Horia Ciorcilă: "I see the future of banking with banks transformed into technology companies"

Horia Ciorcilă, Chairman of the BT Board of Directors for Piața Financiară:

How do you see the Romanian business environment through the eyes of the Romanian banking system leader, Banca Transilvania? What should be noted?

We see it as resilient, adaptable and persevering, given that Romania has just over 30 years of market economy and the entrepreneurial culture is still maturing compared to other countries. Of course, the big leap was our inclusion in the European Union, which came along with free markets. The European funds have helped the country develop and granted direct access to business models.

Because entrepreneurship is the engine of economic growth, contributing directly to our prosperity, GDP and jobs creation, it is in our focus as a bank. We are happy to support over 400,000 businesses - from start-ups, SMEs, to corporations.

In Romania we still have to model a certain mentality: in business, as in everything, there are failures, and unfortunately many Romanians in business consider them a barrier to future initiatives. I think this is also due to the fact that entrepreneurs have had to face tough business conditions during the transformation of our country over the last 30 years. For example, in the Western countries, not to mention the United States of America, where economies have been (much more) stable and the background is different, failures are seen by entrepreneurs as learning opportunities and that is why they did not stop their journey at the first obstacles. If we look at the history of many companies, we see that there have also been challenges, even turning points. It's good to know when to keep going, not just when to stop.

Speaking of mentality, it is interesting to take into account how Romanians see entrepreneurship because that is where we can see the expectations. And to see how these perceptions evolve. We have seen various studies showing that some people want to go into business for the notoriety, others because they want to be their own boss, others because they want to change something. Notoriety can be hard especially if you don't have experience and you have to know how to manage it, and being your own boss - and subordinate at the same time - comes with other challenges. But the fact that people want to change the world can only make me happy and confident.

But we should learn more from the foreigners, from their entrepreneurial culture, from their experience. We can also learn how to expand into other markets, how to become more proficient as entrepreneurs and how to cultivate that pride in building brands that are part of people's lives. I am happy to see young entrepreneurs innovating and creating new business models based on technology, pursuing accelerated growth through the international perspective of business, growth facilitated by technological advancement and by new economic models. Then we can learn more from foreigners about the family-business connection: we can see how others have done it before us - whether and how they have integrated the new generations into the management of the business, how they ensure continuity, how they create and cultivate that entrepreneurial spirit in the family, how to be a family team. Or, why not think about having a family office to manage investments and manage family money.

As Chairman of the Board of Directors, you have been leading the most important bank in Romania for two decades. What have been the most important challenges of these two decades?

There have been many challenges during these years because they marked the most important stage in the bank's growth, on its way to becoming the number one bank in the market. Basically, these 20 years are more than half of the BT story. There have been key moments, which we call re-inventions and which have come with big changes, business thrusts or adaptation to challenges, to crises.

The first reinvention started 20 years ago, when Banca Transilvania consolidated itself as a financial group and especially when we started our nationwide expansion offensive. At that time, we were already present in different parts of the country, but until then we had focused mainly on the region of Transylvania. We were more of a regional bank, with no more than 2% market share and 12th place among the Romanian banks. In five years we grew from 45 branches to over 500. This strategy, attracting customers, but also the fact that in 2008 we reinvented ourselves by adapting our business model to the challenges brought by the international financial crisis at that time, led us to the top 10 banks in Romania. We have grown 12 times in five years, from assets of €250 million to 3.8 in 2007 and 4.3 in 2008.

The 2008 crisis was a unique moment in terms of its severity and it caught us when we were at a much smaller scale, when we were more vulnerable. Undoubtedly, including the difficult years that followed go down in the history of any company. It was also a shock for BT, but survival was not an issue. We had a period of conservative, profitable growth. We didn't question going into deficit just for the sake of increasing our market share. Then, we were forced to adapt and we did it very quickly. Like many others, we didn't see the crisis. At the bank, in 2008, we had the best possible year and then in 2009 it was year you all know. It was only then that we started to see the reality. Because everyone had to tighten their expenses. Those lines we started to see everywhere. That was the moment of truth. And you notice it was a false perception, for the most part, what it had been up until then. A new reality emerged. During 2009, another growth cycle started where we focused on the idea that we had to get much closer to our customers and non-customers, given the general context in which, obviously and naturally, the big groups took a step back in Romania. This is also one of Romania's major problems. There should be as many players as possible. But BT has been a winner of that period, market share has increased: we had 5% in 2008, 5.8% in 2009 and 6.3% in 2010.

Also, every acquisition made by us represents a reinvention for BT. The first one of these, Volksbank Romania, in 2015, prepared us for the acquisitions, integrations and mergers that followed: Bancpost, Idea::Bank and companies with complementary banking activities.

Then, as for every company, the pandemic came with adaptations to our business, with another reinvention that allowed us to turn it into an opportunity. The increase of the business in 2020 underpinned BT's role as a key pillar of the economic recovery in the year that followed, and we're glad that we were able to contribute both on the social side and to support local businesses. Then, the war in Ukraine triggered a big shock for everyone, including us.

Even BT's ranking, from 2018 onwards, on the first position in the top of the Romanian banks, is a reinvention because the position comes with many responsibilities: we are the largest financier of the Romanian economy, we have almost 4 million customers, we are one of the largest employers, we are a payment center and an ecosystem formed by banking and technology.

These were some of the moments when we had to reset and reinvent ourselves to respond to the absolutely new realities we faced. But they have all helped us to transform the bank a lot in 20 years: assets have grown 146 times, net loan portfolio 132 times, and customer deposits 171 times.

Banca Transilvania has grown nicely, laying brick upon brick: if we were to look back in time, what pluses has each acquired banking entity brought to the completion of the today’s company?

BT has so far acquired three banks, Volksbank Romania, Bancpost and Idea::Bank, but over the years we have also focused on companies with complementary banking activities, such as leasing or consumer finance - ERB Retail Services, ERB Leasing, Idea::Leasing or, more recently, Țiriac Leasing.

The acquisition of Volksbank Romania and Bancpost has helped us strengthen our position in the banking sector. Basically, together with the bank's organic growth, we moved up to the first position from third place.

Through acquisitions, we have attracted cost optimization and revenue enhancement synergies, brought us the opportunity to deploy surplus capital optimally with high profitability and strengthened the bank's strong presence through diversified products and services distribution channels.

Acquisitions are not done just to win, precisely because in the M&A market 1 + 1 does not necessarily make 2, it is a long process, integrations are costly and must go in parallel with the business of the company that made the acquisition, and some results are seen in years.

If in case of Volksbank Romania it was an asset transaction, in Bancpost we sought complementarity, we bought market share and, so to speak, customers. Idea::Bank is something completely different because it is part of BT's strategy to accelerate its digital transformation. Basically, on the foundation of Idea we will build the first digital bank “made in Romania”, separate entity from Banca Transilvania, but part of BT Group.

Even if we are not in talks for acquisitions at the present time, they remain focused on our plan. We have the same approach regarding the consolidation, but we are looking for efficient, large portfolios. The bank is growing anyway - practically every half-year it is growing to the size of a small bank.

How do you combine technology with human relations, how do you see the future of banking from this point of view?

Human relations and technology cannot exist without each other. We believe in this complementarity, as a universal, inclusive bank with products and services for all types of customers and with almost 4 million customers. In addition to remote banking solutions, we come with the concept of “human banking” through our network and call center colleagues. We have taken steps towards digitization, including through our branches. because the network is part of our transformation: each one is equipped with self-banking machines, we have implemented the “Digital Hour“ concept, and 50 branches, Dialog Agencies, are dedicated exclusively to consultancy.

On the one hand, people prefer to do banking from anywhere, 24/7, not depending on an institution's schedule. It's only natural, technology is increasingly present in our lives and everything revolves around the mobile phone. That's how we ended up with more than 80% of the BT customers being digitalized, i.e. using at least one remote banking app. On the other hand, there are always customers who need advice, a meeting with our staff, to get solutions. 60% of our employees work in the network and are available to customers.

I see the future of banking with banks transformed into technology companies and a much larger number of customers digitized. Moreover, I see it with open services beyond the banking system, with third-party services via APIs. We need to contribute now, as banks, to this transformational force that is digitization - to deliver prosperity, financial education and inclusion.