Bci is a Chilean retail bank with 360+ branches, originally targeting mid-high value customer segments. It was founded in 1937, and steadily grew to become the 5th largest domestic bank. Like many traditional banks in Latin America, its digital offering was developed gradually, at a slower pace than American and European banks. However, higher penetration of internet-enabled devices and threat of disruptive fintechs led bank leadership to embark on a step change of its business model in 2015 to position Bci as the digital leader in Chile.
The goal: a new business model in a new age
The change started by adopting a customer-centric approach to capture new clients and increase cross-selling by fully redesigning the customer journeys using a design-thinking approach. The transformation was done on a product-level basis, starting with the “plan” (checking account and credit card bundle) since it is the product through which the bank usually acquires customers. Enabling fast, remote, digitally-enabled account opening significantly improves the experience of joining the bank, and at the same time reduces costs. The improved economics allow the bank to profitably expand into lower value segments. In addition, the development of a cross-product omnichannel platform, coupled with advanced analytical capabilities, allow to significantly expand sales of additional products.
The change is best understood by following two clients, Old Arnold and New Newton. If Arnold wanted a personal loan to buy a car, he would have to first visit a branch. He would formally become a client 9 days, 3 visits and 21 signatures later. Then he would initiate a loan request, which took an extra 5 days and required submission of significant paperwork and a telephone recording to agree to terms. In contrast, Newton can become a client from the comfort of his living room in 30 minutes using his mobile or notebook. After he logs in to the account for the first time, the system automatically offers loans suited to his needs. If he accepts the offer, he can have the money deposited in a matter of minutes.
The backbone: a new operation to deliver on customer promise
A transformation of such magnitude requires major changes, starting with a full process redesign. Things look smoother from the customer side, but the bank takes on significant complexity. The main challenges were the automation of manual tasks and digitization of information flow. Amongst the former, were automatic customer authentication, gathering of demographic and income data, and credit and background check. The latter required adjustments in legal and compliance requirements to allow the elimination of paper forms. One of the biggest changes was the acceptance of digital signatures in place of physical signatures in many key documents.
New processes are sustained on two pillars: technology and people. The most visible technological change was the design of a new mobile app and webpage. But invisible to the client were many new applications that incorporated and recalled client information from the bank’s systems, and connected the systems with third-party vendors (for example, for authentication and client data sourcing). In addition, the bank had to develop new services such as click-to-call or online chat for customers to receive remote assistance.
The largest change, however, was in the organization. To enable and sustain the new business model, the bank set up an innovation division reporting directly to the CEO. The transformation was extremely hard for the company, particularly because it required many divisions to work together and break with decade-old preconceptions. Product development, Marketing, IT, Legal, Risk, Finance, and Operations all had to cooperate to deliver the transformation.
The future: a challenging, endless array of opportunities
Bci is on the right track, but it should aim to be a first mover in offering additional services in the rapidly changing financial ecosystem. In my opinion, the bank should be focused on two tasks. First, learning and/or partnering with fintechs. Disruptive innovators have the potential to improve customer experience and revolutionize existing businesses. Take for example payment services. Players such as Venmo have dramatically changed the way people transfer small amounts of money. Such examples abound throughout the industry, and the bank that figures out how to partner with these players to its advantage will win.
Second, working to update the legal framework. In Chile, as in many other countries, the laws for banks are outdated and incomplete. This creates uncertainty, and prevents banks from fully driving change through digital technology. Bci should work with regulators to allow incorporation of more technology in banking services by relaxing unnecessary restrictions. This work should not be limited to theory, but also include investing in proofs of concept to identify necessary fixes and show the regulator that solutions are good in practice.
 Banco de Credito e Inversiones, 2015 Annual Report (Santiago, Chile: Bci, 2015) p. 86.
 Superintendencia de Bancos e Instituciones Financieras de Chile, Reporte Mensual de Informacion Financiera, October 1, 2016 [http://www.sbif.cl/sbifweb/servlet/InfoFinanciera?indice=4.1&idCategoria=2151&tipocont=0] Accessed Nov 16, 2016.
 Banco de Credito e Inversiones, Q3 2016 Conference Call Presentation (Santiago, Chile: Bci, 2016) p. 6
 Roman Regelman, et al., How digitized customer journeys can help banks win hearts, minds, and profits, BCG Perspectives 2016, p. 1-6
 Bci Company website, https://www.bci.cl/webPublico/planes.html#/contratoplanes/landing, accessed on November 18, 2016
 Ryan Sy, Chile’s Bci appoints heads for digital banking, international biz, SNL Financial Extra, August 16, 2016, via Factiva, accessed on November 17, 2016.
 Michael Grebe, et al., Global Retail Banking 2016: Banking on Digital Simplicity, BCG, p. 5