Thursday, September 17, 2009
Financial city to offer front office services
From The Hindu
CHENNAI: Front office functions will now be included within the gamut of services to be housed in the financial city planned here, sources close to the project authority have said.
With recent behind-the-scenes discussions suggesting it will be more than a back office hub, the financial services being considered for inclusion are a commodity exchange, a stock exchange, asset management, risk assessment services, banking services and insurance and reinsurance services.
Speaking to The Hindu, a State Industries Department senior official said: “Mumbai is a financial centre, Gujarat has announced GIFT, the Gujarat International Financial Tech-City, and Hyderabad is also making similar plans. So where do we position ourselves?”
While clearly ruling out direct competition with Mumbai as a financial hub, the official pointed out that the Chennai financial city would meet companies’ need for additional facilities given that concentrating major resources in one place was no longer an option for large financial institutions.
“Your nerve centre cannot be in only one place; this is basically risk management. So we would try to project the financial city essentially in terms of the following concept: whatever Mumbai can offer, we will also be able to offer,” the official said.
Attracting talent
However, to effectively provide an alternative to sophisticated financial hubs such as Mumbai by attracting world class talent, education services offered in Tamil Nadu would have to be ramped up.
The Ministry official explained: “While we have a strong presence in terms of number of Chartered Accountants, in some other areas we really need to improve. For example we need better management institutions, we need to have better risk assessing capabilities built into the system. In areas such as risk assessment, risk allocation and risk management there will be, in parallel, a need to improve the educational set-up as well.”
Among the options being considered is the possibility of bringing in business schools of repute through a tie-up with the University of Madras or Anna University. “Some of these universities can sign an MoU for creating such institutions. We don’t really need to bring an institution here if you can simply provide limited courses of three to six months for CAs and MBAs, tailored to a specific kind of role,” the official said.
While risk diversification would be an important differentiating factor for the Chennai financial city, cost competitiveness and overall product quality would be important for attracting global players.
There may be certain services for which it is possible to be equally effective whether you are in Mumbai or in Chennai and some things are location-neutral, the official explained.
“Suppose that you are in a particular niche where traders are important. You can have all the facilities, but if the traders are all elsewhere, then it will not click. That is the thinking that needs to go into our initial planning on what are the two or three things that we are going to do first,” he said.
However, in some areas the presence of traders can be neutralised by technology: “Today even in the stock exchanges technology can actually neutralise the presence of a trader and everybody is only sitting on his own terminal, isn’t he?”
Knowledge economy
The move to include front office functions and systemic improvements in education and healthcare services reflects a “bigger issue”: Tamil Nadu would be making a big leap in establishing the financial city, having already achieved a similar goal in the IT space. In the announcement made by the Deputy Chief Minister earlier, there was also a mention of an information and media city.
“The point we are trying to make is that Tamil Nadu should get into the knowledge-based economy more. We should stake a claim for everything that is based on that,” the Ministry official said.
CHENNAI: Front office functions will now be included within the gamut of services to be housed in the financial city planned here, sources close to the project authority have said.
With recent behind-the-scenes discussions suggesting it will be more than a back office hub, the financial services being considered for inclusion are a commodity exchange, a stock exchange, asset management, risk assessment services, banking services and insurance and reinsurance services.
Speaking to The Hindu, a State Industries Department senior official said: “Mumbai is a financial centre, Gujarat has announced GIFT, the Gujarat International Financial Tech-City, and Hyderabad is also making similar plans. So where do we position ourselves?”
While clearly ruling out direct competition with Mumbai as a financial hub, the official pointed out that the Chennai financial city would meet companies’ need for additional facilities given that concentrating major resources in one place was no longer an option for large financial institutions.
“Your nerve centre cannot be in only one place; this is basically risk management. So we would try to project the financial city essentially in terms of the following concept: whatever Mumbai can offer, we will also be able to offer,” the official said.
Attracting talent
However, to effectively provide an alternative to sophisticated financial hubs such as Mumbai by attracting world class talent, education services offered in Tamil Nadu would have to be ramped up.
The Ministry official explained: “While we have a strong presence in terms of number of Chartered Accountants, in some other areas we really need to improve. For example we need better management institutions, we need to have better risk assessing capabilities built into the system. In areas such as risk assessment, risk allocation and risk management there will be, in parallel, a need to improve the educational set-up as well.”
Among the options being considered is the possibility of bringing in business schools of repute through a tie-up with the University of Madras or Anna University. “Some of these universities can sign an MoU for creating such institutions. We don’t really need to bring an institution here if you can simply provide limited courses of three to six months for CAs and MBAs, tailored to a specific kind of role,” the official said.
While risk diversification would be an important differentiating factor for the Chennai financial city, cost competitiveness and overall product quality would be important for attracting global players.
There may be certain services for which it is possible to be equally effective whether you are in Mumbai or in Chennai and some things are location-neutral, the official explained.
“Suppose that you are in a particular niche where traders are important. You can have all the facilities, but if the traders are all elsewhere, then it will not click. That is the thinking that needs to go into our initial planning on what are the two or three things that we are going to do first,” he said.
However, in some areas the presence of traders can be neutralised by technology: “Today even in the stock exchanges technology can actually neutralise the presence of a trader and everybody is only sitting on his own terminal, isn’t he?”
Knowledge economy
The move to include front office functions and systemic improvements in education and healthcare services reflects a “bigger issue”: Tamil Nadu would be making a big leap in establishing the financial city, having already achieved a similar goal in the IT space. In the announcement made by the Deputy Chief Minister earlier, there was also a mention of an information and media city.
“The point we are trying to make is that Tamil Nadu should get into the knowledge-based economy more. We should stake a claim for everything that is based on that,” the Ministry official said.
Labels: asset management, banking, Chennai, commodity exchange, financial city, front office, GIFT, Gujarat, insurance, knowledge-based economy, Mumbai, risk management, stock exchange
# posted by Narayan Lakshman @ 7:29 PM 
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