Do tech-based investments present good opportunity for the UHNW segment today

Do tech-based investments present good opportunity for the UHNW segment today?

For several years now, and right before the onset of the pandemic, the tech market has continuously received particular attention from prominent investors.  It was pretty standard for individuals to make their investments directly to companies, or via their branch offices. In fact, a report compiled by Campden Research from 360 family offices reveals that technology is one of the key sectors they prefer to invest in.

Clearly, the pandemic is gradually creating a shift in the way, and manner, people respond to technology. Things that would ordinarily have been done offline are now being fulfilled via technology. And a more significant number of people are harnessing technology for specific purposes.

Tech companies in the private market are now being considered a huge investment opportunity by the UHNW segment. And education happens to be on top of the list of lucrative tech-based investments. As a matter of fact, the pandemic has led virtually every learning institution to shift their activities from physical, to virtual classrooms. And UHNW individuals will not let the opportunity pass. Snapask, a prominent tutoring software that kick-started in Hong Kong, was able to raise a sum of $35 million “to expand in Southeast Asia.” According to a TechCrunch report, “the company now has a total of 3 million students, with 1.3 million who registered over the past twelve months. Over the past year, 100,000 tutors have applied, taking Snapask’s current total to 350,000 applicants.”

The pandemic is gradually creating a shift in the way, and manner, people respond to technology. Things that would ordinarily have been done offline are now being fulfilled via technology.

Online shopping and food delivery platforms are also experiencing the bright side of the pandemic. They are benefiting hugely from meeting the needs of people who are working remotely. Recently, a Korean grocery startup Kurly has raised $150 million in their recent financing round while an Indian shopping platform BigBasket was able to raise $60 million as it continues to scale its business.

Other sectors of technology currently considered by investors encompass the standard tech features that typically accompanies the general use of technology. Cybersecurity, IT services, and enterprise solutions fall into these sectors. Investors are actively considering these respective companies as they are equipped to withstand any degree of economic decline, according to an industry report. Their functions make up essentials in businesses and organizational workflows.

It is further noted in the report that the tech market is currently outgrowing other industries that have always been stable over the years. Companies who are likely to excel in the current global economy are those who proffer technological solutions to business growth and human resource expansion.

In deciding on the company to make investments in, financial institutions are guided by a set of processes to evaluate organizations. First, they review the company’s most recent audited financial records. Then they go on to check the validity of agreements and contracts by interviewing clients and stakeholders.

These evaluations are crucial because every investor wants to be sure that every step has been satisfactorily checked off before committing their assets to companies. So that irrespective of market conditions, investors do not leave out any rule of investment. Instead, they are to follow every due diligence of investment structure to attain a well-distinguished asset portfolio.

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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.

 

Wealth Management How to Improve Business Resilience in Times of Crisis

Wealth Management: How to Improve Business Resilience in Times of Crisis

In this period of uncertainty, it should become a norm for wealth managers to check the feasibility of their developmental strategies. Further actions should also be put in place to ensure that clients have their needs met adequately. 

Coming up with alternative courses of action must be part of the firm’s strategy. Just in case things do not bode well with the established procedures of a wealth management firm, there is a need to review the firm’s yearly goals. They are to plan for a decrease in client participation in addition to financial strategies to sustain anticipated drag in customer engagement. 

In critical times such as the present crisis, wealth management firms must also take essential measures to ensure the continuity of business operations. A group of crisis managers can be set up to represent every important sector of the business. To fully assess the impact of the pandemic on business operations, customers and staff should be analysed by a crisis group. Strategies to keep the firm in business in the face of a global crisis should be well in place.

Finally, as remote working becomes the only viable option for businesses to operate in this period, clients’ data confidentiality becomes a highly significant issue. Staff should be trained on the best ways to work securely from home to avoid compromising clients’ details online. For instance, access to client data should only be provided as necessary and proper access control system must be established. In addition, virtual interactions with client data should be confined to centralized servers only.

As remote working becomes the only viable option for businesses to operate in this period, clients’ data confidentiality becomes a highly significant issue. Staff should be trained on the best ways to work securely from home to avoid compromising clients’ details online.

Enhance Digital Adoption Or Else…

Given the global practice of social distancing and isolation, wealth managers may not be able to schedule physical meetings with clients and potential customers. They may also find it challenging to find new investors. As such, it becomes crucial that they revisit their online and digital policies.

Digital channels of interaction with investors should be reinforced and integrated into the firm’s key strategies. This is to enable open communication between clients and the firm. Managers who are yet to embrace digital channels to reach out to clients – and potential clients – may get to encounter significant challenges. 

It’s inevitable that more organisations will speed up their digital transformation. In this period, wealth management firms cannot afford to be left behind. And as activities related to digitisation start to ramp up, factors related to fraud, cyber security, privacy and data integrity must be top priority.

Besides having online access to minute details of their portfolio, clients should also be able to communicate seamlessly with their relationship managers. They should further be given access to digital tools that allow to issue directives concerning their investments. Video call tools, email, and instant messaging platforms – all in an integrated app or tool – are essential to help clients keep in regular touch with their relationship managers no matter what timezone they might be in.

The impact of the current crisis to wealth and investments cannot be avoided, but with the right strategies, a crisis can turn into huge opportunity.

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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.

 

The New Normal in Payments is Digital-thumb

The New Normal in Payments is Digital

The COVID-19 has prompted several countries to implement various modes of lockdown measures to contain its spread. Safe distancing has become the new norm and work from home has become the default option for many companies and organisations looking to strike a delicate balance between safety and productivity. As a result, it accelerated the adoption of digital payments across many industries.

The fact that using cash or physical bank notes could potentially help the spread of COVID-19 is just one of the factors. While there is no definitive conclusion on this matter yet, many government leaders are taking a cautious approach and are limiting the circulation of cash or bank notes in their system. For example, South Korea, China and the US Federal Reserve have implemented a process to disinfect their banknotes. In fact, “all Chinese banks must now literally launder their cash, disinfecting it with ultraviolet light and high temperatures, then storing it for seven to 14 days before releasing it to customers,” says CNN in its report.

Could these actions be considered extreme precautionary measures? Perhaps. But one thing is clear: such interventions on the supply and circulation of bank notes will directly impact cash payments, further opening the floodgates for further adoption of digital payments.

Safe distancing has become the new norm and work from home has become the default option for many companies and organisations. As a result, it accelerated the adoption of digital payments across many industries.

Digitally ready banks are poised to emerge stronger

As the situation stabilises, and some sense of normalcy start to kick in, banks that are digitally ready are poised to benefit greatly. Investments that help bolster digital payments infrastructure, open banking, artificial intelligence, and data analytics will prove to be wise decisions. In fact, some of the initiatives that have started even before the current pandemic hits now provide considerable value to the customers and entities they aim to serve. Some of them are:

UnionBank’s Financial Supply Chain on Blockchain

In an age where exchanges of goods and services has never been more closely connected, Financial Supply Chain has never been so crucial. Financial Supply Chain on Blockchain enables transparency while protecting sensitive data and information through distributed ledgers and smart contracts. This enables UnionBank to offer non-traditional payment options to Small and Medium Enterprises, Distributors, Suppliers and Dealers while digitizing the invoice presentment and demand order processing.

The development (in partnership with IBM) of the Financial Supply Chain System on Blockchain gives the Distributors, Dealers and Suppliers that are enrolled in the system the confidence to avail non-traditional financing options on a single click of a button. This provides efficiency in managing their receivables and payables as manual processing takes too much time.

NETS’ Click

NETS Click enables the digitisation of NETS Bank Cards on third party merchant mobile applications for secure seamless payments. The product was conceived and built in-house with a lean project team comprising cross-functional domain experts from product, technology, security and compliance teams. The design is aligned to concepts of EMVCo’s Secure Remote Commerce (SRC) and fulfils equally stringent industry security requirements.

NETS Click features a highly advanced security design incorporating multi-layered mobile digital security, EMV-based tokenisation technology, bank card and consumer verification methods. Most importantly, it was developed with a human-centred product design. The result is a simple and friendly user journey incorporating advanced mobile runtime threat detection coupled with host-based AI-driven fraud and security monitoring.

TMRW by UOB’s Intelligent Assistant

TMRW’s distinct service delivery model brings together a complex orchestration of chatbot, live chat, and VOIP voice call similar to some of the leading messaging platforms – creating an experience unmatched by any typical bank. TMRW’s chatbot Tia (TMRW Intelligent Assistant) is right at the center of this experience.

The chatbot orchestration is the first digital service model that uses chatbot to orchestrate the delivery of customer service as a combination of self service, FAQ responses and human support through voice or chat – all without the user having to ever exit or switch away from the TMRW app.

The New Normal is Digital

It is still early to conclude what’s the landscape will look like once the dust fully settles. As it is, the battle against the current pandemic is still ongoing. From a purely financial context, we can clearly see the signs towards increased digitisation of payments. How big and how fast it will grow still remains to be seen.

We can only hope that the present crisis could be eliminated soon. As the world continues to rely on technology to solve many of today’s ills, our habits, patterns and way of living never ceases to evolve. One thing is for sure: the COVID-19 is forcing upon us a new normal – a new normal that thrives on increased digitisation.

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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.

Digital payments surge amid safe distancing measures

Digital payments surge amid safe distancing measures

The coronavirus has totally upended the supply and demand markets. The urgent need for essential products coupled with the fact that governments and regulatory bodies are now discouraging the use of cash, has prompted a swift rise in digital payments. Convenience and security aside, digital payment is now the de facto mode of payment as many e-commerce sites are tightly intertwined with e-payment solutions that make the whole system work.

It is no coincidence that the daily downloads of online grocery delivery apps such as Instacart, Walmart Grocery and Shipt have surged by 218%, 160% and 124%, respectively.

People who are at home for long periods of time need to buy groceries and household essentials more frequently – and they prefer online shopping. Regardless of the level of lockdown being imposed, people tend to avoid visiting brick-and-mortar stores. Shops are taking notice and are rapidly ramping up their online presence as well. Stores that have already started implementing e-commerce solutions are rapidly building scale and capacity to be able to cater to stronger demands.

It is no coincidence that the daily downloads of online grocery delivery apps such as Instacart, Walmart Grocery and Shipt have surged by 218%, 160% and 124%, respectively.

As more consumers continue to stock food and other essentials, the volume of online transactions and digital payments will surge precipitously. In fact, it was revealed that COVID-19 has massively accelerated e-commerce growth to the tune of 77% year-on-year, with a total online spending hitting $82.5 billion in May, according to Adobe report.

“We are seeing signs that online purchasing trends formed during the pandemic may see permanent adoption,” Taylor Schreiner, Director, Adobe Digital Insights, said in a statement.

The future of payments is digital

This observation is consistent with what is happening on the ground. In Singapore, local banks such as OCBC, UOB and DBS are reporting that a significant number of customers have switched to digital banking due to COVID-19.

DBS Bank, Singapore’s biggest bank, noted that more than 100 million digital banking transactions happened this year, compared to the same period in 2019. In addition, digital payments have more than doubled and e-commerce transactions rose by as much as close to 40% in value. It’s interesting to note that there are around 3.3 million Singapore users banking online with DBS and about a quarter of whom are seniors – an indication that the adoption of digital banking cuts across various sectors and demographics in Singapore.

Meanwhile, in China, where digital payments are already in its maturity, COVID-19 may well push the country for the total elimination of cash transactions. In 2008, only 18% of Chinese internet users made online payments. This figure jumped to almost 73% in 2018, which is partly attributed to young people being open to the use of new technologies, according to a recent survey by Deutsche Bank.

Comparatively, China and many Southeast Asian nations have a larger proportion of young populations than Europe and the US. In places such as Japan, Western Europe and the United States, a third of the population still consider cash as a favourite payment method, according to the same survey.

“While we believe cash will stay, the coming decade will see digital payments grow at light speed, leading to the extinction of the plastic card.”

Deutsche Bank’s report, The Future of Payments, neatly summed up where the world is headed when it comes to digital payments: “While we believe cash will stay, the coming decade will see digital payments grow at light speed, leading to the extinction of the plastic card. Over the next five years, we expect mobile payments to comprise two-fifths of in-store purchases in the US, quadruple the current level. Similar growth is expected in other developed countries, however, different countries will see different levels of shrinkage in cash and plastic cards. In emerging markets, the effect could arrive even sooner. Many customers in these countries are transitioning directly from cash to mobile payments without ever owning a plastic card.”

What’s interesting is that even though a significant portion of the population in Western countries still prefer to pay with cash, their preparedness when it comes to digital payments could never be questioned. In the US, digital payments champions such as Paypal, Apple Pay and Google Pay are consistently thriving.

European countries, through its Central banks such as the the Bank of England, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS) have initiated assessment of potential cases for central bank digital currencies. These would perform all functions of ‘cash’ and aims to be used by individuals and businesses to make both payments and savings. The task ahead can be daunting and will require enormous effort and commitments from both the governments and private sector organisations involved.

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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.

The Risks and Rewards of Going Cashless in a Digital World

The Risks and Rewards of Going Cashless in a Digital World

Since about 960 AD, when the earliest known paper money began circulating in China, the thought of eliminating cash, in favour of electronic or digital medium, had been inconceivable. Ironically, these days, China is one of the leading countries in the world with the highest volume of cashless transactions. Elsewhere in the world, the cashless revolution is being spurred by fintech firms and online payment platforms such as PayPal, Venmo, Stripe and Square. These corporate giants have never been busier these days. Merchants are now scrambling to provide digital payment options to customers who seek to avoid, or are simply unable to, pay cash. “Our products have never been more wanted and needed,” said PayPal CEO Dan Schulman in light of the report that PayPal is signing up around 250,000 customers a day with 7.4 million customers activated during April period.

Even as we grapple with the factors that are going to affect our move towards a cash-free society, the pros and cons of living in such an idyllic world must be carefully weighed.

“Our products have never been more wanted and needed,” said PayPal CEO Dan Schulman in light of the report that PayPal is signing up around 250,000 customers a day with 7.4 million customers activated during April period.

BENEFITS:

Convenient Payment Locally and Internationally

Aside from avoiding the hassle of not being able to avail of desired products of services for lack of cash in your pocket, going full cashless also allows you to leave any worries behind when you travel. You don’t need to worry about exchange rates or currency withdrawal as your mobile device could handle everything for you.

Reduced Illegal Activities

Cash is always the preferred medium in many illegal transactions as it provides no money trail and every person involved in the transaction can go completely anonymous. Those days could end in a cashless society. As automatic paper trails are created, illegal gambling, drug operations and money laundering could be a thing of the past as a clear record of transfer of ‘money’ will exist, serving as a deterrent to lawless elements.

Increased Safety and Security

Carrying cash around entails risks and makes you an easy target for criminals. Once cash has been taken away from you, it now becomes a criminal’s possession which can be spent without any trace that they were yours.

Printing Money Costs Money

Going cashless is not only convenient, it also saves money. Printing coins and bills have costs. Storing those bills and moving them around have costs. Even storing them costs money. Businesses that churn a lot of cash have to deposit them, withdraw them and keep moving in order to keep the business going. All of these problems will go away once we get rid of the physical cash.

As automatic paper trails are created, illegal gambling, drug operations and money laundering could be a thing of the past as a clear record of transfer of ‘money’ will exist, serving as a deterrent to lawless elements.

RISKS:

However, depending on how you look at it, going cashless can actually entail more risks than benefits. Some of these are:

Full Access to Funds Might Not Be Guaranteed 

Once you become dependent on technology to get access to your funds, then problems such as glitches, virus, computer error, and even innocent mistakes could prevent you from being able to spend your money. Moreover, merchants that encounter compatibility issues or system malfunction may not be able to accept your payment even if you have enough funds to do so.

Additional Charges by Payment Processors

Moving to a cashless society might entail selecting a few payment processors to handle payment transactions. These payment processors are companies that have invested time and resources to create a product that could handle the task. As such, some form of fees must be implemented in order to recoup their investment. The resultant effect could be higher total cost of transaction instead of savings, purportedly touted due to less cash handling.

Increased Privacy and Security Concerns

Regardless of the amount of encryption, security and safeguards being implemented, electronic payment always entails risks of mishandling data. With the amount of information that will be generated with the continued adoption of electronic payment, malicious elements will be harder at work to get their hands on these data. On the contrary, cash transactions are always anonymous – and to some degree, safe.

Your Funds Can Be Hacked

While there is zero chance that a robber or a pickpocket could steal from you, hackers could actually do you more damage. It’s not unlikely that if someone is targeted by a particular hacker, his funds could be dried up, leaving you with absolutely nothing in your account at all. Even if there are some form of paper trail, restoring your funds after a breach could be complex and time-consuming.

Will cashless ever be possible for all?

If history has anything to teach us, it is that the world is constantly evolving. With the rise of e-commerce and digital payments, it is not impossible to say that physical currencies will soon be obsolete. What’s important to note is that every country in every region are moving towards this ideal at their own pace. The march for progress continues. For now, we have credit or debit cards, mobile payments and crypto/digital currencies that give us hints as to how a cashless society might evolve. Who knows? Something even more revolutionary might come along.

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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.

3 Factors That Will Accelerate the Cashless Revolution

3 Factors That Will Accelerate the Cashless Revolution

The COVID-19 pandemic has spared practically no one. In all corners of the world, with people from all walks of life, everyone is talking about a new normal, barely less than a year after the crisis starts. One of the most hotly debated topics of late is whether we are now heading towards a fully cashless society. Will 2020 mark the start of a process when we completely banish cash as a medium of value exchange?

Since about 960 AD, when the earliest known paper money began circulating in China, the thought of eliminating cash, in favour of electronic or digital medium, had been inconceivable. Ironically, these days, China is one of the leading countries with the highest volume of cashless transactions. From food to clothing to the latest gadgets and games, people, regardless of age or social status, are using some form of digital medium to pay for goods and services in China.

China is truly a trailblazer in the “cashless” movement. According to figures from eMarketer, “mobile payment users in China will represent 61% of the 947.1 million proximity mobile payment users worldwide.” Furthermore, 577.4 million people in China made a purchase via proximity mobile payment within a six-month period in 2019. “Those users account for 49.6% of the country’s population,” says eMarketer.

This astounding growth is enabled by leading Chinese fintech firms, Alibaba (Alipay) and Tencent (WeChat Pay). Reports from Forbes revealed that “Alibaba’s revenue grew 144% over 2017-2019 to $56 billion.” Meanwhile, Tencent reported a total annual revenue of nearly 377 billion yuan in 2019, an increase by 20 percent compared to the previous year,” according to figures from Statista. Surely, the rate of growth of these companies is reflective of the Chinese population’s fondness for digital medium.

This cashless revolution is no doubt going to be further accelerated by the COVID-19 pandemic. In fact, many fintech firms and online payment platforms such as PayPal, Venmo, Stripe and Square have never been busier these days.

This cashless revolution is no doubt going to be further accelerated by the COVID-19 pandemic. In fact, many fintech firms and online payment platforms such as PayPal, Venmo, Stripe and Square have never been busier these days. Merchants are now scrambling to provide digital payment options to customers who seek to avoid, or are simply unable to, pay cash. “Our products have never been more wanted and needed,” said PayPal CEO Dan Schulman in light of the report that PayPal is signing up around 250,000 customers a day with 7.4 million customers activated during April period.

PayPal added that it was growing across all markets including those most impacted by the coronavirus pandemic such as Spain and Italy.

Factors that will affect drive towards cashless society

While all signs point to an inevitable shift to a cashless society, there are real and significant issues that must be addressed first before we declare the death of cash. Some of these are:

Technology

Turning the dream of a cash-free society depends largely on technological readiness. It can be argued that China’s success in the widespread use of digital payment medium is underpinned by its success in setting up an infrastructure that allows collection and processing of enormous amounts of data. In addition, China has also invested significant amount of resources to develop e-RMB, the first digital currency operated by a major economy. Through and through, technology has played a central role in mounting these efforts.

Similarly, in Sweden, a group of six large Swedish banks have joined together to develop Swish, a mobile payment system that boasts of more than 6.5 million users as of 2018. Today, Swish is used by almost all merchants in Sweden as the de facto payment option along with payment by card. Payment by cash, in fact, will earn you some frown as almost very merchant prefers card or payment by Swish mobile app.

In the US, the charge is being led by unicorn fintech companies that have found a way to embed their technology into the lives of online customers locally and abroad. Famous global brands such as Under Armor, Target, Lyft, Grab, Deliveroo, Facebook, Google and Uber, for example, are all using Stripe, an online payments processor for internet businesses.

Turning the dream of a cash-free society depends largely on technological readiness. It can be argued that China’s success in the widespread use of digital payment medium is underpinned by its success in setting up an infrastructure that allows collection and processing of enormous amounts of data.

Culture

For a cashless society to truly thrive, there must be a widespread shift in cultural norms. Whereas some societies have generally been more open with new technology and innovation, some communities are averse to digital technology because due to the inherent security risks involved. Moreover, the digital divide between the highly industrialised and developing nations couldn’t be denied. As such, customs and beliefs among the population on what constitutes ‘value transfer’ may be hard to shift.

Government

Governments, and people’s trust in them, play a crucial role in pushing the agenda of a cashless society. A purely digital value exchange requires management and security of enormous amount of data. Hence, the population must be able to see that the ultimate custodian of their financial transactions, are trustworthy and capable. Perhaps it would be good to start building momentum by capitalising on familiar government-led initiatives such as smart-nation. By touting the benefits of smart-nation, an argument for a digital value exchange on a national level can be made.

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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.

Will StanChart and NTUC’s digital bank, Phoenix, be granted the coveted digital banking license in Singapore

Will StanChart and NTUC’s digital bank, Phoenix, be granted the coveted digital banking license in Singapore?

Monetary Authority of Singapore (MAS) has resumed the assessment process to award its five coveted digital banking licenses and stated that the winners will be announced in H2 2020.  In April 2020, amid the pandemic concerns, the assessment process was put on hold and the 21 applicants were asked to review their business proposals, assumptions, valuations underpinning their financial projections keeping in mind the immediate and post pandemic impact on its business.

With the resumption of the assessment process, MAS announced in June 2020 that it will go ahead with reviewing 14 of the 21 applications stating that “eligible applicants, comprising five digital full bank (DFB) applicants and nine digital wholesale bank (DWB) applicants, will progress to the next stage of assessment”, doing so without revealing any names or bid details. This being said, certain applicants – SEA Ltd and Ant Financial and consortiums such as Grab and Singtel, Razer and Sheng Siong Holdings, FWD, LinkSure Global, Insignia Ventures Partners, Carro and iFast Corporation partnering with Hande Group & Yillion Group – have made their bids public.

While acquiring a digital banking license seems pivotal for all these players, most of them come with bare minimum experience of operating a bank. While having relevant experience when venturing into a new business is a stereotypical question, a relevant one is who are these applicants going to service? Singapore with a population of about 5.9 million has an internet penetration of about 88% according to a survey. Also mobile app banking in Singapore stand at about 65%.  Considering this, it’s hard to think of what value proposition could the 14 applicants bring which differentiates them from other banks? The simple answer to this is to serve the underserved SME sector and workers from unorganized sectors. This digital banking license could foster healthy competition, liberalise banking while being resilient. Companies which want to include financial services as a part of their company portfolio have the chance to use this offering to their advantage.

Another good news for StanChart is that it was recently qualified as a Significantly Rooted Foreign Bank (SRFB) in Singapore. According to the SRFB Framework, the bank can now “establish up to 50 POBs, of which up to 35 may be branches.”

While this is true for the known contenders, an unannounced applicant named Phoenix – a consortium of NTUC and Standard Chartered is also in the race for the digital banking license. While contemplating who could head the digital banking initiative in Singapore, TDB perceives co-founders of neobanks such as Judo Bank, Xinja or 86 400  could be credible candidates for this role. For those unaware, Standard Chartered forayed into Africa in 2018 with a digital-only bank in Côte d’Ivoire (CDI) following it up with Uganda, Tanzania, Ghana and Kenya in 2019.  Armed with this information, it is obvious why Standard Chartered is entering the race for the digital banking license in Singapore. The bank is well positioned to take advantage of this offering and with success projects in Africa, StanChart is uniquely qualified to come out a winner. Also, one of the key items in the business proposal for the digital banking license application must include regional expansion plans. This would provide the much needed entry point into Southeast Asian markets which hold similar value propositions as Africa.

Another good news for StanChart is that it was recently qualified as a Significantly Rooted Foreign Bank (SRFB) in Singapore. According to the SRFB Framework, the bank can now “establish up to 50 POBs, of which up to 35 may be branches.” Not only this MAS is considering enhancements to the framework which will grant “additional full bank licence to an SRFB that substantially exceeds the SRFB baseline criteria. This will enable them (SRFB) to have the same flexibility as Singapore-incorporated banking groups to establish subsidiaries, including with joint-venture partners, to operate new or alternative business models such as a digital-only bank.” With all this being said, StanChart seems to be in the right place to use’s MAS’s proposition.

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Image: mimisim / Shutterstock.com

COVID-19 Pandemic and The Era of Responsible Banking

COVID-19 Pandemic and The Era of Responsible Banking

An industry that has been able to weather crises such as SARS, Ebola, 9/11, Asian financial meltdown and of course, the 2008 financial crisis, otherwise known as The Great Recession, is nothing less than resilient. Amidst the ongoing uncertainty brought about by the COVID-19 pandemic, the banking industry is once again facing an enormous challenge, the likes of which are totally unprecedented in scale.

Instantly, the impact on the economy started to reverberate across all regions. According to The Center for Global Development, an international think tank that focuses on international development, “travel restrictions and lockdowns imposed to contain the spread of COVID-19 continue to impact the economic outlook for low- and middle-income countries.”

In Asia and the Pacific, economic growth is expected to decline by 2.7 percent in 2020 (down from last year’s 3.6 percent growth) and is seen as the most significant fall since the near-zero growth rate logged in 2009 during the global financial crisis, according to APEC. In addition, Asia-Pacific will also see a 50% decrease in passenger demand this year compared to last year. As a result, airline passenger revenues is estimated to record a revenue decline of $113bn compared to last year.

DBS, Southeast Asia’s largest bank, reports a 29% drop in first-quarter year-over-year net profits, setting aside $772.5 million “to cover potential losses from the coronavirus pandemic.”

Meanwhile, Latin America may experience a contraction of income between 11% and 22% according to a simulation by the Bank of Spain. Moody’s predicts a 6% contraction for Argentina’s economy for 2020, 5.2% for Brazil and 7% for Mexico.

Brazilian government minister Salim Mattar estimates that “the unemployment rate in [Brazil] may even double due to the impact of the coronavirus crisis on the economy.”

Not spared from economic shocks, Africa’s growth is also estimated to slow to 1.8 percent in the best-case scenario or to contract to -2.6 percent in the worst-case scenario from the 2.9 percent in 2019 and the pre-pandemic 2020 forecast of 3.2 percent, according to The United Nations Economic Commission for Africa.

Overall, the World Bank warn that “COVID-19 is likely to cause the first increase in global poverty since 1998 when the Asian Financial Crisis hit.”

“Global poverty — the share of the world’s population living on less than $1.90 per day — is projected to increase from 8.2% in 2019 to 8.6% in 2020, or from 632 million people to 665 million people,” World Bank adds.

Overall, the World Bank warns that “COVID-19 is likely to cause the first increase in global poverty since 1998 when the Asian Financial Crisis hit.

The Era of Responsible Banking

Since 2008, in the aftermath of the global financial crisis, banks have made significant steps to take action and create products that are better aligned with the social and environmental values of the clients, not just because regulators have demanded it, but because society expects it. Moreover, it has proved to be beneficial to the bottom line.

Formally, this is now known as Principles for Responsible Banking (PRB). The Principles for Responsible Banking were launched by 130 banks from 49 countries, representing more than USD47 trillion in assets, on 22 and 23 September 2019 in New York City, during the annual United Nations General Assembly.

At the end of March 2020, as the world sees the rapid spread of COVID-19, the PRB group called on its signatories to take action to support society and businesses in this unprecedented crisis. More than 150 banks joined the call and were in fact, doing more than what their governments are asking them to do when it comes to supporting small businesses and unemployed individuals.

The examples of how banks are helping societies during the collapse of an economy is aplenty.

For example, in the US, banks have become the predominant channel for its Paycheck Protection Programme, a $659 billion aid programme for small businesses. US regulators have also eased restriction to allow banks to tap into their capital reserves so they can continue lending.

In Switzerland, regulators and banking institutions worked together to provide loans for businesses who only need to fill out an online form and if approved, the loan could be disbursed to their accounts the next day. Likewise, in South Africa, filling in a form is not even needed as banks were allowed to adopt ‘opt-out’ models making it easier for loans to be extended. And in China, banks worked closely with regulators so loans and extensions could be fast tracked.

In mounting these unprecedented efforts to help societies, as well as prevent further deterioration of economic gains, global central banks are also stepping up to the plate and taking decisive actions.

Elsewhere, in The Netherlands, ABN Amro has extended an automatic six-month deferral on payment of principal and interest for clients with a credit facility of up to 50 million euros. And in Singapore, DBS Bank is allowing credit card holders to roll repayments into a single loan, effectively cutting rates from more than 20% to high single digits.

In mounting these unprecedented efforts to help societies, as well as prevent further deterioration of economic gains, global central banks are also stepping up to the plate and taking decisive actions. Through various measures such as rate cuts, liquidity support and easing of financial policies, the world’s central banks are playing a crucial role in preserving economic stability during this crisis.

Commitment to Move Forward

While the proverbial light the end of the tunnel may not be very clear in sight yet, COVID-19 and its impact already highlight the importance of keeping sustainability and responsibility at the forefront of banking agenda. Banks that have been committed to responsible banking are seeing good progress and are in fact, dealing better with the COVID-19 crisis.

Through the Principles of Responsible Banking, understanding the needs of all stakeholders becomes a paramount concern, and as such, it allows decision makers to understand the potential impact of any decision during a crisis.

However, any principles and proposals around responsible banking may come to naught if these aren’t backed by commitments and tangible targets. The new normal may come sooner than expected, or later than hoped. What’s important is to continue to look out for each other. After all, doing business is all about helping our customers and our people.

The Great Disruption to Open Banking

The Great Disruption to Open Banking

Open Banking has quickly leapfrogged from a mere concept some two years ago, to almost an inevitable reality today. In 2020, we expect a further acceleration of its adoption spurred by aggressive moves and consolidation by the dominant players in the banking industry.

From an inevitable reality just about 6 months ago, Open Banking is now facing a difficult test. And arguably, one of its greatest disrupters, the COVID-19.

Some two years ago, what started with PSD2 regulation in Europe, is steadily being adopted in various regions around the world such as Australia, several parts of Asia, Latin America and many other regions.

PSD2 or the second Payment Services Directive, is designed by the countries of the European Union which aims to revolutionise the payments industry. Its goal is to break down the bank’s monopoly of their user’s data and allow third-party merchants to retrieve your account data – with your permission – for the purposes of providing better and more efficient customer experience.

From an inevitable reality just about 6 months ago, Open Banking is now facing a difficult test. And arguably, one of its greatest disrupters, the COVID-19.

But the current situation is proving to be a great hindrance for its expedited worldwide adoption. For example, in Australia, the Open Banking timeline is once again being postponed.

“While the deadline for non-major lenders to make their product data available under the Consumer Data Right has been set for 1 July 2020, the ACCC has granted a three-month exemption due to the COVID-19 pandemic,” according to a report by Australia Broker.

ACCC or Australian Competition and Consumer Commission is Australia’s competition regulator and national consumer law champion.

According to the same report, “the implementation of open banking has already been postponed once before, to make time for additional testing to ensure security and privacy protections were operating effectively.”

It is foreseeable that what’s happening in Australia is not unique and that similar measures are also being done in various countries and regions facing the same unprecedented crisis brought about by the pandemic.

Open Banking must stay the course

The old rules of banking don’t apply anymore. Regardless of the amount of challenges being faced by the industry, the open banking initiative must stay the course. As digital banking grows and fintechs continue to introduce innovation to the market at a breakneck speed, embracing this brave new world of open banking will prove to be a long-term win, even for traditional banks.

According to a survey by Accenture, 90% of bankers believe open banking will boost organic growth by up to 10%. That does not mean though that it will be a smooth ride. Indicators coming out of European banks reveal that resistance among incumbent banks will be great and that change might come slower than what’s ideal or is required. The onus will be on those banks who can see the future before it happens and are bold enough to take action, now. As the current situation unfolds, this could actually be a golden opportunity to work together to achieve a common, audacious goal.

 

6 Steps to Secure Privileged Access for Remote Admins

6 Steps to Secure Privileged Access for Remote Admins

While many organisations already have telecommute policies and solutions in place, they are most commonly for either fully-remote workers or for employees who typically work in the office but need flexibility for unusual situations. The current environment most companies now face may put their remote workplace capabilities to the test.

This is most pronounced when considering security controls, cyber-hygiene, and reducing risk exposure that a more remote workforce creates. Are organisations prepared for such a distributed workforce and the potential risks that come with it?

When it comes to IT administration teams, outsourced IT, and third-party vendors who might have privileged access to systems and infrastructure, they need secure, granular access to critical infrastructure resources regardless of location and without the hassles of a virtual private network (VPN). Ideally, how privileged users access these systems shouldn’t be different, regardless of whether they are in an on-premise data center or accessing remotely.

Ditch the VPN

Last year it was reported that Citrix was breached through a password spraying attack that also sought to leverage VPN access. ARS Technica also reported last year that energy companies have specifically become targets of attacks that use password spraying and VPN hacking.

Unlike a VPN that generally gives users visibility to the entire network, organisations should only grant access to resources on a per-resource basis. This gives privileged internal IT admins access to only as much  infrastructure as necessary, while limiting access by an outsourced team to only the servers and network hardware their role requires.

Privileged users should authenticate through Active Directory, LDAP, or whatever the authoritative identity store is, or grant granular, federated privileged access to resources for business partners and third-party vendors.

Guard against cyber-attacks by combining risk-level with role-based access controls, user context and MFA to enable intelligent, automated and real-time decisions for granting privileged access to users who are remotely accessing servers, on password checkout or when using a shared account to log into remote systems.

Unlike a VPN that generally gives users visibility to the entire network, organizations should only grant access to resources on a per-resource basis.

Secure Privileged Access for On-Site and Remote Administration

Here are six ways any organisation can create consistency in their privileged access management (PAM) approaches to secure remote access to data center and cloud-based infrastructures through a cloud-based service or on-premises deployment.

  1. Grant IT administrators secure, context-aware access to a controlled set of servers, network devices and Infrastructure-as-a-Service (IaaS).
  2. Enable outsourced IT without the need of including administrators in Active Directory.
  3. Control access to specific data center and cloud-based resources without the increased risk of providing full VPN access.
  4. Secure all administrative access with risk-aware, multi-factor authentication (MFA).
  5. Single secure access point for administrators to manage infrastructure using shared accounts or their own Active Directory account.
  6. Enable secure remote access to data center and cloud-based infrastructures for internal users, third party vendors and outsourced IT through a cloud service or on-premises deployment.

Many organisations may think they are ready for a larger remote workforce, including privileged administrators. But relying on VPNs rather than maintaining consistent security processes, policies, and postures will create more exposure and risk. Step up your secure remote access game and enable intelligent, automated, real-time decisions for granting privileged access.

>> 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.