OPEN BANKING EXPO IDEAS, CONNECTIONS AND DEALS IN OPEN BANKING
Issue 4_Aug/Sept 2019 OPENBANKINGEXPO.COM
THE BEST OF EUROPE PAGE
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INNOVATION LAG Breakfast briefing speakers debate sector progress
SME PROMISE Underserved and undervalued - it’s time for change
CANADA’S JOURNEY The financial sector takes steps towards Open Banking
THE BIG INTERVIEW ING head of transaction services on total transformation
Up Close
THE BIG INTERVIEW Mark Buitenhek ING
Structural integrity While some banks have barely dipped a toe in the Open Banking pond, ING has jumped in and is changing its entire operation in anticipation of the future. Joe McGrath speaks to Mark Buitenhek, the company’s head of transaction services. Joe McGrath reports
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hen it comes to speed of adoption, few European brands have moved to embrace the opportunities from Open Banking like ING. In April, the company announced its latest commitment, launching three new APIs to the French consumer banking market. The bank has been keen to make plenty of noise about its collaboration programme with European fintechs – while some of its competitors have opted for a more cautious approach, concerned about the implications for market share. But for ING, it goes further than the spirit of co-operation. It sees Open Banking as the dawn of a new era, where the very corporate structure of banking institutions will have to change to adapt to the growing and changing demands of customers. “We firmly believe that banks of the future will look completely different,” Mark Buitenhek, head of transaction services at ING, tells Open Banking Expo Magazine. “We embrace an open platform strategy. Having Open Banking capabilities or API-based capabilities
is the only way forward,” he explains. The ING strategy is built upon the expectation that customers will eventually embrace multi-channel financial services through brands with which they have a close affinity. “I have been in banking for 30 years, says Buitenhek. “I started when we had paper and cheques. It is important that we keep looking outside of our industry for ideas. Talk to tech companies who are ahead. Speak to companies in China, in Asia.” Buitenhek says he has encouraged his colleagues to watch how products and services have evolved in other sectors, outside banking, as these may have clues to what tomorrow’s bank will look like. “Don’t just stay within the bank and understand banking products. Have an eye on what is happening outside of your world,” he says. Overcoming market challenges However, Buitenhek warns of a number of market challenges facing established businesses. “For a very long time, the banking industry has worked with developing everything on our own, standardised and in large groups.
What we do see is that if you bring something that adds real value, companies like Revolut and TransferWise will find a place where there is great friction in the products that banks are offering. Mark Buitenhek
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It has been very successful but the way we are now able to connect with each other has dramatically changed. “It is changing that attitude and that mindset. It is a completely different way to look at the world. We tackle this by creating a more agile organisation,” he explains. ING has created multi-disciplinary teams throughout the organisation with lots of autonomy, which Buitenhek says enables them to mimic what start-ups are doing. He cites legacy issues as a challenge facing banks as they work to create a more flexible architecture that can accommodate APIs, as well as the regulatory environment and cyber security. “We are struggling with all these elements, as are regulators. Who is under the supervision of a regulator? If you are working with a fintech, you will immediately move to a public cloud. In some countries, regulators don’t permit the use of public clouds,” he says. “Those are the kinds of obstacles that you need to overcome. It is also a fine balance with the customer experience. You cannot afford any disruption right now.” Steering future regulation PSD2 was introduced at a time when innovation in the banking sector was stagnant. Opening it up to fintechs and third party businesses would allow legacy banks the opportunity to innovate and compete with the rising challengers. However, Buitenhek argues that breaking open the industry in this way, while institutions remain liable for data, has its own issues. He questions: “How do you ensure there is a secure world? If you think of an open and blurry world where everything connects with everything – how do you regulate that? The balance between customer experience, one click, and security is getting much more attention right now. Aug/Sept 2019
Up Close
“Things are not being stolen at banks anymore. The whole debate is about whether your card is being listed on a website somewhere. How do you protect against that? I can see all these things happening at the same time. It will take some time to find that balance and come up with regulatory protection that makes sense.” Consumer benefit In spite of the advances made in the Open Banking sphere, particularly in the UK, consumers have been slow to embrace what is on offer. According to Buitenhek, it will take time for them to make the move to new services, or from incumbent institutions which have spent years winning their trust. “What we do see is that if you bring something that adds real value, companies like Revolut and TransferWise will find a place where there is great friction in the products that banks are offering,” he says. “It is just waiting for someone to step into this space. Our vision is 20 per cent to 30 per cent of the market will start using those services, but it will take some time.” Citing recent studies conducted by both ING and Mastercard which highlighted the hesitance among the majority to switch away from a trusted bank, Buitenhek says that younger people are far more willing to bank with a ‘non-bank’. “The only thing that incumbents can do is prepare themselves and become so good that people don’t want to move,” he adds. “The incumbents who are still licenced have the trust of the public and have the best starting point because of the distribution. But challengers are trying to become banks. They understand that not having that banking licence is a big disadvantage.” ■
Buitenhek is speaking at Open Banking Expo Europe on 4 October in Amsterdam. For more info visit openbankingexpo.com/europe 15
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THE BEST OF EUROPE
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Europe is often talked about as one, homogenous, entity. But which countries are home to the most compelling commercial launches and how are EU-wide regulatory changes influencing development at country level?
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Ellie Duncan reports
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urope is often referred to as one entity that is presumed to be working towards Open Banking adoption at a consistent pace, in line with EU-wide legislation. But this ignores the fact that individual countries have their own rates of adoption and different ideas. It is beneficial for European countries to be unified on Open Banking from a regulatory standpoint. But it is also important that legislation does not stifle innovation at country level. Some of the most interesting developments are now around wider Open Banking initiatives that are not solely regulationdriven, says Brian Jamieson, chief executive of UK fintech Centtrip. ›
One of the more interesting uses of Open Banking is the ‘Open Banking for Good’ approach of Nationwide Building Society. James Buckley Vice President & Director, Infosys Finacle (Europe)
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› He says other developments in Europe are more market-driven, serving to drive and promote collaboration across industries to ensure effective and secure access to data. “It is in this area that we are seeing exciting developments from non-bank companies. Companies such as [UK-based] Bud are delivering excellent platforms designed specifically to serve the Open Banking initiative and providing easier access to the network for companies not yet capable of integrating directly with banks.” “In a similar vein, [UK-based] Codat has created a hub connecting accounting software and bank accounts. Our own technology is focused on providing an intelligent treasury solution to businesses, utilising the Open Banking network to connect customers to a host of transactional, descriptive and predictive analytic services and providers.” Game changing Nordigen’s co-founder and chief executive, Rolands Mesters, flags two important developments when it comes to Open Banking in Europe. “The first is a major optimisation of the way people understand their own financial health,” he says. “Myriad fintech apps have sprouted, including personal finance management solutions such as Spendee [founded in the Czech Republic], which help individuals be savvy with their money.” But he says: “The real game changer is the new approach banks and lenders are taking to assessing the creditworthiness of a loan applicant. Rather than relying on credit bureaus, which have an incomplete picture of an applicant’s financial health, European
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personal finance management offerings of companies like Emma and Yolt, which take advantage of the digital nature of Open Banking to allow customers to consolidate all their financial digital data, Myriad fintech apps have to the more ‘bricks and mortar approach’ of sprouted, including personal [Swiss-based] Sonect, finance management solutions which uses Open such as Spendee [founded in Banking APIs to the Czech Republic], which ★ convert retail premises into ATMs”. Emma, which launched in January help individuals be savvy 2018, was established in London by with their money. chief executive and co-founder Edoardo Moreni. Yolt launched in the UK in June Rolands Mesters 2017 and has since expanded into Italy Co-founder and Chief Executive, Nordigen and France, having clocked up 500,000 ★ registered users within 18 months. It is banks now have access to account a venture of ING Bank NV, the Dutch transaction data at scale.” multinational banking and financial This means there are far more robust services company. and fair assessment processes now in “One of the more interesting uses place, increasing the efficiency of loan of Open Banking is the ‘Open Banking assessments and improving financial for Good’ approach of Nationwide inclusion. Society,” Buckley adds. He ★ Building James Buckley, vice president and says Nationwide is not just looking at director for Europe at digital banking Open Banking as a way of creating application provider Infosys Finacle, monetary value, but also as a way says the most exciting examples of to create value for society. Open Banking developments in “This has led them to back apps like Europe are many and widespread. Toucan – a money and mental health app These range from “the standard that alerts a nominated trusted ally if the ★ going is getting tough – or Openwrks, an app that lets people create accurate income and expenditure statements in minutes.” Tim Hooley, chief technologist, EMEA FSI at open source technology firm Red Hat, cites yet another example of the best Europe has to offer, this time in Spain. ★ “On a banking level, Spanish banking group BBVA has adapted quickly to Open Banking developments by building a single, global platform that is fully automated, self-served, and data-centric,” he says. “It has also made eight of its APIs commercially available, enabling ★ companies, start-ups, and developers ›
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“France and Belgium have made less progress in adopting Open Banking than expected, and Italy is adopting a more conservative ‘wait-and-see’ approach. What is evident is how a pan-regional regulation such as PSD2 is read differently in markets with different digital dynamics,” he adds.
› to build new products and services by accessing and integrating customers’ banking data – with their permission – into their applications.” At the frontier Hooley also mentions Yolt as having “truly embraced the Open Banking vision”. Yolt’s chief business officer Leon Muis says, while there have been some innovative Open Banking launches in Europe, none have been quite as exciting as those that have come out of the UK. He believes the UK is at the forefront of Open Banking – not just in Europe, but globally. “I think the great thing is that the second payment services directive (PSD2) is European legislation and the UK is still part of Europe, but under the Competition and Markets Authority [Open Banking] order the UK went ahead of its time,” he says. The UK has also benefited from having a less complex regulatory system than somewhere like the US, he says. “As a result, the UK has gained good recognition as a leader in Open Banking, which is why we see fintech companies from elsewhere launching their products in the UK first, as they find the regulatory space easier to navigate,” he says. Companies which have done this include Silicon Valley-based Open Banking platform provider Token.io and Amsterdam-based Yolt, both of which are “running on UK-based cloud infrastructure”. Some have found that the fragmented market in Europe is more of a hindrance than a help though, and that regulation has only exacerbated this. “The revised Payment Service Directive (PSD2) is setting the direction for each country. However, it hasn’t been effective in setting the pace globally,”
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★ European ecosystem According to Buckley, EU-wide a survey by Swedish Open Banking regulatory changes, such as GDPR platform Tink of 442 European banks, and PSD2, are creating a distinctively which revealed that 41 per cent of European market in Open Banking. European banks failed to comply “This is forcing individual countries with the March 2019 PSD2 deadline, to make a choice between trying to requiring them to provide a testing ★ environment for third-party providers. ★ carve out a distinctly national offering – as is happening in the UK where fastMeanwhile, in contrast, UK regulators moving challenger banks are taking “have been proactively embracing a lead – or working in a pan-European regulatory changes”. context, which might mean moving Vivek Awasthi, chief information officer slower, but may ultimately mean a at Currencies Direct, says some countries larger market,” Buckley says. in Europe, such as the UK, Sweden and He cites the Berlin Group, a panthe Netherlands, are pioneering in the ★ payment space. But he notes that ★ European payments interoperability standards and harmonisation initiative, others are hindered by an historical as an example of the collaborative misunderstanding of the scale of approach, and which “may deliver the changes required in banking more value in the longer term but applications and infrastructure. currently offers less immediate opportunities than countries ★ ★ like the UK”. Strategically, Europe is likely to gain some advantage from aligning its Open Banking developments as it seeks to hold its own among some of the technology behemoths, such as Facebook and Amazon. ★ ★ “If European Open Banking companies are going to survive in a world dominated by Asian and American ‘big tech’ companies, they are only going to be able to do this by working together to make a genuine European ecosystem,” ★ ★ cautions Buckley. ■
Aug/Sept 2019
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SECONDS INTERVIEWS WITH OBE EUROPE SPEAKERS EUROPE: READY OR NOT? As we take our seats at Open Banking Expo Europe, many organisations are breathing a sigh of relief following the European Banking Authority’s agreement to a limited extension on the 14 September deadline for compliance with Strong Customer Authentication under the PSD2 Payment Service Directive. However, we welcome a C-level audience from banks – high street, digital and challengers – fintechs and regulators who are ahead of the curve and driving forward the Open Banking revolution across Europe. To give you a sneak preview of what to expect from our accomplished speaker line up, here are 60 second interviews from a Lithuanian and Polish viewpoint. Open Banking Expo Europe takes place at the Novotel Convention Centre in Amsterdam in 4 October. For tickets and more information visit openbankingexpo.com/europe
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Ruta Merkeviciute
Head of Division, E-Money & Payments Institutions Supervision Bank of Lithuania Q: Explain what you do A: I am in charge of a division at the Bank of Lithuania that is responsible for supervising more than 100 e-money and payment institutions licenced in our country. Most of them have the right to provide payment and other services at the pan-EU level. At a time when companies are shifting to a higher gear it is vital to identify the weak points and prevent them from becoming an issue in the future. I am also a member of Lithuania’s Payments Council group, which is responsible for the development of Open Banking in Lithuania. Q: Why did you choose to speak about “The role of the central bank in driving forward Open Banking” at Open Banking Expo Europe? A: The choice came naturally as the development of a fintech-conducive regulatory and supervisory ecosystem is one of the Bank of Lithuania’s strategic directions as well as fostering innovations in the financial sector. The Bank of Lithuania is one of the accelerators aiming to identify areas for the
Maciej Kostro Polish API Project Leader Polish Bank Association Q: Explain what you do A: I am organising the dialogue between banks and third parties and taking care of how secure communication based on APIs should look. I am trying to understand and to adopt all regulatory requirements related to PSD2 services. Q: Why did you choose to join the panel debate on “PSD2 Open Banking API standards” at Open Banking Expo Europe? A: Polish API standard is a very important part of the Open Banking European landscape. We are in the middle of a discussion and questions like “Can Open Banking ever
Aug/Sept 2019
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development of Open Banking outside the scope of the PSD2 and provide guidance to stakeholders on further implementation. We also see Open Banking as one of the tools to increase competition among financial market participants in our country. Q: What are the biggest challenges your organisation faces in meeting the PSD2 deadline on 14 September? A: Currently, the Bank of Lithuania is closely monitoring the market preparation for the implementation of the PSD2 requirements. The biggest challenge is to be on the same page, both for the regulator and market participants: we put a lot of time and effort into consultations and discussions so as to ensure that the requirements are understood and treated equally, readiness increased and Open Banking driven forward. Q: What can the audience expect to learn and hear about during your session? A: The audience will hear about the Bank of Lithuania’s experience and the role of a regulator in advancing Open Banking, particularly focusing on the part central banks play in accelerating adoption and management of the
really take off with more than one standard?” are tough but vital. I have to face it! Q: What are the biggest challenges the financial services industry faces in meeting the PSD2 deadline on 14 September? A: Regulatory uncertainty, imprecise requirements and lack of customer awareness. Q: What can the audience expect to learn and hear about during your session? A: The European payment market is diversified, differences are apparent on many levels: digital maturity, adoption of innovations, the share of third parties, etc. I hope that the audience could expect a better understanding of these differences.
ecosystem and exploring the opportunities of open data. Q: What do you think the financial services industry will look like in 10 years’ time as a result of Open Banking? Will much have changed? A: I believe that the financial services industry will become more and more client-oriented and personalised. I won’t be surprised to see portable-data tools that would enable a client to access any financial service with the transactional and behavioural history of his previous products. This would help financial service providers to use Open Banking both as a tool to adapt products to the individual client, and for a client’s risk evaluation (KYC, historical transaction monitoring, credit risk, etc). Q: What innovation do you see in Open Banking in the next 12 months? A: As regards the PSD2 – I see the rise of players that were not direct participants in the payment system, such as accounting firms, combining their accounting products with payment initiation and account information services. In the longer run, the incentives of Open Banking will especially boost the financial advisory sector and also spread to other sectors, such as insurance and investment services. ■
Currently, the Bank of Lithuania is closely monitoring the market preparation for the implementation of the PSD2 requirements. The biggest challenge is to be on the same page, both for the regulator and market participants.
Q: What do you think the financial services industry will look like in 10 years’ time as a result of Open Banking? Will much have changed? A: Such long predictions are risky, especially nowadays. The banking sector is afraid of the position of Big Techs in the financial area and Open Banking could accelerate their attempts to disrupt the industry. But maybe banks should become IT companies with banking licences? Q: What innovation do you see in Open Banking in the next 12 months? A: Open Banking as such, is something new. We can argue whether it is a real innovation or not. Do I expect yet other innovations within Open Banking? Of course, we have just started to define the foundations, now it’s time for new business ideas. ■
Polish API standard is a very important part of the Open Banking European landscape.
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4 OCTOBER 2019
AMSTERDAM EUROPE’S LARGEST MARKETPLACE FOR IDEAS, CONNECTIONS AND DEALS IN OPEN BANKING 20+ SPEAKERS INCLUDING
Lana Abdullayeva Payment Innovation & Policy, Group Chief Information Officer Lloyds Banking Group
Mark Buitenhek Global Head of Banking Services ING
Mike Felten Director Fortuna Banque
Imran Gulamhuseinwala Trustee Open Banking Implementation Entity (OBIE)
Maciej Kostro Board Advisor & Leader Polish Bank Association & PolishAPI
Piet Mallekoote Chief Executive Officer Dutch Payments Association
Ruta Merkeviciute Head of Division, E-Money & Payments Institutions Supervision Bank of Lithuania
Ali Niknam Founder & Chief Executive Officer bunq
Herve Robache PSD2 API Coordinator STET
Søren Rode Andreasen Chief Digital Officer Danske Bank
V I E W T H E F U L L S P E A K E R FA C U LT Y H E R E
AGENDA HIGHLIGHTS: transformation specialist Alexander Zwart - now Tribe Lead • Legendary Digital Platform at Rabobank - will give delegates a rare insight on how to innovate the customer proposition via Open Banking
Mark Buitenhek, Global Head of Banking Services at • Visionary ING will reveal his predictions for the future. and Open Banking first; regulators from the Netherlands, UK, France • AandPSD2 Poland will join forces to discuss if there can be one cross-border standard C-level panel debate will slice and dice where we are now, where • Athehealthy opportunities lie and how we can enhance consumer adoption. Including C-level representation from Danske Bank, Lloyds Banking Group, Dutch Payments Association and Klarna Bank The first real-world case studies will be revealed; including Fortuna Bank, Yolt and the pioneering IATA proposition Challenger bank trailblazer Ali Nikra, Founder and CEO of bunq, will reveal his vision for Open Banking in a fireside chat A spotlight on the SME sector will address how Open Banking can revolutionise business lending.
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KEYNOTE SPEAKERS ANNOUNCED! Alexander Zwart Digital Platforms Lead, Digital Transformation Office Rabobank Carlos Lopez Moctezuma Global Head of Open Banking BBVA
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