The Open Banking Interviews: Joris Hensen, Founder and Co-Lead API Program, Deutsche Bank
At Money2020, in Amsterdam, I had the pleasure to talk to Joris Hensen, Founder and Co-Lead of Deutsche Bank’s API Program. We discussed on how Deutsche Bank looks at Open Banking and how this may affect the way bank data can be consumer for good.
We are quickly approaching the deadline of PSD2 to provide APIs for new players in the market who wish to access customers’ accounts for account information and for payments initiation. Are you on schedule to be ready for the deadline of 14 September?
At Deutsche Bank we look at the bigger picture today. Our journey started already in 2015, when PSD2 was still far away. We quickly realised that Open Banking is an opportunity for us to facilitate the development of new products and services with the help of banking data. These products can be developed by third parties for the benefit of their customers and our customers at the same time.
We believe that Open Banking will accelerate the process of delivering products, and it will create a wider range of products and services the customer can choose from.
The life of a bank customer does not evolve around traditional banking products only, but it is about the daily decisions as well as the decisive moments in their life.
Open Banking is a way to serve the customer in those moments together with third party providers.
Of course we also included PSD2 in the development stream. We are already testing since March, according to the mandatory timeline. But our assignment is more about leveraging the potential of using bank data and services far beyond banking and PSD2.
Do you see Open Banking more like a data business or an API business? Or should we interpret it as two elements that are in balance and that need to be combined to truly benefit from Open Banking?
The way we look at it is that APIs are the technical enablers. APIs is what you need to use banking data outside of banking systems. And we talk about API products, which means that we bundle data to serve a specific use case.
Take the example of our ‘age check’, which can be found in a plug-in for e-commerce shops so that customers don’t have to provide all their ID details to buy fireworks for example. Neither the date of birth nor the specific age of our customer will be shared. The only information shared — on behalf of the customer — is a true or false value if the person is above a specific age. Nevertheless, the vendor fulfils the legal requirements to sell the fireworks.
It is really about creating new products and services out of bank data. That is why we talk to industries beyond the banking industry. We recently had a fruitful discussion with an IoT provider to see how we can collaborate. Our aim as a bank is to become a life companion for our customers.
Indeed, I guess that is the way to go. With IoT that is now in full development we will see more and new discussions. That is where Open Banking becomes extremely relevant, isn’t it?
We see no limits regarding possibilities or dimensions. More important from our perspective is that third parties understand what they can do with banking data. Educating the market is one of the biggest challenges for financial institutions.
Often (prospect) partners are really surprised to hear that we have a developer portal already live. At the beginning of the discussion, they have no idea what to do with banking data. Mostly such conversations conclude with the most innovative use cases.
Next level Open Banking: what do you see as the key trends for 2020 and beyond for consumers?
Open Banking is still in an early stage. That is also what Innopay presented at Money20/20. I’m not sure what people will answer on the street when you ask them what Open Banking really means to them.
The Banking Scene conducted a surveyon 2,000 consumers and found out that of the 1,000 Belgian consumers we asked only 2,6% knew what PSD2 is about.
That is indeed what I would also have expected. It is probably the same for Open Banking. Consumers are likely be interested in practical apps and services where they can use their bank data. So we need more use cases to make them aware of the advantages of using their data outside the bank.
For instance, we have a partnership with a German start-up that has developed an app called Finanzguru. They take my transaction data and provide me with an overview of all my contracts, along with the possibility to quickly terminate them and exchange for a better contract. This case shows how we really can help our customers.
Finanzguru provides additional information, like how much money you will likely have at the end of the month and gives you hints on how to save money.
To come back to your earlier question:
I think the trend will be to transfer such use cases from traditional banking into other industries. This is what we call Beyond Banking — to define a further trend we see.
Open Banking should be about enabling the consumer to control his/her data, to take it with him/her. We call it ‘Data to Go’. The customer alone decides which applications he/she wants to use and determines what data to share. With these possibilities also comes responsibility for us as banks to provide high security standards such as which partner can get which data, instead of providing the whole set of data.
Do you see other trends for SMEs? Are there any different key trends to consider for 2020 and beyond?
For enterprises, it is similar in terms of accessing account information. In particular, this is relevant for the smaller companies without big ERP systems. It is an important market.
I might be a user of Finanzguru and aside from my personal financial behaviour, it may also change my behaviour as a professional when I have a small company.
So this confirms that consumer trends will influence the SME trends and vice versa.
The last big segment is the one of big multinational corporates, who do have ERP systems, and also other needs, in international trade, cash management… Do you see any opportunities here as a result of Open Banking?
We initially focused on retail banking, but I agree that APIs facilitate more efficient and better processes and services for big corporate clients as well.
For financial services companies, for example, Open Banking will enable easier access to other countries. It is a huge leverage for growth for this kind of companies.
For companies with huge treasury departments, the focus rather lies on efficient processes. On the transaction banking side, we are already working with APIs and we have a lot of discussions with treasurers to understand their specific business needs.
One last question: how do you see banks realising a return on investment on the Open Banking projects?
I see three dimensions here:
- a monetisation of premium APIs
- maybe more important one, is to increase loyalty of existing customers
- attracting new customers thanks to a broad digital offering.
With such an offering, you can surely reduce the acquisition cost and keep customers loyal.
This way you start distinguishing yourself from competition. Suddenly Open Banking becomes an enabler of new revenue streams and business models.
This story is part of a series of interviews with executives of the financial services industry. More interviews can be expected in the coming weeks.