bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

ASIAN banks facing regulatory changes and diversifying financial requirements from corporates and individuals must start specialising in the areas where they are most capable, according to an international management consultancy.

   The need to steer towards a specialising market, a trend well-developed in Western economies, had resulted from new regulatory developments and a changing economic environment, said Gordian Gaeta, vice-president of Booz-Allen and Hamilton.

   Speaking at a conference on international financial services for Asia in Singapore, Mr Gaeta said shifts in regulatory objectives in recent years were influencing the way financial services were run in Asia.

  He said that although regulators now wanted to attract foreign capital, they had been more concerned about protecting their own players in the '70s.

   In the '80s, they attempted to enhance the domestic industry and develop domestic capital markets.

   Into the '90s, under free-market conditions, they faced the increasing challenge of how to move forward in developing capital markets and joining global markets.

  ''The changing regulatory parameters and the higher costs have spurred banks to specialise in certain areas and not aim at providing all types of services,'' Mr Gaeta said.

  With the subsequent development of the capital market, the role of banks as a financial intermediary had to be reviewed, he said, adding that Asian banks were in various stages of banking life cycles.

  He said initial banking services to new companies consisted of working capital, and then moved on to support their cross-border business by offering foreign exchange trading, offshore lending and trade finance.

   As the client companies grew further, they required development finance such as long-term loans, venture capital and general insurance, Mr Gaeta said.

   Some of the more progressive ones might even tap their domestic or international capital markets.

   ''Then they need services such as underwriting and placement, corporate advisory, treasury management and portfolio management,'' he said, adding that banks would be tested on their fee-earning capabilities in providing those services.

   While Asian countries were on different sections of the same banking path, he said banks should look ahead when positioning themselves.

  He said that development threatened the bank ''lending bubble'' as companies required less bank financing and resorted to long-term loan or debt securities, adding that banking to individuals was also undergoing irreversible changes.

   While banks offered primarily transactional accounts service to individual customers in the '80s, the rise in living standards by the '90s had prompted growth in housing loans, personal loans, hire purchase, and credit cards - so-called lifestyle financing.

   Moving ahead, wealth accumulation and preservation were becoming more important, he said. Products such as insurance, domestic securities, investment management and individual treasury were becoming demands on time.

   ''Individuals demand more discretion and a growing scope of products. Due to the explosive growth of retail banking demand, banks have to adapt to the changing buying behaviour,'' he said.

   Global banks, both universal and specialist, would embark on cross-border ventures and seep into the rapidly growing Asian markets.

   Asian players would respond by sharpening their domestic market focus, with some even seeking roles as leaders in the region.

       Banks would inevitably have to make certain strategic decisions in the face of these challenges.

   ''These opportunities can become problems for Asian banks if they do not respond, based on their own competitive advantages,'' Mr Gaeta said.



Specialisation the key to meet Asia's fast-changing needs