CCUUSSTTOOMMEERR SSPPOOTTLLIIGGHHTT

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Insurance Technology

in Africa

Driving the Business at

Cholamandalam Mitsui Sumitomo

Little Green Shoots

of Recovery?

AgileFINANCIAL TIMES

June

2009

PPAARRTTNNEERR SSPPOOTTLLIIGGHHTT

Building Bridges in

Bahrain

Greetings!

We have added more products to our growing suite of

banking and financial solutions to cater to our

markets in Asia, the Middle East & Africa.

Innovative Financial Planning on Surface Tables!

A complex subject like Financial Planning made easy

to understand in a relaxed and interactive way, for

your clients, by using pioneering new technology of

Microsoft Surface. Imagine sitting across a big table

with your financial advisor and instead of staring at charts, graphs and numbers

that are not easily comprehensible; the table in between itself converts to a huge

canvas of life where you can touch and visually translate your life’s goals

(comfortable retirement, children’s university education, dream house) into

achievable plans.

Agile FT is keen to contribute to the emerging world’s economy across all

realms. So while we added Financial Planning for the HNWI segment, we added

even more MicroFinance solutions for the unbanked and often forgotten roots

of our society - the humble labourer, the over-worked maid, the round-the-corner

tailor, the family barber….to help them achieve their dreams too (steady rations,

basic schooling for kids, ‘pucca’ house).

Dreams big or small (whether for a yacht or a hut) are what keep the human

spirit alive. Services should be tailored and made available for all to achieve

them. If the poor cannot come to the banks, we provide mobile technology to

enable banks to go to them, right to their village compounds and labour camps.

While we look towards empowerment of the poor, we are equally keen on

empowerment of women. In this edition is an inspiring article from Dr. Manahel

Thabet who presents an insider’s view of the glass ceilings faced by women in

the Gulf and how to overcome them. She is living proof that dreams are

achievable with the right environmental support as she broke into the traditional

male bastion of trading and became a leading female trader to reckon with.

So let us all dream, achieve, inspire and most importantly enable others to do

the same….wishing you all a wonderful time whether getting rain soaked in

Lagos & Mumbai, or enjoying the pleasant winter of Harare, or just plain

shopping in the air-conditioned malls of Dubai!

Be Agile!

Shefali Khera

Chief Marketing Officer

Write to us at info@agile-ft.com

CONTENTS

Editor’s Note

CUSTOMER SPOTLIGHT

Driving the Business atCholamandalam MitsuiSumitomo 4

COVER STORY

Insurance Technology inAfrica 7

PERSPECTIVE

Little Green Shoots ofRecovery? 10

NEWS

Global Update 14

ARTICLE

GCC Women’s Savings:Can it Boost the Region’sEconomy? 16

PARTNERSHIPS

PartnershipAnnouncements 18

SOLUTION SPOTLIGHT

Investment Managementfrom Agile FT 20

PARTNER SPOTLIGHT

Building Bridges inBahrain 22

June 2009

India enjoys the fifth largest general insurance market size in

Asia, in terms of premium earned, after, Japan, Korea,

China and Taiwan. Although India has the second largest

population in the world, it has one of the lowest insurance

penetration rates for property and casualty insurance (P&C).

The economic potential of the country continues to be

among the highest across emerging markets and therefore,

the current under-insurance in the market is expected to be

a key business driver.

Along with low penetration levels, significant scope for

products and services innovation and increase in consumer

awareness for risk management are other key drivers. The

evolution from a tariff-based regime to a free price level

playing field has resulted in companies designing their own

products. This has taken the general insurance industry to a

completely different paradigm in terms of products

innovation and knowledge-based risk management.

However, implementing systems that can cater to new lines

of business such as weather insurance has become a

challenge. Further, several operations in the public sector

companies, as well as many private ones as well, are still

carried out semi-manually, resulting in a high error rate, slow

turn-around-time and limited ability to quickly introduce

new and innovative products. With technology enabling a

competitive edge, there are opportunities for insurers to

further increase market share and build a framework that can

cater to new and innovative product development.

Competition is expected to increase with the entry of

foreign players. “There is a definite threat of foreign players

entering the market without Indian partners. The insurance

sector is already in the process of opening up further to

allow 49% investment by foreign companies, up from the

current 26%”, says S. N. Roy, CIO, Cholamandalam MS.

Cholamandalam MS is a joint venture betweenThe Murugappa Group and Mitsui Sumitomo

Insurance Group of Japan. Set up in 2002, it isthe fastest growing general insurance player in

the country. Its earned premium increased by68% to INR 5,220 million in FY08, up from INR

3,120 million in FY07. The company’s marketshare increased to 1.88% in FY08, compared

with 1.25% in FY07.

Committed to using the best technology, thecompany selected AGILIS - an enterprise level

solution from Agile Financial Technologies forgeneral insurance companies.

4

Driving the

Business at

Cholamandalam

Mitsui Sumitomo

CUSTOMER SPOTLIGHT

5

CUSTOMER SPOTLIGHT

“I would say that

what we selected

(AGILIS) was the

best”

- S. N. Roy

CIO

Cholamandalam MS

After the opening up of the insurance sector, private players have successfully

garnered 25% of the market share. Further, deregulation has also resulted in an

increased competitive landscape and is expected to increase. While competition

has resulted in new products with additional features, it has also led to a

lowering of prices in the form of discounts, commissions and add-on offers.

Hence, profitability has been impacted and profit margins have declined across

the industry. Therefore operational efficiency is now extremely important.

To gain a competitive edge, Cholamandalam MS was looking for a world-class

enterprise-wide solution that could help the company penetrate existing and

new markets, increase market share and successfully scale up to address

evolving requirements. More specifically, Cholamandalam MS was in need of

state-of-the-art technology that could respond to more complex issues of

general insurance, such as floaters, group insurance policies, foreign exchange

fluctuations and reducing turn-around-time.

Of the two competing products considered by Cholamandalam MS’ Project

Team, led by S. S. Gopalarathnam, the current MD, one was incomplete and

needed significant changes. The other product did not appear suitable as the

user experience reported by one of its customers was adverse, with the

customer unable to align and orient technology with the business. Hence

AGILIS became the best fit for Cholamandalam MS’s requirements. “I would

say that what we selected (AGILIS) was the best”, says Roy.

“Cholamandalam MS selected Agile FT because they could see the passion

within each associate for this product. Every question asked by

Cholamandalam MS was answered by associates through the system,” says B

Rangarajan, ED & Head - Product Management, Agile FT, a sentiment which

is echoed by Roy as well.

In addition to technology expertise, Agile FT possesses significant domain

expertise as well. “When I spoke of complete dedication, I was talking about

mastery over the intricacies as well. What we saw from the Agile FT team was

complete knowledge of the industry. I found them to be extremely

knowledgeable, holding their own against people who were decades ahead of

them in terms of experience,” says Roy.

AGILIS is an integrated on-line IT solution designed to implement all the

functions of a general insurance company. It acts as a decision support system

for underwriting, claims, reinsurance and accounting and, as a result, directly

enhances the business processes of an insurance company. The solution is

flexible in terms of defining new or revising existing insurance products and

facilitates dynamically altering the process in time with the market conditions.

AGILIS has the ability to cater to all classes of the general insurance business.

The implementation of AGILIS has resulted in several business benefits to

Cholamandalam MS.

� The first Portal approach in Indian retail general insurance was a high-speed

Motor Insurance page. In February 2003 this started a chain of Process

engineering which then led to many other service accelerators.

� The unique design of the travel insurance module helped Cholamandalam

MS increase its market share to over 75% in the travel insurance segment.

Cholamandalam MS became one of the first companies in India to issue a

motor insurance policy within two minutes as compared to the competitors’

4-5 minutes, resulting in additional business. “Cholamandalam MS is the

first insurer in the country to issue a travel policy in two minutes.” says B

Rangarajan. A substantial reduction in turn-around-time, to a few seconds,

attributable to innovative product design and simplicity

of operating the system, was the main contributor to the

increased market share. “We sometimes issue three

policies together in eight seconds!!” says Roy.

� AGILIS effortlessly scaled up to cater to

Cholamandalam MS’s multi-fold increase in business and

the introduction of a large number of new products

without having to upgrade or undergo any software

changes. Viewed historically, this also meant that

Cholamandalam were able to start with low hardware

investments and scale up gradually.

� Agile FT configured a unique indexing method which

could retrieve complex data at high speed and high date

security from the back-end database, enabling quick

management reporting. This unusual and uncommon

technique is really a unique service proposition.

� The Accounts module of AGILIS, incorporated

information from all the other modules, and presented

an output that would normally require a full fledged

Accounts department. “Cholamandalam MS has a very

small Accounts department. Our closest competitor’s

Accounts department is many times bigger than ours,”

says Roy. Hence, Cholamandalam MS today has one of

the smallest accounts department in the general

insurance industry, giving it substantial cost savings.

The implementation of AGILIS helped Cholamandalam MS

garner significant incremental business, especially in travel

and motor insurance.

AGILIS managed to bring down the turn-around-time

substantially, leading to increased market share. It was not

only instrumental in providing business value, but also was a

favorite amongst all users, both external and internal, due to

its ease of usage and flexibility.

6

CUSTOMER SPOTLIGHT

In Brief

Mitsui Sumitomo Lao DPR Joint Venture

Mitsui Sumitomo Insurance Company Limited recentlyannounced a partnership with the Ministry of Finance,Lao People’s Democratic Republic, to establish a jointventure company to offer a range of general insuranceproducts across business and personal lines.

The joint venture will be called MSIG Insurance (Lao)Company Limited and will have an initial paid-upcapital of US$2,000,000. The company will be locatedin Vientiane and is expected to commence operationsshortly.

Atsushi Yagi, CEO, Mitsui Sumitomo Asia, said, “Weare pleased to be selected by the Lao Ministry ofFinance as a partner to provide general insurancesolutions in the burgeoning Lao market. Thisagreement underpins our strength and leadership inthe general insurance industry in Asia. We have along-term commitment to developing markets inIndochina and contributing actively to its economicgrowth. Our strong network in the region, includingoperations in Thailand, Vietnam and Cambodia, willbe bolstered with the addition of this joint venture.”

Cholamandalam MS Rated as the Fastest

Growing Company in India

After posting a Gross Written Premium (GWP) of INR526 crore for the period of April - December 2008,Cholamandalam MS received the distinction of beingthe fastest growing insurance company for that period.

The premium growth stood at 36 percent for theperiod which was the highest in the industry. Itsmarket share increased from 1.85 percent in March2008 to 2.31 percent in November 2008.

The company management believes that thisachievement is even more remarkable in the face of achallenging macroeconomic scenario which has seena recent decline in vehicle sales. The company hasalso made conscious attempts at portfoliorationalisation through prudent choice of business inloss prone areas of group health, dealer business andsmall and medium business.

A substantial reduction in turn-

around-time, to a few seconds,

attributable to innovative

product design and simplicity of

operating the system, was the

main contributor to the

increased market share.

7

The Nigerian National Insurance Commission (NIC) announced a few years ago

that capitalization requirements would be raised significantly for insurers, the aim

being to create stronger financial entities, and provide a more solid foundation

for the Nigerian economy. Despite their protests, insurers embarked on

complying with capital related regulations at a feverish pace; for some insurers,

the strategy to raise capital included merging with other companies. In addition

to raising capital, the Nigerian authorities also wanted insurers to increase their

focus on the retail business, especially life, health and motor insurance, and not

restrict themselves to the traditional corporate insurance business. In their quest

to garner a share of the retail insurance pie, insurance companies in Nigeria

realized the need to start investing in technology to enable their growth plans

specifically on the retail side.

In Kenya, with the Insurance Regulatory Authority (IRA) becoming operational

in late 2007, insurance companies are required to have a paid-up capital of at least

Kshs 300 million for general business, Kshs 150 million for life business, and

Kshs 450 million for composite insurance business, by June 2010. The Margin of

Solvency of long term insurance companies was amended in line with the

recommendations from the Association of Kenyan Insurers (AKI). According to

Insurance

Technology in

Africa

The potential for insurance inAfrica is very high as the

continent has a population ofalmost 700 million or 14.8

percent of the world’spopulation and occupies 6percent of the world’s total

landmass.

The contention is that if Africacan realise even a part of its

economic potential, it might bepossible to generate, at theminimum, between 6 to 10

percent of the world’s grosspremium income.

A significant enabler for industry growth

AKI, Kenya recorded a GDP growth of 7 per cent last year,

which was higher than the previous year, as well as higher

than African average of 5.7 per cent. Combined with this,

insurers are now under pressure to complete activities within

a certain mandated time frame, an example being settlement

of claims within 90 days after liability has been determined

by a court. While it is envisaged that this will make insurance

companies more customer oriented, it also lays a foundation

for a technology-enabled process to be put in place to avoid

regulatory penalties.

The South African market is also growing at a good pace

and is rated amongst the world’s top ten insurance markets.

According to Celent, in FY 2008, the total premiums

collected were ~US$ 42 billion i.e. 1% of global premiums.

In the current year, the South African market has suffered a

slowdown and the majority of the African insurance markets

are expected to post flat growth in this year.

Growth Drivers and Key Business Challenges

The potential offered by the African market has attracted

both domestic and foreign investment in insurance and

currently, major insurers are in the process of revamping

business strategies in their quest for higher insurance

penetration. The ensuing challenge for all market

participants will be in developing, maintaining and

increasing market share. A key theme in the insurance

industry which is expected to dominate the better part of

this decade, is a larger bouquet of products especially

targeted at under-penetrated customer segments and an

increased focus on developing low-cost distribution

channels. Insurance companies are now getting much more

customer conscious, are actively seeking to move beyond

‘plain vanilla’ products, and are developing risk profile-based

products. African consumers are also becoming more aware

of different insurance products worldwide through

increased usage of internet and globalisation. Companies are

expected to focus on innovation in both, product and

channel development to gain competitive advantage. While

theoretically there are sufficient growth drivers, some

systemic issues exist within the industry which insurers have

to grapple with, while seeking profitable growth.

� High insurance costs: The cost of insurance is

increasing quite rapidly. According to Genesis Analytics,

~50% of the policies lapse within an average period of

two years in South Africa. The value of individual

policies lapsed increased by 40 percent in FY 2008.

There is an immediate need to trim costs to remain

afloat because the price elasticity of demand for

insurance products in Africa is very high.

� Under-developed distribution channels: There is a

lack of proper distribution channels. Cost pressures

coupled with penetration imperatives have resulted in an

increased interest in channels like retail networks,

bancassurance, and internet/mobile access. For instance,

distribution in the Nigerian insurance market is expected

to be an issue as insurance brokers have high influence

and command 80 percent of the non-life business, thus

leading to higher commission expenditure for the

insurance companies.

� Low consumer awareness: Issues in distribution are

translating into lesser consumer knowledge. There is an

acknowledged lack of information on insurance

products. Consumer awareness on new product

launches, the nature of the insurer, returns and risk

factors is relatively low. As a result, insurance clients are

very often unable to distinguish between products.

� Premium collection hurdles: There aren’t many easy

payment options in the African insurance industry.

Facilities such as online and mobile payments are

available with only a small percentage of the population.

The industry is also characterised by inadequate

collections and high receivables.

� Slow claims processing: According to Road Accident

Funds (RAF), a government organisation in South

Africa, slow processing has often created huge backlogs.

For instance, in 2008, RAF employed a staff of 1,700

and had a backlog of ~380,000 claims waiting to be

verified.

� Regulation: Regulation is driving considerable change

in the industry. In the recent past, regulation-driven

product development has been a key theme, such as

Zimele-approved products announced by the Life

Offices’ Association of South Africa (LOA). Zimele

products are designed for the low-income sector

(representing ~65% of the country’s adult population)

and have been driven by the need to provide greater

access to life insurance. When launched, the LOA aimed

to provide at least 22 percent or 3.8 million low income

earners with life insurance over the next eight years.

Most of the major insurers have recognised the potential

of the Zimele market. However, a key concern for them

will be in making the opportunity profitable, given high

lapse rates and distribution costs.

Therefore from the insurers’ perspective, operational

capabilities have to improve to increase revenues and

profitability. The speed with which insurers can embrace and

adopt change related to products, operations and

distribution depends on the technology available to service

it. In this regard, it is pertinent to note that African insurers’

adoption of new technologies has been relatively low and a

big bottleneck has been their usage of old and inflexible

legacy technologies. Large insurers in Africa are

characterised by the adoption of several core systems which

are heavy on maintenance, apart from being inadequate to

service current needs of speed and innovation.

A Significant Enabler for Profitable Growth

To stay customer focused and profitable, insurers have

recognised the need to migrate from legacy and in-house

systems to newer technologies. There are various factors that

should be considered.

8

COVER STORY

9

COVER STORY

overall policy issuance costs, are often difficult to integrate

seamlessly into existing systems.

Faster Claims Processing Without Linear Cost Increase

There is significant scope for improving claims

management, as claims processing ability remains a key

competitive differentiator for insurance companies. Legacy

systems do not have the bandwidth to cater to large chunks

of claims processing. The backlog of un-processed claims at

most insurers is high and current trends indicate a definite

shift towards technologies which support speedier

processing.

Regulatory Compliance

The African insurance industry is among the most regulated.

Regulatory scrutiny continues to intensify and evolve,

increasing the quantity and complexity of compliance. The

cost of compliance can be high and therefore, minimising

compliance costs without compromising on speed and

quality of regulation-related administration is crucial.

Current systems are often not able to respond quickly to

administration and regulatory demands due to limited

flexibility.

Overcoming Challenges of Obsolete Technology

The hardware and maintenance for near-obsolete legacy

systems are increasingly becoming difficult to obtain.

Integration of legacy systems with newer technologies has

become a challenge as well. Further, it is tough to find legacy

system skills as most experts have moved on to work with

newer technologies. While insurers have been quick to

recognise and tap growth areas, more often than not, the

existing technology has been holding them back. For the

African insurance market to fully meet its potential, it is

important that technology not only supports the innovation,

but also enables it. For example, innovation in premium

collection has centered around mobile payments and flexible

billing. These can be implemented only if the back-end

technology is tightly integrated and truly enables quicker

process implementation.

The African insurance industry is set for an overhaul as

competition for this high-potential market gets stronger.

African insurers are changing their product strategies to

work out innovative ways to grow market share. Therefore,

the need of the hour is for technology to deliver beyond

systems catering to disparate processes like policy

management, underwriting, claims management and

premium collection, and display agility in responding to

business concerns. There is no doubt that the quality of

technology implemented is directly correlated with an

insurance company’s success, in terms of both market share

and profitability. African insurers need to ensure that they

have a technology strategy which can deliver on all fronts -

costs, speed, reliability and flexibility.

Rapid Product Development

The primary drawback of legacy systems is that they are

expensive and inflexible. The benefits from new product

development can be easily wiped out from the excessive

costs associated with legacy system maintenance. As product

development is a prime instrument to keep companies a step

ahead of the competition, it is imperative to switch over to

systems which can support product and growth strategies at

the tactical level. For instance, a leading South African

insurer had earlier introduced only one new insurance

product in three years, but competitive pressures forced the

company to replace its legacy systems with new modular

application infrastructure. As a result, the company was able

to introduce nine new products in the market, taking the

competition by surprise. Insurers have gained competitive

advantage by developing new payment options like scratch

cards and payment facilities through mobile phones by

replacing legacy technologies.

Keeping Operational Costs Down

While African insurers will seek and develop growth areas,

three factors will continue to pressure rates and

subsequently profitability - the nature of the market (low-

income dominated and regulation-mandated), competition

and recessionary pressures.

Further, solvency ratios are under threat, given the volatility

in equity markets. Therefore, it is vital that insurers are able

to manage operational costs in these conditions to drive

profitability, keep operational costs down to the bare

minimum and offer insurance policies at lower costs to cater

to consumers across different price points. With legacy

systems, maintenance costs tend to be high because of

various levels of duplication on account of fragmented

systems and declining availability of the required skill sets.

To illustrate, it is estimated that systems which can

streamline operations and provide seamless connectivity

between branches can be expected to bring operational costs

down by 30-40 percent and reduce application development

costs by half.

Another example is micro-insurance, which has come to stay

in Africa, and for which the supporting IT infrastructure will

necessarily need to have a significantly different cost

structure from the current legacy systems.

Improve Reach and Coverage

As noted earlier, distribution remains a challenge. Insurers

have had to think of ways of increasing reach across various

geographies without incurring huge distribution costs, and

without depending extensively on the insurance brokers and

agents. This has led to the emergence of new channels like

mobiles, voucher cards, internet and bancassurance. These

alternate channels, while enabling companies to decrease

Little Green

Shoots of

Recovery?

Andrew Krieger

Chairman, Agile Financial Technologies

10

PERSPECTIVE

We are witnessing one of the most remarkable periods in

modern financial history. Even the savviest investors are

getting tossed to and fro by the rapidly shifting tides of

market sentiment, gyrating from extreme pessimism to

extreme optimism in a matter of weeks. What is most

notable is that these wild fluctuations are occurring with

hardly any corresponding fundamental shifts to justify the

changing views. Consider for example the recent about-face

of George Soros, arguably one of the greatest investors of

all time. On February 20, 2009, less than three months ago,

Soros noted that the world financial system had effectively

disintegrated. He added that there was no prospect of a

near-term resolution to the crisis and that the turbulence was

more severe than that experienced during the Great

Depression. In fact, he likened the current international

situation to the total disarray which occurred in Moscow

after the demise of the Soviet Union. While speaking at a

dinner at Columbia University, Soros pointed out that the

bankruptcy of Lehman Brothers in September marked a

turning point in the functioning of the market system.

“We witnessed the collapse of the financial system,” he said.

“It was placed on life support, and it’s still on life support.

There’s no sign that we are anywhere near a bottom.” Just a

few days later Soros added that we have seen the end of the

free market economy. “The global economy is melting down.

On previous occasions when the system was severely

threatened, the authorities intervened and set things back on

course. This time it is different.”

I worked with George Soros in 1988 as his “successor” so I

came to understand the man and his thinking quite well. He

In the last decade, the asset managementindustry has weathered various environments.

Fortunes have been made and dramaticallylost all in a matter of a few months. With

various players in the market both on the buyand sell side, portfolios have expanded rapidly,

offerings have matured, and institutional aswell as retail players have burgeoned.

In advanced economies, the number ofretirement funds has increased in line with the

aging population, while in emergingeconomies, fund managers have to meetinvestor expectations and offer innovative

products.

In this scenario, predictability is a prized virtue,with investor expectations met with prompt

updates and alerts, improved distributionchannels and obviously better returns. In

addition to complying with increasingregulations, asset managers need technology

that can help them build and assess a portfolioas well as throw up various scenarios to help

them predict the future.

Andrew J. Krieger began hismeteoric rise on Wall Street atSalomon Brothers in 1984,then at Soros FundManagement, after which hemoved to Banker’s Trust in1986. He holds a BA inPhilosophy (Magna CumLaude, Phi Beta Kappa,1978);MBA in Finance from theUniversity of Pennsylvania; andan MA in South Asian Studies.Andrew has authored the book,“The Money Bazaar” in 1992,and has been a contributingColumnist for Forbes andForbes Global. He co-chairsthe Microcredit Summit Councilof Banks and CommercialFinancial Institutions and isFounder CEO of IMGEEmergency Relief Fund andMD of Access CapitalManagement.

11

tends to focus on major themes and major cycles, with a particular fondness for

boom/bust scenarios. George is not one who speaks of global meltdowns and

economic disasters lightly. He also tends to stick with his strongly stated views

quite rigorously, holding firmly onto his beliefs for long periods of time.

Therefore it is quite astonishing that ten days ago, just several months after his

dire forecasts, George abruptly shifted his long term views, noting that the

world had averted a financial collapse and was now poised for an immediate

sharp economic recovery. I was amazed that the master had jumped from a

forecast of economic calamity to a relatively rosy prognosis. Granted, he

conceded that the recovery would be followed by a period of stagnation, but

the economic freefall had been stopped. The collapse of the financial system

had been averted and the national economic stimulus programs were starting

to take effect.

So what happened? What changed in the world to cause this sort of shift in

sentiment? Well, in terms of fundamentals, very little. The economic data

coming out was still horrible, albeit not quite as horrible as some expected. On

the sixth of March, however, almost immediately on the heels of Soros’ doom

and gloom forecast, the global stock markets put in spike bottoms that quickly

led to one of the sharpest price recoveries in history. Although this recovery

has been dramatic, we really need to reflect for a moment and take measure of

where things stand.

Coming into the March period, the world’s major stocks markets had effectively

collapsed from their October 2007 highs, with secondary tops having been

established in May 2008. Using US markets as a reasonable proxy for the

developed Western world’s markets, analysis shows that the combined western

markets haven’t recovered even 50% of the total drop. In the big picture, it is

way too early to know if this is just a technical bear market rally or the start of

something bigger. During the Great Depression, there were periodic stock

market rallies that had remarkable force, but those rallies proved to be short-

lived and unsustainable. We now know that there was a lot of cash on the

sidelines waiting to jump into the markets when the economic situation settled

down a bit. There were also very substantial speculative short positions,

particularly in the financials, but elsewhere as well. In my thinking, the shorts

finally got squeezed and they had to run for cover. At the same time, the fund

managers on the sidelines were forced into action, so they started buying as

well, further fuelling the rally. Therefore, we may simply be watching a bounce

which should be aggressively sold into in case the recent optimism turns out to

be more wishful thinking than sound assessment about improving conditions.

This rally needs to be treated with great caution, even though it may have a bit

more to go.

My experience over a quarter century of trading and investing in multiple

markets has taught me that the vast majority of speculators and investors tend

to lose significant amounts of money over time due to a) very poor money

management rules; and b) a tendency to trade with little conviction. Over

relatively short periods of time most speculators are prone to wild mood

swings, accompanied by ill-formed views of market dynamics and economic

fundamentals. Bullish views tend to turn bearish with little justification,

resulting in a wild flailing about in the markets, with erratic trading and a stream

of losses to match the shifting views. One thing that nearly all speculators have

in common is a remarkable tendency to let their losses run and take their profits

quickly. This simply won’t work over the long haul. I have traded in about

seventy markets and a similar number of derivative markets, and my

observations hold for nearly all traders in all markets whom I have observed.

(Solid academic studies support my observation, so if you don’t believe

me, consult your nearest university.) The lesson to learn is that markets rallies

PERSPECTIVE

are not necessarily linked with improving economic

conditions.

In today’s environment, even the greatest investors have

been reduced to amateurish thinking; allowing short term

market fluctuations to drive their long term fundamental

views on the financial system. This is important, as it points

to a deep-seated underlying component of fear and

confusion which has affected nearly everyone. Investors

invariably watch market behaviour for clues about how to

interpret fundamental data, but at a deeper level, the best

investors tend to have a strong conviction in an underlying

theme. In February and March, Soros had plenty of reasons

to be scared about the global economy, although he might

have been a touch over-dramatic. It is safe to say, however,

that he certainly had substantial justification for his original

forecast. We touched on a few compelling reasons to be

pessimistic in my column last month, however my biggest

fears have to do with much longer, much more pronounced

imbalances and structural problems rather than shorter term

break downs. In fact, I continue to believe that the

authorities had no choice except to take drastic steps to

stabilise the system and pump enough liquidity into the

financial markets to guarantee their survival.

In truth, if I want to err on the side of pessimism, it is quite

easy. Banks are still heavily undercapitalised and largely

unable to withstand a completely imaginable further

deterioration in the broad economy. Government is still

poised to be overly intrusive and controlling, leading to a

fully undesirable combination of too much regulation and

too little financing, which is bound to create a persistent,

measurable drop in the long-term sustainable level of

economic growth. Debt levels are still too high, savings are

too low, and massive structural global imbalances threaten

the very existence of the financial system, but the day of

reckoning is some time off. The twin deficits of the US are

looming in the background but it isn’t time for them to

come cascading down in a horrible crash, ending the free

floating foreign exchange regime of the past thirty six years.

It would be very easy to create a realistic scenario which

could lead to the breakdown of the system which Soros

spoke about -- a complete implosion in the free market

economy -- but fortunately we aren’t in that place yet. Sadly,

band-aid doctoring by central banks and treasury

departments are increasing the likelihood that one day,

investors around the globe might decide that their faith in

the US dollar is unwarranted, sparking a landslide of sales

and market disruptions that would make last year’s trading

activity seem tame. This eventuality has been put off into

the future, however, so we needn’t obsess over it at the

moment.

More pertinent to our discussion, however, is that in the

short term we need to come to grips with the fact that the

era of plentiful funding by financial intermediaries is long

gone. The heavy hand of government is taking a dominant

position over the invisible hand of the markets, and the

spectre of excessive regulation weighs heavily on my

forecasts. The bubble from the insane over-leveraging of

investment banks and commercial banks, coupled with their

gigantic bet on the U.S. real estate market, has already been

popped. The damage is done and the management of

financial institutions around the world has found its new

religion: conservatism. Regardless of how much regulation

the authorities impose, bubbles will still be created, manias

will still grip the minds of greedy, foolish speculators, and

boom/bust cycles will persist.

Recently I have read numerous articles about the little green

shoots of recovery which are sprouting up around the

world, causing a sudden and sharp surge in investor

sentiment. Rarely have I seen so much excitement about so

little. Last month’s US unemployment data, and the

subsequent market interpretation, was truly amazing. The

non-farm payroll data showed a loss of 539,999 jobs,

causing the jobless rate to jump from 8.5% to 8.9%.

Consensus market expectations were calling for worse

numbers, so the markets reacted with euphoria. Does this

really make sense? An unemployment rate of 8.9% is

catastrophic in many ways. Perhaps in Spain where the

number is now over 20%, 8.9% doesn’t sound so bad, but to

millions of medium-term and chronically unemployed

workers, being joined by an additional 540,000 newly

unemployed is hardly a reason to celebrate. Certainly the 5%

of the working population that no longer even bothers to

look for work thinks this is a disastrous number, let alone the

8.9% who are quickly growing weary of finding any work to

do. Overall economic growth prospects are sufficiently

dismal that it is likely going to be a very, very long time

before the millions of newly unemployed Americans are

going to be employed again. Unemployment numbers in

Europe are the same or worse.

Against this backdrop, as spring comes to America,

optimists are seeing “green sprouts” of recovery from the

financial crisis and recession. The world is far different from

what it was last spring, when the Bush administration was

once again claiming to see “light at the end of the tunnel”.

The metaphors and the administrations have changed, but

not, it seems, the optimism.

The truth is that we may be at the end of a free fall. The rate

of economic decline has slowed. The bottom may be near -

perhaps by the end of the year. But that hardly means that

12

PERSPECTIVE

The truth is that we may be at

the end of a free fall. The rate

of economic decline has slowed.

13

the global economy is set for a robust recovery any time

soon.

This downturn is complex: an economic crisis combined

with a financial crisis. Before its onset, America’s debt-

ridden consumers were the engine of global growth. That

model has broken down, and will not be replaced soon. For,

even if America’s banks were healthy, household wealth has

been devastated, as Americans were borrowing and

consuming on the assumption that house prices would keep

rising forever.

The collapse of credit made matters worse, and firms, facing

high borrowing costs and declining markets, responded

quickly by cutting back inventories. Orders dropped

abruptly - well out of proportion to the decline in GDP -

and those countries that depended on investment goods and

durables (expenditures that could be postponed) were

particularly hard hit. The massive destruction of stock

market wealth should make investors appreciate risk better

rather than worry too much about missing out on returns,

but old habits die slowly. Interestingly, one of the reasons

offered for the optimism seen in the stock markets

(particularly in the West) is that inventories have been so

dramatically worked down that they would have to be built

up. The inventory- to-sales ratio for US manufacturers,

however, is still quite high. In fact, sales have fallen faster

than inventories, so there is less room for inventory buildup

than many think. Over time, yes, the buildup can and will

occur -- but it won’t be anytime soon.

We are likely to see a recovery in some of these areas from

the bottoms reached at the end of 2008 and the beginning

of this year. But please examine the fundamentals: in

America, real estate prices continue to fall, millions of

homes are underwater, with the value of mortgages

exceeding the market price, and unemployment is increasing,

with hundreds of thousands reaching the end of their thirty

nine weeks of unemployment insurance. States are being

forced to lay off workers as tax revenues plummet.

The banking system has just been tested to see if it is

adequately capitalised in a stress-free “stress” test. Even with

reasonable levels of stress removed from the analysis, many

major institutions failed. Disappointingly, rather than

welcoming the opportunity to recapitalise, perhaps with

government help, banks seem to prefer a Japanese-style

response: we will muddle through. In fact, the healthier ones

can’t wait to return the government funding so that they can

revert to their preferred levels of over-compensation for

mediocrity.

“Zombie” banks -- dead but still operating among the living

- roamed the Japanese landscape for over a decade and

Japan’s long-term recession is directly linked to their dismal

inability to grease the wheels of industry. Banks prefer to

use improper accounting (they were allowed, for example, to

keep impaired assets on their books without writing them

down, on the fiction that they might be held to maturity and

somehow turn healthy). Worse still, they are being allowed to

borrow cheaply from the United States Federal Reserve, on

the basis of poor collateral, and simultaneously to take risky

positions.

Some of the banks did report earnings in the first quarter of

this year, although significant profits were predicated on a

most amusing accounting trick. The banks were able to book

billions of dollars of profits on the logic that they had issued

bonds which had dropped sharply in price due to the bank’s

weakened credit standing, using the twisted logic that the

banks could buy back their crappy paper at lower prices.

This sort of financial activity won’t get the economy going

again quickly.

The American government, too, is betting on muddling

through, trying to buy time to avoid calamity. The Fed’s

measures and government guarantees mean that banks have

access to low-cost funds, and lending rates are high. If

nothing really horrible happens - losses on mortgages,

commercial real estate, business loans, and credit cards - the

banks will make significant profits the old fashioned way (i.e.

by earning a positive spread on their loans) and they just

might avert another crisis - for a while. In a few years time,

the banks will be recapitalised, and the economy will return

to normal. This is the happy scenario.

But experiences around the world suggest that this outlook

is largely unrealistic. Even if banks were healthy, the

deleveraging process and the associated loss of wealth

means that, more likely than not, the economy will be weak.

Consumption in the US will remain low, and consumption

elsewhere is unlikely to pick up the slack. China, which has

the potential to boost domestic consumption and spending,

needs to re-direct its fiscal spending programs in order to

head in this direction. At the end, the demand for bank

services will be muted. Moreover, the weakened position of

bank balance sheets and even when there is demand, heavily

restrictive underwriting rules means that loans will not be

easily forthcoming.

These problems are not limited to the US. Other countries

(like Spain) have their own real estate crises. Eastern Europe

has its challenges, which are likely to impact western

Europe’s highly leveraged banks. In a globalised world, a

chink in one part of the system quickly reverberates

elsewhere. In earlier crises, as in east Asia a decade ago,

recovery was quick, because the affected countries could

export their way to renewed prosperity. But this is a

synchronous global downturn. America and Europe can’t

export their way out of their doldrums.

Every downturn comes to an end. The question is how long

and deep this downturn will be. In spite of some spring

shoots, we need to be very careful to consider the overall

growing conditions and not bank on a robust economic

harvest anytime soon.

PERSPECTIVE

14

NEWS

Global

Update

A quick review of industry news from

around the world.

VTB Capital to Establish a Presence in Dubai

Moscow headquartered VTB Capital, the investment

business of VTB Group (one of the largest financial groups

in Russia), is planning to set up operations in Dubai. VTB

Capital has recently secured a license from the Dubai

Financial Services Authority (DFSA) to operate as an

Authorised Firm in the Dubai International Financial Centre

(DIFC). The company already has a banking presence in

London and a branch in Singapore and views Dubai as a

stepping stone for its global expansion strategy. According

to Yuri Soloviev, President and Global CEO of VTB

Capital, ‘’Asia, the Middle East and Africa are strategic

markets in terms of VTB Capital’s business development.

The region contains a number of very appealing countries

both from the capital and investment perspective.’’ The

Dubai operation will be VTB Capital’s entry point for the

Middle East and Africa, where it plans to promote its

investment banking services including arranging and

advising on securities, derivatives and other financial

products.

Government to be the Largest Banker in

Venezuela

In addition to the government ownership of Banfoandes,

Banco Industrial, Banco Agrícola and Banco del Tesoro, the

Hugo Chavez administration has announced plans to

purchase Banco de Venezuela from Grupo Santander. This

takeover will make the Venezuelan government the most

powerful player in the financial system and will add more

than 15,000 employees to its payroll. Data from the

Venezuelan Superintendence of Banks indicates that

financial institutions run by the state have a delinquency rate

that is above average and tend to suffer significant losses (as

seen in the case of Banco Industrial) and might therefore

increase the burden on the tax payer.

Bahrain’s Sovereign Wealth Fund to Tap Islamic

Debt Market

Bahrain’s $10 billion sovereign wealth fund, Mumtalakat, is

reported to be searching for international real estate bargains

and may tap the Islamic debt market, including sukuk and

syndicated loans, to finance parts of a commercial

development around the Bahrain International Circuit. It is

believed that Mumtalakat is planning to move away from

private equity into other asset classes such as real estate. A

large part of the funds are expected to be invested in

international markets but at the same time it does not plan

to divest its holdings in local firms in the near future,

possibly due to low market valuations. Mumtalakat, which

has the reputation of being the most transparent Gulf

Sovereign Fund, has already invested in Gulf Air, McLaren

and National Bank of Bahrain.

Bank Central Asia to Launch Shariah Bank

Following its acquisition of a small bank last year, the third-

largest lender in Indonesia, Bank Central Asia, will be

launching a Shariah bank in September. BCA, which has a

market capitalisation of almost $8 billion, acquired Bank

UIB in October last year and has planned to convert it into

a Shariah bank. This is part of its effort to tap into a growing

15

NEWS

Islamic banking segment, especially in the micro, small and

medium enterprise segment. According to Bank Indonesia

data, the country currently has 5 Shariah banks and 26

commercial banks with Shariah units.

Shanghai to be Centre of Insurance Innovation

China’s insurance regulator, CIRC, plans to convert the

eastern metropolis of Shanghai into a centre for insurance

innovation and technology research and development.

“Shanghai has the right infrastructure, an experienced pool

of insurance professionals, highly globalised insurance

institutions and a well-regulated insurance market to set up

an insurance innovation and technology R&D centre,” says

Wu Dingfu, Chairman, CIRC. Shanghai is home to 37

insurance companies, which is almost one third of the total

number of insurers in China. Five of the nine insurance

asset management companies in China are also based in

Shanghai.

New Re-Insurers Enter India

The finalisation of re-insurance rates in India by regular

players such as General Insurance Company (GIC), Munich

Re and Swiss Re has resulted in the entry of a group of new

re-insurers into the country in the recent past. These include

Asia Capital Re, Slovenian Re, Best Re, Malaysia Re and

Kuwait Re. In a shift from trends this year, regular re-

insurers refused to offer re-insurance covers following large

discounts required by insurance companies. With exposures

growing and premium reducing, re-insurers were unwilling

to hike the commissions payable to insurers. On an average,

reinsurance rates grew by 5-10 per cent during the recently

concluded renewals season.

Five International Banks Gain Approval for

Local Incorporation in Vietnam

In the recent past, five international banks have gained

approval from the State Bank of Vietnam to convert their

branch presence into wholly owned, locally incorporated

entities. The first bank to complete the incorporation

process has been HSBC with Standard Chartered Bank,

ANZ Bank, Shinhan Bank of South Korea and Hong Leong

Bank of Malaysia expected to follow shortly.

United India Insurance Mulls International

Foray

Indian public sector non-life insurer United India Insurance

Company has announced plans to launch overseas

operations soon. The insurer is in the process of appointing

a consultant to recommend new market entry strategy. Of

the four government-owned general insurers, New India

Assurance has the biggest international presence in

countries like United Kingdom, Netherlands, Nigeria and

Kenya. Oriental Insurance has a presence in Dubai, Kuwait

and Nepal, whereas National Insurance has a presence in

Nepal. United’s market share last fiscal increased to 13.98

per cent from 13.33 per cent the previous year.

OECD Drives Co-operation to Help Combat Tax

Evasion

Following initiatives of the Organisation for Economic Co-

operation and Development (OECD), Switzerland,

Luxembourg, Hong Kong and Liechtenstein have consented

to follow international standards on sharing bank data and

improving transparency mechanisms to aid the global effort

to combat tax evasion. It is believed that Switzerland holds

$2 trillion of all wealth held abroad and the recent move to

cooperate has been hailed by the international banking

community.

New Takaful Programme Launched by Dubai

Islamic Bank

Dubai Islamic Bank has launched the Al Islami Takaful

Programme, its Shariah-compliant savings plan with takaful

benefits, which is designed to meet the needs of customers

looking for Islamic financial planning solutions. This has

been developed specifically for the needs of the bank’s

existing customers by FWU - a leader in takaful expertise,

with Dubai Islamic Insurance & Reinsurance Co (Aman) as

the Wakeel. The programme combines savings and

investment plans with personal takaful protection.

According to Dr Adnan Chilwan, Chief of Retail and

Business Banking, DIB, “This programme gives customers

the flexibility to switch between investment options at any

time, make partial withdrawals and early encashments or

even continue their investment plan after maturity. The

annual solidarity Takaful fund surpluses are distributed

among all participants, proportionate to their contribution.”

Moody’s Upgrades Chile

Moody’s Investors Service has recently raised its rating on

Chilean sovereign debt from A2 to A1 and has also

upgraded the foreign currency ratings of the country’s top

four banks. Chile is the first investment grade country to be

upgraded since the economic crisis started. It is believed to

have been saved from the brunt of the slowdown by the pre-

crisis high in copper prices, the profits from which were

incorporated into two special funds (which are now worth

$22 billion) and around $23 billion into international

reserves.

IMF Predicts US$ 4,100 Billion Write-down

According to the International Monetary Fund (IMF),

global write-downs on toxic assets by banks and other

financial institutions may reach US$ 4,100 billion. IMF, in its

Global Financial Stability Report, has stated that North

American institutions were only half way through the

process of cleansing their balance sheets and European

institutions lagged even further behind.

16

There are some key factors that contributed to the

accumulation of this wealth and the expansion of women’s

role in investment and economic activities in the Gulf

Region. These include the oil and economic boom,

encouragement of women to enter new business fields, and

the growing flexibility in economic and investment laws in

the region.

However, I believe that there are still a number of challenges

blocking Gulf women efforts to play a more active role in

the domestic economy and entering new business sectors,

especially in the small and medium enterprises. These

include the lack of incentives, as well as lack of financing by

banks, other financial institutions and funds.

Another major challenge is the lack of sufficient incubators

that provide financial support and training for new

businesswomen or those seeking to set up a venture. There

is also the social factor, with many investment opportunities

not reaching women because they are circulated or discussed

among men, which women are not privy to. So, the business

opportunities reaching are only those that have already been

rejected by men!

I also feel that women require more independence,

incentives for their projects, and flexibility in procedures to

set up their own businesses and make a bigger impact on the

economy.

Some women have proposed that they have access to

investment in products and tools that are specially tailored

for them, but thought it is unfair to present some products

GCC Women’s

Savings: Can it

Boost the Region’s

Economy?

Dr Manahel Thabet

Founder, Al Salasa

As a result of the oil boom during 2002-2008,the GCC Region had generated significant

wealth exceeding $6trn, including about$350bn controlled by nearly 50,000 GCC

women.

Other statistics show that the size ofinvestments managed by GCC

businesswomen is estimated at $38bn,including nearly $16bn by Saudi women. In the

UAE, there are around 15,000 womenmanaging $4bn while nearly 1,300 women in

Qatar control $6bn.

ARTICLE

17

ARTICLE

Dr Manahel Thabet is the onlywoman in the Gulf listed as atrader in the internationalbourse dealing with stock andbonds on Nasdaq, Nikkei, DowJones and FTSE 100, andmanaging portfolios in offshorefinancial centres such as theCayman Islands, Switzerlandand Panama.

Dr Thabet has founded AlSalasa, a general tradingcompany established in Dubai,which diversifies into managingportfolios, consultancy, jointventures and creating newbusiness opportunities forthose who are looking to investeither in the GCC, Yemen orworldwide.

and tools only for women because they want to break out of the traditional

female investment sectors and embark on contemporary ventures.

Although GCC women aspire investing in new business areas, they lack

sufficient investment information to break out of the traditional female

investment spheres such as gold, deposits and properties, which limits their

success and curtails their activity in the region.

I urge women to become proactive and make the move. Sticking to certain

traditional investment fields will create setbacks such as assets’ decline or gold

price downturn; moreover, it will limit their success.

Women may be on the edge of the Gulf ’s financial world but their savings

could provide a major boost for the region’s flagging economy, especially as a

significant portion of their savings is in cash, land and jewellery. It is truly

surprising to see such vast potential remain untouched. The social standing of

women in the GCC has improved, but there is still a long way to go, I believe.

In most of the GCC countries, men take care of women’s money, and in some

cases women do not know anything about their portfolios’ status until it is too

late. Though a lot of women have cash, they don’t know how to invest it.

Many young women have revolted against male domination over women’s

wealth and have started occupying high positions in banks to manage women’s

money. For instance, until 2003, women in Kuwait Stock Exchange could only

make deals by making a telephone call to the broker. Now, they have a separate

room with female brokers and real-time information. Having said that,

however, the playing field has not completely leveled out; female traders are still

a fraction in the trading community and in some GCC countries women do not

have the full authority to execute deals (they still have to pass the deals on to

the men to finalize them).

Western countries have recognized the increasing role of women in the Arabian

Gulf states, even as the region is witnessing radical changes in social

composition, and this development is reflected in many areas of employment,

especially in the financial sectors and investment in the government sector and

the area of consulting, engineering, medicine and information technology.

I have personally witnessed that Gulf women occupying senior positions in

various sectors, both in government agencies and private sector institutions,

have demonstrated exceptional performance and represent a great source of

inspiration for other women.

The future of the hitherto untouched women’s wealth can generate large

profits for women as well as the GCC economy if utilized correctly. Through

financial education that energizes, empowers and enables women to lead

effective roles in the financial world, we can ensure GCC women’s participation

in enhancing the global financial situation.

The hitherto untouched women’s wealth

can generate large profits for women as

well as the GCC economy.

enables Financial Advisors to interactively work with their

clients.

With leading financial institutions looking at gaining a

competitive edge using Surface Table to leverage the first-

mover advantage, there has been a huge response to the

asset management offering from Agile FT and the addition

of this intuitive financial planning platform is set to take the

market by storm.

On the occasion of the signing ceremony, Kalpesh Desai,

CEO, Agile FT, said, “We are very excited to partner with

Figlo to offer a futuristic platform to the market that will

create a paradigm shift in how financial planners can service

their clients. Hawanedo promises to change the way we look

at our personal finances and financial planning, providing an

intuitive and easy to use interface on the web, and even on

surface tables where financial planners could sit across the

table with their clients and enable the advisory process

intuitively and interactively. We are also pleased to partner

with Sykes and Ray Equities (SRE) who will enable the

knowledge platform and will be our knowledge partners to

enable financial planners use the software in India.”

Jenze Bosma, CEO, Figlo, who is already getting accustomed

to the Indian way of life commented, “This combination

will make real changes in India in terms of how clients

understand their financial situation and future.”

“With Agile FT and SRE, we are confident that we have

found the perfect combination to serve the financial

industry, both from a financial planning knowledge

Partnership

Announcements

New partnerships enable entry into

FFiinnaanncciiaall PPllaannnniinngg and MMiiccrrooFFiinnaannccee

Financial Planning

Agile FT signs partnership with Figlo and SRE Financial

Planners to Provide Financial Planning Software Agile FT

has begun its entry into the emerging field of financial

planning by partnering with Figlo, the Dutch market leader

in financial planning software and SRE Financial Planners, a

well-known financial planning company that also runs a

financial planning academy.

With this new partnership, Agile FT adds niche financial

planning software and consultancy to its existing

comprehensive portfolio of solutions.

Figlo is the market leader in the Netherlands financial

industry and has pioneered the use of Microsoft’s Surface

Table computing for financial planning. Microsoft recently

showcased the Figlo Surface software in the ACORD

conference in Orlando as well as in Greece, Germany and

Russia.

Agile FT and Figlo have formed an exclusive consortium to

market this solution in the Middle East, Africa and South

Asia. In India, SRE FP is also a part of this consortium.

The Financial Planning platform, aptly called Hawanedo

(Have-Want-Need-Do in action), helps banks, asset

management companies and insurance companies to

graphically analyse the financial requirements of their clients

and then recommend the right products to them. The

solution is available on both, traditional platform as well as

on Microsoft Surface, an intuitive, touch screen table that

18

PARTNERSHIPS

perspective as well as from an IT point of

view,” added Albert van den Broek, Figlo’s

Chief Globalisation Officer.

Yogesh Gupta of SRE Financial Planners,

given his experience in financial planning

shares his outlook, “SRE Financial Planners,

being the pioneers in providing financial

planning services in India, are glad to tie-up as

knowledge partners with Figlo and Agile FT to

bring revolutionary financial planning software

to the fast-growing financial services industry

in India. It is very important to move from

product selling to need-based product

recommendations and we believe that this kind

of software helps financial planners deliver

greater value to their clients.”

About Figlo

www.figlo.com

Figlo, a 14-year old Dutch market leader in

financial planning software, serves banks,

insurance companies, other financial

institutions and independent financial advisors.

It offers new ways of calculating and

communicating personal financial information

and solutions by offering a whole new range of

software products for the financial industry

worldwide.

About SRE Financial Planners

www.srefp.in

SRE Financial Planners, a division of Sykes &

Ray Equities, was established to offer an

entirely customer need-driven platform for

delivering Financial Planning services

professionally and ethically. Through its desk

of dedicated, experienced and highly skilled

Certified Financial Planners (CFP Certificants),

it is spearheading the Financial Planning

movement in India by providing unbiased,

client need-based advice. SRE Financial

Planners is dedicated to help and advice its

clients achieve their life goals through proper

management of their personal finances.

Further it is disseminating knowledge and

training to budding Financial Planners through

its education division called Financial Planning

Academy.

19

PARTNERSHIPS

MicroFinance

Agile FT concludes agreement to acquire solution for MicroFinance

from Chennai-based Theme Technologies.

Agile FT has announced the conclusion of an agreement with

Theme Technologies, Chennai, that would enable Agile FT to

acquire Theme’s MicroFinance, MicroCredit and Credit

Management product stack, Themepro Universal MicroFinance

Solution, in an earn-out mechanism over three years. Themepro

UMFS is compliant with CGAP standards.

The products will be rebranded and launched as AGILIS Universal

Microfinance Solution and will enable Agile FT offer it both as a

software platform and as an outsourced service to MicroFinance

institutions in emerging markets.

The immediate thrust will be in South Asia, Anglophone and

Francophone Africa, Middle Eastern markets like Saudi Arabia and

Egypt and South East Asian markets including Indonesia, Malaysia,

Philippines and Vietnam.

AGILIS UMFS is an all encompassing solution that enables MF

institutions rapidly reach the under-banked rural populace using

mobile and smart card technology.

It includes a comprehensive loan and savings product definition

engine, channel interfaces, data repository enabling centralised

data processing and management of remotely captured

transactions in the field. A compelling feature is an integrated micro-

credit scoring and rating engine based on socio-economic factors.

Kalpesh Desai, CEO, Agile FT, said, “With the addition of Theme’s

products in our stack, we intend to service the MicroFinance sector

by offering our software as well as our platform as a service. From

a modest beginning on a pilot basis in 1992, the microfinance

industry in India has now touched the lives of more than 50 million

people. The need of the hour is to enable delivery of services such

as credit, pensions and insurance to this community quickly and

efficiently, which is possible only through cost effective yet scalable

technology. Agile FT is proud to partner in India’s development and

progress by launching Agile UFMS and making a positive impact on

the lives of millions of people who can benefit through our

technology.”

With Africa being an important market for Agile FT, Desai said, “The

last twenty five years have seen tremendous improvement in

understanding and providing financial services to advance

development and eradicate poverty, including provision of financial

means to save, access credit, and start small businesses, and

finally enhance community development. Agile FT’s solutions will

enable MicroFinance initiatives to scale up beyond the ‘micro level’

and become a sustainable part of economic empowerment.”

iDEAL Funds is a multi-currency, integrated asset

management solution designed to automate the complete

investment management operations of an investment bank

or an asset management company. iDEAL Funds manages

and controls all asset classes ranging from Equity, Fixed

Income (including Sukuks), Money Market, Derivatives, Real

estate, Alternative Investments among others. It automates

the complete process right from pre-deal analytics, order

management, deal capture, position management, valuation,

bank account management, reconciliation, accounting to

NAV generation. The software is intuitive, interactive and

provides real-time information.

The solution also has a powerful risk management module

for maintaining limits and tracking exposure for regulatory

and internal compliance. It is designed to monitor and

administer all portfolios on investment allocation rules as

per regulatory as well internal investment guidelines. iDEAL

Funds allows the asset managers to innovate, scale up

operations and deliver superior performance through the

robust, flexible and powerful tools available.

Platform Enabled Outsourcing

Platform enabled outsourcing services is emerging as the

definitive model for many banks as they strive to lower

operational costs to ensure a high return on investment.

Agile FT provides its services around its functionality rich

application software platform that is used for fulfillment and

dissemination. Platform enabled outsourcing is likely to

experience tremendous uptake in the coming months,

especially in the wake of the current credit crisis. Financial

Presenting iDEAL Funds

20

In the last decade, the asset managementindustry has weathered many storms. Fortunes

have been made and dramatically lost all in amatter of a few months.

With various players in the market both on thebuy and sell side, offerings have matured and

institutional as well as retail players haveburgeoned.

In this scenario of increased uncertainty,investors are demanding more information,

transparency, detailed analysis and wellworked out strategies from their portfolio

managers.

Hence, in addition to complying with increasingregulation, asset managers need to meet

unprecedented investor expectations and arelooking at technology to enable them do so.

Investment

Management

from Agile FT

SOLUTION SPOTLIGHT

institutions should take advantage of the benefits that can

be sought from this model in order to stay ahead of the

competition and drive innovation.

Using its knowledge and business process outsourcing

capabilities, Agile FT helps clients define projects, align

them to organisational goals and builds flexible and scalable

systems and processes to deliver services at an optimum

cost. The key features of iDeal Funds include:

Pre-Deal Analytics

Sophisticated analytical tools are available for fund managers

to perform Simulation and Security-level analysis (duration,

convexity and yield to put/call) at the touch of a button.

These analytics equip the users with powerful information

even before the deal takes place (that is at the Pre-Deal

stage). The manager can thus take informed decisions.

Simulation enables the users to view the impact of their

proposed trades on each of their portfolios, the underlying

limits and predicted performance vis-à-vis a benchmark or a

model portfolio.

Risk Management

Powerful Risk Management engine ensures compliance as

per regulatory guidelines, internal investment policies (at

organization as well as portfolio level), risk parameters,

investors’ risk appetite among various other considerations.

In case of Islamic investment, adherence to Shariah

principles is provided for. The limit checks are configured as

online or offline, hard or soft based on user requirements.

Built in security alerts warn fund managers, risk managers

and other users in advance in case of any event that is

beyond set parameters.

Dealing

The solution has built-in flexibility to cater to specific

workflows of an organization for instance where an order

mandate can originate from a fund manager’s desk and flow

direct to the dealing room or where a chief dealer may want

a single-step order processing or where complete STP with

the broker may be desired. iDEAL Funds has been

successfully working in all such scenarios.

Post Deal

All Post Deal functions such as Corporate Actions,

Valuation, Banking, Settlement, Accounting and NAV

calculation is taken care of in the system. iDEAL Funds is

intuitively built to cater to various types of asset classes in

multiple currencies. The system is able to offer calculations

in both WAC as well as in the First in First Out [FIFO]

method. It also provides for accurate accrual calculations on

both a fixed and floating basis. Another key feature of the

system is the ability to define portfolio level policy for

straight line and constant yield. The software is capable of

comparing the positions as they exist with the fund’s

custodian and reporting any exceptions.

Asset Valuation

Portfolio managers need to track and measure various

important metrics for a wide range of funds under

management. iDEAL Funds simplifies portfolio valuation

using sound portfolio wise policies. The software uses

multiple valuation methods for internal and regulatory

compliance. Built into the system is also a performance

monitoring module that has performance indicators and

compliance mechanisms for management of assets. The

software performs factsheet and attribution analysis as well

as evaluates risk parameters on the entire portfolio or

individual scrips using industry standard practices including

Beta, Sharpe’s Ratio and Treynor’s Ratio.

Interfacing with Third Party Systems

iDEAL Funds has a robust integration engine which has the

capability of interfacing with third party systems and

comparing feeds with the master data resident in the system.

The third party systems include Custodian system from

leading banks including Citibank, Deutsche Bank and

HSBC; Core Banking solutions or Central General Ledger

[GL]/ERP Systems; Equity Trade Interfaces and Market

Price Feeds from Bloomberg and Reuters.

Managing Banking and Accounting Transactions

The banking and accounting module helps the fund

managers to track appropriation, payments and receipts and

provide a comprehensive and reconciled view of the

accounts. The accounting engine can also be configured to

generate vouchers and accounting statements as required by

the customers.

Most important in this process is a feature where straight-

through-processing of files is possible for confirmation of

automatic trades and reconciliations. Deal reporting to the

custodian and fund accountant is also system generated. The

system also has the ability to generate a periodic cashflow

report as well as projections which is vital for the liquidity of

the fund management process.

Administering Users

iDEAL Funds allows for easy administration of users

through a centralised console. Every user has a secure login

id to the system and access to the system is defined based on

his/her function, role and status in the organisation.

Generating MIS Reports

iDEAL Funds has the ability to intuitively generate a variety

of reports that are required by different executives in the

management from time-to-time.

21

SOLUTION SPOTLIGHT

As a leading technology company in Bahrain, Almoayed

Group helps its clients innovate, automate and deploy

business processes at an optimum investment coupled with

very high quality. With a dynamic pool of resources at its

disposal, the group has the ability to implement complex

technology solutions.

The main essence of the group’s approach is the willingness

and ability to understand the customer’s business before

proposing or creating a solution. This customer centric

approach, coupled with strong industry domain knowledge,

sets the group apart from the rest of the pack, and has

enabled them to become one of the largest and highly

credible technology suppliers in Bahrain.

Almoayed Group has spent many years building and

maintaining close business relationships with its partners to

offer clients with best-of-breed solutions for their business.

The group has leveraged its partners’ products to configure,

install and service third party solutions for enterprise-level

clients across various vertical markets and geographies.

The company has an impressive list of customers, including

National Bank of Bahrain, Arab Banking Corporation,

Ministry of Finance, Bank of Bahrain and Kuwait, United

Gulf Bank and Grindlays Bank.

Almoayed Group has a strong focus on quality, and is

dedicated to continuous process improvement to ensure that

customer expectations are met.

22

PARTNER SPOTLIGHT

Almoayed (www.almoayedgroup.com)

Building

Bridges in

Bahrain

A profile of Almoayed Group, Agile FT’s

business partner in Bahrain

Almoayed Group was established in 1982 inBahrain by Mr. Nabeel Almoayed with the

vision of becoming a truly global technologyand telecommunications solutions provider,

committed to best value services and solutions.

Almoayed Group also has operations in Qatar,Pakistan, UAE, India and Kenya.

The company strongly believes in providingbetter products, efficient solutions and support

to its customers. Over the years, it hasnurtured and developed reputed clients acrossdifferent industries, including banking, financial

services and insurance.

www.agile-ft.com

Views expressed in this publication do not necessarily represent the views of Agile FT and the information contained herein is only a brief synopsis of the issues discussed herein. Agile FT makes

no representation as regards the accuracy and completeness of the information contained herein and the same should not be construed as legal, business or technology advice. Agile FT, the authors and

publishers, shall not be responsible for any loss or damage caused to any person on account of errors or omissions.

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Agile Financial Technologies Pvt Ltd

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Tel : +91-22-42501200

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