Hoe Yin joins the panel of judges in this year’s Malaysian Technology Excellence Awards.
Hoe Yin is a partner of RSM Malaysia, practicing in Audit & Assurance and Transactions Advisory. He is also the country leader of the firm’s China Practice Group.
Hoe Yin specialises in financial due diligence, review of post-closing completion accounts and post-acquisition support for integration and dispute. He actively advises clients during the acquisition process as well as in the pre-closing and post-closing stage, primarily in middle-market transactions. He is also involved in the coordination and execution of cross-border transactions for both buy-side and sell-side clients and works with lawyers on litigation support assignments.
As one of the judges in this year’s Malaysian Technology Excellence Awards, Hoe Yin sat down with Singapore Business Review to talk about the financial industry and business sustainability during the pandemic.
Which markets or sectors are your main focus? Can you share with us your work experience or any backstory that has contributed to your professional career?
I am a partner with RSM Malaysia, specialising in audit & assurance and transactions advisory services. I started with one of the big four accounting firms in Malaysia. I have spent my entire career in public practice, and I am happy with what I have been doing. It is a journey throughout, and the great people I met along the way that have greatly benefited me and shaped me to be the professional I am today. I am always grateful to these great opportunities and fate to have come across these fantastic people, be it clients, colleagues or whoever with whom our path had crossed.
The financial industry has been active since the onset of the COVID-19 pandemic, particularly with stimulus packages, rate cuts and other tools being implemented to help the economy stay afloat. What do banks need to consider to drive growth into the economy?
Banks are in a very tight spot due to lower interest rates which compresses their margin. At the same time, the risk of non-performing and impaired loans are expected to rise as a result of the pandemic. Against this backdrop, banks may need to adopt a more pragmatic approach with their clients to provide them enough room for survival, such as opportunities for these accounts to be restructured or rescheduled. Bottom line is, there are no winners if the accounts turn bad. In the long term, I would think that banks can consider reorienting their focus to industries that are expected to generate significant growth, such as the healthcare and technology sectors which are expected to be amongst the clear winners of the post-COVID-19 era. This would enable the banks to play a role in the growth of these industries, to derive a comfortable return whilst at the same time indirectly doing their part in creating job opportunities for those who may have lost their jobs in other sectors. Such moves will eventually benefit the banks.
The global financial crisis has pushed many businesses into a state of instability, with some businesses filing for bankruptcy. Many, however, are exploring strategies to address their sustainability through restructuring or merging with other companies. What would be your advice on how to recover from the crisis?
In the new norm, businesses can no longer be done alone. One of the keys to sustainability will be “leveraging”, where businesses come together to improve the effectiveness and efficiencies along the value chain through collaboration or M&A, and to become more competitive in the market, in terms of offerings, pricing, quality and access to new markets.
Unlike the pre-COVID-19 era, “survival” is now an additional driver for such moves which used to be generally driven by vision and strategy. The selection of the right partner must be given careful thought and consideration as it is a key strategic decision by business owners which needs to be balanced amongst the aforementioned drivers. Collaboration could be something short term in nature to start with, which may or may not end up with an M&A, but at least there is an avenue to explore the possibility during the collaboration. If it does not work out, it can be terminated without any serious disruption (a less onerous option).
M&A is meant for the long term and it will be too costly to fail. In many instances, M&A fails at the inception despite the right partner being identified because both parties lacked empathy and understanding, and were not being transparent and realistic towards the objective of working together. Mutual understanding and sincerity in keeping each other going and stronger during this tough time are important so that the interests of both parties are taken care of.
If business owners had decided to take the M&A route, they need to make sure to involve and commit themselves throughout the process, to drive and structure the deal with the assistance of their advisors. The inherent benefit will be that the business owners will have a better understanding of each other, thereby working out more fitting and realistic business strategies together. They must discuss the integration process and come to a consensus as early as possible because the integration process is usually a headache in the mid-way.
Which trends do you think will define the financial services industry in the years to come?
In my opinion, the financial services industry will see a lot of disruptions in the years to come, mainly impacted by the digital revolution taking place across the globe. The rapid pace of digitalisation and the emergence of new technologies have disrupted the financial services industry, where consumers and businesses are embracing these changes by moving towards e-commerce and online banking.
I would think that the future market leaders in the financial services industry of Malaysia, especially the banks, will have the following attributes:
i. The player who led a digital disruption that comes up with the most secured and innovative products, catered to e-commerce and online banking, as that is the direction where consumers and businesses are moving towards;
ii. Embraced Environmental, Social and Governance (“ESG”) in their business operations and applying these in the risk management process;
iii. Micro, Small and Medium Enterprises (“MSMEs”) and Small and Medium Enterprises (“SMEs”) friendly in view of the recovery post-COVID-19 era (this is on top of not losing sight of big-ticket items); and
iv. Portfolio size of clients in high growth industries such as healthcare and technology sectors who are expected to be amongst the clear winners of the post-COVID-19 era.
Looking at the attributes mentioned above, it appears to be a hybrid between a bank and a fintech company, taking advantage of the strengths of both. Banks have the financial muscle and resources, but may be burdened by complex legacy systems and investment priorities; whilst the agile and niche-focused nature of a fintech company enables flexibility to cope with the fast-changing market environment, riding on the back of rapid digitalisation, though often the gap is a lack of deep pockets. Therefore, in my opinion, it makes sense for both to “leverage” on each other to achieve a win-win outcome.
This article was extracted from Singapore Business Review