The leader of the Forbes Banker list is TBC Bank; whose team prefers to act in the here and now. FOR SEVERAL YEARS, you might have been actively repeating this company’s messages:
#Hello #Whoever You Might Be #Come Here #You And now – #Here #Now
I am certain that many of you, like me, did not realize that if the phrases are joined up, it results in a novel message about action and development. I should mention that this is not a mere coincidence, rather a multiyear strategy that connects seemingly chaotic dots. In this special edition of Forbes Georgia, the nation’s leading bank is represented in full alongside its top management. Every aspect that makes TBC not only a bank, but also a tech company – a space where the evaluation of risks are turned into innovations and foreseeing the future is done with precision, even the sudden calamitous pandemic morphed into a profitable venture both for the company and its customers. Customer is not an accidental word.
TBC does not have clients. TBC has customers. The difference between the two will become apparent if you follow the story to the end. Our guides will be the human beings who manage and are responsible for making decisions in the bank– both the easy ones and the difficult ones.
Vakhtang Butskhrikidze – CEO of TBC Bank since 1998. The phrase I recall most vividly: “Now, the biggest challenge is, when we return to normal after the re-opening of the economy, to retain the gains we made during the pandemic. We do not want to return to the company of February 2020 and would like to remain as TBC from May of 2020– a different company with different services.”
Giorgi Shagidze –Deputy CEO since 2010, with executive experience at Barclays Bank PLC. Currently responsible for the financial direction of the bank. The phrase I recall most vividly: “We have learned a lot during this period and view the gained experience as something new we can do.”
Tornike Gogichaishvili –Deputy CEO since 2018, with 20-years’ experience in financial services and operational management. Currently responsible for retail banking. The phrase I recall the most vividly: “TBC’s culture and character value innovation. Also, we do not rush our decisions. We make measured decisions, and with full faith, aim to execute them. Presently, this is what we are after.”
Goga Tkhelidze –Deputy CEO since 2014, with experience at Barclays Investment Bank as a Vice President in the Financial Institutions Group (FIG), EMEA. Responsible for corporate and investment banking. The phrase I recall most vividly:“We should not lock ourselves in an armored vehicle, thinking that all of this is going to go away. It is of crucial importance to adapt to the environment and continue proactive work, including new ventures.”
Nino Masurashvili – Deputy CEO since 2006. Responsible for risk management. The phrase I remember most vividly: “Communication with both employees and customers is of paramount importance. Informing and mobilizing employees aids the betterment of the communication process with customers. Currently, the vast majority of transactions are conducted outside offices–everything is digitalized, and the process is ongoing.”
Nikoloz Kurdiani –Deputy CEO since 2014, with 14-years’ experience in the industry; five of which were spent at Union Group in Austria, Turkey, and Kazakhstan. Responsible for micro, small, and medium enterprise banking. The phrase I recall the most vividly: “It is important to analyze the situation, but not over analyze and let the analysis kill you. Do not panic –compartmentalize the data and devote time to thinking.” Considering Forbes Georgia and the focus of this article, I was wrestling with two questions.
1) What makes the managerial style of these individuals different from that of others and why TBC – not other equally successful companies –graces the cover of this publication? 2) How do top management become role models for over 7,000 employees?
Talking with every member of the TBC top management team has left me with insight, which I am going to share with you. First of all, the company has a mission and it is not for showboating on the website or easing communication with foreign investors, but due to the company’s real commitment to the mission. TBC exists to simplify life for humans. The CEO of the company believes that it is irrelevant how the environment is going to change due to COVID-19 or other challenges; TBC must still succeed in its mission.
“This is the tour de force of our company,” says Vakhtang Butskhrikidze. Indeed, the context–how simplification is perceived today when compared to yesterday– might change, but only in the realm of tactics, the core mission remains intact. Changes should happen in the here and now, not tomorrow or in the future, but now. In almost two months, an institute of systematic importance to the Georgian economy, with its 7,000 employees and 150 branches, has managed to shift to a digital regime and eased the battle with the pandemic for both its employees and customers.
“The technological development is not due to our liking it.It is for doing tasks more effectively and faster. Let us use technology. But use for what? To simplify life for humans,” Nika Kurdiani said to Forbes Georgia. It is apparent that it is easier said than done, however, the previous observation simplifies the task. Secondly,the company has a long-term strategic vision, meaning that the important tendencies are observed prior to capitalization. In the case of TBC, digitalization is the primary vindicator of its strategic vision. Before the global pandemic, digital products and services were a pleasant novelty,which in the context of Georgia, said a lot more about the company’s development than about customer’s ability to catch up with the changes. But the COVID-19 pandemic has shown that without digital capabilities, in the 21st century, we lose the ability to adapt.
In such a predicament, it becomes increasingly challenging to develop because not everyone is equally capable of escaping their comfort zones, in the here and now. But TBC is here to simplify human lives. It appears that TBC beat the pandemic ten years ago when it implemented digitalization. Throughout 2010 all the way to 2012, the company made considerable investment in mobile and internet banking.
After several years, TBC was able to neutralize the consequences of the pandemic due to its customers having mobile and internet services. “Consequently, the moment that the load on branches decreased and performing banking operations on the spot became difficult –the high digitalization of certain processes aided us quite a bit,” says Nino Masurashvili, TBC’s Chief Risk Officer.
Today it is rather apparent that TBC is trying to digitalize everything regarding simple transactions and view the branch channels as a means of communication and consultation, dealing with more complicated transactions. If we were to observe the previous two months, we would grasp the sheer amount of tech products, created by TBC – including, a wholly digital card in Georgia, unique in its own right, that can be activated in seconds, via the mobile app, or confirming an installment plan online without your physical presence or a handwritten signature, or if you are a TBC employee, request leave online, finalize business trips and avoid any unnecessary bureaucracy.
“At the beginning of June, we want to launch online onboarding,” discloses Tornike Gogichaishvili, the head of Retail Banking. Online onboarding is going to make the activation process of a new client even easier –he or she would be able to digitally onboard via mobile banking, become a customer, open an account, get a card, and use every available TBC service. “And all of this will occur in the virtual space,” explains Tornike Gogichaishvili. Having said this, TBC is not going anywhere and wherever necessary will be physically present, but it is challenging to disprove top management’s reasoning regarding the necessity of digital development.
“Our strength in digital services allowed us to re-organize in a better manner and to re-arrange our back offices in such a manner to minimize health risks,”such is the analysis of the more severe days of the pandemic by Giorgi Shagidze. Every member of TBC’s top management recalls, with a smile, the decision to allow its employees to work from home one day a week.
“The system restructuring took quite a long time, we extensively tested our cybersecurity, and only after its success, implemented it,” recalls Vakho Butskhrikidze. Upon this experience was founded another entirely novel experience. “We quickly reorganized 95% of the back office in a manner to allow individuals to work safely from home, and soon after the pandemic forced us to close offices,” recalls Giorgi Shagidze. And, here, we must pay attention to one strategic vision – the one which was more of a “guess” than a calculation, says Vakho Butskhrikidze. This is, also new and not entirely suitable for a bank, but more for a tech company, which once more is going to learn from experience and is going to dare to be bold. Especially, if the team backing top management, is equally passionate. And the CEO of the bank confirms the narrative. Nonverbal communication, even via Zoom, never lies. To be brief, the story is as follows: after another Zoom meeting, when top management reviewed hundreds of accountson where the company currently is, there was time for a Q&A –one of the employees joked –we did it, we transitioned to agile.
“Transformation to agile banking, of course, is not finished but the pieces were already moving, which became crucial towards its conclusion,” says Vakho Butskhrikidze, who does not deny some inconveniences while performing certain transactions, but most importantly not a single customer – individual or corporate–experienced a delay. That is why agile transformation became an integral component of the bank’s strategy, which was ahead of its time, and without any prior preparations and calculations, became part of the agenda. In this case, employees were grouped not around a leader or an authority figure but around a task at hand, teams became more practical and began thinking and acting more proactively.
TBC was able to avert many challenges caused by the pandemic as well, and as Giorgi Shagidze explains, this was due to the global reputation that TBC has been able to accumulate. “I would like to make it clear; we were able to procure more loans from international financial institutions than was necessary for today.
On the contrary, in a sense we are combating excess liquidity,”says Giorgi Shagidze. These institutions became the founding members of TBC in 2000. The International Financial Corporation (IFC) was the icebreaker and other international organizations flooded in. In 2014, TBC moved to the London Stock Exchange and, after two years, moved up into the FTSE 100, LSE’s premium segment. Today, TBC’s shareholders are from the U.S., Britain,Sweden, etc. “We are on almost every continent,” says Giorgi Shagidze. 25% of TBC’s capital is American. TBC, also, has investors from South Africa and the Middle East.
Besides shareholders, TBC managed to successfully secure funding via bond issuances. Last year, they issued bonds worth $425 million, twice, and the American market bought 30% of those bonds. “I think, the high level of our administrative systems, transparency enables all of us to be bold, dependable, and resourceful. With this attitude, we can procure more resources, whenever it is needed,” says Giorgi Shagidze. His words lead me to the following conclusion. Third, the company is not afraid to take innovative steps and to develop them further afterwards. One factor, addressed rather openly by Nika Kurdiani in the interview, is the need of TBC to find new strategic distinctions.
The head of MSME Banking, Marketing and Payments arguesthe following, “if at the end of the 20th century and the inception of the 21stcentury,companies used digitalization as the major differentiating factor and called it innovation; tomorrow it will become the new normal for everybody. That is why we must think more about other unique distinctive factors,” says Nika Kurdiani. From my perspective, TBC already possesses this factor – non-financial support for businesses.
The logic behind the support-system is rather elementary – everybody needs help. That is why the program has over 20,000 participants who can access experts willing to offer advice free of charge. Consultations have shifted to Zoom, without a single absentee. On the contrary, numbers have drastically increased, making TBC ponderabout the possibility of prolonging the practice, to save money and resources. Regarding financial support – here, apparently, the pandemic is going to leave its mark.
“We are making it abundantly clear to businesses that they need to have enough liquidity to resume their economic cycle,” says Nika Kurdiani, already preoccupied with the creation of products that are going to aid businesses in this challenging up and coming chapter. Goga Tkhelidze believes that, in this situation, it is important for companies to learn how to be effective. “Considering the sheer size of the crisis, our first impression was that it was going to dramatically affect individuals and businesses,” says the head of Corporate and Investment Banking. “Our initial goal was to curb the negative consequences. We postponed loan repayments for three months.
Now, after June, we are going to sit down and cover in detail the current predicament. According to their revenue, will decide about the type of financial structure.” Goga Tkhelidze also shared the results of the efficacy study, which demonstrates that TBC has fared better than was initially believed by members of top management. “It is a possibility that certain services are a bit delayed and this was to be expected,” says Goga Tkhelidze, “but the study clearly shows that our customers receive afull array of services from the bank. And this is of grave importance, a direct result ofour team’s constant work. We must carry on this path; however difficult it might seem.”
The possibilities are boundless for a team responsible for Space – an innovative digital bank, operational only via its app. “We have created healthy courage,” such is the vision of this team. When you are tilting your customer base towards digital products and services, you must first be able to offer them a service, and secondly, the consumer must realize that his or her comfort zone is steadily increasing with you at the helm. “Space, first and foremost, was a symptom of the larger changes within the company,” says Nika Kurdiani. And these changes have occurred. If TBC, previously was a bank, now it is far more than a mere financial institution – presently, it is a tech company– an adequate adaptation to the digital world. Nowadays, Space grants its savings to over 7,000 people and has 50,000 monthly users.
“We can compete with lots of banks in the number of active clients,”says Nika Kurdiani jovially. And here is my next observation. Fourth, the company has ambitious, yet calculated goals and tasks that are based on analytical data. Because the bank feels a profound responsibility for the 5 million customers who have entrusted it with their deposits or business’future. “We are entrusted with tens of millions of deposits,” says Nika Kurdiani,“ in this aspect, we are the leaders and ensure the savings of the people.
We have absolutely no right to endanger their savings due to our creative approach, and we tread carefully. On the other hand, if we were not creative, we would not be able to maximize revenue from their deposits.” Therefore, TBC did not refuse the pre-pandemic regional expansion. Vakho Butskhrikidze’s approach to this issue is purely pragmatic. Firstly, this is going to be a step towards completing the mission, because TBC would be able to ease the lives of people everywhere, and secondly, the diversification would be an important decision for the investors themselves.
“Our banker’s mindset is shown here,”says Vakho Butskhrikidze. And the mindset consists of TBC’s unwillingness to sail into uncharted waters. The Uzbekistan expansion was, primarily, procured due to Space. Space – as a practical neo-bank is already tested in Georgia– the bank has no geographic location but has its active users, possesses a portfolio, and with its indicators is larger than several banks currently on the Georgian market. TBC is planning on expanding to Uzbekistan in June.
“We would like to create a new generation bank, more dependent on digital communication, which will enable us to learn more and achieve faster results.” This proposition has a significant advantage, they do not need to invest in the complex, expensive, and stiff resources. According to the current plan, Uzbekistan is going to have a few physical branches, mostly focused on consulting and mentoring. This experience will probably be useful in Georgia as well. “We want to increase our scale,” explains TBC’s CEO,“our technological development requires a sizable investment, numbering in tens of millions annually.”
Consistent with this plan is the target, announced prior to the pandemic, of 10 million customers before the end of 2023. TBC’s CEO is aware that the global pandemic will make the goal harder to attain, but the banker’s mentality is at full force here and sees an opportunity even in the direst of situations. “If we were to approach the situation levelheaded,” explains Vakho Butskhrikidze, “it is a good opportunity. If we were to choose the companies of interest to us, their value during the crisis has decreased.” TBC, apparently, is ready to make a difficult and risky, but ultimately right decision to diversify. According to the latest data, the company already has 5 million customers.
At TBC, they understand customer satisfaction perfectly well. For the bank, the satisfaction of the consumer base and employees alike is interlocked, because one enables another’s strength, and vice versa. The quality of service is partially dependent upon this synergy. Tornike Gogichaishvili has concrete measures for customer service. “We are, probably, one of the pioneers to have attempted measuring customer service”says the deputy CEO, responsible for retail banking.
“We measure ourselves not only against the banking industry but also every sector of the Georgian economy, to create the best possible customer experience.” This means that TBC’s every product or service has customers in its focus. The main question for this team is whether a given product is going to ease the lives of its customer base and not what TBC itself thinksabout this direction. “This, of course, is aspirational and we cannot boast about a 100% success rate, but we work daily, and try to gain experience,” says Tornike Gogichaishvili. An emotional element is an integral part of any service. We all would very much appreciate proactive contact, bearing in mind our opinions, and identifying and preventing a problem before it becomes a hindrance.
“This is our philosophy,” says the head of Retail Banking. In the risk department, according to Nino Masurashvili, in dealing with the pandemic on a scale of 1-10, TBC would score a sound 9. “You should always be ready for crises,” says the Chief Risk Officer, “and you must not expect something not to happen.We already had the plan for demanding circumstances that helped us quite a bit. Now, we all have to be patient and agile.” TBC’s new task will be supporting businesses with necessary information, and in this manner will help them with their forecasting abilities. “With the reopening of the economy, alongside regular research, we will share weekly business indicators.
We want businesses to see prevalent developments,” says Goga Tkhelidze. TBC understands its systematic importance and the reliance of the national economy on its calculations. Currently, the dominant factors of the current predicament are uncertainty and the lack of certain financial information. TBC has to inspect in detail more scenarios than it would have to, under normal circumstances, but TBC’s CEO ensures me that the restart of the economy, after the pandemic, is not going to be exceedingly challenging. Every member of top management believes that the crisis will be quick but painful – the prognosis coincides with the assertions from EBRD, IMF, and other international financial institutions.
“The second quarter is going to be extremely challenging for the Georgian economy,” says Vakho Butskhrikidze, but unlike the 2008 crisis, we are more optimistic because of the dramatic fall that can be reversed in equal rapidity.” TBC expects that the Georgian economy will return to the 2019 mark by 2022. The main channel of the reversal – per Vakho Butskhrikidze – should be commercial banks, including TBC, because every investment – be it national or international devoted to Georgia – is processed by commercial banks. This is the aspect, according to the CEO of TBC, which needs to change in bankers’ mentalities.
The famed phrase– thata banker gives you money when you do not need it and does not give it to you when you need it most – must be a thing of the past. “We will try to look in detail at cases in damaged industries,” says Vakho Butskhrikidze,“we must find ways to continue funding projects that are going to boost the economy.” And the last observation – the company has a specific corporate culture and knows exactly the types of individuals to employ and for whom they might serve. During the previous ten years, TBC has made two major purchases–Bank Constanta and the Bank epublic. In both cases, the mergers caused major shifts, but ultimately, proved to be positive; Vakho Butskhrikidze believes that the culture was renovated and revivified.
“The more people share the TBC mindset the easier it will be for us to achieve our goals and it will be more interesting and rewarding to work here,” says the CEO. TBC’s culture is quite specific and entails seven core, and quantifiable, tenets. Vakho Butskhrikidze and his team recruit the types of individuals who want to be winners because this breed of people possesses the necessary leadership qualities and can aid the company in implementing novelties. Open-minded and happy individuals who are trying to spread their positivity. How? By performing interesting tasks that are going to be reflected on the happiness level of their customer base. Curious cadres because curiosity entails seeking viable alternatives, and consequently, urges you to implement more novelties.
Individuals focused on results,who instead of talking deliver them. People open to opportunities including the ones associated with taking risks. Honest employees, who neither lie to others nor themselves, always keen on keeping their word. All of the above means that ideas are good, but there are goals and a public company must accomplish them. “We will never entirely fulfill the requirements, but the idea here is to get to them as closely as possible,” explains TBC’s CEO.
What does TBC expect from the future? I asked this last question to every member of top management. It was rather interesting that like the phrase at the beginning of the piece, their expectations too complemented each other. Vakhtang Butskhrikidze – “Every crisis is an opportunity, and the challenge is to turn the current crisis into an opportunity.” Giorgi Shagidze – “We must be ready for more rapid changes –more flexibility, more digitalization. This will create many opportunities for both Georgian business and the nation’s youth because the location will no longer be a competitive edge.”
Tornike Gogichaishvili – “I am expecting development. We are all restless in the team. What can we do that is new and interesting? This is and will be the main question.”
Goga Tkhelidze – “2020 will be arduous, but it will bring in considerable experience. 2021 will be transitional, and in 2022, TBC – likemany Georgian companies – will become more efficient, profitable, and successful.”
Nino Masurashvili – “I believe that effort, when channeled properly, bears results. A company striving to be better today than it was yesterday will always develop.”
Nika Kurdiani – “There will be many uncertainties. Trends will develop extremely rapidly. Many might not be able to adapt. Curiosity, courage, leaving one’s comfort zone will become valuable.” Post Scriptum. As the executive editor at Forbes Georgia for many years, I have come into contact with many businesses. Finding common ground with them has altered my thinking – I have learnt to capture the nuances that speak more about a business’will than the answers I get from in-depth interviews.
I have long believed that one of the core issues is acompany’s and its top management’s view on competition. In 2016, TBC completely altered its vision and stated that it must become the region’s most dependable provider of digital finance. The result was the company’s constant attempts to compare its level of customer service to the companies most proficient in that area – the hotel sector, restaurants who value effectiveness, and speed.
Consequently, when we talk about TBC’s competitors, we go beyond financial institutions. Everyone interviewed chose their words quite carefully while discussing themes in a sector where competition is extremely high and the reader might perceive the overt focus on TBC’s successes as a sign of weakness of others.
This, however, might just be part of the corporate culture of the bank. At the beginning of the article, I promised if you followed me till the end, you would find out why TBC says they have customers and not clients. I hope you will find that the article has answered this question. Whether you are, or you are not a TBC customer, you might value this team’s commitment, but do not deem it to be enough. Perhaps due to a burdensome loan repayment or a bad experience with a bank, you do not agree with a single sentiment of mine. I will simply ask you – what are your realistic expectations from TBC here and now?
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