With this fifth episode of SME Banking Conversations with Olena Gryniuk, we are continuing the series of inspiring interviews on SME Banking, digital transformation, and people making innovations happen in the industry!
The recording of the fifth episode took place in August in Cluj-Napoca (Romania), in the Head Office of Banca Transilvania. Olena Grynuik – CEE Regional Director at SME Banking Club, interviewed Daniel Szekely – Head of SME Banking at Banca Transilvania – the biggest bank in Romania by assets and by the number of SME customers.
Listen to this conversation on our SoundCloud channel:
Olena Gryniuk: I’m in your T-shirt. I don’t know if you can take it closer, but it says that “I don’t need face ID to transfer good vibes”. So, let’s talk today about transferring good vibes and good services to SMEs.
Daniel Szekely: Right.
OG: Banca Transilvania – the biggest bank in Romania in all the segments and, particularly in SME. You serve over 300,000 customers, making up around 80% of SMEs here in Romania. I think this is a dream and target for all the banks. What are your success factors? How did you succeed to have this biggest part of SMEs and making your bank as a bank of the first choice for SMEs?
DS: Thank you very much for the appreciative words. I just want to say that actually there is a debate about how many SMEs are in Romania. So, we could say, let’s say one in every two companies works with the Banca Transilvania. And that is a big thing. And considering SMEs according to the European Union definition, then we would say that we would have approximately 400,000 clients. Now, success factors. I will surely forget to mention some of them, but let’s say the first success factor, the most important one was that we had focus from the start, so we didn’t get here by accident. It was planned. We saw this opportunity of filling the space that everyone filled with either corporate banking products or retail strategy. And we said this segment needs a dedicated approach, a specific approach. And we acted. We made the plan. We followed it thoroughly. So, the first thing was the focus. The second thing was a completely distinct business line, which was right under the deputy CEO. So, it got the needed attention. And then it was because, as you know, in most of the banks, the SME is under either Retail or Corporate. What is the risk of having this kind of approach that other banks have? Retail is huge. And if retail is huge, micro will not get the same attention. If you put it on a corporate, then corporate is also huge, a limited, more limited number of clients, but they have large exposure. What happens if you put it on the Corporate is that the corporate products will be just transferred on the SME side, this is not good either. You should have a completely dedicated approach because these guys are not Corporate, are not Retail, they are in between, and they need something special. The second most important thing was a dedicated team. I mean, what you do in the head office, you should also do in the network, in the branches. And we reached now approximately 400 dedicated colleagues that are working with us on the assembly side. Actually, everyone is dealing with SME clients, but 400 are our experts and they are divided between our RMs, analysts, and of course the managers of the SME activity in a branch. Then I would say because we have done a lot of research over the years regarding SMEs and we found out that the smaller the companies, the more important the proximity. So, we were extremely lucky that the bank developed and that we developed, and we reached several years to 500 units. Proximity is important for SMEs. And then of course we adopted the plan for launching new products every three months at first. And then we slowed down a little bit because we wanted to accumulate the correct number of products and they were mainly loan products, but not exclusively. We also launched some interesting initiatives like the Club for Romanian Entrepreneurs that exists also today, we launched the dedicated current account package, and things like that. So it wasn’t only loans, but loans were the core. The core of everything. And then basically everything we’ve done followed this kind of approach of being close and coming with dedicated products. Because there was another business loan line launched in 2007 if I recall it right, it was the medical division. But the medical division was having the same kind of objective, the same kind of small entrepreneurs, not large hospitals, it was about the doctor. Professionals. And then we had the next one the Agricultural Division, the same approach. I mean, we would try and serve the Romanian agriculture that was made of made up of several, very few big companies and then a lot of small entrepreneurs. This is specific in Romania. So, what we’ve done with this business line is that we created dedicated products for small entrepreneurs in the agricultural field. And then were, of course, other initiatives that kind of helped us reach this stage but maybe we’ll have the opportunity to talk.
OG: How big team is engaged here, in the Head Office, in SME banking?
DS: It is a very good question. You probably would expect us to be, I don’t know, close to 100 or something like this. We are not, by far. There is a team that directly deals with SMEs. And that team is about 20 people. There is also a larger team of companies, that is also very focused on this on the SME side. So, I would say that whenever we are talking about companies, we are always considering SMEs. In the network, we have a large number, it exceeds 400 people. And there are also the agency managers, our smaller units that are dealing with SMEs, half of their time is dedicated to dealing with their micro clients’ portfolio. So, we have to consider also them, additional 460 people approximately that are helping us.
OG: What is your path to SME Banking and Banca Transilvania?
DS: First of all, let me say that I wasn’t dreaming of becoming a banker. When I was in college, I never thought that I would work here, wear a suit and shirt and formal shoes and things like that. How did I get to do work with SME? I was working in the Corporate department as a regional sales manager for the corporate side of our business in Banca Transilvania. And then someday the Deputy CEO came to me and said: “Daniel, I have an interesting proposal for you. It will be interesting. We either make it or break it. If we succeed, it will be the biggest success here. And if we fail, we want to leave”. And I said: “I’m in” and this is how it all started. And I’m happy to have done this so far because it was a very, very interesting journey. It was a beautiful journey. A lot of things changed on the way. First, we launched products, then we had to adjust people’s responsibilities. It was continuously changing. And now, several years now, the biggest concern is about going digital and rethinking the channels. It’s never boring.
OG: Let’s talk about digital. This is visible, and I think everybody in the region noticed that you’ve been launching recently a lot of digital tools for micros and SMEs. You launched online onboarding and online account opening, and online loan application. You have also eSign – a digital signature for the agreements for SMEs. What is the feedback here on the Romanian market on these tools? Do you consider this a successful turn to service and meets the expectations of Romanian entrepreneurs, and do they expect digital tools from the banks? And second: what were the challenges?
DS: We had a lot of challenges. We still do. I am proud of what we have done so far. We can do a lot better and we have to do a lot better. We covered only some basic products, but we are in the course of developing and having the basic services covered with this digital way of doing things. I don’t know which was the first. I think it was the chatbot.
OG: Yes, I am a fan of your chatbot Raul. It was like two-three years ago you launched it?
DS: We launch it more than three years ago. It started with Raul – Head of companies’ digitalization. And we went to a show in Amsterdam and a meeting, it was about it digital, about digital products, how to make digital products. And we met there, the company, I won’t say its name because we didn’t want to advertise it. We established contact with the company that was doing this kind of chatbot. And it was interesting. We set it up in approximately six-nine months. We started a bit slowly. But now our biggest challenge is to make it active. This is what I would like for our chatbot. I mean, if you have it on your WhatsApp, I would like it to give you some data. It shouldn’t be only reactive, it should be proactive. And this is why we’re having the discussion with our colleagues from GDPR regarding how much you can tell them, how much can advertise, and things like that. We don’t want to use it actually for advertising. Of course, everybody wants to sell more, but it’s about giving valuable information to our clients and it’s about giving it that the right time, not when it’s not relevant. So, this was one of the initiatives. And then we had to have the base for everything, the current account opening, we had to have it and it works. We still have improvements to do, but it works.
When we are talking about clients, about what they are expecting. Of course, a lot of them say, yes, do this, we will use it. It’s not quite like that. It takes time for people to adopt another journey because they are used to going to the branches. I know in some other countries, developed countries maybe some of the banks completely prohibited the current account opening in the branch. So SMEs have no other option than to open online. In Romania, it’s not like that. You cannot just close it and say, okay guys, starting from today, you can only open a current account online. It takes time. It’s all change, the routine, and the behavior of people. And from year to year, we have more and more younger people, entrepreneurs, and those who will use online products. So, we expect a gradual adoption, and we will reach a significant part of the market. There’s no question about this.
OG: Which percentage of your customers comes from the digital channels and the branches right now?
DS: We’re closing in one of every four clients coming online, but this is also due to some limitations that we have, considering the KYC rules and everything. But we will make it possible for a larger part to access this account opening online.
OG: Do have some targets for the nearest years on that?
DS: Yes, of course, we have. For SMEs, basically, all SMEs that have one shareholder, the target is almost 100%. We should do it exclusively online. But for other types of companies, more complicated ones, there will be cases in which we will have to open a bank account traditionally. But I know it’s not more than, let’s say, 5% of the cases.
OG: Do you consider Romania a country with an entrepreneurial spirit? Do young people here want to have or found a startup or to become an entrepreneur? Do you feel it? How many new entrepreneurs are opening every year?
DS: Every year on average we have 70000 new companies. I would say yes, I would say that this is aspirational. I mean, people would like to establish their own business, to have an idea, to follow it, to do it. As a number per thousand inhabitants of Romania, I think we are not very good in Europe. Still, I read several years ago a study in which they pointed out that Romania is more collaborative than other countries. I mean, in Romania there is a much higher percentage of people that do business together. So usually we have two-three people doing one business. Yeah. And this is why as SMEs in number we are not so good. But considering the entrepreneurs behind them, we are quite all right, even at the EU level. So, I would say yes.
OG: You opened in July, I guess, a month ago new space for entrepreneurs in Bucharest called Hive. And now you published the first results with new customers acquired, new accounts opened so it looks like a very successful project.
DS: Yeah. It’s our latest initiative, the biggest one in several years. We made a big bet on this, and we will win it, because we are prepared to pilot, to experiment with new things. The basic idea is that we wanted a space dedicated to someone that wants to establish his own business. We wanted the space in which he would not only get banking services, but also other services needed for his business. In this Hive, we thought of having services for startups, for the scale of companies, and for everyone interested in growing their business. And therefore, it’s something new. It’s 2500 square meters of space. We also have meeting spaces. We can organize events there. We can do a lot of things. But what is different from any other initiative is that we actually have this collaborator, these partners inside, and they will on the spot solve the needs of the client. So, this should make the difference. And it will.
OG: What SMEs should expect next from you, which solutions and initiatives? What are you doing preparing for them right now and what are your plans for the nearest future?
DS: We have quite a large portfolio of products. What we are focusing now is on making them accessible. And making them accessible means not only price-wise, but it means that I should do it easily. I shouldn’t go to the bank physically to solve an issue. I should just do it on my mobile phone. So, this is the number one thing that we want to do. We want to get to that level to help entrepreneurs in their daily lives with small things, and bigger things, but they should be able to solve them there. And in this respect, yes, we are working even on an application that we say is beyond banking because we actually want to cover the basic needs of the entrepreneur. So, to make a comparison of what I’ve told you about Hive, that we want to solve their problems, we would like to do this online, we would like to do it in an app, webpage, or portal. And we will start with something new. MVP is supposed to happen this fall. I can’t tell you exactly what will be starting with, but it will be premier on the Romanian market.
OG: This is great Daniel. I’m personally looking forward to it. Very much so. Good luck with it and thank you for this conversation.
DS: Thank you. Thank you for visiting us.
Watch the conversation below: