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BBVA Bancomer
From Product- to Customer-centered Banking
Today, Grupo Financiero BBVA Bancomer is one of Mexico’s largest banks. BBVA
owns more than 50% of Bancomer, which offers retail and commercial banking and
other financial services through some 1,600 branches across Mexico. As of 2003,
BBVA Bancomer’s net revenue was Ps. 7,653 million.
Strategic Situation
VISION worked with Bancomer through one
of its toughest periods, 1995 to 1998. During
these three years, Mexican currency devaluations
drove Mexico’s banks to focus on feebased,
stay-alive strategies. Fortunately, Bancomer
retained its number two-bank status,
based on revenues and accounts, but its backoffice
costs had risen dramatically.
In addition, two new strategic threats
emerged. First, well-financed global banks
were moving into Mexico and were effectively
competing with their financial and brand advantages
- needing no government bailouts -
to capture significant amounts of security-conscious
depositors. Second, global consolidation
in banking was progressing, and virtually
all the large global banks saw the weakened
Mexican banks with their strong customer
franchises as acquisition targets. Without
decisive steps to improve balance sheets,
to increase its ability to attract new customers,
and to show new capacities to handle the distinctly
Mexican customers, senior managers
saw that the Bancomer owners would be forced to sell
at a bargain basement price.
Business-line Leader's New Strategy
Guillermo Acedo, the CEO of Retail Banking at
Bancomer, declared that the retail bank’s business
model would change. Instead of focusing
on products, the bank would focus simultaneously
on retaining existing customers, retaking
former customers, and acquiring new customers,
while increasing its back office efficiency.
Managers at Bancomer realised that developing
a customer orientation - especially following
an era focused on fee collection - required
a cultural change within the bank.
VISION's Engagement Strategy
A team of senior VISION consultants and Guillermo
Acedo’s own senior management team
began to build the new working model of the
bank, one designed to service customer segments
instead of products and regions. VISION
used its special capabilities to address
the areas that would require redesign in order
to fulfill Bancomer’s new strategic direction:
Value-based segmentation and customer understanding
was used to listen to customers
and design appropriate offers around the life
cycles and styles of the newly defined customer
segments.
Commitment-based design and management
was used to redesign the management processes,
beginning with the customer-facing interactions
and ending with the back-office fulfillment
activities.
Using the above methodology as its foundation
for redesign, the Bancomer-VISION team
developed the "Customer Experience-Oriented
Business Model," which focused on producing
more effective coordination among the critical
areas of the bank.
Segment Managers
The new role of Segment Manager became the
centerpiece of the new model. More than any
other act, the creation of the Segment Manager
for each segment transformed the bank into an
organisation focused on customer satisfaction.
On-going segment research supported the
Segment Mangers in offering new products
and services unique to each segment, while
continuing to deepen the bank’s relationship
with its customers.
A number of innovative offers came out of the
work of the Segment Managers. The enormously
successful two-week credit card payment
cycle was introduced to give one segment
the confidence it needed and to feel that
it was in control of its money. The key to the
success of this offer was not just the card, but
also a well-trained phone center. Staff
members at the center were trained to listen,
interact, and check for satisfaction. This program
proved so successful that many banks
tried to imitate it.
Banco Malo
A second necessary area for change in the
turn-around effort was the Banco Malo or
Work-Out bank. Non-performing loans in
1997-1998 accounted for close to 50% of the
bank’s entire loan portfolio. During the banking
crisis, Bancomer had honed a hard-edged
model of collections analysis and recovery that
was now driving newly solvent customers
away from Bancomer.
The Bancomer-VISION design team focused
on developing new processes and practices
that included collections risk analysis and a
shift in the culture of the people who were
responsible for collecting these debts. Collection
teams became Work-Out teams that had
the authority to develop refinance terms following
the guidelines accorded each segment.
These plans focused on enabling Bancomer to
recover the loan and the customer to regain
credit worthiness.
Back Office and Total Coordination
Bancomer had installed highly efficient input-output
models of back-office organisation.
These models worked well for high volume
standard transactions, but did not serve Bancomer
well when the segment experience became
the focus. The Bancomer-VISION team
mapped the back office functions into a coordinated
value chain with measures that showed
each manager the value his or her team produced
across the chain. As the move toward cutting cycle times across the bank’s internal
value chain intensified, it became critical to
include the branches and functions that were
not traditionally “back-office.” The Bancomer-
VISION design team put the branches
on a customer-centered model of management,
budgeting, accounting, and benchmarking.
Normally such “enterprise focused” initiatives
face resistance, but coming after the
other initiatives that were bearing fruit, this
effort easily moved forward.
Results
By the end of the VISION engagement, Bancomer
was positioned as the emerging leader
in customer loyalty, and subsequently
emerged as a leader in profitability. The
credit card division made a stunning leap forward.
In a highly competitive market, this
division achieved market leadership, ranking
high in market share, profitability, and volume.
And, best of all, it achieved the ability to
innovate by keeping the clients’ concerns at
the center of its daily operations. This division
alone attracted acquisition interest from
both Santander and Banamex, not because of
its vulnerability, but because of its success.
Other initial results:
- By the end of 1998, cost savings from an
increase in real efficiency of end-to-end
business processes exceeded more than
Ps. 100 million.
- Operating costs were cut by 20%.
- Product to market cycle time decreased
from 9 months to 5 weeks.
- An internal consulting area using VISION’s
Process Redesign for Customer
Satisfaction generated more than Ps. 100 million
in additional profits during 2000-2001.
At the end of the engagement, Guillermo
Acedo had accomplished the strategic
changes he had sought. Financial results
were much improved and the overall strategic
objective was met. As a result, the bank
was able to be sold at a premium.
Quotations
"It is now our goal to have the best marketing
department in our industry and with the
skills VISION has brought to us, I am confident
we can achieve this goal."
Hector Paniagua, Director of Credit Cards
"Other consultant firms that have worked
with us have tried to implement rigid sets of
rules. They had no way of creating practical
process redesign and change. With the VISION
team, there was constant, personal interaction
with our department. First, they
fully understood our problems, and then they
began to redesign the processes. They did
not just drop information in our laps but actually
taught us the skills to recognise and
change our negative processes and habits."
Hayde Navarro, Sub-Director of Risk Management
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