"Improving productivity is the biggest challenge that companies face today”, said BBVA Executive Chairman Francisco González at BBVA Bancomer’s National Directors Meeting today. During the event, which took place in Mexico City, Francisco González said that increasing productivity is “a process that is neither smooth nor homogeneous, but one that is essential for every company, and also for the banking sector."
In his speech during the annual meeting, BBVA Executive Chairman focused mainly on the challenges facing the banking sector and the progress in BBVA’s transformation process, offering also a brief overview of the current macroeconomic scenario.
Francisco González spoke about the complexity of the current scenario for the financial industry. He stressed the importance of the profitability problem that’s affecting the banking industry, fueled by low interest rates and new post-crisis regulations. He also asserted that, “the banking industry has become obsolete, with burdensome cost structures, outdated legacy systems, barely differentiated product portfolios and an excess of capacity.”
A third element is that customers are demanding a new type of banking relationship. “They demand more symmetry and balance in the relationship, flexibility in the channels, transparency, lower prices and responsiveness,” he warned. “The level of unsatisfied demand keeps growing.”
BBVA Executive Chairman also focused on the technological change as a key factor to improve productivity and general wellbeing. This is the Fourth Industrial Revolution, and exponential technologies such as the cloud or blockchain “open the door to productivity gains that were unfathomable not so long ago,” he explained.
Francisco González considers that “the change we are undergoing does not just entail doing the same things, but through digital channels.”It is not just about, “doing the same more efficiently, but about doing new things that couldn’t be marketed or even imagined with the old technology platform.”
In his opinion, the very few financial industry players that will survive will have to compete in absolutely different ecosystems. The key will be to regroup offerings from many specialists and offer bundled solutions. In this environment, “we don’t want to be just another competitor”, he stated. “We want to be at the core of the relationship with the customer.”
The Executive Chairman devoted some time to talk about the transformation that BBVA has been undertaking in recent years to compete in this new environment. He talked about some milestones, such as the new organization rolled out one year ago, and its six strategic priorities. (1) Provide a better customer experience; (2) drive digital sales; (3) develop new business models; (4) optimize capital allocation; (5) achieve the best efficiency level and (6) develop, inspire and retain the best team.
Francisco González also focused on the evolution of BBVA Bancomer, “Mexico's most important bank and one of BBVA’s cornerstones.” He emphasized the great progress that BBVA Bancomer is making in its strategic plan, “building the largest, most innovative and modern branch network in the country, with new customer service and management models that are yielding significant productivity and service quality improvements.”
He stated his conviction about the fact that BBVA Bancomer was going to “continue playing a key role in Mexico, and through its particular and business lending activities, in the development of its infrastructure and the promotion of financial inclusion.”
During his speech, BBVA Executive Chairman also went over some of the defining aspects of the macroeconomic scenario. He said that the world’s economic growth rate is almost 3%, “a modest figure compared to the period before the crisis.” Regarding Mexico, he underscored that “despite a complex global environment, the country has shown great resilience, thanks to a responsible management of its public finances and the structural reforms that the country has rolled out.” For 2016, BBVA Research has estimated that the Mexican economy will grow at 2.6%.
And, regarding Spain, he emphasized that the “country urgently needs certainty and consensus to implement further reforms and continue with the modernization process of the Spanish economy.” BBVA Research’s estimate points at a 2.7% growth for 2016.