He also warns that bankers have to contain the problem of customers’ distrust because it is becoming a liability for the banking system, and banks cannot attract deposits without trust.
Ten years have just passed since Dutch banker Steven Van Groningen was put in charge of Austria’s Raiffeisen’s Romanian operations. As such he is the longest-standing chief executive officer on the local market and is also a member of the board of the Romanian Banking Association.
“People didn’t care too much about the reputation of a bank before the crisis – whoever gave the highest loan was the best. Customers later found out they had made the wrong choice going for a bank that let them borrow to the max,” Van Groningen said. “Meanwhile, a lot of very negative experiences with certain banks have accumulated and the difference is more clearly visible on the corporate segment where the situations a client may find itself in are more complex so that the bank’s approach really matters. There are customers who even said ‘I won’t work with this bank ever again!’; this crisis is, after all, an opportunity for every bank to show what it is made of.”
Van Groningen also talked about those cases when banks would successfully convince company employees to move their salary account to them tempting them with overdrafts of 12 salaries, which are hard to manage for customers. “The problem here is the customer’s financial education level, as well as the banking system, where a code of conduct to be applied in the day to day operations is needed.”
Raiffeisen’s boss says that in the absence of a sound reputation, if there is no trust in banks, the intermediation – the banks’ most important function whereby they get customers’ savings and turn them into loans, is affected. The lack of trust can therefore become a liability to the banking system if customers are reluctant to put their money into deposits.
He also says that the banking system should not be attacked every time there is a public debate, but also admits that the industry’s duty is to step up communication efforts.
Ten years after taking over as CEO, Van Groningen says that the structure of Raiffeisen as a top bank in Romania is complete and the bank will concentrate on speeding the shift in focus from product to customer and to providing greater value to customers. “I know this is a formula easier said than implemented but it is clear that selling as many products as possible to a customer does not necessarily mean creating value for them. The banker needs to understand what’s important to the customer, not just sell everything to everybody.”
Judging from the challenges the banking system is currently facing, Raiffeisen’s boss expects the market to look completely different in ten years for now, with only three or four lenders still in operation as a universal bank.
Steven Van Groningen says time has come to promote lending in lei on the market, all the more since refinancing in foreign currency is no longer cheap for banks and regulatory authorities are putting pressure on subsidiaries of foreign banks to self finance.
“I hope and think this is the time for lending in lei. We should also try leasing in lei. It would be the best solution for Raiffeisen because we’ve always had a lot of cash in lei, but retail demand is still very low.”
(English version by Loredana Fratila-Cristescu)