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Enhancing Digital Capabilities of Banks in a Changing World

The banking industry is changing extremely quickly on both the retail and wholesale sides. Sometimes helped or threatened by new technologies and developments from third parties – both from fintechs and bigger technology companies such as Apple and Google – banks have to enhance their digital capabilities as a cornerstone to their offerings.

 Contributed by Tibor Bartels, Head of Transaction Services Americas, ING

Retail and wholesale banking have changed dramatically over the last 20 years and that it will change even more in the next 20 years. These days, customers expect and demand easy ways to initiate transfers, see balances or communicate with their bank either via an online tool or an app.

The customer expectations are even raised further by what they see elsewhere in the market, with fintechs or tech companies.

Collective evolution, not internal revolution

 The shift of customer expectations has impacted how we look at product development.Today we are leaning much more towards collaboration with fintechs or integrating products that are proven in the market, rather than to develop products ourselves. We don’t intend to reinvent the wheel but working with some of the strongest players in the market helps us to ensure we have a meaningful offering for our clients that is “future-proof”.

We are always asking ourselves the question as to how as a bank we stay relevant for our customers and we put our money where our mouth is by investing in new and innovative solutions for the market.

ING’s board fully realizes the importance of having a customer-centric approach to the market. While some banks are heavily investing in staying meaningful for their clients, others are sticking with the solutions they have and slowly becoming less relevant. If you are not working with a number of fintechs, I don’t think you have a future proof banking model.

Not about products, but about solutions

The role of the average treasury team is getting much more complicated. If you look back a decade or so, treasury was a cost center and very operational. Today, treasury teams face many extra burdens including fraud prevention, compliance, cost containment, harmonization of processes and so on. Corporates are looking for partners in the market that don’t just sell them products but provide solutions that help realize ambitions.

ING has made a number of investments over the last few years, in companies such as in Cobase, PayVision and TransferMate, for example.These actions prove that as a bank we are actively trying to improve the product offering for our clients.

This has always been in our DNA, take for example Bank Mendes Gans (BMG), it is a proven solution in the liquidity market, which is a big part of a treasury’s responsibility. BMG is a bank-independent plug and play solution that clients can lay over their global payments and cash management landscape, and it does the work for you. Essentially, this means we are part of your treasury team.

Thinking of new technologies and their practical application, we recently announced our part in co-creating a blockchain-based trade-settlement platform.

We have joined other global banks to create a digital coin that can be used to settle international money transfers instantly, cutting out intermediaries and lowering transaction costs. This is the next stage in the development of the utility settlement coin (USC) project set up by UBS a few years ago.

USCs, a digital version of existing currencies, can be used for payments and to transmit all the transaction data. It reduces the exchange rate risks of conventional transactions, making the payments and settlements process faster, cheaper and less risky. We had listened to our customers who had a predominantly documentary trade related business – if you have a lot of partners in Africa and Asia, this can be a full time job. This is where our experts looked at how to evolve this into a more modern way.

Looking to the future, we also want our platform to be a basis for other services that aren’t directly banking related. Using our platform as more of a fintech solution, if you have an ING online banking log in or mobile app, our goal is to also link that to other products from third-party providers.By providing just one entrance for all these different services, the bank would be even more meaningful. Especially taking into account that banks process large data flows which we can analyze to further improve our product offering to our clients. This fast changing banking landscape means we need to keep thinking ahead and finding innovative opportunities for partnerships and co-collaborations.