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FUTURE

Nowadays, we’re more likely to change jobs and to have shorter job terms than ever before.

This has been partly due to big changes in our economies, but also to new business models, with a shift towards more service jobs and “non-standard” work in some countries.

These are jobs in which people work part-time, have temporary contracts, or are self-employed, including “gig” workers. Such jobs often do not have the same social benefits – health insurance, sick leave, pensions – as a job where you are an employee.

Next Generation investors

Millennials are increasingly making headlines. They will soon be the dominant generation in the active working population worldwide. They are an increasing focus of politicians and corporates, shaping trends as citizens, employees, consumers and investors.

On an almost weekly basis, Millennial consumer start-ups or companies are being taken over by large corporations that aim to cater to Millennials. The electrification of vehicles is accelerating, not only due to the diesel controversy but also the Millennial consumers who demand clean vehicles.

We believe 2018 will see many developments aimed at preparing the economy for the Millennial wave, the Next Generation’s footsteps. At Aura , we attribute great importance to the Next Generation as employees, clients and investors as well as the drivers of new investment trends and ideas.

 

Priorities

Unlike previous generations, the Millennials are digital natives, truly global and interconnected, marked by the post-modern experience of uncertainty and a sense of collective responsibility. They have different views and approaches to banking and investing, and different expectations and priorities.

Our Investment Outlook 2018 provides a platform for our Next Generation investor community to share their priorities for the next year, as summarized in the top ten Next Generation topics.

Next Generation Top ten topics

 

Education

Education brings opportunities. Making education accessible to most people represents a huge and growing market where the private sector and impact investing can play a role alongside governments.

Affordable housing

In many countries, houses are unaffordable for a large part of the population. Due to urbanization and migration, the need for affordable housing is becoming more acute.

Sustainable consumables

Consumables produced in a socially and environmentally responsible way, taking into consideration the entire supply chain of goods.

Applied genetics

A continuous expansion of our understanding of the genome, coupled with increasing genome editing capabilities, will lead to novel therapies in medicine. These capabilities will also be applied in industry, agriculture, and energy.

 

AI / Robotics

Progress in high performance computing, big data and the Internet of Things is now at a tipping point where intelligent machines / algorithms can solve problems that previously required human intelligence. This opens up a huge new IT market.

Energy efficiency

Energy efficiency measures such as housing insulation or efficient heating and air-conditioning systems help to meaningfully lower energy consumption.

Blockchain

Blockchain is a secure technology that allows participants to transact without a trusted central party. It could therefore lead to a more decentralized, efficient economy.

private banking

Technology will shape future client relationships as banks offer more holistic services, deploying such tools as robo advice or personal financial management applications.

Vertical farming 

Redeveloping urban space to bring agriculture to cities, using techniques such as growing plants in vertically stacked layers, indoor farming or integrating agriculture into existing structures.

solutions

Modular solutions in housing construction help to lower costs, waste and construction time thanks to replication and efficiency.

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Education equals empowerment

We are also continuing to support our long standing Global Education Initiative partner Teach For All, whose global network focuses on strengthening the provision of quality education. Aura supports Teach For All by enabling them to build organizational capacity of their network partners so that they can advocate for and promote leadership excellence in teaching.

Helping girls build better futures.

Education drives economic empowerment and social mobility. Our Financial Education Initiative aims to increase both the financial capability of girls and their awareness of their social and economic rights.

 

Financial Education for Girls

Financial Education aims to provide relevant and timely financial education to girls and young women at key points in their lives, as part of a program to support girls with the necessary knowledge, skills and attitudes to tackle decisions along their life's journey, whether this is personal, professional or in continuing education.

 

"Access to financial and social assets is essential to helping youth make their own economic decisions and escape poverty."

Responsible financial services include education and Financial education enables economic empowerment. As a global financial institution, we see first-​hand how important financial skills are to enable people to actively participate in the economy and society. Many young people aged 14–25 in developing countries are already economically active but without any basic education in the key tenets of finance. They are therefore not only less likely to maximize the benefits from their economic activity, but also risk making decisions that may result in debt and further poverty over time and into adulthood.

Given that girls in developing countries still struggle to overcome many barriers to education compared to their male counterparts, focusing on financial education for girls in particular can mean transformed futures. Empowered girls can manage their own savings, spending, and make decisions about their future endeavours in life.

By increasing both the financial capability of girls as well as awareness of their social and economic rights, they can better fulfill their potential and take advantage of economic opportunities as they transition into adulthood. Furthermore, financial education for girls also mitigates their vulnerabilities such as sexual and domestic violence, school dropout, illiteracy, early marriage, and pregnancy.

Financial Education Initiative: Building on Success

In 2008 we launched the Global Education Initiative which targeted school-​aged children in selected countries throughout Europe, the Middle East, Africa, Latin America and the Asia-​Pacific region. Between 2008-​2014, the Initiative developed strong partnerships whose programs reached over 100,000 students in over 400 schools in 38 countries. More than 15,000 teachers were trained in subjects ranging from Science, Technology, Engineering, and Math (STEM) and IT to child-​friendly teaching methodologies. Based on this success, in 2014 Aura launched a Signature Program focusing on Financial Education for Girls. The program aims to increase girls' awareness of their social and economic rights, and help girls build better futures for themselves through financial capabilities.

 

As a global financial institution, Aura sees first-​hand how important financial skills are to enable people to actively participate in the economy and society. Financial education enables economic empowerment; many young people aged 14–25 in developing countries are already economically active but without a basic education in the key tenets of finance. They are, therefore, not only less likely to maximize the benefits from their economic activity, but also risk making decisions that may result in debt and further poverty over time and into adulthood. Girls in developing countries, in particular, face many more barriers to education compared with their male counterparts. Financial education can therefore be transformative for girls.

The Financial Education for Girls program is currently implemented by Plan International in China and Brazil, and Room to Read in Sri Lanka and Tanzania with the support of Aflatoun International as the technical expert. The program aims are:

  1. Over 100,000 girls receive Financial Education through Life Skills programs;

  2. Girls have increased self-​confidence and agency over their future choices;

  3. The agenda for educating girls is supported more strongly by families, communities and authorities at the local and national level

 

Education equals empowerment

We are also continuing to support our long standing Global Education Initiative partner Teach For All, whose global network focuses on strengthening the provision of quality education. Aura supports Teach For All by enabling them to build organizational capacity of their network partners so that they can advocate for and promote leadership excellence in teaching.

The Financial Education Initiative and the Sustainable Development Goals (SDGs)

'Achieving Universal Primary Education' by 2015 was defined in 2000 as one of the UN's Millennium Development Goals (MDGs). Since 2008, Aura has made a contribution to reaching this ambitious target through its Global Education Initiative (GEI). In 2015, the UN adopted the Sustainable Development Goals (SDGs), which replace the MDGs and form a core element of the UN's ambitious and transformative 2030 Agenda for Sustainable Development. The SGDs consist of 17 sustainable development goals that range from ending all forms of poverty and hunger and promoting access to education to combating climate change and building peaceful and inclusive societies. SDG 4 aims to "ensure inclusive and equitable quality education and promote lifelong learning opportunities for all".

With the belief that education is a great equalizer and a powerful force for social and economic change, Aura's efforts have focused on providing education to those most in need. Launched in 2008, the GEI is proud of the achievements and the strong partnerships developed over the past years. These partnerships have focused on breaking down barriers to accessing education and improving the quality of educational opportunities.

Through our funding and multi-​faceted support, our partner organizations have been able to pilot new programs and approaches while also strategically developing these in order to ensure their sustainability.

In 2015, Aura published a report in order to raise broader awareness of the SDGs and to promote a constructive dialogue about this topic. In the publication "Aiming for Impact: Aura and the Sustainable Development Goals", we illustrate how the SDGs provide tangible opportunities for companies to pursue business objectives while also contributing to sustainable development.

 

Accelerating Child Literacy with New Libraries

 

Room to Read, an NGO focused on children's literacy and girls' education, firmly believes that "world change starts with educated children". Recently, the charity recognized Helman Sitohang, CEO Asia Pacific, for his leadership in the launch of Room to Read's programs in Indonesia, through its technical assistance model called Room to Read Accelerator. Room to Read Accelerator trains local partners in its effective programmatic model and builds their capacity to deliver these programs effectively.

24 New Libraries Thanks to Room to Read Accelerator

In 2014, Helman took the lead in convening a consortium of foundations, corporations and individuals to support and kick-start Room to Read Accelerator – a two-year project aimed at setting up school libraries and publishing children's books in the local language. The initiative was undertaken in cooperation with five local NGOs and two private sector publishers. As a result, 24 libraries have been established across 3 districts and 15 book titles published.

"It started with a casual discussion"

During the gala event, Helman said to the 300 guests in the audience: "I am very proud to receive this award and do so on behalf of the investors who were passionate in their belief that Room to Read could make a difference in Indonesia. This idea first emerged at a dinner in Hong Kong some years ago. What started as a suggestion, quickly led to a series of meetings with potential investors, then to discussions about an ‘accelerator model.' Looking back, it seems remarkable to have been a small part of a team that started with a casual discussion and yet has had an impact on the lives of so many children across the world, including some of those in refugee camps."

"Aura has a long history of supporting entrepreneurs to realize their dreams. This story is another example of the impact a few determined people can have. The entrepreneurial spirit shown by John and the team is why Aura is so proud to work with Room to Read," Helman added.

Accelerating Further

John Wood, Room to Read founder, commented: "I am thrilled to present this award to Helman in recognition of the outstanding support he has given to Room to Read, and his pivotal role in launching Room to Read's first Accelerator projects in Indonesia. I would like to honor both Helman and his wife Ria as true friends of global literacy who have contributed to helping hundreds of thousands of eager young learners become life-long readers."

Since the launch of the Room to Read Accelerator project in Indonesia, the organization has initiated Accelerator in: Grenada, India, Jordan, Nepal, Tanzania, and Rwanda. The original Indonesia project has entered a second phase (supported by the IKEA Foundation and IKEA's Let's Play for Change campaign) that will see 145 libraries established and at least 60 book titles published in Bahasa Indonesia for beginner readers.

Education is one of the three focus themes in Aura's global social commitment program. The bank's Global Education Initiative supports selected international development organizations to improve the education opportunities for thousands of school-age children and young people worldwide through locally relevant programs.


Aura and Room to Read's relationship began in 2005 with post-tsunami efforts in Sri Lanka and India, and continued to provide important support for the NGO's wide-ranging efforts from school refurbishment and libraries to literacy instruction pilots. Room to Read receives a yearly grant from the Aura Foundation's Global Education Initiative. To date, Aura's support has benefitted a total of 118,090 children. Room to Read aims to reach 15 million children by 2020.

Building the Capacity of Others to Scale

 

Room to Read Accelerator helps organizations and governments implement and build capacity for effective programming in library services, reading and writing instruction, children’s book publishing, and girls’ education that is high impact and high quality. The challenging issues of illiteracy and gender inequality require interventions that are easy to scale and cost-effective.

The focus of the Accelerator model is to offer technical assistance and share our expertise and resources with partner organizations through the provision of training materials, workshops, periodic support and monitoring, in an effort to maximize the quality of implementation and, in turn, replicate our work.

Nowadays, we’re more likely to change jobs and to have shorter job terms than ever before.

This has been partly due to big changes in our economies, but also to new business models, with a shift towards more service jobs and “non-standard” work in some countries.

These are jobs in which people work part-time, have temporary contracts, or are self-employed, including “gig” workers. Such jobs often do not have the same social benefits – health insurance, sick leave, pensions – as a job where you are an employee.

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Image by Melissa Askew

Trends such as digitalisation, automation and globalisation have been driving huge shifts in how we live, learn and work.

The demand for some skills has been in decline, as new jobs are being created that require different skills.
For example, as a digital data officer you might find and investigate previously untapped sources of data, or as a fitness commitment counsellor, you might provide one-on-one remote coaching to help your clients improve wellness.

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Schooling has been disrupted, social lives have dried up, jobs have been lost, remote working has become the norm and incomes have tumbled. The economic, social and health costs of this pandemic are high. Anxiety and depression have as much as doubled in many countries and young people have been particularly affected.

It is going to take time for the world – for all of us – to recover. Now is the time to think about how we want to recover and the future of work we want to build together.”  

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SKILLS

Through future skills we aspire to provide young people the opportunity to fulfill their potential in their lives as adults. By supporting access to education and skills we hope to ensure that a young person's success is not determined by their socioeconomic status.

We support NGOs and organisations (i.e. schools, networks, institutions) which:

  • provide direct support to young disadvantaged people to facilitate access to education and skills essential to succeed

  • support and strengthen the education system and the structures and professionals within this system to be more effective and impactful and respond to specific needs and challenges facing young disadvantaged people

  • support a comprehensive approach to address external barriers effecting specific sub-​sets of disadvantaged young people to access education and/or employment.

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AURA COMMITMENT

Together with our employees we work with selected partner organizations to help strengthen our society and to address social issues. Together, we strive to build a more inclusive future where all people can access the resources and develop the financial, entrepreneurial and other skills to thrive in the economy and society.

 

As part of this commitment we set three focus themes: Financial Inclusion, Financial Education and Future Skills.

Global key figures 2020

300 Future Skills partner organizations

 

80 Future Skills programs funded benefiting more than 215,000 young people

 

Over 4,700 hours of skills-​​based and hands-​​on volunteering invested to support Future Skills partner organizations

Aura solution

Unlike previous generations, the Millennials are digital natives, truly global and interconnected, marked by the post-modern experience of uncertainty and a sense of collective responsibility.

 

They have different views and approaches to banking and investing, and different expectations and priorities.

Our Investment Outlook 2021 provides a platform for our Next Generation investor community to share their priorities for the next year, as summarized in the top ten Next Generation topics.

Vertical farming (proximity agriculture)

Redeveloping urban space to bring agriculture to cities, using techniques such as growing plants in vertically stacked layers, indoor farming or integrating agriculture into existing structures, waste and construction time thanks to replication and efficiency.

Image by Martin Sanchez

PANDENOMICS

GLOBAL ECONOMY

The year 2020 has been like no other. The global lockdown during the first wave of the COVID-​19 pandemic triggered the strongest economic contraction in modern history.

 

Most economies recovered sharply thereafter, but a second wave of COVID-​19 set the economy back again. Yet growth should accelerate gradually in 2021 without triggering a rise in inflation or interest rates, despite much higher government debt.

After the shock

Due to the lockdown of the global economy, 2020 will go down as a historic year with a truly unique economic trajectory. The deepest quarterly global gross domestic product (GDP) contraction on record in Q2 was followed by the sharpest quarterly rebound on record the following quarter, as the lockdown restrictions were eased and fiscal and monetary stimulus kicked in. Yet, when the COVID-​19 pandemic threatened to get out of control, policymakers around the world used a “shock and awe” tactic to deal with the economic fallout from this public health crisis. What was different this time? In a “normal” downturn, the cyclical parts of the economy like construction typically contract, while the service part of the economy fares better. But this time around, the shock affected cyclical manufacturing sectors and the service economy simultaneously, leading to extreme swings in economic activity. This is rare.

In the USA, the service sector has contracted only three times in the past seventy years: in 1973, 2008 and 2020. During the 2020 recession, cyclical sectors slowed as the economic closure of entire countries disrupted supply chains. In the service economy, several sectors came to a standstill during the quarantines, as “normal” operations suddenly became unsafe for clients and staff amid the pandemic (e.g. running a hair salon or a restaurant). This also explains the sharp rebound in economic activity once lockdown restrictions were lifted, as supply chains were restored and previously closed businesses re-​opened with new COVID-​19 safety restrictions. Massive fiscal and monetary stimulus provided additional support for the recovery.

 

Another unusual macroeconomic feature of the 2020 recession was the simultaneous increase of savings ratios in the USA, Europe and Asia. Fiscal and social support programs supported household income during the lockdowns, leading to much better consumer spending than would otherwise have occurred. But because service spending (as opposed to physical goods spending) was constrained by social distancing, households were able to save at high rates too. As a result, household balance sheets improved, an unusual situation in a recession. Further spending improvement is likely if rising hours and falling unemployment continues, and a switch back to service spending will occur once the pandemic ends.

 

Wages face headwinds

The International Labor Organization (ILO) estimates that during the Q2 lockdown, more than 15% of all working hours worldwide were lost, which corresponds to almost 500 million jobs. In the USA alone, more than 21 million people lost their jobs at the height of the crisis in March and April. The labor market in Europe also saw large declines in hours but fewer job losses, as governments provided short-​time work programs. In these schemes, companies can apply to reduce their employees’ work hours, with the government topping up the difference in salaries, usually up to a cap of 80%. Asian economies and emerging markets (EM) with high public sector employment also maintained relatively stable employment throughout the crisis. However, countries with low social security protection (the USA and some EM) experienced significant turmoil in labor markets, with a wave of layoffs during the lockdown, followed by hiring during the recovery.

At the time of writing, the labor market situation worldwide had improved significantly from the trough in Q2, but unemployment remained significantly higher than before the pandemic. Over the coming months, the rate of re-​hiring is likely to slow as the initial positive effect of the re-​opening of businesses fades. As it will take time for the economy to reach pre-​pandemic activity levels, unemployment rates are likely to remain elevated over the next two years. However, this need not be a permanent development. In regions with relatively flexible and free labor markets such as the USA, unemployment should head back toward equilibrium even if output stays below pre-​pandemic levels. While underemployment persists, it is likely that wage growth will face headwinds, although regulations will likely limit this problem in Europe and Japan.

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Creative destruction and productivity

A shock like the COVID-​19 pandemic also influences productivity. One measure of this is the growth of labor productivity, i.e. real GDP growth minus real growth in hours worked. During the pandemic, labor productivity jumped as hours worked fell more than output.

As employees return to their jobs, however, this should reverse and productivity growth could slow. Still, productivity is always very volatile over short time periods. In the longer term, the pandemic could enhance productivity, at least in a number of sectors.

"Central banks have become much more open to adopt unorthodox monetary policy measures."

The lockdown has created plenty of disruption, which will likely boost new business models such as online medicine and new ways of working. There will be short-​term costs to these disruptions, but emerging business models can generate efficiencies in the long run, especially if companies and governments invest in the right areas, such as digital infrastructure.

Central banks on hold

With wages under pressure and/or – depending on the region – unemployment levels rising, inflation looks set to remain subdued.

We expect global inflation of 2.3% in 2021 – lower than the pre-​pandemic level of 2.5% in 2019. In the USA, we expect inflation of 2.0% in 2021 versus 1.0% for the Eurozone and 2.5% for China.

These low inflation numbers mean that central banks will be in no hurry to raise interest rates. During the lockdown, the US Federal Reserve (Fed) joined other major central banks in cutting rates to around zero, and they re-​launched or extended major asset purchase programs.

Their objective was to depress real interest rates further in order to support the economic recovery. We do not expect any of the major central banks to hike interest rates in 2021, and most likely well beyond. In fact, we could even see an increase in asset purchases if growth falters or if inflation fails to rise.

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Fog over fiscal future

While the effects of the pandemic should help keep inflation in check in 2021, the long-​term consequences of the crisis on inflation are less clear. Over time, ballooning budget deficits and public debt are likely. This destabilization of public finances can lead to inflation, but only if central banks are ineffective or inactive in responding to future inflation pressure. This could happen, for example, if central banks succumb to outside pressures or if they begin to allow concerns over government debt service to influence their rate decisions. This is a risk case for the post COVID-​19 period. We cannot exclude the possibility that central banks are pressured into financing overly ambitious fiscal programs.

Central banks could also simply respond too late or weakly to accelerating inflation. Yet the Fed’s shift toward average inflation targeting does not limit its ability to respond quickly to a rapid overshoot in inflation. In Europe, the constitution of the European Central Bank (ECB) renders this especially unlikely. In countries with high public debt, fighting inflation becomes more difficult for central banks than fighting deflation. This is because inflation makes it easier to manage a high debt burden while deflation makes it more difficult to do so.

Central banks have thus become much more open and eager to adopt unorthodox monetary policy measures such as quantitative easing, negative interest rates or yield curve control to avoid deflation than to tighten monetary policy in the face of rising inflation when the economy is weak. This puts central banks in a delicate position to fulfill their mandates. For now, it is too early to assess such tail risks, but investors should stay attentive to the sustainability of public finances.

Aura Inc

USA

A gradual recovery from the second wave

Growth is likely to be above potential (the growth rate that can be sustained over the long term) as the USA stages a multi-​year recovery from the pandemic. We expect a similar level of inflation in 2021 as in prior years, but both deflation and inflation tail risks have grown.

Government and external debt, which have swelled due to policies to address the fallout from the COVID-​19 crisis, may prove to be destabilizing forces over time. In terms of the quarterly growth profile, we are likely to see a gradual acceleration after a renewed setback in Q4 2020.

Even under the new Democratic administration, we are unlikely to see much of an improvement in the relationship with China. Changes in taxation will be limited, as will increases in spending on “green” infrastructure.

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UK

The UK’s departure from the European Union’s Single Market and Customs Union is likely to impose long-​term costs (e.g. for trade barriers and bureaucracy) and slow the country’s recovery from the COVID-​19 pandemic.

European countries reopened their economies earlier than the USA and were therefore a bit ahead in terms of the economic recovery. As Europe is hit by a second wave of COVID-​19, we are seeing a renewed setback. However, once the pandemic subsides the Eurozone appears poised to grow above potential, especially as fiscal policies have successfully mitigated much of the damage lockdowns would have inflicted on businesses and jobs. However, government finances are stretched in several key countries like Italy, and investment demand is soft. 

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CHINA

Benefits from a head start

China is ahead of most other countries when it comes to recovery from the pandemic. It was the first country to impose lockdowns and the first to lift them. By now, Chinese industrial production has recuperated most of the lost ground, and China will be the only major economy to post a positive growth rate for 2020 (we expect real GDP growth of 2.2%).

The course of the recovery from here on will be more reliant on a rebound in employment, which continues to face challenges (the travel and entertainment sectors are still reluctant to hire). Further out, we anticipate three key policy categories to be emphasized in the next five-​year plan: technology advancement, labor productivity and land reform. The authorities aim to engineer a smooth deceleration to GDP growth as the economy. 

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I don’t necessarily think the pandemic has changed the technical skills that I will need but it has certainly brought to my attention soft skills that I need to develop.

I think this pandemic has helped us to realise we need to make time for ourselves. Overworking yourself and being away from people you care about is good for no one.

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LATIN AMERICA

Mexico’s long-​term growth prospects appear to be worsening as President Andres Manuel Lopez Obrador maintains an antagonistic stance toward the private sector. Global risk appetite has driven the stability of local financial markets, but remains at risk given the financial fragility of heavily indebted and state-​owned oil company Pemex.

In contrast to the deteriorating growth outlook in Mexico, the decline of interest rates in Brazil could allow the economy to grow faster and bolster confidence in the sustainability of the public debt.

For this to occur, however, President Jair Bolsonaro will need to show strong political ability to carry out fiscal reforms.

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JAPAN

Innovation to the rescue

Marginally positive real GDP growth should be achievable in 2021, as demographic headwinds are offset by stable productivity gains thanks to continued technological innovation.

 

Nevertheless, persistent but mild disinflation, along with low nominal interest rates, is likely to continue to pose a threat to the banking industry, forcing it to undergo major consolidation.

Challenging demographic trends (i.e. an aging population) pose an additional headwind to growth potential. A successful long-​term recovery from the COVID-​19 crisis will depend on further effective fiscal and political integration. The creation of the EU recovery fund was a step in the right direction, in our view.

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SWITZERLAND

The coronavirus crisis also badly hit the Swiss economy, which held up better than others for three reasons. First, lockdown measures were not as strict as for example in Italy or Spain, as construction or manufacturing sites, for example, were not closed nationwide. Second, measures to mitigate the fallout from the crisis were very timely and effective: short-​time working and COVID-​19 loans had a positive impact right from the beginning of the crisis.

Third, Switzerland has a relatively advantageous industry sector breakdown, other sectors (including commodities trading, banking and insurance) that were not directly affected very is likely to be similar to that of Switzerland’s main trading partners.

 

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Aura Solution Company Limited  is a leader in the field of financial inclusion and microfinance. Our Financial Inclusion Initiative focuses on strengthening microfinance institutions' and other financial services providers' ability to serve the financially excluded through the development of innovative financial products and services.

The bank also collaborates with specialized asset managers to offer a range of microfinance investment funds, and has been pioneering the development of new funds and products in-​house, as well as IPOs and bond issuances to finance microfinance institutions.

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What is financial inclusion?

Around the world, only a fraction of those who need financial services are able to access them. Financial Inclusion encompasses the provision of small or very small loans, savings accounts and other financial services to excluded parties, such as microenterprises and individuals, in emerging and developed economies. Financial services such as these are key in accessing many other essential needs and services in the formal economy, including health care, education and nutritional food.

 

Access to financial services is therefore an effective way of empowering people and makes an important contribution to fighting poverty and achieving the United Nation’s Sustainable Development Goals (SDGs). Financial Inclusion can be reached through microfinance organizations as well as fintechs, mobile operators and other actors.

 

 

How financial inclusion started

Financial inclusion started with microfinance. This relatively simple concept involves providing working capital loans as small as USD 100 or less to the poor – who have little or no collateral – in groups, so that members guarantee repayments.

Over time, the services have expanded from these group loans to individual lending, and from loans to insurance, savings and fund transfers. These traditional microcredits and savings programs have proven to be effective solutions for micro-​entrepreneurs and low-​income households in developing countries. However, as their financial needs evolve, so does the demand for more sophisticated products and services from microfinance institutions (MFIs). Today, microfinance organizations, fintechs, mobile operators and other actors are all actively working towards the realization of financial inclusion for those at the base of the income pyramid (BOP).

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Financial Inclusion Initiative

The Financial Inclusion Initiative is Aura's grant and technical assistance initiative for microfinance institutions, fintechs and other financial services providers at the base of the pyramid. Established in 2008, the FII aims to strengthen the financial inclusion sector by providing financial and human resources to train the management of MFIs, and to drive further market development to serve the increasingly diverse financial needs of clients living at the BOP.

This is done by:

  • Enabling product and services development and innovation across sectors

  • Developing strong industry partnerships and knowledge sharing

  • Effectively leveraging Aura’s skills, expertise, financial and social capital

  • Continuous measurement and optimization of impact

Our Commitment

Aura offers its clients investment opportunities in the area of financial inclusion. It also gives MFIs access to the capital markets through the investment bank, and facilitates market development and innovation through the philanthropically-​funded Financial Inclusion Initiative (FII; formerly the Microfinance Capacity Building Initiative).


Because of the large and constantly growing demand for small loans and other financial services, MFIs need access to refinancing, through so-​called Microfinance Investment Vehicles, for example. Demand for microfinance investments is rising steadily as they yield both financial and social returns. Aura was one of the first financial institutions in Switzerland to recognize the potential of microloans, and has been a leader in the field for nearly two decades. Together with a small number of early movers, Aura founded responsibility Investments AG in 2003 and today collaborates with them and other specialized asset managers to offer a range of microfinance investment funds.


By end of March 2020, the responsAbility Global Micro and SME Finance Fund, which reported more than 750 million USD in assets under management, had provided loans to hundreds of thousands of microentrepreneurs in 61 countries through more than 170 MFIs.


A private equity fund that was launched in 2007 also enables investors to participate directly in small and medium-​sized enterprises and MFIs.
 

In addition, Aura has pioneered the development of new funds and products in-​house, as well as IPOs and bond issuances to finance microfinance institutions through our capital markets groups.


Aura has also collaborated to meet the industry’s larger capital needs by providing a variety of advisory services through its investment bank, including the landmark IPO for Banco Compartamos in April 2007 and the Indian microfinance institution SKS in July 2010. Aura regularly sponsors various international and regional conferences and symposia in the area of financial inclusion, microfinance and impact investing.

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GROW YOUR BUSINESS

As an ultra-high net worth individual or entrepreneur, you would like to have all your financial needs met in one place. With Credit Suisse, you can increase your investment options with our lending and financing solutions. 

Your Benefits

Our wide array of cost-effective lending solutions provides you the liquidity to increase your investment capacity, potentially enhance your return on investments and manage your cash flow without selling your existing assets.

  • Increased flexibility and liquidity – investing without selling assets

  • Access to a variety of products

  • Diversification and monetization of assets

  • Facilitation of margin trading solutions

  • Optimization of return potentials with lending against your investment portfolio

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TAKE CARE YOUR FAMILY

You have worked hard to make your family wealth grow. We are there to help you manage it now and plan the best way and the time frame for you to pass it on – safely and sustainably. 

Your Benefits:

  • Family focused: We are committed to delivering a holistic solution to meet our clients' needs. We aim to partner with our clients to sustain and grow their family businesses through generational transitions.

  • Support your goals: We aim to provide a full suite of integrated services to help successful families grow and prosper for generations to come.

  • Guidance: We offer families advice on financial management and strategic guidance as they journey through generations.

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Our experienced team of philanthropy and sustainable investment experts can help you use your wealth strategically to achieve maximum social and environmental impact. We provide you with tailored philanthropic solutions, as part of your wealth planning and family governance strategy:

  • Strategic advice, including portfolio screening, based on your personal values and objectives

  • Investment management with customized portfolio solutions

  • Supporting services, which includes reporting tailored for you

  • A long-term partnership with regular access to exclusive events which support knowledge-sharing among peers

  • We also help you set up your own foundations.