3 Opportunities for the Financial Services Industry
May 25th, 2018 is almost here and nearly two years after the European Union’s 2016 announcement, the regulation partially designed to put individuals back in control of their personal data will come into force. And shortly in the wake of #DeleteFacebook and the Cambridge Analytica scandal, most banks and insurers are breathing a sigh of relief. After investing millions of pounds in GDPR compliance, appointing a Chief Data Protection officer and wrangling with legacy data systems, reporting and handling, most financial institutions feel prepared for GDPR D-day and potential smug compared to some of their counterparts in the tech world.
In many ways, GDPR has been a blessing in disguise for financial firms. After years of data negligence in the wake of the financial crisis, GDPR has forced banks and insurers to reckon with their housing and handling of customer data.From rationalising and streamlining a patchwork of legacy systems to a bias towards collecting vs. leveraging reams of data without a clear use in mind, in many ways, the EU’s controversial regulation is a blessing in disguise for CIOs and CTOs across the continent and beyond.
But the positive story shouldn’t end there. In the two years since the EU’s GDPR accountment, much of focus has been on compliance. Consulting firms, the accountancies, law firms and technology compliance experts have written extensively around how financial firms can be on the right side of the regulation – and avoid the potentially crippling fees for non-compliance. But it’s not all bad, and relatively little has been written about the opportunities GDPR represents for the future of financial services. So here I outline 3 opportunities for banks and insurers in the wake of GDPR:
- Let’s start with improved data quality, including the ability to have a single view of the customer across data sources. From enhancing marketers’ ability to understand their consumers and target them more efficiently and effectively, to the ability to truly understand which existing customer truly provide value (and how one might target more consumers like those), the access to higher quality data focus around people (rather than products or policies) provides immense opportunities. General Motors has long ago realised the value of this 360-degree view of the customer through their DMP Project 360 – which brought together this view and enhanced the automaker’s ability to better serve customers across internal departments and the full customer experience. Insurers are notoriously bad at looking at the customers as an amalgamation of policies rather than people. They should relish the opportunity to enhance their GDPR compliance efforts with building people-orientated data management.
- When it comes to innovation, the enhanced data quality and customer engagement required by GDPR, as well as the open banking directive, PSD2, should open whole new areas for products, solutions and services for banks. The success of firms like Revolut, Monzoand Transferwisehave shown that there are clear unmet needs for consumers that the high street banks continue to fail to meet. Data – the lifeblood of these fintechs – has always been in plentiful supply at banks. GDPR makes that data infinitely more useful (better structure, more accurate, and more transparent AND creates an impetus for banks to actually ask consumers what they really want in exchange for that data. With these new assets, the banks no longer have any excuse. From streamlining cross border accounts, international transfers, and connectivity to banking adjacent services such as financial advice and wellbeing (and beyond!), the double whammy of these regulatory changes should accelerate, what has already been a fast changing industry in the UK.
- Finally, when it comes to brand and reputation, GDPR provides a point in time opportunity to prove they deserve consumers’ trust. Institutions that try to sneak past May 25th – those that make as little noise as possible and barely comply with the regulation – will be leaving a massive opportunity on the table. Those that embrace this change – and champion their efforts to help move the EU towards a more ethical data future – will be demonstrating that they value their customers, their data and are leading rather than being led by the regulators.MasterCard stands out in this regard by proactively creating data portals where consumers can see all the data being tracked by the company – in a clear and easy to understand way. This is not to say that they are promising to never have customer data issues in the future, but rather that they are taking data protection seriously, valuing privacy and transparency and doing the best they can. Samsung proves a great example of how building goodwill during the good times provides a reputational buffer when things get tough.
So, as you make your final preparations for the end of May – review the final email text to your customers, run the final technical and compliance checks and conduct your last audits – remember, the journey is just beginning. GDPR is likely just the beginning of how the 21stcentury’s data revolution will continue to change the context in which financial firms must operate. Focusing not just on how to keep up and comply, but how to stay ahead and flourish will separate the banks and insurers of the future vs. those who will be left behind.
John Riley is a Senior Engagement Manager at global brand experience consultancy Prophet. As an expert in the field of brand, marketing and growth strategy and consulting, John has helped Financial Services and Insurance brands including Zurich Financial, Swiss Re and MetLife to accelerate growth by becoming more relevant to their customers in a more digital world.
Prophet is a consultancy that helps clients find better ways to grow by focusing on three important areas: creating relevant brand and customer experiences, driving accelerated growth strategies and leveraging digital as a transformative force in their business. Prophet operates differently than other consultancies, blending insight, strategy and creativity with an optimistic yet pragmatic approach. Prophet has partnered with some of the world’s most successful companies, including Electrolux, T-Mobile, UBS and GE. With ten global offices and more than 350 experts in marketing, innovation, digital and design, Prophet are able to bring together the right people with the right experience to solve our clients’ business challenges.
EU recovery funds for telcom networks must help competition – Vestager
MILAN (Reuters) – European Union countries presenting plans to speed-up rollout of high-speed telecoms network should comply with rules aimed at protecting competition, the EU Antitrust head said on Tuesday.
The comments come as member states gear up to present projects eligible for the EU’s 750-billion-euro Recovery and Resilience Facility (RRF) – a fifth of which will go on plans to boost digital capabilities.
“Member States should ensure that the measures will be implemented in accordance with all applicable rules, including State aid and public procurement rules,” EU competition chief Margrethe Vestager said in reply to a question by an EU lawmaker.
StÃ©phanie Yon-Courtin asked Vestager if Brussels had put in place a mechanism to ensure RRF resources would not be used to distort competition in the telecoms industry, claiming the funds should not strengthen the position of dominant operators.
“The Commission encourages member states to include in their recovery and resilience plans investments and reforms aimed… at the fast rollout of very high capacity networks”, Vestager said.
Yon-Courtin also raised concern over a plan drafted by Italy last year aimed at merging network assets of former phone monopoly Telecom Italia with state-backed rival Open Fiber in a company that could be eligible for Recovery funds.
Under that plan, still to be finalised, Rome would create a single-unified network champion to speed up fiber-optic rollout across the country while avoiding a duplication of investment.
“The Commission will continue its vigorous enforcement of the existing EU rules, including the antitrust and merger rules, where applicable, to ensure effective competition in the telecoms market to the benefit of businesses and consumers.”
Italy’s new government, led by former European Central Bank chief Mario Draghi, has not said yet if it intends to implement the unified network project of its predecessor.
One of Draghi’s main tasks will be to redraft Italy’s Recovery Fund plan.
(Reporting by Elvira Pollina and Stephen Jewkes, Editing by Nick Zieminski)
Mining magnets: Arctic island finds green power can be a curse
By Jacob Gronholt-Pedersen and Eric Onstad
COPENHAGEN (Reuters) – In the tenth century, Erik the Red, a Viking from Iceland, was so impressed with the vegetation on another Arctic island he had found he called it “the green land.” Today, it’s Greenland’s rocks that are attracting outsiders – superpowers riding a green revolution.
The world’s biggest island has huge resources of metals known as ‘rare earths,’ used to create compact, super-strong magnets which help power equipment such as wind turbines, electric vehicles, combat aircraft and weapons systems.
The metals are abundant globally, but processing them is difficult and dirty – so much so that the United States, which used to dominate production, surrendered that position to China about 20 years ago.
As Greenland’s ice sheet and glaciers recede, two Australia-based mining companies – one seeking funding in the United States, the other part-owned by a Chinese state-backed firm – are racing for approval to dig into what the U.S. Geological Survey (USGS) calls the world’s biggest undeveloped deposits of rare earth metals.
The contest underscores the polluting side of clean energy, as well as how hard it is for the West to break free of China in production of a vital resource. Rare earth metals have many uses, and last year China produced about 90% of them, according to Toronto-based consultancy Adamas Intelligence. As U.S.-China tensions mount, President Joe Biden’s administration said last month it will review key U.S. supplies, including rare earths, to ensure other countries cannot weaponise them against the United States.
Each Greenland mine would cost about $500 million to develop, the companies say. Both plan to send mined material away for final processing, an activity that is heavily concentrated in China. The only rare earth mine now operating in the United States â€“ Mountain Pass in California â€“ is partly owned by a Chinese state-backed company that currently sends material mined in the U.S. to China for processing.
The Greenland sites are less than 16 km (10 miles) from each other at the southern tip of the island, near a UNESCO World Heritage Site. Debate on them has triggered a political crisis in the capital of Nuuk, forcing a general election on the island of 56,000, due in April. Many Greenlanders, while concerned about pollution, feel mining is key to develop their fragile economy. In a 2013 poll, just over half said they want raw materials to become the country’s main source of income.
The country may ultimately back either project, both, or neither, but for those Greenlanders open to mining, the two proposals boil down to a choice between one mine that would not produce radioactive material, and another that would.
The first mine, a private initiative from an Australian geologist who has presented it to U.S. officials, would not involve nuclear material. It has won preliminary environmental approval, but it needs cash and a processing plan.
The second one has already spent more than $100 million preparing to mine, has proven processing technology through its Chinese partner, and won initial political support from Greenland’s coalition government. But its plans include exporting uranium, a nuclear fuel, and it recently ran into strong opposition, including from residents of the nearby town of Narsaq.
“As indigenous people we have lived in harmony with nature for many, many years,” said Mariane Paviasen, an opposition lawmaker who lives in the town. “We use these lands to hunt and fish.”
Greenland, a self-governing territory of the Kingdom of Denmark, has a gross domestic product of around $3 billion – similar to Andorra and Burundi. With its people living mostly on fishing and grants from Copenhagen, its government is keen to attract foreign investments.
It does not have an estimate for royalties from the first project, but expects around 1.5 billion Danish crowns ($245 million) each year from the Chinese-linked one – equivalent to roughly 15% of public spending.
Greenland’s government did not respond to requests for comment for this story. Acting Minister of Resources Vittus Qujaukitsoq said last month that if Greenlanders suddenly decide they don’t want the second project, “we’ll make a fool of investors. The credibility of the whole country is at stake.”
Greenland’s rare earth metals are also a chance for America and Europe to regain control of a strategic resource.
The island’s potential as a source of the raw materials needed for renewable energy technologies gained momentum in 2010, when China threatened to cut off its supply of rare earth metals to Japan, and tightened quotas to international buyers.
Prices for some of the metals have jumped in recent months, driven by surging demand for electric vehicles as well as concerns that Beijing may restrict sales.
Greenland’s position near the eastern flank of the United States makes it a sensitive location. Former U.S. President Donald Trump offered to buy the island in 2019, and he was not the first U.S. president to do so: In 1946 Harry S. Truman offered Denmark $100 million for it. A defence treaty between Denmark and the United States dating back to 1951 gives the U.S. military almost unlimited rights there, and Greenland houses the northernmost U.S. military base.
Friedbert PflÃ¼ger, a senior fellow at the Atlantic Council think tank, says the revenues generated by a major mine could give its owner leverage over policies in Greenland, and a strong Chinese presence there may pose strategic threats.
“The very presence of Chinese companies in Greenland could be used as justification for China to intervene,” said PflÃ¼ger, a former German politician and ex-deputy defence minister.
China’s foreign ministry said in a statement that such comments politicise economic and trade issues through “groundless speculation,” adding “China has always supported Chinese companies to carry out foreign economic cooperation in accordance with market principles and international rules.”
The U.S. State Department said: “We encourage our allies and partners to carefully review any investments… that could give China access to critical infrastructure in ways that compromise their security or allow China to exert undue, adverse influence over their domestic economies.”
Denmark, which handles foreign affairs and defence for Greenland, has in the past headed off Chinese involvement in infrastructure projects, which government sources say was because of security concerns. Foreign Minister Jeppe Kofod declined to comment on the security implications of China’s involvement. But he told Reuters that Copenhagen’s close ties with the United States “should not be seen as an obstacle to commercial investments in Greenland.”
China is a member of the International Atomic Energy Agency, so it can import uranium from Greenland. But since the fuel is used in nuclear weapons, that would be sensitive. Copenhagen, which has the final say, declined to comment.
Trump’s offer for Greenland aimed to help address Chinese dominance of rare earth supplies. Those involved say he was partly following up on talks between U.S. officials and a privately held company called Tanbreez Mining Greenland A/S. Tanbreez is the owner of the first Greenland site – Kringlerne, or Killavaat Alannguat in Greenlandic.
The company’s owner, Australian geologist Greg Barnes, told Reuters he had met U.S. officials weeks before Trump made the offer, and the company website shows Barnes with them and the former U.S. ambassador to Denmark on a site visit. The USGS confirmed its officials had visited the site in 2019; Washington and a representative for the former president declined to comment.
Barnes said he had put A$50 million ($38.6 million) of his own cash into the Greenland project. New York-based investment banker Christopher Messina, managing director at capital markets advisory services firm Mannahatta Partners, is trying to assemble more financing. He says Kringlerne is “such a huge deposit that what comes out of it could satisfy manufacturing demands in the U.S. for years to come.”
Whether or not that pans out, Barnes says the metals produced by his project can be processed outside China, although he has not yet decided where, and declined to say at what cost.
He said the royalties it would generate for Greenland would be roughly the same as those promised by the China-linked plan. “We’ve managed to get our capital costs down without Chinese technology,” Barnes told Reuters.
The only major plant outside China that does the complex work of separating individual rare earth elements is in Malaysia. But others – including the Mountain Pass mine in the United States – are planning or have started to build such facilities.
“For the foreseeable future, China is going to be the major player in all of these supply chains simply because it’s so far advanced and because it’s not stopping and waiting for alternatives to catch up,” said Ryan Castilloux, head of Adamas.
Tanbreez says half the rare earth metals it mines would be lanthanum and cerium – relatively plentiful metals used in telescope lenses and auto catalysts to cut emissions. About a fifth would be yttrium, which is in demand for lasers and the superconductors used in quantum computing.
Neither of the Greenland projects would be pollution-free. Both plan for mined rock to be locally crushed and separated into concentrates to send for final processing.
Tanbreez’s mining waste will be piped to a lake which, while it does not contain fish, feeds a river with a large population of Arctic char. Turbid water could impact the char, according to the company’s environmental report, which says it plans to dump some 550 tonnes a day of waste material into the lake and will dam it to prevent disruption downstream.
Tanbreez’s plan has passed the public consultations stage and received a government permit in September. Now the company is working on parliament approval.
Both the Greenland projects, though run from Australia, are part of a European Union initiative, the European Raw Materials Alliance, to boost Europe’s output of critical minerals and cut dependence on China for rare earth metals..
The alliance, funded by the EU, is coordinating investment and providing seed money for European mines, processing plants and industries such as magnets.
Last year, the EU kick-started 10 billion euros ($12 billion) of investment into rare earth and other green-energy-related projects, and it says its demand for rare earth metals could surge as much as tenfold by 2050. It says China currently makes up 98% of its supply.
“This is a very critical period of time,” says the Alliance’s head, Bernd SchÃ¤fer. “We in Europe are facing raw materials scarcity on many levels and also the need for action.”
The rival mountaintop site not far from Tanbreez is called Kvanefjeld, or Kuannersuit in Greenlandic. For John Mair, managing director of its owner, Greenland Minerals Ltd, it’s a world-class opportunity at the right moment.
Kvanefjeld’s main offer is neodymium, needed for wind turbines. Brussels says the EU’s demand for the metal may reach 13,000 tonnes per year by 2050, three times more than it used in 2015. Neodymium is also used in combat aircraft.
Greenland Minerals is a listed firm in which Chinese company Shenghe Resources is the biggest shareholder, with just under 10%. Shenghe, which also has a similar size stake in Mountain Pass, declined to comment for this story.
Greenland Minerals, which bought its concession from Barnes, says its planned mine will, at least initially, send minerals it produces to China for final processing. It says it plans to find a site in Europe, but has not said when.
The company has a strong hand. Back in 2011, the estimated costs for setting up Kvanefjeld were $2.3 billion. By 2019, these shrank to $505 million, the company says: Shenghe, whose biggest shareholder is a state-run Chinese mineral research institute, has helped boost efficiency.
But Greenland Minerals faces public opposition. It is one step behind Tanbreez in the environmental vetting process – and its ores include significant amounts of radioactive materials.
When Greenland Minerals embarked on public consultations this year, protests erupted. At one meeting in Narsaq on Feb. 10, locals both inside and outside the hall banged windows and played loud music to disrupt presentations.
As opposition mounted, a small pro-mining party, Demokraatit, triggered a general election by pulling out of Greenland’s coalition in early February.
Polls suggest Greenland’s main opposition party, Inuit Ataqatigiit (IA), which has a zero-tolerance policy for uranium, will become the biggest in parliament, so would be first to try to form a new coalition.
“Our aim,” IA lawmaker and Narsaq resident Paviasen told Reuters, “is to halt the (Kvanefjeld) mining project.” But IA says it has not expressed opposition to Tanbreez, which is seen as less of a threat to the environment.
Kvanefjeld would dump much more waste than Tanbreez – about 8,500 tonnes each day – into a lake on top of the mountain, the Greenland Minerals plan says.
Greenland Minerals says any increase in background radiation from its Kvanefjeld mine will be minimal. It plans to build a concrete 45-meter dam to contain the radioactive waste and to spray water on the ground to keep the dust from blowing away.
The dam will be built to international standards to “withstand even the worst imaginable seismic activity,” it said in a report submitted to Greenland’s government last year.
Even so, residents say they worry contaminated water will seep into nearby rivers or that the dam will fail entirely. They cite the collapse of a mining dam in Brazil two years ago that killed 270 people.
As the crisis has deepened, Greenland Minerals’ shares have dropped by more than 50%. If the mine goes ahead, Paviasen says, many people plan to move away.
(Corrects 10th paragraph to delete China as destination for uranium exports)
(Reporting by Jacob Gronholt-Pedersen in Copenhagen and Eric Onstad in London; Additional reporting by Ernest Scheyder in Houston, Humeyra Pamuk in Washington and Tom Daly; Edited by Sara Ledwith)
‘Turning point’: Cities urged to act on lessons learned in pandemic
By Carey L. Biron
WASHINGTON (Thomson Reuters Foundation) – From better hygiene to greater awareness of inequality and recognition of “essential workers”, lessons learned during the coronavirus pandemic could be harnessed to improve city life for years to come, city leaders and others said this week.
The health crisis has gutted urban economies, emptied offices and public transport and shuttered communal spaces, but it might mark a watershed as cities seek to get back on their feet, the annual CityLab global summit heard.
“One of the big headlines coming out of the pandemic is that the things we thought were impossible before are actually possible and really absolutely necessary,” Chicago Mayor Lori Lightfoot told the three-day event, this year held virtually.
COVID-19 has laid bare “a lot of the economic fault lines around race, around class, gender and inequalities that people believed were intractable – too big to actually solve,” Lightfoot said.
In the United States, the pandemic’s economic effects have taken a far heavier toll on Black and Hispanic families, while federal data from December showed women have been disproportionately affected by job losses.
“The crises we face have made clear the inequity and injustice that persist,” U.S. Vice President Kamala Harris told the event. “We want our cities and countries to thrive, not just survive.”
There are hopeful signs, several participants said.
The pandemic creates an opening to tackle issues exposed over the past year, such as the financial struggles of low-paid workers and their lack of social protection, said Ai-jen Poo, executive director of the National Domestic Workers Alliance.
“Now we all see that some of the work that was least visible to us is actually essential – to our safety, health and our well-being,” Poo said.
She noted advances made amid the pandemic for domestic workers, most of whom are women and from minorities, including a new “bill of rights” in Philadelphia and a push in Chicago to ensure fair wages, time off and safe workplaces.
Such opportunities are not limited to rich countries, said Reuben Abraham, chief executive of the IDFC Foundation and IDFC Institute in Mumbai, suggesting the pandemic could be a “turning point” for cities in the developing world.
“Is there a way for us to embed the good behaviours that we’ve learned during COVID?” he said, noting the possibility of addressing “crowding” in cities through land use management, zoning and the provision of affordable housing.
Diseases such as cholera and typhoid have dropped substantially in Mumbai due to COVID-related hygiene practices such as hand-washing, Abraham said, while the wearing of face masks has had a significant effect on tuberculosis.
“(The pandemic) has been a disaster for all of us,” he said. “But if we do the right thing now, net-net we end up with a positive outcome.”
(Reporting by Carey L. Biron @clbtea; Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
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