From its roots in the Basque Country, BBVA has enjoyed a storied history, now boasting a presence across dozens of countries. Yet between natural disasters and the struggles of the pandemic, the Spanish giant hasn’t always had it easy – something the bank’s new global head of engineering and organisation intimately understands.
Andrea Valentino talks to José Luis Elechiguerra to learn about his career so far, his ambitious digitalisation plans for BBVA, and what all this means for his own role – and that of his counterparts at other institutions.
If you know where to look, you can find a whole history of banking in Bilbao. Make your way through the narrow lanes of the old town, past the medieval cathedral to Plaza San Nicolas.
There – opposite a sandstone steeple and flanked by black Victorian lamp posts – sits a handsome neoclassical palace. Stop for a moment to admire the twin lion sculptures above the doorway, then step inside.
You’ll soon find it: books and memos and accounting ledgers spanning 150 years, the oldest banking archive in Spain and one of the most impressive anywhere.
Two of the banks that would one day merge to create Banco Bilbao Vizcaya Argentaria (BBVA) had already existed for decades before the day in 1971 when the Plaza San Nicolas archive was unveiled.
That alone is impressive about the place. Its ability to recover from setbacks is impressive too. Despite a catastrophic 1983 flood, which ravaged Bilbao and the palace in the square, the space is now bigger and more comprehensive than ever. Since 1999, it has hosted the archives of Corporación Argentaria, the third and final of BBVA’s constituent banks.
In its age and turbulent history, its battles and successes, there’s plenty to learn from the BBVA archive – not least because it so neatly encapsulates the story of the institution as a whole.
From its roots in the Basque Country, the bank has expanded to 30 markets, with Spain and Portugal alone boasting 3,700 offices. That’s shadowed by around 35 million digital customers and nearly the same number logging in from their phones.
Like its site at Plaza San Nicolas, meanwhile, BBVA has gone through hard times too. At the end of 2020, the bank announced losses of $1.9bn, the fourth quarter of the year seeing net profits slump by almost half. By February 2021, it was being reported that bosses were planning to cut 3,800 jobs from their Spanish operations.
Yet like the repository of its past, BBVA is nothing if not resilient. With an experienced new CIO at the helm, the bank has embarked on an ambitious programme of digitalisation, encompassing everything from mobile banking to bitcoin.
Along the way, the Spanish company is helping reshape the industry at large, prodding staff towards greater efficiency and customers towards more personalised services.
Clearly, none of this is easy. But like the ornate building on Plaza San Nicolas, it’s probably worth persevering nonetheless – if not for the present, then for generations to come.
Mexican save
Glance at José Luis Elechiguerra’s CV and one gets a decent idea of the complexity of modern banking. Barely in his 40s, after all, and the man has already been nearly everywhere at BBVA.
He joined the bank in 2008, working at the mortgage division in his native Mexico. From there, he worked at BBVA Mexico’s retail department, then in business transformation.
By 2015, Elechiguerra had graduated to head office across the Atlantic, and by 2019 had been promoted the global director of data governance.
To put it another way, no one was likely surprised when, in late 2020, Elechiguerra became BBVA’s global head of engineering and organisation, the bank’s take on CIO.
Yet, if the Mexican has had the kind of rise typical of a McKinsey man – he enjoyed two stints in those halls and four years at Procter and Gamble – he’s still able to reflect just how much has shifted during his journey.
“The pace of development and adoption of smartphones has grown exponentially,” he says. “That, in combination with the internet boom, has resulted in a dramatic shift in the way our clients interact with their financial services.
“The most remarkable milestone of this era has been the smartphone, the possibility of doing virtually everything from it. And that, I think, is what has revolutionised not only the financial sector, but the world at large.”
A reasonable point, and one backed by the statistics. The past year saw 26% more mobile banking app sessions than 2019, while in the UK alone 73% of consumers now use digital banking platforms every week.
It goes without saying that these trends have been accelerated by the crises of the past few years, but Elechiguerra is careful to emphasise that they’ve been in the works for far longer. As a BBVA veteran, he should know.
As early as 2007, his employer was honing platforms to store and process data at scale. By 2013, BBVA had already invested €2.4bn in new technology. That same year, it was processing 250 million remote transactions every day.
BBVA is hardly the only bank to move this way – even just in Spain. CaixaBank has experimented for years with hybrid clouds, while Sabadell now uses technology to make customer identification safer.
Even so, Elechiguerra suggests that BBVA’s deep history with digitalisation made it uniquely positioned to face down the problems of the pandemic. “BBVA’s leadership in digital banking and mobile banking has been, and is, a differential fact,” he says.
“Thanks to the transformation that our bank started tackling over a decade ago, our customers and clients were able to better cope with the situation resulting from the health crisis, since they were able to access the totality of our product range digitally.”
Certainly, Elechiguerra and his colleagues show no signs of slowing down. After all, they recently announced a strategy to transform BBVA into a “truly digital company” that uses technology to reach every corner of customers’ lives.
Elechiguerra, for his part, describes the move as coming from the “highest strategic level” of the company – and one that will continue to be a strategic priority.
Hedge your bets
Imagine you’re a hedge fund and you’re keen to diversify your portfolio. What do you do? One option is to invest in regular stocks: gold, oil, consumer goods. But what if you wanted to try something less tangible, less secure – but potentially more lucrative too? You could dabble in bitcoin.
Long dismissed as a hobby for pubescent amateur traders, digital currencies are increasingly catching the eye of more established institutions.
Little wonder, then, that ambitious banks like BBVA are rushing to fill the gap. As the Spanish company explained in June 2021, its new bitcoin trading service would be especially designed for private banking clients in Switzerland, helping them invest across a range of digital assets.
For Elechiguerra, the move is typical of BBVA’s commitment to keeping a close eye on what its customers are looking for. “In blockchain, as a financial institution,” he explains, “we remained attentive to the technology’s disruptive potential for the financial industry.”
It’s a fair claim, and one worthy of a company committed to becoming ‘truly’ digital. Nor is it the only place where BBVA is making changes. Like many other institutions, cloud computing is one area of focus.
Among other things, the company has teamed up with Amazon Cloud Services and Bloomberg to create BBVA C-Fit, which will ultimately help the bank’s investment customers manage and understand vast data sets in real time.
Then there’s the BBVA AI Factory. Encompassing a team of around 200 staff, the scheme works to bring what Elechiguerra describes as “advanced analytics” to all corners of the bank’s business.
BBVA’s retail customers are enjoying their moment in the sun too, the bank’s mobile app boasting ultrasound fingerprint recognition, money movement, and outgoing payment alerts, among other features.
These efforts are paying off. In 2019, BBVA’s banking app was voted the best in Europe for the third year running. Beyond the straightforward benefits for customers themselves, meanwhile, this flurry of activity makes sense for other reasons too.
For one thing, it saves the bank time. According to one 2020 report, abandoning pen-and-paper reporting in favour of digital alternatives helps a dozen staff at BBVA’s US subsidiary complete the work once done by 100.
Given the squeeze Covid-19 has put on the lender – apart from those 3,800 job losses, BBVA also plans to close 530 of its Spanish branches – that’s doubtless welcome.
At the same time, going online has boosted BBVA’s market share. During the first six months of 2018, the bank sold over ten million units through digital channels alone.
Of course, it’d be wrong to suggest that Elechiguerra can simply lounge in his corner office and expect these transformations to happen by themselves.
On the contrary, he works closely with stakeholders across his business – beginning with customers. That’s particularly striking in the bank’s home market, where many elderly Spaniards lack the know-how to use new technology.
“Our customers have had to face a steep learning curve,” Elechiguerra concedes, adding that his bank is constantly working to deliver intuitive customer experiences.
To smooth the path ahead, the bank in 2018 unveiled BBVA Experience, a platform offering design seminars and training sessions for technicians with an artist’s eye.
This is of a piece with what other banks are doing too. Once again, staying west of the Pyrenees can be revealing, with Santander recently penning a ‘design manifesto’ to inform how digital products are built.
In a similar vein, the way new services are developed has had to change. With so many pots on the boil at once, BBVA’s staff are having to rush between projects every few months.
That’s why the bank has honed the so-called ‘3–6–9’ model. It works like this: staff have three days to identify who’ll work on a project, six weeks to deliver a prototype, and nine months to get it to customers.
That’s not easy in practice, but Elechiguerra says that promoting collaboration between departments can help get updates out on time.
As he puts it: “We started building our capabilities to ensure that we delivered the best digital product in the financial industry, taking into account our design skills, our engineering skills, our technological evolution, our ways of working, agile, integrating the business with engineering.”
Given 94% of BBVA’s retail products and services are now available as do-it-yourself transactions, you have to think they’ve succeeded.
Basquing in it
As BBVA Experience implies, executives like Elechiguerra can no longer hide behind the shield of their job title – today’s CIOs do far more than just shepherd information.
That’s true in boardrooms right across the financial space, with one recent poll finding that 64% of technology leaders now aspire to be ‘business co-creators’ too. All the same, Elechiguerra warns that his profession’s traditional jobs shouldn’t be forgotten either.
“The technological challenges that we face today are, without a doubt, different from those we faced five or ten years ago – and will be different from the ones we face in five or ten years’ time,” he says.
“In that sense, I believe what doesn’t change is the ability that the CIO needs to have to define how to meet these challenges. But one thing that’s changing is the speed at which technology evolves.”
And what about the future of BBVA itself? Despite a wobbly pandemic, the bank posted profits of €2.33bn in the first half of 2021, suggesting that its march towards the digital uplands is paying off.
New opportunities seem destined to be waiting there,
with Elechiguerra mentioning both blockchain and quantum computers as future areas of growth.
On that second technology, BBVA is already making headway, partnering with Spain’s Senior Council for Scientific Research to make currency arbitrage faster and credit scoring fairer. “We are convinced,” says Elechiguerra, “that the intensive use of data and artificial intelligence are a great lever for differentiation.”
It seems clear, at any rate, that the elegant palace in Plaza San Nicolas will soon host plenty more material – even if, one day, company memoranda and accounting books are stored in ones and zeros, where not even flood waters can reach them.
This article originally appeared in Future Banking Volume 2 2021.
