Finance and Risk Forum
November 2012
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 focus
• 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?
• Warm thanks to all Delegates!
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