In 2012, the Innovation and Technology (I&T) area has carried out its activity around four main lines of action:
- Technological Transformation
- Internal Transformation
- Transformation of the Distribution Model
- Innovation
In addition, the I&T Area performs a number of cross-cutting functions in order to guarantee proper operation of all of the Group’s resources. This includes all internal control and information security measures, aimed at mitigating operational risk and reinforcing global fraud management.
Technological Transformation
In 2012, technology and operations in the BBVA Group have evolved with the implementation of advanced technology projects.
Following the inauguration last year of the data processing center (DPC) in Tres Cantos, the Group has continued to develop procedures and improvements to achieve greater efficiency. Worth mentioning are the migration of the Clara del Rey DPC to the new facilities, completion of the plans for migrating the communication and collaborative work tools to Google Apps and the integration of Alnova in the Network Control Center in Monterrey.
2012 saw the implementation of the new on-line deposit and credit card technological platform for BBVA Compass, a project of great strategic importance that brings us closer to becoming the best universal bank in the United States.
Significant progress was made in other projects, such as the Informational Platform, which has made relevant management tools available to the business units and central services, and in the Risk area, where tools are being implemented which enable the optimization of key management processes such as credit origination, as well as making possible improvements in capital requirements, for example, the new Operational Risk tool.
The Group is also implementing new systems aimed at developing a single procurement model for the various geographical areas.
Other relevant projects in 2012 have been the integration of Liberty Seguros and the digitizing of point-of-sale terminals for businesses in Consumer Finance.
Internal Transformation
As a continuation of the Transformation Project started in 2010, a number of initiatives have been boosted in 2012 aimed at optimizing BBVA’s value chain in terms of both quality and productivity. The central services and factory Transformation Plans and the network process transformation plan have been launched:
Central services and factory transformation plan
The fundamental pillar consists of the Cross-cutting plans where, focusing on enhancing productivity, improvement plans have been implemented in each Corporate Functional Area. The goal is to make the most of the Group’s economy of scale, transforming the organization and the processes of the support functions in order to achieve a simpler organization in which at least 75% of the staff performs functions involving a direct relationship with customers.
Network process transformation plan
The Network process plan has been defined and developed in 2012, based on 5 core elements:
- Automation, digitizing and monitoring
- High self-service capabilities
- Solving problems on the spot (agility)
- Collaborative and multi-channel management
- Simple and smart commercial processes
This plan seeks to enrich the customer’s experience by providing the commercial processes with a greater and better customer view, while reducing the workload of the operating and administration processes.
Over 200 projects have been implemented in 2012 in all the geographical areas, which involve significant progress toward an aspirational model in which the time devoted to customer added-value tasks will be increased by 30%.
Transformation of the ways or working
These plans are supplemented by projects aimed at transforming the ways of working in the Group. Two projects stand out in this area: the Simplicity Plan, designed to simplify the ways of working and making life easier for others, and the Digitizing project, which involves evolving Central Services toward a "paperless" environment and optimizing the internal processes of the Areas.
Transformation of the Distribution Model
New branch formats
As a continuation of the work carried out last year and in order to meet the need to evolve the customer relationship and interaction model, the following activities have been carried out in 2012:
Two new branch formats have been implemented in Spain and Portugal:
In Madrid, at Capitán Haya, 24 and Paseo de la Castellana 107, two branches have been transformed, following a new concept we call “Easy Banking”. These are innovative branches, where all the external space is made available to the customers. They include the new ABIL self-service areas, which offer customers a very user-friendly way of carrying out transactions on their own. Advice is given on very distinctive pieces of furniture we call “cocoons”, where the customer and the manager can see the computer screen at the same time, thus emphasizing sale transparency. All this in an environment which is transparent from the outside, with an attractive design and innovative use of digital media in advertising and information.
The former was opened in late 2011 and the latter in the second half of 2012. They have been received very positively by the customers, emphasizing both the self-service capabilities and the differentiated treatment and form of relationship they offer.
A new concept we call “flagship” branch was also inaugurated in July at Orense 58. It is a larger branch that acts as a main office for other branches in the area, offering innovative approaches.
In addition to having larger self-service and customer care areas, there is a reception area at the branch entrance that we refer to as "experience area", where the offerings and benefits of being a BBVA customer are displayed using digital media for different segments. It includes a multi-purpose area where events can be organized and the bank’s sponsorships or product and service promotions are on display for both customers and non-customers in the area. This is where the Liga BBVA sponsorship was presented, along with the entrepreneurship work carried out by the BBVA Foundation and the Ruta Quetzal. They have all attracted both customers and non-customers. The top floor of the branch also has several meeting areas for customers, designed for occasions when a more private environment or more management time are required.
This initiative complements others carried out in the Group:
In Mexico, the 1st Ulysses Project has been developed and tested. It has transformed the 20 branches in an area into a more segmented sales-oriented commercial model aimed at enhancing the customer experience. These transformed branches, where the self-service and financial advice areas have been improved and correspondents have been included, have been in operation throughout the year and have achieved very positive results. As a result, this concept will be extended gradually over the next few years.
In South America, within its expansion program, new branch formats have also been developed, including the “light” branch, with no cash desk and open to the public on a continuous basis, complementing the area’s format structure. The first pilot branches have been in operation in 2012 and, based on the results, a decision will be made on their gradual expansion.
Telephone banking
As for Contact Centers, an initiative was launched in 2012 to define a global technological platform for the Group, whereby all the contact centers operated by third parties will gradually use and connect to the various global infrastructures that will be set up for this purpose. The initiative will be implemented gradually in 2013 and 2014. The aim is to achieve a qualitative leap in the operation of BBVA’s contact centers through standardization of the service provider management model.
In 2012, the Speech Analytics tool received The Banker Award in the Capital Markets category. This tool involves automating the access and search processes for the conversations held by the Bank’s agents with customers, in accordance with the new regulations in the sector.
Speech Analytics enables alarms to be entered and indexed in a keyword database, providing a greater level of control over the recordings, as regards both the customer advisability and suitability tests (a requirement set by MiFID Directive) and the analysis of the conversation metadata. From the point of view of management, the tool also substantially speeds up access to the recordings and, in the event of conflicts, reduces their resolution time.
The adoption of Speech Analytics by BBVA represents the first implementation of this technology in the financial sector worldwide, and aims to increase efficiency and control of commercial banking transactions.
Development of virtual banking
2012 saw the consolidation of mobile banking as one of the fastest growing remote channels. Available natively on the main platforms for mobile devices, the BBVA Cell Phone solution has experienced the largest growth among the various remote channels and is also one of the most highly rated channels. At the same time, and in order to provide coverage to 100% of the devices available on the market, the bbva.mobi and SMS solutions have been enhanced with new functionality demanded by customers.
In our ongoing effort to adapt out technology to the most advanced standards, the on-line banking website is being adapted according to the most recent recommendations proposed by W3C, an effort that will become a reality in the first quarter of 2013. The new technical developments, combined with the new functionality, will provide faster and more convenient access to our customers from any type of device available on the market.
2012 also saw the evolution of the consumer electronics devices toward access points permanently connected to the Internet. The possibility of accessing the Internet from TV sets, domestic DVD players and other popular devices has made possible the development of new services that, using the same technological platform as the rest of the channels, require a high level of innovation in customer experience.
Apps
Apps are playing a fundamental role in the evolution of our customer relationship model. In 2012, the number of downloads of BBVA applications tripled, with an average of 110,000 downloads a month. This incremental trend is on the rise, with quarterly growth of 40%.
Today, 80.9% of the applications downloaded correspond to cell phones, 11.8% to iPads and 7.3% to Smart TV.
Innovation
Innovation Community
In 2012 we have consolidated the BBVA Innovation Center as a meeting point for the innovative and entrepreneur community. Last year, more than 14,000 people visited the Innovation Center. Of these, 1,688 took part in one of our guided visits and 10,422 attended one of the 157 events organized at the center.
This year we are offering the Open Days, which are intended to communicate the Group’s innovation activity to those interested in this subject. Likewise, the Innovation Center hosted world-class events like TEDx, Knowsquare, Cloudstage or Hacks and Hackers, among others. In addition, we are promoting our own events on Simple Banking, Mobile Banking, Mobile Payments, Gamification & Banking or the “FutureBankingLab” think tank in partnership with the Inter-American Development Bank (IDB) and we have received well-known public figures like Eduard Punset, Alexander Osterwalder, Ken Morse or Sebastian Seung, who shared their projects and knowledge with visitors.
Far from being a physical experience, it has also been offered on the Internet, with over 333,000 unique visitors recorded on the Innovation Center’s website last year. Our on-line presence also extends to social networks, where we chatted with our 9,097 followers on Twitter, who made 6,598 mentions and 7,723 RT, and impacted a total of 77,503,228 users. Not to mention the 3,213 fans on Facebook, with their 1,307 likes, 202 comments and 209 shares. Lastly, the 1,831 Linkedin members who follow us or the 54,240 views on YouTube of our nearly 400 videos confirm the growth of this community.
In 2012 we also launched Innovation Edge, the first corporate magazine for iPad focused on innovation in the banking industry. This is a collaborative exercise among many people who wanted to take part in its creation and has four issues on Apple Store. In Christmas 2012 it was one of the three most downloaded applications in its category. Users have completed 4,096 downloads of the pdf version from the website www.centrodeinnovacionbbva.com/innovation-edge (with a total of 20,232 visits) and 2,077 downloads of the App (with a total of 5,945 visits and 38,046 page views).
Support for innovators and entrepreneurs
At BBVA we are aware that in order for our innovation activity to be effective we need to be close to the entrepreneur community. The BBVA Innovation Center has boosted even more the Open Talent program, with over 500 projects taking part in 2012. We support initiatives such as TR35, a Massachusetts Institute of Technology project that rewards young people aged under 35 who are achieving a great impact with their innovative projects. In 2012 we collaborated in the programs held in Spain, Argentina, Colombia and Mexico. Likewise, we have strengthened our alliances with pro-entrepreneurship initiatives like Iniciador or Red Innova, and we carry out activities and offer workshops at our facilities, including Copymes (Infonomía), EntreApps and The Api Hour.
Information security and fraud and reputational risk management
The BBVA Group has established computer security controls to prevent and mitigate computer attacks that may materially affect the Group’s earnings. These controls are part of the risk assessment and mitigation system established in the corporate operational risk and internal control structure in order to ensure compliance with the Sarbanes-Oxley Act, with a view to guaranteeing their proper identification and effective control. During the processes carried out for reviewing and auditing such risks and controls, no material risks have been identified as a result of the effective mitigation offered by the controls implemented.
The identified risks are basically divided into those which may affect the availability of the computer systems and their supporting processes, and those which may affect the confidentiality and integrity of the information processed by such systems.
Risks related to lack of availability are managed and mitigated through the Business Continuity Plans and the Systems Continuity Plans.
Work is being carried out in the Business Continuity area in order to fully implement and update 128 continuity plans in 26 countries. Some of them have been activated during the year, as in the case of the New York floods.
The risks that may affect the confidentiality and integrity of the information are managed and mitigated within the programs established throughout the BBVA Group in the successive Information security master plans. These Plans are designed to mitigate the various risks through a security model that includes Identity Management, Security Architectures, Monitoring Systems and Incident Management.
The services outsourced by the BBVA Group are not exposed to material cyber security risks.
The BBVA Group has not undergone any security incidents which individually or in the aggregate can be considered material.
By type of business and operations carried out by the BBVA Group, no risks associated with cyber security incidents have been identified which could remain undetected for an extended period of time and represent a material risk. Moreover, and with a view to determining any possible banking-related cyber security risks which might affect the Group, there is no public evidence of incidents occurring in the financial sector which in the case of the Group might represent a material risk.
In 2012, fraud management in the various businesses and geographies has been focused primarily on fraud prevention and early detection of alerts through the use of technology.