Entries to The Banker’s Bank of the Year awards 2019 show an industry that is thriving amid adversity. 

In terms of economics and politics, 2019 has been an uncertain year, with banks facing many challenges from trade wars to low or negative interest rates to the demands of digital and new regulations. Despite all this, entries to The Banker’s Bank of the Year awards 2019 show an industry that is thriving amid adversity. 

Our judges were impressed by the strength of digital transformation efforts across the globe and at how banks are using the squeeze on net interest margins to improve efficiency and move their institutions into a new era. We have given awards in 138 countries this year, as well as six regional awards and of course the top prize for the best bank in the world. Mindful of how banks are increasingly trying to give back to their communities, we also offer an award for banking in the community and one for financial inclusion. 

The Banker’s Bank of the Year awards have maintained their edge in attracting the highest quality of entries and keeping their place among the most prestigious of industry awards.

Global and Asia-Pacific

Agricultural Bank of China

As home to some of the world’s largest banks, offering retail and corporate customers alike digital innovations not seen in any other country, China has become one of the most competitive markets in the world. Finding a way to differentiate a profile in this market is vital for a bank to develop and grow. Agricultural Bank of China (ABC) has managed to achieve this, and in doing so scooped the coveted prize of global Bank of the Year. 

ABC has gone through a steady upwards trajectory, and this growth story has not gone unnoticed. Earlier in 2019, the bank crept up one place in The Banker’s Top 1000 World Banks ranking, taking third place and nudging its domestic rival, Bank of China, down into fourth. This was achieved thanks to ABC’s $243bn in Tier 1 capital. The bank worked to reduce its non-performing loans, an issue that has blighted many of its Chinese counterparts, reducing them to 1.59% in 2018, compared with 2.37% in 2016. 

Reconfiguring its internal processes has also brought in financial boosts. ABC reformed its wealth management subsidiary, and improved its operational management mechanism. Through integrating risk controls, finance and the systems of the parent and the subsidiaries, it helped to homogenise and streamline operations across the group. Because of these changes, during the first half of 2019 five integrated operating subsidiaries recorded a total of Rmb3.16bn ($450m) in net profit. 

When looking at the bank’s customer figures, the numbers continue to be staggering. In June 2019, ABC’s mobile banking offering had 284 million personal customers, an increase of 10.5% on the start of the year. Between them the customers made 7.86 billion transactions, totalling Rmb28,550bn in value. This was bolstered by the bank issuing version 2.0 of its intelligent mobile banking service, which included private and wealth management services. 

Zhou Mubing, chairman of the board of directors at ABC, says: “The effective integration of reform, innovation and fintech has been a critical factor to the growth of our business over the past few years. We will persevere in innovation-driven change to revitalise our operations. We will fully facilitate digital transformation to create new competitive advantages. We aspire to develop a smart bank with a superior customer experience, and a best-in-class digital eco-bank in ‘sannong’ [which caters to agriculture, rural areas and farmers] and inclusive finance areas, creating a digital ABC.”

It is this approach to rural communities that is perhaps the most impressive aspect of ABC’s strategy. It has also taken on board the need to expand its loan offering to keep the Chinese economy growing, and compete with the rising digital banks. To support its customers doing business in the most challenging locations, the bank devised a separate scale for loans, implemented preferential economic capital measures, and prioritised its resources to bring them much-needed support. Due to these practices, by the end of June 2019 the balance of loans in the 832 key counties of national poverty alleviation was Rmb1033.1tn, a growth of 12% compared with the figure at the end of 2018. 

Ensuring there was support on the ground was a key part of this development. ABC focused on poverty alleviation by selecting towns and villages most in need of banking support. The bank set up new branches and self-service centres in the poorest areas, while actively promoting mobile and online banking and ‘Huinongtong’ self-service points. By the end of June 2019, ABC says 57 branches and 44 self-service centres were in development.  

Western Europe

Santander Group

Santander Group has achieved considerable growth across its businesses in western Europe in recent years, despite the challenges linked to the region’s cooler economic development. The group secured two individual country awards in 2019, including Spain and Portugal, in a display of this progress. Underpinning the bank’s momentum is a strategy that emphasises the customer experience and loyalty, customer revenue growth, cost control and improved credit quality, among other priorities. 

“We are delighted to be recognised as the best bank in western Europe for 2019. It has been a strong year in which we have continued to grow our customer base and strengthen our business, despite some significant external headwinds. This reflects the strength of our model and strategy, and the quality of our people,” says José Antonio Álvarez, chief executive of Santander Group.

The bank achieved notable success in the digital banking domain across its western European markets. In the UK, for instance, it retained 55% of refinanced mortgage loans online. In addition, 43% of current accounts in the UK and 65% of credit cards were opened through digital channels, representing a year-on-year increase of 5% and 13%, respectively. Meanwhile, in Portugal the bank’s digital customers expanded by 32% in 2018 reaching 734,000. In neighbouring Spain, Santander’s digital growth was even more impressive. The number of digital customers increased by 51%, to 4.8 million, while sales via digital channels increased to 30% in December 2018. 

Beyond these achievements, Santander Group also made notable strides in its efforts to bank small and medium-sized enterprises(SMEs) across western Europe. Backed by an increase in its SME-focused staff in Spain, the bank registered new lending growth that was 17% higher in 2018 than in 2017. Moreover, the roll out of innovative and attractive product offerings, such as the 1/2/3 Business Current Account in the UK in October 2018, are shaking up the business banking markets where Santander has a presence. 

For these reasons, and others, Santander Group emerged as standout choice for the 2019 western Europe award. As the bank continues to digitise its business further, while simultaneously delivering innovative product and service offerings, expect its strong performance to continue in the coming years. 

Central and Eastern Europe

Raiffeisen Bank International

Raiffeisen Bank International (RBI) has, once again, secured the regional award for central and eastern Europe (CEE). The bank’s long track record of success in these annual awards has emerged as a result of its outstanding track record of growth, its commitment to a strong local presence across its market footprint and its ability to develop long-term relationships with its customer base. Moreover, RBI sets itself apart from the competition by placing innovation at the very heart of its business. 

“RBI runs a region-wide banking network of subsidiaries and branches in 13 CEE markets. A unique local expertise, derived from more than 30 years serving the region, combined with a strong focus on customers’ needs and innovation, are key to RBI’s success. It is our mission to transform continuous innovation into superior customer service,” says Johann Strobl, chief executive of RBI. 

In 2018, RBI benefited from CEE’s strong economic operating environment to register an excellent set of results. The operating result increased by 8% compared with 2017, thanks in part to higher interest income along with higher fee and commission income. Lending volumes also increased over the same period, expanding by 4%. Meanwhile, consolidated profit over the 2018 review period amounted to E1.27bn, marking an increase of 14%, or E154m, from the figure in 2017.

Beyond its performance, RBI has launched a number of eye-catching initiatives with respect to digitisation. In 2018, for instance, the bank launched Elevator Ventures, a new corporate venture capital company with investment capital of E25m. The company prioritises strategic direct investments in specific fintechs, along with co-investments and investments in other venture capital funds. It also acts, to some degree, as an extension to the bank’s fintech elevator, Elevator Lab, that helps to nurture young fintech start-ups. 

Indeed, RBI’s approach to innovation is delivering change across the CEE region. In September 2018, the bank’s Russian business initiated the first mortgage certificate transaction using blockchain technology, in partnership with the country’s central bank and leading state institutions and banks. In the same year, RBI in Slovakia became the first lender in the country to introduce facial recognition to its mobile banking offering. 

Americas

Santander Group

Much of Santander’s overall growth comes from its international operations, which stretch from the US to Poland. But it is Latin America that continues to provide the biggest source of income for the banking group – and an income that is stable. 

In 2018, despite economic troubles in Argentina and the uncertainty of presidential elections in Brazil and Mexico, attributable income from Latin America was nearly unchanged and represented 43% of the total. By the end of the third quarter of 2019, even after a severe Argentine peso depreciation, attributable profits from Buenos Aires, converted in euros, more than doubled compared to the first nine months of 2018. The same indicator for Brazil and Mexico – as well as for the US – grew at double digits.

The group’s digital strategy clearly paid off as Latin American digital customers grew by 80% in 2018 and the group was able to launch and plan new products, as well as to attract the interest of tech professionals. In Argentina, Santander Rio is preparing to replicate the group’s digital bank, Openbank, in the local market and has recruited the new venture’s CEO from Google. 

In Chile, Santander has been heavily investing in cybersecurity and recently launched a contactless payments service through its digital wallet. It is also developing its own point-of-sale system with a view to launch in 2020. Its WorkCafe – a hybrid between bank branch, coffee shop and co-working space – continues to attract traffic and the bank launched a lighter version for smaller branches during 2018 and 2019. 

It also launched Superdigital, a pre-paid digital account for the unbanked created in Brazil which the group plans to roll out across Latin America. As of the end of September 2019, there were more than 600,000 Superdigital active users in the region. The group also sees potential in the international expansion of Prospera, the microfinance operation that has supported more than 700,000 entrepreneurs in Brazil since its launch 16 years ago.

“Once again, our Latin American franchise was one of the key growth engines for Santander in 2019,” says José Antonio Álvarez, CEO of Santander Group. “This award is a testament to the dedication of our teams to continuously improve the service we provide to our 65 million customers across the region.”

Middle East

Qatar National Bank

As the economic impact of Qatar’s isolation by its Gulf neighbours faded in 2018, Qatar National Bank (QNB) regained its position as the region’s largest lender by Tier 1 capital and assets. The lender’s strong financial performance, together with the tighter integration of its international operations, saw it crowned once again as Bank of the Year for the Middle East. 

Perhaps the most impressive aspects of QNB’s financial results for 2018 was the gains posted in both returns and efficiency. Return on equity improved to 21% from 18.7% the previous year, while its cost-to-income ratio improved to 25.8% from 29.1%. Net profit and total assets both grew by 6% during 2018, with Tier 1 capital growing by 12%. 

Of particular note has been QNB’s ongoing commitment to generating revenue and cost synergies in its majority-owned international subsidiaries, particularly those in Turkey and Egypt. The Banker’s selection of QNB Alahli Egypt as Bank of the Year in the country for 2019 demonstrates that QNB’s strategy has already borne fruit. 

QNB has also begun to introduce global standards in all of its majority-owned international subsidiaries in areas such as training, communication and consolidation of vendor agreements. QNB’s home market of Qatar, meanwhile, has also benefited from the key capabilities of its subsidiaries, in areas such as retail, cards and small and medium-sized enterprises (SMEs). 

Elsewhere in Qatar, QNB continues to demonstrate digital innovation, the standout example being the evolution of its interactive teller machines (ITMs). The machines, which enable a video link between customers and a remote bank teller, have now been fully integrated into the lender’s core banking system, making them more effective, accurate and efficient. The project extension has helped the bank cut costs, offering branch-level service via ITMs across non-branch locations, particularly in the country’s shopping malls. 

QNB has also extended its self-service cheque deposit service to its corporate and SME customers, while also rolling out terminals that enable bulk cash deposits.  

The new services have enabled QNB to automate the basic duties of its branch tellers and optimise its counter services to handle more complex service offerings to better position itself against its competition.

Africa

United Bank for Africa

The 3.2% GDP growth registered by sub-Saharan Africa in 2018 glosses over the variation in the continent’s economies. Major markets such as Angola and South Africa saw significant slowdowns, with the likes of Kenya, Senegal and Ethiopia all recording growth in excess of 6% for the year. 

UBA Group saw off strong competition from the continent’s other banking giants to be crowned Bank of the Year for Africa for 2019, the second time it has won the award. While not coming top in its home market of Nigeria, six of the group’s subsidiaries triumphed in the individual country categories, more than any other African bank. Furthermore, the bank also impressed on the digital innovation front. 

On the group level, UBA recorded an impressive 19.67% growth in assets for 2018 (including a 6.05% growth in Tier 1 capital), together with a 1.37% growth in net income, in spite of flat profits for the year in Nigeria. 

The judges awarded regional prizes to six of UBA’s 20 African subsidiaries, compared with five in 2017 when UBA previously won the continent’s crown. The bank particularly excelled in western and central Africa, in challenging markets such as Chad and the Republic of the Congo, as well as the high-growth markets of Benin and Côte d’Ivoire.

“The recognitions come as a reassurance that we are on track towards consolidating our leadership position in Africa, while creating superior value for all our stakeholders,” says Kennedy Uzoka, UBA’s group managing director. 

“We dedicate our awards to the customers, whose loyalty, support and patronage has remained the source of the group’s growth and competitive edge in all the markets we operate.”

A constant theme across the bank’s footprint was its commitment to digital innovation, through the ongoing rollout of its Leo virtual banking offering on Facebook Messenger, as well as its Magic Banking offering over basic feature phones. 

“UBA group will continue to innovate and lead in all our business segments, while delivering top-notch operational efficiencies and best-in-class customer service,” says Victor Osadolor, UBA’s CEO of Africa. 

“We are beginning to realise early gains from our ongoing transformation programme and I am excited about the days ahead.”

Financial inclusion

HSBC UK

Finding oneself outside the financial system makes escaping hardship very difficult. The requirements of opening a bank account may be difficult for many vulnerable people, while for those who lack identification documents and proof of abode, the obstacles can be insurmountable. 

HSBC UK has found a solution, and recently launched two initiatives to work with survivors of human trafficking and modern slavery, and with homeless people.

This is no easy task in the highly regulated world of banking. The accounts required the approval of the financial crime compliance and regulatory compliance functions so that the bank could work with third parties – charities such as the Salvation Army, Kalayaan and Migrant Help – to overcome the strict identification requirements. HSBC UK also worked with the charities Shelter and Crisis to bank customers that have no fixed residence so they could receive benefits and wages payments. With their own bank account this vulnerable group can build their own financial capability, making them less susceptible to harm and financial abuse.

“We are providing people with access to banking, while ensuring we offer an environment they feel safe in,” says Maxine Pritchard, head of financial inclusion and vulnerability at HSBC. She adds that new customers “have been overwhelmed that they can open an account and start to rebuild their lives”. 

Ms Pritchard recalls one person, a victim of human trafficking who struggles to feel secure away from his safe house, who visited the Liverpool branch, where both initiatives were launched, and was relieved to find a safe space in the bank. 

HSBC UK says its partner charity, the Whitechapel Centre, reports that the bank’s branches now feel less intimidating to these new customers. As the initiative launched, it was important “that we had the appropriate skill-set in branches to support such sensitive conversations”, says Ms Pritchard. 

As of November 2019, HSBC UK had opened 290 accounts for survivors of human trafficking and modern slavery, and 79 accounts for homeless customers. It plans to roll out the programme across the UK in stages. 

Banking in the community

Sterling Bank

Sometimes it is simple solutions that solve big problems. In Nigeria, private, fee-charging schools have grown fast over the past few years and now educate the majority of primary and secondary school children in Lagos, according to World Bank data. But paying for children’s education when income is limited and wages drip in in small, weekly amounts can be a major problem for many parents, especially if they have to pay the bulk of those fees upfront. 

For this reason, Sterling Bank launched a programme to help those families by granting loans, at a below-market monthly rate of 3%, with the exclusive purpose of enabling children to attend these schools. It also ran a wider campaign to support the importance of education, which has not only helped the success of the programme but also sustained Nigeria’s rising levels of education. The campaign also aimed to overcome certain cultural barriers too, such as the assumption that only boys should go to school. 

The bank reached families through a network of agents, rather than offering the programme online, as it believed agents based in the community would make the process smoother for families, and the collection of payments easier for the bank. In just a year, according to Shina Atilola, Sterling Bank’s divisional head for retail and consumer banking, the programme has helped more than 8000 children and their parents – as well as 4300 schools, since loans have enabled them to continue to operate and pay staff.

The programme disbursed a total of N400m ($1.1m) across Nigeria, with more than three-quarters of families returning to request loans for the next school term.

“We expect that, in the next three to five years, the project will have given 100,000 children access to quality education, economically empowering 33,000 schools,” says Mr Atilola. “We will do this by creating solutions that will be tailor made to each beneficiary’s [financial situation].”

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