The architects of Dominican banking

Banking & Finance
| The European | 20 July 2021

An interview with senior representatives of Banreservas

Banreservas has been integral to the growth of the Dominican Republic as a country and economic force since the early 20th century. As the largest bank in the country in terms of assets, it provides the nation with a bank they can trust, and one they can turn to in times of need. 

The European caught up with senior representatives from Banreservas to discuss its historic achievements, the health crisis, and how digital transformation is shaping its current outlook. 

Which achievements is Banreservas especially proud of as it celebrates 80 years of service to the Dominican Republic?

Banreservas was established in 1941 with a capital of DOP1m, four offices and only 100 employees. One of our greatest achievements is that today we have more than 10,000 employees and more than 250 commercial offices throughout the Dominican Republic.

Last year represented a challenge for banks in operational terms. At the end of 2020, the bank’s assets exceeded US$12bn. In recognition of this, we have received a multitude of awards from publications and organisations across industry.

The banks achievements in 2020 were the result of our commitment to the wellbeing of our employees and customers. It was a true test of resilience and ambition and we take equal pride in the achievements along the way. In 2019 we had the honour of being recognised with the prestigious “Great Place to Work” certification – whereby employees rate their institution in fields such as leadership, teamwork and wellbeing. This recognition positioned us as one of the best places to work in the Dominican Republic.

As an institution, we are among the architects of Dominican banking, and participated in its most historic moments. In 1988 we launched our first credit card and were at the forefront of the Banking Financial System (SFB), which later led to Banco de Reservas becoming the first bank that operates in real-time. In 1998, it became a full commercial bank.

Our performance over the last 20 years has allowed us to expand our Reservas Subsidiaries, which today includes: Seguros Reservas (general risk insurance); AFP Reservas, (pension fund); Inmobiliaria Reservas (Real Estate); Inversiones y Reservas, Puesto de Bolsa (stock exchange); AFI Reservas, (Investment fund manager) Fiduciaria Reservas (Trust fiduciary Company); SEPROI (institutional security and protection); CoopReservas (employee’s cooperative); Fundación Reservas (non-profit foundation); Villa Esperanza (free zones operator); ARS Reservas (healthcare insurance).

How did Banreservas help alleviate the financial burden of its customers as Covid-19 gripped the global economy? 

The support and dedication of Banreservas has been key to the country’s social and economic well-being during the pandemic. We acted as a primary means of implementing government relief measures, and were a pioneer of the first measures aimed at alleviating the financial burdens caused by the health crisis.

Some of the adopted measures included: a 20% decrease of annual interest rates, the monthly financing interest rate was reduced to 1% for three months and the minimum payment required was eliminated for three months. The late fee charge was then eliminated for three months for customers unable to pay the minimum required, the issuance and replacement of credit card fees were eliminated, and cash withdrawal was free of commission at ATMs. Banreservas kept payroll and supplier’s payments free of commissions when they were made through the “TuBanco Empresas” website and the “Empresas App” application; as well as some SMEs measures, we shall discuss later.

It looks like the pandemic will present a long-term problem. How does the bank plan to support its customers in the years ahead? 

The Dominican Republic was declared in a state of emergency in March 2020. So, the Central Bank initiated a programme to release legal reserve and ensure that the economy flowed to provide support to Dominican households, commerce, micro, small and medium-sized enterprises (MSMEs), the agricultural sector, and the productive sectors in general. Special attention was given to the tourism and export sectors. This action contributed to all commercial banks, led by Banreservas, to be able to offer loans at lower interest rates and cover even more companies and individuals. 

As a part of this initiative, Banreservas and the Ministry of the Presidency designed a process for earlier payments of bills to MSMEs that supply to the state during the emergency period to provide liquidity to pay their fixed costs, especially during the current period of decreased economic activity. In this scenario, ADESS, the entity responsible for managing the social subsidies granted by the government, needed to reach more than 700,000 families in extreme poverty. Banreservas, committed to finding a viable solution, and in the space of two weeks developed a payment method that enabled the National Identity Card (NIC) as a virtual credit card, operating through the Visa network and local suppliers. This solution allowed beneficiaries to access the subsidies in a secure and reliable way to purchase food in a network of merchants. 

On the other hand, as a contribution to the health system and in support of the wellbeing of all Dominicans, Banreservas donated more than two million syringes during April 2021.

Provide some examples of how Banreservas supports MSMEs. 

Banco de Reservas, through its SME Loan Expo, held in September 2020, benefitted approximately 2,950 micro, small, and medium-sized companies in all productive areas with financing in the amount of US$111m to mitigate the economic effects of the pandemic. Of this amount, at the end of the month, 2,742 SMEs from all productive areas had received disbursements of US$101m.

By December 2020, Banreservas, in collaboration with the Dominican Government, launched new financial support measures for MSMEs, channelled through the e-Factoring Banreservas program, with the aim of providing immediate liquidity necessary to facilitate proper operations. Through e-Factoring Banreservas, 100% of the value of the invoices was delivered to the MSMEs in a timely manner, eliminating financial and legal costs that increase the total costs by approximately 30%, and that are traditionally added to the operation. This invoice process was carried out in an automated way, and therefore immediately, from anywhere in the country, reducing time and costs. 

How else does Banreservas engage with CSR initiatives in the Dominican Republic?

Throughout its history, Banreservas has sought to provide Dominican society with initiatives and programmes that stimulate, not only the economic and productive sectors, but also the social and cultural fields of our country. “Cree Banreservas” is an entrepreneurship programme that seeks to support the sustainable development of innovative projects by Dominican entrepreneurs.

“Coopera Banreservas”, promotes the socio-economic development of national producers, through the promotion and development of cooperatives, and producers of goods and services.

“Voluntariado Banreservas” is a non-profit organisation that implements the bank’s corporate social responsibility initiatives. The organisation supports employees, people, and also places that are vulnerable or at risk. The programmes are developed in accordance with the UN’s 2030 Sustainable Development Goals. 

With “Accessible Banreservas”, our inclusive policies have allowed us to employ 131 persons with disabilities, received 56 RD Include Stamps for good inclusion practices from the National Council of Disabilities (CONADIS), 91 fully accessible offices, 287 people with disabilities trained in Preserva financial education workshops, adapted by type of disability, and 7,415 employees trained in workshops for dignified treatment of people with disabilities.

How do you see the decade ahead unfolding for Banreservas?

It is difficult to predict the future in such a changing world, but we predict that over the next decade, digital transformation will become integral to banking in the Dominican Republic , due to the extensive use of alternative channels caused by Covid-19. This unavoidable and forced learning led to 66% of our clients’ transactions in 2020 to be carried out through our alternate channels. 

It is an unstoppable bancarization trend and early adoption of technological innovations and digital services from Banreservas. In 2020 alone, the Banreservas APP registered 1.5 million downloads and 10 million transactions.

In the coming years, almost all of our transactions could become digital. This is due to the expected recovery of the global economy, and to the decisions of millennials, who account for 50% of global consumption, constitute 33% of the Dominican population, and have a marked preference for digital transactions. In addition, Banreservas is prepared to offer its clients more specialised financial products and services focused on the needs of each client, with customised cyber security adaptations, as technological advances allow.

And last but not least, never forgetting our enduring commitment to maintaining a quality face-to-face service for those Dominicans without access to technology but with financial needs. We must meet these needs as the bank for Dominicans… for all Dominicans.

Further information 

www.banreservas.com 

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