulnerability for quite some me, the problem could have been solved before it even existed. Dwyer explained that, “As a singular error it could be seen as fairly trivial – as it was one script that was compromised and used to exfiltrate data. However, that it was not found for so long and that script had not been updated suggests a more systemic issue of IT governance at BA – meaning it is unlikely this is an isolated vulnerability. Effec ve monitoring would have picked this up quickly – not the three months it took BA. Even today, its payment page s ll gives access to third-party scripts and does not add sufficient protec ons that would necessarily be expected to keep payment segmented from poten al access from these third par es.” A er the incident, BA confirmed that the stolen data did not include travel or passport details. However, it did include names, email addresses, credit card informa on – including credit card numbers, expiry dates and the three-digit CVV codes, as well as login and booking details. Informa on Commissioner Elizabeth Denham commented on the incident, “People’s personal data is just that – personal. When an organisa on fails to protect it from loss, damage or the , it is more than an inconvenience. That’s why the law is clear – when you are entrusted with personal data, you must look a er it. Those that don’t will face scru ny from my office to check they have taken appropriate steps to protect fundamental privacy rights.” Since the ICO’s findings, Bri sh Airways has improved its web security.

However, the company refuses to take uncondi onal responsibility for the breach. Alex Cruz, Chair and Chief Execu ve of BA commented on ICO’s decision in a statement, saying that, “We are surprised and disappointed in this ini al finding from the ICO. Bri sh Airways responded quickly to a criminal act to steal customers’ data. We have found no evidence of fraud/fraudulent ac vity on accounts linked to the the . We apologise to our customers for any inconvenience this event caused.”

Willie Walsh, the CEO of BA’s parent company Interna onal Airlines Group (IAG), said that “Bri sh Airways will be making representaons to the ICO in rela on to the proposed fine. We intend to take all appropriate steps to defend the airline’s posi on vigorously, including making any necessary appeals.” Rowenna Fielding, Senior Data Protec on Lead at data protec on consultants company Protecture, said that the main reason the ICO’s intended fine is so big is due to the number of people whose informa on was stolen,

as well as the impact of the breach on those people. However, it is important to note that nothing is final yet. Every penalty involves a no ce of intent, and the organisa on has the right to make representa ons. Fielding also thinks that the ICO’s announcement is not a declara on that it will be fining BA the full amount; rather, it is a “no ce of inten on” that it would like to fine the company $230 million, but this is far from a done deal yet. Perhaps the worst thing about the BA’s posi on when it comes to the

people aﬀected, is the fact that it blames unspecified criminals for the hack, choosing not to take real ac ons themselves. The ICO, on the other hand, had long warned that it would start imposing much larger fines a er the introduc on of the new GDPR rules. And this is exactly why it has been given the power to impose such huge fines: to force companies to take ac on to prevent such hacks, rather than simply apologising for any “inconveniences” when they do. europeanbusinessmagazine.com 25

European Start-ups Challenge Silicone Valley: The Rivalry Is Real

he European start-up scene has experienced big changes over the past few years. For a long me, the old con nent’s tech sector was in the shadow of Silicon Valley, unable to neither challenge nor compete with it. But not any more.Today, new-genera on European start-ups are booming. Breaking records and reaching impressive milestones, Europe’s tech system is now seriously challenging the Silicon Valley, as – for the first me in history – it is growing at a faster rate than the USA’s tech industry. The global venture capital company Atomico and its State of European Tech report has revealed some interes ng things. According to the report, total investment in European start-ups reached $23 billion in 2018. This year, $21.4 billion has already been invested across Q1 and Q2, and Europe is the only region showing a significant venture capital investment growth in 2019 to date. Author of the report Tom Wehmeier, Partner and Head of Research at Atomico, said that, “This year has been an incredible year for the European tech ecosystem. We’re at risk of sounding like a broken record about breaking records – but we can’t dispute the data.” The report also revealed that last year, 69 tech companies went public in Europe, compared to 28 in the

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US. In the same period, share prices of European start-ups increased by 222%, compared to a 42% rise for US companies. Atomico also reported that there were seventeen new “unicorns” in Europe last year, which is double that of the previous year. The list includes such names as Revolut, Monzo, N26, TransferWise and other new-genera on European start-ups. There is a good reason why these new-genera on European start-ups are so successful, and that reason is so ware aimed at niche sectors.

A few years ago, start-ups managed to benefit from the spread of smartphones and cheap cloud computing. But as many of those companies built global empires by simply using exis ng industries – think taxis, food delivery and hotels – and making them mobile, today, new emerging companies are tending to focus on new so ware for specific industries, such as banks, science companies and farms. This new up-and-coming generaon of start-ups is all about adopting more technology in different

industries: health care, automo ve, retail, banking, consumer package goods, advanced manufacturing companies, etc. Anand Sanwal from CB Insights noted that, “The marriage of technology and data is speeding things up” and that new-genera on startups, “are all trying to figure out how technology helps reduce costs or how technology is going to help them build their next business model.”And there’s another reason why new-genera on European start-ups are so successful.

The authors of the State of European Tech report further noted that Europe has at last figured out how to eﬀec vely a ract talent to its start-ups, explaining, “The tech sector is a rac ng more par cipants – whether measured by the healthy increase in professional developers or the up ck in talented execu ves moving into tech from other sectors. This talent comes from universi es, anchor tech companies, and innova on hubs – leading in turn to increases in investment, and growth in anchor tech companies.”

Interes ngly, new-genera on finance start-ups are par cularly strong in the old con nent right now, with Revolut, Transferwise and N26 all showing extraordinary growth trajectories over the last few years, seriously challenging the US giants.Revolut is a parcularly good example, having added 6 million new customers in just four years, using its mobile payment and money transfer app and debit cards. Revolut’s founder Nikolay Storonsky thinks that US companies can definitely learn from European start-ups: “To be honest, I think we are more advanced. We are three to four years more advanced compared to US companies in terms of product, in terms of regula on, in terms of size. US companies should learn from Europe.”According to Capgemini, a global leader in technology, digital innova on and consultancy, half of all banking customers globally are now using FinTech companies, and in order to remain compe ve, tradi onal finance ins tu ons have had to decide their next move – either collaborate or compete with start-ups. The most successful eﬀort so far has been from Goldman Sachs, which launched a banking app named Marcus and signed up 25,000 customers in just eight months. However, whilst Revolut, N26 and other new-genera on finance startups are thriving, what everyone really wants to know is whether they’ll have the ability to catch up, and truly compete with the long-standing global giants such as Barclays. Well, Barclays has 25 million customers and clients, compared to Revolut’s 6 million, but Simon Cook, CEO of Draper Esprit and investor in the successful start-up, says that, “The idea that N26 or Revolut could go on to be the size of Barclays, that looks believable to me.” Nikolay Storonsky also thinks that Barclays should be concerned in the long term regarding the European compeon: “We are so small compared to them, right? So I think they might be a bit worried, but they s ll don’t feel it. They might be star ng departments and assembling big teams and building some of the products that we build. europeanbusinessmagazine.com 27

which is a testament to how incredibly dynamic the tech sector is in the UK,” said Daniel Korski, a co-founder of Public – a venture capital firm. He also added that, “Nearly 40% of the unicorns created in Europe in the last ten years have been in the UK, and that lead is increasing.”

But in terms of revenue, in terms of management, they are s ll not really paying a en on.” What’s more, European unicorns are already outpacing US rivals, growing at a much faster pace with the overall number of new unicorns in Europe having increased by 28% in the last year, compared to just 20% in the US. “We are in a very diﬀerent state than just a few years ago. We have full ecosystems with incubators, angel investors, and seed funds, as well as entrepreneurs with real desire to build big companies,” said Bernard Liautaud, the managing partner at London venture firm Balderton Capital LLC. And it’s true. Europe is no longer shadowed by Silicon Valley, evidenced by the 21 billion-dollar start-ups that have emerged here in 2018, bringing the total number of European unicorns to 84, up from 30 in 2014. Simon Cook of Draper Esprit further noted that, “This genera on like N26, UiPath, Revolut, and Transferwise are growing twice as fast as previous start-ups. They could get to $600+ million revenues in five years. This means we are building real $10 billion companies in Europe for the first me.” The actual number is even more impressive, as Europe will soon boast its first $50 billion “tech tan”. According 28 europeanbusinessmagazine.com

to new research by investment banking company GP Bullhound, Swedish music app Spo fy, which is currently si ng at a $34 billion valua on, is expected to reach this impressive milestone in just a few years – by 2021. Another front-runner in this race is Dutch payment systems company Adyen, with a current valua on of $22 billion. Tom Wehmeier noted that Spo fy’s success has led other European unicorns into the spotlight, saying that, “There’s a lot of talk some mes that European founders can’t compete on the global stage, and I think Spo fy has shown that…you can s ll come out on top if you start from the outset thinking big.”Besides Spo fy, there are a few other names that helped to start a shi in the European start-up scene – Klarna, Playerhunter, Meero, FoxIntelligence, iZe le and Mono, to name a few. The UK remains the biggest tech hub on the con nent. According to industry group Tech Na on, the UK has now created more unicorns than any other country, besides the US and China. Among other FinTech companies, it has given the world TransferWise, Funding Circle, Monzo and Revolut. “We have something like 70 unicorns and 50,000 people with product-level experience,

But other countries in Europe, such as Germany, France, Sweden and Spain, are also blooming when it comes to start-ups. Upcoming hubs, including Tallinn, Dublin, Lisbon, Copenhagen, Oslo and Barcelona, not only are growing rapidly but are also starting to a ract more and more investments.Europe’s start-up scene has been eclipsed by Silicon Valley for a long me, but looking at recent years, there’s no reason why European start-ups can’t con nue to match – or exceed – it. In recent years, Europe has slowly grown its start-up ecosystem, and it is in full bloom right now. It’s all right there: direct access to the world’s largest economy, funding, general posi vity towards start-up entrepreneurship, less compe on and less confusion. For example, in the US, companies have to contend with each state’s banking and insurance regulators, as well as the laws that can vary widely between states. Meanwhile, a company regulated by European Union financial authori es can operate in all 28 con nent countries without having to apply to individual agencies. As over the past few years Europe has made incredible progress and is seriously rivalling the US and Asian tech, Manish Madhvani, a tech-focused adviser and Managing Partner of GP Bullhound, says that, “We have every reason to be op misc about the strength of European tech. Access to capital has improved hugely in the past three years, and with con nued ambi on, a constant reinven on of the product and a willingness to embrace risk, the Spo fys, Farfetchs and Adyens of Europe will soon rival the Ubers and Facebooks of Silicon Valley. Europe’s tech ecosystem has the talent, ambi on, and velocity for that.” And when that me comes, we will have our bets on Europe.

Understanding a Company within a Company:

What You Need to Know about Google and Alphabet Inc

oogle – the most popular search engine in the world, has recently celebrated its 21st birthday.It’s the most popular search engine in the world. According to the latest Netmarketshare report, 73% of Internet searches were powered by Google in 2018. It also dominates the mobile and tablet search engine market, with an 81% share.But have you heard of Alphabet, Google’s holding company? Although it’s been four years since Google restructured and created Alphabet, many s ll find the company’s structure rather confusing. And what’s more, even now when we say

“Alphabet”, commercially speaking we s ll really mean…well, Google. So what do you need to know? Let’s start from the beginning…Google began as an online search firm back in 1998, and as Larry Page, one of the company’s co-creators remembers: “When we began the searches, they all told us: boys, it’s going to fail, there are already 5 search engines. We replied: we’re a search engine company, but we’re doing something diﬀerent”. Step by step, the two founders of Google – Larry Page and Sergey Brin – made the “seemingly” impossible happen, developing the business and con nuously securing significant

investments so that, keeping pace with the growth of the Internet itself, the company grew at a rapid rate, leaving many of its compe tors in its wake. Fast-forward to 2019 and Google is considered one of the “Big Four” global companies alongside Amazon, Apple and Facebook, with a total revenue in 2018 exceeding $136 billion. Although it started as an online search firm, today Google oﬀers more than 50 Internet services and products, including e-mail, online document crea on, so ware for mobile phones and tablet computers, and many more. Early on in the company’s europeanbusinessmagazine.com 29

development, investors noted that Larry Page and Sergey Brin needed an experienced manager to run the organisa on, which led to the appointment of Eric Schmidt as CEO in 2001. He replaced Larry Page who had held the posi on un l this me. It was during this period and under Schmidt’s leadership that Google underwent its first period of major growth and expansion. Page and Brin remained highly involved however, and in 2011 Larry Page once again took the helm as CEO of Google, whilst Schmidt stepped down and became Executive Chairman. Page continued to successfully drive growth and expansion in his resumed posi on as CEO, un l in 2015, something unexpected happened: Google announced plans to create a new public holding company, named Alphabet Inc. Larry Page would be taking the role of CEO of Alphabet, with Sundar Pichai stepping into the role of CEO for the newly restructured subsidiary – Google. Page made the announcement in a blog post on the company’s oﬃcial blog, causing surprise around the

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world: there was no warning about this upcoming move, nor had there been any rumours circula ng. As a result, many began to ques on if perhaps something was wrong with Google, but Larry Page immediately put paid to these doubts by explaining the move: “Our company is opera ng well today, but we think we can make it cleaner and more accountable. So we are crea ng a new company, called Alphabet.” The new CEO of Alphabet Inc. also noted that the new en ty would help them take a long-term view and improve the transparency and oversight of their ac ons: “Alphabet is mostly a collec on of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pre y far afield of our main Internet products contained in Alphabet instead. Fundamentally, we believe this allows us more management scale, as we can run things independently that aren't very related.” Page also explained the meaning behind the new name. He explained

that it represents “A collec on of letters that represent language, one of humanity’s most important innova ons, and is the core of how we index with Google search.”All execu ves retained their posi ons in the company, simply replacing the name Google with Alphabet: Larry Page became CEO of Alphabet, Sergey Brin its president, and Eric Schmidt its Execu ve Chairman. Alphabet’s owners – Larry Page and Sergey Brin – are also the company’s largest shareholders. They both own 20 million shares of Class B stock, as well as 20 million shares of Class C stock. What’s more, their net worth is es mated at more than $50 billion apiece. Eric Schmidt, from his tenures as CEO and Execu ve Chairman from 2001 to 2017, holds 8 million shares of the stock. There are also a few ins tuonal investors, such as Vanguard, Fidelity Management, and the BlackRock Fund. Interes ngly, just six months a er the announcement, Alphabet’s market

cap has recorded an impressive rise by $200 billion, almost doubling its total revenue. Keeping in mind that at that time Alphabet’s products had remained the same as they had always been, it came as quite a surprise. Alphabet is divided into two main parts: Google and “Other Bets”. To put it simply, Google s ll represents the vast majority of Alphabet’s revenues, and is responsible for search, adver sing, maps, apps, YouTube and Android, while the “Other Bets” are eﬀec vely smaller, individual companies, each with their own CEO and leadership. These companies include Calico (life-extension biotech research), Nest (maker of various smart home products), Google Fiber (a high-speed Internet service), Google X (responsible for self-driving cars, delivery drones and other similar projects), GV (a venture capital firm that invests in startups), CapitalG (investor in

startups that are slightly further along – you’ve probably heard of Snapchat, Airbnb and Glassdoor), Verily Life Sciences (a medical research brand) and Boston Dynamics (a robo cs company). Basically, this means that all of Alphabet’s tradi onal products – think Chrome, the Pixel phone, Google Home and Google Play – are s ll housed under Google, which is run in its own right by CEO Sundar Pichai. However Google is also the one who pays the bills at Alphabet. Larry Page noted that “We are not intending for this to be a big consumer brand with related products.The whole point is that Alphabet companies would have independence and develop their brands.” In other words, Alphabet can be seen as an umbrella company for all of Google’s subsidiaries, and its main goal is to oversee the individual companies and manage the distribu on

of funds, making things easier.Alphabet’s code of conduct is somewhat similar to Google’s good-old “don’t be evil” mo o, but this one asks its staﬀ to “do the right thing – follow the law, act honourably, and treat each other with respect.” When you think about it, crea ng Alphabet was the biggest change in Google’s history, and although everyone is intrigued as to how well it will work, and what will happen next, it was undoubtedly a great strategic move – allowing the company to try new, innova ve projects and bring them to life, whilst reassuring Google’s investors that they aren’t risking significant propor ons of Google’s own profits. Today, Alphabet is the world’s fi h-largest technology company by revenue and one of the world’s most valuable companies. It is also the leading company listed on the US market equity index – the S&P 500. europeanbusinessmagazine.com 31

Britain: Recession or No Recession Stock markets around the world remain volatile, and ongoing economic conflict fuel fears of another downturn. Growth has decreased in Germany, Brazil, Italy and Mexico, and alongside a worldwide manufacturing slump and a sharp drop in business confidence, a global recession looks likely. But what is happening closer to home?

he UK’s recovery from the financial crisis in 2008 was the slowest since the Great Depression, and with the threat of a no-deal Brexit rising, Britain finds itself yet again in a dangerously fragile posi on. Brexit uncertainty connues to weigh in heavily on the UK economy - clearly evident from the recent sluggish economic data - and a recession seems almost inevitable. Predic ons for the year end 2020 include UK stock markets to fall by 5%, the pound to plummet 10%, GDP to shrink by 2% and an overall drop in house prices. A no-deal Brexit could plunge the British economy into a yearlong

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recession, adding tens of billions of pounds to government borrowing, according to the Oﬃce for Budget Responsibility. The independent watchdog states that “heightened uncertainty and declining confidence” would certainly deter investment while higher trade barriers could slam exports. Corporate pessimism is also having a real eﬀect on planned investment, now at its lowest level since 2011, while consumer confidence has fallen significantly since 2016. The TUC general secretary, Frances O’Grady reiterates this very real concern saying: “Nega ve growth at home and weaker growth around the

world is a major worry for workers and business. The prime minister’s toxic threat to crash out of the EU without a deal only adds to the alarm. It damages confidence in the economy, pu ng people’s jobs at risk.” Boris Johnson became PM last month, intent on pu ng “rocket boosters” under the economy and finalising Brexit, deal or no deal. Whatever his poli cal ra onale, a no deal would inevitably be a costly blow to the UK’s already weakened economy. A no deal scenario would veto the 21-month transi on period, and consequently consumers, businesses and public bodies would have to respond immediately

to changes and the UK would revert to World Trade Organisa on rules on trade, facing EU external tariffs. Some Bri sh-made products may be rejected as new authorisa on and cer fica on might be required and manufacturers may move their opera ons to the EU to avoid delays in components coming across the border. The Bank of England governor Mark Carney predicts that the value of the pound would fall in response to what he describes as a “real economic shock” - claiming products such as petrol and food would become more expensive if the UK leaves the EU without a deal. Whatever form Brexit takes, the 2016 referendum result has already adversely affected living standards in the UK. According to Resolu on Founda on research it has already contributed to a larger decrease in incomes than the recession in the early 1990s. The Bri sh economy shrank last quarter for the first me in seven years, indica ng that Britain is now just one nega ve quarter away from its first official recession since 2009, and the

Bank of England warns that Britain has a 33% chance of going into recession in 2020. The pound plunged to 93.26p against the Euro, the lowest level since 2009 - apart from a flash crash in October 2016. New data from the Reed.co.uk Job Index, shows vacancies fell by 2.3% in Q2 2019, compared to the same quarter last year – the largest percentage drop on reed.co.uk since 2010. As Boris Johnson prepares to leave the EU with or without a divorce deal, these sta scs paint a gloomy picture of what’s to come. However, the UKs planned exit from the EU may have already forced the country into a recession, according to the Na onal Ins tute of Economic and Social Research (NIESR). In a pessimisc set of new forecasts, NIESR predicted that, even assuming a smooth exit in October, the UK will grow a scant 1% in 2019 and 2020, with a one-in-four chance that the economy is already shrinking. Whether it’s just Brexit related or there are broader factors at play remains a ma er of some debate, but with weak underlying growth, a no-deal Brexit could further contract the UK’s limp economy. NIESR indicates a “severe” downturn in the event of a messy departure.

Even if an organised no deal exit is realised, the research ins tute projects that the economy will deteriorate in 2020, with infla on accelerating to 4.1%. Nonetheless, a recession is so far a fear, not a reality. The future, as ever, is uncertain and past performance of recession recovery is not a reliable indicator of future performance. Retail sales volumes rose 0.2% in July compared with June, defying expecta ons of a slump in purchases, so consumer spending, supported by rising real incomes, may help support modest economic growth. Hopes that the UK might just dodge a recession, despite the pressure from the US-China trade war and the risk of a no-deal Brexit, are echoed by economists who believe the UK will rebound in the current quarter thanks to resumed stockpiling, alongside solid consumer spending. However, should the UK soon enter recession, it is dangerously short of firepower. Britain’s momentous decision to leave the EU has opened up a new era of uncertainty and ambiguity for Europe and the global economy. Yet, one thing remains crystal clear: Brexit is bad for business and therefore will be bad for Britain. europeanbusinessmagazine.com 33

THE FOURTH INDUSTRIAL REVOLUTION AND THE INTERNET OF THINGS: WHAT IS HAPPENING NEXT?

he past three industrial revolu ons each transformed the “modern” society of the mes, fundamentally changing the world in which we live. And we are now in the age of the fourth industrial revolu on – which one again, is totally disrup ng businesses and completely changing the way in which we have lived and worked un l now. And just imagine what might lie ahead, ten years from now, given that some of these new disrup ve technologies, such as Ar ficial Intelligence (AI) or the Internet of Things (IoT), were not even conceivable just a few short years ago?

What does the fourth industrial revolution bring to us? The fourth industrial revolu on has brought us many changes. Instead of tradi onal compe on, businesses now func on through connec on and collabora on, by crea ng ecosystems where par cipants exchange ideas, informa on and resources to improve eﬃciency and product quality, reduce costs and boost innovaons, which have all resulted in new disrup ve technologies that un l recently we could only imagine in movies, yet now –are our reality. Even though many of these new inven ons are s ll in the ini al phases of development, we can already see how our lives are changing as a result of them. It really cannot be said which 34 europeanbusinessmagazine.com

inven on has brought us more opportuni es – Ar ficial Intelligence (AI), Big Data analy cs, machine learning or the Internet of Things (IoT). We can now more easily complete work, and with more precision than before. With the help of robo cs and Big Data, we can be er op mise business processes, which also brings us many opportuni es in our private lives. Companies can now be er custom their oﬀers to our specific needs; banks have introduced new advanced ways of paying such as mobile wallet, face paying, etc., and smart ci es are sure to improve our lives significantly. S ll, one of the main engines of the fourth industrial revolu on is the Internet of Things (IoT), which is set to completely reshape our future with the many opportuni es that it brings.

The main driver of the fourth industrial revolution – Internet of Things (IoT) The Internet of Things (IoT) is the network of interconnected devices that allows easy transfer of data and two-way conversa on with no need for human-to-computer or humanto-human interac on, because all devices are connected to the Internet through WiFi or sensors, enabling unlimited opportuni es for users. IoT allows us to have smarter devices that we can control by applica ons on our mobile phones or computers. Now you can turn on your washing

machine even if you are not at home. Your smart thermostat can learn your preferred home temperature. You can turn on the lights in your house using just your voice, or you can check which ingredients you have in your refrigerator while you are at the supermarket. IoT also enables endless opportuni es for businesses, such as improved data analy cs, monitoring devices, predic ng maintenance needs, tracking the eﬃciency of a produc on line, etc. As a result, all companies simply have to adopt these new technologies if they want to survive today. Digitalisa on and especially IoT have already increased eﬃciency, reduced costs, improved product quality and accelerated innova ons to an extent that a company not adap ng to these new circumstances will be sure to fall behind its compe tors, eventually

have the poten al to create some incredibly dangerous situations if someone were to hack systems that control autonomous cars or a city’s power sta on, for example. And such cases have already happened. For example, Amazon’s Alexa wrongly sent an individual 1,700 voice recordings from another person’s device, while another couple’s home Nest system was recently hacked by someone who raised their smart thermostat to 90 degrees and played “vulgar” music throughout their home. We can therefore also expect some new legisla on in this field.

What is next?

disappearing from the market. On the other hand, people generally have already recognised the many opportuni es that IoT oﬀers, and are more and more interested in using it. For example, Americans have already purchased over 40 million smart home-devices, with this trend being sure to con nue over the coming years.

The fourth industrial revolution and IoT offers endless opportunities Cloud computing will soon be replaced with edge compu ng, which enables extra-fast speeds for sharing large amounts of data. Also, with the help of IoT, Samsung and Sony have introduced Gigabit LTE, based on Qualcomm Snapdragon technology,

so as to link current LTE and future 5G networks. Giants like IBM, Microso , Cisco, SAS and others have already invested a lot in IoT analy cs, allowing, among other things, the further development of smart ci es with parking, weather and traﬃc jam sensors, video cameras in streetlights, incident detecon devices, etc., which will make transporta on, and our lives generally, much easier. However, although our future with IoT will surely be bright, there are some issues with data security and privacy that need to be solved. As all devices are connected to the Internet, there is always a risk that someone can hack the systems. The consequences may be smaller in the cases of someone intruding your personal life and misusing your data, but they

The value of IoT in our lives is shown in the es ma on that the IoT market will be worth $267 billion by 2020 and generate $3.7 trillion in revenue by 2028. Its con nued development will also be much faster, given that adding devices to the current network is less costly. Future direc ons of IoT also include the emergence of new IoT devices, and we can expect the integra on of network sensors into robo cs, ar ficial intelligence and business processes, with further development of driverless cars and smart ci es, etc. Machine learning based on ar ficial intelligence that learns from data received and a faster 5G network will also accelerate further development of IoT and expand its use in other devices. There is also the Internet of Everything (IoE), which unites connec vity and intelligence in devices, thus enabling even more opportunies than IoT. Taking into account its strategic value, the IoE market is es mated to reach $7 trillion by 2020. Indeed, the fourth industrial revolu on and IoT is completely transforming our lives and the world in which we live. Although we cannot imagine how our future will look, or an cipate the further disrup ve inven ons ahead, we can be sure that there is s ll a lot yet to come as part of this transforma ve period in human history. europeanbusinessmagazine.com 35

The Brexit Fog: Chilling Effect on UK’s Economy and Businesses

ith the October 31 Brexit deadline fast approaching, there seems to be more questions than answers of what could happen next in Britain. Will the UK leave the EU? If yes – on what terms? What does the UK’s long-term rela onship with the EU look like? What impact will it have on market access? What about migrant labour and product regula on? And how it will aﬀect businesses in the country? Although at the me of wri ng two weeks are le of the oﬃcial sixmonth extension to the Ar cle 50 process expires, Brexit has already been hur ng the UK – well before it has even happened. The prolonged uncertainty, also referred to as the

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“Brexit fog”, seems to be aﬀec ng everyone in the country: banks, companies, employers and employees already face various challenges and problems. According to the Bank of England, the economy is now 2% smaller than it would have been if the UK had chosen to remain in the EU. The economic output lost since the referendum is worth about $1 billion per week, or $6 million per hour. It seems that for many big companies, Brexit has already happened. Nissan and Siemens have delayed their projects and investments, and giants like Sony, Panasonic and Philips have already moved their assets, jobs and headquarters from the UK to the European con nent.

Even the Bri sh firm Dyson, founded by outspoken Brexit backer J. Dyson, announced the decision to move its headquarters from the UK to Singapore. Although the company said its decision was not linked to Brexit, the announcement was widely cri cised. As a result, UK manufacturing output witnessed its sharpest monthly slump since 2002: in April it recorded a drop of 4.1%. Manufacturing employment also fell at one of the fastest rates in six and a half years in August, with job cuts driven by cost-saving plans, slower economic growth and the connued impact of Brexit uncertainty. T. Pugh, an economist at Capital Economics, commented on the situa on, saying that, “We doubt that the manufacturing sector is going to have any

sort of revival un l 2021, when global growth starts to pick back up.” According to a study by Aston University, fewer manufacturing companies are achieving high growth today and the number of start-ups in the sector has also dropped. M. Ru e, the Dutch prime minister, said that, “Every businessman I speak to from the UK is saying they will cut investments, cut their businesses in the UK. It will have an insurmountable impact on the UK,” adding that Britain is now a “more diminished country compared to what it was two or three years ago.” Interes ngly, oﬃcial figures from the Dutch investment agency show that the Netherlands has been a popular choice for business reloca on, as 42 companies moved to the country last year, ci ng Brexit as the reason. In numbers, it means 1,923 jobs and $320 million in investment. And that’s not all. The study, by Capital Markets’ think tank New Financial, has iden fied that more than 275 financial services companies have moved or are moving some of their business, staﬀ, assets or legal en es from the UK to the EU in prepara on for Brexit. To be more specific, around $999 billion has been moved by banks and investment banks, $81 billion in funds have been relocated by asset managers and $43 billion in assets have been shi ed by insurance companies. As a result, 5,000 jobs are likely to be created in the EU in the short term, with more to come in the future.

And what about the small businesses? The SMEs represent a core part of the UK economy, accoun ng for 99% of all UK firms and 60% of total private sector employment. A. Soady, a federa on spokesman, noted that right now, “lots of small businesses are in wait-and-see mode, and it’s not sustainable for that to go on indefinitely.” In addi on to this, the UK has to deal with a worsening skills shortage in the country. As much as 44% of all

employers were struggling to find the staﬀ they needed last year, and 34% had problems in retaining specific skill sets. For example, nurses, doctors and other health care professionals from the EU are leaving the UK. As of today, almost 10,000 of them have quit, and the number of nurses registering to prac ce in Britain dropped by almost 90% in 2018. Another sector that has been hit parcularly hard is construc on. Worker shortages hit a record low in 2018, according to figures from the Federa on of Master Builders (FMB). In its quarterly report on the state of the industry, the FMB revealed that companies are par cularly struggling to recruit bricklayers and carpenters, while the demand for skilled plumbers, electricians and plasterers is also outstripping supply. And there’s more. Uncertainty over Brexit slowed the UK’s economic growth to 1.4% last year – the slowest pace since 2012. The Bri sh pound is 14% lower than before the referendum. Gross domes c product fell 0.2% in the three months to June. As the sterling keeps fluctua ng, some retailers have warned that prices may increase. As a result, retail spending has sharply slowed, and retail sales fell by 0.5%, recording the biggest decline in spending in 2019. Chris Williamson, the chief business economist at IHS Markit, noted that, “the purchasing managers index (PMI) surveys collec vely indicated that the UK economy remained close to stagna on midway through the second quarter of 2019 as a result,

registering one of the weakest performances since 2012.” To be more specific, the index fell to 47.4 in August, down from 48.0 a month earlier. And anything above 50 separates growth from contrac on. Some numbers, on the other hand, have shown a more posi ve perspecve. In July 2019, UK infla on fell for the first me in four months, dropping back down to the target set by the government for consumer prices infla on of 2%. What’s more, the UK’s trade deficit – the shor all between imports and exports – narrowed to $3.4 billion in April from $7.6 billion in March. However, economists say that these figures might not necessarily mean that import and export volumes are returning to normal. It could indicate that firms in both the UK and in Europe now have unusually high levels of inventory, meaning they do not need to trade as much as they would normally do. Uncertainty over Brexit has resulted in companies being prevented from inves ng, instead diver ng resources into no-deal planning, meaning that funds that might have otherwise been spent on improving economic produc vity or developing new products in the UK, were instead used to prepare for a worst-case scenario. Interes ngly, the Brexit fog has had a good eﬀect on one thing: in 2018, $118.6 million worth of contracts were awarded to consultancy firms to advise the public sector on Brexit. Other than that, Britain has to prepare for October 31 and the potenally large economic shock that will follow, just in case. europeanbusinessmagazine.com 37

Euro Exim Bank: Trade Finance Banking At Its Best European Business Magazine talks to

Graham Bright Head of Compliance and Opera ons at Euro Exim Bank, about smart banks, blockchain technology, the Ripple community and the impact of Brexit In today’s rapidly growing interna onal market, marked by the impact of the One Belt One Road (OBOR) ini a ves and infrastructure, trade finance con nues to play a strategic role, and as major banks con nue to de-risk, Euro Exim Bank provides an essen al service to SME’s in challenging jurisdic ons. Euro Exim Bank is posi oning itself as a smart bank. Can you explain to European Business Magazine readers how you are doing this, and why? Certainly. Dynamic, diverse, competi ve markets require agile handling and suppor ng infrastructure to fully service the growing number of clients in diﬀerent jurisdic ons. Where single rela onships in major trade corridors with established currency and rules were once the norm, the game is changing. New market players in alterna ve financing and payment channels are emerging in economies never before considered as being trusted or technically viable. Our smart processes run on a in-house developed set of advanced systems enabling us to gather, monitor and track progress through the lifecycle of complex trade instruments and these systems are also available on-line to our clients. Why do we do this? Many companies in Africa and other challenging jurisdic ons have been systema cally disadvantaged from compe ng in interna onal markets. Even with quality products, renewed confidence in delivery, geographic loca on, poor infrastructure in many land-locked countries, high costs of liquidity and 38 europeanbusinessmagazine.com

access to hard currency and trusted partners, many players are being excluded from export opportuni es. On the import side similar problems are common, where trust, corrup on, regulatory disparity and funds access con nue to hinder interna onal trade and development. The ongoing USD-China trade wars provide new opportuni es, where we can assist small corporates to be reconsidered as a new alterna ve supply chain. By oﬀering instruments rapidly, at compe ve prices, with fast KYC and due diligence processes with appropriate collateral requirements, we ensure inclusivity and par cipaon rather than immediate rejec on. Euro Exim Bank serves a diverse range of corporate clients and import/export businesses worldwide. What are the main industries that use Euro Exim Bank? Whilst our trade instruments cover many diﬀerent industries, we see interest across a number of sectors. Firstly, all manner of manufacturing industries across India and Asia, many with demand for kni ng and sewing machines to support garment manufacture, and distribu on of finished goods across the globe via UAE. Also, business from the agricultural sector in terms of farm machinery, fer lisers and raw materials such as co on, jute, non-perishable canned goods and sugar. Other industry sectors have included oil and gas, steel, transport and the many products and services available from smaller corporates suppor ng major infrastructure projects.

As part of the bank’s growing fintech strategy and technology innova on, Euro Exim Bank joined the Ripple community and achieved xCurrent connec vity enabling ins tu ons to instantly communicate and se le cross-border payments with end-to-end visibility and tracking. Can you tell the readers more about your rela onship with Ripple? Following our strategic decision to par cipate in RippleNet, supported by the technologists at Ripple, we joined the ever-growing list of major ins tu ons a racted by realme blockchain enabled future-ready payments technology. We were not only one of the fastest ever implementers of the xCurrent real me payments service, but also were front-runners in using xRapid. This innova ve service uses XRP cryptocurrency as the underlying digital asset where counter-par es no longer need to access costly fiat currency to se le their transac ons, which they prefer to be se le in local currency. Ul mately, where liquidity is limited and diﬃcult to secure, currency risk and high cost of low frequency transac ons is eliminated, making cross border business more compe ve in interna onal markets which may have been restricted in the past, with friconless money transfer. How are you using blockchain technology to enhance the speed of transac ons for Euro Exim Bank customers? To start, let us not be confused about the capability, power, a rac on and applicability of blockchain technology. On its own, blockchain does not increase speed, transparency, immutability or trust. What is does provide is a technology pla orm designed to be applied to processes, enabling applica ons to run eﬃciently in an interconnected way, secured, unchangeable and transparent.

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So, the use case is the important factor: finding an industry problem, starting with digi sing the assets being traded and using common standards which are then applied in a technology process, presen ng the ul mate client with speed, transparency and immutability, which should all be delivered at less cost than previous diﬃcult to manage manual process. In fintech today, blockchain-based services could remove the need for an intermediary (usually a financial ins tu on) in a transac on between customers, while keeping a high level of security and confiden ality, reducing transac on me and costs significantly. In trade supply chains, prone to forged documents and ownership/ tle disputes, blockchain could bring an addi onal layer of trust and security tracking goods in the value chain, or facilitate exporters receiving faster payments or digital assets in the form of cryptocurrency. Following the trend, our trade platform is future-ready with underlying blockchain capability already in place. However, whilst many companies have declared their preferred technology such as Ethereum, R3 Corda etc (we selected Hyperledger), and run pilot projects with low volume end-to-end transac ons, the industry has not yet witnessed the projected volumes and returns that the technology promises. Just as Straight Through Processing, Business Process Re-engineering and other great ini a ves were hyped in the past, whilst blockchain is here to stay, it will be some me before it is universally embraced as the underlying de-facto enabling framework for documents and process across the complex trade ecosystem, and suppor ng payments pla orms. And soon blockchain conferences will be consigned to the past as a en on turns to AI, IoT and how we get value from digitalisa on of the processes and documents supported on a ubiquitous blockchain technology. Euro Exim Bank oﬀers its customers state-of-the-art banking and financial services with a focus on facilita ng global trade for emerging markets through 40 europeanbusinessmagazine.com

easily accessible financial services. Due to a successful marke ng push there has been more commercial awareness and the bank has increased its visibility in recent months. What was the reason for this push? Market iner a is key to our business. To avoid being replaced, ignored or forgo en, as a small ins tu on we purposefully look to realise highest value from our marke ng spend. Compe on is as strong as ever, and as such we are constantly reviewing our market standing. So we made the conscious decision to enhance our marke ng eﬀorts to ensure that we remain high in the thoughts of customers, that we are seen in new markets through structured and targeted ar cles and that we are appropriately represented in interna onal exhibi ons and conferences. And this is paying oﬀ. Use of corporate video, social media, interna onal magazines and events has truly elevated us in terms of market awareness, and this will con nue with our Africa expansion projects, bringing our services and products to a new set of poten al clients, having now been represented in key conferences in Cape Town, Nairobi and Zambia. We will be refining and adjus ng our marke ng strategies over me, and intend to be viewed long term as the ‘go-to’ trade finance bank, with the con nuity, innova on and presence that this implies. Innova ve payment technologies and systems are posi vely disrup ng the trade finance environment, thus enabling easier two-way access for emerging markets to the global economy. Can you tell us more about Euro Exim Banks growing fintech strategy and technology innova on? Our fintech strategy and technology innova on plans are simple. Where we do not see a commercial provider, our expanding experienced technology team are able to create new processes and applica ons, underpinned by DLT blockchain technology. We already have experience of AI based KYC/Due diligence applica ons,

which reduce manual search mes and support fundamental legal and compliance decision making. Regarding cryptocurrency, our teams are taking their first foray into crea ng the pla orm to support a new crypto exchange, which will allow fiat to crypto exchange across a number of currencies and digital assets. Other projects include poten al issuance of a digital asset namely a crypto trade coin. Also, we con nue to enhance our home built trade finance pla orm, which supports the workflow surrounding the lifecycle of Le ers of Credit, Standby Le ers of credit, Bank Guarantees and performance bonds. Linked with our strategic Ripple parcipa on, we are looking at enhancing the value of single messages through

Key achievements have been the establishment of our regulated en ty in St. Lucia, our in-house Simplex workflow trade pla orm, rapid increase in staﬀ numbers, our diversity (40% women), and our expansion plans in India in terms of IT and sales capabili es, and now focussing on the emerging markets and opportuni es in Africa. Trade finance services from Euro Exim Bank allow buyers and sellers across borders to transact with ease and confidence, facilita ng global trade. Going forward, with Brexit on the immediate horizon, what can we expect to see from Euro Exim Bank in 2020, and beyond?

embedding complex trade instrucons within Ripple payment instrucons. This will give customers an unrivalled view of a complete transac on including se lement details, all within one immutable, trusted realme friconless message. What do clients really appreciate when using Exim Euro Bank, and what are your key achievements? Our main unique selling points are low costs, fast processing me and low collateral requirements which together enable our global clients to retain all-important cashflow through the lifecycle of transac ons. We employ a simple eﬀec ve process which starts with analysis of a sales or

pro-forma invoice, and crea on of a first dra within three working days of receipt of first informa on. On agreement from the contrac ng pares we start the mandatory due diligence process, which will then involve auto genera on of kyc and indemnity documents for the a en on of the applicant, requiring comprehensive documents, including company and director indemni es, iden ty informaon, balance sheets, ar cles of associa on etc. Once these details have been verified by compliance and legal departments, typically within our service level of 5 working days, and the invoice associated with me, type and condi ons of the trade have been paid, we issue the instrument.

Brexit and con nued poli cal uncertainty are forcing major interna onal corpora ons to review their theatres of opera on, logis cs, tax implicaons, regula on and supply chains. The sen ments of fear, uncertainty and doubt are opening the doors for once restricted countries and their suppliers to be considered as an essen al source of raw materials necessary to maintain manufacturing levels and support export growth in western economies. And, in Africa, new free trade agreements (such as the recently incepted AfCFTA spanning the con nent), will facilitate unhindered movement of goods ensuring countries and their corporates can build stronger economies, gather investment in infrastructure and raise popula ons from new levels of wealth and financial inclusion. It is these markets that EEB are ac vely addressing in terms of offering economically effec ve instruments and establishing local representa on to handle the immense opportunity that this emerging market is crea ng. Next year is scheduled to be an exciting and innova ve me for Euro Exim Bank, with new offices, refined products, greater system capabili es along with more par cipa on as speakers in headlining events, as subject matter experts in high level discussions, and wri ng as thought leaders in the worlds’ trade and financial press. europeanbusinessmagazine.com 41

All aboard: WHY COMPANIES CHOOSE THE CARIBBEAN ISLANDS TO REGISTER THEIR AIRCRAFT

oday, the global business avia on market is booming, and we dare to say that its growth rate can be compared to the speed of light. According to aviation analysts Ascend, there are 23,600 business jets worldwide registered in 50 countries, with an addi onal 2,500 aircra kept in storage. What is more, the Interna onal Civil Avia on Organisa on (ICAO) says that the global air transport network doubles in size at least once every 15

42 europeanbusinessmagazine.com

years, and it’s expected to do so again by 2030. Picking where to register the aircra has become an important decision, but the good news is that there have never been so many choices as there are today. Interes ngly, more and more companies tend to choose Caribbean Islands as their aircra registry des na on — think Aruba, Cayman Islands, Bermuda, Bahamas… A. O’Sullivan, partner with the Air Law Firm noted that “The main reason is flexibility.“

We have one more impressive number for you right here. Since 2002, the amount of offshore-registered business jets has doubled, hitting the 2000-mark recently. However, flexibility is not the only reason why companies tend to opt for an oﬀshore registry, and especially for the Caribbean Islands. You see, there are several important factors to take into considera on when evalua ng the choice of the aircra registry.

For starters, the loca on of a Caribbean Basin countries makes them easily accessible for both the US and European mul na onal corpora ons and tourists. For example, Bimini is located just 50 miles east of Miami, and it takes only about 90 minutes to get from New York to Bermuda. Most of the biggest ci es in Europe — such as Paris, London or Frankfurt — also offer direct flights to Bermuda, Barbados, the Bahamas, St. Lucia, and other Caribbean Islands. Also, there are no strict ci zenship requirements. For example, to register an aircra in the US, the owner must be a ci zen of the US. But the offshore registraon permits you to form a corporaon in the registering country to own and operate the aircra without any requirement that the aircra must be based and primarily used in the country of registra on. Then there’s confiden ality. You see, aircra ownership in the US is a ma er of public record and is available on the internet. However, registering the aircra in the Caribbean Islands is confiden al and not available as a ma er of a public record. Did you know that certain countries do not allow Stage I and Stage II aircra over 75,000 MGW on their aircra registry? Well, that’s one more reason why companies around the world choose the Caribbean Islands to register their aircra : they do not feature the same noise regula ons as the US or European community. H. Rowbotham, a senior associate at Fieldfisher in London says that it’s necessary to think about such things like “Technical cer fica on standards (EASA/FAA), commercial or private opera on, ci zenship requirements, on the level of owner or operator, licenses of operator of choice, acceptance for poten al financier (reputa on, rights and remedies, enforcement there-of, efficiency of law and courts), tax and customs situa on, to men on a few.“

Also, the Caribbean Islands oﬀer some of the most popular tax havens in the world, providing such benefits like a very low tax liability and financial privacy.

And turns out that the Caribbean Islands can provide it all.

Another important factor which a racts more and more companies

Many of the Caribbean Islands impose no taxes at all — think the Cayman Islands, the Bahamas, Panama. Others — like Bermuda and Aruba — oﬀer a favorable tax regime to the companies with no corporate, income or profits taxes.

to register their aircra in the Caribbean is superior customer service: here they find responsiveness, personalized services and solu ons, as well as ease in addressing the issues and requests. J. Colindres, founder, and chairman of the Registry of Aruba noted that “When we decided to start the registry, we wanted to run it like a private company. This means we are always available to customers. There are no bank holidays or na onal days off.“ What is more, the process of registering the aircra in the Caribbean Islands is a rela vely simple one and does not include so much paperwork as everywhere else. Focusing on making the process of registra on more efficient and as easy as possible certainly make it an a rac ve choice for companies. The Cayman Islands have even developed an electronic data management system, which provides an easy way to manage registry applica ons, cerficates, and authoriza ons online. Oh, and aircra from other registries can be registered with minimal inconveniences and expenses here. Last but not least is security. While some of the larger registries are considered high profile and may have associated security risks, the smaller offshore aircra registries are more discreet. The Cayman Islands, Bermuda, and several other Caribbean aircra registries have low-profile registra on marks, which are very valuable when flying an aircra in areas that may be experiencing poli cal instability or other security risks. The poli cal, social and economic stability, highly developed legal system and infrastructure, be er customer service, less paperwork, confiden ality and security, secure mortgage register, tax advantages, knowledgeable, friendly and fluent in English avia on authori es… It’s no wonder why the Caribbean Islands have earned a solid reputa on interna onally, and more and more companies discover the benefits of registering their aircra in this region. europeanbusinessmagazine.com 43

NEUROMARKETING

How to Read Your Customers Thoughts and How to Turn Them Into Profit By Shelley Grierson

Introduction Neuromarke ng is an emerging field when it comes to eCommerce. The prac ce uses medical, scien fic and AI technologies that measure physical responses such as brain ac vity, skin sweat response (the technology behind polygraph, or lie detector testing), and facial emo onal analysis in order to study the brain’s responses to s muli. In the case of eCommerce business, these s muli take the form of desktop websites, mobile or tablet websites, or mobile apps. What these findings can tell us, is how customers are responding to s muli on a physiological level, in real me. In other words, it’s now possible to 44 europeanbusinessmagazine.com

get an idea of what your customers are actually thinking when they are interac ng with your brand, product or service - as opposed to relying on feedback, which has its limita ons. These forms of scien fic tes ng are tried and tested in educa onal ins tu ons (e.g. universi es and research ins tutes) but have only recently been introduced into mainstream business. And it’s been catching on. In Europe alone, we are seeing enterprises across a variety of industries (from private enterprise, government agencies and even not-for-profit sectors) take the leap into this new area, and the results are exci ng. Big businesses are steering more and more toward digital transac ons, and less

toward High Street bricks-and-mortar stores. And the smaller businesses are following suit. But when you don’t have a physical foo all, how do you know who your customers actually are, and how do you begin to measure and understand what it is that they want? Neuromarke ng helps you find out - in a very accurate way. This new gap in the industry is fer le territory for business growth and improved customer sa sfac on. In this ar cle, we will inves gate the methods for understanding what your customers are thinking, how findings from these insights are actually applied, and what kind of results other businesses are achieving using these techniques.

What is Neuromarketing - An Insight into Neuromarketing Research The first step in understanding your customers thoughts is the applicaon of neuromarke ng (or biometric) research. Although it may conjure images of fingerprints and eye-scanning technologies for the likes of passports and security, we’re talking about similar techniques, for the purposes of tes ng your website. Neuromarke ng (or biometric) tes ng is like focus group research on steroids. It starts more or less in the same way. A business (or third party contracted on behalf of the business) reaches out to its customer base to recruit a number of users for tes ng. The customers are invited to par cipate, explained what it involves, and compensated in some way for their me. A researcher runs the session, and asks customers in a one-on-one format, their thoughts and opinions on the product, service or experience. There the comparison between focus groups neuromarke ng research ends. The next phase for the customer is to be connected up to various forms of scien fic tes ng equipment. It sounds a bit scary, but by the me the customer has answered the first few baseline ques ons, they tend to forget all about the biometrics equipment. The tes ng kit usually includes the following:

cultural diﬀerences between East and West. The result of the 4 billion frames tested is a piece of technology that can very accurately measure minute changes in facial muscles. A simple calibra on exercise is required at the beginning of the session for each customer. As a customer completes an online task, 34 facial mapping points record and analyse the corresponding emo ons being logged against that individual. Heart Rate This one doesn’t need too much of an introduc on. We monitor customer heart rate throughout the dura on of the biometrics tes ng session. This gives you another angle to analyse spikes in physiological response to the digital journey being tested.

Electroencephalograph (EEG) Cap It sounds scary and looks even worse. But essen ally an EEG cap is a harmless grid of electrodes that fits snugly over a customers head. These electrodes are painless, and simply but brilliantly measure changes in electrical ac vity in a person’s brain. As a customer wears the cap and performs a task on a website or app, it is possible to see what reac ons they are experiencing, and what areas of the brain are reac ng to, when completing the task. Facial Emotional Analysis This piece of AI technology is seriously impressive. It has been tested across 7.5 million individuals across 87 countries, making allowances for

Customer completes a task while her emotional responses are being monitored and recorded visually and in graph form (source: Space Between)

Galvanic Skin Response (Skin Sweat Receptor Testing) If you have had experience with polygraph or lie detector tes ng, then this will be familiar. Painless electrodes are applied to the customers fingerps, and whilst they complete a digital task, minute changes in skin sweat levels are measured and recorded. In eCommerce, many of the decisions we make and ac ons we take are actually performed on an unconscious level. This is another instrument of measure that allows you to gain a bigger picture view of your customers thoughts and experiences. Eye Tracking This is another clever piece of technology, that is a ached to a desktop monitor and captures eye tracking from light reflected oﬀ the re na. In other words, it projects an undetectable beam of light into the customers eyes, which can capture the reflec on of where the customer is fixated on the screen. This is accurate to a small measure on the screen itself. This is considered to be a much more accurate and reliable measure of areas of interest on screen than mouse tracking alone. Mouse Tracking This is a much more straigh orward data collec on technology. The customers mouse is tracked on screen, so it is possible to analyse using heat maps, the areas of greatest mouse and click ac vity. This is a useful tool for iden fying areas of the screen where customers are struggling to find key call-to-ac on bu ons or prompts. In Biometric Research, customers are connected to all or some of the above forms of tes ng equipment whilst they complete a series of tasks. Throughout the tasks, it is possible to observe the customers emo onal responses to the diﬀerent stages of the task they are performing (such as frustra on at a website not working properly, anger at pricing values, or excitement at checkout for example), what areas of the website or app are most visible to your customers, and those areas or call-to-ac ons that they are missing, and what tasks your demographic struggle with, or enjoy for instance. europeanbusinessmagazine.com 45

Galvanic Skin Response being attached to customer (source: Space Between)

How To Apply Your Neuromarketing Findings - Conversion Rate Optimization Once you have gathered the data that indicates your customer thoughts, it becomes me to apply these findings. In the world of eCommerce, that next step takes the form of Conversion Rate Op miza on (or CRO for short). This is the applica on of data insights to refine your digital presence. It is a system for increasing the percentage of visitors that convert into customers, or, take any desired ac on on a website. The analysis oﬀ the back of the research should take the form of an ac onable user experience report. Key findings should be summarised into relevant categories, and hypotheses clearly defined. These hypotheses are the sugges ons for solving the problems your customers have encountered. They form the basis for your first round of A/B tes ng - where some of your website customers are exposed to version ‘A’ of a page, and some of your website customers are exposed to version ‘B’. Once these tests have run for a period of me, you are able to ascertain which of ‘A’ or ‘B’ performed best. This version is then updated across the en rety of the site traﬃc. This op mises and increases the related conversions for that metric. Your resul ng report should highlight the key posi ve and nega ve 46 europeanbusinessmagazine.com

findings, hypotheses for improvements, details of A/B tes ng plans, recommenda ons and results. In the case studies below, we will take a look at some real world examples.

Measuring Success - Big Brand Case Studies Let’s take a look at some high-profile examples of businesses applying neuromarke ng within their business, and how they increased sales as a direct result. Government Department Example: The Post Office (UK) Her Majesty’s Post Office has historically been a bricks-and-mortar branch style of business. With the decline of the high street, and customers moving more to electronic forms of communica on, the Post Office were conscious of staying relevant in a digital world. The Post Office undertook a project to complete overhaul their old style of delivery of products and services to customers. In the first 6 months a er their neuromarketing research and implementa on of it’s findings, they had already saved £250,000. Now their website offers self-service products such as various forms of insurance, foreign currency, mortgages and banking etc. Key findings from the research report, that were consequently the key points to focus on for their op miza on plan, included:

• 30% of users could not see the main call-to-ac on bu on on the homepage of the website • 99% of users experienced an error message at a par cular point of applying for travel insurance online (input of the date of birth field) • 73% of users received an error message a er failing to click a ‘T’s and C’s’ bu on, which wasn’t obvious to them as being clickable • Customers were also found to be confused at the pricing page. This was found to be due to over-informa on, and too many pricing bundles for users to choose from. Not-for-Profit Example: The British Heart Foundation The Bri sh Heart Founda on recently completed a piece of neuromarke ng research on customers of their website. This included those who had experienced heart issues, had been diagnosed, donate to the charity and those whose family members suffer or suffered from a heart condi on. Their conversion rate op miza on is currently in progress, implemen ng the changes required a er the following findings were revealed during their research: • Over half of customers could not find key call-to-ac on buttons on the homepage • 67% of customers could not find the “how to donate an item to the BHF” bu on • 67% of customers were confused by the terminology “book a collection”, which they thought should be called “donate furniture” • 83% of customers disagreed with the suggested amounts for cash dona ons • 50% of customers could not find how to make a “one-off dona on”.

Private Enterprise Example: ASOS ASOS is one of the Top 10 online fashion retailers in the UK, as reported by Google. This measure is based solely on the measure of website traﬃc volume. As ASOS is a purely eCommerce business model, understanding their digital customers thoughts, and op mizing their online journey for them is cri cal. The following key learnings were unearthed from their neuromarke ng & biometric research: • Customers got to the checkout page 22% faster on compe tor sites than on ASOS (Boohoo & Zara) • Once in the checkout sec on, it took ASOS customers 9% longer to complete the checkout process than on compe tor sites • Customers loved the homepage image, commen ng on the diversity of the people represented, and spend on average 15.5 seconds looking at it • Customers were frustrated by not being able to quickly return to the homepage by clicking on the logo • 67% of customers observed that product filtering features could have been improved if the filters remained visible a er applying.

Conclusion Reading your customers thoughts is no longer a far-flung dream for the future. It is something that is now becoming possible with physiological measures. The insights unearthed from neuromarketing biometrics research is ‘from the horse’s mouth’. In other words, it doesn’t just rely on the self-repor ng feedback of customers, but takes it to the next level in gaining an unconscious and more holis c view of the true customer experience. It seems obvious that understanding more about what your customers are truly thinking is an invaluable tool for business. This cannot be more true for digital businesses and in par cular, for eCommerce traders. In a growing corner of the market that services an invisible

customer, gaining insights into who your customer is and what their needs really are, has never been more vital for business success. Findings from this research can be applied through the prac ce of Conversion Rate Op miza on (or CRO) which refines and op mizes your digital journey. In essence, it minimises barriers for your customers when they are making a purchase, and it increases their enjoyment and sa sfac on in the overall process. As with all new technologies or strategies, enterprise level businesses o en become the early adopters. In the case of neuromarke ng, there is fast uptake in this er across a range of industries. The common denominator is the importance they place on their web presence. This is big business and even op miza on of the smallest percentages equals mul -millions in both cost savings and generated revenue. The Post Oﬃce saved £250,000 in the first 6 months of implemen ng their CRO programme a er their neuromarke ng research. If you are trading online - it’s me to start thinking about incorpora ng proac ve neuromarke ng ini a ves into your strategy for growth. This is the era of ‘The Customer Experience’. Understanding, an cipa ng and catering to your customers’ needs will be the mark of success and failure more and more, par cularly as we move into a more digi sed future of retail. Eye tracking of customer using ASOS website (source: Space Between)

About the Author Shelley Grierson holds a degree in Psychology and is currently wri ng her Master’s Thesis on the Psychology of diﬀerent popula ons. She is the Director of Marke ng for eCommerce Consultants, Space Between who specialise in projects focused specifically on Biometrics Tes ng, UX & UI Design, and Conversion Rate Op miza on. Shelley speaks interna onally on the subject of neuromarke ng and is passionate about posi ve customer experience. For ques ons rela ng to the ar cle, you can contact Shelley at shelley@spacebetween.co.uk or follow her on Twi er @ShelleyGTweets

europeanbusinessmagazine.com 47

rcan Demiralay, Partner at Wellers, one of the UK’s leading accountancy firms, looks at why prevention is better than cure when it comes to protecting your business ideas and explains how to ensure they stay safe. Perhaps it is a reﬂection on how easily connected we are nowadays, making us unguarded and more open than ever, but it no longer comes as a surprise to hear that the act of stealing business ideas occurs. No matter whether it happens intentionally or accidently, it can have a huge impact on even the most established of businesses.

So, how can businesses protect, plan, and respond? In its most simplistic form, it is always better to be proactive and plan ahead, so that your business concept is protected, rather than react to a situation once it has happened. Playing catch 48 europeanbusinessmagazine.com

up after the event is much harder than setting plans in motion when things are operating smoothly. For those that want to follow the prevention line, there are some established ‘safety measures’ that can be put in place to stop business ideas being stolen, for example, trademarks, patents, and/or copyrights. If a business uses any of these solutions, they are in an incredibly strong position from which to ﬁght against anyone looking to steal their concept. However, the process of actually putting these measures in place can be lengthy, so in the meantime, I would suggest taking three steps to protect your intellectual property: Non-compete agreement – It is important that you ask all employees to sign a non-compete contract. This prevents them from starting any business that might rival or impede yours. Non-disclosure agreement – Similar to the non-compete, asking everyone

who has worked/is working on your idea to sign an NDA is an absolute must. By doing this, they are bound by conﬁdentiality, and are therefore not able to talk to third parties about your idea. Do be wary of an expiry date, because not having one might be preferable. Work-for-hire agreement - If you have people helping you improve your idea or product, then make sure that you have it in writing that all improvements are owned by you. Doing this means that any advancements that are made during their work will still come under your ownership.

Cure not prevention I have discussed why prevention is better than cure, but in some instances you might not have been aware it was necessary, or never got around to doing it because you were so carried away with your fantastic

idea. So, if no protection measures have been put in place and your idea is stolen, there are some important things to remember. Firstly, do not confront the person/s involved. Wait for an hour or two, making sure you are thinking rationally about the situation. Thinking with your head over your heart in these situations will always have a more desired outcome. Then, calmly contact them and ask to discuss the issue in person. At this stage, you might ﬁnd that it has all been a simple mistake, in which case the problem can be resolved amicably. If it is not, then it is likely that legal steps will be required. Approaching the situation calmly makes the most business sense at this stage, because if the issue can be settled without involving third parties, it is a much cheaper and quicker option, which for many entrepreneurs is always a preferred route. Once the dispute has been settled, in person or in court, there are three things that need to be considered – learn from the experience, keep your idea and then move on. Learn from it – Put plans in place to stop it happening again in the future. This is fundamental, and is certainly a case of ‘fool me once, shame on you, fool me twice, shame on me’. Though it is incredibly tempting to share your concept with anyone willing to listen, it might be better to only share it with those you implicitly trust. Useful idea – Although the process and concept may seem useless to you now, this isn’t the case. The only thing that has been taken is the actual idea itself, not the strategy or plans you were going to put it place in order to establish a successful business. Having the vision is only one part of creating a successful business, so keep your strategy and implementation to yourself for next time around. Also, having your idea stolen does not mean you can’t launch it to market. It is still your creation, so you know it better than anyone else. Just make sure you are clear on how you are going to launch and ignore the

disturbance that has taken place beforehand. You had plans, stick to them, and innovate wherever possible to affirm your position as the leading product/service available. Leave it – Your other option is to move on. If the process has left you feeling uninspired about the idea or less passionate about your initial vision, you can just walk away. Starting again isn’t for everyone, so don’t feel embarrassed if this is the avenue you take. Don’t give up though. You can start a new project, or find a different market to operate within, but don’t give up. The entrepreneurial spirit is not in everybody, so don’t waste your talents feeling sorry for yourself, pick yourself up and be an improved version second time around.

In Summary Stealing someone’s idea is underhand and unethical, but it does mean that someone thought your idea was worth taking. No matter if you are just starting out, looking to grow, or have had your idea stolen in the past, the same rules apply. Protect your concepts and plan against them being taken. If you have all the appropriate protocols and systems in place, it minimises the risk of them being taken, and helps you rest slightly easier at night. For more informa on and insight into how to asses and implement your business idea visit: h ps://www. wellersaccountants.co.uk/blog/howto-assess-and-implement-your-business-idea. europeanbusinessmagazine.com 49

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The Future of Finance Fintech continues to disrupt the entire financial services system, using innovative technology to deliver financial services that consumers crave. As Bank of England celebrates its 325th anniversary, what is the future of finance?

he usual ‘cut’ taken by tradi onal banks when processing payments could be under threat by fintech companies that offer clients more effec ve banking services, mobile payments and cashless banking services. The last few years have seen major shi s in how consumers pay for goods and services - in 2007 cash accounted for 61% of transac ons, set to decline to just 16% by 2027. As the payments industry con nues to develop, and with smartphones offering new ways to pay, businesses have had to adapt to the new landscape of e-payments. While consumers con nue to demand new ways to pay, it’s the tradi onal financial services turn to transform in the face of fintech innova on and market-driven consumer needs. Between 2015 and 2018, 2,868 bank branches closed in the UK, and in the same period high-growth businesses received over £4.5 billion in investment. Large investments such as these could spell the end for cash, checks and credit cards. In London the number of ATM withdrawals fell 8.7% compared to last year, with the growth in contactless payments probably the key driver in the move away from cash. Fintech start-ups are wooing consumers with a flurry of innova ve personal finance and inves ng applica ons, allowing them to enjoy the benefits of mobile and online payments, as well as virtual wallets. The case for cashless includes security, convenience, cost and personal preference, while the drawbacks are mostly

social. A cashless society discriminates against the lowpaid, undocumented immigrants and older people, and unless the tradi onal banks transform, they are in danger of becoming obsolete. Tech in the payments industry is nothing new. Innova ons such as PayPal and Square – established 21 years and 10 years ago respec vely – are no longer enterprising disruptors but established features of the financial services landscape. More recently, fintechs have proved increasingly able to replicate tradi onal key banking func ons in addion to developing new ones. The numbers of people exclusively using their bank to facilitate payments are decreasing, with alterna ves like SWIFT gpi and other cross-border payments services. gaining trac on. Payments are an important aspect of everyday life and hassle-free, fast and less-transi onal fee payment services will lead the market. With regula ons like PSD2 and growing customer expecta ons, there is pressure amongst banks to innovate and oﬀer con nuous customer service to ensure they retain the primary rela onship with the customer. This widespread growth in digital payments will disintermediate the banks and credit card companies from consumers and take control of the user experience, and unless tradional services embrace new realme payments channels, machine learning tools and Open Banking APIs, they risk losing the race. These increasing regula ons and expectaons should not be seen as threats - banks should use them to provide more informa ve and personalised services to their customers Banks s ll have access to the customers, but are aware of the threat posed by new innova ons if they do not rapidly digitalise. Working collabora vely with newcomers is the best way forward. BBVA was among the first to do so; as early as 2013 it had launched a $100 million in-house fintech fund and increased the figure to $250 million when it transferred investment to an independent fintech venture three years later. HSBC went on to announce an $880 million tech fund that will focus investment in China, Hong Kong and Macau start-ups. To fully realise goals, banks and fintech companies should collaborate, oﬀering innova ve, real me and 24/7 payment services - reducing structural costs, facilita ng greater regulatory compliance and be er serving customers. europeanbusinessmagazine.com 73

Forget to do cyber due diligence and you might as well forget the deal

hink of all the sleepless nights that could have been avoided for Marrio ’s management team: 500 million customers’ records breached1, a poten al £99 million (USD 123 million) fine2 and a 5.6% drop in share price3. Marrio Interna onal Inc.’s recent encounter with the Informa on Commissioner’s’ oﬃce (ICO) in the UK for alleged breach of the GDPR European regula ons through a customer data breach of one of its acquisi ons, Starwood Hotels, makes it clear that the need for cyber due diligence in a merger or acquisi on of a business is more relevant than ever before. Marrio acquired Starwood in September 2016, making them the world’s largest hotel chain with several of the most well-known hotels under their belt. However, the apparent lack of due diligence on Starwood’s IT systems during the acquisi on and subsequent integra on, resulted in the failure to iden fy a significant breach of the guest reserva on database, exposing 500 million customer records to cybercriminals. Inevitably, mergers and acquisi ons have always presented financial, legal and reputa onal risks and the Marrio case is one in a long line of examples of issues idenfied a er a transac on that could have been dealt with through be er due diligence. And in today’s global data economy, cyber due diligence needs to be an integral part of any business investment, just as much as standard due diligence prac ces are now standard procedure. Customer data is acknowledged by both business and regulators globally as a powerful commodity. So, it is essen al for a successful nego a on and deal closure that the acquiring business understands the cyber risks it could be inheri ng both before and a er an investment is made. Incorpora ng cyber into the standard prac ce of assessing reputa onal, financial and legal due diligence calculates all the poten al regulatory risks to a deal- thereby also protec ng the investor from paying a poten ally overinflated price or risking an eye watering fine further down the line. Leveraging this informa on during nego a on stage can help businesses determine the cost of remediating any weakness iden fied and poten ally, if the costs to remediate are significant, use this in price nego a ons. As 1 The Telegraph Private data of 500 million Marrio guests exposed in massive breach, h ps://www.telegraph.co.uk/technology/2018/11/30/private-data-500-million-marrio -guests-exposedmassive-breach/ 2 Forbes Marrio faces $123 million fine for 2018 mega-breach, h ps://www.forbes.com/sites/kateoflahertyuk/2019/07/09/marrio -faces-gdpr-fine-of-123-million/ 3 Market Watch analysis, h ps://www.marketwatch.com/story/marrio s-stock-sinks-a er-disclosing-data-breach-aﬀec ng-up-to-500million-guests-2018-11-30

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Marrio and many other businesses who have learnt the hard way found – cyber due diligence makes both reputaonal and financial sense when acquiring a company today. So how can cyber due diligence inform a nego a on and what steps need to be taken to get it right?

Learning from the past Cyber due diligence should now be as integral as other types of due diligence that were once considered an advantageous but non-essen al benefit in a deal transacon. For example, prior to the UK Bribery Act (UKBA) or Foreign Corrupt Prac ces Act (FCPA), an -corrup on due diligence was not systema cally applied as part of the deal nego a on process. And those businesses who neglected to do so, did at their peril. Lessons learnt, an -corrup on is now a standard component of merger and acquisi on due diligence checks. With GDPR and China’s Cyber Security law among other global data regula ons now firmly in place and star ng to flex their muscles, the same can be argued when it comes to undertaking cyber due diligence nowadays. So, what is the barrier to undertaking cyber due diligence? The issue is that it is o en misperceived as “someone else’s problem”, something that can be sorted post- transac on, or that it can be resolved under the radar from regulators or the public eye, hopefully avoiding any reputaonally damaging disclosure. If only that were the case.

The findings of cyber due diligence can also be used to benchmark other acquisi ons – this is helpful to companies who are rapidly expanding their por olios. This data can be applied to other targets in a por olio to iden fy areas of high risk. Standardising the output from cyber due diligence with the findings from tradi onal due diligence prac ces enables investors to have a holis c view of risks across an en re por olio. The data can also be leveraged by deal teams to put the investor in the best posi on possible to nego ate the price and terms of an acquisi on.

What should investors be doing? Pre transac on cyber due diligence must be conducted by specialists experienced in cyber threat analysis. This could include assessing the external cyber threats and internal maturity of a target company and/or determining the costs of remedia ng iden fied security weaknesses. The outputs of these assessments should be shared with deal teams who can make calculated risks about the acquision and ul mately drive the decision-making on investing. To con nue managing the cyber risks to an investor’s por olio, post-transac on due diligence serves as a valuable tool in maintaining a ‘health check’ on investments. It can also help iden fy issues which are likely to arise from the evolving regulatory landscape.

Avoiding falling foul of the regulators, any business investing in or acquiring another business must be able to demonstrate they’ve undertaken pre-transac on cyber due diligence to the regulators should a breach be subsequently discovered. Recently, the UK’s Informa on Commissioner Elizabeth Denham4 announced that Marrio “failed to undertake suﬃcient due diligence when it bought Starwood”. But posi ve lessons can be learnt too from other examples such as in 2016 when Verizon, a large American telecommunica ons company, leveraged findings from their cyber due diligence on two data breaches at Yahoo!. They nego ated a deal whereby Yahoo! would con nue to be responsible for liabili es from shareholder lawsuits and federal inves ga ons post acquisi on.

Using cyber due diligence to inform negotiations Cyber due diligence, if conducted as a pre-transac on precau on, can be an important nego a on tool. Careful pre-transac on due diligence allowed Verizon to take £281 million oﬀ the purchase price for Yahoo! for considera on of a massive data breach. Cyber due diligence, therefore, serves as a nego a on tool if acquisi on decision-makers iden fy red flags from the due diligence process. 4 ICO Statement: Inten on to fine Marrio Interna onal, h ps://ico. org.uk/about-the-ico/news-and-events/news-and-blogs/2019/07/ statement-inten on-to-fine-Marrio t-interna onal-inc-more-than99-million-under-gdpr-for-data-breach/

Currently, data protec on regula ons such as GDPR are driving change in the due diligence required by businesses during a transac on. But they are limited to regulatory disclosure once the breach has occurred, and only when it impacts personal informa on of EU ci zens. As security and privacy regula on con nues to evolve, we can expect to see greater emphasis on businesses needing to provide accurate informa on on the health of their systems as a proac ve measure, rather than reac ve following iden fica on of a breach. Target companies should equally bear this in mind and be assessing their systems ahead of negoa ons as part of their overall sales prepara on process. Clarity on how any iden fied weaknesses could impact the acquisi on or investment and what measures are being taken to fix them will also avoid stalling the transac on process and guarantee the best possible price for the business. But of course, it goes without saying that businesses shouldn’t wait for a merger or acquisi on process to undertake a review of their cyber security. As cyber security data regula ons across the globe con nue to emerge and strengthen, few businesses nowadays are immune to the poten ally significant reputa onal and financial impact a data breach can incur. Undertaking a regular assessment, at a minimum annually, of your data procedures and cyber security measures, and iden fying if and where cyber threat actors might be able to breach your systems should simply be par for the course for business leaders today. If it’s not a regular point of discussion in your management mee ngs, then let the experiences of the likes of Marrio be a lesson to you. M&A transac on or not, it’s me to get a grip of your cyber security. europeanbusinessmagazine.com 75

No More Coal: Renewables are Booming – Big Numbers and Big Names Ten years ago, coal supplied half of America’s power and was growing more than 1.5 times faster than oil, natural gas, nuclear and renewables combined.

ack then, in 2009, two climate scientists – Mark Jacobson and Mark Delucchi – published a groundbreaking ar cle in Scien fic American outlining a road map for becoming 100% reliant on energy generated by water, wind and sun by 2030. This was something that needed to be done “if the world has any hope of slowing climate change,” the researchers warned at the me. Jacobson recalls that, “Nobody believed it when we put out that paper. It was a very pie-in-the-sky thought. There was a lot of cri cism of it, and the nega vity around the response was enough to make anybody depressed.” At the me, CEO of Peabody Energy Corp Gregory Boyce said that, “It is unrealis c to suggest that renewables could replace conven onal baseload fuels.” Yet ten years later, here we are. Not only has the demand for clean energy never been higher, but coal – long the king of the power sector – con nues to rapidly decline. Its share of total power genera on went down from 45% in 2010 to just 28% in 2018, and is expected to drop further to 24% in 2020. According to data from the Electric Reliability Council of Texas, wind and solar genera on topped coal’s output in the first quarter of 2019 – something that has never happened before in the US. Referring to this, Dennis Wamsted, a research analyst at IEEFA, highlighted that, “Five years ago, this never would

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have been close to happening. The transi on that’s going on in the electric sector in the US has been phenomenal.” “Coal is just an expensive technology that can no longer compete,” agreed Kingsmill Bond, a new energy strategist at Carbon Tracker – a think tank that examines the relationship between energy and financial markets. Today, the renewable energy industry is certainly booming. According to a new report from the UN Environment Programme, renewable energy capacity quadrupled worldwide over the past ten years with an es mated $2.6 trillion invested in its growth. China has been by far the biggest investor in renewables capacity over this period, having commi ed $758 billion between 2010 and the first half of 2019, with the US second at $356 billion and Japan third with $202 billion. Europe as a whole invested $698 billion in renewables capacity over the same period, with Germany contribu ng the most at $179 billion, and the UK $122 billion. Overall, the global renewable energy market was valued at $928 billion in 2017 and is expected to reach $1,512 billion by 2025, registering a compound annual growth rate (CAGR) of 6.1% from 2018 to 2025. According to BP’s 2018 Energy Outlook, over the next 20 years it is expected that renewable energy will be the fastest-growing primary

energy source globally, capturing around two-thirds of global investments in power plants by 2040. More and more companies are becoming ac ve in the renewables sector, with the likes of Budweiser, Gap Inc., Starbucks, AT&T and MGM Resort Interna onal all commi ng to greener processes. “It is good business to be green,” Cindy Ortega, MGM Resort Interna onal’s chief sustainability oﬃcer told the WSJ, “That’s a real shi in thinking.” Even the billionaire investor Warren Buﬀe has taken steps towards going green, with MidAmerican Energy – one of the subsidiaries of his holding company Berkshire Hathaway –aiming to obtain 100% of its electricity from wind power by 2020. Furthermore, major oil companies often referred to as “the Big Oil” – think Enel, BP, Total, Statoil, Royal Dutch Shell and others – spent 1.3%

of their budgets, or $260 billion, investing in low carbon energy in 2018. As BloombergNEF analyst David Doherty noted, “Shareholder pressure, evolving new technologies and rapidly changing consumer preferences have forced oil and gas companies to re-evaluate their long-term strategies and explore new business streams.” Increased awareness about climate change had made us understand that renewable energy is one of the most important solutions to global warming, and should be pursued as quickly, and completely, as possible if we want to have any hope of stopping the catastrophic damage already aﬀec ng our planet. Countries, cities and communities across the world have set ambi ous 100% clean energy goals, and more than 200 influen al corporates worldwide have already joined RE100, a

global ini a ve commi ed to 100% renewable electricity targets. In April 2019, more than 300 US companies, including such mega-corpora ons like Google, Facebook, General Motors and Walmart have also joined forces to create the Renewable Energy Buyers Alliance (REBA). The group claims to represent the largest group of corporate-level renewable energy buyers, developers, and providers in the US and has set a 2025 target to install 60GW of renewable capacity. It is hoped that the ini a ve will achieve its vision to create a resilient carbon-free energy system, where purchasing renewables is an aﬀordable and convenient op on for commercial customers. Michael Terrell, head of energy market strategy at Google explained that, “Every enterprise – whether it’s a bakery, a big-box retailer or a data centre – should have an easy and direct path to buy clean energy. Ul mately,

sourcing clean energy should be as simple as clicking a bu on.” The good news is that total investment in renewable energy worldwide, including early stage and corporate-level funding as well as the financing of new capacity, was $288.3 billion in 2018. What’s more, venture capital and private equity investment in renewables businesses jumped 35% to $2 billion last year. The wave of investment – first into wind, and then solar – has made new technologies aﬀordable to mass adop on: solar panels have become smaller, cheaper to manufacture and more efficient, and today, government funding and con nuous technological advancements are considered among the major trends for the renewable energy market. More and more energy companies are also investing heavily in the digital infrastructure and so ware such as the Internet of Things (IoT), Big Data, AI, advanced analy cs, etc. According to the Renewable Energy World, the possibilities of IoT and Big Data-analy cs have revolu onised the future of the energy sector with the benefits of collec ng enormous sets of essen al data, analysing it, assis ng companies in making smart decisions, recognising consumer needs and monitoring realme energy consump on to op mise energy transmission. Furthermore, this move towards digitalisa on and automa on is expected to help investors achieve the highest possible returns on investment capital in clean energy. Looking to the future, digitalisa on of the renewables sector seems to be the only way to help the fight against climate change and develop a sustainable future. The Interna onal Energy Agency (IEA) has been spreading this key message for many years, sta ng that, “Digitalisa on holds great promise to help improve the safety, produc vity, eﬃciency and sustainability of energy systems worldwide.” And with further developments on the horizon, inves ng in renewable energy projects has never been such an a rac ve proposi on. europeanbusinessmagazine.com 77

KAISERWETTER:

Harnessing the power of big data and artificial intelligence to drive investment into renewables

t is no secret that we are currently facing a climate emergency. The Global Climate strikes which dominated world news in recent weeks, alongside the UN Climate Change Summit in New York, underlines the scale of the existen al crisis we are facing and the urgency with which we must proceed to avert further irreparable damage to our planet. Regre ably, the debates and discussions around Climate Change are o en nged with despair and hopelessness. The reality is that we have the knowledge and the solu ons required to address this situa on, and that investment into renewable energy sources should be at the core of confron ng this climate emergency as an ethical investment solu on to global warming. Indeed, governments are already aware of this, and the European Union hopes to mobilize up to â&#x201A;Ź177 billion of public and private investment per year from 2021 in order to meet its own climate change goals. Investment into renewables is one of the solu ons to address global warming pragma cally in a way that will produce mutual benefits for the planet and the global economy. In turn, this development will steer decision makers into suppor ng policies that will ins tu onalize these sustainable economic prac ces. Private investment in the sector using digi za on such as the Internet of Things and Ar ficial Intelligence is essen al for transi oning away from fossil fuels and towards investments which are both ethically a uned to the climate emergency we are facing, and

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economically viable and profitable. Kaiserwe er is at the vanguard of this drive towards increased digitaliza on in the renewables energy sector. The reluctance to invest in clean energy sources stems from a number of misconcep ons about the sector, notably that it is riddled with investment and performance risks, as well as suscep ble to market vola lity. The crux of Kaiserwe er’s strategy is based on the premise that these misconcep ons must be changed to drive investment into the sector, and that data is the key to a rac ng the required capital to unlock the full poten al of the renewable energy assets that are driving the clean energy transi on. As the market’s first ‘IntelliTech’ company, Kaiserwe er’s business model is centered on digitaliza on performing Data Analy cs as a Service (DAaaS) for the management of renewable energy produc on facili es, combining the opportunies oﬀered by the Internet of Things (IoT) with Smart Data Analy cs, Predic ve Analy cs and Machine Learning to maximize the eﬃciency of power genera on. For example, Kaiserwe er´s award winning IoT Platform ARISTOTELES uses Smart Data Analy cs, Predicve Analy cs and Machine Learning based on Ar ficial Intelligence. Those provide more certainty over changeable factors that impact renewables, like weather patterns, making investment in this sector more a rac ve and thus helping secure climate change targets. These methods of securing leverage over capital would provide the kick that the market needs right now to make these ambi ous goals a ainable.

Machine Learning allows ARISTOTELES to present such a dynamic set of opportuni es for investors, through its ins nc ve and intui ve approach to data analysis based on cu ng-edge algorithms. We are building upon our exper se in this area and as a result we have been recently presen ng our newest Machine Learning innova on, able to predict future wind turbine failures and surfacing alerts to maximize wind farm performance and to minimize investment risks. This story, involving data scien sts, is a success, especially by knowing that 85% of all AI projects are failing. Being part of the 15% shows Kaiserwe er’s great capabili es for future AI innova on. Kaiserwe er provides the key to the push that the market needs right now urgently to a ract and maintain the profitability of private investment into renewable energy technologies in an agile and intelligent manner across borders through data analy cs and digitaliza on. Through this, the ambi ous goals set forward by the EU can be reached and carbon emissions reduced. IoT, Big Data, Smart Data Analy cs, Predic ve Analytics, Augmented Analy cs and AI present the future of renewable energy and a means of helping to change the situa on around climate change. But without con nued investment, strategic partnerships and commitment, we risk backtracking. Through partnerships with companies like Kaiserwe er, energy investors can invest in these renewable energy funds with confidence that they will have higher protec on against market vola lity and will be turning the de on the climate crisis.

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Helping Our Early Tech Start ups To Expand Globally

he United States is a welcoming home to European companies across business sectors, so much so that many European companies are household words in the United States. But beyond the major companies that come to mind as major investors and employers in the United States – such as BMW, HSBC, Nestle, Sanofi, and others – there are also hundreds of companies with smaller-scale investments that are driving business growth in the United States. SelectUSA recently launched a new ini a ve called SelectUSA Tech to help smaller companies – especially newto-market and tech-focused companies – incorporate U.S. expansion into their business plans. As these companies look to grow by finding new customers, innova ng their products, and increasing their workforce, SelectUSA Tech can help them connect with venture capital, business incubators, and other partners that can help enable growth. This helps young and pioneering companies quickly become a part of a pro-growth business environment in the United States that protects intellectual property, fosters innovaon, and helps companies compete at a global scale.

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Of course, we recognize that tech companies and startups are inundated with me-sensi ve priori es, and the infancy of a company is tough to navigate. Where SelectUSA Tech is helpful is in its resource-building capaci es. SelectUSA Tech connects businesses to the poten al partners and mul pliers that can make it easier to grow and scale: • Incubators: Many U.S. regions oﬀer incubator space that provides low-cost oﬃce space and business center capabili es while a company completes its site selec on process. • Accelerators: Business accelerators across the United States provide mentorship programs and supply chain resources that can help startups and tech companies hit the ground running. • Events: We held our first SelectUSA Tech sessions at the SelectUSA Investment Summit in June, helping about 100 global startups make connec ons with poten al partners. We’ll be at Web Summit in Portugal this fall, and will connue suppor ng companies on the road at future events. • Funding: While we don’t have a magic potion to make venture

capital appear out of nowhere, we can facilitate connec ons among companies, economic development oﬃcials, and service providers, which can help companies fasttrack the growth of their network. And as daun ng as it may seem to navigate a U.S. expansion during the startup stage, tapping into the U.S. business environment is well worth the investment. Extremely appealing to startup and tech companies is the U.S. system of intellectual property protec on, which helps safeguard your innova ons as you grow your business. The U.S. educa on system also supports the innova on environment, with 15 of the world’s top 20 universi es based here. These hubs help provide the talent and ecosystem to help companies con nue to innovate as they grow. These factors are among the reason the United States con nues to top the Global Entrepreneurship Index. So, why wait? SelectUSA has teams throughout Europe who are ready to support your business – regardless of its age or sector – as you examine growth opportuni es in the United States. Visit us at selectusa.gov to get started.

European Business magazine catches up with

Debi Durham

Director of Iowa’s Economic Development Authority and Iowa Finance Authority who gives us the lowdown on the hive of activity that is happening in Iowa right now and tells us all about the region’s current development and future goals. Iowa has just won an award: it has been recognized as “The best state to invest in” by European Business Magazine. In your opinion, what are the main factors that a ract businesses to Iowa — especially interna onal ones? Thanks for recognizing us with this honor! I think Iowa has the best business climate you’ll find in the U.S. We have a low cost of doing business, which is a top priority on any company’s list. We have a number of world-renowned research ins tuons that help ignite innova on. We offer easy access to abundant renewable energy, raw materials and markets. And, most important, Iowans have a strong work ethic. Another key differen ator is our Cerfied Sites program. If your company is looking to build a facility in Iowa, we make the site selec on process as simple as possible. In fact, our Cer fied Sites program does a lot of the work for you! Each Cer fied Site comes with all the due diligence and documenta on necessary to deem it development-ready. Last year, Iowa was also recognized by the US News and World Report as “The #1 state in the country.” As you see it, what are the main things that make Iowa different from other states? Besides the wonderful people here?! In addi on to being a great place for business, it’s a great place to live. Across Iowa, you can find excellent jobs and a low cost of living. Our communi es are welcoming, and we have abundant natural resources, which means there’s a lot to do outdoors. From whitewater parks where europeanbusinessmagazine.com 81

you can surf the rapids to nearly 2,000 miles of bike trails, Iowa residents have a natural playground right outside our front doors. We also are blessed with great places to sa sfy your appe te and quench your thirst, including delicious farm-to-table meals and whiskey and wine made with locally sourced ingredients. Economic diversity is an important part of Iowa’s profile. The state is known for its thriving manufacturing industry and strong agriculture founda on. What are other major industries in Iowa? Indeed, manufacturing here is strong, and we are known around the world for our agriculture. But we’re those things AND much more. Our insurance and financial services sector, for example, is thriving. Dozens 82 europeanbusinessmagazine.com

of insurance companies are headquartered in Iowa and benefit from a 1 percent insurance premium tax. Also, our bioscience companies are at the forefront of breakthroughs in the plant, animal and human bioscience industries. We’ve earned a reputa on as a bioscience epicenter with our con nuous focus on innova on and collabora on. In fact, we became the first state in the U.S. to develop a tax credit program to support the renewable chemicals industry. You’ve been working in Iowa’s economic development agency for 9 years now, since 2011. What were the biggest challenges that you’ve faced during that me? In Iowa, we see challenges as opportuni es. And the biggest one I’ve had in my me here is the ability to tell

our story – exactly what I’m doing right now! There’s a lot compe ng for everyone’s a en on. So, whenever I have the chance to tell Iowa’s story to someone who doesn’t know us, I jump at the opportunity. To help us tell our story, we launched our This is Iowa campaign over the summer. It’s all about showing how Iowa is not only cost-eﬀec ve, but home to cutng-edge careers, modern ameni es, short commutes and award-winning recrea on and culture. You once said that the most exci ng part for you in this posion is not to fix everything and clean it up, but to grow and develop Iowa. Are there any new, exci ng projects that you’re working on right now? What are the biggest goals for the upcoming years?

parks, museums and other community spaces. It’s really about everything that makes life producve, purposeful and fun. In Iowa, we’re taking a strategic approach to doing this. I expect what we’re doing here to be transforma onal. Let’s talk about the future. As you see it in, how will Iowa change in the next 5, 10 years?

Something I’m very excited about is Iowa’s Manufacturing 4.0 plan. In the current age of automa on, it’s impera ve that we stay ahead of innova ve technologies. Iowa’s Manufacturing 4.0 is an ac on plan with strategies to leverage the use of digital technologies to remain viable and compe ve in the global arena. By providing a path to address the trends, technology challenges, customer demands and talent issues, we can ensure connued growth and success for Iowa manufacturers.

You’ve once men oned that you believe in a holis c growth plan for Iowa. Could you tell us a bit more about it — why is this parcular strategy so important? For Iowa, it’s not just about jobs. It’s about raising the standard of living for Iowans and building communies where people want to live. That means we’re addressing employee training and infrastructure needs, like broadband connectivity and speeds. As well as ameni es, like

We aren’t ones to be sa sfied with the status quo. In the next five to 10 years, I suspect more and more people will hear our story and want to be a part of it. We will con nue to develop our workforce with programs like Future Ready Iowa. We will con nue to nurture a business-friendly climate through tax incen ves and other programs that make it easy and economically savvy for companies to operate here. And we will con nue to be a hub for innova ve thinking across industries thanks to our tenacious work ethic and highly educated populous. I predict more people visi ng, living and working here in the future, once they see what all the excitement is about.

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Germany’s Economy – Is It Holding Strong or Is It Going into Recession?

lthough Germany has long been synonymous with a strong and stable economy, it has been facing a significant economic downturn of late, and Germany’s central bank has now warned of a possible recession. However, such a situa on does not only aﬀect Germans: it also has large global consequences. Since Germany is both Europe’s strongest economy, and one of the largest economies in the world, its economic downturn jeopardises all global economic flows. As a result, the world is closely watching what is happening in this country, wondering how the German economy will cope with the challenges it’s currently facing and whether it will have the strength to avoid a recession. 84 europeanbusinessmagazine.com

The current state of the German economy Un l recently, Germany was one of the world’s strongest in terms of its employment rate, exports level and produc on growth, also recording a

high government budget surplus. Yet, as shown in the image below, Germany’s economy is now shrinking – facing a flat or decline in almost all economic indicators. Although German retail sales rose 4.4% since last year, a er a slight

power of the Germans, which further jeopardises the whole economy. Overall, the German economy is facing many challenges that must be resolved as soon as possible if they are to avoid the recession currently knocking at its doors.

Reasons for Germany’s economic downturn

increase in June it fell again by 2.2%, which was the largest decrease since December 2018. However, this is only one of its problems. Germany’s industrial output also dropped by around 5% compared to the same period of the previous year and 1.5% since last month. Addi onally, exports – one of the most important areas of Germany’s economy – also recorded a 0.1% decline in the last quarter, and there are also reduced household consumpons and a business investment slowdown. Furthermore, although Germany s ll has the lowest unemployment rate in the world at around 3%, its employment rate has also fallen, causing German workers to worry about their futures. One of the other consequences of Germany’s economic slowdown is also a decreasing purchasing

Germany’s weaker economic growth can be partly explained by the slowdown in the global economy, but also by other factors such as the uncertainty of Brexit and other challenges with which the EU currently faces. There is also a reduced domes c consump on as Germans are reluctant to face excessive costs due to their concerns about the current state of their economy and the uncertain es it imposes. However, one of the biggest reasons behind the current economic situa on in Germany is the trade war between the US and China. As Germany’s economy mostly relies on exports to the US and China, it is directly hit by their trade war, imposed tariﬀs and the slower economic growth in China. Of all sectors of Germany’s industry, the most vulnerable is the automo ve industry. New tariﬀs on car imports into the US, declined global demand for vehicles and the reluctance of Germans to buy new cars due to economic uncertainty have caused a decline in sales and a slowdown in the growth of this industry. This is especially worrying given that Germany’s auto industry has invested a lot of money in the development of new green cars

What is next? Will Germany avoid the recession? As shown, the German economy has been facing many challenges, yet has avoided falling into a recession un l now. Nevertheless, it must resolve current issues if it is to be able to con nue to outperform other world economies. Also, as the German economy is a pillar of the EU economy, if it fails to address the current problems and falls into recession, the consequences would certainly aﬀect all economies in the region, as well as pu ng addi onal pressure on exchange rates all over the world.

Increasing government spending so as to s mulate the economy should be one of the first things it addresses. Although this would not be an easy task, especially taking into account Germany’s rigid cons tu onal balanced budget amendment and Germany’s prudence in borrowing, but this move would certainly help Germany to overcome the current crisis in its economy. Taking into account the current global economic situa on and the trade war between the US and China, which is unlikely to end soon, Germany’s economy should start to rely more on domes c sources of economic growth by inves ng more in its public infrastructure, telecommunica ons and educa on, for example. By s mula ng domes c opportuni es for economic growth instead of exports, Germany would become less trade dependent, and thus less vulnerable to global economic flows. Also, given that the global economy is increasingly becoming a service economy, Germany must focus more on improving its service sector and developing the required skills of its workers. In the same vein, it should also increase produc vity growth, and finally it should apply other macroeconomic measures to boost domesc consump on that will increase its produc on output and accelerate its economic growth. Furthermore, as the EU recorded economic growth at a slower pace due to the economic slowdown in its two largest economies – Italy and Germany – it intends to help Germany to overcome current challenges by cu ng already-low interest rates. The European Central Bank also announced it will restart its trillion-euro bond-buying program, which should addi onally spur economic growth. Therefore, although Germany’s economy – thanks to its own strengths and with the help of the EU – is well placed to overcome the diﬃcul es it has encountered and avoid a recession, uncertainty is s ll present and cauon is called for in all future business decisions. All eyes are thus s ll firmly on Germany’s economy. Will it hold strong, or will it fall into recession? europeanbusinessmagazine.com 85

GOOGLE

Is in Trouble Yet Again: US Tech Giant Accused of “Exploiting Personal Data”

Hidden web pages, a possible violation of several EU privacy regulations, a sneaky GDPR bypass… Google, one of the world’s biggest tech giants, is in serious trouble right now. Or, should we say – once again.

n January of this year, the company was fined $57 million by France’s data regulator for breaching the European Union’s online privacy rules. The French regulator stated that the world’s biggest search engine lacked transparency and clarity when it came to informing users about the handling of their personal data, and that it failed to properly obtain their consent for personalised ads. Then, just a few days ago, YouTube – which is owned by Google – also got in trouble, as the Federal Trade Commission (FTC) discovered that it has violated the Children’s Online Privacy Protec on Act (COPPA). It turns out that Google’s video service had collected personal data on children without their parents’ consent. The FTC reported that Google used ad tracking data on videos, collected from children under the age of 13 without parental consent, and used them to push more targeted ads to those age groups. Due to this latest viola on, Google has to pay $170 million. And now the US tech giant is all over the headlines once more: this me for secretly using hidden web pages to track and feed its users’ personal data to adver sers. The issue started to come to light a few months ago when Ireland’s Data

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Protec on Commission, one of the lead authori es over Google in the European Union, launched an invesga on into Google’s collec on of personal data for online adver sing. J. Ryan, chief policy and industry relaons oﬃcer at Brave, a privacy-focused browser maker, ini ally filed a complaint saying that Google violated GDPR by broadcas ng personal informa on to companies bidding to show targeted ads. The inves ga on had to determine two main things: whether the search giant’s ad prac ces comply with the EU’s new GDPR Regula ons, and if Google really used specific informa on such as the race, health and even poli cal leanings of its users, to target its ads. Now new evidence has been submitted in the case and Google is being accused of sending its users’ personal data to adver sers without permission and “exploi ng it without sufficient control or concern over data protec on”. Essen ally, and to put it in some context of numbers, new evidence revealed that Google is allowing ad-tech companies to compile and share personal information from users on over 8.4 million websites. According to the Financial Times, Ryan tracked his personal data and

found it was being traded on Google’s adver sing exchange pla orm called Authorized Buyers, previously known as DoubleClick. Ryan discovered that Google used an iden fying tracker containing web browsing informa on, loca on and other data, which was sent to ad companies via webpages that “showed no content”. He also explained, “the evidence we have submi ed to the Irish Data Protection Commission proves that Google leaked my protected data to an unknown number of companies. One cannot know what these companies then did with it, because Google loses control over my data

once it was sent. Its policies are no protec on.” In response, Google claims that it doesn’t “serve personalised ads or send bid requests to bidders without user consent. The Irish DPC – as Google›s lead DPA – and the UK ICO are already looking into realme bidding in order to assess its compliance with GDPR. We welcome that work and are co-opera ng in full.” However, Ryan says that Google allowed advertisers to combine informa on about him through hidden “push” pages, which are not visible to web users and could lead to them more easily iden fying people online.

He further explained that “This pracce is hidden in two ways: the most basic way is that Google creates a page that the user never sees, it’s blank, has no content, but allows third par es to snoop on the user and the user is none the wiser. I had no idea this was happening. If I consulted my browser log, I wouldn’t have had an idea either.” To be more specific, Google’s push pages are served from a company’s domain and all have the same name: “cookie_push.html”. Each page has a unique code of almost 2,000 characters, which Google adds at the end: this way it becomes possible to uniquely iden fy the person

that Google is sharing informa on about. Once these ac ons are combined with other cookies supplied by Google, it allows companies to pseudonymously iden fy the person, which otherwise would not be possible at all. Basically, it all comes down to the fact that by providing poten al buyers with such detailed targe ng, Google could gain a very significant compe ve advantage over other companies that run adver sing auc ons. J. Ryan succinctly concluded that, “This constant leaking of personal data, that seems to be happening constantly, needs to be urgently addressed by regulators.” europeanbusinessmagazine.com 87

We caught up with

Thomas Dunstan

who is Director General of Bermuda Civil Avia on Authority, which is responsible for the regula on and safety oversight of avia on in the UK Overseas Territory of Bermuda. We asked him why and how has the region become so popular for having aircra registered from so many diﬀerent global en es and what is in sight for the future.

Why has Bermuda become so popular as a country in which to register aircra ? It’s down to the regula ons and the reputa on of our jurisdic on. Bermuda has developed a great reputaon – par cularly for the quick turnaround of registering an aircra – and that is what is key with a lot of clients. We were also probably the first jurisdic on that met all the new requirements of ICAO’s Annex 6, so have built a world-class reputa on from that too, and the commercial aspect has also been hugely beneficial. The regula ons in some countries aren’t as robust and transparent as in Bermuda, which is also working under English law. Companies and Aircra owners who want to protect their assets will register them with us as they know with the regula ons here it will be more secure for them. That’s where we really started from, mainly in the private aircra sector, which then grew into the commercial aircra sector. This was ini ated with western built aircra being leased and financed to airlines in Russia and the Commonwealth of Independent States (CIS), and our reputa on has grown hugely from there. Companies started to come to us as we had a reputable, neutral jurisdic on for registering aircra . How does the level of service compare to other jurisdic ons? How do you see Bermuda being be er than other jurisdic ons – does being under English law help? We believe that the service provided is only as good as the team that provides 88 europeanbusinessmagazine.com

it. Ul mately, we strive to be flexible, transparent and responsive to make all of our processes – par cularly the registering of an aircra – as quick and easy as possible, while maintaining the highest standards of regula ons, professional service and courtesy. The Bermuda Registry has earned a solid reputa on interna onally, and we con nue to build on that year on year. We work hard to establish trusted relaonships with our global partners. Being under English law has been posi ve for Bermuda. Aircra owners, financiers and lessors all appreciate the sound regulatory framework, which gives them a high level of comfort in our credibility and the security of their asset. What has been the biggest factor in the Bermuda registry’s success in its 85 years? Diﬃcult to pick just one! Our history dates back to the early 1930s. The first ever aircra to be registered in Bermuda came across from Canada on a boat, and was assembled here in Bermuda. That got the registry started, and it gradually added a number of new aircra s over the years – mainly from the 1970s, when aviaon really started to boom. Aircra owners – including civil airlines and corporate and private owners of business jets – soon found that their aircra could be based all over the world yet s ll be registered here in Bermuda. Consequently, we started to see a good deal of internaonal business, and that turned into a package that Bermuda could oﬀer to the business world globally.

More recently, in 1995, the US military withdrew from Bermuda and turned all its base lands back to the Government of Bermuda, including the airfield. At the me, following ICAO guidelines, the government decided to separate out the avia on regulator, known then as the Department of Civil Avia on, from the opera onal side of running the airport. It created the Department of Airport Opera ons to run that side of things, which le the avia on regulator free to regulate, which is how most countries manage their avia on industry. There is generally a split between the service provider, namely the opera onal authority, and the avia on regulator. In 2016 the Department of Civil Avia on transi oned into the Bermuda Civil Avia on Authority, or BCAA, which became a quasi-autonomous body, a “Quango” if you like. The addi onal autonomy that came from this has provided many benefits and allowed us to ensure our high focus on customer service, which is one of the core reasons for our con nued success. Where is your biggest market globally - where do most of your aircra , or clients, originate from? Currently the biggest market for us is the Russian Federa on. What type of aircra are registered with the BCAA? Everything from corporate-sized aircra to B747–400s.

In what way does the BCAA contribute to the economy of Bermuda? Just about all of the revenue we generate is from oﬀshore, or outside of Bermuda. This way it is not a drain on the Bermuda taxpayer and therefore very important to the economy. What benefits does being part of a Quango have? A very posi ve benefit for us, was that it allowed us more autonomy over how we manage our regulatory oversight and our human resources. That has been a considerable aid in helping us to sharpen our focus on customer service even further. We have always had a strong ethos of customer service, and we have been able to move this onwards and upwards. Our transi on to an authority also had the added benefit of taking a lot of expense out of the government’s balance sheet. As an authority we are able to be more customer-driven. We are constantly looking to improve our service, be it through technology or through the way we manage customer rela onships. At the same me, we stay on top of all our regulatory requirements and we are very proac ve in our communicaons with clients. We make a point of keeping them informed of any changes in regula ons that could aﬀect them.

What is your role, predominantly, as Director General for BCAA? I am responsible for the overall running of the organisa on. I report directly to the Board of Directors on the opera on and governance of the authority, while also repor ng directly to the Governor of Bermuda on the safety and regulatory aspects. I am ul mately responsible for safety of aircra on our registry, spearhead the strategic direc on of the organisa on, ensure we are resourced appropriately and I also mentor and help develop our staﬀ.

Does the airport have a big expansion plan for the future? There is a new airport terminal being built at the moment, which is scheduled to open next year. This is a major construc on project for Bermuda that will have a posi ve impact on the travelling public and enhance the experience of our many visitors. What do you see as the biggest challenges for the future for BCAA? Technical exper se, as there is a global shortage. And compe on, which has increased – par cularly for private aircra .

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Greenland Has a Clear Message for D. Trump:

There Are Some Things That Money Can’t Buy

p to World War, sovereigns states could buy and sell themselves to one another.In fact purchasing sovereign territory was not too abnormal — especially to the US was essen ally built through such land purchases. A few examples include the AdamsOnis Treaty, the Louisiana Purchase, the Alaska Purchase, the Treaty of Hidalgo, the Gadsden Purchase… The last purchase of this kind was when the United States bought the Virgin Islands from — — Denmark, for $25 million back in 1917. Back then, the US approached Denmark to buy them out of fear Germany would annex Denmark and occupy the islands to a ack ships. At first, Denmark declined the oﬀer, but a er R. Lansing, the Secretary of State, politely suggested that the US might occupy them instead, the oﬀer was accepted. Now things between the US and Denmark has heated up again which

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is where Greenland comes in . This island is home to more than 57,000 people and relies on Denmark for two-thirds of its budget revenue. Denmark also takes care of Greenland’s defense and foreign policy. Other than that, Greenlanders have gained self-government, acquired its own Parliament and control of its health-care system and schools, meaning that the island’s des ny is actually in its own people’s hands. The mess started when the Wall Street Journal released an ar cle, claiming that the US president had “with varying degrees of seriousness, repeatedly expressed interest in buying the ice-covered autonomous Danish territory“. At first, many dismissed the news as rumors. However, President Trump confirmed that the claims are true. Interes ngly, President Trump is not the first US oﬃcial who was hoping to buy Greenland: before him, there was W. H. Seward, A. Jackson, and president H. Truman, whose

government has oﬀered $100 million for the land back in 1946, when the US wanted Greenland for a Cold War military outpost. Commen ng on the ma er, President Trump said that “Denmark essen ally owns it. We’re very good allies with Denmark, we protect Denmark like we protect large por ons of the world. So the concept came up and I said, ‘Certainly I’d be..Strategically it’s interes ng and we’d be interested but we’ll talk to them a li le bit. Essen ally it’s a large real estate deal. A lot of things can be done.” He also claimed that the ownership of Greenland is “hur ng Denmark very badly because they’re losing almost $700m a year carrying it. So they carry it at a great loss and strategically for the United States it would be very nice.“ For many years — since World War II, the US has had a military presence in Greenland: there are several military bases across the island, including a secret Cold War-era nuclear base, called Camp Century. However, this presence has been extremely controversial, as almost all bases now lie abandoned in remote Greenland loca ons, except for Camp Century and Thule Air Base. What is more, the territory contains le over toxic nuclear waste, which is now being exposed due to the mel ng ice. Besides the long history, there are a few other reasons why the US and Donald Trump is so a racted to this island. Greenland is located in a great strategic spot, just below the Arc c Ocean, between Canada and Europe. According to the Brookings Ins tuon, a nonprofit public-policy organiza on located in Washington, the US is so interested in the territory because of its natural resources, including iron ore, lead, zinc, diamonds, gold, rare-earth elements, uranium, and oil. And as the Earth’s climate con nues to warm, more and more resources in Greenland are being exposed, making them more accessible than ever before. More poignantly it turns out that one of the biggest targets for the US is Greenland’s Minerals, an Australian company that has drawn a lot of

a en on since it started opera ng in the island back in 2007, aiming to develop the Kvane eld mine, which is home to many rare-earth metals. One of the largest shareholders in this Australian company happens to be Shenghe Resources Holdings, a Chinese company, which it seems is one of the reasons why President Trump would like to take control of Greenland. L. Heininen, a professor at the University of Helsinki noted that “Chinese companies have been inves ng a lot in various enterprises in Greenland, especially in mining. China is now a very notable presence in Greenland. Buying Greenland might be an easy way of compe ng with China and making it extremely difficult for Chinese companies to be ac ve in Greenland.” However, although the US and Trump seems to be par cularly interested in buying Greenland, nor Denmark, nor Greenlanders are not too happy with the president’s offer or his comments. Danish Prime Minister M. Frederiksen has immediately rejected the offer with a firm “no“, calling the idea

of buying the island “absurd“ and noting that “thankfully, the me where you buy and sell other countries and popula ons is over. Let’s leave it there.“ “Greenland is not for sale. Greenland is not Danish. Greenland belongs to Greenland. I strongly hope that this is not meant seriously.” Donald Trump reacted to these words by canceling a state visit to Denmark that had been planned for the second of September , accusing M. Frederiksen of being “nasty“, later adding that he thought “it was an inappropriate statement. All she had to do is say, ‘No, we wouldn’t be interested.’“ Meanwhile Greenland’s Ministry of Foreign Aﬀairs also reacted to D. Trump’s oﬀer, saying that “Greenland is rich in valuable resources such as minerals, the purest water and ice, fish stocks, seafood, renewable energy and is a new fron er for adventure tourism. We’re open for business, not for sale.“ A. Hammond, Greenland’s first female prime minister, who later became chair of the Greenland Commi ee in the Danish Parliament, noted that D. Trump’s proposal showed a lack

of sensi vity, and that his a tude to Greenland was “very arrogant“, especially because “he’s not even talking to Greenland — he’s talking to Denmark about buying Greenland.“ E. Volquardsen, a professor of culture and social history at the University of Greenland commented on the situaon, saying that “The President of the United States is not recognizing a people’s right to self-determina on. Ironically, this comes just a er the 10th anniversary of the 2009 Self-Government Act in Denmark, which legally recognized Greenlanders’ right to self-determina on. It’s very disrespec ul to many people here in Greenland.“ It leaves a situa on where Greenlanders have been le very unse led and follow the news with tension. One of them, E. Mathiesen, speaking to the local media noted that “You can’t just buy an island or a people. This sounds like something from the era of slavery and colonial power.“ The message is clear: despite what Donald Trump thinks, there are some things that money can’t buy, and Greenland happens to be just one of them. europeanbusinessmagazine.com 91

How the Cannabis Industry is Saving Small Towns Across America

n states like California, Colorado, and Washington, where cannabis cul va on is now legal, the industry is saving many small locales that are on the verge of becoming ghost towns.

A er decades of strict prohibi on, cannabis now proving to be quite a commodity, rescuing these small towns from bankruptcy and mul -million dollar deficits. Abandoned buildings, dilapidated streets and parks, and overall feelings of financial despair are 92 europeanbusinessmagazine.com

a thing of past for these areas that are cashing in the green rush. One such area is the hot, dusty town of Desert Hot Springs, CA, the first city in Southern California to legalize large-scale cannabis cul va on. Situated right oďŹ&#x20AC; the I-10 freeway near the eastern edge of Joshua Tree Na onal Park, Desert Hot Springs has poten al, but unfortunately lacks the upscale resort reputa on of neighboring areas, like Palm Springs. The

median household income is just over $33,000 annually, significantly less than the state average of $71,000. Following a fiscal emergency, the city council voted to legalize medical cannabis dispensaries and cul va on. The result is a ripple eďŹ&#x20AC;ect economic benefits: construc on and u lity jobs, security jobs, posi ons for project managers (to resolve infrastructure issues for growers), a real estate boom, and of course employees directly involved

Coachella have also started to designate certain areas for cannabis growing. So far, these desert towns have received a total of around 100 applica ons for growers and dispensaries Further north up the West Coast is the town of Raymond, WA. A once thriving epicenter of mber mills was there, but that all changed in recent years when most of the world went digital and the mber industry came to a screeching halt. Raymond became known as an “out of the way” town with dismal employment opportuni es. The decision to legalize cannabis culva on came fairly easily to lawmakers, and within one year Pacific County generated $5 million in revenue from the industry. Cannabis profits have well-surpassed income from any other industry in the area, including ca le ranching. According to BestPlaces.net Raymond’s job growth is expected to be at 34.17% in the next ten years. The revitalizing eﬀects of the green rush are far reaching, from the west coast out to colorful Colorado. The towns of Trinidad and DeBuque were all but withering away a er the collapse of their local fuel and mining industries when they turned to the cannabis industry to fill the financial void. In all, the state of Colorado ended the year quite nicely with nearly $996 million in revenue from recrea onal cannabis sales. A good por on of that money is intended to go towards schools and citywide renova ons

Challenges Faced

in the dispensaries and cul va on. Desert Hot Springs is now home to the largest solar-powered cannabis growing and processing facility in the world. But DHS isn’t the only California desert town expec ng to see a surge of green in their barren landscapes. City Councilman John “Bug” Woodard used the cannabis industry to dig the town of Adelanto (San Bernardino County) out of their 2.6 million dollar debt. Cathedral City and the city of

One thing everyone can agree on is that the revenue and benefits coming from the cannabis industry are bounful. But that doesn’t mean there aren’t some challenges on the horizon. With the recent legaliza on of the industry in some states, two of the main obstacles to overcome are tax related issues and problems with infrastructure. Like with all large-scale business, there is the poten al for greed and corrup on to permeate, This o en comes in the form of frequently

increasing taxes. Many growers and dispensary owners are already dealing with high taxes and minimal tax breaks compared to other businesses. Thanks to Sec on 280E of the tax code, businesses that are involved in some way with prohibited controlled substances are not en tled to the same tax breaks as other businesses. Some growers and dispensary owners have been subjected to tax rates of up to 70 percent. That’s more than double the standard rate of 30 percent that other businesses pay. Another immediate issue is the need for infrastructure. Luckily, that’s something that will most likely be resolved must faster than corporate greed. However, building largescale structures with all the resources needed to grow cannabis is no easy task. They would need to take many things into considera on including climate control, conserving water, and conserving energy. This can be an especially daun ng task in the harsh desert landscape of California, but it’s not exactly cheap to have a climate controlled environment in places where it gets cold either, like Washington and Colorado. Not only that, but ge ng u li es to some of these places could be a challenge in and of itself. These are small towns with small electrical grids, definitely not large enough to handle the energy demands of mul ple, largescale grow opera ons. According to Robert Laﬀoon-Villegas, spokesman for Southern California Edison, said: “the u lity expects that some growers’ power needs could be so large that it would be like adding a small city to the system.” To be able to provide the necessary power will most likely require more energy facili es to be built. There will always be challenges to overcome, that’s true to be said about anything in life. But the cannabis industry has so much poten al and room to develop. Plus, numbers don’t lie, cannabis means money! And there are a lot of small towns throughout the United States that could benefit greatly from the financial surplus that the cannabis industry could provide for them. europeanbusinessmagazine.com 93

EB-5: The Controversial Golden Visa Programme Faces Significant Changes

he EB-5 programme – currently the only visa programme designed to allow foreign investors to gain permanent residency in the US – has recently gone through some major changes. The green card programme was first introduced in 1990, with the intent of s mula ng the US economy through job crea on and capital investment by foreign investors in high-unemployment areas. Un l now, the law required applicants to invest a minimum of $500,000 in a new commercial enterprise within a targeted investment area (TEA) – a rural area, or area with high unemployment – that will create at least ten new full- me jobs for US workers. An investment in a project not located in a TEA was required to be of at least $1 million. Each year, the US issues 10,000 EB-5 visas star ng October 1, with a country cap of 7% – or 700 visas. If one country doesn’t use the allo ed amount of visas, it is given to applicants in other na ons who are waiting in line. And that is usually China. Looking back to the 1990s, the scheme wasn’t par cularly popular in its early years. Only a handful of the 10,000 available visas were issued each year, mainly because the applica on process was long and complex and denial rates for investors’ pe ons were very high. Then in 2005, hoping to accelerate the processing and increase eﬃciency, the US Ci zenship and Immigra on Services (USCIS) created an Investor and Regional Centre Unit. It was not long a er that the situa on began to change. According to a government-commissioned study by ICF Interna onal, the

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number of EB-5 visas issued to foreign investors increased from just 64 in 2003 to more than 1,300 in 2008, and a significantly higher 9,228 in 2014. A more recent study by the EB-5 Investment Coali on further revealed that a total of $10.98 billion in capital investment was made through the Regional Centre programme over a recent two-year period. Projects associated with EB-5 investments have created over 355,000 US jobs, and the study also showed that the EB-5 programme contributed more than $23 billion in labour income to the US economy and resulted in nearly $55 billion, or 3%, addi onal US economic output. According to the US Department of State and its report of the visa oﬃce for the fiscal year 2018, investors from mainland China have been domina ng the EB-5 programme list for the last decade, leaving Vietnam and India in the second and third places. Interes ngly, India has become a major EB-5 investor in recent years, with the number of Indian ci zens who have been issued EB-5 visas having quadrupled since 2017. Vikram Kumar, Founder and CEO of AVG America Investments – an EB-5 fundraiser that is se ng up opera ons in India – commented on this increase, saying that, “The demand from India is due to a range of reasons, from quality of educa on, quality of life and a stable US economy. Further, the number of dollar millionaires in India has grown by 18% 2017.” However, although China-born applicants s ll dominate the EB-5 list, the number of visas issued to this country decreased by nearly 3,000 last year. Major growth, on the other hand,

besides India, was also recorded in South Korea, Pakistan, Hong Kong, Venezuela, Mexico and Pakistan. Through its 29 years of existence, the EB-5 programme has faced some criticism. O en referred to as a “wealthy immigrant visa programme”, a “bou que immigra on programme”, a “visa-forsale programme” or “green cards for cash”, the EB-5 programme has also been reported for fraudulent ac vi es. Cri cs say that for a long me, the EB-5 programme only helped the rich get richer, and did not focus on immigrants who are coming to the US looking for a way out of persecu on, poverty and wars.

US Senator Chuck Grassley, along with his Democra c colleagues, has been advoca ng for changes in the EB-5 for years, at one point even proposing to eliminate the programme because of widespread abuses. In June 2019, he wrote a le er to President Donald Trump, saying that the EB-5 programme “has become riddled with fraud and has serious vulnerabili es that present real na onal security concerns.” Brandon Meyer, a partner at Fakhoury Global Immigra on, also noted that, “The original intent of the EB-5 programme was not to develop five-star hotels in Manha an. It was intended for the manufacturing sector, but has

instead become the source of funds for real estate developers.” This summer, on July 24, USCIS released several changes to the EB-5 Immigrant Investor Programme, marking the first significant revision of the programme’s regula ons since 1993. The new rules will take eﬀect in just over a month, on November 21 2019. “Nearly 30 years ago, Congress created the EB-5 programme to benefit US workers, boost the economy, and aid distressed communi es by providing an incen ve for foreign capital investment in the United States,” said USCIS Ac ng Director Ken Cuccinelli. “Since its incep on,

the EB-5 programme has drifted away from Congress’s intent. Our reforms increase the investment level to account for infla on over the past three decades and substan ally restrict the possibility of gerrymandering to ensure that the reduced investment amount is reserved for rural and high-unemployment areas most in need. This final rule strengthens the EB-5 programme by returning it to its Congressional intent.” One of the major changes is an increased minimum investment amount: now, foreign investors will be required to invest a minimum of $900,000 in a project based within a TEA, and $1.8 million in a project not located within a TEA. Beyond this, the minimum dollar amounts will now be increased every five years based on the consumer price index referencing the ini al $1 million criteria of 1990. Other changes include transferring TEA designa on from state agencies to the Department of Homeland Security (DHS), increasing Regional Centre oversight and changing filing and interview processes. Many predict that such changes will yield significant delays and addi onal costs, as well as cause unnecessary confusion. Allison Berman, the managing director and general counsel of Greystone’s EB-5 division says that “Previously, EB-5 investors were o en middle class people who wanted to get green cards, planning for their children to study in the US, then work, live and stay in the country. Now, it’s going to be a lot harder to raise EB-5 money. Investors at the $1.8 million level are going to be few and far between.” Others think that it’s all for the be er: Jill Jones from NES Financial in San Jose, California, noted that even with the changes, the future of the EB-5 programme and the construction projects it fuels seem secure, commen ng that, “At the end of the day, it’s a terrific programme that allows money to come into underserved areas in the US. They’re genera ng jobs and building business where it didn’t exist before.” europeanbusinessmagazine.com 95

We caught up with

Jean Marc Menahem

a local Barcelona resident for many years now, but originally from France - talks to European Business.

ean-Marc, an amateur driver who is a financier by trade, is unlike many race-driver enthusiasts. He has managed to live out his dream by not only driving in many high octane races such as the V De V Proto Endurance Challenge, but in 2011 he took part in the 24 Hours of Le Mans – the world’s oldest ac ve sports car race, which the majority of professional drivers don’t have the opportunity to par cipate in, let alone amateur enthusiasts. We asked the amateur driver about his racing experiences, outside of his already busy life of work, family, racing mountain bikes, playing and

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relentlessly raising money for chari es around the globe. How long have you been involved in racing? It’s been 25 years since I first started racing. What ini ally made you get involved in racing - did someone introduce you to the sport, or had it been a lifelong ambi on? It’s not an ambi on. It’s a child’s dream! To par cipate in the 24 Hours of Le Mans race is THE ul mate goal for any car-racing driver – both professionals and amateurs (together

with Formula One, obviously). I’ve been car racing for more than 20 years and I’ve never met one single gentlemen driver (as we call non-professional drivers) who did not have this race in mind. It’s like being able to play on Centre Court at Wimbledon for an amateur tennis player! Imagine racing in the biggest race of the world alongside Alonso, Schumacher, Kristensen, Fisichella, Hulkenberg, etc... What were the biggest challenges to begin with, to get a team together and to actually to get in the first race? Talk us through logis cs. When you have never raced in Le Mans previously, the biggest challenge I think is to convince a team to give you the opportunity. When you believe you are ready (you

have the budget, you have the experience and you can see with your results/performances that you also have the speed), you quickly need to iden fy which team is “oﬀering” a gentlemen driver seat. Out of the 55 selected teams for Le Mans, if you exclude professional teams (Toyota, Audi, Signatech Alpine, Rebellion, etc.) and the teams only looking for long-experienced Le Mans gentlemen drivers (almost pro drivers), the list reduces to probably max 5 to 10 teams. This is when you start making calls and trying to ac vate your network to help you get in touch with the right people and to get introduced. Then you pitch yourself as best you can. Personally, it was a er three months of calls and discussions that I was finally called by JMB Racing in February 2011 for a test day in Le Castellet circuit with four other drivers. All candidates for the “one seat”

in a GT2 Ferrari car. That test day is really not only about how fast you are, but how you communicate with the engineers, the feedback you give them for the set up and ... the most important thing: that you make zero mistakes on the track (i.e. you stay right on the track lap a er lap). Le Mans is the most diﬃcult endurance race in the world. Teams want drivers that will first and foremost be able to finish the race and bring the car safely onto the finish line! Pure speed really comes second for us in Le Mans. What has been your most successful race/year and why? I could say 2011, when I finished third in the European Endurance Championship (driving a CN Norma), but for me it is definitely the Formula Renault 2.0’s 2008 season. I raced two years in Formula Renault 2.0. In 2007 in the

French Championship, and in 2008 in the Western European Championship (WEC). Because of the economical crisis, the promoters allowed gentlemen drivers (i.e. I was already more than 50 years old) to race with young drivers – all of whom were racing to soon be Formula One drivers – the best young drivers in Europe were there! Some of those that I raced against in 2008 have raced, or s ll are, in Formula One (Ricciardo, Pic, Bianchi, Vergne, etc.) It was fantas c racing at that level. Of course there was no chance we could win, but just to qualify for the race was a challenge. We needed to do no more than 105% of the pole posi on me during the qualifying session for each race. So max 1.5 seconds slower than the best me/driver on the lap. I qualified for each race of the championship. I was so proud! It was pre y intense but so much fun!!! europeanbusinessmagazine.com 97

It’s pre y simple. You rent the car. And you rent it with the team that goes with it to the race. Overall, in the landscape of car racing, very few drivers get paid to race. Some talented drivers don’t have to pay to race, whereas all gentlemen drivers will pay to race. Le Mans is part of the Endurance World Championship, with races over the season. To prepare for Le Mans you have to par cipate in at least some of these races. Most of the me, there is a price per race but it can be a package for the season. As for the car, in my case the car (a GT2 430 Ferrari) was already sold by the team to a car collector before the race! A car that has raced in Le Mans (and finished) has great value! How many team members are needed on the day? Mechanics, drivers, etc? It is a long day when racing 24 hours - how much prepara on does it take? As a gentlemen driver, when you have a full- me job, family, etc., you really need to free your agenda as much as you can probably at least six months before the race. Because it’s a once-in-a-life me experience, your childhood dream, you just can’t do it unprepared. From February un l Le Mans I raced or prac ced almost every weekend. I hired a fantas c professional driving coach (David Zollinger). I really felt like a pro, travelling from one circuit to another across Europe, flights, hotels, etc. In that sense the prepara on was also one hell of an experience. Physically of course you MUST be fit and lose weight as much as you can (my team manager asked me formally to lose 5kg so as to be below 80kg), so a lot of biking, squash, running, and some specific exercises for the neck, the arms, etc. On the day itself, what are the biggest problems the teams face? We are not involved in the logiscs and technical prepara on of the 98 europeanbusinessmagazine.com

race. Teams are structured with a team manager, engineers, mechanics, spare-part managers, etc. Le Mans is a complex race. The day itself everyone has a very specific role and there is no more me for ques ons. Timing is key and everyone knows the wri en agenda of the day, hour by hour. But I would say that, as in any organisa on, the biggest challenge is to manage the unexpected, the unforeseen. The car gets back in the box a er an accident on the track, the rain changes the strategy of the race, a mechanical problem, etc. This is when you see the talent and the cohesion of your team in ac on. It is pre y impressive and always makes me proud to be working with these guys. At that moment you feel that you cannot disappoint them when you race. Le Mans has this incredible impact on all of us. This is the day when everyone gives the best of himself. This is the day you were born for if you are into car racing!! How does it work with regards to drivers and cars? Do you own the cars? Do you pay the drivers for one race, or are they paid throughout the year with a contract?

All together (and excluding official manufacturer teams like Audi, Porsche, Toyota, etc,) a typical team would probably be around 20/25 people including the three drivers for one car. And 30/35 if two cars race for the team. For any budding entrepreneurs, what advice would you have for Le Mans? I guess everyone has their own way of achieving their ambi on. Mine was rather pragma c. Once I realised it was possible to race in Le Mans, I spent some me establishing a list of what was needed to make it happen. Then I cked the list off, one by one... Any aspiring ambi ons to race in any other races you haven’t as yet? It’s difficult to go higher than Le Mans for a gentlemen driver (and finish it at the first a empt!). This is the ul mate ambi on. A er that, you can only dream of racing again in Le Mans... but otherwise Indianapolis is defini vely on my list! The thing is that you can only race for the ‘first me in your life’ in Le Mans once... This magical moment – you know you can’t live it twice.

Why AI and Smartphones Are the Future

be found in Samsung’s Bixby, where users can point their camera at an image to learn more about it, translate its signs, or know where to find it online. Google Assistant works with the en re Google ecosystem to check a user’s calendar, emails, and search habits too.

Advances in photography Photography capabili es are one of the biggest selling points to every smartphone. Every me a new unit is slated to be released, tech sites from all over quibble about things like megapixels and colour satura on. Smartphone photographers will then be pleased to know that AI might help improve camera image quality. For example, the Huawei P20 Pro produces low light photos by taking mulple shots and then s tching them together in a collage using AI. While this means that the camera takes some seconds to develop a shot, this also points to the possibili es of more photography-based AI in future smartphones.

Augmented reality

ut of all the recent technological developments, it’s ar ficial intelligence that has the most poten al to shake up our world. AI and machine learning are u lised in a range of professional fields, from research centres to multinational businesses. AI has also begun to affect how we live our day-to-day lives. If you’re wondering just how this can be, you only need to take one look at your hand. Chances are, you’re reading this article through your smartphone, which is where AI tech has the most poten al. It&#39;s undeniable that smartphones alone are changing our world, with the rise of such portable tech enabling European and global startups to innovate services, games, and the like. While

AI is already present within smartphones, in many ways, we have only just scratched its surface.

The current state of AI in smartphones Digital assistants are the first things that come to mind when thinking of AI and smartphones. Tech writer Daniel Ling says that Amazon’s Alexa and Apple’s Siri can do everything — from manipula ng home appliances, to setng your alarms. The introduc on of Apple’s Face ID is also an example of AI, as the tech mixes with facial recogni on technology to capture the contours of a user’s face with con nued use. Image recogni on can also

Smartphones are today’s de-facto device for companies who want to develop augmented reality tech. Companies like Ikea and L’Oreal use AR apps to allow users to test their products in real life, whether it’s figuring out how a sofa will look within a room or seeing a par cular shade of makeup against a user’s skin. AI Business suggests that AI will be used to make such apps more customer-focused, as the tech can be used to help developers an cipate where customers need an AR feature. The potenals of this usage may greatly alter how we shop — a habit that’s already being altered by the growing e-commerce industry. Through fingerprint and face recogni on tech, AI does a wonderful job of keeping our smartphones secure. As we con nue to rely on our smartphones on a daily basis, we should expect more developers to rely on AI as a way to make our phones even smarter. europeanbusinessmagazine.com 99

MALTA:

The Best Gateway for Business The Maltese economy continues to shine against an otherwise uncertain European economic landscape. With a buoyant banking sector and foreign investment ever increasing, Malta is tipped to top the EU’s growth chart in 2019 and 2020.

n island country in southern Europe, Malta is located 50 miles from Italy, 176 miles from Tunisia and 207 miles from Libya, and this strategic loca on at the crossroads between the Middle East, North Africa and Europe, promotes a strong economy. Malta 100 europeanbusinessmagazine.com

became a member of the EU in 2004 and the Eurozone in 2008, and a racts business thanks to great government incen ves, an a rac ve climate and the possibility of EU ci zenship. In its recent economic forecast the EU Commission revealed that Malta’s

economic growth should reach 5.3% - three mes the EU average - having celebrated growth of more than 5% for the fi h successive year. Moreover, Malta’s credit ra ng has risen from A+ Stable to A+ Posi ve, according to the ra ngs agency Fitch, making Malta’s economy the strongest of the

28 Member states. This is due, in part, to the country’s 3 year sustained economic surplus by the Maltese government. Last year FDI inflows to Malta reached USD 4 billion, with a total stock of USD 206 billion, according to the UNCTAD 2019 World Investment Report, and Malta is one of the EU’s fastest-growing economies, with strong tourism, financial services, health and telecommunica ons industries. Investment is expected to remain a rac ve in the coming years, supported by planned infrastructure and health projects.

The Maltese government has vowed to make healthcare a priority, transforming the healthcare system into a medical educa on and health tourism centre, with a specific focus on mental health. Since 2014, the government has promoted public-private partnerships (PPPs) in the healthcare sector to establish Malta as a Mediterranean health hub for medical tourism and to expand the capacity of the domes c market. A er launching a 10-year Mental Health Strategy, with the country finally looking to make this growing issue a priority, the government is interested in pursuing new PPP opportuni es. The tourism sector is going from strength to strength in Malta, and is among the primary contributors to GDP. Last year 2.6 million people visited the island na on, represen ng a 14% increase over 2017. Tourism makes up 27.1% of the GDP, a considerably higher percentage compared to 10.3% in Europe and 10.4% of the world’s GDP. The World Travel and Tourism Council reports that employment in the tourism sector is consistently growing year on year in Malta, and if this posi ve performance connues, the sector is projected to make up 33% of the GDP by 2028. The real estate sector in Malta is also booming, with asking prices rising by more than 10% in the past year. While other European property markets are s ll recovering from the economic crisis, Malta is one of the only European countries experiencing consistent capital growth. It is one of the most successful country in terms of investment and is currently the fastest growing property market in the world. Close proximity to mainland Europe and the USA play a huge role, and Malta oﬀers excellent infrastructure with the much-an cipated legisla on regulating REITs oﬀering a rac ve opportuni es to investors. Furthermore, in 2019 a Maltese passport is highly sought-a er, allowing full access to the Eurozone and the USA. Despite being a small island na on, Malta’s influence on the wider European financial sector is huge, boasting one of Europe’s healthiest and most profitable banking sectors.

Rapidly growing and dynamic, Malta-based banks currently hold over €30 billion in deposits, thanks to the robust regulatory and legisla ve framework around which the core domes c and foreign banks build sound and prudent business models. Currently, there are 26 licensed banks in Malta including the Bank of Valle a, HSBC Bank Malta, Sparkasse Bank, BNF Bank and Novum Bank. Global businesses coming to Malta need access to interna onal currencies, safe online banking, low fees and efficient customer service. The Bank of Valle a, the country’s largest and oldest bank with assets worth $12 billion, serves Maltese customers and has approximately 100 ATMs, with offices in Libya, Italy, Belgium and Australia. HSBC Malta is part of a large interna onal bank, with a €250 million HSBC Interna onal Business Fund (HIBF), suppor ng ambious businesses and mul na onals realise their growth poten al. The HSBC Advance Account comes with no monthly fees, free internet and phone banking, no minimum balance and an interna onal debit card. Sparkasse Bank Malta is also part of an global group, and Sparkasse’s internaonal opera ons en ce many businesses in Malta. BNF Bank plc is a rela vely new bank, having begun opera ons just 10 years ago. However, during that me the bank has secured its posi on as one of Malta’s most ambi ous financial ins tu ons, having received the “Best Small and medium-sized enterprises (SME) Partner Bank Malta 2019”award.Finally, Novum Bank Ltd offers products to businesses looking to expand as part of its growth strategy. Currently, Europe is in a state of unrest, with uncertainty over Brexit, the ba ering of many poli cal pares and worries around the strength of the euro taking its toll. However, famous for its 7,000 year history and 300 days of sunshine, Malta has emerged as one of the most remarkable success stories in the Eurozone. Malta is the natural choice for companies seeking to do business in Europe and North Africa, with more than 200 interna onal companies already established on the island. europeanbusinessmagazine.com 101

A NEWLY ORDERED WORLD

Jewellery from the Napoleonic Era 19 October 2019 through 1 March 2020

English translation: Sabine Goodman

Jewel casket for Empress Marie Louise Leather on wooden carcase, velvet and red leather lining, a mirror on the underside of the lid, brass fi ngs German Leather Museum © DLM, M. Özkilinc

apoleon Bonaparte was born 250 years ago. The general, poli cian and French emperor significantly contributed to shaping our modern world. “Napoleon’s personality and farsightedness are s ll fascina ng,” explains Cornelie Holzach, Director of Pforzheim’s Jewellery Museum. In the exhibi on en tled “A Newly Ordered World – Jewellery from the Napoleonic Era”, running from 19 October to 1 March 2020, the museum spotlights Napoleon’s influence, as well as the jewellery and fashion of his era. Visitors can look forward to admiring approximately 150 exhibits, including pieces created by Nitot, Napoleon’s court jeweller. Numerous pictures show how Napoleon presented himself and had himself depicted and, exhibited alongside documents, as well as u litarian and luxury items, give visitors an impression of his epoch. One spectacular exhibit is a replica of the Swedish royal family’s cameo ara. Lavishly embellished with pearls and cameos, it was created more than 200 years ago, and has been worn as a favoured accessory by the Swedish princesses at their weddings. It exquisitely exemplifies the jewellery created during the French Empire, and also reveals how some of the heroes emerging from the French Revolu on and their families were integrated into the ruling dynas es. The ara is presumed to have been a gi the Emperor Napoleon I gave his first wife Joséphine. When the daughter (who was also called Joséphine) of Joséphine’s son Eugène from his marriage to Augusta of Bavaria – which was both a happy one and arranged for poli cal reasons –, married the later King Oscar I of Sweden, the cameo ara was passed to the Swedish royal Bernado e family. The Jewellery Museum is not showcasing the original – for understandable reasons –, but a replica from the Diamond Museum Amsterdam, plus the portraits of several ladies who wore the ara, such as Empress Joséphine’s daughter Hortense. The leather-covered jewel casket on display, on the other hand, is associated with Napoleon’s second wife Marie

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Louise. It was presump vely created for his wedding to the Habsburg archduchess, whom he married in 1810, a er divorcing Joséphine because she had failed to bear him any children, to produce heirs for his newly established dynasty. It is decorated with Marie Louise’s ini als, which are also framed by four Napoleonic eagles – but not with the double eagle of the Habsburg monarchy, as would have been in accordance with tradi onal conven ons. Napoleon’s emblem, a bee, can also bee seen on the casket. The pa ern of parallel, diagonal lines of bees references the Bourbon dynasty, while the bee itself symbolizes the new France because the organisaon of a beehive, with its order, division of labour and the queen’s special posi on, as well as the importance of industriousness as a virtue, came very close to Napoleon’s idea of an ideal state.

Cameo ara of the Swedish royal family (replica) Gilt silver, seashells, carnelian, faux pearls, glass René Brus (goldsmith) Amsterdam, 1989 Diamond Museum Amsterdam

CTICC:

The ripple effect

An astonishing convention centre at the tip of Africa is drawing events from countries across the globe and shaping conversations as well as the future of a city, a region and a nation. Discover what makes the Cape Town International Convention Centre (CTICC) different.

he CTICC is a leader in conferencing, with the capacity to host almost any event, and mul ple events concurrently, across its two glass facade buildings. The complex is flooded with natural light and linked by a Skybridge with picturesque views showcasing the city and Table Mountain. Launched in 2003, the CTICC established Cape Town as a preferred events des na on sharing a me zone with much of Europe. The opening of CTICC 2 in 2018 allowed the centre to oﬀer new and exci ng even ng op ons across an extended choice of venues with greater capacity and flexibility. The CTICC now oﬀers a combined gross space of 140 855m2 encompassing mul purpose

conference and exhibition space; two raked auditoria sea ng 1 516 and 612 delegates respec vely; two terrace rooms for up to 330 and 450 delegates; 47 breakout rooms accommoda ng between 20 and 370 delegates and versa le banque ng rooms, including a 2 000m2 grand ballroom. The CTICC’s friendly staff ensure that every event is professionally and efficiently delivered, strengthening Cape Town’s reputa on as a global business events des na on, and affirming its posi on as one of the top long-haul conven on centres in the world. This was confirmed by the Interna onal Congress and Convenon Associa on (ICCA), which listed Cape Town as the number one meeting des na on in Africa.

A core focus of the CTICC is innova on, and as a result, the centre is consistently searching for new ways to op mise its oﬀering. To remain abreast of the Fourth Industrial Revolu on and to meet the evolving demands of clients, the CTICC connually upgrades its infrastructure, deploying the latest hardware and related so ware to provide worldclass informa on and communicaons technology. The team is commi ed to building a knowledge economy that supports the Western Cape Government’s growth strategy by working to a ract events that align with the cataly c sectors iden fied by the City of Cape Town. These include producve sectors (oil and gas, tourism, europeanbusinessmagazine.com 103

agro-processing, business process outsourcing, renewables and film) as well as enabling sectors (electricity, water, ICT, logis cs and financial services) and social sectors (educa on and health). As a result of these efforts, the centre has succeeded in attracting international conferences, exhibitions, trade fairs, banquets, special 104 europeanbusinessmagazine.com

events and film shoots from diverse nations â&#x20AC;&#x201C; including the United Kingdom, United States of America, Switzerland, France, Belgium, South Korea, Ireland, Turkey, Singapore, New Zealand, Kenya, Malaysia, Equatorial Guinea, United Arab Emirates, Germany, Australia, the Netherlands and Nigeria â&#x20AC;&#x201C; in the 2017/8 financial year alone.

In the current year, the CTICC has won 14 international event bids and secured 71 international events until 2024. Among these are the 2023 Netball World Cup and the 2021 International Karate World Championships. In 2020, the World Ophthalmology Congress will welcome around 10 000 delegates from more than 110 countries to the conference and an exhibition featuring the latest products and services in the field. Clearly, the global community has confidence that the CTICC can and does host events safely, successfully and seamlessly. This success has also significantly impacted on the local economy, R47.3bn cumulative contribution to national GDP and R39.6bn cumulative contribution to the Western Cape GGP. This positive impact continues to maximise economic spin-offs and job creation in the city and Western Cape region, benefiting

both the society in which it operates and the environment as a whole. In its 16 years, the CTICC created over 130 438 direct and indirect jobs, invested in staff training and the future workforce through graduate and student programmes. For the CTICC, sustainability is an absolute business imperative. This passion saw the CTICC become the first convention centre in Africa to align its practices with United Nations Global Compact

standards. The centre continually seeks to increase its energy and water conservation metrics, while also providing for safe disposal of waste and, where possible, recycling or upcycling opportunities. The CTICC event management team advise clients on the many options available for ‘greening’ their events. This balancing of its economic, social and environmental impact ensures that the CTICC remains both a responsible corporate

citizen and a viable commercial concern, committed to triple-bottom-line reporting. Ultimately, however, it is a venue where people meet and learn from each other in a world-class venue set in one of the world’s most desirable cities. The ripple effects of these exchanges will be felt by thousands upon thousands of people for years to come. Isn’t it time you came to Cape Town? To book your next event at the CTICC, go to cticc.co.za.

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How has tech changed the way we give and receive gifts? Yiannis Faf, Co-founder, WhatWeWant On the hunt for convenience

s society evolves, so too does the way in which we give and receive gi s. And in the last decade, the global prolifera on of smartphones, tablets and computers has reshaped the way we search, purchase and receive gi s from friends, family members and loved ones. Perhaps the most evident example of this is the widespread use of online shopping as a means of loca ng, purchasing, and sending the ideal gi . A UK-based study last year revealed that half of UK adults prefer to shop online instead of physically visi ng a shop. Moreover, with the fes ve season being one of the busiest periods in the retail calendar, approximately three quarters of consumers in the UK said they buy half of their Christmas presents online. While this trend is not new – indeed, online shopping has been around for a very long me – technology is changing the social dynamics of modern-day gi giving. How so you ask? I list some of the key trends below. 106 europeanbusinessmagazine.com

One of the key considera ons for the modern consumer today is convenience, and over the years, online shopping businesses have developed intui ve and simple to use online platforms to make the process of buying something online almost seamless. Shoppers who dread crowded shopping centres and markets can breathe a sigh of relief and enjoy the convenience of effortlessly browsing through online marketplaces instead. This is par cularly helpful for those with a busy schedule and precious li le me to spend on gi hun ng; e-commerce pla orms offer the opportunity to shop 24/7, and rewards consumers with a more enjoyable shopping experience. What’s more, it also allows consumers to compare prices between different retailers to scout out the best deals available. The demand for convenience is something that we have seen personally at WhatWeWant, and it’s becoming increasingly clear that new tech innova ons con nue to offer limitless opportuni es in this sphere.

The influence of social media We cannot discuss the changing psychology of gi giving without first exploring the influence that social media has had. The ability for users to build up vast networks of connec ons in the form of friends, family and colleagues from all across the world has been a game-changer; by tearing down geographical barriers to gi giving, people are now able to send so-called “digital gi s” over long distances and at the very last minute.

A paper published in 2018 by Facebook explored the increasingly common trend of digital gi exchanges – the act of sending someone a digital gi , such as an online gi card or voucher. What it uncovered was the social influence exerted by such platforms, and the impact is has on people’s behaviours. For example, the study found that when a person received a gi card on Facebook for their birthday (one which they could redeem for a variety of goods and services), they were then 56% more likely to also give an online gi through the pla orm. In essence, as more people opted to give their connec ons digital gi s, typically on their birthday, more Facebook users would then return the favour. This highlights gi giving’s progression into the digital space. Not only are more consumers now searching online for their presents, the process of actually sending a gi is happening digitally – with social networks driving this change in behaviour. Of course, social media’s influence goes far beyond just facilita ng gi giving. It has also impacted the way people discover different gi s and experiences. The social media effect is not difficult to discern; with connec ons increasingly sharing their products, gadgets and fun ac vi es on pla orms like Instagram, Snapchat and Twi er, users are constantly exposed to new ideas while scrolling through their social media feeds.

The rise of the experiential gift As we’ve seen, technology has had a direct impact on the process of giving gi . But it has also opened up the doors to a new trend; namely, the experien al gi . While vouchers and gi cards have been around for a long me, they have only recently risen in popularity as a consequence of new apps and online marketplaces. Today, pla orms like Groupon and Treatwell are a first port of call for people who are keen to gi their loved ones with an experience that they think they’d enjoy, or one that they want

to share with them. As opposed to tradi onal material gi s, experien al gi s can range from everything from a 3-course tas ng menu at a Michelin-starred restaurant, to a cket for a music fes val.

about leveraging technology to find an answer. That’s why we created an app that enables people to come together and pool their funds in order to buy someone their dream gi .

During the 2018 festive season alone, the UK spent approximately £1.6 billion on experience gi s. The reason for this is clear: it’s now easier than ever before to find and purchase gi s, so people naturally seek out more unusual and quirky experiences that will inspire posi ve memories. Indeed, according to recent research by Barclaycard, half of its consumers (52%) would rather pay for a good experience than splash out on material possessions such as clothes and shoes.

What are the long-term implications?

There is an argument to be made that experien al gi s are more costly than their physical counterparts. At WhatWeWant, we realised that many people would rather have one special present (o en an experience) rather than smaller material items, so we set

With more and more people having access to the experience economy, what are the long-term implica ons of this trend? For one, it dras cally cuts down on unwanted gi s; those that are never used or immediately returned. The amount of money spent on unwanted presents does not bear thinking about – according to a recent survey, more than half of Brits receive at least one unwanted gi each Christmas. This suggest that we ought to think more carefully about the long-term value associated with presents, with experien al gi s neatly filling that gap. In addi on to oﬀering long-lasting memories and social experiences,

this form of gi allows people to try something new. In addi on to cu ng down wasteful spending on unwanted gi s, the rise of the experien al gi also removes the hassle of returning said items. Going back to the shop in which an item was originally bought to arrange an exchange, or if possible, a refund, is a chore that people begrudgingly put on their to-do list. Despite o en being a good sen ment, ge ng an unwanted gi represents an inconvenience on many levels. Experience gi s, meanwhile, can be tailored to the individual interests of the recipient and are thus more likely to bring las ng enjoyment. The world of gi giving is certainly changing, but these changes are bringing with them convenience and value. In the future, we can expect to become even further entrenched in the digital landscape, with new apps and tech solu ons coming onto the market to make the process of ge ng the perfect gi even simpler.

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3 Elements Of VR Development Every VR Studio Has To Master

Client’s Requirements Another task to be dealt with before launching development of a VR project is to fully understand the client’s requirements. In our case, the client wanted the submersible to explore eight loca ons among which were two ships, two submarines, and six natural deepwater objects. The challenge we had to face was that the museum asked for maximum authenticity, while the VR developer should always consider the comfort of users. That is why we made some simplifica ons: reduced the dive-in me (from the authen c 2-3 hours to 30 seconds) and chose not to reproduce the control panel in detail. As a result, the en re mission takes around 5 minutes. During this me, the player can read or listen to the mission brief, find the object of study, move up to it, examine it and take a photo.

User Context

development is not an easy process — any developer will assure you of it. It involves a number of steps that happen between communica ng with a client and delivering end results. However, this process can be op mized to bring more value to your client using less developer me. In this ar cle we want to share with you the three very important elements to pay a en on to when working on a VR project. Considering them in your project development will allow you to op mize the process for your team. We at iVariant have discovered these elements during the development process for one of the first VR projects for a client of ours, and since then paying a en on to them has helped us work more eﬃciently as a team. We now hope that our insights could help other developers op mize their work. For the purpose of demonstra ng you how to work with these elements, we will refer to the project we made for the World Ocean Museum in Kaliningrad, Russia. As part of the case, our task was 108 europeanbusinessmagazine.com

to recreate a submersible in VR for the museum exhibi on.

Expert Opinions In order to represent real loca ons, processes and ac ons in VR, each team of developers has to work closely with industry experts. Somemes you have to find them by yourself, but more o en it’s the clients who connect you with the people you need. It is crucial to devote enough me to communica ng with experts, as they are your go-to resource for building the project. For example, in our case the submersible was closed for public and even developers were not allowed to see the object we had to recreate in VR. Therefore, in order to develop the project, we had to examine various sunk objects, blueprints, and archival photos of the submersible we had to recreate as well as interview museum workers and deep-sea divers. Thanks to their memories and exper se, we managed to recreate in VR not only the submersible itself, but other deep-sea objects also.

Last but not least, it is important to consider user context when developing a VR-project. We were working with a museum, and this environment imposed certain restric ons on our work: 1. Audience. There are children among the visitors of the museum, therefore the VR-simula on should not be scary. 2. Time to complete. Interactive exhibits are always the most popular, therefore, the game should be limited in me so that more visitors can par cipate. 3. Role. It is important for the VR-project to fit its complementary role in the exhibi on rather than take the center of a en on. Overall, expert opinions, client’s requirements, and user context are the three elements that have helped us op mize the process of VR development. Devo ng enough a en on to these aspects of development will allow your team to work more eﬃciently while providing the best result to your clients. h ps://www.youtube.com/ watch?v=WLEhl_e9gmI

Museum of the World Ocean

Screenshot from the project developed by iVariant

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Leaving Fines and Scandals Behind - But Is Deutsche Bank Ready to Rise from the Ashes Once Again?

urope’s biggest investment bank, Deutsche Bank, will be celebrating its 150th birthday next year. However, as it stands today, the mood is far from fes ve. Just a few months ago, in July 2019, Deutsche Bank announced that it will be pursuing a vast restructuring plan, which includes shu ng down its global equi es trading business. This news was shortly followed by repor ng their biggest quarterly loss in four years – a loss of $3.5 billion, in the second quarter of 2019. Deutsche Bank’s restructuring transforma on includes laying-off 18,000 employees – roughly 20% of the bank’s global workforce – over the next three years, taking the number of full- me staff down to 74,000. The first wave of redundancies was in London and New York, then moving over to Hong Kong and Singapore. Shortly a er the first round of redundancies, Deutsche Bank’s investment banking chief Garth Richie announced that he is resigning from his posi on, followed by two other board members: chief regulatory officer Sylvie Matherath and the head of retail banking, Frank Strauss. It is es mated that the whole restructuring program will cost the bank about $8.3 billion. Deutsche Bank’s CEO Christian Sewing commented on the upcoming radical transforma on, saying that, “Today we have announced the most fundamental transformaon of Deutsche Bank in decades. We are tackling what is necessary to unleash our true poten al: our business model, costs, capital and the management team. We are building on our strengths. This is a restart for

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Deutsche Bank – for the long-term benefit of our clients, employees, investors and society. We are determined to generate long-term, sustainable returns for shareholders and restore the reputa on of Deutsche Bank.” And determined he is. Seconds a er announcing the first lay-offs, Deutsche Bank’s share price fell by more than 5% in early trading, a er which Sewing added almost $25,000 of his own money into the bank’s stock in an a empt to shore up investor confidence and keep things in balance. Although Deutsche Bank’s restructuring announcement seemed to many as having come out of the blue, it in fact followed a decade of reckless management, numerous scandals and unprofitable numbers. Financial journalist Geoffrey Smith noted that, “Deutsche has paid out more in bonuses than in dividends over the last twenty years, and its shares have hit a series of record lows since 2016 as it has spent billions on se lements for everything from misselling mortgage bonds and manipula ng interest rates to laundering Russian money.” What’s more, Deutsche Bank has failed three of the Federal Reserve’s stress tests in five years, and although it finally passed the Central Bank’s test in 2019, the bank con nued to face restric ons from the US regulators over its compliance failures. If you’re wondering how the largest bank in Europe got into such a difficult situa on, most observers point to the Libor scandal back in 2015 – for which the bank was fined $2.5 billion – saying that this was the beginning of the end.

The scandal involved a handful of Deutsche Bank employees – traders, managing directors and a vice-president from across Europe, North America and Asia – who were charged with rigging the London Interbank Oﬀered Rate (Libor). It turned out that for almost 11 years the Deutsche Bank employees had been ar ficially inflating the Libor rate to boost the value of their trading books. Two weeks a er the Libor scandal, Deutsche Bank was then fined again – this me for doing business with countries such as Iran, Libya, Syria and Sudan, which were under the US sanc ons between 1999 and 2006. For using “non-transparent methods and prac ces”, Deutsche Bank had to pay a fine of $257 million.

And there was more. In 2016 Deutsche Bank found itself in trouble once again, now facing a $14 billion penalty for misselling mortgage securi es in the US. However, it was able to se le with the US Department of Jus ce, and the final fine was a reduced $7.2 billion. Then in 2017, UK and US regulators fined Deutsche Bank $630 million for being involved in the “Russian Laundromat” case, where the bank failed to prevent $20 billion of Russian money-laundering via “mirror trades”. Russian criminals with links to the Kremlin and the KGB used the scheme between 2010 and 2014 to move money into the Western financial system. Inves gators claimed that the

total amount of involved cash could have been as much as $80 billion. Although Deutsche Bank was unaware of this money-laundering scheme, it admi ed that the scandal has hurt its “global brand” and caused “client a rion”, loss of investor confidence and a decline in its market value. And then just last year, New York financial regulators added one more fine to the long and expensive list: $250 million for “lax oversight” in the bank’s foreign exchange business between 2007 and 2013. In March 2019, searching for possible ways to recover from the financial crisis, Deutsche Bank a empted to organise a merger with Commerzbank. The idea was much championed by Germany’s Finance Ministry, who

hoped to forge one strong ins tu on out of two struggling lenders. However, a er six weeks of intense negoa ons, both banks decided not to pursue this op on as, according to Deutsche Bank, “a combina on with Commerzbank would not have created sufficient benefits to offset the addi onal execu on risks, restructuring costs and capital requirements associated with such a large-scale integra on,” adding that the bank will “con nue to review all alterna ves to improve long-term profitability and shareholder returns.” CEO Chris an Sewing noted that, “We tried to compete in nearly every corner of the banking market at the same me. We simply spread ourselves to thin.” And so he came up with a new strategy for Deutsche Bank. According to Forbes, Deutsche Bank will have a new corporate division and will become primarily a corporate bank, serving German and European businesses. What remains of the investment bank will be refocused on serving the needs of corpora ons. It has also le behind its life-long ambi on of compe ng successfully against such US investment banking giants as Goldman Sachs and Morgan Stanley. A er announcing the new strategy, Deutsche Bank’s stock price rose slightly and its cost of credit insurance fell. However, Neil Wilson, the chief market analyst for Markets. com, commented on the restructuring, saying that, “We’ve noted various efforts at shaking up Deutsche Bank have been too li le, too late. Now it’s the right medicine, it just should have been taken a few years ago.” Paul Achleitner, chairman of Deutsche Bank’s supervisory board, seems to disagree: “Deutsche Bank has been through a difficult period over the past decade, but with this new strategy in place, we now have every reason to look forward with confidence and op mism.” Chris an Sewing also believes that Deutsche Bank is finally on the right track, sta ng that “By and large our strategy is no longer being called into ques on, either by our investors or by the media or – most importantly – by our clients.” europeanbusinessmagazine.com 111

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