Economic crises are never welcome for businesses. For companies big and small, it generally means a time of plunging revenues and severe cost-cutting. However, when the dust settles, we may look back and see the business opportunities the crisis presented us. For example, a crisis of any sort typically reveals cracks – weak strategies, poor risk management, ineffective leadership – and prompts a company to quickly fix what’s broken and whip itself into better shape. It’s an assessment well-run organisations welcome, and the kind of stuff Edmund Lin does regularly as a business consultant. Having spent almost 30 years helping financial institutions steer through the choppy waters of economic turbulence, including serving as Bain’s Global Head of Financial Services, he shares what he thinks is the biggest positive that has emerged in the financial sector amid the pandemic, and what that means for smaller enterprises in Asia.
How brutal has it been for the financial services industry?
Overall, it has been a stressful time for banks and financial institutions. For corporate and retail banks, when interest rates go down, profits also go down, and that means banks make less money. We’ve had to help them shore up their balance sheets and manage their cost base, all while supporting their clients through challenging times.
Business consultants believe a crisis presents opportunities. What do you think has been the upside of it all for the financial sector?
The crisis has accelerated banks’ much-needed push to become more digital. Most banks are not known for their agility, but with the crisis, the adoption of digital services among customers, high-net-worth individuals and companies has been rapid and revolutionary. Frankly, we’ve seen a paradigm shift. This might not have happened, if not for the pandemic that has essentially shut down many in-person interactions. It’s very similar to what has happened in other industries, such as automotive. Brands such as BMW now have a digital showroom, door-step test drives and other contactless services for their digital-savvy customers.
Has it also pushed banks to relook the services they provide?
Yes, for sure. Small businesses in particular look to banks to help them digitise their operations. They want a variety of services today, like accounting systems and cloud services. Banks are realising that they can play a critical role in solving problems for SMEs (small and medium enterprises). As such, they’re learning how to broaden their business participation and build an ecosystem. That means they sometimes have to build a service suite that’s not all directly managed by them because some services may not be part of the bank’s capabilities. They have to engage external service providers, and that’s another big step for banks to collaborate seamlessly with a wide range of partners.
You wear many hats, one of which is that of Chairman of the Singapore Management University Business School Advisory Board. What is the impact of a crisis on education?
Let me share a personal experience. Amid the Asian Financial Crisis in the 1990s, I did my MBA at Kellogg, Northwestern University. That was a memorable experience where I learnt about international finance and business restructurings in an academic environment as the crisis was unfolding. I finished my MBA and put this knowledge to work in real-time, advising on big acquisitions and large-scale restructuring programmes across ASEAN, Korea and Japan. So, I tell undergrads now, you may feel it’s difficult entering a tough job market but the depth of experience you gain during a crisis gives you an unparalleled foundation for your longer-term career.
Given your vast experience helping companies navigate through various crises, what advice do you have for enterprises?
The level of separation between winners and losers is huge during a crisis. Those with a clear strategy and the discipline to make tough choices can gain far more market share in a crisis than in the boom years. This is a chance for companies to learn how to be more agile and adaptive in a turbulent world – make your response a distinctive feature of who you are, not a one-off footnote in your corporate history.