Financial sector news

The National Bank of Ukraine (NBU) expects banks with foreign capital to actively participate in the restoration of the country's energy generating capacities destroyed by Russian aggression. This is stated in a post on Facebook by NBU Governor Andriy Pyshnyi. The NBU Governor also noted that the restoration of the country's energy generating capacities is a matter of national security. The banking system of Ukraine is ready to prioritize this area among its tasks and provide support in the implementation of relevant projects.

Andriy Pyshnyy emphasized that the country is currently facing a significant electricity shortage due to the destruction of the energy system as a result of targeted missile attacks. For several days now, emergency power outages have been introduced in virtually all regions. Experts warn of growing risks to the smooth functioning of the energy infrastructure this summer and fall, so action is needed immediately.

“The potential need for financing in this area is very high. The banking system's capabilities are in the area of lending. This can be credit support for projects to build a large number of distributed small generation facilities, which are relatively safe in terms of risk concentration and the threat of asset destruction. Or much larger projects that can be financed, for example, through consortium lending, where banks pool capital and share risks among themselves,” the NBU Governor emphasized.

Andriy Pyshnyi also noted that various options are being analyzed, and the regulator is ready to adapt certain requirements for banks to promote these projects as quickly as possible. “We are analyzing various options and, for our part, are ready to adapt certain requirements for banks to ensure that the relevant projects move as quickly as possible,” he added.

The first meeting with banks with foreign capital operating in Ukraine has already been held. “Today we have already held the first meeting with banks with foreign capital operating in Ukraine. It is important to start discussing this issue with them, as banks with foreign capital have enormous financial potential and expertise that should be involved in solving the problem,” said the NBU Governor.

He also thanked the banks' representatives for their willingness to carry out in-depth preparatory work. “I am grateful to the banks' representatives for accepting our message and being ready to conduct in-depth preparatory work at the staff level to identify the available capabilities and the most critical areas to which they can potentially be applied,” said Andriy Pyshny.

The NBU Governor emphasized that the banking sector is already doing everything possible, but the demand for investment business loans is recovering rather slowly. “The banking sector is already doing what it can and should do, but objectively, the demand for investment business loans is recovering rather slowly. We need real projects!” he said.

“This is a complex and difficult issue: the demand can be expected to be boosted by maximally simplifying administrative and licensing procedures and a separate state support program, creating competence centers that combine technical and licensing expertise of government institutions, regional aspects and financial capabilities,” the NBU Governor added.

For the second month in a row, Ukrainian businesses have been adapting to the difficult conditions of the war and demonstrating positive expectations for their operations. This conclusion is based on data from Monthly survey of Ukrainian enterprises conducted by the National Bank of Ukraine (NBU) in April 2024.

In April, the Index of Business Expectations (“IBE”) increased to 52.3 points, compared to 52.0 points in March. This indicates that businesses expect economic performance to improve in the near term.

Optimism is supported by a number of factors, including:

• Expectations of increased international financing and improved supply chains.
  
• Seasonal recovery of business activity and growth in domestic demand.
  
• Slowdown in inflation.
  At the same time, the business faces a number of challenges, such as:
• Damage to energy facilities.
  
• Increased logistics and labor costs.
  
• Lack of qualified personnel.
  Despite these challenges, construction and service companies show the highest level of optimism. They expect an increase in business volumes, purchases of raw materials, and new orders. Industrial and trade enterprises also maintained positive assessments of production volumes, new orders, turnover, and purchases.

Against the backdrop of high growth rates in purchase prices, companies in all sectors expect further increases in the price of their products and services. The situation on the labor market remains unstable. Only respondents from the construction industry expect a slight increase in the number of employees. Respondents from other sectors, on the contrary, predict a slight reduction in staff.

Overall, the survey results show that Ukrainian businesses are gradually adapting to the new working conditions in the wartime environment. Expectations of business activity are rising, giving rise to cautious optimism about the prospects for economic recovery.

Ukraine is actively implementing an open banking system that brings significant changes to the banking sector. This system requires banks and other institutions to provide access to customer data to third parties with their consent. This opens up new opportunities for the development of financial services, but at the same time creates a number of challenges that banks will have to address. This was stated by Oleksandr Karpov, Director of the Ukrainian Interbank Association of Payment System Members EMA, on April 3 at the Main Financial Award of the Year ceremony organized and held by the EMA partner, the Association of Ukrainian Banks.

Open banking is a new model of interaction between banks and customers and third-party service providers based on providing access to customer data with their consent. This innovative concept has a significant potential to transform the Ukrainian banking sector, opening up new opportunities for development while posing a number of challenges that need to be carefully considered.

Opportunities for open banking
Open banking can bring significant benefits to both customers and banks.
For customers:
- Increased choice and convenience: Customers will be able to access their financial data from a variety of sources, allowing them to compare products and services from different banks and choose the best deals.
- Personalized offers: Banks will be able to offer customers more personalized products and services based on their financial data.
- Innovative products and services: Open banking can stimulate the development of new innovative products and services that were not previously possible.
For banks:
- Expanding the customer base: Banks will be able to find new customers by offering them access to their data and services through third-party platforms.
- Increased revenue: Open banking can lead to an increase in bank revenues through new products and services, as well as data access fees.
- Cost reduction: Banks will be able to automate some processes and reduce customer service costs.

Challenges of open banking
Despite the significant opportunities, open banking also brings a number of challenges that banks will have to address:
- Ensuring data security: Banks must ensure that customer data is protected from unauthorized access and use.
- Creating and implementing API standards: API standards will need to be created and implemented to ensure interoperability between different systems.
- Regulation and oversight: A clear system of regulation and oversight of market participants will need to be developed.
- Changing business models: Banks will have to adapt their business models to the new environment to remain competitive.
 

Prospects for open banking
Open banking has significant potential for the development of the Ukrainian banking sector. It is expected to make the market more competitive, innovative and convenient for customers.

Ukraine is already taking steps to implement open banking:
- In 2021, the Law on Payment Services was adopted, which regulates this area.
- By 2025, banks and other institutions will have to implement API standards and other open banking requirements.
- The National Bank of Ukraine will regulate the activities of market participants and ensure the security of customer data.

The implementation of open banking will be a complex process, but it can bring significant benefits to both the Ukrainian economy and its citizens. The prospects of open banking for the Ukrainian banking sector are significant. This is an opportunity to expand the customer base, increase market influence and increase business profitability. In addition, the introduction of open banking can help improve the quality of customer service and increase customer satisfaction with banks.