Credit Agricole has recently unveiled a strategic vision for the bank’s development in Ukraine up to and including 2025. The strategy aims to build on existing strengths while adapting to global challenges and the rapidly evolving Ukrainian business climate. The document, dubbed the “AIR Strategy” (“Ambitious, Innovative and Responsible”), identifies a range of core focuses as the Credit Agricole team in Ukraine looks ahead to 2025 and plots the bank’s course as the country navigates the new realities created by a changing economy and disruptive influences such as the Covid-19 global pandemic.
Changing Times
Carlos de Cordoue, the CEO and Chairman of the Management Board at Credit Agricole in Ukraine, acknowledges that the ongoing turbulence of late 2021 makes it a particularly difficult time to create a coherent vision for the coming four years. “We find ourselves dealing with a significant amount of unpredictability right now,” he notes. “This is not only in terms of Covid, but also geopolitics. We must contend with factors such as major fluctuations in energy prices.”
This disruption renders any attempt to forecast the future problematic, but Cordoue says the significance of the shifts in business culture that are currently taking place was a major factor in the decision to outline a new long-term development strategy for the bank. “When discussions first began in 2020 over Credit Agricole’s post-Covid plans, we started to notice how the banking market in Ukraine was changing alongside the behavior of clients. The way we work is also evolving, together with the kinds of banking services we use. In 2020, thanks to the CA+ mobile application launch, we made a digital leap that saved us two to three years. It was at this point that we decided to explore the idea of identifying our future priorities as a bank.”
Efforts to develop the recently unveiled strategy have been ongoing for seven months. In line with the Group, the process began in February and has involved the individual input of over 100 members of the Credit Agricole team in Ukraine during a series of more than 60 workshops. Cordoue says one of the most challenging aspects of strategy development was focusing energies on the bank’s core strengths and the segments where Credit Agricole enjoys a leadership position. “We had to avoid the understandable temptation to try and cover the entire market,” he notes.
Emphasis on Agribusiness
The resulting strategy document is designed to foster organic growth in key sectors of the Ukrainian economy where Credit Agricole already has a strong presence. One priority is consolidating the bank’s position in the agribusiness sector. This includes ambitious plans to increase the Credit Agricole share of the agribusiness financing market from the current level of around 10% to 15% by 2025. The bank will continue building long-term relationships with customers, offering them a combination of agricultural and financial expertise, as well as innovative solutions.
One of the main drivers in the agri-agro sector will be the bank’s leasing services, which have proven popular following a successful summer 2020 launch. The timing of this unveiling was ideal, with commodity prices currently high and agricultural businesses across Ukraine looking to upgrade their equipment parks with new tractors, combine harvesters, and other machinery. “The growth of leasing services is entirely in line with our long-term strategy,” notes Cordoue. “Financing of agricultural machinery is a key focus for the bank, and we are already leaders in Ukraine’s car loan market. We have created a special global offer for our customers thanks to the synergy between car loans and leasing business lines.”
Plans for a larger share of the agribusiness financing market also dovetail with the bank’s commitment to greater environmental responsibility. In partnership with the European Bank for Reconstruction and Development, Credit Agricole is currently offering financing on preferential terms to farming businesses for the leasing of green agricultural equipment incorporating energy-efficient technologies. In line with this emphasis on green financing, the new Credit Agricole strategy also incorporates policies to support the energy transition of clients, and anticipates a 10% share of the bank’s corporate portfolio dedicated to renewable energy.
Growing Ukrainian Middle Class
One of the key trends identified in Credit Agricole’s new strategy is the role of Ukraine’s growing middle class as an engine for retail banking services. “We believe the future of retail banking will be driven by the expanding Ukrainian middle classes and have made the decision to focus on this segment as we expect the rapid growth of recent years to continue,” Cordoue says.
This expanding Ukrainian middle class is in many ways epitomized by the country’s booming IT industry. Cordoue speaks enthusiastically about the impressive development of the Ukrainian tech sector and the positive impact this is having on the wider economy. He notes the high salaries within the IT industry and anticipates that according to current estimates, the number of IT professionals in Ukraine could rise from the present level of around 200,000 to as many as half a million by 2025. “We think this sector will continue to develop and will be a major strength for the Ukrainian economy in the years ahead,” he comments.
Tailoring Offers For IT Professionals
Understandably, Cordoue is keen to welcome this growing IT industry contingent to Credit Agricole. “We think Ukrainian IT professionals are interesting clients for our bank, not only because they are relatively wealthy individuals, but also because we can offer a range of banking products that closely match their needs, such as special tariff packages for IT as well as car and home financing tools. We see strong potential in the development of Ukrainian IT entrepreneurship, and we aim to contribute to the IT industry.”
In order to enhance Credit Agricole’s appeal within the Ukrainian tech sector, a tailor-made app is currently in development that will specifically address the banking services requirements of IT professionals. The bank has brought together fifty IT professionals from a range of tech companies to explain what they would most like to see in a tailored banking app. “Our goal is to create a convenient banking services ecosystem for everyone working in the IT industry,” says Cordoue.
Optimistic Outlook
Credit Agricole’s strategic focuses on some of the most promising sectors of the Ukrainian economy such as agriculture and the IT industry should help consolidate the bank’s overall position in the years leading up to 2025. While Cordoue acknowledges the need for flexibility and agility in today’s often unpredictable environment, he believes the overall outlook is positive. “We maintain an optimistic view while remaining cautious and keeping a sense of prudence. This is a very innovative country and a dynamic business environment, so we are looking to build our strategy around the strong points of the Ukrainian economy.”