“Romania, closer to Western Europe through digitalization” Gabriela Nistor, Deputy Chief Executive Officer Retail Banking BT
In the interview given by Gabriela Nistor, Deputy Chief Executive Officer - Retail Banking BT, for the newspaper Bursa we found out which are the changes in the customers’ behavior in banking and how Romania got closer to Western Europe through digitalization.
How did the banking market start the year?
The banking market started the year positively, due to the improvement of the risk perception, the optimism brought by the vaccination campaign and the mix of relaxed economic policies. The balance of non-government credit increased by 5.2% yoy, on average, during January-February, an evolution determined mainly by the increase of the RON component. The credits 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 its level slightly above the market trend.
Which are the perspectives for 2021?
For 2021 we expect a favorable evolution of the non-government credit balance, with an average increase of over 6% year / year, this dynamic being 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 implementing the programs launched by the European Union in 2020, such as Next Generation and the multiannual financial framework 2021-2027.
Which are the effects of the pandemic on the activity of the bank you represent?
The pandemic has led to a change in behaviors and new consumption habits, and together with them, the way of doing remote banking with greater confidence in the online environment. Two major changes in the lives of the Romanians, brought by the pandemic, influenced the behavior of our customers: "go outside" became "go online" due to travel restrictions and the need to maintain distance, and "cash" became "money in the account" - here also took place a change of a mindset among the Romanians, that of trusting the money value if we have it in our pocket, if we can count it.
Banca Transilvania's figures show that the pandemic period generated a huge step forward in adopting online banking solutions, a progress that would otherwise have taken years and which brought Romania closer to Western Europe in terms of digitalization. Home Banking has brought a digital transformation: another way to organize our money and time. We see extraordinary opportunities for our customers in terms of mobility, given by the remote banking, access to new products and services, but also by the rapid growth of confidence in online payments, as I said. For more and more people, online banking has become comfortable, part of the everyday life.
The BT figures also show us some interesting trends: 500,000 customers made the first online transaction with the card 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 in BT Pay, Apple Pay and Google Pay. I would also refer to the number of retailers with e-commerce solutions, which doubled in 2020, and the volumes processed through BT e-commerce terminals also doubled.
Regarding lending, I noticed a certain caution of the people, especially in terms of consumer loans. The insecurity brought by the pandemic in the health area, but also in the economic field, the work at home and the limitation of the possibility to travel have most likely led to postponements for the expenses that are not a priority or that are no longer related to the life before the pandemic. Instead, fortunately, people have not given up on their bigger plans, and real estate loans have increased significantly compared to 2019. People have started to want more, a bigger apartment with a terrace or they want to move to a house with a garden, which shows that their preferences have changed and their lifestyle is different now.
How many banking installments deferral requests have you approved so far?
In 2020, we have resolved approximately 34,000 deferral requests for loans for individuals.
To what extent were they made based on the government program and to what extent based on the program proposed by the bank?
72% of the postponement requests received in 2020 were made based on the government program, provided by GEO 37, the difference was performed through BT's own programs. Additionally, Banca Transilvania came up with its own measures for customers, postponing up to three credit installments, without recovering the interest on the loans and through the extended grace period on credit cards and exemption from interest for two months, respectively reduced in the third month, applicable to credit cards. Almost 500,000 cards were exempted for 3 months from the payment of the minimum monthly obligation.
Which was the evolution of the lending segment, respectively the evolution of deposits during the last year, at Banca Transilvania, and how do you estimate that this segment will evolve in 2021?
The loans balance for individuals increased in 2020 by 4.4%. The balance of the deposits evolved much faster than that of the loans and increased by 18.4% - explainable for the period we are going through, in which Romanians have moved more towards saving. For this year, we estimate a more accelerated growth on the credit side, considering that, apparently, the world has continued or resumed its big and small plans. Regarding deposits, we estimate a slower growth.
How much has the New House program contributed to the growth of the lending segment?
During 2020, there were two government programs for home purchases - the First House, which began in 2019, but also the New House. At BT, overall, the two programs generated last year approximately 10% of the total granted loans, respectively 24% of the total real estate loans. Referring especially to the New House program, in the last quarter of 2020 it generated 14% of the total volume of loans, respectively 37% of real estate loans.
How have interest rates on loans and deposits evolved?
For both loans and deposits, BT interest rates decreased. For deposits, our bank has made two "corrections" in May and September, on all savings maturities. Loans have maintained a lower overall price level in 2020 compared to 2019. We also came up with online banking shopping campaigns, which meant even lower interest rates for a certain period, but also other facilities.
How fast did you adapt to the forced digitization process?
The pandemic found Banca Transilvania as market leader on the cards market - with a solid customer base and infrastructure, consolidated over time - not long after BT announced in January 2020 that it had exceeded the 4 million cards milestone. Also back then, the bank announced that it intends to make 2020 a continuation of this path, with an emphasis 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 accelerated during the state of emergency. We saw that with the news we came for home banking we can help customers. But we knew this was also a turning point for the bank, so in 2020 we accelerated projects and launches, especially new features in the BT Pay application. It is about accessing the digital card before having the physical card, through which we solved an important problem for our customers, especially when it comes to cards reissued upon 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 a current online account through NEOCont, we now offer them a complete online experience. To give you an idea of the initiative’s magnitude, over 100,000 cards were added to BT Pay before they were physically received. Another new feature in BT Pay was the access to the card details directly from the application, as well as the possibility to withdraw money from all BT ATMs, not only from the contactless ATMs, based on the codes generated by BT Pay. We also launched the telephone donation option, and over 13,000 donations were made through the application for 12 NGOs. This was followed by the launch of the option to perform transfers from card issued by other Romanian banks to BT cards through the possibility of adding in BT Pay the non-BT cards issued by banks and fin-techs from Romania. Also, last year we launched the option to authenticate online payments through biometrics, directly from BT Pay, and over 7 million transactions were thus confirmed last year. I would also like to mention the updating of personal data in BT Pay, a simplified flow for the BT Pay customers.
For future customers of the bank, we launched NEOcont, which offers the possibility to open a current account 100% remotely. Over 12,000 customers have opened an account, requested a card or subscribed online to NEO, through NEOcont, in 2020.
In other words, through everything we launched, especially in the context of the pandemic, having the BT Pay app, our customers no longer need the physical card because by using BT Pay they can make contactless payments to merchants, can withdraw money from ATMs, have access to card details for online transactions, they can transfer money to other people, manage their cards, etc.