Asian banks face tough competition<\/p>\n
SINGAPORE (AFP): Asian banks face fierce competition in
\nattracting deposits as a result of the regional financial crisis,
\nwhich has forced them to streamline operations, a poll of 50
\nbanks in seven economies showed.<\/p>\n
The banks will become less differentiated in their choice of
\ncustomers, products and approach to delivery of services,
\naccording to survey results issued Sunday by Singapore-based
\nresearch and publishing company Asian Banker Journal.<\/p>\n
\"Across the region, banks that previously had very different
\nfranchises are beginning to all want to compete in the same
\nareas,\" said Carol Wheatcroft, a senior researcher and co-author
\nof the survey report covering Hong Kong, Indonesia, Malaysia, the
\nPhilippines, Thailand, Singapore and Vietnam.<\/p>\n
\"We especially found many middle market or corporate banks
\nsaying that they wanted to compete for retail deposits, which
\nwill increase the competition in this area,\" Wheatcroft said.<\/p>\n
The survey, the first of its kind in the region, had sought to
\ndetermine the impact of the financial crisis on bank strategy and
\ntechnology in Asia, especially business plans and budgeting
\npriorities.<\/p>\n
The Asian financial crisis broke out in mid-1997 when
\ncurrencies began sliding rapidly against the U.S. dollar. It hit
\nthe financial sector and other key sectors and slammed the brakes
\non the region's rapid economic growth.<\/p>\n
\"As an immediate reaction to the crisis, the survey shows that
\nfinancial institutions have put forth a defense business strategy
\nby shrinking expenditures and consolidating operations,\" said
\nEmmanuel Daniel, editor-in-chief of the Asian Banker Journal and
\nthe other author of the report.<\/p>\n
The banks said in the survey that apart from attracting retail
\nand corporate deposits, the other \"greatest competition\" areas
\nwere in corporate lending, trade finance, credit cards, cash
\nmanagement and third party funds.<\/p>\n
The poll, which examined spending among banks in the region on
\ninformation technology (IT), also showed they were not investing
\nadequately in building their technology infrastructure.<\/p>\n
\"The survey benchmarked IT spending against the 1997 annual
\nresults of international banks in developed countries, and found
\nthat on average, Asian banks do not spend enough on IT to
\nleverage their competitive advantages,\" the survey report said.<\/p>\n
Banks in Singapore and Hong Kong have the highest IT spending
\nlevels per employee in the region while in Thailand and
\nIndonesia, which have large and inexpensive labor pools, the
\nimpetus to invest in technology was seen as not very strong.<\/p>\n
Bank spending on IT as a percentage of shareholders' equity
\ndrew a \"remarkably different\" picture, with specific banks in the
\nPhilippines, Indonesia and Malaysia spending a relatively high
\npercentage compared to their counterparts in Singapore and Hong
\nKong.<\/p>\n
The survey found that the average IT spending as a percentage
\nof shareholder equity for banks in the region surveyed is between
\n1 percent and 4 percent.<\/p>\n
Major European and American banks benchmarked in the survey
\nspend double the amount, clearly indicating that if Asian banks
\nwant to be competitive in the future, they cannot afford to lag
\nbehind in their IT investment, Asian Banker said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asian-banks-face-tough-competition-1447893297",
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