The new face of digital banking

Biometrics has been called the next frontier in service excellence and security – the technology that will free consumers from the hassle of passwords and all their associated security weaknesses. For banks, keen to eliminate friction in their customer relationships and to thwart increasingly smart cyber-criminals, biometrics is a critical piece of the jigsaw.

So it is worthy of note that CaixaBank has just become the world’s first bank to use facial recognition as a PIN substitute to withdraw cash at ATMs. The system allows users to withdraw money by simply recognizing them from the image captured by the terminal's camera. The ATM has the hardware and software needed to validate up to 16,000 points on the image of the user's face, which guarantees a totally secure identification. The system, developed with technological partners Fujitsu and FacePhi, is currently in place in 20 ATM terminals and will be rolled out across the bank’s new digital-oriented ‘Store’ offices from the second half of 2019.

While an impressive global first, the introduction of biometric ATMs is just the latest in a stream of digital innovations stretching back years. Indeed, in 2017, CaixaBank was the first bank in Spain to incorporate Face ID technology into its security system for mobile banking on iPhone X devices, in a sense a precursor of these new ATMs.

Most importantly, these new products cannot be seen as isolated IT deliverables. They are only possible because the bank has invested in the underlying, strategic transformation required to deliver true digitalization, a transformation most banks still struggle with. 

One of the biggest challenges for banks is to release the value trapped in their vast but siloed data resources. For many banks, the necessary centralization of these into a single data universe remains an aspiration, but CaixaBank saw early that data was the key. In 2014 it partnered with Oracle on a Big Data project designed to consolidate 17 data marts into one, incorporating both structured and unstructured data. This enabled the advanced analytics and business intelligence required to extract value from the data and laid the foundation for the flexibility and agility needed to drive future digitalization. 

Having a single data pool gave CaixaBank a huge head start and its recently launched strategic plan explicitly aims to intensify and extend data and analytics capabilities across the organization. And the bank is not standing still: it intends to continue shifting to cloud processing and solutions, to progressively migrate to an internal API-based IT architecture, to continue to invest in cyber security and to build an additional data centre.

Digitalization in banking may rely on data but it starts with changing customer behaviour. In the case of CaixaBank, of its more than 10 billion annual transactions, although 32% are via cards/point-of-sale, 24% are via web/internet and 33% are via mobile. 

This huge shift to digital channels requires rapid adaptation by banks if they are to remain relevant to their clients. In particular, the rapid adoption of mobile poses a real challenge to banks, many of whom are still getting to grips with online services.

Here, too, CaixaBank has led the way: in 2016, it launched imaginBank, Spain’s first mobile-only bank. The model marked a radical departure from the traditional multi-channel approach adopted by the banking sector, with users managing their finances autonomously, via mobile app and social media only. Customers sign up directly through the mobile app, so not only does it give them the speed and ease of use they want, but it also gives them a completely personalized experience: owing to the investment the bank has made in data and analytics, clients who log on to their imaginBank app are presented with a customized menu of products and services based on their profile with the bank. 

In addition, in 2017, imaginBank customers became the first in Spain to be able to use an intelligent chatbot to explore new products and services. Gina, available through imaginBank and Facebook messenger and driven by IBM Watson technology, can provide information on all the offers and promotions available to a customer, tailored to their circumstances. What’s more, Gina inspired the launch of CaixaBank’s own chatbot Neo, providing customers with answers to more than 450 questions through 100% voice conversations, and which, through the launch of subsequent specialized apps, enabled CaixaBank to become the first financial entity in Spain accessible via both Google Home and Amazon Alexa.

imaginBank hit one million users in 2018 with 75% of those using the app or their card every two or three days. As David Urbano, head of imaginBank, says: “That means instead of customers we have fans.”

So far, the bank’s embrace of digitalization has helped build the leading franchise in retail banking in Spain, with a 23.6% share, and the largest base of digital customers in Spain: more than 6 million digital customers, 5.2 million mobile banking customers and a penetration rate of 32%. 

With new projects involving AI and blockchain in the works, CaixaBank’s digital leadership looks set to continue.