Financial companies adequately withstood challenges of 2020 – expert

KYIV. Sept 20 (Interfax-Ukraine) – The last year was quite difficult for financial companies, but the institutions have withstood all the challenges with dignity, further prospects for the development of the market will depend on the final version of the triumvirate of laws for the nonbank financial market, Board Chairman of the Association of Financial Institutions (AFI) Ihor Pashko said at the XXI International Financial Forum in Odesa last week.

According to him, the nonbank financial market, like all other segments of the economy, last year was under the influence of the coronavirus crisis, quarantine and the unstable economic situation, and also received an additional challenge in the form of a change in the state regulator – the entry into force of the distribution of powers of the National Commission on Financial Services Markets Regulation between the National Bank and National Securities and Stock Market Commission of Ukraine.

At the same time, Pashko said that, in general, financial companies-members of the Association of Financial Institutions were ready for the introduction of quarantine in 2021 much better than in the previous one, thanks to the experience gained in 2020. They transferred their processes of providing financial services and conducting verification and customer identification to a remote format even during the restrictions of last year, therefore, despite the decline in performance during quarantine, the performance indicators of financial companies subsequently recovered, and even increased in the first half of 2021.

The indicator of the volume of loans provided by financial companies, which has grown in recent years by 50% per year or more, in January-June 2020 decreased by 20% compared to the second half of 2019, to UAH 48.180 billion. In the second half of 2020, it grew by 40%, to UAH 52.020 billion, that is, it made up for lost time, after which it showed an increase in the first half of this year by 6%, to UAH 55.540 billion.

At the same time, the overwhelming number of concluded consumer lending agreements for the specified analyzed period were signed with individuals (95.2%) for up to 31 days (68%) and remotely (84%).

Another challenge for participants in the nonbank sector was the transition to the supervision of the National Bank of Ukraine. The market needed to adapt to a new way of filing reports, providing information and communicating with the regulator through the NBU portal, Pashko said. Also, the National Bank introduced the requirements for the organization of financial monitoring in nonbank institutions, developed in accordance with the new law on preventing and combating money laundering, financing of terrorism and financing the proliferation of weapons of mass destruction.

In this regard, it was necessary to change the approaches in internal processes and refine IT programs, according to which financial services are provided to consumers.

In addition, nonbank financial institutions had to study a number of new draft regulations, which were intensively developed by the National Bank, and bring their activities in line with the new requirements. So, over the past year, the NBU published 15 draft regulations for discussion, nine of which were put into effect.

Currently, most of the legal acts of the National Commission on Financial Services Markets Regulation have been replaced by the provisions of the NBU. At the same time, Pashko recalled that there are new legislative changes ahead, which will undoubtedly lead to new approaches to regulating market activities. These are, first of all, the bills on financial services and financial companies, on insurance, on credit unions, which have already been adopted by the parliament in the first reading.