Catalysts of growth and shared value concept as main drivers of Interbank

I’d like to begin by discussing the IMF reports, which put Latin America’s GDP at 1% this year and around 3% in the following five years; while in Peru the prognosis is 3.8% for 2015 and 5% until 2020. In fact, Christine Lagarde considers Peru as one of the most vibrant economies in the world. During the 2013 World Economic Forum you said that banks are “catalysts for growth.” What did you mean by this and how do you think the banking sector has contributed to Peru’s economic performance?

Banks play a fundamental role in the economy. Firstly, because they connect offers of capital to the demand for capital. Secondly, because they finance the growth of consumption and the projects necessary to accompany the economy’s development.

The banks, in their role as catalysts act precisely in that way. That is today, they identify the projects that are going to positively contribute to the growth of the country, and they also attract pools of capital to put to use in those projects.

On the other hand, we have the responsibility to bring more and more people into the financial system.

We made it our goal to attend to the needs of our consumers and, by means of credit, give them greater quantitative and qualitative access to goods of another kind, like education and a home, among others.

We also consider it important to channel and protect savings, offering all citizens a safe place for their money. Considering that it’s difficult to save in countries like ours, our role in this is decisive.

The OECD regards Peru as one of the countries that has most advanced in terms of financial inclusion. Oscar Rivera Rivera added in this respect the importance of e-money. How has this institution collaborated in financial inclusion, not only in Lima, but also in the different regions of Peru?

Although it’s advanced, financial inclusion is still a work in progress. It’s a road we have to build. I think that no one can be satisfied with what’s been accomplished.

Nevertheless, interesting things have been done, like micro-finance, which today constitutes a means through which micro-entrepreneurs can be included into the financial system. In fact, Peru has been a case study for micro-finance.

Another challenge is incorporating more people into the financial system. In Peru 60% of people still don’t have access. In other countries we’ve observed a significant advance through e-money.

Africa is a great example. Now in Peru we’re taking definite steps, knowing that our work is complex and that no institution can do it alone.

We’ve coordinated between all of the banks and companies in the financial sector and telephone companies to develop a platform and create an ecosystem around e-money, which is really what’s necessary for this to work.

The whole financial sector, including cooperatives, banks, and along with tech companies, we’ve been able to invest in creating this company.

With them we’ve made pilot plans so that from this year on the financial system can count on an e-money platform that raises expectations in our sector and on which we can project a level of inclusion at around 5 million new users by 2020.

In that way, we’ll help accelerate the inclusion process of millions of people who are currently outside the financial system.

In 2014 Interbank maintained its place as the leading bank in consumer credit and the number three bank in deposits from nationals. What are the key points of Interbank’s new strategic plan and how has it transformed each agency into a “financial services store?”

We have a really defined strategy that is based on providing convenience and agility to our clients. We are a bank that’s different from others in Peru.

We concentrate on retail, which constitutes 50% of our loans. Other big banks in the country are at around 50% in retail.

We’re interested in being a mix of 50% retail and 50% commercial. Therefore we’re a universal bank with strong expertise in retail, and because of that we’re very focused on our clients’ experience, in taking on and attracting innovating projects.

Our agility and convenience today come from that innovation. We’ve been working for a while on the experience of going to the bank, to make it into something else.

We’ve created this new store format which is closer to a comfortable space than another bank where you’d have to form a line.

You can sit comfortably and drink a coffee while you see what products we offer. Additionally, we also have stores in supermarkets.

These are high traffic spaces that are open Monday to Friday from 9 in the morning to 9 at night. It’s the only bank in Peru, and probably one of few in the world, that is open 365 days a year.

We want the client to feel like going to the bank isn’t a tedious errand. You can go to the supermarket after work and in the same place pass by the bank to carry out your transaction.

Now we’re even working on bringing our stores to the digital and virtual world.

On the other hand, commercial banking is still very important for us. It comprises 50% of our portfolio and we’re focused on sectors where we can add value beyond the size of a ticket.

We specialize in some specific sectors like fishing and agro-exports, areas that we consider strategic. Our advantage in that is also dependent on convenience and agility.

We can offer agile solutions for cash management, or attend to specific sectors where we have particular expertise.

Interbank places a high value on what it invests. In which direction have you oriented your investments?

Our bank is conservative in our investments. We invest principally in government papers, like sovereign bonds, global bonds, instruments from Banco Central, and some corporate bonds from well positioned companies.

We don’t speculate with our investment portfolio.

Interbank has a corporate university to develop its human capital and continued training. How do you understand human resources?

It’s not enough and it’s of no use to tell an employee to keep smiling at the clients, nor to tell the employee to just give good service, as if he or she already knew what good service means.

What’s necessary is to create a natural work environment, where the employee feels motivated, understands his or her importance in the process, is happy and definitely engaged.

That’s why we’re the only company here that’s stayed for 13 consecutive years in the prestigious Great Place to Work international ranking – we’re number four right now in Peru and 18 in Latin America.

If our employees work in a great work environment, offer great service, the client is happy and that’s how good business is generated. A virtuous circle is created between the motivated employee, satisfied client and better businesses.

That’s our perspective on talent management and development and, without a doubt, a lot of it has to do with training and encouraging a spirit of self-improvement, so that everyone can have the opportunity to grow – not only at the professional level, but at the personal level, too. This is where, in our strategic vision, the corporate university’s role comes in.

You mentioned that Interbank does not support corporate social responsibility, but rather the ‘shared value’ concept. What does that mean?

The shared value concept is based on the fact that we don’t adhere to the vision of social responsibility under the paradigm of philanthropy.

I think there’s a concept that covers action beyond philanthropy and it’s that, through our activities, we can have a positive impact by making better citizens, creating a better country, and in this way everyone benefits in some way.

This is because shared value is not just economic, but social and environmental. All of this, at the same time, leads to better business opportunities.

The concept that we have to put in practice creates shared value with society. We shouldn’t just focus on generating tools.

We have the opportunity to give loans to many segments of the population. For example, public school teachers are an important segment because, in helping them with their training and growth, we’ll also be able to educate our students better, and from there get better students and better citizens.

As a derivative of this initiative, we recognize the best teachers every year with the ‘Maestro que Deja Huella’ [Teacher that Makes a Mark] contest.

It’s in this segment that we’re creating value. Every year we pick 26 of the best teachers, one from every region, we bring them to Lima and we have them compete with the innovative projects they work on, and one big winner, the “Teacher that Makes a Mark”, is chosen.

This is an initiative that’s backed by the Ministry of Education and where various organizations related with the sector also collaborate.

There are also other tools like the Work for Taxes law. This is a state initiative that lets companies participate in financing infrastructure with their taxes.

We wanted to participate in this initiative and so we teamed up with two other companies and we made the longest and one of the most modern bridges in Peru – the Chilina de Arequipa Bridge.

It’s an emblematic structure that really transformed transportation and visibility in one of the most important cities in southern Peru.

In that case, there’s no other goal than a city’s growth, in which we’re still investing. If the city’s better then we can make better business. Currently, it takes about 25 minutes to get to the Arequipa airport from the historic center.

That time was double before the construction of the Chilina Bridge. That is to say, time was gained, productivity and efficiency were gained, and so now there’s more value creation in Arequipa.

If there’s any Peruvian financial institution that has a direct relationship with the United States, it’s Interbank. Likewise IFS (Intercorp Financial Services) is going to launch an IPO in the New York Stock Exchange, the most liquid market in the world with the largest franchise in Latin America, in which companies from this region exchange $2.55 million a day. Could you tell me a little about your history with the United States and what your entry into this market means for your group?

The United States is an important country because it’s one of the largest economies in the world. One has to take into account that it’s one of the most important business partners that Peru has today.

This is because we have a close and strong relationship, as many Peruvian products can be exported to their markets, principally from the agro-export and fishing industries.

There are also many American companies that invest in Peru that see important potential because I think in the future Peru will continue growing, despite the recent slowdowns.

We think the growth will continue, and I think that it’s a good opportunity for American companies to come to Peru and take advantage of the number of resources we have to offer them.

At the same time, it’s a great opportunity for the Peruvian business community to keep improving and exporting products to the American market.

We’ve visited the United States many times to educate ourselves. That is to say, to understand what other banks and other businesses are doing, what’s going on in the world of technology and innovation.

With respect to IFS, the idea of reaching the New York Stock Exchange is an idea that came up the first day that we created it and made the Bolsa de Valores in Lima.

From that moment on we considered that what a company like ours deserves is to keep growing, consolidating and to be able to become a world-class company. To be listed in New York is a key achievement.

Now, the current market is not in the conditions for those goals to be planned for the short term.

All of the documentation that we have prepared has already been worked on, and we now depend on the alignment of other factors in the international market, emerging markets, and Peru’s market.

You prefer New York to London, don’t you?

I think that New York is an important market and it’s accustomed to seeing financial companies from the region.

Our comparable principal was already in that market, as were Chilean companies, and that makes it more natural.

London’s market has other particularities that are oriented towards other kinds of companies.

Why are you a member of AmCham’s Executive Board?

Well, on the one hand, because it’s a place where executives and interesting personalities that I can learn from every day participate.

On the other, because the issues on our agenda are positive for Peru. These issues are going to help us keep growing and strengthen our relationship with a country and market as important as the United States.

Moreover, that participation allows us to show that market what we have to offer as a country.

One can consider certain factors as external to the behavior of GDP and the economy, just as one can consider certain others as internal. But without a doubt one of the major topics at the G20/B20 in Turkey was how the banking sector can drive growth despite the global slowdown, not only in Peru but in all Latin America. How do you see the work of Interbank/IFS in that context?

The banking sector will be the catalyst for growth. It’s already been and it will continue to be so in the future.

What we have to do as banks is to stay firm. We’ve already seen crises begin and end with the financial system.

That’s why we have to keep doing the right thing, with well-capitalized and sustainable growth.

We don’t want to have more sustained growth; we want to have sustainable growth. It’s not about growing to grow, as many try to do.

We want to grow in such a way that it lets us keep growing from year to year. To achieve this, banks have an important responsibility that consists of looking after people’s savings and giving convenience and service so that more and more people and companies put their savings into the financial system.

It’s due to those savings that we’re able to lend. We should be extremely careful and disciplined in choosing the projects that will receive our loans.

They should be solid, sustainable and well-capitalized projects with good sponsors and a clear vision to success according to our core values. That is to say, solid foundations that reduce future uncertainty.

The banking sector today has an important responsibility, and that is to bring products and services to more people to promote its growth and better our quality of life.

This impact on society is what we should look for while we develop profitable and sustainable business.

During the World Economic Forum in Lima you said that that kind of event “illuminates all that is left to do.” In what sense and in what way can the World Bank and IMF summit, which hadn’t been held in Latin America for 50 years, illuminate Peru and the region?

I think that it will be very important. There are many paradigms to discuss still in Peru.

I think it’s also a great opportunity for the international community to come and observe first hand how much we’ve advanced, keeping in mind all that we lack.

Let’s consider that the opportunities we lack aren’t only lacking for those in Peru, but also for those outside who have committed themselves to Peru’s potential.

We’re a country that has many resources, that has macroeconomic stability – which is an enviable thing in Latin America – and which also has a consolidated democratic system, with its pros and cons, obviously.

All of these factors allow the international community to see how far we’ve advanced and will let us keep attracting capital and investment opportunities. 

You were the lead goalie for Los Labios Candentes [The Red-Hot Lips]. You marked a before and after in the history of that team. What would be your before and after in this institution when you leave?

Yes, in fact, I was a goalie for Los Labios Candentes…I think that the way in which banking is done today won’t be the same in five or 10 years.

That is to say, there will be profound changes. My goal is to try to help transform the bank so that these first 115 years of history become the base on which we build another 115 years of improvements.

We’ll do this by cementing the bases on which Interbank will continue to exist in the next century, overcoming all of the inherent challenges to the dynamics that we must face in technology, innovation, and what’s happening in the tech finance world. We want to be the least banker-like bankers.