Eliza Livadiotou: Geopolitical challenges a key challenge for 2024

The fact that the Cyprus economy has shown resilience is a widely acknowledged fact, and it must continue to do so in 2024 with the most important challenges in sight having to do with geopolitical developments and unrest, according Eliza Livadiotou, Executive Director Finance at Bank of Cyprus.

Speaking to InBusinessNews as part of its “IN Business Forecasting 2024” series, Livadiotiou stressed that Cyprus will be called to step up its efforts for the green transition and digital transformation in the new year, as it forges ahead with implementing the long-term target of achieving sustainable growth.

As for the banking sector, the bank executive said it will continue with its digital transition in 2024 and the following years, adding that the institutions leading the way in this transition, like Bank of Cyprus, will have a competitive advantage.

She also expects interest rates to normalise in 2024, adding that banks will have to diversify their revenue inflow from sources besides interest rates.

How do you see the economic environment shaping up in 2024, in light of inflationary pressures, high interest rates and unpredictable ever-changing geopolitical developments?

I believe we will continue to be preoccupied with inflation in 2024, as despite its deceleration, it continues to be much higher than the 2% target that has been set by the European Central Bank (ECB).

As such, we expect inflation and monetary policy measures to continue to preoccupy us in 2024, given that they affect economic growth at a time of heightened threat from geopolitical unrest, with everything this may entail in terms of challenges.

What do you consider to be the biggest and most difficult challenges that the Cypriot economy will have to face?

The experience of recent years, with the many successive crises, I would dare to say has “trained” us to live, work, evolve and compromise with the steady uncertainty.

But to answer your question, I would say the challenges coming from the sphere of geopolitical developments and unrest are the most significant in sight.

The war in Ukraine affected the Cyprus economy by reducing tourism, and one could presume that the war in Israel will have an equally significant impact.

However, the Cyprus economy has shown that it is resilient and adaptable. Cyprus is considered a safe country within the EU, as opposed to other neighbouring countries, while we have seen a rise in investments by Israelis who are trying to escape the tension in the country.

Despite this, geopolitical uncertainty is a risk factor that brings constant challenges to our economy; however, with the cooperation of all the institutions, I believe we will manage.

Would you say that, taking into account the latest upgrades, the economy of Cyprus is now well on its way to growth?

For sure. Following the pandemic, we have witnessed the Cyprus economy recover strongly and swiftly return to growth.

The forecasts say that the Cyprus economy will continue to grow in the coming years, at a rate of over 2%, which is significantly above the Eurozone average, and record surpluses and reduce its public debt.

In 2024, our country will be called to step up its green transition, digital transformation while it forges ahead with implementing the enormous target of achieving sustainable growth.

What are the biggest industry trends/changes you anticipate in 2024?

The sector’s digital transformation is definitely a process that will continue intensively in 2024 and the coming years.

Institutions that pioneer in this field, like Bank of Cyprus, will have a competitive advantage. A major change, not just for the sector but also the broader economy, is the implementation of ESG criteria and their inclusion in the broader strategies.

The banking sector is being called to lead the way in including these criteria and the impact is expected to be significant at all levels: regulatory, investment, clientele.

Another change for 2024 is that we are expecting a normalisation of interest rates by the central banks. The banking sector will need to diversify its revenue inflow from services other than interest rates.

Our bank has achieved this by offering a comprehensive package of banking and financial services, supporting our clients in key moments of their lives.

At a business level, despite the progress that has been achieved in recent years, a strict, fair and above all functional foreclosures framework is extremely important for the comprehensive management of old non-performing loans, but also to avert new ones from being created.

What are your organisation's plans/strategy for 2024? Should we expect new products/services/developments and your further establishment in the market? Will it be a year of growth/expansion or maintaining your existing market position? Can you tell us about any of your plans in particular?

Our goals and strategy for 2024 focus on continuous development and to offer high quality digital products and services that will best serve our clients’ needs.

We will continue to offer new, innovative digital products and services that will boost our clients’ experience, providing more options and facilities in their bank transactions.

We are planning to introduce new digital solutions with new innovative services that will improve bank transactions, enhance transaction security and offer customised services that adapt to our clients’ needs.

Our vision at Bank of Cyprus is to ideally have a lifelong partnership with our clients, to guide and support them over time. Therefore, our customer-centric approach has a special weight in our strategy.

Our goal is to provide solutions and contribute to the healthy development of households and businesses in a sustainable manner in order to add value both to our organisation and to the Cypriot economy and society.

Therefore, we are present and leading the transition to a sustainable economy and laying the foundations for strengthening organisational resilience and strategy for Environmental, Social and Corporate Governance (ESG).

What role does technology, such as artificial intelligence, play and what changes is it expected to bring about in your field?

We are an organisation that invests a lot of money and time in technology and generally in what we call the digital transformation.

The bank’s digital transformation will continue to focus on developing digital services and products that improve the customer experience, rationalising internal procedures and introducing new working methods with the aim of improving the work environment.

Furthermore, the bank’s digital strategy embraces the promotion of digital sales, boosting its commitment to providing its clients with an excellent experience.

The adoption of digital products and services is on the rise and constantly gaining momentum, proving that we are leading the Cyprus economy’s effort to transition to the new digital era.

Indicatively, I will mention that on 30 September 2023, 95% of transactions involving deposits, cash withdrawals and transfers within and outside of the bank were carried out through our digital channels.

At the same time, 83.5% of private clients choose the digital channels over visiting our branches for their transactions.

On 30 September 2023, the active users of mobile app and QuickPay increased by 15.1% and 22.4% respectively on an annual basis. In the first nine months of 2023, fresh loans totalling €73m were granted through Quickloans.

The deposits in accounts that were opened digitally increased by 26.3% year on year, reaching €227m by end-September 2023.

The digital sales of the two new insurance products through the mobile app (car & home) more than trebled in the first nine months of 2023 compared with the total sales of 2022. Specifically, they reached €276,000 compared with €68,000 in 2022.

And we have created the Digital Economy Platform Jinius, which is here to support the country’s digital economy and has been embraced by the business world, with over 1,800 companies having registered and using it.