BBVA's Digital Transformation: Gaining Competitive Advantage Analysis

This case study analyzes BBVA's digital transformation journey in the banking sector, focusing on its strategic initiatives and the ensuing risks for incumbents. It assesses BBVA from a 3C perspective (Competition, Consumers, Cooperation) to identify the challenges it faces and explores whether digital transformation can provide a competitive advantage. The study recommends strategies for BBVA to prepare for digital disruption, including growing beyond its core services, creating a financial supermarket, and extending value across the customer journey. The case concludes that successful digital transformation requires integrating digital technology across all business areas, fostering a culture of innovation, and adopting agile practices.

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Executive Summary
In the following assignment the importance of digital transformation is stated. The
innovative process in digital technology is very important in the recent times and specially in the
banking sector. The process involves smart acceptance of agile practice which is an imperative
for digital transformation. There are four key areas that become the important pillars for a
banking sector. The digital transformation has paved its way in collecting more amounts of data
and provides the entrepreneurs with the real time information and greater scope of visibility that
creates insights in the performance of the assets and people.

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Table of Contents
Introduction....................................................................................................................................2
Critically discuss digital transformation in the banking industry and the ensuing risks
for the incumbents....................................................................................................................2
Analyze BBVA from 3C perspective and identify the problem BBVA has to solve........3
Can BBVA gain competitive advantage as a result of digital transformation?................4
What is your recommendation for BBVA to prepare for digital disruption?.....................5
Conclusion......................................................................................................................................6
Reference.......................................................................................................................................7

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Introduction
Digital transformation can be explained as the use of new, frequency and fast changing
of the digital world with a purpose to solve the problem of the people. One of the best examples
of the transformation of the digital technology is the transformation in cloud compute. It reduces
the dependence on user owned hardware and on the other hand increases the reliance on
subscribed cloud service. In case with the digital transformation in the banking industry it caters
to all business operation and delivers value to customers.
Critically discuss digital transformation in the banking industry and the ensuing risks for
the incumbents.
Digital transformation at BBVA (Banco Bilbao Vizcaya Argentina) allows the financial
and economic institutions to know what is the need and requirements of the people. The
members of the organisation can cater and formulate the financial services and make an
offering that meets the needs and requirement of the customers (Alfaro et al. 2018). The
innovative technology allows development in the banking sector and strengthens the customers
who engage themselves with personalized offerings. The digital transformation is a need for
most of the banks and especially in BBVA because the digital transformation embarked on the
initiatives that ventures on innovation, reduced cost and new product development. The four
pillars are (1) leverage the power of data (2) reinvent the consumer journey (3) redefine the
operating model and (4) to build a digital driven organisation.
Based on the risks of the banking sector it is the incumbent who can be categorized into
proactive, reactive and passive, based on the levels of adoption in new innovative technology
and overall engagement. The potential risk may arise for incumbents because of lack of

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adequacy and time (Weill and Woerner 2018). The aggressive are the front runners that alter
the business models without a clear strategic objective in mind, technical and operational
changes and appropriate governance. There are many banks that struggle to find the right way
to dismiss the threat of new entrance and claiming of new entrants which creates new
innovations but rather than dressing up in traditional banking sectors. Accenture on the other
hand depict the shift in revenue with the new entrance that continues and start to create an
impact on incumbent banks.
Analyze BBVA from 3C perspective and identify the problem BBVA has to solve.
The 3C of BBVA refers to competition, consumers and cooperation. Firstly with
reference to Cooperation of BBVA in technological department discovers the clear competitive
advantage. It might be profitable in long run with the presence of biggest leaders to share the
benefits. This would initially as it lead to delays in fulfilling greater inequalities in overall quality
of life. In this situation the balance between the banking sectors will lead to ecological and
economic sector cooperation to be guided by transparency (Asandului et al. 2016). Secondly
the Consumer assumes that the existing firm must enhance its structure and develop in
technology. The consumers have to rethink the energy which is produced and the way of
distribution to the end consumers. Lastly the competition of BVAA is said to be the world’s
largest fintech competition. It is featured to be heavily lined-up with more than forty entrepreneur
business that uses DLT as the backbone of their product and service.
The first problem that is recognized in BBVA is the microeconomic risk which is the top
concern. It involves survey respondents that despite the factors of the economies it is to return
with the positive growth (Chen, Liao and Ye 2019). Macroeconomics is one of the top concern
risks for the bankers and the risk managers analyses the survey who are further concerned to
the positive growth in the lowest interest rate. Second problem that is examined is the system of

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regulation. With a little less concern on the managers and the industry analyst or the bankers
tighten the regulation and the requirements. The bankers must recognize the needs for the
tougher control and the concern should be to rise about the complexities and volume of the
current regulations which was stated in the industry and overall management margins. Lastly
the risk of technology becomes the significant concern for the global bankers.
Can BBVA gain competitive advantage as a result of digital transformation?
With a constructive attribute yes BBVA can gain competitive advantage as a result of
digital transformation. Due to digital transformation the term becomes more comprehensive and
hostile as it covers more number of methods, transaction, technological, evolutions, internal and
external changes (Alfaro et al. 2019). It is considered as an ongoing process which takes time
especially in a profound manner which leads an influence in all aspects of an organisation. The
digital transformation has cemented its way in collecting additional amounts of data and
provides the entrepreneurs with the real time in order and greater scope of visibility that creates
insights in the performance of the assets and people. To speed up the time of the market the
banks are leading to built a structured innovative process of generating ideas and investing in
winning ideas through the process of in-house incubators. The banking sector is the most data
driven sector as compared to other industries (Alfaro et al. 2019). The insurance as well as
regulatory requirements of the banking sector means to meet the banks and store the
transaction data.
What is your recommendation for BBVA to prepare for digital disruption?
The recommendation that can be stated for BBVA can be stated by:

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Firstly BBVA should focus to grow beyond the core and into relevant ecosystem. The
bank is relies on making customer aware about the relevant services that are catered by them
and leads to path of growth. In few instances the customer can check this model until that will
encourage them to consider a personal line of credit and a bank credit card. Secondly it is
important for a bank to create a financial supermarket while it takes a page from few of the
digital businesses. It is a bank that can create a larger digital business. The bank offers a vetted
mix of third party offerings. This aggregation model must provide the organisation with
customers with easy and one stop access towards the financial products and ability to address
multiple financial needs. Lastly it can be said that the extended value across the customer
journey must be working with a mean to an end just to ensure that it has a secured retirement,
buying home, growing a business for some instances. BBVA must offer a mortgage where the
customers’ have a larger goal in buying homes.

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Conclusion
Hence it can be concluded that the digital transformation in the banking sector is an
integration of digital technology in all areas of a business. The banking sector caters to the
development of business process, culture of the organisation, domain and business model.
Banks needs to involve a smooth innovative path of delivery pipeline that is based on agile
practice. It is the one that tracks the market trends, used feedback process and test innovative
products for the purpose of continuous improvement.

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Reference
Alfaro, E., Bressan, M., Girardin, F., Murillo, J., Someh, I. and Wixom, B.H., 2019. BBVA's Data
Monetization Journey. MIS Quarterly Executive, 18(2).
Alfaro, E., Murillo, J., Girardin, F., Wixom, B.H. and Someh, I.A., 2018. BBVA Fuels Digital
Transformation Progress with a Data Science Center of Excellence (Vol. 430, pp. 1-16). CISR
Working Paper.
Asandului, M., Cazan, S.A., Capraru, B. and Ihnatov, I., 2016. THE IMPACT OF BANK
MERGERS AND ACQUISITIONS ON THE BANK PERFORMANCE AND RISK TAKING
BEHAVIOUR. Transformations in Business & Economics, 15.
Chen, T.K., Liao, H.H. and Ye, J.S., 2019. Bank management expertise and asset securitization
policies. Journal of Banking & Finance, 109, p.105667.
Weill, P. and Woerner, S.L., 2018. Is your company ready for a digital future?. MIT Sloan
Management Review, 59(2), pp.21-25.