By Raymond Michaels, International Banker
Comfortably among the top five banks in Serbia in terms of total capital and profit, AIK Banka is one of the Balkan nation’s true banking powerhouses. Crucially, the bank is now taking giant strides towards elevating itself further up the ranking table, thanks largely to the stellar leadership shown by the bank during the last few years, as well as having a new and committed focus on innovation that is rapidly changing how banking is being defined in Serbia.
Established in 1976, AIK Banka a.d. Beograd has actively grown its business activities, both in terms of breadth and depth, since entering the open market in 1993—and in a more pronounced fashion since 1995, when it changed its ownership structure to become a joint-stock company. Today, the bank has a significant presence in retail, corporate and agricultural spaces. It has seen consistent growth over the last few years, both in terms of client coverage and financial performance. Indeed, 2016 was a stand-out year for the Serbian lender, one in which it managed to achieve a startling 40-percent growth in profit before tax.
Ms. Jelena Galić, CEO and chair of the executive board of AIK Banka
Much of this recent success can be credited to the leadership of Jelena Galić, CEO and chair of the executive board of AIK Banka since 2015. Ms. Galić is one of Serbia’s most accomplished banking and finance professionals. She has a wealth of professional experience under her belt, including a productive eight years spent at Deloitte Belgrade (Deloitte Central Europe), during which time she refined her skills in managing complex and multidisciplinary projects—learning about different markets and managing large clients. Having authored several professional papers on economic policy, as well as continuing to teach at the Belgrade Banking Academy as an associate professor, Ms. Galić also brings a profound level of knowledge and understanding of banking and financial markets to her role as AIK Banka’s leader.
Innovation is the key term when one examines AIK Banka “at a glance”. New products and services continue to be introduced by the bank, and are done so in a distinctly innovative manner—one that focuses primarily on customers’ needs, but also exceeds the thresholds of acceptable risk management. Electronic- and mobile-banking solutions have already propelled AIK Banka to the forefront of leading banking innovators in both Serbia and beyond, and now the bank is embarking on the next stage of its evolution in order to provide customers with the most innovative and attractive products on the market.
Among the bank’s biggest goals today is to transform itself into a digital-banking leader in the Serbian market—a process that is expected to take a couple of years. Following the unwavering focus on development and innovation, AIK Banka also recognizes investment banking as a market niche with a unique opportunity to gain comparative advantage, given that only a handful of banks are providing these services, not only in Serbia but in the entire region as well. AIK Banka sees an opportunity here, and it endeavours to utilize it to the fullest.
The bank also prides itself on its business efficiency, which it considers as one of its biggest competitive advantages in the Serbian market. Now it seeks to expand its activities beyond its domestic borders—the recent purchase of shares of Slovenian bank Gorenjska banka d.d., Kranj, for instance, has gone a long way to underlining the bank’s intentions of expansion within the European Union. Through Jelena Galić’s astute leadership and the bank’s own digital banking ambitions, AIK Banka is now well on the way to becoming a regional banking heavyweight.
Jelena Galić has been the CEO of AIK Banka since 2015. During this time, she has managed to trigger a remarkable upgrade to many of the services that the bank offers its clients. What’s more, this upgrade does not appear to be a one-off but rather an evolution of the bank’s mind-set to now seek consistently higher standards. She considers this improvement in customer service to be the biggest achievement of both herself and the bank as a whole during her relatively short time in charge. By nourishing clients’ trust and often exceeding their expectations, AIK Banka under the stewardship of Ms. Galić has generated business results of which the entire team can be satisfied. The accomplished chief executive sees this as an ongoing process. “Looking back we see that today, AIK Banka stands as one of the leaders on the local market, according to all the key financial indicators such as liquidity, foreign-currency savings, capital adequacy and profitability.”
Ms. Galić certainly has leadership acumen; prior to heading up AIK Banka, she spent approximately eight years at Deloitte Belgrade as Managing Director for Business Advisory, as well as being the leader for financial-service industry (FSI) clients of the east Adria cluster (Serbia, Montenegro, Macedonia and Republic of Srpska) and for projects in Central Europe. During this time, she was able to gain invaluable experience by managing complex and multidisciplinary projects, operating across numerous diverse markets and managing some of the region’s biggest clients. She also credits her experiences at Deloitte with sizeably contributing to building her skills in change management and the implementation of sound business models in a competitive environment. Indeed, she now believes that a combination of “numerous systemic issues related to modernisation, investment in new markets, business efficiency, and establishment of a stable and sustainable business model that requires attention” is of paramount importance in boosting the market competitiveness of a company. This is a philosophy that she now applies as the chief executive of AIK Banka.
In addition to an enviable set of practical skills, Ms. Galić also brings a profound understanding of finance and economics to the role. In addition to gaining six years of experience at the renowned Economics Institute in Belgrade, as well as obtaining a PhD in economics from the University of Belgrade, she has authored several professional papers concerning economic and monetary policy in Serbia.
And her biggest challenge so far? “Finding time!” Perhaps that’s understandable, given that plans and objectives don’t always come to fruition as quickly as one would like in the banking world, especially for a leader as ambitious and visionary as Ms. Galić is. Indeed, she certainly has a lot to occupy her time—when she’s not actively taking the reins at AIK Banka’s offices in Belgrade, she offers her teaching services as an associate professor at the capital city’s Banking Academy, where she is helping to shape the minds of the likely finance and banking professionals of the future. She teaches international finance, which provides her with an opportunity to present a diverse range of issues pertaining to financial development, as well as to discuss its increasingly close alliance with the utilisation of new technology movements and innovations. In Ms. Galić’s book, however, the teaching process is rarely in one direction; rather, she freely admits that she learns much in return from being surrounded by such talented young individuals. “I have been teaching ever since I graduated from college, and this is something that I consider an investment not only in my career but also my personal growth.”
The advice she gives to the next generation of bankers clearly indicates that she acknowledges the current state of transition the industry is undergoing. “Look ahead, think outside the box, be innovative, and a step ahead of others,” she suggests. “Digitalization is just around the corner, and with it, the banking sector will change substantially, and it will require us to change and adapt to it also.”
Given that bankers are increasingly needing an evolving skillset to succeed in the industry—a skillset that comprises a weightier technology component—Ms. Galić is also acutely aware of the need to invest in human capital in order to keep up-to-date with the latest trends. She understands that the key to the success of the company internally lies in the employees that make up the core of the business. With that in mind, employee training via courses, lectures, conferences and other forms of professional development are emphasised. “Educated, competent and skilful employees, encouraged by team spirit” is the recipe that Ms. Galić identifies for her employees to successfully meet the bank’s objectives.
AIK Banka, Headquarters in Beograd, Serbia
Although digitalisation of the Serbian banking sector is moving in the right direction, it would be a stretch to define the domestic sector as a global leader of digital services. Nevertheless, it is important for the country to maintain pace with the latest global developments. Indeed, that’s part of AIK Banka’s digital strategy—it is rather sensibly looking outwards towards the rest of the world to identify the best examples of digital-transformation programmes that are currently being implemented by global financial institutions, and that the Serbian lender can learn, adapt and execute in a similar fashion. However, that’s not to say that the transformation being undertaken by AIK Banka is anything other than wholly the result of original thought in terms of strategy and execution. Among the biggest objectives for the bank, both for today and for the future, for instance, is to implement a cutting-edge system that will enable a new range of products and services to be offered to customers in Serbia. As such, the bank hopes that it can fundamentally change the notion of banking in Serbia. As a domestic private bank, moreover, it has the flexibility to effect such a change in a relatively short space of time.
AIK Banka’s approach towards digital banking is to offer services through communication channels of the client’s choice. It also provides the scope to improve efficiency by optimising the bank’s day-to-day expenses, as well as expand the client base by utilising innovative information-technology (IT) solutions, process automation and online sales channels. Many of its newest and most innovative products are geared towards Millennials, which the bank sees as one of the main engines of future growth. With the number of fintech start-ups in the country currently on the rise, there is a danger of this demographic favouring such companies at the expense of the banking sector. Ms. Galić, however, does not view fintechs as direct competition. “On the contrary—we believe that cooperation with them can positively influence our clients’ satisfaction, in terms of offering more flexible, more advanced and secure services and products.”
Over the next two to three years, the overall aim is to move AIK Banka from its current technological position towards its digital-banking model, which it terms the “Banking 4.0” model. According to Ms. Galić, the focus will mostly be placed on developing innovative mobile- and web-banking platforms that will allow the bank to offer traditional products through various digital channels (including a web portal, social networks, a contact centre, mobile-banking applications and specific proprietary apps, among others). New financial services, especially within the payments segment (such as P2P – peer-to-peer, direct payments, low-value payments and e-commerce), will be given particular attention. For example, the bank is currently implementing several innovative projects that will enable full, front-to-end digitalisation of the services offered, including client-centric, omni-channel products and apps, P2P real-time payments, self-service branches, online lending and an innovative personal mobile-banking platform. Various products will be launched by the end of the year and in first quarter 2018, with the goal of completing the process within the next few years.
While AIK Banka continues to develop at a breath-taking pace on the technology front, it remains fully committed to its traditional core businesses. Indeed, it is worth noting that AIK Banka emerged from the Agroindustrijski kombinat Niš, the primary area of business of which was focused specifically on working with the agricultural sector. Even today, the bank considers this sector as one in which it holds a distinct comparative advantage, and as such, the bank’s very identity as one that offers universal services is firmly supported by the diverse range of business sectors—both modern and traditional—that it actively supports.
Small-to-midsize businesses across numerous industries are also given AIK Banka’s first-rate service, and allow the bank the opportunity to diversify its portfolio. Extending credit to the sector after carrying out thorough and conservative risk-management assessments has enabled this segment to yield fruitful results for AIK Banka.
All of this progress has recently landed AIK Banka a top-four spot in Serbia’s domestic banking sector, with total capital of approximately 450 million euro and an admirable capital adequacy ratio of more than 33 percent. Other notably impressive financial results from 2016 include stable profitability that was easily above the banking sector’s average, with profit for the full year clocking in at €38.5 million—while the bank continued to have at its disposal a large quantity of liquid assets that could be used for specific forms of financing. For Ms. Galić, however, such achievements alone cannot be considered as being fully satisfactory. The bank’s goal now is for a continuation of this trend in order to be positioned among the three leading banks in the market, both in terms of the hard financial numbers and the overall quality of its business activities.
To generate future growth, Ms. Galić believes the key factor will be client-oriented innovation, which in turn will form the basis for the creation of a new range of products and services. As an example, the bank is putting much of its efforts into developing an entire spectrum of digital services that will allow clients to have 24/7 accessibility. Providing clients with more efficient access to their finances also has the positive knock-on effects of lowering the bank’s operational costs and attracting new clients, and thus ultimately helping to widen the overall client base. As a result, the bank’s growth can help it to exploit economies of scale and keep the prices of its services low, in the form of reduced interest rates, fees and commissions and the costs of other business activities.
Ultimately, all of this growth, Ms. Galić hopes, will continue to translate into the cultivation of a stronger banking contender in both the domestic and regional markets. The bank recently acquired one of the country’s local banks—a Serbian subsidiary of Greece’s Alpha Bank—which enabled the integration of two strong financial institutions. The acquisition will help AIK Banka become an even more dominant local player, primarily by facilitating an expansion in the overall client base, by widening the bank’s scope of business operations, and by being one step ahead of the competition in terms of the trends and services on offer. Combined, the bank expects these factors to boost results pertaining to all key business indicators.
In terms of the wider region, AIK Banka also recently gained a partner—the Slovenian Gorenjska banka d.d., Kranj—as part of its growth strategy beyond its national borders and into the European Union (EU) markets. Further to Slovenia, moreover, the bank is closely monitoring other neighbouring markets within the European Union, with an end goal of becoming a key consolidated financial player that both supports its domestic economy and makes a significant contribution to regional cooperation in banking and other related economic aspects.
As for Serbia’s banking industry in general, with 30 locally operating lenders currently, it is not a particularly large market for financial services when compared with its regional neighbours. Nevertheless, many expect the sector to consolidate further, with a wave of mergers and acquisitions predicted to take place in the future. As such, a few banks are likely to dominate the local scene, and will take a more consolidated approach to their respective client bases. According to Ms. Galić, moreover, this consolidation will bring about a healthier form of competition between those dominant operating entities that will in turn result in a race to offer a wider range of new products and services that will allow clients to save time and costs, and banks to become more efficient. “We expect all sides involved to benefit from this—clients from improved, more efficient, simpler and more affordable services, and banks from simplifying operational processes and lowering operational costs, thereby increasing profits.”
The one objective Ms. Galić hopes to achieve for the bank during these coming years is to position AIK Banka among those dominant banks as the key local market player, with significant regional exposure and an active and responsible role in neighbouring markets as well as in those of the EU countries. Given the solid growth trajectory the bank has clearly shown in recent times, it would appear that she is well on the way to achieving that goal.