Banks andthepandemic Bankieri Publication No. 38 January 2021 AAB MEMBERS www.aab.al CONTENT Editorial Banks and the pandemic - from "banking as usual" to "banking as digital" Prof. Asoc. Dr. Elvin MEKA 5 Bankieri No. 38, January 2021 Frontline Publication of Albanian Association of Banks Banks and the pandemic - Actual and future challenges 6 Banking System Notary service digitalization - A lever to strengthen the partnership between Albanian Notary Service and the Albanian Banking System Mimoza SADUSHAJ 19 Three things that will be different after 2020 - The accelerator for digital innovation Vanya MANOVA 21 Experts's Forum Banks toward their digital journey Valbona GURI 24 Deceased Orthodoxies and the new capitalism Prof.Asoc.Dr. Selami XHEPA 27 Marketing as a service to support shift to digital channels in banking industry Greta LEKAJ 29 Cybersecurity and banking services continuity during Covid-19 Reglend XHANGO 31 Agile Transformation and Digital Banking Sascha JÜRGENS Lila CANAJ 34 Trainings online 36 Experts's Forum Integrity: A shared responsibility Ardita SEKNAJ 37 EDITORIAL TEAM: Corporate Social Responsibility 40 Elvin Meka AAB: Activities 43 Editor-in-Chief Eftali Peçi Coordinator Dorina Zarka Photographer Design & Layout: FCB Afirma Printed by: Bankieri is the official publication of EDITORIAL BOARD: the Albanian Association of Banks which mainly focuses on the Albanian Silvio PEDRAZZI Georgios PAPANASTASIOU Adrian CIVICI AAB Chairman & CEO AAB Executive Committee Dean, Faculty of banking industry. Bankieri provides of Intesa Sanpaolo Bank Member & CEO Economics, Mediteranean readers with valuable information on Albania of Alpha Bank Albania University of Albania the financial industry's developments in general, and of commercial banks Maltin KORKUTI Dritan MUSTAFA Eleonora OLLI AAB Executive Committee AAB Executive Committee Chairman of Albanian in particular. Member & CEO Member & CEO of Tirana Institute of Authorized of Credins Bank Bank Chartered Auditors (IEKA) ALBANIAN ASSOCIATION OF BANKS Street "Ibrahim Rugova" Andi BALLTA Ervin METE Spiro BRUMBULLI AAB Executive Committee General Executive Director Secretary General, SKY TOWER, 9/3, Tirana Member & CEO of Albanian Financial Albanian Association of Tel: ‘+355 4 2280371/2 of American Bank Supervision Authority Banks Fax: +355 4 2280 359 of Investments www.aab.al January 2021 Bankieri 3 www.aab.al 4 Bankieri January 2021 www.aab.al EDITORIAL Banks and the pandemic from "banking as usual" to "banking as digital" industry in general, and banking by way of offering integrated and sector, in particular. It is crystal clear seamless service to them, through for everyone now that the confluence brick-and-mortar and digital of COVID-19 pandemic, economic channels, in order to keep the existing & social challenges and issues, as customers and attract new ones, who well as technological innovation belong to digital era, or are peers of the and disruption, will profoundly re- Fourth Industrial Revolution. They will shape the future of banking industry, critically need be agile, resilient and throughout the world, even in Albania. profitable organizations, while coping with and handling several challenges Banks in Albania are quite like: conscious that the pandemic has caused permanent changes in - the new economic model and consumer behavior, and this fact will, continuous economic hardships, 1 Prof. Asoc. Dr. Elvin MEKA unavoidably, require them to reinvent - the low interest rate and low Editor-in-Chief the banking operational model, profitability world, while exploring and utilizing new - imminent rise in non-performing The year 2020, and a big part of opportunities for new segments for loans (NPLs), 2021, may be undoubtedly named as loan granting and new value-added - training staff, especially customer “the pandemic year”, with significant, services. Although they weathered service staff, in becoming not only if not devastating, implications and the coronavirus pandemic storm “seller”, but also financial and impact in all aspect of human life and quite well, thanks to their well- economic “adviser” to the bank’s society. The banking industry was capitalization, liquidity abundance and clients, among the worst hit, in all aspects, but a low NPL level, keeping the existing - the multi-faceted competition, one of the few, which remained open realm of banking and developing it from the sector within and from for business and service, in a time in a completely new level will be not the emerging FinTechs, as well when a big chunk of businesses and a difficult endeavor; instead it is an as, services were shut down, due to harsh existential one, given that they are not - the continuous “payment lockdown measures of governments facing a classic financial crisis, but revolution” in Albania, which for some months in a row. a multi-layered and interconnected is expected to be evolved with socio-economic-financial challenge. instant payment and basic Despite the fact that governments account components, which will and central banks reacted swiftly, with Electronic banking, and especially proliferate the payment services various financial guarantees and loan internet and digital banking, has within the Albanian financial repayment holiday programs, to help already been one of top priorities for the system and make banks fight on citizens, businesses and economy Albanian banks during recent years, a client-by-client basis. overcome the difficulties created by the but the pandemic just accelerated pandemic’s health emergency, banks the run toward digitalization with an Definitely, banks have already learned their life’s lesson: COVID-19 unprecedented pace, by crashing begun and will pursue the one-way pandemic has already put an end to the digitalization’s critical path. For journey, from "banking as usual" to “banking as usual” model, therefore the years to come, banks in Albania "banking as digital"! turning into a bold catalyst for an will need to visualize and create a irreversible change of the financial revolutionary customer experience, 1Dean of Faculty of Economy, Business & Development, European University of Tirana, UET January 2021 Bankieri 5 www.aab.al FRONTLINE Banks and the pandemic Actual and future challenges BANKIERI: 1. How COVID-19 pandemic has impacted the banking activity and respective results of your bank, during the year 2020? 2. How prepared, the banking sector is, when coping with the pandemic? 3. How the banking activity will evolve in the near and more distant future? from symptoms of the economic could manage to produce more than slowdown. Many companies have half of the sector’s profit in the first temporarily (even some of them half of the year. permanently) closed down their business activities, or at least shrunk. 2 There are two categories of “being If we consider loan repayments, prepared”. The first one is business difficulties should be expected in continuity aspects, where all banks many countries, including Albania. in the sector, passed the test. They Governments and some international have taken all necessary precautions organizations have made some to give continuous service by positive interventions to relief the minimizing the disease risk. All the burden of the businesses by offering sector is following the protocols some subsidized loan opportunities, issues by the Ministry of Health. or some supports for employment. Besides, banks are promoting to Besides government, also banking increase digital channel usage SEYHAN PENCABLIGIL sector supported businesses and to reduce human interaction and Chief Executive Officer & Member of individuals by postponing loan mitigate contagion risk. The second the Board of Directors repayments with the support of the one is financial preparedness, BANKA KOMBETARE TREGTARE central bank’s provisioning flexibility. perfectly seen with the low liquidity (BKT) But such supports are just sedatives risk during the pandemic. Albania that release some pains, but they are has a systemic advantage, due to not the real cure for the problems low loan to deposit ratio and banks, 1 Pandemic is the biggest health arisen. We will see the real picture in general, are well-capitalized. We concern worldwide after the Spanish soon, NPL rates will start to increase. as BKT, are successfully dealing Flu, also known as the deadliest 1918 In the short run, we will see some with the pandemic with our strong flu pandemic after WWI. Effects of positive impacts in the profitability capital structure and highly liquid pandemic are not limited to health of banks due to provisioning support, position and limited exposure of people; they also affect health of but in the midterm, we will see to most affected sectors like: companies and even economic and negative effects when the companies HoReCa/public transportation and social health of states. Inevitably, have to pay their debts. As BKT, we shopping malls. Anyhow, some extra banking sector has also been affected are in strong position because of our problems will come up for the sector from pandemic, since customers vigilant asset management strategy since NPL rates will increase, due to of banking sector are not immune and strong capital structure. We contracted economy, lower turnover 6 Bankieri January 2021 www.aab.al and revenues of businesses which operating in the health sector; decrease payment capacities of • Application of facilitating costs companies. But we are optimistic for the use of digital channels; that the sector will handle this • Proceeding, within record