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Banks need to adapt to fintech challenge - industry

Banks need to adapt to fintech challenge - industry Photo: Facebook

SOFIA (Bulgaria), March 6 (SeeNews) - The global banking sector is facing the challenge of constantly changing business environment due to the expansion of fintech companies and the related need for digital transformation, bank officials say.

The developing fintech industry is setting new tasks before banks which have to adapt in order to achieve their goals and to respond to customers' needs, representatives of the banking sector said during the Annual FinTech & InsureTech Summit in Sofia hosted by Economedia last week.

"Over the last decade, our role has really changed. Today the skillset and the general organisation that you need to have are completely different," said Petr Baron, CEO of Sofia-headquartered TBIF Financial Services (TBI Bank). "Everyone in banking is used to having quite a specific knowledge base and to think, unfortunately, in a relatively silent approach. That does not work anymore and will not work anymore as the market becomes much more competitive based on customer demand."

Iravan Hira, managing director of Hewlett Packard Enterprise operated by Selectium, noted that while technology was a separate industry 20 years ago, today it is "the industry that is uniting and representing the finance sector, telecommunications sector, healthcare sector."

While every bank relies on digital solutions, different lenders adopt different approaches in today's fast-changing environment. 

For Giacomo Volpi, head of retail banking at UniCredit Bulbank, the Sofia-based unit of Italy's UniCredit, the best digital solution is a product as simple as possible that would work for 80%-90% of the lender's clients.

For Jose Saloio, CEO of the Bulgarian branch of France's BNP Paribas Personal Finance, innovative digital solutions should help bank employees spend more time on interacting with customers and less time on executing administrative tasks.

Regarding the prospects of banks going fully digital some time in the future, bankers are more sceptical. 

"Well, it is a matter of strategy. Raiffeisenbank is a bank which is well known as a physical bank, so we will not give up our physical presence. But we try to balance and see where digital is better and where we still want to talk to our customers," said Vladimir Mahnev, chief digital officer at Raiffeisenbank Bulgaria.

Raiffeisenbank Bulgaria wants its customers to be able to use digital banking as much as possible and to visit their bank's office only when they need to do something that requires human interaction, Mahnev added.

"We are not going fully digital. We do not believe in that. We give the customers a certain knowledge when we talk face-to-face - for mortgage, investments, insurance," Volpi said, adding that two-thirds of UniCredit Bulbank's sales happen because the lender has called the customer and only one-third are done through mobile banking.

"I think you still need a multi-channel operation," Volpi noted.

The current technology developments in the financial sector are still in an early stage, so it cannot be determined whether a traditional bank can make a big leap towards becoming a technology company. What is certain, however, is that fintech companies are dictating the pace.

"Tech companies are coming faster to the financial sector than banks or financial institutions are going to tech," Mahnev opined.

Relying on technology or not, banks still need their employees in order to meet customers' needs.

"Percentage-wise it is 70% people and 30% technology, because it is people who introduce this technology," Baron explained.

According to Vanya Manova, country manager Bulgaria and North Macedonia for Mastercard, banks need to see fintech companies as partners in their business rather than rivals.

"To finding the right solutions, the right moment, the right person, the right technology I would add the right partners because digital innovation is not a one-man show. This is part of the digital transformation of the entire society," Manova said.

The industry has seen many examples of successful cooperation between banks and non-banking financial institutions which were originally  considered competitors but in the end, when they unite and cooperate, their product is actually the best possible, Manova added.

"In order to go faster let us cooperate with fintech, with startups. Our strategy is to take the best of what they have. This is our strategy in Bulgaria and it is working," Jose Saloio noted.