Bank seeks to double its 3 million-user base and multiply its portfolio by four in five years
08/26/2022
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Octavio de Lazari Junior — Foto: Leo Pinheiro/Valor
Bradesco has announced the acquisition of Ictineo Plataforma, a popular financial institution (sofipo) that operates with individuals in Mexico, strengthening its first and only international retail operation. The deal will give access to regulatory authorization to distribute new products in the country.
The bank has been operating for 12 years in the Mexican market and has about 3 million clients of white label and branded cards. The acquisition was made through subsidiary Bradescard México.
The goal is to, at least, double this user base and multiply the portfolio by four in five years — although the bank does not reveal how large the portfolio is now. The value of the transaction was not disclosed.
According to Bradesco, Bradescard México is one of the leading consumer finance companies in the retail chain segment but does not have a license to work in other financial business fronts because it operates as a limited liability company in Mexico.
“The acquisition of the Ictineo Plataforma institution will open a new financial business front for us with high growth potential in Mexico, a country with several attributes, such as being the second largest GDP in Latin America,” Bradesco CEO Octavio de Lazari Junior said in a statement. “We will have the possibility of expanding our operations to be similar to a digital bank to gain a more robust presence in a relevant market such as the Mexican one,” he adds.
Recently, Mr. Lazari had already suggested that he intended to expand the operation in Mexico, which has a market similar to the Brazilian one. He even said that the movement could include the creation of a digital bank, stating that it could take one of the brands used here in Brazil there: “There is no digital bank called Digio in Mexico,” he said.
Alexandre Monteiro, head of Bradescard México, said that the goal with the purchase of Ictineo is to focus on a digital strategy. “The first step will be to offer digital accounts, payroll-deduction loans, and investment accounts,” he said in the note. “It is a relevant move to consolidate Bradescard in the Mexican financial market.”
Bradescard México has plans to carry out the distribution of other products, such as car financing and housing credit. In the credit card segment, in five years Bradescard intends to be among the largest card issuers in Mexico, expanding the number of trade agreements with new retailers and strengthening the digital distribution channel with important investments in technology.
Ictineo has a portfolio of only about R$4 million and less than 3,000 clients. That is, Bradesco is basically buying the license. The bank has no branches there and does not intend to have any. The idea is to strengthen distribution in the stores of partner retailers — one of the most important is Walmart’s chain Bodega Aurrerá — and invest heavily in digital channels, which will include a marketing campaign. For now, the name of the digital bank is likely to be Bradescard, but a change in the future is possible. There could even be an agreement to use the Digio brand, or another Bradesco digital initiative, but this has not been decided yet.
In the cards’ operation, with a focus on low-income clients, Bradescard has a significant market share, close to 24%, and competes with names such as Coppel and Azteca. By creating a digital bank, it will compete with the operations of the large traditional banks and also with new entrants such as Nubank and Rappicard, a partnership between the delivery app Rappi and Banorte.
“We have an important banking role. We are the first card for many of our users. We’re going to maintain that focus, but also increase the number of products and have a broader relationship with our clients. We are going to move up a little from the base of the pyramid and compete with Nubank, which, in my view, targets a slightly more middle-class audience,” the executive said.
Mr. Monteiro points out that another positive aspect brought by the new license has to do with funding. Until then, the card operation was basically financed by accrued profits. Now Bradescard will be able to capture deposits. According to him, the popular financial society license (sofipo) meets all the bank’s needs and there is no plan, at least for the time being, to seek a bank license.
The conclusion of the deal is subject to approval by the authorities in Mexico (Comisión Nacional Bancaria y de Valores, CNBV) and Brazil (Central Bank).
*By Álvaro Campos — São Paulo
Source: Valor International