BBVA Compass to expand in U.S., but focus is digital
BBVA Compass plans to significantly expand its U.S. presence in the next few years, but the Spanish company’s top executive says it won’t be building more physical sites as changing consumer habits make the costs of staffing branches and maintaining buildings not cost-effective over the long run.
“Our main project is to turn the bank into a digital powerhouse,” BBVA Global Executive Chairman Francisco González told the Chronicle this week during a trip to Houston. “More and more, physical banks for us are less valuable.”
In addition, González said he expects the number of global banks
to dwindle to about a dozen within the next decade or so, and the survivors will be those that do the best job providing customers the digital banking services they increasingly demand.
In a wide-ranging interview, González also addressed matters of U.S. interest such as the fate of NAFTA and consumerprotection regulations under the Trump administration. He expressed hope the U.S. would not shrink from its traditional leadership role in global affairs.
BBVA Compass has staked out a high profile in Houston, basing its holding company in a branded building in the Galleria area and opening 76 branches across the region. It put its name on the professional soccer stadium and has sponsored high-profile art events. In little more than a decade, it’s become the area’s fourth-largest bank in terms of deposits. Nearly 20 percent of BBVA Compass’ total deposits are in the Houston market.
González said the U.S. ranks behind Europe and Mexico in market size for BBVA. The digital effort is key to help it grow not just in Texas but elsewhere in the country.
Dan Bass, managing director of investment banking for local bank advisory firm Performance Trust Capital Partners, noted that BBVA has been active in digital expansion, particularly in its European market. It will be interesting to see how that strategy plays out in the U.S., he said.
Another analyst, Jeff Davis, Nashville-based managing director of the Financial Institutions Group for Mercer Capital, said BBVA will have to do more than grow digitally if it hopes to increase its U.S. customer base significantly.
Selective acquisitions of smaller brick-and-mortar banks across the U.S. would be ideal, Davis said. The trick, he added, is to build enough physical sites to achieve brand recognition in new communities while also increasing the number of digital ventures.
Currently, BBVA Compass’ digital efforts are focused on web- and appbased products that work in real time.
Onur Genç, the Houston-based CEO of BBVA Compass, cited Signature Express. Launched in March, the app allows preapproved customers to request a loan, compare interest rates and fees, select terms and monthly payment amounts, and get the funds in their accounts that same day.
The bank’s U.S. digital expansion is kicking off in Texas. A number of BBVA Compass engineers work out of Dallas.
“We have decided to consider Texas our hub for expansion in the States using our digital business model,” González said.
Genç also noted that the Houston area boasts a growing, tech-savvy population.
“The consumers in this market demand the banking we envision,” Genç said.
Genç took over as BBVA Compass’ chief executive in December after the international bank sought out his expertise that he built up while running the Turkish Garanti Bank’s digital efforts as its deputy CEO.
“Garanti is the most advanced bank in the world at deploying real digital experiences,” González said.
BBVA also continues looking to acquire startups. Last year, the bank invested $250 million into San Francisco-based Propel Venture Partners to fund digital financial services startups.
“Real innovation is not going to be in the banks or the government,” González said. “It will be with the startups.”
González did not express much concern over the state of U.S. politics, calling President Donald Trump a “businessman who in my view is learning politics.” He said he agrees with the Trump administration that parts of the Dodd-Frank financial industry reforms should be curtailed, but he insisted any changes should consider the rights of consumers as well as banks and the broader economy.
“We have to strike a deal among all the stakeholders,” he said.
González also has a stake in the ongoing discussion in Washington about NAFTA, the trade agreement that was the target of so much hot talk during the presidential campaign and in the early days of the Trump administration. As BBVA continues to increase its business footprint in Mexico, a sound trade policy with the U.S. is vital.
González said the deal may be renegotiated, but he is confident it will survive.