Juan Miguel Guerra, Head of RappiCard Mexico, discusses how banks can accelerate innovation, on Banking (Remix), Veritran’s new podcast
In times when agility and simplicity in financial services are more important than ever, the speed of technological development is crucial for banks to be competitive.
The speed with which a financial institution adapts to new digital models will define its relevance in a market where more and more new players are emerging, says Juan Miguel Guerra, head of RappiCard Mexico, on Banking (Remix), Veritran’s new podcast.
“Very often [slow tech advances in banking] can be blamed on the regulation or controls or whatever. But it’s really not about that. It’s about bureaucracy. It’s about entropy. It’s about mindsets. It’s about the difficulties,” says Guerra, who was CIO at Citibanamex before joining Rappi in 2020.
According to the executive, one of the keys to digital transformation is having buy-in from senior leadership who understand the need to move quickly.
“A lot of it is just organizational change. The realization that a turnaround is required. […] it’s extremely painful and it’s very expensive and there might not be shareholder support for it because, ‘We had a bad couple of quarters, let’s not get too carried away, no need to change too many things.’ When the need to change too many things becomes evident then it’s already too late,” warns Guerra.
Currently, traditional financial institutions’ large customer bases do not guarantee they will remain relevant, according to Guerra. That will come from strategies to win over the younger generations.
“If you’re not relevant to young people, you’re not going to have a business tomorrow.”
In order to adapt quickly, without letting transformation costs slow down the process, it is ideal to combine banks’ experience with the innovation of fintechs in the ecosystem, says the executive. This will benefit consumers and provide a competitive advantage amid the rapidly changing environment.
“In the case of Rappi, there is an additional layer because with Rappi Pay we have exactly those advantages. We have millions of customers already in the ecosystem and we have the cost advantages of a fintech, but we also have a lot of data about these users and what their preferences are and where they might live, which makes us able to make more relevant offers at the right time to the right person,” he says.
How open banking is levelling the playing field
Along with transformation trends, the advancement of open banking is accelerating the move towards digitized finance.
The playing field is being leveled for all participants progressively and for the good of consumers, Guerra explains. And the winners will not necessarily be those with the most products, but those that manage to stand out in one or two specific services.
“This only becomes relevant to the extent that consumers are comparing and really going for whatever’s best for them.”
This unbundling will make banking services more “commoditized” – and could further pave the way for a re-bundling of services under a new value proposition. “But I think that’s an even harder thing to do than just compete with the core,” says Guerra.
According to the executive, to prepare for open banking, institutions need to have a very tight cost structure. It is also imperative that execution is fast and that all the elements involved add value.
In conclusion, Guerra believes that this period of regulatory changes and the disruption of new players represents a “scary” time for traditional entities, so the changes require a lot of focus on strategy, and on customers.
“The future belongs to the fast, not to the large,” he says.
These and other comments were shared by Juan Miguel Guerra in Banking (Remix), Veritran’s new podcast where leaders in digital finance share strategies and perspectives on the future of the industry.
You can listen to the full conversation on Spotify, Apple Podcasts or SoundCloud.