But are they? Well, in the crisis we learnt that decision-makers often were not. IT systems, data architecture and related processes were not up to the mark. Against that backdrop, we assessed how banks aggregate data and report risks. The yardstick was a set of global best practices that were defined by the Basel Committee on Banking Supervision. These are known as the BCBS 239 principles. The result of our review: many banks do not meet the global standards. As usual, we will therefore be very explicit on how these banks should improve. And we will closely monitor the progress made by the respective banks to ensure that they meet relevant standards. Ladies and gentlemen, good risk data is one thing. But processing such data is another matter. And that leads me to my next topic: internal models. Many large banks use these models to calculate their risk-weighted assets, which then serve as a basis for calculating capital requirements. Over the past years, internal models have diverged greatly, not least due to the fact that supervisors applied different standards when authorising them. In response, we have launched a project called TRIM. That stands for “targeted review of internal models”. It aims to ensure two things: first, that the playing field is level; second, that internal models produce reliable and comparable results. The calculation of risk-weighted assets should be driven by actual risks rather than by modelling choices. TRIM will help to raise trust in how banks calculate their risks.
The bank proved incredibly successful, leveraging its brand affinity and customer loyalty to acquire over 300,000 customers within their first 24 hours, one million within five days, and reaching six million customers within a year. 14 Thus, within a year of opening, Kakao Bank had a third of the number of customers of Shinhan Bank, the largest bank in South Korea. This was despite the fact that Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 10 -  financial inclusion in South Korea was already at 95% at the time. You can imagine how long will it take for Kakao Bank to become the largest bank in the country. This example demonstrates that banks cannot take customer loyalty for granted. They need to ensure that customers engage with them not because they have to, but because they want to. And the only way to ensure that is by not only understanding customers, but also becoming central to their evolving needs. ii. Battle for Value To win the battle for customer loyalty, banks must provide value, which is the second battle. Winning this battle requires banks to adopt a more proactive approach when positioning themselves with respects to their customers. It is not enough to be on the sidelines as, say, a purely auto financing or mortgage provider. Banks need to position themselves at the center of the ecosystem, providing their customers with the best products, services and advice as and when customers require.