• The arrival of fintechs and rapid digital transformation that is taking place all over the world has changed the landscape of the financial industry
• The ability to keep-up and rapidly transform according to these changes is necessary for current industry leaders, or else lose to new players
• As successful disruptors such as Amazon continues to grow bigger, banks should also re-evaluate their goals and practices by mapping their digital journeys

Here is the transcript:

One thing that I’d like to make very clear to all of us in this room but also to also to everyone in the industry that you cannot buy an Asian Banker award. You can only deserve it. You can only earn it. And we as an organization have built the DNA within ourselves not to be able to succumb to any form of pressure to…give awards just because it’s the thing that you do today. It also costs us a lot to hold this position because our researchers work up to six months in a year collecting data from all of the different institutions before we are able to screen them down and then narrow them down to the ones who become winners.

I am very proud of my staff who are sometimes given gifts at the time that they go do interviews. They walk out of the organization, and they walk back and hand the gifts like that to people who give them. And sometimes the people who give them don’t mean anything wrong. It’s just that they sometimes, in different cultures, it’s a practice to be grateful for someone that you visit like us and visited you and so on. We spend our own money. We undertake our own cost of travel for visiting, for narrowing down, and then for making selections. And we also carry the burden of the transformation taking place in industry today.

The transformation taking place in industry today is that the winners, the people who are shaping the industry are no longer the incumbents, are no longer the largest banks in the biggest countries, are no longer the largest institutions or the richest institutions. Sometimes they are struggling institutions. This evening, for example, we have KaKao Bank, which is actually less than one year old, and we as an organization are willing to take the position that this bank demonstrates leadership because of the way in which it’s been able to acquire customers, but more than that also to monetize the relationship and run it as a viable business model.

And so when we make positions like this we have to take the responsibility of standing by our views. By this process that we are capturing the story of a transformation of the financial services industry. When you hear the name the Asian Banker Today, it’s a very funny name, because we are not Asian anymore and we don’t just cover banking anymore. We have offices in Singapore, in Beijing, in Dubai. We’re running a program in Nigeria for the last five years. We run programs in Africa, in Tanzania, in South Africa. We’ve been pushing the proposition of the future of financial services way into regions that originally are not part of the Asian story.

What you may not realize is that the transformation that is taking place and the intellectual weight that is being created is now borderless. It’s coming from anywhere in the world. It does not matter whether you’re Asian or Western anymore. And it’s very important that an organization of this quality emerges from this part of the world because some of the transformational changes taking place in the industry are coming from here, and you are here today in Beijing. This is ground zero of the future of finance.

And the future of finance is not just banks anymore but also the peer to peer players, the payment innovation players, the new supply chain players, the social media platforms, and all of these players who are transforming our industry today. So it’s impossible that the winners and the leaders of the industry come just from the banking industry. All of the awards that you are seeing this evening will be put up on our website, and some of our award programs we actually publish the rankings and the score cards that we develop.

The publishing industry has changed dramatically in that it’s true that I do not make money from news anymore, but we do make money from collating, corroborating, and listing the performance of different institutions as they make their journey into the digital world. Everyone, not just that you know where you stand, we want to start talking to your customers. So all of the rankings and rating that we publish on our website will be increasingly available to your customers so that in future it will be your customers who evaluate you, your customers who will tell us what they liked or disliked about you, that we will add to the story that we create in terms of transformation in the industry.

And you will find that the institutions that will make the top of our list will start to look very strange. They are no longer banks. They are names that you’ve never heard before. Even this evening we’ve heard names that you’ve never heard before. I’m just in the process of completing my first book. It’s called On the Eve of Finance 5.0. The future is talked about finance 3.0, finance 4.0, but in finance 5.0 there is a…evolution that is yet to take place. Today we talk about platforms, about acquiring customers, about the cost of acquisition, about creating platformers that can be as large as the Amazons and the Facebooks of the world.

But there is another transformation that is already on the horizon today, and that transformation is the transformation of the personalization of financial services, where you and I can exchange money, exchange values, do anything we want in finance just like sitting here in this room and being able to communicate with each other on a normal basis. And suddenly the institution starts to look different. And suddenly we are able to evaluate each other as being a authentic person because of technologies such as blockchain and so on. And so we need to take stock of the world after platforms, a world of financialization and the world of personalization where the individual has started to take ownership of his financial services needs at a very, very personal level.

And now it comes to the last point of the evening, where…it gives me great pleasure to…go through the process of honoring the most important award of the evening. The most important award of the evening does not go to an institution. It goes to an individual. At the end of the day, all of us in this industry are a collection of individual, a collection of the integrity, of the shared values, of the shared wisdom which then makes the institution. It is sometimes difficult identifying the individual because an industry like the financial services industry is made up of many individuals who have the integrity, the understanding, the hard work and the proven products to demonstrate that you are a competent individual.

And then when you put a hundred competent individual, you then stand back and look at them and say which one of these hundreds should be picked as being demonstrated of the leadership that’s required to shape the industry and take us into the future? Many years ago we introduced the lifetime achievement award, and the lifetime achievement award is not something based on last year’s annual results or an achievement that was two years ago or something of that nature. It’s something that takes into account a person’s entire life. And when you look at a person’s entire life you are laid down to the bare basics of the individual, what that individual is made up of.

And we named the award the Bill Seidman Award in 2010 because Bill Seidman, the Federal Deposit Insurance Corporation, the FDIC chairman in the US from 1985 to 1991, was a big fan of the Asian Banker. In fact, if he was alive he would be sitting right here with the council of advisors. And through his leadership and through his inspiration, we have been able to ensure that we’ve looked at different leaders in different years who exemplifies what we need to be, an example that the rest of us can take into our hearts and follow and emulate for our own lives.

The person we are honoring tonight is one of the most highly regarded and respected bank regulators in the world. Tan Sri Dato’ Sri Dr. Ungku Zeti Akhtar binti Ungku Abdul Aziz is the daughter of the country’s most prominent intellectual in his time who became chancellor of the country’s most prestigious university, and her mother was a prominent journalist. So it was a family of intellectuals. Zeti received a doctorate from the University of Pennsylvania in monetary and international economics in 1978. She begun her career as an economics analyst for the Southeast Asian Central Bank Training and Research Center from 1979 to 1984.

She was then appointed deputy manager of the economics department at Bank Negara Malaysia before she assumed the governance position in 2000. We honor Zeti for her intellectual prowess, her integrity, and her fortitude in playing her role in the development of Malaysian. Whatever her economic persuasions were, she was drawn into the role of leadership at a time when the country itself had made several important decisions for itself. In 1997, the country decided to impose currency controls to be shielded from the devastating effects of a global capital clause that led awry.

When the Malaysian leadership decided to impose currency control, it went against everything that we came to think of as conventional wisdom in that time. The ironman for the host of leading nations thought that it was a regressive step. The decision also caused cracks in the Malaysian polity that took many years to resolve. Dr. Zeti was part of the team that guided the country through that process while making sense of responsibility to international investors and to the trading nations and making it Malaysia’s status as one of the top three tea-trading nations in the world.

Intellectually the world has generally slumbered into the Western regime, that liberalizing financial systems was good for everyone and that floating currencies to be traded overseas in the global marketplace was a desirable thing to do, without any contemplation to the ability of different countries to withstand such shocks. Malaysia’s actions enabled it to withstand the shock of the Asian financial crisis and to protect the most valuable of its economic assets and infrastructure from being sold to foreign interests, something that other countries that were too afraid to go against the INS prescription at the time regretted.

This intellectual battle, which at one time is between West and East, between developed and developing countries, had been until the time that people like Zeti stood up been a patronizing one. The Nobel laureate Paul Krugman took credit for Malaysia’s policy. He said that Malaysia was following his prescriptions, and then laid out four more impossible conditions that a developing country would not be able to meet but which in turn actually demonstrated that he never ran a political system himself. Everything that the West did was right, and everything that the East has done was subject to question.

We see that right to today where all of the innovations that took place in the US in the 1970s were called innovations, and all of the innovations that are taking place in China today is called shadow banking. The lessons learned from the Asian financial crisis were used to strengthen Asia’s financial system. Zeti oversaw the consolidation of the Malaysian banking industry so that it was reduced to 10 well-capitalized banks of sufficient size and scale that was subsequently able to regionalize and become international players in their own right.

As governor, she put in place measures to ensure its financial institutions was sound and run by competent managers who take their guidance in installing prudent and strong risk management practices and an ability to grow the subsequent institutions in a sustainable manner. There are many things that are wrong with Malaysia today, but a weak financial system is not one of them. A strong economics background factor and guiding the macroeconomics policy of a country to benefit from its potential as a robust and sustainable fast-developing country. She showed wisdom and a deep sense of understanding of both economy and the way it was tied to the rest of the world.

In her final tenure as governor, she demonstrated wisdom and fortitude in defending the institution of the central bank as a pillar of a promising economy. Between 2009 and 2018 the political administration of the country fell into a leadership that was eventually elected out of office on allegations of corruption and nepotism. It was in this era of this administration that Dr. Zeti demonstrated her integrity and defended the institution of the central bank and that of the banking regulator by fiercely taking to task the banks and institutions that draw basic normal customer and compliance groups just because they were afraid of the political masters of the time.

Protecting an institution, protecting the institution of the central bank, also involved understanding and operating within its limit, and not using it to grandstand or pursue other selfish objectives. She was the ultimate professional. For these reasons, Dr. Zeti’s actions and performance as a central banker, as a civil servant, and as a professional with a moral compass in her own right is exemplary of a world class level. She was the first woman to serve the central bank as a governor of a country, and is the second-longest serving, a position which she held for 16 years from 2000 to 2016.

On May 9, 2018, the Malaysian people voted out the previous administration through a peaceful but a keenly-fought election. The integrity of a number of institutions had by that time been compromised, and many decisions had been made that put the financial future of the country at risk. In the aftermath of the election, a number of the institutions had to be rebuilt, new leaders put in place, and decisions reversed. In such a moment, the people went back to those who had shown fortitude, courage, and conviction to provide them guidance again. And to the fortunate of the Malaysian people, who did they find? They found leaders like Dr. Zeti.

So well-regarded and highly respected is she as a fiercely independent and deeply experienced policymaker that she was recently appointed as a member of something called the Council of Elders. There’s one missing in this picture, but all five of them were paid the price of being professionals in their respective professions. There is a price to pay. You must pay the price. There comes a day when you have to pay the price to demonstrate who you really are. There is no way to go around it. There is no way to avoid it. And the price that you pay is the price the price that you have to pay in that if you did not pay it wouldn’t be you.

I say this because there are many that did not pay the price of integrity, of standing by what they believe in, and by not budging in the face of considerable opposition if not punishment. Her achievements have set her high watermark for all leaders who will be put in a similar position of trust anywhere in the world. Do not succumb to intellectual orthodoxy. Protect the institution. No, build great institutions. Put your personal agendas aside. Keep your house in order. Remember that trust is given, earned. And to whom much is given, much is required.

Zeti Akhtar Aziz: Distinguished guest here tonight. It is indeed such a great honor for me to be here today to receive this lifetime leadership award from the Asian Banker Company. I also wish to thank Mr. Daniel for such a generous citation. As a policy leader from an emerging economy in Asia, for more than three decades, it has been for me both exhilarating and most rewarding. It has been a miracle that has been in many parts on treacherous terrain. And one, it has been very challenging. The experience has been tremendously fulfilling for my country, it has been my privilege to be called with managing, especially the policies that took place 20 years ago, mentioned by Mr. Daniel.

Indeed, we implemented unconventional measures. And when we did, we didn’t have a single friend in the world. And we were condemned by the most powerful and highly articulate individuals. And indeed, Paul Krugman did say many years later – he said Malaysia never made it to implement such measures because we recovered at about the same time Korea, Indonesia, and Thailand did. And those who are sitting in an audience and anyone from Central Banking know that you don’t usually put up your hand to say something. But I couldn’t resist it. I put up my hand.

And I said, “Professor Krugman, you are absolutely correct that we did recover about the same time that the other countries did. But there was one significant difference. And the difference was the cost of the crises, the cost of the crises on taxpayer, on the labor market, on the loss of wealth, and so on. For Malaysia, the cumulative cost was less than five percent of GDP. But I’m told recently by Thailand that they still talk about it. And even Korea also still talk about it. It was more than 13 percent of GDP. And they still continue to create the cost which future generations are going to pay for the cost as it’s rolled over into the future.

So, in essence, if we can – honestly, the most critical thing is knowing what the objective, the policy is to achieve. And we looked at the objective of such controls as being a circuit breaker. All those invited into labor markets would know what the circuit breaker is. And that was it for us. We were downgraded by two notches by the rating agency. But what did we do? We reached out to the markets. And that is one of the most vivid memory that I have of that experience. I was given the task of going to the US. We went to 26 cities from coast to coast. And it was in a small, little aeroplane that went down and down for these meetings. We got this off the rating that we were given. It was well-received.

And it was over-subscribed by three and a half times. So, they already know what we want to achieve. We just go for it knowing how to articulate it. I am glad to highlight that it was a privilege for me in particular during my lifetime and career to have been first involved with part of three different areas, the first being the global agenda for the advancement of the force of finding responsible finance and inclusion in financial intermediation. And this is important because while we are achieving our objectives, responsible finance and inclusive finance is particularly important because that is which gives focus to sustainability and that which accords the importance to ethical values.

Second, to be part of the regional financial integration efforts. And the third, to be involved in building the capability to be in a state of readiness at the national and regional levels to effectively address future challenges cohesively and collaboratively to ensure the resilience of our financial systems that can coexist in Asia and thus be more sustainable. And we took a different route from Europe. In 1999, when the euro was introduced, everyone asked in Asia, especially Asia, on coming out with a single currency. We did a study, and it was a resounding no. We were too diverse. We didn’t have the preconditions. So, we do not want to achieve a single currency. But what did we want to achieve?

We wanted to achieve financial integration. And financial integration was important. The motivation for it is we want as high savings we can to mobilize savings from the region for reinvestment in the region. And today, when people talk of Funds, what we did before was we offset the savings, went to the well-developed markets. And then they would come back to us in terms of volatile flows. And what we want to do now is to retain a fraction at least of those savings in our mission to be rechanneled and recycled back to investors in our region. And that is what is happening now already.

We are investing in each other’s both in the real sector as well as the financial flows which are most stable between our financial systems. And it was so great to be part of making that possible. Then, in responsible finance are those that accord attention to the impact of finance and the longer-term orientation of the business as opposed to short-term gains. Equally important are the values that are upheld and that are for purity, the trust, and confidence in the financial system and for creating the foundations for a sustainable financial system.

Third, it’s been my distinct privilege to have engaged with the Centarl Banks in Asia to design the path for this region of financial integration. And of course, with all the technology that you all have been talking about and been part of, this is the golden time. And so that we achieve a more efficient intermediation of funds that are mobilized in Asia. The third is being part of the corporation and collaboration in Asia. And this has moved from strength to strength. And this is what many people, even in the industry, do not know about, that to really strengthen the capability of the state of readiness to deal with future destabilizing eventualities.

Being open and economies in Asia is probably new to the developments that take place around us with Donald Trump coming to office and Brexit and then globalization of parliamentary policy within different parts of the world. All this is going to affect us. So, it’s all about recognizing the indications of these developments and being well-positioned to preemptively manage their implications and the associated risks. Finally, the world of finance is going to completely transform by the recent levels of technology that has celebrated the phase of utilization, financialization of finance.

These developments provide us with a platform that can unlock great potential opportunities and benefit every statement of society and this community. But this will require having the internal capability that is also accompanied by and reinforced with – and this is the most important thing – integrity, governance, and accountability, and the high and equal standards being upheld by the industry. It will only be then that our aspirations for retribution can be realized. Thank you very much.

The winner of the William “Bill” Seidman Award for Lifetime Achievement in Leadership in the Financial Services Industry 2018 is Dr. Zeti Akhtar Aziz, former governor of the Bank Negara Malaysia.

Click here to view the full citation