Juliet Morris of International Banker interviews Mr. Michael Collis, Chief Executive Officer and Managing Director, and Mr. Melvin Pellicano, Head of Business Development, of BNF Bank.
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Today, International Banker is joined by Mr. Michael Collis, Chief Executive Officer and Managing Director of BNF Bank, and Mr. Melvin Pellicano, Head of Business Development of BNF Bank, to discuss the banking sector in Malta, BNF’s fairly recent acquisition and the bank’s digital strategy.
Welcome, gentlemen….
Michael: Thank you very much for inviting us.
Michael, in October 2016, Al Faisal Holding, one of Qatar’s largest private-investment groups, acquired majority shares in the bank. In the two years since then, how has the bank benefited?
Michael: Well, the bank has benefited in several ways, really. Firstly, and most importantly, I think we’ve reinvigorated the bank. Our growth has been extremely positive. This year, the balance sheet has grown by probably 25 percent or more. And we’ve actually been through two rights issues as well, so we’ve increased the capital base of the bank substantially. Threefold, in fact, in the last two years. So that’s given us the opportunity now to build what we want to build in Malta.
Melvin, how much do you think the decision to change the bank’s name from Banif Bank to BNF Bank has had an impact? And has that proved successful? We heard from Michael how well things are going. Do you think that’s made a difference?
Melvin: Yes. First and foremost, the rebranding was brought about by the acquisition of the bank. So the new realities of the bank meant that we had to have a new identity. I guess it’s been very positively received as well, and it has reaffirmed the bank’s position as an innovative bank with a renewed vision for growth. Together with our shareholders, we are committed to building a new future both for us and for our customers. And we just look forward to continuing on this trend that we have just started.
So, you’re focusing on innovation. I understand the bank has recently designed a new home-loan offer. What are some of the key features of this offering, and how is that innovative?
Melvin: Yes, let’s put everything in context. In Malta, there’s a preference for buyers to own their own dwellings, so actually having a competitive home-loan product means a lot to the bank. It means a lot to this strategy of growth that we want to have. Our offer currently is based on a two-year fixed term and a variable rate thereon, making it actually the best available APR (annual percentage rate) on the market at the moment. It’s been quite positively received, as well. We’ve seen, month-on-month, constant increases. And it’s been quite successful as well. Apart from the home loan, we also offer a personal loan to finance personal commitments mainly related to house developments, but…and we believe that we have the right package in place to bring us more customers towards the bank.
So, home is very much where you see the current focus?
Melvin: It is. It’s considered as an anchor product. When customers come to us for their home finances, it means that most probably they will use us for other things as well. So, it’s only natural for us to have a very strong competitive product in the mortgage sector.
Michael, innovation presumably massively involves digital strategy. So, what is BNF’s digital strategy?
Michael: Well, our digital strategy is evolving at the moment. As is common with many banks, we’ve invested very heavily in IT and new systems, and we will continue to do so. We’re going through a transformation program as we speak. And I think in the modern world, any bank that offers financial services to retail or corporate customers has to have a fully thought-through, properly funded and lasting digital strategy in order to compete in the modern market.
And presumably you’ve got something of a blank canvas, really, at the moment, don’t you? On the basis that you are, you know, starting a whole new venture, a whole new strategy.
Michael: Yes, I think it enables us to position, where we are at the moment enables us to position ourselves maybe a lot more easily than some of the larger banks in Malta. We’re not one of the biggest banks in Malta; we’re a medium-sized bank at the moment. We’ve got ambition to be one of the largest banks, but that scale that we have in our business enables us to implement our strategy, digital strategy, far more effectively than say a larger bank which would have more issues, if you like, in going through that transformation.
More constraints. Exactly. Yes. So, Melvin, how important a role do the bank’s social-media channels play when you’re designing business-development strategies?
Melvin: Well, it’s a very important role. It’s…we all know today’s, today’s role of social media in today’s world. We live in a connected global village, where everybody is connected to each other both socially…people interact also with businesses and with financial institutions like us through social media and other digital platforms. We’re even connected to things nowadays. So, it’s very important for us to be present and relevant in the sector. And we have very ambitious plans that we’re going to put in place. Actually, through social media, we are able to offer a service 24/7 365, which means that we have to be top-notch throughout our offering—not only during the normal business working hours but beyond. And we’re working towards that.
And how about improving online banking? I mean, how much scope is there for BNF to do that—and mobile banking as well? Those sorts of capabilities going forward?
Melvin: There’s a lot of scope, definitely. We have, as I said, ambitious plans that we are going to put in place.
When you say we are going to put in place, what sort of timeframe are you looking at?
Melvin: There is a short-term timeframe. It’s a phased approach, whereby we have short-term targets that we want to be present in particular channels with particular technologies in the very short period of time, as we’re speaking. And then we have a longer-term strategy that we want to have in place. By then, we would have the right infrastructure in place to consolidate our position and our product and service offerings through various channels and media that we can operate in.
Michael, Malta continues to enjoy strong GDP growth, having experienced successive annualized growth above 4 percent for each quarter since 2014. Do you anticipate a similar growth trajectory going forward?
Michael: Well, I don’t see why not, is the honest answer to that. Obviously, there are always extraneous events that may impact on the local economy. But certainly as far as the local economy is concerned, what I’ve been very impressed by in my time in Malta is how diversified and how strong the economy is. So, the tourist industry is strong, financial services is strong, fishing…lots of fish farming in Malta, which is a very international business. Gaming. Now blockchain. You know, the government’s really trying to push blockchain, or to be at the leading edge of blockchain in Europe. So, I think…I can’t see why the economy won’t continue to do well. Very, very good and hardworking labor force there. I think Malta’s set fair, as I said, certainly from a local perspective for the next few years. Whether extraneous events impact that, who knows? But that’s my view as a, if you like, a non-Maltese individual coming to Malta for the first time.
So, basically a small population, but with a lot of energy and enthusiasm, is what you’re saying.
Michael: Well-educated, very well-educated, hard-working people. Yes.
And so, on that basis, is BNF Bank well-placed to capitalize on that sort of environment? And if so, how?
Michael: Well, yes, we are. I think as a commercial bank, which is what we are at the moment—commercial banks tend to some extent follow, or be a bit of a lagging indicator to the economy. So they do well when the economy’s up and not so well when the economy’s a little bit down. So, of course, we benefit from the way the Maltese economy is performing at the moment. But far more important to us is a very long-term strategy that we have in place which will look through economic cycles. And for us, our strategy is to very much position ourselves as a community bank in Malta. So, to be part of the community, to provide well-rounded services that see people through their—from their early adult life right the way through to retirement. And in Malta, because the community is very timeless and obviously—it’s only an island of 450,000 people—it is easier in a way to become embedded in the local community.
And how are consumer preferences changing in Malta, Melvin? You know, with regards to banking and services? It’s a very family-orientated community, but presumably, like the rest of Europe, you know, there are changes. There are things that are on the move.
Melvin: Yes, and in certain aspects, it is still very traditional. However, there is evolution going on. The new generation of people demand immediate service with the right products, most probably more often than not, cheap products as well—and simple to use and understand as well. So, we see this for us, it’s an opportunity that we can offer these kinds of services and products to our clients. And we want to be as relevant as we can to the customers and their growing demands that they are having.
And how do you see the banking sector changing or going forward, should I say, in Malta over the next few years, Michael?
Michael: Well, basically there are two banking sectors in Malta: the onshore domestic banks, of which we’re one. And then there are quite a few offshore banks that are in Malta for a variety of different reasons. So, I’m just confining my comments to the onshore banks. At the moment, the situation is that there are two very dominant banks in the market. One is Bank of Valletta; the other is HSBC. Between them, they have something like 80 percent of the market. So, the other three or four banks in the market are competing for that 20. But I think what we’ll see over the next five to ten years is that the banks, if you like, in that second tier will compete very hard with the two banks at the top. And so I expect to see market share even out a little bit more compared to where it is today.
With benefits, presumably, to the consumer, to the client.
Michael: Yeah, well, the competitive environment is always good for the customer.
Exactly. In your opinion, Melvin, what is the most important factor or attribute for a bank to have in order to maintain its relationships long-term with clients?
Melvin: I would put it down to trust. In a very simple model, people trust in us their lifetime savings. We trust in them in repaying back any money that we lend them. And ultimately, customers trust us in conducting our business in a diligent way. So, that, together with honesty and transparency, I guess, they are the right ingredients to have a very fruitful, long-term relationship.
Michael, are there any CSR initiatives with which the bank is involved that you’d like to mention?
Michael: Yes, we have several, actually. As I said, really our objective is to become part of the local community in the, over the long-term, so that people see us as being their bank. Probably the thing we’re best known for is we, for the last 10 years, the bank has sponsored the Fun Run in Malta, which is a presidential initiative. Something like 10,000, 15,000 people take to the streets, and it’s a very, it’s been a very worthwhile event. Both socially, in terms of the money that’s raised that goes to good causes through the presidential office. And secondly, in terms of raising the profile of the bank. Other initiatives we have, we’re involved in educational initiatives helping special-needs children in school. We do a lot of work with the arts community as well. Restoration of old manuscripts and paintings. And many different areas. We like to, rather than just be focused on one particular thing, one particular aspect, we like to be involved in all aspects of both being involved in the social care of the community but also involved in the artistic side of life as well, too. We think that’s an important part of the culture of Malta, actually.
As Head of Business Development, Melvin, which one objective do you hope to accomplish in this role?
Melvin: I would say to be as innovative as we possibly can in terms of both products that we offer and also services and also the channels that we operate, through which we operate. I believe that that there is commitment, and with the direction that we have and the stuff that’s populating within the bank, that can be achievable.
And how about you, Michael? What would you like to see happen? What would you like to achieve during your tenure as CEO?
Michael: I think I’d like to see the bank firstly reach its potential.
And what is that? Where is that?
Michael: Well, I think we can compete with the bigger banks in Malta and really take market share. I think we can become very much the first bank of choice for many clients in Malta of all ages. We have a strategy of wanting to internationalize our business as well to become active in private banking and asset management. I think I’d like to see some foundations laid for that. Whether I’m around long enough to see those come to fruition is another thing. From an HR point of view, really, what I’ve always tried to do in the banks that I’ve been involved in in the past is…I like people to get up in the morning and want to come to work and be enthused and motivated. And I think that’s what we’ve got in the bank at the moment. A very motivated, passionate staff. And I think if we’ve achieved that, we’ve done a lot of good things.
Well, good luck to both of you.
Michael and Melvin: Thank you.