Spanish banks know digital platforms must for survival
Santander's Openbank has changed a great deal since it was founded as Spain's first telephone banking service in 1995. Now a fully digital operation, its mobile app allows users to temporarily disarm a lost credit card, as well as to check whether fellow Openbank customers are buying or selling a given stock at any moment. Currently, it has some 1.2m customers in Spain and more than €8bn ($9.3bn) in assets under management.
Earlier this year, the bank moved from Santander's suburban corporate headquarters to a separate building just off Madrid's Paseo de la Castellana, where its 140 employees work in open-plan offices with cabinets displaying the team ties they used to wear.
The bank's chief executive is Argentina-born Ezequiel Szafir, a former Amazon VP. Mr Szafir explains how the move was encouraged, at least in part, by a Google employee who declined a job offer because of Openbank's former location in the corporate suburbs.
"If you want to be a start- up, you have to act like a startup and be in a place where start-up people want to work," says Mr Szafir, 46. In recent years, Spain's two biggest banks - Santander and BBVA - have increased their financial and managerial investment in fintech, digital banking and big data. Like their peers, they are convinced that the days of branch-based lending are drawing to a close.
"Spanish banks such as Santander and BBVA are certainly part of the first- movers group that were quick to realise that to operate in financial services in this day and age, it's very much about being a technology company as well as a bank," says Jacob Jegher, head of strategy at advisory firm Javelin Strategy & Research.
The rationale goes beyond the need to fend off competition. Spanish banks average about €15m assets under management per employee, says Daragh Quinn, banks analyst at investment bank Keefe, Bruyette & Woods. At a digital operator like Openbank, that number is close to €60m.
The digital push is on two fronts: first, a mobile app that allows customers to access almost all of the bank's products without going into a branch. Second, a venture capital approach whereby banks invest in or partner with fintech start-ups to add products.
"The basic for survival in banking in the future is making 100 per cent - or close to it - of a bank's products available on mobile," says Derek White, global head of customer and client solutions at BBVA. Mr White says 92 per cent of BBVA's products and services will be available in Spain on the mobile application by the end of 2017.
The bank's digital strategy includes Open Talent, an annual talent-spotting competition for start-ups. In April, BBVA completed the acquisition of Openpay, a Mexican online payment start-up that was a finalist in the 2015 edition of Open Talent.
The bank is also an investor in San Franciscobased venture capital firm Propel Venture Partners, and has already poured $250m (£190m) into it. Propel has made 17 investments in fintechs from Coinbase, a bitcoin wallet, to online home insurer Hippo Insurance.