Gonzalo Gortázar, CaixaBank’s CEO, talks to Joy Macknight about driving efficiencies through digitalisation and transforming the Spanish bank’s distribution model.

Gonzalo Gortazar

Gonzalo Gortazar

The secret to CaixaBank’s success, according to CEO Gonzalo Gortázar, is a firm commitment to its core values. The Spanish institution was founded more than 115 years ago to help the working class in Barcelona save for retirement and provide financial support in the event of work accidents.

“Our market share has grown year on year, which can only be because we are doing the right things for our clients,” he says. “In addition, we have been driving efficiencies to ensure that we remain profitable.” Year-end results for 2018 saw CaixaBank’s net profit increase by 17.8%, to €1.99bn.

Emphasis on efficiency

Mr Gortázar emphasises that the bank is focused on efficient cost management, not solely cost cutting, to stay profitable. “If a bank just starts cutting costs and losing business then it is a trip to extinction,” he says. “We need to be efficient and cost sensitive, but having a balanced approach is important.”

CaixaBank stands out from domestic competitors with the wide scope of services that it provides in Spain, including insurance, according to Mr Gortázar. “We have a much larger market share in insurance than banking, for example,” he says. “This has allowed us to focus on long-term savings advisory and protection, both life and non-life insurance, which has boosted our resiliency particularly during these years of low growth, limited opportunities and negative rates.”

He is not resting on his laurels, however. Making further progress towards digitisation is top of mind, as evidenced in the bank’s 2019 to 2021 strategic plan, which aims to “put technology at the service of customers and employees, while also strengthening its socially responsible banking model”.

Future-proofing the business

Part of CaixaBank's strategic plan is to transform its distribution model; hence, it is promoting a remote banking relationship model, InTouch. By 2021 the bank aims to have more than 3 million clients enrolled in the programme, up from 1 million today. “It is working well for digitally savvy people. They also benefit from expert advice that draws attention to different opportunities we can offer them, or they can solve problems as they arise,” says Mr Gortázar.

In line with this transformation, over the past 10 years CaixaBank has created 9000 new jobs, most of which are associated with specialist roles such as private bankers and business managers. “Many CaixaBank employees have been retrained gradually as specialists because their generalist support function has become increasingly less relevant as branches perform fewer transactions and more higher value-added activities,” says Mr Gortázar.

CaixaBank has also renovated its urban branch network, launching 300 larger branches, or store branches, with plans to double that number in the future. These city branches are designed to offer higher value-added services, with more specialists. The bank plans to invest €250m over the next three years in this initiative.

The plan will allow CaixaBank to close smaller branches as businesses and clients feed into the store branches. As such it plans to close 800 branches in the next three years, according to Mr Gortázar. But it will not be making similar cuts to its 1000-branch rural network. “It is profitable, but we want to ensure it is profitable in a sustainable manner. Hence, we will be looking for a high degree of efficiencies, which will mean fewer employees per branch,” he says.

Additionally, CaixaBank has plenty of opportunities to become more efficient and productive to capture additional business opportunities, according to Mr Gortázar, who says that almost every division in the bank has profound transformation plans to execute over the coming three years. “Whether we talk about client-facing operations, risk, finance function, markets, compliance or internal audit, there is a lot that we need to do to ensure we continue to be agile and have the flexibility to adapt to a world that is seeing accelerated change every day,” he adds.

Banking on sustainability

As shown in its strategic plan, CaixaBank consciously positions itself as a socially responsible bank. “Sustainability and social responsibility are a big part of our DNA,” says Mr Gortázar. “We have reformulated our purpose and mission to show our commitment to preserving and contributing to our clients’ financial wellbeing, as well as society’s progress.”

CaixaBank banks 30% of the Spanish population, from the very rich to the very poor. “Most think that those with a higher income would have a higher financial wellbeing, but they may also have higher expenses because they haven’t appropriately planned. We are helping clients to plan – 3 million clients are using our personal financial planning tools and 5 million are clients of VidaCaixa, our life insurance company,” says Mr Gortázar.

According to the CEO, the focus on social responsibility is based on CaixaBank’s link with La Caixa Foundation, which still owns 40% of the bank. The symbiotic relationship is embodied in the bank’s volunteer programme. In 2018 almost 15,000 staff – half of the bank’s headcount in Spain – engaged in volunteering, mainly in activities funded by the foundation. “We provide the hands and the foundation provides the funds. As our profits accrue, 40% goes back into the foundation and our people help put it back into society,” he says.

Its subsidiary MicroBank, which is the largest microcredit institution in the EU, is part of CaixaBank’s social commitment. Since inception 11 years ago, it has provided more than 860,000 credit transactions of an average sum of €5000 to €6000, with no guarantee or collateral. “It is profitable and has reasonable asset quality statistics. Plus, it combines the sustainability associated with a bank that is profitable with an important social function,” says Mr Gortázar.

Sustainability is top of the agenda and CaixaBank is reviewing the role its lending can play in energy transition. As Mr Gortázar says: “Banks are being asked to help in the move to a greener and cleaner world by channelling the funds from various savings pools to the right type of companies.”

Diversity drive

Gender diversity is also important for CaixaBank. In 2017, it launched the Wengage programme, aimed at promoting gender equality. Recently it released a guide for gender-neutral communication. The guide is focused on work situations where an unconscious bias can manifest in discrimination.

“’Most people are aware that this is a good cause but may not realise where the problem lies. We wanted to point out some of these situations that seem to be natural but actually contain unconscious bias,” says Mr Gortázar. “Because of our size and history, we believe that we have to act in the right way; we can also communicate that to society, as an example for other organisations.”

As part of its pledge to address financial inclusion, CaixaBank decided not to close branches in rural Spain; it is present in more than 200 towns where it is the only bank. “It is an important decision to stay, as many competitors are withdrawing,” says Mr Gortázar. “Particularly for people of a certain age or those who aren’t digitally savvy, not having a branch in their town presents a risk of financial exclusion. In addition, MicroBank is precisely directed to combat financial exclusion.”

MicroBank has a full deposit offering for those with no or very low income, with a more basic banking account without any fees. “Some think that this is detracting from our profitability, but it is critical to be a fair and inclusive organisation. And it has its rewards, as people are becoming much more demanding in terms of sustainability, inclusion, equality – millennials in particular are quite sensitive, so we feel it is the right thing to do for us,” says Mr Gortázar.

BPI acquisition

As part of the integration of Portugal’s BPI, which CaixaBank acquired in 2017, Mr Gortázar says some businesses have been brought into CaixaBank Group but not all. “From a distribution point of view, we have no overlap, but where we have looked to consolidate operations is in the product factories,” he explains. “For example, we have the largest life insurance company in Spain and thought it made sense to buy BPI’s smaller insurance company in Portugal to upgrade the product offering, give it scale and cost efficiency.”

CaixaBank did the same with credit cards, merchant acquiring and asset management. “But the core of the businesses is the distribution – the network, the people – those are BPI and will continue to be,” adds Mr Gortázar.

Currently, CaixaBank is not looking at further acquisitions, according to Mr Gortázar, conscious of the many things that need to be done in terms of transforming its operations in Spain and Portugal. He continues: “However, if at some point there are opportunities it would be our duty to our shareholders to analyse them. But it is certainly not what we are expecting as a base case scenario.”


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