A (revised) financial services strategy for Malta plc
The international news regarding the financial services industry just keeps getting worse. The latest (at time of writing) being the £28 billion loss of the Royal Bank of Scotland - the biggest ever corporate loss in UK history. What exacerbates the...
The international news regarding the financial services industry just keeps getting worse. The latest (at time of writing) being the £28 billion loss of the Royal Bank of Scotland - the biggest ever corporate loss in UK history. What exacerbates the situation is that experts believe the problem in Europe (especially because of Central Eastern Europe) is worse than that in America and more bad news (if that were ever possible) is set to come out in 2009.
This global situation (a triple whammy of a near financial meltdown, credit seizure and global recession) changes our government's playing-hand quite radically from that which it had anticipated pre-October 2008.
Within this context, I think that the original aim of increasing the contribution of the financial services sector to GDP from 12 to 25 per cent, especially when one takes into consideration the current global situation, is now in need of reassessment. This is not to say that the target is unreachable but rather to appreciate what revised strategy we need to adopt in anticipation of a point in time (before 2015) when the global economy will bottom up and a new cycle of world growth commences. We can therefore navigate the downturn by investing in our brand strategy in 2009 so as to position Malta plc for growth in the upturn in (possibly) 2010.
This can be achieved by Malta pioneering the concept of "Sustainable Banking" or "Christian Finance" as a means of building a sustainable national brand relevant to the new market conditions and sentiments. Before exploring this concept, it is important to note that a cognitive mind shift seems to be taking place in the international scene, from the assumption that the free-market is based on "self-interest" (Rocha & Ghoshal: 2006) to one in which "co-operation", "collaboration" and "collective interest" will define a new era of capitalism version II.
What do I mean by "Sustainable Banking" or "Christian Finance"? The idea is for our nation to respond to the "creative destruction" currently taking place in the global financial services industry by positioning ourselves as the innovators of this new business model which could be based on the principles of sustainable business development, responsible lending, green investment decisions, a corporate governance (for both company and client) based on Christian principles and a strategic corporate responsibility policy which always seeks to balance key stakeholders' interests rather than just shareholder interests.
I think the Governor of the Central Bank of Malta and the chairman of the MFSA have already acknowledged the wisdom of Malta pursuing traditional banking principles, which fit very well with "Sustainable Banking" and/or "Christian Finance". The point is that we must see the current situation as an opportunity to build our brand equity so we are in a much stronger competitive position come the upturn. To quote Michael Porter and so as to emphasise the point: "Ultimately, nations succeed in particular industries because their home environment is the most forward-looking, dynamic and challenging." That's precisely what this type of a brand strategy, during a global financial services crisis, does - it allows us to be forward looking, dynamic and challenging, at a time when our competitors are perhaps over-consumed by the present given their financial predicament.
To do this Malta must, however, focus its financial services strategy, that is, identify one or two segments in the global industry (such as trusts and re-insurance) and become the world leader in such segments. Malta can never become a global financial centre like London or New York, but it can become a centre of excellence in its own specialist area(s), much like Switzerland did with private banking or Bermuda with re-insurance.
The two options open to us are to either pursue a strategy of "focus" or "differentiation" - the latter meaning to be unique and offer something of value at a premium price whereas the former means to tailor your strategy to serve one or two segments at the exclusion of other segments. I suspect that a strategy of "focus" makes more sense and compliments the brand strategy suggested above.
What I am suggesting is pre-emptive and forward looking, especially when one takes into consideration the fact that we were identified in the recently published Global Financial Index as a financial centre that "might" become significant in the next two or three years. But we can only upgrade from the "might be" to the "will be" if we focus our strategy and build our nation's brand. By this I am also referring to a clear and stable business environment, excellent human capital, excellent market access, first class infrastructure and a general competitive environment conducive to a centre of excellence.
For those of you raising an eyebrow about the marketer's use of the word "Christian Finance" (a spin-off of the recently successful branding exercise concerning Islamic finance), my inspiration comes from our heritage and culture, and the seeming global call to tame the free-market dominated in the last 20 years by selfish, egotistical and ruthless business behaviour in which success was always measured in terms of the near term (quarter by quarter) and exclusively from the shareholders' narrow perspective.
I think that Malta could firmly put itself on the financial services map in Europe by assuming moral leadership at a time when confidence is at its lowest since post-1945 in the then aftermath of the world war and European citizens are receptive to suggestions of a new way of doing business. The government's 2015 Vision can be realised with the right competitive strategy (a focus on two segments) and brand strategy (sustainable banking/Christian Finance) in place. Let us, therefore, seek first-mover advantage and position our financial services industry for growth come the upturn in the world economy.
• Mr Fenech is a partner at Fenci Consulting.
This global situation (a triple whammy of a near financial meltdown, credit seizure and global recession) changes our government's playing-hand quite radically from that which it had anticipated pre-October 2008.
Within this context, I think that the original aim of increasing the contribution of the financial services sector to GDP from 12 to 25 per cent, especially when one takes into consideration the current global situation, is now in need of reassessment. This is not to say that the target is unreachable but rather to appreciate what revised strategy we need to adopt in anticipation of a point in time (before 2015) when the global economy will bottom up and a new cycle of world growth commences. We can therefore navigate the downturn by investing in our brand strategy in 2009 so as to position Malta plc for growth in the upturn in (possibly) 2010.
This can be achieved by Malta pioneering the concept of "Sustainable Banking" or "Christian Finance" as a means of building a sustainable national brand relevant to the new market conditions and sentiments. Before exploring this concept, it is important to note that a cognitive mind shift seems to be taking place in the international scene, from the assumption that the free-market is based on "self-interest" (Rocha & Ghoshal: 2006) to one in which "co-operation", "collaboration" and "collective interest" will define a new era of capitalism version II.
What do I mean by "Sustainable Banking" or "Christian Finance"? The idea is for our nation to respond to the "creative destruction" currently taking place in the global financial services industry by positioning ourselves as the innovators of this new business model which could be based on the principles of sustainable business development, responsible lending, green investment decisions, a corporate governance (for both company and client) based on Christian principles and a strategic corporate responsibility policy which always seeks to balance key stakeholders' interests rather than just shareholder interests.
I think the Governor of the Central Bank of Malta and the chairman of the MFSA have already acknowledged the wisdom of Malta pursuing traditional banking principles, which fit very well with "Sustainable Banking" and/or "Christian Finance". The point is that we must see the current situation as an opportunity to build our brand equity so we are in a much stronger competitive position come the upturn. To quote Michael Porter and so as to emphasise the point: "Ultimately, nations succeed in particular industries because their home environment is the most forward-looking, dynamic and challenging." That's precisely what this type of a brand strategy, during a global financial services crisis, does - it allows us to be forward looking, dynamic and challenging, at a time when our competitors are perhaps over-consumed by the present given their financial predicament.
To do this Malta must, however, focus its financial services strategy, that is, identify one or two segments in the global industry (such as trusts and re-insurance) and become the world leader in such segments. Malta can never become a global financial centre like London or New York, but it can become a centre of excellence in its own specialist area(s), much like Switzerland did with private banking or Bermuda with re-insurance.
The two options open to us are to either pursue a strategy of "focus" or "differentiation" - the latter meaning to be unique and offer something of value at a premium price whereas the former means to tailor your strategy to serve one or two segments at the exclusion of other segments. I suspect that a strategy of "focus" makes more sense and compliments the brand strategy suggested above.
What I am suggesting is pre-emptive and forward looking, especially when one takes into consideration the fact that we were identified in the recently published Global Financial Index as a financial centre that "might" become significant in the next two or three years. But we can only upgrade from the "might be" to the "will be" if we focus our strategy and build our nation's brand. By this I am also referring to a clear and stable business environment, excellent human capital, excellent market access, first class infrastructure and a general competitive environment conducive to a centre of excellence.
For those of you raising an eyebrow about the marketer's use of the word "Christian Finance" (a spin-off of the recently successful branding exercise concerning Islamic finance), my inspiration comes from our heritage and culture, and the seeming global call to tame the free-market dominated in the last 20 years by selfish, egotistical and ruthless business behaviour in which success was always measured in terms of the near term (quarter by quarter) and exclusively from the shareholders' narrow perspective.
I think that Malta could firmly put itself on the financial services map in Europe by assuming moral leadership at a time when confidence is at its lowest since post-1945 in the then aftermath of the world war and European citizens are receptive to suggestions of a new way of doing business. The government's 2015 Vision can be realised with the right competitive strategy (a focus on two segments) and brand strategy (sustainable banking/Christian Finance) in place. Let us, therefore, seek first-mover advantage and position our financial services industry for growth come the upturn in the world economy.
• Mr Fenech is a partner at Fenci Consulting.