These Ideas Will Help the FSI Industry Bounce Back

These Ideas Will Help the FSI Industry Bounce Back

The banking and finance sector today is dynamically changing at a fantastic speed never seen before. It begs the question – how would the next generation of financial services look like? It’s true. Transformation does not occur overnight, but in small, incremental phases.

It will be fueled by an explosive combination of rigorous regulations, investor capital, globalisation and futuristic financial technologies.

Nevertheless, it is equally evident that technological innovation is at the centre of this lightning-fast changes we’ve been seeing of late. Still, what fascinating developments will the next decade bring?

Here are some ideas that will help stimulate growth in banking and financial services:

Reach Out to the Unbanked

The World Bank Report states that over 1.7 billion adult individuals across the globe have no account with any financial or mobile money provider. About half of these unbanked individuals live in developing nations such as Indonesia, India, Nigeria, China, Mexico, Bangladesh, and Pakistan. High-income economies, on the other hand, do not have significant numbers of unbanked individuals as nearly everyone owns an account.

However, statistics also show that about 1.1 billion unbanked adults globally have a mobile phone. Therefore, these mobile phones can be used to access mobile money accounts and other financial platforms. This presents an enormous opportunity waiting to be tapped.  Paired with internet access, there is a huge opportunity for banking institutions to drive financial inclusion.

Statistics reveal that about 1.1 billion unbanked adults globally have a mobile phone. These mobile phones can be used to access mobile money accounts and other financial platforms. This presents an enormous opportunity waiting to be tapped.

Still, these financial services should be designed for unbanked users, many of which are poor, disadvantaged or lack adequate literacy and numeracy skills. The technologies created for these groups will help eliminate the obstacles limiting unbanked individuals from using financial services. Furthermore, providing services to the unbanked will no longer require travelling great distances to meet a need. As such, digital technology will help lower the cost of transaction. Most banks and financial institutions have one core objective – to reach the greatest number of customers possible. Given these facts, it is clear that the unbanked market will be actively pursued in the years ahead.

Get Serious About Blockchain Technology

Blockchain is another trend that will grow in the next few years. About 48% of banking executives in a survey by Business Insider Intelligence stated that AI (artificial intelligence) and blockchain will have the most decisive influence in the growth in the financial sector. No doubt, blockchain will shake the industry globally. As Blockchain drives the new ideology of substituting centralised processes for decentralised finance, it will inevitably drive change in financial systems worldwide. Already, it has led to the creation of a diverse online peer-to-peer (P2P) financial system for monetary dialogues in a decentralised manner. This distributed ledger technology, which gave rise to cryptocurrencies, can help transform existing processes and systems remarkably.

Many cryptocurrencies have been created, and many more will be “mined” soon. Already, several countries are creating their own cryptocurrency. Such a move could significantly push the shift from fiat to cryptocurrencies.  The shift will, in turn, boost coin stability, drive the creation of regulatory frameworks, and make people gravitate more towards decentralised transactions. In fact, some financial institutions are already exploring blockchain technology to uncover how it can help cut costs, improve internal processes and increase efficiency.

Speed up Development of RegTech

Technological innovations present tremendous opportunities. However, the finance industry is heavily regulated. It is essential to realise that technological innovation has also given rise to diverse challenges, including data breaches, cyber hacks, and other fraudulent activities. RegTech was created for this purpose. It involves using innovative technologies to manage regulatory processes in the finance sector. Some examples of regtech include real-time tracking of airliners’ locations and automated monitoring of a company’s compliance with sustainability regulations.

However, even as technology companies, legislators and other stakeholders in the finance industry, work closely together to spring regulatory innovations, it will still take some time before everything comes into fruition. One such example is the implementation of biometric authentication for financial transactions, which has met strong opposition after a high profile data theft case that happened in the US. Notwithstanding this incident, recent studies show that the size of biometric authentication market is fast expanding. By 2023, biometric authentication is expected to have over 2.6 billion users.

 

Can Technology Spur Growth in Finance

Can Technology Spur Growth in Finance?

The finance and banking industry is under an increasing pressure to create new strategies and cutting-edge solutions using data, analytics and artificial intelligence. To improve customer experience, it is necessary to implement programs that will contribute to faster and smoother transactions.

There used to be a time when customers were impressed by the prospect of being able to resolve disputes and financial queries in the comfort of their own homes. Today, customers demand lightning-fast response and resolution. They no longer have the patience to wait a minute longer than necessary, which presents a considerable challenge and opportunity. Customer service is mostly driving chatbot development within the financial sector. Backed by AI and Machine Learning technologies, chatbots can help financial institutions reduce costs and meet the ever-changing needs of their customers.

Gartner’s report states that in 2020, chatbots will handle about 85% of customer service-related affairs. This is because it reduces the cost of two-way communication systems,

such as phone and email. Chatbots inspire conversational interactions and can aid financial companies to offer an outstanding experience to their customers. Chatbots can personalise these interactions and present solutions as though they are happening in-person, which help meet and exceed the customer’s expectations.

Some traditional institutions have been using bots for quite some time to deal with simple issues. However, today’s chatbots provide a lot more. They can help detect and mitigate fraudulent actions, offer financial tips to customers and help customers make informed decisions.

Some traditional institutions have been using bots for quite some time to deal with simple issues. However, today’s chatbots provide a lot more. They can help detect and mitigate fraudulent actions, offer financial tips to customers and help customers make informed decisions. For the best part, these bots help financial companies have smart and effective conversations with millions of customers within seconds. Therefore, it drastically reduces the cost of customer service while creating great interactions with their customers.

Another important aspect to look at is the integration of Big Data into core processes. Big Data presents a huge opportunity to harness actionable and relevant insights from increasing piles of data (credit/debit card transactions, money transfers, ATM withdrawals) created daily by the financial sector. These insights can be transformed into strategic opportunities, which can help any financial institution stay competitive and meet future demands.

Big Data helps financial institutions harness deeper insights about, for instance, their customers’ purchasing habits. This, in turn, enables real-time business decisions about better ways to serve their customers. It can also help financial institutions make smarter decisions about their marketing strategies, sales management and fraud detection.

Overall, big data can help banks and other economic sectors keep up with emerging trends, streamline internal processes and mitigate risks more efficiently.

What to Expect in Retail Banking Technology in 2021

What to Expect in Retail Banking Technology in 2021

Many people envisioned that the 2020s will be a decade of ground-breaking digital banking transformation, seamless innovations and technological advancements that greatly improve user experience.

These advancements are geared towards helping banks decrease cost-income ratios, increase return-on-equity ratios and improve their efficiency through and through. For example, Open Banking, which allows third-party applications to access bank accounts, is adding tremendous value to all parties concerned. Such systems have created an opportunity for companies like Apple, Facebook, Google and Amazon to compete favourably by splitting the value chain into manufacturing and distribution.

Due to the effects of COVID-19, consumer demand for more flexibility and control are driving the need for new tools and technologies.

Banks are now tasked to create new strategies and innovative solutions using available data, digital technologies, novel delivery platforms, and transactional and behavioural analytics.

Future retail banking trends are expected to improve customer experience by facilitating faster and smoother transactions. Here are a few trends expected to disrupt and shape the retail banking industry in the year 2021:

Banks will need to be proactive in recognising the changing needs of customers at the exact time they need them, as having the right products and services will no longer be enough.

1. Artificial Intelligence will drive a shift in the business model

Stakeholders in the banking industry believe that Artificial Intelligence (AI) will be the most consequential technology in the sector.

They expect that AI will play a huge role in creating an improved and personalised user experience, supporting new businesses and in strengthening portfolio management through the use of advanced investment algorithms.

Furthermore, banking executives are optimistic about using AI in fraud detection and improving back-office functions to trace anomalies in future business plans.

Business executives all over the world have invested heavily in the development of artificial intelligence. This massive investment was done to strengthen cybersecurity, curb cybercrime and prevent a breach of data.

The viability of AI depends on its expandability. Regulators require that banks must only use explainable AI. EU’s GDPR, for instance, has introduced a “right to explanation” mandate to guide AI algorithms and other new technologies.

If AI denies a customer loan, for instance, it is necessary to explain to the customer what the reason for this decision is, guide them on alternative ways of sourcing for what they need, or help them solve this problem.

2. Banks will overhaul business models to create digital ecosystems

As new banking technologies come into existence, banks have been changing their business models to be in tune with current trends. They have had to extend their most vital services from strictly branch operations to the internet and mobile banking, thereby providing more access and control to customers from any location. Basically, only the mode of access to banking services has changed. The banking services, on the other hand, did not change.

The digital ecosystem model adds more push to these changes. Ecosystem banking model is based on intuitive self-leading software which studies customer needs and integrates them into banking to create offerings that provide solutions to these needs. Just as mobile banking brought banking to customers’ fingertips, ecosystem brings human needs into banking. It is built on cloud, open APIs, explainable AI and other critical elements of modern banking technology.

3. There will be an increased expansion in Open Banking

Open banking is a banking initiative that allows third parties access to a bank’s APIs. While many people think that open banking is a European issue, the reality is that it is a derivation from traditional business practices that allow third parties to access banking data and functionality. Open banking is also called banking-as-a-service, banking-as-a-platform, open APIs, and API banking.

Open banking seeks to help financial institutions ease the burden of providing customers with seamless financial services without the usual hassles. Fintech companies and other retail banking institutions are already taking advantage of the API banking ecosystem to ease financial hassles involved in making and receiving payments, buying homes, and general financial management. This trend is expected to advance in 2021 and beyond.

4. Wider Acceptance of Real-Time Financial Products

As digital banking accelerates, there will be an increased need for real-time financial products. In 2021, real-time payment is expected to be the norm. Creating real-time experience will no longer be a challenge to the banks. The new challenge would be in creating ways to better compete with other banks in real-time payments.

Real-time payments will rely significantly on APIs. As such, the retail banking community can play a central role in putting up robust and innovative real-time transaction services that will attract individual customers as well as fintech companies.

As digital banking accelerates, there will be an increased need for real-time financial products. In 2021, real-time payments is expected to be the norm.

5. Always-on Invisible Banking will become the Norm

Invisible banking refers to the new trend where financial institutions can integrate their financial services into their customer’s everyday life. Direct deposit is an example of invisible banking.

Today’s technology-driven, always-on world is one where business opportunities appear and disappear in just a snap. Experts believe that in the nearest future, banks will need to be proactive in recognising the changing needs of customers at the exact time they need them, as having the right products and services will no longer be enough.

A Unique Opportunity

Banks are struggling to keep up with the effects of the pandemic, the dynamism of the tech world, and the increased operational pressure from customers.

In all of these, however, banks still have their resources and customers’ trust. Hence, if they implement the right strategies, and adapt adequately to the advanced technologies in banking and the digital ecosystems, they will still succeed in the long term. These changes, when implemented, will also help banks cut cost, become more efficient and achieve the required flexibility to weather future storms.

KASIKORNBANK Leading the Way for CX in a Digital Ecosystem 2

KASIKORNBANK: Leading the Way for CX in a Digital Ecosystem

Built on the foundation of ‘Bank of Sustainability’, KASIKORNBANK (referred to as KBank or the bank) delivers products and services to its clients and customers keeping in mind its core values – agility, customer centricity, collaboration and innovation.  To demonstrate their values further, KASIKORN Business-Technology Group (KBTG), an integral part of KBank, provides state-of-art IT infrastructure and services, develops advanced technology and innovation, and designs solutions addressing customer pain-points and requirements. According to Mr. Wirawat Panthawangkun, KBank Senior Executive Vice President, ‘KBank aims at being a smart Data-Driven Cognitive Bank, using data to address the needs of customers in every lifestyle nationwide, with readily available technology for further development.’

KBank’s customer experience won four awards at the Digital CX Awards 2020 by The Digital Banker. The four titles that the bank won are ‘Best Digital Customer Experience in Wealth Management, Loan Offering of the Year, Best Customer Experience – Debit Card and Outstanding Customer Experience – Loans’. In addition to the award wins, KASIKORNBANK was honoured with Highly Acclaimed: Best Digital Customer Experience – Loan Application and Highly Acclaimed: Best Digital Customer Experience in Private Banking. These award wins and acclaims are a testament to KBank’s ability to understand its customer’s requirements and provide the best possible solutions keeping in mind the current digital trends and ecosystems.

The Digital CX Awards 2020 received more than 200 nominations across various awards categories and consisted of a judging panel that included subject-matter experts known for their integrity and unbiased judgment from companies such as Forrester, EY, Fuji Xerox, Bain & Company, Wipro Digital and KPMG.

“Understanding that data is key to remain competitive today, KBank has leveraged smart data and used analytics across various lines of business to improve customer services as well as operational efficiencies.”

Driving customer experience with K PLUS and MADHUB

Guided by principles of customer centricity, KASIKORNBANK products and services resonate with excellent customer experience and agility coupled with innovation. Proof of this is how KBank was quick to respond to the Covid-19 crisis that shook the world.  As a part of its strategy to enhance customer experience, the bank had integrated all its service channels such as K PLUS (mobile banking application), KBank website, branches, LINE official Account, Call Center, and KBank Live (KBank social media). To ensure a seamless customer experience, KBank also linked K PLUS with its partner platforms to help its customer redeem Rewards Points by purchasing products from partner platforms.  An additional feature let K PLUS points be converted into point of other member cards thus demonstrating flexibility in its service.

About a year ago, KBank demonstrated how important all segments of consumers were, when it introduced MADHUB – a hub for online traders to fulfil requirements related to business opportunities and customer needs. The bank’s understanding of the region and current trends led to the development of MADHUB which offered a variety of services to online traders such as tools for inventory management, accounting systems, learning programs, debit card initiatives with offer various discounts, etc.

“KBank aims at being a smart Data-Driven Cognitive Bank, using data to address the needs of customers in every lifestyle nationwide, with readily available technology for further development.”

‘Better Together’ – Leading the way with collaborations

Understanding that data is key to remain competitive today, KBank has leveraged smart data and used analytics across various lines of business to improve customer services as well as operational efficiencies. While using its own data to improve its initiatives and products worked in the favour of the bank, KBank also saw opportunity in partnering with data rich firm to streamline its banking services and potentially carter to a wider customer base. The bank’s collaborative spirit led to it’s partnership with Lazada – one of the largest e-commerce platforms in the world.  An outcome of this partnership was MADFUND (part of MADHUB) – a financing support program designed to carter to needs e-commerce traders, was introduced on the Lazada Sellers Centre app. Sellers who opted for MADFUND could consent to share data and will then be re-directed to K PLUS to complete the loan application in real-time with instant drawdown to their bank accounts. With Lazada, the partnership was a strategic one, where credit scoring and personalised loans where readily available based on each seller’s transaction history and profile on the Lazada Sellers Centre platform.

KBank didn’t stop at one partnership as it understood that customers relied on multiple platforms and the bank was quick to adopt a multi-channel services approach. Mr. Wirawat Panthawangkun, KBank Senior Executive Vice President commented, ‘To meet multiple lifestyle needs of customers, KBank has teamed with leading business partners within ecosystems at both the global and national level.’ KBank’s other partnerships now include Grab, Facebook, LINE, Lazada, Shopee, Central JD FinTech and JD Central – Thai retail giants; and PTTOR – an energy business to name a few. These collaborations and strategic partnerships truly live up to KBank’s commitment ‘Better Together’ which aims to provide an integrated ecosystem of businesses and banks who provide a fulfilling customer experience and journey.

Mr. Wirawat Panthawangkun, Senior Executive Vice President, KBank

Stronger Together

As the pandemic bought economies to a standstill, KBank quickly rolled out a Covid-19 insurance policy.  This policy was available to all its registered K PLUS users free of charge via KBank Live LINE Official Account. The bank’s Covid-19 initiatives continued when its introduced unsecured lending through all its digital channels, ‘Reduction of monthly installment payment, a moratorium on principal payment, suspension of both principal and interest payment, as well as granting of new loans to bolster liquidity for business customers via the soft loan scheme of the Government Savings Bank and the Bank of Thailand,’ said Mr. Wirawat Panthawangkun, KBank Senior Executive Vice President.

Two separate program ‘Generous (Business) Owners – Empathetic Creditor’ – which includes reduced interest rates payable to banks by business owners and splitting the burden of paying salary due to business staffs and ‘Zero Interest-rate Loan to Retain SME Customers’ – with features such as zero interest, 10-year loan term and no fees, were launced to help the bank’s SME clients.  These programs are expected to save up to 56,000 jobs.

Honouring their campaign ‘Stronger Together’, KBank has provided financial support amounting to more than 393,906 million Baht to 80,229 business customers, and 186,850 million Baht to 297,800 retail clients to date.

Image: Quality Stock Arts/ Shutterstock.com

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>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

US-China Relations Wide Ranging Issues 2

US-China Relations: Wide Ranging Issues, At Risk of Boiling Over

In July this year, the Chinese consulate in Houston had been ordered to close its doors by the US government. This development is just one out of the many conflicts plaguing these two economic giants. Nothing like this has been seen in decades between China and the United States.

There are wide-ranging issues between Washington and Beijing that threaten to boil over if not managed properly. The most notable ones are as follows:

COVID -19

In some of the interviews granted by Donald Trump, he was heard several times referring to the coronavirus as ‘Chinese Virus’. His reasons lay with his staunch belief that the Chinese government failed to give accurate reports concerning the extent of the damage caused by the disease. He believes that their government simply ignored its duty to report to WHO since the first case of the virus was documented on Wuhan in 2019.

However, China insists that it has been nothing but transparent since the onset of the pandemic. Following Trump’s accusations, the World Health Organization has denied its involvement in supporting the disinformation by the Chinese. In response to this, the United States President Donald Trump formally started the withdrawal process from WHO, making good on his threats to deprive the UN body of its top funding source over its dismal handling of the pandemic.

HONG KONG

Tensions have clocked to a new height between the US and China. Recently, protests arose as a result of Beijing’s imposition of a new security legislation over the previous colony of Britain, which returned to China in 1997.

In response to this imposition, Donald Trump has signed a sanction effectively severing preferential economic treatment for Hong Kong. This move will allow him to place visa restrictions and sanctions over financial institutions and Chinese officials who’d been involved in enacting the new security law.

Predictably, China threatens to counter with a retaliatory move of their own in no distant time.

There are wide-ranging issues between Washington and Beijing that threaten to boil over if not managed properly.

SOUTH CHINA SEA

Until 2020, the Chinese has always laid claim to ninety percent of the South Sea. Meanwhile, Malaysia, Brunei, Vietnam, Taiwan and the Philippines has actively contested this claim.

Currently, the United States has hardened its stance in the matter, tilting towards the other Asian countries. The US believes that China has plans to build a Maritime Empire in the energy rich sea.

On July 13, 2020, Mike Pompeo, the US secretary of state, issued a statement that accused Beijing of a bully-based campaign and its claim, unlawful.

HUAWEI

The tech company based in China has been added to the US ‘Entity list’ In 2019, the US suspected the company of violating their sanction on Iran and can spy on customers through their devices. This security concern led Washington to add Huawei to its ‘Entity list’

However, Huawei has vehemently denied every one of the allegations and accused Washington of frustrating its growth because no American company can compete with their prices and tech savvy.

Washington has gone ahead to push other countries to drop Huawei, posing the same violations as their reason. The friction between the two has caused a serious decline in their access of Chips and other important parts from their US suppliers.

NORTH KOREA

According to the US, China has breached their sanctions on North Korea. Though Beijing has denied the allegations, tensions continue to rise.

The common goal of both countries is for North Korea to give up its nuclear weapons program and as such, should work together. Yet, that is far from happening. The Chinese government has agreed to lift some of its sanctions over North Korea but the United States does not agree.

Kim Jong Un, the leader of North Korea has met with Donald Trump thrice in an effort to ease the US sanctions but failed to agree every time. While US requires them to give up the nuclear weapons in Pyongyang, North Korea wants all the sanctions, lifted.

Nevertheless, the number-two diplomat, Stephen Beigun remains optimistic. In an interview, he opined that the two countries might still work together in spite of the dispute because of the greater good of ceasing the development of nuclear weapons by North Korea.

UIGHURS

The Uighurs are a minority Muslim group that reside in the western Xinjiang region.

The Chinese government set up complexes in that remote Xinjiang called Vocational training centers. They have been condemned for trying to stamp out what they term as extremism and have the Uighurs acquire new skills within the complexes.

Following the discovery of the violation of Uighur’s human rights, the US has placed sanctions on all the Chinese institutions, officials and companies.

A Better, Safer World

The relationship between the US and China is reaching a dangerous point. The already fragile relationship is on the brink of total collapse and we could only hope that in the coming days, the relationship could improve for the better. People from all over the world are pinning their hopes that the result of the 2020 US presidential elections will provide a pathway for calmer, more collaborative partnership between the two great powers.

As a famous world leader once quipped: “If we cannot now end our differences, at least we can help make the world safe for diversity.”

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

 

Image: Robert Way/Shutterstock.com

KS thumb

J.P. Morgan Private Bank: The Unique Value of Advice-based Services Model

This year’s Most Influential Female Leader in Asia at the Global Private Banking Innovation Awards is Kam Shing Kwang, Chief Executive Officer of J.P. Morgan Asia Private Bank. In this fascinating interview, Kam Shing shared her most remarkable career achievements thus far, the technologies transforming JP Morgan and the new investment trends that have emerged in the aftermath of the pandemic. Here are the excerpts of our interview.

 

TDB: A sincere congratulations on being named Most Influential Female Leader in Asia at this year’s Global Private Banking Innovation Awards. What is your most memorable achievement in your career thus far?

Kam Shing Kwang

Kam Shing Kwang Chief Executive Officer of J.P. Morgan Asia Private Bank

KS: Thanks for the honour. I am very humbled by the award, this is obviously due to the work from my entire team, who have worked very hard over the past few years. As for my achievements, it’s less about the actual achievements, and more about the journey of working hard and getting something done – this to me is the most memorable and the most rewarding. If there is one particular turning point I can think of, it would be at a very significant stage of my career. When I first joined JP Morgan, I was a portfolio manager focusing on investments for clients. I thought that was going to be my career path, but this job took me from being a portfolio manager to running the investment team and then in 2004, this led me to Singapore to run the investment team for Southeast Asia. Shortly after that, the head of the Singapore office had to relocate, and the opportunities opened up for me to become the head of Singapore office. This was in 2005, and was a very significant milestone and also a turning point in my career, as it opened up all the opportunities for me to broaden my scope beyond investments into business development and strategising for the markets across the region. That was a very significant moment in my career in JP Morgan.

TDB: You seem to be somewhat of a tech enthusiast, which must certainly be helpful given the $11 billion a year JPM spends on technology. Can you talk a bit about specific technologies that are transforming your business and why?

KS: In this current environment, technology facilitates our ability to work anywhere, anytime. It is absolutely remarkable. Mobile devices and different kinds of hardware allow us to access information wherever we are. But, I think it only just dawned on me during this pandemic where, at any one time, we have 97% of JP Morgan staff working from home. So, we’re talking about over two hundred thousand employees completely working from home and processing transactions seamlessly and effectively. This has all been made possible by cloud technology, etc, and I think that is one of the most amazing things I’ve seen.

In this current environment, technology facilitates our ability to work anywhere, anytime. It is absolutely remarkable.

TDB: How has JPM countered the adverse economic impacts of COVID-19, and what advice would you give to businesses navigating these unpredictable waters?

KS: It’s very heartening to hear from our employees and also from our clients. Clearly, our technology and platform have been critical in helping us serve our clients seamlessly and allowing our colleagues to work effectively. The commitment and devotion are simply unparalleled during this period.

One thing that has been extremely helpful and will continue to be particularly important in what we do for our people and our clients is the effort everyone is putting in. So, having empathy is very important for our employees. To think about how they are being impacted by the pandemic, they need to feel safe and secure – this is one of our top priorities. If we prioritise this, we will get there and will allow the entire workforce to work from home.  We put ourselves in our client’s shoes and understand what they need. They need information and require us to truly understand what their needs are. Our ability to listen, and understand this, already goes a very long way. We have a series of digital engagements and as a result, the digital adoption rate has increased a lot and we are now servicing our clients this way.

TDB: What new investment trends would you say have emerged as result of this pandemic?

KS: We see a significant disparity between the winners and the losers during this time. To define that, customers that are able to respond quickly during this period of time have fared well. Technology and healthcare are two sectors that have performed really well. And we’ve been recommending these sectors for a while. More broadly, what we’re sharing with our clients is that innovation is really important. And honestly, the technology that facilitates that. Innovation in this area should look at the way you process and service your clients and any business that is always responsive to new environments will eventually win.

So, we look for companies that have these attributes. We have a strategy about innovation, and it has been doing very well for the majority of our customers in the tech sector. Of course, this goes beyond technology.

Technology and healthcare are two sectors that have performed really well. And we’ve been recommending these sectors for a while. More broadly, what we’re sharing with our clients is that innovation is really important. And honestly, the technology that facilitates that.

TDB: How has business been since the launch of JPMs Trust Company in Singapore?

KS: It has gone well; everything is on track. Especially on the new business side of things. We have started better than we expected, which is great. We’ve been setting up new trusts for many company founders – seeing their companies to IPO. They want to start structuring and planning, so we have set up a significant number of such trusts for founders ahead of their IPOs.

 

TDB: Which products or services help differentiate your firm and what is truly unique to JPM’s Private Wealth offering?

KS: Obviously, it’s easy to talk about product. I’d like to talk about all the products we have – from investment to wealth advisory to credit, and all products that other parts of the bank offer. However, I think the most important thing at the end of the day is advice. And that advice has to be personalised depending on the client needs. I talk about being empathetic. If you have empathy, you can see from the clients’ standpoint on what their needs are. You can give them the right advice and that hopefully comes with the right solutions. So, I’d say, advice is what differentiates JP Morgan and the way we ensure that we give our clients the best advice. Obviously, having the right advisors who are given the right amount of tools is just as crucial too. Most importantly, our global consensus and the innovation mindset will mean that all the advice we give is always timely and holistic.

In the future I think clients will want to pay for advice rather than just products. The force of competitive pressure will drive down prices. So, I think the advice-based services model will be far more valuable.

TDB: What do you think the Private Bank of the future will look like?

KS: I think there are two parts to this, and I’ve probably touched upon both parts. People are going to value advice more and more. What we have seen, especially in Asia, is that certainly, products do play an important role. In the past, clients look at what products you can offer to determine whether you are the right provider. Increasingly, clients are going to see that product can be modified so what differentiates, really, is advice. So, in the future I think clients will want to pay for advice rather than just products. Also, we can see products are being commoditised and being manufactured more efficiently. The force of competitive pressure will drive down prices. So, I think the advice-based services model will be far more valuable.

The other thing is getting digital. Having the most efficient digital platform will be crucial in giving solutions and advice.

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

 

Images: MOZCO Mateusz Szymanski/Shutterstock.com 

Taishin Bank: Reimagining CX With State-of-the-Art Digital Offering

Taishin Bank: Reimagining CX With State-of-the-Art Digital Offering and Wealth Management Services

One of the countries which repeatedly finds itself a spot in the top 10, in the wealth index in Asia, is Taiwan. While this may come as a surprise to many, according to some statistics, 20% of Taiwan’s population had net worth over one million U.S. dollars in 2019. Leading the way in supporting and guiding these individuals is Taishin Bank, one of the leading providers of wealth management services coupled with top-notch digital capabilities. In 2019, wealth management accounted for 36% of bank’s Net Profit. Taishin bank is uniquely positioned to offer wealth management services to a wide range of customers right from young individuals, families, businesses to HNWIs.

Taishin Bank’s wealth management solutions won two awards at the Digital CX Awards 2020 by The Digital Banker. The two titles that the bank won are “Excellence in Next Generation Customer Satisfaction” and “Best Customer Service in Alternative Wealth Management”. In addition to the award wins, Taishin Bank was honoured with Highly Acclaimed: Excellence in Omnichannel Customer Experience and Highly Acclaimed: Best Private Bank for Customer Experience. These award wins and acclaims demonstrate the Bank’s ability and commitment to enhance customer experience in wealth management, while ensuring a seamless digital and real-time experience.

20% of Taiwan’s population had net worth over one million U.S. dollars in 2019. Leading the way in supporting and guiding these individuals is Taishin Bank, one of the leading providers of wealth management services

Now in its second year, the Digital CX Awards 2020 received more than 200 nominations across various awards categories. To be able to stand out in each category and win the awards the bank has truly displayed use of technology, omni-channel experience and demonstrated how customer experience was enhanced keeping in mind metrics such as use of data, efficiency of processes, etc. The judging panel that includes subject-matter experts known for their integrity and unbiased judgment from companies such as Forrester, EY, Fuji Xerox, Bain & Company, Wipro Digital and KPMG.

Enhanced CX in Wealth Management

Following a customer centric approach in banking has led banks and financial institutions to revamp products and services. The approach has become more focused on customers rather than profits and Taishin bank leads from the front. The bank’s approach to reaching out to customers starts from “Client Tagging”. Through this, the bank invites the interest of its existing customers by analysing data and clients are tagged and segregated by segment, behaviour, channel preference etc. Armed with this information, the bank introduces new products to existing wealth management customers and invites interest from others. In addition, the data analysis also enabled the bank to tag potential family-based clients for its wealth management services.

Alternative Wealth Management with Richart and Robo-King

Mr. Oliver Shang, President, Taishin Bank

Mr. Oliver Shang, President, Taishin Bank

Using data to understand clients and their spending and saving habits is key for Taishin Bank’s wealth management services. To combine data knowledge and insights with a complete digital offering enables the bank to set itself apart from its competitors in the region. The bank’s digital offering – Richart is an award-winning app which carters to all the bank’s clients. Built with the aim to become “Bank of Young People”, Richart provides wealth management services such as saving options, fund investments starting at TWD 10, artificial intelligence investing options, and loan offerings. Richart, taking a customer centric approach has also unveiled products such as annuity insurance which can be availed in under 5 mins and sub-accounts which helps customers save and achieve small goals. “To allow customers to manage their assets better, Richart provides innovative product combination designs to allow customers manage their finances in a more comprehensive way, encouraging them to diversify their assets in different products”, commented Mr. Oliver Shang, President of Taishin Bank.

Another powerful digital wealth management service that Taishin bank offers its HNWI is “Robo-King” which focuses on investment portfolio forecast, customer investment participation and is also a market monitor. The bank analyses international markets for its customer to invest in every month providing qualitative and quantitative indicators with a comprehensive risk profile. Customer can also reach out to the bank’s financial experts and aid in decision making and all this occurs in real-time. One of the bank’s latest investment product is “U.S. Stocks ETF” which was added to Robo-King in the third quarter of 2020.

Growth Amidst the Pandemic

In the pandemic, to manage customer expectation all the while ensuring a seamless customer experience – Taishin Bank introduced video-conference calls with their wealth management clients. The bank financial advising team kept clients abreast of new market trends and products. Mr. Oliver Shang, President of Taishin Bank said, “Under the digital financial trend, Taishin Bank is actively integrating financial services with new technologies, hoping to accelerate services through technology, warm up services, and further add value to the profession.”

Under the digital financial trend, Taishin Bank is actively integrating financial services with new technologies, hoping to accelerate services through technology, warm up services, and further add value to the profession.

Richart’s Maji Score is a unique scoring system which aids the Richart in disbursing loans and determining the rate of interest for the loans. For consumers to get a high score, they need to interact and transact on the digital platform. For every 10 Maji points, the rate of interest reduces by 0.1% which has made this offering popular in the pandemic. Richart loan application increased by 4% in the pandemic as customers aimed to avail loans at lower interest rates.

In addition to the above, Taishin Bank provides its customers an omni-channel experience where customers can avail support from Video Teller Machine (VTM) during non-business hours. The VTM is equipped features such as Facial recognition withdraw, consultations by teller, apply credit card, etc. Taishin Bank also introduced Loyalty Program 2.0: Taishin Points, to enable “better customer experience and grow consumer loyalty.” Launched during the pandemic, the bank encouraged its customer to increase online transaction and earn Taishin Points. Bill payments, shopping online, auto debit transactions would be collected in the form of Taishin Points and this could be redeemed against various offers such as cash credit, travel, hotel voucher, Starbucks coupons, gift cards. Wealth Management clients received VIP perks and exclusive benefits from Taishin Points.

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>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

 

Decoding the Needs and Preferences of Asia’s Next Generation of Wealth Holders

Pushing Water Uphill in Asia – SDG6: Clean Water and Sanitation for All

By Arnaud Tellier, CEO Asia Pacific, BNP Paribas Wealth Management

 

A United Nations (UN) goal of providing clean water and sanitation for all by 2030 is proving to be challenging in Asia. What does this mean for the region and what is being done to ensure this most basic of human rights?

The World Health Organization (WHO) offered some simple advice as Covid-19 began to spread: Wash your hands. Hand hygiene was one of the most effective ways to limit the spread of pathogens and prevent infections, it said, including the new virus.

Being able to wash hands is taken for granted by many. For others, it’s not so easy. The United Nations estimates that two in five healthcare facilities globally lack clean water and soap. Nearly two billion people only have access to water that is fecally contaminated and almost a billion more lack access to basic sanitation such as toilets.

Much of the problem in Asia stems from rapid and unplanned urbanisation. More than 60% of urban households live without piped water supply, with the problem being most acute in Manila, Jakarta, Dhaka and New Delhi.

Clean water for all

Access to clean water and sanitation is widely seen as a basic human right. It has the power to alleviate poverty and hunger, improve health, reduce inequality of wealth and gender and improve standards of education. It offers people greater dignity in their daily lives: the World Health Organization (WHO) estimates that some 673 million people still practice open defecation.i

On a broad economic level, the World Bank estimates that poor sanitation resulted in a loss of about US$223 billion of global GDP in 2015. Asia and the Pacific suffered the most, with losses of about 1.1 per cent of GDP overall, and some nations losing more than 5 per cent.

While poor sanitation has significant negative impacts, it also provides an economic opportunity: the WHO estimates that for every dollar invested in water and sanitation, the return is four dollars through saved medical costs and increased productivity.ii

Most goals rely on SDG6

While the 17 Sustainable Development Goals (SDGs) goals are measured individually, none of them can be achieved in isolation and almost all rely in some part on the delivery of SDG6: “Ensuring sustainable access to clean water and sanitation for all.”

SDGs 1 to 3 (no poverty, zero hunger, good health and well-being) are clearly dependent on clean water and sanitation. There are less obvious links with Goals 4 and 5 (quality education and gender equality), but it is impossible to build decent schools without good sanitation and – in many of the world’s poorest nations – it is women who take responsibility for collecting and providing water for the family, keeping them out of schools and further increasing gender inequalities. The goals associated with climate change, energy and the environment are also connected with progress towards SDG6.

Bigger cities, bigger problems

A 2019 United Nations report on the SDGs presents a bleak picture for Asia. The region is failing to make progress on almost two-thirds of the SDG targets and none of the 17 goals look likely to be achieved.iii

Of particular concern was a lack of progress in reducing inequality, protecting oceans and taking action on climate change. In many countries, especially in South Asia, lack of access to clean water and sanitation is contributing to targets being missed, with the situation stagnating or getting worse in developing nations.

Much of the problem in Asia stems from rapid and unplanned urbanisation. More than 60% of urban households live without piped water supply, with the problem being most acute in Manila, Jakarta, Dhaka and New Delhi.

Various countries have proved that dramatic improvements in the provision water and sanitation can be achieved in just a few years, and that some solutions are inexpensive, effective and can be deployed quickly.

Asia: green shoots

Overall, though, Asian countries have made good progress in improving access to safe drinking water and sanitation over the past decade.

Only one per cent of the population now uses surface water for drinking purposes and around 92 per cent now have access to basic drinking water.  Between 2000 and 2017, the SDG regions of Central and Southern Asia and Eastern and South-Eastern Asia increased the provision of basic sanitation by 36 per cent and 24 per cent respectively.

There has also been a dramatic decline in open defecation in Asia since 2000, with more than half of the population of Cambodia, nearly half of the population of India and a third of the population of Nepal and Laos stopping this practice.iv

In spite of these encouraging indicators, progress towards SDG6 remains uneven within the region. According to the United Nations, relatively wealthy North and North-East Asia has almost achieved the 2030 target already, with North and Central Asia not far behind, but populous South-East Asia and South and South-West Asia were behind schedule in 2019.v

 

 

Delivering the promise

Recognising the challenges that remain, the United Nations recently launched a Global Acceleration Framework titled “Delivering the promise: Safe water and sanitation for all by 2030.”

The framework puts in place five “accelerators” designed to dramatically improve the international community’s support for SDG6. These include optimising the use of financial resources; improving the quality of data; improving capacity by increasing job creation in the water sector and the retention of a skilled workforce; developing and implementing new technologies; and improving governance through better cross-sector and international collaboration.

New initiatives

Various countries have proved that dramatic improvements in the provision water and sanitation can be achieved in just a few years, and that some solutions are inexpensive, effective and can be deployed quickly.

UNICEF has lauded government initiatives including China’s Toilet Revolution, Indonesia’s Sanitation Campaign, Myanmar’s Clean Villages initiatives and the Philippines’ Sanitation Master Plan for generating “huge traction in terms of drawing political attention for accelerating progress in sanitation and ending open defecation.”vi

New technology is helping, too. In Vietnam, dirty water from a canal in the Mekong River is treated at a plant using a chemical-free process developed by Akvotek, an Australian company. The energy-efficient system provides at least 400 homes and 2,000 people in the southern city of Ben Tre with safe drinking water today, and is expected to do so for many years to come.vii

Big companies are also looking to SDG goals for guidance in forming their sustainability strategies. Among many others, Dutch brewing company Heineken has made commitments to reduce its use of water. In Indonesia, it has established a cross-sector alliance with UN agencies and partnered with an NGO to replant trees and restore land that is critical to the water supply and flood resilience of 30 million people.viii

Delivering on SDG6 will not be easy for Asia. But there is hope that, with the UN accelerator framework in place and the region’s governments, businesses and communities increasingly focused on sustainability, the chances of delivering clean water and sanitation for all are increasing.

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

 

Notes:

i   https://www.who.int/water_sanitation_health/publications/jmp-2019-full-report.pdf
ii  www.who.int/water_sanitation_health/monitoring/economics/en/
iii https://www.unescap.org/sites/default/files/publications/ESCAP_Asia_and_the_Pacific_SDG_Progress_Report_2020.pdf
iv https://www.who.int/water_sanitation_health/publications/jmp-2019-full-report.pdf
v  https://www.unescap.org/sites/default/files/publications/ESCAP_Asia_and_the_Pacific_SDG_Progress_Report_2020.pdf
vi  https://www.unicef.org/eap/sites/unicef.org.eap/files/2020-05/EAPRO%20WASH%20Results%20Report%202019_FINAL.pdf
vii  https://watersource.awa.asn.au/business/partnerships/akvotek-achieving-sdg-6-in-rural-vietnamese-village/?utm_source=SocialAnimal&utm_medium=referral viii https://www.theheinekencompany.com/our-sustainability-story/our-progress/case-studies/tackling-water-stewardship-challenge-indonesia

Images: Jimmy Tran/Shutterstock.com | GODONG-PHOTO/Shutterstock.com

Decoding the Needs and Preferences of Asia’s Next Generation of Wealth Holders

Decoding the Needs and Preferences of Asia’s Next Generation of Wealth Holders

Before the outbreak reaches pandemic level early this year, Asia has been one of the most robust regions when it comes to wealth creation. From China to India to Singapore, Indonesia and beyond, the number of wealthy individuals in Asia, and the corresponding sizes of their wealth, is nothing less than astonishing. As soon as the pandemic hit, almost everything ground to a halt. Expansion plans were put on hold, internationalisation strategies were redrawn, and Asia’s wealthy families had to recalibrate their long- and short-term plans.

In a recent report entitled Banking, Entrepreneurialism, and the Next Generation of Wealth Holders 2020 by BNP Paribas Wealth Management in Asia in collaboration with Campden Research, relevant data points were gathered to understand the key drivers and motivating factors at play with the ultra-high net worth Next Generation (NextGen) in Asia. One of the most important insights that has been gleaned in this comprehensive study is that the NextGen Ultra-Rich are an emerging generation of Entrepreneurs with great clarity of purpose and direction.

In recent years, families have had to start considering whether the next generation will get involved in family businesses – and, if so, how and to what extent – and how prepared the NextGen is to lead family wealth management.

In this context, there are two broad areas that call for examination: the degree of harmony that will likely be seen between the generations as they work more closely together, and how family engagement with financial service providers will likely evolve,” the report says.

In recent years, families have had to start considering whether the next generation will get involved in family businesses – and, if so, how and to what extent – and how prepared the NextGen is to lead family wealth management.

Indeed, the theme about harmony is an important one to tackle and issues around succession planning takes a primal importance. But of particular interest also is how the NextGen will engage with banks and financial institutions as their needs, educational and professional experience are quite different from their parents’. It is foreseeable that relationship-based banking that their parents have been used to will be replaced by transaction-oriented banking. Moreover, demand for greater digital services and access to more granular reporting would be required.

Next Generation Wealth Management

In uncovering insights from ultra-high net worth NextGen, over 100 individuals were surveyed and 10 were interviewed. This remarkably diverse group of NextGen, whose average age is 38 years, has an average family net wealth standing at US$640 million.

They are highly educated and come with a considerable amount of prior work experience; majority of them are already successful business owners in their own right with diversified interests in Finance & Technology. They are native to Asia but can best be considered as global citizens of the world.

A particularly striking theme that continues to emerge in the research is that while many of the NextGen have significant experience, they still value learning from their parents and on the job. “There is a palpable admiration amongst the NextGen for their parents’ operational know-how and business achievements, and a clear desire for and awareness of the complementarity of the knowledge / skills between the generations,” the report reveals. Some of the most notable findings of the report are the following:

NextGen believe technical and operational skills hold strategic importance

NextGen have a strong entrepreneurial drive and decisions are made with direct application in mind.  Among the NextGen surveyed, 48% are educated beyond Bachelor’s level and a third, in finance-related subjects. Some 48% have also obtained work experience in finance. Against this backdrop, many of them see a job in finance as a stepping-stone to launch to a stronger entrepreneurial venture. What appears to be a natural progression for them is to join the family business to work under the tutelage of the previous generation wealth creators. Given the technical skills that the NextGen possess, matched with the operational skillset that they will obtain running the family business, a potent advantage can clearly be established.

NextGen are usually involved in both the family business and wealth management

NextGen value the hardwork and expertise of their parents in running the business, hence, they are very open to learning from them. Among the respondents who were surveyed, 45% are involved in both their family business and investing their family wealth while 14% are involved only with the business. On the other hand, those that are involved only with investing stands at 31%.

A noticeable difference between sons and daughters of wealth holders is that sons are more likely to be involved with both the family business and investing the family wealth (50% versus 33%). A similar pattern has been observed for firstborn NextGen as against subsequently born (51% versus 33%) and the under 40 compared to the 40+ (52% versus 38%).

NextGen prefer evolution, not revolution

It is also particularly telling that for NextGen, the knowledge of financial markets between generations are seen as different and complementary. They don’t necessarily believe that one generation knows ‘more’ or ‘less’ compared to the other. As such, there is more harmony instead of tension between generations as the NextGen display an evident admiration for their parents’ business accomplishments. Moving forward, given NextGen’s educational and professional experience, and the relatively early stage at which families in Asia-Pacific stand in terms of wealth management, there is a palpable drive to push for greater professionalism. It is also predicted that investment focus will shift from public markets to private markets.

Of particular interest also is that the NextGen are likely to come with more technical expertise in finance and technology, a more global outlook and wider networks in the start-up community. Giving a more well-rounded view, the NextGen participants in the study also shared their views on the relative shortcomings of the older generation in financial matters, which is mainly around implementing a governance framework. This is followed by an observation that the older generation did not adequately diversify. For a third of the participants, they noted that their family would have benefited from professionalising financial management and further diversification.

NextGen see the value of digitalisation but human interaction in banking is still needed

It is clear that human interaction still holds great importance among the NextGen. Only a small fraction prefers digital over direct human interaction with bankers to the extent that they are satisfied with never physically going to a bank or meeting with a banker (5%). A vast majority of them said that while digital is preferred, some direct interaction is still wanted (72%). A smaller percentage (23%) indicated a preference for traditional, direct approaches to banking. Diving deeper into the data, it was also revealed that 9% of participants under the age of 40 were content with eliminating direct human interaction with bankers totally but none of the 40+ participants agreed with this. One NextGen interviewee shared this view: “Some things cannot be fulfilled digitally, including discussions about strategy and solutions. We will still require human interaction. Digital is more relevant to execution, trading.”

A particularly striking theme that continues to emerge in the research is that, while many of the NextGen have significant experience, they still value learning from their parents and on the job.

NextGen are interested in a range of banking services

It is easy to assume that because the NextGen’s educational background and technical expertise is more advanced, that there will be a very low interest in a range of banking services. The study revealed that this is not exactly the case as many of them indicated an interest in a range of banking services although, their opinions on which services they are willing to pay are quite varied.

About 81% of the NextGen said that they are interested in banks anticipating the need for and providing relevant forecasts. For example, some advice on foreign exchange markets that will affect the family’s business and investments. Roughly the same proportion (80%) said that they are interested in being viewed as an institutional client and being offered the associated services, including alerts and quarterly reporting. However, on both services, only 42% of those interested are willing to pay.

The biggest gap between interest and willingness to pay corresponds to the provision of more frequent granular reporting – in which 78% expressed interest, but only 25% of which expressed willingness to pay. On the other hand, 68% expressed interest in banks integrating technology into investment management – e.g., algorithmic trading – and 45% of them expressed willingness to pay.

“Some things cannot be fulfilled digitally, including discussions about strategy and solutions. We will still require human interaction. Digital is more relevant to execution, trading.”

NextGen see a shift in focus from public to private markets with banks playing a role

Looking into the horizon, it is apparent that the next generation of wealth holders is moving away from public markets. In terms of investment focus, the study highlights a growing interest amongst the NextGen in private equity and venture capital, and in direct investments, in particular.

The participants were asked about the role of banks in generating private market deal flow and, for the great majority, banks play some role (82%). This includes 52 people who said that banks play a limited role – i.e., that banks are and will remain one of many providers, but that the family still prefers third-party / sector specialist sources;  24 people who said that banks play an important role – i.e., because families find it hard to identify and structure deals themselves. Finally, it includes 6 people who said that banks play an imperative role – i.e., reflecting the bank’s fiduciary duty and the alignment of interests.

The Next Chapter

The next chapter of wealth management in Asia will be an evolution of how wealth is created in the previous generation. The next generation ultra-high net worth individuals must be meaningfully involved in ventures they are taking part in. Armed with technical knowledge of finance, expertise in family business activities, and global networks on the one hand, and an entrepreneurial drive and eagerness to pick up operational know-how, on the other, the NextGen can prove to be an invaluable asset for family businesses and family offices.

As such, it also goes without saying that banks must step up and ensure greater internal stability. The NextGen places greater emphasis on long-term relationship with the banks however, such relationships must go beyond a traditional banking social event calendar and move into a more professional aspect of banking relations. These include overall bank stability, including financial, structural, and operational stability. The NextGen want less movement of personnel within and between banks, including relationship managers and senior management, and consolidation of roles, so that clients interact with fewer bankers.

In addition, what’s clear from the study is that banks need to provide a holistic service offering technical expertise, consultation and tailored services. The NextGen want their point of contact to draw on and coordinate between different bank departments and regional offices. Ultimately, banks must greatly improve their capabilities. As one of the NextGen interviewee aptly puts it, “Banks have to take more time to understand their clients in terms of what their motivations and long-term visions are. The ones who do this will actually be supporting the business and will see more success.”

To download a full copy of Banking, Entrepreneurialism, and the Next Generation of Wealth Holders 2020 by BNP Paribas Wealth Management, pls visit https://bnpp.lk/nextgen

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The Impact of US-China Relations on Wealth Management

The Impact of US-China Relations on Wealth Management

On 3 November 2020, the United States electorate will head to the polls to decide who will lead the world’s most powerful nation in the next four years. As Donald Trump and Joe Biden battle it out to be the chief architect and implementer of US foreign policy, one issue looms large, and unsurprisingly, a crucial talking point in the election: China.

Of particular interest by economists, as well as wealth managers around the world, are the issues concerning trade and investment.

In 2018, China saw a huge increase in tariff on imports to the US. This is a calculated effort from the Trump administration to force Beijing to reduce subsidies on manufacturing companies based in China and curb their difficult demands on US companies.

In January 2020, the two countries came to agreement by signing a trade deal which knocked back some of the tariff rates but failed to address the major issues. This was after an entire year of back and forth on tariff which considerably slowed and depreciated the economy on a global scale.

Nonetheless, Beijing has promised to increase import of US goods worth 200 billion dollars in the space of twenty-four months.

In the meantime, the US government is pushing to have American companies cease manufacturing and sourcing of materials from China. 

US Companies’ Reaction to Trade Issues

These new restrictions have predictably caused US companies untold tension and pessimism. Every day, the chances of the trade tensions reducing or ending grows slimmer because neither Beijing nor Washington are showing signs of relenting. None of the companies are looking forward to the threat of moving their companies over to the States.

The American Chamber of Commerce based in Shanghai conducted a survey and released the results of their findings. Ninety-two percent of the respondents agreed that they would rather keep their companies in China despite the persistent fracture in the US-China relations.

The survey revealed that over a quarter of these firms are aware that the dispute between China and US may last indefinitely. A year ago, only 17% agreed to that possibility. In 2019, 13% of the companies believed that the issues would be settled with three to five years, a number that has since increased to a fifth of the respondents.

However, about 14% agree that the issues will be over in about twelve months.

In a quote, AmCham Shanghai stated that, “What is likely underpinning this sense of negativity is concern about broader US-China relations.” An opinion that outlined responses from over three hundred and forty companies.

The said survey was conducted from June to July when the conditions seemed to worsen even after a trade agreement by both countries.

About 1400 companies in China participate in the yearly survey conducted by the American Chamber of Commerce in Shanghai, an NPO (Non-Profit Organization) that strives to bridge the thorny trade gap between the US and China.

Currently, relations between China and US have continued to sink to a historic low as they continue to disagree and punish each other from issues ranging from the Coronavirus pandemic to technological control.

Donald Trump severed the special trading relationship in July between US and Hong Kong. That privilege had formerly exempted Hong Kong from some tariffs. In additions, both countries made moves to shut down their consulates in Chengdu and Houston.

By August 2019, Washington issued a sanction to Chinese government officials citing that they undermined Hong Kong’s autonomy, with Carrie Lam – the leader – inclusive.

When suspicions rose that TikTok and WeChat could be used to spy on the US government, Donald Trump issued threats to ban the popular apps from the US.

While 32% of the respondents agree that the bad relationship between the countries is sourly affecting their ability to keep their staff, they know that leaving China is completely out of the question. Even with Trump’s order to leave the country in 2019, and in recent weeks, played around with the idea of “decoupling” the world’s largest economies.

These companies state that China still provides several benefits. For instance, some firms are focused on tapping into the large number of middle-class citizens. While many others rely heavily on China for manufacturing. According to 2020 AmCham survey, the number of companies that said China aided the growth of their profit margin increased from 9.4% to 32%.

In agreement to the above data, President of AmCham in Shanghai, Ker Gibbs said, “US businesses in China would like to see the two countries resolve their outstanding issues quickly and reduce tensions.” Gibbs stated, “A workable cooperative framework for the next decade would be a good place to focus discussions.”

The Long Term View

The relationship between US and China is reaching a dangerous point. The already fragile relationship is on the brink of total collapse and we could only hope that in the coming days, the relationship could improve for the better. People from all over the world are pinning their hopes that the coming 2020 US presidential elections will provide a pathway for calmer, more collaborative partnership between the two great powers. As a famous world leader once quipped: “The forces that divide us are not as strong as those that unite us.”

 

Image: Andrea Izzotti / Shutterstock.com

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>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.