“Daily life” and “relevance” are two concepts that Manuel Rivero, CEO of BanRegio, repeats like mantra when he speaks about the Mexican bank’s digital strategy. To make it happen, the bank is betting on apps, machine learning – and even home delivery services, he says.
“The challenge is to be relevant in digital channels, and to be able to involve ourselves in the daily lives of our clients,” the executive told iupana in an interview on the sidelines of Finnosummit Mexico, a conference that brings together fintech startups, banks and investors.
In that search for uniting the online and offline worlds, the bank is developing a home banking service for cash withdrawals and deposits, where a bank representative will go to clients’ houses to drop off or pick up money. The bank is also planning a delivery service for restaurants, similar to that of Uber Eats or Rappi, but, according to Rivero, at a third of the price. Both projects are set to go live at the end of the year.
“The price that I can offer is cheaper, because I have those clients already [through payment terminals in their businesses]. I’m not interested in becoming an Uber or a Rappi – I’m interested in have a deep relationship with the business, in being able to help then so that they will keep their checking, deposits, loans and terminal integrated with us.”
Rivero cites statistics indicating that just 5% of his clients – who are primarily small and medium sized businesses – have used shopping delivery services through e-commerce vendors in the past 12 months. That proportion has multiplied 12 times over the past year, indicating a small but fast-growing market.
“Right now, the price tag to enter the market is very low, but in three years, this won’t be possible,” the head of the Monterrey-based bank said.
Innovate or disappear
Banregio is developing updates that will allow clients to open accounts from their mobile app, something that will be live in the next three to four months. The bank is also using the data gathered through the use of its app and beginning to apply machine learning tools, with the help of Amazon. In that project, it is developing cloud-based credit profiles which would allow it to tweak in real time its tolerance to various risk indicators.
“In three or four years, developments in APIs are going to be spread all across Mexico. You’ll be able to use any electronic banking system, from any bank, to see how much you have in each of your bank accounts. And then, how will we stay relevant?” he said.
“Here, those who have most to lose are the Mexican banks. There’s a lot of investment coming in digitization at the international banks in Mexico, and the Mexican banks are going to have to respond,” he said, adding that the bank has earmarked at least 4% of its net revenues for innovation and data handling.
Globally, customers are increasingly looking for applications that can offer financial services at a lower cost than traditional banks. That could represent a risk for banks, especially in countries like Mexico where nearly 40% of the population does not have a bank account.
In response, Banregio is improving Hey Banco, an application that from December will offer savings accounts, debit and credit cards (physical and virtual) and some insurance products. The users will also be able to pay into their accounts in convenience stores like Oxxo and 7Eleven. The application currently has 15,000 users and only offers debit cards.
Rivero is also looking at opportunities in open banking, which he says offer new sources of earnings for banks. For example, Banregio has invested in a company that offers legal, tax and accounting advice to small businesses virtually, and connects to it through APIs. That partnership offers added value for Banregio’s customers, and potential new clients for the advisory firm.
“I see open banking as an opportunity, because it’s going to drive a lot of additional business and we’re investing a lot in it,” he said.