Zeti Akhtar Aziz: Talent management, the new paradigm
Opening remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the
AIF (The Asian Institute of Finance) International Symposium 2011, Kuala Lumpur,
7 April 2011.
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It is my great pleasure to speak at this inaugural AIF International Symposium 2011 on
Talent Management, the New Paradigm. While I may not be here in person, I am most
certainly here in my commitment to this Symposium on the enhancement of human capacity
in the financial services industry.
Importance of human capital development
Significant new trends continue to reshape the financial services industry. In this recent two
decades, the intensification of the globalisation process, the advancement in technology and
the unprecedented consequences of the global financial and economic crisis have
contributed to these changes. While the global economy is now on a recovery path, several
challenges continue to remain. The focus of the crises affected countries have been on the
immediate term challenges involving the resumption of the functioning of financial markets
and the financial intermediation process while supporting the overall economic growth. As
part of the response to the crisis, is the financial regulatory reform both at the national and
international level. This has also been reinforced by a tightening of the supervisory oversight.
These cumulative developments are also dramatically transforming the financial landscape of
the international and national financial systems.
The future has therefore become more complex, uncertain, unfamiliar and more ambiguous.
In the context of these fundamental and far reaching changes, less attention has however
been accorded to the necessary changes to the human capital development that is required
for the effective participation and performance in this new financial landscape. Indeed, the
talent required also needs to be transformed. These changes have also precipitated a revisit
and review of education systems around the world over to address the current discontent
that the education has not kept up with the changing human capital requirements of the
financial services industry.
The World Economic Forum has projected that "staggering" talent gaps will arise in large
parts of the world by 2020, and this will have a bearing on national competitiveness while
organisations compete for talent on an unprecedented scale. Managing talent has
consequently become significantly more challenging and needs to be addressed with talent
development. The objective is to harness the full potential of the workforce. This is
particularly urgent for Asia as it emerges as an important growth centre in the global
economy. With Asia's financial services industry poised to grow rapidly, this growth must be
supported by the development of capabilities among the financial industry professionals.
Going forward, the investment in this core pillar will be a defining factor in the performance
and the capacity of the industry to reinvent and transform and thus enhance its resilience and
sustainability.
The path forward needs to be guided by a strategic response to the forces that are shaping
the new talent landscape. There is now an increased demand for highly-skilled knowledge
workers that are able to meet the changing requirements of an increasingly globalised and
borderless workplace. More interconnected businesses within national economies and
across the globe have also increased expectations for employees to be highly versatile and
able to adapt to the fast changing conditions. Talent mobility has therefore increased
substantially not only across geographical boundaries, but also across sectors, as the
demand for talent in financial services by the energy, telecommunications, software and
consultancy sectors are likely to increase over time. Organisations including financial
institutions therefore need to give greater attention to these shifts and develop clear
strategies to narrow the skills gap, in particular to address growing shortages in the mid to
senior level talent groups.
The recent regulatory reform in the financial sector and the onset of new standards and
requirements under both Basel II and Basel III, the emergence of new risk disciplines and the
fundamental changes in financial reporting standards, also require financial professionals to
be equipped with new knowledge and skills. Similarly, talent shortages continue to be acute
in high-growth areas such as wealth management, Islamic finance, and investment advisory
services. At the same time, the role of the financial services sector in the recent global
economic meltdown has also raised questions on the issue of the quality of the leadership
and workforce and for the need to place greater focus on developing ethical and responsible
leaders who will be able to lead a sustainable industry over the medium and longer term.
The economic costs of a failure to arrest talent shortages are strategically significant and
include low productivity, the slow pace of innovation and lost opportunities. Building a strong
talent pipeline has therefore become an economic imperative as human capital rivals
financial capital as the critical economic engine of the future. This requires new and
innovative ways of thinking about talent development, programs, processes and
competencies. The human capital challenge has therefore to be approached with a different
set of solutions.
Giving recognition to its importance, in the United States, the accounting rules were adjusted
to allow organisations to treat a wider range of talent development costs in the same manner
as long-term investments in equipment, manufacturing plants and other facilities. Financial
institutions today are also forming stronger relationships with business schools to increase
the relevance of their curriculum. The World Economic Forum, through its recent work on
skills and talent mobility, has fostered a concerted, multi-stakeholder, cooperation and
dialogue among policy-makers, relevant international institutions, governments and
businesses to develop interdisciplinary solutions to address the talent shortage. The
promotion of more effective international cooperation on training and skills development to
meet the changing demands of the industry, more comprehensive strategies on talent
development and greater mobility that is consistent with the realities of the global economy
will support such talent development.
Despite these demands, under investment in learning remains in a significant proportion of
financial institutions. This is largely due to the focus on keeping short term costs low. This
has however resulted in drawing talent from the existing pool which has in turn resulted in
rising costs of talent. Surveys suggest that the biggest skills and knowledge gaps faced by
financial institutions are in knowledge of regulatory standards, communications, management
skills and risk assessment and management. Professional and technical skills, particularly in
the middle to senior levels, are still very much needed in many parts of Asia. These skills
shortages will intensify as financial institutions expand their operations. Strategies for talent
management and development must therefore change if financial institutions want to be
competitive and well positioned to adjust and adapt to the changing conditions.
The Asian Institute of Finance (AIF) was initiated by Bank Negara Malaysia and established
jointly with the Securities Commission in [2009] to respond to the growing needs of the
financial industry for high quality and efficient training opportunities that would develop
indemand skills. Working with its Affiliated Institutes from the industry, the Institute of Banks
Malaysia (IBBM), the Islamic Banking and Finance Institute Malaysia (IBFIM), the Malaysia
Insurance Institute (MII) and the Securities Industry Development Corporation (SIDC), AIF
has an important role in driving and supporting the development of talent in the financial
sector. This also includes the development of intellectual capital through research that is
being undertaken in the AIF Risk Management Centre and the Applied Finance Research
Centre.
AIF has the vision to build a world class financial sector workforce. In support of this vision,
AIF has developed a Learning Programme Assessment and Accreditation Framework
(LPAAF) which provides a structured and comprehensive approach that defines quality
assurance standards for training programmes for the industry. Benchmarked against
international standards, the framework is designed to be both current and forward-looking.
The education standards promulgated through the framework ensures first class, job-specific
training to meet the industry requirements, and equip practitioners with the practical
knowledge, skills and expertise that are important to their respective job functions.
Malaysia's financial sector has continued to forge ahead. The contribution of the financial
industry to the country's GDP has increased from 9.2% in the year 2000 to 11.7% in 2009
and this figure is expected to grow further in time. Likewise, the employment growth in the
financial sector will continue to accelerate, with increasing demands for specialised skills and
enhanced expertise in finance. In the fast changing and increasingly complex financial
landscape, our workforce in the financial sector must not only rise above current challenges,
but must be well equipped to excel in the significantly changed environment.
In Malaysia, we have prioritised talent development in the financial sector as a strategic
priority and to approach this in a holistic manner, across the spectrum of the financial
services industry. The goal is to develop a deep pool of financial sector talent with world
class capabilities to drive responsible growth and development of the financial sector. As
many of the initiatives supporting these strategies are multi-disciplinary and multi-layered, the
approach is grounded in a shared commitment with the industry in a comprehensive,
coordinated and collaborative manner. This is our best hope for rising confidently to the
human capital challenge that lies before us. With the strong support of all the key
stakeholders and practitioners in the industry, we can make a critical and lasting contribution
towards creating a talented workforce for the industry.
In this journey, the sharing of best practices and experiences will be extremely valuable. I
therefore welcome and encourage your participation at this international symposium to
discuss the important issues, challenges and the way forward in talent development for the
financial services industry.
On this note, I wish you a successful and productive session.