BNP Paribas to spend €3bn on digital transformation in the next three years

BNP Paribas is to invest EUR3 billion in a three-year business plan to build the ‘bank of the future’. The French bank is looking to generate EUR3.4 billion in savings between 2017 and 2019, slashing branches and raising its spend on digital initiatives by 50% over the period.

Jean-Laurent Bonnafé, chief executive, told the Financial Times that it wanted to “transform its business” by boosting spending on digital initiatives by 50 per cent over the next three years. The shift comes amid the closure of hundreds of traditional branches as it adapts to changing client behaviour and job losses in its investment banking division.

“More and more our clients want to do operations online rather than face-to-face,” he says, giving the example of how companies will increasingly organise their cash management and foreign exchange swaps through their own terminals, rather than using an investment bank. Mr Bonnafé said the bank aimed to generate €3.4bn of cost savings from its digital investments, of which €2.7bn would be recurring.

The increasingly digital focus will allow BNP to close branches, which is crucial to cutting costs at a time of low interest rates. The bank closed about 10 per cent of its French retail network from 2012 to 2016. Its investment bank is cutting 2 per cent of its 30,000 employees.

Mr Bonnafé says that while he was not making a forecast, he sees “no reason” why this trend of net branch closures would change over the next three years. This would help the company cut its cost-income ratio from 66.8 per cent to 63 per cent.

“We are in an environment where we don’t create jobs — we are managing the transition,” he says. “The jobs are changing in retail banking and in investment banking . . . There is a big task for us to work with people to manage this.”

He adds that part of the €3bn would be invested in retraining staff and hiring people with different skills, such as data analysis.

BNP Paribas says it will rely on the success of a significant number of initiatives already underway in terms of products, apps and digital platforms such as Hello bank! and Wa! in domestic markets, Cepteteb and BGZ Optima in IFS, Centric and Cortex in CIB, and through its tech labs and incubator programmes.

The bank cites the achievements of Hello bank!, the mobile only subsidiary launched in 2013, which now provides services to 2.5 million customers in France, Belgium, Germany, Italy and Austria.

Source: Financial Times