Millennium BCP – Innovating to change

Portugal’s banks are embracing new smart technologies to innovate, better serve their clients and deal with fraud and cybersecurity threats. Maria José Campos, Executive Board Member and COO at Millennium BCP explained how the bank was rising to the challenges and opportunities that new technologies such as Generative AI can bring at the latest Innovation Talk organised by the American Chamber of Commerce in Portugal (AmCham).

Text: Chris Graeme. Photos: Renata Schiavon

Bank clients expect more from their brands today. Whether clients are interacting with their banks in person, on their mobile phones through dedicated banking applications, or on a desktop, laptop computer or tablet, banks are creating better digital experiences to meet customer expectations and compete with mobile-first startups.

Most banks have digital transformation strategies, but the Portuguese bank Millennium BCP has been investing in this and smart technologies for at least a decade, embarking on a true digital business transformation.

Maria José Campos, Executive Board Member and COO at Millennium BCP, was invited by the American Chamber of Commerce in Portugal (AmCham) to explain the bank’s strategy for digital transformation and technological innovation at the most recent Fireside Chat – ‘Conversations on Change with Innovative Companies and Inspiring People’ in a talk moderated by Maria João Ricou, Senior Partner at Cuatrecasas Portugal – which hosted the event held on June 7.

So, what are the main challenges facing the banking sector?

The Portuguese banking sector over the past decade has undergone a profound restructuring and today has fairly solid capital and liquidity ratios and a cost stream income that is excellent both at international and national levels.

However, the bumper results enjoyed by the banks probably aren’t sustainable in the long term since they were achieved on the back of (high) interest rates. Nevertheless, the sector is now much better prepared for its main role which is financing companies, families and the economy.

Four main challenges — growth, productivity, agility and risk

Maria José Campos says that technology has had a fundamental role in the banking sector for decades. Most people recall the investments that BCP made from its founding in 1985, and which gave it a competitive advantage at the time, and which has been sustained for several years.

Today, the challenges are quite different. “I would say these challenges have four dimensions: the first is growth and relevance, the second is productivity, the third is agility, and the fourth is risk and resilience, the latter two not so often mentioned”, she says.

“The challenge of growth and the question is how we can grow sustainably within a context that is completely different today when our relationship with our clients is essentially based on the digital experience”, explains the Millennium BCP COO.

And partnerships have also helped to increase added value for clients since digital banking platforms are very developed and are frequently used by them.

To give some idea, Maria José Campos says: “In 2018 only 29% of our clients used our app. Today over 60% use it and the intensity of use is high with clients on average using the app 32 times per month. Today, it’s not just about checking balances and making payments; 80% of sales/payments from deposits are made through digital channels. This in fact shows the potential that we have to integrate partner services and create new revenue streams”.

Personalised services

On the other hand, many other sectors, which have also in the meantime digitalised, are integrating these technologies and financial functions in their daily business dealings, such as payments and credits integrations.

“We are seeing personalisation by incorporating all these technologies, including generative AI, in communication and experiences that need to be personalised and anticipate the clients’ needs both when they interact through the app with us, and in terms of products.

For example, four years ago the bank launched an insurance with an on-off capacity according to clients’ needs.

In case you are not familiar with the innovation, this is a relatively new type of insurance product offered by insurance companies, often through banks. Its main feature is that the customer can program their insurance. In other words, they can “switch it on” or “switch it off” so that it is activated only on the days when they need cover.

“We have some digital products and we’ve worked with fintechs on developing them to innovate in this area, but we’ve been using it for personal loans for years, and the capacity that we have today means that these personal loans can be adapted throughout the life of these loans to meet the personal needs of the client. This opened a lot of room to innovate and employ these technologies”, says the Millennium board director.

And adds: “In addition to these personalised services applied to interactive platforms that function directly with our clients, we can also integrate specific personalised offers to further meet our clients’ needs, and on the other hand check personal vantage scores and integrate credit journeys on third party platforms, and in the short term develop the partnerships at this level that Millennium BCP will launch.

Credit journeys, by the way, for those not initiated into the wonderful world of ‘bankilese’ means you can check your VantageScore 3.0 credit score as often as you’d like with no impact to your credit.

As for productivity, in recent years Millennium bank has done an “extraordinary work”, particularly in customer face processes. “Five years ago, the banking sector generally didn’t have automised and prominent credit processes for the client, today this issue is resolved”.

The use of robotisation

Another example of a move away from paper-led and intensive staff computer input processes is robotisation and the elimination of manual tasks, thereby freeing up staff to do tasks that are of greater value added in other areas.

“We have a lot of room to innovate in internal processes that are created and terminated within the organisation itself. There is still a lot of paper and manual processes, but his will change with Generative AI. For example, using it to create an insolvency or credit report in the period of a morning. These are areas we are working on”, explains Maria José Campos.

And emphasises that this has not arisen from a logic of replacement (meaning shedding jobs), but rather taking the opportunity to reinvent using some of the possibilities that these new technologies afford.

Not that Millennium BCP, in common with Portugal’s other banks, hasn’t shed a considerable number of jobs through branch closures, restructuring and technological innovation.

In 2021 it undertook a round of mass redundancies and early retirement through mutual agreement (and some not so mutual) which were fiercely contested by banking unions.

It was a controversial move that led to the bank’s president Miguel Maia called to a parliamentary hearing to answer criticisms that the bank had disrespected the law in the process of the departure of hundreds of staff (900-1000).

Smart technologies

Other smart technologies such as character recognition, natural language processing, and deep learning models that learn based on the previous decisions made by operators are also being employed, for example, in documents validation, formalising contracts quickly and cost effectively, thereby providing the client with a superior and better-quality service.

In terms of agility, which is very important when it comes to competitiveness, technology enables new opportunities to be explored and swiftly reacted to. “Through new software we will quickly be able to create new frameworks to meet new requirements and opportunities and even mitigate risks as they arise”, she says.

Just one example of agility providing a competitive edge arose during the Covid-19 crisis when in a very short period of time Millennium applied a process to the contracting of Covid-19 credit lines in which the bank was a leader in the national banking sphere, and of which “we are very proud”.

The bank went from one moment to the next contracting thousands of credits in a day whereas in the past it would have been a few hundred a month.

Cybersecurity challenges

For example, it used AI to arrange the applications for Covid-19 credit lines. In terms of resilience and risk evaluation and mitigation (and banking by its very nature is a risk-taking business, one where the regulatory component has a very strong impact that seems like it is “from another world”) several challenges are posed by cyber and hacking threats that the bank must be in the vanguard to prevent and counter.

“Every day it seems we hear of cases where client and staff data bases have been compromised. We have made a big investment over time in data protection and defence, but even so, no defence system is 100% secure and safe.

For example, in October 2022 Millennium BCP fell victim to an IT attack which meant clients couldn’t access the application and the site. Luckily, on that occasion the culprits failed in gaining access to client data.

“Hacking will happen, but when it does, we resolve these attacks as swiftly as possible”, concludes Maria José Campos, Executive Board Member and COO at Millennium BCP.

On Friday we see how one of the world’s largest energy providers, EDP – Energias de Portugal has been in the forefront of technology and in the vanguard of the green energy revolution for years with an enlightening discussion from Vera Pinto Pereira, Executive Board Member at EDP Group, CEO EDP Commercial, President of the EDP Foundation.