Banking: What's new?

Dr Helen Lange, director of the MBA programme, Universitas 21 Global, tells Maria E. Kallukaren.

Banking has principally been the same for thousands of years, says Dr Helen Lange. However, as in all areas of life, it has had to adapt to changing times. How? Dr Lange told Notes during her recent visit to Dubai.

What are the new trends in banking?

The big trend in global banking that has gained apace in the last 20 years is that we don't have banks anymore; we have financial institutions - conglomerates that offer a host of financial services. They will have a banking arm, an insurance arm, a funds management arm, a stock-broking arm in some countries where it is allowed by law.

The second is globalisation. Banks are much more outward looking now. Banks can go in either of two ways - they can be outward looking, global and big or inward looking and remain niche players such as the town banks and the community banks.

As far as careers are concerned [when it comes to choosing between a global bank and a community one], the big difference is in the foreign exchange exposure you get. Otherwise the risks banks face are the same; a career in banking is about understanding the risks. Lots of local banks fail because they don't recognise this.

What are the three high-potential areas of the sector where the focus will be in future?

Credit risk management is one. Lending remains the key product of banking and it is important to understand the risks involved. In the last 15 years, a lot of development has come about in the ways these risks are assessed; banks have always known the risks, now there's a better understanding of how we measure them.

The second emerging area is in derivative products, which in other words is risk management tools and techniques.

The third area is securitisation. This is very important as it creates more liquidity in the market; makes more money available.

People nowadays do a majority of banking transactions on the internet. How has internet banking affected the banking sector and by extension the role of a bank employee?

In two ways - it has cut the costs of retail banking freeing the banks up to do more important things such as risk management and lending. And it has made banking services more convenient and more acceptable to consumers. This has also made careers in banking more attractive; the good old days when accounting graduates used to be tellers have changed.

If you are introducing the banking industry to a student aspiring to make it a career, what would you say?

A lot of students regularly approach me; someone says: 'I want to be a foreign exchange dealer' and I tell him: 'No you don't'; the job might appear very glamorous but it's not very interesting.

You might have an idea about a bank today, but it changes. And you need to change with it, be flexible. What you learn in a degree might help you get a job, but it will not help you keep it. For that you have to continue to learn. That's the nature of a knowledge economy. And it's true for any career.

Helen's tip

"Starting your career in a small, local bank might actually be a good idea, because it will broaden your experience and give you the opportunity to better understand the nature of the risks banks face. You are more likely not to get pigeonholed."

People's person

Banks have more or less abandoned the good-at-accounts-be-a-teller approach. Why?

A bank's business in large part depends on good relationship management and tellers are in the frontline, dealing with customers.

"Recognising this, some Australian banks take university graduates who have worked in McDonalds, known for their customer service ethic," says Dr Helen Lange.

Banking as a career?

"I might choose it as a career, due to the facilities they give employees and the loans."
- FatIma FarEEd, management, Middlesex University

"Yes, it gives more exposure; you get to meet more people; it supports my major."
- Salman Khan, BIS, Middlesex University

"I'm not interested. I am more into accounting."
- Umair Javed, accounting, Middlesex University