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Digital banking 23 Feb 2016

Shamir Karkal: building the financial future on BBVA's platform

A  few months ago, I left Simple, the company I co-founded in 2009, took some time out  - including a visit to India with my daughter Asha- and then joined BBVA in a newly created-role as Head of Open APIs. At parties, when talking about the move, I often get quizzical looks asking “Why?” Why would I leave a young, fast-growing financial business that I founded, and go and work for a bank?

Shamir Karkal

Many people assume that this is related to BBVA’s acqusition of Simple in 2014 . Of course the acquisition made me familiar with the parent company, but the real reason I joined BBVA was the opportunity to build an Open API platform. To explain what that means, I frequently use the shorthand “AWS of banking”.

It’s hard to believe now, but when Amazon Web Services (AWS) launched in 2006, people wondered why an online retailer was launching a new business offering companies server capacity from its own technology platform. I think that question has been answered fairly robustly: In the quarter ending in December 2015, AWS had revenues of $2.4 billion and operating income of $687 million. Year-on-year, it grew 69%. This from a business that isn’t even 10 years old. Essentially, Amazon has built the world’s fastest-growing technology business (yes, faster than Google and Apple) by letting 3rd parties build businesses using its technology platform.

Twitter and Facebook have done similar things - we all know the ‘Log in with Facebook’ button, which is essentially 3rd parties using Facebook’s platform to authenticate and access customer data. And I believe

To twitter

BBVA has a huge opportunity to do the same - open up our core platform and services, in turn enabling others to build companies on top of these and thereby helping us build a new business.

BBVA has a huge opportunity to do the same - open up our core platform and services, in turn enabling others to build companies on top of these and thereby helping us build a new business. The industry jargon for this process is ‘Open APIs’ - Open Application Program Interface.

There is huge demand for these core services in areas such as customer authentication, money transfer, accounts, cards, and transaction data. $12bn was invested in financial technology start-ups in 2014 (according to Forbes) alone - a vibrant financial technology ecosystem that needs access to products such as ours.

The experience with Dwolla

BBVA is uniquely positioned to serve this market. We have a long-standing commitment to support the new financial services ecosystem as part of our own digital transformation programme, as demonstrated by our Open Talent competition. And we have experience of working with innovators in the area of Open APIs: our US bank, BBVA Compass, opened its payments API to Dwolla to allow real-time money transfer between bank accounts in the States. Money transfers typically take a few days in the US so this is a huge boon for customers. It’s also in keeping with BBVA’s philosophy around allowing bright new partners to compete with the bank’s own services, believing this gives the customer a better experience and improves the bank’s own offering.

Of course building an Open API platform for banking is a huge challenge as well. Security and privacy of customer data are our highest priorities - after all, our customer’s trust is our biggest asset. So we are going to build the platform methodically, starting by inviting a few partners into a closed Alpha before we gradually expand the scope and scale of our APIs .

We’ve started the invite-only Alpha in Spain 

So, to recap, I’ve joined BBVA because there’s a huge opportunity to responsibly offer the bank’s core services to help support the digital ecosystem and at the same time build a fantastic new business for the bank. Hopefully it won’t be too long before the puzzled expressions at parties are replaced by nods of approval.

Shamir is a software engineer turned finance and banking expert. Prior to joining BBVA as Head of Open APIs, Shamir was the Co-Founder and CFO of Simple, an online banking services startup based in Portland, Oregon. Before Simple, Shamir was a consultant with McKinsey & Co. specializing in strategy consulting for financial institutions in Europe, the Middle East, and the US. Prior to McKinsey, Shamir was an software engineer. He has a bachelor’s in computer science, a master’s in information technology, and an MBA from Carnegie Mellon University.