The paradigm shift that will shape the future of banking was the subject of a keynote address by BBVA’s Derek White in Madrid this week. “BBVA is taking on Big Tech and building the future of banking”, he said.
Addressing the audience at the South Summit, BBVA’s Global Head of Client Solutions, outlined the challenges and opportunities facing the sector, what good digital businesses look like in 2018, and how BBVA is tackling all of these head on.
White began by assess the driving forces for change in financial services - notably the intervention of non-financial services businesses into the area of payments, credit and lending - the so called attack by the GAFAs.
As BBVA outlined earlier this year, while many believe the blurring of industry lines by the Google, Apple, Facebook and Amazons of the world poses a threat to banking, BBVA sees this differently, believing it can be a threat to these digital mega-businesses.
This, as White told the 2,000+ audience at South Summit, is not because BBVA intends to move into social media or advertising - which is effectively Facebook’s business model. But rather because to evolve into a digital business, as the bank has repeatedly stated is its aim, it needs to move upstream into the kind of services the big tech players offer. Services like personalised insights, aggregated data sources and advisory models - for example as seen in the BBVA Valora house hunting app.
For White, the interesting element here is how banks like BBVA start to increase the number of interactions they have with customers, and introduce ´smart interactions' into the equation where the advice, offers, products pushed are really relevant to the client at an individual level.
He said: “Customers who just use a branch have maybe ten interactions with their bank every year, and the products offered may be generic loans, for example. Move that to digital and it increase to perhaps 300. But make these interactions smart, give people content, advice, insight, more value for their time and data, and this can increase to 3,000.
“That’s where banks really start to become more valuable partners to people’s lives, offering services that make people's lives easier, that make decision making better, that ultimately can end - through trust - with them allowing a bank like BBVA to actively manage their money and their data for them in a truly valuable, truly reciprocal way.”
Derek White during his speech at the South Summit 2018 in Madrid.
But to get their banks, and indeed other business transitioning to the digital world, first they need to operate as good digital businesses. White continues that for him and BBVA, that shift to good digital businesses needs three things.
Firstly, a 100% DIY rate — clients, whether retail or enterprise — should be able to all their banking, whenever, wherever and however they want on the device of their choice. But this also includes colleagues too — allowing those working for these businesses to seamlessly perform their jobs with ease and efficiency.
This, White added, was the journey BBVA started more than a decade ago under Chairman Francisco Gonzalez and continued under CEO Carlos Torres Vila — both of whom also spoke at South Summit 2018 this week.
The next step needed was to move the mentality of the business, and its capabilities, from serving millions of customers to billions - in banking terms to ensure that BBVA remains a thriving business when the current 20,000 banks contracts to just dozens in the coming decades.
For White, this involves moving towards smart interactions' but also ensuring you offer your customers the kind of WOW factor that has spurred the growth of the big techs — elements like homogeneous beautiful customer focussed design.
Lastly, increasing the automation abilities within the organisation — reducing time, increasing efficiency, and improving both the client and colleagues experience. White used the example of the five levels of autonomy being seen in the automotive industry, adding that currently banking was probably no more than a level two.
Building on this, White called out three elements that were helping BBVA to nail these issues.
White said: “For us, within BBVA, it comes down to three key things."
“The first is the translation of interactions into opportunities, the second is around human centred innovation, and the third is the translation capacity — the speed with which the organisation can take the amazing idea trapped in someone’s head or that may have been thrown out in a meeting and turn it into a product that ends up in the hands of our clients.”
Lastly, looking to the future, White explained how for BBVA, it saw the future banking model as being one where banks act as digital companies, offering products and services in a marketplace dynamic. This, he said, was critical because it was likely the fourth industrial age will result in decentralised economies and business models, and only those businesses already adapting to this new reality will continue to exist.
He concluded: “BBVA is determined to be one of those success stories, and the path we are on now, started by our Chairman and built on buy our CEO, not only ensures we will always offer our clients amazing products, but that we will truly bring the age of opportunity to everyone.”