In a scenario of greater banking competition with the arrival of open banking, which will allow customers to authorize the sharing of their data with financial institutions, the large banks should use the credit as a “shield” for the offensive of fintechs about your customers. Money, the big institutions already have: the total assets of the five market giants – Itaú, Bradesco, Santander, Bank of Brazil and Federal Savings Bank – reach R$7 trillion. Now, the time has come to apply technology and innovation in the business, to ensure a “fine tuning” in releases.
In addition to technological challenges, including connecting financial institutions to share this data, banks will have to define the niche in which they are most competitive, says the director of banking at the German consultancy Roland Berger, João Bragança. “Credit offers need to be customized, and that will be the challenge. Choices will be needed,” he says. One of the key points, for Bragança, is the focus on the range of customers in which credit is an asset: the average income, which needs financing for cars and homes, for example.
“Banks need to look at their strengths, the niches they reach and work on these segments. They will have to look at each segment, make these strategic decisions and fight to preserve the customer base”, emphasizes Bragança, who conducted a study on open banking that pointed out that R$110 billion in revenue for leaders is under threat with the new advent of central bank. In other words: it is necessary for banks to urgently prepare for a context of greater competition so as not to lose money to fintechs.
According to the specialist at the German consultancy, large banks have the advantage of already having an organized supply of credit for the middle class. This is a less attractive segment for investment giants, such as XP and BTG, which should remain focused on high income. The low-income, according to Roland Berger, should be attracted by digital banks, which offer free accounts and payment services.
Furthermore, it is very difficult for a fintech or platform to be able to provide credit at the bank level, given the need for robust capital. President of Xsfera, a business consultancy specializing in the financial industry, Fausto Ferraz de Arruda points out that banks have very cheap funding, mainly through cash deposits, the name given to the money that the client leaves standing in the account -chain.
With open banking, a bank customer can be constantly harassed and tempted to take their money to a competitor. For this reason, specialists point out that if banks do not improve the range of products and invest in the digital experience of their customers, resources will migrate – as has already happened in the case of investments.
In this initial phase, it is important for banks to look at their own customers – some institutions have already started to adapt products to the customer’s profile and adjust the limit of the credit card, before a competitor does. Another job is to prevent consumers from being bothered by proposals that are unrelated to their profile: today, it is common for high-income people to receive payroll loan offers or customers who do not have a car are impacted by auto insurance advertising.
By looking at its customers and carrying out a risk analysis, Santander has increased over the course of the pandemic, R$ 27.7 billion in credit card limits for around 13.6 thousand customers. “Since the beginning of the pandemic, we have made a big move in our customer base”, says Rogério Panca, executive superintendent of cards and payment at Santander. It says the index of default at the bank, which is the share of customers who fail to pay their bill, it is at its lowest level.
For the director of the Fitch risk rating agency, Claudio Gallina, despite the fact that fintechs represent real competition for the big banks, the biggest dispute that grows with open banking is between the big financial institutions themselves. “With open banking, the biggest competition is between a large bank and a large bank. Despite fintech being able to access customer data, how will it manage to work if it doesn’t have the same products?”, he asks.
For Jean Lopes, director for financial institutions at Fitch, open banking will accelerate an agenda that was already in the hands of large banks, which is the segmentation of their customers. From there, the bank moves to expand its range of products and services.
According to Fitch’s directors, banks are investing heavily to improve the user experience, fleeing from “standard” offers. This is evident when banks increasingly launch benefit programs, car rental services or offers aimed at specific audiences such as gamers. “It will be a game in which each bank’s adaptive power is worth, focusing on the customer experience. That’s what’s going to build loyalty,” says Lopes.