Joel Kornreich taps into his past experiences to strategize for the future.
The Asian banking sector is experiencing varying levels of difficulties and Malaysian banks do not go unscathed. Given that the operating and regulatory environments remain challenging, banks need to be led by someone with a firm grip on its goals and who can strategically maneuver through turbulent times.
“Managing through crises has taught me the incredible power of staff participation, as well as to be prepared for all aspects of risks, such as credit, operational risk, anti-money laundering and liquidity risks, but at the same time not to get completely bogged down,” said Joel Kornreich, group chief executive officer of Alliance Bank Malaysia Berhad.
We sat down and spoke with Kornreich to learn more about his philosophies and the current challenges they face as a bank.
ABF: What are your previous experiences that contributed to who you are as a banker today?
I started in Unilever, a fast moving consumer goods business, which gave me the marketing experience as well as a sense of entrepreneurship. Next, I had the chance to work in a branch, which gave me an appreciation of client management and also basic banking processes and operations, which serves me to this day.
During the 97/98 crisis, I was given the chance to manage a Consumer Banking Business in Indonesia, at the age of just 32. My tasks included a full system migration, which gave me the opportunity to manage in turbulent time and with great autonomy to innovate, especially around customer service, speed and efficiency.
Since then, I have had the opportunity to manage through more turbulent times, like Russia in 2008, Spain, Belgium and Greece through a dark period of 2009-2011, and Indonesia in a business that was under regulatory sanctions.
ABF: What are your key business philosophies?
First, be fair and consistent to your customers and staff. Never let your moral compass waver, and never tolerate that in others.
Second, when it comes to staff, quality (rather than quantity) is everything. And always recognize where you are weak so that you surround yourself with people who are strong in those areas.
Third, get the facts and make decisions based on facts. Data is not enough. It must be structured and challenged in a way that you get real value. Invest in information. Those are always good investments.
Fourth, get rid of bad cholesterol, i.e. bureaucracy and structural expenses, so that you can spend on good cholesterol: marketing, training, exceptional people, research, analytics and innovation.
Fifth, innovate and simplify. And when you think you are done with that, start again. It never ends. In processes, eliminate what you can, automate what you can’t eliminate, and centralize what you can’t automate.
Lastly, always challenge your own thoughts and ideas, and try to see where you are wrong, rather that look for facts that comfort your ideas.
ABF: What three goals are you focused on?
First and foremost, I aim to create value by helping our business owners with their business needs and helping them help other stakeholders, i.e. their families, employees, and retail customers.
Next is client excellence. We want to create a world class relationship bank where we fulfil the promise of becoming the most important relationship for the financial success of business owners, and by creating a world class ‘automated bank’ giving transactional convenience and consumption options to consumers.
Last but not the least, excellent compliance.
ABF: What are the recent trends and challenges in the Malaysian banking sector?
Margin compression and funding pressures, poor risk based pricing decisions and rising interest rate risks, still a fairly weak culture of client excellence and analytics based decision making, the expected rise in importance of anti-money laundering, know-your-customer, market conduct and cybercrime.
Strategic thinking around the mutations in the financial sector also still only nascent, like thought process around branch density and services, technology strategy, disintermediation and how consumers manage their choices.
ABF: What are the effects of the sharp depreciation in ringgit?
There are two effects. One effect is the relative shrinking liquidity and local currency which is very typical when there’s a depreciation of currency. What happens is the paradox that your local currency loses value while at the same time, the interest rates spike because everybody’s chasing that local currency to fund their assets.
The other phenomenon is of course the rising compliance cost, which basically explains the difference between inter-bank rates and the rates that you have to pay depositors. Everybody’s chasing high quality deposits and high quality currency savings.
In the process of doing that, everybody is paying up, which is pushing up the price of funding. In turn, this pushes banks to look at other solutions on how they are going to fund their balance sheets. Because if you have shrinkage of liquidity plus pricing competition around deposits, you have to find other alternatives.
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