The financial industry—especially banking—has characteristics that make it a candidate for rapid and early digitalization, mainly because its fundamental raw materials and products boil down to two: data (or information) and money. And money can be turned into accounting figures, that is, data or information. Still, banking has not suffered anywhere near the level of disruption experienced by other sectors.
But this is changing. A new generation of clients has grown up in a digital marketplace, and it demands different services and new ways of accessing them. What these clients need is agile, rapid service—ideally, in real time—that is competitively priced and personalized, and all this in a safe environment, where their data is protected. Finally, customers will want to be offered other services, such as easy access to P2P systems, so that they can use their banks for any interactions or transactions with other people.
The technologies that make it possible to offer all that already exist; their latest developments and growing adoption pave the way for future changes we can't even imagine, with enormous gains in the variety and quality of services offered and in operational productivity.
Among those technologies are mobile computing (smartphones are increasingly becoming customers’ preferred means of accessing their banks); biometrics, permitting secure identification without need for documentation or physical presence; cloud computing, making it possible to offer scalable, efficient computer services to everyone; and blockchain, which will allow to automate many banking processes that currently require intensive human involvement.
Key cognitive technologies for the development of banking include "conversational interfaces" that improve user experiences; "automated complex reasoning," which permits totally automated decision making; and "deep learning," anticipating more advanced systems for fraud detection. In addition, there's "risk scoring," the definition of dynamic clusters of customers, the construction of artificial stress scenarios, and much more. And artificial intelligence is fundamental for the development of natural-language processing, which allows computers to maintain a conversation with human beings. This would enormously accelerate customer digitalization.
On the other hand, user convenience calls for much more global and integrated solutions to meet their needs, and this will likely be achieved through platforms combining products and services from different providers. So the key question is: who will occupy the center of these platforms the way, for example, that Amazon does today? This central player will be the platform’s “owner,” establishing the rules, taking responsibility for maintenance and improvements, and validating the transactions that take place there. Consequently, it will receive a part of the income generated by those transactions and will have access to, and control of, the information generated around it, which is itself another enormous source of value.
Succeeding in such a competitive environment encompassing start-ups, banks, and probably some of today’s major digital enterprises will involve two fundamental conditions: first, possessing the most advanced capacities offered by the exponential technologies on which the platform is built; and second, being able to gain consumer confidence through an excellent reputation that stresses prudence, transparency, and a complete absence of conflicts of interest.
What is needed, then, are regulations that adequately balance the value of new digital proposals for consumers with protection from the corresponding risks. At the same time, regulation must create a competitive environment—and supervision must ensure that it is respected. How digital regulation and supervision are defined will be determinant in the speed and, to a large degree, direction of the financial industry’s transformation.
BBVA has been involved since 2007 in an ambitious transformation process of our technological infrastructure and our organizational structures, attracting new talent to expand our digital capacities and accelerating the development of a more agile, flexible, entrepreneurial, and collaborative corporate culture. Throughout this complex process, our efforts are aimed at defining our relation to our customers—on the one hand, by placing technology and information at their disposal, and, on the other, by concentrating our efforts on broadening and improving our relations with them.
And that is what we call “exponential banking” at BBVA: banking that draws on exponential technologies to exponentially expand the area of contact with our customers and information about them; banking that multiplies both the variety and the quality of the services we offer; and, in summary, exponentially expands our business on a global scale. Because, in the final analysis, what matters is earning and keeping our customers’ trust, as that is what will determine who succeeds in the financial industry of the future.
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