Results ecosystem (EFE, 07/30/2017). Particularly, alliances with fintechs
Results and findingsMH1
When analysing public
articles and data over the last years, digitization of the financial industry
is a ubiquitous topic, especially recurring in economic newspapers. Many of
them highlight how big banks are shaping strategic alliances with technological
giants and other firms to adapt to the new banking ecosystem (EFE, 07/30/2017). Particularly, alliances with fintechs have
started to proliferate once they have proved to offer products that clients
value considerably (Luis Hernán Paúl, 08/21/2017). However, this news is generally talking about
Spanish international big banks (such as BBVA, Santander, Bankia…). So, what
about the small banks? How are they adapting to the new times to maintain their
position in the market, which is a bigger challenge per se?
Additionally, what is
not so clear is whether banks see these emerging technological players as
defiant competitors or as valuable partners. In
this sense, there are contrary opinions even within some publications. For
instance, an article of the newspaper Expansión titled “Banking allies with
tech companies to adapt to changes in its sector” argues that fintechs are cornering
the incumbents, but adds later on that banks do not see these companies as
competition but more as an opportunity to enhance their products and services.
FinTech cannot only be
competitors, but also allies in their strategy of improving customer experience
and digital transformation while waiting for other more powerful competitors
who, like banks themselves, have abundant financial resources and database of
millions of customers (KPMG 2017, p.3).
This bank publishes every
year a report addressed to shareholders presenting the most important
information about the group that year. If we compare 2015 report to the one of
2016, the strategy definition shifted from a more proactive tone to a more
defensive or reactive one. While in 2015 BBVA highlights its value proposition
and reminds the shareholders how it has survived to turmoil scenarios in the
past, as a reaffirmation of surviving successfully the digitization process as
well, in 2016
approaches different ways of creating new business models, mainly oriented
towards digital transformation, being the creation of strategic alliances and
partnerships just one of them. While in 2015 BBVA does not delve into the name
of its new partners, it does so in 2016. A conclusion that one can draw from
this is that tech players are becoming important and known. So, it is not only
about the new products BBVA is creating anymore, but also the companies that
are enabling their creation.
its internationalization, BBVA is partnering with different players in the
different countries it operates, whether they are national or foreign
companies. This is probably associated to its mission of putting clients and
their needs at the core of the business, which vary among different regions and
fintechs and other startups, 2016 BBVA has established strategic alliances with
Prosper, focused on P2P lending, and Dwolla, which provides online payments and
transfers, according to its report “BBVA in 2016”.
BigTechs are concerned, in 2016 BBVA established a partnership with the tech
giant Google, as well as Cisco (BBVA 02/25/2016). Additionally, the bank has
recently set an alliance with IBM to accelerate and improve its services
through efficient cloud computing (BBVA, 9/29/2017).
it also established strategic collaboration with R3 (enterprise software firm)
in 2016. Some of the goals behind these alliances, as mentioned by BBVA
Communications (BBVA 5/12/2016) are to explore new business
opportunities, technologies and to share knowledge.
Another frequent way of BBVA to integrate some
financial-technological start-ups has been directly through mergers and
acquisitions (M&As). As stated by Jose DaPonte, head of global business
development and new ventures for BBVA Digital, BBVA has successfully approached
fintech firms because it has an entire unit dedicated to that (Bryan Yurkan 2016).
As they do not report formally
qualitative information about their performance and strategy, it is hard to precisely
define the approach of Evo Banco towards digitization.
So far, there has not
been found much information about strategic alliances that Kutxabank is
establishing in terms of its digitization. However, one partner that has
brought together the 5 banks analysed, apart from the other 22 most important
banks operating in Spain is Bizum, that provides an online payment system
application between all their clients, which they have partnered in an attempt
to beat payment systems recently launched by bigger players such as Apple or
Google (Otto 2016).
The case of Kutxabank
leads to the fact that strategic alliances needed to develop further and
broader digital solutions for clients may be key only for players with a wider
geographical approach, in many cases international, so far. These firms then
reach a bigger volume of clients, no matter where they are, in an effective
way, and they therefore pay off the considerable investments needed for
developing these solutions together with partners.
Value of cross-industry alliances:
lessons from Financialization
In some cases, these
alliances are used as a tool to prevent big players operating in other
industries enter this market, protecting their position.
This research paper
possesses many limitations that affect its scalability. Firstly, in the
globalized world of today it is difficult to isolate the intervention of a
company in a single country, since it is usually the consequence of a global
strategy, influenced by the actions taken in the rest of the countries where it
operates. Therefore, trying to compare banks with different geographical scope
does not easily lead to general conclusions
digitization is still a recently developed process, so the influence of the
actions they take towards this technologically-embedded process will be more
significant in some years’ time.
analysis could have been enriched by diversifying data collection, including other
qualitative methods such as interviews to experts on the matter, questionnaires
and/or interviews to executive employees of banks, fintechs, bigtechs and
startups, etc. This is a superficial analysis that can be deepen in future
research. Besides, the research question of this paper is pointed towards
strategic decisions of big firms, which may be considered as sensitive
information from a corporate perspective. Therefore, public information
available is not so exhaustive.
Finally, this research
is more focused on the banking companies side of the alliances. Nevertheless,
future research could try to bring the start-up side to the centre of the
limitations, this research has enabled an insightful look at the strategy of
the banking companies in Spain, as a reflection of the current transformation
in the global industry of financial services, especially looking at how
technological alliances play an important role in their adaptation to the
digital society of today.
All in all, firms in Spain firms have made a very big
step by placing digital transformation at the core of their business, but there
is still a lot to improve. (Juan Pedro Moreno, 2017). This is especially tangible
in the financial industry. Banks play a substantial role in pushing national
economy by providing society with the appropriate financial instruments and
guidance. As it has been observed across recent published data, one of the
foundations which support this digital transformation are the strategic
alliances (as well as acquisitions and in-house business developments) that, as
observed also earlier in history, help companies adapt to new business
environments and pivotal industry transformations.
So, the following question then comes up: will these
alliances continue to happen in the future? Or will the strategy shift into
recurring M? One may not have thought about it, since it is too early to
say but, in that case, will these M be performed by incumbents or rather
by grown FinTechs of small equivalents and start-ups, gaining a competitive
position in the Finance industry, just as strong as traditional banking
institutions? All this may seem very unpredictable for now. However, world is
evolving at a supersonic pace, so we may see some outcomes soon.
MH1In this section I still plan to delve into the shape of the outcomes
of the strategic alliances