Seven months after taking over as CEO of the leading financial institution in Cambodia, ANZ Royal bank, financial services veteran Leonie Lethbridge took time out to discuss the prospects for the country, the bank and the industry, all against the backdrop of the rapidly increasing use of technology, which has brought about unheralded connectivity in the financial industry.
It has been more than 150 years in the making: a shift of global economic clout from the traditional Western powerhouses of America and Britain to Asia, with China at the centre of the rebalancing. Some 1,500 kilometres down the Mekong River, Cambodia is experiencing its own peak of extreme growth, with experts predicting the economy will continue expanding at a rate of around 7% on top of similar figures over recent years.
Earlier this year, Australian Leonie Lethbridge took the helm of ANZ Royal bank.
Having worked in key management roles with ANZ in Indonesia and China, as well as Australia, she had some idea of what was required to manage a team in Asia, and says that driving the quality of service for clientele to international standards–in conditions that are not always ideal–is paramount to the bank’s success. “The quality of financial disclosure in the system, is by and large, lower here than in many other countries, So that represents a particular challenge in terms of how you work in that context and how you work with clients in that context,” she says. “What that means is that our staff here work exceptionally hard to meet the levels and standards that the bank has globally.”
Dr. Lethbridge explained that more than 99% of her staff of about 450 are Cambodian, and estimated that between 10% and 20% of them have been educated abroad. But, despite levels of qualifications, all staff that come on board with ANZ Royal are put through rigorous training, she says. “Training, education, development, its all an ongoing effort. Absolutely everyone goes through some training, and a lot of people go through a lot of training, which is part of our employment proposition and part of the reason people want to come and work with us. Our clients want to know they are working with ultimate professionals, which they are.”
The ANZ Royal staff are constantly updating their skills and knowledge, and must do so as the financial world begins to turn back to the East. “There has been a lot of rebalancing already,” Dr. Lethbridge says. “If you look at the economic centre of gravity of the planet, it took a couple of thousand years to move from somewhere around Asia to somewhere between the US and the UK– somewhere in the Atlantic Ocean, a nominal economic center of gravity—but it has taken about 150 years to swing back to somewhere between Beijing and Ulaanbaatar (Mongolia). It has rebalanced from Europe back towards the East again, and this is a very important phenomena.”
Dr. Lethbridge places China at the centre of the pull back toward the East, with its massive population and increasing prosperity driving the move. “The growth markets coming out of Asia, and particularly China, the growth of the consuming class and the alleviation of poverty means that there has been an increase in economic activity here and that is very important in rebalancing how the planet works,” she says. “There is potential for East Asia to continue to be the growth engine of the planet.”
With relations between Phnom Penh and Beijing at an all-time high, and with technological and physical connectivity increasing across the ASEAN region and into China, Cambodia clearly has an opportunity to capitalise. “China is the number two economy on the planet, they are already an economic powerhouse. What is Cambodia’s role in that? Cambodia is clearly an important, although not huge, economy in ASEAN, and ASEAN is benefitting from trade and investment flows as a result, partly, of low labour costs,” she says, adding, however, that those labour costs will inevitably increase, leaving Cambodia with a need to focus on its competitiveness in other ways.
Building a Foundation
Year–on–year, the Cambodian banking industry has experienced rapid growth of late but has “moderated” slightly in the past six months, according to Dr. Lethbridge. “That is probably a good thing,” she adds. With new financial institutions, both local and international, seemingly entering the market at will over the past few years, the National Bank of Cambodia (NBC), backed by the government, has introduced new measures regarding liquidity and increased minimum capital requirements. Dr. Lethbridge believes this is a necessary step for the NBC to take in order to consolidate the growth that it has overseen in the past decade.
“My report card would be that the banking industry is growing strongly and now it is time for it to build a firmer footing for itself,” she says. “This is very important. You want to make sure that you have sizeable players in the system, and regulating the minimum level of capital requires market participants to think about their commitment and to continue to step up that commitment. There is a long-term strategic architecture being played out.” With more than 50 banks participating in the Cambodian market, Dr. Lethbridge expects, like most experts, to see some level of consolidation. On top of that, there will be a number of banks looking to specialise into niche markets, she says. “Those trends are consistent with trends globally.”
Savings by Tech
As some of the smaller players look to consolidate (some mergers and acquisitions are already taking place), all of those concerned are looking to reduce costs via the latest trend to take hold in the banking industry, fintech, which is being embraced by financial institutions around the world. And as humans become more and more reliant on technology to conduct their everyday affairs, the digital elements of finance are only beginning to be realised. “On one hand, it gives better customer proposition and on the other hand, it does help on the cost side for the banks and therefore improves their returns aswell,” Dr. Lethbridge says.
Looking around the ASEAN region, fintech is becoming increasingly important to financial institutions, their clients, and to regulators, including in Cambodia. The great reason for this is inclusion: people who are normally unable to access a bank branch can do so via a phone or computer. And how far can mobile banking go? “A lot more will go online. If you look at ANZ in Australia, we now offer Apple Pay, digital wallets associated with a phone. There is a long way to go. I think that digitalisation has in some ways just started.”
Words by Matt Blomberg