BBVA, Dwolla Digital Innovators That "Get It"

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This past week, many industry news outlets reported on the new partnership between BBVA and Dwolla.  According to the news release issued by BBVA, the agreement means that the bank’s customers will be able to use the Iowa startup’s real-time network to make money transfers. 

In the BBVA release, the bank stated that it is now the largest financial institution to partner with Dwolla and the only bank to open its platform to such an extent to digital developers similar to Dwolla.  BBVA called the agreement “indispensible and timely given its transformation to a digital bank.”

This partnership is about more than just payments but let’s discuss that angle first.  Jeff Dennes, head of the business development and digital transformation division at BBVA Compass, was quoted in the American Banker as saying that customers already expect their transactions to take place instantaneously. They don't understand the banking system and why it takes 24 to 48 hours to move money. 

Even Dennes, who has more than a passing understanding of banking, doesn’t really want to be bothered with the details.  According to Dennes,  “I just need to move money from one place to another. I don't need to know about the intricacies of how it's done. I do know I need it today, tomorrow, or next week."

Jeff is spot on.  UPS, the logistics company than moves tons of our “stuff” daily, has understood this for a long time.  When we ship things, we don’t care if they go by truck, train, plane, boat or the Starship Enterprise.  We want them delivered intact by a certain date to a certain party.  UPS positions its value entirely on handling that part for us.

The old guard in banking and FinTech has their reasons for not wanting change in how money is moved.  Many find the current system to be quite lucrative.  However, they are losing ground almost daily. No more significant blow has been dealt them lately than this move by BBVA.  And this blow was possible due to BBVA doing what few financial institutions are willing to do.  That is the second important message to take away from this announcement.  To provide this innovation to its customers, BBVA has to be more concerned about what its customers wanted than about the size of the company that could help them provide it. 

A number of banks and credit unions excuse themselves from providing what their customers want and need because it is not available from the large, established legacy FinTech vendors they are “comfortable” using. BBVA had to saddle up alongside an Iowa-based start up – and they did – damn all the implications of risks that might be associated with placing that bet.  Innovation does not come from the establishment or without risk.

The third thing I want to highlight about the BBVA/Dwolla partnership has a lot to do with the part of the country I grew up in, although I do have some proof points beyond my own feelings for the region.  BBVA did not predispose themselves to only looking for for clever folks from the left or right coast.  In this case, what they needed was the brainchild of some clever guys in the Midwest and that served the bank just fine.

I have spent most of my career in FinTech on the Silicon Prairie.  It gets overlooked in discussions about innovation in FinTech specifically and technology in general.  However, I would argue – given the roles I have held and the people I have known –that the Silicon Prairie maybe responsible for more pragmatic innovation in the financial services space than any other region of the country.  That said, we don’t mind playing a quiet role.  It keeps the real estate prices down.

It was a big week in the money movement revolution, thanks to BBVA and Dwolla.  Now I am on a plane to Money 20/20 hoping looking for a chance to tell a few of the bankers in attendance how my own company plays in the money movement revolution.  

We believe that financial institutions need to take back control of the user experience and data associated with all forms to money movement if they want to give their customers the experience they expect.  Our cutting edge digital banking product does just that.  I hope I am as fortunate as Dwolla and meet a few bankers like those at BBVA that “get it.”