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Ukrainian banking system. How it works?


Taking loans for buying furniture, depositing money on deposit accounts, making utility payments or cashing salaries from plastic cards – all these become a part of to-date life of many of Ukrainian natives. And an increasingly higher number of our nationals are concerned about that their financial needs are met at a high level and within the shortest times. These market requirements make rather serious challenges to Ukrainian banks: how to meet the demands of customers under conditions of tough competition especially when transnational financial corporations are expansively butting into this area. The only remedy is to create a public banking servicing system, which will actually be demanded by Ukrainian customers. Newspaper “Today” asked Serhiy Naumenko, Deputy Chairman of the Board, Ukrgasbank, to tell how to create such a financial structure.

“Serhiy Hennadiyovych, the previous day Ukrgasbank declared it was commencing implementation of a new strategy of offering high quality banking services to a wide public of Ukraine. But, earlier, many banks declared of such policy. What will be the difference between the services of your bank and the services of other credit and saving institutions?”

”Certainly, Ukrgasbank is not outstanding with this statement. Moreover, we now are offering a full range of banking services for enterprises, institutions, and for individual nationals of our country. Today, the bank continuously services more than 14 thousand companies and organizations and some 315 thousand individuals. And these are not the highest numbers. Number of our customers grows daily. But in order to actually change to a new quality level of servicing financial needs of Ukrainian public, the banking business should be somehow refigured. This is an up-to-date requirement. That is why Ukrgasbank has made a decision to create a conceptually new model of banking servicing of Ukrainian customers. A principle of “fast money” is a corner stone of this system.
“What does “fast money” mean? Fast coming – fast going?”

“To some extent you are right, but I would change the end of this phrase with the words “bringing fast benefit”. In fact, money as it is constitutes a universal means of payment for various goods an individual wants to have. I think most of people are interested in money not because of the very money but because of their ability to satisfy a need in anything within a short period of time. Therefore, it is important to build a principle banking servicing system on the following formula: “Money comes fast – money brings benefit fast”.

“So, what is the problem? I think the public has positive expectations, hasn’t it? Now is your move.”
”The matter is that there is a number of banking products, for instance, loans, rapidity of granting of which depends on a number of factors. The first and the most important is a customer’s creditworthiness. The bank is not a charity, but a commercial entity. And, it is very crucial for us that the money lent to a certain person be repaid in time. Therefore, estimation of an individual borrower’s creditworthiness affects the rapidity of granting a loan. Today, this procedure is rather complicated and not effective enough.”
“What do you think is the way out of this situation?”
“There are two ways to take. First, it is the increase of the cost of loans where the loan impairment risk is covered with interest rates. And, second, it is the use of advanced technologies and maximum closing to potential customers. We have chosen the second way. It is rather costly, but we are ready to take it as we suggest it is the most effective.”

“If I understood you right, you are going to create a network of some credit shops equipped with advanced banking technologies?”
“Please understand that the essential is not a name, but content. And a quality content is impossible without application of technologies, without introduction of innovations. The thing interesting for an ordinary Ukrainian is to get a quick and relatively cheap loan for a car, an apartment or a vacuum cleaner. If a banking institution fails to shortly reduce the prices of loans and to accelerate making decisions on their granting it will be heartlessly pressed out to the periphery of the financial market. I am positive this problem may be successfully resolved only with introduction of an automated loan granting system together with location of the bank’s offices in the places where they will be the mostly demanded by the Ukrainians.”

“Serhiy Hennadiyovych, please tell about the automated loan granting system in more details.”
“There exists a number of such systems in the world, they were probated by the world’s largest banks and proved themselves to be good in operations. We have chosen an information complex, which includes a line of automated processing of applications and drawing of documents, and a debt collection system. Such automation turns the lending procedure to a certain conveyor. Decisions to grant loans are made within 20 minutes. Only passport, identification code and income statement are required in order to take a loan. And then, the system automatically monitors the process of repayment of the money denominated indebtedness. It is worth mentioning that the system is allegiant to disciplined borrowers. This allegiance will mean reduction of their interest rates and increase of their credit limits.

“What specific products will you be able to offer the customers at such offices?”
“Primarily they will be credit cards, loans for purchase of automobiles, mortgage loans. Besides, each of such office will be equipped with an ATM, a self-service POS, a customer working place with an access to the on-line bank. That is a customer may cash his/her funds from his/her card, transfer funds to his/her account, perform other operations with his/her bank account. And a possibility to make utility payments will be a supplementary service.”
“You said you will locate your banking offices equipped with this information complex at the places where they will be the most demanded by the Ukrainians…”

“We are going to open 100 such offices all over Ukraine this year. As a rule, they will be located at the largest shopping malls. At the places where banking services will be the mostly demanded not only by individuals, but by small enterprises.”


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