Here Goran Pitić, Chairman of the Management Board of Societe Generale Bank and Chairman of the NALED Fair Competition Alliance, talks about the recipe for gradually introducing a cashless society, the development of e-commerce in Serbia and innovative e-banking models, but also the role of the banking sector in supporting eGovernment.
Research has shown a clear relation between reducing the use of cash and increasing economic growth while suppressing corruption and the grey economy. Can Serbia stride more quickly towards developing a cashless society?
– The last time analysis was conducted, the volume of the grey zone in Serbia was estimated at around 30 per cent of GDP, or about 10 billion euros, with the state deprived of a third of that sum and us, as citizens, losing an average salary instalment annually. Every time we don’t take a receipt we become passive accomplices and help shady entrepreneurs make extra profits. Given that VAT, with a share of 51% in budget revenue, is the highest contributing tax, failure to issue a receipt represents a serious problem for our country. One of the ways of fighting this is precisely cashless payments, which is defined by the National Programme for Countering the Shadow Economy.
Electronic payments – card-based payments, e-banking or m-banking – enable transactions to be recorded and visible to the tax authorities, even when a fiscal receipt is not issued. The first step in promoting reductions in the use of cash should be taken by the state, by allowing electronic payments of charges for the services provided to citizens and businesses. We are naturally being pushed towards a cashless society by the development of technologies and the internet, and global networking has made products cheaper and more accessible, while the value of dinar-based internet purchases increased in the first half of 2017 by 30 per cent compared to the same period of the previous year. It is certain that Serbia will not be able to catch up with the likes of Sweden or Canada for a long time, but it is necessary for us to work on education and break the fear of new technologies and possible threats to privacy, to gradually introduce cashless payments, as well as ensuring that the poorest citizens are not excluded from this process.
The volume of the grey zone in Serbia is estimated at around 30 per cent of GDP, or about 10 billion euros, with the state deprived of a third of that sum and citizens losing an average salary instalment annually
What is your stance on the announced reduction of interbank charges for using payment cards. Do you expect this move to lead to an increase in cashless payments?
– From the perspective of the banking industry, we certainly support all the initiatives of domestic regulatory authorities tasked with harmonising local regulations with those of the EU, including the part of the legislation relating to charges for payment accounts and interbank provisions related to payment cards. Of course, it is crucial to overview all the specific factors that define the character of doing business in this field (EU vs. Serbia). This, I believe, will also affect the time dimension of the process itself, and thus the effectiveness (cost/ benefit) of the actual measures. This is a relatively new regulation in the European Union, so the first analysis of the effects is only expected in the middle of this year.
E-commerce today accounts for 20 per cent of total trade in the EU and is expected to reach half of all transactions by 2020. And it seems that the Serbian market is also growing, though it is starting from an extremely low base. What conditions is it necessary to fulfil for us to be able to count on more intensive development?
– Considering that we today have a significantly broader legal framework for electronic operations and, with enhanced technical capabilities, I believe that e-commerce will develop rapidly in Serbia in the coming years. And that it will do so to a large extent, given that there is growing competition and ever more banks that can support their clients in e-commerce.
I expect the further development of e-commerce to be influenced positively by the development of new payment modalities, as well as changes in regulations via PSD2 and the decentralisation of banking services, which can lead to a consequent reduction in the costs retailers are subjected to when conducting e-commerce. Another very important aspect in the development of e-commerce is increasing the offer and further improving the quality of accompanying services, such as delivery, along with changes to the business models of large retailers that can influence the growth of internet-based sales. Increasing the volume of electronic trade can be influenced by all actors – the constant educating of users and strengthening their trust in this kind of service.
A very important aspect in the development of e-commerce is increasing the offer and further improving the quality of accompanying services, such as delivery
Societe Generale Bank has introduced a significant novelty on the domestic market – in the form of an online branch office within the framework of advanced electronic banking services. Where does the innovation of this concept lie?
– Our bank is among the first in the region to establish an improved system of online banking services, with the launch of the first online branch, via which we introduced the digital signature to the financial system for the first time, so that cash loans, approved overdrafts and other products can be realised fully without a single visit to the bank. The implementation process is fully automated, and both clients and banks use contracts and exchange documents in electronic form (there are options to switch to paper documents if the clients wishes). Clients who gain products through this online process are primarily satisfied with the speed and ease. The entire process is very simple and includes the most up-to-date customer support in the form of personal bankers available via video calls, as well as chat and co-browsing, which is extremely widely accepted. Since that time, we have constantly improved our bank’s online services for clients – from the international payment system and e-commerce, to modern m-banking platforms. An interesting fact is that as many as 50% of approved overdrafts are realised through the e-banking platform.
Are you planning to introduce more novelties in this domain? What percentage of your clients are using e-banking today, and what is the trend in this area?
– We have noticed a marked growth trend in the use of e-banking and m-banking applications, which has been contributed to, among other things, by the bank’s great commitment to improving and developing new products and the functionality of these channels. We are planning to further advance products and services that will improve the user experience.
One of the most important novelties is the transition to signing contracts using simpler resources for clients, such as the dual-factor authentication resource, which will make online products available on mobile platforms, as well as increasing the number of products that customers can access.
The state recently enabled online payments on the eGovernment portal. Where do you see the position and importance of engaging the banking sector in developing eGovernment in Serbia?
– The new service on the eGovernment portal enables e-payments of administrative charges with payment cards to be performed quickly, safely and easily, in just a few steps. This long-awaited functionality is an important step forward in the digital transformation, and Societe Generale Bank is among the first financial institutions in Serbia to enable its clients to make payments fully online. In addition to ensuring an efficient electronic payment system, the banking sector can help the state and citizens by utilising existing authentication systems that are used in banking operations – primarily dual-factor authentication – for authentication purposes on eGovernment portals.