BBVA Innovation Edge. Alternative finance (English)

FEBRUARY 2016

Alternative finance THE BOOM IN FINANCIAL SERVICES TECHNOLOGY

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Alternative finances in figures

Worldwide Funding Volumes

World Regions

Crowfunding Methods

Wher does the money go

Europe

Spain

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Alternative finances in figures

Worldwide Funding Volumes (*) 30,270 ESTIMATE

Alternative finance industry has multiplied by 65 the volume of money since 2009

14,250

5,360 466

751.5

1,294

2009

2010

2011

2,469 2012

2013

2014

2015

million â‚Ź (*) Crowdfunding Industry Report 2014 (Massolution)

Worldwide Funding Volumes

World Regions

Crowfunding Methods

Wher does the money go

Europe

Spain

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Alternative finances in figures

World regions Asia 2,995 millon Up 320% since 2013

North America 8,325 millon Up 145% since 2013 UK

USA

USA, UK and China account for 85% total volume

Worldwide Funding Volumes

World Regions

China

Europe 2,957 millon Up 141% since 2013

Crowfunding Methods

Wher does the money go

Europe

Spain

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Alternative finances in figures

Crowfunding methods

Royalty

Hybrid

Crowlending

Equity

240 millions

429 millions

9,750 millions

970 millions

Up 336% since 2013 Up 290% since 2013

Worldwide Funding Volumes

World Regions

Crowfunding Methods

Up 223% since 2013

Wher does the money go

Up 182% since 2013

Europe

Spain

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Alternative finances in figures

Where does the money go?

18.9% Social causes 41.3% Bussines and entrepreneurship

12.13% Arts

4.54% Music

Worldwide Funding Volumes

World Regions

Crowfunding Methods

6.25% Properties

Wher does the money go

Europe

Spain

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Finland

Sweden 107

Europe (*)

Finland 17

Sweden

2014 (total)

Netherlands 78

UK UK 2,337 millions

Estonia Netherlands

United Kingdom represents 74,3% of the European market France 154

It is expected to reach 7,000 million by 2015

Germany

Estonia 22

Germany 140 Switzerland France

Switzerland 12

Spain

Spain 62

Italy Italy 12

(*) The European Alternative Finance Benchmarking Report (University of Cambridge)

Worldwide Funding Volumes

World Regions

Crowfunding Methods

Wher does the money go

Europe

Spain

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Alternative finances in figures

Spain Volume

Crowfunding methods 62

35.1 (Up 111% since 2013)

29

13.7 (Up 363%)

10

10.5 (Up 234%) 0.8 (Up 71%)

2012

2013

Reward

2014

Crowlending

World Regions

Royalty

million â‚Ź

million â‚Ź

Worldwide Funding Volumes

Equity

Crowfunding Methods

Wher does the money go

Europe

Spain

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ALTERNATIVE FINANCE

Between opportunity and risk A market that doubles every year is a market that offers opportunities, both for those who need to invest and for those who need capital, working capital or to finance their growth. Since 2009, the so-called alternative finance industry, with its own ecosystem in the Internet, has multiplied by 65 the volume of money

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While in the US or UK its development is a fact, in the rest of the world it is just starting to take-off. It is estimated that both countries, which represent about 70% of the total volume of alternative finance, are about three years ahead of the rest. It is indeed a market in full swing, and therefore some of its opportunities and risks are yet to discern.

Technology, low rates and entrepreneurship Internet and the development of investment platforms have democratized the possibilities of becoming a shareholder of a company or even a banker. With small investments, from 20 to 50 euros depending on the project and the platform, it can actually be possible.

The access to funding has also expanded. There are thousands of startups, small businesses and individuals who now, with entrepreneurship booming, can apply for money and have more options than just the traditional bank.

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If the former –investors- demand profits sometimes around 20% (impossible to achieve in other ways, especially during a period of low rates), the second -entrepreneurs and individuals- want funding that might not be achieved by conventional channels (or not at the price they would like), and in a very simple way: through the internet, with a relatively small number of steps and without needing to commit to other products. These characteristics make investment platforms particularly attractive to smaller businesses (which comprise the immense majority) and even individuals.

But, besides being an opportunity, are alternative finance a safe option?

If we follow exclusively what investment platforms say, we would conclude that the risk is low. The default rate of projects is very low, close to 0%. But, as in all, we must not lose sight of one basic rule: profitability and risk often go together, and higher performance offered means also greater uncertainties for the investment. When you invest in a company or make a personal loan to finance the purchase of a vehicle, you know that you can lose up to 100% of your money. It is a risk you take, but if it is handled smartly it can be controlled.

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Diversification is key A look at the different investment platforms allows to discover that they offer dozens of opportunities, with different yields. Therefore, it is better to invest a small amount in several of them than to concentrate all the capital in just one, however interesting it may seem. This basic investment rule, recommended by the platforms themselves, also applies in this case.

Therefore, it is important to choose the project carefully, learn about it through all possible channels and keep in mind that, although the projects have passed a preliminary exam (they are solvent and have a credible business plan), there are always unforeseeable factors. Once selected, you invest in them and create a small investment portfolio.

Yields will be entered into your account, ready for you to enjoy them or be reinvested.

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Choosing the platform The platform where you invest also plays an important role in the security of the investment. Not all of them choose the same type of projects or have the same support among accredited or institutional investors, or can claim the same experience.

Their transparency, the way they speak about themselves and the projects they support, must also be taken into account. In Spain, the sixth country in Europe in volume of money, there are at least 34 different platforms; only the UK has more, which speaks of the growing fragmentation of a developing sector.

Many of them are still startups.

There are platforms with international presence (Zencap or Crowdcube), limited to one country, and even to a single project. And there are those who just finance companies, and those who also cater individuals. Unlike what happens in the stock market, where companies are forced to ‘get naked’ in front of the regulator and provide extensive information on their financial statements, alternative finance concentrate on small businesses, so the volume of information shared with shareholders or lenders is lower.

Germany

Sweden

Netherlands

Germany

UK

USA

UK France Spain

Spain USA

Brasil

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Own research, direc contact The platform performs a first analysis of the company, which is assigned a credit rating based on various parameters, such as sales, its ability to generate cash or history of defaults. But from there it is the investor who has to take the initiative and apply a second filter, requesting the information he considers necessary and depending on the quantity to be invested, and even establishing direct contact with those who are going to borrow his money.

Knowing the project managers is one of the possibilities offered by collective investment, and it can be extremely useful when making a decision. The investor’s feeling is key, so being transparent and open to be investigated to some extent gives credibility to a business project. Along with this, it is also useful, especially when funding a personal loan or the business project of a single person, to make sure there is an insurance covering illness, accident or even death of the borrower.

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NORMATIVE

Scattered regulation and still under development Laws tend to walk behind reality; sometimes they merely keep pace, without being able to stay ahead, harmonizing rhythms and generating the best conditions. Something like this has happened with alternative finance, a relatively recent phenomenon, rapidly expanding and much more developed in some places than in others, which has grown without proper laws. innovation edge | Alternative Finance | centrodeinnovacionbbva.com

And even though some common objectives have been sought (protection of investors and some control over financial platforms), once national governments have reacted, they have done it in their own way, from different angles and positions.

tional banking, the cross-border dimension of the Internet itself calls for more uniform rules to avoid a fragmented market.

Thus, the US has its own regulation. UK, with the most developed finance market in the EU, also follows its own path.

Though different, the two Anglo-Saxon countries may have the most favorable framework for this industry.

There is no specific European directive either, even though the European banking authority understands that both the directive regarding means of payment (2007/64/EC) and the one regulating the activity of electronic money institutions (2009/110/EU) can be applied. Outside Europe, most countries do not have a very clear legal framework.

Within the eurozone, national governments haven’t combined positions regarding this global phenomenon, so neither companies have the same financing conditions nor online platforms have a common regulatory framework for providing services that require a clearly defined playing field. In the same way that the crisis has driven a common regulation for conven-

IN ANY CASE, AVOIDING TO REGULATE THE MARKET DOES NOT SEEM AN OPTION Informality aggravates the risks of liquidity and solvency faced by investors who become lenders and need reliable information. Some of the regulations designed in recent years in different countries (see below) have gone precisely in this direction.

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United States, up to 50 millions The world’s largest market for alternative finance has been regulated gradually since the publication in 2012 of the Jumpstart Our Business Startups Act, allowing companies to publicly announce new equity issues through online platforms. Since then, the industry has been developing without very precise rules, as none of the limitations initially raised have been enforced.

Finally, in 2015 the SEC (Securities and Exchange Commission) , established that the maximum amount a company can raise through crowdfunding is $50 million, and limited to 10% of the annual income the maximum amount to be allocated by a non-accredited investor (who wins or has less than $200,000).

These limits are large enough to offer companies a formidable tool to access capital.

United Kingdom, the most vibrant market It can be said that the UK has been leading the way for regulators, especially when it comes to transparency. With a market that widely triples the rest of Europe and where there are already rumors about a certain bubble, the regulator (Financial Conduct Authority, FCA) introduced in 2014 a new framework that limits the emissions per project to 5 million euros a year and differentiates between crowdlending and crowdfunding.

More lax in the case of crowdlending, as it considers it less risky, the British legislation tries to protect crowdfunding investors.

Thus, it prohibits platforms to make direct sales to customers earning less than 100,000 pounds a year or with an equity, outside their residence, valued at 250,000 pounds minimum.

The FCA is also in the process of admitting the different platforms operating in the UK. According to the consulting firm Bovill, 30 of the 114 who initially applied would have already been rejected due to difficulties they have to be profitable.

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Spain, recent legislation Spain waited until April 2015 to begin regulating alternative finance, with the Law 5/2015 for the Promotion of Business Financing. Unlike what happens in France, UK and Italy, the law does not distinguish between financing based on loans and equity stake. It is therefore a legal framework perhaps not as flexible as in the Anglo-Saxon countries, but somewhat less restrictive than the French or German.

In a still underdeveloped market, the Spanish law seeks to protect investors in various ways. Firstly, distinguishing between accredited investors (professionals) and non-accredited. The former are those individuals who earn more than 50,000 euros or have more than 100,000 euros in financial assets, and those companies that meet at least two of the following conditions: revenues of at least 2 million euros, at least 1 million in assets, and own funds of 300,000 euros. Anyone who meets these terms can invest without limit. On the contrary, non-accredited investors can’t invest more than 3,000 euros per project and up to 10,000 euros a year.

It also limits the amount of money that can be captured per project to 2 million euros, in the case of having non-accredited investors, and to 5 million euros for accredited investors. The legislation puts platforms under the discipline of the CNMV and the Bank of Spain, it requires them to have a capital of at least 60,000 euros or to have a civil liability insurance of up to 400,000 euros, to publish all relevant information, and to evaluate the projects. These conditions may contribute to concentrate a young and extremely fragmented industry in Spain, with at least 34 platforms currently operating.

France, the most restrictive Since 2014 France has its own legislation, which differentiates between loans and shares. For the former, the law sets limits for both issuers (1 million per project) and investors (1,000 euros, and 4,000 if there is no interest). In the case of equity crowfunding, platforms can’t collect more than 1 million euros per project in 12 months, although the investor can contribute with as much money as he wants to.

Germany, changes in 2015 Germany used to apply to crowdlending the same rules that govern investment products, and the maximum amount that a company could raise was 1 million euros. This limit was widely criticized by the industry, as it was believed it limited their growth possibilities. As a result, in the spring of 2015 the limit was raised to 2.5 million euros, with a cap of 1,000 euros a year for small investors (10,000 if they can justify taking the risk.)

THE REACTION OF THE BANKING INDUSTRY

Not everyone sees it the same way, but at the presentation of results or at shareholders meetings almost all bankers are warning about the new competitors who, in the not too distant future, will compete with them. It is not just about Apple or Google with their means of payment and almost unlimited liquidity.

Towards a scenario of collaboration innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Crowdfunding platforms and their many variants have also begun to tread well-known areas by the banking industry, such as lending to SMEs, loans to students and even the real estate business. As a matter of fact, in June 2015 Wang Jianlin, China’s richest man, raised in just three days through crowdfunding 720 million euros to build a new complex of buildings.

720

million

The legislation of most countries, which limits the maximum amount of money a project can raise in a year, will not allow to replicate these operations.

But the industry already has a regulation that will give some stability, and the volumes it manages, even though still insignificant within the financial system (in total, one cent per each 100 euros borrowed), continue to grow at rates of up to three digits.

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Are they a threat to traditional banking? Can their advantages (fast response, lower costs, dilution of risks among the lenders) be enough to compete face to face in the future with organizations with tens of years of history and a valuable know-how accumulated? Everything indicates that the future will be hybrid.

s h t g n e r The st

The banking industry might stop being the only player, but both ecosystems will coexist asserting their respective strengths. Here are some reasons that lead us to believe it.

y r t s u d n i g n i k n a b e h t f o

e c n a n fi w e n f o l a i t n e t o The p s r e h t o m o r f g Learnin s e s s e n i s u b y r a ent

m e l p m o C

d a e h a s t n e m e e r g a n o i l l Multimi innovation edge | Alternative Finance | centrodeinnovacionbbva.com

The strengths of the banking industry Many of the largest financial institutions have more than a century of experience providing services to customers. They have spent decades competing with each other, merging, absorbing the weaker... and this translates into greater experience when analyzing risks and better knowledge of the industry and its distribution channels, from traditional branches to working in the field with the clients and even online and mobile banking.

Besides technology giants, few companies have more information about their customers than banks. Many organizations are already exploring the potential offered by big data in order to personalize the services offered to customers and, ultimately, compete better.

The time to monetize this data approaches.

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The potential of new finance It is not only that alternative finance grow fast; in some cases they do it well, with low default rates and taking advantage of their low maintenance costs. They allow investing small amounts of money in instruments that until recently banks reserved to wealthy individuals.

And they offer more interesting types of interest to those who don’t mind taking risks. In short, it is a disruptive business model against a formidable competitor such as the banking industry, but one that is used to play alone.

Learning from others Alternative financing has brought new ideas that can be exploited by banks, which also have their own online channels where they have invested millions of euros in recent years. BBVA Research already alerted in 2013 about the potential of this kind of financing, and indicated in a study some of these new ideas that the banking industry can adopt.

If the success of some crowdfunding platforms lies in making available to retail investors financial instruments that require little investment, “traditional banking can innovation edge | Alternative Finance | centrodeinnovacionbbva.com

imitate them through their online banking platforms or specific new ones�, something that, to a greater or lesser extent, has already started to happen.

According to the BBVA Research study, this would decrease intermediation costs and also allow banks to enter the business of crowdfunding. Along with this, new scoring or risk assessment strategies, obtained through digital connections (reputation, number of visits to the website, interaction in social networks), can complement the face to face relationship at branches.

Complementary businesses The main difference between both businesses can also be a source of collaboration. Banks collect deposits, something that online platforms don’t do, and count with resources that have already allowed them to reach agreements with them, as we will see below.

They don’t exactly lend money to the same customers either. In many cases crowdfunding and crowdlending have funded initiatives that due to their risk, their long maturity or low profitability fell outside the traditional banking industry.

There is thus the possibility to share customers or even that banks themselves implement their own platforms. innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Besides that, there are other purposes less ‘bankable’.

The so-called ‘reward initiatives’, for example, or certain social projects remain outside the financial circuit.

In fact, some banks have already set up their own platforms in order to occupy this space with their own technology. BBVA Suma, for example, has risen close to 1 million euros from donors for charitable projects.

Many banking institutions have now their own microcredit lines, and some have already created their own specific banks for this type of product.

Multimillion agreements ahead In recent months there have been several news reflecting the growing interest of banking in the fintech sector, one of the most dynamic in the market, where they have started to invest.

Thus, in a decision aligned with its commitment to innovation, BBVA invested last April in Prosper Marketplace, a pioneering crowdlending platform that has already lent more than 5 billion dollars. The 160 million dollars that Prosper got from the Spanish bank, In recent months there have been several news reflecting innovation edge | Alternative Finance | centrodeinnovacionbbva.com

the growing interest of banking in the fintech sector, one of the most dynamic in the market, where they have started to invest.

Thus, in a decision aligned with its commitment to innovation, BBVA invested last April in Prosper Marketplace, a pioneering crowdlending platform that has already lent more than 5 billion dollars. The 160 million dollars that Prosper got from the Spanish bank, Credit Suisse and JP Morgan will serve to strengthen its capital.

In 2014 BBVA had already reached an agreement with On Deck, a US platform specialized in SMEs, and it has also made direct purchases, such as the online bank Simple. It is just an example, because the last months are full of agreements between new actors and traditional banking: platforms like Kabbage, Funding Circle, Avant or SoFi have received hundreds of millions of euros from major banks and various capital funds. The banking industry may have smelled the danger, but it has also spotted the opportunity... and is already reacting.

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GLOBAL SNAPSHOTS

Successful stories in alternative finances

With just a decade of life, the alternative finance market is starting to show who are going to be its main actors in the future. They are young companies -the oldest were created in the middle of the last decade in the United States- that have grown in a legal limbo, whose real value probably stills need to be adjusted, and that are just starting to operate beyond their countries. But for volume, history, technology, differentiation or projects funded, some winners are already beginning to emerge in a race that has just begun.

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Success stories

Platforms

Companies and projects

Lending Club There is no market as large as the United States.

And there is no crowdlending company that has reached the volumes of Lending Club, a platform specializing in personal loans, for companies or for medical expenses. Located in San Francisco, by mid 2015 it had already over 11 billion dollars in loans, more than half of them intended to refinance previous loans or credit card expenses. Its growth is exponential: by the end of 2009 it had more than 8,000 credits and about 78 million euros in loans. Six years later, it multiplies by 100 both quantities.

It is publicly traded at 14 dollars, even though after its debut at the end of 2014 it exceeded 20 dollars per share. The company is currently valued at more than 6 billion dollars.

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Success stories

Platforms

Companies and projects

Prosper Market Place A pioneer in the market of loans between individuals, Prosper was born in 2005 and is also headquartered in San Francisco. It was chosen

by BBVA in 2015 to invest, representing one of the biggest bets of a Spanish-speaking bank in the new digital ecosystem. With about two million borrowers and more than 5 billion dollars granted in loans, debt consolidation (grouping several loans into one, reducing the interest rate) is also one of the main business lines of the platform directed by Stephan Vermouth, which works as a meeting point between lenders and borrowers. In the past three years it has shown it is as an increasingly profitable business, with revenues of 80 million euros in 2014, four times more than in the previous year.

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Success stories

Platforms

Companies and projects

OnDeck Another hot fintech company in the US is OnDeck, created in 2006 in New York and now run by Noah Breslow, who replaced its founder, systems engineer Mitch Jacobs, who left the firm in early 2012. Jacobs created his own system of risk analysis taking advantage of a niche left by major banks, not interested in spending time or money evaluating loans under 100,000 dollars.

Its success is based on that and also in its agility: the requests are analyzed in minutes. Once the loan is granted, the cash is available in just 24 hours. Growing at a fast pace since late 2012, OnDeck has gone through several financing rounds (Goldman Sachs, Deutsche Bank, Google Venture) and reached agreements with traditional banks, including BBVA, to do business together.

About to be sold in 2012, it is now a listed company valued at about 1.5 billion dollars.

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Success stories

Platforms

Companies and projects

Fondeadora South of the United States, the market is experiencing a very different phase. Companies are little more than startups and the volume of money raised is much more modest, in an environment of less wealth and unclear regulations. This is the context in which Fondeadora was born, a Mexican crowdfunding platform that has already raised more than 60 million pesos, around 3.5 million dollars.

Created in 2011 to fund student investigations, it expanded its range of action in 2013 to cultural and social projects, offering a small reward to investors and charging a fee over the total amount collected. RenĂŠ Serrano and Norman MĂźller are the names behind this platform, which also has small offices in Colombia, Argentina and Chile, representing around 10% of its business.

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Success stories

Platforms

Companies and projects

Kubo Financiero Also from Mexico, Kubo Financiero is an online platform that since mid 2015 is also a full financial institution, authorized to take deposits, a differentiating factor over its local competitors, such as Prestadero. At the end of the second quarter of the year, Kubo, directed by Vicente Fenoll, had financed more than 2,200 projects with 43 million pesos. After testing its technological and risk assessment systems for nearly two years using its own resources and loans from other institutions, Kubo is now starting to employ the resources of its lenders. It aims to have 25,000 customers within three years.

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Success stories

Platforms

Companies and projects

Comunitae Since last spring, the Spanish market of P2P loans and crowdfunding has its own regulation, which should serve to consolidate a very atomized sector. Comunitae, created in 2009 by Arturo Cerveza, leads the market in Spain, having captured more than 23 million euros from investors. After incorporating in 2015 a line for financing working capital of companies through ‘confirming’, that adds to another one for cashing promissory notes, the company expected to close 2015 with a new three-digit growth. The main claim for investors is its profitability (more than 6% in the case of personal loans) and the minimum amount necessary to participate: 50 euros.

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Success stories

Platforms

Companies and projects

The Crowd Angel This is a platform with a different profile, as it defines itself as the first one that allows to “invest online in technology-based startups with the thoroughness and soundness of venture capital.” Created in 2012 by the Inveready fund, it combines the virality of crowdfunding with a careful selection process, funding only those projects it considers most promising. Directed

by Ramón Saltor, it has completed the funding of 10 projects that have raised 2.29 million euros. It mainly targets accredited investors, who have a minimum contribution of 3,000 euros and acquire a stake in the company.

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Success stories

Platforms

Companies and projects

Bestaker­-Davalor Salud Considered the largest crowdfunding initiative in Europe, the Visión project of Davalor Salud is a very special case. It has used its own platform, an increasingly widespread trend among major projects, and it has raised over 12 million euros from 2,300 individual investors and even the government of Navarra, which has signed a shareholder loan of one million euros.

The project aims to transform optometry, as its promoters have designed a machine capable of analyzing a person’s vision in minutes and at a low cost using 3D videogames.

The machines will be distributed throughout opticians and connected to a database in a clinic. The contributions to the project, now set at a minimum of 1,000 euros, have been

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Success stories

Platforms

Companies and projects

made through its own website (Bestaker) announcing returns, in three or four years time, of up to 17 times the investment.

It was launched by Juan JosĂŠ Marcos before the approval in 2015 of the Spanish law, which currently limits the maximum contribution per project. Without having reached the stage of marketing yet, the company already pays the salaries of more than 30 people. Prototypes are already designed and have been built by Jofemar, and sales should start this year. The company expects revenues of 30 million euros in 2019.

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Success stories

Platforms

Companies and projects

Handiscover Born in Sweden, this is a holiday booking website designed specifically for people with reduced mobility. It follows the model of Airbnb or Homeway, based on the collaborative economy, but takes advantage of the gap left by these platforms for a specific niche of customers: around 10% of the population has physical disabilities. Thus, depending on the degree of limitation, the web created by Sebastien Archambeaud preselects certain accommodations suiting the customer’s needs.

The company opened a round of funding of 55,000 euros that transferred to investors 10% of its capital. It obtained the money 10 months ago through Crowdcube. For now, it concentrates its community only in the UK and Sweden.

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Success stories

Platforms

Companies and projects

Tenoli Mexico’s urban landscape is dotted with about one million tiny grocery stores (‘abarrotes’ or ‘colmados’). Many of them are run by vulnerable women (single mothers, widows...), have a vital role in the lives of hundreds of thousands of families, and represent a traditional way of consumption with increasingly difficulties to remain competitive. Tenoli, which means bridge in the Nahuatl language, tries to integrate these stores into the formal economy by providing them tools to improve.

The first help center, already assisting 30 stores, offers services and workshops (accounting, how to apply for a microcredit, legal advisory for business management...) and provides access to new products that can be sold by these small shops. This reward crowdfunding project has risen through Fondeadora more than 300,000 pesos (16,500 euros), with which it can serve about 60 stores.

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Success stories

Platforms

Companies and projects

Star Citizen There are projects that can only take shape through crowdfunding. And one of them would be Star Citizen, a video game in development phase that has broken all records and has raised nearly 90 million dollars in three years.

It was launched in 2012 with an initial target of 500,000 dollars, but with almost one million believers supporting it through donations, its creators have been gradually enhancing this galactic universe (a virtual reality helmet, development of languages for each tribe of aliens...). There is no completion or launch date for Star Citizen, which currently employs about 300 people. Created by Chris Roberts, donations have been channeled through Kickstarter and, above all, its own platform.

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Success stories

Platforms

Companies and projects

Hemav The boom in the use of drones for different activities explains the launch of Hemav, a Spanish company that offers solutions based on these unmanned aerial vehicles. Created in 2012 in Catalonia by a group of young engineers led by Alex Gomar Manresa, the company turned to crowdfunding in order to strengthen its capital. And the goal was achieved with a remarkable success: Hemav attracted 450,000 euros in less than a week, distributing 20% of its capital between 70 professional and non-professional investors, with an average contribution of 6,000 euros. Its aim is to focus on the agricultural and environmental fields, facilitating decision making in crop management.

The company hopes to produce its first dividends (5% of the capital) in 2016. It the business plan is met, profitability will triple.

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Success stories

Platforms

Companies and projects

Hispabooks Publishing Even though the cultural industry, and especially the publishing sector, has gone through a severe crisis in recent years, it also offers opportunities.

The creators of Hispabooks saw one in the US and UK readers, to whom they will offer contemporary Spanish literature translated into English. Created four years ago in Madrid by Ana Pérez Galván and Gregorio Doval, it has 25 publishing contracts with global exploitation rights. Through Socios Inversores, it closed a round of 210,000 euros, which required a minimum contribution of 3,000 euros. Among its distributors are Amazon and Central Books, and its authors include Lorenzo Silva, José Ovejero, Marcos Giralt and Pedro Zarraluki.

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web

On the

In depth A list of links to other useful tools and resources that you may find useful as a supplement to the information offered on the ‘Alternative finance’ report.

innovation edge | Alternative Finance | centrodeinnovacionbbva.com

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Red Massolution, Crowdfunding Industry Report. 2014.

University of Cambridge, The European Alternative Finance Benchmarking Report.

BBVA Research, Observatorio Economía Digital, Crowdfunding 360º: alternativa de financiación en la era digital. Octubre 2014.

PwC, Capital Markets 2020.

IFM, Shadow Banking Around The Globe: How Large and How Risk?

BBVA Research, Observatorio Económico EEUU, Tecnología financiera: cambiando la manera deahorrar y de invertir.

Garrigues, Una nueva ley para el shadow banking.

BBVA Research, Flash Economía Digital, España: un régimen jurídico propio para lasplataformas de crowdfunding, May 2015.

Business Insider, This is how a new crop of companies is trying to reinvent banking New York Times, Quirky, an Invention Start-Up, Files for Bankruptcy.

Normative Directiva 2007/64/CE Servicios de pago en el mercado interior Directiva 2009/110/UE Business of Electronic Money Ley 5/2015 de Fomento de la Financiación Empresarial CNMV, Plataforma de Financiación Participativa en España SEC (Securities and Exchange Commission) USA, Marzo 2015 Financial Conduct Authority (FCA) en Reino Unido

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1 Trending issues

Summaries of the most relevant news of selected topics that have been published over the course of the period based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

also in this issue

2 Technology trends

In the following section, we outline the upcoming technologies that will change everything, with predictions on what may come of them in financial industry.

3

Innovación

Highlighted in this section some of the actions in which BBVA Innovation Center takes part, on innovation and entrepreneurship. Through this section we also provide direct access to the BBVA Innovation Center events.

innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology

Banking and technological innovation Smaller banks are starting to work with fintech startups to incorporate into their core banking platforms solutions that are technologically agile, as a way to join the digital transformation and innovation in which large banks have engaged in recent years.

Until now most companies that offer core banking technology focused their products and services on the banking infrastructures of big institutions, leaving out of the market smaller banks due to cost issues. Therefore, startups specialized in financial technology have become the new allies of this banking sector, especially those institutions focusing in bancarization, such as credit unions and loans and savings companies deeply rooted in the local economies of many Latin American and Caribbean countries.

New Banking Concepts Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts

Beacons and videos on social networks mark the trend for mobile commerce “New channels, especially social networks as well as other new formats, mainly smartwatches, will act as a lever towards a new dimension, where banking will be contextual rather than mobile,� says Oriol Ros, head of marketing at Latinia.

These new channels will allow banks to promote new platforms to reestablish the relationship that binds them to customers, the key to differentiate themselves from their competitors. According to the conclusions of a study carried out by Latinia about mobility and social networks in Latin American banking, social networks offer an opportunity not only for a greater involvement with existing customers, but as a new fishing ground to capture the customers of the future.

Big Data Future of Work DIY innovation edge | Alternative Finance centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding

The growth of mobile banking among Generation Z The Checking Experience Index study of TD Bank, published in October 2015, shows that mobile banking is playing an increasingly important role in the US, especially among the Generation Z (young people between 17 and 20 years). This new generation of users that financial institutions are trying to capture considers “essential� that their bank has a mobile application.

Crowd Finance App Ecosystem Gadgetology New Banking Concepts

39% of the Generation Z youth surveyed for this study believed that mobile banking is highly relevant for their daily financial activities, compared with 17% of all the respondents and 32% of those pertaining to the Millennial generation.

Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data Future of Work

Social business marketing tips Entrepreneur Stephen Lee, founder of ChariPick shares six key marketing tips for social business:

,

1. Have a focused product offering. Think and refine the product and work the processes around it.

2.

Create a strong brand. Have a mission, a social concept and a brand that the end user can understand. According to Lee, the challenge is to explain the purpose of your business in one sentence.

3.

Care about the impression given to the user. From the website of the company to the images, brochures... everything is fundamental to gain the credibility and trust of the user.

4. Choose your marketing managers. Lee recommends creating a council to help raise the credibility of the organization.

DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data Future of Work DIY

5. Build a social monitoring. Social campaigns are essential, and in order to succeed you should nurture a solid base of followers on social networks.

6.

Understand the costs of services. Lee says there are many non-profit organizations that don’t use an accountant to properly analyze the costs, making it difficult to assume social business strategies and understand how the money translates into a result.

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data

How to motivate the user to use mobile payments Consumer adoption rates of mobile payments are still low, although knowledge about them is improving. Persuading consumers to become regular users of these systems is essential for businesses if they want to strengthen customer relationships and capitalize on the opportunities provided by mobile payments.

Accenture surveyed smartphone users in North America to investigate how to encourage consumers to make mobile payments. Analysis of the survey results reveals how financial institutions, retailers, mobile network operators and equipment manufacturers should educate consumers about the benefits of mobile payments, address their privacy and security concerns and ensure that applications are compatible with a wide range of smartphones and wireless networks.

Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data

Key elements to achieve a good customer-focused strategy How can companies focus on maintaining customer satisfaction without neglecting other processes? Here are five key elements to achieve this: 1. Constant innovation. Having the latest customer service technologies to enhance the relationship established between the company and the end customer. One of the booming strategies is to engage clients in the process, for example in the so-called Alpha projects, to make them feel that the information they provides is truly valuable.

2. Team of experts. Qualified staff is one of the keys to success of any strategy. Therefore, it is essential to have training programs for employees in order to turn them into real experts in their field.

Employees must learn new skills, particularly focused on improving the customer experience. Instill among employees a philosophy that makes every customer feel unique.

Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data

3. Employee engagement. Employees who feel valued offer better customer service, hence training schemes need to be completed with employee engagement initiatives.

4. Listen and learn to build trust. We must learn from past mistakes; therefore, it is essential to have systems to keep track of customers’ answers and feedback on any channel. It is not only important to follow and listen to this information, but also let customers know that the company has listened to them and incorporated their comments. This will generate confidence, the most important element of customer loyalty.

5. Keep the customer at the center of the strategy. Place the customer at the center of the mission, the vision and the values of the company, as the guide that pilots the growth strategy of the business.

Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts

The rise of branded content The so-called branded content will grow three times faster than advertising in the next five years, according to a study from IHS. In 2015 branded content represented already almost half of the market for media advertising, with a growth of 30% over 2014.

Branded content is not new; it’s been around for a long time in the media world as direct marketing initiatives and infomercials. However, it has always been a marginal part. “As online advertising overtakes TV to become the largest advertising medium globally, the challenges of the sector are lowering the value and effectiveness of advertising,� says Eleni Maroulin senior analyst at IHS Technology.

Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data

The access of SMEs to crowd financing methods The paper World Economic Forum’s Global Agenda Council on the Future of Finance and Capital reveals that fintech companies are leading innovation in the financial services sector, offering services tailored to SMEs in the areas of financing and lending. “Financing for SMEs is lacking although there is an ample amount of cash ready to get deployed. But in this case fintech disruptors are increasingly filling the gap banks and investors leave. SMEs can turn to them to get the credit needed to grow their business, as fintech is providing a much needed relief to small businesses around the world,� commented Michael Koenitzer, Financial Inclusion Project Lead at the World Economic Forum and Council Manager.

Given the difficulties accessing traditional financing, SMEs are turning increasingly to the crowd models.

Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance

A solution to generate sales More than 2.5 billion apps were downloaded in 2009, a figure that has been multiplying since then and will reach 224.8 billion downloads in 2016 and 268 billion in 2017, according to a study by Gartner and published by Statista.

Today, the booming market is in the hands of free applications and those applying the so-called freemium model (which are free to download but offer purchases within the app). It is precisely this model the one that will prevail in 2017, the year in which 94.5% of the apps downloaded will follow this strategy.

App Ecosystem Gadgetology New Banking Concepts Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts

Chromebook, computers with an alternative operating system Chrome OS is the operating system developed by Google as an alternative to Windows, OS X and Linux. This operating system stores all programs in the cloud, which is one of the biggest differences of the Chromebook laptops using it. These computers have several shortcuts that link to the software programs dedicated to each function, which are stored in the cloud and open in the computer remotely.

One of the handicaps of these laptops is precisely this difference: all Chromebooks need WiFi or 3G / 4G to run.

Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts

Allow any thing to pay This is the aim of MasterCard, which has announced its plan to turn any device or accessory, from jewelry to keys, into a payment device. The company has clarified that it not only refers to the so-called wearables, but to everyday objects and even fashion accessories. The main pillar of this plan is in the union of the Internet of Things and the world of banking.

To achieve its goal MasterCard is working with Qualcomm and NXP (in charge of Near Field Communication technology), and t o overcome one of the main handicaps for users -security of transactions- it will use a system of tokens to generate random keys with each payment and prevent data theft.

Big Data Future of Work DIY innovation edge | Alternative Finance centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts

Companies maintain their investment in big data projects In its study Practical Challenges Mount as Big Data Moves to Mainstream, Gartner highlights that the investment of companies in big data projects continued to grow in 2015 for third consecutive year. However, a glimpse of deceleration of that growth is starting to show, which according to Nick Heudeecker, research director at Gartner, anticipates a shift in the approach: from big data “to standard practices�. In other words, the standardization of big data is here.

Customer experience, process efficiency, personalized marketing and safety are today the four main reasons why companies invest their time and money in big data. But perhaps the most significant fact is the acceptance of projects based on big data analysis solutions. Up to 75% of the companies surveyed are already implementing -or plan to do so in the near future- technology solutions based on big data.

Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology

Total connection The ongoing technological revolution is leading us to jobs that will not be conditioned by the physical place (as we can connect from anywhere), will be global (as the culture will not determine the relationships with other professionals) and will require us to be connected 24 hours a day.

It seems that programming will be like the “English of the future� for workers, who will be increasingly familiar with terms such as big data, cloud and the Internet of Things.

Robots will also have an important role in the workplace, but their introduction in the labor market will be gradual. It is estimated that not many trades can be fully assumed by a robot, only 5%. Very few workers will be totally replaced by a robot, though many will see how some of their daily tasks are automated: about 60% of the jobs in the US will see how a third of their activities are automated.

New Banking Concepts Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments Customer-Centricity Brands & Branding Crowd Finance App Ecosystem Gadgetology

The innovative role of the ‘maker’ movement Designers, entrepreneurs, computer technicians... anybody can be a maker. However, the base of the makers movement is multidisciplinary and collaborative work, sharing knowledge with other makers, because it can happen that you are an ace with computers but don’t know how to sell. With teamwork you can achieve innovation more easily.

“The education we receive teaches us essential skills. Students are passive and do not take risks. The maker movement -based on STEM education- allows them to participate. It gives them confidence, it teaches them to be leaders. They have to think of solutions to help the society and try to bring their ideas into life. They create, and if the project fails they start again,” says Cecilia Tham, director of Makers of Barcelona.

New Banking Concepts Big Data Future of Work DIY innovation edge | Alternative Finance | centrodeinnovacionbbva.com

SECTION EXPLAINED Core Banking Platforms

App Ecosystem

Here you will find articles related to basic IT infrastructure which supports main banking processes, including technologies such as SOA, WOA, digital platforms, etc.

There are 5 main components in the current Apps Ecosystem: connectivity, devices, OS platforms, app platforms, and apps; along with related products and services providers (MEAPs, Mobility as a Service providers etc.).

New Formats

Gadgetology

Based on design principles focused on customer insights, New formats offers retail banking customers more channels which are more granular and highly functional; a consistent, simple, and collaborative universal user interface; real-time intelligent processes; highly personalized solutions; and is open to social networks and the web. Examples of these new formats are provided here.

Gadgets are everywhere and it seems that there are more and more each passing day. We are moving towards a contextual computing environment and, as a result, the number and functions of gadgets are poised to grow (thanks in part to the internet of things). In this section, we share a word or two about gadgets.

Mobile Banking

New Banking Concepts

Relevant news about mobile banking platforms (which enable customers to access financial services, such as transfers, bill payments, balance information and investment options) can be found here.

Banks around the world continuously explore new approaches to strengthen customer relationships, both in the virtual and the physical worlds; including Virtual assistants, natural language search tools, new marketing tools, different segmentation (children, gen Y,…) etc. This section will cover news along these lines.

Social Business Social Business is the integration and use of social technologies by an organization, which includes social media/work media, crowd listening, crowd intelligence, crowd working, etc. Stay tuned to see how this space will evolve.

Mobile Payments The process of using a hand-held device to pay for a product or service, either remotely or at a point-of-sale. Up to date information is provided.

Customer-Centricity

Big Data It been said, “what gets measured, gets managed.” The Big Data trend offers organizations an opportunity to manage just about everything. Here we’ll share stories about Big Data capture, curation, storage, sharing, analysis, and visualization.

Future of Work

Customer-centricity is the organization’s understanding of customers at a granular level and the capability to create, deliver, and capture different kinds of value propositions to different groups of customers, based on customer understanding.

Work, increasingly, is not about where you do, but what you do. The future of work is more flexible and collaborative; and values are going to play an important role, especially corporate values. The way we work is changing fast … stay tuned.

Brands & Branding

DIY

Marketing in the modern world have many channels to reach consumers at their disposal: (smart)phones, tablets, PCs and (smart)TVs and different ways to communicate their brands, such as traditional ads, banner ads, SMS/MMS, etc.

Do It Yourself (DIY) refers to a trend of people doing “projects” to either be creative/recreational and/or cost-saving activity. This trend becomes really interesting as new technologies enable new functionalities such as 3D printing, health/wellness, etc, which help empowers individuals; this may even change the we think about businesses in the future.

Crowd Finance A process where small amounts are money raised for a definite purpose, Crowd finance sources funds collectively from individuals. In other words, the money comes from a wide range of individuals and not from a single entity. Read more about it here.

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Technology trends The following section outlines the upcoming technologies that will change everything, with predictions on what may come of them in financial industry.

Virtual reality that you can smell and touch You look around and see the beach, the fountains, the gardens and the pool of a luxury villa. It smells of sea and flowers, and the sun hits you back. You feel the heat.

You almost want to put some sun lotion to protect your skin. The teleport cabin of InmediaStudios , looks like a shower, but it is a gadget that combines virtual reality with odor and temperature changes to offer more immersive experiences.

The teleportation cabin is an internal project, but it is certainly not the first idea of this Spanish company to ‘expand’ virtual reality. InmediaStudios participated in the promotion of Tomorrowland, a Disney film in which the main character travels through time using a coin. The company used Arduino to develop a currency that was connected to a pair of virtual reality glasses, and offered users the ability to become the star of the film. It also replicated an action scene for the film Mission Impossible 5, in which Tom Cruise clings to the surface of an airplane during takeoff.

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Neurodigital Technologies turned to crowdfunding to fund its GloveOne, a pair of haptic gloves that transmit sense of touch in virtual reality environments through vibration. When testing GloveOne with a simple shooting game, the feeling of immersion in virtual reality is amplified: you look at your hands and don’t recognize them; you see huge robotic gloves that match the movements of your arms; you point a machine gun with your eyes, and destroy an army just pointing with the fingers...

The gloves allow to “feel and touch allow any object through a screen or virtual reality glasses”, explains Luis Castillo, founder and CEO of the company. “They are wireless and have ultra-low latency, allowing to transmit faithfully to the brain sensations of touch.”

in the virtual reality market: no devices simulating the sense of touch. The company has been developing GloveOne for a year and a half, and the final version will arrive in February 2016, with more accuracy and compatibility with the leading video game platforms in the market. “We aspire to be the tactile Oculus Rift.”

Virtual reality has not reached the homes yet, but many companies already rely on it to launch projects. The success of GloveOne greatly depends on the popularization of virtual reality. But at Neurodigital Technologies they have no fear. “We have a great advantage: our device also works without glasses, so we do not depend on the success of virtual reality,” says Castillo.

The inspiration for this project, explains Castillo, came when they used virtual reality in the treatment of a patient with Alzheimer’s. “We realized that it didn’t work. The patient tried to touch, and when he realized that he couldn’t, he stopped accepting the therapy,” he says. They saw there was a gap

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We must keep our eyes open to innovación in devices and software We must be fast and adapt to the future of the industry

Now there are devices that have a powerful technology that allows us to plan and know what we will use.

Three years ago this was unthinkable

Ana Galán, head of PR at InmediaStudios

Both are convinced that virtual reality is here to stay. “We believe that virtual reality has many practical uses beyond gaming,” says Galán. “We foresee a great future for it in education and training”.

She explains that there are currently engineering companies that use virtual reality to recreate projects and that it is a technology also interesting for the tourism sector. “The content is getting better, and the glasses are getting better,” she concludes.

Castillo also sees it very clearly: “If not, bankrupt companies like HTC wouldn’t be investing in virtual reality. This can’t be stopped.”

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Virtual reality ‘Made in Spain’ 2016 will be the year of virtual reality. That’s what at least experts believe. The technology is now mature enough to reach homes, with major companies like Samsung, Sony, Oculus or Google investing strongly in their models of virtual reality glasses. We have been listening for decades that virtual reality is the future, so we just have to wait a few more months to see if this time it is true or will remain being science fiction.

Oscar Hormigos, founder of The App Date, has launched The VR Date, an event focused on virtual reality that is held at the Espacio Fundación Telefónica in Madrid. In the two editions that have been held so far, The VR Date has gathered some leading Spanish companies in virtual reality.

There is no data about the volume of money moved by this emerging sector in Spain, but Hormigos states “all companies in the Ibex 35 have done or are doing virtual reality projects.”

“This has just started; there are many projects in Spain with no more than a year of life. It is a young revolution,” says Hormigos.

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Many Spanish companies have added virtual reality and 360º video to their projects, and “Spain is a leader in content generation”. “There are companies like Google that need content, and they order it to Spanish companies because they are the best,” he adds.

Hardware manufacturing is another matter. There are some companies that make their own glasses or products related to virtual reality, but is not common. “It is not comparable with the United States,” explains The VR Date promoter.

ge from the 2 euros of the Google Cardboard to the 90 euros of a model designed by Samsung, offering a more immersive experience. The price difference compared to the PlaystationVR (400 euros) or the Oculus Rift (price to be determined) is big, but Hormigos believes that the most inexpensive devices will be popular. “For 90 euros, I would say that Spain will be within the top 5 countries of penetration of virtual reality,” he forecasts.

Spain has few developers and manufacturers, but it has some. Does it also have a virtual reality audience? Hormigos believes so. “The smartphone has a 81% market penetration in Spain,” he says, “and the leap from having a smartphone to having virtual reality is very small.”

The cheaper virtual reality devices take advantage of the screens of mobile phones and turn them into virtual reality glasses. Prices ran-

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Pre-register for BBVA Open Talent 2016 The 8th edition of the BBVA Open Talent is about to start. If you don’t want to miss it, you can already sign in and pre-register your project in advance to participate in this pioneer challenge for startups.

You just have to complete a simple form, so we can know a little more about your startup.

Once registered, you will be notified when the next round begins, so you can then give us all the information about your project and be selected as one of the finalists of BBVA Open Talent 2016.

Last year more than 50 companies joined us in the final phase of the editions in Latin America, Europe, and USA/rest of the world, with the winners of each region participating in acceleration programs in London and Mexico.

With this international program BBVA supports entrepreneurs and startups that are working on innovative projects related to financial technology. BBVA is looking for projects that benefit the business and social environment or promote the financial inclusion of people with weaker economies.

Don’t hesitate and pre-register your project now!

Welcome to BBVA Open Talent 2016

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MEXICO

Mexico opens a new Innovation Center The 33rd floor of the brand new Torre BBVA Bancomer in Mexico City hosts the Mexican headquarters of BBVA Innovation Center “The inauguration of this space will connect the ecosystem of innovation and entrepreneurship, allowing us to promote cooperation and integration in this ecosystem,� said Hugo Najera, CEO of Digital Banking BBVA during the opening event of the center. innovation edge | Alternative Finance | centrodeinnovacionbbva.com

MEXICO Juan Carlos Arroyo, director of the Innovation Centre in Mexico, stressed the importance of this new meeting point, at a time in which the financial industry is going through a transformation process that requires them not to stop.

To know more about the innovative and entrepreneurial ecosystem in Mexico, the Innovation Center has published two new ebooks analyzing the opportunities and obstacles that must be overcome in the country.

Download here the ebooks (in Spanish): Hablan los protagonistas: 33 innovadores mexicanos and Panorama del ecosistema innovador y emprendedor en MĂŠxico .

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INNOVAFACE

Innovaface: to what innovator do you look like?

Steve Jobs, Arianna Huffington, Larry Page...

Who do you think you look like? With the new application launched by BBVA Innovation Center you can discover your true personality in the world of innovation.

Are you a hardworker or a more creative type? Do you feel you have a more competitive or collaborative spirit? Everything counts if you want to discover your alter ego in the innovation ecosystem...

Play!

You can be surprised!

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Blockchain technology The blockchain technology – a peer-to-peer public accounting system maintained by means of a distributed network of computers which requires no central authority or third parties acting as intermediaries – is coming back strongly after the scandals involving bitcoin, its most famous currency. The technology, which has the support of major banks, seeks to build a fully decentralized financial system. innovation edge | Alternative Finance | centrodeinnovacionbbva.com

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Personal financial management Personal Financial Management (PFM) tools allow users to view on their mobile devices all their accounts, transfers, movements and bills in order to better control their daily operations. Users are asking banks to provide them with tools and services that help them manage and monitor their funds 24 hours a day, seven days a week. innovation edge | Alternative Finance | centrodeinnovacionbbva.com

Financial technology companies How is the financial sector evolving with the support of technology? What role are the so-called fintech companies playing in this transformation process? Technology is changing our daily lives and this revolution also affects the financial world. Commitment to the development of innovative solutions that revolutionize the world of services and products is one of the new values of the sector. In this ebook you will find a detailed picture of this transformation.

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Cryptocurrencies Are digital currencies the future? There is much talk about bitcoin and blockchain technology and how it is revolutionizing the financial sector. If you want the entire world of digital currencies at your fingertips you can read the previous issue of Innovation Edge to learn how to use digital currencies and leverage the technology behind them.

Download this issue of Innovation and Edge and learn everything about the bitcoin ecosystem, or if you prefer you can see a video animation to find out how these currencies work.

innovation edge | Alternative Finance | centrodeinnovacionbbva.com

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Digital wallets Goodbye to cash? Banks, technology companies, credit cards and payment processing brands, smartphone manufacturers and mobile operators are ready to conquer the digital wallets market, a business that seems unstoppable and is closely linked to the boom of mobile telephony. The world seems to be ready to start replacing cash and money wallets for mobile devices. innovation edge | Alternative Finance | centrodeinnovacionbbva.com

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BBVA Innovation Edge is the result of a collaborative work done by the people who are involved in innovation at BBVA Group.

Contributors to the issue: 路 Reyes Bolumar 路 Carlos P茅rez 路 Gustavo Vinacua

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