With its sights set on diversifying its service offering in Colombia and taking the lead in the financial sector, Lulo Bank recently presented its new market strategy with which it will aim to make digital banking become an attractive option for people and contributes much more to the reactivation of the economy.
Santiago Covelli, CEO of Lulo, spoke with Portafolio about the challenges ahead for this industry and highlighted that the priority must be to create value for users, leaving behind the concept of safe money in favor of money that grows through different sources of investment, recognizing that although it is not an easy task, there are opportunities for growth.
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Are we in a rate war?
In the current economic context, I think there is a reaction to a change that is taking place from the Bank of the Republic to what has been the evolution of the financial market and the conditions of the country, one could see that there are certain banks, that in certain types of products are looking to attract new clients, to offer us products, which is the case, for example, of housing, where one sees that there are rate proposals, an offer more than a war.
Santiago Covelli – CEO of Lulo bank
Mauricio Moreno – CEET
This is a reaction very much in line with a change in the market context that occurred in response to the trend of the last few months at the Banco de la República. So, there is a need for users to be able to access financial products under better conditions, after a difficult economic context in the last two years and that is why there are these offers, but that does not mean that, as I already mentioned, a war has broken out.
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Is banking reinventing itself?
I believe that the world is reinventing itself and it is reinventing itself because the world began to be a place designed for users and the arrival of digital proposals, such as Lulo in this digital ecosystem, is making banking evolve based on the needs of users. I believe that this is one of the great changes.
What about traditional banking?
The most traditional banking system was a banking system designed for the banking business, not for people, and that is why the experiences we all had were very complex, because the user was really the last in the chain and people were always looking at how you made a product and then how you marketed it, sold it or offered it to someone.
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Now the system is designed with the user in mind, so that banking does not hurt you, so that it builds value for you, it teaches you, and that is where I think the change begins. That change, when you see it from the user’s perspective, has a fundamental element and that is the financially educated user, because before we lived in a disconnected, non-digitalized world, where knowledge was very low due to limited access to information.
Where is it all going?
We are moving towards a scenario with value propositions, such as that banking does not cost you anything, which is what we do at Lulo. Traditionally, statements would say the cost of printing paper. That is in addition to queues for hours and costs everywhere, which people sometimes did not understand and that generated confusion.
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It was said that it was impossible to change and look at us now, we are already seeing this new world where there are products that are offered at zero cost, without queues, connected and easily accessible, but most importantly, which is where we are right now, that generate value. It is no longer just about saving money and keeping it safe, it must grow.
Santiago Covelli – CEO of Lulo bank
Mauricio Moreno – CEET
How is that?
That is the most important message and the fundamental thing is that banking is there to create value, to generate profitability for money and that is where we as Lulo have the bets from our pockets at 13% percent, the savings account at 8%, the 0.5% cashback that we give you for paying or on Tuesdays and Thursdays that we have with 3% percent cashback for purchases in restaurants.
Here we start from the fact that the more you learn about your money, the more you understand that it is possible for it to grow and that cell phone you once had is no longer just a cell phone, but a cell phone plus iPods because your money has grown. So I think there is one element that has been changing a lot and it is really the value of money over time.
That requires financial education…
We must begin by teaching people the value of understanding that a peso that has a long-term return, due to compound interest, creates a lot of value. And if young people or at any time in your life, begin to understand that constant or permanent savings can really lead you to transform your life, that is where everything changes.
Santiago Covelli – CEO of Lulo bank
Mauricio Moreno – CEET
I’ll give you an example: if you were to save 2.5 or 3 million pesos a year for 20 years, after that time you could have a pension, a recurring resource to generate returns, but it’s not done because it’s not attractive and there’s not enough education about it for people. When you have pockets at 13%, then there’s really more value for your money and I think that’s where the magic is.
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Is it a sustainable model?
The important thing to start with here is that Lulo is a regulated bank, which has a banking license and that is why we do all the banking operations. From there we have the best financial practices for our users, where what we are really doing is bringing them the best banking with the best technology and what we want is to transfer that technological capacity, the efficiencies to the users.
Regarding the question, it is a sustainable model, it is a sustainable bank and it is a model that is designed to build value over time. Since we started, what we have been doing is being consistent in offering benefits and transferring the greatest value to our users. Now, the market is dynamic, the rates are dynamic, they can change and that is why we have to take the moment.
What is the offer in dollars?
Lulo X is the fintech that is part of the Lulo group and what we have in particular is that within the same application, within this financial ecosystem there are two companies, Lulo bank that offers you the products of the savings account, credit, your debit card and the fintech LULOX that offers you the possibility of saving in digital dollars and receiving a return of up to 4.8% effective annual.
With this, we seek to allow Colombians to diversify, to have their money in different places, to build it and to deliver the greatest possible value. With this, they should look at what these alternatives are and be able to choose the products that bring them the most benefits, reviewing where their resources grow, how they are projected and how much profitability they are generating in the products they have.
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