KBC Bank Ireland’s Kelvin Gillen reveals how PSD2 is transforming banking and that banks need to respond to customers in a digital-first way.
Kelvin Gillen is KBC Bank Ireland’s director of transformation and innovation. Prior to joining KBC in Ireland in 2017, he held senior strategy and analytical roles at Danske Bank in Copenhagen and at Bank of Ireland. He was also chair of the Analytics Institute, a professional body for data analytics and data science in Ireland.
KBC Bank employs more than 1,200 people in Ireland and has retail banking hubs in Dublin, Cork, Galway, Limerick, Kildare, Waterford, Wicklow and Kilkenny.
‘People will need banking, but they don’t really need banks as we traditionally understood them’
– KELVIN GILLEN
KBC’s innovation hub in Dublin is where digital solutions are created and tested for customers in Ireland and then rolled out across other KBC markets in Europe. The bank notes Ireland’s young population, growing digital economy and high mobile penetration rates as ideal ingredients for new and innovative digital developments in personal banking.
KBC currently offers digital wallets from four of the world’s leading technology companies; Apple Pay, Google Pay, Fitbit Pay and Garmin Pay. In the first nine months of 2018, it reached a milestone of more than 278,000 customers.
Earlier this year KBC became the first bank in Ireland to allow users to view other banks’ balances from within its app. The bank also recently went live with its open application programming interface (API) developer portal and has invited trusted third parties to build new products and services.
Tell me about your own role and responsibilities in driving tech strategy.
My role is twofold. At the simplest level I run a function, and that function is innovation. In that role I am responsible for the delivery of typically what customers experience. I am responsible for the delivery of both mobile and the online capabilities.
On the other hand, I am director of transformation here, so I also look at the wider transformation story for the organisation. How is the bank changing behind the scenes? How is the technology stack evolving? How is our customer value proposition evolving? What does our innovation roadmap look like?
And that is more of a programme role; much more of a cross-functional collaboration process where we have regular interaction, discussions, bring stuff through guidance, bring it into feasibility and make decisions at an executive level, and then push it into the organisation to get executed.
It’s a local role but obviously as part of a wider group you do end up with a hook into the mothership. I would sit on a number of steering groups that look at a number of initiatives, including multibanking. I would have been involved in multibanking when it kicked off in Group in January 2018 and we decided to go for it in a relatively big way.
Can you sum up KBC’s approach to innovation?
The bank’s philosophy very closely aligns with the KBC Ireland strategy. Our public strategy is to be a digital-first, customer-centric challenger bank. At its heart when we talk about digital-first and when we talk about KBC in Ireland, because it is a relatively young bank and it is a new retail bank, it is not about digitising the old bank, it is about building a new digital bank. That gives us quite a bit of an advantage insofar as we don’t have many of the same legacy issues as other banks. We have a good technology stack, we are already into the new ways of working in terms of Agile and MVP (minimum viable product), and we are quite happy to challenge the status quo.
As regards customer-centric, I think that is also something that was quite mature when we arrived as a retail bank because we were already quite good at using analytics and insights to understand what our customers’ needs are. So, it is not a product push, it is a genuine look to understand what are our customers genuinely trying to do, what do they want to do, and how can we make that as easy and simple as possible.
At the heart of it we are all part of that wider, strategic change in financial services about trying to become more of proactive services partner to customers than just be a reactive service agent.
The third part, the challenger bank part, well, that gives us a licence to be different. That gives us a licence to be more out there; challenging in approach, timelines, marketing initiatives; and we have a strong support from our parent in Belgium to do that.
It is a combination of those three things: really believing in being digital-first and having that DNA in the organisation; being very serious about customers and aware of their needs in order to make them more financially confident; and also trying to be a challenger bank.
Was the multibanking application enabled by the advent of PSD2 more than a year ago?
Very much so. PSD2 is a fact. It is law now and has been on the radar for four years and there has been a strong desire at a regulatory level to open up banking, increase competition, stimulate innovation and improve security.
Across the group we had a conversation … were we simply going to adhere to the regulation or were we going to try and drive additional value for customers from it? Luckily, we ended up in the latter camp and decided to be an early adopter of the legislation and the capabilities that it will introduce, because we really believe it offers something pretty unique and innovative to our customers.
We have a lot of good functionality delivered in the app over the last 18 months. People expect services like cards, the personal loans or the new digital wallet interfaces, but seeing your bank accounts from other banks in the app is pretty unexpected; it is more innovative.
When we look at the marketplace, we look at Starling or Revolut, and in fact we are more interested in what they are doing as opposed to what traditional pillar banks in Ireland are doing. Once again, we are benefiting from our parent’s attitude towards innovation and it is keen for Ireland to be a forerunner for the future of banking.
One of the things we are going to see with PSD2 is the advent of these aggregators of financial data. I think people will need banking, but they don’t really need banks as we traditionally understood them, and PSD2 will make it even less so. The actual banking provider will recede somewhat into the background.
We’ve been studying WeChat in Asia and Simple in Hungary and, for a lot of day-to-day banking, people are going towards service models and simplified payments.
Also, at the beginning of 2018 less than 6pc of contactless payments were made by devices, but by December 25pc of all contactless payments were made by devices or wearables like a Fitbit or an Apple Watch. We have seen a tenfold increase in 12 months in the number of wearables devices being onboarded for payments. And for KBC internally, the cost of bringing these new device platforms on board is a lot less than it was two years ago.
The other area we are looking at is using data to help people create meaningful financial goals for themselves and become more financially confident and manage their longer-term life aspirations – and for that, AI will play a key role.
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