Be honest. How many of you reading the title of today’s blog had an idea of where this was going and how many wondered if I had finally lost the plot in writing weekly blogs? Well tonight I was sharing a story with the team about the banking industry and those who are evolving and those who are moving into extinction like the dinosaurs and one of them while taking notes said it sounded like a blog. So, here we are.

Are you a dinosaur or an athlete?

This story begins many years ago with the evolution of online only banking known as virtual banks or open banks. Once one emerged it seemed like several crawled out of the woodwork overnight and then disappeared just as quickly. The important thing to remember is that even if a bank is completely virtual for its customers, it still has to be registered in a physical place and has to follow the banking laws of that country.

And in writing today’s blog hopefully I don’t find myself at the end of the government tamping down on me but reality is what it is. In the EU, there is the Single Euro Payments Area (SEPA). It was an agreement between the countries of the EU to make it easier for individuals and companies to do business in euros regardless of where the transactions originated. And along with this evolved the standardization of the International Banking Account Number (IBAN) so that this process was seamless across member states. Perfect right? Well only if the country in which you are residing accepts other EU member state bank accounts to do business. And Spain does not and I will not go into the legality of this. So upon moving here with my German IBAN, I did not expect that I was going to have to rush around like a mad person to get a local Spanish bank account to do all modes of business. I could not set up utilities, buy a mobile phone, or pay for many online transactions that did not use a credit or debit card.

Lack of banking transparency proves difficult for digital nomads

This particular point has proven difficult for digital nomads who want to transit Spain and have a virtual or open bank account in another EU member state. Worse yet, Spain does not recognize many of the open banks even with a Spanish IBAN for the purposes of conducting official government business. Now you might say well that is Spain being smart and blocking out other markets and banking institutions and keeping everything in house. But in reality it puts them at a disadvantage for people who know this and are intending to move to Spain for any term. Because of the lack of freedom of movement with the bank, it is not attractive to digital nomads or even solopreneurs who want to conduct business here.

Our way or the highway?

Now, let me get off that particular soap box and get to the point. Several of the banks here in Spain have tried to keep up with the times regardless. An attitude that consists of “use our banks or don’t function in our country” could have led to a different outcome - one of stagnation. But several banks have recognized that online banking even in its simplest form is a must for the population at large today and that customers who can perform all of their services on a website or app are much more likely to engage with them to do business.

This meant that they had to not only improve their online presence but rethink service. Banks that have a website for basic functionality but then require you to go to a physical bank for every signature and transaction are losing the under 50 age market share. Banks who think that the population has the time to queue and wait for a bank representative to do even basic services are struggling. And then this was compounded by COVID where the infamous cita previa (advanced appointment) is needed for everything. Now people couldn’t even just drop by to handle these nagging problems.

Modernize or perish

Banks had to pump up their online presence to include fully operational apps to support the transactions as well. Push notifications had to alert customers to potential fraud, transaction alerts, etc. AND biometrics had to be incorporated to not only ensure security but to move with the trend of modern day users

While I make it a habit of watching industries and sectors that need to adapt, it is more interesting to me to watch the evolution of this particular one as it impacts me every day and the decisions I make on how I want to manage my personal finances but also my business. And the impact is seen every day on social media groups for expats and business owners. At least once a week the old “what bank do you use because I can’t make progress” discussion happens. It happened today. And customer service is very geographically dependent here but in general the lines trend in the same direction.

Sometimes you have to rebrand to convince people you have changed

And one bank for me shines in their ability to see the writing on the wall. Not only is the modernization key for the customers but in some cases a complete rebranding of the product is needed to show customers that it is not mutton dressed as lamb. One particular banking group established a virtual open bank. They branded it so obviously as Open Bank and then created a process by which a customer could open the personal account of their choice completely online including three methods of identity verification to meet all technological requirements that an user may have. It is only if you want to know early on in your research that you know with which old school bank this new way of banking is associated. AND if a customer does run into issues, the customer service exceeds even that of the original national bank that started the virtual bank. They have ensured they understand what a customer needs and where the gaps existed in the old ways. It is a new brand, a new product, and new ways of working.

And at the end of the day we have dinosaurs and agile athletes

This is what makes the difference between a dinosaur and an athlete. Athletes learn their craft, train to the intended goal, and are flexible enough to meet the demands of the sport. They are the definition of agility. And as we move through 2021 continuing to redefine who we are as individuals, teams, and business people the dinosaurs will die off like many in the banking industry and the true athletes will emerge. Will your company be a dinosaur or an athlete?

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About the Author:

INDRA A. BOOKS

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