Rostislav Rusinov Head of Bulgarian Branch: Digitisation helps us to be customer-oriented and more efficient
Bigbank is a bank founded in Estonia. It specializes in servicing individuals in Estonia, Latvia, Lithuania, Finland, Sweden and Bulgaria, as well as offering deposit products in Germany, Austria and the Netherlands. In recent years, the bank has developed a successful corporate business in the Baltic States. What is the reason for the bank to target and choose the Bulgarian banking market?
The decision of Bigbank to start business in Bulgaria was made in 2020 and was based on an in-depth study carried out in several EU countries. The main reasons for entering Bulgaria are the positive economic perspective and the expected increase in the income of Bulgarians, the prospects for business, the size of the market, the started (at that time) and already relatively developed digitization of banking products, as well as the well-regulated and managed, secure banking market. Of course, the fact that Bulgaria, like all the other countries in which Bigbank operates, is a member of the EU and has harmonized legislation and rules is very important.
Bigbank is a new generation bank - an online bank and does not have physical offices. Can we say that the cost savings of maintaining a branch network, personnel and other associated operational costs of maintaining it is the reason why the bank provides higher interest rates on fixed deposits to its customers?
In any case this is contributing, although it is not the only reason. The truth is that digitization brings efficiency in every sphere, including the financial one.
In the case of Bigbank, the reason for attractive deposit rates lies much more in the bank's business model. In Bulgaria, we do not conduct transactional business, clients cannot open a current account with us. And unlike the big universal banks, we don't have access to this extremely cheap resource. Because when I have BGN 1,000 and I put it in my account in one of the well-known Bulgarian banks, that bank uses my money almost free of charge, excluding the efforts it makes to store it. Sometimes I even pay a monthly fee to this bank. And at the moment in Bulgaria, the market is such that there is a lot of money in such accounts and the big banks do not need to attract funds in exchange for paying interest to the client. Not so with us - we pay good interest rates to attract customers to us and we don't have any fees on our deposits.
And returning again to the fully online model of the bank - we realize that there are customers who are worried about this and probably refuse to work together with us, but on the other hand, the convenience is incomparable and opening a deposit literally takes minutes, including the transfer of the money to us, as Bigbank is part of the instant payments scheme in Bulgaria. And with renewals, it is a matter of time of less than 1 minute.
Bigbank is a bank that offers very attractive interest rates on term deposits. Can you explain how bank deposits are guaranteed?
All deposits in Bigbank are guaranteed up to BGN 196,000, in exactly the same way as any deposit in any EU bank. Here are some more details: Bigbank operates and is registered in Bulgaria as a branch of its parent bank in Estonia. For this reason, deposits are guaranteed by the Estonian Guarantee Fund. If in practice we have a case where the guarantee needs to be activated, customers of the Bulgarian branch of Bigbank will receive notifications from the Estonian Guarantee Fund with the relevant instructions and their money will be refunded.
But the situation described above is purely theoretical.
Still, Bigbank, although not very well known on the market in Bulgaria, is a bank with over 30 years of history, one of the leaders in the banking sector in the Baltics and a deposit bank for tens of thousands of customers from the Baltics, Scandinavia, Central and Western Europe, and from Bulgaria.
You provide the opportunity to open deposits entirely online. Could you explain the process briefly and what is required?
Our clients must be Bulgarian citizens, with the relevant personal documents. After choosing the desired amount, term and frequency of receiving the interest, we ask them to go through identification, which happens with the help of Eurotrust. Then all that remains is for them to specify their bank account, where we will transfer the amount of the deposit and the interest, when they have chosen or wish to terminate the deposit, we will request information about the origin of the funds, according to the practices applicable throughout the EU. Next comes the signing of a contract, again digitally, and we expect the funds to be transferred within 7 days.
We know very well how sensitive Bulgarians are to the banking system when it comes to entrusting their money, and my personal opinion is that the big plus of our deposit products is not only in the price, but also in the process, as well as in the fact that you can for short periods to get good profitability and comfortably get to know us as a partner.
You have been on the Bulgarian banking market for several years. Can you share your impressions of it?
Rather, I will share with you the main differences between the banking market in Bulgaria and Estonia.
If we talk about lending, first of all, the interest rates in Estonia on credit products are higher than those we enjoy here. And if for mortgages this has only been a fact for the last 18 months or so, it is a long-term trend for consumer lending. In Bulgaria, we have access to more registers through which we can evaluate the client, but the processes in case of a possible delay in repayment are actually much more difficult for the client and the bank.
For deposit and savings products, Estonia also has generally higher interest rates. Although those that Bigbank offers in Bulgaria do not differ much from the Estonian ones. At the moment, savings accounts are a hit with them, but here they are almost a forgotten product.
But, if Bulgaria has something to catch up with Estonia on a number of public topics - education, health care, infrastructure, digitalization (of course), then definitely the banking sector in Bulgaria is at the same, and maybe even at a higher level. And this applies not only compared to Estonia, but also to a significant part of the countries in Western Europe - both in terms of the level of products and services, and in terms of quality of service, and in terms of regulations and security of the sector.
A plus for Estonia is that, with regard to Bigbank, this is an example of the expansion of a local bank in other countries. There are also such examples in Bulgaria, but on a smaller scale. 1.
- D. Nikolova, Sofia: Moitepari, 2024