Sam Ahmed was invited by NUS MBA school to give a 3 hour session workshop on the “Future of Banking and Finance in Asia & how Singaporeans can remain competitive”. The talk was given by Sam Ahmed and attended also by Simon Lacey who was involved in the Q&A.
During this session, he covered the following topics:
- How banking had evolved from traditional banking to capital markets
- How a global market for OTC derivatives was created catering to both banking and the buyside companies and the benefits it inherently bought to the overall economy by creating better hedging mechanisms as well as the instruments to help institutions with term funding
- The transformation of the OTC derivatives market: how the instruments were eventually being created whose value was less related to fundamentals but more to mathematical assumptions e.g. CDO’s
- The financial crises: what really caused it? The relationship that was formed between the real economy and financial markets through instruments such as mortgage back securities that helped spread the virus from the housing markets to capital markets and then back to the real economy.
- The financial crises: prevailing conditions that added to it. Case Study of Lehman Brothers. Over leveraged strategy with a lack of emphasis on controls and risk management and with an overly ambitious agenda to capture market share in securitized products & FICC business. Finally a lack of ethical and compliance related culture was apparent in the DNA of the company. This was not only characteristic of Lehman Brothers but also many of the banks in that era
- The aftermath: post crises environment and regulations. Dodd Frank, EMIR and Basel 3 and the affects on global markets. How new regulations of clearing, stringent capital rules, SEFs & regulatory reporting is making it very challenging for small players and buy side institutions to carry on with their OTC trading programs. Compliance strategy and how banks are over hiring in the compliance field to satisfy regulators. Compliance today is an unsustainable model which should be transformed by compliance technology in the next 3 years as IT replaces the bulk of the newly hired compliance personnel
- How China is Rising: Case study of the offshore Renminbi and how China strategically built offshore hubs and internationalised the currency from 20th place to the 5th most utilised currency globally. Also focused on Xi Jinping’s policy of deliberatly slowing growth in order to undertake much needed reforms. Finally asked the students if China will emerge as the Asia’s de facto leader and the case of the Asian Infrastructure Investment Bank
- The rise of disruptive technology which will threaten full service banks and the subsequent drive for banks to invest in mobile and digital platforms. The advantage of smaller and more nimble players to change strategy to seize opportunities in this changing environment
- The rise of shadow banking and how unregulated alternative means of funding can destabilize the markets
- The future of Banking and Asia: Sector by sector analysis on where the jobs are and in which countries. Example: 1. M&A: watch for cross border acquisitions of Chinese Banks as they try and expand their presence by buying up foreign banks that are closing its businesses in the region or 2. HR: continued offshoring to Philippines & India of generalist HR roles and etc
- Finally he spoke about the need for Singaporeans to be more aware of macro trends outside its borders both from a regional and global perspective. He referred to Straits Times interview of Victor Mills who claimed that Singaporeans do have a “sense of entitlement” and mentioned that while this statement is rather stereotypical and does not cover everyone, it is important to take feedback gracefully and with the objective of self reflection. He further stated that very strategic government policies in the 70’s and 80’s focused on education, transport, health, housing and building a business friendly global hub had given Singaporeans today an advantage of living in a first world country with all the perks that it has to offer. But I did mention that all of this hard work can be unwound and disappear at any stage. He drew a parallel with the SARS crises in 2003 and how quick the foreign investors and companies had pulled out of Singapore. He concluded to the students by telling them that there is a huge middle class growth of educated and skilled workers that is emerging in Asia and therefore in order to compete with them for jobs in the next 10-20 years, Singaporeans cannot only rely on education but also need to enhance their drive & hunger as well as learn to react with humility and wisdom when given feedback
Overall, Deriv Asia was pleased with the level of interest from the students as well as the questions we were asked, all of which to me demonstrated both their maturity and a deep understanding of global and regional economic-political developments and what they need to do today to stay ahead of the race in the Asian continent