By Alexandra Mousavizadeh, CEO and co-founder of Evident

The rush to deploy Generative AI tools like ChatGPT has created a backlash and led to calls for a pause on deployment while we work out how to regulate these powerful systems. The challenge is one of imagination - what should the regulation look like and how should it be enforced? If they have the will to lead, the banks might hold the key to a workable solution...

The basis for The Future of Life Institute’s call to pause experimentation with large artificial intelligence (AI) systems was to buy some time. Time to do what, exactly?

OpenAI’s CEO and founder, Sam Altman, has argued that a vital ingredient for a positive AI future is an effective global regulatory framework. Yet no one can agree what this might look like. The 18,980 signatories to the open letter, (some of whom have since backed out or claimed to have been misrepresented) have not put forward a plan.

The current regulatory landscape for AI is a messy patchwork of national- and industry-level initiatives. These range from FTC and FDA efforts to address specific, yet limited industry use cases, to the EU’s AI Act and the US’s Algorithmic Accountability Act - both admirable in their intent to create a more universal framework, but flawed in their appraisal of risk.

Crucially, there has been no consensus reached amongst technologists, executives or regulators regarding what it’s like to be an end-user of AI-based products, and hence, what sort of regulatory framework is appropriate to pursue.

Like opening a bank account

For many people, AI and its potential harms remain theoretical or fantastical - conjuring up images of Terminator and Skynet rather than practical concerns. And yet, seen within an industry-specific setting such as financial services, it’s easier to understand the AI risks that are already emerging. For example, being defrauded of your life's savings, unfairly denied insurance for medical care, or extorted over loan repayments.

I’d argue that being an end user of an AI system is certainly comparable to a customer opening a new bank account, stepping onto a plane or taking a prescription pill - all industries that require strict external oversight due to the acknowledged risks involved.

When we open a bank account, we do so with the knowledge that we are protected by a rigorous, dutiful and democratically constructed set of regulation-enforced and accredited safety standards which are subject to external oversight. The regulator sets the standards for the industry, and while it won’t fully prevent bank runs, ID fraud or other depositor woes, it protects the vast majority of customers most of the time - to the benefit of the industry, and society at large.

It follows that we ought to create similar standards for any providers seeking to offer AI-based products within these industries and ensure clear oversight to prevent any breaches - intentional or otherwise - from occurring. We should even consider setting the bar higher when it comes to AI standards, due to the potential speed, scale and scope of deployment that ChatGPT has shown to be possible for these systems.

Banks can set the agenda

The idea of a global regulatory framework for AI is bandied about much more often than it is scrutinised. And yet, one key lesson from the financial sector is that overlapping national regulatory bodies, with a remit based in law and the powers to investigate and punish organisations that transgress, is the closest humanity has ever come to controlling systems which, like AI, are both powerful and profitable.

Look no further than the cryptocurrency sector as it is dragged kicking and screaming into the regulatory capture of traditional banking, shedding the worst of its fraud, misdemeanour and exploitation of users as it goes.

Similarly, by approaching AI through the prism of the strict regulatory regime that they’ve been working in for years, the banking industry has already taken significant pre-emptive steps to prevent potential harms from occurring.

The world’s leading banks have already developed best practices that are well-suited to an AI-led future. Kitemarked security (to stop users from seeing one another’s data, as was the case with ChatGPT); a mixture of auditing and industrial safety standards; accreditation for practitioners (where now most AI developers have no training at all in ethical application; transparency and accountable coding); interdepartmental oversight so leaders get early warning when something is going wrong. And of course, there’s intense scrutiny by regulators and regular submissions of financial and other performance data.

All of these tools will be extended to AI deployment in banking use cases. The challenge - and opportunity - for banks is to embrace this publicly. Banks have no greater asset than trust. Getting ahead of this topic will enable them to build public confidence in their approach and set an example across the wider economy - potentially encouraging some of their corporate and SMB clients to embrace a similar mindset.

Seizing the initiative

Time is running out for industry leaders, policymakers and regulators to fill the governance vacuum and ensure that the pursuit of powerful AI proceeds with greater caution and consideration.

Getting artificial intelligence regulation right is a matter of imagination, resources and speed. The imaginative step from current banking best practice to include AI is a feasible one. Banks do not lack in resources. It’s time for banking leaders to seize the initiative, reaffirm their own commitments to (and internal standards) around responsible AI self-governance, and drive the public discourse around workable, industry-specific AI regulation.

An Interview With...

Julia Shamini Chase

Pioneering Compliance Leader and CEO of Gold Leaf Consulting Limited

Recently, Finance Monthly was delighted to speak with Julia Shamini Chase, the Founder and CEO of Gold Leaf Consulting Limited. Julia Shamini is a highly respected figure in the BVI regulatory law and compliance arena. With an exceptional track record and unwavering dedication to excellence, Julia Shamini has positioned Gold Leaf as the gold standard in the compliance industry. She is a highly sought-after authority in the British Virgin Islands regulatory and compliance regime and beyond. Julia Shamini brings a wealth of expertise and experience to compliance consulting.

In this article, we delve deeper into Julia Shamini's insights into the BVI regulatory regime and explore her perspective on anticipated changes and upcoming trends, offering readers a comprehensive understanding of the regulatory landscape in the BVI.

How would you describe the current regulatory environment in the BVI, and how has it evolved over the years?

The BVI business company (BVI BC) and the broader BVI financial services industry are widely recognized as essential enablers of global commerce, establishing the BVI as a prominent international financial centre. With the evolution of its financial services landscape, the BVI has progressed from primarily facilitating company incorporations to offering value-added services encompassing corporate, commercial, fund management, and succession planning products. The BVI BC has gained popularity as an asset-holding vehicle and secured listings on international stock exchanges.

To support its sophisticated offerings, the BVI has developed a robust regulatory framework to prevent misuse of its products, services, and jurisdiction for illicit activities such as money laundering, terrorist financing, and proliferations financing. Compliance with the FATF recommendations and OECD guidelines is a priority for the BVI, demonstrated through its ongoing good standing ranking and membership in the Caribbean Financial Action Task Force.

Building upon its solid foundation, the BVI introduced comprehensive legislation for virtual asset service providers in February 2023, following the establishment of the BVI Fintech Sandbox regime in 2020. The Sandbox regime allows eligible fintech service providers to test their innovative products and services in a quasi-regulated environment.

Investors have consistently shown interest in leveraging the BVI’s exceptional financial landscape to facilitate their trade. In summary, investors recognize the BVI as an all-encompassing business environment emphasizing a harmonious blend of innovation, usability, and regulation.

Gold Leaf has been an active observer and stakeholder, witnessing and participating in the evolution of the BVI’s regulatory landscape. Our deep-rooted relationship with relevant stakeholders and regulators has enabled us to foster a strong understanding of expectations and priorities. Through my appointment as a member of the BVI FSC’s Fintech Steering Committee, we have actively contributed to shaping the virtual assets regulatory landscape in the BVI. Through these collaborations, we have provided valuable insights and perspectives, ensuring that the BVI’s regulatory framework remains robust, transparent, and responsive to the needs of businesses and investors.

In September last year, the BVI Financial Services Commission approved the Territory’s first investment business license, which authorizes the holder to operate a cryptocurrency exchange. Can you tell us more about it?

The approval of the BVI’s first cryptocurrency exchange license marked a momentous occasion for the jurisdiction and Gold Leaf as the regulatory counsel behind the successful licensing application. We take immense pride in having played a pivotal role in preparing and overseeing the application on behalf of our client, ensuring compliance with the stringent regulatory requirements. Our client was also the inaugural participant in the BVI Fintech Sandbox license. Through strategic planning, we successfully navigated the licensing process. We utilized the Sandbox regime to facilitate our client’s operational familiarity within the BVI’s regulatory landscape, fostering innovation and a secure virtual asset ecosystem.

During the Sandbox phase, as regulatory and compliance consultants, we assisted our client in developing and enhancing their policies, controls, and procedures to ensure compliance with BVI regulatory requirements. Once our client was confident operating within the BVI’s regulatory framework, we applied for their full Category 7 license under the BVI Securities and Investments Business Act 2010 (SIBA) specifically for cryptocurrency exchange platforms. We continue to act as regulatory counsel and as the approved compliance officer for our client, through Gold Leaf Corporate Compliance Services Ltd., the licensed corporate compliance service provider arm of Gold Leaf’s business.

The enactment of the BVI’s Virtual Assets Service Providers Act, 2022 has expanded the regulatory regime for BVI entities and legal arrangements involved in virtual assets. This legislation complements the existing regulatory framework, supports fintech development, and aligns with international standards for virtual asset regulation. This has not only bolstered investor confidence but has also attracted a new wave of entrepreneurial ventures to the BVI, positioning the jurisdiction as a favorable destination for cryptocurrency-related activities.

What makes BVI so attractive to institutional investors in the crypto industry?

When discussing the attractiveness of the BVI to institutional investors in the crypto industry, it would be remiss of me to not only highlight the jurisdiction’s favorable regulatory environment which I will discuss in more detail, but also its natural beauty. The BVI’s unique combination of regulatory excellence and breathtaking surroundings contributes to its appeal as a preferred destination for institutional investors in the crypto industry.

In addition to its stunning beauty, the BVI offers the following key elements that make it attractive to institutional investors in the crypto industry:

1. Regulatory Clarity – which the BVI has established with a clear and well-defined regulatory framework specific to virtual assets, through the passing of the BVI Virtual Assets Service Providers Act, 2022 (VASP Act). The VASP Act addresses the licensing and supervision of persons and entities engaged in virtual assets activities. It establishes a framework for compliance, risk management and reporting obligations which enhance consumer protection and investor confidence in the virtual assets space.

2. Investor Protection – the VASP Act implements robust investor protection measures, such as custody and safekeeping requirements, capital adequacy, testing, auditing, and, robust money laundering, terrorist and proliferation financing, and fraud detection measures, to ensure overall investor protection.

3. Compliance and Reputation – The BVI has, and continues to maintain, a stellar reputation as a compliant and robustly regulated jurisdiction. The VASP Act and the BVI Anti-Money Laundering, Counter-Financing of Terrorism and Proliferation Financing (AML/CFT/PF) legislative framework imposes a risk-based approach on virtual assets providers, to demonstrate that their AML/CFT/PF policies and procedures remain adequate and effective to combat their inherent money laundering, terrorist financing and proliferations financing risk exposures. Such robust compliance measures are attractive to institutional investors who prefer investing in jurisdictions that actively combat financial crime, as it reduces the risk of their investments being involved in illicit activities inadvertently.

4. Stable and Political Environment – The BVI Government has demonstrated its support to help develop a robust virtual assets sector, which reduces uncertainties and risks associated with sudden regulatory changes or sudden policy shifts. It has also established a strong and stable economy, which is reflected in its fiscal policies, sound financial structure and proactive measures to mitigate risk.

What other trends do you expect to see around regulation and compliance in the British Virgin Islands?

The BVI has consistently demonstrated its foresight and tenacity to evolve and adapt as a leading offshore finance centre. At Gold Leaf, my team and I actively engage in monitoring and analyzing emerging trends that shape the regulatory and compliance landscape in the BVI. As a forward-thinking and commercially minded consultancy firm, we anticipate several key areas of focus in the BVI’s future regulatory and compliance landscape:

1. Embracing Regtech Solutions – The BVI has always been a forward-thinking jurisdiction, as evidenced by its embracing of Fintech. This has allowed the jurisdiction and, moreover, the BVI FSC as a regulator, to foster innovation while ensuring robust and transparent regulation. I foresee the BVI adopting more regulatory technology solutions to streamline compliance processes, automate reporting, and improve data analytics capabilities. Regtech adoption will enable more efficient compliance management while reducing costs and increasing accuracy. The BVI AML Legislation already permits the use of electronic or digital verification (ED) provided that such ED satisfies certain prescribed criteria within the legislation.

2. Strengthening of Virtual Assets Regulations – With the introduction of VASP, and as the industry continues to develop and mature, we anticipate further enhancements and refinements to the regulatory framework governing virtual assets. The BVI will likely continue to focus on ensuring compliance with the FATF Recommendations, by focusing on preventing illicit activities, while fostering a secure and transparent virtual assets ecosystem.

3. Continued Commitment to Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT) and Proliferations Financing (PF) – The BVI will continue to maintain its strong stance on AML/CFT/PF and sanctions compliance. The AML/CFT/PF framework has matured into a risk-based framework which ensures that the internal controls being implemented by licensed entities are not only adequate but effective in achieving regulatory compliance. I believe we can expect to see ongoing efforts to enhance these AML/CFT/PF frameworks to strengthen due diligence procedures and ensure the highest standards of financial integrity.

As a jurisdiction, we are certainly set to continue our path of furthering regulatory and compliance advancements. These trends reflect the BVI’s commitment to staying at the forefront of regulatory best practices, embracing technology, and maintaining a robust and trusted financial ecosystem.

How does Gold Leaf ensure that your clients stay ahead of the curve when it comes to complying with new and changing regulations?

At Gold Leaf, we take pride in our commitment to keeping our clients ahead of the curve when it comes to complying with new and evolving regulations. Our approach combines proactive measures, industry expertise, and cutting-edge solutions to deliver exceptional compliance services.

1. Continuous Monitoring – Our diverse and expertly skilled team continuously monitors regulatory landscapes, both locally and globally, to stay informed about upcoming changes and emerging trends. We keep a finger on the pulse of regulatory developments, enabling us to anticipate and quickly respond to regulatory shifts, preparing our clients well in advance.

2. Tailored Compliance Solutions – Through our patented SFC-Solutions Focused ComplianceTM (SFC) methodology and tools, we design tailored compliance programs that are sustainable for implementation to help protect our clients’ peace of mind. By tailoring our solutions, we ensure that our clients have a robust framework in place to address new regulations and adapt to changing compliance demands. Also, using our SFC-Solutions Focused ComplianceTM we have created proactive compliance assessment tools that go beyond the minimum requirements. Our assessment tools identify potential gaps and vulnerabilities in our client’s compliance frameworks. By proactively addressing these areas, we help our clients fortify their compliance posture and minimize the risk of non-compliance.

3. Expert guidance and advisory – Our team is comprised of experienced compliance professionals who contribute extensive industry experience and regulatory expertise. Through our wide network, we also work closely with and have access to, leading global consultants who we engage, as necessary, in the delivery of our services. Our goal is to provide timely and informed guidance to our clients, whilst also offering practical strategies on how to navigate regulatory challenges effectively.

4. Training and Education – A fundamental ethos at Gold Leaf is that knowledge is key to maintaining compliance excellence. We offer training tools and solutions, to keep our clients updated on the latest regulations, industry best practices and emerging compliance trends. By investing in continuous learning, our clients are equipped to adapt to new requirements and seize compliance-related opportunities.

How does your company approach balancing a client’s business goals with their regulatory obligations?

Our clients are leaders in their respective markets and industries. We appreciate that they must maintain a keen focus on their business productivity and profits. In balancing their business goals with their regulatory obligations, our approach is underscored by our mission to become our clients’ trusted partners, enabling them to achieve compliance excellence and peace of mind. Our team at Gold Leaf possesses not only extensive knowledge of regulatory frameworks but also a deep understanding of business operations and strategies. This distinctive combination of regulatory expertise and business acumen allows us to effectively guide our clients in navigating the complex landscape of compliance while achieving their business objectives.

We demonstrate this actively through:

1. Client-Centric Approach – We prioritize our clients’ unique business goals and objectives. Our team takes the time to understand the specific client, operational nuances, and growth strategies. By aligning our services with their business priorities, we ensure that compliance becomes an enabler rather than a hindrance to their success.

2. Customized Solutions – We recognize that compliance is not a one-size-fits-all approach. Our team of professionals works closely with each client to develop tailored solutions that meet their specific regulatory requirements while aligning with their business goals. We strike a balance by designing compliance frameworks that are practical, efficient, and customized to their industry and operational needs.

3. Proactive Compliance Planning – We adopt a proactive approach to compliance planning. By staying ahead of regulatory developments and trends, we can anticipate potential impacts on our clients’ businesses. This allows us to provide early insights, assess the potential implications, and develop strategies to address regulatory changes efficiently. Through advance planning, we help our clients navigate evolving compliance landscapes with confidence.

4. Streamlined Compliance Processes – Our SFC-Solutions Focused ComplianceTM (SFC) tools, technologies, and streamlined processes are designed to minimize the burden of compliance on our clients’ day-to-day operations. We leverage automation, digital platforms, and innovative solutions to simplify compliance tasks, reduce manual efforts, and improve efficiency. This enables our clients to focus on their core business goals while we handle their compliance needs effectively.

5. Safeguarding Reputation – We understand that our clients’ reputation is a valuable asset. Our services are designed to safeguard their reputation by ensuring compliance excellence. By implementing robust compliance frameworks, conducting thorough assessments, and providing ongoing monitoring and support, we help our clients mitigate compliance risks and maintain their integrity in the marketplace.

Our approach to balancing a client’s business goals with their regulatory obligations is rooted in our client-centric philosophy, customized solutions, proactive planning, streamlined processes, and a commitment to safeguarding their reputation. In every engagement, we are our clients’ trusted partner, allowing them to focus on their core business while we provide comprehensive compliance support. Trusting us to deliver gold-standard solutions, our clients can achieve compliance excellence, peace of mind, and perpetual business growth.

About Gold Leaf Consulting Ltd

Gold Leaf has established an unparalleled reputation for delivering tailored, practical, and efficient compliance frameworks, making them a trusted partner for organizations navigating the complex regulatory landscape. Under Julia Shamini’s astute leadership, Gold Leaf has achieved an outstanding milestone—an impeccable 100% track record for the approval of licensing applications in the BVI. This remarkable achievement speaks volumes about Gold Leaf’s expertise, meticulous approach, and deep understanding of the regulatory landscape. Clients entrust Gold Leaf with their licensing aspirations, knowing that their applications are in the hands of a proven industry leader.

Gold Leaf’s commitment to its clients extends far beyond licensing approval. Organizations seeking to navigate the intricate web of compliance requirements highly value Gold Leaf’s sought-after services. With their comprehensive understanding of evolving regulations and a practical, client-focused approach, Gold Leaf offers tailored compliance solutions that enable businesses to thrive while upholding the highest standards of regulatory adherence.

Contact:

Gold Leaf Consulting Limited

Units 6 and 7, Road Reef Plaza

Prospect Reef, Tortola

British Virgin Islands

T: 1-284-494-9559

E: info@goldleafbvi.com

When we hear the likes of ex-Prime Minister Liz Truss accused of reverting to an economic theory known as trickle-down economics, what do ‘they’ mean?

What is trickle-down economics?

In its simplest form, trickle-down economics is the theory that by increasing the wealth of the rich, they will spend more money, which would trickle down throughout society, leading to more wealth for all.

How does trickle-down theory work?

The theory itself is relatively simple, with the concept being that if we cut income and corporation taxes in our society and de-regulate our financial institutions, the increased wealth of these individuals and corporations would result in the rich being able to spend more of this additional money. The rich would then, in theory, invest and spend this new excess in wealth, which would, in turn, result in an increased demand for goods and services, increasing employers’ ability to recruit more staff and offer higher wages.

In this theory, the argument presented is that cutting taxes increases the incentive to work. If workers have a lower income tax, they would then be incentivised to work longer. In addition, reducing taxes such as corporation tax should encourage businesses to invest, which would, in theory, increase wealth.

Another outcome would be that the wealthy would invest in businesses, creating new jobs and more income for those employed. If the wealth is invested in new companies, it will create new jobs and increase the incomes of those employed.

As a result of the above-referenced spending and investment, it is theorised that this would stimulate economic activity, which in turn would increase tax revenues through more income tax due to the increased jobs or higher VAT due to increased spending.

These higher tax revenues could then fund public programmes such as healthcare, education, and welfare payments to the poorer in society instead of, the higher taxation that limits the richest in our society from investing.

Does trickle-down economics work?

This is mostly subjective and down to which side of the economic spectrum you lean on. It has both its pros and its cons, and essentially, as with most things in life, it would depend on how you would be personally affected.

There are examples of trickle-down economics in practice. Famously, President Ronald Reagan and his “Reagonomics” became a beacon to those who believed in trickle-down economics when he passed two tax reform bills in the 1980s which brought tax down for higher earners from 73 percent to 28 percent, as well as reducing corporation tax from 46 percent to 40 percent. It is argued that as a result of this, the USA came out of recession in the 1980s and is lauded as an example of trickle-down economics working.

However, this paints only a small picture of that time, as in addition to reducing taxes, government spending increased by 2.5 percent a year, and federal debt in the USA tripled. Therefore, it is argued by its detractors that trickle-down economics in its purest form wasn’t ever implemented fully, and it could have been the increased government spending that, in fact, ended the recession.

There are further examples of this theory being put into practice, such as President Herbert Hoover’s Great Depression stimulus after the crash in 1929, Prime Minister Margaret Thatcher’s policies in the 1980s, and President George Bush’s Tax Cuts in 2001. So the theory has been tested, though some would argue not to its full extent and in its purest form.

In reality, however, one thing that becomes very apparent when this process is applied is that economic inequality increases. Suppose we use President Reagan’s and President Bush’s cuts as examples. According to trickle-down economics, Reagan’s and Bush’s tax cuts should have helped those at all income levels. But the opposite result took place: income inequality worsened. Between the years 1979 and 2005, the bottom fifth saw a 6% rise in after-tax household income. While this on its own seems great, it’s important to note that the top fifth experienced an 80% increase in after-tax household income. The income of the top 1% tripled, showing that prosperity was trickling up rather than down.

Why does economic inequality happen as a result of trickle-down economics?

In most cases of its implementation, the rich get much richer because they don’t want to invest their excess wealth. As a result, money is often stored in off-shore accounts to further preserve their new wealth. Furthermore, tax cuts for the richest in society don’t often translate to increased consumer spending, rates of employment, and government revenues in the long term. Inequality rises, and examples of the opposite system seem to work better with tax cuts for middle- and lower-income earners driving the economy through the trickle-up phenomenon.

In Conclusion

The trickle-down economics system does have its merits; however, in most practical examples, the successes are somewhat clouded due to the use of other measures to prop up trickle-down economics as a system. Therefore, it seems that as yet, we haven’t seen the theory work on its own, and with the recent failure of the Liz Truss & Kwasi Kwarteng mini-budget in the UK in October of 2022, it seems that this may continue until a severe shift in economics and public opinion can happen.

Jacob Mallinder – Finance Monthly

The wearable technology market is rapidly expanding - when walking down the street; it feels like everyone has a smart watch or ring tracking their health, sleep, exercise, and even “energy levels.” But one specific type of wearable is gaining traction: payments. Payment-enabled wristbands, rings, and watches are seeing growing popularity as convenient alternatives to traditional payment methods. However, the technology available for wearables today requires each manufacturer to integrate directly with each and every bank/issuer in the market. Sometimes we’re talking about 1000’s of banks in each market. That creates an impossible mission for innovative wearables manufacturers to offer a credible ‘pay’ capability. At Curve, we recognized the potential of these passive wearables and saw an opportunity to leverage our wallet functionality to revolutionise the payment experience and help manufacturers get to 100% bank coverage. Curve’s wallet functionality also allows customers to attach multiple existing credit and debit cards to the Curve app, and charge those cards through the single Curve card. This “multiple cards in one” functionality makes Curve uniquely positioned to take on the passive wearables market – whereas previously, people could only connect one single card to their smart ring or watch, now they can connect all their cards.

It could have been a risky move, entering an entirely new market – wearables – when we were previously so focused on our original project. Expanding our horizons and jumping headfirst into a new opportunity it’s paid off tremendously. Over the last two years, Curve has focused on forging strong partnerships with leading wearable companies, including Swatch, Garmin, Samsung, Wearonize, Fidesmo, Tappy, Xiaomi, and Digiseq. These collaborations have allowed us to seamlessly integrate our game-changing technology that enables multiple cards to be connected to a single wearable device, a feat that was previously impossible with passive wearables. By doing so, we’re creating a unified payment experience that supports a wide range of payment wristbands, rings, and watches.

Our strategic partnerships have significantly expanded the wearable payments ecosystem. These collaborations have enabled partners to offer an array of customizable wearable options, catering to a diverse range of preferences and styles. While smart devices are bound by the need for software, charging, and screens for interaction, passive wearables can take on almost any form. This flexibility allows manufacturers to really let their creativity flow. Innovators in the space have pushed creative boundaries to enable everything from shirts to jewellery to accept payments. The success of these partnerships is evident in the numbers - wearable customers who attach Curve are more engaged and exhibit higher retention.

Curve is actively exploring ways to support our passive wearable partners in targeting large, traditional fashion brands. Many fashion brands have signature aesthetics that customers use to identify a brand. Through Curve’s successful partnership with Swatch, we’ve proven demand for payments-enabled traditional watches. By combining our payment technology with the design expertise of fashion brands, we aim to create a new breed of fashionable and functional wearables. This strategy will not only broaden the appeal of wearable payment devices but also help our partners tap into new market segments.

In addition to our efforts in the passive wearables space, Curve is exploring opportunities with a number of smartwatch brands. By collaborating with these companies, we can bring the benefits of Curve’s wallet functionality to a wider range of devices, enhancing the payment experience for smartwatch users as well, without much investment required from the smartwatch brand.

Breaking into the passive wearable industry was a marked departure from our traditional channels and serves as a prime example of how it’s worth taking a chance to explore non-traditional customers. As we continue to push the boundaries of innovation, our vision for the future of payments extends beyond just wearables. We no doubt will enter new, currently unconsidered categories. We are committed to raising the bar of customer experience while guiding customers on their journey to financial freedom. Forging strong partnerships with leading wearable companies is a significant contributor to making this vision a reality. By exploring different market segments, embracing new form factors, and targeting untapped opportunities, Curve can confidently shape the future of finance for the better and serve as a model for others to follow.

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.

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 one-time-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 AI-enabled 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 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 customer-related 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 real-time, 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.

FinTech companies see two main opportunities in the auto financing space. First, the financing experience is too arduous, with many brands requiring the would-be buyer to complete paperwork and submit copies of tax returns and pay stubs to the dealership itself. Yet consumers want a fully digital experience, one that allows them to secure financing first, and then select the car they want. The other is subscription services, which Tesla and BMW are pioneering. These brands have implemented services that allow for the activation of new features within a vehicle on a subscription basis. This paves the way for in-car purchasing, which savvy auto financing companies can leverage to build long-term relationships with people.

In-Vehicle Shopping Will Soon Be a Reality 

Right now the only way to make any purchase of goods and services from within a vehicle is via a mobile phone, but Apple CarPlay and Android Auto will change that. CarPlay allows users to connect their iPhone with their vehicle’s display or dashboard screen so that it looks and works just like the app screen of the phone itself. There are some safety features built into CarPlay. For instance, it won’t allow drivers to send or receive text messages from the screen. All in all, it is setting the stage for a vehicle’s display screen to become so much more than just a control panel for the car’s entertainment system.

Imagine this scenario: a consumer applies for a loan from Honda Financial to purchase a car. At the same time, they apply for a line of credit or even a Honda-branded credit card. That card or line of credit can be used to pay for all in-car purchases, which can be made through the dashboard screen.

What are borrowers likely to purchase? First, they can purchase services from Honda itself (think: BMW letting drivers activate heated seats for $18/month). There are a whole host of in-car features that consumers may want to use occasionally, such as cruise control when embarking on a road trip. A services model allows the Hondas of the world to continue nurturing the customer relationship long after the car has left the lot.

Now imagine using that same line of credit or Honda-branded credit card for other purchases, such as gasoline, charging, or paying for drive-through meals. Imagine an app, selected from a Honda app store and accessible from the dashboard screen, that allows drivers to track miles and purchases for work, down to the client level, to streamline their expense reports or business tax filings. Imagine an app that tracks driving habits, which drivers can then send to their insurance companies in order to obtain better rates.

People tend to stick with the same brand of mobile phones when they upgrade because they like and are accustomed to apps they’ve installed. I can see the same phenomenon occurring with cars once there is a robust apps store for each brand (a development that seems inevitable to me).

In order for the Honda Financial organisations of the world to succeed, however, they must first perfect the experience of applying for loans, and ultimately credit cards. What makes for a great experience? First and foremost, it’s one that is 100% digital from start to finish. If Honda Financial needs to see my tax return or pay stub, fine, but allow me to take a photo with my phone and send it that way.

Next, adopt the Quicken Loans approach, where first I secure the financing and then I go shopping for a vehicle. Once I decide which car I want, the check is cut and sent to the appropriate dealer. This is far more relevant to the consumer than many in the industry may realise.

Or, even better, integrate the financing into the checkout process. Manufacturers can follow established processes in retail, including an option to open an account in order to apply for quick financing using a Buy Now Pay Later (BNPL) model. Consumers can choose their car, hold it with their down payment (or an acceptable portion of it), and then start applying for financing. I see opportunities here for targeting in-house financing to consumers or partnering with traditional financing institutions to give consumers a menu of finance sources, all integrated into the single checkout process

Who Will Own Finance Experience?

Auto brands are the natural owners of the finance experience, especially as they can tie in so tightly with the purchase process. However, banks are part of the new experience as well, particularly for those auto brands that either have established partnerships or plan to engage new partners to bring in necessary scale, buyers, or offerings. Going further, the combination of auto brand plus internal financing or partnering is what can ultimately activate the "Honda" card, points, or rewards, leading to payments loyalty.

To lead the market, however, auto brands need more than finance innovation. Experience is equally important, meaning it will be the combination of finance and experience that differentiates the brand and cements customer loyalty.

The services and app-based models are still in their infancy, which means there’s still time for auto manufacturers to lead the innovation (and benefit from the opportunity to cement long-term relationships with consumers).

In a few years’ time, I’ll be ready to purchase a new car. Whether the check for it comes from the lending arm of a manufacturer, or a FinTech company that moves into the space, will depend on the lender's appetite for innovation.

Eddie Chin brings his 15 years of financial services consulting experience to the intersection of experience design, solution development, and financial services. In his role at Rightpoint, he helps his clients use experience and design to innovate and solve strategic and technology challenges. Eddie joined Rightpoint as part of its acquisition of TandemSeven, where. He led engagements with clients in consumer banking, commercial banking, wealth management, and corporate banking.

According to data from the Office for National Statistics, the UK finance industry had more than five vacancies unfilled for every 100 jobs between April and June 2022 – putting the sector behind only hospitality and tech firms.

Finding the best way to embed new talent into the finance team is crucial in ensuring they stay committed to the business for the long haul, but as times have changed, so have the challenges. This was the very topic of conversation at our recent Tipalti Illuminate event, where a panel of finance leaders discussed everything from the automation journey, including key drivers and the implementation process, to the importance of keeping young talent engaged and retained in a competitive market.

Fresh talent want more than mundane manual tasks

When it comes to graduates joining finance teams. Traditionally, they are expected to spend the first few years of their career getting to grips with the intricacies of financial processes. Whilst in years gone by young talent has accepted this as a necessary step within their development, the time in which they are prepared to stick around just working on repetitive tasks within accounts payable (AP) for example, has significantly shrunk.

According to Tipalti research, a third (32%) of young professionals say modernising finance with technology would be the most exciting problem to solve if they became a CFO. Given the ambitions of young talent, entry into the finance profession should no longer be confined to purely budgeting, forecasting and financial operations. Young professionals should be given the opportunity to be part of the pioneering direction that a career in finance can provide – if supported with the right processes.

Capitalise on young talent’s ambitions to add value and thinking strategically

Those entering finance teams start at the very bottom, getting to grips with the basics. But, too much time spent on repetitive tasks will cause an issue much quicker than it used to. Alun Davis, Head of Finance at Plentific highlighted this during the panel, “What I was finding was that our young talent were getting bored quite quickly and losing their attention” - this prevented Davis from getting the best from his team.

Our research revealed that 40% of young professionals see identifying new opportunities to accelerate growth, productivity or profitability as an exciting opportunity as a CFO. It’s clear there’s much to be excited about a career in finance but when stuck in the tedious lifecycle of manually-intensive processes employees, both new to the business and existing, will quickly become disillusioned and churn will be high. Alex Rogers, CFO at Design Cuts, notes that if their junior account hires were carrying out mainly manual, often mundane, tasks then they probably wouldn’t stay at the firm.

Businesses should be capitalising on this passion, instead of isolating them into the back office function. For Maria Liston, CFO at Basebone, she didn’t want her team to be continuously processing. Instead, she said, “I want them to provide useful insights for the rest of the business.” When new talent enters the team, businesses should see this as an opportunity to capitalise on fresh perspectives for strategic insights. But to realise this opportunity, businesses need to be asking how they can limit the mundane tasks to create a more engaged, inspired and motivated team, who are likely to stay at the business long-term.

Facilitate cross-departmental collaboration by increasing efficiency

Crucial to success through global financial instability is ensuring the business is lean, the finance team have an integral role in delivering streamlined operations which are agile enough to withstand change. Currently, 56% of finance teams spend over ten hours a week processing invoices and supplier payments – these inefficient and time-consuming tasks are simply not fit to deliver strategy at pace.

Davis recognises how crucial automation is to increasing efficiency and providing strategic insights for the business. He said: “the automation journey is about getting the information in the timeliest manner in front of my C-suite. And if we can't do that, these guys cannot make the right sort of business decisions.” Liston added, “we’ve grown but our finance team hasn’t…the choice was to invest in technology and not in headcount”.

Not only is the ability to rapidly turn data into insights for the rest of the business key for agility in challenging economic circumstances, but working smarter by improving efficiencies and procedures can result in higher levels of collaboration across the business. Liston said, “I can see much more collaboration, people having conversations about what this data actually means for the business… Automation has elevated the role of my team in the eyes of their peers and in other departments... they’re now a bit more interested in what we do in the sense of where we are adding value.”

For new talent in the business, the ability to see that their insights are not just numbers in a spreadsheet but inform a key part of the decision-making insight for the rest of the business will boost morale and satisfaction in the workplace.

Making the difference

To realise the full potential of the finance team as a strategic asset within the business, and crucially retain that talent, it must stop being siloed and labelled ‘the process department’. Increasing the efficiency of AP through automation can give the team time and autonomy to be integrated, and starting to make the difference as the crucial strategic arm of the business, providing credibility and improved decision-making.

Scale-up businesses will quickly outgrow their current systems – and indeed their young talent – if they do not build a finance department that channels teams towards more exciting, strategic endeavours. To support finance professionals as they craft their trade, it is crucial that finance leaders lean on automation to unleash time for these opportunities. The business will be paid dividends in increased productivity and the ability to capitalise on their talents’ analytical expertise.

Tell us more about The Resurrection Project and how you help clients.

TRP Realty is the one-stop shop for homeownership. Whether you’re purchasing your first home, selling your current home or investing in real estate. We have all the tools to help our clients create generational wealth through real estate. From the smallest details to the greatest fortune.

How do you help clients with their financial wellness? 

We help our clients commit and set a budget by working with our financial coaches, whether it is purchasing their first home, saving for a second home or creating an emergency fund we offer these services at no charge to the consumer. Our coaches help them learn about debt and how to manage it and the importance of building good credit.

What are the challenges you face with this considering the current turbulent financial landscape? 

Economic and political uncertainty prevails, while the risk of asset bubbles and inflation is rising in different parts of the world. There is a lack of affordable housing throughout Chicago and its surrounding suburbs. Where working-class families are not able to find properties within their budgets based on their income.

What are the key tips you can offer our readers when it comes to financial security in the current climate? 

Be alert of your financials. Try to cut your expenses, pay down your debts as much as possible. If you want to reach financial security, you need to take advantage of your greatest wealth-building tool: your income. So, whether you’re trying to find money to build your emergency fund, pay down debt, or invest in something in the future…learning to manage your paycheck is the best place to start.

What goals are you working towards in the new year?

One of my goals this year is to really work on my marketing. God has blessed me with business that I have not fully mastered the marketing component of real estate. I can be a bit timid when it comes to social media but now more than ever, I understand the importance of just being out there!

Because a wedding is an event that brings two individuals and their families together, it is natural for you to want to make it as memorable as possible. However, most weddings require a lot of funds, which may not be readily available for most people. Here’s where a marriage loan comes into the picture. 

A marriage loan is essentially a personal loan that you use to take care of your wedding expenses, whatever they may be. However, if you’re not convinced about taking a loan for a wedding, maybe this article can help. Here are 5 of the most compelling reasons why you should take out a marriage loan to fund the wedding of your dreams. 

#1 - Relaxed Eligibility Criteria

Contrary to popular opinion, getting a personal loan to fund your marriage expenses is quite easy. Most financial institutions have relaxed the eligibility criteria for borrowers in a bid to make it easier to apply for loans. As long as you possess a high credit score of 700 or more and have a steady and consistent stream of income, you should qualify for a marriage loan. 

That said, different lenders tend to have different eligibility requirements. So it is recommended that you compare offers from multiple institutions. This simple exercise can help you determine the provider whose eligibility criteria you satisfy. 

#2 - Highly Convenient Application Process

Nowadays, you don’t have to physically visit the branch of a bank or an NBFC or fill out any manual application to apply for a marriage loan. Almost all financial institutions have moved towards a completely online and paperless application process. This has made applying for the credit facility extremely quick and convenient.  

All that you need to do is visit the official website of the lender, fill out an online loan application, upload scanned copies of all the relevant documents, and submit them. The lender would then process your application and upon successful verification, would electronically transfer the funds to your bank account. 

The entire process usually takes only a few days to complete. On the other hand, if you have a long-standing existing relationship with a lender, you may even be eligible for instant loan disbursals as well. 

#3 - Easy Repayments

This is another major reason why you should take a marriage loan to fund your wedding. Irrespective of the amount of loan that you avail, you can choose to repay the loan in small and affordable monthly instalments over a certain period. 

In addition to being able to easily repay the loan, borrowers also get the benefit of customisability. They not only get to choose the amount of loan they wish to take but also the tenure over which they would like to repay the loan. 

Such flexibility and a favourable repayment plan can be highly advantageous for newly-wed couples since it allows them to manage their financial situation in a much better manner. Also, being able to repay a huge loan in small monthly instalments gives them the freedom to also save some money for the future. 

That said, before you proceed to take out a marriage loan, always remember to use a personal loan EMI calculator. It is a nifty little tool that’s designed to give you an estimate of your monthly loan obligations. By using it, you can quickly ascertain whether you possess the repayment capacity to service the loan on time till the end of the tenure. 

#4 - No Collateral Requirements

With most kinds of loans, you might be required to pledge an asset as collateral to secure the credit facility. This can be cumbersome and can be a deal breaker for individuals who don’t possess any assets to pledge as collateral. 

With a marriage loan, however, there’s no such requirement. This is because personal loans are unsecured credit facilities, which makes them more accessible to a wider base of individuals. As long as you possess a strong credit history, a high credit score, and satisfy all the other eligibility criteria set by the lender, you can avail of a marriage loan.

#5 - Ability to Cover Last-Minute Expenses

No matter how meticulously you plan a wedding, there will almost always be a few last-minute expenses that you will have to account for. Getting quick access to funds to cover these costs is of paramount importance, especially with the wedding not too far off. Since you can apply for it and get it disbursed within a matter of a few hours, a marriage loan is the best way to take care of such unexpected expenses. 

Conclusion

After going through these 5 reasons explained above, you must now be convinced of why you should opt for a wedding loan to cover the expenses associated with a wedding. Now, before you go ahead and apply for one, remember to compare different offers from multiple lenders. 

Doing so can not only help you land an offer with the lowest interest rate but also ensure that you sign up with a lender that offers the most benefits. 

Also, don’t forget to use a personal loan calculator. Knowing your monthly debt obligations beforehand can help you plan your finances better and make an informed decision. 

2023 will be an interesting year as it precedes 2024. Although that sounds obvious, 2024 will see a new European Parliament and Commission and, in all likelihood, a general election in the UK (not to mention a Presidential election in the US). In Brussels, there will be a focus on getting the programme of the current Commission finalised as far as possible and, in the UK, the current Government will be pushing to demonstrate it should be given an extended mandate.

Pressure will be building on policymakers to act, and this will need close attention. Companies should be ready to act to influence the process, whether directly or indirectly (for example through the media).

David Cook, Partner at Penta, sets out the drivers for those of us watching closely where the EU and UK are going.

Competitiveness

Despite some thawing in relations in 2022, the shadow of Brexit continues to loom over both the UK and EU and competitiveness between jurisdictions has become a key concern. In the UK, the Financial Services and Markets Bill will provide regulators with a secondary objective to consider the UK’s competitiveness. The UK government has also set out its strategy for regulation in the form of the Edinburgh reforms. These focus mainly on reform to parts of the UK system that have proven unpopular and have been badged as using Brexit freedoms. Ironically, some of the highest profile reforms are in areas, like ringfencing and the senior managers’ regime, that were not actually related to EU law.

In the EU regulation aims to provide the single market with ‘open strategic autonomy’. This nebulous label intends to boost the efficiency of the single market and the competitiveness of EU firms while not relying on ‘third countries’ such as the UK.  The EU is looking to make tangible progress on its Capital Markets Union agenda, and tech and data will be important features in the regulatory work of the EU in 2023.

A regulatory focus on competitiveness might sound attractive, but memories remain of the financial crisis, before which competitiveness was a regulatory objective, so there may be reluctance to embrace it. Also, regulators do not have a great record of promoting innovation and data-driven change in Europe, so a close eye will need to be kept on this.

Crypto

2022 has been dubbed the crypto winter with huge falls in the value of cryptocurrencies and some high-profile failures in the sector, including FTX and Terra. This has led to a dilemma for policymakers in Europe. The focus on competitiveness means some want to welcome this innovative technology that many people continue to believe has an exciting future. However, the risk to investors, financial stability and even the ability to police and control the supply of money is causing sleepless nights in some institutions.

The EU is, as usual, ahead of the international game when it comes to producing regulation. Its flagship regulation, MICA, is agreed and ready to pass into law (although it will be some time before it needs to be adhered to). The EU has also advanced its work on digital currencies and the ECB is currently pulling together a group on rulebook development.

Similarly, the UK is preparing consultations on crypto asset regulation and digital currency. Except for new powers around financial promotions, new regulation is not expected in 2023. However, the direction will be set in 2023.

Whether the UK and EU adopt similar approaches remains to be seen. A competitive environment could emerge where each jurisdiction seeks to be at the forefront around, for example, blockchain adoption or central bank digital currency. This might introduce risks around intended consequences, where regulatory approaches are not properly analysed in a rush to move forward. Equally, there could be excessive caution that limits the development of the sector in Europe. It will also be interesting to see how the UK and EU overcome the dichotomy of regulators, who will be very concerned about the risks, versus those who want an environment focused on innovation.

Sustainability and productive finance

In an environment where public finances are suffering from severe stress, governments have been focussed on how private sector finance can be used for public policy purposes and how investors can be sure their money is used for such purposes. This is most apparently seen in the regulation around climate change where the EU’s impressive array of rules, including the Taxonomy and disclosure requirements, are becoming a huge compliance challenge for many firms operating in the EU. The UK is pursuing its own agenda and there’s an ambitious approach being developed where the divergence from EU rules is creating its own challenge.

There are also plans to consider how changes in regulation can increase sustainable investment and, in the UK, other policy objectives such as levelling up and promoting innovation. Last year saw the candidates to become UK Prime Minister talking in public debates about how changes to regulation such as Solvency II could be used to promote more of this type of investment in the UK.

Changing regulation in the EU and UK will create risks, burdens and opportunities for the firms that fall into scope. New disclosure requirements are likely to be hard to meet but changing investment rules could play to particular businesses’ strengths. Firms should ensure policymakers understand what’s practical and effective.

Energy

The events of 2022 mean that energy security and cost are a top priority in Europe and politicians have been quick to act to support markets and consumers. When it comes to financial services, there are three main concerns. First, can investment be increased to help reduce the reliance on fossil fuels generally, and Russian gas specifically? Second, have markets delivered efficiently for European consumers. Third, could energy market turbulence lead to turbulence on financial markets, as seen in markets such as the London Metal Exchange.

Of these three, the first concern has increased the urgency around creating a regulatory framework to increase investment in non-fossil fuels (as described above). For the second point, appetite for direct intervention by authorities in markets has been rising, particularly in the EU. This is very uncomfortable for those firms active in energy markets where price caps and public sector produced financial instruments (like price benchmarks) are likely to distort markets and could undermine confidence if not properly calibrated. Policymakers, lacking specific expertise, are going to need a great deal of assistance.

Finally, the third point about risk moving from energy markets to financial markets is likely to be challenging, particularly for those firms who prefer to avoid operating under the burden of financial regulation. Without proper calibration, new measures are likely to raise the costs of operating on energy markets and lead, ironically, to higher energy costs.

Financial Crime

Finally, a focus for regulators will be around how to reduce the levels of financial crime and keep investors safe. The losses to investors caused by the collapse of crypto-currency prices have been part of the story, but there have been a number of misselling scandals that have embarrassed regulators and shaken confidence in investing. In the UK we can expect to see the FCA act to strengthen the approach it is taking to protect consumers. We should also see regulation that helps reduce scams by increasing the requirements on banks and social media providers.

In the EU there is a package of measures around anti-money laundering under development to ensure a more harmonised approach across the single marker and also create a new EU-wide regulator to enhance supervision. This is likely to mean increased compliance and due diligence costs for those brought into scope.

Like every financial pontificator and prognosticator, I am going to present predictions for 2023. I could go tearing through the entrail or birds or try reading tarot cards, but experience teaches the best we can do is guess, and then carefully dress it up and hedge these guesses to present them as informed advice. But that’s not what readers are looking for. Readers generally want insights and ideas so here is my best advice for dealing with 2023.

First, forget everything you ever thought you knew about economics and your perceptions of current markets! That might just be the best piece of advice I ever give. Chuck everything you think is sacrosanct in the bin and start again. Do so, and the current contradictory markets and theoretical economic morass might make a little more sense. Break it down and reconstruct the bits and pieces to make sense of your perceptions! Remembering, of course, to spice it with plenty of self-doubt.

Remember the most significant danger to markets is people. The market, after all, is just an enormous voting machine weighing up the votes of every participant. Things get complicated when everyone is pessimistically careful causing the prices to become overly depressed. Hence smart money says to be fearless when others are fearful. Things get dangerous when market participants are optimistically careless causing prices to soar to euphoric levels. Know the mood and trade accordingly.

We still seem trapped in a phase of over-optimism with investors jumping on any positive news to validate their hopes the market will go higher. After all, that’s what they have been doing since 2009, so surely, they can only ever go up. Nope. A lower-than-expected US Consumer Price Index pushes up prices for a while. Any hints of a Fed “pivot” to lower rate rises will push stock markets higher.

If you want an example of over-optimism in the face of reality, it’s the high likelihood that the market believes that Central Banks can navigate a genuine soft landing. Why? They have never previously succeeded. Every known instance of economies overheating, and rampant inflation has been followed by a crash of some description as Central Banks either let inflation run on too long or engineer an economic crisis by hiking rates too hard. There is no such thing as a soft landing, but a good landing is one you can walk away from.

First, forget everything you ever thought you knew about economics and your perceptions of current markets!

The expectation that we can still avoid a damaging recession in 2023 is strong across markets. I don’t want to sound grumpy, but I still think a recession will happen because of rising rates, property sentiment dipping, and inflation which leaves consumers unhappy, nervous and not buying. For consumer societies to thrive, we need more, not less consumption. People spend even less when faced with tax rises, austerity spending, declining services, rabid inflation, industrial strife, and ongoing political sleaze. It’s a recipe for economic misery, and next year's stagflation, in the UK, looks nailed on.

To see where we are going, look back to where we have come from. 2022 was a watershed year. The third exogenous shock of the decade, the Ukraine War and Energy Price Shock, followed by COVID-19 in 2020 and Supply Chain Disruptions in 2021. We also have a critical endogenous shock underway. Quantitative Tightening as global Central Banks try to unroll the effects of monetary experimentation in the 2010s.

You also must understand the key economic factors that drove markets and inflation through the 2010s. The first was monetary experimentation keeping interest rates low to drive economic recovery following the global financial crash of 2008. But we didn’t get an economic boom. What we got was galloping financial asset inflation as bond prices and stock prices went stratospheric. That distortion enflamed market exuberance and euphoria, triggering the stock market bubbles in Big Tech, disruptive tech and the stupidities of meme stocks, crypto and NFTs.

At the same time, we had the second factor, a de-facto cap on global inflation: China. The Middle Kingdom became the “cheapest to deliver” manufacturer exporting deflation around the globe, and all supply chains led back to it. COVID and the building of a geopolitical stag fight between China and the USA profoundly changed that reality. It unleashed supply chain price instability as geopolitics changed and shut off the deflation spigot.

The era of cheap money fuelling markets and downward pressure on prices is over. Make sure you understand that there is a new reality of real inflation and expensive money before figuring out what 2023 looks like. Although the indications are for inflation to moderate, I reckon it will prove stubbornly high and challenging to de-fumigate from Western economies.

Let’s scribble down some possible scenarios and predictions for 2023. My starting point would be to worry about further shocks. What about another exogenous shock?  Could COVID in China overwhelming the medical system create a judder moment triggering another China shutdown, making the Government look weak, causing the possibility of a deeper global recession, and the possibility of President Xi deciding to deflect by going outward bound on Taiwan?

Could the Bird Flu that’s ravaged Christmas Turkey’s jump species lead to a second major pandemic? What are the chances Central Banks decide to go soft again and turn market accommodating? Slashing rates to avoid a market meltdown and a deep recession?

These are all known unknowns, and none are binary. There are numerous others we could discuss, including political instability across the west, the dollar, and the great retirement causing a demographic crisis in the jobs market, and thus the economics of every firm that hires staff!

Equally, there are a host of entirely unpredictable events that could occur. Dreaming up storyboards for disaster movies is fun but scary: the big West Coast earthquake, a super-volcano triggering a mini-ice-age, a meteor strike, a solar flare, an unwater landslide caused by ocean warming causing a tsunami to hit Europe’s Atlantic and North Sea Coasts, a storm surge in the North Sea flooding London and the Netherlands. There is any number of unimaginable events.

Or it may be something financial. A big bank discovers its bust on the back of a housing crisis, a major hedge fund evaporating in a slew of downright stupid trades, or a pension fund exploding in a leverage/liquidity event. Don’t discount anything upsetting our cosy little apple cart of expectations. I think it is 100% likely the remaining cryptocurrency exchanges will collapse in a welter of liquidity events but if you were invested, there is no one to blame but yourself.

What about bond markets? The consensus is bonds are likely to rally on the back of the pace of interest rate rises declining. That doesn’t factor in residual inflation remaining higher than expected, the effects of the sheer over-indebtedness of nations like Italy, France, and even the USA, or the fact that Central Banks are trying to sell down their QE inventory creating a supply glut. The much-heralded bond rally may yet be premature.

Or earnings? Stock markets are still rolling on hopes rather than the fundamentals of good versus bad companies and their earnings. The quality of earnings and their sustainability to competitive threats and a changing economy matter. There is still a shakeout on valuations and stock market multiples to come.

In currencies, sterling has recovered all its losses since the Liz Truss mini-budget disaster but mainly on the back of adults being back in the Downing Street room, and dollar weakness. What does the coming year hold for US growth on the back of a weaker dollar and with all the effects that would have on the global economy?

I predict the big themes for 2023 will be renewables, carbon mitigation, agri-business, soil enhancement, commodity weakness, healthcare in terms of AI, obesity and Cancer drugs, consumers and retail. I plan to continue exploring these topics in 2023.