The Emirate of Ajman has been a massive success story, in terms of achieving sustainable excellence and leadership in various fields, most notably the real estate sector
AI-enhanced soldiers: Future of warfare unveiled
Rising costs squeeze German businesses hard
Digital wallets: Banking goes Gen Z way
EDITOR’S NOTE
In September 2024, Sri Lanka held its Presidential Elections, resulting in Anura Kumara Dissanayake—a leftist anti-poverty advocate—becoming the new leader of the island nation. His objectives are clear: to alleviate the country’s €34 billion debt burden while tackling rising poverty levels and skyrocketing prices for essential goods. To determine whether he will succeed in these daunting challenges, one will have to wait and see.
When it comes to new governments confronting significant challenges, the Labour administration in the United Kingdom faces an urgent task: reforming the private water sector. Thames Water, the country's largest water supplier, is currently under regulatory scrutiny due to financial difficulties. The Keir Starmer government now faces a critical decision: should taxpayers support the renationalisation of this essential service, especially after it sidestepped a state rescue under the previous Conservative administration? International Finance will provide insights into this pressing issue.
For the first time, we’ll explore the practice of doxing, which involves exposing someone's identity online and stripping away their anonymity. This troubling phenomenon has resurfaced, with victims facing doxing, blackmail, and even threats of physical harm, often in exchange for cryptocurrency.
The cover story of our September-October 2024 edition focuses on the Emirate of Ajman, a remarkable success story in achieving sustainable excellence and leadership across various sectors, particularly in real estate. We had the opportunity to speak with His Highness Sheikh Abdul Aziz bin Humaid Al Nuaimi, Chairman of the Department of Land and Real Estate Regulation, the key agency driving sustainable progress in this dynamic region.
SEP - OCT 2024
VOLUME 24
ISSUE 42
editor@ifinancemag.com www.internationalfinance.com
The Emirate of Ajman has been a massive success story, in terms of achieving sustainable excellence and leadership in various fields, most notably the real estate sector
LABOUR GOVERNMENT'S WATER SECTOR CHALLENGE
In 1989, the UK government cancelled the previous water authorities' debt and gave money to the new ventures to facilitate privatisation
AI-ENHANCED SOLDIERS: FUTURE OF WARFARE UNVEILED
The future of warfare will be shaped by highly skilled soldiers who can make rapid decisions and gather crucial data
THE GROWING WORLD OF CROWDFUNDING
The early 2020 stock market crash showed how investors worldwide became more hesitant to invest in crowdfunding while inflation, which peaked at 70% in 2022, has moderated to 0.5%
Many doxing attempts revolve around Doxbin, a website that hosts over 176,000 public and private doxes
78 US polls countdown: Jobs report anxiety rises
The political establishment in Germany has put up a united front against UniCredit CEO Andrea Orcel's efforts to increase his stake in Commerzbank, the nation's second-largest lender. However, they are out of options to stop the ambitious Orcel, who seems intent on securing a game-changing agreement for the European banking industry. A German government source told Reuters that, legally, there was nothing they could do, but the government's assessment naturally carried weight. Chancellor Olaf Scholz denounced Orcel's most recent action as "an unfriendly attack" following UniCredit's announcement that it had increased its prospective stake in Commerzbank to 21%.
Dell 1130's tiny footprint measures only 360 by 390 mm. It doesn't exactly stand out thanks to its matte black paint job, but it should be able to withstand some wear and tear without developing many dings and scratches. The 1130 lacks a screen, just like a lot of lowcost laser printers. Instead, it just has two LED lights: a red one to alert you when it's in trouble and a green one to show when it's ready to print.
OpenAI is expanding ChatGPT's paying customer base to include Advanced Voice Mode (AVM). Customers in ChatGPT's Plus and Teams tiers will be the first to receive the audio feature, which makes the AI-powered tool more conversational. The access will be made available to Enterprise and Edu customers. Rather than the animated black dots that OpenAI displayed during its technology showcase in May, the feature is now represented by a blue animated sphere. When AVM is made available to users, a pop-up notification will appear in the ChatGPT app next to the voice icon.
SOL Properties has started several upscale projects with an expected gross development value (GDV) of AED 12 billion in the upcoming six months. The development plans are anticipated to support the general economic expansion of the Gulf nation and serve as an anchor for the UAE real estate market, reflecting new benchmarks for efficiency and luxury. SOL Properties, the premier real estate development arm of the Bhatia Group and a leading real estate developer in the United Arab Emirates, has purchased 4 million square feet of prime land for ultra-luxury and reasonably priced luxury projects.
According to recent research, as Nigeria struggles with rising inflation, a depreciating currency, and rising fuel prices, the country's citizens are increasingly resorting to "downtrading," or purchasing cheaper, frequently lowerquality goods and services.
Millions of households are being forced to adopt survival strategies in order to deal with the rising cost of living, according to analysts from the Financial Derivatives Company (FDC), based in Lagos.
The average consumer's daily purchases of goods and services are priced at a level that economists refer to as the cost of living, the report stated.
In August 2024, Nigeria's inflation rate jumped to 32.15%, significantly increasing the costs of essential items such as food, housing, and medical care. Many Nigerians are now faced with tough choices, such as skipping meals or forgoing medical treatment, due to the dramatic rise in fuel prices.
CHANGPENG ZHAO FORMER CEO OF BINANCE
Changpeng Zhao was sentenced to four months in prison for violating US anti-money laundering and sanctions laws, and although he stepped down as Binance's CEO, he still retains a 90% stake in the company
VLADIMIR OLEGOVICH POTANIN FORMER DY PM OF RUSSIA Nornickel has faced certain difficulties in implementing its Sulphur Programme, losing access to Western equipment and technology in the wake of the deteriorated geopolitical situation the cut to be included in the S&P 500
DAVID TEPPER FOUNDER OF APPALOOSA MANAGEMENT
Billionaire David Tepper sold 84% of Appaloosa's stake in Nvidia, favouring a historically cheap cyclical stock, while shifting his focus to a leading e-commerce company
The 350 MW of regulated concentrated solar power assets that Brookfield will keep and operate is not included in the deal
Prices for the dollar were given by two black market vendors in Tripoli at 7.95 dinars, down from 7.36—a decrease of roughly 8%
In an effort to expand its presence in Europe, Abu Dhabi's clean energy leader, Masdar, will purchase renewable power company Saeta Yield from Brookfield for an estimated enterprise value of $1.4 billion.
The deal comprises a portfolio of 745 megawatts (MW), mostly wind assets (538 MW in Spain, 144 MW in Portugal, and 63 MW in solar PV in Spain), as well as a 1.6 gigawatt (GW) development pipeline. The 350 MW of regulated concentrated solar power assets that Brookfield will keep and operate is not included in the deal.
Masdar has hired KPMG to handle its finances and taxes, Linklaters to handle legal matters, UL to handle technology, and Citigroup Global Markets Limited to handle transactions. Brookfield was advised by Santander and Societe Generale. Subject to customary approvals, the acquisition is anticipated to close by the end of 2024.
As the company aims to reach a global capacity of 100GW by 2030, the deal represents one of Spain and Portugal's largest renewable energy transactions and advances Masdar's
growth plans in the region.
In July 2024, Masdar consented to pay $887 million for a 49.99% share in 48 solar plants in Spain that Endesa SA owned and operated, totalling 2 gigawatts in capacity. Masdar and Iberdrola of Spain also completed the financial close for the 476 MW Baltic Eagle offshore wind project, which is situated in the Baltic Sea off the coast of Germany, in March 2024.
The state energy major ADNOC owns 24% of Masdar, while Mubadala holds 33% and the Abu Dhabi government-owned energy company TAQA owns 43%. Meanwhile, the 154 megawatt (MW) Cibuk 2 wind farm in Serbia has reached financial close, according to a statement by Masdar.
Signed in the presence of Masdar's CEO, Mohamed Jameel Al Ramahi, Taaleri's Group CEO, Peter Ramsay, and Taaleri Managing Director, Kai Rintala, the financial close agreement was made during a special ceremony held on the sidelines of RES Serbia 2024. The Cibuk 2 project has been granted non-recourse project financing by Erste (Erste Group and Erste Bank Serbia), a commercial lender.
Amid a crisis over central bank control that has severely curtailed oil output and exports, Libya's dinar currency is depreciating relative to the US dollar on the black market.
Prices for the dollar were given by two black market vendors in Tripoli at 7.95 dinars, down from 7.36, a decrease of roughly 8%. Four and a half dinars to the US dollar is the official exchange rate.
The depreciating dinar could be a sign that the prolonged conflict over the Central Bank of Libya's (CBL) leadership is beginning to affect the country's economy more broadly, potentially leading to further instability of the main oil producer.
Since the crisis has prevented the CBL from issuing letters of credit, a crucial instrument of monetary policy and exchange and export transactions in Libya for years, the dealers attributed the dinar's decline to a lack of dollars in the market.
A large part of Libya's economy depends on oil earnings. As part of the conflict over the Central Bank of Libya (CBL), factions in eastern Libya have blocked most of the oil
exports. This has led the state to declare force majeure on its oil fields and cut off its source of revenue.
According to the Government of National Unity, which is headquartered in western Libya's Tripoli, the CBL should start issuing credit letters again.
The crisis started when Mohammed alMenfi, the head of the Presidential Council and a Tripoli native, declared that he was taking over as governor of the central bank in place of the seasoned Sadiq al-Kabir, which caused opposition from eastern groups.
Legislative groups supporting the two sides are carrying out UN-backed talks to try to resolve the crisis, but they haven't revealed any notable developments as of yet. The CBL's access to foreign dollar markets seems to be restricted as long as the crisis persists.
"The exchange price is volatile because no dollars are entering the country, and oil (exports), the only source of revenue in the country, have also stopped. The dinar could drop further if the crisis drags on," a blackmarket dealer said.
Ephos claims that, due to its concentration on chips, its plant will be the first in the world dedicated to producing
Egypt will soon finalise a deal with two Western companies to explore gold in a 3,000 sq km area of its Eastern desert
Ephos wants to shatter the market for AI and quantum chips
Supporting artificial intelligence, quantum computing, and other high-end technologies requires faster and better processors. Theoretical physicist Andrea Rocchetto reportedly achieved a breakthrough in photonics research to enable this. With the help of $8.5 million in seed money, Ephos plans to establish a new glass-based quantum photonics research and manufacturing centre close to Milan. Other similar companies to Ephos include the $1 billion-plus Xanadu, Microsoft-backed Photonic, United States Department of Defence-backed Oxford spinout Orca, and more. However, Ephos claims that, due to its concentration on chips, its plant will be the first in the world dedicated to producing glass-based quantum photonic circuits.
Azizi completes sale of all residential units within Pearl
The Pearl, a luxury residential property in Dubai's growth corridor, Al Furjan, has all of its units sold, according to UAE-based Azizi Developments. The property offers easy access to all of the emirate's points of interest while remaining comfortably removed from the hustle and bustle of the city There are fourteen two-bedroom apartments, fifty-four one-bedroom apartments, and two studio apartments in this upscale complex. Purchases from the United Arab Emirates account for the largest share among the 40 nationalities that have bought units in Pearl, representing 25% of total sales. Investors from the United States, Italy, and Germany come in second with a combined percentage of 35%, while other GCC countries, including Saudi Arabia, account for 30% of the total.
Source: Statista
Egypt will soon sign a final agreement with two Western companies for the exploration of gold in a 3,000-square-kilometer strip of its Eastern desert. According to the Arabic-language daily Addustour, which cited official sources, the Oil and Mineral Resources Ministry is drafting the financial, commercial, and legal contract with Barrick Gold of Canada and Centamin Company, which is registered in Jersey and has offices in the UK, Egypt, and other countries, for final signature. In the Ministry's 2020–2021 exploration competition, the two companies were given contracts for gold exploration alongside other foreign businesses. However, the report stated that a final agreement for production sharing and other terms has not yet been signed.
The World Bank announced that Denmark has committed to give approximately $491.7 million, or 40% more than it did the previous time, to the bank's most recent replenishment of its fund for the world's poorest nations. By December 2024, the World Bank Group hopes to complete a record replenishment of funding for the International Development Association, surpassing the previous record of $93 billion in December 2021. However, the drive to raise more than $100 billion comes at a time when financial resources are scarce. A significant commitment to development and progress toward the goal, given the growing need for financing in low-income, debt-ridden countries, is demonstrated by Denmark's pledge of 3.3 billion kroner.
As things stand, South Africa will be hit harder than any other nation due to its heavy reliance on coal
IF CORRESPONDENT
South Africa's economic growth picked up in the second quarter of 2024, supported by higher consumer spending and power availability, but output declined in agriculture, mining and transport meant growth was slightly weaker than expected.
The country's GDP expanded 0.4% in the April-June quarter. Seven of the 10 sectors tracked by Statistics South Africa registered growth in the latest three-month period, as the economy benefited from an unbroken stretch without power cuts for the first time in years. The factory activity, however, slumped in August 2024, indicating that business conditions remain highly volatile in key sectors.
Eskom managed not to implement power cuts in more than 150 days, since late March, after a big improvement in the performance of its fleet of mainly coalfired power stations
International Finance will provide an in-depth analysis of the power cuts and their significant impacts on South Africa's labour market.
What's going on with SA's power sector?
Haroon Bhorat, Professor of Economics and Director of the Development Policy Research Unit, University of Cape Town and Timothy Kohler, Junior Research Fellow and PhD candidate, Development Policy Research Unit, School of Economics, University of Cape Town, recently analysed the labour market effects of
scheduled electricity outages in South Africa, referred to as load shedding.
They found that power outages have had negative effects on employment, as well as working hours and monthly earnings among those who remained employed. Effects on employment have been larger than effects on working hours or earnings, highlighting the threat that load shedding poses to job preservation and job creation efforts.
"These effects were not, however, the same for all firms. Workers in the energy-intensive manufacturing industry appear particularly vulnerable to losing their jobs. Also, small and large firms responded differently. Small firms tended to favour reducing working hours rather than introducing layoffs. Lastly, effects varied by load shedding intensity. Low levels of load shedding don’t affect the labour market strongly, but high levels did," the duo observed.
Load shedding, since 2007-end, has become a consequence of frequent breakdowns at the national utility, Eskom, due to a combination of poor longterm planning, a lack of financial resources, rampant state capture and corruption, and ageing coal-fired power stations.
The year 2023 became the worst one on record for both the utility and the country, as load shedding occurred for 289 days. Eskom, however, stated in August 2024 that South Africa could have no scheduled power cuts over the next seven months if the state-owned utility's unplanned electricity losses
stay at their current level.
Eskom managed not to implement power cuts in more than 150 days, since late March, after a big improvement in the performance of its fleet of mainly coal-fired power stations. Apart from increased electricity availability at Eskom coal stations, renewable energy projects operated by independent producers have also delivered more electricity over the past year. The utility’s CEO Dan Marokane said Eskom should be able to say early 2025 when "load-shedding at the chronic level that it is behind us," with an additional 2.5 gigawatts of generation capacity coming online in the next few months.
Despite the positives, worries remain Eskom's turnaround, to some extent, is praiseworthy. However, the damage already done is huge. In 2023, scheduled blackouts reached record levels and cost the already floundering economy about $90 billion and over 860,000 jobs, particularly hitting its mining and manufacturing sectors. Even at the micro level, South Africans have had to mould their lives around daily power cuts.
"Over the past five years, the worsening energy crisis has threatened the survival of businesses, including KFC, the popular American fast-food joint, and required costly fixes for companies that need a
steady supply of electricity. Grocery retailer Shoprite recently reported spending $28 million in six months on diesel generators to keep its lights and refrigerators on," Foreignpolicy.com reported.
To partially cover the shortfall in electrical output in 2023, Eskom ramped up its use of costly dieselpowered generators, further compromising its already unsustainable financial position. According to the utility, the unit cost of electricity from diesel generators is 14 times higher than the utility’s coal plants.
Eskom is now using its diesel-powered turbines to help meet surges in demand during the morning and evening peak periods. According to Eskom, it spent 1.1 billion South African rand, or roughly $60 million, on diesel in May 2024, a notable decline from the 3.1 billion rand spent in the same month in 2023.
Most notably, Eskom has brought several units of the Kusile power plant, located in the Mpumalanga province, back online. The utility was granted regulatory approval to temporarily operate those units without technologies that prevent toxic sulphur dioxide emissions. This has effectively increased Eskom’s available generating capacity by as much as 2,100 megawatts (MW), which is more than the average supply deficit throughout 2023.
In addition to Kusile, the rest of the utility’s coal fleet has remained in slightly better shape due to increased maintenance over the summer months (between October
2023 and March 2024) when electricity demand remains typically below average. Both of these have contributed to a meaningful decline in the number of unplanned outages so far in 2024.
"Meanwhile, a decrease in overall demand, owing to the weak economy and a boom in private renewable energy investments, has also helped. Eskom estimates that solar panels with a cumulative generating capacity of 5,500 MW have now been installed on the roofs of South Africa’s malls, office blocks, warehouses and households. Of that amount, roughly 2,100 MW was added in the last year alone— the vast majority of which is for self-use as the country doesn’t yet have a national feed-in policy," Foreignpolicy.com added.
James Mackay, chief executive of the Energy Council of South Africa, a business group that is working with the government to resolve the power crisis, termed the reprieve as "a genuine shift and result of 18 months to two years of hard work.”
He reflected renewed efforts to clamp down on corruption, a fresh Eskom leadership team that has political support, an improved culture at the utility, and a stronger maintenance programme. The private sector’s involvement, partly in the form of capacity building, is also making a difference.
While the country’s electrical grid remains vulnerable, power cuts will be less severe going forward, Mackay predicted. By 2029, South Africa eyes to have a liberalised electricity sector, by ending Eskom’s century-long monopoly. The Electricity Regulation Amendment Bill,
introduced in August 2024, will allow non-Eskom electricity trading for the first time and require the establishment of a fully competitive wholesale market within five years.
The government has suggested delaying coal plant shutdowns for the foreseeable future, despite the blockbuster $8.5 billion energy transition funding deal it agreed to at the COP26 climate conference in late 2021.
However, Eskom’s recent turnaround still provides an opportunity to accelerate South Africa’s green energy ambitions, to deal with the economic blow of the European Union’s impending carbon border
taxes. As things stand, South Africa will be hit harder than any other nation due to its heavy reliance on coal.
President Cyril Ramaphosa wants to attract private-sector investment worth $110 billion in the next five years as South Africa leans more on its BRICS partners, while also seeking to maintain close ties to the United States, the United Kingdom, and Europe.
To successfully court investors and reignite the moribund economy, South Africa needs to close the chapter on its load shedding nightmare.
Bhorat and Kohler found that
Total number of load shedding hours in South Africa from 2015 to 2023
Source: Statista
load shedding was significantly and negatively associated with employment, working hours and monthly earnings. On average, periods of load shedding were associated with a 2.6% lower chance of being employed, 1.3% fewer working hours per week (equal to about half an hour), and 1.7% lower real monthly earnings. These are large effects. The monthly earnings reductions were also driven by fewer working hours.
Low levels of load shedding (stages 1 and 2) did not have these associations. But they were markedly worse with higher levels (level 3 upwards). Stage 3 was associated with 1.9% lower employment, compared to 3.6% for stages 4 and 5 and almost 6% for stage 6.
Manufacturing, a relatively energy-intensive industry, was worst off by far. Here, load shedding was associated with nearly 17% lower manufacturing employment, about 6.5 times larger than the average of all industries. While most industries suffered from loss of working
hours due to power cuts, workers in large firms were vulnerable to all outcomes. In contrast, those in small firms were only vulnerable to reductions in working hours, but not to job losses or wage cuts.
"One might expect larger firms to be less vulnerable, as they would have more resources to pay for alternative energy sources. While that’s probably true, large firms are more likely to operate in energyintensive sectors. Our analysis suggests that small firms have tended to reduce working hours rather than laying off staff, an outcome which is not unique to South Africa," the duo commented.
The "Electricity Regulation Amendment Act" envisages a hybrid market model, where competition, along with various pricing models will emerge and shape the sector's health. New kinds of businesses will come up, such as traders in electricity, “prosumers” (consumers producing electricity for sale into the grid), market and system operators.
Load shedding has been devastating for South Africa’s economy, weakening the rand and contributing to inflation. South Africa’s central bank estimates that it has cut 2% from the country’s economic growth rate in 2024. In April, some 80% of public healthcare facilities said they were now affected by power cuts.
People have taken matters into their own hands. South Africa's installed rooftop solar PV capacity increased from 983MW in March 2022 to 4,412MW in June 2023, registering a 349% increase in a little over a year. Other government data shows that in Q1 2023, the country imported five times as many batteries as it did in 2022, as consumers looked for more ways to retain power during outages.
The South African Government is actively encouraging the uptake of new rooftop solar with targeted policy, including a new rebate scheme announced in February 2024, which allows individuals who install new panels onto their homes to claim rebates equal to 25% of the cost of the panels.
The latest research from Morgan Stanley suggests that the decline in South Africa’s coal generation, coupled with the boom in private power supplies, means electricity generated from the private sector will exceed output from Eskom by 2025. This can be considered a rare silver lining, as the Ramaphosa government gears up to end the staterun utility's market monopoly.
INDUSTRY FEATURE WATER PRIVATISATION
In 1989, the UK government cancelled the previous water authorities' long-term debt and gave money to the new ventures to facilitate privatisation
The new Labour government in the United Kingdom has an immediate task in its hands: reforming the private water sector. Why are we saying so? Britain's embattled Thames Water has been placed under closer regulatory scrutiny owing to serious financial difficulties.
The announcement, made by the industry watchdog Ofwat, comes at a time when the Keir Starmer government needs to decide whether taxpayers should renationalise Britain's biggest water supplier after it avoided a state rescue under the previous Conservative administration.
In a simultaneous development, Ofwat published a five-year financing plan for all English and Welsh water firms born out of the privatisation of the industry in 1989. The regulator has now proposed that customers would face an average increase of 21% or £19 ($25) per year until 2030. In recent times, the sector has also come under fierce criticism over failures to plug leaks and raw sewage discharges on beaches and in rivers.
In the sweltering summer of 1995, Yorkshire Water's managing director, Trevor Newton, gained notoriety for motivating consumers to use less of the company's product by saying, "I personally have not had a bath or shower for three months."
Newton invited the media to watch him wash with a flannel and bowl following a round of jokes about "the filthy rich,” because megabucks paid water company executives was also a big story back then. He had been visiting his parents and in-laws' houses for soaks, it was later discovered, occasionally leaving Yorkshire.
The episode infuriated the public due to the discrepancy between investor rewards and the quality of service being offered by a privatised utility. Bradford was in danger of
going bankrupt, despite Yorkshire having just distributed a £50 million dividend to shareholders.
The company had to rely on tanker transportation through the Dales to move water since the new grid was running behind schedule. The story also highlighted the water infrastructure's poor condition, which was cited as the primary justification for privatisation. Because of pollution in its rivers and on its beaches, the UK was once referred to as the "dirty man of Europe."
The industry's expenditure on replacing its sewage treatment plants and pipes had decreased between the mid-1970s and the mid-1980s, and the UK was now required to adhere to new pollution regulations set by the European Community.
The same infrastructure needs to be upgraded significantly more than thirty years later, and the costs will increase dramatically. The ten water and wastewater companies in England and Wales have paid out £78 billion in dividends since 1989, but they have also accrued £60 billion in debt. The industry has come to be associated with poor management, corporate greed, and pollution.
The trade-off between price hikes, investment and the environment will test the country's new Labour government. Water companies have routinely released sewage into rivers and seas, which has made Britain's waters increasingly dirty, putting the regulator, Ofwat, under intense pressure to act.
Thames had asked for a 44% increase in bills over the period, excluding inflation, while other providers sought varying amounts, from Southern Water's 73% hike to Severn Trent's 36% rise and United Utilities' 25% rise.
The companies say the bill hikes are Gross value added of the water supply, sewerage, and waste management sector in the United Kingdom from 2014 to 2023 (In Million GBP)
needed to upgrade ageing pipe networks and help accommodate a growing British population, and say more frequent droughts and storms have helped cause sewage spills. However, critics argue that the companies have under-invested for decades while taking billions of pounds in dividends for shareholders and paying large bonuses to executives.
While the government might want the Ofwat to take a tough line on the water companies, it also needs investors onside as Starmer seeks tens of billions of pounds of private investment to upgrade infrastructure and revive Britain's economic growth.
In 2019, Ofwat agreed to a plan for average water bills to fall by 12% before inflation over the five years. Since then, inflation and interest rates have jumped, making price rises in the next period inevitable to allow investors to make returns.
A number of major international funds have already sold out of Thames bonds in recent months, after its parent company Kemble Water defaulted in April 2024 amid a standoff with shareholders over providing more equity.
In 1989, the UK government cancelled all of the previous water authorities' longterm debt and gave money as a "green dowry" to the newly formed companies to facilitate privatisation. Even after selling the businesses for a total of £7.6 billion, these exercises meant that the net proceeds to the Treasury were almost zero.
However, investors in the stock market listings saw their typical fast profit: within a month, shares of the ten companies increased by an average of 20%. Half of the small investors were persuaded to buy, and after a year
Source: Statista
they took their profits and sold their shares. However, additional funding did materialise. In the four years following the sellout, investment almost doubled to £6 billion annually from £3 billion. Supporters of privatisation might counter that underperformers might be forced to improve by the discipline of a stock market listing combined with a scolding from an impartial regulator.
Following the chaos in Yorkshire in 1995, Ofwat dispatched investigators, which resulted in a management shakeup. By the end of the tenth year, the company's performance was the best in its class. Byatt also suggested that Yorkshire give customers a return of £40 million in the form of price reductions, and "it concurred after some discussion."
Nevertheless, it was clear that the businesses had been acquired for far too little money. It was assumed at the time of sale that the companies would require quick access to funds to finance the increase in investment, so during
the first five years, the average customer bill increased by a third. First, it was believed that debt levels could only account for up to 35% of the assets' value, or the leverage ratio, also known as gearing. However, monopoly companies with captive clientele were able to obtain much larger loans from the bond market.
As odd as it may seem today, the regulator also wanted to see an increase in financial gearing. This was justified by the idea that customers would receive lower bills as a result of reduced funding costs. The initial five-year price review by Ofwat in 1994 prevented the anticipated increases in bills during privatisation, while the second one, conducted in 1999, resulted in an average 12% reduction in bills.
The companies were happy to play the debt game. A few people became enamoured with diversification during the boom years of the 1990s, thanks to cheap capital and rising share prices.
Water networks in Chile and Indonesia were awarded to Thames. Welsh Water lost a lot of money by acquiring hotels and country clubs. A building company was acquired by Anglian Water in 2000.
In 1995, the government cancelled its golden shares in ten companies. France's Lyonnaise des Eaux acquired Northumbrian Water and Highland Power acquired Southern Water. Wessex Water was purchased by US company Enron before its spectacular 2001 collapse.
Although water companies were prohibited from purchasing one another, some embraced the vogue of "multi utilities" and acquired local electricity providers, which were eventually privatised in 1990. Welsh Water rebranded as Hyder after taking over South Wales Electricity, and North West Water acquired its local supplier to become United Utilities.
A windfall tax imposed by the incoming Labour government in 1997 on the privatised utilities, including water, did not slow down any of this activity. For instance, Thames was sold for £922 million at privatisation, but in July 1997, the stock market valued it at £2.09 billion; similarly, Severn Trent's value increased from £849 million to £3 billion.
The privatised water sector had undergone radical transformation by the end of the first ten years. The mixed effects of water privatisation were discussed in 1999 in this newspaper. One could argue that an excessive portion of the additional earnings had been "dissipated in unwarranted mega-increases in boardroom pay, excess dividends, and ill-advised diversifications."
On the other hand, "We now have much-improved drinking water because a lot of money was invested in improving the infrastructure."
Negotiations continued unabated. In 2000, the German utility RWE acquired Thames for £4.3 billion in cash and took on £2.5 billion in debt. The 240p per share that all ten water companies were sold for in 1989 was five times higher than the takeover price of £12.15 per share. UK utilities continued to attract foreign capital, which was viewed as a good thing in the spirit of the times. New Labour had no intention of tampering with the model.
A significant turning point was what came next. Following a string of horrific train disasters that claimed many lives in the early 2000s, Railtrack was placed into receivership and transformed into Network Rail. The majority of the nation's nuclear plants are owned by British Energy, which required a bailout.
Both incidents sparked political panic, with the City trying to fuel worries that
foreign investment would dry up if owners thought government action had short-changed them (the baseless accusation at Railtrack). Meanwhile, the water industry continued to vehemently protest that it had insufficient incentives to invest due to the alleged harshness of Ofwat's 1999 price review.
Two decisions were made as a result, which in retrospect accelerated financial risk-taking. The water companies' operating licences were originally set to expire in 2014, but were extended by Ofwat in 2002. They were replaced with 25-year rolling licenses.
"Companies and their investors will be able to plan more securely with the longer notice period," stated Philip Fletcher, the late head of Ofwat, while interacting with the Guardian.
That was the plan, but the change also shielded underachievers from the possibility of being replaced in the
medium run.
Then, in 2004, bills increased by 20% in what was widely perceived as a giveaway to the companies during the next five-year price review. Investors found water to be even more alluring.
After that, takeover activity accelerated dramatically. Investment banks, infrastructure funds, and pension funds were the new purchasers, not other utilities. The year 2006 saw Macquarie's disastrous £8 billion purchase of Thames from RWE. The acquisition of Anglian's parent company by a consortium of Australian and Canadian pension funds also occurred. After a battle with US investment bank Goldman Sachs, Southern Water was acquired by a group that included JP Morgan Asset Management in 2007. A group led by Citigroup and HSBC acquired Yorkshire Water's owner, Kelda Group.
This is the time frame that former
regulators have identified as when the game changed.
"Private equity infrastructure capital showed the hard face of capitalism, involving leveraged buyouts and shortterm policies, namely high borrowing and high dividends," Byatt wrote in his book “A Regulator's Sign Off: Changing the Taps in Britain.”
This earned it widespread criticism for its lack of transparency and financial engineering.
Soon after leaving the regulator, Jonathan Cox, who had held leadership positions at Yorkshire and Anglian before serving as chair of Ofwat from 2012 to 2022, testified before a House of Lords committee that "investment banks started to realise in the 2000s that there was an opportunity to acquire the water company assets and to put significantly more leverage on to those capital structures. At that time, I wasn't at
Ofwat. That strategy has never appealed to me, and I think it's terrible that it took place."
He contended that investment banks produced "the predisposition of thinking of water companies as financial assets" and skewed incentives.
Thames launched a "whole business securitisation" in 2007, shortly after Macquarie acquired it. The fundraising effort was dubbed "banal" despite its aggressive nature. An eight-layered corporate structure, including a subsidiary in the Cayman Islands, was used to package a once sombre business that dealt in pipes and sewage treatment works. This structure allowed debt to be piled on top of debt, much like the layers in a wedding cake.
Leverage ratios of 50% or 60% suddenly rose to 80% at certain companies that were taken off the stock market. In 2018, Thames explained how its complex corporate structure allowed it to borrow more money with the ratings agencies' approval: "An investment grade credit rating allows for a higher level of leverage."
Macquarie has justified its Thames business securitisation strategy by stating that it was "very common" at the time.
Martin Bradley, the head of infrastructure at the company, told Infrastructure Investor in 2023 that "it was a UK water utility product that was invented, advised, and constructed by UK banks."
He cited annual gross returns of 12–13%, which he claimed were consistent with regulatory guidance during the 2005–2009 periods, as justification for investors in Macquarie funds that profited from a staggered sale of Thames in 2017.
Additionally, the Australian bank
has defended its overall management of Thames, stating that the business “undertook a record level of investment despite the returns allowed by Ofwat being reduced."
But the industry's mid-2000s debt binge still has an impact today. In 2021, Southern Water, which had implemented a complete business securitisation in 2003, needed to be saved from what appears to be a miniaturised version of the financial crisis currently engulfing Thames.
Macquarie, which controversially provided £1 billion in fresh equity to recapitalise the company, was the buyer at Southern. Ofwat realised the risks associated with excessive borrowing only much later. Only in 2023, did the company get the authority to halt dividend payments if doing so would jeopardise its stability.
Debt has also been used for its original purpose of accelerating investment,
complementing the portion funded by bills. For example, is it a coincidence that the two companies that have been fined the most over the years, Thames and Southern, also have the most aggressive financing structures? The total investment made after privatisation is £190 billion. However, it is indisputable that excessive use of financial leverage is done to maximise profits for shareholders.
"For most companies, debt has been a prudent low-cost source of finance with low interest rates fixed for the long-term. However, some companies borrowed too much, most obviously Thames Water. The risk for this – and for correcting this – belongs to the company and its shareholders," current Ofwat chief executive, David Black, addressed the point in 2023 when Thames’ financial crisis became acute.
The Emirate of Ajman has been a massive success story, in terms of achieving sustainable excellence and leadership in various fields, most notably the real estate sector.
As
of August 2024, Ajman's real estate market has continued its upward trend, recording 1468 property transactions in July with a total value of over AED2 billion, a growth of 42.85% year-on-year
His Highness Sheikh Abdulaziz bin Humaid Al Nuaimi, the Chairman of the Department of Land and Real Estate Regulation, while interacting with International Finance , noted the role of the wise leadership that stands behind this exceptional renaissance thanks to its unlimited support and comprehensive proactive vision that aims to develop all strategic and vital sectors and enhance the global position of the Emirate of Ajman as a prosperous modern city and a strategic hub for business and investment.
He explained that the Department of Land and Real Estate Regulation is keen to build its vision and plans according to innovative methods and visions based on the needs of its clients and addressing all their requirements, in addition to enhancing the culture of creativity and innovation and upgrading the government work system to
keep pace with the rapid pace of development witnessed by the Emirate of Ajman, especially in the real estate sector, as it is a basic driver of the wheel of economic growth.
The Chairman of the Department of Lands and Real Estate Regulation told International Finance that the Emirate of Ajman possesses all the global components and specifications that make it a fertile environment for real estate investment and a safe destination for investors of all categories and needs, due to the promising opportunities and exceptional competitive facilities it provides.
He also stressed that the strategic objectives of the Department of Lands and Real Estate Regulation revolve around improving the investment environment of the region’s property
sector and contributing to economic growth by enhancing competitiveness in property registration. The Department’s goal is simple: to empower the real estate sector’s competencies as an important element, so that it can emerge as an effective partner in anticipating the region’s economic future and draw the features of the investment map as per that.
“The Department is doubling its efforts to highlight the tremendous investment components and capabilities that the Emirate possesses, especially in the real estate sector, and promoting promising projects and diverse investment opportunities that Ajman provides to investors,”
HH Sheikh Abdulaziz bin Humaid Al Nuaimi told the International Finance
As of August 2024, Ajman's real estate market has continued its upward trend, recording 1468
property transactions in July with a total value of over AED2 billion, a growth of 42.85% year-on-year. The Emirate is witnessing a strong momentum and a remarkable increase in the number and volume of transactions given the diversity of investment opportunities and the attractiveness of the business environment. As per His Excellency Eng. Omar bin Omair Al Muhairi, Director-General of Ajman's Department of Land and Real Estate Regulation, the volume of transactions during July reached AED1.34 billion, with Al Rashidiya 1 neighbourhood recording the highest sales value of AED80 million.
As per the department, it recorded 280 mortgage transactions totalling AED489 million, with the highest mortgage value of AED75 million recorded in the Ajman Industrial 2 area. The Al Helio 2 area topped the list of most traded neighbourhoods,
While talking about Ajman’s real estate success story, HH Sheikh Abdulaziz bin
Humaid Al Nuaimi cited the facilities and success factors provided by the emirate to investors and their projects, and its flexible legislative environment that is investment-friendly
followed by Al Zaheya and Al Yasmeen, while Emirates City topped the list of most traded major projects, ahead of Ajman One and City Towers.
HH Sheikh Abdulaziz bin Humaid Al Nuaimi informed the business publication that the Emirate has recorded major successes in various sectors, particularly real estate which is keeping pace with the comprehensive renaissance witnessed by the Emirate thanks to prudent insights of leaders like HH Humaid bin Rashid Al Nuaimi, Member of the Supreme Council, Ruler of Ajman, and HH Sheikh Ammar bin Humaid Al Nuaimi, Crown Prince of Ajman, Director of Executive Council. The strategic brilliance displayed by these personalities is paving an excellent future for the Emirate, apart from consolidating the region’s position as an attractive destination for real estate investment.
While talking about Ajman’s real estate success story, HH Sheikh Abdulaziz bin Humaid Al Nuaimi cited the facilities and success factors provided by the emirate to investors and their projects, and its flexible legislative environment that is investmentfriendly. Then there are elements like ease of registration procedures and swiftness completion of transactions, in addition to the advanced modern infrastructures provided by the Emirate.
For example, the Department of Land and Real Estate Regulation has begun a comprehensive building classification project across the Emirate from July 2024. This three-month initiative is assessing the compliance of buildings and real estate facilities with international standards and regulations.
A team of qualified professionals is conducting on-site inspections and assessments as part of the classification process. The department will develop an electronic programme to publish the findings transparently, which will further lay the groundwork for classifying the buildings according to international standards and specifications.
Given the critical role the real estate sector is playing in the Emirate’s economy, with a significant increase in commercial property investments in 2024, the requirement of the classification becomes crucial to uphold the quality of services, apart from assisting investors in making informed decisions when it comes to renting or purchasing properties in Ajman.
In May 2024, the Department of Land and Real Estate Regulation in Ajman completed 169 real estate valuation processes totalling over AED 729.5 million. Director of Real Estate Registration Ahmed Khalfan Al Shamsi highlighted that the valuation encompassed commercial, residential, industrial, and agricultural properties, with commercial properties leading the way at AED 437.2 million, marking a 197% increase from April 2024. Industrial properties followed with a total value of AED 148.45 million.
“The Emirate’s Real Estate Growth reflects the confidence of investors in Ajman as a leading investment destination, enhances the solidity of the Real Estate sector in it, and reflects the success of the strategy of the Land Department and Real Estate Regulation aiming at providing an integrated and distinguished business environment for investors of all categories,” HH Sheikh Abdulaziz bin Humaid Al Nuaimi commented.
He explained that the Ajman Real Estate Investment Exhibition which was held last February, contributed directly and positively to stimulating the performance of the real estate market and high results of the first half of 2024, pointing out that the exhibition witnessed the conclusion of 336 property transactions with a total value of AED 195.8 Million, which reflects the confidence of investors and the attractiveness of the sector given the huge investment potential and potential possessed by the Emirate, its promising projects, the various opportunities it offers to
investors, as well as Ajman’s distinguished and central location between the Emirates, and last but not the least, its flexible laws and legislations which contributes towards attracting investment, in addition to the diversity of models offered in the property market. The residential and commercial projects also provide easy financial access for foreigners to purchase and own properties by up to 100%.
While praising the efforts of his department, HH Sheikh Abdulaziz bin Humaid Al Nuaimi stressed the need to continue working and concert efforts of everyone in order to preserve the gains achieved so far and improve the performance level to ensure sustainable excellence within the framework of an innovative and integrated work system centred on customer satisfaction and happiness.
He also appreciated the department for obtaining a five-star rating according to the international star system for service classification and winning the Ajman Award for Government Excellence in the category of the best comprehensive
experience for government services, stating, “This achievement embodies the vision and ambition of the wise leadership keen to achieve leadership and excellence in various fields and promote and consolidate the culture of creativity and innovation to foresee the future and invest in building the human being for a more prosperous and stable tomorrow.”
HH Sheikh Abdulaziz bin Humaid Al Nuaimi also pointed out the importance of adopting innovation to achieve breakthroughs supporting the department’s endeavours towards achieving sustainable excellence, and enhancing the levels of satisfaction and happiness of customers, with the need to adopt modern methods in dealing with customers’ feedback, hearing their opinions, and ensuring their effective involvement in improving the level of services, and building a strong and integrated relationship, in line with the Department’s objectives and plans.
On supporting young Emirati competencies and integrating them into the Real Estate field, he
HH Sheikh Abdulaziz bin Humaid Al Nuaimi further stressed that the Land Department and Real Estate Regulation has harnessed all means and ingredients for success for most of its ambitious programmes and purposeful initiatives, which witnessed a turnout that exceeded expectations
said, “As much as we are interested and keen to support investors and entrepreneurs, we attach utmost importance to the human element and believe in the need to invest in our young energies and empower them to be an effective element in our future development plans.”
HH Sheikh Abdulaziz bin Humaid Al Nuaimi also spoke highly about the “National Broker” initiative, which is eyeing to enhance the performance of the Ajman real estate market, apart from upgrading the brokerage profession by adopting the best practices in this vital field, which the department attaches utmost importance to and strives to develop according to a well-studied
scientific methodology that has been carefully developed to ensure high-quality results and outputs that reflect the department’s orientation towards empowering and qualifying Emirati youth, developing their skills and enhancing their culture related to real estate trading laws and procedures followed to practice propertyrelated brokerage activities and supporting these individuals as entrepreneurs and investors, as they have the potential to help UAE in achieving its future economic goals.
HH Sheikh Abdulaziz bin Humaid Al Nuaimi further stressed that the Land Department and Real Estate Regulation has harnessed all means and ingredients for success for most of its ambitious programmes and purposeful initiatives, which witnessed a turnout that exceeded expectations due to the number of registration applications received, as well as facilitating positive interaction by participants from different community and age groups.
He also pointed out that Emirati women also benefited from this initiative and had the opportunity to enter the real estate market and prove their efficiency and ability to contribute to the renaissance of this sector, stressing that the wise leadership succeeded in providing a supportive and encouraging environment for
women and made them an active element in the process of renaissance and development and was keen to empower them and encourage them to shine and succeed in various fields and disciplines.
While stating that senior citizens received exceptional attention and treatment from the department for their special and important position in the UAE society, HH Sheikh Abdulaziz bin Humaid Al Nuaimi noted that the achievements and successes registered so far will not be completed without ensuring the satisfaction and happiness of all customer segments, in line with the directives of the wise leadership of providing all the care and facilities they deserve, providing all facilities and simplifying the procedures for obtaining government services to ensure a better experience and enhance their comfort and happiness, and especially their quality of life.
He continued, “The initiative “Natanalak” is one of the most important initiatives launched by the Department, as it comes within an integrated package of services directed to the customers of the Department of various segments and the diversity of their requirements, the initiative has received a welcome and approval among senior citizens, which we saw during field tours and visits to those concerned at their residence, where these visits were a favourable opportunity to meet them and get to know their needs closely and write down their ideas and visions about the future of services, mechanisms and ways they prefer to complete their transactions.”
The chairman also expressed his happiness that the department obtained the classification of leadership in the field of maturity of institutional resilience, according to the assessment of the International Organisation for Institutional Resilience “ICOR,” dubbing it as the fruit of the directives issued by the wise leadership, while emphasising the excellence of the department and its continuation of the growth march in various aspects, especially strategic leadership, while setting the ability to respond and adapting to changes as a crucial success recipe.
The department has succeeded so far in applying the thumb rules of the global maturity model for institutional resilience, as it was able to strengthen its organisational infrastructure and proved its full readiness to manage risks effectively
and innovatively, stressing the department’s keenness to develop its operations and raise the efficiency of institutional performance under the highest international standards and in line with the accelerated pace of the real estate sector in the Emirate of Ajman.
Meanwhile, the Ajman administration has contracted the consultancy JLL to come up with a strategy to help make the emirate’s property market a highly competitive one. JLL, which has a longstanding presence in the UAE, will also help with creating new ways by which the region's real estate can be both operationally successful and sustainable.
This is part of the emirate’s broader push to bring in more investments into its economy, particularly on the real estate side.
“The results of the study will contribute to drawing a roadmap for the future of Ajman’s real estate sector,” said a statement from the government's Department of Economic Development.
"JLL’s research, expected to be completed by the end of the first half of this year, will provide a diagnostic vision of Ajman’s capabilities, and result in setting a development road map for the future of this pivotal sector," said Saeed Humood Saeed, Director of the Ajman Competitiveness Office at the Department of Economic Development.
The JLL plan will also focus on the chances for Ajman to top its hospitality sector by way of new investments.
"We are committed to developing the potential of the tourism sector by enhancing competitiveness and creating innovative investment opportunities," said Mahmoud Khalil Al Hashimi, Director-General of Ajman Tourism Development Department, as he continued, "We believe this partnership (with JLL) will contribute significantly to building a system that enhances the attractiveness of Ajman as a distinguished investment destination on the international scene."
While companies may offer pay increases, as seen with Boeing's offer of a 25% wage hike and a $3,000 signing bonus, workers are increasingly rejecting these deals
Wage disagreements between companies and workers are becoming rampant in the 21st century engineering and manufacturing sectors, presenting itself as a new roadblock for the global economy. The growing chasm between workers and management on wage agreements threatens not only company productivity but also economic stability.
In Germany, where manufacturing plays a critical role in the national economy, wage deals are about more than just pay. Job security, worker protection, and longterm benefits are equally important
In recent years, major incidents, such as Boeing employees rejecting a proposed wage increase and Volkswagen's upcoming negotiations with Germany's powerful IG Metall union have highlighted the complexity of the issue. Employees are increasingly rejecting offers that appear generous on the surface but fall short of addressing their core concerns, particularly around inflation-adjusted pay and job security.
International Finance will explore why wage deals are becoming a contentious point between manufacturing giants and their worker unions, focusing on inflation, cost of living, economic pressures, labour market shifts, and evolving worker expectations.
Historically, wage negotiations in industries like engineering and manufacturing have been fairly straightforward. Unions and companies engaged
in collective bargaining agree on pay scales, benefits, and working conditions. This model worked relatively well during periods of economic stability when inflation rates were low, and worker expectations were largely centred around stable jobs with fair wages.
In this context, unions played a vital role in ensuring that workers received a fair share of the profits generated by large companies. Strikes and wage disputes did occur, but they were often resolved through negotiation, compromise, and long-term agreements that benefited both parties.
Today, the economic environment is far more volatile, and one of the major catalysts for wage disputes is inflation. As inflation rates surge across the globe, particularly in developed countries, workers are feeling the squeeze. The rising cost of living, including housing, healthcare, and education, has led to widespread dissatisfaction with stagnant wages.
While companies may offer pay increases, as seen with Boeing's offer of a 25% wage hike and a $3,000 signing bonus, workers are increasingly rejecting these deals. Boeing employees, for instance, voted down the offer because it failed to address their concerns about inflation-adjusted pay. Workers argued that even with the proposed raise, their purchasing power would continue to erode due to rising costs, making the offer inadequate for maintaining their standard of living.
This is not a problem unique to Boeing. Across industries, particularly in manufacturing and engi-
neering, wage increases are being overshadowed by the sharp rise in living costs. Workers are pushing for deals that not only promise higher nominal wages but also account for real inflation rates, ensuring that they can maintain or improve their standard of living over time.
Now talking about the Boeing crisis, over 30,000 members of the International Association of Machinists and Aerospace Workers (IAM), who produce Boeing's top-selling 737 MAX and other jets in Seattle and Portland, overwhelmingly voted down a new contract, before heading for the strike.
As per the Union leader Jon Holden, who initially endorsed the now-rejected wage deal, the priorities for his members were a bigger wage increase and the restoration of a defined-benefit pension scheme that the IAM lost during a previous round of negotiations with Boeing a decade ago.
The initial deal included a 25% pay rise spread over four years and a commitment by Boeing to build its next commercial jet in the Seattle region, if the plane programme was launched within four years of the contract.
Union members, however, vented their frustration at years of stagnant wages and rising living costs, as they stated that the removal of a performance bonus in the Boeing offer would erode half of the headline salary increase.
The situation at German automaker Volkswagen, on the other hand, offers another perspective on the growing tension between employees and companies
over wages and job security. In September 2024, Volkswagen and IG Metall, Germany's most powerful labour union, are set to begin negotiations for a new labour agreement affecting six of the carmaker's German plants. This comes after Volkswagen cancelled a job security scheme that had been in place for years, sparking concern and unrest among workers.
In Germany, where manufacturing plays a critical role in the national economy, wage deals are about more than just pay. Job security, worker protection, and long-term benefits are equally important. When Volkswagen scrapped the job security scheme, it sent a signal to workers that their futures might not be as stable as they had once thought. As a result, wages are now just one part of a broader negotiation that includes demands for reassurances about the longevity of jobs in a rapidly changing automotive industry.
IG Metall, which has a reputation for tough negotiations, will likely push for both wage increases and the reinstatement of job security measures. This situation exemplifies how modern wage negotiations are no longer just about pay but are deeply intertwined with workers' concerns about automation, outsourcing, and the future of their industries.
Why wage deals are becoming contentious?
One of the primary reasons is the mismatch between nominal wage increases and real wages when
adjusted for inflation. As inflation continues to climb, the cost of essentials like housing, food, and transportation rises, effectively reducing the value of any wage increase that doesn't keep pace.
Companies, on the other hand, face the challenge of balancing wage increases with their need to remain competitive in a global marketplace. Manufacturing giants are particularly vulnerable to rising labour costs, which can eat into profit margins and reduce their ability to invest in innovation or new technologies. The result is a standoff where workers demand inflationadjusted pay increases, while companies are wary of agreeing to terms that could hurt their bottom line.
Global competition has put immense pressure on companies to keep costs low, including labour costs.
Manufacturing and engineering firms are constantly looking for ways to streamline operations, invest in automation, and cut unnecessary expenses. This pressure often leads companies to resist significant wage increases, even during times of rising inflation.
Take Boeing, for example. The aerospace giant operates in an industry with razor-thin margins and fierce competition from rivals like Airbus. In this environment, agreeing to large wage increases can threaten a company's ability to compete on price, especially when facing cost increases in other areas such as raw materials and energy. Boeing's management likely viewed the 25% wage hike as a generous offer, but from the employees' perspective, it wasn't enough to compensate for the rising cost of living in areas like Seattle.
Similarly, Volkswagen faces intense competition not only from traditional automakers but also from electric vehicle (EV) manufacturers like Tesla. To remain competitive in the fast-evolving auto industry, Volkswagen needs to control costs while investing heavily in EV technology. This creates a tension between the need to increase wages to keep workers satisfied and the need to maintain profitability.
In addition to inflation-adjusted pay, job security is a growing concern for workers in sectors like manufacturing and engineering. Automation, artificial intelligence, and the offshoring of jobs to lower-cost countries are threats to traditional manufacturing jobs.
Workers want guarantees that their jobs will not be automated away or outsourced to countries where labour is cheaper.
At Volkswagen, the cancellation of the job security scheme has made this issue even more acute. Workers are looking for long-term assurances that they won't be replaced by machines or cheaper labour abroad. For unions like IG Metall, job security has become as important as wage increases in negotiations.
The situation at Volkswagen underscores a broader trend: workers are no longer satisfied with just wage increases. They want comprehensive deals that address their concerns about the future of their jobs in a rapidly changing global economy. Companies, meanwhile, are reluctant to offer such guarantees as they seek to remain agile and responsive to technological and market shifts.
The generational shift in the workforce is also contributing to the increasing friction over wage deals. Younger generations have different expectations from their employers compared to previous generations. While fair pay remains a priority, younger workers are more likely to demand work-life balance, meaningful work, flexibility, and strong benefits packages.
In many cases, younger workers are also less loyal to their employers, which gives them more leverage in wage negotiations. They are more willing to leave a job if they feel that pay and benefits are not meeting their expectations. This attitude forces companies to rethink their compensation strategies, as losing skilled workers can result in lost productivity and increased hiring and training costs.
Number of working days lost due to Labour disputes in the United Kingdom from August 2023 to July 2024 (In 1,000s)
Source: Statista
The broader economic impact
Unresolved wage disputes often lead to strikes or slowdowns, which can significantly impact productivity. In industries like manufacturing, where just-in-time production models are common, small disruptions can lead to cascading delays throughout the supply chain. For instance, a strike at a Boeing plant could delay the production of aircraft, leading to missed deadlines and potential financial penalties.
Manufacturing sectors are highly interconnected, and a wage dispute in one company can have knock-on effects throughout the supply chain. Delayed production at one plant can lead to shortages of parts for other manufacturers, causing delays and financial losses across the board.
When companies eventually agree to wage increases, they often pass on the increased labour costs to consumers in the form of higher prices. This can contribute to inflation, which further exacerbates the wage problem. If wages increase but inflation continues to rise, workers may find themselves in a cycle where their real wages remain stagnant, leading to even more disputes.
Widespread wage disputes can create uncertainty in the broader economy, particularly if they lead to prolonged strikes or disruptions.
Investors may become wary of putting money into companies or industries plagued by labour unrest, leading to reduced capital investment and slower economic growth.
As inflation continues to rise, job security becomes more precarious, and global competition intensifies, wage disputes are likely to become an even more significant challenge for the global economy. Companies will need to find ways to balance the need for competitive wages with the demands of their workers for inflation-adjusted pay, job security, and fair working conditions.
In the future, we may see more innovative approaches to wage negotiations, including the incorporation of flexible benefits, long-term job security agreements, and creative ways of sharing profits between companies and workers. Ultimately, both companies and workers will need to adapt to the new realities of the 21st-century economy if they are to avoid the kinds of disruptive disputes we are currently witnessing in the manufacturing and engineering sectors.
An essential component of the shift to a lowercarbon economy is the transportation sector
The freight rail sector in North America was completely transformed in April 2023 with the establishment of Canadian Pacific Kansas City Limited (CPKC).
The CPKC, the only single-line transcontinental railway connecting the United States, Canada, and Mexico, has its global headquarters located in Calgary, Alberta, Canada. It provides shippers with unmatched rail service, access to major North American ports, and global markets.
CPKC is a significant employer, neighbour, and supplier of transportation services to communities all over the continent, with 20,000 route miles under its belt and 20,000 railroad workers. The merger of Canadian Pacific (CP) and Kansas City Southern (KCS), two historic railroads, to form CPKC has gained momentum over time. This merger has increased supply chain competition and added value for customers while upholding the integration of operations, service, and safety.
In addition, this strategic union gave a rare chance to incorporate ethical business practices as the company develops for the future. Since the establishment of CPKC, early-stage integration initiatives involving workforce, systems, and governance have been the cornerstone of success. The company's ability to maintain dedication to safety, facilitate smooth customer service delivery, and promote sustainable operations has all been aided by these calculated actions.
The company concluded 2023 with a great performance in a year that saw a lot of business change. After CP led the industry in this metric for 17 years running, CPKC now leads the Class I railroad industry with the lowest frequency of train accidents reported to the Federal Railroad Administration.
The company continued to invest in cutting-edge low-carbon technology and set a new climate target for the combined locomotive operations of CPKC. Through significant collaborations and worthwhile community investment projects, the company strengthened ties to the surrounding communities. As CPKC integrated, the company also reorganised the Diversity and Inclusion Council to guide the company's efforts in this regard.
These significant actions distinctly show ongoing dedication to being a sustainability leader to workers, clients, suppliers, and the communities in which companies operate. Sustainability continues to be at the forefront of the company's integration journey as it enters its second year.
It's a big job to combine two railroads that run in three different countries with a diverse workforce of about 20,000 railroaders. Success at CPKC is largely attributed to its people and culture. Fostering a culture that is unified in the pursuit of safety excellence, bestin-class customer service, and ethical business practices has been one of the company's main integration goals.
Ensuring safety is a fundamental aspect of a company's operations, and upholding strict safety regulations is essential amidst the intricate transformations occurring within. Its premier safety initiative, Home
Safe, was implemented throughout operational regions in Mexico and the Southern US in 2023.
The company strives to safeguard the environment, communities, railroad workers, and customers through Home Safe. Maintaining a daily commitment to being home safe, the company celebrates safety performance with the annual Safety Awards for Excellence and improves safety culture through quarterly safety walkabouts.
In order to proactively identify and address workplace hazards while promoting a safe working environment, safety walkabouts bring together management, members of the Workplace Health and Safety Committee, frontline railroaders, and various regulators.
The company's “Home Safe” commitment and actions are embodied by many dedicated railroaders across the network. It honours these people's dedication to upholding “Home Safe Values” and considering
their coworkers' well-being daily by recognising them each year at the CPKC Safety Awards for Excellence.
It also acknowledges that safety is a journey rather than a destination even as companies constantly strive to be safer today than they were yesterday. Its goal of becoming the safest freight railroad in North America will be pursued by reinforcing a strong safety culture.
To fully harness the potential of CPKC’s diverse workforce, which spans three countries, it is essential to foster a culture where all perspectives are valued and heard. To aid in developing a comprehensive diversity and inclusion strategy during the integration process, CPKC has established a Diversity and Inclusion Council, led by senior leaders.
To access the plethora of viewpoints held by CPKC employees, the council hosted fifteen virtual Diversity Dialogue engagement sessions. Participating in these sessions were more than 200 employees, whose insights helped
Source: Statista
shape how CPKC's strategy developed over time.
As the company broadens its operational scope, these staffers assume greater accountability. Being a neighbour to hundreds of communities in North America, CPKC is committed to conducting its business safely and having a significant influence on the communities where it operates, lives, and works. The company increased public safety awareness and emergency response training in 2023 and engaged staff, local first responders, and other community stakeholders along the right of way.
“Over 4,000 emergency responders attended 82 community awareness and emergency training events that CPKC either organised or took part in. Its annual 2023 Holiday Train programme, which reaches communities across our network in Canada, the US, and Mexico in support of local food banks, raised CAD$1.8 million and collected over 160,000 pounds of food,” stated Glen Wilson, Assistant Vice-President, Environmental Risk, CPKC, while interacting with the World Finance.
An essential component of the shift to a lower-carbon economy is the transportation sector. Global trade relies heavily on freight rail, which transports goods over long distances
more fuel-efficiently than long-haul trucking. By working innovatively and cooperatively with suppliers, customers, governments, and industry partners on climate solutions, CPKC hopes to lower operational emissions and bring about change in the freight rail sector.
The release of CPKC's commitment to climate action, which outlines the goal of creating an emissions target in line with a 1.5°C future, was the venture’s early success. It also announced a goal to reduce well-to-wheel locomotive emissions by 369% per gross ton-mile by 2030 from the base year of 2020, which was validated by the Science Based Targets Initiative.
The company is still taking steps to lower operational emissions as it continues to hone its climate strategy, such as investigating and funding cutting-edge low-carbon solutions. This includes creating the first line-haul hydrogen-powered locomotive in North America, which uses batteries and fuel cells to run its electric traction motors.
In this ground-breaking project, the company has continued to reach significant benchmarks since the programme's launch in 2020. It installed hydrogen production and fuelling facilities, finished two hydrogen locomotive conversions, and advanced production on a third in 2023. It jointly announced a joint venture with CSX to construct and operate
hydrogen locomotive conversion kits at CSX's West Virginia locomotive shop for diesel-electric locomotives.
The company achieved another significant milestone in March 2024 when the locomotive biofuel trial project celebrated its first anniversary. As part of this project, CPKC is testing the longterm operational effects of using diesel blended with 20% biodiesel renewable fuel within a fleet of locomotives.
The company is collaborating with industry peers and locomotive suppliers on this initiative. In 2023, it utilised over 8.2 million litres of B20 fuel in locomotive operations, completing more than 500 fuelling events. This effort resulted in an 18% reduction in overall emissions for each litre of B20 diesel fuel used in place of conventional diesel. This pilot project is crucial for validating the operational impacts of using advanced blends of renewable biofuels in CPKC’s locomotive fleet.
Through its capital expenditure programme, CPKC continues to upgrade its locomotive fleet and rail network in addition to investments in low-carbon initiatives. This improves overall efficiency and ensures system reliability. The company committed CAD 2,468 million in capital expenditures in 2023 to maintain and modernise the network and fleet of locomotives to boost overall productivity and guarantee system dependability.
These achievements highlight CPKC’s commitment to sustainable operations and its culture of continuous improvement. As the company progresses into its second year of integration, it remains focused on sustainability. CPKC is unwavering in its dedication to driving positive change both within the organisation and in the broader community.
Driven by the purpose of building a future empowered by better quality of life across the MENA (Middle East and North Africa) region, BEEAH, since its inception in 2007, has been relentless in working towards establishing the powerful synergy between sustainability and digitalisation.
Over the years, the organisation has firmly established itself through the years as a leading sustainability powerhouse, particularly in the Middle East.
The venture has transformed itself as an international holding group impacting the lives of millions through its pioneering innovations. Through their comprehensive approach to sustainability, BEEAH is reshaping industries to be future-ready,
including waste management, clean energy, environmental consulting, green mobility, digital solutions, real estate, health care and more. BEEAH’s strategic focus is on leveraging smart technologies and innovations to drive a sustainable future.
Pursuing net-zero emissions in the UAE and beyond
Through its pioneering innovations and first-of-their-kind solutions in several fields, BEEAH has been helping countries to create and execute their roadmap for a socially responsible future. The venture has now taken a similar approach in the UAE, in terms of fulfilling the commitment of achieving net-zero emissions aligning with the COP28 consensus, apart from helping the
BEEAH’s strategic focus is on leveraging smart technologies and innovations to drive a sustainable future
region to implement its “Net Zero by 2050 Strategic Initiative,” while staying true to the bigger goal of maintaining global 1.5°C climate threshold.
BEEAH’s ambitious goals, as mentioned above, have been built upon existing initiatives and projects that have already achieved record-setting progress. BEEAH, which is known for its innovations like full-circle resource management, is doing wonders in the UAE. In Sharjah alone, BEEAH’s zero-waste strategies have resulted in a remarkable
BEEAH not only recognises the global waste management challenge but has proactively embarked on a journey to netzero emissions by setting global examples for integrated, end-toend waste management.
90% landfill waste diversion rate, significantly reducing the emirate’s dependence on landfills as well as diminishing the associated greenhouse gas emissions which account for over half of those produced by the Gulf country’s waste management sector.
At COP28 UAE 2023, BEEAH actively participated in a dialogue on adopting circular strategies to reduce emissions, launching new projects and forging partnerships to support the acceleration of global climate action, including the phasing out of fossil fuels. In particular, BEEAH launched the development of a 120 MW solar landfill, in partnership with Masdar and SEWA, and a wasteto-hydrogen plant, in collaboration with Chinook Hydrogen and Air Water, that will produce “super green” hydrogen in a carbonnegative process. These projects will help support BEEAH’s net-zero ambitions, within their organisation and simultaneously for their partners and cities of operation.
BEEAH has developed a self-sustaining model for the management of waste and has already achieved the Middle East’s highest waste diversion rate of 90%, thus making headway towards its ambition of making Sharjah the first zero-waste city in the Middle East.
The global waste management crisis at hand
According to the World Bank, the world generates over 2 billion tonnes of municipal solid waste annually, with this number expected to surge in the coming decades.
The Middle East and North Africa (MENA) region is no exception, facing its own challenges in waste management. Rapid urbanisation, population growth, and increasing consumption patterns are placing
immense strain on existing waste management infrastructure.
The World Bank estimates that the MENA region generates over 200 million tonnes of waste per year, with a significant portion ending up in landfills. This improper disposal has severe environmental consequences, including air and water pollution, soil contamination, and public health risks.
And BEEAH is solving it BEEAH not only recognises the global waste management challenge but has proactively embarked on a journey to netzero emissions by setting global examples for integrated, end-to-end waste management. This system incorporates a digitally-enabled waste collection method, where
utilising RFID tagged bins, routeoptimised fleets and 360 degree AIintegrated cameras, the venture is ensuring efficient waste collection, maximising pickups per trip and minimising fleet emissions.
Then comes the “Integrated Waste Management Complex.” Here, BEEAH’s complex comprises 12 integrated facilities, which process and recycle all types of waste, diverting it from landfills and providing usable alternative materials and fuels, while driving circularity and offering industries lower-emission alternatives.
The last one is “Innovative Approach to Hard-to-Recycle Waste,” where waste-to-energy is playing a crucial role in the venture’s waste-to-value ecosystem, unlocking energy value from hard-to-recycle waste through innovative waste-to-energy and waste-to-hydrogen technology.
Powering the future through milestone projects
As a waste management leader in the Middle East, BEEAH was the first to offer several world-class innovations in waste collection, including automated sweepers, electric street cleaners, electric
desert cleaners and other state-ofthe-art vehicles. It was also the first in the region to introduce solarpowered smart bins that also act as community Wi-Fi hotspots. The venture's groundbreaking end-toend, digital waste management solution, WastePro+, has been another regional first.
And that innovation game has remained in the top gear. One such example is “Sharjah Waste to Energy,” the inaugural project of the joint venture between BEEAH
and Masdar, which exemplifies BEEAH's commitment to a clean energy future. This state-of-the-art facility generates 30 MW of power, sufficient to supply 28,000 homes, while displacing an incredible 450,000 tonnes of CO2 annually. Through its modular design, this facility can also be adapted and expanded on, providing a future-ready solution that can be implemented on various scales.
Another is “Solar Landfill,” the first-of-its-kind development in the region, which will utilise sealed-off landfill space for a 120 MW solar farm, collaborating with Masdar and the Sharjah Electricity and Water Authority (SEWA).
They also have a “Waste-toHydrogen Plant,” which has already gone through rigorous R&D with a test plant in collaboration with Air Water and Chinook Hydrogen. The project will convert municipal solid waste into fuel-cell-grade hydrogen through a commercially viable and carbon-negative process.
“Both the solar landfill and the waste-to-hydrogen plant
are planned to be situated near BEEAH’s existing waste management complex and the Sharjah Waste-to-Energy Plant. This strategic placement further enhances the organisation’s circular strategy powering BEEAH’s operations with clean energy sources and decarbonising their fleet operations with green hydrogen fuel,” the venture told International Finance.
The venture is actively expanding its operations and forging strategic partnerships beyond the UAE. In Madinah, BEEAH has formed a joint venture with Saudi Investment Recycling Company (SIRC) and the Al Maqr Development Authority (ALMQR) to implement a comprehensive waste management system, including waste collection, transportation, disinfection, as well as recycling awareness campaigns.
The goal is to aid in transforming Madinah into a sustainable smart city, utilising a blend of digital solutions and a highly
skilled workforce. BEEAH aims to support the city to further enhance waste management and recycling practices in alignment with KSA Vision 2030’s focus on sustainability.
In Egypt, BEEAH has also formed a joint venture with the Administrative Capital for Urban Development (ACUD), the developer of the New Administrative Capital, one of the world’s largest urban development projects. The partnership underscores BEEAH’s commitment to supporting Egypt's sustainability goals, utilising electric vehicles and introducing integrative strategies to achieve an ambitious 80% waste diversion rate.
BEEAH’s ventures extend beyond traditional waste management, demonstrating their commitment to shaping sustainable, smart cities.
“BEEAH has launched several ventures dedicated to digital transformation and creating new, sustainable efficiencies. EVOTEQ
is one such venture that developed a track-and-trace platform that is currently being used for Tatmeen, a platform led by the Ministry of Health and Prevention (MoHaP) to ensure the integrity of medicinal supply chains,” the venture remarked further.
Another innovative platform is re.life market, developed by re.life, an online platform facilitating the trade of recyclable materials. This platform connects businesses and individuals with recycling facilities, promoting a circular economy by encouraging the reuse and repurposing of resources.
Khazna Sharjah, a joint venture between Khazna Data Centres and BEEAH, is working towards the goal of creating more sustainable data centres, starting with the region’s first data centre powered by waste-to-energy in Sharjah.
Employee relocation benefits both parties because it allows people to expand their knowledge and problemsolving skills while also providing first-hand experience in a variety of financial settings
Employee relocation has become a crucial operational function for 21st-century businesses. It allows them to strategically position their workforce to meet organisational needs. Companies often relocate employees to capitalise on their skills in areas where they are most needed, supporting business growth and operational efficiency. Employee relocation is a strategic decision that can stimulate significant growth in the fast-paced banking and finance industry, not just a logistical one. Imagine learning about new financial markets or accessing specialist talent pools from a different angle.
Effective relocation initiatives come with benefits like enhanced job satisfaction, increasing opportunities for career development, and helping companies improve their employee retention ratios
In this industry, strategic relocation entails reaching a wider audience and improving the skills of your workforce. When new work prospects connect with personal objectives, employee satisfaction tends to increase. In an industry that is changing quickly, maintaining competitiveness and innovation requires combining increased variety with local expertise.
We are talking about a trend which revolves around transferring employees from one location to another, either within the same city or to a different geographic location. This process is crucial for businesses looking to optimise their workforce, expand into new markets, or fill critical roles with the right talent. Relocating employees can be temporary or permanent and often includes a range of support services to ensure a smooth transition.
Effective relocation initiatives come with benefits like enhanced job satisfaction, increasing opportunities for career development, and helping companies improve their employee retention ratios. Additionally, offering attractive relocation packages can help attract top talent and retain existing employees, making it a vital part of human resources management.
One of the most effective ways to break into new financial markets is by moving experienced individuals. Instead of beginning from scratch with local hiring, experienced team members who are familiar with your organisation's culture and objectives can integrate more easily into new locations. This strategy guarantees a more seamless transition while quickening market access.
A balanced workforce is produced by combining these relocations with new hires from the community. Local personnel contribute a vital understanding of local financial laws and market developments, while experienced staff members offer stability and consistency. This synergy enhances adaptation in different financial contexts and promotes sustained growth by fusing disparate perspectives.
Relocating employees is often essential for supporting company growth and market expansion. When a business opens new offices or facilities, transferring experienced staff to the new location ensures continuity and helps establish operations smoothly. This strategic move can facilitate the successful penetration of new markets, boosting local business relationships and ensuring the company's
standards and practices are maintained.
"Relocating employees to positions where their skills are most needed is another critical reason for employee relocation. By placing employees in roles that maximise their strengths, companies can improve productivity and operational efficiency. This approach helps address skill gaps in various departments or locations, ensuring that the right expertise is available where it is most beneficial," commented Shiftbase, which provides solutions in the domain of workforce management software.
Also, providing employees with opportunities to work in different locations can enhance their career growth and professional development. Exposure to new environments and challenges helps build versatile and adaptable leaders. At the same point of time, relocating employees can help reduce operational costs. For instance, moving to a region with lower living expenses can reduce overall relocation costs and business expenses.
Offering relocation packages can often attract top talent from different geographic locations, ensuring the company has the best possible workforce. It also helps retain current employees by providing opportunities for growth and new experiences. Aligning employee placement with the company’s strategic goals is another crucial factor that ensures critical projects and initiatives avail the necessary
human resources support in the right locations.
Increasing market penetration frequently calls for your financial staff to develop new competencies. Employee relocation benefits both parties because it allows people to expand their knowledge and problem-solving skills while also providing first-hand experience in a variety of financial settings. Innovative ideas and a greater comprehension of international financial processes result from this exposure.
Their growth as professionals results in insightful ideas and tactics that work in many fields. This flexibility not only makes things run more smoothly but also boosts employee loyalty since they know they have the chance to further their careers while making a big difference in the success of the company.
Relocating employees' skill development facilitates innovation in financial companies. Exposure to varying market demands and practices stimulates innovative approaches to financial solutions as well as creative problem-solving. Innovative financial products and tactics may result from this idea exchange.
Workers pick up knowledge from regional peers, fusing creative thinking with proven methods. This intellectual and cultural interchange promotes a culture of constant innovation and adaptation in the financial industry, helping financial institutions stay one step
Top six external factors influencing employee relocations in the United States in 2022, by company size (In Percentage)
ahead of rivals.
Innovation in the financial industry is contingent upon a robust and cohesive corporate culture. When staff members move, they take your financial institution's mission and basic values with them. This guarantees a constant dedication to teamwork and excellence across all areas.
Employees who have relocated serve as ambassadors, advancing effective procedures and strengthening ties inside the company. They support the alignment of goals and communication philosophies, creating a cohesive culture that raises staff morale and guarantees a feeling of mission.
Employee relocation presents both psychological and practical difficulties. A new financial market demands a lot of preparation and assistance to adjust to. It is necessary to pay attention to housing issues, children's education, and adjusting to new restrictions.
Organisations might use strategic planning to expedite this procedure. Assisting with housing and offering comprehensive information about the new location helps soothe anxiety. By handling logistics and providing
cultural orientation, working with seasoned moving companies like ARC Moving guarantees a seamless transfer. This assistance facilitates the relocation process and raises employee satisfaction.
Relocation offers are frequently conditional on promotions, which is a step up in and of itself. But in addition to that instant improvement, workers' careers will probably gain later on. Ultimately, when workers move, they get the chance to learn new skills. Moving to a new site exposes staff members to new challenges, teams, and projects. These will probably broaden their skill sets, which will allow them to pursue professional options that they might not have otherwise been able to.
The Harvard Business Review, for instance, claims that midlevel managers who take on overseas assignments get a "crash education in leadership," thereby enhancing their ability to make decisions quickly.
Employees can also grow their professional network by establishing connections with new coworkers, clients, and contacts when they relocate. Eventually, such connections might pay off by opening doors or enabling their future selves to link contacts that
they might not have otherwise to accomplish new goals.
Exposure to diverse cultures, people, and situations is a common part of relocation. Let's take the scenario where a doctor from a big East Coast city moves to a small hospital in the heart of the South. She will surely be able to relate to and comprehend patients from backgrounds that are extremely different from her thanks to that experience. She becomes a more effective doctor by increasing her cultural competency, a skill she will carry with her wherever she travels.
Businesses frequently use future leadership positions as a means of encouraging and keeping on board the talent they have invested in. For instance, C-level executives in many big businesses must have expertise in both national and international management as well as working in several divisions. Put another way, individuals aiming for the top frequently need to have a resume that reflects a variety of regional backgrounds.
To further expand on the importance of strategic employee relocation in the banking and finance industry, it's crucial to recognise the broader impact of such strategies in navigating today's complex financial landscape.
As the industry faces shifting macroeconomic conditions, heightened regulatory scrutiny, and technological advancements, strategic relocation becomes even more significant. Moving key personnel into new markets enables financial institutions to swiftly adapt to local regulatory changes and leverage regional growth opportunities.
Additionally, relocation aids in addressing the diverse performance outcomes seen across different financial entities. For example, McKinsey's 2023 Global Banking Annual Review highlighted that while some financial institutions have achieved significant value creation, others lag due to inefficiencies in operations and customer retention strategies.
Relocating experienced employees who understand the organisation's culture and strategic goals can help bridge these performance
gaps by applying successful practices across different markets.
Moreover, the banking sector is experiencing a "Great Transition," where a considerable shift of financial activities, such as payments and capital management, is moving off traditional bank balance sheets to alternative financial entities like fintech, private capital, and other non-bank institutions.
This transition emphasises the need for banks to innovate continuously and adapt to new financial ecosystems. Relocating staff to regions that are at the forefront of these transitions—such as the IndoCrescent region, home to some of the world's best-performing banks—can provide valuable insights and foster a culture of innovation that keeps institutions competitive.
In addition, employee relocation can support the financial sector's ongoing efforts to harness tech-
nology and AI. By strategically positioning talent in tech-savvy markets, banks can better exploit advancements in AI and analytics to enhance productivity and service delivery. This not only improves operational efficiency but also aligns with evolving customer expectations for technology-driven financial solutions.
Strategic employee relocation in the banking and finance sector is more than just a logistical move. It is a critical component of a broader strategy to navigate market complexities, drive innovation, and maintain a competitive advantage. By thoughtfully deploying talent where it's most needed, financial institutions can better position themselves for sustained success in a rapidly evolving landscape.
Employee migration is essential in a field where innovation and adaptability are key components of progress. Within financial institutions, it expands markets, improves competencies, and encourages innovation. Organisations may achieve effective transitions that benefit both people and the business by tackling the issues with careful planning and expert support. When you strategize your next move in the banking and financial industry, don’t forget to keep in mind the strategic importance of wellmanaged staff relocations for longterm growth.
The early 2020 stock market crash showed how investors worldwide became more hesitant to invest in crowdfunding
IF CORRESPONDENT
Netflix. Apple. Amazon. How many regular investors ever pondered what the next big thing would be, only to think, "I would be sitting on a gold mine if I had picked one of those stellar companies to invest in back when they were tiny."
A lot of businesses come and go without ever making the news, but it's still exciting to think about investing in a start-up that eventually becomes global.
Over the last ten to fifteen years, there have been almost as many crowdfunding platforms as there are products and businesses to fill them. Crowdfunding was an early fintech trend that sought to open up some of this investment potential to regular people, not just so-called angel investors.
During this time, peer-to-peer lending also gained traction as a model that spares investors from the stock market but still has the potential to yield returns. It also provides SMEs with the funding they require to expand, eliminating the need for institutional or angel investment and, ideally, accelerating start-up growth.
These platforms may appear to offer a way for those who would like to invest in start-up companies but lack the influence of angel investors to do so at a rate of return that beats the market. The current interest rates offered by traditional banks are competitive for regular savers, but the risk is still higher.
As such, it may not be as clear-cut if this is a wise or even feasible investment plan in comparison to, say, broad-based index trackers. What does crowdfunding or peer-to-peer lending and investing look and feel like now, in light of the recent stock market crashes, COVIDrelated huge business disruption, and challenging circumstances facing small and medium-sized businesses? Does it withstand a more thorough, impartial business study, as demanded by investors, individual consumers, and entrepreneurs wishing to list their goods or services on a platform?
There are numerous platforms available for retail (individual) investors that allow them to select a firm they like the appearance of and make a financial commitment to it. Nevertheless, diversifying your investments is a smart move to avoid putting all of your eggs in one basket. One immediate issue with traditional crowdfunding is that you probably won't see a return unless you spread your money across hundreds of small investments.
People often invest in small businesses or kickstarter because they enjoy the concept, but the chances of any of these ventures becoming the next big thing are low. Think about venture capital firms that fund their investments in early-stage companies; by spreading the risk among hundreds of investments, they hope that one of them will cover the entire fund.
The good news is that you may still use a
diversified fund to trade equity for cash investments in a variety of start-ups. Upon its introduction in 2012, Seedrs stood alone among crowdfunding platforms authorised by the Financial Conduct Authority of the United Kingdom. In 2017, the digital challenger bank Revolut raised £4 million through Seedrs, creating its own unicorn success story.
To foster growth for both small enterprises and small lenders, lending platforms first appeared several years ago. The platforms, which supply the technology, platforms, contacts, and marketing to support their lending model, are a part of the rapidly expanding fintech industry.
Established as one of the first five platforms to receive approval from the UK's Financial Conduct Authority, the 36H group is subject to regulation. As a result, one of its objectives is to advocate for additional regulation of the nascent sector. By banding together, they were able to speak out for the nascent industry, interact directly with policymakers over regulations, and amplify their voices across the fintech and financial sectors.
During the COVID phase (2020-21), the UK government moved quickly to establish a system of financial assistance for companies that suffered from a series of lockdowns. This requirement led to the creation of the Coronavirus Business Interruption Loan Scheme and, subsequently, bounce-back loans. In favour of its sector, the 36H group contended that although fintech lenders received approval to provide these services sooner than traditional larger banks, they did it more slowly.
Regulation was undoubtedly necessary for P2P lending, which some have dubbed the "Wild West" of the financial sector. However, with the global disruption to businesses and industries brought about by the pandemic, fewer
members of the original 36H group are standing in the same position as before.
Founded in 2010, Funding Circle, one of the "Big Three" lending platforms, provided retail investment services for ten years until discontinuing the service in 2023. Before that, the company had put a two-year halt on this service because of the pandemic.
As investors' loans matured, the platform went through a process to return their money. However, this didn't sit well with all investors, who had to wait for their money to be paid back in chunks before they could move it to another platform and maintain its ISA status.
According to press releases from the time, Funding Circle concentrated on government-backed initiatives throughout the pandemic. They were the first platform of that kind to access and participate in the government's
small company support programmes and bounce-back loans. At some point, the businesses decided to close their P2P division permanently and stop employing ordinary investors to finance their commercial clients.
One of the Big Three P2P lending platforms, RateSetter was a pioneer in the industry and operated nearly solely on its retail investment strategy. A news release from 2019 celebrated the introduction of stricter rules in the peerto-peer (P2P) sector, asserting that the new laws would "decisively remove any sense that P2P is weakly regulated" by raising standards in risk management, governance, disclosure, marketing, and wind-down planning.
Ironically, RateSetter ended up becoming one of the big-boy banks they had initially aimed to challenge.
RateSetter CEO Rhydian Lewis said, "We will look back on this as a watershed moment for our industry - the moment that peer-to-peer investing came of age as an asset class, competing against other mainstream investment options and the banks as an attractive way to put money to work."
The new restrictions are intended to lessen the negative reputation of the peer-to-peer lending industry. However, in 2020, RateSetter declared that Metro Bank had acquired them and that they, too, would cease making loans through crowdfunding, with all proceeds for new loans coming from their new parent firm.
As the last of the original Big Three, Zopa was the first P2P lending platform in the UK. However, like the others, it was unable to survive its retail investment division due to a combination of factors, including growing regulation and investor mistrust, which CEO Jaidev Janardana cited.
In 2018, Zopa became a bank in its own right, but amid the pandemic, the company determined that its costs were too expensive to uphold its responsibilities to borrowers and provide retail investors with sufficient returns.
The distinction is that, as a bank, Zopa repurchased the investments of about 60,000 RI clients at face value, meaning that individuals who had an ISA with them could move their investment elsewhere without having to wait for loans to mature or for any other wind down. Estimated transaction value of crowdfunding worldwide from 2017 to 2023 (In Billion US Dollars)
Source: Statista
After eight years in the business, loan Works, another consumer loan company, ended its P2P structure in 2021. Established in 2014 with support from angel investors, the platform's primary function was to offer personal loans. By 2023, the business has changed its name to Fluro and has institutional financial lines supporting it.
In addition to providing personal loans with the now-standard features of pre-approval, flexible payback plans, and decisions in minutes, the company also offers lending-as-a-service, which powers household names like GoCompare and Direct Line in the UK.
By diversifying its business and abandoning its loan crowdsourcing model, Lending Works has been able to weather the COVID-19 storm and create innovative new products for the fintech industry. But it also decided to use a
progressive runoff strategy to repay its P2P loans until all of its lenders were satisfied.
Curated in 2014, CrowdProperty is a different company that has survived the epidemic by adhering to its initial business plan and continues to grow today. It was first established to address two issues: the difficulty SME real estate companies were having obtaining the funding they required, and the fact that investors had been receiving lower-than-average returns for years following the 2008 financial crisis. However, the platform surely profited from the pandemic's movement toward property, not away from it.
While the tourism, leisure, and lifestyle industries suffered greatly, house prices skyrocketed as demand far outpaced supply. One of the company's stated goals is to address the housing shortage in the UK. Despite millions of pounds being
spent both through CrowdProperty and other channels, the housing crisis is still very much present, thus demand is expected to be high for some time to come.
Four of the five largest lending platforms have reduced or eliminated retail investment. Ironically, several of the platforms that challenged large banking models went under due to the coronavirus outbreak, which killed thousands of businesses.
SMEs have more fintech options and alternatives to institutional lending, and their growing size and power give them lending power and stability. However, platforms have mostly ignored retail investors.
The government-backed financing initiative for small business COVID recovery was one of the 36H group's first actions in 2020. This achievement seems great and in line with these platforms' goal of helping SMEs. COVID's other feature and the relative ease of institutional lending may have compelled platforms to reconsider their crowdfunding approach.
The early 2020 stock market crash showed how investors worldwide became more hesitant to invest in crowdfunding. Retail investors may have had doubts about putting more money into it, and many more financially secure people were instead turning to savings or splurges.
This reduced retail investor interest and income, forcing P2P platforms to fund loans through institutional ways to meet their SME commitment.
Retail investors have likely moved on to other investments. CrowdProperty persists. It may be niche, offering investment only in the property sector rather than to SMEs or individuals.
Coronavirus helped its area, thankfully. However, that is only one issue in the considerably more complex UK property and financial system and the lack of traditional access to either. CrowdProperty's magic sauce seems to be
a few hundred pounds to invest in property. It allows property investors to earn predictable but not guaranteed returns. It avoids stock market exposure and the difficulty and expense of buy-tolet properties and other financial and energetic burdens.
Property is still a popular investment class in the UK and worldwide, and the media shows numerous reasons why, from supply and demand to social media property stars influencing younger generations.
CrowdProperty lets ordinary individuals invest in a whole property portfolio without buying anything personally, providing extensive ISA diversification. You can invest enormous amounts of money in any one project, but it also features an auto-invest mechanism that protects you from overexposure and diversifies your money among all approved projects. The platform has offered higher rates of return than banks and building societies for years, even while they raise their interest rates postCOVID. No surprise many like this.
Index tracker funds dedicated to real estate investment trusts (REITs) and the property industry worldwide allow investors to participate in property on the open stock market. In the UK ISA or other
the US, you can access funds that focus solely or mostly on property, from housing estate development to construction materials. It goes beyond residential property. Some REITs specialise in logistics, others in healthcare, real estate, or office buildings.
An investor seeking property exposure has solid diversification alternatives that incur risk. This is different because you are still investing in the free market and may get back less than you put in. Every page of CrowdProperty's website warns against investing unless you understand the risk, but it's confined to debtors who may default.
The platform's rigorous due diligence process and several non-negotiable backups protect RI lenders from this risk, including 'first charge security,' which gives CrowdProperty the same rights as a mortgage lender to repossess a property if a borrower defaults for any reason. The platform appears to have solved the problem by simplifying, regulating, minimising risks, and presenting itself as a specialist investment vehicle. It started as a fintech start-up and raises funds through traditional and non-traditional channels. CrowdProperty raised funds to expand in the first half of 2023 from where? Seedrs.
When considering the possibility of picking the next unicorn through a P2P platform, remember that businesses that choose crowdfunding may do so because they are not confident in getting large investor backing or because they have tried and failed. Local pubs and hospitality firms in the US are increasingly using crowdfunding to launch their enterprises in exchange for beer tokens, goods, or other rewards, but not shares. This boosts engagement but not investment. It's vital to distinguish between the low possibility of finding a start-up business with high growth potential through a crowdfunding platform and using P2P as part of a diversified portfolio.
Investing in small and rising enterprises is possible with 'safer' vehicles. Most internet brokers have unicorn funds and high-quality start-ups you can invest in. The old advice of investing most of your money in broad index trackers of stable markets like the FTSE 100 and maxing out rare investments like unicorn businesses at maybe 1% of your investment capital to minimise risk remains.
Though more accessible than ever, most crowdfunding in individual startups may still be best for knowledgeable investors who know how to value a business, understand the dangers, and realise they may lose money. You may wish you had invested in Uber or Tesla when they were young, but for every unicorn success story, hundreds more fail before reaching that stage. Be practical, diversify your portfolio, and comprehend start-up investments.
The original goal of crowdsourcing and P2P lending was to give money-savvy investors who could invest but not afford the risks of these opportunities. This idea may have worked, but education and implementation are crucial.
DIGITAL BANKING
Collaborations among financial institutions, merchants, and technology companies have been essential in advancing the acceptance of digital wallets
Digital wallets and real-time payments are experiencing rapid evolution because of the widespread use of smartphones and the increasing dependence on these devices. Growing customer demand and regulatory changes are gradually changing the banking sector globally, particularly in the United States, United Kingdom, and European countries.
There is a noticeable trend among younger generations to utilise digital wallets daily. The United Kingdom's 2024 digital banking data show that younger generations account for a larger proportion of bank accounts that are exclusively digital
For people without access to traditional banking services, e-wallets provide an alternative by letting users save, manage, and transfer their financial assets. It's common for consumers to handle their financial affairs online these days, including applying for loans, moving money, and checking balances.
This is a reflection of a fundamental change in consumer behaviour, with accessibility and convenience taking centre stage. Furthermore, the enhanced security features they provide, like biometric authentication, which uses an individual's unique physiological or behavioural characteristics for authentication and security, and tokenization, which enables the digital banking system to identify and process a transaction without disclosing user data, have helped allay worries about fraud and identity theft and have encouraged further adoption of the technology.
There is a noticeable trend among younger generations to utilise digital wallets daily. The United Kingdom's 2024 digital banking data show that younger generations account for a larger proportion of bank accounts that are exclusively digital.
In 2024, half of millennials (50%) and more than half of Generation Z (55%), the age group between 18 and 26 years old, will have at least one bank account that is exclusively digital. In contrast, only 21% of baby boomers and members of the silent generation, as well as 34% of Generation X, have bank accounts that are exclusively digital.
Not only do 18% of millennials and Generation Zers, but also 15% of Generation Xers, who do not currently have a digital bank account, plan to establish one at some point in the future.
In 2023, a Forbes Advisor study on digital wallets found that 53% of American consumers preferred using digital wallets over traditional payment methods. Generation Z was the group most likely to use digital wallets as their primary means of payment for travel (86%) and shopping (91%).
Tech behemoths like Apple, Google, and PayPal have established the standard in the United States with cloud-based digital wallets that provide smooth, instantaneous transaction capabilities. Due to their large user bases and access to cutting-edge technology, these companies have established household names for platforms like Apple Pay, Google Pay, and PayPal, which provide customers with safe and effective
online and in-store payment options.
Similar to this, the United Kingdom has seen a notable increase in the use of digital wallets, thanks to a supportive legislative framework and a thriving fintech industry. Businesses like Wise, Monzo, and Revolut have completely changed the market with features like budgeting tools, real-time notifications, and affordable foreign transfer rates. The open banking policy in the United Kingdom, which encourages competition and innovation, is partially responsible for the recent wave of innovation.
Overall, while the development of digital wallets and payments has paralleled in the US and the UK, there are also distinctions influenced by variables like legislation, customer behaviour, and market dynamics.
The Financial Conduct Authority (FCA) has been instrumental in fostering competition and innovation in the financial services industry, making the United Kingdom a more hospitable regulatory environment for the development of digital payments.
On the other hand, the United States regulatory environment is more dispersed, with several regulatory agencies managing various facets of the financial sector. This has occasionally stifled innovation.
The Single Euro Payments Area (SEPA), Payment Services Directives 2 and PSD3, and other European banking laws are not mandatory for the United Kingdom to comply with, but they have still sped up
innovation and digital banking adoption in the country.
In many ways, the United States has not adopted new financial capabilities at the same rate as the United Kingdom because European banking and payment regulations have had less of an impact outside. In the coming years, we anticipate that nationwide regulations will accelerate the trend of American customers migrating to digital banking and payments.
According to Eric Bierry, CEO of Sopra Banking Software, a global financial technology company, there is a significant market demand for instant payments, particularly in the United States. Major players in this space include Zelle, Paypal, Square, Visa Direct, Mastercard Send, Venmo, and The Clearing House's RTP network, which collectively process more than $900 billion in real-time transaction volume annually.
However, even though the Faster Payments Service has been facilitating speedy payments across numerous UK banks for more than 15 years, current recommendations aim to further strengthen consumer security for immediate payments in light of the rise in fraud and scams.
Although digital banking may be reaching saturation in the UK and Europe, Alex Reddish, managing director of UK fintech company Tribe Payments, emphasised that the industry's evolution is far from finished.
He asserted that "continuous innovation, regulatory advancements, and altering customer preferences will determine the future of banking in Europe and the UK, ensuring that the industry stays dynamic and responsive to future demands."
Reddish noted, however, that while the market has
always demonstrated its capacity to quickly adapt and leapfrog stages like contactless payments, which the UK and Europe pioneered, some growth is likely to be much slower in the US, the largest financial services market in the world.
Collaborations among financial institutions, merchants, and technology companies have been essential in advancing the acceptance of digital wallets.
Reddish continued, "These partnerships have strengthened acceptance networks, increased consumer knowledge of the advantages of mobile payments, and provided incentives to users in the form of discounts and prizes."
Future developments in the field of digital payments are probably going to bring about further innovation and expansion for both the US and the UK. However, difficulties still exist despite these developments, especially in the fields of cybersecurity and regulations. The financial services sector is the second most affected by cyberattacks, after the healthcare sector, in terms of cost per breach, according to an IBM data breach study from 2023.
Chris McGee, managing director of AArete, a worldwide management and technology consulting organisation, emphasised that cybersecurity is still a big trend in digital banking and that security is still a top priority in all countries.
"Banks' use of Artificial Intelligence (AI) in digital banking is evolving in various areas, including threat detection, thanks to the adop-
Of Americans using digital wallets in 2023, 69% used PayPal the most
Around 56% used Google Pay the most, 53% preferred Apple Pay, and 52% preferred Samsung Pay
In 2023, 72% of Americans considered adopting digital wallets as their primary payment method for shopping
Around 43% of users had two or more bank accounts linked to their digital wallets
Americans between 18 and 26 years old are most likely to use digital wallets, with 91% using them as their primary payment method for shopping in 2023
Around 59% of Americans 27 to 42 years old used digital wallets more than other shopping methods in 2023
tion of AI by banks," the official noted. Artificial intelligence (AI) can help banks comply with an increasing number of rules by detecting fraud and other possible threats faster than ever before. AI will become more and more important in safeguarding consumer assets and personal information, as well as, more importantly, in gaining their trust, particularly as consumers continue to experiment with using digital wallets to make purchases.
Similarly, Bierry disclosed that generative AI will be a significant obstacle for American and British institutions.
"Banks are concerned about the potential effects of generative AI tools on security and the banking workforce as a whole, even though they recognise the evident financial benefits of AI. In addition to onboarding the tools themselves, banks will need to invest time in training personnel and customers about the implications of AI technologies. Although incorporating GenAI into banks' operations will undoubtedly provide obstacles, the technology also
presents a huge potential for them,” the speaker stated.
“Banks must stay informed about new rules and procedures as they emerge to ensure compliance. In response to a number of banks failing in 2023, authorities plan to implement a number of additional measures this year with the goal of ensuring that anything similar never occurs again," Bierry noted.
Bierry predicts that 2024 will see regulators concentrate on laws safeguarding customers and their financial data, particularly as new financial services and products arise in the open banking and artificial intelligence eras.
Similarly, Maureen Doyle-Spare, the head of insurance, asset, and wealth management at UST, a US provider of digital transformation solutions, emphasised the critical importance of security, given that digital wallets are highly attractive targets for cyberattacks due to their storage of sensitive financial data.
"Multi-factor authentication, strict
monitoring, and strong encryption are necessary to protect user data. Furthermore, interoperability presents difficulties because improving the user experience requires flawless compatibility across different digital wallet platforms. Scalability is also a critical issue because growing transaction volumes necessitate sophisticated infrastructure that does not sacrifice speed or dependability,” Maureen remarked.
For banks and fintech companies worldwide, modernising antiquated banking infrastructure is a major challenge. To realise the full potential of digital banking, the American and British markets are probably going to have comparable obstacles to overcome.
Neobanks will face challenges in navigating regulatory frameworks largely created for traditional banks, which can be resource-intensive and impede innovation, in addition to challenges in differentiating themselves in the market due to the commoditized nature of digital banking services. Challenges to
profitability can include low revenue per client and high acquisition costs.
The rapid evolution of digital wallets and real-time payments is transforming the global banking landscape, driven by consumer demand for convenience, technological advancements, and regulatory shifts. Younger generations in the US, UK, and Europe are spearheading the adoption of digital banking, compelling traditional financial institutions to innovate or face the risk of falling behind.
However, this digital transformation is not without its challenges. Security concerns, evolving regulations, and the need for the modernisation of outdated banking infrastructure are significant hurdles that financial institutions must navigate. As digital payments continue to grow, collaborations between fintech companies, merchants, and regulators will play a pivotal role in shaping the future of banking. AI-driven solutions and advancements in cybersecurity will be critical to maintaining consumer trust and ensuring the sector’s on-
going innovation and resilience.
In the coming years, digital wallets and real-time payments will likely continue reshaping the banking industry, making financial services more accessible and inclusive, especially for unbanked populations. As younger generations drive adoption, traditional banks must prioritise digital transformation to stay competitive. However, the increasing reliance on mobile technologies and cloud-based platforms will expose financial institutions to greater cybersecurity threats.
The use of AI, while promising for enhancing security and efficiency, also brings its own challenges, such as data privacy concerns and potential job displacement. As regulations evolve to address these issues, banks must balance innovation with compliance, ensuring that growth in digital banking remains sustainable, secure, and consumer-focused.
When third parties and financial institutions work together under the guidance of regulatory input, open banking initiatives are successful
IF CORRESPONDENT
The value of payments made through global open banking is predicted to reach $330 billion by 2027, up from $57 billion in 2023. Are they, however, really international? The majority of transactions are, in fact, domestic rather than international. Interoperability is a major barrier that the industry must overcome to realise worldwide open banking.
The prospect of a totally frictionless yet highly secure payment system is tantalisingly close to reality with the promise of an international open banking ecosystem. Frequently cited as an example of open banking success, the UK industry had eight million active customers by the 2023 end.
However, a closer look reveals that the United Kingdom’s figures are merely a drop in the ocean of global payments. Currently, 0% of British citizens use open banking. Even if there were a record 14.45 million “UK Open Banking” payments made in January 2024, the tens of billions of card transactions handled by the major card networks dwarf this achievement.
Although cross-border payments are taking up a larger
portion of the global payments market, there are still challenges in establishing open banking cross-border due to the lack of interoperability between country systems. Data will not be able to move freely between various businesses, or even different countries, until that time. The goal of open banking is to promote customer safety while increasing competition among retail banks. The Asia-Pacific area has witnessed notable advancements and breakthroughs in the field of open banking. Notably, India has led the way with its innovative Unified Payments Interface (UPI). The 1.4 billion people who live in India are mostly responsible for the critical mass of transactions that drive UPI's success, but another important factor is its compatibility with other Asia-Pacific payment systems, such as those in Singapore, Thailand, and Malaysia. UPI has
already partnered with Google Pay in 2024 to facilitate worldwide payments, and with Lyra in France to facilitate UPI payment acceptance in France. Indian tourists can now use UPI-enabled apps to instantly pay using UPI to a variety of businesses via cross-border QR code transactions between India and Nepal.
However, in other places, the goal of fully realising open banking remains unfulfilled. To make it a reality, different areas will need to provide uniform guidelines, benchmarks, and the necessary technological components.
The capacity of permitted third parties to access account information and start payments with client approval is a fundamental feature of open banking. Banks have two options for accomplishing this: using specialised APIs or their current consumer interfaces. However, participants are free to create their interfaces as there are no standardised APIs in place. Despite multiple regional standardisation initiatives, APIs remain highly fragmented, which makes achieving interoperability challenging.
No matter which bank or service provider a customer uses, interoperability is essential to enabling the patchwork of systems used by various banks, fintech, and third-party players (TPPs) to communicate with one another, exchange data securely using a common standard, and enable easy access to all of their financial data.
However, standardisation is necessary for interoperability, and at the moment, the majority of open banking markets follow regional standards. Since its regulator was the first in the area to outline an open banking framework in 2016, Singapore, along with South Korea and
Hong Kong which adopted comparable strategies, has seen a significant increase in the use of APIs. With its Customer Data Rights, Australia has adopted a regulator-led strategy, requiring financial firms to use open banking. The regional examples mentioned above demonstrate that cross-border data sharing is possible despite the numerous legal obstacles to overcome.
While not easy to solve, interoperability issues are not insurmountable. There are several important questions to ask. Who provides the funding for interoperability, or perhaps for creating a completely new payment system? In markets without a central authority to organise workflows, ensuring conformity to multiple technological and legal baselines will take herculean efforts.
Reaching consensus and allocating funds is difficult enough. Without a comprehensive regulatory framework to direct them, no payment player would dare venture out and start operating independently. One could argue that without initially enacting national regulations, it will be challenging to guarantee regional or worldwide interoperability. However, as previously demonstrated, national market-led strategies have also been successful.
The European Union has recognised national bank and TPP licenses because of the long-standing harmonised legal frameworks like PSD2. The Asia-Pacific region has implemented a combination of regulatory and market-driven strategies to guarantee API standardisation and technical foundations are in place, creating the ideal environment for open banking to flourish.
When third parties and financial
Number of open banking users worldwide in 2023, by region (In Millions)
Europe
42.6
Far East & China
20.0
North America
4.5
Latin America
2.9
Rest Of The World
18.9
Source: Statista
institutions work together under the guidance of regulatory input, open banking initiatives are successful. We also need regulators from various nations to collaborate, exchange best practices, and invite open banking organisations and standards organisations such as ISO.
The European payment industry is currently preparing for PSD3, the new Payment Service Regulations (PSR), FIDA, and other frameworks that will level the playing field between banks and non-banks and completely change how fintech and financial services companies handle customer data throughout the continent. It's time for industry participants to recast open banking as a business opportunity rather than a regulatory requirement.
PSR will enable Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs) to create unique API interfaces that link to banks and other payment providers directly. On the surface, this ought to increase open banking's
acceptance and uptake.
However, banks and other payment companies will also need to provide quarterly reports on the availability and performance of their APIs. By encouraging improved API build quality to connect with banks, this API "league table" could accelerate user adoption and point companies in the direction of the top providers.
PSD3, which takes into account new difficulties in fraud, digital payment transformation, access to payment systems, and open banking baselines, is more expansive and exercises more muscle than its predecessor PSD2. The proposed PSD3 text, however, states there will be no fees for using open banking interfaces and no requirement for standard APIs, meaning thousands of PISP/AISP APIs operating differently.
While PSD2 made open banking a reality by allowing bank APIs to allow customers to consent to the sharing of their data with third parties, this remains a possibility. This means that the limitations of individual APIs and the absence of a clear commercial pricing consensus may hinder adoption and impede the process of bringing Europe and the rest of the globe closer to interoperability.
About almost all financial services data, including current and savings accounts, credit cards, mortgages, loans, and pension accounts, FIDA seeks to grant financial information service providers (FISPs) the ability to obtain real-time client data. It implies that to make better lending decisions, lenders and credit providers, for instance, will have access to more and higher-quality data.
To give you an idea of what that might entail, Experian data from 2022 indicates
that more than five million individuals in the UK who are referred to as "credit invisible" were not eligible for the best credit rates and packages because there was inadequate information available about their financial histories. Millions of people with "thin credit files" who are nevertheless creditworthy may be able to access additional services thanks to FIDA since it uses real-time data rather than the static historical data used by conventional credit scoring methods.
Fintech ventures and banks may increase data-driven decision-making, lessen risk exposure, lower default and delinquency rates, and benefit from fewer credit losses by utilising real-time transaction data from a larger range of consumer account products. Lenders may now see a complete, high-definition image of an individual's financial situation thanks to real-time open banking and open finance data, rather than depending on incomplete snapshots of their clients' financial situations. What was the outcome? More highly customised goods and services increase market share, foster greater client loyalty, and increase consumer involvement.
Before these legislative changes take effect in 2025–2026, banks, fintech companies, and other third-party participants must act quickly to make sure their technological platforms and business procedures can accommodate them. Putting money into risk monitoring, anti-fraud measures, and a software platform that can adapt to changing rules will open up a world of possibilities for innovation and teamwork, as well as help to establish a genuinely global open banking ecosystem.
NISHANT SHAH CHARTERED ACCOUNTANT AND FELLOW OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
Embedded finance refers to the integration of financial services into non-financial products and services
The dark web is the part of the internet that cannot be accessed without specialised software. TOR (The Onion Routing) is one such well-known software that provides significant anonymity and encryption. Accessing the dark web may not always be considered illegal, in and of itself. However, the dark web’s association with anonymity creates an equally strong association with unlawful activities.
Not to be confused with the deep web (the part of the Internet not indexed by search engines), the dark web is a part of the deep web and is used for many reasons: maintaining privacy, circumventing censorship, or providing an enabling space for criminal activity (cybercrime tools, trading data or illicit materials).
Increased ‘cyberization’ has been integral to the financial sector over recent decades and cyberthreats have increased in step, directly impacting the operational risks faced by the financial industry. The dark web provides an enabling facilitator for these cyberthreats.
For example, hacker forums on the dark web can share expertise or coordinate attacks in relative anonymity, syphoning funds or stealing data. Ransomware attacks can be executed on the dark web preventing lawful access until a ransom is paid. In fact, ‘Ransomware-as-aService’ is readily available on the dark web.
The dark web can also facilitate DDoS (Distributed Denial of Service) attacks; denial of access to financial
services in such a time-sensitive sector has a significant negative impact, operationally and financially.
Consumers hold and transact multiple financial assets online and use their identities to access these assets. The identity of a consumer online is often simply a collection of data points others don’t know. Such data points include password credentials, card details, dates, addresses, relationships, history etc. With enough of these data points, a person’s identity can be reconstructed online to gain access to the assets illegally. Obtaining these pieces of data is made much easier when there is a market where missing bits can be bought and sold in anonymity. This is, once again, where the dark web comes in.
The financial sector holds a wealth of such data for its consumers, since it collects the data to enable its service offerings while also maintaining regulatory obligations. Financial institutions are therefore valuable targets of cybercriminals who use the dark web to plan and execute data theft. At the same time, the dark web enables them to monetise the stolen data.
Malware that directly infects users' computers and steals banking credentials is also sold on the dark web. It captures keystrokes or creates backdoors for later exploitation, leading to the loss of assets and consumer trust.
Consumer trust is crucial in the financial sector. Illegal activities on the dark web can erode trust and damage reputation, significantly impacting the financial industry.
Exploiting inside information, commonly referred to as UPSI (Unpublished Price Sensitive Information), undermines trust and investment in capital markets. The dark web enables buying and selling inside information in secrecy which also hurts the regulatory ability to curtail insider information. In response to such challenges, regulators have required the maintenance of Structured Digital Databases to track the flow of all UPSI from the source.
The higher the risk, the more capital the financial sector must set aside to manage it. The impact of operational risks in the financial industry cannot be considered complete without considering the contribution of the dark web in increasing the cyberthreat quotient. Cybercriminals who are yet to achieve the required levels of sophistication can also avail of ‘cybercrime-as-aservice’ on the dark web, increasing the number of ‘threat actors’ and the resultant risks. With the increase in risks comes an increase in the need to hold regulatory capital in reserve, reducing the capital otherwise available for use and ultimately hurting the financial sector.
The threat from the dark web to the financial sector as the primary but anonymous facilitator of tools, resources, expertise, and services continues to increase. In addition, attacks on other sectors can also impact the financial industry. For example, sensitive information belonging
to 815 million Indians recently emerged on the dark web, brought by a hacker described as ‘pwn0001’, advertising the stolen information on the dark web. While the financial sector is not believed to be the source, misuse of such data can nonetheless compromise its consumers. In the future, the influence of the dark web is expected to grow. A marketplace called STYX was introduced on the dark web in early 2023, offering services primarily related to financial fraud. These services include the sale of identities, money laundering, DDoS attacks, bypass mechanisms for 2FA, and distribution of malware, among others. The increasing threat quotient of the dark web to the financial sector rightly deserves greater attention. Simply put, there is little alternative.
Nishant Shah founded Jonosfero International, leveraging over 22 years of global banking expertise. He previously led Banking Market Regulatory and Operating Risk at JPMorgan Chase in India, having worked extensively on risk management technology projects worldwide. Shah, a Chartered Accountant and Fellow of the Institute of Chartered Accountants of India, previously held senior positions at Citibank and Standard Chartered before joining JPMorgan. He is recognised as an expert in complex banking markets and has received multiple awards. Additionally, Nishant Shah has worked on emerging technologies like WEB3.0, FinTech, and has been active in policy consultations across industry and regulatory bodies
With over seven decades of proven performance, La Trobe Financial sets its sights on bringing US Private Credit to the Australian investment landscape
La Trobe Financial has established itself as one of Australia’s most reputable and trusted alternative asset managers. For over seven decades, the firm has built investor wealth by focusing on quality, discipline, and consistent performance across economic cycles. Now, La Trobe Financial is setting its sights on introducing US Private Credit to the Australian investment landscape. To discuss this new development and its implications for Australian investors, the venture's Chief Investment Officer, Chris Paton, spoke with International Finance.
Here are the excerpts from the interview:
Q: What is the La Trobe US Private Credit Fund?
Chris Paton: The La Trobe US Private Credit Fund has been deliberately designed to allow investors to participate in a generational investment thematic: rebuilding the US middle market, which will benefit from strong investment tailwinds of the coming decades. There are billions of dollars in public expenditure pledged through the US Inflation Reduction Act, with the support of both major political parties to re-shore manufacturing and jobs to America.
We provide investors access to that investment theme through a unique investment product. A pure-play investment into primarily originated, senior secured first lien term loans provided to US middle market companies. These are companies predominantly owned by some of the largest private equity firms in the world.
As some short takeaways, our La Trobe US Private Credit Fund has monthly subscriptions and distributions, quarterly liquidity access, up to 5% of each class of units on issue. It also offers a variable yield target return, from 8.50% per annum net of fees and expenses, but before FX rate adjustments, and also will have AUD invested capital hedged against foreign exchange risk.
We designed this product with our product partners, Morgan Stanley, across two years to make sure we were getting it right for Australian investors.
Q: What is the market opportunity right now for investors?
Chris Paton: The fundamentals of these growth areas and the assets they will generate align very closely with the needs of investors. They are long-term trends. They will not likely become assets with wild price fluctuations, and they will generate income.
This positions alternative investments such as private credit with strong tailwinds. It is an asset class where managers can extract value and generate returns for investors when done correctly.
Success in any sector starts with getting the fundamentals right. We have found across our seven-decade history of managing Australian real estate private credit, that there are three non-negotiable for success: the right assets,
the right structure, and the right manager.
The approach to our US Private Credit Fund has been for Morgan Stanley to construct a diversified portfolio comprised primarily of directly originated, senior secured first-lien term loans provided to companies in the US middle market. We target larger, more robust companies. Companies with an EBITDA from $15 million to 200 million, operate across diversified industries within the US middle market. We deliberately avoid lending to companies and sectors that are cyclical.
We have a particular focus on the US middle market, which is by itself the world’s third-largest economy and forms the backbone of the American economy, and will stand to benefit from the big generational investment trends: deglobalisation, decarbonisation, digitisation and de-banking.
Our product partners, Morgan Stanley, focus on the quality of assets and are highly selective in the loans they approve for our investment portfolio. They reject 95% of the 1,000+ loans they review each year, investing only in those where they have the highest confidence in the return of capital and payment of interest throughout the life of the loan.
All of this is done very deliberately, as we seek to construct a portfolio which delivers performance for investors across the economic and market cycle.
Q: What does the future look like?
Chris Paton: Direct lending in the US middle market has provided an annual return to investors of c.9.4% over the past 20 years. It is an asset class which has delivered performance across a range of economic cycles. Looking ahead, the growth of private credit looks set to continue.
The total size of the asset class is forecast to reach $2.8 trillion by 2028 according to Preqin, an alternative assets researcher. It is an asset class benefiting from the rise of private markets, with fewer companies accessing capital via stock exchanges, and instead looking to raise funds directly through private markets. With banks having continued to retreat from these market segments, and fewer companies tapping stock exchanges to raise capital, the opportunities grow for private capital providers to step in; providing lending to high-quality businesses that would previously have either listed on a stock exchange or sourced a loan from a bank.
Experience from our existing strategies has proven that a well-diversified, carefully selected portfolio of private credit assets, when managed effectively, can perform well throughout the economic cycle. This thesis remains unchanged, and with this conviction, we present the La Trobe US Private Credit Fund to our investors.
Since 2015, China has been Germany's most significant trading partner, and in 2022, trade between the two reached a record high
IF CORRESPONDENT
According to the IMD World Competitiveness Ranking, Germany has been slipping behind other leading economies. Placed fifteenth overall in 2022, it fell seven spots in 2023
Call Germany’s economic health moribund, and you won’t be wrong. The European powerhouse became the world's worst-performing large economy in 2023 when its output fell by 0.3% from 2022. Germany Economy Minister Robert Habeck said that his government's forecast for 2024 growth had been revised down from 1.3% to 0.2%. In contrast, the United States economy is predicted by the International Monetary Fund (IMF) to grow by 2.5% in 2024, while China's economy is predicted to grow by 5%. Germany’s plight, described by Habeck as "dramatically bad,” is also hurting the European Union’s economic health.
The country has been severely impacted by the rise in energy prices, since Russia's invasion of Ukraine in 2022. Significant inflationary pressures have affected the efficient production processes of German companies.
German businesses are finding it more difficult to obtain funding due to rising interest rates, which have also increased their operating expenses and decreased both domestic and foreign demand.
Additionally, China has decelerated and begun to make investments toward self-sufficiency, lessening its reliance on imported goods and ser-
vices as well as foreign technology. For German businesses that have heavily depended on the Chinese market over the previous 20 years, this is undoubtedly a problem.
According to the IMD World Competitiveness Ranking, Germany has been slipping behind other leading economies. Placed fifteenth overall in 2022, it fell seven spots in 2023 as all four ranking factors—economic performance, business efficiency, government efficiency, and infrastructure—deteriorated.
As per Habeck, Germany's reliance on exports has made it particularly vulnerable to changes in global trade patterns. Another broader structural problem for the German economy is its lack of workers. On top of these, add the soaring energy costs and the resultant inflation, which are squeezing German households further.
"In its monthly report, the Bundesbank said 'stress factors' would probably remain and that economic output could therefore decline again slightly in the first quarter of 2024. Two negative quarters in a row would put Germany into a socalled technical recession," BBC reported.
What is stopping the analysts from calling it a full-blown recession for the country is the fact that the German economy is predicted to grow slightly in 2024. And there are some indications towards that in the form of falling inflation, low
unemployment and reduced energy costs.
Despite gloomy predictions, Germany successfully pivoted away from Russian gas without blackouts, and wages are rising in many sectors to boost consumer demand, yet businesses remain pessimistic, according to the BBC.
They blame political in-fighting behind the country's economic woes. Habeck's ministry has drafted legislation which should cut bureaucracy and give German businesses billions of euros of tax breaks.
The law, despite clearing the huddles in the German parliament's lower house, got blocked by opposition conservatives in the upper house. And yes, squabbling within Chancellor Olaf Scholz's three-way governing coalition is not a secret anymore.
Even if economists’ optimism around Germany avoiding recession comes true, the harsh reality is that the European giant is facing growth stagnation, something which can only be cured through policy course corrections. How it can be done? Let’s find out.
Diversify, diversify and diversify Germany needs to stop depending too much on
China to be its main trading partner. Since 2015, China has been Germany's most significant trading partner, and in 2022, trade between the two reached a record high.
Berlin has long acknowledged that its reliance on China is too great, but changing manufacturing practices is a slow process that will eventually have negative effects on the country's economic performance.
Consider Volkswagen, which, despite selling only about 3 million cars annually and a peak of over 4 million in 2018, remains a significant player in China, where local companies like BYD have benefited from the rapid shift to electric vehicles.
Foreign automobiles' market share in China decreased from 64% in 2020 to 44% in 2023. For German corporations such as Volkswagen, the task lies in converting this into a chance for increased diversification.
“It will be challenging to diversify while keeping up current trade and investments in China, though, as we should anticipate that the Asian nation will charge more for international businesses to access its domestic market. But in an uncertain geopolitical environment like this, diversification needs to be the top strategic goal,” The Conversation reported.
According to a recent analysis, by Kiel Institute for the World Economy located in Germany, the country's economy would contract by 5% in the event of an abrupt stop to trade with China, matching the COVID-19 pandemic or the global financial crisis in terms of severity.
Germany inserted a "debt brake" into its constitution in 2009. It was believed that the rule, which drastically limits Germany's capacity to borrow and run deficits, would encourage prudent spending and guarantee the stability of the public finances.
As Greece and other nations struggled with their debts in the years following the global financial crisis, Angela Merkel and the socalled Troika of the European Commission, European Central Bank, and IMF adopted this as their catchphrase.
But now, things have drastically changed in the area. Due to the "debt brake" clause, Germany's constitutional court recently halted the transfer of €60 billion (£51 billion) from a pandemic budget to a climate fund. This has resulted in an unresolved budget crisis.
More broadly, because Germany and the European Union compete with other nations that support their businesses, the debt brake has grown to be a significant challenge. Brussels, for example, has opened an enquiry into the possibility of significant market distortions brought about by Chinese state subsidies in the automobile industry.
To help companies transform and remain competitive globally, Germany's only viable option is to make significant investments in R&D, infrastructure, and more efficient state operations. Increased reliance on debt is necessary to finance this.
According to recent statistics from the Bundesbank, foreign direct investment in Germany fell to €30.5 billion in the first half of 2023 from €34.01 billion in the corresponding period of 2022. This is the lowest inflow number in nearly 20 years and a sharp decline.
It urges serious consideration of Germany's declining competitiveness and its capacity to draw in foreign capital. Investing in innovation via European Union-led R&D is the only way to reverse this downward trend. Innovation has long been the driving force behind the economic success of Germany and the European Union.
At just over 3% of GDP annually, Germany is among the countries in the bloc that spends the most on research and development. However, considering that the United States and Japan currently invest close to 3.5% of GDP, this is
about the same as they were ten years ago. Germany (and the EU) must step up R&D and stay up to date with the latest technological developments.
In a globalised world where nations ranging from China to the US are progressively providing corporate subsidies and implementing policies to safeguard their domestic economies, Germany needs to allocate long-term resources towards government efficiency, infrastructure development, and the promotion of corporate ecosystems. Increased foreign investment will result from this, which is essential for Germany and its EU counterparts to innovate and maintain their competitiveness in the global market.
Meanwhile, according to a Reuters’ story citing the Bundesbank, the German economy was probably in recession in the first quarter of 2024 as weak industrial demand and consumer spending continued to delay the recovery.
According to a Bloomberg survey conducted from March 8–14, the nation's GDP will shrink by 0.1% in the first quarter.
For the first three months of the year, analysts were forecasting stagnation. Since the start of the Russia-Ukraine war, the largest economy in Europe has struggled due to rising energy and borrowing costs, but recent indicators, including PMI data and sentiment figures from the ZEW Economic Research Institute, suggest that at least a bottom has been reached.
Germany, which has long prided it-
Germany's GDP in current prices from 2014 to 2023 (In Billion US Dollars)
Source: Statista
self on its "nondisruptive working culture," has been hamstrung by a wave of strikes in 2024. The first three months of the year have had the most strikes in the European country in 25 years.
Be it railways, airports, hospitals or banks, worker agitations have taken a full toll on the German economy, so much so, that Jens Spahn, deputy leader of the conservative Christian Democrats in the Parliament, denounced a “strike madness” that he said risked paralysing Germany.
As the country faces stalled growth, the burden has fallen most heavily on its low- and middleincome workers. Since 2022, their real wages have shrunk more than at any time since the Second World War. To aggravate the problems further, the European giant is facing an ageing population, with officials estimating there will be a shortage of seven million workers by 2035.
Apart from demanding inflationadjusted pay raises, the workers have also been vociferous about better working conditions, the ability to plan work shifts and vacations long in advance, a better work-life balance and fewer hours.
As per the analysts, Germany’s tax system taxes income far more heavily than it does private wealth, disproportionately affecting lowand middle-income workers. And
it needs to be changed.
Clemens Feust, president of the Ifo Institute for Economic Research, told the New York Times that working full-time can be more costly than staying at home. Because of the way taxes are structured for married couples, a family with one partner working full-time and the other working part-time had more income at the end of the month than two full-time working parents.
The strikes are piling up a massive economic risk as critical infrastructures grind to a halt. The one-day strike at airports in March 2024 grounded some 570 flights and affected 90,000 travellers. The Kiel Institute for the World Economy has estimated that the train conductors’ strikes cost the German economy about 100 million euros per day.
However, the disruption also brings an opportunity for the German government to ensure a serious policy reform, which will give the industrial workers both financial and occupational security. After all, one can only ensure a "nondisruptive working culture," if the participating labour force is happy about their jobs and are eager to invest themselves more in their country's economic progress.
Sri Lanka's economy will likely grow 3% in 2024, while inflation, which peaked at 70% in 2022, has moderated to 0.5%
IF CORRESPONDENT
September 2024 marked a key moment in Sri Lanka's political history. The country, which had been struggling with economic challenges since 2022, elected Anura Kumara Dissanayake, a leftist antipoverty advocate, as its new President.
The 55-year-old, immediately after taking over the country's reign, dissolved the 225-member Parliament in which his left-leaning National People's Power (NPP) alliance had just three seats. The snap election will take place on 14 November, almost a year ahead of schedule. The president also selected his ally Harini Amarasuriya as Prime Minister, choosing a woman for the third time in the country's history.
Anura Kumara Dissanayake, who has drawn increasing support in recent years for his anti-corruption and anti-poverty policies, won just 3% votes in the 2019 presidential election. The new President, however, has said that he had no magic solution to hardships people were facing, but would seek a collective effort to end the crisis.
Rather than being a geopolitical
player, Dissanayake wants to rescue Sri Lanka from its economic collapse. The island nation has €34 billion worth of external debt, rising poverty levels, and soaring prices for essential goods. He criticised both the ruling party and the main opposition for adhering to the same neoliberal economic model, which he claimed had led to the country’s economic plight.
The 2019 suicide bombings harmed the Sri Lankan tourism industry badly. Less than a year later, the COVID-19 pandemic and ensuing global food and fuel price rises, combined with interest rate hikes, further complicated things.
In April 2022, Sri Lanka defaulted on its debt, sparking protests that forced out President Gotabaya Rajapaksa. However,
there were some positive changes under President Ranil Wickremesinghe, who took office in 2022.
Sri Lanka's economy is expected to grow 3% in 2024, reversing 2023's contraction, while inflation, which peaked at 70% in September 2022, moderated to 0.5% in August this year. Vital foreign reserves which were once so low that Sri Lanka ran out of fuel and medicines bounced back to $6 billion.
Anura Kumara Dissanayake, as per the Citi analysts, need to deal with the situation where there will be a heightened risk of delays to IMF reviews which trigger the release of money, and a "high probability of debt deal renegotiation."
Sri Lanka signed a $10 billion debt rework with official creditors Japan, China and India in June 2024. Colombo also struck an 11th-hour deal
with bondholders recently to revise the restructuring of $12.5 billion in international bonds to get crucial IMF signoff, a key part of getting the country out of default. However, the bondholder deal is particularly tenuous as a new government could seek changes or even scrap it in search of a better proposal.
Since Dissanayake has dissolved the Parliament, the snap elections will add another source of uncertainty among investors and observers.
Anura Kumara Dissanayake leads both the National People’s Power Alliance (NPP) and the Janatha Vimukthi Peramuna (JVP). In 2019, under Dissanayake’s leadership, the NPP was formed as a socialist alliance with several other organisations. While the JVP continues to adhere to Marxist principles, the NPP has shaped itself as a centre-left, social democratic platform.
For the first time, the economy replaced "national security" as an issue in a Lankan Presidential election. All main contenders promised to fix the country’s broken economy, which has been the product of rash policy decisions made by former President Gotabaya Rajapaksa.
In April 2022, Sri Lanka announced it would default on its foreign loans as the “last resort." As the imports-reliant South Asian country ran out of dollars, essential supplies were affected, along with prolonged power cuts. The agitations became a mass uprising and evicted Gotabaya from the presidency. Soon after, Ranil Wickremesinghe was elected to the country’s top office through a parliamentary vote.
Although Gotabaya was considering seeking IMF assistance, it was only in March 2023 that the agreement for a $3-billion Extended Fund Facility (EFF) was finalised by his successor. Although Sri Lanka had obtained IMF assistance 16
times earlier, this was its first agreement after defaulting on its loans.
The IMF, in return, underscored the need for a “comprehensive anti-corruption reform agenda." To meet the targets set, the government undertook various policy measures, like restoring the taxes that were cut by the previous administration and increasing the Value Added Tax (VAT) to 18% from January 2024.
In June 2024, Sri Lanka sealed an agreement with the Official Creditor Committee (OCC), to restructure the debt owed to its bilateral lenders including India, and signed a separate agreement with China for debt treatment. The OCC comprises 17 countries including India and Japan, from whom Sri Lanka has also borrowed from. OCC was formed in May 2023 to simplify Sri Lanka’s debt negotiations following its default. With the OCC, Sri Lanka reached a restructuring agreement for $5.8 billion of its bilateral loans.
Sri Lanka in September 2024 reached agreements to restructure approximately $14.2 billion of sovereign debt with the holders of its International Sovereign Bonds. On the domestic debt front, Sri Lanka’s restructuring efforts aim to protect local banks, while transferring the burden to superannuation funds, including the Employees’ Provident Fund.
Foreign investment of around $1.5 billion made its way into Sri Lanka in 2023. The tourism industry saw arrivals double, compared to 2022, bringing in revenue totalling over $2 billion. In the first half of 2024, Sri Lanka’s tourism revenue reached over $1.5 billion. Remittances showed an uptick of over 50%, amounting to nearly $6 billion in 2023. The country's gross official reserves rose to $5.9 billion in August 2024. Export revenue increased; however, the apparel and textile industry experienced a drop
in earnings.
Still, a majority of Sri Lankans are reeling under the enduring impact of the crisis. The electricity tariff hike in 2023 threw over a million families off the grid, as they could not afford their bills. Sri Lanka has reportedly the highest electricity bills in the region, with consumers paying nearly three times more than their South Asian counterparts. In early 2024, the nation reduced the tariff by around 20%, but those who lost their connections in 2023 don't have enough household savings to settle the outstanding arrears.
Despite its reduction, inflation is very much there in the country. From the time food inflation soared to 94% at the height of the crisis, shoppers have been forced to pay more for essential goods. According to the Central Bank of Sri Lanka, food inflation accelerated marginally to 1.5% in July 2024 from 1.4% in June 2024. Further, non-food inflation also accelerated to 2.8% in July 2024 from 1.8% in June 2024. Inflation continued to remain below the apex bank's 5% target, but higher utility bills, cooking gas and transport costs, are draining out the families. Add to this the 18% VAT.
While some essentials, including wheat flour, baby food, and medicines are VAT-exempt, everything else costs three or four times as much as it did before 2022. The increased cost of producing, sourcing, and supplying items in Sri Lanka’s food ecosystem is travelling at a much faster rate to the consumer.
During the 2022 economic crisis, around half a million jobs were lost, food insecurity and malnutrition became widespread, poverty doubled, and inequality widened, according to the World Bank. Small and mediumsized businesses are still struggling to return to the path of profitability. A UNDP report published in March 2024
said approximately six in 10 (or 55.7%) of all people are multi-dimensionally vulnerable in at least three of the 12 weighted indicators of access to health, education, employment, and income.
Sri Lanka’s economy made a stunning recovery under Wickremesinghe. After securing an agreement with the International Monetary Fund (IMF), the currency stabilised, the central bank rebuilt foreign reserves, and inflation fell to single digits. By the first half of 2024, the economy had grown by 5%.
The government successfully restructured its domestic debt, followed by a restructuring of its bilateral debt (government-to-government loans). Just days before the election, an agreement was reached with international bondholders to restructure the remaining sovereign debt. However, Dissanayake will inherit an economy where 54.9% of Lankan households are still indebted, and 60.5 % of families are grappling with a drop in household income after the crisis.
While there have been structural reforms to rein in public spending, apart from raising tax revenues, debt restructuring measures with bilateral lenders have also helped attract additional financing from the World Bank and the Asian Development Bank.
Still, poverty levels more than doubled in the island nation from 2019-23, with over a quarter of the population living below the poverty line. Sri Lanka also holds the world’s highest interest payments to government revenue ratio and the grace period on bilateral loan repayments will expire in 2028.
China is the country's largest bilateral creditor and Colombo has become a perfect case study for understanding the
Sri Lanka's growth rate of the real GDP from 2013 to 2022 (In Percentage)
Source: Statista
phenomenon called "China’s Debt Trap Diplomacy."
Claims over China’s predatory economic and lending activities occupied the media headlines as Beijing secured a 99-year lease for the Hambantota port project in 2017 after Colombo was unable to service its debt obligations.
Sri Lanka has also become the hotbed of geopolitical rivalry between China and India, and this has policy implications. For example, delays in the release of the second tranche of an IMF loan to Sri Lanka in 2023 were attributed to China’s stalled approval of a debt relief framework. This was also fuelled in part by Beijing's reluctance to join the official creditor committee that is co-chaired by India, alongside Japan and France. The Xi Jinping government preferred to discuss debt relief efforts with Colombo bilaterally through its Exim Bank.
Colombo needs both New Delhi and Beijing. And it seems that even the United States have entered the geopolitical battlefield. In 2023, the US International Development Finance Corporation
announced a commitment of half a billion dollars to support the development of a deepwater shipping container terminal in the Port of Colombo. Such projects aim to dilute China’s economic influence and reaffirm Sri Lanka’s geostrategic importance along vital maritime trade routes in the Indian Ocean.
Anura Kumara Dissanayake will have limited room to manoeuvre around, even as voters expect him to fulfil popular demands. The new President will likely pursue policies to reflect collective decisions made by the politburos and central committees of the NPP and JVP, rather than his individual views. He advocates for an economic system where activities are coordinated through a central government plan, emphasising the importance of “economic democracy.”
The new President wants to transform Sri Lanka into a production-based economy, instead of solely depending on service industries. One of his key policies is to promote local production of all viable food products to reduce reliance on imports. To support these activities, the NPP plans to establish a development bank. Additionally, the NPP proposes increasing government spending on education and health care, in line with Sri Lanka’s tradition of providing free, universal access to both.
Sri Lanka reached a draft deal with creditors to restructure $12.5 billion of international bonds, in a major boost to the island nation's fragile recovery just before its presidential election. The country had to renegotiate parts of a previous draft deal, which it announced in July 2024, after objections from the International Monetary Fund and official creditors.
Colombo also finalised a preliminary
deal to restructure $3.3 billion in debt with the China Development Bank, one of Beijing’s two main trade policy banks.
Former President Wickremesinghe told the media that the IMF would likely visit Sri Lanka two weeks after the election. However, there are now chances that Dissanayake eyeing changes in some terms of the IMF bailout, and this may also impact restructuring efforts.
"The latest draft agreement raised the GDP thresholds under which bondholders would get bigger payments under so-called macro-linked bonds. The previous agreement would have triggered a GDP of $92 billion-$100 billion, while the latest agreement increased those targets to $94 billion-$107 billion," Reuters reported.
The latest deal was hailed as a major step forward in Sri Lanka's efforts to emerge from more than two years of debt default, while its Finance Ministry bond debt service payments during its IMF
programme would be $9.5 billion lower as a result of the proposed agreement.
Anura Kumara Dissanayake's tax cut pledges won over the Lankans fighting poverty. However, jumpstarting the economy while making good on promises to expand welfare, rework the $2.9-billion IMF bailout and negotiate better deals with debtors, presents a difficult conundrum for Colombo and its investors.
His promises to change the parameters of the IMF bailout and, crucially, the way it determines how much debt is sustainable, may delay new money from the fund and also force lenders to renegotiate debt deals. The fund was set to review progress on reforms by October 1, before its board paves the way for a payout of the next tranche, which had been expected in November 2024. Analysts now expect this timeline to hold.
While a general election could, of course, help bolster Dissanayake's
support, it also means more delays in tackling key questions around the economy and debt. The IMF said it would work with Dissanayake and discuss the timing of its third review of the current programme with Sri Lanka "as soon as practicable."
Given the severity of Sri Lanka’s economic crisis, Dissanayake has no other option, but to stay within the IMF programme for now. Still, he has vowed to renegotiate to make the programme more “people-friendly.”
Dissanayake’s proposals include raising the personal income tax exemption threshold to double its current level and removing taxes on essential goods. His party also plans to add jobs to the public sector, despite the ongoing effort to reduce the government workforce to manage the deficit.
These populist policies will likely strain government revenues while increasing expenses. The IMF programme requires Sri Lanka to maintain a primary budget surplus of at least 2.3% of GDP to ensure debt sustainability. Dissanayake has promised not to jeopardise the country’s economic stability by deviating from this target. His strategy is to improve the efficiency of tax collection, to generate enough revenue to fund his policies.
Anura Kumara Dissanayake wants better terms. However, since most of the IMF agreement terms are already in place, it remains uncertain whether the new government will attempt to renegotiate them.
Bangladesh's economy is in terrible shape, with foreign reserves fast depleting, prices skyrocketing, the banking system in disarray, and most economic activity coming to a complete halt
Bangladesh, the eighth most populated nation in the world, is facing uncertain times in the wake of its fierce revolution that resulted in a military-backed government change and its subsequent appeals for international loans totalling $6.5 billion.
Bangladesh was perceived internationally as having a rapid economic development trajectory as recently as 2022. But as of right now, nothing more exemplifies how Bangladesh's economic success story is coming apart than its desperate pleas for a fresh $3 billion bailout from the IMF, $1.5 billion from the World Bank, $1 billion from the Asian Development Bank, and cooperation from the Japan International Cooperation Agency.
Bangladesh's economy is in terrible shape, with foreign reserves fast depleting, prices skyrocketing, the banking system in disarray, and most economic activity coming to a complete halt
Before the global economic consequences from the Ukraine war started to weigh on Bangladesh's finances, the Sheikh Hasina regime brought political stability and great economic growth to Bangladesh, despite her almost 15-year reign growing increasingly dictatorial.
Bangladesh's growth and stability stand in contrast to Pakistan's ongoing political and economic challenges. The two countries diverged in 1971 following a liberation war marked by significant violence and loss of life.
After Sheikh Hasina was overthrown in a youth-led uprising, the military chose an interim civilian-led government that is currently fighting to reestablish the rule of law and revitalise an economy severely damaged by widespread mob violence and destruction. Bangladeshi politics has historically involved the military as a major actor. The military's influence over the government in a democratic context is concerning, and in Bangladesh, this has contributed to significant instability.
Apart from hundreds of deaths during the antigovernment protests, the new regime contended that some of the rioters had stolen weaponry from law enforcement and other persons. Additionally, mobs in Dhaka took some police officers hostage, resulting in the deaths of at least 44 officers.
Political tensions have increased due to the new government's involvement in human rights violations, including purges, arbitrary detentions, and restrictions on freedom of speech. Many individuals, including academics, journalists, and political opponents, have faced serious charges that led to their imprisonment.
Recently, a 75-year-old retired Supreme Court justice was severely beaten in a magistrate's court, suffering injuries that required emergency surgery. This raises concerns about whether Bangladesh might follow a similar path to Pakistan, where ongoing political dysfunction and economic challenges have resulted in persistent conflict. In
Pakistan, elections have struggled to reduce the military's influence over politics.
In Bangladesh, the military has increasingly taken on a prominent role in national decisionmaking, with the army commander emerging as a key leader. Former military general M. Sakhawat Hussain, now a minister in the interim government, made headlines by threatening political extortionists, stating he had "asked the army leader to break your legs."
The 84-year-old Nobel Peace Prize winner Muhammad Yunus is in charge of an interim government that is unconstitutional.
Bangladesh's economy is in terrible shape, with foreign reserves fast depleting, prices skyrocketing, the banking system in disarray, and most economic activity coming to a complete halt. Regaining the trust of international investors will be difficult in light of the widespread looting, vandalism, and arson that have occurred since July 2024. Travel advisories to Bangladesh are still in force for many nations.
The resurgence of some groups poses a serious challenge to law and order in Bangladesh, similar to the situation in Pakistan.
While Prime Minister Sheikh Hasina's govern-
ment had taken strong measures against faction groups, recent protests led to the release of hundreds of radical elements from jails. Attacks on jails started more than two weeks before the overthrow of the government, but they picked up steam following Hasina's forcible flight to India.
In a televised speech on August 5, Bangladesh's chief of army, General Waker-uz-Zaman, announced Sheikh Hasina's resignation and departure, saying he was "taking full responsibility" and would assist in "forming an interim administration."
However, a partisan administration of three former military generals, a hard-line Islamist cleric, and two student protest leaders have taken office in place of a broad-based government of national unity.
Bangladesh is currently experiencing significant political divisions, which have contributed to cycles of violence and retaliation. Without efforts toward national healing and reconciliation, these divisions are likely to lead to increased tensions and economic instability.
The economy of Bangladesh may confront new difficulties as a result of the present political unrest.
A downturn in economic growth will be among the most noticeable effects right away since volatility breeds doubt and erodes investor confidence.
Official figures denote that the GDP of the nation has grown by 6.6% annually on average during the last ten years. According to Moody's ratings agency, this growth for the year ending in June 2025 will be significantly less than 6%.
To get the nation's economy back on track, the Muhammad Yunusled interim administration must promote political stability and restore law and order.
Before the latest round of upheaval, Bangladesh was already dealing with several economic difficulties. Among these has been a protracted period of high inflation since 2022. In July, the rate of inflation surged to a record 14.1%, with food inflation reaching a 12-year high of 11.66%.
The current situation is likely to persist. Supply chain disruptions from movement restrictions during the unrest have led to shortages, and high inflation is affecting lower-income individuals more significantly.
In Bangladesh, unemployment and the slow emergence of new jobs, particularly among educated youth, have long been problems. Currently, over twice as many Bangladeshi people as the worldwide average, 40% of those between the ages of 15 and 24, are not enrolled in school, employed, or receiving training.
Private sector investment in the country, a significant source of employment creation, has remained flat. Furthermore, the current unrest will provide additional harm to the investment environment.
From $48 billion (£36.6 billion) in August 2021 to just over $18 billion (£13.8 billion) in May 2024,
Bangladesh’s foreign exchange reserves have dropped significantly. The International Monetary Fund (IMF) set a minimum reserve requirement for countries to clear import payments, which the current level of reserves hardly matches.
A protracted period of unrest can lead to a worsening of the situation as export and remittance income decline. Having accounted for twothirds of the GDP per capita increase in Bangladesh between 2001 and 2020, these are the country's two main sources of growth.
The primary goal of the transitional administration will be to prepare the way for a smooth handoff to more permanent leadership. It will also probably have to deal with the urgent economic issues facing the nation. Dealing with inflation is an urgent priority. The central bank has
been under fire in recent years from IMF and Bangladeshi economists for improper use of monetary policy. For example, despite mounting inflationary pressure, interest rates on bank deposits and loans were limited to 6% and 9%, respectively, between April 2020 and June 2023.
The government, under Sheikh Hasina's leadership since 2009, also took out large loans from the central bank to improve its appalling tax mobilisation efforts. However, because borrowing from the central bank increases the amount of money in circulation, it typically increases inflationary pressure.
With the appointment of renowned economist Ahsan H Mansur as the new governor of the central bank, there is optimism that the bank will carry out its mandate.
However, a large number of the economic issues facing Bangladesh are systemic. Reforms are required, for instance, in the banking industry to address problems including excessively high loan default rates, subpar governance, and insufficient risk management procedures.
According to data from the Bangladesh Bank, 11% of loans are either not repaid at all or are subject to late repayment. However, the real percentage is probably far higher.
To guarantee that banks implement sound financial practices, greater regulatory monitoring and greater openness are required. The
interim administration has declared that a banking commission will be established shortly.
In addition, Bangladesh collects far less tax money than other nations of comparable development. The next administration will have to increase tax compliance, expand the tax base, and boost revenue collection effectiveness.
Public spending should be able to rise as a result of these measures. In comparison to similar countries, Bangladesh's public spending has decreased significantly in recent years, accounting for only 15% of GDP. Over Hasina's 15 years in office, around $150 billion (£115 billion) was embezzled from the nation.
According to the US-based think tank Global Financial Integrity, most of the stolen money came from bank loans that corporations and influential people took out.
Lastly, Bangladesh must stop depending so much on the clothing sector. With ready-made clothing making up 85% of all export earnings, it is the nation's largest export sector by far.
However, broadening the export market would not be a simple task. In 2026, Bangladesh is expected to leave the United Nations' list of the least developed nations. Consequently, it is unlikely that the nation will gain the commercial advantages it already enjoys in other nations, including having no export taxes.
Furthermore, the nation receives relatively little foreign direct investment. The new government needs to move toward trade liberalisation, easing investment restrictions, and removing structural obstacles like financing availability to make investing in Bangladeshi companies more alluring to foreign investors.
Right now, Bangladesh stands at a critical juncture as it navigates the aftermath of a turbulent revolution and the establishment of a militarybacked interim government. While the nation previously enjoyed rapid economic growth, the current climate is marked by severe financial instability, escalating inflation, and significant political divisions. The urgent need for international loans highlights the economic challenges ahead, including restoring investor confidence and addressing systemic banking issues.
As the new administration seeks to stabilise the country, it must prioritise political reconciliation and implement essential reforms. Only through unity and effective governance can Bangladesh hope to regain its footing and work towards a sustainable economic future, moving beyond its reliance on the garment sector and fostering a more diverse and resilient economy.
As another presidential election rears into view, spare a thought for campaign operatives on the eve of the first Friday of each month. Aids accustomed to surviving on minimal sleep struggle to survive on even less. Press releases and attack phrases are carefully thought out.
On hundreds of laptops and phones, the Bureau of Labour Statistics website is repeatedly refreshed as the clock approaches 8:30 am, until it eventually lands on a 40-page statistical release called "The Employment Situation."
The monthly jobs report is frequently cited as a trustworthy gauge of the US economy's state. But in the latter stages of an election campaign, examination of its contents usually takes a whole new turn.
“I cannot tell you the anxiety that you feel the night before, and that morning,” said Teddy Goff, digital director for Barack Obama’s re-election campaign in 2012, Guardian reported.
"As polling day neared, and each jobs report rolled around, there was a palpable fear that one bad month could take the entire enterprise down. Had there been a fluky month in October 2012 of negative growth,” said Goff, while adding, “you’re thinking, OK, cool, we’ve just lost the White House."
August saw a decrease in the unemployment rate from 4.3% to 4.2% as employers added 142,000 jobs, which was less than anticipated
Thus, staff members of Donald Trump and Kamala Harris anxiously awaited the release of the most recent official job data as the first week of September came to an end. August saw a decrease in the unemployment rate from 4.3% to 4.2% as employers added 142,000 jobs, which was less than anticipated.
Every side launched an attack. With nearly 16 million new jobs created since he and Kamala Harris took office, Joe Biden celebrated "historic gains" for American workers. The Trump campaign said that "warning lights" were flashing, as "fears of Kamala-induced recession" allegedly increased.
Dozens of news outlets reported on the release – and what it could mean for the election. But does it matter?
"I don’t think there’s any voter who should change their vote based on Friday’s release, with the possible exception of the 12 voting members of the Federal Reserve’s rate-setting policy committee," Jason Furman, who served as chairman of the council of economic
advisers under Barack Obama said.
“If you stopped the average person in the street, they would have no idea of how many jobs had been created, or how many people were out of work, in any given month," observed Stephanie Kelton, a professor of economics and public policy at Stony Brook University.
"And even if they did, people are not moving between camps because of a tenth of a percentage point shift in the unemployment rate,” she added.
That being said, anything can change the momentum of a campaign.
“When you’re in an election that’s basically tied, even very small events could be the difference between winning and losing, In terms of economic data, there are really a very small number of big events between now and election day," Furman said.
A third-quarter GDP economic growth estimate, two more jobs reports,
and two updates to the consumer price index, the widely followed measure of inflation, will all be released between September 10 and November 5, when tens of millions of Americans will cast their ballots. Experts will analyse, discuss, and go into great detail about each.
Right before the American election shifts into full gear, the largest economy in the world has reached a critical turning point.
Aiming to cool the economy and slow price growth, policymakers acted quickly after inflation shot up to its highest level in a generation two years ago, raising interest rates to a two-decade high in the process.
The Federal Reserve Chair, Jerome Powell, has hinted that rate cuts will begin as inflation is now returning to more normal levels. He acknowledged that there are more "downside risks" in the US labour market today.
The concerns regarding the upcoming stage were exposed in August 2024 when the global stock market experienced a brief but intense sell-off due to unsatisfactory jobs data from the previous month.
Even though the jobs report was better than anticipated, it received more negative attention due to the selloff, which made headlines worldwide.
Although the United States economy has recovered remarkably from the COVID pandemic's lowest points, most people in the country don't seem to realise this. According to an incorrect belief held by 55% of respondents in May, in a poll conducted for the Guardian, the economy was not in recession.
“There is a degree to which people just perceive the economy to be worse than it is. Part of it is just that the media has a bias toward negative stuff. The individual murderer gets
reported on ad nauseam in the local news. The declining murder rate over the course of three decades doesn’t get any coverage. There’s that same phenomenon attached to the economy," Goff said.
Additionally, there seems to be a disconnect between the way voters are informed about the state of the economy by official economic data and how they interact with it in their daily lives.
The Trump campaign, which claims Biden has destroyed jobs and fuelled inflation, is trying to win over people who have been directly impacted by the disruption of the economy since 2021.
How much attention would you pay to August's nationwide unemployment rate if you, or a relative, had recently lost your job?
“Voters, particularly the voters that will decide elections, they don’t think about the economy through the
prism of any government statistics,” David Plouffe, who managed Barack Obama’s 2008 campaign, told the Axe Files podcast in March.
He later joined the Kamala Harris campaign as a senior adviser.
Barack Obama entered the 2012 election with the highest jobless rate of any president to be re-elected since 1936. People felt good about the trajectory because, as Plouffe observed, "It was coming down."
"Should the Fed start reducing rates this month, as indicated, perhaps at the margin, in the tiniest of ways, some people might start to feel better about the economy. Maybe there’s a little bit of a vibe shift in having the ratecutting cycle begin, and knowing it’s underway," Kelton suggested.
That feeling shift, or lack thereof, could very well determine the outcome of a race this close. There has been a gap between American words and
deeds for a while now. Could the noise generated by a few positive or negative economic reports tip the scales?
"Right now when people have to put money behind their statements, they are very optimistic. They are spending lots of money. Businesses are investing a lot," Furman, now a professor at Harvard University, said.
"And yet, when they talk to pollsters and no money is at stake, they are quite negative. When they get into the ballot box, will they think more like they do in a store, or when they’re talking to a pollster? No one knows," he concluded.
Riyadh Saleh Al Malik successfully leads SASCO with a diverse skill set, including leadership and linguistic communication skills
The CEO of the Saudi Automotive Services Company (SASCO), Riyadh Saleh Al Malik, has been the driving force behind the company’s success, innovation, and leadership in the oil and gas sectors in the Kingdom. He has achieved notable and diverse advancements aligned with the Kingdom's “Vision 2030” economic diversification agenda.
Some of Riyadh Saleh Al Malik’s key achievements include recommending to the general assembly of the company's shareholders to increase the company's capital by granting free shares to shareholders, amounting to 100 million riyals from retained earnings, to match the size of the company's business and assets and to support future expansions.
SASCO has emerged as a leading company in the Kingdom’s retail sector, providing integrated services for passengers and travellers across the Gulf nation. Established in 1982, SASCO is known for prioritising customer satisfaction with its operations, which include car service centres, motels, restaurants, transportation, and the import and sale of equipment using modern, well-maintained machinery.
Under Riyadh Saleh Al Malik’s able leadership, the company experienced a substantial increase in profits, reaching 89.7 million riyals by the end of 2022. This marked a 76% increase compared to the 50.8 million riyals in profits achieved during the same period in 2021.
Over the years, SASCO has achieved significant success. These include strong financial stability, reflecting adept management of market fluctuations and uncertainties.
Additionally, SASCO has demonstrated effective strategic decision-making in adapting to evolving market conditions, resulting in increased profitability and sustainable revenue growth.
SASCO's vision is to be the leader in quality and service integration, setting an example in the automotive services industry to ensure continuous customer satisfaction with a focus on added value, and under the SASCO CEO's proactive administration, the company is well on its path to achieve the above-mentioned goals.
Riyadh Saleh Al Malik successfully leads SASCO with a diverse skill set, including leadership and linguistic communication skills. Employee surveys indicate high morale, engagement, and alignment with the company’s goals.
His crisis management and adaptability skills are evident in handling supply chain disruptions and safety-related recalls. His commitment to sustainability and social responsibility is reflected in documented sustainability initiatives, investments in renewable energy, carbon reduction, charitable donations, community service projects, and participation in industry forums, conferences, and consultations.
SASCO's pioneering role has made it one of the prominent enablers in Saudi Arabia's sector, achieving significant milestones aligned with the “Vision 2030” agenda. This has enhanced its ability to develop its system, discover products and advanced solutions, launch a generation of innovative services, and develop services to achieve sustainability. This includes recycling water used in "Auto Spa" car washes for irrigation purposes, providing electric vehicle charging stations, offering "Control" services for individuals and companies to manage fuel and digitise payments, and providing an integrated
consumer experience through "Palm" markets.
Today, SASCO is viewed with great pride due to a series of achievements in recent years. This reflects the dedication of its management and staff in serving industries at the highest level of professionalism and performance, and their strong partnership with customers and partners in all fields of station services. Their trust in capabilities and service integration has significantly contributed to realising the vision.
SASCO has set well-defined goals, including maximising efficiency, focusing on customer needs, and providing highquality station models. They strive to maintain the company's leading competitive position and continuously pursue leadership, growth, and excellence.
The company has also developed a comprehensive governance system to outline the rules, standards, and regulations related to SASCO to ensure the application of the best governance practices, protecting the rights of shareholders and stakeholders.
Artificial Intelligence voice textto-speech apps have transformed information consumption and technology use
IF CORRESPONDENT
Artificial Intelligence (AI) is rapidly advancing, transforming various industries and sparking diverse opinions. Undoubtedly, its introduction has revolutionised everything, from creating complex material to automating repetitive tasks.
However, in the voice-over industry, which has always depended on people's abilities and creativity, what does this mean? As AI advances, it will be feasible to accurately mimic human voices, which will require pertinent employment talks.
AI-generated voices save organisations money by eliminating the need to pay for professional voice actors, recording facilities, record sessions, and even postrecording editing
In this article, International Finance examines the potential impact of AI on the voice-over industry, specifically focusing on whether AI would displace current voice actors or open up new creative possibilities and cooperative ventures. The voice-over industry's new direction is where it will be the first worldwide platform to create a popular voice-over featuring artificial intelligence in the future.
Artificial Intelligence has a long history in the voice-over sector, which has aided in technological breakthroughs and their applications. Since synthetic voices were not designed to mimic the synchronous rhythm or emotional range of the human voice, their early development was straight-
forward. But as deep learning and neural networks have advanced, these AI voices have gotten more varied and lifelike. To create voices that can mimic the tones, pitch, and rhythm of humans, these technologies process vast amounts of speech data. These days, AI technology is used extensively for voice-over. Voices that engage millions of people every day are great examples of popular and frequently utilised virtual assistants like Apple's Siri and Amazon's Alexa. Additionally, AI is slowly making its way into the audiobook, commercial, and e-learning industries to provide speedy and reasonably priced solutions. This highlights the increasing prevalence of AI applications in the voiceover sector and raises questions about the future of human voice actors.
AI's advantages in voice-over
AI-generated voices save organisations money by eliminating the need to pay for professional voice actors, recording facilities, record sessions, and even post-recording editing. This reduces manufacturing costs, which is beneficial for small businesses, developers, and content providers with little funding. Another area where cost reductions can be seen as one of the main advantages of adopting AI in the voice-over market is. Businesses can save money by using AI-generated voices instead of extensive recording sessions or studio editing. This cost reduction is especially beneficial for small
businesses and independent content producers with tight budgets, as it presents an affordable option for producing high-calibre voice-overs.
Compared to the time it takes a human actor to record, compile, and deliver the finished voice-over, AI can produce voice-overs far more quickly. This offers several advantages, especially for industries like news agencies or advertising where quick content delivery is required. In terms of sameness and resemblance, AI voices are also superior to human sounds both qualitatively and numerically.
The acoustics of the natural human voice can alter over time owing to several circumstances, including fatigue and illness, whereas the synthetic voice remains consistent regardless of the recording. This ensures that the narrations are consistent in tone, especially for lengthy productions like audiobooks and television shows.
The third element is the multilingual component, where AI can be useful. This implies that AI can perform tasks that would call for the use of human speech in multiple languages, removing obstacles like language boundaries while translating content.
Additionally, because these AI voices can read aloud content to the disabled at events, including
the visually impaired, it promotes accessibility and inclusivity and gives them the same access to entertainment and information needs as their peers.
On the other hand, while artificial intelligence has proven beneficial in the voice-over industry, there are also potentially serious negative effects, like employment displacement. Could AI replace a growing number of voice actors as it improves since they won't need to memorise lines as frequently? The quality of work that AI can produce at a lower cost for voice-overs makes it a danger to the voice actor industry, as demand for their services declines.
The issue of AI-generated voices is another factor that may also be considered quality-related. Even though artificial intelligence has a vocal component and may mimic human speech, this restriction is most noticeable in situations when actors or listeners must have bodily involvement, such as in drama, staging, or character development. Because of this, content that uses artificial intelligence to generate the voice may not be as effective overall.
Ethical concerns are another topic of concern. Despite the innovations in voice-over that artificial intelligence brings, concerns with consent and even copyright arise when the AI mimics the voice of a
specific performer without the actor's knowledge. In addition to raising ethical concerns about who owns and has the authority to manipulate anyone’s voice, this activity violates intellectual property rights.
There are a few significant aspects of the wider effects of AI on the voice-over industry that are worth mentioning. A rising number of industries, such as audio engineering and casting, are experiencing a decline in AI applications due to cost-cutting measures. This series of events may result in joblessness and volatility in the voice productionrelated economic sector.
Self-sounding human voice acting is another difficulty that the industry is undervaluing more and more. AI voices are becoming more common, which could eventually outcompete human voice talent's specific abilities. This change may
result in voice actors earning less money and having fewer career options, especially in fields where AI is more adept than them.
Here are a few real-world examples of AI voice-over applications. Replica Studios and Respeecher have lately produced some of the common software that assists users in creating a natural-sounding voice-over for games, cartoons, or advertisements. Because of their ease of use and ability to produce the greatest outcomes for a fraction of the usual high expenses, these instruments have garnered much praise.
However, some voice actors have experienced certain negative effects from the growing usage of AI. For instance, an AI discovered, without consent and after multiple instances and financial losses, that an actor
well-known video game series. It demonstrates the risk that artificial intelligence will infiltrate the careers of human voice actors and assume their parts.
Let's now examine how the voiceover industry uses AI to overcome these issues: Unions and advocacy organisations are requesting this because voice actors are losing business to AI voice duplicates and lack legal support. It is important to take steps like these to try and ensure that the AI, the new actors in the system, and the humans involved in the processes are getting along.
Regarding future trends, it is reasonable to predict that the advancement of voice-over services will require the fusion of cuttingedge technologies like artificial
intelligence with human voice actors. When it comes to tasks like writing first or second drafts or translating text into other languages using artificial intelligence, human interaction can help prioritise the content and add more creative touches, such as emotions. It can imply improved organisational procedures and higher-quality, more significant products for customers.
Artificial Intelligence is transforming client-actor matching in the voice-over industry. Traditionally, selecting the right voice for a project was time-consuming and expensive. AI has made choosing the ideal voice actor for a project easier and faster. AI platforms offer a large voice actor library that clients can easily browse by language, accent, tone, and style. It saves time and costs and increases alternatives for choosing the right voice for the project.
An AI-powered technology can help a marketing organisation discover multilingual voice actors for a radio ad rapidly. The platform's advanced search criteria would help companies identify voice actors with their target audience's accents and tones. They can avoid manually browsing through audition tapes. It ensures a more realistic brand image across languages and cultures. Besides locating the perfect voice talent, an AI-powered platform can improve radio ads in several languages through speech synthesis. The platform uses efficient algorithms and machine learning to produce natural-sounding voices. The software may generate news reports in multiple languages with regional accents for a news
Source: voices.com
broadcasting organisation. It helps viewers relate to the news and improves their viewing experience. This function saves time and resources and promotes consistent and efficient multilingual communication. Mimicking accents and voices makes media more approachable to its diverse audience.
Artificial Intelligence voice textto-speech apps have transformed information consumption and technology use. These apps read text aloud for visually impaired or auditory learners.
English speakers can use the text-to-speech programme to hear written content read in French, helping them grasp and appreciate the message. For instructional or entertaining purposes, AI voice-tospeech technologies have changed how we communicate and consume media.
Artificial Intelligence voice generators provide realistic human voices for films, advertising, gaming, and more. Artificial technologies can transform scripts into audio, reducing talking time. Natural language processing powers voice processing AI. The voice processing app improves customer service by allowing hands-free queries and real-time voice-over support.
According to Cross River Therapy market data, 35% of firms use voice-processing AI, and this number will climb. The international AI market is touted to reach $266.92 billion by 2027. Voice processing AI is growing because it improves customer experience and streamlines company operations.
Companies are realising that voice-processing AI can automate tedious activities, offer personalised assistance, and learn from customer interactions, helping them innovate and stay ahead in a growing market.
Emerging technologies are now making it possible to assist human voice actors in enhancing their performances through the use of artificial intelligence. These tools can analyse and suggest improvements to help performers reach their full potential.
Artificial Intelligence has both advantages and disadvantages for the voice-over sector and is likely to become more popular in the near future. However, the use of AI poses a risk to traditional voice actors, potentially leading to job losses and a weakening of their talents. The industry's next challenge may be finding a balance between utilising AI and human talent, with concepts such as hybrid models and innovation taking centre stage. It is crucial to approach AI adoption cautiously and encourage its use to elevate voice performers rather than diminish their roles as the voice-over industry advances. Most popular voice-over roles (In Percentage)
The future of warfare will be shaped by highly skilled soldiers who can make rapid decisions and gather crucial data
IF CORRESPONDENT
The American special operators are becoming increasingly worried as the day gradually transitions into darkness. The location of the deployment is a heavily populated urban centre in a politically unstable area. The activity level in the area has increased recently, with the marketplaces and highways brimming with activity beyond the typical hustle and bustle of daily life.
Although there is a high threat level in the city, the details are unclear and the team wants to keep their profile low in case a firefight brings known hostile elements down on them. Americans choose to be more circumspect in evaluating possible dangers. An operator ventures out into the main road of the area, preferring to blend in with possible crowds rather than wear visible tactical gear, to see what he may see.
A single button press grants the operator complete visibility. His headup display has an intricate set of sensors attached to it that begin collecting data from his surroundings. An integrated artificial intelligence engine quickly gathers and routes body language, pulse rates, facial expressions, and even ambient snippets of conversation in regional dialects through his backpack supercomputers for analysis.
Instantaneous analysis, simplification, and regurgitation of the data back into the head-up display occur. The tactical AI sidekick of the operators provides a clear assessment: several seasonal events are approaching the town, and most onlookers are happy and enthusiastic, posing no threat to the crew. For now, the crisis is over.
When talking about the future of United States special operations forces, those elite soldiers tasked with acting as the "tip of the spear" of the United States military, defence department officials have put forth several possible scenarios, this being just one of many. While science fiction writers and defence officials may have imagined a world where brain implants, performance-enhancing drugs, and powered armour akin to Starship Troopers would shape warfare in the future, US Special Operations Command believes that the next generation of armed conflict will be fought (and hopefully won) using a relatively simple concept: the "hyper enabled operator."
The hyper-enabled operator (HEO) concept was first made public in 2019 through an essay written by officials from SOCOM's Joint Acquisition Task Force (JATF) for Small Wars Journal. The Tactical Assault Light Operator Suit
(TALOS) effort, which was started in 2013, aimed to provide US special operations forces with a suit known as the "Iron Man." TALOS, the most recent development in the Pentagon's decades-long effort to create a powered exoskeleton for infantry troops, was designed to increase operators' survivability in combat by making them virtually resistant to small-arms fire through additional layers of sophisticated armour. The programme was inspired by the 2012 death of a Navy SEAL during a hostage rescue operation in Afghanistan. Even though the TALOS project was deemed ineffective in 2019 because of difficulties combining its various systems into a single, coherent entity, the HEO was an obvious successor to the programme because of the lessons it taught.
Giving warfighters "cognitive overmatch,” that is, "the ability to dominate the situation by making educated decisions faster than the opponent,” on the battlefield is the clear primary goal of the HEO concept, according to SOCOM officials.
The future operator will enter combat with technologies intended to increase their situational awareness and pertinent decision-making to superior levels compared to the enemy, rather than giving US special operations forces a tactical advantage through next-generation body armour and exotic weaponry.
John Boyd, an Air Force colonel and former fighter pilot, proposed the "OODA loop" (observe, orient, decide, act) as the fundamental military decision-making model for the 21st century. The HEO concept aims to use technology to "tighten" that loop to the point where operators are making faster and more intelligent decisions than the enemy.
In 2019, SOCOM officials stated that HEO aims to ensure that the appropriate
information reaches the right person at the right time.
By replacing the powered armour at the centre of the TALOS effort with sophisticated communications equipment and a robust sensor suite built on advanced computing architecture, the HEO concept aims to accomplish this goal. This will enable the operator to gather pertinent data and turn it into actionable information using a straightforward interface similar to a head-up display, and to do so "at the edge," in locations where traditional communications networks might not be available.
As previously noted, if TALOS was intended to be akin to an "Iron Man" suit, then HEO is effectively Jarvis, Tony Stark's internal AI assistant who continuously provides him with information via the head-up display on his helmet.
According to SOCOM spokesperson James O. Gregory, who is quoting the programme's general description from the command's website, WIRED was told,
"(JATF) is targeting technologies to deliver cognitive overmatch to SOF operators working at the edge in austere and contested environments in coordination with and working through partners and allies.”
With the use of these technologies, SOF operators' tactical teams will be able to quickly develop situation awareness by using data from next-generation sensors, networks, computers, and communication systems in an easy manner. It will also assist in making prompt, well-informed decisions and acting before an enemy has a chance to respond.
Five years after the HEO was first included in the tactical lexicon of the US military, what does it look like today? Due to the effort's confidential (and partly theoretical) nature, few details are known, and SOCOM authorities have not said anything about its advancement. Gregory of SOCOM, however, claims
that the situation and idea the HEO is attempting to solve have "evolved" from what programme officials initially told reporters.
SOCOM officials envision something more akin to a casually dressed operator collecting information on a busy urban avenue through an eyepiece resembling Google Glass and assessing the situation, more James Bond than Tony Stark, rather than augmenting warfighters deployed to active combat zones.
According to Gregory, "The JATF's present operations are taking place in permissive or semi-permissive environments throughout the competitive phase of combat."
The HEO is not just another tool for kinetic assault. It will support elite troops operating in the "gray zone" between peace and conflict. A permissive environment is generally defined as an operational environment where US forces have the backing of a host country's security apparatus, according to the US Army.
The JATF is pushing for cutting-edge technologies that improve situational awareness, as detailed in a SOCOM broad agency release (a general call for research and development proposals from the defence sector) that was published in 2020 and updated as recently as November 2023.
These technologies include lowvisibility communications systems; sophisticated sensors capable of "iris, facial, anatomical measures, gestures, gait, heartbeat, electromagnetic signals, deoxyribonucleic acid (DNA), and microbiome recognition"; intelligence, surveillance, and reconnaissance capabilities "without substantial manning or networking resources" (the previously mentioned "at the edge"); and "data visualisations" that "permit [operators] to receive and intuitively understand networked information from communication, computing, and sensor systems," among others.
To put it briefly, the HEO envisions systems that allow for the continuous, realtime capture of data and its subsequent distillation into actionable intelligence that may, in an unpredictable circumstance, make the difference between life and death.
Regarding the creation of new goods, Gregory states that throughout the past few years, the HEO effort has concentrated on three key experimental technological domains: language translation, architecture and analysis, and sensing and edge computing.
"Sensing and edge computing" encompasses both the gathering and analysis of data from diverse sources as well as the specialised processing power required by operators to operate both "at the edge" and
TECHNOLOGY FEATURE WARFARE SOLDIERS WARFIGHTERS
the AI-enabled software that will serve as the HEO's core.
According to Gregory, "Conventional CPU-based devices are insufficient for emerging technologies and solutions in artificial intelligence/machine learning, which require specialised 'computing' hardware. Our goal is to include a manpack device that can function as a tensor processing unit, neural processing engine, or graphical processing unit. This will give the required foundation to make use of cutting-edge technologies, such as language translation and other edge solutions, even when the cloud is not available.”
This processing capacity serves as the foundation for the "architecture and analysis" component, which focuses on quickly evaluating and presenting data to field operators.
Gregory stated that the command has created "a flexible (system) architecture that fuses data from diverse sources and media kinds" into an understandable format that operators can evaluate and act upon to accommodate this element, as reported by WIRED.
Regarding language translation, that should go without saying. According to Gregory, SOCOM thinks that "clear communication may considerably increase the development of our long-term partnerships before any conflicts ever occur."
Instead of depending on the frequently insufficient interpreters in the field, operators can communicate more successfully when they use voice-to-voice translation. SOF soldiers, despite being multilingual, are often deployed to regions with different languages or dialects.
According to C4ISRNet, SOCOM has reportedly focused on six main areas of product development in line with these experimental technology areas: the "operator-worn kit," which
consists of sensors and onboard computer processing power; application development resources; a distinct, mission-agnostic system architecture; the "human-machine interface," which is typically thought of as a digital head-up display; a product dubbed "information realisation," which probably entails the clear presentation of data; and beyondline-of-sight (BLoS) communications meant to maintain troops' communication with their commanders (and each other) in environments denied satellite service.
Gregory claims that in recent years, the command has progressively released a few new capabilities resulting from the HEO initiative.
According to Janes' assessment at the time, SOCOM declared in 2021 that two products, a BLoS communications system, and an unidentified "integrated situational awareness tool," would be converted into formal programmes of record.
Gregory confirmed to WIRED, that the BLoS system comprises "a steerable gimble antenna system that boosts the functionality" of the command's SOF deployable nodes, which are a suite of cutting-edge satellite communications equipment. It's unclear if the latter is related to the "automate the analyst" effort the command kicked off in 2020 to provide operators with an autonomous AI assistant.
The spokesperson also confirmed that the situational awareness tool, known as SEEKER, is an app that "enables advisers to build advanced situational awareness, thereby allowing them to select actions with an eye toward the broader situation rather than just the immediately apparent problem."
The "visual environment translation" system translates inputs in foreign languages into understandable English in real-time. This system is called the Versatile Intelligent Translation
Assistant (VITA) and is considered "the most mature" of the JATF's experimental technology areas, according to SOCOM. It has voice-to-voice and visual environment translation capabilities.
Not only has VITA successfully demonstrated Russian, Chinese Mandarin, and Ukrainian language translation capabilities during testing, but the system has even been deployed to two undisclosed theatres of operations.
Gregory describes VITA as essentially "a voice-to-voice translation engine that functions offline on GPU-enabled devices," small enough to be carried in the field on a laptop-tethered smartphone or wearable device and "engage in effective conversations where it was previously impossible."
According to Gregory, "The visual translation component improves situational awareness by translating video pictures in real-time, such as street signs, graffiti, and other written texts. Users may instantly grasp other languages by using their phone's camera to scan their environment."
"A high-quality translation capability that is not dependant on the cloud or
local interpreters, therefore considerably decreasing risk and logistical expenses while enhancing operational range and effectiveness for USSOF and our allies," according to Gregory, is what VITA offers US special operations soldiers.
And that language translation may not be limited to a mobile device for long: according to SOCOM's fiscal year 2025 budget request published in March, the command is still pushing ahead with head-mounted sensors and an augmentedreality HUD to present these functions right before operators' eyes. The JATF is currently working with industry partners to reduce the size of the hardware and transition it into an SOF Programme Executive Office for eventual fielding.
The HEO concept appears promising to US military planners: an Army assessment suggests that a successful implementation of the system might improve operator survivability well beyond what the TALOS programme's extra body armour can do.
However, like with other potentially game-changing technological endeavours, HEO may prove to be a science
Source:
fiction fantasy that crumbles under the weight of its technological intricacy. Furthermore, there's no assurance that operators will accept the new technology with ease: while VITA has demonstrated operational promise, it remains uncertain whether other HEO products will be sufficiently intuitive to support operators in the field rather than burden them with a new and complex system.
"If you load a mud foot down with a bunch of gear that he needs to watch, somebody a lot more simply equipped— say with a stone ax—will sneak up and bash his head in while he is trying to read a vernier," as Heinlein so eloquently stated in Starship Troopers.
Like TALOS, military engineers may find it too ambitious to completely achieve the promise of a tactical AI helper akin to Jarvis, Tony Stark's sidekick. However, the HEO initiative will still provide a significant capability boost for US special operators stationed overseas, even if it merely manages to produce, say, the VITA language-translation tool. The day is slowly giving way to night, but American commandos control the night and will continue to do so well into the following
fight with the assistance of the HEO.
The HEO concept represents a bold leap into the future of warfare, emphasising cognitive superiority and situational awareness over brute strength and advanced weaponry. As the US Special Operations Command refines and implements these technologies, they stand poised to redefine the capabilities of elite soldiers in the field.
By integrating cutting-edge AI, advanced computing, and real-time data analytics into a cohesive and intuitive system, HEO aims to empower operators with unparalleled decision-making abilities. While the full realisation of this vision remains to be seen, the strides made thus far suggest a promising enhancement of US special operations forces.
The future of warfare will be shaped by highly skilled soldiers who can make rapid decisions and gather crucial data. As the nature of conflict continues to change, these technologically empowered operators will lead the way, using their intelligence and agility to overcome the challenges of modern warfare.
editor@ifinancemag.com
One of the primary obstacles to the progress of neuromorphic computing has long been the software development required to make the devices function
IF CORRESPONDENT
The need for electricity in modern computing is growing at an alarming rate. According to a recent assessment from the International Energy Agency (IEA), artificial intelligence (AI) and cryptocurrency use by data centres might quadruple from 2022 levels by 2026.
Event-driven computing is another popular method. Activation in neuromorphic computing can be sparser than in conventional computing, where every component of the system is always on and ready to communicate with every other component
The combined energy consumption of all three industries in 2026 is estimated to be nearly equal to Japan's yearly energy requirements. Businesses like Nvidia, whose CPU chips power most AI applications, are designing gear that uses less energy.
Is it possible to construct computers with a radically different, more energy-efficient architecture as a substitute? Some businesses believe this, and they are using the structure and capabilities of the brain, an organ that uses a small portion of the power of a traditional computer to accomplish more tasks quickly.
In neuromorphic computing, electronic components mimic synapses and neurons, and their connections are structured to match the brain's electrical network. It's not new; since the 1980s, academics have been developing this method. However, the need to implement emerging technologies in the actual world is growing due to the AI revolution's energy requirements. Although the main purpose of the platforms and systems in use is research, supporters claim they have the potential to significantly increase energy efficiency.
Giants in the hardware industry like IBM and Intel are among those with business aspirations. There are also a few small businesses present.
TechInsights analyst Dan Hutcheson adds, "The opportunity is there waiting for the company that can figure this out. And it has the potential to be a killer app for Nvidia."
A Dresden University of Technology spinoff company called SpiNNcloud Systems said in May 2024 that it is accepting preorders for its first neuromorphic supercomputers.
Its co-chief executive, Hector Gonzalez, said, "We have reached the commercialisation of neuromorphic supercomputers in front of other firms."
Tony Kenyon, a researcher in the field and professor of nanoelectronic and nanophotonic materials at University College London, calls it a remarkable development.
"Even if there isn't yet a game-changing app, neuromorphic computing will improve performance and energy efficiency in many areas, so as the technology advances, I'm sure we'll start to see widespread use," he said.
Neuromorphic computing encompasses a variety of methods, ranging from a more cerebral approach to an almost complete replication of the human brain (which we are far from). However, there are a few fundamental design characteristics that differentiate it from traditional computers.
First off, neuromorphic computers lack separate memory and processor units, in contrast to conventional computers. Rather, those functions are carried out in unison on a single chip at a site.
Professor Tony Kenyon points out that cutting out
Neuromorphic computing market revenue worldwide from 2022 to 2024, with forecast till 2031 (In Billion US Dollars)
the need to transport data between the two speeds up processing and uses less energy.
Event-driven computing is another popular method. Activation in neuromorphic computing can be sparser than in conventional computing, where every component of the system is always on and ready to communicate with every other component. Similar to how numerous neurons and synapses in our brains only fire when there's a reason, the imitation neurons and synapses only fire briefly when they have anything to say.
Another way to save power is to work only when there is something to process. Furthermore, neuromorphic computing can be analogue, whereas modern computers are digital, representing data with 1s or 0s. The computer technique, which is significant historically, uses continuous signals and can help analyse data that comes from the outside world. Nonetheless, the majority of commercially driven neuromorphic endeavours are digital due to convenience.
The two primary types of intended commercial uses
are as follows:
One, on which SpiNNcloud focuses, is offering AI applications, such as speech recognition, picture and video analysis, and large-language models that drive chatbots like ChatGPT, a more performant and energy-efficient platform.
Secondly, there is also "edge computing" software, which processes data in real-time on networked devices that run on limited power instead of on the cloud. Wearable technologies, mobile phones, robots, and autonomous cars might all profit.
One of the primary obstacles to the progress of neuromorphic computing has long been the software development required to make the devices function. It's not enough to just have hardware; it also needs to be programmed to function, which may involve creating a completely new programming language from scratch that differs greatly from that of traditional computers.
Dan Hutcheson concluded, "The potential for these
devices is immense. The difficulty is how to make them function," while believing it would take at least a decade, if not two, before the true advantages of neuromorphic computing become apparent.
Professor Tony Kenyon noted that developing drastically new chips is costly, regardless of whether they employ silicon, as the commercially focused projects do, or other materials. The director of Intel's neuromorphic computing lab, Mike Davies, claims that Intel is making "rapid progress" with its neuromorphic computer.
The Loihi 2 is the name of Intel's current neuromorphic microprocessor prototype. The business said in April 2024 that it had assembled 1,152 of them to form Hala Point, a massive neuromorphic research system with 128 billion fictitious connections and over 1.15 billion phoney neurons.
Intel asserts that this system is the largest in the world to date, with
a neuron capacity nearly comparable to that of an owl's brain. It is still a research project.
Mike Davies said that Hala Point "is proving that there's some real feasibility here for applications to leverage AI."
Hala Point, about the size of a microwave oven, is "commercially relevant," and he claims that software development is moving along quickly. NorthPole is the name of IBM's most recent brain-inspired prototype chip.
The concept represents the development of the TrueNorth prototype processor. According to tests, it is faster, more space-efficient, and more energyefficient than any chip on the market right now, claims Dharmendra Modha, chief scientist of the company's braininspired computing division.
He continues by saying that his team is currently trying to show how chips can be integrated into a bigger system.
"The narrative to come will be the path to market," he added, while highlighting that a significant innovation of NorthPole is its codesign with the software, which enables immediate exploitation of the architecture's full potential. A few other minor neuromorphic businesses are Innatera, BrainChip, and SynSense.
IBM claims that its NorthPole chip is faster and uses less energy than other chips.
Researchers from the University of Manchester and TU Dresden developed neuromorphic computing, which SpiNNcloud's supercomputer commercialises as part of the EU's Human Brain Project.
Such efforts led to the development of two neuromorphic supercomputers for research. The SpiNNaker1 machine, located at the University of Manchester and powered by over a billion neurons,
has been operational since 2018.
With the capacity to imitate at least five billion neurons, TU Dresden's second-generation SpiNNaker2 machine is now undergoing configuration.
According to Hector Gonzalez, SpiNNcloud's commercially accessible devices are capable of reaching an even greater level of at least 10 billion neurons.
Professor Tony Kenyon believes the future will see a variety of computing platforms operating together, including conventional, neuromorphic, and quantum, which is a revolutionary form of computing that is also on the horizon.
Neuromorphic computing's integration into several sectors poses ethical and privacy problems as it becomes more widely available and affordable. This covers the gathering, storing, and processing of private stakeholder information, as well as the accuracy of the analysis and the detection of biases. Therefore, safeguards such as strong privacy regulations, encryption, and other measures coupled with set guidelines regarding the use of neuromorphic computing can aid in resolving ethical issues.
Neuromorphic computing, valued at an estimated $8 billion, has the potential to revolutionise various IT disciplines due to its ability to replicate the brain's information processing and learning capacities. It offers significant advantages, such as rapid processing, energy efficiency, and superior pattern recognition capabilities.
For instance, autonomous vehicles can benefit from neuromorphic hardware to make quick, energy-efficient decisions, reducing collisions and emissions. Similarly, drones using neuromorphic computing could navigate complex environments autonomously, conserving energy
by only activating in response to environmental changes.
This technology also promises advancements in edge AI, enabling real-time data processing and extended battery life for devices, and improving automation and fraud detection through its ability to quickly identify complex patterns and anomalies.
Despite these benefits, neuromorphic computing faces considerable challenges. The lack of standardised benchmarks and architectures makes performance evaluation and application sharing difficult. Hardware development is complex, requiring simulations of the brain's intricate structures, while most software remains designed for conventional von Neumann architectures, limiting neuromorphic applications.
Accessibility is another issue, as neuromorphic systems are currently confined to specialists in well-funded research facilities, demanding deep interdisciplinary knowledge that is scarce among professionals. Furthermore, converting machine learning algorithms to spiking neural networks often reduces precision and accuracy, complicating their integration into existing systems.
Neuromorphic computing mimics brain processes using artificial neurons and synapses to solve problems and make decisions efficiently. This braininspired technology is still in its early stages, with practical uses mostly limited to research by academic institutions, government bodies, and major tech companies. However, its potential is immense, particularly in areas requiring high efficiency and speed like edge computing, autonomous vehicles, and cognitive computing.
Neuromorphic designs, often based on the neocortex, achieve high efficiency through spiking neural
networks, which replicate the brain's method of transmitting information quickly and effectively.
The global neuromorphic computing market, valued at $4.2 billion in 2022, is projected to soar to $29.2 billion by 2032, exhibiting an impressive compound annual growth rate (CAGR) of 22% from 2023 to 2032.
This rapid expansion reflects the growing recognition of neuromorphic computing's potential to revolutionise various industries. Leading the charge in this market are major companies such as Intel, IBM, BrainChip, Qualcomm, NVIDIA, Hewlett-Packard, Samsung, Accenture, Cadence-Design, and Knowm.
These industry giants are at the forefront of developing and implementing neuromorphic technologies, driving advancements that promise to transform computing paradigms and applications.
The distinction between neuromorphic and traditional computing lies in their architectures. Traditional von Neumann computers use binary processing and sequential operations with separate memory storage and data processing units, often encountering efficiency bottlenecks.
In contrast, neuromorphic computers process multiple pieces of information simultaneously with tightly integrated memory and processors, offering more computational options and accelerating data-intensive tasks. This parallel processing capability positions neuromorphic computing as a promising alternative to overcome the limitations of conventional architectures, potentially driving advancements in AI and computing power.
In the dynamic landscape of Iraq's financial sector, Qi’s “International Smart Card” has made a significant mark by leading the Middle Eastern nation’s revolution in the digital payment space.
"Qi Card, also known for International Smart Card ISC, was founded in 2007 through a partnership between the private sector represented by the Iraqi Electronic Payment Systems and the public sector represented by the largest bank in the country (Rafidain Bank). ISC has more than 14 years of experience in FinTech and it is considered the largest issuer and acquirer in Iraq," the venture told the International Finance.
Established as Iraq's premier digital payment service, Qi has been instrumental in transforming the financial scene by providing secure, innovative, and socially responsible digital payment options to a vast number of users. Since 2007, Qi has risen to prominence as Iraq's official debit/credit card, boasting over 3 million downloads of its payment application.
Qi Card has now become the quintessential symbol of financial innovation, specialising adeptly in biometric ID cards and cutting-edge electronic financial services
"ISC introduced "Qi Card", the first biometric card in the region aiming to address the significant challenges faced by state employees, pensioners, and beneficiaries of the social security network. Today, "Qi Card" is working on launching a new generation of services that primarily rely on flexibility and providing all banking activities via smartphone, in addition to providing value-added solutions for individual customers and institutions," the venture stated further.
At the heart of Qi’s innovation is its adoption of biometric identification for verifying cardholder identities, distinguishing it from other payment services. This feature positions Qi as the preferred method for distributing pensions, social welfare benefits, and salaries to over 9 million customers throughout Iraq. Its network, encompassing around 6,000 merchants, ensures that Qi serves as an essential financial resource across the nation.
Qi Card has now become the quintessential symbol of financial innovation, specialising adeptly in biometric ID cards and cuttingedge electronic financial services. Conceived through a forward-
thinking partnership that seamlessly blends private and public interests, Qi Card is now harnessing the resilience and ingenuity of the private sector, harmoniously complemented by the stability and extensive reach of the government sector.
Qi has formed valuable partnerships with top state-owned Iraqi banks such as Rafidain and Rasheed. These partnerships allow Qi to issue and acquire payment cards for fourteen affiliated banks, making it a vital player in the Iraqi financial ecosystem. Qi's integration within the financial ecosystem is further strengthened by its network of around 10,000 cash-out agents and 200 Enrolment Centres, which provide customers with unparalleled convenience.
“Beyond technological milestones, Qi is recognised for its dedication to financial inclusivity, tackling issues like low banking penetration, limited financial service access, and a significant unbanked population. The company, under the guidance of its founder Bahaa Abdul Hadi, has committed to fostering growth and innovation, setting new standards for ethical business practices and anticorruption measures in Iraq's
financial sector,” the venture remarked further.
As of April 2024, the Rafidain Bank's Qi Services mobile app is epitomising Qi’s effort to revolutionise Iraq's banking sector, enabling users to effortlessly manage their finances with advanced features for a secure and convenient banking experience.
“Qi also demonstrates its commitment to community service through collaborations with the Ministry of Labour and Social Affairs to support orphans and beneficiaries of the Social Welfare Authority. On the other hand, Qi has made a significant impact by disbursing loans to over 800,000 Iraqi citizens,” the FinTech venture noted.
Qi’s contributions to the Iraqi financial sector have earned it numerous accolades, including awards for the best and most innovative issuer of biometric prepaid cards by Global Economics in 2022. Its influence extends beyond the financial domain, through initiatives aimed at social welfare and partnerships aimed at enhancing the lives of the Iraqi people.
“As Qi continues to evolve, It doesn't only signify technological and financial innovation but also embodies a broader vision for a cashless and inclusive economic system in Iraq. Qi’s journey reflects its role as a cornerstone of progress and innovation in the Iraqi FinTech sector, highlighting its pivotal role in shaping a more accessible and efficient financial future for Iraq,” it concluded.
Doxbin, a website that hosts over 176,000 public and private doxes
Since the early 1990s, doxing, the practice of revealing someone's identity online and stealing their anonymity, has been utilised as a destructive form of online retaliation. However, the toxic practice has resurfaced in recent years, with victims being doxed, blackmailed, and threatened with physical harm in the worst situations, all in exchange for cryptocurrency.
Security researcher Jacob Larsen, who was doxed about ten years ago when someone tried to extort him for a gaming account, has been keeping an eye on doxing groups, observing the methods used to uncover identities, and speaking with well-known doxing community members for the past year.
According to Larsen's interviews, "well over six figures annually" have been made as a result of doxing actions. One technique involves feigning law enforcement requests to obtain people's personal information.
“The primary target of doxing, particularly when it involves a physical extortion component, is for finance,” says Larsen, who leads an offensive security team at cybersecurity company CyberCX but conducted the doxing research in a personal capacity with the support of the company.
Larsen conducted interviews with "Ego" and "Reiko," two members of the doxing community, during several online chat sessions in August and September of 2023.
Reiko served as an administrator of Doxbin, the largest public doxing website, last year in addition to being involved in other groups. Ego is thought to have been a
member of the five-person doxing group known as ViLe, though neither of their offline identities is known to the public.
In June 2024, two additional members of ViLe pleaded guilty to charges of identity theft and hacking. Larsen, Ego, and Reiko mentioned that both individuals deleted their social media accounts, which made it impossible for them to be interviewed.
People can be doxed for a variety of reasons, such as inciting political violence or harassing others in online gaming. According to Bree Anderson, a digital criminologist at Deakin University in Australia who has studied the issue with colleagues, doxing can "humiliate, harm, and reduce the informational autonomy" of those who are targeted.
According to Anderson, there are two types of harms: immediate or "first-order," like risks to one's safety, and longer-term or "second-order," like worry about information disclosures in the future.
The majority of Larsen's study was on people who were doxing for financial gain. Many doxing attempts revolve around Doxbin, a website that hosts over 176,000 public and private doxes. These doxes can include names, social media accounts, Social Security numbers, residential and workplace addresses, and
other similar details belonging to an individual's family.
Larsen believes that extortion is the primary motivator for most doxing incidents on Doxbin, although there are other reasons such as seeking attention. Unless the uploaded information violates the website's terms of service, it will not be removed.
“It is your responsibility to uphold your privacy on the internet,” Reiko said in one of the conversations with Larsen, who has published the transcripts.
Ego added, “It’s on the users to keep their online security tight, but let’s be real, no matter how careful you are, someone might still track you down.”
It is nearly hard to be completely anonymous online, and many people don't even try; instead, they frequently use their real names and other personal information in their online accounts and when sharing
content on social media.
Some of the doxing techniques outlined in the charges against ViLe members include using shared passwords to access accounts, hacking into private and public databases, and using social engineering to carry out SIM-swapping attacks. There are also many malicious techniques in existence.
Additionally, Larsen notes that emergency data requests (EDR) can be misused. When there may be a risk to people's safety, law enforcement officials can use EDRs to obtain the names and contact information of individuals from tech companies without a court order.
In general, these requests must originate from official government or law enforcement email addresses and are sent straight to tech platforms, frequently via specialised online portals.
“If a threat actor can intercept that process, it’s the fastest way for them to get highly accurate sensitive data on the victim. They’re stepping up and using
that as their primary method for doxing victims,” Larsen explained.
In the past, this type of request has been used as a weapon against security researchers and to harass women and children.
Larsen claims to have infiltrated multiple Telegram groups during his research, where individuals were offering access to systems for creating EDRs and the government emails required to submit requests.
Using a United States Department of Justice email address and claiming to have an FBI email address, one person, according to screenshots released by Larsen, claimed to be selling access to TikTok's law enforcement platform. Someone else asserted that they could create official email addresses for $125 per, originating from Mozambique, the Philippines, Pakistan, and Brazil.
According to Larsen, he gave law enforcement authorities the information. A representative for TikTok referred
Share of individuals in the United States who had experienced doxing as of 2022 (In Percentage)
Source: Statista
to the company's public policies regarding emergency data requests and the procedures it follows to verify their validity, but the FBI declined to comment on fraudulent EDRs. A request for comment from the US Cybersecurity and Infrastructure Security Agency was not answered.
“Violence as a service” groups have appeared from SIM-swapping communities in recent years as well, allowing people to pay for violent acts to be carried out. Digital extortion can lead to physical extortion, Larsen says, adding that Doxbin doesn’t allow threats or discussions of violence to be posted on its platform.
“I’ve seen people get doxed and that ends up in them being bricked, getting their house shot up, getting a Molotov thrown through their windows, gang stalked, all in an attempt to extort them for money. Videos of attacks are sometimes posted online. Things get pretty wicked online, much more than people realise,”
Ego said in a conversation with Larsen. These incidents can involve people trying to extort cryptocurrency from people with large stashes—although some violence services have been used by feuding online groups.
“Unless these platforms get taken down, or more actors get punished, both in the US and abroad, it's just going to continue to rise. Particularly as cryptocurrency becomes more adopted by more people," Larsen said.
Although some aspects of doxing may be covered by laws about stalking, harassment, or data protection, there aren't many legal safeguards against it worldwide.
“Laws worldwide are simply not fit to provide protection. Victims have no way to swiftly regain control of information that has been published with the intent to harass, intimidate, and/or harm them," Amanda Manyame, digital rights adviser
at Equality Now, a feminist human rights NGO said.
“The prompt takedown of doxingrelated content is very important for victims, and governments need to enact laws that mandate the removal of such content within 24 hours, with Equality Now’s research stating that doxing can disproportionately impact women and girls," Manyame added.
Doxbin releases a transparency report detailing the quantity of removal requests it receives, emulating the actions of Big Tech platforms and highlighting the difficulties in obtaining information removed.
According to Larsen, there are about 160 requests from lawyers and local and federal law enforcement agencies from 27 different countries. Most of these requests are turned down because they don't violate Doxbin's restrictive terms of service.
There are steps people can take to lessen some of the effects associated with doxing and other widespread online privacy abuses, even though there are few legal avenues to get data removed.
Common cybersecurity precautions, such as locking down social media accounts and refraining from posting images or personal information, turning on multi-factor authentication for as many accounts as possible, and not reusing passwords across apps and websites, can all be helpful on an individual basis, according to Larsen.
Using usernames and emails that aren't connected to the same email address or online handle could be a good starting point for those who want to go further.
