"Romania, closer to Western Europe through digitalization" Gabriela Nistor, Deputy General Manager Retail Banking BT
During the interview given by Gabriela Nistor, Deputy General Manager Retail Banking BT, for the Bursa newspaper, we find out what are the changes in customer behavior in banking and how Romania got closer to Western Europe through digitalization.
With what feeling did the banking market start the year?
The banking market started the positive year, due to the improvement of the risk perception, the optimism brought by the vaccination campaign and the relaxed mix of economic policies. The balance of the non-governmental credit increased by 5.2% y/y, on average, in January-February, an evolution determined especially by the increase of the LEI component. The loan granted to the population increased, at the market level, by 0.5% from the beginning of the year, and Banca Transilvania continued its development, maintaining slightly above the market trend.
What are the prospects for 2021?
For 2021 we expect a favorable evolution of the non-governmental credit balance, with an average increase of over 6% y/y, the dynamics supported by a number of factors: the low level of real financing costs, the entry of the real economy into a new cycle, the positive investment climate at the beginning of a new cycle and the prospects for the implementation of the programs launched by the European Union in 2020, such as Next Generation and the Multiannual Financial Framework 2021-2027.
What are the effects of the pandemic on the activity carried out by the bank you represent?
The pandemic has led to a change in behaviors and new consumption habits, and with them to the way of doing remote banking and with greater confidence in the online environment. Two major changes in the life of Romanians, brought about by the pandemic, have influenced the behavior of our customers: "go outside" has become "go online" due to the limitation of travel and the need to keep distance, and "cash money" has become "money in the account" - here took place including the change of a belief among Romanians, that of being sure of the value of money if we have it in our pocket, if we can count them.
The figures of Banca Transilvania show that the pandemic period has generated a huge leap regarding the adoption of online-banking, progress that would otherwise have taken years and which brought Romania closer to Western Europe in terms of digitalization. Home banking has brought digital transformation: another way to organize our money and time. We see extraordinary opportunities for customers regarding mobility, given by remote banking, accessing new products and services, but also by the rapid increase in confidence to pay online, as I said. For more and more people, online banking has become comfortable, part of everyday life.
BT's figures also show us some interesting trends: 500,000 customers made their first online card transaction last year, and BT Pay was in a speed race, with an extremely accelerated adoption, the number of users doubling in 2020 compared to the end of 2019. Also, 1 in 3 customers ended up using the digital card, from wallets, so we have 1.4 million digital cards, added to BT Pay, Apple Pay and Google Pay. I would also refer to the number of merchants with e-commerce solutions, which doubled in 2020, and the volumes processed through BT e-commerce terminals have also doubled.
In terms of lending, I've noticed a certain caution of people, especially with regard to consumer loans. The insecurity brought by the pandemic in the area of health, but also in the economic field, working from home and limiting the possibility of traveling have most likely led to postponement for expenses that are not priority or that are no longer related to life before the pandemic. In contrast, fortunately, people have not given up on larger plans, and real estate loans have seen a significant increase compared to 2019. People began to want more, a larger apartment with terrace or want to move to the house with a garden, which shows that preferences have changed, and the lifestyle is different now.
How many requests for demation of bank rates have you approved so far?
In 2020 we solved approximately 34,000 applications for demament for loans for individuals.
In what proportion were these made under the government program and in what proportion under the program proposed by the bank?
72% of the requests for demarcation received in 2020 were made based on the government program, provided by GEO 37, the difference was accommodated by BT's own programs. In addition, Banca Transilvania came up with its own measures for customers, the postponement of up to three loan installments, without recovering the interest on loans and through the grace period extended to credit cards and the interest exemption for two months, respectively decreased in the third month, to credit cards. Nearly 500,000 cards were exempted for 3 months from paying the minimum monthly obligation.
What was the evolution of the lending segment, respectively the evolution of deposits in the last year, at Banca Transilvania, and how do you appreciate that this segment will evolve in 2021?
The balance of loans for individuals increased in 2020 by 4.4%. The balance of deposits has evolved much more accelerated compared to loans and increased by 18.4% - explainable for the period we are going through, in which Romanians have turned more towards saving. For this year we estimate a more accelerated growth on the credit side, given that, from what you can see, the world has continued or resumed its plans large and small. In terms of deposits, we estimate a softer growth.
How much has the New Home program contributed to the growth of the lending segment?
During 2020 there were two government programs aimed at buying homes - the First House, which had begun in 2019, but also the New House. At BT, overall, the two programs generated about 10% of the total loan production last year, respectively 24% of the total real estate loans. Referring specifically to the New Home program, in the last quarter of 2020 it generated 14% of the total volume of loans, respectively 37% of the loans.
How have the interest rates on loans and deposits evolved?
On both loans and deposits, BT's interest rates have fallen. For deposits, our bank made two "corrections", in May and September, on all savings maturities. Loans have maintained a lower overall level of prices in 2020 compared to 2019. We also came up with online banking shopping campaigns, which meant even lower interest rates for a limited period of time, but also other facilities.
How quickly have you adapted to the process of forced digitization?
The pandemic has found Banca Transilvania in a leading position on the card market - with a solid customer base and infrastructure, consolidated over time - not long after BT announced in January 2020 that it had surpassed the milestone of 4 million cards. At the same time, the bank announced that it has proposed that 2020 will be a continuation of this path, with a focus on the digital area and especially on the BT Pay application, an application integrated in a continuous development system, in order to bring banking closer to customers.
The trends we noticed before the pandemic started were during the state of emergency. I saw that through the news we came up with for home banking we can help customers. But we knew it was also an inflection point for the bank, so in 2020 we accelerated projects and launches, especially new functionalities in the BT Pay application. It is about the access to the digital card before having the physical card, through which we have solved an important problem for our customers, especially when it comes to the cards reemiseed at maturity because they can use the card in the application, before receiving the physical card.
The functionality is also valid for new customers and, together with the opening of an online current account through NEOCont, we now offer them a complete online experience. To give you an idea of the scale, over 100,000 cards were added to BT Pay before being physically received. Another novelty in BT Pay was the access to the card details directly in the application, as well as the possibility to withdraw money from all BT ATMs, not only from contactless ATMs, based on the codes generated by BT Pay. We also launched the option of donations by phone, and over 13,000 donations were made through the application for 12 NGOs. This was followed by the launch of the option of transfers from cards issued by other banks in Romania to BT cards through the possibility of adding to BT Pay non-BT cards issued by banks and fintechs in Romania. Also, last year we launched the option of authenticating online payments through biometrics, directly from BT Pay, and over 7 million transactions were thus confirmed last year. I would also mention the update of personal data in BT Pay, a simplified flow for BT Pay customers.
For the future clients of our bank, we have launched NEOcont, which comes with the possibility to open 100% remotely a current account. Over 12,000 customers have opened an account, applied for a card or subscribed online to NEO, through NEOcont, in 2020.
In other words, through everything we have launched especially in the context of the pandemic, having BT Pay, customers no longer need the physical card because using BT Pay they can make contactless payments at merchants, withdraw money from ATMs, have access to card details for online transactions, transfer money to other people, manage their cards, etc.