How is healthtech making healthcare affordable?

With regard to how healthtech is making healthcare more affordable and accessible, Julien De Salaberry, CEO at Galen Growth Asia, told International Finance, “A general rule of thumb, will be that digital health is lowering the cost of entry into healthcare for innovators and, therefore, facilitating the democratisation of healthcare as consumers or patients seek solutions online.” Citing the noteworthy deals as examples, he said that while, Halodoc was allowing for easier and cheaper access to medicines, Biofourmis was helping reduce the cost of drug clinical trials and CXA was providing seamless access to health insurance and its consumption.

Felicia Kawilarang, Halodoc’s VP marketing communications further told International Finance, that the Indonesian healthtech company, which connects patients with doctors, insurers, labs, and pharmacies through its mobile application, was making healthcare affordable by ensuring patients paid for just the doctors service fee in a way that they do not have to bear the operating costs of running a hospital or clinic. “A consultation with a doctor in the hospital will on an average cost about IDR250,000 but at Halodoc our doctors on average cost about IDR40,000 for a 30 minute consultation,” she explained.

Another example is Malaysia’s Naluri, which offers professional and confidential health coaching. Speaking more about the company, Azran Osman-Rani, Naluri’s CEO told International Finance, that it works with partner insurers, corporate employers, and healthcare providers to identify at-risk populations, meaning those who have elevated levels of blood sugar and blood pressure among others and offer them a fully-digital health coaching service.

In terms of how it was making healthcare affordable, Osman-Rani said while typically structured intervention programmes like a Diabetes Prevention Programme where patients receive counselling from a team of dieticians, nurses, and doctors, could cost between $1,000 and $2,000 per patient, for a four month programme, at Naluri, a similar programme which included, a before and after health screening, a mental health test and the provision of a bluetooth-connected weighing scale, would cost under $100, since all interactions were done online.

Osman-Rani further added that their solutions in traditional mental support were also more cost-effective when it came to group healthcare that is usually subscribed by corporate employers. While traditionally, in this area, support is in the form of an ‘employee assistance programme’ which comprises a telephone counselling hotline and face-to-face sessions, with Naluri, employers were assisted to identify the 20 to 30 percent of employees who are most at risk to enrol them in its digital coaching programme, where its monthly subscription rates came with unlimited chats with its psychologists and other healthcare professionals. This, he said, costs much lesser than a traditional single face-to-face hourly counselling session.

A Singapore example of a disruptive healthtech solution is mClinica. Operating across Indonesia, Philippines, Vietnam, Malaysia, Thailand, and Cambodia from its headquarters in Singapore, this startup is making healthcare affordable by connecting pharmacies across South East Asia to people, using mobile technology. Its CEO Farouk Meralli told International Finance that its mobile platform helps address several challenges at the pharmacy level including patient affordability and adherence.

He further explained that its platform helps pharmaceutical companies address the affordability of medications through targeted discounts while promoting long term adherence through customised health education and refill reminders. “Patients simply visit participating pharmacies and are registered in the programme by providing their mobile phone number. Through our platforms we have reduced the price of medicine by up to 37 percent and increased adherence by more than 30 percent making a tangible impact inpatient health,” he added.

Another Singapore example is of MyDoc. Dr. Snehal Patel, CEO and co-founder at this digital healthcare provider said healthtech enabled faster and more accurate collection and analysis of important real-time health and behavioural data, thereby reducing the need for costly treatment. In addition, he said, also enabled identifying and addressing inefficiencies and wastage in healthcare to further save on unnecessary costs.

Specifically, with regard to his company, which covers seven countries in Asia, Dr Patel said, they had a clear objective and business model to help the patient stay healthy and make healthcare more affordable by making them avoid expensive hospital treatment. And in cases where they do need to engage with healthcare professionals, MyDoc, he added, ensured they are seen quickly, by the right professionals, with costs tightly controlled and monitored.

Value addition: Healthtech simplifies data

Dr. Patel added that apart from saving costs, the company was also helping its customers in reducing confusions and duplications of key information related to their health which further saves time. “From the patient’s perspective the legacy model of healthcare is very often confusing, fragmented, disjointed, and opaque. They are passed from one place to another with little to no coordination, connectivity or cohesion.

Key information and data sit in disconnected silos and filing cabinets and do not follow the patient on their life-long journey in healthcare. This results in a great deal of duplication, unnecessary appointments, wasted time and gaps in healthcare data and can or do lead to undiagnosed health issues or, worse, misdiagnosis and very costly hospital treatment,” he said.

MyDoc, however, helped avoid the same by guiding the patient through their care journey, ensuring they are referred to the right provider and at the right time apart from ensuring the patient had their health record with them for life, which would help them ask questions, consult a doctor or pharmacist any time they need to , irrespective of where they go.

Naluri’s Osman-Rani, also said there were other healthtech benefits. One such benefit he said was making healthtech accessible to a larger population considering there is a shortage of medical specialists in the region. Citing Malaysia as an example, he said, considering there are about 13 million adults in his country who had mood disorders or chronic disease risks and that there were only about 200 practising psychologists and about 600 practising clinical dieticians, conventional sessions such as face-to-face therapy or counselling sessions would only help one million Malaysians and ignore the remaining 12 million who need help.

Apart from this, he added that healthtech solutions such as those being provided by Naluri were making it more convenient and less time-consuming for patients as they, unlike traditional healthcare programmes, do not require patients to make inconvenient transport arrangements to actually go and visit a doctor at a clinic or hospital.

With regards to Halodoc, Kawilarang said that her company’s other benefits too included making people’s lives more convenient and also helping them save time. “On average in Jakarta, Indonesia’s capital city, a patient’s journey to go to hospital and back home takes a total of 4 hours 30 minutes due to traffic and waiting conditions in hospitals, while with Halodoc it merely takes seconds to get connected to a doctor and get your medicine delivered to your home,” she explained.

Technology is at the core of healthtech

With regard to the technologies being used by healthtech companies, mClinica’s Meralli told that most of them were developing solutions using artificial intelligence and big data technologies. At mClinica in particular, Meralli said they employed an array of technologies including social networking technologies to connect pharmacies, machine learning to manage patient refills, and image recognition to digitise prescriptions at the pharmacy level.

Halodoc’s Kawilarang too said they use AI and machine learning based solutions. These, she said were rapidly productised and taken to production, to allow for efficiencies, cost savings and a distinct competitive edge.

Jaffry Mohammed, head of healthcare practice and senior VP, IT at UST Global, an American digital services company which has invested in MyDoc, told International Finance that there were a few patterns of technology adoption that they were seeing healthtech companies focus on. First, he said was the leveraging of data science and deep AI for propensity of disease, triage of medical conditions, prediction of diagnosis and personalisation of treatment. Second, he said was the integration of IoT into clinical practice.

In this regard, he explained that devices at home, work, and hospitals were all feeding continuous data streams that were being collected, interpreted, and converted to inputs for clinical interventions and personalisation of care plans. Third, he said was the use of augmented reality and continuous imaging in a clinical or surgical setting. And finally, he said was the use of AI and ML for non-invasive detection of disease such as skin scans, retina scans, and even voice samples. All these were new diagnosis methods that were being enabled using such latest technologies. “This is by no means a comprehensive list. The intersection of technology and medicine continues to inform many new disruptions in healthtech,” he said.

Constant evolution key to overcoming challenges

Like any industry, healthtech too faces a few challenges to grow. According to Dr. Patel the primary challenge was to get all the various stakeholders across the healthcare spectrum comfortable with using and relying on new technologies and new ways of doing things. Another challenge he said was to prove that healthtech is not only safe, secure and reliable but also more convenient, simpler, more cost-effective and, most importantly, results in improved healthcare outcomes. The final challenge, he said was convincing payers. This, he said, was very different to convincing patients as they are motivated by very different things and have very different pain points.

Meanwhile Naluri’s Osman-Rani said the challenge they were witnessing was healthcare providers being reserved in launching its programmes. This he said was understandable and was primarily because they wanted to see more clinical evidence before prescribing digital health coaching solutions to their patients. Halodoc’s Kawilarang opined that the biggest challenge that they faced was the lack of awareness for healthtech, apart from the low trust in using digital solutions for healthcare needs.

Halodoc’s Kawilarang however said these challenges would naturally subside with time and with more exposure. MyDoc’s Dr. Patel too said the challenges could be overcome but it could be a slow, iterative process that requires a lot of patience and understanding of the differing priorities and concerns of each key stakeholder. “It could not be further removed from the now infamous ‘move fast and break things’ motto of Silicon Valley. Healthcare is, arguably, the most guarded and sacrosanct industry of all.”

He further added that it was not a one-way street as well. Healthtech companies, he explained cannot force a seemingly robust technology solution upon stakeholders and had to instead also listen to learn from the many counterparties and stakeholders within the eco-system, and constantly evolve their models and offerings to adapt to the ever-shifting landscape that they are helping to shape and develop.

Southeast Asia healthtech industry moving form niche to mainstream

So considering healthtech faces a few challenges even as it uses the latest technologies to make healthcare more affordable to the common man, an important question is, what does the future hold for this space?

According to Dr. Patel there are many factors that indicate that the macro tailwinds for healthtech could not be more favourable. These factors, he said included large funding and investments in this sector coupled with a rapidly aging population, increased wealth, a burgeoning middle-class, heavy public and government support for technological innovation, high mobile internet penetration capable of reaching even the most remote areas and now even carrying out commercial drone deliveries.

He added that the industry was also in a transition phase, moving from niche to mainstream. This was because of governments, payers, which include organisations that take care of financial and operational aspects of providing healthcare to citizens, providers and patients rapidly adopting healthtech solutions due to their ability to solve various issues of accessibility, quality, and cost that the traditional healthcare models were ill-equipped to address. Going forward, the arrival of 5G would further boost this sector as the increased internet speeds will help overcome major barriers that are currently present in providing high-quality and affordable healthcare, Dr. Patel said.

The healthtech industry is currently highly fragmented, with many highly innovative companies, each focusing on addressing and improving different parts of the complex healthcare ecosystem. However, the next few years could make it inevitable for them to all come together and once this happens, they would be in a position, Dr. Patel said, to challenge and displace many of the large, deep-pocketed incumbent legacy players.

The post Healthtech makes affordable healthcare a reality in Southeast Asia appeared first on International Finance.

Some of the Middle Eastern countries that have deemed cryptocurrencies illegal include Oman, Saudi Arabia, Qatar, Jordan, Kuwait, and Lebanon. They have cited risks of using virtual currencies for money laundering and supporting terrorism as well as the volatility of bitcoin, the world’s biggest cryptocurrency and its involvement in financial crimes and cyberattacks as some of the reasons behind their decision.

However, some countries like Qatar and Saudi Arabia have shown their willingness to explore blockchain, the technology that enables the existence of cryptocurrency. For instance, in Saudi Arabia, a few government agencies have tied up with American companies to foster the development of blockchain in the country. Riyadh Municipality’s technology partner, Elm Company has partnered with IBM to allow placing government services and transactions on the blockchain.

Meanwhile, some Middle Eastern countries have been supportive of both blockchain and cryptocurrency. These include Bahrain, Iran, Israel, Turkey and the UAE. While some of these countries have already planned or plan to, setup a legal framework for cryptocurrencies, most of them are said to have also shown their willingness to explore blockchain, as well.

Bahrain however stands out among these countries for being the most proactive and for taking several initiatives towards such a financial digital transformation. Specifically with regards to the cryptocurrency, its most recent initiative includes, issuing the final rules on a range of activities related to such digital assets. A CBB statement in this regard said, “Crypto-assets operating under block chain distributed ledger systems have drawn much regulator attention globally, and the CBB rules are aimed at ensuring that the related activities are brought within the regulatory perimeter and are subject to comprehensive regulatory and supervisory measures.”

Such support at the government level has led to the burgeoning of several blockchain and a few cryptocurrency startups in the region across different verticals. According to a July 2019 statement, it said, “We are happy to announce that Rain has acquired the Crypto-Asset Module (CRA) licence from the Central Bank of Bahrain (CBB). Rain is the first crypto-asset brokerage to earn a regulatory licence in the Middle East and joins an elite group of brokerages internationally. In addition to the licensure, we are also pleased to announce that we have closed a seed round of $2.5 million.”

In an exclusive interview with International Finance, Yehia Badawy, co-founder of Rain tells more about the challenges faced by Rain and the innovations that the company plans to introduce.

International Finance: What are the challenges faced by Rain since its founding it in 2016?

Yehia Badawy: The Rain team was united by the belief that bitcoin and other cryptocurrencies will lead to a financial system that is fast, inexpensive, and accessible to everyone. We hail from the cryptocurrency industry having spent time at Abra, BitGulf, Bitquick, Digital Cotton, Glidera, and Kraken. In order for bitcoin and cryptocurrencies to reach mainstream adoption, the industry needs brokerages all around the world to provide access to the network. Through our research, we found many companies serving this function around the world. However, it became clear the Middle East was underserved.

Over the last three years we have spoken with regulators, banks, and built meetup communities in the Middle East to help legitimise this new technology. It took a considerable amount of effort and perseverance to meet with the different regulatory bodies in the region, and align on a shared vision. After conversations with many regional regulators, it was clear to us that the Kingdom of Bahrain is the best home for an early crypto-asset brokerage in the region. We began working closely with the CBB, as well as other forward thinking institutions, such as the Economic Development Board (EDB) and Bahrain Fintech Bay (BFB). In September of 2017, we were invited to join the CBB’s regulatory sandbox, starting our journey towards being the first licenced cryptocurrency exchange in the Middle East.

International Finance: What does being the first company in the whole of Middle East to receive a CRA licence mean for the company?

Yehia Badawy: By receiving the crypto-asset licence, Rain has demonstrated that we comply with the Central Bank of Bahrain requirements around capital adequacy, cyber security, insurance, reporting, corporate governance, and a number of other factors that ensure that our company is prepared to serve institutional and retail customers.

International Finance: What significance does receiving this licence have on Bahrain and the Middle East as a whole?

Yehia Badawy: We believe Bahrain is a major fintech hub in the region, and this new development will further cement its position. Cryptocurrency companies and enthusiasts now have a clearer path to success.

International Finance: Which are the other regions where Rain has applied for a licence? When do you expect to receive them?

Yehia Badawy: We believe in regulatory redundancy, and are constantly working with regulators in the region to increase awareness, and become as compliant as possible.

International Finance: What is the outlook for innovation in cryptocurrency in the Middle East?

Yehia Badawy: We are proud to have led the way for a cryptocurrency hub in the GCC. We are confident that more companies will emerge in Bahrain and the region.

International Finance: How does Rain plan to use artificial intelligence?

Yehia Badawy: We are constantly looking to make our service more secure and user-friendly, so we are open to implementing new technologies that will assist us in achieving those objectives. One application of AI is in our compliance system that monitors transactions and ensure they are adhering to our policies.

International Finance: How will Rain utilise the $2.5 million it raised recently?

Yehia Badawy: With a licence secured and our initial seed capital raised, we believe that this is the foundation of a company that will last for decades. Rain will maintain focus on our mission to create a top international exchange and provide a way to buy, sell, and store cryptocurrency in a regulated, secure, and compliant way. We also plan on expanding the team to meet growing customer support and engineering needs, as well as invest in new technology.

International Finance: What are the ways in which cryptocurrencies can be misused? How will Rain curtail these possibilities?

Yehia Badawy: We embarked on a journey to become a licenced and regulated company to work with regulators and make sure that best practices are being applied to all facets of our business. We apply best in class technologies to ensure that we are enabling legitimate use of cryptocurrencies only.

International Finance: What are Rain’s future plans over the next three years?

Yehia Badawy: We are already serving clients in Bahrain, UAE, Saudi Arabia, Kuwait, and Oman where our client base continues to grow on a daily basis. Rain clients can buy, sell and store bitcoin, ethereum, litecoin, and ripple via our website www.rain.bh or our iOS or Android application. As a brokerage, our clients buy from Rain and sell to Rain. We plan to launch an exchange soon, where clients can buy and sell from each other. Through the brokerage, we will be offering lower transaction fees, similar to the global standard. We expect the exchange to be available by the end of 2019. We think this is the right timing as the region matures, with increased liquidity and demand.

International Finance: How does Rain serve institutional clients?

Yehia Badawy: Through Rain Desk, institutional clients, family offices, and HNWIs receive a bespoke service tailored to their specific needs, in addition to the facilitation of over-the-counter transactions. Rain Desk offers clients a dedicated account manager, deep liquidity, and secure custody options.

International Finance: Is Rain’s only source of revenue, the transaction fee it charges on cryptocurrency purchases?

Yehia Badawy: Yes, that is correct.

International Finance: How many individual and institutional clients does Rain have? Where do you see this number in three years?

Yehia Badawy: We have seen increased demand from retail and institutional clients, especially in the past year. We see this number growing consistently as the regulatory environment matures, and more companies are established in this space.

The post Rain, the first Arabian Gulf cryptocurrency brokerage appeared first on International Finance.

International Finance: Could you please share some facts and figures about the digital transformation process of OCB over recent years? How could these changes help improve your business performance last year?

Sanjay Chakrabarty: Orient Commercial Bank was clear that our digital strategy had to be embedded in our core business. So, we didn’t simply go around copying ideas from developed markets and implementing them. We put in a lot of effort to understand where we could harmonise our digital strategy with our ongoing business model which includes the physical network. We worked with well-established consultants to build out our roadmap and it took us a while to get full clarity on the digital transformation that we wanted to bring about. We realised that it is so such more than just technology, it is also a mindset and a culture. Today, I can confidently say that digitalisation and automation are part of our corporate DNA.

This process has changed the way we do business. Ninety percent of all new customers we acquire now have complete at least one online transaction in the first six months. Forty five percent of our credit cards are being sold exclusively through digital channels. We have unsecured pre-approved loans that are delivered and fulfilled through digital channels. We are now selling insurance as well as investments through our mobile app – the OCB OMNI platform. This has resulted in a significant enhancement of the customer experience we deliver. Our front end staff work seamlessly between digital touchpoints and physical ones.

What kind of technologies has OCB been investing in upgrading your banking system and services in recent years? How is the progress of implementing the digital core banking system to accommodate Internet banking payment services and digital payments at OCB at the moment?

The enhancement of technology is a continuous process. We upgrade our technology, no matter how small the requirement, every month. Today, we have a frontend that cuts across mobile app (OCB OMNI), online banking, and systems used by tellers. What this means is that any customer can interface with us through any of the channels – physical or digital, and still have a consistent experience. But that’s just the frontend. At the backend, we have a customer relationship management system (CRM) that gives us a 360-degree view of the customer at all times.

We have a workflow system for loans, so that we can track loan applications as they go through different stages and we can keep the customers informed. Our data hub that ties in with the 360-degree customer view, can make trigger-based offers for various products on a real-time basis through mobile apps. We connect to our partners through APIs which then support frictionless payments through our bank. All these capabilities have required significant upgrade of systems, but more importantly they have called for re-orientation of the mindset of our people who design products and customer experience.

As you have alluded to in your question, one of the most primary needs for a retail customer is to be able to make payments. For a customer to stay loyal to a bank, the bank must enable frictionless payments for most of the recurring payment needs of a customer. If the bank cannot do that, it will not be relevant to the customer anymore. We understand that. So, we have built a direct payment network with phone companies and utility companies, hundreds of schools, key universities, and hospitals. We have also tied up with platforms that gives us access to large merchant networks where we have set up our QR code-based payments platform.

At OCB, we have also continued to enhance our credit card and debit card capabilities which were the first means for cashless payments. The internet economy of Vietnam is roughly three percent of GDP which is one of the highest in this part of the world and that has been made possible by banks such as ours that have relentlessly pursued digital payments.

How has OCB’s operational model and business strategy changed in order to adapt to the digital transformation trend as well as to capture opportunities from the local banking sector?

I would like to look at this question at a little differently. For OCB, digital transformation is embedded in operational model and business strategy. So, digital transformation does not change operational model, but it is the other way around where we are using digital capabilities to change our operational model.

For instance, we have been able to build ecosystems for most of our partners across SME and retail banking product lines. Our retail banking products are used by our partners to serve their employees and customers better. The interconnectivity of products and services across different financial needs is possible only because we can build and support it digitally. Now with open APIs, we support real-time interactions with most of our partners. Digital transformation has allowed banks like ours to assemble their complete suite of products and services on one single platform that the customers can access seamlessly. This is important for the customers to be loyal to banks. If a bank offering is discrete and siloed, if they cannot build out product compositions that remove the pain-points of businesses and individuals, they will lose their customers to fintechs who are so much better at addressing a narrow vertical in the financial value chain.

Vietnamese banks consider the interaction with customers among the most important challenges of digital banking in Vietnam. What do you think about this view? What barriers has OCB been facing in the process of digital banking implementation?

Interaction between customers and businesses on digital platforms for any industry is not without challenges. Besides, banking has another very important aspect to it – trust, which is difficult to establish purely on digital channels. So, for digital banks this can be a struggle. However, for OCB, we harmonise physical and digital touchpoints. We have clear understanding of the strengths that each channel brings and so this issue is not so much of a problem for us.

Digital platform is great for simple transactions such as payments and paying bills or even gathering information while deciding on investments or while buying insurance. However, for value added products and services such as getting a mortgage loan, digital channels have to be supported with face-to-face interactions. I think the banks need to understand that clearly.

With regard to challenges, OCB is not facing any barrier in digital expansion that is unique to it. Vietnam is still going through transformation of its regulatory framework that will set clear guidelines for e-KYC or electronic signatures and, once that happens, the banks will be able to onboard a lot more customers and serve them online. This will drive financial inclusion in the country where the ratio of banked population is still quite small at 30 to 35 percent.

What are strategies are you pursuing to accelerate technology investment for OCB’s digitalisation process in future?

OCB is committed to digitisation and digitalisation. This is true not just for customer interfaces, but for every aspect of the business. We have partnered with various consultants and even fintechs to accelerate the digital journey. Our mobile application has been recognised as one of the best in the market. We have built products and services that are targeted at digital platforms. Our customer service has highest ratings from end-users after we automated various process steps and reduced turnaround time for key services. We have loyalty of our partners as we have built out eco-systems for them that offer financial products to their employees and customers with least friction. We are seeing progress and value from different parts of the business coming through from digitisation and digitalisation.

We understand that this is an ongoing journey. We have a company culture where we seek speed and simplicity in everything we do. The key components that sustain this drive are of course, embracing new technology, the orientation to automate as many manual processes as possible, using the data to understand customer needs at all times and present solutions rather than sell products and finally, empowering the customers to make their own choices.

The post OCB: Pioneering Vietnam bank in digital technology appeared first on International Finance.

The Euro-area, wonderland of economic growth and competition?

The main argument for adopting a common currency is so countries in the Euro-area can achieve greater economic performance thanks to increased stability and competition, which will ultimately benefit Euro citizens as they enjoy a higher standard of living. Indeed, as explained by Robert Mundell in his famous 1961 paper ‘A Theory of Optimum Currency Areas’, sharing a common currency in an integrated trading area fosters economic growth thanks to lower transaction costs due to the elimination of exchange rate fluctuations, increased price transparency, and competition.

Has the promise of greater economic performance been delivered over the past 20 years? Based on the recent report published par the European Parliament in January 2019 entitled ‘Euro project, 20 years on’, the Euro-area member countries have clearly enjoyed the longest period of steady economic growth since the establishment of the Euro despite the sovereign debt crisis.

As stated, “since the establishment of the Euro and until the subsequent recession in 2011, GDP grew by 30 percent”. Nonetheless, the steady growth came at the price of a relatively lower level of economic growth as in the previous expansion where ‘GDP had grown by 40 percent,’ according to a London School of Economics study. Turning to data on wage per capita as a way to capture the situation of Euro citizens, they tell the same story as the GDP data: the volatility of wage per capita has been significantly less volatile over the period, but the growth of wage per capita has been comparatively lower. If we had not had the 2007 financial crisis that subsequently led to the sovereign debt crisis in the Euro area, the Euro could have been looked at as a success for its members as they began to deliver steady growth and economic stability through major economic integration.

The Euro, the sovereign debt crisis, and the rise of nationalistic parties

The sovereign debt crisis has been the starting point of the strong criticisms addressed to the European Commission and to the ECB that have been accused of making the population worse off. Since 2011, the GDP growth has globally flattened and countries bailed out have clearly suffered from a decrease in their GDP.

It is hard to say whether Euro-members could have performed better outside of the Euro area; countries bailed out included. Indeed, countries bailed out were characterised by structural weaknesses that have not resisted the global recession after the 2007 financial crisis. In the case of Greece, it can even be argued that its membership to the Euro delayed the crisis as investors kept buying Greek government bonds as a perfect substitute for any other Euro-member government bond in the belief that Euro-members would rescue any country in financial trouble sharing the burden. As it happens, this was a wrong assumption as no rules had been clearly written. It does not come at a surprise that feelings of discontent occur when the bad times come and choices need to be made. As long as economic growth was steady, everyone was more or less benefiting from economic prosperity. When came the time of recession, resources became tight, choices had to be made, and population discontent started to spread.

The main discontent regarded the inability of governments to pursue their own public spending agenda due to the existence of the stability pact capping government deficit and debt – even if in reality the limits have all been bypassed during the worst of the economic recession – and prohibiting the monetisation of government debt. The incapacity of countries to recover was attributed to the inflexibility of the European Commission and the ECB. The situation would have improved if governments could have spent as much as much it took to restore economic activity printing money and devaluating in order to stimulate exports. The reason for the prolonged recession was essentially due to the lack of governments’ empowerment.

Printing money is never the solution

The rise of nationalistic parties across Euro member countries is a straightforward illustration of that belief. Unfortunately, economics does not work that way. Spending by printing money has never brought any restoration of economic growth as some countries in South America or Africa have experienced again recently; it is usually the road to economic chaos. Most of the time, countries that have come under pressure with the spread of sovereign debt crisis are countries that have suffered from structural problems that had not been addressed during booming times. This had been the case especially in Portugal, Spain, Greece, Italy and France. Taking a different angle, it is even possible to say that countries struggling with long-lived structural issues have mainly benefited from the Euro until the sovereign debt crisis because economic prosperity hid their internal problems.

To conclude we can ask ourselves if the situation of the euro-member countries would have been that different if we had not had the Euro? The answer is clearly no since the Euro brought more stability to some countries thanks to the delivery of a more credible and stable currency compared to their national counterparts (just think about the devaluation of the Italian Lira, the Spanish peseta or the French franc during the time of the European Monetary System!).

If we take a look around the world, we can see that demand for nationalistic policies are far from exclusive to Euro-area countries. Let’s start with the election of Donald Trump in the US and the trade war he has started with China! As theorised by the economist Rodrick, governments are now facing the impossible trilemma where democracy, national sovereignty, and global economic integration are mutually incompatible, just two of the three are mutually compatible. National sovereignty is indeed hardly compatible with democracy and economic integration.

The post Is the Euro a threat to European democracy? appeared first on International Finance.

Speaking more on this, Trawut Luangsomboon, CEO at Jitta, a Bangkok-based wealth management fintech startup, told International Finance that the Thailand wealth management industry had been growing along with economic growth and increasing household wealth, which in turn had attracted both domestic and international financial companies to expand here. Indicating this had led to the growth in the number of managed funds, he said, there were 9.9 million funds, across mutual, provident and private funds, at the end of 2018, up 140 percent from the 4.1 million funds that were present in 2008.

Yuttachai Teyarachakul, head of personal financial services at United Overseas Bank (Thailand), a regional subsidiary of Singapore’s United Overseas Bank, too asserted the growth in Thailand wealth management industry. Citing the central bank – Bank of Thailand – he told International Finance that the total wealth assets in Thailand were estimated at $400 billion in 2018. He further added that deposits and funds grew collectively at a compound annual growth rate (CAGR) of 5.2 percent between 2016 and 2018. While deposits alone grew at 3.7 percent CAGR, funds rose at 7.6 percent CAGR. This growth, he attributed to the country’s economic growth, buoyant capital markets, and rising household wealth.

Meanwhile Luangsomboon said that apart from the above factors, the government too was responsible for Thailand witnessing such growth in this industry. He cited the example of ‘Wealth Advisor for All’, an initiative launched by Thailand’s Securities and Exchange Commission (SEC) in 2018. He explained that the SEC had under this initiative, asked 26 banks and wealth management firms to come together in an effort to standardise the then existing wealth management tools and to provide them to a larger audience so that there could be increased investments from the Thai people.

Such regulatory progressiveness, he said had “allowed more products and services to enter the market, catering to a more diverse range of clientele from mass-affluent and affluent to high-net-worth and ultra-high-net-worth individuals.”

Foreign wealth management firms enter Thailand

A spokesperson at LGT, the Liechtenstein-headquartered private banking and asset management group, that recently opened a wealth management office in Thailand, too lauded the Thai government. The spokesperson explained to International Finance that while the government had taken several steps to boost this industry, some of the notable ones included the loosening of foreign exchange rules to allow more money to be invested abroad and permitting HNWIs to buy offshore funds directly rather than going through master feeder schemes.

Meanwhile, Jitta’s Luangsomboon cited his own company as an example to indicate the growth seen in this industry. “Two years ago we started from zero. Now we are managing around 2,500 million baht from thousands of people trusting our investing principle and technology,” he said.

With regard to UOB (Thai), Teyarachakul said its wealth business grew strongly from 2016 to 2018 with revenue and AUM increasing at a CAGR of 33 percent and 13 percent respectively and its total number of affluent customers increasing at a CAGR of 15 percent.

Funds – the most popular wealth management product

When queried about the most popular wealth management product sought by Thailand HNIs, Luangsomboon said funds continue to be one of the first things HNIs gravitate towards. He explained that several HNIs who are entrepreneurs, business owners, and high-level executives saw opportunities existing beyond Thailand and were keen to investing in foreign equities. But investing abroad was not as easy as it sounds and required one to know quite a bit about the foreign market of interest. However, since many of these HNIs did not have the time to do the same, they were still considering investing in funds, especially like Jitta Wealth which is AI-powered, low-cost and hands-free, making it a cost-effective solution for satisfactory performance in the long run.

Meanwhile, Teyarachakul said that at UOB (Thai), its affluent customers had higher asset allocation to deposits – around 70 percent, with the remaining primarily towards funds. “In Thailand, customers typically prefer low-risk products such as current or savings accounts or time deposits, money market funds, and fixed-term funds. As mutual funds typically offer varied investments, they are increasingly popular, with market growth of 7.6 percent CAGR compared with a 3.7 percent CAGR for deposits,” he said.

The LGT spokesperson said, in his view, strict exchange fund flow regulations since long had made local Thailand banks the dominant players in wealth management, with a heavy domestic investment focus. However, now, the spokesperson said things were changing and HNWIs were increasingly looking to offshore investments so that they could seek higher returns and greater portfolio diversification.

Combining technology with Warren Buffett’s value investment principle

With regard to work approach, wealth management fintech Jitta combines technology with Warren Buffett’s value investment principle. Luangsomboon explained that they have developed an AI and Big Data technology that looks at ten years of financial statements to identify Buffett’s ‘wonderful company at a fair price’ stance to analyse and identify 50,000 stocks around the world. “This is our core AI technology, and it’s deeply rooted in value investing. This alone should distinguish Jitta from our competitors,” he added.

LGT (Thailand) has a holistic view and relies more on the skills and experience that it has developed as the family office of the Princely Family of Liechtenstein for over 80 years. This, the spokesperson said, differentiates it from other wealth management firms in Thailand.

UOB (Thai), meanwhile has a three-principle approach to wealth management. According to Teyarachakul, they first, understand their customers’ needs and aspirations, then ensure they appreciate the risk associated with their investments and finally the company helps them prioritise their financial goals.

Low returns and family succession key challenges

While the industry is set to be in an upswing, it has its own set of challenges or obstacles for growth. Speaking on the same, Jitta’s Luangsomboon said, that while the need to invest is growing, the willingness to dive into the market head-on is not. This, he attributed to low returns investors were witnessing from several wealth funds. This obstacle, he said can be overcome if wealth management firms start focusing more on delivering this value to customers. This he said would be the key and could be achieved by leveraging technology, being more transparent and educating customers.

Speaking on the first, he said, technology could help wealth management firms reduce their operational costs and increase profits for its clients. Citing Jitta Wealth, the private fund belonging to his own company, Luangsomboon, said “Jitta Wealth is powered by algorithms and software that help us reduce the paperwork, cut out redundant processes and keep our operational costs low so we can focus our resources on the thing that matters the most: keeping our customers happy.”

With regards to overcoming the issue of transparency, he said this too could be achieved by using technology. He said, considering JItta was completely software-based, their investment methodology would be the same, whether it is ten or 100 years from now. This way, he said, his clients would never be left in the dark about where their money is getting invested into.
Finally, in terms of educating customers, he said, Jitta had placed a heavy focus on this as it was essential for customers to understand the logic behind successful stock investing and are able to assess independently what they have to do to profit from the stock market.

Another obstacle, according to Luangsomboon was regulations. He explained that while the Thai government was open to new solutions and business models, it was not working at the same pace as Jitta was. He explained that while it has been not been an easy experience working with Thai regulators to adjust local laws to account for the nature of fintech operations they were confident that this would bring a huge difference to the industry and their fight for change would be fruitful.

Meanwhile, UOB’s Teyarachakul said that one of the challenges for this industry was related to succession, wherein wealth is passed on from one generation to the next. He explained that the country’s wealth is predominantly held by family-run businesses who also happen to be among Thailand’s biggest employers. And as these businesses mature, they will need to overcome certain challenges, for instance succession planning, in order to preserve their wealth for the next generation. This, he said, will in turn have implications for the growth of this industry over the long term.

In this regard, Jitta’s Luangsomboon, however, had a different perspective. The new generation he said were self-reliant and liked full control of the decision-making process and relied on their own self-directed research and advice and trusted technology more than any human counterpart. He further added that it was projected that in 2020 half of the total assets under management of $100 trillion will belong to this new generation, making it imperative for wealth management businesses to plan accordingly to ensure it is ready for this future scenario.

Younger tech-savvy generation seek digital convenience

With regard to the use of technology to disrupt wealth management in Thailand, Luangsomboon was of the view that the wealth banking industry was lagging behind when compared to other financial services, like banking, stock brokerage, investment funds, and financial advisory. He said while these segments had been quick to incorporate new technologies, wealth management is still very much personal and based on human-to-human relationships.

He however was quick to add that while human relationships may be the preference of the older generations, the growing, younger tech-savvy generation seeked digital convenience and this was something they saw not as a threat but as an opportunity. He added that as a startup, they were advocating on behalf of investors for better return on capital, more transparency and a fairer fee structure so their clients can earn more bang for the buck. Their technology, he added would not only help their clients achieve all this but would also help them regain control of their own financial future allowing them to lead their lives much more peacefully.

The LGT spokesperson too said technology was key and it was an important part of its development strategy, particularly in Thailand, where the rate of adoption is particularly faster compared with other developing markets.

“Eventually, most if not all our operational and client-facing processes will be digitalised, which will not only enable us to work internally end-to-end even more efficiently and keep on top of regulatory demands, but will also give our clients unrivalled functionality and user experience,” the spokesperson said.

Government easing regulations will have a positive effect

With regard to the government’s role in boosting this industry, UOB’s Teyarachakul said the government could ease regulations, such as the income tax deductible benefit. This, he said would encourage investors in their wealth creation and diversifying their portfolios.

Meanwhile Luangsomboon suggested that the government should keep pace with companies such as Jitta with regards to having an open mind to new solutions and business models to help boost the growth of this industry. “Understandably, the world is changing quite rapidly and it’s already challenging for even a small, lean organisation like ours to keep up, let alone a large national institution with many working pieces. But I think we can work together to transform this industry. New technology can fuel tremendous growth of this industry, we just need to do it together to make that happen,” he explained.

The LGT spokesperson however said the government could play a key role in developing the local talent which, in turn, would help boost this industry. “One of the main areas where the government can help the industry is to boost schemes that attract local and experienced professionals to return from overseas and up-skill local talent to deepen the talent pool,” the spokesperson explained.

Low interest rates and an ageing society will drive future growth

However, despite such challenges and government shortcomings, Luangsomboon said the future outlook for this sector looked positive. He said Thailand is likely to see this industry grow as the country moves toward an ageing society, low interest rates, and heightened awareness about investment necessities. He also reasoned he also reasoned that the government would help the industry grow.

“We see the government and related agencies pushing harder for new innovations by working with fintech firms, carving out new regulations in response to changing technologies.”
UOB’s Teyarachakul too was confident that this industry will continue to grow even amid a few challenges. “Despite the potential impact from global trade tensions and financial market volatility, we expect the number of Thailand’s affluent individuals and their wealth to continue to increase,” he said.

The post What’s behind Thailand’s wealth management boom? appeared first on International Finance.

Vietnamese banks also stepped up focus on retail banking in line with the increase in interest in retail banking services as well as keeping up with the policy priorities of the State Bank of Vietnam, the nation’s central bank. Today, most Vietnam banks consider retail banking as an essential part of their development strategy. However, technology integration in retail banking services remains a key challenge for Vietnam banks. Quite a few banks in Vietnam that offer retail banking services lag in data mining and processing, product development, as well as synchronisation of databases and IT infrastructure.

Speaking to International Finance, Rebaca Tan, associate vice president – analyst, Moody’s Investors Services, said that retail lending in Vietnam is relatively young with around a ten-year history. She added that at the end of 2018, the country had an estimated total loan size of around $60 billion which represented about 25 percent of its GDP. Between 2014 and 2018, retail loans had witnessed a rapid growth, registering a compounded annual growth rate of around 59 percent, she added. This, she explained was because of higher incomes and greater penetration of banking services. She has a high opinion of the country’s credit infrastructure. Citing credit bureaus as an example, she said these were evolving with time and had seen good progress in the last few years.

Citibank, the consumer division of American financial services company, Citigroup too said it had seen considerable growth in its Vietnam operations. A Citibank Vietnam company representative told International Finance that it had established the consumer bank in Vietnam in 2009 and had since been developing its momentum and growing its market share in key business areas such as credit cards, personal loans, cash advances, and insurance.

With regard to its cards business, the representative said the introduction of a suite of Citibank PremierMiles World Mastercard, Citibank cash back Visa Platinum card, and Ready Credit, had allowed its credit card customer portfolio to increase substantially, making it the major premium credit card issuer in Vietnam. With regard to loans, the representative said that Citibank Vietnam emphasises on flexibility and convenience of credit management for the customers, by offering cash advance services at ATMs or unsecured loans with competitive interest rates.

Meanwhile, the growth story of South Korea headquartered Shinhan Bank, in Vietnam further accentuates the progress Vietnam has made in developing retail banking. In this regard, Trinh Bang Vu, head of retail and corporate banking at Shinhan Bank Vietnam, told International Finance, “Over the history of nearly 26 years, Shinhan Bank has expanded its network across the country, from the north to the south, with 36 network units nationwide until August 2019. With a wide network of branches and ATMs across Vietnam and a modern ebanking service, Shinhan Bank is serving 1.4 millions of customers by the end of August 2019.”

Challenges to future growth

Moody’s Tan said she believed the future of the banking industry in Vietnam is positive, just like its past, although it came with a few challenges. This, she said could be in the form of increasing competition from new entrants as well as asset quality challenges stemming from rapid growth in previous years.

Meanwhile Shinhan Bank’s Bang Vu specifically mentioned there would be two challenges. “The first challenge is new standards and conditions required for the capacity, organisational structure, and operation of financial institutions to play in the market. The second challenge arises from the business model in the finance and banking industry in Vietnam in the new era,” he said.

With regard to the second challenge, Bang Vu explained that Vietnam was developing in lines with the developed economies in the sense that conventional retail banks would be forced to change in order to survive, as going forward, an increasing number of financial transactions could largely be done through the digital banking applications and platforms.

Technology is key in Vietnam retail banking

Both Tan and Bang Vu said they believed that technology is key and will play an active role in solving some of the challenges. Apart from this, Tan also said that risk management procedures would help. “To address these challenges, good technological and risk management procedures such as scorecards, credit checks, and borrower validation are key.”

Meanwhile, Bang Vu was of the opinion that “..retail banks must strive to strongly invest in technology, cooperate with fintech firms, train human resources, and restructure the business towards the lean, modern, and flexible approach.”

A PwC Retail Banking 2020 report too highlights the importance of technology in the overall retail banking segment going forward. It expects the segment’s landscape to change significantly in response to various factors such as evolving customer expectations, regulatory requirements, and technology among others.

And banks, it said cannot stand to remain the same and had to choose, either to be a shaper of the future, a fast follower, or to manage defensively, putting off change. “We believe that the winners in 2020 will not only execute relentlessly against today’s imperatives, but will also innovate and transform themselves to prepare for the future. This future will require institutions to be agile and open, ready to explore different options in an uncertain world,” the report said.

With regard to role of technology specifically in Vietnam’s retail banking space, Moody’s Tan said, there was a strong potential for fintech development in the country. This, she said was because of Vietnam’s low banking penetration – wherein only one-thirds of adults in the country possessed a bank account. “Together with the increasing use of mobile devices and the internet, fintech could provide tools to improve access to financial and banking services for individuals, especially those in rural areas”.

She further added that because of this potential, Vietnam was witnessing two developments. On the one hand, there was an emergence of several fintech startups especially those offering digital payment services. And on the other, banks in the country were building up their online and mobile banking platforms to enable existing customers handle more transactions online, she explained.

Shinhan bank’s Bang Vu too said that technology would play a key role in Vietnam’s retail banking future considering both the rapid growth of the internet and the non-cash payment policy implementation in the country. “Therefore, the development of digital banks not only meets the needs of the majority of customers but also serves the needs of the banks themselves in expanding the distribution channels, changing the competitive environment and saving its costs,” he said.

Bang Vu added that technology would also bring in various advantages such as enhancing customer experience, retaining and attracting more customers, thanks to mobile banking and internet banking, and also helping improve the security for customers in transaction processing.

Current use of technology in Vietnam retail banking

Suggesting that adoption of technology by retail banks in the country was already underway, Bang Vu said that it had launched an online product last year called the Mobile Banking SOL application. This, he said, came with features that ensured convenience and optimal security for customer transactions.

Bang Vu added that Shinhan Bank Vietnam, as part of its focus towards technology, had partnered with fintech companies such as Momo, Moca, VnPay, Payoo, Zalo, and FPT to introduce digital banking and financial services to meet the diverse needs of its customers. He further said they were seeking more such partnerships in this space through fintech organisations and clubs.

Finally, Bang Vu said his bank was continuing to invest in technology infrastructure. This, he said, included upgrading its core banking system, credit scoring system, customer identification system, data analysis system, and applying new technologies such as big data, AI, Open API, and so on in an effort to build a digital banking ecosystem.

Meanwhile, Citibank too seems to be a frontrunner in the application of technology in its retail banking operations in Vietnam. Speaking on the same, its company representative, said that in an effort to support its digital transformation for customers in Vietnam, it had pushed forward several digital services aimed at improving the digital experiences for retail clients in the country.

“Citi is a leading financial institution to use biometrics technology in Vietnam to enhance customer’s experience, as well as security for its consumers. We introduced Touch ID, a technology that uses finger print to verify customers using mobile banking on the smartphone. Citi also introduced a snap shot feature on mobile banking, provides customers the quick view brief summary of all their accounts with Citi without having to log on. We are also exceptionally proud to be the first bank to introduce voice biometrics technology in Vietnam,” the representative explained.

Other technology achievements according to the representative included, Citi Vietnam becoming the first country globally to accomplish the milestone of 100 percent penetration with clients for e-statements, recording an 82 percent year-on-year growth in downloads of the Citi Mobile App in 2018 and finally Citi’s active app users increased by 47 percent year-on-year.

Government and foreign banks play a key role

So while the future potential for this segment is positive it is also important to note that the government has played a key role in the development of retail banking sector of Vietnam. So when, Moody’s Tan told International Finance that the government was striking a balance between financial inclusion and systemic stability. As an example, Tan said that while the government is pushing towards greater financial inclusion, they are also wary of asset quality issues that could stem from rapid loan growth.

“To this end, the State Bank of Vietnam has recently proposed stricter regulations on unsecured consumer lending for both banks and finance companies which, in our view, are credit positive because it will alleviate asset quality pressure by curbing excessive growth, which will lead to stronger risk-adjusted returns and support internal capital generation in the future,” she said.

Meanwhile, with regard to foreign banks that have till date played an important role in Vietnam’s retail banking space, Tan indicated there was scope for more foreign banks to enter this segment. She said such banks had an opportunity in the form of partnerships with local banks or acquisition of finance companies in Vietnam, or subsidiarisation. She cited the example of Shinhan Card Company that had completed its acquisition of Prudential Vietnam Finance Company Ltd – the fourth largest consumer finance company in Vietnam by assets – in early 2018. She also gave the example of Military Commercial Joint Stock Bank selling 49 percent of its stake in its consumer finance subsidiary to Shinsei Bank in 2017.

Meanwhile, Shinhan Bank’s Bang Vu said that considering there was a huge demand for retail banking in Vietnam but only a limited supply, there was a lot of potential in the country not just for Shinhan Bank but also other foreign banks and investors. He further added that Vietnam’s comparatively better environment further attracted foreign banks. “..demographic structure, stable political and social environment are also important factors in attracting foreign banks to Vietnam, especially when the global financial market become unpredictable,” he explained.

Huge unbanked population promises further growth

Overall, the future outlook for retail banking in Vietnam is positive according to the report by Ant consultants. The report explained that there was a large scope for the development of this segment in the country and the primary reason was that 87 percent of the population were under the age of 54. Citing the State Bank of Vietnam (SBV), the country’s central bank, the report further revealed that while 20 percent of more than 90 million citizens in the country held bank accounts, just three percent of the population possessed a credit card, further highlighting the scope for retail banking in the country.

Moody’s Tan too had similar views. She said loans to the retail segment in Vietnam will continue growing over the next two to three years, buoyed by the country’s young and urbanising population, whose wages were increasing steadily, and because of the increasing use of credit by consumers to make purchases.

The post Vietnam retail banking: Technology is key to success appeared first on International Finance.

The theme emerging from the survey is that the oil and gas employment market is rebounding after two to three years of contraction and crisis following the steep decline in oil prices. Despite the fact that the oil and gas industry is still only slowly clawing back to its past position, employers are looking to hire, spend more on salaries, and training and benefits for their workforces.

Challenges around an ageing workforce, talent shortages and gender imbalance and gender pay gaps remain. But as Karim Abdellaoui, regional manager of Middle East and Asia at oilandgasjobsearch.com, a part of CareerBuilder, tells International Finance in an exclusive interview, it is becoming easier for oil and gas companies globally to overcome those challenges now more than ever before.

International Finance: Oil prices are just stabilising after remaining low for the past few years. What is the reason for the positive outlook in terms of future recruitment numbers on the part of employers and the reported salary hikes among employees despite the oil price situation?

Karim Abdellaoui: There is a very positive outlook ahead in terms of increase in salaries within the oil and gas market. What really caused that is the stabilising oil prices due to which there are a lot more investments coming into the industry now. With that, there are more projects coming to fruition, again causing an increase in salaries, not just within the Gulf markets.

Asia Pacific and the Middle East markets are seeing significant opportunities for growth. In terms of growth, they are pushing it a bit more in the Middle East, but obviously things change quarter-to-quarter for projects.

International Finance: What does the oil and gas employment outlook for the Middle East and North Africa look like for the rest of 2019 and further into early 2020?

Karim Abdellaoui: For the Middle East, in particular it looks very positive as there are many projects coming live. Back in 2017, the oil and gas markets were slow in general. In the Middle East, it has worked out very well even in the downturn. There are a lot of projects based in Abu Dhabi and large refining projects taking place in Oman. So, a significant amount of investments are being pumped into these particular countries — and then there is the Kingdom of Saudi Arabia, where Aramco has released a number of projects into the market. That seems to stimulate high growth opportunities which, in turn, results in salary increases in the market.

From North Africa’s perspective, Egypt as a country is seeing solid investments in its oil and gas markets. Libya and Nigeria have suffered a little bit in the recent years with ups and downs, but I think those markets are also starting to stabilise and look very positive. Also, while speaking to our old and current clients it has become obvious that their local markets are looking quite positive. Morocco, for example, is seeing a huge amount of investment in renewable energy, which is also a solid market for North Africa. That said, Gulf countries obviously lead the way in oil and gas market employment in the MENA region.

International Finance: Virtually all of the Arabian Gulf nations have had major workforce nationalisation plans since the past 10 years. How effective are these nationalisation plans in increasing the share of the local native workforce in those countries?

Karim Abdellaoui: The Gulf countries and APAC have seen a rising nationalisation focus. I have been in the oil and gas market in the Middle East for 12 years. What I find is that with the nationalisation, projects and initiatives from a few years ago, there is fresh talent coming in now. The type of investments in each of the Gulf countries particularly is helping a lot with the skills shortage gap we have in the industry. Now, the Emirati nationals and Saudi nationals are upskilling and developing the industry and the countries are investing more in people to bridge that gap for the future.

International Finance: What will be the effect of digitalisation and automation on global and Middle East oil and gas employment?

Karim Abdellaoui: I think it is very positive. Digitalisation is obviously something that people are getting equipped with and in some ways, it is sort of early to measure that. From what I have seen of people embracing it, I think it is very positive. Although people might be worried that automation could result in job elimination, there is still a human element needed, especially in the oil and gas industry. But from a technological perspective, I think it is only natural that over time technology will evolve and work hand in hand with the human element. I also think it is being embraced in the Middle East because people are very tech savvy and companies want to be ahead of the game.

International Finance: What is the oil and gas employment outlook for Africa for the rest of 2019 and early 2020?

Karim Abdellaoui: There is improvement in African countries such as Mozambique, Uganda, Tanzania, Nigeria, and Egypt. Nigeria is a massive player in the industry. So there is a lot of movement in Africa, particularly in the North African region which gets more candidates from France, Belgium and certain parts of Canada. So, I have a more positive view with projects coming into the east, west, and some parts of North Africa. While speaking to my clients in Egypt and Libya, I have understood that there are a lot of new investments coming in there as well. In fact, tremendous job opportunities are being created with up-and-coming projects in Africa.

International Finance: In the report there seems to be a marginal improvement in the share of women in the oil and gas workforce globally. What more can be done to increase the share of women in the oil and gas workforce globally and in the Middle East?

Karim Abdellaoui: At the moment, more women are coming in to the oil and gas industry, which is great. From gender diversity perspective, I think a lot more can be done. In the Middle East, for example, there are investments going into upskilling and employing women in the workforce. Recently, I was at a conference in the UAE which saw women engineers who had come through the ranks from various universities to work for the national oil companies in the region. There is a push for gender diversity. So in terms of women’s employment what can be done is perhaps encourage younger generation to join the oil and gas industry.

International Finance: There seems to be major investments on the horizon in oil and gas projects coming up in East Africa, especially Mozambique. Do you think East African nations will be able to meet their talent requirements internally?If not, how easy is it for these nations to attract expatriate talent?

Karim Abdellaoui: There are some solid projects coming into fruition now with a fair amount of investments and commitments from governments and private companies too in the eastern part of Africa. If you look at Mozambique, there are significant investments but obviously not as huge as in the Middle East. In Africa, things can change very quickly in the oil and gas markets. So, I think there is a very positive outlook for the region as a whole.

There are many qualified east African nationals and professionals. A lot of these projects in Africa require highly technically skilled people — which means, there will always be a need to attract expat talent. However, it entirely depends on the number of projects running there.

International Finance: What is the reason for the skills shortages in engineering and design side of oil and gas development. What is the solution to this skills shortage?

Karim Abdellaoui: Candidates in oil and gas and energy industry usually have transferable skills, or will learn additional skills that are transferable. So if there is a skills shortage in oil and gas, I would say the industry would have to look outside of it — specifically, more along the energy lines. This is because both industries tend to have talent with transferable skills.

For example, over the last few years people have moved out of the oil and gas industry to the energy industry, or even into the construction industry for that matter. So I would say it is important for oil and gas companies to attract those kinds of people back into the industry by running recruitment campaigns. But, if people are not willing to come back into the oil and gas industry or there is still some sort of skill shortages in particular vertical, then it is important to analyse why they are keen on the energy industry, for example.

International Finance: Looking into 2020, what are the challenges that oil and gas workers and companies that are recruiting oil and gas workers could face?

Karim Abdellaoui: Globally, I would say it depends on the country. In the US, the level of recruitment will depend on the number of projects taking place. Moving into 2020, probably in the second half of the year, it could be very competitive depending on the way oil and gas companies approach their recruitment needs. For example, if candidates decide to move over to another industry other than oil and gas within the energy sector, then it could become very competitive for them.

So, it could become a competitive environment in some areas as oil and projects grow. But candidates will have the choice based on their skillset in in other areas which offer very niche and technical positions. Overall, 2020 looks extremely positive on the recruitment front — but obviously it all depends on the projects and the countries.

International Finance: What is the oil and gas employment outlook for Asia Pacific? Which are the employment hotspots in Asia Pacific?

Karim Abdellaoui: Typically in Asia Pacific, the majority of our clients are located in Singapore and Malaysia. There are quite a few investments taking place in Thailand. We have a solid number of clients in Vietnam and South Korea as well. As a result, we have seen a lot more enquiries coming through with several new jobs being posted for particular roles based on upcoming projects. So I would say it’s mostly Singapore, Thailand, and Malaysia.

The post Oil and gas employment outlook rebounds with prices appeared first on International Finance.

Nonperforming loans (NPLs) are a threat to both the financial institution’s bottom line and everyday operations. Introducing radical innovation in the loan recovery process is a Singapore fintech startup that largely eliminates physical action with a Software as a Service solution and specialised services leveraging data and artificial intelligence – AsiaCollect. AsiaCollect’s CEO and Founder Tomasz Borowski tells International Finance in an exclusive interview how AsiaCollect intends to digitally transform and industry given to strong legacy practices.

International Finance: The debt collection process in Asia has a lot of physical touch points and sometimes involves hostile action by collection agents. In terms of use of technology what is the difference that AsiaCollect is bringing to the market in Asia?

Tomasz Borowski: The debt collection industry in emerging Asian markets are typically still managed by small, provincial collection agencies, who don’t have the adequate resources to invest in proper infrastructure and systems, relying heavily on manual phone calls and traditional field collection where unqualified agents use hostile and intimidating methods to recover debt. This poses a huge reputational risk to the banks and non-bank lenders that use these agencies.

We saw an opportunity in using advanced technologies like machine learning and AI to transform the way debt is collected and managed, drawing from my experience running operations at a large retail bank in Eastern Europe.

International Finance: One difference of AsiaCollect to other CMS companies is that it buys the NPLs of financial services organisations. How does this model work and what does AsiaCollect do with the purchased NPLs?

Tomasz Borowski: Our integrated credit management suite includes outsourcing and advisory in debt management – this is what is typically offered by other collection agencies as well. As you mentioned, we also purchase unsecured consumer non-performing portfolios. In the first case, we get in touch with originators who are not necessarily banks – they can be finance companies, fintechs, and other lenders. We manage collections on behalf of our clients. It is usually for a period of three months. We are more like a servicer, while the case is still on the balance sheet of the lender.

In the second case where we purchase portfolios, we become the owner of those loans. So the loans are transferred to our balance sheet and we can start performing actions as AsiaCollect becomes the new owner of that debt. Keeping in mind the type of loan or portfolio we purchase, we can work on it for three or four years depending on the model we use.

Before we purchase the portfolio we have to evaluate every single debt from different angles and based on the estimation, prepare the price offer. We spend quite a lot of time on analysing all the portfolio details, it mainly depends on the case and can last between a few days to a month. We analyse the portfolio using our purchasing model. The purchasing model is fed with the information about portfolios that we previously worked with.

Each portfolio we analyse has hundreds of characteristics that we are checking, such as demographic data and behavioural history that we take note of. Following the analysis, we check how the clients with similar characteristics performed previously and whether there is a possibility of debt recovery from them in the future. Grouping such debtors into homogeneous groups and estimating the potential recoveries and costs for each group ends with sending the offer.

Once the portfolio is purchased the process is automised – we upload the portfolio into our platform, apply the strategy that best suits the portfolio and all further actions are executed by our system.

International Finance: What is the process you follow to bid and evaluate the NPL portfolio to achieve the best results for all parties involved?

Tomasz Borowski: With regards to bidding, we need to take into consideration what would be the extent of our investment into this process. This means we need to look into all the actions we will need to perform on debtors, how much it will cost and what could be the potential recovery from the portfolio. This way we will also be able to offer a pricing to all our clients. Then we sign an agreement and the data is transferred. After that we choose and apply the strategy that is the most efficient for portfolio with such characteristics.

One of our differentiating factors is our local experience in working with different portfolios and customising individual strategies. These strategies are constantly challenged by alternative strategies applied simultaneously to find even more efficient ways of higher recoveries: a never ending, champion-challenger approach.

International Finance: Could you describe with an example how AI and ML come into play in AsiaCollect’s CMS solution?

Tomasz Borowski: AsiaCollect CMS solution is fully driven by Data and AI. AI is playing significant roles in our solutions from every aspect: we use predictive calling to improve the efficiency of our agents. We built machine learning models to predict the best timing, channels and strategies to reach the debtors to increase the recovery rate and better experience for the debtors. We use deep learning models to convert voice to text with support of multiple Asian languages to automate our QC process and we are researching and experimenting more exciting AI features such as emotion recognition and psychological profiling.

International Finance: AsiaCollect’s target is to make the debt recovery process in its Asian markets completely automated. Do you think that eliminating the human touch points in debt recovery in a market like Asia is feasible and how will you achieve it?

Tomasz Borowski: I’m not sure the market has reached a stage where the operators could be fully replaced now. But I strongly believe that from three to five years it will be possible. Currently, we already try to minimise the human involvement in the collection process by using the IVMR, Email and SMS campaigns and by sending letters. Our integrated solution for call centre agents is equipped with the dynamic scripts: Using the internally developed voice to text model, we analyse clients` answers so that in the future, we can replace our operators, who currently read the scripts displayed on the monitor by the system, with virtual agents.

International Finance: For banks in Asia that are used to physical collection of debt, moving to an AI and ML based system of recovery with behavioural analysis is a major cultural change. How will AsiaCollect work with banks and financial institutions to bring them to the point of using such third-generation debt recovery solutions?

Tomasz Borowski: I agree that sometimes originators believe that physical contact with the borrower is the only powerful way of collecting the debt. We are trying to convince the financial institutions to give us a chance and to prove that despite the ease of changing the SIM card in the region, we are able, by using our cutting-edge technology to reach their clients without conducting field visits. We have helped almost 50 lenders minimise their losses on outsourced portfolios, amounting to us managing over 265,000 loans every day.

International Finance: AsiaCollect acquired CreditSeva in India. What are your targets for the India market and what is the strategy that you will use to achieve the target?

Tomasz Borowski: Previously, we were focused on expansion in Vietnam and Indonesia. We are still exploring the Indian market, trying to find the best expansion strategy. Large BPOs and hundreds of collection agencies are already on the market but I believe the market in India is large enough to accept a new player – one that is AI-driven and focused on digital collections. Currently, we are focused on offering a Smart Agent SaaS (Software as a Service) solution and convincing originators that debt collection is possible without field collection.

International Finance: The markets you have chosen for your debt collection system, be it Indonesia, Philippines, Vietnam or India are some of the hardest regions to collect debt. What inspired the group of European entrepreneurs behind AsiaCollect to focus on these markets?

Tomasz Borowski: The reason why we reach out to those markets is not because they are the hardest to recover, but because of the very early stage of the collection industry in those markets, thus the opportunity to accelerate the changes. I am really interested in transforming the early stage markets, professionalising the collection activities and helping the borrowers to be more responsible and financially literate. Of course, one of the key factors is market size and growth potential of the markets we have already entered.

International Finance: How do you visualise technology transforming the credit management services market in Asia in the next five to ten years and what role does AsiaCollect plan to play in it?

Tomasz Borowski: I strongly believe that our example would help other professional collection agencies to expand to South Asia and help to accelerate the change from manual, inefficient, and people driven high-risk collection practices to digitalised collection, without reputational risk for lenders and threatening borrowers.
Also, I see ourselves being more active in working with industry players (lenders, collectors) and regulators to make professional, responsible debt collections the norm. We have already started working with industry associations in Indonesia, Vietnam, and in India.

International Finance: In terms of rules and regulations are there any challenges that you face for your CMS in Asia and how do you overcome them?

Tomasz Borowski: I don’t see any obstacles in particular, but in India, for example, we are required to obtain an expensive licence for purchasing debts. From a cost perspective, this is mitigated by a much lower cost of such in Vietnam.

The post Digitally transforming debt collection in Asia appeared first on International Finance.

This also represents a 36.5 percent increase compared to the same period last year and while second half activities are expected to moderate, overall Sukuk issuances are up 6 percent year-on-year at $130 billion, illustrating why Islamic finance hubs around the world are competing to increase their share of the issuances of such an attractive financial instrument.

The market continues to be led by Southeast Asia, particularly Malaysia, which saw a 41 percent increase in volumes to $53 billion in the first half – most of the issuances being in local currency Malaysian ringgit. In the GCC, issuances rose 9 percent to $26.5 billion with Saudi Arabia accounting for just under half of that.

In total in 2019, Moody’s expects Sukuk issuances from the six members of the GCC to climb to approximately $48 billion, slightly higher than the $46 billion achieved in 2018. An area to watch out for will be the local currency Sukuk issuances from the GCC mainly in Saudi Arabian riyal. In the last couple of years, over more than $ 20 billion has been issued for regional accounts.

Why has Southeast Asia dominated the Sukuk market?

Benefiting from a well-established framework and supportive ecosystem, Islamic bonds in Southeast Asia, especially Malaysia and Indonesia, are by far the most dominant financial instruments locally. In part, that is due to the attractive fundamentals of the Malaysian industry leaders.

Malaysian Sukuks in general have demonstrated steady and decent long-term returns, exhibited lower volatility, and generated higher yields relative to comparable fixed-income securities. In addition to their appealing risk-return profile, Sukuks also enjoy advantageous tax treatment in Malaysia. Malaysia’s tax framework is conducive for both Sukuk issuers and investors, and robust capital market regulations and policies have further instilled market confidence in these securities.

The engines of GCC Sukuks

The GCC has witnessed an unprecedented growth in local fixed income markets in the last couple of years, with decent size issuances in the conventional and Sukuk space. Countries like Saudi Arabia and Oman have issued almost $86 billion in the last three years following the drop in oil prices to fund their deficits.

The issuance programme from the entire GCC region has been predominantly in US dollars, while GCC has witnessed a growth in the local currency market as well especially with the Saudi Arabian riyal Sukuk issuances. The funding has played an important role in easing the liquidity pressure in local markets, where the market has opened to receiving funds from foreign investors.

Indeed, Sukuk issuances have mostly been led by sovereigns and quasi-sovereign entities in the GCC, while among regional corporates, UAE and Saudi corporates and financial institutions are proving to be the most active in issuing Sukuks.

Year to date out of the $26.5 billion issuances – about $ 11 billion has been issued in US dollar – with the biggest ones being Saudi Telecom and the Government of Sharjah – each around $1.2 billion. Along with the benchmark issuances from sovereigns and GREs, the GCC has also witnessed an increase in demand from investors on lower rated or unrated corporates (approximately 25 percent of the $11 billion has been below investment grade names).

Following this demand, the GCC had a first-time issuer – The First Group, which is a local property and hospitality specialist – issuing a dollar-denominated five-year Sukuk listed at the London Stock Exchange. As the sole arranger and underwriter for this listed Sukuk, SHUAA Capital saw good demand from regional and international sukuk and conventional houses. Overall the risk appetite and willingness to look at smaller issuers have increased with market participants looking for credits with strong fundamentals rather than just ratings.

The GCC has also seen Dubai driving innovation in the region as a way of further enhancing its status as a global centre for Sukuks. In May, regional retail and leisure conglomerate Majid Al Futtaim Group issued the first corporate green Sukuk in the MENA region, demonstrating how Sukuks can tap into broader market trends such as SRI (socially responsible investing).

With many of the region’s governments focusing on knowledge and innovation as a way of diversifying their economies in a post-oil era, the potential for GCC nations to lead the way in Sukuk innovation will undoubtedly play a part in growing their market share of Sukuks overall – for example in the potential application of new technologies such as blockchain. Similarly, one of the limiting factors for the growth in Sukuk issuances has historically been the limited number of existing Shariah scholars and skilled personnel. As Islamic Finance continues to gain prominence in our region, and governments invest in their education provision, this is becoming less of an impediment.

Gaining more momentum

Investors in the GCC region are keen to see further efforts being made to close the gap with Southeast Asia. Governments can play their part in this by boosting regulations that encourage Shariah-compliant product standardisation. In addition, the governments can increase transparency, as well as market access and availability of timely information – for example, the UAE’s establishment of the Higher Shariah Authority. Meanwhile, the private sector can support and embrace policymakers’ efforts, as well as educate their clients about the benefits of Sukuks as a financing mechanism. With this shared determination, the GCC can be confident in its ability to build its status as a market leader in Sukuks.

The post Overtaking SE ASia: How can GCC lead the Sukuk market? appeared first on International Finance.

The platform, which is part of UAE’s The Property Finder Group, further stated that it expected this trend to continue because of various reasons such as revived demand for established luxury projects such as the Palm Jumeirah, Downtown Dubai, and Emirates Hills along with a lot of buyer interest for new projects such as Dubai Hills Estate and Mohammed Bin Rashid City, indicating resilience in Dubai’s luxury real estate market following recent years of slump.

Supercars, luxury shopping malls, five-star hotels, attractive tourist and entertainment destinations, are some of the characteristics that has helped make Dubai the definition of luxury, Niall McLoughlin, senior vice president at Damac Properties told International Finance. This along with an ample choice of outstanding luxury properties, he added, were helping Dubai to further make a name for itself on the global map as a luxury living location, similar to New York.

Expo 2020 to drive luxury property market

Robert Booth, managing director at Dubai-based property developer Ellington Properties, told International Finance that one of the primary factors that will drive the positive momentum in the luxury real estate market going forward is the Expo 2020.

“We see strong growth opportunity for the luxury real estate sector in Dubai, particularly with the positive momentum that the economy gains from the preparations for Expo 2020 Dubai. The event, set to welcome 25 million visitors, will also open doors to more international investors on the opportunity that Dubai offers – which will further drive the growth in demand for luxury property,” Booth explained.

He added that the issuance of long-term visas for professionals and investors would also help build momentum in this segment. He explained this would help promote a stronger and conducive business environment which in turn would catalyse the real estate sector, including the luxury market.

Meanwhile, Aqil Kazim, chief commercial officer at Dubai-based property developer Nakheel, told International Finance that the expo aside, Dubai’s growing population, which is expected to climb from 3.1 million currently to over 5 million by 2030, too would help in creating demand for this segment going forward.

A spokesperson at Emaar, a Dubai real estate company which is listed on the Dubai Financial Market, however, believes there were a number of factors that will help the city continue to be the one of the most sought-after destinations for luxury property in the world. He told International Finance that these factors included the city’s connectivity, central geographic location, world-class infrastructure, variety of leisure and entertainment attractions, strong regulatory environment, and finally, the city’s cosmopolitan community.

Damac’s McLoughlin said that the presence of HNWIs in the Middle East along with the high purchasing power of consumers, especially in the GCC region will also help drive the luxury real estate market in Dubai. Additionally, he said, reasonable pricing of luxury projects in Dubai compared to other popular cities worldwide would also generate demand going forward. Citing a recent report by London-based real estate services provider Savills, McLoughlin said Dubai ranked third on the list of major cities that are less expensive to buy luxury homes.

In this regard, Dr. Martin Berlin, Middle East partner and global deals real estate leader at PwC, told International Finance that the per square meter price of luxury real estate in Dubai was more affordable when compared to cities such as London, New York and Hong Kong. “A $1 million investment could get you approximately 28 square meters in London, 25 square meters in New York, and 22 square meters in Hong Kong. In comparison, a $1 million could get you approximately 138 square meters of luxury property in Dubai,” he said.

Damac’s McLoughlin meanwhile added that the government too has a key role in strengthening the luxury real estate sector. While, governments across the Middle East have adopted a policy of launching initiatives that encourage increased tourism and higher investments, which in turn strengthens the luxury real estate sector, the UAE government had particularly been successful in achieving stable economic growth and prosperity in the country, especially in Dubai.

While various policies in the UAE have helped the real estate luxury sector, a few significant ones include the Real Estate Regulatory Authority (RERA) and the Dubai Land Department (DLD). These regulatory bodies have developed a robust legal and regulatory framework to ensure best practices in activities like property development, marketing, valuation, sale, purchase and brokerage which in turn have helped develop a transparent environment helping attract more foreign investment, McLoughlin said.

Another positive initiative by the government according to McLoughlin was digitisation. Tech-driven solutions across managing contracts, broker information, and mortgage laws, he said were boosting investors’ confidence and helping Dubai hold the position as the MENA region’s most transparent real estate market.

In this regard, Jyotsna Hegde, president at Sobha Realty, an Indian multinational real estate developer which has operations in Dubai, told International Finance that the UAE as a country was moving towards a digital economy with the promotion of smart technology. This, she said, would ensure a positive impact on luxury real estate market going forward.

While these are some of the older government initiatives, the more recent ones that would further boost this segment, McLoughlin said were the government’s decision to allow 100 percent foreign ownership of businesses in certain sectors, long-term visas for skilled professionals and investors, and the recent introduction of the UAE gold card.

Dubai’s luxury portfolio

So, while Dubai as a whole is expected to see positive demand going forward, there are specific locations within the city that is already witnessing an increasing demand. These locations according to Data Finder include the Palm Jumeirah, Downtown Dubai and Emirates Hills.

Nakheel’s Kazim said they had a few luxury projects located in the iconic Palm Jumeirah. One of the completed ones, he said, was its Azure Residences, which included beachfront one and two bed apartments whose prices started at $ 367,000. Another luxury project here, he said, included the Palm Tower, a 52-storey hotel and residential tower whose first 18 floors included the St. Regis Hotel. Prices here started from $ 463,000, Kazim said.

With regard to Emaar’s luxury projects, the company’s spokesperson said that one of its most prestigious projects included the Elie Saab at Emaar Beachfront. As the name suggests, this project, the representative said was being developed in partnership with renowned fashion designer Elie Saab and will include residential units that will reflect the luxurious heritage of the fashion brand’s style and signature apart from overlooking the Arabian Sea, The Palm and Dubai Marina. In addition, the representative said that Emaar had several other luxury projects in Downtown Dubai and other locations such as Dubai Creek Harbour.

Sobha Realty’s Hegde meanwhile said their flagship luxury project in UAE is Sobha Hartland, an eight million square feet waterfront community situated within Mohammed Bin Rashid Al Maktoum City. This project she said offered many residential options from a studio apartment to the most luxurious five bedroom villa, with the latter being priced at Dh 18 million.

Meanwhile Damac’s, McLoughlin, said their newest luxury project Zada, was located in in Dubai’s Business Bay area and came with a price tag of £699,999 (Dh 3.2 million) for one-bedroom apartments which offered views of the iconic Dubai Canal. He added that in the past Damac had, for its luxury projects, joined forces with some of the most recognisable fashion and lifestyle brands such as Tigers Woods Design for a golf course, Italian fashion-houses such as Versace Home and Just Cavalli for its interiors.

With regard to Ellington, Booth said their flagship project was the DT1, which included residential units across 20,000 square metres rising to a height of 76 metres located in close proximity to both Downtown Dubai and Business Bay.

Chinese showing increasing interest

Booth added that while the growing interest for its homes were primarily from UAE residents, it was seeing rising investor interest from South Asia, Saudi Arabia, China, Europe and beyond. Of these, he said, there was a significant growth in interest from Chinese buyers because of various reasons such as UAE being a key player in China’s Belt and Road Initiative (BRI) and the growing trade and cultural relations between the two countries. Sobha Realty’s Hegde too said their company was receiving most interest from Chinese investors, followed by Saudi Arabian, Indian and UAE investors. “In the first two months of 2019, the number of Chinese investors in Sobha Hartland grew by 200 percent,” she said.

Nakheel’s Kazim meanwhile said that while his company has around 30,000 investors from all over the world those from the UAE and GCC constitute for the biggest investor group. Apart from them, it was seeing a strong interest from Indians, Pakistanis, British, Lebanese, Chinese, Russians, and Canadians, he added.

Meanwhile, Damac’s McLoughlin citing the government’s DLD said the top investors by nationality in 2019 were led by Emiratis and Indians followed by the British, Chinese, Pakistanis, Jordanians, and finally the Saudis. Overall, these foreign buyers he said, represented 18.5 percent of the total transactions in Dubai which is equivalent to Dh30 billion.

New generation buyers seek tech-enabled projects

Ellington’s Booth added that this demand was however seeing some key changes. He explained that one of the latest trends they were witnessing was a strong uptake and demand from the younger generation who are design-oriented and seek culturally inspiring living environments. In addition, he said there is also a growing appetite for luxury projects with distinctive USPs. These, he said were not just restricted to just design but also relating to amenities and tech-driven innovations.

Going forward, Booth said that technology will be the biggest game-changer for this segment, as the digital-savvy new generation of buyers seek elegantly designed, functional, and tech-driven environments.

The Emaar representative too believed that technology would also play a key role across all aspects of luxury real estate including construction. The representative cited his own company as an example which had recently announced plans to build their first 3D printed home in Dubai.

Meanwhile Sobha Realty’s Hegde said the most prominent trend the company was seeing is the introduction of mixed use developments. This, she said was something developers were actively pursuing to give residents the comfort of community living with all necessities and amenities available within convenient reach.

While Dubai’s luxury real estate segment seems to be showing positive momentum, there are a few challenges it could face. These PwC’s Dr. Berlin said, included rising interest rates, fear of a global recession, and tighter monetary policies. They were capable of creating a downward pressure on the market, he added. Damac’s McLoughlin meanwhile said fall in oil prices, government’s spending restriction and potential fall in tourism could also be detrimental to the growth of the luxury real estate segment.

The post Tech-enabled environments to drive Dubai luxury real estate appeared first on International Finance.