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Re-thinking the Financial Industry

Re-thinking the Financial Industry 1

Hassan Abdalla speaks with Global Banking and Finance Review on the occasion of winning Best Investment Bank in Egypt 2017.

Hassan Abdalla

Hassan Abdalla

“Finance” has been a core discipline in your life, as a student who studied finance in the late 70s, to a seasoned Professor of Finance since the 90s and a practitioner with a whole career spanning over 3 decades in the financial industry, how do you see the state of the industry back and then?

If I may reflect back and examine the financial industry across the last 3 decades, I think most financiers in my generation would agree that the industry is changing from focusing mainly on the return on equity to focusing on both qualitative and quantitative dimensions beyond numbers. To say the least, you can hardly sustain the same level of growth if you continue with the same business models or the “banking as usual” mode.

We have a dilemma that textbook finance does not comprehensively address real world challenges. Concurrently our real world day-to-day practices do not accommodate the constantly evolving pressures and trends. We have been taught to measure the return on equity and target profit, the single bottom line. Now we are requested to target the triple bottom line. So yes, the financial industry in terms of theory and practice is outdated.

In your opinion, what are the contributing factors that led to this situation? Could the financial crisis be the reason behind this situation?

As a finance veteran, it has always come as a surprise how financial markets never fail to have a crisis almost every decade. Black Mondays, Black Tuesdays, Latin American Debt Crisis, South East Asia crisis, and Saving & Thrifty crisis…etc. It is an industry plagued with crises.

The 2008 financial crisis is a shattering moment that has shaken the foundations of mainstream banking. Notwithstanding the fact that it destabilized the industry to the core, it is more of a symptom of the industry’s falloff rather than a root cause. It is more of an alarming sign urging the financial industry to pause and reconsider its assumptions and its relationship to the whole ecosystem.

What is more compelling is the rise of major developments known as “Megatrends” that are bound to change business fundamentals. Thus apart from the 2008 global financial crisis, the industry has ever since been encountering serious developments that are constantly putting pressures.

For example, the concept of “Sustainability” – a rising trend – has gained traction and is urging governments all over the world to pursue inclusive growth or sustainable development. What is this telling the financial industry?  It is testifying that the grand design was originally not made with the poor and the environment in mind. Suddenly, there is social and environmental risk on the rise urging the revision of mainstream risk management. Banks are in need to run re-evaluation of all types of risks and update them to avoid future crises since the banking risks are no longer the traditional ones we used to know including credit risk, market risk and operational risk.

Sustainability is also telling us that we have to develop new business models to address financial inclusion, funding of SMEs and entrepreneurs as well clean energy, waste recycling and energy efficiency. All this requires conceiving new systems, structures, policies and capacity building techniques.

Shadow banking is another case in point. Informal economies are a tantalizing development. The fact that formal economies failed to accommodate low-income disenfranchised segments left a big amount of wealth outside the financial system. How to get it inside remains to be rethought.

Technology is another megatrend; from “big data” that impact product design to Fintech to Crypto Currencies, these are all rising modalities that urge prompt revision within the industry. IT fraud and electronic crimes remain to be added to the operational risk of banks.

Also topping the list is facing evolving international regulatory and compliance requirements including new risk management techniques and capital adequacy requirements in addition to tighter banking supervision. Compliance cost, data reporting, and necessary IT infrastructure are becoming additional costly mandates. Basle III will add further capital and supervision requirements that will put pressures on banks’ profitability and trigger the risk –return trade- offs.

Banks cannot sustain their profitability unless they undergo a fundamental revision. Every new development is testifying that it is no longer “Banking as Usual”. Many financiers acknowledge this but still few act upon it.

It is important to note that the new trends are destabilizing but not necessarily threatening; if well understood and preempted they could well lead to the revival of the industry and with it create a new round of balanced growth. It is time to take a step back and rethink.

What type of rethinking is necessary if “finance” is to evolve? Which opportunities and challenges does finance bring?

The rethinking is towards bonding with the whole ecosystem not just shareholders; towards creating value rather than only making profit. The nub is to rethink the role of the financial industry in the economy and the society at large. Agile financial institutions can take advantage of the transition, but it is not easy to adapt and evolve. The main issue is how to create value in non-monetary terms and how would this be reflected on banks’ financials. An issue we need to address to enable the transformation.

Egypt has recently been witnessing remarkable economic growth, tell us about its highlights

GDP growth rate reached around 5% in the current fiscal year 2017/18 compared to 4.2% and 3.5% in 2016/2017 and 2015/16 respectively. Also, inflation is taking a downward spiral since its peak in July 2017 reaching 33%, it recorded 17% in January 2018 and is poised to go lower. Foreign exchange reserves hit a record high of USD 42.5BN in February 2018 exceeding the figure recorded before January 2011, and is now covering 8 months of imports. Tourism receipts remarkably surged by 256% in Q1 2017/18 to record USD 2.7BN up from USD 0.8BN a year earlier. In addition, according to the Ministry of Planning (MoP), the construction sector, manufacturing and the extractions sectors grew by 10.7%, 10% and 14% in Q2 2017/18 respectively.

In your view, what are the main drivers of economic growth right now in Egypt?

Current economic growth in Egypt is the function of taking bold and effective reform and regulatory measures on several parallel tracks in a timely manner. This is happening despite the presence of massive challenges. Here, it is important to raise the resilience of the Egyptian economy and its capacity to reboot, when decisions are made right.

Egypt’s successful reform program has played a critical role in stabilizing the economy through liberalization of the exchange rate regime and fiscal consolidation measures, which assertively restored the competitiveness of the economy and encouraged private sector activity, projecting higher investments and job creation in the medium and long term.

Equally important, the Central Bank of Egypt’s (CBE) exchange rate reform has proven to be a “turning point for the economy,” increasing macroeconomic stability and removing most currency restrictions that were earlier replaced to end a chronic dollar shortage that earlier crippled the economy and intimidated investors. Credit rating agencies have applauded the measures and have upgraded the financial outlook to “positive”.

In parallel, the GoE has already commenced a structured approach to overhaul the investment climate believing that a dynamic and strong private sector is an essential prerequisite for growth transformations. The modernized regulatory framework is working its way to alleviate the key bottlenecks that impeded the growth in a relatively short time and create a level playing field for all investors, enhanced competition, greater trade integration, and complete removal of trade barriers along with improved access to finance and land. The government successfully introduced several legislative and regulatory reforms such as the introduction of VAT, Civil Service Law, in addition to investments, and industrial licensing, all of which are likely to boost investment in the approaching period. Recently, the parliament has approved Egypt’s first Bankruptcy Law, the latest in structural developments in the GoE business legal framework and is part of the overall reform efforts to facilitate a healthy business environment for foreign and domestic investors, as well as, local small and medium enterprises as the process of unwinding insolvent companies becomes easier.

In addition, the amendments made to the Capital Markets Law introduce new financial instruments including Sukuks, protect rights of minority shareholders, and lower securities registration fees to encourage SMEs. Broadly speaking, macroeconomic stabilization provides a solid basis for broadening the scope of structural reforms to attract investments, raise the growth potential, and create employment opportunities.

How does the Egyptian government determination to proceed with huge infrastructure projects and huge budget commitments fit in the growth scenario?

Parallel to these structural reforms, economic growth is propelled by ambitious and unconventional Mega Infrastructure Projects that are being implemented with a high degree of dynamism. It is remarkable that these mega-projects run across the whole of Egypt – rather than being Cairo centric- and well leverage its geopolitics and natural resource richness. Some view this as burdensome and should not be addressed at this point of time because they are not Egypt’s priority. In my opinion, they represent the structural base for further sustained inclusive economic growth on the medium and long term. These mega projects will significantly boost job creation.

As a case in point, the headline act for 2018 will be the opening of the Zohr gas field that will help to place Egypt in the league of world’s major energy producers. Also, plans are underway to construct the largest Solar Park in the world in the city of Benban in Upper Egypt. This project will help Egypt tap into its massive potential for solar energy and scale back its use of expensive—and polluting—fossil fuels. The Suez Canal development project aims towards upgrading the infrastructural and industrial capabilities of cities like Port Said, Ismailia, Suez, Ain Sokhna, and Al Tor City in Sinai.

The GoE’s strategy extends to develop the country’s impoverished south along the Red Sea coastline. Golden Triangle is a continuation of a plan that goes further south to cities like Marsa Alam, Safaga, and Qoseir. As the government tries to revive its tourism sector, the cities south of Ain Sokhna all the way down to Marsa Alam can become major tourist destinations. As a new economic zone, envisaging USD 18BN in investments, with the first phase accounting for USD 5.5BN, three-quarters of it private. Infrastructure and utilities projects have been charted out, including a logistics hub to be built behind Safaga Port.

Lately, an agreement was signed between Dubai Ports Worldwide and the Suez Canal Authority to launch the first phase of a marine terminal in Ain Sokna over an area of 30KM which will integrate with Jebel Ali free zone.

Although ambitious and successful, these measures remain within the mainstream. Do you detect any evolution or progressive strides in the Egyptian financial industry over the past period?

Absolutely. Parallel to these impactful structural and regulatory reforms, the financial industry has been experiencing a subtle but a deeply founded overhaul. There is a growing tendency to bring the industry closer to its ecosystem, being more responsive to the needs of the masses, and more focused on inclusive growth and the sustainable development of the country. The financial industry has witnessed a series of regulations that urge the banks to address Financial Inclusion. In my opinion, this counts as a second reform. The first successful round of banking reform (2004-2010) that addressed non-performing loans, consolidated the sector and ensured a competent and solid financial sector that well weathered the global financial crisis and 2 revolutions erupting within couple of years 2011/2013. Now the Egyptian financial industry is experiencing a well-spelled evolution that is felt across several fronts.

The Central Bank of Egypt (CBE) – with the support of the Egyptian government- has ushered a national commitment towards Financial Inclusion. Egypt’s current socio-economic challenges urge addressing SMEs to rebuild and reinforce this vital base. SMEs account for around 80% of GDP and 75% of employment. Today, the number of MSMEs in Egypt exceed 7M with a credit gap of USD 10BN. Currently financial institutions are urged to provide loans to small and medium businesses; new regulations mandate all banks in Egypt to give out 20% of their total loans to SMEs, with 5% interest rate.

In tandem, Egypt has been committed to become a Cashless Society. Regulations have been made in 2016 to launch the mobile payment system, another milestone towards the evolution of the financial industry in Egypt bringing it closer to the populace. Expanding mobile payments will be instrumental in advancing financial inclusion. Mobiles are widely spread in Egypt with a penetration rate 103%, one of the highest in the world. Having a mobile payment platform will revolutionize the industry and further deepen its role in achieving inclusive growth. This national determination has found expression in the establishment of the National Payment Council personally presided by the Egyptian President.

The dynamic evolution of the financial industry in Egypt is one of high pace.  It is challenging banks to cope and revise policies and practices. But it is definitely healthy.

How Does AAIB fit in this dynamic landscape?

There is a seamless fit. AAIB’s distinction lies in its dual feature; a legacy of solid corporate and investment banking tradition that spans over half a century coupled with a progressive and innovative drive. AAIB has a record of accomplishments as an industry trendsetter. Along this spectrum, we have been committed to meaningful and impactful business to help create value to all stakeholders. The bank’s human resources are agile, proactive, and well trained to read the future and move ahead. The current economic dynamism in Egypt certainly avails a precious opportunity for the bank to sustain its growth and contribute to the economic growth of both Egypt and the region.

In what ways does AAIB’s investment banking expertise assist international businesses interested in investing in Egypt? What are AAIB’s plans for continued growth, investment and further strengthening the foundations of the bank?

AAIB has solid credentials as an investment and corporate bank leveraging a comprehensive financial platform to support its international clients with integrated solutions. The bank has both commercial and investment arms and is fully equipped to act as a trusted advisor providing complex solutions that sharply address our clients’ specific needs and challenges. We guide clients to grow in the right direction.

Another advantage is leveraging a financial group providing consolidated investment and financial services including asset management, brokerage, leasing and mortgage finance. Along with our strong regional presence, we are right on track maintaining our distinction and realizing our vision to become the gateway of international business into the region.

There is much AAIB can do to build on current economic growth especially that we already have a strong client base in emerging Gulf markets including Saudi Arabia, Kuwait, Bahrain, Oman and Qatar.

There are huge prospects for our business progress especially that Egypt expects private investments to take the chief role in driving economic growth this year. Private investments are projected to contribute 60% of economic growth in the current fiscal year, compared to 48% last year. FDIs are also projected to respond positively as well by increasing significantly over the medium term due to the higher certainty and clarity regarding the foreign exchange policy paired with the new Investment Law and the CBE’s decision to lower interest rates. FDI inflows reached $8.7BN during the 2016- 2017 fiscal year, up 26% when compared to the $6.9BN in the previous fiscal year.

How is AAIB helping support SME’s and their growth?

The bank has been a forerunner in developing its business to attend social and environmental dimensions. Despite our tradition focus on large corporates, AAIB has been agile in expanding its client base, moving to the Middle Market segment for loan portfolio diversification and the base for creating new revenue streams and uncontested segments.

Moreover, the bank will be further downscaling by tapping the bottom of the economic pyramid. AAIB aims to serve the micro entrepreneurs segment through a dedicated Micro Finance subsidiary, Sandah, in partnership with excellent partners- KfW GmbH and Sanad Fund respectively. Effectively speaking, Sandah will start operations this April 2018. Sandah is planning to leverage on its wide branch capillarity, advanced digital capabilities, and its human resources, which are trained to address the growing needs of its diverse client base.

AAIB has its fingerprint in boosting Egypt’s economy especially in Energy sector and Renewables. The bank has succeeded in financing the World largest Solar Park in Egypt in its first stage in Benban city in Aswan.

How has technology and the move to cashless society transaction impacted the way you do business?

With increased adoption of digital channels, the role of the branch is undergoing a change from a transaction-based entity to customer advisory one, which will significantly curb operational overheads.

As we speak, AAIB is currently upgrading its Core Banking System and replacing its legacy systems to drive agility and efficiency to its clientele. Forward looking, the adoption of financial technology applications (Fintech) and Mobile Banking will allow customers to transfer money without the need to go to channels.

Which unique products and services were created as a direct response to the needs and desires of the clients?

AAIB has a reputation among its clients of its proven ability to innovate and customize products. The bank boosts distinguished calibers who are well groomed to provide tailor- made solutions customized to our clients’ needs across different sectors. Our corporate portfolio services include mergers and acquisitions, advising on equity placements, feasibility studies, valuations, escrow arrangements, agency services and raising finance through syndicated loan market. In addition, AAIB has a leading role in the debt capital market products such as securitization bonds and corporate bonds that assist in promoting various instruments and diversifying the Egyptian market’s sources of finance.

But I always say product distinction does not last as they get replicated easily. The true distinction materializes at the relationship level and this is very proprietary and cannot be replicated easy.

Still our edge lies in the “powerful synergies” that are inherent in the bank’s lines of business, locally and regionally as a Financial Group and corporate legacy of distinguished performance and international exposure for over 50 years. Moreover, the Gulf region provides a solid geographical base for expanding in investment services, especially that AAIB is the first private sector bank to establish presence in the Gulf region (Dubai, Abu Dhabi) in the early 1970s. AAIB is a true partner to its clients. We never let go during times of uncertainty.

AAIB is known for its strong commitment to Sustainable Finance. Can you tell us more about it?

AAIB has been a forerunner in rethinking finance. We have realized the inherent connection between economic growth and social, environmental and governance concerns early on since 2003. The starting point was our commitment to achieve growth, so we started a decade ago but it is a tedious process.

Ever since, we have been committed to advance sustainable finance in Egypt and the region. We have constantly been endeavoring to ensure that our business integrate the ESG into its operations. This entailed several measures to revise our business to include environmental and social dimensions. AAIB has been the first in Egypt to join the UN Global Compact in 2005 and the Equator Principles in 2009 to become the first bank to introduce social and environmental risk management in its credit operations. The bank also joined the UNEP FI in 2017. We have also been a forerunner in issuing our Sustainability Report based on the GRI guidelines.

We are also committed to become a driving force to create an industry move on both the regional and global level towards enacting sustainable finance. Our ambition goes beyond the bank to advance an industry movement within the Egyptian banking sector and that of the region towards sustainable finance by launching MOSTADAM; the first platform in Egypt and the MENA region to enact and promote sustainable finance through capacity building, policy advocacy, and promoting sustainable products and services. MOSTADAM is a joint effort between AAIB, the United Nations Development Program, and the Egyptian Corporate Responsibility Center. To date MOSTADAM, has secured the engagement of 60% of the Egyptian financial sector. In 2016, it achieved a partnership with Frankfurt School of Finance and Management to provide two certified programs in SMEs Finance as well Climate and Renewable Energy Finance grooming a new generation of bankers with a new mindset capable of achieving balanced growth.

It is redeeming to see our consistent efforts bearing fruit on the industry level. It feels good to witness the transformation of the Egyptian financial industry driven by all stakeholders.

Interviews

Delivering Innovative Wealth Management Solutions

Odetta Morton

For more than half a century Deltec Bank & Trust has been providing global private banking services to high net worth clients. Deltec Bank & Trust has delivered comprehensive financial solutions and exceptional client support to meet the international wealth management needs of successful individuals, families, and businesses.Since becoming CEO in 2019, Odetta Morton has focused on leveraging Deltec’s unique global network to serve its private and corporate banking clients with an emphasis on efficiency, innovation, and the highest ethical standards.

In the process, Mrs. Morton has made Deltec Bank & Trust an agile, innovative and solutions-driven institution. Deltec has consistently built on its client service, and Mrs. Morton is committed to growing shareholder value by building the bank of the future with access to the most unique network of opportunities for its clients. On the occasion of winning Best Private Bank in the Caribbean 2020

Global Banking & Finance Review interviewed Mrs. Morton, CEO of Deltec Bank & Trust to find out more about the bank and their plans for the future.

Congratulations on your award- winning success. What initiatives do you feel have led to your success?

Thank you.

I attribute our success to the extraordinary talent that extends across our organization. Our success has always been because of the people who work tirelessly to ensure that we give exceptional service to our clients.

As a team, we’re focused on the future, trusting disruption and investing in technology that delivers 24/7 financial solutions. This audacious approach drives our team to offer award-winning wealth management and financial services.

What are the biggest challenges you see taking place right now and how is Deltec Bank & Trust prepared to help clients navigate this difficult time?

Within the last few years, Deltec’s main focus has been to ensure we have a business model that can withstand the pressure of an ever changing financial environment, which is faced with major disruption due to new regulations, a changing customer base, and emerging digital technologies.

These preparations have helped us tremendously to transition to the COVID-19 dilemma we see today. We have been focused on resilience, having developed a robust and tested business continuity plan as part of our enterprise risk management framework as an essential of component of the Bank’s business model.

With our headquarters positioned in a hurricane belt, we are no stranger to facing crises and our enterprise risk management framework has served us well in this unique environment.

Additionally, our conservative strategy serves as one of Deltec’s advantages – with healthy liquidity ratio, no debt, no proprietary trading, zero commercial loans, and no leverage. We remain conservative in our credit policies and commitment to sound capitalization. These prudent practices ensure that there is no threat to the Bank’s sustainability, safety and soundness.

We are well-served by our commitment to and investments in technology to transform the way we work: rapidly responding to this challenge, finding opportunities and quickly scaling effective solutions for our clients.

In our discretionary portfolios, we have ensured that we are in the best possible position to deliver both investment services and ongoing performance in the face of the uncertainty posed by COVID-19.

As the pandemic has unfolded, we have been proactive and agile in our strategic response. Our team has come together with a renewed commitment to confront new challenges to ensure that we thrive in the new normal.

We believe that these times have revealed why Deltec is so special:

  • our team is guided by our mission to serve and protect our clients; and
  • our commitment and flexibility to rise above the challenges of this moment by solving difficult problems in real time.

How has client’s attitudes towards wealth management changed over the past few years?

With new digital technologies and an always-on culture, clients expect wealth management solutions to be available 24/7. It’s important to add that there is a new generation of clientele emerging- the savvy and empowered digital consumer – who is interacting with their bank in completely new ways.

This is why the role of fintech has become so prominent. Clients want to be more involved in the way their wealth is managed and protected.

At Deltec Bank, we have embraced this and invested in a digital transformation designed to not only provide 24/7 financial services but revolutionize how wealth management and financial services are offered today.

Client relations have always been at the core of your banking operations. Why is this and how do you continue to strengthen these relations?

Quite simply, we provide a network of unique opportunities with white-glove service to our clients. Our approach is two-fold. On one hand, we take the time to understand our clients, their unique situations and we build around that. On the other hand, we have embraced that our service must be available in real-time and available across different time zones. Our technology plays a big role in that. Our clients can interact with us based on their preferences and our expert team of professionals are committed to giving our clients world-class solutions and service.

How do you support clients’ in achieving planning for and achieving their financial goals?

We believe that understanding the financial needs and goals of our clients is one of our most important responsibilities. Whether the client already knows what they require, or would like help developing an appropriate investment and wealth plan, we seek first to understand. This allows our team to more accurately leverage Deltec’s in-house financial and investment expertise and match clients with the right solution for them.

From an investment perspective, we simplify the process for our clients by offering a selection of discretionary model investment portfolios to match their risk profiles. From there our experienced team of investment analysts and portfolio managers make clients capital work for them, applying Deltec’s robust investment framework to investment markets.

Moreover, one of the distinct advantages of Deltec is that we’re a true financial partner to our clients. The Deltec International Group offers diversified solutions, ranging from fund administration, corporate advisory, merchant banking, global insurance to digital asset financial services, therefore at Deltec Bank, we’ve been able to create synergies to match our clients with a wide range of financial solutions.

With over half a century of operations, you are now servicing several generations. What are the challenges in multi-generational wealth management?

Every generation has a distinct set of values, thinking patterns and expectations. For example, we know that the new generation of wealth management clients, which include Gen X and Gen Y, even baby boomers who have been influenced by the younger generation expect to have more control over their finances and are less concerned about authority than previous generations – in fact, they lean on their peers for feedback and advice.

One of the ways we’ve been able to successfully service multi-generational wealth is by being a pioneer in the wealth management industry. At Deltec, we always embrace the future and anticipate what’s next. This approach has positioned the Bank to meet and exceed the expectations of the many generations of clients we serve.

What role is technology playing in the development of services for wealth management?

Technology is changing the way our clients interact with us and enhancing how we deliver financial solutions. We see this transformation happening in many other industries and wealth management is no different.

At Deltec, we’re leveraging technology to provide one of the most advanced wealth management platforms, pioneering models and algorithms for real-time financial solutions based on individual client suitability and preferences. As an international bank, we’ve place priority on 24/7 wealth management and financial services, and technology is the engine behind that.

How does Deltec Bank & Trust support the socio-economic development in the Caribbean?

Deltec Bank has long held strong ties within the local community in The Bahamas through our Deltec Initiatives Foundation, which was designed to foster an environment that empowers young Bahamians to drive positive social impact through the power of arts, entrepreneurship and education.

Since 2013, the foundation has discovered, launched and mentored many talented, motivated and driven Bahamian artists, artisans and entrepreneurs. The Deltec Initiatives Foundation comprises three pillars: The Initiative for the Arts, The Initiative for Young Entrepreneurs and The Initiative for Scholarship & Education.

What can we expect to see from Deltec Bank & Trust over the next 3 years?

Over the next 3 years, I expect to see a complete transformation of wealth management and financial services, and Deltec will be at the forefront of the advanced thinking emanating from the industry. Our technology and processes will provide a model for private banks and wealth managers around the world and deliver even more value to our global clients 24/7.

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Interviews

Enhancing Customer Experience

Mizinga-Melu

Exclusive interview with Absa Bank Zambia PLC Managing Director, Mizinga Melu

Absa Bank Zambia PLC is part of Absa Group Limited, an African financial services group that aims to be the pride of the continent. Formerly known as Barclays Bank Zambia PLC, the Bank has operated in Zambia for over 102 years. The Bank rebranded to Absa on 10 February 2020. Absa is a truly African brand, inspired by the people it serves and determined to always be brave, passionate and ready so that the Bank can make the African continent proud and bring possibilities of its people to life.

Absa Zambia Mutaba Branch, Cairo Road, Lusaka – a state of the art flagship branch

Absa Zambia Mutaba Branch, Cairo Road, Lusaka – a state of the art flagship branch

How is Absa Bank Zambia PLC working towards becoming the pride of the continent? 

Absa Bank Zambia PLC is an award-winning commercial bank that has been serving the financial needs of the Zambian population since June 1918. The Bank is a wholly owned subsidiary of Absa Group Limited (AGL), a well-capitalised banking group listed on the Johannesburg Stock Exchange (JSE).

Mizinga Melu – Absa Bank Zambia PLC Managing Director

Mizinga Melu – Absa Bank Zambia PLC Managing Director

With a strong heritage anchored on local, pan- African and international knowledge as well as a legacy of providing innovative banking solutions with a number of industry firsts, Absa is well positioned to be the Bank of choice of the continent as it aims to provide revolutionary products and services that stem from its wide success of previous accomplishments such as  being the first bank to distribute the newly independent Zambian currency at its Ndola Branch in 1964 following the country’s independence. The Bank also launched the first Debit Card and ATMs in Zambia in 1996 and thereafter the first cash accepting ATMs in 2010. In addition, the Bank launched the country’s first Kwacha Credit Card and subsequently the first mobile Point of Sale (mPOS) in the country in 2016 revolutionizing convenient banking. In 2018, the Bank was first to provide online insurance premiums.

Following the announcement of a change in operating name from Barclays to Absa by June 2020, the Bank also adopted a new strategy focused on being a digitally-led organisation.Over the last three years, Absa Zambia have invested over ZMW 100 million in technology to enhance the banking experience of its customers. This has resulted in the Bank having the largest network of intelligent ATMs with deposit-taking, bill payment and funds transfer capabilities. Through a strategic partnership with mobile network operator MTN Zambia and Fintech company Jumo, the Bank introduced the award-winning KONGOLA, a lending product and KASAKA, a savings product that allows customers to borrow and save funds respectively on their mobile wallets.

As a key player in the growth of the economy, the Bank has invested in excess of USD 7 billion in key sectors that drive growth in the economy and continue to look for opportunities to be a key growth partner. Notable projects comprise of  infrastructure development financing which include the Eurobonds arrangement and Public sector financing, Agricultural support particularly with the Zambia Sugar (Illovo) expansion project and support to the energy sector through the Maamba Coal Mine project adding 300 MW of power to the national grid. The Bank also extends support to Small and Medium Enterprises through its Business Banking proposition as it understands that this sector fuels the economy.

Absa Zambia has continued to be a key partner in addressing societal challenges by playing a shaping role in society and has invested more than K15 million in the last three years. Some notable projects include donation of the country’s first Dexa machineto the leading public hospital in the Country, University Teaching Hospital. This machine is critical for the diagnosis and treatment of bone-related illness; sponsorship of Zambia’s biggest football tournament which was rebranded from Barclays to Absa Cup giving local players an international platform to showcase their skills; financial literacy for SMEs and adolescents to spur entrepreneurship and money skills among others.

The transition from Barclays to Absa reiterates the Bank’s commitment to continue operating in Zambia and the continent at large, further according it with an opportunity to enhance its services by offering home-grown banking solutions for the thriving African continent.

How widespread is your presence throughout the region?

Absa Group Limited, Absa Bank Zambia PLC’s parent company, has a presence in 12 countries in Africa, with approximately 42 000 employees. Across the continent, the Group has over 1,000 branches and about 10,000 ATMs.

The Group’s registered head office is in Johannesburg, South Africa, and it owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa (Absa Bank), Tanzania (Absa Bank Tanzania and National Bank of Commerce), Uganda and Zambia.  The Group also has representative offices in Namibia and Nigeria, as well as insurance operations in Botswana, Kenya, Mozambique, South Africa, Tanzania and Zambia.

In addition, the Group also has representative offices in London and New York.

Absa Group Limited offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.

What type of local challenges do you help your clients overcome and how do these solutions add value?

The biggest challenge most clients face in the market is the lack of access to capital. Absa Zambia is currently the biggest lender in the country among financial institutions providing support to key sectors of the economy.

Absa Zambia realises that the biggest challenge most clients face in the market is lack of access to capital to finance growth projects.  Lending to SMEs in Africa is also difficult using traditional credit scorecards because of lack of data and insufficient collateral/security. In informal funding markets, rates can range between 20 – 50%, which is not sustainable for the SMEs. The Bank has therefore taken time to understand our corporate and SME businesses, including the entire sector so that it can support their financing needs adequately. Some of the initiatives the Bank has done include tailoring its lending criteria to the SME sector and collateral provision.

Other initiatives include:

  • the introduction of Business Internet Banking which allows 24/7 convenient banking
  • the SME tool kit, an initiative to assist our customers develop financial statements and business plans in an easier and structured manner
  • Supporting value chains that the African continent relies on for growth through conferences like the Africa Procurement Summit.
  • Linkages to intentional suppliers of goods and services through SME trips to China

The Bank continues to be a key financier of projects that positively impact the economy like the Zambia Sugar expansion project, the infrastructure projects resulting in the building of various malls in the country and the energy sector where the Bank supported the coal-fired electricity plan in Maamba.

Most recently, in the wake of the COVID-19 pandemic, Absa Zambia became the first Bank in the country to announce a Loan Payment Relief Programme in response to the financial impact on a number of economic activities.The Relief Package is a comprehensive solution that applies to the Bank’s credit products, including home loans, vehicle finance, personal loans, as well as commercial asset finance and mortgage-backed business loans. These solutions cut across Corporate, Business and Retail Banking customers to ensure that customers receive adequate support.

With the Zambian society mainly driven by formal employment,Absa understands the growing need to drive an agenda of a more diverse skillset and entrepreneurship. The Bank realises this challenge and has taken deliberate steps to work with different partners to encourage entrepreneurship. Absa Zambia has worked with organisations like the Zambia Development Agency (ZDA) to provide business clinics that offer financing advice including generation of business plans through to unlocking access to finance opportunities.

The Bank offers financial literacy education as part of our support to communities it operates in line with the corporate social responsibility agenda. As part of Absa Group Limited, the Bank has identified playing a shaping role in society as a key enabler and remain committed to being a force for good in society.

With Financial inclusion being a topical issue in Africa, what is Absa Bank doing to improve access to financial services?

The Bank has been a major supporter of Government initiatives that encourage financial inclusion. Absa Zambia works closely with the Bank of Zambia to develop and roll-out programmes that are targeted at the underprivileged, unbanked and rural population with limited access to banking facilities.

The bank has partnered with the country’s Mobile Network Operators to allow the public to access and move money from the bank to the mobile phones through the bank-to-wallet and wallet-to-bank services.

The Bank has collaborated with MTN Zambia to ensure that members of the public with mobile phones access banking solutions without using data.

Through the Financial Inclusion pillar, the Bank has developed banking solutions that are market relevant speaking into our customers’ needs. The Bank has developed products like the Ignition Student Account especially tailored for the youth with features such as no minimum balance and free ATM withdrawals to encourage youths to use and have access to banking facilities.

Furthermore, the Bank has the CashSend facility which is a mobile banking platform function allowing customers to send cash transfers to any mobile number in Zambia and the recipient can withdraw from any Absa ATM using the Bank’s cardless services. The recipient does not need to be a Bank customer or have a bank account. Customers can also pay bills and check account status through mobile banking.

In addition, the Bank has collaborated with MTN and Jumo to offer the award-winning wallet services KONGOLA and KASAKA that allows customers to borrow and save on their mobile phones. More than 27 million loans have been disbursed to customers since the product was introduced on the market over a year ago.

What range of financial management solutions do you provide?

Serving about 200,000 customers, Absa Zambia has a network of 34 branches in all 10 Provinces across the country. The Bank has a network of 124 ATMs with cash accepting capabilities and over 2,000 active Point-of-sale terminals. The Bank is one of the largest employers in Zambia’s financial services sector employing over 800 people across its operations.

Absa Zambia offers a diverse range of banking services for individuals, Small and Medium Enterprises (SMEs) as well as larger corporates. The Bank continues to be a strong foreign exchange business focused ondelivering a unique product portfolio to support customers’ investment plans. In addition, Absa Zambia has robust digital banking offering transactions easier and convenient.

The Bank’s offering can be categorised as follows:

  • Cash Management
    • Operational and Investment accounts
    • Foreign currency solutions
    • Payments, Collections and Channels solutions
  • Trade Finance
    • Documentary trade that includes Letters of Credit, Bank Guarantees and Documentary collections
    • Working capital solutions to include Invoice Discounting, Trade Loans and Supplier Finance
  • Financing
    • Debt and Capital Markets as well as Vehicle and Asset Finance
  • Treasury
    • Sales & Trading, Treasury Services, Wholesale Deposit and Investment Banking
    • Africa Access online platform allowing FX spot, forwards and swaps as well as real time execution in local and major currency pairs up to one year forward

What makes Absa bank stand out from other banks?

Our agenda transcends just meeting the financial scorecard. It is about being a force for good in society. We want to bring possibilities to life. As a Bank that has been in Zambia for over 100 years, we have a deep knowledge of the market and are able to tailor solutions suited to this environment.

Absa Zambia is a forward thinking Bank that has exciting propositions to offer customers in Zambia and across the continent. As part of its new brand identity, the Bank has committed to being a digitally-led organisation making extensive investment in technology to meet the ever changing needs of its diverse customer base.

The Bank prides itself in being a pioneer in technological advancements that have revolutionised the Zambian banking landscape. Its long history in the country gives the Bank an advantage based on the heritage and local knowledge of trends. Absa Zambia is a model investor committed to being part of the solution to a number of societal challenges.

Going forward, the Bank remains committed to offering unique business propositions that are relevant to various customer segments so that it truly is a financial partner to help customers achieve their financial needs.

Absa Zambia is committed to complement Government efforts in fuelling sustainable growth in the economy by supporting key sectors that include Mining, Agriculture, Public Sectors, Energy, Manufacturing, Telecoms, Financial Services, Wholesale and Trading.

Financial inclusion remains one of the Bank’s key focus areas so that financial services are delivered to different customer segments in the country through strategic synergies.

As a new brand in Zambia that is customer obsessed, the Bank endeavours to offer an enhanced customer experience.

*For more about Absa Bank Zambia PLC, its products and services, visit www.absa.co.zm

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Interviews

Exclusive interview with Mr. Mohammad Yaghi, Managing Director, Orbex

orbex

Who is Orbex? 

orbex serving traders responsibly

orbex serving traders responsibly

Orbex is a fully regulated financial services provider, headquartered in Limassol, Cyprus. Our business was founded almost 10 years ago with a mission to serve traders both ethically & responsibly.

Your tagline is “serving traders responsibly.” What was the inspiration for that mantra? 

As passionate professionals in the FX industry, we got tired of the flashy advertising shamelessly scattered all over the market, making baseless promises of wealth and profit. This caused a warped perception of the industry as a whole, and that didn’t sit well with us.

We wanted to change the way people looked at the forex market and create a community of responsible traders who know how to both respect the market and invest in it wisely.

We wanted to be the only company out there that didn’t promise you success but gave you everything you need to achieve it.

What are the advantages that traders experience when trading with Orbex?

Our traders can expect industry-standard top-tier trading conditions. Our spreads are as low as 0, our execution is seamless, our account types are well-crafted to suit a variety of trading styles, and of course, we are fully compliant with a clean regulatory record since 2011.

But, beyond that, our research team is unparalleled. Few brokers grant their clients free access to research and analysis of such a high caliber.

Our team consists of experienced analysts that curate and create technical, fundamental, and educational content on a daily basis. In fact, our research is so highly coveted that it is being featured on Refinitiv Eikon Financial Analysis Platform.

So, as an Orbex trader you don’t just get good spreads and low commissions. You get to expand your knowledge, develop as an investor, and engage with a thriving community of informed traders.

In your opinion, what are the most common pitfalls that traders tend to fall into? And how do you advise they avoid them?

Well, as you may have noticed, I think trading without research is the ultimate mistake. But when you combine ignorance with emotion, it’s a recipe for disaster.

The number one piece of advice I give to all traders is that they must work as diligently on their trading psychology and discipline as they do on their research.

Entering the market with the right mindset and a realistic set of achievable goals is the key to avoiding significant losses.

What are some of the online tools you have available?

Aside from our blog, which is where our daily content is published, we work with a number of helpful online tools to facilitate our traders’ experience.

Trading Central, for example, is an investment hub that offers support, trade ideas, strategy-building services, and risk-management tools, among others. Orbex traders gain access to this hub when they open a live account, in addition to all our other services.

We also have a Telegram channel, which is the preferred platform of communication among most traders. That way, we can get the latest market updates and trading opportunities to you in real-time, straight to your phone.

What trends do you see taking place right now that investors should take note of? 

Well, it’s clearly a very different time for the markets right now. The oil markets turned negative, and the COVID-19 pandemic has already ‘killed’ off many trends. So, the question now is, will others follow, and will new trends emerge?

Undoubtedly, some of the existing trends will die, but others will resurrect. I would say the golden opportunity lies with big data.

Existing and emerging technologies require data management, governance, data storage, smart platforms, and Artificial Intelligence (AI). And all of these are all driven by consumer demand.

What would you say has been the standout milestone for Orbex in the past year?

Without a shadow of a doubt, it would have to be becoming regulated by FSC Mauritius via Orbex Global Limited, in addition to Orbex Limited’s CySEC license and FCA registration.

These licenses are badges of honor that prove to our clients that their safety and security is our number one priority.

Sure, there were other fantastic milestones, like receiving the “Best Forex Broker” award from two renowned financial magazines, but I think getting licensed by yet another respected regulatory authority definitely takes the cake.

What are your plans for Orbex moving forward?

I think we’ve made some incredible strides in the last year or so, and I’d like to see us continue on this path.

In our future, I see more regulatory authorities on board, an even higher standard of research and analysis provided for our clients, a few more trophies from respected institutions recognizing our efforts, and a bigger and stronger community of responsible Orbex traders.

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