How BBVA’s Open Banking Strategies Deepened Customer Relationships

In banking as in other industries, organizational improvements can allow companies to better focus on the customer experience, but they may still face some technical obstacles along the way. In this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by The Wharton School, Robert Sears, former CEO of a BBVA subsidiary, discussed how banks can streamline organizational functions and become more customer-centric.

Sears began by discussing the open banking strategies he worked on at BBVA. He explained the history of BBVA’s technological innovation and how it has been able to improve cross-functional processes throughout the organization. After a discussion of customer-centricity, Sears went on to explain the data security and policy issues he works on at the World Economic Forum. Finally, he described the role blockchain and other new technologies will play in the future of the financial system.

An excerpt of the interview is transcribed below. Listen to more episodes here.

Transcript

Robert Sears, former CEO of a BBVA subsidiary

Siggelkow: Let’s talk about managing innovation. Obviously, many large established firms are trying to embrace new technologies. And clearly banks are trying to do this, but lots of firms are struggling. Can you tell us a little bit about BBVA’s digital transformation story?

Sears: The roots of the BBVA story stem from the chairman who just recently stepped down, Francisco Gonzalez. For many years longer than most organizations, he’s been pushing for digital transformation. He pushed very hard to get the bank to begin thinking, “How do we use technology to provide a better experience for our customers? How do we begin to open up our systems? How do we begin to rationalize our systems around the world?”

An internationally operating bank, like BBVA, will typically have systems in different geographies that have different histories. Maybe they acquired a bank. Maybe they bought a version of a core processing system in one region and then a newer one later. Those things keep the money coming into the bank. You can’t simply replace them with the stroke of a pen. You have to carefully figure out, “How can I keep modernizing these? How can I begin to rationalize them across my different domains so that my software developers can have a development environment in Spain that’s at least closely related to the one in the U.S. and in Mexico?” You have to have the top management pushing for this kind of forward progress. And then you have to be ready to bring in experts in the various areas in order to help move the technology forward.

“How do we use technology to provide a better experience for our customers? How do we begin to open up our systems?” – Robert Sears

Siggelkow: Often, when organizations try to create more connected strategies, we see that the larger problem is organizational. How do we create common systems or incentives to share information across the organization? Clearly, top management buy-in and energy is very helpful and needed. Is there anything else you can report that worked well in getting the organization ready to change itself, not just implement new technology?

Sears: Being able to begin a conversation across many of the different key areas is critical. There’s a lot of discussion in many different domains, including the banking space, about becoming agile and adopting agile methodologies. Before you get there, you can adopt a few key characteristics that will make your life much easier as you move your technology forward, or even go so far as opening up APIs. Do you have teams that bring together your product designers, your product owners, your developers, and the control functions at the beginning? If you develop the greatest product idea, get it all ready, and then ask the compliance team if you can go live, their answer will be no. So you have to work backwards.

In my time at BBVA, in my time consulting with other banks, and also in my time with the startup before BBVA, I found it was key to both understand the reason behind the regulations and to get the proper control function teams involved early. That’s a competitive advantage. So you want to do that up front.

Siggelkow: Yes, the idea is to have a fairly cross-functional team early on, as you’re saying in particular in the banking environment, but also probably in the pharmaceutical or medical environments.

The other thing is, it’s about creating a deep customer relationship at the end of the day. But this is quite often not the way firms are organized. Firms are usually organized by product lines. And it’s great if a customer happens to want more than one product, but then they have to work through different parts of the organization. What attempts have you seen to restructure a company to allow it to be customer-centric?

Sears: The first thing is to realize that you do have to focus on the customer and the holistic customer experience. I’ve seen companies organizing around the type of customer that they’re trying to reach, for example, rather than the individual products they’re going to offer those customers. They organize around a particular category of consumers, around small businesses or businesses for contractors, and then bring together an assembly of capabilities and tools they can provide to serve that segment of their audience. That’s more effective than the strictly product-based approach.

“You need to be able to make rapid product decisions and adjustments to what you’re offering. If you look at that in the environment of a typical bank, they’re usually not equipped to do that.” – Robert Sears

Siggelkow: What are some obstacles that you’ve seen in trying to implement these kinds of more customer-centric, connected strategies?

Sears: They end up being things you might not expect. In order to implement these strategies appropriately, you need to be able to make rapid product decisions and adjustments to what you’re offering. If you look at that in the environment of a typical bank, they’re usually not equipped to do that. Very few banks have put in effort in the few key areas that enable that change.

There are two areas I found that banks could focus on that would generate the most results. … One is having a robust software build, deployment, and creation environment that allows for modern software creation techniques.

I didn’t expect this to be the sort of problem that it is in most banks. If you don’t have those in place, then it becomes very difficult to push new services and new products out to the market. This creates a back pressure, so you get a quarterly or a semi-annual release cycle. In today’s market, you have to be much more responsive, or your consumers are going to be interested in other offers. It’s important to have this infrastructure in place to allow your software developers to contribute from all over the world. You have to have an automated system that gets the software built and pushed out into production in a reliable way, allowing you to update your products and services more frequently and securely. It’s a better conversation when you talk about the innovation you’re doing with the regulators.

The converse is if you have humans moving stuff from development to production, that’s very ineffective. People aren’t good at that; automated systems are. It was a surprise to me when I analyzed many different situations where things weren’t working. It came out to be a very consistent thread.

About Our Guest

Robert Sears is an experienced banking and technology executive, entrepreneur and innovator. He most recently served as CEO of a subsidiary of a major European bank, pioneering global open banking services. A Silicon Valley veteran, Robert has founded and run venture backed start ups and has also held business and technical executive roles in large multinational corporations. His strengths include the ability to build and lead teams, establish strong internal working relationships across teams and time zones and bring new products to market, from concept to delivery at scale. Robert has direct, hands-on experience combining technological innovations and regulated financial services, delivering powerful new platforms and solutions for businesses and consumers.

Taking a global view of business opportunities, Robert has driven high-value customer relationships that span from the US to Europe. A Ph.D. physicist by education, he has crafted rich collaborations with MIT and Stanford to develop advanced technical capabilities for the financial industry; Robert’s focus has been designing solutions in a way that regulators in the US and EU will accept. He advises the World Economic Forum on financial services, AI and data policy issues and is a regular invited industry speaker and panelist in the US and EU.

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.

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