 
Interview with: Samuel Pereyra, Government President, Banreservas
Spectacular financial development and rising diversification plus an array of government-funded infrastructure developments is fuelling financial alternative for traders within the Dominican Republic. A secret sauce, or a succession of sound policy-making supported by particular financial zones and critical long-range planning?
Productiveness is up. The implementation of many market-orientated reforms from the Nineteen Nineties have matured and are available good. For main banking gamers like Banreservas, greater international direct funding means extra industrial and retail alternatives, strengthening its hand throughout digital banking and fintech.
This 12 months’s re-election of President Luis Abinader with virtually 60 % of the vote reinforces the nation’s financial stability narrative. Now, in a brand new interview for World Finance, Banreservas government president Samuel Pereyra says that whereas the compliance and tech strain is immense, the possibility to meaningfully enhance lives and develop new merchandise is profitably paying off.
Between 2020 and 2023, Banreservas earnings and whole property have been sharply up, due to tourism, SME enterprise and development. How sustainable is that this development for the following three years?
I’m optimistic about sustainable development in our nation’s key sectors, akin to tourism, SMEs and development. Tourism has diversified post-pandemic, attracting a broader viewers with plenty of innovation occurring. Nevertheless, investing in infrastructure and coaching is essential to take care of competitiveness. For SMEs, digitalisation and authorities initiatives to assist financing will help our development. We really feel the development sector is recovering as a consequence of housing and infrastructure demand, however adopting sustainable practices is essential.
Total, these sectors have nice potential for development within the subsequent three years as insurance policies that promote funding and sustainable growth proceed. Banreservas helps all these sectors for the higher well-being and prosperity of all Dominicans.
How lengthy can a twin workplace set-up that blends digital and customer-facing operations stay earlier than going 100% digital? Or will a part-physical dedication keep in place indefinitely?
In our expertise a hybrid strategy, mixing digital operations with face-to-face interactions, is the right combination. In different phrases, twin places of work present flexibility, catering to clients preferring personalised service, particularly for extra advanced monetary issues.
The development, sure, is in direction of extra digitalisation. A twin set-up is sustainable whether it is aligned with buyer expectations. So I’d say the long run is certainly hybrid, specializing in digital whereas sustaining personalised service. The important thing actually is agility in adapting to market calls for.
How a lot of your development hinges on ex-pat enterprise and companies, or Dominicans dwelling overseas? How will this market develop sustainably over 2024 to 2030?
Dominicans overseas play a giant function in driving our economic system, each in native consumption and enterprise development. We expect this market will develop sustainably between 2024 and 2030 as a consequence of digitalisation, facilitating faster and safer transactions, plus extra curiosity typically in investing within the Dominican Republic. For us it’s essential to enhance monetary companies for the diaspora, together with strengthening consultant places of work, tailoring merchandise, and providing personalised service. This can consolidate {our relationships} with Dominicans overseas, making certain sturdy development, we anticipate.
How a lot is the remittances market price and the way worthwhile is it?
The Dominican Republic’s remittance market was up 3.1 % and hit $10.3bn in 2023, a file 12 months. Remittances are essential for households and to stimulate general financial development. For us, the sector’s profitability stems from cash switch companies and complementary merchandise – it is rather aggressive and that may be a driver for extra innovation throughout plenty of totally different companies, placing the client entrance and centre. The remittance market additionally impacts native socio-economic growth by selling consumption and funding in SMEs. Innovation and inclusion on this section are essential for future development, a spotlight for Banreservas within the years forward.
What number of digital clients do you’ve got – and the way a lot will this develop by within the subsequent 12 months, do you suppose?
Banreservas boasts 1.7 million energetic customers throughout digital channels, processing 13 million transactions a month via our App Banreservas and TuBanco (net model). Extra digital developments, like the brand new digital token, digital accounts and digital mounted time period deposits, present purchasers with handy self-service choices additionally. Within the subsequent 12 months, we anticipate a 40 % enhance in customers, pushed by tech enhancements and new companies. A continued deal with monetary inclusion – this is essential for us – will contribute to the increasing digital consumer base.
In 2023 round 85 % of transactions have been digital. The place will this be by the top of 2025, do you suppose?
By 2025 digital transactions will possible turn out to be the norm, with vital development in cellular fee platforms and digital wallets. We anticipate the proportion of digital transactions to extend past 85 %, with companies like loans and monetary recommendation performed digitally.
Rising applied sciences like AI and blockchain may also improve safety and effectivity. Banks need to adapt by providing revolutionary options and prioritise a customer-centric expertise, driving the shift in direction of a extra digital economic system.
By way of digital companies, does the financial institution subsidise the web knowledge consumption use of shoppers? If that’s the case, by how a lot?
We perceive entry to digital companies is important for our clients, particularly in an surroundings the place digitisation has turn out to be more and more necessary. For that reason, since 2021, we have now put in place ‘Information Patrocinada,’ the place Banreservas covers the whole value of information consumption related to the Banreservas App.
Customers of the Banreservas App, for instance, who’ve knowledge companies from telecommunications suppliers within the Dominican Republic, could make stability inquiries, pay payments and settle bank cards, in addition to make different transactions, in a direct and secure method.
What digital area of interest markets are you taking a look at moving into in future?
We’re probing a number of digital area of interest markets to drive development and promote monetary inclusion. Key areas embrace leveraging expertise for cost-efficient, customer-orientated options, collaborating extra with fintechs than previously, and implementing digital monetary training and inclusion platforms. There’s a lot occurring on this house.
Our ‘Bancarizar es Patria’ programme exemplifies our critical dedication to monetary inclusion, we really feel, providing few necessities and offering instructional assets. By specializing in collaboration and innovation, we purpose to adapt to our purchasers’ wants whereas fostering real social fairness and the nation’s broader growth.
What about your digital safety programme – the place are the most important dangers coming from, and the way will your purchasers be shielded from them?
Safety is a big precedence for us, from prevention and detection to cyber. We completely prioritise securing our technological infrastructure and are actively educating our clients about greatest safety practices. We now have constructed our personal Cybersecurity Operations Centre (SOC) outfitted with state-of-the-art expertise and authorized workers for twenty-four/7 monitoring and response. Additionally, our weblog, ‘Your Safety,’ supplies clients with well timed data for asset safety. We now have mixed superior expertise, ongoing training plus a really agile menace response. We really feel we have now created a really safe surroundings for our purchasers – we proceed to work very laborious right here.
What quantity of your digital enterprise is from low-income clients or the financially excluded? And can this ratio rise within the subsequent 12 months – if that’s the case, by how a lot?
Greater than 50 % of our digital clients are from low-income or financially excluded segments. We count on this to develop within the subsequent 12 months as we increase our supply, concentrating on underserved communities to drive monetary inclusion – for as a lot of our folks as attainable. Our common month-over-month development in digital financial savings account openings exceeds 20 %.
I’d say the long run is certainly hybrid, specializing in digital whereas sustaining personalised service
Additionally, our social duty programme – we take this very significantly certainly – aligns with the Nationwide Growth Technique, selling socio-economic growth via initiatives in training, monetary inclusion, entrepreneurship, and co-operative growth. The ‘Reservas del Futuro’ scholarship programme helps excellent college students, whereas the Banreservas Cultural Centre fosters tradition and training.
How does it combine along with your social duty programme extra broadly?
Banreservas’ social duty programme integrates intently with our general technique by supporting weak communities via initiatives in training, monetary inclusion, entrepreneurship and cultural growth. Our ‘Reservas del Futuro’ scholarship programme advantages excellent college students, whereas the Banreservas Cultural Centre persistently fosters arts and tradition.
We even have Voluntariado Banreservas, our social arm, working to chop the wants of the much less lucky sectors of the nation, constructing a world of potentialities and hope that generates a constructive affect on the way forward for our nation.
We all the time purpose to help nationwide expertise, promote cultural development, and supply alternatives for artists to attach with numerous audiences. By this we contribute meaningfully to the social and cultural growth of the Dominican Republic, aligning ourselves with the Nationwide Growth Technique.
How does your digital coin programme work – how difficult has it been to develop?
At present, such a foreign money is just not regulated by the Central Financial institution of the Dominican Republic, nor does it have the authorisation of the Financial Board for its issuance and use as a method of fee for any transactions. This presents vital challenges that restrict our potential to supply cryptocurrency-related merchandise in a secure and efficient method.
Whereas we’re observing developments within the cryptocurrency market and its evolution, our main focus stays on strengthening our conventional companies with new tech, making certain the safety of our companies whereas sustaining the belief and satisfaction of our clients.
How do you differentiate digital accounts with conventional deposit accounts, characterised by mounted phrases and rates of interest? Do digital merchandise supply a greater deal?
To encourage digital adoption with our digital financial savings account, we have now applied a brand new technique that provides a differentiated worth proposition in comparison with conventional financial savings accounts. We now have an outlined charge construction with extremely valued advantages for each present and new clients, who can join with the financial institution 100% digitally and not using a minimal opening deposit requirement. Additionally, digital accounts are exempt from minimal stability costs, making them very engaging to clients.
What’s your threat administration strategy to foreign money threat – are you more and more mixing your USD publicity with CNY, for instance?
Our threat administration strategy focuses on impartial or lengthy positions in USD and EUR to fulfill market calls for. We now have a strong construction for figuring out, measuring, monitoring, and speaking dangers, integrating three traces of defence. We deploy Worth-at-Danger (VaR) and Anticipated Shortfall (ES) to measure publicity to trade price dangers, and our Danger Urge for food Assertion defines tolerance and capability ranges. Monitoring indicators, publicity limits, and alert ranges are tracked and reported to decision-making our bodies. It is a complete in addition to accountable threat administration stance, we really feel.
In your judgement, what situation is the Dominican Republic economic system in in the intervening time – and the way is it positioned for 2025?
The Dominican Republic’s economic system is rising, with constructive indicators in sectors like tourism, development and SMEs. GDP development is strong, and international investments, exports and remittances are important supporting pillars right here. It truly is encouraging. However inflation and public debt administration are challenges that do want prudent fiscal and financial insurance policies to take care of stability and confidence.
Looking forward to 2025, optimism may be very a lot warranted, I really feel, as projections now very a lot present a strengthening of main sectors and financial diversification. Aligning with world developments like sustainability and monetary inclusion will improve our nation’s competitiveness. By addressing challenges, the Dominican Republic can extra reliably seize incoming alternatives. We now have lots to be happy with and enthusiastic about.
What constructions are in place to stability the financial institution’s function as a government-owned entity with its industrial banking operations?
We stability the state-owned entity standing with industrial operations by way of a powerful company governance construction. We now have an autonomous board of administrators with private and non-private sector expertise making certain selections are all the time primarily based on effectivity and profitability. Additionally, we have now specialised committees which oversee key areas, balancing our public and industrial aims.
We provide full transparency, disclosing monetary studies and present process rigorous audits. There are strict insurance policies round potential conflicts of curiosity, sustaining our independence and robustness in administration whereas safeguarding market competitiveness. We really feel we have now obtained the combo proper.
How does Banreservas handle potential conflicts of curiosity given its ties to authorities?
Banreservas manages potential conflicts of curiosity via a collection of insurance policies and practices designed to make sure transparency and integrity in our operations. Firstly, there’s a governance framework that features a sturdy code of ethics, which establishes clear tips for all our staff and executives relating to decision-making. Moreover, we keep a transparent separation between our banking capabilities and authorities selections, permitting us to function independently.
We contribute meaningfully to the social and cultural growth of the Dominican Republic
We additionally conduct common inside audits and exterior opinions to make sure compliance with established rules and requirements. This not solely reinforces our transparency however builds belief amongst our clients and companions. Lastly, we promote a tradition of reporting conditions that will characterize a battle of curiosity, making certain the fitting measures are taken to deal with them promptly and successfully. By way of these efforts, we purpose to function with the utmost duty and ethics in our actions.
What banking improvements are you able to reveal for 2025 and past?
In 2024, Banreservas made substantial strides in innovation. Our 2025 objective is to solidify our market management within the Dominican Republic and our worldwide places of work. Our digital transformation journey will persist, making certain we stay dependable, environment friendly, agile and digitally pushed with out compromising our human contact. So we might be a extra worldwide, environment friendly, customer-centric service establishment making ready ourselves for a dynamic, accessible future that’s genuinely inclusive for each Dominican wherever they’re. We expect that may be very thrilling.
