" class="no-js "lang="en-US"> Exclusive: 'Opening up the future of payments' - Mark Buitenhek, ING in "The Paytech Magazine" - Fintech Finance
Friday, March 29, 2024

Exclusive: ‘Opening up the future of payments’ – Mark Buitenhek, ING in “The Paytech Magazine”

As SWIFT launches ambitious new plans, we caught up with Mark Buitenhek, ING’s Head of Transaction Services and a SWIFT board member, to find out more about the cooperative’s thinking, the role that open banking will play in reshaping the industry, and how the West can keep up with the fast-moving Asian payments landscape Mark Buitenhek | Fintech Finance

The payments world is changing rapidly and Mark Buitenhek, ING’s head of transaction services, is at the heart of it. As a board member at SWIFT, he helped set the scene for the banking cooperative’s forward-looking new strategy at Sibos 2020 – itself a much-altered event this year, in light of the ongoing pandemic.

“SWIFT wants to go further than it’s done before,” says Buitenhek. “It wants to make international payments as simple as domestic payments are, and, to accomplish this, it has created a platform vision that we launched online at Sibos. The ultimate beneficiaries will be our clients, because with these moves, we, as financial institutions, will be able to provide them with more and better payment services.”

SWIFT’s bold new strategy seeks to expand beyond financial messaging to provide comprehensive transaction management services, enabling seamless transactions from one account to another, anywhere in the world, with end-to-end transparency and predictability. This approach will support and accelerate innovation, paving the way for financial institutions – independently, or in collaboration with fintechs – to create new, value-added services to support their business growth.

The planned platform capabilities build on SWIFT’s recent successful transformation initiatives, including SWIFT gpi, a new benchmark in crossborder payments messaging, and will be underpinned by SWIFT’s continued investment in cybersecurity and risk management to ensure resilient and secure transactions. Users will benefit from the capabilities, with minimal disruption through backward compatibility.

Collaboration with bright fintechs in this brave new world of payments is important for Buitenhek. At Sibos 2020, ING used its virtual ‘stand’ at the online event to promote a number of the fintechs that it’s been busy working with.

“We were supposed to be in Boston this year but we adapted quickly so that we could present them in a virtual way,” he explains. “We brought some exciting, innovative ideas, for instance a digital vault that corporates can put their know your customer (KYC) material in, and then open it up for other banks, rather than having to send the information to multiple institutions.”

We also showcased Cobase, which is an aggregator platform we are working with, and FINN, an Internet of Things company – all cool stuff. Despite the pressure everyone has felt over the past six months due to COVID-19, one big plus of the pandemic – if anything associated with it can be positive – is that there has been an enormous boost in terms of innovation and digitisation.

“Contactless payments are basically everywhere, online and ecommerce businesses have thrived, digital signatures, you name it. This is actually the dream for those who talk about digitisation, to reach something in just a few months, where normally it would take years to get there.”

Overcoming the trust barrier

Much bank-fintech collaboration, and indeed digital innovation as a whole, is powered by open banking, which is now becoming much more prominent in markets around the world. Many of the newest financial services are apps that rely on data sharing via open banking, a function that enables a customer to share their personal financial information with multiple parties, for purposes such as payments, money management or investment.

The latest ING International Survey, based on polling in 13 European countries, reveals that consumer attitudes to open banking haven’t changed much since a year ago, but reported usage has. For example, in January 2020, data suggested that customer use of open banking in the UK, the European leader, surpassed one million, doubling over the previous six months. This was despite only 23 per cent of Britons in the survey saying they would be happy sharing information this way.

“Open banking has triggered the debate about the future of payments,” says Buitenhek. “And not only in the UK. The European Commission has announced that it intends to go even further, so they will move not so much from the revised Payment Services Directive (PSD2) to open banking, but immediately jump to open finance. We’re seeing this as the future of the financial industry – where we’re much more open, and we have to share the data, as long as we have customer consent.”

The ING survey highlights an interesting attitude-behaviour gap. What people say and what they do when it comes to their finances don’t necessarily
align. The findings suggest that sharing personal data and interacting with technology in new ways are not developments that people unanimously support and there are significant differences in attitudes across countries. And yet many will use tools that rely on these capabilities if they provide them with obvious value.

To many people, sharing their finances with organisations other than their most trusted provider sounds scary. Only 30 per cent of respondents, on average, across Europe, were comfortable for companies to share their data if they gave consent. That is despite open banking being regulated in Europe since 2016 through PSD2.

“They’re still afraid to use it,” says Buitenhek. “They ask questions about data integrity and data protection, and all those kinds of things. What we are seeing in terms of the usage of PSD2-related services, not only on the payments side but with all kinds of new ideas popping up, is a doubling every month of what people are using, but from an extremely low starting point. So if I look at ING, we are now at roughly 250,000 of our clients using these types of services, and we have more than 40 million customers, so it’s still relatively small.”

Lessons from the East

The hope is that the West quickly becomes more comfortable with open banking and the payment innovations it can fuel. If not, it risks falling further behind the East, which is generally less constrained by regulation and privacy concerns.

“We are carefully watching what is going on in Asia,” explains Buitenhek. “Whether it’s Singapore or Hong Kong or wherever else, there are lots of really interesting things happening without any real form of regulation. Australia is also catching up fast. It has embraced the implementation of instant payments with a completely new platform (the New Payments Platform – NPP) and is building all kinds of value-added services on top via application programming interfaces (APIs).

“APIs are the future. I’m now getting requests from our corporates to expose APIs, whether it’s on reporting or, lately, payment requests,” says Buitenhek. “During COVID-19, for example, we worked on a pilot with one of the largest supermarkets here in the Netherlands. They, of course, deliver groceries but were finding that people didn’t want to touch their machines when it came to card payments. So we offered them a payments request with a QR code, which works a bit like WeChat, and that got a tremendous response. When we started this in February, we did a few hundred, and once COVID-19 came, this increased to 10,000.”

ING’s focus, according to Buitenhek, is on making itself more digital to support customers amidst the spectre of more waves of the pandemic which could lead to further lockdowns. Longer-term, he is in no doubt that open finance is the future.

“I hope that we, as an industry, get there ourselves. I hope it is not necessary for the European Commission to say ‘by 2024, you will all need to be open on every product in the financial industry’ – though I guess that would certainly drive it! We’ll keep investing in this, because our clients are asking for it. Everywhere.”


 

This article was published in The Paytech Magazine #07, Page 59-60

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