BBVA and Anthemis reveal their new way to foster innovation

Technology and data are regularly highlighted as being the biggest drivers of change within the banking sector - and rightly so.There is however another element that is equally and increasingly important - the relationships between customers, their banks and the entrepreneurs looking to disrupt the sector.

It’s an area BBVA has worked hard to strengthen, deepen and grow over the past few years - with the announcement last year of a deal with fintech experts Anthemis the latest evolution. But how does this partnership work, what is it trying to achieve and what will success look like?

At Money 2020 in Europe two of those leading this new initiative took time out from scouting the ecosystem to outline what it meant and why it was an important change in approach for BBVA.

For Gustavo Vinacua, global head of Venture Creation at BBVA, the formation of the venture creation studio program with Anthemis was a next logical step for the bank.

He said that while BBVA has had some strong success with creating internal ventures - for example Azlo in the USA which has attracted tens of thousands of customers in just two years - it needed a way to connect with the external ecosystem more effectively.

“For BBVA the venture creation studio is about building the digital companies of the future, and is another element of BBVA’s commitment to open banking"

"We bring to the table the experience we have as a big global business that has founded dozens of companies, and we use that knowledge to help really early stage businesses to grow and avoid pitfalls.” In practice, and as Farhan Lalji, Venture Partnership Lead at Anthemis, and himself a serial entrepreneur, explained, it is fundamentally about strengthening the fintech growth experience through hands on support.

He added: “The partnership’s job is to scan the wider ecosystem for disruptive, innovative, progressive business ideas, founders and leaders. Once we identify them, we then invite them in to talk through their ideas, and we use the experience we have within Anthemis and BBVA to help them understand the environment they want to operate in. By helping with that initial or early assessment, we can then help the entrepreneur get the information or skills their business needs to grow.”

The pair explained this could range from advice on legal or regulatory matters, to marketing, and assessing the competition landscape the start-up wants to operate in.

Vinacua added: “The key thing is the learning we have got from starting our own ventures we can share - and in doing so support more businesses to achieve success, and yes, also, hopefully finding more products and services to get into the hands of our customers.”

Operationally, Lalji and Vinacua said that the typical business they looked to invest in was at pre-seed stage - with founders perhaps still looking to friends and family for financial support. Once through the assessment stage, and a decision to invest taken, the venture creation partnership would then typically invest between £300,000 and £600,000 into it, sometimes a little more, to help the start-up get off the ground.

Vinacua said: “The good thing is that BBVA sees several end results with these investments that constitute success. Sometimes it could be the business delivering its product and us being able to bring it to customers, sometimes its a pure return on investment, and yet for others we would hope to stay involved with them as they transform into Unicorns”.

Lalji added: “For Anthemis, having a partner onboard like BBVA, with its experience and its focus on supporting innovation and disruption, is a huge benefit and adds value for us when we talk with founders and entrepreneurs".

We will look at a wide range of areas - from SME financial management to saving products for millennials, and everything in between. The key, really, is experimenting - but we focus on quality opportunities in ‘white’ spaces, learning from it all and understanding that there is no one-size-fits-all approach.”

He added that the other key element in the approach to building these relationships was the design of a light and yet compliance governance framework, which allowed for accelerated onboarding.

As for what those opportunities are, Lalji and Vinacua said they had a number of businesses where talks were progressing, and a full pipeline of opportunities still being assessed - both in the UK and the US where Anthemis is based.

Vinacua concluded: “In the end it is about BBVA staying close to the talent that is out there, and being part of the ecosystem and adding value into it, not just as an investor in it.”