(401(K) 2012, CC BY-SA 2.0)
In the monograph “Banking and non-banking institutions in the market of retail financial services in Poland” by Krzysztof Waliszewski, PhD, and Iwona Czechowska, PhD, authors try to analyze how this process looks like. The researchers presented both: the retrospective and the current picture of the retail financial services market in Poland. They capture its full institutional and service diversity. Not only they perform a general characteristics of the market but also go into details, analyzing its individual segments, i.e. commercial, universal, mortgage, car and cooperative banking. They also look at the financial consultancy market, investment and pension funds as well as capital market brokers (brokerage houses and offices).
As they note, an increase in the demand for financial services in Poland results from an increase in the number of households (according to Statistics Poland, the number rose from 13,364 million in 2002 to 14,775 million in 2015) and the growing wealth of the society (in the years 1996-2016, the financial assets of households increased from EUR26bn to nearly EUR277.8bn, which in relation to GDP is an increase from 29 per cent to over 65 per cent).
Interestingly, according to the authors, “so far traditional banking services, as dominating in the group of retail financial services, have been partly replaced by substitutes to banking services, e.g. loan services, as a result of increased cross-sectoral competition”. The ageing of the population, on the other hand, creates demand for the so-called silver banking services.
“On the other hand, we have a whole range of young clients, already present or entering the market of financial services, who expect technical and financial innovations and who are willing to use them. This leads to the creation by new entities (start-ups) of non-banking, innovative solutions in the financial services, in particular in the area of payments, financing, which form the fintechs (financial technology) segment. According to Deloitte’s data, at present, the fintech market in this part of Europe is worth approximately EUR2.2bn, out of which Poland accounts for almost EUR860m,” the authors indicate.
How fast is, in fact, the Polish retail financial services market developing? In relation to GDP, household debt increased from 50 per cent in 2008 to 69 per cent in 2017, which obviously made the market similar to the developed markets of Western Europe. In the years 1996-2017, a nearly 50-fold increase in the indebtedness of Polish households was recorded, from EUR2.6bn to EUR130.3bn, of which consumer loan debt rose from EUR2.4bn to EUR39.2bn, while debt due to loans for real estate went up from EUR232m to EUR90.7bn.
“The portfolio of housing loans grew from EUR50.2bn in 2010 to EUR80.8bn in 2017 and the portfolio of consumer loans in the same period increased from over EUR24.5bn to over EUR31.7bn. At the same time, data on retail deposits in banks indicate their increase from EUR86.1bn in 2010 to EUR129.4bn in 2017,” the authors write.
Its dynamic growth is also evidenced by the systematic increase in the value of assets of financial institutions, from EUR115.6bn in 2001 to over EUR463bn in 2017. “Assets grew particularly dynamically in the period preceding the financial crisis, to stabilize at a level of approximately EUR579bn in recent years (2012-2015). The total assets of the financial system grew faster than GDP, which was reflected in an increase of the financial system asset/GDP ratio, which increased from 75 per cent to 121 per cent in the period under review. Just as in the case of the total assets of the financial system, this indicator has stabilized in the last 4 years (2012-2017) at a level of 121-125 per cent,” wrote the researchers.
According to them, there is no doubt that the retail financial services market in Poland will continue to develop dynamically as the products and services “offer a possibility of relatively higher profits than in the case of corporate clients whose number is much lower and who have a certain bargaining power towards financial institutions while negotiating interest rates on loans, deposits, fees for operating an account and executing payment orders as well as commissions or fees for providing other financial services. Another benefit for a financial institution engaging in retail customer service is also the diversification (dispersion) of risk by financing multiple clients compared to the highly concentrated risk in the case of high-volume corporate loans,” the researchers indicated.
A particularly rapid growth takes place in the consumer loan segment and it is unlikely to slow down. In the years 2012-2018, the growth rate in this segment reached the level of 6-14 per cent, i.e. it was much higher than in the segment of housing loans (2-4 per cent) and the balance sheet of total growth rate (4-6 per cent). “This demonstrates the high growth potential of this segment. Essential information is the growth of the consumer loan portfolio planned by the banks which is related to the search for profitable products in a low interest rate environment,” the authors of the monograph point out.
Taking into account the value of newly originated consumer loans, in the years 2007-2017 the share of banks ranged from 86 per cent to 95 per cent, the share of credit unions (SKOK) after a period of growth from about 5 per cent in 2010 to about 8 per cent in 2013 dropped dramatically to 3 per cent in 2017, whereas the share of loan institutions remained stable at a level of about 1 per cent in the years 2007-2010 and it has increased to 4 per cent since 2011. Thus, we face a decline in the role of credit unions and a slight development of non-banking loan institutions.
In general, according to OECD, the level of use of banking services in Poland — measured by accounts with a bank or a mobile money service provider held by persons aged 15 and more — amounted to nearly 87 per cent in 2017. This gives Poland the 9th position in EU-28. “Still about 13 per cent of Poles do not have a bank account. Taking into account the trend observed over the last few years, it should be expected that the rate of use of banking services in Poland will increase in the subsequent years,” the scientists summarize.
The authors also note the development of online financial intermediation. It is evidenced by the expansion of such entities as Bancovo (Alior Bank), FinAi and JakiKredyt.pl. “The potential of online financial intermediation is demonstrated by the plans. Bancovo assumes that by 2020 it will grant loans in the amount of EUR463-694m and it will have a 30 per cent share in the online intermediation market, while FinAi will grant loans in the amount of EUR231.5m,” the researchers indicate.