13 October 2015


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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.
A post relating to this item from Finextra:

BBVA creates digital banking unit

24 March 2014  |  10112 views  |  0
Spain's Banco Bilbao Vizcaya Argentaria (BBVA) has established a digital banking unit in a bid to boost the development of its various technology-led businesses.

A 600 billion financial StartUp

24 March 2014  |  6576 views  |  2

StartUp is risky business.  It’s well known that half of new ventures fail and the best an investor can expect from nine of ten investments is return of capital for a portfolio of ten.  Consequently, the tenth investment must become the lottery ticket of 20X or more.  Since investors do not know which of the ten will be the fortunate one, all investments must demonstrate the possibility to achieve a 10X-30X return.

Following this Venture Capital logic, BBVA could be expecting to reap a return of at least 2 or 3 billion for his investing of EUR 100 million in Simple Bank. But it looks like the ambitions of the 2nd largest Bank of Spain are even bigger: as they are betting on a full-fledged transformation process by creating, since last Friday, the business area of Digital Banking with a bold objective: to accelerate the Group's transformation and boost development of new digital businesses.

But beware; this transformation is not just a technological one.  BBVA is the first Tier-1 Bank, aligning the organization and politics of the Bank with its strategic objective, as it’s putting in charge the Digital Banking Area with the responsibility of all commercial offerings, the multi-channel strategy, the distribution model and the design of commercial and operational processes.

Francisco González, BBVA’s chairman, and his team are elegantly leading the Bank thru a process of creative destruction, in where transformational change can be enacted only by senior management and where indeed, transformational change challenges the corporation’s strategy and controls.

This is not a minor endeavor. Substantial innovation is often 10 times greater than the change that results from incremental innovation, and offers 10 times the rewards but also invokes 10 times the uncertainties. It should be recalled here, that BBVA is not a small innovative brand, but a financial colossus serving 50 Million clients across 30 countries in all four continents. The execution of this vision will have massive cultural impact on the 110,000 employees’ the Bank provides with jobs worldwide.

According to the press release, BBVA is also pushing forward into the terra incognita of new the financial services developed in the fertile ground of Internet, so Digital Banking has received the order to develop new business lines. In this context the new created division will champion and growth its own PayPal like service called Wizzo (https://wizzo.es) and keep a close eye on the innovative ideas coming from the own BBVA Ventures incubator (http://bbvaventures.com) and the recently acquired Simple Bank (https://www.simple.com).

We all in the Financial Industry community should keep an eye on these exciting developments. 



Comments: (3)

Paul Love - Compass Plus - Nottingham | 25 March, 2014, 18:07

Great report!

From personal experience, it is impossible to buy innovation and agility and any such acquisitions are usually ground down by the weight of corporate culture.

Innovation needs to be embraced as one of a company’s core values in order to thrive. 

But from this blog and previous coverage, it does look as if BBVA are embracing innovation as their way of surviving as a leading bank, rather than merely resting on their laurels and sliding into a managed decline while the new disruptors take away all their best customers. 

Maybe too big to be considered a start-up – but willing to hear the warnings and learn the lessons.


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Cristian Vlad - Consult Services Ltd - London | 26 March, 2014, 09:20

Search for "CitiFi" - Internet only banking from Citi - some 20 years ago.  It was absorbed by Citibank proper eventually.

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A Finextra member | 26 March, 2014, 10:05

@Cristian Vlad  I see the point of your comment. But while at the dawn of the e-banking.. Banks were buying "Technology".  My guess here is that BBVA is buying a cultural transformation. They're aligning the politique of the Bank with the strategic objectives..  But.. I'm with you on this.. there are not guarantees..!

The bet this spanish bank is doing is huge! And I'll follow it very closely because it's full of pit falls and risks. 

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