“We are not impaired by the crisis. The fact that we have a defined development plan already in progress helps us quite a bit. By opening to the retail market, the bank has also become more sustainable compared to the past.” To underline this fact in an interview is Paul Iannone, Vice President of UniCredit Bank, who expressed great confidence in the measures and strategies taken so far. “In the Czech Republic, a market that is giving us great satisfaction, we are getting on well and we want to become even stronger.”
You are considered an expert of the New Europe and you have been working there since 2001. Before moving to Prague in 2009, you worked in Poland for several years. I would like to ask you then, what is the New Europe like as it is seen from Prague and Warsaw?
Compared to Western Europe, I do not see such a big difference. Among other things, they are both countries where the economic development rate is substantially higher compared to the rest of Europe. Instead, I would like to highlight the local peculiarities of the two economies: In the Czech Republic, growth depends heavily on exports and particularly on those from the German locomotive, while in Poland the domestic market plays a fundamental role with its population of 40 million inhabitants. Those who invest in Poland do so not only from a delocalization point of view, but also with the aim of serving the local market.
And in the credit market, what are the differences between these two countries?
The Polish banking sector is characterized by strong competition and a high rate of evolution and innovation. During my time in Poland, there were many new banks entering the market and even among the institutions that were already operating, one could see a constant driving force towards innovation, introduction of new products, with a great deal of attention to marketing. These new companies then stimulated the traditional solid giants, including our Pekao Bank, into becoming innovative. When I moved from Warsaw to Prague in 2009, I immediately noticed this difference. Here in the Czech Republic I found a very solid and stable market, but with very little in terms of new products and players. Few novelties and new players, for example the mBank. However, here as well, things seem to be starting to change. Since last year, new banks have been established, e.g. Axa, EquaBank, AirBank and Zuno. However, I have to add that even in this case, the size of the market plays a fundamental role. Poland is a country where the domestic market is much larger and therefore more attractive, not only for companies that want to develop there, but also for banks.
You have been based in Prague now for over two and a half years. As an Italian banker, how do you rate the way your Czech colleagues operate? .
I really appreciate the fact that things tend to work well here and are carried out thoroughly, with no room for uncertainty. Everything is verified and checked meticulously. This is definitely a good thing, because in banking, you have to be accurate and do things properly. And this also explains why the banks here are very solid.
The aspect that could be improved – and we here at UniCredit Bank are particularly focusing on – is customer service. One should try to be more flexible towards customers, learn to listen to their needs better and be able to afford ad-hoc solutions. Because ours is a sector where the challenge of competition can be met, and won over, just on the basis of how we deliver to customer. To my staff, my colleagues, I always say that: customer satisfaction must be our obsession.
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You are generally considered as the strategist behind the UniCredit Bank expansion into retail
I introduced the idea at first, I set up the plan, but it is clearly a strategy that we shared with president Jiri Kunert, and all my colleagues form the board. We examined the situation compared to the other banks, did our market research and as a consequence, we decided how to move forward. However, it is not just a matter of expansion into retail, there are also other aspects. For example, we introduced other banking products that we did not have before. As the third biggest force in the Czech market, we aimed at becoming the stronger among the small and medium-sized businesses. We have also opened a series of new branches, because we lacked a certain amount of presence in the territory. A year ago we had 57 branches and by the end of this year, we will have twice as many, indeed even more, because we should reach 116. By the end of 2012, we will reach a total of three times that figure. The aim was to cover those geographical areas that were still missing and the analysis of all the micro markets have indicated the most interesting for us, that include quite potential cities, where we were not present before.
The news we hear, though, tends to focus on the crisis. Is this an issue that could slow down your expansion strategy in the Czech Republic?
In no way. With the situation that has arisen, the fact of having a defined expansion plan, already in place, facilitates things quite a bit. By opening to the retail market, the activity of our bank becomes more sustainable, both in terms of balance and revenue. Because, the more customers you have and the more the typologies, the more the bank will be solid and sustainable – also due to reasons of risk diversification. UniCredit is, in fact, a solid institution that is getting on well in the Czech Republic and that wants to invest and become even stronger.
As regards your territorial expansion, a lot has been said about your franchised branches, which represent a real novelty. I wonder then: how does one become a franchise partner of UniCredit?
The choice is made through a very careful and selective assessment. Generally, they consist of entrepreneurs, e.g. a former banker, or ex broker or operator in the real estate sector. We give priority to people who have already demonstrated, in their respective fields of activity, that they know how to succeed. And it clear that they must be operators who – in their cities and field of competence, have gained a high reputation and level of expertise, with substantial, reliable capital. These are indispensable conditions, supported by knowledge of the various bank products and their financial structure. But in this case, if they do not have the necessary notions, we are the ones who teach them.
In what way do you think the Czech banking market will evolve in the coming years?
As I have already said, the Czech market is very solid at present, but it is still very conservative. The banks are fundamentally liquid, so they have more deposits then lending. There are three dominating players: Ceska sporitelna, Komercni banka and Csob, even if, with regard to the sector of corporate customers, we are the third bank. Then there are a number of smaller banks, some of them newborn, which still have a small market share, but that has brought about a change.
As for meeting customer needs?
In this respect, we have undertaken to focus heavily on a number of new products that did not exist on the market or that needed to be made more available. For example, the variable rate for mortgage loans is a novelty that was launched by us at UniCredit Bank. For three years running, our variable rate has also won a prize as the best Banking product and mortgage of the year. And the market has also rewarded us: it was such a great success, that other institutions have begun to follow suit. The same was done for refinancing consumer loans: a client with too many instalments to pay, is now given the possibility to merge them and have a single return plan, with the aim of simplifying his life and allowing him to have a reduced monthly instalment – and even in this case, the market reacted very positively – including mobile banking, because none of the big banks had this very innovative and really user-friendly application, specially created ad-hoc for the mobile phone. And we were the first to start.
In terms of novelty, the attention you afford to foreign customers is also very evident. What are the results?
For more than a year now, we have created two ad-hoc structures for expats, the (ICC) International Client Centre and the (ICCC) Italian Corporate Client Centre – that have been active for over a year. Even in this case, the figures show that we are right, because the results are excellent. The Iccc is in charge of Italian companies operating in this country, as well as Czech companies that have a large part of their work in common with Italian companies. The Iccc is a structure made up of professionals, who also speak Italian and who are in a position to provide the companies of our country with a full range of services necessary to conduct their business. The International Client Centre, instead, is for all expats and provides all the necessary services required by individual private clients. The motto is: “Your bank speaks your language.” With staff who speak Italian, English, Czech (of course), Russian, German and several other languages. Even contracts, forms, internet banking and web pages are all written in the relative languages.
Newspapers have recently reported of your plans to leave these historic premises of Na Prikope in Prague.
Yes, this building is beautiful, but from a functional point of view it is more logical to move. We are all a bit sorry to leave, but we need a more suitable place for the needs of the bank. Our head office will move soon to Brumlovka in Philadelphia, at Prague 4, but all the services currently provided by the three branches around the centre of Prague, are bound to remain in the centre. We will bring them all together into a single building at Náměstí Republiky, which will be called Banking House. A multi-level multi-service centre, a sort of “La Rinascente” of banking that will deal with all customer services, from Private Banking to Retail Banking (for individual customers), Mortgage Centre and Corporate Banking, including the two ICC and ICCC structures.
All this will be done to be able to reach our main objective: that of being the best in serving customers – our obsession must be that of having satisfied customers.
By Giovanni Usai