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Almost 40% of Spaniards use ‘online’ financial services every day, a sector that banks dispute with large technology companies and specialized ‘start-ups’. In the medium term, Santander will invest 20,000 million euros in strengthening this area
Eight out of ten Spaniards use online banking solutions once a month; 60% do it every week and almost 40% use these services on a daily basis. Comfort in operations, versatility of use and security are the three criteria most valued by the financial sector client, which already shows a markedly digital profile.
Users seek digital services, but without diminishing those offered by traditional banking. 60% of customers in Spain would consider switching to an Internet bank, according to the latest Mastercard study on this type of financial institution. 73% of Spaniards use mobile applications from traditional banks and almost a third use them from others that are completely digital. In addition, two-thirds believe that the demand for digital banking solutions will increase even more in the future.
The transformation of financial services in Spain is especially hectic, with the presence of multiple non-banking players, grouped under the name of fintech (financial technology companies) and bigtech (technology giants). Banks, however, are ready to win the battle against this stiff competition in order to improve and personalize the experience of their customers and thereby increase their confidence.
New opponents
Beatriz Rodríguez, specialist in banking technology at the Santander Global Tech portal, dependent on the bank of the same name, recalls that “fintech comes from putting two words together, finance and technology”. This concept “tries to group companies, usually newly created or start-ups, that are using the most current technology to offer financial products or services.” According to her, this type of companies took advantage of the financial crisis, after the bankruptcy of Lehman Brothers, to position themselves in the financial market and try to reach clients who might distrust traditional banks.
However, trust is precisely a competitive advantage that banks have over fintech companies to position themselves in the market. Still, not everything translates to a career. Although these two types of companies compete with each other, they also establish agreements and work together. Santander InnoVentures, for example, is a fintech venture capital fund of Banco Santander that invests in start-ups with this profile, including those specialized in artificial intelligence.
On the other hand, financial entities are also measured with the so-called bigtech, “a term that unites big and technology to group the largest technology companies in the world”, in Rodríguez’s words. In their favor they have huge data banks, which can be monetized. “The most relevant have been cataloged with the nickname of GAFAs (Google, Amazon, Facebook and Apple), although within this group there are other large companies such as Paypal, Samsung or Microsoft,” says Rodríguez. “They differ from fintech companies mainly because they have enormous capital, the most advanced technology and a global presence. And they are similar in that both began being 100% technological ”.
The Bank of Spain itself has taken note of the frenzy in the digital financial services market. “The increase in competition derived from the entry of non-banking actors is one of the most distinctive characteristics of the new environment,” recently admitted Margarita Delgado, deputy governor of this entity. “With digitization, entry barriers to the financial services market have decreased notably, giving entry to new companies, not only national, but also foreign,” she points out. According to the figures compiled by Finnovating, last July there were 358 fintech start-ups offering their services in Spain, which makes our country one of those with the most companies of this type per number of inhabitants.
The appearance of these operators has led to a panorama that Margarita Delgado summarizes: “We have gone from a situation in which many users interacted, practically exclusively, with a single financial entity, to a context in which, for example, a user You can have an account with an entity, order your payments through the interface provided by another provider and use the payment instrument provided by a third party ”.
Cloud infrastructure
Santander is a bank that has already reacted in this regard. In its medium-term strategic plan, it has announced the investment of 20,000 million euros in digital and technological transformation over the next four years “in order to improve and personalize the customer’s experience, and thereby increase their trust and bond, as well as reduce costs ”.
“Technology is changing banking as we know it,” says Ana Botín, president of Banco Santander, who anticipates that the entity is preparing to “take advantage of the enormous strengths of the Group”, such as technology, talent and size. “This will help us to take full advantage of the opportunities that digital innovation brings us and to be digital leaders in the financial sector in the next decade,” she says. In this line, the entity is immersed in a change in its technological infrastructure so that it is hosted in the cloud and can operate with global platforms managed with agile methodologies, which will accelerate the technological and business transformation.
All this, in tune with what the deputy governor of the Bank of Spain pointed out in a recent specialized forum. Digital transformation, according to Margarita Delgado, “requires changes at many levels: remodeling the IT architecture, establishing efficient governance in data management, having access to or being able to develop the necessary analytical tools or incorporating experts in the field, among Many others”. These are requirements that take place in a context of narrowing margins and high competition, in which cost control and the correct discrimination of transactions by risk and price are essential to remain competitive.
Openbank, a strategic piece
The investment committed by Banco Santander in digitization is similar to that of the large US financial institutions. Its objective is to achieve 50 million online users in the medium term, starting from the current 32 million. And, along these lines, promoting OpenBank would be one of the axes of its strategy. Owned by the Santander Group, it is the largest 100% digital bank in Europe. All its services are available from a single web and cloud-based application. Curiously, Openbank was born in 1995 as the first telephone bank in Spain, already achieving a base of 100,000 clients. Before the end of this year, it will have extended its services to users in the Netherlands and Portugal. The objective, according to Santander, is to reach “ten new markets in the medium term, until reaching two million customers.” Only in Spain, a mature market, already has more than one million.
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