Banks in Asia Pacific (APAC) are better placed to weather the recession and emerge stronger due to the harsh lessons of the 1997 Asian currency crisis. This is one of the key conclusions to be drawn in a report just published by independent market analyst, Datamonitor.
Titled Asia Pacific Banking IT Priorities in Response to the Global Recession, the report looks at how the APAC region is being affected by the financial crisis and the technology priorities across the region.
-Capital market integration will drive investment in infrastructure and market data solutions
The maturation of capital markets must continue so as to support future growth and provide investment opportunities in the region. There must be further development of regional institutions and regulatory frameworks to promote growth and stability. Measures such as pension reform, exchange consolidation and the deepening of the regions bond and equity markets will be important steps in improving access to investment and its efficient allocation. Key imperatives are towards exchange consolidation, consolidation of market intermediation services, and reduction of trading costs.
-Strong APAC banks on the acquisition trail will present IT integration opportunities
The retreat of the global banks is providing an opportunity for assets that have been painstakingly built to be picked up at very good prices; Nomura Holdings purchase of Lehman Brothers European and Asian assets, and the retreat of HBOS from the region, are examples. The strong capitalization of the Chinese and Australian banks puts them in a prime position to pick up further choice assets as the global banks retreat.
-Integrated reporting and analytics can bring benefits across risk, finance and operations
Compliance-reporting functions and day-to-day performance management needs are becoming more closely intertwined. What were previously reactive risk- and compliance-reporting functions are extending into real- or near-real-time processing, closed-loop systems in order to give risk managers a greater degree of control. An integrated reporting and analytical suite provides benefits across a range of business needs. By integrating risk and finance management capabilities, significant benefits can be achieved.
A risk-based pricing framework, when integrated with finance, provides a complete economic perspective on new business profitability, including the market price of the risks being taken on, the economic capital required to write the product, and the cost of commission and other expenses.
The APAC region is well poised to emerge from the global recession and resume its rise: its manufacturing capacity and increasing financial strength mean that growth will recommence quickly with an upturn in consumer markets, says Damian Shaw-Williams, technology senior analyst, Financial Services, Datamonitor and the reports author.
With a rebalancing of economies, no longer will the worlds fortunes be so closely tied to those of the US. APAC banks are taking the downturn as an opportunity to revisit IT systems and capabilities to both realize cost savings now, and provide an infrastructure that can grow as economies expand and demand a wider range of financial services.
The APAC region will still perform comparatively strongly in 2009 and 2010, and although Japan has been heavily impacted, other newly industrialized and emerging Asian markets – particularly China and India), will remain attractive in comparison to other markets, continues Shaw-Williams.
With regard to the nature of compliance changes post-crisis, the report notes it is certain there will be increased transparency and more stringent reporting requirements. In addition, regulators will become more proscriptive with ongoing operations as opposed to solely periodic reporting.
From the point of financial institutions, there will be a shift in focus from purely short term profitability to demonstrating ongoing stability, by showing how todays requirements are being met as well as tomorrow’s through extensive scenario testing and modelling. The necessity of testing extreme scenarios should now be obvious to all.
L.D.