Banco de Credito del Peru (BCP) is Peru’s largest bank with over 125 years in the local market. Given its long history, it could easily be considered an established and traditional business, where bureaucracy reigns and long lines make simple transactions a several hour endeavor. But this may soon come to an end. Through their “Digital on boarding” new project, BCP seeks to be a pioneer in the use of digitization technology in Peru. But, how are they doing it?
Although a developing market, internet penetration in Peru has increased significantly in the past few years. From 2005 to 2014, the percentage of internet users has gone up from 17% to 40% , and in the past two years the use of mobile internet has increased from 35% to 51% of the total population . This shifts signify both great challenges and great opportunities for the traditional retail banking business model. As the client changes, there is an increased need for a fundamental change in the overall interaction between consumer and bank, where a technologically savvy consumer values and is getting increasingly used to technologically savvy solutions.
Traditionally, commercial banks operate through face-to-face interactions with the costumer, by operating branches in convenient locations, where representatives guide and support clients. Digitization and technology pushes banks away from the traditional business model by providing tools to make their operations more efficient, and BCP is not falling behind. As Walter Bayly, BCP’s CEO, noted in his recent presentation in the Latam Conference in HBS, the bank is undergoing a digital transformation in order to keep up and take advantage of this new trends.
Using digital technology, BCP is seeking to improve customer service and experience by understanding the new needs and characteristics of customers. They have identified their new customer as being mobile, hyper-informed, intense in their shopping experience, time aware and social . The bank has recognized the need to adapt their operations to meet those needs, and is currently working on several initiatives that challenge the status quo of business in a bank. Their main project so far; the digital opening of a savings account. Using digital products and services BCP has their first prototype: a self-service model to open bank accounts. The client only has to approach one of the iPad stations in the branch, provide basic information and take a selfie. Then, the bank cross-checks the data with the national authorities and, through biometrics, approves the opening of a savings account. A QR code is then scanned to link the card to the client and, in under 4 minutes, the process that in the past took 20 minutes is completed . Although this prototype has since evolved into kiosks by means of several iterations processes to make the experience more efficient, the concept is expected to revolutionize the way in which customers interact with the bank.
So, how does this change BCP’s business model? Are traditional banking branches going to become obsolete? As Walter Bayly mentioned in his presentation, even as the total number of transactions has grown, the number of transactions in each branch has decreased as compared to the previous year due to the use of digital technology. In my opinion, the bank could explore several different alternatives for their locations as they experience an increase in idle time. Being in premium locations close to customers, some “sites” could serve as a meeting points where bank representatives, underutilized due to the potential man-hours saved through their prototype , could educate on financial products and hence reduce the inherent barriers of communication between banks and consumers.
Furthermore, the increased access to digital technology in the form of mobile internet in the rural communities offers an opportunity for BCP as approaching consumer segments that where unreachable before is becoming easier. Technology enables penetration in segments that are not traditionally part of the banking system, as geographic locations are becoming less relevant as barriers to entry.
To be able to embark on this digital journey, the project leaders make it clear that it has to be a process that involves the whole bank and requires a cultural shift that has to come from within . As Gianfranco Ferrari, VP of Retail at BCP, states: the bank needs to have a plan “in order to be leaders for the next 125 years” , and it is made clear through their actions, that the plan is to use digital innovation. (738 words)
 Transformación Digital. http://www.felaban.net/archivos_memorias/archivo20160923154937PM.pdf