In recent years, ProCredit Bank has bucked the market stagnation trend among Ukrainian lenders and led the way in terms of loan portfolio expansion. The Ukrainian branch of the Germany-based international banking group posted robust annual loan portfolio growth of 35% in 2017, following on from an even more striking 40% increase during the previous year. With this upward trend continuing into 2018, ProCredit Bank General Manager in Ukraine Viktor Ponomarenko says the bank is now seeking to help facilitate further growth by bolstering deposits. “We harbor big ambitions to increase deposits as we also want to continue expanding our SME loan portfolio,” he explains. This means reemphasizing the existing private customer banking services they offer.
The prioritization of banking services for private customers is not only about boosting coffers and attracting new capital to the bank in the form of fresh deposits. ProCredit Bank has always had a strong private customer banking arm, but this has been somewhat overshadowed in recent years by the eye-catching progress the bank has made in its efforts to provide financing tools for Ukraine’s SME sector. Mr. Ponomarenko believes the time is now right to highlight the options available for private customers. “The SME sector remains our core focus and is central to our identity as a financial institution, but we have also built up very strong services for private customers. However, this is not always immediately apparent to customers because attention understandably tends to focus on the far more high profile SME direction of our work.”
Mr. Ponomarenko says he is relying on a combination of convenience, transparency, profitability and security to help his bank stand out from the crowd and attract new private customers. All four factors benefit from the bank’s strategic focus on digitalization of services. In recent years, ProCredit Bank has embraced a concept of expanding services via digital platforms rather than physical branches, with virtually all day-to-day banking transactions already possible online and work progressing on a new service that will allow clients to open an account online without setting foot in a branch at all. “The objective is to offer a simple, convenient and transparent business model to customers,” says Mr. Ponomarenko. He argues that while digitalization remains the talk of the Ukrainian banking industry, in practice there is still a strong dependence on traditional branch networks and cash. “We believe that using digital instruments is the right choice instead of the more traditional way of processing transactions, where customers are obliged to visit branches and fill out all manner of paperwork. The goal is to minimize this paper chase and replace it with online transactions wherever possible. We want to be more innovative and at the same time secure.”
Private clients at ProCredit Bank will have a clear idea of what they are signing up for thanks to standard monthly banking fees that remove the uncertainties of service-related charges. “This provides customers with the financial freedom and transparency to plan ahead,” Mr. Ponomarenko explains. “It can often be challenging to compare the services of different private banking packages on offer in Ukraine due to the complex fee structures involved. In this regard, we are as transparent as can be.” This flat fee model makes ProCredit an obvious choice for financially active customers who carry out all their transactions via internet and require a variety of personal banking services that could easily lead to high fees if charged individually. In practice, this means members of the growing Ukrainian middle class, or as Mr. Ponomarenko puts it, “people who have sufficient income to save and to spend.”
Along with other international banks on the Ukrainian market, the ProCredit Bank brand enjoys the kind of associations with security that few Ukrainian banks can match. The upheavals in the Ukrainian banking sector since 2014 have seen close to one hundred banks closed down, rocking public confidence in the industry. This has led many private banking customers to look towards local branches of international banks as safe havens. This sense of security also extends to the digital platforms used by ProCredit Bank in Ukraine, which Mr. Ponomarenko explains are developed by a company within the ProCredit Bank Group to comply with both Ukrainian and EU regulations. “As part of an international banking group based in Germany, we are able to apply EU security standards to all our transactions. Clients can be confident that the services we offer are very solid in terms of safety and security.”
Ultimately, the biggest pull for many private banking customers remains the return they can expect to make on their deposit. Mr. Ponomarenko claims that ProCredit Bank’s business model and online emphasis allow the bank to offer more attractive interest rates than many other international banks operating in Ukraine. “Since we are placing more and more emphasis on digital banking, we are able to offer the largest possible access network online while avoiding dependency on physical locations. This absence of expensive physical infrastructure allows us to pass savings on to our customers in the form of more competitive conditions. In other words, our lower costs create the basis for higher interest rates.”