Spotlight on Gibraltar
Gibraltar is a self-governing and self-financing parliamentary democracy within the European Union.
Nicknamed ‘The Rock’, the territory is officially a British Overseas Territory a fact long disputed by
Spain due to its shared border. It has an area of just 2.6 square miles but the densely populated city
area is home to almost 30,000 Gibraltarians and other nationalities.
Gibraltar is economically prosperous with a highly-diversified economy including financial services,
shipping and tourism, and the Island has benefited from the growth in the e-gaming industry in recent
Gibraltar-licensed banks, investment services firms and other financial institutions benefit from access
to the single European market and therefore a potential client base of over 500m people. This is why
a number of British and international banks have operations based in Gibraltar.
It has several positive attributes as a financial centre, including a common law legal system and a pro-
business economic environment. Regulation is laid down by the Financial Services Commission and
the Department of Trade and Industry established its Gibraltar Finance Centre Division to facilitate
and promote development of the financial sector.
All relevant EU Regulations apply directly to Gibraltar a move supported by Gibraltar’s Parliament.
This includes all EU measures on financial supervision and regulation, direct taxation and the fight
against money laundering ensuring the area is an attractive base for companies looking for an
international finance centre with good links to the European market.
IPBS has experience of working with numerous international finance centres and jurisdictions, so if
you are interested in expanding to Gibraltar and tapping into the potentially vast European market, get
in touch with us.
Internet of Things
The Internet of Things (IoT) has been gaining greater traction and awareness in the last few years.
The phrase was first coined as far back as 1999 and less than 10 years later, there were more
devices than people connected to the internet.
Since 2011 the IoT has been picked out by Gartner as one the major trends that will shape and
influence the IT industry. Judging by the proliferation of conferences and events that are springing up
all over the world to discuss the business impact of the IoT, it looks as though it has arrived as a
mainstream business topic.
What is it though? In simple terms it’s all about connectedness of the various devices that we use in
our daily personal and business lives. It leads to the generation of vast amounts of data, therefore
solutions that can process, analyse and react to the data streams are becoming more popular, which
is one of the reasons Google invested $3.2bn in Nest Labs, a pioneer in smart devices such as
smoke alarms and cameras, not a bad valuation for a company that was only created in 2010!
But one of the major concerns of any system that relies on data is the security and resilience of the
infrastructure in place to protect that data (the issue of Cyber Crime is explored more in our next
newsletter due out later this year.)
A 2015 Accenture CEO briefing note into attitudes towards the IoT found that while the majority of IT
leaders see the IoT as a net creator of jobs and expect to be able to reduce operational expenses
using it, only seven percent are matching strategy with investments. Nearly three-quarters say they
have yet to make concrete progress with the IoT.
I believe the debate around the IoT is likely to be viewed in years to come in the same way as when
websites were first launched and businesses weren’t sure of the value or ROI that they would see
from investing in one. Yet today, almost every business also has an online presence and the IoT will
have a similar wide ranging impact as businesses find new ways to interact with consumers. We may
see a situation where customers take their business to companies that can offer them the products
and solutions that they expect, with IoT enablement a key part of the overall offering.
Cap Gemini’s report ‘The Impact of the Internet of Things on Financial Services’ stated that it is
“shaping up to be among the early part of this century’s most prolific and ubiquitous technological
revolutions. In less than three years, nearly everything we do on digital devices could be
interconnected to other digital devices. In short, the IoT’s impact on our daily lives will be significant.”
What impact will this have on a wealth management industry that has only just mastered offering
customer’s online access to their portfolios? Many market observers are predicting potentially radical
changes from what is considered a disruptive technology, so the industry needs to start planning for
these changes today. In my view, the sooner you start considering the impact of the IoT the better!
The emergence of disruptive Fintech
The phrase Fintech started as a buzzword but has now entered the mainstream business lexicon.
Fintech is the term applied to new technology startups that are disrupting traditional sectors such as
banking, mobile payments, money transfers and even asset management.
Noted banking analyst Chris Skinner goes further stating that Fintech is a new market that integrates
finance and technology: “This new market is a hybrid of the traditional processes of finance – working
capital, supply chain, payments processing, deposit accounts, life assurance etc – but replaces their
traditional structures with a new technology-based process.”
So how much is it worth? A recent report from Accenture estimated that global investment in Fintech
has increased from $930 million in 2008 to over $12 billion by 2015.
Fintech is characterised by an infrastructure that is easier to operate for businesses at a lower cost
base. Fintech companies can pass on the significant cost savings to customers as they are not
weighed down by expensive to maintain and inflexible legacy technology. They are also able to
innovate far more rapidly, taking a hothouse idea to market in months rather than years.
Bill Gates once said ‘we always overestimate the change that will occur in the next two years and
underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction.’ And
nowhere does this apply more than in Fintech.
What impact will it have on the private banking and wealth management industry? As we have seen
with Uber and Airbnb, disruptive technology has the potential to radically alter the competitive
landscape of any market in an incredibly short period of time. Will we see the same in private banking
and wealth management?
In the short term I have my doubts but in the longer term, there will be disruptive digital banking or
wealth management startups using cloud and IP technology, dreaming up new ways to tackle old
The core disciplines of payments, savings and investments are information intensive processes that
are ripe for transformation. Therefore some existing private banks and wealth managers should be
worried. Those with significant legacy systems will struggle to offer the agility and flexibly that their
customers will demand tomorrow.
Just as we saw above with the Internet of Things, Fintech is likely to herald a new way of doing things
that one day will become the new normal. There is potential for customers to benefit from lower costs
and improved services but equally there is also the potential for the digital disruptors to build hugely
profitable businesses without the full scale of the benefits passed to the customer.
However, if you remain aware of the latest opportunities and developments in your own market, it will
increase your chances of staying ahead of any emerging competitors.