Virtual banking: Simple but uncertain

FRANCISCO GONZALEZ, the chairman of Spain’s second-largest bank, BBVA, loves to talk about technology. Even as the financial crisis raged, the former computer programmer has talked up the importance of upgrading the bank’s systems. On February 20th, BBVA bought Simple, an American online-banking platform, for $117m, in a deal that hints at the potential for innovators to shake up retail banking.BBVA, with €607 billion in assets and 50m customers, believes that traditional banks will soon lose their monopoly on banking. In an opinion piece in the Financial Times last year, Mr Gonzalez warned that banks faced certain death unless they took on the likes of Amazon or Google. New entrants will not have the legacy costs of banks and can tempt clients with convenient mobile apps. He predicts mobile services could even triple the number of bank customers worldwide in the next decade.Internet banking has had false starts before and thus far big tech companies have not really ventured into the low-margin, highly regulated and capital-intensive world of retail banking. True, non-banks have had some success in places like Kenya, which lacks an adequate banking network. And niche players like PayPal are thriving in payments. But their impact has been limited. “I am dying to fund a disruptive bank,” Marc Andreessen, a venture capitalist, recently tweeted.Banks...






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