Here’s something few U.S. banks would do: talk their credit card customers into switching to lower-rate loans.

But Onur Genc, the president and CEO of BBVA Compass in Birmingham, Ala., since January, has already sent 4 million pieces of direct mail encouraging its credit card customers to consolidate their high-interest-rate card debt into a less expensive online loan product called the Express Personal Loan. It carries an annual percentage rate between 6.07% and 35.06% based on creditworthiness, loan amount and term length.

The typical customer could save hundreds of dollars by taking advantage of the offer, which raises the natural question of why the $87.3 billion-asset bank has gone out of its way to sacrifice revenue.

“We are doing whatever is good for the customer,” Genc said in an interview this week. “If our credit card customers refinance at a lower rate, we are OK with that because they are still banking with us, so our relationship is being strengthened. … We are not in the business of providing a single product. We are in the business of providing a relationship, and we want to extend that relationship.”

Genc’s plan is partly realism — “If we don’t provide this to our own customers, we are sure they are going to get it from somewhere else,” he said — and partly a bet that a customer-centric, digital-heavy strategy will be more lucrative in the long run.

It’s also an example of a maturation process in digital banking, said Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research.

Onur Genç, CEO of BBVA Compass
Breaking from the pack
“If you have the customer, why would you not put [online loans] in your mobile app?” says Onur Genc, president and CEO of BBVA Compass. “And credit cards — why wouldn’t you have those in the mobile app?”

“Anytime a bank says, ‘I’m willing to think about this through the eyes of what’s best for customers,’ even if that means putting them into a consolidation loan or reducing their rates, it plays to both the bank’s and the customer’s advantage,” he said. “If it’s a wise refinancing, the customer benefits and the bank keeps the customer. And it starts to establish evidence that the bank is acting like a fiduciary.”

Helping credit card customers into lower cost loans is about “building a longer term relationship, not just trying to figure out how to maximize interest or earnings for the next quarter,” Schwanhausser said.

Schwanhausser cautioned that ambitious programs like this take time. BBVA Compass has already made progress, he said.

In Javelin’s latest online and mobile banking scorecards, the bank is a leader in online financial fitness and mobile ease of use.

“Having said that, there are others that have also nudged a little higher” in overall assessment of customer experience, Schwanhausser said.

People power

Genc’s mantra is profitable growth that stems from employee and customer satisfaction, as well as digital innovation. “Our people strategy is that our people should feel good working for our bank, they should be proud of working here,” he said. “Unless they’re happy, customers are not going to be happy.”

Managers’ performance evaluations will be based in part on employee engagement, “so they have to make sure all our employees are engaged in what they do,” Genc said. “That’s how we create better customer service.”

Every manager scorecard will also factor in the bank’s net promoter score, which reflects the percentage of customers who would recommend the bank to others.

To foster business growth in branches, customer experience managers who until now have stuck strictly to service will soon begin offering the Express Personal Loan to customers.

“We have a great product, the consumer would love to have that product because they’re going to pay much less on credit card debt,” Genc explained. “Our customer experience managers are there. Why wouldn’t they tell the customers that we have this great product?”

Digital banking growth

A second major source of profitable growth in Genc’s plan is digital banking.

His background happens to be in tech — he studied electrical engineering in Turkey, then went to Carnegie Mellon University in Pittsburgh where his first job was coding software for professors there.

When he was deputy CEO at Guaranti Bank in Turkey, Genc made a name for himself in digital innovation and sales. More than 50% of Guaranti customers use digital banking at least once a month, and 32% of the bank’s products are sold through digital channels.

BBVA Compass’s percentage of sales through digital channels is lower, yet it’s two and a half times the U.S. national average, according to Genc. About 15% of Express Personal Loans and 45% of credit cards are originated through digital channels.

One difference between the bank’s mobile banking app and others in the U.S. is the fact that it lets consumers take out loans and credit cards entirely through mobile.

“I was really surprised when I came here and saw that digital lending for some reason is being dominated by fintech vendors,” Genc said. “I don’t understand that. If you have the customer, why would you not put that product functionality in your mobile app? And credit cards — why wouldn’t you have those in the mobile app?”

BBVA Compass’s mobile app’s App Store rating is 4.8, the highest among the top 100 banks. Under Alejandro Carriles, executive vice president and head of mobile and online banking, the app has been constantly refined and improved. Recently customers were allowed to buy certificates of deposit through the app. Another feature under development is a search and navigation guide that helps walk people through whatever they need to do; this will eventually be AI driven and predictive.

Meanwhile, Genc plans to allow Simple, the mobile-first neobank BBVA acquired in 2014, to remain independent, as Manolo Sanchez, his predecessor, did.

“There are certain things Simple does that are good,” Genc said. “The NPS of Simple is one of the highest in the U.S. banking sector. It’s 62. They’re doing something unique and we want to retain that culture.”

But Genc also wants to sell more bank products through Simple.

“In the digital space, selling is important,” he said. “They have to have more products in the app and in the offering so the customer can get benefit from those as well.”

The engineer in him

A third aspect of achieving profitable growth, in Genc’s view, is improving efficiency in the back office, the branches and everywhere else through redesigned processes.

“In the U.S., it takes on average 45 days to extend a mortgage loan,” Genc said. “Why is that?”

Some tasks could be done in parallel, rather than serially, and then automated, he noted.

“In some cases, we have automated certain things, but the root process is still not an optimized process,” he acknowledged. “So we have to look into those.”

The adoption of artificial intelligence software is a part of this. AI can take care of certain chores humans do today, speeding up overall processes.

“For certain operational tasks, AI is already in place,” Genc said. For instance, the bank is using robotic process automation in anti-money-laundering compliance and fraud detection.

“In every area, there might be room for AI,” he said. “AI is a buzzword today, but at the end of the day it’s intelligent coding with self-improvement in the logic. You can use that anywhere — in fraud, in compliance, in operations, all of which we are doing, and in more revenue-generating and trust generating services.”

The bank is working to apply AI to predicting customers’ cash flows, and then alerting them to things like potential overdraft fees.

“A good chunk of U.S. customers are still paying [nonsufficient funds] fees,” Genc noted. “We can alert them early on.”

Here again, BBVA Compass is zigging where the many banks that still rely on overdraft fee income zag.

“This cannibalization notion of, ‘Aren’t we going to lose some of that revenue?’ doesn’t matter,” he said. “The customer wins. We have to be sure we’re helping them in those decisions. That’s how we gain trust.”

Editor at Large Penny Crosman welcomes feedback at penny.crosman@sourcemedia.com.