Special edition «50 leading banks of Ukraine», May 2018
Interview by Galina Zhukova
“Banks will have to invest into their networks and digital to meet expectations of their customers”, Galyna Zhukova, Board Member of Credit Agricole Bank, projects.
The banking market moved from the “crisis” stage when only a half of the institutions survived to the “transformation” stage. But do customers change?
Of course, the clients of the banks are changing. But, unfortunately, Ukrainians have short memory. I noted this before and I observe this now. Customers of banks forget their troubles – lost deposits - quickly and fall into difficult situations again. Retail customer has changed visibly but not only due to the crisis. Much bigger changes were caused by the progress in Ukraine and worldwide: fully amended service rendering concept, going online actively. But different customer segments changed in different ways.
Which customers changed more than others?
The well-liked middle class. We call such customers mass affluent. These people are financially literal, they can see the difference among banks, they start understanding the banks’ strategies, where they are heading, and, respectively, whether they move in the same direction with a bank. This segment focuses on values of the bank and makes decisions on the basis of a rather big number of criteria. Customers used to be guided by deposit rates, conveniences or inconveniences of credit card usage, by Internet-banking or digitalization – what can be done in the branch and what can be done remotely, but now they are much more concerned about the reputation of the bank, its values and character. Both banks and customers began to think life cycles rather than products: what the bank can give to the customer, his/her family and children.
If customers understand that you are “their” bank, will they stop changing institutions seeking the highest deposit rate?
They will. Affluent customers value their time. 1-2% difference on UAH deposit no longer matters. They appreciate other things in the bank: transparency and ability to adjust its products. There is even a new tool of co-creation when before launching a new product, the bank asks the customer: “What would you like? We are considering a new product and how would you like it to be?” This is not only about products. When we upgraded our outlets, we asked the opinion of mass affluent and affluent customers as well as of premium customers. We wanted to know not only how they saw the design of outlets but also what offers they preferred, how the staff should communicate with customers, which issued should be handled by outlets, by call center or via online banking. We also analyzed how sensitive the customers were to prices for services and what “special” features they were willing to pay for.
Have you already launched the transformation of your network?
We started to upgrade our outlets last year. The first new model branch was opened in May 2017 in Kyiv, in Podil. It is a flagship outlet and it is very successful. It serves mass affluent and affluent customers only. Now there are three such outlets: in Kyiv (Podil and on the left bank) and in downtown Dnipro. In April, a new outlet will be opened in the center of Kharkiv. Now we have 150 branches and we don’t need more – we need “different” branches. We have many outlets in small towns, some of them are profitable and well performing, and, others are less performing, and therefore, we review performance of all outlets on a regular basis and decide which of them should be closed or relocated. Still we consider our presence in large cities and cities with population over 50 thousand people insufficient, and that’s where we will open new model branches.
How to motivate the staff to keep changing together with changes of business context, how to reach a synchronized improvement of the team of many thousands?
This is extremely difficult as the situation with banking staff in the market is difficult in principle. In 2006-2008, bank jobs were among the most prestigious. It was a high-paying job. But other industries caught up and now we compete for the staff not only with other banks but also with IT sector, FMCG, agrarian, pharmaceutical industry, project management, consulting and, additionally, with migration from Ukraine. The employees’ motivation is the most sensitive issue. Where to get personnel, how to invest in them, how to develop and to retain employees? This is our permanent sphere of attention and efforts. But there is no perfect solution. The bank has various staff development programs, we have the whole project on digital culture, and our digital community conducts digital days in the bank. We understand that our employees are to become digital first and only after they will be able to share with our customers their knowledge about new technologies.
Which sales channel is more efficient: branch or digital?
So far, branches are our strongest sales channel. Their share is about 80%, and the rest is covered by partners, call center and digital banking. If speaking about car lending - 95% of sales are generated by the partnership network, while just 5% - by the branches, contact center and the website. The contact center works with inbound enquiries and carries out its telemarketing campaigns, thus becoming a more and more visible tool in the total sales pool. Online banking is developing towards generation of new customers but is still more focused on serving the existing ones. Customers can leave requests for new products via the website.
What matters for customers when they choose a bank?
Customers look at ratings and reputation, consider whether the bank is stable and large, loss making or profitable, whether it has foreign shareholders or not. Then everything depends on product: both in deposit and in loans the customers are concerned by rates. But they no longer challenge the pricing policy of the bank; they no longer expect that the bank should serve them for free. The customers also consider how quickly and simply the bank meets their needs.
What can retail clients expect in 2018?
The customers need more comfortable outlets as they require higher quality of their entire environment. So, the banks will have to invest into their networks to meet customers’ expectations. For example, we will open special premium zones for our clients in some branches. Generally speaking, customers will require simple, convenient and advanced servicing. Those banks that wish to stay in the market should keep investing not only into front office visible to the customer but also into back office. Customers will be more demanding to digital banking and, therefore, we should keep investing into Internet and mobile banking, into terminals and cash-in ATMs as well as in other innovative solutions to satisfy customers’ needs.
Bankers talk about internal competition between branches and digitalization. Who will win this battle, and will the outlets remain empty?
There is a healthy competition between digital and outlets but, in fact, they are complementary. Yes, we can see some brands in the market “100% online banks” but they cannot provide the whole range of banking products and services. We should develop both channels and look at what the customer needs, where and why he/she contacts us: via the website, web-banking, call center or at the branch to see the staff member and to talk about the matters that cannot be discussed with a chat-bot. By the way, one of the slogans of Credit Agricole Group is “100% human, 100% digital”. We aim to provide all functionalities of digital banking to our customers while retaining live communication. We are convinced that our branches will not be empty but the issues that will require the customer to come to the bank will not arise daily but on a monthly or quarterly basis.