The main Spanish banks have already migrated the bulk of their commercial strategy towards digital channels. The change in habits caused by the pandemic and the high penetration of smartphones in society they have made the mobile phone the preferred channel for the Spanish to control their finances. User experience is the feature most valued by bank customers when using the new channels of financial institutions. And the prescription and opinions shared by new digital customers are also key, who value a positive opinion of a person in their network more than a generic ad in any medium.
These are some of the conclusions gathered in the report Digital transition and transformation of the banking business in Spain driven by Covid-19, prepared by KPMG and the Spanish Institute of Financial Analysts – Financial Studies Foundation, which was made public on Wednesday in Madrid. During the presentation of the document, the deputy governor of the Bank of Spain, Margarita Delgado, highlighted that “the digital transformation not only supposes a cost reduction lever, but is also essential to be able to give a defensive response to new competitors” those facing the banking sector.
Francisco Uría, global partner responsible for Banking and Capital Markets at KPMG, explains what is happening: “Until recently, banks in Spain had around 40% of customers who were partially digital. With Covid, this percentage is already above 60%. In fact, in other geographical areas, such as the Nordic countries, for example, it reaches 80%. This is a preview of the future. The customer that is partially digitized, moreover, is increasingly digital. It is a process that cannot be stopped ”.
In the same sense, Jorge Yzaguirre, president of the FEF, has pointed out that “financial institutions have been immersed for a long time in what we can call the digital challenge. Furthermore, digitization must not only be viewed from the supply side, but also from the demand side. The client is being digitized in many aspects of his life, not only in terms of his banking relationships, and he demands agility and transparency in the products and services he acquires, where his experience as a user is today very important. The speed at which this process is unfolding is high and has been accelerated by the pandemic. Today it is an unstoppable trend ”.
In line with this trend towards digitization, and also due to the additional pressure on their profitability in a context of low interest rates, banks have had to decisively confront this cost reduction strategy. The sector was forced to close more than 1,200 offices throughout Spain in 2020 and this year it plans to do the same with another 3,000.
In this sense, Carlos Cuatrecasas, partner of Consulting Strategy of the financial sector of KPMG in Spain, believes that “the future of banking will be fundamentally digital, although this trend will also coexist with face-to-face interaction in high-value moments.” And he adds: “We will see more reduction of offices, more increase in the use of applications and web and more digitization of services and products. The future goes through the evolution towards a hybrid model in which several channels coexist and in which the customer chooses the optimal combination that best suits their needs ”.
At the end of 2020, around 60% of clients in the financial sector were already digital. Furthermore, 17% of new users were over 65 years of age. This customer segment, traditionally the slowest to adopt new technologies, grew in the year of the pandemic by 70% compared to 2019.
This trend is also directly reflected in the means of payment. Cash continues to lose ground compared to cards, whether physical or virtual, such as mobile phones. Proof of this is that the number of cards in circulation now exceeds 86 million in our country, according to data from the Bank of Spain.
The study has also analyzed the prospects for the evolution of the financial sector in the medium and long term. Its managers conclude that sectoral borders are blurring and that a trend towards “platformization” is already beginning to be visible in the market, that is, for financial institutions to offer non-financial products to their clients in order to establish connections with them and to be able to present them with offers of your own business later.
In addition, the report emphasizes that the banking capacity will largely depend on whether the digitization opportunity of Spanish society becomes a reality and, above all, of the SMEs that European funds offer. The banks face a great operational challenge and a unique opportunity derived from the role they will have to play in channeling NextGen funds from the European Union.
The report ‘Digital transition and transformation of the banking business in Spain driven by Covid-19’ has been prepared from the completion of five work panels and a closing session of two hours each. Different groups have participated in them, in which members of entities such as Innocells (Sabadell), Sipay, Funcas, Cunef, Banco Cooperativo Español, Banco Santander, N26, October, Spanish Banking Association, Bankinter, Microsoft, Solventis and Cecabank have been present. .