Key projects and innovations of mBank Group in 2016
Cooperation with Orange
[G4-4] It has already been two years since the joint-venture of mBank and Orange, Poland’s leading landline telephone, mobile, Internet and data transfer provider, called Orange Finanse, was launched.
At the end of 2016, the number of Orange Finanse accounts reached 330 thousand, including approximately 100 thousand opened in 2016 alone. Orange Finanse became one of mBank’s key acquisition channels.
2016 was a period of changes in the product offer supported by marketing campaigns promoting the Orange Finanse brand among the existing and prospective clients of Orange. The key component of the new offer is the option for active users of the Bank’s services to lower their monthly phone bills in a period of up to 24 months and to open a free account (under no extra conditions) with a payment card, bank transfers and withdrawals from all ATMs free of charge in Poland. The offer is addressed to Orange subscribers, and since November 2016 it has also been available to those who buy Orange prepaid top-ups.
In 2016, Orange Finanse was enhanced with new interesting functionalities in the mobile application and online banking. A dedicated version of Orange Finanse for Windows Phone was released. iOS users can now log into the application with a fingerprint. By clicking a dedicated button in the mobile application, the users of all platforms can now quickly get in touch with the Bank’s contact centre, a one-of-a-kind solution on the market. It is also worth mentioning that new deposits for new funds and the option to pay bills using the Direct Debit in on-line banking were introduced. Orange Finanse clients were also given the opportunity to apply for child benefits under the Family 500+ Programme and to make transfers using telephone numbers within the BLIK system. The offer was also expanded with the Payment Assistant, which is a unique solution on the Polish market, sending text messages reminding clients of upcoming transfers, and with 3D secure, a service ensuring security of online payments. Moreover, the website www.orangefinanse.pl now offers account comparison tools, which allow visitors to compare accounts offered by various banks, and a calculator of exact costs of a cash loan in Orange Finanse.
A new, more comprehensive credit offer was introduced in 2016, as well. The existing clients of Orange Finanse can now take out cash loans of up to PLN 150 thousand in all Orange stores. In addition, the loans are also available to clients who do not want to open personal accounts. In June, a new special offer was launched in Orange stores. New clients were given the option to buy holiday gadgets for PLN 1 with contactless payments or BLIK.
H2 2016 was marked with further efforts to enhance selling competences of Orange stores’ employees. Tests of new selling scenarios and client communication methods were conducted and a series of training sessions was implemented to broaden the knowledge on Orange Finanse products. In order to optimise campaigns addressed to new and existing clients of Orange Finanse, a number of measures were taken in 2016, i.a. new educational campaigns on online banking and mobile application were implemented, a regular e-mail newsletter was launched and effectiveness of acquisition activities was increased.
Plans for the future aim at developing the deposit and credit offer. This includes addressing the Orange Finanse offer to clients of Orange fixed-line services. Moreover, constant efforts are taken to make the latest technology of mobile payments based on Android Pay available to clients. Further measures aimed at improving selling competences of Orange Polska stores’ employees are to be taken as well.
In September, Orange Finanse ranked second in the mobile banking category of the Newsweek’s Friendly Bank ranking (mBank ranked first). This means advantage over competition in terms of easy navigation in mobile application, effective channels of communication with the Bank and services and functionalities available in the application.
Program ALM (Asset and Liability Management)
At the beginning of February 2015, the Bank launched the ALM Project. Its aim is to consolidate the systems of interest rate risk, market risk and liquidity risk, the funds transfer pricing system and the Bank’s Treasury system into an integrated ALM System. As a result, the Bank will improve the quality and effectiveness of balance sheet and net interest income management processes. Through working on the implementation of the ALM System, the Bank strives to eliminate redundant systems and processes for collecting and processing data, reporting processes and analytical tools, which will translate into the improvement of the Bank's cost-efficiency. In addition to the above objectives, the system is meant to automate the processes of management of Treasury and Risk areas, assets and liabilities, controlling and finance by collecting and storing complete input data processed by a complex calculation engine. It will make it possible to create consistent simulations, analyses and reports to be distributed to various stakeholders.
In 2016, an integrated data layer together with a module supporting the liquidity risk management process was made available within the project. The following project priorities are planned for the next year: construction of further modules, including the FTP module and a module supporting the interest rate management process.
Integration of Dom Maklerski mBanku and mWealth Management within the Group’s structure
[G4-13] In Q4 2015, the management boards of mBank and Dom Maklerski mBanku and mWealth Management signed the division plans marking the first stage of the planned integration of the companies within the Group’s structure.
In May 2016 the integration of the brokerage operations into an expanded brokerage bureau of mBank was completed. For the purpose of the integration process, the subsidiaries mDM and mWM were divided.
The division of mDM was effected under Article 529 para.1 item 1 of the Code of Commercial Partnerships and Companies and included a transfer of the organised part of mDM’s enterprise connected with the provision of brokerage services to mBank and a transfer of the organised part of mDM’s enterprise connected with servicing and rendering of human resources and payroll services to mCentrum Operacji Sp. z o.o. The division of mWM was effected under Article 529 para.1 item 1 of the Code of Commercial Partnerships and Companies and included a transfer of the organised part of mWM’s enterprise connected with the provision of brokerage services and the remaining operations not constituting the operations of the Real Estate Market and Alternative Investments Bureau to mBank and a transfer of the organised part of mWM’s enterprise connected with advisory and agency services in the scope of purchasing and investing in real estate and other alternative investments for the benefit of natural persons and real estate market analyses to BRE Property Partner Sp. z o.o. (non-consolidated subsidiary). On May 20, 2016 mDM and mWM were struck off the National Court Register.
The division ultimately resulted in integration of the brokerage operations of mBank, Dom Maklerski mBanku and mWealth Management in an expanded brokerage bureau of mBank. By bringing the brokerage operations under one roof, mBank Group is able to offer an optimum portfolio of brokerage services to all its client groups, both individuals and institutions. Integration will allow the Bank to better use its resources and potential, thus giving the brokerage services of mBank Group a greater competitive advantage.
Changes in the Group’s funding structure
Issue of covered bonds
mBank in cooperation with mBank Hipoteczny pursues a strategy designed to issue covered bonds secured with liabilities backed by mortgage loans, allowing for the narrowing of the maturity gap between assets and liabilities and cutting the cost of new funding.
In 2016 mBank Hipoteczny issued covered bonds worth in total PLN 850 million and EUR 168 million, with maturities ranging from 4 to 10 years. The issues in zloty placed in April and May 2016 were the first issues of covered bonds bearing interest at a fixed rate in Poland.
The following table presents the issues in 2016.
|Volume||Currency||Date of issue||Maturity||Tenor (in years)||Coupon|
|300 M||PLN||09.03.2016||05.03.2021||5.0||WIBOR 3M + 120 bps|
|50 M||EUR||23.03.2016||21.06.2021||5.2||EURIBOR 3M + 87 bps|
|50 M||PLN||28.04.2016||28.04.2020||4.0||fixed (2.91%)|
|100 M||PLN||11.05.2016||28.04.2020||4.0||fixed (2.91%)|
|70 M*||EUR||19.08.2016||28.08.2019||3.0||WIBOR 3M + 77 bps|
|13 M||EUR||28.09.2016||20.09.2026||10.0||fixed (1.18%)|
|35 M||EUR||26.10.2016||20.09.2026||9.9||fixed (1.183%)|
|400 M*||PLN||15.12.2016||25.07.2018||1.6||EURIBOR 3M + 136 bps|
* Private placement.
Bonds issued under the EMTN Programme
In Q1 2016 mBank updated the Prospectus for EUR 3 billion Euro Medium Notes programme (EMTN). On March 23, 2016 the updated Prospectus was approved by Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. The programme aims at issuing debt securities by mFinance France, a subsidiary of mBank, in many tranches and currencies, with diversified interest structure. In Q3 2016, mBank via its foreign unit mFinance France issued a sixth tranche of Eurobonds with a nominal value of EUR 500 million, maturing in 2020. This 4-year transaction was priced at 1.398% per annum.
The issue was of significant interest to the European investors (135 investors), with a final order book size of EUR 1.3 billion. The transaction settlement date was September 26, 2016. The tranche was rated at "BBB" by both S&P Global Ratings and Fitch Ratings.
The following table presents a summary of outstanding tranches.
|Currency||Amount||Date of issue||Maturity date||Tenor (years)||Coupon|
* Private placement.
Funding from European Investment Bank (EIB)
In June 2016, mBank obtained additional funding from the European Investment Bank - a loan of EUR 100 million with a maturity of 8 years. The total debt of mBank towards EIB in euros stood at EUR 946 million and in American dollars at USD 3,387 million on December 31, 2016.
Credit lines from EIB are intended to finance projects implemented by micro, small and medium-sized enterprises with less than 250 employees and to finance projects implemented by companies employing at least 250 FTE, but not exceeding 3 000 employees (i.e. mid-caps).
Bilateral agreement with Industrial and Commercial Bank of China
In May 2016, mBank signed an agreement with Industrial and Commercial Bank of China (Europe) under which ICBC granted mBank a 3-year loan in the amount of EUR 130 million. It is the first loan that has been granted by ICBC to a Polish bank.
Innovations at mBank Group and plans for 2017
In 2016 most of the capital expenditures were spent for technological development. It allowed extension of mBank’s offer supplying clients with highly innovative and convenient transactional solutions.
We delivered a brand new interface for corporate internet banking system (CompanyNet), redesigning customer process flow and allowing migration to electronic documentation. Thanks to simplified processes from customer end, transaction number growth is expected. Next quantifiable result of the project will be additional revenue stream from electronic banking fees. The ultimate benefit is creation of coherent internet and mobile ecosystem designed for corporate customer.
New CRM - the project aimed to simplify processes, optimize the ergonomics and redesign the GUI (Graphical User Interface) to be cross-platform compatible. These changes enable end-users (relationship managers and branch managers) to exchange information in a more efficient and mobile way. The goal was to deliver a brand new user interface for corporate CRM system to enable mobile sales management. Ultimately this will lead to sales increase and speed up internal sales processes.
Further development of mBank’s mobile banking application: the aim of this project was to move transactional features from Internet Banking to mobile scenarios (i.e. transactions planned, periodic payments, CRM features, card management). Moreover it delivered new features (i.e. push notifications, inbox, CVC mobile) and refreshed mobile apps by re-building their navigation, information architecture and look & feel as well as provided new tools for sales and communication within the app.
CRM 3.0 - project implemented the new CRM in WEB version enabled centralisation of applications used in sales activities. It resulted in extending client-content information supporting sales in Call Centre.
New Application System aiming at implementation of a new motion system. The system is a platform for customers, which supports sales campaigns for the whole Bank.
Other investments focused on improvement of the IT security, enhancement of the IT infrastructure, integrating brokerage services within mBank Group and assets & liability management. Moreover, the One Network project has been continued, enabling all customers groups to take advantage of an integrated branch network. 2 new Advisory Centers and 8 Light Branches were open during the year, 5 and 11, respectively, are scheduled for the next year.
As a result of investments spent in 2016 mBank is perceived as a financial institution which sets standards of modern banking. The main focus was not only the acquisition of new customers but also further expansion of cross-selling activities.
In 2017 mBank is going to maintain its organic business growth as well as further develop its specific business model (mobile, direct focus) – differentiating the bank from the competition.
mBank will seek to leverage on its proven ability to incubate high potential financial services and projects. Investments planned for 2017 will strengthen our outstanding digital competences and allow to attract a “digital company” valuation premium.
At the same time we are going to set the pace for the mobile banking revolution. Capital expenditures budgeted for 2017 should develop the “mobile (banking) first” approach within customer-friendly, omni- channel access to the bank. The ultimate goal is the intuitive, simple, hassle-free, friendly banking. e.g. enhancement of navigation, add-on tools to support financial analysis for the customer and extended on- line communication with the customer.
Spreading technological solutions and demographic processes change customers’ behaviours. They are increasingly eager to use non-branch banking as their primary source of contact. The proper understanding of client’s behaviors and preferences, mainly concerning the young generation of customers plays a key role in their acquisition and retention. Investments focused on this goal will allow responsible offering of solutions based on knowledge about clients and adjusting the right offer to the right client. Furthermore it will strengthen mBank’s client acquisition capabilities, especially targeted at the young customers.
Efficiency should support mBank’s profitability in times when returns from core banking products are under growing pressure. This will be supported by digitization and standardization of customer oriented as well as internal processes. mBank’s efficiency will grow due to capital expenditures allowing rational resources management, including operational costs, capital and financing.
As a result of investments aiming at extension of mBank Group’s offer we will supply our clients with highly innovative and most convenient transactional solutions and further improve mobile banking offer also for corporate customers.
And last but not least project planned for 2017 aims at building the new headquarter in Łódź. It was launched at the end of 2016, but the main expenditures are scheduled for 2017. The brand new headoffice will support and foster mBank’s innovative culture by providing motivating environment for staff in order to remain standard setter in modern banking. The new office standard in accordance with modern trends will stimulate motivation and engagement in the team.
Awards and distinctions
Product offer and customer service quality
- In the Golden Banker ranking, mBank ranked second in the “Golden Bank” main category for the highest quality of service and won in the “Advertising Spot” and “Socially Responsible Bank” categories. Moreover, mBank received the “Best Practices in System Security” special prize.
- mBank won the Service Quality Star 2016 in the “Banks” category for the most recommended personal account in 2016. The Bank also received “The Best Bank for Companies” title by Forbes monthly magazine.
- During the Polish Card Gala, which took place in December, the MasterCard Me credit card won two awards in the following categories: the most innovative Polish card of 2016 and the best advertisement for a card product in Polish media in 2016.
- mKsięgowość, a unique service which combines accounting with a bank account and allows clients to keep accounting books smoothly, almost automatically and independently, was awarded in the international Innovation Awards contest organised by Efma together with Accenture. Victory in the competition is determined by votes of financiers from 88 Efma countries.
- mBank in the Czech Republic received three awards, one golden and two silver, in the prestigious “Zlatá koruna” competition and voting. mKonto Business won in the entrepreneurs category (first prize), mKonto in the audience category (second prize) and the transaction service in the on-line application category (second prize).
- In the fifteenth edition of the “Newsweek’s Friendly Bank” ranking, mBank ranked top in the mobile banking category. The mobile application “Orange Finanse”, a project implemented by mBank in cooperation with its strategic partner, Orange Polska, ranked second in the mobile banking category.
- In the Mobile Trends Awards competition, mBank’s mobile application won the first prize in two categories: the Mobile Banking category (jury’s verdict) and the Mobile Trends Awards special prize category (votes cast by Internet users). Mobile mTransfer also won two awards and was ranked first in the company supporting popularisation of mobile techniques and technologies category (jury’s verdict) and second in the Mobile Trends Awards special prize category (votes cast by Internet users).
- For the eight time, Private Banking of mBank was hailed as the best in Poland by Euromoney Magazine, a British financial magazine. mBank was also appreciated in six competition sub-categories, among others, for the best specialist services for the most affluent clients, asset management and intergenerational wealth transfer.
- For the fifth time in a row, Private Banking of mBank received the highest, Five-Star distinction awarded every year by Forbes magazine. The authors of the ranking appreciated the bank for setting the standards of private banking in Poland, as well as for its broad, customized offer and development of mobile banking.
- mBank’s private banking has yet again been recognised as the best in Poland by the prestigious magazines PWM and The Banker.
- In May 2016, active participants of the capital market were granted the awards of the WSE, BondSpot and KDPW for 2015. Dom Maklerski mBanku won awards for the highest total value of IPOs on the WSE organised in 2015 and the highest value of trading in non-treasury bonds on all markets listed on Catalyst and the highest share of the market maker in trading in shares on the main floor. Furthermore, mBank was awarded by the WSE Catalyst in the “highest value of non-treasury debt instruments listed on Catalyst in 2015” category and received KDPW’s award for the largest volume and highest value of OTC transactions cleared at KDPW in 2015 and the highest share of the market maker in trading in shares on the main floor.
- mBank was named the Best Trade Finance Bank in Poland by Global Finance. The following areas were assessed: trade finance volumes, comprehensiveness and innovativeness of the product offer, transaction competence and experience, as well as the scale of pursued business activity.
- Trade & Forfaiting Review (TFR), the leading industry information service uniting world’s biggest banks which offer Trade Finance products, hailed mBank as the best bank in Poland operating in this area.
- mBank also won the “Diamonds of Private Equity” prize in the Bank of the Year category (Diamonds were awarded by Executive Club).
- mBank triumphed in the innovation category in the Banking Stars competition organised by Dziennik Gazeta Prawna daily and partnered by PwC. Furthermore, mBank also took the second place for overall performance in the same competition.
- mBank was named the Best Digital Bank in Poland by Global Finance and distinguished in the Best Online Treasury Services category in this year’s edition of the annual contest.
- Factors Chain International, the biggest industry organisation, hailed mFaktoring as the best company in terms of the customer service quality in import factoring.
- In the seventh edition of the Employer Branding Stars contest organised by HRstandard, which aims at determining leading companies as regards creating the employer image in Poland, mBank ranked first for its image and recruitment campaign “Get a Taste for Career at mBank” (“Zasmakuj kariery w mBanku”) and for the best recruitment materials in the “Banking Talents” (“Bankowe Talenty”) campaign.