Home Banking Economic Outlook for 2024: Towards Recovery or a Prelude to New Challenges?

Economic Outlook for 2024: Towards Recovery or a Prelude to New Challenges?

by internationalbanker

By Andrija Vuković, CFO and Member of the Executive Board, AIK Banka





The world in which we live is confronted with dynamic changes. The consequences are evident everywhere we look, from multinationals in international markets to small mom-and-pop shops operating in local communities. The question is: What key factors and changes will shape the economic stage over the following year? And most importantly for financial institutions: What steps must banks take, given that they operate in a sector that plays a crucial role in shaping the financial landscape and supporting individuals and businesses? In other words, how will financial institutions, amidst constant and growing challenges, continue to improve the customer experience, personalise their financial services and remain competitive in a fast-paced digital environment?

Examining Serbia’s market trends, inflation rate and ongoing struggles to curb it will characterise the months ahead. According to the National Bank of Serbia’s (NBS’s) assessments, year-on-year inflation in Serbia continues to decline, despite the increase in November 2023. As stated by the Statistical Office of the Republic of Serbia, in December 2023, inflation dropped to 7.6 percent, almost half of what it was at the end of 2022. Current estimates suggest that Serbia’s 2024 inflation rate will be around 5 percent, still above target but encouragingly representing significant stabilisation after recent spikes.

This recent reduction in Serbia’s inflation and the overall downward trend have been attributed to monetary-policy measures easing global cost pressures and decreases in imported inflation. High inflation last year, driven by strong increases in energy and food prices, necessitated tightening monetary policy due to weak economic activity, reduced external demand and geopolitical challenges. These challenges have undoubtedly affected Serbian banks’ operations, and they need to adapt their businesses to current events.

The National Bank of Serbia has stated it expects a continuation of the decline in inflation and a return to its target range by the middle of this year, approaching its target of 3 percent by the end of the year.

On the other hand, with the retention of the benchmark interest rate at 6.50 percent, GDP (gross domestic product) growth and a record reduction in unemployment, we can anticipate more proactive credit activity in the upcoming period and lower borrowing costs.

In the economic sector, domestic companies’ increased demand for loans has been expected, and there were no noticeable fluctuations or reductions in credit activity among small and medium-sized enterprises in the previous period. At the same time, in the household sector, the demand for housing loans remained stable with only slight monthly fluctuations and was high for short-term loans, especially cash loans.

In such a dynamic environment, it is crucial to monitor domestic and foreign financial-market developments closely, thoroughly analyse all indicators and adapt to changes. Banking institutions are generally considered conservative; however, the market is becoming increasingly demanding, and financial institutions such as AIK Banka must undergo accelerated development to cover all the essentials through their services while remaining stable and retaining clients’ absolute trust.

AIK Banka offers a wide range of comprehensive financial services catering to legal entities and individuals in Southeast Europe.

For this reason, it is important to emphasise that AIK Banka offers a wide range of comprehensive financial services catering to legal entities and individuals in Southeast Europe. To solidify its position as the largest domestic banking group that also operates exceptionally successfully in the European Union (EU) market, the bank’s focus this year will be on further digitising services, providing personalised products and services to clients, improving the customer experience, enhancing the security of all transactions and finding the best solutions for all client needs and demands.

The past year was exceptionally important for AIK Banka, particularly in terms of our ongoing growth strategy and the expansion of our operations, strengthening our position in the domestic banking market. Our goal is to offer innovative solutions that fully meet our clients’ needs consistently.

We have developed and implemented digital services that provide a wide range of online products. Simultaneously, we are actively advancing analytical models based on artificial intelligence (AI) and machine learning (ML) tools to fully leverage the potential of our existing client base while tailoring our products and services more precisely to our clients and completely personalising their user experiences. Although our primary focus is digital banking and technology utilisation, the bank remains committed to traditional banking services and maintains a physical presence. Our extensive branch network with more than 1,000 employees, who are always ready to respond to clients’ needs and demands, has been further strengthened by our digital offerings, providing customers with comfort and constant accessibility.

Towards the end of last year, AIK Banka received approval from the National Bank of Serbia to acquire Eurobank Direktna in Serbia. The integration of the two banks is expected to be completed at the beginning of next year. After this process is finalised, AIK Banka will become one of the three largest banks in the domestic financial market. This undoubtedly presents significant potential and opportunities for further development and innovation in every segment of our business. However, such a large market share also comes with great responsibilities. Therefore, AIK Banka will continuously strive to be a leader in client education, ESG (environmental, social and governance) and financial literacy for private individuals and corporate clients alike while maintaining its role as a pioneer and leader in innovation and developing new and state-of-the-art banking solutions.

Strong digitisation trend

AIK Banka’s digital-growth trend continues month after month. Although many clients still maintain their “phygital” approach to banking, combining online services with physical visits to our branches, an increasing number complete their business with AIK Banka completely digitally, using our online services.

AIK Banka is continuously working on developing and implementing new digital improvements.

Determined to provide its clients with outstanding user experiences through its available products and services, AIK Banka is continuously working on developing and implementing new digital improvements. The past year was marked by the launch of a new version of m-banking (mobile banking) and e-banking (electronic banking) channels for individuals, with a series of updates for all digital-banking users.

The direct results are not only the higher comfort levels that we have provided to our clients but also the significantly better results surrounding approval and payment of online cash loans, online account openings and online savings requests. We have been recording strong growth trends in each of these products for months, and we are especially proud of the plans for further improvements and developments of our registration process through Video KYC (know your customer), which AIK Banka was among the first to introduce to Serbia’s banking market.


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