BBVA continues to believe that a technological renovation of the banking industry is necessary to be able to face the new business models in the financial sector, although for the moment the results of its investees are not being satisfactory. Proof of this is that in February this year it expanded its fund to invest in fintech to $250M, has carried out 4 operations so far this year and has announced that it intends to invest in Latin America in a short period of time.
BBVA knows that winning in the Fintech sector requires patience
BBVA recognises that returns will be slow to come because of the investments to be made in the conversion to the new way of banking.
BBVA has so far accumulated negative results in these investments, because these types of firms initially require capital efforts to grow and achieve sufficient economies of scale. BBVA has losses of €78m on its investments in Simple, Atom Bank, Holvi and the Propel vehicle, companies in which it has invested some 175 million euros for their acquisition.
Most of the hole comes from the US firm Simple, the most relevant technology firm in terms of size in which it has placed its hopes. BBVA paid €85m in 2014. Since then, this Portland-based fintech has generated a negative profit of 66 M. Only in the first half of this year, losses reached 18M. But from January to June, it has increased the number of users by 43 percent.
What is BBVA investing in?
Bbva has invested in 4 companies so far in 2016, all of them in the US.
BBVA intends to invest in Latin America
Alan Colmenares, from BBVA's Digital Business Innovation team in Latin America, has announced that they intend to make acquisitions in the fintech sector in Latin America. They are mainly targeting Mexico and Chile, but they are not ruling out making mergers and acquisitions in other geographical areas.
According to Diego Serebrisky, managing partner of investment fund Dalus Capital, the Latin American banking sector is not sufficiently proactive despite the new technologies that are emerging.
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