Ukraine’s SME loans leader pri­or­i­tizes pri­vate cus­tomers


Kyiv Post Legal Quarterly - - Banking -

In re­cent years, Pro­cre­dit Bank has bucked the mar­ket stag­na­tion trend among Ukrainian lenders and led the way in terms of loan port­fo­lio ex­pan­sion. The Ukrainian branch of the Ger­many­based in­ter­na­tional bank­ing group posted ro­bust an­nual loan port­fo­lio growth of 35% in 2017, fol­low­ing on from an even more strik­ing 40% in­crease dur­ing the pre­vi­ous year. With this up­ward trend con­tin­u­ing into 2018, Pro­cre­dit Bank Gen­eral Man­ager in Ukraine Vik­tor Pono­marenko says the bank is now seek­ing to help fa­cil­i­tate fur­ther growth by bol­ster­ing de­posits. “We har­bor big am­bi­tions to in­crease de­posits as we also want to con­tinue ex­pand­ing our SME loan port­fo­lio,” he ex­plains. This means reem­pha­siz­ing the ex­ist­ing pri­vate This pri­or­i­ti­za­tion of bank­ing ser­vices for pri­vate cus­tomers is not only about cap­i­tal to the bank in the form of fresh de­posits. Pro­cre­dit Bank has al­ways had a strong pri­vate cus­tomer bank­ing arm, but it has been some­what over­shad­owed in re­cent years by the eye-catch­ing progress Mr. Pono­marenko be­lieves the time is now right to high­light the op­tions avail­able for pri­vate cus­tomers. “The SME sec­tor re­mains our core fo­cus and is cen­tral to we have also built up very strong ser­vices for pri­vate cus­tomers. How­ever, this is not al­ways im­me­di­ately ap­par­ent to cus­tomers be­cause at­ten­tion un­der­stand­ably tends di­rec­tion of our work.” Mr. Pono­marenko says he is re­ly­ing on a com­bi­na­tion of con­ve­nience, help his bank stand out from the crowd and at­tract new pri­vate cus­tomers. All strate­gic fo­cus on dig­i­tal­iza­tion of ser­vices. In re­cent years, Pro­cre­dit Bank has em­braced a con­cept of ex­pand­ing ser­vices via dig­i­tal plat­forms rather than phys­i­cal branches, with vir­tu­ally all day-to­day bank­ing trans­ac­tions al­ready pos­si­ble on­line and work pro­gress­ing on a new ser­vice that will al­low clients to open an ac­count on­line with­out set­ting foot in a sim­ple, con­ve­nient and trans­par­ent busi­ness model to cus­tomers,” says Mr. Pono­marenko. He ar­gues that while dig­i­tal­iza­tion re­mains the talk of the Ukrainian bank­ing in­dus­try, in prac­tice there is still a strong de­pen­dence on tra­di­tional branch net­works and cash. “We be­lieve that us­ing dig­i­tal in­stru­ments is the right choice in­stead of the more tra­di­tional way of pro­cess­ing trans­ac­tions, where cus­tomers are obliged to visit pa­per­work. The goal is to min­i­mize this paper chase and re­place it with on­line trans­ac­tions wher­ever pos­si­ble. We want to be more in­no­va­tive and at the same time se­cure.” Pri­vate clients at Pro­cre­dit Bank will have a clear idea of what they are sign­ing up for thanks to stan­dard monthly bank­ing fees that re­move the un­cer­tain­ties of ser­vice-re­lated charges. “This pro­vides and trans­parency to plan ahead,” he ex­plains. “It can of­ten be chal­leng­ing to to the com­plex fee struc­tures in­volved. In this re­gard, we are as trans­par­ent ac­tive cus­tomers who carry out all their trans­ac­tions via in­ter­net and re­quire a va­ri­ety of per­sonal bank­ing ser­vices that could eas­ily lead to high fees if charged in­di­vid­u­ally. In prac­tice, this means mem­bers of the grow­ing Ukrainian mid­dle class, or as Mr. Pono­marenko puts it, save and to spend.” Along with other in­ter­na­tional banks on the Ukrainian mar­ket, the Pro­cre­dit Bank brand en­joys the kind of as­so­ci­a­tions with se­cu­rity that few Ukrainian banks can match. The up­heavals in the Ukrainian bank­ing sec­tor since 2014 have seen close to one hun­dred banks closed down, rock­ing led many pri­vate bank­ing cus­tomers to look to­wards lo­cal branches of in­ter­na­tional banks as safe havens. This sense of se­cu­rity also ex­tends to the dig­i­tal plat­forms used by Pro­cre­dit Bank in Ukraine, which Mr. Pono­marenko ex­plains are de­vel­oped by a com­pany within the Pro­cre­dit Bank Group to com­ply with both Ukrainian and EU reg­u­la­tions. “As part of an in­ter­na­tional bank­ing group based in Ger­many, we are able to ap­ply EU se­cu­rity stan­dards to all terms of safety and se­cu­rity.” Ul­ti­mately, the big­gest pull for many pri­vate bank­ing cus­tomers re­mains the re­turn they can ex­pect to make on their de­posit. Mr. Ponomorenko claims that more at­trac­tive in­ter­est rates than many other in­ter­na­tional banks op­er­at­ing in Ukraine. “Since we are plac­ing more and more em­pha­sis on dig­i­tal bank­ing, we are net­work on­line while avoid­ing de­pen­dency on phys­i­cal lo­ca­tions. This ab­sence of ex­pen­sive phys­i­cal in­fra­struc­ture al­lows us to pass sav­ings on to our cus­tomers in the form of more com­pet­i­tive con­di­tions. In other words, our lower costs cre­ate the ba­sis for higher in­ter­est rates.”

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