The Open Banking Interviews: Koen Adolfs, Product Owner & API Evangelist, ABN AMRO Bank
ABN AMRO Bank is one of those institutions who is very open in their API management. It is one of those banks that I really wanted to include in the Open Banking Interviews. I am very glad that Koen Adolfs was open for this.
What started as an interview ended up being a very interesting conversation on APIs, Open Banking and the importance of change management in the process of aligning the bank to this new future.
Part III of The Open Banking Interviews (see part II, with Daniel Van Delft, Country Manager Netherlands, Visa).
ABN AMRO Bank is very open in their approach to Open Banking and PSD2 with publicly available blogs. This clearly shows you are a front runner in this domain. Could you please provide us with a status where ABN AMRO Bank stands today on PSD2 and why you decided to be a front runner in the first place?
If you look where we come from, a couple of years ago, we needed to get used to the idea of opening up, just like all the other banks.
The regulation PSD2 really stimulated us to reflect on what the future of banking could be and what API technology could bring in that sense.
In the beginning we were somewhat hesitant to the initiative. Then, we quickly started to look at it more from an opportunity point of view.
We realised that the API technology allows us to easily connect to third parties, like Big Tech and Fintech, competitors, e-commerce, and all that in multiple angles. That is where we see the biggest opportunities.
Because we needed to build the PSD2 APIs, we reflected on how to do this in a much broader scope. Having PSD2 is one thing, being explicit about the opportunities of APIs and partnering up with third parties is were the real added value can be found.
With third parties we can really look for new use cases that can solve very concrete real-live customer problems. We are very motivated by this. That is our motivation to share our knowledge about it to the outside world. After all, the API journey itself, changing the mindset of the company is an important aspect for banks to get used to working with APIs.
What I also experience is that very often third parties are not very familiar in partnering with banks through APIs. We are all quite used to API strategies of Apple and Google for instance, who are very strategically thinking about how to improve the lives of customers by opening up through APIs and by building applications with third parties. Collaborating with a bank in a similar way is new for many parties. The challenge now is to build apps that are beneficial for the customer, the third party and the bank. This requires a completely different strategic thinking, and everyone needs to learn how that works.
One way to learn about that together is of course by sharing ideas and experience through for example these blogs and other occasions to talk about it.
Absolutely. APIs should be seen as yet another channel, next to branches, mobile and internet banking. This means you need to educate the market. Not everyone does it today.
For years I have been telling the story within ABN AMRO Bank to change that mindset. Today, more and more I am presenting the journey on external events as well. I see that the market is not ready yet, I hope that my contributions can help there as well, just like it did within our organisation.
Let us talk about Tikkie now: how did the P2P Payment app contribute in your API journey?
Tikkie is an answer to the frustration of people that look for a convenient way to exchange money digitally.
It has a separate brand name to explicitly show that everyone can use the tool, not just consumers of ABN AMRO Bank but also those of other banks. That way we try to educate a bigger market to generate a higher usage of the app. That also helps us in better understanding how to deal with customers from different banks.
Besides being a valuable payment solution for SME’s for instance, Tikkie helped us to learn what it means to provide APIs to third parties. Only a few banks have thus far looked beyond PSD2 to look for solutions based on API technology. Tikkie is not about consuming APIs but about providing APIs to third parties. That experience helped us to better interact with developers, to build a community around that and to provide solutions that third parties have built.
Thanks to Tikkie we are better prepared to put API propositions in the market in an optimal way, with the right APIs design, the right documentation, the right processes, promotion etc…
We were able to improve our developer portal and APIs well ahead of PSD2. Today, for instance, not many banks have tested their payments initiation API. Thanks to Tikkie we did and we started to improve it, well before the regulatory deadline. That way we were able to provide better tested PSD2 APIs compared to our competitors.
I believe PSD2 is only the start to a new wave of innovation through Open Banking, not only for payments, but probably even more for other financial products. How does ABN AMRO Bank look at that at the moment?
Like what you see on many developer portals, building the PSD2 APIs have taken a lot of resources to become compliant. Payments is one of the core functionalities of a bank, and one that requires a very high level of security. A good implementation of these aspect lifted a lot of banks on the learning curve. Having the PSD2 APIs now in production, provides more headspace to look beyond what is currently provided.
For example, in each mobile banking app in the Netherlands there is the IBAN-name check validation. This means that when you do a payment to a third parties, there will be a check of the counter account. To do that, we needed to develop a partner API to securely transfer the required data at that moment in time for that specific transaction to Shurepay (a daughter company of Rabobank). That company is responsible for the validation and will send the confirmation of a correct IBAN to the respective bank that asks for it.
Last week we also launched multi-banking in the mobile and internet banking app of ABN AMRO Bank. Today, our consumers can also consume the accounts of Rabobank customers in our app and we are looking forward to integrating also the accounts of other banks.
Another example of digital building blocks we are working on is the FX Trade API. This enables corporate customers of ABN AMRO to receive real-time foreign exchange rates and initiate currency conversions.
I also read about the Grip app, where ABN AMRO Bank is taking its responsibility to help customers in keeping control of their consumption. Do you believe banks have a strategic position to take here compared to the pure payments players that look for more seamless payments, only to increase their volumes? Banks have a bigger stake in the customer relationship compared to pure payment providers, with their complete financial services offering, like savings- and investment products.
What you see is that banks are still very trusted by consumers when it comes to their finances and beyond. Various studies show that the preferred guardian of data is a bank, instead of for example social media players. Privacy and trust are a key need of customers that banks can provide.
Having a good insight in your spending and advise on where can be saved is a role for which banks are well positioned. The combination with the trust factor puts ABN AMRO Bank in the perfect position to set up an initiative like Grip.
For us as a bank, developing the Grip app is beneficial for multiple reasons. We work on it with Tink, a Fintech provider in which we also invested with the ABN AMRO Digital Impact Fund. Here as well we noticed that the integration with a Fintech, and working on aggregation helped us to take a lead position in the domain of Open Banking: we were able to adapt and optimize the integration process before most other banks started thinking about it, so to say.
Aside from (1) the investment, (2) the lessons we learned in how to partner with this kind of providers, we also learned (3) to deal with customer expectations related to account aggregation and possible value-added services around it.
I noticed you also participated in all kind of API- and technology events, like API Days and TNW, cross-industry gatherings. What inspiration did you find there to build Open Banking?
Specifically, on the API Days we already participate in this community for years, long before PSD2. When we participated in the first events a couple of years ago, we learned how big the impact is of working with APIs in a banking environment. We got a better understanding of the required mindset and technology within the organisation to make it a success.
These first events were very fruitful for us. These were not local, in the Netherlands, but abroad. Specifically, on Open Banking, I find the amount of events at the moment too much. It has become a hot topic where everyone needs to be. Conference organisers started to understand there is money to be made with the topic, and it gets difficult to really find the good events.
Today Open Banking conferences are a little overhyped with only limited amount of value creation in my opinion. The big value for me, for example in attending the API Days, are the cross-industry learnings I take back home, instead of only focusing on banks.
I also think that a pure focus on banking when it comes to APIs and Open Banking is not the right approach if you really want to learn from it as a banker. It should be much more about digital ecosystems.
TNW provides exactly that. That is also why we, ABN AMRO Bank, developed good relations with them and hosted the Beyond Banking Dome during the 2019 event.
This was a great follow up on our own Beyond Banking Days in 2017 and 2018. Those were 3-day hackathons, visited by +1000 attendees, internal employees as well as externals. That way we were able to share our vision, our learnings and perspectives on all kind to topics going from sustainability, open banking, blockchain… The event helped to trigger the right mindset to partner also with third parties like Fintechs and firms from other industries. These conversations really help to get things started for more concrete projects, with different perspectives.
Very interesting to hear all these different ways of looking at Open Banking. I did quite a few interviews already and each professional does look at it often from another perspective. Some focus on data, others focus on infrastructure or connectivity. You seem to pay more attention on the change management required to make Open Banking a success.
Yes, I don’t think is it a “either/or”. All the perspectives that you heard are extremely relevant. Within ABN AMRO Bank we do look at all these elements as well. I do believe that the only way to make this transition successfully is when people want to change.
Changing a mindset requires people to also believe in this change, to understand what is going on. They need to feel supported in what they are doing in the process to realise the chance. It is my conviction that by just accepting new technology, one will not realise the full potential.
I can preach about Open Banking and APIs etc, but that is not going to be helpful. You need to spend a lot of time explaining what the new interactions with clients can be, and to find an internal buy-in that this is the right way forward. Only then, you can figure out together what is required and what technology can help to enable people to build this vison.
Each bank can of course have a different approach or a different focus in terms of Open Banking, but to me it all starts with the right mindset.
Next level Open Banking: what do you see as the key trends for consumers for 2020 and beyond?
When looking at PSD2, we see that banks are just opening up with APIs. They worked on it for years and a lot of these banks just developed the first version of these APIs and the consumers still need to experience the first services through these APIs. After the first applications are live, improvements can be made to both the propositions as APIs based on the gained lessons from actual usage.
Not only banks, or third parties using the APIs, need to learn. Also, for governing agencies this is a new area.
I bet that learning is going to be the key theme for 2020 for all parties. Only when all parties learn, valuable propositions will be developed that the end consumers like.
If we look at the market today and we listen to what consumers feel about sharing data, we see there is no big concern to share data between banks. However, we see that many consumers are having doubts when it comes to sharing payment data with non-banks. PSD2 and Open Banking is often presented as being a real disruption. In the end, I agree PSD2 will have impact, but it will take some time to take the whole learning curve of these new models.
To summarise: the big trend for 2020 will be the steady maturity through learning.
Does this mean that we can say that we already have an answer on my last questions? The key trends in Open Banking for SMEs for 2020 and beyond?
Yes and no. I do think there is a difference between consumers and SMEs. SMEs and corporates are more used to accountancy software, and CRM for instance. These systems already interact with other applications. They already work with multiple interfaces which interact with their finance infrastructure.
Consumers have their interaction in a mobile app, in internet banking and in a branch. So, to that extend, I believe the change is a lot bigger for consumers compared to business customers.
This topic on a corporate and SME side will likely evolve faster with several new use cases by 2020 and beyond.
This story is part of a series of interviews with executives of the financial services industry.
The complete list of Open Banking Interviews can be found here.