With little more than two years and without any physical place to serve the public, there is a bank in Argentina that has 1.7 million clients and plans to reach two million before the end of the year.
Brubank is what is known today as a “neobank” or virtual bank. It was founded by the ex-CEO of Citi, Juan Bruchou, together with the Cordovan tech Pablo Sánchez, and among its investors is the president of Thomson Reuters, the Canadian magnate David Thomson.
– In general, we all know what a bank is. Can you explain what a neobank is?
–Juan Bruchou (JB): It is a technology company that offers financial services and is controlled by the Central Bank of the Argentine Republic (BCRA). Being one hundred percent digital, with technology, data analysis and design, it can give a different experience, without the need to have any physical branch, through any device, without queues or paper signatures.
– And how did you come up with creating a virtual bank?
–I spent more than 25 years in the financial system, both in Argentina and in Asia, and I retired as CEO of Citi South America. At that time, I saw that the banking experience in the region was not good.
– In the region, about 50 percent of the population is unbanked, and those who are are not happy, even though there are American, British, Asian and Brazilian banks. So, I thought that I could generate a different experience with the revolution that technology was causing in other industries and that in the financial system it had not started.
– Why is it so difficult for banks to enter the digital transformation?
– It is a problem for all banks. In general, they have obsolete technologies that were reconverted with patches upon patches. It is very difficult to change with old technology and with the mentality of large corporations, which is focused on short-term results.
– How did you meet?
–I started the process of founding the bank with two purposes: to bank anyone who did not have an account and to give a totally superior user experience. Through some friends I have at Digital House, I met Pablo Sánchez. I told him my plan and we immediately agreed on all points. The idea was that the processes were so simple and intuitive that anyone who was not trained in technology or financial services could open their account.
I thought that I could generate a different experience with the revolution that technology was generating in other industries, and that in the financial system it had not started.
–Pablo, you’re from Cordoba, right?
–Pablo Sánchez (PS): Yes, I was born in Córdoba capital and since I was a child I was interested in technology. My parents challenged me because I took apart the remotes and phones to see how they worked. When I was older, I studied Systems at the National University of Córdoba and then at IES. I went through Apex America, CTI (today Claro), EDS (later Hewlett Packard) and in 2009 I came to Buenos Aires.
– What were you doing in Buenos Aires?
–I was in the creation of Social Snack, an agency marketing digital. Then I founded Vulsai (together with Juan Rossi and Ignacio Ricci), which was a design studio for digital projects and e-commerce. There we created Mango, a payment processor that was bought by Mercado Libre in 2016, which meant that for a year it was in that company doing the integration. It was at this time that I met Juan.
“Did you know anything about banks?”
–I knew something about Simple Bank, which was born in 2009 in the United States and was later absorbed by BBVA. Seeing it, I thought: “How nice it would be to do some of this in Argentina.” When Juan told me what he wanted to do, I knew it was the opportunity to make that idea concrete.
“When did it start?”
– (JB): The technological development of the platform took a year and was put together while the approval procedures were carried out at the Central Bank. We went through all the audits. The bank was launched in January 2019.
– How many clients do you have?
–More than 1.7 million. Before the end of the year, we will reach two million. In terms of number of clients, we are the largest in Argentina. We have clients who are 13 years old. The Covid-19 virus pandemic accelerated all processes, in six months a million users entered that now continue to operate.
– (PS): This is going to continue because people have already understood that it is not necessary to travel to a physical location to make a payment. Most clients come on the recommendation of other clients.
The digital transformation will continue because people have already understood that it is not necessary to travel to a physical location to make a payment.
– Do you have clients of 13 years?
– (JB): Yes, with the permission of his parents. Many open an account for their children’s monthly payments.
– (PS): Brubank was devised with that plan. As in Argentina children do not have much financial education, the idea is to spread the value of savings and that an account is not an endless piggy bank.
– What services do they provide?
– (JB): Those of any bank. Loans, investment products, transfers, debit card, buying and selling of dollars, savings accounts in pesos and dollars, and collection of salaries without charging for anything, is free. What they use the most is transfer and payment of services and taxes. We have an alliance with Payment My Accounts that receives payments from more than six thousand organizations.
– But if it’s free, how do you monetize?
– (PS): For financial intermediation. For example, interchange fees (fee for transactions between plastics) that merchants pay when using Brubank cards, the income from FX (foreing exchange) when customers buy and sell foreign currency, and the fee (commission) that is charged when users pay service tickets and recharge. These revenues do not have a direct impact on the end user, but are paid by the networks with which we work.
– I have also seen that they use networks, such as WhatsApp.
–We use it as a means to activate the account. The main innovation is that it is a bank that works 24 hours a day, seven days a week. It is like the Netflix of the banks, the products are available at any time.
– Is virtual banking going to accelerate the disappearance of physical money?
– (JB): Cash is going to disappear. The physical card also goes the same way and all operations will be done with applications on the cell phone. It’s a matter of time.
– (PS): We were among the first to launch payments contactless through the cell phone and in being in the cloud.
– Do you operate with virtual currencies?
– We have it in analysis. We look at everything. Cryptocurrencies are here to stay. But currently they are used for hoarding, which gives it a very speculative profile.
– Are you going to buy other companies to grow?
– (JB): We don’t need to buy. We don’t want to be distracted from what we are doing. We have a team of 250 people; half, technicians who are constantly thinking about new products. We have the support of investors, such as tycoon David Thomson, owner of Thomson Reuters.
– Is the expansion to other countries?
– We have it in study. They came looking for us from various South American countries. It is a certain possibility.
– (PS): For now, we continue working on new features, such as the implementation of the interoperable QR that the BCRA launched as an initiative, and other innovations in payments and in the way of using the money that, for now, we have in reserve, but that are coming very soon.
The banker and the tech
Name. Juan Bruchou (63).
Profession. Lawyer and master’s degree from Harvard Law School.
Post. Co-founder and CEO.
Likes. Soccer, rugby, climbing mountains and traveling the world.
Name. Pablo Sánchez (37).
Profession. IT System Analyst.
Post. Co-founder and CTO.
Likes. Football, gastronomy, photography and cinema.
Customers. 1.7 million.
The data. It is the fifth with the highest asset growth (232.6%) and the first with the best returns (3.91%), as published in January 2021 by the English magazine The Banker, specialized in financial matters.