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23.04.2019 Share +
Customer-centricity, digitalisation, and data usage are hot topics on the banking sector’s agenda: But how does that look in practice? Featured in Romania’s leading Business Magazine, Petr Baron, CEO of TBIF (TBI Bank), gives good insight on how we’re moving towards a customer-first digital company and answers many questions on global banking trends. “The financial industry is now in a transformation stage in which the clients are expecting more and more each day”, he says. Here’s the full article – it will take some 10 minutes to read it, but we promise it’s worth your time.
“To achieve success, you must look at where you stand in the supply chain and how you can contribute to it. To do that, you should keep an open mind, as the world is changing very rapidly. Openness is the key for the future”, shares Petr Baron, CEO of TBIF Financial Services of which TBI Bank is part of.
The chief executive pointed out that 4finance, TBIF’s parent company, is among the largest online lenders in Europe. Its operations span beyond European borders and reach Mexico and Argentina. TBI Bank operates in Bulgaria, Romania, Sweden and Germany, serving more than 1.4 million clients, according to data provided by the company. TBI Bank’s total assets in Romania and Bulgaria reached 395.6 million euro last year and the net profit hit 14.1 million Euro, according to preliminary data. In total, the number of approved loans in both Romania and Bulgaria surpassed 400.000 last year.
“TBI Bank, headquartered in Bulgaria, operates on four markets”, says Petr Baron, TBIF’s (TBI Bank) CEO. Baron revealed that TBI Bank has about 1.500 employees in Romania and Bulgaria and people from over 15 countries work within the whole group. The CEO firmly believes that different people can contribute with different, varied views and experiences. That is precisely why he is actively encouraging diversity within the group.
Transformation is the keyword in the banking industry in a challenging context triggered by the digitalization wave. “I would like to believe that in this context we are not talking about survival; rather it’s about evolution. TBI has the competitive advantage of being small when compared to industry giants, which find it hard to implement changes fast. The financial industry is now in a stage of transformation in which clients are expecting more and more each day”.
On the other hand, industry regulations – such as the European Directive PSD 2 (the revised version of the Payment Services Directive) which entered into force last year - will essentially put the client in charge of how banking functions. “The client will be able to make decisions about the financial services used in just a couple of clicks”. But shouldn’t the client already be king? According to Petr Baron, that was not necessarily valid in the past. “Unfortunately, in many industries and in banking even, there was a belief that ‘We will build and clients will come’, but with the ever-increasing rate of digitalization this approach is not applicable anymore”.
He is conscious that today clients have many options and it is becoming easier for them to change the service provider, even when it comes to financial services. “Organizations must become more client-oriented starting from within. Banks have a tendency to be more rigid, maybe also because of the way bankers used to see things: We are bankers, we are serious, we are professional, we take care of money, so we will be pretentious. The reality is that banking is becoming borderless through digital transformation and the client is now truly in the driver’s seat and, as I said, new regulations like PSD2 offer clients the opportunity to change the relationship with banking institutions easily”.
Petr Baron is adamant when it comes to the need to put the customer first. He believes that if organizations don’t recognize and adapt to this shift, there will be other companies ready to do that and fill the gap, which explains the boom of fintechs in the market. “Fintechs take the client’s problem and analyse how they could resolve it in the least stressful manner for clients”. On the other hand, Petr Baron says, banks cover hundreds of clients’ needs, so it is very hard to concentrate on a single one in a certain period of time.
“The future, from a services perspective, will be like a puzzle with several pieces: Technology will allow the entire value chain to benefit from API Integration (Application Programming Interface, a software that allows two applications to communicate) and thus anyone will be able to interact with service providers”.
To support this view, Petr sheds light on a phenomenon from North America, where almost 40% from all the services are conducted using human voice. “If organizations do not transform themselves in order to deliver those services in the smoothest way possible, it will be difficult for them to remain competitive. The largest of them, which have multiple issues to manage simultaneously, will find it hard to keep up”. How will the biggest banks survive in this context? Petr Baron challenges a scenario in which they disappear, which was often spread in the media mainly by fintech representatives. Petr thinks that there are still many big banks which “are doing a great job when it comes to transformation - including giants as JP Morgan that has a huge client base”.
On the other hand, there will also be banks that will fail in this process, because they will not be able to keep up with the transformation. “Clients will essentially view them as utility companies: You don’t really care who the energy or telecommunication provider is; giants like Google, Apple, Facebook, Amazon will be able to offer such services through partnerships with financial institutions”.
On top of that, challenges brought by fintechs from all over the world, like Revolut, which promote themselves as a „digital banking alternative”, will challenge the status-quo and, in fact, will raise the bar for traditional players – “but saying that traditional banks will disappear is rather wishful thinking and PR”.
Thus, the future banking landscape will be totally different from today. When retail clients want a card, for example, they will have at their disposal multiple types of service providers. Big banks will transform into digital services providers and will build ecosystems around their products. „Such an ecosystem means that banks will have some core products in their offer and build further services based on partnerships and provided on platforms. For example, the biggest businesses in the world already operate as platforms – Airbnb, Facebook, YouTube, Instagram. However, I still think it will be a little bit different in the financial services world. Banks will have a hook for their products, whether we are talking about current accounts or some other instrument”.
In case that clients need services that banks cannot offer themselves, these banks will get into partnerships with other providers so that clients will end up with a bundle of services that exactly meet their needs. By getting into partnerships, banks will still be able to offer the best services to its clients; on the other hand, because clients get the services from a single provider, they will significantly optimize their costs. “All that will be offered through robot consultancy, through artificial intelligence – this is already happening in some markets, so we are not talking about rocket science, but about clear trends that will become more and more visible in Romania too, thanks to the significant market size of 20 million people and the European location. In Asia, for example, more and more social services providers are going through this transformation; a big part of banking on their platforms, so it is only natural that Facebook is planning to develop banking services through WhatsApp, but only for certain products”.
From Petr Baron’s point of view, Romania is offering interesting opportunities for all existing players, regardless of their profile. “I think the future will look like that: big banks that will transform themselves, fintechs that will cover some niches and that will have an important role in other players’ ecosystems, and also Google, Amazon, Facebook, Apple, which will have a platform for their own services for those users that the banks can’t serve”. The new generations have an important role in these changes that are now transforming the industry. “Until now, you opened a bank account and you went with it almost your entire life - the youngest generations do not have that loyalty. In the past, big banks attracted clients with brand recognition and reputation for security. Today, clients choose the best solution providers and have no problems to change banks. And because deposits are guaranteed for all banks, the security aspect is no more valid either. „The bank’s size no longer matters that much, you receive the same coverage. Simply put, if you are not evolving to constantly provide the best service, clients will go away”.
How will the Romanian banking ecosystem look in that changing environment? “If we take history as example, banks always used to come and go. Some will just exit the Romanian market because they are not doing well. Others will merge or be acquired by another bank. It is a highly competitive environment”. Baron believes that there will be a reshuffle of the service providers; the client could know, for example, that Amazon is offering the financial services he uses, but he will not care that the services are built on the backbone of a banking industry player. “You will only know that your provider is Amazon.” In addition to this, he anticipates that new players will serve new niches. Regarding TBI Bank, the company’s strategy, “lending at core” (to offer simple loans to a larger number of clients - ed.n), focuses on providing service to underserved European citizens.
“We believe that banks will continue to use a traditional approach to addressing clients’ needs, it is not a matter of black and white here. There are many things to be done in order to increase the client base, to educate clients and to facilitate their access to loans”. Another pillar for TBI Bank’s development consists of focusing on mobile services, while delivering more services under the bank as a service concept. “This is the way we see our future”.
Petr Baron notices the need for being more open-minded – in contrast to the past, when the education system kept people’s skills and abilities limited. Besides this, there are also the social aspects to be considered. “I think that many of the things we are now learning are very much accessible -when you look at the things you need to understand now compared to what banking was initially like, you can tell the transformation is amazing - through technology, marketing, customer behaviour”.
What investments must a company make in digitalization? Petr Baron says that, in TBI Bank’s case, “investments are in the millions range”. “A significant part of our budget is directed to digitalization”, he says, adding that the development stage was focused on finding the right lending solutions and the consolidation stage is related to mobile services. “When you are small, it is difficult sometimes to have data driven development, because you don’t have the necessary resources or experience; but when you are big, it becomes too difficult to change things. overnight I think we have the unique opportunity to be in ‘the golden middle’”, he notes.
Technology is allowing for things to happen and the trends are disruptive - we have to be very open minded from this point of view - the most difficult thing is to create an organizational culture where you can react, you can be very flexible and very fast when it comes to market.
Therefore, the successful companies of the future will be those capable to adapt to multiple external factors, says Petr Baron, but first come client expectations.
021 529 86 00
Monday - Friday
| 09:00 - 18:00
Saturday - Sunday
8-12, Putul lui Zamfir Str.