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Digital Banking Transformation: BBVA vs. Banco Santander.


In the following 5 years banks may lose 50% of their business.

I don’t think I’m exaggerating when I say in 5 years banks will lose 50% of their business. I am pretty sure that the major banks handle this scenario. If not, why announce so insistently their strategy to shift to a digital transformation?

In a low interest rate scenario, with low margins and high regulation there were only two ways to go: Technology innovation or market expansion where margins were still high (such as Africa which was very risky and non competitive for banks such as BBVA or Banco Santander).

It seems that digital transformation is the correct approach. But now they have to start. Entrepreneurs who believe that the idea is worth something, I'm sorry to disappoint you:  the idea has a value of 1%, the execution has 99%.

But how do you transform a traditional bank into a digital bank? There are three ways you can follow or rather a combination of these:


a. Purchasing and integrating existing companies.

b. Develop projects internally.

c. Creating a platform where others offer their fintech products and the bank become a middleman of the generated value. A financial iTunes.


10 variables to be analyzed in the digital transformation

After studying many cases and opinions by hundred business leaders from business schools around the world[i], I’ll analyze the 10 variables that can determine who will win between BBVA and Banco Santander in the digital transformation.


1. ENTREPRENEURIAL CULTURE. Having a very disciplined culture is a handicap for any innovation transformation. The employees must challenge the obvious, question and debate everything, innovate. Even ask themselves why you're my boss? Why am I not your boss?

Can you imagine a bank manager persuading customers not to buy bank shares because the crash of their values in the last five years (-40% BBVA and -60% Banco Santander)? I mean, can you imagine it without his name being mentioned on the next employment reduction list?


2. CULTURAL CHANGE. The hardest thing to change in an institution is its culture. Both banks exceed the one hundred thousand employees (BBVA 135,000 and Banco Santander  193,000 approximately); Employees used to traditional banking culture. How many of these will serve to implement the digital strategy? I don’t think more than 5%.

Banks are making great digital campaigns on their digital tools. For example BBVA Wallet. But if you go to a branch and ask employees if anyone knows how it works, no one will know exactly. It's not what you say you are, but is how the rest perceive you!


3. ATTRACTING TALENT. Is not only that they have more than enough personnel, but is possible they may need 5-6 thousand digital employees who now work for Google and other similar companies that have no intention to change to BBVA or Banco Santander.

10 years ago the brightest students of business schools ended up working for banks. Today the brightest students want to start their own fintech or work for companies like Google, Apple, etc.


4. STRUCTURE TRANSFORMATION. They should flat the organization to boost improvisation. It is true that both institutions have announced in press releases this kind of restructuring. But, "the words do not tell you anything, the facts will."

Anyone that has had to negotiate with a bank can see that each time the deal maker is newer and with less rank than the previous one.


5. IMPLEMENTATION CAPACITY. A project that takes too long to start can only show you what can go wrong, not what it can be transformative and impactful.

Both in USA and the UK and even in Spain, there has been successful robo-advisor developed in just 12 months. None of the surveyed had heard of a BBVA or Banco Santander’s robo-advisor, even after 10 years announcing leading digital transformation!


6. CHAOS  vs ORDER. In the recent entrepreneurial culture of innovation is often put as an example of success the case of Israel. Among other reasons it is often argued that the military training of Israeli society has been one of the pillars of this entrepreneurial culture. This training is characterized by certain "chaos" versus the typical military order of other nations. "Challenging the boss" is one of the commands for all young Israeli soldiers. Any technology that reaches the army of Israel from the USA, is in five minutes modified to find another use of it.

Both banks are using their platforms for different tasks such as risk management, internal training or products assessment. These platforms were bought many years ago and are not flexible to allow any modification by the employee. However, in the market these systems have been improved substantially in the last 3-4 years and most of them use now open sources. Being "managed" by closed and obsolete systems prevents that the innovation process exists.


7. EMPLOYEE PROFILE. Following our example of Israel. One of the successes of Israel in terms of innovation is based on the large number of engineers and doctors that came from the Soviet Union. If a bank wants to innovate, it would be logical to think that they should have a high percentage of highly qualified engineers and doctors.

Silicon Valley companies hire the best engineers and doctors even if they don’t need them. Having them is the best barrier to prevent the competition of qualified personnel. And is not only capturing them but keeping them and create a network-effect that lures those professionals to working with them today.


8. PROCEDURES. When I see all the procedures that today bank employees must follow, I wonder how the hell they will innovate something? How many times will you know what a competitor or a customer plan? It's like saying in the trade stocks market you’ll buy shares regardless what happens because it’s in the procedure.

I recently attended a conference in which three responsible for innovation of BBVA, Banco Santander and Bankia participated. Almost the three of them said the same of how they were going to innovate the financial sector, which surprise me. The three mentioned the importance of procedures in their institutions. I wonder, can they really invent the future of banking following a procedure and also all the same one?


9. ABILITY TO BUY AND INTEGRATION. Is not only buying innovative companies. It is integrating  them into the bank. To succeed in the transformation via purhasing you should be able to buy the best and especially to integrate the projects.

In recent years I have met four entrepreneurs which BBVA bought their innovative companies and incorporated them. None of the four lasted more than 24 months in the bank. Moreover it strikes me that they all had the same reason to leave the bank, "before I used to innovate, since I entered the bank I can’t make any kind of innovation." In the case of Banco Santander I haven’t had a chance to meet entrepreneurs who had integrated to the bank. However I've met at least three ex-Santander that left the bank and have been quite successful creating digital businesses.


10. DISRUPTIVE MENTALITY. To create a style of iTunes platform you have to accept disruptive ideas. At MIT they use two very appropriate concepts to innovate. One is "Irreverent Creativity ". The other is the GSD ("Get this shit done"). But above all, any entrepreneur has forbidden to say "this is impossible". If banks want to innovate they should start by banning from their managers "this is impossible".


How can they deal with "Google Bank"?

At least one of these three things they must do better than "Google Bank": either buy or develop or be disruptive in the platform. Google bought Android for approximately US 50MM, a ridiculous amount compared to what BBVA or Banco Santander are spending on recent acquisitions. Google has been able to integrate and reach 82% of the smartphone global market creating also a totally disruptive platform.

Maybe my initial idea of a 50% business loss for traditional banks in 5 years is a bit short.


[i] This article is based on the opinions of 100 leaders with the following profile:

  • Entrepreneurs, suppliers and customers of BBVA and Banco Santander, colleagues from Harvard Business School and the MIT.
  • Master’s IEB students, from the UNED, Finance Business School and the Tecnológico de Monterrey.
  • Countries: USA, México, Colombia, Chile, Brazil, Peru, UK and Spain.
  • None of them work for the BBVA or Banco Santander.







Comments: (10)

João Bohner
João Bohner - Independent Consultant - Carapicuiba 05 July, 2016, 15:08Be the first to give this comment the thumbs up 0 likes

@Vicente Quesada:


If you permit me, I would like to disagree a little with regard to the answers for the question:

“how do you transform a traditional bank into a digital bank?”


Answer a.:

Nowadays, DO NOT exist 'Digital Banks' offers on the market.

There is, however, a lot of 'cosmetic' offers - peripherals.

It is naive to expect that a Fintech Startup will present an Enterprise wide Solution for the banking business.

Startups have deep understanding of the current technology, but have not the slightest knowledge of the intricate internal "processes" of a bank.

And, in your article, in the 8th variable, PROCEDURES, about the three responsible for innovation:

"The three mentioned the importance of procedures in their Institutions."

They are absolutely right!


Answer b. ‘Develop projects internally’:

It should be internally or externally, doesn’t matter.

The question is:  which project?

By preceding projects, you need to define an architecture, such as in building up a Cathedral.


Answer c.

No comments.


And still, on the 8th variable:

Not are the employees who should innovate.

The new Enterprise Architecture should start from a CoE, formed by experienced bankers together with updated and experienced ICT professionals.

They should draw the required future scenario, recognize the current situation and establish the path to get there.

Then the right projects will popup!

And, always keep in mind Henry Ford’s quote:

If I had asked people what they wanted, they would have said ‘faster horses.’

I'm open to discuss about this fantastic matter!


Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 July, 2016, 16:361 like 1 like

Even I don't think you're exaggerating. But to stop me from wondering if you're hallucinating, can you recommend a single fintech - out of the ones that're going to take away 50% of banks' business - that can offer me a credit card? My big fat bank has been promising an add on card for the past few months but I'm tired of waiting and am in the market for a new credit card.

Vicente Quesada
Vicente Quesada - Gauss Trading - Madrid 06 July, 2016, 08:50Be the first to give this comment the thumbs up 0 likes

Thanks Joao for the comments. Just to clarify: companies such as Google, Facebook, Apple...will be the "Digital Bank", it could be some start ups, but mainly those profiles...

James Piggot
James Piggot - Finastra - London 06 July, 2016, 10:20Be the first to give this comment the thumbs up 0 likes

I recently travelled to Italy and took my traditional bank debit card and also a Mondo debit card. The rate for withdrawing cash from an ATM with the Mondo card was a flat 1.19 euros to the pound (thank you Brexit!).

The rate for ATM withdrawals with the traditional bank debit card was pretty similar, 1.193.

The difference was in the fees, Mondo charge no fees at all while the large traditional bank charged fees that came to 3.26% of the amount withdrawn or £7.52 for withdrawal of 200 EUR.

 It remains to be seen whether Mondo can thrive by charging these types of rates, but their offer is very attractive.  They have an excellent easy to use digital App and offer good rates with zero fees. If lots of people switch (and there is a queue for Mondo accounts at the moment) then will the traditional banks be reduced to the role of middleman providing services to their more agile digital competitors as Vicente says above?


Javier Vidal
Javier Vidal - IBM - barcelona 06 July, 2016, 12:381 like 1 like

My opinion and mainly from my perspective as a customer, is that a successfull Digital Bank is ING Direct, al least in the Spanish market.

I will summarize ING Direct value proposition as:

- End2End digital process

- Efficiency and trasparency


Is ING leveraging other trends related to bank digitization: API, Fintech, Social, etc....? I think no,  at least as an important point in the transformation.

ING Direct is between the  banks growing faster in number of customers in Spain, so a very succesfull case.

Traditional banks are doing very cosmetic things, and not tackling the more complex part of this transformation, redesign your business process for a customer centric perspective, and now for a "Digital Customer" centric perspective.

This is just my opinion.

João Bohner
João Bohner - Independent Consultant - Carapicuiba 06 July, 2016, 13:401 like 1 like


YES! the traditional banks will be reduced to the role of middlemen providing services to their more agile digital competitors IF they don’t act now and swiftly.
And YES, you have to pay that huge fee because you have to sustain that huge back office with myriads of legacy systems of your traditional Bank (85% of the budget just to maintain those oldies).
Just to come to reality, take the Operating Expenses of BBVA, Santander and Deutsche Bank, among others; divide them by the number of their customers and conclude how much the Bank has to suck each customer just to keep their OE.

The required future scenario is very easy to draw:

Wipe out those oldies, replacing them by simple and clever processes (item 8th of the Quesada article). How to get there is another story!

I did an essay on the subject. (There are presentations available ...).
It's amazing the savings that can be realized in OE by managing the processes corporately, online real-time, rather than processing by 'line-of-business' and batches processes.
Studies show savings of AT LEAST 10 times - not 10%.
In some cases, it can reach 50 times, depending on the backoffice entanglement - not 50%.

So, James, your withdrawals charges will certainly be smaller on your traditional Bank!



From Fernando Lanzer’s book Take Off your glasses:

"The simple stuff that needs to be done is often scary stuff, which we would rather not face.
Hence complication is a form of avoiding the simple essence.
Complication is a form of using rationality as a shield to defend ourselves from the emotional consequences of acting."

João Bohner
João Bohner - Independent Consultant - Carapicuiba 07 July, 2016, 13:58Be the first to give this comment the thumbs up 0 likes


Being big is important.

Being big with knowledge is outstanding!

A Finextra member
A Finextra member 20 July, 2016, 10:001 like 1 like

Dear Vicente,

This is a good article but I must say that apart from all teh mentioned challenges, you still struggle with teh clients transforming to your digital channels, especially with the noticable increase of fraudulent attacks.

I guess that if a bank wishes to transform to the digital world, you need to focus on few elements such as:

- Invest in existing solutions, do not obtain cheap ones

- Spend more on e-courses for your staff to shift them from traditional banking practices to digital ones, start sending internal requests via email to improve internal processes.

- Invest in your customers, I never heared of any bank investing in their customers, spend a little on them to gain their blessing in your digital channels to make it easier for you to re-direct them to such untradiotional channels.


Ahmed Al Derbas


Vicente Quesada
Vicente Quesada - Gauss Trading - Madrid 22 July, 2016, 18:00Be the first to give this comment the thumbs up 0 likes

Absolutelly agree with you Ahmed. First thing you have to create passion both in employees and customers.

A Finextra member
A Finextra member 11 October, 2016, 14:331 like 1 like

Dear Vicente,

Very nice post. But from my point of view contains a lot of advices to analyse something (culture, entrepreneurship...). Banks have a little chance to jump on the bandwagon in which companies like TransferWise, Square, Social Finance already are … Also they doesn’t have a time to analyse anything (my personal experience - because analysis takes time). But we already have some matured concepts and approaches of how to start digital transformation immediately - e.g. by opening bank to 3rd parties (Open API in banks) and, as you mentioned, help bank to become a middleman of the generated value. Cultural change will be enforced then :)

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