Banking research is perhaps not the first thing to be conjured in the imagination of the general public when thinking about banking but it does not diminish its importance in the business world. Alexander Chia, who leads RHB Regional Equity Research arm of the 106-year-old RHB Bank Berhad, explains that this is because unlike other parts of banking, research is not always public facing and operates at a higher institutional level.
“Our purpose is to bridge the gap between institutional sales and institutional investors where we interpret the news flow in the industry, come up with recommendations on what stocks to buy and which to sell, and pitch the proposals to clients,” says Chia.
Despite sounding like a bookish data-crunching work, banking research has come a long way in recent decades leading to major changes to the industry and what is expected of research analysts. “Back when I started in the 1990s, the role of a research analyst is more clearly defined and limited to doing research, compiling it in a report before handing it over to the sales representatives who would act on it. But today’s analysts need to be multi-skilled,” explains Chia.
Research analysts of the 21st century are expected, amongst other things, to be up to date with market trends with facts at the tips of their fingers and the mental fluidity to think on their feet. On top of that, they are also required to put on different hats for roles that put them front and centre with clients where the command of soft skills is paramount.
“We need to visit companies, talk to CEOs of listed companies, and interview them about their business to understand what makes their business tick. From there, we need to digest everything they’ve told us and decide whether or not what we were told is the truth lest we are led on a wild goose chase, which does happen sometimes,” says Chia.
According to him, aside from financial literacy and business acumen, the job of present-day analysts requires them to be able to process information like journalists in fact-checking information, investigate like detectives and be able to read a person like psychologists.
And it doesn’t end there. After crunching the data and extracting valuable information, research analysts put on their writing hat and turn into wordsmiths to produce reports on stock predictions that are not only correct but also persuasive and simple enough to be understood by other people.
“Once that is published, you need to be able to pitch it to sales in the morning meetings. With attention span these days down to just three minutes, we need to pitch to them why this stock is a buy, with the right reasons and it needs to be convincing. If you can’t convince your own sales people, how are you going to convince the clients?”
A CHALLENGING ROLE
RHB Research Institute saw an opportunity and introduced a research associate programme where they scout for young talent to ensure the supply of available analysts is kept in check. “It is a 2+1 years programme that includes on-the-job training where they will be tasked to assist senior researchers,” says Chia. “When there is an opening, I will then decide whether to find outside talent or if they are exceptionally good, promote a talent from the programme to fill that role.”
Understanding the demands of the job, Chia says that the most important skills for any young analysts to have is interest and curiosity about how the economy and market works as well as the initiative to get desired outcomes in any tasks given to them. “It is all about the outcome. A certificate from a famous economics school is important but more importantly is attitude,” he says.