Money Matters

The finance curriculum is in for a major transformation, Uma Keni Prabhu discovers why.

The finance curriculum is in for a major transformation, Uma Keni Prabhu discovers why.

There is a pressing need to redesign the finance curriculum to suit the needs of the industry. Experts demand greater customisation and emphasise that it should be more application oriented.

A complex sector, the finance industry is now looking out for keenly analytical minds to drive it. They prefer people, PhDs and experts in Math, Operations, and Risk Management, who are able to work out math models to explain complex scenarios. “I do see an increased attempt by banks and financial services firms to provide training to their employees in fields like risk management,” says Jayanth R. Varma, professor of finance, IIM Ahmedabad.

The hunt for analytical minds started post the economic crisis of 2008 and 2011. Many attributed the financial meltdown to the ignorance of finance managers and their academic training, which they felt was not grounded in reality.

“In my knowledge, there is insufficient evidence to credibly establish any link between academic training and professional performance that contributed to the financial meltdown,” says Uday Kotak, executive vice chairman and managing director, Kotak Mahindra Bank Ltd. “But yes, the curriculum should be made more relevant to the needs of the industry. It should be better aligned to the ground reality. Of that there is little debate.”

According to Ajay Srinivasan, chief executive, financial services, Aditya Birla Group, what the real world offers is quite different from what is being taught in a B-school. “It is much more unpredictable and volatile. There are unchartered territories. The finance curriculum should recognise this.”

Academic experts are on the same page as industry. In his paper titled “Finance teaching and research after the global financial crisis”, Varma concludes that the finance curriculum in a typical MBA programme has not kept pace with the developments in finance theories. While a lot needs to change in finance teaching, finance theory also needs to change, though to a lesser extent. “Some parts of finance simply cannot be dumped down for ease of teaching,” Varma says. “In the best business schools, I think this is being corrected in the last few years,” he adds.

Varma is not wide off the mark. Responding to the volatile situation, Indian School of Business, Hyderabad included a six-month internship in its one-year residential Post Graduate Programme in Management (PGPM). It also reportedly initiated a dialogue with the recruiters to remove/add certain subjects as per their need. IIM-A and IIM- C jointly organised a conference to brainstorm on curriculum, which would produce industry ready graduates.

“Curriculum management is a continuous process and is a function of changing environment, economy and regulations,” says Indu Niranjan, deputy director and professor finance, S P Jain Institute of Management & Research. “We review the curriculum regularly and update it in consultation with the advisory board, which comprises of experts from the industry.”

A B-school has to offer curriculum at two levels, Niranjan says--the general management level, which deals with basic concepts and framework across disciplines, providing familiarity to students about business operations and functions. There is also the focus to bring in integration across functions. It also offers specialised courses for a function, which deals with advance topics across various verticals within that specialisation. “While we have four broad specialisations like finance, marketing, operations and information management – we have micro specialisations or concentrations within the specialisation to enhance the employability of participants based on market needs,” she adds.

However, a lot needs to be done if India has to respond to the challenges of future. “The greater need is to build character,” says Vallabh Bhansali, chairman, Enam Financial Consultants Pvt. Ltd. “And that cannot be limited to the curricula of a MBA degree. It is the leaders of society and families, who have to take this responsibility,” he signs off.


Prudence is the most important strength of a finance professional

- Vallabh Bhansali, Chairman, Enam Financial Consultants Pvt Ltd

“Are finance mangers and their inadequate training responsible for the 2008 meltdown- yes and no. No because it is the governments and the central banks that have to take a major part of the blame. The governments are greedy about growth and jobs, and are the ones who are pushing the envelope. Relatively bright graduate, who join the finance profession are better poised to profit from any slack in the system. However, they will not succeed unless one addresses the greed for higher yields and returns, which is prevalent amongst investors today.

“But the finance professionals, who run the asset management and investment banking companies, ought to see through the risks in the system and mitigate the same. They too succumb to growth and global presence mantras. In the long run protecting one`s constituents is good for business. Thus, learning from the past is essential.

“The governments and society as a whole should understand limits to growth and greed as an essential paradigm - as essential as personal hygiene or traffic safety. Who will do this and how?

“It is heartening to know that even without better financial education, there have been governments and institutions around the world that used common sense to remain safe, and had the character to protect others. North Dakota, a US state and Canada readily come to mind as does our own RBI and J P Morgan.

“The happenings around the world during the past four to five years are very significant at various planes of human understanding and must of course be taught in B-Schools. In today`s world it is increasingly necessary to be well rounded. Whether it is technology, ecology or finance- basic understanding is essential for decision makers. But the greater need is to build character and that cannot be limited to the curricula of a MBA degree. Society leaders and families have to take that responsibility. Self awareness, self restraint (Sanyam in Indian wisdom), and sensitivity to less privileged are some of the factors that come to mind as features of a professional with a character. This character bit is a greater bulwark against any mischief of the `financial lizards’ or ‘military marauders’.

“In a prudent set up there is not much divide between the various departments. Unbridled ambition is what creates gaps all around. Building foundation knowledge among the back office employees for better internal communication is a part of good technical courses already. It is more a matter of culture than teaching.

“My top tips for students: finance is all about alertness, calculation and limits to calculation or in other words the role of prudence. In a manner, prudence is the most important strength of finance professional. One should always remember this.


Being happy is a prerequisite for success

- Ajay Srinivasan, Chief Executive, Financial Services, Aditya Birla Group

“The ‘real world’ is different from what is being taught in a B-school. It is much more unpredictable and volatile. There are unchartered territories. The finance curriculum should recognise this. For instance, the last time the US last went through a crisis like the one it experienced in 2008 was during the Great Depression and the scale of the solution enunciated by Ben Bernanke, economist, has never been tried before.

“The formation of and threat to the euro zone is fairly unique. In other parts of the world we see growth and increasing unemployment, low growth and high inflation, slow growth and high current account deficits...all these are pretty unprecedented. The world is also more interconnected now than it has ever been. This means there are many more variables that impact a single market. The curriculum needs to reflect this changing reality of the world we live and work in.

“The curriculum should equip a student to deal with the issues in the real world. In addition to the theory being broadened to include some of the unusual things we see today, the curriculum should also help enhances one’s ability to take decisions in volatile situations, communicate with diverse audiences, work with diverse teams, and network within the industry. It should enable him/ her to unlearn and re-learn constantly. Many of these are valuable skills in today’s work environment and many students are not prepared for this when they get into the workforce.

“The more B schools are connected with the real world, the more connected their curriculum and teaching will be with the real world. Setting up research centres to look at the policy issues surrounding the finance industry is certainly one approach. Getting industry experts to teach and help students to get practical experience in addition to theoretical inputs is also important.

“Qualifications like an MBA and CA have become fairly common requirements for many organisations for many generalised positions. Having said that, there are specialised jobs that require more specific skills viz a quant based risk analyst, a statistical oriented media planner, a digital specialist etc but these by definition tend to be fewer in number than the jobs that require MBAs or CAs.

“Things that are taught at the corporate level - to the extent they are not specific to an industry or organization - are certainly worth teaching at the academic level as that gets students ready for their jobs much quicker. It is also a good idea for B-schools to run an equivalent of “finance for non-finance professionals" for key employees who may not be equipped with the same background knowledge as those who may possess finance qualifications.

“Here is my hot tip for students: There is no substitute for hard work and a passion to learn. If you enjoy your work and stay fully involved with what you do, you will always be happy and that often is a pre-requisite for success.”

An emphasis on ethical behaviour is a must

- Vikram Limaye, Managing Director &CEO, IDFC Ltd

“B-School curriculum should build in case studies of the various crisis we have seen and the reasons for the same so that students can pick up warning signals better in the future.
“An analysis of the various crises, failures of controls and systems, impact of incentive systems would go a long way in better equipping students as they get into the business world. This will enable them to think about systems and processes in their own organisations and make sure incentives are properly aligned to ensure the right kind of behaviour. An emphasis on ethical behaviour in business practices is a must.

“Research in our B-schools needs to pick up in a significant way to analyse real world problems and look at the evolving financial landscape globally and domestically. This is necessary to provide meaningful input from a policy perspective. Research in Indian educational institutions needs to be given a lot more importance and support by the institutes and also industry. Professors should be assessed based on their teaching work as well as research output.

“The interaction between academia and industry needs to be stepped up significantly. The US university system and the interaction between industry and academia is a good model to look at as we think about the right framework to evolve for higher education in our country. I don`t see enough involvement of academia in discussing and influencing opinions on matters of importance for the financial system in the country.

“I don`t think there is any meaningful change in specialisation expectations from an educational standpoint at the MBA level. There are certainly many more options now available at the Bachelor’s level and that is a positive development. B-school curriculum has evolved over time and does include industry participants sharing their experiences from the real world through guest lectures, or taking certain classes as part of the course design.

“I find very often that communication skills and other soft skills amongst MBAs are not up to the mark. The curriculum in business schools should certainly focus on this as also negotiation skills. Courses in business schools should incorporate the right mix of building the theoretical base while making sure real world examples and cases are discussed to bring in the practical aspects of the subject matter.

“I would advise students of finance to take an interest in understanding not only the theoretical underpinnings of finance but also the practical aspects of markets, historical perspective of financial theory and how it has evolved and real world responses to financial problems and issues. In an increasingly interconnected world it is increasingly important to understand the linkages of global finance and markets.

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