At no time has the importance of innovation and the deployment of advanced technologies in banking been more evident than today. With more consumers embracing digital banking, banks are being challenged to replicate the level of engagement of big tech and new tech organizations such as Amazon, Google, Netflix, Zoom, and Alibaba.
One of the perennial global leaders in technology innovation for banking has been CaixaBank, Spain’s leading digital financial services provider, serving more than 6.5 million digital clients. As one of the pioneering banks in digital transformation, the application of artificial intelligence, innovative product design and most recently hybrid cloud utilization, CaixaBank continues to be at the forefront of what banking can become.
I had the opportunity to interview Benjami Puigdevall, the long-time veteran of CaixaBank and current CEO of imagin, a digital lifestyle platform created and supported by CaixaBank. During the exclusive Banking Transformed interview, Benjami discusses digital transformation at CaixaBank, the importance of innovation culture and the development of imagin.
Instead of being a traditional banking product or fancy app, imagin is a digital open banking platform that includes both financial and non-financial components for younger users. The platform has over 2.6 million customers, including users of the mobile-only imaginBank, as well as customers of CaixaBank’s children and young people segment.
The goal of the platform is to grow the user base with a broad set of offerings, including financial services, music, games, technology and other loyalty components. Unlike traditional banking services, the revenue model of imagin is built on both financial services as well as revenues from third party partnerships.
The following is an excerpt from the great discussion we recorded for the podcast.
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What is the key to building a strong digital transformation strategy within a legacy bank?
Puigdevall: First, there must be a strong commitment from the top management of the bank, because innovation and the use of technology to enhance the relationship with the client is in the DNA of CaixaBank. Of course, this commitment has to be consistent and has to be stable. It’s not a matter of what’s in fashion. I think that’s very consistent in the last 20 years – the strategy of how to use technology to create new services.
In addition, in the year 2000, the bank decided to create a subsidiary that would focus the talent and the resources to develop a digital business. This was a kind of spinoff, with very digital oriented talent to execute the strategy of using technology to enhance digital services.
How does CaixaBank balance the needs of the bank with the needs of the customer?
Puigdevall: The decision was to make major investments in technology even though the digital revolution in year 2000 was still very far away. We had to have a clear vision that was consistent with the evolution of the client and to decide to make the bank more efficient thanks to the technology.
For instance, we were the first bank in Spain to have an ATM, to have digital services and to have a mobile platform. So, the success from the very beginning in using technology was focused on how to create a culture of efficiency thanks to the technology. The stability of this approach in the last 20 years permited CaixaBank to also have the client at the center of this strategy.
How do you integrate simplicity into your innovations?
Puigdevall: Simplicity was not obvious in the year 2000. Today it is. This is something created by the pure digital players who changed the way to develop and to offer totally digital services. Today, simplicity is always key.
The imagin platform is an example of simplicity in a banking value proposition. CaixaBank has hundreds of different products to offer to the whole database of clients. imagin has only two, or three products of each category. So that means simplicity makes decisions for the client easier and this is very powerful to generate engagement with the client.
And the one click capability is always very important, but probably more difficult to execute than simplicity, because it depends on the system – the legacy you have and your IT capabilities. It’s something we always keep in mind when defining new services.
What role do branches play as part of digital transformation?
Puigdevall: Branches are part of the success of CaixaBank in developing the digital strategy, because from the very beginning – since the year 2000 – digital channels and the digital strategy were complimenting the strategy of the branches.
Our employees have been pushing clients to use digital channels as if they were ambassadors of the digital services. And when you have your employees acting as ambassadors of your digital services, you have 80% of the success wired to go … because it’s the best and the most powerful marketing campaign you can have.
To be consistent with this role of ambassadors, you have to permit them to participate in the profits of the digital services. To accomplish this, we had double accounting to permit the branches to obtain the revenues from transactions through the digital channels. This is a matter of consistency in the strategy.
If you really want to accelerate your strategy in developing to digital services, you need the power of your employee network. This is a strength of the traditional players. And we have to take advantage of that.
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How has COVID-19 changed your digital strategy?
Puigdevall: COVID-19 definitely has had an impact on the use of channels. The growth in traffic of digital transactions is around 30% compared with last year. It’s a huge change, and probably has boosted the natural evolution of the digital services by four, five or six years.
With this in mind, it puts pressure on investing more in digital, but at the same time, being consistent with the strategy we have. It’s not only a matter of investing in pure digital services. It’s a matter of also investing in using the digital platforms to link employees with clients. For instance, how can we make the interaction with employees easier through the mobile … how can we ask for a meeting at the branch through the mobile, how can we find a transaction previously started at the branch through the mobile.
How does CaixaBank use data and analytics for a better customer experience?
Puigdevall: We decided to invest in a data pool six or seven years ago. The capabilities of using advanced analytics combined with artificial intelligence is a winner combination. And we are fully focused on this combination. It drives all of our customer interactions and is built into our product development.
How are you preparing your teams for a digital future?
Puigdevall: We have to teach or re-skill all employees to be sure that they feel comfortable when talking about a new technology and digital service with customers. What we are doing is to merge the employee and the client platform to permit our employees to use exactly the same platform as our clients are using.
In that way, we don’t need to teach employees about the capabilities of the digital platform, because they are using the digital platform every day. We found that this is the best way to really teach them about capabilities. This helps support them as ambassadors of what they are using every day, in their daily activity, when talking with clients.
What role have open banking APIs had in the evolution of digital banking?
Puigdevall: APIs are an opportunity to transform banking platforms, or banking services into digital platforms. The potential in banking all over the world is huge. Banks are starting to understand that activities which are not our core business – but that could compliment the relationship with our client – provide the opportunity to monetize non-financial revenues.
APIs are needed … because of the flexibility, because of the time to market, and because of the open-minded DNA a bank has to create, for a bank to be a relevant player in the future. I’m quite convinced that if we offer strictly financial services, we won’t survive. We need to evolve. We need to enhance this relationship to create more engagement, to really convert our capabilities into a digital platform.
Are APIs the foundation for the imagin platform?
Puigdevall: Yes, behind the project of imagin is the transformation of a banking platform into a lifestyle digital platform. And this was not only a matter of generating engagement. It was a matter of identifying new revenue sources, new revenue models, new ways to monetize the relationship of the client. We believe that imagin is the best evolution of a bank platform to a digital platform.
Our goal was to offer Millennials more than what they need … we want to offer them what they love … because we think that the new generations – the digital generations – have relationships with big players that are very different than older generations. We think that we have to start the relationship before they need a financial solution. We prefer to start the relationship in a very frictionless way just with an email and a mobile number to become a member of the imagin community. Within the community, our imaginers will find digital content, experiences and even more financial services to make their lives easier.
Then, next year, in a month, or in five years, or maybe never, they will need a bank account. And when they need a bank account, we will be there. So, in some way, if you take the commercial funnel, we are probably positioning imagin at the very, very, very beginning of the funnel, because we want to start a relationship years before the necessity of having a bank account.
Does the imagin platform completely change the relationship with the bank?
Puigdevall: Yes, we believe imagin in a kind of a game changer. The traditional relationship between banks and young people always started with the process of opening a bank account. This is probably one of the processes with the highest levels of friction, because of the legacy systems of banks.
Today, nobody needs to have a bank account when you are 18 or 19, because of digital wallets and prepayment solutions. So it is very difficult to convince a young person or even a 20 year old to open a bank account, because they don’t need one.
So behind the strategy of imagin is a game-changer positioning. We want to be with our future clients at a very early stage … even when they still don’t think about opening a bank account. And this is the challenge of imagin … because then we have to convert the community of users into financial product users and monetize the relationship. But this is part of the journey of the imagin project.
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How is the ROI for the imagin community created?
Puigdevall: To measure the success of this project, we have various KPIs. On one hand, is it feasible to monetize a relationship within a community without offering financial services?
For example, reaching agreements with third parties or offering products. Not all of the content, but most of the experiences provided are agreements reached by imagin with leaders in each vertical of services and based on a revenue share model. So, that means behind each transaction, we provide a special price for the client and a small revenue for imagin.
This is probably the new rule. We have to assume that it’s a matter of a rotation of number of transactions instead of having the idea of obtaining a huge revenue thanks to a personal loan or a mortgage – which is the traditional way.
The second financial component is that we think that creating emotional links with the new generations before they need the financial services will increase the likelihood of obtaining a financial sale when they will need it. So we are applying in our model a conversion rate from non-financial into financial clients. Financial clients mean a client with a bank account, a car loan and so on, so the traditional approach of what we call a client.
Is the financial payback of imagin a longer-term play?
Puigdevall: We think we will benefit from higher penetration of an entire market segment if we continue with the imagin strategy. This is the journey of imagin. The demonstration of the combination of these engagement models with other ways to monetize the relationship is higher, or is more powerful than the pure evolution of the digital bank model we already had.
Is the imagin platform built on cloud technology?
Puigdevall: Yes. What we did was to deploy a consistent strategy around the concept of non-pure financial services and with a very open-minded approach to offer services from third parties. We created a platform which is not linked with a banking platform. It’s in the cloud, to ensure that it is flexible. This was a new generation platform that could integrate with third parties with an open platform vision.
Our strategy was to create this open architecture to integrate with third parties in a very fast way, in a very flexible and cheap way and managing the project with a lean startup philosophy. The idea is to apply a startup-like philosophy behind the model of management of imagin.
Is structure of imagin a view into the ‘future of banking’?
Puigdevall: The answer to your question will depend on the level of success and the time we need to create the imagin community. But, it seems to makes a lot of sense to combine financial services with engagement tools to make the relationship with the client something different than a traditional financial relationship.
Building a broader engagement makes a lot of sense. The benefit we have is that we have a huge quantity of clients, a huge quantity of interactions and a huge amount of data. We don’t need to go outside our organization to find traffic, because they come to our home banking and mobile platforms once or twice a month.
The magic of the business is how to transform all these interactions into something more. How do we enhance the quality of the relationship – because there is a direct link between the quality of the relationship with the profitability of the relationship. And, engagement is very relevant to enhance and to assist this relationship.