Keytrade Bank is the next financial institution on the list of the Open Banking Interviews. With Keytrade Bank we have a rather atypical, smaller challenger in the Belgian banking market. I know Raphaël d’Ostuni for a few years now. Raphaël has always worked in the domain of innovation and today he is responsible for the Open Banking Strategy within the bank.

Part VI of The Open Banking Interviews (see part V, with Helen Bierton, Head of Banking, Starling Bank).

For the ones that are not familiar with Keytrade Bank: Keytrade Bank is kind of a challenger in Belgium and a frontrunner when it comes to digital experiences. You were, for example, one of the first to offer mortgages loans in Belgium in a digital way.
Before we look at open banking as a general topic, could you please tell us where you are today when it comes to PSD2?

As PSD2 is a regulatory project, it was — and still is — a priority for the bank. Even though we started working on this more than two years ago, it turned out to be quite a challenge. We, like any other bank, basically had to find our way in the RTS (Regulatory Technical Standards) as requirements were not that clear in the beginning.

At this moment though, we are proud to say that we are finalizing the project and we are confident to meet the deadline and be open for business in September.

Moreover, we are actually quite happy about PSD2, because it points the finger in a really interesting direction for our bank: the openness of banking data and new banking experiences.

Coming back to your question, you interestingly described our positioning. We are indeed a challenger on the market. This means that we constantly try to differentiate ourselves from our competitors with new products and experiences.

We thus don’t really see the deadline of the 14th of September as a deadline but more as a milestone in a bigger journey. It’s the start of a new era for banks. If PSD2 intends to create more competition, it could help us as a challenger bank create more relevant experiences for customers.

I’m completely aligned with you guys on this one. I see PSD2 in fact as a starting point towards a whole new journey, one of Open Banking which goes far beyond PSD2 and even far beyond payments. I call it the journey to “Everywhere Banking”. That brings us to the next question. Is Open Banking something that Keytrade Bank is already actively investigating?

In the beginning, we approached Open Banking from the regulatory perspective, allowing us to communicate internally, to open everyone’s eyes, also externally. Gradually we created an atmosphere where it is natural to challenge our business model and where we can reflect on how the banking industry would look like tomorrow.

In our opinion, there are 2 ways to go about Open Banking: either you choose to start from your range of products and services and say to yourself: “hmm I want to open up my product data to the external world » or « I want to distribute new products via my channels”.

Or you take a more holistic approach. Here you start to think of what the banking industry can do for the customers of tomorrow. We decided to take the holistic approach.

Our philosophy was to start from actual customer needs in different ecosystems where we are legitimate. We know that it’s a buzzword, but we chose to start by looking at all possible ecosystems where we could create value.

Yet, given our size and our positioning as a challenger, we selected only a couple where we believe to be relevant for consumers and where we can create the most value.

This is a year-long exercise we did together with customers, external partners and internal employees. All the collected input allowed us to ideate on what we could do and what solutions we could bring to the market. Unfortunately, I cannot give you concrete cases or projects that we are working on internally, but we are in the final phase of that analysis, we are looking for partners working on the implementation of what we identified.

Cool. That already answered my third question as well.

Yes at Keytrade bank we go very fast, indeed 😊!

My question was that Keytrade is mostly known for investment, trading and wealth products, so I was wondering whether that is in the scope of your reflection on Open Banking at the moment.

You are right: we started in the investment sphere, yet today our customers also see us as a complete bank. With the launch of KeyHome, our mortgage product, 2 years ago, we increased our offering and became a complete retail bank. As a consequence, we are no longer considered as an investment bank or purely as a broker anymore.

Of course, we keep on creating value for our investment customers, traders, investors. Our ambition is to become and remain relevant to all three business lines that we have today.

So to come back to your question: yes, on our historical business line, we are also thinking about completing our product offering as well as providing customers with new tools and services to help them take (better) decisions

What do you see as the main driver today when it comes to Open Banking? Depending on the one you ask, you have people who focus on data, others focus on infrastructure, or APIs supply and consumption … How do you see that? Would it be rather data or APIs, or do you see these 2 elements being in balance? Do they need to be combined to really benefit from the advantages of Open Banking?
How does Keytrade Bank look at that?

Please allow me to give my personal opinion on that. I think that data, infrastructure, APIs and also partnerships are all a means to an end.
The challenge banks are facing today is that the current retail banking revenue model is not sustainable. It needs to change but no one knows what it will look like tomorrow. The key question is where do we think that customers will expect us tomorrow, where we will create the most value for them.

In the past banks have been disconnected from their customers’ needs. They were focused on their own products and processes and did not always have their customers’ interest in mind.

Companies that see Open Banking as APIs only still are in that ‘product and process’ mindset and are going to fail. But again, that’s my opinion.

Our ambition is to really rethink our business model and operating model. We don’t have the luxury to say we will only focus on APIs or data. We need to cover all the dimensions to meet customers’ expectations. If we don’t, others will do it.

Until today everyone was thinking in terms of opportunities in online banking, in mobile banking and all in an internal way, today we are forced to look outside.
What according to you is the main challenge in getting the organization to move towards this new way of thinking? This reflection of thinking about new opportunities with 3rd parties?

That’s an interesting question. It is a question that is more prominent for bigger banks. Since the early days of Keytrade Bank, we were not integrated vertically as other banks are. In the beginning, we started as a distributor of 3rd party investment products.

We could say we were already doing Open Banking, so the mindset for us hasn’t changed that much. It was not a question of being smarter. It is just that we were smaller and that we had to do it like that.

Take for example our mortgage loan at Keytrade Bank, called KeyHome. When applying for the mortgage loan, we don’t force you to take your insurance at Keytrade Bank, you can choose your provider. Another example: KeyPrivate, our ‘Robo algorithm-based’ portfolio management service. This investment product is co-created with Gambit.

So as you can see, the Open Banking mindset is not such a big change in the way we work and think.

The decision of whether to build the service or work with a partner is always a challenging of course. But it is not completely new for us.

What is new though, is that with Open Banking we are going to work on non-banking activities and non-banking products.

In the past, we were focused on financial products. Today, we try to enlarge that. So working with partners is more than ever important to deliver value, both for the customer as for the bank.

Of course, we need to keep in mind that our resources are not unlimited. So we need to focus on topics where we are relevant to our customers.

We’re not aiming to be a supermarket of all kinds of services, a one-stop-shop for all non-banking services. That’s not our understanding of what our clients expect from Keytrade Bank. We need to remain focused.

To make it concrete: we will only decide to distribute transportation tickets if we think we have the legitimacy and if we think we can provide value to the customer compared to the options he already has.

Absolutely, as a smaller bank, the focus is going to be key. This brings me to the last question. It is a more general one: what do you see as key trends for 2020 and beyond for consumers when it comes to next level open banking?

I think when you look at the experience of the UK market we have to stay humble. Banks and the banking industry will need some time to find the right approach for exposing APIs, for integrating APIs and for partnering up. So 2020 will be a year of stabilization and learning.

Next year we’ll also start launching new services and products in collaboration with partners. As this is about new activities, we need to have a lean-approach. We’ll start small and enlarge based on feedback from customers, other banks and external partners. With that regard, 2020 will be the year of validation and market feedback.

In the years to come, I think you’ll see our positioning change and our revenue model change also. We know that we have to work on customer needs and we know that we have to leverage our current assets. What we don’t know is how we will make money tomorrow thanks to Open Banking. That will be the main challenge regarding Open Banking in the coming years.

This brings us to the end of the interview and I’ve been thinking already a couple of times that I should come back in half a year to a second one as well.

Hopefully, we’ll have some puddings for you because the proof of the pudding is in the eating. We hope to have at that time some real experiences which can convince you we’re on the right track.

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.

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