"Low cost" banks: without boxes, smaller and with the latest technology to compete with the fintech

"Low cost" banks: without boxes, smaller and with the latest technology to compete with the fintech
Regulatory changes of the BCRA and the landing of new players led banks to modify their branches. They seek to lower costs and be more efficient
Por iProUP
04.02.2019 15.07hs Finanzas 4.0

Digital transformation is undoubtedly changing the link between banks and their customers. Not only from the operational side, the possibility of making any type of transaction through digital channels, but also from its most visible side: branches.

Without boxes, with fewer square meters, wi-fi and technological processes increasingly innovative, the new models 'low cost' promise to be the spearhead towards greater banking in the country.

The disembarkation of the fintech and a series of regulatory changes established by the Central Bank were the motors needed by the entities to redesign their traditional business format. Thus, both public and private banks seek to minimize their costs while responding to the new demands of their customers.

"This type of subsidiary is responding very well, allowing us to expand quickly, because they have fewer square meters and are more efficient when opening more and being everywhere," explains Diego Baccini, manager of the Bank's branch network, to iProUp. Galicia, which in the last three years inaugurated nine "connected branches", as they call them internally.

This change in the physical network is one of the three legs with which Galicia faced, in 2016, a "multichannel" project. The other two were to provide new capabilities to the telephone service model and develop the bank's digital channels, such as the app and online banking."We had the look that the client was already starting to use all the channels, not just one, and we are looking to offer another type of tool," says Baccini.

The BIND also highlights this vision of adapting to the new requirements of users.

"We understand that the branch model is undergoing a strong transformation and we must be prepared," says Karina Yankillevich, manager of Private Banking of the entity, which in 2015 reopened the branch of its headquarters.

After an agreement with the Starbucks chain, it established the first "coffee bank" in the country, incorporating a range of digital solutions to make financial services more agile and efficient.

"Customers, increasingly, operate from mobile devices, although the branch has the regulations established by the BCRA, it leaves the traditional format, incorporating the cafeteria and we want to locate all the services in one place", points out iProUP Yankillevich , who advances that for this year they project two fully automated subsidiaries, this time in the interior of the country.Be more efficient and competitive

The ICBC, meanwhile, is facing an aggressive policy of expansion: in five years it went from 85 branches to more than 120, including more than 21 minibanks in companies and four subsidiaries without boxes.

"Clearly, these branches are more efficient, have a much more digitized transaction level and undoubtedly implies a reduction in costs," says Horacio Muñiz, head of sales and distribution of Personal Banking at ICBC, to iProUP.The manager adds that the savings to the bank depends on each specific case, depending on the size or area in which the unit is located, among other variables.

For this year, the ICBC plans to open up to seven branches, some traditional and others of the "no box" model, but all under the "smartbrunch" style, as they call it in the entity.

This new format will include state-of-the-art technology, with much more developed ATMs and innovative equipment for the country.

"The first one will be in Puerto Madero and it will surely be inaugurated before the middle of 2019," Muñiz told iProUP.According to Baccini, from Galicia, the operating cost of digital subsidiaries is lower and a large part of this improvement in efficiency is related to not having a treasure.

"The cash has a fairly large cost of transaction and transfer of funds, and has a very large impact on the operation, the cash takes a good part of that incidence," he remarks. And calculates that, on average, the cost of structure is reduced approximately 30% compared to a traditional branch.New role of the bank employee

The CEO of HSBC, Gabriel Martino, referred to this new model of subsidiaries, with less surface and employees of a more commercial than transactional profile.

"The branches were a bit old and empty, we will see a big change in the industry in the coming years due to financial needs and developments in the country, and also because of this trend towards digital channels," he said.

Martino, who explained that more than 90% of his clients' transactions are made through alternative channels and discarded that the fact that the new subsidiaries are smaller can generate job losses.

"There may be fewer jobs in the boxes, but surely we will need more people to sell life insurance, retirement or a mortgage," he said. He even hinted that Sergio Palazzo, head of La Bancaria, would welcome the change, because it would imply a salary improvement for workers in the sector.

In public banking, the Nation also redoubles its commitment to digital subsidiaries. The largest entity of the system began in 2017 with the "electronic branch" -as he called it at the time- in La Plata and already has eight, which today called 'digital branches'.

"We are going to increase our institutional presence in urban centers, with dependencies in which the technological aspects prevail over traditional banking", says the president of the entity, Javier González Fraga, who this year aims to cut the ribbon of 50 electronic subsidiaries in the whole country.The Nation follows in the footsteps of La Caixa

González Fraga points out that the idea of ​​the bank is to imitate what La Caixa did in Spain, with the growth of the "store" offices.It was at the end of November, when the head of the Nation just arrived from the World Congress of Savings Banks and Retail Banks that took place in New Delhi, India, where he spoke with Isidro Fainé, president of the Banca La Caixa Foundation, who told him in First person the progress of the new model of branches in Spain.

"This is what is coming in the world, this type of branch allows you to grow much faster and reach more places," the banker acknowledged iProUP.

In these digital branches, the BNA has commercial attention points, ATMs, telephone banking, wi-fi, tablets and computers for its clients to carry out transactions through the app and home banking.

The main difference of this format compared to a traditional branch is that it does not have boxes. The other, not minor, is that it does not have its own manager, but the manager of a nearby branch usually monitors both offices.

In Palermo, for example, the head of the digital branch of Plaza Serrano is number one in the subsidiary of Santa Fe at 4100, less than 10 blocks away.

"The time and value of work and putting into operation, not having treasure, significantly reduce the implementation of these branches," they acknowledge in the Nation.

In the City, the transformation is taking place through the digital spaces that it has installed in three of its branches -in the head office, in front of the Obelisk; and in Nuñez-, in which it offers an extended service hours until 8:00 p.m.

"They allow us to shorten the gap between digital and purely face-to-face clients," they tell iProup from the Buenos Aires office.

These spaces incorporated in the branches have ATMs, Self-Service Terminals and computers so that users can access the home banking and the Self-Management Portal, among other things.From the bank advance that they are analyzing the possibility of moving forward with projects linked to gastronomic and cultural spaces, in its new tower at 326 Maipú Street.

In the Province, meanwhile, they analyze different alternatives with respect to the digital subsidiaries, while they advance with the renewal of branches that they faced since 2016 and for which they have destined an investment of 5,200 million pesos.

At this moment, there are 20 on site, in which it is planned to incorporate the new Self-Service Terminals and machines to assign shifts.

"The new branches, which are built from scratch, are also designed in a sustainable way, with solar panels and energy savings," they say from the entity.The changes of the BCRA, keys

For this advance of the dependencies were determined a series of normative changes made by the Central Bank in June 2016.

The most important was the incorporation of the figure of the automated unit that, as defined by the BCRA at that time, "consists of a bank that has ATMs and other access channels to electronic channels, along with banking personnel to advise to the clients". In other words, it was what allowed these branches to open 'low cost' or without boxes.

In the same battery of measures eliminated the mechanism of prior authorization that governed the opening of these premises, whose processing sometimes extended more than a year, and established the rating through a series of requirements related to solvency, liquidity and the integration of minimum capital, among others."The regulations of the BCRA released the possibility of opening branches where we want, which was a restriction that existed," says Baccini, from Galicia.

Looking ahead to the coming months, a recent BCRA regulation will also impact the traditional branch model. At the end of November, the monetary authority approved the creation of complementary agencies -also called bank correspondents-, which allows entities to install a box in any type of trade, such as service stations, supermarkets or pharmacies.

All these changes aim to expand banking in a business that is moving towards greater digitalization, but still requires a capillary structure to grow strongly. In this sense, low cost branches are the most efficient way to gain ground by optimizing costs.

Thus, in a market with as much potential as Argentina, with a credit stock that barely represents 14% of GDP, banks are preparing for a long commercial battle in which no one will want to give up their share of the cake.

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