Since its establishment in 2007, Moody’s Analytics is among the top global firms engaged in areas including research, business consulting, financial and performance modeling, training and software services. It is one of the subsidiaries of the US-based financial services giant Moody’s Corporation with the other being the rating agency Moody’s Investors Service. In Nepal, Moody’s Analytics has partnered with the National Banking Institute (NBI) to provide trainings to banks. Ari Lehavi, executive director and head of Learning Solutions Division of Moody’s Analytics was recently in Nepal for a visit. In an interview with New Business Age, Lehavi talked about the learning solutions services, importance of trainings and the company’s association with (NBI). Excerpts:
Tell us about Moody’s Analytics.
At Moody’s Analytics, our work, especially in the risk management area, spans the spectrum of development and we have capabilities that are very appropriate to help economies and markets that are earlier in their development process where they need to establish core skills and then begin investing in infrastructure. Then we have tools and capabilities for much more advanced markets, financial institutions, that need risk-based pricing, economic capital and more advanced capabilities.
So in Nepal, my business is in the learning solutions area, teaching through modern online education, complimented where needed with instructional areas for more advanced topics. My area tends to be very well aligned with economies and markets that are early in the process looking to bring their capabilities up to a certain standard that would allow them to make better customer decisions, better internal decisions, better use of systems and technology so however the financial institution evolves, they are equipped to be effective in new the environment.
But we also have tools, capabilities, data, analytics and training for much more developed markets and financial institutions and we go to those markets as well. Nepal represents that market where we think we can have an impact with our capabilities, to help proceed in the transition from developing to more developed. That’s why I am here - to explore whether the degree of appetite, interest, the willingness to invest in people to support a healthy and thriving financial system.
How do you find the zeal for learning to understand risk management better and adopting new techniques among banks in Nepal?
It is very hard to tell. One indication that there is an interest is - preceding us in coming into this market was a company called Omega. They had a similar solution that we have, at least one of the solutions that we have is similar to theirs. Omega was operating here not in a significant scale but enough to show that there is interest. So, the indication of the willingness to invest, you can see it through the expansion of the use of that solution. You can also see it in the regulatory mandate – about 3 percent of employees spend going to training. Whether it is embraced with ‘high-fives’ or whether people have to do it; it’s hard to say, but certainly the momentum seems to be oriented around building capacity here.
What do you think are the existing and emerging opportunities and challenges in organisational management for banks in Nepal?
In my short time here, I have identified at least one or two. First, the central bank has been very good in terms of mandating 3 percent of the budget going into training. The question becomes, from an organisational management perspective - how do they enforce it, how serious are they? Is it just, ‘check the box and we are done’? How ongoing is it? Training cannot be one time.
Second, a lot of banking is being done on the basis of collateral and that becomes a risk to the system because obviously if the value of collateral drops, there are issues. Another issue is that a lot of the SMEs don’t have organised financial information. That’s a problem because it’s a very accurate way to evaluate financial performance.
I have mentioned the fourth challenge in the conference today. It’s one thing to send people and invest in them to do the training which appears to be the case, that is positive. But if they learn everything and come back to the job and everything is the same because the policies haven’t changed, the expectations haven’t changed. So they are really good experts but when they come back to the job all they do is collateral times some kind of a factor, and they are done.
Every market faces organisational challenges of one sort or the other.
The Nepali banking system is currently undergoing a transition with the new merger and acquisition push of the Central Bank. How can problems such as people management in this transition be eased?
There are a lot of books and guides around cultural integration, especially if you have identified in advance that the culture is not a good match, which is the single biggest factor in making an acquisition fail.
If the culture is not a match, it’s a problem, but you never know what is going to improve the merger - aligning the culture, being very deliberate about how many people you need, being very thoughtful about the rationale for it. A lot of people who did not have the opportunity in the current structure might have better ones, so there are lots of factors.
How will Moody’s Analytics help its client banks to overcome issues of this nature and others?
Well, if banks really invest in people who love their skills and remove the barriers of operating more effectively, banks should see an improvement in the results which will lead to a better valuation of their performance by the rating agency or otherwise. There’s no ‘Oh; you buy training so we will give you a higher rating.’ It is more that you buy training, get better people at every level, and that translates into better performance, so that’s how we look at it. But we give you all the reports that you need along the way so you can track how things are going.
Our training spans a whole lot of topics consistently, robustly, using best in breed solutions technology, building gaming and exercises. And obviously, people that go through and are very engaged in learning are better equipped to operate a bank that involves a similar scenario that we would test. If people can learn from that, it is going to be a very good mission to undertake.
How are you planning to extend your partnership with banks and other financial institutions in Nepal?
We understand the needs in Nepal; they are not different from needs in many developing countries. There are a lot of commonalities. We would like, effectively, for NBI to longer be the organisation that only offers one programme but one that offers different programmes for different purposes. We are definitely hoping that we can strike something more meaningful for three to five years.