“I think it’s healthy to be disrupted because it forces us out of our comfort zone.”
The chair of BAFT talks to The Banker about competition, changing regulation and sustainability.
The Bankers Association for Finance and Trade (BAFT) set up the Global Regional Bank Council to bring regional banks – those with total assets of $250bn or less – together as a community to discuss issues that matter most to them, as well as amplify their collective voice.
Establishing the Global Regional Bank Council was one of Maram Al-Jazireh’s strategic objectives as chair of BAFT. She is senior vice-president and global head of financial institutions at Arab Bank, and a member of its financial institutions credit committee.
Q: What is the purpose of BAFT’s Global Regional Bank Council?
A: The regional bank segment is a valuable member of the banking community with its size and number being indicative of the general health of the community. Given the multiple jurisdictions in which they operate, their contribution usually reflects that exposure and is always constructive.
As the Global Regional Bank Council, we believe that a community approach is very powerful. And the closer we can get in terms of sharing ideas, successes, concerns, and challenges, then the more tight-knit that community becomes.
Open communication within the community is core to dealing with the continuous disruption and fast pace of change we are witnessing in the global markets. In my view, it is a key factor when it comes to stabilising the global banking sector. The more we communicate, the more effective our approach will be in tackling challenges and taking advantage of opportunities.
Q: What is top of mind today for regional banks?
A: Competition, such as digital banks and fintechs, is always on our minds. But we can also learn from new players coming into our markets. Sometimes they are called ‘disruptors’, but I think it’s healthy to be disrupted because it forces us out of our comfort zone. It is about exploring creative ways of making the industry better while safeguarding its stability and safety.
Competition is also coming from global banks or local lenders that are targeting similar areas. Regional banks need to keep an eye on those dynamics, see how they can position themselves and maintain an edge in their niche.
Changing regulations is always front of mind for a regional bank. With operations in more than one country, regulatory change in one country can affect the link with the other countries of operation. Given a regional bank’s size and operations, some regulatory requirements are more strict on them compared with other players.
Q: How much competition is coming from the fintech community?
A: While there are fintechs that are going regional/global, I don’t see them as a threat. What’s more important is that we continue to evolve. I don’t think any of us can afford to sit still. So, we are looking at how we can improve and enhance our offerings, as well as ensure our customers have a very solid, enjoyable journey and good service, while making sure that their financial assets/holdings are also safe.
Q: How do regional banks keep abreast of regulatory changes?
A: We stay close to our regulators and aim to be in constant discussion. As such, regional banks are a good reference point for countries within their region.
In addition, we are also a sounding board for regulators because we are close to other regulators in countries of operation within the region. We can provide insight into a regulation, such as open banking, that may be under consideration in one jurisdiction but has already been rolled out elsewhere. We can share pain points as well as how it helped contribute to a healthier sector.
By being a part of that discussion early on, there is always that ability to add value.
Q: What will be on the agenda at the upcoming conference in May?
A: We are just planning it now, but I expect that the topics of trade digitisation, accessing global correspondent banking networks, and sustainability and the lack of standardisation in this space involving transaction banking areas, such as payments and trade finance, will be on the agenda, as well as educational workshops on common approaches developed by BAFT.
The association brings together banks from across the world who collaborate in working groups on payments, trade, compliance, and cyber security, and so on, to develop best market practices. We can tap into these specialised groups and the valuable research, as well as the expertise therein, to collectively create standards that would significantly add value to the products/services offered by regional banks.
A collective approach in the banking sector is the way to go to standardise and harmonise, as well as to assess the impact of new initiatives like central bank digital currencies.
The BAFT Global Regional Bank Conference will take place on May 3, in San Francisco, following the BAFT Global Annual Meeting.
