“BBVA Italy is achieving disruptive growth by bringing the best of incumbent banks and digital banks”
Murat Kalkan, Head of Digital Banks at BBVA, participated in the 36th edition The European House – Ambrosetti, held in Cernobbio, to discuss the rise of digital banks. During his address, he shared his views on the competition between incumbents and neobanks, and highlighted how BBVA Italy is disrupting the banking industry in the country by combining the best of digital banking with the strengths of traditional institutions. The result: one of the fastest growing banks in Italy with more than 680,000customers and the top-rated bank by customers in the country according to the Bain & Company NPS Benchmark Report, all achieved in just three years.
“Around 10 years ago, banks believed that digital banking was most relevant for capturing younger, more digitally savvy clients, as they grow and gain more wealth, but less so for older, wealthier clients. Contrary to those expectations, older and wealthier clients became comfortable doing their finances digitally much faster than younger customers accrued wealth.”, said Kalkan, who argued that the demand for digital financial services therefore is growing much faster than anyone anticipated.
“Digital banks were once a question; today they are a reality. Beyond increasing digital adoption; strong customer experience, structural cost advantages, and rapid scalability have fueled digital banks’ growth. Today, they are strong not only customer numbers, but also increasingly in revenues. ” said Kalkan. And, currently, there’s a race between traditional banks, which are rapidly improving their digital capabilities, and neobanks, which were designed from the outset as digital natives.
“Interestingly, traditional banks have often digitized faster than new players have gained significant market share, but the competition has only just begun,” Kalkan added at the Ambrosetti forum.
In this context, digital banks differentiate themselves from traditional ones and achieve strong growth mainly thanks to better customer experience and more attractive rates and fees. From the outset, they leverage cloud technologies and are free from legacy systems, which allows them to offer an advanced digital experience. Their cost structure is also lower, allowing them to pass that saving on to the user. Meanwhile, traditional banks are rapidly and increasingly stepping up their digital transformation.
However, the competition is more balanced when it comes to features offered. In Kalkan’s view, incumbent banks typically offer more functionalities, but not always in the most simple and user-friendly way, which is where neobanks do a good job.
The greatest advantages of the incumbent banks lie in their products that cover the full range of their customers' financial needs, and in the trust that they earned over the years.
“Neobanks typically focus on the most basic financial products like current accounts and debit cards, but often lack others such as capital-intensive products like mortgages, which are crucial in the lives of customers.”
“Trust could be one of the greatest advantages of traditional banks, thanks to decades of market presence, greater scale, and strong brand recognition,” added Kalkan. However, he warned that this trust can quickly collapse if customers perceive unfair or non-transparent practices. “Overall, trust in incumbents still prevails strongly, but the trend may be shifting in favor of neobanks. It’s important that traditional banks act to protect and reinforce that trust,” he cautioned.
BBVA Italy is an example of how BBVA is addressing this challenge, combining the best of neobanks and incumbents. In just three years, the bank already offers a full range of financial products and services for individual customers, including current account, deposits, debit card, credit card, personal loans, mortgages, investments, and insurance products. Moreover, the bank couples this rich product offering with an attractive proposition that places interest-bearing current accounts at the center, with no fees, and an internationally recognized digital app. All of this has enabled BBVA to reach more than 680,000 customers and become the number one bank in Italy in the NPS ranking by Bain & Company.
Kalkan stressed that a well-executed digital strategy — like the one implemented in BBVA Italy — can become a key growth engine and strategic asset for international expansion. In fact, BBVA plans to replicate this fully digital model as it enters the German market.
The main conclusion from BBVA’s Head of Digital Banks was that this new competition is set to transform the financial industry, and there is still no clear winner. “In my view, the result will be mixed, and it’s still too early to predict how much of the market will shift from one side to the other, but one thing is clear: customers will benefit greatly from this competition” Kalkan concluded.