Armenia
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  • Uncertainty Avoidance This dimension refers to how comfortable people feel towards ambiguity. Cultures which ranked low (compared to other cultures), feel much more comfortable with the unkown. As a result, HIGH uncertainty avoidance cultures prefer formal rules and any uncertainty can express itself in higher anxiety than those from low uncertainty avoidance cultures. Power Distance According to Hofstede & Bond (1984), power distance is defined "as the extent to which the less powerful members of institutions and organizations accept that power is distributed unequally" (419). In other other words people in high power distance cultures are much more comfortable with a larger status differential than low power distance cultures. Masculinity-Femininity This dimension tends to draw unwarranted criticism for its name alone. It basically refers expected gender roles in a culture. The cultures that scored towards what Hofstede referred to as "masculine" tend to have very distinct expectations of male and female roles in society. The more "feminine" cultures have a greater ambiguity in what is expected of each gender. Individualism-Collectivism This dimension is the same as that proposed by Hall and was verified in Hofstede's study ( and other studies time, and time again).
  • Uncertainty Avoidance This dimension refers to how comfortable people feel towards ambiguity. Cultures which ranked low (compared to other cultures), feel much more comfortable with the unkown. As a result, HIGH uncertainty avoidance cultures prefer formal rules and any uncertainty can express itself in higher anxiety than those from low uncertainty avoidance cultures. ------------------- Uncertainty Avoidance Stems from the basic observation that the future is unknown and always will be. Some societies accept this uncertainty more easily than others, one could qualify them as being more philosophical. One can also link this factor to conservatism, in case of high uncertainty avoidance (e.g. Singapore). -------------------- With higher uncertainty avoidance comes the belief that dissidence is dangers, time is money and a need for written rules and regulations along with a belief in experts Lower uncertainty avoidance indicates an acceptance of dissent, time is free, few rules, more risk, belief in generalist and common sense RISK-ORIENTED STRUCTURE-ORIENTED Flexibility. Rules should fit situations and may be broken Rules and procedures are specified and should not be broken Pragmatism, practical principles Philosophical, normative rules Risk-taking Conservative Relatively open towards different or marginal people Relatively intolerant vis-a-vis original or marginal people Information to share is power Information held is power

Armenia Presentation Transcript

  • 1. ING Group and Pension Funds: International Differences Drs. Peter de Bruijne AAG MBA Armenia - 29 May 2005
  • 2. This Presentation is about ...
    • ... the influence of culture on ...
    • … pension, as basis of a healthy long life.
  • 3. Agenda
    • ING Group as source of my experience
    • Pension Funds
    • Value chain
    • ING examples from the Value Chain
      • Technology
      • Administration
      • Marketing
      • Distribution
      • Client-Service
    • Relevance for Armenia?
  • 4. Peter de Bruijne
    • ..1988 actuary
    • ..1997 manager life insurance in Netherlands in Curaçao (Caribbean)
    • 1997-2000 chairman of 3 rd pillar open pension fund in Czech Republic (€ 10 - € 100 m)
    • 2001-2004 advisor employee benefits for ING in HU, ESP, GRE, RUS, LUX, UKR, GER
    • 2001.. board member 2 nd pillar occupational fund in Netherlands (€ 8 bn)
    • 2004.. advisor Financial Institutions Insurance : Sri Lanka, UAE, Mongolia Pension : Antilles, el Salvador, Nigeria
  • 5. ING Global Network ING operates in 50 countries and employs 115,000 employees world-wide Europe Austria Belgium Bulgaria Czech Republic France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Poland Portugal Romania Russia Serbia & Montenegro Slovak Republic Spain Switzerland Turkey Africa/Middle East Iran United Arab Emirates Asia/Australasia Australia New Zealand China Hong Kong India Indonesia Japan Kazakhstan Malaysia Philippines Singapore South Korea Taiwan Thailand North America Mexico United States Canada South America Argentina Brazil Chile Cuba Curaçao Peru Wholesale Banking Insurance Asset Management Operations Ukraine United Kingdom Last update: March 2005
  • 6. A good balance of businesses Operating profit before tax in EUR million 2004 2003 %change Insurance 4,005 3,486 14.9 Europe 1,733 1,791 -3.2 Americas 1,669 1,310 27.4 Asia / Pacific 751 411 82.7 Other -148 -26 Banking 3,414 2,371 44.0 Wholesale Banking 1,932 1,272 51.9 Retail Banking 1,170 1,058 10.6 ING Direct 432 151 186.1 Other -120 -110 Total ING Group 7,419 5,857 26.7 2004 Profit contribution of business lines* * Excludes component ‘other‘ in banking and insurance Europe 22% Americas 22% Asia / Pacific 10% Wholesale Banking 25% Retail Banking 15% ING Direct 6% Insurance Insurance Insurance
  • 7. ING Advisory concept Asset Management Insurance Wholesale Banking Retail Banking ING Direct
  • 8. Build on our skills and experiences:
    • We will tell from our own experience
    • We can show you our best practices
    • We like to help with implementation
  • 9. Pension Funds
    • Private financial institutions with purpose to provide retirement income from invested funds
    Commercially and non-commercially available assets (total pillar II and III) Source: BCG-database, BCG growth projections, in co-operation with ING 2002 2015 Slovakia Portugal Egypt Turkey Israel New Zealand Hong Kong South Korea Italy NL Germany DK Spain UK US Thailand Philippines Indonesia Singapore Malaysia China Morocco SI Croatia RUS Iran U.A.E. Kazakhstan Ukraine Bulgaria Romania Mexico Peru Chile Columbia Argentina Uruguay Cuba Venezuela Swiss South Africa Czech Hungary AUS Greece India Taiwan (1) Sweden Brazil Norway Australia BE Lux Finland Denmark Poland Japan France UK (USD 6 trillion) Ireland US (USD 24 trillion) Canada NL (USD 1.3 trillion) Estimated real asset growth 2002 - 2015
  • 10. Value Chain
    • Influence of culture on the value chain often discussed
    • Service
    • Distribution Barney, Jeannet & Hennessey,
    • Marketing Hodgetts & Luthans, Kotler
    • Manufacturing
    • Product design - Hempel, Herkenhoff
    • Technology - not well described
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 11. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 12. National Culture
    • “ National culture is defined as the values, beliefs, and assumptions that are learned in early childhood and distinguish one group of people from another (Hofstede 1991) ”
    • Hofstede Culture-Dimensions (1980)
      • Uncertainty Avoidance (UAI)
      • Power Distance (PDI)
      • Masculinity-Femininity (MAS)
      • Individualism-Collectivism (IDV)
      • + Long Term Orientation (LTO, 1991)
    • >70 Countries
  • 13. National Culture Example UAI
    • Uncertainty Avoidance Index
    • Flexible
    • Pragmatic
    • Gamble
    • Rules/regulations
    • Conservative
    • Control
  • 14. Culture’s influence on Asset Allocation
    • Hypothesis:
    • “ In countries with a higher uncertainty avoidance index (UAI) pension funds will invest less in equity than in countries with lower uncertainty avoidance index”.
  • 15.
    • Hypothesis rejected
    Culture explains Asset Allocation ? Hypothesis not rejected P < 1 Promille incorrect Culture explain s 55% of Equity investments non OECD OECD
  • 16. Example Chile: influence of asset size
    • Expansion of investment freedom
  • 17. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 18. Pension Scheme Development
    • Objective?
      • Capital Market Development? > Savings > OP or MuF : Chile
      • Ageing problem? > Funding > OP + WP : Western EU
      • Source Diversification > Multi pillar > WB-5 pillars : West Africa
    • Characteristics?
      • Build-up phase only?
        • Will shorten investment duration (and lower yield)
        • Will create 2 nd “sales moment” with commission expenses
        • Will concentrate the longevity risk
        • Will create more focussed companies
        • Will promote lump sum payments
      • Dependents?
      • Disability?
      • Choice?
  • 19. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 20. Administration - Manufacturing
    • Operational
      • Mandatory or Voluntary Pension
      • Legal contract requirements (# signatures)
      • Underwriting requirements
          • Technical
          • Medical
          • Money Laundry
      • Required interfacing
          • Employer
          • Supervisor
          • Tax authority
          • Post (addresses)
          • Clients (internet)
      • Standardisation
          • Straight through processing
          • Faultless basic data (id)
  • 21. Administration - Legal Organisation
    • Trust/foundation (NL)
      • + no strings attached
      • - no transparency
    • Mutual (HU)
      • + power with involved people
      • - none financial decision making
    • Stock company (CR)
      • + clear transparent legal structure
      • - shareholder has different interests than Fund
    • On Balance rights (Germany)
      • + good for cash-flow position of employer
      • - stay dependent on employer
    • Outsourcing: in NL, CR, Pol, Hu, UK, etc.
    PF Investm Admin
  • 22. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 23. Marketing:
    • Promotion
      • Important in retail market
    • Price:
      • Commission important in broker-agent market (CR)
        • Timing even more than amount
      • Yield important in commodity market
    • Product:
      • Quality important for Wholesale market
        • Solvability, employer interfacing, investment strategy
      • Quality important for transfer market
        • Client operational processes
        • Awards (Poland)
    • Work Site marketing
    S ources used in Slovakia (1 st Q 2005) : 32% Advertising in media 23% Mediators 16% Acquaintances 9 % Publications 8% Independent experts
  • 24. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 25. Distribution: + re-distribution!
    • Slovak Republic
      • 30.000 mediators
      • 780.000 savers (in week 16)
        • Initially estimated potential 1.1 – 1.3 million save rs
        • M aximal potential 1.9 - 2.2 million people
    • Broker market: B2A2C
      • ING was retail Insurance Co
      • ING has high name recognition (>85%)
    • > Chile, CR, Poland
    • Russia
      • In house team of 5 fte
      • 2 clients in Q1 2005
        • 1 client of 5000 empl
        • Maximal potential >10 mln people in Moscow
    • Wholesale market: B2B
      • ING is wholesale Bank in RU
      • ING is well known as FI in RU
      • Needs no promotion budget
    • > NL, Belgium
  • 26. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 27. Service: decide by Market or Legislation
    • Dutch market self-regulation on indexation
    • Category indexation Policy Payment Proposed Proposed Scheme Text Communication
    Source: OPF
  • 28. Service: Communication
    • KISS!
      • Keep
      • It
      • Straight &
      • Simple
    • Dear client,
    • we have also provided you with the option of notifying us of changes or of carrying out amendments to your contracts via the Internet.
        • Application to change personal details
        • Application to change the method and frequency of supplementary pension insurance payments
        • Application to suspend payments
        • Application to change or add a beneficiary (beneficiaries)
      • We used to let the actuaries and lawyers decide on texts: DON’T
      • Keep the ultimate reader in mind
  • 29. Value Chain differences from ING
    • Service : Communication in NL & Czech Rep.
    • Distribution : ING in Slovak Republic & Russia
    • Marketing : Examples from Poland & Czech Rep.
    • Manufacturing : Administration issues from Poland
    • Product design : Pension Scheme from Czech Rep.
    • Technology : Asset allocation in Chile
    Asset management & Risk Management Pension Scheme development Administration Distribution Support and customer service Value Chain adjusted for Pension (McKinsey and Co) Marketing technology product design manufacturing marketing distribution service
  • 30.
    • Needs influenced by culture!
      • Listen
      • Ask questions
      • Understand “why”
    • Do Not Copy !! Make your own meal
      • Use expertise of public and private sector
      • Use ING’s international experience
    Relevance for Armenia?