OTP Bank - May 2022

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DIGITAL REPORT 2021

DIGITAL REPORT 2022

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Transforming challenges into opportunities

OTP BANK

www.otpbank.ro

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OTP BANK

OTP Bank’s Constantin Mareș details how combining a peoplefirst culture, a courageous mindset and a three-pronged approach stimulated its organic growth

W

hen most of us think of banks, it’s fair to wager that the image springing to mind would be of one of the more traditional, old-style banks: imposing, almost-gothically ornate, stone buildings replete with marble floors and Greek-style columns. But, in our fast-advancing technological world, banking is no longer the premise of the upper-class elite, with significant modernisation efforts across the financial sector in recent years leading to banks that look nothing like their predecessors.

Constantin Mareș, Chief Digital Officer at OTP Bank, in Romania, has been in the banking and financial industry for 26 years – with the last six of these spent at OTP Bank.

“My role is to help OTP become the leading bank in Romania, through automating processes, developing key products as well as a wider portfolio of products, and also improving the customer experience. My main focus is on improving the customer experience, the employee experience, and increasing efficiency.”

During his tenure in finance, he has witnessed the evolution of banking from an industry that’s fairly static to one that is much more fluid and instant, being revitalised by a range of technology to meet the needs of an increasingly digital society. While this may up-skittle those who are averse to change, for Constantin Mareș, it’s his bread-andbutter, what keeps him interested.

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Constantin Mareș

OTP BANK

“Of course, banking itself hasn’t changed too much. We are talking about loans and deposits – I'm sure that no one will receive the Nobel prize for banking in the near future,” Mareș jokes with a wry smile. “But the way we do banking has changed significantly, which is due to the introduction and adoption of technologies and the digitalisation of services.

“This kept me very interested because, throughout my experience, I was balancing business roles. I was responsible, for example, for sales in direct contact with customers, and in technology roles as chief information 6

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“ You have to provide a superior experience for the customer, no matter the industry” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

OTP BANK

OTP Bank: Transforming challenges into opportunities

officer or chief digital officer. I experienced both worlds, so to speak, and that positions me very well, on the one hand, to understand what the customer needs and, on the other hand, to deliver a solution that matches what the customer needs,” he explains.

It’s certainly a much more considered, customer-centric approach than typically expected, driven by a dedication to stability – but then, that is the ethos of OTP Bank, after all.

Riding the wave of banking evolution The financial industry, as well as many

others, has undergone a pivotal period of transformation over the past three years that is, at least in part, attributable to the global pandemic. As with thousands of global companies, businesses and banks around the world, a sudden need arose for online digital services that reacted in real-time and instantly met customers’ demands.

Without a digital infrastructure already in place or in progress, many companies – big and small – found themselves floundering and having to make changes, fast.

“We always look at what is changing in consumer behaviour, because things evolve very fast and we are not only compared with other banks in terms of digital banking, but we are also compared with Apple, with Google, with Amazon. So you have to provide a superior experience for the customer, no matter the industry,” explains Mareș. Indeed, in a world where some of the biggest players have a finger in each and every pie, other companies in the sector have to jump that little bit higher, go that little bit further, to be seen in such a market. www.otpbank.ro

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OTP BANK

He acknowledges the significant impact of the pandemic across all sectors, in addition to general recruitment challenges and supply chain issues affected by sociopolitical fluctuations in recent months. Despite this, though, the banking sector has continued to evolve at breakneck speed and, with the steady development of neo banks, it’s starting to look like a very different environment.

“During the pandemic period, a lot of problems came with it, but this also meant an acceleration of the digitalisation process.

It also meant that we could be closer to the customer,” says Mareș. “Being a small bank – number nine in the market – we are able to grow faster than the rest of the banks because we are prepared. We just accelerated our digital transformation and are able to launch online flows and better capture the needs of the customer.”

2004 Year founded

7 banks

acquired over the past year – fastest-growing, leading bank in Romania

1,650+ Number of employees

50%

organic growth – 50% in a year (compared to 2.4% in 2020, and 4% in 2021)

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OTP quickly set about creating a digital platform for its customers, in addition to considering the changing wants and needs of up-and-coming generations, and how to best meet these.

Rather than responding to these changes in the same way as some of the more traditional financial institutes and digging its heels in, OTP Bank took the challenge in its stride, quickly onboarding digital solutions and products while, by proxy, gently encouraging Romanian authorities to evolve along with the times, in terms of lessening restrictive regulations.

At the very centre of this was what Mareș dubs an “opportunity to upscale [our] management style”. The leadership team sought to “transform OTP’s management branding” and “empower employees” – but first, a company-wide culture change was needed.

OTP BANK

Constantin Mareș TITLE: CHIEF DIGITAL OFFICER INDUSTRY: BANKING

EXECUTIVE BIO

LOCATION: ROMANIA Constantin Mareș is Deputy General Manager at OTP Bank Romania and coordinates the new Digital Division, created within the local development strategy of the bank.

His management objectives for the Digital Division include stimulating performance, nurturing the innovative environment in the bank, while creating an optimal working environment for professional development and positioning OTP Bank Romania in the elite of the most desired employers in Romania.

Constantin Mareş has 25 years of experience in the banking system, and in the last 20 years, he has held top and senior management positions. Since 2015, he has been the promoter of cultural change at OTP Bank Romania, a change that has included both the digital transformation and the transformation of the way of working into an agile, collaborative and modern one. He is directly responsible for the success of OTP Bank Romania's Apollo organic growth programme, which focuses on improving the customer experience, process efficiency, and developing key portfolio products.

“ Banks that can best use data will be in best position to offer what is needed by customers – so data is key”

FLOWX.AI, THE EXPERIENCE ORCHESTRATION ENGINE, IS THE SECRET TO UNRIVALLED CUSTOMER EXPERIENCES FOR THE OTP GROUP FLOWX.AI is a leading technology company helping to transform the banking system from legacy stacks, processes, and products to streamlined digital solutions.

FLOWX.AI is one of the leading digital solutions companies to emerge in recent years. The platform leverages an entirely novel architecture enabling 40x faster digital developments and specialises in wrapping and consolidating legacy systems into unified, omnichannel digital experiences for both customers and employees.

Ioan Iacob, CEO and co-founder at FLOWX. AI, explains, “The FLOWX.AI platform was born from over ten years of experience, working with large international enterprises within the digital transformation space.

The biggest challenges are the spiderweb of legacy systems and the talent shortage, especially in engineering, making it slow and expensive for enterprises and banks, particularly, to develop digital experiences that are streamlined and easy to use for employees and customers alike.”

Zoltán Kaszás, OTP’s Managing Director and Group’s Head of IT Strategy and Support, explains, “We are not talking anymore about digital transformation

itself because it was a trendy word in the last ten years. We are talking much more about a hybrid mode of working, meaning how human intelligence will work together with artificial intelligence.”

Constantin Mareș, Chief Digital Officer of OTP Bank Romania, agrees. He says one of the biggest challenges in creating such a transformation is talent. “One of the things that OTP Bank Romania started to do since the digital transformation kicked off three years ago is empower people. And this may sound like a cliché. It’s easy to say, but it’s difficult to implement.

Mareș adds, “We are in a regulated market, and we want our people to believe that they can make their life – and the life of customers easier. We want them to actually change the flow by two clicks and for the customer to benefit from those clicks as a simplified process. That’s why I believe FLOWX.AI as a platform would help us grow our talent into skilled intrapreneurs and contribute to changing the mindset of our employees around innovation.”

OTP BANK

Switching-up thinking: challenges to opportunities “Even before the pandemic three years ago, we realised that we had to completely change our offering – we had to innovate and we realised that innovation equals survival. So we had already started to work heavily on customer experience, process efficiency, the product portfolio, and the employee experience,” outlines Mareș.

According to Mareș, OTP Bank – and the European financial sector at large – was facing three core challenges by the time 2019 had rolled around: • The overcrowded financial market in Romania and wider Europe, where 12

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numerous competitors and universal banks are present in a small locale, limiting customer reach – “We have about 19 million inhabitants in Romania, a large part of which is not industrialised, and we have around 40 banks in the system, with many of those being universal banks.”

• Loss of talented employees in the digital engineering and technology sector to Western tech giants, limiting the availability of top talent and, as such, innovation.

“All of a sudden they could earn much more, but stay in their homes to do so – relocation was not needed. And this put a lot of pressure on our offerings as an employer at the time,” states Mareș.

OTP BANK

“ Long story short, in everything we do, we put customers in the middle of it” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

• Lack of digital infrastructure for easy, tech-enabled banking solutions to meet customer demand.

“As a person, I'm a very positive and optimistic one. I see that each challenge also brings an opportunity,” smiles Mareș.

He adds: “We looked at how to combine technology and humanity in this part of the financial industry; to merge these two components into a superior understanding of customer needs and then transform this into a customer experience that is seamless and actually helps them.

“We also looked more at what it means to truly understand our employees, our customers – what do they actually need?

Not only in terms of salaries, I'm talking about a type of leadership style, servant leadership vs smart leadership. We don't hire the best people to tell them what to do; we hire the best people that could tell us what to do.”

By the time the pandemic hit, the company was already wading through the depths of transformation, looking at ways to attract and retain talented employees, extend digital capabilities, and set itself apart from competitors in an overcrowded market.

“We're very creative here. It puts us in the position of looking more closely at product personalisation and how to improve customer experience.”

The bank had already increased flexible and remote working options for employees

by March 2020, but found employee uptake was low; the pandemic gave leadership time to recognise, understand and alleviate the various problems inhibiting uptake.

“There were big problems from anxiety issues to logistical issues. We offered psychological support when employees needed it. We offered them the possibility to take home their chairs, because, usually, you don't have a chair that is ergonomically beneficial at home,” explains Mareș. “So we were really close to people, understanding their needs, supporting them and giving them the tools to work from home seamlessly.”

A central aspect of enacting these changes company-wide, according to Mareș, was shifting the culture and mindset of each and every team member: “We adapted the new way of working that puts the employee in the centre, that puts communication and collaboration in the centre of everything. I would say the biggest cultural change was the culture of fear, because you can’t have innovation if people fear making mistakes and they're afraid of the reaction of their managers.”

“Changing this culture of fear is not easy because it starts with me as a manager and how I react when I see a major mistake from my team. Do I shout, do I ask tough questions or invite people for a dialogue

OTP BANK

to understand what happened and what we can do to avoid the same mistake from repeating in the future?” asserts Mareș, laying bare the typical struggle faced by management teams when errors are made.

“Our response as managers may not be very easy to control because we’re all humans and are programmed to have a negative reaction to mistakes. Now, in our ‘town hall’ meetings, we discuss and share mistakes in front of everybody. I personally share some of my own mistakes in front of hundreds of people just to show that it is normal, it’s human to make mistakes – not to make them isn’t realistic. We did a lot just to break this fear cycle.”

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Oftentimes, it’s nigh-on impossible for leadership to break the cycle of fear – either because it’s so embedded or because there’s a disconnect between management and employees. But, without the ability to fail, it’s difficult to problem-solve or establish efficient, value-producing processes; in other words, fear is the enemy of creativity.

Procuring partners for digital progress An aspirational plan for digital evolution requires top-notch support at all levels – particularly when constructing and running unique, customisable digital platforms.

Although OTP Bank was expanding its portfolio of products and improving its

“ In the last two years, OTP Group has acquired more than seven banks in CEE region and have integrated these acquired banks successfully – which is an unparalleled performance, considering the complexity of such integration and merging banks” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

customers’ experience prior to the pandemic, it’s fair to say that the worldwide lockdowns resulting from it helped to accelerate and expand OTP Bank’s digital offerings for the better. Integral to the speed at which the company was able to react is FlowX, which

provided “top-notch tech” in the form of an online digital platform for remote banking and AI assistance.

With tech titans such as Microsoft, Google, and Amazon dominating the marketplace, Mareș is level-headed enough to recognise that OTP cannot compete outright. Partnering with FlowX, however, OTP is able to stay abreast of current fintech trends to meet the unique needs of its customers. www.otpbank.ro

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OTP BANK

“Our plan was to develop strategic partnerships with smaller fintechs that bring the best technological advancements,” explains Mareș. “The partnership with FlowX is in exactly the same area. We use topnotch technology providing a low code, no code platform for our employees, which means that we can roll out changes and products to the market very fast, before they become obsolete. So we’ve invested in partnerships to avoid this problem.”

And there are more partnerships in the pipeline for OTP, according to Mareș.

Expanding OTP Bank’s physical and digital footprint As established, the franchise area in which OTP Bank currently operates is oversaturated with banking solutions. To compete effectively, the bank needed to expand both its digital and physical presence – in short, it needed to stand up and make itself heard.

As well as constructing digital platforms, OTP sought to expand its physical locations for the more traditional customers.

“We looked – and continue to look – at potential targets for acquisition,” says Mares simply. “OTP is a very strong group in Central and Eastern Europe, with a very strong capital position. In the last two years, we have acquired more than seven banks in this region and have integrated these acquired banks successfully – which is an unparalleled performance, considering the complexity of such integration and merging banks.”

Accompanying customers through each stage of life OTP Bank’s evolution doesn’t just consist of digitising and acquisitions; it also involves a thorough consideration of core customer profiles, to ensure that the products and services offered by the bank match the needs of the population.

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“ Our plan was to develop strategic partnerships with smaller fintechs that bring the best technological advancements” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

“We thought about what would be our ideal customer and defined some profiles that we can use in our services. From this, we started to understand what these clients’ needs are – and I'm not just talking about banking services,” Mareș explains.

For Mareș, it’s about being there at the important stages of a person’s life, moulding services and products to best-suit the growing needs of customers: “A person that is graduating university would probably need a loan to buy a house or start a career; if they get married and have their first child, they will probably need some additional money to prepare. Savings could work the same

way, because parents might want to invest or put some money aside for their children’s education and for retirement. What is the customer’s stage of life about from their perspective and not the bank’s? How can we help these customers fulfil their needs?”

It’s an unusual, yet not unheard of, approach to banking solutions, but OTP Bank is clearly succeeding across all areas – perhaps because it has its customers and employees at its very heart. “Long story short, in everything we do, we put customers in the middle of it.”

www.otpbank.ro

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STR. BUZEŞTI nr. 66-68 BUCHAREST - DISTRICT 1 11013 Bucharest Romania T +40 21 308 5710 www.otpbank.ro

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