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BBVA is a global group that offers individual and corporate customers a complete range of financial and nonfinancial products and services. BBVA holds a leading position in the Spanish market, where it first began operations over 150 years ago. Today, the financial company has a strong international presence—it has a leading franchise in South America; it is the largest financial institution in Mexico; it is one of the 15 biggest commercial banks in the USA; and it is one of the few large international groups operating in China and Turkey. BBVA employs 104,000 people in over 30 countries around the world and has more than 47 million customers and 900,000 shareholders.

BBVA’s corporate vision is expressed in a single idea: “We’re working for a better future for people”. To achieve this vision, innovation is one of the key elements that differentiates BBVA from its competitors and drives its organizational and business development. This focus separates it from conventional banks and positions it firmly en route to becoming a new class of industrial organizations specializing in the distribution of financial and nonfinancial services.

BBVA has the ambition and motivation to set new paradigms. BBVA’s values are defined by seven simple corporate principles, expressed as follows:

  1. 1.

    Focus on the customer as the center of our business.

  2. 2.

    Creation of shareholder value.

  3. 3.

    Teamwork as the key to generating value.

  4. 4.

    Management style that generates enthusiasm.

  5. 5.

    Ethical conduct and personal and professional integrity as a way of understanding and conducting business.

  6. 6.

    Innovation as the engine for progress.

  7. 7.

    Corporate social responsibility as an intrinsic part of development.

1 The Importance of Sustainable Value in Innovation

BBVA’s innovation model creates sustained value by focusing on each and every dimension of customer experience. BBVA believes that innovation is the driving force behind economic growth and long-term improvement in standards of living. Innovation is needed more than ever to tackle the enormous challenges facing the human race—including inequality, poverty, education, health, climate change, and the environment. Our societies and economies require huge amounts of innovation if we are to make widespread improvements to the wellbeing of almost seven billion people (and growing) compatible with preserving our natural environment for future generations.

This ethical commitment extends to all of the societies in which we operate and to global society as a whole. We make this commitment because we firmly believe that economic development and social stability are key to BBVA’s sustained and profitable growth.

2 The Network’s Role in BBVA’s Innovation Model

BBVA’s Innovation Center, located in a unique building in central Madrid, Spain, makes a major contribution to the organization’s innovation model. One of the Innovation Center’s key functions is to make innovation tangible. In line with this, the Innovation Center has evolved into a Living Lab, where knowledge and experience are shared, accelerating the innovation process and transforming ideas into reality.

Our innovation model is open, participative, and is committed to, supports and facilitates disruptive innovation. Under this model, the Innovation Network performs a dual function. First, it assists the company’s Global Observatory in carrying out continual exploration, acting as a source of knowledge about emerging socioeconomic and technological trends, a role in which it not only draws on the findings of its own internal lines of research, but also serves as a nexus with secondary sources in its network of contacts. The Global Observatory is a part of the Innovation Unit, responsible for the identification and following of socioeconomic, scientific and technological trends, and the finding of new business models and technologies likely to produce a disruptive innovation and potentially applicable to the bank. Second, the Innovation Network provides rapid responses to specific knowledge requests made by the bank, which are submitted via the Innovation Unit under the ad hoc coexploration framework, illustrated in Fig. 8.1.

Fig. 8.1
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The coexploration framework of BBVA’s Innovation Network (© BBVA Group. Reprinted with permission)

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Compared with the usual approach adopted by Spanish companies, in which innovation almost always comes from within the organization, opting for an open innovation framework constitutes a genuinely disruptive change. This approach is particularly novel in the financial sector, which, unlike other industries such as telecommunications or energy, is perceived as lacking creativity, despite being one of the Spain’s most technologically advanced sectors.

Given this context, creating the Innovation Network was a challenging task, as no other company comparable in terms of either size or business model had attempted to do so before in Spain.

3 The Innovation Network’s Origins

In November 2006, when the decision was made to create the BBVA Innovation Network, the idea of a financial institution developing an innovation network was received with a certain degree of incredulity not only within the bank itself, but also within the financial sector and in innovation circles in general. Consequently, the initial response from the research institutes contacted was lukewarm at best. It soon became clear that creating the network that BBVA had designed would be a long and laborious process.

The detailed design of the Innovation Network’s structure had been drawn up in the months prior to this initial contact. Right from the start, the decision was made to work only with the best, with innovation’s layer 1. Furthermore, as the model designed was based on the premise that the ideas received should derive from emerging initiatives (in the sense that they should not already be present in the marketplace), the network nodes needed to be institutions and companies that, on the one hand, were among the world’s best known for their innovation capacity and, also on the other hand, had laboratories capable of putting those ideas into practice.

After analyzing innovation clusters across the globe, the decision was made to structure the Network around what were identified as the world’s five innovation poles, located in the USA (both East and West Coast), Japan, Central Europe (essentially Germany), and Finland. These innovation poles were selected as they are responsible for a huge percentage of the patents registered worldwide every year and have the added advantage of representing a variety of innovation cultures and processes, all of which enrich the Network.

The following criteria were applied when selecting the innovation poles:

  1. 1.

    Structural innovation conditions.

  2. 2.

    Volume of investment in R&D.

  3. 3.

    Corporate-level innovation effort.

  4. 4.

    Number of patents registered.

  5. 5.

    Growth of Summary Innovation Index (SII), which gives an at-a-glance overview of aggregate national innovation performanceFootnote 1.

After assessing which research institutes were traditionally considered to be leaders in the field, it became clear that the following should be prioritized:

  • Massachusetts Institute of Technology (MIT), as the nexus of the innovation pole on the US East Coast.

  • Stanford Research Institute (SRI), as its equivalent on the US West Coast.

  • Instituto Fraunhofer-Gesellschaft, Germany, as the nexus of the innovation pole in Central Europe.

Therefore, these were the first institutes contacted. In each of the aforementioned innovation poles, the relationship was bolstered by contacts made with a series of companies identified as innovation leaders, among them IDEO, Intel, Microsoft, IBM, HP, Continuum, NCR, and Philips.

Appropriate contacts were then made in Finland, starting with the Otaniemi technology cluster, VTT (the Technical Research Center of Finland), and Tekes (the Finnish Funding Agency for Technology and Innovation), and companies such as Nokia. Finally, BBVA sent an initial learning expedition to Japan to make contact with research institutes, such as the AIST at the University of Tokyo, as well as with numerous firms, among them Fujitsu and NTT DoCoMo.

The network effect produced by this first round of conversations enabled the Network to expand relatively quickly and, consequently, to seek rapid results that would validate the applied knowledge development process designed.

4 Current Configuration: Five Innovation Poles

Right from the start, the Innovation Network has enabled BBVA to share information with specialized science and technology sources, with experts from various institutions and fields, and with companies from around the world. As mentioned above, to ensure a clear focus, BBVA identified the five global innovation poles where innovation processes were most highly developed and concentrated. All of the key players in these poles, ranging from universities to entrepreneurs and companies, judged to have the capacity to add value to the Network were identified.

This selection has resulted in an open innovation ecosystem comprising universities, institutes, governmental organizations, leading technology firms, investors, entrepreneurs, and technology incubators. Today, the Innovation Network is a fully developed and stable open innovation ecosystem spread across eight countries on three continents. It consists of over 40 institutes and technology companies, as well as numerous universities, governmental organizations, investors, entrepreneurs, technology incubators, applied research institutes, companies working with emerging technologies, and several highly renowned science and technology sector analysts.

Having successfully completed the first two development phases (which involved creating the Network’s core and then consolidating and stabilizing it), the Network has now started to expand into emerging countries such as Brazil, home to some of its newest members.

In addition to maintaining constant contact with all of the Network nodes, several members of the Innovation Unit’s Observatory regularly visit partner institutions and companies to strengthen professional ties with them, assess their laboratories, receive first-hand information about the latest advances in their lines of research, and develop joint projects.

The relationship between BBVA and the MIT is highly illustrative of the type of partnership the bank establishes with Innovation Network members. This relationship started in 2007 when, following the initial contact made, BBVA became the first European bank to join MIT’s Industrial Liaison Program (ILP). Since signing the ILP agreement, BBVA has participated in several of the MIT’s technology development and management programs.

Moreover, in 2010, the bank took its relationship with the MIT a step further by joining the MIT Media Lab’s Digital Life Consortium and signing a Consortium Research Sponsorship agreement. Under this agreement, a BBVA representative has joined the Media Lab team. BBVA has also since signed agreements with MIT Sloan’s Center for Information Systems Research (CISR).

What assessment can be made of the Innovation Network’s first few years in operation? Since being set up, the Network has enabled the bank to identify the socioeconomic, scientific, and technological trends that will shape the future and has allowed it to work with some of the most innovative companies and people on the planet, developing disruptive projects that are now being implemented in BBVA. ABIL, the bank’s new ATM (automated teller machine), is a good example of the latter.

5 A Case Study of ABIL

In 2010, BBVA finalized testing and began piloting its new ABIL ATM in selected bank branches. Development was made possible by cooperation with multidisciplinary companies such as IDEO, Fujitsu, and NCR, all of which are members of the Innovation Network.

The traditional product development and relationship models in the ATM industry have changed, with user experience taking precedence over the financial sector’s need for automation. The ABIL product was developed openly, and access has been granted to the rest of the industry rather than keeping it exclusively as a proprietary BBVA development. ABIL is the result of an exhaustive study into customer behavior and is designed to offer the full service that meets the needs of both regular ATM users and nonusers. ABIL is based on the three key premises that the system should be simple, human, and flexible.

Simplicity is an essential feature and is achieved by employing a vertical touchscreen with large buttons. ABIL has just one multipurpose slot, via which it receives and dispenses the banknotes, receipts, and other documentation required in the various operations performed. This is known as the “One Slot concept”.

ABIL is flexible. It remembers customers’ most commonly performed operations and streamlines usage by providing direct access to them. Users can also work with various associated accounts via the ABIL ATM. In addition, when withdrawing money, customers can select the banknotes’ denomination.

One of the biggest innovations is found in the external design of the ATM, which is shielded by a vertically positioned screen. This allows users to access their accounts without being overseen and makes ABIL both more human and more private than conventional ATMs. This new design also facilitates access for disabled users. In addition, the ATM includes a wide shelf where users can leave their handbag or briefcase whilst using the ATM. ABIL also provides helpful nonfinancial information, such as weather forecasts.

This design, shown in Fig. 8.2, won BBVA The Banker’s Innovation in Banking Technology Award 2010 in the Delivery Channel Technology category. The Banker Awards annually pay tribute to banking technology excellence and innovation. Since it was founded in 1926, The Banker, which is owned by the Financial Times Group, has been a highly respected source of financial information. Its annual accolades highlight the ways in which financial institutions use innovation to create solutions, services and strategies to deal with business challenges.

Fig. 8.2
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Design of BBVA ABIL ATM (© BBVA Group. Reprinted with permission)

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Recently, the MOMA selected ABIL’s interface for inclusion in its “Talk to Me” exhibition held this summer.Footnote 2 ABIL has also been selected for the iF Communication Design Award, a highly renowned design trophy.Footnote 3

6 Looking to the Future: Innovation Network Expansion

The Innovation Network is now performing well, presented in Fig. 8.3, and has achieved varying degrees of consolidation in its various poles. And, as has been described, the ecosystem is starting to produce tangible results.

Fig. 8.3
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BBVA Innovation Network expansion (© BBVA Group. Reprinted with permission)

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Furthermore, the Network has helped BBVA identify other nontechnological forces that are going to transform the financial industry and society in general. In order to identify the opportunities that these new scenarios offer, the Innovation Unit plans to expand the Network along the following lines:

Innovation: In addition to the five primary innovation poles identified during the Network’s initial design, several others were detected and earmarked for exploration at a later date. These poles have continued to evolve and other new ones have since emerged. Therefore, one of the Network’s natural means of expansion is to develop relationships in these emerging locations (currently led by South Korea and Israel).

Economic growth/geography: Several emerging countries are experiencing economic growth well above that of developed countries and are positioning themselves to become major powers in the near future (such as Brazil, India, China, and Turkey). In them, research and entrepreneurial communities, bolstered by strong economic prospects and actively favorable government policy, are producing significant amounts of innovation. BBVA’s Innovation Network has to take these into account, which is why another of the development lines will focus on innovation leaders in each of these countries. In fact, the Network’s first nodes in Brazil have already been identified and learning expeditions have already traveled to the other countries mentioned.

In later stages, the aim is to expand the Network to include those countries that currently represent the next wave of economic growth, several of which, among them Australia and Indonesia, already merit attention.

New sectors: Ever since the Network was first created, one of BBVA’s aspirations has been to include, in later expansion phases, companies that do not focus solely on the technology or financial sectors. The bank firmly believes that the benefits of innovative experiences in other sectors apparently unrelated to banking can be transferred to BBVA, where they could then develop into disruptive innovation projects. In line with this, BBVA plans to expand the Network to include innovation leaders in sectors such as retail, telecommunications, manufacturing, energy, etc.

Financial services best practice: One of the most direct sources of ideas for innovative projects is the best practice by other members of the financial sector. In many cases, these practices are found in players in countries not included in the Innovation Network, but which nonetheless offer the potential to develop partnership frameworks that lead to valuable innovation projects for both parties. The focus here is to identify especially creative players with a view to developing the financial services of the future.

As the Network has developed, it has become clear that the new challenges are to (a) extend the network’s reach, capacity, and coverage, (b) communicate innovation’s values and message throughout the BBVA Group, and (c) encourage cocreation both inside and outside the Group.

To meet these challenges, BBVA has created a new role, that of affiliated explorer or scouter. Any Group employee can extend and strengthen the Innovation Network. Successful node expansion will depend on the scouter’s motivation and commitment to exploration.

When the Innovation Network enters its next development phase, it will become a central node and will act as a nexus to facilitate knowledge exchange between network nodes, shown in Fig. 8.4. This function will be performed by holding events in both the physical and virtual realm attended by representatives from the entire network, by members of BBVA’s Innovation Unit, and by participants in the internal entrepreneurship network also defined within the model. Under this approach, all of the individual components will form part of a single global and fully integrated innovation ecosystem.

Fig. 8.4
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Future framework structure (© BBVA Group. Reprinted with permission)

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The reason for extending the Innovation Network is to broaden the knowledge capture and observation tools’ reach to identify new opportunities that will take BBVA beyond the limits of financial sector conventionality and make it one of the forces driving the transformation of the sector.

In conclusion, we have learned about sustaining innovation, since the decision was first made to construct the network in late 2006. It has been a long and exciting journey, not only across different geographies but through diverse innovation cultures too. We have found new ways of thinking, discovered surprising ideas, and met highly creative people. And this is only the beginning. We envision a future in which the innovation network is a global, interconnected, adaptative, and learning structure, a true planetary brain.