Competiton coming to Poland's retail banking sector
"In industrialized countries they need to cut down on 50% of their branches. It's stupid to consider that in Poland," said Leslaw Paga, chairman and managing partner at Deloitte & Touche in Warsaw.
Paga said the need is not so much developing additional branches, but rather improving operations and customer service - for example, through better technology that would allow for customers to transfer money from one branch to another.
Retail banking focuses on providing financial services to individual consumers. According to a report released here last week by Deloitte & Touche, banks in four major Western markets are scaling down. Banks in the United States, Germany, France and the United Kingdom are increasingly trimming the number of branches and reaching out to customers through technology. The report notes that as banks become deregulated they will increasingly look for higher profits from specialized products targeting high-profile clients.
In Poland, banks first need to focus on general customer service, Paga said.
"They cannot treat the customers as so-called enemies, Paga said, adding that banks need to improve their technology as Poland moves away from a cash-transactions to checking and credit financing.
"I think that it's possible to just simply jump to the period of credit-card or debit-card payment," Paga said. New technology is coming, creating a ripe field for retail banking, he said.
"Branching is going to become very important," said Ramin Habibi, a banking analyst with Cyprus-based Bree Consulting, which tracks the banking industry in Central and Eastern Europe.
"When somebody opens an account they want something near to them. They don't care too much about the bank's solvency," said Habibi, who expects retail banking competition to heat up in Poland in the next few years.
Once the banks are fully privatized they will fight for customers on the retail front, he said.
"During a time of transition all new customers are up for grabs," Habibi said. "The real growth area then is the retail money."
Retail deposits are currently the cheapest source of funding for banks in Poland, said Krzysztof Stupnicki, co-head of CS First Boston in Warsaw.
"You have to build the branches, and it creates cost, but at the same time households continue to keep a significant portion of their savings in current accounts," Stupnicki said.
Stupnicki and others estimate personal household savings in Poland to exceed $18 billion.
Stupnicki noted that banks pay an interest rate of 8% to 12% on retail savings accounts, giving them a large spread. Inflation is currently 32%, and banks are receiving a little more than that for one-year loans (34%), he said.
The Polish retail market is dominated by state-owned Powszechna Kasa Oszcednosci Bank Panstwowy (PKO BP), which has more than 400 branches nationwide, and Bank Przemyslowo-Handlowy SA, which has 37 branches, and is listed on the Warsaw Stock Exchange.
Paga said banks have to be wary of growing competition from companies such as brokerages and financial service corporations offering banking services. "The Polish retail banks do not recognize the competition coming," he said.
Paga said the need is not so much developing additional branches, but rather improving operations and customer service - for example, through better technology that would allow for customers to transfer money from one branch to another.
Retail banking focuses on providing financial services to individual consumers. According to a report released here last week by Deloitte & Touche, banks in four major Western markets are scaling down. Banks in the United States, Germany, France and the United Kingdom are increasingly trimming the number of branches and reaching out to customers through technology. The report notes that as banks become deregulated they will increasingly look for higher profits from specialized products targeting high-profile clients.
In Poland, banks first need to focus on general customer service, Paga said.
"They cannot treat the customers as so-called enemies, Paga said, adding that banks need to improve their technology as Poland moves away from a cash-transactions to checking and credit financing.
"I think that it's possible to just simply jump to the period of credit-card or debit-card payment," Paga said. New technology is coming, creating a ripe field for retail banking, he said.
"Branching is going to become very important," said Ramin Habibi, a banking analyst with Cyprus-based Bree Consulting, which tracks the banking industry in Central and Eastern Europe.
"When somebody opens an account they want something near to them. They don't care too much about the bank's solvency," said Habibi, who expects retail banking competition to heat up in Poland in the next few years.
Once the banks are fully privatized they will fight for customers on the retail front, he said.
"During a time of transition all new customers are up for grabs," Habibi said. "The real growth area then is the retail money."
Retail deposits are currently the cheapest source of funding for banks in Poland, said Krzysztof Stupnicki, co-head of CS First Boston in Warsaw.
"You have to build the branches, and it creates cost, but at the same time households continue to keep a significant portion of their savings in current accounts," Stupnicki said.
Stupnicki and others estimate personal household savings in Poland to exceed $18 billion.
Stupnicki noted that banks pay an interest rate of 8% to 12% on retail savings accounts, giving them a large spread. Inflation is currently 32%, and banks are receiving a little more than that for one-year loans (34%), he said.
The Polish retail market is dominated by state-owned Powszechna Kasa Oszcednosci Bank Panstwowy (PKO BP), which has more than 400 branches nationwide, and Bank Przemyslowo-Handlowy SA, which has 37 branches, and is listed on the Warsaw Stock Exchange.
Paga said banks have to be wary of growing competition from companies such as brokerages and financial service corporations offering banking services. "The Polish retail banks do not recognize the competition coming," he said.
