29 BANKING AUTOMATION: A CASE STUDY ON THE BRADESCO FOUNDATION

Banking Automation: A Case Study on The Bradesco Foundation 1

29

BANKING AUTOMATION: A CASE STUDY ON
THE BRADESCO FOUNDATION

Arquimedes da Silva Szezerbicki CEFET-PR – Ponta Grossa, PR, Brazil
Thompson Copperfield von Agner CEFET-PR
Luiz Alberto Pilatti Prof. Dr. CEFET-PR
Carlos Cezar Stadler Prof. Dr. CEFET-PR
João Luis Kovaleski Prof. Dr. CEFET- PR

ABSTRACT
With the development of the present economical models comes technology as a
promoter of economical growth. As productivity increases, it allows the introduction
of new products and services; this improves the absorption of intensive technology
products. It is noticed that one of the first companies to use technology as an
instrument of knowledge and innovation, in Brazil, were banks. One of the pioneers in
Brazil is the Banco Bradesco. This bank, through the automation of products and
services looks for continuous improvement. This article aims at an analysis of the
innovations on the Brazilian financial system, through bank automation, more
specifically in the Fundação Bradesco, showing their advantages and disadvantages.

Key words: innovation; automation; Fundação Bradesco.

INTRODUCTION
In the last years, it is accepted thoroughly the fact that technology is the strategic
resource for which reduced the differences between more developed nations and less
developed nations. Besides, it is noticed that innovation is now in the academic and
government circles as one of the most important factors of industrial competitiveness
(PORTER, 1986) and also as decisive for the competitiveness among nations
(PORTER, 1990). Porter increases that the association between invention and the
business spirit creates a national competitive advantage that allows invention to be
explored internationally, inhibiting it’s appropriation by others.

        In that sense, it is seen that the current economic development models affirm
that technology promotes economic growth, as it increases productivity. It allows the

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introduction of new products and it improves the absorption of products of intensive
technology. FARRANDS (1997) comments that the process of diffusion of
knowledge that involves know-how, capacities, patents and licenses, more than
machines are seen as essential for the capacity of companies to compete globally.

       As seen in;

               "The emerging 'vision based in knowledge' is still not a theory in the
       company (...) it treats knowledge strategically as a resource of the most
       important, it is a development starting from the vision of the company that is
       based on resources. At the same time, knowledge is central for several
       traditions of different research, notably organizational learning, administration
       of technology and business cognition" (GRANT, 1996: 110).

It can be noticed, that one of the first companies to use technology as a knowledge
instrument and innovation, in Brazil, they were banks, having as one of the pioneers,
the Bradesco Bank that, through automation of products and services, looks for
continuous improvement and quality in service.

This article aims at an analysis about innovation as competence and on the Brazilian
financial system, through bank automation, more specifically in the Fundação
Bradesco (Bradesco Foundation), showing their advantages and disadvantages.

INNOVATION AS COMPETENCE
According to ZARIFIAN (1999), competence is the practical intelligence of situations
that are supported on acquired knowledge and transforms it self with more strength,
the more increases the complexity of situations.

It is seen that, the notion on competence, as well as the administration of innovation,
appear associated to words such as; to know, to act, to mobilize resources, to integrate
multiply and complex knowledge, to know, to learn, to know to engage, to assume
responsibilities, to have strategic vision.

DURAND (1998) affirms that; "In medieval times, alchemists tried to transform
metals in gold; today, the managers and companies try to transform resources and
assets in profit. A new form of alchemy is necessary for organizations. We will call it
'competence'." It still should be emphasized that, innovation is the most effective form
alchemy, since it characterizes companies that try to offer to their customers
innovative, revolutionaries and facilitating products.

Knowing the Brazilian financial system, the restructuring process and innovation, it
can be noticed that this is one of the main business competences.

Banking Automation: A Case Study on The Bradesco Foundation 3

THE BRAZILIAN FINANCIAL SYSTEM: BANK AUTOMATION
Through the analysis of the restructuring process of the Brazilian financial system, it
can be noticed that changes did not only happen in the production sphere and of
capital circulation, but also in all spheres of life. HARVEY (1992 apud CRUZ, 2003)
teaches that the flexible accumulation of capital created a vast movement in jobs at
the call "services sector", what allowed acceleration in the innovation of products.

According to ELY (1996 apud CRUZ, 2003) the banks in Brazil went by important
moments of technological transformations:

       -   Decade of 60: creation of computer centers;

       -   Decade of 70: implantation of on-line systems in large banks;

       -   Decade of 80:      diffusion of banks, intensification of the use of fixed
           capital;

       -   Decade of 90: implantation of quality programs.

For JINKINGS (1995:47 apud CRUZ, 2003) it is important to point out that the
process of introduction of bank automation was always related to the Brazilian
political and economical context and to the structural transformations that the national
financial system passed after the Bank Reform.

With the Bank Reform Law 4595, of 1964, the Reform of the Stock market Law
4728, of 1965 and the Plan of Action by the Government, there was the creation of
legal instruments for the financial structure to be capable support the new
accumulation pattern projected that was developed.

With this, banks started to attended for multiple functions, such as administration of
multiple accounts and stock funds, leasing, home loans, brokers, insurance companies,
dealers, etc... Besides, banks became nationalized extent, losing its regional character
(SEGNINI, 1998 apud CRUZ, 2003).

According to Cruz, starting from the Bank Reform in 1964, the volume of services
rendered by the financial system grew, so much as in function of the volume of
financial transactions, as in the increase of services. Banks started to receive tributes,
social welfare contributions, collection of debits, the sale of insurances, administration
of different types of investments and lines of credit, etc. By this way, it stands out that
the necessary conditions for the implantation of organizational automation were put in
place, and accompanied by the changes in the organization of work and qualification
of the employees in the banks (CRUZ, 2003).

According to JINKINGS (1995 apud CRUZ, 2003) the three basic driving forces of
bank automation were:

       -   market increase through the offer of new products and of better quality
           ("efficiency and speed");

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       -   activation of the flow of information for the administration, increasing the
           profitability of the banks;

       -   increase of the labor productivity causing the reduction of costs.

It was through the economical plan called Plano Real, with monetary stabilization,
that the State tried to adapt the economy and the country banking system to this
restructuring of the financial system.

               "The voluntary adjustments occurred overall in medium size banks,
       involving acquisitions, coalitions and incorporations starting from initiatives
       of the banks seeking better conditions of competitiveness in the market, making
       it possible for intense processes of bank concentrations in the country. Scale
       profitability increases, enlargement of agency networks and of clients, use of
       technologies and shared spaces, are strong relevant factors in this process."
       (CRUZ, 2003)

It is noticed, therefore, that inflation stopped being a safe source of profitability for
the banks. For that, it is seen that the evolution as well as the intensive use of
information technologies, computer science and other sources allowed automating
services, reduction of costs and increase the safety and the quality of the services. For
the reduction of costs the use of third party services are used for matters such as
transport, safety, cleaning, engineering and maintenance of buildings and equipments,
restaurant, software development etc.

In this context, that in Brazil, the banks exercised a fundamental paper in the
development of the computer science industry, so much in the point of view for its
own production, with prominence for Bradesco, Itaú and Bamerindus, as in relation to
the demand, once the financial institutions continue being the largest users in that
market.

This process went by three main stages: the implantation of automated systems for
administrative control, management support and public services (BLASS, 1993:25).

In 1996, the investments in bank automation stayed close to the amounts of 1995,
what is not just explained by the reduction of costs in the area of computer science.
There are other two relevant factors: the creation of partnerships between companies
and banks to make payment operations with more agility and safety, and the
consolidation of the personalized service (home-banking and office-banking), with the
shifting of equipment costs to the client. A third reason is the existence of the use of
third party companies in the computer are, following an international tendency
(SZEZERBICKI, 2003).

However, the investments in bank automation in the country are extremely significant.
Even if the comparisons among different countries, not considering the historical
characteristics, a relationship between Brazil and the United States can be made
(SZEZERBICKI, 2003).

Banking Automation: A Case Study on The Bradesco Foundation 5

In agreement with a study of Ernst & Young from Febraban (SZEZERBICKI, 2003),
there is an application in the national financial system in the order of US$ 500 to 600
billion annually. In the United States the assets add US$ 7,5 trillion. In 1995, the
investments in bank automation in Brazil totaled US$ 4,3 billion and in the United
States, US$ 18 billion. In other words, while the size of the North American financial
system is fifteen times superior to the Brazilian, its respective volume of investments
in bank automation is only four times larger. The study emphasizes that that
disproportion stays the same considering that in 1996 the national prices of the
equipments and services of computer science equaled, in average, to the double of the
North Americans.

However, with the implantation of the bank automation, many of the functions that
before were done manually, by several employees, passed to be executed through
computers, by a smaller number of employees or even no employ at all. This is
because computers are at the disposition to clients, so that they can make their
operations and transactions in the electronic casher.

In the process of transformations, it is verified on a side of the bank "class" still linked
to that section, which they struggle not to lose their rights conquered by CLT
(Consolidation of work laws), undergoing working hours besides the normal schedule.
The fear of the unemployment, the uncertainty as to the future and on the other side
the already unemployed bank class, that struggles to enter in the job market, are both
subject to the dictates of the market and the technological and scientific progress, that
is inserted in the capitalist production system. This brings consequences and social
impacts (psychological, moral and economical), benefiting a portion every time
smaller of society (SZEZERBICKI, 2003).

In the last decades, managers learned a new group of rules. Companies need to be
flexible to answer quickly to competitive changes of the market. They need to
establish continuous benchmarks, to win efficiency and to establish a "body" of
competences to stay ahead of their rivals (PORTER, 1996).

It is necessary to anticipate changes for a long-term vision, or to have the capacity to
answer to the changes in the business atmosphere (QINTELLA and DIAS,1997 apud
ALMEIDA). For Collins and Porras (1996 apud ALMEIDA), the companies that
reach success possess a "body of values and purposes" that stays fixed, while their
business strategies adapt to a world in change. Hickman and Silva (1984 apud
AMEIDA) associate strategy to vision. A vision responsible in creating a road that
generates changes, it can be for the anticipation of facts (creating the future) or even
to answer to external pressures.

BANK AUTOMATION IN THE BRADESCO FOUNDATION
Clearly using a prospective strategy (MILES AND SNOW, 1978 apud ALMEIDA),
Bradesco is continually enlarging its line of products and services. Bradesco
emphasizes the importance of offering new products and services in a wider market
area.

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For PORTER (1996), such strategy means a deliberate choice of a differentiated
group of activities, in relation to competitors, for the delivery of a product or service
of unique value, which, in other words can also be defined as the strategic positioning.

It is also important, according to the author to see that, strategy is to make choices,
and the essence is to choose what not to do. Under that focus, without trade-off there
would not be need for choices and, by this, it would not be necessary a strategy. Porter
emphasizes that the search of operational efficiency, although necessary, is not a
strategy. In that way, the search for productivity, quality and speed has been
generating a considerable number of tools and managerial techniques: total quality,
benchmarking, reengineering etc. Little by little, almost that in an imperceptible way,

managerial tools took the place of strategy. As managers make an effort in getting
better in several fronts, they stood back in viable competitive positions.

According to Almeida, after a process of bank concentration and conglomeration,
BRADESCO reached the thousandth agency in 1978, arriving at the pick of 2090
agencies in 1986. The largest private financial group of Latin America incorporated
the insurances business in the decade of 1980, consolidated itself in that period with
credit cards, leasing, privet retirement plans and tourism.

With the financial plan “Plano Cruzado” a new cycle of financial innovations began.
Preserving the popular culture of retail markets, for small customers trying to work
with lower costs. In the wholesale market, the bank stood out in operations of
exchange financing. The retail market presents entrance barriers, because it demands
contributions in computer science (an area that BRADESCO tried to invest widely)
and many agencies, implicating in high expenses. The policy for opening new
agencies abroad was not very aggressive.

   "Up to 1988 BRADESCO moved forward as an enterprise controller, especially in
   computer science, altering that posture to an investor strategy and not a majority
   partner. Their insurance companies and privet retirement plan started to acquire
   stocks from solid non-financial companies, in the search of protecting themselves
   from eventual debts in the rescue of public titles, becoming, in this way, cautious
   in the diversification of risks. The purchase of stocks does not follow a strategy of
   integration bank-industry, but the use of good opportunities for businesses,
   maintaining an investor posture (safety in the short period and profitability in the
   long period), instead of a speculator posture. It is believed in the tendency that
   banks act in the credit market to finance in short period, and in the stock market as
   a capitalization source in the long period" (ALMEIDA).

BRADESCO seeks business opportunities to allow them to occupy at least a place in
the board of directors. In that way, they have benefits in the current legislation, makes
it possible for banks to have companies as customers for loans. If there is an
investment, is has to be a minority participation, that is less than 10% of the capital.

Banking Automation: A Case Study on The Bradesco Foundation 7

The change of performance strategy of banks has also altered deeply the work of the
bank employees category. In the decade of 90, the job level in banks was reduced
drastically. In the Ponta Grossa, State of Parana branch for instance, in the year of
1988, an estimated number of employees was of 180 employees. This is a reduction of
83,33% in work force, in reference to the registered in an equal period of 2003, where
only 30 employees stayed in the branch.

The brutal reduction of bank jobs have several causes and it is difficult to affirm that
it is just due to the use of computer information, once the adoption of the computer
science also brings new business opportunities. However, no doubts remain that the
impact of the restructuring in this sector has a negative influence on the employees.

FINAL CONSIDERATIONS
It is noticed; through this study that, with deposits and payments done through
Automatic Cashiers; drafts with bankcards, more and more this increases the index of
unemployment in the financial area.

While the import of the equipment in financial institutions is un-employing Brazilian
workers, countries like the United States of America, which manufacture these
equipments, continue to reduce the unemployment index and increasing the income of
its population that already is worrying with the excess consumption excess.

Besides the bank employees' unemployment, bank automation is creating a true
computer dictatorship. Where the computer decides what each citizen should pay,
even if the priorities are others.

Financial institutions demand that their employees are more and more versatile and
flexible. The ones with low education are immediately dismissed. The only ones that
stay are the ones supposedly with the necessary condition for the absorption of
innovations in the process of bank work. Significant increases of bank employees'
with superior education and with specializations in the financial area is growing.

In the wild search for competitiveness, it is included the growing use of technological
and financial innovations as differential in the dispute for customers. In conclusion,
the generalization in expenses with computer science and telecommunications
accentuates the reduction in the number employees in banks.

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