Inter & Co, Inc. (INTR) Earnings Call Transcript & Summary

Hello, and welcome to Inter IR talks. I'm Rafaela Vitoria, Inter Investor Relations Officer, and this video cast is produced by the IR team in order to bring valuable insights into our business. Today, we welcome Andrea Nocciolini, our Marketing and Branding Director in order to deep dive into our branding strategy, how we have differentiated ourselves and how we transform marketing into sustainable growth. Thank you for joining us, and welcome, Andrea.

Hi, Rafaela, thank you very much for the invitation. I'm loving to be here. It's a pleasure to be with everybody.

So before we start, we'd like to talk to our guests a little bit about their background. So tell us about how you come to Inter -- it's been 4 years and a little bit of your experience before that.

It's been a long journey. It's been 25 years already of experience. I started in the sales department, and then I went to a communication agency and then managing iconic brands in Brazil. First, the sales life is very dynamic. So it's running crazy, running after targets, monthly targets, daily targets and celebrating every closed deal. Then at your communication agency, I worked at DM9 DDB, managing big brands also and having the strategic priorities for the clients in the creative campaigns, very interesting also. And then we say I went to the other side of the counter and then managing big brands in Brazil. So first at Whirlpool Corporation, which is a multinational, one of the largest in home appliances. Managing big brands, most important brands in Brazil, Brastemp and Consul, very interesting for many years, more than 8 years at Whirlpool. And then I went to BR Malls, which is one of the largest shopping center companies. Then it's a different retail life. So having our storekeepers sell, have traffic clients coming in, so very dynamic also retail life. And then I went to iFood, which is a large company in Brazil today, one of the most iconic brands, which is an app delivery and very different ways of working, testing, learning, very dynamic also, and I got an iFood in the pandemic. So which it was in moment, where iFood was getting very, very big. It was like an essential product at the moment. So it was very interesting also. And then I came to Inter, which almost 4 years and managing this iconic brand that has so much story to tell, and that's what we've been doing these 4 years and making it healthy, big and bringing lots of results.

What do you say is the importance, the relevance of branding for a company like Inter? How do you connect the branding with our strategy with -- especially our growth strategy?

Branding has been something very important to all big large companies and CMOs because a big brand is totally connected to results, to growth results. So a brand that is not remembered at first will not be considered and will not be [ buyed ]. So branding is very important. And big brands, powerful brands, they have a larger mental availability. So it's a brand that comes to your mind very fast. It has elevated results of preference, so has this emotional connecting bond with clients also. You have loyal customers. So it connects to Inter strategies because we are in a very competitive market. It's a very high competitive market. In Brazil, we know that there are about 25 to 30 financial brands our customers, people know about 8 to 10, and they have in their wallet like 6 brands. So it's a market where we are looking for engagement. We're looking for being the main financial institution. So having a powerful brand is game changing because clients, customers that connect emotionally to a brand is what will really make the difference. And Inter as a DNA disruptive platform that brings anticipating trends and bringing solutions to our clients and our customers, we're part of the Brazilian life today. So we want our clients to be using the most quantity of products possible and understanding our value proposition. So branding is about understanding first customers, our clients' needs and how can we be a strong brand that really is part of their lives.

So today, we have about 40 million -- over 40 million clients, but Inter actually started as a small regional bank in Belo Horizonte. How do you see how our brand evolved over time?

Yes. First, I'd like to -- I would give a step back and think about how we position ourselves as -- in the financial industry. So first of all, we were a bank for many years, Banco Inter. And then we took the inline bank out of our name because it didn't make sense anymore calling us only a bank because, as I just said on the previous answer that we are this robust platform with 180 products, 7 verticals. We were the first marketplace, the first complete investment platform, the first social media inside an app. So first, I'd like to say that we evolved as a product, as a solution in the market. And we almost don't see ourselves just as a bank. We are an evolution. So we are at 3.0 of the bank of the banking industry, positioning ourselves as a financial super app. So first, I think it's important to understand where we are bringing differentiation versus competitors in the digital bank industry. And our brand position evolved from an app that simplifies your life to smarter financial life, which is a more robust vision of how we get into our clients' life. So yes, it's a positioning that brings all the potential that we see of being a financial global brand that is relevant in our clients' day-to-day and how we make them have a moment, where they can speak about money, which is not easy, where we can be a brand that is beside their life to bring the best way to use their money in a smarter way and have a healthier life, smart financial life.

You also mentioned building trust as a relevant part of branding. And in the financial services sector, that is super relevant. How do you connect earning trust to our brand today?

Yes. Definitely, trust is a primary attribute for the category because it's all about money. So you're not going to put your money in an institution, you don't trust. If you need to make any transactions, money passes through everything of our lives. So trust is very important. I would say it's basic. But when we think about the financial industry, that looks rigid because it's all about money and it's all these numbers and it's very emotional because speaking about money is not easy. And having a healthy financial life can change your life too good or too bad. It's all about emotions because money also can make you have your dreams come true. It's all about possibilities. So it brings you lots of energy of how you really want a smart financial life. We studied a lot about that, how Brazilians see this as a challenge in their lives. And it's there that we find as a customer-centric company that we have to speak the same language. So the last campaign we brought here in Brazil was how do we speak about something, which is a taboo in Brazil? How do we speak about money in a very light way where Brazilians will understand, will identify themselves and will be a brand that understand their challenges. So this is where we find that Inter as this robust platform with so many solutions can guide our clients to have a smart financial life. We think this is very strong because it's about human understanding and understanding our clients and putting our customers and our clients in first place is our top 1 priority.

It's interesting because you put that in the prospect of the branding. But when you think about the super app, we have a lot of examples such as My Piggy Bank by Goal that reflects exactly that positioning in branding, how we build trust, how we connect with our clients' goals, thinking about the long term. So the branding is also connected to our product strategy and our growth strategy.

Yes, totally. And being a super app and having all the technology that we have, we're able to understand each client as one client. So it's what we say, when you open your app, it's one app for each customer, one app for each client because it's all about -- and we're going to guide you along the way aligned to this position to make your life healthier and smarter. And that's why I -- it's a lot of what Inter is here for.

So you've mentioned about how our brand has evolved in the recent 3 years. And we've also talked to investors how we have invested a bit more in branding over the last couple of years. Some of the accomplishments from these investments have been to be highlighted as the seventh strongest brand in Brazil. What else can you tell us about some of the results of the investments we have done in branding in the last 2 years?

Yes. Rafa, we were recognized as the seventh most strong brand in Brazil from brand finance, together with large brands in Brazil, so very nice. And we were also the most preferred brand in digital banks for the Gen Z for Forma Turismo, which is also very nice. When we think Gen Z, are these clients getting into the market and being a favorite brand for these customers is having them forever. That's what we want. So it's very nice. Yes, we've been in these 2 big rankings -- brand rankings. And it's totally connected with what has been happening with the brand. So yes, the brand has been growing. The last 3 years, we've been growing considerably in spontaneous awareness, which is first brand that comes to your mind. It's more than 8 percentage points. We've been -- all our brand funnel is much healthier. So in consideration and preference also, preference is not easy to move because it's the most emotional. So these results are totally connected to a healthier brand. And it's connected also to what we want in the next years. So we have this ambition to be among the largest and most preferred brands in Brazil. And what makes us confidence of this journey that we're taking our brand is that it's more about -- it's more than just the marketing investments or our campaigns, but we see our customers happier having a best offer in the app, the best experience, everything grows our branding experience, not only communication. So we're very confident that we are on the right track and that, as I said in the beginning, large brand, brands that understand their clients and speak the same language consistently along the year. It's something we've been doing also speaking the same language as the Brazilians, connecting emotionally and understanding how to speak about something that is not so easy, as I said already, is taking us to the right path. And so this year was -- we're in 2 of these rankings, but we hope to see ourselves much more in the next months, next years as the brand grows together, not only, again, communication, but the product, their experience.

And I think another KPI that relates to that is the number of active clients. We've grown a record number of active clients as of the third quarter. And although we have seen some saturation in Brazil, not for us, Inter was the financial institution with the largest number of new clients as of September. So I think all the branding investments has also translated into new active clients in our platform. So it makes a lot of sense.

Yes. Active clients is something that we look -- it's one of the KPIs that we look monthly together with the client vision, because we understand that an active client is an active client that understands our value proposition that again connects with what the brand is bringing of maybe products they didn't know how to use or they didn't even know there was in the platform. So active clients is totally connected to a client that has a best experience with the brand and has the best experience in their financial lives. So yes, active clients is something totally connected. As I said in the beginning, strong brands drive larger growth results. So it's one of the KPIs that we look every day. The other KPI that we monitor monthly is all we call our brand health, which is all the funnel. It is how much we have clients knowing us, considering us, coming to the institution and buying us and preferring. So this is our marketing funnel. So a healthy brand is a brand that has the best conversion all over this funnel. And one of the most important KPIs that we look and that we got much larger that we grew, that we increased in the last years is the spontaneous recall the spontaneous awareness. We grew 8 to 9 percentage points in spontaneous awareness, and that's very important because we have lots of research that show a brand that is remembered, is most remembered has 3x the chances to be convert -- to convert in sales. So this is one thing very important. And the other number that we -- research we have also says that only 5% of the customers are ready to buy your product when you bring some communication when you talk to them. 95% are not in the moment to buy your product. So if you have a high mental availability, if you are one of the first brands that come to their mind, the probability that you will convert is larger. So yes, we grew almost 9 percentage points in the last year. So we're very happy. We already were in 3 years -- the last 3 years, we were a known brand, but now we're an even stronger and larger brand in Brazil. So we have more and more clients out there recognizing Inter, understanding our value proposition and understanding that coming to Inter is having a smarter financial life.

So before we go, there's one topic that is dominating the discussions today, which is AI. Specifically in branding, how do you see AI helping our branding strategy or helping the efficiency in your team? How do you see the impact of AI in branding today?

Yes, Rafa, we're very excited about AI in branding. Today, we're using AI to scale creativity with consistency, which is very important for any brand. So -- and it goes from different fronts. So for example, when we're going to put something -- a campaign on air, we can pretest very fast to see if it's a good idea or not. That's one example. The other one, we have different formats, when we put a campaign on air. How do we put all formats to go in a consistent and easier and faster way with AI also. And so all the creation images, all the text optimization today, it's you're able to choose digital influencers. And for example, with influencer, digital influencers, Imagine choosing more than 1,000 digital influencers and having to understand what's going to be the script for everyone, for each of the creators, digital creators. So yes, we're using AI for that. And thinking about our reputation, all the search engines, which is basic today, everybody looks about the search engines to understand about brands and institutions. What do we want to -- image, what is about our reputation? What are executives going to say on interviews. So this is something that we're -- it's called GO. We're doing also. So we're very optimistic. And we see AI as an alley and not to substitute, because I understand that the professionals that will be in the market and will be doing an excellent job is how you manage AI to have better results, faster results. And Inter as a company is very strong in AI, always was. And in branding, we're using everything that is possible, so we have the best result for the brand also.

That's very exciting. That was a great conversation, Andrea, thank you very much. Thank you all for listening, and we'll see you next time.

Thank you very much.