ING has a habit of being ahead of its time. Well before anyone uttered the word ‘disruption’, the Dutch bank was challenging accepted models and introducing new channels.
Its digital banking service, ING Direct, launched 20 years ago and it was one of the first to anticipate the open banking revolution with its home-grown aggregation app Yolt on the UK’s new Open Banking platform and payment app Payconiq in mainland Europe.
Transformation and reinvention are now so embedded in the bank’s culture, says ING’s chief information officer Benoit Legrand, that it’s changed its DNA.
“Our culture means we see opportunities rather than threats,” he says. “It’s a mindset that helps us launch new products and services that are in tune with the times and customer needs.
“Banks are facing some big challenges,” he adds. “One is to transform the linear business model into a platform-oriented model. All businesses now talk about ecosystems and how to tie everything together with technology. If we don’t take this seriously, and do it quickly, we could be overtaken by a host of technology challengers.”
With a history of self-disruption, ING doesn’t plan on being one of the ones left behind. In fact, its ambition now is to transform itself into the ‘go-to platform for the new economy’ with custom-built solutions to the everyday needs of customers in both retail and, importantly, wholesale, where there has been less innovation overall.
Legrand believes that will change as more banks build platforms and refine their capability.”Eventually, what you will see is a blurring between wholesale and retail,” he says. “Because while at one end of the platform you might have retail customers, our wholesale customers are also offering their products there. There are a lot of opportunities to investigate in wholesale banking:’
This growing level of integration as well as financial cooperation is a key part of ING’s Think Forward strategy. Launched in 2014, chief executive Ralph Hamers began accelerating its implementation in 2016, now supported by improved data collection and partnerships with around 150 fintechs.
Ultimately, Think Forward is about custom-built services for customers, says Legrand. That means recognising that they are now in charge – thanks to greater autonomy over their data conferred by regulatory changes – and expect higher levels of speed, availability, functionality and flexibility. Banks must therefore use technology to help customers make all sorts of decisions about their financial life – when they want and how they want.
There is no shortage of valuable customer data to draw on in order to achieve that, says Legrand. But the key is how banks use the data so that customers’ interests come first, thus creating a virtuous circle that reinforces relationships, instils trust and generates repeat business.
“It’s fine to use data to help sell a product. But we also need to flip the perspective and use data to empower customers and help them manage their own finances,” says Legrand. “This will create a different relationship and a different type of value, based on data. The viewpoint and experience of the customer is what matters in the long run.”‘
To that end, he welcomes the General Data Protection Regulation (GDPR). “We think it’s an interesting opportunity to place the customer even more firmly in the centre of everything we do and build tailored services where customers have more control over their money and their financial future,” he says.
At the same time, though, he questions why the GDPR applies to all organisation holding information on EU citizens, but the Revised Payment Services Directive (PSD2) only forces the banks to share it at customers’ request.
“Why don’t we do this with other industries? Why not Google? Why not Facebook? We should be able to integrate everything, with the customer’s permission:’
Platforming for all ING isn’t the only bank to question why it is playing against the GAFAs (Google, Apple, Facebook and Amazon) on a tilted playing field, but that hasn’t stopped it seizing opportunities under Open Banking. Volt is an obvious example.
Founded by ING, it grew up in its Accelerator programme and was
launched in the UK in 2016. The app allows users to manage their money in one place, regardless of the bank or the financial service. It is integrated with RBS, Lloyds and Starling Bank and recently connected with Monzo, the UK’s largest challenger bank, while energy bill comparison and international money transfer have also been added to the platform. Take-up has been impressive and Yolt now has 250,000 users.
“We’ve gained a lot of traction with an
open application programming interface
(API),” says Legrand.”Because we were the
first one on the Open Banking platform
in the UK, we’re in a very good position and are now thinking about taking it into other countries. There’s a lot we can do, a lot of places we can go.”
UK consumers have certainly taken to financial apps in a big way. According to Volt’s research, 89 per cent of Millennials use financial apps as well as nearly 50 per cent of those over 55. It works closely with the user community, developing features in response to user feedback and suggestions, so while the same research suggested consumer’s understanding of the Open Banking framework that allowed it to happen was very limited, they are nevertheless enjoying the new flexibility and democracy it brings.In addition to Yolt, ING has stormed the all-in-one app market with Payconiq.
Launched in Belgium in 2015, the app allows users to make direct payments online, in-store and peer-to-peer. Payconiq is compliant with the revised Payment Services Directive (PSD2) and has grown rapidly, expanding from Belgium into Luxembourg, Germany and the Netherlands. In 2018, it further strengthened its reach through a partnership with the Dutch payment solutions provider Buckaroo.ING’s wholesale banking divisions have also been busy innovating, redefining the bank’s customer relationships and Al Change is rooted • in our DNA… we see opportunities
rather than threats digitising business services. Katana, (named after a samurai sword famed for its sharpness, if you were wondering), uses artificial intelligence to improve pricing decisions in bond trading.
“Katana provides views on quotes,” says Legrand. “It’s an enhanced capability that we sometimes call the bionic bank. You still have traders, but they are helped by enriched data so that they can make more informed decisions. Katana learns from the history of hundreds of thousands of trades and then makes predictions or suggestions for the trader to act on.”
Then there is new business tool Cobase, which Legrand describes as a ‘Yolt for treasurers: It’s a multi-bank platform that provides a single point of access for all bank accounts and financial products and services, eliminating the inefficiency of having different bank portals and distributed systems for businesses to remember and navigate, instead bringing everything under one roof.
Cobase, Yolt and Payconiq typify the kind of innovation that ING Ventures, a €300million investment fund set up by the bank in late 2017, would like to encourage by entrepreneurs.
While other banks initially dismissed fintechs, Legrand says they have now entered a new phase where the advantages of working together are clear. Fintechs can create a minimum viable product, but it’s complicated and costly for them to acquire customers. Banks, on the other hand… “Well, we alone have 37 million customers,”says Legrand. “We’re operating in 40 countries, have 51,000 employees, and huge knowledge and experience. So, this is a big benefit that we can bring to the partnership table.
“Today, we have 150 different partnerships with fintechs of all sizes. We also have an investment side, a substantial venture capital fund and are spending a lot of money working jointly on innovation projects.
“This is as much cultural as it is commercial and financial.”
■ Benoit Legrand will be giving ING’s view on technology trends at Money20/20 Europe 2018