The Open Banking Interviews: duo-interview with Laurent Dumont and Kris Roggeman, Crelan
2 weeks before the go-live of PSD2 we are happy to share with you a duo interviews this time, with Laurent Dumont, Digital Banking Manager and his colleague Kris Roggeman, Squad Leader Open Banking. Both work at Crelan, a smaller, ambitious bank in Belgium. What is interesting here is that this bank is a cooperative, where short-term high returns are a lot less relevant than high-level quality service.
Part XI of The Open Banking Interviews (see part X, with Maarten Verboven, Director Open Banking at BNP Paribas Fortis).
Before we really kick off with the PSD2 and Open Banking related questions: could you please frame Crelan’s position in the market of Belgium for our international audience?
Crelan resulted from the merger of Belgian Crédit Agricole/Landbouwkrediet and Centea in 2013. The roots of the bank go back to 1937, when the ‘ Institut National du Credit Agricole/Nationaal Instituut voor Landbouwkrediet’ was founded
Today Crelan is a 100% Belgian and 100% cooperative bank. Crelan is not listed on the stock market. More than a third of our 760.000 customers are cooperators (co-owners of the bank). We must, therefore, be accountable, not to a shareholder demanding a high return, but to our customers who expect a high-level quality service.
Our distribution model is mainly based on independent agencies. We are first and foremost looking for proximity and long-term relationships between the agent and the customer. Our 566 agencies are mainly present in small towns and villages to ensure proximity to our customers.
As customer-centricity is crucial to us, our strategy in digital banking is to be ‘smart follower’. Our clients deserve only well-proven functionalities. We observe the market, we see what works in other banks and institutions, what is really expected and adopted by customers, only then we decide whether to invest in it or not.
The mission of Crelan on digital banking is quite straightforward: to offer user-friendly and reliable tools to our customers. They did not choose for Crelan in order to access the most innovative tools but to manage their core banking and insurance services in a simple, transparent and user-friendly way.
The interview will be about Open Banking, which all started with PSD2. Is Crelan ready for the 14th of September?
Yes, Crelan will be ready for the 14th of September. For us, it is important to follow the required timeline to request an exemption from the fallback mechanism. Exemption is granted when the dedicated interface meets specific criteria. Our developer portal and sandbox are available since March ’19 and our production API’s are open since the start of the wide usage period, so from the 1st of June. Our payment service users are protected by the Strong Customer Authentication (SCA) requirements and must give their permission before we submit their details or process a payment.
In the meanwhile, we continue the developments to improve our services and expand our PSD2 scope.
Crelan is a bank for both consumers and corporate customers, more specifically for SMEs in agriculture. Did this affect your choices related to PSD2?
Not at this stage. Our SME customers are mainly small SMEs, independent retailers and liberal professions. Crelan is one of the few banks with the expertise to serve Agricultural enterprises, which are managed as real business entities.
Open banking opens a wide range of possibilities to facilitate the administrative work of professionals. New, specific tools for SMEs are currently being developed by Fintechs, for example, open banking solutions can be already integrated with accountancy software, opening multiple applications and possibilities.
We investigated at Crelan what building blocks to use. We owe it to our clients to prioritize and focus on the developments with real added value.
I see PSD2 as a starting point of a whole new journey, the one of Open Banking, which goes far beyond PSD2 and also beyond payments. I call that ‘the journey to everywhere banking’. Is this something Crelan is already investigating, to see what else can be done with open access to data and so on?
A couple of years ago we analyzed the opportunities that open banking might bring to us. We have listed a lot of projects that can be done and we have prioritized them.
The first project on the agenda is of course aggregation of accounts since it cannot be considered as a differentiator between banks. That is the starting point. After that, other concepts can be developed by using data to give the customer more personalized offers e.g. a better offer for a loan for instance. This also in line with our position as a smart follower.
Today it remains difficult to estimate how these experiences will be perceived by the customer. Will they give their consent to show their accounts of Crelan in other applications? Belgians are a bit conservative before giving their trust to something new — we see the “wait and see, then move smart” as the best way forward.
Crelan bears new evolutions in mind, but will most likely only act on it when our market is ready.
Do you have any concrete examples of partnerships to share which are built on the Open Banking mindset?
This may not be the example you’d expect, but I would like to refer to our partnerships with other banks.
Every small or midsized bank faces the same challenges, such as cost of regulation, ensure new developments to follow the market with limited resources, employee attractiveness and then mostly in IT, … and then now, Open Banking. I’m convinced that the best way to face those challenges is by cooperation between banks.
To carry out the Instant Payments project, we collaborated with other banks with good results. So we did the same for the regulatory side of PSD2: together with other banks, we partnered up with equensWorldline to develop the PSD2 services. It would have been very difficult and more expensive for each bank alone to be ready for the 14th of September.
Moreover, collaboration with other banks leads to an exchange of information. We can guide each other on for example the interpretation of Regulatory Technical Standards or EBA guidelines by communicating on these matters and get quick feedback on issues.
Belgian banks should not be afraid to collaborate with each other, or with Fintechs by the way.
When you think of open banking in the long term, do you think the key elements of open banking are APIs, data, partnerships …?
Exploring data is very important. As a bank, we can use data to offer the customer what he needs. Based on the data we’ll be able to predict what our customer is looking for and we hope to provide these services to him in a proactive way.
We need to make the life of our customers easier. Customer centricity means for us we should offer our clients what they need at the right time and through the right channel.
What are the key trends in Open Banking in 2020 and beyond?
2020 will see the emergence of the first initiatives, but I don’t believe that the first experiences will be immediately successful.
I read on the blog of The Banking Scene that only 2%-3% of the Belgians know what PSD2 or Open Banking is about. So for Open Banking to reach its full potential, customers have to get to know the concept, get acquainted with all the possibilities, be informed and be confident with these new features.
I guess this will take a couple of years. When we look at the UK, where Open Banking is 1–2 years ahead, we see that the new business models are not widely adopted yet.
Nevertheless, banks or TPPs have to create use cases without having to explicitly explain what open banking is. Customers need to feel the opportunities instead of reading about it.
What also needs to be highlighted is informing and educating our colleagues. I think if you do the same poll amongst the banking sector as you did for consumers, I’m not sure that you will get 50%!
In the coming years, Open Banking will change a lot of things in the banking sector, so it’s very important that our colleagues understand the risks but also the opportunities.
When we look at the trends of Open Banking concepts, the first experience of the customer will be with account aggregators. That already exists in some applications.
Then a lot of new interesting business models, new customer experiences will appear. I think about very concrete use cases like instant income verification when applying for a consumer loan, for example.
I’ve recently seen a demo of a mortgage comparator using open banking to offer immediately a mortgage with better-adapted interest rates to the customer. I find this kind of use case fantastic, with real concrete added value for the customer.
Now imagine a combo with instant payments, Itsme, AI, blockchain,… There are so many possibilities. I consider myself as an “Open Banking believer”, I’m sure that it will be the key that will shape the financial sector in the coming 10 years.
There will be a lot of initiatives, but only a few will survive. The customer will decide which ones. Adherence to the needs of the customer as frictionless and user-friendly as possible is and will become even more crucial. We have to think about what we can offer to the customer and what’s in it for him because ultimately only the customers will determine the success of Open Banking.