By John Manning, International Banker
KBC Group is more than a behemoth within banking and insurance sectors in Belgium; it is also a key financial player across Eastern and Central Europe. KBC (a 1998 merger of the former Belgian Kredietbank, ABB Insurance and CERA Bank) employs more than 36,000 staff across the globe—18,000 of which work in Eastern and Central European offices—and currently serves 10 million customers worldwide. The bank focusses its main operational concentration on its home market of Belgium, on four core countries in Central and Eastern Europe (the Czech Republic, Slovakia, Hungary and Bulgaria) and on Ireland; KBC now serves more than eight million customers across Central and Eastern Europe. KBC Group has become renowned for efficiently serving the needs of retail, SME (small and medium enterprises) and mid-cap customers.
Over the upcoming years, as the national economies across Europe attempt to recover and rebuild from the setbacks of the global financial crisis, economic forecasts indicate that GDP growth in Eastern and Central European countries is expected to outperform that of their western counterparts. As a vital component of the banking and financial-services sectors across the Central and Eastern European region, KBC is positioned not only to take advantage of this growth but also to support regional growth and development through innovative and evolving service provision. The group has been expanding in geographic presence as well as in service and product range to meet the growing and changing needs of customers as the economic climate has moved forward. KBC is perfectly positioned to manage the diverse conditions present in the region and is equally well placed to serve the sophisticated, mature and profitable market of Belgium whilst tackling the challenges and opportunities of the emerging, rapidly growing markets of Central and Eastern Europe.
The ability to serve customers effectively and efficiently in distinct markets and varying economic conditions is one of the many attributes that has led to the group’s consistent success over the past decades. In addition, KBC’s commitment to superior private-banking services has underpinned its success over the years, differentiating the bank from its competitors. The high threshold for customer entry (one million euros investable income) ensures superior private-banking service to individual clients. This enables the group to keep the number of clients per private banker low, and the service and attention exceptionally high—and to be the most proactive private bank in Belgium.
The bank offers a broad and comprehensive range of private-banking services, including advisory and discretionary portfolio management, tax optimization for businesses and individuals (including estate planning and inheritance insurance), equity and option advice, a dedicated bond service and many more. The group furthermore offers exclusive KBC products to private-banking clients alongside a range of third-party funds from preferred partners BlackRock, J.P. Morgan, UBS and Invesco. KBC private banking offers a choice of portfolio-management options: a core-satellite approach to the portfolio and, for high net-worth Wealth Office clients, a more recently introduced goal-based investing approach. Within the core-satellite approach, KBC offers two options: advisory management and discretionary management; whilst under the goal-based investing approach, the client identifies different life goals, such as provisions for the next generation, real-estate investments, health expenses or donations to charity, and ranks them in order of importance.
KBC Group is also an active player in the area of impact investing and is currently developing an impact-investing product line. From autumn 2014, KBC Group will have launched their first impact-investing fund for retail investors in Europe. Clients in this fund will achieve a dual objective: invest to achieve a measurable, beneficial social and environmental impact whilst at the same time generate a financial return.
The operation of the bank is centred at all levels on customer satisfaction. Employees are hired using a thoroughly developed assessment methodology ensuring people with a broad diversity of skills that are vitally important for the realisation of KBC’s strategy are selected—with innovation being a core competence the bank seeks in its staff. All staff are trained and supported within a culture that develops skills in line with the bank’s first-rate customer-service approach. Group-wide, the bank has set up initiatives to promote innovation, such as competitions for innovative ideas, as well as communal networking sessions that stimulate simplification, creativity and improvement in day-to-day activities.
KBC Group is known for its commitment to superior customer service—focussing on bespoke and customised solutions to meet each individual’s needs to the most efficient and effective extent possible. The bank operates under a philosophy of being proactive—and taking extra steps to inform clients of the full range of choices available to them and of any potential setbacks that may arise in the future and how to protect against them. The group offers a personal approach in its services, tailoring solutions to clients’ needs across all channels. It endeavours to guarantee clients great service and engages properly with them through excellent listening and response skills. The group is also known for providing advice, offering better solutions than its competitors, that is backed by research and a holistic approach centred on high-quality products and services.
The KBC Group ensures thorough transparency, client reporting and advanced cross-client dashboards; it devotes time to developing automated processes, including automated portfolio design and MiFiD (Markets in Financial Instruments Directive) monitoring (post- and pre-trade). In addition to automated processes, the bank demonstrates a fervent commitment to evolving with changes in technological solutions and the digital climate. As part of this commitment, KBC Group is one of the few private bankers in Belgium providing an integrated iPad solution, whereby all private bankers use iPads to communicate with clients. This enables bankers to show clients information on the spot or through quick email response, including information that was perhaps not foreseen previously. This allows a rapid response, high-quality interaction and hence a better service and client experience. The email function additionally allows for private bankers to be contacted at any time of the day and reduces response-time delays.
KBC has also launched an extensive program to develop the solutions and distribution channels for the group’s future—focussing throughout on client needs and offering customers a number of convenient access points for reaching the bank-insurer. By committing to a combined offering of tailored solutions and instant multi-channel access, the group offers an engaged and accessible service range incorporated into a fully connected and transparent environment. The bank is committed to maintaining human contact as customer needs require whilst enhancing technological-access options—so that the most convenient options are available to customers.
Since the global financial crisis more than five years ago, the regulatory landscape of the banking and financial-services sector has changed significantly. KBC Group has been responsive in dealing with the changes in requirements and the impact this has had on their day-to-day business operations. The bank has demonstrated its support and commitment to regulatory and operational compliance, working to improve systems and procedures across the bank so as to restore confidence and stimulate investment and growth. The group applies a number of fundamental principles across all areas of operation—including putting the customer first, being transparent to all involved parties (such as stakeholders, clients and regulatory bodies), maintaining adequate capital buffers to protect the group’s balance sheets and applying risk controls and procedures firm-wide to maintain protection and control of day-to-day activities.
In addition to KBC Group’s many successes in the financial sector, the group also undertakes a number of social-responsibility initiatives to support the local and wider community and environment. The group operates around a core belief that being sustainable means taking responsibility towards society and has a long tradition of supporting different projects that focus on poverty reduction, health and safety, and financial inclusion. In Belgium, KBC is a structural and longstanding partner of Kom op tegen Kanker (a fundraising organisation focussed on fighting cancer). Annually more than 300 KBC volunteers man the switchboard for the closing event of this organisation, and KBC supported the fourth “1,000 km Kom op tegen Kanker” cycling challenge (involving the participation of many KBC teams). KBC also supports groups that help the under-privileged, combat social discrimination and assist young people to become independent. It is socially active and involved particularly in those projects that are based in the cities in which the group’s main offices are located. In Brussels, for instance, KBC Group supports “Toekomst Atelier”, where every Saturday morning talented young people enjoy the opportunity to meet professionals from various sectors in order to broaden their horizons.
The group also works to stimulate volunteer work. As an example, the KBC solidarity plan annually supports approximately 50 organisations for which KBC employees are actively involved as volunteers. The plan focusses on organisations that work with the disabled, under-privileged or immigrants, and the organisations also receive a donation of 1,250 euros each. Next to this financial support, each KBC department or team can also participate in a “Time4Society” event, where KBC allows the entire team to spend their annual team-building budget in volunteering for half a day during office hours for selected solidarity projects.
KBC Group is the driving force behind the “Start It @ KBC” project, focussing on the development of real local economies and actively supporting young, budding companies (clients and non-clients) with logistics (such as housing them in KBC office buildings) and with professional advice, in cooperation with several other commercial and academic partners. Another initiative to support the local economy was the “Gat in de markt” campaign, during which the group mobilised the public through the Internet to identify local business opportunities that could be adopted by Belgium’s entrepreneurs. (KBC Group received a Lion d’Or award in Cannes for this project.)
The KBC Group’s overall aim is to be an independent, medium-sized provider of bancassurance to private clients and small and midcap enterprises in select European countries. The group’s established business unit based in the mature and sophisticated Belgium market is a consistent performer with a full-year profit contribution of between 1.4 billion and 1.6 billion euros over the past years that has been delivering a high return on allocated capital (ROAC) based on a core bank-insurance model combined with a fruitful activity mix (including retail, SME, mid-cap, private banking and asset management). In addition, this Belgian business has benefited from GDP growth, whereby KBC has captured market opportunities by offering client-centric solutions and optimizing its bank-insurance franchise whilst growing in the new, more-challenging markets of Brussels and Wallonia. The group is also expanding in fast-growing, lesser-established core markets in Central and Eastern Europe (the Czech Republic, Slovakia, Hungary and Bulgaria), which are likely to benefit from larger GDP growth compared to Western European countries. The economic conditions in these countries will allow KBC Group to achieve significant volume growth, especially in the asset-loan business, whilst also enhancing cost-efficiency benefits and accelerating the group’s bank-insurance business.
To date, KBC Group has been a regional leader in adapting to meet customer needs effectively and efficiently. Key to properly capturing the opportunities available over the next few years will be the firm’s ability to continue to innovate, evolve and expand to meet customer needs and to incorporate technological enhancements into day-to-day operations successfully. In doing so, KBC wants to build on its strengths and be among the best-performing, retail-focussed financial institutions in Europe. This aim will be achieved by strengthening in a highly cost-efficient way its bank-insurance business model for retail, SME and mid-cap clients in its core markets; by focussing on sustainable and profitable growth within the framework of solid risk, capital and liquidity management; and finally by creating superior client satisfaction via a seamless, multi-channel, client-centric distribution approach. By achieving this, KBC seeks to become the reference in bank insurance in its core markets.