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Technology> Artificial Intelligence Updated: 25 Sep 2018

Digital Leaders and Laggards

BBVA has been used by leading researchers from MIT Sloan Center for Information Systems Research (CISR) as the focus for a research briefing investigating what differentiates a digital business and its leadership from those trailing behind in the global digital revolution.

The research briefing examines the attributes that define leadership in the digital economy, and the paradigm shift that businesses have to go through to deliver successfully for customers and clients as they evolve. Available currently only to sponsor and patron members of MIT CISR, the publication will be available to the public on June 14, 2017 with free registration on the MIT CISR website.

MIT CISR Chairman and Senior Research Scientist Peter Weill and MIT CISR Research Scientist Stephanie Woerner, used BBVA as the subject for their insight-driven article, due to the progress the bank has already made in transforming. The briefing, titled Is Your Company a Digital Leader or Laggard investigates the qualities that set digital leaders apart from digital laggards, the commitments needed, and how the change in direction at BBVA was underpinned by actions from the start. BBVA Group Executive Chairman Francisco González co-authored the article.

francisco gonzalez intervention in MIT

BBVA Executive Chairman Francisco González during a speech at the MIT. - BBVA

Weill and Woerner open this research briefing stating: “We have a confession to make. We love large companies, their value creation, and their challenges. A large enterprise can no longer win by being profitable; good profits make you a target in a digital economy. That’s why large companies have to change. In this briefing we identify the management practices of digital leaders, illustrated with the digital transformation of a large bank: BBVA Group.”

The article then progresses to identify the successful management practices of digital leaders, using the digital transformation of Spanish banking group BBVA as a case in point. It continues by saying that while digitization makes companies more agile and efficient, the challenge is that it also makes them more transparent (e.g. websites and apps) which in turn means lower switching costs so new entrants can target the customers of these large companies with a better digital offering.

They add: “A leader in the digital economy must hit the trifecta: be profitable, and innovative, and deliver great customer experience. Accomplishing the three together creates a source of competitive advantage.”

The study then examines, specifically, what defines a digital leader.

  1. Digital first focus: Constantly thinking of how digital can improve customer, client and colleague experience, and lead to better operational excellence – with everyone in the organization thinking this way.  The result is that digital leaders in these companies can innovate while cutting complexity, cost and time to market.
  2. Connected platform of services: Everything is connected in a digital world and digital leaders identify their crown jewels – the key capabilities that make their enterprises great – and enable them to work together.
  3. Digital coordination: Digital leaders coordinate all their digital efforts to meet a larger business goal - like providing a multi-product integrated customer experience. And in their quest, one important way to focus digital efforts is to amplify the customer voice inside the company.

For BBVA - a large Spanish bank with 2016 revenues of $26 billion, 70 million customers and 135,000 employees, operating in more than 30 countries – the briefing says it meant starting with a commitment.

In response to the challenges, and opportunities, he saw for banking in the future the commitment Francisco González declared more than a decade ago was that BBVA would build the best digital bank of the 21st century. To do this the bank took the three key elements outlined above, and put them at the core of its future development.

Peter Weill & Stephanie Woerner MIT authors Is Your Company a Digital Leader or a Digital Laggard?

MIT CISR Chairman and Senior Researcher Scientist Peter Weill and Research Scientist Stephanie Woerner. - BBVA

The research explains how BBVA, for example, developed an entirely customer-focused approach to mobile banking – digital focus first - designing its app to give customers the products, services, advice, research, support and interaction they wanted, whenever they wanted. The document argues: “It’s an appealing concept that puts the customer in charge and merges the bank’s full power - physical and digital - on the customer’s device.”

On connected platform of services, the briefing states: “An IT-savvy bank, BBVA has invested heavily in reusable global platforms since 2007. The company has worked hard at removing “digital spaghetti”- a tangled set of partially digitized business processes, constructed over time from many different systems and versions of data—and replacing it with efficient, scalable global digital platforms.”

In terms of digital coordination, the research briefing outlines how BBVA made its intentions clear, following the appointment of Carlos Torres Vila as the head of the new Digital Banking Unit in 2014. Under Torres Vila’s leadership –the success of which was reflected in his subsequent appointment to CEO in 2015– BBVA created new core digital competencies which included:

  • Talent & Culture: Responsible for promoting new schemes for talent management and adapting the Group’s culture to the new context.
  • Customer Solutions: Delivering the best banking experience to customers across all channels, leveraging data and design to better meet customer expectations.
  • Engineering: Responsible for running IT operations and developing software solutions for digital products using a global approach.

The research document explains how this new structure moves the enterprise from a more traditional brick-and-mortar bank with good digital capability to a fully integrated bank with human and DIY relationship models. It also pulls out statistics to demonstrate this, for example in Spain where the mobile banking tools have proved so popular with customers than they, on average, interact with the bank 150 times a year on their mobile devices, compared to just 4 branch visits per year. BBVA’s Net Promoter Score for its mobile app stands at 63% - the highest amongst its peer group.

BBVA knows that going forward senior leaders have to find the right balance between pragmatic and a visionary approaches. The bank must continue to operate, make money, and serve customers and clients while it’s transforming - requiring difficult decisions.

The authors conclude by saying: “This is a bold strategic initiative by BBVA. It’s too early to definitively measure success and what other kinds of changes will be needed going forward. The early indicators are positive as BBVA is now at the top in customer experience among peers in its main markets. To become a digital leader like BBVA, most large enterprises will need to create their own bold vision and build capabilities in the areas of digital-first focus, a connected platform of services, and digital coordination.”

It is by benefit of co-authorship of this publication by Francisco González of BBVA that MIT CISR is able to support BBVA in sharing the PDF via our company’s website.