Ukraine’s banking system is currently undergoing fundamental reforms. The process has sparked a lively national debate, but there is little argument that it is both unavoidable and necessary. In a statement released to Business Ukraine magazine, officials at Credit Agricole bank said that the banking system is becoming more transparent, stable, and solvent. “The process is proving as painful as any radical reform, especially in a tough geopolitical environment. On the other hand, no country has ever managed such a process in a smooth and painless way. The reforms, in cooperation with the IMF and other IFIs, are developing in the right direction. Confidence in the Ukrainian banking system will be the inevitable outcome.” As confidence returns to the banking sector, one of the key growth areas is likely to be demand for VIP banking services.
From cash economy to financial accountability
“Now is the right time to change the attitude and handle wealth more transparently,” says Yelyzaveta Tymoshenko, Head of the VIP Banking Development Department at Credit Agricole in Ukraine. “We regularly advise our clients that keeping money in safety deposit boxes is not a smart long-term choice. People have to demonstrate the sources of their wealth and account for their finances. More and more people are recognizing this and seeking the appropriate banking solutions.”
Credit Agricole has been offering specially tailored VIP banking services since 2011 and currently works with thousands of wealthy clients. Over the past year, the French-based international bank has been increasingly focusing its Ukrainian personal banking services on the VIP sector. Earlier in 2016, they launched the bank’s global “Horizon 2018” strategy, which in terms of premium banking will see the expansion of VIP banking services and infrastructure throughout Ukraine.
20% VIP client growth in 2016
The experience of Credit Agricole suggests significant demand for such services. In the first nine months of 2016, the bank registered 20% growth in its VIP banking client portfolio. “We regard this as a particularly interesting segment for Credit Agricole, especially when you compare the kinds of banking services required by standard account holders and VIP clients. Many of our affluent clients tend to require a far broader range of services. They want access to premium banking cards, expert financial advice, and things like long-term life insurance. These services have been available elsewhere in Europe for decades, but have only recently become widespread in Ukraine,” says Ms. Tymoshenko.
Who qualifies for VIP banking services? For Credit Agricole clients receiving services in the bank’s exclusive VIP banking office, the minimum threshold is UAH 2 million in deposits, with the alternative opinion of paying an annual fee. In return, clients gain access to a range of additional services from the bank itself and from prestige partners, a list that features everything from insurance companies to luxury automobile importers. VIP benefits include overdraft facilities up to UAH 500,000 with a 55-day grace period, and a concierge service, as well as travel insurance and access to additional money transfer services. The bank already maintains an exclusive VIP Banking office in Kyiv that functions as a kind of First Class Lounge for clients in the Ukrainian capital, removing the everyday hassle of things like queues while providing privacy and a more personal touch. There are plans to open similar dedicated VIP offices across Ukraine. VIP clients can also call on the services of their own personal banker provided by Credit Agricole.
Attractive for executives
At present, the majority of Credit Agricole’s VIP banking clients are senior executives from international and Ukrainian companies that enjoy existing relationships with the bank. “The owners and senior executives of companies we already work with have long encouraged us to move in this direction,” says Ms. Tymoshenko. “Credit Agricole has a traditional emphasis on major international corporations. Providing VIP banking services to international executives who first came to us for their company banking needs was a logical progression. This allows us to build on our existing relationships.”
International banking brands offer sense of security
High net worth individuals tend to pay particular attention to banks belonging to international groups, which, due to the global scope of their business model, offer lower risk together with extensive experience and expertise, allowing them to provide greater stability and stronger positions. Global financial players care about their reputation, usually have high ratings, and enjoy the confidence of customers and partners. This also applies to the Ukrainian banking sector. “We have proved that we are a reliable bank on the Ukrainian market because we have successfully passed through two crises without placing any limitations on the ability of customers to access their money,” says Ms. Tymoshenko. She sees evidence that this proven long-term reliability is now becoming a priority. “Despite the fact that our bank offers low interest rates on deposits, we continue to attract new clients. This suggests that profits are becoming less important than security for Ukrainian clients.”
Exclusive Banking Club
In the coming year, Credit Agricole plans to expand its VIP banking services further while adapting to the growing demand from wealthy Ukrainian and expatriate clients. As well as a range of specific perks and benefits, premium clients also enjoy access to exclusive events with the kind of networking possibilities that are often crucial to success in the Ukrainian corporate climate. “VIP banking with Credit Agricole is not only about the financial services,” says Ms. Tymoshenko. “We created the Exclusive Banking Club which allows our clients to receive access to top events. We pay special attention to synergy and we see these kinds of business and entertainment events as great way for our VIP clients to communicate, to find new partners, and build new business relationships. These events are also an ideal way for the bank to express our loyalty by creating added value for our existing clients.”