31
de Març
de
2016
Act.
31
de Març
de
2016
Within a few years people will no longer visit their bank branch to take out cash or make a deposit. "If you analyse how you interact today with the bank, it is nothing like it was 20 years ago; even if it seems to you as if everything is just like it was, without doubt you carry out operations on the web or via your mobile," says Francesc Fajula, director of Transformació Digital i Innovació at BancSabadell, in an interview with VIA Empresa.
Given this scenario of change, fintech has provided the financial sector with quite a few challenges. Start-ups like Kantox, Holvi, Novicap or plataforms of alternative financing are now an alternative to traditional banking. "It is an opportunity for banks to show that we can work in a different way, by integrating a greater element of flexibility and transparency," argues Fajula, who points out that "most fintech start-ups are not banks, and are not playing in the same league."
This is precisely one of the new director's aims: to accelerate the degree of disruption at Banc Sabadell. "This was the first bank to have an app for the iPad and the Apple Watch; the culture of providing a good service has to be translated to the digital world."
The financial sector still has a large traditional component. How do things stand at the moment?
It is not true that it is a sector that lacks innovation, on the contrary, it is a sector that has been transformed a lot in recent years. To say that banks have not been transformed is a fallacy. What is happening today in the financial world is similar to what happened in the world of telecommunications 15 or 20 years ago. What telecommunications operators now sell has little to do with what they offered 15 or 20 years ago. For example, the great competitive advantage that Telefònica now has is its audiovisual content.
All sectors are entering into a price war… Where do you see banking going?
If Henry Ford had asked his clients what they wanted, they would have said faster horses. So now we are at this point. We cannot ask clients what they expect from a bank because they are stuck in the past, with what banks have offered them for the past 50 years. We have to see things from a much more anthropological point of view, of human tendencies and social behaviour and to act accordingly. We are at a point in which it is very difficult to stand out from the competition, with a significant reduction in margins, and in which the offers made to clients are increasingly based on price.
What is Banc Sabadell's competitive advantage?
The culture of providing a good service to clients, which is part of the organisation's DNA. That means, in terms of benefiting the client and the quality of service, any innovation, however disruptive it may be, is well accepted. It is a bank run very much in the mid-to-long term rather than the short term and you see that every day, in the attention given in branches, in the mobile apps, in the attention over social networks… In this sector, reputation and trust are key. Which is why what we have to do is translate the experience from the physical world to the digital world; not creating specific solutions for certain segments.
Today there are more than 12,000 fintech start-ups offering new innovative banking services.
The fintech start-up sector at heart remains an investment bubble in companies that introduce an element of challenge into the financial sector. Now, fintech firms are based on a model that has little potential for scalability. Most fintech start-ups are designed for collaboration or to be sold on to the financial sector. Thus, they present a challenge for the sector, a very positive aspect, but in terms of competition they are oriented much more towards collaborating with the sector rather than competing with existing players. In other words, if you scale a fintech firm and make it grow, in the end you will need a bank: a regulated environment, investment in technological assets… and that is banking. Competing in the pure business of banking is very complicated because the regulation is brutally demanding. It is a significant barrier to entry.
So, they aren't competition?
No, they are complements. This movement is an opportunity for banks to show that we can work in a different way. They are introducing an element of flexibility and transparency that we have to take on board. We have to stop thinking so much about the product and the service and begin to think more about the client-consumer. In other words, about the experience they have of clients with us. The great difference will come from how we behave. In the end, innovation is tied to ethics and transparency.
What is Banc Sabadell's relationship with the start-ups?
Two years ago we set up the Bstartup programme, in which every year we invest in 10 new companies, not only fintech firms. In all, we have already approved 69.2 million euros of loans for start-ups. But what is even more relevant is that we have created offices specialising in start-ups, with a circuit of risk natural to them. In other words, when an entrepreneur enters a Bstartup office, he or she is no longer asked for the accounts of their results in the past five years, rather there is another criteria for analysing this type of company.
Are you acquaintances, colleagues or friends of the start-ups already operating in the fintech sector?
The reality is that there are very few examples of real collaboration or real valuable integration with these start-ups inside a financial institution. Either you buy out 100% of the start-up and thus you are purchasing technology and equipment, or it is very difficult to integrate this know-how into the bank's operation. What we have done is transform ourselves; we have a programme of operative, commercial and digital transformation which is the heart of the bank, to which we have devoted a lot of resources to assure ourselves that this bank works increasingly like these start-ups. Two innovations we have developed from two start-ups are Sabadell Xat, instant payment between private individuals, merely through a conversation on a mobile phone; and digital signatures. We have also incorporated people from the world of design thinking that are dedicated to conceptualising initiatives that we might consider to be strategic in the future, but which right now are very disruptive. In short, it is not about incorporating their model, but rather incorporating this element of flexibility and transparency that start-ups have. However, these start-ups, as they grow, have to resort to a bank. We have a mass of clients, an infrastructure and a regulatory base. They have the model and the new ways of working. In the future, it will be easier for a bank or financial institution such as Sabadell to act like a fintech firm, rather than a fintech company reaching the dimensions of a bank.
Could we say that banks have already become technological companies?
Yes, technologically banking has made some extraordinary investments. The software is part of our DNA. What does have to be done is to make a cultural change in the way of working. In 20 years, we could find ourselves in a scenario in which the work is done by machines and we have to be ready to differentiate ourselves and know how to do the things that robots do not know how to do, with creativity and in a critical spirit. The labour market is a challenge; we are working on ways to help reduce the digital gap.
What role will the classic bank branch have?
The role of branches is key. Companies such as Amazon are looking into setting up physical points of contact with the client. We come from the face-to-face world and we are making an effort to introduce the digital world. Amazon's problem is the other way round. The branches are a great asset of the financial sector but no doubt the role they will play will be very different from the one they have now, especially in the interaction with clients. People will not go to their bank branch to take out cash.
Given this scenario of change, fintech has provided the financial sector with quite a few challenges. Start-ups like Kantox, Holvi, Novicap or plataforms of alternative financing are now an alternative to traditional banking. "It is an opportunity for banks to show that we can work in a different way, by integrating a greater element of flexibility and transparency," argues Fajula, who points out that "most fintech start-ups are not banks, and are not playing in the same league."
This is precisely one of the new director's aims: to accelerate the degree of disruption at Banc Sabadell. "This was the first bank to have an app for the iPad and the Apple Watch; the culture of providing a good service has to be translated to the digital world."
The financial sector still has a large traditional component. How do things stand at the moment?
It is not true that it is a sector that lacks innovation, on the contrary, it is a sector that has been transformed a lot in recent years. To say that banks have not been transformed is a fallacy. What is happening today in the financial world is similar to what happened in the world of telecommunications 15 or 20 years ago. What telecommunications operators now sell has little to do with what they offered 15 or 20 years ago. For example, the great competitive advantage that Telefònica now has is its audiovisual content.
All sectors are entering into a price war… Where do you see banking going?
If Henry Ford had asked his clients what they wanted, they would have said faster horses. So now we are at this point. We cannot ask clients what they expect from a bank because they are stuck in the past, with what banks have offered them for the past 50 years. We have to see things from a much more anthropological point of view, of human tendencies and social behaviour and to act accordingly. We are at a point in which it is very difficult to stand out from the competition, with a significant reduction in margins, and in which the offers made to clients are increasingly based on price.
What is Banc Sabadell's competitive advantage?
The culture of providing a good service to clients, which is part of the organisation's DNA. That means, in terms of benefiting the client and the quality of service, any innovation, however disruptive it may be, is well accepted. It is a bank run very much in the mid-to-long term rather than the short term and you see that every day, in the attention given in branches, in the mobile apps, in the attention over social networks… In this sector, reputation and trust are key. Which is why what we have to do is translate the experience from the physical world to the digital world; not creating specific solutions for certain segments.
Today there are more than 12,000 fintech start-ups offering new innovative banking services.
The fintech start-up sector at heart remains an investment bubble in companies that introduce an element of challenge into the financial sector. Now, fintech firms are based on a model that has little potential for scalability. Most fintech start-ups are designed for collaboration or to be sold on to the financial sector. Thus, they present a challenge for the sector, a very positive aspect, but in terms of competition they are oriented much more towards collaborating with the sector rather than competing with existing players. In other words, if you scale a fintech firm and make it grow, in the end you will need a bank: a regulated environment, investment in technological assets… and that is banking. Competing in the pure business of banking is very complicated because the regulation is brutally demanding. It is a significant barrier to entry.
So, they aren't competition?
No, they are complements. This movement is an opportunity for banks to show that we can work in a different way. They are introducing an element of flexibility and transparency that we have to take on board. We have to stop thinking so much about the product and the service and begin to think more about the client-consumer. In other words, about the experience they have of clients with us. The great difference will come from how we behave. In the end, innovation is tied to ethics and transparency.
What is Banc Sabadell's relationship with the start-ups?
Two years ago we set up the Bstartup programme, in which every year we invest in 10 new companies, not only fintech firms. In all, we have already approved 69.2 million euros of loans for start-ups. But what is even more relevant is that we have created offices specialising in start-ups, with a circuit of risk natural to them. In other words, when an entrepreneur enters a Bstartup office, he or she is no longer asked for the accounts of their results in the past five years, rather there is another criteria for analysing this type of company.
Are you acquaintances, colleagues or friends of the start-ups already operating in the fintech sector?
The reality is that there are very few examples of real collaboration or real valuable integration with these start-ups inside a financial institution. Either you buy out 100% of the start-up and thus you are purchasing technology and equipment, or it is very difficult to integrate this know-how into the bank's operation. What we have done is transform ourselves; we have a programme of operative, commercial and digital transformation which is the heart of the bank, to which we have devoted a lot of resources to assure ourselves that this bank works increasingly like these start-ups. Two innovations we have developed from two start-ups are Sabadell Xat, instant payment between private individuals, merely through a conversation on a mobile phone; and digital signatures. We have also incorporated people from the world of design thinking that are dedicated to conceptualising initiatives that we might consider to be strategic in the future, but which right now are very disruptive. In short, it is not about incorporating their model, but rather incorporating this element of flexibility and transparency that start-ups have. However, these start-ups, as they grow, have to resort to a bank. We have a mass of clients, an infrastructure and a regulatory base. They have the model and the new ways of working. In the future, it will be easier for a bank or financial institution such as Sabadell to act like a fintech firm, rather than a fintech company reaching the dimensions of a bank.
Could we say that banks have already become technological companies?
Yes, technologically banking has made some extraordinary investments. The software is part of our DNA. What does have to be done is to make a cultural change in the way of working. In 20 years, we could find ourselves in a scenario in which the work is done by machines and we have to be ready to differentiate ourselves and know how to do the things that robots do not know how to do, with creativity and in a critical spirit. The labour market is a challenge; we are working on ways to help reduce the digital gap.
What role will the classic bank branch have?
The role of branches is key. Companies such as Amazon are looking into setting up physical points of contact with the client. We come from the face-to-face world and we are making an effort to introduce the digital world. Amazon's problem is the other way round. The branches are a great asset of the financial sector but no doubt the role they will play will be very different from the one they have now, especially in the interaction with clients. People will not go to their bank branch to take out cash.