Global Banking & Finance Review Issue 14 - 2018 Banking Awards - Business & Finance Magazine by Global Banking & Finance Review®

Issue 14

Investing in Indonesia with Sucorinvest Asset Management Mr. Jemmy Paul Wawointana, CEO PT Sucorinvest Asset Management

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Award-winning, year after year

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Desjardins Private Wealth Management named Best Private Wealth Management Company in Canada in 2018 Winning this award for a third year straight is a nod to the top-quality service our professionals provide. www.desjardinsprivatemanagement.com

Desjardins Wealth Management Private Wealth Management is a trade name used by Desjardins Investment Management Inc. and Desjardins Trust Inc. Discretionary portfolio management services are provided by Desjardins Investment Management Inc., registered as a portfolio manager and as an investment fund manager. Trust services are provided by Desjardins Trust Inc., federal trust and financial planning firm.

Best Takaful Company UAE 2018

Global Banking & Finance Awards

Celebrating 10 Years of Excellence Noor Takaful is at the forefront of the Takaful sector in the Middle East. Our brand is built around innovative Islamic insurance products, backed by agile technology and ﬁnancially strong ‘A’ rated retakaful partners.

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Chairman and CEO Varun Sash Editor Wanda Rich email: wrich@gbafmag.com

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Editorial Coordinator Vish Nair Web Development and Maintenance Anand Giri Head of Distribution & Production Robert Mathew Head of Operations Sreejith Nair Project Managers Megan Sash, Amanda Walker Video Production and Journalist Phil Fothergill Graphic Designer Jessica Weisman-Pitts Client & Accounts Manager Chanel Roberts Business Consultants Rick Saikia, Monika Umakanth, Stefy Abraham, Business Analysts Samuel Joseph, Dave D’Costa Accounts Joy Cantlon, Quynh Quan Advertising Phone: +44 (0) 208 144 3511 marketing@gbafmag.com GBAF Publications, LTD Alpha House 100 Borough High Street London, SE1 1LB United Kingdom Global Banking & Finance Review is the trading name of GBAF Publications LTD Company Registration Number: 7403411 VAT Number: GB 112 5966 21 ISSN 2396-717X. Printed in the UK by The Magazine Printing Company

I am pleased to present to you Issue 14 of Global Banking & Finance Review. For those of you that are reading us for the first time, welcome.

Featured on the front cover is Mr. Jemmy Paul Wawointana, CEO of PT Sucorinvest Asset Management who spoke with us about how the company helps investors achieve their financial goals, the company’s success and their plans for the future. In this edition, we are pleased to present the Global Banking & Finance Award® 2018 Award Winners. The awards were created to recognize companies of all sizes that are prominent in particular areas of expertise and excellence within the financial community. Global Banking & Finance Review would like to congratulate the award winners and look forward to their continued success. You requested more of the exclusive, in-depth interviews we are known for and in this edition we deliver. Inside you will find engaging interviews with several leaders from the financial community and insightful commentary from industry experts. We strive to capture the breaking news about the world's economy, financial events, and banking game changers from prominent leaders in the industry and public viewpoints with an intention to provide you with the tools and information you need to build your financial empire. We have gone that extra mile to ensure we give you the best from the world of finance. I look forward to receiving your thoughts on how we can continue to improve and what you’d like to see in the future. Enjoy!

The information contained in this publication has been obtained from sources the publishers believe to be correct. The publisher wishes to stress that the information contained herein may be subject to varying international, federal, state and/or local laws or regulations. The purchaser or reader of this publication assumes all responsibility for the use of these materials and information. However, the publisher assumes no responsibility for errors, omissions, or contrary interpretations of the subject matter contained herein no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the publisher

Wanda Rich Editor

Stay caught up on the latest news and trends taking place by signing up for our free email newsletter, reading us online at http://www.globalbankingandfinance.com/ and subscribe to the print magazine for direct delivery.

Issue 14 | 5

CONTENTS

inside... BANKING Strategic workforce planning in Investment Banks: what employers need to know

Nicola Hancock, Client Services Director of Investment Banking, Alexander Mann Solutions

An integrated approach for cross-border stress testing compliance Ajay Katara, Domain Consultant with the Risk Manoj Reddy, Head of BFS Risk & Compliance Practice, TCS North America

BUSINESS

Ethical AI: a vital investment for businesses

Martin Benson, Head of AI Consulting, Jaywing

134

Derivative actions in the name of Bermudian companies: when is judicial leave required? Stuart Jessup, Senior Associate, APPLEBY

ENERGY

Winds of change - the case for renewable energy in Turkey Levent Lezgin Kılınç Founding Partner, Kılınç Law & Consulting

FINANCE

A Global Powerhouse Sprints to Record Performance

Amlak Finance PJSC The U.A.E.’s leading Sharia compliant Real Estate Financier

112

Vision to Reality: Creating a Universal Digital ID for UK Financial Services Consumers

Jiri Smejc, Executive Chairman, Home Credit

Brian Smith, Senior Director of Product and Innovation at DST Systems now part , SS&C Technologies

131 TECHNOLOGY

Financial Organizations Are in Denial About SSH Keys

A new era of holistic working capital management Raphael Barisaac, Global Co-Head of Trade Finance and Working Capital Management, UniCredit

Markku Rossi, CTO, SSH.COM

Financial technology trends for 2019

Five FinTech predictions for 2019

Cliff Moyce, Chairman of Advisory Board, DataArt

Martijn Hohmann, CEO, Five Degrees

TRADING

106

How the Next Generation are Shaping the Future of Trading

Shira Rottner, Business Development Manager, Shield FC

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CONTENTS

INVESTING IN MEXICOINCENTIVISING A CULTURE OF SAVINGS Luis Guillermo Ortiz, Global Distribution & Business Development Head, Sura Investment Management discusses the investment landscape in Mexico and how Sura Investment Management is leading efforts to incentivise a culture of savings and assist clients in achieving their financial goals.

14 SPOTLIGHT ON TRADE CREDIT INSURANCE IN ASIA PACIFIC Holger Schaefer, Regional CEO of Asia Pacific Euler Hermes

38 SUPPORTING TRADE FINANCE IN VIETNAM Mr. Nguyen Hoang Hai, Deputy Director of Corporate Banking, PVcomBank

44 Issue 14 | 7

CONTENTS

inside... CREATING FINANCIAL ACCESS AND OPPORTUNITY Mr. Winyou Chaiyawan, Chief Executive Officer, The Thai Credit Retail Bank Public Company Limited

50 TRANSFORMING BANKING IN VIETNAM Global Banking & Finance Review discuss with Asia Commercial Bank (ACB) the way the bank is leading transformation Vietnam banking sector.

FROM VISION TO CREATIONBUILDING A SUSTAINABLE CITY Ahmed Linjawy , CEO, Emaar, the Economic City

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We interviewed Ahmed Linjawy the CEO of Emaar, the Economic City to discuss the vision, creation and challenges that come with developing a sustainable city and look at the opportunities and expectations for the future.

CONTENTS

CELEBRATING 10 YEARS OF EXCELLENCE Mr. Phil Ashkuri, Chief Distribution Officer Noor Takaful

86 SOLUTIONS FOR A BRIGHTER FINANCIAL FUTURE

Joรฃo Bugalho, CEO, Whitestar Asset Solutions S.A.

102

DELIVERING BANKING ON DEMAND IN ANGOLA Mr. Sanjay Bhasin, CEO, Banco Econรณmico

Issue 14 | 9

CONTENTS

inside... TECHNOLOGY INNOVATION MAKING INVESTING EASY Simona Vaitkune, Founder and CEO, Fast Invest

108

INNOVATIVE BANKING IN THE DRC Mustafa RAWJI, Chairman of the Board of Directors, Deputy General Director, RAWBANK S.A.

116 70 YEARS OF BANKING INNOVATION AND LEADERSHIP IN MACEDONIA PhD Vladimir Eftimoski, Chairman of the Management Board, Stopanska banka a.d. Bitola

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CONTENTS

SOLUTIONS DESIGNED FOR SUCCESS

126

George Matharu, MBA. President and CEO, Elite Capital & Co. Limited

INVESTING IN INDONESIA WITH SUCORINVEST ASSET

Cover Story Issue 14 | 11

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Americas 14 Issue 14

AMERICAS INTERVIEW

Investing in MexicoIncentivising a Culture of Savings

Luis Guillermo Ortiz, Global Distribution & Business Development Head, Sura Investment Management discusses the investment landscape in Mexico and how Sura Investment Management is leading efforts to incentivise a culture of savings and assist clients in achieving their financial goals.

In your opinion, what are the biggest challenges and opportunities you see facing the investment industry Mexico? One of the biggest challenges regarding the investment industry in Mexico, is to incentivise the culture of saving. Mexico has less than 30% of its population incorporated in the Banking system, which limits the benefits of many families to increase their wealth or get access to financial products. Moreover, as many EM countries, the pensions system should be monitored as Mexico is close to seeing its first-generation retirement under the defined contribution scheme. Going forward, opportunities will

be on exploiting the current regulation to bring more diversification benefits to the industry. Efforts should be made to offer broader products to target more sophisticated clients.

How are the markets responding to the current political and economic situation?Â Regarding the current political and economic situation in Mexico, it is important to differentiate between both aspects. In the economic front, the current figures in Mexico signal a stable macroeconomic situation. The GDP growth has been stable during the last years with an average growth rate of 2.10% during the last decade. In terms of inflation, even when the last two years the CPI run above the Central Bank target, the five-year average has been 4%, and without the 2017 lecture, it would had been 3.5%. In terms of fiscal budget, the deficit in 2017 accounted for 1.1% of GDP, the lowest of the most relevant countries in Latin America and well below the 2.5% deficit lecture of 2016.

Issue 14 | 15

AMERICAS INTERVIEW

Furthermore, the current account deficit in Mexico has been well managed with a 1.9% deficit in 2017. Moreover, the Central Bank has maintained the financial stability and regulated the monetary policy as needed. Therefore, up to the announcement of the cancelation of the Mexican Airport, markets had reacted accordingly with a stable macroeconomic environment. Regarding the current political situation, the new Government made announcements that hit the investorâ&#x20AC;&#x2122;s confidence. The cancelation of the Mexican Airport along with proposals targeting the Banksâ&#x20AC;&#x2122; fees, cause the Mexican assets to suffer amid a less promarket rhetoric from members of the new Government. However, it is important to mention that none of these proposal, except for the cancelation of the Mexican Airport, has been implemented. In summary, markets are expectant on the fiscal budget that would be announced during December to finally assess the fiscal situation and the priorities of AMLOâ&#x20AC;&#x2122;s government for 2019.

How does Sura Asset Management Mexico help clients achieve the best returns? The aim of Sura Investment Management business is to apply our Latin American expertise skills in serving the needs of our clients and in delivering value. The

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objective with our customer is involved in investing and managing portfolios of mutual funds and other securities complying best practices, experience and knowledge. Add value to our investors not only implies to have a complete and competitive product offer, but also to deliver as an integral solution during their life cycle. Additionally, one of our goals is to continue diversification by capabilities to meet the needs of our investors.

Can you tell us about some of the innovative products and solutions you offer to help individuals and institutional investors achieve their investment objectives? SURA Investment management is concentrated fully in asset management, building up services to wealth managers, institutions; corporations, insurance reserves, pension plans and, working on deliver a competitive value to AFPs and family offices. SURA Investment management has capabilities on i) public markets: multi assets, equity, fixed income, targeted returns, fund of funds and, ii) private markets (alternatives): infrastructure and real estate.

AMERICAS INTERVIEW

According to investor needs, SURA Investment management could support through broad product offer and the advisory of our team. One of the objectives is to continue diversification by product, by client type and by geography.

How does Sura Asset Management support the social economic development of Mexico? SURA Investment management belongs to Grupo SURA, the only Latin American Company out of the total 13 global companies from the diversified financial services sector and capital markets to be admitted to the Dow Jones Sustainability Index. This index is made up by companies throughout the world that uphold the highest standards in business sustainability. Thanks to the responsible way it handles its business from the economic, social and environment standpoints

What are your plans for the year ahead? As previously mention, the recent less promarket speech from the new Government has not been implemented and it has been even discarded by some members of Morena (ruling party). Moreover, the budget for 2019 has not been released and therefore, at SURA Investment Management Mexico we are still waiting for data to assess how many proposals would be implemented and what would be the costs and efficiencies from these projects. As of our investment strategies, we currently prefer a conservative stance given the recent rhetoric that can potentially increase the country risk, but on the other hand, we cannot be indifferent from the overshoot in the financial markets that had triggered attractive valuation under the current financial and macroeconomic environment.

Luis Guillermo Ortiz Global Distribution & Business Development Head Sura Investment

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AMERICAS BANKING

Strategic Workforce planning in Investment Banks: What Employers need to know We’ve all heard of the so-called ‘warfor-talent’ within the US Investment Banking and Financial services field. In fact, it’s no secret that there’s an ever-increasing demand for specific and niche skills, but short supply of the requisite talent. In particular, the ability to attract technology experts into investment banking is arguably presenting the greatest challenge for many employers. Whilst Deutsche Bank chief executive John Cryan's famous idea of replacing as many as half of his 98,000 staff with robots has not yet come into fruition, the proliferation of Artificial Intelligence (AI) on trading floors is impacting the skills that firms need to stay competitive. And with technology acting as the enabler behind almost everything an investment bank does, having the right Tech talent on board to support the management of existing systems and integration of new ones is now more crucial than it has ever been. The challenge for employers, however, lies in competing for these professionals with Tech giants such as Google and Facebook – which, on the surface, may seem to have more appealing employer value propositions for this talent pool.

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On top of this, hirers in the investment banking arena are facing a further battle that can often go undiscussed: the sheer extent of irrelevant CVs that need to be sifted through in order to seek out the perfect candidate. In general, many banks are likely to hire between 1% to 5% of the applications that they receive – that’s a vast number of individuals that need to be deselected. With so many organizations preferring the human approach and relying on people to complete this time-consuming task, the impact on resources and costs can be significant. This, of course, can also present a significant challenge in terms of providing a positive candidate experience to all involved in the hiring process, even those unsuccessful applicants. In this volatile and ambiguous landscape, implementing the right strategy to secure and retain the talent they need to thrive is crucial for investment banks. But how? Make the most of Tech Technological evolution is increasingly becoming a crucial component in every role, across all sectors and geographies, and talent sourcing in Investment Banking is no different. With resourcing teams facing a barrage of applications, the integration of AI

and robotics to manage much of the administrative process can streamline hiring for the benefit of the candidate and hirer alike. Crucially, this can free up time for better interaction between the employer and the selected applicants, enabling hiring teams to build a greater rapport with potential talent. The ability to speed up the entire process will also be hugely valuable to improving the candidate experience, allowing feedback to be shared with unsuccessful applicants in a timely manner. Of course, in many cases it’s not easy to get this technology through the information security processes at banks, so whilst there is certainly an appetite for this, it will be those who can navigate it best that will reap the greatest rewards. Strategic talent pools Critically, firms need to be tapping into data and market insights to identify where the talent they need both now – and in the near future – can be found. Time spent on developing a strong, targeted proposition, which is proactively focused on where talent is and has a clear ongoing engagement strategy, will help organizations get ahead, rather than relying on responses to live roles. This will also impact how banks look at their

AMERICAS BANKING

location strategy, especially in a context of reducing operating costs and increasing efficiency. In the US specifically, New York still remains the largest hub of financial services talent, but it has begun to stagnate, with Dallas, Houston, Phoenix, Jacksonville and Denver some of the fastest growing hubs of today. Really analyse your employer brand When it comes to attracting Tech talent into the industry, too few firms are integrating their digital credentials into the wider employer value proposition in order to really compete with the major Tech giants. Too often organizations assume Tech talent will come to them because of their brand as a big global bank. Tier 1 investment banks can perhaps be forgiven for believing that their well-known brand will resonate with Tech talent – but the simple fact is, it won’t. That’s not to say that these firms should seek to directly compete with the likes of Google – what we need to see across investment banking is a greater emphasis on the opportunities for Tech talent. There’s more room for digital innovation than many potential employees are perhaps aware. Communicating this is the first step in generating a strong employer brand that appeals to this talent pool.

Utilise training and development It’s vital that all of the above effort doesn’t end once a candidate is hired. Given the scarcity of Tech talent available to Investment Banks, competition will be rife and there’s the risk of potentially losing high performing professionals quickly. It’s here that training and development plays a pivotal role, with the likes of Toronto-Dominion Bank leading the way in innovative thinking in this field. The leading North American bank has introduced a process to facilitate quick promotions of junior employees in order to beat the competition for top emerging talent. According to the firm’s Vice Chair and Head of Corporate and Investment Banking, Robbie Pryde, “to continue to attract and retain exceptional new colleagues, we need to demonstrate leadership among our peers and commitment to the development of our people. We must also ensure that talent development D is top of mind as an employer of choice among graduates.” There’s no doubt that strategic workforce planning is becoming increasingly complex in the US

Investment Banking arena. Employers are now facing a battlefield that has moved markedly from the landscape of ten years ago – and this will only continue to evolve. The need to adapt talent attraction and engagement strategies quickly is now more important than it has ever been, and it will be those organizations able to swiftly innovate that will get ahead in the war for talent. Are you prepared?

Nicola Hancock Client Services Director of Investment Banking Alexander Mann Solutions

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AMERICAS BANKING

An integrated approach for cross-border stress testing compliance The aftermath of the 2008 financial crisis saw regulators across the globe coming up with stress testing guidelines for their respective regions. In the US, the stress testing program which is managed by the US Federal reserve initially started in 2009 as SCAP (Supervisory Capital Assessment Program) and has matured into CCAR (Comprehensive Capital Analysis and Review) expanding coverage to 38 US Banks including 5 Foreign Banks with large US operations. In the European region the stress testing guidelines are managed by the EBA (European Banking Association) and impacts close to 100+ Banks, while in the UK the stress testing guidelines come under the purview of PRA (Prudential Regulatory Authority) impacting close to 7 large UK banks. The complexity of the stress testing program varies across regions for different regulators in terms of data requirements, modeling methodologies, regulatory scenarios, and

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granularity of submissions. However, aspects like Application Architecture, Governance, Model Management, Reporting and Data Management provide a great opportunity for global banks to leverage on the commonalities, which can make stress-testing compliance more efficient and work in an integrated manner across the different regions. Furthermore, an integrated approach also helps global banks to reduce overall infrastructure costs and enable them to create a robust and a scalable stress-testing framework with better controls, quality and eventually enabling them to achieve better returns on their investments. Depicted in the chart below are the key components typical stress testing programs globally involve and components that can be potentially explored by global banks for achieving an Integrated Stress Testing approach.

AMERICAS BANKING

•

Data Governance & Management – Granularity of data submissions may vary across stress testing regimes in different jurisdictions but aspects around data governance and data management are also reviewed in these submissions in varying degrees. Regulators usually insist on establishing data governance policies, adequate controls around data movement, ensuring data quality, data dictionaries, establishing data lineage and maintaining the business and technical metadata. Most global banks invest in multiple 3rd party tools which can effectively be crossleveraged at an enterprise level to ensure standardization of processes along with the necessary quality and integrity of the data. This can also help banks move towards a target state of risk and finance alignment at a faster pace.

•

Model and Scenario Management – Regulators provide the stress testing scenarios to the participating banks in their region based on the factors relevant for the region. Maintaining scenario libraries at an enterprise level can also help global banks to extend, leverage and enhance their existing idiosyncratic scenarios for specific regions. Model management platforms and technology can also be cross-leveraged for stress testing requirements. Areas such as model lifecycle management, model hosting, and model documentation management are good candidates which can be maintained at an enterprise level. Many global banks are also exploring an idea of standard unified data model view specifically to cater to modeling requirements across regions.

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AMERICAS BANKING

•

Stress Testing Regulatory Submissions – In the US, CCAR requires participating banks to submit close to 90+ reports, EU regime has close to 36+ reports and the UK regime requires close to 16+ reports from participating banks at varying frequencies. The reporting involved is very granular and many global banks usually rely on third-party solutions to manage the reporting expectations. Enterprise-wide reporting solutions can help the bank to not only leverage the solutions for cross-border stress testing reporting requirements but can also look at moving other regulatory reporting requirements like Basel, liquidity risk management etc. which will also provide more cost efficiencies on the reporting front.

As the stress testing mandates across regions have more or less stabilized, Global Banks are looking at more and more opportunities to simplify, centralize and automate most of the processes involved in stress testing area to gain better efficiencies and controls. An integrated approach or framework could enable global banks to bring in greater efficiency in terms of cost and time to market but also bring in greater depth and consistency in their risk management and capital planning processes

Other components of Cross-Border Leverage •

•

Forecasted Variables - Banks use a number of variables in their stress testing process and the regulators specific to each geography only publish the forecasted value of select variables leaving the banks to forecast the remaining variables by themselves. Banks can cross leverage some of the variables across geographies. For e.g.: Stress Forecast of US GDP rates are published by Fed and if there are a few models which consider US GDP rate in their propriety models in their stress testing regime, then they can use the US stress testing forecasted variables without having to forecast it by themselves. Controls - Stress testing programs across various geographies are at different levels of maturity and currently many regulators are focusing more on only the quantitative aspects as against the qualitative aspects as well as barring the US geography. Banks can leverage the business, technology and data controls established across the stress testing programs as part of their qualitative assessment process in one geography over to the other Regulatory regimes.

Ajay Katara

Manoj Reddy Manoj Reddy is the Head of BFS Risk & Compliance Practice for TCS North America with an experience of more than 15 years in the areas of financial services, IT, and business consulting. Reddy has lead several risk consulting and implementation engagements for financial firms globally. He has provided both Regulatory and Strategic Business solution to his customers over the last decade primarily in the area of CCAR, Basel, Liquidity Risk, and Enterprise Risk management and is currently leading TCS efforts in North America with respect to providing cognitive solutions for Risk & Regulatory problems.

Ajay Katara is a Domain Consultant with the Risk Management practice of the Banking and Financial Services (BFS) business unit at Tata Consultancy Services (TCS). He currently leads the BFS Risk Practice’s portfolio on Regulations and Robotics Process Automation. He has extensive experience of more than 13 years in Consulting & Solution design space cutting across CCAR Consulting, AML, Basel II implementation, and credit risk, and has worked with several financial enterprises across geographies. He has significantly contributed to the conceptualization of strategic offerings in the risk management space and has been instrumental in successfully driving various consulting engagements. He has also authored many editorials, details of which can be found in his linked in profile (https://www.linkedin.com/in/ajaykatara/)

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AMERICAS TECHNOLOGY

Financial Organizations Are in Denial About SSH Keys With the rise in system complexity and scale caused by digital transformation, a large financial institution can have as many as two million Secure Shell (SSH) keys in its network. These keys grant employees’ remote access to servers that house critical systems and data and create connections between machines for automated transactions. In a typical Fortune 500 finance company, most of these SSH keys are unmanaged at best, or major security vulnerabilities waiting to be exploited by hackers or insiders at worst. In short, financial organizations are in denial about their SSH keys.

risk facing the financial services industry regarding securing remote access to sensitive data in a highly regulated environment. As financial institutions continue to digitally transform, the number of people, devices and machines connecting to the company network is growing exponentially. They must ensure their identity and access management plans do not neglect governance and management controls for their legacy SSH key environment or future M2M and human connections secured via SSH keys. Keys in the Wrong Hands

A study conducted at a large bank with more than a million keys found that at least 10 percent of these keys allowed for unlimited administrative (“root”) access to production servers. This was a clear violation of the company’s internal security policies and a PCI-DSS audit failure point. It is just one example of the

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Some financial organizations do have their SSH key environments under management, but those that don’t are typically in denial about the risk. In a sense, this is natural. Enterprise security teams have traditionally been focused on building the perimeter. While systems

administrators and those responsible for internal access provisioning are aware that there might be tens of thousands of root access keys lost, orphaned or neglected on the company’s networks, the problem is not visible at the C-suite or board level. Of course, breaches associated with Equifax, Lennon Ray Brown (Citibank), Edward Snowden and others highlight the importance of key management. Unmanaged SSH keys are a bonanza for hackers, a gift for disgruntled insiders and an unhappy accident waiting to happen. Rogue SSH keys are often used as a secondary attack vector. A hacker might enter a network via a phishing scam, social engineering, malware or botnet. But once inside, when they find an unmanaged SSH key, they can move laterally within the network, access servers without detection and create headlines.

AMERICAS TECHNOLOGY

The Risk Behind the Scenes The reality is that sysadmins, database admins (DBAs), maintenance techs and application developers create keys on the fly, keep a few keys listed on a spreadsheet, neglect keys passed to subcontractors and configure keys just enough to get the job done. This is neither compliant nor safe. Failure to address the issue preserves unacceptable large-scale risk exposure, as revealed in scans of SSH key environment. For instance, a medium-sized international bank with significant digital assets might have 10,000 servers under management.

•

• •

To begin the conversation and learn about the risk from unmanaged SSH keys in your organization, here are some key questions to start with: •

• •

With 10,000 Unix/Linux hosts, the bank might have 1.5 million keys in circulation granting various levels of access and more than 75,000 keys owned by each system admin or DBA. There can be up to one billion authentications per year granting privileged access to critical systems and data. SSH key environment scans typically find that up to 90 percent of keys in circulation are obsolete and should be immediately removed, as they were created for exemployees, former subcontractors or redundant processes. Compliance Concerns Regulatory bodies won’t be easing up any time soon – instead, they are issuing seven-figure fines, jail time and reputationdamaging publicity. For instance, potential fines and jail time await SOXi violators, and PCIii violations pack their own punch. In addition to stiff fines, PCI can take away payment processing privileges. This happened to a national chain, rendering the chain incapable of processing card transactions for several weeks.

•

Visibility into SSH key-based trust relationships and monitoring capabilities

Where in our organization, including for subcontractors, consultants and remote machines, do we use SSH keys? Do we track and monitor the creation and use of SSH keys? Do our current IT policies cover SSH keys? Are our current practices with SSH keys policy-compliant and regulations-compliant?

Is the risk from SSH key-related incidents involving malicious externals, disgruntled insiders, or accidents involving internals or subcontractors in our risk profile? Do we have a named owner for SSH access or Secure Shell governance?

Considerations3 is the first port of call for those in ops, compliance, risk or C-suite looking to further their knowledge. NIST, the U.S. body responsible for cybersecurity standards and guidelines for federal government agencies provides a mandate for agencies and concrete guidance for enterprises in the NIST 7966 Interagency Report4, co-authored by the inventor of the SSH protocol, Tatu Ylönen. Secure Your Keys To be ready for your next IT audit and protect your company and your customers, review the information above and start the conversation with the specialists in your organization. You will face some denial, but you will learn the scale of the challenge with SSH keys in your company. Then, you can get the assistance of experts to help you prioritize and walk you through the process of discovery, management and automation without compromising your core business.

Best Practices Best practices for SSH key management begin with comprehensively managing SSH keys and their lifecycle with best-ofbreed software. With the right tools, major financial organizations can: • •

• • • •

Financial institutions are exposed to increased compliance and security risk if they do not address the following factors:

Processes for provisioning ownership, remediation, revocation and rotation of keys Policies for SSH key-based access Secure Shell governance and reporting

•

Get vast key environments under management Reduce the administrative work related to manually provisioning and troubleshooting key-based access Minimize their threat surface Become and remain compliant Avoid financial penalties from noncompliance Decrease the risk of business disruption Avoid financial loss from data exfiltration, IP theft and reputation loss

Audit associations, such as ISACA and IIA, offer specific guides on best practices for SSH-related risk mitigation and compliance. ISACA’s SSH: Practitioner

Markku Rossi CTO SSH.COM

Wikipedia, Wikimedia Foundation, 22 Dec. 2018, en.wikipedia. org/wiki/Sarbanes–Oxley_Act.

“Official PCI Security Standards Council Site - Verify PCI Compliance, Download Data Security and Credit Card Security Standards.” PCI Security Standards Council®, www. pcisecuritystandards.org/.

“SSH: Practitioner Considerations .” The Future of COBIT-We Need Your Input - ISACA Now, www.isaca.org/KnowledgeCenter/Research/ResearchDeliverables/Pages/SSHPractitioner-Considerations.aspx.

https://csrc.nist.gov/csrc/media/publications/nistir/7966/ final/documents/nistir_7966_draft.pdf

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AMERICAS TECHNOLOGY

Financial Technology Trends for 2019 Blockchain has no real use cases in financial services and capital markets. All ICO’s are frauds. All cryptocurrencies are operated by eastern European criminals. Artificial Intelligence is hype used to break up the monotony of Brexit on 24-hour news channels. Cloud is expensive and cannot be used for customer data. And so on, and so on. All wrong of course, but there is no shortage of articles of this ilk on the internet; articles that can unfortunately inform the views of the ‘experts’ resident around your water-cooler at work. That is how such myths can become accepted truths that impact negatively on progress in your company. Executive boards need to know the truth. IT doesn’t just belong in the IT department anymore. Technology is the business, and the business is technology. Not just in Silicon Valley but in any bank or exchange that you care to mention. Asset managers are really data and analytics managers. Insurance companies always have been. That is why a technology predictions article such as this must not fall into spurious hyperbole and polemics if it is to be of any use to readers who are responsible for safe governance, effective operations, and revenue growth in financial institutions. What readers need is a report on where real

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technology trends are going right now, so that they can look ahead to new ways to solve problems, realise opportunities, and make customers happy. New technologies allow companies to solve problems; create and deliver new products and services; do processing cheaper, faster and better; and, enhance planning, reporting and control. Based on what we saw in 2018, 2019 will be marked by a strong emphasis on fully digitalising customer-facing services; rapid adoption of Open Banking and Fintech; improved productivity through increased and improved process automation, and use of consumptionbased IT services and ‘ubiquitous infrastructure’ models; and, meeting regulatory demands - and enhancing the whole business - by employing best in class data management methodologies, tools and techniques. Technologies that will be important in achieving these objectives include: •

• •

Artificial Intelligence (machine learning; deep learning; neural networks; pattern recognition; and, natural language processing) Blockchain (for cryptocurrencies, and for distributed ledgers) Ubiquitous Infrastructure (e.g. Cloud, and other consumptionbased IT services

Big Data Individually and combined, these technologies can revolutionise delivery of products and services; processing; data management; reporting; and, planning, decision making and control (compliance). By doing so, they will revolutionise the customer experience as well as the operation and governance of financial institutions. That may sound like the hyperbole that this article promised to avoid, but it is not a statement made lightly. Just one of the technologies (Blockchain) applied to one of the highest frequency processes in the industry (settlements) can remove 99% of effort and cost and eliminate the need for another expensive process (reconciliations). More importantly, it is being done right now so is a real trend not a fanciful prediction. Instances will only grow. These technologies applied correctly and comprehensively will mean significant increases in customer satisfaction, compliance and revenues. Whether this will happen or not for you depends on the degree to which your company engages and invests in new ways of working.

AMERICAS TECHNOLOGY

Automation One technology trend that has been overarching the industry since the 1970â&#x20AC;&#x2122;s is automation. It is hard to believe that everything that can be automated has not yet been automated in financial services. However, we cannot ignore all of the manual actions, decision points and paper documents that remain, let alone the high error rates, need for manual reconciliations, rates of fraud, and unnecessary costs that come with manual working. Even when processes have been automated previously, they are often clunky and disjointed (from other processes) and can now be made slicker by using new approaches and technologies. Increased automation is needed to improve data quality; reporting; compliance; cost control; resilience; security; agility; and, customer satisfaction. It is not optional, as financial institutions simply wonâ&#x20AC;&#x2122;t be able to meet their obligations and satisfy expectations in coming years without it. E.g. GDPR compliance; regulatory reporting; security and data protection. Therefore, the easiest thing to predict for 2019 is increased and better automation. Technologies that will play an increasing role in process automation in future are AI, Blockchain, Big Data, Cloud, and a suite of AI powered data management tools.

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AMERICAS TECHNOLOGY

Artificial Intelligence AI tools and approaches such as Expert Systems and Machine Learning (ML) have been used for many years in the industry. E.g. in fraud and intrusion detection; personal finance; portfolio management; wealth management (‘robo advisory’); algorithmic trading; customer services; message and document parsing, etc. ML is often used for automating repetitive tasks and processes where decision points make automatic software adaptation (‘learning’) an important aid to productivity and quality. To the usecase list above will increasingly be added ‘loan and insurance underwriting’ as these will possibly see the fastest growth of ML use in 2019. By adopting ML, lenders and insurance companies will realise significant improvements in productivity as manual effort reduces, errors diminish, quality improves, and costs are reduced. To ML we can add Deep Learning (DL) where a computer model learns to perform classification tasks directly from text, images, sound etc. This allows unstructured data to be included into analyses. Unstructured data can include news, social media posts; emails; web pages; video files; audio files; and, images. Big Data and ML technologies then allow enormous amounts of unstructured data to be parsed and analysed quickly. As well as increasing the scope and power of models and analytics for planning and decision making, DL also facilitates automation generally; e.g. including images in automotive claims handling and analysing them using DL overcomes one of the main barriers to fully automating the process. From an analysis, decision making, processing and planning perspective the addition of unstructured data into the world of corporate analytics means a huge increase in the power of models. It is hard to over-state the importance of this development. Expect a noticeable upward trend in implementations of Deep Learning in 2019.

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Another aspect of AI, Artificial Neural Networks (ANNs or Neural Nets) are also being used increasingly in the industry. Neural networks can handle the uncertainty that cannot be accommodated by traditional expert systems (which require full information as an input). Handling uncertainty makes neural nets excellent for non-linear, data-driven modelling and prediction purposes in economic scenario analyses; stock market predictions; portfolio assessments and strategies; credit assessments and lending decisions; options pricing; forecasting FX rates; bankruptcy predictions, etc. Unlike traditional expert systems, it is the data that determines the structure of the model, without any restrictive parameter assumptions. This is a huge step-forward in efficiency terms. Unsurprisingly, the current trend is that neural network software usage is increasing at nearly 30% across all industries, with financial services accounting for almost half of all ANN usage currently 1. As well as the rise of ANNs, the growth of AI implementations based on Natural Language Processing and Sentiment Analytics - e.g. chatbots and intelligent assistants - has been huge in 2018 and is set to continue in 2019. They are being used for voice for text dictation; team collaboration; employee calendar management; customer service; and, IT help desk management tasks. Microsoft Cortana, Apple Siri, and Google Assistant are the most popular commercial products based on NLP. Research by Spiceworks 2 found that 40% of large businesses will be using chatbots and intelligent assistants by the end of 2019. Financial services will be a huge user. For all of the reasons given above, increasing AI usage is an easy trend to predict for 2019.

Data Management Depending which research you read, 90% of the world’s data were created in the past one or two years, with only using 1% of those data being used effectively3. Two important data issues in financial services and capital markets are: 1.

reconciling data that do not agree, whether that be for transaction processing (e.g. matching trades) or for reporting purposes.

effectiveness of data use is low. Institutions should be getting more value from the data that they hold.

AMERICAS TECHNOLOGY

At one level, both issues can be addressed by better data management. However, the first issue (data not agreeing) is often caused by the massive data redundancy often seen in financial institutions, with no single â&#x20AC;&#x2DC;Golden Copyâ&#x20AC;&#x2122; of any data being held. The second issue (effectiveness) can be addressed by learning from companies in other domains who are leaders in turning data into stakeholder and shareholder value; e.g. ERP providers; social media companies; and, e-commerce. Using the (often AI powered) technologies, models, and techniques of these companies will allow financial institutions to improve data quality; save costs; achieve compliance; collate business intelligence; and, gain better insights into the behaviours of markets, and customers. AI can help enormously by making the workload easier, e.g. by getting the data to build predictive models themselves.

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SURA Investment Management*

Bringing Latin American expertise to develop custom-made solutions for global institutional customers.

* SURA Investment Management Mexico, S.A. de C.V., Sociedad Operadora de Fondos de Inversión, a subsidiary company of SURA Asset Management Mexico, S.A. de C.V., who was awarded as “Best Asset Management Company - Mexico” on the “Global Banking & Finance Awards 2018”

suraim.com.mx

AMERICAS TECHNOLOGY

Digitalisation, Fintech and Open Banking The demand from customers for digitalisation of financial products and services is huge. When customers can access excellent, customer-centric, omni-channel, app based digital services in many other aspects of their lives (travel, e-commerce, media) it is hard to justify current online banking, insurance and investment offerings. Plus, the majority of products and services in financial services are not yet digitalised at all. It is smart-phone app versions of banking, insurance and investment services that customers will be demanding increasingly, and it is how providers will be judged in future. Ease of use (utility) is everything now that anything can be delivered to your door with a single ‘click’; and, it is utility that disruptive Fintech firms are largely about. Open Banking in the UK and EU (and growing worldwide) with its open-API access to customer accounts for authorised Fintech firms now gives incumbent financial institutions the

opportunity to partner with those firms and thus adopt the level of digitalisation expected by their customers; i.e. integration of multiple financial products and services from different providers into a single, optimised and productised service. For these reasons, digitalisation will be strong trend in 2019. Crypto-currencies While articles continue to appear decrying Blockchain, cryptocurrencies, and crypto-exchanges, 2018 has seen NYSE creating the cryptocurrency trading platform Bakkt in collaboration with Microsoft and Starbucks with physically backed Bitcoin futures contracts; Fidelity announcing that it has been mining Bitcoin it since 2015, and is now offering it to its clients; Steve Wozniak joining an investment focused crypto start-up; Bill & Melinda Gates Foundation using Ripple’s interledger protocol to help with payment services for the poor and unbanked; IBM partnering with Stellar Lumens for cross-border payment

solutions; George Soros - formerly a critic - buying Bitcoin at the $6k low; David Swensen investing some of Yale’s $29.4 billion endowment in two venture funds dedicated to cryptocurrency; Circle (owned by Goldman Sachs) launching a crypto finance company; Square’s Cash app allowing users to buy and sell Bitcoin; Coinbase being valued at $8B; singer, American R&B singer Akon launching his own cryptocurrency to help bring security to the currency system in Africa; Steve Bannon betting on Bitcoin as ‘the future’ and talking about launching his own cryptocurrency; ex-Goldman President Gary Cohn joining a blockchain startup; Venrock (owned by Rockefeller) investing in cryptocurrency; and, more initial coin offerings in the year than in all previous years added together. So, guess what the prediction is for next year? Sharply upwards for cryptocurrencies and digital currency exchanges of course! You cannot resist the tide…

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Your support keeps pushing us to the top.

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

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

AMERICAS TECHNOLOGY

Distributed ledgers

Ubiquitous infrastructure

Conclusions

As well as the growth of Blockchain enabled cryptocurrencies, increased use of Blockchain as an immutable, encrypted, distributed ledger in transaction processing and record keeping is an easy prediction for 2019. The industry spends huge amounts of money on a handful of processes where up to 99% of effort, money and time could be removed by using distributed ledger technology. Those perfect use cases are clearing and settlement; cross border payments (e.g. for international trade finance); smart contracts; KYC; and, loyalty and rewards schemes. Example of opportunities being realised so far include:

Infrastructure availability and cost should no longer be regarded as a barrier to achieving ambitious objectives or providing great service in a cost-effective manner. The reason being that ubiquitous infrastructure / consumptionbased IT services such as Cloud (which itself is associated with Infrastructure-as-a-Service; Platform-as-a-Service; and, Software-as-a-Service) make the latest technologies, methods, and services available to anyone at affordable prices with shorter procurement cycles, increased agility, improved scalability, higher reliability etc. Cloud has allowed companies to move to always available, infinitely scalable, current and secure infrastructures without the huge barriers (including people barriers) that came with on-premises / data-centred models. According to IDC, almost half of all IT spending in the industry will be Cloud based next year. By the following year, it will be over 60%. All aspects of ubiquitous infrastructure will continue to throw strongly in 2019, but it is the practical, flexible models of Hybrid Cloud, Multi-Cloud and Connected-Cloud that work best for large financial institutions with their varied needs across storage; Big Data; networking; service delivery; infrastructure management; security; application deployment, etc. Expect to see usage of these three models to increase sharply in the industry in 2019, but also expect to see all aspects of ubiquitous infrastructure and ‘as a service’ to explode next year. This stuff is not commoditised yet (it still needs clever people to make it work at it best) but we are getting there.

2019 will be a make or break year for many financial institutions and their use of technology. They will either demonstrate significant improvements in automation, digitalisation, analytics, quality, productivity, security and compliance or they will start going backwards compared to their peer group. There is no need for institutions to reinvent the wheel to achieve the necessary objectives, as the tools that they need to deploy Blockchain, Big Data, AI, and Cloud are all available commercially. Here is to using better technology and getting great business outcomes in 2019!

•

the Interbank Information Network (IIN) for payments, launched by JP Morgan, Society Generale and Santander in 2017 now has 75 members. Among other things, IIN’s blockchain eliminates the need for reconciliations and all the time delay, cost and effort that goes with them (e.g. in correspondent banking for international trade finance).

•

Nasdaq Linq - a Blockchain enabled settlements service for private markets (a market where paper and spreadsheets dominate currently) launched in 2015 continues to grow.

Smart contracts are lagging behind other use-cases, but will be taking off in 2019 if announcements, events and projects in 2018 are anything to go by. E.g. the largest bank in Australia and New Zealand (CBA) received permission in September 2018 from the World Bank to issue a Blockchain-based bond that will be governed by legally verified smart contracts. The smart contracts will be created, allocated, transferred and managed using distributed ledger technology. It doesn’t take a genius to predict that this will be the first of many such bonds.

Cliff Moyce Chairman of Advisory Board DataArt

“Global Neural Network Software Market 20172021.” Technavio New, Technavio, www.technavio.com/ report/global-neural-network-software-market.

Spiceworks, Inc. “Data Snapshot: AI Chatbots and Intelligent Assistants in the Workplace.” Spiceworks Community Global, community.spiceworks.com/blog/2964-data-snapshot-aichatbots-and-intelligent-assistants-in-the-workplace.

https://www.idc.com/prodserv/custom-solutions/ RESOURCES/ATTACHMENTS/thought-leadership-cs.pdf

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Asia 34 Issue 14

ASIA COVER STORY

Investing in Indonesia with Sucorinvest Asset

Management

Sucorinvest Asset Management (Sucor AM) is a Subsidiary of PT Sucorinvest Inti Investama, a company which also owns one of the leading securities company PT Sucor Sekuritas with more than 28 years of experience in Equity Brokerage, Fixed Income Trading, Investment Banking and Research. Sucor AM was established in 1997 and acquired full license in 1999. They have transformed into a boutique asset management that serves clientsâ&#x20AC;&#x2122; niche of investment objectives and risk profiles through a broad range of tailor-made investment capabilities. Their vast experience and reputation in asset management has led tor rapid growth with Asset Under Management of more than IDR 5.9 trillion or USD 402.19 million as of November 2018. In this exclusive interview, Mr. Jemmy Paul Wawointana, CEO of PT Sucorinvest Asset Management discusses how the company helps investors achieve their financial goals, the companyâ&#x20AC;&#x2122;s success and their plans for the future.

Sucorinvest Equity Fund versus ASEAN Indices

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ASIA COVER STORY

You have experienced strong growth in AUM, what do you attribute to this success? The performance of our mutual funds that has consistently outperformed the benchmark and even its competitors in the past three to five years has brought us a significant growth. Our growth has also been supported by increasingly firm relationships with our distribution channels and partnerships. We continue to strive to maintain the consistency of our mutual fundsâ&#x20AC;&#x2122; performance in order to build trust and to grow along side with our clients. What challenges and opportunities do you see for investors right now? The increasingly volatile global financial market condition with various issues that are still looming, such as developments in the two major economies, US and China, oil prices under pressure, and yields are getting higher and so forth. We see that emerging market valuation has returned to the cheapest level since 2008 compared to S&P 500 and we also expect US yield curve continue to invert around early next year. Historically, subsequent to yield curve inversions will be followed by commodity prices rally. Finding the right sectors

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and asset classes will always be the biggest challenge, nevertheless we are still optimistic yet remain prudent at current market condition. What is the value proposition offered by Sucorinvest Asset Management? We believe in finding value in each business and market cycle for our alpha creation processes. By combining top down and bottom up approach we choose securities (stocks/bonds) that we believe will outperform its sector for our portfolio. In selecting certain securities, we consider their valuation, their growth potential, peersâ&#x20AC;&#x2122; comparison, statistical analysis, microstructure, and special situations that could affect the prevailing securitiesâ&#x20AC;&#x2122; yield or return. How do your advisors help clients achieve the best returns? We work closely with our clients to help them develop a clear understanding of their profiles and reasonable expectations for their investment objectives. This approach has helped us to determine the appropriate asset allocation and design customized investment portfolios to maximize the rate of return with due regard to risk.

ASIA COVER STORY

Can you tell us about SPOR? Sucorinvest Personal Online Mutual Fund or commonly referred to as SPOR is our online based service for individual investors. SPOR is intended for opening new account opening, customer data update, subscription; redemption; and switching of Sucorinvest mutual funds, as well as monitoring the investment balance of Sucorinvest mutual funds. SPOR can be accessed on the "Online Registration" menu on our web site at www.sucorinvestam.com through web browser or directly to www.spor. sucorinvestam.com. How does Sucorinvest Asset Management support the social economic development of Indonesia? As part of our social responsibility, we have been collaborating with the Pansophia Nusantara, a non- profit foundation that provides schools for early childhood care and education (ECCE) along with all facilities related to education and nutritional needs. The collaboration has been carried out by establishing a philanthropic fund: Sucorinvest Anak Pintar balanced mutual fund, as a crowd funding program. Half of the revenue from managing the fund will be donated to Phansophia Nusantara. What are your plans for the year ahead? We are planning to have additional distribution channels and partnerships and by that we hope our Asset Under Management can also grow by 20% next year. We are also planning for additional open- end mutual funds; USD denominated fund and additional Sharia fund.

Mr. Jemmy Paul Wawointana CEO PT Sucorinvest Asset Management

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ASIA INTERVIEW

Spotlight on Trade Credit Insurance in Asia Pacific Holger Schaefer, Regional CEO of Euler Hermes, Asia Pacific spoke to Global Banking & Finance Review upon being awarded Best Trade Credit Insurance Company Asia Pacific 2018 in the Global Banking & Finance Awards®. Congratulations on your award-winning success, what initiatives do you attribute to your success? It is indeed delightful to be awarded as the “Best Trade Credit Insurance 2018” by Global Banking and Finance Review. This international-level accolade reaffirms Euler Hermes’s position as an industry leader and proves our potential to reach our goals. Customers are the centre of everything we do, Euler Hermes’s True Customer Centricity (TCC) initiative is launched to map our customers’ needs, showcasing our commitment to deliver our promises. Also, our Zero Defect initiative where we measure our performance at all touch points that our customers offer. We think this initiative is essential as a quest for perfection in order to improve our quality of service. How are current political and regulatory disruptions impacting the market? The Rule # 180 in China: where factoring businesses was no longer permitted. This impacted credit insurance business as factoring sector in China was one of the main customer segments. Proposed implementation of risk based capital solvency framework in HK: the intention is to better match capital requirements to the risk profile of the individual insurance company and therefore having a more robust capital position. Currently, the likely outcome seems to be higher capital requirements for HK insurers.

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ASIA INTERVIEW

Implementation of new accounting standard IFRS17: huge efforts from insurers to implement the adoption of this new standard which is supposed to make financial results more transparent. Financial performance measurement may need to be re-visited based on the new accounting standards. Trade credit insurance is expected to grow in Asia Pacific, what are the contributing factors to this and why should customers consider Euler Hermes as their insurer? Trade credit insurance is comparatively young in Asia, this form of risk management was only introduced in the region 15 years ago. Euler Hermes is eager to promote the product and services as well as our brand, as much as we can. Being awarded by the Global Banking & Finance Review is one of the best ways as it speaks volume about our position in the market and among our business partners. We also make ourselves and the business known through our partners, social media and traditional media. One contributing factor is the need for cover in a risky environment. We could see that there is an increasing demand from our customers in using trade credit insurance. This is due to the rise of globalization. Also, the fact that China and the US are in the trade-war scenario that stir more needs from the customers in buying credit insurance to protect their account receivables. Second, Euler Hermes has an advisory role to companies that understand and identify their current vulnerabilities by countries and sectors, help them mitigate the risks they may face down the line. We have around 100 risk experts and we are present 60+ countries all around the world that can help your business grow. And this is almost important as we insure USD900bn of global trade. Another trend is the continued alignment of Euler Hermes with banking solutions, and the tripartite relationship with customers.

How does credit insurance work? Trade credit insurance includes a broad spectrum of services, including risk management for customers, credit control on behalf of our policy holders, risk mitigation, claims, debt collection. Our team of experts do their utmost to protect our customers’ trade receivables. They underwrite the policyholders’ credit risk, continuously assess and follow up on the debtors and give the policyholders access to important information from legal matters to market conditions. Trade credit insurance allows a company to benefit from better protection on cash flow, opportunities for sales expansion and enhanced financing availability. What are the common misconceptions about credit insurance? I guess misconceptions may not be an appropriate word, as there are none, except some people mixed Euler Hermes up with the luxury leather goods brand! For the industry as a whole, product knowledge starts to spread among businesses as we offer business to business trade credit insurance. You recently launched single invoice cover in Asia Pacific. What is this and how will companies benefit?

business sector in invoice protection: SMEs. The ultimate goal of SIC is to make trade credit insurance more flexible and more affordable. How does Euler Hermes support the social economic development of Asia Pacific? What does the year ahead look like? At Euler Hermes, we support companies in APAC to identify sales opportunities, grow their business and protect cash flow. Asia is driving the world’s GDP growth, which continues to be a significant contributor to Euler Hermes’ growth globally. We also help companies safely grow their businesses into new countries and territories. At the same time, if a company insures its receivables, it can create assets on its balance sheet that banks and investors will be interested in. Banks use that secured receivable and will lend against it, which can become useful additional source of cash flow for companies – one that is not tied up to existing credit lines. The year ahead…well, we have laid down our 2019-2021 strategies and set a very clear goal that we need to grow, but in a sustainable way. We will definitely place more force in digital marketing so as to offer more flexible and customer-friendly solutions to our clients to support their growth strategy.

We launched the single invoice cover (SIC) solution in Asia in November 2018 as a pilot phase. SIC is provided as an Application Program Interface (API), which allows to display the request for a quote and the cover activation in any given web environment. The API also allows for real-time responses, with users only paying for the times in which it is actually used, rather than for a subscription or long-term policy. SIC offers a seamless process to provide convenience and efficiency to our traditional clients, but also kicks start the democratization of trade credit insurance to the most neglected

Holger Schaefer Regional CEO Euler Hermes, Asia Pacific

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ASIA FINANCE

A Global Powerhouse Sprints to Record Performance Home Credit, by some estimates the world’s largest consumer finance lender, delivers a blockbuster thirdquarter result. How did this company become the market benchmark? Even as recently as a few years ago, few outside the know had heard of Home Credit. Few, that is, apart from the millions of customers it had served, today numbering 111 million with some 29 million of those currently actively paying back a loan. It was the rule rather than the exception to be introduced at industry conferences to head-scratching and whispered queries: “Home-what?” No longer: with this quarter’s net profit announced at a record-setting EUR 173 million, industry watchers have started to take notice. Indeed, many established names in

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retail and finance are scrambling to ink partnerships and subscribe to issues of bonds and asset-backed securities from the company, hoping not to be left behind. Customers are also giving Home Credit a vote of confidence – with their wallets and their custom. The company is active in 10 countries, ranging from China to Russia to India to the United States, and it is the first choice and market leader for small loans for consumer durables virtually everywhere it operates. Meanwhile, up-and-coming fintech players and garage startups are marveling at how a company with over 132,000 employees can keep up with them. “The world’s largest fintech (that you’ve never heard of)” was one recent media title bestowed upon Home Credit.

ASIA FINANCE

But it should be no surprise; Home Credit has actually been around far longer than many believe. Just last year, the company celebrated the 20th anniversary of its founding. Hailing from Czechia in Central Europe, the company traces its history back to a small red building in the town of Hustopece in south Moravia, population barely 6,000. Today the company remains headquartered in the Czech capital of Prague, but its global footprint puts it within reach of 3.5 billion customers. Back in 1997, applications for credit were painstakingly assessed by individuals operating in countries where the idea of a personal credit history was still a novelty. Much has changed since then: like the evolution of the abacus to the calculator to the powerful microprocessor, hand-calculated work gave way to Home Credit’s “credit factories” – remarkable decision engines able to sort through scorecards with hundreds of criteria, but still with credit experts present to assess borderline cases – to today’s even more advanced AI-based, machinelearning tech, which harnesses Big Data to make decisions on whom the company can safely lend to.

The third-quarter financials bear this out. EUR 173 million is a 75% yearon-year increase, while maintaining a remarkably low risk profile. This is against a total asset base of EUR 22 billion, with EUR 15 billion in new loans issued up until September 30th this year. Safety is indeed one of the hallmarks of Home Credit’s offer to customers: the company is careful not to lend in the first place to customers who are unlikely to be able to repay. Offers are tailored individually using risk-based pricing. A cooling-off period of 14 days which allows borrowers to return their loan without questions is a worldwide policy, even in markets where no such requirements exist. There is an emphasis on communicating with customers, especially if they fall behind in repaying instalments, and a range of options like deferments to help get those in difficulty back on track. And customers have the peace of mind knowing that Home Credit is a fully regulated company in each of its markets.

This accountability underpins the company’s strength in financial inclusion. While Home Credit loans are not large (averaging around €300), the very concept of borrowing is often new to many of its customers. Encouraging those who have never used credit before to come aboard is largely a question of access, but also of education. Home Credit’s financial literacy programmes – ranging from rural roadshows to in-store teachins to work on national curricula with governments – is systematic and widely recognized. The ability to bring first-time borrowers into the financial system is particularly important for the markets where Home Credit operates. The rapidly-developing consumptionbased economies of China, India, Vietnam, Indonesia and the Philippines – all Home Credit markets – are home to hundreds of millions of aspirational buyers optimistic in the future and eager to improve their standard of living today, but without access to the funds they need, even when there is a clear ability to repay.

All of this is done in record time. There are no long waits in the shop, or a need for customers to come back the next day. Approval for a loan happens in minutes, sometimes seconds, and indeed in some cases – instantly. Home Credit’s belief is that buying on instalment loan should become as easy as using cash or e-payments like GooglePay or WeChat at the point of sale, without any hassle. Thanks to its use of Big Data, a prospective customer often only needs one or two personal documents, or a retina scan, to apply. Sophisticated KYC checks based on biometrics and stateof-the-art fraud detection ensure a customer experience that is as seamless as it is safe.

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ASIA FINANCE

Jiri Smejc Executive Chairman Home Credit Group

Moreover, while the world moves rapidly online, many of those customers haven’t yet bought their first smartphone. So while Home Credit’s online skills are second to none (the company’s mobile apps are used regularly by 43% of its customers, while 13 million people follow the company on social media), the real cachet is found in its strong online-to-offline conversion. Home Credit knows that traffic is the key to success in retail sales, and consumer credit drives traffic; the availability of credit for consumer durables increases turnover in any shop, whether online or offline. And no matter how advanced many customers are, many prefer an omni-channel choice over a distribution that is limited to either online or offline. Home Credit’s retail network of instore locations and bank branches reached 434,232 points of sale in Q3 2018, also a record. Several of the company’s Asian markets experienced year-on-year growth of more than 50%, contributing nearly 20,000 new

points of sale. This comes on top of more than 7,800 new locations in China versus the same period in 2017. It is for these reasons that the company is so attractive to funding partners – indeed, Home Credit has been pioneering in making new financial instruments available on the capital markets, working with banking partners on many transactions. A joint financing scheme with Tianjin Bank, which was signed in China in September, will, together with the first revolving ABS transaction issued in China last quarter for the total amount of RMB 3 billion, help Home Credit in China to fund its continued steady growth. Home Credit is the second entity in China which is starting to use JFS for its lending activities. In India, the Group successfully issued two Commercial Papers for IND 2.5 billion (rated at A-) and two Non-Convertible Debentures for INR 1.9 billion. And in the Philippines, the company closed a syndicated loan of PHP 6.5 billion, which was oversubscribed by PHP 3.35 billion (167%).

Back in its home markets in Central Europe, Home Credit made headlines this year by announcing its plan that it is in preliminary discussions to build a leading retail bank in Czechia, by combining its own challenger on the market, Air Bank, with the much larger listed entity MONETA Money Bank (formerly GE Money) – and the future entity plans to carry on using the successful Air Bank brand. In the words of its Executive Chairman, Jiri Smejc, “Home Credit has shown that not only can it adapt to some quite demanding changes in its markets, but it can do so swiftly and successfully. The business itself is also adapting rapidly, building on its very strong position in the offline environment while rapidly developing our online presence. We deliver a true omni-channel proposition so that customers can access finance wherever they are and whenever they are ready.”

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ASIA INTERVIEW

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ASIA INTERVIEW

Supporting Trade Finance in Vietnam Mr. Nguyen Hoang Hai the Deputy Director of Corporate Banking at PVcomBank discusses the challenges and opportunities for trade finance in Vietnam. In your opinion what are the biggest challenges and opportunities surrounding trade finance in Vietnam? In recent years, the banking sector in Vietnam has great changes that make further steps into the process of international integration. The process has become more and more widespread while the legal framework, tariff and non-tariff barriers are gradually removed, opening new opportunities and challenges for the banking system of Vietnam. In particular, Vietnamese banks have the opportunities to equally participate in a trade playground with other countries in general and highly professional countries in particularly. The context helps Vietnamese banks be more active in their businesses and, at the same time, create opportunities to show off their capabilities. Besides, the integration process in the field of commercial finance has many challenges, requiring the banking system with constant

innovation, creation and services quality improvement in line with international trade practice standards. Banks also need heavy invests in technology for smart solutions, best service to their users, and be compatible with global IT development, especially in the 4.0 era. How important are partnerships in trade finance? Since the buyer/ seller has their own feature in terms of geography, business practices, legal environment, the partnership development plays a very important role in trade finance as contributing up to 60% out of the success of an international trade transaction. In addition, a successful international transaction contributes up to 70% of the risk control to a commercial bank that finances the transaction. Partners and partner networks of each commercial bank show their own prestige in the international financial system. It is the partner system that helps commercial banks diversify customers, export markets and this is one of the factors that make the advantages of a commercial bank in the area of trade finance and international payment.

What are the risk factors associated with international trade finance and what is the best way to counteract them? International trade is extremely diverse and complicated. Therefore, when conducting international trade finance, commercial banks must also deal with various risk factors e.i. exchange rate risk, payment risk (risk of capital loss), usually occurs when the importer does not pay the exporter, legal risk - occurs when parties from different countries have different legal environments, political risks, natural disasters such as violence, embargo, political instability, fires, earthquakes... Therefore, in order to ultimately limit and overcome the mentioned risks, commercial banks should carefully study trade practices; sign contracts closely, clearly and transparently; cooperate with reputable third parties such as international commercial banks, embassies... to ensure the rights of the parties; set up international standard risk management system; upgrade IT system to ensure safety and accuracy; continuously apply new technologies and services and improve the quality of human resources.

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ASIA INTERVIEW

How are the challenges in obtaining trade finance different for SMEâ&#x20AC;&#x2122;s versus large corporations? For commercial banks in general and PVcomBank in particular, trade finance for SMEs is more challenging than that of large enterprises. The biggest difficulty may be the search for reputable partners for funding. SMEs generally are lack of professionalism in trade finance, international trading, insufficient experienced in controlling international trading risks. As a result, commercial banks often give out more challenging conditions and more stringent control measures to SMEs.

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What are the opportunities for available for domestic producers when it comes to export financing and how does the bank support them? The integration process will bring advantages for commercial export enterprises. They will benefit from the integration process, a low tax rate (possibly 0%), for example, which will also pave the entry into foreign markets. This is a great opportunity for businesses to expand their markets, boost sales, and increase profitabilityâ&#x20AC;Ś

Acting the guideline "Complying with business sustainable development", PVcomBank specializes products for SME customers such as Car Loan, PV Ready for long/medium termed loan package for the need of working capital/ fixed asset investment, PV Support for Lack/ none of collaterals with many special incentives.

In addition, the attracting foreign investments through joint ventures, links, accessing to modern technology learning management experience from partners will help businesses improve management capacity, competitiveness, and product capacity of enterprises.

With these incentives, PVcomBank hopes to be able to closely co-operate with the SME business to leverage the breakthrough that help businesses grasp opportunities, increase efficiency and operation scale, hence, sustainable growth at each milestone.

Commercial banks are introducing preferential policies in order to promote domestic producersâ&#x20AC;&#x2122; potential to become an important driving force for the development of the economy, specifically:

ASIA INTERVIEW

Mr. Nguyen Hoang Hai Deputy Director of Corporate Banking PVcomBank

â&#x20AC;˘

Commercial banks diversified forms of trade finance that give businesses alternatives of financing, thus boost the good import-export and smooth services across countries. Commercial banks shall be capable of performing contracts in the course of negotiating and signing foreign trade contracts.

What are your plans for further growth and development?

Commercial banks have consultants for export businesses to ensure the compliance with international trade practices and risk control.

1. Improving the quality of our human resources for best advices

What role does technology play? In fact, technology plays an important role in risk management and the deployment of new banking products and services. On the other hand, technology is one of the drivers for development, a condition for integration with the international banking community. Hence, commercial banks are perceiving technology as one of the key determinants of success in the trade finance race.

Aiming at the development of modern technology based financial products and professional operation, PVcomBank has been striving to take further steps in the banking and financial market, in which we will focus on main factors as follows:

to clients as well as meet the standards in international payment.

2. Providing preferential policies on fees and interest rates for customers using trade finance products and services.

3. Upgrading the IT system to push service speed and security 4. Developing import-export customer data in areas where Vietnam has strengths as well as great demand from the world market. And one important element that has been mentioned above is to build and expand more and more partners worldwide.

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ASIA TECHNOLOGY

Five FinTech predictions for 2019 The ‘Internet of Payments’ Advancements in mobile and realtime payments in 2019 will lead to the creation of an ‘Internet of Payments.’ Customers will have access to a wider portfolio of payment options, from the use of Blockchain and virtual currency, to cross-border banking and eWallets. Earlier in 2018 we saw a use case of Blockchain in banking involving a cross-border funds transfer between Krungsri: Thailand’s fifth largest bank and Standard Chartered in Singapore facilitated by a Krungsri’s Blockchain Ledger. We’ll continue to see banks harnessing the power of Blockchain in 2019 as it becomes another form of payment solution used as commonplace. Cognitive technologies to stay relevant According to CACI, 35 million people will be using their mobile as a preferred banking platform by 2023. Banks will begin to adapt to these changes in

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customer preferences in 2019 via cognitive computing. This will ensure they stay relevant in a digital age, generating insights to provision for the right mix of branches, digital, and mobile offerings. Through using cognitive computing systems, including real-time insights and information processing, banks can seize an opportunity that will grow revenues up to 30 per cent by 2022. A robust strategy to face regulatory challenges Regulation will continue to dominate the banking and finance landscape of 2019. With the introduction of PSD2 and GDPR earlier in 2018, banks will be required to be regulatory compliant or risk facing heavy fines. For banks to stay compliant they will need to be ready and tested by March 2019. Overcoming regulatory challenges needs a robust strategy, operational and infrastructure change, a comprehensive assessment of risk,

and seamless execution. To align with regulation, banks must facilitate digital transformation across their entire business ecosystem by opening up of their APIs to third parties. This will provide full visibility over customer data, and enable banks to cater better to customer needs. Industry collaboration to improve customer experience Over 2018 we saw disruption to the customer experience of traditional banks caused by outdated legacy IT systems. As a way of overcoming these problems, we’ll see banks form greater collaborations with FinTechs and third parties to deliver a seamless experience for end-users and a wider array of services: also known as ‘Open Banking.’ ‘Open Banking:’ the opening up of banks’ APIs, will result in multiple partnerships between banks, fintech companies, and other professional service providers, such as accountants and lawyers. Services provided via

ASIA TECHNOLOGY

‘Open Banking’ in 2019 will become the norm, making it possible to integrate blockchain, video chat, mobile wallets, and data analytics with existing traditional offerings as one complete end-to-end solution. We will also see smarter collaboration between FinTechs and corporates in 2019. 8 in 10 (82 per cent) of incumbents are expected to increase FinTech partnerships in the next three to five years, with a greater investment by corporates in FinTech collaborations rather than buying products. Smart collaboration is expected to impact up to 80 per cent of existing banking revenue pools by 2020.

Speeding up while remaining secure The need to become fully digitalised, secure, and regulatory compliant will result in an uptake of cloud based solutions, making it easier for banks to have visibility to customer and business data on a single interface.

Financial institutions understand the importance of building IT architecture on cloud platforms already, but according to a recent Accenture report entitled ‘Cloud and Clear’ they lack a cloud strategy that will enable migration to the cloud. In 2019, we’ll see banks working more closely with technology specialists, to create and deploy an IT architecture that will provide consistency and efficiency to banking operations in a digital age. We will also see testing and the deployment of Quantum Computing technology, enabling corporations and financial institutions to deliver their products and services at greater speed to their customers. We’ve already seen the experimentation by Barclays and JP Morgon Chase with IBM’s quantum technology. Other banks will do the same as they realise the benefits of Quantum Computing to drive efficiencies and transform operations.

Martijn Hohmann CEO Five Degrees

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ASIA INTERVIEW

Creating Financial Access and Opportunity The Thai Credit Retail Bank provides commercial banking products and services to retail customers and small and mediumsized enterprises. The bank offers products and services such as deposits, housing, medical loans, cash and credit including atm cards. This large range of products continues to expand and grow. In November of this year we were glad to welcome back to the London Stock Exchange Studios, Chief Executive Officer, Mr. Winyou Chaiyawan another year of success for the bank and their plans for the year ahead.

What innovative products and services have been created in direct response to customers’ needs and wants? The Thai Credit Retail Bank PCL., a specialist in the Micro Segment and the only Thai Bank committed to be an alternative bank of choice offering access to financial products and services to Nano and Micro SME owners nationwide, is gearing up to elevate its brand profile and expand its reach to a greater number of Micro Segment customers. Thai Credit offers innovative products and services designed to meet the needs of small businesses and entrepreneurs throughout the country under its vision of being “The Best Micro Bank in Thailand”. Thai Credit serves micro and nano customers to improve their businesses and cash flows, and

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not for consumptive purposes. The branches are located within the traditional markets where small business owners can easily access them. Thai Credit is a fully licensed micro and nano lender under the supervision of the Bank of Thailand. We are capable of underwriting the customers who do not have any financial records or history, and we do not ask for guarantor and/or financial statements. So we are the only one now who are lending to these small business owners.

How do your relationship managers help ensure customers are receiving the best possible service? We are unique because we truly understand our customers. Our customers are not highly educated on banking and financial discipline. They mostly use cash for their transaction. They also fear rejections from the banks which made them feel inferior. Our service is different because our staff build a genuine relationship with the customers and with our locations next to their shop and we become their neighbors and part of the community. We understand that our customers usually cannot leave their shops, so our RMs will visit and evaluate their

ASIA INTERVIEW

business needs and customer's ability to pay before granting the loan. We also provide transparencies of our products fee and interest to the customers and therefore very different from the informal lenders.

How important are the digital channels (SMS, Online, Mobile) offered by The Thai Credit Retail Bank to bank operations and customers? Digital channels is our future as we are expanding nationwide and aiming to be digitisation, we are now developing many new initiatives in order to serve our target customers. These are some example of what we have already done in our business for our customers; •

Real time and digital payment processing. We have a tablet with printers to support our RM to collect the payment from the customers. The workflow and collection is run from our internal system. All customer payments, although made by cash, are real time

•

We have a controlled process on how our RMs spend their time in processing the application, credit process, checker, and appointment arrangement, etc. which are also fully digitised

•

We are digitising all the customer locations to enable us to build a simple but effective workflow on sales and collections

Can you tell us about your unique business model? The lending branch is a new concept of lowcost branch targeted to rural area and small business community, focus only on providing loan to small business owner. Thai Credit has two main customer segments. The first--TCRB’s main customer segment-is Nano Entrepreneurs. It is estimated that 1 million own small Mom and Pop shops in about 10,000 traditional markets nationwide have limited access to financial support. They operate small shops selling fresh produce from farmers to consumers in the traditional markets, daily earners who form a low-cost distribution network serving a community’s consumers for whom a visit to the traditional market is part of their daily life. Nano Entrepreneurs have run their businesses for many years and are an integral part of their communities. Although they are not rich with a basic education, are a hardworking and productive member of the community.

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ASIA INTERVIEW

However, they face many financial challenges such as cash flow shortfalls, loss of income when they fall ill, and unplanned instances when their family needs money. They are often underserved or rejected by formal lenders, and many of them resort to loans with high fees and high interest rates or loans from informal lenders and loan sharks. •

Market segment of around one million potential customers

•

10,000 traditional markets across Thailand

•

These basic businesses are mainly Mom and Pop shops that act as middlemen selling items such as fresh produce to consumers in traditional markets

•

While expert at what they do and long-established in the community, Micro finance entrepreneurs tend to live “hand-to-mouth” with little money saved up and low incomes

Thai Credit’s second customer segment is Micro SMEs. They are classified as Advanced Micro Business owners with specialised expertise and have brick and mortar shops outside of traditional markets, such as pharmacies, small clinics, and retailers of small goods. Typically, they are family businesses that conduct cash-only transactions, with opaque credit histories and no real financial statements. They aspire to improve their businesses but have limited access to financial products and can face cash flow challenges from time to time. •

Market segment with more than 2 million potential customers

•

Operate brick and mortar shops such as pharmacies, small clinics, etc.

•

Typically are family businesses with opaque credit histories and no real financial statements that mainly conduct cash-only transactions

•

Face the challenge of occasional cash flow problems

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ASIA INTERVIEW

What does the year ahead look like? We foresee many further growth opportunities for our bank. We plan to be the best in micro segment in Thailand. We have only penetrated a small portion of our target segments. So, we will continue to expand our branches according to the business strategy to focus more on small business customers. Next year we will expand to 500 branches nationwide. Digitisation will be a key strategy next year. We have done a lot of digitisation in our internal process. So next year we are planning to extend the new digital product and services to our customers to help their businesses.

Mr. Winyou Chaiyawan Chief Executive Officer The Thai Credit Retail Bank Public Company Limited

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ASIA BANKING

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ASIA BANKING

Transforming Banking in Vietnam Global Banking & Finance Review discuss with Asia Commercial Bank (ACB) the way the bank is leading transformation in the Vietnam banking sector. Wh at are t he c u r ren t c h a llen g es and oppor t u n it ies fa c in g b a n kin g in Viet n am?

How does your business banking division assist clients in managing their risk and enhance their revenue?

Uneven economic growth, difficulties in the credit market, government policy, foreign exchange rates, and interest rate risk are the key challenges facing the Vietnamese banking market. The introduction of FinTech has yielded both opportunities and challenges but provides a great chance to develop our strong customer service. Bad debts will be controlled step by step to ensure system stability and approach common international standards. But when using technology, the science of banking and financial services always faces risks in the process of using such as risk of stopping the system operation, loss of money due to passwords, management of control system, prevention of money laundering, etc.

ACB monthly provides clients with the industries analysis in order to help them have the market insights, to be aware of risk and opportunities as well. •

For clients working with international trading, ACB will help

•

Give consultancy on international market risk, how to make valid documents for ensuring payment

•

Help clients hedge FX risk by offering derivative products

•

Recommend ACB reliable insurance partners for clients’ loss prevention

•

Recommend ACB logistic and warehouse partners to minimize operation cost, enhance clients’ business efficiency.

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ASIA BANKING

Are you launching any new products or services soon?

Can you tell us about the bank’s commitment to support the communities it serves and improve society?

For commercial products: ACB is developing bundles for some priority sectors like textile, logistic, plastic, etc. with special terms and conditions. Besides, ACB also set up particular credit process line for SME clients to make it as simple as possible, saving time for the customers. ACB is developing TB platform in order to not only service clients but also their suppliers and distributers with a wide range of products. The platforms will help integrate their accounting and operating system then ACB can offer more products based on cash flow.

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In 2017, ACB allocated more than 5 billion VND to conduct programs aimed to education and social welfare under the common name of “I love my life” journey. 50% of the budget was used for scholarships granted to students ranging from primary to university age, attributing to Bank scholarships, building schools, sponsoring career days, etc., in Ho Chi Minh City, Ha Noi, Tra Vinh, An Giang, Dak Lak, Tien Giang and Bac Giang. Through those activities, ACB has encouraged the next generation to learn and to manage their own personal development for the benefit of their respective communities. The remaining 50% was allocated to other social activities

ASIA BANKING

natural resources and environment in a systematic and sustainable way. ACB, alongside myriad other companies, has supported Fauna and Flora International (FFI) to protect rare primate species in Vietnam. Since 2014, ACB has been actively encouraging its staff and customers to raise awareness and take practical action to protect the environment and conserve nature. At present, reducing paper use, using environmentally friendly bags, using reusable cups instead of disposable plastic ones, not destroying the natural landscapes, etc. have become habits among ACB staff in both their professional and personal lives. In addition, ACB has sped up the digitalization process and reduced paper consumption in customer service. In 2017, ACB received the award for “Best bank for corporate social responsibility for Vietnam 2017” from Asiamoney Magazine. What are your plans for continued growth and development?

such as gifts for veterans and ethnic minorities in Dak Lak and Dak Nong provinces, sponsoring the “Joining hands for the poor” program, building social houses for the poor in Tra Vinh province, supporting people affected by floods in Binh Dinh province, etc. Additionally, ACB is concerned about natural resources and environmental protection, and ran a campaign called “Near to O” designed to bring people closer to the Earth through practical actions. This campaign has been run by ACB throughout the last four years. ACB is proud to be the first bank to take action to protect Vietnam’s

For 2018/2019, ACB will continue to focus on the retail and SME segments, increase CASA, and developing service fee income. Suitable programs will be used throughout the year in order to attract target customers. In the digital space, banking services will evolve with enhancements to the ACB mobile app and internet banking platform. The bank pursues sustainable, efficient growth in order to remain a safe, profitable and yet innovative bank within the market. ACB will continue to improve asset quality by actively resolving bad loans in support of a healthy balance sheet. State your retail banking goals accomplished in FY2018 against your vision and mission statement? ACB’s strategic target for 2018 was to be the leading bank in Vietnam in the following five key areas: customer

focus, risk management, sustainable financial performance, efficiency, and ethics. In order to achieve this target, ACB promoted retail credit growth by focusing on individuals and small/medium enterprises while simultaneously focusing on the development of digital banking. The bank had focused on handling and recovering bad debts in order to maintain a healthy and sustainable balance sheet. Describe your digital transformation roadmap and set goals per stage? Digital technology can significantly improve the performance of the current business. Therefore, ACB has taken steps toward transforming the bank's businesses. Financial results in the first nine months of 2018 show significant and impressive growth, which creates a solid foundation for the rest of 2018 as well as the years to come. In 2018 and moving forward, ACB will continue to focus on leveraging technology to enhance performance, implementing and adapting the plan for digitization, digital banking, contact center, & data governance, and will look to new concepts in FinTech & big data to promote a deeper relationship with existing and new customers. Describe your institution’s key competitive strength? Throughout 25 years of operation, ACB’s competitive strength has been our focus on the customer. We put tremendous value on delivering an excellent customer experience and our customers have rewarded us with great loyalty. To build a deep customer relationship and win that loyalty, ACB offers a wide range of products which we update regularly to meet changing consumer needs. We make ourselves as available to customers as possible, with 357 branches and sub-branches, a strong online presence, and a welltrained 24/7 contact center.

Issue 14 | 57

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Global Banking & Finance AwardsÂŽ 2018 AWARD WINNERS

Global Banking & Finance Awards® 2018 AWARD WINNERS Global Banking & Finance Review is privileged to honour those financial institutions who have achieved outstanding results and who stand out in their particular area of expertise in the banking and finance industry. Global Banking & Finance Review would like to congratulate the award winners and look forward to their continued success. The awards were created to recognize companies of all sizes that are prominent in particular areas of expertise and excellence within the financial community. They reflect the involvement of leading financial organizations and recognize the accomplishment, achievement, innovation, strategy, progressive and motivating changes taking place within the financial sector.

COMPANY NAMES Mota-Engil Africa African Guarantee Fund EasyPay SIGAL UNIQA GROUP AUSTRIA Sigma Interalbanian Vienna Insurance Group Crèdit Andorrà Crèdit Andorrà MoraBanc Andorra Banco de Fomento Angola Banco Económico, S.A. Banco Millennium Atlantico Odell Global Investors Puente PPI, Portfolio Personal Inversiones PPI, Portfolio Personal Inversiones ArmSwissBank CJSC ACBA Leasing Co CJSC ARMECONOMBANK OJSC INGO ARMENIA ICJSC SIL INSURANCE CJSC Converse Bank CJSC Converse Bank CJSC IDBank Anametrics Holdings Limited OctaFX BOC Aviation Limited Huxley Binary.com SANNE GROUP Euler Hermes OANDA OANDA GAIN Capital GAIN Capital

TITLES Best Investor Relations Company Africa 2018 Best Financial Guarantee Provider for SME’s Africa 2018 Best Digital Payment Platform Albania 2018 Best Insurance Company Albania 2018 Best Customer Service Insurance Company Albania 2018 Best CSR Bank Andorra 2018 Best Private Bank Andorra 2018 Best Commercial Bank Andorra 2018 Best Commercial Bank Angola 2018 Best Mobile Banking Application Angola 2018 Best Internet Bank Angola 2018 Best Asset Management Company Angola 2018 Best Investment Management Company Argentina 2018 Most Innovative Online Broker Argentina 2018 Best Research House Argentina 2018 Best Trade Finance Bank Armenia 2018 Most Innovative Leasing Product “Green Leasing” Armenia 2018 Fastest Growing Commercial Bank Armenia 2018 Best Motor Insurance Company Armenia 2018 Fastest Growing Health Insurance Company Armenia 2018 Fastest Growing Retail Bank Armenia 2018 Fastest Growing Trade Finance Bank Armenia 2018 Fastest Growing SME Bank Armenia 2018 Best Trade Finance Provider Asia 2018 Best Forex Broker Asia 2018 Best Aircraft Leasing Company Asia 2018 Best Banking & Finance Recruitment Company APAC 2018 Best Binary Company Asia Pacific 2018 Best Fund Administration Company Asia Pacific 2018 Best Trade Credit Insurance Company Asia Pacific 2018 Best CFD Broker Asia Pacific 2018 Best Forex Company Asia Pacific 2018 Best FOREX Broker Australia 2018 Best CFD Broker Australia 2018

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

Mr. Sergio Camacho, Director General of Administration & Finance, UNIFIN

Gerardo Garcia, CEO of Barents Re

GAIN Capital AMP Bank AMP Bank Commonwealth Bank of Australia CUA (Credit Union Australia) Heritage Bank (Australia) National Australia Bank Limited Westpac Banking Corporation Simple2Trade Erste Bank Valida Holding AG Turanbank AS Group Investment Azer Turk Bank Azerbaijan Industrial Insurance Pasha Bank OJSC â&#x20AC;&#x153;Yapi Kredi Bank Azerbaijanâ&#x20AC;? JSC Sterling Global Financial Limited Standard Chartered Bank, Bahrain Al Hilal Life B.S.C. (c) Ijara Management Company BBK BBK Bin Faqeeh Real Estate Investment Co Ahli United Bank Al Baraka Banking Group B.S.C. Al Baraka Banking Group B.S.C. Al Baraka Banking Group B.S.C. Almoayyed International Group Kuwait Finance House CIBC FirstCaribbean International Bank NAI Ukraine BTA Bank JSC Belgazprombank JSC Belgazprombank Priorbank Belagroprombank Belagroprombank Belagroprombank Belagroprombank Belinvestbank JSC Sopra Banking Software Orange Belgium KBC Bank Capfi Delen Asset Management Capfi Delen Asset Management LOM Financial (Bermuda) Limited XL Bermuda Ltd BANCO MERCANTIL SANTA CRUZ S. A. BancoSol Nova Banka

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Best Internet Bank Ethiopia 2018 Best Bank for International Banking Services Ethiopia 2018 Best Retail Bank Ethiopia 2018 Best Forex Education Provider Europe 2018 Best Multi Asset Liquidity Provider Europe 2018 Best Social Trading Platform Europe 2018 Best RegTech Company Europe 2018 Best Fund Distribution Network Europe 2018 Best Corporate Social Responsibility (CSR) Finance Group Europe 2018 Best Green Fire Suppression Technology Europe 2018 Best New Online Trading Education Program Europe 2018 Best Fund Administration Company Europe 2018 Best Forex Trading Account (XL Account) Europe 2018 Best STP Broker Europe 2018 Best Credit Insurer Europe 2018 Best Payment Solutions Provider Europe 2018 Best Private Equity Firm Finland 2018 Best Real Estate Consultancy France 2018 Fastest Growing Life Insurance Company France 2018 Best Payments Solutions Provider France 2018 Best Private Bank Gambia 2018 Best Commercial Bank Gambia 2018 Best Core Banking Technology Implementation in the GCC 2018 Best Investment Bank GCC 2018 Best Forex Education Georgia 2018 Best New Forex Company Georgia 2018 Best Retail Bank Georgia 2018 Best Bank for Online Services Georgia 2018 Best Real Estate Investment Company Germany 2018 Fastest Growing Retail Bank Germany 2018 Best CSR Bank Germany 2018 Best M&A Advisory Germany 2018 Best Corporate Bank Ghana 2018 Best Customer Service Bank Ghana 2018 Best E-Commerce Bank Ghana 2018 Best CSR Bank Ghana 2018 Fastest Growing Retail Bank Ghana 2018 Fastest Growing SME Bank Ghana 2018 Best Digital Bank Ghana 2018 Best Banking CEO Ghana 2018 â&#x20AC;&#x201C; RAY ANSELM SOWAH Fastest Growing Commercial Bank Ghana 2018 Best Retail Bank Ghana 2018 Most Innovative Microfinance Company Ghana 2018 Best SME Bank Ghana 2018 Best Savings Bank Greece 2018 Best Internet Bank Guatemala 2018 Best Mobile Banking Platform Guatemala 2018 Best Retail Bank Guinea 2018 Best Commercial Bank Honduras 2018 Best Retail Bank Honduras 2018

Blackwell Global Blackwell Global Bosera Asset Management Financial PR (HK) Limited United Overseas Bank Hong Kong Informatica Software Haitong International Securities Group Limited Haymarket Asia ORIX Asia Limited Dorsum Landsbankinn Landsbankinn Financial Software and Systems Moody’s Analytics Knowledge Services Bahana Sekuritas PT Bank Mandiri PT Bank Mandiri PT. Bank Rakyat Indonesia (Persero) Tbk PT. Bank Rakyat Indonesia (Persero) Tbk PT Bank JTrust Indonesia Tbk PT. Reasuransi Indonesia Utama (Persero) PT HOME CREDIT INDONESIA PT. Didi Max Berjangka PT. SUN LIFE FINANCIAL INDONESIA PT Sucorinvest Asset Management PT Sampoerna Agro Tbk PT Danareksa Sekuritas PT RHB Asset Management Indonesia Bank Muamalat Indonesia China Construction Bank DBS Indonesia BNI Syariah PT Aman Cermat Cepat (KlikACC) PT Indo Premier Investment Management Intrajasa Teknosolusi AQMetrics Fenergo EGE Investment Barents Re Reinsurance Company, Inc. JCB Co., Ltd SBI Sumishin Net Bank Co.,Ltd. Mitsubishi Corporation The Housing Bank for Trade and Finance OFFTEC Jordan Arab Orient Insurance Company Arab Phoenix Holdings Bank al Etihad Cairo Amman Bank

Best New Futures Brokerage Hong Kong 2018 Best New Securities Brokerage Hong Kong 2018 Best Fund Management Company Hong Kong 2018 Best Investor Relations Service Provider Hong Kong 2018 Best Wholesale Bank Hong Kong 2018 Best Data Enterprise Cloud Management Company Hong Kong 2018 Best Securities Brokerage Company Hong Kong 2018 Best Media Solutions Provider Hong Kong 2018 Best Online Platform for Automotive Finance Hong Kong 2018 Best Investment Software Solutions Provider Hungary 2018 Best Commercial Bank Iceland 2018 Best Internet Bank Iceland 2018 Best Payment Technology and Processing Company India 2018 Best Offshore Financial Research and Analytics Services Provider India 2018 Best Securities Brokerage Indonesia 2018 Best Corporate Bank Indonesia 2018 Best Retail Bank Indonesia 2018 Best Corporate Governance Bank Indonesia 2018 Best Microfinance Bank Indonesia 2018 Most Innovative Digital Bank Indonesia 2018 Best Reinsurance Company Indonesia 2018 Best Consumer Finance Company Indonesia 2018 Best Forex Education Broker Indonesia 2018 Best Family Takaful Provider Indonesia 2018 Fastest Growing Asset Management Company Indonesia 2018 Fastest Growing Agribusiness Company Indonesia 2018 Best Investment Banking Company Indonesia 2018 Best Equity Fund Product [RHB Alpha Sector Rotation] Indonesia 2018 Best Islamic Corporate Bank Indonesia 2018 Fastest Growing Corporate Bank Indonesia 2018 Best Bank for Personal Loan Indonesia 2018 Best SME Bank Indonesia 2018 Best New P-to-P Lending Platform Indonesia 2018 Best ETF Provider Indonesia 2018 Best New Remittance Company Indonesia 2018 Best Risk Analytics Solution Provider Ireland 2018 Fastest Growing Client Lifecycle Management Solutions Provider Ireland 2018 Best New Trading Academy Italy 2018 Best Reinsurance Company Italy 2018 Best Payments Solution Provider Japan 2018 Best Internet Bank Japan 2018 Best Industrial Machinery Manufacturing Company Japan 2018 Best Retail Bank Jordan 2018 Best Banking Technology Solutions Provider Jordan 2018 Best Non Life Insurance Company Jordan 2018 Best Real Estate Development Company Jordan 2018 Most Innovative Banking Initiative for Women (Shorouq Program) Jordan 2018 Best Bank for Youth & Students Jordan 2018

Capital Bank of Jordan Dreamtechs for Digital Solutions Investbank MedNet Jordan Co. W.L.L. ProgressSoft Corporation Standard Chartered Bank HDForex NAI Ukraine AAR Insurance Kenya Limited Exotix Capital NIC Bank NIC Bank NIC Bank Transnational Bank Banka Ekonomike SH.A. BPB Kosovo BPB Kosovo BPB Kosovo National Investments Co. “NIC” National Investments Co. “NIC” National Investments Co. “NIC” Ahli United Bank K.S.C.P Ahli United Bank K.S.C.P OPTIMA BANK BIC BANK LAO CO., LTD BIC BANK LAO CO., LTD Ernst & Young Laos Ernst & Young Laos RHB Laos Phongsavanh Bank AgL Startup Chile Atlantis Financials Atlantis Financials Nedbank Lesotho UAB Investiciju ir verslo garantijos Euris Group Banque et Caisse d’Epargne de l’Etat, Luxembourg LRI Group Banque de Luxembourg Carlisle Management Company, SCA Carlisle Management Company, SCA Mirabaud Asset Management Diners Club International Eurostandard Bank AD Skopje Halkbank AD Skopje Sparkasse Bank Makedonija AD Skopje Stopanska Banka a.d. Bitola Stopanska Banka a.d. Bitola Nedbank-Malawi

Best Banking Product Jordan 2018 (VIP Today Program) Best Digital Solutions Company Jordan 2018 Best Corporate Bank Jordan 2018 Best Health Insurance Administrator Jordan 2018 Best Payment Solution Provider Jordan 2018 Best CSR Bank Jordan 2018 Best New Forex Company Kazakhstan 2018 Best Real Estate Consulting Company Kazakhstan 2018 Best Medical Insurance Company Kenya 2018 Best Investment Research House Kenya 2018 Best Asset Finance Bank Kenya 2018 Best Priority Bank Kenya 2018 Best Treasury Bank Kenya 2018 Best Agribusiness Bank Kenya 2018 Best Retail Bank Kosovo 2018 Best Agrobusiness Bank Kosovo 2018 Fastest Growing Commercial Bank Kosovo 2018 Best SME Bank Kosovo 2018 Best M&A Deal (ZAIN & Amricana) Kuwait 2018 Best Asset Manager Kuwait 2018 Best Investment Company Kuwait 2018 Best Retail Bank Kuwait 2018 Best Retail Marketing Kuwait 2018 Best Mobile Banking Application Kyrgyz Republic 2018 Best Retail Bank Laos 2018 Best SME Bank Laos 2018 Best Tax Audit Service Provider Laos 2018 Best Advisory Firm Lao 2018 Fastest Growing Commercial Bank Laos 2018 Best CSR Bank Lao 2018 Best Insurance Company in Customer Service Laos 2018 Best Startup Accelerator Program Latin America 2018 Fastest Growing Financial Advisory Lebanon 2018 Best Personal Financial Advisory Firm Lebanon 2018 Best Internet Bank Lesotho 2018 Best SME Finance Company Lithuania 2018 Best Islamic Corporate Advisory Group Luxembourg 2018 Best Retail Bank Luxembourg 2018 Fastest Growing Fund Management Company Luxembourg 2018 Best Wealth Management Bank Luxembourg 2018 Best European Long Term Growth Fund Luxembourg 2018 Best Fund Management Company Luxembourg 2018 Best Private Equity Firm Luxembourg 2018 Best Credit Card Customer Service Company Macedonia 2018 Best Bank for Loans Macedonia 2018 Best SME Bank Macedonia 2018 Fastest Growing Corporate Bank Macedonia 2018 Best Corporate Bank Macedonia 2018 Best Retail Bank Macedonia 2018 Best Customer Service Bank Malawi 2018

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

Anjuli Pandit, Head of UK Corporate Sustainability, BNP Paribas

Mr. Chaouki Daher, General Manager & Head of Private Banking, International Bank of Qatar (ibq)

Nedbank-Malawi Sunway Construction Group Berhad Prudential Assurance Malaysia Berhad AmBank Group Export-Import Bank of Malaysia Berhad Maybank Islamic Berhad Etiqa Insurance & Takaful Alliance Bank Malaysia Berhad Berjaya Sompo Insurance Berhad CapitalBay Hong Leong Bank Berhad Pheim Asset Management Pheim Unit Trusts Berhad Saturna Sdn Bhd Housing Development Corporation Public Service Media Solarelle Insurance Co Pvt Ltd Allied Insurance Company of the Maldives Pvt Ltd Ooredoo Maldives Plc Bank of Mauritius SANNE GROUP Bank One Limited SBM Bank (Mauritius) Ltd SBM Bank (Mauritius) Ltd Warwyck Private Bank Ltd ABC BANKING CORPORATION LTD NIC General Insurance Co. Ltd National Insurance Co. Ltd Ethica Institute of Islamic Finance SABB Takaful SABB Takaful Qatar Insurance Company UNIFIN UNIFIN SURA Asset Management Mexico Gulf Finance House The Egyptian Exchange (EGX) Emirates NBD Asset Management Ltd Emirates NBD Asset Management Ltd Emirates NBD Asset Management Ltd First Abu Dhabi Bank First Abu Dhabi Bank First Abu Dhabi Bank CB Moldova Agroindbank SA Victoriabank Compagnie MonĂŠgasque de Banque Trade and Development Bank of Mongolia Capitron Bank Attijariwafa Bank Groupe Credit Agricole du Morocco

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Mr. Phil Ashkuri, Chief Distribution Officer, Noor Takaful

Mr. Winyou Chaiyawan Chief Executive Officer The Thai Credit Retail Bank Public Company Limited

Mr. Atul Dixit, CEO, PRUDENTIAL VIETNAM FINANCE COMPANY LIMITED

AYA Myanmar Insurance Standard Bank Namibia Bank Windhoek Standard Bank Namibia Bank Windhoek BACKBASE Access Bank PLC Dunn Loren Merrifield Advisory Partners Dunn Loren Merrifield Advisory Partners Stanbic IBTC Asset Management Limited Stanbic IBTC Holdings Stanbic IBTC Holdings Stanbic IBTC Pension Managers Fine & Country International WA Stanbic IBTC Capital Limited Stanbic IBTC Capital Limited Coronation Merchant Bank First Bank of Nigeria Ltd PwC Nigeria Ecobank, Nigeria Jaiz Bank Plc Diamond Bank Plc UNITY BANK PLC Zenith Bank Plc Zenith Bank Plc Standard Chartered Bank Nigeria Danske Bank BMO Capital Markets Kamakura Corporation Pod Group Zwipe Storebrand Asset Management Standard Chartered Bank, Oman Khimji Ramdas Insurance Services LLC Bank Sohar Bank Sohar Alizz Islamic Bank Oman UAE Exchange Centre Bank Muscat Oman Qatar Insurance Company (OQIC) National Life and General Insurance Company SAOG Oman Qatar Insurance Company (OQIC) Habib Bank Limited BANISTMO Puente PacĂfico Seguros AFP Integra Sura Peru Mibanco Learn to Trade China Bank Capital

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The National Commercial Bank The Saudi British Bank (SABB) Alawwal Bank Alawwal Bank Riyad Bank Standard Chartered Bank, Saudi Arabia KPMG Al Fozan & Partners Emaar The Economic City Tawuniya Insurance Sedco Capital Alawwal Invest Addiko Bank AG Ecobank Sierra Leone Ecobank Sierra Leone Professional Investment Advisory Services Pte Ltd Professional Investment Advisory Services Pte Ltd Aviva Singapore ENOVAX PTE LTD M-DAQ Pte Ltd AXA Insurance Pte Ltd Simple2Trade DBS Bank Ltd RHB Bank Singapore OCBC Bank Hong Leong Finance Ltd UTI International (Singapore) Private Limited MSG-Global Solutions Asia Private Limited OCBC Securities Pte Ltd Learn to Trade Investec Bank MMI Holdings SANNE GROUP Joe Public United Broll Property Group Absa Bank Absa Bank Absa Bank Mr. Abuayubul Ansari (Abang Abu) Black Sea Trade and Development Bank Santiago Exchange SegurCaixa Adeslas Cecabank Sunshine Holdings PLC National Development Bank PLC National Development Bank PLC National Development Bank PLC ARPICO INSURANCE PLC Commercial Bank of Ceylon PLC

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SANASA Development Bank PLC National Development Bank PLC National Development Bank PLC MS Technologies (pvt) Ltd. Hatton National Bank PLC Nation Lanka Finance PLC Nation Lanka Finance PLC LankaClear (Pvt) Ltd M I Synergy (Pvt) Limited Vallibel Finance Plc Vallibel Finance Plc Moody’s Analytics Knowledge Services People’s Bank People’s Insurance PLC Sri Lanka Insurance HNB Assurance PLC LOLC Finance PLC Pan Asia Banking Corporation PLC Pan Asia Banking Corporation PLC Ceybank Asset Management Limited Cooperative Insurance Company Ltd Housing Development Finance Corporation Bank of Sri Lanka Carnegie Investment Bank Norron Asset Management Swedbank Coface Sweden Capitalium Advisors SONECT Valiant Bank Valiant Bank Helvetia Versicherungen Vontobel STOXX Nan Shan Life Insurance Fubon Insurance Taipei Fubon Bank Taipei Fubon Bank Taipei Fubon Bank Taipei Fubon Bank Taipei Fubon Bank Chailease Holding Chunghwa Telecom Co Ltd King’s Town Bank Shanghai Commercial and Saving Bank CTBC Bank KGI Bank AccessBank Tanzania Ltd Barclays Bank Tanzania EXIM Bank Tanzania Limited Thai Credit Retail Bank

Fastest Growing MSME Bank Sri Lanka 2018 Best Financial Group of the Year Sri Lanka 2018 Best Project Finance Bank Sri Lanka 2018 Best IT Solutions Provider Sri Lanka 2018 Best Bank for Remittances Sri Lanka 2018 Fastest Growing Leasing Company Sri Lanka 2018 Most Innovative Leasing Product (Nations OD) Sri Lanka 2018 Best Payment Infrastructure Provider Sri Lanka 2018 Fastest Growing Financial Software Solutions Provider Sri Lanka 2018 Fastest Growing Auto Financing Company Sri Lanka 2018 Best Leasing Customer Service Company Sri Lanka 2018 Best Offshore Financial Research and Analytics Services Provider Sri Lanka 2018 Fastest Growing Investment Banking Unit Sri Lanka 2018 Best Customer Service Insurance Company Sri Lanka 2018 Best Motor Insurance Company Sri Lanka 2018 Best Mortgage Insurance Company Sri Lanka 2018 Best SME Finance Company Sri Lanka 2018 Fastest Growing Commercial Bank Sri Lanka 2018 Fastest Growing Retail Bank Sri Lanka 2018 Best Fund Management Services Provider Sri Lanka 2018 Fastest Growing Marine Insurance Company Sri Lanka 2018 Fastest Growing Housing Development Bank Sri Lanka 2018 Best Investment Bank Sweden 2018 Best Hedge Fund Provider Sweden 2018 Best Investor Relation Bank Sweden 2018 Most Innovative Credit Insurance Company Sweden 2018 Best New Independent Asset Manager Switzerland 2018 Best New Payment Solution Provider Switzerland 2018 Best Investor Relations Bank Switzerland 2018 Best Retail Bank Switzerland 2018 Best Life Insurance Company Switzerland 2018 Best Private Bank Switzerland 2018 Most Innovative Index provider Switzerland 2018 Best Life Insurance Company Taiwan 2018 Best Non-Life Insurance Company Taiwan 2018 Best Customer Service Bank Taiwan 2018 Best Internet Bank Taiwan 2018 Best Payment Bank Taiwan 2018 Best Credit Card Offering Taiwan 2018 Best Wealth Management Bank Taiwan 2018 Best Corporate Governance Company Taiwan 2018 Best Telecommunications Company Taiwan 2018 Best Investor Relations Bank Taiwan 2018 Fastest Growing Commercial Bank Taiwan 2018 Best Bank for CSR Taiwan 2018 Most Innovative Commercial Bank Taiwan 2018 Best Corporate Bank Tanzania 2018 Best Internet Banking Tanzania 2018 Best Investment Bank Tanzania 2018 Fastest Growing Retail Bank Thailand 2018

Anwanda Divine A., Country Treasurer, EcoBank Malawi

Adam Truelove, Global Trading Floor Director, Learn to Trade Pty Ltd

Mrs. Pham Thi Van Khanh, Executive Vice President, Head, SME Banking, BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC. (BIDV)

SCB Abacus Co., Ltd Energy Absolute Public Company Limited Energy Absolute Public Company Limited Indorama Ventures Pcl Thaire Life Assurrance PCL TISCO Asset Management Co.,Ltd. Thai Union Group Pcl Allianz Worldwide Partners TMB Asset Management CO. Ltd AIA Company Limited Bank of Ayudhya Plc Kasikornbank PCL Siam Commercial Bank Public Company Limited Kasikorn Asset Management Company Limited Euler Hermes Turkey Garanti Asset Management AK Asset Management AK Asset Management Unico Sigorta A.S Unico Sigorta A.S Garanti Bank ALB Forex Albaraka Türk Katılım Bankası A.Ş. Alnus Yatırım Menkul Degerler A.S. Borsa Istanbul A.S. Garanti Bank Garanti Leasing Halk Invest Halk Invest Odeabank Odeabank Odeabank ÜNLÜ Menkul Değerler A.Ş. Yapi Kredi Bank Yapı Kredi Bankası A.Ş. Mashreq Al Islami Mashreq Bank Mashreq Bank Mashreq Bank Amlak Finance P.J.S.C. Amlak Finance P.J.S.C. Aafiya TPA Services – UAE Al Hilal Bank Nashwa Al Ruwaini CEO of Pyramedia Group Al Mal Capital Al Mal Capital Century Financial Brokers Wavetec FZCO Evarei Management LLC – Evareium Noor Takaful Mashreq Bank

Best New Data Analytics Solutions Provider Thailand 2018 Best Energy Solutions Provider Thailand 2018 Best Green Project (Energy)Thailand 2018 Best Investor Relations Company Thailand 2018 Best Reinsurance Company Thailand 2018 Best Provident Fund Provider Thailand 2018 Best CSR Company Thailand 2018 Best Travel Insurance Company Thailand 2018 Best Customer Service Asset Management Company Thailand 2018 Best Life Insurance Company Thailand 2018 Best Mobile Banking Application Thailand 2018 Best SME Bank Thailand 2018 Best Investment Bank Thailand 2018 Best New Fund Thailand 2018 (Asian Fixed Income) Best Credit Insurance Company Turkey 2018 Best Multi Asset Funds (SMART Funds) Turkey 2018 Best Asset Management Company Turkey 2018 Best Pension Fund Manager Turkey 2018 Most Innovative Auto Insurance Product” Turkey 2018 Best Insurance Product (Smart Travel Insurance) Turkey 2018 Best Equity Capital Market Advisory Turkey 2018 Best Forex Broker Turkey 2018 Best Investor Relations Company Turkey 2018 Best CFD Broker Turkey 2018 Most Innovative Stock Exchange Technology Company Turkey 2018 Best Project Finance Bank Turkey 2018 Best Leasing Company of Turkey 2018 Best CSR Company Turkey 2018 Best Corporate Finance Advisory Turkey 2018 Best ATM Experience Turkey 2018 Best Internet Bank Turkey 2018 Best Mobile Banking Application Turkey 2018 Best M&A Advisory Turkey 2018 Best Private Bank Turkey 2018 Best Digital Payments Turkey 2018 Most Innovative Islamic Banking Solution Provider UAE 2018 Best Mobile Banking Application UAE 2018 Best Retail Bank UAE 2018 Best Bank for Factoring UAE 2018 Best Islamic Finance CSR Company UAE 2018 Best Sharia Compliant Property Finance Company UAE 2018 Best Health Insurance TPA Service Provider UAE 2018 Most Innovative CSR Campaign (Child safety program) UAE 2018 Best Media Company CEO UAE 2018 Best Corporate Advisory Service Provider UAE 2018 Best Asset Management Company UAE 2018 Best Online Trading Brokers UAE 2018 Fastest Growing Software Solution Provider UAE 2018 Best Real Estate Investment CEO Stefan Hickmott UAE 2018 Best Takaful Company UAE 2018 Best Corporate Finance Deals UAE 2018

Mashreq Bank Huxley Huxley Huxley ENBD REIT Abu Dhabi Securities Exchange Abu Dhabi Commercial Bank Emirates NBD Bank Professional Traders DMCC Ras Al Khaimah Economic Zone Cayan Group Colliers International Commercial Bank International Emirates Islamic Bank Noor Bank RAKBANK TRRIPLE Union National Bank United Arab Bank Waha Capital Opportunity Bank Uganda Limited BANK OF BARODA (UGANDA) LTD. UAP Old Mutual Life Assurance Uganda Limited NAI Ukraine JSC CB PRIVATBANK JSC CB PRIVATBANK OTP Capital Alfa-Bank Ukraine PSCB MEGABANK Learn to Trade Expend Elite Capital & Co. Limited Convedo Fast Invest LTD Simona Vaitkune, CEO, Fast Invest LTD Trade Finance Global Trendsignal Limited Puente MUFG Union Bank, N.A. Inspyrus Turonbank JSC Agrobank BekMegaTextile Joint-Stock Commercial Bank “Asaka” Seide International Ltd Universalbank PJSC Ipak Yuli Bank Joint Stock Commercial Bank with Foreign Capital “Hamkorbank”

Best Bank for Structure Financing UAE 2018 Best IT & Fintech Contract Recruitment Company UAE 2018 Best Fintech Recruitment Company UAE 2018 Best Banking & Finance Executive Search Company UAE 2018 Best Islamic Real Estate Investment Trust UAE 2018 Most Innovative Stock Exchange UAE 2018 Best SME Bank UAE 2018 Best Wealth Management Bank UAE 2018 Best Training Institute for Forex Trading UAE 2018 Fastest Growing Economic Zone UAE 2018 Most Innovative Residential Project (Cayan Cantara by Rotana) UAE 2018 Best Real Estate Management Services UAE 2018 Fastest Growing Corporate Bank UAE 2018 Best Banking Product (Kunooz) UAE 2018 Best Islamic Bank for Home Finance UAE 2018 Most Innovative Outward Remittance Services (RAKMoneyTransfer) UAE 2018 Best New Mobile Wallet Services Provider UAE 2018 Best Corporate Governance Bank UAE 2018 Fastest Growing Retail Bank UAE 2018 Best Fixed Income Fund UAE 2018 Fastest Growing Microfinance Bank in Uganda 2018 Best Customer Service Bank Uganda 2018 Best Life Assurance Company Uganda 2018 Best Real Estate Consulting Company Ukraine 2018 Best Retail Bank Ukraine 2018 Best Treasury Management Bank Ukraine 2018 Best Pension Funds Provider Ukraine 2018 Best SME Bank Ukraine 2018 Best Bank for Mobile Banking Application Ukraine 2018 Best Forex Education Provider UK 2018 Best New Expenses Management Fintech UK 2018 Best Project Management & Finance Company UK 2018 Best Financial Services Solutions Provider Digital Process Automation United Kingdom 2018 Best New P2P Investment Platform UK 2018 Best Woman CEO in Fintech UK 2018 Best Trade Finance Broker UK 2018 Fastest Growing Trading Education Provider UK 2018 Best Investment Management Company Uruguay 2018 Best Corporate Trust Bank USA 2018 Most Innovative Invoice Solution Provider US 2018 Best Bank for Loans Uzbekistan 2018 Best Retail Bank Uzbekistan 2018 Best Textile Manufacturing Company Uzbekistan 2018 Best Project Financing Bank Uzbekistan 2018 Best Property Portal Uzbekistan 2018 Best Private Bank Uzbekistan 2018 Best Bank for Credit Cards Uzbekistan 2018 Fastest Growing Commercial Bank Uzbekistan 2018

The Tower Mall Management Group Uzbek Leasing International Banco Plaza Banco Universal Vietnam International Bank (VIB) SeABank PRUDENTIAL VIETNAM FINANCE COMPANY LIMITED TECHCOMBank VietinBank VietinBank An Binh Commercial Joint Stock Bank (ABBANK) An Binh Commercial Joint Stock Bank (ABBANK) Vietnam Asia Commercial Joint Stock Bank (VietABank) Baoviet Fund Management Company BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC. (BIDV) BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC. (BIDV) BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC. (BIDV) Sai Gon Joint Stock Commercial Bank Bao Viet Insurance Corporation Bao Viet Insurance Corporation Asia Commercial Bank Sai Gon Joint Stock Commercial Bank Lien Viet Post Joint Stock Commercial Bank Lien Viet Post Joint Stock Commercial Bank PVcomBank Tan Viet Securities Incorporation Tien Phong Commercial Joint Stock Bank (TPBank) Vietnam Climate Innovation Center Vietnam Bank for Social Policies Vietnam International Bank (VIB) Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) Nam A Bank Manulife Vietnam Limited Standard Chartered Bank JFD Brokers JFD Brokers JFD Brokers Barclays Bank Zambia Plc Bank of China Zambia Limited Cavmont Bank Limited Cavmont Bank Limited Cavmont Bank Limited Pangaea Securities Limited Madison Life Insurance Company Steward Bank Limited ZB Financial Holdings Stanbic Bank Zimbabwe Ltd Goldfx Investment Co., Ltd

Best Mall Management Company Uzbekistan 2018 Best Industrial Equipment Leasing Company Uzbekistan 2018 Fasted Growing Private Bank Venezuela 2018 Most Innovative Mobile Banking Application Vietnam 2018 Best Savings Bank Vietnam 2018 Best Consumer Finance Company for Customer Service Vietnam 2018 Best Trade Finance Bank Vietnam 2018 Best Retail Bank Vietnam 2018 Leading Contact Center Vietnam 2018 Best Customer Service Bank Vietnam 2018 Fastest Growing Retail Bank Vietnam 2018 Best Bank for Sustainable Development Vietnam 2018 Best Fund Management Company Vietnam 2018 Best DCM House in Vietnam 2018 Best Bank for Fixed Income Bonds Vietnam 2018 Best SME Bank Vietnam 2018 Best Bank for Information Technology Vietnam 2018 Most Innovative General Insurance Company Vietnam 2018 Best General Insurance Company Vietnam 2018 Best Commercial Bank Vietnam 2018 Best Deposit Certificate of the Year Vietnam 2018 Fastest Growing Commercial Bank Vietnam 2018 Best E-Commerce Bank Vietnam 2018 Fastest Growing Trade Finance Bank Vietnam 2018 Fastest Growing Brokerage Network Vietnam 2018 Fastest Growing SME Bank Vietnam 2018 Best Enterprise Solution Company Vietnam 2018 Best Microfinance Bank Vietnam 2018 Best Bank for Credit Cards Vietnam 2018 Best Youth Centric Digital Banking Initiative â&#x20AC;&#x201C; YOLO Vietnam 2018 Best Bank for Customer Loyalty Program Vietnam 2018 Best Insurance Company for Customer Service Vietnam 2018 Best Priority Banking Services Vietnam 2018 Best OTC Brokerage Western Europe 2018 Fastest Growing Financial Services Company Western Europe 2018 Best FX & CFD Research House Western Europe 2018 Best Corporate Bank Zambia 2018 Fastest Growing Commercial Bank Zambia 2018 Best Customer Service Bank Zambia 2018 Best Retail Bank Zambia 2018 Best SME Bank Zambia 2018 Best Mergers & Acquisitions Advisory Zambia 2018 Best Life Insurance Company Zambia 2018 Best Digital Bank Zimbabwe 2018 Best Holding Group Zimbabwe 2018 Best Commercial Bank Zimbabwe 2018 Fastest Growing Forex Trading Company Cambodia 2018

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2019

EMEA 80 Issue 14

EMEA INTERVIEW

From Vision to Creation-

Building A Sustainable City We interviewed Ahmed Linjawy the CEO of Emaar, the Economic City to discuss the vision, creation and challenges that come with developing a sustainable city and look at the opportunities and expectations for the future. Please tells us about the original vision for Emaar Economic City when it was found in 2006 and where it is at today? Thank you! First, let me clarify the difference between Emaar Economic City (EEC) and King Abdullah Economic City (KAEC). EEC is the legal entity listed on the Saudi stock market and is the master developer of KAEC, envisioned as one of the few Economic cities back in 2006 as master project to become a full-fledged city in years to come. KAEC is realizing its vision to become a great enabler of socio-economic development in the Kingdom of Saudi Arabia. As one of the largest and most significant privately-run economic projects in the world, it is centered on the establishment of a 181 million square meter integrated city by the Red Sea coast north of Jeddah. This strategic location will have maximum impact on the local economy. KAEC is destined to become one of the most important cities in the Arab world serving and benefiting from global trade.

KAEC has its own regulator, the Economic Cities Authority (ECA). The ECA governs KAEC with a wide and comprehensive spectrum of incentives for investors and residents alike. It offers pro-business regulations including: 100% foreign ownership for individuals and organizations, government regulations and services at the seaport, and ease and speed of issuance of permits and licenses related to residing, working, operating businesses, and owning and managing properties. KAEC has made rapid progress in recent years and boasts of a rapidly growing port, expanding industrial valley, and variety of residential communities, a host of commercial establishments, multiple educational institutions, multispecialty hospital, and a variety of leisure and entertainment facilities. What are your core areas of focus? EEC focuses on four strategic sectors within KAEC, including logistics and industrial services, tourism and leisure, youth empowerment and, finally, quality of life.

Issue 14 | 81

EMEA INTERVIEW

First sector: Logistics and Industrial Services

Second sector: Quality of Life (Real Estate Development)

This sector comprises of:

KAEC has developed six residential neighborhoods/districts (Coastal Communicates)

King Abdullah Port (KAP): Started operations in 2013 and is now second largest port in the country covering an area of 14Million square meters. Current capacity is 3.4 Million TEUs. A re-export zone is underway. Port is expected to have a capacity of 20Million TEUs when completed, largest in the region. Industrial Valley (IV): The Industrial Valley (IV) attracted more than 100 national, regional, and international companies in promising and competitive industrial sectors that offer jobs opportunities. The IV is connected to King Abdullah Port, the Haramain High-Speed Rail network and the planned Saudi Land Bridge and therefore Industrial Valley offers first class infrastructure enabling a more efficient all round logistics and distribution network to the largest market in the region and beyond.

82 | Issue 14

• • • • • •

Baylasun (HI) Murooj (HI) Alwaha (MI) Talah Gardens (MI) Alshorooq (LI) Village (Labour Housing)

Third sector: Tourism and Entertainment KAEC recently hosted and organized a number of events: KAEC aims to make the city the most attractive tourism destination on the Red Sea in line with the Kingdom’s Vision 2030 and to meet the growing demand on tourism and entertainment destinations in the Kingdom by working on several areas: • • • •

Royal Greens-Golf Course and Club Esmeralda Health and Leisure Club Motor park – racetrack Desert Safari Campsites

In addition, KAEC has a busy calendar of social, cultural, sports, and art events that suit all segments of society according to their different ages and interests. In 2017, the number of visitors exceeded 400,000 with a 100% growth rate compared to the previous year. We aspire to increase the number this year as well. Fourth sector: Youth Empowerment Programs and Entrepreneurship: KAEC is endeavoring to provide a holistic environment to individuals from all walks of life. Not only do we offer a great living and working experience but also are working hard to provide a great learning experience. Towards this we have set up/ setting up institutions that will bring out professionals from various fields. Some of the currently established ones are: • • • •

Tomouh Vocational Training Program MBSC – MBA in Leadership & Entrepreneurship Culinary Academy Aviation Academy

EMEA INTERVIEW

What initiatives do you feel have contributed to your success? The structure of the city has been very thoughtfully created. KAP and industrial valley development were the main initiatives to bring the economic value to the city in terms of job creation and facilitation of businesses. The lifestyle component of the city added to overall value that KAEC offers. Quality living, serene, quiet and very secure environment are hallmark of our offerings. Our success can be attributed to the presence of a number of companies in the IV and the rapid growth in KAP. In addition, we have sold a very high percent of properties launched across various income segments. What are some of the incentives for entrepreneurs and companies to move to the city? Not only has the strategic location of the industrial valley, but also the close proximity to the port coupled with modern infrastructure attracted the entrepreneurs to come to the city. The city offers competitive and unique benefits and incentives for entrepreneurs, for example: •

Exemption from all licensing fees and the granting of free,

fully equipped office spaces and smart infrastructure for three years. •

Competitive discounts on the rental of residential units and the homeownership program along with long-term, interest-free installments.

•

Entrepreneurs also enjoy discounts and benefits exclusive to KAEC residents and investors.

What role if any does tourism play? Tourism plays a very important role. As mentioned previously one of the aims of KAEC is to support the Kingdom’s Vision 2030 by making the city the most attractive tourism destination on the Red Sea meeting the growing demand on tourism and entertainment destinations in the Kingdom. The Haramain fast speed train is now operational and connects the two holy cities (Makkah n Madinah) via Jeddah. This is expected to address connectivity issues and will bring a greater number of tourists from these cities. Various programs and events organized within the city bring a lot of visibility. People are able to see the developments in the city, the facilities available to both residents and visitors and discover the range of hospitality and commercial services

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available. The long coastline and green environs of the city along with the extremely secure environment ensure unparalleled offerings to everyone across different income segments.

SME Authority - The program aims to support entrepreneurs in six economic sectors, including: logistics, technology, renewable energy, food and beverage, entertainment, and innovative industries.

C a n you te l l us a bou t some o f th e stra te gi c a l l i a nces yo u h ave e sta b l ishe d?

Tomouh program – Program for Human Development to train men and women under the patronage of Prince Khalid Al-Faisal.

Huta Marine Co.: To establish Port Development Company that operates the port Customs Authority – For re-export zone Ministry of Housing – Signed MoU to supply 8000 units of Affordable housing within KAEC Gas Authority – Signed contract for connectivity of Gas pipeline to the industrial valley gas zone General Entertainment Authority – Engaged with the GEA to organize/host events in KAEC

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Misk Foundation: MBSC is a private institution of higher education for both men and women, located in King Abdullah Economic City on Saudi Arabia’s west coast. MBSC was established through an international partnership between King Abdullah Economic City, Babson Global (a whollyowned subsidiary of Babson College, USA), and Lockheed Martin under the umbrella of the Economic Offset Program in the Kingdom of Saudi Arabia and the MISK Foundation.

SFH: We established a hospital and a clinic in the city in partnership with Soliman Fakeeh Hospital, one of the leading Healthcare providers in Western Region. Faisaliah Hotel: Operator of our 5 star hotel ‘Bay La Sun’ TROON: Swiss Golf Course operator of the Royal Greens Golf Course & Clubhouse. How have existing partnerships opened up new opportunities? Naturally these partnerships have opened a lot of avenues to develop KAEC further and faster. As cities get to shape over a period of time, we have managed to catalyze the development of the city through these strategic partnerships that offer growth across various business sectors. Industrial growth is spurred by development of the port, and in turn jobs created due to increased economic activity brings in more employees and

EMEA INTERVIEW residents that promotes the need of various commercial setups. In line with this, we are able to bring in variety of developments. Some of our projects are; The Royal Greens Golf Course and Club, which won a variety of international awards as the best sports tourism project, the Bay La Sun Hotel, the Bay X Exhibition and Conference Center, the Juman Family Park and Garden, Juman Karting, the Bay La Sun Marina and Yacht Club, the Bay La Sun Beach and Marina Walkways, and Aqua Fun. Can you tell us about any other projects that are under development at this time? We have a number of projects under development: The Views Hotel, Sun Rise Hotel Apartments, The Rove Hotel, the public beach equipped for swimming, the private beach, Elite Desert Camps, the massive Lagoona tourist area project and others. How do you maximize shareholder value? Our current valuation of Investment properties stands close to 53 Bn SAR. The difference in the current market cap and valuation shows immense intrinsic value offering a potentially high upside to shareholders. In addition, the developments of high-end assets within the city positively impacts the overall value proposition of KAEC in terms of perception, livability and goodwill. What are your expectations for the future? Our future looks very bright. We have spent immense amount of money that are funded by equity, debt, and project revenues. We have a sound business model in place and good liquidity to fund our projects. As we increase the number of operating assets to become operational, we will be able to generate more cash to fund our newer ventures thereby realizing the vision to create a modern, valuable, safe and sought after place for living, working and leisure.

Ahmed Linjawy CEO Emaar, the Economic City

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Celebrating 10 Years of Excellence In November of this year we interviewed Mr. Phil Ashkuri, Chief Distribution Officer for Noor Takaful at the London Stock Exchange Studios to discuss the company’s success in the last 10 years and the insurance market in the UAE. Can you tell us about the creation of Noor Takaful and how the industry has evolved over the past 10 years? I am pleased to say that as we speak, we are celebrating our tenth anniversary. The company was inaugurated exactly ten years ago by His Highness Sheikh Ahmed bin Saeed Al Maktoum. It was originally created in anticipation of the government of Dubai actually setting mandatory health insurance, so with that in mind the company was set up, but we are very privileged these days to be covering not just health insurance, but we cover a full suite of insurance products from general to health, commercial and personal insurance as well. The United Arab Emirates (UAE) has become one of the fastest-growing insurance markets among the Gulf States. In the increasingly competitive market, how do you best capture the growth opportunities in key Takaful markets?

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You are absolutely right, it is a very competitive market, with a market of just over few million customers within target insurance market. There are now over 160 brokers, over 60 insurance companies so that does lead to great competition. Our belief at Noor Takaful has always been in building long term sustainable partnerships, be that with our broker community or our direct lines. So, it is very much around building long term relationships, long term partnerships through great value products and obviously as with every other market in the world, to provide leading customer service. What business lines do you see driving the operation forward? Great question. Well for the last few years, medical insurance. As I mentioned before, medical insurance was introduced as a mandatory product several years ago. It started through corporations who were obliged to give all their employees mandatory medical insurance and that subsequently became mandatory for all individuals as well. That has been driving the growth of medical insurance in the Middle East and I think that will continue for several years. We are seeing increasingly now a drive towards other personal insurances. I think the history of the UAE as with many other parts of the region is that there

EMEA INTERVIEW

has been a low penetration of personal insurances. We are starting to see a big change in that market now through different distribution methodologies, certainly technology and a growing level of awareness. I think the growth will come mainly in this area.

amount of money in the last few years in technology. This part of the world is technology hungry. We have seen the requirement to drive a lot of our products and services down the technology route and we will certainly continue to invest heavy in that region.

Why do you think that change has taken place?

What other innovative products have you brought in to meet the needs of customers?

I think it is a growing level of awareness of the requirement of insurance in the region. We have a unique mix of expat population in the UAE. Expats arriving in the UAE come with their own understanding of insurance. But also, there has been a great drive from the government and the introduction of regulators over the last few years has driven awareness and education throughout the UAE. So, we are seeing not just an increase in distribution of the products but indeed an increase in the demand for the products. Letâ&#x20AC;&#x2122;s look at some of the services you provide to individuals and families? At present a lot of our focus is on medical. We have developed a very interactive, very easy to use, online quote to buy service for individuals wanting to buy medical insurance. Weâ&#x20AC;&#x2122;ve invested a significant

I think the most recent example I can give you is on the SME side. The SME sector is a very important market for the UAE. Earlier this year we were very proud to launch our SME all-in-one product and that basically allows the management of small medium enterprise businesses to buy all their different line of insurance through one product. From their medical to their general, there can typically be five or six different lines of insurance a small business may require. Historically, the business leaders are required to go to different insurance companies or brokers to purchase the various products. But through an online application and with great support of our underwriters we are able to launch all of those different product requirements into one specific product. The small business leader can come online, buy that product and have it fully serviced, register and have claims paid fully online.

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EMEA INTERVIEW

How do your relationship managers help ensure SME and individual clients have the full protections they need? As a multi integrated insurance company we do have four key channels of distribution. The UAE is a broker dominated market and we have a team of people who look after and service our brokers. But particularly for the SME clients, we also have a dedicated team of relationship managers that provide 24/7 service. We visit their premises, we will give them guidance, we’ll give them an insight to their insurance needs, we provide them with all the available online tools for education awareness, different quotations and then continue to give them that great service all the way through to the unfortunate event of them needing their claims settled.

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Noor Takaful is committed to adopting the best environmental and sustainable practices. Can you tell us about the initiatives you have put in place? This is a topic we take very seriously at Noor Takaful. Under the leadership of our CEO, Rajesh Sethi we recently signed the Dubai Declaration on Sustainable Finance. It delivers in a number of different ways. Some of them can be reasonably small but high impact to us. For example, we are promoting our marketing materials on fully recycled paper. We have stopped producing gifts and items that are not biodegradable materials. We’ve introduced different types of pencils in the department that have built in seeds, these pencils you can actually plant at the end of their life and they grow into small trees and plants. These are the types of gifts we are now giving out compared to the traditional type of gifts insurers pass on to their customers and brokers. Everything we do now is consistent with our approach to a sustainable world.

What opportunities do you see for further development of the Takaful industry in the UAE? Whenever I am asked that question, I try to not respond on basis of the Takaful market, Takaful is simply the shariah compliant version of conventional insurance. So, with over 60 insurance companies in the UAE, of which only 12 are Takaful as the market continues to grow in the UAE and it certainly will, it is really important for people to understand that Takaful companies sell to both Islamic and conventional buyers.

Mr. Phil Ashkuri Chief Distribution Officer Noor Takaful

EMEA INTERVIEW

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EMEA FINANCE

Amlak Finance PJSC

The U.A.E.’s leading Sharia compliant Real Estate Financier Amlak Finance PJSC, a specialized real estate financier in the Middle East, provides leading Shari’a compliant property financing solutions that enables individuals and businesses to achieve their goals of owning property in the United Arab Emirates (UAE).

Finance is supplemented by a complimentary full suite of property management services that comes into effect post completion and handover of the property. •

Double Your Property: A first-of-itskind product designed for investors looking to own a second property. The product provides eligible investors with increased returns on their real estate investments as well as attractive financing terms. Amlak forged partnerships with key real estate industry players such as the Dubai Land Department (DLD) amongst others.

•

Private Construction Finance: Offered to individuals or corporates that carry out under construction projects. Financed projects can either be located in freehold, leasehold or mainland.

With a rapidly growing market like the UAE, Amlak is focused on continually expanding its offerings with innovative and leading products and services, in compliance with Shari’a and global standards. In line with this, Amlak provides a wide range of customized financial solutions and products to investors for both ready and off-plan properties. These array of products not only opens the door for potential investors within the UAE but also globally, to achieve their goals of owning a property in Dubai. Some of its key products and services include: •

•

Istithmari: The first-of-its-kind Buy-To-Let real estate investment finance (Ijarah) product in the region, designed for investors looking to invest in completed residential and commercial properties. Ijarah: A finance product designed for buyers of residential or commercial property in ready projects. Under Ijarah, Amlak buys the property from the developer/ seller and leases it out to customers with a promise to sell at the end of the lease term. Tatweer: A one-of-a-kind finance solution for investors looking to buy into under-construction properties.

•

Edaara: Our comprehensive property management services offering exclusively designed for home finance customers that covers everything, from assessing rental value, to screening of potential tenants, to collecting rents, and managing home maintenance.

•

Akeed: Offering new customers a unique opportunity to benefit from a fixed finance profit rate, along with providing them with complimentary property management services.

A buoyant trade and tourism environment, and a surge in business activities due to Expo 2020 are expected to act as a catalyst to the growth of the UAE. The real estate market remains one of the most important pillars of the economy and Amlak anticipates this positive sentiment to have a knock on

effect on the real estate market. Through its Shari’a compliant real estate financing solutions, Amlak’s aim is to positively contribute towards the growth of the Shari’a finance sector that helps to propel the UAE’s vision for Dubai to become the world’s “capital for Islamic economy”.

Amlak has received several awards in 2018 as a testament to its hard work and its ongoing commitment to support Dubai’s growth as the global capital of the Islamic Economy. These awards include ‘Best Sharia Compliant Company in the UAE, and ‘Best Islamic Finance CSR Company in the UAE’. In recognition of Amlak’s efforts in adopting Islamic values in the organization and business excellence, the company has also been awarded the GIBA Award on behalf of Global Islamic Business Excellence Centre (GIBEC) and Department of Economic Development (DED). Through these efforts, Amlak will continue to strengthen its position in the market and looks forward to providing innovative, leading products and services to its customers, in line with Shari’a principles. For more information on Amlak Finance, please visit www.amlakfinance.com.

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EMEA BUSINESS

Ethical AI:

a vital investment for businesses

Artificial intelligence is already reshaping businesses. Corporate leaders are recognising its benefits: automating supply chain management, liberating workers from the more mundane, repetitive tasks and boosting efficiency across the board. While AI is rightly being talked about in largely optimistic terms within business, there are complexities that we need to overcome. The impact on jobs is an obvious and important talking point, although these fears are almost certainly overblown: it’s not at all clear that AI will generate an aggregate reduction in jobs (there have been similar concerns with most other major technological advances throughout history, but this has never happened). But there are also other potential issues, which are being recognised at a governmental level. Last month’s Budget announcement included an interesting development; a pledge to establish a new Centre for Data Ethics and Innovation. The project will focus on ensuring that society is able to keep up with the pace of change driven by artificial intelligence, assessing the implications for public services, the future of employment and businesses. Crucially, the Centre will also explore “ethical issues” relating to AI. This is a crucial element of the debate, which is worthy of greater attention. But what exactly do we mean by ethics in AI?

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AI: the potential ethical dilemmas As AI becomes a fundamental tool in the delivery of public services, as well as healthcare and business decisions, there are potential ethical issues to consider. A model predicting whether someone is more likely than another to buy a product may not need to be understood in depth. However, a life-changing decision on mortgage eligibility requires careful assessment by the lender, and a degree of transparency in how decisions are arrived at. In addition, we could start to see AI used in making predictions on criminal recidivism, potentially informing decisions on probation, as well as deciding whether a patient should receive a drug, and in what quantity. When it comes to decisions like these, it’s vital that the behaviour of the AI is properly understood and potential mistakes are avoided (for obvious reasons). As Lord Timothy-Jones, a House of Lords Select Committee chair, recently pointed out, “there could be circumstances where the decision that is made with the aid of an algorithm is so important there may be circumstances where you may insist on that level of explainability or intelligibility from the outset”. The question, therefore, is whether there is a way of restraining AI’s potential to make incorrect decisions. Is it

possible to build rules into the technology at the outset to prevent poor decision-making later? Building ethics into AI For businesses, the answer is to construct AI technologies that make people feel comfortable and address matters troubling them. Avoiding losing sight of the need for control and the role of human emotion in making business decisions is paramount. When choosing solutions to implement, it’s crucial that leaders take this into consideration, asking themselves whether the technology allows for human insights to be built in, thereby paving the way for common sense outcomes. Fortunately, revolutionary products are emerging which allow users to specify upfront rules about the behaviour of predictive models, so that common

EMEA BUSINESS

sense outcomes are guaranteed. One such solution is Archetype, a patent-pending technology that builds predictive models using AI but allows users to insist that certain rules are adhered to. For instance, if the business needs to be able to explain to a customer that it considers that credit risk increases as salary levels decrease, this can be enforced at the outset. Archetype only produces models in which specified constraints are always adhered to, which is key to being able to confidently deploy a predictive model without fear of generating undesirable outputs. It’s not just about the societal impact. Innovation in ethical AI is about ensuring the UK is a digital innovation leader globally. A recent House of Lords report identified ethical AI as a developmental area

and growth opportunity for the British economy. By focussing on the ethical side of AI, there is a real opportunity for Britain to join the US and China as an AI leader, driving progress that will benefit everyone. There can sometimes be a perception that AI is an uncontrolled force, set to wreak unrestrained revolutionary change on businesses. While the technology is certainly transformative, the development of Archetype illustrates how AI can be controlled and engineered to produce common sense outcomes. The Government’s commitment to understanding more about AI is a promising development and I’m looking forward to hearing more about the Centre for Data Ethics and Innovation’s progress.

Martin Benson Head of AI Consulting Jaywing

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EMEA ENERGY

Winds of change the case for renewable energy in Turkey As one of the world’s fastest growing energy markets, Turkey has been increasing its drive towards greater selfsufficiency for several years. To satisfy its annual 300bn kilowatts of electricity consumption, the current energy mix has been quite well-balanced: a quarter of electricity generation is hydro-based, while roughly a third comes from natural gas and another third from coal. However, the problem is that domestic output has been insufficient to meet rising demand: energy imports have therefore averaged $55bn a year. In order to reduce this deficit, the Ministry of Energy and Natural Resources (MENR) has been driving forward plans to boost domestic energy output across the board. This serves as a further step in the significant reforms of recent years relating to energy provision, which have resulted in much greater participation from private entities, and the creation of a more competitive energy market. A more recent issue has emerged from the economic problems resulting from this year’s sharp devaluation of the Turkish Lira. In October, electricity and natural gas prices increased for the third consecutive month: electricity rates for residential consumers rose by 8

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percent and for commercial and industrial consumers by 18 per cent. Since January 2018, Turkey’s natural gas prices have increased by 29.5 and 54 percent respectively for residential and commercial/industrial consumers. As one of the top ten countries in the world for coal production (mostly lignite), renewable resources and geothermal energy, Turkey’s oil and gas resources are, however, more limited – imports of both are one of the principal factors in the energy current account deficit. To diversify the energy mix further and to maximise the use of domestic resources, a government road map has been implemented over several years to transform and modernise thermal plants and to increase output and efficiency in coal production, which has gone from 60m to nearly 100m tons over the past five years.

So where does wind power feature in the energy equation? Turkey's wind electricity generation hit a new daily record in September with approximately 16.8 per cent of the country’s total power being generated from wind turbines – a clear demonstration of the increasing capacity of renewable energy in Turkey's power generation. However, one day does

EMEA ENERGY

not necessarily mean every day. Incorporating wind power into existing power grids is notoriously challenging because fluctuating wind speeds and direction mean that turbines generate power inconsistently. So, does this daily wind record indicate a potentially more sustainable shift away from non-renewable energy sources? The argument for renewable energy as part of the mix has already been won: installed capacity of wind energy in Turkey has increased rapidly from 20MW in 2002 to 4.4GW by 2015. Currently, 158 wind energy companies are actively operational in Turkey at 207 wind energy plants with 6.5GW of installed capacity, while 32 projects with 808 MW of installed capacity are under construction. The potential capacity of many pf the existing wind power plants in Turkey can be raised, according to industry experts. In total, wind provided roughly eight per cent of the country’s total installed power capacity last year, while wind energy accounted for 6 per cent of Turkey’s electricity production. For Turkey’s expanding wind energy market, further private investment is needed to meet growing demand. Although the country has extremely good wind resources, both onshore and offshore, very deep waters surrounding it require specialist know-how. Since 2006,

Turkey’s wind energy sector has attracted $12.3bn in investment, according to data published by the Turkish Wind Energy Association. In June, MENR announced that it was launching a tender: inviting applications for the construction and operation of a 1,200-MW offshore wind farm with the precise location yet to be determined. When completed, it will become the world’s biggest. The supporting mechanisms of government have also been in place for some time. A Sustainable Energy Action Plan was launched in 2011 which received subsequent support from the EBRD in the financing of several Turkish wind projects. Domestically, the MENR and the Energy Market Regulatory Authority regulate entities operating in the region. M e a n w h i l e c u r re n t Tu r k i s h e n e rg y p o l i c y i s c o m m i t t e d t o f u r t h e r ro l l i n g o u t t h e a d o p t i o n o f re n e w a b l e e n e rg y a n d b o o s t i n g t h e n e c e s s a r y i n f r a s t r u c t u re w i t h p l a n s t o i n c re a s e t h e s h a re of re ne wa ble e ne rgy res o u rces in e le c tric ity produc tion is to inc re a se to a t l ea s t 3 0 % by 2 0 2 3 . To re a lise this obj e c tive , the gove r n m en t i s in the proc e ss of imple me nting suppor tive p o l i ci es , suc h a s fe e d- in ta rif f s a nd inve stme nt inc e n t i ves fo r re ne wa ble e ne rgy.

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EMEA ENERGY

As originally determined by the Electricity Market and Security of Supply Strategy in 2009, several targets have also been adopted to generate electricity from renewable sources. If met, these renewable energy targets will generate between 275,000 and 545,000 direct job opportunities in the energy sector. They will also enable a fossil fuel saving of approximately 790,000 tonnes of natural gas, or 464,000 cubic meters, by 2023. In line with countries elsewhere, renewable energy in Turkey has a critical role to play in shifting dependence away from fossil fuels. Although the region is of strategic importance for oil and natural gas producers, it is also well positioned as a diversified energy market for the future. For this reason, it is crucial for Turkey to use a variety of different energy sources, ranging from imported oil and natural gas to renewables. This will ensure that supply security and continuity are maintained, as well as allowing for the further development of energy transportation projects.

Levent Lezgin Kılınç Founding Partner Kılınç Law & Consulting

www.kilinclaw.com.tr

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EMEA INTERVIEW

Solutions for a brighter financial future With approximately â&#x201A;Ź 6.6 billion under management, Whitestar Asset Solutions is one of the largest real estate and credit portfolio management companies in the industry. JoĂŁo Bugalho, CEO of Whitestar Asset Solutions S.A. spoke to Global Banking & Finance Review about their success and the current state of credit portfolio management. Can you tell us about your history and what has led to your success? We were part of the Lehman Brothers universe when the bank collapsed, and we had to find solutions to keep the company afloat. That probably is part of the explanation why we have been such a resilient, and successful, company over the years. We managed to surf the crisis by convincing investors that we were the right partner to support them in their incursions in the Portuguese market and we ended up being rewarded by having them trusting us portfolios that gave us the undisputed market leadership. At the crux of this expansion was the quality, know-how and expertise of our employees, as well as a clear strategy in a difficult market context. We are focused on training, motivating and engaging employees, aiming to be one of the best places to work in a few years, and our team of professionals make the difference in this market. On a side note, Whitestar is by far the largest company in this industry, in Portugal. How has the industry changed since the financial crisis? As in so many other places, the global financial crisis hit hard the Portuguese economy. The banking

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system faced an explosion in NPEs, liquidity shrunk, the economy slowed down, and unemployment went above 16%. This complex economic context led to massive defaults by debtors, both individual and corporate, and the credit management business suffered, not only as a consequence of lower collections but also because asset sales almost came to a halt, given banks inability to sustain losses. Fast forward to today, things have changed. The economy is growing, driving down the unemployment rate, currently below 7%, the banking system is now much more liquid, and customers are finding alternatives in their lives, many of them being able to fulfill their financial commitments. Simultaneously, banks, pushed by the regulator to clean up their balance sheets and shore up the capital base, have been actively promoting

asset sales, which have never been stronger, probably in excess of â&#x201A;Ź7 billion in 2018. Inevitably, the credit management services sector is benefiting from this flurry of activity. How are the expectations of credit portfolio management changing? Servicers are being faced with progressively lower margins of business and the barriers of entry tend to be less as digitalization makes its way into the business. Many investors are looking to set up their own shops, albeit somewhat specialized in specific niches, such as Real estate. Mostly, the servicers are being forced to provide higher added value services as the plain vanilla portfolios become increasingly more commoditized. Investors expect more and more a full service, ranging from Due Diligence, to business plans and support in structuring and implementation.

You offer a unique range of management services across all asset classes; can you tell us some of them and the benefits they offer investors and originators? We have a team of nearly 600 highly specialized people that knows the business in detail, forming the largest operation offering credit management services in Portugal. We like to think of ourselves as a one stop shop where an investor looking to acquire NPLs portfolios or find exposure to RE can find the right answer, no matter how specific the ask is. We have an STC (regulated SPV specifically set up to provide ring fenced silos for securitization) and over the years we have helped investors in setting up structures to maximize returns on their investments.

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How do you address the everincreasing challenges of data management? Data is one of our most valuable assets. Through a continuous program of investment in IT, we make sure our platforms are able to deliver quality data outputs and analytics that support the different business areas, from pricing to collections strategies. Being such a valued asset, we use the latest technology to protect it from external and internal threats, endowing our staff with the relevant training and awareness to fulfill all regulatory requirements.

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How do you approach Corporate Governance and Risk Management? The structure, the roles and the responsibilities in Whitestar are very well defined, allowing the staff to know whatâ&#x20AC;&#x2122;s expected from them and what they are accountable for. Additionally, Whitestar has a set of policies in force that describe the expected ethical behavior from our staff. In terms of Risk Management, Whitestar uses the Three Lines of Defense approach. The first line, the business mid-line managers, is responsible for identifying risks in their daily routines and for implementing corrective actions and controls. The second line is the Risk & Compliance teams that develop the internal controls and risk processes

of the company as well as providing assurance that first-line-of-defense controls are well managed. The third line is provided by the Internal Audit function that will monitor the compliance of the other lines, providing assurance to the senior management of the consistency versus expectations. How does Whitestar Asset Solutions support the social economic development in Portugal? Literacy is a basic need for human development. In an increasingly complex financial environment, being financially literate not only benefit the individual, but also positively contributes to the effective functioning of a societyâ&#x20AC;&#x2122;s economic stability and development.

EMEA INTERVIEW

In 2018 we established a partnership with Junior Achievement Portugal to launch a Financial Literacy Program for children and teenagers. In this first year of the program we reached almost 2.000 children, from 34 schools in different locations of Portugal. We want to help preparing these young people for employment and entrepreneurship. Whitestar provides since 2015 financial support to ensure the effective delivery of education programmes to children, aged between three and six years old, in a Mozambican school. We help as well Portuguese institutions that take care of children victim of different type of violence and/or with no family. What is your business strategy for the year ahead? We are focusing on the progressive integration of Norfin within the Arrow world following the expected Central Bank approval for the acquisition, expanding the investor base, increase the asset management and the Real Estate arms of the business, attain operational gains through the adoption of a wide Lean program transversal to the entire operation and carry on with the development of a new core platform for the management of NPLs.

Jo達o Bugalho CEO Whitestar Asset Solutions S.A.

Jo達o Bugalho has been the CEO at Whitestar since September 2016 and has nearly 30 years of experience in the financial sector. Jo達o acted in institutions like Citibank Portugal, Banco Comercial de Macau, Interbanco - current Banco Santander Consumer Portugal, Millennium BCP London Branch, Santander Consumer Multirent. Since July 2013, Jo達o Bugalho has held the post of Head of Operational Leasing and Fleet Management of Volkswagen Financial Services Brazil. He holds a degree in Business and Administration from the Portuguese Catholic University, and also attended the International Business Summer School in 2000, in Basel, Switzerland.

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Delivering Banking on Demand in Angola Banco Económico is a leading bank in Angola offering innovative products and services for individual, corporate and Institutional clients. It also has an investment banking unit which focuses on structured and project finance. Mr. Sanjay Bhasin, CEO of Banco Económico spoke with Global Banking & Finance Review about the banking landscape in Angola and the role Banco Económico is playing. Banco Económico is very customer centric and employs a unique strategy of customer segmentation. Can you tell us about the unique business model Banco Económico uses to meet the needs of customers? Our presence, growth and profitability in the market are based on two main pillars, which are client focus and product development. The bank, in the past few years, has been putting the client in the center of its business strategy. This includes a host of initiatives – staff training, branch upgrading, branch consolidation, service levels and complaints management. All these initiatives are aimed at providing a high quality of customer service and satisfaction, by listening to customers and quickly readdressing any issues that they may have. Regarding the Angolan economic environment, the bank’s profitability is also dependent on two other variables – firstly we manage our credit portfolio closely, so as to keep non performing loans in control.

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Secondly, it's important to have the right mix of currency assets so that devaluation of the kwanza is not damaging to the bank. Let’s talk for a minute about product development. What drives product creation at Banco Económico? The second pillar of our strategy is product development and is allied to the first– in the sense that we always try to anticipate our clients’ needs and both improve existing products and launch new products. These

could either be in terms of specific client segments, identified deposit maturities, or currency hedging products. Launching different and differentiated products ensures that we are present in several client segments with an appropriate offering. We also ensure that we are competitive on pricing. Our clients always incur reasonable charges and interest rates, while our deposit interest rates are always in line with the latest economic situation.

EMEA INTERVIEW Are you launching any new products this year?

What role does employee development play?

Along 2018, we launched several innovative products, in the Angolan bank industry. We can highlight a special savings product - DP Mundial – which was inspired by the FIFA World Cup 2018 and applicable to both individuals and corporate clients.

Human resources are a key factor of our operation. We are not only customer centric, but also people centric. We consider that employees are the main competitive differentiation factor of the bank and we have in place a solid talent management strategy.

In October, we launched an innovative and exclusive product in the Angolan market, which is a medium-term savings account, with a bank overdraft possibility, to stimulate the consumer for more long-term savings deposits. Furthermore, we also created several personal credit solutions, for different client segments. We also looked at Credit concession solutions, although with some consciousness, providing the client with a product that today is the most wanted due to the increase in cost of living.

This means that we keep a constant focus on our team to ensure the best training levels, both in technical and personal skills. For example, the bank is implementing a program to strengthen Banco Económico culture, focusing on the development and training of employees through the +Talento (Mais Talento, in english More Talent) initiative. This initiative, aims to develop employees skills and strengthening Banco Económico´s culture, to stimulate a greater sense of belonging and alignment with the bank's way of being and doing.

In 2019, we forecast to focus our offer development on a solution for income accounts, digital solutions, financing and high service levels. Our main objective is to increase our deposits and the number of active clients.

Also, it will allow building a culture of service excellence to enhance our internal and external corporate image. We assume to be a bank who wants to be closer to the customers, through the excellent service level of our

employees, so this program goal is to ensure a strong culture of the banks main values, which breathes abroad. Therefore, +Talento training program aims to stimulate more competence, responsiveness, effectiveness, critical thinking and, consequently, more and better results for employees and the bank. With a two-year term, the program is designed for all teams and is based on three main pillars: DNA Banco Económico, Management, Leadership and Costumer Focus.

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Security is a major concern for mobile banking customers. What does Banco Econรณmico SA do to help ensure a secure mobile banking environment? Digital innovation and technological development are exponentially transforming the operation environment of the organizations, globally. This reality demands the ability to adjust and remain competitive, as well as strong agility towards innovation. As far as the financial system is concerned, the introduction of new technologies is promoting a real revolution, both in the way banks interact with their customers and in the products and services they offer, namely through the usage of mobile phones. Obviously, security is paramount for the success of mobile banking. In this concern, Banco Econรณmico follows the best practices for securing its applications, insuring the protection of its business and its clients, at several levels.

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First, Banco Econรณmico starts at the top, educating its clients, posting security information, ensuring the important information reaches every element of the chain; Second, and at a technical level, all the connections between the mobile application and the servers is made through ciphered connections, assuring the privacy of the data. Executing transactions requires multifactor authentication, increasing factors as more transactions are made in a specific time period, and the password information is stored using adaptive one-way functions on the server side. Another factor that we would like highlight is biometric authentication by fingerprint that makes virtually impossible to alter or fake. And lastly, Banco Econรณmico performs independent security auditing for the mobile solution and application servers. What challenges and opportunities are facing the banking sector in Angola and how will Banco Econรณmico contribute towards the growth and progress of the industry? We are likely to witness consolidation in the banking industry, in Angola, in the next couple of years. This will certainly present opportunities to grow non-organically, and we might even consider being part of the consolidation process as a strategic option. Also, there is already interest by financial institutions from outside Angola. Typically, when emerging economies open up, they see a fair amount of global interest. This could happen in Angola as well. What are your plans for continued development? We will keep our focus on the latest consumer trends to pursue our expansion plans through the continuous launch of more and better products and services. We are furthering our attempts on growth using technology. We are undergoing a major revamp of our core banking system while, at the same time, launching a Digital Banking initiative to both capture a wider base of clients as well as service existing clients better.

Mr. Sanjay Bhasin CEO Banco Econรณmico

In the last years, Sanjay Bhasin has been working on international companies in the banking and finance industry, worldwide. With over three decades of experience, Bhasin has held several leading roles such as Chief Dealer for FX / Money Markets / ALM at Standard Chartered Bank, and CEO of JM Morgan Stanley Fixed Income Securities and Managing Director at West LB London. He has been CEO of Banco Econรณmico since November 2014 He graduated in Commerce, at the University of Delhi, holds a postgraduate degree from the Indian Institute of Management Ahmedabad and attended the INSEAD management program.

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How the Next Generation are Shaping the Future of Trading The EU’s e-Privacy regulation, which is expected in 2019, is set to be the next major piece of legislation designed to protect the privacy and security of personal information. A step on from GDPR, e-Privacy protects meta data (as well as voice and email data) and will oversee and regulate privacy in ‘Over the Top’ eComms channels (i.e. social media and messaging) – something which many younger traders are already relying upon to do business. Naturally, people in the finance sector are no different to those in any other industry. We all know there is a pronounced generation gap when it comes to using communication channels, with many younger people preferring to use the likes of Twitter, Instagram, LinkedIn and WhatsApp (and associated IM solutions) over more traditional emails or phone lines. Legislation for the real world There is nothing inherently wrong with this, communications have always evolved. However, legislation written even a decade ago is struggling to cope with protecting privacy on these new platforms. To some older professionals it may look like the new e-Privacy law is one step ahead of trading trends by capturing all eComms data (including metadata). However, the truth is that financial firms are actually often a step behind in implementation and enablement of eComms and protection of the eComms data. Its time for the financial sector to think ahead!

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Understanding eComms There are good reasons why many traders have turned to newer eComms and messaging channels. These channels are fast to use, instantly connecting with the right person in virtually any location via a personal device. Unlike waiting for an email response for example, they offer visibility of the message being received and a reply being sent. In a highly time-critical environment this makes perfect sense. Understanding the potential benefits and pitfalls One approach (albeit a very shortsighted one) is to clamp down on the communications channels used by traders. Most firms have their business emails and on-site voice communications securely stored and monitored in case of a discrepancy or investigation. It would be very easy to insist no other channels are used – but the reality is that the traders will use these channels for communication and firms need to align with that. The opposite approach can be just as damaging. Unregulated and uncontrolled use of social and mobile communications can leave the firm at serious risk of data breaches and subsequent regulatory scrutiny/ punishment.

The fines can be eye-watering. Figures from Eversheds Sutherlandi1 show that in 2017, FINRA (the Financial Industry Regulatory Authority) reported $8.3 million in fines for electronic communications cases. In the largest single case, a firm was fined $2 million for failing to implement a reasonable supervisory system to review emails. Unregulated and unmonitored communications are too big a risk to ignore. The threats can be even harder to control if the organisation allows traders a degree of BYOD (bring your own device) flexibility in their role. How can a financial firm protect against data or privacy breaches on a platform and device it doesn’t directly control?! Embracing digital transformation Clearly neither banning eComms use or turning a blind eye to its use by traders are realistic approaches for any modern financial firm. The sensible approach is to embrace this digital transformation and to take ownership of it. Many young traders and customers want to use the latest eComms to suit their preferences, so firms need to ensure this is enabled but also that devices and eComms channels are properly monitored and regulated. Ensuring all eComms data is properly collected, securely stored and available for investigation and reports at a moment’s notice ensures any breaches (or potential breaches) can be addressed immediately.

EMEA TRADING

Meeting new e-Privacy Regulations

Giving the people what they want

This approach will be even more important once the new EU e-Privacy Regulation comes into force. Interestingly though, the new legislation will also cover the privacy of the traders themselves, as well as customers and the firm.

The next generation of traders are already shaping the future of the financial sector and the legislation is rapidly catching up too. There are considerable benefits to be gained from embracing change and savvy financial firms always understand this.

Fines for non-compliance will on the same levels as GDPR (up to €20 million or up to four percent of worldwide annual turnover, whichever is the highest) – significantly serious enough to cause firms financial hardship as well as reputational damage.

It is vital to first understand the evolution of eComms and then to employ the right RegTech solutions to ensure your business stays at the front of this change, rather than being left behind by it.

Shira Rottner Business Development Manager Shield FC

“Annual Eversheds Sutherland Analysis of FINRA Cases Shows Restitution on the Rise in 2017.” Eversheds Sutherland(US) LLP, us.eversheds-sutherland.com/NewsCommentary/PressReleases/209060/Annual-Eversheds-Sutherland-Analysis-ofFINRA-Cases-Shows-Restitution-on-the-Rise-in-2017.

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Technology Innovation Making Investing Easy Fast Invest is an innovative peer to peer lending investment platform committed to making investing accessible and easy. We interviewed Simona Vaitkune the visionary behind Fast Invest to find out more. What were some of the biggest challenges you had to overcome? One of the biggest challenges was the lack of support from those around me at first. I was thinking big – but people often have a tendency to think small. Her business idea and work were repeatedly dismissed. People didn’t believe I could successfully turn it into reality. But as a well-known saying goes, “being challenged in life is inevitable, being defeated is optional.” These and other challenges the company faced were never something that could discourage me from continuing. They taught me and the company to keep pushing the boundaries. You have experienced significant growth, what do you attribute this to? People say that perfection is an illusion. That striving for it is a waste of energy – and that being “good enough” is, well, good enough. But that was never something the team at Fast Invest could sign up for. Since day one, we have been striving for perfection in everything we do. •

We set ourselves a goal to deliver the perfect alternative investment platform which simplifies and demystifies investment processes.

•

We made it our mission to give you the perfect opportunity to create a better financial future.

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We vowed to offer perfectly safe, reliable and easily accessible investment solutions.

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•

We have put in place the highest security measures – and the chance to opt out anytime, should you want or need to. Perfect.

For those that are unfamiliar, what is peer to peer lending? Let’s start by defining what P2P finance is. In a nutshell, P2P (or peer-to-peer) finance can be described as connecting borrowers who are looking for loans with lenders who want to invest their money in those loans. This process excludes traditional financial institutions and is often facilitated by P2P lending sites. •

P2P lending (P2PL) refers to the process of financing (i.e. of the received loan application) which allows individuals to lend and borrow money without using a traditional financial institution (i.e., banks).

•

P2P investing (P2PI), on the other hand, can be defined as the process of investing your money to those who are requesting a loan.

Because it is a direct exchange between the lender and the borrower, the process doesn't require the involvement of banks and financial institutions. The P2P platform acts as an intermediary. It facilitates the process of lending and ensures controls protecting both parties are in place. They work to make the experience of lending and borrowing as smooth as possible, as well as determine their clients’ credit rating. P2P finance is a form of alternative finance.

What are some of the misconceptions people have about P2P investing? The process of P2P investing is relatively simple. Once you’ve found a P2P lending platform you want to invest with, you sign up to become a loan lender - and decide how much money you wish to lend and for how long. Then you add funds to your account and start investing in P2P loans. Many P2P companies tie up your funds for an agreed term. Make sure you are comfortable with not seeing your money for a couple of years before committing to such timescales. With alternative financing companies like Fast Invest investment has changed. Fast Invest has an exclusive BuyBack guarantee which allows you to stop investing any time. So, if your circumstances change, the investment will be bought from you in one day. How has the industry evolved since your establishment? There are unique features which helps Fast Invest to stand out from a wide range of competitors and attract more investors each month. •

Security, all loans in Fast Invest pool are protected by a Default Guarantee. It is evident that all investments carry some risks. There is a possibility that the borrower will stop paying his repayments for multiple reasons. Fast Invest is making sure that their customer's investment

EMEA INTERVIEW

would be safe by compensating the payment if a borrower is ever late on his or her scheduled loan payment. If a payment instalment is overdue for just three days or more, Fast Invest Default Guarantee will settle any amounts in arrears. •

Money back, anytime. Fast Invest constantly works to develop a platform that offers the highest quality services to their customers. That is why the platform offers a different BuyBack Guarantee than investors are used to. If anyone decides to stop investing at any loan, Fast Invest will buy the investment back in one day. Investors can receive the funds immediately. As well by establishing this guarantee, they have eliminated the need of the secondary market. In this way investors do not need to worry about the slow money liquidity anymore, they can get it back their assets anytime.

•

One of the highest ROI in the market. Fast Invest peer to peer investment platform offers interest rates from 9% up to 16%. According to their 2018 3rd quarter results, investors received an average 14,3% return on their investment compared to 12.78% in 2017. The positive increase was possible because of excellent management, strategic partnerships, and top-end technological solutions. To make it even better there are no hidden fees on the platform.

•

No secondary market. Our exclusive BuyBack guarantee eliminates demand of secondary market and this feature makes us special in market.

Fast Invest is one of those companies that clearly shows that customer comes first. We have successfully lowered the investment risks so that everyone would have a chance to be an investor. The success that the platform faces is no coincidence. It is purely a result of the hard work that our team put into the development of the platform.

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a free user account. We made the registration incredibly simple; this will take you no more than 5 min.

We will continue to disrupt the investment industry by providing high-quality services to our customers. Let’s talk for a minute about your platform. How does the process work? When it comes to services, we truly believe that simplicity is key. Our company started as a platform aiming to simplify the investing process. To make it accessible to those who previously wouldn’t have been able to dip their toes into investing – because of knowledge, language, or financial barriers. Creating additional sources of income is more important than many people think. It safeguards your future. It creates a more stable, secure life for you - and your loved ones. We have always been on a mission to bring forward a simpler, faster, and more transparent way to invest – with no strings attached. Our users’ needs are always at the forefront of our minds, translating into an easy investing process and a helpful, intuitive, and user-friendly platform. How it works •

First step. To start investing using Fast Invest platform, you need to register

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•

Second step after successful creation of your user account, you can now add the desired amount of money via Bank transfer. This process is fast and reliable. Remember, you can only transfer money to Fast Invest account from your personal Bank account. Account holder and money sender must be the same person. Third step. After successful account creation, identity verification and added funds are finding the loan, which suits your preference. After all the choices match your interest click invest and follow through. We encourage using AutoInvest tool; it automates the investment process. The Auto Invest tool will help you create a properly diversified portfolio. It allows investors to define their investment criteria in advance. These criteria are then applied automatically to all available loans in our platform’s loan list. Just define the investment rules and click Save & Activate our system will do the rest.

•

Forth step. All the investors know, that money market is all about earning passive income. It means your money now work for you - you become free to do what you always wanted to. Each month you will receive payments to your Fast Invest account consisting of principal and interest payments.

What are the main advantages? You’ll probably agree that finding a reputable and trustworthy investment platform is on top of the priority list. While there are plenty of online investment sites out there, do your research before you commit to any of them. The ideal company to invest money with should: •

Offer a high return on investment (ROI), obviously! You’re investing in P2P loans to make money after all. ROI varies with different companies, but look for something not lower than 10-12%;

•

Make the process smooth, easy and quick with a user-friendly platform and an eﬃcient financing system;

EMEA INTERVIEW

•

Protect your money with a BuyBack guarantee (unexpected things happen, and your money should be accessible to you if they do!);

•

Offer protection from late borrower repayments with a guarantee that if the borrower is late to make a payment, it’ll be covered by the company (e.g., a Default Guarantee).

What are the advantages of investing with Fast Invest? Funnily enough – Fast Invest ticks many of these boxes!

•

We also have a Default guarantee, which means we will cover the payments should the borrower’s payment be overdue for 3 or more days. With us, your money is safe.

•

We know that simplicity is key. Therefore, our platform is incredibly straightforward, smooth, and intuitive. Our users’ needs are always at the forefront of our minds.

Here are the benefits of Fast Invest to get excited about: •

•

Loan lenders receive an excellent return for lending their money: Fast Invest offers an 9% - 16% ROI; Fast Invest works with partners who provide loans that are already thoroughly checked and approved – meaning there are no shady borrowers. There is a much lower entry point, meaning that you can start reaping the benefits of online investment even if you don’t have much to start with. You can begin investing with as little as €1!

Our BuyBack guarantee means you can stop investing any time should your circumstances change – we will buy back your investment within one day.

Do you have plans for expansion at this time? Here at Fast Invest, we have seen exponential growth as an alternative investment company – and numbers speak volumes: • Our average interest rate grew from 12.78% to 14.3% (11.88% growth). •

Our cumulative turnover grew from €5.2 million to €29.6 million (2018 3rd Quarter) (469.34 % growth).

•

Our Investment volume grew from €1.4 million in 2017 to €5.3 (in 2018 3rd Quarter) (284.62% growth).

On top of that – we now have over 27,000 customers, and these numbers keep growing. Our advanced alternative investment platform which offers a secure, transparent and highly profitable way to invest money in consumer loans across the EU, continues to attract more users who want to create a brighter financial future for themselves. We’re also truly embracing the digital investment era - and are currently embarking on blockchain-enabled global expansion. What advice do you have for women interested in entering the FinTech industry? Women are outnumbered in the industry – but the truth is, no-one will get you to the top but yourself. I believe in truly immersing yourself in the job – and that this time and energy you’ve invested pays off. Women in FinTech need to focus on acquiring extensive knowledge and skills - and not be afraid to admit that they have this knowledge under their belt. It’s important to own your ambition – and accept your leadership potential. The key to succeeding as a woman in FinTech? To me, it’s perseverance – and loving what you do. Furthermore, I recommend you dive into the alternative investments market, dig some information, build up recognition and try to invest on Fast invest platform. It is important to put some time in order to get on track and control your future. Be smart and brave!

Simona Vaitkune Founder and CEO Fast Invest

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Vision to Reality: Creating a Universal Digital ID for UK Financial Services Consumers Improving compliance, efficiency and customer satisfaction with a single solution The UK is one of the world’s dominant financial services markets, and much of the sector’s strength comes from broad consumer participation. According to the Financial Conduct Authority’s 2018 Sector View, UK retail banks hold some 73 million personal accounts. Wealth managers and brokers oversee around £824 billion (US$1 trillion) in client assets under management, and consumers have invested £548 billion (US$706 billion) via investment platforms. Holdings in workplace and personal pension plans combined total £570 billion (US$734 billion). 1 Yet in many respects, the financial sector is surprisingly inefficient and customer-unfriendly. One glaring example of the barriers to doing business with financial providers is the lack of a simple, universal identification system. In the US, the Social Security Administration functions as a de facto national identity registry, issuing individual ID numbers that enable authorized entities to obtain financial background information on customers. Other European countries have successfully implemented single signon solutions such as Norway’s BankID, which provides 3.9 million customers with access to every Norwegian bank, certain public agencies and a growing number of commercial enterprises. The UK has no such system. Financial institutions rely on a cumbersome process of documenting applicants’

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payment and credit histories and account relationships. This makes it difficult to perform required anti-money laundering (AML) and know-yourcustomer (KYC) due diligence, as well as to onboard new customers efficiently and deliver targeted services. From the customer’s perspective, it adds a layer of friction in trying to access banking and investment services, making it difficult to open accounts or transfer funds among institutions. While most consumers are managing their financial affairs online, they have to maintain multiple logins and passwords across numerous digital services, which is not only inefficient but also poses security risks. When consumers use the same credentials across several accounts, one breach can give data thieves access to all their business. Building Digital Trust The FCA is keen on consumer protection, fairness, disclosure and transparency, and advocates access to financial services with the fewest possible impediments. It is up to the industry, however, to take the lead in improving the customer experience and driving greater satisfaction. Above all, for a universal identity system to be successful, the industry needs to build digital trust – a major challenge with a populace that is famously skeptical of institutional intentions and hesitant to surrender personal data. Consumers will need to be convinced that the industry has their best

interests at heart, and that a universal ID system, independent of government control, would be a step toward financial empowerment. To accomplish all that while simultaneously improving operational efficiency and reducing servicing costs would be a win-win for the industry and its customers alike. Taking the Lead Having built and managed customer experiences for UK asset managers over the last 15 years, our team has gained deep insight into the online interactions between consumers and their financial services providers. Accordingly, we have joined the Tax Incentivised Savings Association (TISA) and leading UK financial institutions to advance an initiative to develop a strong, trusted digital identity capability for the commercial sector. With a leadership role on TISA’s Digital Innovation Policy Council, we are helping to shape the trust framework and technology solution that will make this vision a reality. Initially for use among banks and asset managers, the envisioned digital ID would enable consumers to access a variety of services easily and securely across multiple institutions and government agencies. It would also enable financial services providers to help customers more efficiently and proactively, delivering relevant information and suitable products. The long-term vision is a universal ID system with full interoperability for all UK financial services.

EMEA FINANCE

Importantly, this is an industry initiative and not the result of regulatory pressure. Financial services providers and their technology partners have recognized the need to reduce inefficiencies and make it easier for consumers to do business with the financial sector. It is simply, on many levels, the right thing to do.

range of interconnected online services that help consumers to better manage their financial lives. The financial sector will be positioned to become the trusted identity provider, offering a single ID that can eventually be used across borders and a range of sectors, including public agencies, education, health care and travel.

Advantages of a Digital ID

Potential for new products and revenues: The system will create opportunities for institutions to broaden their services and generate new revenue streams through the development of products specifically to leverage digital ID.

Financial institutions and their customers stand to benefit from a digital ID system in several ways. “Customers expect seamless, omni-channel service delivery and will migrate to services that offer the best customer experience,” notes Harry Weber-Brown, Digital Innovation Director at TISA. “A federated digital identity allows customers to access a broad range of services with a single sign-on and enables them to control the release of their personal data.” Among the benefits he cites: Improved customer relations: A digital ID will enable organizations to strengthen customer relationships by delivering a

Increased operational efficiency: Institutions stand to reap substantial efficiency gains. “A digital ID system is an opportunity to streamline current processes and increase automation, while reducing account opening abandonment, human error and human intervention,” Mr. Weber-Brown points out. It will “streamline and improve onboarding and compliance processes through access to a reliable and consolidated digital view of the user’s identity and attributes.”

Cost savings: The digital ID will reduce customer onboarding costs and new business processing costs related to AMLKYC reviews and the processing of account transfers. It can also lower institutions’ IT costs through industry-wide standards for customer ID systems. Improved security and reduced risks: The current paper-based information collection process is extremely vulnerable to exploitation by malicious actors. The envisioned system has the potential to reduce risk of fraud and identity theft, along with the resulting liabilities for financial institutions. It will improve the industry’s risk assessment capabilities by creating more holistic and accurate customer risk profiles to enable more effective monitoring for suspicious transactions and to inform credit- and risk-based product decisions. Regulatory compliance: The digital ID system will meet consumer protection and due diligence provisions of multiple regulatory regimes governing UK financial

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services, including GDPR, Open Banking, PSD2 and AML4. The digital Identity capability will be designed for compliance with relevant control and governance regulations that may arise in the future. The Consumer Experience For consumers, the process of obtaining a universal digital ID will be similar to signing up for a social platform or setting up online access with a single institution. They will have the option to register through an institution with whom they have an existing account relationship and established online credentials, in which case their data is transferred directly to their new digital ID. Conversely, they can register directly with the ID service by creating a user name and password, building a profile, verifying their identity with a current account, and answering a few questions about their financial history. Once the digital credentials and customer profile are established, the information can be re-used any time the customer wishes to open a new account, transfer funds or access financial services.

Driving Adoption One of the big challenges in implementing such a system is creating awareness, winning consumer trust and driving adoption, which is a key focus of the initiative. TISA has strong ties with the FCA, government agencies and UK banks, and is actively working with them to accelerate industry buy-in and consumer education.

improve their processes, increase efficiencies and reduce operating costs. It will take a coordinated effort between the industry and the regulators, but consumer acceptance will be the critical factor in the initiativeâ&#x20AC;&#x2122;s ultimate success. The key will be delivering a trusted and genuinely seamless solution, backed by wide industry support and consumer communication, to make this vision a reality.

The rollout is taking place two phases. For Phase 1 our team in the UK built a prototype user experience for the digital ID sign-up and sign-in processes. Pilot testing with consumers is already underway. Based on learnings from the testing, Phase 2, the full, general-availability rollout, is planned for 2019. Better for All The concept of a single digital ID promises economic benefits for the financial sector while serving the social good by enabling easier access to financial services and broader participation in the financial system. We are fully committed to advancing this type of innovation, which helps our clients

Brian Smith Senior Director of Product and Innovation at DST Systems now part SS&C Technologies 1

https://www.fca.org.uk/publication/corporate/sectorviews-2018.pdf

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Innovative Banking in the DRC For 16 years RAWBANK has been delivering the innovative products and services to the customers in the Democratic Republic of the Congo (DRC). We spoke to Mustafa RAWJI, Deputy General Director of RAWBANK about the banks tremendous success, use of technology and their commitment to the communities they serve. When you began operations in 2002 the vision was to make state of the art technology and the latest banking and financial products available to your customers in the DRC – companies and private individuals. Over the years this mission seems to remain a constant. What challenges and opportunities has this created for the bank? Constant is certainly the appropriate adjective to describe the challenges we have experienced and those that still await us. In the first years of our creation, we saw an opportunity to modernize the banking sector, which was lacking in so many things. One of our first initiatives as a game changer was to introduce SWIFT technology for international payments in 2002. Years later (in 2006), we introduced debit/credit cards and ATMs into the retail banking market.

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- Various challenges were on the horizon, such as: • •

• •

Interoperability of cards on other local ATMs. An international payment system on our cards, allowing each of our customers to access their own money from anywhere in the world. Online access to everyone's account Business market penetration

- After the subprime crisis in 2008, banks around the world sought to strengthen their governance (2009) and after the Basel III recommendation (end of 2010) for new risk management standards, we committed ourselves to raise our standards accordingly: - Thus, the 2011 Strategy was implemented to build better governance processes, better training modules and continue to generate a good level of return on equity (ROE). - Secondly, the 2012 strategy consolidated our efforts to build better governance processes and bring new products to the Congolese market. - And in 2013, we continued to implement the 2012 strategy, continuing all consolidation efforts.

- At the end of 2013, we thought that stronger fundamentals would be essential to our development. Thus, our Strategic Plan 2014-2016 has set several objectives: Solvency and liquidity ratios; internal control effectiveness (better process); cost/income ratio; governance effort (redefinition of the decision-making process) - And then there is the Strategic Plan 2017-2019, which aims to modernise and professionalise RAWBANK and extend the bank's network. - When you have built such a reputation, you find yourself in this role, which pushes you to excel and always give the best of yourself to remain the leader in the market. How important are the digital channels (SMS, Online, Mobile) offered by RAWBANK to bank operations and customers? RAWBANK wrestles in an environment where the internet is still not available everywhere (areas not covered) and not for everybody. However, we worked tough to make it possible for all our customers to have at least SMS plans on their mobile phones.

EMEA INTERVIEW

The Online access to one’s account is possible throughout a computer and/or a mobile phone (smartphone). Mobile banking is possible through our mobile application Illico Cash, which has a lot of features in managing your account: you can do transfers, you can send money to be somebody and the amount can be withdrawn from an ATM cardless. The beneficiary will just have to go through the menu and type the token that he’s received by SMS. Clients can have all the three of the digital channel products and enjoy the benefit to be fully connected with the bank. In 2016 you created a digital banking solution that was open to everyone, not just clients of RAWBANK or any specific carrier. Can you tell us more about the platform and what led to its creation? Illico Cash was created to be a comprehensive solution for clients and non-clients. The mobile app is downloadable on Play Store and Apple Store and its main feature is the Send-money function to non-clients. A

non-client can also open an Illico Cash account, make deposits to make e-money transfers and cash-outs. Thus, it provides an extensive and seamless service all over the Illico Cash network for all Congolese who are in relations with RAWBANK customers.

Product innovation is has always played important role at the bank. Will you be launching any new products or services this year? Innovation is something that built our reputation throughout the years in the Congolese market. We’ve always been active and ahead of the market. So, of course we plan to add new innovative features to our mobile banking. We’ve already launched an Integrated payment system allowing clients to track their transfers live. If the commodity market is still bullish, we’ll certainly launch a product linked to the performance of the commodities market as we already did the two previous years with the Okapi Series. We expect also meanwhile that the regulatory framework will evolve to accommodate new types of products.

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How does RAWBANK support the social economic growth in the DRC? Being a leading financial institution comes with a lot of socio-economic responsibility. RAWBANK takes this responsibility very seriously. Every year, RAWBANK allocates significant resources to charities. It mainly consists in accompanying local associations that make charitable actions, rehabilitating buildings of public interest or making donations. Last year, actions led for the benefit of hospitals and people under economic stress included: Participating in a surgical operation project led by Mécénat Chirurgie Cardiaque Children of the World for a little girl; A gesture of generosity for the elderly residents of the Kintambo Retirement Home; An invitation on the occasion of World Day of Unity, December 10th, to Orphans of the CECAM orphanage, children of the CPH Kikesa Handicap Center of Livulu as well as the pupils of the Makelele school of Kintambo, to share a meal and illuminate an 18 meter Christmas tree on the square of the central station A humanitarian gesture for an orphanage and a hospital run by Heal Africa, an NGO based in Goma. A resolution of the Executive Committee to completely renovate the pediatric emergency room of the General Hospital of Kinshasa. The work will end in the first quarter of 2018. The year 2017 ended with a positive note regarding the social responsibility of the bank as the Executive Committee renewed its commitment to support several orphanages, schools and hospitals throughout the country.

Education is crucial for development. RAWBANK is fully aware of this, and school renovation is one of the main focuses of his charity work. Here too, the bank assists associations in school renovation projects, providing benches, or teaching materials for pupils. In 2017, RAWBANK brought an original solution to the children of the BOMPIKILIKI school, located in the non-electrified zone in the province of Equateur. Solar bags to charge a small solar panel installed on a bag surface, emit light and connect a USB to the integrated USB port. This initiative now allows children at this school to review their lessons even after sunset at 18:00. RAWBANK has also renovated the entire building of the Wenze Primary School in Kongo Central Province. CSR issues are no longer just a cosmetic skin but a real issue for all economic operators which requires real answers. As such, RAWBANK decided to confirm its commitment by joining the UN GLOBAL COMPACT initiative in 2017.

Can you tell us about your long-term banking strategy for continued growth and development? We are amid the implementation of our 2017-2019 strategic plan. The transformation is going on. Our longterm strategy remains to be a safe and responsible organization that delivers the best financial products and services at cost effective rates to all our existing and potential customers. We will continue to innovate on our product offering. Keeping ahead and anticipating our clients’ needs, while adapting our internal processes in line with technological advancement. Our customers, employees and stakeholders deserve nothing less.

This is also part of "Conquering and sharing". This international initiative within the network of the United Nations is implemented at national level through coordinated and coherent initiatives decided between members of the initiative. We are pleased to be part of this network of companies that will mark a new CSR era in the DRC, uniting the efforts of all member companies on larger and better coordinated CSR projects.

Mustafa RAWJI Deputy General Director RAWBANK S.A.

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EMEA INTERVIEW

70 Years of Banking

Innovation and Leadership in Macedonia For seventy years Stopanska Banka a.d. Bitola has been redefining banking in the Republic of Macedonia. Global Banking & Finance Review spoke with Mr. Vladimir Eftimoski, President of the Management Board at Stopanska Banka a.d. Bitola about the current state of banking in Macedonia and the banks continued commitment to provide innovative and efficient banking solutions. What are the current trends you see taking place in the financial sector in Macedonia? The commitment being in pace with the current trends in all aspects of the business operations is certainly objective of each financial institution. Fast development of smart technologies and increasing number of innovations in the sphere of telecommunication devices and mobile phones has also direct impact on numerous changes in the financial sector of the Republic of Macedonia, and in particular in the banking sector. Slowly but surely electronic and mobile services replace the traditional banking products and services. Era of digitalization is taking place, whereas the banking industry has begun its adjustment to modern technologies and modeled its services and products in line with new-created market needs. Banks are making a full redesign of the traditional service model for their

clients by way of introducing digital platforms and services for facilitated and modernized banking interim being highly available for the clients and their needs and requests. Banks in Macedonia started to follow modern e-banking platforms adapting their services and products to the citizens’ needs, although it cannot be revealed that traditional banking is left behind. How are customer behaviors and the increased use of technology changing banking in Macedonia? Modern technologies applied by the banks allow that increased number of their services are obtained by the citizens and firms from their computers or mobile phones instead of on banks’ counters. Banks digitalization is a global phenomenon power of which may be not only used for satisfaction of the population’s modern lifestyle needs but also for accomplishing useful and educational operations rather than for making transactions. Banks’ functions are constantly changing starting from financial institutions only performing activities related to deposit lending and management all to modern institutions with a range of services that steadily leave the banking operation frames. Banking and banking products and services are constantly changing to satisfy and adapt to their clients’ needs.

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EMEA INTERVIEW How do you assess the last business year for Stopanska banka a.d. Bitola? Last year was especially successful for Stopanska banka a.d. Bitola. It was mainly focused on creating value added for our clients through an offer of attractive lending and deposit products, digitalization of relevant operating segments in line with the market trends as a modern way of intercepting the clients’ needs. In a dynamic environment dominated by restrained investment activity, political uncertainty, the Bank demonstrated high level of responsivity to the changes and managed to realize solid positive financial result for 2017, or profit before tax amounting to MKD 46.38 million. Thus, achieving Return on Equity Ratio of 3.32% and Return on Assets Ratio of 0.39%. Like with the good performance in the Income Statement growth was realized with the key items on the side of the assets and sources. Consequently, the total Bank assets increased by 4.66% annually, loans increased by 10.36%, while deposits increased by 5.30%. Sound capital position remains one of the major characteristics of the Bank with Capital Adequacy Ratio of 17.52%. The Bank also managed to strengthen its position within the banking sector and a group of medium banks, which reflects well-positioned strategic and business objectives, clear vision and mission, professional and dedicated management and employees to accomplish the objectives set. What innovative products and services have you launched in direct response to customers’ needs and requests? Global trends slowly but surely are accepted in our Bank and turn out to be of great interest mainly for our younger clients who feel comfortable to use new technologies. For that purpose, the Bank has introduced two new and safe sophisticated products such as E-bank for access to their own transaction accounts through the Internet and BANK2GO application for mobile phones. E-bank is a tool in disposal of the client that allows preview in account balances and fast and modern payment through the Bank’s website. This is maybe allowed by way of most secure element currently present in the digital world – OTP (one time password). This guarantees presence of the end user and abuse is reduced to minimum. OTP password is sent to the mobile phone as additional verification of the end user.

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EMEA INTERVIEW Bank2GO is a new, innovative and easy to use application for mobile devices, which allows preview of all clients’ products, and transactions are entirely safe. BANK2GO application of the Bank allows for the mobile device to be a portable virtual branch for the clients through which they may get information on all their accounts, credit cards, loans, and deposits simply and fast, and they can make payments at any moment and place. What services do you have in place to support SME’s and how do their needs differ from those of your corporate clients? Stopanska banka a.d. Bitola has successfully built relationships with its clients for almost 70 years based on mutual trust and cooperation thus creating long-term partnerships with its clients. The Bank invests in recognition, funding in quality and profitable business projects, in particular targeting small- and mediumsized enterprises, key target group of the Bank in the wide assortment of products. The Bank always commits to adjust its products to its clients’ requests and needs; accommodates the method, terms and type of lending products based on the opportunities and proposed business ideas. Of its assortment of corporate products, the Bank offers the following: Overdraft loans, short-term working capital loans, short-term revolving loans, long-term permanent working capital loans, long-term investment loans (purchase of equipment, machinery, transport vehicles, facilities, business premises etc.), agricultural credit lines, small-business loans, export loans, bank guarantees and letters of credit. Guided by these principles, the Bank has effective cooperation with institutions offering strong support to small- and mediumsized enterprises such as USAID, through the credit guarantee scheme that allows support in the part of securing loans intended for investments in projects in the field of agriculture; MBDP, through credit lines for small- and mediumsized enterprises ensuring fixed interest rates during the repayment period and acceptable percentage of the client’s own participation in the relevant investment. How do you approach risk management? Financial stability is crucial for economy and its disruption may cause many side effects. Stability of the banking system in Macedonia is relatively good, primarily because of the caution and capitalization of banks, low level of inter-sectoral linkages of individual financial institutions and efforts of the National Bank of the Republic of Macedonia to take a deeper approach to risk management by continuous regulatory reforms. Risk management involves activities such as: identification of risk exposure for all categories of assets with estimate of their potential losses, risk assessment including loss measurement and analysis in the past in order to estimate the variables that will affect the future, control of the risk in terms of reducing or eliminating the risks of losses using all types of collaterals, financing risks by providing provisions, insurance, development of administrative techniques and use of expert knowledge and practices, and finally, risk monitoring.

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EMEA INTERVIEW Table: Indicators of financial stability of the banking system in the Republic of Macedonia compared to those in Stopanska banka a.d. Bitola

Indicators (in %)

Stopanska banka a.d. Bitola 2018Q2

Liquid assets //total assets

27.1%

31,07%

Rate of capital adequacy

16.5

17,68%

The net open foreign exchange position / own funds

6.4

0.39

RОАА

2.4

0.40

RОAE

21.3

3.34

Indicators show that liquidity of banks is satisfactory, capitalization is high, and Rate of Capital Adequacy is twice higher than the legally prescribed. Exchange rate risk is controlled by maintaining the net open foreign currency position at the lowest level. Considering the importance of the process of risk management for long-term stability and profitability of the Bank, as well as the expected further changes in the regulation of the Central Bank in accordance with changes in the Basel Capital Accord – Basel 3, Stopanska banka a.d. Bitola managed to significantly improve its performance in the area of risk management. During 2018 Stopanska banka a.d. Bitola continued to successfully manage the assets and liabilities while ensuring timely and regular settlement of the Bank’s liabilities i.e. optimal liquidity. The liquid asset/ total asset on 30.06.2018 amounted to 31.7% and on 30.09.2018 totaled to 32.88%. Such indicators have a

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Banking sector 2018Q2

large contribution in providing longterm financial stability and further strengthening of the customers’ confidence as a precondition for improving the market position under the Bank’s strategic objectives. The credit risk data in the period until 30.09.2018 showed that the exposure to clients classified in A risk category is 93.15%. Credit exposure to clients classified in B risk category was 3.80%, while exposure to clients in C, D and E category of risk was lower (1.74%), (0.18%) and (1.13%) respectively. As a complementary feature of the credit risk management, Stopanska banka a.d. Bitola paid proper attention to nonperforming loans management and sale of foreclosed property. In addition to credit and liquidity risk management, the Bank placed an appropriate emphasis on management of other risks (market, operational, strategic, reputational risk) while maintaining appropriate capital levels in accordance with

the regulations. Speaking of risk management, maintenance of proper Capital Adequacy Ratio is crucial for the Bank. As of 30.09.2018, this indicator amounted up to 17.57% which is significantly higher than the legally prescribed minimum of 8%. The indicator for the coverage of riskweighted assets with core capital (Tier 1 Ratio), which indicates to high quality of structure of the Bank’s own assets. To sum up, the risk management data for Stopanska banka a.d. Bitola represent an image of healthy and stable bank, which successfully balances between optimizing the risks on the one hand and profitable operation on the other hand, while acting in accordance with applicable regulations. In the future, the Bank’s efforts will focus on improving the risk management processes in accordance with the expected changes in regulations and internal evaluations, aiming to maintain financial stability as a prerequisite for profitable operations in the long term.

EMEA INTERVIEW Are you running any promotions at this time? Stopanska banka a.d. Bitola organizes its activities to be constantly present with certain novelties for its customers. Our current actual product, which assumingly said is most competitive in the market in the segment of deposits is the new deposit product promotionally run this year when the Bank marked its 70-year anniversary. It is FX minimum EUR 100.00 70-month time deposit with attractive interest rate, disbursed on annual basis 12 months after the deposit date, or 12 months of the previously disbursed interest. Furthermore, the package composed of MasterCard Standard with promotional interest rate, EUR time deposit (there is option of three different deposits) and electronic service – SMS – free notification provided to the clients in the first 6 months, is currently active. One of existing promotions commenced in mid-august to the end of the year is Master Mania game of chance in cooperation with MasterCard where the client can potentially win some of three main awards – Journey to Maldives, MacBook or iPhone 8 Plus for a certain number of transactions made with relevant cards. How does Stopanska banka a.d. Bitola support the social economic development in Macedonia? Stopanska banka a.d. Bitola creates models in line with the needs of an open small economy such as Republic of Macedonia. Important and significant economy segment supported by Stopanska banka a.d. Bitola is placement of various credit lines with favorable interest rates thus maintaining its competitiveness in the dynamic and stable banking system. In addition to objectives related to profit, Stopanska banka a.d. Bitola commits to achieve higher goals. Guided by the idea that a company success is not only measured by profitability but also from the aspect of its social responsibility, in its long 70-year existence, Stopanska banka a.d. Bitola has always been fully dedicated to the community and the imperative of

its operations includes the idea of social responsible action. This is evident by the numerous social responsible activities of different nature regularly implemented by the Bank. In addition to great number of donations in various segments, the Bank is a trusted partner to and supporter of numerous sports events, concerts, festivals and occurrences aimed at creating culture of values grounded on the principles of ethics, humanity and social responsibility. When recently the Bank celebrated its 70-year anniversary and focused on support of cultural values and youth talents, Stopanska banka a.d. Bitola awarded annual scholarship to three students for the State Music School in Bitola. This was one of the range of many proves distinguishing Stopanska banka a.d. Bitola as a company that knowingly integrates its social responsible practices in its activities. What is the Bank’s strategy for the year ahead? Following the domestic market and global trends, in the further period it is planned to grow both from the aspect of loans and deposits to retain and potentially strengthen our share in the market in conditions of strong competitiveness. Intensive activities will be taken to extend the offer of products funded by credit lines as inexpensive source of assets. Additional digitalization of certain banking activities is one of the key strategic objectives for the next period, which will contribute to reduce the operating costs and intercept the customers’ needs.

In that context it is planned to implement operational services with Big Data, automation of a part of the existing services through introduction of new ATM functions such as Cash – IN/ Deposit ATM/Recycle АТМ/ExChange, DCC (Dynamic Currency Conversion) service for conversion of currencies at ATMs, Е-Commerce, On line application – for applying through digital services for any of the Bank’s products. It is also planned to connect with entities in economy through digital platforms allowing mutual communication between the clients or functioning in so-called Two sided markets, where the Bank’s values and benefits shall not be measured through profits but through netting and the clients’ benefits. Thus, innovation itself will be value added, and not investment. For that purpose, we will intensively work on our existing platforms for E-banking and M-banking as well as possibility for connection with other types of digital platforms that are increasingly present in the international banking markets and we expect their appearance in Macedonia soon.

PhD Vladimir Eftimoski Chairman of the Management Board Stopanska banka a.d. Bitola

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EMEA INTERVIEW

Solutions Solutions Designed Designed for for Success Success

How is Elite Capital & Co. (ECC) able to assist businesses where traditional financing isn’t unavailable?

Elite Capital & Co. provides project related services for primarily large infrastructure and commercial projects. To meet the unique needs of customers they offer turnkey solutions customized to meet the specific needs of clients. To find out more about their unique offerings and the current opportunities in the market Global Banking & Finance Review interviewed the President and CEO of Elite Capital & Co., Mr. George Matharu, MBA.

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Mainstream banks normally have a set of products that make up their finance offering. Each product is managed by a different team, and has a specific set of criteria to activate the funding. Projects often require different types of funding that might need some of the bank’s products to be packaged together to achieve the project’s funding objectives. So, unless the bank has a person that sits across all the finance products, it is rare that a financing solution will be found.

EMEA INTERVIEW

Furthermore, when a company makes an application for funding at a bank, the application goes into a ‘black box’, where there is no visibility of the credit funding criteria and the resulting credit decision. There is normally a yes or no decision, with a superficial level of feedback if the answer is no. These are just two examples of how project owners might find it difficult to be accepted for bank funding. There are many other examples. At Elite Capital & Co. (“ECC”), we take the time to understand the project funding requirements, and look at the strengths and weaknesses of an application. We work with many funding sources including banks, Export Credit Agencies, Hedge funds, Family Offices, and private investors. So, we can look across all our funding sources, and build a package of finance elements which make an overall solution. What types of products does ECC usually accept? ECC mainly accepts major infrastructure / construction projects for funding, including Power Plants, Renewable Energy, Water Desalination Plants, Refineries, Railway, and Metro or Monorail. Typically, the project would need to have some form of technical requirement or solution. Therefore, the types of project we tend not to accept are Road construction and Housing, where there are fewer technical requirements.

funding options. For example, requesting finance from a bank is a completely different presentation to looking for equity investment against shares, or executing a bond offering. A good finance consultancy firm would be able to determine the most appropriate type of funding, and structure the finance request documents accordingly. ECC has a wide range of experience when it comes to project management. Can you tell us about the services available around infrastructure projects and how your experts help guide customers through the process? At ECC we prefer to work on projects where we can provide a turnkey solution for Engineering, Procurement, Construction and Finance. This give us the most flexibility in securing finance with competitive terms and rates. It also allows us to provide our clients with a road map for project and funding completion, since we are managing all of the elements in-house. This is much more difficult when multiple parties are involved, all with competing interests and priorities. In terms of individual services, we don’t have a prescribed list, but here are some typical examples: •

Project reviews, documentation and recommendations.

•

Writing Feasibility Studies.

•

Compiling Technical Studies.

•

Writing finance request documents – Investment Memorandums, Bond Offerings, Debt Funding Requests, Joint Venture or Partnership Proposals, etc.

What advice do you have for prospective clients? Project owners should consider using specialist finance consultants when putting together their financing plans. There are many forms of financing, and the request for finance document should be geared towards specific

•

Structuring finance solutions using multiple finance sources when necessary.

•

Selecting specialist Contractors for all types of Infrastructure projects.

You have established strong strategic alliance in Europe, Asia, Africa, Middle East and GCC Region. How do these alliances benefit your clients? It is impossible for our company to offer all project and finance related services in-house. In fact, this would take away from our core strength of being flexible, impartial and nimble. Therefore, we make alliances with carefully selected companies, so that we can call on these outside services as and when required. We only work with ‘best-in-class’ service providers that have been tried and tested, which ultimately benefits our clients. In your view, what are the current opportunities and challenges facing the market? The immediate challenge facing the UK today is Brexit. Some of our funding sources are reluctant to make investments in projects until the outcome is more clear. Brexit also has an impact on Renewable Energy projects in particular, as the EU had put a number of incentives and subsidies in place to encourage these projects to be implemented, which are no longer available. Another key challenge is USA and China relations. We have a number of funding sources in China, but the trade war between the countries precludes us from looking at any USA based projects at present. There are also significant challenges with political instability in the Middle East. We can’t use money from financial institutions or investors in certain countries, to invest in projects in other countries where there are political or religious differences of opinion.

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EMEA INTERVIEW

However, these challenges give rise to opportunities, especially for specialist finance companies like ECC. Market uncertainty makes the banks more cautious to lend money, so clients seeking finance are more likely to look for alternative sources of funding.

inter-connectivity, modular and prefabricated construction, ease of communication, and many others.

Despite the market sentiment amongst project owners, there are a number of funding sources that have capital to deploy on infrastructure projects. However, many projects that we see on paper have one or more of these three issues; (i) no adequate security, (ii) not enough attention given to de-risking the project, (iii) returns do not justify the â&#x20AC;&#x2DC;risk vs rewardâ&#x20AC;&#x2122; equation. By tackling these issues, clients could be more successful in getting their required funding.

ECC is currently working on a number of projects including Water Desalination Plants, High Speed Rail, Oil Refineries, Logistics and Warehousing Hubs, and an Agri-Tech implementation. These are all government projects, so the details have to remain confidential until formal contracts are signed. However, keep watching this publication for more news in Q1 2019!

We must also mention advances in technology as a major opportunity for the market. Technology plays a major role for enabling projects in a number of areas - reducing manufacturing costs, increasing

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Do you have any current projects you would like to share with us?

What are your plans for continued growth and development? In addition to ECCâ&#x20AC;&#x2122;s infrastructure business, we have expanded into two other market segments. That we will build upon during 2019.

EMEA INTERVIEW

Firstly, we have established a new Division called â&#x20AC;&#x153;Elite Petro & Gasâ&#x20AC;?, which is a Finance, Trading and Advisory firm with a focus on downstream activities in the global Oil and Gas markets. This is to leverage our considerable experience in this industry sector, and it compliments the work we do on the infrastructure side of the company for Refinery projects. More information can be found at www.petro.uk.com. We are also setting up a new Division to focus on Real Estate funding, as we have seen a growing number of requests from potential clients during 2018. Again, we can leverage many of our existing contacts to provide funding for Real Estate projects, using the same principles of packaging the projects to adequately mitigate the risks and provide sound economic models for investment returns.

George Matharu, MBA. President and CEO Elite Capital & Co. Limited

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A new era of holistic working capital management As traditional, single-product offerings prove increasingly ineffective, corporates must challenge their banks to devise holistic solutions that address their working capital needs in totality, says Raphael Barisaac, UniCreditâ&#x20AC;&#x2122;s Global Co-Head of Trade Finance and Working Capital Management The sheer range of working capital products now available to corporates is making traditional methods of bankcorporate interaction unviable. Where once corporates worked with banks on individual products, such as factoring or forfaiting, to address isolated challenges, the prospect of replicating this approach across the huge and growing range of solutions available today no longer offers the most value. It is therefore imperative that corporates and banks alike adopt a more holistic approach to trade finance and working capital management. At the core of this will be maintaining a single, coherent dialogue on working capital needs, with a view to developing a wholesale plan that can draw on a diverse range of financing tools. This will be essential for corporates as they look to overcome their challenges while exploring the rapidly evolving landscape of working capital solutions.

Upscaling client interaction Historically, corporates seeking working capital solutions have met with numerous teams from the same bank to discuss individual solutions â&#x20AC;&#x201C; often having to repeat their story to each new team. This typically leads to additional administrative effort on both sides without progressing towards a clear and comprehensive solution. It can also introduce conflicts of interest, with each team pursuing its own product-driven agenda, rather than truly trying to solve the problem at hand for the corporate. The result is often a solution less than ideally suited to their needs, and a lead-in time protracted by numerous meetings. Of course, there is a better way. Progressive corporates are now engaging in conversation with a single team from a given bank, discussing their specific working capital needs and looking to construct a solution that addresses them all, rather than targeting a single one. This process ensures that the solution is highly targeted and bespoke, while simultaneously cutting down on inefficiencies. This kind of meeting can also add value for corporates in other ways, as bank teams with the right data can carry out analyses of their historical transaction activity ahead of the meeting to identify inefficiencies and factor them into the proposal.

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EMEA FINANCE

To facilitate this approach, progressive banks will begin setting up dedicated working capital advisory teams, as UniCredit has done over the past few years. Situated in various geographies, these teams can be the single interface between bank and corporate, always on hand to advise on the solutions and products that best suit a company’s specific working capital requirements. Modern solutions This streamlined dialogue will be increasingly essential if corporates are to navigate the expansive range of innovative working capital solutions now available. And these are not just available to the biggest corporates anymore. Blockchainbased platform “we.trade”, for example, is a trade platform designed for SMEs, connecting transacting corporates by hosting and formalising their commercial interactions within a single, easy-to-use, digital application. Once the clauses of a contract are successfully agreed on the we.trade platform, corporates can choose to apply a number of bank-provided working capital services for both sellers and buyers. Industry innovations such as this stand to simplify trade processes and associated financing instruments, but there are also proprietary working capital solutions emerging within many banks. For instance, UniCredit’s UC Balance brings together mutual clients of the bank with reciprocal payments and collections – promoting strength across the supply chain, freeing up working capital and reducing payment risk by settling mutually owed payment loops early.

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A new role for banks These, of course, are just a couple of examples of the growing range of innovations available to corporates looking to manage their working capital. Add to these the traditional options, including factoring and forfaiting, along with more sophisticated solutions, such as securitisation, and the landscape quickly becomes one that only experts can tread. This ever-increasing range of solutions makes it imperative corporates look to their banks for guidance when it comes to the correct working capital management strategy for their business. This makes it all the more important that the out-dated model of setting up multiple meetings – each to pitch separate working capital products – be reviewed and revised. The clear way forward is a single, strategically focused dialogue in which banks can assess the full range of a business’s needs and steer it through the broadening landscape of working capital solutions.

Raphael Barisaac Global Co-Head of Trade Finance and Working Capital Management UniCredit

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EMEA BUSINESS

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EMEA BUSINESS

Derivative actions in the name of Bermudian companies: When is judicial

The starting point: substance vs procedure

leave required?

From 9 July 2018, derivative actions commenced in Bermuda may not be continued without leave from the Supreme Court. The requirement comes by way of amendments to the Rules of the Supreme Court 1985: a new rule 12A has been added within Order 15, in terms which replicate an equivalent provision in the Cayman Islands’ Grand Court Rules 1995. Until now the right to pursue claims derivatively was governed exclusively by the common law, and in particular the various exceptions to the rule in Foss v Harbottle (1843) 2 Hare 461. The introduction of a formal requirement of judicial leave brings Bermuda into line with other common law jurisdictions such as the Cayman Islands and BVI and should provide additional protection against frivolous or vexatious shareholder claims.

Rule 19 in Dicey, Morris and Collins on the Conflicts of Law holds that “All matters of procedure are governed by the domestic law of the country to which the court wherein any legal proceedings are taken belongs (lex fori).” Matters of substantive law, on the other hand, are “governed by the law to which the court is directed by its choice of law rule (lex causae)”. In cases relating to the constitution and internal management of a company (which makes up much of the litigation in offshore jurisdictions), the lex causae is the law of the place of incorporation. In Konamaneni v. Rolls Royce Industrial Power (India) Limited and others [2002] 1 WLR 1269 Lawrence Collins J (as he then was) discussed the nature of the exceptions to the rule in Foss v Harbottle, which form the principled basis for derivative actions:

One question to which the new provision gives rise is whether it applies to “Although for purely English domestic purposes, any proceedings in the name of a the exceptions to the rule have been regarded as Bermudian company, wherever a procedural device, I do not consider that in the commenced. For example, must international context their real nature is procedural. leave of the Bermuda Court They confer a right on shareholders to protect be sought in order to continue the value of their shares by giving them a right derivative proceedings brought to sue and recover on behalf of the company. It in Hong Kong? would be very odd if that right could be conferred on the shareholders of a company incorporated in This question ties into a broader a jurisdiction which had no such rule, and under debate about requirements of which they had acquired their shares.” leave in other offshore jurisdictions, most notably the Cayman Islands and BVI. The debate has important practical implications: on a number of occasions derivative claims in Hong Kong have been struck out because leave was not first So, in an “international context” at least, sought elsewhere.i Unfortunately, the the right to bring a derivative action is authorities have developed in a way which considered substantive. Whether that right has made it difficult to provide clients with exists is governed by the lex causae. But clear advice. This article will consider the is a grant of leave to bring such an action effect of those authorities as they relate to an expression of that right, or is it a merely the provisions in BVI and Cayman, which procedural mechanism? in turn should inform the approach to be

taken under Bermuda’s new Rule 12A.

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EMEA BUSINESS In Waddington Ltd v Chan Chun Hoo Thomas [2009] 2 BCLC 82 Lord Millett, sitting as a NonPermanent Judge of Hong Kong’s Court of Final Appeal, offered the following obiter dicta while discussing the domestic regime for derivative claims:

"… The question whether a shareholder has a right to bring a derivative action may have to be distinguished in future from the question whether the shareholder has satisfied any procedural rules from bringing a derivative claim, for example by serving prior notice on the company. My provisional view is that these are matters of procedural law for the lex fori rather than the law of the place of incorporation."”

“If the question whether a derivative action is available is a question of substantive law… then it is governed by the law of the place of incorporation. The same law also governs the company’s indoor management. Neither question is governed by the common law of Hong Kong; both are governed by the law, whether statutory or common law, of the overseas jurisdiction. The question whether the leave of the court is required is a procedural question governed by the lex fori.”

In Wong Ming Bun v Wang Ming Fan [2014] 1 HKLRD 1108 a shareholder of a BVI company commenced derivative proceedings in Hong Kong without first obtaining leave from the Eastern Caribbean Supreme Court under Section 184C of BVI’s Business Companies Act 2004. Section 184C (1) provides, in relevant part: “…the Court may, on the application of a member of a company, grant leave to that member to

This seems clear enough, but Lord Millett’s approach has since been departed from. We now turn to consider how that has happened, with reference to two of the most popular corporate domiciles for Asian businesses – BVI and Cayman. Suing in the name of BVI companies In East Asia Satellite Television (Holdings) Ltd v New Cotai LLC [2011] HKCA 128 the Hong Kong Court of Appeal considered a slightly different question: whether the lex incorporationis or the lex fori governed whether a multiple derivative action in the name of a BVI company was available. In that context the leading judgment of Hon Tang Ag CJHC concluded that “it is not arguable that the right to bring a multiple derivative action is not governed by the law of the place of incorporation.” The Court did not need to consider the separate question of whether a requirement that leave of the Court be obtained before bringing a derivative action was procedural or substantive. However, in reviewing the authorities Hon Tang Ag CJHC made the following observations:

(a) bring proceedings in the name and on behalf of that company; or (b) intervene in proceedings to which the company is a party for the purpose of continuing, defending or discontinuing the proceedings on behalf of the company.” Section 184C (6) provides: “Except as provided in this section, a member is not entitled to bring or intervene in any proceedings in the name of or on behalf of a company.” Having considered Waddington and other cases, Peter Ng J decided the claim must be struck out:

“The legal position is clear - whether a shareholder can commence a derivative action in the name and on behalf of the company is a matter of substantive law, and is governed by the law of the place of incorporation… In the present case, this question is governed by BVI law. Under BVI law, a shareholder can only commence a derivative action … with leave of the BVI Court. No leave has been obtained. The action as presently constituted is defective.”

“…Konamaneni has not decided that a requirement for leave by the law of incorporation is not procedural. Nor is such a view inconsistent with Konamaneni, thus Arden LJ in Base Metal after expressing agreement with Konamaneni said at para 68:

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EMEA BUSINESS This analysis seems to have started from the premise that the right to bring a derivative action is governed by the lex incorporationis and then inferred that a requirement of leave under that law must apply to proceedings brought elsewhere. In other words, he did not expressly address the distinction identified by Lord Millett in Waddington. He did cite the passage from Waddington mentioned above, but unusually left out the last two sentences, including the important final one. Later in 2014, the same issue was considered in Novatrust Limited v Kea Investments Limited [2014] EWHC 4061 (Ch). English proceedings were commenced in the name of a BVI company, and the claimant sought leave from the English Court to continue them. The defendants alleged that the Court did not have jurisdiction over such a claim unless permission was first obtained from the BVI Court. Judge Pelling QC said at paragraph 37:

“Whilst I fully accept that, as Arden LJ said in Base Metal Trading Limited v. Shamurin [2014] EWCA Civ 1316 at [68], the question whether a shareholder has a right to bring a derivative action may have to be distinguished from the question whether such a shareholder has satisfied any procedural rules for the bringing of such a claim, whether that is so is contextual. As Arden LJ says, purely procedural law requirements are likely to be treated as governed by the lex fori rather than the law of the place of incorporation. However, whether a particular requirement of the law of the place of incorporation is a purely procedural step and thus one that can in effect be ignored depends critically on the particular circumstances. Where a step that is otherwise procedural in nature is a condition precedent to the right of a member to bring such an action then satisfaction of that condition will have to be established even if the condition concerned has the hallmarks of a procedural requirement.”

The judge went on to find that the requirements of Section 184C were substantive, since a member did not have the right to bring such a claim without first obtaining the leave of the Court. He explained that decision in the following way2:

“In my judgment the effect of s.184C(6) is that by BVI law a member of a company does not have the right to bring proceedings in the name of or on behalf of a company unless that member has complied with the other provisions within s.184C and that is so whether the proceedings are to be brought in the courts of the BVI or elsewhere. Absent this provision I would have agreed that the requirement for leave from the BVI Court was procedural. However, the effect of s.184C (6) is that before the member of a BVI company can have the right to bring derivative proceedings in respect of that company, permission has to be obtained by that member from the BVI High Court (“the Court” being defined for these purposes by s.2 of the act as meaning the BVI High Court). Obtaining that permission is a condition precedent to the ability of the member to bring such proceedings.”

The emphasis was on the nature of the provision. A requirement of leave was not necessarily procedural; sometimes, because of its terms, it was substantive. But this invites the question: if section 184C is substantive, what if an equivalent but differently-worded provision in the lex fori were deemed procedural? Could this mean that leave of both courts was required? Is Lord Millett’s formulation – that whether leave is required is always for the forum – therefore to be preferred? The Court in Novatrust did not expressly consider that question in its reasons. It did not suggest, for example, that once leave in BVI was obtained, a fresh application under Rule 19.9 of the English Civil Procedure Rules 1998 may be necessary. Until these problems are resolved by an appellate court, it would appear advisable to seek leave from the BVI Court before commencing proceedings in the name of a BVI company overseas.3

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EMEA BUSINESS The position in Cayman Similar issues have arisen in the Cayman Islands. There, the provisions governing leave are contained in the Grand Court Rules rather than the companies legislation. Order 15, Rule 12A (now mirrored in Bermuda) provides that where a defendant in a derivative action has given notice of intention to defend, the plaintiff must apply to the Grant Court for leave to continue the action.4 In other words, the application can only be made after proceedings have been issued and a notice of intention to defend filed. This can be distinguished from BVI’s Section 184C (1), which refers to “leave… to bring proceedings”. Further, as might be expected of a rule of court, Rule 12A contains a number of provisions which regulate the way such a claim must proceed, such as by allowing the Court hearing the application to make directions as to the joinder of parties, the filing of further evidence, discovery and crossexamination of deponents. The Rule was considered in Charles Zhi v SRK Consulting Ltd [2015] HKCFI 1547, where a shareholder brought a common law derivative action in Hong Kong on behalf of a Cayman company. The plaintiff did not file evidence or appear at the hearing of the defendant’s application to strike out the statement of claim. Judge Le Pichon granted that application on the basis that leave under Rule 12A had not been obtained. She found support for her decision in Wong Ming Bun, East Asia Satellite and Waddington. However, none of those cases were about Rule 12A; the difficulty with Wong Ming Bun has already been noted; the Court of Appeal in East Asia Satellite expressly reserved its view on whether a requirement of leave is procedural or substantive; and in relation to Waddington, the Judge quoted Lord Millett, but like Peter Ng J in Wong Ming Bun left out the very sentence which addresses the point in issue. Later decisions have taken a different view of the effect of Rule 12A. In Top Jet Enterprises Limited v Sino Jet Holding Limited [FSD 106 of 2017 (NSJ)], a shareholder of a Cayman company issued derivative proceedings in Missouri and sought the Cayman

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Court’s permission to continue them. The Honourable Justice Segal declared that no such permission was needed:

“[Rule 12A] clearly contemplates and presupposes that the action by the relevant company against the relevant defendant which has been commenced by the relevant shareholder is being conducted before this Court so that the application for leave to continue the action can be made within that action and the Court can make orders regulating the future conduct of such action (for example, by making an order on the application of the defendant to dismiss the action). Furthermore, the rule contemplates that the timetable of the action will be affected by the need for an application for leave. The procedural mechanism created by the rule only works where the derivative action has been issued in Cayman. In my view it can have no application to a foreign derivative action.”

The same view was reached by the New York Court of Appeals in Davis v Scottish Re Group Limited, No. 111 (N.Y. Nov. 20, 2017). At first instance and on an initial appeal it had been held that Davis did not have standing to bring the claim as he had not first obtained leave under Rule 12A. Consistently with certain other American decisions5, the rule was deemed to be substantive and therefore applied under New York conflicts of law principles. But the New York Court of Appeals disagreed, holding that “Rule 12A is procedural, and therefore does not apply where, as here, a plaintiff seeks to litigate his derivative claims in New York.” This is a sensible interpretation, and one that can reasonably be expected to be adopted in Bermuda. It remains to be seen whether it will also be adopted in Hong Kong, in spite of the decision in SRK Consulting and, to a lesser extent, the authorities considering section 184C in the BVI Act.

Stuart Jessup Senior Associate APPLEBY

See for example Wong Ming Bun v Wang Ming Fan [2014] 1 HKLRD 1108 and Charles Zhi v SRK Consulting Ltd [2015] HKCFI 1547, both discussed below.

Novatrust Limited v Kea Investments Limited [2014] EWHC 4061 (Ch) at [38].

An example of where this was not done is Sinwa SS (HK) Co Ltd v Morten Innhaug [2010] SGHC 157, where the Singapore High Court considered a common law derivative claim in the name of a BVI company without expressly addressing whether leave of the BVI Court was required. The defendant appears not to have raised this jurisdictional point.

Rule 12A (1) provides that the rule applies to “every action begun by writ by one or more shareholders of a company where the cause of action is vested in the company and relief is accordingly sought on its behalf”. In Renova Resources Private Equity Limited v Gilbertson and Others [2009] CILR 268, leave was given to pursue a double derivative action.

See for example ARC Capital LLC v Kalra 2013 NY Slip Op 3136[U] No. 652931/2012

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