Presentation on theme: "Finance and Risk Forum November 2012. Plenary Session Where do Finance & Risk professionals currently add value to the business, and how might this change."— Presentation transcript:
Plenary Session Where do Finance & Risk professionals currently add value to the business, and how might this change in the future? The impact of structural change on banking model
Plenary Session Reflection on the conference Key challenges going forward Your role in these challenges Sharing Ideas – how to deal with these challenges
Reflection on Forum John Peters – stable / good outlook – China key driver – structural change (industries – regions) – savings culture Steven Glenfield – growth logic – point of difference – clear path - risk appetite – technology adoption – Basel III – Tier 1 options Peter Russel - Reduced NIM-NII, less in top 15 – Falling ROA (long term) Darren Ball - IR – Game Changer – Management – Business Plan Geoff Yui - GST anomalies, Monthly payments, surplus fo cus Mark Degotardi - 48% > $4bn, ROA.56% from.70%, NIM 3% fall 10 yrs cost to income 27 > 90% - technology challenge, Risk v Reward - stand out from crowd – inward focus
Reflection on Forum Paul Williams – Treasury – risk appetite, manage liquidity – Financial Risk – Capital – Debt Issuance, profit centre, securitise Mark Workman - setting-up treasury, skills – structure – strategy – systems, working with brokers, complex products – FRNs - CDOs Sam Garland:Risk: 3 lines of defence (Executive – Risk Function – Internal Audit), Risk-Return Thinking, Understand Risk Appetite, Confident Decision Making Rob Kella:Risk Framework – Resilience Framework, change structure – raise risk function / strategy (belief, skills, culture), $ impact on risk model David Tattam:VAR, Quality Quantity Consistency – Capital & Liquidity, leverage-maturity mismatch, capital buffer, Capital Strength – Liquidity Strength, options – CCDS, others?
Structural change in bank model: Savings (Mint.com, Smarty Pig) Insurance (Real etc) Mortgage Lending (iSelect, Ubank, BBVA) Channel – no one dominates – ‘Omni Channel’ Customer Engagement (PFG, Smart Phones) – Paradox Margin Pressure: Banks vying for deposits 55% funding mix (more TDs) Rate competition – discounting, third party channels, disruptive models Lower volumes – more competitors Key Challenges Going Forward
Convergence: Banks changing branch to store (change in transaction banking), Life Cycle and Life Stage Focus New stores – ‘Apple style’ Wealth – Risk – Retirement – Home Purchase (problem: training/compliance) Governance: Boards still not engaged in strategic thinking Over focus on operational – audit issues Skills mix often skewed Risk appetite – conservative – easily scared by APRA etc Key Challenges Going Forward
Basel III: More pressure on profits to build capital Counter Cycle buffers, working with new Tier I Technology Investment: Apps, smart phone banking, core banking, payments switch Shorter life cycle – higher amortisation Productivity: Falling volumes – explains most of scale problem Tendency to avoid targets – cross sell culture Key Challenges Going Forward
Back to the Question Where do Finance & Risk professionals currently add value to the business, and how might this change in the future? The impact of structural change on banking model
Your Role What do you think are the three top challenges you face in your role?
Your Role How do you contribute to dealing with these now?
Your Role What new value can you add to deal with these more innovatively?
Metaphor Thinking Activity What motor vehicle describes your business best?
Metaphor Thinking Activity What type of restaurant – café describes your business best?
Metaphor Thinking Activity What type of airline describes your business best?
Back to the Question Where do Finance & Risk professionals currently add value to the business, and how might this change in the future?