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Unless you are a corporate with a Citibank account – and there are many in this country – your understanding of the bank in Hungary might well be limited to the sale of its retail business to Austria’s Erste back in 2015. But Citi has been in Hungary a long time, and it is committed to staying, Citibank Europe Plc CEO Zdenek Turek tells the Budapest Business Journal in an exclusive interview.
“We like Hungary. We have been here since 1985. Today, in addition to our core banking business, we operate our own service center here with more than 1,800 people, supporting the whole of Europe and beyond, and supporting our Dublin headquarters,” Turek says. “We have a lot in Hungary, that means we believe in it, are committed and want to grow our business here.”
He was making a whistle-stop visit to Budapest, seeing staff, alumni and clients of the bank, after what he characterizes as a “very good year” for Citi. But – and this must be something of a double-edged sword for the current CEO of Central Europe and country head for Hungary, Kevin A. Murray – Turek also has a personal connection to the country; older readers might well recognize that distinctive Czech name.
“I monitor this branch very closely,” Turek admits. “I used to work here for three and a half years; it goes to my core.” He did not just work here, of course. In 2002, he was made Citi country officer of Hungary, while also overseeing a Central European cluster of five countries.
Let’s deal with that service center first: is Hungary’s labor crisis making it hard to find colleagues? “Yes, there’s pressure there. SSCs are an area in which people change jobs more often. So, we have to defend ourselves. How? We work with the best people. We are good at retaining well qualified middle managers. Part of it is to make sure you have interesting jobs for people, and that may mean moving less interesting jobs to other territories,” Turek explains.
Developing the Curriculum
“Another part is to work with the education system, the universities, to help develop the right curriculum.” Colleagues need the right skills sets – soft and hard – to prepare them for a working life very different to what has gone before, he says.
“Last, but not least, we are international, so some gaps [that are hard to fill] we can cover from our network. We can get people here on assignments from elsewhere.” And that is also a two-way street, Turek points out. Hungarians who are interested in broadening their horizons can seek assignments across the borders.
Did the sale of the retail business have any impact on business? Turek shakes his head. “We worked with our partner [Erste] very closely to ensure there was a good outcome for our retail customers. I do not think it impacted us in any negative way.” He makes the point that, since the sale was part of Citi’s global reposition away from retail markets, corporate clients could see it would leave the bank better able to focus on them.
Those clients are drawn from three major groups: large Hungarian firms, often with an international outlook; SMEs on a growth path; and the subsidiaries of multinational companies operating in Hungary, “a traditional stronghold” many of which have been with Citi since it opened in Hungary. “We are a window for foreign companies coming into Hungary and a window for Hungarian companies going abroad.”
Citi’s success is built on a number of factors, Turek says. “It has been a very good year. The economy is growing very nicely, and not for the first year, so the macroeconomics are helping us, but most importantly our clients are doing well. Hungary faces some challenges on the supply side, primarily labor; that tells you capacity issues might become cost issues as labor becomes more expensive,” he notes.
That said, investments are still being made, and companies are still growing. So what is Turek’s prediction for the year ahead? “A modest slowdown can be expected, but still very good growth.” And the banks are part and parcel of that. “The banking sector is in good shape. Banks are lending, but it is very competitive.”
Broadly speaking, the same picture can be seen across the region, he says. Poland, clearly, dominates through the sheer size of its market. Hungary is more comparable to Turek’s homeland, though he points out one interesting difference. “There are a lot of international companies that came here [Hungary] in the ’80s and ’90s. These are more sizeable compared to the Czech market; there are more local companies there.”
The area of differentiation for corporate banks in the very near future will be digitalization, the CEO says. “It has [already] changed the landscape in retail banking.” He expects commercial banking to follow suite, with “straight through processing” (electronic account-to-account transfers without human involvement) dealing with perhaps as much as 90% of transactions “because we want it and the clients want it [….] transparency of transactions and speed will be the battleground for banks”.
But if that sounds like a call for a digital revolution, then it is not one devoid of personal interaction. “People will always need to be part of the equation. I am not saying banking will become the play of machines. Your people, that is where the value is added.”
Citi is in the process of looking at what services it should provide; banks must specialize, he says. “Today, many banks are still trying to run a very universal model. We should identify what we are really good at and concentrate on that.”
Zdenek Turek is CEO of Dublin-based Citibank Europe Plc., which employs 9,000 people across 22 countries. He is also the Europe cluster head, which includes 25 countries across the region. He joined Citi in his native Czech Republic in 1991, before moving to Citi Romania in 1998 as Citi Country Officer. In 2002, Zdenek became Citi Country Officer of Hungary, while also overseeing the Central European Cluster of five countries. He has also worked at management level for Citi in South Africa, Russia, and the United Kingdom
Zdenek was born in Kolin, Czech Republic. He graduated with an MA in Finance and Banking from University of Economics, Prague in 1986. His further studies included the Advanced Management Development Program at the Wharton School of the University of Pennsylvania in 1997 and the Executive MBA program at INSEAD, from which he graduated in 2010.
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