I spotted two stories about BBVA that appeared yesterday. The first was in the Financial Times with BBVA Chairman Francisco Gonzalez asking the G20 to take action against the big internet firms, saying “authorities [need] to bring order to this massive change” that could “pose risks to financial stability”. He warns that groups such as Facebook and Amazon in the US, and Alibaba and Tencent in China will “replace many banks”.
Understood. The key requirement he’s looking for is that the internet giants are subject to the same rules as banks, when it comes to lending or holding deposits. Sure. Make sense.
But bear in mind that this is a bank that calls itself a software company and, more recently, a digital company. At this year’s Davos, Mr. Gonzalez states that he doesn’t “see BBVA as a bank” but sees BBVA as a digital company which has information”.
In other words, he aspires to turn the bank into a global platform that can compete head-to-head with the GAFAs and BATs.
This is where the other article cropped up. In Spanish but an article that gives away quite a lot of BBVA’s plans to be digital. Right now, they’re not quite there as Iñaki Bernal, CTO of BBVA, says that “we are a pretty bad software company” but getting better. BBVA manages more than 4.5 petabytes of data and has 11,000 developers who have produced more than 400 million lines of code, more than six times those generated by a digital giant such as Facebook.
So BBVA is actually a digital platform, or trying to be. In fact, those 11,000 developers are about to triple: “we intend that another 15,000 or 20,000 professionals who are currently in offices or central services, such as risk management or data science, end up being recycled as software developers”, says Iñaki Bernal. 30,000 developers is the sort of number I hear from many big banks. Strange, as Facebook can support two billion active users a day with just over 17,000 employees worldwide in total. Equally, by my estimates, Microsoft has around 2,000 developers working on Windows, so why does a bank need 30,000? Oh ... I guess because 28,000 are maintaining the old legacy systems.
The bank is also managing a huge volume of information. In 2007, BBVA managed 0.2 petabytes (PB) of data; that figure grew to 0.7PB in 2012 and 2.5PB in 2016. The bank estimates that, in 2020, that figure will be around 100PB of extremely valuable information.
In other words, industrial era banks like BBVA are transforming into digital era platforms where their duty is to store value and manage data. They compete directly head-to-head with other digital platforms – GAFA and BAT – and need to be regulated with a common standard by the entities that oversee the financial system.
They get it. Do you?
Meantime, if you're really interested in BBVA, Marisol Menendez, Head of Open Innovation and External Ecosystems in BBVA presented at our recent Nordic Finance Innovation meeting in Oslo. Here's her presentation that shows how they understand the new platform world ...
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...