Photo: Javier Ramírez, head of Digital Transformation at Banco Industrial de Guatemala. Credit: Courtesy of the interviewee.
By Elena Astorga
Guatemala's Banco Industrial (BI) is one of the largest financial organizations in Central America and the most important in Guatemala, with national market shares of around 29% in terms of assets and loans as of February 2022, according to data from Fitch Ratings. In 2021 it was recognized in the Bank of the Year Awards by the financial magazine The Banker, and has been declared the best bank in Guatemala by publications such as Global Finance, in 2022, and Latin Finance, in 2021.
Javier Ramírez, as leader of Digital Transformation, is in charge of the innovation strategy, digitalization and adoption of new technologies and business models of the institution. He is currently leading initiatives in open banking, artificial intelligence, digital culture and literacy, innovation processes and a recently created Digital Incubator focused, among other products, on developing solutions for a key sector: small and medium-sized enterprises (SMEs).
According to ECLAC, SMEs are responsible for more than 60% of formal employment in Latin America, although they account for only 25% of the region's GDP. In Guatemala, according to data from the Ministry of Economy, micro, small and medium-sized enterprises (MSMEs) generate 80% sources of employment, but their contribution to GDP is 40%. This disparity can be explained, in part, by the lack of penetration of digital technologies: according to a report by the International Labor Organization, 52.4% of small businesses and 24.8% of medium-sized ones do not have their own web page, although the Guatemalan Chamber of Commerce estimates that seven out of ten consumers prefer to make their purchases online.
BI participates in the MSME Digitalization Plan promoted by the Guatemalan Ministry of Economy, whose main objective is to encourage micro, small, and medium-sized enterprises in the country to join e-commerce. How does BI contribute to promoting digital transformation in this sector?
Part of our objective has always been to support the country's development in some way. We have more than 30,000 SMEs, which need to be served in a more specialized way. The process of banking access is an important issue where we can play an important role, as well as in the area of microfinance through our digital platforms.
Another area of BI is focused on e-commerce, with a platform called ebi. There we have a whole range of solutions for these companies, such as a product called "ebi mall", for those who do not have a web page where they can sell; or "ebi pay", which allows them to generate payment links and make payments remotely or in person. This also gained momentum with the pandemic, as many companies or entrepreneurs needed to be able to sell products and charge their customers digitally, avoiding transfers and cash handling. And it has grown much more than expected!
A study by the consulting firm McKinsey estimated that the COVID-19 pandemic had accelerated the digital transformation process of companies by an average of three to four years. Has the crisis also led you to step up your commitment to digitalization? What new behaviors do you detect in your customers in this new context?
During the pandemic, we compared our data with that published by McKinsey, and our clients' digital adoption was even higher. Metrics such as the number of logins and the number of users that grew were higher than in other countries in the region. We have experienced the pandemic differently in several countries, and here it was not so much confinement but fear that accelerated all digital issues, even internally. Many things were handled on paper, but as a result of the pandemic we have a 100% digital platform to manage all the issues of notifications and authorizations. I used to say that authorizations went at the speed that a piece of paper moved from desk to desk, and sometimes it could take more than a week. Now, with all the digital platforms we have, we can have it signed in thirty minutes. That gives us corporate agility so we can speed up our processes and improve customer service.
Digital transformation goes hand in hand with an internal cultural transformation in which all employees must embrace new technologies as a core part of their work. How are you following this process of change in the transformation department?
The tip of the iceberg is what the customer sees; it is for example the frontend of the application, which must have a good UX (User experience), and a lot of customer feedback. However, if I have the most beautiful and usable application in the world, but the processes behind it are not adapted to the digital world, an extraordinary effort will have to be made for activities that are ordinary. We must look for efficiency in the entire value chain to give the highest customer satisfaction.
The cultural issue is very important. It is useless for me and my team to have the most complete knowledge of new technologies and trends, of where the world is going, if we keep the information to ourselves. We want to democratize it and we want everyone to have that knowledge, that awareness of what the customer wants, of where we have to go. That is why we have trainings with which we communicate the knowledge of experts, in order to be "digitally literate" and create that transformation mindset. We also promote agility from the business incubator; we want to export everything that is being experienced there - the self-management, the empowerment, the autonomy that these teams have- to the rest of the organization.
Do you work with startups, especially in the fintech sector? How is the relationship between a traditional bank, already established and with decades of experience, and these new companies that bet on technology as their hallmark?
BI is a member of the Fintech Association of Guatemala, with two objectives: one, to be aware of what they are doing; and two, to be able to listen to the value propositions they have for us. In fact, we are affiliated with a fintech called Fri[an open digital wallet], with which we have been integrated for more than a year. The idea was to expand the services we have for our clients in a much more agile and friendly way, since a fintech can go at a different speed, with different processes or regulations, which we could not have.
This does not mean that we have not been innovating along the same lines. For years we have been making progress in innovation, and we are already offering some of the proposals that fintechs have today in Guatemala to our clients. Our strategy has been to continue developing and improving what we have today, but we are always in constant search and listening for new business models, new value propositions and innovations from fintechs or startups that can complement what we undertake.
The digitization of banking services is a tool for financial inclusion: among the measures included in the G-20 High Level Principles for Digital Financial Inclusion are to generalize the use of digital documents to open accounts or to promote mobile technology. What initiatives is the BI developing to promote financial inclusion?
Part of our strategy is to promote self-service, so that our customers do not have to travel, but can do everything in a more agile way. We opened the bank's app so that anyone can become a client, 100% remotely, which opens the door for us to reach more people. Then we realized that not everyone had access to the app due to data availability and cost, and we made the decision to sponsor the data in our app: that is, anyone in Guatemala can use the Banco Industrial app without consuming data. This is a very important support in this process of banking and inclusion, because what we want is for our service to be available to everyone.
Finally, what do you think companies and institutions that do not give the necessary importance to digitalization risk? What message would you give them?
They risk not being there. We started the transformation process, not because we were doing badly, but precisely because we are doing well and in the right position to be able to make that leap. Is there a threat? Yes, we have to watch out for innovation by other banks, but there are also the fintechs, the big techs.... There was Facebook with its digital wallet Novi in Guatemala, or there are the big neobanks such as Nubank, Revolut, etc.
We must be prepared in such a way that we can react easily. We know that we now have a good position in the market, but without the right actions, we will not be able to keep it. We have to prepare the bank so that these 54 years of growth will be 100 more and that we can always be in this process of change and evolution.
Telecoms, banking, and insurance are among the industries most impacted by digitalization, but all of them - agriculture, energy, construction, food... - are being affected, to a greater or lesser extent, by some technologies more than others. We must adopt them, research them, know where they are going, and where traditional competitors are moving, and identify which are the new ones. Innovation is the only way to grow. We know that there comes a point when organically I cannot grow any more, and it is innovation that allows me to make that leap and stand out from others.
Published by OPINNO © 2022 MIT TECHNOLOGY REVIEW spanish edition.