Finance Monthly - April 2023

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Finance Monthly. Ed i t or ’ s No t e Hello and welcome to Finance Monthly Magazine’s April 2023 edition! As we close Q1 and excitingly prepare to welcome spring, I’m thrilled to present Finance Monthly’s April 2023 collection of interviews and articles exploring topics like the top priorities for financial services right now, is being cyber insured worth the rising cost and tips on surviving the current business climate. Here are some of our favourite stories from our April 2023 edition: All of this and so much more - I hope you enjoy the content in Finance Monthly’s April 2023 issue! For more financial news and commentary, please visit our website to stay up-to-date on industry news as it happens, join the conversation on our Twitter (@Finance_Monthly), like our Facebook page and follow us on LinkedIn and Instagram (@FinanceMonthly). Best wishes, Katina Male Editor Copyright 2023 Published by Universal Media Ltd The views expressed in the articles within Finance Monthly are the contributors’ own, nothing within the announcements or articles should be construed as a profit forecast. All rights reserved. Material contained within this publication is not to be reproduced in whole or part without the prior permission of Finance Monthly. Circulation details can be found at Universal Media Ltd PO Box 17858, Tamworth, B77 9QG United Kingdom 0044 (0) 1543 255 537 8. Follow us on Instagram Financemonthly Find us on Facebook Finance Monthly Stay Connected Tweet us @Finance_Monthly Monthly Finance 3 The Rise of Banking on Purpose 14. Top Priorities for Financial Services Firms in 2023 36. FinTech Should be Leading the Way for Gender Equality How to be a Disruptor in the Payment Card Market 30.

Finance Monthly. Con t en t s 4 CONTENTS THE MONTHLY ROUND-UP News You Can’t Afford to Miss 6. 8. FRONT COVER FEATURE Top Priorities for Financial Services Firms in 2023 Why Financial Institutions are Focusing on the Human & Monetary Costs of Human Trafficking Business Planning 101 How the Finance Industry Can Beat Fraudsters at Their Own Game How to be a Disruptor in the Payment Card Market BANKING & FINANCIAL SERVICES BANKING ON PURPOSE The Rise of 14. 18. 24. 26. 30.

Finance Monthly. 5 Con t en t s YFM Equity Partners’ £5 Million Investment in AutomatePro Alpha Holdings and Services on €400 Million Note Issuance BBC Bergamasca and Orobica’s Sale of UTP União Química Farmacêutica Nacional’s BRL330 Million Financing 68. TRANSACTION REPORTS 70. Is Being Cyber Insured Worth the Rising Cost? 40. 52. 18. Why Financial Institutions are Focusing on the Human &Monetary Costs of Human Trafficking Surviving the Current Business Climate FINANCIAL INNOVATION & FINTECH FinTech Should be Leading the Way for Gender Equality Is Being Cyber Insured Worth the Rising Cost? 36. 40. 71. BUSINESS & ECONOMY Female Leadership: How to Promote Sustainable High Performance Surviving the Current Business Climate Cash Management During Business Turnaround 46. 52. 56. INVESTMENT How Investors and Savers Can Use VCTs to Put Their Money to Work in 2023 and Beyond 62. 72.

Finance Monthly. 6 THE MONTHLY ROUND-UP News You Can’ t Af ford to Mi ss The Mon t h l y Round -Up SILICONVALLEY BANK COLLLAPSE TRIGGERS PANIC US regulators shut down Silicon Valley Bank on 10 March in what emerged to be the largest failure of a US bank since the 2008 financial crisis. A major lender to tech firms, the bank faced “inadequate liquidity and insolvency” as it scrambled to raise money to plug a loss from the sale of assets affected by higher interest rates, according to banking regulators in California. Its struggle set off a series of customer withdrawals and sparked fears for the wider banking sector. The Federal Deposit Insurance Corporation (FDIC) said it had taken charge of the roughly $175 billion in deposits held at the bank, the 16th largest in the US. Many firms with money tied up in the bank have been left in uncertainty regarding their futures. The bank’s UK branch was put into insolvency from the evening of Sunday 12 March but swiftly rescued by HSBC for only £1 in a move praised by Krista Griggs, Head of Financial Services & Insurance at Fujitsu. “The UK technology industry is thriving, and it requires a commitment to long-term success if the country is going to achieve its ambition of becoming a scientific and technology superpower,” she said in a statement. “HSBC’s fast response is a welcome move that will ensure continuity for businesses at risk from the collapse of Silicon Valley Bank. It shows commitment to innovation, and I expect to see more involvement from traditional banks as they look to provide stability during disruption – as well as further union between them and FinTech companies as this sector continues to rapidly evolve.”

Finance Monthly. 7 The Mon t h l y Round -Up THE BANK OF ENGLAND ON “HEIGHTENED” ALERT FOR FURTHER TURMOIL IN THE BANKING SECTOR Accusations have been made against Sam Bankman-Fried, the founder of the now-defunct cryptocurrency company FTX, for allegedly offering a bribe to at least one Chinese official. The US authorities unveiled the latest charges, claiming that the entrepreneur authorized a bribe of “at least $40m” to regain access to trading accounts that were frozen by Chinese regulators. These allegations add to the fraud case brought against Bankman-Fried last year after the collapse FTX FOUNDER ACCUSED OF CHINESE BRIBE of FTX. Although he pleaded not guilty to the previous charges, he is currently under house arrest at his parents’ residence in California while waiting for his trial. As per the updated indictment, Mr. Bankman-Fried endorsed the bribe after Chinese authorities froze accounts owned by his trading company, Alameda Research, holding approximately $1bn worth of cryptocurrency. The accounts were released after the transfer, which went to a private cryptoThe governor of the Bank of England has stated that the bank is on “heightened” alert for potential further turmoil in the banking world. However, he reassured MPs that recent problems faced by lenders have not caused stress in the UK banking system. Officials have sought to calm investors after the failures of Silicon Valley Bank and Signature Bank led to concerns about the stability of other lenders. The concerns over Swiss banking giant Credit Suisse in Europe resulted in a hasty takeover by rival UBS, leading to sharp falls in banking shares worldwide and nervousness among investors. The Bank of England will remain “vigilant,” according to Mr Bailey, who informed the Treasury Committee that we are currently experiencing a period of “very heightened, frankly, tension and alertness.” currency wallet, according to the filing. The alleged bribe followed several months of other attempts to access the funds, which Bankman-Fried thought were frozen as part of an investigation into another trading company. This incident occurred before FTX’s bankruptcy last year, when reports about the firm’s finances led to a surge of withdrawals, ultimately causing the company’s downfall. Photo Credit: Cointelegraph

8 Finance Monthly. Fron t Cove r Fea t ur e BANKING PURPOSE Zachary Scott Associate Managing Director at Publicis Sapient on The Rise of

The financial industry is lagging in its environmental transformation. In 2019, the UK Government set a goal of Net Zero by 2050 with an additional pledge to reduce emissions by 68% compared to 1990 levels, by 2030. However, The British Standards Institution’s Net Zero Barometer report, surveying 1,000 senior decision-makers and sustainability professionals in the UK, found that financial services are falling behind: while 61% of the IT sector have set sustainability goals, financial services sits at 42%. Banks need to understand and address this lag and fast - needing access to the right data to understand the problem and address it in multiple ways. Finance Monthly. Fron t Cove r Fea t ur e 9

Pressure on Financial Services Unsurprisingly, the financial sector has come under a lot of scrutiny from regulators and the public alike, for a perceived lack of action and its role in supporting unsustainable practices. The issues have been kept in the spotlight not just by vigilante groups like Just Stop Oil, but also by recent examples like an active shareholder revolt at HSBC, pushing them to divest from energy companies. But it is not just activists and regulatory groups. There is significant proof in the data that consumers are seeking alternatives to the traditional banking orthodoxy. Customers of retail banks have shown strong demand for green finance products, with 45% seeking sustainable credit & debit cards, and 31% seeking green loans and mortgages. The focus on environmental, sustainability and governance (ESG) within investing has also ramped up year after year. We’re starting to see a new phase that we call ‘banking on purpose’, connecting boards and consumers in visions for a greener future, whilst increasing prosperity for the communities they support. ESG considerations are set to loom large over companies — this will be important to maintaining reputations at a consumer, shareholder and board level. Integrate Green into the Offering Promisingly, data reveals that 83% of new build houses in the UK are eligible for a green mortgage. However, £2.9 trillion of UK housing stock is currently ineligible, providing a significant opportunity for banks to serve these homeowners. Offering loans to support renovations that seek to improve the energy efficiency rating of properties can help FS institutions embed consumer-focused initiatives into their offerings, rather than having them as an afterthought. “Customers of retail banks have shown strong demand for green finance products, with seeking sustainable credit & debit cards, and seeking green loans and mortgages.” 45% 31% Fron t Cove r Fea t ur e 10 Finance Monthly.

Retail banks have started to promote sustainability and are affecting change — for example, Lloyds Banking Group’s ‘Helping Britain Prosper’ strategy directly tackles the challenges of ESG for all stakeholders, securing more sustainable returns and capital generation by honing in on housing access, inclusion, and regional development, while aiming to reduce its own carbon emissions by over 50% by 2030. Its efforts are aligning with a sustainable financing portfolio, pledging over £52 billion in investment by 2024 as part of their ESG strategy. Change is equally underway at the consumer level with NatWest introducing its own carbon tracker feature that analyses consumer transactions and applies it to a regulated emissions calculator, calculating the carbon footprint throughout the complete process. By introducing this feature as well as suggesting ways customers can reduce their own personal impact, they hope to save 1 billion kilograms of CO2e emissions per year, the equivalent of planting 1 million trees. To ensure banks can become sustainable whilst remaining competitive, accurate measurement of emissions is critical and must include scopes 1, 2 and 3 emissions. This is not a simple task and requires a digitally enabled, agile and modern core at the centre of the business. If Financial Services firms want to drive meaningful impact, they will need to move from treating sustainability from the periphery to the core of their business priorities. By putting environmentally friendly initiatives at the heart of their business strategies, the banking industry can fulfil the needs of their customers and ensure we all play our part in building a more sustainable future. This is certainly a positive start to the UK’s mission of reducing its greenhouse gas emissions by 2050, we still expect to see this industry ramp up its efforts as we get closer and closer to the point of no return. of new build houses in the UK are eligible for a green mortgage. However, of UK housing stock is currently ineligible, providing a significant opportunity for banks to serve these homeowners.” 83% £2.9 trillion “ Finance Monthly. Fron t Cove r Fea t ur e 11

Banking Financial Services 14. Top Priorities for Financial Services Firms in 2023 Why Financial Institutions are Focusing on the Human & Monetary Costs of Human Trafficking Business Planning 101 How the Finance Industry Can Beat Fraudsters at Their Own Game How to be a Disruptor in the Payment Card Market 18. 24. 26. 30.

Robert Prigge is responsible for all aspects of Jumio’s business and strategy. Specializing in security and enterprise business, he held C-level or senior management positions at Infrascale, Secure Computing, McAfee, Quest Software, Sterling Commerce, and IBM. Bank i ng & F i nanc i a l Se r v i ce s Finance Monthly. 14

Top Priorities forFinancial Services Firms in 2023 Robert Prigge - CEO of Jumio Constant disruption is nothing new to the financial services industry. From developments in payments and regulations to combatting new kinds of fraud, it’s safe to say there are a few key areas that need to be addressed in 2023 in order for financial institutions to continue evolving and adapting. Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 15

Continued threat of evolving fraud types According to a recent report by Cifas, the UK could be heading into 2023 with unprecedented levels of fraud spurred on by the cost of living crisis. The figures reveal that more people have reported being a victim of identity fraud, which has increased by nearly a quarter (23%) compared to pre-pandemic levels. With no sign of abating, solutions that provide robust identity verification measures must be implemented to combat this type of fraud. By utilising technologies such as biometrics and artificial intelligence (AI), organisations can enhance the security of their systems, all thewhile improving the customer experience. Biometrics, such as facial recognition and fingerprint scanning, can quickly and accurately verify a customer’s identity, reducing the risk of fraud. AI-powered fraud detection systems can in turn analyse large amounts of data and identify unusual patterns, helping to prevent fraud before it occurs. Our research shows that over half of UK consumers (57%) are more likely to engage with an online financial services provider that has robust identity verification measures in place, so by embracing these solutions, financial services organisations can better combat fraud in a way customers are open to. Digital identity payments The shift toward a cashless society has spurred on the adoption of digital payment methods. Debit and credit cards are declining in popularityas consumersopt for the convenience and security offered by mobile wallets and payment apps such as Apple Pay. Biometric authentication of digital identities is a driving force behind this trend; e-wallets and digital banking apps tend to provide a more secure and convenient way to store and authenticate financial information and complete transactions without the need for physical cards or cash. In fact, in 2023, it is expected that the number of transactions made through digital identities will surpass those made through traditional credit and debit cards. As consumers grow more comfortable with the use of 57% of UK consumers are more likely to engage with an online financial services provider that has robust identity verification measures in place.” “ The UK could be heading into 2023 with unprecedented levels of fraud spurred on by the cost of living crisis. Bank i ng & F i nanc i a l Se r v i ce s 16 Finance Monthly.

digital identities, financial services organisations should leverage this level of acceptance – and even preference – by looking at ways to implement this technology. We know that the use of digital identities already provides a higher level of fraud prevention, but it could also improve customer acquisition and drive business growth. Impact of EU AI Act on financial sector firms The European Union AI Act is a proposed legislation aimed at regulating the use of artificial intelligence in the EU. The draft legislation outlines a risk-based classification of AI systems and provides a certification framework. The Act has been agreed upon by the European Council and is set to be voted on by the European Parliament in April 2023. If passed, financial services firms will likely have to ensure their AI systems meet the necessary standards of safety, transparency and ethical considerations outlined. Itmay impact areas inwhichfinancial organisations employ the use of AI, such as credit scoring, insurance underwriting and fraud detection, meaning they will potentially have to conduct safety assessments and implement transparent decisionmaking processes for the AI systems being used. Considering the ethical implications, such as the potential for perpetuating biases or discrimination, would become a requirement. Firms should take a proactive approach to ensure compliance with the proposed EU AI Act as it represents a significant development in AI regulation that could have far-reaching implications for many industries, financial services no exception. By taking steps to understand the requirements of the EU AI Act now and planning how to address them, organisations can set themselves up for success in an increasingly regulated landscape. As new challenges present themselves, so too do newsolutions. Technology is at the core of this and it’s important for financial services firms to stay ahead of the curve and embrace new solutions to meet the changing landscape. The future is full of possibility, and we can expect to see continued growth and innovation in 2023 to realise the potential that lies ahead. “In 2023, it is expected that the number of transactions made through digital identities will surpass those made through traditional credit and debit cards”. The European Union AI Act is a proposed legislation aimed at regulating the use of artificial intelligence in the EU. Finance Monthly. 17 Bank i ng & F i nanc i a l Se r v i ce s

Why Financial Institutions are Focusing on the Human & Monetary Costs of Human Trafficking Ted Sausen - NICE Actimize The illicit act of money laundering is nothing new. It has been occurring for more than a century dating back to the mafia in the 1920s and 1930s. While the schemes have changed over time, the purpose and intent have been consistent: to disguise illicit funds and transactions to make them look legitimate. Bank i ng & F i nanc i a l Se r v i ce s 18 Finance Monthly.

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which is more of a crime against the border than the person(s) involved. There are instances in which human smuggling turns into trafficking when a debt needs to be paid and the person(s) being smuggled, or their family members, are forced into labour to pay off that debt. In many instances, the “payment” could go on for years as they receive very little compensation for their services. Human traffickers use the global financial system to conduct business and launder the proceeds. Regulators have identified many red flags associated with human trafficking to help combat these activities. Transportation is one of the tip areas for scrutiny as one tracks human traffickers. Investigators look for high value and volumes of fast-food purchases at major transportation hubs and purchases inconsistent with an individual’s stated purpose or business. Fast forward to today, expansive global regulations have been established, specific directives have been released for the EU, and the number of country members for the Financial Action Task Force (FATF) has increased. Many guidance efforts and regulations centre on financial institutions, the source, the intermediaries, and the destination of the illicit funds. And with this growth in regulation, there is a corresponding increase in the cost of anti-money-laundering, both in terms of what it costs to go after it and the level of fines for those who do not comply with regulatory guidelines. According to a 19 January 2023 report by the Financial Times, financial institutions globally were fined nearly $5B in 2022. Although this uptick was almost 50% over 2021, it was an almost 40% drop compared to 2019 and 2020. The fines can be significant, and the cost to fix an AML shortcoming can be daunting. Human Trafficking is Expanding For years, the industry has estimated that the amount of money being laundered is between $1T and $2T; however, in some studies, it was estimated that the number could be as high as $6T. Unfortunately, despite the significant efforts being made, less than 0.1% of the money being laundered today is recovered, and a surprising 90% of money laundering crimes go undetected. Criminal activities continue, and the illicit funds generated are still being laundered to make them valuable to criminals. What is the source of all these funds? It is no surprise that the drug trade industry is a vast contributor and sits at the number one position. But after drug dealing, human tracking is the second largest contributor to money laundering. According to the US Department of Homeland Security, “After drug dealing, human trafficking is tied with the illegal arms industry as the second largest criminal industry in the world today, and it’s the fastest growing.” It is estimated these crimes generate over $150B annually. 5.4 out of every 1000 people globally are victims of modern slavery, which equates to approximately an estimated 40.3 million victims. It is essential to understand what human trafficking is. Human trafficking is a crime that involves coercing a person to provide labour or services, engage in sex acts or forced labour to pay debt. Human trafficking has nothing to do with crossing borders; that is, smuggling “After drug dealing, human tracking is the second largest contributor to money laundering.” Bank i ng & F i nanc i a l Se r v i ce s 20 Finance Monthly.

Another area that often throws up red flags is what is known as “loading.” Are there multiple hotel rooms booked by the same individual? Are there numerous non-related individuals residing at the same address? Last, there may be a public appearance profile that may look unusual. Are there frequent purchases at cosmetic stores or beauty salons? Are there transactions to escort agencies or classified sex industry advertising services? Are there relatively high expenditures unrelated to the stated business purpose? Following the money provides a pathway to identifying human traffickers. Payment activity is an important way to discover a human trafficking situation. Are there repeated cash withdrawals and deposits across multiple cities at multiple ATMs or branches? Are cross-border transfers inconsistent with the stated business purpose or from areas with an elevated risk of trafficking? Last, are there frequent cash transactions in amounts just under reporting requirements? Is there a circulation of funds between seemingly unrelated accounts? All of these may indicate an underlying issue of human trafficking. Red flags around personal behaviour may also signal incidents of human trafficking activity going beyond simple and direct transactional activity. Mannerisms play a significant role in detection. For example, does the person seems submissive or tense? When questions are directed to another individual, do they rely on another person to provide information? If a minor, are they unaccompanied at odd hours or locations where they seem out of place and do they falter when explaining their behaviour? A person’s residence may also provide clues tohuman tracking. For example, does the residence have a substantial amount of garbage compared to the number of people living at the location? Another sign is seeing unusual traffic around a particular residence without a clear explanation. Or there may be an extraordinary amount of people entering and leaving the residence. Additional signs include residents working long or excessive hours or appearing to be available “ondemand.” Law enforcement also notes if an individual has multiple phone lines or numerous social media accounts. Using Red Flags to Enhance Detection As you can see, detection can be overly complicated. There can be legitimate explanations for any of the above red flags. Being tense or lacking identification could signify many things and have legitimate reasons. Booking multiple rooms under the same name does not necessarily indicate criminal activity. So how can financial organisations use these red flags to detect human trafficking if legitimate explanations could nullify any of them? To understand who your customers are and the intended use of their accounts, financial institutions must implement a robust Know Your Customer (KYC) program. A strong Client Due Diligence (CDD) program can also identify and track red flags. Individually, they may not pose any risk; however, a combination of them may start to indicate a problem by leveraging innovative technologies with robust monitoring and detection models that can identify combinations of red flags that can lead to trigger alerts that indicate unusual activity. Financial institutions must also train the staff reviewing these alerts to understand the red flags and perform thorough investigations to ensure nothing suspicious is “Red flags around personal behaviour may also signal incidents of human trafficking activity.” Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 21

occurring. Criminals never rest, and new schemes are being introduced frequently; therefore, keeping current on the latest red flags, suspicious activities, and schemes is essential. Ensure these typologies are also incorporated into your processes and procedures and addressed by your technology operations. In addition to watchdogs at the financial institution, can more be done to target human trafficking at the governmental level? From a US perspective, FinCEN modified the Suspicious Activity Report (SAR) form to include a checkbox for human trafficking. That simple step facilitates the ability of law enforcement to more easily identify criminal activity related to human trafficking. Previously this check box was just included in the narrative of the form, which made this activity much harder to identify. But FinCEN then declared Human Trafficking a top priority in the AML Act of 2020 which brought some improvements. In December last year, the European Commission proposed further strengthening of the rules that prevent and combat human trafficking. Under the proposal, changes will be made to include forced marriage and illegal adoption as criminal offences of human trafficking. It also proposes to make it a criminal offence for people who knowingly use services provided by victims of human trafficking. It also provides for imposing mandatory sanctions for persons held accountable for trafficking offences. Industry Joins Together The increased attention and strengthened regulations look to be a good sign of change in the fight against human trafficking; however, fears remain in the industry. Many institutions have programs in place to combat human trafficking; however, the concern is that with increased regulations, the focus may shift to just “checking the box” to ensure they are meeting the regulatory requirements, which may take focus away from their current efforts to detect patterns and greater activity levels. Human trafficking continues to be a significant problem, and current efforts are not enough. We must join forces, and everyone needs to take an active role. No one can do this alone, and there is strength in collective intelligence. Fortunately, the financial services industry is seeing unity around this issue. A number of nonprofit organisations have teamed up to fight the fight, leveraging strength in numbers to capture traffickers and their activities. The Knoble, which describes itself as a network of financial crime experts passionately fighting human crime, is one of these organisations which is working hard to pull together financial institutions and technology leaders to focus their talents on human trafficking. Many financial institutions and financial crime technology vendors such as NICE Actimize have joined with The Knoble in a variety of research and outreach activities which target a range of crimes ranging from human trafficking to elder and child abuse and more. As stated by Ian Mitchell, founder and board chair of The Knoble, “The financial industry is well positioned to have material positive impact in the fight against Human Crimes like scams and human trafficking. But to accomplish this, it is going to take bold leadership, development of intentional programs and banking with heart.” “FinCEN declared Human Trafficking a top priority in the AML Act of 2020 which brought some improvements.” Bank i ng & F i nanc i a l Se r v i ce s 22 Finance Monthly.

As we look to the future, technology will play an even more prominent role in combatting human trafficking, but so will the impact of dozens of organisations collectively sharing information on trafficking patterns. From Technology to Shared Intelligence In recent years, Artificial Intelligence has taken on a vital role and has entered the fight against anti-money laundering. AI provides the ability to sift through large sums of data, identify patterns, and more importantly, identify anomalies in “normal” behaviours and activities. We are in a world where data is everywhere; however, the problem is making sense of it and converting it into actionable intelligence. AI brings that ability to us. As previously mentioned, there are many red flags surrounding human tracking, many of which can individually be rationalised. However, the data points and activities can be analysed through advanced technologies to determine which are truly indicative of illicit activities such as human trafficking and which are more “coincidental” occurrences. By prioritising the more suspicious and deprioritising the less suspicious or coincidental, compliance officers and law enforcement can focus their attention on where illicit activities are most likely to occur. And by that effort, come closer to catching the bad guys. Financial institutions have the opportunity to leverage the investigative work that has already been done in this area. For now, continue to pay attention to the red flags, stay vigilant, and address anything that is suspicious. And join the united fight to put human traffickers and their ilk out of business. “In recent years, Artificial Intelligence has taken on a vital role and has entered the fight against anti-money laundering.” people globally 5.4 out of every are victims of modern slavery, which equates to approximately an estimated 1000 40.3 million victims. “ “ Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 23

Hendrik Janse van Vuuren is a Fiduciary Practitioner of South Africa® and a Certified Financial Planner® and has worked in the financial planning industry for 30 years. He is the owner of the Paarl African Advisory (FSP 52180) and Paarl African Trust (Fiduciary Services Company) and is indirectly one of the largest shareholders in Trèsor Wealth - a collective Investment Fund Management Company. We speak to Hendrik over the next few pages about the ins and outs of business planning in the current environment. Hendrik Janse van Vuuren Fiduciary Practitioner of South Africa® Certified Financial Planner® BUSINESS PLANNING 101 How do you approach business planning for your clients, and what steps do you take to ensure that their long- term financial goals are met? As with any planning, information is key and we, therefore, require information from all the key individuals, directors, trustees, and the various entities of our clients. This includes identification documents, registration documents, letters, or minutes of authorities-, partnership-, trust- and existing loans and even personal agreements. Our approach is quite simple - we strive to succeed in making sure that each individual and each entity take care of their own financial requirements, assets and obligations. Every solution must provide in such a way that all parties can honour the financial obligations independently from each other in the event of death, disability, severe illnesses, and any other event in the change in ownership. This requires discipline, continuous administration, dedication and discipline from clients and the willingness to work with you to plan, implement and continuously monitor solutions. Can you discuss a time when you had to navigate a complex business issue for one of your clients, and how you approached the situation to ensure the best outcome? Business owners rely mostly on the advice of their accountants or auditors, merely because they are involved with capturing transactions Bank i ng & F i nanc i a l Se r v i ce s 24 Finance Monthly.

and financial statements and see to the tax requirements of the entities and individuals. This is also because they are forced to file tax returns. They sometimes rely on the advice of their lawyers and many times to a lesser degree on the advice of their financial and trust/wealth advisers. Independent advice from each of these professionals, each with their own proposed solutions, often confuses and conflicts clients in achieving their goals. After all, there are many ways to travel. This brings us to the challenge. Business owners create wealth through their business activities. Clients must set up their wealth and asset protection plan as priority number one. Trusts form part of an extremely important component in building, protecting, and preserving wealth, and by using trusts properly, clients can avoid or minimize death and transfer taxes like estate duty, executors’ fees, transfer costs, capital gains tax, etc, just to name a few. This is the most cost-effective way to address continuity. Trusts, however, require another discipline and must be managed and administered correctly. The success and protection that trusts provide are determined in court by minutes or documented trustee decisions, and not by up-to-date financial statements. Clients need to appoint an independent captain for their fleet, and this person or company should collaborate with accountants, lawyers, financial advisors and asset managers to achieve and manage the long-term wealth and security of businesses. The challenge always lies in convincing clients to appoint this captain of their ship and let this person control the documented requirements. How do you stay current with changes and developments in the South African business landscape and what resources do you use to keep up to date with market trends and best practices? As a member of the Fiduciary Institute of Southern Africa and the Financial Planning Institute of Southern Africa and as Financial Services Provider licensed by the Financial Services and Conduct Authority and being a registered tax practitioner, we must complete a certain amount of continuous professional development hours on an annual basis. These hours that we must spend can be via studies, seminars, training or reading of financial articles and must be documented and submitted to the various bodies annually, to adhere to requirements. I am still a student and am more careful now working with clients than I was when starting in 1992. Learning is a virtue, and one can never think you know it all. Can you discuss a time when you had to collaborate with other professionals, such as lawyers or accountants, to provide comprehensive business planning services to a client? How do you balance the needs and concerns of different stakeholders to achieve the best outcome for your clients? We have close relationships with an accounting firm since 2006 and with a legal firm since 2008, with whom we collaborate daily when needed. All stakeholders, however, must have and work towards a common goal. My experience is that the alter ego of different stakeholders very often leads to plans that fail. It is almost impossible to provide business planning advice without collaborating with other professionals and every professional should buy into one plan, work towards it, and monitor it regularly. How do you advise your clients on risk management and contingency planning in their business planning, and what steps do you take to help them prepare for unexpected challenges or opportunities? The very basic principle to follow is to keep proper records, firstly in date and secondly in subject and document order, preferably in a secure cloud so that it is easily accessible. Every authorised individual involved in the business must become so used to work with and store records. It takes 30 seconds to store a document, but it very often takes hours and sometimes days to search for it if you don’t. Deal with every risk and opportunity separately - a one fix for all is a recipe for failure. Make the people in your organisation feel special and trusted; it makes big decisions easier to implement. Provide for the unexpected as far as you can, but remember a business is a journey; strive to enjoy it. Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 25

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How the FINANCE INDUSTRY Can Beat FRAUDSTERS at Their Own Game Daniel Marchetti Customer Advisory, Fraud & AML at SAS We’ve all witnessed the extraordinary rise of ChatGPT in recent weeks, with discussions around the power of Artificial Intelligence (AI) dominating discourse across many industries. While there’s no denying that the ongoing development of AI has allowed the financial services industry to enhance and transform its ways of working, fraudsters can also exploit this technology for their own gain. Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 27

28 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s How fraudsters are using AI In the first half of 2022 alone, UK Finance revealed that criminals stole a total of £609.8 million through authorised and unauthorised fraud and scams. The same report shows that these figures were even higher during the pandemic. It’s therefore no surprise that the financial services industry is constantly looking for ways to strengthen security protocols and protect consumers, with tools such as two-factor identification and biometric authentication becoming the norm. However, professional fraudsters are also seeking to find new ways to exploit consumers - something the finance industry needs to respond to quickly. Just recently, an investigation by Which? revealed that criminals are increasingly intercepting onetime-passcodes delivered via sms - putting customers at risk. They identified further weaknesses as insecure passwords, lax checks on new payees and vulnerable log-in processes. While fraudsters recognise that they are unable to readily fake an account holder’s fingerprints or face, they are now turning to AIenabled social engineering tools to generate a brand new or synthetic identity, creating fake bank accounts and then committing fraud. The aforementioned ChatGPT has taken the internet by storm, with the AI-powered chatbot Fraud is always at its most virulent during economic downturns and crises. In fact, in the first nine months of 2022, over 309,000 cases were recorded to the National Fraud Database, a 17% rise compared to the previous year. This increase was mainly driven by the rise in false application and identity fraud, up by 45% and 34%, respectively. It’s perhaps no surprise that fraudsters will see new AI-powered technologies, such as ChatGPT, as a golden ticket to exploit vulnerable people. Others may turn to opportunistic fraud if the resources are available to them, highlighting the need for organisations to be investing in both predictive and preventative technology if they are to protect consumers.

29 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s able to interact with users in a conversational way within a matter of seconds. Experts working in the finance industry have noted that the tool could be used for enhancing banks’ customer service or marketing efforts. Yet experts have also highlighted how ChatGPT can be a gateway to fraud. The chatbot can enable scammers from all over the world to craft emails that are so convincing they can get cash from victims without relying on malware or other unscrupulous techniques. Unsurprisingly, speculation is rising around what else the tool could enable - especially when developments are moving faster than regulation. The next question for the finance industry is how to proactively get ahead of the game and prevent fraud before it occurs. The answer lies in the same technology - AI. AI to the rescue It’s important for organisations to join up their defences. Having a robust, enterprise fraud framework in place will enable fraud to be identified and prevented across all channels. For example, through the deployment of AI, banks can analyse customerrelated and behavioural-based data, set up alerts and automate case management. This will help to create a holistic overview of fraud risk, as well as enhance accuracy. For years, banks tended to rely on rules-based technology to spot fraud risk. However, as fraudsters have got smarter these rules need to be continuously updated and tuned if they are to be effective. AI comes to the rescue here. The implementation of a model development framework will allow a business to import and execute rules via a real-time decision engine. Through the use of Machine Learning (ML), organisations can also be automatically alerted to any concerning changes in a person’s transaction history or behaviour - catching criminals in the act when masquerading as a customer. We are already seeing some organisations introduce adaptive machine learning techniques - which build on traditional ML to process large amounts of realtime, rapidly changing data - an approach which certainly needs to become more mainstream across the sector in order to catch fraud before it’s too late. AI-powered technology can also detect cases of false or synthetic identity in real-time, to ensure fraudulent activity is immediately stopped. For example, should a fraudster apply for a loan or credit, or seek to withdraw funds, using a fake identity this will be flagged and investigated. Similarly, AI allows organisations to stay one step ahead of fraudsters, producing a comprehensive fraud risk assessment - a targeted fraud landscape review with a focus on identifying current sources of fraud losses, process leaks and other pains. At SAS, we always test our AI models against challenger models and then optimise them as new data becomes available. When new scams arise, our systems immediately know. Customers are often left with limited options after falling victim to fraud, particularly if it occurs through a customer authorising a transaction themselves. More regulation could help here, but educating the public is of equal importance. With tools such as ChatGPT on hand, typos in emails are no longer the first indicator of a scam. The industry should look to invest significantly in both fraud detection and prevention technology if they are to avert a rise in fraud. “In the first half of 2022 alone, UK Finance revealed that criminals stole a total of through authorised and unauthorised fraud and scams.” £609.8M

How to be a Disruptor in the Payment Card Market True disruption is hard to achieve and rarer than you think, but when a company addresses a real consumer problem and rides the wave of consumer change, you see the birth of a major market player. Jeremy Baber - CEO of Lanistar Bank i ng & F i nanc i a l Se r v i ce s 30 Finance Monthly.

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But this still means some 1.4 billion people remain outside of the traditional banking sector. These tend to be the hardest people to reach – very often women, the poor, the less educated and, very often, those living in rural areas. While digitising payments is the way to go, much more is needed. Governments, private employers and financial service providers – including FinTechs – should work together to lower barriers to access and improve physical, financial and data infrastructure. This means FinTechs need to build trust and confidence in using financial products, develop innovative new products, and implement a strong and enforceable consumer protection framework that will include these aforementioned individuals. After all, the unbanked and the underserviced sector is today the greatest untapped market opportunity for many FinTechs. We often see the biggest disruptors thrive in times of change, very often as a result of economic challenges. It will come as no surprise, therefore, that the likes of Netflix, Uber and even Airbnb all rose to prominence after the financial crisis in 2010 simply because they all provided solutions for consumers facing very real problems in a time of change. Each brand delivered convenience and financial savings, using the very latest technology and a shared economy model that created new, exciting, and inherently better experiences for consumers. This is exactly what consumers wanted, and it helped spawn a host of new markets. It is this model that is powering a revolution in the card payment market today- one that has so often been at the forefront of change and innovation in its own right. Today’s consumers – banked or unbanked – are demanding more from their suppliers, forcing them to reinvent themselves and their product offerings. This is happening while the financial services industry as a whole is facing increased regulation. The Disruptive Consumer Historically, brands and service providers have always relied on consumers basing their purchasing decisions on basics such as service levels and fair pricing. But the modern consumer has developed far higher expectations based on a host of new metrics such as personalised interactions, proactivity, and even whether a company can offer a connected digital experience. Today’s consumers are disrupting traditional buying patterns and businesses, demanding elements such as cloud, mobile, social media and AI to deliver an immediate, valuable and personalised experience. They have learnt from Netflix and Uber, and any business that fails to address this will fall by the wayside. But the disruptive consumer does not stop there. According to research from Capita, over half (56%) of all consumers said it was important to them that their bank or building society acted sustainably and/or ethically. This does appear to be a direct result of the pandemic and increased awareness of the climate crisis, with consumers taking time to reappraise what’s important to them. Put bluntly, these views have been extended to those businesses where they wish to spend their money. Millennials are leading the charge in this ethics revolution, with 60% claiming it’s important, followed by Boomers (57%) and Gen X (39-53 years old) on 55%. Democratisation of Financial Products Financial inclusion matters and is the cornerstone of economic development. When people have a bank account, it enables them to take advantage of other financial services like saving, making payments and accessing credit. According to The World Bank, 71% of people have a bank account in developing countries today, up from 42% a decade ago, while globally, 76% of adults around the world have an account today, up from 51% a decade ago. These tremendous gains are also now more evenly distributed and come from a greater number of countries than ever before. 56% of all consumers said it was important to them that their bank or building society acted sustainably and/ or ethically.” “ Bank i ng & F i nanc i a l Se r v i ce s 32 Finance Monthly.

The Integration of People and Technology The evolution of technology is at the heart of efforts to better serve customers. Adopting new technology is, therefore, critical for financial services organisations to thrive. Progressive financial services companies are on the lookout for new technologies to improve efficiency and speed of service, as well as provide a better customer experience. This is without doubt a direct result of the competition faced by consumer brands like Amazon, Facebook and Google. Even before the pandemic, customers increasingly expected easily accessible and fully personalised digital products and services. As a result, financial institutions were already rethinking processes, expanding tech investments and testing new applications. Incumbents have traditionally looked for technologies to increase efficiency and lower costs. FinTechs, by contrast, start with a customer problem, identify ways to address it with digital tools, and then build new business models around digital solutions. The digitisation of financial services is ongoing. Enterprises have a choice: make innovation the focus of a stand-alone organisation or integrate it throughout the business. The winners in this race will be the ones that marry technological innovation with the expectations of today’s consumer. The Progressive Consumer Over the last few years, some of the most influential global financial institutions have committed to reducing emissions attributable to their operations. They have also pledged to reshape their lending and investment portfolios to produce a net zero carbon footprint by 2050. ESG is big business. Banks are restructuring to adopt green pledges, and FinTechs are developing new solutions to address climate-related consumers and issues, all as part of detailed, overarching ESG strategies. ESGfocused FinTechs in particular have a unique ability to achieve rapid growth, deliver sustainabilityfocused innovation, and attract investment capital to support their efforts to improve the environment and society, all while generating substantial returns. All of this is being done due to the requirements of an ever-evolving and demanding consumer. The climate-centric FinTechs in the payments sector driving the biggest change are the ones focusing on influencing the spending behaviours of sustainabilityminded consumers. By engaging with this demographic, FinTechs can sustain their revenues by aligning financial transactions with ESG goals. Over the past decade, new digital FinTechs have begun to transform and disrupt the financial services sector. Technological advances in finance are not new, but progress has arguably accelerated in the digital age due to improvements in mobile communications, AI, machine learning, and information collection and processing technologies. This revolution was matched by an extraordinary increase in consumer expectations. The payments market in particular has experienced a rapid proliferation of digital innovations that make payments faster and cashless. Consumers in advanced and emerging markets have increasingly adopted FinTech services because of their convenience and lower cost. The challenge for both new and existing firms is to create and deliver new financial products and services as they strive to compete. 76% of adults around the world have an account today, up from 51% a decade ago.” “ “The likes of Netflix, Uber and even Airbnb all rose to prominence after the financial crisis in 2010 simply because they all provided solutions for consumers facing very real problems in a time of change.” Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 33

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