Spanish bank Banco Bilbao Vizcaya Argentaria SA on Wednesday announced a major overhaul to the technology backbone powering its BBVA Compass U.S. subsidiary.
BBVA Compass is in the process of installing a new core system, which banks use to manage and process loan and deposit accounts, from technology outsourcer Accenture PLC.
The project, which has been widely rumored in the banking industry for some time, began in 2009 and is expected to be completed in 2012, executives said in an interview Tuesday. It is one of only a few significant core conversions taking place in the U.S. Core conversions are especially rare because they carry the risk of technical setbacks, can cost billions of dollars and last several years.
BBVA said the move to Accenture's Alnova Financial Solutions system, which it already uses in nine other countries, should help it improve its ability to cross-sell products to customers and cut costs by integrating U.S. operations into the same system its other units run on. Because of the upgrade, BBVA Compass will be able to perform real-time processing of customer transactions as opposed to batch processing, which results in a lag between when transactions occur and when the information is reflected in customer accounts.
The project will also help the bank get a fuller, more accurate view of a customer's entire account relationship, which is difficult today because various product lines, such as checking and savings accounts, mortgages and consumer loans, are run on separate software programs, said Sergio Fidalgo, the chief information officer for BBVA Compass. Customer information for each product line is contained in separate files, making it nearly impossible to get an up-to-the-minute view of the customer's account.
"The information we are going to have for customers is going to be saved in one single place and the quality is going to be much, much better," Fidalgo said.
BBVA Compass has 716 branches in seven states. It reported $63.3 billion in assets as of the end of the 2010.
The Birmingham, Ala., subsidiary's project is a further sign that the recent logjam of spending on big technology projects may be loosening. Citigroup Inc. signed a deal in late 2009 to convert its domestic operations to a system from vendor Fidelity National Information Services Inc. Union Bank in San Francisco, a subsidiary of Mitsubishi UFJ Financial Group, is also doing an upgrade.
"I've seen more core banking activity in the past year at big banks than I've seen in the five to seven years before," said Bart Narter, the senior vice president of the banking group at Oliver Wyman Inc.'s Celent research division.
The reasons for a core conversion are unique to each bank but often result out of operational inefficiency, Narter said.
"Generally folks move cores when they believe their existing system is just unsupportable or they find their existing system to be so much of a detriment to change that they simply can't bear it," Narter said.
Shelaghmichael Brown, senior executive vice president and head of retail banking for BBVA Compass, said the new system should also help the bank compete for customers.
"We can be more responsive and that should help us gain market share," Brown said. "We expect to be able to acquire more customers in a better way as a result."
For example, the amount of time it takes to roll out new deposit products could be reduced to as little as a month. It now takes six months or more, Brown said.
A spokesman would not say how much the project is expected to cost or which vendors BBVA Compass is replacing.
