Lay your cards: Ukrainian banks lost more than 1.8mln active cards since January'22. What keeps this banking segment afloat?

The number of active cards, that is, the ones by which at least one transaction was made in the previous month, is one of the most important indicators of the banking business. From October 2021 to October 2022, the number of active cards in the Ukrainian banking system increased by 2.4 million in total. The growth leaders were PrivatBank, monobank (UniversalBank); A-Bank, Ukrgasbank, Vostok Bank, etc also had a significant increase in their new cards.

However, looking at card statistics from January 1, 2022 to September 1, 2022, reveals that Ukrainian banks, the largest in particular, lost over 1.8 million active cards. The growth trend can be found only in PrivatBank.

The cut down of cards further accelerates the fall in the service component of bank revenues, and indicates the outflow of customers as well, who will be difficult to return even in the post-war period.

Mind analysed the main factors that affected the amount of bank cards and discovered that the trend was not only the result of the war.

Shrinking number of bank customers due to the outflow of Ukrainians abroad. This is the most apparent and the most global factor that affected the card segment.

According to the UN, almost 7.8 million Ukrainians were forced to seek refuge in Europe, of which 4.8 million received temporary protection status.

The impact of this factor is uniform and all-inclusive – the number of cards is being reduced in almost every bank. There is, however, a clear geographical and war tendency. "The drop in active cards is linked to a decrease in activity with cards that were opened in the occupied territories," the press service of Oschadbank commented to Mind.

As for the Ukrainians abroad, they quite reasonably switch to servicing in local financial institutions as their stay is prolonged.

"According to our analysis, a growing number of customers abroad switch to payments by foreign bank cards, because these are where welfare payments and salaries are paid when Ukrainians get employed in Europe, etc. And their Ukrainian cards become inactive", the press service of Sense Bank (formerly – Alfa-Bank) said.

Some state-owned banks that massively serve the military are the exception to the general pattern. "Salary payments to servicemen in 2022 increased several times, so this segment has explosive growth rates," Sense Bank adds. This partly explains why the growth in the period from January to September was seen only in PrivatBank – the largest amounts of payments to the military go through it.

The high base effect. A huge role in increasing the number of "plastic" (including virtual cards, NFC, etc.) was played by the state programme ePidtrymka ("eSupport"). It allowed people who had been vaccinated against COVID-19 to open a special card and receive UAH 1,000 of assistance. From the very beginning, six banks participated in the programme, according to the Ministry of Economy: monobank, Alfa-Bank, A-Bank, PrivatBank, Ukrgasbank, Oschadbank. As the use of an existing bank account was not allowed, a large number of entirely new active cards appeared in the system.

The main rise in the number of cards occurred in the second half of 2021, when banks were preparing to launch eSupport.

Top 15 banks by the number of active cards from August to December 2021

		Active cards as of 1.12.21	Active cards as of 1.8.21	Difference
	Total	43 809 555	41 675 162	2 134 393
1	PrivatBank	23 541 383	22 877 464	663 919
2	Oschadbank	6 174 710	6 002 711	171 999
3	Universal Bank	4 964 197	4 156 915	807 282
4	Reiffaisen Bank	2 274 953	2134 308	140 645
5	FUIB	1 231 658	1 173 630	58 028
6	Alfa-Bank	1 094 601	1 001 446	93 155
7	Ukrsibbank	1 083 688	1 063 832	19 856
8	Ukrgazbank	497 398	464 223	33 175
9	А – Bank	645 743	576 525	69 218
10	OTP Bank	463 135	439 086	24 049
11	Ukreximbank	206 507	214 117	-7 610
12	"Pivdenny"	198 049	198 209	-160
13	TAScombank	171 910	127 002	44 908
14	Credit Agricole	194 849	187 728	7 121
15	Vostok	231 758	214 046	17 712

In 2022, this factor had a moderate impact, as people who were entitled to support already owned the required card. And having withdrawn money, they usually did not use it further. The usage of these cards was somewhat revitalised with the allocation of the government financial aid to internally displaced persons: accruals for IDPs were made to the same ePidtrymka linked to the Diya app.

Increasing customer requirements. Sense Bank names another reason for reducing the number of active cards: tougher customer requirements when applying for loans. Consequently, the number of active credit cards has also decreased. As Mind previously wrote, most credit programmes work mainly through government projects and short-term loans to individuals for whom banks are confident in their solvency.

Banks' policy to prolong the "validity" of cards. Each and every bank decided to automatically extend the validity of cards at the beginning of the war. "This allowed individuals to keep using them. But not all online transactions with such cards are available, which probably prompted people to get new cards", suggests Ivan Svitek, Chairman of the Board at Unex Bank.

"Currency tourism" that was very dynamic this spring. So-called currency tourists, who profited from the difference in exchange rates in the border areas, opened many cards in various banks. And for a time this was a very large-scale trend.

Customer migration from non-banking services. For many years, alternative payment services to banks have been fighting for citizens who did not use mobile and remote banking services for various reasons or were simply looking for a "plan B". It was about several million citizens: pensioners, rural residents, people who were used to dumb phones, etc. However, in 2022, the banks played everything back.

Because of the war, some of these folks were forced to move to other regions of Ukraine or abroad. They started to apply to banks and open accounts there. "Due to the war and migration, a large number of people carried their money to banks and opened cards to have permanent access to the money. Because it is dangerous to travel during the war with cash," explains financial analyst Vasyl Nevmerzhytsky, adding that such customer behaviour eventually led to an increase in the number of active cards.

Non-banking services, in their turn, had to give up a number of ambitious plans. For example, the telecom giant Kyivstar suspended the Smart Money programme in 2022. "The company decided to stop developing it due to a change in their strategy. Being a telecommunications leader and having a great responsibility to citizens, the company believes it is necessary to channel all its resources to restore the infrastructure destroyed by the full-scale war, as well as to continue to digitalise the country through the development of 4G," the Kyivstar press service said.

More intensive digitalisation of the card issuance process. "Now you can open an account and issue a virtual card linked to it online in at least ten Ukrainian banks. On the one hand, this is freedom, on the other – competition. Thus, individuals have a simple, geographically unlimited choice between several tariff proposals, interest rates on balances, etc.", Ivan Svitek points out.

All this together led to an increase in the number of active cards during the year from October 2021 to October 2022 and mitigated the market decline with the outbreak of war. 

Top 15 banks by number of active cards, October-2021 to October-2022

Bank Name	Number (items, units)
	of electronic means of payment, which validity period has not expired (in circulation)	active cards as of 1.10.22	active cards as of 1.10.21			self-service banking devices			payment terminals					Number of points of sale/services provided, units
				difference	total	ATMs	including cash-in ATMs	self-service machines	total	POS	including contactless	bank	including contactless
1	2	3			4	5	6	7	8	9	10	11	12	13
Total	108779635	45185474	42807034	2378440	28355	15420	2543	12935	355314	346218	334928	9096	4489	305227
PrivatBank	47533024	25664560	23305753	2358807	16712	6621	1207	10091	213701	212127	201625	1574	1382	185955
Oschadbank	16605342	5994740	6056042	-61302	5161	2700	57	2461	71960	69261	69261	2699	716	47101
Universal Bank	13774444	5719372	4552098	1167274	21	21	15		39	3	3	36	36	6118
Reiffaisen Bank	7115721	2060734	2215994	-155260	1742	1501	554	241	25761	25005	24914	756		19147
FUIB	4631307	862977	1193625	-330648	469	469	5		5518	5159	4792	359	359	7226
Alfa-Bank	3462506	791439	1049423	-257984	491	491	213		9887	9669	9667	218	218	10022
А – Bank	3435158	740281	618938	121343					1578	1376	1376	202		3828
TAScombank	2360617	132915	150831	-17916	106	106	71		1446	1359	1359	87		3215
Ukrsibbank	2144577	932912	1070136	-137224	678	676	113	2	6140	5424	5424	716	716	6442
Ukrgazbank	1986926	547900	476573	71327	675	675	43		1497	1106	1106	391	391	342
OTP Bank	1530735	358710	452464	-93754	146	146	129		146	1	1	145		7
Vostok	598650	239540	225675	13865	69	69	1		4764	4661	4661	103	103	4746
Ukreximbank	453989	171885	208831	-36946	341	341	27		1282	1171	1046	111	13	1047
Credobank	439181	146649	147544	-895	326	240		86	162	24		138		4
Pivdenny	394870	149093	197989	-48896	130	109		21	2364	2244	2124	120	119	2081
Credit Agricole	384871	167126	191174	-24048	268	268	40		161			161	161	19

Why did PrivatBank's card statistics not "shrink "? As already noted, PrivatBank was the only bank that maintained a positive trend in the number of active cards during the active phase of the war.

"Since the beginning of the year, as of 1.11.2022, the number of cards issued by the bank has increased by more than 930,000, and the number of new customers by 613,000. The reasons for the growth in the number of clients are trust in the bank, stable operation of the bank and all its systems and services, the work of the bank's network and network's rapid recovery in the de-occupied areas," says Oleg Serga, Deputy Head for External and Internal Communications at PrivatBank.

Privat denies the effect of government programmes on the growth in the number of cards*. " For instance, the bank as a payment operator of assistance under international programmes pays funds to the cards of any bank indicated by clients in the application for assistance", Oleg Serga clarifies.

In his words, the bank has relocated all processes and data to cloud storages abroad. "It was done in the shortest possible time. Therefore, the work of the bank and its services does not depend on the situation with power supply, possible physical vulnerability of its equipment or hacker attacks. We actively support no-touch payments, encourage merchants, expand the network of terminals, offer technological solutions that work even without electricity. As soon as we have our Victory, we have some interesting things to offer to our customers", Oleg Serga says.

"Most government programmes of support to Ukrainians are built on the basis of the ePidtrymka card. And I do not see any significant bureaucratic barriers for the bank to start issuing it. There are technical difficulties if the bank wants to set up the process of remote registration, but they can be overcome. For example, we started issuing such cards in autumn," Ivan Svitek says.

What should be expected next year? Competition for customers will increase, and therefore new services will appear and the quality of existing ones will also improve. "For example, I expect that most banks will return interest on card balances – the statistics of banks' portfolio structures show that customers need it," Ivan Svitek says. According to his forecasts, card lending will intensify, banks will probably be more active in the cashback programmes portion.

Sense Bank believes that in 2023 the trend for increasing the number of digital cards used by Ukrainians will persist – that is, cards that do not require tangible"plastic." "Thus, 95% of cards have already been issued through Sense SuperApp. The entire process takes only a few minutes due to remote identification. We also expect the growth of online payments. This applies both to online purchases and payments for services provided," Sense Bank says.

The key trend will be further moving to online. In the eyes of private customers, the procedure of opening an account in a branch increasingly looks anachronistic. "Any bank that intends to work in the retail segment will have to reach this minimum standard," Ivan Svitek believes.

Consolidation of the retail market will be another trend in 2023, according to Mykhailo Komissaruk, Chairman of the Supervisory Board at the Familny Bank. "There will be a general growth and overflow to the private sector," he concludes, emphasising that this trend will get its final shape in the post-war period.