The big banks are besieged on all fronts by challengers baying for change and pushing for disruption. It leaves the likes of Barclays, RBS, HSBC and Santander with two options: innovate or sink.
But fending off agile challengers whilst keeping the massive, cumbersome business-as-usual leviathan going is no easy feat let alone being proactive in supplying your own innovation. How do you find the time, the budget and the people to research innovation that will prove cost-effective? And ‘proof’ is often the key word that drives the business case.
A large part of building that business case is keeping the ear to the ground to listen to the ebb and flow of the fluid fintech eco-system. Keeping track of new ideas, new players and predicting the next convergence of technological trends requires a dedicated workforce.
We spoke to Marisol Menendez, Head of Open Innovation at BBVA, on how exactly she is looking to make the most out of the technological eco-system. Specifically, we address BBVA’s Open Talent competition, which looks to draw the latest and greatest fintech startups to the Spanish bank with the prize of funding, mentorship and an excellent global customer base.
Menendez outlines the cultural change that actively engaging with the disruptors of the eco-system can have on BBVA, and how the bank’s unorthodox delivery and execution puts them in good stead to weather the Open Banking challenge.
You’ve had an interesting career progression with BBVA. In 2012 you were their social media manager and now you’re their Head of Open Innovation. What does this say about BBVA?
I think it says a lot about the bank’s personality and culture. I have a background in engineering, as are several members of the BBVA c-board, so BBVA has this mentality of focusing and improving processes and macro processes in corporations.
When I was tasked with innovating our social media channels, there was a focus of looking at the wider scope for the bank. That plays into a strategy BBVA had back in 2012, which was to continue advancing the ways we connect with the outside world.
The innovation part of my role looked at how to create value for customers within those connections. Internally, we felt that the new way we were treating social media was a natural progression and a way to accelerate innovation within BBVA.
What is BBVA’s current innovation process?
We call it distributed innovation. We don’t actually have a department for innovation because we want the entire organisation to take ownership of innovation, so that innovation can happen across all business processes organically.
We currently operate in 35 countries with many different business lines, divisions and models, but everybody has a mandate to innovate their particular process - be it in retail or corporate banking, in insurance, HR or procurement. We split this idea of intra-innovation into ‘transformation’ and ‘disruption’. Transformation means improving existing processes and disruption means going beyond the existing model rather than simply improving it.
Whilst we have this internal drive to innovation, we also have an interesting venture to partner and collaborate externally with big corporations and M&A projects with Simple Bank, Madiva, Spring Studio, Holvi and a stake in Atom Bank. This is essentially Open Innovation, or better put, innovating in collaboration with others.
Where emerging technologies are concerned, everything is happening at the same time. Our strategy is to solve the most common day-to-day problems that customers might have. BBVA won the Forrester Best Mobile app, for instance. It’s certainly a high energy eco-system to be in and we’re trying to tap into it with our Open Talent competition.
What specifically does BBVA’s Open Talent competition seek to address?
Open Talent is another dimension to our Open Innovation strategy. It sits between our internal and external ventures where we look to foster long term collaborations to ultimately give our customers greater value. We’ve been running these competitions for 10 years now because we realise this is a great way to understand how the eco-system is adapting, so we’re constantly encouraging reinvention year on year.
The Open Talent awards are somewhat inspired by the Oscars, in that we award specific areas within the eco-system. The three main awards are focused around disruption, so “Fintech for: Future, People and business. The first, Fintech for Future, looks at how we can future-proof and push the boundaries of current capabilities. Fintech for People focuses on improving the consumer world and Fintech for Business looks to improve current enterprise processes.
Each of these awards come with 50,000 EUR but more importantly they will go to an open summit with the chairman and CEO and generally to meet like minded people.
Open Talent seems to be a vehicle for a symbiotic relationship between startups and BBVA.
Absolutely. We benefit from their agility and new ideas and they benefit from our resources, connections and business direction. I remember when the conversation was around whether fintechs would even survive but right now I think collaboration is the new norm. We recognise our skill limitations and we know how to build those relationships to ultimate reward the end-user.
That reward is made greater by treating those startups as colleagues. We had a summit where the executives of BBVA met with the founders of the startups to brainstorm the future of finance. That’s what we want to foster.
What is the future of BBVA’s technology stack?
From the perspective of Open Innovation, as you can imagine, there is plenty of research into how the emerging technologies with play into the eco-system. If we want to roll out a new technology we have to look at the play between business and technology. Blockchain per se is neither a good or bad development until it has a real use case that can affect a business; that’s how you build the business case.
Ultimately, it depends on the question you ask the eco-system because ideally you want to pass on the benefits to your customers and make an end difference. Until we find that blockchain solution we’ll keep asking these sorts of questions of the innovators and Open Talent is a way of doing that.
Just to give you some idea of BBVA’s tech roadmap, we’re looking at innovating our customers’ financial health checks which will include AI and robot advisory technology. Blockchain’s immutable ledger qualities are being looked at how they can play into security. We’re also looking to branch our regtech, insurtech and paytech capabilities, as well as looking at how emerging technology is opening up opportunities for financial and sustainable inclusion around the world.