Profit, risk and tailored customer solutions. These were the main themes debated at last month’s APAC chief risk officer (CRO) forum in Bali. This year I was joined by 28 of the region’s leading CROs, for what is, in my opinion, the most engaging event on our Asia Pacific calendar.
This year was our fourth annual forum and the theme was “Managing Risk and Driving Profitable Growth.” Interestingly, there was a sense that priorities are shifting. Previous concern and activity over compliance and regulation is now under control and attention has moved to profitability. Competition and share-of-wallet are driving a need for technology that will provide a return on investment.
At the core of many of these initiatives is the need to boost analytic capability to increase precision, optimizing decisions to manage complex business objectives. New systems must be able to access these powerful analytics in real-time, further increasing demands on critical systems that support the business.
This marks a significant shift for many banks in Asia. The backroom IT priorities of the organization need to be balanced with the need to remain relevant with customers who expect more. Forrester Research says that process and decision management are keys to “Age of the Customer” solutions. They also predict that in 2014 that 25% of IT spend will be on customer-facing systems.
While we sit in a diverse and rapidly growing region, there seemed to be plenty of commonalities among the participants, even when the markets themselves had very different environments. Here are the insights from five key questions posed at the forum:
1) Is driving profitability a greater concern in 2014 than in last 12 months?
This result echoes what we have seen from the global analyst research and confirms the re-focus on profitability in 2014.
2) How much of your IT spend do you estimate will be spent on ”customer-centric” IT as opposed to organizational IT?
There is quite a spread here, as you might expect, given the mix of under- and over-banked markets. However, IT spend in this area is certainly on the rise.
3) Of your own bank’s priorities in risk & compliance, which will receive the most investment in 2014?
Credit risk was the clear leader here, closely followed by product development which shows that growth of loan books and innovation for customers are front of mind.
4) Which area of your organization do you think could most benefit from a technology investment?
In terms of priorities, originations received the highest number of first priority votes, followed in second place by mobile banking and marketing. Second priority was a tie between origination, collections and marketing. Marketing received solid scores, showing it is on everyone’s agenda. Fraud came in almost unanimously as the fourth priority in the survey.
5) Do you feel that your APAC organization is ahead of the market for technology & innovation when it comes to banks in the US & Europe?
In what is probably a case of ‘grass is greener’ bias, 83% of CROs felt their bank was either about the same or behind their European and US peers. Only 17% felt they were marginally in front.
In conclusion, the shift to customer-centricity in APAC has changed how organizations view customers and measure profitability, how they market and attract new clients, how they prioritize capital investments, and how those capital investments are balanced against risk and growth priorities.
It is against this background that the CRO must try to steward his or her leadership team to make the right decisions for the future. Finding vast pools of new customers is unrealistic, and so business growth depends primarily on expanding existing relationships. New customers are welcome of course, but the best chance of growing revenue — and often the least risky — is to get more from those customers who already know your firm.