As a major global bank, BBVA stands out in its early embrace of the banking as a service model. The BBVA Open Platform provides verification, money movement, account origination, and card issuance for commercial and consumer financial products.
Susan French, the head of product for BBVA Open Platform, joins us on the podcast to give us an update on the platform and what new products and services BBVA plans to roll out this year. We talk about the work BBVA Open has done with upstart fintechs like Digit and Wise, and where we are in the evolution of platform banking. Lastly, we discuss the role Open Platform plays in BBVA’s overall strategy.
White label banking
We are probably the only bank of our size in the U.S. that offers our capabilities as a white label product. The end customer opens a bank account or makes a payment by interacting with our client’s branded experience.
There are other competitors in the marketplace that do similar things and all of the major banks have API platforms or are developing them. But, by and large, those are positioned as additional distribution channels for their existing products to their existing customers. None of the big guys have tackled the concept of white labeled services. At this point, we’re pretty unique in this regard.
Evolution of the platform
The genesis of the Open Platform began when BBVA acquired Simple in 2014. In order to migrate them off of their bank provider at the time and onto BBVA, we had to create a platform of API-based services they could integrate to. Once they did that and we saw the potential of other companies like Simple, we started building out the platform, adding more services and a broader range of products and capabilities.
Today, we have five major products: know your customer for consumers and businesses, accounts, debit card issuance and payments across a number of rails like ACH, cards, bill pay and checks. We also have a real time notification service. We focused on two things since launching: adding more capabilities and broadening the scope (soon, we will add interest-bearing accounts and credit cards) and scaling (we’re now up to 750,000 API calls a week across our client base).
Our initial focus was on smaller institutions that helped us build out and test the platform. Now, we’re working with larger, more established firms, and helping them integrate the same kind of banking and payments services into their platforms.
Banking as a service
When speaking with people, we often make the distinction between open banking and banking as a service. Open banking is a major topic in the European banking community around data sharing and the authentication protocols that come with that. Some of that will find its way to the US.
Banking as a service is a more robust concept. It’s not just about data sharing and enabling consumers to share their data. It’s about giving companies of all sizes the ability to create more seamless financial experiences for their customers.
As banks and technology companies come to realize the importance of that, we’ll start to see more BaaS applications arise. More financial institutions will participate in the future.
Open Platform in BBVA’s strategy
Globally, BBVA is known for innovation. They run innovation centers in multiple countries and are probably at the forefront of many of the major trends. BBVA US has embraced Open as an opportunity to grow the bank in a way that isn’t possible via traditional marketing methods.
If you think about what it costs to add a million customers through traditional banking channels or branches, compare that to how straightforward it is to add the same number of customers doing partnerships with ten fintech companies that have 100,000 customers apiece. It isn’t hard to see how the network effect can bring new customers, deposits, and payments in a way traditional bank acquisition channels can’t. This way we can also acquire new customers outside those states where BBVA has branch presence.
Clients building on BBVA Open Platform
Wise is a small business bank that launched on our platform last September. They offer digital banking services for SMBs of all sizes. They take advantage of the full scope of our platform. They use our KYB capabilities to do customer screening on businesses that apply. They open business checking accounts and issue business debit cards through our platform. Their customers can then fund their accounts by ACH or pull from debit using our move money service. They can pay their employees using ACH and electronic bill pay and push to debit. They’re building a whole ecosystem for small business customers by building on our platform.
Competing and partnering
Another small business bank Azlo also built on top of our platform. Azlo also happens to be owned by BBVA US. We have supported both BBVA’s own owned client entities and also third party entities that compete directly with them. It’s an enlightened point of view of supporting innovation generally.
One of the challenges of the white label model for us is that we’re one level removed from the end customer. We’re B2B2B or B2B2C, interacting mainly with our clients, who get more feedback from customers than we do. Having a comparable enterprise like Azlo or Simple gives us direct access to feedback from the actual end customer.
Looking out into the future
We’re focused on continuing to build out the functionality of the platform — adding more ways to pay and adding more services. We’re looking closely at lending — both enabling consumer unsecured loans and installment lending at the point of sale. We’re looking to add credit card issuance to our existing debit card issuance. We’re also looking at scale, bringing more and bigger clients onboard.
What’s beautiful about a platform is that it isn’t designed for a specific use case — it’s designed to support a variety of them. I’m really looking forward to see what interesting new ideas our client population has to use our services.