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Chilean banks compete with department stores

Chilean commercial banks in Chile compete in the retail market with each other and with financial companies and department stores.

Meanwhile, in the retail market, Chilean banks face competition from Banco del Estado, which has a large individual customer base.

Among private sector banks, the strongest competitors are Banco Santander-Chile, Scotiabank Chile, Banco de Chile and BCI.

These banks have developed diversified business strategies focused on both small and medium-sized companies and the low- to medium-income probationary segments of Chile.

Furthermore, for example, Banco de Chile estimates that its strongest competitors in the segment of high-income individuals are Banco Santander-Chile, Banco Bice and Banco Security, since these banks are based on specialized business models that provide management of heritage and traditional banking services.

Chilean banks

Historically, commercial banks in Chile have competed in the retail market with each other, and with finance companies and department stores, and the latter two have traditionally focused on consumer loans to low- and middle-income segments.

However, finance companies gradually disappeared between the 1990s and 2000s, as most of them merged into the largest commercial banks that dominate the Chilean banking industry today.

Furthermore, in the late 1990s, the Chilean financial industry witnessed the rise of non-traditional banking competitors, such as department stores.

During the 2000s, these players became increasingly important in the consumer loan sector, as they were allowed to issue financial products such as credit cards.

Currently, there are two consumer-oriented banks affiliated with the largest department stores in Chile: Banco Falabella and Banco Ripley.

While these banks had a combined market share (excluding foreign subsidiary operations) of just 2.1% as of September 30, 2021, according to the CMF, the presence of these banks is likely to cause consumer banking become more competitive in the coming years, especially within the lower-income segment.

As of September 30, 2021, consumer loans granted by Banco Falabella and Banco Ripley represented 12.6 and 2.8%, respectively, of total consumer loans granted by the industry (excluding operations of subsidiaries abroad).

 

Redacción Opportimes

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