Wıth a year left to complete its restructuring programme, Poland’s 11th-largest bank by assets, BPH, is set to compete with international banking giants such as Santander and Raiffeisen. Grzegorz Jurczyk, deputy president of GE Money subsidiary Bank BPH, tells Duygu Tavan about the bank’s growth strategy.
Last year was a busy 12 months for Bank BPH. Besides rebranding and consolidation efforts, out went unprofitable product lines such as sales finance and the sale of auto loans through intermediaries. In came fresh product offerings, such as the Lokata Pracowita deposit and Sez@m Direct accounts. In addition, BPH began to replace its magnetic strip card portfolio with contactless credit cards deploying Visa’s payWave payment technology.
But with another year to go to achieve its post-merger targets, BPH has great ambitions for its retail banking business in 2011.
Grzegorz Jurczyk, BPH’s deputy president responsible for sales, retail banking, marketing and product management, told RBI the bank’s key strategies for the year.
Although the macroeconomic situation has improved since the peak of the economic crisis and GDP grew by 3.8% in 2010, fierce competition from strong international banks may lead to further consolidation of the Polish banking sector.
“It is still difficult to stand out in the Polish market with a breakthrough offer as far as individual products are concerned. So we focus on customer service quality and a transparent offer. We have made our market offer simpler and more attractive to customers,” said Jurczyk.
With the re-engineering strategy introduced in May 2010, the bank wants to grow its footprint both in terms of branches and earnings. Core product segments are personal loans, credit cards, current accounts and deposits, plus SME and mid-cap corporate banking.
“We will play to our strengths, invest where we are competitive and accelerate. In 2011, our focus is on growing our profits by developing high potential markets and creating a high quality portfolio. Our market offer has become more attractive to customers, and this will continue.
“BPH is on the way to becoming a universal bank. For us, this means further development of the retail segment, in particular credit cards and current account sales.”
As of year-end 2010, the bank had 1.5m retail banking customers. Current account deposits rose by 30% from the previous fiscal to PLN4.2bn ($1.5bn). Total retail deposits soared by 37% to PLN8.4bn.
In the current account segment, BPH introduced a new personal account titled Kapitalne, or Capital, at the end of January for which customers pay PLN9.99 a month.
“The name of this product is a word play – Capital in Polish means great. And it is our customers – they get a comfortable account, which they can use with no additional costs. A Capital account owner can also open a savings account with a higher interest rate than a standard one, subject to no additional fees.
“The new account is accompanied by a free of charge assistance package, which is the broadest on the Polish market. It is the first account in the family of new accounts we plan to launch.”
He said that the bank will upgrade and extend its Capital account family throughout the year to reach its target of 100,000 new account openings by year-end.
At the end of 2010, the bank maintained 650,000 current account customers.
In the credit cards segment, growth is based on three pillars: product, distribution and portfolio management.
“Currently, we have a competitive offer with a wide range of products dedicated to all customer segments, including premium cards and usage rewarding programmes based on a money back mechanism, which are very popular among customers.
“We observe an enormous potential in increasing customer loyalty through intense engagement activities.”
“We continue to enhance our offer to make sure products’ value proposition reflects customer expectations, especially in the area of rewarding usage, as well as perceiving the product as a convenient and safe payment tool.
In terms of branches, BPH’s growth ambitions are less competitive: the bank plans to add 20 to its existing 285-units strong branch network by mid-year, to be located at locations with high business potential.
But Jurczyk promised that the new branches will look considerably different and operate in a new and innovative format to enhance the bank’s value proposition and offer an improved branch experience for customers.
He said that the bank will reveal further details later in 2011.
In addition to investing in its branch channel, the bank also plans to replace the majority of its ATMs, issued by Wincor Nixdorf, with new technology.
In the credit cards segment, Bank BPH is planning another contactless credit card portfolio using MasterCard’s PayPass scheme in 2011. It is already a strong player with a 12% market share of cards in circulation.
In 2010, BPH issued 282,000 new credit cards, taking the total number of cards in circulation to 1.14m.
Jurczyk said that contactless technology was becoming a standard in the Polish market.
“Speed of product development and innovation is going to be crucial. And since the prices of banking services tend to even out, banks increasingly compete on customer service.”
Part of improving customer service quality will be the consolidation of GE Money Bank’s GEM24 internet banking platform with BPH’s Sez@m and a revamp of the mobile banking platform. Jurcyzk said that the unified system will go live in 2011.
Looking ahead, Jurczyk is confident the bank, which merged with GE Money Bank in 2009, will return to profit in 2011.