Bankinter urges digital euro push, dismisses stability concerns

Bankinter CEO Gloria Ortiz delivered a stark assessment of Europe’s digital payments landscape, signaling urgency around the development of a central digital euro – and a pointed critique of past strategic blunders.

Private systems thrive, but a digital future demands action

Speaking after the bank’s first-quarter results, Ortiz underscored the remarkable success of systems like Bizum, declaring it “works perfectly.” However, she emphasized that the continent’s future lies in interoperability, predicting cross-border payment connections will arrive sooner than a standalone digital euro. “It’s starting to see interconnections of instant payments across all of Europe, and I believe that interconnection will come before the digital euro,” she stated, a clear indication of her prioritization.

Ortiz’s approach is pragmatic: leveraging existing private infrastructure for the digital euro’s implementation – a network of nodes connecting countries – rather than embarking on a costly, complex undertaking. “We believe it would be much faster and less expensive to establish it on the existing private infrastructure because you just have to make connections between the different nodes in the different countries and establish rules and standards,” she explained. This strategic vision reflects a commitment to efficiency and a recognition of the existing financial ecosystem.

Despite concerns about the potential impact on financial stability – Ortiz forcefully dismissed worries about individual wallet limits, characterizing them as “not causing any problems.” Her focus remains firmly on the wholesale, or ‘interbank,’ market, where she envisions significant utility for the digital euro. “We will give the digital euro a lot of utility in the wholesale world because that’s where it will allow for 24/7, 365-day payments, which is something that cannot be done through any of the platforms that the banks have,” Ortiz asserted, emphasizing the need for a more aggressive push. “The digital euro wholesale is a very important bet that we should promote more,” she added, highlighting a target date of 2029 or 2030.

The bank’s performance in the first quarter was robust, with a net profit of €290.66 million, a 7.61% increase year-over-year. Margins expanded across the board, showcasing the success of its digital strategy: interest margins rose 5.5%, while net commission income climbed 8.06%. These gains, coupled with a 6.5% increase in gross margin and an 8.7% jump in operating margin, drove a significant reduction in efficiency ratios, culminating in a historic low of 35.4% and a substantial drop in the loan loss ratio to 1.92%.

Bankinter’s global footprint continued to grow, with total assets increasing by 10.3% to €136.678 billion. Resource management outside of balance sheet operations also surged by 17% to €69.123 billion. While Spain remains the primary market, with a 10% rise in pre-tax profits, Portugal and Ireland experienced double-digit growth. However, a sobering reminder of Europe’s vulnerability lies in the dominance of American firms – Mastercard, Visa, Android, and Apple – controlling the majority of the payments market.

Ortiz’s comments serve as a critical wake-up call, echoing a past strategic misstep: the sale of Visa Europe to American firm Visa USA. “We sold Europe to Visa USA… This strategic issue is a long-term issue; we can’t wake up 15 years later,” she cautioned. The takeaway is clear: Europe must embrace strategic pragmatism, leverage its existing digital infrastructure, and accelerate the development of the digital euro wholesale to avoid repeating past mistakes and safeguarding its position in the global payments ecosystem.