“My role as CEO is to lead by engagement, to create a conducive environment for people not the CEO, to perform”
OCBC Bank’s CEO Samuel Tsien is steering the bank to remain true to its nature: of being a commercial bank, an intermediary for people. It will not be distracted by technological adoption and investment for the sake of earning a little return for the bank, but whether the technology will do something for the customer.
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Here is the transcript of the video.
Emmanuel Daniel (ED): Samuel Tsien, I’m very pleased to be able to speak with you today, on a day when you are recognised as the leading chief executive, not just for Singapore, but also for the Asia Pacific region. That you were recognised for this award has a lot to do with the way you have been able to hold your people together, to give them a sense of belonging, and also a sense of direction on where you are taking the organisation. At the same time, the institution that you had overseen is a strong regional player, and very strong in each of the core businesses that it operates in, which, in our view and in the view of The Asian Banker advisors, is sustainable in the foreseeable future. You’ve taken on the role of chief executive and there’s a certain confidence in the way you lead. You’ve grown into your own and maybe this is a good time to sit back and reflect from the time you took on this position to where you are today. What sort of a journey has it been for you?
Samuel Tsien (ST): First of all, thank you very much for conducting this session and I’m very appreciative of the recognition that you and your company and the panel of judges has given me. I’m very fortunate in the sense that I was given the opportunity to grow into this job, which is much more diversified than my previous one. Many years ago, when I was heading Bank of America Asia as the CEO, Bank of America Asia was the largest subsidiary of Bank of America outside of the United States. I had to run the bank; understand how the different functions interact with each other, how they relate to each other, and how they need to work together. It was a much smaller scale than OCBC, but it was a complete bank.
When I was given the opportunity to join OCBC Bank, I was able to expand what I learned at Bank of America Asia, where I was CEO for 12 years. I realized that as CEO, my role is to create a conducive environment for people to perform, not for the CEO to perform. The CEO should set the stage, create all of the elements necessary for people to perform, and let them perform. I was also fortunate enough to be able to inherit from my predecessors the foundation that they have created in terms of OCBC’s presence in different markets, which I’m able to grow, deepen, and broaden.
ED: Tell me a little bit about your relationship with the Board. When the Board took you on, they had been doing the search for some time and they took a bet on someone who’s never led a large franchise. How was your relationship at that point and how has that evolved to what it is today?
ST: Ffirst of all, when I joined OCBC Bank, I joined as the head of global corporate banking. At that time, I was one of the more senior officers, but I was not the most senior officer. That helped me to understand the bank and the areas that can be emphasised more, areas where our competitive advantage is not adequate.
ED: Did you get a buy-in in the beginning, for that kind of thinking?
ST: Yes. I think the Board was quite open. The Board, in a way, welcomes ideas from the outside. At that time, in my corporate banking responsibility, I already said we should be more focused, rather than planting flags around the world. We focused on a few countries, and for those other countries in which we do not have a dominant presence, what I did is to change them into network branches. We needed to support the customers from the core markets that we were in. So that was the approach I took on the corporate banking side. And then the CEO position became available. The Board considered many candidates and perhaps thought at that time that I’m more prepared than others. So I was selected.
ED: OCBC is essentially a family-owned institution and the Board is made up of a lot of people who understood that. As a career banker, when you came into an institution like this, what was your understanding of the cost of the business? And the challenge between growing a business and managing the cost side of the business? I’m sure that there would have been a very important pull-back from the Board, and not many professional managers could manage this dichotomy well.
ST: Yes. First of all, the Board is there, but it is management that is running the bank. The Board gives us guidance to make sure they are comfortable with the strategy, with the direction that we are on. The bank is very professionally run. So although there is material ownership by the Lee family, the Lee family leaves it to the management to run the bank. The good thing about having a material shareholder is that it provides institutional continuity. So in our relationship orientation, we always bear in mind that we are here to serve our shareholders, and also to serve the community. This culture and values are very much embedded in OCBC. So that part actually helps me to bring the staff together for a common good, for a common purpose.
ED: Do you feel the business in your stomach? Do you feel as if you own that business?
ST: I do. I think for anybody, being passionate about the business is very important. But the most important thing for my role is to make sure that the people who work in the organisation also have the same passion. We have to work as a team. We have to work almost like a family to make sure that we deliver the things that we believe in.
ED: Tell me a little bit about the difficult decisions that you’ve had to make, the acquisitions that you’ve made, especially on the private banking front. What sort of processes did you put yourself through to make sure that there was no margin for error? Or did you give yourself margins for error? That you will make mistakes; that you need to pull back and so on?
ST: First of all, these acquisitions did not just happen; they were not just available and we decided to take it. Our acquisitions are fairly well researched. For our latest acquisition of Wing Hang Bank, we felt that we needed to have a greater platform in the Greater China region in order to capture future opportunities. China is slowing down right now, but China is still the major originator of economic business activities for the entire region, even for Southeast Asia. And we need a platform there.
So we said, okay, this is the platform that we’d like to do. We’d like to have a strong presence in Southeast Asia, but we need a stronger presence in the Greater China region. Then the opportunity came so we took it. We take a fairly long-term look. I’ve been telling the Board that if it were only for the Hong Kong business, I would not be interested to make that acquisition. It has to be a platform upon which I can do more than the Hong Kong business, more than what the bank that we acquired is doing. And we want to make sure that we are able to grow it into areas it was not into before.
ED: But the bank that you acquired was not large in itself, so did it need to scale as well?
ST: It is pretty substantial in that particular region. What we did is to make it into a stronger platform so I can create what I call the “flow business” into our parts of the world, which is Southeast Asia. And then we made sure that the culture of the bank, the way it approaches customers, the way it does risk management, the way it grows, is something we are comfortable with.
ED: Is that OCBC’s regionalisation strategy?
ST: Yes. The flow business is very important because OCBC Bank’s domestic business is in Singapore, which is a small economy. Singapore is a hub economy that depends on flows—whether it’s investment flow, wealth flow, people flow, trade flow—all of these are very important. We want to be able to capture that. And when you look at Asia’s flow business, the originator is primarily China, so we need a platform there. So we looked at Wing Hang Bank’s culture, did the due diligence, and then we talked about the acquisition price. And we felt that it’s a very good fit.
ED: Is that a formula that you’re going to use for any other acquisitions that you do?
ST: That is very true, yes. If you look at our more recent acquisition, the wealth management business of Barclays in Singapore and Hong Kong, it fits into the markets that we are in, which is Greater China and Singapore. It fits into the core businesses that we are in, which is wealth management, commercial banking, and insurance. During the initial stages, we look at the culture. We speak to the team. We understand how they approach customers, their way of screening of customers. We felt very comfortable and said this is a target that we would like to pursue. Then we talked about the price. So many times people say, let’s talk about the price, but we don’t. Because the basic ingredients must be there before we make the acquisition.
ED: Just about the time you became chief executive, the bank had already embarked on its journey to find innovation, to renew itself, to realise the potential value of the franchise. And it was perhaps the bank with the greatest difficulty because it was so successful in its entrenched business model that even the staff did not see a need to change. But if I remember correctly, you were one of the first banks to have an innovation center, experimenting with new things. How has that journey been and would you say that you’ve made that transition successfully? That you’ve on-boarded at least all the key constituents of your bank complement on that journey? Or is there going to be still some more renewals to be done?
ST: There will always be renewal because the market is evolving. We always have to make sure that we are able to reinvent ourselves along the way. But coming back to your basic question, I want to make sure that the management team as well as I lead by engagement. In other words, we do not say, “After all of the wisdom that we have thought through, this is the way that we should do it.” We have to engage the people and say, “This is why we want to do it, this is what we are seeing.”
So in crafting our strategy, I start off by first presenting to the Board the mega trends that we see will impact our business going forward, such as the rising accumulation of wealth, China’s growing importance, technology coming into play, digitalisation of data. And then we say, out of the mega trends, what is it we are good at? Because we cannot be good at everything. We identify our core businesses. We identify the core markets. And then we explain. I go out with just a one-page corporate strategy chart. That charts explain to the people overseas, to the people in Singapore, Malaysia, and Indonesia why we want to do this. So we get buy-in from the people, then we do new things. Why do we want to do new things? Because digitalisation of data will force us to do new things as customers come to require new things.
ED: At the same time, as the empire grows and you take on Wing Hang, you’ve got an ISP, Barclays, all these disparate parts with very disparate cultures and disparate types of people with different motivations. Is there something you would call a variation on a theme? Meaning you have that one sheet of paper as an overall strategy, and specific application in each of these aspects? You’ve actually been somewhat successful with an ISP, for example. There are lots of platforms that you share, and yet there is a certain form of autonomy that you give the bank. Is that how you’re going to build it? And how far do you think you can take that model before it starts to tear at the sides?
ST: I think this model will continue to work. But it’s actually not done on an entity basis. It’s on a function basis. So if you look at our treasury business, we use a global system where we are able to connect all the treasury centers into one, such that we know what positions the group is holding. But when it comes to retail business, the small businesses, they are more local. We leave the authority to local businesses to determine what is the best approach to approach customers, how best to promote the products, and what is the marketing strategy. We try not to get involved in the things that are very local, but we will be involved in the things that could be regional and that could be global. This is not only for control reasons, it is also for cost and efficiency reasons.
For example, I have a global limit for a particular entity or a particular segment of the industry, so this global limit will be applied to all of our units. But in terms of local businesses, we leave that to them to determine. I think that’s very important. We cannot have one standard; we cannot say, “This is the Singapore standard.” We have to have an international standard. But within the international standard, we have to divide it by functions.
ED: One of the reasons you were recognised for your achievement in holding the franchise together is actually your abstinence from superfluous areas, such as using treasury for treasury’s sake and growing the treasury book, when it’s an easier source of income. Actually, the advisors were impressed with that. There’s a certain discipline in that. Today, investment banking may not be the flavor of the season, but there will come a time when it might be. How do you hold your center? What do you think you need to put your finger on in order to be faithful to the business and not get distracted?
ST: In my town halls, I always say, “We have to recognise we are who we are.” We are here as a commercial bank. As a commercial bank, you have to do the things that a commercial bank does, and you cannot be distracted by other pockets of revenue-earning opportunities. I’ll give you a good example: fintech. Some banks actually wanted to invest in fintech companies to make a return, in addition to getting the technology.
I look at fintech companies in two areas. First of all, I am only going after the technology. I am not interested to invest into fintech companies to get a return. Because once you become a shareholder, you get more and more engaged and it distracts you. So I’m only there for technology.
The second point is, I’m there for technology not only for a particular function, not only for a particular product. I’m here for the technology holistically. So if, for example, an application program interface (API) becomes important, I will see how I can adopt API. Blockchain, by the way, is the more fearful technology to me because it can remove the element of trust. And that I think is the biggest threat. So we are engaging blockchain to see how we can make use of it to further reinforce the trust that the banks have, rather than have it replace the trust in the bank.
My direction to the team is to look at the technology side. Don’t look at the investment return by investing into them. This is important because I always say, “We are who we are. We are a commercial bank. We are here as an intermediary for the people, for the businesses, and this is what we do.” Other little things that can get you a little bit of money here and there is not the main thing.
ED: That’s the commercial banking aspect, but your wealth management, your private banking is growing.
ST: We have three areas: commercial banking, wealth management, and insurance. These are the only three things that we do.
ED: On the wealth management front, there will come a point where it creates its own critical mass and its own momentum. It will confront the same issues that some of the global banks have faced, such as creating global flows and global support capabilities. It will have to consolidate the research function and advisory role, and look to create a treasury function of its own to support the products that it has. It will risk having a different agenda from your commercial banking agenda.
ST: Yes. We try to avoid that. Even for the treasury business, we try to make sure that the treasury flow from the private banking area also flows into our main treasury group. This is to make sure that the wealth management side will continue to focus on the customers—focus the research for customers, advisory for customers.
ED: What about high-risk customers? Customers who are willing to take on much larger risks who need kind of an advisory function that can help them? Is there a limit to what you can do as a commercial bank that owns a private bank?
ST: I would not think so, because I think we can specialise as a subsidiary of the commercial bank. We can still specialise in the private banking area to come up with the products that customers need. I don’t think it will be impacted by virtue of ownership. The reason that we created a Bank of Singapore and put it under Bank of Singapore is not so much that we wanted to let it be independent of the commercial bank. That was not the intention. Rather, when we purchased ING Asia Pacific private banking, we purchased a legal entity. We felt that some of the systems of the legal entity are quite attractive to us, so we just kept it there.
Now if you ask me sometime in the future, if we can into these very small spaces and integrate them into the big commercial bank, we will also do that because I think there are synergies. There are efficiencies that we can achieve. So the creation of a Bank of Singapore as a separate legal entity is not to encourage it at all to be as independent from OCBC Bank as possible.
ED: This holy grail of treating the customer as a customer of one and having different products that are being sold to the customer, this never quite arrived for you, did it? The ability to sell insurance and start being able to profit on a customer level because of your diversity of product sets?
ST: I don’t think we are there yet but this can be done. I think we are moving towards that direction. It will only be done by internal education and internal confidence. You could do it just by cross-referral and I’ll give you a certain incentive if you have a successful referral. But that’s not enough. The most important thing to successfully make use of the group resource, is for the internal people to have the confidence to sell the products that are not directly under their control.
Our relationship managers are very devoted to the job. They do not want their customer relationship to be disturbed by a product that turns out to be not as attractive. So my role, again, is to create a conducive environment for the ability to perform. I always say that you need to be confident in the relationship managers to make sure they’re confident enough to sell your product; that your product is attractive to the customer and it won’t disrupt the relationship. So internal engagement is very important. And I think we are quite successful in that.
Taking another example, we are very good at the network business. If you are based in Singapore or in Malaysia and you come to me saying, I have a requirement in Sydney, I have a requirement in Japan, I have a requirement in Tokyo, in Seoul, our relationship managers will send the information over to that unit. Then that unit will serve this customer as if it was his own customer. We are very good at that now.
ED: You sound still very much passionate about the business, and that you are still a work in progress, as it were. What milestones are you giving yourself personally that will give you a sense that you’ve achieved what you set out to do?
ST: That a difficult question because I think the markets we are in, the customer franchise we are in, continue to provide us room for deepening. And as long as there’s room for deepening, we really are not there yet. So the continuous ability to generate increased revenue and increased activity from the customer base in our key markets is what we want to pursue.
ED: And your personal ambitions? How long do you think the role of CEO is something that will keep you busy for a while? Or is there a natural plateau? Your predecessor, for example, set for himself a timeline and he reached it and he was happy with it in a sense. And there are people who take on roles like this and give themselves a road map. Do you have such a road map in your head or do you see this as a career that you could continue building on?
ST: I would say not in terms of definite timelines, but we are actually grooming internal successors, and we are also looking for external talents as well. As soon as we find a person whom we—the management team, the Board, myself—feel comfortable with, whom we can work with, then I think it’s time for me to exit the scene and for the new person to come in. We always need to be refreshed in that regard.
ED: Are you a believer in exiting on a high as opposed to exiting when you have to?
ST: I think I will exit at a time when a successor is truly ready.
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