Bradesco plans to spin off its digital sub-brand Next by March 2020.
Octavio de Lazari, Bradesco CEO told analysts on 13 November that a spun off Next will be more competitive. In particular, Next will benefit from lower funding costs and capital ratios.
Bradesco is not ruling out a listing via an IPO or seeking a partner for Next. Bradesco is Brazil’s second-largest private sector lender.
It launched its Next standalone digital bank in October 2017 to attract millennials and to compete with digital-only start-ups. The Brazilian bank is also transforming itself into an innovation centre.
Digital natives and millennials account for 30% of Brazil’s population.
Next spin off: 2 million customers by year end
But when Bradesco created Next, it did not just develop a digital banking app. It created a bank to meet the lifestyle needs of millennials, with smart budgeting tools, personalisation and customised graphics.
Next says it will reach 2 million customers by the end of the year. It forecasts that Next can attract an additional 3 million clients by December 2020.
Next offers discounts to over 70 partners including Cinemark, Uber, Airbnb and Hotel Urbano. Its proposition includes a free current account and Visa credit card.
Chat and social networks represent 96% of Next customers’ interaction with the digital bank. It uses Bradesco’s IBM Watson-based chatbot, Bradesco Inteligência Artificial (BIA), to answer customers’ questions in what it describes as millennial-friendly language.
Next spin off: competing with Nubank, Banco Original
Next competes with digital-only neobanks such as Nubank and Banco Original. Bradesco’s success with the Next sub-brand follows its group wide drive to push digital innovation.
For example, it has invested in a New York hub for innovation. And in 2017, Bradesco invested BRL6bn ($1.6bn) in technology and innovation. Major developments included its BIA chatbot, the roll-out of cash-recycling ATMs, and a digital account-opening app.
Moreover, in November 2017, Bradesco signed a memorandum of understanding with MUFG Bank. The deal enabled Bradesco to use Ripple’s blockchain-based inter-bank platform for cross-border payments between Japan and Brazil.