Benoît Legrand was appointed chief innovation officer at ING Bank in January 2018, having previously served as the bank’s global head of fintech and CEO of ING Ventures. On the sidelines of Money 20/20 in Amsterdam last week, bobsguide sat down with the Legrand to talk about the future of fintech in Europe and the hype around the industry’s new favourite trend: platforms.
How do you see Europe's fintech centres developing, outside of London’s shadow?
Without a doubt, London has been where the fintech story started. It is the financial centre of Europe, right? It has a natural head start. It has the knowledge, the people, and a regulator that has also been very proactive in its thinking. That environment is one which creates a culture of success.
In the meantime, what we see is that different countries are also increasing their own environments in terms of maturity. I would not be surprised if in a few years other cities begin to come up as major hubs. Berlin and Amsterdam come to mind, as well as Paris. Paris is lagging behind a little bit – I can say that because I’m Belgian.
I think we need to move beyond this centralised way of operating. It’s something that is happening in the US, too. On the East Coast you have New York and Boston developing themselves in the technological sphere, challenging the hubs that exist on the West Coast.
Brexit is not having an influence on this, I think. We made a lot of buzz about it as an industry, but it has just turned into an opportunity to have things deployed in more places. Sure, you might need to acquire new licences but that is not really a problem.
If you look at Yolt (the personal finance brand owned by ING), it has people in Poland, and marketing and sales people in the Netherlands. Now we’re deploying into Italy and France and have a team in the UK. So frankly, where is the centre of this? You might see hubs of speciality emerge in the next few years, but I don’t see the developments in this industry being centralized.
Discussions around platform models have dominated Money 20/20, but does the term need to be defined properly?
It does, I couldn’t agree more. Everything is an enabler, right? You look at AI as a buzz, too. Right now, everything is AI this, AI that. It’s a tool, and the real problem is how do you solve the needs of your customer. This is the basics of building a business, you must have a problem somewhere that needs solving. We invented the fridge because we needed our food chilled, we invented the car because we needed to get places faster. Solving problems is when you see real change.
A lot of the words around these days are just that – words. I remember when I started about four or five years ago I think I was the first head of fintech, which I invented myself because I needed a title! Back then the word fintech didn’t mean what it means now. We can very easily be distracted by words.
Everybody is using the word platform, but I’m not sure everybody understands what a platform is. Some use it as an IT platform and that’s certainly [laughs] something. Other use it as a marketplace. When you want the highest level of what a platform is you need to look at the Bigtechs. Those are the real platforms, where you’re locking in the customer on a wheel of services and products which incentivises them to remain loyal. Many of these Bigtechs have built ways to lock you down in such a way that the benefits you get from being there are greater then the pain of moving away from them.
Does a balance need to be struck in retaining customer loyalty but not taking advantage of that trust?
Yes, this is the key question. If I take for example my iPhone, I don’t want to buy a new one, they’re very expensive. What happens when my memory isn’t big enough to support my 6,000 pictures? Apple says, ‘no problem, just pay one euro a month and we can keep all those pictures for you in the cloud.’ I as a customer know that Apple knows everything about me. The benefit for me in using those services is still larger than those – perhaps – concerns. I don’t feel trapped, because I still think it’s a choice that I make.
I don’t know how many people have left platforms like those after scandals around privacy. People definitely complain, but do they change? 80% of customers in France once said that they were not happy with their bank and would not recommend their bank, yet only 4% on average move. It’s because of the perceived hassle of changing bank account.
The hurdle is actually getting higher and higher for people to move as long as things simplify your life and make it easier, faster, and better. The same goes for banking. No one wants to be stuck doing their banking. They don’t like banking, it’s not the fun part of their day. If those techs or banks are doing this for you in a smarter, faster, better way then you will be happy to be ‘stuck’ in there. It is a choice to be stuck.
How can banks use their advantages to maintain a dominant position in the marketplace?
We have a lot of assets. A bank has everything it needs to be successful. The only thing that needs to change is the culture, and the sense of urgency. Everything that a fintech does I think technologically is something we can do. In some cases we just haven’t done it yet. How do we change this? We have that paradoxical trust from customers. We don’t like banks, but we still think it’s a better idea to keep money in them, rather than under our mattress.
If we as an industry effectively get things together and get thing moving, we can build many great things. Take the example of Yolt, which has been a successful venture so far. After two years of operation we are close to 1m customers. Any bank could have done this. We saw [the EU’s second Payments Directive] as an opportunity, not as something we had to defend ourselves against. Some are now seeing the opportunities out there, but we started this journey four years ago, right? We haven’t woken up suddenly with deadlines a few months away.
I hear a lot of banks complaining, but they must take their futures into their own hands. Of course there are constraints, and of course there are issues and of course thing won’t always be as we would like them to be, but we make the best of it.