The digital transformation of the financial industry is challenging banks—and especially digital ones—to create positive experiences and become an invisible facilitator of their customers’ needs, not a mere provider of products and services.
Traditional banking today needs to be more efficient, above all in customer service, as well as offering products such as loans, says Claudio Rodrigues, technology leader at Banco Ripley Chile, in an interview with iupana.
That means it’s vital to invest in digital transformation to convert lenders into an invisible yet omnipresent operator, even if the results won’t be seen immediately.
“Being digital is not just selling, it is being inside the experiences,” said Rodrigues, who has more than a decade of experience in digital transformation at banks in the region, including Itaú Unibanco in Brazil and Banco de Crédito and Interbank in Peru.
The executive says banks traditionally have been perceived negatively by customers, despite efforts to streamline processes to become less bureaucratic.
“When a person buys a car, the whole experience is tied to the store that sold him the car not with the bank that financed the purchase,” he says. “It’s like being the devil’s advocate; we’re never going to be the ones recognized, because we work in areas that are very sensitive for the customer.”
So, to compete in an increasingly tight market, where fintechs and bigtechs offer intuitive digital journeys, it pays to insert yourself into that chain—and do it well.
“How to be the invisible agent but still be there, in the middle of that experience? The big challenge is how to be recognized as the enabler of the dream.
Digitalize or transform?
A common mistake on this journey is to confuse digitaliization with digital transformation, says the executive. By implementing online distribution channels or creating an application without putting the customer into the equation, you are only digitalizing old processes.
A real digital transformation strategy aims to understand the user’s mindset.
“When companies transform, they no longer want to know what channels or technologies they have to implement but what kind of experience they have to provide and how technologies help in that,” he says.
Banco Ripley is a medium-sized Chilean lender that works in close synergy with sister company Ripley, a department store chain, especially in the delivery of credit and cards to shoppers. The bank also has operations in Peru.
In that sense, the bank has the advantage of knowing the customer’s shopping habits very well. It sees technology as a tool for improving its products and services: streamlining the lending process or improving credit evaluations, for example.
“Transformation can’t be the company’s goal. Transformation is a means by which you achieve something,” Rodrigues said.
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Innovation in banking
Investment in innovation is fundamental and, although it generates uncertainty, it’s a way to stand out from the competition and achieve positioning.
Technological development has upended the traditional competition model—fintechs are ready to fill the gaps left by banks. This requires entities to look at what startups propose.
A bank can innovate using its own development area or “it can look for open innovation, startups and fintech, and incorporate this into the portfolio,” says Rodrigues.
The practice of incubating fintechs and then acquiring them is becoming increasingly common in the region: Good examples are Itaú and its accelerator Cubo, which works with some 500 startups, and Krealo, of the Credicorp group.
“The banks realized that new things have to be launched,” the executive said.
Banco Ripley also has an electronic wallet called Chek and plans to launch it in Peru, although it has yet to develop onboarding and digital authentication for that country.
Rodrigues cautions that innovation means putting money into projects that are unlikely to generate revenue for at least three years. However, not doing so is a risk that banks cannot afford to take today.
“You have to create a culture of trying new things because at some point you will succeed and you will leap ahead of the competition,” he says.
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