S GENERAL SPONSOR OF THE FORUM GOLDEN SPONSOR SPONSORS Media Partners PRIME ADS AD 30 April, 2018 News Making Money http://www.fi nchannel.com THE FUTURE OF BANKING «Over 70% of Georgia’s residents prefer to pay with a smartphone» well as customers have been During the last decade, the Igor Stepanov, forced to adapt. Mastercard development of smartphones Regional Director has made a number of im- has had a profound impact portant changes over the past on the way businesses oper- of Mastercard few years. Mastercard had to ate. With the percentage of overcome signifi cant chal- the global population using in Georgia and lenges to develop eff ective smartphones increasing ev- Central Asia digital tools that meet the dif- ery year, businesses are now fering needs of the countries expected to provide a fully it operates in. Also, by mod- integrated digital platform s the digitaliza- ernizing, particularly through that can provide diff erent tion process of digital services, banks cur- services. life faces sig- rently have an opportunity to nifi cant changes, diff erentiate themselves in a companies, as crowded market. A Continued on p. 4 Bank of Georgia Invests in Social Responsibility as Part of its Obligations See on p. 6 Why would we use crypto euros? See on p. 7 How DRC Carries out the Successful Resolution of Local and International Commercial Disputes See on p. 16 CARTU BANK: Strong Bank For Stronger Georgia See on p. 9 “Digitalization is the future of banks See on p. 10 CURRENCIES Bank of the future Apr 28 Apr 21 1 USD 2.4617 2.4402 is a bank oriented 1 EUR 2.9762 3.0017 100 RUB 3.9379 3.9729 on customers 1 TRY 0.6077 0.6036 See on p. 15 © 2018 The FINANCIAL. INTELLIGENCE BUSINESS PUBLICATION WRITTEN EXPRESSLY FOR OPINION LEADERS AND TOP BUSINESS DECISION-MAKERS 2 HEADLINE NEWS & ANALYSIS tthehe ffutureuture ooff bbankinganking 30 APRIL, 2018 | FINCHANNEL.COM Georgian Banking Forum 2018 Welcome to the Georgian Banking Forum’s 2018 Innovations, Performance and Risk Show, an annual event focused on future of the banking. We offer a platform for discussion and sourcing solutions to these challenges. It’s a chance to meet key decision makers across the banking sector, make live presentations for business media. Blockchain to disrupt Swiss hold on global bank system, Moody’s says lockchain has the poten- The banking systems with the smallest shares of fee and commission The banking systems with the largest shares of fee and commission in- tial to significantly re- income in revenues come in revenues duce transaction costs and time, likely cutting into bank fees and commis- Bsions, Moody’s said in a report Monday. In that scenario, Switzerland is most at risk since its massive banking industry generates half of its revenue from fees and com- missions, the ratings agency said. Switzerland is also among the nations most sensitive to block- chain technology’s potential to drastically increase the effi- ciency of cross-border payments, Moody’s said. The blockchain technology un- derlying bitcoin could hurt Swiss banks the most, according to Moody’s Investors Service. “While making cross-border at risk since its massive banking are exploring how blockchain can der transactions relative to GDP Its Zug region has already been transactions faster and less ex- industry generates half of its rev- reduce cross-border payments — excluding outliers Luxembourg dubbed “Crypto Valley” for the pensive would be credit posi- enue from fees and commissions. processing time from days to sec- and Hong Kong. The UK tops the number of digital currency busi- tive for banks, these efficiencies Blockchain technology elimi- onds. list, followed by Belgium. nesses located there. In July, the could also compress their fees nates the need for a third-party Switzerland is also among the Known historically as a hub for nation’s financial markets regula- and commissions, a credit nega- intermediary by quickly creating most sensitive to that aspect of international banking, Switzer- tor also approved the first Swiss tive,” Moody’s said in a report a permanent and secure record of blockchain technology. land has also become one of the private bank for bitcoin asset Monday. transactions between two parties. The nation ranks third on friendliest countries in the world management, a move many saw In that scenario, the ratings Bitcoin is the first application of Moody’s list of countries whose to blockchain and digital currency as potentially paving the way for agency said, Switzerland is most the technology, and many banks banks handle the most cross-bor- enthusiasts. other global banks to do the same. HEADLINE NEWS & ANALYSIS 3 FINCHANNEL.COM | 30 APRIL, 2018 tthehe ffutureuture ofof bbankinganking Digitalization: Georgia in the spotlight Mastercard company researches Georgians’ opinion on digital technologies and services, how digital bank solutions are used and what kind of innovation is in high demand SUPPORTING THE INNOVATIONS REASONS GEORGIANS CHOOSE DIGITAL: speed and time savings support easy to use digitalization of bank services 83% MORE DIGITAL INNOVATIONS ARE REQUIRED IN: healthcare education public transport BANKS AND PAYMENTS IN THE DIGITAL AGE WHERE RESPONDENTS WOULD WHAT CLIENTS WANT TO GET LIKE TO USE BANK CARDS: FROM BANKS: special offers in taxi 76% for cardholders using other while shopping online banks’ ATMs banking products with dis- counts in public transport have positive experience of digital services usage POPULAR FINANCIAL SERVICES 48% 52% 47% 38% use contactless bank card bill payments money transfers online shopping to make payments FUTURE OF DIGITAL PAYMENTS: BIOMETRICS AND SMARTPHONE PAYMENTS 74 % 44% prefer mobile phone prefer fingerprint scan as a device for payments as an authentication method during payments Digitalization of Life Research prepared by IPM Research on demand of Mastercard at Autumn, 2017. 1000 users of banking services and bank cards holders took a part in the survey. Men and women aged 20-75 years from Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Poti and Gori were interviewed. 4 HEADLINE NEWS & ANALYSIS tthehe ffutureuture ooff bbankinganking 30 APRIL, 2018 | FINCHANNEL.COM Igor Stepanov: «Over 70% of Georgia’s residents prefer to pay with a smartphone» s the digitalization process of life faces signifi cant changes, companies, as Awell as customers have been forced to adapt. Mastercard has made a number of important changes over the past few years. Mastercard had to overcome signifi cant challenges to develop eff ective digital tools that meet the diff ering needs of the countries it operates in. Also, by modernizing, particularly through digital services, banks currently have an opportunity to diff erentiate themselves in a crowded market. During the last decade, the development of smartphones has had a profound impact on the way businesses operate. With the percentage of the global population using smartphones increasing every year, busin esses are now expected to provide a fully integrated digital platform that can provide diff erent services. Today digital services are no longer something new and strange: they are the bare minimum that customers expect. IGOR STEPANOV, Regional Director of Mastercard in Georgia and Central Asia Q. How would you estimate cent of Europeans prefer this meth- for online payments, security is payments in the near future? If allows to turn connected devices cashless payments develop- od. Contactless card has already be- again ensured by Mastercard high yes, how may cards be trans- into payment ones. Due to tokeniza- ment in the country? Has come a symbol of speed and comfort level global standards, Mastercard formed in the future? tion, the original payment creden- Georgia made a progress in e- of payments in the country, where SecureCode is a program designed A. User experience is changing tials (16-digit account number) is economy development? 48 per cent of respondents use it for to protect consumer against un- indeed; it’s becoming more and replaced with a unique “digital ac- A. Georgia is very innovative payments. Today, we see the emer- authorized use of card, as well as more digitalized and mobile. Stud- count number” (token) which may country, and it’s moving towards a gence of a new trend, smartphone provide online merchants with ies carried out by Mastercard show be used to initiate payment activity world without cash at a steady pace. payments. We at Mastercard do a the added security of having issu- that a quarter of Europeans (24%) for wallet transactions. In 2017 the Over the last 3-4 years both, the lot together with our partner banks ing banks authenticate cardhold- would now like to pay using wear- amount of payments via MDES has number and volume of POS trans- to develop a “digital” lifestyle: in ers and qualify online transactions able devices (fi tness-bracelets, smart grown by 100 times globally, NFC actions, has grown considerably. particular, Georgian cardholders for protection against “cardholder watches etc.). Smartphone becomes payments is now a global trend, and According to the National Bank of got new opportunities for digital unauthorized” or “cardholder not number one gadget for payments we a very happy to drive it with our Georgia, non-cash payments in- payments with the launch of the recognized” chargebacks. Today globally. According to the Master- partners here. creased by 20 per cent over a year. fi rst NFC-wallets for smartphone globally Mastercard establishes card ‘Impact of Innovation’ study, Q. What about competitors, As for the contactless payments payments in the country. biometrics as the new normal for mobile payments have the high- what’s your further strategy penetration, Georgia today is among Q. And what about e-shop- safer online shopping, this shift is est potential across all countries and special off er to the con- the leaders in the region, almost ev- ping? You were mentioning a part of Mastercard’s new action – nearly 50 per cent of Europeans sumer? ery second transaction here made 41 per cent growth of online plan to help banks, retailers and put mobile phone on the fi rst place A.