How it all began in May 2015: an interview with AIB Bank’s Valerie Byrne

Raisin just celebrated a successful first five years and we took advantage of the occasion to look back at how we started — what drove the founding of Raisin and the partnerships that established us as a pan-European company, breaking down barriers to better saving across the continent. We had the opportunity to speak with Valerie Byrne of Allied Irish Bank about why they chose Raisin and how a big bank sees partnering with a fintech.

AIB Bank was one the first banks to join the Raisin platform, in May 2015. How did you learn about Raisin and when did you decide to put your trust in a fintech startup from Berlin?

Our CEO at the time, David Duffy, had been made aware of Raisin’s (formerly SavingGlobal) presence.  Senior AIB management met with Tamaz and Frank and from there our partnership began.  Although they were a start-up, Raisin presented themselves as very strong, knowledgeable professionals.

What are the biggest advantages for AIB of working with Raisin?

Our partnership with Raisin, a fast growing European deposit broker, has been a most positive experience. The Raisin management team are highly professional individuals with whom we have built a strong working relationship, sharing ideas, making broader connections and making new ideas a reality.

AIB, established a retail funding channel through Weltsparen in Germany in 2015.  This channel aids diversification and helps us insulate against any potential future liquidity shocks in Ireland. It provides AIB the opportunity to compete in the German deposit market where we have access to trillions in deposit savings.

(Given the low interest rate environment in Ireland, our offering is of course not currently as attractive as it was when we first launched.)

Do you see the distribution model working for Irish customers?

A partnership with a fast-growing fintech allows us to provide new products and services to our customers, transforming the speed and agility with which we can delivery greater opportunities to our customers. With Irish deposit interest rates so low, access to the European Market offers great potential to Irish customers.

Since 2013, interest rates have decreased dramatically. Do you think the time has come to reverse this trend and is the ECB on track to raise rates by the end of 2019?

The latest from our Eurozone watch is forecasting deposit interest rates in the Eurozone unlikely to start to be hiked until the autumn of 2019 at the earliest. Further out, the market envisages rates remaining low; indeed the three-month rates are not expected to get to 1% until around mid-2023.  Personally, I am really looking forward to a more normalized deposit interest rate environment, where we can offer our customers at a minimum a modest return on their savings.

What are the biggest challenges AIB had to overcome in the last five years?

The Irish state invested a large amount of money in AIB when the global financial crash occurred, and the bank is determined to repay that.  Our return to sustainable profitability and last year’s IPO, which was the largest in Europe, have gone some way to helping us do so.

One of the IPO targets included a sustainable cost income ratio target of 50%.  That has been achieved through the adaptation of technology and the flexibility of our workforce.  Our customers are telling us digital and convenience are priorities for them.  We have seen 96% of customer transactions become automated, and 67% of our transactional customers are active on digital channels.

AIB has had an elevated level of NPEs, and those NPEs have reduced materially from €18bn in December 2015 to €7.2bn in September 2018.  This represents a 77% reduction from peak NPEs. AIB now has a stronger and more resilient capital base of 17.9% fully loaded CET1.

Challenges remain, but the bank is well equipped to face them.

A warm thank you to Valerie Byrne for speaking with us! We look forward to a continued dynamic partnership for many years to come.