Home Banking New Year, New Challenges: An Interview with Ms. Umut Shayakhmetova, Chief Executive Officer, Halyk Bank

New Year, New Challenges: An Interview with Ms. Umut Shayakhmetova, Chief Executive Officer, Halyk Bank

by internationalbanker

 

Halyk Bank, headquartered in Almaty, Kazakhstan, celebrated its 100th birthday last year, commemorating its long history as a commercial savings bank. Part of Halyk Group, the country’s leading universal financial group, the bank is indisputably recognized as Kazakhstan’s largest bank, with 14 subsidiaries, including banks in Kyrgyzstan, Georgia and Uzbekistan, and more than US$30 billion in assets. The bank has grown organically over the years, but it also merged with the country’s largest private bank, Kazkommertsbank, in 2018, leading to further expansion and its ascent to a regional powerhouse in Central Asia, providing a full suite of products and services from banking and insurance to brokerage and wealth management for retail, SME (small and medium-sized enterprise) and corporate customers. The bank has won numerous awards, with some presenters acknowledging it as one of the top-achieving banks in Eastern Europe, even though only a small percentage of Kazakhstan’s territory lies in Europe. Halyk Bank has risen from being the fourth-best bank in the country to the top bank under Ms. Umut Shayakhmetova’s 15 years of leadership, establishing her as Banking CEO of the Year Eastern Europe 2023.

Halyk Bank leads its industry peers not only in its financial metrics but also in its commitments to achieving the United Nations’ Sustainable Development Goals and its ESG (environmental, social and governance) initiatives.

International Banker recently spoke with Ms. Umut Shayakhmetova, chief executive officer of Halyk Bank, about the bank’s exceptional standing and accomplishments.

Ms. Umut Shayakhmetova, Chief Executive Officer, Halyk Bank

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

You are coming up to 15 years in charge of the biggest bank in Kazakhstan. What are the key ingredients to your success as the bank’s leader?

I started in the midst of the global financial crisis at the beginning of 2009. It was especially painful in Kazakhstan because BTA Bank, the biggest bank then, and Alliance Bank collapsed simultaneously. The crisis lasted for a very long period and had a significant effect on Kazkommertsbank, one of the main banks in Kazakhstan at the time.

In my early years as a leader, I had to come up with a lot of unique answers and strategies. Looking over my shoulder now, I would state that the ability to assume great responsibility is the primary requirement for becoming a leader. It is assumed that initially, you have to explore an issue, embracing its technical, financial and human aspects, always trying to reach well-balanced decisions.

The second most important part of being a leader is building your team. It is crucial to find the right people, be able to motivate them and work with them. Employees should be strong, professional, honest, committed to the organization and patriots of the country. It is also extremely important to find the best people in the market and work as a team.

The third component of successful leadership is strategic vision—understanding where to make your move, what areas will be in demand by your customers and the market, and what challenges lie ahead. It is essential to anticipate potential developments, forecast exposures and adopt appropriate development strategies.

Summing up, I can say that the essential “ingredients” of a leader include professionalism, responsibility, teamwork skills, understanding and accepting people, strategic vision, empathy and caring. When it comes to supplementary components, they are creativity, lifelong learning skills and the ability to explore new areas and industries.

Over the years of my leadership, Halyk Bank, which was ranked number four in Kazakhstan at the time of my appointment, has become the number one bank in the country. Today, we have the highest ratings from international and reputable rating agencies (including Moody’s Investors Service, Standard & Poor’s and Fitch Ratings), not only in Kazakhstan but also in the whole of Central Asia. At Halyk Group, we have successfully navigated various challenging stages and always strive to adapt our operations to all sorts of challenges.

Do you feel that being CEO at Halyk Bank for 15 years has helped you become a better leader and form long-term relationships with your clients and staff? 

I have gained my current experience and wisdom year after year over the past 15 years. Undoubtedly, they have helped me reach more balanced decisions. Our team considers a particular situation not only through the lens of Halyk; we also look at its impact on the community, our customers and our employees.

Our clients and partners, having experienced working with Halyk Bank and me personally, develop trust in us. That trust and our reputation built up over the years are extremely important. Our investors strongly believe that any information from Halyk is verified, professional and trustworthy.

Shortly after dealing with the global pandemic, we unfortunately had Russia’s invasion of Ukraine. How difficult was this for the bank to deal with on your northern and western borders? What have been your biggest learning lessons in the last three years?

Every year gives you a new challenge. In fact, the last three or four years have been very complicated for our country and region. The pandemic and the closure of borders with our big trading partners, China and Russia. All these factors have definitely had an impact on the breakdowns in supplies, giving rise to logistics issues. Then came the war between Russia and Ukraine. Faced with the unprecedented sanctions imposed on Russia in 2022, we were forced to restructure our internal compliance procedures. It was imperative to be fully compliant with all sanctions regulations. Halyk Bank is traded on the international London Stock Exchange (LSE), so we are subject to particularly stringent requirements.

We hired a large team of risk managers, automated all our processes and provided training to our employees. We also undertook extensive client outreach, explaining to them what could and could not be done and what transactions would be rejected by the bank. Since many of our customers had business and trade relations with both Russia and Ukraine, we were concerned that the war would have large adverse effects on our loan portfolio. We discussed each case with the team, lawyers and Western correspondent banks—how certain situations should be interpreted and perceived.

The main lessons learned by Halyk Bank’s team and me personally as a manager are not to lose control, spirit or faith; not to be afraid of crises; and to lead the team, being confident that there is no such thing as a dead end and that we will find a way out even in the most complicated situations. 

What exciting plans for the next 18 to 24 months can you tell us about?

Given the current geopolitical situation—the war between Russia and Ukraine—we have had to restructure our operations. Thus, in 2022, we decided to sell our subsidiary banks in Russia and Tajikistan. Those decisions were taken in a very short period, and I am glad that we were able to exit those markets without violating any sanctions while accommodating the interests of all parties to this major process: employees, clients, investors and regulatory authorities.

We are looking at the next 18 to 24 months and realizing that the world remains exposed to the risks of high interest rates and likely economic recessions, with the risks of further regional developments being acute, including those related to Russia and Ukraine, China and Taiwan. Therefore, we take all those risks into account and look, study and understand that we need to be prepared for certain scenarios. We continuously conduct stress tests within the bank, including in terms of businesses.

What remains unchanged are the ongoing digitalization of the bank and Halyk Group, client focus, development of new products (both banking and non-banking) and building our ecosystem.

ESG (environmental, social and governance) policy development is also our priority. I would like to note that Halyk is a leader in implementing ESG principles. We were the first financial institution in Kazakhstan to be rated by the international research agency MSCI ESG Research; we are a participant in the United Nations Global Compact; and, without the slightest exaggeration, we can be called the driver in the implementation of ESG standards in Kazakhstan.

Can you share any of the most significant upgrades the bank has made to its IT (information technology) infrastructure in recent years? And have any of those upgrades been carried out to improve the bank’s retail-banking credentials (for example, big-data storage capabilities)?

We have been working hard on the infrastructure development of our IT systems. Our priority is to promote our banking mobile applications: Onlinebank for legal entities and Halyk for retail customers. Today, the Halyk app is the second-most downloaded free mobile app in the finance category on both iOS and Android, with over nine million active users. With Halyk, you can make more than 14,000 payments; domestic and international transfers; various contactless payments, such as QR (quick response), Google Pay, Samsung Pay and Apple Pay; and get more than 80 percent of public services online. Our application, Onlinebank, has been recognized as the best mobile application for businesses, according to the SME Banking Club ranking. The number of active clients exceeds 350,000 companies. Onlinebank helps an individual entrepreneur make transfers to business partners, arrange digital loans and issue tender guarantees. And all of this can be done online in just a couple of minutes.

Obviously, these meaningful results achieved in such a short time are based on the synergy between the state and businesses. Our government places a great emphasis on the digitalization of all business spheres and public life. This resonates with the bank’s strategic goals and its team’s efforts to develop innovative technologies.

Now, we are deeply engaged in developing our ecosystem products, such as the lifestyle service kino.kz, online insurance and Halyk Invest. We have become the best bank for brokerage services in Kazakhstan. During the IPO (initial public offering) of the national company KazMunayGas, more than 70 percent of retail customers purchased its shares through the Halyk banking app. All services are developed primarily through large infrastructure investments. Supported by external consultants and AI (artificial intelligence), we have built a data factory. It was a huge project that lasted over two years, yet we completed it successfully. In brief, this project will allow us to fundamentally change the quality of our work with client information, including collecting and processing large amounts of data at the nexus of modern technologies. This will enable us to provide better service, provide customers with the information they need when they need it, offer more of the products demanded by our clients and work with them in real-time. We are sure that this will improve satisfaction with our services, particularly by enhancing service quality.

Furthermore, we have built data centers across the nation on our own dime. Our subsidiary, Kazteleport, is involved in the development of telecommunications. We currently offer services to outside parties and are present in a number of Kazakhstani cities.

We have installed smart ATMs (automated teller machines) that comply with the newest technology and have invested in expanding our ATM network. We have invested in technology that allows an outlet to instantaneously issue a card. Significant sums of money were invested in the network expansion and acquisition of POS (point-of-sale) terminals.

We introduced the Halyk QR payment system, which is now used for all domestic payments made within the nation. We are investing in processing development since we also offer processing services to outside partners, such as banks, which necessitates significant infrastructural investments.

Do you have any examples of successful social-responsibility initiatives the bank has undertaken in the community?

Charity and ESG principles are two of the bank’s main areas of focus, as I have already mentioned. As the very first financial institution in Kazakhstan to publish sustainability reports, we can attest to Halyk’s significant progress in applying ESG principles across all areas of operation. A program document, the Sustainable Development Policy, has been adopted, which served as the basis for the Sustainable Development Action Plan for 2022-2024.

It is important to note that the bank’s numerous key standards demonstrate our dedication to reaching the Sustainable Development Goals (SDGs). In addition to those mentioned above, the bank has adopted a new Code of Ethics, Anti-Corruption Policy, Environmental Policy, Freedom of Association, Collective Bargaining, Diversity and Inclusion Policy and Personal Data Collection and Processing Policy. We have begun implementing responsible-finance principles, incorporated ESG principles into the bank’s risk-management system and computed the carbon footprint of indirect emissions from the financed portfolio in order to control the bank’s indirect environmental impact (Scope 3).

With the help of these policies, we formally affirm our adherence to the UN Global Compact’s Ten Principles, the largest voluntary initiative that brings together the efforts of over 20,000 member companies from over 160 countries. Since joining the initiative in January 2023, Halyk Bank has been the first bank in Kazakhstan to align its operations with global values in the areas of anti-corruption, responsible labor practices, human-rights protection and environmental preservation. It is important to highlight that a thorough independent evaluation of Halyk Bank’s policies and procedures against the 10 key principles of the Compact was conducted prior to this major step. Furthermore, the approval of the bank’s membership in the UN Global Compact happened very quickly, primarily because our bank voluntarily initiates, participates in and supports projects related to the accomplishment of environmental, gender, institutional and other Sustainable Development Goals.

Transparency in an organization’s operations for all stakeholders is a crucial indicator of its commitment to sustainable development. As a result, starting in 2020, Halyk Bank has been reporting yearly on its ESG progress in accordance with the Global Reporting Initiative (GRI), an international set of guidelines for ESG disclosure. In August 2021, Halyk Bank’s ESG rating was upgraded from “B” (low) to “BB” (medium) by international research firm MSCI ESG Research, which acknowledged our positive advancements in ESG disclosures based on the bank’s 2019 and 2020 reports. This indicates that we have also made significant progress in this crucial activity. Based on the outcomes of the annual selection for the best bank in Kazakhstan in 2022, experts from the international financial publication Asiamoney named Halyk Bank the winner in three categories: Best Investment Bank, Best ESG Bank and Best Diversified and Inclusive Bank (December 2022). Two independent organizations gave Halyk Bank’s “Sustainability Report 2021” high marks: the Kazakhstan Stock Exchange (KASE) recognized it as the best ESG report among financial-sector companies in January 2023, and PwC (PricewaterhouseCoopers) ranked it in the top 10 for the quality of ESG disclosure, along with the bank’s annual report.

I need to briefly mention our philanthropic endeavors as a major component of our ESG policy. Corporate social responsibility (CSR) is something that Halyk Bank upholds by supporting initiatives that are important to the nation and its people. In the previous two years alone, the volume of charity and sponsorship provided by Halyk Group exceeded US$ 24.3 million. Over USD 12.6 million was allocated for social initiatives in 2022. Last year, our bank celebrated its 100th anniversary and launched a large-scale campaign, “100 Good Deeds”. The total amount of funding amounted to over USD 11.1 million, not to mention the ongoing projects in healthcare, culture, education and sports that we sponsor. Thus, it is appropriate to say that our bank is regarded as one of the largest corporate philanthropists in the nation.

Looking ahead, we need to update our plans and goals for the next strategic cycle this year. We will concentrate on maintaining the same level of productivity and velocity in the development and delivery of new products to our clients in the face of regional and global challenges.

Our top priority, however, is to maintain the financial stability, leadership and strong performance of both the bank and Halyk Group as a whole.

You are doing a remarkable job of realizing this priority, Ms. Shayakhmetova. Thank you for sharing such a thorough update on your progress.

 

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