The banking system could undergo a "sudden change" of landscape in the coming period, given that the overall population is underbanked, while there are too many banking branches in urban areas.
"We might witness a sudden change of the banking market, with a drop in the number of branches and a shift towards alternative channels," says Razvan Munteanu, vice-president in charge of retail operations at Raiffeisen Bank.
He explains that there has not been much pressure for consolidation in the system yet, despite the relatively high number of banks, in the context where most players are owned by regional groups and have a relatively short history on the market. Practically, the only merger in recent years was determined by deals sealed abroad.
Several medium-sized players announced as early as last year their intentions to heighten their focus on alternative channels in a bid to avoid the high cost of network expansion.
Claudiu Cercel, head of the Market Operations Department at BRD-SocGen, also believes alternative channels could be looked at with rising interest after office efficiency deteriorated. Banks could also boost the efficiency of branches through cross sales with external partners from other fields.
Catalin Parvu, general manager in charge of retail and operations at Piraeus Bank, also considers that up to 30-40% of loan sales could be operated through alternative channels. Internet banking can also become a powerful channel, says Cercel. This way, branches will no longer be overcrowded and sales officers could focus on the sale of higher added value products.
Despite allowing for costs related to the operation of a territorial network to be avoided, loan sales through intermediaries require the development of some risk management policies that should allow for the quality of released financing to be kept under control, Parvu says.
In fact, the population's overdue payments have been rising steadily in recent months, although their weight in overall credits remains moderate, says Ion Dragulin, head of the Financial Stability Department of the NBR. In 2007, the population became a net debtor to the banking system on the foreign currency side.
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