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Banking on new, interesting ideas

Publication Date : 12-09-2012

 

It is indeed boring to keep hearing that banks have to be boring in order to re-establish customers' trust. The latest prominent figure to join the chorus is the chief executive officer (CEO) of Lloyds Banking Group.

The banking sector, riddled with scandals and misdeeds since the financial crisis, needs a new song. Harping on the old themes makes one think that the sector is suffering from a dearth of ideas.

A new banking model that incorporates the progress charted as well as lessons learnt, may be required. For in this day and age, there would be new and interesting ways of doing things,

It would therefore be regressive to say “make it boring, just as it was before”.

And by interesting, it does not mean fanciful or overly creative but merely new and useful ideas of how an old chore may be perfected. The new themes should be inspiring and help customers look forward to new concepts, offerings and structures.

However, they are still rooted in the principles of basic banking to provide access to financing and not merely to push sales.

As far as the banking sector in the West is concerned, the fall from grace has been partly precipitated by the obsession with bonuses. That obsession has drastically changed the landscape for banking in that part of the world and when the crash came, it affected the entire world.

Arising from the guilt, is the cry for boredom which became synonymous with secure banking. No more risky products that may bring in a lot of fees and commissions but may result in severe losses.

Those that have “transformed” themselves to this boring but secure level and consistently kept up with their performance, have been praised.

An example would be Lloyds of London that received positive comments in The Guardian but Barclays went under criticism. Its former CEO had also ascribed to boredom in banking just last year, reports said.

But come this year, the bank became riddled with the Libor interest rate-fixing scandal. Apparently, reports indicate that the scandal had to do with efforts to fix rates to ensure a certain return that is related to bonuses.

Over here, banking is not associated with such decadence; there are still plenty of growth opportunities in the provision of basic banking services in the region.

However, industry players should still be careful about their image that they should not be seen as purely profit driven. It is no secret that banks, at least in Malaysia, are running very profitable businesses.

Customer care, good service and reasonable prices are all to be expected on the ground while top levels are governed by sound decisions and disciplined moves.

Yap Leng Kuen is an associate editor of The Star.

 

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