After losing a relatively modest 4% of GDP to the COVID-19 pandemic in 2020, the Ukrainian economy grew at a healthy 3.2% in 2021 and was expected to grow at the same pace in 2022. The sudden Russian invasion heavily impacted this forecast. The initial stage of the invasion hit the capital Kyiv and ten regions, which jointly account for 55% of pre-war GDP. Ukraine’s GDP shrank by 15.1% in the first quarter of 2022 – the year-on-year decline recorded in March 2022 was a massive 45%. In the second quarter, GDP fell by a staggering 37.2%.
Today, the fighting continues in the regions that account for less than 15% of pre-war GDP. But even so, the World Bank estimates that the Ukrainian economy will shrink by one-third in 2022, a far higher number than the typical threshold of 15% that economists use to start referring to a severe economic recession as an economic disaster.
Each day the war continues, the cost of postwar reconstruction is driven even higher, with current estimates placing the expense at more than 350 billion dollars. It will take a mutual effort and comprehensive financial support to rebuild the Ukrainian economy after the war. Today, businesses try their hardest to survive, relying on financial institutions to assist them. A healthy banking system is vital to any nation’s economic foundation. Currently, Ukraine’s banks juggle maintaining stability, supporting citizens – including the disbursement of social benefits, salaries, and pensions – and providing additional financial investments to support the survival of Ukrainian entrepreneurship.
To be able to serve the Ukrainian economy, the financial industry had to adjust its operations to unpredictable war conditions. Banks focused on building their resilience by improving their ability to absorb losses and maintain lending. Many Ukrainian financial institutions turned to technology to ensure the continuation of operations. One such example is Kredobank.
A member of one of the largest financial groups in Central and Eastern Europe, PKO Bank Polski, Kredobank is classified as a systemically important bank by the country’s National Bank. Besides providing financial support for retail customers, Kredobank also funds business investments. The war seriously disrupted the bank’s operations, endangering employees’ lives, jeopardizing the functioning of bank branches, and hindering cash distribution from ATMs across the country. These interruptions affected people’s ability to get financial support during a time it was critically needed – as many citizens were forced to relocate due to military activities. Kredobank, like other Ukrainian banks, relentlessly works to ensure international financing and help for the Ukrainian economy while transforming its operations to address daily challenges. The employees of Kredobank have taken on the huge responsibility of helping ensure business continuity for the Ukrainian economy.
Rapid transformation in a traditional sector
Although banking solutions today include digital and tech-based services, the industry is still perceived as old-fashioned and traditional, only slowly embracing changes brought by technology. Dealing with strict legislation and personal data handling, banks face specific challenges in accelerating digital transformation. However, this situation doesn’t stop institutions such as Kredobank from striving to adopt and make the most of cutting-edge technology.
Kredobank started its digital transformation years ago but had to speed up its plans to ensure business continuity after the war began. “Our business continuity is largely dependent on technology. For example, the technology required to support business processes will apply a stack of IT solutions to restore the systems to stable operations as quickly as possible. In times like this, fast recovery becomes a priority,” commented Artur Cieslar, the Vice President of the Management Board and the CIO at Kredobank.
In order to boost security, safeguard customer data, and protect its business processes against continuous cyberattacks, Kredobank turned to Microsoft Azure. The bank uses IaaS, PaaS, and SaaS services in the cloud computing platform, which simplifies operations and enables quicker implementation of new solutions. This year, to further strengthen its resilience, the bank started storing backups on Microsoft Azure as well. Following the Cloud migration strategy roadmap, Kredobank plans to continue the rapid adoption of Azure even more.
Mitigating risks in wartime, powering the economy in peacetime
While managing wartime risks and solving accompanying challenges, Kredobank continues supporting the Ukrainian economy. Backed by technology, the bank provides financial services to Ukrainian citizens and helps to uphold Ukrainian businesses in spite of hardship. Kredobank consistently negotiates with international organizations to obtain credit lines and financial support for Ukrainian enterprises.
Nonetheless, the bank continues to look ahead towards peacetime, as well – aware that the Ukrainian banking sector will play a major role in the reconstruction of the country and its economy. Resilience to hardship and utilization of state-of-the-art technology make for a great start to having a strong and stable banking sector after the war.