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The future of finance in LatAm & the Caribbean

O futuro das finanças na América Latina e no Caribe



Financial inclusion goes at full throttle in Peru with BN’s first digital bank account

Jun 8, 2022

By John Quigley

The pandemic spurred Banco de la Nación’s project to give every adult access to a free, 100% digital bank account. Already nearly 2 million Peruvians have joined the financial system as a result.

Article produced with sponsorship from Temenos

Imagine persuading more than seven percent of the population to activate their first-ever bank account—in the space of a month.

That’s what Peru’s government-owned lender Banco de la Nación (BN) pulled off late last year when it debuted Cuenta DNI: a commission-free, 100% digital bank account that also granted access to emergency welfare check.

Nearly two million people who were new to banking, activated an account without going to the bank. The BN is planning to open accounts for another 10 million more people this year—out of an adult population of 24 million—as it strives to change the way many Peruvians think about money.

What began with the problem of how to get financial aid to people quickly during the pandemic without requiring them to leave their homes became an opportunity to implement financial inclusion on an unprecedented scale.

A one-off cash bonus of PEN350 ($94), known as Bono Yanapay, was deposited for all those who activated the DNI account, named after the country’s national identity card. While account holders represent a minority of the 14 million people that received the payment, the bank says there will soon be other incentives to open an account.

Cuenta DNI is currently a bank account that allows cash withdrawals from the bank’s vast ATM network but little else. Luis Matias Sternberg, the bank’s CEO, says that by the end of this year, Cuenta DNI will be the country’s only “highway” that connects the main e-wallets—Yape, Plin, Tunki and BIM— and users will also be able to make transfer money between Cuenta DNI and other banks. By the end of 2024, the bank plans to make the account available to every adult and turn it into the country’s must-have financial product in the fintech era.

“It will have a lot of advantages and benefits because it will be the only account that every Peruvian has,” he says. “The idea is to give it a lot of functionality to make it attractive so that people say ‘I’m going to open an account even if there isn’t a bono because the value proposition is super, super attractive’.”

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Financial inclusion at the speed of light

The project is an example of how countries can use technology to bring financially excluded people into the banking system in the 21st century—and can do so at lightning speed.

Banco de la Nación hired Geneva-based banking software company Temenos to build the underlying technology for the new product and to run it in the cloud, giving it the flexibility to activate new accounts as and when they were needed. The elasticity of the cloud made it as easy to open 1,000 accounts as 1 million, and the bank only pays for the ones that customers activate, says Enrique Ramos O’Reilly, Temenos’ regional director for Latin America and the Caribbean. Expanding to 12 million or eventually the entire Peruvian population of 33 million, is just a question of empowering more hardware, he says.

“Banco de la Nación had the vision to say that, rather than going to our legacy system and getting into a complicated modification or extension of the current system and processes, let’s just think outside the box, let’s look at something new while also saving on costs and moving rapidly, which meant that very, very quickly this current account was up and running,” says O’Reilly.

To support the rollout of the DNI account, the bank plans to double the number of ATMs in its Multired network by 2025; currently there are 906 nationwide. It also plans to add 25,000 correspondent agents to its existing network in the next two years.

The main barriers to reaching 24 million users are no longer technological or budgetary but rather the limited internet connectivity in rural areas and the distrust of people accustomed to operating outside the banking system, the bank’s CEO says.

“Many people are scared about using the financial system because they think giving information exposes them to unscrupulous people” or the tax man, Sternberg says.

Temenos manages the account application and transaction processes using technology that’s hosted on Microsoft Azure. Indian financial IT service provider Techmill Global implemented the core banking system. O’Reilly says the platform’s flexibility means Banco de la Nación could incorporate artificial intelligence, fraud detection, a multi-currency feature, and a range of additional functionality such as financial management tools provided by Temenos’ fintech partners.

“The more people have access to the tools, the more willing they will be to invest and make the economy grow,” said O’Reilly. “The bank has the option to go in any of the directions. It’s not complex, it’s not rocket science, it’s not hugely expensive—it’s doable. The technology is there and the social benefits are enormous.”

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