 Group Head of Transaction Banking at SCB |
Staff Reporter
Following the 1997-1998 financial crisis, Korean banks underwent large-scale restructuring. They have become much stronger than before and are now on a better footing to become global players.
Of late, many of them have rushed to expand in overseas markets with ambitious goals of becoming leading banks in Asia. However, they are still lacking scale beyond Korea, as they have yet to embrace globalization.
A global banking expert with rich overseas experience said that Korean banks should make further efforts to get localized to be successful globally. ``No matter how well prepared the company may be, if it is unable to localize, then success cannot be guaranteed,'' Karen Fawcett, senior managing director and group head of transaction banking at Standard Chartered Bank (SCB), said in an interview with The Korea Times.
She emphasized that since each country has a different culture, language and market environment, a company's ability to localize is a key factor if it is considering advancing overseas.
``If you look at your largest (Korean) companies, they have been incredibly successful at going global,'' she said. `What we find interesting about them is that if they have an ability to become very local, when they go into a market, they become one of the biggest local companies,'' she said. ``Korean banks could look at the big corporations and learn from them.''
The veteran banking expert pointed out that the most important thing in going global is to have an ability to secure people who understand cultures, languages and ways of working in different countries. ``It is building relationships in the local markets with regulators and with various companies there,'' she said.
``Going global takes lots of time because you have to build such relationships. In that sense, I believe that it would be much better if you do it in a very steady, structured fashion because getting the right people takes a long time.'' She pointed out that SCB has employees with over 150 different nationalities and it has taken 150 years for it to build the global network it has now.
`` In our own business we now see a huge amount of enthusiasm for Koreans to work abroad. It's becoming very positive for Korean companies and banks to be able to expand internationally,'' she said.
Transaction Banking
SC First Bank, a corporate entity of SCB, is looking to expand in the Korean market capitalizing on its advanced position in the so-called transaction banking business, which includes cash and liquidity management, trade services, securities services and electronic channels.
Fawcett, who works in SCB's Singapore office, said that there is much room for the British bank to expand both strategically and geographically in Korea capitalizing on the transaction banking business, noting that the bank sees great transaction banking opportunities ahead.
``SC First is still quite a small bank in the Korean market. Relative to the big four _ Kookmin, Shinhan, Woori and Hana, so we have big opportunities to grow here,'' she said.
``Boosting the transaction banking business will help add more products and expand geographically because we have over 300 branches in Korea,'' she added. ``Our plan is to be able to serve clients with transaction banking in a lot more areas.''
She pointed out that since most of the bank's clients are focused around Seoul and the main metropolitan areas, there are big opportunities to offer services to clients in different parts of the country.
``Korea accounts for approximately 8 percent of our global transaction banking revenues and is a key market for us. We see ourselves as aiming to be a large local transaction banking player in Korea with at least a 10 percent market share by 2011,'' she said.
SCB's special interest in the Korean market is due to robust growth in the local fund market. The Korean funds market increased 220 percent over the last 4 years to $475 billion in May, 2008.
Fawcett stressed that although big Korean banks traditionally have performed very well in the transaction banking business, SCB can bring differentiated services to Korean clients.
``Since we have this transaction banking network in over 70 countries, we can offer a set of services for big Korean companies going abroad, which will be very difficult for local banks to offer,'' she said.
``For example, we are the largest Korean bank in Taiwan. If your position is such, we, as a key bank, can help them as they go overseas. That's where we position ourselves,'' she added.
She pointed out that SCB is a leader in electronic channels with an international network, which Korean banks at this point in time cannot match.
``I think one of the things that we want to do is to help Korean firms go abroad and bring the experience to our network,'' she said. ``So if Korean firms move to different countries, stop talking to us in Korea. Instead, build a relationship here and then we can easily help them as they go global.''
Pursuing Organic Growth
Regarding a question on any plan to increase the size through merger and acquisition (M&A) in Korea, Fawcett said that SCB has no plan to enlarge its size in the Korean market at this moment.
``SCB's main strategy in every country is to grow organically but in Korea, we've bought Abrain and a savings bank,'' she said.
``We focus predominantly on organic growth. Where there are specific opportunities that bring us very strong capability, we will consider acquisition from time to time,'' she added. `` Korea is a very important market. That's why we have a strong ambition for Korea.''
Outlook on Korea's Financial Industry
Fawcett said that Korea's financial sector has made remarkable progress and this is likely to continue down the road.
``What is so impressive about the Korean banking system is that it has managed to go through massive structural change in a very short amount of time,'' she said. ``It is actually becoming very strong. The Korean banks have upgraded capabilities tremendously in that time frame.''
``Korea has a very impressive story. It had to go through a lot of pains and disruption to get that but I think now you actually have the basis for a very strong industry which is already consolidated. The outlook for the industry is pretty good,'' she added.
The banking expert pointed out that the recent changes in Korea's financial environment are very encouraging and will contribute to the country's ability to compete internationally.
``The Capital Market Integration Act and privatization is bringing down the barriers among financial institutions and this could lead to a good opportunity to strengthen the competitiveness of local banks,'' she said.
``Korea has gone through many changes, and in particular, it had the strength to overcome the financial crisis,'' she added. ``Based on the abilities it has shown, I believe that Korea's financial industry has the potential to advance greatly.''
kjk@koreatimes.co.kr
< About Karen Fawcett >
Karen Fawcett is senior managing director and group head of transaction banking at Standard Chartered Bank. Based in Singapore, Fawcett is responsible for the end-to-end performance of transaction banking. Prior to this, she was the Global Head of Strategy for the Wholesale Bank, where she was responsible for the repositioning strategy of the wholesale business and key acquisitions including Korea First Bank. She joined the bank in 2001 from Booz Allen & Hamilton, where she was vice president and partner focused on the financial services sector in the Asia Pacific. Fawcett, who is British, holds an MBA from INSEAD and graduated from Cambridge with an MA (economics).
