Bank of the Year Awards 2018 - western Europe
The best banks in 2018 from western Europe.
Highly banked Andorra is a market where lenders must adapt or die: the small fiercely competitive domestic market makes an international strategy indispensable; players have had to adapt their processes and services to international banking standards of transparency and commit to an agreement on the automatic exchange of information in tax matters between the EU member states.
“A strategy based on swift, efficient and deep action has allowed for a profound transformation of the bank in very quick time in order to focus on growth in Andorra and internationally,” says Pedro González Grau, the chairman of MoraBanc, the Bank of the Year for Andorra.
MoraBanc’s three-year strategic plan is 90% complete and ahead of schedule with a focus on five key areas. These include a retooling of teams and departments to create a leaner, more efficient organisation, a strategy that is already bearing fruit and saw the bank drive down costs by 22% in 2017, causing its cost-to-income ratio to drop from 54.9% in 2016 to 42.7%. The bank has also sought to improve its product offering, particularly in retail loans, where growth reached 10%. Moreover, the bank pursued growth outside its home market, particularly in investments: client assets under management jumped 10.4% in two key markets over 18 months.
The bank has carried out a significant tech upgrade, spending €12m and developing MoraBanc Digital. The mobile app and website platforms give clients access to artificial intelligence-powered support and enable them to chat to financial managers and access the investment platform. The new offering proved a hit and overall there has been an increase of 34% in digital users at the bank.
MoraBanc also launched a range of insurance products in October 2017 that are simple to buy and come with a low monthly cost. In a market marked by low client turnover, the bank reached an impressive conversion rate of 19.2% with this product, which encouraged it to launch a second campaign in May 2018.
Austria, Raiffeisen Bank International
Raiffeisen Bank International (RBI) has substantially improved results through a downstream merger with parent bank RZB and a comprehensive transformation programme helping it clinch the Bank of the Year in Austria. Together, these have improved capitalisation, increased transparency and reduced complexity. The results are clear. Consolidated profits are up 81% year on year in the first quarter of 2018.
The transformation programme, kicked off in 2015, has seen the bank exit or substantially reduce business in non-core markets including the US and Asia, and reposition itself in central and eastern European markets. That contributed to an 84% drop in risk costs.
For retail customers, the bank has focused on accelerating payments and joined Swift gpi to provide same-day use of funds and transparent fees. Additionally, as a clearing bank, RBI started SEPA instant payments in November 2017. That allows payments of up to Ä15,000 to be made in as little as 10 seconds on a 24-hour, 365-day basis. Peter Lennkh, a member of the managing board at RBI, says: “RBI is the relationship bank in Austria. We foster long-term partnerships with our customers based on mutual respect, trust and benefit. Our customers value the high product expertise in all areas of corporate and investment banking.”
Overseas subsidiaries have also been improving their digital offerings. Ukrainian customers of Raiffeisen Bank Aval benefited from a new digital strategy launched in 2017 offering simple registration and intuitive usage, for example.
One of RBI Retail’s key challenges is adding customers. In Slovakia, RBI took advantage of a law that allows verification based on biometric data held by the government. This allows customers to sign up to the bank using a ‘selfie’ verified by an ID card. The bank won 1800 new-to-bank customers with this innovation: nearly 50% of them were students, a hard-to-reach client base.
BNP Paribas Fortis is managing to juggle profit improvement with a strong focus on sustainable banking and social entrepreneurship. The Belgian bank increased its net profits in 2017 by 9.8%.
At the same time, it is at the forefront of sustainability and socially responsible investment.
The lender has set up a competence centre to advise companies on how to implement sustainability in decarbonisation, human capital, the circular economy and smart cities. It boasted a national share of 52% in socially responsible investment at the end of 2017 and expanded its portfolio by 62% in just one year.
The flagship BNP Paribas Fortis Private SRI fund has won close to 30,000 investors and is approaching Ä6bn, making it the largest such fund in the eurozone. Separately, the bank is helping 359 social entrepreneurs to develop projects that serve the public interest. BNP Paribas Fortis had more than €90m in loans out to social enterprises at the end of 2017.
Maxime Jadot, CEO of BNP Paribas Fortis, says: “We constantly strive to strengthen our clients’ trust. We do this by putting our clients first in all our actions. Sustainable finance and investments in the future of the bank are at the heart of our values.”
The bank has set ambitious targets for technology and aims to have 2 million users on its Easy Banking platform by 2020. In 2017, the bank launched its Instant Credit Experience for Enterprises and Entrepreneurs, an automated loan facility that lends to corporate customers. Finally, BNP Paribas Fortis has set up a new CompanyMakers initiative to simplify and streamline the setting up of new businesses, allowing entrepreneurs to avoid going to a notary or even having to pop into their bank branch.
OP Financial Group is focusing on identifying trends in payments, financing and services and developing products for the future. In digital banking, it is particularly catering to entrepreneurs, and working on a far-reaching roll-out of artificial intelligence and robotics.
Its digital strategy is multi-pronged. For example, the bank’s e-wallet, Pivo, is Finland’s leader with 860,000 users and will soon power a wider range of transactions. Recently launched e-commerce platform OP Kassa has doubled its user base every six months. Although the direct financial impact has been modest, these innovations are improving OP’s reputation, particularly among small and medium-sized enterprises. Crucially, the innovations are getting the attention of freelancers and entrepreneurs, a fast-growing segment in Finland.
OP Financial Group has also pushed into automating its businesses with the adoption of robot-based processes. Robots are employed to slash time-consuming and repetitive tasks, allowing employees to focus on more value-added and customer-facing roles. Robots have been widely implemented in the approval of government-backed student loans and have lowered costs and cut lead times by 90%, while their impact in mortgage documentation has also been dramatic: they can reduce tasks that took an individual an hour to just a few minutes. Over the past 18 months, the bank has brought in robots for 106 workflows and saved €11.5m annually.
In a further move to appeal to the self-employed, OP launched a tool to help entrepreneurs launch and manage a business. A single registration enables subscribers to manage many of their business functions. Since its launch in March 2017 through to mid-2018, OP had signed up 4300 entrepreneurs. The bank is thus well positioned to capitalise on the growth in self-employment, with data suggesting that this will increase by 50% through to 2025 in Finland.
The winner in France this year is also the winner of our award for western Europe. BNP Paribas is continuing to innovate in a digitally advanced market. In 2017 it launched a three-year strategic plan to drive its digital transformation and place sustainability at the heart of its business.
The digital transformation is well under way. The merger of Fivory and Wa! to create Lyf Pay has improved the mobile offering, which encompasses payment cards, loyalty programmes and smartphones, as well as the capacity to send and transfer money.
BNP committed to spend €3bn on digitalisation in 2017. This has enabled it to offer a brand new type of account with the acquisition of Compte-Nickel (since rebranded to Nickel). Nickel offers a current account that requires no minimum income and is hassle free to get as it is available at 3000 tobacconists across France. Nearly 1 million customers have signed up to the account and received cards which they can use to pay both in France and in other countries.
Other fintech investments are geared to specific parts of the business. For example, BNP acquired a stake in a robo-adviser to advise customers in its retail and wealth management business, and in a separate transaction gained an artificial intelligence tool to help with compliance and data management. It is also using technology to share ideas internally and deepen staff co-operation in its global markets business by investing in an internal communication platform that helps bring people together across disparate departments.
Finally, the wealth management division has worked closely with clients to develop teams that work on new client-friendly apps. One such app offers financial advice tailored to the client’s aims and profile via a smartphone.
Commerzbank has continued to roll out a strategy that focuses on growth and digital transformation to improve its profitability by 2020. The Commerzbank 4.0 strategy, initially launched in 2016, received fresh impetus with the launch of a new phase in 2017. The strategy is staring to bear fruit with a strong growth in customers – a net gain of 502,000 was added in Germany in 2017 – and growth in assets under control by €38bn.
The bank has focused on tailoring services to private and small business customers in what is a highly competitive segment in Germany. In fiscal 2017, the bank attracted 500,000 such customers. It is swimming against the tide in retail banking by emphasising branches as a key part of its retail strategy, opening seven flagship outlets across the country to highlight its services to individual customers. Retail customers are also flocking to the bank for mortgages, where financing hit €15bn in fiscal 2017 against €12bn the previous year.
When it comes to its digital strategy, Commerzbank’s Frankfurt-based campus now counts 1000 staff. The idea is to digitalise 14 end-to-end processes and develop and try out new ideas. That is already leading to roll-outs of new products including CashRadar, a service for small business customers that helps entrepreneurs to see all their business accounts and help them manage their entire business. The tool analyses income and spending and provides forecasts for up to four months. The full version was made available in March 2018.
The bank’s financial planning software, Customer Compass, allows advisers to analyse the needs of both retail and business customers to create tailor-made solutions and financial plans. In a three-step process, customers receive financial solutions and advice.
Kvika has continued to transform its business with an emphasis on acquisitions and gaining market share in asset management and corporate finance. At the same time, the bank remains committed to obtaining economies of scale and providing strong returns on equity for shareholders. It continues to excel in this area, achieving a cost-adjusted return on equity of 24.9% in 2017.
The bank has four core business areas: asset management, capital markets, corporate banking and corporate finance. Asset management had been a sleepy area. That has changed, however, and in 2017 Kvika grew its assets under management from Ikr121bn ($982m) to Ikr263bn, turning the business line into its largest fee revenue generator. Asset growth came primarily from acquisitions: Kvika bought two businesses – Virding and Alda Asset Management – which brought in a total of Ikr144bn in new assets. The bank’s corporate finance business was also bolstered with the purchase of Beringer Finance’s Icelandic Corporate Finance practice.
Armann Thorvaldsson, Kvika’s CEO, says: “Kvika has been a leader in consolidation and rationalisation in the Icelandic financial market. At the same time the bank has provided its customers with excellent service while creating value for its shareholders.”
Kvika has continued to trim costs and since 2012 has cut operating expenses from Ikr5.3bn to Ikr4.5bn. The bank is also investing in back-office processes and automation to cut costs.
Kvika continues to innovate in capital markets. It was the first to reopen multiple market segments, at a time when Iceland was emerging from capital controls, with issuances of senior unsecured bonds, subordinated debt and unsecured structured equity-linked bonds.
AIB Group has adapted to the booming Irish economy by focusing much of its attention on making its mortgage offering both more competitive and digital. Ireland has seen another wave of house price increases: they are running 8.6% higher than a year previous as of August 2018.
AIB, the country’s leading mortgage provider, today provides three mortgage brands. The AIB brand emphasises the lowest standard variable rate; the EBS brand offers low rates plus cash-back incentives; and the Haven brand appeals to a higher end profile. AIB managed to further trim its standard variable rates by 0.25%, representing one-fifth reduction over the course of three years even as the European Central Bank has held rates steady.
The bank has encouraged customers to transition to the My Mortgages web app and also streamlined mortgage decision making, with automation now accounting for 40% of decisions. At the same time, it has boosted its advisory network, ensuring there is a full-time homes adviser in each branch.
The transition to digital is also shown in the retail area, where biometric authentication for mobiles has helped drive the number of active customers from 650,000 to 850,000 from January 2017 through June 2018. Biometric automation with both fingerprint and face log-in has helped answer customers’ desire for quick and secure mobile access.
Bernard Byrne, CEO at AIB, says: “Our purpose is to back our customers to achieve their dreams and ambitions. This will enable us to create long-term shared value in our business, the economy and the communities where we work.”
The bank also chalked up a success with its re-listing in Dublin and London in Europe’s largest initial public offering of 2017. The transaction enabled the Irish government to raise €3.4bn and cut its stake to 71%.
UniCredit, in line with many of its Italian peers, has been aggressively tackling its backlog of non-performing loans. As part of its Transform 2019 programme, the bank successfully completed the sell-down of its position in the Fino project to less than 20% in February 2018. The Fino project covered a €17.7bn gross book of non-performing loans (NPLs), a portion of which has been securitised. The deal helped drive UniCredit’s NPL ratio down from a worrying 8.21% in 2015 to a more manageable 4.81% in 2017.
In addition to tackling its asset quality, UniCredit has been pushing ahead with digital improvements, including launching an instant payments solution in Italy and Germany in 2017. Its inaugural transaction was international and took 2.5 seconds, making it the first bank to offer real-time payments in Germany and the first to use instant payments cross-border. Gianni Franco Papa, general manager at UniCredit, says: “Our strong local roots allow us to be very close and deeply committed to our clients, offering them advice, a unique and innovative product range, and access to our international network.”
The bank has been seeking to help Italy’s beleaguered exporters. In February 2018, it launched Easy Export. Working with partners, UniCredit can offer a personalised e-shop and help with banking, logistics and online marketing. Moreover, it also inked an innovative tie-up with Alibaba.com, the business-to-business marketplace of the Chinese online marketplace. UniCredit clients gain access to the giant platform, supported by a dedicated website to facilitate usage.
UniCredit is also emphasising its work in social impact banking, where it seeks to support initiatives that encourage inclusion and employment. These include micro-credit and financing to individuals and small organisations including social and trade associations as well as micro-enterprises.
LGT has continued to grow its international business, particularly with the acquisition of ABN Amro’s private banking business which has centres in Hong Kong, Singapore and Dubai, winning it the Bank of the Year award in Liechtenstein. That deal added $20bn in new assets, bringing LGT’s Asian assets under management total to $55bn, and more than 300 new staff. The strategic acquisition positions the bank in fast-growing Asian and Middle Eastern markets and was completed in just five months.
LGT is embarking on a second wave of digitalisation, bringing in a new platform to support relationship managers, for example. The other priority for the bank is sustainability, which it is addressing through the LGT Sustainability Rating. In 2017, LGT introduced a rating for equities, bonds, funds and electronic fund transfers. Based on a proprietary database, the ratings come from a well-established group of experts and evaluate companies according to 23 criteria, including greenhouse gas emissions, labour conditions and gender, while countries are assessed on 20 criteria, which span air quality through to corruption. This provides private clients with information that has been mostly available only to institutional clients up to now. Moreover, it has been implemented in a user-friendly and simple five-step rating system.
LGT continues to grow as an asset manager. In the past five years the bank has seen net asset inflows of some $90bn, with $18.2bn in 2017. Moreover, its banking footprint is growing in multiple countries, with Switzerland notching up an annual growth rate of 12% over the past 10 years.
Thomas Piske, CEO of private banking at LGT Group, says: “Our success is to a large degree attributable to our outstanding client services, our strong balance sheet, which reflects a high degree of financial security, our focus on investment management and our stable ownership and management structure.”
Luxembourg has faced a long squeeze on banks that lack critical mass. BGL BNP Paribas has been a beneficiary of a shift to larger, better capitalised banks. In this tough market, the bank’s assets grew by a healthy 10% in 2017, reaching close to €50bn at a time when other leading banks have been retrenching in the country.
In February 2018, BGL BNP Paribas signed an agreement to buy ABN Amro Luxembourg, which brought in an additional 150 staff, more than 2000 customers and €8bn in assets under management. IT infrastructure, growth and cross-selling will help the bank to absorb the employees: it is encouraging the 3500 locally employed staff to find jobs internally where there is duplication. The acquisition catapults the bank into the ranks of the top three private banking players in Luxembourg and boosts its coverage of strategic customers and regions.
BGL BNP Paribas has taken an innovative approach to mastering know your customer (KYC) regulations. Parent BNP Paribas Group organised an international hackathon in 2017 which was won by start-up fintech Tetrao. That gave birth to a close collaboration between the winner and the Luxembourg bank, which led them to jointly design, develop and implement KYC solutions including through artificial intelligence. The process reduced account opening times from several months to just a few days and is being implemented for the bank’s professional clients by the end of 2018.
Another impressive technology development has been Private Lease, a product that allows private customers to lease cars, reflecting a customer-driven solution to the growing drift away from the rigidity of car ownership to more flexible models. The new product piggybacks off the existing corporate car rental business carried out in co-operation with its partner, Arval Luxembourg.
The winner of this year’s award for Malta, HSBC Bank Malta, is working through an ambitious transformation programme that is causing plenty of short-term pain. Assets declined 7% and net profits tumbled a hefty 9.5% in 2017. The bank is taking these hits in its stride as part of a wider plan to meet the highest global standards and eliminate the chance of any potential financing of terrorism, human trafficking or other illegal activities.
The first step was centred on training its 1300 staff. That has paid off: potential compliance cases identified increased by 600% and the bank filed more than 80% of all suspicious transactions in Malta, a far higher amount than its market share of 40% would indicate. To de-risk, the bank has slashed the number of commercial banking customers by 50%, although revenues fell by just 7%. The commercial banking division now ranks number one in the world for its compliance risk assessment. It has sought to spread its governance message to a wider public through seminars, videos and social media engagement.
HSBC Bank Malta has also embarked on a significant digitalisation drive in a country with the highest usage of cash and cheques in Europe. It is the first bank in Malta to have launched contactless cards and digital signing capability. Mobile banking log-ins jumped 22% in a recent six-month period. The bank has also been a frontrunner in biometrics: 70% of iPhone log-ins in Malta are now through fingerprints or face recognition technology.
The bank has also driven further into the small business segment with the launch of Fusion, which melds business and personal accounts on digital platforms and gives easier access to lending products. Finally, the bank has paid out a special dividend and is the top dividend-yielding stock on the local stock exchange.
Portugal, Banco Santander Totta
Banco Santander Totta has become Portugal’s largest private bank due to the acquisition by the Spanish parent of Banco Popular Español, including its Portuguese operations, in December 2017.
Assets at the Portuguese operation were up by more than 18% and net profits over 10% in 2017 year on year. CEO António Vieira Monteiro says: “Santander Totta has been showing, quarter over quarter, a sustained and profitable growth of its activity. As of September 18, credit to companies had grown by 23% year on year, clients of the main bank has grown by 8% and digital clients by 25%. We will continue this trend in the future based on our strong capital ratios, the quality of our risk assets and a strong focus on digital transformation.”
Santander Totta benefited particularly in the small to medium-sized enterprise segment, where Banco Popular had been a leader. At the end of 2017, loans to companies grew 45.3% year on year. Also, Santander Totta continues to expand in niches such as urban revitalisation projects, where the bank enjoys an impressive 53% share of lending.
To enhance its digital transformation, Santander Totta uses the Agile programme, which brings together different teams to drive innovation and improve customer service. In January 2017, it introduced Credi-Simples to facilitate individual customer borrowing via an app and home banking. In the first quarter of 2017, 30% of loans to this customer base came via this new channel.
The company’s signature 1|2|3 World current account, which offers cashback on some spending, continues to attract new customers, with 391,000 signed up as of June 2018 and more than Ä22m paid in cashback payments. Finally, Santander Advance, a programme to help companies train employees, has been extended in scope: more than 2000 companies had availed themselves of services such as training and online courses as of June 2018.
CaixaBank has continued to grow organically and through acquisitions, driving forward strong results and winning it the award for Bank of the Year in Spain. Its most recent notable addition was that of Portuguese bank BPI, including its Spanish operations. In February 2018, CaixaBank announced its best results ever with net profits of €1.68bn, an increase of more than 60% on 2016.
CaixaBank boasts close to 14 million retail customers in Spain, with a particularly strong performance in salary deposits, where it has a 26.3% market share. It is also the number one bank in pension plans and savings and insurance products. To improve service to its retail customer base, the bank is modernising and specialising its extensive branch network while trimming the number of outlets by 5% to 4618. Innovations include developing 1100 speciality outlets, including ‘store’ branches, with longer opening hours and a tech feel.
CaixaBank is equally developing mobile-only and online banking brands, including mobile-only imaginBank. That will enhance its digital offerings and build on a strong showing with a full 58% of customers having used digital channels over the past year. Tools such as personal financial management have also proven very popular and garnered 3.8 million users, while other value-added services include accelerated payments via mobile. The bank is particularly proud of Smart Money, which provides personalised investment recommendations for investors.
CaixaBank has launched DayOne for its business customers to offer customised services, training and networking activities for clients from branches in Barcelona, Madrid and Valencia. It aims to bring in 4000 customers in its first year.
Gonzalo Gortázar, CaixaBank’s CEO, says: “Our success is based on making sure our clients and our people always come first. Our clients inspire our people to strive for continuous improvement, and our people make our organisation innovative, profitable and sustainable.”
In a highly competitive market that has faced headwinds of enhanced supervision, Credit Suisse, Switzerland’s second largest bank, has thrived. The domestic Swiss universal bank division (SUB) has managed not only to maintain its leading positions across most key areas, it has also grabbed market share in sectors such as ultra-high-net-worth banking, small and medium-sized enterprises and financial institutions.
At the same time, the SUB business is being managed prudently. The bank has driven revenues steadily higher while stamping down on expenses: revenues were growing at 2% in the first half of 2018 over the same period in 2017, while expenses were slimmed by 7%. That has helped drive pre-tax income in 2017 up by 8%.
Thomas Gottstein, CEO of Credit Suisse, says: “We have succeeded in impressing our clients, from wealthy private clients to corporate clients and pension funds, by offering them the right banking solutions… and, in the third quarter of 2018, increased our profit for the 11th time in succession. I would like to express my sincere gratitude to our clients… and our about 12,600 employees.”
Strategic aims include being a ‘bank for entrepreneurs’, which entails offering a wide, customised range of services that stretch from advice on monetising illiquid assets to helping venture capital firms thrive. Its strategy as a ‘bank for the digital world’ has seen the bank re-launch online portals for private clients to improve payments and offer foreign exchange trading, for example. Finally, as a ‘bank for the next generation’, it is encouraging children to learn about planning and savings with a digital piggy bank dubbed Digipigi.
The investment bank continues to dominate rankings domestically, particularly in mergers and acquisitions, while the international wealth management division saw pre-tax income grow 33% year on year in the first half of 2018.
Akbank has been announced the Bank of the Year in Turkey in what has been a torrid year for its domestic market, with an economy marked by high inflation, currency volatility and fluctuating financial markets.
In the teeth of this challenge, Akbank has ploughed on with improvements. It started implementing a new branch format with input from the same company that designed Apple Stores and a focus on a simple, digital experience. This will free up employee time to spend advising and selling to customers.
In 2017, the Turkish bank broke ground on a new centre, the Akbank Data and Living Centre. With investments of $250m, the centre will be its single biggest investment ever. An ambitious development with environmentally friendly credentials, it will be a magnet for dynamic talent. At the same time, the bank has launched an innovation centre where employees will work with external fintech companies and host hackathons and innovation cycles.
Digital innovations for customers include a new Axess Mobil app, which reached 1.5 million downloads in two months and allows cardholders to customise interactions, while a popular Facebook campaign ‘A bank with a difference’ has already become a case study. A full 86% of transactions took place through digital channels at the end of 2017.
The bank has also focused on improving the management of information risk through a new chief information risk office that reports directly to the board to look at cyber security, compliance and information risk governance, among other topics.
Hakan Binbasgil, CEO at Akbank, says: “Through years of consistent, prudent and transparent management, we have continuously strived to pioneer the future of banking. We have invested in our people and infrastructure in order to create value for all of our stakeholders, whose trust has been our most valuable asset.”
The return of Lloyds Banking Group to financial health continues apace. In February 2018, the bank completed the second phase of a strategic initiative launched in 2014, targeting the customer experience, becoming simpler and more efficient, and delivering growth. In May 2018, the bank returned to full private ownership.
The customer experience is key as Lloyds is the UK’s largest retail bank by network, with 1843 branches. Improvements saw the bank accelerate mortgage processing and simplify account opening. António Horta-Osório, the CEO of Lloyds Banking Group, says: “Putting customers and shareholders at the heart of everything we do, and understanding that our purpose is to help the UK prosper, means we have clear goals that we relentlessly pursue as a team every day.”
Becoming simpler is undertaken through the bank’s ‘Simplification’ programme, which has seen run-rate cost savings beat expectations with a reduction of £1.4bn ($1.82bn) against the forecast of £1bn; the bank boasted a cost-to-income ratio of 47.8% in the first quarter of 2018 compared with about 70% for global banks.
Lloyds’ focus on delivering growth emphasises sustainable approaches. The bank has been pushing into areas where it had been under-represented including small and medium-sized enterprises. Completing the £8bn acquisition of the MBNA credit card business represents its first major acquisition since the financial crisis and the largest integration of such a business ever in Europe.
Its digital presence is well established with 9.3 million mobile customers. New innovations include the adoption of software that uses an audio fingerprint to listen for fraudulent behaviour on calls.
The next three years will see investments top £3bn and include the development of flagship branches that blend personalised service with technology after successful openings in Manchester and London.
