This surge represents a major shift in the banking landscape. According to In Spain News, much of this growth is attributed to Revolut, which alone has more than 3.5 million users in Spain.
But what about those who are against digital banking? What will happen to traditional banking in Spain amid this digital revolution?
According to the latest figures, the number of digital bank users in Spain has grown by nearly two million in just the past year.
The rise of Revolut
Revolut’s expansion has been nothing short of impressive. In 2022, it had just one million customers in Spain, a figure that doubled by the summer of 2023. Globally, Revolut has over 45 million users. According to Ignacio Zunzunegui, Revolut’s Head of Growth for Southern Europe, one of the main reasons for this rapid expansion is the launch of Revolut’s banking branch in Spain, allowing users to have a local IBAN (International Bank Account Number). “We’ve evolved from being just a travel card for foreign currency payments to a full-service daily bank,” Zunzunegui explained in a statement sourced by Expansión.
Other key players in the digital banking market
While Revolut leads the charge, N26 is the second most popular digital bank in Spain with over one million customers. The German bank has seen a 20 per cent increase in its Spanish user base in the past year and is now focusing on encouraging existing customers to use its platform more frequently for daily banking activities.
Spanish fintech Bnext, with around 870,000 users, has benefitted from partnerships with Spain’s postal service Correos and government schemes like the cultural voucher programme.
Digital banks vs. traditional banks
The success of digital banks in Spain is shaking up the traditional banking industry. A recent study by Grupo Inmark revealed that fintech banks, including Revolut, N26 and Bnext, have acquired 53 per cent of all new banking customers in the country. Revolut alone accounts for almost 20 per cent of new customer accounts, overtaking traditional giants such as BBVA, Santander, and CaixaBank.
This trend is a welcome development for many expatriates who find traditional banking in Spain to be expensive and cumbersome. Language barriers, high fees and bureaucratic processes have driven many expatriates and locals to easy, instant digital banking apps on their smartphones.
Digital banks also offer additional perks such as low-cost international transfers, competitive exchange rates, and integration with popular payment systems like Bizum.
The dangers and drawbacks of digital banking
However, not all digital banks are without issues. For instance, Revolut UK has received thousands of fraud complaints, highlighting the potential risks of digital banking. Scam artists are becoming increasingly deceiving. Additionally, digital banks often provide limited or no in-person support, making it difficult for customers to resolve issues such as account access problems or transaction disputes. There can also be a lack of traditional banking services, such as cash deposits, which may be inconvenient for some users.
The Spanish government is also aware of the challenges facing certain demographics, particularly the older generations, in accessing banking services. In response, they have proposed measures to ensure better access to financial services for seniors, meaning more ATMs.
Whether it’s managing day-to-day expenses, making international transfers, or investing, digital banks are providing a more seamless financial experience. However, there are dangers and drawbacks that we all need to be aware of.
Do you use digital banking? What are your thoughts on it?
