With five projects having already been launched across three Saudi regions as of February 2024, demand for ROSHN infrastructure continues to grow
Charting Bidenomics’ future in an election year
Apple in 2024: What's Tim gonna 'Cook'? UBS's
In early 2024, Tim Cook, the CEO of Apple, found himself at the helm amidst a flurry of formidable challenges. The renowned tech titan encountered patent disputes, resulting in the removal of key features from two of its flagship smartwatches, compounded by the weight of antitrust lawsuits. Furthermore, Apple's diminishing market share in China loomed ominously over its worldwide trajectory. Adding fuel to the fire, Wall Street analysts voiced concerns about the overvaluation of Apple's stocks. Now, the onus falls squarely on Tim Cook to craft a masterful strategy to navigate Apple through these turbulent waters and emerge stronger than ever.
Meanwhile, all eyes are on President Joe Biden as the United States gears up for another election cycle. As the country braces for a potential rematch between Biden and Trump, it's imperative to scrutinise the state of the American economy. Has the touted "Bidenomics" strategy delivered on its promises, and what can we expect from a Biden 2.0 administration? International Finance Magazine delves into these pressing questions.
It has also been precisely one year since the UBS Group finalised its acquisition of its Swiss counterpart, Credit Suisse Group. The merger, orchestrated on March 19, 2023, under the watchful eye of Swiss authorities, aimed to avert potential turmoil in global financial markets. We undertake a comprehensive evaluation to determine whether this acquisition has proven to be a lucrative venture for UBS.
And finally, gracing the cover story of our March-April 2024 edition is the remarkable tale of the ROSHN Group.
Saudi Arabia's premier national real estate developer ROSHN Group stands as a beacon of visionary progress in the Gulf nation's journey towards diversification. Through its dynamic developments, which seamlessly fuse tradition with innovation, ROSHN Group is reshaping the future of the Kingdom's urban living.
With five projects having already been launched across three Saudi regions as of February 2024, demand for ROSHN
‘PRIORITISING CONTINUOUS LEARNING IS KEY TO SUCCESS’ Sodexo UK Corporate Services MD Jade Boggust noted that for aspiring leaders in facilities management, prioritising continuous learning is key
UBS reported a net loss of $785 million for the June-to-September 2023 quarter, driven by
The lucrative opportunities that SIM card theft presents to criminals is one of the main causes of the recent surge in SIM card theft
46 MOLIM:
68
88
12 The battle over ‘Nakamoto’ identity
32 ASML: Powering the semiconductor industry
48 Future banking: Tech-first solutions
58 Financial planning for families: The success formula
70 Understanding currency fluctuations
80 RCT: The science of decision-making
90 Apple in 2024: What's Tim gonna 'Cook'?
108 Innovate & adapt: Next-gen fleet management
www.internationalfinance.com
OPINION
OPINION
Embedded finance refers to the integration of financial services into non-financial products and services
Sterling Bank, the top commercial bank in Nigeria, and Export And Sell Nigeria Limited (EAS), a preeminent international trade consultancy, have announced a strategic alliance to host the "Export to Wealth" conference. This innovative programme intends to equip at least 2,000 export-ready companies with the knowledge and resources they need to make profitable sales on global e-commerce platforms. Another significant step in Sterling Bank's ongoing commitment to support economic growth and enable Nigerian businesses to succeed in the global market is the partnership with Export and Sell Nigeria Limited.
In a recent on-campus Memorandum of Agreement ceremony, American University of Sharjah (AUS) and Waseela, a leading master systems integrator that specialises in large-scale ICT (information and communication technology) projects throughout the Middle East, joined forces to advance engineering education and innovation in the Internet of Things (IoT) field. Under the new framework, Waseela will support AUS students' training through internships, offering priceless practical experience to supplement academic learning and fulfil graduation requirements. Both parties will work together to supervise chosen capstone and research projects, promoting industry-relevant research and encouraging innovation.
The United Kingdom’s services sector remained in the greener territory in February 2024. The S&P Global/CIPS UK services PMI survey showed a reading of 53.8 during the month, as growth slowed marginally from 54.3 in January.
Economists said that the data suggested the “UK economy turning a corner." Tim Moore, economics director at S&P Global Market Intelligence, said, "New business intakes were a particularly bright spot as service providers reported the fastest order book growth since May 2023. Survey respondents cited rising business and consumer spending, linked to improved optimism towards the broader economic outlook."
Intel brings Bitcoin mining chip
Intel Corporation has made waves in the cryptocurrency mining industry by revealing details of its new mining chip, designed to significantly enhance Bitcoin (BTC) mining efficiency. During the IEEE International SolidState Circuits Conference (ISSCC), a pivotal event for the electronics and chip manufacturing industry, Intel introduced Bonanza Mine (BMZ2), its secondgeneration Bitcoin mining ASIC. This ultra-low-voltage, energy-efficient mining chip promises to deliver a robust 40 terahashes per second (TH/s), setting a new benchmark in the field.
At Glance
Top Freight and Logistics Companies in UAE and their market share
Deutsche Post DHL Group
143 Million
Agility Logistics
132 Million
Ceva Logistics
89 Million
Aramex International LLC
83 Million
Al Futtaim
66 Milliont
Careem
58 Million
Source: mordorintelligence.com
Source: mordorintelligence.com
Chinese Premier Li Qiang recently stated that the world's second largest economy aiming for an approximately 5% growth by 2024. Speaking at the 14th National People's Congress (NPC), he outlined the primary development goals for this year, which include over 12 million new urban jobs and a roughly 3% increase in the Consumer Price Index (CPI).
Li Qiang also mentioned the expansion of personal income in tandem with economic growth, fundamental balance of payments
equilibrium, the production of more than 650 million metric tons of grain, a decrease of roughly 2.5% in the amount of energy used per GDP unit, and ongoing environmental advancements. Li acknowledged reaching the target "will not be easy," adding a proactive fiscal stance. According to the Chinese Premier, all municipalities and government agencies should enact more policies supporting maintaining stable employment, economic growth, and expectations.
CARL COOK
CEO OF THE COOK GROUPT His company announced plans to sell its West Lafayette-based subsidiary, Cook Biotech, to RTI Surgical, a surgical implant contract development manufacturing organisation headquartered in Alachua, Florida
DAVID DUFFIELD FORMER CHAIRPERSON OF WORKDAY
David Duffield company's shares fell more than 5% recently, trading close to the $275 per share mark after the company missed the cut to be included in the S&P 500
JEFFERY HILDEBRAND CEO OF HILCORP ENERGY COMPANY
His company agreed to pay $34.6 million to resolve claims it knowingly underpaid royalties for oil and natural gas it extracted from leased federal lands, the US Department of Justice said
The bidders released a statement stating that the new offer represents a 33.3% premium over the closing price of Macy's shares
Malaysia Airlines Flight 370, a Boeing 777, vanished from view as it was travelling from Kuala Lumpur to Beijing
An investor group has improved its bid after being rejected in December 2023 from its initial offer to purchase the failing US department store chain Macy's.
Arkhouse Management and Brigade Capital Management increased their initial offer of $5.8 billion to $24 per share, up from the previous figure of $21. The move now puts the acquisition's value at $6.66 billion.
The bidders released a statement stating that the new offer represents a 33.3% premium over the closing price of Macy's shares.
Additionally, they stated that they could provide additional details regarding the proposed deal, such as the fact that "Fortress Investment" and "One Investment Management" were participating with financial contributions. Brigade Capital Management and Arkhouse made an unsolicited takeover offer, which Macy's rejected in January.
The 166-year-old department store chain, best known for its annual "Thanksgiving Day Parade" in New York, revealed that it would close nearly a third of its namesake stores by 2026 in order to focus on growing its luxury Bloomingdale's and Bluemercury brands. It also announced in January 2024 about cutting
31.5% of its workforce.
"We remain frustrated by the delay tactics adopted by Macy's Board of Directors and its continued refusal to engage with our credible buyer group," the investors said.
"While the restructuring plan Macy's unveiled last week (in February 2024) failed to inspire investors, the fourth quarter earnings and year-end results have given us further confidence in the long-term prospects of the Company if redirected as a private company," the statement said.
According to Macy's annual report, as of the 2022 end, it employed about 94,500 people and ran 722 stores. It now intends to shut 150 of them down. The company released its year-end results for 2023, revealing declining revenues and a sharp decline in profits.
According to the company, sales were $23.1 billion, which was a 5% decrease from the prior year. Net profits also dropped steeply by 91%.
For years, department stores have struggled with declining sales as customers shift their shopping habits online.
This trend has been made worse by the COVID-19 pandemic.
The search for flight Malaysia Airlines MH370 may resume ten years after its disappearance, with Malaysian Prime Minister Anwar Ibrahim declaring that he would be "happy to reopen" it in the event that "compelling" evidence surfaced.
"If there is compelling evidence that it needs to be reopened, we will certainly be happy to reopen it," he said when asked about the matter during a visit to Melbourne.
His remarks were made on the tenth anniversary of the aircraft's disappearance in the Indian Ocean, which had 239 people on board.
"I don't think it's a technical issue. It's an issue affecting the lives of people and whatever needs to be done must be done," Ibrahim noted further.
On March 8, 2014, the Boeing 777 vanished from the radar as it was travelling from Kuala Lumpur to Beijing. The search operation (being the biggest in the aviation industry's history) was halted in January 2017.
Transport Minister Anthony Loke informed that "Malaysia is committed to finding the plane...cost is not the issue," while stating his plan to meet the representatives of the Texas-
based marine exploration company Ocean Infinity, which carried out an earlier, fruitless search, to talk about a potential new mission.
As per the latest news, Ocean Infinity has submitted a proposal to the Malaysian government for a new search in the southern Indian Ocean where the MH370 is believed to have crashed.
The Texas-based marine robotics company, which had last attempted in 2018, to identify the aircraft, has now proposed an all-new nofind, no-fee search.
Reports even suggest that Loke has promised Ocean Infinity that, if the venture can provide credible evidence on the flight's final resting place, he would push to greenlight the mission.
Ocean Infinity's CEO Oliver Plunkett told the media, “We now feel in a position to be able to return to the search for MH370, and have submitted a proposal to the Malaysian government."
There was very little evidence of the aircraft in an earlier Australia-led search that scanned 120,000 square kilometres in the Indian Ocean, with only a few pieces of debris being discovered.
In February, there were 198 ships that called at Qatar's three ports
Tether issues a stablecoin, designed to maintain a constant value of $1
Egypt's Ministry of Finance hopes to raise EGP 459.5 billion in March 2024, with the issuance of 26 T-bills and bond tenders, totalling EGP 440 billion for 16 T-bills and EGP 19.5 billion for 10 bonds. This is a component of the Abdel Fattah El-Sisi government's plan to borrow EGP 1.647 trillion from the market to finance the budget deficit and pay off maturing debt in the third quarter of FY 2023-2024. The Central Bank will hold four tenders for 91-day, 182-day, 273-day, and 364-day Treasury bills, each worth EGP 100 billion, EGP 120 billion, EGP 100 billion, and EGP 120 billion, respectively. In addition, the Central Bank will tender two zero-coupon bonds worth EGP 4 billion.
In February 2024, 111,341 twenty-foot equivalent units (TEUs) of containers were handled by the Mwani Qatar ports, an increase of roughly 8% from January. According to Mwani Qatar on its X platform, the ports also saw growth of 186% in RORO units, 127% in livestock, and 186% in general and bulk cargo. In February, there were 198 ships that called at Qatar's three ports. In addition, the ports handled 169,212 tonnes of shipments of general and bulk cargo, 7,163 RORO vehicle units, 71,219 livestock heads, and 40,898 tonnes of building materials. One of the main objectives of the "Qatar National Vision 2030" is economic diversification, which is supported by the container terminals' design.
The number of dollar-pegged stablecoins issued by Tether has crossed the $100 billion mark, amid the bitcoin setting up new price records throughout March 2024. Blockchain-enabled platform Tether issues a stablecoin, designed to maintain a constant value of $1. The product is widely used to move money in cryptocurrency without being exposed to price swings. At just over $100 billion in circulation, Tether has now emerged as the third-biggest cryptocurrency, with around $27 billion worth of the tokens having been issued in 2023, stated market tracker CoinGecko. Tether said that it maintains its dollar peg by holding dollar-based reserves which match the volume of cryptocurrencies it has created.
Jeremy Jurgens, Managing Director of the World Economic Forum, stated that contrary to popular belief, the use of technology and artificial intelligence will not result in a decrease in the need for labour. “Overall we continue to see geopolitical tensions, inflation is subsiding but not at the pace everybody would have liked, resulting in high levels of economic uncertainties. Amidst all this India has emerged as a positive spot globally. While all this is happening in the global economy, we also see the emergence of technology especially AI, renewables, synthetic biology etc. So we have these ongoing tensions alongside these opportunities," he said, while delving into the current scene of global economies.
Craig Wright mostly cleaned up his internet personas but did not initially reply to claims that he was Satoshi Nakamoto
The world first saw Bitcoin in October 2008, thanks to Satoshi Nakamoto. But the truth is nobody is still unaware of Nakamoto's identity. One individual emerged from the conjecture: Craig Wright, an Australian computer scientist who has claimed to be Nakamoto since 2016. Since then he has been trying to provide evidence to the court of his identity.
In the wake of the 2008 global financial crisis, Nakamoto published a white paper outlining plans for a peer-to-peer payment system
Wright's claim to Satoshihood will be contested in a trial that will start in the United Kingdom High Court. The Crypto Open Patent Alliance (COPA), a nonprofit organisation of tech and cryptocurrency companies, is bringing the case in response to numerous lawsuits that Wright has filed against other parties and Bitcoin developers, attempting to claim intellectual property rights over Bitcoin as its purported inventor.
The COPA alleges that Wright's actions have had a "chilling effect," discouraging developers and impeding Bitcoin’s development. It is asking for an order prohibiting Wright from denying that he did not write the original code and that he does not possess the copyright to the white paper that first suggested Bitcoin. In essence, COPA is requesting that Wright be declared not to be Nakamoto by
the court.
The decision will directly affect a complex web of related cases that will decide whether Wright can restrict the use of the Bitcoin system and prohibit developers from working on it without his consent.
"There are a lot of stakes involved," said a representative of the Bitcoin Legal Defence Fund, a non-profit that supports Bitcoin developers in court. The representative asked to remain anonymous out of concern for Wright's potential legal retaliation.
“Wright is asking for ultimate control over the Bitcoin network in the eyes of the law," the source told WIRED.
In the wake of the 2008 global financial crisis, Nakamoto published a white paper outlining plans for a peer-to-peer payment system and new electronic money that would do away with the need for unreliable middlemen like banks. He sent the first Bitcoin transaction in January of 2009. After that, he vanished into thin air a little over two years later. Finding Nakamoto became a mission.
According to Jameson Lopp, a software developer and early adopter of Bitcoin, the lack of a "leader" has helped Bitcoin in the interim by requiring it to develop under an unadulterated anarchy system, which has made it "robust."
Anyone who volunteered their time to work on Bitcoin could have a say in its direction, free from
the censorious influence of a founder. However, Wright's assertion that he is Nakamoto raises potential complications.
Wright was first nominated as a potential candidate by both WIRED and Gizmodo on the same day in December 2015. The original story, based on a trove of leaked documents, proposed that Wright had “either invented Bitcoin or is a brilliant hoaxer."
WIRED released a follow-up article a few days later, highlighting inconsistencies in the data that bolstered the latter conclusion.
Wright mostly cleaned up his internet personas but did not initially reply to claims that he was Nakamoto. However, by the next year, he had started to identify himself as the person who created Bitcoin. He has made numerous attempts—using a variety of techniques—to unequivocally substantiate the assertion, winning himself a devoted following of believers.
In 2016, Wright succeeded in persuading Jon Matonis, the former director of the advocacy group Bitcoin Foundation, and Gavin Andresen, an early contributor to the underlying software of Bitcoin. The billionaire Calvin Ayre, whose venture capital firm recently bought a majority stake in one of Wright's businesses is his most outspoken supporter.
Wright hasn't been able to change the consensus that the identity of the founder of Bitcoin is still a mystery. Lopp asserts that only a small percentage of Bitcoin users—those who "really want for there to be a Satoshi figure"—buy into Wright's narrative. Recently, Andresen reversed his stance, saying, "I now realise it was a mistake to trust Craig Wright as much as I did. I regret getting sucked into the 'who is (or isn't) Satoshi's game,' in response to a previous blog post.”
Wright appears to have turned to litigation as his main strategy for pursuing his claim since 2019. He has accused those responsible for maintaining the Bitcoin codebase, exchanges, and developers of violating his copyright. He has also filed libel suits against those who have publicly criticised him.
According to Lindsay Gledhill, IP partner at Harper James, Wright's approach in the lack of a patent appears to be to utilise legal action to "cobble together a basket of rights" that, when taken collectively, serve a similar purpose. Wright says she has tried to "use the wrong tool to do the job of a patent" in an attempt to claim ownership of Bitcoin. That's the main idea behind it.
Wright has brought three lawsuits, one against a group of Bitcoin developers and the other against cryptocurrency exchanges Coinbase and Kraken,
all based on the theory that he is Nakamoto. As a result, Edward James Mellor, the judge overseeing the cases, has made arrangements for the COPA proceeding to start first. In the vernacular of the courts, it will function as a preliminary issue trial, the decision of which will also be honoured in the related disputes.
According to IP specialist Rachel Alexander of the legal firm Wiggin, the identity problem is fundamental.
"It becomes much more difficult to pursue the broader claims if COPA can put an end to that," the expert noted.
It is anticipated that the COPA case will last six weeks. Wright is scheduled to testify early, and the majority of the remaining time will be devoted to evaluating the veracity of the documentary evidence supporting his claim to be Nakamoto.
The principal accusation is that Wright falsified numerous of these records to give the impression that they were written at a specific period. A COPA representative requests that their identity not be made public in order to shield themselves from potential legal action from Wright.
"COPA has filed extensive evidence that we believe shows Wright has fabricated and forged," the representative said, while asserting that, "COPA systematically reviews and dismantles the documents in reports filed with the court, pointing out 'anachronisms' that undermine his claim to have been Satoshi Nakamoto."
Several individuals in the Bitcoin community, such as Lopp and blogger-podcaster Arthur
van Pelt, have made prior efforts to enumerate Wright's purported misrepresentations. Van Pelt refers to Wright's actions as a "Satoshi Nakamoto cosplay" and the narrative he has created as a "Potemkin village." Wright has written off criticisms of this nature as "basically fluff." He declared before a Norwegian court in September 2022 that he had "never changed any documents or manipulated any documents."
According to Gledhill, it is noteworthy that one of the highest courts in the UK is permitting COPA to make forgery claims.
She continued, "The courts will not let you make vague suggestions." This is not an accusation that the court will automatically accept. Strict guidelines apply. To put it another way, COPA would not be permitted to accuse Wright of forgery unless the court determined that it had sufficient justification to do so.
According to Alexander, the disagreement over the documents will be the "heart of the case." That will be the main problem the court has to deal with. Wright's chances of winning the COPA case and those who depend on its outcome would be harmed if the judge finds him
About 46 million Americans own a share of Bitcoin
29% of all millennial American parents own cryptocurrepncy
An estimated 1 billion people around the world use cryptocurrencies
There are more than 250,000 confirmed transactions of Bitcoin daily
Around 50 million unique addresses have a non-zero balance of Bitcoin
Research from July 2021 shows that 89% of American adults have heard of Bitcoin
24% of Americans said they don’t understand how cryptocurrency works, let alone a Bitcoin wallet
By 2025, financial analysts say, the global blockchain market will grow by $39.17 billion US Dollars
51% of Americans in May 2021 had bought cryptocurrency for the first time within the last 12 months
Cryptocurrency creator Satoshi Nakamoto is thought to own 1 million bitcoins, worth $40 billion to $60 billion US Dollars
guilty of forgery. It could also result in a contempt of court charge against him.
Alexander continued, "The punishment for this could be a fine, imprisonment, or both."
Wright made COPA an unexpected settlement offer on January 24, two weeks before the start of the trial. Under the terms of the proposal, Wright would give up the right to pursue IP rights over Bitcoin and halt his own legal action in the related cases.
COPA would be required to acknowledge Wright as Satoshi Nakamoto in exchange for a number of other requirements. Tweeting that there were "loopholes that would allow (Wright) to sue people all over again," COPA declared that it would "hard pass" on the offer.
The representative for COPA states that the organisation hopes a decision in its favour will "create a safe space" where developers won't be "bullied or cowed" into stopping work on crypto-
currency technologies.
Wright's victory would essentially mean the opposite of COPA's, which would be a return to business as usual. It would be easier for Wright to prevail in the related cases in which he is the plaintiff if the court determines that Wright is, in fact, Nakamoto, the author of the Bitcoin white paper. Wright accuses Bitcoin developers of violating his intellectual property rights by making "fundamental changes" to the system without first obtaining a license or authorisation in the most well-known of those cases, which is colloquially referred to as the Database Rights Case.
By essentially requesting a ruling, he would gain control over the primary software and prevent developers from making changes to the Bitcoin code without his consent. The effects would also be felt globally.
"Each country will analyse a copyright case on their own basis, but
the general principles underneath copyright law are harmonised by an accord that has been ratified by the vast majority of nations," James Marsden, a senior associate at the law firm Dentons said.
In other words, if a United Kingdom court finds that Wright is Nakamoto, courts all over the world will probably conclude the same.
According to Lopp, the architecture of the Bitcoin network prevents code changes from being enforced on the parties operating the client software, or "nodes," which support the payment system. Changes are intended to be suggested only, not imposed. This implies that Wright would be unable to alter Bitcoin on his own.
However, if he prevails, Wright might use the validation of his intellectual property rights to bring legal action against people who do not apply for a license, making it more difficult for developers to work together freely on the Bitcoin codebase—thereby ruining the unspoiled anarchy. It might be necessary for project developers to work in secret in order to keep themselves safe.
"We'd have to become much more ardent cypherpunks. The system's functionality and health may suffer if developers become less and less willing to take legal action. There's a chance that Bitcoin will become less well-known over time," Lopp said.
Affordability is a big concern in Canada, particularly in Ontario and British Columbia, where RBC's Hogue highlights that high house ownership expenses have greatly reduced property resales
The last few years have seen a rollercoaster ride for the Canadian housing market. Since rent increased by 8% in 2023, you may wonder if 2024 is the right year to purchase a home.
Nearly one-quarter (24%) of Canadians between the ages of 18 and 34 say they might or probably will purchase a home in 2024, while 22% of those between the ages of 35 and 54 are considering buying this year, according to Wahi's most recent 2024 Homebuyer Intentions Survey. Of those considering a home purchase, 49% await how home prices develop, and 48% want to wait to see how interest rates change.
Whether a first-time or seasoned home buyer or if you're considering purchasing a home this year, there are a few things to consider before making the important call.
As per the Canadian Real Estate Association (CREA), despite interest rates being at a 22-year high, there has been an increase in activity in the home market.
CREA chair Larry Cerqua said, "The market has been showing some early signs of life over the last couple of months, probably no surprise given how much pent-up demand is out there."
Home sales activity increased 3.7% between December 2023 and January 2024, according to CREA data, building on the 7.9% month-over-month gain seen recently.
The Greater Toronto Area, Hamilton-Burlington, Montreal, Greater Vancouver the Fraser Valley, Calgary, and the majority of areas in Ontario's Greater Golden Horseshoe and cottage region lead the nation in sales increases once again.
"The biggest year-over-year gain since May 2021 was observed in the actual (not seasonally adjusted) number of transactions, which came in 22% above January 2023. Having said that, the double-digit gain was more indicative of the base effect from the
comparison to January 2023, which was the worst start to almost any year in the previous 20 years, given that current activity is still running below average levels," CREA said.
In January 2024, the number of newly listed homes increased by 1.5%, although it was still very near the lowest level since June 2023.
Robert Hogue, Assistant Chief Economist at RBC, stated that "the larger window of opportunity for buyers is likely to open only after interest rates have dropped materially—something we foresee in the latter stages of 2024 or 2025. This is particularly true for first-time purchasers who might have more limited funds.”
According to Hogue, "There will be a lot of pent-up demand to satisfy in the market once confidence returns, which could heat things in a hurry. If interest rates start to decline in the middle of the year as many predict. Expect little to no decline in home prices, nevertheless, since poor affordability conditions will restrain the recovery."
Pent-up demand may drive up prices, but shocks from mortgage renewal payments (as mortgages renew at much higher rates) may cause more homeowners to list their properties on the market, balancing supply and demand.
Hogue projected a 9.2% increase in Canadian home resales for 2022, following declines of 25.1% and 11.1% in 2021.
A "return to the rollicking price gains of recent years, and previous highs for some locations, is unlikely at this point," according to BMO Senior Economist Robert Kavcic. This is good news for purchasers in areas like Ontario, where he anticipates further pricing pressure in the spring. However, costs would remain high, and "the subsequent rebound
will likely be temperate due to stillchallenging affordability."
The Bank of Canada is probably done raising interest rates and will start lowering them shortly, according to Kavcic, who agrees with most analysts: "We believe the Bank will be in a position to cut rates around mid-year, with 100 bps or 1% of easing through 2024. Mortgage rates will drop as a result of those reductions.”
Despite a spike in home sales in December 2023, Marc Desormeaux, Principal Economist at Desjardins, predicts lower prices and sales this spring.
Desormeaux does, however, also anticipate a broad-based increase in housing prices in the middle of the year that will last into 2025, in keeping with the Bank of Canada's anticipated interest rate reductions in the middle of 2024.
He predicts that the more expensive areas of Toronto and Vancouver, which are more susceptible to changes in interest rates, would see the biggest recoveries. But by historical standards, price increases will be "mild," particularly when compared to the pandemic-era real estate boom, when prices nationwide increased by more than 20% when loan rates were still low.
Because the Bank of Canada's monetary policy influences mortgage interest rates, its perspective on the housing market is significant. To curb consumer spending when inflation increases, the Bank hikes rates; but, when inflation approaches its target of 2%, the Bank is more likely to lower rates. The prime rate, now 2.2% higher at 7.2% than the overnight rate, is impacted by increases in the overnight lending rate.
Lenders utilise the prime rate to
Number of housing units sold in Canada from 2018 to 2023, with a forecast by 2025
2018
457,600
2019
489,873
2020
552,433
2021
665,934
2022
498,269
2023
443,511
2024
489,661
2025
525,498
Source: Statista.comdetermine the interest rate on various products, including variable-rate mortgages. Consequently, the cost of borrowing increases as the prime rate does. However, the shelter component of the Consumer Price Index, or CPI, the most widely used inflation indicator, includes mortgage interest rates in addition to rental expenses. Thus, high mortgage rates lead to pressure on inflation.
The Bank of Canada maintained its 5% overnight rate target in its most recent rate decision, stating that while inflation is declining, certain CPI components are still too high to lower rates just yet. One of the most prominent elements is housing: according to Bank Governor Tiff Macklem, "Inflation in shelter services remains high—close to 7%—because of rising mortgage rate costs, higher rents, and other housing costs."
Macklem stated that while there was a "considerable uncertainty" around property prices, he anticipated that the
market would "rebound" in 2024 with predictions for interest rate decreases later in the year. He stated that although buyer demand would determine whether or not the Bank anticipates a "modest increase" in property prices.
Nevertheless, Macklem also stated that the apex bank is powerless to address the issue of home affordability.
For many years, the supply of housing has lagged behind the demand for housing, according to Macklem.
"There are numerous causes for this, including labour shortages, zoning constraints, and ambiguities and delays in the approvals process. Monetary policy cannot solve any of these issues,” the official continued further.
CREA has revised its projections for home sales and average home prices, citing the continued influence of interest rates as a primary factor shaping things for 2024 and 2025. The forecast
anticipates a modest 2.3% increase in the national home price, reaching $694,173 in 2024, with further growth expected in 2025. National home sales are predicted to rise by 7.3% in 2025, accompanied by a 4% increase in average home prices.
Significant sales gains are anticipated in provinces with robust housing demand, such as Alberta, as well as in regions experiencing a rebound from lower sales volumes, including Ontario, and Nova Scotia. Moreover, several provinces, including Alberta, Quebec, New Brunswick, Nova Scotia, and Newfoundland, are forecasted to see price gains surpassing the national average. Conversely, British Columbia and Ontario are expected to see prices remain stable. Contextually, the decline in home sales by 11.1% in 2023, compared to 2022, marked the lowest annual level since 2008.
There has been a lot of finger-pointing
as the nation's housing crisis worsens: at foreign investors buying up residential real estate, at local governments and their onerous zoning laws, and now, at immigrants and international students, who are the most recent group to come under fire for making the situation worse.
Canada, leading among G7 nations in growth rate, crossed the 40 million population threshold in June 2023 after experiencing an increase of more than a million in 2022. Immigrants made up almost all of those new Canadian citizens. The number of international students has also increased dramatically; as the country is expected to welcome 900,000 overseas students in 2024, three times the number from 2013.
Immigration Minister Marc Miller stated that "volume is volume, and it does have an impact," on the immigration wave, even though Canada's main political parties have been careful not to hold immigrants responsible for housing issues. The federal government is thinking of capping the number of overseas students to relieve some of the burden, but it is not going to back down from its recently raised annual objective of 500,000 new permanent residents by 2025.
However, Carolyn Whitzman, a housing policy researcher at the University of Ottawa and a specialist advisor to the University of British Columbia's Housing Assessment Resource Tools project, asserts that restricting immigration is not the answer.
"We have an inaccurate view of the problem because the millions of Canadians who currently live there as well as anticipated arrivals are not included in currently estimated housing needs. Immigrants are an easy target. We discussed the pressing need for a national social housing programme, the
lack of statistics on who genuinely needs housing, and our eagerness to turn the conversation toward immigration," she said.
Overall, economists anticipate interest rate reductions to commence in mid-2024, contingent upon the Bank of Canada's assurance that inflation is managed. Interest rates impact the demand for property by potentially deterring purchasers from entering the market and influencing supply as homeowners with current mortgages may choose to sell when faced with interest rate fluctuations during renewal. This could result in a market favourable to buyers.
CMHC Senior Specialist of Housing Research Tania Bourassa Ochoa predicts that 2.2 million mortgage borrowers,
accounting for 45% of all outstanding Canadian mortgages, will need to renew their mortgages between 2024 and 2025.
"The majority of these borrowers secured their fixed-rate mortgages at historically low interest rates, most likely during the peak of housing prices around 2020 to 2021," she observed.
Decreasing interest rates may prompt potential buyers who have been holding off due to less favourable rates to reenter the housing market. This can lead to an increase in house prices, which is anticipated by the middle of 2024. Sales volumes and prices are projected to rise nationwide.
As per the CREA, recent price decreases have mainly occurred in Ontario markets, especially in the Greater Golden Horseshoe region, and to a lesser degree in British Columbia. In most parts
of Canada, prices remain stable, but certain regions, such as Alberta, New Brunswick, and Newfoundland and Labrador, continue to experience price increases.
Note that there are significant variations in market circumstances across different locations. A house located in a metropolitan area like Toronto will have a higher price compared to a house in a smaller town or village. Urban areas may have higher demand leading to competitive bidding among buyers, favouring the seller. In contrast, rural properties may take longer to sell, making sellers more willing to negotiate on price.
Borrowing costs are high, although home prices have decreased from their peak levels during the pandemic. Prices
are anticipated to remain low in the first half of 2024, potentially encouraging buyers to enter the market. Affordability is a big concern in Canada, particularly in Ontario and British Columbia, where RBC's Hogue highlights that high house ownership expenses have greatly reduced property resales.
Long-term trends indicate an increase in home prices, which can create pressure for first-time buyers to enter the market promptly. Let's examine two situations to observe how interest rates and purchase costs impact your monthly budget. Both alternatives presuppose a minimal down payment.
Scenario A: Elevated interest rate, reduced house price. Buying a $500,000 home with a 5-year fixed-term mortgage at 5% will result in monthly mortgage payments of $2,873. By the end of the five years, you will have paid a total of $172,388, comprising $56,773 in principal and $115,615 in interest.
Scenario B: Involves a reduced interest rate and an increased house price. If the home's value increases to $525,000 (a 5% increase) and you obtain a 5-year fixedterm mortgage at 4.75%, your monthly mortgage payment will be $2,934. By the end of the five years, you will have paid a total of $176,046, consisting of $61,242 in principal and $114,804 in interest.
During the five years of the mortgage, you will pay a higher amount towards the principal and a lower amount towards interest, resulting in slightly increased monthly mortgage payments. Based on this example, it appears more advantageous to purchase a property when interest rates decrease.
If the price of the $500,000 house increases to $550,000, your monthly mortgage payment at a 4.75% interest rate will be $3,067. Over the five-year term, you will have paid $64,022 towards the principal and $120,017 in interest. You have reduced the principal amount more
significantly, although the total interest cost has increased. Additionally, you may not have the financial means to cover this increased monthly payment.
Setting aside these eventualities, it is hard to predict the timing of the housing market or the stock market, and these forecasts are not definitive.
According to the CREA, there was a 1.2% monthly decline in the Aggregate Composite MLS Home Price Index in January 2024. Compared to the 1.1% decline seen in December 2023, this indicated an acceleration of the decline.
The Greater Golden Horseshoe region of Ontario and, to a lesser extent, British Columbia has seen the most price reductions.
In other parts of Canada, prices are either barely changing or, in certain situations, notably in Alberta and Newfoundland and Labrador, are
still rising.
In January 2024, the real, nonseasonally adjusted national average house price was $659,395, a 7.6% increase from the same month in 2023.
"Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers, however, prices are still trending lower in areas where sales have shot up most over the last two months," Senior economist at CREA Shaun Cathcart said.
When combined, these patterns point to a market that is beginning to recover from the past two years' difficulties, but still navigating them. So before you start your house search, keep your finances organised.
IF CORRESPONDENT
With five projects having already been launched across three Saudi regions as of February 2024, demand for ROSHN infrastructure continues to grow
As per the market research firm IMARC Group, Saudi Arabia’s residential real estate market size will exhibit a growth rate (CAGR) of 6.89% during 2024-2032. As government subsidies and financing solutions facilitate home buying galore, the property sector is stimulating economic growth, and improving living standards.
As the Kingdom's urban landscape continues to evolve, ROSHN Group, Saudi Arabia’s leading national real estate developer and a PIF-owned gigaproject, establishes itself as a visionary force. With its vibrant developments seamlessly blending tradition with innovation, ROSHN Group is reshaping the future of the Kingdom's urban living. Through its meticulous integration of residential, retail, commercial, and hospitality structures amongst vital green spaces, ROSHN Group has envisioned a new way of living in the Kingdom. The cover story of the March-April 2024 edition of the International Finance Magazine will talk about how the real estate venture is becoming a driving force behind Saudi's urbanisation efforts.
As a key enabler of "Vision 2030," ROSHN's mandate
goes beyond the conventional realms of real estate development. It has emerged as a national developer in the Saudi market, with the commitment to delivering a high standard of living and modern integrated communities to domestic customers.
The Group is building integrated developments that reflect both the Kingdom’s rich heritage and the aspirations of its people, with its residential, retail, educational, hospitality, and commercial spaces combining to establish a truly comprehensive and perhaps unmatched real estate portfolio.
As Saudi continues its emergence as one of the most dynamic and robust economies in the world, PIF-owned giga-projects have been strategically crafted to fulfil specific elements of the diversification agenda.
ROSHN has a geographic commitment as broad as Vision 2030’s goals to create a “thriving economy,
a vibrant society, and an ambitious nation.” The Group is actively supporting the national vision by enhancing the quality of life and well-being of people across Saudi Arabia and using its scale to act as a catalyst for economic diversification, while working with the private sector to strengthen and localise the construction industry supply chains by working across the full gamut of real estate verticals.
With five projects having already been launched across three Saudi regions as of February 2024 and the latest sales tranche for its flagship Riyadh project SEDRA launched this month, demand for ROSHN projects continues to grow. By 2030, ROSHN seeks to enable Vision 2030’s key goals, by supporting the goal of 70% home ownership.
ROSHN already stands as the first PIF giga-project
to deliver to customers since its flagship SEDRA community welcomed its first residents two years ahead of schedule in October 2022.
SEDRA, situated in Riyadh, will eventually encompass eight phases with 30,000 homes. It has rapidly established itself as one of the capital’s most desirable districts, with every one of the three sales tranches launched so far being sold out rapidly. Building on the demand of the first three phases, the Group recently launched sales for the fourth phase of this flagship development eventually bringing a further 4,860 units over 1.9 million square metres to the community. ‘SEDRA 4’ will also notably include a world-class sports dome, offering year-round, allweather recreation facilities through an agreement with Saudi Sports For All (SFA). SEDRA is also closely integrated with ROSHN Front, formerly known as Riyadh Front. The Group’s acquisition
ROSHN's master planning of its projects is creating open, green, and walkable neighbourhoods that will empower social interaction, revitalising a way of life that was once much more widespread in the Kingdom. Furthermore, a ROSHN street is a "Living Street," with pedestrian priority, low-speed limits, and natural shade enabling 15-minute walkability through these green spaces to community amenities
and rebranding of this popular retail and commercial destination epitomises ROSHN’s strategic ability to facilitate integrated lifestyles, as SEDRA residents now benefit from privileged access to one of Riyadh’s most popular zones.
ROSHN kept up the momentum and launched ALAROUS in the storied Red Sea city of Jeddah. As 2023 arrived, the venture launched WAREFA in Riyadh, a 2,000-plus unit project expanding and enhancing one of the capital city’s most promising neighbourhoods in the Janadriyyah district. They next turned east to the iconic Dakhna Mountain of the Eastern Province’s Hafouf. Here, ROSHN’s ALFULWA project will bring a new swathe of units to market in a “Garden City” composed of 22% green public space. October 2023 saw the cornerstones for both WAREFA and ALFULWA laid in ceremonies attended by both ROSHN and regional governmental leaders.
Turning to 2024, in February ROSHN broke ground on Jeddah’s MARAFY, the Group’s most ambitious project to date. The project, which links distinct districts with a Red Sea-fed 11km long canal, has become the first of its kind in the Kingdom, apart from becoming an instantly iconic landmark for the city. MARAFY is ROSHN’s largest mixed-use project, and will feature the venture’s signature combination of residential, retail, hospitality, leisure, commercial, and educational spaces. With MARAFY now well underway, hints about the possible announcements of new multifunctional and mixed-use projects fill the air.
ROSHN is fashioning fully integrated developments that enable health, well-being, and fulfilment by
combining multiple real estate verticals in a humancentric way. It’s a new way of living in Saudi Arabia, where communities and lives are living beyond walls in developments designed from the ground up to create a daily dialogue between a uniquely Saudi past, present, and future.
ROSHN has strived to create a real estate offering that is unique in the Kingdom with a range far wider than just homes. Interlinked facilities, including education, sports areas, shopping malls and commercial areas, cafes and restaurants, and healthcare centres, integrate and interact to encourage genuine community-focused lifestyles.
ROSHN's master planning of its projects is creating open, green, and walkable neighbourhoods that will empower social interaction, revitalising a way of life that was once much more widespread in the Kingdom. Furthermore, a ROSHN street is a "Living Street," with pedestrian priority, lowspeed limits, and natural shade enabling 15-minute walkability through these green spaces to community amenities.
The Group is also committed to ensuring that its projects become an integral part of the Kingdom’s social, urban, and cultural fabric. Walk those living streets of SEDRA or look at the designs of any of ROSHN’s projects and you see exactly how this ambition manifests itself. In SEDRA and WAREFA, buildings hark back to the traditional architectural vernacular of the region, while in ALAROUS and MARAFY in Jeddah and the Eastern Province’s ALFULWA, different forms and colours speak to those regions’ historic buildings.
Meanwhile, the natural environment has become part of the projects as well with the design teams prioritising the preservation of habitats and drainage patterns in the communities, while also adding distinctive green public spaces coloured by native flora in these projects.
Sustainability is at the core of ROSHN’s operations. It promotes walking and green micro-transport solutions to smart city projects that improve the efficiency of irrigation, street lighting, and waste management. Coupled with cutting-edge materials that cut water and electricity usage, a robust material
and community recycling programme, and a wideranging planting programme, ROSHN is setting new standards in sustainable development.
ROSHN has achieved the "Diamond category" in the Kingdom’s Mostadam sustainability ratings as well as the internationally recognised "BSI Kitemark Certificate" for Saudi smart cities, which includes the "Smart City Operating Models" for "Sustainable Communities ISO." Recently, ROSHN was presented with an award for the "Best Waste Diversion Initiative of the Year" by the "Saudi Arabia Cleaning, Waste Management & FM Awards" in recognition of its innovations in that area.
ROSHN GROUP also engages in a daily embrace of the same values it promotes: integrity, responsibility, empowerment, opportunity, trust, safety, and sustainability. These guide ROSHN’s internal operations, where employees are engaged in feedback processes, and offered regular opportunities to upskill their existing talents. The Group is playing its part in imbibing these values in the next generation of the Saudi workforce with its
HIMAM graduate programme, which has seen over 70 graduates taken under the ROSHN wing so far.
ROSHN is also setting new standards for corporate conduct, apart from establishing itself as a partner of choice for suppliers. In 2023, ROSHN marked 35 million safe working hours and joined the "United Nations Global Compact" on responsible business practice, thereby becoming the first Saudi giga-project to do so.
The Group has also been recognised with awards as wide-ranging as "Best Developer in the GCC" by Construction Week, the "Best Place to Work in Saudi Arabia" for the second year running by the Best Places to Work organisation, certification as a Top Employer for the past two years, and for Corporate Social Responsibility (CSR) Initiative of the Year.
ROSHN also has numerous ISO certifications, becoming the first Gulf-based developer to secure ISO 9001 for Quality Management and the first company of any kind in the India, Middle East, Turkey, and Africa (IMETA) region to achieve the BSI Kitemark for Smart Cities, ISO 37106:2021.
A highlight of the "ROSHN Supply Chain Forum" was the venture’s agreement with Partanna, the world’s first carbon-negative concrete manufacturer. The collaboration will see the two entities establish the Middle East’s first carbonnegative concrete production facilities, ensuring the spread of this revolutionary technology across the region, apart from cementing ROSHN’s status as a global pioneer in sustainable development
As it quickly expanded across the country of Saudi Arabia, ROSHN recognised from the outset the critical importance of establishing strong and flexible supply networks rooted in resilient local and global collaborations. The year 2023 witnessed a significant shift through the establishment of numerous strategic business alliances and agreements with suppliers hailing from various regions in Saudi Arabia and beyond.
ROSHN has secured significant partnerships to enhance the development of essential and lifestyle facilities. Among these partnerships is a SAR 7.7 billion agreement with China Harbour Engineering Company. Additionally, ROSHN has entered into multi-million SAR agreements with key Saudi suppliers. These include PC Marine Services for canal and bridge construction in MARAFY, Abyat for the design and supply of approximately 12,000 kitchens in future ROSHN communities, and Saudi Pan Kingdom Company for primary and secondary infrastructure in upcoming western Saudi communities.
As ROSHN entered 2024, the venture took the game to the next level by hosting the "ROSHN Supply Chain Forum" during which it worked to enhance connections, highlight prospects, and forge fresh collaborations by convening a diverse group of private sector suppliers and contractors under one roof. The event proved to be highly successful, resulting in the signing of eight new agreements with private sector partners from Saudi Arabia and around the globe. These agreements aim to localise manufacturing, pioneer innovative materials, and enhance the efficacy of ROSHN's partnership
procedures.
A highlight of the "ROSHN Supply Chain Forum" was the venture’s agreement with Partanna, the world’s first carbon-negative concrete manufacturer. The collaboration will see the two entities establish the Middle East’s first carbon-negative concrete production facilities, ensuring the spread of this revolutionary technology across the region, apart from cementing ROSHN’s status as a global pioneer in sustainable development.
This approach has not only ensured minimal impact on ROSHN from supply chain disruption, but it has also allowed the venture to have as broad an impact on Vision 2030’s goals as it has on Saudi Arabia’s map, in particular economic diversification targets. This has been achieved through job creation, the expansion of emerging economic domains, and the localisation of manufacturing processes. This process is particularly serving as a catalyst for aspiring Saudi entrepreneurs and invigorating local economies. ROSHN envisions creating a substantial number of job opportunities in the Kingdom by 2030, thereby contributing significantly to the non-oil sector's GDP and aligning closely with the overarching goals of Vision 2030.
Recently, ROSHN won International Finance’s "Best Community Residential Project Developer" award for their exceptional performance in 2023. SEDRA, ROSHN's flagship development in Riyadh, stands as a testament to the company's commitment to fostering sustainable, integrated lifestyles.
Comprising eight phases and over 30,000 residential units, SEDRA's strategic location and traditional architecture make it a highly desirable living space. SEDRA is also a pioneer in sustainable design, as it boasts reductions in energy and water usage that are above and beyond the mandated "Saudi Building Code."
ROSHN's other projects, such as WAREFA, ALAROUS, MARAFY, and ALFULWA, also uphold sustainability as a core principle. Emphasising walkable thoroughfares, solar energy, advanced insulation technologies, and abundant natural lighting, these projects play a crucial role in achieving ROSHN's sustainability objectives. The recent collaboration with EVIQ, Saudi Arabia's pioneering electric vehicle charging network, marks a significant achievement in promoting electric vehicle adoption in a nation heavily dependent on cars. This partnership
will result in the establishment of charging stations throughout ROSHN's developments, contributing to a more sustainable future.
ROSHN’s Jeddah communities are continuing this legacy of innovation. ALAROUS, ROSHN’s first community in the Red Sea city, and now MARAFY, both showcase the Group’s signature integrated approach, emphasis on sustainable practices, and commitment to traditional architectural heritage, combining residences, amenities, and human-centric design.
The incorporation of classical Jeddah architectural elements pays tribute to the rich Saudi heritage, blending innovation with respect for tradition. Situated prominently as the primary residential area
within the revolutionary MARAFY canal project, ALAROUS emerges as the premier destination in Jeddah, a city that ROSHN endeavours to elevate into the ranks of the world's top 100 most livable cities by 2030.
ALFULWA, ROSHN's first venture into the Eastern Province, has emerged as a harmonious blend of nature, history, and modern living, centred near the iconic Dakhna Mountain on the outskirts of Hofuf. With an abundance of native flora, and a design inspired by the region's architectural heritage, ALFULWA is exemplifying ROSHN's commitment to creating communities that immerse residents in the beauty of their surroundings.
ROSHN now foresees an evolutionary expedition
through different sectors, extending beyond its premises. The Group is carefully designing multifaceted environments that foster centres of health, wellness, and a dynamic social fabric. ROSHN sees its role as shaping a new way of living where opulent regional architectural patterns intertwine with the pinnacle of contemporary design.
ROSHN has assumed a responsibility that exceeds its construction sector activities. It has far-reaching implications for Vision 2030's goals, a thriving economy, a vibrant society, and an ambitious nation. ROSHN's developments act as a catalyst for entrepreneurial Saudis, apart from supporting
domestic supply chains, generating jobs, and stimulating local economies. By 2030, ROSHN aims to create hundreds of thousands of jobs in the Kingdom, making them an important instrument of national development.
ROSHN’s ‘YUHYEEK’ CSR initiative uses its size and reach as a PIF-powered giga-project to extend its commitment to quality of life, sustainability, and community building beyond its projects, benefitting Saudis across the Kingdom through partnerships that uplift, empower, and inspire.
From inspiring the love of reading at Riyadh and Jeddah Book Fairs to supporting events like LIV Golf and the Zahra Breast Cancer Awareness Campaign, ROSHN has become a catalyst for a vibrant Saudi society.
Recognising the importance of local arts in the formation of the Kingdom’s emerging identity, ROSHN has also engaged in sponsorships of the Diriyah Biennale and the Tuwaiq Sculpture Symposium. YUHYEEK is continually seeking new partners to deliver benefits to Saudi society, demonstrated further by its partnership with the Tarmeem Charity to renovate homes for the needy.
ROSHN is dedicated to fostering ambition within the nation, boasting a commendable 72% Saudisation rate alongside a 28% female employment rate. A groundbreaking initiative in Saudi Arabia, ROSHN’s RETURN Programme not only propels societal advancement but also symbolises inclusivity. By providing compensated training opportunities to women rejoining the workforce, this programme is intricately crafted to nurture, empower, educate, and instil confidence in those seeking to reignite their professional journeys.
Aiming to become one of the world’s most diversified real estate ventures, ROSHN continues to make long-term investments across Saudi Arabia, muscling up its presence across a range of verticals.
ROSHN is committed to elevating the quality of life, fostering economic diversification and prosperity, and contributing to the realisation of Vision 2030's objectives by hosting top-tier events in the Kingdom to enhance global involvement.
ROSHN winning International Finance’s "Best Community Residential Project Developer" award is a testament to the venture's transformative impact on Saudi Arabia's real estate landscape. Standing tall, the venture truly symbolises the convergence of tradition and modernity, sustainability, and innovation.
With the tech sector steadily moving towards the 'Everything AI' kind of future, semiconductors will be in great demand in the coming years
Netherlands-based semiconductor company ASML hit the headlines in January 2024 for its lithography machine, which will project nanoscopic chip patterns onto silicon wafers.
Reporting on the development, The Economist reported, "Ten times a second an object shaped like a thick pizza box and holding a silicon wafer takes off three times faster than a manned rocket. For a few milliseconds, it moves at a constant speed before being halted abruptly with astonishing precision—within a single atom of its target. This is not a high-energy physics experiment."
ASML has also been witnessing record orders for its ultraviolet lithography machines as Intel, Samsung and Taiwan Semiconductor Manufacturing Co (TSMC) are all lining up to induct the tool in their production ranks
On January 5th, American semiconductor giant Intel became the first owner of ASML's latest technical marvel, which it will use for assembling chips at its Oregon factory.
As January 2024 passed by, ASML closed at a record high after its orders more than tripled. Order bookings rose to a record €9.19 billion ($9.98 billion) in the fourth quarter from €2.6 billion in July to September 2023, driven by demand for ASML's most sophisticated chip making machines.
What makes ASML's presence crucial for the semiconductor industry is that the company is the only one which produces the equipment needed to
make the semiconductors.
ASML has also been witnessing record orders for its ultraviolet lithography machines as Intel, Samsung and Taiwan Semiconductor Manufacturing Co (TSMC) are all lining up to induct the tool in their production ranks.
"ASML also benefited from strong demand from China last year (in 2023) as chipmakers there rushed to get lithography machines ahead of Dutch export rules meant to hobble Beijing’s semiconductor ambitions. The rise in Chinese demand helped offset the effects of a global chip industry slowdown on ASML, which is the only producer of the equipment needed to produce most advanced semiconductors," Bloomberg noted.
China accounted for 39% of ASML’s sales in the fourth quarter and became the Veldhoven-based company’s largest market in 2023.
However, ASML has been targeted by the United States in the latter's effort to curb exports of cuttingedge technology to China. In 2023 itself, Joe Biden’s administration urged the Netherlands government to prevent ASML from shipping chip making devices to China without a license. US officials also reached out to ASML and gave similar directions to the venture, as per Bloomberg reports.
And as the West keeps on preventing companies from its shores from supplying cutting-edge tech to Beijing, ASML too has fallen in line by restricting its China exports. The venture now expects as much as 15% of its China sales in 2024 to be affected by the new export control measures.
Apart from its cutting-edge chip making products, the Dutch venture is also known for its market value being quadrupling since 2019, to €260 billion ($285 billion), thereby ensuring that the company stays as Europe’s most valuable technology firm. Between 2012 and 2022, ASML's sales and net profit both rose roughly four-fold, to €21 billion and €6 billion respectively.
"In late 2023, ASML’s operating margin exceeded 34%, staggering for a hardware business and more than that of Apple, the world’s biggest maker of consumer electronics," stated the Economist.
You can say that Silicon Valley still leads the innovation race, but none of its innovations will see the daylight if it doesn't get powered by cuttingedge semiconductors. That's where ASML comes in handy, by holding the monopoly over this critical supply chain. And the West needs to be thankful because ASML is a Netherlands-based venture, not a China-based one.
The global semiconductor sales are predicted to double to $1.3 trillion by 2032. However, the US-led Western Bloc will be looking to ensure that Beijing doesn't get the cherry. So ASML's business will depend to some extent on geopolitical developments, but to its credit, the company has created a network of suppliers and technology partners across Europe, that itself looks like a well-oiled lucrative
industrial vertical.
"Its business model ingeniously combines hardware with software and data. These unsung elements of ASML’s success challenge the notion that the old continent is incapable of developing a successful digital platform," the Economist commented further.
ASML’s complex machines project chip blueprints onto photosensitive silicon wafers. In 1986, when the Dutch venture delivered its first machinery model, individual transistors measured micrometres and its kit almost looked like a glorified photocopier, states Dutch journalist Marc Hijink.
Jump forward to 2024, with transistors being shrunk by a factor of a thousand, ASML lithography gear has emerged as the most sophisticated equipment ever sold commercially.
ASML and its partners pulled off the shrinking trick through some engineering manoeuvring. It involved powerful lasers incinerating droplets of molten tin, each no thicker than a fifth of a human hair and travelling at over 250kph. The process produces extremely short-wavelength light, which then smoothly gets reflected by a set of mirrors. ASML's latest lithography gear costs over $300 million and exposes enough semiconductors. The object that holds the silicon wafer (known as a 'table') accelerates faster than a rocket and comes to a stop at exactly the right spot.
Economist paid a visit to ASML's Berlin factory, where the venture makes the 'mirror blocks', which serve as the main part of a wafer table.
"These are sturdy pieces of a special ceramic material, a square 8cm thick and measuring about 50cm on each side. Some get polished, measured, repolished, remeasured and so on, for nearly a year—until they are exactly the right shape, including allowances for the fact that they will sag by a few nanometres once installed," the media house noted further.
The factory's owner, Berliner Glas, was acquired by ASML in 2020. Berliner Glas, along with 800 other firms (mostly European), helped put together ASML’s machines. ASML
owns stakes in only a few of these businesses, meaning most of these ventures operate as independent units, while being part of ASML's massive manufacturing ecosystem.
ASML outsources over 90% of its manufacturing workloads and directly employs less than half the estimated 100,000 people required for its operations.
This is due to the fact that ASML, during its spin-off in 1984 from the Dutch electronics giant Philips, did not possess its in-house production lines. Since then it has been relying upon specialist component suppliers.
Also, manufacturing the various parts of the lithography machine is cutting-edge in itself. Carrying out all these functions can easily overwhelm ASML. Also, semiconductor economics preaches the decentralisation of the
production networks.
In this particular industry, demand moves up and down in the blink of an eye. With the tech sector steadily moving towards the 'Everything AI' kind of future, semiconductors will be in great demand in the coming years.
The sector is very much prone to supply chain gluts. So the industry stakeholders are now outsourcing some of the component manufacturing duties to its suppliers, which can limit the fallouts by catering to customers working in different business cycles.
The practice which ASML started in 1984, has now become a phenomenon called 'HyperSpecialisation,' which prevents the risk-reducing double sourcing (practice of using two suppliers for a given component, raw material,
product or service).
"In the case of ASML, technical demands are so high and production volumes so low (it shipped 317 machines in 2022) that it would be uneconomical to manage several suppliers for a single part even if they could be found. For such crucial components as lasers and mirrors, which are made by Trumpf and Zeiss, two German firms, respectively, it is impossible,” Wayne Allan, who is in charge of sourcing on ASML’s board, told The Economist.
Approaching things smartly
ASML mostly limits itself to designing the architect of its cuttingedge semiconductor-making tools. After that, the venture decides who (suppliers) does what, apart from defining the interfaces between the main parts of its machines (modules) and carrying out the required research and development activities.
This simplified workload helps the venture to test the machine equipment, certify and assemble them, followed by the transportation of the finished products. The suppliers have also been encouraged to experiment with technologies. The whole thing works on two Ts: 'Trust' and 'Transparency.'
Information flows freely throughout the supply chain. As engineering teams from different firms work together, ideas and patents get shared, along with financial data and profits. Also, suppliers engage in healthy competition with each other.
If a supplier runs into operational trouble, ASML proactively intervenes to ease things out. If the trouble is bigger in size, then the venture ends up buying the
supplier, as it did with Berliner Glas.
Can anyone challenge ASML?
ASML's manufacturing ecosystem is something to envy about. It is a loosely coupled structure that ensures the operational autonomy and financial well-being of all the component suppliers. The whole model is well-oiled enough to outperform an entire industrial vertical.
ASML is now trying to consolidate its market dominance by complementing its chip making hardware with software and data. The goal is to further refine the 'Wafer Table' in the lithography machines. The process will be performed through data mining and machine learning. In that way, ASML will make itself into some sort of AI venture too.
Of the 5,500 devices ASML has sold since 1984, 95% are still in operation and many even send data back to the venture's Dutch headquarters. These data then get used to fine-tune the products further, which in turn leads to higher semiconductor production ratios and generates even more data to help digital services like the Internet and Internet of Things (IoTs) to perform stronger.
"If rivals cannot topple ASML, can anything? Maybe physics. Even with the best AI, you can’t shrink transistors forever (certainly not in a commercially viable way). If technical requirements become too otherworldly the supplier network may unravel. Or maybe economics. Chipmakers may recoil at ASML’s data hunger, which extends to other linked devices in their factories. Some are pushing back against its digital expansion, insiders say," The Economist noted.
"Then there is geopolitics. ASML’s share price dipped after news broke about the cancelled deliveries to China. The worry is less over lower sales; ASML cannot build its machines fast enough anyway. Of greater concern is the risk that strict export controls could in time push China to build its own chipmaking-gear industry. That could one day threaten ASML’s position at the centre of the sector. For the time being, though, the company’s network and its network effects remain indomitable. Who said Europe couldn’t do tech?" it concluded.
Sodexo UK Corporate Services MD Jade Boggust noted that for aspiring leaders in facilities management, prioritising continuous learning is key
‘Prioritising continuous learning is key to success’
Jade Boggust assumed the role of Managing Director for Sodexo's Corporate Services business in the UK in June 2023. The business delivers a wide range of facilities management and food services to clients across various private sectors, such as financial services, professional services, media, technology, pharmaceutical, and FMCG. At the age of 33, Jade stands out as a notable and influential female leader making strides within the facilities management sector.
Jade joined Sodexo in 2021 as Business Development Director - Europe, leading its operational and sales teams to drive growth across 22 countries. Before joining Sodexo, Jade held key leadership positions in sales and operations, managing a portfolio of clients where the delivery of experience-led services was paramount.
Armed with expertise in energy and carbon, Jade has been instrumental in shaping Sodexo's energy management, net-zero, and remote monitoring programmes in recent years. Her contributions have played a pivotal role in positioning Sodexo as a frontrunner in this domain, establishing the company as a trusted advisor to clients seeking guidance on decarbonisation initiatives.
Jade is a frequent speaker at FM industry events, previously serving as a Trustee for the Harrogate District Climate Change Coalition. Currently, she extends her support to young professionals in the facilities management sector by serving as a mentor.
In her interview with the International Finance Magazine, Jade Boggust, Managing Director of Sodexo UK Corporate Services, delves into the nuances of the facilities management industry, offering valuable insights on cultivating a positive work culture, harnessing technology for enhanced efficiency, adapting to evolving client needs and expectations, and a host of other pertinent topics.
As the Managing Director of Sodexo UK Corporate Services, can you provide an overview of your leadership philosophy and how it has contributed to the success of your team and the organisation?
In the fast-paced and ever-evolving world of facilities and workplace management, I have learnt that the success of the business directly translates to leadership philosophy. Having worked alongside several successful leaders in my career to date, I have learnt from each of them how different leadership philosophies can influence different results. For me, however, the greatest success comes from empowering my teams, instilling trust, and owning the results, both positive and negative.
My role is to instil a shared vision, that my teams are
inspired to play a part in contributing to and then supporting them in delivering this. Empowering my team is crucial for achieving operational excellence, by giving them the autonomy to make decisions within the framework of their roles. When team members feel a sense of ownership over their tasks and projects, they are more likely to take initiative, innovate and contribute to the overall success of the organisation. This, combined with prioritising individual growth and recognising achievements, leads to higher job satisfaction and increased productivity.
Managing facilities management contracts for prominent global companies requires a deep understanding of their unique needs. How do you ensure that your
Staying informed about emerging trends and technologies in the facilities management industry involves continuous learning and industry engagement. This can include attending conferences, participating in industry forums, government events and leveraging professional networks
team tailors solutions to meet the specific requirements of each company?
In managing facilities management contracts for large global companies, it is crucial to get to know our clients intrinsically. To quote Steve Jobs, ‘Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves.’
This involves close collaboration with our clients to understand their brand, culture, expectations, ambitions and future plans. Whilst a number of our core services happen behind the scenes such as maintenance and housekeeping activities, a significant number of our workplace services such as catering, digital concierge, front of house, security solutions interact with our clients’ employees and their own clients. We map out our client journeys, so we are able to design the experience and adapt our service offering to reflect expectations at all touchpoints from the minute a guest arrives, to the minute they leave and form their lasting impressions. Regular feedback loops, continuous improvement workshops and a proactive approach to problem solving contribute to the success of delivering tailored solutions for each of our clients and our leading high retention score.
Given the dynamic nature of the facilities management industry, how do you stay informed about emerging trends and technologies, and how do you incorporate them into your strategic planning for Sodexo UK Corporate Services?
Staying informed about emerging trends and technologies in the facilities management industry involves continuous learning
and industry engagement. This can include attending conferences, participating in industry forums, government events and leveraging professional networks. Incorporating these insights into strategic planning involves proactive analysis of potential impacts on operations, considering technology adoption and ensuring the team is equipped to adapt to industry advancements. Regularly reassessing strategies helps us to stay ahead in a dynamic environment, alongside leveraging data and insights.
As a global operation working within multiple sectors, we are able to collaborate with our colleagues across those different markets to learn from one another. Internally, we have significant innovation, strategy, and digital teams, who are constantly on the front foot with research into trends and client behaviour, placing Sodexo in an excellent position when it comes to gaining invaluable insights from data and information.
Can you share a challenging situation you've encountered in managing facilities management contracts and the strategies you employed to overcome it, ensuring positive outcomes for both Sodexo and the clients?
For many businesses emerging from the pandemic, increasing costs – particularly energy costs – are exerting a massive amount of pressure to find cost savings. For businesses where cost-cutting is the main driver, outsourced services, such as FM may be seen purely as a cost and, therefore, one that the business may be keen to shed. The challenge, however, is that many of these services are critical to ensuring building compliance or the cleanliness and attractiveness of the workplace, and they are services that rely heavily on people.
Ensuring we can demonstrate our service provision is optimal is now more important than ever. Ensuring we have flexibility in
our operating models to adapt to fluctuating building occupancy levels, deliver efficiencies in our processes and demonstrate engineering, housekeeping or helpdesk productivity now plays a key part. Technology underpins this; from automating routine tasks to demonstrating performance against our service agreements, to tracking energy savings we have committed to.
Many client organisations also now recognise that as a global facilities management provider, we are able to drive value in other ways, including increasing energy savings, delivering decarbonisation programmes and contributing to attracting and retaining talent through the provision of a world-class workplace.
Employee engagement is crucial for workforce performance. What initiatives or practices have you implemented to foster a positive work culture within your team and, by extension, enhance the service delivery to clients?
Our employees are at the heart of our business and personify our values of Service Spirit, Team Spirit and Spirit of Progress. It is essential that we invest in them to succeed. In fostering a positive work culture, initiatives like regular
team-building activities including with our clients, joint recognition programmes and open communication channels can boost employee engagement. Every employee also has a personal career development plan, with training opportunities, mentoring and talent programmes. Additionally, soliciting feedback and involving employees in decision-making processes fosters a sense of ownership. Circles, a Sodexo workplace concierge and community company, offers a Five star hospitality and community engagement programme which builds bespoke training programmes for our teams at each client location to ensure our colleagues are vested in the client brand, understand their role and feel part of one team. The positive work environment, alongside an industry-leading rewards and benefits package, contributes to our leading employee retention statistics and hugely motivated team.
Sustainability is a growing concern globally. How do you integrate sustainable practices into your facilities management contracts, and what role do environmental considerations play in your decision-making process? Sodexo’s commitment to sustainability
Like every other organisation, the COVID-19 pandemic impacted our business and therefore meant we had to adapt to support our clients and ensure resilience in our business model. We harnessed our agility to diversify our services to meet the changing needs of clients
underpins everything we do. From building onto clients’ net zero roadmaps and activating relevant areas, to supporting clients decarbonise their estate and integrating sustainable decisionmaking in future maintenance strategies, to driving circular economy practices from waste management to materials management and reduction of food waste with our AI tool; in each element of our service offering we are always driving the sustainable agenda.
For every client location, we complete a sustainability assessment and then work with our clients to baseline their performance and, in partnership, build a clear roadmap of initiatives incorporating sustainability metrics into key
performance indicators to ensure ongoing commitment. We celebrate our achievements, learn from piloting innovations and also recognise that we can’t tackle this alone. This is why our accelerator programme works to identify start-ups in the sustainable arena to work alongside our clients to pilot solutions. We also host roundtables focused on sustainability challenges where client organisations come together to learn from one another and share success stories. We truly believe a collaborative approach to driving this agenda is key. Whilst we can go fast alone, we can go further together.
Technology is transforming the way facilities are managed. Can you discuss specific instances where you've leveraged technology to improve efficiency, cost-effectiveness, or overall service quality for your clients?
Sodexo puts technological innovation at the heart of what we do to provide actionable insights, enhance the workplace experience, deliver efficiencies, drive decarbonisation and ensure the uptime of our clients' critical assets.
Our Digital Intelligence Hub in Manchester is at the heart of this process. Here our teams of specialist engineers and analysts run diagnostic checks on remotely monitored assets, derive insights from utilisation and occupancy sensors, use AI to automate routine tasks and support clients with their decarbonisation programmes. We then use this intelligence to adapt our services; whether it is realigning our maintenance strategies to a client's decarbonisation programme or real estate strategy, looking at repurposing space to drive employee productivity or adapting our workplace food offer to align with consumer nutrition preferences. This intelligence is essen-tial in the development and improvement of effective strategy and operational decisionmaking at Sodexo.
The COVID-19 pandemic has reshaped the way we work. How has Sodexo UK Corporate Services adapted its facilities management
JADE BOGGUST MD, SODEXO'S CORPORATE SERVICESstrategies to address the changing needs and expectations of clients in this new environment?
Like every other organisation, the COVID-19 pandemic impacted our business and therefore meant we had to adapt to support our clients and ensure resilience in our business model. We harnessed our agility to diversify our services to meet the changing needs of clients. From providing flexibility in our workplace solutions to adapt to fluctuation in client building occupancies, to having workplace solutions for remote employees to feel part of an organisation even if working from home through the introduction of meal vouchers and a digital concierge, through to the activation of online ordering and payment systems to optimise catering solutions to employee preferences and reduce overproduction of food.
For many clients, our role has also evolved considerably from a facilities management provider to a strategic partner sitting at the table, supporting clients to reduce the total cost of occupancy, enhance the employee value proposition, lead their decarbonisation programmes and support real-estate strategic decisions.
As a leader with plentiful experience in the FM sector, what advice do you have for professionals aspiring to leadership roles in the facilities management industry, especially those looking to manage contracts for highprofile clients?
For aspiring leaders in facilities management, prioritising continuous learning is key. It is vital to stay updated on industry trends, technologies and best practices as well as develop strong communication skills, lead with integrity, and empower your teams. Foster a mindset of continuous improvement and adapt to changing environments and client needs. Deliver what you promise and build and maintain strong relationships with clients built on trust.
In
2023,
the United States
National Health Care Anti-Fraud Association estimated that tens of billions of dollars per year were lost to healthcare fraud
On June 2023, the United States Justice Department announced federal and local criminal charges targeting 78 defendants across 16 American states as a part of its law enforcement action involving $2.5 billion in alleged healthcare fraud schemes, which targeted elderly and disabled people, HIV patients and pregnant women.
Cases included false billing of the federal medicare insurance programme for elderly and disabled Americans and paying illegal kickbacks, illicit diversion of expensive prescription medications and the improper dispensing of highly addictive opioid painkillers.
"Among those facing charges include 24 doctors, nurses and other licensed medical professionals, as well as healthcare executives including the current and former CEOs of a durable medical equipment online platform accused of falsely billing $1.9 billion in fraudulent claims," Reuters stated.
The rotten state of affairs
As per the Justice Department, out of the $2.5 billion in fraudulent medicare claims, state Medicaid programmes serving the poor and private medicare insurance programmes, about $1.1 billion was actually paid out to the fraudsters.
Some cases were related to expensive HIV medications, which can fetch medicare reimbursement rates as high as $10,000 for a month's supply.
In one case, the owner of a pharmaceutical wholesale distribution company was charged in New Jersey with illegally purchasing diverted HIV drugs and then reselling the medication by falsely claiming it was acquired through legitimate channels. In another incident, federal officials announced an indictment against a Wisconsin-based business owner accused of preying on low-income pregnant women by enticing them to sign up for prenatal care services, and submitting phoney claims for services never rendered.
Then there were fraud cases targeting elderly/disabled patients. These victims were tricked into providing their insurance information to telemarketers in lieu of receiving testing, medical equipment or other "free service" paid for by medicare. Doctors having no relationship with the patients were then rubber-stamping the orders by falsely certifying that they were medically necessary. These claims were getting submitted to federal/state insurance programmes for reimbursement.
Persons contributing to the scheme were receiving illegal kickbacks. The Justice Department also cited examples of services like durable medical equipment, genetic testing and lab diagnostic services, which were targeted by the fraudsters.
In January 2024, reports emerged about YouTube deleting a thousand videos circulating on its platform that purportedly showed singer Taylor Swift, television personality Steve Harvey and podcaster Joe Rogan pitching a 'Medicare Scam.'
These videos were artificial intelligence-generated deepfakes. YouTube told Newsweek about the video streaming platform being "aware" that it was containing such fake advertisements and deleted over 1,000 videos, 90 YouTube channels and multiple advertiser accounts linked to the scams.
In 2023, the United States National Health Care Anti-Fraud Association estimated that tens of billions of dollars per year were lost to healthcare fraud.
Many of these losses were attributed to the fact that medicare is required to pay medical claims quickly. As a result, claims were getting paid long before they could be flagged for potential fraud, which meant that these monetary losses were evading the government's radar.
Some of these scams also preyed upon the disabled and elderly, making them unwitting victims of large criminal schemes. One such was the Durable Medical Equipment (DME) companies paying illegal kickbacks and bribes in exchange for referrals of medicare beneficiaries. Authorities described this scam, which involved telemedicine, as one of the largest healthcare frauds they had ever investigated. The scam targeted hundreds of thousands of elderly/ disabled patients and involved medical professionals and call centres in other countries in pulling off the heinous act.
The scammers didn't spare the COVID outbreak either. Medicare advocates noticed an eleventh-hour rise in complaints from beneficiaries
who received tests, sometimes by the dozen that they never requested. For these experts, the trend was a signal that someone might have been using, and could continue to use, seniors' medicare information to improperly bill the Joe Biden government.
In 2023, the United States Department of Health and Human Services' Office of Inspector General received complaints about unsolicited tests being billed to medicare, as per the reports.
As per María Alvarez, who oversees New York State’s Senior Medicare Patrol, an organisation which helps identify and educate beneficiaries about medicare fraud, a stolen medicare number can be used repeatedly to get payment for all kinds of things.
According to Nancy Moore, the Senior Medicare Patrol programme director for Indiana, one beneficiary suspected something was amiss after receiving 32 unrequested tests over a 10-day period. In fact, complainants didn't give out their medicare numbers to random people.
Lisa Dalga, project manager for Ohio's Senior Medicare Patrol, stated in 2023 about medicare being paid for tests for some beneficiaries who never received them.
Recently, the New York Times reported about a person named Linda Hennis, who, while checking her medicare statement in January 2024, saw a company, which she had never heard of, had been paid about $12,000 for sending her 2,000 urinary catheters. The fact is that Hennis never needed/received any catheters.
Chicago-based Hennis was among over 450,000 medicare beneficiaries whose accounts were billed for urinary catheters in 2023, according to the "National Association of Accountable Care Organisations," an advocacy group that represents hundreds of healthcare systems across the country.
"The massive uptick in billing for catheters included $2 billion charged by seven high-volume suppliers, potentially accounting for nearly one-fifth of all medicare spending on medical supplies in 2023. Doctors, state insurance departments and health care groups around the country said the spike in claims for catheters that were never delivered suggested a far-reaching medicare scam," The New York Times noted.
"Pretty in Pink Boutiquet," the organisation under the lens here, billed
medicare at least $267 million for catheters between October 2022 and December 2023.
Talking about medicare billing scams, if patients do not pay the bills themselves, more spending by the government can increase the premiums paid by enrollees in the future.
In 2019, an international fraud ring involving over $1 billion in phoney billing for back and knee braces got busted. The trend is clear here-medical supplies have become the sources of scams, thanks to relatively low-quality bars that result in the mushrooming of medical supply companies.
"The companies don’t need much to show why grandma needs a urinary catheter," Eva Gunasekera, who previously led healthcare fraud investigations at the Department of Justice said.
Patients and doctors who have been reporting mysterious catheter claims to medicare for months expressed their frustration, as there was a lack of communication from the Biden government about whether billions of dollars have been lost to an ongoing billing scam.
Dr. Bob Rauner told The New York Times that his patients got collectively billed nearly $2 million in 2023 for "Phantom Catheters."
He had to file a complaint with the
federal health department’s Office of Inspector General in December 2023.
"Pretty in Pink Boutique is registered with medicare to a street address of a house in El Paso. Its phone number tgoes to an auto body shop called West Texas Body and Paint, where an employee who answered a call from a reporter said the shop receives 'calls all day, every day' from medicare enrollees concerned about fraudulent bills," NYT stated further.
Pamela Ludwig, who runs an unrelated business in Nashville that is also called "Pretty in Pink Boutique," got so many catheter complaints (as the medical supply company was sharing the same brand name) that she had to give an online clarification that her business was not part of any scam.
She complained to medicare in September 2023. After that, her husband heard from a New York City banker about several men coming to his office and asking to set up an account for "Pretty in Pink Boutique."
The issue landed on the radar of the Oklahoma Insurance Department in July 2023, when it was investigating fraudulent medicare claims for COVID-19 kits. The officials then noticed a surprisingly high number of claims for catheters as well. The massive spike in billing for at-home catheters cost medicare as much as $2 billion.
The healthcare structure in the United States is in dire straits, with the scamsters having field days at the cost of the Americans' well-being. Will the government ramp up its regulatory watch? Because being extra vigilant will help things more, rather than launching the regulation investigation after the occurrence of the crimes.
MOLIM strives to assist users in achieving their financial goals through informed decision-making
In the fast-evolving landscape of financial technology, MOLIM has emerged as a trailblazer in the credit reporting industry in Saudi Arabia. MOLIM, dedicated to providing individuals with comprehensive credit information, recently clinched the prestigious title of the ‘Best Credit Reporting Application’ in Saudi Arabia. This award not only recognises MOLIM's commitment to innovation but also underlines its mission to empower users with the insights needed to make informed financial decisions.
MOLIM stands at the forefront of credit reporting applications in Saudi Arabia, embodying a commitment to empower individuals with comprehensive credit information and insights. With an unwavering focus on delivering an exceptional user experience, MOLIM strives to assist users in achieving their financial goals through informed decision-making.
The recent recognition of MOLIM as the ‘Best Credit Reporting Application’ in Saudi Arabia is a testament to the application's outstanding contribution to the credit reporting industry. MOLIM has not only set a new standard but has also redefined the user experience within the industry. Let's delve into the key features that set MOLIM apart and contributed to its well-deserved success:
MOLIM takes pride in offering users detailed and comprehensive credit reports that provide a holistic
view of their credit history. From credit scores to payment history and account details, MOLIM equips users with the necessary information to make well-informed financial decisions. This feature is a cornerstone of MOLIM's dedication to financial transparency.
In a world where financial landscapes can change rapidly, MOLIM's real-time monitoring feature serves as a proactive shield for users. Instant alerts notify users of any changes in their credit reports, enabling them to take immediate action to protect their credit profiles and scores. This emphasis on real-time information empowers users to stay in control of their financial well-being.
MOLIM's commitment to accessibility is reflected in its user-friendly interface, ensuring a seamless and intuitive experience for all users. The application is designed to be inclusive, with support for both iOS and Android
platforms. This user-centric approach contributes to MOLIM's mission of making credit information easily accessible to a diverse user base.
MOLIM's milestone and commitment to continuous improvement
The recognition of MOLIM as the ‘Best Credit Reporting Application’ in Saudi Arabia is a significant milestone in the company's journey. This award not only acknowledges past achievements but also serves as a catalyst for MOLIM to continue enhancing its application and delivering exceptional value to its users.
In a dynamic industry, MOLIM remains committed to continuous improvement. The Credit Reporting Application is a testament to this dedication, and the company actively seeks ways to enhance its features, user experience, and overall functionality. MOLIM recognises that staying at the forefront of innovation is essential to meeting the evolving needs of users in the financial landscape.
Accessible and widely recognised
MOLIM's Credit Reporting Application is readily available on both the App Store and Google Play Store, ensuring accessibility for a broad user base. The application's user-friendly design and comprehensive features have not only won the hearts of users but also garnered recognition from esteemed institutions.
MOLIM's journey to becoming the ‘Best Credit Reporting Application’ in Saudi Arabia is a testament to its commitment to user empowerment and innovation. As MOLIM continues to evolve, users can expect an even more robust and feature-rich application that caters to their ever-changing financial needs. The recent recognitions are not just awards but a celebration of MOLIM's dedication to excellence in the credit reporting industry. As individuals navigate their financial journeys, MOLIM stands as a reliable companion, providing the tools and insights necessary to make informed decisions and achieve financial goals.
Technology is advancing at a rapid pace, which has caused the banking industry to change and will continue to do so
Humans have always pushed the banking industry boundaries. The human race has always been interested in change and innovation, from the exploration of new planets in the 15th century to the search for new worlds in the present. The banking industry is no exception.
With the advent of open banking and decentralised finance (DeFi), which give consumers more control over their financial data and access to a greater range of financial services
Technology is advancing at a rapid pace, which has caused the banking industry to change and will continue to do so. Banks are using cutting-edge technologies like blockchain, artificial intelligence, and data analytics to improve their services in this era of digital transformation. These developments are simplifying banking procedures while also giving consumers a more tailored and responsive banking experience. With the advent of open banking and decentralised finance (DeFi), which give consumers more control over their financial data and access to a greater range of financial services, the all-pervasive technology layer is continuing to change and empower consumers.
In response to customers' growing demands for convenient and seamless banking experiences, banks are utilising automation and data-driven insights to offer customised financial services and products. Customers can now access banking services more easily and manage their finances while on the go thanks to the introduction of chatbots, virtual assistants, and mobile banking apps.
At its core, banking is a customer-centric business, and its ability to adapt to technological advancements and customise services will determine how far banks can go in the future.
Banking has always been the foundation of trade, from trading in Renaissance Italy to the sophisticated financial instruments of today. Although the methods and procedures are changing, the fundamental goal stays the same. By 2024, banks want to be more than just financial hubs—they want to be comprehensive platforms designed with customer interaction in mind.
The emergence of Generation Alpha, or people born in 2010 and beyond, marks a turning point in consumer behaviour. Over the next few decades, Generation Alpha will have higher expectations of the banking system than previous generations did. Because of their inherent inclination toward technology, banks will be compelled to use it as well and offer a technology-first service that meets their unique financial needs. The expectations of this generation regarding banking services are shaped by their experience with digital technology. They look for platforms where interactions happen, not just transactions; where things happen instantly, seamlessly, sympathetically, and in harmony with their digital lives.
In order to provide real-time, context-aware services to this tech-savvy generation, banks need to leverage data analytics and artificial intelligence (AI). The idea of a fixed credit score, for example, is becoming dated. Rather, dynamic credit assess-
ments at the point of sale will become standard practice, enabling quicker and more precise financial decision-making. As demonstrated by China's recent social credit law, credit evaluations now consider individuals' moral principles and social conduct in addition to transactional factors. Credit needs to be placed in context.
The foundation of banking's future is intelligence, individualisation, and intuitive design. AI systems that can create individualised financial plans with little human supervision are replacing human experts in the field of financial advice. The intention is for banking services to provide customised solutions and anticipate the needs of their clients without requiring their requests.
In this new era, technological infrastructure is essential, and the idea of convergence is crucial. Banks can now provide incredibly dependable and speedier services thanks to 5G technology, bringing in a new era of seamless connectivity. The Internet of Things (IoT), advanced analytics, and high-speed data transmission are coming together to create a revolutionary wave of innovations that will continue to reshape the banking experience. The convergence of these technologies fosters a potent partnership
that allows banks to offer personalised, context-aware, real-time financial solutions to their clientele.
The integration of diverse financial services from all industries, including banking, payments, insurance, and investing, all accessible through a single digital ecosystem, is another aspect of this convergence beyond connectivity. Customers can anticipate an unparalleled degree of ease and effectiveness in handling their financial matters as a consequence, paving the way for a banking environment that is more connected and focused on the needs of its clients than in the past.
The growing collaboration between the banking sector and the transportation industry is exemplified by ride-sharing applications that feature automatic payment mechanisms. By 2027, there will be 3,467.00 million users in the shared ride market, and revenue is expected to reach $429.10 billion in 2023. The way we pay for transportation services has been drastically altered by ride-sharing apps. Those days of trying to find the closest ATM before getting a ride are over. Instead, users can connect these apps to their credit cards or bank accounts to enable automated, cashless transactions. The payment process is made easier and security is improved by this integration.
Additionally, the e-commerce industry and banks are collaborating more and more. By providing co-branded
credit cards and even investigating the idea of offering Amazon-branded checking accounts, Amazon, for example, has made a foray into the financial services industry. In addition to strengthening Amazon's relationship with its clientele, these financial products establish the business as a major force in the financial industry. Furthermore, Amazon Pay has expanded its influence in the digital payments market by enabling users to make payments on other e-commerce websites, in addition to Amazon's own platform.
The distinction between banking and shopping will likely become increasingly hazy as banking services become more integrated into the e-commerce ecosystem. Customers may benefit from more tailored financial advice, adaptable payment options, and improved security measures as blockchain, digital wallets, and artificial intelligence technologies develop. The way that people shop and handle their money is ultimately going to change as a result of this developing partnership.
The food and beverage industry is one of the other sectors to which this also applies. In the past, the partnership has mostly focused on handling payments for delivery services and restaurants. However, biometric authentication techniques, like fingerprint recognition, are increasingly being incorporated into the payment process. The latest collaboration between Mercedes and Mastercard, providing fingerprint authentication for car purchases, is just one instance of the application of this technology. With the help of this development, consumers will
soon be able to safely and easily use biometric information, like their fingerprints, to pay for groceries or restaurant meals.
We may expect additional biometric authentication integration across different touchpoints in the food and beverage industry as technology develops. This could include self-checkout options at grocery stores, fingerprint-enabled payment terminals in restaurants, and even biometrically secured food delivery services. These innovations improve security while streamlining the payment process and increasing consumer convenience and efficiency. In the end, banking spreads throughout society.
The partnership between fintechs and banks signifies a significant change in the financial services industry. Financial institutions, frequently encumbered by antiquated systems and conventional methods of operation, require substantial digital enhancements to effectively mesh with the nimble and technologically advanced methodologies of fintech enterprises. This integration forces banks to embrace open APIs for improved interoperability, modernise their IT infrastructure, embrace cloud computing, and improve their data analytics capabilities.
Meanwhile, Fintechs have to conform to the strict security and regulatory frameworks that are characteristic of the banking sector. In addition to quickening the rate of financial services innovation, this convergence forces traditional
banking institutions to change their culture in order to promote a more customer-focused and cooperative approach.
Fintech businesses are experts at creating digitally first, user-friendly experiences that appeal to today's tech-savvy customers. By utilising this expertise, traditional banks are modernising their outdated systems and switching from rigid, paperbased procedures to flexible, digital platforms. This change improves the overall customer experience, lowers expenses, and streamlines operations.
Moreover, banks can access cutting-edge technologies like blockchain, artificial intelligence (AI), and data analytics through fintech partnerships. These technological advancements enable banks to provide more individualised services, instantaneous risk assessment, and effective fraud prevention. Consequently, clients experience expedited loan approval processes, customised investment suggestions, and improved security protocols.
Even though there are many reasons to be optimistic about these partnerships, organisational outlook alignment and cultural synergy are necessary for true success. The recent split between Apple and Goldman Sachs emphasises how crucial it is to align oneself not only in terms of technology but also in terms of values and strategic vision in order to forge enduring and successful relationships.
Meanwhile, the market capitalisation of publicly traded fintechs as of July 2023 was $550 billion, which is two times more than in 2019. Furthermore, as of
the same time frame, there were over 272 fintech unicorns, valued at a total of $936 billion, a seven-fold rise from the 39 companies that had a $1 billion or higher valuation five years prior.
A market correction in 2022 caused this rapid growth momentum to slow down. Even now, the effects are still noticeable. There is a general decline in funding and deal activity, fewer initial public offerings (IPOs) and SPAC (special purpose acquisition company) listings, and fewer new unicorn creations. The macro environment is still unpredictable and difficult.
In this case, fintechs are starting a new chapter in their value-creation history. Businesses in the past have been more experimental, taking calculated chances and going for growth at any cost. Fintechs can no longer afford to sprint in the
new era due to a difficult funding environment. They have to run more slowly and steadily to stay competitive.
The transformation of the banking industry is driven by a move away from conventional profit models and toward ones that prioritise customer outcomes. Banks are gauging their success by the total value they offer to clients, rather than just the difference between deposits and loans. Providing an integrated platform with a seamless convergence of banking, commerce, and lifestyle services is part of this.
These days, banks are supposed to be flexible organisations that can adjust to shifting consumer needs and technological advancements. Future banks will be transparent, data-driven, customer-focused, and
flexible. It must be prepared to adapt its offerings instantly, placing the needs of the client first at all times.
The future of banking is being shaped by three layers of models: innovative, flexible, and agile products at the top, ever-evolving, robust technology at the base, and a customer-centric approach at the top. This has the potential to propel the banking industry forward and make banking experiences as instinctive and natural as the environment we live in. Banks are laying the groundwork for a time when banking will be more than just a service—rather, it will be a customised path to financial empowerment and well-being as they adopt this revolutionary model.
UBS reported a net loss of $785 million for the June-toSeptember 2023 quarter, driven by costs tied to the Credit Suisse rescue deal, which came in at $2 billion
Arecent yet noteworthy event in the banking industry has been the UBS Group's acquisition of its Swiss rival Credit Suisse Group.
The acquisition took place on 19th March 2023, through an all-stock deal brokered by the government of Switzerland and the Swiss Financial Market Supervisory Authority. Credit Suisse, the then global banking major, got involved in a series of scandals, leading to market panic. Credit Suisse also saw its share price plunging after the leading shareholder, Saudi National Bank ruled out further investment into the bank due to regulatory issues.
The merger deal was rapidly agreed upon and implemented to prevent turmoil in the global financial markets. As the merger is about to complete one year, International Finance will evaluate the acquisition, and consider whether it has been a profitable endeavour.
Given the fact that Credit Suisse was in deep crisis and the timing of the merger deal also coincided with the closing down of three prominent American financial institutions (First Republic Bank, Signature Bank and Silicon Valley Bank), the marriage between the rivals saved the stock markets from utter chaos.
The acquisition of Credit Suisse by UBS had several strategic objectives. The first was to achieve synergies by streamlining operations, eliminating redundancies, and maximising resources to improve efficiency and cost-effectiveness. Additionally, it aimed to bolster market position and competitiveness by expanding the range of products and services offered, increasing the client base, and extending the geographic reach of the combined entity.
The acquisition aimed to mitigate risks and capitalise on growth opportunities in a highly competitive and volatile market. Ultimately, the goal was to create a stronger and more resilient banking conglomerate capable of navigating global financial challenges and seizing opportunities.
The process of merging two large financial institutions has been a complex and intricate undertaking filled with difficulties. Both entities had their own unique organisational cultures, business models, and operational structures, making it crucial to align and harmonise these aspects.
As of February 2024, UBS has announced its plan to restart share buybacks and find $3 billion more in cost savings from integrating Credit Suisse, as the bank now outlines the next phase of absorbing its fallen rival.
UBS now expects $13 billion in cost
savings by the 2026 end, with half of it coming from slashing staff headcount. They had previously set a cost savings goal of over $10 billion. It is also worth remembering that since taking over Credit Suisse, UBS' share price has jumped some 50%.
The bank has already completed the first phase of the Credit Suisse staff and other resources' integration, but trickier stages will come now, in the form of thousands of job losses and the combination of different IT systems. UBS CEO Sergio Ermotti has already informed the media that the progress over the next three years would not be "measured in a straight line."
However, UBS reported a net loss of $785 million for the June-to-September 2023 quarter, driven by costs tied to the Credit Suisse rescue deal, which came in at $2 billion.
UBS now predicts that the expenses will decrease in the coming months as the integration stages progress. However, the fact remains that when the merger happened, Credit Suisse was financially in a bad shape and now this legacy has fallen upon UBS.
Despite the third-quarter loss, shares in UBS gained 4% in Zurich, as the banking group went through a strong inflow of funds, a phenomenon which displayed high confidence from the clients.
"UBS saw $22 billion of net new money flow into its global wealth management business, as it gained new clients and won back assets from those who had pulled funds immediately before and after the emergency takeover. That figure includes flows into Credit Suisse’s wealth management unit, which turned positive for the first time in 18 months," stated CNN, while mentioning about UBS attracting net new deposits of $33 billion, with two-thirds of the amount coming
Any merger and acquisition activity comes with staff restructuring, along with the demon called 'job losses.' As per the reports, UBS has intensified its efforts to reduce costs and increase earnings by aggressively cutting thousands of jobs.
The Swiss Bank aims to save $13 billion by 2026 by cutting gross costs. In August 2023, it announced plans to cut at least 3,000 jobs in Switzerland.
As of February 2024, the headcount at the merged group has been reduced to 112,842 employees at the end of 2023, down from 120,000 post the merger.
UBS has managed to reduce costs by $4 billion, partly through layoffs, and the process accounts for nearly one-third of the venture's current targeted amount. In the 2023-24 fourth quarters alone, the company cut more than 3,100 positions,
bringing its total headcount to fewer than 113,000.
UBS CFO Todd Tuckner has revealed that a significant portion of the latest round of job cuts consisted of staff who were formerly employed in Credit Suisse's investment bank. These layoffs mostly occurred in the United States and the United Kingdom, with staffers from other parts of the world feeling the pinch too.
For the October-to-December 2023 quarter, UBS recorded a net loss of $279 million, marking its second consecutive quarterly loss, partially attributed to expenses related to the acquisition deal.
UBS's team of managing directors now possesses 177 individuals. Only around 30 of them reportedly are from Credit Suisse. The number of people promoted to the managing director rank in UBS is now on a downward trajectory. In 2021, it was 208, followed by 183 the
following year.
UBS' effort to make its organisation leaner also coincides with weak customer demand and China’s economic slowdown. Relationship managers were among the
posts that faced the elimination heat in Singapore and Hong Kong. These teams were purchased from Credit Suisse during the March 2023 merger.
Singapore and Hong Kong, which traditionally hosted China’s ultrawealthy, saw UBS fighting low consumer demand and activity levels in 2023. The region’s profit before tax for the wealth management division decreased by 9% in the second quarter compared to the same period in 2022.
China's rebound from COVID has entered into a stall, with the real estate crisis taking a toll on its economy further. China saw one of its weakest GDP expansion rates in decades (3% in 2022).
In February 2024, UBS announced a big payout to shareholders. However, CEO Ermotti warned about his venture facing a substantial restructuring before reaping the benefits from its Credit Suisse takeover.
"The year 2023 was a defining year in UBS's history with the acquisition of Credit Suisse. Thanks to the exceptional efforts of all of our colleagues, we
stabilised the franchise and have made tremendous progress in the integration," these were Ermotti's statement in UBS' earnings call, a confident one despite the bank reporting a net loss of $279 million in the final three months of 2023. There was a silver lining in this figure as it was less than the nearly $500 million forecast by analysts.
For the full year, UBS bagged a net profit of $29 billion in 2023. Ermotti also highlighted clients entrusting the bank's global wealth management division with $77 billion in new assets since the Credit Suisse acquisition.
UBS suspended share repurchases after the acquisition and now plans to reinstate them in the coming months, with the plan to buy back up to $1 billion worth by the 2024 end. The venture will raise the dividend it pays to its shareholders to $0.70 per share
for 2023, up from the 2023 tally of $0.55.
Still, Ermotti, while interacting with the analysts, preferred to express caution, as he said, "We need to deeply restructure. Our plan is not relying on overly optimistic assumptions about market activity."
After the merger with Credit Suisse, UBS was able to save $4 billion in cost savings in 2023 and it has raised the target to $13 billion by 2026. However, according to the venture's chief financial officer, Todd Tuckner, expenses are expected to remain high in 2024 as two-thirds of the integration costs are anticipated to be incurred this year.
UBS had the option of getting Credit Suisse listed separately across the stock markets. Nevertheless, it decided to fully absorb its former rival. Then it identified the problem area, which was Credit Suisse's investment bank, as the division
was at the centre of scandals and crises that brought the venture's demise.
As per senior equity analyst Andreas Venditti, UBS has done a tremendous job with the Credit Suisse takeover as the business saw a strong increase in dividends, resumption of share buybacks and higher cost savings target. However, he still believes that the financial institution needs to do a lot more to keep the momentum going.
With the Credit Suisse takeover, UBS got an unprecedented 25% of the dealmaking fee pool in Switzerland in 2023, which helped the venture bring in $251 million in domestic investment banking fees which translates into a 24.9% market share. Bank of America came in second with $91 million in deal-making revenue (a 9.1% share).
The Swiss investment banking market has long been dominated by Credit Suisse and UBS, with Switzerland firmly establishing its ability to fend off the prominence of Wall Street banks in its domestic market.
As financial platform Dealogic decoded UBS' deal-making successes last year, it found out that Credit Suisse's revenues were added to these figures, suggesting the size of the Swiss market UBS will defend the merger. In 2022, Credit Suisse brought in 15.1% of the Swiss deal-making fee pool, while UBS grabbed 9%.
UBS's 25% of the Swiss fee pool in 2023 was the venture's biggest proportion on record as it bettered Credit Suisse's 23.5% market share in 2014. In fact in the category of dealmaking, UBS has become a European giant post the Credit Suisse merger, as in terms of market share, only Spain-based Santander comes in the second position with 12% of the domestic investment banking fee pool.
Talking about the 2024 aspirations, UBS has set its eyes firmly on markets
like the United States and Asia. The venture aims to achieve at least $5 trillion in invested assets across the world by 2028, a vision which was laid out during the presentation of the financial giant's 2023 results. To realise the goal, the company will be required to add a minimum of $1.15 trillion from its current $3.85 trillion in invested assets.
The Swiss banking major aims to achieve $100 billion in net new assets (NNA) per annum through 2025 before optimising for greater capital efficiency to achieve $200 billion in NNA annually by 2028. UBS is also eyeing to reduce its underlying cost-income ratio to 70% by 2026, down from 87.7% at the 2023 end.
Asia will likely continue to play a prominent role in UBS' growth roadmap. Let’s check the figures. UBS' wealth management arm in Asia saw its assets surge by over $200 billion in 2023.
Overall invested assets totalled $645 billion, marking an increase of 51%, or $217 billion, compared to $428 billion at the 2022 end.
Net new asset inflows were $13.5 billion for the fourth quarter. The bank recorded a pre-tax profit in Asia Pacific of $97 million in the 2023 fourth quarter, down 45.5%. This was driven by the consolidation of Credit Suisse revenues
which were partly offset by lower net interest income. Loans decreased 4% to $45.8 billion, primarily reflecting $2.5 billion of net new loan outflows.
The bank’s cost-income ratio in the region also soared from 69.7% to 87.7%, coinciding with an expanded workforce, as the number of client advisors grew to 1,101 compared to 847 at 2022 end. Compared to Asia, UBS earned net new assets worth only $21.8 billion in other parts of the world.
UBS has recently undergone a revamp with the aim of achieving growth in Asia in a more diversified manner. Prior to the merger with Credit Suisse, UBS was already a dominant player in the AsiaPacific region. Following the merger in March 2023, UBS gained access to the South APAC clientele of its now-defunct rival.
As per the reports, within its APAC wealth unit, UBS has set a deadline of end-2024 to complete the migration of Credit Suisse clients and products in Hong Kong and Singapore.
UBS was the top wealth advisor in the Asia-Pacific in terms of value and volume, stated GlobalData’s Deals Database, as the Swiss banking major advised on 32 deals worth a total of $27.7 billion in 2023. JP Morgan was placed second, advising on deals worth a total of $26.1
billion, followed by Citi, which advised on deals worth $21.8 billion.
GlobalData lead analyst Aurojyoti Bose said, “UBS was the top adviser by volume in 2022 as well. Meanwhile, its ranking by value took a massive jump and it went ahead from occupying the 27th position in 2022 to top the chart in 2023. UBS advised on seven billion-dollar deals, that also included one mega deal valued at more than $10 billion. Against this backdrop, UBS registered a 123.5% jump in the total value of deals advised in 2023 compared to 2022.”
When the Swiss government-choreographed merger happened between Credit Suisse and UBS, there were apprehensions about the move's future, as Credit Suisse was marred by scandals and financial irregularities. Analysts were concerned about UBS' future. UBS did experience consecutive quarterly losses, which was unprecedented in its history of operations.
By February 2024, the venture has also achieved a few other firsts, be it becoming a European giant in the field of deal-making or maintaining its status as the top wealth advisor in the AsiaPacific region since 2022. At the same point of time, the venture has also been strategically brilliant, when it comes to restructuring the staff. Instead of blindly mass firing everyone, it has taken a detailed look at the talents in Credit Suisse who can help the Swiss banking giant to continue its expansion and has inducted those faces into their organisational folds.
CEO Sergio Ermotti sees his venture's progress over the next three years not being something "measured in a straight line." If no major bump comes in those three years, the muchdebated Credit Suisse-UBS merger may very well turn into a muchcelebrated one.
Family financial planning includes long-term planning in addition to day-to-day or month-to-month spending and saving
Following a financial plan gives families direction, freedom to pursue their interests, and access to opportunities that they might not have otherwise had, like beginning a family company or buying a property
Financial planning for families is a must in the 21st century, as the move can ensure that your loved ones enjoy the activities and material comforts that are important to them, while having monetary security for life's inevitable bumps. We all saw those dark days in the last two years, when Europe for example, saw families getting affected by the inflation and the resultant cost of living crisis.
While there is no guarantee that the situation mentioned above won’t come back again, this article will enlighten and prepare its readers on the family financial planning front, its essential elements, and simple measures that can bring everlasting mental comfort to you and your dear ones.
While households create a family budget, many fail to implement the plan, says Taylor Kovar, the CEO of Texas-based Kovar Wealth Management.
"This is where we want to go and this is how much we have right now," Kovar said. Following a financial plan gives families direction, freedom to pursue their interests, and
access to opportunities that they might not have otherwise had, like beginning a family company or buying a property.
"We don't say that the person with the most money or the one with the best financial sense gets to make those decisions. Working as a team, so everybody feels satisfied is crucial. It is a little more complex than just money," Kovar explained further.
Establishing both long-term and short-term financial objectives for the family might aid in defining the "why" behind your strategy. It could involve long-term goals like retirement, investing in a college degree, or buying a house. Alternatively, it could be short-term objectives like saving money for an emergency fund, clearing debt, or planning a family vacation.
Taking general guidelines into consideration when creating your list of objectives can be helpful. The 5030-20 rule is frequently recommended by Brandon Robinson, president and founder of Texas-based JBR Associates Financial Services, who cites the rule's efficacy and simplicity.
According to this rule, you should set aside 50% of your salary for necessities and 30% for luxuries. The remaining 20% goes toward savings and investments, which promote long-term growth and financial stability.
You can experiment with alternative methods or
a different percentage breakdown. Don't be scared to attempt multiple approaches until you find the one that best suits your family.
A budget is an essential tool for your family's financial plan since it makes it clear how your money is being spent, which helps you manage it better. It is said eloquently by financial advisor Kovar, "You can't manage what you can't measure."
The need to watch spending has grown, as evidenced by a New York Life Wealth Watch poll that found an astounding 73% of parents struggle to keep up with expenses. The first step in creating a budget is adding up all of your income, including child support and other sources of income such as paychecks.
After that, every price is totalled, with variable costs like groceries and entertainment coming after fixed commitments like rent or a mortgage, auto payments, utilities, and tuition. Any money left over after deducting expenses from income should go into investments and savings to promote stability and growth in one's finances.
Frequent monitoring of spending enables continuous evaluation and necessary adjustments, guaranteeing that financial goals are met.
Families can save money for many purposes at the same time, but if you don't already have one, your main focus should be setting aside money for an emergency fund. You may prevent debt or even financial disaster by setting aside money
for unforeseen costs like house repairs or medical emergencies.
If you're just starting, open a different savings account and schedule a monthly or weekly automatic deposit. Selecting a high-yield savings account allows you to accrue interest in addition to your contributions. The ultimate objective is to accumulate enough funds to cover three to six months' worth of costs in the event of a job loss, personal crisis, or other unforeseen disaster. You can start by transferring as little as $50 to $100 per month.
Having debt can hinder your ability to reach your financial objectives. Robinson claims that although some debt, such as a mortgage, may be required, many families wind up in debt as a result of overspending on wants and accruing large credit card debt. In other instances, having to use credit to cover unforeseen costs results from not having enough emergency cash.
For whatever reason, you should prioritise making those payments consistently for a while if you do have high-interest amounts. It could mean temporarily cutting back on some expenses or earning additional money. If you're unsure of where to begin, you can look into other possibilities or consult with a credit counsellor for assistance.
The last thing you want is for unanticipated events to ruin the hard work you've put into adhering to a family financial plan. Products for insurance can help with it.
Term life insurance, health insurance, and vehicle insurance are the main kinds to have. In the latter
case, your loved ones may benefit monetarily in the event of your untimely death if you have a term life policy worth multiple times your yearly income and you have dependents.
There are additional insurances, such as business, umbrella, and pet insurance, that could also be helpful to you.
Family financial planning includes long-term planning in addition to day-to-day or month-tomonth spending and saving. You can prevent yourself from ever having to support your children financially by setting up money for retirement.
You'll have more growth potential the earlier you start investing. Additionally, you can achieve consistent growth while minimising your risk by keeping a diversified portfolio that includes a variety of investments.
Stocks, bonds, mutual funds, and retirement plans such as 401(k) s and individual retirement accounts (IRAs) are examples of long-term investing alternatives.
An investment in college can increase your children's earning potential in the long run. The most recent data available, from 2021, showed that the median wages of individuals with a bachelor's degree were 55% greater than those of individuals with only a high school diploma.
You can save and grow money tax-free using special accounts like 529 plans to assist lessen your children's future student loan debt
Above the same financially as a year ago
Worse off financially than a
Source: Statistaburden. Adding more money to a college savings plan can be a wise investment if you have a healthy emergency fund and are saving for your retirement.
According to Tyler Meyer, CFP, founder of RetireToAbundance. com, financial education ought to be a family affair. He suggests that everyone, whatever of age, contribute their financial expertise at a "Family Finance Night."
"This not only fosters financial literacy but also establishes a welcoming atmosphere for candid financial discussions, strengthening sound financial practices," Meyer stated further.
While shopping with your children, you may also look for instructional moments related to money and educate them to divide gift and allowance money into spend, save, and donate buckets.
A family financial plan ought to adapt as your priorities and funds do. It shouldn't remain stagnant.
"Plan a monthly check-in with your partner and/or children, and
then you can go deeper once or twice a year," Kovar advises.
Additionally, you may decide to review your financial planning checklist, consider new options, and be guided by a financial counsellor or planner once a year.
A common goal for many families is to retire. A crucial component of family financial planning is evaluating clients' retirement objectives and assisting them in creating a strategy to reach those objectives. If applicable, a successful retirement plan for a couple entails a thorough and well-coordinated strategy to guarantee that each person has the resources and financial techniques that work best for them.
As their financial advisor, you ought to urge your clients to fund their employer-sponsored retirement accounts 401(k)s and 403(b)s and to fully utilise any employer match that may be offered. When compared to other retirement
savings vehicles, these plans may have higher contribution limits and offer tax advantages.
You should advise both spouses to open IRAs, either standard or Roth, based on their income, tax status, and eligibility, in addition to employer-sponsored plans.
Couples can diversify their retirement funds and enhance their long-term financial plan by utilising the extra tax advantages and investment flexibility that IRAs offer. You must motivate your clients to make regular contributions to their retirement accounts, especially in times of market volatility or uncertainty. Furthermore, it will emphasise the significance of routinely assessing and adjusting their investment portfolios to preserve the intended asset allocation and risk profile.
As your customers mature, talk to them about the best time to file for both spouses' Social Security benefits, keeping in mind their ages, life expectancies, and possible survivor or spousal benefits.
Assist them in creating a retirement income plan that accounts for required minimum distributions (RMDs), tax consequences, and probable changes in their spending habits as they approach retirement.
Tax and legacy planning
Legacy planning is developing a plan for safeguarding a family's wealth and transferring it to subsequent generations in addition to life insurance. This can involve tax planning techniques to reduce estate taxes, if applicable, as well as estate planning techniques including drafting a will or establishing a trust.
Give customers advice on the significance of establishing a power of attorney, will, and healthcare proxy. Talk about ways to minimise taxes and preserve money using gifting techniques, trusts, and charitable contributions.
To assist clients in creating a thorough legacy plan that is in line with their beliefs and longterm financial objectives, financial advisors want to collaborate with
estate planning attorneys.
Due to many income streams, dependents, and possible credits or deductions, families can have more complicated tax circumstances than do individuals. Financial advisers should advise clients on ways to reduce their tax burden and assist them in understanding the tax ramifications of their financial decisions, working in tandem with certified tax professionals.
Achieving financial milestones and setting priorities is facilitated by creating financial goals that involve your entire family. Once you construct the family budget, tools, and technology can help you put a lot of your plan on autopilot, even if it can feel overwhelming at first.
Your family's financial stability can be strengthened for both the present and the future after you manage debt, build an emergency fund and insurance policies, and begin to see growth in your savings and investment accounts.
GRAHAM KITCHING PRESIDENT OF CHARTERED ACCOUNTANTS WORLDWIDE NORTH FLORIDA CHAPTER
Technology has evolved at a breakneck pace in the last few years. Banks have had to adapt and evolve to stay competitive, and in step with the evolving consumer. They are using innovation to reach customers at the most opportune time for transactions. One such opportunity that banks have capitalised on is embedded finance.
Accenture’s 2022 global survey analysis has predicted that embedded finance offerings to businesses could potentially increase global bank revenues by up to $92 billion by 2025. This presents banks with an opportunity to serve customers where they are purchasing goods and services, instead of having to acquire them in the first place. Providing a profitable shortcut to a paying customer. A Bain & Company report believes that by 2026, the value of embedded finance will exceed $7 trillion – in the US alone.
As this market continues to grow, success will depend on accurate risk assessment and brand strategy, diverse integration approaches, and strategically choosing areas of involvement.
Embedded finance refers to the integration of financial services into non-financial products and services. Examples could be “buy-now, pay-later” schemes, apps offering debit cards to partners, and more complex offerings such as loans and investments.
It benefits individual customers by making access to financial services easier as they can access it when they need it and where they need it. No need for a bank or an app. For industry, it helps boost sales and customer loyalty. Adding financial services to their
Embedded finance refers to the integration of financial services into non-financial products and services
offerings, enterprises help customers buy products and services easily, besides helping them collect payments faster and with more efficiency.
Thus, embedded finance is mutually beneficial to both non-traditional financial service providers as well as banks, because the latter perform the customerfacing interface to distribute products and services. In contrast, banks function as the engine room. By leveraging this additional channel, banks efficiently deliver financial services on scale at reduced cost. This allows banks to optimally utilise their infrastructure without worrying about marketing products via their distribution networks.
The impact of embedded finance on banking
The embedded finance business is also a threat to conventional banking due to growing competition from non-financial companies offering these services. Banks must carefully consider and define their roles within the embedded finance value chain. Here’s how: Banks have various strategies to navigate the digital landscape. One approach involves serving as an ecosystem curator, where they integrate financial services within a unified digital ecosystem, enhancing customer control but potentially limiting outreach to new clientele. Alternatively, banks can act as backend capability providers, collaborating with digital platforms to offer foundational capabilities, thus extending customer reach while ceding control over the customer experience. Additionally, banks can opt to be pass-through partners, joining forces with digital platforms to incorporate branded products, enabling them to leverage their technology and maintain a degree of brand connection with customers.
A three-stage approach to unlock the benefits of embedded finance could lead banks onto the path of peaceful co-existence. They should define their strategy after assessing the existing and prospective capabilities, understanding customer requirements, evaluating opportunities for value creation, and establishing clear milestones and objectives. Then follows a go-to-market strategy that involves choosing their roles within the value chain, their product offerings, target markets, customer segments, and strategic partnerships. Finally, they prepare for implementation by assembling dedicated product teams, crafting sustainable business models, determining necessary technological resources, and finalising detailed rollout plans.
Without a doubt, embedded finance will have a profound impact on the financial sector as banks adapt to a new landscape by developing their own set of embedded finance models in tandem with nonfinance companies. The focus will be on small and medium businesses (SMBs), that are emerging as prime customers. This is another significant shift in the banking business model where non-traditional finance providers act as intermediaries to integrate their services onto a platform, leading to a more contextual and user-friendly experience for enterprise customers and driving market share growth.
Banks now face the imperative to adapt and capitalise on this emerging trend by positioning
themselves as platforms, allowing third-party companies to tap into their APIs and offer valueadded services. Failure to do so may lead to a potential loss of up to 8% of their revenue streams from the SME segment, highlighting the urgency to respond to change.
Embedded finance also helps improve financial inclusion via innovation, making products and solutions available to underserved populations. Through partnerships with non-financial companies, banks can develop new and innovative financial products and services.
Embedded finance is a trend that can transform the banking industry. For this to happen, banks must adapt to the changing landscape by integrating their embedded finance capabilities with non-finance entities. This would result in a better customer experience for both individuals and enterprises and provide a growth fillip to the banks.
Graham Kitching is Practus’ Chief Business Officer for North America. With over 35 years of experience under his belt, Graham has acquired extensive global knowledge. He has worked with companies such as PwC, P&O, Bristol Myers Squibb, McGraw Hill, and TCS, amongst others. He has held various leadership roles in these organisations and his responsibilities have extended across Europe and Asia. A visionary and a motivator, Graham currently serves as President of Chartered Accountants Worldwide, North Florida Chapter.
AI and ML can be used in various aspects of banking, including fraud detection, customer service, credit risk assessment and personalisation
In 2023, the spotlight shone brightly on generative AI and other robust language model-based (LLMs) tools, as they not only proved to be lucrative for the tech sector but also catalysed a transformative wave throughout the global economy.
There isn't any sector, which got affected by the disruptive innovation. For example, take the banking sector, you have technology changing the game called 'Customer Interactions'.
Jump forward in 2024, financial institutions have understood the need to adapt to the rapidly evolving technological landscape and gain the market edge
In 2020, a study on AI in Financial Services conducted by the World Economic Forum in collaboration with the Cambridge Centre for Alternative Finance at the University of Cambridge Judge Business School found that 85% of the surveyed financial services are utilising AI in some form within their company.
Jump forward in 2024, financial institutions have understood the need to adapt to the rapidly evolving technological landscape and gain the market edge. The stakeholders need to carry on the push by keeping the investments time and capital going.
As per a September 2023 McKinsey study, while corporate and investment banks (CIBs) are using
AI at scale and reaping enormous benefits, the overall industry lags very much, when it comes to embracing technology, as many banks are using "bespoke, artisan-like approaches that are inherently less productive."
"Bankers often see areas across the front, middle, and back offices as too complex to use machine learning. A few leading banks have made AIrelated progress in some of these areas, including relationship manager (RM) support and advisory, compliance and risk decisions, and client service on complex bespoke products (think foreign-exchange hedges on forward commodities agreements)," the study commented further.
McKinsey Global Institute (MGI) now estimates that across all of the banking, wholesale, and retail sectors, generative AI will add between $200 billion and $340 billion in value through greater productivity.
In fact, in 2023, we saw Ant Group launching a financial Large Language Model, which is a specialised language model fine-tuned for AI applications in the financial services industry. The innovation also surpassed the existing generalpurpose LLMs in key areas like cognition, generation, domain knowledge, professional thinking and compliance.
Ant Group has trained the financial LLM on an extensive dataset, which includes hundreds of billions of token datasets containing Chinese financial documents and over 1,000 billion
tokens from general corpus datasets. The new tool has additionally incorporated a dataset of over 600,000 instructions from real-world industry use cases.
Then in November 2023, came a new LLM solution called 'Slope TransFormer,' specifically trained to understand the language of banks.
In 2023, Swiss enterprise software giant Temenos launched an industry-first secure solution for banks using generative AI to automatically classify customers’ banking transactions, which will help banks provide personalised insights, recommendations, engaging and intuitive digital banking experiences to society, apart from enhancing customer loyalty programmes through more relevant products and offers.
As the global economy is undergoing its 'Technological Renaissance,' the question here is 'Will human jobs end up getting replaced by
machines?' Well, in sectors like banking, the need of the hour is ensuring a 'Smart Automation,' as reflected in the innovations brought by Ant Group, Temenos and Slope TransFormer, where LLMs are not only taking over the daily mundane tasks but also helping to make functions like customer loyalty programmes 'smart' ones for the banks.
Through the tech's helping hand, human professionals are reading through and classifying customers’ banking transactions, to understand the latters' banking behaviour and draw up personalised customer loyalty programmes.
As per Chris Tapley, Vice-President of the Financial Services Consulting at the US-based EPAM Systems, financial ventures need to pay attention to the challenging economic environment that is pressuring them to protect the bottom line while delivering the quality and scope of services customers expect.
"Therefore, many banks must take direct and deliberate steps to significantly revise their technology stacks and operational processes to control
current costs, optimise near-term revenue and position themselves for future growth," Tapley stated further in his article, written for the Global Banking and Finance Review.
'Automated' road ahead?
Tapley predicts the banking sector's automation efforts to follow the path called 'Optimal Implementation'.
While automation will reduce the cost of critical processes, the phenomenon itself will require modernisation, especially in the domain of 'Underlying Technology Infrastructure'. Tapley believes that there are challenges associated with using AI and automation in the finance sector.
These include 'regulatory compliance issues', 'data privacy concerns' and the 'potential for bias/ discrimination'. He is pitching for the industry emphasising responsible and ethical usage of the technology.
Tapley says careful planning and execution are the keys to success, when it comes to the banking sector's automation efforts. The banks need to create essential investment areas to effectively implement automation and create seamless, personalised customer experiences.
Firstly, financial services providers should focus on RPA (Robotic Process Automation) as it will help these ventures streamline repetitive and time-consuming tasks, thus improving operational efficiency and reducing human errors. Tapley sees this course correction automating routine processes like loan processing, account opening, and customer onboarding.
Secondly, banks focussing on
Main benefits of artificial intelligence in the financial services sector globally in 2023
Created Operational Efficiencies
43%
Created A Competitive Advantage 42%
Improved Customer Experience 27%
Yielded More Accurate Models 27%
Opened New Business Opportunities 23%
Reduced The Total Cost Of Ownership 14%
Source: Statista
RPA will allow their employees to invest more time in strategic tasks like personalised interactions with the customers, apart from analysing market trends, developing new commercial strategies and making decisions to keep the financial services provider competitive.
As per Tapley, artificial intelligence and machine learning will be fundamental to the successful implementation of automation in the financial industry.
"These technologies (AI and ML) can be used in various aspects of banking, including fraud detection, customer service, credit risk assessment and personalisation. Banks should allocate resources for researching and developing in-house AI and ML solutions or partner with dedicated vendors to stay ahead in the swiftly evolving landscape. It is also important to note that all generative AI models should serve as assistive tools, not the sole decision maker," he stated further.
On the potential of tech transforming the personalisation
aspect of banking, Tapley bats for investing in 'Digital Customer Experience'. Implementing AIpowered customer support chatbots, enhancing the quality of baking apps and leveraging advanced analytics for personalisation will do wonders for the industry.
"After a virtual assistant verifies the customer’s identity, a customer can communicate with these chatbots in real-time and receive details on their accounts that would otherwise require human attention. Financial services can increase customer satisfaction, loyalty and revenue by prioritising the digital customer experience," Tapley commented further.
The key 'I' word
Talking about the banking sector and automation, implementing 21st century breakthrough technologies will require the overhaul of the legacy systems. Having a computer on every desk inside the building (backed by a centralised server) won't make a financial venture
'Future Proof'. Their infrastructure game should and must embrace cloud-based technologies, and APIdriven architectures, which will be friendly towards the integration of automated solutions like AI-powered personalisation tools.
Also having AI-powered personalisation solutions, for example, will only make sense if the banks back them by investing in data management systems and advanced analytics tools capable of collecting and analysing vast amounts of data in a very short period.
"This will enable them to gain important insights, make informed conclusions, and improve the accuracy of their predictive models, leading to better personalisation and customer experiences," wrote Tapley.
We all know the impact the fintech (financial technology) companies have made in the market, be it heavily investing in technology or disrupting the financial sector by introducing products and services that are tailor-made as per the customers' needs (using solutions like AI and ML).
While the fintech ventures have been successful in challenging their legacy counterparts in the last few years, the latter should and must collaborate with these disruptive start-ups and other technology providers to accelerate their automation efforts.
These partnerships will help the banks to benefit from innovative solutions and expertise that may not be available within
their existing rulebooks. Fintech companies are known for marketing and diversifying their offering and enhancing customer experiences in the blink of an eye, something which has been only possible due to the ventures heavily investing in breakthrough solutions like AI and data analytics.
Teaming up with fintech companies will only benefit the legacy banks as the latter will be able to improve their AI and personalisation tools, which, in the long run, will help them to offer highly customised and responsive services to their customers.
One of the key factors contributing to Emirates NBD Egypt's success is its continuous enhancement of Global Markets Sales
In a resounding testament to its commitment to innovation and excellence, Emirates NBD Egypt has been honoured with the prestigious title of "The Most Innovative Global Markets & Treasury Service Provider" at the International Finance Awards 2023. This recognition not only applauds the bank's dedication to providing cutting-edge treasury services but also underscores its relentless pursuit of delivering an exceptional banking experience to its diverse clientele.
Emirates NBD Egypt, a subsidiary of the renowned Emirates NBD group, has consistently demonstrated its leadership in the financial sector by adopting contemporary models and strategies to achieve excellence. The bank's Global Markets & Treasury Department has played a pivotal role in optimising liquidity and driving unparalleled performance in the market.
One of the key factors contributing to Emirates NBD Egypt's success is its continuous enhancement of Global Markets Sales. By staying ahead of market trends and leveraging the team's indepth knowledge, the bank makes well-informed trading decisions. This proactive approach, coupled with extensive experience in managing and optimising liquidity, sets Emirates NBD Egypt apart as a frontrunner in the industry.
The Global Markets Sales team at Emirates NBD Egypt goes above and beyond in understanding clients' needs. Conducting a thorough analysis of risk profiles, objectives, and constraints, the team develops tailored hedging strategies aligned with client objectives and risk tolerance. This approach enables the bank to mitigate various risks, including FX risk, interest rate risk, and other market exposures, offering clients a comprehensive and personalised financial solution.
Amr El-Shafei, Managing Director and CEO of Emirates
NBD Egypt, expressed his delight at receiving the award, stating, "We are delighted to receive this recognition as 'The Most Innovative Global Markets & Treasury Service Provider.' This award comes as an attestation to our active presence and diligent market analysis, enabling us to achieve a staggering 70% increase in net trading income in 1H23 compared to 1H22. These outcomes not only underscore our solid performance but also signify the trust and confidence our clients have in us. We remain dedicated to delivering innovative, tailored financial solutions and unwavering support to our clients."
The remarkable 70% increase in net trading income in the first half of 2023, as compared to the same period in the previous year, is a clear indicator of Emirates NBD Egypt's exceptional performance and ability to adapt to market dynamics. This success not only reflects the bank's financial acumen but also highlights its unwavering commitment to meeting the evolving needs of its clients.
Emirates NBD Egypt's accolades extend beyond the recent recognition, with the bank previously earning titles such as "Fastest
Growing Corporate Banking" and "Best Digital Bank in Wellbeing" in Egypt. These achievements underscore the bank's holistic approach, combining financial prowess with a commitment to corporate growth and digital innovation.
Since it entered into the Egyptian market in 2013, following the acquisition of BNP Paribas' subsidiary, Emirates NBD has seamlessly integrated its solid capabilities with its growing customer base and deep understanding of the Egyptian market. Currently boasting a balance sheet worth USD 3.75 billion and employing more than 2,300 individuals, the bank operates through 67 strategically located branches across major districts and cities in Egypt.
Leveraging its strength in the GCC region, particularly the United Arab Emirates, Emirates NBD Egypt continues to uphold its reputation as a trailblazer in the financial sector. As the bank looks toward the future, its focus on innovation, tailored financial solutions, and relentless client support positions it as a dynamic force in the global markets and treasury services landscape.
One notable instance of the chaos sparked by unfavourable currency fluctuations is the ‘Asian Financial Crisis’ that commenced in the summer of 1997 due to the devaluation of the Thai baht
Having a floating exchange rate is a must for any major economy. Floating exchange rates, which also contribute to currency fluctuations, generally get influenced by a wide range of factors, such as the state of a nation's economy, the likelihood of inflation, differences in interest rates, capital flows, and more.
One of the most important factors that central banks take into account, when determining monetary policy, is the value of the home currency on the foreign exchange market
The strength or weakness of the underlying economy usually determines the exchange rate of a currency. As a result, the value of a currency can change at any time.
Exchange rates are often ignored by the public because they are rarely necessary. An average person uses the local currency to conduct his/ her daily business. Only in the case of infrequent transactions like international travel, import payments, or foreign remittances, exchange rates become a concern. A strong national currency would appeal to foreign visitors because it would make trips to the country more affordable.
However, there is a drawback, as over time, a strong currency can significantly hinder the economy by making entire industries uncompetitive and resulting in the loss of thousands of jobs. Although some people might favour a strong currency, there
are more economic advantages to a weak currency.
One of the most important factors that central banks take into account, when determining monetary policy, is the value of the home currency on the foreign exchange market. Currency fluctuations can affect several things, including your mortgage interest rate, investment portfolio returns, the cost of groceries at your neighbourhood supermarket, and even your chances of landing a job.
The economy is directly affected by the level of a currency in many manners. Take merchandise trade for example. This represents the imports and exports of a country. A weaker currency generally raises the cost of imports while lowering the cost of exports for buyers abroad.
Over time, a country's trade surplus or deficit may be attributed to its currency, which may be strong or weak. Say, for instance, that you are an American exporter who offers widgets to a customer in Europe for $10 apiece. The exchange rate is $1.25 for every €1. Thus, each widget will cost €8 to your European buyer.
Let us now assume a weakening of the Dollar and an exchange rate of €1=$1.35. You can afford to give your buyer a break and still make at least $10 per widget, but they want to bargain for a lower price. Your price in Dollars is $10.13 at the current exchange rate, even if you set the new price at €7.50 per widget, which is a 6.25% discount from your buyer's perspective. A feeble Dollar makes it possible for your export company to compete in
global markets.
On the other hand, if imports become more affordable and exports become less competitive, the trade deficit may increase and the currency may eventually weaken as a result of a self-adjusting mechanism. However, an overly strong currency can harm export-dependent industries before this occurs.
Another case study is the capital flows. Strong governments, robust economies, and stable currencies are typically associated with a flow of foreign capital into those nations. For a country to draw in money from international investors, its currency must be reasonably stable.
In the absence of such, foreign investors may be discouraged by the possibility of suffering exchange-rate losses due to currency devaluation. Foreign direct investment (FDI) refers to the process by which foreign investors build new facilities or acquire stakes in companies already operating in the recipient market.
On the other hand, foreign portfolio investment involves the buying, selling, and trading of securities in the recipient market by foreign investors. For developing nations like China and India, FDI
is a vital source of funding. Foreign portfolio investments are hot money that can flee the country quickly in hard times, so governments typically prefer foreign direct investment (FDI) over them. Any unfavourable event, like currency devaluation, can cause this capital flight.
Also, significant importers may experience "imported" inflation as a result of a depreciating currency. Imports could cost 25% more in the event of an abrupt 20% decline in the value of the home currency because a 20% decline implies a 25% increase is required to return to the initial price point.
Another way the economy is directly affected by the level of a currency is interest rates. As was previously mentioned, when most central banks set monetary policy, exchange rates are a major factor. When determining monetary policy, the Bank of Canada considers the Canadian Dollar's ongoing strength, according to Governor Mark Carney's statement from September 2012.
Carney claimed that one factor contributing to his nation's "exceptionally accommodative" monetary
policy for so long was the strength of the Canadian Dollar. A strong home currency has a similar effect on the economy as how a tighter monetary policy does.
Furthermore, if monetary policy is tightened further during a period when the domestic currency is already strong, this could make matters worse by drawing in hot money from overseas investors looking for higher-yielding investments, which would strengthen the domestic currency even more.
With over $5 trillion traded every day, far more than all global equities, the forex market is the most actively traded in the world. Even with these massive trading volumes, currencies are typically not featured on the front pages. On the other hand, there are instances when sharp fluctuations in
currency values have global effects.
One notable instance of the chaos sparked by unfavourable currency fluctuations is the ‘Asian Financial Crisis’ that commenced in the summer of 1997 due to the devaluation of the Thai baht. This devaluation followed a targeted speculative onslaught on the baht, ultimately compelling Thailand's central bank to relinquish its fixed exchange rate with the US Dollar and allow the currency to float freely.
The adverse effects of this currency crisis then radiated to neighbouring countries including Indonesia, Malaysia, and South Korea, resulting in a substantial economic downturn characterised by a surge in bankruptcies and a sharp decline in stock markets.
The other one is China's undervalued Yuan. China maintained the renminbi at roughly 8.2 to the Dollar between 1995
and 2005, allowing its export-led economic boom to capitalise on what its trading partners claimed was an artificially devalued and suppressed currency. China reacted in 2005 to the mounting chorus of grievances from the United States and other countries. As a result, the value of the yuan increased gradually, reaching roughly 6 RMB for every Dollar by 2013 from over 8.2 RMB in 2013.
Similarly, the Japanese Yen's Gyrations is one such incident. From 2008 to 2013, the Japanese Yen was among the most volatile currencies. Due to Japan's policy of nearly zero interest rates, traders preferred the Yen in carry trades, where they borrowed money for very little and used it to invest in foreign assets with higher yields.
However, as the global credit crisis deepened in 2008, terrified investors rushed to buy Yen to pay back loans denominated in the
currency, which caused the Yen to appreciate sharply. The outcome was a more than 25% increase in the value of the Yen relative to the United States in the five months leading up to January 2009. Then, in 2013, Prime Minister Shinzo Abe unveiled plans for fiscal and monetary stimulus (dubbed "Abenomics"), which caused the Yen to fall by 16% in the first five months of the year.
Also, the Euro fell 20% from 1.51 to the Dollar in December 2009 to roughly 1.19 in June 2010, owing to fears that the heavily indebted countries of Greece, Portugal, Spain, and Italy would be forced out of the European Union. Over the following year, the Euro gained strength once again, but only momentarily. The Euro fell 19% between May 2011 and July 2012 as a result of renewed concerns about an EU breakup.
There are some ideas for profiting from currency changes. The first way is to invest overseas. Foreign exchange gains will increase your returns if you are an American investor who feels that the American Dollar is losing strength and you want to invest in robust foreign markets.
Examine the S&P/TSX Composite Index for Canada from 2000
to 2010. While the S&P 500 Index was essentially unchanged during this time, the Canadian Dollar saw returns on the TSX of roughly 72%. For American investors buying Canadian equities with greenbacks, US Dollar returns were about 137%, or 9% per annum, due to the steep appreciation of the Canadian Dollar.
The other ideas are to invest in US multinationals, refrain from borrowing in low-interest foreign currencies, and hedge currency risk. A sizable portion of the revenues and profits of the numerous large multinational corporations based in the United States come from overseas. The depreciating Dollar helps American multinational corporations' earnings, and when the Dollar depreciates, stock prices should rise accordingly.
Since 2000, the United States has experienced record-low interest rates, so, indeed, this hasn't been a major concern. However, the rates have risen since 2022, as the world’s largest economy, along with a huge part of the world, faced record inflation.
When such a situation, like the above one, occurs, investors should keep in mind those who had to rush to return borrowed Yen in 2008 when they were tempted to borrow in foreign currencies at lower interest
rates. The lesson learnt from this tale is to never borrow money in a foreign currency if you cannot or will not be able to manage the exchange risk and it is likely to be appreciated.
Unfavourable currency fluctuations can have a big effect on your finances, particularly if you're heavily exposed to foreign exchange. However, there are many options available to mitigate currency risk, including exchange-traded funds like the Invesco Euro Currency Shares Japanese Yen Trust (FXY) and Euro Trust (FXE), as well as currency futures, forwards, and options. If you prefer to sleep at night, consider these.
Changes in currency can have a broad effect on both the domestic and international economies. Investors can profit from weakening US Dollars by making foreign investments or purchasing shares in US multinational corporations.
When one has a significant amount of exposure to foreign exchange, currency movements can be a powerful risk, so it might be best to use one of the many hedging tools available to reduce this risk.
The White House maintained that Bidenomics helping the US economy to add over 13 million jobs by June 2023
Call the year 2024 as the 'Super Election Year.' While Bangladesh and Taiwan have already nominated their countries' leaderships, the focus now shifts to the United States and India, two of the world's leading democracies.
In this article, we will talk about the state of the economy in the electionbound United States, while giving a fair take on the Joe Biden administration’s performance on this front, while trying to figure out the road ahead for Uncle Sam as the all-important Presidential Election is just a few months away.
The United States economy grew faster than expected in 2023, driven by robust household and government spending. The world's largest economy expanded at an annual rate of 3.3% over the three months to December 2023. The annual growth rate was 2.5%, up from 1.9% in 2022.
The American economy has shown resilience amid the Federal Reserve raising its borrowing costs sharply to
cool down the inflation.
President Joe Biden has been arguing that his policies, including investments in green energy, roads and other infrastructure, have contributed to Uncle Sam's economic resilience. Also, surveys show an improving consumer sentiment, along with an upbeat stock market and a low unemployment rate.
The inflation rate has also eased after soaring to more than 9% in 2022. Till the middle of 2023, there were talks about American households cutting back on their spending and business activities cooling down, due to the Federal Reserve's aggressive interest rate hike and the resultant expensive borrowing costs. However, things have started improving now.
At the height of the COVID pandemic, as household spending dipped, the Biden
government spent massive money in the form of unemployment allowances, universal stimulus checks, and expanded child tax credits. All these moves resulted in the Americans accumulating trillions of dollars and this advantage came in handy in the country’s battle against inflation.
Average pay increases peaked at 6.4% and rose as high as 7.5% among the lowest-wage workers. That allowed the people to keep up with inflation. In the post-pandemic scenario, the wage growth for the bottom half of earners also outpaced the wage growth for the top half at a faster rate than at any time since at least the 1990s.
However, there are downsides too, as the country is also going to add nearly $19 trillion to its national debt over the next decade as the mounting costs of an ageing
population and higher interest expenses continue to weigh on the nation’s fiscal outlook.
However, recently enacted legislation to curb federal spending and the fasterthan-expected growth of the American economy are making the overall fiscal picture "slightly less bleak." Annual deficits over the next decade will be 7% smaller than the $20.3 trillion predicted by the Congressional Budget Office.
Biden also faces the question of whether his administration should continue its aid towards Ukraine and Israel or focus more on the child tax credit and restoring expired business tax breaks. The budget office projects the annual deficit to grow to $2.6 trillion in 2034 from $1.6 trillion in 2024, adding $18.9 trillion to the national debt during the decade. By then, the debt will surpass $54 trillion. Interest rates have surged to two-decade highs since 2022, making borrowing costs an increasingly significant contributor to the national debt.
Till 2034, the US will spend more than $12 trillion alone on interest costs. Net interest costs will be larger as a share of the US economy than at any time. Spending on safety net programmes such as Social Security and Medicare continues to grow as well even as their trust funds may get depleted in the next 10 years.
Biden’s 2022 Inflation Reduction Act created massive incentives for certain industries to speed up the research and development of their climate-friendly technologies. The budget office initially projected these incentives would add $391 billion to deficits from 2022 to 2031. It now estimates the actual cost will be at least twice as large.
Biden has also introduced the proposal called "Environmental Protection Agency Regulation," which will ensure that two-thirds of the new
American passenger cars will be allelectric by 2032. The office expects that regulation to supercharge demand for electric vehicles and reduce the amount of gasoline will result in the reduction of federal revenues from gasoline taxes. And Republican lawmakers see this reduction as bringing a red signal for the American economy.
Treasury Secretary Janet Yellen believed that interest costs remained manageable as a share of the overall US economy, while noting Biden's proposing $2.5 trillion in deficit reduction, much of which would come from tax increases and a more rigorous approach to tax collection.
Throughout 2023, the unemployment rate remained at historic lows. The S&P500 stock index rose 24% and the dollar remained strong. These developments also augur well for the Asia Pacific, as Uncle Sam is one of the region's largest foreign investors, apart from being the largest export market for the region.
The game-changer called 'Bidenomics' Biden propagated 'Bidenomics' in the lead-up to the 2020 election, while putting the focus on extending healthcare access, increasing wealth taxes, ensuring major investments in green energy and other infrastructure, promoting competition across businesses and sectors and most importantly supporting the American middle class through periodic stimuli.
Bidenomics came into play in 2021 when the 'American Rescue Plan Act,' a part of Biden’s 'Build Back Better Plan,' released $1.9 trillion to deal with the economic fallouts of COVID. The 'American Rescue Plan' provided individual direct stimulus payments, eviction and foreclosure moratorium support, funds for testing and vaccination, and more.
Then in 2022, came the 'Inflation Reduction Act,' to lower the inflation, and boost investments in domestic energy production. The White House maintained that Bidenomics is helping the US economy to add over 13 million jobs by June 2023, while putting up a brave fight against inflation and the economic fallouts of volatile geopolitics in 2022.
The White House defines the goal of Bidenomics as that of “building the economy from the middle out and the bottom up," apart from undoing the shortcomings of the American policymaking which "fostered inequality, shocks including the Great Recession, a slow pace of growth, and an exacerbation of climate change."
Bidenomics preaches investment in American business and infrastructure, especially, in clean energy, semiconductor and related industries, apart from updating, improving, and building out additional infrastructure across the country.
Apart from IRA, there are other examples of important laws such as the Bipartisan Infrastructure Law and the Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS).
The Bipartisan Infrastructure Law designates $1.2 trillion for investment in repairing and building roads, bridges, and rail lines, providing clean drinking water and access to high-speed internet, reducing the impact of the climate crisis, creating a national network of electric vehicle charging stations, and more. The White House sees the law contributing to the creation of 1.5 million jobs per year for a decade.
The CHIPS and Science Act came into being in August 2022. It provides $280 billion in funding for the nanotechnology, clean energy, quantum computing, and artificial intelligence (AI) industries. Amid the growing
technology battle between Washington and China, this bill aims to strengthen American semiconductor research and manufacturing, and wireless technology development, apart from supporting the domestic technology and research hubs.
Then we have the Biden administration's goal of reducing the cost necessary to decarbonise the American housing sector by half over the next decade. The administration is offering credits to underserved communities to help retrofit buildings, apart from providing states with dedicated clean energy funding, and granting billions in resilience funds to communities to deal with extreme weather events.
Bidenomics also focuses on worker empowerment and education, through investment in registered apprenticeships and career technical education programmes at a higher rate than any prior administration. To support worker unions, the White House now has its Task Force on Worker Organising and Empowerment.
Biden also sees higher rates of competition across sectors leading to lower customer costs and higher wages for workers. He signed the 'Executive Order on Competition', under which his administration got the power of aggressively enforcing antitrust laws, to aid the small businesses.
To fund the Bidenomics, the idea propagates an increase in wealth taxes, while working people and families with children will have taxes being reduced by nearly $800 billion by 2034, with additional funds added to the Child Tax Credit and Earned Income Tax Credit (EITC) pools.
What to expect in Biden 2.0?
Biden administration unleashed a surge in spending that briefly slashed
the childhood poverty rate in half. He breathed life into a beleaguered worker union movement and produced an industrial policy to reshape the American economy.
Factory construction has seen a boom, along with the rise in investment in manufacturing facilities, which has more than doubled under Biden, as per the Economist.
However, Biden’s economic agenda has so far been limited by the bipartisan US Congress. Bidenomics was written all over the $3.5 trillion “Build Back Better” bill that, despite clearing the House of Representatives huddle, crash landed in the Senate. However, key legislations on infrastructure, semiconductors and green tech have all received the Presidential signature of approval, resulting in a $2 trillion push to reshape the American economy.
Another example is the semiconductor law, which allocated over $250 billion to overhaul the American chip industry. However, a giant portion of the capital didn't get appropriated, as it was Congress which had to pass budgets to provide the promised amount.
As of 2024, only $19 billion will be given to three federal research agencies, nearly 30% less than the authorised level, according to estimates by Matt Hourihan of the Federation of American Scientists. Having a bipartisan Congress hell-bent on conflicting with Biden will not augur well for 'Bidenomics.'
However, many of the big tax cuts passed during Donald Trump’s presidency will expire by 2026. Republicans want to renew them. Biden can use this to leverage a deal in which he gets to make Republicans back his policy priorities, in return for renewing the tax cuts.
However, a few dozen Republicans in the House and Senate supported the federal spending on science and technology, as the move would safeguard the US’ competitive edge over China. So it is likely that Biden’s policy calls, which will help America to maintain its edge over China, will continue to receive support across the party lines.
The perfect scenario for Biden would be for Democrats to receive an absolute majority in Congress. Reforms like free preschool, generous child-care subsidies, spending on elderly care, an expanded tax credit for families with children and paid parental leave will get the required lifeline.
As per the US Treasury Secretary Janet Yellen, more investment in education will produce skilled and productive American workers, while investments in care will free up people, especially women, to work, leading to the labour force expansion.
However, these reforms will require a minimum yearly capital support of $100 billion, through additional spending, thereby adding half a percentage point to the annual federal deficit (which hit 7.5% of GDP in 2023).
Biden claims himself as the 'Most Pro-Union President' in US history. He joined striking auto workers near Detroit in September 2023 and became the first President to walk a picket line. He also wanted to make many industrial subsidies contingent on companies hiring unionised workers. The labour movement will be hoping to see Biden get a second term and introduce reforms which will boost the unions' bargaining power further. Nevertheless, there are chances that industry may paint Biden as an anti-business figure.
However, his administration believes that corporate profits have soared during the 81-year-old's first term. Still, there is a drawback to this logic and the reason here is Lina Khan-led Federal Trade Commission. She tried to cut down corporate giants with failed lawsuits against Meta and Microsoft. The FTC has now introduced new merger-review guidelines that require regulators to scrutinise deals that will make big
companies bigger, thereby 'killing the fair competition.'
"Excessive scrutiny of deals would also use up regulators’ scarce resources and poison the atmosphere for big business. An alternative focus, on relaxing land-use restrictions and loosening up occupation licensing, would provide a much healthier boost to competition," Economist commented further.
Biden 2.0 may see the Democrat doubling down on the manufacturing policies of his first term.
"The $50 billion or so of incentives for the semiconductor industry has been a start, but it is small relative to how much investment is required for large chip plants. Advisers talk of a follow-on funding package. There would also be a desire to craft new legislation to smooth out bumps in the implementation of industrial policy," said Todd Tucker of the Roosevelt Institute, a left-leaning think-tank, while advocating a national
development bank, creating a reservoir of cash that could be channelled to deserving projects.
Biden wants to raise taxes on the rich, in particular on households and businesses earning over $400,000 a year. His advisors pitch him as a firm believer in fiscal discipline. His budget for the current fiscal year would cut the deficit by $3 trillion over a decade, or by 1% of GDP a year, according to the Committee for a Responsible Federal Budget (CRFB).
If anything new that Biden 2.0 can bring to the table is a new trade agenda that trumps Uncle Sam's geopolitical adversaries. Can Washington and Europe establish a game-changing critical minerals agreement, which will secure inputs for battery production and curb reliance on Chinese suppliers?
While Biden’s supporters believe that his policies made the American socio-economic set-up more equal and just, others dubbed his reforms as 'AntiBusiness' in nature. The reality is that the American economy has been prospering under the 81-year-old's watch.
Will we get to see Biden 2.0? What are the new economic reforms the era will introduce to the Americans? What will happen if Democrats perform badly in the 2024 elections? To get conclusive answers, we need to wait till 2024 end.
As February 2024 arrived, former President Donald Trump won Nevada and Virgin Island’s Republican presidential caucuses, an incident which made his GOP nomination for the poll battle brighter. No doubt Biden has a battle on his hands. Will Bidenomics help its creator? Let’s wait and watch.
In spite of detractors and substitute methodologies, Rational Choice Theory continues to be a fundamental component of economic analysis
Game theory is another field in which Rational Choice Theory excels. It examines the strategic interactions between rational decisionmakers
In the field of economics, it is critical to comprehend how people behave and make decisions. Rational Choice Theory (RCT) is one theoretical framework that aims to explain these choices. Based on the idea that people behave rationally in order to maximise their utility, RCT offers insights into a range of economic phenomena, including terminologies like ‘Market Dynamics’ and 'Consumer Behaviour'. This article explores the foundations of Rational Choice Theory, as well as its uses, drawbacks, and ongoing significance in the development of economic analysis.
The foundations of Rational Choice Theory are found in the neoclassical school of economic thought, specifically in the writings of economists like John Stuart Mill, Jeremy Bentham, and Adam Smith. Fundamentally, randomised controlled trials (RCTs) suggest that people make decisions by comparing the advantages and disadvantages of potential options and selecting the option that will maximise their utility or satisfaction. Rational decision-making in economic models is based on this utility-maximising behaviour.
The idea of utility, which describes the
contentment or pleasure obtained from consuming goods and services, is fundamental to Rational Choice Theory. RCT also states that people try to maximise their utility while taking into account limitations like time, money, and cost.
As per the theory, people also make rational decisions that maximise their well-being by weighing the marginal utility (additional satisfaction) of consuming one more unit of an item or service against its price.
The theory of rational choice is widely used in many different areas of economics. RCT is used in consumer theory to explain how people divide their limited resources among rival products and services in order to get the most satisfaction out of them.
This knowledge serves as the cornerstone for pricing plans, market segmentation, and demand analysis. RCT also sheds light on government policy-making, producer behaviour, and investment choices—all of which are predicated on the rational actor's pursuit of self-interest.
Game theory is another field in which Rational Choice Theory excels. It examines the strategic interactions between rational decision-makers. Game theory models situations in which a decision made by one person is influenced by the decisions made by others, resulting in strategic behaviour.
Through the analysis of these interactions, economists are able to forecast results, comprehend the dynamics of cooperation and competition, and create mechanisms to accomplish desired results,
like in negotiations or auctions.
Rational Choice Theory has limitations and is criticised frequently despite being widely used. Its presumption of perfect rationality, which ignores bounded rationality—the notion that people have cognitive limitations and might not always make the best or most informed decisions—is one criticism.
Furthermore, RCT frequently ignores other elements that affect behaviour, like emotions, social norms, and altruism, in favour of focusing only on self-interest. Opponents contend that these drawbacks compromise the accuracy and realism of RCT-based models.
In reaction to these critiques, Behavioural Economics has surfaced as an adjunctive methodology that incorporates understandings from sociology and psychology into economic analysis.
To gain a more complex understanding of human behaviour, behavioural economists investigate how heuristics, social influences, and cognitive biases affect decision-making. Though it questions some of the tenets of Rational Choice Theory, behavioural economics also adds valuable perspectives from other fields to economic analysis.
In spite of detractors and substitute methodologies, Rational Choice Theory continues to be a fundamental component of economic analysis. It's a useful tool for comprehending and forecasting human behaviour in a variety of situations because of its elegance, simplicity, and predictive capacity. The basic ideas of rational decision-making still guide economic theory, policy, and practice, even as economists continue to build upon and improve upon their foundations.
Evolution, decision-making and rationality
Rational Choice Theory has grown and changed over time, absorbing knowledge from different fields and adjusting to new difficulties. The primary focus of early RCT formulations was on individual decision-making in settings that were relatively simple. To better capture the complexities of human behaviour, economists had to refine and expand the theory as they came across more complex real-world phenomena.
Rational Choice Theory can be extended to include collective decision-making processes like voting and group behaviour. An area of economics based on randomised controlled trials (RCTs) called public choice theory examines how people's self-
interests affect political outcomes and the operation of democratic institutions. Public choice theorists study topics like electoral competition, government regulation, and the provision of public goods by modelling voters as rational actors looking to maximise their utility.
The rationality premise of Rational Choice Theory has generated a great deal of discussion among psychologists and economists. Critics contend that social influences, emotions, and cognitive biases cause people to frequently stray from the ideal of making rational decisions.
Behavioural economics empirical research has shown multiple cases in which people's decisions deviate from RCT-based models' predictions, casting doubt on the idea of perfect rationality.
The idea of bounded rationality, which acknowledges that people have limited cognitive resources and must make decisions under uncertainty, was developed by academics to address the shortcomings of perfect rationality. Economic Nobel laureate Herbert Simon developed this theory first, proposing that people use heuristics, or mental shortcuts or rules of thumb, to make difficult decision-making tasks simpler. Beyond economics, bounded rationality has impacted domains such as artificial intelligence and cognitive science by offering a more accurate picture of human decision-making.
The expected utility framework of Rational Choice Theory can be substituted with Prospect Theory, which was created by psychologists
Daniel Kahneman and Amos Tversky. Prospect Theory describes how people assess and decide between risky prospects by utilising psychological insights. Prospect Theory suggests that people show a unique pattern of risk preferences, characterised by loss aversion and reference-dependent valuation, in contrast to traditional economic models that assume people are riskneutral or risk-averse.
Rational Choice Theory and its derivatives are well suited for application in the study of financial markets. Examining how investor behaviour deviates from the predictions of rational choice models is the focus of behavioural finance, a subfield that combines traditional finance theory with insights from psychology. Behavioural finance emphasises how sentiment, cognitive biases, and herding behaviour influence market outcomes in everything from stock market
bubbles and crashes to anomalies in asset pricing.
The application of behavioural economics and Rational Choice Theory to policy-making and intervention tactics has significant ramifications. If behavioural biases and heuristics are ignored, traditional economic policies predicated on the idea of perfect rationality may not produce the desired results.
Policymakers can create more effective nudges, incentives, and regulations to encourage desirable behaviours, like saving for retirement, taking up healthier lifestyles, or using less energy, by having a better understanding of how people actually make decisions.
The field of economics is not the only one that studies human decision-making; computer science,
psychology, sociology, and neuroscience are also involved. Multidisciplinary partnerships have improved our comprehension of decision-making processes by illuminating the interactions between social, emotional, and cognitive elements.
Multidisciplinary research provides fresh perspectives on the intricacies of human behaviour, ranging from computational models of social networks to neuroeconomic studies of brain activity during decision tasks.
Ethical issues become more pressing as scientists investigate the mechanisms underlying human decision-making. The capacity to foresee and impact behaviour prompts concerns regarding the proper application of this knowledge and the possibility of unforeseen outcomes. Concerns about autonomy, privacy, and manipulation arise when designing and implementing behaviourally-informed interventions; these concerns affect scientists, policymakers, and ethicists equally.
Looking ahead, interdisciplinary cooperation, data analytics, and technological advancements will propel the study of human decisionmaking to continue changing. Our comprehension of the intricate relationship between social dynamics and individual cognition is expected to be further enhanced by incorporating insights from the fields of artificial intelligence, psychology, and neuroscience. The principles of Rational Choice Theory, tempered by insights from behavioural science, will continue to be indispensable tools for navigating the complexities of human behaviour as we navigate
an increasingly uncertain and interconnected world.
The validity of the invisible hand and rational choice theories is contested by a large number of economists. Opponents have noted that people don't always choose actions that maximise their own utility. A more modern approach to the challenge of explaining how people and institutions make economic decisions is the study of behavioural economics.
Behavioural economics looks at why and how individual actors' behaviour deviates from the predictions of economic models, as well as why and how they occasionally make irrational decisions, from a psychological standpoint. Those who oppose Rational Choice Theory argue that, in a perfect world, individuals would always choose the course of action that will yield the most benefits and satisfaction. But the world isn't perfect, and people are often influenced by outside forces and their feelings.
In place of the mainstream economics' assumption of perfect rationality, Nobel laureate Herbert Simon put forth the theory of bounded rationality. According to this theory, people can't always find all the information they require to make the best choice. As stated by Simon, it is practically impossible for humans to know all of the options available to them or all of the outcomes that would arise from each choice.
Further drawbacks to the presumption that people are rational
agents were also highlighted by economist Richard Thaler. Although all dollars have the same value, people value some dollars more than others, as demonstrated by Thaler's concept of mental accounting. Mental accounting is all about the different values a person places on the same amount of money, based on subjective criteria, often with detrimental results. Thaler also contends that individuals classify funds differently and therefore are prone to irrational decision-making in their spending and investment behaviour.
Mental accounting is all about "the set of cognitive operations used by individuals and households to organise, evaluate, and keep track of financial activities."
Underlying the theory is the concept of the fungibility of money. Regardless of its origins or intended use, all money is the same.
Like all theories, Rational Choice Theory has the advantage of being able to explain both individual and group behaviours. Every theory makes an effort to interpret the phenomena we see around us. The Rational Choice Theory provides an explanation for the decisions made by individuals, organisations, and society at large based on particular costs and benefits.
Additionally useful in explaining seemingly irrational behaviour is the Rational Choice Theory. Since the fundamental tenet of Rational Choice Theory is that all behaviour is rational, any action can be examined to determine its rational underpinnings.
In their recent statements, Uber and the Flex Association—a trade association that advocates for gig economy businesses—said that the rule would not immediately affect their operations
IF CORRESPONDENT
The term "disruptors" was applied to app-based ridesharing services like Uber and Lyft because of how they forced established taxi companies out of business. They are currently attempting to stave off the potential upheaval in the shape of a new federal labour law.
Now a new worker classification rule has already been the target of at least one court challenge, and businesses in the gig economy that it threatens to disrupt will probably oppose it further. Employment experts predict that the new rule will have a significant impact on the estimated 22.1 million Americans who work as independent contractors, upending the gig economy.
The Department of Labour published information regarding a law that establishes criteria for determining when an individual qualifies as an employee to receive overtime compensation, unemployment insurance, and a host of other legal advantages. The new rule will take effect in March 2024.
Three authors from New Jersey are among the group of freelancers who sued the Department of Labour in January
2024 to have the new regulation overturned. Legal action is also being considered by at least one significant industry lobbying group.
The business models of companies like Uber, Lyft, and Doordash would be jeopardised if the Joe Biden government was to grant "employee" status to workers categorised as contractors. This is because contract workers are far less expensive for their employers than traditional employees.
In their recent statements, Uber and the Flex Association—a trade association that advocates for gig economy businesses—said that the rule would not immediately affect their operations.
In a statement, Uber said that this rule "will not impact the classification of the over one million Americans who turn to Uber to earn money flexibly, nor does it materially change the law under which we operate."
Millions of additional gig workers, including drivers for Uber and Lyft, may be reclassified as employees when the new law takes effect, according to Erin Hatton, a sociology professor at the University at Buffalo and expert on the gig economy.
"If their employees are viewed as legally covered employees, their employment model will not endure. They will fight back against this with all of their might because they have deep pockets," Hatton said.
The business lobbying group United States Chamber of Commerce announced that it was thinking of filing a lawsuit to overturn the rule.
Marc Freedman, vice president of workplace policy at the chamber, said in a statement that "the Department of Labour's new regulation redefining when someone is an employee or an independent contractor is clearly biased towards declaring most independent contractors as employees, a move that will decrease flexibility and opportunity and result in lost earning opportunities for millions of Americans."
The freedom of individuals to work when and how they want is threatened, and our economy may suffer grave consequences.
In a call with reporters acting United States Labour Secretary Julie Su stated that low-income workers are disproportionately harmed by the misclassification of workers as contractors rather than employees since they stand to lose the most from legal safeguards like unemployment insurance and minimum wage.
"The relationship between an employer and employee is the foundation
of a century of labour protections for working people," Su said.
Advocates for workers and a few Democratic officials applauded the rule, arguing that it was essential to guarantee workers' fundamental rights.
"Worker misclassification also undermines law-abiding businesses that are forced to compete with dishonest employers who use misclassification to unfairly cut down on labour costs," said Virginia Democrat and US Representative Bobby Scott.
However, some industry associations contend that the law unfairly tilts the odds in favour of classifying workers as employees rather than contractors, depriving millions of workers of opportunity and flexibility.
Marc Freedman, vice president of the US Chamber of Commerce, said in a statement that "making matters worse, the rule is completely unnecessary, as the Department continues to report success in cracking down on bad actors that are misclassifying workers."
The largest business body in the United States, the Chamber, he continued, is thinking of filing a legal challenge against the rule.
The rule relates to a distinction that has grown in significance in light of the growth of gig-based businesses offering a wide range of services, including food delivery, dog walking, rides, and many more services: What distinguishes a worker as an employee from a contractor?
The distinction is significant because employers are subject to several duties under federal, state, and local labour laws regarding their workers.
The ‘Fair Labour Standards Act’
Source: Zety
provides safeguards such as overtime compensation, minimum wage, union formation rights, and other benefits to individuals who are classified as ‘employees’ across the country. When employers reduce employee wages, they are also required to make Medicare and Social Security contributions.
In addition to workman's compensation insurance in the event of an injury sustained on the job, employees are covered by unemployment insurance at the state level. They also have the right to paid sick days and family leave in several areas.
That doesn't apply to independent contractors, who are treated more like small businesses under employment law and who individually enter into a business partnership with the employer on an equal basis.
According to Samantha Prince, a law professor at Penn State Dickinson Law and an authority on worker classification and the gig economy, the terms of employment are determined by a mutually agreed-upon contract rather than being subject to regulations.
This is true even though the contract is typically written by the big company and is a "take-it-or-leave-it" situation for the contractor.
"Opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer, the degree of permanence of the work relationship, the nature and degree of control, the extent to which the work performed is an integral part of the potential employer's business, and skill and initiative" are the six factors listed in the new regulation, which is similar to an older Obama-era rule, to determine whether an individual is an employee or an independent contractor.
In actuality, judges assessing those variables in court cases will decide how those rules apply to any particular worker, according to Prince. For example, a lot of Uber drivers appear to fulfil four out of the six requirements to be classified as employees, according to her.
"And will that be sufficient for a judge to rule that Uber drivers are employees for the purposes of the FLSA?" That is conceivable," she questioned.
Businesses have the incentive to categorise workers as contractors as a cost-cutting tactic, even when it isn't suitable, because hiring a contractor is simpler and less expensive than hiring an employee.
A progressive think organisation called the Century Foundation conducted research that revealed widespread misclassification in the construction business, with as many as 2.1 million workers, or 10–19% of the total workforce, being paid under the table.
Independent contractors frequently
receive lower pay for performing the same tasks since they do not receive benefits or overtime compensation.
The Economic Policy Institute, a progressive think tank, predicted that the average person working in construction as an independent contractor would make up to $16,729 less annually in wages and benefits than they would as an employee.
Notwithstanding the disadvantages, a large number of contractors express their preference to not be classified as employees and have rebelled against worker categorisation laws.
According to the freelancing complaint, "This lawsuit seeks to vindicate the right of individual entrepreneurs to remain independent in the face of a concerted effort to force them into neither employment relationships they want nor need."
According to a 2023 Indeed job study, individuals who work as independent contractors prioritise their independence and flexibility in terms of work hours, ranking these benefits over higher pay.
However, according to Prince and Hatton, there's no legal reason why businesses can't provide flexible work schedules in addition to the perks of employee status.
Prince asserted, "There is no legal restriction on having flexible hours while working as an employee."
"This flexibility—sometimes true, sometimes not so true—and permanent employment or legally classified employment are not at all synonymous. Those don't have to be exclusive of one another," Hatton concluded.
finexis advisory is the first financial advisory firm in Singapore to launch a WhatsApp chatbot integrated with ChatGPT
finexis advisory has become the beacon of innovation and excellence in the fast-paced and ever-evolving world of financial services. With its two sister companies located in Singapore and Hong Kong, finexis advisory is now pioneering digital transformation, while catering to high-net-worth individuals.
The firm has also earned the distinction of being the "Most Innovative Homegrown Financial Advisory Firm 2023" by the International Finance Awards, due to its efforts in the arena of digital transformation in financial advisory, marked by resilience, adaptability, and foresight.
Amy Chong CEO, finexis advisory (HK)
As the COVID-19 pandemic in 2020 posed unprecedented challenges in the financial sector, finexis advisory enhanced its digital capabilities to support its extensive network of over 700 financial advisors and their clients.
finexis advisory’s digital strategy consists of digital tools designed to enhance the financial planning experience and foster stronger relationships between the company’s financial consultants and their clients.
The strategy also includes a Financial Dreams Manager tool that can simulate the feasibility of a client’s financial goals and dreams, a client mobile app, and an electronic Know Your Customer (eKYC) application.
finexis advisory has also become the first financial advisory firm in Singapore to launch a WhatsApp chatbot integrated with ChatGPT.
During an interaction with International Finance, finexis advisory (SG) Deputy CEO Irene Ho said, “Our recognition as the Most Innovative Homegrown Financial Advisory Firm 2023 is a testament to our journey of growth and innovation. At finexis, we're not just embracing digital transformation; we're actively shaping it to align with our core values of client-centric service. This award reflects our team's dedication and our commitment to staying ahead in a dynamic financial landscape.”
The digital enhancements have allowed advisors to focus more on understanding the needs of the client and providing tailored financial strategies and personalised advice.
The eKYC process has reduced the time required for client onboarding, verification and compliance checks.
While the use of the Financial Dreams Manager tool facilitates
better client engagement, the client mobile app allows faster access to financial information. Moreover, the integration of the WhatsApp chatbot has enabled advisors to swiftly receive responses to address client’s enquiries during their review.
The firm has also improved its advisor efficiency by at least 30%, apart from enhancing client interactions.
For two consecutive years, finexis advisory (HK) has earned the recognition of being the "Fastest Growing High Net Worth Advisory", a milestone which highlights the venture's expertise in serving highnet-worth individuals (HNWIs).
Speaking about the success, finexis advisory (HK) CEO Amy Chong told International Finance, "Our consistent growth is a clear indication of our acute market sensitivity and successful strategy formulation. We deeply appreciate the recognition from our partners and are committed to continuing to create higher value for the market and our partners in the future."
finexis advisory (HK) has developed integrated wealth management services that encompass both personal and corporate financial planning through a suite of professional and tailormade financial products.
The venture has harboured partnerships with over 45 international fund houses, 40 insurance companies, four investment platforms, and five international banks to offer over 400 professionally managed funds.
finexis advisory (HK) has been proactive in expanding its market presence, while understanding the ever-changing needs of the financial sector, exploring new
markets and forging new business partnerships.
The company's expansion into jurisdictions like Bermuda and Luxembourg reflects their commitment to adapting to the evolving needs of the HNWI clientele, while going beyond traditional solutions. This approach to market expansion is anchored in the firm’s philosophy of fostering new relationships, gaining new insights, and exploring new territories with courage and foresight.
As a process-driven company, finexis advisory is continuously enhancing its systems and operations with a focus on improving customer experiences.
The venture's motto, “Sustainable growth is derived from Happy Customers,” underscores its strategy for client retention and the resultant success in a competitive market.
The combined achievements of both Singapore and Hong Kong branches have set new industry standards, thereby marking a path of transformation and growth for the firm in the global financial landscape.
Irene Ho Deputy CEO, finexis advisory (SG)
The way Apple charges developers to sell their apps in the App Store has already changed as a result of a lawsuit brought in 2021 by the video game developer Epic Games
Apple CEO Tim Cook kicked off 2024 amidst a whirlwind of challenges. His company weathered an onslaught of setbacks in the past few months. From patent disputes stripping features off two smartwatches to impending antitrust lawsuits from the US Department of Justice, the tech titan faced a barrage of legal woes.
Even though Apple's market value has been in the top ten globally since 2010, it was trading at a low valuation in relation to profits until a few years ago. It was perceived as a hardware manufacturer, a more challenging industry to grow than software
Additionally, news of dwindling market share in China, the second-largest smartphone market, cast a shadow over Apple's global standing. Adding fuel to the fire, Wall Street analysts echoed a onceunthinkable sentiment: Apple's stock appeared overvalued. To make matters worse, longstanding rival Microsoft briefly dethroned Apple as the world's most valuable company on January 11th.
When Apple released its most recent quarterly earnings on February 1st, the string of bad news continued. According to equity researchers, the company's revenues increased very little, in the final quarter of 2023.
Recently, Apple decided to put the company through another test. After developing and talking up the Vision Pro augmented reality (AR) headset for a few years, it will begin shipping the device. The expensive device, which will retail for $3,499, is a significant wager on a novel techno-
logical 'platform' that, perhaps in the future, Apple hopes will displace smartphones as the focal point of users' digital lives and the iPhone as the source of its creator's wealth.
Early signs suggest that Apple should be concerned about the future of the device. The wellknown streaming services Netflix, Spotify, and YouTube have declared that they will not support the headset version of their software. Nobody explained why. However, it's also possible that they're all in direct competition with Apple's streaming services, and creating an AR app is probably going to be expensive.
Despite various concerns, Apple's stock price has remained relatively stable in January, providing Tim Cook with some reassurance amidst the challenges. After being surpassed by Microsoft a few days earlier, it regained both its heavyweight stock market title and its $3 trillion valuation. Additionally, considering the headset's limited initial production, the short-term impact on Apple's revenues from a failed launch of the Vision Pro will be zero.
However, it would be foolish for Apple's CEO to ignore the complaints from the new year, because of the larger challenges they indicate for the business. Three main categories can be identified from these: growing geopolitical tensions; slowing iPhone sales; and antitrust and legal issues. Now, none of these are existential. However, there's always a chance that one will upset the Apple cart. Could they prevent Apple from holding the top spot in the world's most valuable company rankings for more than a week,
is still a question.
Even though Apple's market value has been in the top ten globally since 2010, it was trading at a low valuation in relation to profits until a few years ago. It was perceived as a hardware manufacturer, a more challenging industry to grow than software. Its price-to-earnings (p/e) ratio, which measures investors' expectations of future profits, was below 20 for a significant portion of the 2010s, similar to that of Lenovo or HPE, two uninteresting computer manufacturers with slow growth and narrow margins. It was also lower than the S&P 500 index average for large American corporations.
According to broker Toni Sacconaghi of Bernstein, this began to change in 2019. The $1 billion or so users of Apple devices receive software from the company's "services" division, which started to generate revenue. The two largest components
This contributed to investors' conviction that Apple was no longer a stuffy hardware manufacturer. It was a software platform that allowed paying users to be added for a nominal fee. This translated into more recurring revenue and higher profits— Apple's services division has a gross profit margin of 71% as opposed to 37% for devices. With services Source:
of this category are the App Store, which brings in an additional $24 billion annually, and the advertising business, which Bernstein values at $24 billion annually (including about $20 billion from Google for setting its search engine as the default on Apple devices). In addition, Apple provides streaming services for Apple TV and Music, as well as a rapidly expanding payments business. Services generate $85 billion in revenue annually, or 5% of total sales. They only made up $24 billion, or a tenth of total revenue in 2016.
accounting for a larger portion of the company's revenue, Apple's overall profitability increased from 38% in 2018 to 44% in 2019. The fact that it was selling more upscale, highmargin iPhone models helped with that as well. All of this contributed to Apple's p/e ratio rising to approximately 30, well above the average for the S&P 500 and higher than Alphabet's (Google's parent company).
Apple's legal troubles present one set of risks that could reverse its p/e progress. Certain ones, like the patent issue, seem like small threats. The medical device manufacturer Masimo owned patents pertaining to an oxygen-measuring sensor, which were found to have been infringed upon by Apple in October, according to a federal agency called
the International Trade Commission. Apple discontinued offering the versions with the problematic technology. However, after turning off the disputed sensor, it began selling them again on January 18.
The main legal issues Apple is currently facing are related to its services division. EU regulations, a sizable market, will take effect in March and compel Apple to permit app installations on its devices without going through the App Store. This makes charging the 30% fee that it charges for the majority of in-app purchases more difficult for it (Apple has filed a lawsuit against the rules).
According to reports, the DOJ is investigating why Apple's messaging service isn't available on competing smartwatches and
whether the smartwatch performs better when paired with the iPhone than when used alone. Apple may lose out on almost $20 billion in essentially free money each year if courts in a different lawsuit against Google support the DOJ's claim that the company's defaultsearch agreements with device manufacturers are anti-competitive. The way Apple charges developers to sell their apps in the App Store has already changed as a result of a lawsuit brought in 2021 by the video game developer Epic Games.
In legal disputes, Apple is not without defence. It swiftly discovered a workaround for the App Store policy modifications brought about by Epic, allowing it to continue collecting large fees. It will likely take years before the DOJ's
case against Google is resolved. Its anticipated lawsuit against Apple is comparable. Investors appear unfazed, as has been the case with many antitrust cases against Apple.
The second area of concern, the company's slowing core business, is where it is most exposed. In 2018, Apple sold roughly 220 million iPhones, just slightly more than the 217 million it sold in 2017, according to a poll of analysts. Maybe not much more than that in 2024. Apple was able to temporarily offset declining sales with higher prices. However, from an average of 10% between 2012 and 2021, annual revenue growth has dropped to 2% in the last two years.
Rivals are attempting to chip away at Apple's market share in high-end devices by taking advantage of consumers' desire for "generative" artificial intelligence (AI) that resembles ChatGPT. By the end of January, Samsung, a leading South Korean tech company, plans to introduce a new line of artificial intelligence-powered smartphones. Vibrant features will include enhanced photo and video editing, as well as real-time voice translation. The devices could go on sale eight months ahead of Apple's upcoming iPhone models. On the other hand, Apple has said little about its plans for the hottest thing in tech since, well, the iPhone.
"We’re investing quite a bit," Tim Cook noted cryptically on the company’s most recent earnings call.
China, where Apple makes up 17% of its total revenue, is another market where it is competing fiercely with Apple. An investment bank called Jefferies claims that
Apple's smartphone market share fell in the nation last year. In the meantime, the leading domestic tech company, Huawei, saw an increase of about six percentage points. In August, Huawei surprised observers of the industry—as well as the US government, which for years had prohibited the company from receiving US technology due to national security concerns—by releasing the first 5G device with cutting-edge chips made in China as opposed to imports. Chinese consumers, feeling patriotic, rushed to buy the phone and additional Huawei devices as well.
Concerns regarding Apple's advancements in AI might be exaggerated. The investment bank Morgan Stanley's Erik Woodring identifies indicators that show the business is making significant investments. The company's scientists and Columbia University researchers collaborated to release the open-source Ferret artificial intelligence model in October. After two months, Apple released a paper outlining how these models might operate on smartphones, which have far less processing power than the data centres that are usually used for this kind of work. A South Korean tech blogger claimed in January that artificial intelligence (AI) improvements for Apple's robot assistant, Siri, would be included in an operating system update, potentially arriving as early as June. Apple is rumoured to be incorporating generative AI into its own search engine.
However, China poses a greater threat than previously thought— and not just because Huawei has
revived. Apple's growth aspirations rely heavily on its performance in emerging markets, especially the largest one. During Apple's last three earnings calls, Tim Cook began by discussing the company's sales outside of the wealthy world. He was certainly thinking of China.
Apple's supply chain exposes it to risks related to China. Even with widely reported attempts to shift some production to India, about 90% of iPhones are still made in Chinese factories. As are the majority of Mac computers and iPads. For at least the next five years, according to Sacconaghi of Bernstein, Apple will be extremely vulnerable to a major geopolitical escalation, such as a conflict over Taiwan.
Aside from a Chinese invasion of Taiwan, other things could harm the business. Increasing trade barriers and Sino-American tensions would undoubtedly result from Donald Trump's potential return to the White House, now that he has virtually secured the Republican nomination. He is by no means a China dove, even if Joe Biden wins in November's presidential election against Trump. In response to US sanctions, the Chinese government is starting to retaliate. It has already prohibited the use of certain Micron chips—manufactured in Idaho— in infrastructure projects. There were rumours in September that government officials were forbidding the use of Apple products. The incident alarmed investors even though the authorities subsequently refuted the allegations.
Mark Zuckerberg wants Meta's AGI to be a transparent and inclusive one, while mitigating issues surrounding the AI capabilities
IF CORRESPONDENT
Meta CEO Mark Zuckerberg is in the news again. His venture has now joined the race to turn the concept called Artificial General Intelligence (AGI) into a reality. Meta will be competing against San Francisco-based AI start-up OpenAI, which has already outlined its AGI plans.
Artificial General Intelligence is all about creating software with human-like intelligence and the ability to self-teach itself. The software should be able to perform tasks that the tool is not trained/developed for.
Meta is training its next-gen model Llama 3, apart from building a massive computing infrastructure to support the company’s future roadmap on the AGI front.
AGI will have the ability to mimic human performance across tasks. Given the fact that this particular innovation will be the next holy grail of the tech sector, Meta wants to eat the pie when it is hot.
Given the fact that AGI will be mimicking human performance, critics have been uneasy. They are after Zuckerberg for taking an "irresponsible approach" to AGI. The tech boss' detractors think that Meta may make AGI available to the public in future, which may lead to a situation where "AI will evade human control and eventually take over humanity."
Dame Wendy Hall, a professor of Computer Science at the University of Southampton, told The Guardian that the prospect of an open-source AGI was ‘very scary.’ Hall, who is also a member of the United Nation’s advisory body on AI, also lashed out at Zuckerberg for playing around with the AGI, as she believed that the technology, if fell into the wrong hands, could do a great deal of harm.
However, Meta is going ahead with its plan, under which Nvidia’s H100 GPU chips will power the tech giant's computing infrastructures for AGIrelated projects. Zuckerberg wants Meta's AGI to be a transparent and inclusive one, while mitigating issues surrounding the AI capabilities.
David Thiel, a big data architect and chief technologist of the Stanford
Internet Observatory, told RollingStone, “Honestly, the ‘general intelligence’ bit is just as vaporous as ‘the metaverse,” as he found Meta's AGI claims a pretentious one, something which gives the venture "an argument that they’re being as transparent about the tech as possible. But any models they release publicly are going to be a small subset of what they actually use internally.”
Sarah Myers West, managing director of the research non-profit ‘AI Now Institute,’ explained Zuckerberg’s announcement as something that “reads clearly like a PR tactic meant to garner goodwill, while obfuscating what’s likely a privacy-violating sprint to stay competitive in the AI game.” Myers, like Thiel, found the AGI pitch less than convincing.
Vincent Conitzer, director of the Foundations of Cooperative AI Lab at Carnegie Mellon University and head of technical AI engagement at the University of Oxford’s Institute for Ethics in AI, speculated that Meta could start with something like Llama and expand from there.
“I imagine that they will focus their attention on large language models, and will probably be going more in the multimodal direction, meaning making these systems capable with images, audio, video,” he said, while comparing Meta's efforts with Google‘s Gemini, which got released in December 2023.
Conitzer, however, stated that while there were dangers to open-sourcing large language model-based technology, "The alternative of just developing these models behind the closed doors of profitdriven companies also raises problems."
Experts are also flagging Meta's notso-good history on the privacy front.
“They have access to massive amounts
of highly sensitive information about us, but we just don’t know whether or how they’re putting it to use as they invest in building models like Llama 2 and Llama 3. Meta has proven time and time again it can’t be trusted with user data before you get to the endemic problems in LLMs with data leakage. I don’t know why we’d look the other way when they throw ‘open source’ and ‘AGI’ into the mix,” Sarah Myers West commented.
As per Conitzer, human civilisation is facing a future where AI systems like Meta’s have “ever more detailed models of individuals.”
“Maybe in the past, I shared some things publicly and I thought each of those things individually wasn’t harmful to share. But I didn’t realise that AI could draw connections between the various things that I posted, and the things that others posted, and that it would learn something about me that I really didn’t want out there,” he
added further.
Remember the October 2023 Guardian article, which spoke about Meta had to argue in an Australian court, while fighting a case over the Cambridge Analytica breach, in which tens of millions of users’ data was harvested using a personality quiz and used to aid political campaigns, including former United States President Donald Trump’s election campaign in 2020.
In front of the Australian judge, the social media company had to state that private messages, pictures, email addresses and the content of Facebook users’ posts were not “sensitive information”.
Then in August 2023, X (rebranded Twitter) users shared screenshots of Threads’ (Meta's newest flagship social media product) privacy policy from Apple’s App Store. Threads reportedly indicated gathering personal details from its users, ranging from health and
financial data to browsing history and location, details which could be passed on to advertisers.
In another 2023 example, the European Union fined Meta a record $1.3 billion after finding the Facebook parent broke its privacy laws by transferring user data from Europe to the United States.
Just the above three examples are good enough to show that experts' scepticism around Meta's AGI efforts is not completely unfounded.
"Off the two-lane highway that winds along the northeast side of the Hawaiian island of Kauai, on a quiet stretch of ranchland between the tourist hubs of Kapaa and Hanalei, an enormous, secret construction project is underway. A six-foot wall blocks the view from a nearby road fronting the project, where cars slow to try to catch a glimpse of
what’s behind it. Security guards stand watch at an entrance gate and patrol the surrounding beaches on ATVs. Pickup trucks roll in and out, hauling building materials and transporting hundreds of workers," reports the WIRED on a project, where (as per the news agency's sources) the workers have been told to maintain utmost secrecy about what they are working on.
Nobody working on this project is allowed to talk about what they’re building. Almost anyone who passes compound security is bound by a strict nondisclosure agreement, according to several workers involved in the project. And, they say, these agreements aren’t a formality.
Multiple workers claim they saw or heard about colleagues removed from the project for posting about it on social media. Different construction crews within the site are assigned to separate projects and workers are forbidden from speaking with other crews about their work.
"The project is so huge that a notinsignificant share of the island is bound by the NDA. But everyone here knows who is behind it. Mark Zuckerberg, CEO of Meta, who bought the land in a series of deals beginning in August 2014," WIRED stated further, hinting at whose brainchild the 'project' might be.
WIRED, after interviewing several stakeholders associated with the 'project', apart from accessing public records and court documents, suggested that the roughly 1,400-acre compound, known as 'Koolau Ranch,' will include a 5,000-square-foot underground shelter, have its own energy and food supplies, and, when coupled with land purchase prices, will cost in excess of $270 million. The project has been relying upon legal
manoeuvring and political networking, apart from reportedly showing disregard for the local public's concerns.
'Koolau Ranch' is located on Kauai, the oldest and smallest of the four main Hawaiian Islands. Kauai is a tight-knit community of about 73,000 people, who are mostly the descendants of Native Hawaiians, along with Chinese, Japanese, Filipino, and Puerto Rican migrants who came to work the sugarcane plantations in the late 19th and early 20th centuries.
"Some of the more recent arrivals come from the US mainland and other Pacific islands. When plantation owners moved their operations overseas in search of cheaper labour, the island’s sugarcane economy was replaced by tourism. Workers on the Zuckerberg site are part of a growing construction industry focused on luxury home builds for mainlanders looking to move to paradise," The WIRED stated further.
"Tall tales about the compound and its owner run rampant on the local rumour mill—known colloquially as the 'coconut wireless.' One person heard that Zuckerberg was building a vast underground city. Many people speculate that the site will become some sort of post-apocalyptic bunker in case of civilisation collapse. What’s being built doesn’t live up to the coconut wireless chatter, but it's close. Detailed planning documents obtained by WIRED through a series of public record requests show the makings of an opulent techno-Xanadu, complete with underground shelter and what appears to be a blast-resistant door," the publication noted further.
The property is centred around two mansions with a total floor area comparable to a professional football field, while containing multiple elevators,
offices, conference rooms, and an industrial-sized kitchen.
"In a nearby wooded area, a web of 11 disk-shaped tree houses are planned, which will be connected by intricate rope bridges, allowing visitors to cross from one building to the next while staying among the treetops. A building on the other side of the main mansions will include a full-size gym, pools, sauna, hot tub, cold plunge, and tennis court. The property is dotted with other guest houses and operations buildings. The scale of the project suggests that it will be more than a personal vacation home — Zuckerberg has already hosted two corporate events at the compound," the report noted further.
"The plans show that the two central mansions will be joined by a tunnel that branches off into a 5,000-square-foot underground shelter, featuring living space, a mechanical room, and an escape hatch that can be accessed via a ladder," WIRED stated, with one of its sources even narrating that there were cameras everywhere in the property, with more than 20 cameras are taking care of one smaller ranch operations building alone.
"Many of the compound’s doors are planned to be keypad-operated or soundproofed. Others, like those in the library, are described as 'blind doors,' made to imitate the design of the surrounding walls. The door in the underground shelter will be constructed out of metal and filled in with concrete—a style common in bunkers and bomb shelters," WIRED continued further.
The compound will have its own water supply, along with a 1,400 acre agricultural property. The utmost secrecy around the project gives the impression as if the world is getting its next 'Area 51.'
As per a Kauai journalist named
Allan Parachini, publishing news on the 'Koolau Ranch' will result in the local press getting 'reprimanded.' Throughout 2017, Parachini requested permits to know about the property. After his opinion piece on the 'Koolau Ranch,' Parachini was informed by a 'Local Zuckerberg Representative' about the Meta CEO's team 'not communicating' with the journalist for any future coverage.
Despite Meta’s chequered history with its data privacy practices, Zuckerberg is known for being a perfectionist, when it comes to protecting his privacy. In 2004, Zuckerberg reportedly requested that two student journalists sign an NDA (Non-Disclosure Agreement) before an interview. In 2010, when one of his employees leaked product plans to the media, Zuckerberg demanded the leaker’s immediate resignation.
Facebook’s contracted content monitors have reportedly been made to sign NDAs. These professionals can't discuss anything about their working conditions publicly.
Zuckerberg's Kauai neighbour, Hope
Kallai, saw a six-foot wall being erected around portions of the Meta boss' property in 2016, ensuring privacy for his family. However, it reportedly denied the local residents to enjoy the ocean view in the process. Also, the island is seeing a massive influx of outsiders (mostly construction workers), along with heavy vehicle flows and the resultant noise pollution.
On Kauai, if a private construction happens within a conservation zone known as a 'Special Management Area,' it results in a public review process. The Meta boss's project, however, hasn't been put inside such protected zones. Still, as per Kallai, a community meeting on the project “would be really welcome.”
Zuckerberg has been facing bad press regarding his Kauai project. To mitigate that, he and his wife, Priscilla Chan have reportedly launched a local charity, called the 'Chan Zuckerberg Kauai Community Fund', which has given over $20 million to various Kauai non-profits since 2018. The couple has also reportedly established a relationship with Kauai mayor Derek Kawakami, and
held meetings with the official to discuss funding local initiatives during a 2018 flooding crisis and the COVID outbreak in the island. In March 2021, Zuckerberg and Chan helped to relaunch a county jobs programme with a $4.2 million donation and gave $3.5 million to local COVID-19 assistance projects.
In November 2021, Zuckerberg reportedly gave a $4 million gift to fund the purchase of a traditional Hawaiian fishpond managed by Malama Huleia, a local non-profit that focuses on wetland restoration through native Hawaiian practices. That non-profit also had ties to local government, with the then vice chair of the county council Mason Chock serving as its president.
Brandi Hoffine Barr, spokesperson for the 'Chan Zuckerberg Initiative,' informed the WIRED about the Meta boss and his team continuously trying to engage with the Kauai community.
Through donations, Zuckerberg and Chan are reportedly now among the most important philanthropists on Kauai.
Local Facebook pages regularly feature 'Appeals to Zuckerberg' to fix the island's problems.
However, the question remains, will the local community on Kauai ever accept Zuckerberg?
“Zuckerberg’s presence may increase charity, but will not address the root causes of why we need this type of philanthropic charity in the first place,” says Nikki Cristobal, executive director of local Hawaiian education and arts nonprofit Kamawaelualani.
The WIRED report claims that Kauai locals view the billionaire as a part of a larger machine, "the same one that has been buying up Hawaiian land since the 'Great Mahele' authorised private land ownership in 1848."
Zuckerberg may not feel himself entitled to sit and clarify his 'AGI Vision' to his detractors. However, in Kauai's case, a similar 'I Don't Care' approach may not work for the Meta boss.
Jason Raymer, Senior VP of Revenue for iQmetrix, believes that the use of AI analytics to analyse customer behaviour will allow retailers to more accurately action their strategies
CL RAMAKRISHNAN
With a career spanning 15 years in wireless telecommunications, Jason Raymer is currently Senior Vice President of Revenue for iQmetrix, North America’s only provider of Interconnected Commerce solutions designed to power the telecom retail industry.
Jason spent the early days of his career navigating the intricacies of consumer electronics retail, which quickly evolved into revenue and operations roles at Tier 1 and 2 North American telecom carriers. These experiences have proven invaluable to his current leadership role, which has a focus on a strategic vision that propels organisations to new heights.
Jason’s expertise lies in crafting revenue-generating strategies, leveraging technology to help telecom retailers optimise their operations, and fostering strong client relationships. As a seasoned industry expert, his commitment is driving iQmetrix’s success in an ever-changing landscape, and propelling the company to the forefront of the telecom industry.
He is a champion of initiatives that harness the power of emerging technologies, ensuring iQmetrix solutions remain agile and competitive in a rapidly evolving digital ecosystem.
In an exclusive interview with the International Finance Magazine, Jason Raymer, Senior Vice President of Revenue at iQmetrix, offers a comprehensive insight into the transformative impact of AI within the telecom retail sector, delving into topics such as AI-driven chatbots and the nuanced utilisation of AI analytics in examining customer behaviour, and much more.
How have telecom retail companies found success by implementing AI into their business models, and what specific areas have shown improvement?
Most AI solutions in use today are currently serving the organisation’s operations
where they are experiencing an increase in productivity.
This can be seen today with examples such as the use of AI-based workforce scheduling software that can easily use sales data to predict the volume of traffic, the number of employees needed to support that traffic, and which staff member should have each shift that will perform best, based on their historical sales. AI can also help immeasurably in improving the store rep’s knowledge and, ultimately, the customer experience. Without AI, the associate in a store must juggle knowledge of all kinds of rate plans, the promotions available, different device options, and much more. Besides — all of them have vast amounts of documentation that needs to be explained to the customer. This can be dramatically eased by AI tools ingesting all the necessary information and turning it into a search model, whereby the rep asks what the customer wants and inputs it, and the AI tool offers the optimal package for that customer.
How does AI make the retail customer experience better?
Beyond efficiency and productivity gains, AI can unlock a vastly improved customer experience in many ways. One is by offering personalised shopping based on the customer’s wants and needs, no matter where they encounter the
Unlike most industries that are starting to leverage AI, the impact on job security in the near term could be those that hold administrative positions within telecom retail companies
brand—online, in store, or on social media for example. Or it could be by improving the quality of the user’s experience with customer service, with AI tools triaging issues and feeding instant solutions to the agent, or even directly to the consumer. This improved retail experience in turn can radically improve customer loyalty and retention. The business’ bottom line can be boosted from both angles—both lower overhead costs and reduced customer attrition.
How might the expanding influence of AI in the telecom retail sector impact job security for human workers?
Unlike most industries that are starting to leverage AI, the impact on job security in the near term could be those that hold administrative positions within telecom retail companies, where AI can take over administrative tasks. With that said, there may be a crossroads when AI is used
With the use of AI analytics, the shift and volatility in customer behaviour become predictable and can be actioned accordingly. No longer will retailers be working from 36 months of historical seasonality. Instead, real-time/near-time data will be used to react to market conditions in a way we have never seen
to solve the individual needs of a consumer to the point that a retail sales associate is adding less value than the technology. Shifting the soft skills of sales into a hard skill reduces the need for training and maintaining a soft-skilled workforce to realise revenue targets. At this point, the role of the retail sales associate could dramatically morph or even be phased out.
How can AI play a role in accelerating the advancement of innovative technologies related to 5G, particularly in countries such as Canada, where 5G accessibility is currently lagging?
The lagging advancement in 5G accessibility can be partly due to the ageing tech stacks that the Tier 1 Carriers are supporting. This tech debt has created internal focuses that prioritise transformation, vendor consolidation, and take-away resources that could be focused on the commercialisation of 5G. AI should play a
pivotal role in reducing the bulk of these aged tech stacks and enable investment in nextgeneration networks.
Since there has been increasing use of AI analytics to analyse customer behaviour, what impact it will have on shaping retail strategies?
The use of AI analytics to analyse customer behaviour will allow retailers to more accurately action their strategies. Specifically, around the effectiveness of personalised marketing offers. Personalised offers are designed to promote the right product, to the right customer and the right time for conversion. With the use of AI analytics, the shift and volatility in customer behaviour become predictable and can be actioned accordingly. No longer will retailers be working from 36 months of historical seasonality. Instead, real-time/near-time data will be used to react to market conditions in a way we have never seen.
How do you view the effectiveness and potential impact of AI-powered chatbots for online customer support and in-store virtual assistants?
The effectiveness of these tools is predicated on the data set that is available to them. The actual customer experience and engagement with these tools will be based on the amount of personalised data each retailer has of their consumers. A general use of chatbots for questions and conventional support will meet the needs of most consumers as they have been in existence for many years. However, to implement this with a consumer who expects an Amazon-like experience will require AI to have and use the personal information that all companies are trying to keep secure.
What key considerations must telecom retailers address regarding privacy and bias when implementing AI, and how have these concerns led to calls for regulatory changes and legislation around AI?
Regulation around AI is needed, and with countries such as Canada leading the way in proposing laws to support this, many more will follow. With telecommunications being federally regulated today, the legislation that will come is guaranteed to alter how AI can and will be used.
How does better customer experience, facilitated by AI, play a crucial role as a cornerstone of customer retention?
At this time, it is retailers who are predicting what the customer experience needs to look like in order to drive customer retention. As AI gets to scale and becomes consumer-facing, the feedback and engagement of those customers will give retailers the best understanding. The next generation that is coming to the marketplace, Gen Alpha, has grown up with a device in their hands and is not afraid of digital. We would expect that retailers striving to capture this generation should be able to do this with ease with the right implementation of AI. Whereas older generations still have trust
issues with certain technologies and expect a hybrid experience when available. For those telecom retailers that need to address multiple generations, the retention of these customers will not be solely on AI, but will certainly assist in acquiring and retaining Gen Alpha consumers in the marketplace.
What kind of challenges does the implementation of AI have on large and small telecom retail businesses in 2024?
The greatest challenge is knowing where and who to invest with when trying to realise the benefits of AI. If companies try to sit back and wait for clear understanding, they are laggards by default. Organisations that have chosen to be early adopters have a learning curve and sunk cost associated with the bleeding-edge technology. The reality for most is that there needs to be clear AI use cases formed by the organisations that are putting AI into action today.
The lucrative opportunities that SIM card theft presents to criminals is one of the main causes of the recent surge in SIM card theft
In the day and age when having digital connectivity is essential, SIM card theft has become a worrying trend. The theft of SIM cards represents a serious risk to people's security, privacy, and financial stability because individuals are depending more and more on their mobile phones for banking, identity verification, and communication.
Financial fraud and identity theft are just two of the many severe and far-reaching effects of SIM card theft. The methods that criminals use to take advantage of weaknesses in the system are evolving along with technology, so it is crucial for both individuals and authorities to be on the lookout for these threats and to take preventative action.
The lucrative opportunities that SIM card theft presents to criminals are one of the main causes of the recent surge in SIM card theft. It is possible to carry out fraudulent transactions, obtain unauthorised access to personal accounts, and assume the identity of someone else using stolen SIM cards. Fraudsters can circumvent security measures and take control of online accounts by intercepting sensitive information, such as SMS authentication codes, sent to victims who have provided their phone number. Identity theft of this kind can have disastrous results, including monetary losses and harm to one's reputation.
Furthermore, miscreants now have even more profit from SIM card theft thanks to the growth of digital payments and mobile banking. Fraudsters may be able to
access a victim's bank accounts, credit cards, and other financial assets by obtaining their phone number. They might even be able to use the victim's payment details to make fraudulent purchases or withdraw money from their account in certain situations. Such acts can have disastrous financial repercussions for the individual, including debt accumulation, savings loss, and credit score damage.
Furthermore, SIM card theft serves as a sophisticated tool for surveillance and espionage, enabling malicious actors to meticulously track a target's activities, intercept their communications, and clandestinely access intimate details of their personal and professional spheres through the acquisition of their phone number. The inherent threat posed to the privacy and security of individuals is profound, particularly when the victim occupies a position of prominence or operates within a sensitive sector. The repercussions of such breaches extend beyond individual safety concerns, encompassing significant implications for national security and geopolitical stability, thus necessitating heightened vigilance and strategic measures to mitigate these risks effectively.
The increasing sophistication of cybercriminals and the accessibility of resources and tools to support their operations are additional factors driving up SIM card theft. The dark web has a plethora of forums and online markets where stolen SIM cards can be easily bought and sold, giving criminals a sizable source of income. Furthermore, fraudsters can now easily evade conventional security measures like two-factor authentication thanks to technological advancements, which make it simpler for them to use stolen SIM cards for personal gain.
The frequency of SIM card theft highlights the necessity for people to take preventative action to safeguard themselves from this risk. Enabling extra security features provided by mobile service providers, such as PIN codes or biometric authentication, is one of the best ways to prevent SIM card theft. People can make it more difficult
for fraudsters to hijack their phone numbers and obtain unauthorised access to their personal information by adding an additional layer of protection to their accounts.
In addition, people ought to use caution when disclosing personal information online and be suspicious of requests for private information— like account numbers or passwords— that come from unknown sources. By exercising caution when disclosing information and being selective about who they share it with, people can lessen their vulnerability to phishing scams and other social engineering techniques that hackers use to obtain SIM cards and commit fraud.
In order to properly combat SIM card theft, mobile service providers, law enforcement, and regulatory bodies must work together more than just on an individual basis. Stakeholders can more effectively detect and capture
those responsible for SIM card theft and sabotage their activities by exchanging intelligence, organising investigations, and putting industry-wide security measures in place. To further reduce the risk posed by this expanding threat, stronger laws and penalties for those found guilty of SIM card theft can act as a deterrent.
Although the dynamics and driving forces of the SIM card market are somewhat different from those observed in 2022 through 2023, the year 2024 is still expected to be a challenging year. Inflation is a major market inhibitor that will continue to influence and shape the overall economic climate in 2024.
In the end, inflation is lowering consumer spending, which will directly affect the shipments of mobile devices as consumers try to save money and, as a result, stop buying
new phones as frequently. Positively, the ecosystem is starting to recover from the shortage of chipsets. With the realisation of investments in expanding IC manufacturing capacity, supply is starting to return to normal levels. There is a softening in other high-computing markets like CE devices, which indicates that more space is opening up for the production of chips.
A SIM card is still necessary for many of the markets where demand is softening, despite the possibility that this will free up manufacturing capacity in other markets where demand is cellular in nature. Because SIM cards and smartphones are such closely related products, any softening or impact on the smartphone market is likely to have a similar effect on the SIM card market.
In 2024, the market for SIM cards will enter a new phase as production capacity rises but short-term demand declines in tandem with shipments of mobile
devices. In general, the market for SIM cards in 2024 is depicted in a rather vague manner. ABI Research had previously predicted a YoY growth of +7.2%, but that prediction has been revised to just -2.3% due to the new macroeconomic trends.
Also, it's important to closely monitor the performance of Apple's smartphone devices that only support Embedded Subscriber Identity Modules (eSIMs) in consumer markets. Apple is currently limited to offering eSIMs in the US market, but the tech behemoth's goals extend far beyond American boundaries. Based on credible reports, Apple is reportedly planning to introduce its eSIM-only smartphone lineup to other nations, including the UK, Germany, France, and Japan. ABI Research predicts a decline in the shipments of removable SIM cards in North America.
Moreover, experts think even though the SIM card market is growing at its speed, the surge in SIM card theft
poses a major hurdle in an ever more interconnected society. As advancements in technology proceed, cybercriminals likewise adapt their strategies to exploit system vulnerabilities. Individuals must stay alert and adopt precautionary measures to safeguard against this danger, while also supporting increased collaboration and stricter regulations to effectively combat SIM card theft. Through collective effort, we can minimise the risks associated with this alarming threat and establish a safer and more secure digital future for everyone.
Managers may access all the fleetrelated data they require in one location with the help of fleet management software
As per the management consulting firm MarketsandMarkets, the fleet management industry, which includes telematics and GPS tracking, will increase at a compound yearly growth rate of 11.3% from $19.9 billion in 2020 to $34 billion by 2025.
According to the report, the main drivers of development are the stringent government regulations, the growing adoption of cloud-based solutions, the expanding Internet of Things (IoT), and the growing need for big data analytics.
Managers may access all the fleetrelated data they require in one location with the help of fleet management software
The concept called Fleet Management
Fleet management is, to put it simply, the administration and planning that goes into managing company cars. The ultimate goal is for businesses to have complete control over the fleet's lifecycle, which will enable them to boost production, lower expenses, increase efficiency, lower risks, and guarantee regulatory compliance. Work vehicles play a significant role in practically every industry and the economy as a whole. Hauliers, couriers, the sales, maintenance, and repair sectors, utilities, public transportation, the distribution of gas and oil, and emergency services are among the businesses that own fleets.
Even if a certain company doesn't own a fleet,
it probably depends on one for some aspect of its supply chain, which it may contract out to another business.
Decoding the nitty-gritty further
GPS is used in fleet tracking to keep an eye on workers, equipment, and vehicles. It gathers data in real-time via telematics technology so that fleet managers can immediately benefit from relevant insights.
This increases overall operational productivity by giving management the ability to act quickly and intelligently when it comes to things like dispatching vehicles, forecasting return times, answering customer enquiries, and rerouting drivers for a safer route.
Managers may access all the fleet-related data they require in one location with the help of fleet management software. It functions as a database efficiently, helping businesses monitor costs, driver dispatching, compliance duties, driver conduct, and fuel usage. As part of a suite, some of them will require various apps; nonetheless, the data might be retrieved from the entire database, greatly improving the efficiency of the administrative process.
Black boxes are usually installed inside cars as part of telematics systems to track their whereabouts, measure their performance, and give fleet managers information on driver behaviour. It can alert them, for example, if a driver is braking or speeding excessively, which will increase fuel expenses.
Telematics systems gather operational data
on driving style, gearbox, vehicle speed, miles per gallon, fuel consumption, load weight, and braking force. Furthermore, certain telematics systems can notify the fleet management when the panic alarm goes off, when the ignition is turned on, and when the doors of a car are open. The information is transmitted either directly to the company's computers or to a vendor's server that an organisation can access.
Typically, security is not offered as a stand-alone programme or feature but rather is integrated into the solution.
Cybersecurity threats have increased along with technology use. For this reason, before choosing any gear or software, a fleet manager must thoroughly inspect them. It is more likely that those with identity and access management, encryption policy, and security validation have the required measures in place to secure the software.
A thorough understanding of the infrastructure being used, the location of data storage, and knowledge of third-party providers are all essential for guaranteeing effective cybersecurity measures.
The majority of other security considerations centre on keeping the driver and the car safe. Driver
identification, which enables drivers to quickly identify themselves when operating a car using biometrics or a key fob, is one of the features offered by certain solutions. When it comes to third-party insurance claims or speeding citations, this tool is really helpful.
Furthermore, cars can be configured to only start when it detects the presence of an authorised driver. When combined with door opening and closing notifications, this informs the fleet manager of any questionable activity.
Fleet managers can quickly act by utilising tracking technologies like GPS tracking and telematics to identify risky driving behaviours and foresee possible collisions. To guarantee the safety of the asset and its contents, they can also assist in locating distant assets or vehicles.
Organisations can schedule and monitor each vehicle's maintenance and repairs with the use of maintenance software, which is frequently, included as part of fleet management packages.
In addition to sending bills to clients via its platform, a robust maintenance system can also generate purchase orders for suppliers and parts. It can also hold additional papers, including complete maintenance records, provider information, warranties, and claims.
Managers may automatically monitor engine hours, fuel consumption, and distance via GPS fleet tracking. They can programme notifications to notify them when a car needs maintenance or repairs, based
on their preferences.
This calculated action enables managers to plan how to make the most efficient and economical use of their workforce, budget, and assets in addition to guaranteeing that the cars are constantly in perfect condition. Furthermore, this will increase the vehicle's return on investment.
There are two varieties of GPS trackers available for fleet management: active and passive. Either of these fleet tracking solutions could be beneficial to your company, depending on your requirements.
GPS coordinates, vehicle speed, and other information about driver behaviour can be stored by passive tracking devices. Consider them as a kind of data logger.
They work similarly to the GPS trackers found on many fitness watches, recording data that can be downloaded and viewed after the
car is linked to the fleet management system.
Passive tracking systems are perfect for fleets that don't need real-time monitoring capabilities, just wish to track mileage and basic data, and have a limited budget.
Active systems use 4G and 5G cellular networks to transfer data immediately to the server, eliminating the need for manual data downloads and accesses. This implies that companies can process and send data in real time without requiring the device to be connected to the server to download it.
Fleet managers who wish to ensure that their drivers receive messages and alerts wherever they are, as well as gain a better understanding of their fleet's real-time position and vehicle information, will find this to be excellent.
Fleet managers can exert better strategic control over their fleet with the use of these capabilities. For instance, delivery services and public transportation managers can
real-time redirect their drivers to increase productivity.
Companies using active tracking systems can create a geofence or a predefined area on a map. This implies that the fleet manager will be notified whenever the vehicle enters or exits the geofenced region. Since active tracking systems enable fleet managers to trace the whereabouts of a stolen vehicle, a lot more security precautions are in place for these systems.
Active GPS trackers are more expensive than passive ones because of the extra functionality they include. Software vendors will counter that the extra efficiency and productivity from employing active trackers will make up for the price difference.
In summary, critical data is captured and stored by passive trackers so that it can be accessed later. However, in addition to recording and storing the same data, active trackers also communicate it
in real-time, giving fleet managers even more options for how to use the information.
Fleet management software, GPS tracking, and telematics have revolutionised the way businesses with vehicle fleets operate, offering an expansive array of features and benefits that extend far beyond mere administrative simplification.
These technologies serve as the backbone of modern fleet management, enabling organisations to optimise their operations, enhance efficiency, and drive down costs through a comprehensive suite of functionalities.
At the heart of these solutions lies their ability to streamline administrative tasks, providing a centralised platform for managing critical functions such as quoting, invoicing, driver dispatching, and expense management.
By automating these processes, fleet managers can significantly reduce manual workload, minimise errors, and improve overall productivity, allowing them to focus on more strategic initiatives.
Moreover, the integration of GPS tracking and telematics capabilities brings unprecedented levels of visibility and control over fleet operations. Fleet managers can monitor vehicle locations in real time, track fuel consumption, and analyse driver behaviour patterns to identify areas for improvement.
Insights gleaned from telematics data, such as excessive idle times or inefficient routes, empower managers to implement targeted interventions, optimise fuel usage, and ultimately reduce operational costs.
In addition to operational efficiency gains, fleet management software offers robust maintenance scheduling features, enabling protactive maintenance planning based on factors like vehicle mileage, usage time, and historical performance data. By staying ahead of maintenance needs, organisations can minimise unplanned down-time, extend vehicle lifespan, and reduce repair costs, ultimately contributing to a more reliable and cost-effective fleet.
The communication capabilities embedded within these platforms further enhance operational coordination and customer service levels. Mobile applications enable seamless communication between fleet managers and drivers, facilitating the efficient dissemination of orders, instructions, and updates. Realtime tracking and status updates allow for enhanced transparency and accountability, ensuring customers are kept informed and satisfied throughout the service delivery process.
Furthermore, the integration of fleet management software with other business systems, such as accounting, route optimisation, and human resources management, creates a seamless ecosystem that enhances overall operational efficiency. By automating tasks like payments, optimising route planning, and managing driver schedules, organisations can further streamline processes, reduce administrative overhead, and improve resource utilisation.
Beyond operational benefits, fleet management solutions also play a critical role in ensuring regulatory
compliance and risk mitigation. By maintaining up-to-date records, issuing timely notifications for compliance deadlines, and providing comprehensive audit trails, these platforms help organisations navigate complex regulatory landscapes with confidence, minimising the risk of penalties or legal issues.
All the above-mentioned transformative tools are empowering businesses to unlock new levels of efficiency, visibility, and costeffectiveness in managing their vehicle fleets. By harnessing the power of these technologies, businesses can optimise operations, enhance customer service, and drive sustainable growth in an increasingly competitive marketplace.
Fleet management is a crucial aspect of any business that owns a fleet of vehicles, from hauliers and couriers to public transportation and emergency services.
The use of GPS tracking, telematics, and fleet management software enables fleet managers to automate administrative tasks, monitor driver behaviour, streamline maintenance procedures, enhance security, and reduce costs.
With the projected growth of the fleet management industry, it is evident that businesses are recognising the benefits of implementing these technologies to optimise their fleet's performance and improve their bottom line.
According to market research, the global artificial intelligence market is expected to experience significant growth from 2023 to 2030
The current artificial intelligence (AI) movement has turned into a rocket ship for enormous transformative changes that are set to accelerate new opportunities, despite the business landscape of the past few years being terrified by challenges posed by geopolitical and economic uncertainties. Research indicates that the amount of data being created globally will surpass 180 zettabytes by 2025, coinciding with the current AI craze and the exponential growth of data within every organisation. But, in the intelligence era, the question isn't how much data a company can produce, rather, it's how they use it to inform decisions and train their employees to ask the right questions in order to receive the right answers.
Enterprises nowadays gather data from various sources, ranging from outdated databases and applications to contemporary cloud data warehouses and platforms. This can be done by a CFO seeking to shorten the time it takes to close a quarter or a Head of Supply Chain seeking to streamline intricate logistics.
As more businesses work to realise the full potential of these innovations, it appears that AI-driven automation will continue to be a crucial feature of future businesses. This will create a perfect storm for data and AI-related skills and will also change the roles and skill sets needed for the workforce of the future. The World Economic Forum echoes this in its "The Future of Jobs Report 2023." Stressing that two of the top ten jobs predicted to grow at the fastest rate between 2023 and 2027 are "AI and Machine Learning Specialists" and "Data Analysts and Scientists."
Whether met with anticipation or trepidation, AI is certain to change the face of business in the coming three years. According to the latest Alteryx research, around 82% of businesses believe AI is already influencing how they will define and shape the future enterprise, and 57% of business leaders believe AI will be widely used in all industries and functional areas. Whatever the future holds, generative AI needs to be successfully incorporated into every aspect of the company's operations through a business-wide strategy for data-driven decision-making that enables every employee to fully utilise the technology. Tech and business leaders need to start planning for the future now. Organisations can leverage both present and future AI capabilities—all driven by data—by collaborating with people managers to build the skills stack that supports the tech stack.
A growing amount of dirty data is available everywhere. The heightened volumes and varieties of data cannot be turned into business opportunities by investments in the tech stack ecosystem on their own. It isolates the process to a small group of people rather than enabling value extraction from data at the speed and scale
required for real-time intelligence. This limits the ability to obtain the decision intelligence required to meet changing business objectives by making it difficult to extract meaningful insights from data at scale.
All businesses, though, have a large pool of untapped data talent waiting to be realised and used to the fullest extent possible. The way that AI operates and performs in the future is expected to be greatly impacted by the skills gap that currently exists. If this gap is not closed, this progress will come to a halt. The development of non-technical soft skills—which should not be limited to traditional data analysts—is essential to preparing for this increasingly complex and data-driven future. These skills allow a wider range of people to participate in thoughtful decision-making.
The size of the world market for artificial intelligence was estimated at $136.55
billion in 2022, and it is anticipated to rise rapidly in the years to come due to rising investments in AI technologies, digital disruption, and competitive advantage in the rapidly expanding global economy.
According to market research, the global artificial intelligence market is expected to experience significant growth from 2023 to 2030. The compound annual growth rate (CAGR) is projected to be 37.3%, reaching a total value of $1,811.8 billion by 2030. This promising technology has the potential to boost the world economy, and some analysts predict it will have a greater global economic impact than the combined output of China and India.
By 2030, it is expected that the world economy will benefit from artificial intelligence by $15.77 trillion, which is more than the combined GDP of China and India at present. The countries that are expected to gain the most economically from AI are China, where
GDP is expected to rise by 26% by 2030, and North America, where GDP is expected to rise by 14.5%. These two regions are expected to account for nearly 70% of the global economic impact, which comes to $10.7 trillion.
Meanwhile, by 2027, it's predicted that the size of the global AI chip market will be $83-$225 billion. For the years 2019 through 2027, it is anticipated to grow at a CAGR of 35%. A lot of industries use AI chips, including telecommunications, IT, healthcare, and automotive. The market for AI chips is dominated by North America, with AsiaPacific said to be growing at the quickest rate. Among AI chips' advantages are their extremely high bandwidth memory, quick computation, and faster processing in parallel.
The market for self-driving cars is predicted to grow, from 20.3 million in 2021 to 13.7 billion. By 2030, 10% of automobiles are anticipated to be driverless. It is projected that by 2030,
(In Percentage)
fully automated vehicles will bring in roughly $13.7 billion. The most common application for driverless cars is expected to be robo-taxis. Also, according to Gartner, by the end of 2023, about half of US-based healthcare providers intend to implement AI technologies like robotic process automation, or RPA, in their medical facilities.
Businesses are adopting AI and Large Language Model (LLM) technologies at an accelerating rate, so it is imperative that everyone learn how to use these cutting-edge tools to extract insightful data. As per Gartner's 2025 projections, the most in-demand skills in the data and analytics talent market will be analytical and soft skills.
The cornerstones of developing the next generation of data science talent are encouraging data curiosity and analytical thinking. But equally important are transferable soft skills
NEGATIVE IMPACT
23%
NEUTRAL IMPACT
28%
POSITIVE IMPACT
49%
Source: appinventiv.comlike communication, curiosity, teamwork, and creative problem-solving.
According to research by Alteryx, 72% of companies believe that having employees with a broad skill set is more important than having them specialise in a particular area. Additionally, 61% of respondents identified creativity as the human skill that will be most valuable in a market environment that is being shaped by artificial intelligence, followed by empathy and critical thinking.
Although their value may not always be immediately apparent, employees who possess both technical and soft skills are extremely valuable to businesses. In this category are professionals in the middle of their careers, regardless of age or educational background. It also includes individuals considering returning to the workforce or expanding their skills to progress in their professions. Their most valuable asset is their distinct understanding of the larger business context.
Individuals can utilise this skillset to showcase their ability to generate relevant enquiries, execute effective data procedures, and generate valuable outcomes. Moreover, the same ability can also be used to convert data into insights that play a vital role in making informed business decisions. Even though this expertise may not align with the conventional definition of data scientists' skills, it is crucial to gain insightful information.
For AI to help businesses understand the "what" and "why" behind important business decisions, it must be combined with high-quality data, a variety of human intellect, and business context. When data is used alone, it cannot offer the insights required to address business problems, and when AI is used without domain knowledge to ask intelligent questions, it cannot produce results that are dependable, secure, and trustworthy.
As a result of the AI wave, new paradigms for data interaction will be created, and patterns and insights that have business value will be found in data more quickly. Companies that equip their domain experts with analytical, dataliterate, critical thinking, and domain knowledge will prosper in the AI-driven intelligence era.
Without a doubt, data-driven decisionmaking will continue to be essential to businesses in the future. Businesses can only successfully transform and be prepared to use generative AI by supporting the upskilling and reskilling of their current employees, from knowledge workers in business lines to those in more technical roles.
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