The fourth industrial revolution has finally arrived and the future belongs to a new set of key technologies. Steve Chiavarone, portfolio manager for Federated Investors, told CNBC that blockchain tech could set off a global revolution in information management, supply chain, administration and virtually every major industry.
Money poured into Bitcoin first, explains Chiavarone, as a result of investors looking for exposure to blockchain-which could bring more efficient supply chains and cut costs.
Mentioned in today’s commentary includes: Bank of America Corp. (NYSE: BAC), International Business Machines Corp. (NYSE: IBM), Cisco Systems, Inc. (NASDAQ: CSCO), Veeva Systems Inc. (NYSE: VEEV), Sony Corp (NYSE: SNE).
Along with AI, automation, robotics and the Internet of Things, key tech like blockchain may likely completely transform the global economy and the future is bright for companies that seize the initiative and pursue these game-changing trends.
Here are several firms that span the tech and finance spheres. Each one deserves special attention from investors. Take a look:
One of the best stocks of 2017 has continued its winning streak into the New Year. NVIDIA, the world’s leading computer hardware manufacturer, announced Q1 earnings that included a 66 percent jump in revenue and the company has seen its profits and shareholder value surge thanks to rising demand for data centers, accelerated computing components and graphics processing units (GPUS), an NVIDIA staple.
CEO Colette Kress expects data center revenue to skyrocket, from $701 million this quarter to $50 billion by 2023, an increase of 17,000 percent and to process this enormous increase in data management, NVIDIA is investing in deep learning training-developing forms of artificial intelligence (AI) that allow computers to learn by observing human behavior.
The AI work comes on top of NVIDIA’s Titan X GPUs, and while it’s only in the experimental phase, analysts are already predicting NVIDIA will emerge as the premier AI firm once the tech has been fine-tuned. That means the best stock of 2017 could be a winner for years to come.
Global Blockchain Technologies (BLOC; BLKCF)
Breaking Update: Hewlett Packard announces partnership with Global Blockchain Technologies to transform the data storage market. This groundbreaking agreement will allow users to profit from excess digital storage space, expanding on the success of companies such as AirBnb and Uber in utilizing the sharing economy.
Blockchain technology could transform entire industries. Put simply, it’s a digital ledger used to store transactions. It has been used primarily with crypto-currencies like Bitcoin and Ethereum. But its potential applications are far wider.
Already, blockchain is being used to transform real estate, finance, healthcare and retail, to name just a few.
Global Blockchain Technologies can be thought of as two companies in one: a crypto-currency hedge fund-type entity that enables shareholders to participate in the cryptocurrency market, and also an incubator for blockchain tech.
BLOC’s management is staffed with experienced pros and veterans of the crypto-currency marketplace. This is no “Millennial Millionaire” start-up looking to make a quick buck mining Bitcoin, but a seasoned, qualified blockchain and crypto firm that can secure the best investment opportunities.
BLOC holds a diversified portfolio of crypto-currencies, from the massive Bitcoin ($142 billion) to smaller cryptos with the potential for large jumps in value. According to President ShidanGouran, “When you invest in us, you’re investing in a company run by people who have been in blockchain from the beginning.”
Leading BLOC’s staff of experts is its Chairman, Steven Nerayoff. Nerayoff took part in the creation of Ethereum and helped engineering the currency’s meteoric rise…one that saw the humble crypto increase by 94,000 percent to a market cap of $70 billion.
BLOC leverages its deep bench of experts in finding applications for blockchain technology. Last year it entered into an arrangement which gives it partly ownership of KodakCoin, the world’s first corporate branded crypto currency, teaming up with Overstock.com and tZero to facilitate the KodakCoin initial coin offering (ICO).
BLOC is hoping to branch out into video games, an industry that already utilizes crypto-currencies for in-game transactions-the currency used in World of Warcraft, for instance, is worth more than the Venezuelan bolivar. BLOC is helping to create a “game galaxy” where crypto-currencies are used exclusively, and all transactions are processed on the blockchain.
Finally, the company’s premier blockchain asset is its new Laser platform, a tool that connects different blockchain networks into a single union-“blockchain without borders.”
BLOC can do all this with a tiny market cap, accessing potentially billion-dollar opportunities for its shareholders without exposing them to the risks inherent with individual investments in the Bitcoin world.
One of Silicon Valley’s trailblazers, PayPal hasn’t lost any momentum in 2018. The company added 8.1 million new active users in Q1, a jump of 35 percent from last year. Revenue growth is strong and net income reached $511 million, an increase of 29 percent.
But PayPal, which emerged as alternative to traditional financial firms, has since branched out-and it’s relying on its bill-splitting app Venmo to carry it into the next age of digital, peer-to-peer transactions.
Two million merchants around the U.S. now use Venmo, while the app’s total transaction base was $12.3 billion.
PayPal has been adding to its assets through acquisitions, taking over Swedish fintech firm iZettle for $2.2 billion before that company had a chance to carry out its IPO. Smart money is on PayPal following up this big buy with even more acquisitions, which would evidence an aggressive 2018 strategy.
Given how strong this stock has performed already, it’s clear the rest of 2018 looks bright for PayPal, particularly if its fintech investments pay off.
Bank of America (NYSE: BAC)
One of the biggest banks in the world is embracing “fintech”-financial technologies that could radically change how people, money and data interact. A few years ago, fintech firms started popping up all over the place. They seemed leaner and meaner than the established banks-but now venerable firms like BAC have gone back on the offensive, buying out their fintech competition and developing their own innovative tech to stay in business.
BAC has acquired a taste for blockchain patents, and currently holds more than any other financial firm.
One of those patents is for a blockchain-based system for managing network security-one that would be fully automated.
BAC boasted at Davos this year that it’s spent more money on blockchain tech than any other bank, though some analysts believe it’s falling behind in the fintech race. COO Cathy Bessant told CNBC that AI will be the key to fintech’s future-and feels BAC is at the forefront of bringing AI to average consumers.
On the basis of these innovations, BAC has been a strong performer, rising by 150 percent in the last five years. It’s long been an earner for shareholders, and with its investments in blockchain, BAC will likely continue to bring value to its shareholders. Its price might seem a little high, but for investors looking to profit from the fintech revolution, you could do a lot worse.
IBM (NYSE: IBM)
Another venerable tech firm with a long pedigree has bought into tomorrow’s technologies. International Business Machines (IBM) has been an aggressive advocate of applying the newest tech to solving a wide range of problems. When it’s not taking on new acquisitions, IBM is investing heavily in blockchain.
This year could be the year that IBM, along with other major firms, brings blockchain to mainstream business.
IBM has praised the blockchain for its security and transparency, and about sixteen months ago it launched a blockchain business. Right now, about 1,500 employees of the firm are working on blockchain projects.
One project has food and retail giant Walmart using IBM’s blockchain tech to track the food supply chain. IBM has launched an initiative extending blockchain solutions to small-time food distributors in Kenya.
IBM is also working with Maersk, the shipping giant, on using blockchain for logistics. With the resources to tackle major problems, IBM could emerge as the torchbearer that brings blockchain into the mainstream-allowing its shareholders to reap the benefits.
So, while the stock might be a bit overpriced and has suffered through some doldrums since early 2018, we believe IBM will improve as its tech imprint grows.
Other companies to watch as the tech industry continues to reshape the world:
Cisco Systems (NASDAQ: CSCO) is a major player in telecommunications hardware. With a market cap of more than $185 billion, the company earned $49 billion in 2015 and $48 billion in 2016. For years Cisco was a stable stock, though one that showed very little growth. But in 2018 the company plans on pivoting away from its old staples towards new products.
Cisco is about to make the transition from hardware to software. For years, Cisco sold the hardware needed to build and maintain telecommunications networks: internet routers, switchers and cables connecting thousands of offices and households.
Veeva (NYSE: VEEV) Veeva is one of the most prominent cloud services providers out there, focusing specifically on the pharmaceutical sector. The company’s cloud platform for the world’s pharma companies is more popular than ever before.
The cloud race is clearly heating up, with more and more getting into the SaaS business, but as a pioneer in a niche industry, Veeva can expect more repeat business and more solid growth than its competitors.
Sony Corp (ADR) (NYSE: SNE) is a tech heavyweight. From TVs to video games, Sony covers anything and everything media-related. The company’s infamous Walkman was in the hands of every young person throughout the 1980s and 1990s.
Sony’s partnerships and innovative technology make it an appealing investment for those looking for a company with longevity. Sony isn’t going anywhere and is sure to continue its entertainment dominance for years to come.
By. Charles Kennedy
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Seven lessons from 2020
Rebeca Ehrnrooth, Equilibrium Capital and CEMS Alumni Association President
Attending a New Year’s luncheon on 31 December 2019, we played a game that involved predicting the world in 2020. Some of the questions included: would Uber become profitable? Would the three-decade bond rally finally come to an end? Would the US hit a recession?
Unlike any of our predictions based on a traditional approach to business and predicting, we now know that 2020 became the year where business, professional and personal plans were turned upside down, reshaped and put-on hold. The proverbial black swan had arrived.
As revealed in a new CEMS Guide to Leadership in a Post-COVID-19 World, to which I contributed, the COVID-19 pandemic has exposed deficiencies in the 20th Century vision of leadership, giving a rare opportunity to question the status quo.
So, what are the main lessons from 2020?
- Humans are enormously adaptive. This is not an extinction scenario. The world is getting used to dealing with global human disaster which may become a recurring event. Life continues guided by new parameters.
- No sector or country is immune to rapid change. Just as the leveraged finance and equity markets ground to a halt during the Global Financial Crisis, we have seen a disruption in the financial markets (including M&A) in 2020, including a significant redistribution of wealth between sectors; think tech vs airlines and the hospitality industry. When a market is disrupted it has secondary and tertiary effects such as less work for accountants, lawyers, financiers etc.
- Location is not as important anymore. The belief that finance staff need to be based in one of the financial capitals to be effective has been forever altered. Pursuing a career in finance from anywhere is becoming possible. However, it’s likely that over time, financial controls and human interaction will move the work model back towards the traditional office approach, as work is a critical sanctuary for people. While working from home may allow more time for family, chores and sports, it is mainly effective for people who already have their internal and external networks. For junior employees it presents a notable challenge as they may be forced to spend their formative years without a chance to really build their networks.
- Change is likely to be lasting. The opportunity for alternative finance and tech focused providers is enormous and 2020 will accelerate this shift. For example, many retail banks are providing rather poor customer service, blaming the pandemic. Even the most loyal customers will be heading elsewhere. For recent graduates and current students this is a major shift; future winners and key employers may not be names we are used to seeing in the headlines.
- There will be a spotlight on leaders with visionary strategy and understanding of the operations. 2020 showed many politicians and business leaders behaving like they were playing a game of snakes and ladders, rather than executing a thought-out strategy. The next wave of thoughtful leadership is urgently required.
- Collaboration leads to success. The definition of a pandemic is an infectious disease prevalent worldwide. A global problem requires a collaborative solution rather than each country and industry on their own. Quoting Steven Riley, professor of infectious disease dynamics at Imperial College London: “Once you have the knowledge and you share the knowledge, then you are able to take measures to push transmission much lower”. This principle is transferable to management education. In a world more complex than ever, investing in a degree is hard currency. Combined with the full global alumni network, corporate partners and schools, CEMS is capital that doesn’t depreciate.
- Resilience has become a watch word. Saint-Exupéry’s quote resonates with me: “If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” We are in a new paradigm – so prepare for the next change. For COVID-19, while we hope that the vaccine will soon upon us, the broader long-term positive challenge remains.
Data after Brexit: How does the end of the transition affect GDPR?
By John Flynn, Principal Security Consultant at Conosco
The UK has officially left the European Union now that the transition period has ended on January 1st 2021. But this could raise issues with one of the biggest bugbears for many companies – the international transfer of personal data.
Businesses can relax, somewhat – GDPR, which took businesses months to get their heads around, is not being replaced. It will continue as the UK GDPR 2018, and will still be based on the criteria of the Data Protection Act of 2018. However, the UK will retain the right to change the UK GDPR as it sees fit in the future.
The main changes apply to those who receive data coming into the UK from Europe. Transfers from the UK to other countries can continue under existing arrangements.
We know it can be difficult to cut through the legal jargon, so we have simplified what you need to know to protect yourself and your data:
1 – Update your privacy notice
Most businesses do not have the correct clauses in place ahead of January 1st, potentially exposing their liability, should something happen to their data. All company privacy notices online will need to be updated to specifically state ‘UK GDPR’, as opposed to ‘EU GDPR’. You will also need standard contractual clauses in place, which cover both parties – those transferring and those receiving the data.
The Information Commissioner’s Office (ICO) has a list of what needs to be included in the standard contractual clause here. The ICO will remain the UK regulator for data protection, regularly liaising with each EU member state.
This also applies to Multi Corporate Groups who operate in multiple countries, who need to update their documentation and privacy notice to expressly cover the data transfers. The UK has applied for an adequacy assessment, which would negate the need for contractual clauses, however this has not yet been approved by the EU.
2 – Data privacy assessments
Any company which runs applications and software should always perform a Data Privacy Impact Assessment. This was also in the guidelines before, but these assessments are now more important for those who outsource their IT operations internationally.
For example, when using a service such as a cloud-based system, the company must be sure that its service provider adheres to UK GDPR and stores the data within the European Economic Area (EEA), or has a binding corporate agreement with the company, where data is stored outside of the EEA. You should also, as mentioned above, make sure that a contractual clause is in place.
3 – Review local legislation
Contracts should now have contractual clauses that specify the responsibilities of the data controller and the data processor. If you are receiving personal data from a country territory or sector covered by a European Commission adequacy decision, the sender of the data will need to consider how to comply with its local laws on international transfers. You should check local legislation and guidance in this case.
4 – Cyber Security health check
The ICO is increasing its capacity and efforts to crack down on data breaches, post-Brexit. Now is a great time for all companies to have a health check to understand their Information Security posture and GDPR compliance. Nobody wants to be caught handling data improperly and fined when it could have been prevented with education and training.
A gap analysis performed by an expert is money well-spent. It’s also a fact that companies that have cybersecurity and Information Security controls are not only able to better defend against attacks but are also far better placed to recover from an attack.
It’s important that all businesses – large and small – are properly preparing their data storage and transferring for the 1st January. ICO has been busy setting examples by fining large, high-profile companies for failing to keep millions of customers’ personal data safe.
It will continue to come down hard on the data breaches of personal identifiable information and special categories of data. The saying ‘prevention is better than a cure’ rings truer than ever this year, and you will thank yourself if you make the efforts to properly store your data now, and not when it’s too late.
2020 reflections and 2021 outlook
By John Hunter, Head of Banking and Fiduciaries, Finance Isle of Man
Reflections on the most surreal year
The Covid-19 pandemic has completely changed the world as we knew it, resulting in catastrophic loss of life and fears of a downturn hang over global economies like a sword of Damocles. In the UK, the new strain has further exacerbated the situation. As I am sure many have already said we are living in what could be called the most surreal times. People have been trying to cope with this “new normal”, by changing their lifestyles and evolving behaviours.
The Isle of Man responded swiftly to the pandemic by closing its borders and enforcing social restrictions which everyone respected and adhered to. Socially and culturally the Island demonstrated all the good things that come from living on a relatively small Island where community still means so much.
The Isle of Man’s financial services sector adapted quickly, seamlessly transitioning to working from home. The banks too adopted flexible remote working practices and continued to support clients around the world helping them navigate the challenging situation and making the most of any opportunities that arose.
Although there is no substitute for face-to-face interactions, we all embraced web-conferencing platforms like Microsoft Teams and Zoom to stay connected with contacts around the world and build and nurture business relationships, whether it was with financial services firms or high net worth individuals looking to relocate to the Island.
Furthermore, a priority for the Isle of Man has been to reinvigorate the business and cultural ties with South Africa. In a normal world, we would have travelled to the country, held in-person meetings with businesses and industry representatives and talked about building on our wonderful historic ties. However, because of the scale and breadth of disruption we had to change all our plans! We hosted a virtual roadshow which comprised a series of webinars exploring why it has never been more important for South African businesses and individuals to choose the right jurisdiction for long term financial planning.
Looking ahead to the future
We are all hoping that the global rollout of vaccines will provide the pathway to some form of return to normality and all the things people are missing will be back. Like amidst all periods of immense turmoil, interesting, new possibilities have emerged such as the revolution in work culture and a renewed importance of being close to nature and green spaces is. And these possibilities can help reshape society for the better.
The global economic recovery and rebuild might seem further away in the current environment especially amidst the new lockdowns. But we are confident in the resilience of economies and are hopeful that different industrial sectors and governments working together would result in green shoots.
The financial services industry has an important role to play in getting the world economy back on its feet. It is a core component of the solution to continue facilitating the financing of corporates, as well as to develop sustainable finance and nurture digital technologies which have proven to be vital during the pandemic. The sector should continue its cooperation and collaboration with governments and regulators to ensure efficient capital flows and financial stability for businesses and individuals.
Banks too have a crucial role to play as they are instrumental to the effective transmission of monetary policies and stimulus packages. As mentioned in a report by EY: “Financial insecurity in the wake of COVID-19 will require banks to boost consumer confidence and help build a more resilient working world.”
We expect the Isle of Man’s financial services sector and banks to continue navigating the situation with resilience as they have been doing thus far and contributing to the global recovery process. Also, we truly hope this will be our busiest year ever (subject to our ability to travel), with an extensive global schedule of planned activity to promote the Island as an international financial centre of excellence and innovation. Personally, I had planned to be in South Africa for the British & Irish Lions tour, but regrettably, it might not take place and as such we will look forward to catching up with friends there as and when we can.
No doubt, there are significant challenges for the world ahead but as Albert Einstein said: “in the midst of every crisis lies great opportunity”. And it is this opportunity that we all need to work together to identify and make the most of. We are confident that in 2021 the Isle of Man will continue to support financial services businesses help their clients, employees, and the wider society through these surreal times. We are all in this together.
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