New technologies mark the new times and these augur a very different period for the banking business. Beyond the recent mergers, digitization is becoming the key point of what will be its future. This progressive digitization, together with the huge boom of Bizum, could be the prelude to the almost complete disappearance of cash. It is more than likely that the use of physical currency as a payment tool will end up becoming obsolete, sooner rather than later.
What is clear is that the payment sector is doomed to experience one of the biggest transformations in the market. The already more than widespread mobile payment also adds to the potential revolutions such as cryptocurrencies that could displace the bank as an intermediary.
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Currently, almost any banking operation can be done from a mobile phone. Photo: Getty Creative,
Every time the conditions to which banks are binding to allow their clients to get rid of commissions are tougher. You have to hire insurance, investment funds or credit cards so that the cost of the transactions is zero.
The reason? Large banking entities are in low hours due to the policy of economic revitalization set by the European Central Bank. Low rates pushed them to expand other avenues of income linked to insurance or real estate after the crisis. But neither the progress nor the profitability that has been achieved in this way has been ideal.
Now the Spanish bank is losing weight. The impending branch closures have destroyed thousands of jobs. Increasingly, customers abandon physical treatment in offices and the use of ATMs to carry out all transactions and payments online. Bizum has become the catalyst for this particular phenomenon.
Digital banking advances, although traditional banking is not exhausted
The digital operation coexists with the traditional one, without a clear winner. But given the speed that technologies evolve and, consequently, the fintech sector, it will not take long for banks to adopt more drastic measures that will completely transform the sector.
The Bizum phenomenon
Bizum is the online payment giant that is sweeping right now. And this with a chillingly small workforce of just seven employees, Bizum has managed to conquer more than 15 million users in March 2021 and want to reach 20 million before the end of the year.
But, although it may seem otherwise, Bizum does not compete with banksInstead, it participates in a joint project with Spanish entities in which it plays an essential role in the transition towards digitization.
Currently, Bizum is focused exclusively on the national market, where there are already 27 member banks that have more than 99% market share, thus being able to reach any client with an account in Spain. However, its alliances are not exclusively with Spanish banks or with traditional banks. In fact, the long-awaited agreement with ING came last summer. And since July 2020 they allow the clients of the Dutch entity in Spain to use this service.
But banks are not his only target. Right now, Bizum is already available in 10,000 online stores. A figure that has accelerated since just a few months ago giants such as El Corte Inglés and the DIA supermarket group decided to join their project.
Since its birth in 2016 and until 2019, only one Bizum could be made between individuals. And to this day this is still the most popular service, with more than 14.7 million active users. However, e-commerce payment has accelerated in the last year, driven in large part by the pandemic.
Among the large companies, Iberdola was one of the pioneers in adopting this payment model. The energy company allows its customers to pay bills on its website. You just have to request a code from Bizum in advance to use when you choose this payment method. Also companies such as Alsa, Yelmo Cines or Decathlon joined to facilitate online payment to their customers. And throughout 2020, firms from all sectors such as Agatha Ruiz de la Prada, Baleria, Destinia, Jazztel or Waynabox joined.
New competition for banking
Bizum does not compete for banking clients, but recently, names from other sectors have joined its business. At Carrefour, for example, you can sign up for a credit card with Carrefour EFC finance company. Not only that, in France, it has already launched a bank account, which makes it an entity as such. It would not be surprising if it expanded services to other markets.
Orange will also officially open a mobile bank in mid-May from which a wide variety of financial products can be contracted. Competition in the traditional sector has been declining since the financial crisis, but technology has allowed the entry of new players.
Only time will tell how our relationship with banks will be in the future, although if one thing is clear, it is that it will be very digital.
The other side of the coin