Petia Dimitrova: Instant payments are the new normal and banks are part of it
4 June 2021
An interview with Petia Dimitrova for Bloomberg TV.
The Covid-19 pandemic opened quite a few possibilities for the fintech industry. Could commercial banks leave the payments market in the long run?
I do not think so. Commercial banks began their digital transformation long before the pandemic. The fact is that the pandemic catalysed this process. Payment is commercial banks’ main activity, and they are partners with fintech companies. We can see many purchases, sales and partnerships worldwide. I do not think that banks would ever leave this market, on the contrary – banks have accelerated their digital strategies and solutions in terms of improving the payment and transaction process. You can see that the so-called instant payments have become a hot topic; this is the new normal, and banks are part of this process. By the end of this year, in our opinion, these payments will be possible, including in Bulgaria, where our BORICA payment system is working very intensively and we believe that at the end of the year we will see the results.
The question is – at what price?
Each bank has its own pricing, but I believe the price will be comparable to the one fintech companies can offer.
When, if at all, the official ECBB currency is launched, will commercial banks be ready for it?
Let’s see if it will be launched at all. So far, there have only been discussions without any specifics. The European Central Bank has issued statements that it will hold public hearings, which are ongoing, and will announce by the end of this year whether such a project will be launched. Let’s first see what they will offer, as currently we have no basis to discuss such a topic. What has been announced is that this currency will complement the normal banknotes, coins and the
current fiscal policy.
Could banks lose their depositors in the long run, as currently they need no liquidity and offer quite unprofitable saving products?
Rather not, because banks are the safest place to store consumers’ money – and they know it. Statistics prove this, and if you look back over the years and even now, you will see that bank deposits are growing, not declining. However, banks have come to offer very interesting products. We, at Postbank, have started offering a product called Structured Deposit, which clients can profit from. It is already exhausted, and now we are working on two new ones, which we will release by the end of the year.
Mutual funds are also a very popular product in Europe and around the world, and they are yet to become popular in Bulgaria as they are investment products. While deposits represent a risk-free storage, in investment product there is certain risk, but we have minimized it.
I advise consumers to look at the various products of Postbank, as they will find a variety of options in which to invest.
Are you concerned that once loan forbearance ends, the share of non-performing loans will increase?
We are monitoring what is happening and so far, we have not noticed such a trend. We see that in the market bad loans and indicators account for about 8 percent and we have not seen an increase. In Postbank the share is 6 percent, and it is going down, i.e. the trend does not show this. The forbearance has expired several times – in December last year, then in March, now in June, we are yet to see its actual end, but during the first waves, we at Postbank did not see such signs. Of course, there are specifics – country, region, but in general, what I can say is that the money was invested in the system precisely so as people and companies could avoid bankruptcy and continue living normally. This is very optimistic.
The pandemic seems to be ending. How are you planning to go on? Are your employees going to come back to the office, or are you going to keep the hybrid work mode?
Postbank is a big institution with 3,000 employees. We will make a smooth transition, without any sudden movements and we will decide. The remote way of working has yet to be evaluated and analysed by all companies, because there are pros and cons. People are looking for socialization and do not want to stay at home all day, but there are different industries and in some of them these processes are easier. It is unlikely that there will be major changes in the near future, but in the long run we will probably rely on different formats and shared workspaces. Here, each institution will decide and act according to its field of business.
Are you considering this?
We have been considering this on the international group level, as well as in Bulgaria, and we are conducting the respective analyses with consultants.