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This article first appeared in The Edge Malaysia Weekly on December 30, 2019 - January 5, 2020

IN the last decade, nowhere was the power of technology as greatly felt as in the banking sector, globally and domestically. It was a period of disruption that saw the rise of fintechs and megatechs as the new competitive threat. Traditional banking, as we know it, may no longer be good enough. Amid these rapid changes, the local banking industry saw a slew of changes in the top echelons as well as the rise of a crop of younger bankers. Who were the movers and shakers? Read on to find out.

 

Playing in the big league

Datuk Khairussaleh Ramli

Group managing director

RHB Bank Bhd

For Khairussaleh, the last decade has been a period that has established him as one of the key bankers in the local industry.

Perhaps his stint in Malayan Banking Bhd (Maybank) from 2008 to 2013 was what launched him into the big league. After all, his first taste of managing a bank came in 2012, when Maybank appointed him as president director of PT Bank International Indonesia Tbk.

When Tan Sri Abdul Wahid Omar left Maybank to take up a post in the government in 2013, Khairussaleh was among the frontrunners to take the helm at the largest banking group in the country.

He, however, decided to join the RHB banking group as deputy managing director in December 2013 and was promoted to his current position, group managing director, on May 5, 2015.

During his early years with RHB, the banking group was “always the subject of talk of M&A (mergers and acquisitions)”, says Khairussaleh.

“As could be imagined, it was indeed difficult to attract top talent for key positions. Whenever I interviewed prospective hires, one question I would be asked was ‘will there be a merger?’” he shares candidly.

“The downturn of the oil and gas sector that unravelled in late 2015 did not help the situation either as it adversely affected our financial performance through the booking of high provisions. I remember constantly stressing to my colleagues the simple truth — if our performance is good, there would be no reason for us to be merged. So, we buckled down, focused on the fundamentals and worked hard.”

That advice seems to have worked — RHB’s FY2018 dividend payout of 35.7%, the highest since 2003, showed sceptics that it was unperturbed by any M&A distractions.

Certainly, his journey in RHB has been any-thing but unexciting. Since he joined, RHB has had two potential M&A talks — with CIMB Group Holdings Bhd and Malaysia Building Society Bhd in 2014, and with AMMB Holdings Bhd in 2017.

Both exercises did not go through.

In June 2016, the group underwent a structure change that saw the listing of RHB Bank on Bursa Malaysia. The bank’s total shareholder value increased 28.3%, and market capitalisation rose 20.9%, between June 28, 2016, and Feb 28 this year.

The group also implemented several transformation initiatives, including the IGNITE programme, FIT22 and Agile — the latter looks at building a sustainable and competitive operating model for the group.

“I am glad to see that our hard work is yielding positive results. Our total return to shareholders have improved. We have become the best capitalised bank in the country, from a capital ratio perspective. Our brand is more visible and better acknowledged by the public,” says Khairussaleh.

But bankers must evolve with the landscape, he says, adding that the banking sector has continued to see rapid changes over the past few years, driven primarily by technology, customer behaviour and demand. “Regulatory compliance requirements have amplified the emphasis to protect customers; digitalisation has changed the way we work; and fintechs have pushed aggressively in customer acquisition — in many instances, they have been able to disintermediate banks through their own brand of customer experience.

“The ecosystem play is now strongly emerging, where offerings go beyond banking products and services, providing end-to-end customer journeys, to grow — or at least defend — revenue for banks,” he notes.

“Our talent pool is more visible, backed by a full suite of committed senior team members who know what they need to do. It makes my job as the leader of RHB more fulfilling and exciting in meeting the challenges going forward.” — By Joyce Goh

 

‘Regrets, I have a few’

Datuk Seri Nazir Razak

Founding partner and chairman, Ikhlas Capital

Ex-chairman, CIMB Group Holdings bhd

In September 2018, Nazir penned a personal letter to all staff in CIMB, announcing “with a heavy heart” his exit from the banking group that he had journeyed with for 29 years.

Indeed, few would have thought that Nazir, long regarded as the face of CIMB and the architect of its transformation from a domestic player into a regional banking group, would step down — in December 2018 at the young age of 52. But when political regimes change — as ours did in 2018 — one can expect the unexpected.

For Nazir, the previous decade held many defining moments in his career as the banking group’s regional footprint continued to gain traction in an industry that was — and still is being — disrupted by the digital revolution. In fact, there was never a dull moment. “At the turn of the decade, we were high on optimism, relentless in doing deals, supporting clients and building our platform,” he tells The Edge.

At the same time, he said, “It was a decade where banks and bankers were reined in — and rightly so, as we were the main culprits behind the global financial crisis of 2007/08.”

It was also during this period that re-regulation coupled with dramatic advances in technology changed the banking landscape almost beyond recognition. “It made sense for old-generation bankers like me to step aside as it had become hard for us to adjust or enjoy it as much as before,” says Nazir.

In 2014, after being at the helm for 15 years, Nazir handed the baton to Tengku Datuk Seri Zafrul Aziz.

Nazir’s journey with CIMB was not without its ups and downs. As he told CIMB staff in his farewell speech, “Regrets, I have a few.” Perhaps, in hindsight, as some market observers put it, CIMB’s 2012 acquisition of Royal Bank of Scotland’s investment banking assets in Asia would count among the “regrets”.

In 2016, he became embroiled in a controversy surrounding the distribution of political funding in the run-up to the 13th General Election for his brother, then prime minister Datuk Seri Najib Razak, via the bank. He was subsequently cleared of any wrongdoing by the board.

Still, nothing can take away the fact that it was Nazir who took CIMB to new heights, declaring boldly in 2005 his aspiration to make the banking group a regional champion. “I look back with enormous pride on what we have achieved in CIMB, transforming it from a small Malaysian merchant bank into an Asean banking powerhouse.

“Of course, we wish we had done some things better, but it is about the bottom line, not the line items.”

On what the next decade will bring, Nazir says, “I remain optimistic about CIMB because of its brand equity, regional footprint and economies of scale. I think it is one of the best-positioned financial institutions to withstand the coming wave of digital banks and exploit new technologies for banking.”

He admits that he misses the high-octane banking of the past decade. Being a true-blue banker, Nazir did not exit the world of finance after leaving CIMB. With a few partners, he set up a private equity firm, Ikhlas Capital. “I am hoping to get some of it [high-octane banking] back at Ikhlas Capital, my new Asean private equity firm.” — By Anna Taing

 

Keeping Maybank on an even keel

Datuk Abdul Farid Alias

Group president and CEO

Malayan Banking Bhd

In 2013, Farid took on what must have been one of the biggest challenges of his career. He was appointed group president and CEO of Maybank, the country’s largest and Asean’s fourth largest banking group.

At the time, market observers were of the view that he had big shoes to fill. First, Tan Sri Abdul Wahid Omar had started Maybank on an aggressive transformation path regionally. Second, while Farid had an impressive string of credentials and is not new to Maybank, he was “untested” when it came to being in the driving seat of a large banking group.

However, Farid has proven his capable leadership and has been steering the group on an even keel, even during the toughest periods in the banking industry.

The past decade saw the rise of social media, disruption from digital technology, changes in the way business is conducted and how stakeholders and organisations are relating to one another very differently. “It has been a steep learning curve manoeuvring through an era where traditional banking, as we knew it, had all but changed, and new ways of creating value had to be explored,” says Farid.

He points out that it would be wrong to think that what coloured the last decade was solely in the field of banking. “My journey, and that of Maybank, was also shaped by many other events that happened outside our business. For example, the twin tragedies of the Malaysia Airlines planes, and then AirAsia’s, reminded us to always be prepared for the unexpected and that we can and must be a force for good in society, more so in times of adversity.

“We saw how the nation changed on the political front too, and used our past experiences to navigate an environment where geo-political events — both at home and abroad — could erupt without warning.”

How does he see 2020 and the coming years? “As this decade comes to a close, I sit back and ponder the journey ahead with a sense of caution and, yet, hope. We are faced by continued global uncertainties, a low revenue growth environment and increasing risks on multiple fronts.

“At the same time, we need to be prepared for Industrial Revolution 5.0 (IR5.0), which will dawn upon us in no time at all. It will change the way we work, reskill our people and have a fresh vision of our purpose,” he opines.

The ride ahead may be rough but Farid advises that one should not despair. “I have always believed in the enduring spirit of our people — who have time and again shown they have the ability to rise through the dark clouds and reach for a new dawn.” — By Anna Taing

 

Speed of change has been exhilarating

Tengku Datuk Seri Zafrul Aziz

Group CEO

CIMB Group Holdings bhd

Zafrul, one of several “young” CEOs who have entered the top echelons of Malaysia’s banking industry in the last decade, finds the speed of change that has been taking place “exhilarating”.

“Banking is no longer the safe traditional business it once was. In an ever-connected world, we need to keep pace with technology and our customers,” he observes. Indeed, ever since taking the helm at CIMB in 2014, Zafrul has had to make some tough decisions to steer the banking group through some very turbulent times.

Perhaps, given the rapid pace of technological change and its disruptive nature, youth may well be a good thing in an industry long dominated by a generation of older bankers. Zafrul himself has had a long career in the banking industry. “And while people may feel I am a relatively young CEO in the banking industry, I am positively old in the digital and fintech space.”

Zafrul, incidentally, is not a stranger to disruptions, having been a disruptor himself. His 25-year career in the financial services industry across various sectors includes a stint with an early financial services start-up, which Zafrul says was an early disruptor.

The game changer in the past 10 years across all industries is digital but more importantly, he believes it is the speed of adoption. “To reach 50 million users, the airlines took 68 years, credit cards, 28 years, and the internet, seven years. Now, we have apps taking days to go to market and being adopted — Pokémon took eight days!”

The one thing he has learnt in his career, he stresses, is that change is the only constant. Connectivity and mobility, he opines, will be key moving forward, and it will not be just mobile-led. “For example, how can banking services be more ubiquitous in sectors like food and beverage (robotised restaurants), automotive (autonomous vehicles) and even fashion (digitised wearables)? Our customers are increasingly connected and we need to ensure we can meet their lifestyle-led expectations.”

CIMB, he says, is going through a very rapid transition from traditional bank to a bank of the future. “This is what our Forward23 plan is all about. We either disrupt ourselves or get disrupted. We have invested heavily in tech and will continue to invest over the next five years. We are aware of a considerable staffing challenge.

“We are looking to have the right mix of digitally-savvy people to ensure the success of Forward23. If we look at the 3D skilled people — that’s data, digital and design — they currently make up about 10% of our 36,000 workforce today. By 2023, we are aiming for 30%. So we need to re-skill our staff and get new talent.

“Perhaps, the most interesting thing we are doing is the digital bank we launched in the Philippines and Vietnam,” says Zafrul. “The two countries are a testing ground for new ideas because we are not a big incumbent and they are new markets for us. In the Philippines, you can do video KYC (know your customer) checks, so you don’t need a branch network. We have seen great success there, amassing over one million customers in less than one year in operation,” he explains.

He is cognisant of the fact that besides keeping pace with the digital disruption and evolution, there will be other challenges, some of which could be unforeseen, given how rapidly trends change.

“To rise above these challenges and fulfil our responsibility as a corporate citizen, CIMB is also prioritising sustainability to future-proof the group to ensure the longevity of the bank, its partners, employees, customers and communities. We have integrated sustainability as one of the key strategic pivots of our Forward23 transformation strategy and our five-year aspiration is to become a leader in sustainability practices in the Asean community.” — By Anna Taing

 

Taking the road less travelled

Datuk Sulaiman Mohd Tahir

Group CEO

AMMB Holdings Bhd

In 2015, Sulaiman accepted an offer to lead the AmBank Group, a decision not many would have made.

“Midway into the decade, I was offered an opportunity to lead a bank that was facing one of its toughest times. That was a crossroads for me. [I asked myself,] should I stay where I was and carve a niche for myself in consumer banking, or should I choose the road less travelled and take on the challenge of transforming a bank that has so much history? I did not want to retire and wonder what if, so I took the plunge,” he says.

Some believed that Sulaiman’s decision to leave CIMB Bank Bhd was an unwise career move. “Many questioned me on why I was walking away from what was a regional organisation and moving to AmBank.

“Apart from the fact that I saw this as a challenge, I was also pragmatic. I saw tremendous potential in AmBank and was determined to ensure that AmBankers and everyone else believed in the group’s potential once more,” he explains.

Indeed, Sulaiman’s decision to resign as CEO of CIMB Bank to take over the driving seat at AmBank Group — during a turbulent time for the financial institution — raised eyebrows at the time. After all, AmBank is the only local bank that has been publicly named as being involved in the 1Malaysia Development Bhd scandal.

Sulaiman took on the role of group CEO of AMMB Holdings Bhd effective Nov 23, 2015.

Describing his first day at work as “unforgettable”, he recalls how the bank had on the same day received a letter informing them of an unprecedented RM53.7 million fine by Bank Negara Malaysia.

Sulaiman did not waste any time and got straight down to building the business at AmBank, putting in a four-year strategic plan aimed at making the sixth largest banking group in Malaysia one of the top four by 2020.

It was no walk in the park. “It took time to shape our transformation plan for AmBank Group and executing it was undoubtedly a challenging and exciting undertaking,” he admits.

“It was also a time of spearheading transformation. Working with my highly driven management team, we have been able to steer AmBank into a position of strength. It has not been easy but it has certainly been fulfilling.”

Then there was the merger attempt with RHB Capital Bhd. If the merger had gone through, the combined entity would have been one of the top four banks in the country.

The banking sector itself has gone through a sea change over the past 10 years, Sulaiman points out. “The financial services industry is changing dramatically. The disruption has democratised the market by lowering barriers to entry, which is great news for smaller, more agile businesses that are now dominating the scene.

“We have seen the entry of many new players in the market, challenging traditional banks to reimagine, reinvent and differentiate themselves. Even chatbots have become trusted personal advisers to some!” he exclaims.

With over three decades of banking experience, Sulaiman recognises the need for banks to be agile and nimble, to be able to adapt to the needs and expectations of customers in a shorter time.

“Inevitably, the way we organise and manage our workforce has also changed. This includes creating a work environment that encourages innovation, allowing teams to work autonomously and embracing diversity,” he says.

Looking back on the past decade, what was it like for Sulaiman personally? “It has been a decade of growth, embracing change and jumping headfirst into the unknown. I am glad I took the risks that I did,” he shares. — By Joyce Goh

 

The long-standing banker

Tan Sri Azman Hashim

Non-executive chairman & major shareholder

AMMB Holdings Bhd

Few bankers in leadership positions have the kind of staying power that Azman has had in the industry.

Azman, 80, has been in banking for almost six decades — he has been with AmBank Group itself since the early 1980s — and seems to be in no hurry to retire.

He has, however, loosened the reins in the last few years, stepping down from six entities within the group, including as chairman of key banking unit AmBank Bhd. He continues to be the chairman of holding company, AMMB Holdings.

He remains a key figure in the group he co-founded because of his 12.97% equity stake in AMMB, which makes him the largest shareholder after Australia and New Zealand Banking Group (ANZ) (23.78%).

“I could be there another 10 years if I survive. If I am chairman, I will still be holding my stake. If I have no stake, I won’t stay,” Azman declared in an interview with The Edge last year.

Given his significant shareholding, Azman holds the key to potential mergers and acquisitions at the country’s sixth-largest banking group by assets.

Over the last decade, there have been several attempts at mergers. The most recent was in June 2017, when AMMB and RHB Bank Bhd explored a union. In under three months, however, they called off talks as they could not agree on mutually acceptable terms and conditions. Interestingly, a preliminary attempt by key shareholders of the same two banks in mid-2015 also did not come to pass.

If a stake sale is what Azman is actively seeking — it is something he has to think about as none of his family members are in the banking business — then next year will prove difficult. On Dec 9, Najib filed a lawsuit against AmBank Islamic Bhd, AMMB and former relationship manager Joanna Yu over the management of his accounts in relation to funds diverted from SRC International Sdn Bhd.

Although the banking group believes it has a strong case and has said it will “vigorously” oppose the action, it will be tough for Azman and ANZ to find prospective buyers for their stakes at this time. It is no secret that ANZ has long been looking to divest its stake at the right price.

Be that as it may, Azman may well want AMMB to steer clear of any M&A while it continues to build itself up and focus on digital transformation.

At his 80th birthday celebration in July, the octogenarian, who has a passion for music and singing, said he did not feel any different than when he was 60. Indeed, his mind is just as sharp. It will be interesting to see how developments play out with his stake. — By Adeline Paul Raj

 

 

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