Gen Z in the US heavily relies on social media platforms for connecting, sharing, and consuming content
Saudi Arabia is gifted with oil reserves, a robust agricultural sector and mineral resources like gold. However, with an increasing population and an economic transformation fuelled by the diversification roadmap called 'Vision 2030', the Kingdom's real estate market is staring at the possibility of emerging as the country's most valuable player in the coming years.
Saudi has a fascinating line-up of hotels, apartments and villas and the Kingdom now plans to build new airports, railways, and highways, while upgrading its healthcare and education systems and formulating more investor-friendly policies, to become an economic powerhouse by 2030. Due to all these, the demand and prices of residential properties in this part of the world are steadily increasing.
Meanwhile, when it comes to the crypto crisis, FTX has gone bankrupt, thus putting a heavy toll on the digital currency sector. Bitcoin prices are now witnessing significant volatility. Ether too has followed a similar path. Since November 6, the sector has seen a bloodbath of over $260 billion.
However, decentralised crypto exchanges, (peer-to-peer marketplace connecting cryptocurrency buyers and sellers) and hardware wallet manufacturers (wallets containing the crypto user's private keys in a secure hardware device) have reported huge profits since the FTX's collapse. People are now looking for physical options to keep their private crypto keys safe. Cold wallets seem to be an answer to that.
Also, the banking sector is undergoing a change, as the financial institutions' way of interacting with their customers have been rapidly transformed, due to the emergence of the tech-savvy demographic forces called millennial and Generation Z. The cover story of the final edition of the Global Business Outlook for the year 2022 will revolve around the wave of behavioural shifts seen in the banking sector.
Thomas Kranjec Editor kimberly@gbomag.com
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Saudi Arabia covers an area of approximately 2,150,000 square kilometres and has a population of approximately 32 million people
Saudi Arabia is among the wealthiest nations, with a GDP purchasing power parity of $55,368. In addition to its oil reserves, it has a robust agricultural sector and significant mineral resources such as gold. Moreover, with an increasing population and an economy fueled by Saudi Vision 2030 (which includes diversifying into new sectors such as mining and petrochemicals), Saudi Arabia's real estate market is poised for considerable growth in the coming years.
The Middle Eastern country covers an area of approximately 2,150,000 square kilometres and has a population of approximately 32 million people. In recent years, Saudi Arabia has been investing heavily in its infrastructure. The government has plans to build new airports, railways, and highways. They are also working on improving the healthcare and education systems in the country. As a result, home prices have been rising steadily, and there is a high demand for properties.
With an investment of SR4.13 trillion ($1.1 trillion) in real estate and infrastructure since Saudi Arabia's Vision 2030 launch in 2016, the Kingdom is on course to become the largest construction site in the world, as per the international real estate consultancy Knight Frank.
According to the real estate company, Riyadh's population will increase from an estimated 7.5 million to 17 million by 2030. Since the commencement of the Kingdom's National Transformation Plan in 2016, the city has launched real estate projects worth $104 billion. Faisal Durrani, partner and head of Middle East research at Knight Frank, said, "Vision 2030 has fanned the spark of excitement across the Kingdom, and with NEOM positioned at the heart of the transformative plans, people are eager to be part of history."
Durrani added that with over 275,000 hotel rooms, 555,000 residential units, over 6.1 million sqm of office space, and more than 4.3 million sqm of retail space planned for the Kingdom. Saudi Arabia would undoubtedly surpass all previous records for the largest construction site.
According to Harmen de Jong, partner, and head of real estate for Strategy & Consulting in the Kingdom, the consultancy is now keeping an eye on 15 giga-projects throughout the Kingdom, many of which are brand-new independent supercities. When NEOM (a Saudi super city) is finished, it will be the largest giga-project declared to date, housing 9 million people in over 300,000 new homes. After NEOM and The Red Sea Project, Diriyah Gate ranked third
in popularity among 1,000 Saudi households for home ownership.
According to Durrani, NEOM fundamentally alters urban life in areas with limited resources. Sub-cities like the Trojena, Octagon, and the Line will also raise the bar for abundant living in the region. A second home in NEOM will cost more than $800,000 for almost 30% of Saudi homeowners. To meet this unmet need, developers will have their work cut out for them, Durrani continued. According to De Jong, just $7.5 billion of the projects' subprojects have been launched, and only 29% of the project's overall construction has been completed.
Another eye-catching megaproject is the $20 billion Diriyah Gate, which, when finished in 2027, will provide Riyadh with 20,000 houses and a historic neighbourhood the size of a city. Knight Frank calculated the cost of building Diriyah Gate to be around $2.3 billion.
Riyadh's reinvention as the Kingdom's commercial hub is well underway, not to be outdone. And companies globally are already vying to be at the centre of the second
and most crucial global hub for the Middle East. The proposed construction of 2.8 million square metres of top-notch office space could not arrive at a more opportune moment, given that 97% of Grade A offices in the city are already occupied, according to Durrani.
Knight Frank says $147 billion international airport is also about to open. The new airport receives over 74% of the $200 billion national infrastructure investment. House prices are rising quickly and are currently about 26% more than last year, he said, adding that the city is also attracting many internal migrants.
With the $23 billion Green Riyadh project, which involves planting 7.5 million trees in the Saudi capital to make it a green, thriving metropolis, and the $500 million Riyadh Sports Boulevard, the Kingdom is also enhancing and delivering world-class urban surroundings for its citizens. Additionally, it includes a $13.8 billion plan for 19,000 hospital beds, of
NEOM: A super city for the future - $500 billion project value - $7.5 billion value of commissioned projects to date - 29% construction completed
KING SALMAN PARK: The world's largest urban park and community - $17 billion project value - $1.2 billion value of commissioned projects to date - 12k residential units
DIRIYAH GATE: A mixed-use cultural and historical heritage city - $20 billion project value - $5 billion value of commissioned projects to date - 56% construction completed (1m+ sqm office space & 200k residential units)
THE RED SEA PROJECT: The world's most ambitious luxury tourism development - $16 billion project value - $3.2 billion value of commissioned projects to date - 57% completed construction
JEDDAH ECONOMIC CITY: A mixed-use megaproject - $30 billion project value - $1.7 billion value of commissioned projects to date - 74% completed construction (800k sqm office space & 470k sqm retail space)
JEDDAH CENTRAL PROJECT: A revitalisation project centered on the city's history: $20 billion project value - 17k residential units & 2.7k hotel keys - 2030 expected completion
Source: Datahub.com
which $8.6 billion will be spent in Riyadh Province alone. De Jong claims that $82 billion is being spent on constructing more than 80 new educational institutions. Furthermore, the transformative plans' focus on healthcare, education, and wellbeing "sits at the core of the exceptional evolution in the Kingdom's physical realm, making it unrecognisably from what we see now by the end of the decade," according to Durrani.
Saudi Arabia has opened 2,957 new free land plots for eight housing projects to increase the number of homes owned by its citizens. According to the Saudi Press Agency, the eight schemes are spread throughout five regions: Riyadh, the Eastern Province, Madinah Munawwarah, Makkah Al-Mukarramah, and Aseer Province. The Sakani program's website has an internet gateway that beneficiaries may access if they want to take advantage of the free lands. The website outlines a variety of housing and financial choices, including pre-built homes and homes being built in collaboration with skilled real estate developers.
The Sakani programme was established in 2017 by the Ministry of Housing and the Real Estate Development Fund to promote home ownership in the Kingdom by creating new housing stock, distributing plots and homes to citizens, and financing their purchases. The initiative helps attain the housing program's goal of increasing Saudi family house ownership to 70% by 2030, which aligns with the Kingdom's Vision 2030.
Saudi Arabia's real estate is booming, and it would be the ideal time to invest in the Kingdom. The following are some frequently asked questions by foreigners
who wish to buy land in the gulf country:
What should I understand before buying a home in Saudi Arabia?
Price is discussed directly between the buyer and seller or with the help of intermediaries like real estate brokers or attorneys. Real estate ownership by foreign nationals is permitted, but only with the licencing authority's consent. Property can be bought by foreign investors for building and investment, although this too needs prior approval.
What steps are involved in registering a piece of property in Saudi Arabia?
Property registration in Saudi Arabia consists of three primary steps that typically take no more than a few days:
Through the First Notary Public Department, the buyer searches for the property's title
The buyer follows the process to ensure that the information on the property deed provided by the seller matches what is found in the agency's database. The seller must give the buyer permission to access this data. This process is carried out to get a formal, in-depth description of the property and to see if it has any recorded encumbrances.
The buyer and seller schedule a notary public appointment online Parties should make an appointment online at www.moj.gov.sa to request a transfer; the work can be reserved immediately. Then, the client and dealer go to the first window of the First Notary Public Department on the day specified. Employees will ensure that all the required paperwork is in order and accurate.
The required paperwork is listed below: Cards of identification, check certified, deed/ownership documentation,
and original copies of the association's bylaws, an original copy of the registration certificate, a power of attorney certificate.
The parties sign the deed before the notary, who also issues it
The front desk is where guests check in first and are given a room number where the transfer will occur. The notary gathers the required paperwork, performs one last inspection, and authenticates the sale and the owner's name change. A new deed is then produced after the buyer hands the seller the cheque. The buyer receives this deed with the notary's signature, and the notary retains a copy with the signatures of both parties.
Is Saudi Arabia a viable option for financing real estate?
Depending on the client's requirements, Saudi Arabian banks or mortgage businesses may lend buyers up to 85% of the value of a home.
Is a report on the property inspection necessary?
An inspection report is not needed to be sent to the buyer by the seller. The buyer is free to undertake the inspection on their dime.
Are any costs associated with buying property through the land registry?
A 500 SR charge is needed to transfer ownership of a residential unit or piece of land, and a 5,000 SR fee is required to transfer ownership of a commercial structure or piece of land.
Real estate prices in Saudi has gone up by 1% in 2023 beginning itself and since the property sector is going to drive the Kingdom's economic diversification efforts, such price hikes will be the new normal.
Real estate ownership by foreign nationals is permitted, but only with the licencing authority's consent. Property can be bought by foreign investors for building and investment, although this too needs prior approval
The ripple effect of crypto exchange FTX going bankrupt has been taking a toll on the digital currency sector. Bitcoin prices saw significant volatility. Ether too has followed a similar path. And also not to forget that since November 6 (the day Binance CEO Changpeng Zhao said that his crypto exchange would liquidate its FTT tokens), the sector has seen a bloodbath of over $260 billion.
While the sector is also facing negative confidence levels from the investors, Sir Jon Cunliffe, a senior Bank of England official has now said that the crypto ecosystem needs tougher regulations to prevent another FTX-like episode, a sentiment which has been echoed by the policymakers of other countries as well.
Amid all this chaos, crypto exchange Genesis halted capital withdrawal, a move which sparked fears about the company’s future. However, it rubbished such rumours and said that the firm has no plans to file a bankruptcy plea.
If a Decrypt report is to be believed, decentralised crypto exchanges (peer-to-peer (P2P) marketplace connecting cryptocurrency buyers and sellers) and hardware wallet manufacturers (wallet containing the crypto user's private keys in a secure hardware device) have reported huge profits in the last few days.
Hardware wallet manufacturing companies
Ledger and Trezor got benefited from the consumers’ panic buying of self-custody solutions to safeguard their cryptos, given the fact that these wallets are almost immune from cyber-attacks.
Ledger CEO Pascal Gauthier, during an interaction with Decrypt, said that his company saw its highest sales week in 2022, especially after the FTX saga.
"The message is clear: people are realizing that we must return to decentralization and to self-custody. ‘Not your keys, not your coins.’ A saying as old as crypto itself, but it has never been more relevant," the official remarked, while talking about the sales week's success, which Ledger witnessed in November 2022.
Trezor’s bitcoin analyst Joseph Tetek too said that the company had “indeed seen an exponential increase in sales since November 7.”
Also, another solution which hit the headlines recently is the decentralised crypto exchange alias DEX.
As per Dune statistics, DEXs accounted for $31 billion of crypto trades, amid the FTX crisis. Many such exchanges even saw a trading volume doubling in the 24 hours following the news of Binance liquidating its FTT tokens.
As per Dune statistics, DEXs accounted for $31 billion of crypto trades, amid the FTX crisis
Uniswap, a leading DEX, saw a business jump of more than three times (from nearly $1.3 billion to more than $4.2 billion).
Another Cointelegraph article stated that the price of Trust Wallet Token (TWT) has surged by nearly 150% after the FTX saga.
And yes, Binance CEO Changpeng Zhao’s endorsement of TWT’s parent platform, Trust Wallet, also helped the token to surge ahead. The token’s trading volume increased from 279 million TWT to 593.25 TWT amid the chaos in the crypto market.
TWT is basically a utility token for Trust Wallet, wherein traders can buy, sell and collect nonfungible tokens (NFTs), as well as exchange and stake cryptocurrencies.
While TWT operates as a centralized exchange token, Trust Wallet, on the other hand, enables users to control their own funds.
As of 1st December 2022, the global crypto market cap is $858.43 billion
Trading volumes of crypto investment products surge 127%
Crypto owners prefer exchanges for their crypto assets
Owners are comfortable with using crypto as money
Daily trading volume in crypto is down to $47.1 billion
Confidence towards cryptocurrency is almost 100%
67% of Millennials see Bitcoin as a safe haven asset
Older generations are also showing interest Bitcoin is still the most popular crypto
Reports also speculate the emergence of Trust Wallet as an off-ramp for traders, who are pulling their funds from crypto exchanges post FTX collapse, leading to the rallying of TWT prices.
Cold wallet’s function is to store cryptocurrencies in an offline mode. Also known as cold storage, the solution is used on platforms not connected to the internet. Not only individual investors, but crypto exchanges also use these cold storages as well. Not only do these serve as safe storage for bitcoins and altcoins, but they also form a crucial part of the crypto security chain, as unlike conventional banking methods, a compromised wallet results in token theft, leading to a wealth drain kind of scenario. So having offline crypto storage makes sense here.
A bitcoin wallet is linked with the public and private keys of the crypto owner. Generally, storage methods also contain security mechanisms for these keys. The private key carries alphanumeric characters, using which the user can access his/her crypto holdings. The public key is similar to an account name/email address, which helps to locate the destination for the digital currencies being sent to the wallet. People trading in bitcoin share their public keys with each other and complete the transaction.
The commodity/service buyer sends the required number of bitcoins to the seller’s divulged address as payment, after which the blockchain verifies the transaction. After the payment is delivered to the destination address, the receiver then requires to use his/her private key to access the money. In case of the theft of this particular key, the user’s bitcoins/altcoins will be accessed without authorization. So the case of having a cold wallet becomes a strong one, just to save these private keys.
While another method of storing crypto is known as a ‘hot’ one, those wallets remain
connected to the internet. Apart from being free, it doesn’t require the process of connecting the wallet online to implement the token transfer. However, cold wallets do have a crucial advantage in form of enhanced security.
Since hot wallets remain connected to the internet, they are prone to hacking/networkbased theft. This particular wallet generates and stores private keys and using the latter, digitally signs transactions and broadcasts them to the network. The problem with this whole process is that the threat actors can abuse the broadcasting part and get details about the private key.
Cold storage addresses the issue by signing the transaction with the private keys in an offline mode. Online transactions get transferred to the offline wallet kept on USB drive/CD/ hard drive/ paper/ offline computer. Then it gets digitally signed before another round of online transmission. Since the signing process happens in offline mode, hackers won’t be able to access the private key. However, the only drawback of the whole system is that it is a time and effort-consuming one.
Meanwhile, hardware wallet manufacturers have been registering profits recently after the FTX saga, they are very much part of the cold wallet ecosystem. Let’s discuss some of the prominent cold wallets to understand the whole concept in layman’s terms.
This is the most basic cold storage. It is a simple document, where private and public keys get written over. A bitcoin holder can print the above-mentioned document from the currency’s online paper-wallet tool, with the help of an online printer.
The paper wallet or document contains an embedded quick response code, scanning which further transaction-related steps
can be performed. If you lose the paper or get it damaged, you won’t be able to access the address of your funds.
This wallet uses an offline device or smart card to generate private keys offline. Prominent examples are Ledger USB, TREZOR and KeepKey. This device functions like a USB drive. To store your private keys offline, use a computer and a Chrome-based app. Also don’t forget to store the USB device and smartcard in a safe place, as damages to these entities will terminate your bitcoin access. While many hardware wallets are certified waterproof and virus-proof, some also support multi-signature ("multi-sig") transactions (a crypto signature method that requires more than one user to approve a transaction using private keys).
These wallets encrypt and record private keys in sound files on CDs/ vinyl disks (records). These audio files also have hidden codes, which can only be decoded with a spectroscope application/high-resolution spectroscope.
These wallets are similar to the hardware ones, but complex. This one splits a wallet into two platforms (An offline wallet containing the private keys and an online one which has the public keys stored). The online wallet generates unsigned transactions and sends the user's address to the receiver/sender. The transaction then gets stored in the offline wallet, where it gets signed by a private key. The signed transaction then goes back to the online wallet, which broadcasts it to the network. Electrum and Armory are the best in this category. Now, let’s shift our attention to DEX. Talking about DEX, another crypto ecosystem component, which has gained tremendously post-FTX fiasco, is known for using the Ethereum blockchain. Decentralised crypto exchanges, such as Uniswap and Sushiswap have become integral parts of the decentralized finance (DeFi) tools, enabling a huge range of
Binance CEO
Changpeng Zhao’s endorsement of TWT’s parent platform, Trust Wallet, also helped the token to surge ahead
The token’strading volume increased from 279 million TWT to 593.25
TWT amid the chaos in the crypto market
financial services directly from a compatible wallet.
These exchanges, by the first quarter of 2021, saw some $217 billion worth of completed transactions and by April of that year, there were over two million DeFi traders.
DEXs don’t allow exchanges between fiat and crypto as they do token trades. They act as a set of smart contracts, setting the crypto prices with the help of an algorithm and liquidity pools (entities where investors lock funds in exchange for interest-like rewards).
DEX transactions get settled directly on the blockchain. These exchanges are built on opensource code, enabling developers to adapt to the existing code and create new competing/rival projects. One prominent example here is which is Sushiswap and Pancakeswap following Uniswap’s code has been adapting pattern.
These exchanges offer a limitless range of tokens. Anyone can mint an Ethereum-based token and create a liquidity pool for it, so the
users can find a greater array of projects. Since the DEX trade-related funds get stored in the traders' own wallets, the chances of them getting hacked are less. Also, these exchanges don't ask for the personal information of their users, be it for trading or any other purposes. Also, DEX's features like peer-to-peer lending, speedy transactions, and anonymity made possible have made the solution a popular one in developing economies, in terms of meeting the financial inclusion goals.
Dealing with these decentralized exchanges requires specialised knowledge. Apart from gaining a lot of expertise through intensive research, the users need to be careful against committing mistakes such as sending coins to the wrong wallets. Also, don't go for experiments such as pairing a more volatile cryptocurrency with a less volatile one in a liquidity pool.
DEXs are a set of smart contracts and these contracts are coded. Any exploitable error/bug in these codes means an open invitation to the threat actors and subsequent token loss.
Since DEXs offer a vast array of digital coins within their liquidity pool, chances of any of these tokens getting 'rug pulled' can't be ruled out. The token creator can suddenly mint a bunch of new coins and overwhelm the liquidity pool, resulting in the coin getting depreciated and causing loss to the customers. Again deep research and expert advice are suggested here, when it comes to buying new cryptos on these exchanges.
The reports suggest that Singapore is conducting a probe into Binance, over its involvement in the botched FTX deal. While the FTX exchange crash has created a crisis in the crypto market, the soaring profits of hardware wallet makers and DEX show that investors are now looking for a viable alternative to keep their money safe from external volatilities such as crypto exchange crashes.
Despite a paper purse being one of the safest options for crypto investors, it doesn't prevent physical data breach possibilities. Also, if there is a burglary at your home and your carbon wallet gets stolen, there goes your Bitcoin as well. So, one should go for a safe platform like 'Bit Go', which offers the best protection in the business for bitcoin storage.
Bit Go employs several security measures like dedicated hardware units, multi-factor identification, and custom risk assessment methods, to protect the bitcoin storage.
Another requirement of ensuring foolproof cold crypto storage is understanding the freezer storage needs and making crucial arrangements as per that roadmap. One must first confirm that the supplier is delivering appropriate capabilities as per the business needs.
For instance, some telecommunications companies provide multiple signatures, which enhance the safety of one's digital currency-related operations. While some companies charge a fixed amount, others bill
customers as a portion of the total transaction price. So understanding your needs and comparing various pricing structures is another crucial requirement as well.
Crypto businesses understanding the safety game as well Binance, the cryptocurrency exchange company, which used to be FTX's rival, has recently announced the launch of a crypto asset store dubbed ‘Binance Mirror’ as investors return to the industry. Specifically targeting institutional investors, the solution will provide an off-exchange cold crypto storage solution to hefty investors so that their fear of losing their finances to data leaks or liquidity crises can be reduced.
Yes, with 'Binance Mirror', Binance is taking a positive approach to shift the focus of its crypto service to cold storage.
“Through Binance Mirror, institutions lock a certain amount of their asset balance available in their Qualified Wallet, Binance Custody’s cold storage solution, and mirror it to their Binance Exchange account with a 1:1 balance. Their assets will remain safe in their segregated cold wallet as long as their Mirror position remains open on the Binance Exchange, which can be settled at any time,” the exchange said in a statement.
The launch came at a time, when a Forbes report, citing a Chainalysis study, claimed that more than $3 billion was stolen in 125 hacks in 2022. This stat is more than a compelling one to make people move towards cold/offline storage.
And people are indeed moving to cold crypto storage. Glassnode noted that about 5,50,000 Bitcoins worth $9.2 billion had been moved to cold storage in 2022.
“Security is a top priority for institutions. We spent much of the past year fine-tuning operations to help our clients unlock the liquidity of their assets in our cold storage,” said Athena Yu, Vice-President of Binance Custody told Knownews.
Some telecommunications companies provide multiple signatures, which enhance the safety of one's digital currency-related operations. While some companies charge a fixed amount, others bill customers as a portion of the total transaction price
In a move that is anticipated to push up petrol costs globally, some of the main oilproducing nations have decided to reduce the quantity of oil they export. Members of OPEC+ - a bloc that includes Saudi Arabia and Russia - stated they will decrease production by two million barrels per day.
The organisation claimed it wished to stabilise prices, which have decreased recently as the global economy has slowed. However, the decision sparked worries that petrol prices might increase. Oil prices have already increased due to expectations that nations may reduce their pumping. The cost of a barrel of Brent crude increased by about 2% to over $93 (£82).
"The question is when, and to what extent, retailers choose to pass these increased costs on at their forecourts," spokesman Simon
Williams said.
The Organization of Petroleum Exporting Countries and its allies have announced a drop, the largest since the pandemic's peak in 2020. It happens despite calls from the US and others to pump more after oil prices soared this spring as a result of supply disruptions caused by the conflict in Ukraine. In a statement, the White House said US President Joe Biden was "disappointed by the short-sighted decision."
Aluminium prices on the London Metal Exchange (LME) shot up, following a Bloomberg story that the United States was mulling an embargo on Russian aluminium in reaction to the situation in Ukraine. After temporarily jumping 7.3% to $2,400
per tonne, benchmark aluminium was up 3.3% at $2,309 per tonne.
According to Bloomberg, which cited anonymous sources familiar with the decision-making, the Biden administration is considering increasing tariffs on Russian
aluminium to levels so severe they would essentially ban Russian aluminium maker Rusal. The company is the largest producer of aluminium outside of China and it is expected to meet global demand of 70 million tonnes or 6% of global production. Price increases would almost probably result from a ban.
After Rusal was sanctioned by the US Treasury Department and its metal was banned by the LME in 2018, aluminium prices increased 30% over the course of a few days. The LME launched a discussion paper on the possibility of banning Russian aluminium, nickel, lead, tin, iron and copper from being traded and stored in its system.
The cost of a barrel of Brent crude increased by about 2% to over $93 (£82)Green Initiative
Mohammed bin Salman, the Crown Prince and Prime Minister of Saudi Arabia, declared that his country would contribute $2.5 billion to the Middle East Green Initiative over the following ten years. He also stated that Saudi Arabia aims to have 50% of its power consumption dependent on renewable sources by 2030 at the second Green Middle East Initiative meeting, which was hosted in the Egyptian resort of Sharm el-Sheikh alongside the COP 27 conference.
He further stated that the Public Investment Fund (PIF), the Kingdom's sovereign wealth fund, wants to achieve zero neutrality by 2050. The Saudi Crown Prince and Egyptian President Abdel
Fattah al-Sisi are serving as cochairmen of this year's Middle East Green Initiative summit.
The Saudi Crown Prince declared that the Kingdom will establish one of the biggest Carbon Capture, Usage and Storage (CCUS) hubs in the world as part of Saudi Arabia's national emission reduction targets and the implementation of the Circular Carbon Economy concept. By 2035, this will capture 44 million tonnes of CO2e, or 15% of the Kingdom's current NDC. Additionally, planting 50 billion trees around the region is the Kingdom's second MGI target. According to state news agency SPA, this is the largest-scale project in Saudi.
In an effort to increase defence spending, the Japanese government, which has previously stated that it does not want to issue new debt, intends to use construction bonds to create facilities for the Self-Defense Force, according to a report by the Kyodo news agency.
According to Kyodo, which cited an unnamed source engaged in the process, the government would set aside nearly 1.6 trillion yen ($11.61 billion) for construction expenditures by the fiscal year that ends in March 2028. The issue of debt to pay for military expenditures was described by Prime Minister Fumio Kishida as "impossible as a responsible option for the future." Shunichi Suzuki, the finance minister, confirmed that he was aware of the media report and added that no decision had been made.
"We are in the middle of a decisionmaking process. At this moment, the government has not reached a conclusion. In developing defence capabilities stably for the future, it's difficult to consider government bonds as stable funding sources," he said.
Kishida has instructed his administration to set aside 43 trillion yen for defence.
Kuwait International Bank spared no effort to comprehend its customers' needs and aspirations, while designing programs that suit them
As products and services are redesigned to change how we live and conduct businesses, the digital age has forced many people into a paradigm shift. To create a world-class commercial hub for "New Kuwait," Kuwait International Bank has actively reshaped this new environment.
How we earn, save, invest, and spend money today dramatically influences our lives. It can shift the entire market in hours, throwing the global population to where the demand is. The banking and financial industries are at the epicentre of these changing tectonic plates, simultaneously driving change and adapting to the recently emerged market needs.
Kuwait’s banking sector has always been embracing changing global trends, especially on the technology front, since its formation in the early 1940s, thus setting the way for other GCC nations to do the same. The COVID crisis and the global lockdowns transformed how services are delivered worldwide. Kuwait's banking sector is unwavering in its commitment to staying updated on these changes.
As part of the national 2035 vision for "New Kuwait" to become a regional and international financial hub, the Gulf country hosted the “International Banking Conference: Shaping the Future" in 2019, where banking pioneers and market experts discussed the future of digitization of industry.
In February 2022, the Central Bank of Kuwait (CBK) stated that it would begin accepting applications for licenses for digital banks, which was greeted enthusiastically by consumers and
industry insiders, apart from generating a lot of buzz in the market. In the end, it also inspired existing banks to speed up their modernization efforts.
Kuwait International Bank (KIB), a bank that is no stranger to adaptation and innovation, is one of the market leaders whose digitization continues to set the tone for competitiveness. To support its comprehensive digital transformation strategy, KIB reimagines its internal workings and surrounding ecosystem, going beyond the limited perspective of digitization that restricts it from creating digital alternatives to already-existing services and products. This is done by drawing on its 50 years of experience and market insight. However, let's first take a moment to explore digital transformation before going further into KIB's journey toward it.
It isn't a collection of digital goods and services offered via a website/mobile app. The way the banking industry interacts with and serves its market, as well as the role it plays in society, has completely changed. The digitization of the banking sector requires institutions to reshape their building blocks in line with the philosophies, mindsets, and needs that underpin the digital sphere while also taking into account the entire ecosystem. Of course, this is true of any
top-down reform. In light of this, let's follow KIB's lead as a market leader as it undergoes a digital transition.
No one would ever invest in a structure; regardless of how beautiful it is, unless it is constructed on sturdy foundations. The same holds true for financial services as well, as it involves managing clients' hard-earned wealth. In recent years, Kuwait International Bank has focused on developing a sturdy digital infrastructure to support its large, allencompassing digital banking arm.
By this, Kuwait International Bank has ensured the flawless operation of all of its digital-first services and products. It keeps on making significant investments in bolstering its cybersecurity and protecting its clients' from threat actors. By partnering with one of the largest consulting firms in the world recently to modernize the bank's IT infrastructure, KIB made a significant step forward in its road toward digital transformation.
It's time to start developing a customer journey that seamlessly transitions from one touchpoint to the next once
the digital infrastructure has been set up with strong security barriers. Understanding the financial behaviours and priorities of these majority age groups is crucial to the success of any bank's digital solutions as those between the ages of 15 and 24 makeup almost one-fifth of the Kuwaiti population, followed by an astounding 52.32% of those between the ages of 25 and 54.
Kuwait International Bank spared no effort to comprehend its customers' needs and aspirations, while designing programs that suit them. Whether these consumers need either assets management/diverse investment portfolios or these tech-savvy youth are looking for digital-only financial products, KIB right now has answers for all.
Integrating services that take clients on a very smooth journey from the first sales/ marketing touchpoint through service fulfilment is the distinguishing feature of KIB’s digital experience. To realize this, it was crucial for KIB to meticulously plan out every step of the client experience and ensure that the in-app capabilities required to support each milestone were created.
By working with the Public Authority for Civil Information in Kuwait (PACI) to utilize its database and digital "Mobile ID" app to assist an online onboarding process for new clients, KIB pushed integration a step further. Through PACI's Mobile ID, the bank will now be able to identify unique users swiftly, authenticate their identities, and extract the necessary data. As soon as Kuwait International Bank has its digital signature, it can quickly register them as new clients and finish the online account opening process.
The digital factory, an innovationfocused concept staffed with the appropriate resources and entrusted with improving the bank's services, was recently established by KIB with success. As a result, the bank has begun to create a variety of digital goods and solutions that cater to all of its key consumer segments. The team adheres to a dynamism and agility ethos, using design-thinking approaches, agile working norms, and the most recent technological advancements to respond to client needs and market developments quickly.
Fintech has seen a flurry of activity during the past ten years in all of the financial hubs of the GCC. The Regulatory Sandbox at Abu Dhabi Global Market and the FinTech Bay incubator in Bahrain both debuted in 2018. The Dubai International Financial Center (DIFC) established its FinTech Hive accelerator program in 2017.
In Kuwait, the Central Bank of Kuwait announced its own regulatory sandbox structure in collaboration with local banks that same year, allowing players to test innovative services with light regulatory and licensing requirements. Currently, the CBK's website lists four companies as having "graduated" from the sandbox: open-banking firm Spare, buy-now-pay-
It was crucial for KIB to meticulously plan out every step of the client experience and ensure that the in-app capabilities required to support each milestone were created
later supplier Taly, aggregator of money exchange services Xent, provider of electronic know-your-customer solutions FRM Tech Labs. The DIFC's FinTech Hive graduated 44 startups in 2021, although this level of activity is insignificant in comparison to Kuwait's regional counterparts.
Kuwait was ranked 238th overall out of 264 cities in findexable's Global Fintech Index for 2021 and last in the MENA region. The issues faced by Kuwait in the fintech space are related to how it is viewed as a financial hub. The country was placed 108th in Long Finance's Global Financial Centres Index for 2021, which is again lower than any other GCC hub.
But outside of its official programs, Kuwait has seen the emergence of a number of prosperous fintech start-ups. These include digital financial services aggregator FinFirst, payments companies Tap, MyFatoorah, and UPayments, which ironically graduated from the Qatar FinTech Hub accelerator program in 2020.
The three telcos in the nation, Zain, Ooredoo, and STC, have perhaps been the most interesting players outside of the banks in the fintech field.
The Kuwait-based Zain, which operates as a telco in seven Middle Eastern and African nations, has introduced financial services of all kinds across its service area, including microloans in Saudi Arabia and digital wallets in Iraq and Jordan, with plans to introduce services in Kuwait, Bahrain, and Sudan this year.
According to the operator, the number of customers using its digital financial services increased from 372,000 at the end of 2019 to 1.54 million in December 2021.
According to the vice-chairman and group CEO of the operator, Bader AlKharafi, "Zain views the opportunities presented by the Middle Eastern digital economy as brimming with potential, as
digital capabilities offer greater levels of innovation and direct positive impact on economic and social development."
"We are particularly interested in supporting innovation in the fintech sector and establishing a challenger bank headed by telcos," he remarked in 2021, while attending the financial institution’s “Ordinary General Assembly."
But many institutions need to pay more attention to the equal necessity of reorganizing the workforce to accommodate the modified digital workflow. For example, to provide its customers with an unrivalled online banking experience, KIB made sure its personnel adopted digital's flexible, 24/7, adaptive, and inventive qualities.
The bank continues to emphasize the necessity of developing its human resources in parallel with developing its services and products to deliver an impeccable, well-rounded, premium digital service to its customers through a variety of training programs that KIB periodically offers to its staff.
Since change is not typically a constant in the traditional banking environment, improving the institutions' internal operations and removing any underlying bureaucratic and systemic barriers to change are prerequisites for success as a digital banking service provider. Instead, a flexible mentality that promotes more agility should be embraced, enabling the institution to react quickly to changes in the market as they occur.
Data enables improved consumer comprehension, which results in a more individualized experience and higher retention. Additionally, it entails more precise campaign targeting. KIB has understood the reality and is now reshaping country's banking environment in this line.
Kuwait has seen the emergence of a number of prosperous fintech startups. These include digital financial services aggregator FinFirst, payments companies Tap, MyFatoorah, and UPayments, which ironically graduated from the Qatar FinTech Hub accelerator program in 2020Analysis \ Kuwait International Bank
Gen Z in the US heavily relies on social media platforms for connecting, sharing, and consuming content
Prajwal Wele
The way banks interact with their customers is changing as a result of millennials and Generation Z (Gen Z), which is good for all customers, businesses, and investors. The tech-savvy and mobile-native demographic force is causing a significant change in financial institutions across all spheres, from consumer behaviour to technology adoption.
Chethan Shenoy, Director & Head –Product & Research, Anand Rathi Wealth Limited told Global Business Outlook in an interview that Gen Z is pragmatic and mathematical in their decision-making. They will be more in the decision-making position in the coming decades. Gen Z kids are not afraid of taking risks if they understand the odds of achieving returns. They also like the idea of personalized delivery of advice. They prefer paperless speedy implementation of decisions and easy online access to their simple portfolio snapshots customized to show them what needs to be seen rather than crowding the performance report card with unnecessary complex data.
According to Morgan Stanley research, millennials are the largest drivers of net new credit demand and will keep this position for the ensuing few decades. While many members of Generation Z are still considered to be "kids," they will also soon enter the crucial 25–40 age range, which is considered to be the prime spending period. These two generations are positioned to shape the direction of banking in the future because of their distinct spending and saving patterns and global worldview.
David Donovan, EVP of Financial Services, Publicis Sapient said, "Modern banks must switch to a digital-first strategy that streamlines customer service and automates procedures as more of their customers come from this segment of "always online" users. They must quicken the pace of digital transformation in order to produce more cutting-edge, individualized fintech goods and mobile transactions."
David Donovan said in order to draw in
more clients from this segment, banks and other financial institutions should keep the following thing in mind.
Due to their extensive exposure to online advertising as children, millennials and Generation Z have a strong sense of scepticism about it. Instead of only promoting their products, banks should focus on providing experiences, entertainment, and personalized interactions to draw in customers. Banks can implement chatbots as well as unique features like EMI calculators, live advisory support, financial planning tools, and online community discussion forums to create an interesting and educational customer experience. Additionally, promoting financial literacy using video or other multimedia will be more effective at luring young customers than
of Gen Z customers express frustration with banking procedures.
This suggests that banks and other financial institutions must analyse their customer experience at a micro level in order to win over younger clients and foster loyalty
traditional advertising.
Even though they spend most of their time online, millennials and members of Generation Z have demonstrated a desire to form more meaningful emotional connections. By providing real-world human interactions through audio and video chat features in mobile banking applications, banks can capitalize on this demand. This can lessen the transactional element of meetings, promote deep professional connections, and guarantee increased client loyalty.
A personal touch is one of the greatest deal-breakers for millennials and Gen Z clients. They desire a special, tailored financial experience that makes them feel
important and recognized. So, a major differentiation that will keep their interest is hyper-personalized messaging with customized content. Financial institutions ought to spend money collecting, analyzing, and interpreting data about Gen Z and millennials' preferences, behaviour, and shifting demands. They should then make relevant touch points and tailored product suggestions using this information.
According to a recent study, 83% of Gen Z customers express frustration with banking procedures. This suggests that banks and other financial institutions must analyse their customer experience at a micro level in order to win over younger clients and foster loyalty. Rather than using the phone or visiting a branch, Gen Z prefers to do their financial transactions online and anticipates instant access to customer service. Banks should put an emphasis on simplicity and ease of use
Gen Z have a strong sense of scepticism about online advertising. Instead of only promoting their products, banks should focus on providing experiences, entertainment, and personalized interactions to draw in customers
since customers seek frictionless and seamless experiences. With 97% of Gen Z using a mobile device to access their bank accounts, banks should also be building their mobile apps for better, more seamless user experiences.
Any organisation, including those in the financial services industry, must provide engaging customer experiences if it is to expand consistently. To ensure that young people are contacted in a way that demonstrates they are "known" and "understood," banks will need to use data at a granular level. In order to be more engaging with the use of in-app filters and live streams, they need to be utilizing technology for algorithms that better suggest relevant recommendations provide a personalized shopping experience, reduce friction between purchase desire and checkout, and do all of the aforementioned. The expectations of Generation Z include immersive experiences, possibly in the metaverse. Additionally, banks should think about investigating the application of VR and AR for customer engagement and service delivery.
A majority of millennials and Gen Z are stressed about their financial future, coupling a lack of financial literacy with high educational debt, lower savings and rising expenses. They want a banking partner who is aware of their particular issues and way of life and offers solutions in line with those considerations. Banks must provide useful solutions that will aid these clients in achieving their objectives if they are to be viewed by these demographics as the partner of choice. An example of this is an in-app investment feature that educates customers about shares, mutual funds and bonds and provides ‘how-to’ content on the first steps in investing wisely.
Online time is a major pastime among Gen Zers. The majority of them acquired their first smartphone around the age of 12, having
grown up with fast-speed internet in their pockets. They are also the biggest gamers and users of social media. Gen Z in the US heavily relies on social media platforms for connecting, sharing, and consuming content. In actuality, 61% of them access the daily news through social media. This offers banks a fantastic chance to highlight their presence on all of the major social media platforms with platform-catered content that goes beyond offering a service for sale.
The average attention span of members of Generation Z is eight seconds, according to research. If you don't quickly capture their interest, you can lose them forever. Bank participation will need to be more logical. Participating on social media will also assist in keeping a pulse on current events and continually increase accessibility to new payment methods. In order to maintain Gen Zers' attention and perception of the value of the service, this can inform ongoing enhancements to its apps and features.
When catering to a generational cohort
61% of them access the daily news through social media
Gen Z are the biggest gamers and users of social media.
According to research, the average attention span of members is eight seconds, and around
that creates digital trends rather than follows them, banks must also boost their technological game. The most recent developments in fintech, including blockchain technology, robotic process automation (RPA), microservices-based architecture, cryptocurrency, and others, must be actively implemented by banks. Banks can also concentrate on creating immersive, featurerich platforms that will persuade these clients of the technological prowess and customer obsession of their financial partner.
In addition to experimenting with cutting-edge new technology, banks must make sure that their fundamental structures are sound. Making mobile banking for customers seamless is a good illustration of this. Nearly 98% of millennials and 99% of members of Generation Z use mobile banking apps to conduct normal banking operations, according to the Digital Banking Attitudes Study by Chase. Banks should offer a userfriendly, entertaining app that consumers may use independently for as many transactions as feasible, without having to go to a branch or phone a helpline, to guarantee that these customers have a seamless journey.
According to a recent Salesforce survey, only 50% of millennials and 42% of Gen Z trust a firm, with customers citing lack of trustworthiness as the most important area in which brands needed to improve. In addition, 59% of Gen Z and 57% of millennials are worried about how businesses handle their customer data.
Although the poll included various industries, it is an indication of the young consumer's innate desire to work with trustworthy, moral partners. Similar to Millennials and Gen Z, a bank's reputation and business practices are just as significant to them as the services it really provides. Therefore, a modern bank must make sure it has a culture of openness, abides by strict data privacy laws, supports causes outside of its own industry, and presents itself as an organisation with integrity and honesty.
The Fintech sector will face new problems as a result of millennials and Generation Z's fast-changing consumer expectations and behaviour. These clients demand that banks develop a distinctive strategy—one that fuses cutting-edge technical know-how with traditional values like honesty and trust. Banks may easily survive in the competitive environment and grow in this digital-first era by adopting new digital technology and building strong relationships with their young customers.
According to the most recent statistics from Morgan Stanley Research and AlphaWise, the company's in-house survey and market data research arm, 47% of 16 and 17-year-old smartphone owners use mobile banking choices. This percentage rises to 71% among 18 and 19-year-olds. These numbers are from a poll of 6,000 consumers, aged 16 to 34, that Morgan Stanley Chief US Economist Ellen Zentner and AlphaWise derived from a survey in 2022.
The survey also provided information about Millennials, who in 2022 became the
50 % only of millennials and 42% of Gen Z trust a firm, with customers citing lack of trustworthiness as the most important area in which brands needed to improve
most populous generation in the US at 73 million, overtaking the 72-million-strong post-war Baby Boomers. Millennials are currently and will continue to be the primary driver of net new-credit demand, according to Morgan Stanley loan predictions, which were generated from forecasts of historical household formation, population growth, consumer borrowing trends by age, and income growth.
Banks have been waiting a while for this next pocket of growth. Gen X, which hit its 25 to 40-year-old financial stride during the financial crisis, "is not providing as big a boost to lending as Baby Boomers did," Ellen Zentner said. Millennials are expected to pick up the slack.
"Going forward, our expectation is for loan growth of 4%, in line with the historical average, excluding the early 2000s boom period leading up to the housing crisis," she added.
According to Morgan Stanley’s population forecasts, by 2034, Gen Z will be the largest generation in the history of the United States, with a peak of 78 million. Their projections also indicate a higher rate of increase than those made by the US Congressional Budget Office. By 2040, Gen Z may be responsible for one-third of all consumer debt in the United States as their total borrowing levels will rise in the 2030s.
Today, however, the majority of Gen Z are still children and do not use banks. They could still influence how the industry develops.
Betsy Graseck, Morgan Stanley US Large Cap Bank Analyst and Global Head of Banks and Diversified Finance Research, said, "Why? Because some kids get their cell phones as young as 10 years of age. They can have their own social media account from 13 years of age. But they can't get a bank account on their own until 18. So, banks are missing this critical five-year window, where young people are beginning to live their lives connected to their smartphones."
This includes using mobile phones to
send and receive money, pay at the register, and make online and in-store purchases. Banks will need to make investments in teen banking if they don't want to fall behind as Fintech and Big Tech competitors expand their payment functions.
"When these kids turn 18, the banks will have to fight to explain why these consumers should use them as their primary financial institution, not just as a back end," Betsy Graseck added.
In fact, between 50% and 80% of Gen Z smartphone owners already use mobile banking. According to the Morgan Stanley survey, this is essentially on par with the pace of the Millennial generation.
Banks will need to continue investing in mobile platforms for teens in order to be on the cutting edge in terms of features, functionality, and interface. Betsy GraseckTeen-driven accounts are active in this direction. Although teen accounts need parental approval, they provide teenagers access to their money and, more crucially, allow them to join the banking community.
"These accounts would allow younger users
"Some kids get their cell phones as young as 10 years of age. They can have their own social media account from 13 years of age. But they can't get a bank account on their own until 18. So, banks are missing this critical five-year window, where young people are beginning to live their lives connected to their smartphones"
Only 47% of Gen Z respondents claimed to have an account with a traditional bank, credit union, neobank or technology company
More than 80% of Gen Z and millennials are using a money transfer app
53% of Gen Z respondents and 42% of millennials wanted to be able to find their answers online, while only 27% of baby boomers preferred online channel
A survey by Bankers stated that around 85% of Gen Z were satisfied with their overall banking services experience, though baby boomers were much more likely to be very satisfied
More than 80% of Gen Z said they trust their primary financial service provider with their personal financial data
to learn how to monitor their own budgets and spending, all with a parent's permission and ability to monitor the account. While several banks offer this today, they are more the exception than the rule. Saving and spending tools are also a plus," Betsy Graseck said.
Efforts like these will help put the banks' brands front and centre, not simply as a backend function that facilitates transactions. In order to appeal to the Gen Z generation, which has higher expectations and different habits, traditional customer service will also need to alter.
"Banks still need to ensure that their call centres are offering excellent customer service, but they also need to invest in Artificial Intelligence and other technologies that can seamlessly address customer questions and needs, without requiring a phone call, and without becoming a frustration point. Mobile or digital chats with customer service representatives are critical for this generation which prefers texting to an intrusive phone call," Betsy Graseck concluded.
Banks, clients, and investors should prepare for additional experimentation
along the way as well as adjustments to strategy and tactics, particularly as current technology advances. As a result, financial services ought to be more convenient and efficient. Customers would benefit from this, and it might eventually increase bank growth and bottom lines.
Gen Z is an intriguing generation of young people that respect both technology and personal financial stability. They will keep pushing the financial sector to reimagine traditional banking as more of them mature.
Gen Z will require a larger focus on uniqueness and interaction if banks want to win them over. Open banking and gamification are two excellent examples of how financial institutions are embracing new technologies to provide a more engaging banking experience.
Gen Z will undoubtedly have a significant impact on the development of the world's financial markets because of its size and diversity. For banks to remain competitive among customers in this age group, they must consider more than just providing digital services.
Gen Z will require a larger focus on uniqueness and interaction if banks want to win them over. Open banking and gamification are two excellent examples of how financial institutions are embracing new technologies to provide a more engaging banking experience
Banking hasn't been the same after COVID-19. People are now opting more for digital and personalised solutions, despite lockdowns becoming a thing of the past. Customers in the 21st century now prefer mobile banking rather than visiting the branch. Technology, which was brought by the fintech in the financial sector, is now being embraced by the legacy banks as well. The customer experience (CX) has now become the established and key differentiator and the relationship between banks and customers is going through a drastic change.
A study from KPMG UK suggests that at least one-fifth (20%) of bank customers have not visited the branches since the lockdown removal. Banks are now adapting services accordingly, with research revealing that more than 300 bank branches across the United Kingdom are facing closure prospects by 2022 end and the
number will be bigger in coming years. All these factors suggest that the banking sector is going through a major transformation, with technology being the key guiding factor. The term called 'Customer Experience' (CX) has become important more than ever.
"No two customers are alike, and each consumer expects you to know them, understand them and reward them with a level of contextual experiences that extend from product creation to service delivery… across the entire customer journey. Effectively executed, this level of personalization will support proactive engagement at the time and in the channel where the customer benefits the most," remarked
Jim Marous, Co-Publisher of The
Financial Brand, CEO of the Digital Banking Report, and host of the Banking Transformed podcast in a recent article.
"Organizations in every industry are making major investments to improve customer experiences. An estimated $6.8 trillion of direct investments in the digital experience is expected through the next two years, according to IDC, with 75% of organizations pursuing comprehensive digital transformation. Differentiating an organization requires customized solutions that can deliver contextual experiences," he wrote further.
“Banks need to recognize how to keep customers engaged through their banking experience. Personalized tools to proactively build consumer portfolios are vital for keeping the customer feeling seen and understood,” Jim Marous stated.
A Decision Intelligence Platform allows banks to understand customers' needs based on the latters' lifecycle, while deploying AI-based recommendations for beneficial engagements
between customers and financial institutions. With a centralized and updated customer profile, banks can interact with customers as a “financial concierge” for sales, service and security solution optimization.
The platform also allows financial institutions to deploy insights internally and externally at a fast speed and large scale. As per the International Data Corporation (IDC), by 2025, 75% of businesses will leverage digital decision-making platforms to become more agile and adaptive.
"The democratization of data within an organization improves collaboration between business units and allows all employees to support the customer experience. Equally important, insights can be delivered securely," commented Jim Marous in his article.
"In making a decision intelligence platform more valuable, first-party insights can be enhanced with third-party data for highly contextual recommendations delivered across both internal and external communication channels. Imagine doing a test drive as part of buying a new car and receiving a personalized financing offer based on an instant credit score before leaving the auto dealership. Or a financial institution could provide reviews and ratings for vehicles like the one just test driven. This level of realtime engagement can increase the lifetime value of the customer by instilling trust in the use of data on the customer’s behalf," he remarked further.
A Decision Intelligence Platform also allows for the instant simulation of business outcomes based on “digital twins” of the existing customer database, thus using AI to drive alternative scenarios and business impacts. It enables safe testing of financial products, pricing and processes across the organization, without affecting daily business.
These platforms allow financial institutions to optimize and monetize their people, data
percentage of adults with a digital bank account in 2022 and one will have by 2027
and analytics for more intelligent decisions, thus remaining future-ready. The process involves leveraging data to create instant insights and enables smart actions to achieve the desired outcomes.
“Digital decisioning provides the endto-end connectivity that unifies the four stages (data>insights>actions>outcomes) with a single platform to deliver enterprisewide visibility, scalability, and decisioning transparency,” states eBook of software and data analytics company FICO.
In short, the platform is all about creating a 360-degree uniform view of the customers, allowing banks/credit unions to support a seamless experience at every touchpoint of the customer journey. It works with the combination of first-party data, shared decision assets like attributes, models and segmentation, along with third-party data for an accurate picture of the customer's financial health and his/her priorities. Decision intelligence platforms streamline and simplify data aggregation and management, at a fast speed and big scale.
Successful insights creation needs an approach which will align with existing banking systems, processes, people and even culture. A customer-centric financial product takes care of customer patterns, models, events and then recommends solutions which show empathy towards the concerned individual. While banks know in great detail about their customers, the real challenge remains to deploy financial recommendations, which show empathy and create a positive engagement. Basically, the whole process is about the perfect combination of automated and human interactions, giving customers a positive experience.
The final outcomes of the bank-tocustomer communication create new data and insights, thus beginning a new highspeed learning loop.
"This flywheel effect continually adapts and calibrates decisions in realtime, improving innovation, efficiency, internal collaboration and financial results.
Leveraging data, advanced analytics, automated communication and a continuous learning loop, banking organizations can empower both internal business users and customers. By deploying smarter, faster, more contextual engagement, banks and credit unions will increase trust and generate higher lifetime value by decreasing relationship attrition," writes Jim Marous in his article.
Legacy banks and independent digital banking ‘Twins’
"Digital banking transformation has become an imperative for banks and credit unions. Unfortunately, the process of transforming a traditional bank into a digitally-focused institution can be complex and challenging, requiring significant changes to business processes, technology systems and organizational culture," writes Jim Marous in his article.
"In research done by the Digital Banking Report, and from discussions with banking leaders on the Banking Transformed podcast, one of the biggest challenges to digital banking transformation is changing a traditional bank’s organizational culture. In becoming more digitally focused, banks and credit unions must shift to a more collaborative and agile culture where meeting customer needs at speed and scale is the priority. This requires collaboration and support from leaders at all levels of the organization, as well as a willingness to embrace change and take risks," the co-publisher of The Financial Brand commented.
The fact remains that the existing technology of legacy banks lacks the flexibility required for digital transformation. Replacing/ modernizing these systems can be a costly and time-consuming affair. Now, these banks are planning to build entirely new, digital organizational units. However, Bain & Co. research has found that some of these digital banking units have flopped and some have succeeded, thus providing a mixed picture. The research also saw the financial institutions interviewed by it justifying the formation of these separate digital banks as an "opportunity
One of the biggest challenges to digital banking transformation is changing a traditional bank’s organizational culture. In becoming more digitally focused, banks and credit unions must shift to a more collaborative and agile culture where meeting customer needs at speed and scale is the priority
to build a new, high-growth business that leverages the parent’s capabilities — a form of portfolio diversification."
These banks’ focus on the endeavour and long-term investment took centre stage because of a significant opportunity/threat that would disrupt their businesses, stated the survey.
The research said that building a digital banking unit makes sense "when an incumbent bank faces disruption by fintech competitors, wishes to serve a segment where a digital banking model can be used for market entry and growth, sees their existing core growth stalled or reversing, has gained commitment from executive management, builds or already has the capital to invest to support the digital bank, believes in the digital banking business model as a way to future-proof the existing organization."
However, just because of a few failed experiments, it doesn't mean that the idea of building a separate digital bank within a parent legacy organization is a bad idea.
A separate digital bank can help a traditional financial institution to reach new customer segments, especially the lot consisting of younger, tech-savvy individuals who prefer to bank online, unique business categories like sole
proprietors/the medical community, or even segments with lower customer lifetime value. By offering exclusive digital products and services to these sections, the bank can attract newer customer landscapes, which they wouldn't have been able to cover with their traditional arms.
The legacy organization consists of talent pools, decades of experience, significant sources of existing technology and investment funding, all of which fintech firms lack. Most importantly, the digital banking unit can leverage the trust and brand equity, built by its parent business over multiple years. All of these can give them an advantage over the fintech rivals.
A separate digital bank brings the cost efficiency factor as well, as a traditional institution can operate more efficiently by leveraging digital channels and automating processes, thus reducing required headcount, lowering operating expenses and increasing profitability.
Digital banks offer a more streamlined user experience compared to their traditional counterparts. A legacy financial institution can offer customers the convenience and speed of digital banking with lower costs and increased engagement opportunities. In fact, the Bain & Co. research found that the customer advocacy of the digital unit exceeded that of the parent bank.
Having a separate digital banking unit within a legacy financial organization can enable the bank/credit union to become a highly competitive digital player. Much of the profit potential in 21st-century banking resides within the digital sector. These digital banks are more adaptable to marketplace changes compared to their traditional counterparts. Through its separate digital bank, a traditional financial organization can experiment with new digital products, services and delivery methods, apart from being customer friendly.
"Far too many financial institutions find
excuses not to move forward as opposed to taking steps towards creating an improved learning loop and differentiated decision intelligence platform. Define what area of your business requires the most attention and determine what is needed from a data and analytics perspective to achieve your goal," Jim Marous added.
Banks/credit unions are now focussing on generating quick profits in months, rather than waiting for years.
“Projects that have good alignment to your strategic vision and are fast time to value are often great candidates to start with,” states FICO.
In short, time is the new capital here. However, this new approach is facing potential obstacles like legacy mindset around new technology/processes, compliance requirements, accessing 'clean' data, lack of support for AI/automation, and lack of internal skills and talent.
To address these challenges, the banks need to engage third-party solution providers, who, in turn, can use case studies across the industries to provide the best-resultoriented blueprint for these legacy banks. Collaboration with these external solution providers is the key for traditional financial institutions to excel on the digital path.
Also Bain and CO's research found that “the economics of (a separate digital bank) model remain a work in progress for most banks, with the particular challenges of moving from a rapid growth phase to delivering sustainable returns, and from small to large scale.”
Talking about independent digital banking 'Twins', a major challenge comes in form of divisiveness within the financial organization, along with the chances for internal competition for leadership attention, investment and talent.
A digital banking unit has to be agile and innovative, thus prioritizing speed, experimentation and result-oriented collaboration. The question of whether a legacy organization can form such a
maverick mindset becomes crucial as well. These banks depend on legacy technology which is unsuitable for digital banking. Heavy investments in breakthrough platforms are another challenge here. These digital banks also need corporate leaders and staffers with different skill sets than their traditional counterparts. These professionals need to be comfortable with data analytics, programming, and user experience design. While these digital talents are high in demand, traditional banks struggle to attract and retain such digital talents. Seamless integration is another potential roadblock here, since a digital banking unit needs to be integrated with the traditional counterpart’s operations to ensure a seamless customer experience. With a completely different set of technologies and processes becoming part of a legacy organization's operational structure, seamless integration can become a difficult job. While the digital banking unit must be aligned with the existing legacy financial institution’s brand values, it also has to offer a new, refreshing experience to the customers.
Conclusion
Talking about 21st-century banking, legacy organizations need to respond to changes and opportunities in their sector faster than ever. Not only do they need to rethink their business models, understand the breakthrough technologies and invest in them, but most importantly, they need to ensure that these changes are getting integrated within their legacy frameworks seamlessly.
Adjusting to such a maverick and agile approach can be challenging, especially when a bank has had its successes with more traditional approaches. And most importantly, the agile approach can only work when the financial institution is tied up with a reliable decision intelligence platform.
To address these challenges, the banks need to engage thirdparty solution providers, who, in turn, can use case studies across the industries to provide the best-resultoriented blueprint for these legacy banks
As consumer demand is threatened by inflation, the US banks are preparing for an economy that will deteriorate next year. Jamie Dimon, chief executive of JPMorgan Chase, said that while consumers and businesses are doing well, this situation might not last much longer as the economy weakens
In addition to warning about threats to the country's financial stability, the Bank of England (BoE) disclosed other measures aimed at calming markets that had been shaken by the UK budget. The BoE and the UK government have already taken steps to calm the markets.
The move comes after the pound hit a record low against the dollar and UK bond yields skyrocketed when former PM Liz Truss presented debt-fueled tax cuts in the budget. The central bank announced that it was expanding the scope of daily purchases of UK government bonds, or gilts, after
and inflation reduces consumer purchasing power.
"Those things might very well derail the economy and cause this mild to hard recession that people are worried about," he said.
According to Dimon, US consumers have $1.5 trillion in more savings thanks to previous stimulus
measures, but they may run out by mid-2023. Additionally, he stated that after raising rates to 5%, the Federal Reserve may halt rate increases for three to six months, but that this may "not be sufficient" to reduce rising inflation. In November, the US central bank increased interest rates for the fourth time in a row by 75 basis points, bringing them to 3.75%–4%, but it also hinted that it hoped to switch to smaller increases as soon as its next meeting.
Meanwhile, stock markets around the world have fallen amid concerns about economic stagnation next year. European shares are down by weakness in healthcare and ratesensitive tech stocks.
launching a temporary facility to ease liquidity constraints.
In a statement, the BoE said the latest action would "act as a further backstop to restore orderly market conditions." It noted that "the starting of December has seen a further significant repricing of UK government debt, particularly index-linked gilts," which the central bank will now purchase
under its wider operation of bond purchases.
"Dysfunction in this market, and the prospect of self-reinforcing 'fire sale' dynamics pose a material risk to UK financial stability," it added.
Meanwhile, British unemployment fell to a near 50-year low at 3.5%. Wages, however, continue to be eroded by sky-high inflation.
The 'Big Four' Australian lenders, Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corp, and Australia and New Zealand Banking Group, said that they will increase house loan rates by 0.25% annually. The action coincides with a 25 basis point increase in the benchmark lending rate by the nation's central bank earlier in the day. As of now, Australian banks have increased borrowing charges in accordance with the Reserve Bank of Australia's (RBA) lead.
After the RBA's most recent boost, which was milder than the 50 basis point, bank shares increased. The central bank claimed that because rates had already been significantly boosted, it had delayed the pace of monetary tightening. The financial index had its highest day since June 2020 as it closed 4.2% higher. Westpac's rates will go into effect, while CBA, ANZ, and NAB's new rates will start to apply from November 2022.
While NAB claimed its savings and term deposit rates were "continually under review," Westpac, ANZ, and CBA also increased interest rates on several of their deposit products.
Meanwhile, the RBA raised its cash rate to a nine-year peak of 2.60%, the sixth hike which included four outsized moves of 50 basis points.
Stocks opened under pressure in Asia as US shares fell and Treasuries showed hints of the possibility of a recession. South Korean, Australian, and Japanese stocks all experienced losses, but Hong Kong futures increased. Following the S&P 500's fifth day of losses, contracts for US benchmarks declined, closing to its 100day moving average. The bonds increased in Australia, resulting in a 5 basis point decrease in the 10-year yield to 3.31%. Treasury rates decreased throughout the curve over the course, highlighting growing wagers on the world's largest economy experiencing a hard collapse. While 30-year yields fell to their lowest level since September, a crucial portion of the US curve hit an extreme which was not
seen in four decades. As trading resumed for the Asia session, actions remained substantially unaltered. After ending a rise, a measure of the dollar showed no change. As investors continued to concentrate on China lifting COVID restrictions, the offshore yuan wavered below the sevenlevel to the dollar.
According to Cathie Wood of Ark Investment Management, the bond market looks to demonstrate that the Federal Reserve is engaging in "serious error" in monetary policy. The risk of deflation is considerably greater, she wrote.
The bonds increased in Australia, resulting in a 5 basis point decrease in the 10year yield to 3.31%
GBO correspondent
With the return of Luiz Inacio Lula da Silva to office as Brazil's new President, the country has a chance to correct the wrongs of the previous four years under Jair Bolsonaro and restore the nation on the path of equity-oriented growth. The socialist Workers' Party leader known as Lula has a reputation for excellence and popularity. His first two administrations, which spanned the years 2003 to 2011, used a mixed economic strategy that combined market-friendly policies with substantial social spending. This approach enabled around 25 million Brazilians to escape poverty while simultaneously fostering rapid economic growth. However, years of difficulty ensued.
Lula's hand-picked successor, the former revolutionary Dilma Rousseff, was impeached by a hostile Congress. The story of Brazil's economic prosperity vanished under Jair Bolsonaro, the far-right, ultra-nationalist President who supports the country's terrible military dictatorship, while hunger rose and its healthcare system disintegrated. At least 7,00,000 people died due to COVID-19 as the President downplayed the threat of the pandemic and his administration botched up its crisis response. Due to the initiatives are taken by Jair Bolsonaro the Amazon rainforests have been rapidly deforested.
During the Bolsonaro administration, Lula, who had been found guilty of corruption before being exonerated by the Supreme Court, was supported by Brazil's liberal, working-class, and progressive groups. Lula, who departed office in 2011 with an approval rating of 83%, mobilized the opposition, helping
Experts say that significant negative risks still exist in 2023 due to the high level of uncertainty
them win the presidential run-off by a small but resounding margin. Lula said that he will put an emphasis on peace and rebuilding. To his advantage, a new pink tide is sweeping through South America. Leaders on the left in nations like Venezuela and Chile will embrace his programme. As he intends to spend an additional $28 billion this year, Lula has already succeeded in getting a constitutional amendment passed that suspends Brazil's expenditure cap.
Many political experts say the journey would not be easy for Lula. One such example is the protest that happened just after the inauguration where Jair Bolsonaro fled Brazil, and his supporters violently protested, urging the military to "shut down the government." The challenges facing the economy will be worse if social tensions remain high. The commodity boom that helped fund Lula’s social welfare spending in the early 2000s is non-existent today. Experts say he needs to unify a divided nation, and rebuild the economy, the healthcare system, and the public's confidence in the government. Lula should move gradually, engaging in
negotiations with the various factions of Brazil's aristocracydominated political system, and working for modest but significant improvements in the country's wealth distribution.
Jair Bolsonaro increased cash handouts and capped gasoline and energy taxes at the end of his term, which increased Brazil's debt load. The nation's debt-to-GDP ratio is currently close to 90%. High debt loads have higher interest costs, which reduces government spending on items like healthcare and education. Undoubtedly, inflation has decreased recently but Brazil's economic situation is very fragile. Lula’s Workers Party (PT) has already hinted at maintaining the recently approved boost to social welfare.
Nelson Barbosa, Brazil’s minister of finance from 2015-16, said the boost to social welfare won't last forever. "Assuming growth rebounds towards the end of next year, support measures will have to be rolled back. That said, the focus will be on stimulating growth and then reducing
debt", Nelson Barbosa added.
PT economists have voiced concerns about Brazil's present fiscal regulations in light of Lula's emphasis on public investment. The government's expenditure cap, which restricts budget increases to inflation, has received particularly harsh criticism.
"This fiscal protocol is not fit for purpose. It should be replaced by a new rule which allows spending to grow in real terms and is based on a long-term fiscal scenario for public debt," Barbosa said.
The convoluted tax structure in Brazil has to be simplified, according to the PT. Some observers predict that Lula would keep some of Jair Bolsonaro's policy recommendations, like the consolidation of regional sales taxes into a single national value-added tax. In other places, PT is rumoured to be proposing a more progressive tax system that would increase exemptions for people with low incomes. Aside from the state of the economy, the PT earlier promised to undo Brazil's 2017 labour reform law, which reduced the bargaining power of employees. However, the party has softened its position in recent months.
According to Marcos Casarin, Chief Economist for Latin America at Oxford Economics, Lula may try and adjust the bill by reintroducing mandatory funding for unions. He may also try to raise the minimum wage, but that would cost him politically.
During the election campaign, other talking points included increased pay for 'gig' workers. The COVID-19 exacerbated socioeconomic vulnerabilities in Brazil's sizable informal economy, which accounts for 40% of the country's employed workforce. To assist these workers, Mr Marcos pointed out that “a tax indexed to app companies’ revenue could be explored”, but stressed that, “while these measures would provide a fiscal lift, they are not a priority for Congress.”
The far-right consolidated its control over the
National Congress of the country in the firstround elections on October 2. All deputies in the house and one-third of senators were reappointed by voters. In the former, Jair Bolsonaro’s PL won 99 seats, making up the largest single-party bloc.
PL and its right-wing allies won 19 of the 27 seats up for grabs in the latter. In the upcoming years, it is now widely anticipated that Bolsonaro-supporting parliamentary forces will try to stymie PT's programme.
"The terrain is very treacherous for any political leader…passing economic reforms will be an uphill battle,” noted Alfredo Saad-Filho, professor of international development at King’s College London. Lula’s politics, in turn, may be forced to shift more to the centre.
"Lula is arguably the most talented politician of his generation and if anyone can heal the country’s fissures it’s him. But given the political landscape, he will have to make big concessions over the next four years. I’m not optimistic about progressive reform," Saad-Filho added.
So far the financial markets have been optimistic about Lula's return. Fernando Haddad, Brazil's new finance minister, allayed market fears by downplaying the possibility of excessive state spending.
In opposition to Jair Bolsonaro, Lula was compelled to establish a sizable political church at the same time. This, together with vehement parliamentary resistance, will probably be reflected in an economic policy that is moderate.
The result is that Lula won't be able to benefit from a growth spike that occurred in the 2000s. Additionally, he is coming under increasing pressure to decarbonize Brazil's economic strategy and reassert greater government control over Petrobras, the state-owned energy corporation. In other words, he has enormous challenges coming ahead.
Lula may try and adjust the bill by reintroducing mandatory funding for unions. He may also try to raise the minimum wage, but that would cost him politically
Despite favourable demographic trends, structural limitations in Brazil's economy over the past ten years have resulted in a meagre GDP growth of 0.3%. Ineffective sectoral state intervention policies, a complex tax system, a burdensome business environment, slow human capital accumulation, low savings, and compression of public investment to accommodate rising current spending and rising pension obligations are all contributing factors to the weak productivity growth.
Brazil suffered one of the greatest mortality rates worldwide as a result of the COVID-19 pandemic, but since the middle of 2021, a quick vaccination programme has helped things get back to normal. In Brazil, 86.8 % of the populace had received the first dosage of the vaccine as of September 2022, and 79.4 % of people had completed the initial immunisation schedule.
The economy recovered in 2021 (+4.6% y/y) on the strength of the services sector following a pandemic-induced recession in 2020 (-3.9% y/y). The substantial countercyclical fiscal reaction adopted in 2020 through social protection programmes lessened the pandemic's impact on poverty, but it also increased the reliance of households on public transfers, increased the primary deficit, and increased the Gross Debt of the Government. Although Brazil's labour market is showing strong signs of recovery, with the unemployment rate hitting 8.9% as of September 2022, the unequal labour market impacts reinforced pre-existing vulnerability profiles as bigger job losses were concentrated in low-skilled and highly insecure jobs.
Significant negative risks still exist in 2023 due to the high level of uncertainty. The global economic backdrop further weighed on Brazil’s recovery, including
inflation and rising policy rates—both in Brazil and in the world—and supply bottlenecks related to the ongoing war in Ukraine, causing commodities prices to soar and thus further reinforcing the inflation pressures. Additionally, concerns remain about anaemic potential growth and slow policy reform continues. Even though the continued fiscal consolidation accomplished throughout 2022, Brazil's most pressing economic concern continues to be restoring fiscal sustainability.
The substantial decline in poverty and inequality rates starting in 2020 was just temporary. Employment levels, labour force participation rates and the proportion of formally employed people all declined in 2021 compared to 2019. In the final quarter of 2021, unemployment rates reached their pre-pandemic levels, but they are still high. Higher poverty rates could result if labour income is unable to fully offset the drop in government handouts. Fewer employment prospects and a slower return to the workforce have made female workers and households headed by women more vulnerable.
In order to reduce poverty from 26.2% in 2019 to 18.7% in 2020 (based on the $6.85/day PPP level), the government provided quick and generous temporary relief. But in 2023, poverty is projected to rise to 28.4% of the population. Even though a new round of Auxiliary Emergency Income Support was granted and extended till December 2022, the benefits were lower and the covered population was smaller. In addition to a sluggish labour market recovery and rising costs, particularly for food, the real worth of the income of those at the bottom of the distribution fell dramatically. The next round of policy formulation needs to address the problem.
2015 - 1.83
2016 - 1.79
2017 - 1.36
2018 - 1.45
2019 - 1.54
2020 - 1.66
2021 - 1.71
2022 - 1.75
From 2015- 2022 (In trillion US Dollar)
Source: Statista
Russia's invasion of Ukraine in 2022 has given another blow to the global economy, which has already been reeling due to the COVID aftershocks.
If the economic warfare between Russia and the United States-led Western bloc has been negatively affecting the energy sector, other factors like repeated COVID lockdowns in China and the monetary policy tightening race between central have been worsening things further.
So we have two things to worry about, inflation and a possible recession, for the next few months or to be realistic, for the next couple of years. The United Kingdom has been the worst sufferer of this whole crisis. Not only has its internal GDP slowdown cost the country a fall in the ranking of economic superpowers, but the political instability is also making the matter even worse. The country is on the
Lifestyle inflation is an increase in spending when an individual's income goes up
brink of entering a recession.
With Russia cutting down its energy supplies to Europe and the G7-led Western bloc has now gone for the price cap mechanism to hurt Moscow's trade of oil and natural gas. The British population is in a dire state as of now, be it paying energy bills and rent or shopping for daily necessities. Reports even tell that some regions of the country are going through food crises as well, with double-digit inflation figures hitting global headlines.
Moving on from the UK, let’s talk about the United States. Although its inflation didn't touch the double figures, still it has been well over the 5% mark, thus forcing the Federal Reserve to go for monetary policy tightening, which, in turn, has made the dollar stronger (and simultaneously making imports an expensive affair for emerging and small economies).
Even though the domestic job market has
been resisting the super-high inflation in a sound manner, a new phenomenon has emerged in terms of job cuts, as tech firms, which onboarded a huge number of professionals during 2020 and 2021, as communication technology witnessed its boom due to the remote work culture and social distancing amid COVID outbreak, is now witnessing a slowdown.
As per a recent report from Bankrate, full coverage auto insurance has hit a high of $2,014 a year due to inflation in the United States, along with labour shortages and supply chain challenges. It is now accounting for 2.9% of the average US household income.
Double-digit inflation in the UK is now forcing expat investors to rethink their retirement plans. The savings target has shifted the minimum cost of day-to-day living upwards by almost 20%, as per reports.
The Pensions and Lifetime Savings Association (PLSA) has calculated the least money a single retiree can get by is £12,800 a year, up from £10,900. At the same time, a couple needs a yearly income of £19,900, up from £16,700. For a moderate lifestyle, the
numbers rise 12% to £23,300 for a single saver and 11% to £34,000 for a couple.
In short, there is no immediate escape from this economic turmoil. Inflation has gone up to that level, where even the salary revisions are failing to match up with the increasing costs. While many news reports are talking about the effects of inflation and recession on the global economy, in this article we talk about another lesser-known phenomenon called 'Lifestyle Inflation', something which becomes important in an environment where both job security and financial well-being have been put under stern test.
Lifestyle inflation is an increase in spending when an individual's income goes up. It tends to become greater every time as a salaried individual, despite getting a pay raise, finding it difficult to get out of debt (loans, credit card bills and EMIs), thus compromising on bigger goals like retirement savings. Under lifestyle inflation,
people get stuck in a cycle of paying bills and then just managing to save enough money to survive a month.
Between July 27 and August 29, 2022, financial group BMO surveyed some 3400 American adults, as part of its research called 'Real Financial Progress Index'. The result showed that some 84% of surveyed individuals anticipate an incoming recession. Some 76% of the respondents even stated that they were making lifestyle changes to deal with the economic slowdown.
While some 34% talked about financial adjustments like delaying house or car purchases, 29% were concerned about their debt payments. The remaining 28% spoke about cutting back on their holiday spending. The study also saw 74% of the surveyed Americans expressing concerns about inflation being increased.
“People are feeling less confident than they were a year ago or even a quarter ago,” said Tina DeGustino, director of consumer strategy at BMO, while interacting with CNBC.
A recession, by a layman's understanding, happens when two back-to-back financial quarters register negative economic growth, along with massive job losses.
The US economy, for example, contracted in both the first and second quarters of 2022 by 1.6% and 0.6%, respectively, according to the Bureau of Economic Analysis.
Despite the unemployment rate maintaining a low of 3.5%, the recent spurt of layoff reports adds a new headache for households and policymakers alike.
Another worry has been the persistently high inflation, which reached its record high of 8.2%. The Federal Reserve too has been on an interest rate hike spree since the beginning of 2022, with the goal of making the cost of borrowing money more expensive, thus reducing spending, which will slow consumer demand and ease inflationary pressure. However, falling consumer demand also means job losses.
While interacting with CNBC, certified
financial planner David Mendels said, “If we do go into a recession, it doesn’t mean it will be bad or last long. And it doesn’t mean you’re going to lose your job, or if you do, it doesn’t mean you won’t get another."
So, in short, if you are a new job entrant and sharing a three-bedroom apartment with two other individuals, stay there, cause at a time of low-income security, going for studio apartments would almost qualify as an act of lunacy. Also, try to avoid taking unnecessary loans, apart from controlling your credit card expenditures. In short, try to cut down lavish expenses and just save that money, to sail through these difficult times. Also, invest your money in savings accounts. The monetary return will help you to adjust to inflation.
“Six months to a year’s worth of income is what you should have in savings anyway. Bad things happen even when there’s not a recession. If you have that safety net, you can face the future more confidently," David Mendels remarked.
He also pointed towards a viable backup option like opening a home equity line of credit, which will come in handy, if the person loses his/her job.
“You would come out of joblessness with debt, but you’d be able to eat and not fall behind on other bills,” David Mendels concluded.
"Keep in mind that while your emergency funds generally should be in a cash account, rising interest rates mean you may be able to find a better return on your money than you’re currently getting, depending on where you keep it," said Kathryn Hauer, a CFP with Wilson David Investment Advisors in Aiken, South Carolina.
“Open a high-yield savings account to hold your money. The bottom line is that if you’re feeling vulnerable to what a recession may mean for your financial security, it’s worth adjusting your budget so that you can build a cushion to weather a job loss," she added.
In short, one needs a complete change in financial behaviour, to stay away from lifestyle inflation.
Projected annual inflation rate in the United States from 2017 to
The very basic first step is keeping a tab on your spending. Maintain a diary, budget spreadsheet or even take the help of budgeting apps, but consider this as a necessary step to maintain your financial well-being. You need to follow a tightrope walking in the coming days, so having records of financial inflows and outflows on a weekly/monthly basis is very important.
Then make a budget for your monthly expenses. Shortlist the payment priorities and prepare a spending plan as per that. This will help you to control your expenses and save for essentials like required large purchases and even medical treatments.
Equally important is the understanding of essential and non-essential spending. A good amount of your salary (even after being inflation-compatible) goes for purposes like taxes, health insurance, food, clothing and accommodation. Vacation, buying cars and houses, and entertainment spending come under the category of 'non-essential' and plans on these things can be adjusted as per the economic scenario.
Disposable income is how you pay for vacation and those other non-essential purchases. For example, given the ongoing
economic slowdown, you can put your plans of buying a house or car on the backburner for a few months, in case they are not among your absolute priorities presently (again it is a subjective point of view and can change person to person).
Another problem which is often encountered during budget planning is controlling the tendency of indulging in unplanned and recurring expenses. While the article is advocating hacks for avoiding lifestyle inflation, we all can afford a little bit of leeway right?
For unplanned purchases (especially non-essential ones), set a monthly spending limit. Talking about recurring expenses, also adds bit by bit to the cycle of lifestyle inflation. However, when it comes to buying gasoline and groceries, we can't compromise there, despite higher prices. To compensate for that, we can switch to cheaper/ discounted alternatives. For example, we can switch to a cheap mobile data plan for the time being. Also, keep your eyes and ears open for those discounted sales offers at supermarkets/grocery stores. And those who do frequent online shopping please try to control expenses there, unless and until it’s a product for household necessity purposes.
Also, many tend to forget about unsecured debts (loans that are not backed by collateral), such as credit card debt, student loans, and personal loans. These are 'wealth killers'. Why is it so? Cause it doesn’t make sense to invest and actively build wealth and passive income on one hand, and then have a credit card and loan debts hanging over your head.
The individual may be earning a 10% average return from the stock market but he/she is paying 24% interest on a credit card. It doesn't make sense because the individual, instead of investing more into tax-saving investments, is paying off the credit card/other unsecured debts. If you are one such individual, then draw up your budget plan in a manner, where you can
pay your unsecured debts first. Get these commitments knocked out of your priority list. Then think about your long-term goals, including retirement, and start your savings as per that.
Talking about credit cards, if paying debts every month is becoming a difficult affair, then don't use the card. Use your debit card and cash more, as it will allow you to spend the money which you have in your savings accounts. Each time your salary increases, you can adjust your savings account balances.
Talking about savings accounts, one should open an account and start putting money there from now on. It would be even better if you start this activity in your 20s itself. Even if you put your long-term goals on the backburner due to the ongoing economic slowdown, having steady savings will help you to complete those priorities once the situation improves. Another solution is scheduling recurring transactions into a sinking fund (a fund containing money set aside or saved to pay off a debt or bond). Also setting up separate funds as per the financial goals will be an added advantage. Be mindful of the occasional large purchases, as these can unsettle your spending plans. Instead of making these purchases with credit cards and getting into debt loops, it would be better to do the payments in hard cash.
Also, try to buy used/refurbished consumer goods instead of new ones. Facebook Marketplace, Craigslist and OfferUp will let you find the best local deals. Also, if you have unnecessary items at home and you need to pay off a loan amount as well, you can sell those old products on the above-mentioned online marketplaces. You can free some spaces at your home, along with shaking off some of your monetary worries.
If you get pay raises, instead of going after lavish items like cars and smartphones, put that amount into your 401(k) or IRA (Individual Retirement Account). You can even use that money to open other taxsaving investments, which will help you to
start the process of your wealth building and boosting your post-retirement savings.
As per experts, you should be saving at least 10% of your income for retirement. Both 401(k) and IRA contributions carry tax benefits as well. Also, take advantage of tax-saving accounts when possible. While your employer’s 401(k) can be the go-to option as it allows you to make direct paycheck withdrawals, a 529 college savings plan is another good addition as these contributions can be withdrawn tax-free for undergraduate, graduate and professional educational expenses. Given the potential of student loan debt snowballing into another crisis in this recession environment, a 529 savings plan can be a gamechanger here. Also, Health Savings Accounts (HSA) contributions reduce one's taxable income. The withdrawals are tax-free in most cases. One can qualify for this scheme with a High Deductible Health Plan (HDHP).
Last but not the least, get philosophical about your financial health. Just because your friends buy expensive stuff, that doesn't mean that you need to get involved in that materialistic rat race. Instead, use your salary hikes to pump your savings. Instead of entering an expensive restaurant or a high-profile pub, use house parties as a cheap alternative to spend good times with your friends. A dinner party at home will save you at least a hundred dollars, without sacrificing your urge for socializing. Also, interact with people who share the same financial concerns and try to discuss lifestyle inflation with them. The more you open up about the issue, the more it will help your mates to get enlightened about the topic. Also during these discussions, your mates may give you suggestions about savings schemes you haven't heard about that much and in the long run, those tips will further boost your financial health.
As per experts, you should be saving at least 10% of your income for retirement. Both 401(k) and IRA contributions carry tax benefits as well. Also, take advantage of taxsaving accounts when possible
The top economic official of the Philippines stated that the country will not enter a recession. During a Commission on Appointments committee hearing on his ad interim appointment, Finance Secretary Benjamin Diokno made the comment in response to a question regarding the Department of Finance's efforts to combat the impending global recession.
"I can assure you, your honour, that given the data that we have, under very extreme conditions, we will not have a recession because we have a very young population," Diokno said.
"For example, our unemployment rate is now down to 5%—that is the lowest since before the pandemic. So
I can assure you, given our focus on agriculture, restored mining, power industry, and manufacturing are working well plus we have opened up the overseas workers, we have increased the quality of our overseas workers, I don't think we'll have a recession, your honour," he added.
CA Majority Leader and CamarinesSur Representative Luis Raymund Villafuerte, who raised the question during the hearing, said while the projected economic growth is "very good," the country still needs to consider the global economy. Diokno, in response, explained that the Philippine economy is "less dependent" on external factors.
The 19 nations that use the euro currency saw record-high inflation, which was fueled by escalating natural gas and energy costs brought on by Russia's conflict in Ukraine. Economic growth also slowed, largely as a result of those rising costs stifling Europeans' ability to spend, ahead of what many worry is
an impending recession.
According to data released by Eurostat, the statistics office of the European Union, annual inflation reached 10.7% in October. That represents an increase from 9.9% in September and is the highest level recorded since figures for the eurozone were first compiled in 1997.
Following the invasion of Ukraine, natural gas prices surged as Russia reduced pipeline supply to a fraction of what they had been before the conflict. To continue producing energy and heating homes, Europe has been forced to turn on costly liquefied gas shipments that arrive by ship from the US and Qatar.
While liquid gas was successful in filling Europe's winter storage, several industrial items, like steel and fertilizer, are now either too expensive to produce or are just not profitable.
Annual inflation reached 10.7% in October. That represents an increase from 9.9% in September and is the highest level recorded since figures for the eurozone were first compiled in 1997
Despite inflation that has been hovering near a 40-year high and significantly rising interest rates, the US economy recovered from July through September after contracting during the first half of the year. However, rather than being an indication of a better future, the performance was probably just a respite before the anticipated recession of next year. A more favourable trade balance, small increases in consumer and corporate expenditure, and an offset to a further decline in housing building and weaker company stockpiling, all contributed to the strong performance.
According to the latest statistics, the UK economy fell more than initially estimated in the three months leading up to September. The Office for National Statistics (ONS) stated that corporate investment fared worse than anticipated, causing the GDP to decrease by 0.3% as opposed to the 0.2% previously estimated. Additionally, growth estimates for the first half of 2022 have been reduced. As rising costs hamper growth, the UK is predicted to enter a recession in the latter three months of the year.
When a nation's economy contracts for two consecutive quarters of three months, that nation is said to be in a recession. Typically, as business profits decline, wages decline, and unemployment grows, the government has less tax revenue to spend on public services.
Darren Morgan, director of economic statistics at the ONS, said, "Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing notably weaker". He added that household incomes, when accounting for rising prices, continued to fall, and household spending fell for the first time since the final COVID-19 lockdown in the spring of 2021. The GDP is downgraded from 0.8% to 0.4%.
The value of all products and services produced in the US increased at a seasonally adjusted annual rate of 2.6% in the third quarter, according to data released by the Commerce Department. Bloomberg had predicted an increase in output of 2.3%. The increase came after declines of 1.6% and 0.6% in the first and second quarters, respectively, which were primarily brought on by changes in corporate stockpiling and trade, two volatile areas that don't normally reflect the state of the economy.
The NBFR considers a wider variety of economic activities, such as employment, retail sales, and industrial production, before establishing when a downturn begins and ends.
GDP decreased by 0.3% as opposed to the 0.2% previously estimated
Analysis
According to aviation IT provider SITA, there were more than 24.8 million mishandled bags in 2021
There can’t be too many experiences more disheartening than waiting at an airport baggage carousel after a long flight – only to realize that your suitcase is missing. Such incidents are depressing. According to aviation IT provider SITA, there were more than 24.8 million mishandled bags in 2021, accounting for, roughly, 40 bags disappearing every minute.
European passengers continue to be far worse, totalling 7.29 botched bags per 1,000 passengers annually, compared to 2.85 in North America and 1.77 in Asia. While incidents of global baggage mishandling have fallen over the last decade – in 2007, the figure stood at 46.9 million, says SITA – the current statistics are nothing to be proud of for airlines and airports.
Baggage losses don’t only result in disgruntled customers and tarnished reputations – they are also reported to cost the air transport industry in the region of $2.4 billion each year. The trend is of concern for industry body IATA, which last year rolled out a new regulation, Resolution 753, which means airlines are obliged to track all items of baggage along the course of a journey – most crucially when they are loaded onto the aircraft and enter the transfer system at airports.
There is a pressing need to redress the problem – not least because global passenger numbers are increasing (they hit an all-time high of four billion in 2021). In light of such growing custom, the industry cannot afford to repeat the same mistakes. The most
common cause behind mishandling is delayed bags, which accounted for three-quarters of lost luggage last year.
According to SITA’s Baggage IT Insights 2021 report, the most common cause behind mishandling is delayed bags, which accounted for three-quarters of lost luggage last year. Of the 19 million delayed bags recorded by the group in 2021, nine million were as a result of transfers. Damaged bags represent 18% of mishandling incidents, with stolen bags accounting for 5% of such cases. Writing in a blog post on the group’s website, Peter Drummond, SITA’s portfolio director for baggage said that delayed bags at the hands of transfers was “no surprise” as “transfers are complex with multiple airports and airlines involved.”
SITA supports end-to-end baggage tracking – as laid out in IATA’s Resolution 753 – as the best means of driving down the mishandling rate.
“The resolution has undoubtedly provided an incentive for airports to invest in technology to reduce lost or delayed baggage,” wrote Drummond.
Forming the backbone of its report, SITA analyzed over ten million records last year using its BagJourney service, a global baggage monitoring system that uses machine learning tools. Among the group’s main recommendations was that bag tracking is most effective when implemented during the loading stages. “We found that bag tracking implementation at loading stage is helping airlines improve their baggage mishandling rate by 38% where good processes are already in place, and by up to 66% where no tracking had been done previously. SITA proposes airlines and airports should do more in providing baggage updates to passengers’ mobile devices,” said Drummond.
The report also advocates airlines make use of baggage reconciliation systems (BRS) as a means of both reinforcing the baggage process and tracking every single piece of luggage. Etihad Airways is one such player to have used BRS to its advantage, having reported a 33% year-on-year improvement in mishandled baggage in 2021, thanks to
deploying the technology at its Abu Dhabi hub.
SITA also proposes airlines and airports do more in providing baggage updates to passengers’ mobile devices. Roughly 64% of passengers surveyed as part of its analysis reported a desire to track their baggage via an app, while 63% claimed they wanted to see a collection notification of their belongings on arrival. If this all can be condensed down into one message, it’s that passengers want a personalized service on their smartphones that allows them to track their bags in real-time across the whole journey.
There’s some evidence that airlines have taken note of this trend. Russian carrier S7 recently integrated its baggage tracking data – provided by SITA – into its app. Today, approximately 16 million passengers receive baggage status notifications through the app. Etihad introduced a similar app-based system at the beginning of this year.
Despite the millions of bags that go missing each year, SITA’s report makes for sanguine reading. Investments in tracking technologies – particularly RFID radio frequency identification – are already paying dividends, claims the group. Airports seem to be ready to implement RFID for baggage tracking, which will provide a rich data set for operational analysis and planning.
RFID tags are hardly new – they were first introduced at airports, including Hong Kong, Milan Malpensa, and Las Vegas McCarran back in 2005 – but the industry still clearly holds hope that they remain the best defence against lost luggage. US airline Delta attributes its 99% success rate in handling its passengers’ luggage to these barcoded labels, which allow bags to be scanned as they pass through the airport system.
According to Andrew Price, IATA’s head of global baggage operations, RFID still carries much potential. The group supports the implementation of the tags throughout the
industry. “The industry is looking at RFID as a low-cost tracking solution. Airports seem to be ready to implement RFID for baggage tracking, which will provide a rich data set for operational analysis and planning," he said. Other than this there are various techniques that will bring a change in the aviation sector, some are as follows:
Computed Tomography (CT) technology is going to see its role become far more significant over the next decade. First used in hold baggage security systems in the early 90s, already seen regulatory and technological advancements leading to CT being increasingly used in the cabin baggage screening process too. European Civil Aviation Conference (ECAC) C3certified scanners, which allow screening of cabin baggage containing liquids, aerosols and gels, laptops, and other large electrical items, will mean passengers (subject to approval from the appropriate local authorities) will be able to keep their liquids and electronic items in their hand luggage, rather than needing to put everything in a see-through bag when they get to the security gate. Not only will that make the process much quicker, but it’ll be a better experience for passengers who can pass through the airport with their liquids remaining stored in their hand luggage.
In coming years we will see airports embracing artificial intelligence (AI) to enhance aviation security and operations – both in terms of passengers and their baggage, as well as cargo. Currently, whether a tray passing through the security screens is a bag filled with goods or simply contains a belt, it’s treated with the same level of severity and undergoes the same level of checks. As technology
in this area becomes more sophisticated with the adoption of machine learning, it will be easier to detect weapons and other prohibited items. So, rather than spending a lot of time focusing on images of lightlypacked trays or bags that pose no threat, systems will be able to concentrate on suspect baggage, and not show operators the images of bags cleared by the X-ray system.
With the amount of available data increasing each minute, the insights we’ll be able to gather from it over the next decade are only going to be more and more beneficial.
The information we get from databases, screening processes, and more refined algorithms can be used to support enhanced methods of screening – known as risk-based screening (RBS).
The concept of risk-based screening is based on the principle of differentiating passengers and applying appropriate screening protocols to them. This differentiation is based on a ‘risk score’ derived from an analysis of their destination or status as a passenger. The precheck scheme in the US is a form of riskbased screening. Future developments will incorporate biometric data and dynamic risk assessment to better inform decisions on appropriate screening measures.
Within the next few years, data taken during the booking process will be combined with that from customs, border control, and other sources, to help support the passenger journey through the airport, including the security process. Passenger data can be assessed in advance of travel and prior knowledge of the passenger, their needs, and potentially their behaviour, will help inform the level of security measures they undergo when they get to the terminal.
Thanks to AI and the increasing availability of data pertaining to a passenger’s journey, biometric recognition is more widely implemented, including for instant identity verification as the traveler moves through the airport. Biometric identification reduces the need for physical documents and credentials at every touchpoint, promoting a paperless and seamless journey and supporting riskbased screening. Passengers around the world will soon be welcomed by biometric terminals or even biometric boarding gates at airports. Travellers have said they would definitely be interested in using biometrics if it makes the boarding process faster, according to the 2018 International Air Transport Association (IATA) Passenger Survey Report.
The increasing use of data in airport operations highlights the importance of protecting this data and the networks used to store and process it. Although the threat actors and tactics may change, cyber threats and attacks will continue in the years to come.
A joint approach between regulators, airports, and suppliers is required to ensure ‘cyber-compliant’ equipment is available and that it is deployed and maintained securely to protect the wider aviation network. This will continue to be a key concern for both operators and equipment suppliers in the years ahead. All of the above have one thing in mind, getting us through the airport as swiftly as possible, but without compromising on our safety in any way. Thankfully, airports and airlines understand the impact technology can have on the experience and are investing heavily in this area. The next decade will see a lot of changes accordingly – and it will be exciting to see it all come to fruition.
The concept of risk-based screening is based on the principle of differentiating passengers and applying appropriate screening protocols to them. This differentiation is based on a ‘risk score’ derived from an analysis of their destination or status as a passenger
The term metaverse, first mentioned in the 1992 science fiction novel ‘Snow Crash’, currently refers to a digital world, which is guided by Virtual Reality (VR) and Augmented Reality (AR) devices. To simplify it even further, the metaverse is a network of 3D virtual worlds focused on social connections.
Some of the metaverse components are already available in the video gaming fraternity. In 2003, came a virtual world platform called Second Life which was developed by the San Francisco-based firm Linden Lab. Second Life gives its users features such as creating virtual avatars and user-generated content within the multi-player online virtual world.
Most of the initial projects catered to the gaming community. Games such as Active Worlds, The Palace, Habbo Hotel, World of Warcraft, Minecraft, Fortnite and VRChat
all have been catered to the metaverse audience. Microsoft acquired AltspaceVR in 2017 and implemented the avatars and other elements of virtual reality into Microsoft Teams.
Facebook entered the arena a bit late as they launched a social VR world called Facebook Horizon in 2019. Two years later, company founder and CEO Mark Zuckerberg renamed Facebook “Meta Platforms”, with a commitment to developing the social media giant’s own metaverse.
Despite criticisms from Facebook whistleblower Frances Haugen, along with concerns over sexual harassment, Mark Zuckerberg has remained committed to developing the metaverse and pumping more capital into the project, despite facing a loss of over $10 billion in 2021.
Games such as Active Worlds, The Palace, Habbo Hotel, World of Warcraft, Minecraft, Fortnite and VRChat all have been catered to the metaverse audience
While metaverse relies on digital currencies, with assets within the project traded as nonfungible tokens (NFTs), the application areas include workplaces, interactive learning environments, e-commerce, real estate and fashion.
A recent report from “NFTICALLY” cited a study from international consulting firm Analysis Group which stated that a proper 10year growth path from metaverse will add some 1.7% or $440 billion (€417 billion) to Europe’s economy in 10 years. The study even says that in the best-case scenario, Meta will add some 2.8% to the world’s GDP by 2031.
Although the metaverse is still in the evolution phase, its impact has been felt in the formal economy in many ways.
While the concept of a formal workplace has a new member in form of a “Hybrid Work Culture” post-COVID, the metaverse is working extensively in this field to change the playbook.
Apart from IT and tech ones, most other
businesses are opting for the solution by asking 50% of their employees to work from remote locations, in order to save operational costs. While FaceTime, Skype, Zoom and Google Meet have become the conventional communication channels between employers and employees, another issue has cropped up in form of the feeling of alienation among these remote workers, affecting their mental health and productivity in that process.
Meta has stepped up to this challenge with the concept of a ‘virtual office’, assisted by AR and VR. Here the employees, while working from home, will be able to feel the real-time office atmosphere. Microsoft too has unveiled its futuristic concept on the same topic, while sealing a partnership with Meta. The company’s HoloLens/MixedReality tools will help businesses transition into the AR/VR phase. Microsoft’s Quest headsets, assisted by Mesh, will even allow the professionals to join their team meetings in Horizon Workrooms (virtual conference rooms).
Another innovation in the virtual office
field has been avatars, allowing remote workers to virtually interact with their teams, apart from pulling off tasks such as PowerPoint presentations, organizing team meetings and trade fairs, training programmes, and everything virtually.
Not only Microsoft, but start-ups such as Teamflow, NextMeet and PixelMax are also offering avatar-based virtual office models to businesses as well. A Lenovo survey has reported that some 44% of its participating professionals are ready to work in virtual offices in near future. Another PwC study too has predicted about virtual reality being used in 23 million jobs worldwide by 2032.
As per a report from eLearningindustry. com, educators have the option of using the metaverse to build a virtual classroom and take the concept of online learning to the next level. In that case, students can use their avatars to interact with each other and with the teachers, just like how virtual offices work. Say for science students, a virtual practical lab can be created, where the students can come and put their theories into practice. Study rooms can be built where the students, using their avatars can study, socialize together, share notes, and play games, thereby enhancing the learning experience. By combining VR/ AR tools, educational instructors can even create game-based learning activities for the students.
A report from influencermarketinghub. com gives us the future of the e-commerce industry as the metaverse comes into play. The shoppers will be represented by their virtual avatars. They will have the option of going into digital shopping from the comforts of their homes.
Metaverse marketing will be the future for e-commerce players. Brands are already
using augmented reality to showcase their products. With AR’s help, people can even try on clothes, shoes, and fashion accessories. With digital currencies steadily becoming part of the mainstream economy, buyers can use their crypto wallets to buy products in virtual product showrooms. The traders can even hold virtual product launches.
Talking about brands making the best use of metaverse, Gucci sold a $4,000 digital bag on Roblox. Spanish fashion giant Balenciaga, in collaboration with Fortnite, virtual outfits and accessories, catering to the customer avatars.
Coca-Cola and Samsung used virtual billboards within video games to advertise their products.
Despite Meta being far from reaching its maturity stage, healthcare specialists are betting big on it, given its immediate scope in imparting training and education among workers in this sector, via the virtual route. The doctors can even hone their skills, especially in pulling off complex surgeries, as they can practice the methods in a simulated real-life operation table. Another immediate application of this concept has been on the telemedicine front, especially for psychologists. Since 2020, due to lifestyle and economic disruptions due to the COVID restrictions, cases related to depression, anxiety, and addictive behaviours are rising. The concept of social distancing is adding more to the misery in form of bipolar disorder and schizophrenia. While it has been a difficult task for the specialists to attend to this large pool of patients physically, metaverse now presents a solution as it can not only help in the counselling process, but also guide the doctors in recreating situations in the patient's mind, with the use of virtual reality and observe their responses in that simulated environment.
As per a Biz Buzz report, Dr. Daniel Freeman and his colleagues at Oxford University have already developed a VR system called gameChange, to treat various psychosis scenarios. Meta can be used in the telemedicine field in form of a 3D virtual office for the
Number of mobile augmented reality (AR)
2019 0.44 billions
2020 0.60 billions
2021 0.81 billions
2022
1.07 billions
2023 1.40 billions
2024 1.73 billions
Active user devices worldwide from 2019 to 2024
Source: Statista
patients, making the whole affair even more personalised, smarter and informative.
AR and robotics are already getting deployed in surgeries. Neurosurgeons at Johns Hopkins reportedly used AR to remove a cancerous tumour from a patient's spine. United Kingdombased Latus Healthcare is developing a 'virtual hospital', whereas Apollo Hospitals is investing in metaverse too. Another healthcare platform GOQii is launching a health metaverse as well.
A Cointelegraph report recently cited a study which stated that clothing lines with a digitalonly presence are proving to be eco-friendly, compared to their physical counterparts, as they emit 97% less CO2 and use 3,300 litres of water less per item. The end result is these innovative businesses reduce their brand carbon footprint by 30%. Before sending the clothing collections into production, they can be used for modelling, sampling and marketing purposes, using digital means. The whole idea is referred to as digital fashion and yes, it’s prospering, if the stats are to be believed.
In 2022 alone, Adidas, Nike and Gucci generated some $137.5 million in nonfungible token sales alone. Italian fashion giant Dolce
& Gabbana sold a digital Glass Suit, which fetched the company a record $1 million in 2021. The brand’s NFT sales collected some $6 million in total. Talking about Gucci, its Queen Bee Dionysus virtual bag was sold for $4,000, an amount bigger than the product’s actual valuation.
Explaining the phenomenon, Lokesh Rao, CEO of Trace Network Labs, a project enabling brands to explore Web3 products and services, told Cointelegraph that metaverse’s further growth will be directly proportional to the prosperity of the fashion industry.
While businesses can experiment with the design aspect of the clothes in the virtual world, they can even trade these products in open NFT marketplaces. The customers too can deploy their avatars to visit these virtual stores and compare the products before buying them.
Believe it or not, the entire process of breaking the ground of the new construction to completing the project on time can be done through the use of immersive solutions such as AR and VR.
Entreprenuer.com in one of its articles on metaverse stated that an application can be designed for accurate mapping of the construction sites, enabling engineers and contractors to conduct virtual field visits from their offices. They can also take help from their social network to get inputs on design ideas, floor plans and other projectrelated aspects, thereby saving daily commuting costs.
Not only the project team can use augmented reality to chalk out floor plans and designs before going ahead with the construction activities, but they can also do accurate virtual modelling, as part of the interior decoration tasks, to visualize how the building will look from the inside. The clients, based on the virtual model, can give their input as well. Colour palettes,
Not only the project team can use augmented reality to chalk out floor plans and designs before going ahead with the construction activities, but they can also do accurate virtual modelling, as part of the interior decoration tasks
furniture, window alignments, and everything can be included in the 3D virtual rendition of the dummy room. A virtual tour of these will even give the consumers the likely impressions of the rooms in various climatic situations.
However, we should not overlook the fact that Meta is creating a sort of its own digital economy as well. Bloomberg Intelligence has predicted that the Metaverse market will reach around $800 billion in 2024. PricewaterHouseCoopers has even backed VR/AR sectors pumping some $1.5 trillion into the global economy by 2030.
Let’s discuss California-based IMVU as a case study to prove the above argument. The avatar-based social network, which has a monthly user base of over 7 million, allows its creators to sell their virtual products for the metaverse and generate around $7 million in form of monthly revenues. The company also has a team of developers, known as "meshers", who are designing 3D templates, which can be customised as virtual products and sold online.
If recent reports are to be believed, Mark Zuckerberg-led Meta Platforms Inc. is planning to close one of its New York offices after scaling back its expansion in the city. While the company looks to restructure its operational teams, along with a hiring freeze to save costs, it will go for a budget reduction this year as well. Its revenue count has gone down by 4% since July, 2022, from $29 billion to $27.7 billion. Meta has cited the global economic slowdown behind the crisis, saying that the client companies were pulling back their digital advertising plans.
As per a recent Accenture survey, 71% of the participating company CEOs backed transformation into metaverse to have positive results on their businesses. Another JP Morgan report says that the metaverse
will cover every industry in the next few years, thus creating a market opportunity consisting of yearly profits of over $1 trillion. There are a series of metaverse trends to watch out for in 2023.
While close to 11 million 10.7M users have participated in Fortnite concerts online so far, Metaverse looks at this avenue as a profitable one, as it eyes yearly $800 billion worth of live events and advertisements from 2023 onwards. While the primary market for online game makers and gaming hardware will exceed the $400 billion mark in 2024, live entertainment and social media events will make up the remainder of the $800 billion profit benchmark. NFT tokens, and digital land plots in Decentraland Metaverse have generated over 75,000 sales for a total of nearly US$25 million so far and this area will get richer as well in the coming months.
While the current range of avatars comes from 2D to photorealistic ones, come 2023, this is to change as well, with Microsoft working on using artificial intelligence and responsive animation to make these avatars cater to various business environments. Apps such as Zepeto and OSUVOX too are working on these solutions.
Another invention to watch out for is 3D digital twin technology, aimed to transform the business and consumers' experiences. Here an immersive 3D virtual office space will be created and this will be the accurate replica of the exact physical location of the company headquarters. Another brilliant application area will be at the NFT Front. A prominent example of it is Decentraland, a metaverse product, where NFT land sales have become a profitable venture.
As per a recent Accenture survey, 71% of the participating company CEOs backed transformation into metaverse to have positive results on their businesses.
Another JP Morgan report says that the metaverse will cover every industry in the next few years
According to International Business Machines Corp, the Osprey, a 433-qubit machine with three times as many qubits as the Eagle machine unveiled in 2021, is the most potent quantum computer to date.
Although different quantum computer firms make varying claims about the power of their qubits, which can be manufactured in a variety of methods, the quantity of qubits, or quantum bits, is an indication of the capability of the quantum computer that uses quantum mechanics.
Experts say, in the future, quantum computers are anticipated to perform some calculations millions of times quicker than the current fastest supercomputers.
Dario Gil, IBM's director of research, saidIBM is still on track to launch a computer with over 1000 qubits but for further scaling was working on a new approach. "As we push the limits of the size of the Osprey chip that we're announcing, if you look at it, it's really big already. Next year, 1000 is going to be very big. So after that, we have been designing and engineering the whole architecture for quantum computing based on modularity," he said.
The Chinese electronics giant Huawei predicted that its 2022 revenue would remain unchanged. This suggests that the company's revenue downturn brought on by US sanctions has stopped. Sales for the company have barely increased by 0.02%. Despite
this, in the company's yearly New Year's message, rotating Chairman Eric Xu sounded optimistic.
"US restrictions are now our new normal, and we're back to business as usual," Xu wrote in the letter that was addressed to staff and released
Quantum computers are anticipated to perform some calculations millions of times quicker than the current fastest supercomputers
to the media.
Xu estimates that the total revenue for the year will be 636.9 trillion yuan, or $91.53 trillion. Huawei's income has increased slightly from what it was in 2021 (636.8 billion yuan).
Huawei's profitability was not mentioned in Xu's letter. The company normally releases its complete yearly results in the first quarter of the following year.
In 2019, Huawei's revenue hit a record USD 122 billion. At the time the company was at its peak as the top Android smartphone vendor globally. The US Trump administration imposed a trade ban on Huawei, citing national security concerns, which barred the company from using Alphabet Inc's Android for its new smartphones, among other critical USorigin technologies.
According to reports, the parent company of Facebook, Meta, plans to start mass layoffs that will affect thousands of workers. The US media reports suggested that job layoffs would be majorly from the marketing sector.
CEO Mark Zuckerberg hinted that headcount would decrease during Meta's dismal third-quarter results.
"In 2023, we're going to focus our investments on a small number of highpriority growth areas," he said.
Over the course of its various platforms, which include Facebook, Instagram, and WhatsApp, Meta has roughly 87,000 employees worldwide. Plans for employment reduction came after challenges faced by the tech industry as a result of the slowing of global economic development. According to Zuckerberg, some teams will "stay flat or shrink" during the upcoming year.
"In aggregate, we expect to end 2023 as either roughly the same size, or even slightly smaller organisations than we are today," he added.
Platforms that rely on advertising, like Facebook and Alphabet's Google, are experiencing a decrease in advertising spending as a result of inflation and rising interest rates. The day when Stripe announced layoffs, Amazon imposed a hiring freeze for its corporate headquarters.
A new chatbot ChatGPT has reached one million users in less than a week, after its launch. ChatGPT was made available to the general public by OpenAI, a company that does artificial intelligence research. The company issued a warning that it may generate undesirable results and behave inimically. As part of its ongoing efforts to make this system better, Open AI claims it is "eager to gather user feedback."
The company refers to a group of AIs as GPTs, which stands for Generative Pre-Trained Transformer, the most recent of which is ChatGPT. A preliminary version of the system was improved by discussions with human trainers during its development.
Many people who have used the chatbot are impressed with the results. The amount of interest in the artificial conversationalist
was revealed by OpenAI CEO Sam Altman in a tweet. The chat interface enables the AI to respond to "follow-up questions, admit mistakes, refute false premises, and reject inappropriate requests."
A journalist for technology news site Mashable who tried out ChatGPT reported it is hard to provoke the model into saying offensive things. The journalist Mike Pearl wrote that its taboo avoidance system is pretty comprehensive.
The chat interface enables the AI to respond to "follow-up questions, admit mistakes, refute false premises, and reject inappropriate requests
At TechCrunch Disrupt, Netflix's vice president of gaming, Mike Verdu, revealed two bits of information concerning the streaming giant's entry into games. Verdu said that Netflix is seriously exploring a cloud gaming offering and the company will also open a new gaming studio in
In an effort to sell video games that people can play without having a costly gaming machine or sought-after console, Google's Stadia and Amazon's Luna have made the same move. However, these services have had trouble becoming widely used. Google just announced that Stadia would be discontinued in January 2023.
Southern California.
"It’s a value add. We’re not asking you to subscribe as a console replacement. It’s a completely different business model. The hope is over time that it just becomes this very natural way to play games wherever you are," Verdu said.
According to preliminary data from the Worldwide Quarterly Mobile Phone Tracker from International Data Corporation (IDC), the third quarter of 2022 saw a global fall in smartphone sales of 9.7% year over year to 301.9 million units.
The decline represents the largestever third-quarter decline and the smartphone market's fifth straight quarter of decline as shipments struggle amid weakening global demand and economic uncertainty.
Nabila Popal, research director with IDC's Worldwide Tracker team said, "A majority of the decline came from emerging markets where lack of demand, rising costs, and inflation
impacted consumers with lesser disposable incomes. With high inventory coming into the quarter, shipments and orders by OEMs were further reduced in an attempt to deplete inventory. Although Chinese vendors continue to suffer the most, all vendors were impacted, including Samsung and Apple. While Apple is the only vendor to deliver positive growth this quarter, it still faced
"While Stadia’s approach to streaming games for consumers was built on a strong technology foundation, it hasn’t gained the traction with users that we expected so we’ve made the difficult decision to begin winding down our Stadia streaming service," Stadia VP and GM Phil Harrison wrote in a blog post.
challenges as its growth was stunted in many markets, including China, due to the poor macroeconomic situation. Looking to 2023, the market's expected recovery, which we continue to believe will happen, will be pushed further into the year. Moreover, we now expect a steeper shipment decline for 2022 and a softer recovery in 2023."
