Ramón is the CEO and co-founder of Bewater Funds, co-founder and director of Indexa Capital, and we have talked about digital transformation, Fintech and Bigtech.
What’s your view on the digital transformation process that banking has undergone over the last decade?
Banking has been very slow to convince itself of the need to digitize its services. Until before the pandemic, the sector was still generally reluctant to close branches at a massive scale. The pandemic has proved that most customers do not want or need to go to the branch. This has been a huge catalyst for the recent wave of closures.
After finally decided on the need to transform, they now face two major challenges:
- Having teams good enough to innovate. Will the best digital professionals want to work in banking?
- Creating a modern organization that allows innovation to flourish.
Do you think traditional banking still has time to compete with the fintech and big tech companies that are pouring into the sector?
Yes, of course. Banks have been providing their services for hundreds of years, and their business model is remarkably resilient. They are the best at giving credit to their customers. Another issue is whether the banking business will ever be as profitable as it was, which is much more doubtful. The banking business model has been based on cross-selling products to its customers. However, both fintech and tech giants have started to take a bite out of some of the higher-margin segments (payments, investment funds, foreign exchange, etc.). This trend has only just begun and will become much more pronounced in the future. As a result, there will be fewer banks, and they will be less profitable than in the past.
What new services or products should banks develop to better adapt to the needs of their customers?
In my opinion, it isn’t as much about new products or services as it is about how they’ll make them. I think the best way for banks to compete is to form independent subsidiaries (organically or via acquisition) that can compete on speed, usability, price, or talent attraction with the banks themselves. Innovating from within a bank that’s top-heavy, with an outdated IT system, and under the watchful eye of a sales director whose main focus is to deliver the next three months' profits to report to the market, is a task doomed to failure.
What technology do you think is most interesting for the financial sector?
Banks have, or can have, tons of customer data. Through processing that data, banks can orchestrate new products and services. For example, banks can mix geopositioning data from their apps with their historical payment databases to offer more competitive credit or insurance prices.