This article first appeared in Capital, The Edge Malaysia Weekly, on January 4 - January 10, 2016.

STANDARD Chartered’s regional CEO for Asean and South Asia, Ajay Kanwal, acknowledges that he has taken up his new role when the banking industry is navigating a sea change, and when Asia seems to be out of favour with investors.

Standard Chartered — which in November announced plans for an overhaul of its operations, to raise US$5.1 billion in capital and cut 15,000 jobs over the next three years — has not been spared the effects of a slowing Chinese economy and slump in commodity prices.

Nevertheless, Ajay is optimistic about Asia, given its better growth prospects compared with the rest of the world.

“I think this is a very interesting time. While Asia is not the most favoured destination, I feel it will be back in many ways because if you take global growth of 3% to 3.5%, Asia is still growing faster at 5% to 5.5%. I think it’s inevitable that people will still look for growth, so that is when we will all be back into Asia again,” he says.

The multinational banking and financial services group, which is headquartered in London, has had a long history in Asia. It set up its first branches in Mumbai, Kolkata and Shanghai in 1858, followed by Hong Kong and Singapore in 1859.

“For Asean, my sense is that we shouldn’t forget the fundamentals. I think Asean is in much better shape now than before financially and it is still a growing region. We should all be very balanced when looking at our future. We should not get anxious about every quarter,” says Ajay.

He adds that he is convinced that funds will flow back into Asean in the future, but admits that bankers will have to work hard to direct the fund flows back here.

“There is work for bankers like us, and certainly for a bank like ours, to present the fundamentals of our economies to all investors and get more investment interest in our economies. We are working closely with many bodies in Malaysia to make sure that the case is well presented and then to help the flow come in. I do think there is a positive in Asia and people have to feel comfortable about it,” he says.

Even as the slowing Chinese economy causes ripple effects in the region and has caused many banks to see a decline in their bottom line, Ajay opines that his job as a banker has not changed much.

While certain sectors, like the commodity space, have seen a decline in the quantum of business over the last year, other areas of opportunities, like proposing potential mergers and acquisitions to clients or even helping them manage their funds better, have come to the fore.

Asked if he thinks the end of quantitative easing will cause a liquidity problem within the banking landscape in Asean, the seasoned banker says he doubts that it will be the case.

“We do think there is a lot of liquidity on the sidelines and once there is clarity, they will all come in. I think a bank like ours, with a balance sheet and strong capital position, is very well positioned in this environment,” he says.

Ajay, who has been with Standard Chartered for over 20 years, believes bankers like himself should be more aware of the growing wealth in Asean as this makes the wealth management segment a big area of growth going forward.

He adds that growth opportunities can be seen across Asean in the infrastructure sector as many countries are still building infrastructure and will continue to do so for many years as they become more affluent.

Ajay also believes that the larger young population in Asean will create more opportunities for banks to develop as this generation pushes the sector to be more digital in its services and approach. He adds that digitalisation is changing the pace of the banking sector and spurring it to adapt to and lead the changes.

“I do think that Asean will take a big position in innovating banking and financial services,” he says.

It is worth noting that, Standard Chartered Malaysia was one of the first banks to cut jobs in early 2015. Ajay says that the banking industry is not a lead indicator as many other industries, like oil and gas as well as steel, embarked on job cuts too.

“What banking is really going through is a shift towards digital. There is a physical distribution which is in question,” he says when asked if the banking industry is going through a structural change.

“Banks are also going through a time when, for example in the commodity space, the basis points earned on a single trade are different (from before) because commodity prices have dropped. So it’s normal to expect banks to make less money than they made in the past. If the bank is making less money, it’s very easy to adjust the cost base to suit it.”

Ajay believes that the banks’ shift towards digital is a fundamental change to how banking will look in the next 10 years. This means that banks’ resource allocation going forward will be more focused on digitalisation and automisation. He believes this change is good for employees and clients.

“There will be big hiring on the technology side but there could be less hiring where the manual processes are. That is a pretty normal way to think about it,” he says.

On Malaysia, Ajay says the country is seen as strategic for Standard Chartered because of the ease of doing business here and the economy’s ability to attract foreign direct investment.

“Malaysia has a developed supply chain and it has done well in the services sector and is doing strategic things on the borders with Singapore. It is accepted globally as a destination people consider when they want to put up a manufacturing facility.

“To that extent, Malaysia has got the fundamentals of what it is to be an acceptable investment destination,” he says.

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