Onur Genç: The Turkish banking sector is well prepared to face this crisis
BBVA’s CEO sat down with Turkish news agency Anadolu to discuss the current scenario facing Turkey’s economy and banking system. Onur Genç expressed his optimism regarding Turkey's progress at the economic level and considers that banks are in good shape to face this crisis. Digitization, in his opinion, will be key for banks in the current scenario. In this sense, he cited Garanti BBVA as an example of a digital leader, with almost nine million digital customers, eight million of whom are mobile.
On the Turkish economy, Onur Genç noted the need to keep an eye on the balance of payments. “The Turkish government is focusing on solving the current account deficit that’s built up over the years and rebalancing it again.” As he explained, last year, the country did not have a current account deficit, but a surplus: “We have to be careful with our dependence on the balance of payments from external sources, which was the key driver of our deficit in recent years . This is something that we have to keep under control. And this is what the country is doing now. The country’s potential is huge.”
Regarding how the global banking sector, and Turkey in particular, is facing the COVID-19 crisis, Onur Genç first underscored that, unlike the 2008 financial crisis or Turkey’s 2001 crisis, this time it hasn’t been caused by the banking sector. “This is a positive aspect of the current situation that is worth noting." As for Turkey’s financial sector, BBVA’s CEO considers that it is well prepared to face the pandemic. In general terms, he emphasized that banks around the world are better positioned to face a crisis of this nature than in 2008, especially in terms of capital and liquidity.
Onur Genç does expect the crisis to have a sizable impact in terms of banks, as well as on the cost of financing. Banks’ outlooks are closely linked to economic trends and, right now, this year’s economic growth prospects are negative for almost all countries, he explained. Therefore, in some sectors the cost of financing will increase, and this has an unavoidable impact on profits. However, “even if profitability is affected, I think we have enough capital to cope with the impact,” he noted. “Banks will be able to weather out the current situation,” he said.
As for the Turkish financial sector, the CEO considers that "it is one of the strengths of the economy.” “Banks are in very good shape in terms of capital, liquidity and strength and we have to transmit confidence in the strength, resistance and future of Turkey's banking sector,” he explained.
Digitally-advanced banks will pull out of the crisis stronger
Onur Genç thinks the crisis will profoundly change the way banks operate and work, with banks using technology emerging stronger from the crisis. He referred, for instance, to the surge in digital customer channels during the confinement period. In the case of BBVA, the bank saw a 32 percent increase in transactions through digital channels worldwide, in the weeks right before and after the start of the pandemic. But this increase didn’t just affect transactions, but also remote communications, as employees couldn’t meet face to face with customers, but by video call. “We are going to go through a period when we’ll see banks reassessing the importance of these channels. This is one of the pivotal consequences of the crisis,” he underscored.
“In digital transactions, both BBVA and its Turkish unit achieved very good results. Both globally and in Turkey, the pandemic put us to the test. The question was if we really were that good, pushing ourselves to prove it," he says.
For BBVA, therefore, the increasing value of digitization is proving that our company was right when it defined its strategy. In the case of BBVA Garanti, Onur Genç highlighted its leadership in the digital arena. The bank has 8.8 million digital clients in Turkey, of whom 8.2 million are mobile. “When we look at the percentages during this period, the share of active customers that used digital channels increased to 76%,” he said. Specifically, Garanti BBVA set a new record when 3.6 million customers logged on to its digital service platforms in a single day.
The CEO of BBVA stressed that the COVID-19 pandemic reinforces the idea that people should be at the core of banking activity. “You have to unite people and technology,” he said. One of the key takeaways of the crisis, in his opinion, is that, in order to be successful, banks need to combine the strength of their digital services with the human factor, which is essential to maintain customer trust. Thus, the personal relationship continues, not only in the branch, but with an increasing weight of remote channels, he said. Looking ahead, he anticipates that this customer advisory service will be the key value that bank employees will deliver.