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Extending Credit to New Markets: Q&A with Itaú Unibanco

Itaú Unibanco is Brazil’s largest private sector bank and the ninth largest globally. But when it launched its credit card as an initial entry into the highly competitive Mexican market, it had to adopt startup-style strategies. Key to the effort was an origination process using FICO® Capstone® Decision Accelerator to render instant online decisions, and provide the bank with the agility to test different strategies and adapt to learnings. Ricardo Toledo, Marketing Director for Itaucard Mexico, talks about the program with Andreas Suma, FICO Senior Director.

Andreas Suma, FICO: What challenges did you encounter when you launched in Mexico?

Ricardo Toledo, Itaú Unibanco: The barriers were many. It's a very saturated market, with the top three banks holding a 77% market share in credit cards. We were an unknown brand with no branch network for distribution. And of course the economy was in difficulty. But we believed, and still do, that Mexico is the second most attractive market in Latin America for long-term investment, after Brazil.

AS: What steps did Itaú Unibanco take to confront these challenges?

RT: We knew that to compete in Mexico, we had to be very innovative. First, we took time to research and educate ourselves on the market. Second, we pursued a strategy of commercial alliances, whereby Itaucard would align with established, well-known consumer brands and get the benefit of their infrastructures and customer databases. It's important to find partners who are a good fit for you and vice versa, and that both parties benefit from the alliance. Third, we developed an innovative value proposition for consumers to differentiate ourselves.

AS: You mention needing to be innovative. How did you accomplish that?

RT: Through research, we learned that if you treat consumers with respect and make the process easy for them, they are more likely to come to you. We saw an opportunity to differentiate through excellent service and an easy application process through all channels with an instant online decision – at which point, if approved, the customer could immediately make a transaction.

AS: How did you use analytic solutions in this process?

RT: To make this kind of offer in a responsible fashion, we needed expert decision models to understand customer behavior and risk. FICO Capstone Decision Accelerator was at the very core of our process and enabled us to deliver on this proposition.

AS: Are you pleased with the results?

RT: Knowing that Mexico is still undergoing recovery, we projected conservatively and have achieved what we hoped. Moreover, having seen what we can do with FICO, we plan to implement similar solutions in other markets.

AS: Other regional markets? Where specifically?

RT: We have been using the origination program successfully in Paraguay, and we plan to implement in Chile and Uruguay. Argentina is also on our horizon. The FICO solution will give us a consistent platform from market to market that is very adaptable to the particular characteristics of each country.

AS: What do you think is the key to success in a new market?

RT: For us, it's been a combination of know-how and infrastructure. The know-how is the expertise and market knowledge of our Itaucard team. The infrastructure means providing the team with the best tools to manage decisions and control risks, namely the FICO suite. The solution implementation was quick, and the systems are user-friendly, giving a lot of autonomy to our business analysts. We have the agility to adjust strategies when necessary, which is critical in a new market. This combination has enabled us to be innovative and challenge the market.

For more information, view the Itaú Unibanco case study or FICO World 2011 presentation, “Extending and Adapting Credit Offerings to New Markets.”

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