BBVA API Market
Carlos López-Moctezuma, Global Head of New Business Models, Open Banking and Open Innovation at BBVA, took part in the latest Money Live 2020, held online between June 30 and July 2, where he analyzed the present and future of open banking, the redefinition of banking in the digital age and what steps banks have to take to adapt to this new paradigm.
López-Moctezuma began his presentation by discussing the importance of digitization, especially in an environment marked by COVID-19. “This crisis has allowed us to verify our level of digitization and how it has helped us to better overcome this situation in every aspect of our everyday activities, such as gaming, sports, e-commerce… Everything is much more open than a few years ago.”
BBVA’s Global Head of New Business Models explains how this new era, marked by the digital transformation, plays a fundamental role in how we live and behave, as it allows us to be permanently connected in different ways. We are closer to each other now than in the past. “We can see it in our children; it’s not that they’ve changed their mindset and want to stop doing their activities, but they can complement what they did before with new digital devices and identities. We’ve changed how we do our shopping, for example. And this change has even taken place in emerging countries, where the change in the behavior of citizens is apparent.”
López-Moctezuma also emphasized the importance of the sharing economy in this new digital era, a reality that is already present in every sector and activity of our daily lives. “The sharing economy is transforming every sector, such as transportation, work spaces, hotels, shopping… and it allows users to interact more to add new opportunities to those we already have in our day-to-day lives.”
During his talk, López-Moctezuma also mentioned the evolution of the financial sector and how it is adapting to this new technological paradigm. “The financial sector has evolved a lot in recent years. And not only from the point of view of digital services, but also in terms of personal contact between people. For example, bank offices have turned into more open spaces, focused on a relational model to communicate products and how to interact with them.”
This new reality, continued López-Moctezuma, has brought other challenges to the financial industry, such as the appearance of new players in the market and new regulations, which has changed the banking industry from a monopoly in financial services offered exclusively by banks to an ecosystem that offers a place to other financial service providers.
This new technological and digital reality provides an opportunity to innovate. For López-Moctezuma, BBVA is one of the most advanced commercial banks, digitally speaking. “In recent months, we have seen the effect of this digital strategy on the bank’s results and on the services offered to customers.”
The technological transformation must be approached from different points of view. This digital adaptation is not new in many sectors, but in the banking industry it is a game changer. Areas such as Banking as a Service, data and privacy, banking APIs, ERPs, new anti-fraud models, cloud computing, blockchain… Each of these areas needs a lot of work to transform a bank from a financial point of view.
However, the digital transformation is not the only important element. López-Mochtezuma is also committed to cultural transformation to achieve these objectives. “Banks must change their mindset in everything that has to do with creating new products, finding new methodologies and how they adapt to this new ecosystem. The way they will manage their relationships with fintech companies, outsourcing their services consistent with open banking strategies, and sustainability will play an increasingly important role that is not going to stop in the future.”
Finally, López-Moctezuma also referred to the need to change business models by transforming traditional banking models into new digital models that serve to meet the needs and experience of its customers.
Of course, López-Moctezuma explained, banks must collaborate with the other stakeholders involved. “We can no longer keep going by ourselves. We must be an active part of this change and collaborate in this open ecosystem with other financial service providers.”
New products for new needs. This was how López-Moctezuma ended his presentation at Money Live 2020. “We must stop thinking about products and start thinking about adding value, leveraging the fintech ecosystem to develop our value proposition to customers. At BBVA, for example, we are investing in different companies, for example, buying a real estate appraisal company like Madiva, pursuing internal projects such as Azlo, BBVA API_Market and Covault, and forming part of the capital of other fintech companies.”
López-Moctezuma also explained BBVA’s strategy to undertake this digital transformation. “We are moving faster in some of the important elements of the digital and cultural transformation and slower in others, but the most important thing is that if we don’t take the right steps to transform our organization digitally, we might end up being a bank with a lot of volume, but little profit.”
In summary, López-Moctezuma mentioned some of the key aspects that we should take away from his talk. These include:
As their use is enhanced, APIs are becoming a basic and essential element in any developer’s portfolio. But what is really important is creating products and services that can be cleanly and seamlessly integrated into a third party’s ecosystem. A good example is the alliance between BBVA and Uber in Mexico, which has created an entire banking system to manage its drivers’ earnings that is perfectly integrated into its app.
Uber drivers can use their account, created ad hoc and without having to go to a branch, right from the Uber app. “The most important thing isn’t so much the co-branded card and the account itself, but the iteration with its users,” concluded López-Moctezuma.
Various case studies are used to show how open finance enables the financial inclusion of SMEs and the economic growth of developing regions.