Edgar Bran, CEO, Banco Promerica Guatemala, explains how fintech and financial inclusion are fuelling Central America's financial revolution

What makes Banco Promerica stand out from the other banks in Guatemala?

Edgar Bran: The fact that we are a regional bank, present throughout Central America with additional presence in the Dominican Republic, Cayman Islands and Ecuador, gives us the strength to help our clients in different countries. Our approach is to develop a close and long-term relationship with the client. We are looking build long-term businesses, not just carry out transactions. That is one of the fundamental principles of our founder, Ramiro Ortiz. The idea is that we are there for people and businesses throughout their lifecycle.

We also place great emphasis in our human talent, with committed and well-trained people. Over the last five years, we’ve invested heavily in our digital platform to make it easier for our clients to put their money to the best use. We are the regional leader in banking technology, which gives us speed and scale. Now, our focus is on becoming a more sustainable bank, both in terms of our social and environmental impact.

The exit of the global banks from most of Central America, definitely created space for local and regional banks like Promerica. If you look across Central America the biggest banks are now local or regional. I feel that Banco Promerica Guatemala is a local bank but with the advantage of having a regional platform.

What more should the authorities do to encourage the growth of the Guatemalan banking sector?

EB: I don’t think we should look to the government or central bank – instead the banking sector needs to take responsibility. We need to help the people bank themselves. We have made some important advances, for example a digital account can be opened in three minutes with a simple online form, while credit cards can be completed in 8 minutes.

Perhaps where the authorities can help is by convincing unbanked Guatemalans that opening a bank account won’t mean they face a higher tax bill. People in the informal economy don’t open accounts because they don’t want to be taxed and we need regulation to convince them that formalisation is positive. Maybe there could be lower tax rates for SMEs to reduce their fear of the banking system.

As a regional bank do you think Central American integration has been a success?

EB: I think it’s clear that more needs to be done. Despite the fact that we are a region that shares language, culture and history it’s still not easy to circulate people, goods or money around Central America. We have seen some advances in streamlined border crossings in the Northern Triangle of Guatemala, Honduras and El Salvador.

Regional initiatives such as Sieca also help. But travelling between the countries is still more difficult than travelling around Europe. Improving the logistical, economic and regulatory integration between Central America won’t just make our lives easier but it will also help attract foreign investment as it builds up the scale of the investment opportunities.

Will the new government be good for the Guatemalan economy?

EB: We have analysed their governmental plan and we can see positive plans to invest in social spending. Guatemala is a poor country so investing in health, education and security can only be a good thing. If you improve the social indicators you end up with a healthier workforce and a more productive economy.

The infrastructure spending plan is also attractive for international investors, because they are large-scale projects with the potential to earn in quetzales which is one of the world’s most stable currency. Again, the infrastructure projects will also generate benefits across the wider economy. So, as a bank, we will be doing our best to support these initiatives.

Guatemala is a poor country so investing in health, education and security can only be a good thing. If you improve the social indicators you end up with a healthier workforce and a more productive economy.

The challenge is to ensure that spending doesn’t get out of control. The Congress will need to ensure that a sensible budget, based on tax receipts, is adhered to because Guatemala needs to protect its macroeconomic strengths.

It is early days in this new administration but the early signs are positive. The key ministers are people with a clear economic and financial vision. Moreover, in the forums we have shared with the president, it is clear that he is an experienced politician that understands the importance of macroeconomic stability.

How is Promerica innovating to improve its business?

EB: We have been keenly studying where digital banking works and where it has failed to inform the decisions that we have taken in our markets. We realised that digital banks like Nubank fill spaces that a traditional bank doesn’t cover, so we started to till those needs. We built a digital platform in three years, but we weren’t racing to get it ready but steadily developing it to ensure that it was secure for our customers.

We now have a strong digital service offering, which means that if a digital bank comes to Guatemala, it won’t be a pioneer, giving customers something they can’t already get from us. We are also keen to use fintech to expand our offering.

Fintech’s evolution in Guatemala depends on the regulation. At present, we don’t have specific fintech regulation, unlike Mexico which is a Latin American leader in the area. There are some areas where we can’t operate – for example we can’t offer open banking as a service for third parties.

We are also exploring sustainable finance and thematic bonds. Again, we don’t have a specific regulation in Guatemala that classifies a bond as sustainable but there is growing interest in the area. We are studying it closely – and it helps that we have other banks in the group that have issued green bonds – and the multilateral banks here, like the IDB, are also keen for it to happen.

Where will the bank grow in the coming years?

EB: We will keep looking for opportunities in providing credit cards and electronic payments to the unbanked population. The pandemic drove a boom in electronic transactions in Guatemala because people didn’t want to use cash. And even though the pandemic has gone the trend remains in place.

We are also focusing on the interior of Guatemala, which these days is growing more quickly than the capital city. Most of the remittances, which are an important source of consumer spending in the country, do directly to the interior.

We have a very young population, with an average age of 26, so the are only just beginning their use of financial products and services. What starts with a credit card, could then turn into a mortgage, so these are great clients to build relationships with.