Risk management challenges sound banking practices

Venkat Raman – 

The banking scene is witnessing drastic changes caused by the rapidly advancing technology and evolving business practices, a top banker has said.

Logan Munro, General Manager, International Banking, Migrant Banking and Auckland Branches at ASB Bank, said that the challenge is to keep pace with the changes and remain as a proactive, customer-oriented and business-focused bank in an increasingly over-crowded market. Adding to the complexity is the regulatory framework of the Reserve Bank of New Zealand (RBNZ), which in turn is influenced by international developments.

Regulatory Framework

“The Anti-Money Laundering and Countering Financing of Terrorism Act (AMLC-CFT) has obliged banks to enforce better systems, controls and reporting standards. ASB has always been a prudent bank,” he told Indian Newslink during an interview.

A veteran banker with more than 23 years of experience to his credit, Mr Munro believes that there will be further changes to the way banks operated and how customers accessed services.

Automated Branch

ASB recently opened its first ‘fully automated branch’ in the South Auckland suburb of Takanini, with new banking hours for customer convenience.

“This is an exciting development in our branch network. Having noticed a sharp decline in over-the-counter banking, we thought that automation for normal banking transactions would deliver better service. The Takanini branch is still an experiment but we are confident that we have set the right banking environment,” Mr Munro said.

Open from 10 am to 6 pm on weekdays and from 9 am to 4 pm on Saturdays, the Takanini branch is likely to set new service and technology standards for ASB, encouraging other banks to follow a similar practice.

GetWise Programme

Mr Munro said that ASB Bank was keen to encourage people to save, reduce debts and improve their standard of living.

Risk Management challenges-ASB Caravan“We have always been conscious of the need to improve the financial literacy of New Zealanders, as a part of which a number of innovative products have been introduced. The ‘ASB GetWise Programme’ was launched in 2010 (in conjunction with ‘ChangeLabs,’ a leading behavioural change and education organisation) to assist Primary and Intermediate Schools to deliver financial literacy concepts to students,” he said.

Over the past five years, the Bank has facilitated workshops and encouraged teaching staff to provide financial education lessons to children on a continuous basis.

Helping Migrants

ASB established its Migrant Banking Division more than 15 years ago to meet the specific needs of the migrant population.

“We understand the varying needs of migrants, who often experience the anxiety of settling in a new country. Our team of multinational and multilingual staff assist migrants to settle well in New Zealand. Their ability to speak several Chinese and Indian languages, Korean, Malay and other languages has been helpful,” Mr Munro said.

Mobile Banking

ASB_Logo_Y_on_B_SPOTThe ‘ASB Caravan’ is another initiative that helps the Bank to take its products and service to the communities at events, fairs and festivals. The fully-equipped Caravan also helps people to understand banking products and services better.

“This initiative has enabled us to further the concept of people-to-people banking. Our presence at events enables us to understand the needs of New Zealanders better,” Mr Munro said.

Moving Interest

Fluctuating interest rates always cause uncertainty and in a high credit-oriented economy, they can cause fear among investors and common people.

“While we pass on the rate of interest to customers, we also discuss with them the choice of floating rate. We aim to help customers to liquidate their loans as soon as possible. The circumstances of each individual and company differs and we always try to find solutions that are suitable on case-to-case basis,” Mr Munro said.

The property market

Mr Munro said that the Loan-to-Value Ratio (LVR) introduced by the Reserve Bank of New Zealand (RBNZ) on October 1, 2013 was aimed at restraining the runaway growth in the price of residential properties, especially in the Auckland market.

While there have been numerous views on what is driving Auckland property prices, the Reserve Bank has continued to take action to elevate the concerns that a rapid house price correction in Auckland property market would have on New Zealand’s overall financial stability.

“ASB has always been always been cautious in its lending policy and our market exposure has been conditioned by proper risk assessment of every case. The success of the LVR policy will depend on the market forces but clearly, RBNZ has taken steps to lessen the risk of financial instability that can be caused by a sharp correction in house prices,” Mr Munro said.

Strong Profits

ASB was among the five major banks (the others are ANZ, BNZ, Westpac and Kiwibank) that reported strong profits and growth in lending during the first quarter of the 2015 calendar year.

However, lending margins tended to thin due to stiff competition during the first quarter (January to March) this year.

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