In a first-of-its-kind venture in
Mexico, Banamex has launched Blink, a stand-alone internet bank
replete with services designed to attract younger customers. Robin
Arnfield spoke to banking analysts to get their views on Blink and
the potential in Mexico for the features it offers, including
mobile access.
Go deeper with GlobalData
Aiming to capitalise on potential in
Mexico’s young adult market, Mexican bank Banco Nacional de México
(Banamex) has launched Blink, the country’s first stand-alone
internet-only bank.
Focused on the 18-35 year age group, Blink is
a joint effort between Banamex and Acciones y Valores de México,
the brokerage and funds management arm of Banamex’s parent, Grupo
Financiero Banamex, a wholly-owned subsidiary of US bank Citigroup.
Banamex took nine months on the development of Blink at a cost of
$3 million, according to Mexican press reports.
Banamex is promoting Blink as Mexico’s first
Internet-only bank, although it does offer call centre support to
customers. There are no charges for online banking transactions
such as bill payments or funds transfers, but transactions
involving Banamex branches or ATMs that do not belong to Banamex
will attract fees.
“Blink was specifically designed for young
people, as the internet and mobile communications are a natural
part of life for them,” Banamex says in a press release.
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By GlobalData“It provides a new banking and brokerage
experience that reflects the difference between young people and
the older generation.”
Broad appeal
Ensuring broad appeal, Blink can be accessed
via PCs as well as web-enabled smartphones such as Apple’s iPhone,
Blackberry and Windows Mobile-based devices.
Neil St Germain, senior vice-president with US
consultancy Speer & Associates, told EPI that Blink’s approach
is to offer fast, easy transactions.
“It’s about moving money from A to B, but it
is not really about account management,” said St Germain.
Blink offers online account opening, funds
transfers, bill payments, lines of credit, and the facility to
design Blink debit cards online. Customers can also invest in
mutual funds, exchange-traded funds and Mexican and international
stocks via the online bank.
A range of investment tools are available
including real-time stock quotes, news and research. Banamex
categorises Blink investors according to their risk profile –
basic, moderate, and active investors – and investment services and
fees are offered according to these profiles.
First-time bankers
As, for many of its target customers, Blink
will be their first experience of banking, Banamex has included
tools and games on the Blink website to educate users about
financial services, money and investing.
Blink is also plugged into social media sites
such as Facebook and Twitter, Banamex says.
The minimum balance required to open a Blink
account is MXN15,000 ($1,135). Banamex says Blink’s page layout
allows for much quicker and easier transactions than conventional
internet banking services.
“In the financial services industry, it’s not
common to see a ‘drag and drop’ mechanism for paying bills or
transferring funds,” Banamex said in a statement.
“By contrast, with just one click, a Blink
customer can pay their phone bill. There are no drill-down combos,
large menus, or pages and pages that you have to go through just to
carry out one transaction.”
Banamex aims to have signed up 100,000
customers for Blink within the bank’s first year of operation. St
Germain thinks Banamex’s target (of 100,000 customers by the end of
the first year) is realistic.
“In Mexico City alone, there are 25 million
people,” he said. “I think they can easily get 100,000 customers,
especially in the 18-35 age group, in the first year. This segment
is very focused on mobile devices, and they will be attracted to a
service that offers instant transactions via smartphones.”
Mobile banking is important in Mexico, St
Germain continued, as there are many more mobile phone users than
PC users.
“If a big bank has a lot of customers who
don’t bank online but do have a mobile – and, of course, everyone
in Mexico has a mobile – then it could capture these users with an
online-only service like Blink that is geared towards mobile
devices,” he said.
“Last year, Grupo Financiero Banorte, Mexico’s
fourth-largest bank, launched a Java-based mobile banking software
application for the Apple iPhone.”
Big Latin American potential
St Germain said he believed that there is big
potential in Latin America for banks that are heavily geared to
smartphone users.
Indicative of a developing trend, he pointed
to the US – where banks are noticing that there is a large
population of customers that are mobile and not online bankers.
“It’s safe to say that the young, 18-34
demographic, regardless of country, is highly connected to texting
as a means of communication,” said St Germain.
“Providers that take advantage of this
communications method as a channel [in its own right] rather than
as an addition to an existing channel – that is, using mobile to
interact with basic functionality from the online channel, such as
checking balances – are making a strong play towards catering to a
specific market.”
St Germain says that US banks that
experimented with the online-only banking market in the late 1990s,
such as Bank One with Wingspan Bank, found it hard to make
money.
“These stand-alone web banks eventually folded
up, as it was hard for them to make real money from their
customers,” he noted.
“They found it easy to attract deposits, as
they offered better interest rates than bricks-and-mortar banks.
But to make money from web-only banking, you will need to sell
assets such as loans and mortgages.”
Banamex’s business model of offering fee-based
stock trading and mutual fund investments on Blink could prove
revenue-generating, St Germain believes.
“In Mexico, if you focus on offering
transactional banking activities and low-end investment products to
18 to 35 year-olds, you will probably do well,” he said.
“An additional source of transactional
revenues could be a small charge – say one penny – per mobile
banking transaction, similar to the charge for sending a text
message. After all, mobile users are already accustomed to paying
for sending text messages.”
Incentives needed
Kristin Moyer, research director, banking and
investment services, at US-based consultancy Gartner, said: “The
key to Blink being successful will be to get consumers into the
habit of using the banking service.
“Banamex will need to incentivise usage of
Blink through things like rewards and attractive services specific
to the market segment it is targeting.”
As an example of an incentive programme, Moyer
mentioned a large bank in Brazil, which is targeting the unbanked
by partnering with a telecommunications company.
“The bank and the telco are giving cellphones
away to customers for free,” she said. “The phone has GPS
technology embedded in it to show the nearest branch. It also
enables customers to call the bank for free, and to call other bank
customers with the phone for free. This is an interesting example
of incentivising consumers to use their cellphone for banking as
well as providing incentives for them to get the phone in the first
place.”
Grupo Financiero Banamex (GFB), Mexico’s
second largest bank behind BBVA Bancomer, operates 1,700 branches
and 6,800 ATMs.
GFB was acquired by Citigroup in 2001, with
the US bank attracted by its success in winning customers in
Mexico’s lower-income groups and its impressive growth.
In 2007, for example, Banamex provided about
half of Citigroup’s total profits, according to the Wall Street
Journal. In the third quarter of 2009, Banamex’s return on equity
rose from 9.2 percent in the same quarter of 2008 to 16.5 percent,
Banamex reported.
