During the last decade, the development and proliferation of smartphones has had a profound impact on the way businesses operate. With the percentage of the global population using smartphones increasing every year, businesses are now expected to provide a fully integrated digital platform that can perform both basic and sophisticated services. Indeed, digital services are no longer exceptional: they are the bare minimum that customers expect.
In banking, this presents a number of challenges. Many banks that operate on an international scale are reliant on outdated systems and are further constrained by inconsistent and elusive regulatory standards. This makes meeting the expectations of the modern consumer a serious challenge. It is one that BAC Credomatic had to face head-on in order to modernise its systems across its operations in six countries: Panama, Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala. That being said, the company has been able to overcome similar challenges in the past, having been the first bank in the region to introduce credit cards and a native mobile banking app.
Digital services are no longer exceptional – they are the bare minimum that customers expect
BAC Credomatic’s most recent modernisation effort began in 2013, with the implementation of a digital transformation strategy. “Our approach was to tackle the challenge as a company-wide endeavour, instead of building isolated functional or digital areas,” said José Manuel Páez, Chief Digital Officer at BAC Credomatic, in an interview with World Finance. He continued: “Hence, the corporate structures were strengthened and a message of becoming simpler, more accessible and digital began permeating the company culture. Given that innovation has always been a key differentiator for BAC Credomatic, a clear message from top management has empowered the organisation to propose and execute new and inventive initiatives.” The successful execution of this strategy should future-proof the bank for whatever tomorrow may bring.
Overcoming regulatory hurdles
BAC Credomatic’s commitment to updating its digital systems has been driven by the bank’s changing demographics. “Currently, 57 percent of our customer base and 70 percent of our employee base are Millennials,” Páez explained. “Our Millennial customers and employees have reacted very positively to our strategy of becoming nimbler and more accessible. Less than two years ago, the digital office was created with a direct line to the CEO in order to function as a catalyst for digitalisation efforts that have been distributed across the bank.”
This modernisation process has seen many difficulties emerge, particularly around regulations. Páez explained that BAC Credomatic has centralised its platforms in order to scale up across the six countries it operates in, but differences in the maturity of each region’s regulators still presented challenges when designing more efficient processes. Páez added: “For example, only one country offers a public registry consumable via web services. Hence, it’s only in this country that we can automatically populate data, instead of burdening our clients with keying in their information.”
Another issue surrounds Automated Clearing House (ACH) transfers. Páez said: “Some central banks have mature interbank clearing houses enabling swift ACH transfers, while others are still evolving and permit interbank transfers, but that comes at a cost to user experience. Legislation continues to lag behind and some countries still do not allow electronic proof of acceptance, which forces the bank to physically document customers’ approval.” Indeed, some jurisdictions even require every new digital feature to obtain regulatory approval. He continued: “These examples show the hurdles we frequently need to overcome when reaching our clients with new and innovative ways of banking. These challenges have forced us to work tightly between our compliance, legal and business areas as we launch innovative products and processes with the aim of improving the customer experience.”
Páez said another imperative for success was finding the right staff: “We have exceptional people in our talent pool, but the company has gaps in capabilities when it comes to digital marketing, user experience, design thinking and agile concepts. We have faced this challenge by searching for talent outside the organisation and by strengthening our own internal capabilities.”
The push to digital
Despite all these challenges, BAC Credomatic has been able to reinvent its banking platform to meet these greater demands. Currently, 50 percent of all the service requests the bank receives can be performed automatically. Páez said this is tremendously helpful to customers: “For instance, changing or requesting an ATM PIN, a common task that previously required customers to visit a branch, can be done online or from our app. Also, our clients greatly appreciate being able to request an increase in their card’s credit limit online. This is an option we have optimised by integrating our digital banking platform with our FICO risk scores, delivering credit decisions in real time and providing suggested increases that can be approved immediately.
“Accompanying this digital push was a renewed focus on digital marketing, which involved the consolidation of BAC Credomatic’s social media presence,” Páez explained. “A milestone in this process was merging 11 Facebook accounts into one global page. This enabled us to govern our online presence centrally, while still allowing local flexibility in content creation and campaigns. With the consolidated presence, we reached more than 1.4 million fans – more than Citigroup, Wells Fargo, Scotiabank or Barclays UK.”
With this scope, BAC Credomatic plans to further improve its customer outreach, feedback and marketing processes. The results so far speak for themselves: at present, 67 percent of BAC Credomatic’s digital banking customers use mobile banking, while 30 percent are purely mobile banking users.
A future of innovation
Next year, BAC Credomatic expects to launch a completely renovated mobile banking application. The new Banca Móvil app will include a fully redesigned user experience and several additional differentiating features, including the ability for customers to temporarily lock their cards if lost, P2P transfers and in-app near-field communication capabilities.
As with any digital transformation journey, the goal must be establishing the base for continuous development. Indeed, the company’s focus for the next 12 months will be on user experience, agile development and artificial intelligence.
“It is nothing new that the capacities and possibilities around the use of data have advanced extraordinarily in the last few years,” Páez said. “Data provides infinite opportunities to develop new digital business models, which can produce more personalised and engaging experiences. We are currently working on building predictive models to aid us in sales and marketing efforts, as well as in the risk and collections areas.” Páez added that chatbots are also being developed, and could fill a number of service roles in the near future.
“In the past, user experience was not something we used to consider frequently,” said Páez. “There is also much ground to be made up in terms of communicating information to customers clearly and concisely.” As a consequence, the organisation plans to invest in user research that supports the value proposition of its services and products qualitatively and quantitatively. Páez continued: “We also plan to place extra attention on the governance of user interface design and interaction design, both areas where we need better alignment. Customers are an integral part of this process as they frequently contribute to the design of our products and features, either by providing feedback on a prototype or through co-creation workshops.”
Páez said the shift to agile development teams will revolutionise the way the company develops its digital tools: “It has been a two-year journey, and currently we have more than 70 agile teams building our new service proposals and showing the rest of the company how nimbler, motivated units can be more productive. This push is changing the company culture, as the business and IT sides fuse and the organisation starts becoming flatter.”
The cultural changes that accompany agile development have not been easy to implement. “In conjunction with HR and a full dissemination programme, we are evolving the current roles to include key positions such as scrum master and product owner, and define their career paths within the organisation. These changes will enable more tribes to be formed and more teams to be created.” The benefits of working this way are significant, with the company estimating a 50 percent reduction in lead times over the next six months.
The future is exciting for BAC Credomatic, with many more developments in the works for the coming months. “We’ve had so many instrumental developments recently, including a completely redesigned mobile banking app, an e-commerce functionality embedded on our website, and a new email marketing platform that is integrated with our campaign manager and our CRM, among others,” Páez explained. “Nonetheless, our key focus areas for the next 12 months remain on growing our digital competencies. We believe that ingraining these competencies into the bank’s DNA will be crucial in executing our strategy – to enable BAC Credomatic to continue fuelling its innovative spirit and compete in an ever more competitive landscape.”