NZ banking poll shows technology, social media risks rate higher than governance

Wednesday 9th December 2015

New Zealand's banking industry feels more prepared to handle risks and has lower anxiety than many of its global peers, according to a survey by the Centre for the Study of Financial Innovation and PwC.

In terms of its sense of preparedness, the New Zealand industry ranked ahead of South Africa and Australia, and only ranked 21st on an anxiety index behind Hong Kong, Australia, the US and the UK. In both measures NZ outranked China. NZ respondents to the survey rated technology and social media as the highest risks.

"There is not enough investment and commitment to system upgrades," the survey cited one respondent as saying. Another said banks may stifle innovation because of concern about reputational risk. Perceptions of technology-related risks came amid growing awareness of cyber crime, it said.

Corporate governance ranked 24th in a New Zealand banking industry survey of risks, while for the rest of the world it was ranked 19th.

New Zealand's banking industry specifically cited risks of a buildup of a housing bubble, said PwC banking and capital markets leader Sam Shuttleworth. It saw earnings risk from a market correction in "the heated state" of the Auckland market, he said, citing a risk manager.

Criminality ranks down the NZ list of risks at sixth, while for the rest of the world it is second-highest ranked, the Banking Banana Skins report says. Regulation ranked third for the rest of the world as a risk and seventh in New Zealand. Political interference was at eighth in New Zealand and fifth in the rest of the world.

The New Zealand part of the survey is a small subset of the global survey and took in 25 responses, of which nine were bankers, 11 observers and five risk managers.

BusinessDesk.co.nz

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