Brazilian bank BTG Pactual has taken advantage of a move towards digital banking to expand its business to new segments of the market, as well as to reinforce its dominance in one particular niche. 

“Digital transformation is a never-ending process of improvement and of gradually gaining market share in the different areas and products where we operate,” says Roberto Sallouti, BTG Pactual’s CEO. “That is exactly what we are managing to achieve.” 

It all started when the bank decided to move its systems to the cloud in 2016. Seven years on, it can boast a fully operational digital investment app for individuals, a consumer banking app and plenty of operational improvements that have helped to bring efficiency ratios below 40%. 

Sallouti says that digitalization has empowered BTG Pactual to enter new segments such as retail banking for high-income clients. The bank’s apps enable account holders to perform all kinds of tasks, including international banking, a new service that has just been released. The transformational impact of such changes is reflected in the fact that BTG Pactual, traditionally a bank for corporations and wealthy clients, now gets one third of its funding from retail banking. 

“We evolved from being an investment platform to a banking platform,” Sallouti says.

The investment in technology also allows us to offer banking as a service for fintechs, which is something that we would have never imagined before. Roberto Sallouti, CEO, BTG Pactual 

BTG Pactual’s IT division employs 3,000 professionals, which gives a sense of how important a strategic move the digitalization push has been for the bank. It even launched a dollar-denominated stablecoin in April in an effort to provide clients with an easy-to-use tool for hedging currency risk or making investments in the US currency, notes Sallouti. 

The digitalization of operations is also paying dividends as BTG Pactual navigates a challenging operational environment. 

Sallouti notes that while the Brazilian economy started the year slowly – with the banking market suffering the impact of two major credit events, accounting scandals at domestic firms Americanas and Light – by the second quarter, its outlook had appreciably improved. 

“Amid the volatility, we kept offering new products and services to our clients of all segments,” he says. “We have managed then to grow our business despite the challenging macro environment, especially in wealth management.” 

When it comes to the latter, its results continue to stand out. The bank posted revenue growth of 4.8% in its wealth management operations in the second quarter of 2023, representing the 18th consecutive quarter of record-breaking performance. As a result, half-yearly revenues in the segment were 19.2% higher than in June last year. The acquisition of new clients is also accelerating: BTG Pactual closed the first half of the year with 630 billion reais in assets under management, a 36.3% increase year-on-year.  

“We are the best capitalized and most liquid bank in Brazil, so clients feel comfortable with us in a scenario of volatility,” Sallouti says. “We have also benefited from the crisis at some of the other banks in the wealth management market, and, especially, the expansion of our offer of products and services.” 

He mentions the purchase, in March, of FIS Privatbank in Luxembourg as an example of the widening of the range of services pursued by BTG Pactual in its quest to meet the demands of wealthy clients. 

“Our clients are sophisticated, they want to diversify their investments,” Sallouti says.  “They want to have at their disposal an offer of global products with the same quality of services that they are already used to.” 

Digital transformation has also provided BTG Pactual with a powerful tool to grow in the market for small and mid-sized companies, a sector that was not traditionally a target for the bank.  

Sallouti says that the bank’s SME effort started with supply chain finance, where BTG Pactual offers services for providers of its corporate clients. This activity nurtured relationships that motivated the expansion of the offer of credit products to this public, which is majorly composed by mid-sized companies. The SME business is fully conducted via digital banking, and the bank claims that, in 2022, 99% of new accounts were functional one hour after an application was filed.  

“In 2015, we had about a hundred large corporate clients. With our digital transformation, now we have thousands of other companies as clients,” he says. “We are getting to know them better, which enables us to improve our services on a daily basis.”