The Open Banking Interviews: Fanny Solano, Head of Digital, Retail & Markets Regulation, CaixaBank
At ESBG, Fanny and I participated in the PSD2 discussions already years ago. Fanny is head of Digital, Retail and Markets Regulation at CaixaBank. In that role, she also spoke at The Banking Scene last year, where she got the floor to explain how Regtech is changing the way we bank.
Part VIII of The Open Banking Interviews (see part VII, with Ali Niknam, CEO, bunq).
Hello Fanny, CaixaBank is one of the most innovative banks in Spain, as you demonstrated last year at The Banking Scene Brussels. There, we could see how CaixaBank is strengthening its international positioning in financial innovation. Could you please describe for the audience what your position is in the market?
CaixaBank S.A. is the largest domestic bank in Spain and a leader in retail banking. We have a main banking relationship with 26.3% of Spanish customers and we are a leader in online and mobile banking in Spain. We also have the largest branch network and customer base across the territory with 15.6M clients (13.7M in Spain, 1.9MM in Portugal, 4,916 branches in Spain & Portugal and 9,229 ATMs in Spain).
Technology and digitization are key in the company’s business model, which has the largest base of digital customers in Spain (6.3 million). In this sense, it is leveraging on the opportunities offered by its digital transformation to enhance customer service, as well as management across all areas of the organization.
CaixaBank currently offers a wide range of proprietary applications with special features, such as biometric identification to access CaixaBankNow, peer-to-peer payments and Click&Go loans. CaixaBank has also created imaginBank, Spain’s first-ever mobile-only bank, which engages with users exclusively via a mobile app. ImaginBank offers pioneering mobile services such as a chatbot to help users locate commercial offers, and a money transfer service between friends via instant messaging applications, including WhatsApp and Facebook Messenger.
It has also been the first bank in the EU to offer instant payments through the ECB’s SCT Instant Scheme.
Emerging technologies have paved the way for new financial services that offer true added value to customers. One such example is “My Finances”, a new digital service for managing personal and household finances and expenditure. The service keeps a detailed record of customers’ financial activity, organizing the information in a single digital platform that can be accessed at any time and is fully safeguarded by CaixaBank’s online banking security. Combined with big data technology, the platform can offer customers new services, such as notifications when unusually large bills are due or automatically estimating spending associated with a specific issuer or provider.
On another side, CaixaBank has successfully combined the compliance of regulatory requirements with a robust onboarding process. For instance, CaixaBank was the first bank to support facial recognition via its mobile application through Apple’s iPhone X Face ID. It is also implementing an AMLD-compliant video conference onboarding process.
Ultimately, CaixaBank has driven several projects based on cognitive computing and artificial intelligence, providing CaixaBank account managers with greater and better resources to support their customers. For example, CaixaBank pioneered such technology when it created a virtual assistant, based on IBM Watson technology and others, to provide support to its branch employees.
In conclusion, CaixaBank has shown its true and permanent commitment to digital transformation and has achieved important milestones in this area. This has been widely recognized too, among other means, by international awards by Euromoney, The Banker…
This clearly demonstrates your authority when it comes to digital banking and innovation in banking. PSD2 is quickly getting closer. I found the developer portal of Caixa Bank online. Are you ready for September 14th?
Yes, of course. For 2 years now we are working hard towards the deadline. CaixaBank is ready for the deployment of PSD2-compliant services on September 14th. The implementation of APIs, which has been undertaken mostly internally, but following the standards set by Redsys (which follow Berlin Group Standards) as our main technology provider, has been quite successful and we will be ready on the 14th of September.
We will be able to give third parties access to the payment data their users have consented to share, within the PSD2 scope. The first third parties are currently already testing our infrastructure and APIs.
Specifically, from Spain, I hear voices that PSD2 is not going far enough for banks, on the condition though, there is a clear level-playing field where third parties need to share more information as well. Could you tell me a bit more about that? Should the industry accelerate speed to a new directive to resolve the issues of PSD2 today?
Spanish banks have been particularly fast in adapting to the digital transformation of their services and the delivery of innovative customer experiences. Instead of asking for a new Directive/Regulation, we consider that first, we should give some time to the full implementation of the PSD2. APIs are about to get started in September this year, and we will not be able to assess the effects of the rules and the changes for the market, at least until the end of 2020. This will likely take some time.
Concerning open data for all sectors, we should be cautious and carefully evaluate 3 important aspects:
- what information/data we are asking for (e.g. Raw, Inferred, Observed);
- if the supervisor/regulator will allow us to use that information and in which way
- how we will use the information.
We consider the trend of opening up for all sorts of data should be carefully examined before we ask an initiative in this direction by the Regulator.
We consider that banks still hold the most valuable data in the financial and banking sector, so the prospect of BigTechs entering the banking sector strongly depends on our ability to hold and exploit our data in favor of our clients.
OK, so first we need to observe in detail what the value of data can bring, before looking beyond to see what other opportunities the future can bring?
Yes indeed, we need to analyze very well what we are asking for.
I see PSD2 in fact as a starting point towards a whole new journey, the one of Open Banking, which goes far beyond PSD2 and even payments. I call it the journey to ‘everywhere banking’. How do you look at this? Are we moving to a completely different way of banking?
The banking sector has suffered an enormous transformation in the last decade, and it is clear that more changes are coming.
So the first conclusion here is that we are not just evolving to a different way of banking, but that we need to learn how to constantly navigate from one way to another. It’s how you transform that is relevant, not where you are going in this exact moment.
We consider Open Banking as an opportunity. With the PSD2 Regulation, we can improve our client’s banking experience and we are seeing new ways of getting engaged with them. With Open Banking we also see new business development opportunities by thinking in terms of ecosystems, thanks to the APIs we offer to our clients. In that sense, we think that financial institutions should be evolving to Bank-as-a-Platform in this area.
CaixaBank has already started to take advantage of the opportunities of this new context in its relation with aggregators offering services both to consumers and businesses. The aggregators allow their users to visualize all their financial information in a centralized way, facilitating their financial management and decision-making.
For example, through our platform, CaixaBank has integrated Booking.com, the leading traveling industry platform globally, on its online banking platform. Since July 2018, CaixaBank’s clients can make their travel reservations with Booking.com directly via CaixaBank’s online banking platform, and enjoy some discounts along the way.
This service, different from traditional banking services, is highly regarded by clients using innovative digital channels, as well as is promoting more recurrent access to CaixaBank’s online banking platform.
We see that this combination is going to be the future.
However, in Europe we repeat that it is first essential to wait and see the effects of the implementation of PSD2 and only after that, having learned the lessons from the numerous challenges we have and are going to find along the way, we will be able to decide how to take the next steps in the payments industry. If it is Open Banking, we will try to deliver the best possible Open Banking services we can.
Is the Spanish banking customer ready for this kind of evolution?
As numerous reports have demonstrated, the Spanish bank customer is very sophisticated with mobile banking and digital payments, and so we understand that it is ready for the evolutions we just mentioned. Spanish customers are ready for innovations, and their long-standing trust in banks enables innovations to be received very well and to directly benefit the customer experience.
For instance, the rate of our digital customers, more than 6 million, proves that. We think that they are waiting for more innovation and improvements in relation to the services that we, as a bank, provide to them.
Next level Open Banking: what do you see as the key trends for 2020 and beyond for consumers?
We believe instant payments will continue to grow in value and importance. Besides, when looking at Open Banking into further detail, we believe it will continue to open up, with also cross-industry data sharing, as a detailed analysis of course.
Another aspect that I think is going to be important concerning Open Banking is digital identity. I am convinced that we are going to have a more harmonized approach to digital identity.
We have a lot of processes where digital identity is involved. Facial recognition in the KYC process is just one of them as an additional step, next to video conference in digital onboarding for example.
We are going in that direction, and with CaixaBank, I believe we are going to be part of that journey towards more harmonization in digital identity.
Next level Open Banking: what do you see as the key trends for 2020 and beyond for SMEs?
Instant Payments and the Bank-as-a-Platform are two developments that can really bring value to this segment. The possibility to provide more information than we can extract from other third-party providers will give SMEs the opportunity for new services.
Having only one platform to manage all their services will help them to save a lot of time in the future.
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.