Tan Kin Lian's Blog: Change in business culture of banks

Sunday, August 03, 2008

Change in business culture of banks

Dear Mr. Tan,

I witnessed the changes in the banking industry first hand. When I joined a bank in 1989, bankers were well regarded even though our salaries were not as high as today. Integrity was the most important quality, as we are given the responsibility to look after depositors' money.

Banking is a business where the product is easy to sell, as we are giving out money and many people need a loan from the bank. Bankers must put the depositors' interest above sales.

The bank will assess your character and your technical skill sets. Once you are selected to join the bank, it is a privilege. If you are selected to be a credit manager you have arrived as the bank has empowered you to give loans. You have a long term career with the bank.

Foreign exchange dealers were there to support the lending business and not there to gamble or speculate on the bank's balance sheet.

Investment bankers are not allowed to take in public deposits. They start with a clean page every day. In essence, they were brokers, they have to hustle to make a living. No qualms about misleading investors. However they were highly paid but they put their money back into the firm as they were partnerships. That acts as a check to their excesses.

Later when they became listed companies, they took even more risk with other peoples money. Inevitably, all the commercial bankers wanted to be investment bankers as they are so well paid.

Allowing commercial banks to become investment banks is a recipe for disaster, as they have the balance sheet and public deposits to gamble with and have access to a large retail franchise to exploit. I never thought I will live to see the day when banks are selling their credit cards in Raffles Place like tourist touts. We sink to a new low when we out sourced it to a third party.

Where is the bank culture now ? Greed is acceptable. Well paid, short term careers is the order of the day because someone else can pick up your mess. Any way you are paid more than if you have worked longer with the institution.

5 comments:

David said...: You can see where the banks' priority now is by looking at the way they renovate their branches. They have bigger spaces for more cubicles to do selling. The space for counters for normal banking transactions has shrunk. Even the teller is also doing sales work (definitely not voluntary) and prolong the queue. Even my company cafeteria sometimes has bank booth set up (definitely outsourced) to promote credit card and even disturb people having their lunch.
In short the environment has become more risky for those who can fall prey easily to such things, especially with goodies dangling and pretty girls and handsome men talking to you.; August 03, 2008 2:00 PM
ym said...: i believe this is the product of worldwide monetary expansion..

it fools people to misprice risks, become more risk-taking, give the ILLUSION of economic prosperity, misallocate capital, create speculative BUBBLES...

all the money created does not exist, is not backed by anything, and for all practical purposes is FAKE...

add to this, the now widely accepted "theorectical voodoo of financial engineering" and you have the biggest financial crisis since the great depression...

as nassim taleb says in one of his interview, do not trust these ppl to drive your car...; August 03, 2008 2:57 PM
hongjun said...: I remember receiving a call from an outsource company to promote a credit card from the Bank of China. I questioned them how they managed to get hold onto my contacts since I do not have any banking relationship with BOC. According to them, they got it from contests or lucky draws I have enrolled for, and many other sources. These contacts are sold to the outsource company. If the outsource company is correct and not lying, only names and contact number are sold. Other details like address, NRIC, etc are not sold.

From them, this practice is legal and there are many other outsourcing companies doing the same thing with valid business registration numbers. I talked to their manager and demand my name to be removed from their call-list. I commented on how their customer service officer should introduce themselves. I bet many are deceived and thought the caller works for the respective banks but as a matter of fact, they work as a middle man. A prankster can easily pretend to be from a certain bank and con a gullible victim into surrendering his sensitive personal details.

Word of advice: If you wish to apply for credit cards, get application forms from the respective banks or apply it online directly via websites.

hongjun; August 03, 2008 4:44 PM
Falcon said...: Guess who are behind all these financial mavericking? For years I have been saying that the liberal FT policies of our government are letting in the sharks and baraccudas into our small guppy pond. Our local guppies are being eaten alive! Get MAS to check on who heads all these middle-men schemes. If they bother to check, a pattern will emerge. This is what citizens expect our million dollar ministers to do, find ways to protect the citizens after liberalising our guppy pond to the oceans of the world.; August 03, 2008 6:50 PM
ym said...: mr tan, share with you and your readers, john bogle's comments on the financial crisis and our hugoboss suited over-paid "bankers" :

http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=93218187&m=93218169

rgds,
ym; August 04, 2008 8:21 PM