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Bryan Yurcan
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The Continuing Evolution of Customer Experience

BBVA's acquisition of "the bank that doesn't suck" is part of the industry's overall move away from traditional service models.

When news broke late last week that Spanish banking giant BBVA has acquired digital bank Simple for $117 million, many wondered if the startup's maverick sensibilities would be quelled somewhat.

After all, Simple bills itself as "the bank that doesn't suck" and was borne out of its founders' dissatisfaction with his then-bank's customer experience, and digital capabilities.

In a blog post after the move was announced, co-founder Joshua Reich wrote that Simple's philosophy would remain unchanged. "We will continue to embrace our philosophy, our business model and the way we treat customers," he wrote. "Working with BBVA gives us the resources, scale, and autonomy we need to accelerate our growth while staying true to our mission. To achieve this, we will function as a separate business within the BBVA structure, operating in parallel with BBVA’s existing US banking operations."

As Reich noted in his blog post, this move makes sense for Simple in that it provides them with scalability it didn't have before. Since Simple is not a full-service bank, it's accounts reside with a FDIC-insured partner, Bancorp Bank. BBVA certainly provides a bigger platform as a banking partner.

But what of BBVA's motivation in this deal? BBVA is a technologically forward-thinking institution, and Simple's focus on digital and customer experience fits in line with what BBVA is trying to accomplish. Further, notes Mike Goodson, a managing director and head of management consulting for Accenture’s North America banking practice, Simple has a service model many banks are trying to move towards.

"Banks know they need to move customers to more sales and service models rather than just to the branches," he says. He adds that Simple already has the relationship with its customer that many banks desire; one where the bank is an everyday partner in a customer's financial life as opposed to a place they go sometimes to conduct transactions.

"Simple had a great idea but a scalability challenge," he notes.

Goodson doesn't see more acquisitions like this happening by banks in the near future, though, simply because there aren't many other companies that do what Simple does.

"It’s a strategy that could make sense to other banks, but the supply is kind of limited," he says. "[Digital bank] Moven is one example, but the supply gets limited after that."

[See Also: BBVA Compass Offers New Accounts for Both Digital and Branch-Centric Customers]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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User Rank: Author
2/25/2014 | 8:25:51 PM
re: The Continuing Evolution of Customer Experience
This reminds me of a (somewhat) similar deal that took place a few years ago in the insurance industry -- when Allstate (large traditional insurance carrier) acquired Esurance (newer online-based upstart insurance carrier that had created an edgy, young innovative brand/image). As established companies seek to innovate, change their cultures and engage with a younger demographic, in many cases it may make more sense to acquire that kind of expertise and culture, rather than take the years necessary to totally transform the larger organization. Then the "traditional" company gains the customer, technology and procedural benefits of the newer company, can learn from it; and, as you suggest will happen with Simple, the newer firm will gain resources, scale, market share, etc.
User Rank: Author
2/25/2014 | 9:05:01 PM
re: The Continuing Evolution of Customer Experience
Good move by BBVA to acquire an operation like Simple given the lack of similar organizations out there that Goodson mentioned.
User Rank: Author
2/25/2014 | 9:37:14 PM
re: The Continuing Evolution of Customer Experience
Good point; it's better to have a win-win situation for two firms than have one company spend years trying to change its culture - something that not only takes a long time but is very difficult to accomplish.
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