Technological highlights from 2019 and a look at the year ahead, according to BBVA experts (Vol. I)

Today, the impact of the paradigm shift this digital revolution is having is being seen across all industries and geographies - and in a range of technologies, from data science to quantum computing.

With not only the end of the year, but the end of the decade too, now complete, some of BBVA’s experts in the field of technology have given their views on the most important developments of the past year in their area, but also future-gazed for us too.

In this two part series, let’s start by taking a look at the disciplines of data science, behavioural economics and venture building and how startups are disrupting the banking sector.

The article also features views from BBVA’s former head of retail solutions, now Spain’s Business Development lead, and the business’ expert on quantum mechanics.

Gonzalo Rodríguez: “The big change in retail banking will come with the automation of our financial lives”

Gonzalo Rodríguez is the new Head of Business Development in BBVA Spain. He is a financial services executive with proven track record of developing digital solutions and improving customer experience. Gonzalo has a deep expertise in Digital, Retail Banking, Product Management, Innovation and Technology. He is responsible for developing digital solutions for customers across BBVA, from open market capabilities, to DIY and advice solutions so customers can do everything from their mobile app. He led the digital transformation in Spain, where BBVA’s mobile banking app has been named worldwide leader according to Forrester for the third year in a row.

1. What has been the biggest development in retail banking during 2019

In terms of BBVA’s biggest things, honestly, there’s been so much it’s hard to narrow it to just a few. But if I had to, I’d say these two things. Firstly, the deployment of our new global banking app, which we launched in Mexico, this year has arrived to all Mexican customers and is now expanding to other countries. Secondly, our continuing work to bring personalised advice services to customers, as we have done in Spain (and we will continue delivering in 2020), where the levels of advice - warnings on overspending, expected bills, ways to save etc - are proving hugely successful.

2. How has this, or how will it impact customer and clients going forward?

All of these things deliver a much better customer experience. We are shifting towards being a truly digital, truly global business, and as we are seeing with the likes of big tech, customer experience is a key element in retaining customers. So that what we are working hard at - being better partners, offering better advice, supporting people to meet their goals. In short, helping them improve their financial health. The use of data and technology allow us to reach our whole customer base. And, as we do that, we see that people really value these services positively and they want to use them more and more.

3. Looking to 2020, what potential development excites you the most and why?

Adding to everything we’ve delivered in 2019, there are two things that I am excited about the most. In the first place, continue deploying our global mobile banking platform in Spain and in other countries such as Peru or Argentina. And, in second place, as I’ve just touched on, for me, the ways in which we develop how we offer really individual, personalised, actionable advice to people will still be key. It’s about BBVA helping people with their financial health, both long term - pensions, mortgages, investments - and short term - making sure the bills can be paid, that money is being used as effectively as possible - so the stress that money sometimes causes can be reduced. For us, this ability to use our experience and tools to help people in this way is a key differentiator for us and a core focus in 2020.

4. How will this impact the way in which customers and clients access financial services in the future?

On the one hand, we’ll see changes in the access channels people use. Nowadays the growth of mobile banking is clear, and will continue. But I also think that voice activated banking services will become more prevalent, although that brings with it is own set of challenges. Another significant area of change will be around the automation of financial decisions. This relies on step changes in how banks support people - from automating bill payments or moving money into savings accounts through to full level hands off banking, where the bank will do everything for you to ensure your money is used as effectively and efficiently as possible. To get to this point, having the trust of customers is key.

5. Long term, how do you see retail banking heading - if you could peer ten years into the future, what will have changed and why?

I think the last answer has touched on it, in terms of automating people’s financial lives. Further, I think there is a big job to do around making people’s non-financial data work harder for them, and in many cases, tying together financial and non-financial data to deliver better end results for people. I also think the shakeup of the industry being caused by digital players coming into the sector, and refocusing on user experience and technological powered solutions has only just begun - so interesting times ahead.

Elena Alfaro: “There will be a big leap in our understanding of how data and algorithms work”

Elena Alfaro is the Global Head of Data & Open Innovation in BBVA Client Solutions, which functions include the generation of machine learning algorithms that constitute the intelligence behind BBVA’s digital products, as well as the transformation of BBVA’s skills and culture into a data-driven organization. She also leads the Group's efforts to make the most of Open Innovation, both for the Bank and for our partners in the external ecosystem. Before that, Elena was the CEO of BBVA Data & Analytics, the Group’s Center for Excellence in Data Science and Advanced Analytics, position that she held during 3 years.

1. What has been the biggest development in data and artificial intelligence (AI) during 2019?

Inside BBVA we have progressed a lot in the type of teams needed to deliver data-driven products, and how we can work in closer, more related ways. This goes well beyond data science, and includes data developers, data engineers, designers and of course business domain specialists. We now work much more integrated not only here in Madrid, at the BBVA AI Factory, but also together with colleagues in all the countries in which we operate. In Data more broadly, among some technical breakthroughs and trends, I would point out the focus (from companies, institutions, academia, and the general opinion) on how to develop AI responsibly.

2. How has this, or how will it impact customer and clients going forward?

Internally I think this will help on the delivery speed and also on the quality of the products and projects that BBVA launches. From a broader perspective, I think the 'Responsible AI' movement will help ensure that this technology is used to empower humans and society, and will mitigate some of the risk of the "AI superpowers" and fears the technology has caused.

3. Looking to 2020, what potential development excites you the most and why?

One of the most exciting areas for me is anything related to personalized advice, both in terms of financial and non-financial. I think we can still do a lot to help clients and users in their daily lives and to achieve their goals, including being more sustainable economically and environmentally. Also, we have a huge potential to improve internal processes, for instance like automatic document reading or supporting colleagues with data and insights in their decision making processes.

4. How will this impact the way in which customers and clients access financial services in the future?

I think that the impact can be huge. On the one side, because the services will become less "financial", and more "life focused". This means that for instance, the act of payment will become more and more invisible (as is happening already with some services), but we will advise the customer on how to buy better, or how her payments are aligned with her life goals. On the other hand, and from a AI and data responsibility perspective, and I think (and hope) that people will take a step ahead in understanding how data and algorithms work, because companies will take a big step on transparency. And this hopefully will lead us to building and using systems that we can trust.

5. Long term, how do you see data science heading - if you could peer ten years into the future, what will have changed and why?

It is very difficult to make predictions on predictive technologies... So I will focus on what I think it will not happen and a wish: we will not have general AI and we will not live in a society controlled by robots and algorithms. The wish is that in 10 years from now we finally avoid the risk of concentration of data in the hands of a very few number of companies, and we have people more in control of their own data - able to share it more widely and reap the benefits of it.

Enrique Belenguer: "Behavioral economics will enable us to create stronger advisory experiences"

Quique Belenguer is currently Behavioral Economics Global Leader at BBVA. He is in charge of Behavioral Economics (BE) methodology & research. He also works on several BE projects within the bank, such as Financial Health, Behavioral Sciences and Cybersecurity or BE and Diversity, and coordinates the BE discipline in USA and Turkey. He previously worked as a consultant in market research and behavioural economics.

1. What has been the biggest development in BE during 2019?

Perhaps the biggest development within BBVA and Behavioural Economic generally has been moving beyond "nudges" - gently nudging people towards ways to make better decisions - and creating bold interventions based on deeper understanding of how people decide. For example, when building a personal finance manager it may be more useful to give asymmetric feedback: specific actions or advice when doing bad (you overspent 50 euros against your determined budget) vs vague when doing well (congrats you have not spent your budget); this way, when doing well, people do not accelerate spending.

2. How has this, or how will it impact customer and clients going forward?

It is helping us greatly in terms of how we build better advisory models in the future. We will be able to build stronger advice experiences that help people to have a better financial health, to be more informed, to have more tangible actions they can take and to better understand how they can more effectively manage their financial lives.

"We could build experiences that are taylor-made for the client, the most effective way to help them with their finances"

3. Looking to 2020, what potential development excites you the most and why?

How AI and BE can be used together to create customized interventions at scale. For me, this is a really exciting development, as it allows us to really personalise the advice we can give, in a way that simply was not possible before.

4. How will this impact the way in which customers and clients access financial services in the future?

We could build experiences that are taylor-made for the client, the most effective way to help them with their finances. We can also more fully integrate the BE discipline into other areas of the business. Also, there is an element of people understanding that the BE we advocate is not about influencing the customer decision for our benefit, but rather its a service intended to help support them to make better, more informed decisions.

5. Long term, how do you see BE heading - if you could peer ten years into the future, what will have changed and why?

I believe BE will have permeated most areas and everyone would use insights from Decision Sciences in the way we build experiences and communicate now, as well as how we relate in the work environment. What we know about how people decide and make decisions - the actual mechanics of what goes into making a decision - should not be just an area, should be a way of working.

Gustavo Vinacua: "Super applications will give rise to a concentration of users of the big platforms"

Gustavo Vinacua is Global Head of Venture Creation in BBVA Group. Senior innovation executive and entrepreneur with more than 20 years experience in wireless and telecoms, tech markets, financial industry and fintech gained from key management positions in leading multinational and through entrepreneurial activity. Gustavo is an expert in venture building, creative, customer focused, results-oriented and clear goal to deliver.

1. What has been the biggest development in the startup and venture creation world during 2019?

For me, there were three big developments I’m watching closely. Firstly, the offerings in digital banking coming from challengers like Revolut, NuBank, N26, Chime, Uala, Albo, and Klar for example, have exploded during 2019 showing good traction in customer acquisition as well as getting strong funcing and with increasing valuations.

Secondly, the super app type of model expanding from Asia into Latin America - for example Tinkoff’s recent announcement. As well as growing greenfield - for example Rappi - based on the belief that some of the specific circumstances that fostered the creation of these offerings - for example low banking and credit card penetration paired with a high smartphone usage - are similar in the Latin America region and may support an exponential adoption.

Thirdly, the gig economy has also been an interesting space with quite some action and touches some of the trends around the evolution of work and the new labor force.

2. How has this, or how will it impact customer and clients going forward?

The super app concept may lead to some concentration of users on big platforms, which may potentially lead to them having access to massive amounts of data. The ethics of how this access is managed, and how this data is used is going to be key. Interestingly, there are already a few technologies and businesses working on how to support multiparty sharing, for example PET (privacy enhancement technologies) like federated learning, homomorphic encryption, multiparty computation, zero knowledge proof etc, and it will be interesting to see how they get used.

3. Looking to 2020, what potential development excites you the most and why?

Firstly, increasing availability of data and technology evolution is creating the perfect environment for a new wave of profitable financial inclusion offerings that will both expand access to financial services for a huge audience and provide new sources of revenue. A win-win situation that would bring opportunities to everyone.

Secondly, increasing consciousness around the need for action with regards to the challenges that the planet faces in particular those related to the use of resources and the impact on the environment may impact the consumption model and pattern which could facilitate the appearance of new offerings. I think banks can and will play an increasingly important role in addressing these challenges.

4. How will this impact the way in which customers and clients access financial services in the future?

There is trends-based evidence that users are both attracted by specific solutions addressing pain in the financial daily lives, coming from digital players (small and bigger players) as well as leaning towards the convenience of having all in one same place (platforms/ecosystems/superapps). Whether there would be a need to choose between the two options or not, it's not clear. What we know is that data privacy and security could, perhaps will play, a starring role and financial services may also continue to embed deeper into experiences and move from product focus further and more into solving other pains we now see as part of other industries or verticals.

5. Long term, how do you see startups and venture building heading - if you could peer ten years into the future, what will have changed and why?

The platform and ecosystem play will consolidate and derive in massive concentration of users into just a handful of players, since they facilitate smaller players access to customers and other means and bring convenience to users in a world that values time and hassle free experiences above all else. That in turn will feed a stronger and heated battle for decentralization and partial re-fragmentation. Tension from regulatory bodies may also support in a way - potentially reducing the size or scope of the biggest players.

Escolástico Sánchez: "Quantum computing will represent a drastic change for financial services"

Escolástico Sánchez is currently Leader of Research & Development Discipline in New Digital Business of BBVA. He has been leading the Quantum Computing Algorithms Research Line and team during the last two years. He is a Fundamental Mathematician, with two master degrees and two U.S. patent filed, that began working in the financial sector in 1998. He has an integrated view of the financial sector, adding up the quantitative and realistic point of view of a portfolio manager, of a risk budget officer and the Legal and Compliance side of the industry.

1. What has been the biggest development in Quantum Computing during 2019?

For me, there are a number of key developments in the quantum world that have happened during 2019. Of those, I would highlight the increased levels of both private and public investment, as well as the growing availability of quantum computing through cloud access. This has helped fuel an exponentially growing level of quantum talent during this past year, which in turn has led to great developments such as: Google announcing that they achieved quantum Supremacy with their 53-qubits Sycamore processor, and the subsequent backlash from IBM against that announcement while they presented their 53-qubits processor.

From the BBVA side, our biggest development was really to have stepped up and become part of the quantum ecosystem and worldwide community. As an example, we are really proud of our partnership with a top public research center (Consejo Superior de Investigaciones Científicas - or CSIC) which has greatly enhanced our scientific capability for researching into this topic. We have created significant internal talent, both in terms of knowledge and capabilities, through the generation of the first Quantum Hub for BBVA, with other areas such as Corporate and Investment Banking or Asset Management, working on quantum algorithms. As a first fruit of the Quantum Hub, we have built a prioritized financial use cases list and tested several hypotheses in Proofs of Concept (PoCs).

2. How has this, or how will it impact customer and clients going forward? 

The first of these PoCs, in collaboration with Asset Management, is about a better heuristic for portfolio optimization. Apart from the future potential of these approaches, more immediate collateral benefits have been reaped through quantum inspired algorithms that we can apply, in a way, on the management of mutual funds. This is great for clients  because they will receive better, more efficient and cheaper advice with deeper research and calculations going into them.

3. Looking to 2020, what potential development excites you the most and why? 

There are really any number of things I could highlight - part of the benefit of working in such a vibrant, new, field. Certainly, we will be looking at where and how quantum computing can support our core focus across BBVA on sustainability. In tandem, it will be interesting to see where and how quantum computing can help in solving things like Monte Carlo simulations with quantum advantage (which allows to simulate the evolution of variables with random conditions). We might also get into areas like quantum machine learning or quantum solutions of partial differential equations. For me, there are the most exciting developments in the near future because they mix the potential impact of quantum computing algorithms with the medium-term availability of quantum hardware.

4. How will this impact the way in which customers and clients access financial services in the future? 

It will change dramatically financial services, as well as more broadly significant elements of the global economy and society in general. Apart from cybersecurity implications, there are other classically intractable problems - because of their high dimension in terms of variables, simulations, time needed - which will become tractable with quantum computing. This is still nascent technology , so as well developing its capabilities - and we are seeing huge leaps in this every year - we are also looking at its potential, what it can do, where it can solve problems and how it can be used.

5. Long term, how do you see Quantum Computing heading - if you could peer ten years into the future, what will have changed and why? 

It’s going to have a huge, huge impact: communications, cybersecurity, sensing equipment, the way the internet operates, supply chain logistics, scientific exploration and of course finance...all of it will be profoundly changed for the better. Actually, computing in general too, and consequently the whole way in which people interact digitally will shift because of the new quantum paradigm, and of course we will have created by the quantum-winner hardware by then too. Those who bet on quantum talent and research now will reap the benefits and be compensated in a decades time.