SRS 103-1 SRS 103-2 SRS 103-3 SRS 417-1

Technology

We remain at the forefront of technology in order to make the transformation to a digital world, where customers have access to easier and more convenient methods of doing business between each other and with their bank, through the implementation of reliable solutions that are easy to use and provide security in financial operations.

At GFNorte we continue promoting the use of innovative technological tools to add value to our customers and users through solutions that anticipate their needs in a practical, simple and secure way.

The development of projects in the area of technology is oriented to execute tasks and activities in a more simple and effective manner. To do this, we have evolved the way in which we manage our operation and execution methods, our relationship with suppliers and our performance measurement model. This has allowed us to become more efficient and produce 2 million hours in technological solutions, 17% more than in 2016, which has positioned us as a strategic business partner and has strengthened us in the face of the competition.

Our programs and projects of technology are classified into the following categories: Operating the Bank, Change the Bank and Transform the Bank.

In 2017, productive capacities were assigned to our portfolio in the following manner:

• Operating the Bank, 48%. These projects are oriented to pay attention to regulatory requirements, security and technological and operative risks, as well as corrective (incidents) and evolutionary (adjustments) maintenance in existing systems. Among the most relevant programs we work with, are:
  • The Prevention of Money Laundering and Illegal Activities Program. We have developed a tool that generates alerts when it detects unusual behavior in bank and brokerage customers, pursuant to Article 115 of Law of Credit Institutions.
  • The Information Security Management System (SASI for its initials in Spanish), a management system based on ISO 27001:2013, certified for Banorte with a specific incremental scope, that periodically establishes the comprehensive Information Security Management System. SASI has incorporated critical bank services and processes since 2016, when it received the first certification, to seek to reduce risks to acceptable levels, comply with regulations, business agreements and internal regulations, in accordance with the General Information Security Policy.
  • The 2020 Information Security Program. A long-term program that we initiated in July 2016 which is based on three main actions:
    • A broadening of the base of information security controls already installed.
    • Ensuring that the technical infrastructure supporting applications and critical data bases provide security in accordance with industry standards.
    • Introducing new technologies for access protection, monitoring and testing of applications’ security.
  • Updating data center technology. We renewed the data center’s core infrastructure (switches), mitigating the obsolescence of equipment and enabling an architecture that permits the fast, agile, and efficient deployment of services in accordance with the new digital age.

Now we are more efficient
and produced
2 million hours
in technological solutions,
17% more
than in 2016.

Now we are more efficient and produced 2 million hours in technological solutions, 17% more than in 2016.

• Change Bank, 27%. These projects contribute to updating the way operations are managed through increasingly advanced technologies that automate operations.
  • The transformation of branches: implements a new self-service model that permits customers to perform simple, fast and secure transactions thereby avoiding lines and saving time.
  • Credit card system update: the competitive functionality of our credit card in the market was reinforced with a more modern processing platform for this product with greater attributes and functionality.
  • La Comer and other new correspondents: a credit card co-branding La Comer-Banorte was developed focused on providing other service points to clients and users of our financial services, which will be available in Banorte modules located in the supermarkets with a programmed growth plan scheduled over the next few years.
• Transform the Bank, 25%. These projects are the result of our continuous quest to reinvent the bank through digital technology solutions, which is the inspiration for innovation in businesses.
  • Odyssey, IBM Service Management. Through the transfer of our service management infrastructure to IBM, we improved controls and tools for service management related to infrastructure, reduced costs, added new services and improved current services. This technological renovation implies savings in energy through the use of new technologies and sites with optimum efficiency levels (green data centers).
  • Customer Business Intelligence Program (CBI). Represents a new knowledge-of-customer module that allows a better understanding of customer needs, suggesting the most suitable financial solutions based on their behavior and profile.
  • Market Operating Platform Transformation Program. The first phase involves implementing a new operating model for Financial markets, the Brokerage house and Investments. In the second phase, the program’s vision will be consolidated, seeking to increase benefits for the business by reducing operational risk. This program enhances increased revenue and profits, due to the increased number of products available such as funds, futures, derivatives, swaps and exchanges among others, as well as the unification in various sales and execution channels.
  • Digitalization of the Call Center. We seek to serve our customers through social networks and channels such as the Internet and mobile services, integrating social mobile and web engagement projects.
  • Watson Virtual Assistant. This artificial intelligence system will enable customers, by simply giving instructions, to perform transactions in electronic banking and receive digital assistance in topics of interest at any time. It represents a self-service solution that facilitates interaction with banking services.

Innovation

At Grupo Financiero Banorte, innovation is essential to continue our transformation, keep us abreast of customers’ needs and offer them the best service.

EGFNorte is seeking to anticipate customers’ needs and increase their satisfaction with our services, through innovation. For this reason, we have an area dedicated to innovation to develop ideas, prototypes and projects that are then tested with the end user.

We focus on three main themes:

• Disruptive changes: promoting the development of new technologies, processes or services on the market.
• Critical processes: addressing those processes that are transversal to our services and channels that support cross-sales of different business lines.
• Cognitive capabilities: developing new sales channels with new generation and security systems.

In this way we seek to meet the changing needs of our customers, to whom we offered multiple upgrade options in 2017, including:

• Campaigns to strengthen cross-sales of products and our relationship with customers.
  • Next Best Action (NBA) campaigns and Multi-channel Sales. Using the multiple access channels to perform different transactions in one visit such as credit card activation, increment in the line of credit, acquiring and renewal of credit, payroll and updating of data.
  • Informative campaigns with referencing, that involve the following companies, products and operations: Afore, Mortgages, Car loans, Personal loans and Collections.
  • Direct closure campaigns focused specifically on insurance products such as: Integral Protection, Car Driver’s, Hospital Assistance and Breast Cancer.
  • Campaigns in different channels of the institution. The web, branch offices, mobile, ATMs, Call Center and SMS messages, by which we reach more customers directly and encourage greater communication and contact between the customer and the bank.
• Implementation of the GESCO platform. A tool that integrates the functions required by sales directors and executives for the management of their activities. Among its contents are a commercial agenda, profitability information, campaign and offerings management and customer portfolio information.
• Release of payroll loans on non-working days. Our customers have the advantage of liquidity at any time.
• Formalization of an agreement to adhere to the R3-Corda which will provide access to develop collaborative research, evaluation and development projects and deployment of new technologies (Blockchain/DLT).

In addition, we pioneered a program in Latin America together with the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM) and IBM to contribute to the development of new technologies and education in Mexico. The program consists in using Blockchain as a core part of two projects, both developed by computer engineering students from ITESM, using IBM’s Bluemix platform.

Banorte’s Ingenuity Program

It is the best-known and most popular program among our employees in terms of innovation. Since 2010, this program has become one of the main promoters of innovation among GFNorte employees.

In 2017 we decided to put a twist on this initiative and challenge the internal innovation process to improve it by changing the platform, the rules and the manner in which it is managed.

One of the main features of Banorte’s Ingenuity Program is that it allows open innovation, i.e., employees can go beyond boundaries and work with colleagues from different areas or external professionals to innovate in a more distributed way, participative and decentralized, generating new networking among participants.

The program works with a mixed model that includes internal crowdsourcing using an institutional collaboration tool for the registering, enrichment, voting and selection of the best ideas, and internal crowdfunding through what we call the Ideas Market. During the year, 1,200 employees invested in previously selected proposals to select the winning ideas.

With the objective of determining whether the ideas presented could be feasibly implemented, more than 60 employees used Design Thinking and other innovative tools to test them using a non-functional prototype.

These actions strengthen innovation and consolidate it as a continuous process in the organization, to inspire, encourage and motivate our employees to think beyond the usual.

Innovation for the future

At Banorte we seek to position ourselves as the Group that provides the best customer service and experience, setting the example for being avant-garde and innovative. Therefore, in 2018 we will promote the following projects:

• Virtual Assistant based on Watson. At the end of 2017, we began testing IBM’s virtual assistant that uses cognitive technology, Watson, which will help to answer questions about Banorte products and services, as well as to execute the most common transactions that customers require in real time. The virtual assistant will be launched on a massive scale in the first half of 2018. Pilots based on Watson will also be developed for other services, both for internal customers (processes), as well as for external customers (sales, risks and channels).
• Paykey. Maintaining our position as pioneers in the use of applications, in the first quarter of 2018 Teclado Banorte (Banorte Keyboard) will be launched, linking mobile banking services to social networks, without leaving the application the user is in.
• Blockchain. Because we are convinced that this tool has the potential to reinvent innumerable processes and change the way we carry out operations, we are contributing to boost the technological education of Mexico with the use of disruptive technologies. We are developing initiatives for customer identity and processes that could be used in and out of our financial services.
• Mobile applications. We will provide continuity for the implementation of architectural security for external applications, in order to prepare us to connect internal systems to applications on the market in a swift and secure manner.