There were many victims of 2008’s Great Recession, but perhaps none were as hard-pressed as those in emerging markets, who were effectively cut off by the suddenly risk-averse big banks of developed countries. Access to finance through traditional avenues is still hit and miss for those in developing countries, but things are looking up with the advent of technological solutions that are bridging the gap to a more promising future.
The European Union has put up a brave front against financial crimes such as money laundering, but the criminals still manage to get away with a way too much ill-gotten gain. Progress is being made with the new AMLD5 framework, but much more needs to be done to achieve resounding success. What are some of the steps the EU should take to finally grab this brazen bull by its horns?
New players driving fresh business models, innovative products and increased adoption of the power of big data affect not only the provision of financial services but the fundamental structures of financial markets. As the tectonic plates shift, banks need to actively seek and embrace new opportunities. For the data economy to thrive, fintechs and bigtechs to provide client choice without affecting financial stability, and for crypto-assets to provide a viable option to traditional assets, regulators must master the art of balancing innovation with regulation.
The push to transition from fossil fuels to renewables for power generation has been motivated largely by environmental concerns. But today, dollars and cents are increasingly supporting the transformation drive, as renewable-energy sources become much more cost-effective, even outmatching fossil fuels in value per dollar. Forecasts predict that new power generation through renewables—especially solar, wind, hydroelectric—will soon outstrip fossil fuels, attracting growing interest from governments, banks and investors.
5G digital cellular network technology is one step up from 4G and LTE, so what’s the big deal? A lot, apparently, as 5G promises to deliver speeds 200 times greater than LTE. For the investor, when considering any potentially ground-breaking technology, the question remains, “When to jump in?” The answer may depend on whether he/she seeks short- or long-term gains. As a long-term bet, anyway, 5G looks like a shoo-in.
Problems have continued to mount for the German banking sector in 2019. According to Ronit Ghose, the global head of banks research at Citibank, German lenders are in a much worse position than their European counterparts—and that even includes Italy when it comes to profitability.
Little will be affected as much by the ageing of the world’s population as pensions. In Europe, the ratio of workers to pensioners has decreased and in 40 years will be roughly two to one rather than the much healthier four to one of the recent past. Many wonder from where the pension funds will come, and they should. The solution may lie in the new Pan-European Personal Pension Product.
New sanctions are continually being imposed, making life difficult for banks, which must comply or face stiff penalties. In the past, much of the work toward sanctions compliance involved burdensome manual tasks, but today, technology can lift off much of the load. Since compliance is not an option and pleading ignorance doesn’t work, banks are turning to tools such as intelligent process automation to do the job better and quicker.
Diversity and inclusion have recently become top goals in the strategic policies of many banks, but how is execution matching up? Research continues to expose large gaps between good intentions on paper and good outcomes in practice. Diversity and inclusion are more than nice-sounding words; when realized, they boost profitability. Banks that go no further than prioritising these goals in mission statements miss out on playing the ace.
Interbank offered rates, the interest rates at which banks lend and borrow in the interbank market, are being replaced by risk-free rates, partly due to past rate-rigging scandals. In Europe, what is in itself a tricky conversion has been made even more complicated by the implementation of the wider EU Benchmark Regulation. Market participants must not delay in preparing to meet the transitional challenges as the deadline draws nearer.