Nicolae Andrejka, retail director of ING Bank, in dialogue with Cătălin Bălan, CSALB communicator

Katalin Balan: What is the bank doing in relation to consumers to make financial education useful for them to present this somewhat nebulous subject more concretely?

Nikolay Andreyka: I believe that our relationship with money is deeper, more complex, and much larger than our relationship with the bank. The fact that I buy a new phone or go on an amazing trip that I can afford or not depends on how we feel about money, not on the direct relationship between the customer and the bank. What does the bank do? I will give an example of a strategy at the level of the ING group in Europe and Australia. This strategy has two pillars: customer experience and sustainability. There are two big themes in the field of sustainable development: financial education and the green economy.

Romania is a country with an insufficient level of the banking system, we have a population that has very poorly developed relations with the banking system. If we measure bank assets relative to GDP, we can still consider ourselves an underdeveloped market. This does not mean that we do less, but that the battle is harder, that we have more work to do.

Therefore, banks should be careful when offering simple products to their customers. Easy to understand, easy to use, no fine print or hidden features. Second, to help customers use these products in the right context for their needs.

Another major area of ​​activity is the fight against fraud. In recent history, we have had situations where people provide their credentials to online banking platforms or access their cards and make transactions on their behalf. We need to make a big effort to raise awareness of the methods by which this fraud occurs, by which fraudsters reach, convince and gain access to the financial resources of bank customers.

Katalin Balan: How are consumers responding to your financial education programs?

Nikolay Andreyka: We see people improve, adjust their financial behavior and know much better what to expect and how to prepare. We try to introduce people to the basic concepts of economics, but mainly budgeting.We started with a few thousand people a year participating in such sessions, we reached several tens of thousands. About 15% of the client portfolio went through these sessions, but these programs are not only for our clients, they are generally for the population that interacts with the bank, or even for those who do not interact with the bank and now we are going, for example, to high schoolers or freshmen who are at the beginning of their economic life, they have money, a budget, cards for the first time, they have to manage it, and we try to do that part of the learning much earlier.

It is not easy for many of us to keep a list, a spreadsheet, Excel, in which we can enter what incomes, what expenses, have a forecast. One of the main mechanisms we try to convey to clients and non-clients is how to make a plan: what is our household income, what are our needs, what are our recurring expenses, what are our plans, what are we left with, so that this projection can be made in the medium term, and a person will know at a certain moment whether he is tempted by an exotic vacation, whether he can afford it now or next year.

I’ll give an anecdotal example: I was at an agency last year and I had a client who was somewhat intrigued that the bank wouldn’t give her a loan that she wanted to buy her child the newest and most expensive model of phone on the market. However, love doesn’t mean the latest and most expensive phone model, especially if you can’t afford it. If you go to the bank and are told that you should think again because you really can’t afford it, there’s no point in trying to get into more debt.

Katalin Balan: Is there a direct relationship between financial education and the fact that there are few loans to the population?

Nikolay Andreyka: I have been working in this field for more than 20 years, and I always hoped that the level of financial intermediation would increase. It could be a cultural thing, a mindset thing, related to debt service and financial literacy, for sure. More importantly, we don’t have any money saved up. A large part of the population does not have the resources for the dark days, or those who do, do not have enough of them. Here we are not only talking about immediate and urgent needs, but also about resources allocated for protection: products that will protect you from accidents and disability if you lose your job, or products that also have an investment component.

We should not consider syllables only as a variety buffer short term because our life is more than a short term. I don’t think we’re very inclined to think about our retirement now, and it’s probably the education here, the local culture where, say, our parents are used to, they work, they retire, the government takes care of the option pay if you go – pay them pensions. What we see is that, not only in Romania, but also in more developed countries, states are having trouble paying sufficient, decent levels of pensions for longer and longer periods, because life expectancy is increasing. There they ask the question “how can we maintain a decent standard of living when we leave the labor market, from activity.” And we should ask ourselves these questions much more meaningfully, and we do not have this reflex. Therefore, pension and insurance institutions should promote financial education.

Katalin Balan: ING operates in many countries. How are things there? Are people saving more? Will pensions and private insurance play a bigger role?

Nikolay Andreyka: It is clear that we have a shortcoming, a lack of adaptations and understanding of financial mechanisms. In Holland, for example, the world’s first stock exchange was founded in 1600. Most likely, if you get into a taxi in Amsterdam, the driver will be able to talk about stock option. So it’s the level they’re used to, the society, the contacts they have at home, in the environment they live in, at school, what they read in the press, gives them a much better level of understanding. We had a disadvantage – we are a poor country.

Now we are not such a poor country anymore, so it is no longer an excuse for us to save a single lei anywhere. We save less than the Dutch, but we should be able to save in proportion to our purchasing power. So, it is about education, thinking and culture. For example, the Romanian economy is much more resilient compared to the financial crisis of 2008-2010. In 2009, when the real estate boom ended, the economy stalled. Now we were in a much better situation, we continued to invest, the government continued to spend, people continued to spend, buy, and the economy not only did not stop, we had healthy economic growth year after year during the pandemic, with war on the horizon, econ. This is a sign that the engines are much more powerful.

Katalin Balan: Could the increase in lending also come from consumer confidence that the bank will find a solution if they run into trouble?

Nikolay Andreyka: definitely! When we have a mortgage, the discussion with the client is this: we have a 30-year contract, a lot can happen during that time, there has to be trust on both sides that if something difficult happens, we will overcome it together. You cannot expect that life will be linear, that everything will be smooth for 20-30 years. The model proposed by CSALB provides the expertise and influence that an independent third party can have. And here I mean peace mediators.

Katalin Balan: How do banks perceive the NBR’s cautionary recommendation?

Nikolay Andreyka: Deeper than strategy, one of the bank’s guiding values ​​is caution. As for lending and investments, where there is risk and money can be lost, we try not to expose the bank or the clients to unnecessary risks. There is a risk that some people who are in debt will eventually have problems and not be able to repay the money. It is a traumatic experience to be listed as insolvent, to be registered with the Credit Bureau, to be unable to borrow for a while and to have your credit rating deteriorate, and if you can borrow, with a much higher interest rate, because the price of the risk associated with your person, much higher.

We came out of the pandemic years with softer scoring and credit conditions than those with which we entered, precisely because the credit portfolio and the behavior of credit consumers in Romania were impeccable. Few had problems, most were afraid that there might be problems. We have to realize, accept that the economic cycle comes – this is an English saying “expect the best, prepare for the worst“, so we can hope that it will be good, but we also have to be prepared for situations where it won’t. I need to have some white money for the dark days, not go to the maximum level of debt, hoping that my income will grow faster than the rate. In context boiling economically, when interest rates go up, I will exceed the debt limit.

Article supported by CSALB