New Financial Sector Developments

29 March 2017

MIM-Kyiv started the Financial Club series by holding a conference “Global Banking System Transformation: Challenges and Opportunities”. Norvik Banka top executives Mr. Oliver Ronald Bramwell, Chairman of the Bank’s Board together with Mr. Dmitry Kalmykov, VP for the International Business Line and Dr. Olexiy Aleksandrov, head of the Private Banking and MIM’s MBA were speaking to MIM’s community at this event.

“Communications, open dialogue and transparent discussion with other market participants are at heart of our activities,” said Mr. Bramwell when telling about the Bank’s activities in Latvia. “Due to those approaches we could develop our service and product model and better understand what our clients need and how we can help them.”
Mr. Kalmykov discussed the end of bank secrecy age nowadays and the new international Standard on information. First of all, automatic data exchange on the banking accounts implies annual reporting on tax residency of clients. Secondly, Mr. Kalmykov specified what information was exchanged automatically. Thirdly, he mentioned that governments rather than banks were the parties of the international exchange agreements. So, inquiries were made to the appropriate governmental agencies. Currently, 91 countries joined the Standard. Although Ukraine is supposed to join the standard after 2019 the information is flowing freely between the countries. Thus, it is safe to say that there is no such thing as the bank secrecy so far.

Mr. Kalmykov also explained how the role of banks is changing. According to him even two years ago banks were lending, saving, and transferring. These days, banks are expected to perform oversight and monitoring which previously were within the regulators’ scope of activities. Such situation not only leads to banking internal systems and operations’ transformations but results into restructuring clients’ internal business processes. Accordingly, banks have to be financial educators for their clients. “When discussing the list of the documents required for opening an account, we are acting more as consultants than as bankers,” Mr. Kalmykov said. Although the banks are not licensed to do anything but banking, they face the need to be capable of consulting. This new transparency changes the whole HR policies and new set of rules for clients. All those trends completely alter both the whole business scene and banking strategies we once knew.

Mr. Olexiy Oleksandrov spoke about private banking in the new digital world. 66.6% of Europeans are ready to deal with technologies rather than wealth managers. It means several things for private banking and the whole financial sector. On one hand, digitalization brings the quality earlier unseen even for rich and famous to majority of the clients. On the other hand, it “kills” specialists and intermediaries. Altogether it reduces the prices and expands the customers’ base.

All participants agreed that trust was a key to successful banking and financial sector. European rate of trust is 53%. In Ukraine even back in 2011 it was 1% and situation did not seem to improve. However, the National Bank of Ukraine’s activities since 2014 let in the cautious optimism as to the good financial instruments availability to both private persons and businesses.