In Bulgaria, financial innovation comes with 10 years of delay, reported financial forum organized by the Association “Bank of the Year” and VUZF University
Bulgaria lags behind the global innovation in funding for ten years, but this is not necessarily a bad trait. It allows to avoid phase errors and switch directly to, proven as workable, solutions for users. Around this thesis the participants in the financial forum “Innovations” had united. The forum took place on June 14 in Sofia for a third consecutive year, and is organized by the Association “Bank of the Year” (ABY) and VUZF University.
The forum was opened by the Chairman of ABY Valentin Panayotov, the VUZF University rector Prof. Grigorii Vazov and Deputy Governor of BNB Nina Stoyanova. The event gathered the entire financial and banking elite of Bulgaria, representatives of academia, the international banking sector. Moderator of the second panel was VUZF University CEO Ch. Assist. Prof. Dr. Radostin Vazov.
According to the presented during the forum researches, status quo of Banks in Bulgaria is not yet threatened by competition from financial companies, but in the medium term prospects are that they will bite a substantial share of their business. This first will become apparent in the segment of consumer financing.
By 18 September Bulgarian National Bank (BNB) will launch site on which will allow comparison between bank fees. Until then, must be adopted the necessary legislative changes. That said Nina Stoyanova, deputy governor of the central bank and head of sector “Banking” at the opening of the forum. In late July, is expected to eliminate the practice of bank reporting of transactions and payments between local and foreign persons and cross-border transfers, which exceeds BGN 100 000. These changes come under European directives, but among them the sector preparing hard for the onset of the global trends in banking.
Expectations in the industry is that because of the inclusion of financial companies in the market over the next 10 years, the revenues of banks in consumer lending will suffer by 40% and their profits – by about 15%. This will be the result of the “stolen” customers, rather than deleted margins from interest, fees and commissions. Besides threats, the competition and digitization wear benefits as well, for banks – the estimates are that thanks to them there will be a contraction of 30% of costs and a significant improvement in efficiency.
Petar Andronov, CEO of EIBank and chairman of the Association of Banks in Bulgaria, said that at this stage in the industry have no unified strategy to counter the negative trend. According to him, it is possible to prove that staying in an open competition between traditional players and new entrants is a better option than for banks to struggle to absorb the financial companies that threaten their business. As a small and flexible their opponents are able to quickly develop as intermediaries in financial services, but nothing guarantees them that at a time will fall under the same heavy regulations as banks and so the race is over.
Investments in financial innovation globally are 20 billion USD, targeting 12 thousand aActive companies. “95% of them will probably fail, but others will move, will frame the very different rules of banking,” predicts Peter Andronov. He said that in Bulgaria we are not at the forefront of financial technology, but it is not alarming because the big issues facing the banking intermediation will not be decided on our territory.
“Bulgaria, being in the periphery, always had the privilege to learn from the mistakes of others” added Levon Hampartzoumian, CEO of UniCredit Bulbank. “Bitcoin burned, but blokcheyn stuck and could cause significant changes in payment systems. In certain segments the issues will be resolved as a series of quick matches. Something will rise, sets and what remains will be used by traditional market players”said Hampartsumian. He also commented on why it is worrying that despite the fast Internet in Bulgaria, only 5% of consumers use online banking. “The uneven development of the state – territorial and social – in terms of motivation, access to education, is essential and this is a much bigger problem than any technological development. For if only 20% of the population benefit from new technological developments, and the rest languish in the fog of the XX century, will not become anything. “
“Before the banks are ahead interesting years,” predicts Postbank CEO Petya Dimitrova. More and more users are online at any time. Therefore, banks need to adapt to this change, she added. According to her, if a comparison is made in Europe, Internet banking are using on average 46% of the people, and in our country the rate is only 5 percent”. This gives us the advantage to make more customizable products that fit into our local realities”. said the Postbank CEO.
“The direction in which we work is the ability to access banking products and services through all channels into a single digital ecosystem. For banks this is the future that we see, and the other, more developed banks in Western Europe, have already reached”, said Petya Dimitrova.
According to her, the specific characteristic in Bulgaria it is that customers still emphasize on the traditional offices to search for information and common products and services, remaining far from mobile banking.
She said that the biggest difference is security, because this whole revolution leads to the big question of confidence and security systems of banks and protecting their users.
“70% of people looking for traditional channels such as going directly through the bank. Digitalization targets customers to be more satisfied. We seek products that are simple, personalized and services are automated and can be accessed at any time and from anywhere in the world. New technologies should lead to personal approach to customers”, stressed Petya Dimitrova.
“One of the main problems is the fact that consumers are very difficult to navigate and need advice what service to choose, how to manage their money”, said in turn, Director General of Hewllet Packart Enterprise Bulgaria Iravan Hira. According to him, most importantly is the banking services to be customized, and digitization is only a means to accomplish this.
Source: Capital.bg, Economymagazine.bg
Everything about the forum can be found at http://finance-ino.vuzf.bg/.
Here you can find all the presentation from the forum.