Dr. Shah Md Ahsan Habib
Fresher risks and financial irregularities came up very strongly as critical banking sector challenges throughout the Globe. Especially, notable transformation has taken place in recent years in terms of introducing new regulations and compliance requirements. Necessity of sound corporate governance in banks is being proven again and again. Diverse regulatory frameworks are compelling banks to be caring about risk appetite, protection for customers and managing capital and the requirements are becoming even more stringent. It means, the business strategies of banks have undergone major changes and talent strategies are required to be changed accordingly. And the expectations for the senior leaderships in banks have also changed drastically where banks are looking for leadership qualities to handle issues about how the business interacts with customers alongside innovation with products and processes.
In response to the changing situations, bank managements consistently busy with accommodating the newer risks, changes; and dealing with regulatory implications and capacity development. There is no alternative but to have right and capable people or developing appropriate skill-set to address the challenges and developments. Regulatory expectations continue to rise and regulatory supervision is implemented with higher assigned accountabilities to respond to the potential financial difficulties and crisis. The compliance staffs are required to be dynamic in regulatory interpretation and expectations of the regulatory authorities. Most of these are prudential regulations and compliance requirements to ensure more stringent rules to restrict banks against undertaking excessive credit-related risks, ensuring transparency, and addressing financial crimes. These have visible implications in the volume of regulatory reporting, efforts and costs. These are burdensome but cannot be bypassed.
Though, human resource management function is considered responsible for the quality and ethics of the bank employees, role of leadership network comprising boards and top managements are crucial in this connection. Irrational and unethical behaviors of some boards and top managements were questioned following the most recent financial and economic crisis. It was observed that in many instances huge expectations of profits by the boards and very high compensation packages of top management result excessive risk-taking activities and failure of banks. Autocratic leadership caused drastic harm in case of several multinational banks. Such scenarios cannot ensure sound human resource management practices in banks. Top leadership network must create congenial environment for developing and nurturing future leaders. Practically, the chief executives and boards having transformational or participatory leadership approaches were able to save their banking and financial institutions in a critical business environment following the last financial and economic crisis. More specifically, banks having capable leadership and sound governance culture were able to carry on by absorbing immense regulatory and market pressures and risks.
As other countries of the globe, banks of Bangladesh have no option but to concentrate on improving risk and governance culture and capacity development to survive. Central Bank of the country has brought major changes and up gradation in the enforcement of regulatory standards and compliance requirements in line with the global standards. Especially several supervisory actions reflect very serious stance to deal with scams and financial crimes. In a number of times Bangladesh Bank alerted the banks and financial institutions over poor performances on regulatory compliances and for negligence in fighting against money-laundering other irregularities in recent years. Truly, the management of risks of criminal activities and compliance of regulatory requirements are expensive, challenging and even sometimes unmanageable. However, in the current complex scenario, improved banking business and better reporting and compliance go hand in hand. There is no scope to consider compliances and regulatory reporting requirements as operational hazard, rather these are risk management tools. Banks must have right kind of attitude to address the complexity. It is a serious challenge to the bank management today to employ and engage adequate and equipped human resources to ensure the required compliance.
In Bangladesh, availability of alternative jobs and growing number of banking and financial institutions are favorable factors for existing employees, especially for the good performers. In connection with availability of the work force, this may also be a matter of comfort. However, banks have been facing turnover costs in the form of retaining good performers. There is no doubt that losing an employee means losing some valuable undocumented learning embedded in the moving out employee. Practically, banks are expected to focus on capacity development efforts to meet such challenges and to address barriers associated with growing global business complexities. It is now essential to bring all key stakeholders of all levels within the fold of capacity development, financial education and knowledge platforms. In the context of Bangladesh, the arrangement for data gathering, knowledge creation, capturing, storing and application is not widely practiced in banks. In the long run, it is the 'knowledge development and information storing and dissemination' that helps minimizing risks and creating a sustainable banking sector of the country. ‘Soft skill capacity development’ is another area that demands greater attention of the bank management. And very importantly, it is essential for banks and regulators to allocate resources for offering research-based education and arranging knowledge management forums for sharing and learning. Annual Banking Conference of Bangladesh Institute of Bank Management (BIBM) is that type of a forum to facilitate research based operational knowledge sharing amongst bank executives, regulators and researchers.
BIBM is organizing Annual Banking Conference 2019 during November 27-28 and this is the Eighth Conference of the annual event. This is really inspiring for BIBM and also personally for me. Back in 2011, BIBM’s the then management and Governing Board responded positively to my proposal and conceptualization for having a platform of knowledge sharing amongst bank practitioners, researchers, and academicians. After the inauguration of the ABC 2019 by the Governor of Bangladesh Bank Mr. Fazle Kabir, the plenary sessions of the first day is designed to concentrate solely on the ‘Operational Issues of Banking’. In the opening session there will be a key-note presentation based on the BIBM’s review studies in nine broad functional and operational areas. On the way to arrange the Annual Banking Conference 2019, we called for papers in July and received tremendous responses from researchers from Bangladesh and some other countries. Finally, the review team selected 25 papers for presentation; and 12 papers would be presented on the first day. BIBM invited selected senior industry experts and top-level bank executives to add value to the business sessions as session chairmen, moderators and designated discussants. We believe that the key stakeholders of the banking sector would be immensely benefitted out of the interactions of bank executives, academicians and researchers. In organizing the event, BIBM appreciates the cooperation of supporting organizations and media partners- Bangladesh Post; Banik Barta, Arthokhabor, Somoy TV, and ammra network.
