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Everything will Change. Be Ready As AI Takes Over!

By
Ndubuisi Ekekwe
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Are you ready for the new era of AI? The redesigns are already happening even if you are not ready.

A popular edtech company is largely gone: “Online education company Chegg is struggling to retain users as students increasingly abandon the platform in favor of ChatGPT for homework help… Since ChatGPT’s debut in November 2022, Chegg has lost more than half a million subscribers …”

More than 80% of coding personnel placement startups which recruit in the developing world, and place the young people into leading Western Europe and  US firms have folded, or are seriously struggling. Most have changed CEOs as AI becomes the “entry level coders” for the experienced American software engineers. In other words, the jobs which these entry level coders used to do for those experienced guys are now done by AI in US firms!

But it does not end there: “According to a report by CleverTap, a leading all-in-one customer engagement platform that helps brands unlock limitless customer lifetime value, it has been revealed that nearly 60% of banking customers would consider switching to a competitor if their bank fails to provide personalized digital experiences and AI-enhanced, convenient engagement models.”

Be ready and attend Tekedia AI in Business Masterclass.

60% of Bank Customers May Switch For Better AI And Digital Experiences – Report

By
Ojukwu Emmanuel
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According to a report by CleverTap, a leading all-in-one customer engagement platform that helps brands unlock limitless customer lifetime value, it has been revealed that nearly 60% of banking customers would consider switching to a competitor if their bank fails to provide personalized digital experiences and AI-enhanced, convenient engagement models.

As the banking landscape undergoes a radical digital transformation, CleverTap report titled “Banking on AI: A Leader’s Guide to Customer Engagement Excellence in Banking” reveals that financial institutions must adapt or risk being left behind.

This underscores the urgent need for banks to meet rising customer expectations for greater convenience. The potential value of AI in the banking sector is projected to contribute $16 trillion to the global economy by 2030.

“Generative AI is helping us enhance our customer support capabilities. The goal is to eventually build to establish customer trust, as this technology has the potential to improve trust by providing real-time solutions and immediate problem resolutions”, said Sebastián Pontillo, Head of Marketing Technology, Tenpo.

Despite advancements in generative AI and open banking, a significant number of banks still struggle with technology adoption and building customer trust. Many of these banks remain on the sidelines, waiting for proven results before adopting new technologies

“Banks are inspired by fintech in terms of delivering personalized experiences and adopting AI/ML algorithms for recommendations, but our agility and speed are often hindered by slower approval processes”, said Nikhil Padmanabh, Head Martech & Digital Analytics, Axis Bank.

The report also pointed out that banks often prioritize short-term gains over long-term strategies, neglecting the entire customer journey. By adopting a more holistic approach that considers both new and existing customers, banks can increase customer lifetime value and foster deeper engagement.

To bridge the gap between immediate actions and long-term financial impact, banks must leverage advanced analytics and metrics that focus on both current performance and future customer behaviors.

The report introduced the Core Four framework which are; Trust, Technology, Touchpoints, and Transactions, that provides a foundation for improving customer experiences and driving long-term value in the age of AI. By implementing this approach, banks can drive revenue growth and retain valuable customers by fostering trust, optimizing key touchpoints, and creating seamless, personalized experiences.

CleverTap’s Core Four customer engagement framework empowers banking professionals in retail, neo, and specialized banks to build stronger connections and deliver phygital experiences that boost customer lifetime value. This framework helps banks gain a holistic view of customer engagement and seamlessly integrate AI to meet evolving customer expectations.

The report further highlighted that different banks exhibit varying levels of trust, technology adoption, touchpoint usage, and transaction volumes. Each type faces unique challenges and excels in different aspects of the Core Four. Retail banks benefit from high trust levels due to their established reputations and physical presence but often lag in technology adoption.

Neo banks effectively drive high transaction volumes through their user-friendly digital platforms, but may struggle to provide a sense of security and trust due to the lack of physical branches. Specialized banks maintain trust by connecting with regional communities and prioritizing personalized service, but they also tend to adopt new technologies more slowly. To successfully pave the way for AI in customer engagement, banks must optimize their strategies around the Core Four.

By leveraging AI, banks can personalize customer experiences, optimize marketing campaigns, improve customer service, and predict customer churn. Also, by embracing the Core Four and harnessing the power of AI, banks can elevate their customer engagement strategies, drive long-term value, and secure a competitive advantage in the digital age.

Conclusion

Generative AI is helping to enhance customer support capabilities. The goal is to establish customer trust, as this technology has the potential to improve trust by providing real-time solutions and immediate problem resolutions.

To stay competitive in this evolving digital landscape, banks are urged to adopt a customer-first strategy rather than a product-first approach. By utilizing AI for dynamic personalization based on real-time customer behavior, such as spending patterns, banks can proactively engage with tailored offers. This shift can lead to higher customer relationships and build trust.

Institutional Investors Leveraging Exchange-Traded Products (ETPs)

By
Paul Ugbede Godwin
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Institutional investors are leveraging exchange-traded products (ETPs) in a variety of innovative ways to execute their trading strategies. These sophisticated investors, which include entities such as hedge funds, mutual funds, and pension funds, are utilizing ETPs for their liquidity, diversification, and the ease with which they can be traded.

Risk management is a critical component of institutional investment strategies, especially when it comes to the use of Exchange-Traded Products (ETPs). Institutional investors, such as pension funds, endowments, and hedge funds, employ various techniques to manage and mitigate risk through ETPs.

One of the primary strategies employed by institutional investors is strategic asset allocation. ETPs provide a convenient means to gain exposure to a wide range of asset classes, including stocks, bonds, commodities, and even more exotic instruments like swaps and derivatives. This allows institutions to diversify their portfolios efficiently and adjust their exposure to different market segments quickly in response to changing economic conditions.

One of the primary methods is through diversification. ETPs offer access to a broad range of asset classes and market segments, allowing institutions to spread their investments across different areas, thereby reducing the impact of volatility in any single asset or market.

Another common use of ETPs by institutional investors is for tactical trading moves. For example, they might use ETPs to implement short-term trades to capitalize on market movements or to hedge other positions in their portfolio. The ability to trade ETPs like stocks – with prices fluctuating throughout the day – gives institutions the flexibility to execute trades at the opportune moments during trading hours.

Institutional investors also employ ETPs for index rebalancing and factor investing. By using ETPs that track specific indexes, institutions can align their portfolios with the desired benchmarks, ensuring they maintain the targeted risk-return profile. Factor investing, which involves targeting specific drivers of returns such as value, size, momentum, and volatility, can also be facilitated through the use of ETPs that are designed to capture these factors.

Furthermore, the use of advanced technology by institutional investors allows for more informed trading decisions and efficient trade execution. This technology includes algorithmic trading systems that can execute trades based on predefined criteria at speeds and volumes beyond human capabilities.

The growth of ETPs has been significant, with assets under management increasing substantially over the years. This growth reflects the value that institutional investors place on the flexibility, efficiency, and range of investment opportunities that ETPs offer.

Moreover, institutions often employ risk assessment tools and stay compliant with regulations to ensure that their risk management practices are robust and effective. This includes keeping abreast of the latest market developments and adjusting strategies accordingly.

Institutional investors are utilizing ETPs as versatile tools in their trading arsenals. From strategic asset allocation to tactical trading and beyond, ETPs provide the means for institutions to navigate the complexities of the financial markets with agility and precision. As the financial landscape continues to evolve, it is likely that the role of ETPs in institutional trading strategies will only grow more prominent.

A Foray into U.S. Federal Reserve Interest rates of 25BPS

By
Paul Ugbede Godwin
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The Federal Reserve’s recent decision to lower interest rates by 25 basis points (BPS) marks the second rate cut in three months, a move that reflects the central bank’s response to the current economic landscape. This strategic decision aims to adjust borrowing costs, potentially affecting millions of Americans and the broader economy.

The reduction brings the federal funds rate to a range of 4.5% to 4.75%, down from the previous 4.75% to 5% level. This change is significant as the federal funds rate influences various consumer and business loans, impacting everything from mortgage rates to the cost of financing for companies.

The rate cut is part of the Fed’s ongoing efforts to recalibrate monetary policy to support sustained economic growth while managing inflation levels. The adjustment follows a larger 0.5-point cut in September and reflects the central bank’s strategy to right-size its policy in response to current economic conditions.

The Federal Reserve’s actions often have a ripple effect on the economy, influencing various consumer debt instruments such as mortgages, credit cards, and auto loans. By lowering the cost of borrowing, the Fed aims to encourage spending and investment, which can help maintain economic momentum.

Primarily, it is a response to cooling inflation, which has been a pressing concern over the past few years. By lowering interest rates, the Fed is attempting to encourage borrowing and spending, which can help fuel economic growth. However, this must be balanced against the risk of too much inflation, which can erode purchasing power and savings.

The unanimous decision to cut rates indicates a consensus among Fed officials on the need to adjust the benchmark overnight borrowing rate. This move is seen as a balancing act to support the labor market, which has shown signs of softening, while also striving to bring inflation closer to the central bank’s 2% target.

Looking ahead, there is speculation about another rate cut of 25 BPS in December. This anticipation stems from ongoing economic indicators and market expectations. However, the future path of rate adjustments is not set in stone and will depend on a variety of factors, including economic data and global events.

The impact of these rate cuts on the average consumer may not be immediately noticeable, but over time, as borrowing costs decrease, it could lead to more affordable loans and credit. For those with variable-rate debts, such as credit cards or adjustable-rate mortgages, the effects might be seen sooner in the form of lower interest payments.

It’s also worth noting that the Fed’s decisions are made in the context of the broader economic policy. With the re-election of President Donald Trump, there are questions about how his economic priorities, such as tariffs and tax cuts, might influence future policy decisions and potentially affect inflation.

The Federal Reserve’s recent rate cuts are a proactive measure to support the U.S. economy by making borrowing more affordable. While the immediate effects may be subtle, the long-term implications for consumers, businesses, and the overall economic health are significant. As always, the Fed’s future actions will be closely watched as they navigate the delicate balance between fostering growth and controlling inflation.

Schaeffler announces 4700 jobs to be cut in Germany, as the Country Navigates Coalition Challenges

By
Paul Ugbede Godwin
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0

The recent announcement by Schaeffler, a prominent German automotive and industrial supplier, regarding the reduction of 4,700 jobs has sent ripples through the European job market. This decision, influenced by a 44.9% drop in third-quarter profits, highlights the ongoing challenges within the automotive industry, especially as it pivots towards electric vehicle production.

The job cuts are a part of a broader strategy to enhance competitiveness and secure long-term growth in the face of a challenging market environment and the intensifying global competition. Schaeffler’s plan includes three main strands: improving earnings from the Bearings & Industrial Solutions division, realizing synergies from the recent merger with Vitesco Technologies, and addressing the transformation of the automotive supply industry due to a decline in ICE (Internal Combustion Engine) technology and a slowdown in new programs for electric drives in Europe.

The automotive industry is undergoing a significant transformation as it shifts towards electric vehicles (EVs), and many companies are facing challenges similar to those of Schaeffler. The transition is not just about changing the type of vehicles produced; it involves a complete overhaul of the manufacturing process, supply chains, and workforce skills.

One of the primary challenges is the cost of EVs. Consumers often find EVs too expensive compared to their internal combustion engine counterparts, which hinders widespread adoption. Companies like Byd and CATL are working on developing more affordable battery technologies to address this issue.

Another significant challenge is the lack of charging infrastructure, which leads to “range anxiety” among potential EV buyers. This is a concern that needs to be addressed by both private companies and public policy to ensure the successful adoption of EVs.

Toyota, a pioneer in hybrid technology, is also facing challenges as it has been slow to offer a fully battery-powered vehicle. Similarly, Ram plans to release its competitor to Ford’s Lightning only by 2024, indicating a slower transition to EVs for some established manufacturers.

The industry is also dealing with compressed development timescales, ever-tightening regulatory limits, and rapid technology changes, all of which require companies to adapt quickly. The shift from internal combustion engines to EVs necessitates new strategies and innovations to stay competitive in the evolving market.

The restructuring will result in a gross loss of about 4,700 jobs in Europe, with approximately 2,800 in Germany. However, production relocations are expected to reduce the net job loss to about 3,700 positions, which corresponds to about 3.1 percent of the total post-merger headcount. The company’s merger with Vitesco Technologies in October 2024 increased its workforce to roughly 120,000 employees. The downsizing will affect 10 locations in Germany and five additional sites in Europe, including the closure of two facilities.

Schaeffler’s move reflects the broader trends in the automotive industry, where companies are grappling with high costs, sluggish demand, and a significant shift towards electric mobility. The company aims to achieve a savings potential of about 290 million euros per year by the end of 2029, with one-time expenditures estimated at about 580 million euros. These measures are to be implemented in a socially equitable manner, based on the Future Accord of 2018.

The automotive industry’s transition to electric vehicles is a necessary evolution for environmental sustainability and innovation. However, it also poses significant challenges for the workforce involved in traditional manufacturing processes. Schaeffler’s announcement is a stark reminder of the delicate balance between progress and the human impact of industrial transformation.

Navigating through Coalition Challenges in Germany

Meanwhile, in the dynamic arena of German politics, the recent events have marked a significant moment in the nation’s governance. The coalition partners, representing a spectrum of political ideologies, have convened once again in a concerted effort to resolve a burgeoning crisis that threatens the stability of the government. This meeting comes at a critical juncture, as the coalition grapples with economic policy disagreements and the future direction of their partnership.

The coalition, a blend of diverse political entities, has been the cornerstone of Germany’s political structure, embodying the spirit of cooperation and compromise. However, the current scenario underscores the inherent complexities of coalition governments, where differing priorities and visions can lead to friction. The cancellation of a key parliamentary budgetary committee meeting has further exacerbated tensions, casting uncertainty over Germany’s 2025 budget and highlighting the delicate balance of power within the coalition.

The dramatic developments have culminated in the collapse of the coalition, prompting Chancellor Olaf Scholz to navigate the challenges of leading with a minority government. This turn of events was precipitated by the dismissal of Finance Minister Christian Lindner, which led to a domino effect of resignations within the Free Democrats, one of the coalition’s key parties. In an unexpected twist, Transport Minister Volker Wissing retracted his resignation, choosing to remain in his ministerial role while severing ties with his party.

One of the central points of contention has been the proposal of a state investment fund to support companies of all sizes, which was met with resistance from both the Chancellor and the finance minister. This reflects the broader issue of how to stimulate the economy while managing fiscal responsibilities and social welfare commitments.

The coalition’s difficulties have been compounded by external pressures, such as the global economic climate and the return of Donald Trump as U.S. president, which have added urgency to the need for a cohesive economic strategy. The internal tensions and policy disputes have culminated in the dramatic collapse of the coalition, leading to a minority government and raising the possibility of an early election.

The unfolding situation has brought to the fore the intricate dance of political alliances and the quest for consensus in the face of divergent agendas. Chancellor Scholz’s decision to seek a vote of confidence and the possibility of an early election have introduced new variables into the equation, signaling a potential reshaping of Germany’s political landscape.

The outcomes of these meetings and the subsequent decisions will not only shape the future of Germany’s domestic policies but also have implications for its role on the international stage. The resilience of the coalition framework is being tested, and the coming days will reveal the capacity of Germany’s political institutions to adapt and evolve in response to internal pressures.

The situation remains fluid, with the potential for further developments as the coalition partners continue their deliberations. It is a testament to the vibrancy of democratic processes, where dialogue and negotiation are essential mechanisms for resolving conflicts and charting a path forward. The eyes of the nation and the international community are fixed on Germany, anticipating the next steps in this political saga.

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