Banking and technology: The future is yesterday

10 2018 August
Executive Education INCAE

Technological disruption has entered all industries, but more so in the financial sector. Can you have the profession of banker, as we understand it today, the days numbered? What is clear is that, from what we see around the world, it is changing by leaps and bounds. Chatbots, which are being implemented by more and more banks in Central America, are a clear example. 

This also entails a change in the service orientation of the physical branches. Will these end up becoming a kind of Apple Stores, for customer orientation in some services?

The fintech companies have entered strongly, but also very large players, such as GAFA (Google, Amazon, Facebook and Apple), which could well sink the income of traditional banking, It is pointed out that up to 30% by 2020. The telecommunications companies will join them.

Latin American banks continue to expand the services they offer in their online banking and mobile banking. They have no other choice. Some entities in the region are already beginning to offer sales and opening of products online, virtual wallets that facilitate transfers between people, chatbots for virtual attention, among other services. The palm of our hand has a lot to do with it. Rather, the tool that is in it constantly. 

"The cell phone has greatly facilitated access to financial services at any time and in any place", explains Roberto Gomes, executive director of EY in the Financial Services division. Mobile banking allows the customer to make inquiries and transactions in a simple way.

Banistmo App, for example, has become one of the tools most used by its clients, "becoming an important instrument for our professional or personal management," says Joycelyn García, Vice President of Identity and Communications at Banistmo.

All this has caused digital transactions to double in the five years. The launch of more services and the greater use of mobile banking are causing this growth.

Central America sees this growth in digital channels: just five years ago these transactions represented less than 40% of the total, "Now depending on the bank we can be talking about digital transactions representing between 55% and 70%", says the EY expert.

A clear and concrete example of this is that of Davivienda Costa Rica. Its CEO, Arturo Giacomin, states: "Five years ago, our clients made 30% remain in our physical channels." In the last three years the bank has invested US $ 6 million in improving its digital channels.

The search for improvement has resulted in greater use of its digital platforms. In Costa Rica, three out of every four BAC clients carry out monetary transactions through digital banking, and the number of total transactions made on mobile already exceeds the volume in branches. 

These changes, together with Artificial Intelligence, make evolution occur by leaps and bounds, thanks to the benefits it offers, which we can summarize in three: improvement in customer experience and service, improvement in safety, and aid in operational efficiency. According to the Gartner consultancy, the creation of intelligent systems that learn, adapt and potentially act autonomously, instead of simply executing predefined instructions, is one of the great trends that are seen from the technological point of view for the next few years.

SARA already serves clients in Ficohsa, a chatbot service through Facebook and Twitter, which is used "mostly by our millennial clients to check balances in their savings and credit card accounts," says José Nicolás Arrubla, vice president of Digital Channels of the Honduran bank.

But the region's banks are not thinking of making physical branches disappear, but rather of transforming them "So that they go from being fundamentally spaces to carry out operations, to spaces for customer knowledge and attention to their needs in the face of new products or services," says Juan Carlos Arcila, president of the Latin American Congress of Digital Banking.

The digital transformation "It has made our offices become more and more accessible and process, streamlining service, improving response times and offering greater means of access and service ”, complements Carlos Li, Deputy General Manager of Businesses of the Costa Rican Banco Popular y de Desarrollo Comunal.
"Agencies, in the short term, should become points of sale, financial education and Apple Store-style digital boutiques, where we teach our clients how to use new technologies", says Arrubla, from Ficohsa.

In summary, physical branches begin to focus on developing customer relationships and greater product sales, many accounts with electronic or self-service lobbies that reduce waiting and attention times for simple transactions.

Excerpt from the article published in Strategy & Negocios Magazine, issue No. 221.

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