Benoît Legrand, CIO of ING and CEO of ING Ventures, discusses the Dutch bank’s strategy to keep it – and its customers – out in front.
We’re used to the concept of a bank for millennials, but ING is the original millennial bank. Born during the internet boom of the 1990s it’s grown up during two decades of change and uncertainty, driven to stay one step ahead – too far ahead sometimes perhaps. Who remembers the payment wallet Yucom that it teamed up to create with British Telecom 20 years ago?
“Innovation in financial services can go very fast once it reaches a certain stage,” says Benoît Legrand, who combines the role of chief innovation officer at ING with that of chief executive of ING Ventures, the bank’s venture capital arm. And the Youcom wallet may have been a little too prescient. “Often there is a disconnect between what the customer is able and willing to do, in terms of changing behaviour, and what the technology can offer.”
But that hasn’t deterred the bank from being visionary – and now that’s more important to its strategy than ever. With the financial services market crowded with challengers, it’s clearly focussed on keeping the advantage with its Think Forward enterprise-wide plan, which is about ‘creating best-in-class, omnichannel financial platforms that offer services beyond banking’ . That means embracing and shaping through selective investment, advances in big data, artificial intelligence (AI), machine learning (ML), deep learning and a host of other technologies that trip off the tongues of industry insiders and consumers who, five years ago, were asking ‘what’s fintech?’.
What characterises these new technologies, and makes them so compelling for banks, says Legrand, is that they can reduce risk.
“Digitisation tools make a lot of sense in an industry where there is a great deal of complexity and huge data volumes,” he says. “For one, it helps to identify money laundering and other fraudulent activities, and it helps with credit risk and risk management in general. The core of banking is really ‘just’ risk management, and risk is a function of knowledge, which in turn is a function of the data you have.”
Open and collaborative
Being able to access more data, and draw insights from it, also leads to better customer-oriented applications and the personalisation of banking – something the ING Labs, which bring disruptive ideas to market by working on blockchain, AI, open banking and other technology initiatives, help to deliver. Among many fintechs to emerge from the Labs is Katana, an AI tool that helps bond investors to easily find and compare interesting trade ideas. In this instance, traders are the customers who benefit after Katana became the latest idea to be spun out of the labs as an independent fintech, backed by ING Ventures, earlier this year.
Legrand says ING is happy to share ideas and see its work inspire others – the goal being to empower people and business. It’s manifested in ING’s open and collaborative culture and embodied in ING Labs. These creative centres, located in Amsterdam, Brussels, London and Singapore, bring disruptive ideas to market by combining ING’s knowledge and network with the knowledge and skills of other organisations. ING is committed to collaborating on existing platforms and creating new ones, whether working with startups, scaleups, researchers, entrepreneurs, or other corporates.
The framework for all this – the Think Forward strategy, which has been running since 2014 – has seen ING partner with many organisations to bring disruptive ideas to market faster. Among those, it has worked with Deloitte, the Centre for Economic Policy Research (CEPR) and Amazon Web Services with the aim of gaining a deeper understanding of financial needs and behaviours and then using those insights to help people make better financial decisions.
In ING’s words, the Think Forward strategy ‘aims to create a differentiating customer experience by simplifying and streamlining our organisation… striving for operational excellence… enhancing the performance culture within our company, and… expanding our lending capabilities’.Transparency is another defining characteristic of the strategy.
“We have three different platform plays,” says Legrand. “The first is to transform ING, itself, into a platform bank, and build all the different services that a customer might need, which includes connecting to other banks and service providers when they can strengthen our proposition. The second, in parallel, is we’re building our own, independent platforms such as Yolt and Cobase, which we think will generate plenty of business in the coming years. And third, we’re using platforms outside ING.”
Legrand recognises that customer needs are evolving fast, and that ING must keep on accelerating its own transformationto stay in front. This was spelled out by ING in 2016, when it defined key actions to support its foundations, businesses, and future vision. The foundations would be improved by simplifying and streamlining global support functions to help ING collaborate better across borders and innovate faster. Complementary businesses would benefit by being united and therefore able to offer those ‘services beyond banking’. And finally, the future vision would be served by creating a ‘united ING’ offering a single experience to people and businesses worldwide.
The changes signalled by the revised Payment Services Directive (PSD2) in Europe, and other open banking initiatives, have created the right environment for innovation and collaboration, and ING has been quick to respond.
“We saw PSD2 as an opportunity, not a challenge,” says Legrand, “and we were ready to seize the initiative because innovation and thinking ahead are part of our DNA. Yolt is a good example of this.”
Backed by ING, Yolt is a money management app that helps people keep track of their finances and make better decisions by offering them a smart and aggregated view on their accounts. Launched in the UK in 2016, it was the first example of a third party provider connecting with all of the UK’s largest banks. Yolt’s single dashboard integrates users’ bank accounts (including savings and credit cards), and can be accessed by customers in the UK, Italy and France. It enables, for instance, users to see how many days are left till pay day, predicts balances according to direct debits, and highlights changes in spending patterns.
Yolt now has more than 1.3 million registered users, says Legrand, and at one time it had more than 70 per cent of all open banking volumes in the UK. Since November, it has aggregated accounts for digital bank Revolut, allowing customers to analyse transactions, set budgets, monitor spending and manage investments in one place. Yolt is also partnering with Raisin, the pan-European savings marketplace.
“Retail might be more visible, but we are also quite active in the wholesale banking market,” says Legrand, referring to the multibank platform Cobase, which he describes as another ‘concrete application of open banking’. Cobase provides treasurers of corporates a single access point to their bank accounts from various financial service providers as well as other financial products and services.
“Companies that hold accounts with different banks face many inefficiencies,” says Legrand. “They have to use different portals to interact with their banks and other financial service providers, and often multiple enterprise resource planning connections have to be maintained. The more different banks and accounts a company has, the more complex it gets. Cobase unravels this.”
ING’s commitment to joint ventures and fintech investment is evidenced in many other projects. In addition to Katana, ING Ventures currently holds about 30 investments, including in FinCompare and Eigen Technologies. FinCompare is a German financing platform for SMEs, and uses automation to create financing solutions for customers’ specific needs or creditworthiness. Eigen is a London and New York-based provider of natural language processing (NLP) technology, and will help to develop use cases for retail and wholesale banking.
Across all its projects, ING is making the most of opportunities presented by open banking and fintech progress.
“Our mission is clear,” says Legrand. “We must always stay ahead to empower people to stay ahead in their lives.”