Inside BNP Paribas' Digital Banking Innovation: Cloud, Data, AI
The banking sector, for many decades, has relied on legacy processes and systems to serve its customers. But today, the rise of online banking, digital applications, and challenger banks has caused significant disruption across financial services.
The COVID-19 crisis has put pressure on banks to improve their digital offerings as lockdowns have forced customers to turn to online banking rather than physical, in-store experiences. Big banks, once kings of capital, are facing competitive pressure from both fintech and the technology giants, who are making great strides to offer a seamless digital financial services experience tied to their core platform, while managing a flurry of stringent regulations across the globe.
The need to provide better, faster, and safer digital services to customers remains a powerful driver of digital transformation for banking institutions. This is especially true for BNP Paribas, the world’s seventh largest bank by total assets and the largest bank in Europe.
Today, BNP Paribas is taking a bold approach towards harnessing data and technology to accelerate digital innovation in the banking industry. Read our interview with Global Chief Information Officer Bernard Gavgani as he reveals ways in which the organization strategically leverages data to elevate the customer experience, the most important AI initiatives at the bank, and more.
Editor’s note: This interview was edited and condensed for brevity and clarity.
Jedidiah Yueh: Bernard, you're running one of the world's biggest technology organizations as part of one of the world's biggest banks. How important is it for you to keep pace and to innovate at the speed of the tech giants?
Bernard Gavgani: Digital transformation has never been as urgent as today, bringing new opportunities to constantly evolve our IT and to ensure interoperability within the chosen solutions. In such a fast changing environment, we see the emergence of new players in the banking industry, such as neobanks that are relying on technologies to compete with traditional players in the sector and are particularly agile and innovative.
For the banking industry, we need to have a co-opetition posture, collaborating with some, while working actively with others to be more and more attractive. Digital is the answer. The bank of tomorrow must be modern and digital.
BNP Paribas began its digitalization journey in 2013. In 2017, the bank realized that the private cloud structure was hammering the rapid development of digital banking functionalities. Companies using public clouds could get new computer servers or new storage to develop applications in minutes, while it took the bank several weeks to secure similar resources. It therefore seemed natural to us to embrace the movement of using the public cloud while finding solutions to preserve the sovereignty of our customer's data and banking transactions.
Jedidiah Yueh: When you think about digital transformation as a complete journey, where do you see BNP Paribas?
Bernard Gavgani: We have to provide efficient day-to-day banking for clients and a more digital personalized sales approach to deliver higher quality service. To remain attractive, we have to build new relationship models and find the perfect balance between human and digital. For example, we have launched many initiatives to support business transformation for the instant payment domains. Instant payment rollout is on track, thanks to the creation of the dedicated IT department to ensure both rationalization and security from the retail and corporate payment to the whole group.
We have also transformed our IT architecture by facilitating internal and external partnerships, launching the API program, and accelerating the move to the cloud. At the same time, we are strengthening IT security while maintaining a strong focus on data leakage prevention. BNP Paribas is accelerating its digital transformation journey in order to build the European bank of reference, even though we will have a long way to go.
Jedidiah Yueh: During COVID-19, we saw more and more privacy bills that were introduced or passed. How do these regulations impact the bank like BNP Paribas?
Bernard Gavgani: Regulations lead to increasingly important constraints, which for a certain number of them are contradictory with the very spirit of the digital transformation. As an example, banks are trying to find a good balance between cloud, public, private, hybrid, and the regulatory requirements. The question now is how do regulators impact innovation at the banks?
Regulators need to set up to stay relevant in the digital economy. They need to drive a cashless digital economy, overcome a trend of increasingly complex regulatory requirements, protect the interests of the end customers and the country's citizens, and define a business continuity plan to take into account crisis and security threats—all impacting the volatility of the global economy. To manage the increasing costs of compliance and facilitate innovation and market competition, we are implementing emerging technologies such as blockchain, artificial intelligence, robotics, and APIs.
Jedidiah Yueh: Can you talk about the importance of APIs to the bank?
Bernard Gavgani: Our IT department embraced APIs a long time ago, both internally and connected internal applications, but also externally to connect to our technology partners and suppliers. To drive internal efficiency and organization.
More recently, we have started to embrace an API-first mindset, in which APIs are not only a question of connectivity but also a product. We are shifting to the paradigm, where APIs are a means to expose data and services, to carry a value proposition in a convenient package that is easy to consume with appropriate access rights and data protection.
Jedidiah Yueh: Bernard, you're one of our most innovative customers, and you've actually built an extensive application on our platform and APIs. Talk to us about your open digital marketplace and your data agility products.
Bernard Gavgani: The challenge of the open digital marketplace and data agility is the increasing capacity to the bank's data teams to develop new models. We have a data producer, and we have a platform producer. Both expose their products to the open digital marketplace, a portal where data teams come to define and couple data and platforms.
Data allows us to better know our customers, to manage continuous and consistent messaging between the customers and the bank, and build a highly personalized relationship with each customer.
BNP Paribas must strengthen customers' trust and protect data usage through optimal data privacy practices with an operating model relying on local empowerment and federated extensions. All this goes with APIs, so APIs are the fuel of our economy today.
Jedidiah Yueh: How important is data to the bank?
Bernard Gavgani: Data is a key asset for the bank, as all processes rely on data. Value will come from data manipulated, created, stored from and by our services to build services for our clients.
Data is part of our DNA in our day-to-day lives. Our objective is to facilitate the usage of data to increase productivity and the performance. For example, without a robust scoring engine, we cannot give customers credit. Without algorithms, we cannot send efficient marketing campaigns. Without high quality data, we cannot detect potential risk, hence the importance of collecting and making the best use of our customer data.
This is why BNP Paribas has invested into data management. Within our bank, a dedicated organization has been put in place around the data to ensure data integrity, quality, and fluidity, so that IT and the business closely cooperates to improve a common data strategy trajectory.
Jedidiah Yueh: There's a lot of hype and promise around AI, machine learning, and deep learning. Tell us about the AI-as-a-service application you've built.
Bernard Gavgani: Digital intelligence is a powerful driver of growth and innovation. It's key to reaching operational excellence, customer satisfaction, and value creation. We’re also advising new ways of working with our customers more efficiently and leveraging AI to manage our IT and IT department.
Jedidiah Yueh: There are so many places where you can apply machine learning. What are the most important areas that you could apply the technology as you look into the future?
Bernard Gavgani: Between September 2017 and June 2020, the number of AI use cases have increased by 3.5 times. Those going into production increased from 12 to 31. Use cases are mostly articulated around enhancing operational workflow and customer knowledge.
Jedidiah Yueh: You've been with BNP Paribas for over 20 years now. How has your perspective changed over that time?
Bernard Gavgani: Our industry is now changing with new players, such as GAFA, neobanks, fintech. To meet the many challenges in the banking world, BNP Paribas is evolving its traditional model to adopt new technologies, offer new services while guaranteeing capability and interactivity with all the systems—all in the secure environment. IT is the heart of such significant transformations.
In today’s fast changing environment, IT is now at the heart of the bank strategy to deeply transform the banking sector. We can say that IT will definitely become the symbol of the bank of tomorrow.
About the Speakers
Bernard Gavgani began his career in 1982 and successively supported several companies in the design and management of IT projects, exercising the responsibilities of Head of Technical Services, consultant or project manager. He joined BNP Paribas Group in 1995 at CIB-Capital Markets IT department and continued his career at Inspection Générale in 1999. In 2000, he became General Secretary of BNP Paribas Arbitrage, then Chief Operating Officer of the Equity Derivatives business in 2003, then Global Head of Information Technology and Operations of CIB in 2009.
Jedidiah Yueh started his career as a high school teacher. He is the bestselling author of Disrupt or Die, a book that refutes conventional ideas on innovation with proven frameworks from Silicon Valley. Prior to his book, Jed put his frameworks to the test, leading two waves of disruption in data management, first as founding CEO of Avamar (sold to EMC in 2006 for $165M). Avamar pioneered data de-duplication and generated over $5B in cumulative sales. After Avamar, Jed founded Delphix, which provides a data platform to enable digital transformation for over 30% of the Global 100 and has surpassed $100 million in ARR. In 2013, the San Francisco Business Times named Jed CEO of the Year. Jed has over 30 patents in data management and graduated Phi Beta Kappa, magna cum laude with a degree in English and psychology from Harvard.