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Fintech company developed algorithms which already grant credits

The future of the General Deposit Fund (CGD) is insured in the digital laboratory. Divided into several sections, such as risk analysis, consumer credit, housing loans or business management, nearly 100 people contribute to the digital transformation of the Savings Bank. On the walls, the phrase “done is better than perfect” by Mark Zuckerberg, founder of Facebook, is read a little everywhere.

“The objective is to make the Savings Bank secure its leadership position in this new world that has already reached the bank”, says Rui Soares, the maximum responsible for the digital banking of the CGD. “It’s not about guaranteeing sustainability in the short term, but to enhance what has brought us here with the new paradigm shift,” he said. CGD has about 1.4 million active customers in digital.

The bank, in deep mutation, is no longer just at the counters. Now it is on the Internet and in the applications of our smartphones. “It is where the client wants,” said Rui Soares.

Unlike the CGD, there are banks that were born digital. BNI Europa is “a digital bank, focused on niche markets and that goes to meet needs that were not yet being addressed by traditional banks,” said Pedro Pinto Coelho, CEO of the bank. BNI never opened counters and, “since it did not have the legacy of traditional banks, it soon became a challenger bank,” said the CEO.

In addition to the application that allows the opening of an account, the approximately 17,000 BNI clients manage their accounts with the index finger. With the ‘Puzzle’, the bank’s credit solution, clients manage to obtain financing at any time, 24h / 7days, processed by intelligent software, in a “totally digital experience”, said Pinto Coelho.

In just ten minutes “we managed to identify the client, analyze the risk profile and sign the digital credit contract, without the client needing to sign a single paper,” he said. As it does? “Through an algorithm that defines whether or not we should grant credit,” he explained.

The CGD also manages to be agile, working on similar solutions. “The automated credit decision is for short,” revealed Rui Soares, who promises not to stay here. “Soon we will have a solution to raise money through an application, such as the MB Way.”

The change of paradigm of banking goes through the “totalitarianism of the consumer”, as Rui Soares called him. “Through technology, the consumer has a power that he never had before, and that determines how [the banks] are going to provide services.” Through technology, this means putting on the market more convenient products for the consumers.

The adaptation of the business models of the banks to the new technologies also goes through the alliances with the FinTech. “If there is a solution that has a better experience for the client and at a cheaper cost, it has to be incorporated,” said the director of the CGD. “I never had the vision that FinTech is a threat,” he said.

In the same way, the BNI “is very interested in making alliances with the FinTech”, assured Pinto Coelho. “The idea is to make the selection of a certain FinTech that brings some technology that we do not have”.

The BNI has made more than 18 alliances with the FinTech that operate in the credit market in almost all of Europe. “They are digital companies that originate credit digitally to individuals or companies,” explained the CEO.

In the area of deposits, the BNI also established alliances with FinTech that “allowed to collect clients from other countries, such as Germany, Holland and Austria,” revealed Pinto Coelho. “This lets the balance grow quickly and outside of Portugal.”

The future is, by nature, uncertain. But, to have a vision of what the future of the financial sector will be like, you can look to China, where there are 500 million users of mobile payments, which contrasts with the nearly 200 million users of Internet banking. “In China, it is possible to live without a renminbi in the portfolio for months, you just have to have a smartphone,” said Rui Soares. “The bankization of them was made by mobile payments, not by traditional banks: it was made by Alipay and by Wechat Pay,” he explained.

Published inArtificial Intelligence (AI)FintechTechnology

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