Petia Dimitrova: Moving ahead of the “wind of change” is the most important skill that entrepreneurs in Bulgaria need to demonstrate right now
24 July 2020
Petia Dimitrova is Chief Executive Officer and Chairperson of the Management Board of Postbank. She is also a member of the Management Boards of BORICA, Atanas Bourov Foundation, Endeavor Bulgaria Association and the International Banking Institute. Petia Dimitrova is also a member of the University Council of the American University in Bulgaria, of the Young Global Leaders Forum with the World Economic Forum, of the Young Presidents’ Organization (YPO), etc. She has won over 20 prestigious Bulgarian and international awards, including Mrs. Economy, an award by Atanas Bourov Foundation for banking and financial management, Banker of the Year award, etc. In recent year, under her management, Postbank has become one of the most awarded financial institutions in Bulgaria, having been awarded the Best Bank in Retail Banking in Bulgaria for three consecutive years by the London-based World Finance Magazine, as well as with an award for customer experience in banking in one of the most prestigious competitions in the banking sector – The Retail Banking: Europe 2019 Awards.
Ms Dimitrova, the coronavirus crisis has put the banking business to the test. What challenges did you face and what measures did you specifically take outside the state restriction to help your clients go through that time more easily?
The COVID-19 pandemic has put all businesses to the test, not just the banking business. It has changed consumer behaviour and we had to quickly reconsider the way we communicate with our customers. The coronavirus has played the role of an accelerator of the digital transformation that banks have been talking about for a long time. At Postbank, the digitalization processes started years ago, which allowed us to react quickly and offer specific solutions to our customers. Our Bank@Home campaign encouraged consumers to stay at home and use the bank’s already established digital channels, thus protecting both employees and customers. We provided citizens and businesses with the exact banking products and services they needed at the moment, they were able to use them easily from a distance and through various channels of communication with us, but we also left the offices open, of course, while observing all necessary protective measures. Despite the challenges, the COVID-19 pandemic has taught us something positive – to be united, even from a distance, and to come out of difficult times wiser and stronger together.
What new changes do you envisage in Postbank’s work in line with the tendency for further digitalization of the banking services? Did clients learn to use online banking so as not to visit bank offices?
We are currently seeing, as expected, an increase in consumption through our digital channels – increased use of mobile and online banking, submitting loan applications online, as well as an increase in card payments at the expense of cash. In the future, consumers will continue to use and provide more and more services online – shopping, banking, training, work – not only because of the speed, but also because of the convenience.
However, I do not think that the traditional banking in an office would be completely replaced. There will always be such clients who will prefer the personal contact with their banker. The digitization processes were actually taking place before the onset of the coronavirus pandemic, but its appearance gave a huge boost and made us change the direction of our thinking towards implementing innovations and digital solutions for the convenience of the customers.
As of the beginning of June our bank offers a completely remote process for ordering and receiving debit and credit cards, and our customers can order their card online and receive it at an address of their choice. We provided them with the option to receive an online consultation on a housing loan through the mobile application EVA Postbank, as well as a real time contact with an expert of the bank through the “live chat” function. In this way we facilitate as much as possible the access to information on mortgage loans, as well as the application procedure. Thanks to EVA Postbank, our clients receive a personal consultation. They can get acquainted with the main steps in the process of buying and financing a new home, as well as with the documents required to apply for a housing loan without having to visit a bank office.
In response to consumer expectations, as of this month, we offer unique digital self-service zones that provide speed and convenience. The new service is available in 30 offices of the bank in 15 cities in the country, where specialized modern devices, intuitive navigation and many functionalities are located. In them our clients can perform almost all operations available in the bank office without having to wait in line.
What practical solutions did you come up with in connection with the clients’ difficulties in paying their loans during the coronavirus crisis?
Postbank was among the first financial institutions to agree to apply the terms of the BNB-approved programme, offering deferral of existing loans to its customers – individuals and legal entities, who have or expect difficulties, caused by the pandemic, in servicing their loans. The application for the programme was extended until the end of September literally days ago, and the grace period can be extended until March 2021.
As a responsible bank and a loyal financial partner, we take it as our responsibility to assist our clients in ensuring their financial peace. To support customers in this difficult and unforeseen situation, we have introduced a set of options that allow deferred payments on used credit products.
Apart from the fact that our loyal customers can defer their obligations for up to six months, they can defer the payment of an upcoming monthly instalment in full, including interest and principal, or only the payment of the loan principal.
We also offer flexible repayment of a mortgage loan with the “Flexi” option, as our clients can miss one monthly instalment, as well as adjust the amount of their monthly obligations to their needs at the time, reducing their instalment by up to 50%. They may request renegotiation of their obligations under various products of our bank. Only Postbank in Bulgaria also offers a mortgage loan with a fixed interest rate for up to 30 years. All customers of the bank can apply for a new credit card without an issuance fee, without interest for the first six months and without an annual fee for the first year. Our business clients, who experience temporary financial difficulties in paying their debts to the bank, have the opportunity to request a grace period in which they pay only the interest. Those who receive their salaries in an account in the bank can request a pre-approved express overdraft of up to one monthly salary. The measures we have taken are many and our clients can consult our experts about all of them by phone, through our mobile application EVA Postbank, through video consultations via Skype, as well as in our offices.
It became clear that the Bulgarian Development Bank (BDB) aid schemes were not effective and they did not achieve the expected results. How should they be revised?
Whether or not all the programs that are being introduced in support of the people and businesses are successful, we will find out at a later stage. I personally see that there is interest in the BDB programmes and that the state is trying to find a way to help those affected by the crisis. In crises like this, speed is important – aid must reach those who need it as quickly as possible.
It is too early to draw conclusions, and I believe that the benefits of the programs will be felt at the earliest in the autumn of this year or at the beginning of next year. The aim of these programmes was, on the one hand, to help individuals who have temporarily lost their income and, on the other hand, small and medium-sized enterprises, which have temporarily ceased their activities, lost their staff and are struggling to survive. The very fact that by July, over 19,000 applications were received under the first support programme for individuals shows that this support is meaningful and it is important for a very large part of the workers who have taken unpaid leave and for self-employed persons.
Banks are doing everything possible to support the business, as our bank has also joined the BDB programme for portfolio guarantees in support of the liquidity of micro, small and medium enterprises affected by the state of emergency and the COVID-19 epidemic. Thanks to our partnership, our business clients have the opportunity to receive guarantees issued by the National Guarantee Fund in the amount of up to 50% of the loan value, as part of the required collateral. Thus, we directly support companies that do not have the necessary assets available to fully secure their bank loan.
We will also be able to provide lower interest rates than the standard loan terms, and we will also allow farmers to benefit from the programme. Another initiative we have taken is to apply for a European Investment Fund Programme to guarantee a portfolio of loans under the Jeremy Initiative. The instrument is an anti-crisis measure to support companies affected by COVID-19. We are about to sign an Agreement under the EIF COSME Programme with an approved limit of EUR 70 million and under the Fund of Funds Programme, which is also an anti-crisis measure in support of companies and in which our bank is interested to become even more useful to our customers.
How does the acquisition of Piraeus Bank Bulgaria by Postbank affect the banking sector in Bulgaria?
We managed to complete the merger deal with Piraeus Bank Bulgaria in a record short period of four months, which is the second for us after the successful acquisition of the Alfa Bank branch in Bulgaria in 2016, and we are proud of that. This is a significant moment in our almost 30-year history, it is also an important moment for the banking sector as a whole. The consolidation was also key for the entire Eurobank Group, as part of its strategy to expand its activities in the markets in which it is a leader. We have more opportunities to invest in our digital banking channels, in even better customer service and we opened our first three innovative offices in Sofia, while continuing our bank’s digital transformation – part of our overall policy to introduce innovations that improve the customer experience in contact with us.
Postbank is part of the Eurobank group with major shareholders being Canadian and American funds. How does the banking business cope with the challenges of making decisions in the expected economic recession?
The banking business is facing challenges everywhere and they are not something new for us. The important thing was that we managed to keep people’s trust – because we were faced with and continue to face the challenge of taking care of our employees’ health and the financial well-being of our customers. As part of a large banking group, we follow their good practices, upgrading them with our own. I will share only one – we support entrepreneurs in our country for the second consecutive year by implementing the Dare to Scale programme, as the main partner of the Endeavor entrepreneurial network in Bulgaria. It is structured to provide scale-up companies with direct access to valuable practical knowledge, business experience, financing and a network of contacts. There are many companies with innovative business ideas that need a trusted partner, serious support and additional resources to take full advantage of all existing opportunities to make this business profitable, sustainable and competitive not only in our country but also on the international market. For us, participation in the programme is extremely important and we see it as part of our mission and social responsibility. We already have over seven years of experience with a similar programme of the parent bank Eurobank, which is called egg – enter/grow/go, to support entrepreneurs with different businesses. More than 400 companies have gone through the programme, many of which have grown, and some have become really large, thanks to support from the bank. We believe that we can contribute with expertise, know-how and financing to the companies in our country, especially now when in the situation with the virus many of them face the challenge not only to develop but also to keep their business. The current situation is a test of the business sustainability. For me, the big restart can be done by people with ideas and innovative business that adapts to the changes. Each crisis provides new opportunities for development and now we expect the businesses to take advantage. Moving with the “wind of change” and even ahead of it is the most important skill that entrepreneurs in our country must demonstrate right now.
Many predictions suggest that we may expect the coronavirus pandemic to continue. Do you have mechanisms to maintain the financial stability of the bank and the customers, respectively?
Crises have this property of reminding us to be more careful. We, at Postbank, know the success, as well as the path that leads to it, and that is why we rely on the positives and experience gained over the past months. This combination gives us confidence and even more opportunities to support the people and the businesses.
The results and indicators speak for themselves. The bank is in excellent financial condition with a market share of over ten percent in terms of assets, loans and deposits, and in terms of loan portfolio and deposits we rank third. We have enough buffers, which gives confidence.
We follow very carefully the development of the economy and the financial state of our clients. So far, both are doing better than expected and I hope for a speedy recovery.
Will the bank’s strategy change in the face of the prospect of shrinking economic activity?
Our long-term strategy remains unchanged – namely, to be the preferred bank for our customers and to provide them with smoothly working integrated services. The sensible organic growth is at the heart of our strategy, and we intend to continue to pursue this strategy, which has proven to be effective. I am sincerely proud to say that our efforts were awarded for the third consecutive year last week with the prestigious award Best Bank in Retail Banking in Bulgaria by the prestigious London-based World Finance Magazine, for which I would like to thank and congratulate again our entire team, our customers, partners and last but not least – our shareholders.
If we are going to change something into a proven winning strategy, it will be to focus more on digital transformation and online sales. Convenience, innovation, quality service throughout all channels – this is what our customers demand from us and we will aspire to meet their expectations. Along with the investments in digital solutions, we will continue to develop our branch network, continuing the process of complete transformation of our branches into specialized spaces with self-service zones that offer with many functionalities and conveniences to our customers.
