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BBVA, a TechFin poster child, buys Holvi

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BBVA have made another bold move this week, acquiring Holvi. This follows hard on the heels of other significant moves, such as investing $60 million in digital first UK start-up bank Atom and the acquisition of Simple a couple of years ago.  From that acquisition, they now have re-hired Simple co-founder Shamir Karkal to build their open source bank service.

Bold moves, and led by a banker who is a technologist by background: Francisco Gonzalez.  A former programmer, Mr. Gonzalez has been the first to make bold statements like we are a software company, and has been aggressively building the bank’s position in this space.  It’s not just investing either, but also opening the bank to hackathons and Open Days:

  • BBVA Innovation Centre 
  • BBVA Innova Challenge: BBVA initiative that aims to promote the open and collaborative culture between the bank and an active community of developers with similar values.
  • BBVAOpen4u: Develop, start up, be inspired. BBVAOpen4u is the perfect community to find ideas and tips, knowing interesting events and participate in BBVA contests
  • BBVA API Market: Financial APIs from BBVA to fuel innovative businesses

They’ve even had an interview with some guy called Chris Skinner, “a British expert on financial issues”, and support things that would seem rather undiplomatic to traditional bankers such as Fuckup Nights, a movement that encourages entrepreneurs to talk about their failures.

So, where BBVA goes, others follow … or do they?

I honestly have not seen any other bank so hungrily investing in their appetite to be in the Fintech space.  Possibly DBS in Singapore springs to mind and JPMorgan in the US, purely because both have Chief Executives calling the Fintech Revolution and being focused upon a response.  Other than these three, I have to say the names start to fall away.

That doesn’t mean the other banks are not aware of what’s going on, they just don’t have a CEO who’s making a big deal about it publicly.  Privately, they’re all doing a lot though.  Take this Bloomberg report from the World Economic Forum in January:

Biggest Global Banks at Davos: We're All Fintech Innovators Now

Fintech was every banker’s buzzword at the World Economic Forum, as leaders of the world’s largest financial companies both touted the potential of new innovations and leaned on regulators to control the startups threatening parts of their business.

Deutsche Bank AG Chief Executive Officer John Cryan predicted the disappearance of physical cash within a decade. Bank of America Corp. CEO Brian Moynihan said his firm now spends $3 billion a year, more than 5 percent of total expenses, on coding. JPMorgan Chase & Co. and Banco Santander SA announced an investment in ex-banker Blythe Masters’ blockchain startup.

“It seems every bank calls itself a fintech company now,” marveled Taavet Hinrikus, CEO of TransferWise Ltd., a London-based online marketplace that moves money internationally at lower costs than banks.

While many executives in the startup world, including Hinrikus, made their first trip ever to the Davos-based forum, the official discussions last week were dominated by the established players. At the conference devoted to the official theme of “the Fourth Industrial Revolution,” one panel titled “The Fintech Revolution” featured no startups, while “The Transformation of Finance” had as its disruptor Dan Schulman, CEO of PayPal Holdings Inc. Its $38.7 billion market value is already bigger than that of Deutsche Bank.

Disrupting Banks

The world’s largest financial-services firms could lose as much as $150 billion of revenue to financial-technology startups, according to an Oliver Wyman report this month. The cost of upgrading IT systems to adapt to increasing competition could cost more than $4 billion at each bank, compared with the $1.7 billion average dividend payout of the 100 largest lenders, according to the consulting firm. Potential cost savings from such investment across the industry could total $340 billion.

Those opportunities outweigh the threats, said UBS Group AG Chairman Axel Weber, as banks on both sides of the Atlantic face fundamental questions about whether they can earn adequate returns on equity in their current forms. Plunging asset values and spooked investors are unlikely to provide a near-term boost to trading businesses that have struggled for half a decade and are now being reshaped.

Still, some bank chiefs tried to splash some cold water on the bold talk. Morgan Stanley’s James Gorman said regulation is still a bigger deal for banks, and bemoaned the “near hysteria” surrounding fintech.

The biggest banks also called for a level playing field with new entrants that offer banking services to consumers. New rules are likely to lag changes in the industry, Moynihan and Standard Chartered Plc CEO Bill Winters said.

“It’s a disruptive development that will challenge regulators along the way,” Winters said. “Payment systems have to be regulated. They need to be observed.”

Seeking ‘Alternatives’

Dutch Finance Minister Jeroen Dijsselbloem said on the same panel that European economies are far “too dependent” on the banking system, and regulators would welcome alternative providers of financing to consumers and small- and medium-sized businesses.

“We need alternatives, and technology can help,” he said. “Regulators should never be at the front of technological development. Regulators should follow it as closely as possible, understand it and deal with financial stability and consumer protection. You don’t want to over regulate before you understand it.”

Even new entrants were surprised at how quickly the changes brought on by technology became the dominant theme for banking discussions.

Tim Levene, co-founder of Augmentum Capital, which invests in fintech companies in the U.K. and Europe, said he was even getting questions about whether the burgeoning industry is already a bubble.

As Masters’ Digital Asset Holdings raised $52 million from investors and won a contract to radically speed up settlement in Australia’s stock market, several bankers said blockchain, the type of technology her firm uses, was still several years from having a real impact on payments or securities markets.

“It can’t be a bubble because it hasn’t happened yet,” Levene said. Still, he added, “if I had a dollar for every time I heard the word fintech this week, I’d have a much bigger fund to invest.”

Watch: Fintech Disruption - Fact or a Fad?

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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