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Exclusive Interview with Chartered Banker, Rizleen Mokhtar, former Executive Vice President of Credit Risk at AmBank Group
Unfazed by the Future
IDEAS FOR LEADERS | JUNE 2021 PP 17327/05/2013(032407)
Values: The
New World
Currency
Finally, some bite-in-bark for
sustainable finance.
‘No Banking on
a Dead Planet’
MANY MARKETS,
ONE COMMON
LANGUAGE
Novel
Ways of
Thinking in
Finance
Contents June 2021
Cover Story Exclusive
Values: The Unfazed by
New World the Future
Currency A Chartered Banker’s
Finally, some bite-in- personal take on risk,
leadership, and life.
bark for sustainable
[pg09]
finance. [pg12]
Prospects 06 Insights
Governance 16 Rising Temperatures, 20 Money is Memory, Take 24 A New Opportunity for industry build on the rise
Melting Ice Caps, and Two Banks? in approval to make lasting
the Banking Sector With digital currencies on With social, emotional, changes for the better?
Stronger ESG adoption the rise, an old economic and professional fatigue
is driven by financial, theory takes on new now setting in across
economic and regulatory dimensions. the country, how can the
factors.
Security ‘No Banking on a Dead Pre-empt a Green Swan
Planet’ Focus on material sustainability
Ça va bien? Hold your issues to mitigate sustainability
horses. [pg28] risks and achieve alpha. [pg32]
36 Data Ethics: Time to 40 Digital Transformation Financial Industry
Get Your House In Poses Potential Risks Reining in the risk of
Order for Stability and the regulatory arbitrage.
Thought 44 Eye-openers from 48 The Ethical Advantage: 52 The Customer Journey 58 Novel Ways of Thinking
Leadership GameStop’s Wild, Wild The Economic and and Its Ethical in Finance
Ride Social Benefits of Implications Critical and Lateral
Consequences to the Ethics to Australia 54 Islamic Finance Thinking, the winning
Internet-dubbed “greatest Numbers show that Leadership: Lessons combination.
real short burn of the choosing what’s right is from the Past and
century”. really the best. Strategies for the
Future
Technical Influencing Food Financing: Many Markets,
Financial Why Credit in One Common
Behaviour the Hands of Language
Tipping the scales Farmers Uplifts Getting to a
for values-based Us All harmonised
banking takes more Banking’s role taxonomy in
than just a plan. in bridging the sustainable finance.
[pg62] food-insecurity gap. [pg70]
[pg66]
The views expressed in this magazine are not necessarily those of AICB or its Council. Contributions including letters to the Editor and comments on articles appearing in the magazine are welcome
and should be sent to the Editor. All materials without prejudice appearing in Banking Insight are copyright and cannot be reproduced in whole or in part without written permission from AICB. Note: All
information provided in this publication is correct at the time of printing.
Prospects
All Aboard
Building the Right Board to Respond Projects at UBS Zurich, outlined the impact
to the Climate Challenge, a webinar of current board trends at government A University of Cambridge
jointly hosted by the Asian Institute and corporate levels, existing knowledge research, What Board
of Chartered Bankers and UK-based on board characteristics and their degree Characteristics Are Driving the
Chartered Institute for Securities & of impact to positively influence climate Climate Change Response of
Investment, addressed the discourse response. The closing Q&A also addressed Firms in the Financial Sector?
surrounding board commitments in the global expectations as climate-related revealed:
transition to net-zero. issues gain further traction.
During the 71-minute webinar this In response to an audience question The importance of the chair in driving
January, panellists including Richard on voluntary or mandatory disclosures the firm’s climate response. When
Burrett, Fellow at the University of by boards, Burrett elaborated: “We are the chair possesses a sustainability
Cambridge Institute for Sustainability seeing an increasing regulatory burden mindset, this has an impact on
Leadership, and on institutions in general and financial whether climate is included on the
Beate Van Loo-Born, institutions in particular around climate board agenda and ultimately in the
Executive Director change. The TCFD (Task Force on Climate- firm’s climate response.
– Head of Strategic related Financial Disclosures) has had
a major impact on the way that many Even a climate-literate chair with a
institutions now think about climate change, sustainability mindset needs to bring
and the regulators are doing this because other directors along on the journey.
they see climate change as a material
systemic risk and I think that’s an important
Separation of CEO and chair roles are
addition to the shareholder versus
found to positively influence climate
stakeholder debate.”
response.
“Even if you don’t care about your
stakeholders, even as a shareholder, the
Board diversity, including gender, age,
materiality of climate change as an
and expertise, positively contributes
issue is evolving and people are
to a firm’s climate response, as does a
recognising that it does have
sustainability mindset.
a material impact.” Q
Watch the recording at
https://member-portal.aicb.org.my/login.
Visit https://www.aicb.org.my/events/upcoming for
information on upcoming webinars.
Stronger performance in advanced and emerging
IMF: Asia’s
economies in Asia – China, India, Malaysia,
Recovery Thailand – led to an upgrade in the International
Lifts Global Monetary Fund’s (IMF) global growth estimate
Growth for 2020 by 0.7 percentage points to a
Estimate contraction of 1.5%.
Its January 2021 World Economic Outlook
Update reports that the pandemic-led collapse
last year has had acute adverse impacts
Banking Insight
on women, youth, the poor, the informally
6
Exclusive
Unfazed by
the Future
Reporting by the Banking Insight Editorial Team
A Chartered Banker’s personal take on risk,
leadership, and life.
This issue, we switch gears with banking process flow.
Rizleen Mokhtar, CB, whose vigour and In those early days, I was fortunate
insights mark our most candid interview to have been given the opportunity to
to date. From her views on ‘credit as an tackle a wide range of customer profiles,
art’ to discussing Impostor Syndrome, starting with both private- and public-
owned midsized firms to eventually the
the former Executive Vice President
larger top-tier corporate entities, covering
of Credit Risk at AmBank Group is
businesses in the manufacturing, trading,
seemingly unfazed by challenges or a construction, property development, and
forthright question. She exemplifies the energy sectors.
fighting spirit that keeps the engine of In between, I was also given the
finance going and banking reinventing opportunity to handle financial institution
itself. groups, which gave me a totally different
credit experience. One of the turning
Rising from the frontlines of points in my career came sometime in 2000
banking to helming the Wholesale Now a risk manager, I came when the CB division was restructured
Credit Risk division at AmBank, to have better understanding into separate, dedicated functions – the
could you set the stage for us and ‘frontliners’ and the credit specialists. I was
of the intent of the
talk about some turning points in assigned to the latter (known at the time
recommendations under the
your career? as credit risk management unit or CRMU)
I joined AmBank in the late 1980s as
Basel Accords, in particular the which initially was still under the purview
an executive trainee in the Corporate relationship between of the business line managing director.
Banking (CB) division, and in those days credit and capital Eventually, CRMU was hived off and
there was no dedicated client relationship adequacy in ensuring became part of Group Risk Management
unit, credit evaluation unit, credit risk sustainability of the (GRM) under the purview of a chief risk
units, etc. financial institution. officer. This came on the heels of the
Banking officers did everything This gave me a different Asian Financial Crisis, at a time when
practically end-to-end, from engaging perspective when analysing regulators, both global and domestic, were
customers to sniffing out potential deals credit proposals. It was no strengthening risk management practices in
or offering financial solutions; conducting financial institutions.
longer just about short-term
credit evaluation and running sensitivity Now a risk manager, I came to have
gratification, it had to also be
scenarios on cash flow models; preparing better understanding of the intent of
submissions for credit approval; right
about long-term sustainable the recommendations under the Basel
through to preparation of offer letters, growth. Accords, in particular the relationship
reviewing facility documentation, and between credit and capital adequacy in
ensuring conditions are in order for loan ensuring sustainability of the financial
disbursement. This gave me a holistic institution. This gave me a different
learning experience, and enabled me perspective when analysing credit
Banking Insight
to understand the building blocks and proposals. It was no longer just about
appreciate each facet of the corporate short-term gratification, it had to also be
9
Values: The
New World
Currency
By Angela Yap Siew Peng
Finally, some bite-in-bark for sustainable finance.
I
nvestors are cranking up the heat on business model, Buffett – the market’s American non-profit for shareholder
the world’s biggest companies. most vocal opponent to ESG – has advocacy, on behalf of a small retail
On 1 May, Berkshire Hathaway repeatedly said “I don’t believe in imposing investor.
Inc, the massive Omaha-based my political opinions on the activities of our Unsurprisingly, both proposals were
investment holding company chaired by businesses” and gives vast independence rejected, given that the ‘Oracle of Omaha’,
billionaire Warren Buffett, clashed head-on to its subsidiaries as long as they deliver on as Buffett is known, controls almost
with shareholders at its annual meeting. the numbers. one-third of votes and continues to hold
At the centre of this controversy are two “We are not going to shy away from enormous sway over retail investors.
landmark shareholder proposals, billed as holding Berkshire accountable just because What is surprising this round is that 25%
the “litmus test for ESG (environmental, it’s run by Warren Buffett,” said Simiso of shareholders’ votes went against Buffett
social, and governance) investors”. Nzima, CalPERS’ Head of Corporate and his management team, surpassing
The first proposal came from a trifecta Governance. the usual 3% or less opposition. Media
of institutional investors – California Public The second proposal was for Berkshire outlets including Reuters comment that
Employees’ Retirement System (CalPERS), to report its diversity, equity, and inclusion this is “greater discontent than Berkshire
Federated Hermes, and Caisse de Dépôt (DEI) efforts across its 400,000 workforce. shareholders historically demonstrate”,
et Placement du Québec (CDPQ) – who This was mooted by As You Sow, an leading to questions on whether the
demand that Berkshire declare physical, 90-year-old Buffett could possibly be out of
transitional, and other financial risks in sync with the times.
efforts to address climate change and At the centre of this
transition to a low-carbon economy. To controversy are two landmark Turning the Bend
date, Berkshire is the only major US or shareholder proposals, billed Whichever camp you’re in, it’s undeniable
European stock that does not disclose its as the “litmus test for that shareholder activism is on the rise and
risk exposure to climate change and whose ESG (environmental, investors are demanding that ESG targets
Banking Insight
board has repeatedly rejected these pleas. social, and governance) be placed squarely on the shoulders of
Stressing its “unusually decentralised” investors”. boards and top of the corporate agenda.
13
governance
Rising
Temperatures,
Melting Ice Caps,
and the Banking
Sector
By Nik Shahrizal Sulaiman
Banking Insight
16
governance
Money is
Memory,
Take Two By Angela Yap Siew Peng
With digital currencies on the rise, an
old economic theory takes on new
dimensions.
B
ack in 1998, leading American tap into the memory of money, he warned
monetary economist Narayana that this could be exploited by parties other
Kocherlakota posited that than the central bank (the only authorised
‘Money is Memory’, a singular issuers of money) and “the government’s
idea that continues to inspire economic monopoly on seignorage might be in some
thinking. jeopardy as information access and storage
His paper of the same title, published costs decline”.
in the Journal of Economic Theory, argues For a long time, the theory that ‘money is
that money is a primitive form of memory memory’ was seen more as a philosophical
and its circulation in the economy is akin endeavour than practical reality. Today, that
to a “superledger” (as Agustín Carstens has all changed with fintech, specifically
of the Bank of International Settlements distributed ledger technology (DLT), the
puts it) that carries within it a history of all foremost technology underlying the
transactions – from big kahuna deals of creation of central bank digital coins
who bought which submarine to mundane (CBDC).
affairs of who paid for that bag of lemons,
what you still owe the grocer, and if you’ve Digital Cash
got enough pennies for a soda on the way CBDC, the new electronic currency that
home. most governments are experimenting
This is the central idea behind with, is very much talked about but often
Kocherlakota’s theory. Money is more than misunderstood. The most important
just a medium of exchange; it is intrinsically misconception that needs to be cleared
Banking Insight
a source of “high quality information is that although the idea of a CBDC was
storage and access”. If there were a way to inspired by bitcoin, the former is not a
20
governance
A New
Opportunity
for Banks?
By Chartered Banker Institute, UK
With social, emotional, and professional fatigue
now setting in across the country, how can the
industry build on the rise in approval to make
lasting changes for the better?
S
ince 2012, public confidence general. But exactly what is the reason packages have also played a part in
in the banking industry behind the surge in trust, in particular public perception of the sector. “At the
has been recovering from during a time of such unprecedented heart of the government’s response has
the aftermath of the 2008 uncertainty? For Christopher Box, been the banks, which together have
financial crisis, from 27% approval in Financial Services Consulting Leader, authorised payment holidays and issued
2012 to 56% approval in 2020, according PwC, it’s not entirely surprising. “I various support packages worth over
to Gallup. As well as this, the 2020 think it’s partly a reflection of times of GBP57 billion,” Richard Kibble, UK Head
Edelman Trust Barometer, which surveys uncertainty, when there is usually a flight of Banking, Deloitte, said at the end of
more than 13,000 respondents globally, towards institutions,” Box suggests. 2020.
found that the public’s trust in the sector “That says to me that people want “This hasn’t gone unnoticed by
reached an all-time high of 65% amid to trust during a period of uncertainty. customers with more than three-fifths
the pandemic. Organisations currently have an of customers saying they were pleased
opportunity because lots of engagement with their banks’ response to the crisis.
Fight or Flight scores were consistently high across Moreover, customers are voting with
With financial organisations juggling financial services, but now is the critical their feet, with more than one-third of
a fast-shifting set of logistical, social, time because we have reached the those who switched or opened bank
and economic challenges, the display point where fatigue is starting to set in.” accounts as a result of the pandemic
Banking Insight
of public confidence is a good news The authorisation of payment holidays saying they were motivated by their new
story for the industry, and for society in and facilitation of government support bank’s societal impact.”
24
Security
‘No Banking
on a Dead
Planet’
by Angela Yap Siew Peng
Ça va bien? Hold your horses.
F
Minh Cuong
Le Quan
rench agronomist and Framework Convention on Climate
sustainability leader Minh Cuong Change.
Le Quan has advocated for As CEO of Staterre, a France-based
environmental justice in Asia, accelerator for change, he advises
Africa, and Europe for close to 30 years. companies on transition and climate
His award-winning projects are known adaptation strategies. He also lectures
for putting people and their communities on environmental stewardship at French
at the heart of market-based solutions. business schools.
These pioneering ideas have garnered We share excerpts from our interview
Minh and his team accolades, including with the climate expert.
the prestigious Clinton Global Initiative
Award, the EU Energy Globe Awards, Achieving net-zero by 2050
Ashden Awards for Sustainable Energy, under the Paris Agreement calls for
and recognition as best-in-class solutions decarbonising our planet in the next
by bodies such as the US Environmental & 30 years – companies must do away
with fossil fuels and other sources
Protection Agency.
of emissions or match every tonne of
Minh founded the Minh founded the Climate Change
carbon dioxide (CO2 ) emission with
Climate Change Unit at Unit at international non-profit, Geres. a ton removed from the atmosphere.
international non-profit, He subsequently chaired a global What challenges will industries,
Geres. He subsequently carbon-finance cooperative, designing including banking, face en route to
chaired a global carbon- its unique financing mechanism for sustainability?
finance cooperative, improved financial inclusion of Asia in the The financial sector must wake up to
designing its unique carbon trading market. His perspective the realisation that we are in the midst of
financing mechanism that environmental stewardship is a collapse.
for improved inseparable from social justice goals has Net-zero pledges have become the
financial inclusion been presented to international panels, norm, but for me, it’s not a sufficient
Banking Insight
of Asia in the carbon including the carbon market fora and target.
trading market. technical bodies of the United Nations Net-zero means that in 30 years, I’ll
28Security
Pre-empt
a Green
Swan by Julia Chong
Focus on material sustainability
issues to mitigate sustainability risks
and achieve alpha.
W
hilst alarmist reports landmark new regulation issued by the protection for end investors as firms must
make for good European Supervisory Authorities to now disclose sustainability characteristics
headlines, they are an achieve the goal of a carbon-neutral Union and risks at both entity and product level
incomplete reflection of by 2050. The Regulation is a legislative in accordance with EU-issued technical
the work that has been done to forestall tool designed to reorient capital towards standards. Otherwise, firms must
a potential climate-related financial crisis. sustainable businesses in order to explicitly state that the product or entity
Reining in sustainability risks has been on achieve global climate goals whilst does not take into account sustainability
the agenda for some time, but garnered ensuring financial institutions actively risks. This is known as a ‘comply or
little attention from media stalwarts. combat ‘greenwashing’ i.e. conveying explain’ regime.
Take, for instance, non-profit Ceres’ a false impression or misleading Most European banks have in place
announcement that lending linked to fossil information to investors that the products policies and/or established frameworks
fuels and energy transition could translate are environmentally friendly. to address this risk and actively inform
into more than USD100 billion in losses An important aspect of the SFDR, investors how controls are in place to
for US banks and systemic financial risk. specifically Recital 10, is that it is now take into account sustainability impacts.
What this soundbite – carried by major mandatory for financial institutions Rothschild & Co Merchant Banking, for
newswires throughout the world – fails to to make pre-contractual and ongoing instance, discloses to investors how
reflect is the other side of the story. disclosures with regard to sustainability sustainability risk may occur as part of its
risk to end investors in accordance with ESG investments:
Comply or Explain regulatory technical standards. “This policy therefore approaches
In every way, sustainability policies The European Banking Authority sustainability risk from the perspective
today are the result of years of behind- (EBA) define sustainability risk as an of the risk that ESG events might cause
the-scenes work by supervisory environmental, social, or governance a material negative impact on the value
authorities. (ESG) event or condition which could of our products’ investments. To give an
The EU’s Sustainable Finance cause an actual or a potential material example, if a Merchant Banking fund has
Banking Insight
Disclosure Regulation (SFDR), which negative impact on the value of the significant exposure to digital services
came into effect on 10 March 2021, is a investment. This provides greater businesses which collect and process
32Security
Data Ethics:
Time to Get
Your House
In Order
By Dr Amanda Salter
Landscaping what’s fair and responsible
use in emergent banking tech.
T
he technophiles among us are This perception is patently untrue. All (including responsible innovation,
well aware of the recent high- algorithms and data carry the biases of programming, hacking and professional
profile cases of algorithms and the people and the cultures that collect, codes), in order to formulate and support
artificial intelligence (AI) gone process, analyse, and present that data. morally good solutions (e.g. right
wrong. A solid, long-term data ethics conducts or right values).
Take the ignominious Apple credit programme can forestall harmful and The nascent field of data ethics is
card. Launched in 2019 in the US and costly impacts, mitigating risks so that constantly evolving. There are many
backed by a leading global bank, the banks won’t be caught with their pants societal and technological drivers behind
offering was panned by consumers who down. the need for data ethics, from the rise of
noticed that, as a result of its credit- big data to the Internet of Things, and of
rating algorithm, women were offered Evolution & Iteration course, AI itself.
significantly lower lines of credit than Researchers Luciano Floridi and We could argue that right now, our
men who had similar income and assets. Mariarosaria Taddeo, in a 2016 Royal capabilities are only limited by our
The subsequent media storm sparked Society Journal article, classify “data ambition and our expectations. But to
an ongoing investigation by the state ethics as a new branch of ethics that misquote a phrase by Dr Ian Malcolm,
regulator, who stated that “any algorithm studies and evaluates moral problems the iconic scientist in the sci-fi classic
that intentionally or not [emphasis added] related to data (including generation, Jurassic Park, just because we can do
results in discriminatory treatment of recording, curation, processing, something doesn’t mean we should –
women violates [the] law”. dissemination, sharing and use), ability doesn’t mean prerogative. In the
The fracas highlights the common algorithms (including artificial intelligence, emerging field of AI there is often no
Banking Insight
fallacy that technology, algorithms, and artificial agents, machine learning and clear-cut right or wrong answer, and the
data are clean, objective, and neutral. robots) and corresponding practices mere presence (or absence!) of data can
36Security
Digital
Transformation
Poses Potential Risks
for Stability and the
Financial Industry
By Prof Hans Genberg
Reining in the risk of
regulatory arbitrage.
D
igital transformation is changing
how and by whom financial services
are provided, bringing benefits to
consumers in the form of expanded
and simplified access to financial services.
However, this transformation is also affecting the
financial services industry in ways that could lead
to greater risks to systemic financial stability.
The Arrival of Big Data and
Artificial Intelligence
Transformation of the financial sector and the
provision of financial services are driven by ‘big
data’ and the computer-aided ability of financial
institutions to analyse these data to provide
improved services to customers. By big data, we
mean very large structured and/or unstructured
data sets containing tens of thousands of
observations on bank customers, insurance
policyholders, and users of online payment
platforms etc., as well as textual data that can
be digitised and used for the computer-aided
analysis of newly issued financial regulations,
Banking Insight
40Thought Leadership
Eye-openers
from
GameStop’s
Wild,
Wild Ride By Kannan Agarwal
Consequences to the internet-dubbed
“greatest real short burn of the
century”.
B
y now, every financier worth his
or her salt would have heard of
GameStop Corp, the stock which
– thanks to a subreddit called
wallstreetbets – climbed a whopping 1,625%,
resulting in multi-billion losses at hedge funds
like Melvin Capital and other short-sell firms.
For the uninitiated, a subreddit (denoted by
the prefix “r/”) is a forum on the social platform overlooking it.
Reddit, where users post questions and engage “If you saw a classic value investor
with other Redditors. Hence, r/wallstreetbets make the arguments that they were
is a forum about…well…what wall street bets. making for GameStop on wallstreetbets,
It’s a mix of people from all walks of life – from you wouldn’t flinch. You would look at it,
teenagers seeking investing tips right up to and you’d be like, “Oh, good idea.””
divergent views from prominent analysts.
In a recent radio interview on NPR, Brandon Background
Kochkodin recounts: “It started with someone When GameStop Corp listed in 2002,
laying out the case that was, you know, it was a successful American video
GameStop’s being treated in the market as game retailer, opening thousands of
if the company already went bankrupt. But stores all over the world. However,
if you look at the fundamentals, they have its fortunes plunged as video gamers
cash, they can pay their debt, they can service switched to downloading games over the
Banking Insight
their debt. This isn’t a bankrupt company yet, Internet. GameStop stocks dwindled as it
there’s something there still and people are shuttered most of its stores.
44Thought Leadership
THE ETHICAL
ADVANTAGE
THE ECONOMIC AND SOCIAL
BENEFITS OF ETHICS TO
AUSTRALIA
By The Ethics Centre
Banking Insight
48Thought Leadership
The Customer
Journey and
Its Ethical
Implications By Bob Souster
The challenges of change.
F
or many years, banking Bank Negara Malaysia’s document, Fair
organisations placed great Banks owe obligations Treatment of Financial Consumers, which
importance on signing up new to their stakeholders: sets down the outcomes that should be
customers. The conventional those who are pursued by providers of financial services.
wisdom in marketing suggested that once affected by and can In short, customer interests should lie at
a person became a customer they would affect the bank. the heart of everything that a bank does,
probably stay for life, and in doing so These include customers, not just when the customer arrives but
influence others, such as their family and shareholders, suppliers, throughout the relationship. Increasingly,
friends, to bank with the same institution. the community and even doing the right thing is doing what is right
To a large extent this remains true: the physical environment. for customers.
people do not instinctively shop around This is no easy task. It was once
for banking products and services in the accepted that customer needs could
same way as they might for fast-moving be predicted by extrapolating a typical
consumer goods and gadgets, nor are customer base. This article argues that this customer life cycle. Young customers
they as susceptible to fads and fashions. is becoming a more difficult task and will would need a current account and access
It takes some effort to persuade a person become more difficult as time passes. to modest levels of credit. Over time,
to switch their bank account from one Banks owe obligations to their they would then need personal loans,
provider to another. stakeholders: those who are affected by mortgages and investment products.
Customer inertia breeds complacency. and can affect the bank. These include Going into their senior years, customers
Satisfied that many existing customers customers, shareholders, suppliers, might need to plan their lives around
are here to stay, it is too easy to assume the community and even the physical retirement and inheritance. It is no longer
that resources should be focused on environment. Yet, to paraphrase the famous straightforward, if indeed it ever was.
attracting new ones. This serves a author George Orwell, “All are equal, but Consider some trends.
purpose, as there is much benefit to some are more equal than others”. Mindful
society in persuading those who do not of the deficiencies exposed by the global + The perception of the typical family
avail themselves of banking services to do financial crisis, many regulators responded has changed:
Banking Insight
so, yet it is important to accept that banks by insisting that customers must be Society has become more diverse.
owe ongoing obligations to their existing prioritised. This is strongly reflected in Marketers used to write of a typical
52Islamic Finance
Leadership:
Lessons from
the Past and
Strategies for
the Future By IslamicMarkets.com
An interview with Tan Sri Abdul Wahid Omar
on structuring viable and sustainable projects.
A
s Tan Sri Abdul Wahid Omar crisis, Bank Negara Malaysia (BNM)
had successfully directed had ensured that the Malaysian banking
Maybank through the 2008 sector was well capitalised with better
global financial crisis, Daud asset quality, such that sufficient capital
Vicary, Chairman of the Advisory Board of buffers were maintained to absorb any
IslamicMarkets.com, invited him to share sudden shocks. Third, the government of
Tan Sri Abdul Wahid Omar
his experiences and whether the lessons Malaysia did not solely focus on keeping
learned could be applied to navigate the financial and banking sector afloat,
through the current global pandemic. but also concentrated heavily on the
Omar admitted that whilst the previous economy by ensuring that all businesses
global financial crisis was challenging, it were able to survive the crisis, such
was manageable due to immediate action that manufacturing capacities were
taken by the Malaysian authorities. maintained, and jobs were protected.
First, the Malaysian banking system In contrast, the current global
was insulated from the knock-on impacts pandemic is unprecedented and very
of events that were taking place in different to previous crises, in that there
financial systems across the United is an impact on the global economy,
States of America and Europe by way with not just corporations, but also
of rigorous risk management strategies economies, societies and families being
Banking Insight
put in place. Second, through the negatively affected. Omar added that
learnings from the 1998 Asian financial with lockdowns being imposed in many
55Thought Leadership
Novel Ways
of Thinking
in Finance By Derek Ariss
Critical and Lateral Thinking,
the winning combination.
L
et’s face it. Where would we be if we didn’t have
problems to solve? Throughout time, the ability of
people to think has been crucial. We use thinking
to communicate and create new opportunities,
to develop strategies, devise tactics, and….yes, to solve
problems. As we know, in banking, we solve a lot of
problems.
In this article, I introduce you to two types of Deliberate
Thinking: Critical and Lateral Thinking. Both thought
processes have strengths and combined, they create an
essential toolkit in business.
Critical Thinking is to apply reasoning to evaluate
information and identify the best answer. It’s about
separating truth from falsehood, assessing strengths and
weaknesses in order to find one best conclusion.
Lateral Thinking is about identifying opportunities from
various sources and then using appropriate methods to
create unique and original solutions.
Let’s first take a closer view at Critical Thinking.
Critical Thinking is about the analysis of facts to form a
judgment, to get to the one decision point.
We constantly apply this analytical process in business.
We look at data, information, context, evaluate it, and then
select the best decision to act upon. In banking, we use
Banking Insight
deductive and inductive reasoning methods. To do this well,
it is essential that the evaluation is factual and unbiased.
58Technical
Influencing
Financial
Behaviour
By Julia Chong
Tipping the scales for values-based
banking takes more than just a plan.
Banking Insight
62Technical
Food
Financing:
Why Credit
in the Hands
of Farmers
Uplifts Us All By Dr Amanda Salter
Banking’s role in bridging the
food-insecurity gap.
H
unger is now officially a malnutrition, that all people may achieve
weapon of war, on par food security by 2030. Currently, the world
with money laundering and is not on track to meet this, but this can
terrorism financing. change if financial institutions collectively
The World Food Programme, awarded mobilise the capital at their disposal in
the 2020 Nobel Peace Prize for being favour of food security.
“a driving force in efforts to prevent
the use of hunger as a weapon of war Small is Beautiful
and conflict”, is fighting a dramatic rise The British economist EF Schumacher
in hunger due to violent conflict and espoused in his book, Small Is Beautiful: A
the Covid-19 pandemic. Food insecurity Study of Economics as if People Mattered,
impacts society at every level. Vulnerable that championing small, appropriate
households face malnutrition and loss of technologies which directly empower
income. Businesses face supply chain people, has a greater multiplier effect
issues. Countries face food price inflation, than investments in “bigger is better”
reduction in economic output, and long- conglomerates or what he calls ‘gigantism’.
term consequences of dealing with poor This principle is also the foundation for
health. modern economic strategies such as CK
Banking Insight
For this reason, the United Nations has Pralahad’s Bottom of the Pyramid.
set a goal to end hunger and all forms of The key to resolving food insecurity
66Technical
Many Markets,
One Common
Language By Julia Chong
Getting to a harmonised taxonomy
in sustainable finance.
T
he sustainable finance landscape lit institutions, companies, and issuers in order
up in 2020. to delineate between green (compliant), light
According to research house green (transitioning), and brown (incompatible)
Morningstar, assets under activities.
management in economic, social, and
governance (ESG) funds leapt 29% to hit
a record of nearly USD1.7 trillion in 2020. + Such taxonomies are a necessary
step to
Reuters also reports that throughout the
Covid-19 pandemic, ESG assets were a bright Accelerate the flow of private capital
spot that bucked the capital flight trend into toward climate-friendly investments;
passive products as investors sought resilient
investments that will perform better over time. Reorient existing capital flows and
transition to a low-carbon economy;
Coupled with the global push to achieve the
Paris Agreement climate targets, the creation Enhance investor confidence and
of a common taxonomy for sustainable awareness of the environmental impact
finance has gained renewed traction. of products or services;
Track and measure the flow of
More Than a Dictionary
sustainable finance;
A taxonomy for sustainable finance is a
comprehensive classification that defines Inform future policies, such as inventive
whether or not an economic activity is setting; and
environmentally sustainable. In the coming
Banking Insight
Eliminate greenwashing.
years, work in this sphere will be increasingly
crucial for global investors, financial
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