Category Archives: Europe

What innovation strategies will unlock the growth in the financial sector in 2015?

Growth drivers of financial services, Today and Tomorrow

It will be very difficult to not mention ‘Fintech’ when discussing financial innovation of today. The buzz word has captured the attention of the media and, in turn, the media has started a cycle of monetization (conferences, special reports etc). No doubt, financial technology will be a key growth driver for the industry as a whole and over a longer period of time. Financial services companies that have brushed it aside will likely suffer customer attrition, while those that have embraced it will attract more and more ‘mobile’ customers. Some thinkers speculate that new comers coming from outside the financial industry could oust big and slow incumbents, but that is a little too stretched. Finance is, at the very core, a ‘conservative’ industry. But even though ‘Fintech’ is here to stay, it won’t be the main driver of growth for the year at hand, 2015.

Having touched upon the hype of today, which innovation strategies will unlock the growth in the financial sector in 2015? The short answer is the innovation that has been happening at the core of innovative financial services firms, which is to acquire the execution capability to provide cross-border investment solutions and advice in the institutional space, while also providing the ability to replicate something similar for retail investors. These early movers will immediately reap the benefits and growth will come in the traditional forms of increased AUM and fatter fees, not tomorrow, but today.

Asia’s Institutional Appetite for Global Assets

There is much money in Asia that is looking for solutions to invest in global asset classes. China’s sovereign wealth fund CIC (China Investment Corporation) which holds assets of 652.7B USD (end of 2013) of which about 220B is invested in overseas assets, manages about 67% of this through external management. Those Chinese and global advisors who have invested in their network and relationship with CIC and Chinese decision makers will reap great rewards. CIC holdings grew a whopping 13% (77B USD in absolute terms) in 2013.

Japan’s Government Pension Investment Fund (GPIF), the largest of its kind in the world, manages some 137B JPY (1.14T USD, end of 3Q 2014). Its overseas allocation is 13.14% in global bonds and 19.64% in global equities. Recently, its decision to more than double its target allocation of foreign stocks to 25 percent, which came together with BOJ’s shocking decision to ramp up stimulus, was greeted with a world-wide equities rally. Again, those firms who had strategized before-hand and have come up with innovative solutions will stand to benefit.

NPS, the Korean national pension grew 10% in 2014 to 426B USD. Of the 42.9B USD increase, 20B was in global asset classes.

Recently, the Ministry of Employment and Labor of Korea, selected one lead manager to manage its 14B USD holdings. In the past, it used to directly apportion the holdings to about 10 different managers. In the new scheme, a single manager will be making the decision as to which asset manager will get how much, while the firm earns a fee on the total AUM for providing advice and risk management services. This ‘beauty-contest’ to decide which firm will lead was decided based on many criteria, of which allocation and execution skills were key.

Reduced home bias, a common trend for all Markets

In their Global Pension Assets Study 2015, Towers Watson calculated a 6.1% rise in the assets of the top 16 markets reaching a 2014 year-end total of 36T USD. During the last 10 years, the most rapidly growing pension markets have been Mexico (16.1%), Australia (11.7%), Hong Kong (10.0%), Brazil (9.7%) and Canada (7.3), when measured in US dollar terms. Since 1995 bonds, equities and cash allocations have been reduced to a varying degree while allocations to other alternative assets have increased from 5% to 25%. There is a clear sign of reduced home bias in equities, as the weight of domestic equities in pension assets portfolios has fell, on average, from 64.7% in 1998 to 42.9% in 2014.

Innovation of Core Competencies: How to execute is a strategic choice

As the most visible ‘smart money’ in each of the regions, SWFs and pensions have great impact on how wealth managers advise and HNWIs invest. Financial services firms all over the world, both local and global, both emerging and developed, will be competing for the patronage of not just institutional clients but also HNWIs.

Winners will have already answered critical strategic questions: Will it provide execution for all or part of the vast space that is global asset classes? Will it forge alliances or go it alone to create a platform for that chosen space? How much customization and dedicated personnel will it provide to the major SWF and pensions? How much, if at all, can this capability be replicated or mirrored for the retail clients?

Local firms have the clients, global firms have the execution capability. Fintech firms are providing easier and cheaper ways to reach both clients and execution platforms. The innovation challenge is huge: people, IT and networks. It is almost to the scale of reinventing the whole business process and value chain.

In the Now

This megatrend is not in the near future, it is in the here and now: 2015. Firms that innovated their old locally oriented models are experiencing growth. Those that think this is still a future event are quickly losing ground.

What are growth drivers in the global retail chain sector in 2015?

Being a leading-edge retailer requires a high-effort diligence to be innovative and a commitment to excellence in customer-centric practices, whether they are customer facing or not. To maintain a competitive advantage in 2015, retailers should focus their attention on meeting consumer demand in the following three areas: omnichannel capability, information security and customer loyalty.

Omnichannel capability

Omnichannel, in its simplest definition, means to be everywhere the customer is and provide the options to browse, consult and buy on demand when and how the customer wants. Consumers are looking for simplicity in their shopping experience – invisible transitions from one mobile platform to another (i.e. tablet to smartphone) and limitless accessibility to a retailer’s merchandise. While purchases at physical stores still far outpace the rapid growth of traditional retailer’s online shops – 94% to 6% according to the U.S. Census Bureau – retailers are finding innovative ways to blend selling channels for consumers.

In-store pickup for online orders. Major U.S. retail chains such as Macy’s, Sears, Target and Wal-Mart give consumers the option to make purchases online and pick up items from a local store, which uses existing e-commerce technology and store-level inventory systems to repurpose the store as a fulfillment center. Retailers who leverage both the brick-and-mortar store experience and a digital presence, with appropriately tailored features and benefits, will see results from this winning combination for both the retailer and consumer.

While continued investment in technological systems is critical, retailers also need to focus on attracting, grooming and retaining the right talent who can think broadly and strategically to create and grow the infrastructure needed to bring the omnichannel vision to life. The sector needs leaders who can drive results through people, and not at the expense of one over the other.

Information security

The level of awareness – and concern – about potential security breaches of personally identifiable information is on the rise. The 2013 security breach at Target, which cost an estimated $148 million and impacted over 40 million payment card numbers, was followed by the data loss of 56 million credit cards at The Home Depot in 2014. These similar breaches have occurred at eBay, T.J. Maxx, Marshall’s and Michael’s.

Chip card + PIN transactions. To gain consumer confidence, active measures must be taken to mitigate risk and safeguard collected data. Consumers will see a widespread adoption of PIN and chip card technology at point-of-sale by retailers, primarily driven by an October deadline among the major U.S. card issuers. Under the agreement, the least compliant party – card issuer or retail merchant – assumes liability and expense for future breaches. More commonly referred to as EMV, this global payment system works to reduce fraud and secure data through multiple levels of encryption. An estimated 575 million chip cards will be issued by the end of 2015. Information security has to be a priority for everyone who handles data – not just IT, systems or legal.

Retailers also must be willing to disclose how they are using data such as email addresses and spending levels: not asking for the sake of asking, but leveraging information appropriately to drive business decisions toward the benefit of the consumer.

Customer loyalty

Consumers who feel connected to a retailer’s identity are usually its most consistent social promoters and most profitable customer segment. Brand affiliation for consumers is an outward expression of lifestyle choices – social responsibility, fitness and environmental consciousness, among others. Retailers must continue to invest in rewards delivery networks that provide personalized, tailored experiences for consumers – often, this comes in the form of a loyalty program that offers value in both tangible and intangible ways.

Shared partner loyalty programs. Coalition loyalty programs allow consumers to earn and redeem a single rewards currency at multiple stores with a single card, offering retailers a unique and unprecedented view into consumer behavior. Popular and successful in driving engagement and profitability worldwide for over 20 years – Germany’s Payback has a household penetration at 60% or Spain’s Travel Club at 70% – the U.S. introduced its first national loyalty program coalition, the American Express-operated Plenti, in 2015.

Retailers must also focus on a multi-generational strategy for attracting and retaining all customer segments. A new generation of best practices will continue to emerge on how to recruit millennials to build loyalty to brands without alienating existing customers from other generations who are driving sales and profit today.

“How should Corporate Treasurers handle currency volatility in the markets with hedging?” Interview with Mr. Ashish Advani

According to David Woo of Bank of America Merrill Lynch, an unspoken currency war has broken out, which would make it more expensive for companies to take out insurance against currency flows. How should corporate treasurers handle this currency volatility in the markets with hedging?

The world has been experiencing some form or another of currency wars for the past couple of years. This has led to a significant amount of volatility in individual currency pairs. Each international company has been affected by this and has had to respond in various ways.

Dependent on the currency hedging policies, companies rarely hedge their translation risk. Translation risks are too large and expensive to hedge and can have a very material effect on cash flow of the company. But many companies will hedge transactional risk, also known as Balance Sheet hedging.

In today’s volatile world where we have such currency wars, there is a definite pattern to the direction of the currencies. The emerging market currencies tend to bunch together while the commodity currencies will act in a particular fashion. It is a little bit easier to manage groups of correlated currencies then hedge each risk by itself.

In this environment, it would be wise for companies to utilize techniques such as Value at Risk (VaR) or Cash Flow at Risk (CFaR) which enables companies use statistical functions of correlation and determine an optimum level of risk between the various currencies. Once a company determines such a statistical level of risk, it can use portfolio risk hedges to manage its currency risks. There are a number of SaaS software solutions that one can use to manage currency risks in such fashion.

Will hedging currency with Exchange-Traded Funds (ETFs) dampen volatility?

There is little to no evidence that currency volatility managed by Over The Counter (OTC) derivatives increases or reduces volatility compared to utilizing Exchange Traded Funds (ETF) as a means of instrument used to hedge risk. One of the critical components of hedging is receiving Hedge Accounting treatment so that the volatility of the hedge portfolio does not run through the P&L each period. By utilizing OTC derivatives, the risk metrics are closely aligned to the hedge instrument thereby achieving a close to perfect matching of terms and thus obtaining Hedge Accounting with very little ineffectiveness.

When we use ETF’s we lose a fair bit of the close matching of the terms of the risk (duration, notional volume, etc.) and thus one can experience a fair bit of effectiveness leakage into the P&L when applying hedge accounting. It is therefore advisable to utilize OTC hedge instruments compared to ETF’s for corporate hedge accounting programs.

What are the steps corporate treasurers can take in regards to foreign exchange risk?

I believe that currency volatility is going to remain with us over the next few years. As the world goes though some unprecedented geo-political, as well as economic turmoil, we may see increase in such currency volatilities. I believe we are in the early phases of a sea change in the world with the US Dollar facing an imminent threat to losing its reserve status in the world. Last time this happened in history was when the British pound lost its reserve status around the 1910-1915 era and the world experienced a World War as one of the outcomes of that turmoil. While I am certainly not predicting similar outcome, it will not be a smooth and orderly transition if the US Dollar loses its reserve status.

This is not a time for Treasurers to be indecisive or nervous about hedging the currency risks that the company faces. It is time to seek and obtain the necessary skills required to manage its risks as well as stay continually abreast of the changes that we are experiencing.

The changes are not limited to the market movements and directions but also refers to the new innovations and techniques of hedging along with the multitudes of changes in accounting guidance that are being unleashed upon corporations. Finally, the new laws and regulations that mandate the tax laws that affect cross border transactions also have to be studied in lock step to ensure that the company is in full compliance with its objectives and is not caught unaware.

It would behoove a Treasurer to obtain professional advice in determining the currency risks, evaluating the various techniques of hedging, choosing the right instruments, understanding and obtaining compliance to accounting regulations and guidelines and then executing a series of hedge transactions. Once that is done, it is also important to continually monitor the risks, observe shifts in markets and then adjust the hedge strategy accordingly.

According to Jared Cummans of ETFdb, “one of biggest hindrances for the currency-hedged world is education; investors simply are not comfortable with the idea of hedging their fund because it sounds intimidating on the surface.” What would you say to these investors hesitant to a currency-hedging strategy? 

Granted that hedging can be an intimidating concept to an average investor or company not large enough for having its own dedicated treasury department of currency and hedging expert. It can become an enhancer of risk rather than a mitigation of risk if applied inappropriately. In some rare cases it can lead to a higher risk of bankruptcy if one is not careful.

Yet that should not be the reason an investor or company decides not to hedge its currency risk. One has to realize that a decision not to hedge is a decision to allow risk to control some part of the results of your business. Like most other risks in business, if you do not manage it, it can have unintended consequences for you. A decision not to hedge or a decision to postpone the decision of hedging due to lack of knowledge is not a prudent decision.

Fortunately today in the market, there are quite a few currency services that can be employed to help assess the situation, determine the risk, optimize the hedging strategy, execute the hedges and manage the accounting behind those hedges. There are a number of turnkey outsourced solutions available for the inexperienced or fearful investors / companies that can help in gaining such expertise in a quick fashion and help getting control of the currency risks that can significantly affect the outcome of your business or investment portfolio.

What trends and challenges will the Automotive LED lighting market face in 2015?

To many, LED’s are the hot topic of the moment where lighting is concerned. Given the hype that has surrounded them in recent years, it is still surprising how little they have actually penetrated the automotive lighting market. So happily, in an age where growth is all too scarce, the LED trend is still very much an upward one.

Passenger Car Lighting
Safety and comfort are the cornerstones for every vehicle. As a result, reliability has always been a key item where lighting on a car is concerned. The long life of LED lamps was initially attractive, however, low brightness and high cost meant that they were generally restricted to use in dashboards. Nowadays, LED solutions are smaller, brighter, more efficient, last longer and cost less. They already provide smaller day-time running lights and fog lights that deliver superior performance for less energy, which in turn requires less battery power and smaller cables. Weighing less than their traditional counterparts, they contribute to more fuel efficiency and a greener vehicle. Designers have been able to unleash their creativity by using multiple small sources in place of one larger point source. (Think of creative brake light designs that look like eyes.) LEDs can be individually addressed allowing for multiple functionality. For example, some of the brake lights can change color or form a pattern depending on whether the vehicle is stationary, turning or driving normally.
The front of the car has also seen technological advances in recent years and the smaller size allows for better aerodynamics and energy efficiency. But because an LED headlamp is made up of multiple small light sources that can be individually addressed, the beam can be more precisely controlled. This means that for the first time, we have adaptive lighting which can turn the shape of the beam as you turn a corner; allowing you to see more in the turn. This adaptive ability will be a big trend in 2015.
Exciting as that is, already the use of lasers for headlamps are being touted as the next big thing. On the horizon too are Organic LEDs. OLEDs can be made in any shape, giving designers the freedom to create uniformly lit panels that clearly differentiate the particular brand. But even more exciting is that they can be flexible; allowing them to conform to the shape of the vehicle.
Lighting will continue to feature more prominently in the overall design of the exterior of the vehicle and brands/models will be recognizable by these signature looks. Who would have thought that you would recognize a car at night just by the shape of its brake lights?

LED Interior Lighting For Passenger Cars
Here, the focus is on style, personalization and ambiance. Whether purely functional, or design-oriented; LEDs in car interiors provide efficient and stylish light which can be addressed, dimmed or personalized in ways never before possible with traditional lighting.
Just as each ignition key can adjust the seat and mirrors automatically, LED lighting opens up completely new styling opportunities to illuminate interiors in different colors and levels of brightness. Lighting in the foot well or door panel can automatically turn on and aid entry into the vehicle for those with mobility issues. Luminous ceiling panels can mimic the sky and help the driver feel ‘fresher’ on rainy days or during long journeys. The interior of the car can be zoned so that it is optimally set for tasks such as driving, reading a book, or watching movies in the back. The fun element can also be addressed with LEDs; lighting can change with the choice of music or soundtrack from a movie. A green interior for St Patrick’s Day or orange for Halloween anyone?
Sensors are another trend. A simple daylight sensor could gradually dim dashboard lights while increasing headlamp brightness. Or imagine a bio-sensing steering wheel that could measure your vital statistics and flash a light alert if it thought you might be falling asleep at the wheel. One of the biggest challenges here is knowing when to stop. What should development dollars be spent on? What will consumers be willing to pay for?

Truck Lighting
Trucks must withstand enormous loads, for long periods, often driven in poor conditions. Daily professional use means that high performance solutions with a long life are required. Again, LEDs are being used in more and more areas of the vehicle, resulting in less down time and maintenance costs, lower power consumption and less weight. This amounts to huge savings in fuel consumption.
The use of ‘off road’ LED lamps improves recognition of signs, obstacles and hazards. Since these are much brighter, more efficient, more mobile and weigh less than their traditional counterparts, more are being bought and used. This is also true for emergency and other service-type vehicles. So the trend will be an increase in both value and volume in the short term.
Coupled with advancements in interactive streetlights that decrease light output when vehicles are not in the vicinity, the trend to increase efficiency and reduce energy consumption will continue.

LED Interior Lighting for Trucks
Professional truck drivers travel formidable distances night and day. LED Interior lighting for commercial vehicles could be adapted to help drivers’ natural bio-rhythms. Using light to suppress melatonin production and make drivers feel more awake, hazards and obstacles could be detected more quickly; improving safety and concentration on long journeys. However, the possible long term effects of altering natural rhythms are unknown and further study is needed. In the meantime, the technology could be used to simply wake the driver more naturally – with light – rather than an annoying alarm clock.
Given the amount of time spent in the cab, personalization of the interior is a trend which is enjoying a growth spurt thanks to all things electronic. Interior designers will be challenged to find the right balance between cost efficiency and providing a ‘template’ of built-in options that will allow the occupant to stamp their own personality on the interior.

LED Innovation
Traditional light sources didn’t change much over decades. LED lamps continue to rapidly improve in terms of cost, efficiency, quality, life and color. Their use in the automotive sector will deliver energy and maintenance savings, allow unique vehicle designs, personalization of interiors and contribute to better road safety. Designers will be challenged to keep pace with the technology so that products are not obsolete before the cars hit the showroom.

What are the top cloud trends that will shape 2015?

The usage of cloud-based services continues to penetrate deeper in to the enterprise than ever before. The fear factors of security, data control, privacy and contractual exit strategies continue to be tempered by the virtues of cost savings, availability, speed to market and innovation.
If you are evaluating technology upgrades, replacements or acquisitions, 2015 is the year that cements cloud on the list of considerations.

I have detailed below in no order of importance what I think will be the main cloud focused trends in 2015 but I would love to hear what else you would add to the list?


Thanks to the price and feature wars between the biggest providers including AWS, Microsoft and Google the market is now more available than ever as organisations now look beyond raw infrastructure for value.

Hybrid Clouds

Gartner broadly defines hybrid clouds as the combination of two or more cloud services coming together to create a unified cloud experience. It can be a mix of private and public cloud services, but can also include combinations that are all public or all private.
In 2015 a blend of on-premise and cloud services is pretty normal but enterprises should adopt cloud services in a tactical way that ensure they’re getting the right match and secure model to suit the needs of their organisations. Hybrid cloud is the much-discussed direction that many organisations will ultimately follow.

Hybrid cloud management tools will improve and allow IT organisations to seamlessly administer and operate them securely.

Cloud Operating Models

As cloud services converge with social, mobile and information in what Gartner calls the. “Nexus of Forces”, organisations will need to start incorporating cloud operating behaviours in a platform for digital business.

Maturing and well defined Cloud Market

The cloud marketplace has matured significantly and moved away from the free for all approach of the past couple of years. The global scale cloud providers such as AWS and Microsoft’s Azure will continue to operate at the high end but there will be lots of smaller, more regional, industry focused custom providers to fill in the gaps around them.

Cloud Brokerages

There will be a rise of intermediation services that will seek to help organisations manage and integrate their cloud services. Organisations new to the cloud and those delving in to the hybrid approach will welcome such third-party providers and the niche skills they bring but will need to decide how much they cede control.

Enterprise Workloads Moving in to the Cloud

Amazon’s AWS has long been a go to choice for those offering online services but 2015 will see a greater enterprise adoption for not just AWS but Microsoft’s Azure and Google’s Compute Engine amongst others.

Cloud is the new style of elastically scalable, self-service computing and many enterprises will look to embrace all that it can offer.

Containers will gain momentum

Containers have helped solve many of the problems that the cloud poses for IT operations. Developers love containers but IT operations now need to be able to containerise different parts of an application, locate them in different types of cloud infrastructure, and manage them as discrete units whilst keeping the part acting as a whole.

Compliance and Regulations

As cloud platforms continue to mature, cloud is spurring interest from even those industries that have previously been hesitant. Think of those most beset with regulation, compliance and privacy: public sector, life sciences, financial and health care. Lots of cloud providers will take the necessary steps to receive appropriate industry certifications, creating more platforms designed to align to Sarbanes–Oxley and others.

Internet of Things

Interest in the Internet of Things will build throughout 2015. Positioning clouds and applications for it right now is difficult but if your organisation is moving in to this space you need to be prepared for how to capture and store the potentially large amounts of resulting data. Everything from orchestration to database management tools will need to evolve to better support this area.

Disaster Recovery

Traditionally this has been a problem area for IT but DRaaS enables you to address many previous problems such as testing, the high cost of installing a backup system and accurately mimicking potential issues. I think this will be a growth area in 2015.

With CIO’s under constant pressure to deliver innovation and business value whilst continuing to provide BAU services, they are always looking for new ways in which to achieve their goals. Cloud services have often provoked fear in many enterprises due to security, data and privacy issues but with the market rapidly maturing, costs falling, security and services improving could this be the year that cloud thrives?

How will tech innovations impact the retail and consumer goods industry in 2015?

The overall supply chain (meaning manufacturers, distributors and retailers) is facing a huge business transformation. Companies will have to change their methods and stand new commercial and operational capabilities to meet the customers’ expectations and behaviors’.

Smartphones will catch, follow and drive from web to store the customers’ attentions and consumption. About 65% of the global population will use a mobile phone by 2015 and these mobiles should attract 83% of Internet usage. Companies have to turn to predictive analytics by computing their information, and targeting the right product offering to the correct consumer in the most appealing way.

SMAC (social, mobile, analytics and cloud) will feed back to the industries and the retailers, helping them to develop a real-time connection with their clients. We speak about rating, mobile search and information (mobile to store process) localization, and of course servicing.

Demand driven revolution will help to move to yield management, predictive real-time demand and reduce inventory and prevent stock-outs. Consumers and the regulators will focus more and more on data safety and privacy. Ability to trace and record information will be an advantage to the company in order to provide the consumer with the trustworthy, suitable and effective information they are waiting for.

Internet growth utilization and household budget pressure will provide more digital based applications to help customers to find the best value-for-money. Theses consumers will search for used products and/or will recycle them as secondary goods to be sold. Sharing, exchanging, renting goods and/or services will develop the circular economy, and that will have an impact on the traditional retail business.

While customers will use these new technologies more frequently, others will abandon and turn back to the “old world”. Afraid, against the tracking, they will stop utilizing these tools and technologies for a world without the GAFA (Google, Amazon, Facebook, Apple), searching for a new value for their consumption such as direct link with the producer (alimentary goods), less technology (against Wifi, cookies,..) fighting against big brother, more (previous) real relationships and downgrading their overall consumption.

We believe that 2015 could be the year of contrary trends. More technology and products, services with retail driven by these new IT customers behaviors… and at the same time, back to an “old world”, with less technology, searching for “real” goods and services, based on the sustainable downsizing consumption.

What are the top trends in the global banking and which segments will be the growth drivers?

There are many challenges that banks in general have to face in the year 2015 and in general in the near future. Let me highlight one, which is the nature of their existence as we have come to know so far.

The impact of technology and the emerging non-banking banks, selling an assortment of products and services, are constantly questioning the concept of the universal bank. A bank will be the company that helps us manage our personal finances, safeguard our savings, facilitate our transactional use of cash, and generally offers individuals and businesses quality services at optimized costs.

Today banks are under tremendous pressure to maintain and improve their strategies for growth and value creation. It is clear that the changes affecting the banking industry are dramatic: regulation, specialization, the pressure to gain size and efficiency, and improvements for scale, are all leading to major players needing rethink their strategies to maintain and improve their ability to generate resources efficiently. Traditional ways that banks have grown so far are in doubt.

 From my point of view there will be 4 major trends in the new banking industry:

  • Impact of technology
  • Regulatory aspects
  • Training and skills of managers
  • Business intelligence applied to customer satisfaction

Innovation in banking will no longer be a differentiator, but an element of survival. In this regard it will require the vital capacity of each bank to establish and develop tools for information management. This allows executives to use this information strategically in order to meet customer expectations. It will no longer be sufficient to have a good product or service, moving forward it will need to be backed by knowing in advance exactly who to target and how it should be offered.

There are signs that the banking industry is polarizing. The guarantee of survival will basically be to become a global player, who can efficiently exploit synergies with industrialized management and enlarge capacities for geographical diversification. And secondly, niche players able to offer tailor-made solutions.

The demands for greater transparency and more demanding regulatory requirements and commitment to society will force global institutions to be more efficient; because if they do not business will become increasingly expensive. Only a business a large enough critical mass to absorb these costs may capitalize banks operationally in the medium term.

In general, banks will have to make great efforts to understand and differentiate the needs of its customers by the segment in which it is intending to grow. Creating internal management instruments for key information and a business intelligence tool that allows them to anticipate their needs will certainly add valuable elements.

Within the retail banking business it has been shown that small and medium enterprises are the most profitable, however this can only be achieved by placing focus on a basis of expertise. After acquiring a new customer its profitability becomes higher than any other segment.

Meanwhile personal and private banking is facing a period of high competitiveness where it is very difficult to differentiate between other market players. Only through faith in their professional service and the ability to generate differentiated products may they achieve sustainable growth rates.

Personal banking banks will struggle to attract “premium” customers. These are families and generally high-income professionals, who seek quick fixes and are highly digitalised. They are accustomed to a high quality service and are consumers of at least 5 products or services offered by the bank among which are; the current account, means of payment (debit and credit), financial products for household savings, insurance protection or planning for the future, and all with easy access via smart phone or tablet.

In regards to the customer opinion, confidence in your personal banker will remain key, but have a prestigious institution away from scandals and a conservative profile will be seen as an added value.

Finally in investment banking, global businesses will be more regulated and transparent. The ability to offer value-added services and advisory for large corporations and institutions will only be available to global banks.

What will be the top opportunities and challenges faced by global clean energy market in 2015?

The sharp and sudden fall in international oil prices in recent months has generated a radical change in the global energy market. With low oil prices equations are rearranged and new winners and losers emerge along the entire value chain, not only of petroleum products but also of substitute products and secondary energy markets.

In recent years, clean energy sources have gained importance in the global energy scene; clean energy has achieved broader participation in energy portfolios around the world. However, in order to identify opportunities and challenges that arise in this industry globally, it is important to make two clear distinctions: First, it is not possible yet to speak of a global clean energy market, as it happens with other primary energy sources such as oil, coal or some refined products. In this regard, clean energy still does not constitute a global market as such; ie markets of clean energy remain local and in few cases regional. Second, it is important to point out what is considered as clean energy; in other words, there is still no consensus of the energy sources that are considered clean energy. In general nuclear energy is considered clean energy, although there are detractors that still do not consider it as clean energy. Also, in the case of biofuels there is a strong debate on the environmental effects of biofuels along its entire life cycle.

Considering the above, it is difficult to establish general recommendations and points of view for a clean energy industry as a whole. Nevertheless, it is possible to point out some general rules of thumb. In the case of renewable energies, such as wind and solar, currently these sources are almost entirely focused on power generation that in most cases are direct competitors of other conventional power generation technologies, such as natural gas or fuel oil. On the opportunities side, the sale of renewables and other clean energy, these sources are often favoured for their zero variable cost, so they are the first to be dispatched and therefore gets the highest kw/hr rate.

Strategically speaking, in the case of hydroelectric or nuclear power, in many cases these represent strategic and national security investments that vary from country to country. Their investments constitute decisions that take into account levelled generation costs that are modulated by the cost of the externalities associated with the project and their role in public policy.

As mentioned before, in general terms, the challenges and opportunities for clean energy depend largely on regional or local conditions. In the case of countries in which low oil prices have a negative effect on their economies, it is expected that their levels of public investment and economic activity be affected. Economic constrains can lead to austerity programs and general savings that can cut subsidies and opt for electricity generation projects with the best economic options in the short term. Furthermore, some renewable projects, in many cases have to be developed together with additional backup generation capacity, which implies extra costs. Nevertheless, opportunities arise with projects such as distributed power generation projects that in many cases increase reliability and bring cost reductions. In this sense, renewable energy projects represent a viable alternative that replaces or complements other transmission and distribution projects for remote or difficult areas to access.

On the other hand, countries in which their economies are favoured by low oil prices, opportunities emerge as result of greater economic activity and industrial development, which results in greater electricity demand, expansion, and the development of less vulnerable systems to external volatility.

The consumption of electricity around the world keeps growing, although at lower rates, but this together with the current energy market situation, represents a clear opportunity to evaluate the high vulnerability that today’s oil-driven economy is facing. Now, more than ever, a balanced portfolio of clean energy represents a viable alternative to establish energy models with less susceptibility and focused to the long term growth, that also takes into account the reduction of greenhouse gases.

What will be the top three global challenges & opportunities facing the Telecom industry in 2015?

The telecom industry has been in turmoil for some time already. The voice and data volumes in traditionally fixed and mobile networks are declining, and the trend continues to give headaches to operators, who are increasingly turning on their business priorities to provide content in their networks.

1.     Ubiquitous communications – is there capacity enough?

Telecom users are connected wirelessly to the internet and other services all the time at home and at work. Increasingly many transportation companies, including trains and buses, now offer wireless connections to their customers. Not to forget airlines, which are rapidly updating their planes to allow WiFi-connectivity – and even the possibility to use mobile phones – during flights.

This is why there is increasing press for cities and other public players to provide free-of-charge wireless access at city centres and market places. The private players have already understood their responsibilities and have a free-of-charge WiFi-access in their boutiques and shopping centres.

The challenge for the telecom industry will clearly be how to handle the declining data volumes over the mobile networks (GSM, 3G, 4G), as the WiFi-access available all over will provide a free-of-charge connection.

 2.     Cloud storage – what about the data security?

Although smart phones have become increasingly smarter, the users still have a number of devices with which they wish to have access to all of their data, especially photos, videos and music. They may have a laptop with Windows, an iPad with Apple’s iOS and a smart phone with Android – too many operating systems to allow easy synchronisation for a normal user.

Here come the cloud services as an answer. The telecom industry has found the cloud services as a good sales argument, so almost everyone is providing one. We seem to have a sky-high trust in these cloud-services – of course, nobody can steal anything from there! If we are honest with ourselves, we actually do not know very much about these cloud-services. Where are they located, who administers them, how good is their data security?

This is an easy service for the telecom industry to sell, as typically they do not provide the cloud-services themselves. To add customer value and be successful in the field companies must embrace fresh and creative power, as well as flexibility of open cloud. The ability to manage a large amount of consumer data and anticipate customer behaviour through data analytics, at the same time as keeping it confidential is a unique opportunity to shine and stand out from its competitors.

3.     Soft-SIMs are coming

Machine-to-Machine (M2M) communication has extended already all forecasts, and this business area is one of the fastest growing within telecommunications. These applications have great potential to erupt in the market. By leveraging their network assets, large customer bases, and distributed field forces, telecoms players can increase value.  M2M has endless possibilities, and some of the most used already are automated meter readings or supervising fleet movements.

Traditionally M2M has utilized mobile communications technology, i.e. GSM, 3G or 4G. This, however, means that M2M utilities demand a SIM-card and a mobile phone number.

Many countries have already needed to review their telephone numbering plan for mobiles to allow enough capacity for exploding demands. Another issue is that telecoms authorities still demand number portability to also cover M2M – and this would mean costly SIM-card exchanges for thousands or millions of equipment spread all over, geographically.

The answer here is the soft-SIM. A “SIM-card” which is made by a software without needing a physical card at all. A soft-SIM would allow, for example, an operator change in a number portability operation to be carried out over-the-air, which would bring huge cost savings to M2M service providers who, at the same time, would be able to enjoy benefits – i.e. lower prices – of competing operators. Operators, naturally, have tried to slow-down the soft-SIM development, as is it not in their favour that the customers could change operators too easily. The soft-SIM development has been active for years; will the year 2015 be a break-through?

To summarize

If innovated correctly, Telecoms have great potential to move from passive infrastructure providers to platform and solutions providers. For the establishment of successful business opportunities, it will be integral to build good customer relationships and a strong channel presence. We can be confident that, utilizing this platform, exciting business opportunities will be presented.

What is the perspective for the electric vehicle market over the next 3 years?

The market introduction of electric vehicles (EV) requires preparing the product environment. Electricity networks need to be upgraded, public charging stations installed and electricity charging services should be offered to EV users.

The imminent growth of the EV share in the car market implies technical and commercial challenges. The electricity grid will suffer from the impact of EV stock growth. To minimise this negative consequence, it is crucial to prepare the grid integration of EVs. Charge management, vehicle-to-infrastructure and vehicle-to-grid are some of the solutions that are planned or that already exist. ICT will play a critical role to allow and optimise the implementation of such innovative solutions. Also, sustainable business models need to be conceived to ensure the deployment of an effective EV environment, which represents one the main challenges.

However, the most relevant technological barriers affecting the EV market deployment have been overcome during the last years. Current charging infrastructure and electricity grids can manage the EV loading process, allowing the use of vehicle batteries as a big distributed storage to balance the generation and load-fluctuation. Batteries can charge power when renewable energies are present in the grid and feed it back into the grid later or take into account electricity tariffs. Furthermore, electric vehicles help the energy industry optimise the load management of their grids.

From the vehicle standpoint, current EV architecture and technology optimise energy management, allowing users to drive more than one hundred kilometres and satisfying their needs as about half drive less than 50 km per day. The EV market share is thus increasing due to the absence of technical barriers and the availability of new models. And even more importantly, hybrid EV models are being gradually replaced by pluggable hybrid models.

On the commercial side, EV manufacturers offer one-stop shopping, which includes EVs, battery renting, charging wall box installation, electricity supply and access to public charging infrastructure.

Nevertheless, business models are not yet sustainable for most of the stakeholders, in particular for EV service providers. This is mostly the result of the low EV market share, currently less than 1%. Also, EV grid integration is in a premature state of commercial deployment and there are very few charging management services on the market. Most of the installed public charging stations can be remotely operated and some of them can perform discharging (V2G) but these services are not implemented, again, due to the low EV stock barrier.

Since the electric vehicle come-back in the 2010s, governments have been promoting policies to stimulate and encourage the purchase and use of EVs. This has a positive impact on EV sales with sustained growth. As the technology is ready and matches the users’ needs, it is now only a matter of time for the last EV barriers to be overcome: a sustainable business model and the reduction of costs. Both are intimately related and have a direct impact on EV attractiveness.

To conclude, the electro-mobility market represents opportunities of high potential for the car industry, ICT and service providers. Alliances with traditional transport sector stakeholders are a viable strategy for improving innovation in the sector. Although the market today remains small for sustainable business models, we should expect the market to grow in the next years with a rise in the number of EVs and the appearance of innovative business models that will increase their attractiveness.