Zeti Akhtar Aziz: Building human capital for emerging challenges
Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 9th Bank
Human Resources Conference 2008 organised by the Indian Institute of Banking and
Finance (IIBF): "Building Human Capital for Emerging Challenges", Kuala Lumpur,
29 February 2008.
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Let me first of all extend a warm welcome to the participants of this 9th Bank Human
Resource Conference organised by the Indian Institute of Banking and Finance (IIBF). It is
our honour to host this conference that is being held outside India for the first time. This is
one of the concrete outcomes of the alliance that has been entered into between the Indian
Institute of Banking and Finance and the International Centre for Leadership in Finance
following the MOU that was signed about three months ago between the two organisations.
The development of human capital has to be a constant undertaking in an environment of
constant change. As recent as ten years ago, we have seen the economic and financial
environment dramatically transformed. There has therefore required a corresponding change
in the knowledge, skills, competencies and capabilities that are now required, in particular, by
the banking industry, which is a highly knowledge-intensive and skills based industry.
New challenges have also emerged in this environment arising from the rapid globalisation
and internationalisation of the financial system and the significant advancement in
technology. These developments have led to a rapid pace of innovation and enhanced
international interdependence and inter-linkages. This has generated an environment that is
increasingly more complex, competitive, uncertain and ambiguous. The recent episodes of
financial turmoil, have shown that even financial systems in developed and advanced
economies continue to be vulnerable to financial stress.
This more difficult operating environment demands new skills and the ability to manage these
new challenges. Indeed, the role of leadership has changed. It is essential to have the talent
that are not only able to see the new emerging opportunities, but also to be able to deal with
the high level of unpredictability and navigate through turbulent conditions. The industry
leaders need to be visionary and comprehend future trends, chart strategic directions and
adapt to changes to stay competitive and relevant. Effective leaders in this era, will be those
who are continuous learners, who are on the cutting edge of excellence, who have strong
convictions, and yet, having humility to recognise the need to reinvent themselves and
inspire their organization to adapt to the new environment. Such attributes are vital if the
financial services sector is to forge ahead and remain at the forefront of new innovations and
thus secure long-term competitiveness. In this process, there needs to be avenues for
continuous learning. The establishment of ICLIF is part of our commitment towards providing
such an avenue to enhance leadership capability and develop world-class leaders in the
financial services sector.
The changing configuration of the global economy and financial markets, increasing regional
economic and financial integration, increasing internationalization of financial services, the
continued enhancement to the regulatory structures and approaches will have a significant
bearing on the future of the financial services industry. The road in front of us is therefore
likely to be significantly different to the one from which we have traveled on. The investment
in human capital development is thus important for the future development and growth in the
financial services sector.
Building human capital has become much emphasised in today's world. Successful banking
institutions in the future will be increasingly dependent on intangible assets such as talent. As
competition intensifies, the need for banking institutions to attract and retain the best skills
and talents will become more urgent. Going forward, the availability of talents will become
the pivotal factor determining the capacity for the industry to reinvent and transform. Banking
institutions would need professionals with the requisite skills and expertise not only at the
strategic and management level, but also at the technical and operational level. Successful
institutions will be the ones which accord high priority to the continuous enhancement of
human capital.
Human capital development has thus become of strategic importance and is integral to the
success of an organisation. The involvement by senior executives in the management of
human capital development has also become essential. Senior executives need to take the
lead and devote a considerable amount of their time to this initiative. Human resource
development functions is integral to the talent management process and in supporting the
human capital management strategy. Of equal importance is that this should occur at all
levels in the organisation. In essence, the accountability for talent development requires
concerted efforts throughout the organization and needs to be embedded as part of the
working culture that is communicated, shared and understood at all levels.
While the need for human capital development is apparent, what is less apparent are the
appropriate methods and policies that should be adopted to advance human capital
development. The financial services industry needs to identify the appropriate strategic
direction for human capital development. Attention need to be given to the entry level, to the
specialists and to the senior management levels. This would benefit from greater
industryuniversity linkages which is a major channel through which the talent requirement and talent
gap can be narrowed. The industry involvement in the curriculum design and delivery will
ensure graduates are equipped with the relevant knowledge and skills that meet the
requirements of the industry. Participation by the industry players may be in the reform of the
academic curriculum and methodologies and in providing other forms of practical support to
the institutions of higher learning. This will contribute directly towards meeting the human
capital needs for the future. The quality of human capital is the cutting edge of
competitiveness. Having competent staff to deliver high quality products and services is
critical to building customer confidence and goodwill, driving customer satisfaction,
enhancing reputation and ultimately realising individual institutions' corporate vision and
strategic goals. It is therefore, in the best interest of banking institutions to strengthen further
the competence and professionalism of staff in the industry. In this regard, financial
institutions can of course adopt the measure of "buying talent" from the market. This may
however, risk in high compensations that are not commensurate with the value added. The
more desirable option is the building, developing and maintaining a pipeline of talent from
within the company.
Let me turn to Malaysia's experience in human capital development for the financial services
industry. In Malaysia, structured and comprehensive approach to human capital development
has been a key part of our efforts for the development and advancement of the industry. The
programmes by ICLIF, which is now in its 6th year of operations, provide programmes in
leadership development for the senior management level in the financial services industry.
The programmes carried out by the Institute of Bankers Malaysia, the training arm of the
banking industry, have also been recently reviewed to meet the new demands of the financial
sector. In addition, dialogue between the industry and other education providers including
institutions of higher learning have taken place to promote well equipped supply of talent. In
September 2007, Bank Negara Malaysia initiated the Financial Sector Talent Enrichment
Programme (FSTEP) to train and prepare 1000 highly qualified graduates for immediate
placements in banking and insurance institutions. This effort is undertaken in collaboration
with the industry and training institutes and is aimed at boosting the supply of well-trained
and competent personnel for the financial services industry.
In the area of Islamic finance the continued international expansion has increased the
demand for talent and expertise in the industry. The establishment of the International Centre
for Education in Islamic Finance (INCEIF) in Malaysia in 2006 represents a structured
investment in the development of human capital to support this global development of the
Islamic financial services industry. The programmes are for practitioners and graduate
students. In addition, it is envisioned that INCEIF will act both as a professional certification
body as well as an education centre for post-graduate programmes in Islamic finance.
With the firm commitment to build human capital, the challenge is to formulate the
appropriate strategies and mobilise the resources necessary to produce results that will
enhance the intellectual capital of the industry. This will require the combined efforts of
internal strategies within banking institutions, that involves a holistic approach that
coordinates the strategies for human resource management and development reinforced by
strategies for organisational development. This will also involve putting in place the
appropriate processes and structures. A total solution will be required. These efforts will also
need to be supported by education providers. Finally, this initiative of bilateral engagement
on the issues in developing talent in the industry will also gain from the synergy and will
contribute to strengthening the ability to further the agenda of building human capital in the
financial services industry.
On this note, I wish you a productive and successful conference.
Thank you.