Learning from Poland: how the most disruptive banks in the country innovate
Over the last six years, newcomers and challengers in Poland have notched up huge successes. That’s why Efma is taking its highly regarded study tour concept to the country. Taking place from 7-12 June, this very special study tour will allow attendees to visit Poland’s most disruptive banks and learn about their success. Here five of the hosting banks tell us what to expect
We’re very excited about bringing our study tour to Poland. What makes the country unique in terms of retail banking?
Bartosz Zborowski, head of strategic projects, Bank Pekao: Poland is a fast growing market with a very innovative approach towards new solutions and technologies. Retail banking in Poland is chasing the European average in terms of percentage of people with bank accounts, but it is in the forefront in mobile solutions and contactless payments. All this creates special opportunities and business scenarios to be pursued.
Robert Piotr Hibner, vice-director of retail banking marketing, mBank: The Polish retail banking sector is very young. It’s evolution following the transformation towards the free market economy in 1989 is unbelievable. 25 years ago Poland only had two banks with 400 branches between them (1 per 96,000 people). In the 90s foreign capital was flowing in and the biggest global banks brought their know-how and technology. Traditional banking was evolving. Now we have very advanced digital banking. Almost every bank has a mobile app and mobile banking adoption is almost 15% (at mBank it’s over 30%). Poland is the most advanced European country regarding NFC card payments and moreover there are also lots of mobile payments initiatives - the most important countrywide mobile payment standard (BLIK) set up by a joint venture initiative between the six biggest polish banks. There are also three big telco-bank projects with a very positive business traction. Traditional channels like branches have also changed their role and look. They are light, modern, digital, more often with a role of an incubator and meeting place for start-ups. Above all, internet banking is very well developed and includes lots of innovative features like videochat, personal finance management, real time marketing, merchant founded offers, P2P payments, gamification, real time money transfers between banks, ecommerce experience and more.
Katarzyna Prus-Malinowska, head of electronic banking at Bank Zachodni WBK: Over the last few years the Polish retail banking market has experienced an upswing in the area of products available online and via mobile devices. These products are characterised by online access, applications available24/7 and very attractive prices in comparison to products available across traditional distribution channels. With reference to mobile banking in Poland, we encounter a polarisation of stances: quick adaptation and fear of new solutions. On the one hand, our market is really receptive and desires new technologies. Producers of consumer electronics have noticed this - for example LG and Samsung decided to implement their newest Android operating system, Lollipop, in Poland before any other country. For the past two years we have been observing a boom in tablets sales, smartphones have arrived in almost every home and wearable technology is waiting in line. Poles are now thirsty for innovation. On the other hand, however, there is a noticeable group of clients afraid of new technologies. There is a lack of knowledge. The financial industry needs to focus on educating and helping these clients to overcome the fear of the unknown.
Monika Pałczyńska, innovation specialist, Alior: The Polish banking market has evolved over the last 25 years from a complete banking desert to a fast growing and innovative market. 25 years ago there were two banking brands in Poland, with 400 branches, no cards and no ATMs - cash was the only tender. Today there are around 40 commercial banks. At the end of 2014, the 19 biggest polish banks had over 38 million clients (both individuals and businesses). Over 26 million of these had internet access to their accounts - over three million more than the previous year. What’s more, across the 13 biggest banks, 3.5 million customers actively use mobile banking. The Polish market is quickly adopting modern solutions, not only in banking, and this makes the market a great testing ground for new technologies.
Jacek Obłękowski, Head of Retail Banking at PKO Bank Polski:
The turn of the 21st century in Poland has witnessed rapid development of digital technologies, in particular, online and mobile banking, payment cards and ATMs. Currently, the Polish banking market is one of the most innovative not only in Europe, but in the world. Credit cards, of which over 90% are EMV cards, may serve as an example. Moreover, more than 50% of payment cards are proximity cards. Also dynamically growing is the number of proximity POS terminals which make up approximately two thirds of all payment terminals in Poland. That number is one of the highest in Europe. At the same time, Polish banks are also effectively developing other innovative services or products based on digital technologies. The local mobile payment standard, which brings together the largest banks in Poland, is enabling customers to use smartphones to pay for shopping, to withdraw money from ATMs and to make online payments.
What are the biggest challenges facing the industry today? How are banks in Poland meeting those challenges?
Hibner: The Polish retail banking market is very competitive. The price level is very low and customers are used to having zero fees. There is no space to make the offer better for customers. There are also limited possibilities to compete with service quality because its level in the polish banking sector is very high. Recently the economic and regulatory environment has had a negative impact on the profits of the banking sector: interchange fees declined from 1.6% to 0.2-0.3%; interest rates, deposit and credit margins are at a historically lowest level. All these challenges result in polish banks needing to compete on customer experience - by developing very convenient mobile apps with innovative features, outstanding internet banking or physical branch experiences, unique features such as videochat advice, merchant founded offers or mobile payments or by extending their business models into telco-banks.
Pałczyńska: Increased popularity and the assimilation of electronic channels changed the expectations of our customers and created the opportunity to deliver a broader and more innovative range of products and services. It is no longer business opportunity, but a necessity and, at the same time, a great challenge for every bank. In the Polish banking market there are many examples of banks that have quickly adapted to provide services to customers in the digital era. You can find here state of the art mobile and online banking solutions, the most modern branches and innovative banking products.
Prus-Malinowska: Creating access to products through convenient and diverse channels is the current challenge for banks in the area of financial products sales. Mobile banking is one of these channels. We also face business problems such as the reduction of the interchange fee for cards, which affects whole ecommerce market, and has brought unfavourable consequences for the income dominated by online payments with pay by links.
Zborowski: The Polish industry coped well with the crisis. The economy is growing but, of course, there are the topics that strongly affect the sector, such as the need to adapt the strategy to new factors like low interest rates and a significant reduction in revenues from interchange. Search efficiency and additional revenue are crucial and we believe there’s an important role for new technologies and innovation in this field.
Banks operating in Poland have to cope with dynamic market conditions. There’s been a significant decrease in market interest rates and interchange rates due to regulatory changes. The increase in contributions to the stabilisation fund of the Bank Guarantee Fund, and an increase in credit risk arising from changes in exchange rates, has a negative effect on borrowers. At the same time, the market consolidation process is progressing and an increasingly progressive migration of customers to remote channels is being observed, with sales via remote channels making up a small percentage of total sales. Banks have strong equity, and still achieve good financial results. Banks facing changes in the market are trying to offset the negative trends by raising bank fees and charges and increasing volumes and cross-selling activities.
As a hosting institution, what do you think attendees will be able to learn from your business?
Prus-Malinowska: The main idea that we would like to convey is our strong focus on mobile banking customers. Everything we create has a strong connection to the needs of our users and solving their problems. While developing new solutions we closely cooperate with our customers and listen to their voices. We invite groups of clients for testing and allow them to voice their opinions on new services before releasing them to the market. We develop our application in the direction chosen by the users. We want to satisfy the needs of the biggest possible audience. We devise our application with the focus on simplicity, quickness and design. We also cannot forget about our advanced, more demanding users, for whom the mobile context is already a standard.
Zborowski: Thanks to the study tour, attendees will gain the opportunity to look at their business through the prism of experience of the Polish market, particularly in the areas of internet, mobility or payments. Advanced solutions and great experiences in those areas can give a solid base for building participants’ own strategy.
PKO Bank Polski is the leader in the Polish banking market, not only in terms of financial results, but also in terms of scale of operations. Owing to strict cost management system, the bank has the lowest C/I ratio in the market, and recently it has implemented a modern sales system in its branches called ‘New Rhythm’. The bank holds a leading position in the implementation of innovative banking products and services. In this context, the ‘PKO Junior’ offer is one of the first products in the world intended for parents of children under 13 years of age. The bank has also implemented a mobile application ‘IKO’ which combines payment and banking functions. IKO gave rise to the local mobile payment standard in Poland which brings together the most significant banks in the country.
Can you tease us with a specific innovation or approach that you will demo during the study tour?
Zborowski: During the study tour attendees will be able to familiarise themselves with our mobile banking approach concerning mobile banking applications. We will also showcase our mobile payments solution, including one of the first implementation in the world of HCE contactless payments. We will present our understanding of current market trends and our thoughts on the direction in which mobile payments are developing.
Pałczyńska: During the visit attendees will have a chance to see how solutions arise and function in one of the most innovative Polish banks - Alior. We’ll describe our cooperation with the biggest polish telecom T-Mobile and present our internet banking solutions like the virtual branch. We’ll explain how, in the digital banking era, we maintain popularity and profitability of our physical branches. We’ll also discuss the role of IT in developing modern banking services. Visitors will have a chance to meet the heads of the most successful projects run in the bank and observe our solutions from the backstage.
Prus-Malinowska: During the meeting, we will present our advisor online service - an innovation which allows direct contact with a Bank Zachodni WBK consultant via video, audio or chat. BZ WBK is the first bank in Poland that allows customers to contact advisors via their smartphone or tablet. We will also showcase BZWBK24 mobile, the only banking application that allows customers to buy municipal transport tickets and pay parking fees directly from their bank account.
Hibner: Attendees will be able to understand how mBank is approaching changing customer behaviour and new trends like real time marketing, contextuality, social media, mobility and better user interfaces and experiences. They will learn about the new and innovative mobile and desktop features that have led mBank to win 11 major global prizes in 1.5 years. They will find out the key success factors of innovation implementation on large scale, in big and stable institutions - how to organise, how to cooperate, how to create a proper environment, how to approach each customer segment - early adopters, laggards etc. - to ensure adoption success.
We will showcase Innovation Centre, a tool which allows PKO Bank Polski to effectively support the innovation process. It makes it is possible to collect, filter and evaluate ideas voiced by employees in the innovation campaign. Innovation Centre also supports the building of a pro-innovation culture and promotes the emergence of innovation leaders. We will also highlight PKO Bank Polski’s Warsaw Payment Card, a combination of the PKO Express credit card issued to a personal account with the Warsaw City Card which makes it possible to upload public transport tickets in Warsaw and selected neighbouring municipalities.
What do you think are the biggest benefits of attending a study tour like this?
Prus-Malinowska: The biggest benefit is the possibility of exchanging experiences across a wide range of topics including strategy, multichannel approach, mobile banking, products and services, organisational structure and stimulating innovation. As a host, it is also a chance for us to showcase our activities and their effects on the customer experience.
Pałczyńska: The Study Tour in Poland is a unique chance to meet banking specialists from different European countries in one room, see different points of view and be a part of discussions supported by winning examples of the best banking practices and solutions.
Zborowski: The biggest benefits of attending a study is a possibility to experience benchmark solutions in different regions and draw conclusions which suit the particular areas you represent. The opportunity to share and discuss solutions and strategies in different counties and environments might be crucial to identify priorities and determine paths in attendees’ own business.
There are only a few places left, so there's no time for hesitations: save your seat now on www.efma.com/poland!