Raiffeisen, the most advanced bank in digitization

Raiffeisen Bank Albania accelerated its road to digital transformation in 2022. Christian Canacaris, CEO of Raiffeisen Bank Albania, underlines that Raiffeisen became the first bank to offer loan products 100% digitally, thanks to the application of identification and digital signature. 

How would you evaluate the performance of Raiffeisen Bank Albania during the past year? What were the most important developments in your bank and more broadly in the activity of the Albanian banking system? 

Although Raiffeisen Bank, like all other banks, operated in a very challenging environment, where geopolitical events prevailed and the consequences of the war in Ukraine were felt all over the world, we achieved our objectives and pulled off a high financial performance. Profit after tax increased by 17.6% compared to the previous year. As the second largest lender in the country with approximately 17.3% market share, we continued to support individuals and businesses with loans throughout the year, increasing total lending by 9.2%, higher than the total credit increase in the banking system by 7.7%. Vitin e kaluar, ekonomia u përball me inflacionin më të lartë në dy dekada dhe me rritje të shpejtë të normave të interesit. Si u reflektuan këto zhvillime në ecurinë e sektorit bankar? 

Furthermore, I can say that the bank is continuing its transformation process towards an "agile" way of working, aiming to become an adaptive organization ready for the future generations of the bank. During 2022, Raiffeisen Bank accelerated its efforts toward digital transformation. We are continuously investing in our digital platforms strengthening our leadership position as the most innovative and advanced bank in the country. Our digital platform, Raiffeisen ON, was enriched with new features and functions. An important milestone towards digital lending is the expansion of the customer base who can get an end-to-end loan through the digital platform, RON. This was made possible thanks to the digital signature process. We are now proud to say that we have impressed our customers by providing them with ease in applying for and obtaining a loan, becoming the first bank in the market to offer complete end-to-end lending products. To improve digital lending and commit to digital banking transformation processes, we strengthen cooperation with third parties and fintech, introducing new and efficient lending channels in order to provide the same seamless experience through channels of different. 

One of the main pillars of our strategy is our commitment to a sustainable future by offering sustainable products. That is why we are a proud pioneer of responsible banking. Our green product portfolio includes four successfully launched ESG-compliant products: RSF loan, mortgage loan, consumer mortgage loan, and unsecured loan. So, we support our clients to finance activities that contribute to sustainable cities and communities, green energy, green buildings, etc. Raiffeisen Bank has made tremendous technological progress, especially in embracing Cloud technology and transforming IT operations. The bank's commitment to embracing Cloud technology and transforming its IT operations has resulted in 50% of its workload in the Cloud. One of the main achievements was the implementation of the first digital wallet in the Albanian market, RaiPay. This new product is a radical change when it comes to simple and secure payment through NFC (contactless payment) technology, improving the payment experience. 

The significant development that banks have made in the infrastructure supporting payments in recent times has enabled a substantial increase in the use of electronic money. But it must be said that the work towards open banking and instant payment should continue with dedication. Also, the banking sector has continued to expand at a good rate and has further financed the economy while maintaining healthy levels of liquidity and capital. 

Last year, the economy faced the highest inflation in two decades and a rapid rise in interest rates. How were these developments reflected in the performance of the banking sector?

Indeed, inflation was an indirect consequence that the armed war in Ukraine brought to our market, and not only. However, beyond the forecasts, the country's economy grew at an annual rate of 4.8%. The expansion of the economy was also reflected in the banking activity. The sector's financial assets increased by 5.8% in 2022, while lending increased by 7.7%. However, credit expansion was lower than a year ago with a rate of 9.4%. This came because of the tightening of financing conditions, especially the increase in the loan interest rate, reflecting the tightening of the monetary policy and the strengthening of the local currency. The new environment with high inflationary pressures also brought uncertainty and hesitation from the businesses, manifested in weaker demand for credit. Contrary to expectations, the quality of the loan portfolio improved further in 2022, falling into the level of only 5.0% of the total loan of the system. These are all considered satisfactory developments under conditions of high uncertainty arising from the external environment.  

What will be your main objectives for 2023 and what do you expect to be the main challenges for the banking business this year? 

We aspire to continue supporting the country's development by financing projects that positively affect sustainable development and improve the quality of life in the country as one of the main pillars of our strategy. Our long-term goal is to bring the best innovative offer to the market and maintain a strong digital presence by embracing and incorporating digital technologies that continuously enrich our online banking solutions for all groups of individuals. 

The terrain remains challenging for banks considering that economic growth is expected to slow down to the low levels of around 3.0% due to tight financial conditions and poor performance of trading partners. On the other hand, in the presence of core inflation above the Bank of Albania's target levels (6.5% in March 2023), the monetary policy will continue the path towards further tightening, making lending more expensive and thus discouraging the demand for loans. On the other hand, a deterioration in credit lending quality is expected, but the current capital adequacy ratios (18.4%) are sufficient to best cope with it.