Brazilian banks have it all to play for in the digital banking world. With changing customer mindsets, strategy must embrace the self service, digital world. Patrick Brusnahan speaks to Itau Unibanco and Santander Brazil
Brazil, like all large, developed economies, is looking to take advantage of the digital revolution. The biggest banks, such as Banco do Brasil, Bradesco, Itau and Caixa, have millions of online customers.
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With so much competition in this area, retail banks need to commit to a digital presence which not only satisfies their current customers’ needs, but also stands out enough to attract new customers.
Usage of digital mediums is becoming increasingly crucial in the global market, no place more so than Brazil. Brazilians spend more time, one hour and 22 minutes a month on average (according to IBOPE Media), on digital banking than any other country worldwide.
That is nearly double second-place Germany’s forty-seven minutes. The survey attributed the large amount of time to Brazilian online banking users frequently visiting multiple banking websites.
In July 2013, there were over twenty-two million unique users of this technology, a 20% increase year-on-year. The 2013 Digital Future in Focus report by comScore stated that 43.7% of internet users in Brazil accessed web banking services, the third largest market penetration rate in Latin America.
As digital banking becomes more prominent in their customers’ lives, retail banks must adapt if they are to stay relevant in the current market. Fernando Diaz, CIO of Santander Brazil, says: "The TI key-strategy for a bank such as Santander is being a part of our clients’ lives.
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By GlobalDataAlmost 90% of our transactions are done through digital channels and this number reflects the importance of these technologies for our activities, in regards to cost and efficiency."
As technology develops and popularises, customers crave wider utility of that technology. Diaz believes that ‘digital channel users are connected most of the time and the way they express themselves are not the same anymore.’
Banks need to follow that trend and develop accordingly. Between 2010 and 2011, current mobile accounts grew by nearly 50% and analysts forecast this rate to continue. According to the Brazilian Bank Federation (FEBRABAN), 51% of all transactions were digital. In addition, the number of mobile banking and internet banking users are both predicted to continue rising.
It is predicted that the platforms will be so integrated by 2018, it will be nearly impossible to differentiate between the two. Moreover, the survey also claimed that by 2015, Brazilian banks will increase their expenditures and investments in information and computer technology by 42%, over double the global average rate of 18%.
The rapidly transforming market is a treacherous path and needs constant attention from banks in order to maintain customer satisfaction. Diaz says: "To deal with the new reality, we are always monitoring and actively answering all of our customers’ online demands."
However, keeping abreast of all technological change and then adapting comes with quite some cost. Itau, which accounts for approximately 11% of Brazil’s retail banking market, places great importance on their digital output.
In 2012, they announced an investment of over R$10 billion in their digital infrastructure and data centres. The new technology centre, located in Sao Paulo, will be one of the largest data centres in the world. A wise investment it seems as, in 2013, Itau recorded ten million downloads of its existing banking app for smartphones and tablets since its launch in 2009.
Santander has also dedicated an ‘important part’ of their IT budget, which amounts to over R$2 billion, towards developing their mobile banking network and ‘its share is growing every year.’
Ricardo Guerra, director of multi-channel customer service for Itau Unibanco, says: "The channel is currently used more frequently by customers than our telephone line and it is expected to become the second most important bank communication channel with clients, after the internet, in a few years time."
Similarly, Diaz says: "What we can say is that the number of users for both internet banking and mobile banking platforms has been growing more than 100% per year for the last few years."
Guerra adds: "Currently, more than three million customers use any of our several solutions for banking, products and services applications, both with regards to private clients and businesses. In the last three years, the number of customers using applications grew by 750% and in 2013 alone, we saw more than 730 million transactions using the applications.
Last year was also significant because it was the first time that operations done remotely – either with applications or on the internet – surpassed the ones done in one of our almost five thousand branches."
