BBVA: Traditional retail bank embraces digital disruption

Telco 2.0 Transformation

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This article is part of: Telco 2.0 Transformation

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Retail banks are threatened by a new breed of focused and fast digital firms – fintech – that offer cheaper and more tailored financial services. BBVA management saw this threat early and acted decisively to ensure it remained competitive. Telcos have much to learn from this.


Why are we doing non-telco case studies?

Digital transformation is a phenomenon that is affecting every sector. Many industries have been through a transformation process far more severe than we have seen in telecoms, while others began the process much earlier in time. We believe that there are valuable lessons telcos can learn from these sectors, so we have decided to find and examine the most interesting and useful case studies.

Traditional banking is being disrupted by fintech. This disruption has not happened overnight, but its speed has accelerated in recent years as consumers and enterprises have become more confident using digital tools to manage their finances. Although the fintech market is currently highly fragmented, with fintech companies typically focussing on one or two specific financial products, this can still have an enormous impact on the traditional banking value chain, which relies on a diversified portfolio to create profit. In addition, there is the threat that a digital native company, such as Amazon or Google, will enter the mainstream banking market through a series of acquisitions.

BBVA’s chairman, Francisco Gonzalez, foresaw this threat early-on, and has worked tirelessly to restructure the bank to be competitive in the era of digital banking. This transformation has involved significant changes in leadership, technology, business processes, and the bank’s portfolio. Like telcos, traditional banks are large organisations with legacy technology and processes, and turning the ship around is challenging. Therefore, there are many ways that BBVA’s experience can inform telcos’ own digital transformation strategies.

General outline of STL Partners’ case study transformation index

We intend to complete more case studies in the future from other industry verticals, with the goal of creating a ‘case study transformation index’, illustrating how selected companies have overcome the challenge of digital disruption. In these case studies we are examining five key areas of transformation, identifying which have been the most challenging, which have generated the most innovative solutions, and which can be considered successes or failures. These five areas are:

  • Market
  • Proposition
  • Value Network
  • Technology
  • Finances

We anticipate that some of these five sections will overlap, and some will be more pertinent to certain case studies than others. But central to the case studies will be analysis of how the transformation process is relevant to the telco industry and the lessons that can be learned to help operators on the path to change.

How digital disruption is threatening banking

Retail banks rely on a two-sided business model

Retail banks make money by using deposits in current or savings accounts made by one group of customers (depositors) to finance loans to other customers (borrowers). The borrower not only pays the bank back its loan, but also interest on top – in effect, paying the bank for the service of providing the loan. The bank pays the depositor a lower interest on savings, and makes money on the spread between the two rates of interest.

Retaining depositors is a vital part of retail banks’ business model

Source: STL Partners

While this is highly simplified, this is the fundamental business model of all traditional retail banks, whose main source of income is created through managing a diversified portfolio of financial products across savings and loans. Banks also make money from applying charges when customers use credit or debit cards, or charging its customers fees such as ATM fees, overdraft fees, late payment fees, penalty fees.

Societal changes have driven digital banking adoption

Digital disruption in banking has taken much longer than in other industries, for example, publishing and media, despite attempts from banks themselves to persuade more customers to use online services. For traditional banks, moving customers to digital channels for most of their banking needs could significantly cut the cost of maintaining and staffing a large network of physical branches. However, when online banking services were first launched in the 1980s and 90s, consumer concerns about security and a lack of confidence in managing accounts themselves online meant that adoption was slow.

Since then the market has changed: For example, in 2000, 80% of banks in the U.S. were offering internet banking services. The launch of the iPhone seven years later caused a paradigm shift, triggering a wave of enormous development and widespread adoption of digital services accessible online and via smartphone apps. Ten years on, consumers are much more confident using digital financial services, and, although younger consumers are leading adoption, older generations are also increasingly using these services.

To read on about how BBVA responded to a changing market, please login and download the report, or contact us to subscribe.


  • Executive Summary
  • Six lessons telcos can learn from BBVA
  • BBVA in STL Partners’ transformation index
  • Introduction
  • Why are we doing non-telco case studies?
  • General outline of STL Partners’ case study transformation index
  • How digital disruption is threatening banking 
  • Retail banks rely on a two-sided business model
  • Societal changes have driven digital banking adoption
  • Challenger banks and fintechs are changing the game
  • BBVA’s story
  • Phase one: Investing in technology to catalyse change
  • Phase two: Organisational change
  • Conclusions
  • BBVA in STL Partners’ transformation index
  • Appendix


  • Figure 1: BBVA is rated as “Green” (good) in the STL Partners’ Transformation Index
  • Figure 2: Retaining depositors is a vital part of retail banks’ business model
  • Figure 3: The digital banking generation gap is closing
  • Figure 4: The sharing economy has taken off
  • Figure 5: BBVA’s global presence
  • Figure 6: Telcos need to virtualise their core to deliver cloud business models
  • Figure 7: Digital experience needs to be distributed across the organisation for transformation to succeed
  • Figure 8: BBVA’s leadership team is structured to accelerate digital transformation
  • Figure 9: Traditional banks need to adopt agile processes to compete with digital-native competitors
  • Figure 10: Ecosystem markets need new business models
  • Figure 11: BBVA’s co-opetition strategy involves acquisitions, investments and open APIs
  • Figure 12: BBVA’s shares are performing well
  • Figure 13: More smart and mobile device owners in Turkey use their devices for digital banking services than any other country surveyed
  • Figure 14: Turkey leads the way in four out of seven digital banking services
  • Figure 15: Turkish respondents are the most open to automated digital banking services
  • Figure 16: Less than 60% of Turkish adults had a bank account in 2014
  • Figure 17: Turkey is an attractive emerging market for investment
  • Figure 18: BBVA is rated as “Green” (good) in the STL Partners’ Transformation Index