We are living in an era of “mega-change”, in which social, economic and political models are no longer fixed, and this causes insecurity and fear: fear of others, fear of the future. Moreover, today’s accelerated technological change makes it even more difficult to predict the future of the global economy.
There are differences in opinion regarding the direction; magnitude and speed of the impact of the technological revolution on the global economy, but there are none regarding its disruptive effect on production sectors and companies.
The first sectors that experienced disruption coming from the development of the internet and the digital economies were those with a greater informational content in their inputs or outputs: communications, media, music, many distribution sectors, etc. These industries have already transformed completely, with great improvements in efficiency and productivity.
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The banking system is an industry with an extremely large amount of information: its inputs and basic products are data, or information, and money; and the bank’s money is, ultimately, an ensemble of accounting entries, which is, information. Because of this, it could have been an early example of digital transformation. Nevertheless, even though the banking system has changed very much in the last two decades, it has not undergone changes of a magnitude similar to those in other aforementioned sectors. This is due to several reasons: in the first place the conservatism of most of the people that have money; secondly, the strong growth and profitability of the industry in the period previous to the great crisis did not encourage radical change; and thirdly, and this is fundamental, regulation, that on one hand limited the freedom of banks to innovate and, on the other hand, protected them against the entrance of new competitors.
A new generation of clients has grown up in a digital environment and it demands different services and new ways of gaining access to them.
Present technologies (not to mention those that may be developed) have enormous potential to transform the banking system. We are already witnessing great changes, but the future implications of cloud computing, Big Data analysis, biometry, distributed ledger technologies (such as Blockchain) or artificial intelligence are almost unimaginable.
All this entails, potentially, enormous benefits for consumers and companies in terms of quality, variety, convenience and the pricing of products. In addition, it will allow thousands of millions of people, in the lower income strata, and to whom the conventional banking system cannot reach efficiently and profitably, to gain access to financial services, increasing their chances of prosperity and improving their lives.
Up to now, the conventional banking system was incapable of profitably offering financial products and services for small costs, frequently in distant places, at prices assumable for their clients. Nowadays, the greatest influence for encouraging financial inclusion is, without a doubt, the expansion of the digital finances supported by mobile phones.
Today, some 85% of the adults in the emergent economies have a mobile phone contract, and this proportion is still growing. It has been calculated that the cost, in the emergent countries, of offering a client a digital financial account is between 10% and 20% of that of a physical account. This allows the opportunity of a profitable supply of many more products for the clients. And as more and more people and businesses use these services, economies of scale and network are being created that improve the products and make them cheaper, generate a better efficacy for the users and encourage their adoption.
At BBVA we see ourselves as facilitators of these opportunities for our clients and in order to do that, we are creating a multitude of better products and functionalities. We are developing new relationship models with our clients by combining all the different channels, improving them so that clients can interact with them any time they choose at their convenience.
The results of all this effort are already becoming apparent. In the last few years, we have radically enhanced of our digital and multichannel offer. Our Mobile Banking app was judged best in the world in 2017 by the most prestigious consultancy firm regarding these matters. In June 2017, we already had 20 million digital clients, with an increase of 22% on the previous year. Among them, almost 15 million were mobile clients, with an increase of 42%.
There is still much to do; technology changes constantly and competition is increasingly fiercer. At BBVA we are contributing, through our daily work, to make the opportunities afforded by the digital era increasingly available to our clients; our objective is that people and companies may realize their hopes and dreams. This goal hopefully translates into growth and wellbeing for those in the countries where we work.