George Agioutantis: 2024 will be a landmark year for the banking and financial sector
07:15 - 20 January 2024
The CEO of the National Bank of Greece (Cyprus) George Agioutantis says the prospects of the banking sector are quite promising for 2024, estimating that it will be a landmark year for the banking and financial sector, with significant transformational changes.
In an interview with InBusinessNews, in the context of "IN Business Forecasting 2024," Agioutantis indicates that we are going through a period where the banking sector in Cyprus is making significant progress, strengthening its capital adequacy and maintaining high liquidity ratios, while creating a reserve to address ongoing external and internal challenges.
Referring to the problems of the sector, the CEO of the National Bank of Greece (Cyprus) points out that banking institutions will have to prove their resilience once again, in the midst of high inflation and lending rates, ongoing geopolitical instability, but also to other exogenous factors such as extreme weather events.
"Adapting to regulatory changes and cyber security," he notes, "are also of utmost importance towards safeguarding and protecting against cyber-attacks and breaches of customer data."
Regarding the course of the National Bank of Greece (Cyprus), George Agioutantis underlines that having successfully completed a broad reorganisation plan and despite the economic circumstances and geopolitical developments, a dynamic cycle of development has begun in Cyprus.
How do you see the economic environment shaping up in 2024, in light of inflationary pressures, high interest rates and unpredictable ever-changing geopolitical developments?
The Cypriot economy is expected to face strong pressures again this year, from the intense instability that is dominating global politics, markets and geopolitical developments.
With the effects having a direct impact on household incomes and the viability of businesses, we will need to remain calm in order to meet the challenges in the most ideal manner, as we have successfully done during similar crises in previous years.
I believe that the Finance Ministry’s macroeconomic forecasts for 2024, anticipating the economy to recover at a higher rate of 2.9%, will be confirmed, as well as the estimates regarding the reduction of inflation and unemployment.
This, however, should not make us complacent, as the recent past has shown us that the unexpected will always lie in wait to make things difficult for us.
On our part, we must continue with the same zeal to design the next day that will focus on the rise of creative artificial intelligence, managing skilled human resources, and addressing environmental, social and governance (ESG) issues.
The top challenge for the Cypriot economy
What do you consider to be the biggest and most difficult challenges that the Cypriot economy will have to face?
Undoubtedly, the top challenge that the Cypriot economy has to face is geopolitical and political uncertainty, which in recent years has disturbed the world economy, with our country receiving a significant blow due to the sanctions involving Russia, and the recent war in Israel.
There have been developments with a significant impact on the service sector, with the Tourism Industry receiving significant shocks, as it loses its second largest market again in a short period of time, that of Israel.
Today, it is impossible to predict the conclusion of the war in our neighborhood with any certainty. Even now, however, if Israel and Hamas joined hands, the effects of the war on the economy, society and purchasing power of Israeli households would be such that it would still significantly affect tourist flows to our country.
What we can say with certainty is that as long as the war continues its imprint will be even more pronounced on the development of 2024.
Other significant risks for the economy are also interest rates if they remain high for a longer period of time, the rise in oil prices, extreme weather events, but also the lower performance in exports.
Would you say that, taking into account the latest upgrades, the Cyprus economy is now well on its way to growth?
The recent upgrades of the Cypriot economy, especially in a highly changing environment such as today's, prove that we have taken important steps in the right direction.
Today, Cyprus's solid economic fundamentals create very favorable fiscal prospects, the course of its public debt, and also the reduction of the vulnerabilities of the banking sector, are positive indications for the day ahead.
Substantial private and public investment, combined with the implementation of further structural reforms under NextGenerationEU, support solid medium-term growth prospects.
But, we need to implement the investments and reforms related to the National Recovery and Resilience Plan of Cyprus at a faster pace, to proceed with the transformational changes where they are imposed, first of all in the banking sector, and to fortify ourselves from external factors such as climate change.
The banking sector
What do you think will be the course of the sector in which you operate in 2024?
We are going through a period where the banking sector in Cyprus is making significant progress, strengthening its capital adequacy and maintaining high liquidity ratios, while building reserves to face ongoing external and internal challenges.
With the significant strengthening of profitability and by extension capital reserves, the prospects of the banking sector are quite favorable for 2024.
The enhanced resources can be allocated to deal with any worsening of the crisis, as well as to investments related to the transformation of banks.
What are the biggest industry trends/changes you anticipate in 2024?
I believe that 2024 will be a landmark year for the banking and financial sector, with significant transformational changes.
Developments that, if used effectively, will have the potential to offer more efficient, innovative and cost-effective solutions in the banking, investment and insurance sector.
Banks will continue to implement their digital transformation with stability and consistency by constantly incorporating new technologies that will offer more specialised and personalised services.
In this context, the inclusion of artificial intelligence will personalise services, while automation will continue to streamline tasks and support a smoother journey for the customer.
At the same time, blockchain technology will affect safe and transparent financial transactions, while discussions on digital currency by the ECB and the EBA will be accelerated in an effort to ensure safe and fast transactions.
In addition, the transition to a more sustainable and green economy, in the context of ESG, is expected to be among the top priorities of banks for 2024.
The most important problems of the sector
What do you consider to be the most significant problems plaguing your sector today and the resolution of which you considered to be a priority in view of the new year?
Banking institutions will once again have to prove their resilience amid high inflation and lending rates, ongoing geopolitical instability, and other external factors such as extreme weather events.
Adapting to regulatory changes and cyber security are also of utmost importance to ensure and protect against cyber-attacks and breaches of customer data.
With the risk management function remaining pivotal, strengthening the frontline and integrating risk into day-to-day operations is imperative as changes in the real economy continue to evolve unpredictably.
If you could ask the Government to take specific measures or formulate policies to support/strengthen your sector, what would they be?
I believe that the banks and the Government should go in the same direction, and together implement plans and legislation that will benefit the economy and society, especially in a period like today with the current economic pressures.
With the right dialogue and application of best practices, the economy can be on safer paths.
The National Bank of Greece (Cyprus)
What are your organisation's plans/strategy for 2024? Should we expect new products/services/developments and your further establishment in the market? Will it be a year of growth/expansion or maintaining your existing market position? Can you tell us about any of your plans in particular?
The National Bank of Greece (Cyprus), having successfully completed a broad reorganisation plan and despite the economic circumstances and geopolitical developments, has started a dynamic cycle of development in Cyprus.
Today, we stand by businesses and declare our readiness to finance major investments for local and international corporate clients, as well as to participate in syndicated loans and international projects, leveraging the great experience and know-how of the National Bank Group.
At the heart of our interest in financing, are the energy sectors and mainly investments in renewable energy sources, tourism, construction and trade, giving special emphasis to ESG issues, in all our new lending activities.
However, we also stand by the citizens, with extremely competitive deposit options with high yields to support their personal plans.
At the same time, in our modern business model, digitisation is an important priority for the bank, as on the one hand it improves the quality of customer service and reduces its operating costs, and on the other hand it enables the provision of more advanced financial solutions.
What role does technology, such as artificial intelligence, play and what changes is it expected to bring about in your field?
Technology and artificial intelligence multifacetedly affect various aspects of our daily lives, significantly shaping the way in which we work, communicate and live.
The developments could not leave the banking sector unaffected. Today, financial technology provides more power over how customers manage, spend and invest their money, and these capabilities are expected to be maximised by the inclusion of artificial intelligence, with the most visible application of creative artificial intelligence being chatbots.
A tool that will provide the ability to talk to banking apps and online money services in a natural manner, while in the near future special innovations will be provided such as: Personalised financial planning and customised investment strategies based on customer profiles and behavioral data, all thanks to productive models like the ones powering ChatGPT.
Large banks abroad are already integrating the capabilities of artificial intelligence into their services, a trend that is expected soon in our country as well.