Can you outline the bank’s strategy and explain how you have navigated the challenges and opportunities presented by the current economic climate?
Banco Popular’s strategy is based on innovation with a sustainable vision and a customer-centric approach. Our main objective is to deliver a unique experience by offering services and products that match customers’ needs and preferences. Banco Popular caters to all segments of the economy with a differentiated commercial, product, and advisory offering. For corporate and middle market customers, we provide innovative loan, cash management, and capital markets products, supported by relationship managers and specialists tailored to the company’s needs. For SMEs and retail customers, we base our offering on relationship managers who can advise customers and leading electronic channels where they can complete all their transactions and product services.

Our digital transformation and commercial strategies are based on an innovation culture. We are constantly looking to transform delivery channels to create value for customers while redesigning and streamlining internal processes to increase speed of response and capture efficiencies.

The core elements enabling this transformation at the bank are: 1) A state-of-the-art IT infrastructure that leverages leading technologies and cloud applications for fast development, scalability, and reliability; 2) Data analytics and AI models as key differentiators in our decision-making process; 3) Operational efficiency based on agile processes adopted throughout our organisation; 4) Best-in-class talent and an innovation culture that is continually evolving; and 5) Analytical and predictive risk management practices that anticipate the risks we face as a bank, including cybersecurity. This strategy is supported by our sustainable vision; we are leaders in the country in ESG practices.

The Dominican Republic has enjoyed a positive economic environment in recent years, but like everywhere else, the pandemic posed difficulties that required firm actions. During that period, the CEO led the bank to overcome challenges and seize opportunities in topics such as: 1) in collaboration with monetary authorities and the government, Banco Popular strongly supported individuals and companies in all economic sectors, such as tourism, which faced severe challenges. This backing was essential for the sector’s revival, making it one of the fastest in the world to recover from the pandemic; 2) Acceleration of digital transformation to serve customers remotely. Today, 88 percent of transactions and over 25 percent of product sales are conducted through electronic channels; and 3) Internal process automation and robotisation to improve delivery and efficiency, during the past five years the bank’s efficiency ratio improved more than 1,300 bps.

At present, the country is experiencing a positive economic climate that has stimulated growth and attracted investments. The IMF expects the Dominican Republic to grow 5.4 percent in 2024. This positive economic outlook brings opportunities, and the CEO is leading the bank to have a robust and sound growth in our loan portfolio and continue to drive innovations introduced to the market to maintain our market leadership and improve customer satisfaction.

The strategy Banco Popular has adopted led to very favourable results. In 2023, our assets grew by 19 percent, and we closed the year with a ROA of 3.30 percent and a ROE of 22.85 percent. This growth was achieved with a very sound loan portfolio, with past due loans at 0.86 percent of our portfolio and a reserve ratio of 3.2 times past due loans. Moreover, we have a strong capital, with a solvency index of 14.8 percent.

How did the bank contribute to the advancement of sustainable and responsible banking practices in the Dominican Republic?
Today’s banking landscape requires sustainability and responsible banking as key components. At Banco Popular, sustainability is part of our DNA, and we have continually reinforced this vision. We became the first bank in the insular Caribbean to join the United Nations Principles for Responsible Banking as a signatory partner, an international coalition of banks launched in 2019 to align banking services with the Sustainable Development Goals (SDGs) and the Paris Climate Agreement, thereby supporting social and sustainable development. We are also part of the Partnership for Carbon Accounting Financials (PCAF), which develops the Global Standard for Greenhouse Gas (GHG) Accounting and Reporting.

To promote sustainable development and clean energy, we lead green financing in the country, with more than $600m in loans for various clean energy projects, including a recent $100m loan to build the largest solar park in Central America and the Caribbean. Additionally, we offer retail customers and SMEs the ‘Hazte Eco’ solution, the first green programme in the country to offer advisory and financing (including green leasing) services to promote sustainability initiatives. Moreover, in 2024 we issued the first green bond in the Dominican Republic, which will be allocated to fund loans from our green portfolio to support the country’s transition to a low-emission economy.

Internally, we aim to reduce our environmental impact through initiatives as installing solar panels, implementing efficient lighting and water control systems, and running recycling programmes for employees and customers. Our employees have planted more than 1.2 million trees in different areas of the country. We consume more than 8MW of clean energy, partially produced by solar panels installed at our branches.

How does Banco Popular plan to take the business forward over the next few years?
In the coming years, our business will be driven by innovation and a mandate to promote financial inclusion. This innovation will cover products and services to meet customers’ needs and expectations; advanced analytics and AI models to enhance decision-making; and internal processes and risk management practices to achieve efficiency and agility.

We are leaders in digital transformation, enabled by agile methodologies, and offer the most advanced financial services and products in the market. For example, our new app ecosystem features four specialised mobile applications that enable online customer onboarding and cover everything from personal financial management solutions to corporate banking, remittance reception, and the renovation of the Popular App – the most downloaded mobile financial application in the market. In 2023, the Banking Superintendency recognised Banco Popular as the best digital bank in the Dominican Republic for the third consecutive year.

Analytics and artificial intelligence are reshaping the financial sector and will have a major impact in the coming years. We envision a future where our interactions, insights, and solutions for customers are influenced by these technologies. We established the Digital Centre of Excellence and the Data and Analytics Centre of Excellence several years ago to enhance our capabilities. Today, we have a world-class team that keeps Banco Popular’s innovation on par with the most relevant global players in the industry. This Centre of Excellence has implemented different analytics use cases along the customer’s lifecycle such as client acquisition, next best action, client satisfaction, and churn prevention, among others.

Artificial intelligence will continue to change how we communicate with customers and operate internally. At Banco Popular, we use AI solutions for fraud prevention, code development, and cybersecurity. However, we believe that generative AI, combined with our analytics expertise, will revolutionise how we engage with and deliver value to our customers. Therefore, we are developing internal skills and in partnership with Microsoft creating generative AI models focused on client acquisition, client satisfaction and internal processes.

How is digital integration incorporated into business strategy?
Innovation is a core value of our organisation. Digital transformation is an important part of our business strategy. The bank has always been a pioneer in innovation in financial services, consistently introducing new solutions to the public. We believe that our ongoing digital transformation is a key advantage, helping us strengthen our market leadership and achieve high customer satisfaction.

As I mentioned earlier, digital transformation has revolutionised our channels, providing customers with the ability to conduct all their transactions securely and conveniently on their computers or mobile devices. Today, 88 percent of transactions and over 25 percent of product sales are completed through electronic channels. Our goal is that soon, customers will be able to perform 100 percent of their transactions, services, and product purchases through our digital channels, all while enjoying the exceptional customer experience and convenience they expect.

Digital transformation has impacted not only our customer-facing channels, but also internal processes. We recognise the importance of having fully automated, end-to-end processes. To achieve this, we have implemented strategies such as digitalisation, automation, and robotisation of processes, enabling fast, reliable, and efficient delivery to customers.

To support this digital transformation, the bank has made substantial investments to modernise our IT capabilities with a flexible architecture based on microservices, enhancing our agility and the reliability of innovations. Our data centre was certified as Tier III Design and Facility by the Uptime Institute, the only financial institution in the Dominican Republic with this achievement. Additionally, we have adopted cloud infrastructure and applications, enabling faster deployment, scalability, and efficiency.

What specific support does your bank provide to the tourism sector, given its significance to the economy of the Dominican Republic?
The tourism sector is vital for the Dominican economy, directly and indirectly influencing the country’s economic activity and employment. For over 30 years, Banco Popular has firmly supported this sector, earning the reputation as the ‘Tourism Bank.’ Our strategy focuses on maintaining long-term, sustainable relationships with all customers and stakeholders in the tourism industry, acting as an enabler of its growth. This commitment extends beyond having the leading tourism credit portfolio in the country to offering a comprehensive range of specialised products, including cash management, project financing, and merchant acquiring services tailored to the needs of tourism clients.

Banco Popular understands that each project has unique features, strategies, and requirements, and we adapt to support customers in their hotel investments and operations. In 2023, we financed projects investing over $500m in the country. For 2024, we have approved facilities for projects exceeding $700m, impacting over 4,600 rooms. Our tourism credit portfolio exceeds 40 percent of the banking loan portfolio to the sector. Over the years, this support has strongly incentivised foreign investment, resulting in the construction of over 26,500 rooms and the creation of more than 33,000 jobs in the country.

Banco Popular recognises the sector’s significance to the country and the importance of co-ordination with the government and tourism associations. As a result, we participate in all major tourism fairs to promote the Dominican Republic and its investment opportunities. Additionally, we sponsor, in collaboration with ASONAHORES, the main tourism study conducted in the country to assess tourism’s economic impact. More than 20 years ago, we established a specialised business area in the bank to oversee the tourism sector.

What measures has Banco Popular Dominicano taken to ensure financial inclusion across various demographic groups in the Dominican Republic?
Banco Popular was founded 60 years ago with a mandate to promote financial inclusion in order to assure economic and social growth in the country. One of our main objectives is to facilitate growth to all Dominicans in a sustainable way. Without a doubt, through financial education and inclusion, we support the country’s socio-economic development.

Banco Popular’s strategy involves socially responsible initiatives to expand access to financial services for the unbanked and underbanked. These initiatives include tailored products, accessible channels, and comprehensive financial education. Our deposit products, such as ‘Cuenta Digital Libre,’ along with bancassurance options and remittance services, are designed to meet the financial needs of this population simply and effectively.

Our channel offerings have expanded to reach more people with specific needs, incorporating innovative initiatives. Our APP ecosystem promotes financial inclusion and education with specialised applications: GNIAL for young people entering the financial system, YAVA for customers receiving remittances and accessing banking products, and Comerza for small merchants to transact with customers using QR codes. Additionally, we have ‘Subagente Popular,’ a network of merchants where customers can perform regular transactions conveniently and efficiently. These include hardware stores, pharmacies, grocery stores, and as well as other locations. The ‘Subagente Popular’ network currently includes about 2,000 affiliated stores.

In financial education, Banco Popular has helped over 200,000 SMEs and individuals. For individuals, we have a digital academy that offers free courses, workshops, and tools to help users manage their personal finances, through an online platform and in-person sessions. And for SMEs, we have Impulsa that gives guidance to small businesses to boost their competitiveness and enhance their financial management. Impulsa has a dedicated website and the most relevant SME conference that takes place annually.

Additionally, we offer a scholarship programme that covers the full cost of university education for low-income students. This scholarship has benefited more than 650 students who after graduating have gone on to work at leading companies in the country.

How does Banco Popular Dominicano plan to address the challenges posed by digital security and data protection in its operations?
One of the main challenges we will face in the coming years is cybersecurity and data protection. Financial institutions are encountering increasingly sophisticated attacks every day. Additionally, the emergence of artificial intelligence is providing new tools for cybercriminals to target our infrastructure and customers with fraudulent transactions.

At Banco Popular, we have recognised these risks and developed a robust cybersecurity strategy focused on cyber protection, monitoring, and fostering a cyber-aware culture among employees and customers.

In terms of cyber protection, we have implemented advanced security tools (EDR, NGFW, PAM, WAF, IDP, etc) to safeguard our data, infrastructure, and networks, both on premise and on the cloud. We protect customers with strong authentication protocols, including biometric authentication for high-risk transactions.

For monitoring, our Security Operations Center (SOC) utilises various tools (network detection and response, SIEM, automated response, etc) and AI models to detect potential breaches across channels, networks, emails, servers, and endpoints.

We understand that the awareness and readiness of employees and customers constitute the last line of defense against cybercriminals. Therefore, we have implemented a highly effective strategy to build a strong cyber culture among our employees, which includes certifications, frequent reminders, and ethical phishing campaigns. This awareness extends to our customers through campaigns via direct mail, radio, and social media, providing information on common attacks and tips on how to protect themselves.