The Foundations and Drivers of BANKS ASSOCIATION the Innovative - - PowerPoint PPT Presentation

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The Foundations and Drivers of BANKS ASSOCIATION the Innovative - - PowerPoint PPT Presentation

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THE POLISH The Foundations and Drivers of BANKS ASSOCIATION the Innovative Banking Sector in Poland Mieczysaw Groszek Executive Vice President The Polish Banks Association 30 September 2014, Boston ul. Kruczkowskiego 8 00-380 Warsaw tel.

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The Foundations and Drivers of the Innovative Banking Sector in Poland

30 September 2014, Boston

Mieczysław Groszek Executive Vice President The Polish Banks Association

THE POLISH BANKS ASSOCIATION

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

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1989 2014 13 52

Achievements of the Polish Transition 1989-2014 Poland Then and Now

Democracy & Market

THE POLISH BANKS ASSOCIATION

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

1989 1994 1999 2004 2009 2014 1989 1994 1999 2004 2009 2014

Inflation (annual, %) GDP per capita (Intl. dollars, PPP)

Source: IMF. Source: IMF.

586 1.5 6,154 22,201

We, the People! Free market!

* Forecasts. * *

Tertiary education enrolment rate (%)

Source: Central Statistical Office. *

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  • Stable

economic growth

  • Resistance
  • n economic

crisis

Foundations and Drivers (1)

THE POLISH BANKS ASSOCIATION

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

  • 10
  • 5

5 10 1989 1994 1999 2004 2009 2014* Source: IMF. * Forecast.

Annual GDP growth 1989-2014 (%) Cumulative GDP growth 2007-12 (%)

Source: IMF.

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1989 1993 2014

9 87 39

  • Prudent and competent banking

supervision (but not blocking innovations):

  • 1. Consolidation of banks based on

takeovers or mergers approved by FSA.

  • 2. Recovery and resolution under the

supervision of FSA.

  • 3. Sound structure of the banking system

as a result.

Foundations and Drivers (2)

THE POLISH BANKS ASSOCIATION

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

  • No. of commercial banks

Source: Narodowy Bank Polski (national bank of Poland)

1989 1993 2014

1663 1653 566

  • No. of cooperative banks
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Foundations and Drivers (3)

  • Mixed structure of foreign and domestic

capital in banks:

  • 1. Inflow of know-how.
  • 2. Fast modernization of the obsolete banks

inherited from the communist era.

  • 3. Good mixture between the established

corporate culture of the western banks and the dynamism of the Polish employees.

  • POLISH SPECIFICITY: INNOVATIONS DRIVEN BY

LARGE INSTITUTONS BOTH DOMESTIC AND FOREIGN.

THE POLISH BANKS ASSOCIATION

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

100% 28% 72%

Domestic Foreign

38% 62% 1989 2008 2014

Source: The Polish Financial Supervision Authority.

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  • Stable: CAR = 15.8%.
  • Efficient: ROE = 11.7%.
  • Resistant: no single

bank got a bailout in the crisis.

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

Polish Banks Sound and Resilient (1)

THE POLISH BANKS ASSOCIATION

Sources: The European Central Bank and the Polish Financial Supervision Authority.

ROE by Country 2008 2010 2012 Austria 2.3 6.6 4.5 Belgium

  • 62.3

10.8 2.6 Cyprus 13.4 6.2

  • 178.6

Germany

  • 11.4

2.3 1.3 France 2.2 8.3 3.4 UK

  • 12.2

4.8 1.9 The Netherlands

  • 12.5

7.2 5.9 Poland 17.0 12.5 11.7 Italy 4.9 3.8

  • 1.2

2007 2008 2009 2010 2011 2012 2013

12,1 11,2 13,3 13,8 13,1 13,1 15,8

CAR in the Polish banking sector (%)

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  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

Source: TNS and own sources.

Innovations in payments:

  • More than 50% of bank accounts can be accessed
  • nline.
  • 12% of mobile phone users are active using mobile

banking.

  • 5% of mobile phone users pay mobile.
  • 60% of payment cards are contactless (NFC).

THE POLISH BANKS ASSOCIATION

Polish Banks Sound and Resilient (2)

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Thank you for attention!

30 September 2014, Boston

THE POLISH BANKS ASSOCIATION

  • ul. Kruczkowskiego 8

00-380 Warsaw

  • tel. +48 22 48 68 180

www.zbp.pl

Mieczysław Groszek Executive Vice President The Polish Banks Association

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Adam Tochmański

Director of the Payment Systems Department Narodowy Bank Polski

Sibos 2014 Boston

Polish Payment System – modern but secure and compliant

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Polish Payment System – modern but secure and compliant EURO ELIXIR Express ELIXIR BlueCash PLN

Polish payment system evolution

SYBIR

1989 1990 1991 1992

1993 1994

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

2005

2006 2007 2008 2009 2010 2011

2012 2013

2014

Traditional interbank settlements in NBP branches

Large value payment systems (LVPS) Retail payment systems (RPS) PLN EURO SORB Euro ELIXIR SORBNET-EURO SORBNET2 SORBNET TARGET2-NBP

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SORBNET2

RTGS kdpw_stream

TARGET2-NBP

RTGS

EuroELIXIR

Large value payments Retail payments

ELIXIR

net Interbank payments from securities market

RPW

Interbank payments

Express

ELIXIR

net gross

PLN EUR

Payment systems in Poland – 2014

gross

BlueCash

Customer payments gross gross gross / net Securities depository (CSD) & securities settlement systems (SSS) Retail payment systems (RPS) Large value payment systems (LVPS)

Payment cards & innovative payment intruments

gross gross

Polish Payment System – modern but secure and compliant

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Polish payment system MODERN SECURE COMPLIANT

 Modern IT solutions  Short settlement time  Two immediate payment systems  High usage of innovative payment instruments (contactless cards, mobile payments)  Flexibile approach towards the needs of different users  Different systems for large value and retail payments  Three SIPS designated under SFD (SORBNET2, TARGET2-NBP and ELIXIR)  All payment systems

  • verseen by NBP

 Ongoing assesment vs international standards  Reliable and secure IT platforms  International standards applied  Ongoing monitoring  Low share of card frauds

Polish Payment System – modern but secure and compliant

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Polish Payment System – modern but secure and compliant

The role of NBP in the payment system

NBP

Overseer Regulator Operator Catalyst

 Payment System Council and its subgroups  Polish Banks Association and working groups  Alliance for non-cash payments and micropayments  Education – conferences & seminars

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Adam Tochmański

Director of the Payment Systems Department Narodowy Bank Polski adam.tochmanski@nbp.pl +48 (22) 185 27 28

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KDPW Group State-of-the-art post-trade infrastructure

Ph.D. Iwona Sroka – President & CEO of KDPW and KDPW_CCP

Boston, 30 September 2014

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17

join the celebrations

  • f the 25th anniversary
  • f economic freedom

in Poland

___________________________________ was established in 1991 was separated in 1994,

as an independent, join stock company

was created in 2011

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Polish Capital Market vs. Europe

18

Equity market Futures market

Market Operator 2012 2013 London Stock Exchange Group 21,37% 20,56% NYSE Euronext 15,36% 15,21% Deutsche Börse 12,42% 12,29% BME (Spanish Exchanges) 8,31% 7,48% SIX Swiss Exchange 5,69% 6,28% NASDAQ OMX Nordic 5,71% 5,72% Oslo Børs 1,42% 1,11% Warsaw Stock Exchange 0,57% 0,64% CEESEG - Vienna 0,23% 0,23% Athens Exchange 0,15% 0,18% Boerse Stuttgart 0,14% 0,18% Irish Stock Exchange 0,09% 0,13% CEESEG - Budapest 0,11% 0,09% CEESEG - Prague 0,13% 0,08% Bucharest Stock Exchange 0,01% 0,01% Bulgarian Stock Exchange 0,00% 0,01% CEESEG - Ljubljana 0,00% 0,00% Luxembourg Stock Exchange 0,00% 0,00% Malta Stock Exchange 0,00% 0,00% Bratislava Stock Exchange 0,00% 0,00% Cyprus Stock Exchange 0,00% 0,00%

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19

Capital Market in CEE Region

26% 26% 34% 42% 50% 54% 59% 71% 73% 65% 58% 48% 44% 39% 2% 1% 1% 1% 2% 2% 2% 2007 2008 2009 2010 2011 2012 2013

Share of Stocks Turnover in the CEE Region

32% 35% 40% 46% 44% 47% 49% 58% 56% 53% 48% 47% 45% 42% 9% 9% 7% 6% 9% 7% 9% 2007 2008 2009 2010 2011 2012 2013

Share of Capitalisation of Exchanges in the CEE Region

70% 75% 80% 77% 86% 88% 92% 30% 25% 20% 23% 14% 11% 8% 2 007 2008 2 009 2010 2 011 2012 2 013

Share of Numbers of Index Future Contracts in the CEE Region

CEESEG: Austria, Czech Republic, Hungary, Slovenia Warsaw Stock Exchange Bucharest SE, Bulgarian SE, Bratislava SE

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At-a-Glance Statistics: August 2014

  • KDPW participants – 65
  • KDPW_CCP participants – 38
  • Issuers – 1152 (of which 77 are foreign)
  • Deposited equities issues – 1099
  • Deposited bond issues – 1099
  • Capitalisation of shares in KDPW – EUR 138 billion (USD 178 billion)
  • Capitalisation of bonds in KDPW – EUR 139 billion (USD 179 billion)
  • Number of cleared transactions – cash market: 6.14 M
  • Value of cleared transactions – cash market: 22 EUR billion (USD 28 billion)
  • Number of cleared transactions – derivatives market: 1.95 M
  • Value of cleared transactions – derivatives market: 33 EUR billion (USD 41 billion)

20

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KDPW and KDPW_CCP

21

  • Stable and credible shareholders
  • Main objective: safety and stability of financial system
  • Low risk profile - not-for-profit infrastructure institution
  • Supervision by Polish FSA (KNF) and ESMA, oversight by Polish

Central Bank (NBP)

***

  • EU registration of KDPW Trade Repository – one of 4 first TRs

registered in Europe

  • LEI assigning (KDPW_LEI)
  • Services for energy market (KDPW_GIR)
  • Planned CSDR authorisation of KDPW

***

100 %

NBP Treasury WSE

33% 33% 33%

KDPW_LEI

  • EMIR authorisation of KDPW_CCP (3rd in Europe)
  • KDPW_CCP own capital: EUR 54 M (USD 70 M)
  • Central counterparty functionality through novation
  • Reporting to KDPW_TR (non mandatory)
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CSD Services

22

Numbering Agency (LEI, ISIN, FISIN)

Key functionalities:

  • Omnibus accounts for foreign investors
  • Collective securities accounts on the CSD level, with option to

segregate by investor/group of investors

  • Hold/Release mechanism (optional)
  • Cash settlement in central bank: money – PLN in Polish Central

Bank (NBP), EUR in TARGET2

  • Agent for Securities lending & borrowing - automatic and

negotiated

  • Settlement and collateral management for repo (Tri-party Repo

Agent)

  • Partial settlement
  • CA: information, distribution of proceedings, tax services
  • GIR - clearing and settlement of energy market transactions
  • T+2 settlement cycle regarding to CSDR requirements

Ancilliary Services Core Services Commercial Services

Regulated market Alternative Trading System OTC cash market

Central Depository of Securities Corporate Actions processing Operational links to foreign CSDs Trade Repository Commodities Clearing House (GIR KDPW) Securities settlement system

CSD authorisation process planned for 2015/2016

Tri-Party Repo

Maintaining securities accounts at the top-tier level Initial recording of securities in a book-entry system

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Regulated market ATS OTC derivatives

Clearing of trades Clearing risk management Collateral management

SPAN VaR

T-bonds T-bills PLN WIG20 shares Bank guarantees OTC REPO

CCP Services

23 Authorised in April 2014

Key functionalities:

  • Central counterparty functionality through novation
  • Netting in cash (obligatory) and securities (optional)
  • Segregation of accounts (individual and aggregated

accounts)

  • OTC derivatives:
  • Currently - PLN (FRA, IRS, OIS, Basis Swap, REPO)
  • Planned - EUR (FRA, IRS, OIS, Basis Swap, FX

instruments)

  • OTC clearing based on MarkitWire and SWIFT Accord

instructions

  • Guarantee system for negotiated securities lending

transactions

  • Margins calculated on intra-day and daily basis
  • STP with WSE trading system (UTP - NYSE Euronext)
  • Default waterfall and procedures compliant with EMIR
  • KDPW_CCP own capital: EUR 54 M (USD 70 M)

Derivatives trade reporting to KDPW_TR Supplementary Services

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Future Developments

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The KDPW Group conducts its business operations on the basis of the Development Strategy for 2014-2016, reflecting international trends in financial markets. The strategy defines a diverse business model for the KDPW Group, while leveraging the specific strengths and potential of the Polish financial market. Key Strategic Projects of the KDPW Group:

  • KDPW_CCP
  • Integration of transaction clearing from diverse financial markets in Poland: regulated, interbank and commodity
  • OTC multicurrency instruments
  • Extending eligible collateral
  • KDPW
  • Strengthening the position of the Trade Repository
  • Further development of securities lending and Tri-Party Repo services
  • Creation of securities central valuation service
  • Introducing ISO20022 messaging with participants
  • Enhanced operational co-operation with other markets in the area of clearing and settlement
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www.kdpw.eu www.kdpwccp.eu

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Real-time, mobile and contactless – practical lessons from the evolution of the Polish payment market

30 September 2014, Boston

Michał Szymański Vice President of the Management Board Krajowa Izba Rozliczeniowa S.A.

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Real-time (immediate) retail payments

  • Facts

– ExpressELIXIR was launched in June 2012 as the second real-time retail system in Europe – The CAGR of number of transactions is at the level of 1600% – The demand is also visible in other EU countries so interoperability between such seems to be unavoidable

  • Lessons learned

– The infrastructure creates many new business opportunities like value- added bank services for corporates (real-time reconciliation and account reporting) or real- time loans – Technical implementation by banks may be a challenge – Despite the 24/7 mode, due to technical reasons some banks are only available during time windows

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Mobile payments

  • Facts

– 6 big banks in Poland started an initiative aimed at creating the standard for mobile payments (Polski Standard Płatności) – Another big bank runs an independent system – Both systems are based on ”one-time ticket” authentication

  • Lessons learned

– When there is demand for POS transactions, P2P payments and ATM withdrawals seem to create even more value for customers – Cooperation of banks is a necessary element and a challenge at the same time – The simplest possible user scenario (keying in the 6-digit PIN) is prevailing due to simplicity for customers and merchants and also low technical requirements

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Contactless card payments

  • Facts

– More than 90% of all issued cards are equipped with a chip, more than 60% contactless – Almost 57% of POS are contactless-capable – 30% of all card transactions are contactless

  • Lessons learned

– Security fears were visible at the beginning but their intensity has decreased with time/experience – Nevertheless some customers want to block the wireless functionality so there should be a procedure for that – The POS infrastructure makes mobile NFC technology an attractive choice for mobile payments

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Michał Panowicz

mBank | Managing Director | Products, Marketing & Digital

Poland’s banking: from nothing to innovation

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31

How to get?...

…To there? …From here?...

25

YEARS

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32

2 retail banks 400 branches / 1 per 96k people 0 (zero) cards 0 (zero) ATMs ~100% cash 585% inflation 0 (zero) foreign Banks

We started where so many emerging markets did…

3

… roughly an equivalent of banking desert

Poland in 1990

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33

Such starting point could have taken us anywhere

Oligopoly Banking bubbles Special bank taxes Protectionism National champions Reactive regulation Sluggish followers Just OK Main stream banking Digital transformation

4

1990

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34

STAGE 1: Catching up through foreign investments 90’s

PRIVATISATION KNOW–HOW CAPITAL GOVERNANCE IT PRODUCTS COMPETITIVENESS BRANCHES CORE IT SYSTEMS STABILITY MODERN PRODUCTS MODERN PAYMENTS

OUTCOME PREMISE

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35

OUTCOME PREMISE STAGE 2: Massive innovations pushed by banking startups 2000’s

COMPETITIVE NESS INNOVATION DIGITISATION GOVERNANCE RE-BALANCE MODERNIZATI ON MODERN:

  • 1. DIRECT
  • 2. ONLINE
  • 3. COSTUMER

FINANCE

  • 4. BRANCHES
  • 5. BRANDING
  • 6. SEGMENT

OFFERINGS DIGITAL & REMOTE REGULATION

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36

STAGE 3: Championing digital transformation NOW

7

TELCO BANKING ULTRA MODERN DIGITAL MOBILE PAYMENTS MODERN BRANCHES

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37

Our work ingreasingly recognized globally – THANK YOU!!!

8

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