Volksbank, the eighth largest bank in the system in terms of assets, will introduce value-added products and service packages to its offer and drop its current strategy to stand out by offering low-interest loans.
However, the improved range of products will need to secure additional sources of income in the future, given that reduced margins have put pressure on gains generated from financing operations.
"Interest rates have dropped a great deal and we can no longer stand out just through costs. While we still want to be aggressive through prices, we'll try to offer different services, which provide advantages for customers," says Gerald Schreiner, Volksbank Romania chairman.
In 2005, when they began their first foray into retail, the Austrian bank tried to stand out with attractive interests rates for loans and was the only bank in the system to cut the annual interest rate for RON loans below 10%. Volksbank has structured its offer around mortgage loans, which are viewed as a "central product". At present, Schreiner says real estate financing will continue to be important, but the bank will centre on other products and services, as well, which can bring additional benefits for customers.
In the following period, the bank will re-launch its Internet banking service, which will have additional features and services.
"So far, we've focused on sustained financing dynamics. In the second phase, we'll centre on cross sales and value-added products. It's going to be more difficult," believes Schreiner.
The chairman wants 40% of revenues to come from non-risk products by 2010, against 26% at present. "It's only this way that we can offset the lower loan margins".
In the first phase, Volksbank will promote a current account-based package, which will also include debit or credit cards and access to Internet banking services. Schrein
