At Banco Industrial, a mid-size bank in Buenos Aires, people can enter the main branch through a Starbucks. It's one thing the Argentine bank is doing to attract and keep customers. Another is to tailor its products to what clients want, instead of offering fixed packages of accounts and credit cards.
"If we give good service to the client, the customer will continue to accept us. If we give poor service, they will look for another bank," said Gaston Eckelhart, finance manager with Industrial.
Banks in Argentina, known for inflexibility offering mostly packages instead of personalized services, long lines, and poor service, are now placing emphasis on improving service as competition rises.
This includes digital banks, with the first to launch in December: Wanap. Its president, Guillermo Francos, is optimistic. "We will capture funds by offering better rates for deposits than the rest of the banks," he told Latin Trade. Wanap's advantage is low operating costs. "If the bank today pays you 1% monthly interest for a savings account, my bank will pay you 7% or 8% or 10%." There is room for more competition. Half of the adult population in Argentina remains unbanked, compared with 94% in the high-income countries of the Organisation for Economic Co-operation and Development (OECD). The ratio of domestic credit to GDP is 14%, far below the worldwide average of 132%, according to the World Bank.
Argentina must more than double its financial system to catch up with Colombia, Mexico, and Peru, said Guillermo Barbero, a partner at First Corporate Finance Advisors, a financial services advisory in Buenos Aires. To equal the coverage of Brazil's banking institutions, "we have to more than quadruple the financial system."
It will take time to close the gap. While deposits rose in the years after a 2001-02 economic crisis and sovereign debt default, lending lagged. Companies faced tight access to credit and high borrowing costs, worsened by inflation that peaked at 40% annually in 2015-16.
"Companies that have gone through these last crises are very well capitalized," said Barbero. "They try not to get into debt. They are taking very prudent and very slow steps."
The benchmark interest rate is still high --at 26.25% in September in local currency --even though inflation has dropped to 23% annualized (August 2016-2017), according to official data. This encourages saving in pesos, but dampens lending.
Companies can wait. Although the economy is emerging...