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Advancing Online Banking Platforms

Before beginning, it is important to differentiate between traditional digital banking (which is comparable to a virtual version of a physical bank) and online banks (which may or may not have physical locations).

Banks have been experiencing a complete digital transformation for some time now. Between 2009 and 2015, over 13,000 offices closed. Today, there are less than 30,000 remaining banks in the whole country.

This banking digitization was inspired by similar transformations in other business sectors, as well as the rise in new technology: smartphones, smart watches, tablets, et cetera.

But how could technology have gained so much ground on traditional banking in such little time? Clients’ preference of the online method has a lot to do with it. The advantages over a traditional bank are immense. Two main features stand out:

  • The client can take care of all business digitally 24/7 and does not need to worry about a schedule.
  • When buying online, conditions and contracts are more concise so that the client does not have to go into the office to ask for help.

According to Eurostat, in 2016 43% of Spaniards used online banking. The average in all of Europe (49%) increased 4% from last year.


Spanish leaders of online banking

It is not easy to topple a giant. As a result, Santander still has the greatest number of clients (22.1 million), followed by BBVA (19.3 million), and far behind them is CaixaBank  (5.4 million). Online banks, however, are increasing in size every single year:



The famous Netherlands entity has the most online banking business. According to the Spanish Banking Association (AEB), this orange bank manages more than 32,000 million of its clients euros, and is the foreign bank with the highest number of deposits.



Santander’s digital subsidiary is in second place behind ING. Its clients’ deposits add up to 6,100 million euros. This is up 25% from the previous year.


EVO Banco

Sitting in third place is EVO. They manage more than 3,400 million euros, which is 13% more than in 2016. This is a positive trend, especially considering that they were established in 2013.


In the following spots are:

  • WiZink (formerly Bancopopular-e), managing more than 3,000 million euros with a 7% increase from the previous year. Of all of the online banks, it has issued the most cards, doubling ING Direct.
  • Self Bank won first prize from Rankia, given to the best vender of 2017, manages 532 clients.
  • Finally, Banca Farmafactoring has experienced a 297% growth in one year. It is closing in on 397 million euros.


Mobile banking startups

Some innovative alternatives to traditional banking have emerged in recent years. Mobile banking has taken charge. There are multiple startups offering this service. Those that stick out are Varo Money, Deserve, Chime and Zero. Although none of them originated in Spain, they are rapidly innovating and increasing. They are worth following.

Thanks to their revolutionary services and minimal to nonexistent commissions, these mobile banking startups have exponentially won clients since their launches.

Their main clients are Generation Y, also known as Millennials. Youngsters that have evolved along with digital technology are rooted in its grasp and have now started their working life.

Varo Money, the online banking startup created in 2015 and backed by the Federal Deposit Insurance Corporation (FDIC), raised 45 million in 2017 during a financing round thanks to The Rise Fund. Amongst their contributions leading them to be one of the most important, one is “an automatic learning algorithm developed to predict incoming deposits and spending by clients.” This helps to easily tell if the clients will repay loans.

This startup, like the majority of online banks, does not have commissions (except for withdrawing cash from ATMs that are not a part of their network). Clients know at any moment if their ATM is associated to Varo Money through their app.


In second place, despite a considerable distance from first, is Chime. This startup was funded in 2014 and raised 18 million dollars in 2017. Focused on attracting millennials, this business is commission free and supplies automatic savings options that permit clients to differentiate from a fixed amount of money each month.


Deserve, the startup founded in 2013, targets university students. It raised 12 million dollars in a financing round last year thanks to participation from Accel, Mission Holdings and Aspect Ventures, amongst others.

Kalpesh Kapadia, cofounder and CEO, mentioned during an interview “our mission is to supply credit access to young clients that deserve it, but do not have it.”


Finally, we have Zero. They are a startup who came about in San Francisco in 2016. Their innovative idea raised 8.5 million dollars in a financing round via ENIAC Ventures, NEA, and Lightbank, amongst others. Such an idea consists of a hybrid card that has the advantages of both a credit card and a debit card. Because of this, clients only spend money that they have, avoiding indebtedness, but obtaining a predetermined return rate on all their purchases.



The role of electronic devices in digitizing banks

Online banking has considerably expanded its presence in day-to-day human life. Electronic devices such as smartphones, smart watches, and, to a lesser extent, tablets, have notably helped fuel this increase. In 2016, more than half of online clients accessed their banks via mobile.

A considerable improvement in the security of electronic devices, such as is the case with biometric authentication, has favored the improvement of applications, online payment platforms, and contactless systems iOS and Android.

Apple Pay technology, integrated in iOS devices, and Samsung Pay, integrated into Korean smart phones and watches, facilitate cellular payment through Touch ID and Face ID.

However, it is not necessary to immediately buy an iPhone or Galaxy to enjoy these innovative payment systems. A large quantity of banks are developing  apps specifically for contactless mobile payment. These banks include BBVA, CaixaBank, Santander, and ING, amongst others.

What is 2018’s preview? This year, we can expect biometric authentication going a step further to include retina recognition. This is further progress toward new contactless systems.