Transaction banking is a hot sector in Singapore and across Asia. It's generating jobs as banks in the region chase steady income streams from globalising Asian companies and try to reduce their reliance on investment banking.
Salaries in the sector are rising as a result, as we reported last month. Meanwhile, wholesale transaction-banking revenues in Asia Pacific are expected increase to $139 billion by 2022, from $46 billion in 2012, according to a September report by the Boston Consulting Group.
DBS, Southeast Asia's largest bank, is among the firms recruiting transaction-banking professionals across Asia right now. We speak to Lum Yin Fong, managing director of global transaction services, cash and trade, at DBS and a veteran banker who's also worked for Citibank and ABN AMRO, about the type of candidates she is looking to hire.
There were a lot fewer innovations, it was not so much of a KPI-driven culture and probably less stressful as well. Back then, your competitors were just the banks, while in transaction services today you’re competing against non-bank players like PayPal and e-commerce portals. And while compliance has always been important, Basel III, FATCA and other new regulations are fundamental to jobs in transaction banking – it’s no longer the responsibility of the compliance officer. For example, DBS is now offering more Renminbi products, so for these we need to understand relevant regulations not just here in Singapore but in Hong Kong and China too. Another big issue today is the importance of cyber security, because of the potential for transactions to be compromised by cyber attacks.
I joined DBS in 2001 and was tasked with setting up a transaction-banking team. We had about 20 people in the team back then; now we have almost 400. When I started at DBS, it could sometimes be quite difficult to hire good people, but this situation has totally reversed now. Our capabilities and product range have expanded enormously – we regularly win trophy deals from large corporates in Asia – and this means we can attract the best talent. We’re headquartered in Singapore, but I no longer define us just as a Singaporean bank; we are regional now.
We continue to hire and grow our headcount in both core areas of transaction services – cash management and trade financing – for both product-sales and product-structuring roles. When sales increase, we also have to hire more product people to support them. Trade within Asia is growing faster than Asian trade with the US or Europe. Our corporate customers are expanding their businesses into new Asian markets and we must respond to their changing needs. For example, we have set up a China desk in Singapore to service mainland companies who are expanding here.
We are hiring across Asia – especially in our core markets of Singapore, Hong Kong, China, Taiwan and India. We’ve also been hiring a few people in Vietnam, Korea and Los Angeles, and are now potentially looking at London. In the near future, Myanmar will be a key place for trade growth. When you’re helping clients manage and reconcile payments, handling day-to-day things like letters of credit, you need people on the ground to service them directly.
I’m not just interested in whether you can do a letter of credit or remittance, you also need to be able to help clients with their broader working-capital needs. Transaction banking is a volume business, it’s not about doing one big IPO deal, so you need to enjoy helping customers over the long term.
Prior to 2008 most young graduates wanted to work in glamorous areas like equity capital markets or debt capital markets, but the financial crisis highlighted the importance of bread-and-butter transaction services, which provide stability to banks’ revenues. Things have changed a lot – I now see much more interest in transaction-banking careers.
During my early days at Citibank I told the Singapore CEO that I didn’t want to work in an operations role, but he told me to do it for a few years and that I’d soon change my mind, which I did. Now I always encourage people in the DBS management associate programme to do a stint, perhaps two years, in the back office. If they then do a customer-facing role, an ops background helps them speak to customers with an in-depth knowledge of what’s really happening at the bank – the key risk and control processes. You know exactly what you can put into products and exactly what you are selling. A corporate banker who’s done a stint in credit ops, for example, will have a much better understanding of their customers’ credit worthiness.