13. Research and development

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In 2011, the Innovation and Technology (I&T) area, using technology as a cross-cutting element for Transformation, carried out its activity around three areas:

  • Optimizing the current value chain
  • Defining a new customer experience
  • Developing a new innovation management model

In addition, the I&T Area performs a number of cross-cutting functions in order to guarantee proper operation of all of the Group’s resources. This includes all internal control and information security measures, aimed at mitigating operational risk and reinforcing global fraud management.

  • Value chain transformation

As a continuation of the Transformation Project started in 2010, a number of initiatives have been boosted in 2011 aimed at optimizing BBVA’s value chain in terms of both quality and productivity. The Central service and factory transformation plan and the network process transformation plan have been launched:

  • Central service and factory transformation plan

The fundamental pillar consists of the Cross-cutting plans where, focusing on enhancing productivity, improvement plans have been implemented in each Corporate Functional Area. The goal is to make the most of the Group’s economy of scale, transforming the organization and the processes of the support functions in order to achieve a simpler organization in which at least 75% of the staff perform functions involving a direct relationship with customers.

  • Network process transformation plan

The Network process plan has been defined and developed in 2011, based on 5 core elements:

  • Automation, digitizing and monitoring
  • High self-service capabilities
  • Solving problems on the spot (agility)
  • Collaborative and multi-channel management
  • Simple and smart commercial processes

This plan seeks to enrich the customer’s experience by providing the commercial processes with a greater and better customer view, while reducing the workload of the operating and administration processes.

Over 200 projects have been implemented in 2011 in all the geographies, which involve significant progress towards an aspirational model in which the time devoted to customer added-value tasks will be increased by 30%.

  • Technology and operations

In 2011, the BBVA Group’s technology and operations have evolved by combining the implementation of technologically advanced projects with the development of the 2011-2015 Transformation Plan, whose ultimate goal is to reach a new frontier of internal excellence, boosting the role played by Technology and Innovation as the driving force behind the Group’s transformation.

One of the most significant achievements in 2011 is the inauguration of the data processing center (DPC) in Tres Cantos that has enabled BBVA to become the first company in Europe to receive the Tier IV double certification, in design and construction, awarded by the Uptime Institute. The implementation of the new DPC consolidates the BBVA Group’s position as a global benchmark in terms of technology, security and energy efficiency.

Migration to the Google Apps communication and collaboration tools also began in 2011, a process that will be completed in 2012 and extended to the rest of the geographies. This solution, together with the new global intranet and the progress made in workstation virtualization in branches and central services, is contributing to the implementation of a new way of working at BBVA, aimed at promoting communication, collaboration and knowledge management globally. Moreover, the steps taken in 2011 as regards reduced use of paper, known as Paperless, are promoting digitizing of documents versus their sending via internal mail.

As for applications, 2011 has seen the revamping of the BBVA customer website, while work has been carried out to develop services on alternative channels such as tablets or smartphones. Upgrades have also been made to the Asset platform in order to prepare it for implementation in the various geographies; the Informational platform, using the most advanced information analysis technologies; the Operational risk control platform to meet the standards required by the Basel III regulatory framework; while the first versions of the new Advanced asset management platform have been implemented.

The plan for extending a 3-layer operations model to all the geographies began in 2011. It has already been implemented in Spain to improve the efficiency of back-office operations. In this regard, initial projects have been carried out in 2011 which will subsequently give way to full implementation of the model.

An ambitious quality plan has been carried out in order to establish greater control throughout the product’s life cycle, with the resulting decrease in the number of incidents and the shortening of response times, which will enable a more efficient use of resources.

  • Transformation of the distribution model

In order to meet the need to evolve the customer relationship and interaction model, an initiative known as “Concept Car” has been developed in 2011 aimed at offering customers solutions adapted to their needs. This new “Bank of the Future” model creates more channels and more granularity, with smart processes executed in real time, with high customization capabilities, solutions based on the understanding of our customers and better functionality with a clear Customer Centric Bank approach. In short, a new customer relationship model.

The showroom where BBVA’s proposal for the future can be experienced today can be visited at the BBVA Innovation Center (CiBBVA), with the various models for approaching the customers: Easy Bank, Flagship, Stand…

An “Easy Bank” pilot project, a new branch model, has been developed in Madrid at a Commercial Banking Center (CBC) for Spain and Portugal, with a value proposition based on terms such as lay out, collaborative front, self-service area (ABIL) and new roles and ways of working.

This initiative complements other similar ones developed within the Group, such as the Ulysses Project, a pilot for a new segmented commercial model in Mexico, or the "light" office in Chile. They will all continue in 2012, maintaining the efforts towards the transformation of the Group’s distribution models.

Transformation of the Contact Centers model is another key element in the evolution of the customer relationship model. February 2011 saw the completion of stage I, which began in 2010, for preliminary diagnosis of the Group’s contact centers. Stage II has been presented in September. It’s main objective is to achieve a qualitative leap in the operation of BBVA’s contact centers through standardization of the service provider management model.

  • Development of virtual banking

A major effort took place in 2011 for developing banking solutions in the mobile world. One result of this effort has been the creation of a BBVA Cell Phone native solution for each smartphone platform available on the market, as well as the evolution of the www.bbva.mobi and SMS service for non-smart devices, providing 100% coverage for all the devices existing in all the countries where the BBVA Group operates.

The evolution of transactional services that began in 2010 has continued in 2011, adapting the infrastructures, the content and the way in which the Group’s websites are developed, according to the new technologies that have become consolidated this year, and emphasizing accessible development according to W3C standards.

Integration of the various virtual channels with the world of social networks has enabled the Group to develop a more social, more participative website which is more closely connected to our customers. A result of this integration has been the creation in 2011 of several financial crowd funding tools fully integrated in the world of social networks.

2011 has seen the final consolidation of new channels more integrated with the customer’s day-to-day life. Consumer electronics has completed its integration with the world of the Internet, and devices such as TV sets and media players are now fully connected elements. Through its firm commitment to innovation and technology, BBVA has developed applications adapted to these devices in order to enable easy access to existing products and services.

  • Innovation model in the medium and long term
  • BBVA Innovation Centers (CIBBVA)

2011 saw the inauguration of the Innovation Center in Madrid. Francisco González, Chairman of BBVA, officially inaugurated the CiBBVA on July 7 with the attendance of Joy Ito, Director of the MIT Media Lab, Cristina Garmendia, Minister of Science and Innovation, Alberto Ruiz Gallardón, Mayor of Madrid, Esperanza Aguirre, President of the Madrid Regional Government, and the renowned Spanish scientist Eduard Punset.

On the same day, the “OpenMind” innovation community was launched and the book Innovación, perspectivas para el Siglo XXI (Innovation, prospects for the 21st century) was presented.

It can be said that 2011 marked the beginning of the consolidation of an international configuration of the Group’s Innovation Centers, with the inauguration of the San Francisco Office, the Birmingham Center and the Innovation Center in Mexico.

  • Innovation products/projects

With regard to products, ABIL strengthened its position as a global benchmark in its sector. Throughout the year it was featured at many international conferences, awards and honors such as the “Talk to Me” exhibition at the MOMA in New York, where its man-machine interaction capacity was acknowledged in the presence of Ángel Cano, BBVA’s COO. Expansion of the ABIL family will continue in 2012 with new developments that will build on the success achieved, providing greater versatility to the solution.

Another major milestone in 2011 is the implementation of High Performance Desktop (HPD), the new BBVA intranet based on cloud computing, with Google as partner. This major leap in the way in which the Group’s work is organized has been announced officially on January 9, 2012.

This year saw the migration of the technical areas in Spain to HPD, its integration as a social network and the final deployment of HPD in Spain in non-technological areas. The year ended with 8,500 users migrated.

  • Creating disruptive innovation

The BBVA Innovation Center carries out lines of work that are based on the analysis of specific trends and methodologies in the field of innovation that seek to identify possible solutions that go beyond the conventional in our business in order to provide a vision of the future and detect business and value generation opportunities for the Bank and its customers.

  • International innovation network and virtual community

The global innovation network became established in 2011 with the inclusion of companies, experts and institutions from all over the world that contribute to BBVA’s innovation projects.

Similarly, the CiBBVA participated in, and supported the holding of various leading events, both national and international, linked to innovation, new technologies and scientific, academic and enterprising communities, including Ideágoras, iniciador, El Ser Creativo, TED, La Red Innova, Foro Internacional de ATM, Expo Smart Cities, Emtech and TR35 Spain (MIT), among others.

Moreover, the CiBBVA head office in Madrid has become a meeting place for innovation communities. Over 80 events have been held in 2011, and 11,778 visitors have been received.

As a core element for the creation and monitoring of virtual communities, the Innovation Center’s website has been launched: www.centrodeinnovacionbbva.com, along with the OpenMind community: www.bbvaopenmind.com and the profiles on social networks such as Facebook and Twitter. Tens of thousands of people have participated in the conversations and interacted with the content.

  • Partly-owned companies

Projects have continued to be promoted in 2011 in order to generate innovation and transformation levers for the Group, through the various partly-owned companies.

BBVA Globalnet has refocused its service catalog, specializing in emerging technologies like HTML5 and mobile technologies (IOS, Android, etc.) and in the development of cloud applications, with Google Application Engine (GAE) deserving a special mention.

Moreover, Solium has continued to make progress in adapting its services towards a cloud computing and pay-per-use model, and has launched a new security line with the involvement of a team highly renowned in the market.

BBVA Soluciones Avanzadas de Asesoramiento y Gestión (formerly Econta Gestión Integral) has made a significant effort to develop a new technological platform offering greater functionality and scalability, aimed at the commercial relaunching of the service in 2012 under the new trademark Tugestionline.com.

Finally, BBVA Consultoría has launched two new projects in partnership with the Corporate Training Area in order to sell the corporate online training catalog to external customers, under the brand BBVA e-learning, as well as face-to-face courses offered by prestigious national and international business schools, under the Campus BBVA brand.

Altogether, the companies within the unit’s management perimeter have contributed €8.2 million to the Group’s consolidated net income.

  • Information security and fraud management

The BBVA Group has established computer security controls to prevent and mitigate computer attacks that may materially affect the Group’s results. These controls are part of the risk assessment and mitigation system established in the corporate operational risk and internal control structure in order to ensure compliance with the Sarbanes-Oxley Act, with a view to guaranteeing their proper identification and effective control. During the processes carried out for reviewing and auditing such risks and controls, no material risks have been identified as a result of the effective mitigation offered by the controls implemented.

The identified risks are basically divided into those which may affect the availability of the computer systems and their supporting processes, and those which may affect the confidentiality and integrity of the information processed by such systems.

Risks related to lack of availability are managed and mitigated through the Business Continuity Plans and the Systems Continuity Plans.

Work is being carried out in the Business Continuity area in order to fully implement and update 126 continuity plans in 25 countries. Some of them have been activated during the year, as in the case of the tornados and floods that ravaged the south of the United States, Mexico, Colombia and Venezuela, the earthquake in Lorca (Spain) and the volcanic emissions in Patagonia (Argentina).

The Critical Infrastructure Protection Act has been approved in Spain in 2011 in order to meet the requirements of the European Directive of the same name. BBVA is available and ready to fulfill any possible obligations and requirements derived from this Act.

The risks that may affect the confidentiality and integrity of the information are managed and mitigated within the programs established throughout the BBVA Group in the successive Information security master plans. These Plans are designed to mitigate the various risks through a security model that includes Identity Management, Security Architectures, Monitoring Systems and Incident Management.

The services outsourced by the BBVA Group are not exposed to material cyber security risks.

The BBVA Group has not undergone any security incidents which individually or in the aggregate can be considered material.

By type of business and operations carried out by the BBVA Group, no risks associated with cyber security incidents have been identified which could remain undetected for an extended period of time and represent a material risk. Moreover, and with a view to determining any possible banking-related cyber security risks which might affect the Group, there is no public evidence of incidents occurring in the financial sector which in the case of the Group might represent a material risk.

In 2011, fraud management in the various businesses and geographies has been focused primarily on fraud prevention and early detection of alerts through the use of technology. The Group has also laid the foundations for the launch of new projects that will enable a more efficient management of this risk and will be carried out in 2012.

  • Monitoring of the BBVA Group strategic transformation plan

In 2011, the I&T Area has continued to play a key role in the monitoring and promotion of the lines of work set out in the Group’s 2010 - 2015 Strategic Transformation Plan, an activity based on a Global Project Office, aimed at strengthening the Plan, supporting the definition and monitoring of corporate metrics, and collaborating in cultural evolution initiatives and in the associated Communication Plan.