Starting a bank from scratch is many an incumbent banker’s dream. Ezequiel Szafir, CEO of Openbank, talks to Joy Macknight about constructing Santander’s fully digital experiment from the ground up.

Ezequiel Szafir

When Santander Group decided to launch a fully digital bank in the Spanish market, it took its existing online bank, Openbank, went back to the drawing board and put a non-banker in charge. CEO Ezequiel Szafir had digital disruption experience from the likes of Amazon Europe, where he managed Kindle.

His fear when making the leap was that Santander would limit the new bank’s aspirations, particularly in areas where it was in direct competition. But Openbank is fully independent, with its own board and banking licence. “That is a promise that Santander made to Openbank and it has kept its word,” he says. “Santander has shown the world it has the guts to compete against itself with a digital bank – and learn from the experience.”

Career history: Ezequiel Szafir  

  • 2015 Santander Group, CEO of Openbank
  • 2012 Amazon Europe, vice-president
  • 2009 Grupo Cortefiel, group general manager
  • 2006 Deloitte, partner, financial advisory services practice

Openbank differentiates itself from many other challenger banks by offering a suite of retail banking products, as well as having both a mobile app and a website. “Customers aren’t mobile only. For example, while many mortgage applications start on the mobile, 90% are completed on the desktop. This is because the screen is larger, partners can sit together, examine the house, the payments and so on,” says Mr Szafir. “Therefore, we believe that a full portfolio digital bank can’t be mobile only.”

Roadmap to success

Three years ago, Mr Szafir sat down with peers from Amazon, Google and Facebook to map out what a bank should be for its customers. They identified three areas that a bank must excel in: payments, loans and investments. Then 'smart bankers' from Santander were brought in to help deliver on Openbank’s vision to attract, engage and retain customers in a fully digital way.

The bank relaunched in July 2017 after 15 months in development. Today, it is the fastest growing bank in Spain, with a 26% increase in new customers to over 1 million and a 20% growth in deposits to more than €9bn, as of September 2018. It has seen a 25% increase in customers using Openbank as their primary bank, another differentiator from many challengers.

The secret to its success, according to Mr Szafir, is Openbank’s approach to the three critical areas of banking. For example, it provides customers with the option of paying by any method they choose, including Apple Pay, Google Pay and Samsung Pay. Customers also have greater control over their debit and credit cards, and can temporarily block and unblock cards by country and channel type.

On the loan side, customers can swipe and access finance no matter what was purchased or when the purchase was made. Openbank uses machine-learning algorithms in its credit risk modelling to ensure appropriate lending limits.

As to investment, Openbank – through its partnership with BlackRock – allows any customer with €500 access to quality investing tailored to their risk appetite. “Through our recently launched robo-adviser, we want to bring the high-net-worth individual and private banking experience to our customers,” says Mr Szafir. “Customers can combine micro-investing, as little as €1 per day, with investment by objectives and robo-advisory.”

In the cloud

Openbank’s front end is fully cloud based, which brings many advantages, according to Mr Szafir, including speed, computing power, elasticity, space and open architecture – at a much lower cost. He emphasises the importance of open architecture for engaging with the fintech ecosystem.

In the back end, it shares the same legacy systems as Santander’s. However, in 2019 Openbank will begin migrating from the “monolithic and mainframe infrastructure” to one that is componentised and cloud based. “We are going to learn a lot through the migration and will pass on this know-how to Santander,” says Mr Szafir.

Temenos T24 was chosen as Openbank’s core banking platform and will form the basis of what Mr Szafir calls “a component library”. He explains: “While the core platform is important, there are many other components that are equally so, such as the risk engine. Previously everything was built into the core system, but today we want to have many different modules, a bit like Lego, connected through an application programming interface layer.”

While Openbank schedules regular updates on a weekly basis, at the end of September 2018 it performed a bigger release, which included allowing customers to keep their passwords in a password manager within the mobile app. “When we asked our customers what they wanted, many said: ‘If you can keep my money, can you keep my password?’,” he says.

It also launched a charity marketplace. “Customers can go to the website, select a charity, set up an automatic transfer every month or year, and receive a tax receipt,” says Mr Szafir. In addition, it launched a 'solidarity' debit card that rounds each purchase up to the next whole euro and the remainder is donated to the customer’s chosen charity. “All those things we do to become a better bank and encourage customers to stay with us,” adds Mr Szafir. Next year, Openbank plans to expand outside its home market – so watch this space.

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