Quick service, availability and lower prices turning clients towards digital banks – mts to expand operations to finance as well

The telecommunications company Telenor opened its bank in Serbia in mid-2014. In carrying out this project, the Norwegian giant used its experience from other countries, where it offers financial services as well, in addition to TC ones. In 2017, after a long period of preparations, they are to get competition.

Telekom Srbija has joined the game by presenting mts bank to the market. As the company says for eKapija, “one of the development goals of mts bank is to increase the market participation in operations with natural and legal persons, through a further development of digital channels and digital banking”.

It is precisely the segment of digital services that is the focus of all participants in the financial market.

For the existing banks, the reorientation of clients to electronic channels considerably reduces operating costs, and this manner of carrying out transactions pays off for the clients as well. Banks mostly don't charge fees for transactions carried out through e-banking and m-banking apps, there are no queues, nor is there need to worry about the bank's working hours.

It should be surprising, then, that the number of electronic transactions, having first exceeded the number of physical payments in 2015, left the payments at counters in the dust in the meantime.

As Artur Turemka, General Manager of MasterCard for the Balkans, says for eKapija, “Serbian consumers turn to solutions which save them time, are easy to use and can be used any time, any place”. He cites client experience as the main advantage for clients.

– The fact that digital banks are technology-based enables a quicker implementation of banking products and services and a quicker adjustment of the offer to clients' needs than in traditional banking. Consumers use their phones all the time anyway – our Impact of Innovations research from 2016 shows that Serbs use their phones five hours a day – so the option of performing financial operations on a mobile phone is a natural continuation of the mobile experience that people are used to and that they expect to be available – Turemka explains.

This is exactly the direction mts bank is to take as well.

– mts bank will direct most of its activities pertaining to digitization of operations and development towards mobile banking, which is expected to become the main type of communication with clients in the future – the bank says and adds that “when it comes to initiating new digital services, clients will soon be able to apply for and realize cash credits, credit cards, consumer credits, business cards and overdraft through their e-banking and m-banking accounts”.

Of course, in addition to digital channels, electronic and mobile banking, mts bank will also use the large network of mts branches, where clients will be able to apply for certain banking products. They also say that “the advantages to clients are also reflected in considerably lower fees compared to other banks”.

– Everybody looking to become a client of mts bank can do so regardless of whether they are using mts services. Additional benefits will be available to all mts clients who open accounts in mts bank – the company says.

Just as Telenor, mts bank aims to attract the clients of other, conventional banks through lower prices and improved client experience. That this is certainly feasible is shown by the recent MasterCard research, according to which the loyalty of Europeans to their current banks is relatively low.

Nearly half of the clients of European banks (49%) would consider switching to digital banks due to the better conditions they offer.

When asked to what extent traditional banks and financial institutions in Serbia could respond to the changes brought by digital banking and new competition in the form of TC companies, Turemka reminds that although “traditional and digital banking operate under different models, they are still intertwined”.

– In practice, this means that traditional banks try to offer more digital solutions to their clients as an addition to their standard offer, in order to attract more technologically advanced clients, so we now have banks with digital branch offices and high-performance banking applications... On the other hand, digital banks are drawing closer to traditional banking, for example in terms of ATMs, because, even though card usage in the country is constantly on the rise, there are still commercial locations in which it is only possible to pay in cash, so digital banks must meet that need – he adds.

Turemka concludes that a greater degree of digitization of financial markets in Serbia, as well as globally, can be expected, “for the simple reason that technologies are more compatible with the modern lifestyle”. At the same time, he adds, it should be expected for the regulatory authorities to adjust to the needs imposed by the digital environment to a greater extent.

mts bank says for eKapija that “an increased digitization of banking services in Serbia requires an amendment to legislations on electronic signatures, a reduction in paperwork and the option of including digital documentation into each client's file”.

(Artur Turemka) Artur Turemka of MasterCard believes that “financial education is the key factor to market development”.

– Once consumers begin to understand technologies and their benefits, they become ready to use them more often, and that's why education will remain our priority in both traditional and digital banking – he explains.

mts bank agrees that one of the basic challenges is to educate the citizens about digital banking, “as well as to change the set habits regarding traditional banking services”. There's also the still present distrust among the citizens regarding the safety of such operations.

For this reason, mts bank says for eKapija that they are paying great attention to the safety of all IT processes and the security of transactions”.

– The possibility of card abuse is minimal, as the client is immediately informed of the attempt and can block the card practically instantly through their e-banking or m-banking accounts – the bank emphasizes.

Corporate sector services available as well

In addition to services meant for natural persons, mts bank also offers those meant for legal persons.

The bank offers to its corporate clients, in addition to local and international payment transfers, the securing of loans and guarantees, as well as the claims buyout. The services are primarily meant for entrepreneurs and small and medium enterprises.

mts bank approves short-term and long-term loans, overdrafts, foreign exchange loans for foreign payments, revolving loans, bullet loans or loans with installments (with a potential grace period) and loans under the most favorable terms based on partial or full specific-purpose deposits.

The bank also approves all types of guarantees, avals and letters of credit with deferred deposit.

Milos Vlahovic

mts banka a.d. Beograd

Telekom Srbija a.d. Beograd

Yettel d.o.o. Beograd

Predstavništvo Mastercard Europe Beograd

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