For the 16th interview, I had the chance to talk to Nathalie Knops, Head of Business Transformation at Banque International à Luxembourg (BIL). BIL is an international organisation, with a particular interest in technology and Open Banking. With a Chinese shareholder that is used to big platforms and APIs in financial services, I was very curious how their vision on the future of banking.

Part XVI of The Open Banking Interviews (see part XV, with Tjeerd Tesselaar and Nico Strauss of Rabobank).

The deadline for PSD2 is now behind us. Out of personal experience I know for many it was a long process where the industry experienced a changing mindset, from a lot of reluctance to a quest for opportunities. What was that experience at BIL?

In the many years of experience in projects, also in an international context, I learned one constant: in every initiative people and their mindset is key to our success. At BIL, we did lots of changes over the past three years. The most important one was changing the approach to problem-solving via agile transformation, design thinking, …

To explain the importance of design thinking, I always take the example of asking a colleague of compliance to imagine they were the customer — it completely changes their perspective. That’s a way to change the mindset, to change the approach to managing a project.

What we did as well is to fuse teams between IT and business (like Gartner now recommends). We created new roles such as product owners, with a UX lab, a data science team, … All this created a new ecosystem, which changed the way we work together and the way we tackle issues.

With the business teams, we also tried to map the business organization to our customer journeys. This enabled us to have stakeholders of a scrum team that managed the issues in the same way.

To achieve this, we were lucky to have extensive training with the full department. It was called “growth mindset”. It really makes you understand the way you are functioning as a person and how you can interact and function with others, what your stress factors are, …. This was very useful to better align internally. I would advocate having this in school for students too!

You had your platform go live earlier than the official deadline of PSD2. Instead of collaborating with other banks through LUXHUB for example, you decided to set up your own platform. Was there a specific reason, like for example design thinking?

When we had to take the decision, two reasons could have made us go for LUXHUB: (a) that we would have the financial power to invest as a shareholder and (b) that we were not confident we would be ready for PSD2. I know that LUXHUB helped a lot of financial institutions that took up the topic way too late, but that was not our case.

Furthermore, back then I was writing a vision note on Open Banking. One of the messages I highlighted was that we would have to build our platform, one day or another. And if we don’t have enough funds to support both a common platform and our own, then we must choose. Investing in building our own platform was the right way forward. We took the decision to be independent and to build our own Open Banking platform with our business models.

I see PSD2 as a starting point of a whole new journey, the one of Open Banking, which goes far beyond PSD2 and payments. I call that ‘the journey to everywhere banking’, where the bank becomes increasingly more an actor behind the scenes. How do you look at this?

When I look at the different business contexts that exist around the world, and in Luxembourg, in a few years time, I’m sure we will no longer speak about banks like we do today. Some of them will probably be only operating as Bank-as-a-Service and must manage a back-end platform and the regulatory constraints, with another party who will manage the customer experience. That’s one thing.

Take for example the payment industry, with so many fintechs and intermediaries. In my opinion, we are far away from being ahead of the curve in the competition for payments.

On top of that, when I look at some banks such as BBVA or Starling bank, I still believe that some of us will manage to build a platform where they will have the ownership of the interactions with the customers, with the employees, with the partners, with the providers. The key question to answer for these players is to define which type of interaction they want to manage and for which purpose.

They will probably have to specialize in an offer in such a way that for the customer, it makes sense to use the bank’s platform. It might be that some services are provided by another party. In the end, it’s important that we have a strong customer base, we gather and manage lots of data, we can manage regulatory constraints. We need to keep these advantages in mind when building new models. We have also to admit that on some products and services we are not as good as we were. These services should be left to others.

Luxembourg has a huge fintech community, supported by LHoFT, but all by all, Luxemburg is a small market, especially in retail. Are banks like BIL able to fully benefit from this fintech scene?

I believe Luxembourg is a good playground for fintechs, but it doesn’t mean all is easy. There are a lot of obstacles to tackle. BIL is a bank that has always tried to be close to fintechs and to help them to grow. We are partnering with incubators; we have a special program to help fintechs/start-ups get loans for example.

On top of that, during the last 3 years, we initiated projects with fintechs and start-ups. The last example, we’ve teamed up with the start-up Carpay Diem to launch just this week a new payment service for fuel on our mobile app.

Luxembourg is a small market, which facilitates networking and building close relationships. No one is far away, everybody knows everybody. When you have an issue, you can ask someone who will connect you to someone else with the right solution. It’s very easy and that is an advantage.

It’s not the size of the market that makes it difficult for fintechs, but other challenges such as regulations or the costs of resources.

If you look at Open Banking, do you think technology is the biggest challenge in this context or should we rather be looking at the changes that are required within a company to start thinking differently on the way that we will be banking in the future?

I think you know my answer 😊. It’s certainly not technology, technology is easy today. You can imagine doing things much quicker, cheaper and more convenient than it was before. For a traditional bank, the legacy is still a constraint.

Aside from that, the cultural change needed is also challenging to put in place. Make people understand that we are not in the same playground, even if the business playground is good. Maybe it’s good today but tomorrow it will be much more difficult, maybe customers’ expectations will be different and maybe we’ll have to find new business models that are totally different than what we imagined before.

To innovate you must be a bit crazy. Banks are a difficult environment to have a disruptive mindset. You have your financials, it’s very binary, you have assets, you have liabilities, and so forth. In the end, and especially in this period of high regulatory focus, banks are much more like risk managers.

Some banks warn for sharing too much data with Big Tech and that’s today a very actual topic. For me as an outsider, I would say that PSD2 is rather an opportunity to better follow up which data they are gathering, how do you look at that? Because it’s not going to be the end of screen scraping either. So, are we opening doors or closing the doors thanks to PSD2?

I think we are opening doors, but I agree with you it’s in a much better-managed way then it was before. Personally, I am not shocked by screen scraping because we had no incident until now. I don’t believe that we can fight against Alibaba, Google and so forth, because in the end, who is sharing the data? It’s the customer.

If banks are afraid how their customer data will be processed, I would be much more in favour of helping our customers understand what happens with their data, what is the contract that we have with them in terms of data sharing, and educate people, young people as well. Some kind of financial education 2.0.

In the Open Banking Interviews, we also talked to Ali Niknam, CEO of challenger bank Bunq. He asked for more openness from the banking industry. On the other hand, for example, Karel Van Eetvelt, CEO of the Belgian Banking Federation, asked for more openness from other industries to make innovation happen. How do you look at that?

I think it’s true that we should stop focusing on banks, even the term ‘Open Banking’ is too narrow: it’s nice if you talk about banks, but something much bigger is happening; the open economy, platforms…

It is true that we should try to be open but always with the same final objective. In the end, what is important? The reason behind is something that is required by the customer (or the employee), let’s take both.

If we manage to have this way of working in the full ecosystem, it will work.

To come back to your question: they both have probably reasons to say what they say. We just spoke about the regulator; they should help us as well.

In terms of next-level Open Banking: what do you see as key trends for 2020 and beyond for consumers? And what can we expect from BIL in that respect?

For BIL it’s very difficult to answer because we are at the start of building awareness. Having PSD2 is just the first step. We strongly believe that we should be able to provide new products and services through the API platforms, either with partners, with fintechs, with new providers… I don’t know yet which ones.

I can tell you our idea is essentially to work with marketing teams, to find partnerships or customers that would be interested to test our APIs, and the services linked to these APIs. Today we already have fintech customers and corporate banking customers that are asking us to build some new services via APIs.

I was very happy when the platform went live and we already had customers asking to build API’s, which reassured us that building our own platform was the right decision to make.

I think that in the coming years, we will still have to work on this cultural shift: convince, explain, and we’ll have to learn as well. I’m not sure that IT teams in all the banks, traditional banks, are used to building and to manage APIs.

It’s a start. What will be there tomorrow, I don’t know. My strategy is to say that we need to be prepared for all scenarios. We need to choose our battles: be a provider of services, lose the relationship with the customer on some aspects and manage a better relationship on our key strengths. Thanks to the fact that we manage to keep the customer on our platform we maintain the relationship on some topics.

We should also build personalized services with fintechs if they make sense.

Our Chinese shareholder, who is used to big platforms and Fintechs, support us in the construction of our Open Banking vision.

This story is part of a series of interviews with executives of the financial services industry.

The complete list of Open Banking Interviews can be found here.

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