Costa Rican Banks Must Look To The Hi-Tech Future

Mike Godfrey, Tax-news.com, Washington

13 July 2000

With the Internet becoming a way of life and the means by which many of us now conduct business, it comes as no surprise to hear that Spanish and Costa Rican banking experts have this week stated that, as international competition intensifies, banks whose branches fail to implement the latest technology will find themselves out on a limb.

Raul Heraud of Costa Rican financial consulting firm HG Consultores said 'Maintaining a bank branch is very, very expensive. As Internet banking and telephone banking become more established, we’ll see the conventional bank branches disappear. Banks that fail to incorporate this new technology will probably not survive.'

His statement came during a three-day seminar on future trends in banking, held in San Jose and hosted by HG Consultores for its Spanish associates Antares Consulting. Heraud added that Costa Rican bankers recognize Spain’s retail bank system as one of the best in the world. Antares' president Luis Mariano Garcia warned that it was in the best interests of banks to follow the Spanish example.

Garcia called upon local bankers to "rediscover" their customers by creating detailed databases on customer needs, services used and demographics. According to Garcia's colleague Enrique Martín, only 23 per cent of the average bank’s clients actually make money for the bank via loans and other services. Around 50 per cent of total clients – those who use the bank exclusively as a depository for their small savings – do very little to boost banking profits. According to Garcia and Martin, the way forward is to nurture the profitable clients with new services, more convenience and better service, without losing any of the non-profitable clients, who depend on the bank for security.

In trying to give the Costa Ricans a few pointers, the Spanish contingent stated that an increase in bank profits would come about by enticing clients to take advantage of bank-offered pension plans, investment funds, home loans and insurance services - all vital in a highly-competitive market. At the same time banks would need to take full advantage of both the telephone and the Internet to automate their services: banks that invest heavily in state-of-the-art technology to make these automated services available will be overpowering banks that lag behind, said Garcia and Martin.

Reiterating that Costa Rica should follow the Spanish model, Garcia said 'Spain’s banking sector has always been extremely competitive. About 20 years ago, the industry as a whole began to orient all of its decisions around customer satisfaction. At the same time, banks invested heavily in technology. The result is a retail banking sector that is without equal in the world. Many of the most powerful banks have also branched out to Spanish-speaking markets all over the world.'

Finally, it was emphasized that making changes and introducing technology isn’t necessarily more difficult in a government-owned banking system such as Costa Rica’s, in which clients often have to wait in line a half-hour or more just to cash a cheque. Garcia said 'Ten years ago, the kinds of customer-oriented changes we’re taking about would have been impossible. But the technology that exists today makes it easier for banks to improve services. All it takes is for the bank to make a serious commitment to change. Society is changing, and clients demand faster, more efficient service.'

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