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World Economy on the Brink •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Millennials and their Money •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Facebook Money & Climate Change •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• From Follower to Leader: China’s Special Economic Zones December - January 2020 europeanfinancialreview.com Exclusive Interview with Mr. Graham Bright JP HEAD OF COMPLIANCE AND OPERATIONS EURO EXIM BANK Accelerating GLOBAL TRADE ECOSYSTEM with Compliance, Innovation and Efficiency empowering communication globally USA $22 EU €17.5 CAN $22 UK £15

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The European Financial Review empowering communication globally DECEMBER - JANUARY 2020 World Economy Sustainability 8 World Economy on the Brink 44 How Facebook Money Could Counter Climate Change Graham Vanbergen Shann Turnbull Great Britain Venture Capital 11 With the general election out of the way, the government 47 Time to Fix the Broken Investment Model needs to refocus its efforts on housing reform Kevin Monserrat Paresh Raja Data Security Innovation 50 Security vs. Convenience: Delivering seamless, 14 Atradius and Kemiex Shake up the Raw Material Trading secure service experiences Landscape in Pharma, Veterinary, Food and Feed John Watkins Accelerator Series Risk Management 18 Accelerating Global Trade Ecosystem with 53 Managing Risk in a Modular Economy Complience, Innovation and Efficiency Kamil J. Mizgier Interview with Mr. Graham Bright JP, Head of Compliance and Operations, Euro Exim Bank 56 The Challenge of the ‘Shifting Sands of Model Risk Management’ for Banks Trade Finance Tony Bethell 26 New Opportunities in Old Markets: the Changing China and the World series World of Global Trade Finance 60 From Follower to Leader: China’s Development of Special Chris Newman and Andrew Fraser Economic Zones and Its Global Impact and Lessons Interview Xiangming Chen 26 Trading with Trust: what does it take to provide the Executive Compensation best trading experience? 68 Why Do So Many People Think That Exclusive interview with Ms. Farah Hawilo Executive Director, Trust Capital TC CEOs Earn Too Much? Rainer Zitelmann Wealth Management 33 Millennials and their Money: Predictions for Family Business 71 Portrait of Darius Forbes the Great Wealth Transfer Ben Revill Denise Kenyon-Rouvinez Interview Leadership 39 Trading Forex on the Wings of an Eagle 75 If Transformational Leadership Comes First, Knowledge Exclusive Interview with David Muscat, Management and Financial Performance Will Follow Head of Affiliates and Marketing, EagleFX Mostafa Sayyadi empowering communication globally

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From the Editors A s we approach the start of an entirely new value of money in each region needs to be tethered to decade, there is no better time to bring inno- a Sustainability Index, which can be implemented by vation at its peak and sustainability as a top collecting the data from each region of the world, and priority. With this in mind, the year-end issue of The all the large corporations (like Facebook) are already European Financial Review features a brand new doing it. series “The Accelerators”. Another highlight of this issue is the return of our In this special feature series, we want to high- China and the World Series. Started in 2012, Professor light the top innovators who accelerate the positive Xiangming Chen has taken our readers to discover the development of different sectors. In the inaugural local and regional development and transformation episode, and also our Cover Story, we are delighted deep inside China and their echoes and extensions to focus on the Trade Finance industry, and we have across varied places and boundaries around the world. an exclusive interview with Euro Exim Bank’s Head The article in this edition takes the trans-local dimen- of Compliance and Operations, Mr Graham Bright. sion of “China and the World” further by tracing He provides revealing insights into the exciting how China has evolved from a follower to a leader in innovations and developments in the trade finance building special economic zones (SEZs). industry and beyond. He further shares his views on the broader ethical, social and people issues that are Turning our focus back to Europe, the recent interconnected and indispensable elements in making general election in the UK has made a significant the bank a global success. impact across the region. With the Conservative winning the majority, the new government now needs Another fast developing industry is the world of Forex. to manage the remainder of Brexit negotiations, and To discover the latest trends and innovation in this sector, Paresh Raja suggests that it is also vital to refocus its we have the pleasure of speaking with Trust Capital’s Farah efforts on housing reform. Hawilo and EagleFX’s David Muscat. We talked about their unique features and offerings, and the story behind Further in the issue, we explore trending subjects their respective company’s journey to the top. including risk management, executive compensation, the millennials’ financial behaviour, identity security, as More on innovation in the financial industry, well as leadership and transformation. Shann Turnbull offers an intriguing proposition on how Facebook money can be used to combat climate We hope that you find inspirations from the pages change. He argues that the value of money in the more of this year-end issue for your new year’s resolution, sustainable regions needs to have a higher value than and we want to send you our best wishes for a beautiful money in less sustainable regions. This means the and restful Christmas holiday, and a blessed and pros- perous new year. Happy Holidays! Production & Design: Angela Lamcaster Print Strategy: Stefan Newhart Production Accounts: Lynn Moses Editors: Elenora Elroy, David Lean Group Managing Editor: Jane Liu Editor in Chief: The European Financial Review Publishing Oscar Daniel READERS PLEASE NOTE: The views expressed in articles are the authors' and not necessarily those of The European Financial Review. Authors may have consulting or other business relationships with the companies they discuss. The European Financial Review: 3 - 7 Sunnyhill Road, London SW16 2UG, Tel +44 (0)20 3598 5088, Fax +44 (0)20 7000 1252, [email protected], www.europeanfinancialreview.com No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission. Copyright © 2019 EBR Media Ltd. All rights reserved. ISSN 1757-5680 empowering communication globally



World Economy WORLD ECONOMY have still not been learned though. ON THE BRINK Our species is, after all, inherently flawed as are the financial systems we BY GRAHAM VANBERGEN build around us. 2019 has already proved to be the consequences of living and since the Last year, in an article for The weakest global expansion in a decade birth of money – so are economic reces- European Financial Review (The and another fracture in the financial sions. And it appears that no matter Predicted 2020 Global recession Oct system is producing yet more rising how much meddling and tinkering we 2018), I wrote that by late summer dangers in shifting political econo- humans do, even with the advantage 2019, economists all over the demo- mies – ill-prepared for a second assault of our collective history and technical cratic West would be talking of like the last. Graham Vanbergen advances – all three are as assured as another financial crisis. They are, but makes the case that there is a lot more each other. with ever more shrill warnings of a at stake than just another recession. repeat of the most ruinous economic It was not so long ago that the slump in history, which is yet still to It was Benjamin Franklin that opined global banking system suffered its fully recede. that in this world nothing can be near-death experience. In its death said to be certain, except death and rows, flashbacks of the 1920s depres- The IMF reports that that global taxes. Both, of course, are the normal sion years came and slowly went. The economy is in a synchronized slow- lessons of these and other recessions down and is now performing at its slowest pace since the global financial crisis. In its October report – rising trade barriers, increased geopolitical tensions, low productivity growth and aging demographics in advanced economies are the key issues. Investor confidence is also draining away. All these issues are a problem, but they were not unexpected.1 8 The European Financial Review December - January 2020

The real problem is that the world has Roubini makes the point that there are In its wake, the democratic four global collision courses being played out. world is seeing a shift of not faced up to the real aftermath of what First, is the zero-sum game of chicken repre- ideologies – the rise of sented by the US-China trade war. Then, the populists, the far-right and happened in 2008 and unexpected events escalating and highly divisive political trench religious conservatism. warfare in the UK over Brexit and its effects Isolationism, nationalism now dominate global growth as a result. upon the European Union – (just as America and racism are some starts prodding it with tariff barriers to of the hallmarks of its The impact of the last crash has been far more force the EU to comply to its own standards progress and declining devastating than the financial ruin of millions. reductions). Then, there is the potential fallout middle-classes along with In its wake, the democratic world is seeing a shift in the Middle-East as American influence austerity is its ringleader. of ideologies – the rise of populists, the far-right wanes and finally, the economic implosions of and religious conservatism. Isolationism, nation- South America.3 alism and racism are some of the hallmarks of its progress and declining middle-classes along Roubini says that additional economic pres- with austerity is its ringleader. sures are building into political outcomes and King asserts that the institutions put in place Steve Bannon, the architect of Donald to protect global economies from another Trump’s ascendency to the Whitehouse likes to bank-led crisis don’t have the firepower to insu- brand it “economic nationalism.” The falsity of late from another emergency. this is that its ideology takes greater control of the markets – far from the free-market system Roubini: he espouses. “A full-scale trade, currency, tech, and cold war between the US and China would push the current Mervyn King, the former governor of the Bank of England has recently made the point downturn in manufacturing, trade, and capital spending that another global financial crisis is not just inevitable but actually en-route. into services and private consumption, tipping the US The Western banking system has proved and global economies into a severe recession. A failure to beyond doubt that it was neither robust nor disciplined enough to make the necessary compromise would lead to a collision, most likely followed adjustments to future-proof markets and as King asserts – the democratic West is strolling by a global recession and financial crisis.” blindfolded straight into a new slump, turning King: the Great Recession into an epoch. “Following the Great Inflation, the Great Stability King rightly warns that – “Another economic and and the Great Recession, we have entered the Great financial crisis would be devastating to the legitimacy of a Stagnation. It is the failure to face up to the need for democratic market system - and sticking to the new ortho- action on many policy fronts that has led to the demand doxy of monetary policy and pretending that we have stagnation of the past decade. And without action to deal made the banking system safe means we are sleepwalking with the structural weaknesses of the global economy, towards that crisis.” there is a risk of another financial crisis, emanating this King goes on to say that – “No one can doubt that we are once more living through a period of political time not from the US banking system but from weak turmoil. But there has been no comparable questioning of financial systems elsewhere.” the basic ideas underpinning economic policy. That needs The lethal combination of Trump’s global trade wars, Britain's democratic failure to to change.” contain Brexit alongside, Europe’s fragile euro and the aforementioned triggers of economic Nouriel Roubini the economist that advised difficulties almost guarantees another fracture the IMF, the US Federal Reserve and World in a system ill-prepared for a second assault Bank also warns of the rising dangers of these like the last. shifting political economies. The real problem is that the world has not faced up to the real aftermath of what happened in 2008 and unexpected events now dominate global growth as a result. europeanfinancialreview.com 9

World Economy 2019 has already proved to be the weakest The decade long economic perfect storm global expansion in a decade. was passing but political ripples are once again turning into the breaking waves of economic Last month's United Nations trade and devel- shocks and dramatic political change with opment body, Unctad warned that – “A spluttering far-reaching implications. north, a general slowdown in the south and rising levels of debt everywhere are hanging over the global economy: Today, we are witnessing the failure of neolib- these combined with increased market volatility, a frac- eralism to deliver its “trickle-down” promises tured multilateral system and mounting uncertainty, are and as this 40-year project of failure continues, framing the immediate policy challenge.” the liberal global order is disintegrating. Autocratic rulers, demagogues and populists The UN argues that the slowdown in growth are now leading countries that contain well over in all the major developed economies around half the world’s population.4 the world are relying on easy monetary policy and asset price rises to stimulate demand. This Our system of financing the global failure to act on the crisis of the last decade will economy is the very cause of its own demise produce, at best, “ephemeral” growth, while tax – with democracy now at threat even in places cuts for corporations and wealthy individuals is like Britain. failing to trigger productive investment. Britain is a burning example of economic Rising economic and political failure failure where vulture capitalists now circle The result of this failure of economic manage- and hedge funds are backing its decline and ment is evidenced all over the world and even shorting its currency. Brexit is nothing more in historically stable countries. From months than the accomplishment of disaster capi- of rioting in France to mass public protests talism – itself nothing more than evidence of in Britain. The ʻjust about managing’ are economic mismanagement. reacting against a political economy that is not working for them. Neoliberalism is crushing its most revered jewel where tolerance, freedom and economic Anti-government protests or one-sided polit- prosperity has quickly been replaced with its ical economies have ignited protests in a dozen ugly twin – Steve Bannon’s economic nation- other countries around the world – and as the alism, not just in America but of all places in saying in Chile goes – “If there's no bread for the the world – in Britain. poor, there's no peace for the rich.” It is not just the world economy that stands on the brink but the social democratic political systems that underpinned it. Graham Vanbergen is the founder and contributing editor of TruePublica and author of Brexit – A Corporate Coup D'état. References 1. https://blogs.imf.org/2019/10/15/the - world - economy - synchronized - slowdown - precarious - outlook/ 2. https://www.theguardian.com/business/2019/oct/20/world - sleep- walking - to - another - financial - crisis - says - mervyn - king 3. https://www.project-syndicate.org/commentaryplaying - chicken - with - global - economy - trump - china - iran - argentina - by - nouriel - roubini - 2019 - 09 4. https://www.hrw.org/world-report/2017/country - chapters/dan gerous - rise - of - populism 10 The European Financial Review December - January 2020

Great Britain With the general election out to business consternation over what of the way, the government direction things were going. Of para- needs to refocus its efforts mount importance is the next fiscal on housing reform statement, where those in property are hoping various reforms will be pursued. BY PARESH RAJA Positive action is needed to inject opti- mism and growth into the sector. The general election campaign weeks – not least to draw a line under Indeed, according to Nationwide, the in December was a vociferous, the ongoing political hostility and market stagnated for most of 2019; in intense political duel. With the economic uncertainty. October the average rate of house price dust still settling, Britons now look growth remained below 1% for the 11th to see how this new government will Indeed, one of the government’s consecutive month. manage the remainder of Brexit nego- main tasks will be to lead national tiations and our withdrawal from the healing; Brexit has been a traumatic The question beckons: what reforms European Union. Many, especially saga for the national consciousness. should this new government implement business leaders, hope it will come to Thereafter, it needs to set a clear now it has the opportunity? some kind of conclusion in the coming agenda. Sajid Javid’s Autumn Budget was cancelled in November, leading Stamp duty is perhaps the area that springs to mind most easily. Boris Johnson previously touted that the tax was an area he was considering making changes during his leadership campaign. Whilst Sajid Javid went on to backtrack Positive action is needed to inject optimism and growth into the sector. europeanfinancialreview.com 11

Great Britain For reform to be fully implemented and have its desired effect, stakeholder buy-in is critical.As such, the government needs to consider educating landlords, tenants and property investors before changing things further. on that suggestion, there was value in it. Market Finally, the government must recognise and liquidity can certainly be improved and making address the dearth of policy understanding in the it easier for people to get on and move up the private rental sector. Recent research conducted property ladder could pay dividends to the entire here at Market Financial Solutions has found that as sector. Further, the duty is one of the least popular many as three in ten (28%) landlords do not under- taxes in the UK, second only to inheritance tax, so stand what the end of Section 21 means. Almost as reducing its burden – or even abolishing it – could many (25%) say they are not up to date with the latest be a major political win. changes to reduce tax relief on buy-to-let mortgage repayments. It goes almost without saying, but for Due to the dominance of legislative time by reform to be fully implemented and have its desired Brexit over the past two years, there is also work to effect, stakeholder buy-in is critical. As such, the be done in regard to new development guidelines government needs to consider educating landlords, and planning rights. New builds are often regarded tenants and property investors before changing by the public as less desirable than urban homes things further. and detached, countryside properties, leading to reduced marketability. As such, the announce- The level of uncertainty over the years since ment at the Conservative Party Conference the referendum has dampened the property last September of new design guidelines was sector. Whilst this has ensured the sector has not welcome. These rubrics were revealed as part of overheated (which was a risk) there is now a need the ‘Building Better, Building Beautiful’ inquiry, reinvigorate things. This may come naturally, as and include proposals for how developers can per normal cyclical market phases. However, to create dwellings that appeal to traditional motifs. ensure the sustainable building of homes and the Although the policy lacks regulatory teeth, it still overall health of property in the UK, this new has the potential to set positive precedents for the government must take a multi-pronged policy homes of tomorrow. approach that approaches the problems from all sides. On the broader theme of new build improve- ment, Mr Javid also touted a new infrastructure Paresh Raja is the Founder and CEO investment package that could lead to £29 billion of Market Financial Solutions (MFS). being spent on roads. Increasing the marketability Through his guidance, leadership of new builds will be an important part of tack- and expertise, MFS has successfully ling the housing crisis, and the preconception they become one of the most prominent are inconveniently located is widespread, so this bridging lenders in the industry, renowned for its government would do well to consider significant ability to address complex cases through a tailored investment. Considering how both parties agreed and transparent lending service. Prior to estab- to massively increase spending after the election, lishing MFS in 2006, Paresh was a senior this hopefully will be a matter of some consensus. professional consultant whose experience extended from working in one of the top 5 management consultancy firms to setting up an independent investment group. 12 The European Financial Review December - January 2020

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Innovation Shake up the Raw Material Trading Landscape in Pharma, Veterinary, Food and Feed An online trade platform designed and introduced by Kemiex and Atradius is revolutionising the B2B global trade landscape for APIs, vitamins, and other food and feed additives by integrating digitalisation and credit insurance in a sophisticated network ecosystem. T he annual trade volume for active pharmaceutical ingredients (APIs), vitamins, and other food and feed additives is estimated at USD 300 billion, of which approximately 90% are traded based on long-term contracts. With a secular shift of production to China and India and increasingly volatile markets, the share of spot transactions is growing. zzinto a rather secretive spot market brokerage industry. Current trading processes are often time consuming, opaque, and limited to personal networks. In this complex environment, trading network Kemiex and credit insurer Atradius are the first to offer In this complex environment, trading network Kemiex and credit insurer Atradius are the first to offer an online trading platform that helps to easily identify reliable and compliant counterparties and conduct trade in a safe way at the click of a button. 14 The European Financial Review December - January 2020

an online trading platform that helps to easily The platform aims to decrease the number of identify reliable and compliant counterparties touch points in the sourcing process, and yet, and conduct trade in a safe way at the click of secure that all stakeholders comply with a button. restrictions and regulations accordingly. Trusted and Secure animal health and nutrition industries. Kemiex’s Nowadays, technology and digitalisation are success and market acceptance are noteworthy disrupting multiple and traditional trade ecosystems and outstanding. The platform has already progressively and at a faster pace. In line with attracted hundreds of B2B companies in the this trend, the partnership between Atradius and respective sector by now, and its premium Kemiex is setting new and unparalleled standards network is flourishing rapidly. for security and trust in B2B marketplaces for raw materials in the life sciences industries by means of Atradius, operating across 54 countries, is one a revolutionary online platform. of the world’s leading credit insurers and an avid supporter of innovative technologies to serve With this digital solution, the future of customers in the most efficient way. Apart from exchanging raw materials between buyers and credit insurance, Atradius is also leading in other sellers on the global spot market are brought financial services such as bonding, collections, in today. The platform aims to decrease the and reinsurance. number of touch points in the sourcing process, and yet, secure that all stakeholders comply with Through the first of its kind strategic restrictions and regulations accordingly. partnership with Atradius, transactions occurring on the platform can be insured right Combined Expertise away. Atradius will provide Kemiex’s customers The Swiss-based Kemiex is an independent credit risk insights and invoice credit insurance online trading platform for commerce of for single transactions between traders, sellers, commoditised additives, vitamins, amino acids, and buyers. APIs, and other substances for the human and The Swiss-based Kemiex is an independent online trading platform for commerce of commoditised additives, vitamins, amino acids, APIs, and other substances for the human and animal health and nutrition industries. europeanfinancialreview.com 15

Innovation In a world where trade increasingly takes place online, Kemiex and Atradius offer the comfort of doing this in a trusted environment that is ready for the future. In order to build a holistic network and assure risk mitigation expertise to provide, through a high level of trustworthiness and product Kemiex’s platform, single invoice insurance quality among stakeholders, Kemiex has outlined and financial insights, supporting Kemiex’s strict onboarding rules and a quality management customers in making smarter decisions across system overseen by a qualified person. In addition, their trade deals. the platform has a systematic monitoring structure that renews members’ trade excellence The platform has already benefitted multiple scoring after every finalised transaction. This buyers in the acquisition of raw materials, provides a meticulous account of the entire trade and they have been able to increase product stream by continuously assessing the behaviour availability and reduce purchase prices in and reliability of the transaction counterparts parallel. At the same time, sellers kept their throughout the transaction. margins stable. Both effects have positively influenced the short- and long-term growth of Added Value businesses. In a world where trade increasingly Being a Kemiex stakeholder minimises takes place online, Kemiex and Atradius transaction lead times and allows businesses to offer the comfort of doing this in a trusted offer more competitive prices while staying in environment that is ready for the future. full control of trading activities from A to Z. Simultaneously, Atradius is using its years of Why wait any longer to join? Have a look at www.kemiex.com or www.atradius.com Atradius, operating across 54 countries, is one of the world’s leading credit insurers and an avid supporter of innovative technologies to serve customers in the most efficient way. 16 The European Financial Review December - January 2020

How can you Business success is often achieved through adaptability. adapt your In retail it is no different. The changing balance between business to the bricks and clicks requires a credit management approach changing market? that efficiently insures bad debts, monitors unpaid invoices and collects outstanding debts. Atradius can provide you with that credit management package enabling you to trade with confidence in the ever changing markets. Protect your business against bad debts, go to atradius.com Credit Insurance | Debt Collections | Business Information

Accelerator Series Interview with Mr. Graham Bright JP HEAD OF COMPLIANCE AND OPERATIONS EURO EXIM BANK Euro Exim Bank is an innovative global financial insti- tution with head Office in St. Lucia and representative office in London. In this exclusive interview with their Head of Compliance and Operations, Mr Graham Bright, he provides revealing insights into the exciting developments in the trade finance industry and beyond. He further shares his views on the broader ethical, social and people issues that are intercon- nected and indispensable elements in making the bank a global success. Good day, Mr Graham Bright! It is such an honour to have this interview with you. In today’s fast-paced business environment, what do successful leaders such as yourself have at the front of their minds each and every day? What is important? For me, not profit or income, but having defined purpose and direction, trying new things, being adaptable and open to change, encouraging talent, and, importantly, appreciating the most precious commodity of all, namely time, and making the best use of it. Common traits of successful people include reading and learning, appreciating and creating lasting trusted rela- tionships, sharing experiences, doing things right and doing the right things, philosophies to which I fully subscribe in my role as a sitting UK magistrate, and in my private and work life. 18 The European Financial Review December - January 2020

Above all, one should be able to look back management is challenging, and we are fortunate over a day and say, “I achieved something of in that today we deal with relatively small trading note and made a difference. volumes, where identification, measurement and management are relatively simple. Euro Exim Bank is the world leader in trade finance solutions for global corpo- For larger companies, having a meaningful rates and trade companies. Can you tell us high-level view, understanding all the elements what sets you apart from other trade finance and getting value from the data is a major companies? Which sectors and industries challenge. The only way to ensure effective will benefit most from your services? management is investment in and implemen- tation of technologies where standardisation, We differentiate ourselves through a number data normalisation across platforms, rational- of aspects, namely time, cost-effectiveness of our ising of systems and reusability of information products, specialisation, locations and people. are commonplace. Primarily, our aim is building long, lasting The use case for distributed ledger tech- relationships with clients. Finding and keeping nology in payments where structured data is clients is key to cash flow and ongoing busi- standard is well proven, and we see that it may ness supported by our advanced technology be successfully applied when assessing the issues platform, accessibility and participation with and possible remedies in tackling fraud with payments technology leader, Ripple. KYC/AML and compliance. Coupled with our competitive rates and DLT can also provide the technology to market focus across Asia and Africa, we, along improve heavy, non-standard, data-bound with our agents and partners in strategic loca- processes. Addressing the fundamental issues tions, serve corporate clients in connecting the of internal, intra- and interbank data sharing, players in the trade ecosystem both economi- DLT may assist submissions and oversight with cally and efficiently. regulators, and more rapidly identify activity in foreign accounts used for illegal and fraudulent Big data, distributed ledger technology drug- and terrorist-financing transactions. and AI are on the rise in today’s era across diverse industries. Can you tell us about Our aim is building long, lasting relationships their different roles and impacts on the with clients. Finding and keeping clients is key to cash trade finance industry? flow and ongoing business supported by our advanced technology platform, accessibility and participation Our understanding of big data is a massive with payments technology leader, Ripple. volume of both structured and unstructured data that exceeds the processing capabilities of For KYC, AML and due diligence across an traditional database and software techniques. enterprise, proliferation of paper, identification of false positives, multiple submissions of data, In trade, with the complexity and scope of uncertainty in identity assurance and manual the ecosystem, it is easy to see how multiple reconciliation times may be drastically reduced. parties, goods, services, buyers, sellers, freight specialists, insurers, inspectors, customs regu- Coupled with more efficient verification lation and compliance across over 200 cultures of KYC data, rapid, cost-effective client and jurisdictions can create data on a massive onboarding, faster loan servicing and effi- scale. And volumes are growing year on year. ciency in creation, communication and one-touch handling of trade documents will We have identified 12 distinct big data “Vs” enable banks to offer long-lasting, cost-effec- common to our business, namely Volume, tive customer experience. Variety, Veracity, Velocity, Viability, Value, Variability, Visualization, Validity, Venue, Vocabulary and Volatility. Finding individual data elements and understanding the impact on operations and europeanfinancialreview.com 19

Accelerator Series refinement ensures a better operating experi- ence internally, expanding the use of digitisation and advanced analytics. Whilst banks should not underestimate Euro Exim Bank offers friction-free and the investment and commitment in terms of instant trade solutions through its part- budget and resource to implement such DLT/ nership with Ripple. Can you tell us how blockchain technologies, failure to plan, act and blockchain technology enhances the trans- compete will have a serious impact on long-term action speed, while ensuring security and institutional viability. safety? Can you tell us more about your part- nership with Ripple and the development it As part of our ‘future-ready’ system capa- has brought to Euro Exim Bank? bilities, our Simplex trade platform embeds DLT/blockchain technology, with payment Ripple is not just about cryptocurrency. It is APIs, more automated and integrated processes an innovative technology company with a finan- covering identity assurance, real-time company cial network capability (RippleNet) handling data access, PEP and sanction lists with the real-time, frictionless transmission of payments benefits of full compliance and due diligence. across a secure decentralised DLT infrastruc- ture, covering both fiat and non-fiat currency. Artificial intelligence is intelligence demon- strated by machines, in contrast to the natural We have implemented Ripple xCurrent, intelligence displayed by humans. At EEB, AI speeding up and ,securing real-time payments, is used within applications to aid our staff in and On-Demand Liquidity, enabling immutable reviewing trade transactions faster, identifying payouts in local currency without the need for exceptions and supporting complex risk- exchange into dollars or for traditional corre- based decisions. spondent banks, through use of the Ripple XRP digital asset, which is a game-changer in Unlike the programmed, automated trading reducing capital liquidity requirements. systems prevalent in high-volume, real-time deriva- tives and equities markets employed to capitalise Whereas in the past, client access to funds with competitive advantage, our ultimate decision and foreign currency meant competition in process remains in experienced human hands. world markets was impractically expensive and restrictive, through service delivery with other AI has helped to streamline time-consuming, RippleNet participants, customers can achieve highly manual processes associated with high-volume, frictionless, low-cost, secure, fast, reviewing growing volumes of global trade guaranteed payments and instrument movement transactions. Its implementation and continual across the globe. Euro Exim Bank has earned an excellent reputation for its comprehensive compli- ance policies. What are the unique features of Euro Exim Bank for anti-money laun- dering and fraud prevention? AML and fraud prevention are just some of the challenges rising in importance to all financial As part of our ‘future-ready’ system capabilities, our Simplex trade platform embeds DLT/blockchain technology, with payment APIs, more automated and integrated processes covering identity assurance, real-time company data access, PEP and sanction lists with the benefits of full compliance and due diligence. 20 The European Financial Review December - January 2020

institutions and combating these has With a dedicated IT for technology and education, and the grown into a lucrative industry with a level team, we continuously overall lack of finance options, many of seriousness that permeates throughout review and enhance companies are actively discouraged from all commercial operations. Fraudsters our systems, preferring starting their trade journey. and dedicated cyber attackers follow the our own controlled, money, and banks by their very nature are protected development Recognised by the WTO and IFC, such a target that, even with extreme vigi- environment. trade finance has been vulnerable to lance and significant investment across all international banks reducing their expo- parts of the organisation, it is no longer exporters around the globe, has never sure to, and relationship with, market a question of “if ” an organisation is been more challenging. participants, namely de-risking. compromised, but “when”. Trade finance is a safe form of finance Since the global financial crisis, UK banks have not been immune to but it is commonly perceived that the major institutions have steadily reduced system attacks, with client data stolen terms and conditions of the trade itself and, in some cases, completely ceased and online account access denied. are subject to high risks. Moreover, their trade finance activities, especially And we are seeing more sophisticated whilst SMEs make up the majority of in supporting emerging markets in attacks from multiple parties, all with players, they are still more likely to have developing countries. the purpose of maliciously control- requests for finance rejected than any ling computing environments and, in other category of firm. And in two- Originally, de-risking was driven some cases, complete infrastructures, thirds of rejection cases, traders do by the burden of regulatory compli- or destroying the integrity of the data not seek alternative financing, simply ance related to money laundering and or stealing controlled information. because it is not available. terrorism financing. However, the significant costs of maintaining rela- With a dedicated IT team, we In terms of unique challenges, primary tionships is now a main driver, as banks continuously review and enhance our checking and responsibility for due dili- rationalise the quantity and quality of systems, preferring our own controlled, gence does not stop with the buyer, active correspondent relationships and protected development environment. as KY3P (know your third party) and nostro accounts. Accordingly, we have implemented increasing FATCA (Foreign Account security with a formal policy, countering Tax Compliance Act) requirements now Ultimately, servicing global, regional IT, operational and communications demand more documents and proofs. and local businesses necessitates a strong risks through pervasive use of backups, active participation and view of the firewalls, antivirus, limited-authority Coupled with more intense accounting, market, ‘feet on the ground’ to cope with access, truly private intranet and pass- tax and reporting obligations, the need different jurisdictions and understanding word change frequency. local culture, keeping up with regula- tions, focusing on specific markets and Vigilance is key, and is supported by understanding the flows and infrastruc- an experienced board-level team who tures that support those markets. understand the implications of threats and the ongoing need for investment Euro Exim Bank Limited is an innovative global financial institution with head Office in to ensure protection and the measures St. Lucia and representative office in London. needed to safeguard people and process as effectively as possible. They hold a \"Class A\" international banking license from Financial Services Regulatory Authority (FSRA) of St. Lucia. This license provides authorisation to conduct business What do you think are the unique with third parties across industries and geographies worldwide, exercising strong due challenges of compliance from a diligence, full compliance and operational excellence in our processes. trade finance perspective? Euro Exim Bank is an associate member of the Caribbean Association of Banks Inc Despite diverse geographies, regu- (CAB). Being a member of CAB offers them opportunities and knowledge sharing with lation, sanctions and transport issues, industry leaders that are applied to modernise their operations and customer service. underpinned by Incoterms guidelines first issued in 1936, compliance in trade, where millions of transactions take place daily between importers and europeanfinancialreview.com 21

Accelerator Series Uncertainty cultivates opportunity. The Our staff are professionals, and are treated as volume and value of global trade is growing, such, with a policy to match their experience and with an increased awareness of new origins ability. And we are currently undertaking a major of goods, free trade agreements and growing recruitment drive in India from the established trust and confidence in emerging markets. finance industry, which will result in doubling the size of the company in a short time frame. Whilst the rewards in emerging markets and the new world of truly global trade may be lucra- Their previous experience will allow fast tive, new participants should not underestimate the onboarding and rapid training, ensuring that teams effort, resources, obligations and risks involved. are as effective as possible in the shortest time. As an innovative financial institution that Our key We do not micro-manage, such that staff are business asset empowered regarding sales, creating trade instru- uses advanced technology, how does Euro is our people. ments and generally in their daily activities to We maintain complete tasks diligently. Exim Bank assess the importance of balancing close personal relationships We have developed training materials and a strict and incorporating the human element amidst with clients and employee handbook, mandating adherence to policies, know our people which provide professionalism and a consistent client- the digitalisation? very well. oriented approach with humility and trust, ensuring that reputation is maintained and that our business Our key business asset is our people. We maintain continues to grow dynamically in challenging times. close personal relationships with clients and know our people very well. Amidst the uncertainties of Brexit and the trade war between China and the US, how do With the volume of documents and general data you see the dynamics of global trade changing? on the rise, whilst the vision of a paperless office in trade is some years away, integrated, information-rich Uncertainty cultivates opportunity. The volume systems are fundamental to servicing global clients. and value of global trade is growing, with an increased awareness of new origins of goods, free Digitalisation will normalise and allow full inte- trade agreements and growing trust and confidence gration of standard and non-standard data, resulting in emerging markets. in golden records which can be analysed and reused, without the need to store multiple versions in many Past restrictions to market entry included costly locations. However, institutions should not under- access to exchange-traded currencies, corruption and estimate the time, effort and investment needed to theft, low in-country liquidity and difficult-to-navi- achieve true digitalisation. gate transport links (with many landlocked countries restricted from port access). When implemented correctly, benefits include rapid movement, data authenticity, accessibility and more efficient storage of trade documents. In future, we would expect automated document handling, information gathering and the ability to interrogate and derive value from content to increase, whilst reducing physical handling times and aiding exception processing. Until that time, as sectors of our industry create more standard documents, share data in common formats and agree more international standards, we will still see a blend of technology and physical handling of documents for some time yet. Trust is a difficult attribute to measure and a delicate dynamic to maintain. How do you maintain this with your employees? 22 The European Financial Review December - January 2020

The phenomenon of the rapid economic but also safeguard and promote long-term Tomorrow’s winners growth of East Africa, with access to much- financial welfare. will be those that read needed metals and agricultural goods, cannot be trends, adapt working ignored, nor can the ease of doing business in How do you keep up with the changing needs practices, embrace Singapore and Dubai, making them ideal areas of your customers? What are your top prio- the challenges of for efficient trade. rities when it comes to customer relationships? change, and look at new markets with Whilst trade wars and tariffs persist between Our clients, the global buyers arranging greater margins which the US and China, new trade agreements are imports of goods and services across multiple were once perceived being sought, with attention turning to new jurisdictions, require the keenest price, guarantee difficult to work with. supply routes. And, as evidenced by the result of document delivery, secure payments and of the recent UK elections, a new mood of unhindered receipt of goods. optimism is being touted in regard to significant UK/US trade deals. From our perspective, gathering client requirements and listening to local, national and What are the other challenges facing the international trends is fundamental to our busi- trade finance industry? Where do you see ness. We are very active participants in industry opportunities for growth? events, international conferences and exhibi- tions, and contribute to the financial press as Tomorrow’s winners will be those that read thought leaders and trade specialists, and closely trends, adapt working practices, embrace the liaise with our local teams as they meet their challenges of change, and look at new markets customers personally. with greater margins which were once perceived difficult to work with, e.g. in Africa. With the span of your successful profes- sional career, can you share some tips The opportunities in working with developing or advice for those aspiring to enter and nations providing raw materials and technology succeed in the financial industry? are immense, driven by increased experience, acceptance and trust, a drive for higher financial I have been fortunate to work in various inclusion, innovative free trade agreements, trusted roles across the industry, and it is important to low-cost applications delivered through smart accept that where you start or where you think phones supported by Ripple-enabled real-time you wish to be is not where you may ultimately payments in fiat and cryptocurrency transactions. find your niche. Financial inclusion remains a challenge, with There is a huge variety of roles across the ease of access and delivery of services to an esti- different parts of the financial ecosystem, from mated 3 billion adults currently unbanked. Rural front-office activities, including sales personnel economies deal mainly in cash, physical banks and corporate finance, middle-office roles are remote and costs of maintaining low-value managing risk and IT resources, and back-office accounts are high. The impact of cost-effective, functions providing administrative, support and secure mobile technology, linked with innovative payment services. payment challengers, is changing the dynamics of trade across the financial landscape. Each is a vital component to the efficient running of an organisation and suitably skilled The winners, apart from the account holders, people are required at each stage and level. will be institutions able to scale up operations Whilst trade finance may be perceived as a ‘grey’ with low-value, high-volume transactions. The industry, with most employees being ‘more next key deliverable will be the ‘value-add’ of mature’, the industry is dynamic and should simpler transfers, cheaper savings and pensions appeal to a wider range of younger entrants. products, not just for day-to-day transactions, As it spans gaining experience in legal, europeanfinancialreview.com 23

Accelerator Series GROWING A BUSINESS, KEEPING CUSTOMERS AND PROTECTING IT ARE NOW KEY PRIORITIES, AND THAT REQUIRES THE RIGHT PEOPLE AND MINDSET. compliance, transport, insurance, quality inspection, commitment to good causes and to making a differ- sanctions, regulation and client-facing sales, it is an ence for underprivileged, disabled and disadvantaged ideal industry sector in which to build and hone communities and the environment across the globe. effective skills and a long-term, fulfilling career. In addition to our stance on working with clients, Experience is everything, from understanding dealing in goods of ethical origin and looking to the importance and availability of cash flow, reduce carbon emissions and footprint, we are ever implications of cleared funds, e.g. efficient nostro mindful of the wants and needs of others. reconciliation processes, ultimately knowing what funds are available and where they are. Over the past three years, we have sponsored major fundraising events with themed concerts in Also, in today’s fast-moving financial environ- London, resulting in donations of thousands of ments, continuous learning is vital in the use of pounds to local and international charities. Some efficient payments channels, FX and funds settle- of the organisations which have already benefited ment with same-day obligations, customer and deal include the Cerebral Palsy Association of St Lucia, onboarding, risk profiling and all-important due dili- Montgomery Heights Children’s Foundation in gence, KYC, AML, PEP and sanctions processes. Zimbabwe, UK Downs Syndrome charities and Great Ormond Street Hospital, and the Maa Kupa Growing a business, keeping customers and Foundation, who assist local charities for the poor protecting it are now key priorities, and that requires and needy in the UK, India and Africa. the right people and mindset. Regarding our influence in the trade finance Lastly, can you share any stories or exam- sector, we have achieved recognition and industry ples of how Euro Exim Bank is making a awards (CFI – 2 years running, Mirror Review, difference to others, or how you’re making an International Finance). influence in your sector? We are featured in fintech finance online videos As an international bank with representation in St on industry challenges, open banking and the culture Lucia, India, the Far East, the Middle East and the of innovation, and quoted on the GTR website UK, our management were keen to demonstrate our regarding articles on African fintech during the Cape Town Conference, (see https://www.gtreview.com/ Executive Profile supplements/gtr-africa-2019/african-fintech-show- case/), and other industry sites. We also provide Graham Bright is the Head of Compliance and YouTube updates on trade finance instruments. Operations at Euro Exim Bank. He has more than 35 years of experience in the finance industry in a number EEB are contributors to a number of high- of roles, working collaboratively with industry utilities, profile international magazines, including The World regulators and central banks, and in consulting and Financial Review, CEO Insight and European partner/channels management. He holds a BA (Hons) Business Magazine, and EEB Head of Compliance degree in Business Studies, and is also a serving UK Justice of the Peace in and Operations, Graham Bright is a regular keynote the magistrates’ court, having sat on criminal and proceeds of crime trials, speaker at GTR, TXF and Gulf Trade events, where and he also sits on Crown Court appeals. Graham is a regular contributor we are also main sponsors. to trade journals (GTR, TFR), with published thought-leadership articles in the financial technology press, and a speaker at international trade industry Thank you very much Mr Bright. It was a conferences, such as SIBOS, GTR and Ripple Regional events. pleasure speaking with you. 24 The European Financial Review December - January 2020



Trade Finance New Opportunities in Old Markets: the Changing World of Global Trade Finance BY CHRIS NEWMAN AND ANDREW FRASER With the decade rapidly coming to an end, The trade finance increasing. Meanwhile, competition over loan orig- risk indicators suggesting an impending industry experienced ination is pushing down yields at the very moment economic downturn, and the market’s investors should be demanding greater returns to attention focused on heightened geopolitical risk, its greatest reflect the risks being taken. it is no wonder investors are seeking uncorrelated developments during strategies in their hunt for return. For some, this the Renaissance, when We believe there are certain areas of private means reshaping portfolios with alternative strate- credit that will continue to offer secure, uncorre- gies that offer better protection for investors’ capital. the Medici family lated investment opportunities should a recession pioneered the letter hit in the new year. Specifically, we see compelling Looking ahead to 2020, where should investors of credit as a financial openings in Commodity Trade Finance, which turn to find strong, risk-adjusted returns from has – until now – remained relatively untapped liquid investments when opportunities in tradi- instrument by investors. tional markets have been exhausted? We believe the answer can be found in one of the oldest, and Trade Finance is a longstanding pillar of the least fashionable, corners of the global economy: global economy. While its roots can be traced Trade Finance. back thousands of years, the industry experienced its greatest developments during the Renaissance, The search for return has led many institutional when the Medici family pioneered the letter of investors to alternative investments in private markets credit as a financial instrument2. Remarkably, this – and at staggering rates. This year alone, US$778 innovation continues to form the key part of collat- billion of new capital has flowed into the space due eral for trading opportunities today. And now, more to a growing belief that private markets are essential than ever before, institutional investors outside of for diversified participation in global growth1. the realm of banking can access it. Direct lending, in particular, has surged as funds Large financial institutions and trading houses continue to fill the space left by traditional banks, have historically supplied the majority of credit which have been forced to scale back as a result of needed to finance the flow of trade. The imple- post-crisis regulations. This shift has led to some of mentation of Basel III in January 2019 and the the largest capital flows into corporate credit right pending requirements of Basel IV have changed at a time when corporate credit risks may well be this, creating significant challenges for the 26 The European Financial Review December - January 2020

For those looking towards In actuality the risk is low. The risk products globally to the major oil compa- alternative private credit profile measured by defaults is better nies. Chris began his career in energy in strategies, we maintain than BBB-rated corporate bonds, 2008 at BNP Paribas’ commodity busi- that trade finance should with overall default rates of between ness, responsible for originating all new not be overlooked. 0.04% and 0.21% 2. More importantly, business within BNP Paribas’ trade the recovery rates are far superior. To finance franchise and creating an inte- European banking landscape. As illustrate the diversification benefits grated strategy combining derivatives methodologies for determining banks’ for investors, these statistics remained with the physical financing business capital requirements are being pressur- virtually unchanged during the finan- globally. He then went on to establish a ised and revised, innovative managers cial crisis, where the financial markets team that pioneered technical derivative have stepped in to fill the funding collapsed at the same time as the structures within physical pricing gap, recognising the attractive char- world commodity prices collapsed. contracts, enabling BNP Paribas to offer acteristics of Trade Finance and the effective risk management solutions to opportunities it offers investors. Additionally, investors often fear their clients. that investing in alternative credit A general lack of understanding of means capital is tied up for years, Andrew Fraser joined Trade Finance often means it is viewed but Trade Finance offers liquidity Audentia in 2019 from as a ‘niche’ asset class. In reality, the (on average 15-50 days duration) Wake Trade Technologies, opportunity set is broad; in fact, the and can be accessed via open-ended an investment firm applying term ‘trade finance’ covers a huge structures. By their very nature, trade machine learning tech- range of activity valued at over US$16 finance transactions are self-liqui- nology that he co-founded in 2014. trillion annually2. Trade Finance invest- dating, asset backed and transparent, Since 2014, Andrew has served on the ment strategies facilitate economic allowing an investor to understand investment committee for Perspective growth in developing economies by the returns and tenure before allo- Investments, an investment business providing financing to many fami- cating capital to the transaction. This offering a range of liquid and illiquid ly-owned SMEs and supplying global will be valuable if a downturn does investments. Between 2008 and 2014, consumers with foodstuffs and energy. come. Andrew worked at Winton Capital Despite its global impact, most inves- Management as Head of Americas and tors remain unaware of the depth of The threat of a global recession Institutional business development. the opportunity. may continue to loom, increasing Prior to Winton, Andrew was the anxieties for advisors and their Director of Institutional Business Growth of this investment class investors. For those looking towards Development and a member of the has been largely hampered by false alternative private credit strategies, we Executive Management team at assumptions about the invest- maintain that trade finance should not Henderson Global Investors. ment risks in Commodity Finance. be overlooked. Investors’ hesitance stems namely References from the belief that they are taking big Chris Newman, Prior to 1. https://www.mckinsey.com/~/media/McKinsey risks through exposure to price move- co-founding Audentia in /Industries/Private Equity and Principal Investors/ ments in the cargo of commodities, to 2018, Chris established an Our Insights/Private markets come of age/ emerging markets and currencies, or energy company in Private-markets-come-of-age-McKinsey-Global- to the credit worthiness of the SME. Singapore delivering oil Private-Markets-Review-2019-vF.ashx 2. https://www.cambridgeassociates.com/research/ trade-finance-an-expanding-opportunity-for-institu- tional-investors/ A general lack of understanding of Trade Finance often means it is viewed as a ‘niche’ asset class. In reality, the opportunity set is broad; in fact, the term ‘trade finance’ covers a huge range of activity valued at over US$16 trillion annually. europeanfinancialreview.com 27

Interview Regulated by CySEC, Trust Capital TC is team, debriefings with shareholders, and getting up committed to providing the most trusted to speed with unanswered emails. and secure trading platform for their clients. Among the innovative features that charac- The second half of my day is all about over- terise the company is its educative approach to seeing the day-to-day operations, along with setting its client base, which includes providing them strategies to take us to where we want to be in with trading seminars, personal mentoring and the foreseeable future. It’s all about setting short-, webinars. In this interview with their Executive medium- and long-term milestones to achieve. Our Director Ms. Farah Hawilo, she tells us more lunch break is at 4 p.m. and usually takes place in the about this unique feature, and describes the office, followed by one-on-one and group meetings ethos that drives the company. with my team members. Ms. Hawilo, thank you for sharing your valu- able time by doing this interview with us. To start with, can you give us a glimpse of what a regular workday for you looks like? Unlike the sleepless market that governs our business, I try my best to get my rest before waking up at 6 a.m. to put in a quick 30-minute workout. My dose (or two!) of espresso is a must before I head to the office. My driving route happens to come with a sea view, and this makes the ride to work even more enjoyable. Once in the office, the first half of my day is comprised of quick follow-up meetings with the 28 The European Financial Review December - January 2020

As we are a company dealing with vast volumes of customer investments, we prioritise our services with the utmost safety and security, while ensuring that our customer portals are designed with firewalls and adhere to every safety regulation. As a relatively new company in the trading success for the group in the forex market in industry in Europe, established in 2018, Europe and globally? what do you think are the unique features As we are a company dealing with vast volumes of customer investments, we prioritise and advantages offered by Trust Capital TC our services with the utmost safety and secu- rity, while ensuring that our customer portals that set it apart from its competitors? We put the client first and provide top-notch 24/5 service. We value our clients’ assets and take it upon ourselves to make sure we educate our client base as much as possible. As rewarding as the industry can be, risk and reward are forever correlated. So we try to hold our clients’ hands and show them how these risks can be minimised by providing educational seminars and webinars on the best trading practices. Moreover, we provide each client with constant live updates on their trading account status in order to assist them in making optimal trading decisions. We offer a more personalised family-office- style experience by dedicating a staff member to each client, but going about it with the highest global standards. Whether it’s responding to in-depth queries or simply assisting first timers, our team is ready to help. Our business is strongly regulated by CySEC, so that our clients’ funds are segregated from the company’s funds. Moreover, our clients’ accounts are insured with negative-balance protection, basically implying that they can never lose more than they initially invest. Trade responsibly! We have a knowledgeable team, one that is always learning how to service clients better. Given the client-oriented nature of our business, we ensure that every Trust Capital TC member has years of experience under her or his belt, and we are expanding our skillsets constantly. With the fast-changing tech- nologies and innovations in the financial industry, what are your strategies for achieving greater europeanfinancialreview.com 29

Interview Trust Capital TC is a are designed with firewalls and adhere to every One of the key focuses of Trust Capital TC is financial intermediary safety regulation. offering the highest level of customer satisfaction. specialising in online We ensure complete transparency with the client trading on a variety of With the assistance of our analysts and at each stage, and clearly explain every aspect of investment products experts, we’re always striving to innovate and trading with Trust Capital TC. We provide educa- such as FOREX, advance our trading environment. tion to all clients with no cost, whether they’re Metals, OTC Futures beginners to the world of forex, or advanced. and Equities. It is Similarly, would you share with us your authorised by Cyprus current challenges and observations on One of the unique approaches of Trust Investment Firm CIF and the latest trends and developments in the Capital TC is the use of trading seminars, regulated by the Cyprus trading industry? personal mentoring and webinars to attract Securities and Exchange and retain clients. Could you tell us more Commission (CySEC). The forex industry is becoming more about these initiatives? demanding and challenging with all the new regulations. Nevertheless, we use this to our Like in any other realm, in trading too, it’s advantage and it motivates us to break bound- important to get your basics right. To start aries, while committing to our regulatory trading, you need to have at least a surface- requirements. This helps Trust Capital TC to level knowledge of forex and some essential stand a mile ahead in the industry, due to our trading terms. We believe that people should strong regulation and customer security. be educated and made comfortable with the technical aspects before they start trading. The age-old maxim says, “The customer Otherwise, it’s going to be just like playing is king.” What is your focus when it comes football without a warm-up. It’s important to to ensuring the satisfaction of your clients? understand the rules of a game you are inter- How do you deal with their changing ested in learning. That’s why we developed our demands and behaviours? training programs to be highly customised to satisfy all levels of traders and help them under- stand every corner of trading. We host live seminars and offer live webinars (on demand). Trust Capital TC recently launched the latest Affiliate Marketing Program. Could you tell us how it works and the benefits and values it offers? Trust Capital TC’s recently introduced Affiliate Marketing Program allows clients to partner with us in our marketing campaigns. An affiliate can drive traffic from their website to Trust Capital TC and receive competitive compensation rates. The steps to register as an affiliate are simple. Just fill in and complete a question- naire, and once it’s approved by the team, we begin the partnership. One of the key focuses of Trust Capital TC is offering the highest level of customer satisfaction. We ensure complete transparency with the client at each stage, and clearly explain every aspect of trading with Trust Capital TC. 30 The European Financial Review December - January 2020

With your commitment to providing the best trading experience for your customers, what are the short- and long-term plans for Trust Capital TC and what else can your clients expect from you in the coming years? The short-term plan is to make sure that all our clients are satisfied and engaged with our services and our commitment to delivering a smooth trading environment. The long-term strategy is to listen to our clients and create plans that will be more attractive and person- alised. We are always aware of the gradual shift towards technology solutions and AI, and the positive implications it will bring to the industry in terms of facilitation. We also acknowledge the risks that come with it; therefore, we’ll add more focus on enabling each trader to “grow gradually with TRUST”. Being a successful female leader, how do The core value of that a high-calibre business leader like you achieve a work-life balance? What are Trust Capital TC is to your tips for women leaders in achieving work as a full-fledged you does to recharge during their day off the life they desire?' team and achieve our ultimate goal: from work? Being organised and setting priorities are customer satisfaction. the important ingredients of achieving a I don’t believe in a “perfect” work-life vibrant work-life balance. Time management is balance, as I commit to work and don’t stop another important aspect in order to cover all till the task at hand is done. However, time the checkpoints within deadlines. We don’t find management and prioritising – that’s the key. We time, we make time; this is what I follow when all have the same 24 hours in a day, and it’s all it comes to effective time management. about micro-managing your activities. I organise the schedule of my day the night before, and On a lighter note, we are interested to make sure I commit to the timings. My alone know what the top things or activities are time is sacred, and I make sure to disconnect for a while, outside the work environment, as it empowers and recharges me for work every day. Exercising, yoga classes and a nice-quality dinner add more flavour to my life and fill me with positive vibe. Executive Profile Lastly, can you share with us the most significant core value of Trust Capital TC Ms Farah Hawilo is the executive director of Trust that you and your colleagues live by? Capital TC LTD. She has obtained her diploma in busi- ness, the core direction of which was in finance. She has The core value of Trust Capital TC is to work proceeded and succeeded on professional examina- as a full-fledged team and achieve our ultimate tions related to risk management (Certification in Risk goal: customer satisfaction. Working as a team and Investment), anti-money laundering (Certificate brings us together and helps us grow stronger. in Compliance and Anti – Money Laundering) and Loyalty, honesty and friendliness are some of CYSEC’s Advanced exam (CN 4204). She has hands-on experience working in the key words that we want our team to feel the financial services sector specifically in the FX industry since she has been strongly about within the company. involved from early age in many departments of FX entities, such as back office and marketing whereby she had the chance to promote products taking into Thank you very much Ms. Hawilo. It was consideration the applicable legislation and procedures. a pleasure speaking with you. europeanfinancialreview.com 31



Wealth Management Millennials and their by 2030. This ‘Great Wealth Transfer’, Money: Predictions for the the considerable wealth Millennials Great Wealth Transfer are due to inherit, means firms need to assess their current digital capabil- BY BEN REVILL ities and honestly evaluate how ready they are to meet the expectations of E verything you think you know the UK are not the young, Instagram- this next-generation of investor. And about customers’ experiences obsessed teens they’re sometimes whilst some firms have recognised the with money has changed. This assumed to be. In fact, by 2025, need to pivot and update their client is due to the 17 million people domi- Millennials will comprise three quarters experience offerings, many firms are nating the job, housing and money of the global workforce. still lagging behind. market – Millennials. The Great Generational Wealth Transfer Why is the client experience impor- They’re leading and founding busi- Though Millennials currently hold a tant? As the first generation to grow up nesses, buying their first, second and smaller percentage of investable assets surrounded by the internet, Millennials third homes and dominating the finan- than Baby Boomers and Generation are digital natives. As such, they have cial market as Baby Boomers enter X, estimates suggest that Millennials a very close relationship with tech- retirement age. Aged 21-39 (though are positioned to receive more than nology that previous generations do it is hard to determine an exact, glob- USD68 trillion of inheritable wealth not. With the transfer of wealth to the ally agreed timeframe), Millennials in younger generation already happening, Some firms have recognised the need to pivot and update their client experience offerings, many firms are still lagging behind. europeanfinancialreview.com 33

Wealth Management Despite concerns from some quarters regarding the sharing of data and how much organisations today know about clients, overall, Millennials are generally happy to share their data as long they receive a modern, tailored client experience in return. Millennials expect that the experiences they have services, risk losing out when competing to win with their wealth management firm of choice will new clients. Likewise, those same wealth managers mirror the experiences that they have with the will also test the loyalty of the next-generation of multitude of other companies they interact with investor. Unlike older generations, Millennials are on a daily basis. For example, from retailers and less likely to stay loyal to a particular brand if a restaurants, to taxis and travel agencies, Millennials better offer or service can be found elsewhere. If expect to be able to go online whenever they a client does not feel that the customer experience choose, access their account details, speak to a meets their expectations, they will simply take their customer or client service representative (or even business elsewhere. a chatbot that uses the latest AI to replicate the behaviour of a human advisor), and conduct all ‘Traditional’ wealth management experiences of this on their phones, tablets, smart watches or might have been enough for Baby Boomers and Gen laptops. There’s no reason for them to assume that Y, Millennials want more from their wealth firms. interactions with their wealth managers should be From greater flexibility and streamlined onboarding any different to the that an ‘always-on’, 24/7 digital processes, all the way to proactive, personalised engagement they experience in other industries. financial planning recommendations, there is no more room for a one-size-fits-all approach. Regardless of location, Millennials expect a modern client experience when interacting with And if you’re used to dealing with businesses their wealth manager. Those firms that are not who are happy with the status quo in regards to embracing the latest technology and implementing financial management – think again. Millennials it effectively to deliver high-level, competitive are not just getting started in their careers. They’re already CEOs, MDs, CFOs, founders and decision makers. If you don’t adapt and provide a superior service that meets their preferences, you could easily lose a business client as well as an individual client, and with it, a significant amount of wealth. So just how will money management change? More Data, Better Experience Issues surrounding data security regularly makes the headlines and for good reason. But despite concerns from some quarters regarding the sharing of data and how much organisations today know about clients, overall, Millennials are generally happy to share their data as long they receive a modern, tailored client experience in return. In order for wealth managers to effectively deliver the type of client experience the new gener- ation expect, investments in the latest technology and strive towards towards digital transformation are essential. A ‘digital-first’ wealth management 34 The European Financial Review December - January 2020

firm will find it can gain increased visibility into their no different in wealth management. For example, Millennials are clients full situation, tying in much of their personal the latest AI capabilities, can help relationship always on the go information, their interactions with the firm, their managers and advisors better serve every client by - there’s a reason investment preferences and more. surfacing intelligence that helps firms proactively that they are the provide advice regarding future investments and champions of This increase in data leads to more in-depth what clients should do next. And despite some fears flexible working. conversations and more opportunities to offer in some quarters that AI will eventually replace clients the solutions that are right for them, and human advisors, or that ‘robo-advisors’ will take at the right time, each tailored to their specific over, the reality is AI and automation will help firms wealth goals. All of this intelligence is held in a enrich the client experience, but it won’t replace Customer Relationship Management (CRM) human advisors. There will always be a requirement system. A CRM is a powerful digital solution that for experience and the ‘human touch’. Take the collates client data and provides firms with the 2019 survey by Wells Fargo/Gallup for example, ability to drill down into specific client profiles and that showed 84% of investors believe human advi- effectively analyse the data. An advanced CRM sors will be always be needed. solution enables wealth managers to offer a far more bespoke service, meeting the clients needs The future of financial advice in wealth manage- and expectations and in doing so, also helping their ment is the ‘Hybrid Advisor Model’; the emergence firm stand-out from the competition. The better of experiential human advisors supported by the the service offered, the closer the relationship and latest AI, automation and CRM capabilities. The the higher the level of retention. Hybrid Advisor Model enables firms to find a synergy between technology and human, combining the best The Wealth Management Landscape is only of both worlds. So whilst it is easy to think that in Going to get Busier a world obsessed by technology, everything must be People are no longer sticking with the same finan- digitalised, in the wealth management industry, where cial institutions for long periods of time out of experience and expertise is a valuable commodity, the simplicity. With the advent of new technology in human touch will always be welcome. financial services, 57% of Millennials have said they would change firms for another if that one A successful Hybrid Advisor was to provide a superior technology platform. Model takes effort and time, but Historically, wealth transfers from one generation to the rewards are worth it. another have also resulted in 90% of heirs changing their advisors. And in another recent study, 73% of Of course, establishing a successful Hybrid respondents indicated that they are already engaged Advisor Model takes effort and time, but the in a relationship with more than one wealth manager. rewards are worth it. For example, with a custom- Clearly, the more you can do to to showcase your ised CRM solution tailored to a firm’s specific understanding of the next-generation of client and needs, advisors will be able to access detailed evidence your efforts in investing in the latest tech- intelligence that surfaces the best opportunities nology to meet their needs, the greater your chances and provides advice on how best to approach the of reducing clients transferring to a competitor. new opportunity based on historical data points. Modern CRM solutions also help break down the There’s no doubt the landscape is getting busier. silos that often exist in wealth management firms, With the advent of ‘challenger banks’ - those which meaning more data is shared amongst teams which focus purely on app-based, digital offerings and leads to a more comprehensive view of the client invest heavily in customer service such as Monzo and in turn, more bespoke services that can be and Revolut – you need a USP which will position offered. Technology also provides firms with more you as a leader in an increasingly competitive sector. The Hybrid Advisor Model will thrive Advancements in automation and artificial intelli- gence are helping organisations of all kinds and it’s europeanfinancialreview.com 35

Wealth Management intelligent marketing, communication and event and technology strategy in order to appeal to the automation tools, again helping to strengthen next-generation of investor so that they may retain client relations. And the right technology can the wealth that already exists within their firm and help streamline the onboarding process, turning ‘market their appeal to new clients in this increas- a usually laborious paper-driven process into an ingly competitive market. efficient, digital task that minimises frustration for both the client and the firm. From smart challenger banks to the rise in cryptocurrency and Bitcoin investing, Millennials are exposed to more diverse and technologically advanced financial opportunities every day. When it comes to digital transformation, financial insti- tutions are battling it out to try and stay one step ahead of the competition, but many are being left behind due to a misguided belief that what worked in the past will work for future generations. Add to this senior management and boards of directors that may be resistant to digital transformation, and the result is a firm that only realises their mistake not to evolve to meet the needs of a new generation when it’s too late. As Millennials take centre stage, firm must rethink their digital strategies now in order to appeal to a new generation of investors. A gener- ation poised to benefit from the greatest wealth transfer in history. Firms Need to be More Accessible Millennials are Ben Revill, Business Consultant at exposed to more Xpedition. Xpedition Wealth Manage- Millennials are always on the go – there’s a reason diverse and ment has already helped firms better that they are the champions of flexible working. technologically understand the millennial mindset, build As such, they’re less inclined to want to meet advanced financial a winning CRM business case, and help their wealth advisor in a specific boardroom, opportunities deliver a modern, digital, holistic client experience. at a specific time and in a specific location that every day. might not be suitable for them. And with mobile References banking poised to overtake high street banking in 1. http://blog.coldwellbankerluxury.com/a-look-at-wealth-mill the next two years due to rapid uptake, and two ennial-millionaires/ thirds of British high street banks already having 2. https://www.thedrum.com/news/2018/10/05/research-reveals- closed in the last thirty years, clients and advisors what-online-value-exchange-means-millennials-and-gen-z need to take note. Whilst not in direct compe- 3. https://www.efma.com/study/detail/26945 tition with retail banks, this shift in the client/ 4. https://www2.deloitte.com/content/dam/Deloitte/lu/Docume financial institution interaction provides a strong nts/financial-services/lu-millennials-wealth-manage- indication that clients want to be able to receive, ment-trends-challenges-new-clientele-0106205.pdf access and discuss their finances whenever, and 5. https://www.ey.com/Publication/vwLUAssets/EY-the- wherever, they are. Other wealth management experience-factor-the-new-growth-engine-in-wealth-manage firms are offering a modern, holistic client expe- ment/$FILE/EY-the-experience-factor-the-new-growth-engine-in- rience. Yours needs to too. wealth-management.pdf 6. https://www.finextra.com/pressarticle/78039/majority-of-inves- As the generation of investors in their 70s start tors-favour-human-touch-over-technology---wells-fargo transferring their finances to the heirs, it will be 7. https://www.theguardian.com/business/2019/jul/01/mob the wealth managers who are already showcasing ile-banking-to-overtake-high-street-branch-visits-in-two-years their digital prowess who will thrive. Others need to urgently shake up their current digital 36 The European Financial Review December - January 2020

Working with today’s entrepreneurs and trailblazers to make tomorrow great Family Office Management Consulting Ltd. 33 St. James‘s Square, London SW1Y4JS +44 (0)20 3170 5966 www.fo-mc.com



Interview Exclusive Interview with David Muscat HEAD OF AFFILIATES AND MARKETING, EAGLEFX A relative newcomer to the world of forex, the night before to give me that extra edge in EagleFX is an EagleFX has landed firmly and securely the morning, as I know my team and I are ready online Forex and in the sector, with a range of innovative to dive into our set tasks right away. This is a cryptocurrency STP options to make trading accessible and fantastic way to save time and it motivates my broker providing secure. Here, David Muscat, Head of team in that they are prepared for the day ahead CFD trading on Affiliates and Marketing, explains how the with clear aims and objectives. hundreds of assets company’s offering is of interest to begin- and optimal trading ning and advanced traders alike. EagleFX was founded just this year, in conditions within 2019. How has it been so far? Could you the award-winning Good day, Mr. Muscat, and thank you for share with us the story behind how the MT4 platform. the opportunity to have this interview with company started, and what is the vision and you! First off, for a business leader like you, mission of the firm? how do you jump-start a busy day, and what are your quick tips to improve productivity I am a trader myself and have been for some for a day’s work? years now. My favourite assets to trade are forex and trading forex with high leverage. I started Thank you for having me. It’s great to be here! to get fed up trading with unregulated brokers Well, I start the day like most people, I suppose. who would always hold on to withdrawals for The alarm goes, I get up, take a shower, get dressed no real reason, and often these withdrawals and prepare myself a cup of coffee. Coffee is never came! always very useful early in the morning. My morn- ings are pretty straightforward, to be honest. I was in a position where I had to take risks like trading with these brokers because it was I think the key to being productive during any the only way to gain access to high leverage. day is planning. I like to plan my following day As a result, we decided to create our own europeanfinancialreview.com 39

Interview We are a true STP ECN broker, so we can assure our users that orders will be filled, and filled quickly. We offer a maximum 1:500 leverage on forex and 1:100 on cryptocurrencies, with instruments backing into MT4. trading environment to start trading in, which Additionally, we have just launched a brand was directly connected to liquidity providers. We new affiliate scheme, where you can not only loved it so much that we opened it to the public, refer traders but they can, in turn, decide to be an so anyone in the same position as I used to be in introducing broker and the original IB can earn wouldn’t get ripped off. a commission from the referred people of your IB. Master IBs can potentially earn an additional As a new company in the trading industry, $1.00 on top of the standard $4.00 commission, would you tell us more about your competi- all thanks to our multi-tiered commission struc- tive services? What are the unique features and ture. This helps our affiliate programme to stand advantages that set you apart from other estab- out from the crowd and enables our users to truly lished forex and trading companies? boost their earning potential. That’s not all; we offer media packs where we can help you boost We are very proud of the fact that we offer a range your ad campaigns, free of charge. of products and services that are more commonly associated with tiered accounts – accounts with EagleFX operates with the goal of making certain set rules and ongoing costs. We offer high- forex trading easily accessible, secure, fast and leveraged trading with ultra-fast execution, tight profitable for traders throughout the world. spreads, and low deposits, with free registration. What are your plans or strategies to better serve your customers and to achieve this goal? We are a true STP ECN broker, so we can assure our users that orders will be filled, and filled quickly. Good question! Well, we have existing strategies We offer a maximum 1:500 leverage on forex in place when it comes to account finance. Our and 1:100 on cryptocurrencies, with instruments primary deposit method into EagleFX is bitcoin. backing into MT4. An innovative feature that sets Deposits can land within minutes but are subject us apart from most brokers is that as well as USD, to the speed of the blockchain. That being said, GBP and EUR, our clients can use BIT as their this deposit method eclipses outdated payment baseline currency with their accounts. This in effect methods such as wire transfers, which can leave means that our clients can speculate on the price of traders waiting days or weeks for deposits to land bitcoin without necessarily having to trade. and with the added risk of getting “stuck” due to incorrect banking information submitted by the client. This, in turn, can result in charges attached to submitting missing credit reports. Bitcoin transfers enhance user experience in that our traders can get involved in their trades, with little delay. We also guarantee our clients same-day withdrawals via bitcoin, and we store all client funds in cold storage – meaning it is offline, away from potential malicious online threats. In terms of profitability, I touched earlier on the fact that we offer up to 1:500 leverage with no ongoing costs, and EagleFX registration is completely free. With regard to accessibility, our clients have the option to download MT4, or use the web trader version, should that client not wish to download 40 The European Financial Review December - January 2020

software to their PC. Our traders can also use less the pip value, the less the cost of the spread. MT4 iOS and Android, meaning our product is A low spread generally indicates that volatility is always available for our clients when on the move. low and liquidity is high, whereas a high spread would indicate high volatility or low liquidity – EagleFX offers access to an impres- 24/7 Support two aspects of forex trading that are not ideal. The EagleFX support sively wide range of trading options, which team are on hand Innovations within the financial sector 24/7 to support you are emerging continuously, and EagleFx is includes 53 forex markets, 31 cryptocurrency through Live Chat, already at the forefront of this innovation Email or Phone when curve. Can you tell us more about your plans markets, 11 equity indices and 7 commodi- you need it most. in upgrading your platforms and quality of services? ties markets. Can you tell us more about the 24/7 Trading Trade a variety of We are always trying to improve our prod- type of traders and investors that are most assets at EagleFX ucts and take into consideration feedback and take advantage from not only our team members but from likely to be attracted to your offering? of uninterupted our clients too. We are more than happy with 24/7 trading. the fact that EagleFX backs into the MT4 One of the appealing factors about our server, so there are no plans for change there. platform is the accessibility to trading. We Same Day This has been tried, tested and is trusted by offer a trading platform where beginners, Withdrawals thousands of traders around the globe. intermediates and experts alike can all trade in EagleFX prides the same conditions. itself on processing Most recently we have incorporated some withdrawals within educational materials into our platform. This We show great flexibility in that the minimum the same day to includes a “daily analysis” page which gives our deposit is $10.00 via bitcoin and we allow micro- ensure you have rapid clients an insight into what is happening in the lot trading starting at 0.01, targeting traders in access to your funds. global economic markets and details of which their infancy. When we look at the other end of important meetings are coming up in the world this spectrum, we have no maximum deposit and of business, government and much more. Our the largest lot size we allow is 1,000, targeting clients can make use of charts and even edit more-experienced clientele. We want to make existing charts themselves with indicators of trading with high leverage and fast execution their choice. easily accessible and I believe we achieve this, thanks to no sign-up fees, fast execution, and In terms of quality service, we have a 24/7 deposits starting at just $10.00. support team contactable through the LiveChat platform, as well as email, and our clients can In terms of our products, we have over 50 request a call back at their preferred time of day, forex pairs, including many of the exotic pairs any time. Our support staff are dedicated and that you wouldn't necessarily find in other highly professional, giving us a truly rounded brokers. We have the pulling factor to attract product from registration to withdrawals. On more-experienced and, dare I say, older traders the subject of payments, we aim to process all who like to trade on the better-known pairs, withdrawal requests within 30 minutes. There such as EUR/USD. That being said, the range of crypto pairs we have on offer helps us to tap into the more-modern and emerging market of crypto trading, which is encouraging a new wave of users – users who would not tradition- ally be associated with trading. One of the main selling points of One of the appealing factors about our platform is the accessibility to trading. EagleFX is its competitive spreads. Would We offer a trading platform where beginners, intermediates and experts you elaborate more about how this would alike can all trade in the same conditions. benefit potential traders? Traders need to be aware of spreads, as they are the principal cost of trading currencies. As we know, the spread is the difference between the bid and ask price. The tighter the spread is, the more beneficial to traders. The tighter the spread, the europeanfinancialreview.com 41

Interview is no need for brokers to hold on to client funds and we like Executive Profile to show our integrity by offering our clients a truly speedy and professional service. David Muscat is the Head of Affiliates and Marketing at EagleFX. A tech-savvy individual EagleFX is registered in the Dominican Republic and with a wealth of experience in Forex Trading is in the process of examining which regulatory body and the iGaming sector alike drawing on skills to align with, since the laws of the commonwealth of built up from over 8 years in marketing and Dominica do not provide a regulatory framework for business development. forex-related services. Can you tell us about the chal- lenges and opportunities this entails, and how do you I stick to activities that will have less impact on my knees. ensure the security and safety of your trading platforms I particularly enjoy yoga, which helps me to relax and clear against the threat of fraud? my mind. When I feel like stepping up the intensity, I will go to the gym and go hard for 30 minutes or so, which is a The real challenge is finding a regulatory environment massive stress reliever. Staying active helps me to keep clear that allows traders to trade with very high leverage and that thoughts. Other than that, I enjoy reading to build on my doesn’t restrict certain countries. existing knowledge and I can’t resist taking a peek at the latest market trends on my “days off ”. We take client security seriously. All of our clients have the option to enable two-factor authentication on their accounts. What message or advice can you give to people who As well as this, all client funds are stored completely offline in would like to venture into the forex and trading industry? cold storage, meaning that funds are kept away from potential online threats. Research! It is important to educate ourselves on anything that we choose to get involved in. This is espe- You have been working in the trading industry for cially important in the world of forex trading. There are so quite some time. What excites you most about this many different strategies traders adopt, as well as different industry and what are your views on the important types of analysis that can be used. We offer a free-to-use trends that may emerge in the coming years? demo account for our users to develop a trading strategy before ‘going live’ and depositing. For a clearer picture of I think the main emerging trends are coming in the shape how the markets might move, it’s important to use a balance of digital asset trading. There are so many coins in the of fundamental and technical analysis and to research and marketplace, which makes it such an exciting environment to develop strategies which would be best suited to your be involved in. Not only buying and selling cryptocurrencies, personality and style. It is impossible to say which strategy but having a place where you can trade on their performance is ‘‘best’’, as there are simply too many permutations. is thrilling. So, to answer your question, I think what excites me most is the evolution of trading and the evolution of how So, to summarise, I would advise making use of a demo goods are being purchased generally. It is fascinating to think account, making use of daily market analysis and taking a look of how financial institutions will operate in the next 20 years. at some educational materials. Knowledge is power, after all. On a lighter note, could you share with us the top Thank you very much Mr. Muscat. It was a pleasure things or activities that you do to recharge during your speaking with you. day off from work? I am an ex-footballer, so I have always made an effort to keep fit and stay healthy. As I do not play so much anymore, There are so many different strategies traders adopt, as well as different types of analysis that can be used. We offer a free-to-use demo account for our users to develop a trading strategy before ‘going live’ and depositing. 42 The European Financial Review December - January 2020

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Sustainability How Facebook Money Could has become self-referential. There is Counter Climate Change no tether. Relative values of major currencies have become volatile and BY SHANN TURNBULL unpredictable. This inhibits trade and investment. T o counter climate change, The value of money should be teth- official currencies need to be ered to a Sustainability Index (SI) Ideally, the International Accounting replaced with money tethered with the existence of money being Standards Board (IASB) should set for sustainability. Official curren- time limited. This would make money standard units of value2. It will be a cies have exacerbated climate change “ecological” and unsuitable as a store surprise to many that it does not already by ignoring the pollution costs of of value. There are better ways to store perform this task. When I asked the burning carbon. This makes burning value in procreative assets. IASB chairman in 2014 why they had carbon cheaper than renewable not set such a standard he replied that it energy. Lord Stern reported to the UK The band-aid approach to correct was “too hard”3. However, technology government that: “Climate change is market failure has been to intro- now allows this task to be automated as the greatest market failure the world duce carbon taxes, trading and even described below. Automation minimises has ever seen”1. Stern is a former more government regulations. A opportunities for manipulating mone- World Bank Chief Economist. superior solution is to change how tary values, or the politics involved in the value of money is determined as using a basket of goods as tether, or Official currencies also carry out too suggested below. as proposed by Facebook, governing a many functions. These are being the basket of currencies. unit of account, a store of value, and a A fundamental problem of major medium of exchange. Technology now currencies is that their value has Economic values have become subject allows these functions to be separated. become disconnected from reality. to natural disasters, threats of war, war, We have standards for weights political announcements and Presidential Money can now be simplified to and measures but no standard for tweets. These actions explain how and become only a medium of exchange. economic value. The value of money why markets fail as noted by Lord Stern. It means that a belief in markets allo- cating real resources efficaciously is either a religion and/or a sign of mass insanity. Because the value of money is self-referential, a failure in one currency region can be transmitted to others creating a global crisis. This insane 44 The European Financial Review December - January 2020

arrangement was described as a “Doom Loop”4. The Internet of Things (IoT) provides the means Because the Doom Loops could be constrained with currencies for collecting all the data required. It could also value of money tethered to regional IASB standards. continuously update the SI tether for each region is self-referential, without human intervention. There should be little a failure in Each region of the world could possess a opportunity for the value of tethers to be manipu- one currency different standard to take into account: its endow- lated. Manipulation becomes possible when a basket region can be ments of nature, and support by its citizens for of goods or currencies are used as a tether. transmitted to a circular economy. A circular economy is one others creating a that only consumes renewable and/or recyclable To provide slow and predicable change in the global crisis. resources. Only in this way can humanity exist on value of tethers they could be based on five year our planet indefinitely. rolling average of data. Economic value would facebook become much more stable and investor friendly crytocurrency If there were no humans, then there would be no than with any current forms of official money called \"Libra\" need to define economic value. The use and meaning or crypto-currency. of economic value depends upon human existence. Economic value must therefore be tethered in each The cost of collecting the data from each region that can sustain humanity indefinitely. region of the world would be trivial for corpora- tions like Facebook, Apple, Amazon, Netflix and The ability of humans to exist in each region of Google (FAANG). These corporations are already the world is dependent upon four main variables: the involved in online banking. Some are proposing to natural endowments of each region to enable sustain- offer banking services and Facebook has proposed ability, population size, commitment to renewable/ creating its own proprietary currency called “Libra”. recyclable practices, and trade. The last three variables are subject to change. So economic value needs to be One way for governments to control online banking, defined in a way to nudge the distribution of humans crypto and other digital forms of private currencies and their total number in each region to a level where is through the IASB. It has more than 120 member they can be sustained. In addition, to provide incen- organisations covering most jurisdictions around the tives for regions to increase the domestic reliance on world.5 Most member governments have made IASB renewable/recyclable goods with appropriate trade. standards mandatory. If the IASB does not act to create standards for value then governments should. To create market incentives to further these objec- tives, the value of money in the more sustainable Another condition for governments to approve regions needs to have a greater value than money private mediums of exchanges is that any such in less sustainable regions. This means the value of money cannot become a store of value competing money in each region needs to be tethered to a SI. with other real assets. The ability of official money Competition could then arise between regions to to be store of value is another reason why it is not manage the size of their populations and the nature of their activities to increase the value of their index. There are many factors that could be included in a SI. An example is the need for bio-diversity. However, fine-tuning of an index could be deferred to avoid delay in initiating action that is now urgent. To allow immediate action the SI could be based on the total energy consumed from benign renewable resources in each region divided by the total energy consumed in each region from all sources. As a region becomes more dependent upon benign renewable energy then the greater will become the value of their money. This would reduce the cost of imports from regions with less sustainability. Unlike carbon taxing and trading this approach could be developed to include numerous determinants of a circular economy. europeanfinancialreview.com 45

Sustainability The only fit for the purposes of increasing human produc- Alternatively, any community could issue ecolog- way society tivity, wellbeing or equality. ical currency as required. Market forces would limit can increase excessive issue of money because it cannot be used productivity The only way society can increase productivity as store of value. In a major financial collapse there without humans without humans working longer or harder is by would also be need to possess a creditable IASB or working longer employing “procreative:” assets “that allow nature to government tether. or harder is yield her resources more productively”6. It is coun- by employing ter-productive for any type of money to become a Governments and regulators possess many ways “procreative:” competing asset class. Increasing productivity provides to encourage the private creation of IASB accept- a way to improve human wellbeing. But aggregate able standards for defining economic value. Some wellbeing is reduced by inequality exacerbated by offi- ambitious corporations could initiate the creation cial money earning interest. It makes the rich richer of such indexes. It would provide unprecedented without necessarily increasing nature’s yield. respectability with ever lasting global kudos for underwriting the future of humanity. Monetary assets have become a huge unsustain- able bubble that respected commentators think Shann Turnbull PhD has been a serial will create an even bigger crash than in 20087. The entrepreneur founding enterprises and time has come to build financial lifeboats as soon re-organising listed firms. In 1975 he as possible. This means facilitating trials of digital co-authored the first educational qualifi- limited life ecological tethered money. cation for company directors in the world. His PhD research established the science of Limited life money was privately introduced in governance for evaluating and designing organisa- Europe and the US when banks closed during the tions by using bytes as the unit of analysis. Great Depression8. Local communities issued one ([email protected] ) year promissory notes accepted to be used as money that required a stamp of two percent of their face References value to be affixed on the back of the notes each 1. Stern, N. 2006, The Economics of Climate Change: Stern Review, 30 October, week. The sale of stamps provided the issuer with p. viii, https://webarchive.nationalarchives.gov.uk/20100407163608/ an income of two per cent each to create a gross http://www.hm-treasury.gov.uk/d/Summary_of_Conclusions.pdf income of 104% over a year. The issuer incurred a 2. Turnbull, S. 2019, ‘How might standard units of value be defined?’ cost of 100% to redeem their money but obtained Journal of Modern Accounting and Auditing, 15(5): 221-231 <https:// a gross profit of 4% even if the money was initially ssrn.com/abstract=3429726>. given away! 3. Conversation in Sydney with Hans Hoogervorst, 10th April 2014. 4. Haldane, A. G. 2009, ‘Banking on the State’, p.7, https://www.bis. The negative interest may appear unrealistically org/review/r091111e.pdf excessive. However, this forced the notes to circu- 5. https://www.iasplus.com/en/news/2019/10/ifac-survey lated very quickly. The notes became known as 6. Moulton, H. G. 1935, The formation of capital, pp. 11-12, Brookings “speed” money. This reduced the cost of termi- Institution, Washington D.C. nating money to become less than the transaction 7. King, M. 2016, The End of Alchemy: Money, Banking, and the Future of costs of modern digital money9. the Global Economy, Little Brown: London. Wolf, M. 2016, ‘Will there be another huge financial crisis?’ The Irish Times, June 1, <https:// Negative interest rate money has been circu- www.irishtimes.com/business/economy/martin-wolf-will-there-be lating in Germany again since 200310. This has -another-huge-financial-crisis-1.2668834>. occurred in competition with official money 8. Fisher, I. 1933, Stamp scrip, Adelphi & Co., New York, <http:// without having an incentive of the Great userpage.fu-berlin.de/~roehrigw/fisher/>. Depression. Ideally, all money should carry a 9. Turnbull, S. 2016, ‘Terminating currency options for distressed negative interest rate as supported by Keynes11. economies’, Athens Journal of Social Science, 3(3): 195—214, <http:// Current ultra low official rates and the need to www.athensjournals.gr/social/2016-3-3-3-Turnbull.pdf>. stimulate economies create a supportive situation 10. Gelleri, C. 2009, Chiemgauer Regiomoney: Theory and Practice for their introduction. Government “helicopter” of a Local Currency. International Journal of Community Currency drops to citizens would avoid counter-productive Research 13: 61-75 unconventional banking policies. 11. Keynes, J. M. 1936, The general theory of employment, interest, and money, Chapter 23, part VI, <bit.ly/1NaDFen>. 46 The European Financial Review December - January 2020

Venture Capital Time to Fix the Broken company needs to be a unicorn to be Investment Model successful. They do, however, need effective ways to raise capital. BY KEVIN MONSERRAT The post-Bretton woods world In the era of unicorns and high- T his is not a sign of healthy driven by profits is not a particularly profile IPOs, it’s easy to assume that start-up ecosystem. Rather this inclusive or equitable one. Assets glob- start-ups are bound to be successful inefficiency is the symptom of a ally are governed by accountants while if they are based on a good idea. The model that is broken to its very core. GDP remains the global benchmark truth, however, is start-up failures are It is time we question the very funda- for national performance, despite it far more common than you might mentals of how our industry operates. reflecting an unsustainable and inequi- assume. Research conducted by Modern capital circulates the globe table economic model. It all seems like a Harvard Business School says three rewarding consumption over creation, very myopic way of looking at the world. out of four start-ups will fail1, never to quick exits over sustainable growth, Valuing people and the planet seem to be return any cash to investors. Although, and shareholder profit over shared no-brainers, and yet they are not baked if you were to define failure as not wealth. It seeks “unicorn” compa- into the global economic system. Based delivering on the projected ROI, nies fixed on disrupting the market, on the analysis of 101 startup post-mor- then 95% of VC- backed start-ups rather than supporting businesses that tems2, the top 3 reasons given for failure are, in fact, failures1. build, nurture and connect. Not every were not serving market needs, lack of money, and partnering with the wrong team members. In the current VC model, founders can spend as much as 60% of their time searching and raising capital. This is an important process, but many of these problems could be resolved if founders could spend more time focused on the strategic growth of their company, and less time on fundraising. europeanfinancialreview.com 47

Venture Capital The VC industry wouldn’t exist year was an excellent example of this. case of a successful business they will without entrepreneurs, yet entrepreneurs They had raised a jaw dropping $700 see most of the returns offered to share- often feel as if they’re in the backseat million in investment, its paper valuation holders. This set up leaves everyone when it comes to dealing with VCs. The exceeded $9 billion and the founder, frustrated. Businesses need time and key challenge the investment industry Elizabeth Holmes, was worth over $4.7 a reliable network that can help them faces is to realign the interests of those billion. There was one little issue. The grow. Capital is certainly essential; but founders, investors and the experts cutting-edge technology it promised so often it is what inhibits that growth. crucial to turning ideas into companies. would revolutionise blood testing, didn’t As an entrepreneur, your job is to do These Interests are too often in conflict work. One employee described the tech what is right for your customers, money in the current system. VCs need to return as no more sophisticated than a school and valuation are the end-product of three times their fund in order to be prof- science project. How was it possible that endeavour. itable for their investors. This is neither for a student straight out of college to a realistic nor a sustainable goal. Yet it fool some of the most respected inves- Now more than ever we must remains the benchmark by which all new tors in the world to be fooled to tune establish the right environment and companies are judged. Regardless of the of hundreds of millions of dollars? incentives for innovators. We need social benefits they may be able to deliver. That debate will no doubt be the focus to create an ecosystem where indus- These targets have driven investors of business school classes for years to tries can work together with start-ups, towards FinTech products, where profits come, but what is clear is both investor universities, corporates, governments are more easily and quickly accrued. and founder were not incentivised to and investors to solve societal problems Investment into the UK FinTech sector work towards the same outcome. effectively. The centralization of capital doubled in 2019 to £2.15 billion. is killing innovation and slowing down Investors are instead on the hunt for economic growth. We must be able to Research from the Economic lower valuations and an opaque rela- deploy capital accurately at speed and Innovation Group’s discovered that tionship. They seek a company that can at scale - which only decentralization despite all this talk of ground-breaking quickly accrue profits and begin to repay combined with knowledge transfer can change, the most striking feature of their initial investment. For the start-ups, reach. Innovation is happening outside modern business is its complete lack of these profits are often lost at a crucial of universities – in co-working spaces, dynamism and innovation. One figure time for growth. Not only does this garages, accelerators and start-up that stands out in its Dynamism in Retreat stifle the development of companies at collaboratives. Some of today’s most report was that the number of busi- an early stage in their development, but innovative ideas are coming from these nesses created in the US between 2010 it also minimises the chances of long- groups. We need to embrace, engage and 2014 was less than a quarter of the term success for both parties. For the and propagate these communities. number created between 1983 and 1987. experts, those who the initial capital is This issue is accompanied by a wide- often spent on and whose experience is When raising capital becomes an spread dissatisfaction amongst those are so key to the success of start-ups, in the almost impossible process, it hurts setting up start-ups who face a lengthy innovation. To be clear, innovators are and consuming process of finding and securing VC investment. As well as the unwanted “strings attached” once it has been secured. Which brings us to the key weakness in the VC model, that the inter- ests and agendas of start-ups, investors and experts are not aligned. Start-ups, for example, seek high valuations. This results in an informa- tion asymmetry between founder and investor which incentivises start-ups to hide their pain points while problems escalate behind closed doors. Med-tech company Theranos, who collapsed last 48 The European Financial Review December - January 2020

The key challenge the investment industry faces is to realign the interests of those founders, investors and the experts crucial to turning ideas into companies. These Interests are too often in conflict in the current system. not those incrementally reshaping products; but they own. We are using a blockchain supported those offering fundamentally new and superior platform to track the ownership of these tokens, ones. On occasion, they make the quantum leap which can be exchanged in the community for and create an entirely new market. We have not expertise and knowledge. These tokens operate been fostering an innovation ecosystem that like digital shares in that they pay you a dividend, encourages this, but one where investment piles but they are also unique because they can also be into the incumbents, rather than the insurgents. used as a currency. This creates the opportunity To concentrate their market share, these compa- for liquidity between the hundreds of investors nies then continue to snap up much of the talent, and start-ups in the eco-system. Crucially, it also only to then smother originality. Its left innovators realigns the interests of the founders, investors and entrepreneurs not effectively addressing the and experts. The community is not under the major social challenges we face of health, educa- same pressure from investors to grow at all costs tion, food, water, jobs, security and environment. and by delaying the returns to the exit event, it doesn’t eat into the early profits that start-ups Our innovation culture is therefore being need to grow. New technologies mean these stifled. Many of our brightest, high potential inno- models can help us tackle the faults with the VC vators with tech start-ups are struggling to survive. model but most importantly, give start-ups a fair We need a new model that offers direct access to chance of sustainable growth. knowledge and expertise, without the stress of repeated funding rounds. We must establish an Start-ups are the engine of national economic enabling environment that support the growing growth. SMEs provide over 15 million jobs in number of start-ups and budding entrepreneurs the UK, they create new markets and boost the by providing resources, access to advisory and production of goods and services. If the UK is to capital services for greater chances of success. reap the benefits of entrepreneurship – job crea- tion, economic and social prosperity – we must These reasons are why I launched Consilience be prepared to nurture a strong entrepreneurial Ventures, an investment platform that is culture that is supported by an investment model unlike any other traditional fund. It’s goal is that sees beyond the short-term and provides to support every stage of the start-up life- sustainable development and growth. That’s how cycle with capital, resources and mentorship we can fix this broken investment model. from high-profile industry leaders. It offers a one-stop-shop ecosystem with a community Kevin Monserrat is the CEO of of carefully selected investors and experts that Consilience Ventures, a disruptive new are incentivised to help grow each company. By collaborative community connecting doing so we believe we can drive more sustain- capital, growth companies and busi- able and ultimately profitable growth. By ness expertise. pooling invested capital across an ecosystem of companies, experts and investors, the risks References: of investing are shared across the community. 1. https://www.inc.com/john-mcdermott/report-3-out-of-4-venture- It means pain points are openly discussed and backed-start-ups-fail.html resolved through the mentoring programme to 2. https://www.cbinsights.com/research/startup-failure-reasons-top/ assist their growth towards an exit event. When the company in the eco-system is bought or IPOs, the proceeds are shared by everyone in the community, according to how many tokens europeanfinancialreview.com 49

Data Security Security vs. Convenience: A global identity crisis Delivering seamless, secure Digital identity is a convenient means service experiences of authentication, but the lines are starting to blur. The industry has woken BY JOHN WATKINS up to the fact that online identities are malleable and spoofable. Impersonating Customer identity is a precious asset time they want. Indeed, the speed and customers online to commIimt afrgaeusdouarcned: and a highly prized commodity. As ease of this process has become a point gain access to their financiaBlloags.ssaest.scohmas the financial services industry has of competition, with organisations become big business for cybercrimi- become more digitised down the years, vying to provide the most seamless and nals. In 2017, identity fraud peaked in customers’ digital identity decides what frictionless online experience possible. the UK with 174,523 cases reported by they can do and what online services they Cifas, with eight out of 10 fraudulent have access to. However, in the rush for greater applications made online. convenience, the industry can’t afford This has been revolutionary for the to forget about proper identity verifica- What’s more, these hackers are customer experience. So long as the tion. The threats from identity theft and constantly innovating and adopting service provider is happy that customers cyberfraud are growing more sophisti- new technologies to stay ahead of secu- are who they claim to be, they can cated and pernicious. Organisations rity measures. Even popular, tried and access their account, make a transaction must guard against this, but in a way that tested measures like two-factor authen- or take out a loan anywhere and at any doesn’t penalise the innocent customer. tication have been compromised. Impersonating customers online to commit fraud and gain access to their financial assets has become big business for cybercriminals. 50 The European Financial Review December - January 2020