Jerome Mahadeo explains how the actuarial skill set can be put to good use in banking and why banking is a great place to test new ideas.
Tell us a bit about yourself and your current role
I currently work at Absa, based in South Africa, where I look after some of the group models for stress testing and economic capital. This role enables me to make an impact across the bank and the bank’s international subsidiaries by giving stakeholders more information on their portfolio and risks. These models are important in assisting these stakeholders with various aspects such as portfolio management, budgeting, performance measurement and risk appetite setting.
Before Absa I worked for a large banking group where I did some consultancy work focusing on banking projects. My work included managing the development of models across the credit lifecycle, portfolio management analytics and value optimisation.
I’m also the Deputy Chair of the Actuarial Society of South Africa: Banking Committee. My activities include looking at the banking practice area subject syllabus, examinations and other education activities.
What made you choose banking as a career path?
I’ve always been interested in non-traditional or wider fields. Accordingly, I chose to pursue a career in banking. Compared to the insurance industry, banking risk management and models were not as defined. This provided scope for a lot of new thinking and innovation. The need for innovative thinking sparked my interest further.
When I entered the industry, it was at the early stages of embedding models around credit risk management and this made the journey even more stimulating. I realised there was potentially huge scope for the actuarial skill set in the banking industry.
How has the actuarial skill set equipped you for a career in banking?
Many of the methodologies studied in the actuarial training are applicable to banking problems. The skills around problem solving and thinking about alternative solutions has assisted tremendously, especially in some of the projects where a defined solution does not exist. The actuarial training emphasises the technical knowledge as well as the requirement to communicate the technicalities to a wider audience. The communication aspect assists with thinking about problems from different stakeholders’ perspectives, thereby helping to generate value-added solutions.
What are some of the most interesting discoveries you’ve made while working in banking?
It was interesting to see how many of the actuarial techniques were applicable to banking. For example, specifying and developing a solution to an expected cash flow problem are applicable to many areas in banking, such as pricing, provisioning and credit risk.
It was also motivating to see the many areas in which the actuarial skill set can add value, such as finance and business operations. I’ve seen some banks realise this and promote the actuarial skill set in other functions apart from just the traditional model and analytics areas. Subsequently, in South Africa, while the actuarial skill set is found across all banks, there are a few that have embedded the skill set in broader functions.
What have been some of the challenges?
Initially, it was getting used to the banking language and landscape, as throughout the actuarial courses there was more focus on insurance. Later challenges included workplace dynamics in helping set up an actuarial study program for students. This included ensuring that proper support was in place for actuarial students to study and pass their exams. I was lucky that there was already some senior management acknowledgement of the actuarial field in my first role in banking.
Getting senior management buy-in on the actuarial skill set, or getting senior management actuaries embedded in an organisation, can be challenging. Top-down buy-in may make the journey a bit easier for actuaries looking to enter the banking industry.
Do you see yourself remaining in banking?
Yes, there is scope to do much more. Banking is a growing field and the demand for both quantitative and actuarial skills is on the rise. The banking industry in a lot of countries has seen a growth in actuarial skills coming into banking. Many regions are looking to introduce banking as an actuarial practice area in addition to the traditional fields such as insurance. This demonstrates that there’s a lot of potential future opportunities.
A number of banks have different areas, including insurance and asset management. This makes it a great place to test out other areas, if you’re inclined to do so. The larger financial institutions are recognising the value of providing the customer with all their financial needs across lending, investing, insurance and lifestyle. This provides many opportunities for bringing in value and managing new risks.
How do you see your career progressing?
The principles of banking will probably remain far into the future. For example, the need for credit will still exist and the risks around that will remain. I see myself continuing to solve problems, and assisting in generating value and strategic decisions.
I would like to progress my career to an executive level, noting that the banking landscape will look very different in the next few years.
How will you use what you have learned in the future?
As technology progresses, the fundamentals of professionalism will still be relevant. Exercising good ethics and business judgement will be skills that continue to be highly importance. I hope to show the benefits that actuaries can bring to banking at all levels and in different roles. I will also continue giving back by volunteering for the actuarial community and in promoting education to a wider audience.
You can find out about more about career paths in banking, as well as a range of support and resources on our Banking Lifelong Learning web page.
