Dominican Republic growth forecast from Banco Popular

Transcript

The Dominican Republic’s economy is set to expand by around six percent this year as construction and tourism continue to bolster one of the fastest-growing countries in the region. Luis Espinola, Executive Vice-President of International Business and Private Banking from Banco Popular Dominicano, brings us his forecast. The Dominican Republic’s banking sector is among the strongest in the Latin American region, and it’s helping local SMEs thrive, with the DR seeing huge inflows from tourism, exports, and foreign investments.

World Finance: The Dominican Republic’s economy is set to expand by around six percent this year as construction and tourism continue to bolster one of the fastest-growing countries in the region. With me to discuss how this translates into the banking sector is Luis Espinola, VP Executive of International Business and Private Banking from Banco Popular Dominicano.

Luis, the Dominicans’ economy is flourishing, and last year you also reported strong growth – what are the main driving forces behind this?

Luis Espinola: The Dominican economy grew seven percent in GDP last year, led by construction – especially in affordable housing, hotels, schools, and other infrastructure – as well as the financial services and trade sectors.

This growth was achieved through a low inflation scenario of 2.3 percent and a very stable exchange rate.

At the same time we had tremendous inflows from tourism, free trade zone exports, remittances, and foreign investments.

World Finance: Banks in the Dominican Republic are among the strongest within Latin America, with 15.08 percent of solvency, according to a recent report from FELABAN. How do you think this goal has been accomplished?

Luis Espinola: For the last 12 years we’ve been under a new and modern monetary and financial law. And supervision since then has shifted, if you will, from a more compliance-based supervision that it was before, to a more risk-based supervision under international guidelines set by the Basel committee. This – in addition to new competitors that we have in our marketplace – has strengthened the banks’ willingness to continue to increase capital, and thus not only maintain their market share, but also their competitiveness.

World Finance: SMEs are said to be driving the economy – how does the banking sector facilitate them?

Luis Espinola: We have offered our SMEs a unique platform which we call Impulsa, or Impulsa Popular. Through which we not only customise their products and service needs, but also offer them training workshops in important areas for them, such as accounting, finance, marketing, and export facilitation.

At the same time, we offer them multiple capabilities such as the Paypal exclusive partnership we have, which permits our SMEs to grow their e-commerce sales.

We continue to partner with SMEs to open what we call bank sub-agents in their locations throughout our country, and thus facilitating financial inclusion in communities where we don’t have a typical branch, located with SME partners.

World Finance: Of course worldwide the banking sector is undergoing a digital revolution – how are you responding?

Luis Espinola: We have enhanced our mobile and internet capabilities. Our website now – we’re very proud of this – is the leader in financial services, in terms of monthly visits: we have more than 3.5 million. And just last year alone, our customers transacted more than 13 million transactions.

Recently we have launched a new version of our app, which makes the process for our customers more seamless, and permits our customers to review all the products and services options available to them, compare, and request – do their applications online, and receive immediate responses.

We provide digital wallets through which not only our customers, but unbanked customers, can do different transactions through their mobile cellphones, under pre-paid accounts. And this also has the advantage of enhancing financial inclusion.

World Finance: And in terms of challenges moving forwards? What does the banking sector face, and how are you overcoming these?

Luis Espinola: As our customers’ needs change – for example, millennials and generation Y – so does the bank. And all of us have to adapt quickly, and be able to respond to those needs accordingly.

Another critical challenge is availability. In our world today, customers demand and expect availability 24/7 through all our different channels.

And finally, but no less important: efficiency. We have to be able to continue to produce low cost services in a very automatic manner.

World Finance: Well finally, what’s your strategy for future growth?

Luis Espinola: I think that our chairman and CEO Mr Manuel Yeong better summarised our future strategy with the phrase “Innovation for inclusion.” We will continue to lead the digital transformation for present and future customers, while at the same time continue our focus on the dynamic segments of our marketplace: tourism, corporate businesses, small and medium enterprises, and retail and private customers.