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Jane Fraser takes office in February, but is already at the helm of America’s third-largest bank. And one of its focuses, it is said on Wall Street, will be to revitalize retail banking in the US and its other operations in the world. And that includes Banco de Chile, where Citi controls together with the Luksic group.
It was the subject of many conversations at Banco de Chile, in the offices and in the corridors. He also had banking analysts pending. They wondered when Banco de Chile was going to jump into the pool. Of the market leaders, only the Luksic family bank and Citi remained uncertain about the milestone of a 100% digital account.
The FAN account, announced in August, relieved several. It started strong and already has 70 thousand clients. Although it has already taken the first step, it is far from the more than one million users that Mach has from the BCI, which was the pioneer in this matter. Santander, with the so-called Super Digital account launched in April this year, is around 100,000.
With this milestone achieved in retail banking, he will receive in a few months the new global CEO of Citi: Jane Fraser, who has precisely that expertise and is expected to be demanding in this area.
It calms them to know that she knows the Banco de Chile team very closely. She was director and vice president of the board of directors, between June 2015 and January 2018. She also took charge of the entire Latin American operation of Citi until last year, when she focused on retail banking at a global level, prior to her jump to the highest position. Executive of the Third Bank of the United States.
Jorge Awad, shared directories with her. “She is very focused on speaking the precise and short on the issues. He is a specialist in personal banking, but has a very comprehensive vision of the business, and knows well the behavior of the regional banking client “. But in addition, says Awad, Fraser came hyper-prepared with technical material to each board, which she always and without fail personally attended.
Another who shared with her was Arturo Tagle, as general manager of the bank. “As a director she was applied. He studied the issues and had asked his team for opinions before the meetings. Concerned about understanding everything and especially respectful of all people regardless of their position at the bank. A person who projected simplicity and closeness”, Tells DF MAS.
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Also at the executive level, they are sure that there will be harmony in the strategy, since it is expected that Fraser will have a seal in the deepening of retail banking, in line with Chile.
But not everything would be so calm after the departure of Corbat from the Executive Directorate. On the day of the announcement, Citi’s stock fell, showing according to analysts that far from wanting continuity, investors want changes that allow the bank to catch up with the growth of its main competitors. If you take Corbat’s entire term in charge, the stock has rented 50%, but its two main rivals – JPMorgan Chase and Bank of America – have rented 200%. They have also seen better returns in stocks in this Covid period. Therefore, Fraser has a flank where he is expected to regain that part of the race where he has been lagging behind.
Get out of everything “not USA”?
On September 15, in a report published by Wells Fargo, it was realized that the new administration led by Fraser can give a “fresh” look to the ailing bank. “His new perspective can help in the restructuring, especially given his experience in M&A and McKinsey. In other words, we believe the time is up for this 23-year experiment called Citigroup, and that it should focus more on its areas of relative strengths. Options include selling non-US consumer areas in Mexico and Asia. We have made these points repeatedly in multiple annual meetings and, for us, the additional benefit now is to simplify its control structure to comply with regulatory requirements, in addition to a better allocation of capital, “says the bank’s report.
The Chilean fan account has already reached 70 thousand clients, and is close to the Santander digital super which exceeds 100 thousand, but they are far from the bci mach, which has more than one million users. the digital battlefield is getting more intense.
That data about his 10 years of tenure at McKinsey, specialists in restructuring, is key, and could have an impact on Chile. It should be remembered that in 2017, after a tough period of adjustments within the bank, outgoing CEO Michael Corbat said publicly that “our restructurings are finished.” But now it looks like Fraser will have to reopen that discussion in light of several years of weak results when compared to its competitors.
On Wall Street they say that Citi has other big ones lurking and with better results in recent years for investors. For example, when compared to other major league banks, the bank has a weaker penetration in the domestic US market. Even in these digital times, several specialized articles have emphasized that the bank that Fraser will lead has significantly fewer branches than its rivals, which leaves it at a disadvantage to receive deposits. For example, Citi has 2,300 public offices versus the 5,000 that JPMorgan Chase has.
Fraser’s men in Chile
However, sources from the bank, the market and the competition agree: Citi does not get involved in Chile’s day-to-day life, but does, and a lot, in its long-term strategy through the board of directors.
And there you have three heavyweights sitting in the region. As vice president, and alongside Andrónico Luksic, is Julio Figueroa, who in July of this year went from being CEO of Citigroup in Argentina to CEO for all of South America. Along with him are also Raúl Anaya, president of Citibanamex, and Samuel Libnic, in charge of Legal Affairs for all of Latin America.
“His new responsibility is of such magnitude that he probably won’t have much time to devote to Chile. In any case, the knowledge of Banco de Chile and its team will generate a good momentum for the relationship of both institutions ”, says Arturo Tagle, about the new role of Fraser.
In addition, even as a brand, Citi in Chile only exists for investment, M&A and capital raising purposes, where the work they do with Banchile Inversiones is key. That area, experts say, should not be impacted by Fraser’s arrival at Citi. Although if the bank at the corporate level grows source in financial operations for large clients and corporations, “something could trickle into Chile,” says an insider.
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But why is it so important to have this type of product? A banker explains that to grow today, Chilean banks have mainly two ways to do it: with more consumer loans and with more credit card operations. In the end, everything is a matter of commissions. “Growth from commercial or corporate banking is not going to come in the middle of a global recession. There you can see what all the large and medium-sized companies such as Itaú or Scotiabank have done, they all point to the retail segment ”, he adds.
In any case, unlike what Scotiabank has done with Cencosud, or the BCI with Walmart, Chile is betting on organic growth in personal credit and would not have inorganic growth on the horizon.
“There is a great opportunity in digital transformation in order to remain the leading bank that it is. There is a lag, not a great lag, but there is a lag in terms of new digital products ”, explains Sebastián Gallegos, a banking analyst at Credicorp.
Chile’s digital head
The role of Claudia Herrera, manager of the Marketing and Digital Banking Division of Banco de Chile, has been key in this advance. Several in the market syndicate her as the right hand of the general manager, Eduardo Ebensperger, and in whom she has placed her absolute trust to lead the bank’s catch up. “She is really an expert on the subject, she convinces you of what she is talking about and it shows that she has several projects in the pipeline,” says a market analyst who has spoken with her.
“For us, the pandemic represented an opportunity to move more quickly towards new digital products and services, understanding that this will improve the experience of our customers,” Herrera said when the FAN account was launched.
Herrera, a commercial engineer from the Adolfo Ibáñez University, assumed this position in October last year, and from there she has been devising and reinventing the digital strategy both for the client and in the bank’s back office, to modernize and update the operation to face rising digital demand. And first the closing of branches due to the social outbreak and then the Covid, with the consequent transfer of many transactions to the online channel from face-to-face, has been a litmus test for Herrera, who joined the group through Banco Edwards, in 2000.
Of course, in this segment there are always doubts about what the bank will do with means of payment. Chile, again unlike BCI or Santander, has not said anything about its own acquisition networks, or what it will do as the main shareholder of Transbank, in a four-part model prevailing in the country. In any case, several analysts consulted agree: Chile, although it has taken longer to launch its digital and means of payment plan, has the license to do so, and it may even be part of its strategy. Almost like a “pay per view”, like in poker. “Chile’s brand and its client portfolio alone help it to remain on the podium. Also, that’s how he learns from the costalazos from next door “says a banker.
When the bank was consulted, it declined to participate in this report.
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