Political unrest, inflation and IT security are the top three threats identified as the main inhibitors of revenue growth in the financial services industry (FSI) this year, according to results from a survey of senior decision makers representing 136 unique financial institutions across Asia/Pacific.
The findings of the survey also reaffirmed IDC Financial Insights’ prediction that the economic center of gravity is shifting towards the Asia/Pacific region. Fifty-four percent of the respondents are expecting high growth of over 10% in revenues from Asia/Pacific financial institutions in 2011. Forty-six percent are expecting medium growth of between 3%-10%. None of the respondents surveyed expect low or no growth.
"Banks in Asia are set to reap the rewards of the strong financial capital and liquidity that they have wisely built over the years. With the economy out of recession and businesses running at full capacity, 2011 will see strong financial performance among the region's financial institutions. However, rising interest rates, inflation issues as well as political unrest need to be resolved quickly so that they don't derail the momentum in the industry," remarks Keith Lam, Associate Market Analyst for IDC Financial Insights Asia/Pacific.
In his keynote presentation, Tony Chew, Director, Technology Risk Supervision, Monetary Authority of Singapore says that technology risks are unlike any other risk. When core banking systems fail and customers cannot access their accounts, the bank's business operations instantly come to a standstill, says. "The impact on customers is immediate and the consequences widespread." Despite growth in the economy, Chew cautions that "Sacrificing safety for higher profitability is a fool’s paradise as a huge IT debacle will wipe out the false gains of such a folly.”
For Sigit Pramono, Chairman of PERBANAS, Asia has overtaken the economic dominance from the West. In terms of nominal GDP, ASEAN ranks as the 9th largest economy in the world or the 3rd largest in Asia. He adds, "Open opportunities exist in the equal playing arena of the One ASEAN market especially for Indonesia where opportunities for more capital injection exists. IPO and M&A will also gain momentum in 2011."
According to John Laurens, Head of Global Payments and Cash Management, Asia/Pacific, HSBC, Asia will account for nearly 40% of global trade by 2028 and shifting trade patterns will create a change in trade finance and transaction banking requirements. "The move will generate opportunities for new products and services, ultimately triggering a rise in transaction volumes.” Laurens advises, "Banks will need to change their operating models in order to take advantage of this opportunity."
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