Singapore

Fiserv is making a major push into investment services in Asia with some key appointments in Singapore and a solid technology line up, says Paul Thomas, managing director for international operations of Investment Services from Fiserv. “The range of solutions that we offer that are specifically focused on an investment services company is large.

IASB* recently published an exposure draft on the classification and measurement of financial instruments. This is the first of three planned phases to replace the controversial International Accounting Standard 39 (IAS 39), which determines how financial assets and liabilities are accounted for. It is a complicated area, and has been the target of much debate in the international arena, with governments and companies around the world getting into the fray.

The banking world hasn’t been as dynamic as we see it today and bankers are looking at technology as an enabler to meet up with the challenges of ever changing banking industry. The current downturn has lead to banks no longer having the luxury of deep pockets, extended timelines or telling their customers to be patient while they go through a refurbishment of their systems. The world is here and now. This then is crunch time. The marketplace is demanding “more for less”. Banks need to offer more products and services than their immediate competitors, faster, cheaper and more conveniently. On top of that, the silos of banking, insurance, wealth management, mutual funds, and mortgage companies are becoming one big banking melting pot. Bankers are very adept on knowing exactly what their end customers need, but they do not really know how their technology infrastructure will support them on their customer needs. The legacy systems are good enough to “run the bank”, costly yes, but good enough, but they are no good if the need of the hour is to “change the bank”.Faced with the growing competition from the marketplace, and the need to keep up, banks and their solution providers have been forced to move away from the “big bang” change of core systems. Instead they are adopting the process of “Legacy Replacement by Installments” (LRI) which enables banks to replace specific segments of their systems in a time-bound and effective process. LRI helps banks operate their existing systems while upgrading a component. The new components based on service-oriented architecture seamlessly operate along with the older systems, thus making it time and cost-effective for the bank, and effortless for the bank’s existing customer community.To enable fast, effective LRI, we need to keep the following criteria in mind:1) The components must be SOA compatible so that their end results become paramount, measurable and congruent.2) The new system must afford express customization, as this is the key to the bank having unique offerings, and to offer products that best harness its differentiated business processes.3) The customer experience must be totally unique and give a very different comfort feel, through whatever channel the customer chooses to interact with the bank, and be equally comfortable to customers who are established, as well as those who are relatively recent additions.4) The technology should afford scalability so that the bank does not run out of capacity, as and when the product launches succeed in the marketplace.5) The system should be easy to integrate across a galaxy of disparate systems, and must work seamlessly with the existing products and services, because the bank’s goodwill does depend on the existing customer community.LRI can be looked at one of the pragmatic ways for bankers aspiring to retain and enhance their competitive edge. If drafted carefully, LRI program can a long way in helping bankers achieve the supremacy in technology. Following are some of the pointers, which can be looked upon as to increase the effectiveness of LRI : 1) The bank’s management must involve IT proactively before major business decisions are taken – not as an afterthought.2) Banks cannot afford to proliferate more silos in order to support business growth.3) Banks have to find a way out to not only rationalize applications that perform similar functionality within the organization, but also identify, isolate and reuse business logic and data that represent core business processes such as account origination and pricing.4) Banks cannot afford to hold onto applications that rely on outdated technology.5) Banks must have consistent processes across the lines of business for similar functions.6) Banks must invest in obtaining a holistic view of the customer across the product silos.7) Banks must move away from vendor lock-in situations by moving to a service-oriented architecture and standards-based interfaces.8) Banks must measure the return on additional technology investments more closely and in terms of impact on business agility and performance.Therefore, in conclusion, the banking world is no longer ready to wait more than one quarter to see the impact of its technology investments. This makes it imperative for the technology partner to enable existing technology and systems to effectively and seamlessly interact and co-exist with the new technology. The chances that partners will be able to land orders for a completely new comprehensive retail banking system are dimming by the minute. No bank can afford that type of money, the enormous disruption to existing processes and customers, or the extended time-table that such a change envisages. Legacy Replacement in Installments is a methodology that reduces the “shock effect” to the existing infrastructure, and is relatively affordable and time-efficient.

Valuations for private banking assets dropped significantly after the end of the last major boom in 2007. The landscape of private banking is rapidly changing as large local institutions try moving up the value chain and full service private banks try leveraging their corporate banking set-ups to gain bigger shares of the market. In a quest to tap Asian wealth, multiple initiatives in private banking have been created which will lead to multiple M&A opportunities in this sector. Although opportunities are developing, executives should resist the temptation to assume that their organizations possess the whole truth about M&A management and should be wary of the following “half-truths” regarding some of the common M&A pitfalls in the world of private banking: 1. To satisfy investors, an M&A transaction must unlock big value gains quickly: The way to impress investors is to deliver on your promises, so resist the impulse to promise more than you can deliver in a short time. 2. Focusing purely on the deal’s strategic purpose during the integration ensures that the vision will come true: You should translate the vision into an “end-state” definition that includes the new company’s products, platforms, resources, locations and other attributes. 3. A detailed master plan is essential for a successful integration: You need an overall plan, but don’t overestimate what you’re likely to achieve by creating one or underestimate the need to augment and revise it as you go along. 4. Responsibility shifts as merger cycle proceeds: There will be some role changes over the cycle, but the whole team should be involved from start to finish. 5. During integration you should strive to retain key managers and employees: You should re-enroll not only people inside the organization, but also other key constituencies, including customers, suppliers and business partners. 6. Constant communication keeps employees informed and prevents unwanted departures: You need more than just Rhetoric from the front office; you also need leaders who model the desired values and behaviors of the merged organization, as well as mechanisms that permit communication from the organization to the leaders. 7. To achieve planned revenue synergies, start implementation early and push hard: In the early stages, the challenge is to keep sales and customer service from getting hurt by the turmoil. Focus on avoiding harm rather than achieving big gains. 8. Precise targets for reduction are vital for capturing synergy: Being specific about reductions is important, but reductions from what? The starting point from which the cost reductions will be measured should be clear as well. 9. Day one should be issue free: Issue-free doesn’t mean perfection. Focus on essentials and go with solutions that are 70 percent perfect but 100 percent achievable. 10. Day one marks the end of the beginning: Day One is a crucial milestone but hardly the end of the line. Much will remain to be done and integration efforts will need to be redoubled as Day One fades into history. In regards to the Private Wealth Management industry, banks need to stick to their growth plans but they shouldn’t get too “greedy” – as investment banks have shown – by trying to do too much at times when valuations are comparably lower. Of course there is a window of opportunity for large local banks or foreign full service banks to become significant players in these sector but these firms need to make sure that it really is a match.

DBS has appointed veteran banker Piyush Gupta, 49, as Chief Executive Officer (CEO). A Singapore permanent resident, Gupta spent over two-thirds of his 27-year career in South East Asia and Hong Kong, including eight years in Singapore. His appointment is subject to regulatory approval, and he will join the bank in November.

Andrew Dickinson takes a look at some big changes ahead in the credit card arena, particularly in Australia.

One of the most obvious consequences of the credit crisis has been the reduced availability of external liquidity. Mario Tombazzi, Regional Head of Liquidity Product Management for Asia at HSBC, examines the lessons that have been learnt and the most effective responses.The recent and sudden contraction in available liquidity has prompted many treasuries to seriously reconsider their existing liquidity strategies. While much of this focus has inevitably been on fulfilling immediate needs, the situation also represents an opportunity to put in place structures that will deliver long term benefits in terms of return, flexibility and risk management.Treasurers who resist the temptations of a quick fix will be taking a major step towards ensuring the long term stability and profitability of their corporations.Liquidity risk is real – deal with itEvents of the past eighteen months have brought a widespread realisation that liquidity risk is just as real in terms of its impact on the corporation as credit or foreign exchange risk. In the past, companies with respectable credit ratings were able to tap seemingly limitless and inexpensive liquidity via issuance of commercial paper, notes or bonds – or turn to banks to take advantage of uncommitted facilities. This relaxed era is now most definitely over. In the current liquidity-constrained environment, it is vital to have a proper frame- work which can be used to mitigate liquidity risk; and in particular to make optimal use of internal liquidity, which has shot up in value.The basic starting point is complete visibility at the treasury level of all corporate cash, so that the cash position, funding requirements and investment transactions can be tracked in real (or near-real) time. Corporate cash must also reside within a mechanism that allows any idle balances to be used quickly and efficiently.In addition, the associated investment policy has to be robust, with all the appropriate risk parameters, checks and controls in place.

If this banking crisis is as bad as it gets, then Singapore’s banks can afford to pat themselves on the back.

Provisions for bad loans almost trebled USD$310 million as chairman Wee Ee Hong said he was more upbeat.

OCBC Bank reported a net profit of US$325.3 million in the second quarter of 2009, up 10 percent from the US$296.6 million profit a year ago. Excluding the non-core gains and tax refunds of US$30.7 million in the year ago period, core net profit increased 22 percent, driven by growth in net interest income, higher insurance income contributions and lower expenses.

After months of negotiations, ANZ has been confirmed as the buyer of RBS' wealth and retail operations in Singapore, Indonesia, Taiwan, and Hong Kong for $687 million.

With 60 percent of customers opting for 9 and 12 month tenures, Maybank Singapore allows personalised tenure dates with its Choice Date Time Deposit.

How microfinance exchanges like ZOPA, Lending Hub, Prosper, Smava and Boober threaten banks.

For a minimum placement of S$10,000 or US$6887 for a 12-month tenure, clients can avail of Maybank Singapore's first Islamic term deposit. It has a minimum of S$25,000 or US$17,218 for a 3- and 6-month tenure. This deviates from the current available Islamic term deposit products in the market. For example, some products require a minimum placement of US$500,000, catering only to the high net worth segment.

SunGard has added a new offering to its suite of analytics, software and processing solutions for securities finance. SunGard’s Apex is a consolidated front-to-back office solution that supports equity and fixed income securities lending and repo trading. It has been designed to help increase productivity and automation, help drive down costs and help improve operational efficiency by providing a full front-to-back office solution for global securities finance trading and operations.

Sundarganj Branch of Islami Bank Bangladesh Limited at Janata Market, College Road was inaugurated as its 199th Branch.