Interview with Ms. Jelena Galić, Chairman of the Executive Board and Chief Executive Officer, AIK Banka

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In the 45 years since its establishment, AIK Banka of Serbia has gained a reputation for being a reliable and efficient financial institution, focused on satisfying customer needs through high-quality retail and commer­cial products and services, and today is acknowledged as one of the country’s top 10 banks. Through organic growth and acquisition, AIK Banka has focused on increasing its market presence; it was the first Serbian bank to enter the European Un­ion market, through its acquisition of Slove­nia’s Gorenjska banka. According to CEO Jelena Galić, the footings underlying the bank’s business strategy include “regional connection, European values, stability, availability, trust, social responsibility and orientation towards individual-user requirements”.

Recog­nising that it exists because of its customers, AIK Banka contin­uously searches for fresh ways to do what it does better through the development of digital services and products—made available to customers 24/7 and tailored to meet their requirements with enhanced speed and flexibility while also ensuring the securi­ty of their finances. AIK Banka had been fully engaged in digital development before the pandemic but further enhanced its product offerings to meet its customers’ changing needs—for example, being among the first in its market to offer an e-commerce service. The bank has supported the government in preserving stability and prosperity for Serbians in a taxing macroeconomic environment.

AIK Banka’s commit­ment to its community matches its service delivery and is reflected in its continuous investments in innovations; adherence to the highest levels of professionalism and business ethics; respect for its business partners, customers and consumers; demonstrated environmental awareness and environmental protection; as well as its concern for broader social issues. In acknowledgement of its contributions, this progressive bank has won the prestigious International Banker award for the best commercial bank in Serbia five years in a row, 2015-19.

Ms. Jelena Galić, chairman of the Executive Board and chief executive officer, recently shared with International Bank­er AIK Banka’s latest activities and achievements.

Ms. Galić, thank you for speaking with us today….

Do you anticipate that some banks in Serbia may fail, or at least end up in deep trouble, due to COVID-19 restrictions? How confident are you in AIK Banka’s resilience, especially when it comes to capital and liquidity strength?

In the previous period, Serbia achieved and preserved macroeconomic stability through responsible economic policy and helped investor confidence grow, which significantly increased the inflow of foreign direct investment and altogether influenced the decline in risk premiums and growth in credit ratings. The National Bank of Serbia has contributed significantly to achieving good economic results through the consistent implementation of monetary policy and full coordination with fiscal policy. 

Given the complexity of the circumstances caused by the COVID-19 pandemic on the local market, we have found room for taking a set of measures to facilitate the settlement of obligations of both legal and natural persons and the responsible credit-risk management of financial institutions. The main benefits for clients are supports for the most vulnerable sectors through certain benefits, delays in the repayment of obligations and lending through the state-guarantee scheme, which aims to neutralize the pandemic’s negative economic effects and provide additional impetus to economic growth. 

AIK Banka supports all programmes intended for the local market, monitors market trends, is in constant contact with its clients and undertakes all available preliminary activities. Taking into account the capital and liquidity positions of the bank as well as the fact that the indicators in this area are significantly above the regulatory limits and market benchmarks, and with all available market information in this period, we are fully convinced that we shall maintain a stable position in the future. The bases underlying our business strategy are regional connection, European values, stability, availability, trust, social responsibility and orientation towards individual-user requirements, thus ensuring long-term sustainability.

Has COVID-19 accelerated AIK Banka’s digital-banking ambitions? If so, which specific digital-banking products and/or services offered by the bank do you consider to be most important in ensuring customers remain satisfied with their overall banking experiences?

The COVID-19 pandemic has affected the way all companies and economies do business globally. AIK Banka developed state-of-the-art digital services with the aim of making its services available to its clients every day, 24 hours a day, even before the pandemic, which has only accelerated what we had already started. The bank was among the first in the local market to implement an e-commerce service. Apart from transactional services, the bank also wanted to automate the sale of products and make them available via online channels—along with numerous background services and processes related to everyday banking operations. 

In addition to the constant availability of funds and payment transactions via electronic- and mobile-banking applications, AIK Banka’s clients can get short-term borrowing in the form of an overdraft, credit card or loan in just a few clicks. A contract with the bank can be signed online, and the funds will be in the client’s account within 10 minutes. The online lending process is automated; the client chooses the loan term and amount, while the bank gets all the necessary data in real-time, approves the loan and enables digital signing of the contract with the client. We have also introduced the possibilities of online savings, concluding contracts on term deposits and on-boarding of clients—i.e., those who are not bank clients can open an account via video identification.

All of the bank’s clients who use the mobile application can pay a bill by reading the QR (Quick Response) code at points of sale (POSs) that allow it. Companies that allow this payment method at their POS terminals or via the mobile application will receive the funds from the transactions within 15 seconds, with lower transaction fees than with card payments. Clients who come to the branches also have multifunctional devices available 24/7 in self-service zones. What is more, AIK Banka was the first in Serbia to release the functionality “Purchase with cashback” with its partners—during a purchase through a POS terminal, a client can buy goods and withdraw money in a single transaction.

Which product is most important in the field of digital banking depends primarily on the user. Citizens who do not care about the availability of funds and payments via the mobile application and, for example, a small company that develops its online store through e-commerce services during the coronavirus pandemic do not have the same priorities. We have made every effort to enable both of them by meeting their needs with our bank’s services and good customer experience.

The bank’s e-commerce service sounds particularly worthwhile to clients. Can you please briefly explain how this service works and why you consider it to be so important among the bank’s offerings?

When it comes to our e-commerce service, AIK Banka is already a traditionally recognised and reliable partner to a large number of clients, to whom we offer expertise and full support in establishing a successful and profitable business model. The advantages of the online store have become especially significant during the pandemic—with no direct contact between buyer and seller, this type of store does not require many employees. Usually, a small number of employees are enough to update and run an e-commerce business, especially in the SME (small and medium-sized enterprise) segment; the market expands easily, and services are more readily available. AIK Banka’s e-commerce solution provides, among other things, high data security and business in accordance with standards, the latest 3D Secure technology but also advisory services on the integration of e-commerce participants. Together with the various integrators we work with, we offer clients quick and easy integration into IPG (Internet Payment Gateway), the possibility of Card-on Files (CoFs), recurring transactions, payment to merchants in multiple currencies that legal entities have recognised—all of which makes our offer unique on the market.

Serbia’s benchmark interest rate is now at a historic low of 1.25 percent and is likely to remain low for some time, given the COVID situation. How does this environment impact the bank’s growth strategy, and is the bank adopting an alternative strategy to compensate?

The reference interest rate has been further reduced to one percent. This is important to support the country’s economy because by reducing the reference interest rate during conditions of low inflationary pressure, the central bank additionally supports credit and economic growth. The central bank explained that the additional reduction of the reference interest rate to one percent was for additional support to the domestic economy, bearing in mind the scale of the crisis around the world caused by the pandemic, the worsening epidemiological situation and the slowdown in the global economic recovery, especially in Europe.

Under such conditions, it is quite certain that organic growth will be limited. In this sense, we monitor the market trends, aiming toward potential further acquisitions through which we would continue to successfully implement our strategy of strengthening and expanding in the region. In 2017, AIK Banka bought Alpha Bank in Serbia and, in the same year, successfully integrated the two banks. Also, with the acquisition of Gorenjska banka in Slovenia in 2019, AIK Banka became the first domestic bank to expand its business in the European Union (EU) market. AIK Banka’s entry into the EU market speaks in favour of the strong foundations and sustainable development that its operations rely on. The bank’s strategic commitment is to further position itself in this part of Europe as a financially strong and credible banking group. Previous experience is certainly another confirmation of the bank’s strategic direction aimed at further growth and development on the regional market, and in that sense, we have a clear vision of our banking group’s focus on further expansion in Serbia and the region.

Has the pandemic changed your approach to leadership? What one quality above all others makes a successful banking leader when facing such unusually tough times?

I believe that a leader is characterised by the strength of vision to go ahead of his or her time, flexibility to be open to different approaches and wisdom to make smart choices—i.e., to make good decisions. However, one of the key elements of a good leader’s success is caring for people and the environment. Our team functions as a unique team dedicated to innovation, openness and expanding boundaries in thinking and acting and which learns and acquires new knowledge and skills every day and invests in the development of its own capacities. Only in this way is it possible to progress together, both individually and collectively. It is necessary to have consistency, perseverance and transparency on the development path. This is the foundation for safety and sustainability, which is crucial in all endeavours, from the operational to the strategic level, gaining the trust of partners, clients and employees. I believe that working together, caring for people and the environment, and expanding boundaries in thinking and acting can turn challenges into opportunities and create a positive experience. In these challenging times, it has been reaffirmed that solidarity, mutual support and a team spirit that unites are of paramount importance. In that sense, AIK Banka and the entire financial sector have reacted responsibly in implementing all measures to preserve the health of employees and clients, ensure financial stability and support the real sector of the economy. 

What does the term sustainability mean to you and AIK Banka? Does the bank focus in specific ways on improving sustainability, or does it have key sustainability objectives? And if so, can you provide one or two examples?

In the market environment in which we operate today, the interests of different stakeholders are intertwined: capital owners, employees, clients, regulatory bodies, the state and society. Sustainable financing is exactly what gives all these interests a common denominator and gathers the stakeholders around a common, unique goal, which is to ensure sustainable development for the long-term existence of human society and the entire environment. In their traditional role of financial intermediaries, banks play a significant part in directing the further development of the concept of sustainable financing, from providing stable sources of financing to advisory services to stakeholders, thus not only creating economic benefits for clients but also improving the quality of business cooperation and the development of the overall environment.

AIK Banka has arrangements with companies that invest in renewable-energy sources, energy efficiency and, in general, the green economy. These are clients from the public sector—state administration and local self-government—and more and more clients from the private sector are implementing changes in their businesses while relying on these foundations. In that sense, we are an active participant in the work of institutional bodies that deal with these topics at the national level and thus take on the role of mediator in spreading the national strategy of sustainable development to the real sector of the economy. We continuously use the knowledge and skills that we possess to best help our clients adequately manage the challenges posed by climate change, the green economy and sustainable development. Although sustainable financing recorded significant growth in the previous period, a further increase in demand for so-called green banking products in the coming years is expected, especially with the maturation of younger generations among the active users of banking services and future investors.

What is the bank’s single most important objective over the next 12 to 18 months? And how do you intend to achieve it?

Our strategic commitment in the coming period is to expand further and position organic growth and acquisitions in the CEE (Central and Eastern Europe) markets that we have identified as primary. In addition—since we are focused on clients, both in the retail and corporate segments, with the aim that our offer adequately responds to their needs—investing in the further development of the digitalization of services and products that we offer will remain a key determinant of our organic growth in the coming period. In this regard, the bank’s basic goal remains the same: to create products and services for each client, looking individually at his/her personal requirements and preferences. At the same time, the timely consideration of market trends and needs of the bank’s users as well as an adequate response to challenges and wise management of the changes and risks that they bring is an approach that we have nurtured so far and will continue to nurture.

Ms. Galić, this approach certainly seems to be working for AIK Banka and its many customers. Thank you for your time today.