Home Banking Banco de Brasília: Empowering Customers While Embracing Collaboration

Banco de Brasília: Empowering Customers While Embracing Collaboration

by internationalbanker

By John Manning, International Banker

 

With economic growth slowing considerably throughout last year, inflation mostly above the central banks’ target levels and borrowing costs still exorbitantly high—albeit declining during the second half of the year—it was tough going for Brazil’s banking sector in 2023. And yet, Banco de Brasília (more commonly known as BRB) delivered stellar financial results throughout the year. This was no more evident than in the most recently reported third quarter (Q3), when the bank registered a net profit of R$76.4 million, 34.9 percent higher than that recorded in Q3 2022, and R$48.4 billion in total assets, an annual increase of 20.5 percent. A default rate of 2.01 percent by the end of September, well below the market average of 3.6 percent, further underscored the bank’s strength and prudence amid challenging times.

Such impressive performance is attributable not only to BRB’s sound business management but also to a hugely effective strategy that the government of the Federal District’s (DF’s) majority-owned bank has pursued to elevate its customer service to standards rarely observed within the Brazilian banking market, promote a digitalisation journey replete with relentless innovation and visible customer satisfaction, and establish shrewd strategic partnerships with key financial and non-financial entities that are only further lifting the BRB customer experience to ever-higher levels.

BRB focused on expanding its potential revenue streams and further diversifying its customer portfolio of products and services by accessing new business lines across the length and breadth of the country.
Regarding that astonishing Q3 performance, it was the entire BRB team’s effort that enabled the bank to achieve such enormous success in the face of those aforementioned pronounced economic challenges. Specifically, BRB focused on expanding its potential revenue streams and further diversifying its customer portfolio of products and services by accessing new business lines across the length and breadth of the country. Indeed, whether in physical or digital form, BRB is now present across 93 percent of Brazil’s national territory.

Such a strategy has yielded phenomenal results, with Q3 witnessing a 19.4-percent annual increase in the bank’s credit portfolio to R$34.6 billion and a 23.3-percent annual rise in funding to R$41.9 billion—again representative of BRB’s growing, stable and diversified business base. Third-quarter growth also reflected the fruitful relationships the bank continued to cultivate with new and existing customers during the July-September period. According to the bank, particular attention was given to maintaining the highest quality of service and ensuring customers continued to enjoy their banking experiences to the fullest.

A new retail-banking business model has certainly helped in that regard. Introduced recently to elevate the customer’s banking experience across sensory, attitudinal and relationship criteria, such key improvements marking the model include better training of the sales force, more effective customer segmentation and a comprehensive resizing of the bank’s branch network, with the ultimate goal of facilitating higher rates of long-term growth for BRB’s credit portfolio.

Indeed, this model has gone a long way towards propelling key BRB businesses up the national rankings. The bank’s real-estate financing operation, which currently commands a leading position within the DF region, sits in a lofty sixth place within the country overall. BRB also offers some of the best payment options in the national market, including a complete portfolio of payment cards. The bank is renowned for the BRB DUX Visa, arguably the most highly regarded card in the ultra-premium segment. With 1.4 million active cards reached in total in Q3—18 percent more than a year earlier—and with annual growth in card revenue of 41 percent to R$2.2 billion in the same quarter, the bank’s leading position in this segment has done much to meet the unrivalled levels of customer satisfaction for which it is so highly regarded.

Digitalisation also plays a crucial role in this process. Indeed, the bank has created an entire digital ecosystem for innovation in which it has lab-tested at least 46 different customer journeys to maximise customers’ digital experiences and expanded its digital bancassurance (DBS) platform, which it considers a crucial part of its business. Such efforts have come off the back of BRB’s record investment levels in 2023, strengthening and accelerating its digital transformation and resulting in a whopping 95 percent of all the bank’s transactions being conducted digitally in Q3. By broadening the digital-service channels available to customers—including a recent comprehensive upgrade to its mobile-banking app—BRB is facilitating improved accessibility to the bank’s full suite of products and services and, ultimately, a more enhanced banking experience overall.

Concerning the exciting specific innovations being deployed, BRB’s new machine learning (ML) tool is proving hugely effective in helping to combat fraud. By analysing complex and variable patterns of large-scale banking transactions, the technology can flag potential fraud attempts—for example, if transactions do not align with a customer’s usual pattern of financial behaviour. This not only improves fraud-detection accuracy but also helps reduce false positives, ensuring that legitimate customer transactions are not unduly interrupted.

While BRB deserves the overwhelming share of the credit for its successes, the strategic partnerships it has formed across key areas of the bank have proven hugely effective, with insurance, investment, telecommunications and payment methods all benefiting in terms of boosting the overall value of customer relationships. Indeed, irreversibly more digital and autonomous consumer behavioural patterns, coupled with additional agile competitors to industry incumbents, have made collaborative endeavours essential for banks such as BRB to meet the increasingly diverse needs of their customers and still deliver substantive value to them.

Most famously, BRB’s business and strategic partnership with Clube de Regatas Flamengo continued to reap remarkable dividends throughout 2023. Most significantly, the new digital bank Nação BRB FLA, which was launched through this partnership, has gained more than 3.5 million customers, with more than 400,000 added in 2023 alone, in addition to being present in 93 percent of Brazil, 32 countries in total and all the world’s continents. With a variety of products and services, the digital bank also has more than 1.04 million active cards in circulation, with those that bear the Flamengo emblem proving a hit amongst customers. Not only do they indicate customers’ passion for the club, but fans can also accumulate points and access unique benefits, such as ticket discounts, official club products and VIP (very important person) experiences at games.

The successful expansion of Nação’s customer base beyond the Federal District, its adjacent regions and Flamengo fans into the wider banking market reflects its unique combination of a strong brand identity with a portfolio of innovative, competitive financial products. It has also delivered wonders for BRB’s brand and reputation. By associating with such a prestigious sporting institution as Flamengo, BRB’s image as an innovative and customer-oriented bank has aligned succinctly with the values of excellence and passion that the Rio de Janeiro-based club represents.

Mr. Paulo Henrique Costa, Chief Executive Officer, Banco de Brasília (BRB)

We are fortunate to be joined today by BRB’s chief executive, Mr. Paulo Henrique Costa, with whom we will delve deeper into some of the underlying factors for BRB’s incredible recent success….

The bank introduced a new retail-banking business model recently. Can you briefly outline this new model’s key pillars and strategies? And how specifically does it seek to strengthen the relationship between the customer and the bank?

The new retail-banking business model reflects the strategic maturity of BRB, personifying an agile, modern and efficient bank actively responding to the needs of a constantly evolving market and a diversified customer network.

At the heart of this new approach is BRB’s unwavering commitment to customer satisfaction, which is the backbone of our operations. We have abandoned a process-and-product-oriented structure in favour of a customer-centric decision model. This approach has enabled us to embrace a profound digital transformation, offering each customer a unique journey, backed by record investments in technology and the establishment of vital strategic partnerships in areas such as insurance, investments and payment methods.

This new model is centred on four fundamental pillars: a modern and comfortable ambience, process improvement, repositioning of the customer-service network and new segmentation.

We have developed an improved service environment that aims to promote a superior and seamless customer experience. The redesign of our branches, now full of comfort and equipped with an award-winning design, reflects our commitment to creating an inviting and business-friendly space. This environment is an integral part of our omnichannel approach, which connects the boundaries between digital and physical, providing a fluid and integrated customer journey.

Operational efficiency is another key pillar. Through continuous optimisation of our internal processes, we guarantee the agility and accuracy of the services we provide. The third important axis is the strategic expansion process of our service network, characterised by the repositioning of our presence both regionally and nationally. In this way, the bank is able to be increasingly close to its customers, ensuring accessible service wherever they are.

And finally, with its new segmentation, the bank meets the specific needs of each user, customising our products and services to suit their exclusive financial objectives, further reinforcing trust and loyalty to our brand. BRB’s new retail model reflects the bank’s commitment to strengthening its ties with its customers through a hybrid approach that combines digital advancement with essential human interaction.

Speaking of customised products for customers’ exclusive financial objectives, BRB DUX Visa is widely regarded as being among the best cards in the market’s ultra-premium segment. Why is this the case?

BRB DUX Visa is recognised as the best credit card in the ultra-premium segment due to a unique combination of factors that exemplify Banco BRB’s commitment to excellence, innovation and customer satisfaction. This card, the result of a partnership with Visa, stands out initially for its exclusive design, inspired by the work of the renowned artist Athos Bulcão and the use of metallic material, giving it an aspect of sophistication and exclusivity.

Furthermore, BRB DUX benefits from strategic partnerships, offering customers a variety of additional benefits and exclusive offers. This is complemented by market recognition, as evidenced by the awards received from respected Brazilian entities, such as Passageiro de Primeira and Melhores Destinos.

Customising services is another fundamental pillar of this product. With an exclusive and specialised “concierge”, BRB DUX Visa users have a wide range of services available, from consultancy and travel planning to access to exclusive gastronomic experiences. Card management is facilitated by a dedicated application, available for both iOS and Android, that allows efficient control of transactions and benefits. Additionally, users can access VIP lounges such as Priority Pass, LoungeKey and Visa Airport Companion, which significantly enhance the traveller experience.

The bank’s annual Q3 growth in card revenue was a mighty 41 percent, to R$2.2 billion. What were some key underlying factors for such an impressive performance, and did your excellent customer-service standards play a significant role in this growth?

In fact, our means-of-payment business has received special attention from the administration. This is reflected in the 41-percent growth in card revenues, totalling R$2.2 billion in the third quarter of 2023. Since 2021, we have started an important product diversification, emphasising a new portfolio of products. It is worth highlighting the products related to government programmes in different modalities. BRB’s role in implementing social programmes, in addition to exercising the primary mission of a public bank, allows for expanding the card base while guaranteeing a greater volume of business.

Revenue growth can be explained by our constant technological updates and digitalisation of services, including the adoption of intuitive platforms for card management and investment in secure technologies, allowing for a more fluid and convenient user experience.

Digitalisation has become crucial these days. Indeed, BRB’s Q3 presentation referred to an innovative “digital ecosystem” being cultivated at the bank. At the surface level, what are some of the key components of this ecosystem?

We are committed to continuing to innovate and improve our services, ensuring that BRB is recognised not only for its operational excellence but also for the unique experiences in our relationships with our customers that positively impact their lives.
This ecosystem reflects our commitment to being a modern and innovative bank that prioritises the needs and satisfaction of its customers. We are committed to continuing to innovate and improve our services, ensuring that BRB is recognised not only for its operational excellence but also for the unique experiences in our relationships with our customers that positively impact their lives.

Key components include smoothly integrating our digital and physical channels and creating a unique “phygital” experience. This means users can enjoy seamless services, whether interacting with us online through our app or in person at our branches.

Which specific aspect of this “digital ecosystem” would you say is the most exciting for customers in early 2024?

We recently launched the first version of our BRB Super APP, which aims to be an integrated platform that offers users a personalised and comprehensive experience. Customers can access a variety of financial services in a single application, all adapted to their individual needs.

To this end, in terms of technology, we are using machine learning (ML) tools to improve security and effectiveness in fraud prevention, together with the application of change data capture (CDC) for risk, credit and compliance analyses. In this way, we are allowing an expansion of our protection capacity and cybersecurity requirements.

You mentioned the change data capture (CDC) system. Can you provide more insight into this system and its main goals? Also, in which specific areas of the bank is this solution being utilised?

Change data capture (CDC) technology is an innovative tool at BRB that has revolutionised the data engineering applied to a wide range of processes. This tool, specialising in capturing and monitoring database changes in real-time, offers the advantage of immediate updates without interfering with the original transactions.

At BRB, we are fully exploring CDC’s potential to strengthen security and improve our business. By identifying suspicious activities, such as unusual financial movements or unauthorised access, we can significantly reduce fraud cases. In 2023, we observed an impressive 81-percent reduction in incidents compared to the previous year.

As I understand it, the bank recently expanded its digital bancassurance (DBS) platform. What are some of the specific features of this expansion?

Since the administration’s beginning, we have clearly understood that the bank’s insurance segment is fundamental to the institution’s economic and financial results while being an important relationship product in meeting customer demands. In this sense, it was essential to establish a partnership with the Wiz company that could leverage our insurance business.

We have made significant advances in how we deliver integrated insurance-product and -service offerings. As a result, Banco BRB has achieved records in this segment, including surpassing the R$1-billion mark in negotiated premiums in 2023. This reflects the results of constant reviews of our portfolio combined with the construction of solid strategic partnerships. In recent months, 11 new insurance products have been launched with new commercial partners, such as international insurance companies Cardif (BNP Paribas Cardif) and Mapfre, S.A.

What does the expanded DBS platform allow BRB to do now that was previously impossible?

Partnerships and introducing new products have brought customers several benefits and made it possible to consolidate a complete product portfolio. With our new digital platform, we are able to offer a wider range of insurance products, including life, health, property and vehicle. The new platform has also brought greater operational efficiencies through greater simplicity in the insurance-subscription and -management processes.

Banco de Brasília (BRB) Executive Team (Full captions at the end)

Partnerships appear to be an essential component of BRB’s recent success. If I’m not mistaken, the bank formed key strategic partnerships across insurance, investment, telecommunications and payments. Can you provide examples of such fruitful partnerships in some or all of these areas? Why are such partnerships improving the bank’s offerings and capabilities compared to what was possible before?

It has been a great challenge for traditional banks, with their heavy cost structures, strong regulatory controls and complex corporate-governance systems, to meet the new consumer requirements in their multiple profiles. There is a growing demand for hyper-personalisation in meeting customers’ needs quickly and easily. Therefore, partnerships become a way to ensure that their needs are fully met, access new markets and diversify revenue sources, overcoming possible difficulties and operational incapacities.

Strategic partnerships allow BRB to position itself at the forefront of what is most modern and advanced in the banking sector. In the investment area, the partnership with Genial Investimentos resulted in BRB Investimentos, a competitive, easy and complete platform for our clients that has more than 600 products. In insurance brokerage, the partnership with the company Wiz allowed significant results in our integrated bancassurance offer, permitting BRB to reach records in its insurance segment, surpassing the R$1-billion mark in premiums negotiated in 2023.

In telecommunications, we partnered with telecommunications operator Americanet to launch a new digital bank, AmericaBRB. The initiative was also aligned with the bank’s strategic planning, and it aimed to promote the expansion of its customer base and the diversification of both companies’ businesses, in addition to strengthening the bank’s digital presence across the country. As for payment methods, we constantly seek to increase our range of partners for loyalty programmes, processing, vouchers and prepaid cards.

Mr. Costa, thank you for your time today.

Banco de Brasília (BRB) Executive Team

(From left to right):

Emerson Rizza – Acting Chief Executive Officer, BRB DTVM

José Maria Corrêa Dias Júnior – Executive Director of Technology

Cristiane Maria Lima Bukowitz – Executive Director of HR and Operations

Bruno Rangel Avelino da Silva – Legal Director

Leila Republicano – President, BRB Institute

Paulo Henrique Costa – President, BRB

Luana Andrade Ribeiro –Executive Director of Risk and Compliance

Dario Oswaldo Garcia Júnior – Executive Director of Finance and Investor Relations

Alexsandra Braga – CEO, BRB Insurance

Diogo Ilário de Araújo Oliveira – Executive Director of Retail, Digital Business, Wholesale and Government

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