Taking Payments in the 21st Century

May 26, 2021

When you need to collect payments from your clients, you might be confused as to which will benefit both you and the clients themselves. There are a number of different ways that you can collect the invoiced amount, and these methods can vary depending on the type of work carried out and the location. Taking some time to figure out what is most likely to make your working practices more efficient can be a great way to make the payment process smoother for all involved.

Bluetooth Payments

Although Bluetooth was first created in 1989, it has become much more popular in recent years. You can get hold of an NFC card reader that will allow you to take payments on your smart cellphone or tablet, linked directly to your business bank account, from any location. This will give some extra flexibility if you work at a number of different residential or trade locations within your role. As long as you ensure that your cellphone and card reader are charged and operating, then you can continue receiving payments. There is also usually no minimum amount that needs to be paid, however, you will still need to adhere to the maximum available contactless payment that can be made, which is currently set at $100.

Wire Transfer

For exceptionally large payments, such as individuals who do extensive building work or repairs, you may need a means of getting paid that is not bound by certain limits. Having your clients pay via a wire transfer can be a means of accomplishing this. This type of payment can also be highly beneficial for those who will not be seeing their client again after work is completed, or where trade is finalized remotely, as it involves the client entering your business bank details into their transfer operator of choice, and the money is then passed from one account to another. Some operators will also have security checks in place to validate the information given, to prevent fraudulent moving of money, as well as to ensure that the correct business name is attached to the details.

Cash Payments

Even though there are some more high-tech means of paying an invoice available, you may also have clients who prefer to pay you in cash. This will need to be logged within your company accounts, and it is important that the money is also stored correctly, as it will still count towards your overall earnings, even though it has not been gained by digital means. As with card payments, you need to make sure that any cash income is also listed within your tax return, to keep your business as compliant as possible.

One of the great joys of working for yourself, or owning your own company, can be receiving payment after the completion of a job. To make sure that the handling of any money is achieved safely and promptly, you can give due consideration to the different methods of payment, to see which most suits your business needs.

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Diversity and Organisational Health in Financial Services – Building the Foundation for Innovation

May 25, 2021

By Evelina Bondareva and Romeo Effs

Disruption in financial services is the new normal. However, the lessons for the traditional financial services institutions stretch beyond the immediate gains that employing technology and digital capabilities can bring. Instead, the focus should be on facilitating innovation and long-term, sustainable growth, and the key ingredient for that is good organisational health.

Once pioneers in the adoption of information technology systems, some financial services institutions are now facing a threat to their very existence. Digital transformation and disruption led by financial technology start-ups, commonly called Fintechs, have brought a significant shift to the financial services (FS) industry that has been resistant to change for a very long time. The inherited inflexible legacy systems, bureaucratic and risk-averse cultures facilitated by the regulatory environment, have made these former pioneers slow to change and innovate. It has also made it difficult for these established players to attract and retain top talent, particularly in the area of technology. This, in turn, has paved the way for those outside the industry to disrupt and reinvent financial services. New banking products, such as bill splitting and dividing money into pots, as well as highly personalised insurance products that can be controlled from mobile applications, have been attracting younger customers, who often see the traditional FS sector as outdated. By using new technologies to enhance customer experience and building products that have a customer focus at their core, Fintechs have revolutionised the market, pushing the incumbents to consider how they can begin embedding change.

With the pandemic accelerating disruption and further strengthening the position of Fintechs, many traditional banks and insurers are seeking new ways to keep up with the competition. Most commonly, this has involved replicating Fintech capabilities, forming new partnerships, and investing in Fintech Start-ups. Although these approaches may be successful and are likely to yield good results, there are lingering questions about their long-term impact and sustainability. To answer these questions, it is first important to understand what facilitated the rapid growth and success of FinTechs.

Fintech business models – looking beyond digital capabilities

There are fundamental differences in the business models of traditional FS institutions and Fintechs. At the core of Fintech business models is flexibility, agility and adaptability, as well as customer focus, which enables them to innovate, quickly respond to changing customer demands and adapt in times of crisis. These Fintech capabilities have been especially important during the Covid-19 pandemic when customers increasingly accessed online services, and it became critical to have fast and secure access to funds, protection, assurance, and financial information. It is not surprising that the highly personalised, easily accessible products that offer greater transparency, particularly when it comes to fees, have been the key to Fintech success. The responsiveness of Fintechs is evidenced by the fact that during the pandemic, 30% of bank customers and equally, 30% of insurance customers said they would switch to a FinTech bank or an InsurTech respectively if their existing provider failed to deliver the customer experience they expect¹. As customers have also increasingly prioritised organisational values and transparency since the start of the pandemic, Fintechs were able to tick all boxes and gain customer trust in this challenging time.

There are fundamental differences in the business models of traditional FS institutions and Fintechs.

The continued success of Fintechs throughout the Covid-19 pandemic, highlights why it is important for organisations to be agile, flexible, and adaptable, as these qualities go hand in hand with innovation. This, in turn, shows the need for companies to look beyond employing digital capabilities. Whilst it might help incumbents to win the race in the short term, organisations must be ready to learn and adapt other key elements, if they are to create the kind of company culture where innovation can thrive.

Diversity and inclusion foster innovation and help a company’s bottom line

An agile, flexible and innovative environment is directly linked to an organisation’s leadership and culture, which are the essence of overall organisational health. It plays a central role in enabling any organisation to successfully thrive, particularly when faced with unprecedented challenges and changes². Diversity is at the core of this. Innovation does not thrive in an environment where everyone agrees, so divergent voices are indispensable³. However, if companies do not foster a culture that values diverse ideas and takes on board these contributions, they limit their ability to gain a competitive advantage.

Here, the evidence is compelling. Companies that champion diversity and foster an inclusive culture and an environment of belonging, are in a much stronger position to unlock innovation. Almost 80% of the companies that have a formal Diversity and Inclusion strategy in place, said that this has helped them to innovate, and further 85% said that it has improved their business performance⁴. This shows that diversity, inclusive organisational culture and innovation go hand in hand. Each element is indispensable for the success of the other.

Diverse and inclusive company cultures are a commercial necessity

Despite overwhelming evidence in favour of diversity, inclusion and good organisational health, traditional financial services companies have been extremely slow to invest in improving their cultures. Such companies are often criticised for box-ticking when it comes to D&I, and encouraging monocultures and groupthink, whereby everyone is leaning toward a particular idea because of an environment that makes it difficult to have divergent opinions. This is also evidenced by the attitudes of leaders in financial services – fewer than half believe that better D&I outcomes lead to overall better business performance. Furthermore, only 48% of leaders implement diversity and inclusion initiatives to create a more open and accepting environment, and only 34% do so to aid decision making with a wider range of views and perspectives⁵. Given the lack of innovation in the sector, this data is unsurprising. It indicates an urgent need for companies to transform the cultures before they can unlock innovation and create an environment that will help them thrive. Additionally, as FS firms with monocultures face 24% more governance-related issues5, this gives a strong indication that transforming company cultures can go a long way to restoring the reputational position of the sector, which is particularly crucial in these unprecedented times.

Laying the foundation for innovation – understanding the key elements of good organisational health

Creating a diverse and inclusive culture that facilitates innovation does not happen overnight. However, with serious commitment, organisations can begin reaping the benefits even with minor changes⁶. Successful implementation of D&I initiatives first and foremost requires a strong commitment from leadership, particularly those in C-suite and upper and middle management. Participative leadership that encourages and values different views, frequent communication, openness to new ideas, along with a strategic emphasis on diversity and inclusion led by the CEO are indispensable for an inclusive environment. Diversity also needs to be present across the company board and leadership team, as it will enable the space for divergent opinions in leadership, whilst also ensuring the presence of positive role models, which is equally crucial.

Creating a diverse and inclusive culture that facilitates innovation does not happen overnight. However, with serious commitment, organisations can begin reaping the benefits even with minor changes.

Attracting top talent from diverse backgrounds and with diverse characteristics, will go a long way towards creating an innovative environment. With the right inclusive foundation, companies can take full advantage of the unique viewpoints and perspectives of employees and leaders alike, as well as gain an understanding into the needs of under-leveraged markets. It can also foster an environment that enhances individual qualities, such as flexibility and problem-solving – skills which are indispensable in the context of innovation⁷. However, if a company does not have an inclusive culture, it will be difficult to retain diverse talent and the advantages they bring. In addition, as 80% of millennials report inclusion as an important factor when choosing an employer, companies risk losing out if they are unable to attract and retain the top performers. Given that millennials will make up 75% of the workforce by 2025, this is critical⁸.

And finally, taking a tailored approach based on the needs of the organisation and establishing and tracking clear metrics, can go a long way towards meeting strategic organisational health goals. Organisations need to be proactive in understanding and meeting the needs of their employees and ensuring their feedback is considered. Without fully understanding how employees feel and what their expectations are, organisations risk-taking generic approaches to increasing diversity and inclusion can prove ineffective. Any approaches to improving organisational health must therefore always place employees’ views at the core, to avoid top-down approaches that risk causing more harm. In turn, thought-through and tailored approaches will help build a strong base for an environment where innovation can thrive.

Conclusion

In a race between more established financial services companies and the disruptors, the question is no longer simply who will win, but who will create an environment that facilitates sustainable long-term success. Both, the disruptors and incumbents have their strengths and downsides. Whilst disruptors may lack industry knowledge and experience, the traditional financial institutions are being held back by legacy systems and cultures. They can learn from each other, and successful partnerships can certainly facilitate this. However, for traditional FS firms, the most successful will be those, who not only take new products and technologies, but those who also take on new lessons and use them to adapt their business models and organisational culture in a way that fits the current landscape and meets key stakeholder expectations. They need to be proactive in identifying customer demands now and in the future, and innovative in finding solutions, rather than being reactive to incoming trends. That, however, will require looking beyond the immediate gains the technology can bring.

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About the Authors

Evelina Bondareva is Head of Research at Lumorus, where she creates content on the social and economic impacts of corporate governance, leadership and inclusion. She has previously worked on several research projects relating to social justice. She also holds MSc in International Social and Public Policy from the London School of Economics and Political Science.

Romeo Effs is the Founder and CEO of Lumorus, a global consultancy that works with business leaders to redefine governance and leadership to bring about positive, structural change and impact. He is the Founder of IBRIE Foundation and Chair and Trustee of several other global Charities. He is an Advisor to several Boards and an adjunct lecturer at London South Bank University.

References

1. Capgemini, 2020. Everything will change, starting with consumer behaviour and expectations toward FS providers.

2. Lumorus, 2021. Navigating Disruption & Digital Transformation in Finance: The Role of Leadership & Company Cultures.

3. PwC, 2015. 18^thAnnual Global CEO Survey.

4. McKinsey & Company, 2018. Delivering through Diversity.

5. BrightPool, 2019. Diversity & Inclusion: The New Cultural Barometer.

6. BCG, 2018. How Diverse Leadership Teams Boost Innovation.

7. World Economic Forum, 2020. The Future of Jobs Report 2020.

8. Deloitte, 2017. Unleashing the power of inclusion

Top 6 Ways To Incentivize Your Employees

May 25, 2021

There’s a puzzling notion that kept business owners and management executives reeling for answers in decades, and that’s how to motivate employees effectively. Employee motivation plays a huge role in workplace productivity. If associates feel disengaged in their job responsibilities, it’ll ultimately harm the organization.

Significant implications of employee disengagement can be a subject of immediate concern because it can cause hefty financial damage. To combat this growing issue, plenty of organizations seek ways on how they can incentivize their employees. Here are some of them:

1. Employee Share Options

Shares options, by definition, are the opportunity to buy a particular amount of company shares at an agreed price after a vesting period. It’s a unique arrangement that some organizations utilize to compensate their employee for a job well done.

In this setup, the company incentivizes its employees by rewarding them with stock options. When employees ‘exercises’ their options, this means they’re eager to purchase a percentage of the company’s share. Receiving shares of the company you’re working for represents you’re a part-owner of the company. When the company grows, you as an employee will see your company shares grow as well, sometimes even outdoing your salary.

A benefit to this setup is, it creates positive reinforcement and loyalty because it motivates employees to help the company grow.

However, on the management side of things, options management is quite a complex job to do. It will help if you are attentive to many factors like vesting triggers, exercise rules, payment, and issuing of shares. It’s pretty complex that it requires the expertise of lawyers and accountants to pull through. As a business owner, you can acquire the help of an options management platform that takes care of all those hassles for you.

2. ‘Thank You’

Words of thankfulness go a long way, and even saying a simple phrase such as ‘thank you’ is never an exception. Appreciative words convey a lot of meaning, but it especially makes employees feel appreciated for their contributions.

Top-level executives and associates alike can learn from being grateful as it’s widely known that thanking employees shows an increase in productivity. Moreover, individuals who feel they’re appreciated at work also have high job satisfaction.

Always remember gratitude is widely contagious. When you thank someone, these people will probably thank someone else, thereby creating a wave of appreciation in the entire workplace.

3. Work Flexibility

Astonishingly enough, plenty of employees strongly consider a stable work and life balance. A 2013 study has found that many people prefer flexible work hours; millennials and non-millennials.

Company management can use this idea to award those who demonstrate good work ethic and performance with work flexibility. It will immensely help them allocate sufficient time tending their interests and personal lives.

4. Online Recognition

Nowadays, online engagement is exceptionally prevalent. With this in mind, it can also be an avenue to display the success and achievement of your employees. Please don’t wait for the next staff meeting. Take the initiative to recognize your employees by talking about their noteworthy contributions to your company’s social media accounts and blogs.

Keep in mind that public acknowledgment is a powerful tool. Showcasing the achievements of an individual or a team will genuinely go a long way and even perhaps set your business ahead of the competition.

5. Thoughtful Gifts And Small Recognitions

Small recognitions might be minute at best, but they can be the entire world to your employees. Present something as simple as gift vouchers or a bouquet of sweet-smelling flowers. You can also give them a corporate gift card for employees. You can never go wrong with a small token of appreciation as a reward for a job well done. It makes people feel valued and appreciated.

You can further add a dash of personal touch to these gifts by being more thoughtful. Think of a notebook for a diligent writer or a movie ticket for an associate who loves going to movies. Or get a curated graphic tee for a designer or illustrator who likes to keep it simple.

6. A Time Off

Rewarding someone with a ‘day pass’ or vacation time is a thoughtful thing to do. It’s an excellent option for business leaders because it allows rest and refreshment for hardworking individuals. Not only that, a well-rested individual is a productive individual. It can also function as a point of motivation for individuals seeking the same time-off reward.

Closing Thoughts

Aside from the tips mentioned above, you can do plenty of other ways to incentivize your employees. Regardless of what it is, keep in mind your employees need motivation. When they’re highly motivated, they become more productive. When the entire workforce is effective, the whole organization thrives, and the business grows and succeeds.

With that said, it’s worth investing in your employees.

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Top Benefits of Transferring Money Online: Revealed!

May 25, 2021

As technology develops, our lives get a little easier. Whether it’s monitoring our health, keeping in touch with friends and relatives, finding information and even ordering your favourite takeaway without making a phone call. Access to the internet has also made money management easier, allowing us to pay our bills, save and transfer our money all with a few taps on a screen.

The ability to send the funds we need to any account in the world as an instant money transfer without the additional hassle of paperwork or complicated communications means you can send and receive money straight away, ticking off all those time-consuming administrative errands as you go. So, are there any other benefits of transferring money online? Read on to find out more.

It’s fast and efficient

Whether you’re a business owner trying to send money to a contractor, you need to send your friend the money you borrowed, or you’re overseas waiting for your parents to send you some emergency cash, choosing to transfer your money online means you can do all this and more, in a fast and highly efficient way. While cash deposits and cheques can take days to clear, you’ll be able to send and receive money whether you’re at home, on your daily commute or on the other side of the world.

Faster payment options mean that you’re less likely to accrue late fees and penalties if you’re trying to pay your bills, and because it’s all done online, there’s no need to rush to the bank before it closes and line up for 45 minutes to speak to a cashier.

It’s much more secure

Transferring money online isn’t just about convenience, it’s also a secure and safe way to move your money. It may also save you from being an impulsive buyer and cutting daily expenses that are not necessary to your budget. If you’re thinking about sending cash in the post, or writing a cheque, think about all the mishaps that could occur between the post box and its destination. Theft, lost mail and damage are just some of the reasons you should never send cash in the mail.

If you’re trying to pay your bills and you sent a cheque or cash in good faith, then the company or individual you’re dealing with doesn’t know that and may assume you’re delaying payment. And if your cheque is intercepted, then it could lead to all kinds of fraudulent activity on your accounts. Transferring your money online comes with added security, as it’s instant and all transactions are protected. If there is an issue, you’ll be notified, and your money sent straight back to you.

It’s available 24/7

Whether you’re a business handling international clients in different time zones, having the need to send money to Latin America while you are continents away, or you’ve woken up in the middle of the night remembering you haven’t paid your water bill, when you choose to transfer money online, you won’t have to wait until the bank opens to solve these issues. You can access your accounts 24/7, helping you move your business forward or get a better night’s sleep in the process.

Final thoughts…

From round the clock convenience to reduced paperwork and service charges, transferring money online is the best way to manage your money.

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2021 Toyota Hilux Review

May 25, 2021

In the United States, the Toyota Tacoma is the dominant pickup truck from this Japanese manufacturer. However, around the world, the Toyota Hilux is the pickup of choice. The Toyota Hilux name was first introduced in 1968.

Changes for the 2021 Hilux

For 2021 the engineers at Toyota redesigned the outside as well as adding some power to this truck. The front fascia was redone and the headlights received a narrower and more swept-back look for this launch. The front grille was also redesigned giving the truck a more aggressive, forward stance. But the changes don’t stop there.

Diesel Powered

Powering this little beast is a newly tuned 2.8-liter turbodiesel four-cylinder engine. The engineers were able to tweak out 201 hp and 369 lb-ft of torque out of the little four-cylinder, giving the truck good power over the entire shift range. Other engine options include the 2.7-liter four-cylinder and the 2.4-liter turbodiesel. Engines can be paired with Toyota’s venerable six-speed automatic or manual transmissions. The high torque produced by the turbodiesel gives the Hilux an advantage in off-road and towing duties.

More Capable Footing

With the stronger engine and increased torque, Toyota had to beef up the truck overall. Engineers added better shock absorbers, improving upon the old leaf spring design, and added better bushings, all in an attempt to give the driver and passengers a less bouncy ride. The 4×4 version also got an increase in towing capacity with a new maximum of 7,700 pounds. The 4×4 version also comes with downhill assist control for those tricky winter and off-road driving conditions. They also added traction control for the two-wheel-drive model to help navigate unforeseen circumstances as well.

On the Inside

The Toyota Hilux offers a very comfortable and almost car-like interior cabin. There are various trim levels available, but the seats are comfortable and the controls intuitive. For rear passengers, accessibility is easy with the optional four-door configurations, and the seats are passable for even extended trips. Chunky knobs for various controls and steering wheel control options make it easy for the driver to keep their eyes on the road while making adjustments. The gear cluster for speed and engine information is clean and clear with standard round dials and backlighting. Toyota also added an 8.2-inch infotainment system that supports Apple CarPlay and Android Auto. In addition items like satellite navigation, push start control and an impressive JBL Premium Sound System are available.

The Verdict

The 2021 Toyota Hilux is a capable off-road truck and with its horsepower and torquey engine, it will get you in and out of trouble confidently. As they say, the proof is in the pudding, Toyota has been successfully running the truck in the annual Dakar Rally. So you can be rest assured that it will get you wherever you need to go. The Toyota Hilux price guide ranges from $23,00 for the basic model up to $68,000 for the top-end model.

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e-Governance in Estonia: Balancing Citizen Data Privacy, Security and e-Service Accessibility

May 25, 2021

By Eric Blake Jackson

How can governments provide effective e-services to the public, while also protecting the privacy of citizens and securing their data from inside and outsider threats? What can we learn from Estonia? a small country with big ideas on digital governance and innovation leadership.

In the age of COVID-19 and the limited nature of face-to-face contact, digitalization of public services has never been more important for the public sector at all levels. As governments seek greater efficiency and innovative solutions for citizens, they are increasingly embracing online services, or e-services, such as tax declarations, voting, land registration, vaccine passports, medical insurance, permits, prescription databases and hundreds more.

However, digital transformation in the public sector is a challenging and resource-intensive process. Citizens expect their government to provide high-quality services while simultaneously protecting their privacy and personal information. This is even more difficult due to the current global cybersecurity environment. Powerful state-sanctioned hackers routinely breach government information systems and access constituent data. So, the problem becomes: how does a government provide quality, comprehensive e-services on the one hand, while on the other hand, ensure citizen data is protected and not misused for illicit purposes?

The answer may lie in the small Baltic nation of Estonia. Over the past two decades Estonia’s leadership has implemented an innovative architecture that combines secure digital identity, public key infrastructure (PKI), and interoperable data exchange to form an accountable and accessible e-service environment.

According to the 2020 U.N. e-Government Development Index[1], Estonia ranks first in the world in e-government development and third in the U.N.’s e-Participation Index.

One of the main reasons for this position is Estonia’s implementation of two intertwined cornerstones of secure digital government: e-identification (eID) and national public key infrastructure (PKI).

While rankings alone don’t tell the whole story, it’s fair to say Estonia is recognized as a global leader in the e-government domain. One of the main reasons for this position is Estonia’s implementation of two intertwined cornerstones of secure digital government: e-identification (eID) and national public key infrastructure (PKI). In order for citizens to access public e-services, individuals must be able to authenticate their identity and digitally verify their intent to receive services. Without such identification, it’s impossible for public service provision, or any form of secure government-to-citizen interaction to occur digitally. Thus, in Estonia, it’s mandatory for Estonian citizens to have a physical eID card who are above the age of 15[2].

Let’s start from the beginning. The first thing an Estonian receives when they are born is an immutable, eleven-digit National Identification Code (NIC). The NIC serves as a primary identifier electronically and physically. Along with it, each citizen above the age of 15 gets a physical eID card embedded with a microchip containing 384-bit ECC public key encryption[3].

Think of the NIC as a general identifier that everyone knows, but on the other hand, a citizen or resident also holds private keys that are secret and verify an individual’s intent to receive an e-service or legally sign documentation through digital signature. The private keys are also protected by two secret pin codes: Pin 1 and Pin 2 which act as verifiers. Pin code 1 is used for signing into services, pin code two is used to commit any transactions or sign digitally, meaning even if an unauthorized individual knows a person’s NIC, he or she would also have to have both pin codes to do any damage. In contrast to the United States, only one social security number is used as not only an identifier but also a verifier, and thus lacks two-factor security. Consequently, a social security number is an extremely insecure identifying mechanism compared to the Estonian model.

Moreover, the Estonian government has multiple avenues for citizens to electronically identify themselves securely in different contexts: mobile phone (mobileID), online (digiID), and for residents of Estonia, smartID is used. The result is an extremely robust digital identity ecosystem that allows for flexibility for e-identity authentication and also the ability to provide legally binding digital signatures, which are equivalent to hand-written ones based on the EU’s electronic IDentification, Authentication and trust Services regulation (e-IDAS)[4].

It can’t be overstated how important eID is to Estonian e-service provision. Take for example tax declaration. In Estonia an individual can use mobileID to login into a state-sponsored tax declaration portal application through Pin 1 and can digitally sign his or her income statement as legitimate using Pin 2. As a result, the tax declaration process can take less than two minutes online assuming the income statement is accurate.

In Estonia an individual can use mobileID to login into a state-sponsored tax declaration portal application through Pin 1 and can digitally sign his or her income statement as legitimate using Pin 2.

From an organizational perspective, the Estonian Police and Border Guard is in charge of securing and distributing the physical eID cards, while the State Information Authority develops eID strategy and handles procurement. Although Estonian public sector entities are the primary stakeholders, Estonia’s eID framework is built on trust between government and citizens. For instance, based on the amended 2018 Personal Data Protection Act any official who processes a citizen’s data must inform the citizen of the purpose while also providing the person their name and contact information, unless for the purpose of criminal investigation[5]. Subsequently, this legislation provides an important legal safeguard complementing Estonia’s e-service provision.

Another way Estonian legislation creates an efficient environment for e-service uptake is the legally mandated “once only principle”. The concept is simple: an individual should only be asked once and only once by the state to provide personal information. This ensures maximum efficiency for citizens, as they don’t have to repeatedly give the same information to different government agencies, and the public sector doesn’t have to retain duplicate records.

The third component for providing effective e-services while also ensuring the privacy and data of citizens is secure interoperable data exchange. The frictionless exchange of data is a primary catalyst for providing digital services. Without it, it is difficult to provide integrated e-services as interoperable data flows enable the seamless delivery of different public services. In the Estonian public and private sector, this occurs via the X-Road platform[6]. Developed in 2001, the X-Road is an open-source solution that has enabled over 600+ Estonian public/private sector entities to exchange data amongst one another over encrypted public internet.

Each Estonian ministry in the X-Road ecosystem can choose what type of information system they want to use for database implementation.

A key tenet of X-Road is decentralization. Each Estonian ministry in the X-Road ecosystem can choose what type of information system they want to use for database implementation. As there is no one “super” database ministries are connected to, single points of failure are mitigated. This is a crucial architecture, as e-services should be consistently available 99 percent of the time. From a security perspective, public/private sector entities install a security server which facilitates connections, encrypts data payloads, and decrypts data payloads.

To further ensure the integrity of data and transaction processes in the Estonian X-Road, time-stamping and real-time auditing is conducted by an extremely lightweight blockchain, called Keyless Signature Infrastructure (KSI). This provides an important cyber forensic mechanism which logs X-Road event data in an unchangeable way. However, X-Road should not be misconstrued as blockchain technology whatsoever as it uses REST API protocols to exchange data. In sum, citizens or residents who use an eID or some of the associated alternatives can conduct any government service except buying or selling real estate and getting married or divorced.

While eID, national PKI and the X-Road have been operational in Estonia since nearly 2002, new technologies and architectures have been proposed for integration into the Estonian e-government ecosystem. One of these technologies is artificial intelligence (AI). Estonia has put AI at the forefront of public service provision through its national AI strategy, which envisions a network of interconnected virtual assistants, chatbots, and virtual agents who will provide an interface for citizens to access public services as well as decision support systems in instances where legal and ethical barriers do not prevent it. In addition to a generalized vision, AI was implemented in over 41 specific uses-cases[7] by the Estonian government in 2020, with more planned in the future.

Forward-thinking leadership has also been exhibited by Estonian Chief Technology Officer, Kristo Vaher. As outlined in his 2019 publication, Next Generation Digital Government architecture[8], the ubiquity of virtual assistants like Alexa and Siri provides an innovative channel for accessing e-services. For example, Estonia envisions a new service paradigm where a citizen would be notified their passport is about to expire through Alexa. Through simple voice commands, a citizen would tell Alexa to renew it for them, trigging automated backend administrative processes necessary for passport renewal.

Although this article outlines the core components which make Estonian e-service provision successful, this is not to say everything is perfect. Like in many countries, COVID-19 has exposed shortcomings in Estonia’s digital infrastructure, primarily in the healthcare sector. However, citizens have been able to access digital services throughout the pandemic unabated, and for countries looking to develop their public sector digital maturity, Estonia provides concrete solutions and principles that should be considered.

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About the Author

Eric Blake Jackson is an early-stage PhD candidate at TalTech University for Next Generation Digital State research group in interoperability governance and public sector digital transformation. Previously, he served as an intern at the E-Governance Academy in Tallinn, Estonia and was a 2015 Fulbright Fellow. He holds an MSc in Engineering from TalTech University and a B.A. in Political Science from Nebraska Wesleyan University.

References

How to Master the Art of Debt-Free Living

May 25, 2021

Debt can be so easy to get into yet so difficult to get out of. What does your debt look like, right now? Did you take out a student loan to get your degree? Have you spent thousands on credit cards to get things you thought you needed?

It can be a challenge to think about paying off all of your debt, but if there’s anything that brings peace of mind, it’s living a debt-free life one day. Whether you want to reach a high net worth or have big plans for your retirement, having too much debt is something that can weigh heavily on us.

So, what can you do to master a life lived without debt? Here are some tips to help you learn how best to manage your money, so you can avoid a life full of debt payments. It’s not easy and it requires dedication to the end-goal, but you can rest assured, it will be worth it. Here are a few steps you can take to master the art of debt-free living:

1. Don’t use your credit card for emergencies. Instead save for an emergency fund. If needed, open an account specifically for emergencies, where you only ever use it for those times when your child needs an unexpected hospital visit or your car needs costly repairs. Things like new clothes or a new haircut on a whim don’t belong on this specific card.

2. Consider the idea of not using a credit card. In this country, credit scores are everywhere you look. It’s a vicious cycle and unfortunately one reason why so many in this country are living in debt. In some ways, it can be difficult to do different things without a credit card, as so many necessary things—like simply opening an account at a credit union—require credit history. However, living without a credit card means you’re not living on money you don’t have and thus, not racking up debt.

3. Have goals you’re saving for. It’s easy to take money out of savings when you have plenty of it left over and nothing to spend it on. However, when you set goals, it makes it easier for you to avoid spending the money, as the goal trumps the desire to spend more on unnecessary things. Essentially, you should look at the money in your savings as money you don’t have. If you spend it unnecessarily, you may not have it when you need it.

4. Invest your money. If you’re making enough money to be setting aside substantial savings or have some extra cash, you could consider investing. Nothing grows your money like investing. Whether you make a smart financial move by investing in real estate or a mutual fund, there are several ways you can avoid debt and grow your money while you’re at it.

5. Make a budget. At the end of the day, the unnecessary expenses and random purchases are more than likely due to the fact you may not be using a budget. Those who avoid debt and are able to build financial wealth most certainly have a budget. While making a spreadsheet for your expenses and bills, plus income, may not be an appealing idea to you, the good news is that there are apps you can use on your phone that will help make it that much easier to keep track of it.

6. Avoid random purchases. It is so easy (so easy!) to make purchases here and there. You see a cute top on another woman while out and determine you need to get it. You buy the latest gadget your bros are using because it seems cool. Random purchases because “we feel like it” or “treat yourself” can be a detriment to our financial stability. When you check in with how much you spend on a monthly basis, you’re able to see all the times you spent money that would have been better used to save. It’s good to treat yourself every now and then, but make sure it’s allowed on your budget.

7. Pay off high debt first. If you already have debt, start paying it off as soon as possible. If you can set aside savings, you can start making debt payments, as well. Start with the debt that has the highest interest. Since interest builds up and the highest one could be hurting your pocket, the sooner you pay it off, the easier it will be to start saving. A debt-free life only comes when you’ve paid off any and all of the loans and financial obligations you may already have. So, before you even start saving, consider making payments on your debt first.

8. Make more money. At times, situations arise that require money we may not have because of our fixed income. Whether it’s a car crash or hospital visit, we may find ourselves in situations where we have to pull from our savings or use a credit card. If you’re finding that you are getting into debt because you are unable to make enough money at the moment, consider starting a side-job, at least for a time. For example, what if you have 5,000 in debt? It won’t take forever to pay off but it may mean you need extra money to become debt free quickly. If you pick up some more work or try to find a job with an increase in salary, that extra money can go towards your debt. You may be tired, and you may not love it, but when your debt is paid off, you’ll be glad you made the sacrifice of a few late nights or early mornings to get it done. If you don’t know what other job to get, look at your hobbies. You may be able to make some extra cash from something you love to do.

Conclusion

Debt doesn’t look good, and it doesn’t feel good either. If you want to live a debt-free life, start by making these tips habits today. From saving your money to investing it, and cutting out unnecessary expenses, avoiding debt is possible, and it’s completely worth it. Take the first steps today and start seeing just how much better you feel as you relieve your financial burdens.

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About the Author

Jacob Dayan graduated with a Bachelor’s in Business Administration from the University of Michigan’s Ross School of Business. He began his career as a financial analyst at Bear Stearns’ industry leading Financial Analytics and Structured Transactions group. In 2010, he co-founded Community Tax LLC, a tax company dedicated to helping customers nationwide with tax resolution, tax preparation, bookkeeping and accounting services. As CEO of Community Tax, Jacob Dayan has assembled a strong team of attorney practitioners, CPAs and enrolled agents to deliver superior customer service and expected results.

Unpacking Islamic Modes of Financing for MSMEs in the Halal Industry

May 25, 2021

By Greget Kalla Buana and Wahyuwidi Cinthya

With over $2 trillion spendings across six-real economy sectors and often forecasted to jump to $3 trillion in the next few years, the Islamic economy is a big business. Today, there are 1.9 billion Muslims in the world, making up one-fourth of the entire population, who play a part in the figures. Not just halal food, modest fashion, and media or recreation—the top three—but also a whopping $2.88 trillion of Islamic finance assets alone that represent the market, according to the State of the Global Islamic Economy Report 2020/21.

Indonesia in the global Islamic economy

Home to the highest number of Muslims with a thriving halal industry ecosystem, Indonesia is conceivable to boost the global Islamic economy by becoming one of the leading hubs. The country sets an ambitious GDP target of $4 trillion by 2025, of which $3.8 billion is possibly sourced from the halal economy, Indonesia Halal Economy and Strategy Roadmap revealed.

In terms of production and export, despite being the biggest halal product exporter among the OIC member countries and always topping the halal food and beverage consumption, Indonesia only contributed 3.3% or $7.6 billion to the halal export global share. Maximizing the halal export adds potentially $5.1-11 billion per year to GDP and increases employment up to 333,000 jobs. Unlocking this potential will make Indonesia the global halal economy engine in both production and consumption.

Besides ensuring stability in the halal industry, Indonesia can improve its performance by empowering micro, small, and medium enterprises (MSMEs). Accounts for 99.9% of all business entities, MSMEs are the largest economic sector confirming at least 61% towards GDP and absorbing 97% of the workforce (Ministry of Cooperatives and SMEs, 2018).

Fostering the role of MSMEs requires an enabling ecosystem. MSMEs possess strong leverage for the halal value chain greater than material benefits, including ethics, morality, and spirituality, with economic independence as the ultimate goal. The development of MSMEs is the door opener for an equal job opportunity that affects real income growth per capita. It consequently results in the attainment of the GDP target.

However, challenges remain. A cliché problem rooting in the sector is the lack of financing, where 74% of MSMEs have no access to it (PwC, 2019). Compared to larger firms, MSMEs are less capable of attracting bank loans at an early stage of the entrepreneurial lifecycle. Instead, they rely on internal or personal funds to launch and run their businesses.

Concurrently, MSMEs have been hit hardest during the COVID-19 pandemic, leaving a massive dismissal and overall economic downturn. The majority of MSMEs had been forced to close their business, either temporarily or permanently. Thus, an alternative financing modality for MSMEs expansion and resilience is imperative.

Rising demand for alternative financing

MSMEs are the lifeblood of Islamic communities from villages to cities. Hence, such a faith-inspired approach as Islamic finance is supposedly present to keep them humming. Islamic finance needs to be explored to help MSMEs gain reliable access to capital, providing a diversity of instruments from (1) banking, (2) microfinance, (3) social finance to (4) fintech. Viewed as a kind of ethical investment, Islamic financial institutions must be pro-poor. In addition, Islamic finance lies in real economic activities, not merely a paper-based product. Therefore, a strategy of mimicking the conventional counterpart is no longer relevant.

Let’s unpack one by one!

The newly born Bank Syariah Indonesia (BSI) is shifting the old-school stories about banks being hesitant to channel funds for MSMEs or the allegation of charging a higher margin for financing. In reality, the three state-owned banks (i.e., BRI Syariah, BNI Syariah, and BSM) forming the BSI through a conditional merger agreement recorded a notable proportion of financing for MSMEs (46%, 18.56%, and 14.72% respectively of their total financing scheme per September 2020).

Asset-backed financing and risk-sharing are two distinctive features of Islamic banks by which entrepreneurs can share profits and losses. Murabahah (cost-plus financing), mudharabah (profit sharing), musyarakah (profit and loss sharing/joint ventures), ijarah (leasing), salam (forward sale), istisna’ (construction or manufacturing financing), rahn (pawnbroking) are well underway to enhance equity and fairness for MSMEs and the funders. Those practices bridge the ‘rational’ and ‘spiritual’ Islamic banking segments by linking commercial merits and faith-based preference.

A variety of Islamic banking products are available notwithstanding, 49 million MSMEs are ineligible to obtain loans (OJK, 2020). Here comes Islamic microfinance as a substitute for debt-based financing. The application of interest-free contracts in microfinance serves many options for MSMEs. Islamic microfinance involves (a) charitable giving: zakat (almsgiving), infaq (donations), sadaqah (nonmaterial donations), waqf (endowment), hibah (gift); (b) deposits: wadiah (safekeeping), qard hasan (benevolent loan), mudharabah (one party provides capital, the other provides expertise or effort); (c) equity: musyarakah (each party contributes to the capital).

Two typical Indonesian microfinance institutions are Islamic cooperatives and Baitul Maal wat Tamwil (BMT). Both apply a profit-sharing mechanism in place of riba (interest) since Islam prohibits it. A program from the Indonesian Government started in 2017, ultra-micro financing (UMi), is channeled through Islamic cooperatives and BMT. UMi ranging from Rp500 thousand to Rp10 million targets the ultra-micro enterprises untouched by the banking sector, not to mention the 5Cs factor—character, capacity, capital, condition, collateral. Interestingly, 93% of UMi debtors are women (Ministry of Finance, 2020).

Although not specifically defined in Law No. 20/2008, the ultra-micro enterprise category comprises a significant number of players. Converting 2.8% of micro-enterprises to small ones is highly encouraged, considering that it brings along 10 million employment opportunities and extends GDP contribution by Rp2,700 trillion (Indonesia Islamic Economic Masterplan 2019-2024). But first, the ultra-micro must be scaled up. This projected conversion also applies to small-to-medium and medium-to-larger businesses.

The ziswaf is redistributed to those entitled to receive, which can be of working capital. In particular, harnessing waqf, generating profit for MSMEs is possible.

To the same degree as financial assistance, a set of capacity building beneficial for MSMEs to move beyond survival is entailed. Aside from disbursing funds, BMT conducts incubation, coaching, and mentoring. In connection with the halal industry, BMT supports MSMEs to get halal certification. BMT functions as a financial intermediary and an Islamic social finance collection role called ziswaf (zakat, infaq, sadaqah, waqf)—dual mission. The ziswaf is redistributed to those entitled to receive, which can be of working capital. In particular, harnessing waqf, generating profit for MSMEs is possible.

Ziswaf may resolve the risk issue in financing the MSMEs using blended finance, a combination of public and private capital. Ziswaf takes the first loss if an investment fails when treated as public resources, in line with the nature of wealth redistribution. Countries with equal distribution of wealth are in favor of being more stable. Simultaneously, blended finance promotes the productive model of ziswaf, which embodies a longer-term spending horizon and multiplies societal impact.

The potential of national zakat is Rp330 trillion, whereas cash waqf is Rp180 trillion excluding waqf in the form of asset, land, or property. However, the actual collection never gets to those multi trillions, albeit online and digital platforms catalyze. The 4.0 industrial revolution and the pandemic have been the impetus of digital transformation from the traditional media.

Digitalization has paved the way for microfinance and social finance to expand their reach. In this case, Islamic financial technology (fintech) that integrates sharia-compliant financial services and technology eases people to save, borrow, and invest online. Through crowdfunding and peer-to-peer (P2P) lending, among others, fintech offers affordable financing mechanisms. Sharia P2P lending is 70% dominated by offline MSMEs, as stated in a study by the Indonesian Joint Funding Fintech Association and DailySocial Research last year.

Islamic financial technology (fintech) that integrates sharia-compliant financial services and technology eases people to save, borrow, and invest online.

In the past few years, some fintech companies started adopting blockchain technology—a decentralized digital ledger. Equity crowdfunding, for instance, allows investors to fund startup companies and MSMEs in return for equity. Investors are welcome to invest in local or cryptocurrency (e.g., Ethereum) via a secure and transparent database. That way, MSMEs are getting exposed to broader funders.

Another difficulty faced by MSMEs is collateral management, where blockchain can be the solution. Blockchain enables MSMEs to share transaction records allowing greater synergy through security and transparency. By eliminating several traditional elements, such as a third-party intermediary, know-your-customer protocols, administrative tasks, and overhead cost, blockchain surges efficiency concerning amount and time. That, in essence, simplifies the collateral requirement based on trust.

For MSMEs’ daily operation, blockchain better manages and digitizes trade (i.e., recording, tracking, and verifying). It speeds up supply chain financing through product authenticity and traceability at every level. Credit scoring, reporting, and decision are very well accommodated in the blockchain in a more sophisticated and less costly infrastructure. Smart contracts and automation will very much ease access to finance for both financiers and customers. On top of that, innovative funding mechanism through IPO, sukuk, or any other capital market instruments facilitates export-oriented MSMEs.

Financing MSMEs promotes productivity, leading to higher income and better standards of living. Unpacking Islamic modes of financing becomes the answer to the demand. Millions of MSMEs will now have alternatives from the Islamic finance universe. In this regard, Islamic financial institutions need to look at the stages and characteristics of MSMEs. Furthermore, embracing digitalization and inclusivity are the secret recipes to build resilient and sustainable MSMEs to go on the global halal industry’s deeper side.

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About the Authors

Greget Kalla Buana is an Islamic finance specialist who graduated as a Master of Islamic Finance and Management at Durham University, United Kingdom. His work experience has always been in the Islamic finance sector, such as Dompet Dhuafa, the Islamic Banking Department of the Indonesia Financial Services Authority, and the United Nations Development Programme.

Wahyuwidi Cinthya is an early-year sustainable development practitioner with a specialization in sustainable finance. Graduated from the Department of International Relations, Universitas Gadjah Mada in Indonesia, her work revolves around sustainable development, climate change, and human security.

Should Nations Legalising Gambling Place More Focus on Advertising?

May 24, 2021

Although gambling within the UK is legal, gaming operators must act within a very strict set of regulations. As well as there being a gamble responsible infinitive there are a number of rules that help to ensure that gambling is both fair and transparent. Gambling advertising falls under these same guidelines, which means that anyone promoting gambling must act accordingly.

Advertising Rules Within the UK

Any products that are advertised in the UK must follow a strict set of advertising rules. As a bare minimum adverts must be – legal, truthful, decent, honest and socially responsible. The public has the right to report any adverts they feel fall foul of these guidelines to the Advertising Standards Authority. Companies can be made to remove or change adverts that are deemed not to follow these regulations and they can also be fined if they are found to be purposely misleading.

Under the gambling act of 2005, anyone who wishes to advertise gambling services within the UK must follow a number of advertising codes that have been put in place for this industry. This means that adverts must:

Not encourage behaviour that is not socially responsible
Not condone gambling behaviours that could lead to financial hardship or emotional harm
Avoid any suggestion that gambling is a solution to financial issues
Ensure that gambling is not portrayed as seductive or a sign of being successful
Make sure that characters used in advertising appear to be over the age of 25

What Sort of Adverts Could Be Missed?

Although advertising on major platforms is easily monitored and generally reported by the public if they are not advertising in a way that they should, the same cannot be said for other forms of promoting products. For example, social media influencers are known to work with my brands advertising a range of products. There are many rules that cover advertising via social media platforms and personal websites, but these are less easy to monitor. For example, if an influencer is paid for a post then this should be clearly marked as ‘#ad’ or as a ‘paid promotion’ and if they have received a gift item, they should mark the post as ‘#Gifted’. If an influencer or website has an existing working relationship with a brand then this should be marked on all posts.

Whilst most bloggers and influencers will be aware of these rules and operate accordingly, it is a massive platform that is much harder to monitor. This doesn’t mean that people in charge of these accounts won’t get into trouble if they don’t act correctly, but it does mean that the Advertising Standards Agency have a massive job in checking, tracking and monitoring all social media platforms throughout the UK. The same could be said for adverts in sidebars of websites and things like Facebook adverts, which anyone can place and are much harder to check and track.

What Does This Mean For Countries Where Advertising Gambling Services is Soon To Be Made Legal?

For countries that are considering the legalisation of gambling, they should also make sure they have steps in place to ensure that all products are advertised correctly. It is likely to be a big deal when online sports betting or casinos are allowed to operate and as such, many companies will want to promote their products to customers. As industry stats make very clear the amount spent on TV advertising within the gambling industry has increased year on year since 2015 within the UK; so it is clearly big business.

According to Regulus Partners, the online marketing spend in 2018 was £725M, up from £376, in 2014; a massive increase in a short time. This is a trend that is likely to have continued, so it is clearly something that many companies are willing to spend out on. Online advertising is not an issue and is something that can help promote problems, but with 24% of people saying their gambling advert exposure happens on social media, it is clearly something that needs to be monitored. As such, companies that wish to legalise betting, especially online sports betting should be aware of this and ensure that they have steps in place to monitor this and ensure they are happy with the way different gambling products and platforms are being promoted.

Getting Help with Advertising Standards

The good news for those countries that are looking to legalise gambling is that many countries are doing it successfully, so there are examples that they can follow. Countries are often changing their gambling regulations and advertising standards – Spain a good example of this, so it is easy to see how regulations are having to be adapted to keep up with modern ways of accessing these adverts.

Gambling support charities are often keen to work with gambling operators too. After all, they are the people that are keen to make sure that people are not encouraged into gambling that isn’t positive and instead will have adverse effects. By working with gambling charities, online casino operators can get a first-hand idea of the effect that different types of adverts can have and how they can ensure that they advertise their products responsibly. It also means that they can put links to gambling support networks on their website, which is a great way of showing that as a gaming operator they do have the best interest of their users at heart.

Advertising gambling, online casinos and the chance to place sports bets isn’t something that is likely to go away anytime soon. Even if a country took the decision to ban it completely there would always be people looking for loopholes and ways around this. Instead, it is best to allow advertising with clear guidelines and rules on what type of promotion is deemed acceptable. That way it can be monitored, everyone knows where they stand and governing bodies can feel confident that any products are being advertised as they should.

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How to Keep Your Small Business a Step Ahead

May 24, 2021

You’ve done everything right. You opened your business, got the word out, and gained customer loyalty. You have a constant flow of customers, and you’re even thinking about expanding. Now it’s time to sit back and enjoy the fruits of your hard work, right?

Wrong! Sitting still in a small business can mean falling behind, as your competitors are just as hungry, and the market can change in a minute. Success isn’t the end of the journey; it’s an opportunity to take the next step while you’re on top. There are several ways small businesses can stay a step ahead of their competition.

Market Research

You can’t beat the competition unless you understand the market. Finding out what customers want and how they’re getting it is one of the best ways. Especially in today’s market, things are changing fast. When the pandemic hit, companies that saw the trend towards online options were prepared to weather the storm, and many are coming out of this past year stronger than ever.

Market research can be as simple as asking your customers to fill out a short survey, but many businesses choose to hire a specialized market research firm for a more thorough breakdown. This can help you attract new customers and also identify weak spots in your business plan. The most successful businesses understand the market never stays the same for long.

Get Insured

This is something you should take care of before you open your doors, but better late than never. If your business doesn’t have adequate insurance, you could be one bad day away from potentially losing all the gains you’ve built so far. Small business insurance costs may seem intimidating at first, but they’re worth every penny to know that a single lawsuit can’t undo your hard work.

Your first priority should be obtaining workers’ compensation insurance before you open to ensure that your employees are covered for any on-the-job injuries. This is legally mandated in almost every state. Beyond that, if your company offers any consultations or services, you should have business liability insurance to ensure that you’re covered in the event of a malpractice or negligence claim. Your business may need other types of insurance depending on your operations.

Prioritize Customers

A business that draws in a lot of first-time customers but few repeat customers is not sustainable. The key to long-term success is customer loyalty. The best way to establish this is to show customers you value their support by giving them reasons to return.

There are many ways to create customer loyalty, such as giving out discount cards. It can be as simple as an ice cream parlor offering a card that allows customers to get a free cone for every 10 purchases. Finding out what customers want and what they can do without is essential. Offering a survey available for customers either in-person or online as a link in an emailed receipt can help you adapt to customers’ preferences.

Ask for Advice

No business is an island, and you’re likely part of a complex ecosystem of businesses both in your field and in related areas. Competitors are often your best source of information on how to improve your business. They might run into the same problems you will at some point, and learning from their experiences can save you a lot of time and aggravation.

Getting advice from competitors can be helpful, but it’s even better to find a mentor before you open. If you’re filling a niche in your market, the odds are someone filled it before. A retired business owner willing to share their wisdom can provide decades worth of anecdotes, one of which might be a million-dollar idea. Having someone to bounce ideas off of can save you a lot of time and money when brainstorming logistics or help you realize it’s time to hit eject on an idea that isn’t worth it.

Seize the Opportunity and Get Ahead

The market won’t stay the same for long. The companies that survive are those who adapt smoothly. Find out what your customers want, research your market, and protect yourself from eventualities to allow your newfound success to continue for years to come.

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