After 38 years at Bank of Valletta, CEO Kenneth Farrugia is still galvanised by the varied nature of the sector, its people and the diversity of its offering. And, as he looks ahead to the next 12 months and beyond, Kenneth – cognisant of the bank’s symbiotic relationship with the Maltese economy – is keen to celebrate the organisation’s 50-year history by driving up the pace of its technological transformation.

“Our mission at Bank of Valletta is to support the personal and business communities operating in our economy, aiming to positively impact the country’s economic growth in the process,” says Kenneth Farrugia, the CEO of one of Malta’s best-known financial institutions, and which celebrates its half-century this year. In this regard, he continues, the bank wants to be at the vanguard of developments and movements that are bringing about rapid changes in the banking landscape, whether in technology, risk management or the adherence to environmental, social and governance (ESG) principles.

“Strengthening our core business, entering new areas of business, addressing the impact of climate and environmental risk on our operations, enhancing cybersecurity measures, and determining the next big initiatives on the horizon and the way they will impact our customers and the bank are high on our agenda. To achieve these objectives, it is crucial for the bank to have a clear understanding of the shifts driving marked changes in consumer and business behaviour within our industry and beyond,” he explains.

Staying ahead of the game requires agility and nimbleness – “we have accelerated our pace in this regard, exemplified by the acceleration of our programme of initiatives to embed digital across our processes and product/service delivery. This will be a core focus area going forward,” Kenneth continues.

Kenneth is well-positioned to understand the ever-shifting landscape. After joining the bank in 1985, he worked for five years in the retail side of its operations and spent around 20 years in investment. He was only 42 when he moved to BOV’s Executive Committee, overseeing the asset management and servicing business of the bank, subsequently also responsible for personal banking, corporate finance and wealth management before being appointed CEO. “Jokingly, I say that I’ve moved from C to C – that is from Clerk to CEO,” he says. His extensive experience, however, is no laughing matter for it has given him the tools to understand and manage all aspects of the business – indeed, it’s this variety which has made his career “highly enjoyable every day,” he asserts.

Across the decades, he has also learnt that “meeting and exceeding customer expectations is critical in the process and a competitive differentiator.” BOV, he continues, is “a long-standing institution; our history is evidence of this, and we recognise the vital importance and role we play in our economy.” He cites the cyber incident in 2019: “we understand the significant impact this had on the bank, our customers and the wider economy. We managed to resume normal operations in a relatively short timeframe, but it showed us the pivotal and systemic role we play in our economy which shoulders us all with significant responsibility,” he asserts.

This awareness encouraged the bank to focus and significantly intensify its efforts on cybersecurity, as well as other technological tools that could help boost its operations and ensure a secure environment for both the bank and its clients. On the tech front, he says, moving forward, “AI will have a meaningful impact in terms of assessing and servicing changing consumer preferences as they shift from one stage to another in their lifecycle, enabling the bank to tailor those products and services in a more personalised manner.” Moreover, AI is expected to be a “game changer” in the arena of compliance and anti-financial crime. “Instead of looking at thousands of transactions, there are several generative AI tools to enable automated monitoring and alert escalation. We’re already seeing the way this could transform our systems, allowing us to continue to meet the demands of our regulators and at the same time drive operational efficiency,” he explains.

This technology, he hopes, will also help in bolstering dayto-day efficiency, particularly when it comes to, for instance, opening bank accounts – a sore point for many businesses today despite the marked improvements over the past 12 months. “Undoubtedly, the country went through a significant shift over the last few years in relation to the extent of information and documentation required to support the opening of a banking relationship. Today, I strongly feel that across the country we have a much stronger governance framework,” he attests. “We know that what we’re asking of our customers these days is elevated, compared to the past, but we need to know our customers and their profile, since this will greatly facilitate our ability to service our banking relationship with them.” Indeed, he says, as a result of recent changes that have been implemented, BOV has been onboarded by Citibank in the US, as its correspondent bank. This is a vote of confidence in the control framework that the bank has implemented through various initiatives over the past three years, he adds.

In the meantime, and in an effort to ease any administrative pains, BOV, he explains, has established a new digital channel which “allows customers to update their personal account profiles from the comfort of their home. We’re trying to alleviate as far as possible any inconveniences, and our turnaround time for the opening of accounts has improved, although we continue to work assiduously as there is clearly room for further improvement. Ultimately, it’s in our interest to onboard clients quickly,” he says.

Further improvements have been underway at BOV. In 2022, the entity engaged an international company to assess the environmental impact of its operations. “We identified a number of key areas that are impacting the climate and the environment, and have already started to implement initiatives to reduce our carbon emissions,” the CEO says. “By way of example, we’ve reduced our use of paper, both internally and when working with our customers, and we’re introducing digital documentation that can be executed via digital signatures. We are strongly committed to ensure our platforms are frictionless as far as possible and intelligible.”

Furthermore, he adds, “due to our extensive use of electricity through system servers and the operation of Malta’s largest fleet of branches, investment and business centres, we have started the implementation of smart lighting in our properties and adopting building management systems to enhance the efficient use of lighting and air conditioning. As Malta’s largest bank, we will lead by example. This also applies to our CSR programme – over the years we have invested significantly through our CSR programme, with a strong focus on five key pillars: Pillar 1 – Environmental, Resource and Climate Sustainability; Pillar 2 – Education and Financial Literacy; Pillar 3 – Support Vulnerable Members of Society; Pillar 4 – Cultural Heritage and Environmental Capital of the Maltese Islands; Pillar 5 – Ethical and Responsible Behaviour.

“As ESG becomes increasingly prominent, our social initiatives, currently organised within our CSR programme, are aligning with efforts supporting our environmental efforts, as well as those on the governance side, advocating with our customers for the importance of good corporate governance,” he asserts.

Going forward, BOV will continue to focus “on its core banking domains through which we generate revenue, with a strong drive on corporate and consumer finance, ensuring we remain supportive of our clients,” he explains. “We are committed to further enhancing our product catalogue by introducing innovative investment products to meet the evolving needs of our valued customers. Our focus extends to key areas, including our Cards business and Payments, placing them at the forefront. Additionally, we plan to explore new business avenues that complement our existing suite of products and services,” the CEO adds.

Furthermore, he emphasises “undoubtedly, the digitisation of our operational model, intensified use of data and data modelling, and a firm commitment to ESG will stand as robust and overarching strategic thrusts across our business, operations and governance domains. We’re investing heavily to enhance our understanding of customers and proactively anticipate their needs. Data can provide significant insights and will enable us to propose personalised solutions to our customers.” Expanding his perspective, Kenneth affirms, “ESG will remain at the forefront of our strategic priorities. The bank is already offering our customers green financing and investment solutions, with plans underway to broaden this offering.”

In its commitment to superior customer service, the bank aims to elevate the service experience “from good to great,” he shares, adding that “the objective is to surpass customer expectations, with a dedicated focus on strengthening our service offerings. We run monthly customer service surveys and organise various customer panels that are moderated by members of the Executive Team to ensure ownership of outcomes.”

Kenneth reiterates a two-fold commitment: “our core ambitions revolve around propelling digital growth within the company’s operations while simultaneously ensuring that we consistently meet and surpass customer service expectations,” he insists.

This article is part of the serialisation of 50 interviews featured in MaltaCEOs 2024 – the sister brand to MaltaCEOs.mt and an annual high-end publication bringing together some of the country’s most influential business leaders

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