The Bank of Georgia Group PLC, listed on the FTSE-250 as BGEO LN, pioneered Internet banking in Georgia. The bank’s digital leadership helps it satisfy over 1.6 million retail and 81,000 corporate clients and earn a 20% return on equity. The strategic priorities are customer-centricity, strong customer connections, specialized financial services, shared possibilities, long-term value, rigorous governance, and thorough risk management. Motivated by purpose, this technique empowers customers and boosts Georgia’s economy (Pyle, 1999).

According to its 2022 annual report, the bank’s digital transformation relies on a robust I.T. infrastructure and enhanced cybersecurity to address cyber risks and support its digital products. Risk management addresses financial, operational, and cyber concerns to guarantee sustainable banking operations and consumer confidence. This extensive risk assessment, financial overview, and strategic and operational strengths of the Bank of Georgia show its potential for fintech development and innovation.

1-      Introduction of report

The Westminster Business School Bank Technology module demands a detailed report of the Organization that needs to be selected by the Student. For this purpose, the Bank of Georgia PLC Group has been selected to discuss the bank’s market risk, focusing on contemporary theoretical and practical advancements. The required report demanded well-organized, demonstrated preparation, analytical abilities, understanding of information strengths and weaknesses, and excellent presentation, with credit for the range and depth of materials employed. To address the requirements, we have prepared a report based on the Organization’s historical performance exchange in the last 3 months and the share trading pattern and investment recommendations based on the discussion in the report.

2-      Background of Bank of Georgia Group PLC

a)      Organizational History

By using the ticker symbol BGEO LN, the prestigious Bank of Georgia Group PLC, a significant participant in the world of finance, has established its place on the FTSE-250 index. It is widely acknowledged that the Bank of Georgia, which serves as the foundation of the Group, was an early innovator in digital banking within the state of Georgia (Hagen et al., 2005). With over 1.6 million retail clients and over 81,000 corporate customers engaged regularly, it caters to a big clientele and offers its services to many consumers. One of the most important factors in achieving high levels of customer satisfaction and delivering a return on average equity that is consistently more than 20% is the effective execution of this digital leadership.

b)     Strategic Direction of Bank

The bank’s strategy direction focuses on establishing deep customer relationships via the provision of specialized financial products and services. This is done to achieve the bank’s strategic direction. As a result of this step, customers are guaranteed to enjoy a positive and consistent experience across all of the bank’s touchpoints. The commitment to shared possibilities, the development of long-term value, rigorous corporate governance, and a comprehensive risk management framework all contribute to strengthening this strategy centred on the customer(Sikharulidze et al., 2022). Furthermore, the bank’s strategy is infused with a purpose-driven ethos, aiming to empower clients and contribute to Georgia’s general social and economic prosperity. This is being done to achieve the bank’s business plan.

c)      Strategic direction from a technology perspective

As a part of its journey, which was documented in the annual report for the year 2023, the Bank of Georgia highlighted its strategic pivot towards digital transformation, which has become increasingly vital to its operational ethos (Al-Aali & Teece, 2013). Having a robust information technology infrastructure and implementing cutting-edge cybersecurity measures are the pillars upon which this change is constructed. Through the implementation of these steps, the bank will continue to maintain its resilience in the face of growing cyber threats. The institution’s proactive information technology strategy aims to support the bank’s ambitious digital offerings, increase operational efficiency, and secure the integrity of customer data. These goals are supported by the implementation of the plan.

d)     Risk Management of Bank of Georgia Group PLC

At the Bank of Georgia, risk management is an all-encompassing process that considers financial and operational risks and cyber threats. This is because the Bank of Georgia is a financial institution. A preventive plan is used by the financial institution to identify, assess, and remove possible dangers(Lau et al., 2004). This ensures that the Organization’s banking operations are reliable and consistent. This comprehensive attention to risk management complies with regulatory criteria and highlights the bank’s dedication to maintaining the confidence and security of its customers and other stakeholders throughout time. While this continues, regulatory requirements are simultaneously honoured (Pyle, 1999).

3-      Construct a Risk analysis for the Bank of Georgia Group PLC

a)      Market Competition

To preserve a competitive edge, the Bank of Georgia is now operating in a highly competitive fintech industry, which needs innovation and the assurance that new technologies help improve rather than erode security. The strategy consists of keeping a careful eye on growing trends and technology to deliver exceptional services without making the system susceptible to new vulnerabilities (Al-Aali & Teece, 2013).

Compliance with rules:

For the Bank of Georgia to successfully navigate the intricate web of financial regulations, the firm must find a way to strike a delicate balance between acting complying and being flexible(Eling, 2018). When using technology for compliance, especially with the General Data Protection Regulation (GDPR), it is essential to develop robust defences to ensure the safety of client information. Because of this, it is necessary to conduct regular audits in addition to a cycle of continuous improvement.

Potential Dangers to Cybersecurity

Because Bank of Georgia is digital, it is susceptible to a broad range of cybersecurity risks. It is of the highest significance to reduce them via the use of contemporary security technologies, including the most current authentication and encryption methods. The Bank of Georgia’s commitment to advancing cybersecurity is essential to the Organization’s operational integrity (Cuske et al., 2005).

The operational efficiency

Bank of Georgia’s operational efficiency is leveraged via technology automation to enhance efficiency and eliminate errors, both of which are necessary for the expansion of operations. Scalability is one of the benefits of cloud technologies; however, this benefit comes with the proviso that additional security procedures are necessary to guard against breaches and assure consistent service delivery. Scalability is one of the potential advantages that cloud technologies provide (Eling, 2018).

A Reliance on Available Technology

The fact that the Bank of Georgia is so reliant on technology is a double-edged sword since it increases productivity and the number of possible failure places. To lessen the chance of any service interruptions, it is necessary to have a robust information technology infrastructure and redundancy plans in place. This fact highlights the need to continuously perform system inspections and technology updates (Lau et al., 2004).

Customer acquisition and Retention

Bank of Georgia uses data analytics and artificial intelligence to create tailored customer experiences to increase customer acquisition and Retention; this is done to boost customer retention. The Retention of customers has improved as a result of this. Through open and honest communication on the firm’s cybersecurity measures, Bank of Georgia’s customers are more likely to be willing to trust the digital environment that the company maintains(Cuske et al., 2005).

Financial Sustainability

Regarding the Matters of Finance and sustainability, there is a direct correlation between the use of technology for efficient resource management and the financial health of the Bank of Georgia. Cyber attacks, on the other hand, provide a significant amount of financial uncertainty. As a result, it is recommended that cyber insurance be invested in and a comprehensive incident response strategy developed (Singh, 2016).

International Expansion Risk

When exploring new markets, managing a range of legal frameworks is required. This is one of the risks associated with international expansion. Bank of Georgia’s technology platforms must be adaptable to efficiently manage cyber security threats across several nations. Additionally, a global compliance framework may be a tremendously aided endeavour.

Product Development

Bank of Georgia’s commitment to product development is crucial to the company’s ability to distinguish itself in the financial technology market and fulfill the expectations of its current and potential clients. However, new goods can expand the extent of cyber security risks, necessitating adopting safe development practices and rigorous security assessments. New products can widen the spectrum of cybersecurity hazards (Singh, 2016).  

Reputation Management

Regarding the management of its reputation, the Bank of Georgia’s reputation in the digital technology field is contingent on how it responds to both technical issues and cyber occurrences. It is vital to have a proactive strategy for regulating online presence and a competent rapid response team for dealing with cyber incidents to maintain and recover consumers’ trust. This is required to achieve the goal of preserving and regaining the faith of customers (Sikharulidze et al., 2022).

Share price Information

The stock price of Bank of Georgia Group PLC reached a new 52-week high during trading on Wednesday, March 24. This record was made during trading. At some point during the trading session, something took place. During the most recent trading session, the stock reached a high of GBX 5,190 ($65.87) and a low of GBX 5,020 ($63.71), with 111728 shares being traded. The stock is now trading at GBX 5,020 ($63.71). The price of the shares has hit a previous closing price of GBX 5,030, equivalent to $63.84. Over the last fifty days, the stock price has had a moving average price of GBX 4,086.59, and it has had a moving average price of GBX 3,708.58 over the same period. There is a significant difference between the two. With a market capitalization of 2.34 billion pounds, the firm’s price-to-earnings ratio is 479.52, the price-to-earnings ratio is 0.88, and the company’s beta value is 1.09. The forecasts indicate that the Bank of Georgia Group will see a growth in earnings and sales of 0.8% and 9.4%, respectively, over the year. On an annual basis, it is projected that earnings per share will grow by 1.7%. The return on equity is predicted to be 25.3% over three years (Parise & Shenai, 2018).

While the earnings of the Banks industry have been expanding at a rate of 23.3% on an annual basis, the profits of Bank of Georgia Group have been increasing at an average annual rate of 34.6% this year. Around the course of the last several years, the yearly growth rate of sales has been an average of around twenty-one percent. The return on equity for Bank of Georgia Group is 36.1%, while the net margins for the firm are 74.1%. There is a significant difference between the two. While the whole equity of the Bank of Georgia Group amounts to GEL4.5 billion, the total assets of the Bank of Georgia Group are equal to GEL28.7 billion. A net interest margin of 5.4% is achieved when all deposits amount to 20.5 billion GEL and the total loans amount to 18.3 billion GEL are considered. Even though bad loans now account for 2.4% of total loans, there needs to be more buffering for them. There is a total of GEL2.3 billion in cash and investments at the short-term level.

• Investment recommendations

Considering the existing ticker, Jefferies has determined that Bank of Georgia Group PLC has the potential to increase its value by 24.3%. The company was assigned a target price of 5,900 GBX by Jefferies, which, when compared to the share price of Bank of Georgia Group PLC, which was 4,745 GBX at the beginning of trading today (01/03/2024), indicates that there is a potential upside of 24.3%. This is because the share price now stands at 4,745 GBX. Over the last 52 weeks, the trading volume has ranged from 2,218 (the 52-week low) to 4,965 (the 52-week high), with an average of 75,370 shares being exchanged daily. When this article was produced, the total market capitalization was currently valued at 2,256,501,603 pounds.

• Conclusion

To summarize, the Bank of Georgia’s ability to innovate and lead in the dynamic financial environment of Georgia has been significantly aided by its strategic emphasis on digital transformation. This emphasis is supported by robust information technology and cyber security frameworks, as well as a comprehensive risk management plan(Hagen et al., 2005). In addition, the Bank of Georgia has a comprehensive risk management programme. In a global market that is becoming more digitalized, these strategic pillars make it possible to deliver excellent service and serve as the basis for the bank’s longevity and further development in the future.

• Reference
• Al-Aali, A.Y. and Teece, D.J. (2013) ‘Towards the (strategic) management of intellectual property: Retrospective and prospective,’ California Management Review, 55(4), pp. 15–30. doi:10.1525/cmr.2013.55.4.15.
• Cuske, C. et al. (2005) ‘Towards formal ontologies for technology risk measurement in the banking industry,’ SSRN Electronic Journal [Preprint]. doi:10.2139/ssrn.744404.
• Eling, M. (2018) ‘Cyber risk and cyber risk insurance: Status Quo and Future Research,’ The Geneva Papers on Risk and Insurance – Issues and Practice, 43(2), pp. 175–179. doi:10.1057/s41288-018-0083-6.
• Hagen, S.M., Haukås, K. and Wasland, J. (2005) ‘Organizational structures and effectiveness in Norwegian and UK Banks: A Comparative Study,’ Beta, 19(1), pp. 1–18. doi:10.18261/issn1504-3134-2005-01-01.
• Lau, K., Chow, H. and Liu, C. (2004) ‘A database approach to cross-selling in the banking industry: Practices, strategies and challenges,’ Journal of Database Marketing & Customer Strategy Management, 11(3), pp. 216–234. doi:10.1057/palgrave.dbm.3240222.
• Parise, T. and Shenai, V. (2018) ‘The value effect of financial reform on U.K. Banks and insurance companies’, International Journal of Financial Studies, 6(3), p. 81. doi:10.3390/ijfs6030081.
• Pyle, D.H. (1999) ‘Bank Risk Management: Theory,’ Risk Management and Regulation in Banking, pp. 7–14. doi:10.1007/978-1-4615-5043-3_2.
• Sikharulidze, D. et al. (2022) ‘Determinants of the structure of the board of directors and their impact on the performance of the Georgian Banking Sector,’ Globalization and Business, pp. 83–91. doi:10.35945/gb.2022.13.012.
• Singh, D. (2016) Banking regulation of the U.K. and U.S. Financial Markets [Preprint]. doi:10.4324/9781315568676.

• Appendix
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1. Weekly Trading pattern of share trading since 1-Jan-2024

1. Financial Ratios