Betting on a growing middle class

Делая ставку на растущий средний класс

The banking system of Ukraine in 2018 after a long break has again become profitable. Large-scale reform of the banking sector, which was launched after independence, continues to bear fruit.

And while Ukrainian banks have adapted to the changed in 2014 economic environment, ProCredit Bank remained one of the undisputed leaders and always ahead of the curve recovery in the industry. In 2018, the Bank reported an increase in the loan portfolio of small and medium businesses by 34%, which is only slightly less than the 35% growth achieved in 2017, and 40% in 2016.

Of course, noting the steadily working with Ukrainian businesses, representatives of ProCredit Bank’s focus on what is actually the most significant step forward made in the past year was the finalization of a set of proposals for private clients. In the past few years, ProCredit Bank has worked on long-term strategy of providing personal banking services increasingly more numerous representatives of the Ukrainian middle class. This work meant a rethinking of the possibilities that are available to private clients. Under the new concept, convenience, transparency and profitability will be achieved through digital innovation and the transition to a fixed monthly banking Commission, on the principle of club fees, which will allow financial active account holders get the maximum benefit, while avoiding hidden costs. According to the Chairman of the management Board of ProCredit Bank in Ukraine, Viktor Ponomarenko, 2018 was the year when this vision took shape.

2018 was one of the most successful from the point of view of growth and business development, says Ponomarenko. And this progress is measured not only by numbers. In many respects, the changes were not quantitative, but qualitative. The task we set ourselves was to bring our services to private clients in accordance with the expectations of our target audience. It on the middle class today, we orientirueshsya, choosing the direction for development. And as this segment grows, we must grow along with it — trying to understand what you need from a Bank middle class customers and what services they will require in the coming years. Our goal was to anticipate this future demand. And now we have a worthy and interesting for the most demanding customers offer.

The desire to meet the needs of the Ukrainian middle class in the first place means changing the business model of the Bank towards online banking. Over the past year, ProCredit Bank has upgraded its digital platform and launched a mobile application that continues to improve. Additional functionality was introduced throughout 2018, and starting in January 2019, the new customers can open accounts online — even physically coming into a Bank branch. A special role is played by the fact that ProCredit Bank is part of the Germany based international banking group ProCredit. Introducing digital innovation, the Bank in Ukraine was able to fully use all the capabilities of existing technologies of e-banking, adapting them to local conditions, as a result of digital services provided by the Bank, fully comply with EU standards and yet sensitive to the needs of the Ukrainian market.

Another obvious advantage for the customers of the middle class, traditionally related to one of the most active daily users of banking services, is fixed by the Commission, that a private customer pays monthly for the services. We believe that this is the most transparent and competitive approach to the question of creation of prices for banking services — especially beneficial for those who are conducting transactions on a daily basis, explains Ponomarenko. — This format is commonly used in Western markets, but has not yet become standard in Ukraine. This means that Ukrainian clients may need some time to get used to this pricing — but closer acquaintance with this approach, they very quickly appreciate its advantages. According to Ponomarenko, that the fixed fee is gaining its supporters, suggests the following fact: more and more private customers starts the cooperation with the Bank, based on recommendations and positive reviews to their friends and colleagues.

The transition to digital banking allows you to reduce its physical presence on the territory of Ukraine operates a total of nine offices of ProCredit Bank. Ponomarenko said that even this small amount is more than enough, but recognize that some customers still prefer personal contact. At the same time reducing the number of offices that need to maintain, allows the Bank to invest in other areas of development and continue to expand its online offer. “The concept of a large office network is losing its relevance. Offices will probably continue to exist for some time, but the good news is that we no longer depend on them in the development of our business. On the contrary, we see the willingness of consumers to fully use the advantages of digital banking — particularly when we are talking about a segment of the middle class. We found that our private clients are very quick to adapt to new ways of performing their banking transactions.”

This willingness to change is a characteristic of modern Ukraine. The pace of change occurring in the country in recent years, helped to create a dynamic climate, and Ukrainian consumers generally become more open to innovation. According to representatives of Mastercard, in the fourth quarter of 2018 Ukraine was the fourth country in the world in the number of contactless payments — this statistic emphasizes the enthusiasm of its inhabitants for new banking instruments. According to Ponomarenko, this is another argument in favor of digital banking, giving a clear idea of how it will look, the banking system in a few years. “Data on contactless payments tell much about the attitude of Ukrainians to the technology. Without problems Ukrainians perceive innovation and rapidly adopt new technologies. Our clients have shown us that people are open to using new banking services. However, they quickly become very demanding. Convincing customers of the advantages of some new services, be prepared for the fact that soon they will require even greater innovation.”

The readiness of the Ukrainian society of innovative banking instruments — an auspicious sign for the ProCredit Bank, which continues to move towards greater digitalization of services. Customers mostly respond positively to the proposed innovations, in particular on the focus of the Bank on online services in General. Now the problem is that in this rapidly developing sector to retain that position. We have a clear idea of what we want to achieve through the year — said Ponomarenko. — We will continue to work on the quality of services provided, focusing on the introduction of additional features and improving security. It is clear to us that over time clients will demand banking services to a new type. In fact, they already require them. And our strategy is to implement these technologies today so that I can be ahead of the competition.

Author: Peter Dickinson

ProCredit Bank is part of based

in Germany, the international banking group ProCredit