Strategic solutions Romanian entrepreneurs can adopt on economic level during the pandemic

Strategic solutions Romanian entrepreneurs can adopt on economic level during the pandemic

Interview with Theodor Stefanovici, Commercial Director, AKCENTA Romania

Q: With AKCENTA launching a new type of financial   service   23   years   ago,   the   fintech  industry  is  very  clearly  still  at  the   beginning   of   its   development.   This   year   marks the 6th anniversary of your activity on the Romanian market. How do you see the evolution of  the  industry  in  the  next  5-10  years  and  what  changes   do   you   foresee   for   the   Romanian   market?

T.S. The Romanian financial market has experienced an important  evolution  in  recent  years,  partly  due  to  the    increase    in    the    number    of    non-banking    organizations that have stimulated competitiveness on several levels, such as prices, quality of services, and, last but not least, digitalization. The increase in trust   that   companies   now   place   with   fintech   organizations  is  particularly  noteworthy,  especially  in the key cities for the national economy.Looking   ahead,   I   believe   Romania   now   is   in   a   favorable  position  in  order  to  gain  new  foreign  investments,  thanks  to  the  E.U.  policies,  which  aim  to  shorten  supply  chains  and  reorient  production  capacity    towards    eastern    Europe,    where    the    workforce is significantly cheaper and underused. If foreign  investment  increases,  the  industry  has  a  strong   chance   of   positively   evolving.   This   is   a   scenario   from   which   the   financial   environment   naturally has something to gain.

Q: As for any other business, the pandemic we  are  going  through  has  changed  the  way  we  think  and  anticipate  strategic  progression.    What    are    the    main    strategic    recommendations you have for the B2B area?

T.S. One  of  the  effects  of  the  pandemic  is  undoubtedly  the  insecurity  regarding  cash  flow.  Of  course,  the  pandemic has made each of us pay closer attention to  our  spending,  including  business  spending.  Our  recommendation for customers is to try, as much as possible,  to  plan  their  cash  flow.  For  example,  let’s  take exchange operations: exchange rate orders can be   placed   through   AKCENTA   so   that   when   the   needed  currency  reaches  the  desired  value,  the exchange  of  a  predefined  amount  is  automatically  performed  based  on  the  existing  online  Banking  setup. We offer this service for free and it appears to be   increasingly   appreciated   and   used   by   our   customers.

Q: In  Romania,  AKCENTA  does  not  have  commercial  branches  but  operates  only  through  agents.  What  kind  of  changes  do   they   observe?   Did   you   notice   any   new   challenges      or,      on      the      contrary,      more      opportunities? And how do you help your agents cope with a process that is certainly more limited compared to pre-pandemic times?

T.S. It is true that we don’t have local branches, because our business philosophy is to maximize the value we give  to  our  customers.  Therefore,  we  invest  the  money  saved  with  workspaces  and  other  implicit  logistic costs in the services we offer, thus being able to  offer  unparalleled  exchange  rates.  This  has  been  AKCENTA's  strategy  for  the  last  23  years,  namely  since  the  company  was  founded.  We  have  agents  that  cover  all  of  Romania  and  who,  due  to  the  situation   generated   by   the   pandemic   and   the   imposition    of    social    distancing    protocols,    are    affected   in   terms   of   the   number   of   face-to-face   meetings.   The   advantage   is,   however,   that   our   business  model  was  built  for  remote  work  and  thanks  to  that,  we  can  easily  perform  a  remote  identification in a maximum of 2 hours. This allows a  rapid  signing  of  new  contracts  under  any  given  conditions.  Moreover,  in  order  to  speed  up  this  process and provide even more comfort to the sale of    our    services,    we’re    currently    undergoing    digitalization  which  aims  to  improve  our  current  platforms and expand to new solutions, features and benefits for our customers and agents.

Q: We’re    talking    about    a    non-banking    financial        institution,        which        is        conditioned by the European regulations to    operate    through    banks.    How    do    these    partnerships  work  and  what  benefits  do  they  bring to AKCENTA’s customers?

T.S. As fintech, it’s indeed mandatory for us to carry out our  operations  through  banks.  Due  to  the  financial  market’s  regulations,  at  least  declaratively,  banks  must  support  fintech  companies’  activities,  thus  creating a healthy competitive market that generates increased benefits for customers. In Slovakia, Czech Republic,  Poland  and  Hungary  we  have  solid  and  long    lasting    partnerships    with    many    banking    institutions  which  supported  our  activity  since  the  beginning.In Romania, we’re currently collaborating with BCR and  BRD,  which,  for  our  common  customers,  is  translated  into  increased  payment  speed,  as  the  intra-bank  transfers  are  made  instantly.  For  clients  of  other  banks,  the  transfer  speed  of  the  payments  depends on the Transfond round under which they are   executed,   taking   into   consideration   that   in   Romania  the  Transfond  runs  3  times/day.  In  other  countries  (like  Hungary,  for  example),  these  inter-bank transfers are made in 2 hours maximum.

Q: What    are    AKCENTA’s    plans    for    a    potential     second     wave     during     the     pandemic?

T.S. Is there a crisis strategy that you’ve already put on paper for another potential European lockdown?As       previously       mentioned,       our       advanced       digitalization  allows  us  secure  access  to  internal  systems   so   that   our   entire   team   can   remotely   operate from home without affecting our availability or   the   quality   of   our   provided   services.   At   the   moment we work partly from home, partly from the office,  according  to  the  legal  requirements  of  the  Czech Republic, where we are headquartered.

Q: Among     your     Romanian     customers,     which ones do you feel are most affected by the current situation?

T.S. Our  customers  are  mostly  from  the  mid-size  area  and, unfortunately, most of them have been affected, with  the  most  notable  differences  noticed  in  the  catering and hospitality industry. Take, for example, the  wine  or  meat  importers  who  used  to  deliver  to  restaurants and hotels, and which have not received orders anymore; the travel agencies, transportation and also logistics, or the companies in the automotive industry  (given  that  local  car  manufacturers  have  stopped      production      for      a      while).      Some   manufacturing companies as well, traders importing goods from China and so on. Some companies have obtained  emergency  situation  certificates  (blue  or  yellow)  in  order  to  be  able  to  apply  force  majeure  clauses  included  in  collaboration  agreements  and/or to benefit from applicable governmental facilities.

Q: You    have    repeatedly    mentioned    in    previous   articles   that   importers   and   exporters      form      the      majority      of      customers  for  AKCENTA.  What  can  you  offer  to  them    in    order    to    help    with    their    current    international  trading  needs,  in  addition  to  the  services we already know you’re providing?

T.S. Following    a    major    investment    made    by    our    headquarters  in  the  Czech  Republic,  AKCENTA  is  piloting  a  new  financial  product  locally,  namely  a  non-bank  invoice  financing  (known  as  factoring).  This is a financial instrument that allows companies to  collect  their  payments  earlier  than  the  due  date,  thus covering current cash flow needs. This modern trading  method  is  widely  used  and  appreciated  in  other  European  markets  in  which  we  operate,  and  we’ve  noticed  a  growing  demand  from  our  local  customers  as  well.  So  after  testing  it  on  the  local  Czech market, the plan is to start offering this type of service to our Romanian customers as well.

Q: If we look at what analysts across Europe estimate,  the  euro  currency  looks  very  unstable.  What  can  we  expect  for  the  next  quarter?  What  is  AKCENTA’s  view  on  the  European currency fluctuations and what should we expect in the future?

T.S. The  pandemic  has  had  the  most  significant  impact  on the progression of the global economic situation and, obviously, it directly affects the evolution of the foreign exchange market. Following the estimates of the  European  Central  Bank,  our  team  of  analysts  formulated two possible scenarios for the evolution of RON currency: The baseline scenario (with 80% probability ) takes into account a new pandemic wave that brings new restrictive  measures  from  European  governments.  For Romania, this means that the economic recovery from  Q3  will  stop  completely  in  Q4,  with  negative  effects  on  the  evolution  of  the  quarterly  GDP.  The  negative   impact   of   these   restrictive   government   measures on output, consumer/business sentiment and   investment   activity   illustrates   the   need   for   additional  fiscal  and  monetary  policy  incentives  to  support  the  economy.  1  euro  is  estimated  to  reach  the value of 5 RON in Q4.The  alternative  scenario  (with  20%  probability  )  takes   into   account   the   situation   in   which   the   pandemic will be kept at manageable levels in most countries,  including  Romania,  without  the  need  to  introduce   new   severe   restrictive   measures.   The   recovery   of   the   economic   activity   will   continue   between  Q3  and  Q4,  but  it  will  not  reach  pre-coronavirus GDP levels this year.Both  the  consumer  and  business  sentiment  will  continue  to  improve  in  the  fourth  quarter  and  the  supplier-customer        relationship        will        keep        normalizing.  Partial  improvement  is  also  expected  in the most affected sectors of the pandemic, such as tourism. Romania won’t need further interventions and  rescue  measures  from  the  Government  and  Central Bank. In this scenario, the Euro is estimated to   remain   around   RON   4.88   for   Q4.   Obviously,   fluctuations may be even bigger due to the upcoming elections in December 2020.

Q: What    is    the    biggest    challenge    you    identify in the local financial market? 

T.S. Strictly  speaking,  in  the  current  reality  created  by  the  coronavirus  pandemic,  the  biggest  challenge   is   certainly   managing   the   sense   of   uncertainty     looming     in     the     local     business     environment.  There  are  leaders  who  managed  to  innovate and quickly adapt their business model to the   lockdown,   even   showing   increases   in   their   revenue. Most companies, however, are in extremely uncertain  situations  and  their  main  objectives  and  efforts are put into the company’s survival, trying to keep     their     employees,     renegotiating     existing     business  partnerships,  accessing  facilities  through  government  programs,  and  so  on  and  so  forth.  For  all  of  them,  even  though  any  savings  during  this  pandemic  are  welcome  and  felt  (and  keep  in  mind  that  for  multiple  transactions  the  financial  benefits  are growing even more), optimizing such operations is not a priority on their agenda. We, therefore, focus on  transparency  and  the  best  possible  information  for our small and medium-sized business segment, where    some    entrepreneurs    do    not    yet    have    experience in using advanced financial instruments, which is why they are still reluctant to use some of the services we offer.

Q: What  is  the  most  useful  advice  you     can     give     to     Romanian     entrepreneurs           related           to           international     transactions,     to     help     them     anticipate the future of their business?

T.S. One of the most important goals every leader has, is to  ensure  sustainable  financial  planning.  When  it  comes to external relations, it is important to build an honest dialogue between the commercial parties involved,  in  order  to  identify  the  best  payment  options   and   openly   discuss   the   force   majeure   clauses,   which   are   increasingly   invoked   in   the   context  of  restrictions  imposed  by  governments  to  stop   the   spreading   of   COVID-19.   In   order   to   maximize the financial results gained from trade, we recommend  the  use  of  financial  instruments  for  tracking  the  exchange  rate  (mentioned  above)  and  also the use of our Forward operations, which allow the  setting  of  a  certain  exchange  rate  for  a  future  payment,  thus  eliminating  the  currency  risk  for  situations    when    the    exchange    rate    has    an    unfavourable evolution.AKCENTA  is  the  first  fintech  in  Europe  to  exclusively  address  the  B2B  segment.  Founded  23  years  ago  in  the  Czech Republic and operating on the Romanian market for over 6 years, AKCENTA serves over 40,000 customers, of  which  over  2,000  are  Romanian  companies.  To  start  saving  money  for  your  business,  we  invite  you  to  access  our   website   www.akcenta.ro   where   you’ll   discover   unbeatable   exchange   rates,   cheap   and   fast   external   payments and financial planning services.

You can also consult the interview in the document below: