ING ON THE INSIDE

Olivier Guillaumond, Global Head of Fintech for ING Bank, explains how a benign Trojan horse strategy is benefiting the wider financial ecosystem

Open banking is driving root-and-branch change across the financial services landscape, particularly in payments. Traditional hierarchies and legacy systems are ripe for disruption, meaning incumbents have to resort to defensive tactics in order to fend off attack from newer, more innovative, rivals.

In this climate, ING is taking what could be seen as a benign ‘Trojan horse’ approach to innovation, by seeking to make sure its payments platforms, which are largely developed in conjunction with fintech companies, are adopted by other providers and institutions – even those it might consider to be rivals.

Why is this turf war over payments important? The $100trillion payments industry has traditionally been controlled by major institutions such as ING. But with the arrival of open banking and, specificallyin Europe, the revised Payment Services Directive (PSD2) – not to mention the advent of payment-in-message apps, such as WeChat Pay and Facebook Pay as well as Libra cryptocurrency – banks risk seeing global payments and settlement taken out of their jurisdiction completely. Or, at the very least, they risk seeing throughput seriously eroded. And, as Olivier Guillaumond,  the bank’s global head of fintech, says: “Payments is a volume game.”

By making sure its payment platforms are adopted by other institutions, the bank guarantees the volume that it needs to sustain them. Sneaky but clever.

Guillaumond prefers to describe it as creating an environment ’where you have ING inside. So, whether it’s within the ING platform or on someone else’s, we want ING payment to be everywhere’. And to achieve that, ING is working with fintech companies in a range of ways, not least by creating fintech firms itself – consumer money management service Yolt being a particularly successful example.

It is also working with fintechs through collaboration and commercial contracts. “We have about 170 partnerships today, so it gives us huge access,” says Guillaumond. And it’s investing in them, too, either through its commercial venture capital arm, ING Ventures, or by merger and acquisition.

A Yolt out of the blue

The launch of ING’s UK-based, in-house-built but independently operated smart money app Yolt in 2017 was useful reconnaissance for the payments push.

Yolt was one of the first examples of a bank in the UK providing an aggregator platform for customers to manage money held by other banks. Now heading towards a million users, Yolt uses application programming interfaces (APIs) to allow customers to view and access multiple accounts held with more than 25 (and counting) financial institutions, including all the main UK high street banks. A Yolt for Business API was added in February 2019, offering similar businesses account information but, notably, also payment initiation services. Yolt is now widening its payments function further, announcing support for global acquirer and payment processing platform Payvision – in which ING took a majority stake in early 2018. Although not payment-related, Yolt is also partnering with UK-based funding comparison site Funding Options, which has benefitted from ING investment, and recently signed a deal with pan-European savings marketplace Raisin, both of which cement Yolt’s position as an aggregator.

Like Yolt, Belgium’s Payconiq also emerged from ING’s innovation cauldron, where it had its genesis in an ING accelerator programme. It allows online and offline businesses to accept smartphone payments and set up loyalty programmes. Having created the platform and made it available to five other banks, ING bound them even closer to its payments ecosystem by inviting them to take a stake in the company. In 2018, Payconiq merged with major domestic card-based payments platform Bancontact with the combined ambition to become the default payment service across the Benelux region. It’s an example of ‘ING on the inside’ if ever there was one.

Stamping an even bigger footprint in the omnichannel payments space, the bank sunk €21million in crossborder business-to-business payments company TransferMate in July 2018. The intention is to offer the Ireland-based provider’s technology as a payment processing option for all of ING’s small business and corporate clients.

All these partnerships are clearly good for business, but Guillaumond stresses that open banking and PSD2 are also beneficial for clients and customers.

“We look at PSD2 in a very aggressive way,” he says. “We feel it’s a great moment for us to propose a very personalised service to our users and clients, as well as implementing our platform strategy.”

He says the bank is keen not to impose technology on customers but, rather, to select solutions appropriate for them by embedding innovation in ING’s daily business – not, as he puts it,  ‘something you do on the side’.

Since 2016, 5,000 people across the organisation have been trained under its PACE programme – a methodology that encourages staff to listen to customer feedback, so that the bank builds something customers actually want, rather than what it thinks they want.

“The best way to know what the customer wants is  to ask them,” says Guillaumond. “We’re trying to include retail as well as corporate customers as part of our development cycle.”

API at the heart

ING is so far ahead of the curve that Guillaumond says creating application programming interfaces (APIs) for third-party technology companies was a given, even before it became a stipulation under open banking and PSD2. And he sees the bank transforming its own infrastructure to be API-based within the next few years.

“Modular, granular internal APIs, on which the ING ecosystem can operate, allows us to rapidly roll out best practice from one country to another,” he explains. “In parallel, we have been developing our open banking portal, which is our gateway to the developer community and to partners. We already made our sandbox available and now we’re going to translate some of the APIs that we’ve been working on internally to external roles. We’ll be listening to the community as we do that.“

Payments via open banking are forecast to hit £300billion of transactional volume by next year. For banks like ING to continue to dominate the payments market, collaboration will be key.

“You can be self-professing, thinking you will change the world of payment by yourself, but payment is a volume game,” says Guillaumond. “We do not believe we can do it on our own, so we are partnering with the major players in that ecosystem to make sure that the solution is the one that will help all of us be more efficient going forward.”