Banking Awards 2020

The banking industry was already set for a lively year in 2020, but even so, the upheaval caused by the coronavirus pandemic came as a huge shock. The virus’ spread resulted in substantial economic damage across many markets, which will consequently have implications for the financial sector as a whole.

Banking Guide 2020

Click here to view the World Finance Banking Guide 2020

Thus far, a great deal of uncertainty remains around the long-term impacts of COVID-19, particularly with regard to how governments and businesses will react. Banks will be charged with providing some welcome stability among the turbulence, but they have challenges of their own to deal with.

Fortunately, technology is helping financial institutions to cope with the disruption, allowing them to maintain a large degree of business continuity while keeping their employees and customers safe. Nevertheless, making sure a limited number of in-person services remain available will be essential, as will ensuring that digital solutions are reliable, efficient and secure.

Aside from the virus, banking is due to face several other market shifts in 2020: a significant number of mergers and acquisitions are expected, building on a spate of similar activity in 2019, with many financial institutions still struggling for growth; the shadow banking market remains an issue (and not only in the developing world); and customers’ growing desire to have access to banking services that are more than just profit-driven shows no sign of abating. These factors, and many others, mean that financial institutions have plenty to grapple with as they move through 2020.

Time to rethink
Once thought to be a temporary measure to inject short-term liquidity into the market, low interest rates are proving impossible to shift – for banks, they have already outstayed their welcome. Since the financial crisis, central banks around the world have slashed interest rates, tentatively raising them during periods of economic stability. However, the coronavirus crisis has meant that further cuts may be forthcoming – there has even been talk of negative interest rates being imposed by the US Federal Reserve for the first time in its history.

The problem for the finance sector is that banks make a significant proportion of their profits from charging interest on borrowing. With rates at rock-bottom levels, they have been forced to find new efficiencies in order to protect profit margins. Throughout 2020, this is likely to continue.

In the majority of cases, technology will provide the lifeline that banks are looking for. Digital solutions, from online banking to mobile apps, will allow financial institutions to better differentiate themselves from competitors and reduce their outgoings, all while providing customers with an improved service.

Artificial intelligence (AI) will also see increased adoption. An IHS Markit report from last year predicted that the value of AI in global banking will reach $300bn by 2030, with North America set to become the largest market over the next few years. Voice banking services – the kind that can be delivered by virtual personal assistants like Siri or Alexa – are also set to become more popular. According to a recent survey from Fiserv, more than half of Americans already perceive voice banking to be beneficial. If the coronavirus means that remote services continue to be encouraged by governments around the world, this figure could rise significantly.

Technology will result in other market shifts too, with the emergence of neobanks likely to gather pace over the coming months. They and other fintech operators have caused significant disruption for established banks, many of which failed to foresee the popularity of digital services. They have belatedly started to catch on, which meant that 2020 was initially set up to be a busy year for mergers and acquisitions activity. This was likely to involve the mergers between smaller and mid-sized banks or the acquisition of digital laggards by more innovative players. The COVID-19 pandemic has meant that predictions of such activity may now be out of date.

The spread of the virus calls for strong leadership – this will be just as vital in the banking sector as anywhere else. The right conditions for potential dealmaking may still exist, but stability is likely to be the first port of call – once the safety of employees and customers has been guaranteed, of course.

Finding a purpose
Even if disruption from the coronavirus continues throughout the entirety of 2020 – or even beyond – there are some banking trends that are likely to continue unchanged. For a number of years now, customers have been demanding that their financial institutions adopt more sustainable and ethically sound policies. They want a bank driven by purpose, not profit.

The need to please this new breed of customer doesn’t necessarily mean upsetting investors: many banks are choosing to move away from supporting ethically questionable organisations, like fossil fuel companies, because it is financially prudent to do so. Earlier this year, research undertaken by asset manager BlackRock found that funds with high sustainability ratings performed better during a market sell-off.

In order to ensure banks consider the needs of all their stakeholders, relationship managers will become increasingly important. They will be tasked with accumulating important feedback from clients and customers about how the bank is performing, what services are operating satisfactorily and which ones are being badly received. Some banks struggled to maintain relationships during the height of the coronavirus pandemic as more of their staff worked remotely. As social distancing measures are eased globally, these relationship managers will be tasked with shoring up any damaged partnerships while also securing new ones.

Relationship managers – and, indeed, their colleagues in other roles – will also have to keep customers from leaving their traditional banks to access services from non-bank lenders or shadow banks. Although the number of these institutions has fallen this year, they remain widely available and have previously posed a significant risk for the finance sector in markets like India and China.

The 2020 World Finance Banking Awards shine a spotlight on the organisations that have excelled across investment, private, retail and commercial banking during the year, helping to protect the industry’s long-term future in difficult circumstances. Congratulations to all our winners.

World Finance Banking Awards 2020

Best Banking Groups

Brunei Baiduri Bank
Chile Banco Internacional
Cyprus Eurobank Cyprus
Dominican Republic Banreservas
Finland Nordea
France Crédit Mutuel
Germany BNP Paribas
Ghana Zenith Bank (Ghana)
Indonesia OCBC NISP
Jordan Jordan Islamic Bank
Most Sustainable Bank, Jordan Jordan Islamic Bank
Macau ICBC (Macau)
Nigeria Guaranty Trust Bank
Spain Banco Santander
Turkey Akbank

Best Investment Banks

Armenia Ameriabank
Belgium KBC
Brazil BTG Pactual
Canada RBC Capital Markets
Chile BTG Pactual
Colombia BTG Pactual
Dominican Republic Banreservas
France BNP Paribas
Georgia Galt & Taggart
Germany Commerzbank
Greece Piraeus Bank
Nigeria Coronation Merchant Bank
Switzerland UBS
Taiwan Fubon Financial Holdings
Thailand Bualuang Securities
US JPMorgan Chase

Best Private Banks

Bahrain Ahli United
Belgium BNP Paribas Fortis
Brazil BTG Pactual
Canada BMO Private Wealth
Czech Republic J&T Banka
Denmark Nykredit Private Banking
France BNP Paribas Banque Privée
Germany Deutsche Bank Wealth Management
Greece Eurobank
Hungary OTP Bank
Israel Bank Leumi
Italy BNL BNP Paribas
Jordan Arab Bank
Kuwait Ahli United
Kyrgyzstan Optima Bank
Lebanon FFA Private Bank
Liechtenstein Kaiser Partner Privatbank
Malaysia CIMB Private Banking
Monaco CMB
Netherlands ING
New Zealand ANZ Bank
Poland BNP Paribas Bank Polska
Portugal Banco Finantia
Singapore Bank of Singapore
Spain CaixaBank
Sweden Carnegie Private Banking
Switzerland Pictet
Taiwan Cathay United Bank
Turkey TEB Private Banking
UK Coutts
US Raymond James

Best Commercial Banks

Armenia Unibank
Belarus Belagroprombank
Belgium KBC
Cambodia ABA Bank
Canada BMO Bank of Montreal
Dominican Republic Banreservas
France BNP Paribas
Germany Commerzbank
Macau Bank of China, Macau Branch
Montenegro CKB Banka
Netherlands ING
Norway Nordea
Poland ING Bank Ślaski
Singapore United Overseas Bank
Sri Lanka Sampath Bank
US Bank of the West

Best Retail Banks

Austria BAWAG Group
Belgium KBC
Bulgaria Postbank
Dominican Republic Banreservas
France BNP Paribas
Greece Eurobank
Indonesia OCBC NISP
Jordan Arab Bank
Macau Bank of China, Macau Branch
Netherlands ING
Nigeria Guaranty Trust Bank
Poland BNP Paribas Polska
Portugal Santander Portugal
Sri Lanka Sampath Bank
Taiwan O-Bank
Turkey Garanti BBVA
VietnamSai Gon J.S. Commercial Bank

Most Innovative Banks

Africa RMB
Asia KakaoBank
Australasia BNZ
Europe BNP Paribas
Greece Eurobank
Latin America and the Caribbean Next
Middle East Boubyan Bank
North America BMO Bank of Montreal

Bankers of the Year

Africa James Formby, RMB
Asia Wei Sun Christianson, Morgan Stanley China
Australasia Ross McEwan, National Australia Bank
Europe Jean-Laurent Bonnafé, BNP Paribas
Latin America and the Caribbean Octavio de Lazari, Banco Bradesco
Middle East Shayne Nelson, Emirates NBD
North America Darryl White, BMO Bank of Montreal

US fracking trailblazer Chesapeake Energy files for bankruptcy 

Chesapeake Energy, a leader in the shale boom that helped the US become the world’s largest producer of oil and gas, filed for bankruptcy on 28 June, amid pandemic-induced turmoil within the energy industry.

Oil prices crashed to their lowest level in decades in March as countries went into lockdown, leading to an excess in supply and a sudden drop in demand. Despite a recent recovery, US oil is still trading beneath $45, putting many producers at risk of insolvency.

Despite a recent recovery, US oil is still trading beneath $45, putting many producers at risk of insolvency

Chesapeake’s collapse is bound to send shockwaves through the American energy sector. Founded in 1989, it became the world’s second-largest natural gas producer in the 2000s, as hydraulic fracturing and horizontal drilling uncovered huge reserves of oil across US states. At its peak in 2008, the company was worth more than $35bn.

But in recent years, the company has racked up huge debts expanding its search for oil across New Mexico, Texas, the Dakotas and Pennsylvania. Between 2010 and 2012, it spent $30bn more in drilling and leasing than it made from its operations. Its debt problems were exacerbated by years of consistently weak natural gas prices.

This week, the company said it has reached an agreement with lenders to wipe out roughly $7bn in debt. It has also secured $925m in financing so it can continue operations during the bankruptcy process. “We are fundamentally resetting Chesapeake’s capital structure and business to address our legacy financial weaknesses and capitalise on our substantial operational strengths,” Doug Lawler, Chesapeake’s CEO, said in a statement.

So far this year, 18 oil and gas companies have defaulted on their debts, compared with 20 for the entirety of 2019, according to an S&P Global Ratings tally. Now that a pioneer of US fracking has fallen victim to the oil price crash, many other vulnerable producers may soon follow suit.

The Philippines closes financial markets due to the coronavirus

The Philippines became the first major country to shut its financial markets in the wake of the coronavirus crisis, after all stock, bond and currency trading was halted on March 17. Although other markets have closed trading floors or paused trading, the Philippine Stock Exchange (PSE) is the first to order a blanket ban.

“Please be advised that there will be no trading at the Philippine Stock Exchange… and no clearing and settlement at the Securities Clearing Corporation of the Philippines starting tomorrow, March 17, 2020 until further notice to ensure the safety of employees and traders in light of the escalating cases of the coronavirus disease (COVID-19),” read a memo shared by the exchange.

The Philippines has recorded a sharp rise in coronavirus cases of late, with the country’s main island of Luzon placed in quarantine this week in order to stem the tide of infections

The Philippines has recorded a sharp rise in coronavirus cases of late, with the country’s main island of Luzon – home to the capital Manila – placed in quarantine this week in order to stem the tide of infections. Recent figures place the number of confirmed cases in the country at 142, with 12 confirmed deaths.

The spread of the virus has wreaked havoc with financial markets around the world. On March 16, the S&P 500 fell by 12 percent, representing the biggest single-day decline since Black Monday in 1987, while the Dow Jones Industrial Average experienced a similarly chastening day. Meanwhile, the PSE’s circuit breaker, designed to limit market volatility, was triggered for the first time since 2008 last week, after a fall of 10 percent.

As the virus continues to make its impact felt across the globe, all but the most necessary of gatherings are being discouraged or prohibited, leaving trading floors deserted. Although some trading can occur remotely, many stock markets may soon be following the PSE’s lead to reduce the likelihood of mass sell-offs.

Central banks around the world react to COVID-19 outbreak

Politicians and central bank governors have reacted en masse in an effort to prop up their economies in the face of the coronavirus. On March 11, Iceland became the latest state to take such contingency measures, after the country’s central bank cut interest rates by 50 basis points to 2.25 percent.

Mirroring the move, the Bank of England announced an emergency rate cut from 0.75 percent to 0.25 percent on the same day, just over a week after the US Federal Reserve revealed similar measures of its own. However, while the cuts have proved effective in bolstering stock markets, they will struggle to solve many of the other challenges associated with the virus’ spread, including supply chain disruption and sharp falls in consumer spending.

While rate cuts have proved effective in bolstering stock markets, they will struggle to solve many of the other challenges associated with the virus’ spread

“The European Central Bank is due to report tomorrow and we’re expecting a reduced rate also, but it’s a mistake for central banks to use the coronavirus as an excuse to lower interest rates,” Celine Hartmanshenn, Global Head of Risk at Stenn International, said in a statement.

“It would be more effective for governments to introduce temporary tax breaks, new loan programmes, or other financing to companies hurt by the virus. This is all about raising stock prices and lowering borrowing costs. The measures put forward by the world’s bankers can’t keep workers from getting sick or factories from closing.”

Around the world, however, some governments have imposed additional economic measures to mitigate the impact of COVID-19. In Italy, for example, mortgage payments have been suspended and Prime Minister Giuseppe Conte has committed to a €10bn ($11.3bn) fiscal stimulus package.

As well as potentially causing recessions in any number of affected markets, the coronavirus could ultimately cost the global economy as much as $2.7trn, according to some estimates. Governments are swiftly moving on from policies of containment to ones of mitigation. Measures to assuage damage to public health will, of course, be important, but increasingly finance ministers are scratching their heads as they attempt to limit the disease’s economic impact as well.

Coronation Merchant Bank works to safeguard Nigeria’s future

Over the past 10 years, Nigeria’s insurance sector has exhibited poor performance – in fact, it has not expanded at all. Gross premiums, for example, did not achieve any growth in inflation-adjusted terms during the period from 2008 to 2018. They also only grew very slightly in US dollar terms over the same period, according to a report by Coronation Research, one of the leading research houses in Nigeria and a subsidiary of Coronation Merchant Bank.

The implications of this become all the more obvious when you compare the sector to the country’s pension fund industry, where the total assets under management (AUM) grew at an average annual compound rate of 9.8 percent in inflation-adjusted terms. This can largely be attributed to the fact that insurance companies have not yet become part of Nigeria’s broader drive for financial inclusion – however, things could soon be set to change, thanks to new reforms that are due to be implemented in 2020. In light of this upcoming transformation, World Finance spoke with Guy Czartoryski, Head of Research at Coronation Merchant Bank, about the industry as it stands today and what’s on the horizon for the near future of the business.

Why is insurance penetration so slow in Nigeria?
The Nigerian insurance industry is very fragmented: of its 59 companies, many lack adequate capital. When there are so many companies, it’s difficult for customers to compare service standards, for the regulator to monitor activities and fix problems as they arise, or for the industry to effectively engage with the regulator. Essentially, the industry lacks an adequate capital base while having far too many companies. Without these two problems being addressed, the industry is unlikely to grow.

What opportunities does this slow growth present?
If you look at countries with a similar GDP per capita to Nigeria, you will find very big differences in insurance penetration, which measures the total gross premiums of the industry against nominal GDP. For example, India has an insurance penetration rate of 3.69 percent, while Kenya has a rate of 2.37 percent. Nigeria, on the other hand, has an insurance penetration rate of just 0.31 percent.

The systems already exist to turn Nigerian insurance companies – which are accustomed to managing thousands of customer accounts – into companies that are able to manage millions

Although concerning, this is a great opportunity for the country: if Nigeria can get close to India’s level (say, reaching 3.1 percent in the next 10 years), the industry’s total gross premiums would expand at a real-term compound annual growth rate of 25.9 percent. The encouraging thing is that this has happened before in the banking sector, during the five years following the banking reform of 2004. In that period, Nigerian banks’ total gross loans grew by a compound annual growth rate of 27.9 percent.

How can insurance penetration be increased?
The essential thing to understand is that the building blocks for transformation already exist. For example, there are 38 million bank verification numbers in Nigeria, so banks’ abilities to distribute insurance or bancassurance is not in doubt. What’s more, there are 170 million mobile phone lines in the country, which suggests another effective distribution method. Number-plate recognition technology, using real-time referencing with insurance records, is already being used in some parts of the country, showing that the datasets, hardware and technology for rapid development are already there.

The technological platforms for managing high volumes of customers are tried and tested in other markets, and are available for deployment here too. In other words, the systems already exist to turn Nigerian insurance companies – which are accustomed to managing thousands of customer accounts – into companies that are able to manage millions.

In addition, there is microinsurance – low-cost insurance that is distributed in cooperation with state institutions, development finance institutions, foundations and other agencies. Microinsurance can help to familiarise a market with insurance products and pave the way for the expansion of insurance overall. It’s therefore a matter of which combination of these assets and initiatives will be deployed in Nigeria.

Can you tell us about the reforms due for completion in 2020 and what impact they will have on Nigeria’s insurance sector?
Nigeria’s National Insurance Commission (NAICOM) has found a deceptively simple device to reform the industry as a whole. This involves helping insurance companies to raise extra capital.

In the coming months, the minimum level of capital for a composite insurer is set to rise from NGN 5bn ($13.8m) to NGN 18bn ($49.8m). Meanwhile, the minimum level of capital for a non-life or general insurer is set to increase from NGN 3bn ($8.3m) to NGN 10bn ($27.6m) and the minimum level of capital for a life insurer is predicted to rise from NGN 2bn ($5.5m) to NGN 8bn ($22m). In May 2019, instructions regarding these changes were given to insurance companies, and a further document was issued in July giving clarification to NAICOM’s precise definition of ‘capital’. The deadline for complying with NAICOM’s minimum capital requirements is June 2020.

In the process of recapitalisation, we expect two things to happen: first, we expect companies to raise fresh capital on their own. As of September 2019, we can already identify eight companies that are doing this, but there will be more companies raising capital over the coming months. Second, we expect more mergers and acquisitions to take place, consolidating some of the medium-sized and smaller players together and perhaps bringing them under the umbrella of one or two of the larger players. It is also possible that some of the weakest players will be eliminated entirely. The result – and we can see this evolving at the moment – is the creation of a suitably capitalised industry with fewer companies.


Number of banks in Nigeria in 2004


Number of banks in Nigeria in 2005


Number of insurance companies in Nigeria in 2019


Predicted number of insurance companies by 2020

The insurance reforms of 2020 looks very much like the banking reforms that took place in 2004. The banking reform of 2004 was introduced under Charles Chukwuma Soludo, who was governor of the Central Bank of Nigeria at the time. His reforms involved a steep increase in the capital requirements of banks; as a result, there was a round of capital raising and mergers and acquisitions. The number of banks in the country fell from 89 in 2004 to 25 in 2005. In a similar way, we expect the number of Nigerian insurance companies to fall from 59 today to around 25 by the middle of 2020.

The banking reforms of 2004 also re-established the credibility of the industry in the eyes of international partners, domestic commercial customers and, crucially, retail customers. The number of clients who entrust their current accounts and savings to banks has grown enormously, which in turn has expanded the measurable money base. There is a strong precedent for something similar to happen in the insurance industry too, starting in 2020.

In addition to these reforms, what else is needed to promote the growth of Nigeria’s insurance sector?
The role of the government and regulators is very important. In countries where the government takes an interest in the development of insurance, there have been many instances of successful insurance rollouts. These governments understand the social benefits of widespread insurance deployment in providing a safety net for individuals, SMEs and businesses in sectors as diverse as agriculture, logistics, transportation and power generation. When it is understood that insurance is a social good and essential to the smooth running and development of the economy, then governments are likely to get involved.

Regulation is not restricted to insurance regulators. If the insurance industry is going to expand through bancassurance, then it requires both insurance and banking regulators to work together; if the industry is going to expand through mobile telecoms, then it requires the insurance and telecoms regulators to work together too. In fact, all three need to collaborate in order to create the optimal mix. Ultimately, what is required is a collaborative approach from NAICOM, the National Communications Commission and the Central Bank of Nigeria. It may be a tall order, but there are gains to be made for all the parties involved.

What role does Coronation Merchant Bank play in helping to make this change happen?
Coronation Merchant Bank plays many roles in supporting the insurance industry in Nigeria. We have a strategic advisory role with our investment banking division, which has a clear insight as to how the industry is going to develop. We also have advisory and capital-raising capabilities in investment banking and Coronation Securities, as well as key contacts in the industry.

Part of the success of an insurance company comes from the effectiveness of its liquidity management – in other words, how effectively it manages the premiums it receives. This is an important factor in Nigeria, where risk-free interest rates are in double digits. It is therefore very important to judge fixed income markets well. Thankfully, our global markets and Coronation Asset Management divisions provide critical services and support for insurance company liquidity management.

What can we expect to see from Nigeria’s insurance sector in the coming years?
It seems likely that the NAICOM reform will reduce the number of insurance companies to around 25. Within that number, it is possible to identify a group of six to eight largely foreign-owned insurance companies, and a group of six to eight wholly indigenous insurance companies, followed by a number of small companies. So, there is likely to be an even split between foreign and indigenous ownership among the biggest firms. This bodes well for the competitive aspects of the industry going forward, and for the relationship between the industry and its regulators.

Raising capital costs money, therefore there has to be a return on that money. Clearly, the recapitalised industry of 2020 needs to achieve scale if it to make the kind of profit that strategic investors and stock market investors demand. That scale can only be reached with rapid expansion. Fortunately, the industry is likely to work together with distribution partners and regulators to achieve growth.

It can also be expected that development finance institutions, foundations and other agencies will take greater interest in the industry, quite possibly through sponsoring microinsurance schemes. There could also be innovations in bancassurance and mobile telephony if regulators are prepared to amend existing regulations. As such, the insurance industry is likely to be very dynamic, with rapidly evolving partnerships and alliances forming over the coming years.

Why disruption shouldn’t be viewed as a negative thing

The Nigerian economy faces a unique set of challenges and opportunities. While economic growth was subdued in the first five months of 2019, an uptick in oil revenues and a gradual improvement in non-oil sectors have together brightened the outlook for the rest of the year.

Monetary and fiscal authorities remain tasked with sustaining macroeconomic stability, but interest rates and exchange rates have steadied. Inflationary pressures, which returned at the end of 2018, have stayed relatively constant, while the value of the naira against the US dollar has stabilised, thanks in large part to a significant increase in the nation’s external reserves.

What’s more, the 2019 budget, which seeks to maintain Nigeria’s growth momentum, was recently signed into law. Its implementation is now expected to bring prosperity to the nation. The reappointment of Godwin Emefiele as governor of the Central Bank of Nigeria, meanwhile, has been regarded as a good omen by financial institutions operating in the region, as it will provide a degree of continuity and stability to the market. Despite this increasingly positive outlook, Nigerian banks cannot afford to become complacent. In fact, as change continues to sweep the market, the country’s financial institutions will need to adopt a more pragmatic approach to business, or suffer the consequences.

Zenith Bank places a very high premium on its customers’ experiences and has worked to ensure that all of its platforms offer a seamless service

The customer is king
Traditionally, the role of a financial institution has always been to accept money from customers and then lend surplus funds. Today, however, customer expectations have expanded the parameters of banks to include the provision of financial and non-financial products. This change has been accelerated by the development of cutting-edge technologies, which have forced previously slow-moving
institutions to invest heavily in infrastructure to stay relevant, let alone competitive.

There are a number of ways in which technology has redefined Nigeria’s banking sector. Among the most noticeable has been its impact on brick-and-mortar branches, which are rapidly becoming redundant as online alternatives grow more sophisticated. Put simply, customers can now transfer money or pay for goods with the tap of a button, so the need for in-branch interactions has dwindled.

At Zenith Bank, we place a very high premium on our customers’ experiences and have worked to ensure that all of our platforms offer a seamless service. This is reflected in our suite of electronic products, which allow customers to enjoy convenient banking services on the go. For example, we have introduced new payments solutions, including ZedStores on Instagram and the Scan to Pay app, which makes use of QR codes. We also provide electronic mandates for payments on merchant websites, where debits are made against subscribers’ accounts.

What’s more, prospective customers can now open an account using any of our channels, whether that’s through unstructured supplementary service data, our mobile banking app, ATMs or the Zenith website. With an array of e-business products – including our *966# EazyBanking service, which allows users to access Zenith’s mobile banking offering without using internet data – transactions have become easier and more convenient. This has helped us to attract new customers as well as retain existing ones, providing a significant boost to our bottom line.

While such tools and software require major investment, they ultimately help banks cut costs by improving efficiency. For instance, technology has reduced the time it takes to process loan applications, improving due diligence at the same time. It has also been instrumental to reinforcing security and has reduced the likelihood of mistakes being made or fraud being committed.

The introduction of these cutting-edge and robust software solutions has allowed Zenith to drastically reduce turnaround and processing times. This has led to a direct increase in customer satisfaction, which in turn impacts profitability and sets the bank apart from its peers. But the biggest aspect of the Nigerian banking sector to be disrupted by technology has to be customer service: in the past, it was difficult for customers to make their voices heard. With the help of technology and social media platforms, however, the customer truly is king.

Taking responsibility
Banks are not only accountable to their customers and shareholders, though: they must also answer to larger societal issues. As this realisation has grown, corporate social responsibility (CSR) has become an essential business practice in the Nigerian banking sector, with many institutions now putting a sizeable portion of their profits towards initiatives that directly impact the communities they operate in. Some of these banks – including Zenith – have gone a step further by publishing sustainability reports in line with global best practices.

Throughout the 2018/19 financial year, Zenith engaged in a number of projects that will continue to benefit local communities in the decades to come. Most recently, we supported the Nigerian Government in its efforts to improve the standard of education and human capital development by hosting capacity building workshops and developing ultramodern IT centres in several educational institutions across the country. We have also encouraged youth development through our support of sport at both a professional and grassroots level. These projects clearly demonstrate our commitment to the ideals and tenets of CSR, which hinge on the ‘triple bottom line’ of people, planet and profit.

We have also directly contributed to development projects and healthcare delivery causes across the country. These have included the provision of disaster-relief materials – such as mattresses, food items, rechargeable lamps, insecticide-treated mosquito nets and personal care items – to victims of floods in several states of the federation. As well as providing physical assets, Zenith has sought to empower displaced children by offering education and skills programmes.

In addition to making donations to various state governments’ security trust funds, Zenith has sponsored numerous summits, conferences and seminars organised by governmental and non-governmental organisations. These investments were targeted at creating platforms to improve policymaking and helping to sustain economic growth at the local, state and federal levels.

Zenith’s efforts to engage with the community can be seen in its first ever lifestyle, fashion and entertainment fair, Style by Zenith. The two-day event, which was held in Lagos in late 2018, featured a number of live musical performances from top Nigerian and international artists, as well as a selection of fashion shows, providing a wonderful space for purveyors of lifestyle products and services to interact with the public. The aim of the fair, which is set to become an annual event, was to connect consumers across all demographic segments and facilitate the growth of retail-focused, small-and-
medium-sized businesses in Nigeria.

Catalyst for growth
Zenith has made tremendous progress in its attempts to incorporate sustainability into every aspect of its business operations. In fact, we recently became the first Nigerian bank to audit the carbon emissions of its headquarters across multiple years.

Today, Zenith remains the biggest CSR contributor in the Nigerian financial services industry. Our sustainability and CSR initiatives hinge on the belief that profit should not be the only measure of business performance: instead, balance sheets should reflect institutions’ social investments and contributions to inclusive development, as well as their efforts to improve the condition of the environment. At Zenith, our workforce is increasingly aware of and passionate about the wellbeing of the environment and less privileged individuals – this is a natural step towards achieving our overall sustainability objectives.

Sustainability goes beyond a regulatory requirement: it is the springboard into the future we want as a bank. Consequently, Zenith is committed to revising its business processes, products and services to ensure they comply with globally accepted economic, environmental and social standards. With this in mind, our CSR and community investment initiatives align with the United Nations’ Sustainable Development Goals, which seek to bring an end to poverty and hunger, protect the planet and create sustainable wealth for all. We will continue to invest in initiatives that help meet these aims and provide long-term benefits to our host communities.

Our vision is to become the leading retail and commercial bank in Nigeria. As an institution, we have done well within the corporate segment and continue to claim more ground in the retail space by providing cutting-edge solutions that cater to the strategic, operational and financial targets of our clients. In the coming years, Zenith’s priorities will remain the same as they are now: put simply, we will aim to continually improve our processes and capacities to meet customers’ increasing financial needs, sustain high-quality growth through investments, constantly upgrade our IT infrastructure, and invest in human capital.

BMO Bank of Montreal is focusing on progress over profits

Canada’s banking sector is rapidly becoming more complex. Driven by advances in technology and increasingly knowledgeable and sophisticated consumers, clients are demanding convenience, customisation and control. In order to keep up, banks must continually enhance existing platforms. Simultaneously, they must build new capabilities that enable clients to bank quickly, efficiently and in their own time.

These changes have evolved over time to vastly reshape the financial industry. In fact, the most successful businesses in this fast-paced environment are the ones that challenge their preconceptions over what banking services will look like in the future.

In a bid to anticipate the changing needs of its customers, BMO Bank of Montreal is focused on harnessing the power of digital technologies and data. The bank’s Head of Canadian Business Banking, Dev Srinivasan, spoke to World Finance about the company’s priorities during this time of transformation.

While BMO works as a great partner in periods of success and stability, it is even better when challenging times arise

How is BMO’s approach to business banking evolving?
As an organisation, we are driven by a clear sense of purpose. This elevates our focus so we can think beyond transactions, dollars and cents. We look for opportunities to make the biggest possible impact for our clients and the communities in which we operate. We challenge ourselves to bring bold solutions to help them grow in a competitive market.

As the banking environment changes, we remain focused on providing a great experience. That said, we are also pushing ourselves to look at our clients’ businesses through a new lens and make decisions with new intentions. This is an approach that builds trust, confidence and loyalty with our clients.

Some examples of how we are doing this include small business loan approvals in under 30 minutes and mobile device capabilities, including wire transfers and automated risk monitoring, which allow for significantly more time serving our customers.

How do you differentiate yourself from your competitors?
While the technological advances discussed previously are market-leading, they are also just an outcome of our focus on being the market leader in client loyalty. We drive success in this area by first understanding what our clients’ needs are and then bringing the full power of BMO to every interaction.

We aim to form thoughtful relationships with our clients and we regularly revisit plans and work with them to ensure we remain aligned with their strategic needs. While we work as a great partner in periods of success and stability, we are even better equipped when challenging times arise. I believe challenging times are really when you prove your value as a banker.

You have talked about the power of digital technologies and data. How is technology changing the way you serve clients?
It is important to recognise that all businesses – including our clients’ – are facing the same challenges and opportunities as us when it comes to technology and transformation. At BMO, we view technology as an enabler of success, both for our clients and for our firm. Externally, technology is giving clients more choices. For example, online and mobile banking offer more choice with regards to when, where and how to bank for businesses that are located outside of urban areas or have multiple locations, or for businesses that operate outside of traditional working hours.

Technology makes our clients’ lives easier and enables us to work more efficiently. We are looking to digitalisation to enhance personal service – not replace it – through mobile features such as quick bill pay and biometric authentication.

Internally, we are driving digital transformation at the bank and improving how we work. This means employees spend less time on administrative and processing tasks, and more time with clients. Moreover, with advanced analytics, we can more accurately assess and predict risk. This enables us to customise solutions to individual needs and ensure we are operating in line with our risk appetite.
BMO’s approach to efficiency is holistic: generating value from data, simplifying processes and exploring the role of automation in helping teams deliver high performance. By finding new ways to work together, we are building client loyalty and accelerating growth.

In terms of focusing on key areas, how do small businesses fit into your overall strategy for business banking?
In Canada, small businesses employ just over 70 percent of the total private labour force, while small-to-medium-sized businesses contribute roughly 41 percent of Canada’s GDP. You cannot have a business banking strategy without including small business.

We have made great progress over the past two years by ramping up our focus on this segment. We recognised, for instance, that for many small businesses, speed and simplicity are at a premium. In response to this, our strategy has evolved to serve businesses both small and large, and we have dramatically simplified processes and products where it makes sense.

Canada’s SME sector


of the labour force is employed by small businesses


Contribution to Canada’s GDP

For example, coupled with enabling small business loan approvals in under 30 minutes, we also launched a new suite of small-business banking Mastercard products that have been well received by our clients. The number of new clients we acquired has increased by over 30 percent from the year prior.

What about clients on the larger end of the spectrum?
While speed and efficiency are also important with larger clients, the ability to structure complex cash-flow-based transactions increases in importance with this segment. Additionally, the cash management solutions required to properly support these clients are equally complex.

To us, leadership in this space is driven through a high-touch, team-based, customised approach to client service. This approach has resonated with our clients, as we are able to complete deals that our competitors often struggle with. This helps our clients accelerate growth and strengthen their business.

What other industries are you focused on?
We serve clients in all industries and specialise in areas where our clients value deep expertise. For example, in healthcare, knowledge of the industry is invaluable when structuring credit and providing advice. We have specialists plucked straight from the industry who, when combined with BMO’s suite of products and services, form a truly differentiated, value-added offering for our clients in this space.

Then there’s the agricultural industry, for which we are an industry leader in terms of providing customised financial solutions for Canadian farmers. We have agriculture banking specialists in place who focus on understanding the challenges of this industry, including its cyclical nature and the need for financial banking solutions that are convenient, affordable and adaptable.

BMO is also making a particularly strong effort with regards to a key, growing segment: female entrepreneurs. This sector now represents more than half of all new small-business start-ups in Canada. We are the bank for women in business; we are one year into a commitment of $3bn to support female entrepreneurs. So far, we are ahead in this plan. By having more of the bank’s balance sheet available to women, they are afforded more certainty in terms of credit, enabling them to invest in their businesses, expand their operations and create more jobs for Canadians.

While the industries that female entrepreneurs enter are varied, our approach focuses on understanding their unique needs from the point of view of the banking sector, which has traditionally been male-dominated. This message and our approach have definitely resonated in the market.

What are BMO’s plans for the future?
The business banking sector in Canada is highly competitive; we’re facing competition from traditional and non-traditional businesses alike. While traditional players continue to invest in innovative customer service technology, non-traditional competitors are gaining momentum and deepening connections with our clients. We plan to continue our leadership in client experience because that is an area where we have built our brand and our strength in the past. Clients expect BMO to continue to define what the banking customer experience should be.

Furthermore, we are committed to expanding our advisory sales force and targeting opportunities across geographic regions, market segments and industry sectors, especially in high-value sectors and businesses. We lead in many industries; where we do not, we aspire to achieve leadership. We believe we have the value proposition to achieve our aspirations.

Should Europe’s banks consider joining forces?

There are too many banks in Europe. The European Union is home to 6,250 credit institutions, according to the European Banking Federation. Of these, 4,769 are within the eurozone – a particularly striking figure considering all of these institutions provide banking services in a single currency. Comparatively, there were 4,398 domestic banking institutions in 2016 in China, a country that has almost four times the population of the eurozone.

The sheer number of financial institutions on the continent would not be so problematic if they were all performing well. However, that is not the case: the average return on equity, an indicator used to assess the banking sector’s attractiveness to investors, stood at 6.2 percent for financial institutions in the EU-28 in Q4 2018. By contrast, US banks achieved 11.96 percent in the same period.

Every so often, the possibility of consolidation is floated as a solution to Europe’s banking woes. Its re-emergence is typically driven by news that two of the continent’s financial institutions are planning to unite – most recently, it was Deutsche Bank and Commerzbank’s decision to explore the possibility of a merger that set tongues wagging.

Consolidation means increased regulatory scrutiny and a greater governmental burden in the event of another financial crisis

While the German lenders have since abandoned their discussions, citing commercial viability concerns, the consolidation question has not faded from industry minds as quickly as it has done previously. In fact, two of the European Central Bank’s most senior figures – Vice President Luis de Guindos and policymaker François Villeroy de Galhau – have expressed their support for consolidation in recent months, while Deutsche Bank CEO Christian Sewing told Germany’s Bild newspaper: “I still expect banking consolidation in Europe over the next few years. And I don’t just want to watch, I want to be a player too.”

The chorus of voices calling for tie-ups has led many to believe that this could be the moment when the much-hyped M&A boom finally comes to fruition. Such an event could eliminate many of the profitability issues that Europe’s banks are currently grappling with by bringing down operational costs and giving them more clout at a global level. Consolidation, however, is not without risks: it means increased regulatory scrutiny and a greater governmental burden in the event of another financial crisis. These are factors banks must consider before jumping into bed with one another.

A seat at the table
“Europe’s banks simply don’t have the critical mass to compete at a global level,” said Lorenzo Codogno, former chief economist at the Treasury Department of the Italian Ministry of Economy and Finance. The comparatively small size of each institution makes dealmaking considerably more challenging, particularly when competing with US counterparts for M&A advisory fees or underwriting. For example, when Dutch payments firm Adyen made its public debut on the Euronext Amsterdam exchange last year, it selected

JPMorgan and Goldman Sachs to underwrite the share offering, in part due to a lack of European banks that would have been robust enough to support the €7.1bn ($8.02bn) market capitalisation it was seeking.

As the US’ largest bank, JPMorgan has its own market capitalisation of over $380bn, meaning even if it had been forced to buy the entirety of Adyen’s shares, it would have only created a relatively small dent in its finances. For Europe’s biggest bank, Santander, which has a market capitalisation of €80bn ($90.36bn), that eventuality would have been far more problematic. “If [Europe’s banks] cannot provide the same kind of services that international banks can, they will lose commerce and European companies will have to rely on non-European banks in order to do their global business,” Codogno added.

Given that the market is so crowded, Europe’s banks also face competition from continental neighbours, as well as from counterparts across the Atlantic. As such, they are constantly vying to offer the lowest credit costs to customers, while maintaining workable profit margins. This is made all the more difficult by the fact that operational and compliance expenses in Europe are much higher than in the US, due in part to the EU’s failure to create an integrated banking union in order to support the single currency.

“Capital is not fungible and liquidity really cannot freely flow within the eurozone,” Codogno told World Finance. Due to the lack of legislative and regulatory tie-up between countries, which makes dealmaking more complex and costly, banks are more likely to rely on business within their domestic market rather than exploring cross-border trade. According to de Guindos, this obstacle is unlikely to disappear in the near future, either. “The political momentum behind completing the banking union is fading,” he said at a conference in Brussels on May 16.

“Achieving a full-fledged harmonisation of [legal frameworks] is infeasible, because clearly the legal systems across Europe are completely different, so it will be close to impossible to do that,” said Codogno. “But I think it’s feasible to achieve a minimum harmonisation so that there is effectively an equivalence of treatment – that would facilitate the situation enormously.”

The EU attempted to harmonise regulations across the bloc in 2018 with the introduction of MiFID II. However, rather than facilitating cross-border business, its actions effectively placed another cost burden on banks to ensure they are compliant with the directive. According to consultancy firm Opimas, the cost of implementing MiFID II across the finance industry was more than €2.5bn ($2.82bn), with further costs expected year-on-year as banks take on additional compliance staff to ensure they meet all the reporting criteria. While the continent’s larger institutions are able to withstand those increased costs, for smaller players, these could be the tipping point between survival and collapse.


Banks in Europe


Banks in the eurozone


Banks in China (2016)

Internal frailties
It is clear that consolidation would provide a solution to these issues by affording smaller banks economies of scale. By pooling resources and sharing the cost of compliance, institutions could reduce operational expenses and boost their global presence. However, consolidation also carries a number of risks: first, M&A relies on each party being in a strong financial position, a claim that not all of Europe’s small or even large lenders can make. The industry is still recovering from the effects of the 2008 crash and the 2009 sovereign debt crisis – according to Deutsche Bank figures, European banks’ nominal revenues are down 12 percent compared with 2010, even though the continental economy expanded by 24 percent during that time.

“Europe’s banks have recapitalised a lot compared to the initial phases of the [sovereign debt] crisis,” said Codogno. “However, [many] banks still have large portfolios of government bonds and because of that they remain fragile. If there were [substantial] movements in the market or a weakening in the economy, they might immediately run out of capital.”

Consolidation between banks with a significant amount of sovereign debt on their books could also give rise to the collapse of the entire continental economy in the event of another financial crisis. Creating the sort of ‘too big to fail’ institutions that dominated the US banking sector pre-2008 means centralising a huge amount of capital in a very small number of institutions, which, if they do fail, have to be bailed out by governments, as was the case in 2008 in the US. Fortunately, the US Government was able to make $700bn available at the time to purchase toxic assets from banks through the Troubled Asset Relief Programme, saving the system from total collapse.

Many of Europe’s governments are not in a position to offer a similar sort of bailout today, given that many of them still have significant debt burdens that are tied up in the region’s banks in the form of bonds. If these banks were to merge and then find themselves in difficulty, governments certainly would not be able to bail them out. “The ‘doom loop’ between the banks and sovereign debt is still very much there, at least in some European countries,” Codogno told World Finance. “Should the economy start weakening again, the weaknesses of both banks and sovereigns would become very clear.”

Finding a place
While consolidation may give banks more leverage against one another in terms of dealmaking, it may not make them more attractive to customers. The 2008 crisis fostered major mistrust in massive financial institutions, which were seen by many to have caused the recession by making irresponsible lending choices in order to boost profits. That mistrust has not entirely dissipated and any bank seeking to grow through M&A would have to be aware of that fact and prove itself trustworthy, either through compliance or investing in technology to offer a more personalised experience.

“Banks need to [consider] a big restructuring, a reduction in personnel and a change in attitude,” said Codogno. “Employees need to become far more proactive in drawing in business and offering a consultative service to their clients, rather than just being operational [middlemen]. They [had] better be quick about it, too, or they might find themselves out of business, given consumers have so much choice now.” Indeed, alternative lenders and fintech firms have already begun siphoning off customers that have become disillusioned with large-scale banks, and are well-placed to continue doing so if banks do not step up their game.

Ultimately, the question of consolidation comes down to the purpose of lenders in the larger financial landscape. For investment banks that are struggling to compete in the dealmaking sphere, tie-ups with competitors would afford them influence at an international level, help them to capture more advisory and underwriting fees and deliver a greater return on equity to shareholders. “Achieving a decent size would strengthen their capital position,” said Codogno. For retail banks, consolidation would certainly provide benefits in terms of economies of scale, but should not be undertaken if investment in technological innovation must be sacrificed in return. After all, a global presence is important, but attraction and retention of customers should always be the first priority.

Ghana is sub-Saharan Africa’s land of banking opportunity

At Zenith Bank, our outlook for the Ghanaian economy is largely optimistic. According to IMF’s latest growth projections, the country is expected to become the fastest-growing economy in sub-Saharan Africa in 2019, with a GDP growth rate of 8.8 percent. In light of this positive view, the government’s 2019 budget aims to reach an inflation rate of eight percent by the end of the fiscal year. This looks feasible, even though inflation currently stands at 9.5 percent, according to a Bank of Ghana Monetary Policy Committee press release from May 2019.

GDP growth signals increased economic activity and higher employment rates in the country, which together work to the great advantage of the banking sector. Essentially, higher economic activity translates to higher investment needs for firms, while banks stand to gain from the arrangement of funding for expanding industries. Higher GDP also means growth in household spending power; banks, in turn, can leverage sound retail strategies to tap into the enhanced disposable incomes of citizens.

We expect governmental fiscal discipline to intensify in line with steady GDP growth. This means that governments’ tendency to crowd out private firms in financial and capital markets will be reduced, which in turn will result in lower interest rates. For banks, this means our lending rates are seen as much more favourable, which translates into more lending activity and more income, too.

Ultimately, Zenith’s goal is to dominate the Ghanaian market by introducing innovative banking products for specific industries and customers

Making strides
A recent recapitalisation drive by the Bank of Ghana saw an increase in the minimum capital requirement from GHS 120m ($22.4m) to GHS 400m ($75m). As a result of this, the number of banks in Ghana dropped from 35 to 23. In addition to making the industry more robust, the move also provides further capacity for banks to partner with the private sector through additional funding. As explained by the Bank of Ghana, banks can now rely on ploughed-back profits or fresh capital inflow. Banks that fund their balance sheets with the latter will have excess capital to lend, especially to the private sector.

The increased minimum capital requirement will also allow Ghanaian banks to handle bigger-ticket transactions, which were previously unfeasible. Until now, individual banks had to pool resources to meet large-ticket transactions due to the single obligor requirements under Section 62 of the Banking Act. With the tripling of the capital requirement, however, banks will have the ability to handle larger transactions individually.

There have also been other significant developments in the economy in recent months: for example, recent moves to bring back the Ghana-Nigeria Chamber of Commerce will have a considerable impact on Ghana’s banking industry. The economy stands to benefit from a potential increase in foreign direct investment (FDI) from Nigeria, which is already substantial. Increased FDI also translates to a surge in both employment and household income. As such, Ghanaian industries will now have a chance to network and exploit new opportunities in the largest economy in sub-Saharan Africa. Indeed, Ghanaian businesses with an eye on expansion will be presented with a platform to venture into an economy with a population of 191 million. This will require funding, and will therefore be an opportunity for banks to bridge the financing gap between current and required capacity.

The establishment of the Ghana-Nigeria Chamber of Commerce also opens up more channels for investment across borders. Nigerian investments currently lead FDI in the West African sub-region (see Fig 1); banks in Ghana, therefore, stand to gain from a larger customer base. This will bring in much-needed forex as well.

Digital drive
Against this backdrop, a lot of banks are now seeking a foothold in the digital banking space, with most turning to digital offerings such as mobile banking, relaunching internet banking products and creating apps on the Google Play store. That said, largely speaking, services available to customers remain somewhat homogenous, with most banks offering traditional deposit accounts, as well as some investment products.

There is a great deal of room for the market’s continued growth and development, however. For example, banks in Ghana now have the capacity to undertake big-ticket transactions, which can contribute to the overall development of the nation. Financial inclusion, meanwhile, continues to propagate throughout the country. Thanks to the accessibility offered by mobile banking to even the most remote areas in Ghana, inclusive economic growth is being achieved. By participating in the financial system, individuals are able to invest in their children’s education, start a business, save and better absorb financial shocks.

Financial inclusion through the use of digital banking products and services continues to form a major part of Zenith Bank’s strategy year on year. Since its inception, the bank has ensured the continuous roll-out of a wide array of innovative digital products and services, which are user-friendly and provide total convenience to customers.

In fact, Zenith Bank was among the first banks in Ghana to launch an app-based mobile banking service. Z-Mobile, which is available on both Android and Apple devices, enables customers to make instant interbank transfers, set up beneficiaries, top up investments, pay utility bills and much more right from their mobile phone.

Through its strategic partnership with major companies, the bank has leveraged mobile banking to reach the population’s unbanked citizens. For example, Zenith’s Bank2Wallet service enables customers to link their mobile money wallets to their bank accounts in order to make immediate transfers and payments remotely at any time of day.

Earlier this year, the bank also launched its ‘Go Lite with Zenith Bank’ campaign in order to create greater awareness of how its digital banking products and services can be tailor-made for individuals and corporations in order to make banking transactions faster and smarter. The bank’s recently upgraded internet banking platform also provides more functionality through the introduction of a new dashboard, which allows customers to view a summary of all the accounts they have with the bank at a glance. With Zenith’s Scan To Pay service, they can make payments in stores and restaurants simply by scanning a QR code with their mobile phone.

Meanwhile, the bank’s point-of-sale terminals allow customers to process card transactions electronically in real time. Transactions can be verified by biometric identification, PIN or signature using these terminals. Aside from the convenience they offer, they also reduce the cost associated with handling cash and, thanks to a back-up power source, are available 24/7.

Standing apart
The bank has collaborated with the likes of Mastercard, Visa and the Ghana Interbank Payment and Settlement Systems to provide unrivalled products and services to the banking populace in Ghana. Ultimately, Zenith’s goal is to dominate the market by introducing innovative banking products for specific industries and customers.

To this end, Zenith Bank boasts a very robust IT platform, as well as talented personnel. Together they form the bedrock of the many innovative banking products and services we continue to churn out into the Ghanaian banking industry. Our ability to provide our customers with top-notch e-banking products and services sets us apart from our direct competitors: for example, our IT personnel are on hand 24 hours a day, seven days a week, to ensure that business continuity is achieved with no downtime.

Some years ago, there were not enough bank branches in Ghana to serve every customer. People had to travel long distances to access a branch for the sole purpose of conducting a simple transaction. With the onset of the internet and mobile devices, however, cutting-edge banking processes have been developed so that banking can be carried out right in the comfort of one’s home or office.

A lot of Ghanian banks are now seeking a foothold in the digital banking space, with most turning to digital offerings such as mobile banking

At Zenith Bank, we have been able to balance the use of these two channels to better serve our clients. We understand the unique needs of our customers and appreciate that not everyone is ready to make the shift from visiting our banking halls to banking digitally. As such, we will continue to assess the environment and provide customers with the specific solutions that cater to their needs.

In conjunction with such developments, safety always comes first. Due to the nature of the bank’s operations, protecting its systems, networks and programmes from cyberattacks has become critical. As such, in August 2018, Zenith began the process of adopting ISO 27001:2013 and the Payment Card Industry Data Security Standard (PCI DSS). Shortly after, it was certified for both in record time. Zenith is now among very few banks in Ghana to have both certifications.

By taking this major stride towards meeting regulatory requirements through the implementation of an information security management system that is compliant with the requirements of ISO/IEC 27001:201 and PCI DSS, Zenith has reinforced its commitment to embracing global best practices. This in turn ensures the integrity of customer data and a secure operating environment.

This level of robust security runs all the way through to the customer. For example, at the beginning of an account-opening process, several Know Your Customer parameters must be met in order for customers to gain access to a bank account. This is a requisite regulation set by the central bank and has been implemented in order to protect every customer’s funds. The use of customer relationship management models, along with other technology-driven databases, has further contributed to Zenith adequately verifying and profiling its customers. After these regulatory processes have been duly followed, customers then go through some requisite steps in order for funds to be disbursed.

With a vigorous security system in place, as well as a forward-thinking approach when it comes to digitalisation, Zenith Bank is well positioned to capture all the new opportunities unfolding in Ghana’s promising economic landscape.

How the Mexican pensions sector plans to tackle a national demographic shift

Linking the US with Central America, the expansive country of Mexico is the world’s 15th-largest economy and the second biggest in Latin America. Despite ongoing uncertainty surrounding the North American Free Trade Agreement, the Mexican economy has shown remarkable resilience of late, with the IMF expecting the nation to post a steady growth rate of 2.3 percent in 2019.

With a median age of 27.5 years, Mexico boasts a relatively youthful population, and the nation is currently enjoying the economic rewards of this significant demographic dividend. As with many countries across the globe, though, Mexico is facing a rapid shift in its age structure, with the median age projected to increase to 40.8 years by 2050 (see Fig 1). What’s more, the proportion of Mexican citizens aged 65 years or older is expected to reach 25 percent by 2050, reflecting a substantial rise in the number and share of older people in the population.

As life expectancy continues to rise in Mexico, with men living to an average age of 74 years and women to 79.2, citizens are facing an extended retirement period. This, in turn, will require extensive financial planning, as well as access to both state and private pensions. As such, this fast-approaching demographic shift is putting increased pressure on the Mexican pensions system.

Mexico’s fast-approaching demographic shift is putting increasing pressure on its pensions system

Consequently, the country’s pension providers must ensure that pensions remain financially sustainable and workable for all. Put simply, as the population changes, so must the pension sector. Fortunately, forward-thinking pension funds are now helping to drive the industry towards a promising future.

Going green
The Mexican pensions sector is at a pivotal point in its history. The growing demand for pensions among older citizens is prompting industry leaders to consider the future of the sector and review the direction in which they hope to move in the coming years.

For some time now, ‘sustainability’ has been something of a buzzword in the financial services industry, with image-conscious institutions adopting green policies and strategies in the hope of appealing to ethical consumers. More recently, though, environmental issues have climbed the global political agenda, culminating in the signing of the landmark Paris Agreement in 2016. In order to meet the ambitious goals set out by this milestone accord, financial institutions around the world will need to embrace sustainable products, services and practices, directing capital away from potentially harmful industries and towards environmentally friendly alternatives.

As Mexico’s largest pension fund, Afore XXI Banorte understands the importance of setting an industry-wide example, especially when it comes to establishing and achieving sustainable development goals. Environmental, social and governance (ESG) issues are an integral part of our business and we hope to inspire our peers to adopt similar practices as part of a continued effort to propel the industry towards a greener future. We are proud to be a signatory of the United Nations Principles for Responsible Investment. By adhering to these principles, which prioritise ESG issues, Afore XXI Banorte is showing its firm commitment to building a more sustainable global financial landscape.

Further, we appreciate that returns and sustainability are not mutually exclusive. A growing body of evidence has shown that companies with good ESG practices often enjoy higher, more stable profits than those without, suggesting that an improvement in sustainability can prove just as beneficial to a company’s profitability as it does to its credibility.

While our ESG ambitions are global in their scope, we hope that our efforts will also have a significant impact closer to home. Mexico is a wonderfully diverse nation, encompassing tropical jungles, arid deserts and more than 9,000km of coastline. Unfortunately, this distinctive topography also renders Mexico highly vulnerable to the most devastating effects of climate change, including tropical cyclones and hurricanes from the Atlantic and Pacific Oceans.

Indeed, in 2017, Mexico City’s Chief Resilience Officer, Arnoldo Kramer, told The New York Times that “climate change has become the biggest long-term threat to [the] city’s future”, highlighting the extent to which global warming threatens to disrupt our country. Through our sustainable development commitments, we hope to address this issue and effect a positive change within Mexico, as well as throughout the wider world.

A positive impact
One of the core principles of sustainable finance is investing in low-carbon, resource-efficient energies and green infrastructure in favour of environmentally damaging alternatives.

Afore XXI Banorte is deeply committed to such practices and has been steadily expanding its investment portfolio to include a variety of green products. Over the course of the past few years, we have strategically invested in the renewable energy sector, providing funding to a range of alternative energy options. At present, these investments stand to generate enough renewable power to prevent more than one million tonnes of carbon dioxide from entering the atmosphere – the equivalent of planting in excess of 28 million trees. We hope these green investments will make a real impact in the fight against climate change – both in Mexico and around the world.

Life expectancy in Mexico:

74 years


79.2 years


As well as honouring its environmental commitments, Afore XXI Banorte is dedicated to improving the lives of Mexican citizens. As the nation’s leading pension fund, we want to set an example to our peers by giving something back to those who entrust us with their retirement savings, and have lent our support to a number of valuable causes throughout the country. Over the past three years, we have made substantial investments into local infrastructure, including the construction of toll roads, telecommunications systems, housing and hospitals.

We firmly believe that financial institutions of any size have a duty to enhance the communities they serve, making corporate social responsibility a crucial aspect of any modern business. We will continue to show our support to the community and to the people of Mexico in the years to come, with the aim of maximising citizens’ access to education and medical treatment, as well as improving disaster support throughout the country. Through our ongoing and growing support for environmental and social causes, we feel confident that we are moving towards a fairer, more sustainable future.

New tricks
As well as championing sustainability and social issues, the Afore XXI Banorte of the future will be largely defined by technological innovation. We believe that new technologies, such as machine learning and big data, can help us vastly improve the customer experience by giving us a better understanding of what clients want.

As such, we are undergoing something of a digital transformation, rapidly digitalising our services and expanding our contact channels. We have developed a handy mobile app that provides consumers with all the information they could possibly need at the touch of a button. What’s more, it acts as another touchpoint for our clients, allowing customers to contact us around the clock, quickly answer any queries and ultimately feel more secure in their investments.

Big data and machine learning are set to revolutionise the pension industry and the wider financial sector, so it is crucial that institutions understand how to effectively harness such vital information. Data analysis therefore forms an integral aspect of our technological strategy, enabling us to continuously enhance our customer service experience. By harnessing machine learning in our social media channels, for example, we can gain greater insight into each demographic and anticipate their future requirements. We also utilise data from our online chat, social media and call centre offerings to assess the interests and needs of our clients. This allows us to offer a more personalised experience to each customer.

The internal culture of Afore XXI Banorte is undergoing a transformation, too. We hope to create a workspace where all of our staff feel inspired to provide an excellent service. With this in mind, we offer crucial support to our employees in the form of specialised training and provide effective communication channels at every level of the organisation. Our inspired employees and innovative digital solutions ensure that the client always comes first – after all, we are fully committed to enhancing the customer experience at all stages of the savings journey.

BNL-BNP Paribas Private Banking forges a new path for European banking

Private banking, as well as wealth management more generally, has enjoyed reasonably favourable market conditions over the last few years. According to Deloitte’s 2019 Banking and Capital Markets Outlook, the sector has been the best-performing business arm of major banks for some time now. Positive macroeconomic trends, strong stock market results and maturing populations that are enthusiastic to preserve their wealth have combined to provide the sector with the fertile ground needed to increase margins. With these three trends showing little sign of slowing down, a multitude of opportunities for private banks to attract and retain clients remain open.

Despite the positive climate, there are new challenges on the horizon. The threat of a slowdown in the market could lead to a range of problems, particularly for banks that have a large clientele of middle-income customers. Another threat – or opportunity, depending on how you perceive it – is the inflation of customer expectations. Technology such as robo-advisors and low or zero-cost products – many of which are app-based – are also leading to a raft of new competitors carving slices out of big banks’ traditional market.

In many ways, Italy’s private banking sector and the companies within it mirror the global market. This is the perspective BNL-BNP Paribas Private Banking is taking as we reimagine our business. Since its establishment in 2002, the bank has grown to boast more than 57,000 clients and now has over €33bn ($37bn) in assets under management. We have cemented our position as one of Italy’s most trusted financial institutions and are now looking at how we can hold on to this position. The next several years will be crucial for Italy’s – and, for that matter, the world’s – private banking sector.

In many ways, Italy’s private banking sector and the companies within it mirror the global market

A sturdy base
Italy’s private banking market has historically been dominated by the private banking divisions of the country’s large commercial banks, alongside the Italian branch of the world’s major international wealth managers. The country’s wealthiest clients are also served by small and specialised private banks that offer highly tailored services. Unlike other European countries, Italian clients are not yet enamoured with digital wealth managers. That said, this is likely to change as younger people begin to seek out wealth management services.

A winner-takes-all dynamic continues to define Italy’s market, with the majority of assets flowing towards the country’s financial powerhouses, such as Intesa Sanpaolo Private Banking, UniCredit Private Banking and Banca Aletti. All three have achieved strong and consistent growth over the past five years. Despite this, new players continue to enter the market. A contraction of credit issuing, combined with low interest rates, has encouraged a number of financial institutions to enter the private banking market to find new sources of revenue. In particular, networks of financial advisors, such as Fideuram-ISPB, Banca Generali and Banca Mediolanum, have quickly developed, poaching private bankers from their competitors in order to quickly grow their assets. These businesses have also invested significantly in financial advisory services. All this has led to more competition in the space, as well as declining assets for Italy’s traditional leaders.

Amid these changes, a transformation of the Italian market is now well and truly underway. On the financial side, the implementation of MiFID II is forcing those in the market to rationalise their products, leading them to focus on efficient financial instruments and more refined ‘wrappers’ with simpler governance requirements. On the ancillary services side, businesses are primarily focused on building non-financial wealth advisory services. They are doing this to increase client retention by presenting private banking as particularly good value, which is especially important in light of MiFID II’s introduction. Since most of these services are offered through automated tools, market players are now trying to differentiate themselves by offering more sophisticated services through non-financial experts.

Hazards ahead
With such a dynamic landscape, there are a number of new risks and opportunities for those in the market. While younger generations are presenting a new customer base, their demands are very different from those of their parents and grandparents. With the added scrutiny being placed on the sector due to regulation, the next generation of clients will be particularly selective.

In the coming years, a huge amount of wealth will flow from today’s owners – the current clients of private banking – to their heirs. This change poses a threat to wealth managers, who presently have very little time to develop a relationship with the next generation. Naturally, both assets under management and revenues are under threat. To avert catastrophe, wealth managers should focus their efforts on supporting their clients for the journey, accompanying them and their heirs every step of the way.

A key factor in this will be investing in the financial education of clients’ heirs. Successfully doing so will mean that a private banker has a relationship with an heir before wealth is transferred to them, and that the heir is equipped with the knowledge needed to have a meaningful conversation about the future. Before this happens, wealth managers should alter their offering to include new technology in order to meet the next generation’s expectations.

BNL-BNP Paribas Private Banking in numbers




Assets under management

Unsurprisingly, these new expectations boil down to digitalisation. Businesses like Amazon, Apple and Uber have irrevocably changed what people expect in terms of service. While most financial institutions have implemented their own digital transformation strategies, Italy’s private banks have so far lagged behind. Failure to deliver exceptional experiences may result in clients switching to easier and more convenient providers.

However, developing new digital customer experiences does not mean private banks need to change their business models. Instead, they need to embrace new technologies in order to serve clients more effectively and efficiently, while still maintaining a personal relationship. Private banks should also use digitalisation to improve their internal processes, subsequently reducing costs and accelerating service delivery. Those that do all this successfully will have a healthy competitive advantage over those that do not.

Amid all this, regulation is poised to have a significant impact on the Italian market. MiFID II has resulted in the publication of all costs associated with investment services. Lacklustre performance will almost certainly have an adverse effect on client relationships and make any fees difficult to justify. Private banks will need to simplify their offerings to make them compelling to customers, focusing their core products on revenue generation above all else. Wealth managers should also not be passive in this process, and instead work to anticipate and subvert negative outcomes before cost reports are published. The sting of bad news is far less severe if a plan to correct it is already in place.

These trends of generational change, digitalisation and regulation should not be seen as separate problems since they all affect each other. The development of digital products might help private banks address generational-change issues, as well as reducing advisory costs that would now be reported under MiFID II. A broad strategy is the only way to address all these challenges at once.

Service first
In order to respond to such a complex environment, BNL Private Banking has initiated a transformation of its service models. This is led by an innovative approach to client segmentation based on archetypes – or ‘personas’, to use the jargon of Jungian theory. This informs our client-centric approach, which has led us to take three main actions.

We have shifted towards a wealth advisory approach by improving our non-financial services, such as generational planning, real estate, insurance and corporate advisory. This positions us as a client’s partner and helps us address more than just investment needs. A long-lasting relationship with the entirety of a client’s household helps us identify liquidity events and, subsequently, opportunities for new cash generation. These services will be available under a single contract, which represents the pact we make with our clients.

Our digital evolution will focus on platforms for better relationship management. These systems will help us become far more contactable for our clients, particularly those of the younger generations. Soon, they will be able to contact their banker through video collaboration, receive advice remotely and much more. We are raising the bar by creating a dedicated 24/7 service centre for clients, giving them priority access to any service they may need. For our relationship managers, this brand-new platform provides a one-stop shop for all of the bank’s services, including advice and products, thereby significantly simplifying their job.

Finally, we are also increasing our focus on positive banking. In Italy, banking can play a critical role in economic development by matching demand, such as SMEs looking for funding, with supply from wealthy individuals. BNL Private Banking can leverage its competence and professionalism to direct clients towards projects that offer a good return while also creating value for the country. As always, investments will remain within the client’s boundaries.

Between all these measures, BNL Private Banking is positioning itself as a tastemaker for the future of Italy’s private banking sector. The rest of Europe should keep a close eye on the country, as the next decade promises to be the catalyst of several new trends.

The key to commercial banking success: serving a segment of one

Businesses today are operating in a global marketplace defined by an expanding set of challenges, complexities and uncertainties. PwC’s 22nd Annual Global CEO Survey, which polled 1,378 CEOs in 91 territories, revealed that CEOs are “extremely concerned” about the ease of doing business in the markets in which they operate. This was due to a variety of factors, including increased regulation, geopolitical uncertainty and trade issues.

At the same time, technology continues to be at the forefront of many executives’ minds. While it offers tremendous opportunities to lead and disrupt, it also poses significant risks as a result of the looming threat of cyberattacks, as well as increasing sensitivity and regulation around data privacy.

We are currently living in the Fourth Industrial Revolution – a key chapter in human development that the World Economic Forum refers to as an age where new technologies are developing “at a speed and scale unparalleled in history”. To maintain a competitive edge amid this unprecedented flux, both companies and their operations are changing fast. To that end, KPMG’s 2018 Global CEO Outlook, which surveyed 1,300 CEOs across 11 of the world’s largest economies, reported that 71 percent of CEOs say they are prepared to lead their organisation through a radical transformation of its operating model.

Customers do not want to be painted with a single brush and handed a generic set of fixed, disparate services

A bank’s only customer
Rapidly evolving companies have a new set of expectations for the commercial banking partners they rely on to help them successfully adapt and grow. In today’s environment, the oversimplified, one-size-fits-all approach is no longer sufficient to meet companies’ wide-ranging and intricate needs.

Customers, meanwhile, are looking for banks that have a deep understanding of their business. They do not want to be painted with a single brush and handed a generic set of fixed, disparate services – increasingly, they want to be treated as if they are the bank’s only customer. With this in mind, let’s take a closer look at three critical ways banks should treat their commercial customers.

First, commercial banks should focus on using innovation to make the user experience simple, intuitive and transformative. This includes utilising integrated tools that organise solutions in the way the client requires, thinks about and uses daily. Commercial banks that employ a genuine ‘segment of one’ approach put their customers first in every aspect of the relationship; crucially, they provide solutions tailored to a company’s specific needs.

Second, they should take a consultative approach in order to help customers grow their business by configuring a level of control and delegation that is flexible and aligned with the company’s operations and objectives. Lastly, banks must deliver an integrated experience that spans all services and markets around the globe.

Bank of the West’s treasury management platform does all this by offering both a frictionless experience and customer control. Essentially, it enables individual users to tailor the online and mobile banking platform to their own unique business needs. For example, the platform’s landing page can be customised either for the sole proprietor of a small business or for an accounts payable analyst in a large corporation. Reports, templates and views can also be tailored to maximise efficiency and eliminate manual effort for each user, as though the platform were designed specifically for them.

Similarly, our investments in a payment hub with customisable functionality enable us to tailor services to the unique needs of any specific customer. To cite two examples, we can offer select customers after-hours processing of wire and ACH transfers, and we can restrict transactions to certain IP addresses or certain users.

Our payments hub also helps us understand a specific customer’s payment patterns across different transaction types so we can compare those against aggregated industry and domain data. Using this information, we can offer individualised cash management consultation services and advice.

A global gateway
The individualised solutions a commercial banking partner delivers need to extend across the client’s global footprint. The first step is ensuring that the bank’s services are aligned with the customer’s objectives and organisational structure, which can vary broadly across markets.

Every company has unique needs across its footprint, particularly with regards to financing and supply chains. To help address increasing concerns about the ease of doing business in international markets, commercial banks should be focused on minimising organisational and geographical boundaries that restrict growth.

As a subsidiary of BNP Paribas, Bank of the West connects its customers to commercial banking solutions and expertise in 72 countries. Our One Bank team acts as a strategic partner, understanding our customers’ objectives wherever they operate. In doing so, the team helps them navigate the challenges of local banking markets in Europe, the Middle East, Africa, North America, Latin America and the Asia-Pacific region. Essentially, we match banking solutions to a customer’s organisation. We also help multinational organisations restructure their operations in order to maximise efficiencies, such as by setting up a centralised treasury function with all countries reporting to it.

It is also essential that a commercial bank has specialised and local knowledge of specific industries to help customers position themselves competitively in the relevant sector. For example, when a leading real estate development company in Europe – a BNP Paribas customer in its home market – made a decision to enter the US market, our One Bank team swiftly connected that company to Bank of the West so we could provide guidance on what it might expect if it pursued a land acquisition loan in California. This included market knowledge and a general review of local real estate regulations and procedures. Building on that advice, we customised the financing for the company so it could acquire its desired US property in less than 90 days.

As another example, we recently assisted a family-owned boutique winery based in Napa Valley, which was selling its main wine brand to an international food and beverage company. Drawing on our experience advising wine and beverage companies, our strong M&A track record in the industry and our long-standing relationships with potential strategic and financial acquirers around the world, we supplied global industry insights and diligence to the client. We also made a vital introduction to the eventual buyer – an Australian-Japanese company. In situations like this, Bank of the West’s direct access to a global buyer pool can help elevate pricing when we lead a sales process.

Cybersecurity safeguards
Even the most customised commercial banking relationship is ineffective if it’s not underpinned by a holistic approach to cybersecurity and fraud prevention. These safeguard both the commercial bank and the company it serves, and should not be overlooked.

As cybersecurity risks continue to threaten every company’s competitiveness, growth prospects and survival, 49 percent of CEOs say that becoming a victim of a cyberattack is a case of ‘when’, not ‘if’, according to KPMG’s latest Global CEO Outlook. Despite this, the survey revealed that only 51 percent of executives believe they are well prepared for a cyberattack.

To be prepared, commercial banks should use a risk-based, not rules-based, approach to security that serves customers with more flexibility. For example, our clients can configure our treasury management platform to their unique needs and preferences. We also offer a range of authentication options – from hard tokens to biometrics – as a toolbox our customers can select from. To make the system even more robust, we are now working on incorporating FIDO2/WebAuthN into our treasury management platform by year-end. By leveraging cryptography, FIDO2/WebAuthN sets a new standard by enabling simpler and stronger authentication for online users.

In another payment area, V-PAYO (our virtual card payment optimisation solution) applies a unique method to each B2B payment based on an algorithm that optimises cards or automated clearing houses. This gives our customers increased control and provides greater fraud protection, while also increasing efficiency and reducing expenses.

To genuinely put customers first and serve them as a segment of one, commercial banking partners must make continual investments in innovation, serve as a seamless gateway to local solutions and market expertise that matches the client’s global footprint, and deliver cutting-edge cybersecurity safeguards. That bespoke support is vital to help any company thrive in this new Industrial Revolution.

Do luxury perks and ultra-cool facilities really create a better work environment?

Once upon a time, office facilities equated to a desk, a chair and a coffee machine if you were lucky. Greenery was sparse, save for perhaps a vase of flowers on the desk at reception. The poorly equipped workspaces of yesteryear, with their grey walls and squeaky whiteboards, were designed as locations for unadulterated concentration, free from distractions and frivolity.

However, the ultra-cool offices owned by some of the world’s most prestigious businesses now resemble adult playgrounds, boasting facilities such as slides, hammocks and nap pods. Gone are the days of endless meetings in soulless conference rooms; they’ve been replaced by walking ‘think-ins’, most likely accompanied by at least one team member’s pet spaniel.

The most famous proponent of these creativity-driven office spaces is Google. It pioneered the model with its original campus, nicknamed the Googleplex, which opened in Mountain View, California, in 2004. The expansive signature complex features sand volleyball courts and two lap pools, along with replicas of rocket-fuelled experimental aircraft SpaceShipOne and a dinosaur skeleton. Employees working there benefit from onsite laundry rooms, access to 18 eateries – in which all food is free of charge – and many more perks besides, although the company remains tight-lipped about exactly what those are.

Working in a creative office space filled with fun amenities can have a positive impact on employee happiness, which boosts productivity

“What Google has done is raised the bar for the amount of time, attention, thinking and financial investment that organisations should make in their workplaces’ facilities,” said Tim Oldman, CEO of Leesman, a company that compiles an eponymous index charting effectiveness in thousands of workplaces around the world. While some view the installation of trendy facilities as necessary in the war for talent and contributory to productivity, others have questioned whether it really aligns with what modern employees seek from their workplace experience.

Proven improvements
Aside from the cool credentials, there are practical reasons why companies like Google might invest in facilities that would typically be found in someone’s home rather than office space. For example, tech developers often work unsociable hours to support site functionality through the night and may be forced to work longer than usual if there is a glitch that needs to be dealt with. The availability of sleep pods makes their jobs infinitely easier as they’re able to take a quick nap to keep them firing on all cylinders, rather than driving home and back again. According to the Journal of Sleep Research, naps can improve performance in areas such as reaction time, logical reasoning and symbol recognition – all vital mental tasks for web developers. Moreover, having well-rested employees reduces the margin for human error as a result of tiredness, which can be catastrophic for a company like Google, which could lose hundreds of thousands of dollars if it were to crash for even an hour.

And it’s not just developers who might find themselves at the office at all hours of the day and night: around 30 percent of meetings that take place at Google involve employees in two or more time zones, according to Veronica Gilrane, who manages the company’s People Innovation Lab. The time difference between employees could be up to 17 hours: if someone in Google’s Sydney office had a conference call with their California-based counterpart at 5pm Australia time, their colleague would have to stay in the office until midnight. Having a comfy space in which to relax while waiting for a late meeting, or facilities for doing some laundry, makes life easier for employees who are at the office during periods when they would normally be at home.

Research also suggests that working in a creative office space filled with fun amenities can have a positive impact on employee happiness, which boosts productivity. “If your employees are happy, they’ll perform better and stay with [the company] for a longer time,” said Gautam Saghal, COO at employee benefits provider Perkbox. Researchers at the University of Warwick studied the impact of employee support on overall satisfaction, observing an increase of 37 percent at Google. In the same experiment, elevated employee happiness levels raised productivity by 12 percent. “Making workers happier really pays off,” the researchers concluded.

Age matters
It’s no secret that happy, engaged, productive employees make for a profitable company. In 2013, a global review by the International Labour Organisation (ILO) found labour productivity to be the main driver of economic growth, while Gallup polling over the past two decades has shown that organisations with engaged staff are, on average, 18 percent more productive than less engaged competitors. “When [employees] are engaged, they’re happy to come into work, and they perform because they have a sense of their own purpose [within an organisation],” Saghal told World Finance.

The jury is out, however, on whether fun office facilities are the most effective means of engaging employees and boosting productivity. “Things like slides, or beanbags, football tables or basketball hoops may be nice things, and they may reinforce aspects of corporate culture, but there are very few of them that you could associate with a great day at work,” Oldman said. Saghal agreed: “Those kinds of perks are heavily contextual… If you’re Google and you have developers working around the clock, nap pods make perfect sense, but in a different environment, they may not.”

While quirky features may help to distinguish a company from its competitors, they must also be applicable to its employee base in order to contribute anything to the bottom line. This is particularly true when it comes to the Millennial proportion of the workforce, as Google-style perks such as video games and ping-pong tables are often seen as being particularly appealing to that demographic. According to Perkbox’s Great Perk Search survey, in which the company studied 2,315 UK adults in full-time employment, those in the Millennial group (aged 22 to 37) were far more likely to favour ‘fun’ perks than their Generation X coworkers. The most sought-after perk for Millennials was having a ping pong table, with respondents giving it a rating of 99.15 out of 100 (see Fig 1).

Re-evaluating perks
According to Leesman’s research, this demographic valorises the opportunity to step away from their desks and take a break more than other groups in the workplace. Facilities such as games or comfy breakout areas provide the opportunity to do so. However, digging a little deeper into the data indicates that it’s not so much the facilities themselves, but rather what they represent, that Millennials crave.

“Most of the Millennials we speak to through our survey are slightly embarrassed by things [like slides],” said Oldman. “They’re a group of the workforce that are keen to prove their value and work up the corporate ladder. Our experience is that they tend to steer away from those sorts of facilities because when they’re using them, they’re somehow fulfilling their stereotype.” As such, it is likely that Millenials would be just as satisfied with comfy seating areas or a cafe to relax in.

Both Perkbox and Leesman’s research highlights the fact that Millennials are keener than any other age group to access benefits that allow them to further their careers. “They come into the workforce expecting to learn more and access a higher level of knowledge transfer,” said Oldman. In Perkbox’s survey, 47 percent of Millennial respondents listed access to training and learning resources as a priority perk. This indicates that there’s a real mismatch between those designing workspace facilities for Millennials and Millennials themselves. “With regards to companies like Google, I think we’ve been somehow distracted by the slides and the gimmicks,” said Oldman. “We don’t ever see photographs of desks or meeting rooms or coffee machines – all we see are the swing seats and the foosball tables. It’s easy to forget that there’s actually some awesome benefits-infrastructure behind that.”

Transforming the work environment into a more domestic space can make it difficult to switch off from one or engage with the other

It’s also important to remember that, while Millennials make up a significant proportion of the workforce, they’re not the only demographic to take into consideration when it comes to perks and office design. Given their current age, it’s unlikely that Millennials are the largest revenue generators for most corporations. Although they may grow into that role, currently the greatest contributors to company profits are likely to be from Generation X, who are aged between 38 and 53. “The risk is that [companies] become so blindly obsessed with appealing to what they’re told Millennials want that, actually, they forget about the rest of the workforce – those that are generating the majority of innovation and income for the organisation,” Oldman told World Finance.

This age group is likely to have the most complex role within an organisation, balancing managerial, strategic and revenue-generating responsibilities. As such, they are the most in need of infrastructure to support them. This may include perks that bring down the cost of living, as workers at this stage of life are likely to have a number of significant financial responsibilities, such as a mortgage or costs associated with supporting children through school or university. According to Perkbox’s survey, 89 percent of Generation X respondents deemed discounts at supermarkets to be an important perk. A further 86 percent said they would like the opportunity to bring their child to work, a perk that would save on childcare costs. “This is a group that looks for a benefits package to support them in being committed to their role and to that organisation,” said Oldman.

Crossing the line
It’s not just the demographic debate that has led some to question the effectiveness of luxurious office facilities. Some have raised concerns that making corporate spaces an extension of the home serves only to blur the line between work and leisure. If an office boasts facilities such as laundry rooms, there can be a perception that employees no longer need to go home to complete that task and will therefore work longer hours.

Similarly, transforming the work environment into a more domestic space can make it difficult for employees to switch off from one or engage with the other. “If it’s done in the wrong spirit, this absolutely can happen,” said Saghal. “That’s why context is so important. But at the same time, I think people don’t really separate work and life quite as much today as perhaps in previous generations – work is more an extension of life.”

There’s also the matter of cost. Installing unique facilities certainly isn’t cheap – nap pods, for example, can cost up to $13,000 a pop. Smaller companies simply cannot afford that sort of investment, but this could mean they lose out on top talent as candidates defect to companies that can splash out. “Of course it’s a cost, but it’s also extremely costly to have to find new talent if you can’t retain the talent you already have,” said Saghal. “By staying longer, [talented employees] provide a return that’s… much larger than any outlay that goes on to perks, benefits and so on.”

Saghal added, however, that companies don’t necessarily have to splash out on Instagrammable features to retain employees. In fact, initiatives that are very low-cost or even free can have similar benefits. Saghal gave the example of a ‘bring your dog to work’ policy, saying: “That’s really no cost to us, but immediately, it takes a load off our employees’ minds and it makes for a much more fun environment.” He continued: “A company shouldn’t be dissuaded from implementing perks because of cost.”

Appearances can deceive
Ultimately, as an employer, the best way to go about deciding on how to make your office space more appealing to your employees is to ask them what facilities would benefit them the most. Before that process begins, though, it’s vital to ensure that the company has the structures in place to support potential benefits. “Employees are increasingly cynical of being somehow missold policies such as the ability to work from home,” said Oldman. While many may jump at this opportunity, “if [employees] then don’t have the technology, the digital security to be able to connect from home, or their employer isn’t contributing to their internet connectivity, it all falls down quite quickly,” he added.

Only once those logistical issues have been worked through should an engagement process with employees begin. “This shouldn’t just be with employees that are high up, either,” said Saghal. “If you’re really trying to create a kind of culture that’s nimble and agile, there should be consistent and constant feedback at a variety of levels.”

This consultation process can help employers develop a value proposition, which is designed to improve the experience of existing employees and draw in new talent. “That starts with mission and values, and continues through perks,” said Saghal. It may be that employees of a certain company do particularly value perks such as massages, beanbags or foosball tables, but the implementation of those facilities should be a result of their feedback, not a top-down policy according to what other companies are doing or what’s considered trendy. A consultative culture where all contributors feel valued is worth far more than a slide in the office, even if the former doesn’t look so swish on the pages of a magazine.

Crédit Mutuel continues tackling the issues facing the French economic and social landscape

Following the unprecedented upheaval of the financial crisis, the global banking sector has made significant strides towards creating a stable future. Now, more than 10 years on from the crash, the banking industry is enjoying increased stability, healthy profits and improved consumer confidence, thanks to ongoing efforts to enhance transparency and strengthen the customer service experience.

But despite this progress, the banking industry still faces myriad challenges and economic obstacles. The financial landscape is currently marked by persistently low interest rates, stringent regulatory controls and increased competition from fintech start-ups and non-banking competitors. What’s more, this year is set to be something of a tipping point for the financial services industry, with new technologies rapidly reshaping the sector and redefining how customers interact with their banks.

The technological transformation of the industry had created a wealth of both opportunities and obstacles for financial institutions: those that successfully integrate these emerging technologies into their businesses are sure to reap the rewards of their efforts, but those that fail to do so will risk lagging behind their forward-thinking peers. In this challenging economic climate, adaptability is the key to longevity, and banks across the globe must learn to continually reinvent themselves in response to the evolving environment. It is only through flexibility and innovation that banks of all sizes can hope to remain profitable and relevant in the years to come.

New technologies are rapidly reshaping the financial services sector and redefining how customers interact with their banks

Weathering the storm
The banking industry may be enjoying a period of increased stability, but this could very well be a short-lived economic chapter. According to economic analysts, a second major financial crisis could be on the horizon, prompting financial institutions to consider how they would prepare for such an event. In its Global Financial Stability Report, the International Monetary Fund (IMF) warned that rising debt levels, an increase in trade tensions and widespread political uncertainty could leave the banking sector exposed to numerous medium-term risks. Indeed, with ultra-low interest rates pushing global debt higher than pre-crisis levels, mounting financial vulnerabilities threaten to upset the stable progress made by the banking industry in recent years. If another financial crisis is indeed a possibility, banks must ready themselves for this eventuality, and must take action to reduce their exposure to risk and ensure they are prepared for even the worst economic eventuality.

At Crédit Mutuel, we pride ourselves on our strength and stability in testing times. We believe that our robust performance stands us in good stead to weather any financial storm. As an industry leader with more than 100 years of banking experience, Crédit Mutuel once again demonstrated its financial strength in 2018, recording a net income of €3.5bn ($3.9bn) for the year. This represents a year-on-year net income growth of 17.2 percent, reflecting the company’s remarkable financial performance across its central body and its 19 autonomous federations.

Despite the current challenging economic environment, Crédit Mutuel is proud to have attracted more than 900,000 new customers in 2018, in addition to creating more than 1,500 jobs across the business. We are therefore doing remarkably well as a group – largely as a result of our solid business model, which is centred on sustainability and growth.

Our group shareholders’ equity also rose 5.6 percent to reach an impressive €54bn ($60bn) in 2018, enabling Crédit Mutuel to post a strong CET1 solvency ratio of 17.5 percent. These results confirm that Crédit Mutuel’s financial solidity meets the very highest European standards, placing the group in a strong position to withstand any external economic shocks.

Aside from these financial results for 2018, Crédit Mutuel’s solidity was also emphasised during the stress tests that were carried out by the European Banking Authority in November. These tests – which are designed to determine how a bank might perform in adverse economic conditions, such as a sudden recession – placed Crédit Mutuel first out of all French banks in the November 2018 round of testing. The bank also placed fifth out of all commercial banks in the eurozone, demonstrating its resilience among its peers and its solid positioning in the case of any future economic downturn.

Crédit Mutuel’s results prove that its diversification strategy is a success. We will now continue to reinvent our business well beyond its historical borders while retaining a focus on the success of all its distinct business lines (see Fig 1). This is the outcome of several years of major transformation of all the bank’s subsidiaries, and thanks to the sincere commitment of all the people present in all our territories. Let’s not forget that it is unity and solidarity that make our group shine.

With a history in France spanning back more than a century, Crédit Mutuel is not indifferent to the social unrest currently being displayed in France, nor to the malaise expressed by the French people. We believe that the purpose of a bank – especially for a cooperative bank such as Crédit Mutuel – is to always serve its customers and accompany them at all stages of their lives. The scale and nature of this crisis, however, reveals a level of inequality that is jeopardising our vital social contract. The role of a bank has therefore never been more important than in these testing times. We must refuse the fragmentation of society, and we must give back to all our customers the ability to have plans, and thus to have confidence in oneself and in one’s future.

Our role, especially now, is to both protect what has been acquired and to provide the means for customers to reach their desired future. At Crédit Mutuel, we have a simple aim: to be a bank for everyone.

Time to transform
Crédit Mutuel has recently renovated its governance structure. Our organisation can now be proud of the association between autonomy and solidarity through its ability to offer services that have been adapted to suit everyone. Crédit Mutuel is a strong and diversified group, built around a united brand that bears the constantly renewed trust of its customers and members.

Today we are entering a new dynamic, thanks to a modernised mutualism model that can meet the needs of all our customer-members. We are ready to face the future with a model that is able to take into account today’s challenges. Our structure and performance have allowed us to adapt to the world around us as and when it changes.

In 2018, we accelerated the transformation of our business model by using a diversification strategy across all of our business lines. We have strengthened our position as a local multi-service bank and have placed an emphasis on our technological transformation in order to constantly improve the relationship between customer and advisor. This relies in particular on the development of artificial intelligence (AI) in 100 percent of our business lines, and on the constant enrichment of the functionalities of our websites and mobile applications.

We are convinced that technology must serve the people, not the other way around. Our challenge is to give our advisors time to more closely match the needs of our customers. The very foundation of our business is the relationship we have with our customers; thanks to technology, our advisors will be able to fully devote themselves to their clients and thereby forge privileged links with the people they assist on a daily basis.

As part of an ongoing commitment to expanding its digital portfolio, Crédit Mutuel has strengthened its strategic partnership with IBM. Together, we have launched the Cognitive Factory – an innovative taskforce that unites AI-specialised engineers with business experts from the Crédit Mutuel Group. The Cognitive Factory builds on the successful partnership between two industry leaders and marks an exciting new chapter in Crédit Mutuel’s digital development. As the company commits to a digitally diversified future, our customers can rest assured that they will remain at the core of our business.

We believe that the purpose of a bank – especially for a cooperative bank such as Crédit Mutuel – is to always serve its customers and accompany them at all stages of their lives

The Crédit Mutuel model combines the very best of traditional banking and digital banking; this will remain the case in 2019 and beyond. We understand that customers want all of their interactions with their bank to be smooth, informative and highly personalised, whether that be in person, over the phone or through online services. By employing AI and other cutting-edge tools, our dedicated advisors can strengthen this relationship with consumers, making the customer service experience more streamlined and effective for everyone involved.

A bright future
While we are certainly proud of our successes, we are also constantly looking to build on our achievements and improve our services for our 32.5 million customers. Despite a challenging economic climate, along with the disruption caused by technology firms, we are confident that Crédit Mutuel will keep flourishing, thanks to its adaptability and innovative outlook. The financial landscape is always changing, and so are we.

As we look to the future, we plan to continue capitalising on Crédit Mutuel’s unique strengths – namely, our 5,700 points of sale, our thriving corporate banks, our dedicated account managers, the quality of our services, and our loyal staff, who are highly trained and always in direct contact with our customers.

By 2023, we aim to increase our net income to more than €4bn ($4.45bn) and our capital ratio to 18 percent. While bancassurance remains our core business, our sector diversification is favourable and our specialised business lines continue to be profitable. Furthermore, we remain attentive to opportunities both in France and the eurozone more generally.

We are aware of the challenges facing all modern banking institutions, but we believe our financial solidity and our inspired employees will guarantee Crédit Mutuel continued prosperity, even in the most testing circumstances. At Crédit Mutuel, success is built every day, in every branch of our network, and at every point of service.