Yes, interest rates will rise in Croatia. Recession? It won’t happen

– Yes, interest rates will rise in Croatia. However, I have good news as well. I believe they will rise less than in other European countries. The liquidity of the banking system in Croatia is very high, which provides economic reasons for why interest rates can be lower. In Croatia, you have a regulatory mechanism that maintains maximum interest rates and also protects consumers from high rates,” explained Mario Žižek, CEO of Addiko Bank Croatia, during a panel discussion at today’s Money Motion conference.

When asked by the moderator, economist Vuk Vuković, whether there will be a recession, Liana Keserić, CEO of Raiffeisen Bank in Croatia, Balazs Bekeffy, CEO of OTP Bank in Croatia, and Draženko Kopljar, Chief Operating Officer at PBZ Bank, agreed that – there will not be.

– The euro provides us with a shield, albeit not bulletproof, but against macroeconomic effects. The Eurozone has a much slower growth of interest rates compared to EU countries that are not in the Eurozone. Yes, rates have risen from zero, but thanks to the introduction of the euro, we have very good protection. Moreover, Schengen and the Eurozone will give us a boost in tourism, and since Croatia is a tourist country, this will also boost GDP growth,” explained Kopljar, adding that the euro will not bring us a recession.

Keserić added that GDP growth will be slower, but that a recession is not in question, neither in Croatia nor in the Eurozone.

Fintech – threat or opportunity?

When asked whether financial technology, so-called fintech, is a threat or an opportunity for the banking system, Keserić believes that with the right mindset, almost nothing is a threat, including fintech.

The development of fintech forces banks to be better, more flexible, and more agile, and to open their minds to customer desires, added Žižek, who definitely sees fintech as an opportunity.

However, among the top five banks in Croatia, the digital bank Revolut holds the second position, which is therefore a threat, noted Bekeffy.

– However, for us, every threat is an opportunity for collaboration,” added Bekeffy, noting that OTP collaborates with fintech companies.

Looking at the profitability of fintech companies, it is about ‘hype,’ said Kopljar. On the other hand, he pointed out that the advantage of fintech is that they are young, agile, technology-oriented, and focus on specific niches. Banks, on the other hand, offer a range of different services, including government bonds, added Kopljar.

– Fintech will come and occupy some niches, but banks are here to stay,” emphasized Kopljar.

All panel participants agreed that fintech companies raise the bar for the competitiveness of banks and force them to innovate, but that banks still provide essential services such as lending, personal banking, and savings.

All panelists emphasized that banks are synonymous with security and trust, while fintech still needs to reach that level.

In line with the expression ‘change is the only constant’ mentioned by Žižek, the conclusion is that the best customer experience will ultimately attract the most users. The fintech industry certainly leads in this regard, thus putting pressure on banks to be increasingly flexible and innovative.

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