In 2018, Greece achieved a positive GDP growth rate of 1.9 percent for the second year running. This was a major milestone for the country: after years of financial turmoil, Greece’s economic outlook showed signs of improving. Additionally, at 4.4 percent of GDP, the primary fiscal surplus had exceeded its target of 3.5 percent of GDP for 2018 and unemployment dropped.
It now seems that the Greek economy is on track to recover from its chronic financial grievances. This recovery was hard earned. The successful completion of the third economic adjustment programme, together with the decision to implement midterm debt relief measures, has contributed to the country’s improving economic outlook.
As a result of the economy’s ongoing recovery, Greece’s banking sector is experiencing a period of renewed positivity
As Greece’s recovery process continues and its investment climate strengthens, it is likely that confidence in the country will grow. The recent lifting of capital controls has made for a more investment-friendly climate and, as such, we can expect to see credit ratings improve. Furthermore, the reinstating of several major development projects and continued growth within the tourism sector – which accounts for 20.6 percent of Greek GDP – will also aid the economy’s long-awaited turnaround.
A clear vision
As a result of the economy’s ongoing recovery, Greece’s banking sector is experiencing a period of renewed positivity. Despite lingering problems, international credit rating agencies maintain a positive outlook for the Greek banking system. Funding and asset risk management are expected to improve in the near future, while the abolishment of capital controls is likely to lead to a gradual return of deposits and increase access to the interbank lending market. As the economy gradually recovers and more investments flow into Greece, we are sure to see further deposit increases.
However, if the Greek banking sector is to continue on this upwards trajectory, it must ride the wave of digital disruption and unlock dynamic growth. By embracing digitalisation, banks will benefit from huge increases in their productivity, competitiveness and e-commerce development.
At Eurobank, we have a clear vision: to become the most mature digital bank in South-East Europe. Our customers’ banking preferences are changing rapidly; many people have high expectations of their banks and demand more convenient and efficient services. To meet these new requirements, we are investing heavily in human resources, digital services and technical infrastructure.
However, digital transformation also presents challenges. On the demand side, the patterns of consumption and the savings behaviour of customers have changed radically. Millennials and Centennials are becoming increasingly important customers as they join the labour force. It is therefore essential to understand the services that meet the needs of these younger generations. Meanwhile, on the supply side, the sector is facing a transformation of the competitive structure of the banking industry. This has been triggered by new entrants from the fintech market. An important challenge for regulators is to create a level playing field between bank and non-bank providers, as well as to ensure adequate control and supervision of these players.
To address the changing structure of the banking system, the EU has introduced the Second Payment Services Directive (PSD2), a piece of legislation that aims to regulate payment services and their providers throughout the EU and European Economic Area (EEA). PSD2 updates and replaces the Payment Services Directive of 2008.
PSD2 is part of a global trend in the EU banking sector geared towards improving security, innovation and market competition. The intention of this specific directive is to create an integrated market for payments that will force banks in the EEA to open their application programming interfaces (APIs) to provide third parties with direct access to customers. This will create attractive opportunities for established payments organisations. Banks will need to adjust and use this market disruption to their advantage by harnessing their years of transactional experience and reputation as trusted financial institutions.
In retail and corporate payments alike, the biggest opportunities combine capabilities associated with PSD2 – such as data aggregation and account-to-account transactions – with improvements in settlement and clearing infrastructures – including faster payments. In both retail and corporate environments, payments will increasingly be embedded within digital applications that address the full value chain. For example, lifestyle apps tend to include consumer budgeting tools, consumer finance, mortgages, insurance and investments. Such a solution involves a much broader functional scope than banks typically offer, spanning the full customer shopping journey and drawing on data from a diverse set of sources, including social media, the internet and in-store searches.
The EU’s new regulatory framework supports Eurobank’s business strategy as it will help us offer more technologically sophisticated products to meet our customers’ needs. For example, to embrace this disruption, Eurobank introduced its Eurobank API Portal in May 2018. API technology enables the exchange of data, such as account information and payment services. The new portal therefore allows third-party service providers – such as payment institutions, foreign banking institutions and fintech start-ups – to develop innovative financial and payment services in collaboration with Eurobank. We are hopeful that PSD2 will ultimately support our vision to become the most innovative digital bank in South-East Europe.
Putting the customer first
Being customer-centric is not just about engaging with customers. It’s about recognising what they value beyond a company’s products and services and enhancing the brand-customer relationship. Many of the fintech firms currently disrupting the sector have built their businesses from the end user’s perspective rather than from a product perspective. This is what gives them their competitive advantage: they not only get results, but they also generate excitement around their brand.
In 2018, we decided to make sure that our customer-first principle was reinforced across all the sectors of our operations, including retail banking, private banking and corporate banking. Through our customer-centric model, we offer solutions, products and services that benefit both the consumer and the bank. For example, to become more efficient, we realised that we needed to streamline our processes: in 2018, we carried out a range of streamlining projects within our retail banking operations. The programme is proceeding well and will prove invaluable in not only improving our services, but also in reducing our costs.
In accordance with our customer-centric model, we constantly monitor customer needs and create tailor-made products in areas such as savings, insurance, investment and trading. For example, Eurobank offers a variety of deposit products, including accounts for everyday transactions, savings accounts and time deposits, as well as reward programmes. To support Greek households’ savings efforts and address the savings needs of each family member, the bank offers two products: the Regular Savings Account and the Growing Up Account, for customers under 18 years old. As well as an advantageous interest rate, the Growing Up Account offers customers the opportunity to participate in a biannual lottery as a way of potentially doubling or tripling their savings balance. Meanwhile, as part of our ongoing digital transformation plan, we recently enhanced our e-banking platform to allow our customers to open and manage all types of time-deposit products online.
Looking ahead, we will continue to cover all of our customers’ needs by offering the most innovative products and services that focus primarily on user experience. We are doing so by building tools and solutions that will provide a unique experience in daily banking and product acquisition. What’s more, we are soon set to launch a new series of tools and solutions that stem from PSD2 implementation, so that our customers can begin benefitting from their daily banking transactions straightaway.
Eurobank recognises the growing trend for online products and services, as well as for offering an enhanced omnichannel experience to customers. With this in mind, and taking into account the new regulatory environment, we will continue to invest in new products, services and technical infrastructure in order to provide the best possible banking experience, as well as the most efficient service, to all of our customers.