The past year has seen Asia-Pacific banks attracting top transaction banking talent away from global institutions. What is triggering a reverse migration from global to regional? Joy Macknight investigates.

Asia-Pacific banks with regional aspirations have been steadily ramping up their transaction banking operations over the past few years. They recognise the importance of a solid transaction banking offering in diversifying their income streams and building closer – and ‘stickier’ – relationships with corporate clients. Being the primary account holder and lead relationship bank for a corporate provides the bank with sustainable shares of that customer’s business over the long term.

Two macro trends are fuelling this expansion. First, the ongoing economic challenges and regulatory environment following the global financial crisis in 2007/08 are forcing many top tier global banks to either pare down their cash management and trade finance products and services in the region, or exit it altogether. Corporates operating in Asia-Pacific have been forced by necessity to diversify their core banking group and incorporate regional players to safeguard critical financial flows.

Second, the Asia-Pacific region as a whole has remained a buoyant and dynamic marketplace despite the gloomy global economic situation, encouraging corporates to grow their business within the region. To support their clients’ budding regional ambitions, Asia-Pacific banks have expanded their strong domestic transaction banking franchises into regional footprints.

Consequently, regional banks have become more sophisticated in their cross-border transaction banking offerings and are challenging the global incumbents for market share. Australia's ANZ, with 43% market coverage, sits in fourth place in Greenwich Associate’s 2015 Asian Large Corporate Banking Market Penetration Index, behind HSBC, Standard Chartered and Citi; and for the first time Singapore-based DBS Bank made it into the top five, tied with Deutsche Bank, with a market coverage of about 30%.

People power

While much of their success to date has been built on existing in-house ability, those regional banks looking to take their transaction banking capabilities to the next level are now trying to attract senior talent from the top-tier players. And some have already succeeded in winning some high-ranking transaction bankers during the past year.

The prestige gap between regional and global banks is diminishing. Today it is viewed as a positive should a global banker join a local or regional bank – not just neutral but positive – Kah Chye Tan

For example, ANZ convinced Carole Berndt, global head of transaction services at RBS, to move across to the Australian bank as managing director of global transaction banking, based in Hong Kong. In addition to RBS, Ms Berndt’s career in transaction banking includes spells at Citi and Bank of America Merrill Lynch (BAML).

DBS Bank, which has been on a transaction banker hiring spree for the past year, won over John Laurens following a 13-year term at HSBC, most recently as Asia-Pacific head of global payments and cash management. Mr Laurens joined the Singaporean bank as head of global transaction services (GTS) in November last year.

In addition, Commonwealth Bank of Australia (CBA) has engaged the advisory services of Kah Chye Tan, previously global head of trade finance securitisation at JP Morgan and former chair of the International Chamber of Commerce banking commission. Currently CEO of his own consultancy firm, KC Tan Company, Mr Tan has been brought in to develop and implement strategies related to capital management, structured trade finance and talent development.

Specifically, Mr Tan will help CBA develop its trade finance business in Australia and regionally – and, more importantly, help the bank to execute its strategy. “CBA is the largest Australian bank [by market capitalisation] and has a large customer franchise in Australia,” says Mr Tan. “But there is opportunity for it to further its relationship with clients domestically and globally.”

ANZ on the rise

The growth story of Asia-Pacific regional banks was the impetus for both Ms Berndt and Mr Laurens to leave their respective global institutions.

Ms Berndt says: “Those working in a global bank, with deep experience and product knowledge, have advanced their careers by building out capability and growing the business. But now they are in an environment where many global banks are contracting – some geographically, some along product lines.

“On the one hand this can affect their ability to get to the top because there are fewer positions available; but also they end up playing more defence than attack and their job becomes mainly about unwinding the business.” Ms Berndt speaks from first-hand experience: RBS, which is 73% owned by the UK government, announced in February that it was going to sell off or wind down its cash management and trade finance businesses outside of the UK and Ireland.

“[At ANZ] we get to build, grow and play attack in the marketplace – we can move the needle and that is a good feeling,” says Ms Berndt. “People work for more than money and position – they want to feel good about what they do.”

ANZ’s jump from being outside the top 20 banks in Asia-Pacific just seven years ago to fourth place in the Greenwich Associates index proves to Ms Berndt that talent already exists at the Australian bank, but it needed to sprinkle in-house talent with global expertise and “a couple of battle-hardened bankers”.

DBS's draw

Likewise, Mr Laurens’ move to DBS was clinched by the opportunity to lead the bank’s GTS business through its next phase of growth. “The GTS business is a clear-cut strategic imperative for DBS – its success is important. To take a leadership role that will make a material contribution to the future growth and direction of one of the top 50 banks in the world, a bank that has a progressive stance on emerging technologies and the digital world, and one that has the potential to bring transformational change to transaction banking in Asia, all proved to be irresistible.”

He sees DBS as a young bank on the move, one that has been an outpost for competition over the past five years. “It is great to work with a team focused on growth, developing customer franchises, and in an environment that attracts, retains and develops people. The bank is also focused on the future – from the top of the institution it is embracing digital, driving innovation and encouraging experimentation,” he adds.

To illustrate the point, he mentions the DBS MegaHackathon, which brought together 150 DBS employees and start-ups from around Asia to tackle business and societal challenges. “Those that were involved in my team were buzzing,” says Mr Laurens. “DBS doesn’t just sponsor and support, but encourages people – myself included – to act as subject matter experts and mentors to financial technology start-ups. Bankers can bring the ‘fin’ to fintech and in exchange get tech experience from the start-ups.”

Changing perceptions

Asia-Pacific regional banks are in a better position today to attract talent from global players compared with 10 years ago, according to Mr Tan, because the perception of the former has changed. “Asia-Pacific is now directly competing with Organisation for Economic Co-operation and Development markets, so the prestige gap between regional and global banks is diminishing. Today it is viewed as a positive should a global banker join a local or regional bank – not just neutral but positive,” he says.

Ms Berndt reports that others have indicated to her an interest in changing geography and brand; she believes that this is because people want challenges and adventure, as well as rewarding careers. “Whereas I don’t think there will be a mass migration, there is a push factor as much as a pull factor, particularly in the challenged European market,” she says.

She recently hired Francyn Stuckey, ex-global head of strategic solution delivery for GTS at BAML in London. Ms Stuckey joins ANZ in Hong Kong this month in the newly created role of global head of capabilities and client solutions in transaction banking.

Furthermore, DBS appointed another HSBC veteran, Iain Taylor, as chief operating officer of GTS in September. Mr Taylor moved from New Zealand-based ASB Bank, a CBA subsidiary, where he was head of transaction banking and responsible for building and leading a team covering payables, receivables, cards, liquidity and connectivity. Before that he spent more than 17 years at HSBC, most recently as global head of marketing, global transaction banking.

Global talent, local knowledge

According to Raja Ahmad Muzamir, manager at recruitment firm Robert Walters Malaysia, transaction banking talent from global banks is in demand due to their exposure to technology and advanced transaction banking platforms to cater to the international, cross-border services required by their customers; advanced transaction banking products, such as structured commodity trade financing; and cross-border solutions, such as for cross-border cash concentration.

Global experience also brings a different competitive perspective to a regional bank, according to Mr Laurens. For example understanding the paths that a bank will travel down as it continues to expand regionally and delivering solutions to customers from multinational corporations to small and medium-sized enterprises. “If you have worked in a global institution, you can identify some of the pitfalls, such as operational, control and customer service issues that come with scaling up the business,” he explains.

But while global talent can bring experience of operating in larger institutions, especially when developing operating models, roadmaps and business strategies, Mr Tan argues that it is also important for them to have a deep understanding of the nuanced difference in regulatory regimes, client-buying behaviour and transaction banking capabilities in each of the Asia-Pacific domestic markets. He stresses the need to tailor products and services to local delivery, citing the 80/20 rule: 80% of domain knowledge can be transported globally, but 20% needs to be adapted for local delivery.

“It is necessary to have a global strategy, but it is only as good as the execution locally. Never underestimate the need to attract global talent that can operate in a local environment,” he says. “How successful a global banker can be in a regional bank depends on their ability to operate in a different cultural environment, not that of the bank but of the clients’ geography.”

Ms Berndt agrees, adding that being effective in her new role would have taken much longer without her previous experience in Asia – although that is not to say it would be impossible, she stresses. In the early 2000s, she worked for Citi GTS in Hong Kong. “We were in Shanghai [recently] reviewing our China business, and even though I was there eight years ago when it was beginning to open up, being on the ground now reminds you about the complexities and nuances of that market,” says Ms Berndt.

Fostering regional talent

With extensive transaction banking experience at HSBC and Citi in Asia-Pacific, Mr Laurens’ first act when he joined DBS in 2014 was to get to know the bank, its people and values, and gain an appreciation of “what makes it tick”. Since then he has worked with his team to design and implement a new global model of operating for GTS.

“We used our human-centred design methodology, which brings customers, as well as business partners and employees, into the organisational design process. We also did a full competitive analysis across our complete product set – cash, trade, open account trade and securities services – to develop our strategic five-year roadmap to 2020 on building our transaction banking business,” he says.

DBS plans to continue expanding the GTS team but the priority will be to do that through internal recruitment, according to Mr Laurens. For example, recently DBS appointed Iwan Rusli as head of GTS in Indonesia, an internal promotion.

“DBS is deeply committed to developing its employees and I am cognizant of the fact that it is DBS’s people that have outperformed the market in the past four to five years. Clearly, if we need to seed the team with external expertise – which will also aid the development of our people – then we will look at doing so. But we won’t be looking to drive expansion through external recruitment solely; we will look to foster in-house talent,” adds Mr Laurens.

Internal strengths

Correspondingly, when Ms Berndt landed at ANZ in May and began restacking her leadership team, she was impressed that existing ANZ transaction bankers made up the majority of the team. “I have been very fortunate to have inherited a strong group of leaders and the bank should be proud of that,” she says.

Her mantra is “people, people and people”, followed by platforms and processes. “My initial focus has been on simplifying our organisational structure, making it easier for people to get things done and empowering people within the organisation,” she says. The bank recently launched ‘Power of One’, a personal development programme for all GTB employees.

Currently, Ms Berndt is examining the bank’s transaction banking platform and its offerings to clients, as well as revamping the bank’s processes to ensure that it is easy for clients to do business with ANZ. “Our client base is Australian and New Zealand corporates expanding into Asia and global corporates coming into Asia, especially our home markets of Australia and New Zealand. The bank is focused on protecting and evolving market share in our home markets, leveraging technology to grow and leapfrog the incumbents in Asia,” she says.

The biggest challenge for regional banks is building up capability quickly, according to Ms Berndt. While global banks such as Citi and HSBC have built up systems and capabilities over the past 100 years, new players such as ANZ have had to become as good far quicker, in order to compete.

“On the other hand, regional banks have a fantastic tail wind because when the global banks were building up their capability it was IBM mainframes, JLC job codes and hard-wired connectivity, whereas now the technology is more nimble,” says Ms Berndt. “Emergers like us get to leapfrog a whole technology platform era, which clearly presents an opportunity.”

And there is a lot to play for. According to a September 2014 Boston Consulting Group (BCG) report, wholesale transaction banking revenues in Asia-Pacific, including both mature and emerging markets, are expected to more than triple to $224bn by 2023 from $73bn in 2013.

Ms Berndt’s strategy is clear. “We need to be exceptionally good at a few things, rather than be moderately good at many,” she says. “As long as we remember that, don’t stretch too far and stay true to our objectives to be a super regional bank – not a global bank – I think there is space, opportunity and client need for specialist transaction banking services geographically.”

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