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His long professional career in retail banking in Mexico has seen him adopt an approach to innovation at BBVA that is very closely aligned with the banking business. Hugo Nájera understands that the time has come to demonstrate that BBVA's sizeable investments in technology over recent years have begun to bear fruit in new services and products, both in traditional banking and the new environments that will shape BBVA's long-term future, and where it will face competition from the likes of Google and Apple.
The most innovative projects involve concepts such as Branchless Banking, Big Data and Open Platforms. All while never losing sight of the bank's natural business area of financial brokerage.
Nájera has a clear goal in his new post: to align innovation at BBVA with the bank's real business requirements, while also capitalizing on the potential of technology to improve daily operations.
Question: What are your initial challenges and objectives as Chief Innovation Officer?
Answer:In recent years BBVA Group has worked very hard to identify the areas where we need to explore and work, but it is not easy to make things happen on a corporate-wide basis. We have evolved from a simple and standardized group, selling the same product in all regions, into one that operates in numerous countries all with different structures and commercial strategies.
The key in this first stage of innovation has been technological investment. Major efforts have been made to improve platforms, rendering them more competitive and developing new features.
Often these efforts have not yet have benefited customers or staff, because we are only just beginning to work on the tangible benefits. And that's the challenge.
Despite possible geographic differences, the platforms now share a core mission that is very characteristic of BBVA and that makes us stand out from the rest: the customer. Most banks develop their platforms focusing on products only. They see the customer as something of an oddity that they try to understand by making a series of connections between products.
BBVA is breaking that mold and establishing a platform that helps us to truly understand our customers. This is a real competitive advantage, but only if we are able to manage our capacity to build a future. So far a lot of work has been done to develop our technological capabilities, but there is still plenty to be done to capitalize on them in a business setting.
With the platforms already built, my mission now is to ensure that what needs to be done actually gets done. This means using platform capabilities for business operations and ensuring that the platforms continue to develop based on real business requirements.
Q: What will be the outcome of this business-aligned approach?
A:To date our approach to innovation has focused on making sure that we were moving in the right direction. Now we need to transpose all this work into banking. While in future we will have to compete against operators like Google and Apple, we must understand that we are a bank and that banks make a living from money brokerage and providing services.
The difference is in how that brokerage will be performed and how those services will be provided. Current regulations establish entrance barriers around traditional banking. Our position in such areas is safe, and that sense of security poses a major risk: we might be blind to the banking products and services that are being developed in more global and digital environments.
We therefore need to think about how to use our technological capacities to look beyond those barriers and ensure that can compete in new areas.
We must always strive to build on our brokerage and service provision capabilities, including in new environments. These represent an enormous market that is very different from traditional banking, operating with far smaller sums and requiring much faster credit management, while the service cost to users will tend to be zero.
Nonetheless, in our comfortable regulatory environment we still need to take decisive steps to ensure that we are leaders in three very clearly defined spaces, which represent the bridges towards the future: the multi-channel experience, payment channels and global businesses.
Being the best means having more customers and ensuring that they recommend our bank.
Q: Will this have a direct impact on income statements?
A:Definitely. This is precisely where the long-term growth opportunities lie. Income statements are affected by a myriad of factors, but certainly in the long term these KPIs will allow us to manage our development.
Therefore in the first few years our initial priority is to attract a much larger number of customers and improve customer satisfaction and loyalty. This is what we will be targeting initially.
Q: Are the less traditional areas of banking therefore losing relevance?
A:On the contrary. The main challenges that we face are precisely where technology can be most disruptive.
It is very important that we operate in these new spaces. Perhaps traditional banking will never disappear completely, like camera film, video rental stores or vinyl records. The risk is that we fail to notice what is emerging outside of our safe and regulated environment, which could be much larger and more profitable than current operations.
That is the real risk. The potential to miss out on new opportunities due to our reluctance to explore new territories. How many people in the world are "bancarized"? Some 4.5 billion. What we need to ask ourselves is whether our traditional system will be capable of "bancarizing" the other 2.5 billion. These are people with small wages, they are highly transactional and have large lending requirements.
The opportunity in terms of brokerage and transactional services is enormous. How can we approach this potential if we fail to engage in branchless banking initiatives? The same is true in terms of our capacity to exploit customer information and to use this to understand them better. This will allow us provide services truly relevant to them and be fully customer centric. How can we be customer centric if we fail to engage with the Big Data concept?
Likewise, we have learnt from our past errors that we are not good at generating content other than financial content. So, why not give other content providers the financial tools of the future, operating on a plug and play basis, so they may be put comprehensively to the service of our customers? This can only be possible if we develop our capacity to open platforms for use by third parties.
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