The KPMG Difference

Magazine April 2016

How to win in the era of digitalization?

Fintech: A digital revolution underfoot Auto connectivity and digitalization Adoption of standards: an added value for your organization?

KPMG kpmg.com/be

The KPMG difference 1 Table of contents

Time to catch up! 4 The European digital economy decreased by 16%, while the global digital economy grew by 40%. An interview with Dominique Leroy

Fintech - A digital revolution underfoot: 8 opportunity or threat?

Auto connectivity and digitalization now #1 key 10 trend through to 2025

Adoption of standards: an added value for your 12 organization?

KPMG in Belgium continues to support 15 Golf until 2018

2 The KPMG difference The KPMG difference 3 Digital economy

applications. In terms of internet We do not have an internal connection speeds, it’s actually ‘advertising model.’ Our primary one of the top three. The main focus is on generating revenue by competition or threat doesn’t providing content. You should also come in the first place from the keep in mind that, due to privacy other Belgian operators but rather regulations, the advertising model Time to catch up! from the big American players. is strictly regulated in Belgium. For example, let’s consider mobile In fact, the Belgian government telephony. Young people don’t should make this possible to The European digital economy decreased by 16%, phone as much but are now just ensure a level playing field for while the global digital economy grew by 40%. as likely to use Facebook, Twitter, all the players. But that is not or Google. The business model happening or in any case it’s An interview with Dominique Leroy of these major players, which is happening much too slowly. based on advertising revenue, is This results in a competitive also very solid. disadvantage. Perhaps we should encourage - Isn’t it more logical to point Proximus has gone through a big metamorphosis in the past the use of mobile telephone the finger at Europe in this services even more or try to regard? few years. An ambitious investment plan focusing on innovation make these services more - Dominique Leroy: That’s a good relevant? Proximus could point. What is Europe doing? has been prepared and signed by Dominique Leroy. For her also opt for a similar model First everything is regulated and impressive achievements, she was recently awarded the title of by generating advertising then, if something is forgotten, revenues. regulations are also created for Trends Manager of the Year 2015 in Wallonia. However, on the - Dominique Leroy: That is a lot less that as well. The situation in the 27th floor of the Proximus Tower, the always modest CEO puts self-evident than you might think. US is very different. In principle, her contribution into perspective. “Our most important task is to ensure that our customers are satisfied and happy.”

- Can we still call Proximus a group. The range of services regardless of whether it involves telecom company at present? that we can provide can be very a Facebook application, Google, - Dominique Leroy: Yes. broad. For some, it’s all about Twitter or fast digital connections Telecommunications is still the cloud, for others the focus in industrial zones. All these our core activity. The business is on the new way of working, screens must be continually of Proximus is to provide keeping data costs under control, supplied with bandwidth at ‘connectivity’. That is the security, access control, or other very high speeds. That is the reason for our existence. All our applications. The world around us challenge. And that requires investments also point in that has changed: we now live in an investments. direction. Accordingly, we do age in which the Internet of Things everything we can to strengthen is important. our network, regardless of - What does this mean Europe is whether it involves Wi-Fi, data specifically for Proximus management, telephone services, as a provider of internet or something else. After all, at limping connectivity? the end of the day, consumers, - Dominique Leroy: In our as well as businesses, must at the rear rapidly changing digital world, be able to benefit from our data usage is also increasing drive to guarantee and improve exponential. That is true for the - What are the biggest threats connectivity. Both groups are market for private individuals as and opportunities faced by a entitled to high expectations in well as the commercial sector. I company such as Proximus? that regard. It’s our job to deliver always say that we have to make - Dominique Leroy: I think added value, although customer sure that our clients’ computer Belgium is one of the leaders in expectations can of course screens ‘come to life.’ This is true Europe when it comes to internet differ, depending on the target

4 The KPMG difference The KPMG difference 5 Digital economy

everything is permitted there. Secondly, no sector is safe say that we also need to remain Regulations are implemented only from disruption. Just look at the open to new creative ideas from The world in case of excesses. As a result, emergence of companies such elsewhere. there is a much more vibrant as Uber or Netflix from nowhere. belongs to business environment in the US Thirdly, the world belongs to - How difficult is it for manage- and many more innovations are those who believe in innovation. ment to chart an independent those who developed there. So no one should The drive towards innovation path in relation to your biggest be surprised that Europe is limping is unstoppable. Companies shareholder, namely the Belgian behind. can therefore never position government? believe in themselves flexible enough. They - Dominique Leroy: A shareholder - Can you support that with is satisfied if the customer innovation. numbers? should ask themselves what can happen in the market and how is satisfied. It’s our job, as - Dominique Leroy: No problem management, to keep the (sits up and reaches for an can we anticipate this as best The drive as possible. The need to make customers happy every day. That’s international comparative study). the best way to remain financially Since 2007, the total global digital policy frameworks more efficient, towards including data management, healthy and keep the shareholder economy has grown by 40%, on your side. In the final analysis, from US$2.9 billion to over US$4. also needs to be considered in innovation is that regard. It is in this area that the government wants nothing In the US, that figure was even more than to create sustainable higher, namely 56%. The same Proximus can be of great service unstoppable. to businesses. added value for the Belgian was true for Asia with 57%. So economy. That’s also why our how did Europe do? Europe saw - What do you think of the investment proposition was given Companies a decrease of 16%. That says Dominique Leroy proposition in the book by Leo a favorable reception. However, it all. Europe is missing out on Neels, Jo Caudron, Dirk Wauters the Belgian government should of can therefore enormous opportunities and is and Geert Wellens, Vlaanderen more efficient, and also smarter content. In general, you could say course also never lose sight of its therefore seeing a slowdown in Inc (Flanders Inc.), about the (via data mining) in many areas. that the big American companies role as regulator. In that respect, never position economic growth. need for cross-media and cross- In short: help them become more aren’t really in tune with the its first responsibility is to ensure platform cooperation between competitive. European market; as a matter that there is enough competition But let’s not get overly the Belgian media, distributors, themselves of fact, they don’t even really in the market. If it’s a level playing pessimistic, because that’s not and producers to enable them understand this market. field for everyone concerned, then my style. I think the tide is turning to compete with the foreign, flexible The government has now Proximus can operate like any for the better in Belgium, and that Act locally, i.e. American, giants such as approved legislation that will make private company, although it has a the digital economy is gradually Google, Facebook or Netflix? enough. They it possible to sell shares in the special relationship with the state. starting to recover. Proximus think By doing so, they could also future. In our role as management aims to play a prominent role in keep the advertising revenues - Finally: Not long ago, Proximus of Proximus, we do not get should ask this regard. Rather than paying a in their own country and be got caught up in a major globally. involved in government policy with dividend, we decided to further able to continue producing security breach scandal. What themselves strengthen our focus on making regard to its shareholding, but we - In view of the global context, and distributing the resources lessons have you learned from investments in the future. Instead are in favor of a strong and stable Proximus, which is now largely needed for top-tier productions. that? of the previously planned 750 dominant shareholder. what can controlled by the Belgian - Dominique Leroy: As I see it, - Dominique Leroy: In June million Euros, we’re investing government, would be an ideal it’s not a question of this or that, 2013, our security officers 900 million Euros annually. After happen in the acquisition target for major but rather this and that. It seems discovered that we had been all, we really do believe in the Good advice foreign companies with an logical to me that content must hacked. We then carried out a digital revolution. And we’re market and appetite. Don’t you think so? be of a primarily local nature. major cleanup operation and already reaping the benefits - Dominique Leroy: I don’t think - What good advice would you Just look at the success realized removed the malware. At no time of that approach. I’m talking consolidation in the telecom want to give to our readers, by VTM with local productions. did our customers experience how can we about investments from which sector will happen all that soon. that financial/operational/IT On the other hand, for certain any problems, and we always businesses as well as private managers could connect to and applications such as Netflix, I communicated transparently. We anticipate this individuals benefit. This includes - Why not? that would catch their interest think it’s logical for us to also look learned quite a lot ourselves from new applications in the field of - Dominique Leroy: I see three and encourage them to reflect for cooperation with big foreign this experience, but we have also as best as cyber security for businesses reasons. One: because the seriously about their own players. I’ll give you an example. given customers and businesses or new opportunities when it investments in networks are company or situation? How did Uber originate? It started valuable advice regarding their possible. comes to working from home for still primarily a European affair. - Dominique Leroy: In the first because two Americans visiting security. In addition, Proximus example. In the business world, Two: because the services place, everyone should realize Paris came to the conclusion that invested an extra €15 million in there is a growing awareness provided are largely localized. And that the linear world is history they had to wait up to half an hour security, and we were one of that the Internet of Things can three: because our customers and that the digital world is for a taxi and that it was also much those who took the initiative for help companies become better, are primarily interested in local impacting almost everything. too expensive. By which I mean to the Cyber Security Coalition. ■

6 The KPMG difference The KPMG difference 7 Fintech

Fintech - A digital The Top 10 companies in the Fintech 100 for 2015 are:

1. ZhongAn (China) 2. Oscar (USA) revolution underfoot: 3. Wealthfront (USA) 4. Qufenqi (China) 5. Funding Circle (UK) 6. Kreditech (Germany) 7. Avant (USA) 8. Atom Bank (UK) opportunity or threat? 9. Klarna () 10. OurCrowd (Israel)

Over the past 3 years, global fintech financing has risen seven-fold MyMicroInvest’s unique approach allows individuals to The answer from the banks select and invest alongside professionals in European Many emerging fintech ventures are capitalizing on to an estimated US$20 billion for 2015, a rise of 66% compared to startups and SME’s. Individuals can invest €100 or more the ever-increasing market needs. Rather than feeling in innovative companies. If those companies manage threatened by these new models, traditional financial the level of investment in 2014. A digital revolution is underway in to collect enough money from the general public, services organizations are finding a way to integrate the Fintech sector. professional investors can decide whether they want to a fintech initiative into their existing businesses, and co-invest in this project. Ever since the launch in 2012, seize the opportunity themselves. MyMicroInvest has funded more than 40 SMEs on its Some of these global actors decided to jump on the Fintech, a combination of the words ‘financial’ experience and a demonstrated ability to do one platform for more than €12 million from a community bandwagon. Here’s what some of the major SIFIs are and ‘technology’, stands for innovation in financial thing in the market better than everyone else. of 30,000 investors. The company is currently looking to are doing: services. Whether that means new products from gain a foothold in , the Netherlands, , Swiss • Investing in startup programs to incubate fintech new startups, or new approaches adopted by existing The Fintech 100 includes the leading 50 fintech and Poland, perhaps putting Belgium on the map?1 companies (43%) players, technology plays a crucial role. companies across the globe, and the most intriguing • Setting up venture funds to fund fintech companies 50 ‘emerging stars’ – exciting new fintechs with (20%) In an industry that will soon be irrevocably changed bold, disruptive, and potentially game-changing ideas 7 The Fintech 100 in 2015 includes: • Partnering with fintech companies (20%) by the disruptive effect of innovation and regulation, – expanding on the success of last year’s list. This 25 25 payments and transactions • Acquiring fintech companies (10%) 14 the companies that are actively pursuing fintech year companies from 19 countries around the world companies • Launching their own fintech subsidiaries (7%)2 opportunities are those most likely to succeed. are represented in the Fintech 100. The study also 22 lending companies Already, some of the world’s major financial centers showed that the top 100 of 2015 are increasingly 14 wealth companies BBVA for example is increasing its fintech fund are equally becoming known as centers for fintech focusing on new technologies and improving the 22 7 insurance companies by investing US$250 million into a new and innovation: London and New York, and more recently customer experience. independently managed outfit called Propel Venture Sydney and Berlin. Fintech is clearly not to be Partners3. ignored. The next question one must ask: “who are MyMicroInvest – A Belgian example 7 The Fintech 100 in 2015 includes: the most innovative global fintech companies across “Crowdfunding is demonstrating its capacity to 25 25 payments and transactions the globe?” offer entrepreneurs with a real alternative source 14 companies of funding and to provide individual investors the Contact: 22 lending companies Insights from Fintech 100 opportunity to participate to quality projects.” - Vincent Piron 14 wealth companies That’s why, together with H2 Venture, KPMG Olivier de Duve, Co-Founder & CEO. 10 Partner The Fintech 100 in 2015 includes: 22 7 insurance companies KPMG Advisory International took a closer look at the fintech sector 12 40 companies from The Americas and composed the second annual ‘Fintech 100’. It is It’s not a coincidence that MyMicroInvest, a Belgian 40 T: +32 2 708 44 98 an international report on the most innovative Fintech “Venture Capital” investment platform, ended up in Source: All data are taken from “Fintech 100:20 Leading companies Global Fintech from the Innovators EMEA Report 2015” E: [email protected] companies. The Fintech 100 are those companies KPMG and H2 Ventures’ ‘Fintech 100.’ At the start of 18 18 companies from the UK using technology to its best advantage and driving this year, MyMicroInvest collected more than €1,6 1 Source: Tibau, Frederik. “MyMicroInvest12 companies verzamelt from1,632 Asia miljoen euro tijdens live crowdfunding”, Datanews 21 January 2016, a new wave of change within the financial services million from 210 investors during a live crowdfunding http://datanews.knack.be/ict/mymicroinvest-verzamelt-1-632-miljoen-euro-tijdens-live-crowdfunding/article-normal-648565.html.20 10 companies from Australia and Web. 2 Source: Swamy, Avinash. “How are banksNew Zealand reacting to FinTech?”, Medium 21 January 2015, industry. These companies are connected in a shared action, the best Belgian result in crowdfunding ever. https://medium.com/@avinashswamy/how-are-banks-reacting-to-fintech-891617c69321#.pevw7ot3b. Web commitment to excellence, superior customer Their objective to reach 1 million within an hour was 3 Source: “BBVA increases newly independent fintech venture fund to $250m”, Finextra 11 February 2016, https://www.finextra.com/newsarticle/28461/bbva-increases-newly-independent-fintech-venture-fund-to-250m-.10 Web. already achieved after just 17 minutes. The Fintech 100 in 2015 includes: 12 40 40 companies from The Americas 8 The KPMG difference 20 companies from the EMEA The KPMG difference 9 18 18 companies from the UK 12 companies from Asia 20 10 companies from Australia and New Zealand Automotive

providers and, for the first time, 54% of all also ICT companies. Moreover, also over 2.100 consumers from around consumers indicate Auto the world were interviewed. The conclusions of the survey that consumer data indicate a major shift in the mindset of auto executives and a new should belong to the focus of the automotive industry connectivity from a growth model towards driver of the vehicle. connectivity and digitalization. Indeed, a large part of global executives believe that in the near drivers in this respect is the Total future ICT companies will bring Cost of Ownership (“TCO”) ground breaking innovations to the and digitalization sector. Self-driving features are In Belgium the car sharing economy expected to be absolute purchasing is on the rise. The use of car sharing criteria on a longer term. services has increased significantly compared to previous years. The The consequences of dieselgate demand, from customers as well as and the discussion on emission manufacturers, for a more flexible now #1 key tests have made the executives legal framework for all sorts of even more aware of the need to mobility services and integrated invest in alternative technologies mobility solutions has become such as hybrid and electric vehicles. louder than ever before, especially Note that consumers as well as in a densely populated country constructors prefer hybrid cars over where congestion is a key concern. trend through pure battery electric vehicles. While connectivity and digitalization The local regulatory and legislative is dominating the auto executives’ framework will play an important strategic agenda, it becomes clear guiding role. As a local example, that even here customer trust the Flemish government recently will be important. Although an to 2025 adjusted the car registration tax astonishing 32% of executives regime. For cars registered as expect most consumers to trust from 1st January 2016 the car the automotive industry when it th For the 17 consecutive year, KPMG proudly registration tax will be calculated comes to managing their data, the based on ecological parameters results clearly show: consumers presents its Global Automotive Executive providing significant advantages would trust no one but themselves. Survey in which it investigates the current for environmental friendly cars and This indicates that the car industry whereby diesel vehicles are worse today believes they have a higher state and future prospects of the worldwide of. Also the rates for the annual trust function than consumers automotive industry. road taxes have been adjusted actually reflect. A clear majority of accordingly. Moreover, individuals all consumers (54%), especially can receive a premium (up to those from North America, Eastern The findings and conclusions EUR 5.000) from the Flemish and Western Europe, as well as drawn from this survey are based government when buying a new from South America, indicate that on the insights of 800 executives zero-emission vehicle. especially consumer data should from all parts of the world. 50 belong to the owner or driver of the percent of which are actual C-level The KPMG Global Automotive vehicle. executives (i.e. CEOs, Presidents, Executive Survey also shows Contact: or Chairmen). The respondents that shared mobility services The key question remains who Frank Vancamp represent companies of all parts (car sharing) are becoming more owns the up- and downstream Partner of the automotive value chain attractive, also in mature markets data generated in and around a KPMG Tax and Legal including vehicle manufacturers, such as Belgium. The focus evolves vehicle. The consumers, the car Advisers suppliers, dealers, financial towards flexible mobility rather manufacturer or ICT sector third T: +32 2 708 36 70 services providers, mobility service than car ownership. One of the key parties? E: [email protected]

10 The KPMG difference The KPMG difference 11 Physical Asset Management

Standards are omnipresent in the world of business and in our everyday lives: the A4 format, 3G networking, technical standards, Adoption of management standards etc. Although we come into contact with them every day, for many people standards are invisible and therefore unknown. But what are standards actually?

standards A standard is a voluntary Five advantages of the use of In the picture: management agreement standards standards An added value for your organization? A standard is an agreement In recent years, the requirement that stakeholders make The use of standards offers has arisen in the business world voluntarily about a product, quite a number of advantages: to create greater clarity and a service, a process or a 1. Companies achieve greater transparency about a number of method. Standards reflect efficiency, effectiveness, strategic topics such as quality, good workmanship in industry, quality, and safety in their sustainability, or information the services sector, and in business processes, which security. Management standards governance. The initiative for means they cut costs and are a suitable instrument for developing a standard usually convey a positive image. achieving these information arises in the business world, needs, because they lay down where producers or service 2. By applying standards, the a number of management providers reach agreements, quality of products or service principles that are supported but where other players in the increases resulting in higher internationally and therefore value chain such as suppliers, customer satisfaction and meet the needs of businesses. customers, regulators or trust in the company. societal stakeholders can make The best-known management their contribution. Although 3. Standards are also a standards are ISO 9001 and a standard is non-binding in major asset for gaining ISO 14001, which stipulate nature - a standard is not a access to new markets. the requirements for law or regulation - compliance With approximately 40,000 quality management and with a standard may become European or international environmental management mandatory, e.g. if legislation standards, products and systems respectively. In refers to a standard. This is the services compliant to these the latest versions of these case for CE marking. Contracts standards are better accepted standards, attention is paid can also refer to the application in other countries, thus in a consistent manner to of standards which is another boosting exports. leadership, competencies, risk, way they can be made binding and compliance management. 4. Implementation of standards for the contracting parties. enables a number of business Although a standard is non- risks to be better understood binding in nature - a standard and therefore, better is not a law or regulation - controlled. compliance with a standard 5. And finally, standards support may become mandatory, e.g. if innovation and access to legislation refers to a standard. know-how. This is the case for CE marking. Contracts can also refer to the application of standards which is another way they can be made binding for the contracting parties.

12 The KPMG difference The KPMG difference 13 Four reasons Event to collaborate KPMG in Belgium with the NBN

With 40,000 standards continues to support 1 to which thousands of experts worldwide have contributed, NBN gives you access to a lot of sector- Golf until 2018 know how via its catalogue of standards: production specifications, test standards, quality requirements, services standards, management The sport of golf, with the precision of the game and the standards; sooner or later, every The scale of international Bureau for Standardization business will be involved in determination involved to succeed, mimics KPMG’s own mindset management standards is very (NBN): your independent source implementing these standards. broad, and the range is expanding for standards in Belgium Moreover, the NBN has ties to towards business, with our dedication to our clients, and our fast. These include: information a number of sector federations, expertise with highly technical and complex matters. security (ISO 27001), physical The NBN (Bureau for which means that the NBN asset management (ISO 55001), Standardization) is responsible can easily refer companies for risk management (ISO 31000), for the development and sale additional input. energy management (ISO 50001), of standards in Belgium. In The values of this sport such as etiquette, fair The KPMG Trophy, kicks off 9 June and runs until 12 etc. Quite a few developments are addition, the NBN organizes If you would like access to play, discipline and the education of young talents June, at the Cleydael Golf & Country Club in Antwerp also anticipated in years to come training courses about the use 2 the content of standards, correspond to the values of our company. KPMG (Aartselaar). in the field of Human Resources of management standards. the NBN has devised a in Belgium’s involvement in the sport of golf not number of custom solutions in only helps to support a significant golf tournament, Management. In Belgium, the NBN is the Sponsorship of the (Golf) Belgian Team the online myNBN platform. This the KPMG Trophy, but also demonstrates KPMG’s representative of ISO and of the At the same time, KPMG in Belgium is supporting platform is accessible anywhere, commitment to the development, advancement, Some insights on the ISO CEN. The NBN is an institution of the [Golf] Belgian Team of the Royal Belgian Golf anytime, and always contains the and empowerment of the golf sport through the standard for physical Asset public utility, which comes under Federation. Through this support, KPMG wants to latest version of the standards. sponsorship of the Royal Belgian Golf Federation and Management (ISO 55001) the responsibility of the Federal commit itself to promote further the development of Minister in charge of the Economy. Furthermore, customers can the (Golf) Belgian Team. compile a personalised collection this sport and its promising young players. The (Golf) The standard for physical Asset Belgian Team in fact groups our best talented Belgian Management being ISO 55001 The NBN is the Belgian knowledge of standards, which they can consult, print out, and expand. The KPMG Trophy 2016 amateur golf players and supports them to reach a explicitly places assets in a center for all activities related to The KPMG Trophy is a major golf championship with the higher level through optimal coaching. The goal of value context, aligning asset standardization. The NBN plays a Innovative companies opt purpose of promoting the golf sport to a higher level in this approach is to realize a Top 15 European Ranking, management objectives to the societal role by helping businesses, 3 to cooperate in writing a Belgium. This event will provide a great opportunity to a Top 32 World Ranking on the short term and a organization’s strategic objectives. consumers, government, and other standard. For a number of meet and see top golf players. Just like last year, KPMG participation to the Olympics… ISO 55001 defines “asset” broadly stakeholders to improve quality them, this activity is of strategic in Belgium will continue to be the main partner of the as “Something that has potential in a competitive and international importance because in this way, Belgian event on Europe’s second tier golf tour. A nice example of our upcoming talents and member or actual value for an organization”. context. they can influence the market of the (Golf) Belgian Team is Thomas Detry, our best That value can be tangible or for new products, services and national amateur golf player. He has recently been intangible, financial or non-financial, More info: www.nbn.be their value chain. As a member awarded the Jack du Vivier challenge cup and has and includes consideration of asset of the International Organization decided to become a fully professional golf player. risk and liabilities. for Standardization (ISO) and His first tournament? The KPMG Trophy! the European Committee for Our experts of the KPMG Global Standardization (CEN), the NBN is Our support comes at a perfect time, as golf will be Asset Management Competence Contact: the contact point par excellence. highlighted in the coming year as it enters the 2016 Center are specialised in both Daniël Pairon Summer Olympics for the first time since 1904. The implementing this standard for Partner - Global You can contact the NBN Golf sport is a highly technical and demanding sport your organization’s “physical Lead KPMG Asset 4 Academy for training that is now recognized for its complexity through the assets” and in performing Management courses about the Olympics participation. maturity assessments and audits T: +32 3 821 19 41 use of the most widely-used for accreditation of ISO 55001. E: [email protected] management standards. More information can be found on www.kpmgtrophy.be

14 The KPMG difference The KPMG difference 15 We deliver on our commitments

At KPMG we are committed to delivering value to our clients.

Our efforts have been recognized by two awards that we recently won. We have been named a leader in the area of cybersecurity in the Forrester Wave Security Consulting Services report, the most authoritative analyst report on the global cyber security consulting market. Furthermore, KPMG was also named “Sustainable Firm of the Year” by the International Accounting Bulletin for the fourth consecutive year. kpmg.com/be

The information contained in this magazine is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. This magazine is also available in Dutch and in French.

© 2016 KPMG Support Services, a Belgian Economic Interest Grouping (“ESV/GIE”) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Belgium.