International Finance - Nov-Dec 2022

SANJAY KUMAR EDITOR-IN-CHIEF INTERNATIONAL FINANCE

When healthcare meets tech

China, apart from struggling with the surge in coronavirus cases, is witnessing a shrinking labour force. 'Manzella Report' states that the worker shortage is happening in China's coastal manufacturing regions. It has taken a serious shape in Guangzhou and Shanghai, where there is an estimated 30% to 70% gap between the number of workers demanded and the ones available. Chinese media also reiterates that an increasing number of workers, who were previously employed in these coastal manufacturing hubs, are now seeking work near their home districts.

Speaking about the crisis in China, let’s not forget about another problem brewing within the tech industry. Many of Wall Street's experienced investors are now being plagued by recollections of the dot-com crisis, as 2022's stock market collapse gives them considerable déjà vu. Since 2022, the S&P 500 has decreased by 19%, and the tech-heavy Nasdaq has fared even worse, falling more than 28%. The sector flourished during the COVID period, as the global lockdowns forced companies to adopt technological solutions, in order to stay in touch with their remote workers and keep the daily businesses going.

However, ‘Metaverse’ provides a ray of hope for the sector. Ever since Facebook changed its name to Meta in 2021, the game-changing potential of the 3D virtual world to revolutionise the formal economy is quickly catching everyone’s attention.

Concepts like ‘Virtual Office’, ‘Metaverse ATM’, and ‘Digital Stores’ are becoming new tech catchphrases.

While the International Finance’s last edition of the year revolves around these topics, our cover story is about the inspiring transformational journey of Bahrain’s King Hamad University Hospital (KHUH), which aided by Artificial Robotic Process Automation Software (RPA Software), has been changing the health sector for the better.

INSIDE

CHINA'S 'BLUE COLLAR' HEADACHE

Business confidence in China has already fallen to its lowest since 2013

EVOLUTION OF LABOUR MARKET

The gig economy is expected to grow to $455B by 2023 year-end in gross volume transactions

REVOLUTIONIZING HEALTHCARE INDUSTRY

KHUH excelled in introducing many other disruptive solutions in Bahrain’s healthcare sector

EUROPE’S ENERGY CONUNDRUM

Europe is now on the verge of recession, if not already in one, and the worst looks yet to come

BUSINESS DOSSIER

44 Warba Bank pioneered innovative digital-banking services

58 Ahli United Bank of Kuwait bags two accolades

SHADOW BANKING: THREAT TO GLOBAL ECONOMY

The shadow banking peaked at $62 trillion in 2007, Financial Stability Board stated

THE IDEA CALLED METAVERSE: NEW 'REALITY'

Metaverse platform Decentraland is introducing the first metaverse ATM

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Elon Musk fires entire Twitter board

Elon Musk fired the Twitter board of directors and replaced them with himself as the only member. In a company filing with the US Securities and Exchange Commission, Bret Taylor, the former board chairman, and Parag Agrawal, the former CEO, are listed as two of the nine directors who have been fired. After months of legal wrangling, Elon Musk finally completed his $44 billion acquisition of the social networking platform. As he begins his first week as the new chief executive of the corporation, the richest man in the world is thinking about significant changes.

DBS uses DeFi to trade FX

DBS Bank, a significant financial services organisation in Asia is applying decentralized finance (DeFi), a project backed by Singapore’s central bank. DBS said that it had begun a trading test of foreign currency (FX) and government securities using permissioned, or private, DeFi liquidity pools. The project is a part of Project Guardian, an industry-spanning initiative led by the Monetary Authority of Singapore (MAS). The deal involved buying and selling tokenized Singapore government securities like Singapore dollar, bonds and Japanese yen.

Money View raises $75 million

Fintech company Money View announced it has raised $75 million in its ongoing Series E-funding led by UKbased asset manager Apis Partners, at a valuation of $900 million. The company is currently handling assets under management (AUMs) of over $800 million and operating at an annualized disbursal run rate of $1.2 billion with over 40 million app downloads. The current funding also saw participation from Tiger Global, Winter Capital and Evolvence. The funds will be used as growth capital, according to the company.

The eagerly awaited PlayStation VR2 from Sony will go on sale in November, with the headset expected to arrive on store shelves on February 22, 2023. The business announced in a blog post that the virtual reality (VR) headset will start at $550. The headset, controllers, and stereo headphones are all included in the retail box. "We've created the PS VR2 headset with comfort and lighter design in mind," the tech giant said in a blog post.

Russia to rejoin Ukraine grain exports deal ECONOMY Ones

to Watch

AHMAD ALZABIN CEO, AVIATION LEASE AND FINANCE

A standoff that threatened to reignite a worldwide food crisis has been resolved, and grain shipments from Ukraine will restart, following Russia's decision to rejoin an UN-backed campaign to permit exports via the Black Sea.

Recep Tayyip Erdogan, the president of Turkey, claimed that Sergei Shoigu, the Russian defence minister, had called his Turkish counterpart to announce Moscow's re-engagement.

In a speech to his security council,

Russian President Vladimir Putin stated that even if the most recent agreement failed, Russia would still provide "the volume of grain that was provided from Ukraine to the poorest countries."

According to Erdogan, the following grain shipments will go to Sudan, Djibouti, and Somalia. The Turkish President assisted in arranging the initial grain transaction in July and has kept close ties with Putin ever since Moscow began its full-scale assault in February.

By the Numbers

The ALAFCO Aviation Lease and Finance Company recently firmed up an agreement for the acquisition of 20 new advanced Boeing 737 Max aircraft for a total value of $1.9 billion.

OSMAN SULTAN CEO, EMIRATE INTEGRATED TELECOMMUNICATIONS

The company achieved total assets of $3.282 billion, with a return on equity ratio of 17.6%. DU offers a wide range of telecommunications services like mobile and fixed-line telephony.

DORIS HSU CEO, GLOBALWAFERS

Hsu leads GlobalWafers, one of the world’s largest suppliers of silicon wafers used in making chips. The company announced it would invest up to $5 billion in new wafer plants.

Source: Statista

The total airline sector revenue is predicted to increase by 43.6% in 2023

The FinTech Bridge builds on an agreement signed in 2016, which will remove barriers to FinTech trade by opening new regular talks between regulators and businesses

Aviation sector to return to profit in 2023?

According to the International Air Transport Association (IATA), airlines are expected to return to profitability in 2023, after cutting losses brought on by the COVID-19 pandemic on their companies in 2022.

Airlines are predicted to report a small net profit of $4.7 billion - a net profit margin of 0.6%. It is the first profit since 2019 when industry net profits were $26.4 billion (3.1% net profit margin).

In contrast to IATA's June 2022 projection, which predicted a $9.7 billion loss for 2022, the industry is now expecting net losses of $6.9 billion in 2022. This is much better than the losses of $42.0 billion and $137.7 billion that were reported in 2021 and 2020 respectively.

Airlines have exhibited resilience throughout the COVID-19 pandemic. The financial recovery will start to take shape as we move ahead to 2023 with the first industry profit since 2019. This will be considered a great achievement given the severity of the financial and economic harm brought on by the government-imposed pandemic restrictions.

However, a $4.7 billion profit on $779 billion in industry revenues also shows that there is still a lot of work to be done to put the global sector on a sound financial foundation. Many airlines are successful enough to draw the funding required to advance the sector as it decarbonizes. But many others are struggling for a variety of reasons. These include onerous regulation, exorbitant costs, inconsistent government policies, poor infrastructure and a value chain where the gains of linking the world are not equally divided, stated Willie Walsh, IATA's Director General.

In the face of rising fuel prices, improved prospects for 2022 stem largely from strengthened yields and strong cost-control methods. The increase in passenger yields is estimated to be 8.4%, up from the 5.6% predicted in June. Passenger revenue is anticipated to increase to $438 billion (from $239 billion in 2021) thanks to this strength. Air cargo revenues were crucial in reducing losses, with estimated revenues of $201.4 billion. In comparison to 2021, the total airline sector revenue is predicted to increase by 43.6%.

UK and SGP sign FinTech-focused MoU

The UK and Singapore have signed a Memorandum of Understanding aiming at enhancing FinTech trade and cooperation between the two countries. According to the UK Treasury, the MoU will reduce obstacles to bilateral FinTech commerce. Along with the previously existing cooperation between the UK and Singapore, it will also intensify engagement between businesses and authorities.

The regular meetings between UK and Singaporean policymakers and the FinTech industry will focus on lowering trade restrictions. The FinTech Bridge builds on an agreement signed in 2016, which will remove barriers to FinTech trade by opening new regular talks between regulators and businesses. This will boost collaboration and information sharing about new developments in the FinTech industry. For the UK and Singaporean FinTechs, it will also lower trade obstacles, enhancing growth and investment prospects.

According to FintechGlobal, UK Economic Secretary to the Treasury Andrew Griffith said, "The UK and Singapore are among the world’s leading jurisdictions for fintech investment – and

this announcement will only accelerate growth and innovation in our respective sectors. The MoU we have announced is crucial – and I would like to thank the Monetary Authority of Singapore for their constructive engagement throughout discussions."

Meanwhile, The City UK CEO Miles Celic said, "The UK and Singapore are two of the world’s most dynamic and innovative FinTech markets. The FinTech Bridge will drive exciting new opportunities and greater alignment of regulatory approaches will help with the expansion of FinTechs from the UK and Singapore into each other’s markets. Greater cooperation between government, regulators and industry will boost innovation and drive better outcomes for customers." The legal formalities have been completed on both sides and the MoU will come into effect in December, Miles Celic added.

After the United States, the UK is the second-most popular location for FinTech investment. The UK continues to be the most attractive site for FinTech in Europe, as investments in the sector grew by 9.1 billion in the first half of 2022, a 24% rise from the same period in 2021. The sector contributes an estimated $13.4 billion to the UK economy.

In order to save $1.4 billion, over the next five years, HP will lay off between 4,000 and 6,000 workers

World Bank reduced China's growth forecast for the next year from 8.1% to 4.3%

HP cuts Jobs as recession looms Take action on plastic impact: UN

Big Tech is bracing for a challenging future as HP Inc. announced it will lay off 10% of its workforce, while Dell warned that sales are declining, and Google is getting ready to flag 10,000 employees as underperforming, possibly setting the stage for significant staff layoffs. The reductions come as a potential recession and post-pandemic decline in sales have led many technology companies to re-evaluate staffing needs. In order to save $1.4 billion, over the next five years, HP will lay off between 4,000 and 6,000 workers.

HP CEO Enrique Lores said, "At this point, it’s prudent not to assume that the market will turn during 2023. More than 137,000 white-collar workers have already lost their jobs this year."

On November 10, prominent UN system members gathered during the 2022 UN climate summit (COP27) to discuss the sometimes disregarded but nonetheless significant connection between plastic garbage and carbon emissions that cause climate change. The topic of the conference, "How combating plastic pollution and illegal traffic in plastic waste can help reduce carbon emissions," was how to lower carbon dioxide emissions through the prevention of plastic pollution and illegal traffic in plastic waste. It was co-organized by UNCTAD, BRS Secretariat, the UNEP and the UNODC. The UN said that they will deliver targeted policy advice and effective technical assistance to member states.

Monthly average electricity prices in United Kingdom

WB cuts China's growth forecast

The World Bank slashed its China growth forecast for the year as the pandemic and weaknesses in the property sector hit the world's second-largest economy. The World Bank announced that it had reduced its projection from the 4.3% expected in June to 2.7%. Additionally, it reduced the forecast for the next year from 8.1% to 4.3%.

In a press release, the World Bank said, "Economic activity in China continues to track the ups and downs of the pandemic -- outbreaks and growth slowdowns have been followed by uneven recoveries. Real GDP growth is projected to reach 2.7% this year, before recovering to 4.3% in 2023."

UK economy shrinks in Q3

The United Kingdom's economy has contracted more than previously thought in the third quarter of this year, placing the nation at the bottom of the G7 in terms of quarterly growth. The Office for National Statistics (ONS) released data showing that the third quarter's Gross Domestic Product (GDP) decreased by 0.3% as opposed to an expected 0.2% loss. The country only managed growth of 0.6% in the first quarter and 0.1% in the second, according to revised growth numbers for the first half of this year. The office also disclosed that the GDP is currently projected to be 0.8% lower than it was prior to the outbreak. Experts have predicted that the economy will shrink in the last quarter.

Electricity consumption in the United Kingdom

Companies can maintain a better staff retention ratio, if they pass on the WFH benefits to staffers with parental responsibilities

Work From Home culture takes over biz world

IF CORRESPONDENT

After the COVID-19 outbreak in China’s Wuhan in late 2019, the year 2020 brought a culture shock for the traditional office rulebooks as the whole world went into lockdown mode by March. To stop the transmission of this contagious respiratory virus, Work From Home (WFH) and Remote Workplaces emerged. After two years of strict pandemic rules and aggressive vaccination campaigns, now normalcy is getting restored again across the globe.

While the WFH has shown that employees can produce the same officelike productivity from their homes, with help of personal computers/laptops and good internet connections, no one can deny the role workplaces play in areas such as team collaboration, employer-employee networking and most importantly, mental health of the professionals. Technology is powering up the Hybrid Work culture, where the staffers on alternative days, can perform their duties from anywhere instead of reporting to the offices.

While the office properties of the companies are still facing the COVID aftershocks ahead of

the recession madness, they still remain a major component of the white-collar economy. The following are some of the trends and success formulas that companies can follow in this 'Flexible Office' environment, without compromising on the basic work cultures.

Decentralisation the key

With technology driving the 21st-century economy, decentralisation is becoming the mantra for businesses. Sitting from their headquarters, the business leaders can connect to their employees and clients through video calling tools such as FaceTime, Skype, Zoom, and Google Meet to conduct meetings.

As per reports, as the US white collar workers worked from suburbs and second and third-tier cities in the last two years, there is still a great demand for office spaces as the pandemic wanes and these employees feel the urge of having a formal work atmosphere. The study also said that despite embracing the tech, companies are looking for solutions such as downsizing main headquarters and opting for smaller office spaces available in suburban markets. It’s a win-win situation for both parties as the property markets in small cities get boosted, while the businesses can maintain their diverse profile by attracting more job seekers from such regions. These smaller offices can stay in touch with their headquarters

No one can deny the role workplaces play in areas such as team collaboration, employeremployee networking and most importantly, mental health of the professionals

in the form of virtual communication tools. The businesses not only get exposed to a wider range of regional economies, but also can come up with region-specific operations strategies.

Flexible offices are here to stay

A recent YardiKube survey saw over 90% of US businesses preferring formal office setups to ensure companies’ well-being. Artificial Intelligence data said that employee footfalls in workplaces haven’t reached the 2019 level. In August this year, the office visit rate saw a 17.4% rise from what the ratio was in early 2022. Another Gallup poll showed that the workers’ preference for the hybrid model is rising.

While big shots such as Apple and Tesla have asked their employees to return to the office, media reports have talked about logistical nightmares such as fewer work desks in these places. While most workplaces are undergoing post-COVID transformations, there are concerns over social distancing rules, forcing the companies to increase their office footprints to decongest workspaces. Some businesses have even opted for an alternative

reporting days model, where their employees can do work from home on certain days in a week.

Crexi's study has reported an 18% increase in the amount of US co-working spaces, along with a shrinking commercial property market, as businesses are quickly grabbing up whatever new buildings are available. It shows one thing, as the recession nears, investing in co-working spaces, rather than building a new headquarter from scratch, makes more sense for the businesses. A recent Gartner survey has said that three out of four finance executives may move a minimum of their 5% onsite workers to permanent remote workplace arrangements.

How does this solution help?

If we take the US white collar market, branded businesses are already reaping the benefits of the Work From Anywhere pattern, as per reports. Tech firm Sun Microsystems are saving some USD 68 million in real estate costs in a year, while Dow Chemical and Nortel didn't have to spend over 30% of their non-real estate capital. Global WorkplaceAnalytics study saw some six of its 10 survey participants talking about cost savings, a major plus from this WFH solution.

Areas such as commercial property rent and utilities, cleaning services, cafeteria services, taxes, vehicle parking fees, employee health insurances, stationeries and electricity bills witnessed major spending decline in the last two years for some of the businesses. On the staffer front, many firsttime job seekers too are now opting for flexible work patterns, so that they can balance professional and personal commitments. A Business. com report has also said that the companies can maintain a better staff retention ratio, if they pass on the WFH benefits to staffers with parental responsibilities. lt helps your business to see an improvement in employee retention.

A Stanford study too has found that despite not reporting to the office, 13% of its surveyed remote workers are showing more productivity than their on-site counterparts. Minus the disadvantages of being surrounded by noisy colleagues and commuting-related stresses, these staffers have displayed the traits of maintaining calm minds and sharp focus on their professional commitments. As per a Hubstaff report, 65% of US workers believe they are super productive, while working from home. 85% of the surveyed business leaders agreed with the fact.

Remote work policy beneficial for employees and jacks up company profiles as well Work From Home comes with the perk of the staffers having better time management skills to

Work From Home Statistics

• Remote work has increased by 173% between 2005 to 2018

• 56% of companies across the globe allow remote work

• 52% of people work remotely at least once a week

• 4.7 million people already worked from home even before the pandemic

• 51% of employees prefer remote work because it improves work-life balance

• 75% of employees are less distracted at home

• 77% of remote employees are more productive when they work from home

• 99% of people want to work remotely at least once in their life

• Remote work makes 81% of employees recommend their company to others

• 54% of office employees would leave their job for one that offers remote work

Source: kissflow.com

maintain their work-life balance. A Multiplier survey cited some 84% of its survey participants backing the remote working method as having a positive impact on their mental health as well. While it increases their gratefulness quotient towards the employee, the business leaders can use that factor to increase the team productivity by asking his/ her juniors to increase their shifts by a few hours, if the need arises. US-based software firm Coso Cloud, in its recent surveys, identified some 35% of staffers using their spare time for some sort of physical exercise, thanks to the Work From Home. With a good diet, they can remove the

job-related burning out factor as well, boosting their productivity even more. Not to mention the costsaving aspect as well, where they don't need to spend on their daily commuting, food and office dresses, stationery and other things. Also, they can invest some spare time in their hobbies as well.

While Census Bureau Data 2018 mentioned that the US workers lose 117.7 minutes in a week on commuting alone, the ratio reaches 96 hours in a year. A 2019 study from the leading freelancing website ‘Upwork’ stated that by 2028, 73% of United States businesses will have remote staffers. It also said that the companies will

be offering commercial spaces in their staffers’ resident cities, which can be used as a company based in that geographical territory, with tech support connecting them with the main headquarter. The report highlighted the importance of having a mixed and merged workforce, which now has emerged as a ‘Hybrid Workforce’.

A ‘Slack’ report has said that some 78% of professionals now want flexibility when it comes to reporting to work. Instead of jostling in cramped cubicles, they are giving preference to the hybrid workplace concept. Shifting to the work-fromhome concept has been beneficial, especially for those, who went back

to their hometowns during the COVID pandemic and global lockdowns. If they would have been staying in the cities, where their offices are, they would have to spend money on their food and accommodation rents, which currently are not required, if they are reporting to their duties from their hometowns themselves, through the help of tech.

Talk about the pre-pandemic days, when your work-life balance would have easily gone into the thin air, thanks to the juggling between your professional tasks, presentation deadlines and household chores, family commitments. Thanks to the hybrid work culture, the stress levels on this particular front are now slowly coming down among the workers. They can spend most of their time with their near and dear ones, and celebrate birthdays and anniversaries without opting for too many holidays. A bunch of happy, satisfied and grateful employees is all businesses need at the end of the day to keep the productivity level going.

Tesla CEO Elon Musk has jumped into the debate, saying that his staffers can work from home, as long as they clock 40 reporting hours in a week. As per a Stanford economist, working from home is driving growth at companies across the globe and some other studies have already supported his claim. One of them even found that 77% of workers witnessed increased productivity in the

hybrid atmosphere.

For businesses, having a flexible work pattern means fewer distractions in form of office chit-chat sessions between the team members, on a bigger picture, this flexibility model can be a big boost for the companies, as they will get branded as 'progressive' ones, embracing the work culture related changes much faster than their competitors.

Having a remote-first work policy can help these companies not only to tap the young workforce with promises such as better worklife balance and tech-friendly workplace, but these leaders can also present this narrative of decreasing the carbon footprint with the Work From Anywhere method. They can also cover the time zone-related gaps in their business operations by hiring talents across all parts of the world, ensuring they remain 24/7 up for their duties.

Flexible workplaces will remain relevant in the future as well, as it offers the much-needed worklife balance for the workers, while business leaders can save costs and increase team productivity with the effective use of technology. It’s a win-win situation for both sides. The commercial real estate sector has always shown resilience against inflation and interest rate hikes, which means that the companies which are going for regional, decentralised workplaces, may come up with their own headquarters in near future.

editor@ifinancemag.com

IF CORRESPONDENT

As China right now is struggling with the massive surge in coronavirus cases, due to the emergence of XBB.1.5 sub-variant of Omicron, there is another crisis which is brewing inside its economy in form of a growing labour shortage.

Since 2020, China, under its 'Zero COVID' policy, has taken harsh lockdown measures to control the pandemic's spread. The experts are blaming this approach, along with poor and ineffective vaccination, behind the country's domestic population lacking herd immunity against the virus. The lockdowns harmed the economy even harder, as part of supply chain disruptions, media reports suggest that one in every five Chinese in the 16 to 24 age group was unemployed in 2022. For 2023, the World Bank has predicted the world's second-largest economy to grow at a rate of 5.2% in 2023. This doesn't sound good for the country which has some 11.6 million graduates waiting to enter the workforce.

Business confidence in China has already fallen to its lowest since 2013, as per a World Economics survey. In November 2022, iPhone maker Foxconn saw massive workers unrest in its Zhengzhou factory, due to harsh

Business confidence in China has already fallen to its lowest since 2013, as per a World Economics survey

Decoding China’s bluecollar labour shortage

COVID restrictions and claims of overdue payments. You have Vietnam setting its eyes on dethroning China as a ‘Number One Tech Hub’ as industry giants look for alternative markets. Apple, Google and Samsung are all set to shift their manufacturing activities to the Southeast Asian nation, whose GDP growth has accelerated to a record 8.02%.

Amid these, the growing labour shortage is becoming another headache for the country. The question is what is driving this phenomenon?

As per the 'Manzella Report', the labour shortage is happening in China's coastal manufacturing regions. The reasons are Chinese government policies, along with work and living conditions in these areas.

Since 2000, migrating rural workers have been the chief source of labour in coastal cities. The government stats show that these workers have increased to more than 250 million from just over 60 million in the last 20 years. However, NGOs think that the real tally is somewhere between 350 to 400 million. However, labour shortages are getting worse in Guangzhou and Shanghai, where there is an estimated 30% to 70% gap between the number of workers demanded and the ones available. Chinese media reports also reiterate that an increasing number of workers previously employed on the coast are now actively seeking work in provinces near their home districts. They are doing it as they believe that they can get equal or better financial results (in terms of salaries) under this arrangement while saving costs for travelling to cities.

Also in urban areas, workers from the countryside don't get legal protection as an antiquated Hukou (household registration) system bars them from

taking part in these cities’ basic social infrastructure. Migrants cannot utilize local childcare, education, housing, medical, or unemployment benefits. To take advantage of urban benefits such as accredited schools or proper hospitals, they must pay “usage fees” often equal to more than a year’s worth of wages.

Both United Nations and Chinese studies have also shown the increasing cost of living crisis in these urban areas. The same cost comes twice below if these labourers are working in interior districts. Also, wages (excluding mandatory overtime) are, on average, nearly 50% higher in coastal cities and the amount fails to support living expenses.

While a recent International Monetary Fund (IMF) report has predicted a fullscale nationwide labour shortage by 2025, it cited the Hukou system as a key reason behind this. However, the report is too reliant on Chinese government data rather than independent assessments. Also, the report ignored the factors mentioned below.

While the popular belief suggests a near equilibrium between Chinese labour supply and demand is inaccurate, the country does not really have the official 87% employment ratio.

A large portion of Chinese society remains untracked for such employment statistics. A significant section of the domestic population works in completely unreported industries, and/or is paid off the books.

The IMF study also underestimated the impact of changes to the Chinese retirement age. Those who are forced to retire in their late forties and early fifties generally continue their working lifestyle in urban areas. They work off the books and are statistically untracked. Changing the retirement age may not fill as much of the labour

demand as the report estimates.

Also, the report doesn't speak much about the massive spike in unemployment/underemployment among Chinese university graduates. At least half of these graduates are unemployed/underemployed since 2019.

As per the 'Manzella Report', the labour shortage issue has its roots in the country's bureaucracy. Reforming the Hukou system and guaranteeing the migrant workers their basic rights in urban areas should be the top priority now.

With the Chinese population inevitably declining due to the onechild policy, the retirement age can also be adjusted as per the economic needs. Also, a reformed labour-related statistics-gathering system that reflects the ground reality accurately will help policy-making immensely.

Foreign firms, on their part, can

introduce higher pay and some of the missing societal infrastructure to workers, apart from working with their respective chambers of commerce to improve the Hukou system.

IMF, on its part, can concentrate on partnering with China to align the latter's educational system with the 21st-century professional skill sets, to keep the labour force future-proof.

As per a January 2022 report from 'China Macro Economy', in 2020, migrant workers, who account for the largest share of China’s blue-collar labour pool, earned an average monthly income of 6,214 yuan, an increase of 6.2% over the previous year, if the report from National Bureau of Statistics is to be believed. In the first six months of 2019, the median per capita disposable income was 14,897 yuan per year.

In 2020, a report titled 'New Blue Collar Employment and Living

Conditions Research Report', released by the Data Centre of China Internet, showed that wages can be even higher for workers in the gig economy, with nearly 40% of couriers, online taxi drivers and delivery workers earning an average monthly income above 9,000 yuan. This figure was higher than the starting salaries offered to university graduates in 2020.

Still, these generous incomes didn't stop the workers' shortfalls, and now government estimates that by 2025, there will be tens of millions of labour vacancies.

According to the human resources company 'China International Intellectech', in 2021, nearly 70% of Chinese businesses were facing labour shortages, and some 55% of these companies struggled to find blue-collar workers.

The Ministry of Human Resources

and Social Security said in 2021 that of the 100 occupations with the greatest worker shortages, as many as 36 were categorised as “manufacturing and related personnel.” Of the 25 new occupations on the list, 15 were directly related to manufacturing, accounting for 60% of the total.

The report also stated that the number of "open positions for occupations on the rankings" jumped to 1.418 million in Q4, which is up by about 100,000 from 1.316 million seen in the third quarter of 2020.

This only shows that factory owners across the country are facing the same struggle, in terms of getting an adequate labour force, including the higher skilled workers, while facing increasing demand pressures. The fact is that the workers' pool has been steadily decreasing and sectors like manufacturing are bearing the brunt.

Another 2021 report from Apparel Resources sums up the situation perfectly, "This is not only because jobs in other industries have become lucrative but it is also because of the impact of the legacy of decades of the one-child policy that was officially scrapped in 2016. Notably, as per official figures, China’s working age population has gone down by more than 5 million people in the last decade as births have slumped, and this is despite a rollback of the one-child policy."

"To make it worse, the migrant workers on whom the entire manufacturing industry survives and thrives are still worried about getting infected by Coronavirus despite the low number of cases in the country, and this worry is forcing them to stay at home, thereby hitting the businesses in the country significantly. Chinese migrants who had returned to their hometowns

for the Spring Festival are reluctant to come back to cities and according to a reported survey conducted in the country, women migrant workers are less likely than men migrant workers to return to factories," it remarked further.

"The report also highlighted that having a preschool-age kid had a negative impact on women migrants’ employment decisions. Notably, COVID-19 has today reinforced traditional gender roles in many apparel and business establishments in the country, and intensified labour market inequalities. Also, the recent floods in many parts of China haven’t helped the cause either. In fact, as on March 2021, the Statistics Bureau said that there were still 2.46 million fewer migrant workers than during the same period back in 2019," Apparel Resources study commented, while citing the Chinese government data.

"Several migrant workers have been battling tough working conditions, employed as labourers in garment factories or as courier employees in China’s e-commerce firms. Also, a stringent residency system — called ‘hukou’ — prevented migrants from accessing public health care and schools, or buying property in their city of work. In such a scenario that’s already plagued by high living costs, migrant workers are not keen to rush to cities – at least for the time being," it added further.

So the trend suggests that the Chinese population is looking for office/ clerical jobs more, than factory ones. As per the Education Ministry, there will be a shortage of nearly 30 million workers in the manufacturing sector in the coming days.

China Daily came out with a report in 2022, which had some significant

observations on the country's return to economic normalcy after two-year-long COVID-related disruptions. It also talked about how the declining factory workforce could potentially have a negative impact on the country's growth story.

"With restrictions on social mobility being lifted, China should avoid the systemic risks that some major economies have encountered in this process," the report commented.

"The factor that is likely to have the greatest impact on the economy is likely to be a decline in the labour force participation rate. One reason for this is that the speed of labour returning to the market is slow relative to the increase in labour demand, resulting in a shortage of manpower. The COVID-19 pandemic has seriously affected the manufacturing industries with long supply chains and assembly-line operations. The United States, for example, currently has a labour shortage of 11 million people," it said further.

"China's manufacturing labour is mostly migrant workers. If the pandemic continues for months, which is highly likely, the process of returning to work of some migrant workers may be slowed down to a certain extent. Or, after the recovery of the hard-hit service industry from the influences of the pandemic, there will be a change in the employment structure of the country. More labour will flow to the service industries, where the wages are higher, resulting in a shortage of manufacturing labour," the study observed.

"Besides, the shortage of truck drivers in the logistics industry is as high as 10 million. If a certain number of drivers have to stop work due to infections every day for a period of time in the future, it will continuously cause a decline in the efficiency of the logistics

Number of employed people in China from 2011 to 2021 (In Millions)

Source: Statista.com

industry, and affect the efficiency of the entire supply chain and the operation of the manufacturing industry. In countries such as the US and the United Kingdom, reduced logistics efficiency and a shortage of lorry drivers are among the factors driving inflation," the report remarked.

"Therefore, it is necessary for Chinese factories to prepare for possible labour losses after the expected mass migration of workers to their hometowns for Spring Festival, which falls on January 21 next year. For example, incentives should be offered to workers who promise to return on time, and workers should be guaranteed paid holidays or other benefits if they become infected.

Factories with heavy orders can offer bonuses to encourage employees to stay on the job during the Lunar New Year holiday to avoid labour losses and shortages as much as possible," it suggested, while talking about the ways to deal with the problem of decreasing labour force.

"The salary may appear attractive for some outsiders, but insiders are still cautious. Given that workers are paid by the piece, higher salary would mean taking up heavy workloads," the report said.

"The income of truck drivers and other practitioners in the logistics industry needs to be increased and their welfare improved, so as to avoid supply chain disruptions. Maintaining the normal economic cycle of consumption, production and distribution is the biggest challenge and task for restarting the economy in the post-pandemic era," it concluded.

Yang Zhixiong, Executive General Manager of the Guangzhou International Textile Trade Zone, told Apparel Resources, "There is nothing more disheartening than seeing young men and women running away from

apparel units. Youth would like to try more challenging jobs, especially in the creative design and automated industries.”

Zhang Xiaorao, director of Silk Road Vocational College, which trains mechanics and automation technicians, informed the 'China Macro Economy' in 2022 that due to high worker demand, students were usually hired in advance of graduation. They undergo a one-year internship programme after a two-year professional course, and companies contact faculties in advance to express what type of interns they need.

“Companies have seen an increase in export orders after the COVID pandemic, and now companies are coming to recruit even more employees than before,” she said.

However, traditional Chinese Confucian culture is an important historical reason for society’s prejudice against “skilled workers”, as per the official.

“The ancients divided jobs into ‘three teachings and nine sects’ and those at the bottom of this chain are all skilled workers, which is a deep-rooted concept among many Chinese people, who

believe these workers are in undignified professions,” Zhang Xiaorao remarked.

Since 2009, the Chinese government has provided vocational school students with free tuition, accommodation, meals, and a subsidy of 2,000 yuan a year for poor pupils. For Zhang Xiaorao, this shows the administration's serious intent on this front.

In 2021, Beijing issued new guidelines to address discrimination against students graduating from vocational schools. In October of that year, the labour ministry outlawed the practice of employers carrying on hiring based on where a job applicant studied.

In the same year, the Standing Committee of the National People’s Congress had also recommended changing the term “technically skilled personnel” to “highly qualified and technically skilled personnel”.

“Changing the name of the workers also sidesteps social discrimination against these industries,” Zhang Xiaorao concluded. editor@ifinancemag.com

FEATURE CHINA

KHUH excelled in introducing many disruptive solutions in Bahrain’s healthcare sector

Armed with RPA, KHUH revolutionizes healthcare industry

IF CORRESPONDENT

Aided by Artificial Robotic Process Automation Software (RPA Software), Bahrain’s King Hamad University Hospital (KHUH) has taken a giant technological leap towards revolutionizing the healthcare industry.

KHUH has recently hit the headlines after it adapted to Amazon Web Services (AWS) and developed a long-term storage solution without making changes to its existing Picture Archiving and Communication System (PACS).

The 600-bed hospital faced limitations on the data maintenance front as their onpremise storage of medical images kept on getting bigger with every passing year. The AWS solution has helped the healthcare facility to reduce its data storage costs by 40%

KHUH’s journey as the tech pioneer in Bahrain’s healthcare sector is sure to be a textbook reference for hospitals in other parts of the world wanting to make it big in the industry.

KHUH's cloud-based solutions

By January 2022, the hospital had accumulated around one million image studies in some 476 million files. While the total data volume is around 44TB (terabytes), to date, the hospital has been adding around 1TB of new data monthly. Out of those one million image studies, only 94,000 from the timeline of 2011-19 were retrieved in 2021, and these nine-year data alone formed a 3TB volume. To simplify the equation, only 7% of PACS data was retrieved annually.

While these storage upgrade works kept KHUH’s IT staff busy until 2021, a state-of-the-art archival solution became a necessity. The innovation required to be an adaptive one towards future technological breakthroughs, while making minimal changes to the PACS system. That’s where Amazon Web Services stepped in with its S3 File Gateway and S3 Glacier. Now, the new on-premise data storage architecture keeps only medical images generated in the last four years, whereas AWS archives the remaining data. The hospital is now having the best information and communication technologies in Bahrain.

KHUH’s data infrastructure

While the Amazon S3 File Gateway provides a file interface into Amazon Simple Storage Service (S3), these two together create a service and virtual software compliance,

through which the hospital can store and retrieve objects in S3 file sharing, using the file protocol Server Message Block (SMB). The software gateway is deployed in the KHUH onpremises environment as a virtual machine (VM), which is running on VMware ESXi. The gateway then allows the medical image-related data to be accessed in S3 as files or file share mount points.

While KHUH used the solution to transfer the image data to the cloud without much modification to the existing PACS system, the latter uses the SMB protocol to store data on a Windows file server. If the data volume rises, the hospital adds IBM SAN (Storage Area Network) Volume Controllers (block storage virtualization appliances from the IBM System Storage product family) to the Windows file server and creates new file shares.

These new file shares are then added to the PACS storage manager. The S3 file share added as another file share, helps the PACS system to store medical images on the S3 File Gateway.

While the initial solution architecture was developed with AWS, the Amazon S3 Glacier Flexible Retrieval storage class got roped in as well, as the healthcare facility onboarded more and more solutions. S3’s induction was done to store those archived data which may not be required immediately but can be easily retrieved as per the hospital staffers’ demand.

“We have achieved our digital transformation by focusing on three vectors. Robotic process automation, AWS storage technology, and most importantly, empowering our inhouse engineers,”

- Hamad Saeed Abdulrahman

HEALTHCARE INFORMATION SYSTEM INDUSTRY COVERSTORY KHUH

The feature has flexible retrieval options, balancing cost with access times. KHUH’s goal was to avoid manual interventions in the data retrieval process, which is why the healthcare facility automated the whole operation. If the PACS system attempts to access a file from the Glacier Flexible Retrieval storage class, an error message will be sent to the Amazon CloudWatch logs, resulting in an AWS Lambda function, aimed at retrieving image files via S3 batch operation.

“We have achieved our digital transformation by focusing on three vectors. Robotic process automation, AWS storage technology, and most importantly, empowering our in-house engineers,” said Hamad Saeed Abdulrahman, Director of ICT at King Hamad University Hospital.

But then, there was a catch as the KHUH didn’t have access to the image data in any of the S3 File Gateway cache or S3 bucket in the AWS Cloud, which prolonged the recovery process. To remove the obstacle, the medical facility deployed another S3 File Gateway virtual machine in their data centre. These gateways are addressed through a single domain name system with failover alias records.

Following the AWS Storage Gateway user guide, KHUH didn’t write multiple file shares to one S3 bucket and configured two Identity and Access Management (IAM) roles to put the bucket in the failover architecture. The hospital’s on-premise application monitoring system checks

the S3 File Gateways. If one of the gateways becomes unavailable, KHUH’s IT team gets a notification about the glitch.

While the hospital reduced the storage cost by some 40%, it achieved benefits such as higher durability for medical images, a reduction in administrative efforts like expanding the on-premise storage facilities yearly, and long planning cycles for infrastructure development. The KHUH can even carry out quicker changes in the archiving department.

KHUH Healthcare information system recognized by oracle

“After trying many other systems, we realized we had to build our own. Today, we are very proud to have developed HOPE. It has shown that it is a robust, userfriendly system with proven excellence over the years,” said Major General Dr. Shaikh Salman Bin Ateyatallah Al Khalifa, Commander, King Hamad University Hospital, in a recent Oracle report.

KHUH has been using HOPE since 2017. From scheduling, admissions, electronic medical records, lab testing, speciality care, pharmacy, catering, revenue management, or any other healthcare service, HOPE is the answer.

While the facility offers over 40 specialized treatments, it was finding it difficult to come up with a responsive hospital management information system. Eventually, they found a capable solution in the form of Oracle Application Express (APEX). This cost-effective framework provides application development at a faster rate compared to Java and Net programs. KHUH's development of the HOPE portal relied heavily on APEX.

The hospital now has one application, which carries a suite of over 40 modules. Under it, the application development speed not only got increased by five times, but it also resulted in the creation of a paperless modern healthcare information portal, while saving 80% of the operational costs of the KHUH during its 10-year budget period savings exceeding the $40 million mark.

The healthcare facility has now diverted the saved money towards fulfilling the goal of becoming the first and only healthcare facility to connect to Bahrain’s National Electronic Medical Records (NEMR), National Healthcare Insurance Information System (NHIIS), and Drug Utilization Review (DUR).

Bahrain Oncology

(BOC),

KHUH has taken innovation to the next level with the development of its fully automated robotic pharmacy and chemotherapy preparations. During the COVID pandemic, apart from having robust virus testing and vaccination services, its telemedicine mechanism proved to be a gamechanger as well.

Bahrain Oncology Center (BOC), under KHUH, currently possesses a fully integrated chemotherapy protocol workflow. Under it, some 300 protocols have already been integrated, with 30 more to go, to meet the goal of a costsaving, safe medication management programme. Services, especially on the chemotherapy front, improved by leaps and

Center

under KHUH, currently possesses a fully integrated chemotherapy protocol workflow. Under it, some 300 protocols have already been integrated, with 30 more to go

bounds, as few errors and incidents got reported.

Currently, the hospital app has 5,000 users, including its physicians and staff. It registers some 4 to 5 million hits daily, apart from arranging 8,000 to 10,000 sessions in the same timeframe.

While access to real-time data and reporting has brought transparency in hospital finance and accounting, the institute now has an efficient budget control mechanism under its wings. All these are helping the hospital to prioritize patients and reduce waiting periods.

Robotic Process Automation: KHUH’s answer to COVID

King Hamad University Hospital has been no stranger to the entity called automation. Since the start of COVID, KHUH has worked to have robotic process automation that empowered it to make drastic changes to its operations to cope with the pandemic fallouts.

Beginning with the declaration of COVID symptoms, an RPA (Robotic Process Automation) mechanism was developed to integrate and operate multiple silo systems. The rota system sent an actionable email to all healthcare

staff members to see if they had COVID symptoms. Following the identification of the infected personnel, an infection control mechanism will be activated, in which the healthcare facility will schedule testing appointments, initiate a quarantine action in the HR system, and notify managers/ team leaders of the isolated employees. The system was operational from the start of the pandemic until mid-2022. Furthermore, this system enabled KHUH management to monitor trends and spikes, giving the hospital agile and proactive quarantine measures, which ensured healthcare provisioning and continuation of services.

The RPA took one week to create and another week to test. This quick rollout utilizing current in-house technology had a significant impact on the hospital. A positive case would cause the action of having symptoms to be triggered by clicking on a staffer's email prior to the

start of the designated shifts. All of the preceding actions would be activated, and they would be assigned time slots to be tested in the quarantined COVID testing tent. The HR attendance system would be locked for the duration of the testing results, and their managers/team leaders would be notified so that any necessary shift changes could be made.

The rapid and agile deployment of the RPA inspired multiple applications and systems that coped with pandemic challenges, such as the lack of human resources and the extended duration of material deliveries. This will be discussed in depth in the next part of the article.

Migrating the hospital in Zero Operations Downtime

In early 2020, KHUH faced the complex challenge of core network replacement. Even though the cycle refresh was due, the medical facility wanted to ensure that not a single second of hospital operations would be disrupted. Putting matters into perspective, all KHUH systems that supported operations were on-premises. The hospital leadership came up with a three-tier plan.

Firstly, through Microsoft M365 SaaS (software as a service), KHUH was able to shift communication from on-premises to a cloud solution. That enabled two main success factors, more versatility in the user experience and connectivity, and independence for the current infrastructure.

The second plan was to virtualize all systems in place. Going from physical to virtual was a challenging task as all the systems were live and had to be accessible during working hours. KHUH utilized VMware virtualization technology, with ICT engineers creating virtual copies of current running systems as they were running, and then utilized the time between

hospital shift changes to replace the live physical system with the virtual copy.

KHUH was left with the access server hardware after virtualizing all of the systems. Therefore, it enabled the hospital to have multiple server clusters, meaning that those servers could be moved seamlessly from one data centre to another. This was the main success factor behind KHUH’s core network migration.

The last tier was to segregate the network into different zones. In simple words, this operation was all about splitting a complex setup into many small segments, which are easier to manage. Furthermore, it meant that the engineers could migrate systems from affected segments.

Because all of the tiers were in place, the hospital's migration went smoothly and was completed by mid2022. Furthermore, the performances of all systems have been exponentially great. Faster response, increase in storage space and having an agile infrastructure are some of the added features achieved in this endeavour.

Going beyond standard Oracle Enterprise Business Suite

Another aspiring endeavour was the vast implementation of proactive systems that were developed and deployed in record time. The KHUH IT team has worked extensively to boost its current ERP (Enterprise Resource Planning) with agile and proactive features to face the challenges imposed by the post-COVID period.

With its HR portal, mass hiring of health care

The KHUH IT team has worked extensively to boost its current ERP with agile and proactive features to face the challenges imposed by the post-COVID period

professionals was already in place. However, maintaining the vast quantity of documents and licenses for each employee was a great challenge, especially during the pandemic times. Therefore, KHUH ICT developed an employee profile management system, in which staffers’ medical licenses with dates were maintained, managed, and scheduled. This system ensured zero congestion with renewals and regulation compliance-related issues.

The hospital’s ICT team also streamlined the maintenance of the healthcare facility’s bio-medical systems, through the creation of its custom bio-medical assets management system. Under this, all assets’ locations are tracked. It also listed the history of the maintenance works done on the assets. It also sets the planned periodic maintenance of each asset. The solution expanded the life of the medical equipment in KHUH, apart from enabling the pre-ordering of consumable parts per item, prior to shortages and supply chain stagnation.

Lastly, KHUH ICT managed, maintained, and automated the hospital’s sub-store inventory. This system empowers these sub-store managers for accurate item consumption history throughout days, months, and years. This also enabled department managers to easily transfer items between sub-stores and have the deliverables tracked and confirmed. Finally, an in-depth investigation on the maximum and minimum requirement of each item in each store has been digitized to enable auto reordering of those products, thereby stopping item shortages hospital-wide.

As for what is next in KHUH ICT plans, they have finished the initial testing of a supplier portal and moved

it to a selective release in November 2022. This system completely transforms the procurement operations in the healthcare facility, as it enables its suppliers to update and upload their proposals and bids for any open purchase order, check the status of the awarded bid, and track the delivery dates through two-way communication and a delivery calendar.

Conclusion

King Hamad University Hospital’s case study is not any other success story of a healthcare facility. It shows the gamechanging effects of disruptive technologies in the medical field. Embracing the technology has not only cut down the hospital’s daily mundane paperwork and operational costs, but it also ensured an improved patient care mechanism. Days are not far away when the KHUH model will not only be replicated across the Middle East but will emerge as a viable solution across the world as well.

editor@ifinancemag.com

Protests against a rise in the price of food and petrol in Peru turned violent in April

Global food crisis: Economic hardships ahead?

IF CORRESPONDENT

The price of lemons has risen in India. In Nigeria, jollof rice has increased in price to the point where many are skipping meals. The cost of avocados has increased in Mexico, making them a luxury few can afford. The Florida orange orchards are producing the fewest fruits in recent years. A lack of salmon is also affecting the sushi industry in Japan. Zoom out, and it's obvious: A global food crisis is developing, and prices are skyrocketing everywhere. And when that occurs, everyone is hurt. When there is an increase in the cost of tickets or petrol, people can cut back on going to the movies or driving, but everyone needs to eat.

The long-brewing crisis was finally brought to a climax by Russia's invasion of Ukraine. Protests against a rise in the price of food and petrol in Peru turned violent in April. In July, Sri Lanka too saw such protests and the government fell. Experts warn that the problem might have severe global repercussions if there is no immediate action. Changes in the food supply in some nations may cause a shift in traditional recipes and nutritional practices. Civil unrest may lead to instability in some of the most

impoverished parts of the planet. A failure in the food systems could trigger massive waves of migration.

Pricing crisis causing food problem

Following the Russian invasion of Ukraine in late February, food prices worldwide have risen sharply. For example, US consumer prices increased 10% year over year as of May, the most since 1981, and by a record 8.9% in the Eurozone. The situation is getting worse. As of June, the UN's world food price index had increased by 23% compared to 2021. Simply put, many people are having trouble paying for food. Chris Barrett, an economist and authority on food policy at Cornell University, told Insider that "a food crisis is a price problem." Even if people are not immediately aware of it, he claimed that it has broad consequences and affects everyone's life.

"You should pay attention to the food problem, because it is lurking in the background, driving those things," Chris Barrett remarked further.

Global groups are issuing increasingly urgent and louder warnings. According to the UN World Food Programme, fifty million people worldwide are in danger of going hungry and facing famine, which the WFP head has dubbed a "looming hunger disaster."

Collection of problems bunched together

The Ukraine war has broken the world's food supply chain and there is no denial about that. According

When there is an increase in the cost of tickets or petrol, people can cut back on going to the movies or driving, but everyone needs to eat

ANALYSIS COMMODITIES FOOD

to the WFP, Russia, and Ukraine supplied 70% of the world's sunflowers, 20% of maize, and 30% of the wheat marketed globally before the conflict. Not only have farms been destroyed by the battle, but Vladimir Putin's forces have also blockaded the Black Sea coast of Ukraine, preventing the export of crucial agricultural goods. In addition, oil prices have increased by more than 40% in 2022 due to the conflict and the ensuing Western sanctions against Russia, which have driven up energy costs and, in turn, the price of fertilizer.

“This issue could easily extend into next year, because if you're a Ukrainian producer and your domestic price is, say, half of what it is on a global basis, your incentive or your ability to plant the next crop has been curtailed significantly due to poor margins, as you are still paying high prices for inputs,” said Wayne Gordon, a senior commodities strategist at UBS.

Although the Ukrainian conflict was the initial cause of the crisis, other reasons have been building for a while. The pressure on the world food system has increased recently because of factors including climate change, the COVID-19 outbreak, and the increase in international conflicts. The climate issue is to blame for the warning indicators that

existed long before the Russian invasion. For instance, a severe drought in the Black Sea region in 2011 led to a rise in the cost of food, especially wheat. Many observers cited it as a factor in the upheaval that led to the Arab Spring. There are "clear parallels" between the current drought and the one that occurred in 2011, according to Samuel Tilleray, a sovereign credit analyst at S&P Global Ratings.

According to a UN report from 2021, up to 30% of current farmland may no longer be suitable for growing crops by the end of the century due to the impact of greenhouse gas emissions on weather patterns. The entire world is already aware of it. For example, severe drought has reduced wheat production in important states like Kansas, and drought in South America, which reduced soybean production, has caused cooking oil prices to soar globally.

The pandemic also didn't make things much better. Governments all over the world are "trying to revive economies struggling under the weight of the pandemic,” according to Cornell's Chris Barrett.

Still, supply-chain disruptions are rife, and prices for oil and ocean freight are skyrocketing. He claimed that as a result, prices were continuing to rise because supply was not keeping up with demand. In response to the world food crisis, Annabel Symington, a

spokesperson for the World Food Programme, said, "Things were already really strained, and now we are facing even greater strain." It's a collection of problems coming together.

Situation affects you

A vital component of any community's culture is its food. Civil unrest may emerge if that component becomes insufficient or disappears entirely. The international price of wheat, milk, and meat increased in 2008, forcing significant producers to impose an export ban to ensure that domestic populations would continue to have access to food. Ten people died in Morocco in 2008 protesting food shortages, which sparked a wave of strikes and rallies. The same year, 10,000 labourers in Bangladesh rioted against rising food prices by damaging factories and smashing cars. According to experts, it seems unlikely that this time will be any different.

According to Chris Barrett, "Periods of high food prices are related and directly associated with an increased frequency of violence, political disturbance, and social discontent. Additionally, they have a causal connection to higher levels of forced migration. People leave their homes in quest of food when they are unable to feed their families there. Additionally, some of those migrations are very dangerous."

However, governments may use short-term and long-term solutions to ensure that people have food. According to Symington of the World Food Programme, governments should make every

effort to reduce the growing risk of famine in the world's most vulnerable areas. According to Barrett, there should always be automatic safety-net mechanisms in place to guarantee financial resources are available if somebody experiences food insecurity.

Longer term, Symington argued, government leaders and international organizations should promote a transition toward increased local food production, reducing reliance on global supply networks. To stop "crazy price gyrations," Chris Barrett urged the World Trade Organization to stabilize export prices. However, no matter what steps the government takes, life will become more expensive for all of us and much harder for billions of people. Even if you have enough food for yourself, your family, and your neighbours, Chris Barrett added, "you are still affected by this."

Already lagging behind

The World Bank has cautioned that the crisis in Ukraine will cause 50 million people to experience severe hunger and an extra 95 million to live in extreme poverty by 2022 end.

"Since we already didn't fulfil our food security goals by 2020, let's be honest. The situation is now difficult, though. The shocks of numerous global crises have undermined our economies and institutions and hampered our capacity to respond in a timely manner,” UNGA President Abdulla Shahid remarked.

He emphasized that despite this dire situation, nations must not give up. Instead, they must band

together to address the causes of hunger and malnutrition and the symptoms of both. The necessity to prioritize food security in the least developed countries, like the landlocked developing ones and small island states, was also emphasized by Abdulla Shahid.

“These nations' citizens are typically forced to spend a larger share of their income on basic necessities, including food, and are thus disproportionately affected by rising food prices," he said.

Relationships, not seclusion

Following the suggestions made at the 2021 UN Food Systems Summit, these nations also require assistance in sustainably transforming their food systems. According to Abdulla Shahid, as nations adopt more environmentally friendly and sustainable food practices, they

Countries that are most affected by hunger

Source: Statista

must also consider food security as a component of a larger multilateral agenda that acknowledges both the interrelatedness of today's challenges and the futility of trying to solve them individually or exclusively. Food systems must be able to offer accessible, inclusive, and healthy diets at reasonable prices.

Additionally, they must become a potent force for eradicating hunger, food insecurity, and malnutrition. Scaling up climate resilience throughout food systems, bolstering food environments, and altering consumer behaviour to support eating patterns that have favourable effects on both human health and the environment are among the steps we must take right away, he said.

"Securing sustainable agriculture, repairing our relationship with nature, and strengthening the international

institutions working to alleviate poverty and hunger are also necessary for addressing food security," the UN said.

An important moment

Along with the Committee on World Food Security and the Global Crisis Response Group on Food, Energy, and Finance of the UN Secretary-General, Abdulla Shahid organized the high-level special event. António Guterres, the head of the UN, thanked the partners for cooperating during "this important moment" during the gathering, while stressing that the number of people experiencing acute food insecurity has doubled since 2020. The possibility of numerous famines in 2022 is dire.

“The following year maybe even worse. But if we take action right once, we can avert this tragedy,”

António Guterres remarked.

The Secretary-General also emphasized the importance of maintaining open international trade and swiftly reintegrating agricultural output from Russia, Ukraine, and other countries into global markets. Additionally, he urged rapid resource unlocking to improve social protection and aid smallholder farmers in becoming more productive and self-sufficient. He also advocated for addressing the financial crisis in developing countries. Countries must overhaul their food systems to make affordable, healthy, and sustainable diets accessible to everyone, everywhere.

editor@ifinancemag.com

António Guterres, the head of the UN

The gig economy is expected to grow to $455 billion by 2023 year-end in gross volume transactions

Gig Economy: Evolution of labour market

IF CORRESPONDENT

Agig economy is a system in which independent contractors and freelancers occupy temporary and part-time employee positions instead of full-time, permanent workers. Gig workers gain flexibility and independence but little or no job security. In order to save money, many firms choose not to pay these workers benefits like health insurance and paid time off. Even if some businesses provide benefits to gig

workers, they contract out the management duties of these plans (in other words, outsourcing) to external organizations/ third parties. The term 'gig' is taken from the music industry, where performers schedule "gigs," which are one-time or temporary engagements at various venues.

Understanding a Gig Economy

Many people work part-time/temporary jobs, or as independent contractors in a gig

economy. For those willing to use them, a gig economy produces less expensive, more effective services like Uber or Airbnb. The advantages of the gig economy may be lost on those who don't use modern services like the Internet. Cities typically have the most advanced services and the deepest roots in the gig economy.

A gig can be any job with a wide range of positions. The labour can be everything from delivering food or driving for Uber to programming code or doing freelance writing. For instance, contract employees as opposed to tenuretrack/tenured professors, including adjunct and part-

time professors. By appointing more adjunct/ part-time professors, colleges and universities can save expenditures while better-matching teachers to their course requirements.

Factors behind Gig Economy

Experts predicted as of 2021, up to one-third of the working population would have already been engaged in some form of gig work in America, and the gig economy is very much on its way to becoming a dominant market

force in the coming years. Since these professions permit independent contract work and the companies don’t require freelancers to report to offices, experts are now anticipating a rise in the employment figures in this sector. Part-time/remote works are far more common among gig workers.

Additionally, since they are not required to recruit someone based on proximity, employers get the luxury of having a greater selection of suitable candidates. Also, computers have advanced to the point that they can either replace human jobs or enable people to work from home just as productively as they could in person.

Market factors are contributing to the rise of the gig economy as well. Businesses which cannot afford to recruit full-time workers to complete all the necessary work frequently use temporary/part-time workers to handle time-specific projects.

On the employee side of the equation, individuals frequently discover that they must relocate or hold numerous jobs in order to support the lifestyle they desire. The gig economy might be seen as a large-scale reflection of the fact that changing occupations frequently throughout a lifetime is also prevalent.

In 2020, the gig economy saw tremendous growth due to the COVID pandemic, as gig workers supplied goods to customers locked down at their own homes. People whose occupations got terminated in those pandemic times turned to these part-time works for money.

Criticisms of the Gig Economy

The gig economy has significant drawbacks despite its advantages. While not all firms favour hiring contract workers, the gig economy trend

can make it more difficult for full-time employees to advance in their careers because these temporary workers are frequently less expensive to hire and have greater availability and flexibility. In some industries, workers who prefer a traditional career path and financial stability, are seeing those jobs getting crowded.

For some workers, the flexibility of gig work might actually disrupt the work-life balance, sleep patterns, and everyday activities. In a gig economy, frequent flexibility implies that the employees must be accessible for duties, regardless of their other priorities, and must always be on the hunt for the next gig. The competition for gigs has grown too, and the workers who are unemployed are not often covered by insurance or any other financial assistance, which comes under the USA's CARES Act of 2020.

In effect, gig economy employees behave more like entrepreneurs than regular employees. The stability of consistent employment with a regular salary, benefits—including a retirement account—and a daily schedule that has defined work for generations is quickly disappearing, which may provide the individual worker more flexibility of choices.

Last but not least, long-term connections between employees, employers, clients, and vendors may deteriorate as a result of the fluidity of gig economy transactions and relationships. As a result, the advantages that come from long-term relationships of trust, established routines, and familiarity with clients and employers may be eliminated. It could also discourage investment in relationship-specific assets that would otherwise be profitable to pursue since

no party has the incentive to invest significantly in a relationship that only lasts until the next gig comes along.

Examples of Gig Economy

Occupations that people find and access through online job-listing sites are examples of gig economy jobs. These positions are frequently temporary or contract ones. These include operating a vehicle for a ride-sharing company, painting a person's home, and working as a freelancer for duties like gym training and private tutoring. There are no additional perks, such as health insurance, and the job is exchanged for money.

Benefits of the Gig Economy

The gig economy has many benefits for both employees and employers. A hiring manager has access to a diverse talent pool. There is no commitment to keep the employee on or concerns with firing them if the skill turns out to be subpar. Additionally, firms can hire from the gig economy at a time when it is getting harder to find fulltime employees. Additionally, since employers don't have to cover benefits like health insurance, using gig workers is a cost-effective option. Benefits of the gig economy for employees include the ability to perform several jobs, the freedom to work from anywhere

depending on the employment, and flexibility in their daily schedule.

Is Gig Economy worth it?

Studies show that 79% of individuals who work in the gig economy are more satisfied than when they were doing traditional jobs. In 2021, the value of the global gig economy is predicted to be $347 billion. It is predicted that design and computer freelancing employment is the most common with 59% of gig workers working in them globally. It is also noted that the oversupply of expertise in these industries is driving down the compensation. In the US, 60% of gig workers are engaged in

freelancing activities at least weekly, with 44% of them considering it to be their main source of income.

The global gig economy is anticipated to develop at a compound annual growth rate (CAGR) of 17.4%, from $204 billion in 2018 to USD 455 billion in 2023. In the Western World, the number of independent contractors is rising steadily. For instance, it is predicted that there will be 86 million freelancers in the US by 2027, while there were 4.7 million more gig workers in the UK between 2016 and 2019.

The average hourly wage for freelancers in the world is $21. The number of high-earning freelancers

Studies show that 79% of individuals who work in the gig economy are more satisfied than when they were doing traditional jobs

The value of the global gig economy is predicted to be $ 347 billion

in the US (those who claim to have an annual income of over USD 100,000) has been increasing every year and now totals 3.1 million people (20% of the workforce). The majority of full-time freelancers in the US are unprepared for a financial emergency; 80% of them say it would be challenging to cover a USD 1,000 unforeseen bill.

Overall, gig economy employees are happier with their jobs. Around 79% of full-time independents claimed that working for themselves made them happier than working in a typical formal employment in the US. Gig workers worry about their cash more. It is reported that around 45% of full-time gig workers and 24% of typical full-time employees have high Economic Anxiety Index scores. According to data from 2017, in the US, most freelancers worry about their working circumstances. Among gig workers, 54% don’t have employer-based benefits.

According to analysis and the figures provided by Mastercard, the global gig economy is predicted to be valued at close to $350 billion in 2023. Uber, Airbnb and asset-sharing platforms account for a significant portion of the value added by the gig economy.

If one examines the global gig economy state from 2018, the division of capital in the gig economy is clearly visible. The TRNS (TransportationBased Services) has $117.8 (57.8%) capital. Whereas the ASSET (AssetSharing Services) $68.1 (30.3%), HGHM (Handmade Goods, Household & Misc Services), $16.7 (8.2%), PRFS (Professional Services), $7.7 (3.8%), respectively.

Nearly 90% of the overall gig economy is attributed to asset-sharing platforms and services based on transportation. This is not surprising,

given the rapid expansion of services from these categories that could be provided on a freelance basis, driven by the phenomenal success of businesses that offer them, such as Uber and Airbnb. It is not shocking that the economy is worth so much if one considers the number of workers currently contributing to this sector. For instance, there are 4.7 million freelancers in the UK compared to 57.3 million in the US. According to Mastercard, the stark difference in numbers between these two countries can probably be explained by more than just the total population difference, Americans account for 44% of global gig gross volume.

Freelancers steadily rising in the West

The total number of gig workers worldwide is expected to continue increasing in the coming years. Experts give reference to the studies conducted by MBO Partners, Upwork, and the University of Hertfordshire when discussing the growth. For instance, the University of Hertfordshire study discovered that between 2016 and 2019, there were 4.7 million gig workers in the UK (defined as persons who had worked for an online platform at least once per week). In just three short years, there has been a considerable increase. Additionally, the present US gig workforce of 57 million is anticipated to increase to 86 million by 2027; this corresponds to a 50% increase in 7 years, which is an astounding number given the US gig labour's already large size. Finally, the rise of sporadic gig workers in the US is another example of how the gig economy's workforce is expanding. In the US, the number of occasional independents (those who

perform gigs for less than 15 hours per week) increased by 42% over the course of three years and was stable at 15 million workers in 2019.

As per the Payoneer report, freelancers around the world earn $21 per hour on average. The report stated that the younger generations are paid less than the global average, with income progressively increasing as age groups move along. Earnings for the ages 18 to 24 and 25 to 34 are $16 and $19 per hour, respectively, which are less than the global average. The report also stated that 69% of all gig workers fall into one of these age categories. As a result of age and job experience, the majority of the population earns less than the average, which indicates that there is an unbalanced allocation of capital in the gig economy. Furthermore, according to Upwork, the median rate for freelancers in the US is $20/hour, whereas the median rate for the overall US workforce is $18.80/hour. Additionally, the hourly

Technological advances, notably in the fields of artificial intelligence (AI), robotics, and data analytics, have shortened the gap between people and services

The present US gig workforce of 57 million is anticipated to increase to 86 million by 2027

ECONOMY FEATURE JOB MARKET FREELANCERS

median wage for freelancers providing skilled services is $28.

According to MBO Partners, a fulltime US independent makes $68,000 on average annually, which is more than the $59,000 median household income nationwide. There are a startling 3.1 million high-earning full-time independents in the nation. To be clear, the survey defines a high earner as someone who earns more than $100,000 each year. Over the past ten years, the number of high-earning freelancers in the US has been continuously increasing. That number increased from 1.9 million to 3.1 million people between 2011 and 2019, a 64% increase.

Tech leading the way

Technology has dominated the development of the gig economy by overcoming the complexity of contingent labour. Without technology, gig work would just be limited to project-based work. Using a gig

workforce independently has its own set of challenges, regardless of how advantageous it is for any business. Most businesses struggle to handle sizable on-demand staffs that are not on a regular payroll without the right tools and technology. However, the emergence of work tech platforms has enabled businesses to efficiently finish the full cycle as each step of the process becomes effective thanks to automation and builtin smart-assist capabilities. Work tech cloud-based systems give businesses the instruments they need to manage deliverables and hours worked as well as monitor and assess results to increase efficiencies, improve communication, and generate higher income.

For instance, a no-code technology can offer end-to-end workflow management that is tailored to business requirements. It can configure the permutation and combination of potential workflows, calculate payouts automatically, and use algorithms to ascertain the skills and

backgrounds of gig partners, among other things. The same technology also provides training interventions, automatic reallocation to meet deadlines and SLAs, project-wide visibility across the world, and local insights into attendance, shifts, and task completion.

Assuming the role of a gig partner nowadays, technology has made it possible for businesses to outsource essential operational recurring work to gig partners rather than just transactional, short-term project labour. Finding employment has become simpler and smoother for gig partners because of the technology infrastructure of work-tech platforms. From applying for a job to finding work based on their abilities and location to in-app training, task fulfilment, and even payment, processes and applications are made to ensure a seamless experience. All of this can be done with only a few touches on the phone.

The tech of endless possibilities

Experts say, technological advances, notably in the fields of artificial intelligence (AI), robotics, and data analytics, have shortened the gap between people and services, particularly in the labour market. For instance, there are platforms available today that process reams of big data from all over the world on a secondby-second basis, use AI & ML powered smart task allocation to ensure the right gig partners are matched for tasks in real-time, and simultaneously validate a different set of big data provided by gigworkforce using image recognition and artificial intelligence-powered audio transcription.

Europe’s energy conundrum

IF CORRESPONDENT

A Federal Reserve report showed that the United States household debt reached a record high of $16.15 trillion in the second quarter, driven primarily by a $207 billion increase in mortgage balances. Credit card and auto loan debt also raised as consumers increase their borrowing to deal with skyrocketing inflation. According to the New York Fed's quarterly household debt report, overall delinquency rates increased moderately for all debt types, with credit card and auto loan delinquencies "creeping up," notably in lower-income areas.

The report states that mortgage debt had grown to $11.39 trillion. The origination of purchase mortgages increased by 7% in the second quarter as a result of increased borrowing limits. The US central bank started raising interest rates in March as it ended the easy monetary policies it had maintained during the worst of the COVID-19 pandemic to safeguard an economy that had been severely harmed by lockdowns and other protective measures.

Since then, the Fed's benchmark overnight lending rate has been increased by 225 basis points as a

result of persistently high inflation that has reached four-decade highs. The goal range for that rate is now between 2.25% and 2.50%. The central bank is expected to continue raising interest rates for the rest of the year in an effort to stop the inflation that is draining Americans' wallets. Over the past two and a half years, prices for expensive commodities like homes and cars have risen sharply as demand has outpaced supply. As a result, the average new purchase origination dollar amount for both of those goods has increased by 36% since 2019.

The invasion of Ukraine by Russia led to an increase in global food and energy prices. According to the New York Fed, total household debt in the United States has increased by more than $2 trillion since the fourth quarter of 2019, right before the pandemic started. In the second quarter, credit card balances rose by $46 billion, ranking among the highest the Fed has seen since 1999, while auto loan originations increased by $33 billion to $99 billion. According to the research, this was mostly due to higher origination rates per loan as opposed to a bigger number of loans.

Europe is now on the verge of recession, if not already in one, and the worst looks yet to come

"All debt types saw sizable increases, with the exception of student loans. In part, the growth in each debt type reflects increased borrowing due to higher prices," the regional Fed bank's researchers said. The average contract rate on a 30-year fixedrate mortgage has shot up by more than 240 basis points since the turn of the year to levels not seen since 2008, according to the Mortgage Bankers Association. It now stands at 5.74%

New York Fed researchers said on a call that delinquency rates were increasing to more typical pre-pandemic levels seen in 2019 that are still historically low. "But we have to keep an eye on that because if they rise above that we'll be a little more concerned about the state of household balance sheets. The concern is where we are heading," New York Fed researchers said.

Consumers' credit soaring?

Americans have racked up record-high credit card debt. According to the doomsayers, this demonstrates unequivocally how difficult it is for households to make ends meet in the face of the highest

inflation rates since the early 1980s. The truth is not quite so bad. Consumers have a long runway until mounting debt commitments become an issue because their finances are actually in some of the greatest shapes they have ever been in. It is simple to comprehend anxiety. According to data from the Federal Reserve, there have been four of the largest monthly increases in consumer credit on the record. Over the last six months, outstanding balances have increased by an average of $33.1 billion each month. To put that into perspective, the monthly average for all of 2019 was $15.4 billion, or slightly less than half that sum. Although the figures are indeed startling, there are signs that they are largely healthy and normal.

First, think about revolving credit, such as credit cards. Early in the COVID-19 pandemic, this type of financing rapidly declined as customers used extra savings and stimulus money to settle bills rather than spending since they had fewer options. As long as the quantity of revolving credit outstanding stays below the pre-pandemic trend line, consumers will primarily just be playing catch-up.

INSIGHT ENERGY CRISIS

The financial system as a whole isn't even close to that degree now, but if it bursts past the trend that would suggest wider inflation-induced trouble. Of course, many households with lesser incomes are impacted by the sharp increase in costs and are being compelled to use their credit cards. But there are no indications that a widespread debt issue is developing that could harm the economy.

The situation with non-revolving credit is a little different. That includes financing for other expensive items like boats and trailers, which saw an increase in popularity during the pandemic. The majority of those loans are for education and cars. Automobiles, which make up 39% of non-revolving credit and 30% of consumer credit, appear to be the main culprit for the category's pandemic-era expansion that outpaces the trend. Put that down to the startling rise in car prices in 2021 and, possibly to some extent, the increased interest in car ownership brought on by concerns about public health. Many people who earlier used public transportation now choose to drive because it offers better social isolation.

Although considerably smaller than the auto

sector, the "other" category of non-revolving loans, which includes the aforementioned maritime toys, was the true driving force behind the loan increase. Early in the COVID-19 pandemic, boating interest skyrocketed in coastal areas as a result of social distance rules. However, that category is too small to have a significant effect. Additionally, boat owners often don't live paycheck to paycheck, so exclude that possibility from the list of potential causes of a structural leverage crisis. The non-revolving credit segment would contain any cause for concern in the consumer credit data. However, that segment's growth reached its apex earlier in the year and began to moderate in the most recent report.

Finally, the household debt service ratio, which measures how much of a household's income is used to pay off debt, is at or near historic lows. That's because there will be opportunities to refinance debt at cheap rates in 2020 and 2021, as well as because the government poured in trillions of dollars during the COVID-19 outbreak. Even if inflation is terrible, homeowners with fixed-rate mortgages—which make up the vast majority of home loans—might have benefited from pay rais-

Source: Statista

es while their greatest liabilities stayed the same or were renegotiated at lower rates. Even when you combine credit card debt with mortgage debt, the overall load is still incredibly low.

Household debt history

Historical data might shed light on the current condition. Since the middle of the 1980s, the ratio of household debt to total disposable income has increased significantly. By the turn of the century, the percentage had risen from 60% to 130%. This excessive family debt was a major cause of the financial catastrophe in 2008.

After fast declining from its 2008 peak, household debt stood at around 92% by the time of the pandemic. In a report for Barons, economist J.W. Mason makes the case that this growth in debt was actually caused by high-interest rates set by Fed Chairman Paul Volker in the 1980s rather than an increase in borrowing. Mason claims, “With higher rates, a level of spending on houses, cars, education and other debt-financed assets that would previously have been consistent with a constant debt-income ratio, now led to a rising one.”

After the 2008 financial crisis, interest rates were low. Household debts decreased as a result of this, along with decreased borrowing and defaults. Contrary to common assumption, higher interest rates combined with excessive borrowing appear to be the main contributors to today's rising debt burden rather than excessive borrowing alone. Mason comes to the conclusion that a decrease in borrowing and low-interest rates is both necessary for a decrease in household debt. The Fed's evident commitment to continuing rate hikes suggests that household debt will increase in the near- to medium-term.

Source: Statista

Share of low-carbon sources and coal in world electricity generation, 2014-2021

Leading countries in installed renewable energy capacity worldwide in 2021(In gigawatts)

Warba Bank pioneered innovative digitalbanking services that position it as a digital-first bank

Warba Bank was established on February 17, 2010 to help revive the economy of Kuwait. During the same year, Warba Bank joined the Islamic Banks Register at the Central Bank of Kuwait. By leading in digitisation, it has established itself as a leader in the sector and has provided a blueprint for its peers. In an interview with International Finance Magazine, Shaheen Al Ghanim chief executive at Warba Bank described the bank’s varied offering of digitally delivered products and services, which have resulted in high ratings from its appreciative customers.

IF: How has Warba Bank adapted to the Covid-19 pandemic?

Shaheen Al Ghanim: Covid-19 has had a pounding effect on the banking sector and macro-economic factors. Despite the challenges, Warba Bank managed the situation efficiently and effectively through the implementation of sound measures to ward off the negative implications of Covid-19.

For example, through our customerservices initiatives, we are committed to strengthening our service quality to customers. We have developed various new processes and operations to combat the impact of Covid-19 on our society. Our key initiatives show how Warba has played its part. As an example, we launched an integrated queue-management system for our branches. Customers can book appointments digitally to visit their desired branches through the bank’s mobile banking app and the website. All Warba branches follow a firm policy for SOPs (standard operating procedures); limitations on the number of people in branches apply to employees and visitors to protect them from Covid-19. The policy is in line with the

Mr. Shaheen Al Ghanim, Chief Executive Officer, Warba Bank

best practices and standards dictated by the Ministry of Health and Commerce and Industry. Also, out of transparency, Warba is publicly disclosing all incidents of Covid-19 cases discovered in its branches.

The bank continues to serve its customers during lockdowns and curfews. Since the start of the pandemic, Warba, either directly or indirectly, has served customers, namely through home delivery of card products, the call centre being available 24/7, and IT (information technology) applications and systems being maintained to an uptime of 98.86 percent during the fiscal year 2020.

We have also put forth a strategy to utilize social media and the direct channels of the bank in comforting the public. We continue to educate and spread awareness to the public about the Covid-19 SOPs and the benefits of vaccines through our far-

region

reaching social-media channels.

Warba Bank has launched three digital wallets to retail customers for fast and contactless payments, namely Samsung Pay, which is available to Warba customers with a Mastercard credit card on Samsung devices; Fitbit Pay, for Warba customers with any active Warba credit card on compatible Fitbit smartwatches and trackers; Garmin Pay, available to Warba customers with a Mastercard credit card on compatible Garmin wearable devices.

We also introduced a fully digital onboarding service allowing new customers to open the saving account Al Sunbula through fast, simple and secure steps in less than five minutes. The service does not require customers to visit a branch in person.

On the retail-banking innovation front, Warba Bank is continuously investing in the digitisation of

Warba was the first bank to offer a banking app for youth in the

its banking products and services through the mobile and classic web to meet all the banking needs of its customers. This direction is in line with the bank’s long-term corporate strategy that was renewed to adapt to the ongoing circumstances created by the Covid-19 pandemic. The bank envisions leading the banking industry as a digital-first Islamic corporate and retail bank in Kuwait.

Where does Warba Bank stand on the increasing use of technology in all sectors of banking? Do you envisage the bank increasing automation and decreasing human contact?

In line with its vision to continue leading in the digital realm, Warba invests heavily in its digital banking apps and services available on iOS, Android and Huawei smartphone operating platforms for the retail-banking sector. In addition to offering essential products and services, Warba has pioneered several innovative digital-banking services that position it as a digital-first bank, especially in Kuwait. One of our top digital solutions available to retail customers is our youth banking app. Warba was the first bank to offer a banking app for youth in the region with a satisfying UX (user experience) and feature-rich interface. The

banking app comes with special features, offers and discounts tailored for the segment. We also provide an in-app Mastercard Send-remittance service; the Mastercard Send service in our banking app is called Super Transfer Service. Being the first-of-its-kind remittance service in Kuwait powered by Mastercard, the service offers a unique value proposition of multiple payout channels, competitive rates, possibility of tracking payments and transferring full payments to beneficiaries without any operational charges to 30 plus countries.

And we offer our fully digital and first-of-its-kind loyalty programme in our app W-Pocket, enabling users to earn and burn loyalty points. Users earn points when paying telecom bills using Warba credit cards, inviting friends to bank with Warba and transferring personal salaries to Warba. To redeem loyalty points, users can burn points by getting certain banking services or converting points to cash.

Further, Warba partners with external companies to provide other methods for redeeming points, including the purchase of goods and services from listed merchants in the app in collaboration with the local digital-wallet solution BookeeyPay; subscription for buy-one-get-one-free offers from the popular

Entertainer App; and exchange of W-Pocket points for Oasis Club Miles from Kuwait Airways.

As well, we offer our first-of-its-kind in-app personal-finance-management service, which combines Warba’s key banking and financemanagement services as widgets on a single page in addition to new features for users, including My Portfolio, which shows previews of assets and liabilities in Warba with the ability to add balances from other locally available banks; My Cashflow, which provides snapshots of money-in and money-out from accounts in Warba; My Growth, which reveals patterns of saving in Warba accounts.

We also provide a fully digital financing product, Express Finance. Being the first of this type of digital service to market, it enables existing customers to get Al-Wafi financing of up to 250,000 KD against collateral, without the need to pay a single visit to a Warba branch. We offer a first-of-its-kind digital-money box feature called Hassala with intuitive funding methods that encourage customers to save. Also available is our innovative and personalised in-app banking advisory service Al Mustashar that identifies and suggests the best digital solutions for users’ banking needs. We have found that the most used

interfaces and navigational features are fingerprint and face-identification login services as alternate login methods for users who prefer logging in without password entry; bio verification for transactions through the banking app; dark mode theme on iOS.

On the corporate-banking front, Warba launched the following digital services for clients through the corporate online portal during the year 2020: our salary-upload service for companies to transfer employee salaries directly, which is linked to the Ministry of Social Affairs and Labour; merchant services to reconcile company points-of-sale and payment-gateways transactions with different types of detailed merchant statements; dashboard services that summarise customers’ accounts and term deposits with the last 10 transactions; transfer service to easily transfer funds between a company’s accounts to beneficiaries in Warba Bank, local banks and international banks; enhanced access-management function to include sub-users’ access to accounts and daily transfer limits.

Do you have any examples of successful socialresponsibility initiatives or work undertaken in the community by the company?

The bank is extremely keen and open regarding its positive impact on society. As part of its corporate social responsibility (CSR), Warba Bank launched the social-banking and gamification app Fayez for Warba customers and the public with an intuitive user interface. The app comprises two components: comprehensive fitness tracking features to promote social well-being and healthy lifestyle as well as sports prediction and social engagement based on the concept of gamification.

The bank has also partnered with many charity organisations to enable and encourage customers to donate digitally. The donation methods span beyond the traditional cash donations and include donating points earned on Fayez and W-Pocket. The bank also supports SMEs (small and medium-sized enterprises) by featuring them in Warba’s CSR vlogs (video blogs) on social media, especially amidst the fallout period of Covid-19.

The bank is actively releasing Covid-19 educational videos for digital banking and IT-security awareness, customer financial knowledge and rights, and many other topics mandated by the Central Bank of Kuwait.

we offer our fully digital and first-of-its-kind loyalty programme in our app W-Pocket, enabling users to earn and burn loyalty points

Banking revolution: The change is here

IF CORRESPONDENT

The US banking industry, real estate appeared to be unstoppable at the beginning of the 2000s, and a euphoric price run-up encouraged consumers, banks, and investors to take on more debt. Exotic financial products drew investors from all over the world but instead of diffusing the risks they exacerbated and concealed them. When US home values started to fall in 2007, there were cracks that eventually led to the failure of two sizable hedge funds that were heavily invested in subprime mortgage instruments. However, when 2008's summer came to an end, few people could have predicted that Lehman Brothers was going to fail, much less that it would trigger a global liquidity crisis. The damage ultimately sparked the first worldwide recession since World War II and laid the groundwork for the eurozone's sovereign debt crisis. Millions of households lost their jobs, their homes, and their savings.

Following the 2008 crisis, central banks, regulators, and decision-makers were compelled to adopt exceptional measures. As a result, banks are now more capitalized, and the global financial system is experiencing less money sloshing. But new threats have also developed, as well as some

old ones. The article will draw on ten years of financial markets research to examine what has changed and what hasn't happened in the banking sector since the crisis.

Banks are safer but less profitable

Following the crisis, authorities and policymakers all around the world took action to fortify banks against potential shocks. For US and European banks, the average Tier1 capital ratio increased from less than 4% in 2007 to more than 15% in 2017. According to Jerome Powell, all banks now keep a minimum level of liquid assets. He stated that the largest systemically significant financial institutions must hold an additional capital buffer.

Scaled back risk and return

Most of the biggest international banks have scaled back their trading activity during the last ten years, including proprietary trading for their own accounts, which has decreased risk exposure. However, despite the extremely low-interest rates and new regulatory frameworks, many banks with headquarters in industrialized economies have been unable to develop new, viable business models. Since the crisis, the return on equity (ROE) for banks in advanced economies has decreased by more than half. For European banks, the pressure has been the strongest. They had an average ROE of 4.4% over the previous five years as opposed to US banks' 8%

Nonperforming loans are a burden on the banking system in several emerging economies

The article will draw on ten years of financial markets research to examine what has changed and what hasn't happened in the banking sector

Banks are only modestly valued above the book value of their assets by investors, who have a pessimistic view of growth prospects. The priceto-book ratio of banks in advanced nations was at or slightly below 2 % before the crisis, reflecting expectations of rapid development. However, most advanced economy banks have had average price-to-book ratios of less than one since 2008. (including 75 % of EU banks, 62 % of Japanese banks, and 86 % of UK banks). Nonperforming loans are a burden on the banking system in several emerging economies. More than 9 % of all loans in India are non-performing. The recent currency decline in Turkey may increase the number of defaults.

In the post-crisis era, the best-performing banks have been those that have drastically reduced operational expenses while also hiring more risk-management and compliance personnel. In general, US banks have reduced more drastically than their European counterparts. But unless the sector revives revenue growth, banking might turn into a lowmargin, commoditized enterprise. The industry's average annual global revenue growth from 2012 to 2017 was only 2.4 %, a sharp decline from the euphoric pre-crisis years of 12.3 %

Digital disruption

New digital players are posing a threat to established banks, just like they are to incumbents in every other industry. Platform firms like Alibaba, Amazon, Facebook, and Tencent threaten to snatch up some market share; this is already happening in the world of mobile and digital payments. According to predictions made by McKinsey's Banking Practice, the banking sector's ROE might reach 9.3% in 2025 as interest rates rise and other favorable factors come into play. However, if retail and business consumers transfer to digital providers at the same rate that people have in the past for new technologies, the industry's ROE may decline much lower.

However, technology threatens more than just banks. It might also provide them with the boost in productivity they require. For increased efficiency, several institutions have already begun to digitize their consumer-facing and back-office activities. They can also improve how they employ big data, analytics, and artificial intelligence in risk modelling and underwriting. By doing this, they may be able to avoid the kinds of bets that went wrong during the 2008 financial crisis and increase profitability.

Global banks retrench

Banks in the Eurozone have taken the lead in this decline

in global activity by becoming more regional and less national. Since 2007, their total foreign debts and other claims have decreased by $6.1 trillion, or 38%. Reduced intraeurozone borrowing accounts for about half of the drop (and especially inter-bank lending). German banks, for example, had two-thirds of their assets located outside of Germany in 2007, but that number has since dropped to one-third.

The amount of business conducted abroad has decreased for some US, Swiss, and UK institutions. Since the financial crisis, banks have sold more than $2 trillion worth of assets worldwide. Global banks' cutbacks are a result of a number of factors, including a new assessment of country risk, the realization that doing business abroad is frequently less profitable than doing business at home, national lending policies that favor domestic lending, and new capital and liquidity regulations.

The biggest international banks have also reduced their correspondent links with local banks abroad, particularly in emerging nations. Banks can conduct different types of business in nations where they do not have their own branch operations because of these connections. These services have been crucial for remittances, trade financing, and providing underdeveloped nations with access to valuable currencies. However, due in large part to a new evaluation of risks and regulatory complexity, global banks have begun adopting a tougher cost-benefit analysis of these connections.

Ten years after the credit crunch

• £115bn total fines global banking group has paid out in the US

• £200bn unsecured household debt of June 2017

• £137bn bail out cost for the UK banking industry in 2008/09

• Increase in tier 1 capital held by UK banks now (compared to 2006): 244%

• The rise in London house prices (compared to March 2007): 78%

A few banks, most notably those from China, Japan, and Canada, are diversifying their international operations. Due to the saturation of their domestic

market, Canadian banks have expanded into the United States and other markets in the Americas. Japanese banks are expanding their footprint in Southeast Asia and increasing syndicated lending to US corporations, albeit as modest investors. Banks in China are increasing their loans internationally. They used to have almost no overseas assets, but today they have more than $1 trillion. The majority of China's loans go toward supporting Chinese companies' outbound foreign direct investment (FDI).

FDI is now a larger share of capital

From a peak of $3.2 trillion in 2007 to $1.6 trillion in 2017, global FDI has decreased, but this decline is less dramatic than the decline in cross-border financing. In addition to reflecting a substantial fall in

cross-border investment in the eurozone, it also represents a decline in the number of firms using low-tax financial hubs. However, FDI accounts for 50% of crossborder capital flows in the postcrisis period, up from the average quarter before the crisis. Contrary to short-term funding, FDI shows enterprises adopting long-term business expansion initiatives. It is unquestionably the least erratic form of money movement.

According to Ben Bernanke, the "global savings glut" produced by China and other nations with sizable current account surpluses is what is causing interest rates to drop and the real estate bubble to expand. Interest rates were pushed lower because a large portion of this capital surplus was invested in US Treasuries and other government bonds. The result was a reallocation of portfolios and ultimately a credit

bubble. This pressure has now decreased, along with the danger that unexpected withdrawals of foreign cash will plunge nations into crisis.

The reductions in China's current account surplus and the US deficit are the most notable improvements. China's surplus peaked in 2007 at 9.9% of GDP but has since dropped to just 1.45 of GDP. The US deficit peaked at 5.9% of GDP in 2006, but by 2017, it had dropped to 2.4%. Large deficits have similarly decreased in Spain and the UK. There are still some imbalances. The previous ten years have seen Germany maintain a sizable surplus, while certain emerging nations, such as Argentina and Turkey, have deficits that put them at risk.

Corporate debt danger

There is a risk associated with the increase of corporate debt in developing nations, especially if interest rates rise and the debt is issued in foreign currencies. Companies may become trapped in a vicious cycle that makes it impossible to repay or refinance their debt if the local currency depreciates. At the time of writing, a sharp depreciation in the Turkish currency is causing market tremors that expose international and EU banks.

Credit quality has decreased as the market for corporate bonds has expanded. Non-Investment grade "junk" bonds have seen significant growth. Even investment-grade quality is no longer acceptable. 40% of the country's outstanding corporate bonds have BBB ratings,

which are one step above trash status. We estimate that 25% of corporate issuers in emerging markets are already at risk of default; if interest rates increase by 200 basis points, that percentage may increase to 40%

A record number of corporate bonds will mature globally during the following five years, and there will be a $1.6 trillion to $2.1 trillion yearly requirement for refinancing. It is reasonable to anticipate more defaults in the years to come given that interest rates are rising and some borrowers already have precarious financial situations. The significant increase in collateralized loan commitments is another issue that merits close attention. These instruments, which are related to the collateralized debt obligations that were popular before the crisis, use loans to businesses with poor credit ratings as collateral.

Mortgage risk

One of the lessons from 2008 is how challenging it is to spot a bubble as it inflates. Real estate prices have increased dramatically since the financial crisis in highdemand real estate areas including San Francisco, Shanghai, and Sydney. Contrary to 2007, these run-ups are typically confined, and crashes are less likely to result in widespread collateral damage. But sky-high urban housing costs are also a factor in other problems, such as a lack of affordable housing options, financial strain on families, restricted mobility, and rising wealth disparity. editor@ifinancemag.com

BANKING AND FINANCE FEATURE BANKING SHADOW BANKS FINANCIAL CRISIS

Shadow banking has rapidly grown in many other emerging economies where small businesses remain unbanked

Shadow Banking: Threat to global economy

IF CORRESPONDENT

The phrase 'shadow banking' refers to banking-like operations (mostly lending) that take place outside of the mainstream banking industry. It is now frequently referred to as market-based finance or non-bank financial intermediation internationally. Similar to traditional bank lending, shadow bank lending serves a similar purpose. However, it is not subject to the same regulations as traditional bank lending. The entities that engage in shadow banking are Bond Funds, Money Market Funds, Finance Companies and Special Purpose Entities.

Shadow banking is considered one of the major flaws in the financial system that contributed to the global financial crisis. Paul McCulley, an economist, first used the phrase "shadow bank" in a 2007 lecture at the annual financial conference held in Jackson Hole, Wyoming by the Kansas City Federal Reserve Bank. In Paul McCulley's talks, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Traditional banks engage in maturity transformation when they use deposits, which are normally short-term, to fund loans that are longer-term.

Shadow banks do something similar. In the money markets, they raise (or, more often, borrow) short-term funds that they have and then utilize them to purchase assets with longer-term maturities. However, because they are not subject to regular bank supervision, they cannot borrow money from the Federal Reserve (the US central bank) in an emergency, unlike banks, and they do not have conventional depositors whose funds are insured, therefore they are considered to be in the "shadows."

How does shadow banking work?

In the traditional lending model, a bank's ability to lend depends on how much money it can borrow from the market and how much money it gets in deposits. The same principles apply to shadow banking as well. An investment fund, for instance, receives funding from investors and issues shares of the fund in exchange. The investment fund utilizes this money to purchase securities in an effort to generate a return on investment for its investors (for example, a bond issued by a country or company).

The investment fund acts as the channel linking investors and countries/companies to earn an investment return, just as the bank acts as the 'middleman' between savers and borrowers to earn a specified interest rate. Shadow banking firms act like banks by obtaining funding from investors and then lending this money to nations or businesses.

Many experts were initially drawn to shadow banks due to their increasingly important role in turning home mortgages into securities. The "securitization chain" began with the issuance of a mortgage, which was later purchased and sold by one or more financial institutions before

becoming a part of a group of mortgage loans that served as the collateral for a security that was sold to investors. A mortgage-backed security's value was linked to the value of the mortgage loans included in the package, and its income was funded by the interest and principal payments that the borrowers made on their own mortgage loans. From the mortgage's inception to the sale of the security, almost all steps were completed out of regulators' direct line of sight.

A group of financial and supervisory authorities from major economies and international financial institutions known as the Financial Stability Board (FSB) developed a broader definition of shadow banks that encompasses all entities outside the regulated banking system that carry out the core banking function, credit intermediation (that is, taking money from savers and lending it to borrowers). The four main facets of intermediary are as follows: maturity transformation which means obtaining short-term funds to invest in longer-term assets; liquidity transformation, a concept similar to maturity transformation that entails using cash-like liabilities to buy harderto-sell assets such as loans; leverage which means employing techniques such as borrowing money to buy fixed assets to magnify the potential gains (or losses) on an investment; credit risk transfer which means taking the risk of a borrower’s default and transferring it from the originator of the loan (or the issuer of a bond) to another party.

By this definition, broker-dealers that use repurchase agreements to fund their assets would be considered shadow banks. In a repurchase agreement, an organisation that needs money sells a security to raise the cash and then promises to buy the asset back

at a set price and on a set date to pay back the borrowed money.

Shadow banks are money market mutual funds that aggregate investor money to buy commercial paper (business IOUs) or mortgage-backed securities. Financial institutions that sell commercial paper (or other short-term obligations) and use the proceeds to provide loans to households are also included in this category. These intermediation services are currently being performed by a wide variety of businesses, and they are continuously expanding.

What oversight is there of shadow banking?

The majority of the shadow banking system in the EU is heavily regulated. Resident money market funds, investment funds, and finance businesses are subject to regulation in Ireland. Irish-resident special purpose entities are not regulated by the Central

BANKING AND FINANCE FEATURE BANKING SHADOW BANKS FINANCIAL CRISIS

Bank as a sector, as is the case in other jurisdictions. However, compared to other jurisdictions, the Central Bank enforces more stringent reporting requirements on special-purpose corporations, which makes it easier to keep an eye on shadow banking activity.

Experts say, mainly because they obscure the shapes and sizes of objects within them, shadow banking can be frightful. Due to the fact that many of the shadow banking system's companies do not file reports with government regulators, estimating its size is extremely challenging. The shadow banking system looked to be most prevalent in the United States in the years leading up to the global financial crisis, although nonbank credit intermediation existed in other nations and is still expanding, especially in China. Since 2011, the FSB has examined all nonbank credit intermediation as part of a "global" monitoring operation.

The G20's 20 largest advanced and emerging market economies have mandated the exercise, which now includes the European region and 28 other countries. The first findings were unreliable since they included "other financial institutions" as a catch-all category, but today the FSB now looks at shadow banks by 'function' rather than an entity. Using the entity-based approach, the most recent report (data from the end of 2015) reveals that the US shadow banking system has decreased from 33% to 28%, making the euro area shadow banking system the largest globally at 33% of the total, up from 32% in 2011. The global shadow system peaked at $62 trillion, across the jurisdictions contributing to the FSB exercise in 2007. It dropped to $59 trillion during the crisis, then increased to $92 trillion by the end of 2015. According to the 'functional' category, which includes only 27 jurisdictions,

asset management related operations account for about 22% of the $34.2 trillion in total shadow banking.

Although the FSB's decision to focus on activities (rather than institutions) rather than institutions brings the measurement of risks closer, it is still insufficient to accurately assess the hazards that shadow banking poses to the financial system. Additionally, the FSB does not assess the amount of debt used to buy assets (often referred to as leverage), the system's capacity to amplify issues, or the pathways by which issues spread from one industry to another (although there has been some attempt to gauge these latter linkages using balance sheet data between nonbanks and banks).

Over time, it has become clear that shadow banking in several countries is replacing banks' function as credit intermediaries. Although it is still unclear what the underlying dangers are associated with these behaviours and whether they are systemically significant, we are getting better at tracking their scale.

What are the advantages/disadvantages of shadow banking?

Shadow banking has the benefit of reducing reliance on traditional banks as a source of financing. This is advantageous for the economy since it diversifies the financial system and serves as an extra source of lending. On the other hand, there is a chance that excessive lending in the economy could be a result of shadow banking. This has the potential to lead to a harmful downturn.

How big is the shadow banking system in Ireland?

Over €2.3 trillion in assets were thought

to be held by the shadow banking sector functioning in Ireland as of the end of 2017. This makes the majority of investment funds, money market funds, and special purpose entities. They possess non-Irish assets and primarily represent foreign investors. This means links to the home economy are weak.

China's message of shadow banking to the world

Considered the greatest economy in the world, China has also seen the danger of uncontrolled shadow banking. Following the global financial crisis, the Chinese government encouraged economic growth by providing easy lending and fiscal stimulus, much of which was distributed to the economy by shadow banks that were frequently linked to traditional banks. In 2019, the non-bank sector made up 8% of the nation's financial industry, by 2016, it had increased to a third of it. The Chinese government covertly supported this trend, and in some cases actively promoted it.

"Shadow banking expanded rapidly based on a combination of regulatory arbitrage by banks trying to channel credit to restricted sectors, along with a widespread perception that government guarantees at some level, central or local, would ultimately backstop any losses," says Logan Wright, Director of China Markets Research at Rhodium Group, a research firm.

While many inexperienced retail investors were entering the local stock market, problematic loans were steadily burdening Chinese financial systems with dangerously high levels of credit risk as the system developed leverage. Its crash in 2015, which caused major shares to lose up to a third of their value within a month, convinced the

authorities that the non-bank sector’s growth posed a threat to financial stability. In response, regulators implemented reforms that mostly involved limiting the interest rates that shadow banks might charge in order to limit their ability to lend. As a result, from 2017 to 2020, the country's shadow banking assets shrank by RMB11.5 trillion ($1.6 trillion), falling from over 100% of GDP to roughly 80%

According to Logan Wright, the changes had undesirable side effects even if they were successful in shrinking the sector and lowering liability risks. As additional defaults happened as a result of numerous institutions being cut off from financing, credit risk increased significantly on the asset side of the balance sheet. The crackdown effectively undid the financial system's deepening, which had benefited underserved borrowers including lower-income people, while undercutting the government's strategy to create the 'shared prosperity' development model, which is intended to promote more equal growth. Although their reliance on shadow banks increased during the COVID pandemic, SMEs, which banks have historically avoided in favour of lending to huge state-run businesses, were particularly hard impacted.

Real estate is another industry that has been severely impacted because some of the main users of shadow banking channels are property developers. The industry, which contributes up to 30% of the nation's GDP, is currently experiencing a severe crisis, putting some of China's major property developers at risk of going bankrupt.

"The deleveraging campaign contributed to the property market crisis by encouraging property developers to

Funding from shadow bank in China from 2015-2022

2015 - 102

2016 - 109

2017 - 150

2018 - 158

2019 - 200

2019 - 203

2020 - 205

2021 - 206

2022 - 209

(In Trillion)

Source: Wiley Online Library

rely more heavily on pre-construction sales as a primary mode of financing,” says Logan Wright, adding, "Presales effectively became a substitute form of credit for shadow financing channels, which were contracting under the deleveraging campaign. This process also produced a significant expansion of housing supply and new construction at a time when fundamental demand among owner-occupiers was slowing."

Falling real estate sales are increasingly affecting the banking industry and putting many non-bank businesses' ability to stay afloat to the test. According to data provided by 'Use Trust', Chinese trusts missed payments on financial products with real estate connections totalling almost $9 billion in the second half of 2022.

According to University of

BANKING AND FINANCE FEATURE BANKING SHADOW BANKS FINANCIAL CRISIS

Tennessee professor Sara Hsu, an authority on China's shadow banking sector, one potential reaction would be to further expand the nation's bond and stock markets.

Sara Hsu said, "The Chinese shadow banking system underscores the need to provide finance to SMEs and early regulation, as well as the need for market-based solutions, even though the West doesn't have an exact analogue to China's shadow banking system."

Shadow banking across the world

In many other emerging economies with unbanked small businesses, shadow banking has risen quickly. An example of this is Mexico, where the tiny size of the banking industry and the low level of trust in SMEs have increased their desire for other finance sources. The

credit provider AlphaCredit defaulted first, followed by Credito Real and Unifin, as the boom broke in 2022. Many other non-banks have since been affected by the contagion, and they are now financing themselves with everhigher interest rates. In total, the three insolvent businesses loaned nearly $6 billion, in addition to releasing about $4 billion in unsecured bonds and debt to international banks. As hundreds of smaller businesses fear running out of financing, the crisis has spread to the actual economy.

Victor Herrera, Partner at Miranda Ratings Advisory, a Mexican financial services firm, and former CEO of S&P Global Ratings in Mexico, said, "Contagion has already set in, and it is very difficult for all remaining players to obtain funding and refinance

maturities."

The economy of the nation is impacted more broadly by default on shadow bank bonds. "Normal Chapter 11 procedures have not been followed and bondholders feel they have been mistreated because of Mexican debt restructuring practices," Victor Herrera said, adding, "All bond issuers in Mexico, regardless of the sector they are in, will suffer the reputational effect."

The overarching problem, according to Victor Herrera, is the lack of regulation and supervision. "One questions why a $100 deposit in the bank benefits from ample regulatory supervision, but if a doctor or teacher buys a $100 bond, no government body monitors the risk the retail investor is undertaking, many times without knowing it," he added.

The crisis ahead

Many analysts worry that authorities may soon discover they have even less control and comprehension of the non-bank financial sector than they anticipated as gloomy clouds gather over the global financial system. The amount of the correction is impossible to forecast because "shadows" do not promote openness, according to Copsey from ABL Business. Increased borrowing costs may have caused asset valuations to become overvalued, which could cause problems with liquidity or possibly insolvency. The financial sector is also facing issues from the oil crisis and the conflict in Ukraine, but complexity is likely the largest problem. According to McMahon of Parallel Wealth Management, "We just don't know what the trigger event will be."

Ahli United Bank over the years has strived to incorporate global industry best practices in its functioning

Ahli United Bank of Kuwait bags two accolades

Ahli United Bank of Kuwait was accorded two awards at the International Finance Awards 2021 held in Dubai on March 25. Incidentally, the annual award ceremony organized by the International Finance Magazine reached its 10th edition this year in 2022.

Like every year, industry leaders from across the world were felicitated for their unmatched leadership and sector expertise after being identified by a dedicated pool of industry observers and researchers.

One of the award categories in which the bank emerged as a winner was IT Innovation.

Abdullah Jaragh, General ManagerInformation Technology for the bank bagged the award for his pivotal role in navigating the bank through the COVID-19 pandemic and its resultant hurdles. AUB had to face an overnight increase in demand for digital services and products. This swift turnaround by the bank helped it retain the confidence of its customer base.

Even before the pandemic, the bank had

been focused on increasing its digital products and services portfolio. Not stopping at that, the bank under the IT leadership of Jaragh has not been shy to deploy emerging technologies like robotics for its service delivery. According to Jaragh, IT is an enabler to better serve the customers and scale innovation.

Under his leadership, the bank has always strived to enhance its customer experience and add value to its services. Not being reluctant about their progress, the IT team is constantly upgrading their core competencies and staying aware of new technologies. The IT department is composed of a small number of individuals with varied expertise.

The bank has also made adequate investments for all

the necessary IT infrastructure to remain future-ready and has given thrust to security as well. The bank conducts thorough training programs for the entire staff on a regular basis to ensure that the bank does not fall prey to phishing attacks or any other forms of cyberattacks.

As an IT leader, Jaragh showed imagination in leadership and showcased a long-term vision to ensure that the bank’s human resources were up to face the challenges of the day. His leadership in addressing adverse conditions due to the impact of the pandemic helped the bank tide over the sudden crisis and increased demand. He was also able to provide the necessary information infrastructure to support the bank on its path to providing digital services and products in addition to its traditional services.

However, this achievement did not come as a surprise to his colleagues at the AUB. Abdullah boasts of a stellar career in the IT domain with experience spanning just short of four decades. Since his appointment in the bank, he has strived to work on business agility and elevate the operational resilience potential of the firm. He has worked consistently to keep the cost of IT investments at the minimum while delivering an optimal level of resource efficiency.

The other award for the bank came under the Best Liquidity Management Bank –Kuwait 2021 category. Abdullah AlLangawy, the bank’s General Manager-Treasury received the award for his role. AlLangawy has been instrumental in ensuring that the bank remains healthy liquidity depending on the market dynamics and macroeconomic conditions. The assets and liabilities committee has remained ductile through turbulent times and managed to maintain adequate liquidity. At the same time, the bank’s treasury team has ensured that the bottomline is not affected and confidence of the customer is never compromised.

Recently, Fitch Ratings gave the bank an ‘A’ rating with a stable outlook as part of its Long-Term Issuer Default Rating (IDR) amid the current global financial uncertainty.

The bank also recorded a net profit for 2021 amounting to KD 31.2 million, which is higher by 5.1% than KD 29.7 million in 2020. Fitch noted that AUBK's profitability metrics continue to recover, supported by a mild rebound in the bank's operating profit. The rating agency noted that these will be supported by improved operating conditions and higher profit rates in 2022.

This was possible because the bank had managed to achieve the lowest cost of funds in the market.

AlLangawy brings more than 16 years of prime banking experience including that in assets and liabilities management, investments and treasury sales, and derivative desks. Other than his responsibilities at AUB, he also serves on the Board of Directors and is a member of the Audit Committee at MEFIC Capital based in the Kingdom of Saudi Arabia.

His enviable professional journey is preceded by an equally enviable academic journey. He has an MBA degree from Maastricht Business School of Management and has completed PLD (program for leadership development) from the prestigious Harvard Business School and the Certificate of Investment management analysis and Investment Strategies Program from Wharton University.

The dot-com crisis destroyed several tech sector darlings that had dominated the 1990s

Is the tech bubble finally bursting in 2022?

IF CORRESPONDENT

It is no secret that the tech industry has been on a roller coaster ride over the past few years. We have seen huge highs, like when the market hit an alltime high in December 2019, and devastating lows, like the crash that followed shortly after. So, is the tech bubble finally going to burst in 2022?

The dot-com crisis destroyed several tech sector darlings that had dominated the 1990s. Today, cryptocurrencies have an astonishingly similar trajectory

Many of Wall Street's experienced investors are plagued by recollections of the dot-com crisis, and this year's stock market collapse is giving them considerable déjà vu. Since 2022, the S&P 500 has decreased by 19%, and the tech-heavy Nasdaq has fared even worse, falling more than 28%. However, historical tendencies suggest that the stock market collapse may still be only 50%. For example, the Nasdaq-100 plummeted 78% between March 2000 and October 2002 as once-popular, but now primarily unsuccessful IT firms went out of business.

The dot-com crisis destroyed several tech sector darlings that had dominated the 1990s. Today, cryptocurrencies have an astonishingly similar trajectory in an industry that didn't exist decades ago. In perhaps one of the worst sell-offs

in the history of the developing market, the crypto market has lost around $1 trillion so far in 2022. And, of course, a brief but traumatic recession followed the deflating dot-com bubble. So is that the current direction of the markets?

A new period of growth over profitability

Markets and investors of the dot-com era were famously described as "irrationally euphoric" by former Fed Chair Alan Greenspan, and this dynamic was ever present during the 2010s. Both periods characterize Wall Street's emphasis on expansion over profitability and the aggressive rise of retail investing. The best-performing stocks in both economic developments belonged to businesses with a growth-oriented strategy.

Take Priceline as an illustration. After its creation, the online travel firm experienced sudden success in 1999 and became public. After spending millions on advertising featuring William Shatner from Star Trek, the company soon piled up $142 million in losses in its first few quarters of operation, but investors didn't seem to care.

All they needed was a share of the explosive growth from the business that would eliminate travel agencies. As a result, shares rose to nearly $ 1000 from the $96 IPO price (adjusted for a six-toone reverse stock split), but as the market turned, the stock dropped 99% to a low of about $6.60 by October 2002.

Consider Peloton as a modern-day analogy. A work-from-home favourite during the COVID pandemic, the exercise bike manufacturer saw a 600% increase in stock value between March and December 2020 even though it continued to experience losses. But, of course, the stock subsequently collapsed, with shares dropping more than 90% from its peak as investors questioned whether the company that makes exercise bikes is worth close to $50 billion (its peak market cap).

According to George Ball, Chairman of Sanders Morris Harris, a Houston-based investment company, it's evident that investors have been prepared to pay up for market share increases and projected future profitability, even in company models that haven't yet demonstrated their ability to generate a profit.

"There was a strong, essentially unthinking assumption that a subset of investments would go up in price forever in the dot-com period, and in the current market run-up and decline this year. The justification, if there was any, relied on a very high rate of growth going beyond any reasonable assumptions of the bounds of scale, had no real basis in metrics, and had no real basis in logic," he said. According to Ball, the "poisons" that

ultimately caused a crash back then are the same as what the markets are currently going through.

What's happening now?

Nobel laureate Robert Shiller defined a speculative bubble in irrational exuberance as "a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, amplifying stories that might justify the price increases and bringing in a larger and larger class of investors who, despite doubts about an investment's real value, are drawn to it partly."

Tech observers are used to this craziness. COVID wreaked economic havoc in 2020 and 2021, but the IT industry was unaffected. Amid the lockdown, tech CEOs and owners got richer. Their enterprises expanded faster and were more profitable than others. Apple spent $90 billion buying its shares, nearly Kenya's GDP. Amazon spent $50 billion in 2021 on warehouses, staffers, electric vehicles, cloud computing centres, etc. And then... The Nasdaq (heavily influenced by tech businesses) reached 16,057, then plunged on November 19, 2021. Currently, it's 12,369. So, was this a "market correction" or a sign that this speculative bubble had burst?

According to quarterly numbers revealed by IT

companies, the bubble has popped. Luke Gbedemah and Sebastian Hervas-Jones of Tortoise Media said the data shows a difference between companies that can "sustain an economic crisis" and those that may face existential decline. In addition, for the first time in the industry's history, the companies' combined real revenue growth rate was negative, and actual sales overall were lower than the year before.

Alphabet's revenues grew 13%, but earnings plummeted 14% Apple's revenues rose by a hair, but earnings fell by 10%. Amazon's sales increased 7%, but profits plunged 60.6%. Facebook had a bad quarter, with marginally lower revenues and 36% lower earnings. Microsoft's revenues were up nearly a fifth, while profits were only up 2%

In interpreting these numbers, the usual caveats apply: these are just one quarter's results (though Meta has had two terrible ones); global supply chain problems and pulling out of Russia may have impacted Apple; and Amazon's results may reflect its massive investment in Rivian, the electric vehicle manufacturer from which it has ordered 100,000 vehicles.

Investors formerly praised these companies for being different from regular, uninteresting corporations. Instead, these gigantic money-printing machines are headed into unknown territory, where they will push margins, expenses and privileges trimmed, workers fired, and efficiency found.

Alphabet's CEO urges employees to be "more entrepreneurial, working with greater urgency,

sharper concentration, and more appetite than on sunnier days." Similar sanctimonious exhortations are likely coming from other heavyweights.

Firstly, the era of "tech exceptionalism" – when investors and speculators praised companies and their supporters for being different from typical, boring corporations – may be ending. It is because these corporations are now no different from BT or Unilever.

Secondly, Microsoft’s case was misjudged because it blew the smartphone opportunity. Instead, it provided organizational computing infrastructure for organizations worldwide. For example, the NHS has 750,000 PCs running Microsoft OS and apps. Ditto for the UK government, massive firms, university administrations, and western SMEs. Microsoft's cloud computing business is booming; though not glamorous or thrilling, it is a stable business.

Dot-com 2.0: Tech stocks and cryptocurrencies

Any business that added ".com" to its name appeared to achieve success practically right away in the years leading up to the bubble, and recently it has been the same with "crypto" and "Defi." These innovative technologies have attracted an influx of investors. Both then and now, the reasoning went something like this:

"Something is expanding quickly; it will continue to grow very soon." The bigger fool notion then takes hold, individuals employ leverage, and when they can no longer sustain growth at a high

level, the power is revealed, and the crash occurs, according to Ball. That's the case with tech equities right now, as you're aware, and it's also the case with cryptocurrencies. The price drops in finished SPACs were an obvious indicator of this.

People are reluctant to acknowledge it, but psychology has a considerably more significant influence on stock values than the economy or profitability. It is psychology, and the psychology has changed for the worst," the Chairman of Sanders Morris Harris said, adding that although "no one knows where the tech bubble burst is going to be," he believes the Nasdaq may "very probably" fall below $10,000 in 2022. According to Ball, the best time to invest is probably when psychology and tech companies begin to increase.

Not everyone is anxious about the future of tech stocks

The chief financial strategist of Charles Schwab & Co., Liz Ann Sonders, tweeted that the forward P/E for the S&P 500 Tech sector is "nowhere near" the levels experienced in the period leading up to the dot-com bust. Even the crucial price-to-earnings (PE) ratio known as the Shiller PE ratio, which is cyclically adjusted, didn't reach dot-com levels during the height of the stock market in late 2021. However, it is still higher than before the Great Financial Crisis.

Macroeconomic differences could cause an intensified recession

While the time leading up to the dot-com bust may now be

startlingly similar, they also recall a remark sometimes credited to Mark Twain that may or may not be true: "History doesn't repeat itself, but it often rhymes."

In an interview with CNBC, Jeremy Grantham, co-founder and chief investment strategist of the Boston-based asset management company Grantham, Mayo & van Otterloo, stressed the macroeconomic differences between the dot-com period and current markets. He claimed that while the latest decline in tech stocks may be comparable to 2000, the impact on the economy now may be considerably worse.

"I'm worried that there are a few more significant differences from 2000," he said. One of them is that the 2000 stock market crash only affected US stocks; bonds were excellent, yields were fantastic, housing was affordable, and commodities behaved themselves, according to Grantham, who

noted that 2000 "was paradise" compared to today. The renowned investor continued, saying that, in contrast, the bond market recently experienced its "lowest lows in 6,000 years of history." In addition, the cost of food, metal, and energy is rising, and the housing market is cooling, which might negatively impact the economy.

A Fed-driven downturn

However, experts claim that, unlike in 2000, the latest slump in IT stocks will not be the primary cause of a recession. Instead, the Fed's efforts to combat the highest inflation in nearly four decades are the primary cause of economic suffering. The Federal Reserve has been increasing interest rates. That might not be good news for Main Street or Wall Street.

The Fed will boost interest rates to combat inflation because it is now running relatively high

and is not merely a passing trend. But even though it will be acting appropriately, this is likely what will trigger a recession, Ball continued. The notion that the Fed will probably be blamed by Wall Street if a recession occurs is widely held. Even the former vicechairman of the Federal Reserve, Randal Quarles, acknowledged that it would be difficult for the government to create a "soft landing" for the American economy, where inflation is controlled, but economic growth is maintained.

"I believe that we are entitled to a recession given the length of time we have experienced high rates of growth, affluence, and GDP gains. A cold shower brings about an understanding of reason and reasoning, and the popping of the bubble will do the same," Ball stated.

editor@ifinancemag.com

Epyllion CEO Matthew Ball explains the concept of the metaverse as a relatively new name for an outdated idea

The idea called Metaverse The idea called Metaverse The idea called Metaverse

The idea called Metaverse

Does anyone remember the term superhighway? In the early 1990s experts indicated that high-speed data networks would soon connect millions of people across the globe. Ultimately allowing them to exchange information and linking them to “films and TV shows, shopping services, email and huge collections of data," as the New York Times put it. Yet today millions use OTT platforms like Amazon and Netflix, Gmail and Wikipedia, and no one talks of cruising the information superhighway—or ever did. The vision was foreseeing, but the terminology perished.

Just like the information superhighway, the term "metaverse" now suggests that something similar is taking place. This time, it's about the potential of 3D virtual worlds and how online communication and video game technology are fascinating modes. This is the subject of frenzied speculation. However, it is very hard to define, and none of the throngs gathering in virtual spaces at the time, such as Fortnite players, actually use the specific term.

In October 2021, when Facebook changed its name to Meta, it indicated its intentions for this new environment, which first came to the attention of the general public. People who had never heard the term "metaverse" prior believed it to be a brand-new Facebook service. However, the word has been used for years in the IT fraternity, and other companies, including prominent ones like Microsoft and Roblox, have actually staked their own claims to be metaverse retailers.

Expertise analyst and Epyllion CEO Matthew Ball explains the concept of the metaverse as a relatively new name for an outdated idea. Neal Stephenson first used the word in his 1992 book "Snow Crash." Matthew Ball credits "Pygmalion's Spectacles," a 1935 short story by Stanley Weinbaum, as well as later works by Ray Bradbury, Philip Okay Dick, Isaac Asimov, and William Gibson with the idea of a parallel, manufactured reality. All of their simulated worlds are dystopias, which is a striking fact that modern tech leaders have either overlooked or refused to acknowledge.

Matthew Ball's overview of the evolution of virtual worlds in fiction and computer science provides insightful knowledge. But his notion of the metaverse—a network of 3D digital worlds that can be accessed simultaneously by millions of users around the world and in which they can exercise ownership rights over digital objects may prove to be his book's most valuable contribution.

This definition is intriguing both for what it includes and for what it omits. Since headsets are optional and most people now access digital worlds via flat displays, it won't just be a rebranding of virtual reality. Blockchains and non-

fungible tokens aren't mentioned either, despite Matthew Ball's admission that they might be useful.

According to him, there must be only one metaverse, made up of numerous virtual worlds, just as there is only one web, which is made up of numerous different networks and services that are more valuable because they are connected.

Digital worlds already exist, therefore the next phases will be to scale them up to help more users, make them more functional and accessible, and design new gear to enable better immersion. On each of these fronts, progress is being made. However, connecting what are currently disparate realms will likely be the biggest challenge. For instance, taking digital clothing items from "Fortnite" into "Minecraft" is not likely.

Similarly, Matthew Ball, who was also the former global head of strategy for Amazon Studios, asserts that sharing knowledge and collaboration

between digital realms make proper business sense. Nowadays, people buy fewer items from video games and other virtual worlds than they would if ownership rights were more secure and items more portable. If you address these difficulties, more people will probably be willing to pay for them. Matthew believes that over time, economics will drive standardization and interoperability.

He draws an intriguing comparison to the development of smartphones. He stated that another way to consider the metaverse is the evolution of the cell web. With the advent of features like navigation apps and ride-hailing, mobile phones not only improved but also changed how people interact with the internet. The metaverse may represent a similar change in the web's abilities and usage habits.

But don't tech giants Apple and Google have a monopoly on the smartphone market? In this particular instance,

• Metaverse

• There are only 50,000 users of Web 3.0 virtual worlds

"economic gravity" did not result in interoperability. According to Matthew, both the tech giants' have control over price structures and app stores, which "limit the growth potential not only of virtual-world platforms but also the internet at large," calls for legislative action.

The author wisely refrains from expending too much time attempting to consider all of the metaverse's potential long-term applications or analyzing which of the current tech titans are best positioned to utilize it. He also doesn't go very far into the inescapable problems with governance and regulation. Within the sport, it is far too early. Consider the forecasts made in 1993: they have largely come true, yet Netflix, Amazon, Gmail, and Wikipedia didn't exist at the time. Even previous commerce leaders were overthrown by the rise of smartphones. An equivalent changing of the guard could be brought on by the metaverse.

Matthew Ball pointed out that even the term "metaverse" failed to catch on.

By the end of the final decade, something akin to it will have materialized, although "we may ultimately use a different title for this future." This newest phrase, like the information superhighway, seems to be heading on the right path but may be lost along the way. Matthew Ball's well-timed e-book offers a gateway into a new world for everyone interested in learning the process and what's at stake.

First Metaverse ATM

The first metaverse ATM is being introduced by the well-known metaverse platform Decentraland. The Ethereum blockchain powers the virtual reality platform Decentraland. Users on the platform can produce, consume, and make money from their own content and applications.

To make it simple for consumers to buy Mana or any other cryptocurrency, Decentraland has partnered with the Transak payment gateway and the

Metaverse Architects studio. Mana is mainly utilized as a form of ingame money. In-game objects can be purchased and sold by players using cryptocurrency.

The developers say that the ATM is intended to ease the user experience.

In a post, the developers said, “Just like an ATM in real life, we wanted to give users a more seamless journey while navigating web3."

One should note that banks are embracing the idea of the metaverse. At the beginning of 2022, J.P. Morgan opened its first metaverse lounge on Decentraland. In addition, cooperation between The Sandbox, a virtual game platform, and HSBC, the largest bank in the world, was also announced.

There are 90,000 properties altogether in Decentraland. Common areas, plazas, and roadways in Decentraland are owned by developers; people cannot purchase or sell them. One of the main factors influencing the price of land in Decentraland is its scarcity.

Digital Stores In Metaverse

When deciding to purchase a home, it is crucial to consider the area in which the property will be located. It appears that the metaverse will follow the same mantra. This is the immersive online space—still in its infancy—where our 3D avatars, resembling cartoon characters, may move about, interact with others, and communicates. Accessing it typically requires donning a pair of virtual reality (VR) goggles that are connected to your computer.

According to Mark Zuckerberg, the founder of Meta, many of us will eventually work, play, and shop in the metaverse. Or at the very least, our avatars will. While many may find this a little crazy, more and more businesses are buying property in the metaverse in order to establish themselves there. Among them are Adidas, Burberry, Gucci, Tommy Hilfiger, Nike, Samsung,

• 74% of US adults are joining or considering joining the metaverse

• By 2026, 25% of people will spend an hour per day in the metaverse

• 1.73B people are projected to use mobile AR by 2024

• 64M Americans are projected to use VR in 2022

gamers are 59% male and 38% are aged 10-20

Image : www.matthewball.vc

Louis Vuitton, and even the financial institutions HSBC and JP Morgan.

The dilemma is which site these businesses finally select. Some of the most well-known world providers in the metaverse at the present are The Sandbox, Decentraland, Voxels, Somnium Space, as well as Meta's own Horizon Worlds. Which of these will grow to dominate the metaverse and get the most visits from our avatars is a bet that retailers and other investors must make. Retailers and other investors must wager on which of these will dominate the metaverse and receive the most visits from our avatars.

On Decentraland is a businessman from Canada named Andrew Kiguel. He made a 2021 bitcoin investment of $2.4 million (the currency needed to conduct a transaction in the metaverse) to purchase some property in Decentraland's authorized fashion retail area.

Kiguel, the proprietor of the cryptocurrency exchange Tokens.com, asserts to have previously organized a fashion show and plans to rent out his space to the industry.

The idea behind these companies is that you can shop for items from a clothing store in the metaverse and have them delivered to your real-world address. You might even invest in a brand-new virtual outfit for your avatar.

NFTically came up with a report in June 2022, on the future of Metaverse in our formal economy. It remarked, "Constructing of metaverse economics is underway. Major corporations are ceasing their efforts to establish themselves in the virtual domain. New research shows that the Metaverse could add $3 trillion (€2.8 trillion) to the global GDP in ten years if it grows in popularity as mobile technology has."

The study also cited the economists

at the international consulting firm Analysis Group, who found that expanding the virtual world could add 1.7% or $440 billion (€417 billion) to Europe’s economy in 10 years.

The research also stated that if everyone started using technology on a large scale in 2022, it would add 2.8% to the world’s GDP by 2031.

Contrary to popular belief, there is no virtual economy inside the Metaverse. Because of this, these innovations have far-reaching and significant economic impacts. The Metaverse will alter various present economic factors, including employment, specialized industries, and infrastructure.

Due to the COVID-19 pandemic, remote labour has become the new and dominant trend in the formal economy. Organizational frameworks that explicitly foster a WFA culture are becoming more common in large corporations. Now, workers worldwide may take advantage of several new possibilities due to this paradigm change.

Professionals with a high skill level may find a job in their home nation without needing to travel. Thus, these employees will create income that will in turn be reinvested in the local economy. Opportunities to engage will multiply as it expands.

Here, Metaverse will come in handy as it will open up a whole new world of possibilities for remote work platforms. Users not only can access entire office suites through their virtual avatars, but they can also connect with their colleagues, and explore more of their office life without travelling physically. It is expected that this expansion would lead to additional employment possibilities around the nations, bringing money to previously underserved regions.

Additionally, the Metaverse will provide a wide variety of educational options for people, as the educational and training facilities will be much more advanced and immersive than those on Earth.

"Isn’t it tempting to imagine attending a virtual training school where you may interact with professors, courses, and other students? And this is only one example of the many possibilities. Also, in the Metaverse, organizations may send their personnel on virtual training courses that anybody can attend," the NFTically report commented.

Employers may be able to afford to recruit more highly qualified people due to these improvements. Increased wages may lead to higher taxes, which frees up resources for further economic growth.

"We should anticipate metaverserelated changes in areas like digital infrastructure. The ecosystem cannot operate without digital infrastructure projects. It’s plausible to argue that the digital infrastructure rather than the other

way around," the research said further.

The Metaverse will impact digital infrastructure. Massive data centres will become needed to store the data generated.

To meet the increased demand, chip designers and makers of other computer or gadget components will have to create more of their products. The digital infrastructure relies on the capacity to switch between a 24-hour parallel virtual world and the natural world at any given time. It has the potential to become not just the most significant digital infrastructure project ever but the largest infrastructure project ever completed.

"Metaverse will also boost global economic development. The purchases, language, and pomp around the Metaverse may make us forget that it reflects the real world. A distinct virtual economy will be created to preserve society’s people, places, and experiences, replete with virtual professions that bring genuine value. It is predicted that the global economy will grow at a fast

speed due to the seemingly unlimited opportunities for making money. A virtual world also has no limitations," the report added.

The Asia-Pacific area would profit most from the metaverse, with a 2.3% rise in GDP, or $1.04 trillion (€993.9 billion) if implemented in 2022.

Companies like Roblox, Nvidia, and Microsoft have also built virtual worlds using virtual or augmented reality technology in the past.

"The western world was ahead of the curve when it came to building the infrastructure for communication, which led to the internet we use today. Now everyone seems linked and developing the metaverse at once," the report concluded.

"However sceptical some individuals may feel about the metaverse and web3, real change is happening right now. Foundational technologies are converging, NFTs are being issued, cryptocurrencies are being developed, innovative smart contracts are being

created and taxable events are taking place. Tax teams must keep pace with developments," Ernst & Young commented in a 2022 report.

"There is a growing expectation that individuals will be using the metaverse daily within just five years. To ensure the metaverse economy is a success, companies and governments must ensure tax, law and regulation work together to reduce high levels of uncertainty and complexity," it said further.

Deloitte came up with its observation on the impact of the metaverse on the Asian economy. It stated that the metaverse’s contribution to the gross domestic product in the region could be between $800 billion and $1.4 trillion per year by 2035.

That would make up roughly 1.3% to 2.4% of overall GDP, the report added (as reported by CNBC), assuming that there are “sustained technology investments made in the next five to ten years.”

There are 1.3 billion mobile gamers in Asia, making up the world’s largest player base, the report said.

“The metaverse is no longer science fiction. Early metaverse platforms are already being used by millions,” it wrote.

Duleesha Kulasooriya, Deloitte Center for the Edge’s managing director in Southeast Asia, attributed the size of the forecast impact to the “demographic gravity” of the region.

“If you look at the youths, they’re are the ones who are interacting and engaging in the metaverse mostly today, and 60% of the world’s youths live in Asia,” he said.

Gaming is “one of the early ways” in which one is introduced to the metaverse, Duleesha Kulasooriya concluded.

HARSH SURESH BHARWANI CEO AND MD, JETKING INFOTRAIN

payments

Crypto payments via social media

The rise of cryptocurrency has been a hot topic in recent years, and the world of social media is not immune to its influence. In fact, some social media platforms are now embracing crypto payments as a new way to transact on their platforms.

Crypto payments via social media have become a popular trend, and it's easy to see why. For starters, cryptocurrencies are decentralised and provide more anonymity than traditional payment methods. They are also faster and cheaper than traditional payment methods like wire transfers and credit card payments.

Social media platforms are now allowing their users to send and receive payments in cryptocurrencies, making transactions more seamless and convenient. This is particularly useful for people who live in countries where access to traditional banking services is limited or unreliable.

Twitter is one of the social media platforms that has started accepting crypto payments. Users can now send and receive Bitcoin payments using the Lightning Network, a decentralised payment network built on top of the Bitcoin blockchain. The process is relatively straightforward: Users need to download a Lightning-enabled wallet, connect it to their Twitter account, and start sending and receiving payments.

Facebook is also exploring crypto payment options. The company has been working on its own cryptocurrency, called Libra, which it plans to launch in the coming years. While Libra is not yet available, Facebook already supports crypto payments in its Messenger app. Users can send and receive Bitcoin, Bitcoin Cash, Ethereum, and Litecoin through the app.

Popular messaging app Telegram has also introduced crypto payments. The app has its own cryptocurrency called Gram, which users can use to send and receive payments within the app. Telegram has a built-in wallet that allows users to store and manage their Grams.

Reddit, the online discussion forum, has also joined the crypto payments bandwagon. The platform now allows its users to tip each other in the form of cryptocurrency. Users can send tips in Bitcoin, Bitcoin Cash, Ethereum, and Litecoin through a third-party app called Tippr.

In August 2021, TikTok announced that it was partnering with a blockchain-based payment provider to allow users to send and receive Bitcoin, Ethereum, and other cryptocurrencies.

One of the advantages of using crypto payments via social media is that it eliminates the need for middlemen. Traditional payment methods like wire transfers and credit card payments require banks and other financial

Twitter is one of the social media platforms that has started accepting crypto

institutions to process transactions. These middlemen can add fees and delays to transactions, making them slower and more expensive. With crypto payments, there are no middlemen, so transactions are faster and cheaper.

Another advantage of using crypto payments via social media is that they provide more privacy and security. Traditional payment methods require users to reveal personal information like their names and addresses, which can be vulnerable to hackers and identity thieves. With crypto payments, users can transact anonymously without revealing any personal information.

However, using crypto payments through social media does come with its own risks. The value of cryptocurrencies can change drastically and quickly. Users need to be careful when sending and receiving payments, as the value of their transactions can change quickly. It's also important to note that cryptographic transactions are irreversible; once a transaction is made, it cannot be reversed or cancelled.

It's important to note that regulations around cryptocurrencies and crypto payments are still evolving, and there may be legal and regulatory challenges to implementing these types of payments on social media platforms. Additionally, the trend around

crypto payments via social media may have evolved since my knowledge cutoff date, so it's important to stay up-to-date on the latest developments in this area.

In conclusion, crypto payments via social media are a new and exciting development in the world of cryptocurrencies. Social media platforms like Twitter, Facebook, Telegram, and Reddit are now embracing crypto payments, making transactions more seamless and convenient for their users.

While there are risks involved, such as the volatility of cryptocurrencies, the benefits of using crypto payments through social media are many, including faster, cheaper, and more secure transactions. So, next time you need to send or receive payments on social media, consider using crypto!

Mr. Harsh Suresh Bharwani is the CEO and MD of Jetking Infotrain. He spearheads the international business, dedicated services, and employability initiatives at Jetking Infotrain. In the past decade, Harsh has trained over 40,000 students on success, confidence, social skills, leadership, business, health, and finance. With 17 years of solid experience behind him, he is a Certified NLP Trainer & Certified Business Coach.

editor@ifinancemag.com