If you look at who’s successful in the digital world, in any industry, it is companies that are global
One of BBVA’s proudest achievements over the last two years was gaining the top ranking globally for the functionality and user experience of its mobile phone app from Forrester, a US research firm. Can it give clients similar benefits by copying what its best peers’ apps do, as another chief executive of a big European bank suggests?
Certainly not, says executive chairman Carlos Torres Vila. The app is just the tip of its programme for the digital age: “Our purpose is to bring this age of opportunity to everyone – and everyone means society, and the challenges that society has because of the lack of sustainability in the environment, the lack of sustainability socially. It’s about how you think strategically about your role and your value added, your reason for being.”
Banks have the chance to move beyond merely keeping money safe, handling it, lending it to others and offering a return on it, he says. “The big opportunity is to move from this infrastructure of money value proposition to solving a deeper problem that people have around money, which is making the right decisions.”
According to Torres Vila, this shift – which will also demand distributing more third-party products – requires new skills in design, data science and software coding.
“Unless you have a massive transformation programme around a clear strategy and goal, this is not going to work. You can copy here or there but it’s going to be a hodgepodge of features without strategic intent.”
Indeed, BBVA is increasingly designing its own APIs so that other distributors of financial products, such as ride-sharing apps or social media platforms, can use them. Tech firms will want products and services that are globally applicable. But the greater scope to do business in the same way in different countries is also the central benefit of digitalization for BBVA.
Even regulatory convergence is helping.
“I think, strategically, digital blurs geographical boundaries,” says Torres Vila. “We might still have some differences on capital requirements and the stance of some of the supervisors, but to the extent that those things are happening, digital is a huge driving force to eliminate boundaries across industries and across geographies.
“If you look at who’s successful in the digital world, in any industry, it’s companies that are global,” he adds. “You will not find one that is pursuing any different approach than a global one. In banking, including retail banking, that’s the direction of travel. If you’re able to make that move now, you’re better off.”
Like most banks, BBVA is not yet trying to integrate its local core banking infrastructure. On the other hand, it no longer needs to develop its products and structure its operations country-by-country. Instead, again like other banks, it designs software with the global market in mind, then plugs them into country-level IT systems. BBVA’s local banks in countries such as Peru and Uruguay can subsequently provide an app that is much better than they could afford to develop independently.
Digitalization should therefore allow BBVA to better enjoy the scale benefits of its international diversification.
So, is it a global bank? Perhaps not – yet. Torres Vila admits: “We are global in the sense that we are diversified across emerging and developed countries in Europe, the Americas and the US. But we’re still very much in our daily operations, in our daily offerings, very much multi-local.”
This is changing. “We’re globalizing how we develop solutions and how we deploy the solutions to the countries where we operate.”
The bank now has a global client solutions team, for example, reporting to chief executive Onur Genc, and a global data unit reporting to Torres Vila.
There is also more alignment on key performance indicators, particularly on how they determine bankers’ pay.
“We’re starting to be more of a global bank by doing things more globally, where we are present today.”
Ultimately this will make it easier – assuming it can gain banking licences – to serve clients in more countries than it does today, even in Asia. A similar realization is one reason why it has acquired a 40% stake in app-only lender Atom Bank in the UK.
“Some of those investments have represented a sort of stake in the ground in places where we didn’t have presence,” says Torres Vila. “Without making a very large investment, it’s like buying options that might develop into something big in markets where we have no presence.”