"Payments is all about customer experience"

“Banks have the potential to remain relevant in the field of payments providing they act now and reinvent themselves,” Mark Buitenhek, global head of Transaction Services, ING, said in his keynote address at the EBAday 2015, held in Amsterdam.

“While digital disruption may diminish the role and relevance of today’s banks, it can also help them to create better, faster and less expensive services that will become an even more indispensable part of everyday life for institutions and individuals. This is especially true when you consider that no less than 84% of the mobile device users surveyed trust their bank’s app, while only 5% trust apps from social network providers.”

Mark Buitenhek was the opening keynote speaker at EBAday, the two-day payments conference and exhibition that took place in May in Amsterdam. The theme of this year’s edition was “Payments 2020 – From Vision to Action”. The entire payments community, comprising banks, service providers, EU representatives, consultants, IT companies, fintech companies and others, attended this annual conference.


Innovators focus on key factors

Payments remains an attractive market with double-digit growth rates. Technology is developing rapidly and is becoming less expensive and more widely available. Electronic payments are taking the place of cash. E-commerce and m-commerce have created completely different markets that need solutions for small payments and this contributes to the continuing growth in the market. Technology is driving this development and not only banks benefit from it. Figures suggest that more than 25,000 fintech companies worldwide are trying to eat away at banks’ share of the market. Buitenhek: “One guy working out of a garage can now reach millions of customers who are willing to help him improve his product. That is the competition we are facing today. Payments are no longer a bank-only monopoly and we know it. These innovators genuinely address the key factors of speed, cost and, above all, user experience.”


It takes more than a compromise

Banks need to embrace this mindset. Buitenhek: “We are still organising innovation in the same way we have been doing it for the past ten years - through committees, working groups and taskforces. This approach consequently results in a banking industry-wide compromise. But there are lessons to be learned when it comes to user experience: a compromise simply isn’t good enough! So we need to reinvent ourselves and genuinely think from the customer’s perspective.”


In May, the yearly, international payments conference and exhibition EBAday was held in Amsterdam under the title ‘Payments 2020 – From Vision to Action’. The conference was attended by the entire payments community: banks, PSP’s, consultants… ING was one of the host sponsors. Managers and specialists of ING also played their part in many discussions on the future of payments. Read the different articles on ingcb.com.

Easy customer experience and reliable payments

Traditional payment methods will become a thing of the past. New generations have placed the smartphone at the centre of their lives and they expect more and more from their devices. ING conducted a survey in association with Ipsos of 15,000 mobile device users in thirteen European countries, the United States and Australia in order to gain greater insight into mobile banking. The survey results reveal the scope of the digital revolution. 41% of the respondents already use their smartphones for mobile banking and another 15% said they plan to begin using mobile banking on their smartphone next year. 58% shop online using their smartphones. 34% said they are more likely to be a repeat customer if the retailer saves their details to enable ‘one click ordering’. This percentage climbs to 55% if the retailer provides other convenient shortcuts as well. This means a better payments experience can cause a webshop’s revenue to rise by 20%. Buitenhek: “You can imagine that it is much easier to negotiate payment service prices if you can demonstrate that you can increase your customer’s revenue by 20%!” Convenience and speed are the main reasons for using a payment app. But when asked why they do not currently use a payment app, 42% said they do not sufficiently trust apps that are not from banks. 84% of the respondents trust their bank’s app, while only 5% trust apps from social network providers. Buitenhek: “So there is immense trust in banks when it comes to payments. But the customer experience has to be easy and the payments must be reliable.”


Key success factors for innovation

Buitenhek says the key challenge for banks is to meet these customer needs. This means they must reinvent themselves and take a completely different approach to innovation. Three critical factors will determine the success.

1. Act openly. Open innovation is at the heart of the digital revolution. Examples of this already abound in the market. Crédit Agricole launched an open API back in 2012 and ING has developed an API strategy as an integral part of its IT strategy.

2. Collaborate – co-innovate. It has already become very popular to collaborate with start-ups. Research conducted by Accenture reveals that 80% of banking executives are convinced that collaborating with start-ups generates new ideas for their business. But 56% of them say their organisational culture needs to change in order to achieve this. Procurement departments, for example, need to be engaged in the innovation process so that they will be able to work with start-ups and not be concerned that they will not fulfil their usual criteria. 

3. Invest. It is important to invest and accept that if you try, there is always a possibility that you might fail. Banks are accustomed to undertaking large projects that take between three and five years to complete. ING is taking a different approach. It is developing, building, testing and introducing an innovation within six months. This means if it does not work within six months, the project is called off. So instead of spending millions on very large and well thought-out projects, ING instead spends only a few thousand euros, introduces it to the market and then makes further improvements. ING consequently carries out the process in the same way that app makers do. It is a very agile approach to innovation.


Change of attitude and way of working

“It is crucially important to manage talent in order to create the required favourable conditions,” says Buitenhek. “I have been working in the field of payments for between fifteen and twenty years and I am extremely proud of what we have achieved. But I’m also aware that we will not be able to transform the business if we do not succeed in attracting new talent that has the internet generation’s mindset. If we don’t, we will be dragged down by legacy, regulations and solving the usual day-to-day problems. And as a result we would lose sight of the things we could do to change the business. We are living in a fantastic era that provides huge opportunities. But we will have to change our attitude and our way of working. As long as we keep the focus on the customer, I am convinced we as the banking industry will be able to succeed in making it to the next level.”


Also read:

‘Innovation and digitisation: the treasurer’s imperative’, by Mark Buitenhek, global head of Transaction Services and Dick Oskam, global head of Sales, Transaction Services, ING

‘Keeping up with the revolution in the payment industry’, by Inge van Dijk, director of Instant Payments, ING

‘The impact of real time payments on consumers and their businesses’, a short write-up of an interview of Inge van Dijk, director of Instant Payments, ING