Alexander Pinilla
Andres Arango
EGADE Business School Tecnologico de Monterrey
Consuelo Garcia-de-la-torre
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Bancolombia, Colombia's largest bank, with 11 million clients at the regional level, was given the mandate of finding a new way to interact with people, which allowed the inclusion of new generations and people of lower socioeconomic levels. At the same time, it is seeking to provide a non-traditional banking experience to counteract resistance to traditional banking models. In traditional banking models: a) The money is in an account that I can only "touch" by going to the bank or paying a fee (which, at most banks, is between $3 and $5 per month, equivalent to 80% of a day's salary for a person earning the minimum legal monthly salary [$220]). b) If I go to the bank or ATM, I can get robbed (in Colombia there were some 66,000 cases of theft reported during 2016[1]). c) Each withdrawal has a cost associated with the plan or type of credit.
[1] Source: http://caracol.com.co/radio/2017/03/28/judicial/1490686136_318677.html
Nequi is the way by which you can get closer to people. It's also a new--entirely digital--bank. Account opening is virtual. It does not require visiting a physical branch and can be done over a cell phone. No physical documents or paper forms are required. Account security is guaranteed by biometric technology, including face, voice, and fingerprint signatures. These transaction levers ensure security and make it possible to use ATMs without a debit card. Additionally, customers are not charged for many services that would have fees at a traditional bank.
The big message here: “the better way to solve root problems is to innovate on soft matters that help the helpers.”
For over five years in Bancolombia Group, a transformation has been taking place towards a more human banking, building long-term relationships between clients, employees, shareholders, and the general community. This slogan came to the group from its former president, Dr. Carlos Raul Yepes. It was precisely the beginning of the democratization of banking with concrete actions such as eliminating: a) The cost of transactions in electronic ATMs of the network and transactions through electronic means; b) The cost for credit reports; c) The cost for failed transactions in other network ATMs. 3.4 million people (60% of their clients) benefited from this first initiative to live out their slogan through concrete actions. His message was a shock to the Colombian financial sector: "It is not easy to change the dynamics of a sector that traditionally did not speak about humanization. I dream that in a few years the headlines will not be focused on the profits of the banks, in which the government calls for lower costs for their services, for not talking about regulation. I would like to see a focus on the stories of how we have realized the dreams of thousands of people, that we give opportunities for growth, that we give hope to a country, that we have seen small businesses grow, not to talk about recovering assets but to conquer customers, talk about a more human banking."
[1] Source: http://www.finanzaspersonales.com.co/ultimas-noticias/articulo/grupo-bancolombia-apuesta-banca-mas-humana/43686
More than a bank, NEQUI is a new model of banking: an open platform for third parties to interact with it and with the general purpose of reaching 10 million Colombian unbanked through a simple and efficient model and language, without needing to go to the bank or even open the account, allowing Bancolombia to convert daily activities into banking-prone activities. These include: a) Receiving payroll or payments for salary or provision of services by NEQUI; b) Running scheduled savings group (called "natilleras” in Colombia "susus” in Panama); c) Group purchasing of products or services (called in Colombia "cows"); d) Paying virtually; e) Applying for visas.
Currently Bancolombia has 6 million local clients, based on 75% of the banking population, and reports annual profits of $9.69 billion. It also has 50,000 Nequi users [1]. If the penetration rate is maintained over the remaining 25% of the population, the customer base could increase by around 2 million. (Bancolombia has a market penetration rate of 16.3%.)
4 Source: http://www.larepublica.co/el-grupo-bancolombia-tuvo-utilidades-netas-de-286-billones-en-2016_474826
The main benefit for the bank is to attract public resources; to stimulate the formal economy by allowing customers to use NEQUI in traditional and electronic commerce; and to bring in new customers without incurring the expense of expanding its network of physical branches, managing physical documents, handling cash, and maintaining other administrative procedures that generate high operating costs for most banks.
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