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New Tech to Help 2 Billion People Without Bank Accounts

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New Tech to Help 2 Billion People Without Bank Accounts

FN Media Group Presents SafeHaven.com Market Commentary

LONDON,-For all the talk of an emerging “cashless” society, in much of the world cash is still king. In Mexico, it’s estimated that 65 percent of the adult population is still without a traditional bank account – and 80 percent of all financial transactions are conducted in cash. Yet an upstart company is working to change that. Mentioned in today’s commentary includes: DPW Holdings Inc. (NYSE: DPW), Square Inc. (NYSE: SQ), Teradata Corporation (NYSE: TDC), Advanced Micro Devices Inc (NASDAQ: AMD), Rapid7 Inc (NASDAQ: RPD).

 

QPAGOS (QPAG) has developed a way to offer digital payment services to as many as 2 billion “unbanked” consumers worldwide. By installing self-serve payment kiosks in easily accessible locations, QPAGOS helps people without bank accounts pay bills electronically, transfer money to relatives and friends, and access digital services once cut off to them.

It’s a brand-new industry in many places – and business is exploding. QPAGOS reported a 58 percent increase in revenue in the first quarter of 2018 – and is now expanding to an initial target market estimated at 400 million people.

Not surprisingly, QPAGOS’s stock has also soared in recent months, up more than 100 percent in value since late January 2018. Plus, there are reasons to believe that QPAGOS’s recent revenue growth will persist – and that QPAGOS’s stock could continue to rise in value in the months ahead.

Advanced technology: The key to QPAGOS’s (QPAG) growth lies in its simple yet sophisticated self-service kiosks and secure digital payment technologies. The digital banking kiosks are like ATM machines on steroids, allowing “unbanked” consumers who normally use cash to pay bills electronically and transmit payments to remote locations.

In addition to the kiosks, the company also provides payment solutions via mobile phones.

That’s important because, according to estimates from the World Bank, half of the world’s 2 billion unbanked consumers have cell phones – and thus could potentially access QPAGOS’s “Monedero” electronic wallet app.

The app lets users without bank accounts pay for products and services with their phones, and the same technology gives small businesses the ability to accept payments in remote locations without expensive merchant card terminals.

Strategic partnerships: To achieve its ambitious goals, QPAGOS (QPAG) is working with some of the world’s largest companies, including AT&T, XBox, Dish, Apple, Virgin Mobile, Nextel and 150 others.

These companies are able to use QPAGOS’s digital banking platforms to gain access to millions of cash-paying customers who might not normally avail themselves of digital services. Consumers, for their part, can use QPAGOS kiosks to pay in cash for services such as cell phones, utility bills and even digital movies.

Huge revenue potential: The fees that digital banking generates are legendary. Although the individual charges can be relatively small, the large number of transactions creates a revenue stream that is a virtual tsunami of cash. Since it started in 2014, QPAGOS has seen its revenue soar from $1.1 million in 2015 to $3.9 million at the end of last year.

Plus, in addition to the traditional fees that QPAGOS collects – payment processing fees, service provider commissions, advertising fees and kiosks sales and rentals – QPAGOS is also now targeting the enormous “remittances” market in North America.

Each year, foreign workers in North America transmit an estimated $60 billion to relatives back in their home countries, often using expensive and inconvenient storefront locations, such as 7-11 or Western Union, to do so. With its easy-to-use self-serve kiosks, QPAGOS hopes to siphon off a large portion of this $60 billion cash payment stream.

Virtually unlimited market: At the moment, QPAGOS (QPAG) has consolidated its position in emerging market countries in Latin America where an estimated 80 percent of the adult population still uses cash alone to pay its bills. For QPAGOS, this represents a market of 320 million unbanked consumers in countries such as Brazil, Chile, Columbia, Peru and Mexico.

In Mexico alone, QPAGOS has already placed 700 kiosks and is targeting there an untapped market of 36 million unbanked consumers with the potential of 320 million payments per month at 214,000 possible locations, such as supermarkets, pharmacies and mom and pop stores. And beyond the emerging markets in Latin America, QPAGOS also aims to expand into the U.S. and beyond.

Its initial goal is to establish 1,000 kiosks in the U.S., primarily in California, and then to expand quickly to 10,000 kiosks. If the company can assist foreign workers with just 1 percent of their $60 billion electronic transactions, that represents payments of some $600 million.

Plus, the U.S. is just the beginning. As noted earlier, the World Bank estimates there are currently 2 billion adults around the world without access to formal financial services. QPAGOS could potentially service -billions of electronic payments per month. It could easily end up being the PayPal of the unbanked world.

Limited competition: What makes QPAGOS (QPAG) a potentially exciting opportunity is the relative lack of competition in the unbanked market. While those with access to regular bank accounts can avail themselves of a wide variety of electronic payment systems, such as Venmo, Apple Pay and PayPal, the unbanked have limited choices.

QPAGOS stands virtually alone in aiming to introduce the 2 billion unbanked consumers around the world to the entire digital electronic “ecosystem” – one that includes cell phone “wallets,” cellular advertising, point of sale payments, bill paying and more. In Mexico, there is currently no comparable technology and QPAGOS has a virtual monopoly on the electronic payment market among the unbanked.

Experienced management team: In addition, QPAGOS’s (QPAG) management team has unique experience in both the Latin American market as well as in the financial services, IT, telecom, and digital payment industries. The broad international resources available to the management team give QPAGOS a foundation for rapid expansion across multiple markets.

The CEO, Gaston Pereira, is a seasoned financial executive whose experience includes serving as CEO of IUSATEL Chile, MARCATEL Mexico and as vice president and country manager for Citibank. Chief of Operations Andrey Novikov served as vice president for business development at a large Russian electronic payments company, Qiwi. And the Independent director James Fuller served as Chairman of the Board of the Pacific Research Institute, Senior Vice President of the New York Stock Exchange (NYSE) and past president of both the Bull and Bear Group and Morgan Fuller Capital Group.

Undiscovered windfall: Right now, QPAGOS is a relatively small, brand-new company. Yet already its stock has shot up 114 percent just in the past few months as word of its unique position in the self-serve payment market spreads.
At the moment QPAGOS is generating annual revenue of approximately $4 million with just 700 of its self-serve, touch-screen kiosks operational. If it adds an additional 3,000 kiosks per year, it’s possible that QPAGOS could hit $35 million in sales in just 24 months.

Best of all for investors, QPAGOS is currently flying below Wall Street’s radar. Yet that could change overnight – especially as QPAGOS strikes new deals with such giant e-commerce companies as Virgin Mobile, Movistar, Telcel and others.

It’s possible that QPAGOS (QPAG) might eventually be seen as the “PayPal of the emerging market.”

Other companies to watch as financial technology takes off:

DPW Holdings Inc. (NYSE:DPW) is a holding company focusing on the acquisition of disruptive tech within a number of industries. From aerospace to cryptocurrency mining, DPW identifies and incubates undervalued assets with the possibility of significant growth in the future. The company’s devotion to innovation cannot be ignored, and as the fintech revolution takes off, DPW is sure to jump in head first.

DPW’s sharp eye for emerging technology and dedication to shareholders make it a likely choice for investors, and as the tech boom accelerates, the company is unlikely to disappoint.

Square Inc. (NYSE:SQ): Its genesis was all about smartphone plug-ins (hardware) targeting food truck vendors and other small businesses that needed an easier way to accept credit cards, or face losing major business. They filled a niche that did not exist but needed to…and quickly. Since then, the company has started targeting much larger businesses with an array of services and software-all geared toward merchant convenience, which translates into bigger revenues for all parties.

Teradata Corporation (NYSE:TDC): Providing other data platform solutions, Teradata Corporation specializes in analytic data platforms, analytic applications, and related services. The services are used around the world and its offerings include analytic solutions, ecosystem architecture consulting and hybrid cloud solutions.

Teradata Corporation may be flying under some investors’ radar, for the moment, but with the rapid growth of the fintech industry, the opportunity to get in cheap won’t last for much longer.

Advanced Micro Devices Inc (NASDAQ:AMD) is Nvidia’s biggest competitor. The company has developed a cult following among gamers, leading to many a Reddit debate. AMD’s groundbreaking technology not only rivals that of Nvidia, some even argue that it outperforms it. As the two square off, one of the key areas to keep an eye on is in the GPU race. Widely purchased across the world as Bitcoin frenzy heats up, AMD is making a particularly hard push toward conquering that emerging demand.

While Nvidia has a significantly higher market cap (and stock price), AMD provides investors a much cheaper entrance into the gaming market. Those looking to get into tech industry stocks, mine Bitcoin, or play their favorite game on the highest quality are definitely not ignoring AMD.

Rapid7 Inc (NASDAQ:RPD) is a huge player in security and information technologies. The company’s special, analytics-driven approach to cybersecurity and IT operations give it an incredible advantage over its competitors. The company’s in-depth knowledge of the threats facing businesses’ physical, virtual, and cloud-based assets allow for high quality service which puts Rapid7, Inc ahead in the field.

As the threat of cyber-attack becomes more and more apparent, investors are realizing the value of cybersecurity firms, making them some of the hottest stocks on the market.

By. Ian Jenkins

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Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19

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Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19 1

Organizations in the Middle East have had to take immediate actions in reaction to the COVID-19 pandemic, such as shifting to remote and virtual work, implementing new ways of working and redirecting the workforce on critical activities. According to Deloitte’s 10th annual 2020 Middle East Human Capital Trends report, “The social enterprise at work: Paradox as a path forward,” organizations now need to think about how to sustain these actions by embedding them into their organizational culture.

“COVID-19 has created a clarifying moment for work and the workforce. Organizations that expand their focus on worker well-being, from programs adjacent to work to designing well-being into the work itself, will help their workers not only feel their best but perform at their best. Doing so will strengthen the tie between well-being and organizational outcomes, drive meaningful work, and foster a greater sense of belonging overall,” said Ghassan Turqieh, Consulting Partner, Human Capital, Deloitte Middle East.

According to the Deloitte report, many organizations in the Middle East made quick arrangements to engage with employees in the wake of the pandemic through frequent communications, multiple webinars where senior leaders addressed employee concerns, virtual employee events, manager check-ins, periodic calls and other targeted interactions with the workforce.

The report also discussed how UAE and KSA governments have reexamined work policies and practices, amended regulations and introduced COVID-19 initiatives to support companies and the workforce in the public and private sectors. Flexible and remote working, team-building and engagement activities, well-ness programs, recognition awards and modern workspaces are among the many things that are now adding to the employee experience.

Key findings from the Deloitte global report include:

  • Only 17% of respondents are making significant investments in reskilling to support their AI strategy with only 12% using AI primarily to replace workers;
  • 27% of respondents have clear policies and practices to manage the ethical challenges resulting from the future of work despite 85% of respondents saying the future of work raises ethical challenges;
  • Three-quarters of leaders are expecting to source new skills and capabilities through reskilling, but only 45% are rewarding workers for the development of new skills; and
  • Only 45% of respondents are prepared or very prepared to take advantage of the alternative workforce to access key capabilities despite gig workers being likely to comprise 43% of the U.S. workforce this year according to the Bureau of Labor Statistics.

“Worker well-being is a top priority today, and similarly to the rest of the world, companies in the Middle East are focusing their efforts to redesign work around well-being by understanding workforce well-being needs,” said Rania Abu Shukur, Director, Human Capital, Consulting, Deloitte Middle East.

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One in five insurance customers saw an improvement in customer service over lockdown, research shows

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One in five insurance customers saw an improvement in customer service over lockdown, research shows 2

SAS research reveals that insurers improved their customer experience during lockdown

One in five insurance customers noted an improvement in their customer experience over lockdown, according to research conducted by SAS, the leader in analytics. This far outweighed the 11% of customers who felt it had deteriorated over the same period.

This is positive news for insurers during such challenging times, with 59% of customers also saying that they would pay more to buy or use products and services from any company that provided them with a good customer experience over lockdown.

The improvement in customer experience also coincides with a rise in the number of digital customers. Since the pandemic started, the number of insurance customers using a digital service or app has grown by 10%. Three-fifths (60%) of new users plan to continue using these digital services moving forward.

However, while the number of digital users grew over lockdown, half of the insurance customer base has not yet chosen to move to digital insurance apps or services.

Paul Ridge, Head of Insurance at SAS UK & Ireland, said:

“It’s impressive that there was a net improvement in customer experience during lockdown, despite the challenges the industry was facing with a transition to remote working and increased claims for things like cancelled holidays. While many were forced to wait on customer help lines for long periods, part of the improvement may be explained by even a small (10%) increase in the number of digital users.

“However, it’s clear that a huge number of customers are still yet to make the move online. It’s vital that insurers provide the most accurate, timely and relevant offerings to customers, and this is best achieved by having additional insight into online customer journeys so they can understand them better. Using analytics and AI, insurers can seize this opportunity to digitalise their customer experience and offer a more personalised approach.”

Meanwhile, for insurers that fail to offer a consistently satisfactory customer experience, the price could be severe. A third (33%) of customers claimed that they would ditch a company after just one poor experience. This number jumps to 90% for between one and five poor examples of customer service.

For more insight into how other industries across EMEA performed during lockdown, download the full report: Experience 2030: Has COVID-19 created a new kind of customer? 

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The power of superstar firms amid the pandemic: should regulators intervene?

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The power of superstar firms amid the pandemic: should regulators intervene? 3

By Professor Anton Korinek, Darden School of Business and Research Associate at the Oxford Future of Humanity Institute. Gosia Glinska, associate director of research impact, Batten Institute for Entrepreneurship and Innovation, Darden School of Business

Recent news that Apple hit a market cap of USD2 trillion highlights an extraordinary success story: A once struggling computer-maker on the verge of bankruptcy innovates its way to becoming the most valuable publicly traded company in the United States.

Apple’s 13-figure valuation is indicative of a larger trend that is not entirely benign — the rise of a handful of superstar firms that dominate the economy. Over the past three decades, advances in information technology, mainly the Internet, have supercharged the superstar phenomenon, allowing a small number of entrepreneurs and firms to serve a large market and reap outsize rewards. And COVID-19 has greatly accelerated the phenomenon by pushing us all into a more virtual world.

Apple — along with Amazon, Facebook, Google, Microsoft and Netflix — is a case in point. The combined market value of those six companies exceeds USD7 trillion, which accounts for more than a quarter of the entire S&P 500 index. Even amid the pandemic’s economic wreckage, these megacompanies continue to prosper. The combined share price for Apple and its five peers was up more than 43 percent this year, while the rest of the companies in the S&P 500 collectively lost about 4 percent.[1]

Superstar firms can be found in almost every sector of the economy, including tech, management, finance, sports and the music industry. They command increasing market power, which has consequences for technological, social and economic progress. It is, therefore, critical to understand how their advantages arose in the first place.

THE FORCES BEHIND THE SUPERSTAR PHENOMENON

The “economics of superstars” was first studied by the late University of Chicago economist Sherwin Rosen. Forty years ago, Rosen argued that certain new technologies would significantly enhance the productivity of talented workers, enabling superstars in any industry to greatly expand the scope of their market, while reducing market opportunities for everyone else.[2] Digital innovations, including advances in the collection, processing and transmission of information, is what Rosen envisioned would lead to the superstar phenomenon.

Digital technologies are information goods, which are different from the traditional, physical goods in the economy. What it means is that fundamentally different economic considerations apply. Unlike physical goods — a loaf of bread or a car — information goods have two key properties: They are non-rival and excludable. Non-rival means that something can be used without being used up. Excludability means that an owner of digital innovation can prevent others from using it, by protecting it with patents, for example. These two fundamental properties of information goods are what give rise to the superstar phenomenon.

In a working paper I co-authored with Professor Ding Xuan Ng at Johns Hopkins University[3], we described superstars as arising from digital innovations that require upfront fixed costs that allow firms to reduce the marginal costs of serving additional customers.[4] For example, once an online travel agency has programmed its website at a fixed cost, it can easily displace thousands of traditional travel agents without much additional effort, scaling at near-zero cost.

Because a firm can exclude others from using its digital innovation, it automatically gains market power. The innovator then uses that power to charge a mark-up and earn a monopoly rent — basically, a price superstars charge in excess of what it costs them to provide the good — which we call the ‘superstar profit share’.

THE POLICYMAKER’S DILEMMA

In a vibrant free market economy, businesses compete for customers by innovating and improving their offerings while keeping prices low; otherwise, they are displaced by more innovative rivals entering the market. Unfortunately, the increasing monopolization of the economy by technology superstars is weakening the competitive environment around the world.

Monopoly power is the main inefficiency from the emergence of superstar firms, because superstars can exclude others from using the innovation that they have developed.

So, what policy measures can be employed to mitigate the inefficiencies arising from the superstar phenomenon?

We do have antitrust policies designed to promote competition and hence economic efficiency. Authorities could take a drastic measure and break up monopolies. Or they could tax all those excess profits megacompanies make.

Another policy to consider involves giving consumers control rights over their data. Right now, only companies have that data, and they are selling it. If you free it up and don’t allow them to sell it anymore, it reduces their monopoly profits. And if you give consumers more freedom over their data, they could, for example, share it with the latest start-up and create a more competitive landscape.

However, such policy remedies can be a double-edged sword. On the one hand, they reduce monopoly rents. On the other hand, they can also reduce innovation.

Innovation requires investments in R&D, which represent a significant sunk cost that only large firms can afford. Government regulations can easily backfire, discouraging large firms from making long-term R&D investments.

What, then, is the best policy intervention? Professor Ding Xuan Ng and I believe that basic research should be public. Digital innovations should be financed by public investments and should be provided as free public goods to all. This would make the superstar phenomenon disappear, and the effects of digital innovation would simply show up as productivity increases.[5]

We live in a brave new world that is increasingly based on information. Because the information economy is different from the traditional economy, antitrust policy should be revamped to reflect that. Instead of worrying about the economy being eaten up by these gigantic monopolies, policymakers need to focus on the question ‘What specific actions can we pursue to make the economy more competitive and efficient?’

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