The pandemic is mounting a historic challenge for the global economy and the business community as a whole is dealing with the largest economic disruption we have faced on a global scale since World War Two. Greece, similarly to most European economies, has been experiencing a deep downturn in economic activity, estimated to reach a 10 percent economic detraction for 2020. Projections point to a modest recovery of around 4.8 percent during 2021, as positive developments on the vaccination front allow for cautious optimism for the year ahead and the prospects of an economic rebound.
This new crisis occurred when Greece was accelerating its pace to recover fully from the global financial crisis that had a huge impact on the Greek economy. Eurobank, one of the four Greek systemic banks, had completed its economic transformation and dealt effectively, ahead of local peers, with the non-performing loans inheritance of the Greek debt crisis. In 2020, Eurobank materialised, despite the objective difficulties imposed by the pandemic, its complex balance sheet strengthening plan, that had begun in 2018 and that will eventually allow the bank to increase its competitiveness in the post-COVID-19 recovery phase.
Leaving the economic downturn aside, the pandemic has also brought along fundamental changes in customer behaviour that have reshaped retail banking, forging us to rethink our organisation, redefine our service and operating models and our value proposition to our clients and reframe our economics.
As a result, I see five main imperatives for banks, to position ourselves for the strategic long-term changes already underway in the post-pandemic era, encompassing: redesigning our service model, transforming digitally, adopting new smart ways of working, alongside with strengthening our risk management, and bringing environmental, social and governance (ESG) corporate purpose to the forefront.
Transforming customer experience
COVID-19 has accelerated the migration of retail banking customers, throughout the world, towards digital channels: more users of e-banking, fewer customers visiting our branches. In light of that change, retail banks need to reassess their distribution strategies and the physical-to-digital channels’ mix. A key concern is how much physical space is really needed and how to make the most use out of it. In my view, as it is also supported by recent research, customers will never cease to value banking branches, especially for those interactions that entail advice or help, where customers appreciate human contact.
Eurobank has already been making investments to accommodate customers’ moves from traditional to alternative channels, whether that is advancing our call centres’ infrastructure and functionalities, upgrading our automated payment systems, redesigning our e-banking and m-banking or adding new features on our award winning v-banking service, which allows for individual or business banking customers to consult and transact with their relationship manager by video. At the same time, we are also reinventing our customers’ experience in our new era designed branches that will be available this year. Our goal is to provide seamless, omni-channel customer experience, as defined in our bank’s new motto: ‘Eurobank is your bank, wherever you are: in your house, in your office, on the street!’
Technologically accelerated changes
The experience of the pandemic has highlighted the importance of deploying banks’ wealth of data in the service of a more personalised customer experience, redefining the industry’s former ‘customer centric’ approach to the new, individualised, customer segment of ‘one.’ Following the paradigm of other industries, which have framed our customers’ expectations, banks adopt micro-segmented customer engagement strategies that, based on customers’ behavioural data and past product purchases, customise product recommendations and personalise service and communications.
Going forward, banks are called upon to play a continued role in the pandemic recovery, addressing ESG imperatives and having a sustainable impact on society
In the post-COVID-19 era, banks will focus even more on enhancing the customer journeys, expanding their data sources and analytics capabilities so that customers may receive timely credit extensions and personalised financial transaction reminders throughout the day, in a similar way they receive movie recommendations from Netflix. In parallel, it is imperative that we build, as we already do, our analytical capabilities, incorporating machine learning algorithms to rate our customers’ experience and explore their insights on a regular basis and at every touchpoint and embed it in our decision-making to foresee customer expectations and rapidly address customer needs in a personalised and relevant way.
Cost efficiencies and innovation
Eurobank has already signed up on the digital transformation journey, aiming for paperless branches, digitised internal process, and automated infrastructures to maximise productivity of central office functions.
In the face of the tech challengers that also frame our customers’ expectations, we have set as a strategic priority the creation of in-house innovation boosters for quick time-to-market ideas from the lab prototype to small-scale population testing. A few examples of first-to-Greek-market products include: Eurobank wallet, e-commerce solutions (bundling banking and non-banking services), payment link (an easy to use and minimum infrastructure payment service offered to merchants during the pandemic), bio-card, and tourism electronic platform.
In parallel, creating sector-based ecosystems, and becoming a one-stop shop providing our customers with value-adding banking and non-banking services, has been a value creation source for our customers.
During the pandemic, we transitioned rapidly to having at times over 50 percent of our staff working from home. Moving forward, we plan to adopt hybrid remote-onsite working models that will help us to benefit from the related flexibility, cost efficiencies, and higher employee satisfaction rates. In the meantime, investing in digital collaboration tools and in our people’s digital upskilling and reskilling is a necessity.
Risk management and ESG
The need to mitigate the risk of an increase in non-performing loans, due to COVID-19, calls for investments in automated credit decision-making that combined with the deployment of transactional behavioural data will allow for enhanced risk management and lead to improved credit decisions. Advanced early warning systems and sophisticated credit portfolio reviews with advanced analytics are expected to be widely deployed in the coming years to address various risk considerations including sectoral concentrations.
Finally, the role banks assumed addressing the pandemic crisis, ensuring employees’ and customers’ safety and supporting economic recovery, brings corporate responsibility to the forefront. Going forward, banks are called upon to play a continued role in the pandemic recovery, addressing ESG imperatives and having a sustainable impact on society.
At Eurobank, responsible banking is at the core of our strategic priorities, with the design and implementation of green funding, socially supportive programmes and corporate social responsibility initiatives. During 2020 we launched biodegradable cards and electric car financing, we eliminated paper statements, and endorsed paperless branches and paperless internal procedures, while ensuring environmental certification of our buildings.
Finally, lessons learned and strategic directions driven from the pandemic, can definitely have a positive effect on our bottom line. Challenges triggered by COVID-19 have been putting an undeniable stress on the banks’ profit and loss. Nonetheless, improved productivity and cost efficiencies can be achieved as a result of our digital transformation; and targeted, personalised and relevant customer value propositions in conjunction with advanced risk management systems can drive our top line.
In the post-pandemic era, banks will play a pivotal role as the backbone of the financial system’s stability and as the driving force to a socially and environmentally considerate world, fuelled by advanced data analytics to allow our customers a personalised experience with flexibility, ease of usage and relevance to their lives.