Banco de Brasília S.A. (BRB), headquartered in Brasília, Brazil, was created by federal law in 1964 and granted authorization to operate by the Central Bank of Brazil in 1966. Banco Regional de Brasília S.A.’s original purpose was to provide the Government of the Federal District (GDF), which is still the financial institution’s majority shareholder, with the financial resources necessary to develop the region economically. In 1986, its name was changed to Banco de Brasília S.A., and in 1991, it underwent a transformation, branching out from its beginnings as a development bank to include multiple products and services, such as commercial, retail, foreign exchange and real estate. Recently, the bank ventured into new areas, such as bancassurance and judicial service. BRB also holds equity interests in several key companies.
Its staff, numbering in the thousands, are located in branches throughout the Federal District and other states, serving customers in conjunction with numerous self-service terminals and correspondent offices spread across Brazil. BRB employees closely adhere to the bank’s vision “to be the preferred bank of our customers, recognized for the innovative and complete experience, the superior result and the positive impact on people’s lives and the development of companies.”
International Banker recently had the opportunity to ask Mr. Paulo Henrique Bezerra Rodrigues Costa, president of Banco de Brasília, a series of questions regarding BRB’s recent progress, despite the challenging operating conditions of the last two years.
Mr. Costa, thank you for your time today…
Banco de Brasília (BRB) managed to achieve an accumulated net income of R$608 million in 2021, an increase of 35.2 percent compared to the previous year. The result is the biggest in the bank’s history. To what main factors do you attribute such an impressive performance?
BRB achieved the biggest net income in 2021. This resulted from a series of decisions following our strategic plan and was mainly generated by the growth of the bank’s relationship with both individual and company customers. This also reflects our growth in our relationship with governments, whereby we are one of the main providers of social benefits. And finally, this is also due to M&A (merger and acquisition) operations following the partnerships of BRB with other private banks and insurance companies in Brazil. I would like to bring attention to some of the main businesses, such as payroll, loans, credit cards and mortgage financing, where BRB is the leader in the Brasilia market.
How satisfied are you with BRB’s commitment to ensuring business continuity over the last couple of years in response to the coronavirus pandemic? What has been the single biggest challenge the bank has faced?
The bank held a very strong position during the coronavirus pandemic. In 2020 and 2021, this happened on several fronts. The first was that we launched three different economic programs to support families and companies, where we have invested more than R$8.8 billion and benefited more than 156,000 customers. We have also worked with the government to implement new social programs that have helped more than 480,000 families—almost 1.6 million people in Brasilia, representing almost half of the population living here. Another big challenge was keeping our people safe and focused while delivering the achievements that we had planned. Dealing with health and business simultaneously was a huge effort for everybody, and our team understood and engaged in making a difference for everyone who needed BRB. Our customers understood that they could count on BRB in any situation at any time.
Approximately 81 percent of the bank’s transactions were carried out through mobile and internet channels last year. Do you see this hefty figure as largely due to the COVID-19 pandemic, or do you expect similar figures to be recorded when we are in the post-COVID era?
In fact, the COVID pandemic accelerated digital transformation in all kinds of economic activities and has also been key to changing the profile of our transactions. We see that this is a new trend that will not reverse. We are going to become even more digital every day. This has also been the basis for us to develop a new retail-banking model through which we are changing all our branches and the way our managers relate with our customers. We see that our customers are happier with the quality of the service we deliver in this new omnichannel model, putting together all channels simultaneously to serve our customers properly.
What are the key aspects of the bank’s approach to digital transformation in recent years? And what have been some of the key differences in the bank’s digital-banking business model compared with its previous traditional-banking model?
I believe that the key aspects involve several fronts at the same time. The first and best known in Brazil is the partnership we made with Flamengo, Brazil’s largest soccer team, with which we launched in 2020 a digital bank that now has 3,000,000 customers and implemented a completely new experience linking football passion and digital banking in a very innovative way. The second front was increasing the products and services available on our mobile-banking platform. The third front was the change in culture and internal processes, where we started several projects to abandon paper and make everything digital.
In the digital model, we have ease of access over the availability of the different channels and also the ease and simplicity of doing business involving insurance, credit cards and loans. For example, we became the leader in mortgage financing in Brasilia, and we have the fastest and simplest process in the country. While concurrence competitors take around 40 to 45 days to make a deal, we finish it within 5 to 10 days.
In September 2020, it was announced that BRB would serve as an ecosystem partner for Plug and Play, the global innovation platform. How has this partnership been progressing?
We see that the bank’s growth, digital transformation and change depend a lot on fintechs (financial technology firms) and the start-up scene in general. And these processes of bringing new companies to our ecosystems so that they can help us increase the pace of transformation are fundamental. We have already selected 23 start-ups that are working with us. Now we are moving to the second selection. We are also stimulating internal innovation and sending two teams to spend six months in Silicon Valley to help us advance in some key projects and reinforce the changes in mindset and culture that are fundamental to continuing to transform the bank.
BRB recently adopted a new model for its customer-service strategy. What are some of the key features of this new model?
This is a completely new model. We have reviewed the types, the sizes and the places of these branches. We have reviewed our customer segments and trained all our managers. We have adopted several sustainable concepts—for example, all the bills that come out in the branch are sterilized, so you don’t have the risk of getting coronavirus from them. We will have different opening and closing hours for the branches. You, as a customer, will have access to your manager not only using the branch and telephone but also WhatsApp. This new experience will also be completed with a BRB proper welcome: a pleasant aroma and great coffee! So it’s not going to be only a banking experience but also a completely new environment and a place that people will love and sometimes miss and to which they will want to go to decide, solve and consult regarding several matters.
This model was built considering customer feedback and involving customer journeys, where we learned from and listened to customers, so they are key to or at the centre of these strategies.
Between 2019 and 2021, the bank’s customer base reportedly increased from 600,000, mostly concentrated in the Brazilian Midwest Region, to approximately 4.2 million spread across the country, while the credit portfolio more than doubled, going from R$9 billion to R$23 billion in balance. What were the main catalysts for this impressive expansion?
Our presence in the digital world, the changes in our image, the revisions we made in our processes and products, the changes in the culture and the attitudes of all our team, and the several changes we made in technology—these all brought the customers’ attention to BRB, and we knew how to transform it in business. There is plenty of room to continue growing and have a stronger market position.
Part of BRB’s physical-expansion strategy is the recent launch of the services of collection and administration of the judicial deposits of the Court of Justice of the State of Bahia (TJBA), a region with more than 14 million inhabitants—with the bank having opened 49 service points in addition to 402 business representatives to deliver service to customers in this region. For what main reasons did the bank decide to provide this judicial service?
We will have access to a funding pool of about R$7 billion, which is key to financing our growth. Besides, when we have such a relationship with a state and open such a banking presence, this brings several other businesses together. We had been looking for opportunities to grow in the North, Northeast and Midwest regions of the country. Bahia was one of the states where we were looking for opportunities, and we couldn’t find a better one.
BRB has sought to diversify its revenue sources by increasing its capacity to sell insurance products through a new bancassurance model in partnership with Wiz Soluções, a distribution-channel manager for insurance and financial products. What are some of the key features of this new model, and how does this Wiz partnership help achieve some of its objectives?
The key features of this model involve: first, setting up a JV [joint venture] through which we will share the governance and experience that we have in managing channels and our customer base. We also see that it will bring its large experience in the insurance business. It will bring new IT [information technology] solutions such as CRM [customer relationship management], which will provide a superior experience to our customers. Wiz will also bring a complete portfolio of insurance products. We’ll bring a team of experienced distribution professionals who will help us accelerate the sales of insurance products, and we will build a new bancassurance approach together. From the product offer to the insurance claim, this will be a complete, familiar and easy process for our travel customers. Insurance is a sector in which the Brazilian market has a huge space to grow compared to the penetration and sales of insurers in other markets, such as the United States, Europe and even Japan. So, we expect to be an important part of the change in the Brazilian market.
According to BRB’s stated mission, the bank aims to “act as a solid, agile, modern, efficient and profitable public bank, protagonist of economic, social and human development, the generation of employment and income and the improvement of the regional quality of life, in line with the best governance and management practices, and the principles and ethical values”. What is the most significant way you are aiding human development at present?
We have three main initiatives regarding human development. The first is by executing 21 social programs of the government of the Federal District, reaching almost 50 percent of the regional population, providing several kinds of support and income-transfer programs. The second is through our Institute, where we invest in social initiatives such as women’s support and economic development so they can get out of socially vulnerable situations. And the third is when we invest in culture and sports and help people get out of poverty by practicing positive activities.
As BRB’s president, what is the most significant lesson you have learned from the COVID-19 pandemic regarding your approach to banking leadership?
The main lesson is that we have to stand strong, keeping in mind that despite the size of the crisis and the challenges we face, if we communicate properly, if we continue focusing on the strategic planning and if we protect and involve our people and our customers, sometimes this type of crisis can be an opportunity to reinforce values, objectives and increase the impact that we have in society.
What would you say is BRB’s most significant challenge over the next 18 months? And how do you intend to accomplish it?
The most significant challenge is to continue delivering the digital transformation, surpassing our customers’ expectations and growing in a challenging economic environment. We have faced everything. We have come through a pandemic. Now we are facing a war, and it’s key to go through it and continue to deliver this high level of growth, satisfaction and return to our customers, our society, our shareholders and our employees, whom I would like to especially thank for everything they have done over these years.
And I thank you for your time, Mr. Costa. It certainly has been a pleasure to learn more about BRB.