Recovery is still the name of the game in Slovenia but banks are confident that the card market is poised to rise. CI investigates whether the country’s card market will enter growth over the next few years and what we can expect when it does
The Slovenian card payments channel declined during the review period mainly on account of the recession that has crippled the country’s economy. The government took a series of steps such as offering stimulus packages to banks in December 2008 and February 2009 to improve lending to priority sectors. Again during 2013, the government is planning to inject EUR900m (US$1.2bn) into the banking sector to improve liquidity and provide loans to priority sectors such as SMEs. As the recovery of the economy will take time, over the forecast period, the card payments channel is further expected to experience slower declining trend compared to review period.
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Measures taken by banks to encourage card use
All major banks in Slovenia are adopting new strategies to increase card penetration, and are also focusing particularly on niche segments such as young consumers, sole proprietors, professionals and small and medium-sized enterprises (SMEs). Banks are also increasingly making use of social networking sites such as Facebook and YouTube to reach their target audiences. With regard to serving SMEs, banks are appointing relationship managers and expert consultants to involve themselves at all levels of business growth and help SMEs improve their businesses. Banks are also in a position to cross-sell their card products by offering loans through the cards. For young individuals banks are conducting programs such as ‘evenings in the bank’ to promote financial awareness, while for low-income individuals and senior citizens, banks such as SKB are offering Visa and MasterCard cards combined with insurance.
Growth in online and conventional retailing resulting in enhanced card use
Growth in internet penetration has resulted in increased online retail sales in the country, and the number of Slovenian enterprises making purchases online was above the EU average in 2012. While 17% of Slovenian enterprises made online purchases, the EU average was 16%. Likewise, the turnover achieved through e-commerce by Slovenian enterprises during 2012 increased from the previous year to reach 13%. Conventional retail sales also grew from EUR11.5bn in 2010 to EUR12.3bn by the end of 2011. To benefit from the growth in online and conventional retailing, banks are increasingly expanding their merchant and point-of-sale (POS) networks, as well as improving their internet banking infrastructure.
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By GlobalDataAdoption of secure payment technology to drive card-based transactions
To offer more security to card users and enable them to conduct more online and offline transactions, several banks in the country have taken steps to offer enhanced security features in cards. Several banks in Slovenia are offering cards with the inclusion of chip-and-PIN technology. Similarly, to conduct secure online transactions, banks have started to offer the 3D-Secure service to cardholders. With the adoption of advanced security features, the use of debit and credit cards is expected to rise over the forecast period.
Growth in young and economically active population to drive the demand for cards
Banks are offering tailor-made products to drive adoption and increasingly target the young population. The younger generation is a considerable and growing target segment: according to the US Census Bureau, there were 346,643 people aged between 15-29 years, representing 17.3% of the country’s total population in 2012. Similarly, the percentage of economically active people in comparison to the overall population stood at a healthy 86.6% in 2012, and is projected to increase to 86.7% by the end of 2017. To attract the younger population and working people, banks are offering debit and credit cards with special discounts and privileges.
Emergence of new technologies
During 2010, contactless cards and SIM-based near-field communication (NFC) technology were undergoing trials in Slovenia. In December 2010, Banka Koper took the initiative to conduct trials to implement NFC-enabled mobile contactless payments in the country. The trials were conducted by the bank in association with Cassis International, Inside Contactless, Sagem Orga, Sagem Wireless and Mobitel. According to MasterCard, similar trials are underway in the country to offer cards that support its PayPass technology.
In June 2012, Visa issued cards that support contactless technology on its Activa cards. The emergency of new technology in the country is expected to have a positive impact on the card payments channel.
Increasing demand for cards with enhanced security features
All banks and card issuers in Slovenia are offering cards with enhanced security features such as chip-and-PIN and 3-d secure technology to reduce card fraud online and in-store.
With the adoption of cards with advanced security features, the card fraud value had decreased significantly during the review period from EUR160,283 in 2008 to EUR115,539 in 2012. Improvements in technology to make transactions safer and more convenient are expected to drive the card payments channel over the forecast period.
Prepaid cards offer growth prospects
The prepaid card category is at a very nascent stage in Slovenia, with only a few banks offering these cards. The category holds a negligible share in the overall card payments channel. For instance, Banka Koper is offers the MY Activa Visa Electron Prepaid card for both customers and non-customers. Likewise, in 2010, Ljubljanski potniki promet (LPP), the city bus operator, launched the Urbana Card, a prepaid card for electronic ticketing. The card is issued at a cost of EUR2 and can be refilled with amounts ranging between EUR1 and EUR50.
The growing popularity of prepaid cards in the country, coupled with low levels of penetration, offers a significant opportunity for both foreign and local banks to access the unbanked population in Slovenia.
Embracing social media to benefit the cards and payments industry
The use of social media by businesses to promote products and services is gaining popularity in Slovenia. Banks such as Banka Koper, SKB and Nova KBM are increasingly making use of social networking sites such as YouTube and Facebook to reach their target audiences, improve brand awareness and promote products. Growth in the number of banks embracing social media to engage with customers will have a positive impact on the cards and payments industry.
