Week ending February 24, The Banker

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Your quick guide to the week ending February 24, 2023, on TheBanker.com. The Banker editorial team reports.

Last week, female fintech CEOs commented on the current economic environment, and women forged a path in fund management in the Middle East. While Asia-Pacific looked to improve infrastructure funding, the London Stock Exchange moved forward with big tech partnerships and several banks experiment with digital currencies. Meanwhile, deforestation presents a growing problem for banks if they pay attention. We also continued our new column, Fintech Fortnightly, with its second iteration – collating fintech news from around the globe. 

Opinions range from the reach of shadow banking, FCA enforcement, central bank independence and artificial intelligence.

Our global coverage offers insights into Bahrain, Georgia, Egypt and Brazil. 

Trending topics 

  • Women in Fintech: How can fintechs stay afloat in troubled waters? – The Banker Editorial | Click here to read

In honour of International Women’s Day on March 8, The Banker has brought together six female CEOs from the fintech world to discuss the current challenging operating environment and how they plan to expand their business in 2023. Iana Dimitrova, CEO, OpenPayd; Marina Goche, CEO, Sentifi; Diana Paredes, CEO, Suade; Catherine Parry, founder and CEO, DeepView; Gabrielle Patrick, CEO and general counsel, Knabu.me; Uma Rajah, founder and CEO, CapitalRise. 

  • Female-founded private equity fund forges path in the Middle East – John Everington | Click here to read

Huda Al-Lawati, founder and CEO of Aliph Capital, the first female-founded private equity fund in the Middle East, speaks about the current environment in the region.

“More broadly, there has been amazing progress for women in recent years in both financial services and in society more broadly. First Abu Dhabi Bank’s group CEO is a woman, as is Saudi Arabia’s ambassador to the US. The changes in the past few years in Saudi Arabia in particular have been extraordinary; the glass ceiling that was there for women, particularly in their 20s and 30s looking at career growth opportunities, is no longer a given.

“Within the private equity space, less than 12% of senior positions worldwide are held by women, which is only a minor increase compared with when I started my career around 20 years ago, so there’s still work to be done in the industry in general.”

  • Funding Asia-Pacific’s infrastructure projects – Kimberley Long | Click here to read

Asia has a wide infrastructure gap, which was further exacerbated during the Covid-19 pandemic. As countries look to new ways of raising financing, innovative structures and a focus on renewables is helping to lure in new investors. 

Jamie Leather, chief of the transport sector group at the Asian Development Bank (ADB), says funding is the answer: “In 2017, we were estimating that Asia needed $1.7tn in infrastructure investment each year. That requirement has not been met. Even then, we estimated it was around half of what was needed to be invested.” 

The majority of the investment was coming from government spending. 

  • Digital currency network developer invites banks to participate in tests – Bill Lumley | Click here to read

Unveiled at Davos, UDPN, a global messaging network supporting digital currency systems, has already been tested by several leading banks. The banks involved participated in a series of proofs of concept (PoCs) last month to demonstrate how the UDPN will address the challenges of integrating digital currencies into daily business, banking and payment scenarios. Among those on the panel were HSBC, Deutsche Bank, Standard Chartered’s SC Ventures, the Bank of East Asia and Bank of Baroda. “Now we are inviting any bank in the world to participate in PoCs, which they can do of their own free will,” says GFT CEO Marika Lulay.

  • Report shows banks may be failing to recognise the risks of deforestation – Philippa Nuttall | Click here to read

Of 500 organisations surveyed who are “most exposed to deforestation risk in their supply chains and investments”, 40% have not set a single policy on deforestation. 

Emma Miller, head of investment banking and capital markets in the data and analytics division at London Stock Exchange Group, sees technology and better application of data as essential to modernising the investment banking industry – helping financial institutions lower costs during a difficult period for the global economy, but also speeding processes, enhancing decision-making and even making banks more pleasant places to work.

“Despite a lot of the fintech innovation and start-up culture that you see in the financial services space, investment banking workflow in particular hasn’t really changed or evolved in the 35 years since the invention of the original Excel spreadsheet,” says Ms Miller.

This fortnight, reports of a fall in fintech investment may be premature, while open banking continues to grow. The UK regulator cracks down on buy now, pay later, but interest in the sector is not dead. Regions continue experiments with digital currencies, examine the use of English law and retain interest in all things bitcoin. Meanwhile, Monzo returns its gaze to US expansion. 

Opinion sharers 

  • Will shadow bank contagion impact traditional banks? – Joy Macknight | Click here to read

The challenging operating environment for shadow banks, including increasing interest rates, a tighter funding environment and a potential global recession, will likely slow down global shadow banking activity. Those operating with high leverage or taking significant credit risk could face financial pressure.

But could their problems spill over into the traditional banking sector?

  • Balancing speed and fairness in regulatory investigations for individuals – Harvey Knight | Click here to read

Commentators have remarked on the FCA Enforcement model having been ‘broken’ due to the sheer number of unresolved investigations and the regulator’s ability to operate through and beyond the pandemic with remote working, low staff morale and high staff turnover compromising its operational resilience. 

  • (In)dependent central banks: the law of unintended consequences – Vasso Ioannidou, Sotirios Kokas, Thomas Lambert and Alexander Michaelides | Click here to read

Despite well-intentioned legal reforms being aimed at ensuring central bank independence, data suggests that they may actually have the opposite effect.

  • Delivered, developed or dreamed, AI must take account of the EU’s latest law – Lorna Doggett and Carolyn Sullivan | Click here to read

The EU is expected to approve its long-awaited AI Act in March, introducing new rules for, among others, lenders in the EU making credit decisions based on machine learning or AI-based algorithms. The ‘machine learning’ aspect of this casts a very wide net over almost any decision made using data, a key point that should see banks sit up and take note.

Globe at a glance

  • Bahrain’s economy enjoys respite despite long-term challenges – James King | Click here to read
  • Georgia central bank governor Koba Gvenetadze reflects on his seven years in office – Anita Hawser | Click here to read
  • Egypt remains a key African investment destination despite economic challenges – John Everington | Click here to read 
  • Brazil’s PIX payment system teaches us a valuable lesson – Sergey Sarkisyan | Click here to read 

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