Governor's Remarks at the Opening of the Global Banking Leaders Programme
Datuk Muhammad bin Ibrahim
Asian Banking School, NU Tower 2, Kuala Lumpur
28 November 2016
Source: Bank Negara Malaysia 

Thank you for the opportunity to speak at this opening of the Global Banking Leaders programme. Let me commend the efforts of all who have put together this flagship programme, particularly the Asian Banking School and Cass Business School. We have committed much resources and efforts in developing talent in the banking industry. Today, as part of a collaborative effort, we are charting a significant milestone for the banking sector’s investment in human capital.

This programme brings together some of the best resources and leaders in your respective fields. The structured content, courtesy of the Asian Banking School and Cass Business School, is comprehensive. But the unstructured content – the discussions among peers in the halls of this building, or the streets of London’s financial district – will be as invaluable. It is indeed befitting that a programme for global banking leaders should draw on broad and diverse global perspectives. As we face complex challenges in the financial industry, our most important strength must be the ability to harness different viewpoints, and to critique, challenge and improve them to deliver solutions that far exceed the sum of all its parts.

Leadership in banking marches in lockstep with an unwavering commitment to professionalism. Until the Global Financial Crisis of 2007-09, the global economy was adding an estimated 150 million new consumers to the financial services industry each year. According to the World Bank, the rate of increase subsequently diminished in the immediate aftermath of the crisis. This is a sobering lesson on the consequences of lapses in professionalism, which ultimately led to a loss of trust in financial institutions. Episodes of widely publicised financial scandals in recent years are likely to have compounded matters. Public confidence and trust will ultimately be defined by the professional standards that our industry upholds. And the cost of professional lapses, both economic and social, will be far greater than experienced in the past as financial services become more inclusive and integrated globally. Therefore, it is important for us to start the first steps towards professionalising the banking sector.
With these objectives in mind, there are two recent developments that would raise the standards of professionalism in Malaysia’s banking industry:

  • First, is the signing of the industry declaration in support of the Chartered Banking Programme, a flagship professional qualification for present and future banking leaders; 
  • Second, is the expectation for all graduates who are employed by the banking industry to become members of the Asian Institute of Chartered Bankers, and complete a mandatory program on ethics and professional standards. 

Let me elaborate on these developments,

BNM is a strong proponent of the Chartered Banker programme. It is our belief that such a programme can be a catalyst for change in the industry. The declaration by the industry today signals a clear commitment to the professionalisation of banking across all levels of the workforce. The introduction of professional banking credentials through the Chartered Banker program fills a conspicuous gap in ensuring that professional standards are observed and enforced in the banking industry. To unlock the full potential of the chartered banker qualification, the industry should recognise that this professional qualification contributes towards one's career advancement in the banking industry. Over time, the aspiration is to create a cadre of well-respected Chartered Banker holders that will serve as flag bearers for the banking profession. This qualification is a recognition that a banker should wear with great pride.

Over the longer term, the industry should position the Chartered Banker professional qualification as a masters-level equivalent qualification. Continuous refinements and expansion of curriculum on a regular basis are imperative to ensure relevancy with contemporary and future demands for new skill sets. For this to happen, the input of the industry is essential. In this respect, the industry must take an active role in managing the changes that it wants to see to secure a deep talent pool for its future. This would entail working closely with AICB and the Asian Banking School. The industry must be the driver and support the changes needed to achieve a highly competent and professional workforce. It is us collectively, that will shape the future landscape of the industry.

We can start the journey by taking a few meaningful steps. The drive for professionalism must begin at the entry level. Membership of AICB should be made mandatory. Graduates who are employed by the banking industry must become members of the Asian Institute of Chartered Bankers, and complete a mandatory program on ethics and professional standards. It is worth emphasising how important this seemingly small step is.

Today, financial services is a complex business. Regulatory requirements, governance systems and decision-making frameworks are becoming more sophisticated. Making judgment calls have become an increasingly important part of day-to-day policy and decision making. In making these judgment calls, the ability to identify and resolve professional and ethical issues cannot be under-estimated. It is from this perspective that we need to educate and equip new entrants into the industry with good values, norms and ethics.

As an industry we should not simply set our sights on incremental changes to address existing perceptions. We should aspire much more and higher - to rebuild a banking brand that is trusted and respected. To achieve this, as an industry we must continuously demonstrate our ability to deliver value to society.

This is a higher call than just observing industry codes of conduct and ethics. It is about fulfilling a purpose expected of the profession. Because of the public trust entrusted to the banking profession, it should be expected that bankers are held to higher expectations that exceed requirements narrowly dictated by law or commercial interests. This should be driven by a strong sense of purpose. Not unlike the medical profession whose call is to save lives, the banking profession should fundamentally exist to contribute to the betterment of society.

Today, banks rarely appear in the top 10 employers of choice, both globally and within Malaysia. Technology companies and others are becoming increasingly attractive employers of choice. One of the main reasons for this is the strong alignment of organisational direction and organisational purpose in many of these companies. Its employees feel a deep and emotive connection to the company’s goals and purpose. This is hardly surprising. A Harvard study in 2014 found that a collective sense of purpose is an overwhelming differentiator in attracting top talent. The banking sector must similarly create a strong sense of purpose that reflects the needs and concerns of society – such as promoting sustainable finance, improving financial literacy and assuring inclusive access to financial services. Only then can we realise the full potential of positive finance in advancing social and economic development.

Before I end, it will not be complete if I do not touch on recent developments in our ringgit exchange market and Bank Negara’s announcements to reinforce and strengthen our market from being adversely impacted by speculative activities. When it comes to the development of the financial markets and our thinking behind ringgit policy, our philosophy has always been the same. Our market activity and exchange rate should reflect the economic realities of Malaysia. As such, when it comes to the pricing of the ringgit exchange rate, it should never be disconnected from real economic activities in the onshore market.

This brings me to our view on the offshore ringgit non-deliverable forward (NDF) market. In recent weeks, speculative position taking in the offshore ringgit NDF market has had adverse impact on the domestic foreign exchange market. While the ringgit faced the same external shocks as many neighbouring countries, activities in this opaque market had exacerbated the depreciation pressure by disrupting the price discovery process. This, for me, should not be tolerated.

For a small but highly open economy like ours, we face unique challenges. The volatile and erratic movements in the financial markets render the opening up of financial markets and continuous liberalisation more challenging. Nevertheless, as an economy that operates on free market principles, it is still a path we need to take. But we need to open up responsibly – we have to ensure the markets, players and products in our economy are transparent, fair and serve their intended purposes.

Paradoxically, while there has been tremendous demand globally for transparency on governments and policymakers, the same level of intensity is not necessarily reflected for financial market players. Perhaps it is time to change the rules of the game. Financial market players, especially those in the NDF market, need to be as transparent as the demands they expect of others. Similarly, jurisdictions that govern them ought to make this opaque market more transparent and accountable.

On the Bank’s part, our actions, including recent measures, are not new. The Bank has been taking measures to reduce the speculative and damaging influence of NDF since the early 2010s. It is our responsibility to ensure orderly functioning of the foreign exchange market and maintain public confidence in the financial system. The recent actions by the Bank are merely to reinforce our existing policy on offshore trading of the ringgit. Besides reducing the detrimental effects of financial market speculation on our markets, these policy reinforcements are aimed at instilling greater transparency, integrity and fairness in our financial markets. This is our responsibility as regulators and policymakers, of financial market development that aspires to see a more open and transparent market.

On that note, it gives me great pleasure to join the score of executives here this morning who have been chosen as participants of the Global Leadership Programme. I have great confidence that you will find encouragement, reinforcement and inspiration throughout the program to become better and more enlightened leaders in your own organisations.

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