BTG Pactual Banking, a Brazilian digital bank aimed at high-net-worth individuals, has been praised for being user-friendly and feature-rich. It was launched in 2021 after only eight months of development and tests. Since then, it has won several awards for the quality of its services. This digital bank is part of BTG Pactual, Latin America’s largest investment bank.
At Febraban Tech, Latin America’s most important financial technology trade show, Edson Higashi, Associate Partner at BTG Pactual, discussed the technological strategies that enabled the bank to attain this fast time to market. He interacted with Rodrigo Melato, Vice-President of Sales at Pismo, in a panel at the AWS booth.
Choosing a technology partner
When the project started, BTG Pactual hired a consulting company to help it define the strategies for the digital bank it would build. “There are three options to start a bank: to build a banking system, to buy it or to “rent” it by using another institution’s banking licence and system to provide services,” says Higashi.
After analysing these options with the help of the consulting company, the BTG Pactual team decided they should look for a banking software provider. Higashi adds: “We examined tenths of software developers from many countries and built a short list. Then we started making questions to the selected suppliers and testing their systems.”
At the end of this thorough selection process, which lasted from four to six months, BTG Pactual chose Pismo as the back-end processor for BTG Pactual Banking. “Unlike other solutions, the Pismo platform can handle core banking and card issuing. So we adopted it for these two applications. Nevertheless, we kept the internally-developed systems the bank already had to manage investments.”
A complete bank in eight months
Large banks, like BTG Pactual, have a tradition of developing most of their computing systems internally. “Some IT people think they will save costs by building and running the applications themselves since they won’t have to pay an external provider. The main problem with this strategy is that it implies a long time to market,” says Higashi.
The BTG Pactual IT team developed and tested the complete digital bank in only eight months using the Pismo platform. It would have been impossible to attain such a fast time to market by developing all the system components internally.
“This is especially true for credit card operations. Integrating the banking systems with card networks like Visa and Mastercard, which have complex communication protocols, requires an experienced team and a lot of work. It would have taken a long time,” says Higashi.
The best of both worlds
Since BTG Pactual had already built many applications for its investment business, its IT team examined each component they would need for the digital bank to decide how to proceed. They combined the core banking and card issuing capabilities of the Pismo platform with components such as KYC and anti-fraud that the bank already had in place. Besides speeding up the development, this approach resulted in an efficient use of the available resources.
The Pismo platform comprises hundreds of microservices communicating with other systems through standardised application program interfaces (APIs). Banks and fintech companies use these APIs to connect the platform with their front-end applications and auxiliary components such as anti-fraud, KYC, credit analysis, and regulatory report services.
Higashi warns that building something with APIs is more complex than it looks at first sight: “You need to know how to call the APIs and in which order. Pismo gave us a script showing how to do it. But we had to adapt it to use our own components with the Pismo platform.”
A rich data stream is essential
Unlike most digital banks, BTG Pactual Banking aims at high-net-worth individuals. Dealing with these demanding customers requires a lot of flexibility.
“We have customers that don’t use their credit cards regularly. Then they make, for example, a 500 thousand-dollar purchase. Since they don’t have a spending history, the anti-fraud system tends to suspect fraud and block the transaction. But the customer wants the purchase to be authorised quickly, which is challenging,” says Higashi.
A vital ingredient to serving high-net-worth customers is having much information about them. The Pismo platform provides a rich data stream that BTG Pactual uses to feed its data analysis systems. “Without adequate data, we cannot understand these customers,” summarises Higashi.
