There is a claim often levelled at incumbent banks – that following the financial crisis, they have failed to innovate at the same pace as the world of fintech.
It’s down to a number of reasons. Following collapses, bailouts, and cutbacks, when combined with a plethora of post-crash regulation to unriddle, banks have been less hawkish as they find their feet. When you’re so preoccupied, it’s difficult for the top brass of a big bank to get their shareholders to buy into big changes – great news for fledgling fintechs.
Curiously, HSBC was recently heralded as a harbinger for digital innovation with its new beta app – despite offering little more than the services that digital challengers have provided for some time.
Dutch bank ING, though, is bucking the trend. Spotting an opportunity in the approaching era of Open Banking and the second Payment Services Directive (PSD2), it sent an expedition into the fintech jungle with the task of creating a product that encapsulates the change.
The original research team consisted of just four people working in the ING innovation center in Amsterdam. Frank Jan Risseeuw and Pauline Van Brakel were two of them. They came back with Yolt, an app-based money management platform of which they are now respectively chief executive and chief customer officer.
“It was kind of ‘intrapreneurship’, not entrepreneurship – all inside the organisation,” says Risseeuw. Building a product with the might of ING backing you up has its benefits, adds Van Brakel. “It brings out the best of both worlds. We really consider ourselves to have the agility and speed and innovation of a startup, but also working with people who have tremendous amount of years of experience in banking the security, the solidness of a big player.”
Now based in London – “the fintech capital of Europe” – Yolt offers a cross-dimensional view of all your bank accounts and credit cards in one place. Once you’ve registered your accounts, it offers smart insights to make your spending easy to understand, so you can see what you’ve spent, where, and avoid surprises due to its “predicted debits” feature.
Further, you can act upon these insights by setting yourself budgets, monitoring your bills and subscriptions, and even looking for better energy deals within the app.
“I think that was one of the most exciting periods – starting the company, coming up with ideas and hypotheses. It was around February that we crossed the North Sea and sat down here with people in London to say ‘we have an idea to design a new money platform, embracing the ideas of Open Banking’. It was talking, iterating, designing prototyping, and that brought us to 1 June last year, when we brought our first offer for our colleagues at ING.”
Next January, the PSD2 regulations and Open Banking Standards will be implemented across Europe and the UK. For the uninitiated, at its most basic it forces banks to open up customer data (current account information) to third parties through secure APIs, providing the customer gives consent. The idea is to allow new companies to innovate with an important data source, giving the market a much-needed competition boost.
“It’s all about giving customers choice,” says Van Brakel.
“Their data is kind of locked at their bank at the moment, and if you give them the choice to share their data with other partners, it gives them more options, gives them the choice to manage their money better and look for opportunities they otherwise might miss.”
Once the APIs from banks are available in January next year, Yolt’s offering will become ever more appealing. Having been working towards it for two years, the pair both seem giddy – genuinely excited – at the prospect of 30 January.
“For about half a year now, we’ve been actively involved in the Open Banking Working Group, talking with the project team but also with the banks, to see how it will come alive. I’m very impressed about how structured and profound this programme is run and it’s great to be there. Everyone is excited about that date, and how it will evolve from there.”
When Open Banking was first announced, banks were – it’s fair to say – largely unhappy. Customer data is a competitive advantage, they said. Now it can be used to make up the structure of countless other services.
“The ING chief executive mentioned something interesting,” says Risseeuw. “You’re either a platform, or you're joining a platform. And you’re either the wheels, or you’re the wagon on the wheels. At the end of the day, the best propositions reduce effort, or make life more easy and convenient. From that point onwards, you can think about a lot of nice plugins to create a real open platform to manage your money.
“And I think both banks, as well as new players like Yolt, can do this. The question is, which will consumers prefer the most?”Let's