Interview: Dante Campioni
What is the potential of the retail banking market, and where do you see room for growth?
DANTE CAMPIONI: ALEXBANK affirmed its leading position in Retail loans with a market share close to 8%, occupying the first place among private sector banks in terms of market share. The retail market offers strong opportunities for growth and is an area in which we have historically been very active. According to a household survey released in late 2014 by the World Bank, only 14% of the adult population in Egypt owns or shares an account at a formal financial institution. Just 4% of the adults surveyed had saved money in a formal account in the past year, and about 6% had originated a new loan from a formal financial institution, with 22% having preferred to borrow money from family and friends. Of all the adults surveyed, only slightly less than 2% had a credit card.
How is technology making it easier for banks to reach a wider customer base?
CAMPIONI: Technology plays a pivotal role in reaching this untapped resource. Improved ATMs and mobile solutions enable banking services to reach remote areas, where the unbanked segment may find it difficult to access a branch. Technology also decreases transactional costs at a bank level as fewer people are required to perform everyday tasks, allowing banks to free up their resources and invest in more inclusive technology and in enhanced platforms such as e-banking and mobile banking.
We are currently adopting a multi-channel sourcing strategy whereby all of our channels and services will be interconnected and customers will be able to bank with us through branches, ATMs, contact centres, the internet, smartphones, kiosks and other points of service, all with the same level and ease of reliability. Innovations like this allow customers to bank the way they want and unchain them from having to visit a branch for all of their transactions. This is especially important when attempting to reach the youth segment, which represents over 60% of a population that is historically under-represented.
What efforts are being undertaken to increase the amount of loans to the private sector?
CAMPIONI: It is true that the loan-to-deposit (LTD) ratio is relatively low in Egypt compared to other markets. Bank deposits have seen sustained growth rates during the last few years in the absence of alternative channels of investment, rising by 18.6% year-on-year (y-o-y) at the end of December 2014 and by 21% y-o-y at the end of May 2015. Bank loans started to regain momentum in 2014 in light of the improvement in the political and economic environment, rising by 14.4% y-o-y at the end of December 2014 and by 22.5% y-o-y at the end of May 2015.
Thanks to the improved business conditions in the country, the banking system is beginning to increase lending. In fact, our bank increased its lending to corporate, and small and medium-sized enterprises (SMEs), far in excess of 20% in 2015. Given the government’s ambitious plans for a number of mega-projects, we think this is an area that is particularly attractive. Also, we are very focused on the SMEs as there are huge opportunities in this segment.
What opportunities exist in SME financing?
CAMPIONI: SMEs represent the highest share of GDP and are the main generator of private employment in the country today. It is vital that banks continue to focus on this area given its potential as a growth driver. Banks need to design standardised lending products for SMEs, accelerate the credit decision process and reduce the scope of required documents. These have to cover short-term needs, for instance working capital, in addition to more medium- and long-term necessities, such as the capital required for expansions and other activities.
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