For the first few months, it was safe to say that it appeared the EU was taking a decidedly conciliatory approach. For the most part, information commissioners seemed to lean toward a less-strict approach—if an organisation at least had a plan to be compliant, then they would be given time to execute that plan and move towards achieving full GDPR compliance.

This was borne out by the research conducted by AIIM and Nuxeo just after the May 25 2018 deadline. While just 30 percent of organisations said they were 100 percent ready, an additional 50 percent said they were 75 percent of the way toward achieving compliance. But as we approach one year since GDPR came into effect, and with signs the EU is getting much tougher with penalties, it’s time for financial firms to accelerate their GDPR compliance initiatives, or risk facing substantial fines.

The consequences of GDPR non-compliance

Since the start of the year, the EU has upped its stance on enforcing GDPR. News emerged in January 2019 that Google is to be fined 50 million euros by the French data regulator CNIL for a breach of the EU’s data protection rules, and there has been a number of smaller penalties announced too.

While Google is still mulling over its options, this is clearly a landmark case. Targeting an internet giant, one of the biggest companies in the world whose very business model is built on the use of consumer data, means that no organisation can feel truly safe.

But there are other consequences of non-compliance that can be just as damaging. Respondents in the AIIM / Nuxeo research said their organisation’s investment in GDPR compliance was motivated first by the legal obligation, then reputational damage, and thirdly the prospect of a fine. The damage to reputation is especially pertinent in financial services. Consumer data is an increasingly highly prized asset. Any bank or other financial services firm found to be in breach of GDPR (i.e. not protecting its customer’s data effectively) could find the long-term brand impact more of a problem than any fine.

Another point to consider is that GDPR is not regulation that has a fixed end point. Not only did firms have to ensure that all existing data was managed in accordance with GDPR, but they also had to do so with every new item of data entering the organisation. When we live in an era that generates more data and content than at any other time in history, that is no small undertaking, and further increases the pressure on financial services firms to implement solutions that manage compliance on an on-going basis.

Increased volume of SARs

A perhaps slightly overlooked aspect of GDPR is the Subject Access Request (SAR), which is issued by an EU citizen who wishes to see the personally identifiable information (PII) held on them by an organisation. There is no fee for this service, and organisations must respond within 30 days.

As expected, the enactment of GDPR has led to an increase in the volume of SARs over the past 12 months. Furthermore, research by cloud and data firm Talend revealed that just 50% of FS firms are fulfilling SARs within the legal timeframe, so there is a clear issue to address.

Part of the reason that some financial services firms are struggling with SARs is because they are addressing GDPR as purely a data issue, when they should be approaching it from a data, content, and process perspective. A content services platform (CSP) approach can be a major asset when it comes to GDPR compliance and efficiently handling SARs. These platforms can help firms easily identify data residing within multiple, different information systems and repositories within the business, and quickly serve up this data as SAR requests are made.

The benefits of a CSP-powered approach to GDPR

A CSP can also look at file systems for unstructured content in the enterprise systems it connects with, as well as with database applications containing structured data. A centralised hub that connects structured data systems with unstructured content repositories means organisations benefit from a 360-degree view of GDPR related data.

There is also the prospect of financial services firms differentiating themselves via GDPR compliance and using that in their marketing. Demonstrating that they care about their customer’s data privacy will become a powerful unique selling point (USP) and can be a true differentiator. Consumers are asked for more and more of their data by financial services organisations, so surely those firms that proactively and transparently protect that data will be favoured over those that do not.

It’s clear that GDPR fines are going to be enforced more strictly in 2019, and those financial services firms could also face other penalties that come with non-compliance, such as damage to the brand. The best way of addressing this is to approach GDPR from an intelligent information management perspective, not just data, otherwise financial services companies could run into serious difficulties.

The post One year into GDPR, how are financial firms managing? appeared first on International Finance.

A select group of asset owners, however, experienced 2018 in a very different light. Between them, they shared $10 billion in additional revenue by engaging in a practice which is described as one of the best-kept secrets in finance. What could this secret be? These asset owners engaged in the 50-year-old practice of lending out their stocks, bonds, and exchange traded funds in the same way, that many homeowners choose to rent out their home or, in other words, they engaged insecurities lending.

At its very core, securities lending presents a lucrative opportunity that all investors in stocks, bonds, and ETFs can benefit from. Furthermore, this additional revenue stream does not require investors to sacrifice their economic rights, other than the right to vote. Sounds cool, right? But despite all this, while the market capitalisation of global equities has trebled since the 2008 trough, the value of securities on-loan, a common measure for the size of the securities lending industry, is still way below its pre-recession highs, representing a ‘real’ shrinkage in the industry size.

So why has the securities lending industry failed to keep pace with the rest of the market?

Until now, securities lending operated as a closed ‘members club’. For decades, a small group of financial institutions, mainly pensions funds, asset managers, and ETF issuers, were the sole beneficiaries of securities lending. That’s like a housing market where only real estate conglomerates are able to rent. But even these institutions faced a trade-off. Either they had to invest considerable time and money in doing it themselves, or hand over control to someone else.

As a result, globally more than $40 trillion worth securities are idling instead of collecting income. These assets belong mainly to private investors, through their banks and online brokers, as well as small and medium asset managers, and digital wealth managers.

So how can we level the playing field and enable these investors to benefit from this basic right?

For most investors, securities lending is too complex, too opaque, and not user-friendly. While the rest of the world has moved to transparent pricing and user empowerment, securities lending is still heavily intermediated, traded over the counter, and is extremely opaque. Worst of all, securities lending requires a large investment of time and money, even though it will likely never be an investor’s primary investment objective –leaving them with little interest inactively managing it.

It can, however, become a secondary investment objective, if extracting additional value from a portfolio can be done with minimal risk and in a simple and transparent manner. In that respect, user-experience is not just a fancy dashboard with buttons and dials. Rather, it is the ability to deliver a simple solution which most investors can ‘set and forget’, retaining full control, transparency and the peace of mind. What the securities lending industry needs is to design an equivalent user experience to the one offered by modern day digital wealth managers.

At Sharegain, we offer a securities lending solution fit for the 21^st century, which we have achieved by relentlessly focusing on the user. In doing so, our offering finally brings a fully automated solution that enables investors to set their lending appetite and let our technology work for them. By introducing the world’s first digital agent lender, we eliminated the need for operational overheads and high level proficiency in the technology, enabling all investors to benefit from this basic right. Our vision is to fully democratise the securities lending industry, effectively bringing the ‘Airbnb moment’ to the stocks, bonds, and ETFs of each and every investor.

The post Technology is finally democratising securities lending appeared first on International Finance.

Recently, the CBK has played a watchdog role to protect consumers from fraud, unfair levies another practices, while preventing unfair competition among banks. Additionally, the CBK has tried to avoid the dominance of the bigger banks over smaller ones as well as to prevent the type of mismanagement that hassled to the collapse of a number of Kenyan banks in the past.

Over the past few years, the country has seen waves of bank failure and collapse. The first wave happened between 1984 and 1989, before the Kenya Banking Act was constituted. Nine banks including Union Bank, Estate Finance Bank, Rural Credit and Finance, and Nationwide Finance, among others, collapsed causing losses of millions of shillings to customers.

While the second wave happened between 1993 and 1995 when 19 more banks collapsed, the third came to the fore in 1998 when six banks, Bullion Bank, Fortune Finance, Trust Bank, City Finance Bank, Prudential Bank and Reliance Bank also collapsed causing customers losses of millions of shillings.

In June 2015, the then Dubai Bank collapsed taking along with it 1.7 billion shillings in customer deposits. On August 14,^, 2015 the Kenya Deposit Insurance Corporation (KDIC) took over as its receiver manager through CBK intervention. On August 20, the KDIC was again appointed by CBK as liquidator of the bank. In October of the same year, the Imperial Bank started wobbling and was put under the KDIC management by CBK, placing a cloud of uncertainty over 58 billion shillings of customer deposits.

Corruption is a serious socio-economic challenge in the country, both at national and devolved government’s levels. Cash diverted from socio-economic and other empowerment projects or even from the bank accounts of government institutions have been laundered through other banks and financial institutions. The CBK Governor Peter Njoroge introduced a new rule a few months ago that requires any person depositing or withdrawing more than one million shillings in cash to provide a written explanation or justification with regards to the source of the money and its intended use.  This rule, among others, is also intended to prevent money laundering which has become a serious challenge to the financial system in the country.

Kenya happens to be a transit route for drug traffickers and people who deal in game hunting and poaching. Such people often make huge cash transactions and have in the past used banks and financial institutions as a conduit for their payments while escaping scrutiny. The new rule targets such people.

The DTB Bank of Kenya is under scrutiny following its failure to question and stop the withdrawal of millions of shillings from accounts that were linked to people who are also key suspects in the January 15 terror attack at the Dustin Hotel in Nairobi.

Financial fraud has become a bane, especially immobile financial transactions. Today it is common for citizens to receive calls or messages from unscrupulous people who pretend to be agents of the bona fide mobile telephone services providers and seek the personal details of customers including personal identification numbers (PIN) which they later use to pilfer cash from the victims’ accounts. Following the rise of such incidents, the government, the mobile operators, and the banks and financial institutions that offer mobile money services are working together to design rules and regulations that can curb such malpractices.

Unfair competition and the domination of some big banks and financial institutions over small banks have necessitated rules that can ensure fair play. The demand for more consumers’ protection created the need for on-going regulation of the sector. The capping of interest rates at four points above the CBK’s monetary policy committee (MPC) level in 2017, for instance was touted as a measure to stop banks and related financial institutions from charging too high interest rates that could harm consumers. This has, however, proved to be counterproductive with banks and financial institutions preferring to reduce the quantum of consumer loans disbursed while investing in other vehicles that ensure higher returns.

Mismanagement is another issue that can spur further regulation of the sector in 2019.Many Savings and Credit Co-operative Organizations (popularly known as SACCOs and whichhaveattracted14 million investors, especially from the SME and related informal sectors, are currently reported to be facing management challenges. Three SACCOs in the country: Ekeza, Mwalimu Co-operative, and Stima Investment Co-operative are currently under investigation for not meeting their customer needs by providing loans in time or for not facilitating acquisition of properties as stipulated by their original mandate. The issue can only be untangled by bringing clarity to the grey area in the role that the Saccos Societies Regulatory Authority (SASRA) plays at the national level and the role played by Saccos regulatory bodies at the county level, which leaves many Saccos in the counties unregulated.

The post Why the Kenyan banking and finance sector is likely to see further regulations­­ in 2019 appeared first on International Finance.

But since that fateful day, the doom and gloom predictions have largely proven unfounded—or else largely exaggerated—and the UK continues to be an attractive destination for students, businesses, professionals and investors.

With Brexit dominating the headlines for the past 30 months, however, many other issues were moved down the long list of national priorities; including housing. And while many indicators suggest that the UK property market is demonstrating great resilience in the face of the current political and economic uncertainty (recent data reveals that the number of property sale completions grew112% year-on-year in January 2019), we can’t let Brexit overshadow the challenges currently facing the sector.

After all, the government must continue to push for much-needed reforms to ensure more people can access and benefit from the property market.

What are the current challenges facing the property market?

Without a doubt, one of the biggest obstacles hindering the property market is the undersupply of housing. Admittedly, this issue has long been on the government’s radar. Last year, Prime Minister Theresa May pledged to build 300,000 new homes every year by the mid-2020s in order to solve the imbalance.

As it stands, these targets appear overly ambitious—less than half of house builders surveyed recently are confident that this goal is achievable. This is despite increasing the rate at which they have built homes over the last year. Evidently, we are in desperate need of more creative solutions to make housing more accessible.

There is also the added issue of affordability. Average house prices are2.9% higher now than in January 2018—and while this underlines the attractiveness of UK real estate—it also means that many people are being priced out of the property market.

Meanwhile, for those gearing up to purchase a property in the coming months, the high rate of property chain collapses presents an obstacle. Half (49.8%) of all transactions in England and Wales fell through before completion in the final quarter of 2018; one of the most common reasons for this was ‘gazumping’, when sellers accept a higher offer from another buyer after a sale is already agreed.

How can we overcome these challenges?

Clearly, there is a lot of work to be done to ensure more people can engage with the housing market. For one, we must advocate creative new ways to put more homes on the market—without simply relying on the construction of new-builds alone to solve the housing crisis.

One promising solution is to cast an eye towards the thousands of properties that currently stand empty across the UK. It is thought that more than 200,000 homes are unoccupied, with more than 11,000 having been left untouched for more than ten years. Hiding stores of untapped potential, it might just take some incentives to encourage people to refurbish these derelict properties and put them back onto the market.

Moreover, the public is eager for such solutions. Last year, Market Financial Solutions conducted a nationally representative survey to uncover what housing reforms Britons would like the government to introduce. A significant number (44%) believe that financial incentives should be on offer for those seeking to renovate derelict properties in order to then rent or sell them.

At the same time, MFS uncovered clear demand for the introduction of new laws to prevent gazumping. More than half of households (55%) want to see this action banned, with the number rising for those who own a home—just under a two thirds (64%) are keen for stronger government action to reduce the risk of a property chain collapsing.

Looking ahead

Given the current political climate, it is difficult to predict what changes the government might make in the coming months to instil greater confidence into the housing market.

For the time being, Brexit clearly remains a priority—but we also shouldn’t ignore the challenges people are facing daily when it comes to getting on, and moving up, the property ladder. As the uncertainty fades and the UK’s future post-Brexit becomes clearer, I urge the government to make housing a priority once more.

The post Under supply of housing a challenge in the UK, despite Brexit appeared first on International Finance.

This certainly wasn’t wrong but it took ten years longer than everyone envisaged and no one had heard of Facebook, Amazon, Netflix or Google at that time. However, the ‘rumour’ or ‘travelling’ phase was the period from 1995 to 2000 when markets went ballistic and anything vaguely related to dotcom went stratospheric.

When the millennium finally arrived, the bubble burst shortly afterward and much of the profit that had been made in the travelling phase disappeared when the reality arrived. Investors suddenly realised that everyone had been caught up in the hype and in reality most of the forecasts for earnings were profitless. Those that bought the rumour and speculation but sold the story on arrival were very wise, banked their profit and saw it for what it was—a bubble!

This phenomenon is a part of human nature and the inherent greed and fear of the investor. Anxious to make as much money as possible and not miss out when others are profiting, but also anxious not to lose money, especially when news headlines are reporting the sell-off as many start to panic. It also goes a long way to explaining why markets often appear blind to the reality of when a positive development arrives—this is because all the good news is already priced in.  Many an investor gets to the party late, not realising that the markets have been there for weeks—any upside is limited and a hangover is about to set in.

However, the opposite can also apply. When markets appear to be anticipating a doomsday scenario and sentiment feels extremely bearish, there is a point of maximum negativity where some investors capitulate and manage to sell at the bottom of the market cycle. An example of this is Christmas Eve just gone by, when a multitude of negative stories appeared to combine into an environment of extreme weakness, not helped by thin holiday markets or an overwhelming sense of desperation fed by the political turmoil.

Since that point, markets have rallied with the MSCI World Index rising by 14.5 percent year to date at the time of writing (April 182019). The FTSE-100 Index which also managed to hit a low on Christmas Eve, dragged down by the US market, has also rallied by 10.4 percent year to date despite all the Brexit noise (April 18 2019). If anything, since the market lows, the intensity surrounding Trump’s actions and his tariff negotiations with China and the approaching Brexit cliff-hanger has become much worse, but the markets have been rising.

This is travelling and arriving in reverse. The travelling period is the gradual realisation that the bad news that caused the previous low is fully priced in and all it takes is any glimpse of a ray of light for the gloom to lift.

This is exactly what we have witnessed. Donald Trump desperately needs some good political news as his opponents start to stir ahead of the next Presidential race. He has taken the heat out of the March 1 Chinese tariff deadline by announcing an extension if a deal isn’t done by then. This implies there is a deal on the table and the much feared second phase of tariffs will be avoided. As Trump is obsessed with his standing in the media and judges his performance by the stock market, he realises that this will be seen as a political coup.

Sentiment has also been lifted by the Federal Reserve reducing the degree of planned rate rises it has scheduled this year in light of softening economic growth. The anticipation of the negative news caused the market low and, as we approach the reality, the worst outcome (which has so far failed to materialise) was priced in three months ago with investors seeing returns of up to 12 percent till March.

Human nature defines the greed and fear characteristics of the markets. Over-expectation of the upsides and downsides leads to opportunity for the active and brave investor. It is often said that time in the market is more important than timing the market.  However, at times, extreme swings provide opportunity to boost the long-term returns that reward the patient investor.

Brexit is another case in point. The UK equity market was composed as the UK approach the March 29 deadline without a deal. While it would be understandable that most would have lost interest and just wanted some sort of resolution, it was rather more sophisticated than that. As many in Parliament lamented about the removal of ‘no-deal’, the reality is that Theresa May needed that option on the table during the negotiations, because it kept the pressure on Brussels as the German car industry, to name just one affected industry, predicted catastrophe.

With regard to Brexit, the market sees two scenarios. First, a backstop fudge which delivers a majority in Parliament with the alternative being ‘no-deal’ or more likely, an extension to kick the can down the road to seek more time for a backstop fudge.  Either way, we get a deal but remember, this is only a deal for the withdrawal agreement before we start the actual trade negotiations.

Trade negotiations are interesting. Liam Fox, the UK’s International Trade Secretary, is having a hard time with regard to the number of deals he hasn’t done.  Once we do successfully pass a deal(assuming we do) it would appear that we will then use the transition period to strike trade deals with all our trading partners, based on our current trading arrangements under the EU.  It appears to us that even if the EU says we can’t have our cake and eat it by trading with the EU on the same terms as previously. However, if we are able to replicate at least the same trading arrangements with the rest of the world as we currently have in place with the EU, then as far as that goes, we will be eating our cake too. The issue lies with the EU itself and whether they choose to impose tariffs where they don’t currently exist.

The UK is a big market and a big importer of European goods. If German cars suddenly become 10% more expensive as with many other car imports into the EU, we doubt that the German car industry is going to take that sitting down. The same goes for French wine, Italian fashion, Dutch flowers, or Spanish fruit. We could at last start to see some of the bargaining power that we don’t appear to have enjoyed while negotiating with the EU colossus over the withdrawal agreement. The UK is the fifth largest economy in the world and is currently experiencing stronger economic growth than both Germany and Italy, despite all the Brexit disruption.

Imagining an investment world without having to think about Brexit seems distinctly more positive than where we are today.  An investment world without the overhang of Trump’s tariffs on China also seems rosy. Although his negotiations with North Korea have faltered, he can still advertise the fact that he is talking with Kim Jong Un rather than grandstanding about missiles and red buttons. He can also not be accused of caving in to achieve a political coup at home.

We hesitate to compare Trump and May, but both show a single-minded determination to pursue what they believe to be right for their country. Both are probably the most criticised leaders within the G20 and both have huge challenges to overcome. Most importantly, both are most definitely up for the fight and us mere mortals can only stand back and admire how an individual can put themselves through so much pain in pursuit of a goal in which they steadfastly believe. Both are driven by ego and power, but both also appear to have a sense of responsibility to leave their country in a better place once their era has passed. Perhaps this is what the markets are sensing. Despite the struggles and uncertainty along the way, we will soon experience a better economic environment with greater certainty and more prosperity for our nations.

The post A counter-intuitive take on the stock market is relevant amid Brexit and the Trump trade war appeared first on International Finance.

The letters in question are being sent out by the Risk and Intelligence Service, a dedicated project team within the Wealthy, Mid-Sized Business and Compliance Unit. This is part of HMRC’s new investigation tool called Certificates of Tax Position to elicit undeclared offshore income and gains from UK citizens.

But how did they decide who to send these letters to? HMRC have gained information from international and foreign banks on customers who have accounts with them through the Common Reporting Standard (CRS). The CRS was created in response to G20 request that calls on jurisdictions to acquire information (such as the different types of accounts and taxpayers) from banks in the

ir own countries and automatically exchange that information with other jurisdictions on an annual basis.

Be aware that taxpayers who receive this letter are required to sign a ‘Certificates of Tax Position’ within 30 days. This is a formal declaration of three options: ‘Yes, I need to bring my tax affairs up to date’, ‘No, I do not have offshore assets, income or gains’ and ‘No, my tax affairs do not need updating’. It might be tempting to give a false answer in the assumption that it will get rid of the problem or to ignore the letter completely. However, both of these actions will invite further action from HMRC.

The potential consequences should outweigh the temptation to ignore the letter or give a false answer. There is the likelihood of criminal investigation and prosecution for taxpayers who give an erroneous statement. Above all, it could result in a higher penalty if the response was not completely accurate.

It is important to remember that those who have been sent a Certificate of Tax Position letter have received it because the HMRC have information that indicates they have tax irregularities. Regardless of whether this is correct or not, HMRC will fight tooth and nail on their position, so it is recommended that you gain expert assistance if you wish to challenge their stance.

Ultimately, the Certificates of Tax Position campaign is being led to draw out tax irregularities. If you are concerned about the repercussions of undeclared offshore income, it would be incredibly beneficial to possess experienced tax investigation representation. This is so that a specialist can reach an agreement with HMRC that avoids criminal action, and limits the possibility of tax penalties.

The post Ignore at your peril: The UK HMRC’s new tax letter is a warning to tax cheats appeared first on International Finance.

As of January 2019, there are more than 300 unicorns around the world. A variant of the unicorn is the decacorn, which refers to companies valued at over $10 billion.

Other types of startups include ‘my little pony’—a startup worth $10 million or more; a ‘centaur’—a startup worth $100 million or more; a ‘quinquagintacorn’—a startup worth $50 billion or more; and a ‘unicorpse’—a former ‘unicorn’ now valued at less than $1 billion. Although the vocabulary may sound ridiculous, the development of these new industry jargons represents the vast proliferation of startups all over the world, in the past decade.

This coming year is expected to be shaped by decacorn IPOs, with at least five of the nine US-based startups valued at more than $10 billion by private investors expected to go public in 2019. But exactly how long does it take for them to reach decacorn status?

RS Components has investigated how quickly it took some of the world’s leading businesses to go from unicorns to decacorns.Of the ridesharing startupsaiming for success Uber, Lyft, Didi Chuxing, and GrabTaxi have already hit $10 billion.

• Uber is likely to fetch a valuation of between$90 billion and $100 billion, following its IPO later this year, despite Wall Street banks’ proposing a valuation of $120 billion. Recently, the company was valued at $76 billion in the private fundraising market

  

• Didi Chuxing, among Uber’s biggest rivals, is one of the fastest companies to transition from unicorn to decacorn status

• US-based ride hailing app Lyft was valued at $24.3 billion in its IPO this year, according to Reuters

• GrabTaxi is a Singapore-based technology company that offers ride-hailing in Southeast Asian countries, and it took just three and a half years to go from unicorn to decacorn status

The transportation network giant Uber, founded in March 2009, reached unicorn status in August 2013, only four years and five months after starting up. Uber offers on-demand private cars and food delivery—the company has operations in 785 metropolitan areas worldwide. The on-demand transport service reached decacorn status 10 months later in June 2014, much sooner than the global average.

Similarly, Didi Chuxing, reportedly looking at a $80 billion valuation from its still in the works IPO, is a Chinese ride-sharing, artificial intelligence, and autonomous technology conglomerate. Headquartered in Beijing, the company offers services including private car-hailing, social ride-sharing, and food delivery to Chinese users through smartphone. Didi Chuxing reached decacorn status only six months after reaching unicorn status in December 2014, two and a half years after being founded.

Lyft, a ridehailing unicorn from the US,is in its initial weeks as public company and it is in a stiff competition with Uber. Lyft was valued at $24.3 billion in its IPO this year. The company priced its IPO at $72 per share, which was slightly above its initial offering between $70 to $72 per share. However, at the start of its IPO roadshow, the company had disclosed a price range between $62 to $68 per share.

Despite its name, GrabTaxi is not just a taxi service—it offers food delivery services too. At the young age of two and a half years, it reached $1 billion (unicorn status) in valuation. Just three and a half years later it hit the decacorn status and is currently valued at $11 billion.

So, why is the on-demand transportation industry doing so well in reaching its unicorn and decacorn milestones? The ease of adoption of technology has helped these companies to create apps that make getting from A to B far easier and quicker.     

The total number of decacorns grew 67 percent from 2017 to 2018. So, what can we expect to see in 2019 with the new wave of unicorns rising through the ranks?

Summer seems to be the season for ‘decacorn-ing’ with 45 percent of decacorns achieving their status in June or July of 2018.While predicting trends, we can expect to see new companies reach unicorn and decacorn status or go for IPOs around this summer, too. But which type of companies can we expect to see in that league?

According to CB Insights, the technology and mobile service industries are among the easiest ones to achieve unicorn status in. A new algorithm used alongside CB Insights data helps predict the companies that are expected to become unicorns and decacorns.

The 50 predicted future unicorns hail from various industries and the median company has received about $111 million in total funding. The majority are based in the US, with 22 from California, five from New York, and two from Massachusetts.

Some of the companies that are expected to reach unicorn status in 2019 are in the technology industry and include mobile software as well as internet services startups. MapBox is a company based in the US that is a large provider of custom online maps for websites and applications such as Foursquare, Lonely Planet, Facebook, the Financial Times, The Weather Channel, and Snapchat. Not only is MapBox worth $225 million, but it is working alongside some of the biggest brands in major industries, so, it is likely to become a unicacorn in the summer of 2019.

C2FO is a fintech company that takes control of your capital to help improve cash flow. Founded in 2008, the company is now worth $200 million. C2FO was also previously known as Pollenware. Not only is the company in CB Insights’ top 50 companies to possibly achieve unicorn status in 2019, but it also ranks ninth.

The total number of decacorns grew 67 percent from 2017 to 2018 (from 12 to 20). At the rate companies are progressing to unicorn status we can expect to see more and more of them achieving decacorn status in 2019.There are currently over 20 companies in the ‘decacorn’ club and it’s predicted that this figure will increase to 30 by 2021.

The post How many startups will achieve unicorn and decacorn status in 2019? appeared first on International Finance.

Over the past couple of decades, the nature of the threats facing security professionals have changed. The stakes are higher and there is a greater potential for criminal gain or malicious disruption. Like any enterprise, the more money you make, the more you can invest in making money. Which is why today, cyber criminals have become so incredibly well resourced, sophisticated, and organised.

But there is one type of target that’s uniquely attractive to attackers, because of the huge potential financial gains by successfully compromising their defences. Financial institutions such as banks hold a massive amount of consumer data that can be sold on the black market for a healthy return. 

Alongside the value of consumer data that can be compromised, banks are also exposed to risks through weak points in their IT infrastructure. To get an idea of the impact from exposed weak spots, the Lazarus FASTCash operation saw cash withdrawn simultaneously from ATMs in over 30 different countries in 2017 and from ATMs in 23 separate countries in 2018. To date, this specific activity is estimated to be responsible for the theft of tens of millions of dollars—and that’s just the work of one attack group.

There’s a big difference, of course, between being a target and being vulnerable; and banks remain vulnerable to cyber threats—despite the advances in security technologies and compliance. So why is this?

Legacy challenges

Banks were early adopters of IT systems from the late 60s as technology modernised book-keeping practices and automated other manual processes. 

As computer technology became more ubiquitous and indispensable, the result was new systems were being repeatedly layered upon incumbent and legacy systems.  This resulted in complex interdependencies, and the necessity for legacy systems to be maintained. Maintaining these interdependencies can fall short of the bank’s priorities over time.

Older systems eventually reach their end-of-life without being suitably replaced, leaving the organisation vulnerable to new zero-day threats and emerging malware. As a result, these decaying and unprotected systems are attractive areas for criminal organisations to target.

Complex relationships

All mergers and acquisitions introduce a degree of uncertainty to the enterprise. For context, there were 697 merger and acquisition deals in global banking in 2017.

The acquiring organisation must understand the risk presented by the acquired business. This includes everything from how endpoint and network access is controlled, and how the cloud extends on that network infrastructure. This is complex enough, without the recent introduction of regulatory compliance with legislation such as GDPR and the NIS Directive, while balancing the playing field of different security postures and risk appetites.

IT teams face the additional strain of integrating and standardising security controls across both organisations. In this way, each M&A becomes a kind of digital transformation project, except with potentially twice as much complexity and disruption. At this scale, some of those vulnerabilities can be missed or deprioritised for more business-critical matters—leaving banks blind to entirely new threat vectors after the M&A.

The data mystery

Accounting for an organisation’s data estate can be tough—where it lies, the type, and where in the organisation it touches. These undefined data flows are even more complex and problematic for large banks that have overlapping legacy systems and a sprawling organisation extended through M&A deals.

For example—one project to upgrade user web browsing for a large multinational bank involved a brief planned outage. It emerged that this outage affected one of the business processes for approving loans—which used the browser system to function.

It’s because of unexpected connections like this that clear visibility and an accurate understanding of organisational processes and the IT estate are fundamental principles for building a robust security strategy. When system integrations and data flows are not fully understood then it’s much harder to protect all your data, which leads an increased risk of a bank being compromised.

Time for a platform led approach

When you consider the breadth of these issues, and the legacy headaches that lead to banks juggling more and more point solutions from different vendors—as they seek to bolt on new protections for new kinds of threats—the scale and complexity of the challenge is laid bare.

Banks must manage their cyber-defences holistically—with fewer vendors and centralised tools that match the bank’s security ecosystem. In short, banks need to an integrated platform-led approach.

The ideal platform should offer tools with reporting and shared telemetry across each layer of defence. Due to the fast-moving nature of the threat landscape and the practicalities of managing complex systems across large financial services organisations, the platform should also be extremely adaptable—it must be able to rapidly deploy new modules, plug in legacy systems, and integrate continuously evolving intelligence and threat detection.

Cybersecurity professionals in this sector face a challenge distinct from any other. Throughout history, banks have served as institutions of trust and responsibility – and in today’s digital economy, that responsibility takes on entirely new forms

The post Why are banks the most vulnerable to cyber threats? appeared first on International Finance.

There is an outside possibility that the mergers and acquisitions activity at the global level will shrink as the slowdown in the global economy gathers pace.  The latest to raise the spectre of gloom is the estimate from OECD which in its interim assessment recently pared global economic growth forecast for 2019 to 3.3% citing shrinking economic activity levels in Europe and China. The recent US payroll data, the rising interest rates and a strong dollar hint that the two-pronged growth theory might no longer be relevant: that the US economy will expand without hiccups while the rest of the world hits the slower lane of economic growth. The confusion over whether Britain will have a soft or hard landing once it ejects from the European Union confounds the thinking.

Against such a backdrop, it is only natural to expect that the investment banking segment at a global scale may hit a rough patch. But being an investment banker for decades, I have real reasons to make a pitch for a contrarian view—that the investment banking business will continue to grow at a faster clip and there is no need to read too much into the sagging global growth leading or the resulting volatility in equity markets.

To put it in the simplest possible terms, I anticipate strong cross-border financial flows to support the heightening activities at the micro enterprise level, despite increasing and newer risks to global growth. Going forward, the most important factor to drive the new wave of cross-border financial flows will be the appetite for increasing market share to power growth as volatility in the markets has capped the room for organic growth. This is not to say that there are no bumps ahead, but to put it simply, positives outweigh the negatives. You can predict increasing investment banking activity based on four factors.

Clients raise the bar for investment bankers

Increasing client awareness calls for higher diligence by investment banks in their business activities. While scaling up business still remains the dominant theme, there is an ever-increasing emphasis on portfolio clarification.  This is because firms are starting to take a clear call on businesses that they see as their core. They are also more than willing to put their non-core assets on the block, if necessary, to raise capital and sharpen focus on the core business. Moreover, since volatility and uncertainty became the new normal for the market, the needle has moved toward more accountability in transactions with a core focus on returns on investments and capital employed, respectively.

Liquidity is now abundant

In spite of the fact that major central banks are tightening their balance sheets and sending lending rates soaring in major economies, there is still plenty of liquidity available in the market for business with good AA or AAA rating. It is true that while hardening interest rates will make capital costlier, the system is still awash with funds and the lenders are pricing capital more realistically and accurately. The more the private funds available with private equity, sovereign wealth funds, family offices, and others are at their historically high levels, together they may set a new floor for the market from a value perspective.

Technology to the rescue

The market for capital, especially the IPO market, which has been remaining lacklustre for a while, is set to see elevated activity levels because more and more technology firms in key verticals are poised to hit the market in full force to raise growth capital. This is expected to rekindle investors’ interest in the primary equity and debt markets. Once the mood in the market lifts, brick and mortar firms too will join the rush to raise funds from the market lifting the spirits of investors.

India becomes a major player

In India, the looming political uncertainty with the nation shifting to the poll mode and the liquidity strain that still haunts the financial sector, weigh on domestic growth. However, benign price levels and softening lending rates still put India on a high visibility growth map. A leading global brokerage house has just added muscle to the India growth story by saying that funds could shift to emerging markets in coming days from developed markets and included India among its most preferred emerging market economies.  The traction will also come from the on-going resolution processes as the seminal bankruptcy (IBC) code comes into force as well as from the planned divestments by the government. Moreover, companies in India that are aiming either to disrupt the market or consolidate the market are mainly driving the M&A wave in India. Together, these factors will put India high on the global investment bankers’ radar.

According to a recent report, the value of the announced merger and acquisition (M&A) transactions, involving Indian companies, has more than doubled in 2018 to reach $129.4 billion, the highest since 2007. In addition, according to EY’s Private Equity Monthly Deal Tracker – February 2019, investments worth $2.6 billion across 61 deals and exits worth $472 million across 10 deals were recorded in India.

To come to the question posed in the beginning: Can the investment banking business sustain the high visible growth it has clocked in the past few years? The answer is a resounding yes provided the bankers keep playing by the new rules of the play book that place value in each deal high on priority.

The post Investment banking set to sustain the high growth rates of the recent past appeared first on International Finance.

What does the Omnio Group’s exclusive launch at the Tower of London mean for the fintech sector?

The launch showcases the successful merger of our two predecessor companies—Payment Cloud Technologies (PCT) and Tuxedo Money Solutions. PCT was an incredibly strong fintech in cloud-based banking while Tuxedo was a leader in digital payments, so the powerful combination of the two gives Omnio the scale, resources, and the global reach to be a true global fintech partner.

What was the main focus of the launch?

The opening ceremony was attended by over 250 of the some of the most important influencers and experts in the global banking and payments industry. Attendees were formally introduced to Omnio’s new brand and vision which takes into account our insight into the state of the global financial services sector.

In addition to the Omnio presentation, some of our industry friends and partners took to the podium to talk about the highlights of their experience with the business. Peter Altabef, Chairman and CEO at Unisys explained the strategic partnership with Omnio and how the partnership helps power its Elevate™ product set that are being used to deliver cloud-based digital current account services to their global customers, including the signed deal with the Monmouthshire Building Society (MBS).

Former Senior Executive Director at AnPost, Liam Sheehan, highlighted the business’s unique platform and how it powered the digital banking element of AnPost’s Smart Account. While Chris Pond, Chairman at Lending Standards Board, in his key note address explained the scale of financial exclusion, alluding to the 1.3 million citizens in the UK without a bank account and how the government is now recognising the problem. He spoke about how, Change Account, one of Omnio’s subsidiaries, is doing sterling work in this area with the credit unions.

What is Omnio’s new brand all about?

The new brand is an opportunity to redefine Omnio, by showcasing how we are at the heart of the revolution sweeping through the global financial services market in digital banking and payments.

In the world of B2B, it’s important that we ensure that all of the key stakeholders in the world of banking and payments know our new brand, while at the same time taking steps to safeguard against the loss of past collateral or brand equity. It’s also vital that our existing stakeholders and prospective partners fully understand our bold new vision, and appreciate our new capabilities as a true global fintech player. Our launch has been carefully calibrated to achieve all of this—communicating our new brand and our new capabilities, while also highlighting and reinforcing our impressive pedigree.

How will the merger of Payment Cloud Technologies and Tuxedo Money Solutions help innovation in the global banking and payment services market?

Bringing together the two expert PCT and Tuxedo teams, combined with the £70 million investment, means that we at Omnio Group now have a great deal of talent, digital assets, and resources at our disposal.

This will particularly benefit the product innovation for our digital banking and payments propositions—we will be able to significantly speed up the delivery of innovative new products. These will join our innovative cloud based Omnio. VISION client engagement platform is already on the market, supported by our programme and reliable banking system, VISION digital banking offering, as well as our flexible payment VISION payments option.

The increased resources will also help us further boost the support we offer our clients through our Global Managed Services. This offering allows us to guide our clients through the launch of their banking or payment service, from initial conception, to development and implementation, to ensure they have the best solution for their needs. We are even able to offer on-going customer service and technical support once the solution is launched so that we can support clients in meeting their customers’ evolving needs. Omnio is a member of Visa and MasterCard and a preferred supplier to both the schemes. Thanks to the merger, we can further enhance these managed services, opening up new revenue streams for our business.

In addition, merging the two companies also means that we will be able to create synergies in the services we offer all of our customers. This will enable us to benefit from economies of scale, which we can pass on to customers. As a result, it will help us become even more competitive, driving more sales.

Finally, the merger has given us a truly global reach—now we will be able to provide banking and payment support to our customers no matter where in the world they are operating, enabling them to grow their business internationally.

Can you explain Omnio’s role in powering the digital banking element of AnPost’s Smart Account?

AnPost’s Smart Account was the second banking-grade product to go live with our bank VISION platform. It equipped the smart account with a digital account that included all the cloud-based functionally rich benefits of a top tier current account, with two unique additional features: Digital wallets that allow for the subdivision of spending, budgeting and bill payments and Smart Rewards, a cash-back loyalty scheme that benefits customers who use the account at selected retailers.

This means that Smart Account customers can make payments, and transfers, switch funds between main accounts and wallets, and check their balance online or through mobile. They can also complete transactions at the branch including account application, lodgements, withdrawals, mini statements and balance enquiries at one of AnPost’s 1,100 branches nationwide. The new cloud-based platform helps Anpost to leap from its competitors and dramatically lower its cost of operations allowing them to focus on giving their customers a superior experience.

The partnership with AnPost represents a significant step for us as we were building on our reputation in the digital banking market and furthering our goal of widening access to fit-for-purpose financial products for customers worldwide.

How will Omnio lead the fintech market in the next two years?

The next two years will see significant growth in the markets and Omnio is going to be part of leading the changes this brings. We already serve more than two million users around the world on our Omnio. VISION platform and we want to grow this number further through direct sales and through our strategic partnerships such as Unisys. The Omnio team will focus on completing a number of key strategic acquisitions that are currently in the pipeline. These will reinforce our product scope and our international expansion, enabling us to continue growing our banking platform throughout Europe. In doing so, it will further strengthen our international presence. This will give us a strong foundation to build on the support we provide to our existing customers, so that we can help them achieve their ambitions to grow and scale their businesses around the world.

The post What does the launch of Omnio Group mean for the fintech sector? appeared first on International Finance.