finance

Outsourcing credit lets the Chinese EV maker scale fast while leaving asset risks to lenders.

This article appears in the July/August issue of Global Finance Magazine.

Walk the streets of cities like Valencia or Paris, and you don’t need the data to see BYD everywhere, especially in ride-hailing fleets and private transportation. These days, the sleek logo you notice isn’t always Tesla’s or Kia’s; it’s often BYD’s.   

Sales of BYD’s electric vehicles surged across Europe last year, up roughly 270% year over year. In the first quarter of 2026, sales increased by another 156%. 

While most coverage frames this as a product story, the bigger story is financing: BYD’s rise has less to do with design or price than with how the cars are financed.

BYD hasn’t expanded in Europe by building a traditional captive-finance arm. Instead, it has plugged directly into the region’s existing banking and leasing infrastructure, achieving captive-finance reach without the balance-sheet burden. In doing so, it has turned Europe’s financial system into a distribution engine that moves vehicles by turning them into financeable assets.

At first glance, BYD’s success seems straightforward: strong demand, rapid adoption, and a new entrant quickly gaining share. But in a market where vehicles are often financed, leased, and cycled through multiple channels before reaching long-term ownership, the headline numbers don’t always tell the whole story. The surge in European BYD registrations may signal demand and financing strength, or it may reflect window dressing shaped by the way the system works.

Turning Cars Into Collateral 

BYD relies on a familiar but strategically deployed set of financing and leasing arrangements. Vehicles are sold in bulk to leasing companies, fleet operators, and dealer networks, which then finance or lease them to end users, including corporate clients, ride-hailing drivers, and private buyers. European banks and auto-finance platforms provide the underlying credit, while leasing firms structure contracts and manage residual-value assumptions. 

What stands out in BYD’s case is the speed and scale of the operation.

“European OEMs [original equipment manufacturers] built their captive finance arms over 30 to 40 years, and those businesses now function as profit centers,” says Stefan Bratzel, founder and executive director of the Center of Automotive Management (CAM) in Bergisch Gladbach, Germany. “BYD cannot replicate this overnight, nor does it try to.”

Instead, he notes, the company is partnering with established asset finance providers to accelerate market entry. BYD gains “speed to market at the cost of margin while it accumulates the balance sheet and regulatory standing to eventually internalize these functions.”

In effect, BYD is compressing a decades-long buildout of captive finance into a partner-led model, trading margin and control for faster access to Europe’s credit and leasing channels.

It’s easy to see the appeal for lenders: Vehicles placed into leasing or fleet programs become financeable units, bundled into loan or lease portfolios that generate predictable cash flow. In a market where electrification is both a policy priority and an investment theme, high-volume EV programs provide a steady pipeline of assets.

Window Dressing?

The speed of BYD’s expansion raises questions about the numbers.

“BYD’s channel mix is improving,” says Matthias Schmidt, an independent analyst tracking the European auto market. Retail share in Germany rose to 32.5% of volume in the first four months of 2026, compared with 12.4% for all of last year, suggesting a shift toward a more balanced sales mix. But the relationship between registrations and vehicles actually on the road is less straightforward.

“Out of more than 30,472 BYD models registered in Germany since it entered the market in December 2022, only 18,536 are currently on the road,” says Schmidt, suggesting that “after models have been registered, they are then being exported to other European markets as used-car inventory or are going back into used-car inventory in Germany. This could be a strategy to demonstrate to market observers that they are performing better in Europe’s largest market than they actually are. We call it window-dressing the data.”

In a system driven by leasing, fleet placement, and dealer networks, that gap is not necessarily unusual. Vehicles can be registered into the channel before reaching long-term ownership, then repositioned through resale, export, or short-term use across markets. For financial stakeholders, the distinction matters: registrations may signal momentum, but they do not necessarily show sustained demand.

What Banks Are Really Underwriting

For the institutions partnering with BYD and helping fund its expansion, the focus is less on BYD’s near-term concern — speed to market — and more on how those assets perform over time.

Residual value assumptions underpin the economics of leasing. If vehicles retain value, the system works: Monthly payments remain competitive, credit risk remains contained, and lenders and leasing firms can recycle assets efficiently through secondary markets. When they don’t, the economics tighten quickly.

“The EV residual value question is the single biggest structural challenge in automotive finance right now,” Bratzel says. “Whoever solves that problem credibly — either through data, scale, or balance sheet — will have a significant structural advantage.”

Bratzel points to one potential factor that could shape how banks ultimately price that risk: “Vertical integration around the battery — especially battery cells — can have a positive impact on risk assessments, as this is based on a lot of their own data.”

BYD’s advantage stems in part from how much of that data it controls. Unlike many automakers that rely on third-party suppliers for critical components, the company produces its own battery cells and key parts of the EV supply chain. That level of vertical integration gives BYD clearer visibility into battery performance over time, arguably the most important variable in determining how an electric vehicle depreciates.

The geographic distribution of BYD’s growth in Europe adds another layer.

According to Schmidt, roughly 70% of Chinese EV registrations in Western Europe in the first quarter of this year were concentrated in Spain, Italy, and the U.K.: markets that tend to be more price-sensitive and open to new entrants. 

While this doesn’t invalidate BYD’s growth, it suggests that location-dependent finance dynamics are driving expansion as much as consumer demand.

For lenders, the distinction is not academic. They are not underwriting registrations. They are underwriting residual values, which is where the rubber meets the road.

Over the next two to three years, vehicles deployed and financed today will begin to cycle back through the system via lease returns, resale markets, and secondary channels. At that point, the assumptions that anchor today’s financial models will be tested against real-world market conditions.

But the next phase will be less about volume. It will instead focus on testing the model that facilitated BYD’s rapid entry into Europe. If BYD’s vehicles hold their value, the company’s partner-led model will look less like a workaround and more like a fast-track version of what legacy automakers spent decades building. If residual values weaken, or if too much of the growth proves channel-driven rather than demand-driven, the financing engine that built BYD’s presence could become a constraint.

That’s the real question for banks: Can the vehicles BYD has placed in Europe retain their value once they return to the market? Because in a financing-driven system, growth can be engineered, but asset performance determines whether it lasts.

Rocco Pendola is a contributing writer based in Spain.

Whether driven by retirements or re-configuration, the insurance industry is scrambling for tech talent.

This article appears in the July/August issue of Global Finance Magazine.

Caught between a wave of retirements and a weak talent pipeline short on tech-savvy candidates, the insurance industry faces a talent shortage that could affect its ability to address cyber and other emerging risks.

“Demand is rising sharply for fluency in analytics, AI, as well as in cyber risk. These are all capabilities that are either new or that the traditional sources of talent haven’t produced at scale,” says Peter Miller, president and CEO of The Institutes, a risk management and insurance education provider. 

In 2014, to help expand the talent pool, a group of risk management and insurance companies, nonprofits, and educational institutions, led by The Institutes, created MyPath, a one-stop resource for job seekers that outlines the benefits of, and pathways to, insurance careers.

The initiative remains timely because, in a November 2024 Institutes report, 66% of insurance professionals in the property and casualty sector surveyed identified the loss of institutional knowledge as the retirement wave’s greatest impact: “The result is both a talent shortage and a knowledge-transfer risk.” That means organizations must find ways to “preserve institutional expertise that took decades to build” while developing new skills.

Other Industry Observers Agree

“There is a dual-sided talent crisis,” says Margaret Milkint, global insurance practice leader at DSG Global, an executive search firm. “Organizations are losing experienced professionals faster than they can be replaced while simultaneously racing to build leadership capacity around capabilities that barely existed a decade ago.”

The talent crunch is rippling beyond primary insurers to encompass reinsurance carriers, brokerages, and risk management firms, she says. “Artificial intelligence is creating an entirely new category of roles spanning enablement, governance, ethics, and cultural integration that require skill sets the traditional insurance pipeline was never built to produce.”

The shortage of talent with tech and AI capabilities has become one of the industry’s most critical gaps as roles across underwriting, claims, and risk management become more data-driven, says Victor Harris, vice president at financial services recruiter Selby Jennings. “The shortage is slowing the pace at which many organizations can fully adopt and scale their AI strategies,” he warns.

Worsening Insurance Talent Squeeze

While they agree that AI is increasing demand for certain roles, experts at Aon observe that AI and automation are reducing demand in some entry-level and operations slots, particularly in finance and reporting. 

“There is a risk of mischaracterizing the issue as a blanket shortage,” says Louisa Blain, head of insurance for human capital at Aon. “The reality is more nuanced, and linked to where the industry wants to grow versus the skills it currently has versus requirements for the future. This is less about replacement and more about reconfiguration of the workforce.”

Yet, the talent constraints could limit industry growth in specialist and emerging risk areas, argues Jeff Reider, head of Aon’s benchmarking, strategy and technology group. The Institutes’ Miller sees the shortage coming in cyber, complex liability, multinational program structuring, and cross-jurisdictional claims coverage. 

“Knowledge lost to retirement can have meaningful downstream effects on compliance and strategy,” he says. “For any multinational that depends on its risk transfer partners to keep pace with growing exposure complexity, this is a material consideration.”

The infusion of capital and the emergence of new carriers and managing general agents in specialty lines have made the talent squeeze more pronounced over the last five years, says Tony Chimera, chief administrative officer at carrier Westfield Specialty. 

“That has pulled talent out of the pool used by insurance carriers and brokers,” he adds, noting the talent squeeze has been building for two decades. “You do have an aging workforce. Some people are working longer, but you have a 55- to 65-year-old workforce that is probably not going to be there in the next five years.”

In addition, insurers are competing with the banking and technology sectors, which many younger professionals are turning to for more attractive careers with greater compensation. Yet, the actual compensation for some banking sector jobs, when salaries are integrated with a lack of work/life balance, can be much less desirable than insurance roles, Chimera points out: “Insurance is a great industry where you can earn a lot. And you can have a life.”

But Harris notes that many insurers’ locations in midsize cities can dissuade younger professionals intent on living in larger, more alluring metropolises. That leaves the industry with a limited pool of specialized talent.

Technical Fluency Isn’t Everything

How, then, is the industry to attract new talent? 

The technology industry could be one source, Chimera says. But candidates must accompany the tech skills needed for roles in data analytics, AI, and cybersecurity with knowledge of the complex insurance business. 

“Technical fluency alone doesn’t translate directly into effectiveness in risk management and insurance,” says Miller, adding that regulatory knowledge, coverage mechanics, and underwriting judgment take time to develop. “The most successful transitions involve strong technical capabilities combined with a genuine curiosity to develop insurance-specific expertise.”

While agreeing that the talent shortage has been building for years, Milkint notes that there is no clear consensus on when, or whether, it will peak. “Closing this gap,” she says, “will require the entire industry to go on the offensive and actively dismantle outdated stereotypes, confront long-standing biases, and make a compelling, unified case that insurance is not just keeping pace with the future, but helping to shape it.”

To attract more students from outside the traditional insurance and risk management programs, the industry must expand students’ awareness of career opportunities “beginning well before students reach their junior and senior years of college,” says Grace Grant, executive director at Gamma Iota Sigma. The collegiate society represents more than 7,000 students interested in careers in insurance, risk management, and actuarial science across 177 colleges and universities.

“Many students simply are not exposed to the breadth of careers available in the industry,” Grant says, adding that employers should highlight their innovation, technological sophistication, purpose-driven work, career stability, and advancement opportunities. “Students are highly motivated by careers where they can make a meaningful impact, and insurance is fundamentally about helping individuals, businesses, and communities recover from loss and manage uncertainty.”  

Paula L. Green is a contributing writer based in New York City.

Speedier implementation could boost the country as a regional trade gateway.

Freight rail and port reforms being implemented by South Africa can boost the country’s role as a trade gateway between Africa and the Middle East, a key Southern African export and source market for commodities, including minerals, fertilizers, and fuel.

South Africa launched logistics reforms in 2020 to prop up an economy dragged down by freight rail, port, and electricity supply logjams. President Cyril Ramaphosa’s (pictured) administration recently issued a progress report, noting that reforms in the key freight-rail sector are underway but moving slowly. 

Boosting Regional Trade Competitiveness

There’s every reason to speed up the process, said Lerato Mzezewa, senior operational risk analyst at Fitch Group’s BMI advisory. Accelerated and effective implementation of freight rail reforms can “improve the movement of Gulf-sourced inputs into South Africa and the wider Southern Africa region while helping exporters move bulk, refrigerated, and containerized” cargo, she said.

“This would strengthen South Africa’s competitiveness as a trade gateway, particularly for firms that require dependable port logistics and inland distribution alongside maritime capacity,” she added. “South Africa’s revived freight rail and port infrastructure will support South Africa-Middle East trade by improving the domestic movement of seaborne cargo between ports, inland production centers, and end users.”

Gulf markets accounted for about 11% of South Africa’s total imports in 2025, totaling approximately $11.6 billion; the Gulf supplied 60% of the country’s crude and refined petroleum imports.

Private Operators Step In

As part of the reform process, South Africa recently finalized contracts with 11 private rail operators. Opening core rail corridors to third-party private-sector players strengthens “the investment proposition by shifting rail recovery away from sole public-sector dependence toward a more competitive, multi-operator” environment, said Matteo Addonizio, head of infrastructure research at BMI. 

The moves aim to attract sustained private capital investment in the freight rail sector and support the medium-term recovery of freight rail volumes. The new operators are expected to move an additional 24 million tons of freight rail capacity across coal, manganese, containers, fuel, and general freight. Freight rail volumes rose to about 168 million tons in 2025 from 160.1 million tons in 2024. However, this remains below the 200 million tons of capacity required to improve transport logistics for South African freight rail users.

South Africa’s freight rail and port inefficiencies have significantly affected heavy freight movers, including bulk commodity miners like Kumba Iron Ore, which ships key steelmaking ingredients to China and the Middle East.

Kumba has had to reconfigure its business to “align production more closely with Transnet’s constrained rail” and port capacity, according to a company spokesperson. “Aging infrastructure and inadequate maintenance practices impact the reliability and efficiency of logistics channels, which directly impacts our operations.”

Logistics inefficiencies are not South Africa’s only vulnerability.

The regional powerhouse is also vulnerable to global fuel price fluctuations stemming from the war in Iran, whose effects continue to ripple through supply chains and cost ecosystems across the continent. An overreliance on imported crude oil and refined fuels, alongside a freight system that moves roughly 80% of goods by road, compounds South Africa’s situation, said Jee-A van der Linde, senior economist at Oxford Economics Africa.

Tawanda Karambo is a contributing writer based in South Africa.

To become a financial hub, the sultanate needs the infrastructure that a major custodian can provide.

U.S. custody giant State Street is expanding into Oman, a vote of confidence in the Gulf’s smallest aspiring financial center.

At the Oman Capital Market Conference in Muscat in early June, the bank signed an agreement with Riyadh-based Jadwa Investment, which manages about $30 billion in client assets, to jointly pursue institutional clients in the sultanate, with a focus on global custody and asset servicing. The agreement formalizes State Street’s deeper push into the Omani market. State Street, one of the big three global custodians alongside BNY and Northern Trust, has served Omani clients from a Muscat office for more than two decades.

The Gulf Cooperation Council, of which Oman is a member, is a declared strategic priority for State Street. But for both sides, the logic of the deal centers on infrastructure.

Targeting Emerging Market Status

Custody and asset servicing are what Oman, as a financial center, has lacked at scale as it pursues its central ambition: to elevate the Muscat Stock Exchange (MSX) from frontier to emerging market status, attracting index-tracking capital, credibility, and prestige.

The sultanate has spent five years working toward that goal. The Oman Investment Authority, its sovereign wealth fund, took ownership of the MSX in 2021 and began injecting liquidity and floating state assets, including units of the energy group OQ. Market capitalization has nearly doubled to about $98 billion in an economy of roughly $117 billion.

Even so, the bourse is a sliver of the region’s dominant exchange, Saudi Arabia’s $2.7 trillion Tadawul. A unified regulator, the Financial Services Authority, created in 2024, has since introduced listing incentives, a junior market for smaller companies, and cross-border arrangements to give foreign investors a way in. Oman plans to privatize as many as 35 state firms by next year, further increasing the total float.

As its Gulf rivals absorb the fallout from the Iran war, Oman’s long-cultivated neutrality, its port of Duqm, and its free-trade agreement with the U.S. have positioned it as a relative haven. Whether it will harden into a genuine regional financial hub is less certain; Oman is a latecomer to a field led by Dubai and Abu Dhabi, and liquidity on the MSX remains thin, with heavy state ownership and slim free floats.

The agreement between State Street and Jadwa is, for now, only a memorandum of understanding, with no concrete mandate and no assets yet committed. But the signal is clear. When a custodian of State Street’s heft attaches its name to Oman, it redraws the Gulf’s financial map at the edges. Muscat has decided it would rather build the back office than keep renting someone else’s.

Kim Iskyan is a contributing writer based in the U.S.

To counter major cyber threats, Danmarks Nationalbank is pioneering an offline emergency payment system.

This article appears in the July/August issue of Global Finance Magazine.

Danmarks Nationalbank, the Danish central bank, has launched a financial systems security project to establish a Dormant Emergency Bank (DEB) to serve as a robust reserve bank in the event of a massive cyberattack against a large banking institution or the wider banking infrastructure in Denmark. 

The DEB proposal forms a central part of Danmarks Nationalbank’s Emergency Preparedness for Critical Financial Sector Activities in Extreme Scenarios (EP-CFSA-ES) strategic plan announced in December 2025. The plan’s bank emergency solution would enable businesses and the public to continue using payment cards, receiving salaries, and transferring money in the event of a significant cyberattack that immobilizes key financial institutions and the national banking infrastructure. 

The DEB would provide the Danish economy with an additional layer of cyber protection, according to Ulrik Nødgaard, governor of Danmarks Nationalbank. In the event of a hyper-scale cyberattack paralyzing a major Danish bank, the proposed backup DEB platform solution would activate to ensure Danish businesses and society “continued to function normally” until the cyberthreat recedes, Nødgaard said.  

Building a Contingency Net

The EP-CFSA-ES plan envisages DEB operating as a decentralized emergency bank prioritized to secure Danish society’s payment systems against a massive and prolonged AI-driven cyberattack.  

The level of threat from cybercriminals in the EP-CFSA-ES plan covers attacks that specifically result in the prolonged immobilization of banks’ IT infrastructure, a scenario that could disrupt the ability of Danish consumers and businesses to conduct normal banking transactions. 

The EP-CFSA-ES plan also includes a Card Payment Contingency (CPC) facility, enabling high street stores to keep trading during cyber-related IT outages. CPC lets consumers pay for goods and services with physical cards and mobile wallets — Vipps, Apple Pay, Google Pay, Dankort, Mastercard, and Visa — for up to seven days. Now being piloted nationwide, the system is expected to be fully operational at grocery chains and pharmacies by year-end 2026.

The CPC system works by letting store payment terminals process and store transactions offline; once reconnected, payments settle automatically with customer banks, Nødgaard said. “The technical solution developed resolves all the key issues around a significant IT outage,” he added.

Gerard O’Dwyer is a contributing writer based in Finland.