Let’s Talk with Mr Guram Andronikashvili
Mr Guram Andronikashvili, Fortebank: “In the medium term banks will still provide banking services, telecom – the telecom ones”.
KIMEP student - Mukash
Khanym, Master Student of Business Administration program of Bang College of
Business at KIMEP University speaks with Mr. Andronikashvili about the
convergence of the banking sector with other industries and differences between
banking systems in Kazakhstan and Great Britain.
Guram Andronikashvili serves as the First Deputy Chairman of the Management
Board of ForteBank. He brought his experience from JPMorgan, London to
Kazakhstan 7 years ago. Guram talks about market innovations and ForteBank
achievements with a master graduate of KIMEP University.– Mr Andronikashvili, can you tell
us about your international working experience?I
started working in 2001 in London as an analyst at a leading international
investment bank JP Morgan, where I worked in financial institutions mergers and
acquisitions team for nearly for 10 years. There, I was responsible for banks and insurance companies in Central
and Eastern European region and worked on dozens of transactions in acquiring or
selling financial institutions as well as helping them to do an IPO on London
Stock Exchange. In 2010, already being a vice-president at JP Morgan, I was
invited to Kazakhstan to lead the building of one of the best banks in
Kazakhstan, which is now called
ForteBank. Can you name the differences between
banking systems in Kazakhstan and Great Britain?Of
course, there are quite significant differences. The main one is the maturity
and stability of the banking sector. British banking system was established a long time ago and has a very
wide range of banking products and a deep penetration with retail and corporate
customers, as well as highly developed capital markets. Banking sector in
Kazakhstan is relatively new by international standards, as it evolved after
the country gained its independence, and being quite young, has shown a much
higher rate of growth and sometimes volatility. Because of this, in some aspects, Kazakhstani banks had to be more
innovative than British banks but on the other hand, the range of products
which the banks provide here is typically much less than in Britain. In recent years we saw a rapid
development of internet and mobile banking, which affected customer relations
as well. How does ForteBank keep up with this progress?We
believe that it is very important not only to keep up with this progress, but
to be the leaders and drivers of such progress. Internet and mobile over the
last twenty years have really transformed the world for both consumers and
companies and any company which does not build its future business model with
this in mind will likely not survive. At
ForteBank, when looking at this progress, we don’t just look at the banking
sector examples, but look much wider to understand the future trends and how we
need to interact with our clients and what services they would require in the
future. We
study many industries and companies, and an example which I like to quote is
Netflix. Before Netflix, when you wanted to watch a movie you went to a local
video rental shop, like Blockbuster and rented a movie on a videocassette or
DVD, which you had to return in several days. And now, with Netflix, you can
just switch on your computer, mobile phone or a tablet and watch pretty much
any movie wherever you are. Additionally, Netflix provides its customers suggestions of what they should
watch based on their previous history of movies and their browsing patterns and
other factors, so each customer does not even have to spend much time choosing
what to watch. So, in the end Netflix provided a service, which the customer
required, and this was one of the reasons that Blockbuster eventually went
bankrupt.
Banking
is very similar in this respect, because we provide a service which is not a
physical one, e.g. the customer does not have to be physically in a bank branch
to use any of the banking products. This
means that ForteBank has to be able to provide its services to our clients at
any time of day and any day of the week wherever they are. To do this, last
year we introduced a brand new internet and mobile banking system for our
customers, which was developed with the help of Monitise from the UK — one of
the leading financial services technology developers in the world. I believe we
have one of the fastest growing mobile banking platforms in Kazakhstan, which grew
to over 100 000 users in less than a year.
What is the role of innovation at ForteBank in the correlation with IT?Innovation is one of the key values of our bank and we understand that to progress in this world we have to innovate and change constantly. To be absolutely correct, the value as we have defined it at the bank is leading edge, which means that we are not just innovating ourselves, but we are looking around us at other banks and industries, and using the best examples at ForteBank.We do not feel that innovation is something we should try to do, we feel that innovation should be a part of our culture, a part of our everyday job. Every day we think how we can provide our services to customers in a better and more convenient way. We have a strong IT team within the bank, but as any bank in Kazakhstan, we can not compete with international giants of IT industry. Therefore, the approach that we use is to develop solutions internally which we use specifically in our bank, and use the worldwide market leaders in specific areas to provide us with already developed solutions. Such an approach makes our services much better and faster to develop and present to our customers. In your opinion, how open to innovation banking sector in Kazakhstan is?I think it is relatively innovative, but as everywhere, such innovation is driven by several players in the market and then the other participants try to copy the ideas. I can give you several examples, which were introduced by ForteBank. We were one of the first banks in the country to provide cashback of up to 15% on our cards and to be able to withdraw money for free from any ATM in the country. We felt that our customers would like this service a lot, as previously banks tended to put hurdles for customers to use their cards by charging them for each transaction or putting unreasonable commissions for using other banks’ ATMs. Our customers really liked our product and on average we see that they spend nearly 1.5x more money using their ForteBank card, than an average customer in the market. This year we see five or six banks in the country have introduced cashbacks for their customers. Another example which I can share with you is the design and layout of our physical branches. First of all, we have separated our branches for retail and SME customers, as they require completely different services, but banks previously tended to provide these in a same setting. Now, ForteBank is one the fastest growing SME banks in the country and just last year was one of two banks in Kazakhstan to be financed by EBRD for SME development. Additionally, coming into our branch, the first thing that customers will see is a self-service area where our managers help out clients to learn how to use our internet and mobile services for everyday banking products. We do not advertise our mobile banking app but as mentioned before already more than 100,000 clients use it because of its accessibility and the ease-of-use.
Could you please describe the
activity of IT and telecom companies in banking sector? There
is a long discussion of integration of banking and mobile services around the
world. However, we have seen very few examples when telecom providers also
provide banking services in large international markets. It sounds very easy
and obvious to a user to do it because everybody seems to have a mobile phone
and, therefore, everybody can use mobile banking services on it. But for now, I
have not seen a combination of telecoms and banking in significant markets. The
main reason why this does not happen, I think is because these are
fundamentally different businesses. I think in future we will see some sort of
joint ventures or partnerships between banks and telecoms, but banks will still
provide banking services and telecoms will provide telecom services and
everybody will focus on their key competencies. How quickly are world banking
innovations introduced in Kazakhstan?Today,
mainly due to the Internet, the speed of transfer of knowledge and innovation
is very high. Whenever a bank presents something somewhere in another part of
the world, we see it promptly because we try to keep up-to-date with news, read
the industry journals, and discuss them with our international colleagues. So,
I think the speed of innovation, the speed of change is very high. I would say
that Kazakhstan is maybe just several years behind the world leaders in banking
innovation development, and the gap is narrowing. At ForteBank we try to
accelerate the innovation and raise the quality of services we provide. How do you overcome obstacles in
implementing innovations and new services? Generally,
the banking sector is strictly regulated and banks are governed by laws and
regulations of the national banks. It is a job of the regulators to be very
conservative and to decide and to think what are the best ways to develop
banking sector. So, sometimes banks want to do things faster than the regulator
allows them to. We work very closely with the National Bank of Kazakhstan and
often discuss with them ideas of change and ways of providing better services
to our clients, and we have very good progress, because they understand that
these changes need to be applied, therefore the regulations and laws should be
changed to allow that. So, of course, there are difficulties, it is not that
easy to do something new, but we think that together with the government and
the National Bank we can make the right changes to make the difference. What is your opinion on the
development of banking sector in Kazakhstan? What activities will be the
priority in the next few years?
I think there is one direction in which most banks will be moving —
distance services and products to clients. So, in future any client willing to
get a loan or open a deposit will not have to go to a bank, they could just do
it directly on a mobile phone. Then there are further developments, for
example, cryptocurrencies, digital wallets, but I think those will be not seen
for several years by general population.