Pursuing profits in volatile markets will inevitably lead to risks.
The role of financial companies, including asset management firms and banks, is to provide an institutional way of thinking and guidance to their clients, according to a top executive of Standard Chartered Bank Korea.
“People, even experts, may have their (own) personal views concerning economic situations and prospects,” Rajesh Kannan, regional head of SC’s wealth management department in Korea, told The Korea Herald.
“But when the company sets its official stance, this is what should be delivered to the client, holding priority over each individual’s opinion.”
This is the key concept of Wealth Care Service, the company’s representative wealth management program.
“We need to let customers know that all of us within the organization stand on the same line and present a coherent perspective, and that we will not act on whims or unfounded forecasts,” Kannan said.
The India-born official pointed out that Korean society, including its financial service sector, tends to place great importance on interpersonal relationships -- which he deemed to be both a strength and a weakness.
“I notice that my managers here in Korea display a level of commitment and passion unlike anywhere else in the world, and I praise them for such merit,” he said.
“But this personal touch, this relationship-based culture may sometimes prevent us from doing what is eventually best for the client.”
Following a personal perspective, one tends to do what has been asked for, but following a professional perspective, one pursues clear objectives and achieves the best interest of customers, he explained.
“Along that line, it is one of our great advantages not to have any in-house asset management or securities companies, besides the bank that we are,” the official said.
In a comprehensive financial group structure, a bank would naturally be exposed to pressure to sell the financial products of its group affiliates, which may be in the best interests of the group rather than the customers, he explained.
“Standard Chartered made a clear and conscious decision several years ago not to establish any affiliates of this sort, but to encompass all of its financial businesses within the bank’s range.”
He also added that their complex management structures may act as a major constraint for Korea’s top banking groups, most of which are currently managed under a holding company system.
“The affiliation often seems to be impeding the company’s performances, even causing more rivalry within the organization, rather than against outside competitors,” the SC executive said.
What is more important than the affiliation between the holding company and its affiliates is the global network between the headquarters and its overseas offices, he claimed.
“Korean banks, though most of them have a wide range of overseas offices, tend to consider them as satellite branches to their Seoul headquarters,” he said.
But the fact is Korea only has 2 percent of the world’s market capitalization and one needs to see beyond the local horizon, he added.
“Samsung Electronics may be the big bite here in Korea and in the world too, but it was those who turned their eye to the outer world and invested in Apple who saw profits last year.”
By Bae Hyun-jung (email@example.com