An interview with Justin Soong


Mitchell: What are your top IT risk priorities over the next 12 to 18 months?


Soong: The Bank is at the end-stages of a merger integration exercise, having acquired a mid-sized bank last year that has also resulted in the Bank having the second largest branch network in Malaysia. The merger integration has proceeded smoothly thanks to forward planning and focused execution. This has resulted in the Bank being able to achieve cross-servicing of customer through all channels within 100 days of the acquisition, and consolidation of IT systems and unification of operating platforms within a year of the acquisition.


From a risk management perspective, the IT risk agenda which naturally also needs to reflect the business imperatives of the day, is centred on (i) supporting the IT department to maintain achievement of the system SLA levels through validation of IT approaches, (ii) protection of customer interests particularly in the area of data protection and confidentiality, and (iii) preservation of IT business value through minimisation of lost opportunities, and (iv) ensuring constant readiness of business continuity assets and capabilities.


Mitchell: To what extent is technology risk driving the overall business strategy at HLB?


Soong: Technology has always been perceived as an enabler to business strategy. In the banking industry, it is a critical factor towards success in delivery of services to customers. Often, it is even a key differentiating proposition considering the increasingly commoditised industry that is the banking sector.


In the new thinking heralded by the success of Apple Inc which operates in the oft-quoted "intersection between technology and liberal arts", the use of technology could potentially take a different turn in banking. Instead of being an enablement, an IT innovation could be the product itself, provided that we can wrap it with a coherent customer proposition, i.e. the ‘liberal arts’ component.


These are areas that HLB is actively working on. For example, building the success of our Hong Leong Connect product offerings, we are building new and compelling service models, driven by new technological ideas and applied to focused customer segments.


Mitchell: How are you balancing the demands of regulatory constraints with business profitability requirements?


Soong: The business profitability perspective at HLB has always been one that seeks to ensure sustainability of earnings and stability of growth in order to protect and enhance our franchise value. As regulatory requirements are invariably put in place to promote systemic stability of the economy and the banking sector, it is well aligned to the HLB philosophy.


In many aspects, HLB often operates within parameters which are more stringent than the minimum standards espoused in regulatory requirements, as we actively scan and analyse emerging risks in the economy and continuously enhance our portfolio diversification profile.


This has resulted in the Bank recording superior financial results in its income statement and developing a solid financial profile in its balance sheet over the last few years. Led by the CEO, Yvonne Chia, the management team has recorded one of the lowest impaired loans ratio in the industry and possibly the highest base of stable retail deposits as a proportion to total deposits in relation to the bank’s funding. Hence, the Bank has in many respects already met most of the quantitative requirements for Basel III. Remarkably, all these are achieved by the management team while generating superior ROE numbers compared to the industry average.


Mitchell: What are you currently doing to increase the usability of data to generate more informed decisions around business strategies and profitability models?


Soong: Most financial institutions have multiple source systems and related downstream analytical and reporting systems within their operating environment. In the first instance, a logical data model that is integrated across these systems is essential to improve the capabilities of an organisation to harness the power of information and drive business strategies. At more advanced levels, the embedding of meta-data to provide intelligent layers to data helps to automate the linking of disparate data and enable the creation of meaningful analytics.


While we may have a comprehensive infrastructure setup for managing data, the most important investment a bank could make would be in the people resource area. Data by itself is just noise, and at the end of the day, it takes human intelligence to turn it into useful information that facilitates better business decision making.


Mitchell: What techniques are you currently implementing in order to improve liability management practices at HLB?


Soong: The Bank is currently a market leader in retail deposits in its core market in Malaysia. That enables the Bank to be ahead in terms of compliance to the liquidity standards and requirements of Basel III. In addition to enhancing our current strength in behavioural analysis of liabilities profiles, we have also made sure that liquidity stress testing and implementation of preventive action plans are rigorously applied through a structured and relevant methodology.


As the Bank expands its presence and business in other countries, we want to design our approach to be modular in order to be able to quickly deploy our core competencies in liability management to our new subsidiaries and branches in other countries, each of which would necessarily have moderately different business segment emphasis and scales.


Mitchell: What is HLB currently doing to optimise business intelligence processes to better facilitate a holistic, customer-centric view of the business?


Soong: Similar to the earlier discussion on liability management, the key to understanding customers is to understand customers’ behaviours. Hence, our approach to business intelligence processes is centred on putting in place processes that facilitate and advances our understanding of behavioural patterns and customer segment nuances.


For example, we seek to have a holistic and practical approach towards data linkages with the aim of facilitating the testing of customer behaviour hypothesis. There is actually no lack of relevant data in a typical bank, but the challenge in most banks is the ability to link data that might be present in different databases or systems together (for example, credit card utilisation data may reside in one system while banking accounts transaction data may reside in another system), and being able to conceptualise test theories and implement test hypotheses that might elicit some novel perspective about customers’ behaviours.


Mitchell: You have been involved in the banking industry for several years, what have been your key achievements during your career?


Soong: Earlier in my career, I was a member of a small team of about thirty people that successfully launched and operated a financial derivatives exchange. Today that exchange is part of Bursa Malaysia. Getting an exchange operational in the areas of structure, rules, membership, trading platform, and education was a unique experience. Seeing an entire derivatives brokerage industry created along with it was fascinating as well.


About a decade ago, I worked with a very capable team at KPMG in the area of financial risk management and implemented a number of advisory engagements around the Asia-Pacific region. The experience was wonderful and it pushed the individual to continuously develop deeper thought leadership. I also recall the challenging task of delivering a Basel II IRB seminar to a large group of bankers in Beijing using the Mandarin Chinese language – which was not an easy task to do.


A number of years ago when I was the Group CRO of another banking group, I was fortunate to work with another great team in getting a Basel IRB program conceptualized and successfully implemented. I am again blessed with the opportunity to work with a great team in HLB and am really looking forward to exciting adventures with the dynamic people that we have in the group.