Ecuador fell into recession in 2015 following staggering declines in commodity prices. But despite a challenging operating environment, the country’s third-largest commercial bank by asset size, Banco de la Producción S.A. (Produbanco), has yielded first-rate results. By realizing the four pillars of its long-term strategic plan: responsible risk management; market dominance in corporate banking; expansion in SME, commercial middle market, personal banking; and cutting edge strategies in omni-channel banking, Produbanco—incorporated in 1978 and headquartered in Ecuador’s capital city, Quito—has demonstrated its tremendous capacity for growth through the years.
Produbanco’s CEO, Ricardo Cuesta, joins us today to provide insight into the bank’s success despite the economic conditions in which it has operated.
As I understand, under your leadership the bank devised the five-year Strategic Plan, 2015-2020. What are some of the key objectives of this plan? Would you say you are on track to deliver them on time?
Banco de la Producción S.A. (Produbanco) has remained focused on the four pillars of its long-term strategic plan: 1) execute responsible risk management; 2) maintain our market dominance in corporate banking; 3) expand in small and medium-sized enterprises (SMEs), commercial middle market, personal banking, and credit and debit cards; and 4) implement cutting-edge strategies in omni-channel banking. The latter has yielded stellar results in the face of mounting operating challenges for Ecuadorian banking.
We intend to achieve these goals by reinforcing our customer-centred culture, enhancing inter-relationships between the different market segments and strengthening relationships with existing customers. We believe in utilizing the most innovative technology available and exploiting the strengths of the Produbanco brand and corporate image to push our objectives forward. Given that the successes the bank has recently achieved have been among its hardest won—especially when one evaluates them against the backdrop of Ecuador’s languishing economy in recent years—it would be reasonable to assume that the bank will prosper by an even greater degree going forward, as oil prices rise and the nation begins to recover. As such, one suspects that the best days continue to lie ahead for this Latin American powerhouse.
The bank is well-known for its superior levels of customer service. For instance, it has earned first place in the EKOS Customer Satisfaction Index in the last three semesters, within the “large bank” category. What do you believe to be some of the main reasons why Produbanco consistently outperforms the competition in this regard?
Indeed, Produbanco is arguably best known for our unwavering commitment to serve our customers. Our customers are our utmost priority. The bank’s desire to provide the highest possible standards of customer service continues to remain unrivalled throughout Ecuador. The lengths to which our various teams go in order to cultivate the best, most fruitful relationship with each individual customer is admirable. All available resources are utilized to facilitate this mission—from many of the best banking professionals in the industry to the smart utilisation of the latest technological resources.
Produbanco defines itself as a customer-centric organization. We aim to meet all of our customers’ needs through excellence in service. This philosophy has allowed Produbanco to acquire a clear competitive differentiation—our continued commitment to maintaining high levels of quality and satisfaction in our product and service offerings sets us apart.
We actively manage service-quality standards through various mechanisms, which include:
- Service-satisfaction surveys,
- Telephone and face-to-face surveys,
- Mystery shopper,
- Benchmark studies.
The bank inaugurated its new Quito head office in Ekopark Business Center not too long ago. What were the main reasons for the relocation, and are you beginning to observe any benefits from this move?
In November 2016 we celebrated the bank’s 38th anniversary. We opened a new head office in the heart of the modern Ekopark Business Center and simultaneously introduced our new corporate identity. Our new corporate image is much more powerful, and it brings us closer to our stakeholders. It also displays our customer-focused strategy—we strive to create outstanding experiences for our customers and staff. Furthermore, our new corporate image is aligned with that of Grupo Promerica and its various regional banks to showcase our regional presence and prowess.
One of the key components of the bank’s strategic plan is to focus on developing cutting-edge technology. What is the most innovative technology-based solution that the bank has introduced in recent times?
Technology plays a pivotal role in the achievement of Produbanco´s stated objectives. Our main IT projects include:
Omni-channel banking: We just launched a new transactional web channel. It provides a unique customer digital experience—it features a responsive look and feel, and it allows navigation by all browsers and multiple devices. Our design for the transactional channel also allows for friendly usability and provides continuous information for all transactions.
Advanced analytics and big data: Our priority for this year is to incorporate non-structured data and social media, strengthening our current big-data model. This information will complement the demographic, transactional and behavioural data already collected to allow us to enrich customer knowledge. We can then offer personalized services and promotions that improve the customer experience and enhance our bottom line.
Mobility: We are planning to extend all the capabilities available on the web to our mobile channels as soon as the local regulatory regulations allow it.
Social media: We are working on providing customized offers to our segmented client audiences at the right time. In this way, we can generate product and service solicitation directly from the social-media channels available.
Acquiring/co-innovating with fintech start-ups: We have established strategic alliances with fintech start-ups to integrate innovative services to our mobile apps. For example, we are currently working with a start-up that provides credit scoring, incorporating social-media information into the risk analysis.
If I’m not mistaken, you have recently launched a new digital account called “be Produbanco”. What are some of the key features of this new service? And in terms of innovation, how is it different from what has preceded it?
An essential part of Produbanco´s strategy is our strong focus on innovation, based on technological developments and with the aim of providing better experiences for our customers.
Our focus on innovation, coupled with an analysis of Millennials’ behaviour, is reflected in our new digital account “be Produbanco”. It provides digital users with a great tool for their personal finances, and simultaneously gives them a different customer experience, without ever having to visit a bank branch.
The innovative app, which can be downloaded free from digital stores (App Store and Google Play), allows our customers to open an account directly on this platform, without approaching a branch. This solution helps to manage financial resources with total ease and security. The application can be accessed from any mobile device with Internet connection 24 hours a day, 365 days a year.
As far as payment channels are concerned, how successful would you say Produbanco’s online presence has been in helping customers conduct important transactions? What growth strategies are you implementing for this segment in particular?
In terms of specific virtual-service channels, the most crucial of Produbanco’s recent innovations has been the launch of its new mobile application, which allows customers to check their account and credit-card balances and transactions and to make transfers, payments for services and airtime top-ups. Useful and pertinent banking information is now at the customer’s fingertips, including the nearest locations of branches and ATMs, as well as information about the latest banking products and special offers.
Two years ago, we partnered with Payphone, a start-up at the forefront of innovation to launch the first mobile-payment system of the country. It allows customers to make payments with credit and debit cards through a smartphone, without revealing credit- and debit-card information to vendors. All you need to do to use the app is download the app and register. Now, we have fully integrated the Payphone platform inside our mobile apps to have the option to make payments directly from the app without carrying the physical debit or credit card.
The bank has now established the solid foundations of its “omni-channel project”, which provides the customer with a consistent format for its banking services across all consumer devices. Thus, it enables user-friendliness and usability irrespective of whether a customer wishes to access a service on a mobile phone or a desktop computer. As such, customers are given a seamless technological network on which to complete their bank transactions.
Which one achievement are you most proud of since taking over as CEO of Produbanco? And what is the one outstanding area that you believe requires the most improvement/immediate attention?
Within our strategic plan, we direct our priorities and efforts towards the digital-transformation plan. We are focused on short-term digital enhancements for our customer base and medium- and long-term flexibility to allow for the best and most automated user experience possible.
Our growth strategy is focused on maintaining our market share in our core markets and growing our customer base in other markets. We have been able to increase our market share because of our incremental growth in cities other than Quito, Ecuador´s capital city, which is our core market. The local markets in which we have grown include Guayaquil, Cuenca, Manta and Ambato, among others.
If there is one philosophy within the working culture of the bank that you strive to promote above all else, what would that be?
Our strategy highlights four strategic pillars: Customer Focus, acquiring and developing the Best Professional Talent, running Highly Efficient Operations, and implementing and offering Cutting-edge Technology.
Produbanco has defined five cultural values that all employees are aware of and should live on a daily basis. These values are:
- Customer Centric,
- Delivering on our Promises,
- Making a Difference,
- We Are One Team,
- Our Ideas Innovate.
Customer advocacy is how and why we do banking.
How aware is the bank of its impact on the environment? And are there any recent measures the bank has taken to reduce its overall environmental footprint?
Produbanco is also at the forefront of the global shift towards clean-energy adoption—and we are moving away from activities that generate an abundance of carbon emissions. 2017 will be the third year in a row that we received a Carbon Neutral Certification, which is given to organizations that are intent on promoting activity that reduces and offsets carbon emissions generated by their own operations. The bank also runs several energy-awareness campaigns to ensure its employees have sufficient knowledge about their resource utilization, especially pertaining to the use of paper, water and energy. Emissions have further been offset by Produbanco via the sponsorship of 950 hectares of forest in the Zamora province, which has enabled the bank to laudably offset 100 percent of its emissions. In so doing, the bank provides a shining example of ecological efficiency and of how to go about utilizing resources carefully.
Our commitment to the environment led us to introduce our Green Lines credit program in 2016, a financing program with preferential conditions for qualifying companies, targeting various productive sectors in the country. It supports improvements in the use of resources, environmental mitigation and energy efficiency. The product provides capital and knowledge transfer for companies, projects and financial institutions aiming to reduce environmental impact with the aim of supporting the country’s productive and sustainable sector. At the end of 2017, Produbanco placed a total of USD 30 million in this type of loan.
I notice that a significant chunk of Produbanco’s corporate social responsibility is devoted to financial education for communities. Do you have any measures of success in this regard?
Produbanco’s corporate-social-responsibility initiatives continue to achieve a slew of impressive results, largely focused on delivering financial education to various groups in Ecuador. Produbanco’s main objective is to raise awareness about the importance of actively managing personal finances. We provide training on 15 practical aspects of daily finance, the use of e-channels and safety measures. Again, technology lies at the heart of this Produbanco endeavour. The bank uses several media channels to spread these messages.
Elsewhere, Produbanco is heavily involved in assisting Ecuador’s underprivileged communities. Its most important association pertaining to such work is with the Fundación Su Cambio por El Cambio, which among other outreaches has provided crucial support in the rescue, education and re-insertion of approximately 6,000 vulnerable children and adolescents.
Since September 2016, we have been part of Global Compact, a United Nations initiative through which Produbanco has voluntarily committed to align its operations and strategies with the universal principles of human rights, labour and environmental standards and the fight against corruption—all issues closely linked to the 2030 Agenda for Sustainable Development Goals (SDGs).
Additionally, we have made publicly available our ninth Corporate Social Responsibility Report, based on Global Reporting Initiative (GRI) for CSR reports parameters, version G4. GRI is a non-profit organization that has set up an integrated framework for the presentation of information on sustainability, with principles and indicators that enable organizations to assess and report their performance in economic, environmental and social matters. The Corporate Social Responsibility Report presents Produbanco´s performance and achievements regarding its environmental, social and internal governance priorities. It moreover describes how the bank forges relations with all of its interest groups.
Well, it sounds as if Produbanco has gone out of its way to make life better for its communities—and may those efforts continue to reap benefits. Mr. Ricardo Cuesta, thank you for your time today.