Mexican bank Banregio is jumping ahead of open banking regulations, incorporating non-financial services into its digital banking platform to boost customer loyalty.
Through “Comunidad” (“Community”), Banregio’s clients can order lunch or request a cash withdrawal to their house. The Mexican bank’s app is part of its new bet not just to compete with other parts of the gig economy, but also to get closer to clients and integrate them with its virtual bank.
“We’re trying to incorporate everyday services into our digital banking model,” said Demetrio Strimpopulos, director of Banregio LABS.
The Comunidad app allows users to make financial transactions, buy food and have it delivered to their door.
“We’re aware that the client has a banking relationship with us, and that we need to offer them exceptional services. Through these apps, we think we can offer a lot of value,” Strimpopulos told iupana.
The businesses that are part of Comunidad connect with the bank through a platform designed in-house. This is integrated with a payments engine – also developed in house – that directs orders and transactions to the delivery workers that sign up to the gig economy model offered by the app.
The system mimics the type of cross-industry, multi-company integrations that are expected to become more commonplace under open banking rules. However, Banregio controls each part of the Comunidad platform. Rather than connecting via application programming interfaces (APIs) with other food delivery systems, for example, Comunidad directly connects restaurants and delivery workers.
“We have this ability to build technology,” said Strimpopulos. “Being a relatively young bank allows us to also have that agility and speed to respond to new models of digital customer service.”
Aggregators and banks
Banregio’s plan to boost the usefulness of its digital platform through integrations with non-financial services comes as Latin American banks – particularly those in Brazil and Mexico – prepare for forthcoming open banking rules. Those regulations will force banks to share clients’ financial data with third parties.
Digital native platforms such as aggregators and comparison sites are expected to get a huge boost from open banking rules, thereby intensifying industry competition.
Banregio’s Comunidad strategy has echoes of Brazilian bank Bradesco’s quest to make the app from its digital spin-off “the hub of people’s lives”, by partnering with transport companies among others.
For Banregio, before launching Community, the bank saw that the use of platforms to deliver e-commerce purchases was growing quickly among its clients – even though that amount represented just 5% of its users, the bank’s CEO Manuel Rivero told iupana last year.
That observation made them see that this market in Mexico was small but offered high growth potential.
The bank does not have it’s eye on competing with platforms such as Rappi or Uber Eats, executives say. Rather, it aims to have a presence in the online and offline lives of its clients, and to make itself increasingly indispensable.
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Payments via QR codes and CoDi to come
Banregio is also continuing to develop new products for its digital banking brand, Hey Banco. New users and existing Banregio clients can use the app, which is testing QR codes for person to person payments. Banregio is also part of the group of banks that are working with the Central Bank on a new digital payments initiative called CoDi (short for Cobro Digital – Digital Payment), which is expected to launch in September.
“Launching these kinds of payments helps us to have much higher financial inclusion,” said Strimpopolus. The Central Bank hopes that the new payments system will help close the banking gap in Mexico, where 60% of people don’t use formal financial services and 70% of transactions are made with cash.
“Through these mechanisms, people can find convenient ways to pay digitally and we can incorporate the payment method into our checking accounts, tying them together with QR code payments,” he said.