Building the BBVA franchise in the US

Marco Island FL, March 16th 2009

Best Practices in Retail Financial Services SymposiumAmerican Banker

Disclaimer

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1. BBVA Compass Retail Banking

3. Takeaways

agenda2. Towards BBVA Retail Business Model

1. BBVA Compass Retail Banking

3. Takeaways

agenda2. Towards BBVA Retail Business Model

Blending the best …

Retail BankingShelaghmichael Brown

… into one single organization

BBVA Compass Retail Banking

Loans

Deposits

Revenues

Branches

Employees

As of December 2008Million Dollars

13,112

19,324

1,299

7,125

577

34%

51%

49%

59%

Percentage of total

1. BBVA Compass Retail Banking

3. Takeaways

agenda2. Towards BBVA Retail Business Model

Retail Banking transformation processis part of the overall banks transformation

Transforming our future

Product-centric

Organizational silos

“Different, better because of you”

Customer-centric

Collaborative and customer oriented

“We work for a better future for people”

A new Business Model

A new Organizational Structure

New principles

A Vision: The BBVA franchise in the U.S.

Outdated and not integrated technology

Serving a newbusiness modelTechnology Platform Upgrade

Towards a customer-centric model

Adapting locally BBVA’s best practices

1. Customer Intelligence

Enhancing our customer knowledge capabilities …

… with Competitive Advantage from BBVA Customer Intelligence Approach

IntegratedDatabases

Knowing the client based on past

behavior

Campaign Management

TrackingResults

Client Centric View

Online Multichannel Platform

Test and learn

Implementing behavioral

tools

Accessible & profitable financial product portfolio …2. Innovative solutions

Innovative products … … leveraging BBVA Group’s international capabilities and best practices

Power CDsm

Bi-National mortgages

Equity link CD

2. Adapting BBVA’s positioning to our reality …

Blending the best of two leading organizations

2. … and translating it into relevant marketing

From “the value bank” … … to adaptability

Heavy reliance on monthly incentives to drive short-term volume

3.Integrate technology for consistency

across channels

Enhance self-service capabilities

Towards an integrated multi-channel strategy

Encourage migration of transactions to most effective channel

Our goal is to see the same customer across all channels in the same way

3. Piloting new concepts of branch

As a more efficient sales

outlet…

Focus on sales and advice…

Cornerstone of our multichannel

distribution.

Reengineering the branch:

Achieving excellence in customer service

3.Implementing BBVA’s functionalities into our alternative channels

New enhanced functionalities Exploring innovative channels

Online Banking Mobile Banking

ATMs Call Center

Further enhancing the customer experience across channels

Communication Goal Setting

Sales Planing Customer management

Follow - up Incentive model

Developing a homogeneous Management Methodology

1. Actively managing budget as a measure of success.

2. Leveraging activity levels, with the commercial plan as the main axis.

3. Combining demanding goals and high levels of support

4. Prioritizing efforts and keeping focus on the customer.

Turning the retail network into a more powerful sales structure

Management model4.

Developing new Customer Management Plans to upgrade customer relationships

Management model4.

1. Increasing and improving the quality of financial dialogue with the customer.

2. Managing customers in different ways depending on the value they bring to the bank.

3. Rediscovering the branch as the center of sales and customer service.

4. Developing distribution synergies with other LOB’s.

Building long term relationships with our customers

Customer Centric Model: Strengthening a different customer approach

Management model4.

Incentive Model

Customer needs and value

Roles and functions

Sales processes

1

2

3

4 1. Understanding customer’s different needs and value they bring to the bank.

2. Defining customer sales processes aligned to these different needs and value.

3. Adapting / implementing roles and functions to deploy these processes.

4. Developing incentives plans tailored to each role.

All processes initiated and built around the customer

1515

ChannelsChannels

ATM Internet Call Center Others

BranchesBranches

Servicing (Teller) Sales

Sales AgendaSingle 

Customer View

Selling support tools & Simulators

Customer Ownership Model

Sales tracking Referral

Cross selling Tools

Cross FunctionsCross Functions

Help DeskBranch MIS Follow‐up of customer obligations

Customer Complaints Service

Account Posting 

Resolution

Branch Cost Model

Human ResourcesHigh‐Value Capabilities Training 

Branch Career Plan (specially tellers)

Branch Staffing Model

Integrated Teller System

STP Processing Automatic decision making process

No ticket (no paper) Customer Identification

Cash handling Improve Customer Experience

Multi‐customer Multi‐language

On‐line / Off‐line availability Workflow

Ops./Commercial Information Cross‐sell  opportunities Sales Origination

24

Applying technology throughout the whole value chain of our customer relationship

Management model4.

From customer knowledge…

to product origination…

sales support processes (agenda,

wallet info)…

and monitoring sales staff goals and

activitiesTechnology as a key tool to support our dialogue

with the customer.

Incentive Model

Customer needs and value

Roles and functions

Sales processes

1

2

3

4

5.Adapting BBVA’s corporate culture and people management tools

The BBVA Experience Program Competencies Model

Management Styles Passion for people

Key for the retail unit as

they allow for:

Empowering our people…

Generating enthusiasm

and motivation…

To increase quality of service …

To deliver a superior customer

experience.

6. Risk management

Global Risk Map: Economic Capital Distribution

CREDIT & OPERATIONAL RISKECONOMIC CAPITAL DISTRIBUTION

Equity Loans2%Credit Card

3%

Consumer Direct Loans

1%

RE CONSTRUCTION20%

RE RESIDENTIAL8%

CF&A27%

Equity LOCs4%

Mortgage7%

Consumer Indirect10%

CRE18%

Implementation of BBVA corporate risk tools according to

Basel II standards

• Gradual integration of economic capital methodology in:

• Pricing

• Risk-adjusted return information by product, LOB, customer…

• Value analysis

• Portfolio management

• Credit reserves

7.A customer oriented retail banking organization

Financial PlanningPat Riley

Business Development

Enrique Gonzalez

Liability Products

Bill Hippensteel

Consumer Asset Products

John Mulkin

UnderwritingRalph Dalton

CollectionsJohn Frey

Management Methods

Operational Processes

NetworkDesign

Internet

ATMs

Call Centers

Payments

Incentives

DDA & TransactionAccounts

InterestBearing

Accounts &Pricing

Merchant & Small

Business

Asset ProductManager

Credit Care

Shared Services

Retail BankingShelaghmichael Brown

Credit Risk OperationsDianne Bruer

StrategicPlanningSupport

New PlatformDevelopment

Mortgage Operations

Mortgage Administration

Mortgage International

Construction Lending

MarketingFrank Sottosanti

Customer Intelligence

Advertising &Brand

HispanicStrategy

NetworkJeff Talpas

Texas NorthBranches, Small

Business & Mortgage Sales

Texas SouthBranches, Small

Business & Mortgage Sales

WestBranches, Small

Business &Mortgage Sales

EastBranches, Small

Business &Mortgage Sales

1. Who is the BBVA Group

4. Takeaways

agenda

3. BBVA Retail Business Model

2. BBVA in the US

In summary …

• Our strategy, global customer approach.

• Our aim, to deliver a superior customer experience.

• Our retail model, an excellent launching pad for further growth.

• Our focus, always, execution.

Building the BBVA franchise in the US

Marco Island FL, March 16th 2009

Best Practices in Retail Financial Services SymposiumAmerican Banker