Brazil’s largest bank Itaú faces challenge of changing its culture

RIO DE JANEIRO, BRAZIL – Milton Maluhy, Itaú Unibanco’s CEO, said on Wednesday, June 2, that the bank needs to undergo a major cultural transformation. The executive mentioned the need to focus on the client and on new technologies.

During an event to introduce his projects to investors, Maluhy also discussed the creation of a new retail banking operation and the need to increase – and greatly – the share of its digital operations in revenues.

“Transformation, now, has to be culture. We need to have a more agile and simpler structure, have the humility to recognize mistakes and not be afraid to make mistakes,” Maluhy said. “The good news is that this transformation has already begun. We have to intensify and expedite it.”

This new direction is part of a “war” with fintechs. Part of the market criticized Itaú Unibanco for taking too long to create an independent digital bank, as Bradesco did with Next, which became strong enough to function without the help of its controller. Itaú’s iti entered the market much later.

Within this cultural revision, Maluhy mentioned the elimination of hierarchies and vice-presidencies. “We are all directors, and some are members of the executive committee, which is broader, closer to the team and with more capacity and decision speed,” said Maluhy.

The director of Itaú Unibanco André Rodrigues said that the new retail bank project, ivarejo2030, is in an “accelerated implementation phase.” The action provides for a strategic review of the retail operation with a new approach, the executive explained. “We are in an accelerated implementation phase,” he said.

The project for a new retail bank was initiated at Itaú about two years ago, still under the management of Candido Bracher. Among the strategies is the combination of the physical network service with the digital. Since 2019, Itaú has closed the doors of over 600 branches.

Focus on digital

Digital channels should represent over half of revenues for Latin America’s largest bank in the near future, Rodrigues said. “Our ambition is to quadruple digital channels so they may represent 50% of the bank’s revenue.”

André Sapoznik, director of payments, operations and marketing, highlighted the growth of iti digital banking. “We have captured almost 7 million customers and we are working to add 1 million each month,” he said.

When presenting the first quarter results, Itaú Unibanco set a target of 15 million customers on iti. According to Sapoznik, the digital bank’s structure, built in the cloud, allows for greater flexibility.

Regulation favors fintechs

Itaú Unibanco’s co-chair of the board of directors Pedro Moreira Salles said yesterday, in a bank event for investors, that there is an imbalance of rules between large banks and new entrants in the financial sector, such as fintechs.

“There is no regulatory isonomy. We are losing this war,” he said. For the co-president of the board Roberto Setubal, the way regulators have been addressing new entrants has given them an advantage, because they do not face the same requirements in terms of capital, liquidity and anti-money laundering issues.

He further said that if it can be shown that there is no systemic risk, it makes no sense to have such harsh regulations in Brazil. He also advocated an equal rule for the whole financial system. “In the future, regulation will have to be isonomic.” Thus, the advantages will be eliminated, making competition “more equal,” he said. Moreira Salles said that the bank has to react. “We have to accept reality as it is.”

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