Q: BBVA has set ambitious growth targets for 2024, what role does digitization play in achieving them?
A: BBVA’s objectives continue to be very ambitious and are based on the strategy we set a couple of years ago. One of our objectives is to reach more customers and to do so as efficiently as possible. Currently, scale is a competitive advantage for the banking business, something that, added to our digital capabilities, is allowing us to increase our customer base significantly.
Over the past five years, BBVA has been able to increase its customer base by 35 percent and the number of new customers has multiplied by 2.5. In fact, in 2016 we added 3.4 million new customers and we expect to gain 8.3 million in 2021, 3.3 million of which have been through our digital channels.
Digitization has clearly played an essential role in our organic client growth and will undoubtedly continue to do so, as reflected in our sales through digital channels, which already account for more than two thirds of the total.
Our objective is, on the one hand, to continue to grow both in our own channels and those of third parties, and on the other, in high-value verticals such as SMEs, private banking, companies with multi-country footprint, as well as in payment and insurance products where, thanks to our digital transformation, we are especially prepared to accelerate our growth opportunity.
Q: When you talk about third-party channels, do you mean commercial agreements or embedding your services in third-party platforms?
A: We mean both. At BBVA we aspire to expand our positioning, reaching where we previously did not, either through strategic alliances or through the integration of services leveraged on our ‘open banking’ capabilities.
Regarding alliances, some examples include the one with Allianz Seguros, through which we offer a range of non-life insurance products, with a special focus on SMEs and the self-employed, or with Telefónica in Colombia, offering consumer loans to its customers. As I said, these are only a small example, since, over the last two years, we have increased our agreements with new partners fivefold.
At the same time, we also want to achieve a natural integration of our products and services in third-party platforms, which will allow us to reach new audiences and markets. We are currently adding 37 percent more customers through third-party channels than in 2019, 10 percent of the new digital customers. So in view of this data, our commitment to alliances takes on special importance.
Q: Has the agreement with Uber started to yield results? Can you comment on any other agreements?
A: This partnership arose with the idea of making life easier for their car drivers, giving them access to a debit card linked to their Uber account. In this way, they have access to their income directly from the application. In addition, through the instant payments functionality, they receive the payments corresponding to the rides they make immediately without having to wait for Uber to transfer the balance to their bank accounts.
This means new users for BBVA and the possibility of expanding similar solutions to other partners and in other geographical areas.
With regard to other types of agreements, we are offering our partners loans, payments or insurance products at time of purchasing, making them truly contextual. For example, in Spain, you can pay in installments when you buy on AliExpress.
With other partners, we are reaching new segments. This is the case for young people in Spain, who find the BBVA App pre-installed in Xiaomi smartphones, or cleaners or housekeepers in Mexico who can open accounts with BBVA through the Zolvers platform.
In short, these types of agreements with third parties seek to capture customers where they interact most frequently in their daily lives.
“The needs of our customers force us to constantly innovate our digital proposal”
Q: Payments is one the most valuable verticals where BBVA is going to focus, but this seems to be an area with a lot of competition and new players…
A: Indeed, over the last few years, the strong acceleration of digitization has led to an ever-increasing demand from our customers for payment methods and, with it, a high potential for this segment to generate revenue. This is why payments will be one of the key growth areas for BBVA. So much so that our card sales have grown by 51 percent this year and our POS sales by 57 percent.
Our objective is therefore to continue developing new payment solutions, taking advantage of a global approach. A good example is Aqua, a card with a clearly differentiated value proposition that already operates successfully in Spain, Mexico, Colombia and Turkey. And Openpay, a ‘one-stop-shop’ for merchants, which offers omnichannel payment solutions and value-added services through payments, operating under a common infrastructure in Mexico, Colombia, Peru and soon in Argentina.
And in this demanding and, therefore, increasingly competitive environment, BBVA has the digital capabilities, channels, data and products that allow us to be more competitive and grow our business. We gained market share this year in all our geographical areas. But it is really the needs of our customers and, in fact, this competition, which is pushing us to constantly innovate our digital proposal.
It should also be noted that the world of payments is a world of collaboration and open innovation, which allows us to approach other ecosystems with which we are willing to collaborate and embed our services to reach more customers, so it is possible that, in the future, we will see more agreements and collaborations.
Q: What’s your opinion on the success of the ‘buy now, pay later’ formula. Do you have any plans in this area?
R: Payment in installments for purchases made in stores is growing exponentially, mainly due to the strong growth of ecommerce and the emergence of fintechs specialized in these payment methods (Buy Now Pay Later).
In Spain, we are seeing how Buy Now Pay Later is beginning to increase its penetration in e-commerce in particular, estimating that, in the medium term, it will reach levels similar to other northern European countries (around 15 percent). Furthermore, in Latin American countries this payment method is in a much more preliminary stage, so we expect its penetration to grow progressively in the coming years.
BBVA’s goal is to be a leading bank in this business, leveraging our experience in consumer finance and payment methods. To this end, we are working globally on the development of internal solutions that are integrated into merchants and that enable the financing of purchases in installments, both for existing customers and non-customers. These solutions require a great deal of specialization to be able to offer flexible products, with entirely digital contracting processes, real-time response and reaching all consumer sectors.
By way of example, in Spain we have already launched this type of ‘Buy now, pay later’ product in large retailers with which we have strategic agreements, such as Inditex and Aliexpress.