Rabobank’s history of innovation

ACORN

FOUNDED: 2020

HEADQUARTERS: UTRECHT, NL

Acorn is a digital platform that empowers smallholder farmers around the world to access the voluntary carbon market. Acorn supports smallholders to transition to agroforestry – where trees grow among other crops, leading to better soil quality and more sustainable farming. This provides certified, nature-based carbon credits, which Acorn offers to responsible corporates to help them reach their climate goals.

The startup has already enabled more than 100,000 farmers to put their land to good use, covering over 135,000 hectares of land – the equivalent to nearly 14 cities the size of Utrecht. Acorn supports smallholders by monitoring the biomass growth, issuing carbon credits and ensuring that farmers receive 80% of the €3.5mn of total revenue generated so far.

Carbon Insights

FOUNDED: 2021

HEADQUARTERS: UTRECHT, NL

Carbon Insights is a feature within Rabobank’s banking app that helps retail clients make more carbon-conscious decisions. In practice, Carbon Insights leverages payment data to give app users insights on their carbon footprint and helps them understand where it comes from. Carbon Insights also gives suggestions on actions customers could take to reduce their footprint.

Initial results show that more than half of users became more aware of their CO2 impact and a substantial number of long-term users have made more sustainable decisions. With this in mind, Rabobank continues to further scale this solution while designing for behavioural change.

“At this point, more than 60% of our innovation projects are geared towards that transition,” Leurs elaborates, “towards making the food value chain more effective and more sustainable in the future.”

Empowering the energy and agri-food transitions

In the same report, the FAO also pinpoints energy security as a major global concern. The two are very closely linked; food production is a resource-intensive industry, meaning fluctuations in wholesale energy prices – as we have been seeing since the beginning of the war in Ukraine – have a major impact on farmers, growers, and food producers.

“Agri-food systems are becoming more energy-intensive,” the FAO report says, “and this has implications for food prices, as well as for the environment. On the one hand, several studies have highlighted the relationship between energy and food prices, and the recent hikes in food prices have been pushed up by increases in energy prices. On the other hand, it has been estimated that almost a third of the emissions of the global agrifood system comes from energy-related activities.”

One thing we can do is reduce the amount of water needed for growing crops, and transitioning to renewable energy wherever possible within the food value chain. But the FAO also highlights the source of energy for cooking as a problem: in 2019, a third of the global population relied on wood, charcoal or agricultural residues for their household cooking needs – a demand that, in some cases, outstripped the abundance of natural supply.

Explaining how Rabobank empowers the energy transition, Leurs says: “We are one of the biggest financiers of wind farms around the world, but we also have the obligation of making sure that we bring clients with us in making this huge transition to a more electrified world. In energy security, our knowledge is younger than it is in agri-food, but we can still have a major impact and we know we already have a strong position.

“That’s why we have chosen those two – agri-food and energy – as the main transitions to bank on for the future. We know that, if we do a good job with our clients in those two areas, we will also do a good job for the planet.”

How is Rabobank fostering a culture of innovation?

Leurs joined the business in October 2016, and since then, he knows that there have been improvements. Even from the beginning, Rabobank has always been an innovative organisation: it was the first bank to offer internet banking and ATM withdrawals to its clients in the Netherlands; and it pioneered a payments system called iDEAL, which has become instrumental to transactions, taking less than a decade after launch to capture 50% of online payments made in the country. But it hasn’t always got everything right.

“We have made lots of mistakes and had quite a lot of setbacks,” Leurs freely admits, “but we have tried to learn from every single one of them.

“When I joined Rabobank, it already had a strong history of innovations. But my perception coming into the bank was that innovation was very disorganised. We were doing lots of different things in different places, and it was very tech-driven. Innovation was part of our IT department, and there was no structured way of bringing innovation to fruition. In that respect, we moved from being an organisation of inventors – people who create technical solutions without much coordination – to being an organisation that has a mature innovation governance with seasoned innovation professionals.

Leurs says that, in those days, innovation within Rabobank lacked direction. “We collaborated with tech startups and tried a bunch of different things just to generate power and enthusiasm. However, we learned that you can only be successful and impactful on innovation when it’s linked to the mission and strategy of your organisation,” he says.

In the intervening years, Rabobank has worked on a number of different approaches. One is to ensure that every innovation project is intrinsically linked to the bank’s mission and strategy – and to those important transitions of energy security, food security, and financial inclusion for all; the other is to view innovation as a craft.

“I believe you can learn innovation, but you need discipline and structure. Things don’t just happen by accident. We’re not all Steve Jobs. You have to get a sense not only of how you generate ideas, but also how you validate (or invalidate) them quickly and integrate them with the mission of the organisation.

“We have organised ourselves quite well. We started with the concept of ‘businessled’ innovation, and we said we’re not going to build projects outside the organisation that are not being inherited by the mothership. We’ve really set business-led innovation as the key.”

Building ‘the machine that creates the unicorns’

Within Rabobank itself, there are a number of separate work streams that help the bank dial-up its innovation efforts. The first is called the ‘Innovation Factory’. Rabobank has recognised the need to ‘industrialise’ innovation, so it has assembled a talented team of innovation experts with experience in founding startups, building and scaling corporate ventures and shaping partnerships with fellow innovators. These experts accelerate Rabobank’s internal ventures including scouting and shaping partnerships via its Open Innovation activities. “It is the machine that creates the unicorns,” he jokes.

Then the company has a corporate venture fund, Rabo Frontier Ventures, that is investing in early-stage fintech companies and several venture capital funds, as well as an open-innovation ecosystem that allows it to bring external innovators into the business and give them the chance to start working with Rabobank.

“We have organised innovation portfolio management,” Leurs continues. “We have a funnel where we’re constantly looking at how many innovations we have and in which phase of development – whether they’re just starting an innovation project or scaling up within the organisation.”

Innovation has its own centralised budget allocated that is ring-fenced, meaning other tech projects within the bank don’t eat into innovation. The bank’s innovation leads are connected to board members, ensuring that there’s corporate buy-in for major innovation projects.

And the bank isn’t afraid of letting go where it needs to: take the example of Peaks, a retail investing app where Rabobank was an early-stage backer. Rabobank itself was not able to turn the company into a success and, recognising that there was a better place for Peaks, chose to sell its stake in the company to allow the fledgling fintech to fly.

“With the challenges that we face in the world today, there’s always a need for innovation, so I don’t think we’ll ever slow down. We will always need innovation to continue making those energy and food transitions a success, so I don’t see a world where we will never need to innovate.

“Of course, that doesn’t mean you can’t be sensible with what you spend and what you get out of that expenditure. We’re super-realistic. If we see that our innovation projects aren’t moving fast enough throughout the year or we’re not going to use up our allocated budget, we give it back to the organisation. We don’t need to use up our budget to show that we’re successful. But I think it would be naive to think you can just pause your innovation. I don’t think that’s an option in today’s world.”

Innovation is embedded in Rabobank’s DNA From Leurs’ perspective, this cooperative mentality makes Rabobank ideal for outside partners to deal with – whether that’s startups, consultants, or innovation enthusiasts. That doesn’t mean that new relationships are always seamless, though. Any organisation of Rabobank’s size would find it difficult to integrate with young, agile entrepreneurs – particularly those that are used to moving at pace, and less experienced in dealing with a heavilyregulated industry that has internal safeguard layers, protocols, and approval procedures.

“We have had a number of successful collaborations, but we have also had some failures around collaborating with startups, too. We always start with good intentions, but, sometimes, it can be a difficult thing to marry the small with the big.”

Leurs believes that innovation is baked into Rabobank’s DNA. It’s an integral part of the way it does business. “I honestly think that the cooperative culture in the organisation translates into our people being willing to work with teams, to help each other get results. That, in the end, is what you need to get great innovation and great new ideas.”