Brazil’s original online bank becomes ‘attractive’ again in four years

SAO PAULO (Reuters) – Brazilian bank Banco Original SA expects returns from a new online-only retail banking unit to match those of the bank’s corporate and agribusiness segments in four years’ time , a bold bet on the growing appeal of digital lending in Latin America’s biggest economy, a senior executive said on Monday.

Former Brazilian central bank president Henrique Meirelles gestures during the national industry meeting in Sao Paulo, Brazil November 13, 2015. REUTERS/Rodrigo Paiva

Henrique Meirelles, former president of Brazil’s central bank who now chairs the investment holding company that owns Original, said in an interview that the launch of the retail banking division made Original the first online bank from the country. Original’s platform allows customers to open an account, invest their money and pay their bills using their mobile phone.

Over the past four years, Meirelles has engineered the transformation of Original, a mid-sized bank that was traditionally a corporate and agribusiness lender, into an online bank. He expects the retail division to post “acceptable” returns by 2018 and “attractive and very positive” returns by the end of the decade. He did not specify.

With larger competitors gradually digitizing their businesses, online lenders and companies like Original are trying to get a head start by increasingly marketing, selling and servicing loans. According to Meirelles, not only will the customer experience improve, but the lender will also be able to track default trends more accurately, which will increase returns.

“We expect our banking model to help us achieve better sales margins, maintain better delinquency trends than the system average on a historical basis,” Meirelles said. “Our platform can make Banco Original a competitive player, no doubt.”

His remarks point to the growing appeal of so-called fintechs, which are slowly gaining more customers from traditional banks due to the former’s cheaper mobility platforms and services. Traditional U.S. banks risk losing a third of lending revenue as they fail to keep pace with innovation among online lenders, Bain & Co said in a recent report.

Meirelles expects Original’s online retail banking platform to begin to fully mature within the first two years, noting that models could eventually be calibrated to compensate for unexpected increases in defaults or defaults. other events.

Brazil is facing the longest credit cycle in two decades, with delinquencies reaching their highest level in a decade and demand for credit rising at the lowest rate in more than 15 years.

Original is controlled by the Brazilian billionaire Batista family through their J&F Investimentos SA holding company. Meirelles, who has orchestrated and executed Banco Original’s transformation into a fully online lender over the past four years, is the chairman of J&F.

The Batistas are also the majority shareholders of JBS SA JBSS3.SAthe largest meat packer in the world.

Reporting by Guillermo Parra-Bernal; Editing by Bernard Orr


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David A. Albanese