GENEVA, Switzerland – October 3, 2019 – Digital banking is key to generating economic growth, reducing poverty and guaranteeing the prosperity of a country. The financial sector faces the challenge of creating banking mechanisms for the rural and lower income members of the population, making technological advances – such as mobile phones and the internet – a necessary tool.
According to a recent survey conducted in El Salvador by the banking software company, Temenos (SIX:TEMN), 44% of respondents prefer to make payments and transfers in-person using cash, regardless of whether they have a bank account. Although El Salvador is the smallest country in Central America, it is the most densely populated country in the region. Yet according to the Global Findex database by the World Bank (WB), only 30.4% of Salvadoran adults have a formal banking service, which corresponds closely with Temenos’ findings (33.7%). This means the majority of the population – roughly 70% – lacks access to financial products or services.
When asked what they would look for in a bank, 39% of respondents indicated that the most important feature is digital accessibility and 24/7 customer support. Self-servicing, where consumers can carry out transactions themselves, provides convenience and offers security, while offering the advantage of making bank transfers, even to accounts in other Central American countries, without the need for cash.
Technology is key for banks to remain competitive and serve more consumers, lowering the total cost of ownership while enabling scale for mass reach. Banco Azul is one of the recent challenger banks that has selected Temenos Transact. As a digital bank, it chose Temenos to support its growth strategy and provide outstanding digital customer experiences.
Oscar Armando Rodríguez, executive director of Banco Azul, explained:
“When looking to launch Banco Azul, we looked for modern technology from a company with a presence in other more developed countries. Technology that would allow us to design and quickly introduce specific products to Salvadorans. We selected Temenos Transact, finding it to be the most comprehensive core banking product, simultaneously supplying cost efficiencies while empowering us to meet the needs of a constantly evolving market.”
In the past three years, Banco Azul has taken advantage of a new source of funds to offer its clients options for loans, and to develop strategies for a new digital culture in El Salvador. Recently, the bank presented its digital innovation MonedAzul, a tool which, through online banking from any device, allows its customers to make payments and transfers of money to third parties without charges.
Enrique Ramos O’Reilly, managing director of Latin America and the Caribbean, Temenos, believes that Salvadorans are ready for digital banking, as digitalization is spreading rapidly in society and in the economy. According to data from the Banco Central de Reserva de El Salvador, transfers done by electronic banking made up more than US $18 million, demonstrating an active mobile and online banking community.
Enrique Ramos O’Reilly said:
“The purpose of a bank is not only to safeguard money; it is also to advise and give answers to its clients about how to reach their life goals, such as building savings, buying a house, paying for studies, or dealing with emergency cases. Front-to-back digitization and analytics are key. Temenos is proud to partner with forward-thinking financial institutions, like Banco Azul. By running Temenos Transact, Banco Azul taps into the most advanced, rich, end-to-end digital banking functionality, and also benefits from increased agility and elastic scalability. This enables it to take banking to those who have been excluded from the banking system, and empower the local community with personalized services.”
Since its launch in 2015, Banco Azul has become “a Salvadoran bank for Salvadorans”. In just three years, Banco Azul opened more than 46,000 accounts and originated more than 29,000 loans, with one of the best margins in the market. Banco Azul aims to exceed $1 billion of assets under management by 2020.