Frontiers in Finance : Center of attention !
48
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English
Documents
2011
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48
pages
English
Documents
2011
Le téléchargement nécessite un accès à la bibliothèque YouScribe Tout savoir sur nos offres
The eyes of millions of
sports fans around the
world turn to South
Africa this month, as the
2010 FIFA World Cup
kicks off. Beyond its
sporting content, the South African
government hopes the tournament will
generate substantial economic spin-off,
and has invested heavily in transport
and infrastructure improvements
across the country. It is appropriate,
therefore, that this issue of frontiers in
finance has a special focus on Africa.
In many ways, Africa is a forgotten
continent for financial services: we
focus much of our attention on Europe,
the Americas and the Middle and Far
East. Yet Africa is home to a billion
people, has a collective GDP of some
US$3 trillion, and is increasingly a target
of major inward investment, most
notably from China.
Voir
sports fans around the
world turn to South
Africa this month, as the
2010 FIFA World Cup
kicks off. Beyond its
sporting content, the South African
government hopes the tournament will
generate substantial economic spin-off,
and has invested heavily in transport
and infrastructure improvements
across the country. It is appropriate,
therefore, that this issue of frontiers in
finance has a special focus on Africa.
In many ways, Africa is a forgotten
continent for financial services: we
focus much of our attention on Europe,
the Americas and the Middle and Far
East. Yet Africa is home to a billion
people, has a collective GDP of some
US$3 trillion, and is increasingly a target
of major inward investment, most
notably from China.
frontiers in finance for decision makers in financial services June 2010
FINANCIAL SERVICES
Center of attention! Focusing on new strategies
“It’s all about me” Putting the focus back on the customer
Is privacy a luxury? Private banking is changing...
Africa feature: A game of two halves The contrast in financial services
Foreword
frontiers in finance June 2010
Alison Halsey Editor,frontiers in finance Partner, KPMG in the UK Tsm idr aeiprniavugEnomr hrto ee ailn innesstsibtuustiioinnsg t.kef roB ra nuEorepg Westerl Bankin seuvirdeht ssi cuisesssaycl ds,ofs il mheye efriAedgitrantoui dhnAniah sdaocctp ovsdih eatwru,iw noagr ltonh aiSlsoi rstnmo , t ocr af osunmamfo iethitd dsnnuohoef st roan ltis rtopno senxou cdittie vsC ihfeE pal kRiectkasi oofff . GBleoybaFm 0e1t eAkFrIolrrfo WhutC mdSnatom om ,alho,trho s fL2e0em n African financita eogevnrnaeci tuna orecof orrpt tac ehgnah gnilso We ae thargus’e iracym .oconn ileroAfh utSo yalp ot lativ a sporting content, the South African sustainable performance. We explore potential opportunities in government hopes the tournament will generate substantial economic spin-off, Elsewhere, we explore how curbs on US commercial real estate; how and has invested heavily in transport foofrf strhaonrse pbaarenknicnyg ,a ngrdo gwrienagt edr epmreasnsdusr e paruedsitso rres aficntido nt;h ehomws elpvreosc ufarecimnge nat ihso stile and infrastructure improvements on margins are transforming the nature increasingly becoming a core strategic across the country. It is appropriate, of private banking. Increasing function; and report key issues from a therefore, that this issue offrontiers in KPMG round table discussion on recenttransparency is also being driven financehas a special focus on Africa. In many ways, Africa is a forgotten bayu tthhoer itgireos wiinn cg osnusctrcaeisnisn og f bfiasnckailn g tFhinea illnyv, efrsotnmtieenrts imnafinnaagnecmes tnotce.ri slpaeesd eto continent for financial services: we security, but is equally driving greater welcome Jeremy Anderson as the new focus much of our attention on Europe, complexity in tax reporting. Regulatory the Americas and the Middle and Far East. Yet Africa is home to a billion rfreofomr mth ies tao sp uobfj ethcte waghiecnhd ias tnheevseer dfaary s; aGSpleoprrbvioaclp erCisa htpaeri,ra tcmhtiaecnne ,.o tIft h KaistP JeMesrGpe’esmc iFyai llnoyaf fnecrisa l people, has a collective GDP of some US$3 trillion, and is increasingly a target apsu bKliPshM aG nInetwe rrneavtiieownalo fp rgelopbaraels to bhiasn tkihnogu. gI hhtso poen ythoeu efivnodl vimnugc hw toorl d of of major inward investment, most notably from China.ionfs tuhrea nkceey rtehgeulmaetiso en, mwereg lionog.k aWt es aolsmoe ponder on there, and elsewhere in In our feature on Africa, we discuss discuss the slow change in emphasis this issue. how the comparatively unsophisticated which seems to be taking place within nature of financial services meant that banks’ control regimes, away from the financial crisis in Africa was less hard tangible controls towards soft intense than in more developed regions. controls including social and moral In South Africa itself, financing for small aspects. Once again, we argue thatAlison Halsey business is increasingly supporting a a new focus on the customer is the new entrepreneurial spirit; and informal soundest basis for business success investments and savings mutuals build in the future.
© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
Topics:A view from the market: Retail banking in Europe
Topics:Turning a corner... Changes still to come in banking
8
Africa feature:A game of two halves: The contrast in financial services
Series:Islamic finance: Coming of age Past challenges, future opportunities
Contents| frontiers in finance – June 2010 In this issue
For your information
fyi…2 Topics “It’s all about me”Putting the focus back on the customer4 A view from the market:Retail banking in Europe: Turbulent, but interesting...8
Is privacy a luxury?Private banking is changing...
Turning a corner...Changes still to come in banking
A clearer view:Increasing transparency and complexity in tax reporting
Changing gears:Rethinking a bank’s approach to soft controls
Global convergence?Insights into global insurance regulation
Ripe for investment?Opportunities in US commercial real estate
Truth and fairness:Reputation and risk in auditing
In demand:The talent challenge in strategic procurement
State of the nation: Key issues in investment management
10
12
16
18
30
32
35
36
38
Africa feature – A game of two halves The contrast in financial services A game of two halves:The contrast in financial services20 The financial crisis in Africa...Its impact and the resulting regulatory response22
Finance for small business:Incubator financing in South Africa
Saving together:Informal savings and funeral schemes at work
Under control:The changing role of corporate governance Series London – Washington:Regulatory exchanges across the pond Islamic finance:Coming of age: Past challenges, future opportunities
Insights
Updates from KPMG member firms, thought leadership & contacts
24
26
28
7 40
44
© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
frontiers in finance – June 2010 |For your information fyi...
Customers at the forefront
Treating Customers Fairly (TCF) has become a top priority within the governance structures of the financial sector in the UK, as firms aim to rebuild consumer trust as well as their underlying capital and profitability. The collapse of Lehmans and AIG exposed numerous companies to litigation claims, which has lead to the extensive revision of mandatory documentation and processes to ensure the robust recording of investment decisions taken in the interest of customers. However, many national regulators believe variations of TCF are not an isolated compliance issue, but rather pervades organizational culture and leadership. How TCF principles will be embedded in management directives and the inherent ethos of financial institutions will be seen over the coming months. Whether this important framework can be employed so that it has a meaningful and coherent application will rely on strong leadership and integrated market implementation.
Source: “Treating customers fairly” www.fsa.gov.uk, October 2009. “About TCF” www.tcf-index.com, March 2010.
The World Cup – Hopes and financial holes
With excitement rising in the run up to the 2010 Soccer World Cup, all eyes will turn to South Africa this month: - the price to the South African government of staging the world cup is currentlyUS$ 3.7 billion1 -2.1 million2tickets have been sold worldwide
- the original budget for building five new stadiums and renovating five others has stretched by20 percent3 - employment law experts warn the World Cup could cost participating economies almost£4 billionin lost productivity4
1. “2010 World cup finals to cost $ 3.7 billion”, http://www.worldcup2010southafrica.org.uk, March 20, 2008. 2. “US leads the way in foreign ticket purchases for World cup”, www.guardian.co.uk, March 9, 2010. 3. “2010 World cup cost skyrocket”, www.news.bbc.co.uk, November 20, 2007. 4. “World cup could cost UK £14 billion”, http://www.management-issues.com, June 5, 2006.
Revisiting inflation: Pocimna dgn r torio up theam-ycilodna srek lt,mium pngdiea G20 S academics meet in Seoul for a one day conference as part of the larger re-examination of key macro and financial issues undertaken by the IMF in response to the global economic crisis. Included in the discussions was the proposal that central banks may wish to consider setting their target inflation rate at 4 percent rather than the traditional ideal of 2 percent. “Higher average inflation, and thus higher nominal interest rates to start with, would have made it possible to cut interest rates more, thereby probably reducing the drop in output and the deterioration of fiscal positions.” IMF Chief Economist, Oliver Blanchard, and coauthors
The suggestion by the IMF chief economist, Oliver Blanchard has provoked considerable debate in the public arena. Whatever consensus is reached, it will need to be married with more targeted fiscal instruments in addition to the tool of monetary policy alone. Source: “The Seoul Papers”, www.IMG.org, February 25, 2010 –
With this focus on South Africa, we thought it appropriate to take a closer look at financial services in Africa – see page 20.
2 © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
The world at a standstill ven today in an era E ,noitaz globaliogy andt cenhlodaavcnde of a natural phenomenon can still bring the world to a halt! The volcanic ash from the eruption of Eyjafjallajökull volcano in Iceland grounded thousands of planes all over the world, with much of Europe’s airspace closing for several days. What impact has this had on the global economy? According to the International Air Transport Association (IATA) an estimated £130m was being lost by airlines daily. Over the month of April, there was a 21 percent drop in the number of flights handled in the UK.1But this was by no means the only industry hit by this natural disaster. Importers and exporters of perishable goods were seriously affected, with economies such as Kenya losing US$3.8m per day as a result of the flight cancellations2 . For much of financial services the issue has been an inconvenience and presented many tactical challenges. It has shown how much global business can be affected by people not being able to travel. It has also shown the value of technology keeping the world connected. Some would argue, on the latter point, it has also shown the value of face to face meetings. Regardless of your viewpoint, it is a timely reminder of how much global financial services need effective communication.
1. “Ash Cloud May Cost Travel Industry $1.5 Billion, TUI Chief Says,” Paul Jarvis and Andrew Cleary, www.bloomberg.com, May 11, 2010. 2. “Iceland volcano cloud: The economic impact ” , www.bbc.co.uk/news, April 20, 2010.
For your information| frontiers in finance – June 2010
The wave of regulation Given the prominence of the current generic, but one conclusion agreed regulatory agenda across the globe, upon was that the investment KPMG International wanted to assess management industry was fully how top executives in the investment embracing the opportunities of management sector viewed the regulatory change and keeping ahead impact on their organizations. Will of the curve. increased regulation direct future business strategies? Will it restrictFor the full report innovation and investment returns?please go to the Will investment managers move theirFinancial Services businesses to new locations, weighingpages on up the benefits between off-shore andwww.kpmg.com on-shore centers? It is clear there are many nuances within the industry and geographical trends may be specific rather than
Satisfaction guaranteed? As the general perception that consumer trust is returning following the financial crisis, customer focus remains a key business strategy for many financial institutions. However, it appears there may be stratifications among the financial services industry lines. In the US and UK the majority of insurers rate significantly higher in comparison to some of the largest banks.1 Similarly investment management firms get lower customer satisfaction ratings, with the perception that firms prioritize what’s best for its own bottom line.2 Whether this development will subsequently favor bank-owned investment houses, increase M&A activity, or these industries will become more aligned as customer confidence continues to increase, will play out over the coming months. 1. “Recession offers silver lining to customer service” www.instituteofcustomerservice.com, January 15, 2009. 2. “Customer advocacy 2009: How customers rate US banks, investment firms and insurers” B. Doyle, October 7, 2009.
3 © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
frontiers in finance – June 2010 |Topics
Scott Marcello
Linda Gallagher
Michael Bernaski
“It’s all about me” Putting the focus back on the customer
The crisis has been traumatic for financial institutions. Those still in business, and still independent, have spent two years riding out the storm and starting to rebuild. But their customers, too, have suffered a severe shock. They need help, support and access to new strategies which match their new circumstances. AsScott Marcello, Linda Gallagher and Michael Bernaski claim, it is time to re-emphasize the customer – and in so doing help to rebuild trust in financial services.
y financial buoyancy, income from investment institutions have portfolios and pensions plans has also spent much of the shown a significant decline. Many M dmnoucesrunie sng cpnaofaeNjannvdi npoorweoofirr xod oipsendiptenvmipcdeinceoonte,rten stth idauensdrrni .eeiw wr tniaNheaeerettcis.degnadsche av hwemotsuc d deford the eulav rwoh eht ac yfa ngn nxaiiagn sa hocuoefr orvremo htsucisk otawdrr iuted s last two years customers now feel poorer, and are their own survival, lifestyle which they anticipated in terms of seeking to restore balance sheet strengthedisposable income, payment of school fees and liquidity. They have also been facing Customers have lost significant apparent and retirement from the workplace etc. a major paradigm shift in the financial wealth as a result of the crisis. In many Increasingly-sophisticated customer rseegruvilcateosr iyn rdeufsotrrmy, cwoitmhi npgr ofrpoosma lsm faonr y pmaartnsy opf etohpel eU hS aadn pdr eUvKio, ufoslry ebxeaemnp rleel, ying segmentation techniques mean that potentially profitable customer deinreorctmioonuss. aThmeosuen itsss oufe ss ehnaiovre absorbed iomn pthoret avnatl upea rotf otfh teihr eihr owmeealst ha ss tarna tegy opportunities can more easily be identified and targeted. In particular, management time, effort and energy. laonodk,i imptloi critellye aors ee xspolimcitel yo, f htahda tb veaelun e those customers who have suffered from The challenges of meeting new capital to sunpgp lement their retirement incomeover-exposure to particular asset classes . such as property, but who retain requirements and ensuring compliance The crisis has clearly revealed the risks substantial earning potential, are prime with likely future regulation – in an inherent in over-exposure to the property prospects for innovative and tailored heanvvier omnemaennt tt hofa tc coontminpuaendie usnhcaevrtea inty – amnadr kthete i–r cbuosttho fmore rfisn a– nacniadl idnesctilitnuteiso inns savings and investment solutions. inevitably been inwardly-focused. But the property values have had a major impact The global dimension of the financial way in which the crisis has affected on both perceived and actual wealth. services sector also results in customers customers has opened up significant having a greater breadth and choice of opportunities, alongside significant The value of other savings and prospects, with access to global solutions challenges. A return to focusing on investments has eroded at the same coupled with increasingly international meeting customer needs can now pay time. Despite recent general stock market needs. Although the credit crisis has
4 © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
