Generating growth through innovation

Banking & Finance
| The European | 8th January 2015
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Éva Hegedüs, Deputy Chairperson and CEO, Granit Bank

Éva Hegedüs, Deputy Chairperson and CEO, Granit Bank

GRÁNIT Bank was established in 2010 by one of Hungary’s most successful and wealthiest businessmen, Sándor Demján. It was managed from its inception by widely appreciated senior banker Éva Hegedüs, Deputy Chairperson and CEO, who is also an owner of the bank. The management believes that banking should be convenient, cost effective and easily accessible across digital platforms.

GRÁNIT Bank has opted to follow a direct banking model (rather than build a huge branch network) in order to ensure a completely new customer experience and optimise operational efficiency. The past four years have proven that the management strategy is working: the bank has become a dynamic player, demonstrating growth in the otherwise struggling Hungarian banking industry. It has also outperformed international banking market benchmarks by reaching break-even in its fourth full business year.

GRÁNIT Bank, is a continuous innovator, combining a digital approach with easy to understand products and a client friendly service model. The founder members established partnerships with private investors and the Hungarian state – who were convinced by the results achieved – inviting them to become part of the success story; the latter acquired a 49 per cent stake, purchasing newly issued shares based on the market economy investor principle. Due to the impact of the internet and in particular the growth of smart devices, customer behaviour has changed dramatically over recent years. Such trends have impacted the financial service industry, but it’s the global economic crisis of 2008 that has led to the biggest changes. A more rigorous regulatory environment, a loss of consumer confidence in the traditional banking approach and increased competition from non-bank competitors (eg, in the payment services) has resulted in lower profit margins and created challenges to the traditional “high street” banking model. At the same time, the so called Y generation customers have become more and more important as a market segment, so banks have been forced to optimise their financial services to digital technology and internet access. Éva Hegedüs, Deputy Chairperson and CEO, who has many years of experience in both commercial banking and public administration in top executive positions, explains the reasons of the growth of GRÁNIT Bank: “While the majority of banks have been concerned with balance sheet adjustment in the recent years, GRÁNIT Bank – free from the burden of crisis – has been able to focus on business development and to keep a strong liquidity and capital position.”

“Realising the quick change in customer behaviour and the clear shift towards online and mobile platforms in the financial services sector, we decided to implement a direct banking model, where we utilise the latest technology to provide high-quality services at a competitive pricing. This message, together with our belief in equal customer-bank relationship, has had a very positive reaction both from our clients and the growing circle of our investors.”

Beyond traditional products

GRÁNIT Bank, as a universal bank with European Union service license, offers a wide range of banking services for corporate and retail clients including customised current accounts, savings plans, loans and tailor-made corporate financing and treasury services. Since Hungarian shareholders are committed to improving the competitiveness of the national economy, GRÁNIT Bank aims to become a strategic partner of small and medium-sized enterprises as well as of private individuals, by providing innovative and integrated financial services that go beyond traditional banking products. Since its foundation four years ago, the bank has increased its balance sheet total almost twenty times to more than HUF 120bn (400m euros).

Innovation is an integral part of the bank’s strategy and corporate culture. The bank has introduced Hungary’s first live VideoBank service, which was awarded Hungary’s “Most Innovative Bank of 2012” by Master Card Europe. “Through our VideoBank service, the customer can have personal contact with a senior expert of the bank using his PC, tablet or smartphone, receive documents online and conclude transactions,” says Ms Hegedüs. GRÁNIT Bank has redesigned client acquisition as well: it only takes six minutes to set up a new online account through the bank’s website and in case of transferring a certain amount of money to this passive account the client can choose date and place of contracting (according to EU legislation “know your client” procedure requires a personal meeting). The mobile application of the VideoBank service was launched in 2013 and was awarded second place in the Mobile Application for Retail Clients of the Year as well as second place as Most Innovative Bank 2013 by MasterCard.

The latest innovative solution, GRÁNIT Messenger, was launched in 2014. “It is a unique mobile application, through which our clients can monitor and approve all their banking transactions online – saving all the SMS notification fees – and manage the different kind of notifications in a single tool. This solution does not only provide our customers a convenient way to keep track of their account information (transaction history, daily balances, one time passcode, etc) and marketing messages, but also significantly decreases the total cost of banking services,” says Ms Hegedüs.

Outstanding performance

In 2013, the Hungarian government invested in the bank – according to the EU market economy investor principle – by purchasing newly issued shares, which further supported the dynamic growth of the bank, while the founders kept all the management rights. The management utilised the new equity to extend the loan portfolio and the bank reached break-even in the first half of 2014 generating more than HUF 100m (330,000 euros) net profit. “Reaching break-even in the fourth full business year of operations of a new bank is an outstanding performance in light of the international benchmark of 6-8 years. We were able to reach this mainly due to the expansion of loan portfolio and our focus on maintaining very high lending standards: our portfolio is entirely free from non-performing loans. Our objective is to become the most innovative full-service mid-sized bank in Hungary.

“Our mission is to convince more and more people that managing their financial matters through innovative services and digital channels can be simpler, cheaper and more convenient. The bank plans to go public in the following years, which will provide an opportunity for anyone to enjoy the benefits of an innovative – and profitable – business model as a GRÁNIT Bank shareholder,” states Ms Hegedüs.

The successful implementation of this ambitious growth strategy is supported by a number of valuable assets: the management who had the vision and courage to implement an innovative strategy in the middle of the global financial and economic crisis, an innovative business model that reconciles the services of an all purpose bank with the opportunities of the latest online and mobile technologies and – last but not least – a highly qualified and motivated management team and employees. “Our business model demands great professional experience and commitment from our staff,” says Ms Hegedüs. “Those who want to succeed need to enjoy their work and regard problems as challenges. This approach is a key element to achieve our strategic goals and keep on being one step ahead of our competitors.”

Further information
To find out more please visit: www.granitbank.hu

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