BB&T makes first fintech foray in bid to boost digital banking

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BB&T in Winston-Salem, N.C., has dipped its toe into fintech investment.

The $217 billion-asset company participated in a recent round of financing for Enigma, a New York company that helps companies leverage data. BB&T invested $5 million as part of a $95 million deal led by NEA that included funding from Capital One Growth Ventures, MetLife, Third Point and Glynn Capital.

Enigma, which started in 2011 and focuses financial services, life sciences and insurance, will use the funds to expand its core offerings and target new industries. The firm also plans to recruit top talent and build a satellite office.

BB&T is one of Emigma's clients; it uses the firm’s services to improve its anti-money laundering controls.

BB&T, which announced plans in January to invest up to $50 million in fintech ventures, has been investing heavily in its digital platform and digital marketing efforts.

The investment marks a vital moment in BB&T’s digital transformation, which began in 2015, Bennett Bradley, the company’s chief digital officer, said in an interview.

Here is an edited transcript.

Why did BB&T take an interest in Enigma?
BENNETT BRADLEY: We continue to our enhance our capabilities to manage and leverage data across the company. That’s going to become increasingly important and Enigma’s data expertise,coupled with their data assets, really did make them an obvious choice for our first investment. We had already established a business relationship with Enigma. That relationship really led us to the investment opportunity.

What service does Enigma provide for BB&T?
We are early into our business relationship with Enigma, but they have already enhanced our anti-money laundering controls by developing a dynamic platform that assists with the identification of any potential money laundering risk. That's our initial entry point, but we do believe that there are other opportunities to expand the relationship certainly within that business unit but also we will be introducing Enigma to other business units.

Why did BB&T set aside $50 million to invest in fintech?
Things are changing rapidly and we, like many financial institutions, recognize we have to move faster to meet and exceed our clients’ expectations. We really have to continue to disrupt and transform our business to make sure we remain relative and meaningful. With that fintech is part of our overall digital transformation strategy. An investment strategy is one important component of that. We feel like this is an opportunity for us to gain exposure to emerging technology as well as skillsets.

We have been active in the fintech ecosystem for a couple years. We have been participants in terms of sponsorship and mentorship in accelerator-type programs, and we felt like moving forward with an announced investment strategy is just a natural evolution of our fintech engagement. We view it as a good way to augment and support our overall digital transformation objectives.

What progress has BB&T made on its digital transformation?
A lot of good work has been underway supporting our digital and mobile capabilities prior to me joining the role but we began to accelerate our investment and vision (in 2015). We have invested heavily in our digital platforms, including our retail platform. We accelerated our digital marketing activities and last year introduced a program that allows us to take client feedback and input it on a more timely basis. We have again increased our digital investment across different segments to improve our capabilities and began to enhance our text-and-learn capabilities. This allows us to test emerging technologies and be a sandbox environment. We enhanced those capabilities and then most recently we had our first internal hackathon.

How was the hackathon?
It was very exciting. It was an internal audience and we had very good participation. We partnered with IBM to do this and really tailored it to our associates to tap into the internal organization. We had several teams that competed and a couple that came out with really good ideas and next steps for what we can build into our solutions. We were very pleased and impressed by the level of excitement and energy we got from the group.

How does this investment in Enigma fit into BB&T’s digital and fintech strategy?
As we think about how do we pursue fintech investments, part of our approach from an investment standpoint is to be opportunistic. We also want to pursue emerging technology and business models that will help enhance our overall client experience and also opportunities that can improve efficiency and productivity within our business. We believe our initial use case with Enigma will enhance our efficiency and productivity. So we are interested in pursuing other opportunities with them as well as we introduce other business lines.

How do you identify fintech firms to work with?
We have been engaged with various accelerator and incubator programs and we will continue to do so. That is a good opportunity for introduction and allows us to continue to be engaged in the ecosystem. We also will look to pursue partnerships with others in the business including venture capital funds where we can expand our opportunities and exposure to what is occurring within the market. And then our travels across the country to different events and venues where we can make introductions and get our message out that BB&T is interested in pursuing these types of investments.

Are there any fintech areas that BB&T is particularly interested in?
We want to be opportunistic. Areas we are interested in would include intelligent automation such as machine learning and artificial intelligence. Also we are interested in solutions that can help enhance our overall client experience. An area we would be focused on there is this overall category of advice. How do we improve our consultative value proposition with our clients? So again we will focus on a few items but overall we want to be opportunistic and really focused on solutions that support all of our client segments whether that be retail, small business or commercial.

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