Simon Hughes of International Banker interviews Mr. Walter Bayly, CEO of Banco de Crédito del Perú on the banks objectives in the rapidly growing Peruvian economy.
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Meeting with me today is Walter Bayly, CEO of Banco de Crédito del Perú. Very good to have you with us.
Thank you for inviting me. It’s a pleasure to be here.
Now, one of the bank’s principles is clearly customer satisfaction. In fact, you said “to offer our customers a positive service experience through our products, services, processes and care”. How on earth do you actually measure the general levels or improvements in customer satisfaction?
We’ve gotten better over time, and this is a continuously evolving topic. But one, lately we have gotten into a tremendous amount of data and asking the customers, and being able to understand from them—not just from each customer segment but each product in each distribution channel, what are what we call the pain points. What are the points of the direction of that customer with the bank that makes them feel uncomfortable? And through massive accumulation of data, we’re able to really get insightful information that helps us prioritize what are the things we should eliminate. We take a statistic measurement, we want 70 percent of our customers to say they’re happy or very happy with dealing with the bank. So there’s a lot of data, and it is a sophisticated, an increasingly sophisticated way of getting to know the customers.
Another important part of the bank’s mission statement is to support the country’s sustained development. Can you give me a couple of examples of how you actually do that?
Well, let me put that a little into context. We’re a bank that’s over a hundred years old. And as you can imagine, we have gone through very volatile times in the country. And we are by far the largest financial institution. Therefore, we view ourselves not only as the largest bank in the country but a relevant institution. And we want to establish ourselves as a model of a financial institution not only in terms of governance, how we treat our customers—but how we interact with the government, and how we interact with society. So we view ourselves as more than just the largest bank—a point of reference in everything that we do. Very specific examples would be going way back. The most important bank in the reconstruction of the country after the war we had with Chile in the 1800s. Or with our recent natural disasters, we took the leadership in rebuilding the infrastructure of the country. So it’s a very active involvement dealing with the government, with our customers, with regional authorities.
Over the last few years, Peru has been among the world’s fastest-growing economies. Has BCP managed to capitalize on this growth in terms of the bank’s own performance?
Absolutely. First of all, we have such a large market share—we’re about a third of the banking system—that our objective has always been to maintain that, to grow as the country grows. Not to increase our market share. It’s probably not good for the country or for ourselves to be more than just a third of the system, which is relatively large. So for us, being able to accompany the growth of the country was one of our objectives. And, yes, we’ve been able to do that. We have been the largest bank with about a 30-to-33-percent market share for the past 100 years. And the bank has tripled in size in the past eight to ten years, because precisely the level of activity was so large and the potential to penetrate the economy, which was underbanked—so we’ve been able to capture a lot of that growth and capture the synergies and the economies of scale.
And apart from market share, if you think about your range of current banking products and services, how comprehensive is it, and are there other areas you think you might need to be thinking about developing new products or services in?
Our product offering is extremely complete. It’s the model of the universal bank that goes from microfinance to large corporates, capital markets. And on the consumer side, from the most simple, basic banking needs to the most sophisticated portfolios. So I don’t think there’s a lot we can add to our product offering. What we are very much focused lately is, though, on how technology is going to impact the way customers interact with the bank. The digital revolution, and everything that’s behind it.
One of the external factors, of course, is the ongoing commodity prices. If you compare them to kind of 2013-14 levels. And how is that affecting performance?
One of the key drivers, or the key driver of growth in Peru is precisely investment. And a lot of that investment was precisely attracted or directed toward mining, driven by the commodity prices as you mentioned. That has clearly subdued, and we are in the process, not only Peru, but most of Latin America, in searching for new engines of growth. And we are all focusing today on infrastructure. Peru, amongst the other Latin American countries, we do have big gaps in terms of our infrastructure. And there are tremendous opportunities for us to attract investment to build that much-needed infrastructure. So infrastructure, I think, is going to be the driver of growth, as mining was in the past decade.
Now, you’ve mentioned the importance of data and the importance of digital. And you launched Innovation Center in October 2015 as a way to transform the bank and improve that customer experience. Can you explain what this has entailed to date? And how do you rate its progress so far?
It’s fascinating. I am a true believer that the way customers interact with financial institutions is going to dramatically change; and it involves, it will require us financial institutions to dramatically change the way we do things and the way we work, the way we create products and services. Customers today do not compare the banking experience we can offer them with that of our competitors. They want an experience similar to what they can get in Uber and Amazon and Netflix, any of these native digital companies. In order to do that, we cannot evolve in a straight line. We have to reinvent ourselves. So we create these innovation centers where we bring people with fresh mindsets. Who work with different tools that are able to understand better and decide our products better so that they adapt to the changing needs of our customers. We’re extremely excited. It brings, it requires a change in the culture. The change in the type of talent that we’re traditionally used to attracting. So it’s fascinating to see what the industry will do in the next five to seven years worldwide.
And can you give me an example of any digital applications that you developed recently which would demonstrate that?
We are now able to offer our customers to open a checking account, a debit account, any kind of account, without having to interact with any human being. So by just taking a picture of yourself, the data or your fingerprint, the data flows to the central agency—the government agency that issues IDs—and we get a confirmation that that is the person; you choose your account, and you’re done. It’s fascinating.
Turning to your own career, you’ve had a long career in banking, including management roles at Citibank and Casa de Bolsa Mexico. What are some of the main ways in which your current role differs from previous roles that you’ve held?
Good question. Three very different roles that I’ve played in financial institutions. The initial one, where I learned to be a banker and worked in the first years of my career, was, as you mentioned, with Citibank in Peru, Mexico, New York and Venezuela. I was really learning. I have tremendous respect for that institution. I learned a lot. Interacted with a great many bankers. It was an experience. The second stage was with Casa de Bolsa in Mexico, which is a small brokerage house in Mexico. But I was there, one of the leading partners. So at a young age, being able to be part of a four- or five-management team leading a financial institution, totally changed my perspective on what banking is. It was not about role-playing or selling products, but running an institution. And then the last part of my career with Banco de Crédito del Perú is a combination of both. Leading a financial institution but a relatively large financial institution. And it’s much more to do about leadership, vision, talent, surrounding yourself with the right kind of people. I’ve had a very satisfying and gratifying career.
And you just mentioned kind of moving around, and you’ve worked in lots of different geographical locations—what advantages are there, do you think, of having that experience of being in different countries with different cultures?
Today it’s a must. In the past it was an advantage. The world today, especially in the financial world but everywhere else, is so globalized that the anecdote that I always have mentioned to my kids is: as comfortable as I feel interacting in London, New York, you have to feel in Shanghai, Manila, Bangalore, or all over the world. We have to be totally in tune with what’s happening in the world. Isolation is not an option these days.
Now, you’ve been CEO since April 2008. During that time in the bank, what do you consider to be your greatest achievement?
When I retire, I would like to leave a financial institution that is prepared for the future and that has built a management team that allows the financial institution to prosper and grow regardless of individuals. I have always felt very comfortable and thought it was necessary to surround myself with a management team of people that are more capable than I am. More intelligent than I am, more knowledgeable than I am. I’ve always been very focused on strategy and choosing the right kind of people and letting them, delegating, and letting them do their own thing.
We’re kind of touching on the whole leadership question there. How would you describe your leadership style, and what’s the kind of underlying philosophy that supports that for you?
I would say it’s being able to transmit or to let the other members of the team feel that there is a vision and understanding a common route that we are going through, making them feel passionate about it, is the first thing. So it’s the right strategy and the buy-in from the team. And the rest is having the right team. And then letting them work. Don’t get too involved.
So the delegation part is an important part of that process.
Yes.
Okay. So, back in 2016, BCP was recognized as one of the most attractive companies to work for in Peru, and it’s considered to be the financial institution lots of Peruvians would like to work for. How do you maintain that position and separate yourself from the competition in terms of being such an attractive destination for people?
It’s not an accident. It was an objective that we set for ourselves. We want to be the most attractive place for people to work. Not only a financial institution. More and more we need to be able to attract a very, very diverse set of talent skills and individuals diversified so that the company can be richer in what we create and do. So we went through this very detailed program that we call Somos BCP: We Are BCP. To really ask all our, the people who work in our company, what is it that you like and you don’t like about working for BCP. So we identify which are the 10 things they like the least. And every year we work on one or two of them. And they know we’re working on it. They understand that, you know, we are doing things so that all the people who work in our institution feel identified and engaged with the company. And that flows, even though it’s a program exclusively designed for us, the market knows about it. So we’ve been very successful with that program, and that allows us to attract talent. It’s a self-fulfilling exercise.
And that kind of link to the community links directly to your kind of corporate social responsibility initiatives, where it appears that your focus as an organization is very much on the educational sector and educating people within the country itself. How are those initiatives being driven forward?
We have an educational system which is not very good. Our public education system is not very good. It has a lot of room for improvement. And clearly talent is one of the most urgent needs our country has. Very early, about seven or eight years ago, I met, I was invited to speak to what is called a high-performance group. I was so engaged with that concept, that we have supported in our building 16 of those. The concept here being that you pick from the public schools—in the last three years of education—the one percent most talented set of individuals. If you pick out of a million the top one percent, they will be geniuses. And these are incredibly talented people who have not been able to access top-quality education. We think we can make a difference there. So we are setting up, building these 13 schools around the country, to allow these extremely talented people to access the best education, and take it from there. We’re extremely engaged with it, and we think that can have an impact.
And apart from the educational ones, are there any other CSR projects that you’d like to mention?
We have introduced something which is called Obras por Impuestos, which is highly unique. It’s public works for taxes. There are some regulations whereby you can, every corporate, can spend 50 percent of your income tax, used directly in a public works approved by the government. So we’ll build dams, water/sewer systems, roads, schools and hospitals. So we’re extremely engaged in building that infrastructure that I mentioned before from the private sector. We want to demonstrate to the country that infrastructure can be built without corruption, on time and at cost. So we’re very engaged with it, and we think that can have a demonstrable effect on the economy.
Now, thinking about infrastructure, I am going to refer to my notes, because you have 125 years trading but also 450 agencies, two and a half thousand ATMS, 6,000 BCP agents and 17,000 employees, plus correspondent banks around the world. Are you satisfied that that gives you the correct level of coverage to be and maintain your position?
Yes, but the way customers are going to interact with banks is going to change dramatically. The number of transactions done at the branch level has remained flat for the past eight years. Even though the total number of transactions grows about 10 percent a year. So people are interacting less with the branch and doing the transactions through their mobile, through any other channel. So the physical infrastructure that we have is probably not going to increase. Nevertheless, our capacity to build digital infrastructure for our customers has to improve dramatically.
And if we kind of lift that up geographically, you are in Bolivia, the US, Chile and Panama. Have you got the right geographical coverage in place, do you think?
We want to expand that. We are very, in Peru we do have the right coverage. We think that there’s a lot more we can do in Chile and Colombia, which are countries, neighboring countries, good countries with very good prospects going forward. So we will be focusing our investments in those countries.
And you’ve already mentioned that in terms of your leadership style, kind of establishing the values and the vision is really important. You’ve given yourself a target, 2021, for being the number one ranked financial institution for customer service. How close are you, do you think, to that, and what areas need improving to get there?
That’s not correct. The target is not being the best financial institution; it’s being the best company for customer satisfaction. Which is even more ambitious. Again, our customers do not compare our experience with just other banks but with other companies. We’ve got a way to go. And that is precisely the type of challenges that I like to put in front of our organization. Which is something far-reaching, something really ambitious, and we have a five-to-seven-year program to get it done. I’m sure we’ll get it done. Banks in the world are not necessarily loved by our customers. We have set ourselves as a target to be a loved brand, which is tough for a bank; but we’re going to do it.
Well, good luck with that. Great ambition. Very nice talking with you.
Thank you very much for your invitation again.
Thank you.