When you look across the Houston skyline," says Francisco González, chairman and CEO of BBVA Group, "there's not one building that defines it." True enough. In the biggest city in Texas, there is no Space Needle, no Empire State Building, no Gateway Arch, no Sears (or make that Willis) Tower. Houston has Heritage Plaza, the JPMorgan Chase Tower and the Wells Fargo Bank Plaza, but nothing on the iconic scale of the postmodern Cuatro Torres (Four Towers) in BBVA's corporate home of Madrid, or even Dallas' Reunion Tower, capped by a bulging-ball design.

No, in Houston, the city's primary architectural achievement, the Astrodome, sits vacant and neglected, and the former Enron Tower now goes by the less-than-catchy name of "1400 Smith Street."

González offers his observation not to puncture the civic pride of the city adopted as BBVA's U.S. headquarters, but to underscore the vibrancy and potential of what both he and BBVA USA manager Manuel "Manolo" Sánchez see as a perpetually growing city, one that perhaps would give any skyline feature trouble emerging from the bustle.

And now BBVA has made its own contribution to the urban landscape, a sleek, 22-story headquarters representing close to a decade's worth of Texas-sized ambition from across the pond.

A June ribbon-cutting at BBVA Compass Plaza attracted a crowd of 800 mostly local guests eager to see the results of the first new construction project completed in nearly 30 years in Houston's densely developed Galleria area.

"We chose Houston eight years ago as a base for our U.S. operations," Sánchez says at the ceremony, "because like BBVA, it's hardworking, fast growing and global. A city of the future."

The guests toured the seven upper floors, where the staff works in an open-space atmosphere with few doors and offices, no cubicles and apparently no printers. (Paper waste is eschewed by the environmentally conscious bank, where managers attend meetings only with smartphones and tablets.)

Some visitors peeked into the Innovation Lab off the lobby, where the company's mobile banking technology can be sampled on a wall-mounted, oversized iPhone with a screen as big as the door on a wine refrigerator.

BBVA, formally known as Banco Bilbao Vizcaya Argentaria SA, entered the United States less than 10 years ago to invest in a money-remittance business. A subsequent $12 billion acquisition spree netted several small banks in South Texas along with the former Compass Bancshares of Birmingham, Ala., which was purchased in 2007 for $9.1 billion.

BBVA Compass, as the combined U.S. subsidiary is known, is now a top 30 U.S. commercial bank in both deposits and assets, and the fourth-largest bank in Texas, where its 6 percent market share is about what Wells Fargo had in the state before acquiring Wachovia, Sánchez notes.

BBVA's U.S. growth strategy has had hiccups. The company took a $1.3 billion charge against earnings for 2011 after writing down goodwill at the U.S. business. It was the second major U.S. goodwill writedown in three years.

But analysts say that the business has bounced back, and structurally it is better positioned than other foreign-owned banks because it already meets the Federal Reserve's proposed requirement that foreign-owned institutions be held under a domestic intermediary holding company.

Prior to the financial crisis, the market had expected BBVA Compass to maintain its acquisitive streak, and some analysts say the predictions may yet come true.

"The fundamentals of the West are still attractive," says Chris Marinac, managing partner with investment research firm FIG Partners in Atlanta. "Being deeper in California still makes sense, and with the heft of the parent company you have to wonder to some extent do they circle back at that again."

At nearly $70 billion in assets, BBVA Compass still has ample room for growth in key markets within its seven-state branch footprint. It's still only the fourth-largest bank by deposit market share in Houston, for instance.

But it's unclear that any of BBVA's growth ambitions involve an expansion in the traditional sense.

Sánchez who was appointed as head of the U.S. banking operations in 2008, acknowledges that "internally we think about growth strategies, in which acquiring banks is one of the possibilities. But there are so many other things we could be doing in terms of developing new business models to acquire clients, through lighter fiscal infrastructure deployment, also through new ways of creating brand awareness."

For example, it is experimenting with direct-banking approaches to customer acquisition outside its branch footprint.

As part of this effort, BBVA Compass, which has marketed itself nationwide as the official bank of the National Basketball Association, offers NBA-themed checking and savings through a branchless account.

It also is developing a new generation of automated teller machines with video- conferencing, for transactions requiring chats with a teller, which could bring more BBVA Compass services into markets where the bank lacks a traditional branch presence.

"My view is that over the next five years we will do a little bit of everything," says González. "We'll acquire some branches in specific places, we will buy products, probably partner with some new guys, but I don't know—this is changing very, very rapidly.

"What happens if tomorrow Apple decides to go into the banking system and wants to buy BBVA, for example?"


whatever route BBVA compass takes to expand, it is certainly built to grow. It made a $362 million investment in a core systems replacement that the technology research firm Celent calls "game-changing" and other analysts describe as the new industry standard for real-time processing and other key demands of modern banking.

Not long before his visit to Houston, González was in Shanghai for the annual International Monetary Conference, where he heard Sir Martin Sorrell, chairman of British advertising conglomerate WPP, take a dig at the financial services industry for being too stuck in legacy systems to grow their businesses. "He says, you banks are lost," González recalls. "You are absorbed in debt because you have so many legacies, because you cannot change your platforms. It's like a plane and you have to change the engines without stopping the plane."

The analogy was stunningly familiar. "I laughed because over recent years I have explained that changing platforms is like having a lorry on the road," González says, using the Britishism for truck, "and you have to change the wheels and everything without stopping the lorry."

González, BBVA's chairman and CEO since 2000, can afford to chuckle a little since his is an institution that figured out how to change a flat on the fly.

BBVA Compass recently completed one of the most substantial core platform upgrades in the industry. The adoption of Accenture's Alnova Financial Solutions system made BBVA Compass one of the few commercial banks in the country to process transactions in real time, rather than in end-of-day batch cycles.

Previously, BBVA Compass had been encumbered by an aging platform that couldn't handle the relationship-based business model the bank was looking to adopt. Instead of providing a single view of an accountholder's scope of activity at the institution, customer information files were fragmented into 26 separate segments across 17 databases. The old system wouldn't support plans to use "best-of-breed" customer relationship management software for studying and synthesizing customer experience data.

It took two years to complete the U.S. changeover to the Alnova platform, which syncs BBVA's U.S. operations with the BBVA universal banking platform already in use in Mexico and eight countries in Europe and South America.

The technology has shortened the turnaround time for account openings from 45 minutes to 5 minutes, improved the speed at which new products are brought to market by 75 percent, and cut overall costs by 13 percent. Transactions by check or by card are posted immediately, and this year the bank is expected to puts its loan business onto the real-time platform for faster turnarounds.

"They have managed to reduce the cost-to-income ratios 20 percentage points in most of the markets in which they have [done] a transformation," says Juan Pedro Moreno, a senior managing director for global banking at Accenture, who has worked with BBVA on its core system upgrades across the globe.

"Our price-competitive advantage right now is real time," Sánchez says. "Batch processing is not the way we do business in this day and age. I sort of use the caricature of trying to batch process emails" at the end of the day. "People are operating on real time ... and banks are not providing the platform that people are accustomed to."

Celent says BBVA Compass' migration to the new platform was "one of the first successful infrastructure transformations by a major U.S. bank in over 10 years," and predicts it will be a "monumental leg up for BBVA in the U.S. market."

Core replacements are now underway at other U.S. banks, including the U.S. subsidiary of Spanish rival Santander and at Zions Bancorp in Salt Lake City.

One of the benefits of making a core upgrade with real-time capabilities, which are more commonly found these days in Europe, is the relative ease of integrated data from any new banks brought into the fold. So the BBVA Compass upgrade has only stoked speculation about its appetite for acquisitions.

But at BBVA's new Houston offices, the real buzz is about organic growth and the potential to identify, and work with, young startups offering alternatives in the banking or payments services space—the future Squares or PayPals who might just turn out to be greater threats than the peer banks to which BBVA is usually compared.

"In order to grow, of course we're going to grow organically with our work every day," González says. "Normally growth happens in two ways. One is to acquire physical banks, which is still an option, but ... the acquisition of physical branches is fading. Their value is going down.

"The other way is acquiring a company developed by the new guys that are entering the banking space. Therefore ... who are the guys we should partner with? What are the companies we should buy a little stake in?"

In January, BBVA put down stakes in Silicon Valley and established BBVA Ventures, a $100 million fund to seed startups that are exploring new business models, products or features related to mobile technology, loyalty, payments, data analytics and e-commerce. One firm BBVA has funded is putting together a beta test of a rewards program that would issue free gift cards to bank customers based on purchase data.


Knowing customers, and having a 360-degree view of them that allows you to decipher their tastes and habits, is the holy grail for marketing and customer experience executives. But maybe you don't always need a quant to get you there. Maybe the best way to a customer's heart sometimes is through the local sports team.

For three consecutive seasons, Major League Soccer's Houston Dynamo was unbeatable at home, putting away 36 consecutive games at BBVA Compass Stadium. Sánchez can't resist taking a little credit. "You can tell the name of the stadium, it's very intimidating," he jokes. (The winning streak, an MLS record run, finally snapped this spring with a 1-0 loss to Sporting Kansas City.)

Connecting itself to major league sports is one of the pathways BBVA Compass—like its parent, which sponsors Spain's premier soccer league—has chosen to increase its profile.

Besides the MLS stadium, it sponsors the college football bowl game hosted in Birmingham and has a four-year partnership with the NBA, under an agreement inked in 2010 at a reported cost of more than $100 million. The deal includes global sponsorship involvement by the BBVA Group and the U.S. bank's name placed on the uniforms of WNBA players. Despite not having branches in most NBA markets, BBVA Compass has puts its brand name at the forefront of a national campaign tied to the sponsorship.

In March of this year, in conjunction with television spots that ran nationwide during NBA telecasts, BBVA Compass launched its online-only NBA affinity account program, marking the first time that a BBVA Compass bank account had been marketed outside the franchise's branch footprint. In one TV spot, a pudgy NBA fan is rescued from his nosebleed seats to join Oklahoma City Thunder superstar forward Kevin Durant courtside. Now he feels part of the team, presumably just like he does when he uses his NBA-logo Visa check card and BBVA mobile app providing scores and statistics.

"We know it has given us national experience for our products and services," says Sánchez. "And at this point it has given us that national client base opportunity. Going forward, I personally think there are a lot of unchartered opportunities in acquiring clients digitally.

"The beauty of NBA banking for us is it's a real pilot. It's not a Power Point presentation," Sánchez says.

The NBA account attracted 10,000 new customers throughout the country in the first two months.


BBVA's ambitions for its U.S. operations are big. González is on record stating he expects the U.S. operations to eventually become the largest segment of BBVA's overseas revenue generation through retail and commercial banking, wealth management and loan production, for which offices have opened in Chicago, Tampa, Fla., and New York, with a fourth planned for Washington, D.C., later this year. In the first half, the U.S. business generated a profit of $284 million, contributing 7 percent of its parent company's total profit.

"BBVA Compass is small within our organization ... but this is one of our top growth priorities," says González. Perhaps this explains why the core platform upgrade, the out-of-footprint marketing and the opening of its new headquarters seem to be happening all at once.

BBVA Compass may have a ways to go in growing its market share in key areas like Houston, Dallas, Austin, Phoenix, Florida and California. It may have a hard time selling a lot of NBA accounts to fans in Boston, Milwaukee and Toronto. Indeed, maybe Apple finds there's no money in iPads anymore and forms a bank with its $150 billion stockpile of cash.

But both Sánchez and González say they feel good about the position BBVA Compass is in, as it blazes a trail in technology evolution and sets standards for customer centricity and branchless banking for a future that many bankers are slow to acknowledge is forthcoming.

If BBVA is on the mark with all this, perhaps 22 stories is all it needs to define the Houston skyline once and for all.



Glen Fest is the executive editor of American Banker Magazine.

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