After almost five decades as one of Malta’s leading financial institutions, Bank of Valletta has remained steadfast in its commitment to providing its customers – and the country – with a dependable service which can weather rough winds. Today, its CEO Kenneth Farrugia is determined to have this constancy spur the evolution of its future strategy.
At almost 50 years old, Bank of Valletta is one of the doyennes of Malta’s financial services and banking sectors. Established in 1974, today, it is one of the country’s systemically important banks (SIB), upon which the island’s economic system rests. As a result, “we’ve always prioritised the effective delivery of our services,” BOV’s CEO, Kenneth Farrugia asserts, going on to explain that the customer lies at the very heart of the institution’s long-term goals and strategy.
“As the largest bank in Malta, we’ve always been in a leadership position,” he says. This has driven BOV to remain at the forefront of the industry through the introduction of new technologies, and systems, he continues. “We’ve long been known for our innovations which have prioritised our clientele: we were the first to introduce internet banking in the 1980s; we then launched mobile banking once technology could sustain this; we were one of the first to establish a network of ATMs across the island; and, later, we entered into the financial services sphere with our asset management programmes,” Kenneth explains.
At its helm, Kenneth sees his role as “contributing to the strategic development of the bank,” by harnessing its various capabilities – such as its human resources and capital investments – to execute its long-term plans. And, with his almost four decades of experience in the banking sector, Kenneth is well positioned to understand the challenges and opportunities which face BOV. “Over the years, I moved within the industry and, later, within the organisation, working my way up to CEO,” he recalls.
There were many career defining moments on this journey, he says: he started out working in retail banking, moving into the investment space after a few years. In 1995, he joined BOV, having been entrusted with establishing Malta’s first asset management company – BOV Asset Management (known at the time as Valletta Asset Management). “We set it up in six to seven months, and the first investment fund was launched in October 1995. In 2004, when we joined the EU, we started to explore more opportunities for the bank, and one of these was the setting up of a fund-servicing outfit, for which I was responsible,” he outlines.
This became BOV Fund Services. “I ran that for a number of years, helping to provide fund administration to investment funds of the group and third parties,” he explains.
He credits his years of success to his attitude towards all his endeavours. “I believe the commitment towards work needs to be based on more than simple self-interest. In other words, while some people are fixated on how much remuneration they will be getting – over and above the personal satisfaction their position could bring – leaders need those who are committed to their role for reasons beyond self-aggrandisement,” he says. This requires vision of the future. “You need to be driven by your long-term aspirations, not short-term wins,” he states.
This philosophy has stood him in good stead for, today, Kenneth has reached the apex of his career, and enjoys decision-making capabilities leading the strategy at the bank. Indeed, his position is to “support fellow chief officers on the executive committee,” and his typical day is spent in meetings dealing with the governance structure of the bank, as well as more operational matters. He is energised by the bank’s commitment to developing new projects and initiatives, which aim to deliver better customer experiences. “It gives me great satisfaction to see the positive outcome of some projects,” he asserts, although he admits to the necessity of ensuring his time is spent efficiently. “You never have enough time, so I am constantly trying to be more disciplined,” he smiles.
Prioritising the customer experience is imperative in a market that has changed markedly over the past 50 years. “Today, there is a proliferation of operators in the sector – so there is much more competition. There has also been an increase in the number of tech companies entering the financial services sector and into domains which traditionally belonged to banks. This has been made possible by revolutionary developments in technology, and it has meant that the customers’ expectations – in wanting their banks to be more responsive, and to have digital solutions on offer – have changed, shifting the way we work,” Kenneth explains.
As a result, and to ensure enhanced competitivity, the bank has, among other initiatives, recently launched a digital product to streamline home loan enquiries via its website, through which customers can log into the home loan page and get an assessment of how much can be borrowed, with the further capability of submitting an application online.
“It has been very well received, and this is the direction we’re heading into as we continue to refine our products,” he says. “We want to give that wow factor to our clients. And there is more to come in this space, as we review the customer experience of our digital and physical channels,” he states, adding that, as testament to its commitment to improving outreach, the bank has recently organised a CX (customer experience) week to discuss developments in this sphere. “Our plans, even for this year, are to strengthen our personalised service, empower customers through self-service functionalities, and use data to better optimise and linearise our operations,” he says. “The bank’s aim is to continue to be seen as a leader in the market, so we want to bring innovation to our customers.”
However, such an intent has not meant, he insists, a wholesale pivot into the digital sphere, without consideration for more established ways of connecting to the customer. “We offer an omnichannel service, that is providing physical, digital and hybrid customer support. We try to accommodate a balance between these different methods. In fact, if you look at our branch network, you’ll see we have the same number of outlets as all the other branches of all the other banks put together,” Kenneth points out, insisting on the importance of maintaining a strong presence in Malta and Gozo’s towns and villages.
Looking ahead, Kenneth predicts that big data will continue to rise in importance in the banking sector, as will the dominance of digital tools. “These are and will remain two important enablers and will be transversally imperative for our business across operations, governance and HR,” he states. Moreover, Environmental, Social and Governance (ESG) priorities will also be an “overarching theme within our business, even beyond our core banking functions, so we’ll see significant traction in the suite of products we offer clients within the investment space, focusing more on ESG goals, which have a positive impact on our culture, society and natural environment,” he explains.
Coupled with this drive, the institution is currently going through a “dramatic transformation programme”. This consists of investment in its governance structure, the strengthening of its risk management capabilities and the prioritisation of sustainability, in terms of profit generation. “This transformation will help secure the bank both for the benefit of the institution itself, and for its customers,” he insists, adding the motivation behind this push is BOV’s strategic importance to the island’s sound future. “We consider ourselves to be catalysts for the wider economy, and as pivotal to supporting Malta’s economic health,” he concludes.
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