For the past year, the coronavirus crisis has created unique challenges for businesses around the world. In the banking sector, these challenges were first felt in the retail sector, explains Galyna Zhukova, Deputy Chairman of the Board of Credit Agricole Bank in Ukraine with responsibility for retail business and network. According to Zhukova, retail banking customers tend to respond with particular caution to the onset of crisis conditions, typically reducing spending and becoming more reluctant to take on loans. This proved the case in Ukraine during 2020, but a combination of new digital tools and direct engagement with clients enabled Credit Agricole to end the year strongly and enter 2021 with an optimistic outlook.
When Ukraine first introduced coronavirus lockdown conditions in March 2020, Credit Agricole responded by implementing a series of measures. A decision was taken to keep around 90% of the bank’s nationwide branch network open, with new disinfection measures introduced that meant individual branches were professionally disinfected twice daily prior to opening and during the lunchtime period. In order to minimize the need for clients to visit branches physically, the bank opted to automatically extend the expiry dates on existing banking cards. Additional services were also made available via the Credit Agricole Contact Center, allowing clients to access personal banking services without the need to travel.
Zhukova notes that the onset of coronavirus lockdown measures was marked by a mood of uncertainty that left many clients with outstanding loans unsure of how long the crisis would last or whether their incomes would remain stable. “We immediately took the decision at Credit Agricole that we must be here to support our clients and help them,” she explains. What followed was an initiative to contact every client who might be facing difficulties in order to offer personal consultations. This led to a large-scale loan restructuring campaign for clients who wanted to temporarily reduce monthly payments or introduce other changes to their payment plans in light of the pandemic.
Looking at 2020 from the perspective of the Ukrainian banking industry, Zhukova says the year saw a number of clear seasonal patterns as clients and the market adapted to the new realities of coronavirus conditions. By the autumn period, earlier disruption became less prominent as quarantine regulations were relaxed and people adjusted their daily routines to account for the pandemic.
Overall, she highlights the rise on contactless spending habits among Ukrainian consumers as a key trend. “Contactless payments have been rising sharply in Ukraine for a number of years, but in 2020 this growth accelerated due to the pandemic. We saw far more payments and transfers online, driving the rise of the Ukrainian e-commerce sector. People switched increasingly to online retail for everything, including daily essentials and food deliveries.” Indeed, consumer spending levels remained surprisingly crisis-resistant in Ukraine during 2020, with Zhukova attributing this partially to the additional disposal income in the market due to COVID-related restrictions on international travel. “People who could normally afford to travel abroad on vacation could not do so due to border closures. Instead, they spent much of this money in Ukraine, either traveling to domestic tourist destinations or on dining out and other purchases.”
The robust nature of the Ukrainian banking industry was also visible in the car loans sector, where Credit Agricole has occupied the position of market leader since 2014. Zhukova says coronavirus conditions initially created inevitable difficulties that led to a temporary pause on some loan services, but these restrictions were relaxed by October. Overall, the bank issued around 6,000 auto loans in 2020, which represented approximately 40% of the overall Ukrainian market for loans to purchase new cars. This outcome was close to the result for 2019. “There were no disruptive changes due to coronavirus,” notes Zhukova. “The market, and our annual loan portfolio, remained more or less stable.”
Timely New App
The biggest single development for Credit Agricole in Ukraine during 2020 was the unveiling of the bank’s new application. With the coronavirus crisis driving demand for digital banking services to unprecedented levels, the June 2020 launch of the new CA+ app proved particularly fortuitous. Zhukova says this timing was a “happy coincidence” and notes that development work on the app began one year earlier in summer 2019.
The CA+ app has proved a resounding success. In the first eight months since its launch, it attracted around 90,000 registered users and entered the top three in its category for Ukraine in the Apple Store and Google Play marketplace. Zhukova attributes this popularity to the app’s customer-friendly emphasis on convenience and functionality. “A successful application does not need to offer one million different functions,” she argues. “It must enable users to access the most popular and frequently required services in a quick and simple format, allowing it to become an unobtrusive aspect of their everyday lives.”
This user-friendly format did not come easily. “From the beginning, our objective was to achieve a maximum of intuitive simplicity,” notes Zhukova. “But of course, the more simple you want to make the app for customers, the more challenging it is from the development point of view.” This meant months spent developing the concept internally with regular input from the many different divisions of the Credit Agricole team in Ukraine, who worked closely with the bank’s in-house IT department. “We maintained a dialogue throughout the development process, both internally and with our clients. We are very happy with the result. It is an example of what can be achieved when everyone is involved,” Zhukova says.
Looking ahead, Zhukova argues that the shift towards digital banking services over the past year of coronavirus disruption is part of a long-term trend that will inevitably continue to gain momentum in the years to come. However, she rejects zero-sum assessments of the relationship between traditional banking branch networks and digital services. “Digital is an instrument not a strategy,” she says. “Clearly, digital services are essential and will be central to the future of the banking industry. But there must also be a human element. Our annual client surveys indicate that customers still place high value on professional advisors and personal contact. We all appreciate the convenience of digital solutions, but we are all human beings as well. When we have a problem or don’t understand something, it is very important to have a human face or voice on the phone who will take responsibility for answering our questions and solving our problems. Our strategy is to continue building long-term relationships that incorporate digital solutions.”