E-commerce firms make moves on growth opportunities in KSA

Updated 20 November 2012
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E-commerce firms make moves on growth opportunities in KSA

International investors are setting their sights on the Middle East’s young but booming e-commerce industry, and particularly on the promising opportunity in the Saudi market.
Paypal announced the launch of its Middle East operations on Nov. 14, and three of the Middle East’s largest online retailers - Namshi, Souq.com and MarkaVIP — have all raised rounds of funding this year for major expansion.
Namshi, a UAE-based online retailer focusing on fashion and footwear, has secured 20 million dollars from JP Morgan Chase and Blakeney Management; Marka VIP, the Middle East’s largest flash sales site focusing on luxury goods, raised 10 million from multiple international venture capital firms; and Souq.com, the region’s largest online retailer with a customer base of 8 million, secured $45 million end of last month from Naspers, a South African media company, and Tiger Global, a New York hedge fund.
Saudi Arabia is the top destination for these e-commerce businesses. It ranks second in e-commerce sales in the GCC, and more importantly represents the biggest retail sector in the region, with the promise of huge growth in e-commerce in the near future. The challenges and opportunities of building an e-commerce business in Saudi Arabia is one of the central topics that will be explored in depth at ArabNet Riyadh, the largest gathering of digital executives and entrepreneurs in the Kingdom, taking place on Nov. 20-21 at the Four Seasons Hotel. The forum will bring together more than 50 expert speakers and 600 attendees, and is hosted by the Badir Program for Technology Incubators, part of the King Abdulaziz City for Science and Technology, and supported by the Communications and Information Technology Commission of Saudi Arabia.
“Being able to capture the Saudi market is a critical success factor for e-commerce ventures in the Arab region,” said Hassan Mikail, regional manager for E-Commerce at Aramex, which is the e-commerce partner for ArabNet Riyadh. “All eyes are on Riyadh, where the next phase of rapid growth will be in this sector.”
Some of the main challenges facing e-commerce businesses in Saudi Arabia and the region more broadly are payment and logistics. More than 70 percent of online buyers in the region choose cash on delivery as their preferred mode of payment, straining the cash flow of e-commerce startups. Cash on delivery purchases are 7 times more likely to be returned, according to Aramex, and this puts e-commerce companies at the risk of incurring extra shipping costs as well. Paypal’s recent entrance to the market could help alleviate some of these issues and stimulate rapid growth in the sector.

Paypal’s new Managing Director for Middle East and North Africa Elias Ghanem, said: “Paypal has big ambitions to help millions of Internet users to shop conveniently and safely online within the MENA region.”
Beyond online retail, there are also tremendous opportunities for companies that can help existing offline businesses transition to the digital realm. Over 85 percent of businesses in the GCC have no online presence, according to Google; these businesses are losing out on the 66 percent of MENA Internet users who use the web to search for products and services. Companies like Jeeran, a business reviews’ site, and Fursaty, a group-buying site, are stepping in to fill the gap and providing merchants with their first glimpse of the benefits of going online and raising consumer awareness, further driving e-commerce in the region. Jeeran and Fursaty will be discussing the ways in which they are doing this at ArabNet Riyadh.
E-commerce markets in the MENA are evolving and the online customer base is rapidly expanding. Co-Founder and Managing Director of Namshi.com Hosam Arab said: "The Middle East region is finally ripe for e-commerce as governments ease restrictions on regional trade, logistics providers scramble to improve their services to e-commerce retailers and their customers, and investment funds pour into the sector after the emergence of a number of exciting regional success stories."


Wells Fargo to pay $1B for mortgage, auto lending abuses

Updated 20 April 2018
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Wells Fargo to pay $1B for mortgage, auto lending abuses

  • Fine the latest in a series of setbacks for US bank
  • Federal Reserve in February prohibited lender from growing assets until governance issues addressed

Wells Fargo will pay $1 billion to federal regulators to settle charges tied to its mortgage and auto lending business, the latest chapter in years-long, wide-ranging scandal at the banking giant. However, it appears that none of the $1 billion will go directly to the victims of Wells Fargo’s abuses.
In a settlement announced Friday, Wells will pay $500 million to the Office of the Comptroller of the Currency, its main national bank regulator, as well as a net $500 million to the Consumer Financial Protection Bureau.
The action by the CFPB is notable because it is the first penalty imposed by the bureau under Mick Mulvaney, who President Trump appointed to take over the consumer watchdog agency in late November. The $500 million is also the largest penalty imposed by the CFPB in its history, the previous being a $100 million penalty also against Wells Fargo, and matches the largest fine ever handed out by the Comptroller of the Currency, which fined HSBC $500 million in 2012.
The fine against Wells Fargo had been expected. The company disclosed last week that it was in discussions with federal authorities over a possible settlement related to its mortgage and auto lending businesses, and that the fine could be as much as $1 billion.
The settlement also contains other requirements that would restrict Wells Fargo’s business. The bank will need to come with a risk management plan to be approved by bank regulators, and get approval from bank regulators before hiring senior employees.
“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” said Wells Fargo Chief Executive Tim Sloan in a statement.
The $500 million paid to the Comptroller of the Currency will be paid directly to the US Treasury, according to the order. The $500 million paid to the CFPB will go into the CFPB’s civil penalties fund, which is used to help consumers who might have been impacted in other cases. But zero dollars of either penalty is going directly to Wells Fargo’s victims.
The bank has already been reimbursing customers in its auto and mortgage businesses for these abuses. Wells Fargo has been refunding auto loan customers since July and been mailing refund checks to impacted mortgage customers since December.
While banks have benefited from looser regulations and lower taxes under President Trump, Wells Fargo has been called out specifically by Trump as a bank that needed to be punished for its bad behavior.
“Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!,” Trump wrote on Twitter back in December.
The abuses being addressed Friday are not tied directly to Wells Fargo’s well-known sales practices scandal, where the bank admitted its employees opened as much as 3.5 million bank and credit card accounts without getting customers’ authorization. But they do involve significant parts of the bank’s businesses: auto lending and mortgages.
Last summer Wells Fargo admitted that hundreds of thousands of its auto loan customers had been sold auto insurance that they did not want or need. In thousands of cases, customers who could not afford the combined auto loan and extra insurance payment fell behind on their payments and had their cars repossessed.
In a separate case, Wells Fargo also admitted that thousands of customers had to pay unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation’s largest mortgage lender.
Wells Fargo has been under intense scrutiny by federal regulators for several months. The Federal Reserve took a historic action earlier this year by mandating that Wells Fargo could not grow larger than the $1.95 trillion in assets that it currency held and required the bank to replace several directors on its board. The Federal Reserve cited “widespread abuses” as its reason for taking such an action.
This settlement does not involve Wells Fargo’s wealth management business, which is reportedly under investigation for improprieties similar to those that impacted its consumer bank. Nor does this involve an investigation into the bank’s currency trading business.
Consumer advocates have been critical of the Trump administration’s record since it took over the CFPB late last year. However, advocates were pleased to see Wells Fargo held to account.
“Today’s billion dollar fine is an important development and a fitting penalty given the severity of Wells Fargo’s fraudulent and abusive practices,” said Pamela Banks, senior policy counsel for Consumers Union.