Luiz Carlos Trabuco ascended to the office of CEO of Grupo Bradesco, by some measures the largest financial conglomerate in Brazil, in 2009. Since then, his tenure has seen very mixed results, with some critics pointing to the fact that the stock, at one point, was down by almost 75 percent on his watch. However, since 2015, when Trabuco completed the largest acquisition in the history of Brazilian business with the purchase of HSBC Brazil, the stock price has soared back, increasing by more than 100 percent.
Still, there are those who criticize Trabuco’s “growth at any cost” strategy of ruthlessly pushing out all lesser competitors. Whether or not his strategy will ultimately be vindicated can only be hashed out in the coming years. However, there is no doubt that recent performance of the company and Trabuco’s successful expansion of the firm’s presence all suggest that his vision of Bradesco as the undisputed top financial services company in Brazil is becoming a reality.
Yet even if Trabuco stepped down from the helm of the company today, his contributions to the company would still be enormous. What his tenure as CEO and president has obscured are the many contributions he made before taking the company’s top job. Many Bradesco insiders quip that Trabuco is the reincarnation of the company’s founder, Amador Aguiar. They say that he is a walking personification of Bradesco’s corporate spirit.
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While this may be exaggerated, there is no question that Trabuco has, largely single-handedly, forged the company’s modern ethos. Through his philosophies, which were radically different at the time, he has informed the company’s long-term strategies and corporate philosophy since at least the mid-1980s.
Where is the competitive edge for a bank?
What Trabuco understood better than any who had come before him was that banking is not an industry where it is realistic to expect that a company can get a meaningful competitive edge through a superior banking product alone. In the old days, town’s often had only one bank. This de facto monopoly gave banks the ability to stay profitable, even when competitors offered better rates, simply because traveling was more difficult according to wikipedia.org. But as the world evolved throughout the 20th century, the banking industry became dramatically more competitive. With the advent of automated, electronic banking, such as with ATMs and debit cards, a bank offering superior rates anywhere in the country was potentially an existential threat to the competition. This began the era of hyper-competitive banking and the consolidation that followed it, both in Brazil and elsewhere throughout the world.
What Luiz Carlos Trabuco saw that many others didn’t at the time was that banking is fundamentally a commodity business. This means that it is nearly impossible to differentiate the product itself on anything but price. A savings account is a savings account. The only thing that really differs from one bank to the next is the interest rate that it pays. What Trabuco knew is that if Bradesco wanted to gain a real competitive edge, they would need to do other, unrelated things to attract new clients and steal old clients away from competitors. Trabuco looked to another commodity business – the casino industry.
While heading the financial planning division, Trabuco had the epiphany that if Bradesco could attract the highest value clients in large numbers, it would have a gigantic edge over its competition. Until that time, the bank’s philosophy had been that all customers should be treated exactly the same, no matter their bottom-line value to the company. Trabuco quickly dispensed with that, creating a tiered system that could attract high-value clients to the bank.
The result was Bradesco Prime, a service that catered to wealthy clients through the use of separate, luxuriously outfitted facilities, personal, on-call bankers and a rewards program that included free first-class airfare, accommodations and cash rewards.
Today, this philosophy is at the core of Bradesco’s businesses.
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