Perhaps the best advice banks ought to take from veterans is
to learn from history. Recent economic crises have exposed these financial
institutions’ main weakness, and it can be summed up in one word: greed.
The desire to make more money on top of what they already
have has made banks susceptible to unsustainable schemes, such as derivatives
of derivatives of derivatives, undue exposure to credit risk, and fueling the
real estate bubble, especially in the United States.
Prudence and innovation remain the key to competitiveness in
the banking industry, especially in a market that is about to become diverse
and integrated at the same time.
To gain a foothold in foreign markets, it would be more
prudent to partner with local institutions that have a better understanding of
their market. The best new clients will always be enterprises; they are a good
stress test of the bank’s capability to adapt to local conditions because at
the end of the day, building a clientele is also about building relationships.
It would also be wise to not be too aggressive in testing
the new markets. Growth should not just be measured quantitatively, but also
qualitatively. By this we mean looking at the kind of relationships the bank
has established with its partners. Are partnerships amicable and trustworthy,
or are they hostile and laced with paranoia? The imperative is to build trust
from the beginning, honor commitments, look out for each other’s best interests,
and find mutually beneficial endeavors. It should not really matter who has a
controlling stake, equal is always best, because leadership and bulk of the
decision making will be determined by the executives anyway. What matters is
that business goals, ethics, and values are laid down clearly and mutually
agreed upon.
Open communication lines should be maintained, the spirit of
teamwork engendered. It should be stressed that the real value of partnerships
lies not only in quantifiable parameters, but also in the quality of
relationships the banks build as a single unit. Trust takes time to build but
could take just one mistake to destroy so that banks should examine their
intent carefully before entering into partnerships with other banks.
Do not be swayed by the lure of attracting a wider market if
the market does not measure up to credit risk standards. Prudence is always a
good recourse in expanding banking assets, especially loans. Examine your
portfolio: are your assets invested in clients with a solid track record, with
a reliable capacity to pay, and sustainable income? Or are they flash in the
pan, fly by night debtors? Getting the latter’s business in the beginning may
not be worth the heartache of running after them to cut your losses.
However, non-performing loans are a reality banks must deal
with. Sometimes even the clients with the best credit ratings can experience
down cycles brought about by unavoidable circumstances. In such cases, be
flexible enough to consider debt restructuring and renegotiation. Accept longer
payment periods with adjusted (but not exorbitant) interest rates. Looking out
for such clients may benefit the bank in the long term as well, by being
remembered as an institution that did not cause them to lose their shirt in the
negotiation process, a humane bank that also looks into the individual
conditions of its debtors.
Innovate. Study your market. Learn from your customers, do
not be shy to ask them how else you can serve them better. The answer to this
question cannot be found in the boardroom but in the streets, in the branches,
among the common people.
Perhaps one common concern among the emerging middle class
in the ASEAN is the lack of personal documentation among the masses. Apart from
their birth register, they may have little to show for their legal and
financial identity.
BPI-Globe’s partnership, called BanKo is innovative in
itself. It combines microfinancing with mobile technology, thus addressing the
former’s need for a medium to deliver the concept to a wider market.
The services already on offer on the platform, such as bills
payment, cash transfer, and insurance are also compelling.
However, the bank can take this service a step further by
allowing mobile finance to be used for online transactions and brick and
mortar. E-commerce is a force that cannot be ignored. With the still limited
number of credit card holders in the country, mobile payment is a viable
substitute, provided safeguards are put in place to minimize risk to the bank
and to the client. Wouldn’t it be nice to pay for your lunch at the carinderia,
your cab ride, or that book you purchased online with G-cash? You minimize the
cash you carry around with you, you also minimize a lot of risks that attend
carrying cash.
Another service that the platform can offer is an expense
tracker. Develop an application that would help the user keep track of their
expenses for certain periods of time, perhaps from one pay period to the next,
to help those trying to budget their income become more literate.
The possibilities are endless. Remember, two heads are
better than one, so make the environment in your workplace conducive to
teamwork, creativity, and innovation. And don’t forget, register everything you
develop at the Intellectual Property Office. You deserve to reap the financial
rewards and the credit for your brainchild (or brainchildren, as the case may
be).
To paraphrase the evolutionist Charles Darwin, it is not the
strongest, nor the most intelligent of the species that survive, but the ones
who are most able to adapt to change.
ASEAN integration is almost upon us. Embrace it with
excitement rather than apprehension. Look out for new opportunities to grow
rather than let your fears fester. Remember, fortune favors the bold!
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