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Posts By : Ben Bschor

Designing an Award-Winning Report

As publisher of data-driven research, our team here at Euromoney Institutional Investor Thought Leadership often faces a particular challenge: how to present reports full of numbers and charts in a way that keeps the audience engaged and leaves a lasting impression.

More and more often we advise our clients to move away from PDF-only publications and opt for a clear-cut screen first approach, featuring design optimised for on-screen consumption above all.

This approach allows us to build reports that are interactive and truly engaging. We aim to constantly activate our readers’ curiosity: what’s coming next?

Deloitte-artwork-file

“Balancing the Books” is the winner of this year’s “Shorthand Communication with a Difference” award

Communication with a Difference

Balancing the Books”, which we prepared for Deloitte, examines the impact of an incoming accounting standard on the aviation finance industry. It is based on a detailed global executives survey and relies on the interpretation of a huge amount of data.

And the winners are...

“And the winners are…” (screenshot: shorthand.com)

This piece of research covers a “dry” (Shorthand’s words, not mine, although it’s hard to disagree) topic that — despite the importance of its findings — doesn’t necessarily keep readers glued to the screen.

To present our analysis we developed visual language that reflects the aviation industry. We animated planes to fly across screens, built interactive charts that resemble cockpits, flight radars and plane seating maps and created graphs that gradually reveal data as the reader scrolls down the page.

More than 100 publications were considered for this year’s Shorthand awards.

The jury, including members of the BBC College of Journalism, The Guardian, the Economist, OglivyOne, and Columbia University, voted for “Balancing the Books” for “digital storytelling at its best”.

Screenshot: "Balancing the Books"

Screenshot: “Balancing the Books”

This is thought leadership brought to life,” they wrote. “It really keeps you engaged.

We feel honoured to see our work being recognised by our colleagues from the global publishing world.

It has been a great experience to manage this project and work with the team and our partners to develop and bring together high-quality content and great design.

Our thanks go out to Deloitte for teaming up with us to produce “Balancing the Books”, and to Airfinance Journal for their invaluable expertise.

Here’s our promise: Euromoney Institutional Investor Thought Leadership will continue to strive to produce best-in-class content, in 2018 and beyond.


 

Shorthand Awards — The Jury

  • Scott Manson, director of content at OglivyOne UK
  • Jora Gill, chief digital officer at The Economist & non-executive board member at Quality Care Commission
  • Sasha Koren, editor of the mobile innovation lab at The Guardian
  • Jonathan Albright, research director at the Tow Center for Digital Journalism at Columbia University & faculty associate at Berkman Klein Center for Internet & Society at Harvard University
  • Vin Ray, founding director of the BBC college of Journalism & chair of the board of trustees at Ockenden International
  • Charley Sutton, deputy head of editorial at Barcroft Media
  • Robb Montgomery, author & teacher specialising in mobile journalism
Balancing the Books

Getting readers’ attention with a post about an accounting standard is not easy.

But when in a survey 90% of executives in an $800 billion industry suggest that one of the key pillars of their business will be subject to contract renegotiations because of accounting changes, some might want to listen up.

I’m talking about the impact IFRS 16 Leases will have on the airline industry when it comes into effect as of 1 January 2019.

Deloitte-artwork-file

What’s going on?

To understand the impact of IFRS 16 on airlines it is essential to first explain some of the basics of aircraft management, i.e. how airlines operate their fleets.

Of the roughly 26,000 commercial aircraft globally today, 38% are no longer owned by conventional airlines, data from the Airfinance Journal Fleet Tracker shows. Increasingly, planes are instead leased from specialist lessor companies. The two largest lessors, General Electric’s GECAS and Netherlands-based AerCap own and manage about 2,000 and 1,500 aircraft respectively. In the words of The Economist, they are “airlines with no passengers”.

Leasing makes sense for most airlines. Because leasing allows them to scale fleets up or down quickly when demand changes, it reduces their exposure to volatile aviation travel markets.

Leasing is also less capital intensive than buying aircraft outright.

There’s something else, though:

If an airline buys a plane and finances it with debt, the plane will show up on the balance sheet as an asset, and the associated debt as a liability. If, however, the same plane is added to the airline’s fleet under an operating lease agreement, there’s no asset or liability to be recognised under the current standard for lease accounting, IAS 17. Operating leases are – until now – means of off-balance sheet financing.

Social_1200x628_GreenThat’s advantageous for airlines, because it means that operating leases have no impact on a number of key performance metrics, such as gearing, EBITDA, or return on capital employed (ROCE).

This off-balance-sheet treatment of operating leases will change when IFRS 16 kicks in in less than 12 months. According to Fleet Tracker, a whopping $325 billion of aircraft assets will then transfer to airline balance sheets.

The impact of the associated “new” liabilities on performance metrics could cause certain domino effects. For instance, in some cases credit ratings might change. Or airlines might break certain performance-related covenants in contracts.

And that’s why airlines think that operating lease contracts will be renegotiated.

When Euromoney Thought Leadership, working in conjunction with Deloitte, recently surveyed industry experts, 90% of airline executives told us that this is what they are expecting to happen. Even a huge majority of lessors agreed.

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If the airlines are right, the sector should get ready for flurry of activity to renegotiate lease contracts, in particular, according to the survey, with regard to the lengths of leases, lease rates, and security deposits. The lessors though, despite similar expectations, might be somewhat reluctant.

David Breen, for instance, is sceptical about renegotiating. The Head of Finance at Avolon, a lessor with a portfolio in excess of 900 aircraft, told Euromoney Thought Leadership that lessors – who face extra remarketing costs from shorter leases – would resist shorter leases.

There’s also little indication that the market for aircraft leases will dry up, even if some of the advantages of leases might be less pronounced under IFRS 16.

“The core commercial reality of lease rates and lease terms will remain consistent with the supply and demand we currently have in the market,” Breen says.

The survey data, at least, does not show that the market is about to collapse. 47% of respondents said the number of operating leases would decrease, leaving a small majority to predict either no change, or even an increase.

The complete report, Balancing the Books: IFRS 16 and Aviation Finance  by Euromoney Institutional Investor Thought Leadership in conjunction with Deloitte, is available for free here.

How a San Francisco-based hedge fund uses the blockchain

Banks were among the first to recognise the need to embrace digital currencies and distributed ledger technology, but they are not the only ones.

Within the financial services industry credit card companies or insurers come to mind.

But one particularly intriguing example comes from Numerai.  In a bid to develop artificial intelligence, the San Francisco-based hedge fund developed its own cryptographic token, called Numeraire. The idea is that data scientists developing AI models stake Numeraire in an auction to quantify their confidence in the models. Those that prove their predictive prowess earn Numeraire, while those that don’t see their digital stakes destroyed.

Geoffrey Bradway Numerai

Geoffrey Bradway, VP of engineering at Numerai, expects “more and more novel coin applications in the finance realm”.

In part nine of our digital currencies series we’re going beyond banking, looking at other areas where the financial services industry considers – or already uses – distributed ledger technology.

To read the article, which we have produced in collaboration with law firm Baker McKenzie, please follow this link.

Earlier in the series, in May 2017, we looked at the potential of digital currencies and distributed ledger technology for central banks. And in June, we discussed what’s in it for banks.

 

Animation: how the blockchain could fix payments systems

Today’s payments platforms are creaking. The next-generation will use digital currencies and distributed ledger technology to make them faster, cheaper and more convenient.

But there are barriers.


For our digital currencies project in collaboration with law firm Baker McKenzie, we have produced a new animation that explains how the blockchain could improve today’s payments systems, and what the hurdles are central banks need to clear first.

The two-minute animation can be accessed by following this link.

 

 

Should ICOs be regulated? A majority thinks so

In the most recent iteration of our digital currencies series with Baker McKenzie we are looking  into the rising popularity of Initial Coin Offerings – a means for blockchain start-ups to raise capital.

For those interested in cryptocurrencies and distributed ledger technology ICOs are one of the hottest trends of 2017. According to the latest estimates around US$1.3bn have been raised in ICOs since the beginning of 2017.

But we also warned that ICOs are “not for the faint-hearted“: while they can offer huge returns to investors they are also risky.

ICOs take place in a largely unregulated environment and a discussion is taking place whether this needs to change. More regulation would presumably reduce the risks, but quite possibly also the returns.

We were wondering how experts think about regulating ICOs and turned to banking, cryptocurrency, fintech and blockchain experts in the Euromoney Thought Leaders Panel to find out.

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Flash poll: 50.4% say regulating ICOs would make them more attractive

It turns out that a majority of respondents to the poll favours regulation, while about one third do not consider it to be necessary. Those opposing regulation do so for different reasons though: 15% argue that more regulation would reduce investor returns, while 21% think regulating ICOs would be a waste of time because they won’t be around for long anyway.

The poll “highlights the maturing of the digital currencies business, with its early adopters increasingly outnumbered by financial traditionalists with mainstream regulatory concerns around fraud and consumer protection,” writes my colleague Solomon Teague in his comprehensive analysis of the survey.

This is part six in of our series on digital currencies that we are publishing in collaboration with law firm Baker McKenzie. To catch up with all articles, infographics and interviews published earlier in the series, please head over to the Baker McKenzie financial institutions content hub.

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Initial Coin Offerings: Not For The Faint-Hearted

Initial coin offerings are the latest way for blockchain startups to raise capital and engage with their prospective client-bases. Investors have been making huge returns but the market has all the hallmarks of a bubble and is bound to burst sooner or later.

The ICO market has been red-hot in recent months. Only an indicator is the increased popularity of the search term “initial coin offering” on Google.

In fact, the total number of ICOs in the first half of 2017 surpassed the number for the whole of 2016, according to Santiment, a crypto-market intelligence platform: the increased interest reflected on Google is certainly no coincidence.

Advocates argue ICOs, where companies create and sell a new digital token or ‘coin’ to investors to raise capital, offer issuers huge advantages. They allow them to raise millions with lower barriers to entry than alternatives like debt financing or an IPO and link issuers with investors that are also typically early adopters, beta testers, development contributors and evangelists.

While issuers are attracted to ICOs by the flexibility that is possible due to the lack of regulation around them, investors are principally in it for the returns. These have often been spectacular, with returns of 10 or 20 times the initial investment not unusual.

But others warn of the volatility and risk for investors. In our latest piece in our digital currencies series, Gabriel Dusil, co-founder of blockchain infrastructure company Adel, describes the ICO space as “Wild West”. He knows what he’s talking about: Adel conducted its own ICO in March 2017.

You can read the full article “ICOs: not for the faint-hearted” here.

 

Banks Embracing the Blockchain

Digital currencies and distributed ledger technology will have huge and unpredictable implications for banks, increasing efficiency in some business segments and inviting competition in others. Eventually it could completely transform their relationships with clients.

Christophe Van Cauwenberghe, head of payment innovation at Societe Generale

Christophe Van Cauwenberghe, head of payment innovation at Societe Generale

The distributed ledger has the most obvious potential for banks in payments, syndicated loans, trade finance and know your customer (KYC) compliance, according to Christophe Van Cauwenberghe, head of payment innovation at Societe Generale.

In part four of our digital currencies series, which we are publishing in collaboration with law firm Baker McKenzie, we are asking how banks are embracing the blockchain.

While for now it remains next to impossible to say specifically how things may change, one thing is clear: no matter how disruptive distributed ledger technology may be for banks, it is always better to embrace new technology and adapt than pretend it isn’t happening.

If you would like to catch up on our digital currencies series, you can find our earlier publications here:

Part 1: Life after quantitative easing: Digital currencies could be a powerful tool for central banks, but there are risks

Part 2: Infographic: Centralised vs decentralised digital currencies

Part 3:  Banking on the Blockchain. An interview with UBS’ Head of strategic investment and fintech innovation, Hyder Jaffrey.

 

An interview with UBS about digital currencies
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Hyder Jaffrey is Head of Strategic Investment and Fintech Innovation at UBS

Banks have spent the last few years exploring how distributed ledger technology, or the blockchain, can help them cut costs or improve service.

To better understand how banks look at the issue we spoke to Hyder Jaffrey, Head of Strategic Investment and Fintech Innovation at UBS. In the interview he explains the utility settlement coin, a form of cryptocash a group of banks, including UBS, is working on.

Jaffrey argues that it helps to think of the world of digital currencies as a spectrum:

“At one end of it you have bitcoin, which is unregulated and operates outside of government control. At the other end you have central bank digital currencies – digital versions of existing currencies. The utility settlement coin is positioned right in the middle, with some of the benefits of bitcoin, such as the real time transfer of value (settlement), while taking on some characteristics of ‘real money’ issued by central banks. It is pegged to those fiat currencies and will always have the same value.”

You can read the full interview with Hyder Jaffrey here.

This is the third part in of our series on digital currencies, that we are publishing in collaboration with law firm Baker McKenzie.

Who Owns Digital Currencies (and why it matters)

Digital currencies come in different shapes and forms, which in turn has important implications for their respective use and application.

A lot depends on the question who ultimately controls a specific currency. Bitcoin, for instance, is decentralised and operates outside of the oversight of a single institution. It is therefore not well suited to manage inflation.

ownership digital currencies snippetBut a central bank issued digital currency* – none exists so far, but central banks around the world are considering it – would be a powerful tool to control and manage inflation.

A third type are digital currencies issued by banks, such as the Utility Settlement Coin (USC), being worked on by a number of top tier banks.

Our infographic: Centralised versus Decentralised Digital Currencies compares the implications the characteristics of different digital currency types have.

The chart is the second iteration in our new series on cryptocurrencies, which we are publishing in collaboration with law firm Baker McKenzie.

We’d be delighted to hear your comments. You can get in touch using the contacts form. For social media, we recommend the hashtag #cryptocurrencies.

* For more on central bank issued digital currencies, check our recent article, “Life after Quantitative Easing

Digital Currencies: Powerful Tools for Central Banks

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Today, we are launching a new project on digital currencies.

Over the next weeks and months we will investigate different types of cryptocurrencies and consider their benefits and potential downsides to financial institutions, central banks and the real economy.

We will discuss regulatory hurdles, explain digital payments systems, and look at distributed ledger technology.

We will also be speaking to central bankers and blockchain developers, commercial and investment bank experts, fintech visionaries and other stakeholders who will play a role in shaping the future of cryptocurrencies.

In the first part of this new project, which we are publishing in collaboration with law firm Baker McKenzie, we are examining why central banks are looking seriously at creating digital versions of fiat money. The article explains how the issuance of digital currencies will provide central banks with a new powerful tool that will give them unprecedented control over economies and markets.

Upcoming pieces in the series will include interviews, videos, animations, infographics and more.

In the meantime, please head over to our partner’s website to read our first article, “Digital Currencies: Life after Quantitative Easing”.

We hope you will find this new article series interesting. As ever, we would be delighted to hear your thoughts. You can get in touch using our contacts form. For social media, we recommend the hashtag #cryptocurrencies.

About us

Thought Leadership Consulting creates thought-provoking content for global business leaders.

With a team of independent journalists, experienced editors and professional marketers, we create reports, surveys, blogs, articles, videos and infographics. All of our content is unbiased, original, research-driven and audience-led.

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