Transformation of the banking sector during the war: no pause for change

On 4 September, Kostiantyn Khvedchuk, Director of the Strategic Management Department of Pivdenny Bank, took part in a panel discussion organised by CFA Society Ukraine on the topic “Transformation of the banking sector during the war:  no pause for change.” The discussion brought together representatives of the regulator, international financial institutions and commercial banks.

Kostiantyn noted that banks today largely earn from free liquidity, which creates certain risks. “After the full-scale invasion, the ratio of customer funds to loans increased significantly due to the introduction of capital movement restrictions. This reduces the incentives for active work with clients,” he said. In his opinion, in the medium term, banks should prepare for the possibility that free liquidity may shrink, and both banks and the NBU should already be developing scenarios for their actions and applying liquidity management tools.

The second systemic challenge he highlighted was people: “The demographic situation is no longer a risk but a trend. We feel a shortage of personnel, and this creates an operational risk: there is more work, but fewer qualified people,” Kostiantyn stressed. He is convinced that solutions must be found through process automation, function optimisation and care for staff.

Commenting on the lending situation, he pointed out that loans are being created – according to the Bank’s estimates, last year the portfolio of net hryvnia loans to businesses grew by 20%, and by the same amount in just the first half of this year. “Most loans now finance working capital. That is good, but we also need investment loans and project financing. Here it is important that the state remains a reliable partner, with no delays in interest compensation under support programmes,” he emphasised.

Concluding his speech, Kostiantyn returned to the issue of personnel. “Banks compete not only with each other but also with ‘abroad’. If we create better conditions internally, people stay, and this is even inspiring,” he said.

According to him, employee development has become part of the Bank’s strategy: in 2022, strategic goals focused on personnel were defined: “Last year, 70% of managerial appointments were internal. This year we aim for 80% – and we want to retain them.”

As an example of cooperation with the educational environment, Kostiantyn spoke about the Academic Hub Pivdenny project in partnership with Taras Shevchenko National University of Kyiv. Within this initiative, the Bank’s top managers teach students the course “Managerial Thinking: Modern Approaches and Practices”, which consists of workshops and seminars and is an elective credit course at the university.