Banco Bci, Chile’s biggest bank, is exploring the potential of new technological applications that have yet to be tested in the financial industry, as it tries to gain an edge in Latin America’s increasingly competitive digital sector.
Manuel Sacasa is head of the bank’s innovation center, Bci Labs. Among the novelties his team has been evaluating are digital twins, synthetic avatars, and the synergy between the Internet of Things (IoT) and artificial intelligence (AI), Sacasa says, stressing he's unable to elaborate since the work is confidential.
Innovation labs and factories have become an essential part of the banking business. Given the rapid advance of fintech and big tech, with their agile organizational and product design structures, traditional players have set up incubators and tasked them with scouting for technology that can be incorporated into their business.
It’s a way for banks to keep in step with the rhythm of the market without disrupting operations at their head offices. Bci Labs has had as many as 200 technological developments under review at times, Sacasa tells iupana. Some will be discarded, while others will become part of the bank’s operations or product offering in the next few years.
“To take a quantum leap, you really need to go five or seven years into the future and see those things that make you think ‘hey, banks don’t have this yet; it’s not used by the financial sector but it could be if I plug it in somehow.’ A disruption,” he says.
“It’s in order to see what technological capacity we need and what technical capacities we need in people,” Sacasa adds.
No use cases for blockchain and Web3 (yet)
Besides exploring home-grown innovations, Bci Labs also considers proposals from fintechs and startups that approach it with functionalities and business models to enhance the bank’s products.
The laboratory conducts large-scale, controlled testing to gauge the feasibility of the innovations that reach its Bci Startups program. For example, it recently married a fintech and a digital factoring solution to create a new service provider.
“There are pains within the bank and it’s much easier to solve them with a piece or a solution that’s already built. And that allows the bank to accelerate its value proposition without eroding the development curve,” says Sacasa.
For many people in the industry, blockchain represents the next frontier of financial services. And although the tokenization of the economy is certainly gaining traction thanks to programs such as the digital real in Brazil, he says the challenge for banks is to find models that are truly profitable.
“The technologies have been validated, they’re mature. Now we have to find use cases where these technologies really yield [returns] and where they deliver, because they’re generally technologies that are designed in the ether,” he says.
Sacasa adds that there are often innovations that work well in a laboratory but when they’re taken for real-world implementation, they are missing sections in the execution flow, which prevents them from being applied in, for example, the purchase of a property.
“That’s what happens to us and to all the banks. When we try to find cases, they fail because there are certain parts of the user journey that aren’t in blockchain,” he says. “So, are we exploring blockchain or web3? Yes, but we’re always seeing incomplete things. There isn’t a big case [for use] in the real world,” he says.