Investments of 1 billion in the new banking model in 3 years

By Leonidas Stergiou

The digital transformation and the transition to the new banking service and experience model announced by the four systemic banks come to support a wider strategic transformation plan that starts from culture and internal structures to the redesign and launch of new products, the utilization of staff and the network, while expanding to capitalize on changes in consumer habits and demographics.

Significant investments are made in cyber security, internal control, staff training, talent attraction, staffing with new specialties and changes in stores (downsizing and redesign) and physical presence points (ATM etc.).

According to market executives who know the evolution of the banks’ strategic plans, in this period, the largest investments in digital transformation are made by Alpha Bank and National Bank.

Alpha Bank

Alpha Bank has moved into the second phase of the implementation of the transformation program with the code name “Alpha Blue Print” which includes total investments of 430 million euros, to reduce costs by 60 million euros per year, increase operating income by 350 million euros , boosting productivity by 25%, and new products, such as special packages for the Greek family, businesses, but also loans when paying in e-shops. Investments in technology alone amount to 120 million euros. This program ends in 2023.

National Bank

The investments of the National Bank are moving in corresponding sizes, as parallel to the other movements, its central system is changing, which requires resources and more time. These investments are part of the project “Bank of First Choice in Greece” which briefly includes the further integration of new technologies and fintech in all digital and physical channels, with an emphasis on V-banking and corporate banking, with a parallel expansion of activities through API ( development of code that gives access, eg to stores to apply and have an online loan application approved or rejected).

Eurobank

Eurobank, with the Eurobank 2030 strategic plan, implements the new “Phygital” banking model of service and operation, even incorporating a hybrid work system (physical presence and telecommuting). It was preceded by, for example, the creation of V-banking and the construction online applications (e.g. Business Check Up). It is proceeding with the development of ecosystems (collaborations with the aim of providing its customers with non-banking products and integrating services from foreign subsidiaries into the Temenos platform. According to market information, Eurobank is proceeding with a investment plan of approximately 70 million euros per year.

Piraeus Bank

Piraeus Bank, in addition to Winbank and the digital transformation of the group (it recently announced the Online Appointment that enables customers to schedule a meeting with a representative of the Bank, choosing a day and time), is proceeding with the creation of an Internet bank, with the aim of attracting new age audience, familiar with technology and online services. This is a venture, which will require investments of at least 40 million euros in 2 years, offering revenues of more than 50 million euros by 2025 and easing the Bank’s network by 25%.

The new banking model

Their strategic plans, usually three years, in some banks preceded the digital transition, in others they are now underway and in others the increase in investment in the integration phase is expected, which in all of them reaches 2025. At least, for the first phase of the transformation, as the digital transition never stops, while there is competition from fintech and online banks. Even from the big tech giants, such as Google, Amazon, Apple, etc., where they have entered the financial sector and in some countries, in addition to payment methods, they offer loans and even a bank account (through partnerships).

Investments in the digital transition are not limited to servers and new applications, but to database integration, classification and evaluation of big data in order to create predictive and assessment models for risks, new needs, etc. For example, the new generation compares the banking service to that of large electronic chains such as Amazon. This means redesigning the service and products as the customer has in mind and not as provided by existing structures based on laws, etc. Legislation and compliance should be followed but it is not necessary for the customer to be involved in this process. The interested borrower knows that he should make an application and then he should receive a positive or negative response quickly. What happened in between, how many and which checks were made, where the information was obtained electronically, etc. are none of his business.

The response should be fast and KPIs should be set on it, i.e. review of request in 1 day. The service should be available 24 hours a day, 7 days a week, in all possible ways (chat, video call) and devices (mobiles, computers, tablets). The process and the customer’s “file” must be available at every stage either in store or on the phone or through e-banking or mobile banking. For example, a question or a request can be initiated by phone or in a store, updated through chat and be completed via mobile banking.

Bank systems should understand the needs of customers, for example through transactions or complaints, in order to propose the corresponding solutions in each period of life. Study packages for students, housing loans for young families, savings-pension funds, even non-banking services, such as accounting packages and consulting.

In the future we will see digital channels offering content, such as music or theater tickets etc. So, whether it is called “Online Appointment”, or “Appointment” (Alpha Bank) or V-banking (Eurobank) or digital customer onboarding (ETE), it is about digital onboarding and soft registration, i.e. key features of the new transformation experience of the banks.