LEADERSHIP. LEARNING. TECHNOLOGY BUSINESSTHE WEEK OF JUNE 17, 2013Strength overplayedWould Abraham Lincoln’s leadershiphav...
MW4•THEEDGE SINGAPORE | JUNE 17, 2013COVERSTORY | BY ASSIF SHAMEEN |Sanjoy Sen was busy presiding over thepainful restruct...
THEEDGE SINGAPORE | JUNE 17, 2013 • MW5the driver’s seat at the No 6 Indonesian bank.ANZ is now the second largest among t...
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Sanjoy sen -June 14, 2013

  1. 1. LEADERSHIP. LEARNING. TECHNOLOGY BUSINESSTHE WEEK OF JUNE 17, 2013Strength overplayedWould Abraham Lincoln’s leadershiphave been more effective had he notbeen quite so caring?Porsche orRolls-Royce?The art of selling a luxury car,according to Eurokars’Karsono KweeSpeed and safetyAkamai Technologies offerssecurity against denial of serviceattacks from hackersANZ’s Sanjoy Sen has been tasked to builda regional retail franchise for the Australianbanking powerhouse. The obstacles lookdaunting, but Sen is relishing the challenge.Start where you are. Use whatyou have. Do what you can.— Arthur AsheTarget AsiaTarget Asia
  2. 2. MW4•THEEDGE SINGAPORE | JUNE 17, 2013COVERSTORY | BY ASSIF SHAMEEN |Sanjoy Sen was busy presiding over thepainful restructuring of Citibank’s re-tail banking business in the Middle Eastand North Africa a year ago when a callcame to gauge his interest in growing aconsumer banking franchise across 21 marketsin Asia-Pacific. “My friends all thought I wascrazy to leave Citibank”, just as the troubledglobal bank was on the verge of a turnaround,he recalls. But the more he thought about it, themore he realised the job he was being offeredwas what he really wanted to do. “You don’t getthe exciting opportunity to build a regional retailbanking franchise in Asia every day,” he says.So, in October, Sen began work as head of retailbanking for Australia and New Zealand Bank-ing Group or ANZ, with the responsibility forbuilding the bank’s retail business in Asia.In many ways, Sen is tailor-made for thejob, having headed Citi’s retail operations inChina, India, the Middle East and North Af-rica. With a degree in electronics engineer-ing and an MBA from the Indian Institute ofManagement, Sen joined Citi 23 years ago andworked his way up in Citi to regional roles. Be-fore relocating to Dubai, Sen was retail bank-ing head of Citibank China for two years, andbefore that, he headed Citi’s retail bankingunit in India. His mandate at ANZ is to de-velop connectivity across markets to deliverproducts and services for customers with do-mestic and regional needs.ANZ’s foray into Asian retail banking ispart of its “Super Regional Strategy”. Eversince Michael Smith was lured from HSBC’sAsian operations to run ANZ more than sixyears ago, the latter’s top management hasarticulated an audacious vision to rebuild thetheANbawiedToSmchantaiCEtoAu20esAsnoforStabagiosomlartrepasumgloforasvera rinma“RanforsaybraIndenmainsrearecstifinretersbaANlanannieornean“WsaygoproNohoareAsAututstrnememanegioersopantohaneiscomSinSeninTargetAsiaANZ’s Sanjoy Sen has been tasked to build aregional retail franchise for the Australian bankingpowerhouse.The obstacles look daunting, butSen is relishing the challenge.bank into an Australia-based, Asia-focused fi-nancial services behemoth that leverages itsheft Down Under with its growing Asian con-nectivity. Smith’s stated goal was to establish“a real franchise” in the region as opposed tojust a footprint that other Australian banksdoing some business in the region have. Theformer HSBC Asia chief recruited senior Asia-experienced bankers — from Citibank, Stand-ard Chartered as well as his former employer,HSBC — to grow ANZ into an Asian bankingpowerhouse.ANZ Bank, Australia’s third largest, is amongthe top 20 of the world’s best capitalised banks.ANZ is a core part of the country’s six protectedfinancial services pillars — four large banks andtwo giant local insurers. While rivals Westpacand Commonwealth Bank are still mostly do-mestically focused and National Australia Bankhas confined its growth overseas to developedmarkets such as the UK, alone among Austral-ian banks, ANZ has long had a fledgling pres-ence in Asia. Over the past two decades, it hasexpanded in the region, only to retreat and lat-er expand again. In 2007, Smith arrived at ANZand vowed to remake it into a regional player.It was a clever differentiating strategy as bankshad been giants at home but minnows on theglobal front. Ironically, ANZ once owned Grind-lays, the largest foreign bank in the Indian sub-continent, which it sold to Standard Charteredmore than 12 years ago. And indeed, Grindlaysonce owned Dao Heng Bank, which changedowners a few times over 15 years before it wasbought by DBS Group Holdings in 2001.In the aftermath of the global financial crisis,Smith acquired the Asian retail banking assetsof the UK’s troubled Royal Bank of Scotland,buying up its branch and consumer opera-tions in Singapore, Hong Kong, Taiwan, Indo-nesia, the Philippines and Vietnam, giving it54 additional branches, US$4 billion ($5 bil-lion) in new loans and more than US$9 billionin new Asian deposits and a base of two mil-lion new Asian clients. RBS had itself boughtthat franchise after merging with Dutch giantABN Amro just two years earlier.ANZ has since grown its total Asian cus-tomer base to more than 2.6 million, up from925,000 in 2007 and now has 94 branches inAsia, compared with just 30 branches six yearsago. The Australian bank employs more than9,100 people in the region. Earnings from itsAsia-Pacific businesses have grown more thanthree-fold since 2007 to A$976 million ($1.15billion) in 2012.Despite the big headway the Australian fi-nancial group has made in the region duringthe gregarious CEO’s six-year tenure, two keytargets have eluded Smith: a big footprint inSouth Korea and Indonesia. Smith had bid forKorea Exchange Bank when he was headingHSBC’s Asian operations, so when he crossedover to ANZ, his relentless pursuit of KEB con-tinued. A year ago, KEB was acquired by localrival Hana Bank.Smith also tried in vain to increase ANZ’spresence in Indonesia by tightening the bank’sgrip on its Indonesian associate, Panin Bank.Even though ANZ increased its stake in PaninBank to 39% from 30% six years ago, it wasunable to turn it into a subsidiary. With tighterbank ownership rules in Indonesia, it is nowtoo late for ANZ to increase its stake in Panin,though Smith has indicated that he is happywith the current stake, which still puts it inANZ is Australia’s third largest, and among thetop 20 of the world’s best capitalised banksBLOOMBERG
  3. 3. THEEDGE SINGAPORE | JUNE 17, 2013 • MW5the driver’s seat at the No 6 Indonesian bank.ANZ is now the second largest among the glo-bal banks operating in Indonesia, behind Citi,with 1,900 people working in its own-brand-ed 28 branches.Tough businessSmith’s original vision was to build a full fran-chise in Asia — a large institutional businessand, as much as possible, a decent-sized re-tail business. To meet that objective, the ANZCEO had articulated a strategy to source 25%to 30% of his bank’s earnings from beyondAustralia and New Zealand, mostly Asia, by2017. While barriers in the financial servic-es business are slowly coming down acrossAsia, consumer banking in the region is stillnot an open playing field. Only a handful offoreign players such as colonial era HSBC,Standard Chartered and New York-based Citi-bank, which have had operations in the re-gion for more than a century, have achievedsome scale in consumer banking alongsidelarge local banks. “Retail banking is an ex-tremely tough business everywhere and it isparticularly tough in Asia,” notes Sen. “Con-sumer banking is a segment where many largeglobal players have faltered in recent years, sofor a bank such as ANZ expanding in a regionas diverse as Asia-Pacific, we need to remainvery focused,” he told Management@Work ina recent interview.But why is ANZ so keen on retail bankingin Asia, particularly in fiercely competitivemarkets such as Hong Kong and Singapore?“Retail banking brings in the brand, branchesand physical presence, which ANZ requiresfor a strong super regional presence in Asia,”says Sen. “Whatever you see here in Asia, ourbranches and ATMs in Singapore, Hong Kong,Indonesia, Taiwan, it actually helps strength-en the ANZ brand in Asia through branding,marketing and sponsorships,” he says. “As aninstitutions-only or markets-only business, wereally would not be able to have strong brandrecognition in the region.”Moreover, he says “retail banking also bringssticky deposits for ANZ in Asia”. If the globalfinancial crisis proved one thing, it was thatretail deposits are more valued by sharehold-ers than institutional deposits, he adds. Retailbanking also leverages the connectivity thatANZ in Asia has with Australia and New Zea-land as its home market, he notes. Australiansand New Zealanders working in Asia, compa-nies from Down Under doing business in Asiaor Asian companies expanding southwardsneed a bank with a strong footprint in Asiaand knowledge of Australia and New Zealand.“We have got that connectivity well covered,”says Sen. “Australia is the place where Asiansgo, whether it is to send kids to college, buyproperty or do commodities trade,” he says.Not only is Australia nearer, or just a seven-hour flight away, unlike the US or UK, whichare more like a 14-hour flight away, affluentAsians are actually now more comfortable inAustralia. “As one of the largest financial insti-tutions in Australia and New Zealand, we arestrategically the best positioned to help con-nect high-net-worth individuals or small andmedium-sized companies in Asia to our homemarket,” says Sen.Clearly, it is not just its Asia-Australia con-nectivity that ANZ is leveraging, but also its re-gional connectivity. “We have affluent custom-ers from China or the Philippines who want toopen an account or buy property in Singapore,and customers in Indonesia or Taiwan who wantto do the same in Hong Kong,” he says. “Wehave customers in China who are doing busi-ness in Papua New Guinea and helping themis where we can add value that some of ourcompetitors are unable to,” Sen says.Aside from its core Asian markets such asSingapore, Hong Kong, Taiwan and Indonesia,Sen notes that ANZ has a very large businessin the Pacific region — including Fiji, PapuaNew Guinea, Guam and the Solomon Islands.“These are small but high-growth marketswhere we have a large market share, so wewant to continue growing our business there,”he says. “The Pacific is a region that is veryrich in natural resources and you don’t havethe sort of competition that you have in Sin-gapore or Hong Kong,” he says. That meanshigher margins.ChinaANZ is growing in China. It incorporated lo-cally in 2011 and has opened new branches inBeijing, Shanghai, Guangzhou and Chongqing.The Australian bank also has investments inShanghai Rural Commercial Bank and theBank of Tianjin as well as a rural bank in Li-angping and has set up an operations centrein Chengdu. From a staff of just under 100 in2007, ANZ now has 700 employees in main-land China and still scaling up rapidly. ANZis also expanding in the Philippines where ithas a successful joint venture called Metro-card, the second largest card firm in the Phil-ippines. ANZ also locally incorporated its Viet-nam operations, which paved the way to ex-pand its branch network to nine outlets. Andit recently re-started operations in India withthe opening of a branch in Mumbai. One ofANZ’s biggest assets in Asia does not evencarry its name. ANZ holds a 24% stake Ma-laysia’s sixth largest bank, AmBank, up from19% in 2007. Because of its stake in AmBank,ANZ was unable to buy RBS’s retail operationsin Malaysia. In Taiwan, where ABN Amro hadexpanded its retail network just before it wassold to RBS, ANZ has 18 branches and 1,400employees.ANZ’s retail banking strategy is to grow inkey core markets: Hong Kong, Singapore, In-donesia, Taiwan and, to an extent, China. “Weare basically playing in a niche segment,” Senexplains. “We are investing heavily in tech-nology and training,” he says. Because it is alatecomer to the game in Asia and does nothave the branch network of HSBC or Stand-ard Chartered, Sen wants ANZ to leverage dig-ital and mobile platforms. “These days, mostpeople do their banking on smartphones, tab-lets and PCs”, so it is just as well that ANZis not burdened by the same legacy networkand costs. “We have also done a lot of workon things such as risk profiles, behavioural fi-nance and we think there is a high-end nichein retail banking in Asia where we can do fairlywell,” says ANZ’s retail bank chief. “In Singa-pore, we have five branches, we have a strongwealth management business, we have a gooddeposit business, a strong mortgage businessand a growing cards business,” he explains.ANZ employs 2,000 people in the city-state, upfrom 150 just six years ago. And it has identi-fied clear and differentiating niches.“We have a growing business for non-resi-dent Indians in Singapore,” he explains. “Ourcredit card gives rewards across multiple air-lines rather than just a single airline. We be-lieve while there is competition with localplayers as well as [the] HSBCs and Citis of theworld, there is space for niche players like our-selves, players who have a customer-friendlyfocus,” he says.Can ANZ compete against the likes of Citior Standard Chartered on similar products butwithout their large economies of scale? “Whilescale is very important, cost management isalmost as important in retail banking,” notesSen. “If you can manage your cost well andrun a tight ship, you can make as much mon-ey with five branches as the other guy canwith 15 branches,” he says. “More than justthe scale of the total business, it is also aboutscale in the segment that you operate, cost in-come ratio and managing the overall cost base.I tell my team that we don’t want to just growmarket share in our key markets, which willgive us scale. We want to grow market shareof the revenues,” he says. “The key is not [to]get the next 1,000 credit cards out there butadd customers who will spend more moneyon the cards,” he stresses. “Since everyone inSingapore has four or five cards in their wal-lets, the key is to get more revenue-generatingcustomers.” As card acquisition costs in Sin-gapore are high, the ANZ banker notes thatbanks need to focus on acquiring high-spend-ing customers.“Building a credit card business in a com-petitive market such as Singapore and createvalue is not easy, but it can be done,” saysSen. “Sure, there are demanding customersand fierce competition but you can make mon-ey as a niche player.”The way Sen tells it, ANZ is not trying tocompete head-on against local players Over-sea-Chinese Banking Corp, DBS and UnitedOverseas Bank in Singapore or HSBC, Stand-ard Chartered, Bank of East Asia and Bankof China in Hong Kong. “Our focus is on [the]affluent and emerging affluent segment,” hesays. “We can’t get into [the] mass-market busi-ness because we don’t have the branch net-work,” he notes. Indeed, he says, “even if wecould build a big branch network, we won’tbecause the returns just won’t justify the ex-pense” of building it. “In Singapore, our tar-get is mid-career affluents or emerging afflu-ents,” he says.How does ANZ differentiate from otherswith a similar strategy? “We are trying to of-fer family banking products,” says Sen. Thereis the above-mentioned Australian connec-tivity that gives it an edge. It is also keen togrow its Signature Premier services — akin toCitigold or HSBC’s Premier — targeted at cus-tomers with US$100,000 in investable assets.“When we expand our retail operation in anycountry, we ask ourselves: What can we offerour customers and what exactly is our valueproposition in each of the segments that weare trying to enter?”ANZ is currently not locally incorporatedin Singapore the way Standard Chartered orCitibank are. Local incorporation has allowedthe two main foreign banks in Singapore to ex-pand their branch and ATM networks. “Regu-lators are moving towards local incorporationsand we will do what is required to grow ourfranchise across the region,” says Sen. “Localincorporation is tough for regional and globalplayers because they need to allocate capitalseparately for each of their markets. But in theend, if that’s what regulation requires, that’swhat we will do.” For now, he is in no rushto incorporate locally just to get permission toopen more branches.Simplicity, speedIncreasingly, the key to successful retail bank-ing in Asia is “simplicity and speed” notesANZ’s Asian retail bank chief. “We have triedto re-engineer our processes because we knowthat banks have become too complex. Just toget a credit card requires you to send in lotsof documents,” he notes. “There is too muchpaper work involved. Some of it is necessarybut if we can somehow eliminate the unnec-essary part, speed up the process, the custom-er appreciates it.”Sen says ANZ will be a formidable retailbanking player in the region in five years. “Wewon’t have the same market share as HSBCor Citi in most of the markets but we will bevery strong in our chosen niche in key mar-kets,” he promises. “We will have a strong-er brand and growth in core geographies aswell as stronger, embedded market share,” hesays. Fiercely competitive retail banking mar-kets in Asia need not resemble killing fieldseven though the regulatory environment isgetting tougher, regulatory costs are going upand margins are being compressed owing toprice caps, interest rate caps and generallyhigher costs. “If you get the basics right andmanage your costs well, there is money tobe made in retail banking in Asia,” he says.“Regulators are only protecting customers, soif you have a customer-centric approach, youshould welcome what the regulators [are do-ing],” says Sen. The key in retail banking isto differentiate.After 23 years in mostly retail banking inAsia and the Middle East, Sen has seen the seg-ment transformed from physical branch-basedoperations to transactions through ATMs, PCs,smartphones, tablets and, soon, mobile wal-lets. “Customer touch points are different to-day but you still need to differentiate on prod-ucts or services and you need to manage yourcosts,” he says. Sen says he is lucky to havebeen asked to build a regional retail bankingfranchise just as technology is making it eas-ier to reach a broader swathe of customers.Just 10 years ago, it would have been difficultto even contemplate executing such an auda-cious growth strategy across Asia.ra-do-g itbil-onmil-ghtantus-ominarsanitsan15fi-ngkeyinforngedon-calZ’sk’snk.ninwasterowin,pyinSen: Retail banking is an extremely tough business everywhere and it is particularly tough in AsiaBLOOMBERGSAMUELISAACCHUA/THEEDGESINGAPOREE