The leading banks over the past 12 months from the Americas.
Much can change in one year. Argentina’s deteriorating economic conditions and a currency crisis that resulted in a record-breaking bailout by the International Monetary Fund are a stark contrast to the buoyant spirit of 2017, which was fuelled by signs of development in the banking sector.
Because of high inflation and bitter memories of account freezes from nearly two decades ago, Argentines have grown wary of trusting banks with their long-term savings and investments. Macroeconomic conditions and short-term funding have meant that tenures on loans have hardly passed the 20-year mark. In 2017, however, thanks to government-sponsored inflation-linked mortgages, banks were finally able to offer affordable, longer dated credit. This was true not just for public sector banks, which have an economic development mandate and can afford to pay less attention to profits, but changed the market for private sector lenders too.
Santander Rio built on the opportunities offered by such government programmes and improved its mortgage application and management process by allowing it to run entirely through digital channels. This resulted in greater ease of use for customers and cheaper costs for the bank.
In particular, the automation of asset appraisals through machine learning slashed the cost per appraisal from $60 to $5 as no human interaction is now required. The process that analyses property prices was also fully digitised; geolocalisation and digital comparison with similar real estate complements customers’ own descriptions leading to a reduced error margin in the pricing process, according to Santander, of less than 5%.
Santander Rio chief executive Enrique Cristofani says: “On behalf of the more than 9000 employees of Santander Rio, I thank The Banker for this award. It is a well-deserved recognition of our work [and] at the same time challenges us to try harder to become more agile and digital for our customers and more committed to serving our community.”
CIBC First Caribbean continued to outperform the financial system in the Bahamas in 2017, with net profits increasing by 8.8% to Bh76.7m ($76.7m) and the non-performing loan ratio dropping to 6.8%, compared with 9.2% in the system, according to the International Monetary Fund.
It is not surprising, then, that CBIC First Caribbean, has been named Bank of the Year for the Bahamas for three years running.
The bank has honed its focus since mid-2017 on improving the mobile banking service it provides customers. It recently implemented eight new features, all firsts for the Caribbean, to enhance its already award-winning mobile banking app, which was launched in 2016.
New additions include fingerprint and facial recognition, and a mobile location confirmation. This final component allows for a customer’s location to be compared to credit card transactions, not only cutting down on fraud but eliminating the hassle of charges being declined during travel.
A new feedback upgrade allows customers to let the bank know about their experience, providing input for the future digital roadmap.
The numbers speak for themselves. Client penetration increased by 70% between the launch in 2016 and February 2018, with transactions conducted via the app up 260%.
“Harnessing technology to improve our products, services and operational efficiency, as well as prudent risk management practices, contributed to our success,” says CIBC First Caribbean managing director Marie Rodland-Allen.
The bank is in an ongoing process of simplifying transaction processes and cost structures with the goal of removing paper from the banking experience.
This does not mean keeping customers from visiting branches, however, which are in the process of being modernised, but to allow the bank to fit into the lives of customers in a seamless fashion. Ms Rodland-Allen says the accomplishments come from technological advances, but are made possible by the bank’s staff.
“Winning this award for a third consecutive year is a fitting testament to the high standards, dedication and commitment of our loyal staff and trust of our cherished customers,” she says.
Digital, but with a human touch, is a winning combination for Scotiabank Barbados. The first digital branch in Scotiabank’s Caribbean system was opened in Barbados in August 2017. The branch has a more open layout and is designed to enhance the interaction between customers and employees. It has a social area and an educational space for workshops and informal discussions on key topics.
This was complemented by the system-wide introduction of digital ambassadors, who work individually with customers to enrol them for online and mobile banking. The result has been a 31% increase in customers using online and mobile banking channels. On the flip side, there has been a 22.5% decrease in in-branch transactions, such as deposits, withdrawals and bill payments, all of which can be done digitally.
“It is important to note that the digital process for Scotiabank does not eliminate the human element from customer service. The human element is still critical – it is simply a shift in focus,” says David Parks, managing director of Scotiabank Barbados.
An example of this dual focus has been the appointment of a customer experience manager. This new managerial position responds to customer feedback and resolves issues that could otherwise pose a roadblock to client satisfaction. At the same time, the manager has been a driving force in helping customers transition to digital options.
In many ways the position reflects Scotiabank’s strategic agenda and five-pillars – business mix, customer focus, digital transformation, leadership and structural cost transformation. The position is in flux and taking on a much broader scope to create a customer relationship management system so that the bank can engage with customers on an intricate level as it continues to grow.
Net profits at Scotiabank Barbados in 2017 were Ba66.3m ($33.16m), while Tier 1 capital was Ba672.8m, an increase of 55% from the previous year.
Bermuda, The Bank of NT Butterfield & Son
The Bank of NT Butterfield & Son celebrated its 160th anniversary in 2018 by completing two acquisitions to extend its global reach.
In February 2018, it agreed to acquire Deutsche Bank’s banking and custody business in the Channel Islands and the Cayman Islands, a move that will increase the bank’s overall deposits by approximately 20%. A month later, it reached a second agreement with Deutsche Bank to take over its global trust solutions business, adding to its existing holdings in Guernsey, the Cayman Islands and Switzerland, as well as giving it a footprint in Singapore.
The acquisitions reinforce Butterfield’s vision of being the world’s leading independent offshore bank, allowing it to expand in jurisdictions that other global players are mostly leaving.
The bank also continued to build on its technological infrastructure, creating links between its European and North American/Caribbean platforms. In 2017, it completed its conversion of credit cards to a new contactless system.
Butterfield’s newest focus, which started in 2018 and is extending into 2019, is to improve its online channels, with the bulk of attention being on online and mobile banking in Bermuda and the Cayman Islands. In Bermuda, it was the first bank to transition its credit cards to contactless technology.
The bank has seen strong growth since it listed on the New York Stock Exchange in September 2016. Stock prices doubled in the 20 months from the initial public offering launch.
Net profits in 2017 were $153.2m, up 32.2% from the previous year, while Tier 1 capital reached $772.2m, up 15.8%. Return on equity was 19.9%, compared with 8.9% the previous year, and the non-performing loans ratio was 1.3%, down from 1.6% in 2016.
Bolivia, Banco Mercantil Santa Cruz
In 2018, Banco Mercantil Santa Cruz (BMSC) finalised the largest move in the country’s financial system in the past 10 years, acquiring another institution to solidify its role as Bolivia’s largest bank.
The acquisition of Banco PyMe Los Andes Procredit allowed BMSC to consolidate its position with traditional products, such as housing loans, and also boost its presence in Bolivia’s important small and medium-sized business segment. After the transaction was completed in August 2018, BMSC had 143 branches, 444 ATMs and 33 field offices and other points of services. The bank now has the largest ATM network in Bolivia.
BMSC forecasts that its acquisition will help improve its already strong position in the country. Net profits were up by 16.2% in 2017 compared with the previous year, while assets were up by 22.6% and Tier 1 capital by 12.4%. Return on equity was 18.9%, up a few decimal points from the previous year.
The bank has simultaneously been working on a complete overhaul of its operating system through a project known as Renovar. The project is renovating the bank’s core banking operations and data management system. It will be finished in 2019, making BMSC the most technologically advanced bank in Bolivia.
The bank has been offering new mobile operations for corporate customers as the project moves forward. Some of the changes already introduced include enhanced transactions through mobile devices that allow for third-party transfers, loan payments, and payroll and supplier payments. On a broader scale, the bank has also introduced fingerprint and facial recognition to mitigate risk for all card holders.
“We are convinced that one of our greatest competitive advantages is our human resource. This, combined with our strong focus on the client, our ethics and innovation, gives us the leadership in the market,” says BMSC CEO Valdés Andreatta.
While Brazil’s economic performance was weak in 2017 and political volatility ramped up ahead of presidential elections, Bradesco’s financial results held steady. In fact, they improved. Net profits grew by more than 10% from the previous year and a slightly higher return on equity was secured for investors. Encouragingly, the ratio of non-performing loans over the total portfolio reduced to 5.6%.
Of even greater note is Bradesco’s digital progress. This has seen efforts to improve customer interactions via chatbots, which the bank says led to an impressive level of customer satisfaction in 2017, as well as more recent development such as the ability to use verbal instructions on the banking platform, which was introduced in 2018.
Other initiatives include the ability to open accounts through the Bradesco app by providing all required information, proofs of identity and signatures digitally, as well as customising the parameters of the account such as the personal credit limit, the overdraft and credit card selection. Generally, technological innovation can help not only to beef up portfolios and customer satisfaction but also to combat fraud. Bradesco’s digital efforts moved in this direction too, using solutions based on geolocation to detect fraud.
Moreover, the bank has been promoting innovation outside of its organisation with a series of hubs and programmes to connect start-ups, large tech companies and investors, both locally and internationally. This activity has been growing over the years and now counts a total of eight programmes thanks to the introduction of a digital platform and a physical lab in 2017, a new space for collaborative work in São Paulo and the creation of a team in New York to capture tech trends.
Banco Bradesco chief executive Octavio de Lazari Jr says that the bank’s focus is “on providing the best experience to our clients, based on the expertise of our people, with cutting-edge banking technology and [our important] presence in Brazil”.
Canada has been vocal about its openness as a country in terms of international trade and immigration, and it appears equally keen to establish itself as a global tech hub. The idea is to retain and attract talent from all over the world to support local innovation programmes.
Royal Bank of Canada (RBC) is committed to the same goal. The lender has created a research institute that focuses on artificial intelligence, Borealis AI, the first of its kind in Canada, according to RBC, which groups more than 65 researchers and scientists to solve practical problems with a global impact.
The bank has been busy with other interesting innovation projects too. RBC Ventures, for example, creates solutions for problems that are not necessarily financial with the aim of onboarding new customers in the future. One of these helps users to manage their vehicles in one place by allowing them to book service appointments with dealers, arrange for tyres to be serviced at home or at the office, rather than at a mechanic’s, or receive and store vehicle information such as recall notices and maintenance records. Customers do not need to bank with RBC to access the app, but the rewards they earn from the tool can be used when financing the purchase of a car through the bank.
Furthermore, RBC is investing in emerging technology such as predictive analytics to help customers manage their day-to-day finances and, in 2017, launched a mobile app that the bank says was the first of its kind in Canada as it offers clients personalised financial analysis.
These initiatives, along with the development of other projects, resulted in solid profits with net profits representing nearly 20% of Tier 1 capital.
Cayman Islands, Cayman National Bank
Cayman National Bank had a banner year in 2017, with net profits up 35% to $19.3m and return on equity at 18.3%, up from 14.1% the previous year. The bank’s philosophy is two-pronged: providing more products and greater security to clients, while at the same time maintaining a sharp focus on having world-class staff.
In 2018, the bank began testing a new service, Notify, that uses mobile phone technology to provide customers with instant notification of card-related transactions. The service not only provides information on card use to ward against cyber risk, but a series of notifications, such as payments due and card expiration dates, to guarantee that customers are never caught off guard.
Bank president Stuart Dack stresses that services depend on human resources and the bank is serious about making sure its staff are well trained and on top of their game. “In an age of homogeneity in financial products, we found that building up our human resources capacity and delivering consistent, unrivalled client service provides the critical pathway to sustainability and growth,” he says.
The bank completed an employee engagement survey in March 2018 to figure out what was working well and areas where improvements were required. The staff are working on a developing an innovation centre to enhance operations. They are also completing the final touches to implement a bank-wide human resources information system.
Cayman National Bank offers opportunities for employees to attend local and international training seminars and fully covers the cost of academic and professional endeavours pursued by personnel.
Mr Dack says that while many banks seek to reduce staff numbers in the name of efficiency or profit margins, Cayman National Bank strives to increase personnel alongside furthering its digital banking to comply with the needs of clients. “We realise that a solid organisation starts from inside out,” he adds.
Santander Chile is powering through its digital strategy. Among its new initiatives is the ‘tax folder’ solution that uses small businesses’ tax information, given with consent, to generate reports for the bank, sparing the customer the need to bring paper documentation to the branch to discuss financing and, crucially, providing a fast solution to the lender too.
The 123 Click loan, which customers can obtain online or through the bank app in three steps, is another example, as is the on/off swipe that allows a customer to block a card through the app, without needing to speak to an operator, reducing the risk of fraud.
Santander also introduced a merit system that rewards ‘positive behaviour’ such as meeting repayments on time. This allows clients to receive exclusive benefits such as additional interest-free instalments and flexibility in the repayments, among others.
Thanks to these and other initiatives, the number of monthly transactions executed through digital channels more than doubled in 2017. Naturally, the digital push translated in a smaller physical presence with a reduction of branches – and costs – and a focus on physical locations of greater value, such as Santander’s WorkCafes: prime location branches aimed at attracting existing and potential customers by offering free work-spaces and wi-fi.
Such initiatives contributed to the bank’s record results in 2017, with net profits growing by more than 20% and a larger return on equity of 19.2%. The efficiency ratio also improved and shed a few percentage points to reach 40.8%.
Chief executive Claudio Melandri says: “We set ambitious objectives for ourselves. We have loyal customers that enjoy improved service; our digital and physical transformation has progressed and we’ve enhanced our reputation. We are a better place to work and becoming a more sustainable bank. This recognition reflects the efforts of our team, and it motivates us to continue working to help people and businesses prosper”.
In 2017, the most pressing issue for Banco de Bogota was technology. One of Colombia’s largest banks, it is keen to keep up to speed with innovation and the changes in cus-tomers’ habits.
Banco de Bogota has launched its Digital Lab BDB, where multidisciplinary teams come together to create and launch new products over a short period of time. Currently, the lab teams are working on five products – in the areas of savings accounts, credit cards, payroll loans, mortgages and other consumer loans – and two digital channels, one for the web and one for mobile phones.
The bank is particularly proud of its efforts to improve accessibility to bank services. It might seem intuitive that a digital product should be opened through digital channels without the need to visit a branch, but customer habits are hard to change and many still prefer a physical location. Banco de Bogota’s ‘self-service’ points within its premises are still the preferred way to open a digital product. Encouragingly, however, more than one-third of digital savings accounts were opened through either the bank’s website or the mobile app – a positive development.
Among Banco de Bogota’s other initiatives are a number of solutions. One allows customers to run balance enquiries or make certain payments through the Facebook Messenger app. Another allows customers to pay bills through ‘intelligent’ ATMs. Another still simplifies processes to transfer funds with the group’s operations in central America and other subsidiaries abroad. Other initiatives have looked at digitally adapting both customer service and the bank’s own work environment.
Banco de Bogota chief executive Alejandro Figueroa says: “The success of our strategy is based on our human talent at all levels of the bank, who with their knowledge, professionalism and adequate risk management make possible the fulfilment of goals and objectives.”
Banco Lafise’s key focus is risk. Or, better stated, managing risk to provide the best quality service to its customer base.
The bank has a three-tiered system to minimise risk, including a highly trained risk management unit, a risk manager for each area, and a system of internal and external audits. Fifteen mitigation and control actions were employed in 2017 as part of the system. Among other procedures, actions included a new organisational structure for the risk management unit, and the creation of new indicators and methodologies for financial risks.
Banco Lafise also created new products in all areas of its client base, as well as specialised wealth management services for high-volume customers, in line with its risk management strategy.
It began a mass roll out of contactless technology for credit and debit cards to make payments easier and safer. The goal was to have customers switch to the new technology by the end of 2018.
The bank also introduced the Lafise Advisor app in July 2018, the first in the country, that allows customers to check investment portfolios in real time with risk and performance indicators.
The new app complements the bank’s three products for high-end customers, including one with a minimum investment of $250,00 for clients who want a low-risk, long-term portfolio, and two others, each requiring a minimum of $500,000 and seeking high profits, but with a moderate to high risk.
“The success of Banco Lafise is the result of the commitment and excellence of our people, which allows us to offer our customers innovative financial solutions tailored to their needs,” says a spokesperson for the bank.
Banco Lafise’s total assets were up 7.45% in 2017, while Tier 1 capital expanded a more modest 0.3%. The non-performing loan ratio was 2.24%, an increase from the previous year, but below the country average.
Dominican Republic, Banco Popular Dominicano
One of the shining stars in the Latin America and Caribbean region, the Dominican Republic’s economic growth is set to continue to outpace its neighbours. Forecasts from the International Monetary Fund project growth of 6.4% for 2018 and 5% for 2019, against significantly lower regional averages.
This buoyant growth is particularly evident when looking at the development of a number of sectors in the country, from tourism to construction – and to banking too. While still relatively small – total assets of full-service banks represent about one-third of the Dominican Republic’s gross domestic product – local lenders have invested to make their products more accessible, both in terms of ease of use and in terms of social inclusivity.
Of note are Banco Popular’s efforts in these areas. The lender re-launched its mobile banking app in 2017, adding new features and improving security – efforts that have continued well into 2018. The app now offers a Visa wallet and can be used to request cash advances, among other features. It has more than 500,000 users, according to the bank, and nearly two-thirds of customers make transactions through this channel.
On the financial inclusion front, Banco Popular has widened its network of agents to reach larger parts of the population through nearly 2000 stores across provinces where banks often lack any formal presence. New functions such as cash withdrawals and bill payments have boosted the number of transactions through Popular’s agents network, providing new income to stores too thanks to the payment of bank commissions when customers use bank services in the premises.
Chairman Manuel Alejandro Grullón says: “Banco Popular Dominicano has [created] a successful banking model based on innovative digital solutions, products and services; technological and operational excellence; outstanding performance through the skills of our employees; and strong risk management.”
Ecuador’s Banco Internacional (BI) has taken to heart the adage that the customer comes first, making it the key component of its strategy in the past 18 months.
The bank has changed the role of its branch managers, keeping their focus on commercial operations, but also putting much greater emphasis on operational and service indictors to create more cohesive teams.
Personnel at the branch level meet daily to organise a schedule to attend to customers’ needs. They meet every 15 days to address issues of customer satisfaction, and on a monthly basis to analyse operational indicators. Branch managers also meet monthly in zone committees to compare data.
BI has also launched a host of new programmes, including online banking for individuals and a corresponding mobile banking app. Online banking now allows for payments and transfers abroad. The bank is now working on version 2.0.
The app, one of the most complete in the Ecuadorian banking system, attracted immediate attention, with 31% of BI’s customers using it in the first six months of the roll out in 2017. Version 2.0 will include fingerprint and facial recognition, and a cheque deposit option. This last function is already available to companies, and it allows companies to deposit cheques remotely using a scanner.
BI increased its domestic market share in 2017, with deposits increasing to 9.8% of the financial system, and it maintained its role as the top lender for companies with sales above $400,000 annually. It had 17.1% of the market share in this segment in 2017, up a point from the previous year.
Net profits in 2017 were $44.2m, up 46.7%, while assets were $3.5bn, up 14.8%.
Banco Agricola is always looking for new options to expand its portfolio and build on its status as El Salvador’s leading bank for loans and deposits.
The bank began down two new avenues in 2018, becoming the first lender in the country to launch an investment fund, and moving into the insurance market with its new ‘insurance banking in the cloud’ platform.
“Our passion for achieving the satisfaction and preference of our customers motivates us to continuously innovate in products and services relevant to their needs, thus, allowing us to maintain our leadership,” says Banco Agricola CEO Rafael Barraza.
The bank received authorisation for the investment fund in 2016 and launched the first product in January 2018. It had 204 clients in the first five months of operation, managing close to $5m. Another fund is planned.
As part of its new insurance platform, Banco Agricola launched two new products. In April 2018 it began testing Business Plan, which provides inventory coverage for small and medium-sized enterprises. In June, it obtained permission to begin a health insurance product, Ideal Health Plan.
The bank is also working on a new project, Omnichannel, to create a more user-centered platform for mobile banking and e-banking. It allows easier payments between customers, mobile phone recharging payments and remittance collection. This final component is critical in El Salvador, with remittances equivalent to nearly 20% of the country’s $24bn gross domestic product. Remittances in the first nine months of 2018 were $4.04bn, an increase of 9% over the same period in 2017, according to the country’s central bank.
Banco Agricola’s strategic management and constant innovation are reflected in its numbers, with return on equity improving to 13.2% and its non-performing loan ratio falling to 1.6% in 2017. Net profits were $67.8m in 2017, up 4.1%.
Guatemala’s Banco Industrial is the largest bank in Central American’s largest economy. This economy has been sluggish in recent years, however, growing by 2.8% in 2017, but that has not slowed Banco Industrial. Net profits were up by 15% in 2017, assets by 7.1% and return on equity was 18.6%
The bank has the largest market share in Guatemala, with 28.4% of total assets, 28.6% of net loans and 24.8% of deposits. Its client base is just shy of 1.5 million and the product-per-client ratio is 5.0, increasing annually since early in the decade.
“Our success is based on the professional education and honesty of our staff. The culture at Banco Industrial is one of respect for each other and this makes us innovative and productive,” says CEO Diego Pulido.
The strategy going forward focuses on retail banking, which represented 13.3% of the market share in 2017, compared with 37% for corporate banking.
While still comparatively low, Banco Industrial’s retail banking segment has grown by 1.5% in the past 18 months and options for faster expansion abound, given the country’s slow banking penetration and efforts to boost financial inclusion. The loan-to-gross domestic product ratio is 32%. Banco Industrial plans on expanding its already large network, made up of 3485 points of service as of mid-2018, including 629 branches and mini-branches.
Banco Industrial continues to innovate its Bi-Check programme, adding a new consumer loan component. The loan programme allows customers to get a quick loan equal to one salary payment as long as they have an account and credit card with the bank. They can receive the sum in cash or have it applied to a retail establishment.
A new digital sales component on the bank’s website introduced in 2017 allows clients to request a loan or an investment fund digitally, speeding up the process for clients and customer representatives alike.
Scotiabank Guyana celebrated its 50th anniversary in 2018 coming off one of its strongest showings in recent years. Assets increased by 6.6% in 2017, net profits by 16.9% and the return on equity was 17.7%. The bank’s non-performing loan ratio was 7.3% in 2017, compared with a 12.2% national average, according to data from the International Monetary Fund (IMF).
The bank has been working through a process of guaranteeing customer satisfaction through greater efficiency and new products to ease transactions. Significant changes were made to back-office support in October 2017, with services such as loan processing and verification moved out of the country to Scotiabank’s Caribbean South Hub in Trinidad and Tobago.
Scotiabank Guyana country manager Raymond Smith says the move has helped reduce duplicate functions and costs, allowing the bank to be more responsive to client needs.
New services, such as a top-up mobile service, have been introduced in the past year to provide new tools for clients. The service allows customers to use ATMs or Scotiabank’s e-banking services to add credit to prepaid mobile phones. While the service allows customers to remain connected to their networks, Mr Smith says it also provides the bank with the opportunity to stand out from the competition and showcase its digital banking channels.
“As we celebrate our 50th year of operations in Guyana, Scotiabank remains committed to helping our customers become better off,” he adds.
The bank could get a boost as Guyana’s economy looks to take off. The government and international financial institutions, such as the IMF, are predicting a bright future as the country prepares to become an oil economy thanks to a huge field discovered by ExxonMobil that will begin operating in 2020.
When Hondurans are looking for a loan, they are increasingly turning to Banco del País (Banpaís) to meet their needs.
The bank saw a 27% increase in personal loans in 2017. This is a big jump, but even more impressive compared with the 2.4% growth achieved by the Honduran financial system as a whole.
Banpaís holds a strong second place in mortgages in Honduras, with a 15.2% market share, and is emerging as national leader in the microfinance sector, with a 18.5% share. The loan portfolio is one of a string of positive figures, with Banpaís seeing assets increasing by 12.3% in 2017, to $2.2bn, and non-performing loans falling to 1%. The non-performing loan ratio dipped further at the end of the first quarter of 2018, falling to 0.98%.
Banpaís also witnessed a huge jump in processing remittances in 2017, registering an increase of 41.2%. A new programme, ‘receive remittances without leaving home’, led to more than 8000 new accounts so customers can receive deposits directly into their accounts. Like many countries in the region, remittances are an important economic component of the Honduran economy, equivalent to 18.5% of gross domestic product in 2017, according to the World Bank.
Banpaís continues to innovate, becoming the first bank in Honduras with facial recognition technology for its mobile application, which allows customers to make transactions faster and safer. About 30% of the bank’s clients now regularly use self-service electronic services.
María del Rosario Selman-Housein, Banpaís CEO, believes the strong numbers result from a solid team that offers agility, efficiency and innovation. “Preparation, attitude and perseverance are key in developing strategies that challenge and inspire team members to produce outstanding results,” she says. A study by Prodatos, a marketing firm covering Central America, supports her thesis. According to the study, 93% of the bank’s customers are satisfied with the service they receive.
Jamaica, National Commercial Bank
National Commercial Bank (NCB) is Jamaica’s leading financial institution and its digital transformation strategy is facilitating even faster growth.
A new self-service platform allows potential customers to open an account digitally in less than 30 minutes. Another recent introduction is a service that sends customers credit card alerts to quickly recognise fraudulent transactions. Internet banking and debit card transactions will soon be added to the system.
These are just two innovations in the bank’s armoury, which is far from over as it pursues its three priorities of building a digital future, accelerating its regional footprint and reinventing its core operating model.
“We have enjoyed significant growth over the past few years and our success has been amplified by the execution of our strategy across our three business priorities,” says Patrick Hylton, NCB’s president and group CEO.
The bank is currently testing a host of new digital applications that will be launched in the next year, including a pivotal container service, which is a cloud-based technology that will reduce time and provide options for non-standard products.
Indicators point to the plan working. NCB had record profits in 2017 for the second consecutive year and continued to expand in the English-speaking parts of the Caribbean. It acquired a controlling 50.1% stake in Bermuda’s Clarien Group (owner of Clarien Bank) in 2017. This followed NCB taking a near 30% share in Trinidadian insurance company Guardian Holdings the previous year.
It does not hurt that Jamaica’s economy is starting to pick up after years of low or no growth. The economy expanded by 2.2% in the second quarter of 2018, the best quarterly expansion since 2009. The World Bank sees economic growth for 2018 at 1.7% and unemployment in April was down to 9.7%, dropping into single digits for the first time in many years.
Mexico, Grupo Financiero Banorte
With the acquisition of a specialist lender, Grupo Financiero Banorte has beefed up its presence in Mexico and plans to take advantage of new infrastructure financing opportunities in the country. Grupo Financiero Interacciones, which Banorte bought at the end of 2017, has a great deal of experience of working with the public administration and expertise in the structuring of short-term infrastructure loans at state and municipal levels. This is a valuable complement to Banorte’s existing project financing abilities, which are traditionally on longer term financing.
Banorte sees growth opportunities in infrastructure, as the new Mexican government – which takes office in December 2018 – plans to focus on the sector in its first budget.
Banorte has been active on other fronts too. It has created a system to improve the activation rate of issued credit cards, as typically a large proportion of new cards never get used.
It has also joined forces with Amazon’s local operations to issue a debit card that can be offered to customers who do not yet have a debit or credit card and who, therefore, would not be able to shop online. Despite the size of Mexico’s economy, Latin America’s second largest after Brazil, 56% of the population still does not have a bank account or a debit card. Although a small step towards increasing banking penetration, the card helps to create a credit history that can be used to access wider banking services. Furthermore, it helps to digitalise the provision of such services in a market that traditionally favours cash.
Nicaragua, Banco de la Producción
Nicaragua’s Banco de la Producción (Banpro) has established an important model in the country, focusing attention on financing value chains, and sustainable and renewable production.
It has made loans for renewable energy projects and coffee plantations, not only contributing economically, but allowing the target companies to help mitigate the country’s carbon footprint. It has financed projects for cassava growers and a plant to turn the root into flour, and has also provided a loans for 600 fruit growers and a corresponding processing plant.
Banpro’s goal is to finance each link of the supply chain, as a way of building value chains in key areas of the economy. It has currently financed close to $50m in green lines.
At the same time, Banpro has maintained its core business, with commercial loans representing 65% and personal loans 35% of its portfolio.
This combination has helped it solidify its role as the leading bank in Nicaragua, with $1.4bn in gross loans as of December 2017. It also has the lowest non-performing loan ratio in the country at 0.75%. Net profits were up 7% in 2017, while assets increased 7.2%.
The bank took another technological step in March 2018, inaugurating Banpro Chatbot, one of the first artificial intelligence financial assistance systems in the region using natural language processing techniques. The system allows clients to use mobile devices to check balances of products with the bank. It has a geolocation function that points customers to nearest branch or ATM.
The system is designed for standard questions, with a feature that allows customers to speak with a service representative when required.
Chatbot strengthens the bank’s already strong alternative service channels, with 50% of transactions now done outside a branch.
Banistmo has ramped up its focus on data and analytics through a series of interesting and successful initiatives. The bank has created a data tool that estimates customers’ income in order to tailor sales pitches to their specific monetary and lifestyle needs – it says that the technology used allows for near-perfect estimations. Customers’ data is not only shared with sales teams, it is also filtered throughout the bank, including at the branch level and in call centres, to improve customer service.
Initiatives for a more sophisticated use of data did not stop with retail customers, however. The same tools were applied to corporate and government clients too, providing the bank not only with a higher degree of automation in the internal reporting processes about those client groups, but also with forecasting tools on clients’ activities. For example, it has created predictive models that allow the bank to understand corporate customers’ cash flows and anticipate deviations from the norm, as well as models that use data on business transactions of existing clients to assess and mitigate risks related to new potential clients.
Furthermore, new fully digital services have boosted sales. A credit card can now be issued in minutes and through a fully digital process from enquiry to approval – the only bank in Panama that can offer such a service, according to Banistmo.
Another key development was the introduction of a more collaborative work environment, where procedures have been modified to encourage internal communication and reduce formality. Banistmo chief executive Aimeé Sentmat de Grimaldo says that the bank’s success “is the result of having a balance between a team of committed professionals in a space where leadership is shared and where our clients are the centre of our operations”.
Banistmo’s success is visible in its financial data, with the bank becoming more profitable and efficient. Net profits grew by nearly 80% in 2017 while the cost-to-income ratio shrank to just over 53%.
The year 2017 was particularly successful for BBVA Paraguay. The bank displayed a large net profit increase and a steadily rising return-on-equity ratio of 25.31%. Its asset size grew too, mirrored by a similar expansion of its Tier 1 capital, while the efficiency and non-performing loans ratios improved to 44.37% and 2.91%, respectively. The bank’s focus on the corporate segment and its catching up with digital solutions implemented elsewhere in the BBVA group explain much of this success.
BBVA Paraguay has beefed up both the offering of foreign trade and foreign exchange products, which have proved particularly successful in the past, and it has launched new products, specifically in the payments area.
Behind all of the improvements has been the use of digital solutions. The number of corporate clients using digital channels grew by 20% in 2017; they now represent 60% of total. Volumes of payments have multiplied by a factor of 2.5, while more than one-fifth of consumer loans and an encouraging 5.26% of pre-approved credit cards were sold through digital channels.
Once a larger number of products were available online or on mobile apps, and proving successful, the next logical step was to improve the experience of customers interested in those products. Earlier in 2018, BBVA Paraguay launched its new mobile app, which now offers biometric authentication features and a more intuitive navigation.
Technology will continue to drive growth in the future, according to BBVA Paraguay president Ignacio Sanz y Arcelus. “Focusing on the customer and undertaking a continuous digital transformation allows BBVA Paraguay to be at the forefront of the financial system,” he says.
Peru had outpaced Latin America’s economic growth for more than a decade, from the 9.8% peak of 2008 to the healthy 3.1% average gross domestic product growth sustained between 2014 and 2017. In 2017, however, the country tilted into recession, and the corruption scandals that led to the president resigning in March 2018 have acted as a drag on the business climate.
It is noteworthy, therefore, that in such conditions banks continued to perform well. BBVA Continental not only put in a solid financial performance, it also improved efficiency and, crucially, pushed ahead with its digital programme, creating products and services that aim to reduce Peruvians’ preference for cash.
BBVA Continental worked both on the retail and corporate segments. In the corporate segment, it launched an app that allows businesses to consult accounts, execute transfers and authorise other operations through mobile devices. This builds on the already solid digital offering the bank is rightly proud of.
In retail, BBVA Continental launched a digital product that replicates the ‘envelopes’ system widely used by Peruvians to divide up the cash they withdraw as income is paid into their bank accounts. They can now achieve the same results by dividing money into digital savings ‘pockets’ to manage regular and one-off expenses. The product has enjoyed an encouraging take-up rate since its launch in early 2018, according to BBVA.
Chief executive Eduardo Torres-Llosa says that focusing on both the BBVA Continental’s “digital transformation and, at the same time, [the growth of] all banking product segments allow us [to achieve] positive short-term results and ensure our sustainability in the future.”
Puerto Rico’s Banco Popular continued to expand and grow its customer base, racking up strong numbers in 2017.
The bank saw an 18% increase in total deposits and added another 31,000 customers. Total assets reached $44.3bn and net profits were up 47.6%. The strong numbers are even more impressive given that the bank had to work under emergency conditions for months in the wake of hurricanes that pummelled the island in September 2017.
Popular became one of the first banks in the West to use biometrics for authentication and was the first bank in Latin America to offer mobile payment and digital wallet service Samsung Pay.
These developments are visible to all. What customers cannot see is even more advanced technology that is making the bank more efficient. Banco Popular has started using robotics and has identified more than 40 manual processes that are being automated. An example is the process needed to comply with the US Treasury Department’s Office of Foreign Assets Control, which enforces economic and trade sanctions. The cross-matching process used take up to 180 days. The use of robotics has brought the time down to a maximum of 30 days.
The bank also continued to extend its reach with a February 2018 agreement to acquire two subsidiaries of Wells Fargo – Reliable Financial Services and Reliable Finance Holding Company. The bank will take on $1.5bn in retail automobile loans and $340m in commercial loans. Its auto loan and lease portfolio increased by 8% in 2017.
Popular CEO Ignacio Alvarez says the success in quickly recuperating from the disaster and moving forward in 2018 would not have happened without the bank’s committed personnel. “At the heart of our success are our employees, whose steadfast commitment to Popular’s customers and communities have set us apart throughout our 125-year history,” he adds.
Trinidad and Tobago, Republic Bank
Trinidad and Tobago’s economy is pulling out of recession, and is forecast to grow in 2018 after two years of steep decline.
The International Monetary Fund expects growth for 2018 of 1%, increasing to above 2% at the start of the next decade.
Higher prices for oil and gas are having a ripple effect across the economy, with the central bank reporting a 7.3% increase in manufacturing and 3.4% increase in cement sales – both key indicators – in fiscal year 2018, which ended on September 30.
This is good news for Republic Bank, which had already shown strong signs of improvement in 2017 even when the economy was contracting by 2.6%.
The bank had net profits of TT$921m ($136.6m) in 2017, up 47.5% on 2016’s figures. Profits had declined by 44.2% in 2016. Return on equity was 15.3% in 2017, compared with 9.5% the previous year. The non-performing loan ratio was 1.8% in 2017, lower than the 3% national average.
Republic Bank continued to improve on its digital strategy to expand its customer base. Its Banking by Appointment plan, the first such plan in the country, reduced the time customers require for transactions and improved staff efficiency.
Its recently introduced online application process for loans and mortgages not only makes the process easier for customers, but the bank has found that it has increased engagement with staff.
The newest innovation was the introduction in March 2018 of ‘cardless cash’, another first for the country. The system allows clients to obtain cash from ATMs via their own products or from a third party without a card by inputting a code received via text on a mobile device. This opens up options for quick third-party payments.
Uruguay, Banco de la Republica O del Uruguay
In a relatively small market, Uruguay has one overwhelmingly large bank. Banco de la Republica O del Uruguay (Brou) has grown to hold nearly half of the local banking market share, thanks in part to it increasing its participation in both the private sector credit and deposits markets in 2017.
More than its size, however, what is impressive is Brou’s commitment to reaching parts of the population that are still out of the banking system. The launch of new products and improvements to existing ones have not only solidified its role as Uruguay’s dominant lender, but also allowed Brou to reach a wider customer base. Its Inclusion Microaccount, for example, is now offered to both companies and individuals, including university students, and it can be opened in both pesos and dollars, which is proving to be helpful when trading. Brou also launched a credit product for small agricultural producers and other micro and small companies in the industry, trade and services sectors, and a new digital deferred payments platform for companies that manage both accounts receivables and accounts payables.
Technology has helped provide better customer service too, particularly through the bank’s app, e-Brou. In 2017, the number of digital transactions grew by 18% and they accounted for 96% of total transactions. The larger and better use of alternative channels helped to further improve efficiency: Brou’s cost-to-income ratio was 53.8% in 2017.
Brou’s president, Jorge Polgar, says that “incorporating cutting-edge technology into our wide range of digital channels [has helped] us to reach 38% of the population of Uruguay.” The bank’s past successes will only incentivise the promotion of digital channels in the future.
The list of Bank of America’s new products and initiatives is long and interesting. It includes new features added to its mobile app, from where retail clients can now access the Zelle person-to-person payment platform; use voice commands to make transfers and retrieve information thanks to an artificial intelligence-powered assistant; and view car dealers’ inventories, estimate monthly payments and apply for a loan.
As part of the wider Bank of America Merrill Lynch group, wealth management clients can now use a scanning feature to send documents to their bank adviser, access a budgeting tool and view transactions for their Bank of America accounts and cards, among other features, all through the Merrill Lynch app. Meanwhile investor clients in the US can now benefit from the freshly created capital markets app that provides real-time updates on deals.
Growing numbers of customers use the bank’s digital channels, so investing in these areas is crucial. However, so too is ensuring that when customers do need to visit a branch, the staff there are able to provide a fitting service. While digital is generally the preferred option of transactions, physical locations typically tend to be used for loans or investment advice. Bank of America, therefore, boosted its brick-and-mortar operations with more than 5000 extra staff as well as 500 new locations across the US to serve affluent clients, small businesses and corporates.
The bank’s financial performance was solid in 2017: its profits were healthy and efficiency improved with its cost-to-income ratio shrinking by three percentage points to 63%.
Brian Moynihan, chairman and CEO at Bank of America, says: “We are driving responsible growth and it is delivering for our clients, for our shareholders and for our teammates. Responsible growth means we have to grow, no excuses. And we have to do it by delivering for our clients and managing risk well.”
