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Child of the Reserve Bank and the FSCA, set to open in 2020.

Article  Source – Moneyweb 

South African authorities are working behind the scenes to ensure that regulation and oversight of fintech or innovative financial products keeps up with the pace of innovation, the FSCA-OECD International Conference on Financial Education in Cape Town heard this week.

The hub will include:

    • A regulatory guidance unit – a platform where financial institutions and fintech providers can engage with regulators for guidance on these new products and services. It will provide formal guidance engagement for fintech companies that need to understand the regulatory landscape and act as a tool for regulators to keep abreast of innovation in financial services.

    • Regulatory sandbox – this will allow innovators to test their fintech products in a ‘live’ environment with specific regulatory relief. For example, the innovator may test a specific product with 100 clients over a three-month period. Sarb and the FSCA will have oversight of the process and will use the information gathered to guide any regulatory actions that may need to be introduced.

Sarb senior fintech specialist Anrich Daseman says a consultant has been contracted to assist with the practical implementation and development of the hub. “Hopefully the consultation process will be completed by the end of 2019 and we can move forward with practical implementation next year,” he says.

Daseman confirmed that after releasing a discussion paper on the proposed regulation of cryptoassets earlier this year, the Sarb is likely to issue a draft policy paper within the next couple of months. The intergovernmental fintech working group, including Sarb, the FSCA, the Financial Intelligence Centre (FIC) and National Treasury will host its second workshop on fintech and related matters in September this year to discuss the way forward.

Fintech as a means to improve financial access

Tendani Mathobo from the regulatory policy division at the FSCA told the conference that fintech offers good opportunities for financial inclusion. “We need to look at fintech as an innovative and efficient way to provide financial services through digital means,” he says.

“Accessibility to financial services can be provided in rural areas via cellphone penetration. A Finscope survey showed that 90% of [the] adult population have cellphones and close to 60% have a smartphone. So there is definitely opportunity to leverage that and promote financial inclusion.”

However, Mathobo warns that service providers have to be cautious about introducing products that may have worked in other markets but might not be not suitable for the South African consumer.

He says a typical example is M-Pesa, the cellphone-based money transfer, financing and microfinancing service that was successful in Kenya but flopped locally.

“South Africa is more developed in terms of banks having a physical network,” he says, adding that often with these types of products, there is high initial uptake but accounts become dormant over time. “It has to do with financial literacy. There is a need to make consumers aware of the benefits of using technology to access financial services and also we have to change the mistrust of financial services providers that is entrenched among consumers.”

What does fintech include exactly?

Daseman notes that, contrary to popular perceptions, fintech products are not limited to bitcoin but include innovation within different financial service activities – lending, deposits and savings, insurance and investments, and payments. The international Financial Stability Board defines fintech as technology in financial services that materially disrupts existing business products and services. An example would be a cryptoasset, defined by international economist Usman Chohan of McGill University in Australia as an asset that exists in a dimension that is not physical and can only exist in a digital form. The value of a cryptoasset is also determined by supply and demand forces and not by outside intervention.



Technology and customer demands are just two factors behind an evolving business model for banking in Africa.

Article  Source – Barron’s 

Digital technologies drive business disruption. Today, artificial intelligence (AI) is at the forefront of financial industry disruption, allowing these firms to look differently at operations, staffing, processes, and the way work is done in a human-machine partnership. In PwC’s 2019 AI survey of US executives, financial services executives said they expect their AI efforts to result in increased revenue and profits (50%), better customer experiences (48%), and innovative new products (42%).

AI encompasses an array of technologies, from fully automated or autonomous intelligence to assisted or augmented intelligence. Financial firms are already deploying some relatively simple AI tools, such as intelligent process automation (IPA), which handles non-routine tasks and processes that require judgment and problem-solving to free employees to work on more valuable jobs. Banks have been using AI to redesign their fraud detection and anti-money laundering efforts for a while, and investment firms are starting to use AI to execute trades, manage portfolios, and provide personalized service to their clients. Insurance organizations, in turn, have been turning to AI—and especially machine learning (ML)—to enhance products, pricing, and underwriting; strengthen the claims process; predict and prevent fraud; and improve customer service and billing.

But before financial institutions can reap all of AI’s benefits, they must first overcome challenges, including security, privacy, bias, and regulatory issues. The greatest challenge may be the need to win customer trust: ensuring that AI systems are trustworthy is the top challenge of 40% of the financial industry executives in our 2019 AI survey.

Many of these leaders plan to improve the trustworthiness of their AI initiatives in 2019. Sixty-four percent of them plan to create AI models that are explicitly transparent, explainable, and provable; 60% intend to improve AI security with validation, monitoring and verification; and 54% expect to improve governance with AI models and processes.

Another challenge facing financial institutions is the shortage of workers with the tech skills and expertise needed in today’s AI-enabled business world. Currently, almost a third of the financial executives in the AI survey are worried that they won’t be able to meet the demand for AI skills over the next five years. Almost 60% said they plan to implement AI-inclusive continual learning initiatives to upskill their employees. Slightly over half of respondents intend to develop a workforce plan that identifies the new skills and roles AI deployments might require.

On its own, AI is a potent technology, but its power grows exponentially when it’s combined with technologies such as analytics, blockchain, and the internet of things (IoT). An impressive 60% of the financial industry executives we surveyed said integrating AI and analytics to gain business insights was one of their top 2019 priorities. Another 40% cited AI’s convergence with other technologies as a key effort this year.

Of course, the finance industry isn’t the only sector looking to AI to innovate, improve customer experiences and boost profits. For example, in the 2019 AI Survey, just as many healthcare leaders (45%) as financial services industry executives expect AI to improve decision making. And while leaders in media & telecom (54%) and consumer goods (52%) agree with financial services executives (50%) that using AI can increase revenues and profits, only 33% of finance industry executives said they expect AI to create more job roles than it eliminates.

One of the biggest AI differentiators for financial services, compared to other industries, is that finance executives believe AI will create new privacy challenges (49%), second only to healthcare leaders at 51 percent. Of course, healthcare (55%) and finance services (52%) are also the most concerned about managing risk, fraud and cybersecurity threats. Perhaps that’s one reason that, in our survey, financial services (64%) along with energy and utilities (67%) are the most likely industries to create transparent, explainable and provable AI models to enhance customer understanding, which is critical as customers increasingly demand visibility into how businesses use their data.

As businesses across sectors embrace AI, it will continue to offer unique opportunities, challenges and inherent risks to every industry. However, financial services remain leaders when it comes to creating AI solutions that balance customer experience and profitability with trust and transparency.

Scott Likens is an Emerging Technology Leader at PwC.


Article  Source – Compelo Banking

The In a special 2019 series, Compelo is shining a spotlight on South Africa. From Standard Bank to Absa, Andrew Fawthrop takes a closer look at five of the biggest banks in the country.
With the second biggest economy on the African continent after Nigeria, and a population of more than 56 million people, South Africa is home to a number of established banks serving the varied needs of consumers, businesses and investors.
But as well as catering to the domestic market, many of the largest financial institutions in the country also have operations across the continent.
It has a sophisticated financial infrastructure, overseen by a central bank, the South African Reserve Bank, and regulated by the Financial Sector Conduct Authority.
Here we take a look at five of the biggest banks in South Africa in terms of assets, which incorporates all physical and financial property owned by the institutions such as loans, overdrafts and reserves.

Biggest banks in South Africa
Standard Bank Group

Based in Johannesburg, Standard Bank is the country’s biggest lender by assets, which stood at 2.1tn rand (£112.4bn) as of the end of 2018.
The bank has more than 150 years of history in South Africa, tracing its formation back to 1862 as a subsidiary of a British parent institution, under the name The Standard Bank of South Africa.
Today it serves much of the continent, employing 54,000 people across its operations in 20 African countries including Ghana, Kenya, Nigeria and Zimbabwe.
The Industrial and Commercial Bank of China, which is the world’s largest bank by assets, holds a 20% stake in Standard Bank.


FirstRand is one of the biggest lending institutions based in South Africa, with further operations spanning across eight other African countries – as well as in the UK.
It is the parent company of First National Bank, which is one of South Africa’s most popular retail banks.
Based in Johannesburg, the FirstRand began life as an investment bank in the 1970s and, through a series of mergers and acquisitions, is today a more diversified financial services provider, offering banking, insurance and investment products and services to retail, commercial, corporate and public sector customers.
It operates an owner-manager culture that gives franchise operations “ownership of – and accountability for – their strategies, operational decisions and financial performance”, while remaining aligned to the wider group strategy.
FirstRand recorded assets of $110.48bn (£84.7bn) in 2018.

Absa Group

Formerly majority-owned by Barclays, Absa is now a standalone financial institution in South Africa after the UK bank sold off its controlling share during 2017 – from 62% down to 14.9%.
This sell-off prompted Absa to drop its former name, Barclays Africa Group, and undergo a brand refresh last year.
It is now South Africa’s third-largest lender, with assets of $89.58bn (£68.8bn) reported in 2018.
Based in Johannesburg, Absa has a presence in 12 countries across the African continent, employing around 41,000 people.
The lender provides an integrated set of products and services across personal and business banking, corporate and investment banking, wealth, investment management and insurance.

Nedbank Group

Based in Sandton, Nedbank’s primary market is in South Africa, although it also operates across Africa in Lesotho, Malawi, Mozambique, Namibia, Swaziland, Zimbabwe, Angola and Kenya.
It has roots tracing back to financial institutions in the Netherlands in the 19th century and, after several branding and structural changes, was established in its current form in 2005.
Nedbank provides personal, business and corporate banking services to its customers, and reported assets totalling 1tn rand (£53.4bn) at the end of 2018.
Employing more than 31,000 people, the bank claims to reach eight million customers across all its operations, with 700 branches throughout Africa.


Founded in Johannesburg in 1974, Investec is a specialist bank and asset manager targeting three key markets – the UK and Europe, Southern Africa and the Asia-Pacific region.
It employs more than 10,000 people across 44 cities globally, and in 2018 claimed total assets of $45.16bn (£34.7bn).
Investec’s separate business divisions encompass specialist banking, wealth and investment, asset management and property services, across which it manages £166.5bn in customer assets.
The company is dual listed on both the Johannesburg and London stock exchanges.



With the introduction of online banking, transactions can now be done remotely through your smartphone with just a few taps of your screen.

Article  Source – TechAeris

The days when you need to make an appearance at a financial institution just so you can complete a transaction are almost a thing of the past. This is true for bank withdrawals, loan approvals, and even bills payments. Back then, you had to present a passbook to either make a deposit or withdraw money from your bank account. Loan approvals required filled-out forms, printed documents, and credit investigations. When making payments, you still had to show up and get a receipt.

All these inconveniences are slowly becoming less of a need thanks to wonderful advancements in technology. The financial sector is shaping up to becoming an arena for faster, more secure, and more accurate transactions. New doors are being opened with a wide array of services introduced by FinTech companies, revolutionizing how money is being handled, which is the major reason why they are growing at a rapid rate.
With the introduction of online banking, transactions can now be done remotely through your smartphone with just a few taps of your screen. Loans are also processed using the same tech. Different industries are slowly embracing cryptocurrency with innovative blockchain solutions that improve processes by leaps and bounds.

FinTech companies are making massive waves due to these tech advancements. This comes as no surprise since any financial solution introduced to the public benefits both consumers and their country’s economic growth. Crucial time is saved in executing transactions while making it a lot more secure. Indeed, the convenience that these new services bring is just phenomenal. And by the way, things are moving along, the future of finance is bright.

These tech upgrades in the finance industry are just the beginning. Pretty soon, there will be more high-tech solutions that will make transactions easier. If you want to find out what’s in store for the finance sector, here are FinTech trends that you should keep an eye on.



Technology and customer demands are just two factors behind an evolving business model for banking in Africa.

Article  Source – Global Finance 

Global pressures on international banks, growing intracontinental cross-border trade and investment, customer demands, technology and regulation are all significant factors in shaping a new banking landscape in Africa.

Together they are encouraging banks to more fully assume their classic role in an ideal economy. “It has to start with appreciating the primary drivers of why we exist as banks,” says Thabo Makoko, head of Transactional Services at Absa Bank, a regional bank based in Johannesburg. As taught in college economics courses, banks collect deposits and allocate credit to help business create wealth, while providing financial services to customers.

“The message is that domestic banks are being asked to be more relevant to national development plans,” says Stefan Nalletamby, director of the Financial Sector Development Department at the African Development Bank (AfDB). “Governments are realizing that banks are for the allocation of resources.”

One outcome: “more vibrant” institutions that seek to uncover new sources of revenue, notes Nalletamby. Banking systems are moving away from the classic model, he believes, when banks “used to make a fortune basically by not doing much.” For instance, local bank books would customarily be top-heavy in government bonds with often-generous spreads, thereby crowding out more-productive investments.

Domestic banks are responding to consumer demand, especially from the middle class, Nalletamby adds. “African banks have either worked with governments or foreign companies, and a few rich people,” he says. “But the middle class is energized and has become more demanding.”

Source: Coalition. Figures in US$ millions.

In many jurisdictions, banks are increasingly providing financial services that matter to the middle class, such as housing loans. The trend is more pronounced in East and Southern Africa. “West and Central Africa are getting there, but they’re behind,” Nalletamby notes.

Thanks largely to the expansion of mobile banking, Kenyans can use their phones to make small trades in government bonds or buy insurance. The peak in mobile operations in Africa is between 3 AM and 5 AM, notes Nalletamby. “And not because people are still at the bars; it is early-morning traders who are buying goods in bulk.” The traders are taking one-day loans to pay for produce at the central market; they will pay the loans back from the day’s proceeds garnered in their neighborhoods. “Now [the banks] realize that they can make money from everything, from every type of client,” adds Nalletamby. Nothing happens at once, but Moody’s Investors Service projects “a slight acceleration in loan growth to around 10%” this year, fueled in part by regulatory changes in Ghana and Angola, according to a recent report.

Despite Africa’s diversity and size, the trends can seem strikingly similar in many places. Noteworthy blue-chip international banks are retrenching on the continent. A decade ago, Barclays helped Absa cobble together its regional presence, especially in Southern Africa, and took a 63% share in the resulting conglomerate. Two years ago, it reduced its participation to 14%. Last year, France’s second-largest banking group, Groupe BPCE, announced plans to sell its subsidiaries in Tunisia, Cameroon, Madagascar and the Republic of Congo to Morocco’s BCP.

Global dynamics in a post-crisis regulatory environment drive these strategic decisions as much as anything in Africa itself. The fear of regulatory penalties related to the flow of illicit funds has led to restrictions on operations in many emerging markets, including some African countries, according to a World Bank report. “Over the last decade, global banks have been tightening operations to comply with regulations designed to curtail money laundering and terrorism financing,” the report states. “As a consequence, global banks have been limiting correspondent banking relationships (CBRs) with local banks in emerging and developing economies—a practice referred to as ‘de-risking.’ ”

Just as international banks fade away, African corporates are increasing cross-border trade and investment. Absa and Groupe BPCE are leaders among the regional banks vying to meet the needs of those potential clients. Lomé, Togo–based Ecobank Transnational, which operates in 36 African countries, also ranks among the biggest regional players. In addition to the corporate business, there’s a growing need to transmit remittances from one African nation to another. “Cross-border banking has been increasing in Africa,” states a World Bank report released last year. “As of 2014, there were 104 active cross-border banks with at least one branch or subsidiary outside their home countries.”

African central bankers are working to forge agreements to make regional operations easier, Makoko says. He cites the East African Cross-Border Payments System, instituted in 2013, as a prime example. “The cross-border business is going to occupy a lot of attention over the next five years,” he says.

Technology headlines out of Africa in recent years have focused on how the continent—especially East Africa, and specifically Kenya—have leapfrogged the rest of the world in mobile banking. People pay street vendors with their phones in Kenya—and not just there: Somalia, a consensus choice for “failed state,” along with its breakaway neighbor Somaliland, count among the world leaders in “mobile money markets,” according to a country-specific World Bank report. “That’s interesting, because Somalia doesn’t have a banking system,” says Nalletamby. Notes the AfDB official, “Access to financial services on mobile phones is a reality.”

Yet, many observers believe that the financial-inclusion part of the equation lags behind. Mobile-phone penetration numbers need to be readjusted because many upper- and middle-class individuals have more than one phone—one for work and another for personal use, for example. “The statistics have to be taken with a grain of salt,” says Makoko. He estimates that only about 30% of Africans are integrated into the banking system. “Much of the population is quite illiterate, and they are not familiar with the internet,” says Theophilus Tawiah, managing partner at Nobisfields, a law firm based in Accra, Ghana.

If financial inclusion lags behind, mobile banking is making its mark by disrupting the entire banking systems in many countries. When he joined Absa in the pre-digital era, Makoko recalls, clients gave their trust to bankers based on four things: reach, meaning a branch network; cost efficiency; speed-of-operations and responses; and information and transparency. “Mobile technology addresses all four,” Makoko says.

Branches are considered sunk costs and are being shut down everywhere. Legacy banks are scrambling to hire a “head of digital operations,” or as they’re called in Nigeria, a “head of e-business.” They’re trying to stay one step ahead of the fintechs and telecommunications companies—or both, depending on the regulatory environment.

The phenomenon isn’t confined to Kenya and East Africa. At least four digital-only banks are moving forward in South Africa, including two that are almost household names already: TymeBank and Bank Zero. French telecommunications firm Orange, drawing on its experience in Europe, is scheduled to launch Orange Bank Africa in Senegal and Ivory Coast this year.

This new reality has sparked a free-for-all among existing institutions—and another tussle between the old guard and the wannabes. In the past, a local bank might just sit on its far-flung fiefdom tucked away in some forgotten corner. Now everything is up for grabs. “In a digital world, [geographic] reach means nothing,” said Makoko. Nor does longevity: “The one who amasses the most customers will win.”

Regulatory regimes are changing. Nigeria, for example, is liberalizing rules about how telecommunications firms can operate in the banking realm. As mentioned above, Moody’s is optimistic about the new regulations in Angola and Ghana. Ghana’s increase in capital requirements and related adjustments provoked seismic shifts. Regulatory reforms sparked a fury of mergers and acquisitions. “Ghana just consolidated its banking system,” says Nalletamby. “It will come out with stronger banks.”


Article  Source – Business Tech 

Capitec this week published audited financial statements for the year ended February 2019, showing strong growth in headline earnings and customer growth.

The bank said that its client base has grown by 15% over the past year, to 11.4 million clients. On average, it said that 127,000 clients join the bank each month, with more than 500,000 new clients in January and February alone.

While this growth continues to be impressive, Capitec and other traditional banks will face increased competition in 2019, following the launch of Tyme Bank and the upcoming launch of Bank Zero and Discovery Bank.

Speaking to BusinessTech, Capitec CEO Gerrie Fourie said that the conversation surrounding the new entrants at Capitec has been to focus on the same fundamentals that the bank launched with.

“When we started the bank in 2000 we focused on what the client wants and what do we need to deliver for the client?

“We know that our client’s needs are changing the whole time and it is changing quickly. When you start looking at the competition you are not really focusing on the client.”

Fourie said that Capitec has four main fundamentals:

  • Affordability

  • Accessibility

  • Service

  • Simplicity.

“We continue to focus on these and then measure up to what the opposition is doing,” he said.

Digital push 

Fourie said that new digital only entrants it’s good for the country, however he added that the local market in general still needs and wants to interact with people – especially on more complex financial matters. 

“Capitec believes in an omni-channel strategy that consists of a combination of digital banking, a strong branch network with superior service, and the ability to communicate with clients to help them manage their banking better.

“We still have over 6 million clients visiting our branches every month,” he said.

“We believe the real solution is a combination of digital, branch and very personalised communication, informing and adding value to a particular client. People want that personal contact.”

Fourie said that there has been a clear push by opposition banks to focus on digital.

However, citing Capitec’s statistics, he noted that there are 3.1 million clients who are ‘digital’ but still prefer to visit a bank branch.

“The one thing that people miss is that all the new digital entrants are only on smartphones, and the lower-income, rural South African uses a feature phone,” he said.

“If you look at the so-called ‘unbanked’ they are not on a smartphone, and there are a lot of smartphones that don’t have the capability to run banking apps.”

“If you look at Tyme they are only on Android and not on iOS, so one needs to analyse their offer very carefully and what need they are addressing.”

Fourie said that he understands Discovery’s model – which also only offers smartphone banking – because that is the higher income segment they are playing in.

“The moment you go into the lower-income, financially illiterate, client base you will find that people still predominantly use feature phones.”

Fourie said this was reflected by the 4.4 million people who use Capitec’s USSD service, compared to the 2.2 million who are on smartphones.

“When you talk to clients they say that ‘smartphones eat data’ and they cannot afford it,” he said.

“The average Capitec client spends between R20 and R30 on data and they cannot afford contracts.”



When respondents were asked to estimate their expected investment return in the coming year, a quarter (24%) expected returns exceeding 10% and just 7% expected returns to be under 2% or negative

Dubai: New research* from Old Mutual International and Quilter Investors shows investors in the United Arab Emirates (UAE) may be susceptible to over-estimating the potential for investment growth in the coming year.

When respondents were asked to estimate their expected investment return in the coming year, a quarter (24%) expected returns exceeding 10% and just 7% expected returns to be under 2% or negative.

Global financial markets suffered in 2018. Through the latter half of the year, stock market indices in the US gave up gains made earlier in the year and finished in negative territory. This was echoed in the survey as 69% of respondents blamed market volatility as the reason why their investment returns fell below expectations.

Meanwhile, almost all other asset classes suffered a challenging year as a range of fears over a global trade war, economic slowdown and fluctuating oil prices concerned investment markets.

While people’s expectations are still very positive, they have lowered since 2017 when 28% of respondents expected to achieve over 10% in returns for 2018. Despite this drop, over 10% returns was still the most popular category among respondents.

Paul Evans, Head of Region, Middle East & Africa, Old Mutual International, comments:

“A positive outlook is typically a positive trait to have. However, in the world of investment, it should be tempered with a realistic outlook, especially considering how volatile the market place is at present.

“Some people might see a sharp drop in the value of their investments and decide that they want to cut and run because their positive outlook has been shattered. However, if they have taken financial advice, their adviser should explain that staying locked in for the long-term can ultimately get better returns.”

Danny Knight, Investment Director at Quilter Investors, says:

“We know from experience that patient investors can expect to realise capital growth as a reward for time in the market and long-term investment. However, investors still need to be prepared for the fact that over the course of their investment journey, there will be ups and downs. This research suggests that many investors hold optimistic expectations for investment returns in the near-term.

“This can place them at risk of losing sight of their long-term objectives if their near-term expectations are not met. The volatility we saw in 2018 is normal and even slightly below the historical average, but it is much more pronounced than investors have become used to since the financial crash. We caution that investors may be at risk of recency bias, whereby a ten year bull run has clouded expectation and left investors with unrealistic expectations.

“An important tool for managing expectations and helping investors stay true to their long-term goals through all market conditions can be the use of risk targeting in investment portfolios. This gives investors confidence and reassurance about how their portfolio can be expected to behave under various market conditions, and what level of volatility they can expect to experience during their investment journey. Now more than ever, it is crucial that investors have realistic risk and return expectations and choose a portfolio which is carefully managed according to their own expectations.

“While global markets remain fundamentally sound and we believe there are still growth opportunities available for skilled managers, it would be fair to take a measured view on expected returns for this year. The important thing to remember in these moments is that investing is a long-term game. Rallies often follow periods of volatility or decline, and even if markets underwhelm in the near-term, the only way to capture the corresponding upturn is to remain invested.”

*Old Mutual International and Quilter Investors investment and retirement research, August 2018. A targeted piece of research, aimed specifically at investors living in the UAE (mainly Dubai and Abu Dhabi) who use the services of a professional to invest in the stock market. Investors needed to have a minimum of US$50,000 invested. 130 responses were received in total and were a representative cross section of those living in the UAE (expats, Non-resident Indians and Gulf Cooperation Council Nationals).

About Old Mutual International, Quilter Investors and Quilter plc:

Old Mutual International is a leading cross-border provider of wealth managementsolutions and part of Quilter plc.

Quilter Investors is part of Quilter plc. It provides multi-asset investment solutions designed for advised clients in the UK and internationally and manages 18.8bn on behalf of its investors (as at 30 September 2018).  

Quilter Cheviot is one of the UK’s largest discretionary investment management firms with over £24.4 billion of assets under management (As at 30 September 2018).

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.1 billion in customer investments (as at 30 September 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms 
includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management 
encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors
• Intrinsic to Quilter Financial Planning
• The private client advisers business is now Quilter Private Client Advisers
• The UK Platform to Quilter Wealth Solutions
• The International business to Quilter International
• The Heritage life assurance business to Quilter Life Assurance
• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.


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Quilter Cheviot Limited (DIFC Representative Office) operates in Dubai as a representative office at Room 12, Level 13, The Gate, PO Box 121208, Dubai, UAE. Quilter Cheviot Limited (DIFC Representative Office) is regulated by the Dubai Financial Services Authority as a Representative Office. Quilter Cheviot and Quilter Cheviot Investment Management are trading names of Quilter Cheviot Limited. Quilter Cheviot Limited is registered in England with number 01923571. Quilter Cheviot Limited is a member of the London Stock Exchange, authorised and regulated by the UK Financial Conduct Authority and regulated under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of investment business and funds services business in Jersey and by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 to carry on investment business in the Bailiwick of Guernsey. Accordingly, in some respects the regulatory system that applies will be different from that of the United Kingdom. This document is intended solely for the addressee and may contain confidential or privileged information. If you have received this document in error, please permanently destroy it and do not use, copy or disclose it.



Source: The Financial Brand

2019 will not be a continuation of the past with banking technology. But which technology trends will matter most in the months and years ahead? Big data and AI? The cloud? Digital-only banks? The answer is critical because ignoring these trends now will make it more difficult than ever for complacent banks and credit unions to catch up.

Never before has the importance of technology been greater in financial services. Competition from fintech firms and big tech giants, increased expectations from the consumer, and new innovations connecting data to digital delivery are requiring banks and credit unions to embrace new technologies in order to build winning strategies.

Here are some of the most important technologies banks must focus on this year and in the foreseeable future. These are in no particular order, since each organization will be different as to the prioritization and investment allocation. Suffice it to say, however, than none should be ignored.

1. Using Data and AI for Personalization at Scale

When it comes to personalization, consumers are pretty clear what they want. They want recommendations that they wouldn’t have thought of themselves, and a clear direction about what they should buy when they are shopping for a product or service. In other words, financial institutions should show consumers that they have been listening and learning from their activities.

People also want their banking providers to know them, look out for them, and reward them no matter what channel they use or what time of the day or night it is. This includes letting them know their overall financial status — on demand. Finally, banks and credit unions must continuously show the value they provide for the insight consumers let them collect.

With artificial intelligence (AI), there is the potential to transform customer experiences and establish entirely new business models in banking. To achieve the highest level of results, there needs to be a collaboration between humans and machines that will provide a humanized experience that is different for each customer.

2. Voice-First Banking

A major part of the voice-first paradigm is a modern “intelligent agent” (also known as “intelligent assistant”). Over time, all of us will have many, perhaps dozens, of these agents interacting with each other and acting on our behalf. These agents will be the “ghost in the machine” in voice-first devices. They will be dispatched independently of the fundamental software and form a secondary layer that can fluidly connect between a spectrum of services and systems.

Most financial organizations will move from basic dialogue and account inquiries to doing transactions using voice commands. This can include being able to execute payments using voice commands, as well as doing account transfers and establishing account alerts using voice commands. Many believe that in the next five years, 50% of all banking interactions will be via voice-first devices.

With the vast majority of consumers having banking relationships spanning a decade or longer, the integration of voice, long-term transactional analysis, geolocation, and current contextual learnings combined with preferences and behaviors outside of banking over time, is where the power of AI and voice commerce becomes really exciting.

3. Open Banking

While the largest tech firms — Google, Apple, Facebook, Amazon (GAFA) — are leading the charge towards implementing open API platforms, the model they use may not be the one most banking organizations should follow. Not only do most financial institutions lack the technical expertise or the financial wherewithal to implement these models and support a vast developer community, the ability to acquire new customers to replicate their success is unlikely.

That said, an open banking platform future is within sight for financial organizations of all sizes. For instance, account aggregation is becoming much more commonplace, with firms like Citibank developing completely new digital-only products with this capability. Similarly, traditional banking functions like taking deposits or making payments could become integrated within non-traditional organizations (Starbucks, Amazon, etc.). In the end, key managers in virtually all financial organizations should already be meeting to determine what their organization may look like in the future and how services will be created, marketed and distributed.

4. Digital-Only Banks

Creating a digital-only banking proposition involves aligning new technologies and solutions with the legacy bank’s existing design, brand value and business model. There must be the involvement of leaders who are tech-savvy, building technology with customer-centric approach. Financial institutions can also leverage the technical capabilities of fintech startups to assist in the development of digital-only banks.

Having a digital-only proposition may become increasingly important as more non-traditional banking choices are available to consumers today, enticing them to switch banks for better customized services and value propositions. According to an Accenture report, “banking consumers in North America want it all — deals and discounts, convenience, relevance and banking customer experiences that combine the latest in digital banking with human interaction. Consumers will share personal data to get what they want and switch banks if they do not.”

5. Cybersecurity

There is no doubt that the increased use of technology and digital channels have made the banking industry more susceptible to cyber-attacks and have forced banks and credit unions to be in the unenviable position of playing ‘catch up’. New open banking regulations that require banks to share customer information with third-party providers makes the industry even more vulnerable.

Now more than ever, banks must become proactive in their handling of data protection and managing cybersecurity risks. Unfortunately, consumers want the best of both worlds — ease of use and increased protection of data and identity. This will require the banking industry to implement multi-factor authentication, secure applications, digital signatures, and other forms of security such as biometrics.

6. Threat of Big Tech

Almost six in ten consumers who are looking to move to a new primary financial institution (or would consider doing so) are open to Big-Tech firms such as Google, Amazon, Facebook or Apple, according to a report from Novantas. This represents a 14-point increase over the 2017 survey, illustrating the potential impact of a major banking product introduction by any of the major tech companies.

One of the primary benefits traditional banks and credit unions had over their competition in the past was trust. Nobody wants to put their life savings at risk or to partner with an organization that wouldn’t protect their identity and privacy. According to recent surveys, however, it does not appear as though trust is a big problem for firms like Amazon. In fact, many consumers trust Amazon more than their current primary bank.

If an organization wants to improve their standing against the likes of Google, Amazon, Facebook and Apple, it is best to focus on becoming a much better digital organization and making it easier for digital consumers to do business with you. That may require partnering with specialists or solution providers that excel in these transformations, but the investment is important as the gap in performance between the best and the mass is widening every day.

7. Blockchain Tipping Point

More and more financial institutions are using blockchain technology or are in the process of implementing blockchain capabilities given its myriad applications. These tests and roll-outs could push blockchain into mainstream adoption in 2019, especially at larger organizations.

For the most part, the focus of blockchain implementations has been around cost reduction and process simplification. The adoption of blockchain in payments, remittances, provenance, and traceability are where blockchain technology seems to be used the most extensively currently.

According to CBInsights, “For use cases that don’t need a high degree of decentralization — but could benefit from better coordination — blockchain’s cousin, ‘distributed ledger technology (DLT),’ could help organizations establish better governance and standards around data sharing and collaboration.”

8. Cloud-Based Solutions

According to the American Bankers Association, banks are generally receptive to cloud-based core banking, with 29% saying they would consider it, 50% saying they were unsure and 21% saying they would not consider it. Many experts think cloud-based core banking will soon become more mainstream, with many believing that the majority of new core banking projects launched by 2020 will be in the cloud.

Much of the momentum around cloud-based solutions is because any financial institution relying on a legacy infrastructure cannot compete against faster and more innovative digital competitors. Implementing cloud technology automates operations and workflows, resulting in increased efficiency, security and cost savings.

Whether banks go with a public or private cloud, security of data, identities, etc. is essential. And while cloud-based core banking may not be the biggest trend right now, banks and credit unions should consider this one of the most important technology trends in the future.



Article  Source – CCN 
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced its decision to launch a pilot Global Payment Initiative (GPI) service which aims to compete with the growing threat of competing blockchain and fintech solutions provided by institutions like Ripple, JP Morgan and Transferwise.
Still in its initial stages, the ambitious pilot aims to “build the foundation of a new integrated and interactive service that will significantly improve efficiencies in the payments process and which will ultimately be made available to all 10,000 banks across the SWIFT network.”
A recent GPI test, was successfully conducted  in October, carrying out instant cross-border payments with banks in China, Singapore, Thailand and Australia. Equipped to enable speedy identification and elimination of errors and omissions in payment data such as missing or incorrect beneficiary information or incomplete regulatory information, SWIFT hopes the GPI payments service will enable speedy and seamless transactions, thereby reducing delays and costs, as well as improving customer experience.

Taking on Blockchain’s Threat

With the move, SWIFT has turned its attention to containing the threat of blockchain-based fintech startups offering the same services at a cheaper price. One such blockchain project is J.P.Morgan’s Interbank Information Network (IIN). Launched in September, it now boasts a membership count of more than 130 banks, including Satander and Societe Generale.
IIN, claims to minimizes friction in the global payments process, enabling payments to reach beneficiaries faster and with fewer steps. With its membership still growing, IIN promises banks the ability to resolve errors and compliance issues speedily by sharing information on a mutual distributed ledger.

SWIFT’s GPI, on the other hand, uses an Application Programming Interface (API) which enables banks to access each other’s data to validate recipient account information before payment is processed, thereby avoiding errors and delays.
An excerpt from the statement released by SWIFT reads:

“Fully integrated with GPI payments, the service will facilitate real time dynamic bank-to-bank interaction using APIs to improve the predictability and efficiency of international payments, and look at using predictive analytics. It will later be complemented with a post-payment investigation and reconciliation service that will allow for fast resolution of the remaining factors, typically arising from compliance or regulatory requirements, which can slow down the payments process.”

The pilot GPI pre-validation service is set to kick off at the beginning of 2019 with 15 selected banks including J.P. Morgan, Barclays, Bank of China and CitiGroup, among others. According to SWIFT, the service is expected to provide total transparency to payment beneficiaries and originators, making the cost, routes and delivery of their funds highly predictable.

Article  Source – Forbes Middle East

Challenges in introducing digital wealth management
Digital wealth management (“DWM”) – either in the form of an automated portfolio management platform, commonly referred to as ‘robo-advisory’, or a funds supermarket platform – is familiar to most financial firms in the GCC. The GCC financial sector is aware of the under-served mass affluent segment for wealth management services and the many benefits the introduction of DWM can bring to these customers.
The issue is not a lack of awareness or access to the relevant technology solutions – the challenge is one of economic viability.  While the customer benefits of DWM are self-evident, its market launch needs to make economic sense.  In this context, there are many factors that make DWM a less than economically viable proposition when looked at from the vantage point of an individual financial sector firm in the GCC.
The biggest hurdle is the fragmentation in the GCC banking sector.  For instance, the top 5 banks in the UK hold 87% of the total banking deposits.  In comparison, the top 5 banks in the GCC region hold 27% of the region’s banking deposits.  The impact is that the total potential revenue pool for DWM services for the mass affluent segment is too small for most banks, let alone relatively smaller insurance and brokerage firms in the GCC region.
Against this small revenue pool, any one bank has to be brave to incur the significant costs needed to launch a DWM service for its limited affluent customer base. The costs to cover in order to be viable are first, an upfront capital expenditure to set up the technology infrastructure, second, an even bigger expenditure on customer conversion campaigns over the first 3 – 5 years and, lastly, other fixed and variable costs for obtaining and maintaining regulatory approvals for DWM and provision of these services.
Given the above, it is no surprise that for most GCC banks, insurance and brokerage firms the financial case for launching DWM business does not “stack up” and therefore never happens. In addition, small and medium size GCC banks, insurance and brokerage firms will have difficulties in convincing international asset managers to provide funds and portfolio management services given their preference for dealing with a very limited number of leading financial sector firms in each country.
So, where do we go from here!
While the economic viability of DWM initiative is decidedly shaky when looked at from the vantage point of an individual financial firm, the same is not true when looked at an aggregate GCC financial sector level.
At an aggregate level, the liquid investible assets of the mass affluent segment are projected to reach $1 trillion in the GCC by 2022.  If we assume that DWM could potentially get 10% share-of-the-wallet, it could create a new annual fee revenue pool of $1.5 billion for the GCC financial sector.
If addressed at an aggregate level, the capital expenditure on a technology platform and customer conversion campaigns can cost a fraction of what it would cost if each individual bank did it alone.  Similarly, there is significant potential to reduce the on-going fixed and variable costs of providing DWM services to clients through economies of scale.  At an aggregate GCC financial sector level, the economic viability of the DWM initiative starts to look very attractive.
With such an exciting opportunity, it is quite realistic to think of building an industry-wide, interoperable DWM platform that is available to any GCC bank, insurance or brokerage firm to offer a standardised set of wealth management services to its mass affluent customers.  It is not a pipe dream to think that such an interoperable platform access could be made available, ready for DWM service launch for any financial firm without the need for complex and time-consuming integration with that firm’s technology framework.
The GCC banking sector is already using such an interoperable platform for credit cards. The largest as well as the smallest GCC banks are able to offer identical credit card services using Visa and MasterCard interoperable platforms without the need for any complex systems integration projects. The same can be done for DWM through the launch of a pan-industry, regional initiative in the GCC.
With different regulatory requirements in various GCC states and a highly fragmented financial sector requiring a lengthy effort to gain a broad consensus and active participation from banks, insurance and brokerage firms, the goal of setting up a regional interoperable DWM platform is challenging and rewarding at the same time.  The rich rewards are evident from multiple perspectives: a new and profitable line-of-business for financial firms; mass affluent customers achieve a levelling of the investment playing field between the rich and not so rich, significantly enhanced buying experience and lower costs; and lastly, it helps in the development of a transparent, modernised wealth management sector, greater involvement of international asset managers and a more sophisticated GCC financial sector – all cherished goals of financial regulators in the region.
It is indeed a $1 trillion opportunity for the GCC financial sector!
Nadeem Mujtaba is the CEO of Gulf Wealth Management Limited (“GWM”).  Falcon Capital Group Limited recently announced its decision to take a 20% stake in GWM, a UK-based digital wealth management initiative focused on the GCC region. Nadeem can be contacted at


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