Ready for Real Time: BBVA Compass Up & Running on New Core System

Sergio Fidalgo, BBVA Compass

When the Madrid-based bank BBVA announced in 2011 that it would replace the legacy core banking systems of its U.S.-based banking operation, BBVA Compass (Birmingham, Ala.) with Accenture's Alnova Financial Solutions, it identified several ambitious goals: achieve real-time processing capabilities, improve time to market, and respond more quickly to customer needs and expectations. Just shy of two years later, BBVA not only has accomplished those goals, it already is starting to realize the benefits of this $362 million project.

BBVA and Accenture announced this week that the new core banking infrastructure is running BBVA Compass' checking and savings deposit platform across the bank's 716 branches, with consumer and business lending coming soon. The new infrastructure also will be integrated with BBVA Compass' brand and ATM networks, call centers and online and mobile banking services.

[Once banks decide to modernize their core systems, what's the best approach to successfully completing the project? Check out BS&T's digital issue, The Core Systems Dilemma.]

"This is a very complex program," notes Sergio Fidalgo, CIO BBVA Compass. "Our main goal was to deploy the deposit system in 2012, which we already have done. Now the checking accounts, savings accounts, CD accounts for our 716 branches are connected to the core banking system." Perhaps even more important than the actual roll-out, Fidalgo adds, is that this has been accomplished without disruption of customer services, which was one of the obvious risks of such a large-scale implementation.

"We have been receiving good feedback from customers," Fidalgo reports. Among the factors that have helped BBVA Compass avoid service disruptions has been the close involvement of the bank's senior management, including its chief executive Manolo Sanchez, who also is BBVA country manager. Along with strong management oversight, there was "very rigorous testing," Fidalgo says. "We had to modify the system to make it U.S. compliant, those modifications were thoroughly tested." BBVA uses Alnova in nine other countries.

Another success factor, according to Fidalgo, was the bank's decision to implement a staggered roll-out over the course of five months, starting with one branch this past April and then expanding state-by-state. Texas was the last state to go live on the system, which took place September 10.

External communications with customer and internal communications with employees about the changes the new system would bring also were critical, he says. "This is a huge change for our employees in how they work every day," he notes. "And we had to communicate with our customers how the way we process their accounts will be changing."

Central to that "huge change" is the realization of the goal of real-time banking. BBVA recognized that the long-standing batch processing, transaction banking model was an impediment to the type of relationship banking it sees as key to growth. "We had a good sense of the opportunity that was in the universal or relationship banking model, the ability to serve the client [around] more comprehensive aspirations on the financial services value chain," Sanchez says. "This will allow us to be a better relationship bank, to be there for [customers] when they need us."

Not only is batch processing an outmoded technology, he adds, it does not support the kinds of immediacy and transparency that customers now expect. "Try to explain to a millennial batch processing! This is a real-time world we're in," Sanchez says. Real-time thus offers "a very interesting advantage." Getting to real time, and doing so in a way that effectively integrates multiple delivery channels, requires a modern "architecture that allows you to be customer-centric, serve them in real time, and be multi-channel."

[Read more about BBVA Compass' mobile banking strategy.]

There also are operational benefits that come with abandoning batch processing. "Real-time processing means the process no longer divided between what happens in the channel and what happens in the back office," Fidalgo says. "That leads to lower back-office costs, fewer mistakes and smaller reconciliation efforts. It's [improving] customer experience and helping the efficiency of the bank."

BBVA Compass is counting on the Alnova system to help it bring new products to market faster. "The main difference with the legacy system is that, instead of having to code [software], it's parameter-based," Fidalgo explains. "We have to test, but we don't have to recode to create a new product." Pre-rollout tests indicated that on the new platform time-to-market could be reduced by as much as 75%, he reports.

This capability is a "game changer" for the bank, according to Sanchez. "Now we are owners of our own destiny," since BBVA Compass no longer will be dependent on vendor system upgrades in order to develop new offerings and capabilities.

Addressing both the strategic and operational aims of BBVA Compass' core systems initiative,

Bruce Voelker, senior managing director for financial services, Accenture, notes, "They eally did focus on changing the business model, not just the technology. So it's really a combination of people, process and technology. From core banking transformation point of view, that's how you do it."

BBVA Compass remains somewhat unique among U.S. banks in terms of the scope of the project, according to Voelker. "There are organizations looking at making changes, but this is a comprehensive, end-to-end change, and not many organizations have taken that on [because of the] complexity and the risk. The industry will continue to need to make changes [in core systems] to continue to serve customers in the way they want to and need to in the future, and to address the changing environment in which banks are operating in North America."

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio