Institutions like BBVA Compass are in the middle of a technology revolution.
Smartphones have turned banking chores into quick tasks undertaken from the couch, the office or a restaurant. A tap on the screen can pay a credit card bill or transfer money. Users can open accounts without ever setting foot in a bank.
Financial institutions are in the middle of a technology revolution, and BBVA Compass chairman and CEO Manolo Sánchez wants to be a frontrunner.
“The brick-and-mortar model is going to mutate massively in the coming years,” he said. “And you don’ t want to be Kodak .”
He said the U.S. banking sector lags the country’s other advances in technology. The mobile banking feature most quickly adopted was taking a picture of checks to deposit them. But millennials and people from other countries don’t use paper checks anymore, Sánchez said. Banking technology needs to think bigger.
So BBVA Compass partnered with Iowa-based Dwolla in October 2014 to allow its account holders to make real-time money transfers. Three months later, the corporate venture arm of BBVA Group, its Spain-based parent company, announced its invest- ment in a bitcoin platform called Coinbase.
Then BBVA Group announced the acquisition of San Franciscobased Spring Studio, a user experience and design firm, to improve its digital banking experience from smartphones, computers and tablets.
One of the more notable deals was the purchase of Simple for $117 million in 2014. Simple is a digital bank without branches that offers its users tools for saving and budgeting. Users get a Simple Visa debit card for their checking account and can access more than 55,000 AT Ms without paying fees.
The Safe-to-Spend feature gives users their account balance minus pending transactions, upcoming bills and money being saved in Goals, which is like savings accounts. Consumers using Goals choose how much they want to save — for, say, a summer trip or a friend’s birthday gift — and each day Simple automatically saves money needed to reach that objective.
Sánchez said the bank doesn’t meddle much in startups’ affairs. It wants the companies to keep their innovative culture. Simple, he said, created an idea for millennials that the bank couldn’t have done on its own.
“We could have never written that code,” Sánchez said. “You know why? Because it’s not just computer code. They created a concept.”
The bank has, however, taken impairment charges on the Simple acquisition suggesting it paid too much. Sánchez is undeterred and he stressed that the bank’s online strategy is paying off. It’s reporting steady growth in clients opening accounts without entering a physical bank.
The CEO also expressed confidence that Simple will be a “home run.” That and other technological upgrades should put the bank in a stronger position to grow and even purchase other banks.
“We want to be a consolidator because we have the financial muscle,” he said, “but we also have the technology muscle.”