Serbia’s AIK Banka, operating as an independent, full-fledged bank since 1976, prides itself on creating innovative solutions that enable it to resolve clients’ financial needs around the clock. Employing omnichannel and phygitalmodels, AIK Banka has built up a network of branches equipped to satisfy customers’ choices any time of the day or night with 24/7 Zones providing multifunctional automated teller machines and smart safes. By automating routine transactions, staff are freed up to help customers discover their best avenues to success. The bank continues to develop its online and mobile capabilities through its eBanking and mBanking channels so that customers can bank whenever they need to wherever they are. The pandemic has accelerated the bank’s inevitable digitalization and prompted staff to learn to work effectively from their home offices to meet their customers’ requirements for reliable and efficient banking services. AIK Banka’s reach extends outside of Serbia. It was the first Serbian bank to gain a foothold in the European Union and has increased its ambit through acquisitions, such as Slovenia’s Gorenjska banka and Greece’s Alpha Bank (later renamed Jubanka). The bank is also actively aiding its communities, especially by supporting children and families.
International Banker was able to catch up on AIK Banka’s progress in realizing its goal of being a reliable and progressive partner to its customers and communities by interviewing Ms. Jelena Galić, chair of the bank’s board of directors.
Welcome, Ms. Galić, and thank you for your time today….
Would you say that the pandemic and resulting lockdowns have accelerated the bank’s digital-transformation strategy, and, if so, can you provide any specific examples? Also, are you expecting the major shift in customer utilization of digital banking as a result of the pandemic to be permanent?
Digitalization is an ongoing process. We are constantly witnessing technological advancements that push banks and other industries, as well as regulators, to adapt. I am confident that we would have reached this stage of digital development anyway, but the pandemic definitely influenced the timeline. Due to the health risks we all faced, people were more eager to adopt the idea of mobile banking, for example. Mobile payments, online loans and account openings are all processes that were pushed by the pandemic situation but also enabled by regulation. We don’t expect customer utilization of digital banking to be reversed since it offers considerable comfort for the end-user. It saves time and money, and people are aware of these benefits. It is reflected in numbers, as well, where we can see ongoing positive growth trends on a monthly basis for the past two years. Since the end of 2019, the number of our mBanking users has increased by 400 percent and continues to grow.
What has been the single most challenging aspect for AIK Banka so far in dealing with COVID-19? And how have you endeavoured to overcome this challenge?
It was the overall situation that made us change the way we operated, but it was also a good example for the future. Before the crisis, it was unthinkable that the bank could function from the home office, but it has shown us that we are more flexible than we thought. If I have to single out the most challenging aspect, it would be protecting the health of clients and employees. It was both a social and business responsibility. We adapted to the new reality and introduced measures to mitigate health risks. The level of digitalization within the bank achieved prior to the pandemic definitely helped since our clients had the necessary tools to use in their everyday transactions, preventing unnecessary contact.
The bank’s phygital concept sounds particularly interesting. Please briefly explain what exactly this concept involves?
The digital business-transformation strategy led to the adoption of the omnichannel and phygital (physical/digital) concept and business models, which means that we are at our clients’ disposal 24/7 through a network of branches equipped with multifunctional devices. In addition, there are the digital channels of mobile and web banking, through which the bank’s clients can apply and receive approval for various credit and deposit products. We introduced the concept of a digital branch as well, offering clients direct online contact with our advisors. In this way, clients can enjoy the benefits of financial advising without leaving their homes. The advisory role of banks is becoming crucially important since the transactional sphere of banking is slowly being replaced by fintech (financial technology) companies and digital platforms, offering clients more control over their budgets. The phygital concept offers diversity for customers by providing a physical branch when needed and digital banking whenever and wherever. Even though we always emphasize the advantages of digital, we are aware that some customers prefer face-to-face conversations in order to be advised and decide on some important financial matter, and we would like to keep this as an option for the time being. In this sense, phygital means banking in accordance with the client’s preferences.
Part of the bank’s digital-transformation strategy has involved a significant expansion of its sub-brand Bank 24/7, introducing a network of multifunctional ATMs (automated teller machines) and smart safes that enable clients to use state-of-the-art services and solutions to perform the majority of their banking transactions within specified zones of AIK Banka’s branches. How satisfied have you been with this particular expansion so far? And how challenging have social-distancing restrictions been to the successful functioning of such branch zones?
24/7 Zones offer multifunctional ATMs and smart safes with the main purpose of ensuring the constant availability of cash transactions to our clients, which are still a significant part of the overall transactions in local economies in this region. In this sense, the 24/7 Zones have helped social distancing since there has been no need for clients (both retail and SME [small and medium-sized enterprise]) to wait in line to complete a transaction that cannot be done online. Clients are no longer dependent on the working hours of the branch, which minimizes queuing. By combining the two, the 24/7 Zone and the digital platform, we are also improving the quality of our services in the branch. Our advisers are now focused on listening, advising and finding a personalized solution for each client instead of performing mechanical transactions, which are now automated. The roles of employees have changed as well as the quality of service.
We have seen a wide range of views in recent months from banks worldwide on making employees return to the office. What is your view? Should employees increasingly be in the office as much as possible, or are you happy to expand the number of hours employees can work remotely on a more permanent basis?
The situation with the pandemic gave us all a valuable lesson on flexibility. We managed the unthinkable, and it functioned. This influenced companies—not only in the banking sector but across industries—to adopt the home office as a new reality. On the other hand, working in the office speeds up processes, builds teams, inspires employees to work together and share ideas and experiences better than remote work. The bottom line is that the choice doesn’t depend on personal preferences but the healthcare situation and real needs.
The small and medium-sized enterprise (SME) sector in Serbia is particularly important and has been significantly impacted by the pandemic. What key measures has the bank taken to support this sector during this period? And what, if any, have been the bank’s most important recent digitalization efforts to help SMEs?
This crisis is not typical, characterized by a lack of demand. On the contrary, demand has existed in the market, and the problem has been supply, which has had certain limitations due to restrictions taken to preserve public health. The state took measures to mitigate the shock that all SMEs went through by reducing the reference rate, introducing a moratorium and offering guarantee schemes in cooperation with banks. AIK Banka supported all these measures and actively participated in all the programs available to support SME clients, ensuring their stability during the pandemic. Digitalization also played an important role, enabling the availability of funds and bank services 24/7 in real-time. The number of online transactions during 2020 featured a growth of 39 percent compared to the previous year and 37 percent in 2021 compared to 2020.
In terms of the bank’s commitment to corporate social responsibility (CSR), what has been the most significant way in which AIK Banka has supported local communities over the last year or so?
In 2020, AIK Banka donated more than 330,000 euros to the National Health Insurance Fund of the Republic of Serbia to purchase medical equipment. In this way, through the support of all of us, the capacities of the health system have been strengthened, providing the possibility of faster reactions in the treatment of patients with more severe clinical pictures. However, the backbone of our business and CSR activities are children and families since we believe that investing in younger generations and providing better conditions for their development means investing in a better future. Traditionally, AIK Banka organizes its Family Support program in which subsidies are awarded to employees who became parents during the current year. Over the course of this initiative, AIK Banka and the MK Group have donated more than 600,000 euros to 620 families and more than 1,000 children. In 2021, this program was significantly expanded to improve the conditions in which a new life is born, not only in Serbia but also in the region. In this way, we wanted to instigate regional initiatives and accentuate the importance of youth if we want to ensure a sustainable future. Together with the MK Group, AIK Banka donated to maternity hospitals in Serbia, Bosnia and Herzegovina, Montenegro, Croatia and Slovenia. The value of this donation exceeded 700,000 euros.
AIK Banka has also shown its support for the family through cooperation with SOS Children’s Villages Serbia, an organization that works to improve the quality of life of children and young people without parental care—empowering families at risk, fostering the economic independence of young people from vulnerable groups and providing all kinds of support for marginalized categories. We are also proud of our cooperation with the organizations Be Humane and NURDOR to provide support for children and parents in moments when they need help the most, as well as cooperation with the Serbian Philanthropy Forum and the Coalition for Charity, the actions of which we continuously support.
Specifically with respect to further digitalisation, what are the bank’s key objectives over the next couple of years? Are there any exciting digital-banking products and/or services that are being rolled out in the near future that you would like to highlight?
We are continuing with the same strategy. In order to keep up with the standards we set, we will continue investing in digital services. Due to market trends, we are focusing more on mobile, expanding the scope of services and products available on this platform but also enabling additional functionalities by using the high-end technology available, as well as the latest trends regarding UI (user interface) and UX (user experience). Our goal is to be recognized as a regional leader in digital banking by offering state-of-the-art technological solutions, high-quality services and products oriented towards clients’ needs.
We have seen several waves of the coronavirus already, prolonging lockdowns and delaying economic recoveries around the world, including across Europe. Would you say that the bank is now adequately prepared for any further breakouts or new strains of the virus?
I am confident that we are, though we can never say we are 100 percent ready for something that may come in the future and doesn’t depend on us primarily. We are not immune to the virus, and, therefore, no one can be prepared or careful enough. During the previous two years, the world faced a crisis that affected each and every individual on the planet, either because of imposed restrictions or health problems, but we all felt it. As a responsible organization, we will continue to support the communities in which we operate, as well as our clients in their day-to-day banking activities. We are doing our best to be a reliable partner and give back to society as much as we can. This will be our goal in the future as well.
AIK Banka has been exceptionally successful in meeting its clients’ financial needs. Thank you again for answering my questions.