Global Banking & Finance Review Issue 43 - Business & Finance Magazine

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Dear Readers’

Allianz Trade, formerly Euler Hermes and part of the Allianz Group, is international world leader in trade credit insurance (TCI). Its product offering also includes surety bonds, guarantees and business fraud insurance. Since 1910, Allianz Group has had a presence in the Asia Pacific region, where it currently serves 21 million customers. I got the lowdown on Allianz Trade’s Go2025 strategic plan in a recent interview with Paul Flanagan, Regional CEO of Allianz Trade in Asia Pacific. (Page 24)

In this edition we also take a look at the impact of the Metaverse and GenZ on banking, delve into the ethics and risks in using AI-generated content, and explore the impact of consumer sentiment as recession fears rise.

We strive to capture the latest news about the world's economy, financial events, and banking game changers from prominent leaders in the industry and public viewpoints with an intention to serve a holistic outlook. We have gone that extra mile to ensure we give you the best from the world of finance.

Send me your thoughts on how I can continue to improve and what you’d like to see in the future.

Enjoy!

Wanda Rich Editor

FROM THE ®

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I am pleased to present

Issue 43 of Global Banking & Finance Review. For those of you that are reading us for the first time, welcome.

the

Beaudreau

STORY

Allianz Trade in Asia Pacific CEO On the Group’s Go2025 Strategic Plan

Paul Flanagan Regional CEO

Allianz Trade in Asia Pacific

How the metaverse will revolutionise retail banking

The metaverse presents exciting opportunities for banks when it comes to customer experience and managing transactions.

It will go beyond existing digital banking opportunities to create an immersive experience using technology like augmented reality (AR), virtual reality (VR) and artificial intelligence (AI) – in addition to other technologies such as blockchain and NFTs.

It will revolutionise the way banks engage with their customers, both in the products they offer and the new marketplaces they can explore. Given the demographics of likely metaverse users, it also has great potential to reach new customer segments.

Financial services companies are already starting to explore the metaverse

In December 2021, Bloomberg Intelligence predicted that the metaverse “revenue opportunity” could be worth $800bn as early as 2024.

We’re seeing financial institutions take their first steps towards banking in the metaverse.

JP Morgan, for example, has its Onyx lounge in Decentraland, an openworld metaverse environment built on the Ethereum blockchain. Spain’s CaixaBank also has a version of its imaginCafé there.

HSBC and Standard Chartered have purchased virtual land in a metaverse environment called The Sandbox.

To avoid disintermediation, card providers are also exploring opportunities, with American Express filing patents to provide metaverse payment services, for example.

This is just the beginning of the metaverse journey for traditional retail banks, which are starting to think about how they can use the metaverse to achieve business goals (such as customer experience and service). But first, they need to understand what the metaverse is, how it works and how financial services can play a role. They need to know about the platforms, technologies and ecosystems in play and how they can use them to shape a metaverse strategy that has customer experience at its core.

How will the metaverse revolutionise retail banking?

While the introduction of so many new technologies will be disruptive to traditional retail banks, they’re also a massive opportunity. As cryptocurrencies become more mainstream and people want to trade digital assets as easily as they do physical ones, they’ll need banking services that facilitate and protect their transactions.

The metaverse will allow banks to differentiate themselves in several ways. Here are three core services that retail banks may want to think about, and how the metaverse could enhance them.

1. Using immersive, virtual experiences to attract and engage new customers

As the metaverse becomes more mainstream and more consumers start to use it, those consumers will start to need financial products and services designed with the metaverse in mind.

Younger generations already spend a lot of time playing games and socialising digitally. As more of them start to embrace NFTs and the metaverse, they’ll likely be more predisposed to using virtual goods and buy digital assets.

The metaverse will allow retail banks to reach new customer segments like creators, gamers and creatives who are creating multiple sources of income for themselves and looking for help – like instant loans – from banks as they seek to improve their presence in the metaverse.

One emerging strategy for retail banks is to create educational experiences and engage and connect with customers by setting up virtual lobbies and displaying demos on financial wellness and planning. Quontic Bank has started doing this in Decentraland, for example.

2. Providing innovative products and services

As well as providing the needed metaverse-specific products and services, we could see banks developing virtual world platforms – allowing their customers to seamlessly complete transactions between physical and virtual worlds.

We’re already seeing financial services companies develop metaversespecific products. For example, TerraZero Technologies claims to offer the first-ever metaverse mortgage for customers who are looking to buy virtual real estate. This “virtual land grab” is one of the hottest trends we see within the metaverse.

Decentralised finance (DeFi) facilitates borrowing and lending of cryptocurrency against collateral (which could be an NFT or blockchain token-based digital asset). As more consumers and organisations join the metaverse, we’ll see more decentralised autonomous organisations (DAOs) make the metaverse increasingly accessible - creating fairer ways to invest in

and monetise digital assets. Again, this kind of ethical investment environment is likely to appeal to younger customers.

Banks are also considering supporting digital payments by launching credit or debit cards that customers can use to make secure payments in the metaverse. They could also allow for secure lending against NFT assets and help facilitate the metaverse real estate market.

3. Shaping the future of the workplace

Retail banks, like all financial institutions, are looking for innovative ways to attract and retain talent now that hybrid and remote working models are becoming the norm.

Immersive technologies like AR and VR will become standard ways to foster creative, collaborative and inclusive environments for employees. We’re already seeing personalised avatars, for example. These will include services like Microsoft Mesh for Teams and Meta’s Horizon Workrooms.

The metaverse will offer a great way for retail banks to provide an engaging employee experience and promote a general feeling of ‘togetherness’. It will help attract and retain talent as well as offer new ways to train employees through virtualisation and gamification.

We could even see on-demand, AIpowered digital coaches training employees and providing interactive and immersive metaverse-based learning experiences.

Bank of America already offers immersive and engaging training using VR, where employees can learn via scenarios played out in a simulated environment.

It is clear that the metaverse will give banks powerful new ways to connect with their customers. Right now, it might be hard to imagine the benefits that banks and customers could gain from this new virtual world–it’s still in its very early stages, and a lot of people remain sceptical of its potential. The truth is, we don’t yet know the full potential of the metaverse (in the same way we didn’t really know the full potential of the internet in its very early days).

However, now is the time to start thinking about it and planning for success. We’re already seeing financial institutions taking calculated risks by innovating in this area. Banks that start thinking about metaverse products and services now will find themselves in a very competitive position by the time consumers are ready to fully embrace this brave new world.

Owen Wheatley Lead Partner for Banking & Financial Services ISG (www.isg-one.com)

Why supply chain management needs to go back to basics

The global supply chain is, in essence, the movement of goods between manufacturers, retailers, and consumers. It is a complex web of moving parts that is, in its current state, is easily impacted by an array of external factors. As of July 2022, consumers have seen an increase in fuel, food, and energy prices, alongside a short supply of brands and items. In the USA, for example, consumers have seen a shortage of babyrelated products, like baby formula, throughout 2022 due to issues with the supply.

New SAP research shows that almost a quarter of decision-makers anticipate that supply chain issues will remain a problem in the summer of 2023. This daunting prospect has encouraged some retailers to rush investment into technology solutions, like artificial intelligence and machine learning, in an attempt to find a solution. However, a strong focus on perfecting the fundamentals of supply chain systems would be a far more effective approach.

The global supply chain itself has undergone significant change during the last two years, driven largely by the ripple effect of the COVID-19 pandemic. Recent reports suggest that hybrid working models have transformed customer expectations of retail experience: 27% of consumers and 36% of Gen Z prefer a hybrid shopping model with a blend of digital and physical channels. As a result, retailers are now under increased pressure to not only deliver a streamlined and effective online experience but also to bring digitalisation into their stores to

improve customer experience in-store as well. Tech-enabled touchpoints that allow customers to locate products, order food, and self-checkout easily are just some of the tools that customers have grown to expect as part of their retail experience.

This transformation has also come at a time of huge disruption for the supply chain. The traditional supply chain model, “just in time”, failed to hold under the pressure of the pandemic, where demand for goods outweighed the supply. Lockdown gave some consumers excess cash, saved from spending less on expenses like travel and eating out, which drove up demand for goods, and an appetite for accessible and intuitive online shopping experiences.

The pandemic was only the start of problems for the supply chain. Rising fuel prices and a shortage of HGV drivers are driving up the cost of transporting goods through these traditional systems and putting an increased burden on supply chain managers to adapt. Additionally, disruptors such as the war in Ukraine and new coronavirus outbreaks in China are interrupting trade and forcing retailers to move away from specific regions for goods: exacerbating an already strained supply chain.

It is clear, therefore, that retailers need to rethink how they approach the supply chain and reinvest time into ensuring their foundations are secure. By developing a concrete foundation, retailers can limit the disruption that external factors might have on their supply.

Redefining the global supply chain

The pandemic forced many retailers to adapt quickly to manage business disruption in an unprecedented set of circumstances. However, now is the chance for retailers to focus on getting the fundamentals right and optimising their supply chain.

The key to this is redefining how we perceive supply chain disruption. First, a distinction must be made between supply chain disruptors and poor supply chain management. Whilst geo-political situations disrupt the supply chain, they are not the root cause of why we’re missing products off our shelves. Instead, it results from clients struggling to react to the market and feeling the effects of chronic underinvestment in supply chain technology.

Current industry solutions

Some retailers, most notably those in the fashion industry, have turned to near-shoring solutions which involve bringing manufacturing closer to end consumers. Inditex, a fast-fashion giant, now manufactures 53% of its fashions in Europe. This not only reduces shipping costs and increases the reliability of their supply but can also improve a company’s environmental impact.

Others have turned to new technology to improve their delivery services. Dark stores and automation, from factory robotics to delivery drones and autonomous vehicles, have become popular methods for improving efficiency.

However, getting the basics right is often found to be the most effective way to elevate a delivery service. General merchandiser Target, for example, has released an app that allows shoppers to switch from pick-up in-store to drive up or send someone in their stead, all changeable in real-time with a couple of clicks. The solution works as it addresses a key consumer issue, the collection of goods, in a quick, accessible, and intuitive way, without any over-complication.

Understanding and delivering on consumer demand

Perhaps the biggest struggle facing retailers is predicting demand and optimising their supply chain to reflect uncertain times. This has become clear during the last few years when demands have become more volatile, and retailers have struggled to keep up.

An effective system that maps your supply against demand allows you to plan a strategy to sustain your growth. This is where Data and Analytics Platforms become essential.

Access to real-time data insights allows businesses to plan for seasonal peaks and react to the unexpected. The lockdown showed that businesses that were unable to adapt to demand quickly, for example, and didn’t meet demands for eCommerce solutions, suffered

the most. By equipping yourself with a real-time understanding of supply and demand, you can bolster yourself against these potential disruptors rather than get lost in the storm.

Keeping your customers on your side

A positive consumer experience is about more than just super-fast delivery. It is about working with the consumer to ensure they receive their goods reliably and at a time that reflects their needs.

Essential to this is being transparent and accurate with delivery times. The sense of control given to a customer by sharing precise times for pick-up or home delivery and proactive warnings about delays creates a positive relationship between retailer and consumer.

Amazon has set the benchmark for expectations. Even though the company is not a direct market competitor for all retailers, the experience it offers has led to consumers expecting the same experience across all retailers, and responding negatively to those who fail to deliver these standards.

To meet this requirement, some retailers have started integrating the shipping data into their own systems. This can streamline the tracking process by reducing the need for multiple logins and simplify any returns processes by keeping it in-house. It also allows you to ask your consumers when they want their products and focus on meeting the individual needs and expectations of the customer.

Making the most out of your real estate

Another area in which retailers need to invest in is warehouse efficiency. Current shipping models rely on just-in-time supply chains, which are subject to geo-political disruption and disruption from a lack of skilled workers in the shipping and HGV industries. However, many retailers are ill-equipped to evolve into new shipping models.

Limited warehouse infrastructure in the UK means that retailers cannot effectively move stock into the country ahead of time. Over the last decade, the scale of warehousing growth in the UK has been huge, but warehousing costs are around three times higher than they were ten years ago.

Bringing increased automation into these spaces, such as through warehouse robotics, has limited impact as the supply chain is still vulnerable to supply chain disruptors. To move forward, retailers must focus on building their real estate before investing in new technology.

Retailers must seize the opportunity to optimise their warehouse spaces. Click and collect services can be used to create local hubs, as retailers only need to transport goods to spaces, such as supermarkets, which are conveniently located near their endconsumers. Most supermarkets now offer this service as an alternative to home delivery, and the total market for click and collect is set to be valued at £9.8bn by 2023. The model is an easy way for retailers to save costs as they can use their in-store staff to sort orders and minimise the additional cost of delivering the items to the consumer. Other options include huband-spoke models, which use regional hubs and reduce your reliance on HGV drivers – currently in short supply –and utilise vans instead. These models can help retailers meet the customer expectation of order fulfilment without incurring a high cost.

Analysing your warehouse space can bring further benefits. Making a note of your warehouse space, production line speed, and system accuracy enables you to maximise efficiency and measure your warehouse’s spare capacity. If you find you have a significant amount of excess space, you can rent it out to other companies and bring in additional revenue.

Retailers need to work smarter, not harder. By making full use of all their infrastructures and existing metrics, retailers can provide goods quickly and reliably without incurring a considerable cost.

Martin Pateman-Lewis Engagement Director

Digital

The confidence crisis - how organisations can better tackle ESG reporting

The current goal is to have those in non-financial roles produce reports with the same rigour as financial controls in the next three years; however, this may be unrealistic considering that financial reporting took significantly longer than a few years to get right. In order for organisations to achieve this goal they must assemble a cross-function team. Bringing teams together from both financial and non-financial roles enables organsiations to produce the best, most collaborative assurance and board-ready reporting that is investor grade.

Pressures are mounting from regulations like the Corporate Sustainability Reporting Directive (CSRD) to meet the growing demand from investors and other stakeholders to provide high quality, transparent, reliable and comparable reporting on climate and other environmental, social and governance (ESG) matters.

However, there seems to be a growing confidence crisis amongst UK organisations. A 2022 ESG survey research by Workiva, has revealed that nearly two-thirds (63%) of senior decision makers in the UK feel their organisations are underprepared to meet their ESG goals and regulatory reporting mandates. Despite the current lack of confidence in tackling these reports, there are significant positives to getting ESG reporting right - such as attracting investment and better alignment with customers, and other stakeholders.

Perfecting ESG reporting will not happen overnight but there is no better time than now to begin this journey. As such, this article will discuss the existing steps businesses can take to improve their confidence in the ESG data they report.

Building the foundation for ESG reporting

Despite evidence that over half of UK organisations (59%) are addressing the issue, having appointed an ESGspecific role to oversee reporting, 73% still do not have confidence in the data being reported to stakeholders. This may simply be down to time, as organisations have not been required to produce ESG reports long enough to have real confidence in their processes.

Meanwhile, among expectations that are concerning businesses are stakeholders who are calling for more detailed and uniform data related to ESG. Despite progress needed across all facets of ESG, tackling the environmental or ‘E’ element is clearly the current major focus.

Included in this data gathered, reporters are expected to calculate greenhouse gas emissions and provide carbon accounting details which are currently the areas that decision-makers are most concerned about reporting on. In fact, for almost half (43%), these were cited as priority concerns.

While identifying the areas where major focus is needed is evidence that businesses are taking steps in the right direction, being prepared does not stop there. Organisations also need to understand existing and upcoming regulatory demands and determine how these will impact ESG strategy.

Keeping up with policies and standard initiatives

The lack of preparedness by decision makers can be strongly tied to the lack of clarity around the future ESG expectations that might lie ahead.

In efforts to improve this issue, government and industry regulators are currently rolling out a range of regulatory reporting requirements to provide constant standards across the globe. These range from the recent Sustainable Finance Disclosure Regulation (SFDR) directive in Europe, to the ESG disclosure rule proposed by the SEC in the U.S. and the Singapore Exchange’s recommended 27 core ESG metrics. Meanwhile, the Task Force on Climate-Related Financial Disclosures (TCFD) has outlined the most effective principles for companies to analyse, understand and ultimately disclose climaterelated financial information.

Government regulators and internal policymakers are needed to communicate requirements clearly and work closely with reporting teams as well as their technology providers to ensure that these initiatives bring about the change they envision. Having the right controls in place ultimately makes processes more robust and repeatable, ensuring that the resulting metrics stand up to scrutiny. In particular this process applies to materiality assessments, which illustrate which ESG issues matter the most to an organisation’s stakeholders.

More regulatory requirements are still needed and these can come into place over time. As regulations, frameworks and stakeholders’ demands evolve, the key to maintaining confidence in reports will be to stay committed to regularly reassessing the processes organisations have in place. This will ensure they are equipped and ready to meet ever-evolving ESG standards.

Technology as the enabler to advance ESG reporting

Organisations are calling out for solutions to navigate the challenging ESG landscape. Meanwhile, financial reporting is in the middle of a digital revolution, focused on re-architecting and modernising systems. By taking lessons learned from finance and applying them to ESG reporting, businesses do not need to reinvent the wheel. Moreover, there are existing solutions that account for both financial and ESG reporting, which should encourage collaboration between the teams. The key outcome is to ultimately produce decision-useful data.

Desirable solutions should unite teams and workflows, and simplify the process of gathering data from across the organisation. Survey respondents also see these as being important for validating data for accuracy (80%) and mapping disclosures to regulations and framework standards (85%).

For example, automation is critical to ensuring consistently accurate results. Where data is input manually, the risk of calculation error is significant. Automating processes has been proven to remove additional steps that offer an invitation for human error. Where uniformity is needed across different reports and where data input is usually a repetitive task, automation offers a time efficient solution.

Similarly, through real-time collaboration, financial and nonfinancial reporters can ensure that when a data point is updated in one place, it is updated in every relevant analysis and report. Since data needs to be consistently merged in real-time to produce fully transparent, trustworthy ESG sustainability reports which can easily be integrated with financial data, there really is zero margin for error. Uniform, accurate reporting can be produced most effectively when combined with a platform that centralises related teams and integrates the full reporting process.

Taking the steps to prepare as much as possible

To navigate this era of change in ESG, organisations must be forwardlooking and flexible in their planning. Regulators, investors, customers, and other stakeholders have identified what’s essential in today’s reporting, but this is only part of what will be essential for tomorrow.

Looking ahead, organisations are planning to dedicate more resources to improving their ESG reporting, with the ‘E’ becoming more of a priority. This renewed focus will ultimately help drive tangible change to improve the business impact on the environment and society at large.

Technology which enables seamless integration between teams in one centralised platform will be key to streamlining the reporting process in the long term. This will also support in delivering transparent reports that are critical to meeting evolving demands as well as attracting investors and wider stakeholders. Ultimately, smart preparatory efforts that take advantage of innovation will enable organisations to feel more confident in their current reporting now and when facing future ESG mandates.

Mandi McReynolds Global Head of ESG Workiva

Next generation credit: Gen Z’s impact on banking

More than one third of the world’s population is Generation Z.

To give you an idea of what this means in figures, the UK has approximately 12.6 million (19%) Gen Zers entering the workforce, whilst the world’s eighth most populated country, Bangladesh, has well over 58 million Gen Zers – a staggering 35% of the population, around 27% of whom live in urban areas.

With larger numbers of young people entering the workforce at one time than any generation before it, what legacy will these digital natives leave on the banking sector?

Interestingly, wherever they are from, whether the UK or Bangladesh, Gen Zer’s have common behaviours and common challenges for the banking sector.

Every generation approach money and personal finance in a different way. Millennials discovered the road to adulthood was paved with financial difficulties including slow pay growth and uncertain economic conditions. This environment contributed to the development of the group’s spending patterns and views toward debt.

Millennials made their fair share of financial blunders along the way (as most generations do), but evidence is already accumulating suggesting the “next generation”, Gen Z, is already learning lessons from their elders. Some of Gen Zers’ older acquaintances struggled to reach high-paying professional roles while simultaneously taking on significant debt. As a result Gen Zers seem to be approaching personal finance with a level of caution.

Financial institutions offer services to customers of all ages, but many focus their marketing efforts on the youngest group, timed to coincide with the time when they complete college and begin to enter employment. Building a solid, enduring relationship with youthful customers can be profitable and result in many years of business. Many people stick with the same retail bank they joined as a college student for life. Institutions have the chance to develop and maintain its brand with each new generation whilst balancing the needs and wishes of older, existing customers.

Digital innovation and customer engagement is becoming fundamental to banks’ ability to differentiate themselves to customers. Gen Zers, as digital natives, demand different approaches. They are forcing the banking system to enter the innovation of technology.

There’s a proverb that says you can learn a lot about someone’s worldview by looking at how it was when they were in their twenties.

Few generations in recent times have experienced pandemics, transformational digital change, recessions, inflation, and global instability. Digital-first customers are no longer the future of banking but the present. Unlike millennials, who came of age during the 2008 global financial crisis, Gen Zwas expected to inherit a strong economy and record-low interest rates. The Covid crisis changed all of this.

Keeping Gen Zers motivated and interested in their financial futures will require creativity. Around 40% of Gen Zers use TikTok over Google for search. Fun and educational, video led, banks’ communication needs to ensure it reflects (and demonstrates an understanding of) the interests and concerns of this group.

But what of credit?

In order to further promote economic accessibility, fintechs across the world are working to make credit inclusive, making way for the younger generations to be able to step out of the credit paradox and qualify for their first loan.

Gen Z has recently entered the banking industry, and they are upending it. The 2008 financial crisis impacted this generation’s parents, and they took lessons from it. Gen Z have a new relationship to credit. Despite having access to credit and the possibility of debt, Gen Z does not necessarily make use of it. Even though the majority of this generation has at least one loan account and is credit active, they handle their money wisely. The majority of Gen Zers who use credit are managing their debt better than Millennials did at the same age.

Spending

Gen Z are the obvious target for fast growing e-commerce brands. Gen Zers’ inspiration comes from aesthetic Pinterest boards, and TikTok highlights are used to capture their every move; therefore, it only makes sense that their methods of purchase are online first. And, e-commerce brands were quick to embrace fintech solutions for part payments or delayed payments. Such benefits previously were only limited to a smaller segment of customers having credit cards.

Historically, to be eligible for this credit customers had to earn the ‘right salary,’ with the right amount of transaction histories to be considered credit-able for the banks. Younger shoppers were almost always excluded from that group. The Klarna Generation have been granted access to credit in huge numbers. But, are these customers getting the ‘right’ credit? With little access to Gen Z to date, banks’ are missing out on the opportunity to service these customers.

And, with limited financial education, are Gen Z making the best financial decision for themselves? This is where next generation UK fintech, AGAM International, comes in. AGAM is the answer to the real-world financial problems faced by the unbanked community. It provides lenders with the information and access to those who have previously been denied a credit score. With the creation of a more sophisticated credit scoring method known as ‘Individual Independence Index’ individuals with limited credit histories, but who the data show are suitable borrowers, are able to receive access to loans – instilling a sense of financial confidence and security in many individuals without previous financial knowledge.

In order to further promote economic inclusivity, fintechs across the world are working to make credit accessible and it can only happen with digital innovation in every step of the way.

To remain in business, let alone thrive, financial institutions must embrace Gen Z’s digital native sensibilities and respond – and that means accelerating their digital transformation, adopting more sophisticated credit scoring and payment systems and communicating with Gen Zers in a language and format they understand.

Shabnam Wazed Founder and CEO

AGAM International

AI Content Marketing: The Ethics and Risks for Ecommerce Brands

A major part of effective Ecommerce marketing involves writing search engine optimized content, a job that can be rather tedious. It is no wonder some writers attempt to simplify the task using artificial intelligence (AI) generated content. However, this raises the concern of whether AI copywriting tools can actually develop helpful content that solves the consumer’s problem by providing the right answer to their search intent. Is their contribution to the web a net positive or a net negative?

AI content generators rely on pattern identification by crawling through billions of sentences online. The tools then use a transformer model to generate predictive text based on the learning samples; that’s where the major concern lies for critics of AI writing tools. This article will delve into the ethics and risks of using AI-generated content in Ecommerce marketing and how it could potentially be harmful for your brand in the future.

How do AI content writers work?

AI content generators rely on a set of inputs such as keywords or topic headlines to predict word by word entirely ‘new’ content. At the very core of the generator is a collection of machine learning algorithms which identify patterns in the human language. The language models rely on mathematical functions designed as neural networks similar to the way neurons in the brain are wired. The prediction is made by computing the strength of neural connections to reduce prediction error via parallel training. These models are pre-trained on billions of pages with all manners of content on the internet.

A large number of AI-content generators rely on the GPT-3 language model, which uses deep learning to create human-like text. The key phrase here being ‘human-like’. When it comes to predicting text, the model uses generative pre-training meaning its predictions are based on the patterns it learned from the training data. While the model may come up with uncanny and sometimes almost genius sentences, it's still based on statistics and not actual humanlevel intelligence.

Ethical concerns and risks associated with AIgenerated content marketing

Toxic content

Since AI content generators learn from both supervised and unsupervised sources, there’s the inherent risk that the model will be exposed to biased and toxic content. Keep in mind that the models cannot fully comprehend what the content they are trained on really means. Think of it as a big game of word association. Sooner or later, the algorithm will learn to associate certain words with similar ones as they appear more often in similar contexts in the training data.

While Ai writing tools can create well-structured content, there’s still the likelihood that they will spew hate speech amidst a normal sentence. Researchers attribute this to the presence of hate speech-related words in the training data, which leads the algorithm to form statistical relationships between phrases that it's trained on. Still, it doesn't fully understand the context or meaning behind them.

It goes without saying that if this kind of content is published without being thoroughly checked and edited by a human, it could have a real negative impact on any Ecommerce brand using AI to generate web content for the purpose of promoting their brand.

Nonsensical statements

While most large language models train on billions of parameters in what is best described as brute force scale, there are still scenarios when their predictions do not make any sense at all. Professor Emily M Bender, A computational Linguist from the University of Washington, referred to these models as “stochastic parrots” owing to their echo chamber-like abilities to make ridiculous yet comprehensible statements. This is because the algorithms just introduce randomness to existing content in their predictions, so they retain the biases in the training data.

When you prompt a writing tool to generate text on a topic that's not very common on the internet, chances are that the model will have even fewer data to learn from. This affects the varying quality of the results, and often, the generated text will contain placeholder text that has nothing to do with the topic at hand. The predictions may also contain statements that are not fluent and the paragraphs lacking in the flow of ideas.

Potential for AI content to see poor search engine performance

In a recent blog post, Google stated that its upcoming update will focus on helpful content in an effort to fix the loopholes that websites have been using to gamify the ranking system. The fix involves changes in the search engine's ranking signals to rank content worthiness. It's expected that the update will change how the algorithms evaluate a website’s content and how it's helpful to satisfy the searcher’s intent.

With this update, Google will give top priority to people-first content so that quality evaluation will be paramount. This is bound to negatively impact websites with AI-generated content that doesn't clearly demonstrate the depth of knowledge and expertise of the topics covered. While the new signal is automated based on machine-learning models, it will not mark content as spam or issue a manual action. Instead, Google's ranking algorithm will consider the signal while ranking websites in search engine results pages (SERPs). If you are looking to rank higher, it's high time you got rid of unhelpful content, especially if you use extensive automation to write your content on many topics.

Ryan Turner, founder of Ecommerce marketing agency EcommerceIntelligence.com, said the following when asked about the trend of Ecommerce businesses using AI to make content marketing production faster and cheaper: “It is something we’re wary of for sure. Many brands we speak with have ambitious content publishing goals which are potentially focused too much on quantity instead of quality. We haven’t seen search engines take any kind of definitive action against AI content yet, but it is something many in the industry feel will happen at some point in the near future.”

Misinformation and disinformation in AI generated content

Ai writing tools are bound to repeat inaccurate information that already exists in the training data. In this case, the tools generate inaccurate information without the intention of causing harm in what is commonly referred to as misinformation. However, as AI tools advance in complexity, there’s fear that they may start deliberately generating false information, a common disinformation tactic. This is often the case with AI tools that write news articles that can dupe human readers.

In an effort to stay competitive with larger brands in their market, some Ecommerce marketers publish AIgenerated articles without much human proofreading and editing of the content. This mass publication of AI-generated content is more likely to spread disinformation by repeating existing malicious information in a never-ending cycle. Some researchers have estimated that 99% of the internet will be based on AI-generated content by 2025 if we continue at the current rate of adoption, raising concerns on just how accurate all that information will be.

Summary for Ecommerce marketers

There’s no denying the fact that artificial intelligence is here to stay. While AI writing tools have experienced drastic improvement over the last couple of years, there still exists some serious ethical and operational risks associated with publishing AI-generated contentparticularly if it is online representing a premium brand. AI writing tools can be used to help generate article and blog post ideas and headlines, as well as the overall structure of the piece. However, it might be a good idea to rely on real humans to do most of the actual writing.

Ryan Turner Founder EcommerceIntelligence.com

What will banking look like in 10 years time?

As we find ourselves living in a world of ever-changing global challenges, the future of banking over the next 10 years will no doubt look very different from today.

Digitisation of banking

With banking apps increasingly taking the place of in-person visits to the local branch, personal devices such as smartphones will greatly shape the way consumers manage their money. Bank cards will be a thing of the past, making the smartphone a major player in how consumers interact with financial goods and services.

Handling cash, once a defining feature of banking, will also be phased out. All, if not, most, money will be digital. According to UK Finance, only 17% of all payments made in the UK were cash payments. That figure is expected to decline further over the next decade, which leaves ample room for digital payments to take precedence over all other forms of payment.

In tandem with this, the next 10 years of banking will likely do away with all finance hardware. Banking activities, from payments to savings, will be conducted online using software and will be further optimised to enhance the customer experience.

Trending customer needs

Moving away from legacy banking systems will create an increased appetite for frictionless and more personalised banking. Consumers do not want to wait for payments to clear or get generic service offerings that do not suit their needs. All financial services will need to be fast but tailored, otherwise consumers will vote with their feet and will take their money with them.

As such, the future of banking looks to be one of complete ease and inclusivity, without the need for consumers to meet specific criteria all the time. Sending money to friends, recuperating group expenses or even just splitting a bill will become the norm as peer to peer payments will be seamless regardless of where they bank.

Another change to look out for will be the fight for consumer retention and engagement. Established banks have long enjoyed consumers flocking to their services, but now challenger banks such as Monzo and Revolut have given consumers greater financial choice. This will mean increased competition between banks and generous reward systems to ensure customer loyalty.

Over the next decade, we will also likely see more regulated ‘buy now, pay later’ services and should expect to enjoy greater flexibility that suits every day life in our banking experiences.

What Gen Z want from banks

With severe disruptions to their education and entry into the workforce, Gen Z are arguably the most economically fragile compared with previous generations. Gen Z will need banks who will cater to their unique pain points as they face their first recession.

Gen Z desires banks that won’t penalise them for their lack of financial knowledge or stability. They want banks that are sympathetic to their financial and personal goals. A bank to this generation will not just be where they store their first paycheck, but will be their own personalised financial guide.

We will see the banking sector face an increased push for innovation and this generation will be quick to give their feedback. Banks behind on innovation will lose out on having Gen Z customers and will struggle to entice them away from competitors.

This generation wants to know; will you make a decision on what I can do today, tomorrow and not my past?

As they face the most financially challenging times in recent history, Gen Z will turn to services that will make their financial lives easier. Gen Z wants to save whilst they spend; looking to services, such as cashback offerings, that will not require them to greatly alter their consumer habits. Gen Z needs to navigate the cost-ofliving crisis but not at the expense of their wellbeing.

The next decade of banking

As time goes on, we will see a bold shift away from legacy banking processes to new hyper-personalised experiences. Fintech innovation is already improving business to consumer (B2C) and consumer to consumer (C2C) payments, boosting the financial economy - we can expect this trend to continue.

As digital natives, Gen Z are tech savvy enough to adapt to the changes we foresee over the next 10 years. They will take full advantage of opportunities to make and save extra money using technology and social media content.

Our personal mobile devices will take on an even greater role in our everyday life and will determine our engagement with financial services. As a result, we know that the next 10 years in banking will be greatly shaped by technological innovation and exciting developments in the world of finance. Watch this space.

Tariq Zaid CEO and Co-founder Cheddar

Allianz

Allianz Trade, formerly Euler Hermes and part of the Allianz Group, is international world leader in trade credit insurance (TCI). Its product offering also includes surety bonds, guarantees and business fraud insurance. Since 1910, Allianz Group has had a presence in the Asia Pacific region, where it currently serves 21 million customers. Wanda Rich, editor of Global Banking & Finance Review, interviewed Paul Flanagan, Regional CEO of Allianz Trade in Asia Pacific, when he gave the lowdown on Allianz Trade’s Go2025 strategic plan.

“APAC is a growth region, and our strategy is all about growth,” he began. “It focuses on three pillars.

The first is to extend core business; we want to expand our leadership position in our TCI core business across all geographies. We will do this by being a strong and consistent partner for our customers, particularly now as we enter uncertain economic conditions. Our clients value our financial strength, our global footprint and the level of support provided by the local teams in over 50 countries. We are constantly working to improve our communication to our clients and the market and to refine our strong level of service to our customers.”

“When it comes to growth, we have a unique multi-channel distribution model based on strong relations with brokers, internal sales teams and increasingly, online,” he continued.

“We will continue to extend our core business with banks and, following our recent rebranding, the Allianz network. In addition, as trade is increasingly done online, we have developed products that support our customers in making that transition.”

The second, Paul reported, is about boosting growth via scalable engines.

“While we are already a recognised expert in the surety business, we also have other specialty products such as Specialty Credit and Excess of Loss. The surety market is twice the size of TCI and growing twice as fast. We look to drive surety to the next level through our investment in people, refining our underwriting framework and expanding our product offering.

Meanwhile, Asia Pacific and the US will continue to serve as our growth engines in the TCI business as well.”

The third focuses on exploring the new world of trade, and seizing the opportunity given by the online shift of B2B trade by becoming a key player in this ecosystem.

“We will do this by developing specific products that support the market, such as e-commerce sales and Buy-NowPay-Later (BNPL) business,” Paul said.

“We will capitalise on our strong value proposition as a global credit insurer, our financial strength, proven credit expertise and worldwide collection network. The development of our API offerings is opening up many opportunities for growth and, already, APIs support a significant proportion of our revenue stream.”

He described the aforementioned rebranding from Euler Hermes to Allianz Trade as “significant, but also a natural move for us.” Euler Hermes was a brand full of history and it has existed, in one form or another, for over 120 years. “Of course, in the TCI space, Euler Hermes was a strong brand, especially in Europe. The Allianz brand is the number one global insurance brand and adopting that brand is a game-changer for us. As Euler Hermes had been wholly owned by Allianz since 2018, it was a natural decision to rebrand and carry the Allianz brand.”

“The trusted Allianz brand will open new markets and new segments for us, from multinationals to SMEs, as well as new distribution channels, starting with the Allianz distribution networks. There will be more opportunities for collaboration and knowledge sharing and also for building common technology assets, to better accompany the changes happening in online trade. Rebranding to Allianz is a win-win scenario.”

Paul also spoke on the current trends being witnessed in the APAC trade credit markets in terms of trade flows and volumes. “The inflation increase resulting from the COVID-19 pandemic and geopolitical tensions in Europe and Asia, as well as demand for normalisation, have resulted in a challenging and volatile business environment,” he said. “The actions taken by central banks to curb inflation will have a significant impact on the global economy in the coming months. The increase in debt servicing costs, currency devaluation and slowing consumer demand will put pressure on all business and will increase the risk of payment default.”

A slowdown in trade flows has already been seen between APAC, the US and Europe caused by the slowdown in the respective economies. “Intra-regional trade is showing more resilience but this may change if the global economy slows further,” Paul told Wanda. “During the pandemic, we saw a significant reduction in insolvencies due to government support and monetary policies. With global insolvencies expected to increase by 10% this year and 19% next year, we are seeing many enquiries for trade credit insurance across Asia Pacific, especially from companies who are looking to expand to new markets or customers.”

He acknowledges that today’s climate of uncertainty makes it even more important to protect business growth and cash flow against late payment or insolvencies. “At Allianz Trade, our team of experts brings together local expertise and global reach for companies to help us make fast, informed risk decisions that meet globally coordinated compliance standards and optimise trade risk management.”

Next, Paul discussed the recent announcement of Allianz Trade’s collaboration to develop a BNPL solution for the B2B space. “Allianz Trade is uniquely positioned to grasp this new business opportunity leveraging on our assets and our first mover advantage,” he said. “B2B e-commerce is projected to grow at 17% CAGR until 2027, with market size reaching EUR21 trillion. While 95% of businesses prefer paying on

credit terms, just as they are able to when buying offline, less than 10% of e-merchants offer such an option.”

This scenario can often lead to B2B customers abandoning their baskets, hence a sales opportunity is wasted. This, Paul explained, is where BNPL comes into play. “BNPL refers to shortterm financing that allows buyers to make online purchases and pay for them at a later stage. By offering payment terms, sellers can increase their customers’ average shopping baskets and improve conversion rates. It is a real competitive advantage and builds customer loyalty.

“Our strategy is two-fold. First, we look to directly address large merchants and give them the ability to offer credit terms to online customers. In addition, we are able to support businesses providing BNPL services to sellers who want to offer BNPL

terms. Our strategy is to offer a bundled product, partnering with fraud specialists and banks, and offer it to both traditional sellers and platforms.

“Our e-commerce product allows our customers to offer deferred payment terms to their buyers with complete peace of mind, confident that the transactions are secured. With e-commerce credit insurance from Allianz Trade and via API integration, sellers can safely and automatically propose payment terms to their customers in real time.”

“Finally, the execution of our strategy depends on our teams who will deliver it and who have direct contact with our customers. We will continue to invest as we grow, not only in additional resources, but in our existing teams in terms of personal development and training to keep pace with a fast-changing business environment,” Paul concluded.

Paul Flanagan Regional CEO Allianz Trade in Asia Pacific

Why customer experience in financial services is the new differentiator

Over the last few years, the banking sector has faced severe disruption which has dramatically accelerated digital transformation across the banking sector. Catalysed by the Covid-19 pandemic, the transformation has irreversibly changed banking as we know it.

Previously, banks would attract new customers through their various offerings and services and people physically going into their local bank branch. However, when it comes to customer expectations, in-person interactions have fallen to the bottom of list, especially for simple or recurrent transactions and interactions. Most customers now expect and prefer the convenience of being able to carry out these kinds of transactions using online banking and mobile banking solutions.

The surge in demand for digital banking services has levelled the playing field for financial services providers. With the sharp rise of digital banks and legacy banks transforming their products and services, customers are now spoilt for choice when it comes to how and who they choose to bank with. Consequently, identifying differentiators between banks and fintechs is becoming increasingly difficult in an already saturated industry. What’s more, economic uncertainty is set to limit attractive interest rates set by lenders, so there isn’t much financial services providers can do to remain competitive. As a result, greater emphasis has been put on customer experience (CX), as providers try to strike the balance between attracting new customers and ensuring existing customers stay with them.

The impact of the pandemic alongside the recent explosion of fintech brands, has brought the value of high-quality digital interactions to the forefront. So, how can banks make CX their strongest asset?

The growing importance of CX

According to Insider Intelligence’s Mobile Banking Competitive Edge Study, 89% of consumers said they use mobile banking, rising to 97% of millennials. These users don’t leave their bank for fees. Instead, they’re most likely to leave because of dissatisfaction around mobile banking capabilities (43%), online banking capabilities (35%) and customer service (33%).

In addition, 75% of respondents to the 2022 World Retail Banking Report said they are attracted to new agile competitors as they offer fast, easyto-use products and experiences that are readily available while remaining low in cost.

With in-person interactions playing a much smaller role in banking, CX is one of the main ways that banks can ensure they stand out from the crowd. Customers still want to be understood, respected, appreciated, and valued – they want to maintain the human connection that was traditionally established through in-person interactions. The key is learning how to offer this through digital channels.

Most customers prefer digital interactions over physical or phone conversations, the delivery of these interactions is the main differentiator. They must be delivered in a way that’s both transactional and emotional, demonstrating to customers that their bank genuinely wants to help them achieve their financial goals.

This will bolster consumer confidence and loyalty. Although the journey towards customer-centricity doesn’t happen overnight, banks that invest in good CX have higher rates of recommendation, greater wallet share, and are more likely to up-sell or cross-sell products and services to existing customers.

Ultimately, customers have increasingly high expectations and are demanding more from their banking experiences. The onus is therefore on banks to rethink their business models and focus on providing an overwhelmingly easy, convenient, and distinctive CX. The key to success lies in understanding customer needs, and then fulfilling those needs in a way that no other brand can.

Building a customer-centric experience

Financial services customers are generally looking for four things: help in maximising the benefits of existing products, relevant product offers at the right time, personal knowledge of things they care about, and customised product features. Therefore, banks strengthen their customer knowledge so they can serve customers holistically.

The starting point is to establish a CX vision. This will help shape business goals and connect them to key experiences that will distinguish the brand and ensure customer loyalty. For example, this could include defining how certain features will work, identifying the right training for employees, or structuring CX teams in a certain way.

Once the CX vision has been defined, banks should then set up an analytics framework to measure their progress. Any effective analytics framework will have highly defined KPIs, data sourcing and reporting – along with market analysts who can generate and interpret insights that will enable real-time customer guidance and help banks track their success.

The final step is workforce transformation, which should be addressed from an operational and cultural perspective. Operational in terms of defining ways of working, organisational and process improvements, and access to applications for employees to work more effectively. Cultural in terms of identifying skills gaps and building a culture that encourages employees to adopt new technologies and a customer-centric mindset.

These steps will help banks to identify any gaps, as well as the opportunities to introduce consistent, crossfunctional omnichannel experiences.

They can also look to banks that have successfully transformed their CX for inspiration. For example, Scotiabank rolled out a global AI platform called C.MEE, which analyses data across all customer touchpoints to deliver personalised and relevant banking experiences. Additionally, Capital One significantly increased its CX investment after identifying that 47% of its customers are early adopters of technology and 88% regularly use their smartphone for banking interactions.

Digital banking is prevalent in today’s society and it will continue to shape the industry for years to come. CX is now a clearer differentiator than price or products, so there is more pressure on banks to deliver on this front. With consumers facing more choice than ever before, banks must lay the groundwork to provide unbeatable customer experiences. Failure to do so could be detrimental to their ability to maintain existing customers as well as attracting new ones, so banks must prioritise CX and ensure they’re meeting customer expectations.

Financial Services

Valtech

Julien Traversini

Overcoming cyber security challenges in the evolving fintech landscape

The finance sector is a lucrative target for cyber criminals. Attacking fintech organisations offers numerous avenues for profit through theft, fraud, and extortion, while nationstate-backed groups are increasingly targeting the sector for political and ideological leverage.

As such, the heat is rising for businesses. The Financial Conduct Authority (FCA) recently revealed that malicious attacks targeting financial websites and servers increased fivefold in 2022, with a quarter of all incidents involving distributed denial-of-service (DDoS) attacks. To add fuel to the fire, 81% of cyber leaders in the finance sector have reported a rise in attacks since the start of the Russia-Ukraine war, according to research by Bridewell.

As the finance sector continues to undergo major digital and infrastructure transformation, it is more important than ever for businesses to reconsider their cyber security investments. Organisations should seize the opportunity to adopt a proactive approach to security operations and implement a robust cyber security transformation process, so that they can continue to improve services whilst minimising cost and risk.

Threats facing finance

No other sector is more data-driven, digitised, or more attractive to cyber criminals than the finance sector. As both a vital component of the UK’s critical national infrastructure (CNI) and a treasure trove of sensitive data and financial capital, the industry continues to be targeted by hackers around the world. And these criminals are becoming ever more sophisticated in finding and targeting weak points across the finance community.

For fintechs in particular, the threat landscape is evolving in line with technological advancements, with cyber criminals leveraging insecurities in cloud configurations for easier access to sensitive personal data and valuable corporate intellectual property. For example, ransomware has rapidly evolved from being a malware issue to a highly profitable and nuanced human endeavour. Different from traditional commodity ransomware attacks, humanoperated ransomware (HoR) sees criminals with high levels of offensive security knowledge gaining access to organisations and surveying the environment for extended periods of time, before launching devasting attacks on data and systems.

Even the big players in fintech can fall prey to sophisticated and multi-layered ransomware. In 2020, the world’s third largest financial services software provider, Finastra, was hit by a ransomware attack that caused disruption to its global operations and interrupted services for its 9,000-strong customer base. Fortunately, customer and employee data remained untouched in this instance – but attacks like these can have cascading negative impacts, including a broader loss of consumer confidence.

When escalating geopolitical tensions are added to the mix, the stakes for financial organisations are even higher. Bridewell’s recent survey of cyber leaders in CNI found that over three-quarters (76%) of IT decision makers in the finance sector are worried about the impact of cyber warfare. Following the recent rise in cyber attacks in the wake of the Russian invasion of Ukraine, the

need for organisations to collaborate more effectively and mount a proactive response to evolving security risks could not be clearer.

Adjusting cyber strategy

Today, fintech organisations must protect themselves against a diverse and escalating range of threats. As cyber crime rapidly displaces conventional crime in both volume and sophistication, it is important for all business leaders to be able to define and truly understand the specific threats facing their organisation. This understanding should encompass all potential adversaries, motivations, and tactics. By asking themselves some challenging questions, fintechs can gain a crucial head start in defining clear security objectives and adjusting their cyber strategy accordingly.

Traditionally, many senior managers in finance have considered digital transformation and cyber security to be two separate strategies with independent objectives and goals. This approach is fundamentally flawed, as it causes organisations to overlook the security weaknesses and system vulnerabilities that come with rapid technological change.

As ever, criminal groups are poised to take advantage of any business that quickly deploys new tools or completes fast upgrades without properly securing systems and defences first.

Instead, cyber and digital security strategies should be thought of as inseparable, enabling organisations

Gavin Knapp Cyber Defence Technical Lead Bridewell

to plan and integrate both into their transformation projects from the very beginning. Financial organisations are already making good progress in this area. Bridewell’s research found that, for many cyber leads in finance, the source of greatest pressure to improve cyber maturity came from the business itself and the need to support new technology and digital initiatives. This suggests that organisations are taking steps to ensure they have a strong cyber security strategy that matches their digital transformation strategy.

From reactive to proactive

For financial organisations, the next step towards cyber maturity and resilience involves shifting mindsets from reactive – based on meeting minimum compliance – to proactive. This change of stance is key to staying one step ahead of cyber criminals.

While legislation like the NIS Regulations has undoubtedly helped improve security within finance, it is important that business leaders do

not use regulation as a primary driver for cyber security improvements. Nor should they simply build cyber security walls higher and only respond to breaches after they occur. To become truly mature in the face of threats from all angles, fintech organisations should embrace an integrated, well-considered, and proactive strategy centred around intelligence-driven managed detection and response (MDR).

An effective MDR strategy consists of threat intelligence, threat hunting and penetration testing, along with deployment and management of security monitoring and incident response. By blending artificial intelligence (AI), automation, and human analysis, MDR provides enhanced visibility over networks and systems, enabling organisations to detect and prevent both internal and external attacks. This holistic view of cyber security allows organisations to gain full visibility across people, skills, and technologies as well as processes, driving far-reaching improvements to their overall cyber posture.

Transforming securely

Innovation is the lifeblood of any successful fintech, so no organisation should be afraid to transform. The good news is that the jump to cloud and modern technologies needn’t come at the expense of cyber security.

More and more organisations in the finance sector are realising how cyber security can drive both digital transformation and business transformation, rather than holding them back. As such, a golden opportunity exists for fintech’s to align their cyber and digital security strategies from the outset. By ensuring that security is weaved into their DNA, organisations can implement a proactive cyber posture to keep critical services running whilst building a wider culture of security.

How automation can help nurture employees in the banking industry

Like many industries, banking can be demanding. Long hours, a competitive landscape, and rapid decision-making make it a challenging, but also a highly rewarding, career path. However, in an age where businesses are in a race for competitiveness to retain talent, organisations within the industry need to look at how they can best respond to a rapidly changing landscape.

The industry is incredibly broad. Encompassing, but not limited to, legacy banks, building societies, challenger and even retail banks, the sheer variety of challenges within these different settings is vast. There is common ground however, with one particular challenge plaguing each of these organisations; the high volume of repetitive tasks workers must complete on a daily basis.

Whether it’s loan processing, account closures, anti-money laundering, or even accounts payable, organisations need to look at innovative ways to reduce the repetitive, data-intensive tasks which are still being carried out by staff. This requires an adaptable technological solution which can free up worker time and improve their dayto-day roles, and that is exactly where software automation comes in.

Software automation in banking

Software automation isn’t a new solution to the banking industry. In fact, it is already in many banking organisations worldwide, working behind the scenes to improve customer service and increase operational efficiency. But, many are overlooking its potential to help support and nurture their employees even further.

It’s important to note that software automation isn’t a replacement for human teams, rather an accessory for them. By emulating human workers on the software they use within their jobs – such as ERP systems and MS Office – via a front-end interface, automation can perform rule-based, tasks, taking these repetitive and tedious tasks away from workers.

Interestingly, a staggering 43% of all work in financial services has the potential to be automated, which would give back vital time to employees, helping them avoid burnout, become more productive and, hopefully, happier in their roles.

Putting the employee first

There are many strings to the automation bow. An inherently customisable solution, it provides real potential for every team and can empower individual needs. For example, we are currently seeing significant use of automation at the back end, such as reconciliation and updating general ledgers, however, it can be especially empowering for customer-facing employees in call centres and retail branches also.

It's undeniable how important human empathy is within customer interaction. When it comes to finances, customer-facing teams often have to deal with emotional and serious situations. In these cases, it is important employees can engage with the customer, create a rapport and have the right information on hand to swiftly solve issues. Having to sort through multiple siloed and legacy systems to find a solution is not only tedious but can result

in poor customer service. Having a solution – such as automation – in place which can source masses of data within a few keystrokes can speed these interactions up and provide an overall better experience for both the customer and, just as vitally, the employee.

Expanding the use of automation to every area of the organisation is important in helping all employees feel equally supported and satisfied in their work. Personalised robot assistants are another way in which automation can assist, ensuring each team feels encouraged to put their energy into the heart of the job and can focus on what they want to be doing, rather than simply getting through admin work. KYC checking, client onboarding, replying to emails requesting information, and many more time-consuming tasks can easily be automated.

Empowering the workforce

With hundreds of IT systems in play at once, banks generally can’t afford to carry on the way they are – reliant on legacy IT systems which often aren’t compatible. This current setup creates a lot of repetitive work involving moving, transforming, and validating data, and often leads to attrition and frustration within teams.

Traditionally, there has been a widespread fear that automation will replace a large number of jobs, but this couldn’t be further from the case. In fact, automation is at its best when used to complement human workers and their skills, while also providing them the freedom and time to upskill and reskill in areas that can truly impact business growth.

Simply put, automation creates additional capacity for banks to further develop the skillset of their staff. This, in turn, boosts employee satisfaction and enables financial organisations to retain highly skilled talent while automation meets demands in other areas.

Profiting from automation

Due to the digital and rules-based nature of the tasks performed by bank workers, automation has presented a great opportunity for financial organisations to modernise their services into the digital age. In the industry, automation is already performing tedious work of thousands of people in many banks and expanding its use will be key for improving the employee experience and talent retention.

The simplicity of automation adds to its appeal. It is possible for one person to automate a simple process in as little as a few days, making it a disruptive delivery solution with transformative ROI and time to value.

Financial service organisations need to jump on this opportunity as a way to boost employee satisfaction sooner rather than later. By giving back precious time once spent on time consuming, data-heavy processes, employers can have a tangible impact on the employee experience and significantly improve the level of engagement of workers.

Keelan Singh Industry Practice Director UiPath

Consumer Sentiment Impact Amid Recession Fears

Often fascinating and counterintuitive, historical data of consumer sentiment can powerfully foreshadow market behavior and its impact on investment market performance.

As fear of recession rises, a review of consumer behavior during recessions of the past gives us a pretty good idea of how financial institutions and markets may fare during the coming year.

For example, concern about an uncertain future typically motivates consumers to hold on to cash assets and take refuge in safe investments.

For financial institutions during the pandemic, this has meant soaring deposits as consumers sought security in saving against the potential for unexpected financial hardships that could arise from this unprecedented (in our lifetime) global occurrence.

At the same time, interest rates remained low throughout the pandemic, until recent hikes by the European Central Bank and the U.S. Federal Reserve. This has meant that financial institutions are beginning to enjoy a wider spread between what they pay on deposits and what they make on the loans that they underwrite.

Now what?

Now that interest rates and the Consumer Price Index (CPI) are on the rise, will consumer behavior follow the same pattern as it has in the past?

Interestingly, the answer may be “no.” Usually when interest rates are high, deposits decline as people look for higher yields through stocks or other investment options. However, because the Central Bank and the Fed are trying to cool the economy to bring inflation down, prompting fears of recession, and people are nervous.

It's entirely possible that people will stick with the safety of their FDIC-insured or European Banking Authority-insured bank deposits rather than take the risk of betting on a potentially higher yield, simply because they’re scared of a recession. Consumers may be seeking a return of their savings more than a return on their savings.

This will be a particular challenge for people in or nearing retirement, who will be hit particularly hard by inflation. They’ll be looking for strategies to protect their savings and investments while covering increased costs caused by inflation.

An unfortunate and truly unprecedented market anomaly is complicating matters for them, however: both stocks and bonds have declined simultaneously. Usually, when one goes down, the other goes up. So, this is really disorienting for a lot of people who would normally be shifting from more stock-heavy portfolios to more bond-heavy portfolios.

Fortunately, there are strategies for mitigating the risks of inflation, such as low-risk government-issued I bonds that currently offer a yield in the 9% range (but investment amounts are limited), Treasury

Inflation-Protected Securities (TIPS) that increase or decrease with changes in unexpected inflation, or inflation swaps that can be easily accessed in a mutual fund format.

Of course, another tactic is to invest in shorter-term bonds so that every year or two you can reinvest maturing bonds at a potentially higher rates.

As with any investment, the key is balance. There can be a cost to protecting against inflation.

For example, a two-year treasury bond may have a 4% yield today. If you buy a two-year TIPS bond, which has inflation protection built into it, you’ll get a lower yield. Accepting the lower yield is the price investors pay for protection from unexpected inflation. But if inflation is lower than expected, you would've been better off getting the 2-year treasury without inflation-protection at 4%.

A Buyer’s Market

The best inflation hedge over time is stocks.

For people who are still saving toward retirement, the decline in the stock market can be viewed as good news: stock prices just got a lot cheaper than they were at the beginning of the year.

The paradox is that the time for strong value creation is when things feel the worst. Existing value is going down now, but that gives us the opportunity to buy at a tremendous discounts with the expectation that we’ll see a rebound in returns in a year or two.

There’s nothing to indicate that we should be expecting an economic downturn that is greater than what the market has already priced. But, in this time of unprecedented occurrences, if the economy sinks further than expected, it’s good to remember that for disciplined investors it can represent another opportunity for buying stock at a discount.

Inflation Destination More Important than the Journey

Month-to-month inflation data during a time of market volatility will always generate a lot of noise, with analysts and traders interpreting the meaning of each single inflation reading.

But when we look back five years from now, we’re unlikely to remember what inflation did in September of 2022. We will be talking about the overall trajectory and, perhaps most importantly, the Fed’s determination of the “neutral rate,” which is the rate that provides the optimal balance between price stability (inflation) and full employment.

It’s important to remember that while monetary policy can affect the demand side of the inflation equation, it has relatively little effect on the supply side. Improvement or deterioration of supply conditions will have a material impact on both the trajectory of inflation and the final destination (or “neutral rate”). There are good reasons to expect some improvement to supply as China’s zero COVID policies ease and Europe adjusts to the ongoing war in Ukraine.

Beware Concentration, Be Diversified

There is an old saying: “If you don’t know your tolerance for risk, the market will teach it to you.” I would like to suggest modified version of this: if you don’t know the benefit of diversification, the market will teach you.

Periodically, markets recalibrate. It’s a healthy process, akin to periodic forest fires clearing underbrush and preventing the kind of devastating wildfires that come with excess fuel. The current environment is a healthy recalibration of markets, and those with diversified portfolios are weathering the volatility well.

It’s even important to diversify your diversifiers. Some investments just feel safe. Gold is a good example. At the risk of raising the ire of investors who favor gold, this is what we call “imperfect hedge.”

There’s a saying about gold, for instance, that you could buy a decent suit for an ounce of gold in the 1800s, and you can still buy a decent suit for an

ounce of gold in the 2000s. If you had invested the same amount of money in stocks over that same time period, you could buy many more suits with the resulting performance above inflation.

There’s certainly nothing wrong with gold or other securities that offer a measure of inflation protection, but there is a risk during volatile periods that investors will abandon diversification for assets they perceive as “safer.”

Building a resilient, diversified portfolio begins with a clear assessment of the risks that need to be managed. Remember that inflation, for example, isn’t the same for everyone. If you commute, you’ll feel rising gas prices more. If you’re a vegetarian, you may not feel as much pain at the checkout counter as other consumers when meat prices go up.

So, it’s important to assess your inflation exposure when deciding how much of your asset base to protect to ensure that you continue to have strong purchasing power through a period of inflation and/or recession.

Chartered Financial Analyst®, Chief Investment Officer

Baker Boyer

John Cunnison is Vice President of Baker Boyer and Chief Investment Officer of D.S. Baker Advisors. He is a national financial markets expert and Chartered Financial Analyst.

John Cunnison

The Future of Finance: What is waiting for us?

The need for CFOs and accounting teams to be more inventive and strategic is growing. Since there are now technologies that make it unnecessary to do financial chores manually, senior executives don't want to waste their time on tedious, repetitive work. The use of conventional accounting and finance procedures is also deteriorating. As a result, finance leaders who continue to use clumsy, antiquated technologies that are slow and prone to human mistakes endangering their company. CFOs and financial executives know that their reputations depend on their capacity to devise and carry out the plans that will propel the firm to success. They also realize that their time should be devoted to working with a high investment return. They need to be innovating and ready for the future. They can no longer afford to be distracted from implementing strategies, managing money, interacting with clients, and other value-creating activities by financial reporting and other tasks.

Finance and Accounting

The future of finance and accounting is all about outsourcing since it is a solution that aids in lowering operating expenses while receiving the support of top finance talent and the expertise of knowledgeable accounting professionals. Additionally, you gain from their cutting-edge digital finance solutions. Giving control of your department to a finance provider as a service does not imply outsourcing your accounting.

When done well, outsourcing entails acquiring a strategic partner who complements your current financial staff and bridges any operational gaps. You gain from their team's expertise, skills, and cutting-edge technologies, which will most likely use the cloud. As a result, there is more adaptability and better business scalability.

Technology is transforming finance.

AI/ML, RPA, advanced data analytics, and cloudbased infrastructures are transforming banking. Embracing these technologies entails acknowledging the future of accounting and finance, not just adopting innovative solutions. As A.I. and ML evolve, their applications in banking rise. A.I. and ML automate and understand financial activities using data analysis, algorithms, and pattern recognition. Today, the technology detects fraud and automates tax accounting, reconciliations, and accounts payable. The technology improves FP&A, risk management, and regulatory compliance. Before RPA, transactions required human reporting and data entry. It forced accounting employees to undertake repetitive tasks that were tedious, error-prone, and duplicative. RPA can automate accounting tasks across numerous systems. The workforce can focus on strategic duties by saving time and energy on accounting. Data and business analytics inform growth initiatives. Analytical skills improve financial planning, forecasting, and opportunity recognition.

Financial analytics assist a corporation in evaluating its business performance and financial health to plan and manage investments. Financial leadership uses historical data to identify strengths, shortcomings, and waste. Data and analytics have helped financial services make better investment decisions and confront regulatory and competitive difficulties. Cloud computing isn't new, but many traditional business owners find it disruptive and risky. Digital transformation requires cloud usage. The cloud enhances speed, agility, cost management, innovation, and application resilience compared to traditional I.T. infrastructure. Digitization is transforming how people connect and do business, and banking technology is influencing the future of financial services worldwide. Millennials and Gen Zers' appetite for digital banking are altering the sector. From retail and mobile banking to startups, technology touches nearly every element of the banking business and will continue to digitize banking. Retail banking, sometimes called consumer banking, includes savings and checking accounts, credit and debit cards, and loans. Growing consumer demand for digital financial services has led to a surge in new banking technologies redefining retail banking.

Lyle Solomon Principal Attorney Oak View Law Group

Lyle Solomon has legal experience as well as experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific's McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a principal attorney.

Is net-zero by 2050 a pipe dream?

Climate change is the defining crisis of our time and a rapidly escalating issue that has left many with a sense of hopelessness and helplessness. Thankfully, new initiatives and developments are taking shape, giving public sector authorities and certain industry segments some power to take action to reduce emissions. Collective efforts are instrumental to combatting this crisis, and companies that commit to reaching their net-zero targets will become the most significant agents of change for our future.

Net-zero is considered critical to insulating the world against the worst effects of climate change. If achieved, it means that human CO2 emissions will no longer exceed the amount of CO2 we remove from the earth’s atmosphere. Its importance has led to governments and corporations around the world pledging to meet such targets by 2050. But are net-

zero emissions possible by 2050? I believe they are, however, meeting them will require substantial change and determination.

Following the World Economic Forum Annual Meeting in Davos this year, it was confirmed that digital technologies, such as artificial intelligence, machine learning and automation – scaled across industries – have the power to accelerate decarbonization efforts and reduce emissions by up to 20%. While it is understandable why people are losing faith in the future and being impacted by eco-anxiety, these findings give us hope by uncovering how digital solutions could pave the way for achieving sustainable outcomes that align with net-zero targets. In fact, if scaled, digital solutions could be most effective at reducing emissions in the three highest emitting sectors –energy, materials and mobility.

But to make this possibility a reality, high-emitting industry sectors must rethink their strategies to leverage efficiency, circularity and sustainability.

The predictive and productive power of digital solutions

With the support of digital solutions, the energy sector can reduce carbon-intensive operations and, subsequently, emissions by 8%, according to estimates from the World Economic Forum (WEF). To successfully transition to more renewable energy sources, utilities suppliers need to develop better methods for estimating how much energy is required so that they can make better use of resources –including systems, staff and partners – and fill any gaps with renewables. One such method is machine learning (ML), which can anticipate energy

outputs and demands through its data analysis. We’re finding that these forecasts can then help industries effectively implement climate change strategies while reducing inefficiencies and carbon emissions.

The benefits of these ML algorithms extend beyond the utilities sector and can be used in any business, across industry verticals. As a result, more accurate supply and demand forecasting contributes to drastic cuts in manufacturing and transportation waste through improved understanding of what’s needed and when. Targeted suggestions for low-carbon items can also drive ecologically responsible purchases by helping to optimize power usage and avoid unnecessary storage and waste.

Intelligent automation (IA) solutions can also improve sustainability in vital industries, such as manufacturing, infrastructure and data centers. We’re seeing organizations reduce emissions by employing data automation and modeling to digitize and analyze processes and develop predictive maintenance and monitoring capabilities.

Although IA algorithms that anticipate energy consumption already exist, we think there is room for improvement to ensure they can keep up with the multiple sources of energy production today and the need to meet new and evolving regulatory and measurement requirements. Complex algorithmic features also need fine-tuning to be able to react to changing trends or behaviors, and to expand beyond the industrial level to cater to family and individual demands.

One-stop digital solutions such as IA not only boost efficiency and production, but they also enable the development of new procedures that reduce power consumption and harmful emissions, directly and immediately contributing to the fight against climate change.

AI-powered waste reduction

Artificial intelligence (AI) has the power to support climate action by reducing waste in all forms (financial, temporal and material). The problem is that even amongst the many firms that utilize a high level of automation, a fragmented approach to AI is often adopted. This stifles transformation, wastes valuable time and staff resources and generates “technical debt” (referring to the costs that arise from organizational reworks needed due to sub-optimal solutions being originally chosen for fast, shortterm results).

Organizations need to reimagine their existing strategies and use varied yet complementary technologies that work together, rather than in isolation, to maximize efficiency and reduce waste. AI-managed energy systems can then identify the appropriate amount of energy consumption needed at any one time. These insights support the fight against climate change by minimizing energy waste, simplifying processes and maximizing productivity by creating efficient and unified workflows.

Innovation driven climate action

The future ahead may be rife with daunting uncertainty, but there are still limitless opportunities to generate innovative technologies that drive forward climate goals. Only five years ago, a company’s intelligent automation objectives often outstripped the capabilities of available technology. The market hype around advanced technologies didn’t deliver the promised business results. Since then, automation technology has progressed significantly, as billions of dollars have been invested in research and development. The prioritization of generating digital solutions in this sector, including the use of process analysis and predictive maintenance to reduce energy waste, has done much to accelerate the journey to reaching net-zero.

AI-enhanced digital solutions can assist with the development of tools that will help individuals and businesses understand their carbon footprint and outline steps to decrease it. In an example of the potential of digital solutions, the revolutionary World Bee Project harnesses the power of technology and science to enhance the wellbeing of bees and other pollinators. The collective effort has created the world's first global bee database, which collects data intelligence from monitored colonies around the world. Monitoring sensors capture and combine data points, such as hive temperature, humidity, pollinator decline and deficiencies. These data points support the creation of solutions that maintain a healthy and sustainable ecosystem.

Digital solutions that are currently available present an actionable step towards net-zero and can help to prevent unnecessary damage from the climate crisis. Organizations that have committed to such targets will not only be able to reach their goals by continuing to employ digital solutions, but will also do so faster as they implement intelligent automation to simplify work processes, reduce waste and contribute to a sustainable and brighter future.

Saranjit Singh VP Telecommunications and Utilities APAC SS&C Blue Prism

How investing in diversity and inclusion pays off

Investing in diversity and inclusion (DEI) is not only the right thing to do –it is paying off for banking and finance companies in 2022 as well as bringing major business benefits.

Rachael Kinsella, Editor in Chief of leading thought leadership specialist, iResearch Services, says businesses that promote inclusion and greater accessibility can reap the benefits.

“Through investing in diversity and inclusion, companies can future-proof their business by:

• Maximising talent opportunities at a time when talent is competitive and hard to come by.

• Being more sustainable - how can you be a sustainable company if you exclude a significant portion of the workforce and population?

• Building a better customer experience and making the workplace, products and services more accessible for customers.

• Offering opportunities to widen the client base and gain repeat business and advocacy from a loyal and engaged customer base, which feels valued and welcome.”

The conversation around diversity, equity and inclusion (DEI) in our workplaces has been particularly active during the pandemic and throughout 2022 as the need for inclusion and greater equality has come to the forefront.

“Work makes up a huge part of people’s lives and the boundaries have blurred in a sea of lockdowns

and remote/hybrid working over the past few years. As the world of work continues to evolve in line with external events and employer demand, having the right DEI approaches and processes in place will be vital.”

“It’s also a key part of building on positive change for wider sustainability - the “S” and people-focused elements of environmental, social and governance (ESG) initiatives.

Measuring progress

Business leaders switched on to the commercial and cultural benefits of greater inclusion are also interested in tracking and measuring progress, while developing standards for DEI metrics, greater consistency and collaboration.

With the increased focus on DEI, businesses have made progress, but a new professional services pulse survey carried out by iResearch Services suggests there is more work to be done. It finds that 73% are working on a DEI policy and 15% say they would like one. 8% are focusing on other priorities. Of those that have a policy, 68% have measurements in place.

Disability inclusion and accessibility – more than just lip service

More than three-quarters of respondents are positive about the progress their companies are making in disability inclusion and awareness, for example.

Over three quarters (77.5%) of the 200 Human Resources professionals and DEI specialists across a range of sectors say their company is actively working on fostering a supportive culture that encourages disclosure, while 14% say that although this is not immediately happening, they would like to build a supportive company culture and 8.5% are working on other priorities.

Seven out of 10 respondents (71.5%) say their company includes disability awareness in its DEI training. Just under 30% don’t include disability issues in their DEI trainingsuggesting that disability isn’t on the radar in the same way as other areas of inclusion. Most say it is something their company is working on. It is not a priority for 7.5% and 3.5% do not know.

When it comes to disability initiatives, just over half (54%) of respondents say there are programmes to support disabled employees where they work with around one in four (26.5%) working towards it. However, one in five HR professionals is not thinking about how their business can offer disability support, with 12.5% having other priorities and 7% unaware of the situation.

Implementing DEI policies, processes and strategies

Regarding wider DEI initiatives, half of the companies surveyed (49.5%) are actively working on an agreement and 34% are in the process of creating a strategy. Another 11% have no policy

at the moment but want to create one. Encouragingly, just 5.5% say DEI is not a priority for their organisation.

There is also progress to be made on female leadership roles in business to help break the bias. In an earlier similar snap survey of 200 senior leadership figures in the UK and the United States conducted by iResearch Services, just 11.5% of those companies surveyed have 1-5 women in leadership roles, 19% have 6-9, 22.5% have 10-19, 16% have 20-29, 16.5% have 30-39, 5.5% have 40-49 and 9% have 50-plus.

Looking at board membership, 3% having no female board members, 6.5% with one female board member, 28.5% with two, 25% who have three, 14.5% with four and 22.5% with five or more.

Strategies for smashing the glass ceiling

It is encouraging to note that six in 10 companies are actively working on appointing more women to senior roles and another 32% are creating a strategy to do so. Just 5% say they have no plans, but would like to, while 3.5% state that appointing more women to senior positions is not a priority for them.

Rachael concludes: “It’s positive news that building an inclusive company culture is an active priority for the majority of professionals we spoke to across business disciplines, with apparent progress made to date. The next step is to build a picture of employees’ perceptions and

Rachael Kinsella Editor, Writer, Strategic Communications Professional iResearch Services

experiences of this in practice and look at opportunities for greater investment, awareness and inclusion throughout all areas of the business.

“But there is a gap that needs to be addressed between positive attitudes towards building awareness and supportive corporate culture and seeing practical changes to workplaces in the form of concrete strategies, support and assistance. Our data shows that honest conversations around diversity, equity and inclusion in our workplaces need to continue and move from words to action.”

iResearch Services provides thought leadership services and industry insights about the future of the workplace and the most pressing environmental, social and governance challenges for organisations today, providing first-hand knowledge and insight into often-overlooked issues such as how disabled people are treated at work. The agency’s clients include some of the top names in technology, professional and financial services, healthcare and other B2B sectors.

E-commerce in the land of cherry blossoms

Selling to Japanese consumers has long represented a compelling proposition for Western businesses – offering access to a large market of generally wealthy consumers. To date, few have taken full advantage of this opportunity, with many held back by high hurdles to entry, including linguistic and cultural differences. Yet as technology advances, the right support can enable almost any business to realise considerable returns in the Japanese market. Jack Momose, CEO of Degica, explains how European merchants can open the door to Asian e-commerce

What is the biggest difference between Japan and Western markets?

It might come as a surprise to those who don’t know, but even though Japan is the fourth largest e-commerce market in the world, it is still largely dominated by cash payments, while most Western economies have long since shifted to card and other more digital methods. This preference carries through to perhaps the most striking of many differences between Japan and Western markets – the preference of Japanese consumers to pay with cash even for online purchases – via convenience stores known as Konbini.

These convenience stores can be found on every corner and serve as a one-stop-shop where consumers can purchase food and drinks, pay bills, use ATMs and printing machines –as well as pay for online purchases. With a high demand for Japanese convenience stores, many brands are competing for the top spot in the market, with the most popular brand being 7-Eleven.

When making online purchases, customers can choose a nearby Konbini, where the goods will be delivered and paid for in cash. While this is alien to most in the West, in Japan, Konbinis are a symbol of familiarity and trust for consumers, so being able to offer this kind of payment can be beneficial for foreign companies that want to establish themselves here as reliable and reputable sellers.

More recently, however, the Japanese government has been pushing for cashless payments methods, with smartphone payments being rapidly adopted among consumers.

How can foreign merchants adapt to accommodate these differences when selling to Japanese consumers?

It’s worth stating at this point that Japan does not pay entirely via Konbini or cash. Credit cards are also popular (though less so than in the West and largely through local Japanese providers, such as JCB). Mobile payments, meanwhile, have also seen rapid adoption among Japanese consumers, processing billions of dollars in transactions. The main technologies that enable mobile payments methods are NearField Communication (NFC) and QR code-based, with local brands such as PayPay allowing customers to pay by scanning a QR code with their smartphone. It is also a prepaid-based payment method, which means that users can top up their money from a debit and credit card, or from their bank account into their mobile wallet.

Until recently these methods have been largely inaccessible to most Western companies. Now, however, fintech platforms can facilitate the process, making it easier and more seamless for them to do business in other countries. KOMOJU, for instance, acts as an extension of an e-commerce shop, encompassing all payment methods under one contract. Merchants can simply connect their website to the platform and the solution manages their check-out process, with the software ensuring that the payment is completed and shipping can progress.

Fintech solutions like KOMOJU can offer support not only for payment methods like Konbini, but also for other popular Japanese payment methods such as credit cards, digital wallets or the increasingly popular mobile payments.

Do businesses need a Yen account to sell to Japanese consumers? How do they manage their exposure if their costs are in another currency?

Solutions such as KOMOJU incorporate FX functionalities that enable merchants to receive funds in their desired currency, while processing currencies native to local markets.

When merchants sell to Japan, their customers typically pay in Yen, but fintechs, such as Degica, these days have FX capabilities that can instantly convert between Yen and the merchant’s base currency – meaning they can keep their books and pay their expenses with minimal uncertainty.

Jack Momose CEO Degica

Can problems arise when implementing new payment methods?

The biggest challenge in implementing new payment methods is to bridge the gap between the levels of expectation. Whether it is Know Your Customer (KYC) checks, merchant onboarding or identification of the final beneficiary, Western providers have different views on how this should be handled compared to their Japanese peers, and therefore different methods.

The speed at which merchants expect their money is also different. European merchants for instance, expect their money very quickly. In contrast, settlement cycles of a month or more are common in Japan. Experienced fintechs, with a strong knowledge of the country, its laws and its customs, should be able to negotiate these, however, and ensure that processes are as smooth as possible.

Why should the Western e-commerce markets even consider Japan?

Japan is considered particularly demanding due to its local and cultural characteristics. However, Western products do not need to hide here – quite the opposite. They are increasingly popular in the country and prized for their quality and Japanese consumers tend to pay more if they have the choice to get a better product. As a result, the Japanese market’ high margins and high per capita income make it fundamentally more attractive than many other regions.

The large population should not be underestimated either. According to Trading Economics, Japan had a population of approximately 126.4 million by the end of 2021 and therefore remains one of the 20 countries with the largest

population worldwide. In turn, Japan's e-commerce market is worth more than 11 billion euros and is growing by 9% annually, a sign that the country’s economy remains strong. Indeed, with Japan’s inflation well below that of other economies, this could be a good way of diversifying from Western markers that are currently facing a considerable cost-of-living squeeze.

Japan is considered the wealthiest country in Asia and one of the richest in the world. Meanwhile, its consumers have an affinity for global brands and are accustomed to shopping primarily online. With the help of appropriate tools, there is nothing to stop businesses from entering this e-commerce market and forging new and profitable revenue streams.

Angel investment: Why invest in early-stage startups?

After difficult times resultaing from the pandemic, startups around the globe were delighted to experience a funding boost in 2021. By the end of the year, $29.1 billion had been invested by business angels, marking an increase of 15.2% on the previous year.

At present, angel investment remains a viable option as we move through the end of 2022. Given that global inflation is predicted to rise to dizzying heights of 7.5% by the end of the year, money from venture capitals (VCs), government grants, and other traditional sources could be drying up.

Angel investors are a vital lifeline for early-stage startups seeking rapid growth. The benefits for angels themselves are significant too, ranging from significant returns on individual investments to strengthening their overall portfolio by contributing to innovation within their chosen industry. The relationship between angel investor and startup should therefore be one of mutual gain, whereby the angel can increase their asset value, and the startup can grow its business.

Business angels: A vital lifeline for the global startup ecosystem

The number of startups is increasing every year, with almost 5.4 million applications to form a new business filed in the USA alone in 2021. A majority of these companies are seeking to disrupt a traditional industry, bringing an innovative model

to an existing market. But, in order to do so successfully, these businesses need funding, and relying on one single source alone is rarely sufficient.

Business angels take a significant risk when investing in early-stage startups. The price of investing is generally much lower than investing in more mature companies, but the risk is also significantly higher. Angels are investing in a business which doesn’t yet have much market share, and is not guaranteed to succeed. So, why take that risk?

Trust in the potential of early-stage businesses

Angel investing is riskier than other asset classes, and is less liquid, but has significant potential to offer greater returns in the long-run. Angel investors are said to expect a 30-40% return on investment, making investing in early-stage businesses a highly attractive asset class for many.

Business angels are also often able to acquire a larger stake in the businesses they invest in. The earlystage organisations to which they pledge their capital generally have cheaper shares than more mature companies. Consequently, angel investors can afford to grab a larger piece of the pie, and receive higher returns down the line. There will always be a risk associated with this, but if the risk pays off, the investor will receive a much bigger chunk of the profits when the company scales up and multiplies its value. Investing in smaller companies can therefore bring a significant return on investmentwith risk, comes reward.

Reaping the unique returns on investment

Inevitably, there are other benefits to investing in early-stage startups for business angels. Angel investors tend to be those with significant experience in their industry, who have perhaps already seen personal success in starting, managing, and growing businesses. Typically, they take a more altruistic approach to investment as a result, seeking to impart their knowledge to founders in the form of advice and strategic direction.

Angels tend to truly believe in the businesses and industries they support, whether that be by investing in green energy or digital transformation, for example. As such, angel investors often invest in impact startups, otherwise known as businesses which aim to build solutions to the United Nations Sustainable Development Goals. Such startups in the UK attracted a record £2 billion investment in 2021, marking a firm commitment to sustainable business growth. Angels want to back businesses that are contributing to the greater good of society, and in return, will experience reputational benefits derived from having a socially conscious portfolio.

Finally, angel investors are known for chasing after innovation. Startups can be among the most innovative businesses on the market, as they seek to contribute something new to their chosen industry. As such, those who invest in early-stage businesses are often directly contributing to

innovation. When doing so, not only can investors acquire a sense of pride in contributing towards progress, but they support the market’s development as a whole. Then, if investing in other businesses within the same market, investors can ensure that their whole portfolio brings strong returns.

As the number of startups conceived continues to climb, it is likely that more and more investors will take a chance on smaller businesses. The potential is astronomical and goes beyond mere financial gain. Those who get ahead of the game and invest early are those most likely to reap the highest reward.

Luis O’Cleiry Co-Founder and CMSO LastBasic

The end of Greenwashing?

Being sustainable and environmentally friendly has been at the forefront of every organisation’s strategic agenda for some time. Events such as COP26, and frameworks such as the Green Loan Principles setting out the components for a loan to be considered green have helped ESG remain at the forefront of all agendas. This has also meant that everyone is very keen and meticulous about communicating their contributions and compliance with ESG criteria. The reasons for this should of course be part of contributing to a better, more sustainable and greener future. However there has been concern that some organisations use it more as a marketing tool to promote and/ or change the perception of their company which may, or may not

be that sustainable. Whilst from a lending perspective it can also assist with obtaining more favourable terms.

On-going Concern

Ever since ESG requirements and the availability of Green Finance have become more prominent in the market concerns around “greenwashing” have been raised. This was bought into sharp focus with the recent raid by German prosecutors on Deutsche Bank’s asset management arm DWS. Whilst they continue investigations into allegations of greenwashing we cannot ignore the sense that this may prove to be a pivotal moment in the developing ESG market. Many experts believe that blanket statements about sustainability will no longer been seen as sufficient and that ESG reporting will subject to greater scrutiny going forward. Whilst

this may be seen as long overdue in some quarters, it will not immediately provide a solution as the question of suitable data quality is likely to provoke further debate. What one institution may consider satisfactory to substantiate an ESG claim, another may not. Understandably it may also lead people to be more reserved about what information they disclose if they have concerns around being able to substantiate it sufficiently.

The finance industry relies heavily on reporting and labels and at present there are differing standards in relation to defining sustainability and ESG thresholds. This only serves to conflate matters further which has led to a perception that sometimes there can be a disparity between what a product is labelled and it’s actual ESG performance.

Grey Area

Many would argue that there is a lot of grey in the ESG and greenwashing sphere. Even the current sustainability rating agencies can have differing criteria. In light of the raid on DWS many financial institutions’ immediate reaction may be to take a much more conservative approach to KYC and compliance. Particularly in relation to clients, products and monitoring. However, for this to be effectively implemented there are likely to be various operational obstacles. Banks for example can ask for additional, detailed information from their clients. This though poses the question - are they really best placed to analyse and evaluate to ensure it can be adequately substantiated? They will not hold all of the knowledge and may need to recruit new talent and third-party assistance to support this transition, which will only increase time and cost.

Regulation

Whenever there is a grey area or widespread debate around the level of acceptable scrutiny, the prospect of greater and wider regulation is raised. Whether this takes the form of more legislation, general disclosure standards or consistent environmental reporting remains to be seen. But by having clear, concise and consistent requirements, nongovernmental organisations, consumers, investors and regulators should be able to more effectively hold financial institutions to account over their ESG claims and provide a way to measure actual performance against representations. This will enable greater transparency, provide a definite rulebook and level the playing field.

Putting this in place is unlikely to be a quick or straightforward task given the number of stakeholders involved and process to go through. At the European level, the European Securities and Markets Authority’s Sustainable Finance Roadmap 202224 highlights “tackling greenwashing and promoting transparency” as the first of its three priorities. Whilst in the US, the SEC has proposed requiring US listed companies to disclose a range of climate-related risks and greenhouse gas emissions in filings such as annual reports. Whilst this is being implemented - and considering the DWS raid - there is a concern that the ESG market may stagnate until this clarity is provided. The truth is that it needs to be scaling up.

Conclusion

Putting a stop to greenwashing practices will be appreciated by all in the ESG community. Applying and putting in place consistent standards and requirements will be welcomed by the finance sector on both the retail and institutional side for the assurance and clarity it will bring.

Ultimately the primary goal of ESG commitments is to protect the planet and ensure a greener more sustainable future. Time is therefore of the essence, and whilst the requirement for firms’ actions to match their words is a necessity, we mustn’t lose sight of the bigger picture.

John O'Donovan Partner and Head of Banking & Finance Law Firm Harold Benjamin

How to know what and what not to automate in your business

In today’s fast-paced, increasingly tech-centric business landscape, automation is commonly considered a vital way for firms to improve efficiencies and streamline processes, saving valuable time and money in the process.

Matt Weston Founder and Managing Director

According to statistics from Salesforce, 73% of IT leaders have cited that automation is saving employees between 10% and 50% of time previously spent on laborious, manual tasks, with a further 57% declaring that automation technology has also saved departments between 10% and 50% on costs previously associated with manual processing.

Given these savings, it is evident that there is a wide range of potential benefits that embracing automation can bring. However, businesses should not adopt a ‘one size fits all’ approach to automation. In fact, there are a number of specific processes that should never be automated, particularly when it comes to optimising customer experience.

The key, therefore, to effective and successful automation, is having an understanding of which processes are ripe for automating, and for which it is best to retain a human touch.

When to automate

As a rule of thumb, many of the business processes that are most suited to automation are those that are time consuming and labour intensive without providing much in the way of tangible value.

Vantage 365

Employee onboarding, for example, can be an arduous task for employers when manually filling out the necessary paperwork, such as welcome letters and contracts. By configuring an e-signature platform to send out documentation

automatically, business leaders can make their onboarding process considerably more streamlined, while automating the process of creating a new user account enables new recruits to enter the company workflow far more seamlessly.

Beyond the obvious efficiency benefits that this would bring, figures from HR Technologists show that 45% of employees who undergo a structured on-boarding process say that they have greater trust in their organisation as a result. Through automation, firms can therefore achieve the level of structure that prospective workers are looking for, providing a boost to both the hiring process and overall employee satisfaction.

Invoice processing is another critical area where automation can drive efficiencies. Many companies continue to process invoices manually, and, according to Cloud Trade, the average Accounts Payable [AP] clerk can process five manual invoices per hour.

Not only does automation significantly cut down on error rates, but less manual entry means less room for mistakes, speeds up the approval process, and reduces processing times. On top of this, organisations can make savings on labour costs, allowing staff to focus on other, more mission-critical tasks.

Staying human

While automation can clearly be highly effective in lightening the load caused by certain, high-volume, lowworth processes – such as handling customer enquiries like rescheduling a booking, or checking the status of an open ticket – organisations must take a targeted approach to introducing technology.

This is because there are likely to be parts of the business where human engagement can add more value than automation technology is capable of.

At stages on the customer journey, for example, there are instances where the problem a customer is experiencing may have evoked an acute emotional response from them, and the ability to speak to a human advisor in such a situation could be hugely comforting and rewarding to them.

This is corroborated by a study conducted by Google, which found that, despite the rise in automation technologies, such as chatbots, introduced to interact with customers, the majority of respondents – 57% –would still rather talk to a real person.

It is clear therefore, that there is still lots of value to be gained from retaining a strong human presence in certain facets of an organisation’s practices and processes, especially those that pertain to, and are capable of, enhancing the customer experience.

Automation supports human workers rather than replacing them Moving towards implementing automation is a significant step for any business to take, and because of it is important that the appropriate level of thought is given to it before diving in.

Automation should not be regarded as a ‘silver bullet’ solution to driving efficiencies and productivity –instead, it needs to be carefully and strategically implemented into a business’ existing operations to have the greatest level of impact, rather that in those areas that are easiest to automate.

Above all, it is crucial to remember that the objective of automation adoption is not to replace humans, but to support them in performing their jobs as effectively and efficiently as possible. As such, businesses must realise that humans and technology have to work together if they are to thrive and survive in today’s digital landscape.

Head in the cloud: how businesses can optimise their cloud usage without unintended consequences

Introduction

Amid inflation and the ever-growing threat of a possible recession looming on the horizon, businesses are likely to pay even closer attention to their cost base. This is particularly true where cloud is concerned. However, businesses need to be mindful of untargeted cost-cutting, which could harm their long-term business health.

Does public cloud still make sense for the average business?

It makes sense to see cloud computing under tight scrutiny: It is one of the most significant costs major organisations incur, with cloud bills that can run into the millions. Cloud spending currently represents approximately 30% of overall IT budgets; and with potentially challenging conditions on the horizon, it is unsurprising that some analyses show that spend has fallen YOY for top public cloud providers, as businesses are slowly but surely looking to tighten the belt. Given its significant expense, and the difficult economic climate, does public cloud still even make sense for the average business?

Public cloud provides unparalleled flexibility and elasticity, which in turn makes way for innovation and the delivery of business-critical services. A common practice to achieve a balance of innovation, cost saving and efficiency was for businesses to explore both on and off premise technology stacks. But now, tighter

budget constraints mean that organisations cannot as easily justify a dual approach of on-premise and cloud infrastructure – as has often been the norm – to experiment with different operating models.

The real question around cloud computing costs therefore is not if it still makes sense – clearly it will continue to be a vital element of enterprise innovation. The real question is whether businesses are able to adequately maintain control and visibility as they cut costs in some areas and embrace more cloud services than ever in others. In these challenging times it’s essential to know where your cloud spend is going and what value it is driving for your business.

What a challenging economic environment could mean for the next five years of business

It is clear that CFOs are considering cutting back on cloud projects to offset the negative effects of inflation. However, while this method may save costs in the short term, this strategy carries its own risks in the long-term. Over-focusing on reducing spend could cause longer term damage to a business’ competitive ability.

Now more than ever, it is essential that businesses track the value of their transformation projects to understand what is driving long-term business value and ensure that they do not lose competitive advantage as a result of reducing capability in the cloud.

In fact, those businesses who do establish better visibility of their cloud infrastructure across business, finance, and technology teams will be able to make better data-driven decisions and ensure that vital projects are not scaled back. To use an exercise analogy, businesses need to cut fat, not muscle; in cloud, this requires a strong understanding of who is spending what and for what business purposes.

Visibility leads to flexibility, and those that continuously adjust their priorities while continuing to invest in areas for growth will be the ones who will lead the market in five years.

How to establish cloud cost visibility

By understanding cloud cost associated with each application, service and customer, business leaders realise the true value of investment and focus on a balance between cost and quality. That is why frameworks such as FinOps are becoming essential business tools.

An evolving discipline and cultural practice in cloud financial management, FinOps enables enterprises to maximise commercial value by tracking, analysing and planning cloud spend. Working with FinOps in mind, businesses achieve accountability as they’re faced with a clearer structure through which to track the success of their investments.

FinOps helps businesses gain a better perspective on their cloud spend which in turn optimises crossdepartmental collaboration. By renegotiating the architecture of cloud spend within a business, leaders can then begin optimising cloud usage, in turn reducing their cloud service bill.

So, at a time where businesses would normally look to cut down on cloud spend, they should instead focus on engaging in frameworks such as FinOps to gain a better view of where the spend is going in order to redirect it more efficiently. By doing so they would be promoting business cloud utilisation efficiency; increasing spend without losing sight of data in the cloud to maximise competitive advantage.

Conclusion

Leaders do not have to choose between cost saving and innovation. There are clearly challenging times ahead, but those leaders who prioritise greater spend visibility and tracking will be the best placed to not only survive but thrive in the next five years. By engaging in frameworks such as FinOps business can help their business grow, optimise development, and retain competitive capability.

Mallory Beaudreau Customer Portfolio DirectorEMEA

Apptio