BANKS and financial institutions in Malaysia are still lacking in the areas of operational risk management and customer service, the cornerstone that is needed for them to further improve the profitability of their business, according to professional services company Deloitte KassimChan.
Its director (financial services) David Vicary said that although the level of operational risk management and customer service had generally improved compared with a few years ago, there was still room for improvement.
In terms of operational risk management, financial institutions in Malaysia are 'on the first rung of the ladder' compared with other Asian countries. Financial institutions in Malaysia are probably ahead of Indonesia and the Philippines in risk management, but behind China, India, Thailand, Hong Kong and Singapore.
The same thing applies to customer service in that there are countries in the region which provide better customer services than banks in Malaysia, he told StarBiz.
Good risk management and customer service involve everyone in the organisation and not just a select handful, so everyone should be pro-active in the two areas, he said.
According to Vicary, one of the biggest challenges in ensuring adherence to and implementation of operational risk management and customer satisfaction is to get people in the organisation to change their behaviour or adopt a more pro-active stand on the two subjects.
To this end, chief executive officers and managerial staff should take the first step in implementing good risk management and customer service, so that their subordinates and other staff in the financial institutions could emulate them.
Some benefits of having good operational risk management are improved profitability of an organisation, reduction of operational errors and enhanced predictability of a business and improved customer service, he said.
Asked whether the upgrading of risk management would, to an extent, prevent a new round of mergers in the banking industry, Vicary said it would not.
I think there are too many banks in the country and it is only natural that they merge to provide better and efficient services to customers.
On the logistics aspect, Malaysia has a population of 22 million and currently with 10 anchor banks plus some foreign banks and niche players, there are just too many of them providing almost the same products and services. And therefore, a further round of rationalisation should take place.
Market forces (demand and supply) will come into play and ensure that further consolidation in the banking industry takes place, hence resulting in a few strong anchor banks in the country, he said.
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