Banks that delivered solid financial results while demonstrating prowess in developing new products, services and the employment of new technology, came out on top in the Banker Awards 

The Banker’s Bank of the Year Awards 2018 top off another year in which banks have been quietly doing great things while facing a plethora of challenges.

In some countries these have been political, in others economic, and every-where they involve coming to grips with new technologies and competitors that are disrupting the sector. 

Our award judges were set the task of deciding which banks had performed the best against this backdrop. We picked banks that have delivered solid financial results while demonstrating prowess in developing new products, services and the employment of new technology. 

Competition as always was fierce and we received some of the strongest entries in the history of our awards. There was a particularly good response from emerging markets, where some of the most exciting changes in banking are taking place.

As well as making awards in 140 countries, we awarded six  regional winners, and of course the most prestigious award of all was made to our global winner. This year we expanded our emphasis on corporate social responsibility by adding to our existing Financial Inclusion award one for Banking in the Community. Hearty congratulations to all our winners.

Global and Asia-Pacific, DBS Bank

DBS Bank’s journey to becoming this year’s overall Bank of the Year is the culmination of a process that started back in 2014. Embarking on its digital transformation programme, the bank outlined how it was to become a truly digital bank in a way not yet attempted by other institutions. Where other banks are beginning their digitisation process, DBS is already well on its way. 

This has required innovative thinking and approval from the very top of the business. The bank decided to take the approach of a tech company, choosing to move its business away from storing information in data centres to using the cloud. By the end of 2017, 66% of the bank’s applications were cloud-ready. 

Changing the culture within in the bank was recognised as being crucial to make digitisation a success. The bank has encouraged its staff to embrace the start-up mindset and carry out experiments to test out innovations. More than 1000 experiments have now been tried out to find possible future developments. 

Piyush Gupta, CEO of DBS Group, believes the way the bank has rethought its approach to business is the key to its success. “Over the past four years, we’ve set out to reimagine banking: being digital to the core, embracing journey thinking and becoming more start-up-like,” he says. “We’ve also focused on delivering higher shareholder returns, and being top of class for customer and employee satisfaction. We’re honoured that these efforts have culminated in DBS being recognised as the world’s best bank.”

Part of the strength of DBS comes from its openness to working with external partners. In November 2017, DBS launched its application programming interface (API) developer platform. By opening up its APIs to fintechs, corporates and software developers, customers are enjoying greater convenience when it comes to transferring funds, making real-time payments and even earning rewards. 

And to ensure that these services work as smoothly as possible, DBS allows access to its API team to help troubleshoot problems. The bank launched its References Apps tool that simulates how different APIs will interact and devise solutions to give a seamless experience as customers move between software providers. 

The move to digital has brought more benefits than just making the bank look like it is keeping up with the latest technology trends. The bank has assessed the data to identify the impact that digitisation has on its bottom line, and it has found some interesting results. 

The data showed that, compared with a traditional banking customer, digital customers bring in twice the loan income and 3.6 times higher investment balances. Digital customers are more engaged, conducting 16 times more transactions. Furthermore, the cost of acquiring a digital customer is 57% of the cost onboarding a traditional customer. 

As well as increased revenues in the consumer business, DBS has enjoyed a period of financial success, recording higher return on equity over the past year. With the bank’s newly developed businesses such as wealth management and cash management coming into their own, in the first half of 2018 the bank saw return on equity rise to 12.5%. DBS forecasts in the future this could increase to 13%, a total that will see the bank among the some of the most developed banks in the international market. 

Western Europe, BNP Paribas

BNP Paribas has pulled off an impressive feat by collecting three of this year’s individual country awards as well as clinching the overall regional award. In addition to being our western European winner, BNP and its subsidiaries walked away with Bank of the Year for France, Belgium and Luxembourg. 

BNP Paribas has balanced a sustained increase in net profits all the while pushing deeply into socially responsible investing, including through divesting from the most damaging fossil fuel production. Net profits at the group reached €7.8bn in 2017 against just under €6.7bn in 2015.

Jean-Laurent Bonnafé, CEO of BNP Paribas, says: “These awards reflect the strength of our integrated and diversified business model and our ambition to become the leading bank in Europe serving our clients globally. We pride ourselves on becoming the bank of the future through sustainable development, digital transformation and enhanced customer experiences.”

BNP Paribas is roughly halfway through an ambitious three-year strategic plan, which includes building customer-focused digital solutions. In its home market of France, the bank combined two existing businesses to create a new and wide-ranging unified mobile solution, covering in-store and online payments, donations, loyalty programmes and coupons. Meanwhile, in Belgium it has set ambitious targets for its Easy Banking platform and expanded an instant credit feature for smaller enterprises. Over in neighbouring Luxembourg, with its complex international clientele, the bank is improving know your customer processes.

BNP Paribas’ sustainability drive takes a multi-pronged approach yet stays within a targeted framework. Examples of projects in corporate, social and environmental responsibility abound. In France, BNP Paribas is seeking to finance companies in an ethical way by adding sustainability conditions to lending facilities. A pioneering deal was signed with Danone which links the food company’s environmental, social and governance (ESG) performance to the pricing of a BNP loan and where the interest rate has some link to an ESG score provided by an environmental agency. In Belgium, similar conditional loan deals have been signed and the bank runs Europe’s largest strategic socially responsible investment fund. 

The proof that BNP is getting much right can be seen in the continued growth of group assets, which were up 10% in 2017 over the same period in 2016. Further success looks likely to come the bank’s way as it successfully balances growth with a mission to benefit society. 

Central and Eastern Europe, Raiffeisen Bank International

The newly restructured, streamlined Raiffeisen Bank International (RBI ) says that its core task is the customer. A measure of its success in addressing that task is being named Bank of the Year for 2018 in four countries across its region – Austria, Bulgaria, Slovakia and Ukraine.

The group’s recent transformation saw RBI’s parent bank, Raiffeisen Zentralbank, merged into RBI in March 2017. This improved overall capitalisation and efficiency, while reducing complexity. 

At the same time, RBI sharpened its focus on central and eastern Europe. The group exited or reduced its presence in non-core markets such as Asia and the US, and repositioned itself in markets such as Russia, Ukraine and Hungary.

Its small bank in Slovenia was sold, along with much of the Polish business. In the process its risk costs fell by 84% and its fully loaded common equity Tier 1 capital ratio improved by 3 percentage points. This provides room for selected growth in risk-weighted assets, particularly in Austria, Bulgaria, the Czech Republic, Slovakia and Romania, but also to a lesser extent in Bosnia-Herzegovina, Croatia, Hungary, Kosovo, Russia and Serbia.

In 2017, group pre-tax profits rose by 82% to €1.61bn and consolidated profit by 141% to €1.12bn. While assets grew 21% to €135.15bn, return on equity improved from 16.2% to 19.4%.

There were a number of technological firsts. In Slovakia, for example, Tetra banka introduced remote identification and verification based on a state biometric database. This allows rapid mobile account opening and new-to-bank lending, and bestows competitive advantage, particularly in the millennials market.  

Raiffeisen banks across the region were among the first in Europe to implement SEPA Instant Payments. RBI implemented the Instant Payments functionality in its payment processing system and established the link to EBA Clearing’s RT1 platform.

But even when it is delivered through digital channels, banking is still a people business, according to Johann Stobl, CEO of RBI. “A main ingredient of RBI’s success has traditionally been the customer relationship, which is even more important now that competition is just a few clicks or swipes away,” he says. 

So it is important to run the bank in a way that fosters mutually beneficial customer relationships, he adds, saying: “These must be based on a deep understanding of customer needs, top products and services, efficient processes and fast decisions.”

Americas, BBVA

It would be hard to miss BBVA’s presence across Latin America. Its operations stretch from Mexico to Argentina, and its businesses in Peru and Paraguay have receives our awards as the best banks in their countries thanks to their use of technology.

Indeed, the importance of BBVA’s work in digital banking across the region cannot be overstated. Its commitment to the digitalisation of its banking products and services has served as a strong driver for its Latin American operations, where, compared with other regions in the world, technological innovation in financial services has been playing catch-up.

Thanks to the group’s global development platform, products created by one business can be replicated elsewhere. For example, BBVA Paraguay’s new mobile app launched earlier in 2018 to improve user experience was based on the group’s global design, which had focused upon being easier to use and more intuitive.

BBVA’s presence in the fintech space is also impressive. The bank’s renowned Open Talent competition seeks to spot promising start-ups globally. This has helped the group in Latin America too. In 2017, BBVA completed the acquisition of one of the contest’s previous finalists, Mexican online payment company Openpay. Technology is the mantra of the whole group and it is reflected in its leadership appointments. In the US, BBVA-backed digital bank Simple poached Amazon executive David Hijirida as its CEO. And, in possibly the clearer signal yet of BBVA’s digital commitment, group CEO Carlos Torres Vila, a recent head of digital banking, will replace retiring executive chairman Francisco Gonzalez.

“Now everybody talks about digital change, everybody is in a hurry to jump on the bandwagon,” Mr Gonzalez told a fintech conference in 2017, as reported by the Financial Times, adding that BBVA had been working on its technology transformation since 2007. 

Of winning the Best Bank in the Americas award, Derek White, global head of client solutions at BBVA, says: “It is a honour for BBVA to be named as Bank of the Year for the Americas, and it’s testament to the hard work of our colleagues, the strength of leadership we have in the region, and the relentless customer-focus and innovation we put into our product line-up.” 

Middle East, Qatar National Bank 

Qatar National Bank (QNB) remains a juggernaut, despite facing a number of regional and domestic headwinds over the past few years. Ongoing growth of the bank’s regional footprint has been accompanied by a number of exciting new strategic initiatives, technological innovations and an impressive suite of growth figures to ensure that the Qatari lender scooped the 2018 regional award. 

Net profits at the bank increased by 6% over the 2017 review period, while total assets and Tier 1 capital expanded by 13% and 11%, respectively. The lender’s return on equity was 18.7% at the end of 2017, while its cost-to-income ratio came in at 29.1%. Non-performing loans were low at just 1.8%. 

Beyond this strong set of financial indicators the bank has been working on a number of long-term strategic initiatives, including the closer integration of its foreign subsidiaries. This is seeing QNB push to align its foreign operations with the group’s strategy, business and operating model. 

The objective is to generate efficiency, enhance governance, streamline global product offerings and extract greater value from its global business offerings. QNB has integrated the local transaction banking capabilities of its Turkish operations into the global network, meaning additional revenue opportunities can be captured as a result of trade flows between Turkey, Europe, Asia and Africa. 

Meanwhile, in June 2018 QNB implemented a single, centralised multi-entity payments platform known as the Enterprise Payment Hub (EPH). This offering integrates with multiple banking channels, products and currencies and helps to manage the payments lifecycle and process end-to-end flows irrespective of their originating channels and back-end applications. As a result, QNB will be able to scale its international payment processing capabilities quickly in the event of any increase in transactions. EPH will also deliver benefits for the QNB group in terms of reducing operational costs by streamlining and centralising the bank’s global payments processing. 

The EPH also delivers the flexibility that QNB requires in terms of meeting future changes in the market. With the ability to engage with application programming interfaces, the hub’s bespoke infrastructure means that it can evolve to meet future trends in technology and integrate with a range of new payment modes and players.

Africa, Standard Bank Group

Africa’s economic fortunes appear to be improving after a period in which lower commodity prices hit some of the region’s largest economies hard. Growth across sub-Saharan Africa is expected to reach 3.1% in 2018 before picking up to 3.6% over 2019 and 2020, according to the International Monetary Fund. 

The continent’s changing fortunes have buoyed the performance of its banks, and none more so than the Standard Bank Group, the largest lender in the region. 

The group’s growth over the review period was impressive: net profits surged by 14%, while total assets and Tier 1 capital also grew by 4% and 8%, respectively. In tandem, the group’s return on equity increased to 17.1% from 15.3%, while its cost-to-income ratio fell to 55% from 56%. 

“There are three ingredients to our success. First, we’re guided by our purpose: ‘Africa is our home, we drive her growth’. This reminds us to think long term and to aim to be fiercely competitive. Second is our unique network across Africa, and linking Africa to the world. Third is our commitment to creating consistently excellent customer experiences,” says Sim Tshabalala, group chief executive of Standard Bank Group.

Over the review period, the Standard Bank Group completed its core banking replacement programme. This investment will enable the group to respond quickly to client needs and to deliver leading digital banking solutions. 

In South Africa alone, a range of new retail products were delivered on the new core banking system in 2017, along with the migration of investment products to the platform. By the end of the year, there were more than 7 million accounts on the new platform with about 60 million transactions being processed every month. In early 2018 the group completed the migration of South African retail client accounts to the new platform.

Across Standard Bank Group’s operations in the rest of Africa, there has been a successful upgrade of existing core legacy systems with Finacle. A modern and competitive platform, it allows the group to better manage operational risks while leveraging the massive growth potential in key markets across the continent. Finacle has been implemented in a total of 14 countries with Lesotho, Malawi and Mauritius being upgraded in 2017 and the Democratic Republic of the Congo in early 2018. This continent-wide overhaul has made for a faster, more efficient and innovative banking offering across the group’s footprint. 

Financial Inclusion, Standard Chartered Bank Zambia

The Meheba Refugee Camp opened in Zambia in 1971, close to the border with the Democratic Republic of Congo and Angola, stretching out for 720 square kilometres and now hosting more than 15,000 people. The challenges of living in such an environment are many, from the emotional to the practical, and carrying out payments is one of them. 

Standard Chartered Bank Zambia created a mobile wallet that can help alleviate some of these issues. Eligible refugees receive a monthly stipend from the UN High Commissioner for Refugees (UNHCR), which manages the camp; this was previously paid in cash to the head of a household or a chosen representative. However, the process of handing out cash was inefficient as long queues meant that people could wait up to 10 days for their money in some cases. It also created reconciliation challenges, given that payments were handed out manually. It presented security concerns too. 

Standard Chartered signed up UNHRC to its Straight2Bank wallet platform and, with the support of mobile money services providers, provided eligible beneficiaries with SIM cards. Once they had registered and their mobile wallets were up and running, they could receive stipends quickly and safely. Average waiting times have now been reduced to just one hour. Furthermore, the wallet allows users to transfer funds to others more conveniently and to keep non-cash savings. 

Although simple in nature, the project had to overcome a number of practical challenges. This started from poor network connectivity, according to transaction banking product manager Kasanga C Sondoyi, who oversaw the initiative. This problem hampered SIM card registrations and the activation of mobile wallets. Nonetheless, the initiative took off. More than that, it was so successful that Standard Chartered is rolling it out to two other UNHCR-supported refugee camps in Zambia as well as in Uganda and Kenya.

“The mobile wallet initiative has resulted in a number of key benefits to the UNHCR and eligible refugees – these include financial inclusion for the refugee community in Zambia, a significant reduction in payment turnaround time and improved beneficiary experience on payment dates,” says Mr Sondoyi. “Other benefits have been seamless reporting and reconciliation of payments for UNHCR as well as an elimination of cash handling risks for UNHCR.”

Banking in the Community, Kenya Commercial Bank

Kenya’s youth have typically taken on informal jobs, which hinders the development of the country. The reasons behind this are common in a developing economy, and include a lack of sufficient entry-level positions in the formal sector and, for the young people willing to start their own business, a lack of training and financing. In a vicious cycle, existing small businesses also struggle to grow – and therefore create formal employment – because of the same workforce and financing deficiencies. 

Kenya Commercial Bank set out to correct this. With the launch of its 2Jiajiri programme, now in its third year, the bank has supported young Kenyan entrepreneurs by training them on technical skills, providing financial education and helping them to register their activities. Crucially, KCB has provided loans too to assist in further growing these nascent businesses. 

More than 4500 individuals have accessed the programme’s business incubator and KCB has lent a total of Ks50.6m ($500,000) to deserving businesses.

It is a simple programme that has delivered fast results. 

An example of a success story brought about by the project can be found with fisherman David Owino Odhiambo, who struggled to make ends meet and provide for his family because of a lack of equipment. Once he joined the programme, KCB sponsored him to study fish farming and entrepreneurship at Jaramogi Oginga Odinga University of Science and Technology in Bondo Town for six months. The programme also gave him access to a team of three advisers on legal, financial and marketing matters drawn from a pool of local graduates. The team helped him structure and monitor his activity and promote it and interact with customers through the creation of a Facebook page. After his training was completed, KCB lent Mr Owino Odhiambo Ks100,000 to expand and buy a motorised boat and new fishing nets. His daily sales have now doubled.

The initiative has proved so successful that the Kenyan government, along with larger corporates and development agencies, have expressed interest in joining KCB’s efforts.

“Jiajiri is a Swahili word that means ‘Let us employ ourselves’. It is KCB’s strategic youth empowerment programme and it aims to reach 50,000 youth and informal sector entrepreneurs in the next five years. It is powered by KCB’s conviction to liberate the youth from relying on formal employment in order to earn a living,” says Jane Mwangi, the KCB Foundation’s managing director.

“KCB is one of the few Kenyan corporates that has integrated a sustainability agenda into its corporate structure. KCB decided to do its part in addressing the unemployment crisis in Kenya by investing in 2Jiajiri. The government can’t do it alone and if the UN’s Sustainable Development Goals are to be achieved, everyone has a role to play.”

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