This year’s Money20/20 event – to me by far the world’s best and largest event for financial services innovation – was held in Copenhagen, a city at once historic and innovative. Known for its state-of the-art design scene, green credentials and inventive cuisine, the Danish capital has been a constant source of reinvention, resourcefulness and transformation. In the same way, brick-and-mortar institutions must not only innovate to stay relevant, but must also adapt to the needs and changing aspirations of the customer. To adopt another principle of our Money20/20 host country, financial services, I suggest, must in the future aspire to engender customer hygge – that intangible feeling of comfort and contentment so beloved in Danish culture. And how might they achieve that you might ask? Well, embracing the kind of human-centric design approach favoured here at Claro Partners would be a start, but that is only half the story. If traditional banks and financial institutions want loyal, happy and contented customers, they must first innovate before others beat them at their own game. To illustrate this, I wish to draw upon one of the standout speakers at this year’s 20/20 event – BBVA CEO Carlos Torres Vila, who is overseeing an ambitious transformation process as they seek to play a prominent role in the innovation ecosystem of the future.
As CEO of one of the world’s 50 biggest banks, Carlos knows firsthand the upheaval that traditional brick-and-mortar finance institutions are facing in light of disruption by new entrants, such as technology giants and fintech start-ups that make use of the latest technology and are not bogged down by legacy systems, culture and staff. These new kids on the block are more agile and can be more responsive to the needs and desires of their customers, offering leaner and, in most cases, cheaper services. Part of the success of this new slew of start-ups is their intense focus on a single, very specific value proposition. A large traditional institution like BBVA that offers many such services under one roof cannot hope to compete with such singularity of focus. Their current malaise can in part be attributed, ironically, to their past success. So what can be done? How can these ocean liners replicate the kind of responsiveness their speedboat brethren have?
One solution adopted by BBVA, which they call “reinventing from the outside” is to create, acquire and collaborate with a portfolio of companies that innovate, disrupt and ultimately attack the incumbents, including BBVA itself. This policy not only helps mitigate complacency in the ‘host’ organisation, but keeps it ready for new challengers and market changes. Furthermore, by hedging their bets and investing in different companies with different approaches to finance, they are, in effect, covering their bases for the future disruptors that may affect their business, providing them a level of preparedness for the next industry killer.
For me, the reason why Carlos’ keynote was so well received was not only because of his no-nonsense style, but even more because BBVA is doing so many of the things every bank should be doing. BBVA has developed a portfolio of innovation activities. These include internal innovation projects, an Open Talent competition and VC investing with Propel Venture Partners. They’ve also set up a customer insight-driven venture-creation approach that seeks to find non-obvious opportunities to address unmet customer needs and build businesses around them, similar to the approach we have been pioneering. So far, they have already developed four new businesses using that approach. They still run hackathons to drive adoption of their open APIs, which I believe could be done in a more human-centred design way, as I expressed in my previous post.
Another aspect of the approach adopted by BBVA in their response to the challenge of competing with the surge of leaner and often lower-cost new entrants, is one that I hinted at in the opening to this post, one that I describe as helping engender hygge within customers. For BBVA, this translates to investing heavily in design and incorporating a human-centred design focus into its customer experience. They are, for example, running design-thinking bootcamps, similar to those that Claro run, all over the world. Good design is not just pleasing to the eye, but incorporates the full spectrum of human behavioural needs and attitudes, designing solutions that echo the simplicity and joy pioneered by Steve Jobs. Through this focus on the customer experience, loyalty is born, and with loyalty comes steadfastness, an important attribute in times of troubled waters.
Now, to come full-circle to our work at Claro Partners, we have been pioneering this human-centric approach to business, design and research since our founding day. We are based on the fundamental belief that at the heart of every successful business is a happy and contented customer. Every single customer must be made to feel charmed, cozy, captivated and, in a word, feel hygge. By designing services that help stimulate this feeling, by putting the customer front and centre, being responsive to their needs while being alert to the wider market ecosystem, we can go some way to navigating the inevitable disruptive shifts ahead.
Aldo de Jong was at Money20/20 2017 with Alejandro Ugarte hosting the “Co-creating financial services to enable the future of Mobility” interactive workshop. Claro has identified key opportunity spaces for financial services in mobility by taking our understanding of human needs from ethnographic research and mapping it to global emerging value propositions. Request for the upcoming point-of-view paper on this topic by emailing firstname.lastname@example.org.