Financial services firms increase focus on building sound risk culture

• Financial services firms increase focus on building sound risk culture
• Majority of banks are planning changes to performance management programmes
• Many are changing employee value propositions to attract a new breed of graduates and retain millennials

Mercer’s latest Global Financial Services Executive Compensation Snapshot Survey* found that most financial services companies are taking significant steps towards fostering a sound risk culture amongst their staff. Of the companies surveyed, 62% have carried out initiatives to penalise misconduct and non-compliance to a ‘great degree’; 60% can show evidence of setting the right tone at the top and 58% are communicating clear (risk) culture objectives.

“It’s encouraging to see companies engaging senior leaders to set an example when it comes to risk taking and compliance behaviours,” said Vicki Elliott, Senior Partner and Financial Services Talent Leader at Mercer. ”The best way to foster a sound risk culture and combat excessive risk taking is with strong, authentic leadership who are willing to manage consequences for good and bad behaviour.”

Mercer research showed that rewarding positive risk behavior continues to be challenging with only a few organisations having taken these steps “to a great degree” (only 11%). “Proactively rewarding positive risk behaviour can be tricky but it is likely to have a more positive impact on culture in the long term compared to punitive measures,” said Elliott.

Mercer’s survey reviewed the practices of 68 financial services companies globally – banks, insurers and other financial services companies – based in 20 countries in Europe, North America, and Asia. The report provides an update on key changes in talent management and rewards practices in financial services

Experience with bonus malus**

Over 90% of banks and 72% of insurance organisations have malus policies in place largely due to regulation which requires that all or a portion of deferred or unvested awards can be reduced or wiped out. Such policies are mostly triggered by individual misconduct (89%), individual breach in compliance (89%) and negative business performance (74%). About half of banks have applied malus for individual performance reasons. However, approximately 60% of them do not retain individuals involved in malus cases, which may call into question their overall effectiveness.

Performance management changes

“Establishing an effective employee performance management system continues to be a highly challenging task for financial services organisations,” said Dirk Vink, Principal in Mercer’s Talent business. “However when done right it can have a greater impact on behaviour and performance than just changing compensation plans. Performance management reform is a key lever to help manage toward desired culture change.”

In Mercer’s study, more than half responded that their performance management approach works well, though only a small proportion indicated that it delivers exceptional value. Mercer’s survey finds that change is on the horizon, with half of all banks planning to make changes to their performance management processes in the next 12 months, this compares to just 16% of insurers. However, 32% of insurers want to change their processes but are unsure when. Almost half of respondents indicate that their feedback process and performance management linkage to development needs work. Most banks are increasingly involving their risk management function in selecting performance measures, goal setting and performance evaluation, which is a significant development for aligning performance with sound risk-taking.

Employee value proposition beyond pay

Mercer’s report found that many financial services companies have made or are making changes to their employee value proposition (EVP) beyond pay in order to better attract and retain talent who might otherwise choose not to work for them. The most prevalent initiatives planned, or already in place, are learning and development programmes (47%) and remote working programmes (43%). Other popular changes include implementing career frameworks (37%), introducing flexible working (37%) and non-monetary recognition programmes (34%).

“Following the financial crisis, the reputation of traditional financial services firms suffered badly. Esteem turned to stigma as a new generation of graduates started rejecting a culture they viewed as aggressive and lacking in integrity,” said Mark Quinn, Partner and Head of Mercer’s UK Talent business. “Banks, in particular, who have since been struggling to attract and retain the best new talent, are realising that these so-called millennials are not just in it for the money. They look for a sense of pride and purpose in their work, as well as flexibility and career support. To attract them, companies need to develop a strong and genuine purpose-led employee value proposition.”

Source: Mercer. Steps taken towards fostering a strong risk culture.

*This edition of the survey looks at changes in annual, deferred and long-term incentives, pay mix and role-based allowances. Forty-seven percent of companies are based in Europe, 32% in North America and 21% in Asia. Fifty percent of companies are in banking, 28% in insurance and 22% in other financial sectors (asset managers, for example).

***Bonus Malus refers to the part of the deferred bonus that has not yet been paid out and can be ‘reclaimed’ because, for example, an acquisition’s due diligence is not carried out thoroughly.

Asian financial institutions to average 4% pay increments for 2016

• Ratio caps driving more guaranteed fixed pay
• Asia and Latin America average 4.3% for projected 2016 base pay increases, against 2% to 2.7% in Europe and North America
• Overall, 2016 pay to be static: lower variable pay matched by fixed pay increases

Source: Mercer.

The 11th edition of Mercer's Global Financial Services Executive Compensation Snapshot Survey highlights that 2015 saw the world’s financial services organisations continue to respond to regulatory developments by increasing fixed pay, decreasing variable pay (bonuses) and increasing the emphasis on non-financial performance. While processes to penalise misconduct and non-compliance are widespread, rewarding positive risk behaviours continues to be a challenge, says the consultancy.

The survey, which was conducted in October and November 2015, reviews the pay practices of 71 global financial services companies — banks, insurers, and other financial services — based in 20 countries in Asia, Europe, North America, and South America.

According to Vicki Elliott, Senior Partner and leader of the Global Financial Services Talent Network at Mercer, "The focus for financial services firms is firmly on trying to set the right tone from the top with strong governance and high involvement of risk management. Overall, total compensation levels remain broadly the same compared to levels prior to regulated bonus caps. However, banks, particularly in Europe, have significantly increased fixed pay levels improving the certainty of pay delivered to key risk-takers."

The report found that 61% of organisations had increased their employees’ fixed pay by more than 5% while 58% had reduced variable pay by more than 5%, marking a shift in pay mix. Total compensation levels are expected to remain relatively unchanged in 2016 — within plus or minus 5% (92%) — and most organisations are not planning further changes to their pay mix. Dr Hans Kothuis, Partner and Executive Rewards Practice Leader, Asia & Middle East at Mercer said, “We are at a tipping point in Asia, as companies prioritise business critical functions and share resources across their businesses to increase overall productivity. Financial institutions in Asia are adopting a cautious outlook towards compensation for 2016.”

Overall, 2016 projected base salary increases for the sector are modest with average forecasts globally expected to be between 2% and 2.7%. The banking industry is generally projecting slightly lower salary increases than the insurance industry. The majority of organisations predict 2016 annual incentive levels to be similar to those in 2015; those expecting change predict that levels will decrease.

“There continues to be a concern that increasing the focus on fixed guaranteed pay breaks the link between pay and performance and may actually be counter-productive for aligning pay with risk,” says Dirk Vink, Mercer principal and Financial Services Project Manager. “We have concluded that the most positive impact on sound risk-taking behaviours and decision-making has come from significantly improved governance and increased involvement of risk management in the performance management and compensation process.”

Fostering a risk culture 

When asked how their organisation is fostering a strong risk culture, the most prevalent response was penalising misconduct and non-compliant behaviours (93%) followed by the role of risk management in performance expectation setting and evaluation (89%). Setting the right tone at the top of the organisation, for example, through top management leadership, communications and real consequences, was also highly cited (88%), as was training and coaching managers on sound risk culture (87%).

Intriguingly, with all parts of the business impacted by these risk management efforts, the report highlights that some organisations, particularly in North America, are finding it more difficult to attract and retain staff in the crucial functions that oversee these processes, the control functions (risk, legal and compliance).

posted from Bloggeroid

More than a third of the APAC working population are free agents

Kelly Services’ 2015 Free Agent Survey, the first-ever global survey by the company, finds that nearly one in three workers globally is a free agent.

The survey further reveals that in Asia-Pacific (APAC), 34% of the region’s working population is considered a free agent. This is slightly ahead of the global average of 31%. Free agents are defined as individuals who consult; perform temporary, freelance or independent contract work; or have their own business.

“The findings of the 2015 Free Agent Survey provide some interesting insights into the talent’s mindset of wanting a workstyle which provides greater freedom, flexibility and entrepreneurial benefits,” said Natalia Shuman, Senior Vice President and General Manager of Kelly Services for EMEA and APAC.

“Employers should capitalise on this trend and look to free agents as a solution to managing their talent supply chain in the face of continual pressure to attract and retain skilled talent,” she added.

posted from Bloggeroid

Myanmar gets first Maybank branch

Maybank, Southeast Asia’s fourth-largest bank by assets, is the first and only Malaysian bank to open a branch in Myanmar. The Central Bank of Myanmar had on 1 October 2014 awarded a banking licence to Maybank as part of its move to liberalise the banking sector in the country.

The Maybank Yangon branch has a registered capital of US$75 million and will operate with a team comprising of mainly Myanmar nationals. Located in the commercial district of Yangon, the new branch will strengthen the Group’s international footprint which comprises some 2,400 offices in 20 countries worldwide, including all 10 ASEAN nations.

The opening of the branch was officiated by the Myanmar Central Bank Governor, H.E. U Kyaw Kyaw Maung and Chief Minister of Yangon Division, H.E. U Myint Swe, together with the Malaysian Ambassador to Myanmar, H.E. Mohd Hanif Abd Rahman and Maybank Group Chief Strategy Officer, Michael Foong. Among others present at the event were the Myanmar Central Bank Deputy Governors, U Set Aung and U Soe Min, Minister of Finance, Yangon Region, H.E. U Daw San San Nwe, Maybank CEO Indochina, Soon Su Long and Maybank Managing Director, Transaction Banking, John Wong.

Maybank Yangon branch will serve wholesale and corporate clients as well as domestic banks in Myanmar with a range of services such as deposit accounts, working capital financing, cash management, treasury and capital market solutions. In particular, it will leverage on its expertise in financing of power, utilities, oil and gas as well as the telecommunications sectors, which are also priority growth areas to cater to Myanmar’s immediate needs.

Speaking at the event, Maybank Group Chief Strategy Officer Michael Foong said, “Since 1994, Maybank has operated a representative office in Myanmar and supported Myanmar in infrastructure building by leveraging upon our regional presence and project financing strength. We also helped arrange financing for key infrastructure projects such as airports, telecommunications and gas pipelines.”

In 2012, Maybank Malaysia established a Malaysia-Myanmar remittance service jointly with five Myanmar banks under its Maybank Money Express service which was aimed at facilitating the remittance of funds from Myanmar nationals in Malaysia to their families in Myanmar.

Foong said that with the foreign banking licence, Maybank will now be able to play a bigger role in Myanmar and participate in previously restricted financial services, including providing loans to foreign companies as well as domestic banks.

“We intend to build strong partnerships with domestic banks in the areas of international trade, interbank and capital markets, as well as draw on our regional assets and capabilities to help Myanmar’s growth leapfrog in the region. In addition, we can help support Myanmar’s priorities in developing its banking infrastructure and financial system,” he said.

“We are positive on Myanmar’s economic outlook and hope to facilitate greater cross-border trade between Myanmar and our core markets as well as the Greater Mekong sub region.”

He added that Maybank will also continue to play its role in the area of community building. “We believe in contributing to the country’s economic prosperity and growing our business responsibly through ethical and sustainable financial services and products. We remain committed to improving the lives of the communities that we serve and giving back to the community – which is what we term as humanising financial services.”

In conjunction with the opening, Maybank Yangon announced a community-driven initiative for Myanmar, Project H.E.A.R.T. (Helping Every Asian Rise Together). This project aims to empower and bring light into needy communities across Asia, providing them with solar-powered light bulbs – a free, sustainable light source. Project H.E.A.R.T. is a key community initiative that forms part of Maybank Group’s larger mission to humanise financial services.

Western Union renews agreement to offer its services at Hong Leong Bank branches in Malaysia

Western Union, which specialises in money transfer services, has signed a three-year renewal agreement with Hong Leong Bank (HLBB) to extend its offering of money transfer services throughout the 283 HLBB bank locations in Malaysia.

Chew Mei Ling, Malaysia Country Director at Western Union, said, "Outward and inward remittances have been growing in Malaysia. Western Union's renewal of the agreement with HLBB will support this growth. This will enable HLBB's customers to continue to use Western Union's fast, reliable and convenient money transfer services."

Susan Wong, General Manager, Retail Deposits and Remittance, HLBB, said, "Total outward remittance for workers has shown a significant growth of 27.8% in 2014 versus 2013*. Collaborating with Western Union reflects a huge opportunity for us in accelerating the remittance business and meeting the growing consumer needs for real time money transfer."

Since the passing of the Money Services Business Act in 2011 that defined stipulations for the licensing, regulation and supervision of the money changing, remittances and wholesale currency business, there has been a tremendous increase in outward and inward remittances, with a three-year compounded annual growth rate of 30% and 20% respectively*. This growth is due mainly from senders converting from informal to formal channels for money transfer driven by greater public awareness on the value of using legal channels for remittances plus additional and easier money transfer options through mobile and Internet remittance services.

*Source: 2014 Annual Report, Bank Negara Malaysia.

Cisco offers advanced firewall security for smaller companies

Source: Cisco website. Some of the members of the Cisco ASA with FirePOWER Services family.

Cisco has announced new models of Cisco ASA with FirePOWER Services targeted at small and mid-sized companies and branch offices with the same malware protection and threat detection capabilities deployed by large organisations.

According to a recent PwC study, security compromises at mid-sized organisations increased 64% in 2014. They face the same challenges as enterprises when it comes to securing their network and data, but often rely on legacy and outdated security platforms that fail to provide protection before, during and after an attack. Attackers are finding distributed sites and industrialised locations to be attractive targets because they are often viewed as easier entry points to access sensitive information and data either at the remote location or on the corporate network.

Many mid-sized companies and midmarket organisations still rely on a patchwork approach to security, Cisco adds. With the new Cisco ASA with FirePOWER Services, which it says is the industry's first threat-focused next-generation firewall (NGFW), automated tuning and correlation capabilities prioritise events and reduce false‐positive alerts, reducing IT staff demands. The firewalls also flag previously unknown malware, significantly reducing time to detection and time to resolution from weeks to hours.

The multi‐layered threat protection solution addresses blind spots common with disparate point solutions with many unique detection techniques, including continuous analysis, big data analytic and Cisco threat intelligence. Threats that can be detected and controlled by Cisco AMP include zero-day attacks, advanced persistent threats and targeted attacks, Cisco said.

Cisco Managed Services for Security can supplement customers' internal protection efforts with full‐time, proactive, systematic threat monitoring and management. For customers migrating from existing legacy firewalls or in need of deployment assistance, Cisco offers migration services that help distributed enterprises and organisations with remote and branch offices accelerate the deployment of Cisco ASA with FirePOWER Services. Cisco, along with its partners, provides the expertise, creating deployment plans, testing and implementing the solution to maximise cybersecurity threat defense and performance.

The new ASA with FirePOWER Services models include:

• 5506-X – Desktop threat-centric NGFW for small and home offices as well as small businesses
• 5506W-X – Desktop threat-centric NGFW with integrated wireless access point

Pricing starts at US$995 including a Cisco ASA with FirePOWER Services appliance and management.

Epson printer helps Indonesian entrepreneur expand, diversify

Source: Epson. A range of the results from the printer.

When Indonesian entrepreneur and digital textile expert Budi Santoso opened his own business in 2008, it had nothing to do with printing. Moshaict is a clothing store that specialises in fashions for Muslim women. The first store opened in Jakarta about six years ago. In 2011, he had a brainwave: why rely on external printers, when he could print his own products and sell them in his store? 

Having discovered the Epson SureColor SC-F7070 online, Santoso made some comparisons with other similar machines and found that the SC-F7070 was the most suitable for his needs. “Everything I read talked about the quality of the prints and the cost was within my reach. I also found out that many of the other brands use Epson’s parts so I thought why not get an entire machine that was made by Epson, rather than one that only has parts," said Santoso. 

“Working with my designer, I used the printer to create our own unique fashion designs and print them in-house. It was a hit and we managed to reduce our costs,” 

The in-house capability that Santoso had spread by word of mouth, with one designer telling another and coming to Santoso for printing. This led to the creation of another company, iPrintex.

Since purchasing the SureColor SC-F7070, Santoso has seen his business double. When he started with iPrintex, he went through a roll (approximately 100m) of material per day, but after a year, the business is going through two rolls per day, its maximum capacity.

Source: Epson. The Epson SureColor SC-F7070.

Santoso currently has ten Moshaict outlets in and around Jakarta and is looking to open at least another five more. This means more textile printing, an area that Santoso has already decided to focus on.

"I chose Epson and it paid off; my customers are all very satisfied,” states Santoso. “This investment has already allowed me to grow my fashion business and branch out into a brand new area of business – professional printing. I definitely want to expand my printing capabilities, invest more in it and see it grow.”