COLOMBIA - Finance
Álvaro F. Pimentel studied at University of Campinas (Unicamp) and holds an MBA from Institute of Education and Research (Insper). His time at ITAíš spans 20 years, and he has been CEO of ITAíš’s Colombia operations for the last two years.
We had a proposal for Latin America and ITAíš aims to be the most important Latin American bank, supporting regional companies and investors looking to expand as well as global companies who are planning to enter Latin America. Any company with an aim to target Latin America must include Columbia in its strategy, not only because of its relevance in the region but also because the country has a population of 50 million people. Moreover, Colombia has dealt successfully with inflation and the drop in oil prices. Particularly, Colombia has never defaulted on its debt. According to my knowledge, Colombia recorded negative GDP growth only once during the last 15 years. With these facts in mind, it would be wrong to claim that we are a Latin American bank if we didn’t operate in Colombia. ITAíš’s Colombia operations were established here six years ago with a small second floor wholesale bank with the objective of understanding the country. We waited for the opportunity to have a full-scale bank here, which arrived in 2016 when ITAíš merged with CorpGroup in Chile. CorpGroup owned two banks: Helm Bank and CorpBanca. After the merger, CorpGroup became a part of the ITAíš Unibanco Holding. In May 2017, ITAíš started integrating Helm Bank and CorpBanca with ITAíš. The process was completed by end-2017 and at present, we have only one bank and brand integrated under the same culture.
Talking about institutional investors, the brand of ITAíš is extremely important. Once we integrated the brand ITAíš in our branches, the regulator was clear that ITAíš has a long-term compromise with Colombia. When talking about retail, we represent 30% of the value of the ITAíš brand in Colombia while the other 70% will depend on the quality and value proposition we are creating for Colombia. It is easy to say that you have to be customer-centric, but it is hard to implement. A company has to be creative and experiment with all sorts of operations, from small tasks to digital strategy, while keeping the clients’ needs in mind throughout the entire process.
First, ITAíš has an organized way to work—one that focuses on setting a different value proposition for our three segments. Our aim is to not be the cheapest bank in the market, but I believe that it is possible to have the most competitive value proposition, so that our offer for one client with the service quality of digital solution can be the best value offer in Colombia. ITAíš employs the same technology in Brazil and while it is applying the same model here, the solution needs to consider the needs of the Colombian market. The company has spent the last year understanding and preparing this value proposition and the local market, and it is using the expertise and knowledge from its operations in Brazil, Chile, Paraguay, Uruguay, and Argentina to set a value proposition for Colombia. Although we started the value proposition in 2018 after completing the integration, we continue to conduct polls to better understand what the client wants.
Colombia has a highly organized financial market with strong players, thus presenting tough competition. We had to deal with a tough market during the integration process; it wasn’t a part of our plan but we are succeeding in our efforts. It is better to work on organizing a company’s operations in a new market when the market is not so strong because there are less opportunities to lose. At present, looking at the non-performing loans related to the retail market, I think that the market is at an inflection point.
The main point is that the marginalized part of the population has to get inside the consumer market, of which financial systems are a part of. This is a challenge not only for the banks but for the entire country. There is a need to formalize the next segment of the population, and while looking at worldwide regulations, it is important to understand that banks should deal with a formalized sector. Different stakeholders hold clashing opinions in Colombia, but the country has a huge potential to start a strong process of formalization, as close to 50% of Colombia is yet to be formalized. We have an opportunity and the growth and economic responsibility to maintain the fiscal side and get inflation under control with sustainable GDP growth of 2.7 to 3.3%. If that is maintained for two to three years, it will allow the underserved part of the population to get inside the formalized market in all different sectors. Such an outcome is extremely important for financial services.
We have an organized plan and a vision that we want to be the best retail bank in Colombia. If an interested investor comes to Colombia and a consulting firm wants to present a successful story about a bank that expanded to Colombia, ITAíš will be the reference. Our vision to maintain that image of ITAíš.
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