Interview with Peter Philippaerts, Head of Retail and Commercial banking (RCB) at Belfius (1/2)
More than one year after Dexia bank's buyout by the Belgian State and its recent name change, Peter Philippaerts, Head of RCB at Belfius, took the time to share his insights with Sia Partners on the Belgian retail banking industry and allowed us to have a look behind the scenes at Belfius bank.
Presentation of Peter Philippaerts
Peter Philippaerts is currently Head of Retail and Commercial banking, i.e. he is in charge of the 800 Belfius branches, as well for the sales as for the support functions.
SIA: What is your current scope of action?
P. Philippaerts: I'm currently in charge of the sales division. Its main tasks are: process industrialization and operational excellence, starting up of client files, organization of trainings, ensuring that processes are aligned with client needs, etc. This division also contributes to the innovation within the network by creating new ideas and by implementing uniformly these actions in time across the 800 Belfius branches. One could thus consider the sales division as the "Voice" of the network with a particular strength in process speed.
It is also important to mention that the implication and the added-value of the Â« sales Â» division will vary according to the client segment we are dealing with.
For instance, the "daily" segment regroups clients who are often using highly industrialized products such as current accounts, savings accounts, mortgages, etc. For these types of products every aspect will be treated directly by the sales division and its processes and not by the agency network. On the contrary, as the complexity of our products starts to increase, a more tailored approach is necessary to treat our client's requests. In general this is the case for products intended for clients from the "affluent" segment (i.e. private & business clients). Hence, our agency network receives dedicated trainings concerning these products. Also, more time is stretched out to inform our salespeople before a product launch. This allows our network to be fully autonomous in responding to these queries, with the result that clients are contacting their agency instead of going through the standardized process approach.
Finally, our sales division will soon take over the responsibility for the multichannel strategy. At the moment our direct and indirect channels are treated as separate entities but they will be grouped together as soon as the sales division will take over.
SIA: As expressed in the November Belfius press review, the bank positions itself as "a bank owned by the Belgian society and for the Belgian society". Do you believe there are specificities linked to the Belgian retail banking industry that need to be taken in consideration? If yes, which ones?
P. Philippaerts: Yes, I'm convinced that - even though we are moving towards a European single market for financial services and consumer behavior is partly converging across borders - , there are still a number of important differences related to the Belgian market such as the degree of market concentration and the pressure it entails; the fact that Belgium has three official languages, and the very tight revenue margin on loans. Especially this last element constitutes an important difference opposed to other countries like the Netherlands and the UK.
To that we should also add that Belgians exhibit a specific consumer behavior (as opposed)/compared to their European counterparts. For instance when it comes to online banking the Dutch population is much more advanced than we are. If we look at the online distribution of loans, the Dutch have reached (?) 20% of loans sold through the internet, whereas in Belgium this number is significantly lower. Also in terms of means of payment Belgians are still using enormous amounts of cash to finance their transactions. I believe these differences can partly be ascribed to culture.
Finally, the regulation in the European Union isn't harmonized yet. For instance, in Belgium doorstep selling of investment products isn't allowed. However, loans can be sold at the client's home, but since margins are very low in Belgium this practice isn't really adopted. On the contrary, in the Netherlands there is a law that stipulates that, when you sell a loan to the customer, you have the right to charge the customer € 2,500 on top of the price of the loan. By definition, this law facilitates and increases the margin on credit sales as this compensation can cover immediate expenses that were incurred for the sale of credit (e.g., moving to the customer's home).
SIA: Do you believe these differences have a direct impact on the way you are organized today?
P. Philippaerts: Yes, there is a clear impact. If loans are the main business driver, as it is the case in Great Britain and the Netherlands, banks are more likely to send out mobile agents who on average spend more time to contract a loan. As a result, the size of your branch network won't be as important as it would have been if investment products were the principal revenue generator. In fact, as I mentioned earlier, in Belgium investment products aren't allowed to be sold at the client's home. Therefore if you want to build up client proximity and confidentiality, you will need a large branch network to secure these goals. This will obviously impact the way you're organized and how your processes are built up.
SIA: Do you feel the current financial crisis has impacted consumers' behavior and hence the way banks should run their operations?
P. Philippaerts: In Belgium, two major banks have been most strongly affected by the crisis, one of which is Dexia (nowadays called Belfius). The effect on Belgian customers and hence on our business shouldn't be underestimated; people are really shocked by the crisis and have fundamentally changed their behaviour. In fact, even after the buyout of the Belgian state and our name change to Belfius; many of them are still convinced that the bank will go bankrupt. We believe it will take at least from 2 to 3 years for people to regain trust in us. That is why today, at Belfius, "quality" has been put on top of our strategic agenda.