Finance

In the 1960s South Korea was a poor, backward country recovering from a devastating war. Now it is the 12th-largest economy in the world. Its 52m people earn an average of $35,000 a year, nearly as much as Italians and way more than Iberians. Its stockmarket is the 16th-biggest globally, with a capitalisation of $1.8trn, and the seventh-busiest by daily traded volumes. The IMF has deemed South Korea an advanced economy since 1997. Anyone still describing it as an emerging market might therefore appear to have been asleep for the past half-century. And yet this is what MSCI, a company that creates market benchmarks, has been doing for three decades. South Korea was the 13th country to join its Emerging Market Index, which now counts 24 members. Some have since been relegated to a “frontier” basket (Croatia, Morocco), shunted to “standalone” markets (Argentina) or even dropped altogether (Venezuela). Less glitzy economies than South Korea’s, such as Greece and Portugal, were elevated to MSCI’s Developed Market index years ago. South Korea therefore thinks it is overdue a promotion. It may hope to achieve one on June 22st, when MSCI announces which countries stand a chance to receive the accolade next year. The index provider has long pointed out that investing in South Korean assets is often an unnerving experience. Shareholders’ rights are weak. Ownership structures are byzantine. Repeated scandals expose lapses in governance. And state interventions routinely warp markets. To address such misgivings the government in January announced a raft of ambitious reforms. Rules governing the distribution of dividends, for years clear as mud, will be brought closer to Western standards. Procedures for takeovers and spin-offs will be revamped to better protect minority shareholders. An arduous registration process for foreign investors will be abolished by the end of the year, with large South Korean companies required to release filings in English from then on (smaller firms are slated to follow in 2026). Most important for MSCI, South Korea has pledged to open up its foreign-exchange market and to extend its working hours, which should help make the won more tradable internationally.Such reforms aim to make South Korea’s financial markets more dynamic—a worthy goal in itself. But the government reckons inclusion in MSCI’s elite benchmark is also worth angling for, because it would bring with it a vast influx of cash from foreign investors. About $3.5trn of assets under management, spread across the globe, currently track MSCI’s Developed Market index—nearly twice as much as the money following its emerging-market cousin, according to Goldman Sachs, an investment bank. Analysts estimate that a promotion could lure some $46bn-56bn of fresh capital into South Korean assets. Moving on up could also help put an end to the “Korean discount”—the persistently lower valuation of South Korean firms relative to foreign ones with similar earnings and assets. Investors had to contend with poor governance and shareholders’ rights, along with the nagging risk of a conflict with North Korea; they often received meagre dividends for their trouble. By signalling that the regime is becoming friendlier, the logic goes, an msci upgrade would help dispel investors’ doubts.The trouble is that South Korea has been there before. It made it on to MSCI’s coveted watchlist in 2009, only to be crossed off in 2014 after the index provider alleged it was not sufficiently upping its game. Various administrations have since aimed for the promotion but failed to set adequate reforms in motion. Some critics paint even the latest batch of measures as half-hearted. South Korea has ruled out some changes the MSCI would like, such as removing limits on foreign ownership in key industries and loosening restrictions on short-selling. And political whims continue to make investors queasy. Last year bond markets experienced a wild few days after a provincial governor refused to honour the region’s debts. In February the country’s president, Yoon Suk-yeol, ordered the markets watchdog to keep a lid on banks’ profits, because they are “part of the public system”. Investors were unimpressed.MSCI has already indicated that this might still not be South Korea’s year. On June 8th it hinted that it would wait until the capital-market reforms were fully implemented and see how investors react to them before considering adding the country to its premier league.That might be a blessing in disguise. South Korea should not rush into an upgrade, says Hwang Sun-woo of Korea University. Its economy, which depends heavily on exports, could be rocked in the event of a hasty opening of its foreign-currency markets. And the potential rewards should be put into perspective. The expected capital inflows, small relative to the size of South Korea’s markets, would mostly benefit big companies. They could also be reversed. After luring money upon its promotion in 2010, Israel, the country to most recently graduate to developed-market status, suffered $2.5bn in net outflows the next year, which erased all earlier gains.Membership of elite clubs will not in itself cure South Korea’s reputational ills; after all, these have persisted despite its inclusion in top indices created by other blue-chip providers, such as Dow Jones and FTSE Russell. To do so, the reforms will have to convince a wider public. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

The intensifying rivalry between America and China has not been kind to open markets. Letting defence or foreign ministers dictate trade policy, it turns out, is not conducive to making goods move more smoothly across borders. Yet even as globalisation crumbles, a race to gain commercial clout in the world’s most populous and fastest-growing region has kicked off. It is a race China is quietly winning.Both America and China are keen to trumpet to Asian countries the benefits of the regional pacts they sponsor (each of which excludes their rival power). On May 27th a group of 14 countries agreed to set up an early-warning system over supply-chain problems—the first building block of the Indo-Pacific Economic Framework (IPEF), President Joe Biden’s flagship offering. On June 2nd the Regional Comprehensive Economic Partnership (RCEP), a China-backed trade deal which includes Australia, Japan, New Zealand, all of South-East Asia (bar East Timor) and South Korea, came into force in the Philippines, the last of the pact’s 15 members to ratify it. At first blush the two pacts look mostly insubstantial. American negotiators are not interested in offering greater market access for Asian exporters, robbing IPEF of the raison d’être of a trade deal. Critics dismiss RCEP as broad but shallow because it does not cover labour rights, the environment and state-owned enterprises.Despite those limitations, however, RCEP is already expanding More

Masterly inactivity is back in vogue at the Federal Reserve’s rate-setting committee. After its meeting on June 14th it kept its benchmark rate on hold, rather than raising it, for the first time since January 2022. One or two more rate rises may lie ahead: Jerome Powell, the Fed’s chairman, suggested so in his post-meeting press conference, and that is what investors expect. Gradually, though, the main debate among Fed watchers has shifted from how high the rate will go to how long it will stay there before being cut.Listen to this story. Enjoy more audio and podcasts on More

Masterly inactivity is back in vogue at the Federal Reserve’s rate-setting committee. After its meeting on June 14th it kept its benchmark rate on hold, rather than raising it, for the first time since January 2022. One or two more rate rises may lie ahead: Jerome Powell, the Fed’s chairman, suggested so in his post-meeting press conference, and that is what investors expect. Gradually, though, the main debate among Fed watchers has shifted from how high the rate will go to how long it will stay there before being cut.That is a knotty problem, made knottier by the fact that core prices in America (excluding volatile food and energy) rose by 5.3% in the year to May. It is also not the only one facing Mr Powell and his colleagues. They have spent the past year steadily shrinking the Fed’s huge stock of Treasuries and mortgage-backed securities (MBS), the face value of which has fallen from $8.5trn to $7.7trn. Each month the Fed allows up to $60bn-worth of Treasuries, and $35bn of MBS, to mature without reinvesting the proceeds. Now it must decide when to stop.This vast portfolio was amassed via the Fed’s quantitative-easing (QE) programme, through which it bought bonds with newly created money. Conceived amid the global financial crisis of 2007-09, it was put into overdrive during the covid-19 pandemic. QE flooded markets with liquidity and nudged nervous investors into buying riskier assets—because the Fed was already buying the safest ones, which pushed their yields down. That kept the supply of credit and other risk capital flowing into the real economy. Critics decried all this as reckless money printing. But with inflation low and deflation more of a threat, they were easy to dismiss.The return of high inflation makes QE’s reversal (quantitative tightening, or QT) desirable on several counts. Just as buying Treasuries brings long-term rates down, the disappearance of a buyer should raise them, complementing the tightening effect of the Fed’s short-term rate rises. And if the Fed is not buying Treasuries, someone else must be holding on to them. That means they are not buying a riskier asset such as a stock or corporate bond, reducing the supply of capital to an overheated economy. Both effects should dampen price rises.QT also bolsters the Fed’s credibility. If it only ever conducted QE, and never reversed the process, accusations of money printing and currency debasement would be much harder to brush off. Inflation expectations could rise, self-fulfillingly and perhaps disastrously. So the Fed must prove it is willing to hoover up dollars as well as pump them out.In that case, why stop at all? The simplest reason is that the Fed’s tightening cycle is approaching its end. Eventually it will consider cutting short-term rates again, especially if economic cracks appear. To still be pushing long-term ones up at that point would be akin to a driver pressing the accelerator and the brake at the same time.The more troubling reason is that, just like raising short-term rates, QT can inflict its own damage. Having been tried only once before, from 2017 to 2019 and at a much slower pace, its side-effects are poorly understood. That does not make them less dangerous. By sucking cash out of the system, the previous bout of QT prompted a near-failure of the money markets—the place where firms borrow to meet immediate funding needs and one of the world’s most important pieces of financial plumbing. The Fed cleared the blockage with an emergency lending facility that it has since made permanent. It also had to halt QT.This time it would be something else that breaks. The stockmarket is an obvious, if unthreatening, candidate: only a devastating crash would threaten financial stability. A broader liquidity crunch would be worse. Credit markets, already tight following several bank failures and rising defaults, are more likely to seize. America’s Treasury, meanwhile, is set to soak up yet more liquidity. It must sell more than $1trn of debt over the coming three months to rebuild its cash buffers after the latest debt-ceiling drama. By increasing the risk of sudden market moves, that raises the odds of participants suddenly needing to raise cash for margin calls—and the risk that they cannot.However small the ideal size of the Fed’s balance-sheet, ever more shrinking could be dangerous. So QT must stop before it risks sparking a crisis that requires a return to QE. But when? That is the central bank’s next big dilemma.■Read more from Buttonwood, our columnist on financial markets:Surging stockmarkets are powered by artificial intelligence (Jun 7th)Investors go back into battle with rising interest rates (Jun 1st)The American credit cycle is at a dangerous point (May 24th)Also: How the Buttonwood column got its name More

Hardly a day passes without someone in Chinese finance “falling off his horse”, or coming under a corruption investigation. State media warned on June 5th that the banking industry is infested with “moths”—mid-level managers who slowly ingest lenders’ resources from the inside out. “Internal ghosts”, executives who use insider connections to pilfer billions from banks, often pose a greater danger. There are “nest cases”, where clusters of fraud spanning several banks are discovered at once, and “skewer cases”, in which the arrest of one banker leads to another, then another. After a recent spate of scandals an official newspaper dubbed smaller banks an “anti-corruption disaster zone”. Such parlance hints at pervasive graft throughout China’s vast financial system, which has assets of 400trn yuan ($56trn). Between January and May at least 60 financial institutions were hit with major investigations into personnel, according to official statements and press reports. Research by The Economist shows that, over the past five years, 78 executives at China’s eight largest banks have been investigated or charged with corruption. Since 2018 authorities have also probed 385,000 shareholders of rural banks suspected of using the lenders as personal piggy banks.The crackdown has shown no sign of ebbing as the Communist Party gains a much firmer grip over enforcement. In the biggest regulatory change in two decades, the central government announced earlier this year that it would create a super watchdog that oversees all areas of finance except the securities industry. How it applies its mega-powers is bound to remould a sector the health and stability of which matters hugely not just to China, but also to the global economy. The new system is modelled on America’s, which seeks to avoid overlapping mandates. The National Administration for Financial Regulation (NAFR), as the new watchdog is dubbed, has been granted status that moves it closer to the central government. That gives it stronger enforcement powers, similar to America’s Securities and Exchange Commission. It has gained investor-protection responsibilities, akin to America’s Financial Stability Oversight Council, and taken over financial oversight from the central bank (which, like the Federal Reserve, now focuses on macroprudential policy). NAFR is preparing to take forward what has perhaps been the most extensive financial clean-up campaign in history. Starting in 2017, its predecessor scrambled to slow down a dangerous rise in risky financial activities. It tightened rules on shadow banking, shrinking the stock of shadow loans from the equivalent of 25.3% of total banking assets in 2017 to just 13.5% last year. It subdued sprawling financial firms and powerful people that had sought to manipulate the system. Among them were Anbang, an insurance group, and Baoshang Bank, a mid-tier lender. It crushed a 1trn yuan peer-to-peer lending industry, where people lent to one another via online platforms. The central government also upended the fintech empire of Jack Ma, China’s most famous entrepreneur, after his company, Ant Group, built a mammoth lending business that received little regulatory scrutiny.The new team will have to reckon with the costs of the clean-up, which are mounting. Many wealth-management products have gone bust, causing investors to protest. The bill for cleaning up urban banks and bailing out several large lenders has come to 10trn yuan. Rescuing Anbang alone cost $10bn. Tens of thousands of investors in peer-to-peer lending products have lost their savings. Nearly 630 small banks have been restructured. The cutting down of Mr Ma has hurt China’s reputation as a place safe for entrepreneurial experimentation. So has the recent detention of Bao Fan, one of China’s most famous investment bankers. Senior regulators bristle at such criticisms and feel that, at least in Mr Ma’s case, official actions were too timid for a risky business model. The new system will rectify that by giving NAFR regulatory control over financial holding companies such as Ant.The vision for regulating the financial sector is becoming clear. Senior officials believe they have chosen the best features of the American system while rejecting the values of Wall Street, which, in their view, have seeped into China over two decades. The message to bankers is grim. Entrepreneurs will be allowed to continue to reap enormous fortunes. But the government does not want bankers to become exorbitantly wealthy. No celebrity financier, no matter how high-profile, appears immune from corruption probes.NAFR has several pressing tasks ahead of it. First it must replace local financial regulators with its own teams and dismantle the connections between banks and local governments. The establishment of thousands of new banks since the 1990s and commands from politicians to build endlessly have helped feed a cesspool of bad assets. The small lenders that sprung up across the country often had close connections with local governments and the largest local companies, namely developers. In many cases tycoons who held shares in the banks, or controlled them outright, used them to fund their businesses. One result was a decade of high-speed economic growth. Another was rampant graft and poor allocation of funds.So far the onslaught on corruption, the biggest threat to China’s financial stability according to many, is proving highly effective, says Sam Radwan of Enhance, a consultancy. The number of arrests will probably fall. But to purge the financial system of the bad assets revealed by the campaign will be a big job—and it is an urgent one. Tight links between banks, property developers and city governments have left the industry with masses of risky loans. Developers and local-government companies owe China’s banks 130trn yuan, or about 42% of total banking assets, according to Xing Zhaopeng of ANZ, a bank.Most of those debts are deemed healthy. Li Yunze, who was recently appointed to lead NAFR, said on June 8th that the risks are controllable. In its most recent review of the banking system, the central bank said just 1.6% of total system assets are considered high-risk.That could change if things get worse for developers and local governments. Both are finding it increasingly hard to pay back loans. A group of companies called local-government financing vehicles (LGFVs), which often borrow from banks on behalf of cities and provinces, have spooked markets in recent weeks as many show signs of impending failure. Such risks often emerge suddenly and have the potential to contaminate banks. Dalian Wanda, one of China’s top developers, has reportedly entered into talks with banks on a loan-relief plan. It has more than 90bn in outstanding loans. An LGFV in south-west China is rumoured to be paying back loans using local social-security funds.Failure to handle this pile of debt threatens to mire the system in bad credit. Many such loans may not turn into toxic assets overnight. Instead, some will become long-term drags on bank profits. Another LGFV in southern China recently agreed with banks to restructure 15.6bn yuan in loans by lowering interest rates and pushing the maturity of the loans out by 20 years. In such situations banks have few other options than to extend.Regulators have been experimenting with merging bad banks for years. So far 23 urban banks have been combined. But insiders say the process is cumbersome, can drag on for years and ultimately leads to the creation of larger bad banks. Another option is letting banks fail. This has been tested only a few times and risks causing runs on deposits—the opposite of the stability China’s leaders are trying to achieve.Large banks are absorbing some bad debts from smaller ones. But their ability to do this is limited, and they are unlikely to take on equity in troubled banks. Some local state-owned firms have started injecting liquidity into rural lenders and taking shares in them, according to Chinese media. This type of recapitalisation is bolstering banks’ balance-sheets and giving them more room to dispose of bad debts.The only way to heal the sector is to recognise and treat soured loans. Efforts to do so have been haphazard. In 2019 regulators said they would require banks to declare the true scale of bad loans instead of using fancy accounting to hide them. But the pandemic then forced watchdogs to enforce the rules less stringently; they also told banks to roll over loans. This avoided mass corporate defaults, but also added to the hidden accumulation of bad assets. Now, with the pandemic at an end, the long-delayed recognition of more bad debts is starting, says Ben Fanger of ShoreVest Partners, an investor in distressed debt. This means a vast flow of toxic assets is coming on to the market. State-owned asset managers will buy up some of that debt at discounted rates. Unlike 20 years ago, when the previous mountain of bad assets failed to lure bargain-hunters, there are now more local private investors willing to snap up non-performing loans from banks. Some corporate investors will also pick through the rubble of the property sector to search for distressed debts that allow them to take over projects on the cheap. As the economy slows and the extent of the financial rot is revealed, China’s new regulators can only hope there are enough of them. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

After astonishing breakthroughs in artificial intelligence, many people worry that they will end up on the economic scrapheap. Global Google searches for “is my job safe?” have doubled in recent months, as people fear that they will be replaced with large language models (llms). Some evidence suggests that widespread disruption is coming. In a recent paper Tyna Eloundou of Openai and colleagues say that “around 80% of the us workforce could have at least 10% of their work tasks affected by the introduction of llms”. Another paper suggests that legal services, accountancy and travel agencies will face unprecedented upheaval.Economists, however, tend to enjoy making predictions about automation more than they enjoy testing them. In the early 2010s many of them loudly predicted that robots would kill jobs by the millions, only to fall silent when employment rates across the rich world rose to all-time highs. Few of the doom-mongers have a good explanation for why countries with the highest rates of tech usage around the globe, such as Japan, Singapore and South Korea, consistently have among the lowest rates of unemployment.Here we introduce our first attempt at tracking ai’s impact on jobs. Using American data on employment by occupation, we single out white-collar workers. These include people working in everything from back-office support and financial operations to copy-writers. White-collar roles are thought to be especially vulnerable to generative ai, which is becoming ever better at logical reasoning and creativity. However, there is as yet little evidence of an ai hit to employment. In the spring of 2020 white-collar jobs rose as a share of the total, as many people in service occupations lost their job at the start of the covid-19 pandemic (see chart). The white-collar share is lower today, as leisure and hospitality have recovered. Yet in the past year the share of employment in professions supposedly at risk from generative ai has risen by half a percentage point. It is, of course, early days. Few firms yet use generative-ai tools at scale, so the impact on jobs could merely be delayed. Another possibility, however, is that these new technologies will end up destroying only a small number of roles. While AI may be efficient at some tasks, it may be less good at others, such as management and working out what others need. ai could even have a positive effect on jobs. If workers using it become more efficient, profits at their company could rise which would then allow bosses to ramp up hiring. A recent survey by Experis, an it-recruitment firm, points to this possibility. More than half of Britain’s employers expect ai technologies to have a positive impact on their headcount over the next two years, it finds.To see how it all shakes out, we will publish updates to this analysis every few months. But for now, a jobs apocalypse seems a way off. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

The NFL consulted with Bank of America and the National Black Bank Foundation on its loan.
The full terms of the loan are not being released. However, an NFL executive said the terms are at “market rates,” and the league plans to fully draw on the loan over the next three years.
“It’s definitely a needed shot in the arm at a time when community banking is being questioned,” said Ashley Bell, co-founder of the NBBF.

A football with the NFL logo.
Jacob Kupferman | Getty Images

The National Football League is making a big play to increase lending in underrepresented communities.
The league is borrowing $78 million from a syndicate of Black- and minority-owned banks and community development financial institutions.

The loan deal will generate “tier 1 capital” for the banks and CDFIs. According to the National Black Bank Foundation, it will boost their lending power by millions through banking fees and interest. The full terms of the loan are not being released.
However, Joe Siclare, the NFL’s executive vice president of finance and league policy, said the terms are at “market rates,” and the league plans to fully draw on the loan over the next three years.
“These banks play a vital role in our overall economy and many of them are in markets that our teams play, so there is good synergy there,” Siclare told CNBC.
“These community banks sometimes have difficulty navigating down economic times. When large corporations like the National Football League can partner and provide reliable revenue streams, it helps those banks continue to do the great work they do in their communities,” he added.
The NFL deal follows a similar $35 million loan linked to the National Basketball Association’s Atlanta Hawks for a practice facility in 2020 and a $25 million loan with Major League Soccer in 2022, both of which were arranged by the NBBF and a syndicate of Black-owned banks.

NBBF co-founder Ashley Bell is hopeful these deals will prove Black- and minority-owned banks are viable partners for large corporations long term, especially with the threat of an economic downturn or recession that would likely have a bigger effect on communities of color.
“These banks loan money to people and businesses that need it without being predatory. This gives them breathing room. These banks are centers of hope around the country. Whether they are Martin Luther King, Jr Drive or Main Street,” Bell said. These are the places people go to get opportunity and by supporting these institutions, the NFL is supporting these communities.”
The NFL consulted with Bank of America and the NBBF on its loan.
“It’s definitely a needed shot in the arm at a time when community banking is being questioned,” Bell said.
Bell said the regional banking crisis triggered by the collapse of Silicon Valley Bank in March has the potential to destabilize many Black and minority financial institutions. The NBBF says in many cases, Black and minority banks are “hyper local,” providing 85% or more of the loans to underrepresented groups in their area.
“Doing a deal with an entity like the NFL, that helps your brand. It helps people understand that you can do a complex deal. So, if you can do a deal with the NFL, surely you can trust that bank with your home loan,” Bell said. “Surely you can trust that bank with a line of credit for your business, your church, your faith organization. You can go to them and trust that you’ll get the best service.”
The NFL’s involvement will create opportunity for Black- and minority-owned banks to make income and then put that money out into the community, according to Dominik Mjartan, CEO of Optus Bank in Columbia, South Carolina, one of 16 financial institutions partnering on the loan.
“The NFL giving us this chance to participate, it enhances our ability to deliver on our mission to serve underserved, underestimated high-potential customers and communities,” he said. More

Money transfer unicorn Zepz is looking to expand its business through mergers and acquisitions, the company’s CEO Mark Lenhard told CNBC.
The firm, which owns the WorldRemit and Sendwave brands, laid off 26% of its global workforce in May, citing a need to consolidate its operations.
The digital payments group is looking to reach full-year profitability after achieving monthly profitability in the first half of 2022.

Zepz, which owns the WorldRemit and Sendwave brands, has a total headcount of around 1,600.
Sopa Images | Lightrocket | Getty Images

LONDON — Zepz, the owner of money transfer firms WorldRemit and Sendwave, is on the hunt for mergers and acquisitions after cutting 26% of its workforce last month, the company’s CEO told CNBC.
With a $5 billion valuation, Zepz is one of the largest fintech companies in Europe, backed by leading investors including Accel, TCV and Leapfrog.

The company enables users to send money from a smartphone or computer to people abroad, who can receive it in their bank account, mobile wallet, or as a mobile airtime top-up.
The service is a challenger to large banks and established money transfer services like Western Union, touting cheaper fees and the ability to move funds rapidly. A close rival is Wise, which also claims to offer cheaper international money transfers than banks.
Mark Lenhard, Zepz’s CEO, said the firm wanted to grow its portfolio of businesses in an effort to own a larger part of the global digital payments pie.
Lenhard didn’t identify which companies Zepz was looking to buy, but said the sharp slump in private fintech valuations made it an attractive time to kick off M&A exploration.

Digital wallets

The overall value of cross-border payments is forecast to increase from $150 trillion in 2017 to over $250 trillion by 2027, according to the Bank of England. It’s a highly competitive industry with various players operating and taking a slice of each transaction a consumer makes.

A particular focus for Zepz product-wise in the near term is digital wallets, Lenhard said, with the company planning to launch its first digital wallet “imminently.”
“We want to be a core financial hub for a very particular segment,” he told CNBC Wednesday, with a particular focus on migrant communities sending funds home.
The push into M&A is a surprise move in many ways as it follows a significant amount of cost reduction at the 13-year-old company. In May, Zepz laid off 420 employees, equating to about 26% of its global workforce.

Zepz says it cut the jobs to consolidate its operations after its acqusition of U.S. remittances firm Sendwave led to a duplication of certain roles.
Still, at the time, Zepz said it wasn’t pausing hiring, and was actively trying to fill 200 roles.
It marked the second time in just under a year Zepz laid off staff. In June 2022, Zepz cut around 5% of its workforce, according to Sky News.
“Any time you’re laying off individuals it’s hard, it sucks, but it was certainly the right thing to do. We’ve expanded things out of that,” Lenhard said Wednesday.
He added that he hopes the company’s upcoming digital wallet product will convince customers to rely more on Zepz, rather than using competing digital banks and other financial apps which have grown their services to offer a much wider range of products.
PayPal, for example, offers users mobile wallets, the buying and selling of cryptocurrencies, and buy now, pay later installment loans, among other things.
Like other fintechs, Zepz has been in cost-cutting mode as the industry faces huge pressure from a slump in technology valuations, stoked by a host of macroeconomic headwinds including higher inflation and interest rates.
Despite this, Zepz says it has been less susceptible to those economic pressures than other firms in the space. World remittances is less impacted by broader macroeconomic pressures than, say, banking, according to Lenhard.
Zepz’s overall customer transactions are up 25% year-to-date as of April 2023, the company said, while its customer growth accelerated to 30% on average and by as much as 80% in certain areas.
The company, which hit monthly profitability in the first half of 2022, wants to achieve profitability on a full-year basis this year.
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