www.retailbankerinternational.com Issue 755 / november 2018

A NEW BALL GAME

CITIZENS LOOKS TO DIGITAL TO EXTEND ITS REACH IN THE US

FEATURE RESEARCH INSIGHT

TD combines West Coast YouGov: improved The regulatory framework style with the latest design customer satisfaction needs to be right for all thinking in Vancouver scores for the big four Open Banking entities

RBI 755 November 2018.indd 1 05/11/2018 16:37:14 contents this month

COVER STORY NEWS 05 / EDITOR’S LETTER 09 18 / DIGEST • Santander Q3: solid results boosted by Brazil, Spain profits rise • SME Open Banking goes live with iwoca- Lloyds partnership • Monzo joins the ranks of the unicorns • Crédit Agricole Italia instant payments go live • Tinkoff mortgage app goes live • to launch Marcus in Japan • Metro Bank Q3 profits double as customer numbers hit 1.5 million • MoneeMint secures assistance to build ethical bank • DBS introduces startup matchmaking platform • Canada’s Central 1 unveils forge digital banking platform CITIZENS BANK 19

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RBI 755 November 2018.indd 2 05/11/2018 16:37:26 contents november 2018

RESEARCH 08 / CONSUMER TRUST The sector has undergone rapid changes since 2008, and it is essential for and building societies to ensure that a strong customer experience remains at the forefront of their strategy. Briony Richter reports 16

INDUSTRY INSIGHT 16 / I-AM Branches tend to be places people have to go, not places they want to go. There is a huge 12 challenge for banks to ensure that they can craft meaningful physical environments, argues FEATURES I-AM’s Nicholas Griffin 06 / OPEN APIS 12 / TD BANK 16 / CCTA APIs provide the gateway to innovative, TD was the first bank to open a branch The assault on the lending industry has been tailored solutions that enhance the customer in Vancouver’s River District waterfront going on for years, cheered on by campaigners experience. Bank’s Imran Haider development. Its design is in keeping with the and claims companies. It is time to wake up to and Capgemini’s Vikrant Karnik discuss their latest thinking and the development’s West the harm it is causing, argues the Consumer true value with Briony Richter Coast style. Robin Arnfield reports Credit Trade Association’s Greg Stevens 09 / CITIZENS BANK 14 / 22 / ENVESTNET | YODLEE Citizens Financial Group has been through Luke Ryder, director of external engagement If Open Banking is to succeed, consumers need a process of reinvention in recent years, and for Open Banking, and Zena El Farra, vice- to feel safe in embracing the opportunities wants to become a nationwide player. Robin president of customer innovation at Barclays, it offers. For that to happen, argues Matt Arnfieldspeaks to executive vice-president and detail the bank’s vision for an ever-more- Cockayne, the regulatory framework needs to head of distribution Simon Griffiths connected ecosystem. Briony Richter reports be right for every entity in the chain 14 22

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Page 1 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580 editor’s letter

UK bank customer complaints hit record high

Douglas Blakey, Editor

nother set of results, and another record number launches of Monzo and Metro. The writer cannot recall of bank customer complaints. any occasion when either gentleman has ducked or A Complaints figures for FCA-regulated firms dodged a question, or declined an interview request. They for the first half of 2018 hit 4.13 million, up 10% from both say what they believe, and believe what they say. the previous six-month period. PPI remains the most Other common features relate to the undoubted ability complained-about product, accounting for 42% of all of both brands to engender fans among their customers. complaints. It is followed by current accounts (15%), The net promoter score at Metro is off the scale, in credit cards (8%) and motor and transport insurance (6%). contrast to traditional incumbent UK banks. It is a similar The volume of complaints received by firms in the first story at Monzo, and both banks enjoy exceptional scores half of 2018 for current accounts rose by 18% from the in terms of employee satisfaction. second half of 2017, and for credit cards by 8%. Excluding There the similarities end. Monzo is genuinely not PPI, complaints increased by 9% (193,360) from the trying to be a conventional bank, but will instead be a previous six-month period. Around half of this was due hub using partner companies, and taking a cut by way of to the rise in banking and credit card complaints to TSB commission. The focus at Monzo is on data, not deposits. about disruption to banking services followings its move Metro is hell-bent on gathering deposits, and is rather to a new IT platform on 22 April 2018. good at capturing low-cost deposits while focusing on To the surprise of nobody after its troubled IT migration, customer service excellence and best-in-class stores. TSB fares especially badly in the latest results. The At the current rate of trajectory, it is quite conceivable proportion of TSB customers that registered complaints that Monzo’s valuation will overtake Metro Bank. For the about current accounts or credit cards is 1.7%; this figure year to date, Metro Bank’s share price is down by 32%, compares with 0.5% at Lloyds, 0.6% at Barclays, 0.7% at giving a market cap of £2.5bn. Monzo’s valuation has RBS 0.7%, and 0.9% at HSBC. increased more than fourfold in the same period, and As complaints rise, so does the total paid out in redress. now has a valuation in excess of £1bn. Monzo has now In the first half of 2018 the total paid was £2.6bn passed one million customers, while Metro Bank is just ($3.3bn), up 9% year on year. This was driven by an in excess of 1.5 million. Metro deposits increased 38% to increase in redress payments for PPI complaints, which almost £15bn in the year to end-September, while lending rose by 13% to £2.31bn in the first half. increased by 52% to more than £13bn. The average redress paid for each PPI complaint upheld Metro is now in profit; Monzo, by its own admission, is has, however, fallen, from £2,087 in the second half of a few years away from break-even. Total revenue at Metro 2017 to £1,765 in the first half of 2018. Excluding PPI, rose by over 40% to nearly £300m for the nine months the total redress paid fell by 17%, from £312m in the to end-September; at Monzo, total revenue last year second half of 2017 to £259m. amounted to just £1.8m. It is hard to find good news among the complaints data, So, in say three to five years’ time, which of the two but there is one positive: packaged accounts complaints high-profile challengers will have the greater valuation? show a 10% fall for the first half of 2018. And is there greater value in data than deposits? From Metro versus Monzo a neutral perspective of being neither a customer nor There are contrasting fortunes for backers of two of the shareholder of either bank, the writer would prefer to most high-profile UK challengers in the past year. back the bank focused on cheap/sticky current account First off, Metro Bank and Monzo share a few and instant savings deposits. similarities, such as charismatic founders, excellent PR, In the last quarter, Metro’s cost of deposits notably fell and investors predominantly based in the US. below base rate for the first time. It is also successfully Tom Blomfield at Monzo and Vernon Hill at Metro are hoovering up commercial deposits, and is almost certain two of the most likeable, approachable, quotable and to benefit from the RBS Alternative Remedies Package. media-savvy bankers one could hope to meet. And both It will be fascinating to continue to track the ongoing had stellar business track records prior to the respective success stories of both Monzo and Metro. <

Get in touch with the editor at: [email protected]

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RBI 755 November 2018.indd 5 05/11/2018 16:37:36 feature | open apis

apis: the future depends on open, transparenT GATEWAYS

APIs provide the gateway for innovative, tailored solutions that hold the key to an enhanced customer experience. Imran Haider, head of product – open API channel at Wells Fargo Bank, and Vikrant Karnik, executive vice-president and global head of cloud and digital services at Capgemini, detail the true value of harnessing open APIs. Briony Richter reports

pplication programming Japan, but not yet in the US. However, that in the digital transformation process.” interfaces (APIs) can support has not stopped Wells Fargo from noticing In addition to enabling a wider range of A banks in pursuing new distribution the benefits that the system can offer its own channels, APIs allow banks to respond quickly channels for their products and services. customers. to rapid changes in digital technology. Open Finding the right touchpoint for customers Haider continues: “There isn’t, at this APIs will enable banking organisations to is essential in the banking industry, and APIs point, a directive here in the US, but we have gather actionable data from various aspects of can generate new and more personalised proactively seen the value of what APIs can customer behaviour, including buying habits, customer insights that will enable banks and deliver for our customers, and have started out savings goals and social interactions. other financial institutions to improve the on this journey really based on that customer Many incumbent banks suffer from a overall customer digital banking experience. value. The functions that we have live are reputation of having slower infrastructure Banks at the forefront of the Open Banking similar to what the UK has on the retail side.” due to legacy systems. However, using era will harness the power of APIs to better APIs correctly can modernise those understand what their customers want, and AGILITY AND ABILITY systems, allowing them to keep up with the how best to meet their needs. technological advances. Imran Haider heads up the API business Vikrant Karnik leads Capgemini’s cloud Speaking about the integration process, at Wells Fargo, which established its Open and digital services business for the financial Haider notes: “Security is very much a Banking channel two years ago. The goal services sector. Expanding on the capabilities baseline for us. For anything we build, for Imran and his team is getting banking of APIs, Karnik states: “In our recent report, the foundation starts off with security and products, solutions and features out to what we found was that as customers are compliance. The next layer up is looking at customers in the experiences that are most going down the path of digital transformation, what features we can provide, and whether relevant to them. By doing so, the bank aims APIs are becoming an integral part of enabling these features are valuable. to create longer-lasting and stronger customer that journey. “The third layer is the developer experience. relationships. “The challenges that the digital When you build an API, while the Speaking to RBI, Haider outlines the transformation process is having are driven functionality may be for a consumer, what benefits of APIs. “A lot of the time, people by how to make the customer experience you have is a developer from a partner that is think of banking as its own use case – doing better and how an organisation can digitise its actually going to do the integration – so we XYZ at the bank – but it’s really part of a operations. Building agility and the ability to have to focus on that developer experience. broader set of use cases,” he explains. “There’s react to changes has become an essential part.” We want to make it simple and easy for the a whole process that includes the payment as He continues: “APIs are a big enabler. developer to understand what the API does.” well. So what APIs will do is take banking’s Customers will ask for a range of channels Haider adds that while the back-end process small features and functions and embed those to engage in, and you must have the ability may be very detailed, the complexities are into the broader context, so customers can to provide that. APIs are a way for an hidden from the consumer, enabling the bank proceed seamlessly.” organisation to build that robustness, but, to provide a seamless platform to conduct Open Banking went live in the UK in at the same time, have the contact level. banking tasks. January 2018. There are similar regulatory Essentially, what we found is that APIs are Part of Karnik’s role at Capgemini is to directives in countries such as Australia and becoming more prevalent and more important support clients on how to accelerate their

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RBI 755 November 2018.indd 6 05/11/2018 16:37:37 feature | open apis

fashion through multiple different channels. He adds: “When you use APIs to expose banking services, you have to remember it’s like building a new door in your house: you can’t just punch a hole in your house. Banks have put a lot of money into making sure their systems are protected and secure, so you can’t just punch a hole in it. Building a very secure gateway that allows APIs becomes an integral part of how you set up these gateways. “If a bank offers a product or a new service, it has spent a lot of time making sure the product is thorough, clean and safe, and then it does the grand reveal. When you go to APIs, you can’t really take that approach because you don’t really know what your end customer wants. You have to take the approach of working with a lot of APIs, make a lot of effort to have developers consume these APIs, Imrain Haider, Wells Fargo Vikrant Karnik, Capgemini and then figure out which are working and digital banking transformation. He notes that which are not.” that is something we will pursue. there are three different types of support that “Last year we started a partnership with he offers to financial organisations: CUSTOMER DRIVERS Intuit on the mint.com platform and 1. Strategy: Helping businesses think QuickBooks online. QuickBooks online is through the approach to this new model, Enhancing the digital banking experience for an accounting platform for small businesses; and the changes needed to facilitate it; customers requires quick action but, more Inuit builds QuickBooks, and our customers 2. Setting up the organisation: Hiring importantly, strategic action. – small businesses – then go onto QuickBooks tech-savvy people with a good working Digital technology gives banks the for accounting. knowledge of banks, and opportunity to regain trust with customers. At “That was an opportunity for us to 3. Technology: Developing a secure the heart of that trust is data and APIs. Every recognise that it would be valuable for environment, and building connections time a customer clicks, swipes or searches, our joint customers if we could bring back into the legacy system without banks like Wells Fargo have an opportunity banking information securely and easily breaking them. to use that data to find the best services and into QuickBooks for customers to view products for individual customers. their financials. It’s definitely something we Banks may choose to use Capgemini for APIs and Open Banking open doors to new focus on where we can find value for our all three levels of support, or just for certain competitors, so incumbent banks also have to customers.” aspects of the process. adapt to an environment that is now filling Across the world, consumers are shifting Although APIs help drive digital up with fintechs that offer a quick digital towards digital methods of banking, and transformation, the institution integrating experience from the start. Haider notes that Wells Fargo’s mobile the platform must always ensure that the For his part, Haider does not view fintechs banking customer base is now much larger legacy system in the back end is not becoming as a threat, but as an opportunity to find the that its online banking base. He says: “Digital over-burdened. As Karnik highlights: “With right partner – if both can add value to the innovation has been part of our DNA from a bank the size of Wells Fargo, there is a lot end customer. Recalling an experience that the earliest days of online banking. We have of infrastructure; those banks start to collect Wells Fargo has journeyed on, Haider says: been focused since then on creating a perfect what I call a ‘museum of technologies’.” “Broadly speaking, APIs open up partnership digital experience for our customers.” The challenge, he notes, is getting those opportunities. If we can partner with a He continues: “My perspective on digital transactions out to other people in a secure company and drive value for a joint customer, adoption is that we want to create the very best experience and products we can. We talk to our customers about when they want to wells fargo: Digital and mobile adopt which touchpoint. The digital adoption is really about the consumers and when they • Wells Fargo currently has 29 million customers. It continues to invest in are ready.” digital (online and mobile) active the mobile channel. Over the next couple of years, both Haider customers, including 22.5 million and Karnik agree that the banking industry • Wells Fargo had six billion digital mobile active users. will be driven by further enhancements to the interactions in 2017. • For the first time, in May 2017 customer experience. Finding new ways to Wells Fargo had more mobile • Digital consumers who log on, do so deliver services to customers in a channel they active customers than online active on average every 42 hours. < desire will bring about a trusted and more secure relationship. <

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RBI 755 November 2018.indd 7 05/11/2018 16:37:40 research | consumer trust

In 2013, the average satisfaction score for the four banks was 66%; this rose to 68% retail banking: in 2015, before jumping to 71% in 2017. Similarly, while 15% were dissatisfied in 2013 that number decreased to 12% in 2017. Of those four, Barclays recorded the the changing shape highest customer satisfaction improvement. Its individual score has grown by seven percentage points since 2013, rising from 62% to 69%. of consumer trust Today, banks face another challenge. With the increase in technology, competition for customers has become fiercer than ever, giving The banking sector has undergone rapid changes since banks a huge incentive to improve their the 2008 financial crisis, and now Brexit poses similar customer experience. By implementing top-of-the-line customer uncertainty. It is therefore essential for banks and building service solutions, banks can create a better all- societies to ensure that a strong customer experience remains around user experience; this essentially leads at the forefront of their strategy. Briony Richter reports to continuing long-term loyalty. TALKING POINTS fter the financial crisis, levels of consumer trust in retail banks, YouGov highlighted that, over the past year, A unsurprisingly, took something of the bank with the highest word-of-mouth a hammering. score – how many people are talking about However, research by YouGov, published the brand – among its own customers is in its Shape of Retail Banking 2018 report, B, the digital challenger bank launched by highlights that the ‘big four’ banks have Clydesdale Bank and Yorkshire Bank in 2016. improved their customer satisfaction scores The bank’s overall Buzz score – which over the past five years. analyses whether the attention a bank is The YouGov data explores the banks and generating is positive or negative – for the building societies with which customers are past 12 months measured +27, which YouGov most satisfied. CUSTOMER SATISFACTION describes as “healthy”. The bank also scores respectably well on the Apple app store, where SWITCHING ACCOUNTS Many big banks struggled to get their core it is rated at 4.6 out of 5. message over to customers after the 2008 first direct and Metro Bank also make the It is often said that people in the UK are crisis. The period immediately afterwards top five for positive reasons, with Buzz scores far more likely to get a divorce than switch focused mainly on recovery, and focus was of +31 and +21 respectively. Metro Bank has current account. There are only a few often lost as a result. been recommended in the past as one of the reasons why many consumers would think Restoring the focus on improving the most trustworthy and transparent current of switching, and they are usually something customer experience was a key element of accounts. This is mirrored in its third-quarter drastic on the scale of TSB’s continual IT how high street banks have regained customer results, which show significant growth with meltdowns. trust. YouGov BrandIndex data reveals that the bank on course to reach its 2020 target. According to the latest switching service taken together, the ‘big four’ – Barclays, Making the top five, but for very different statistics for current accounts, it is of no HSBC, Lloyds and NatWest – have seen their reasons, are the Norwich and Peterborough surprise that TSB suffered major customer satisfaction scores rise significantly since 2013. Building Society, and TSB. Both scored high losses; following multiple outages, TSB saw for word-of-mouth, but because of their over 21,000 customers leave for another HOW LONG HAVE YOU HAD YOUR MAIN shortcomings. TSB’s were widely reported. provider. CURRENT ACCOUNT? The Norwich and Peterborough Building The YouGov data shows that almost seven Society recently closed down; the building More than 20 years 36% in 10 (69%) Brits believe all banks provide society announced in January 2017 that it was essentially the same service. Furthermore, 11-20 years 21% to retire the brand that traces its origins back over a third (36%) stated that they have had to 1852. 7-10 years 14% the same current account for over 20 years. Creating valued relationships with Only 4% have opened their primary current 4-6 years 13% customers is at the heart of a strong customer account within the last year. However, the 1-3 years 12% service strategy. This is crucial to customer report notes that this figure can also include satisfaction – but it is often easier said than younger people opening an account for the Less than a year 4% done. Those relationships require trust, first time, rather than switching. Source: YouGov transparency and consistency. <

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RBI 755 November 2018.indd 8 05/11/2018 16:37:43 feature | citizens bank

citizens bank: widening its scope as a digital player

Citizens Financial Group has been through a process of major reinvention in recent years, and now wants to become a nationwide player. Robin Arnfield speaks to Simon Griffiths, executive vice-president and head of distribution at the Providence, -based bank

cquired in 1998 by Royal Bank of CITIZENS ACCESS which is available nationwide, is part of Scotland (RBS), Citizens expanded Citizens’ strategy to expand its reach beyond A through a series of strategic In July 2018, Citizens launched a direct-to- the states it serves through its branches. acquisitions which transformed it from consumer standalone digital bank, called Citizens launched a digital investment a small local bank into a major regional Citizens Access, to cater to digitally savvy advisory platform in September 2017 called player in the US’s North-Eastern and Mid- customers. The launch of Citizens Access, SpeciFi, which won the Celent Model Wealth West regions. Manager Award for New Platform in April Citizens was divested by RBS following 2018. According to Citizens, launching the financial crisis, and held an IPO in 2014, SpeciFi made it the first large regional bank with RBS selling its remaining stake in 2015. to offer a fully integrated banking and digital It had assets of $155.4bn as of 30 June, 2018, wealth management service. plus 3,200 ATMs and 1,150 branches in 11 states in the , Mid-Atlantic and CUSTOMER CONVERSATIONS Mid-West regions. In the last year, Citizens has taken Citizens takes its corporate responsibilities significant steps to widen its footprint across seriously, as witnessed by its receiving a the US. Its August 2018 acquisition of Community Reinvestment Act rating Franklin, Tennessee-based Franklin American of ‘outstanding’ from the Office of the Mortgage Company gave Citizens a $41.4bn Comptroller of the Currency. The rating nationwide mortgage servicing portfolio. This was for the OCC’s most recent examination generated $13.7bn in annualised originations period: 1 January 2012 to 30 June 30 2015. in the first quarter of 2018. “Helping make our communities stronger Citizens said the acquisition made it one is at the heart of our values, and we’re of the top 15 US bank-owned, residential pleased that the OCC recognised Citizens’ mortgage servicers and originators, adding work to put the needs of all customers front 200,000 servicing households, 600 and centre,” said Bruce Van Saun, Citizens correspondent relationships and 1,000 Financial Group’s chair and CEO, at the time. wholesale-broker relationships. Simon Griffiths, Citizens Bank “We look forward to further advancing our

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RBI 755 November 2018.indd 9 05/11/2018 16:37:48 feature | citizens bank

efforts to make our communities even better events such as Invest in Girls. This programme, Island. “She wanted to do something regularly places to live, work and play.” which involves several FIs, provides financial in our communities,” Griffiths said. “So we Griffiths believes that enabling Citizens staff education and information on careers in started to do random acts of kindness – for to have engaging conversations with customers for girls aged 15-16. example, helping a customer with a challenge is critical. He joined Citizens in 2015 from Retail banking consultant David Cavell or taking cookies to the local firehall. We Santander, having previously worked at says branches need to create a local ambience, currently have nearly 1,200 branches where JPMorgan Chase and originally at Accenture. for example by displaying pictures relevant colleagues do random acts of kindness once “I manage all our ATMs and other physical to the community, and become a destination a month on the same day, to thank people in distribution networks such as branches, and point. “Branches have to be more than just our communities.” the functions that support those channels,” he says. “We spend a lot of time thinking about how we connect with our customers We want to bring technology and data and with local businesses and communities. Adding value to the customer experience to the front to create personalised and being relevant to clients’ lives is very important. How we provide advice and enter experiences and advice the customer conversation is a vital aspect of retail banking.” In April 2018, US telco AT&T announced brand support,” he notes. “If they aren’t a Griffiths recently toured all Citizens’ that it had won a contract to provide advanced destination for things other than core banking branches over a whole week. “I saw 1,300 technology, including digital signage, for transactions, they will die, as transactions colleagues in six states in an initiative to 1,100 Citizens branches. move to digital channels.” recognise staff-members’ work,” he says. “As part of our retail network Citizens displays local works of art in “I heard about a colleague in a branch who transformation, we’re leveraging digital its branches to provide a community feel. learned sign language to communicate with signage in new ways, which has a tremendous “We’ve started looking at community a deaf customer. One branch connected with impact on both customers and colleagues,” involvement beyond just the things that a local florist through a branch community says Griffiths. “Digital signage allows us to businesses normally get involved in, and event, as the florist provided flowers for a local provide relevant content, specific to the needs make meaningful community involvement group’s fundraiser. So we partnered with that of certain communities and branches, which and connections part of our DNA,” explains florist to help them grow their business.” helps us to have more engaging conversations Griffiths. “At Invest in Girls events in our with customers.” branches, we immerse the attendees in BRANCH INVESTMENTS In-branch digital signage has moved away banking advice and financial literacy. We talk from just providing adverts, to offering the to them about the financial challenges they’ll Citizens’ stated aim is to refurbish over 40% ability to visualise more complex financial face and the planning they need to do.” of its branch network by 2021, and its branch topics. Another programme Citizens offers was reinvestment programme involves looking at “We can use screens to start a conversation, suggested by a regional manager in Rhode its footprint holistically. such as a trivia question about how much money is needed in retirement,” Griffiths says. “This lets us move to advice-driven conversations. We also link the signage with tools we developed internally, such as a video learning tool we put onto staff handheld devices for learning and sharing best practices.” Griffiths says Citizens believes in a “human digital” approach to technology investments. “It’s not just about technology in isolation or just about people,” he says. “We want to bring technology and data to the front to create personalised experiences and advice.” COMMUNITY

To achieve its goal of a holistic ecosystem, Griffiths devised a strategy combining the colleague, the retail and small business customer, and the community aspects. Citizens uses its branches to get involved with the community, for example by hosting is home to the Phillies baseball team

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RBI 755 November 2018.indd 10 05/11/2018 16:37:51 feature | citizens bank

Citizens is also committed to its branch network

“We continue to invest in branches and “Currently, we’re working on different segments that like the convenience of digital have created some new branch formats,” formats for the supermarket branches, as banking.” says Griffiths. “For example, we opened our there are many differences between individual first wealth centre in Boston, supermarket branches. So we’re looking at FINTECH PARTNERSHIPS recently, and others will be coming onstream how to meet the needs of each community via shortly. We also opened some digital format the local supermarket branch.” “We have quite a few fintech partnerships,” branches.” In Citizens’ digital-format branches, staff says Griffiths. “For example, we’re partnering Citizens is also investing hugely in training members provide advice and help to clients with Zelle for P2P payments, and we’ve its staff. “When we think about our branches, with the use of technology, rather than acting launched a digital small business lending we try to develop the right format to facilitate as traditional tellers. platform with Fundation.” conversations with customers,” Griffiths says. “We look at what the right complement is for our staff, and what are the specialist skills digital augments our strategy to provide needed for a local community. We align staff and technology to local communities, which different types of service to clients, and is a complex programme to execute. But when you get it right, it’s very good. meet their needs on their terms “We have a big focus on data analytics internally to help us understand our customers. We use data to personalise advice, “We have a concierge model in some digital Citizens’ SpeciFi digital advisory platform make it relevant to customers. But we team branches where we meet and greet clients and was developed with West Coast-based fintech this with the colleague dimension, which explain how use the digital tools,” Griffiths SigFig. “Our mission with SpeciFi wasn’t to is about how to have conversations with explains. “We’re also investing in a number of go fully digital,” says Griffiths. “Clients can customers to really get to know them and different self-service technologies to facilitate opt for fully digital or have access to human use the data to offer personalised advice and customer transactions.” advisors by phone.” information.” Griffiths says Citizens’ digital-only bank Citizens is also talking to chatbot providers, Citizens operates a network of in-store is aimed at a nationwide customer base. “It but is yet to develop a platform similar to branches in supermarkets in New England. augments our strategy to provide different ’s Erica tool. “Supermarket branches are an important types of service to clients, and meet their “With this type of tech development, you channel,” says Griffiths. “We get a lot of foot needs on their terms,” he says. need to be sure they augment the customer traffic in those branches and they provide a “The demographics for the digital bank experience in a meaningful way and some great way to have conversations with new and are younger people and millennials, but not of these technologies are rather early on,” existing customers. exclusively. There are a number of customer Griffiths concludes. <

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RBI 755 November 2018.indd 11 05/11/2018 16:37:55 feature | td bank

td bank: a new branch in vancouver’s award- winning new disrict

Canada’s TD was the first bank to open a branch in Vancouver’s new upscale River District waterfront development. The design of its branch is in keeping with the latest thinking for branches, while adhering to the West Coast style adopted by the River District development. Robin Arnfield reports

iver District is a 130-acre site branch banking expert David Cavell. “The convenience and the community. We focus on bordering the Fraser River, River District branch is not dissimilar to the delivering the most comfortable, convenient R the longest river in British latest style of branches deployed by [West banking environment by introducing a Columbia, and has capacity for 15,000 Coast US-based] Umpqua Bank. warm, hospitality-focused design allowing inhabitants in 7,000 residences. “In general, the big Canadian banks have for deeper customer engagement. This is Opening this Autumn, it has won 10 been investing far more in upgrading their reflected in the use of furniture, layout, Canadian and international architectural, branches than UK banks have done.” colours, lighting, signage and graphics. All urban design and community planning new designs incorporate energy-efficient and awards. So far, only Scotiabank and a credit BRANCH NETWORK sustainable elements, e.g. LED lighting, and union, Westminster Savings, have joined TD environmentally friendly finishes.” in River District. “Our retail network has evolved into a range Ferreira says TD goes to great lengths to In terms of demographics, the community of branch formats designed to meet the needs understand the people and places making consists mainly of young families, of the markets we serve,” says Liz Ferreira, up the local communities it serves. Each professionals, first-time buyers and people vice-president of branch channel strategy at branch reflects a special connection between downsizing to smaller homes. TD. “These include flagships, full-service TD and the local community; for example, TD’s branch features sustainable interior branches, help-and-advice [tellerless] centres new locations have murals or art celebrating elements like responsibly sourced wood and micro-convenience centres.” the history of the area and representing the finishes, recycled materials, low-flow plumbing Flagships and full-service branches offer a community and energy-efficient lighting. TD says the range of services including financial advice, The River District branch pays tribute to branch can be reorganised to accommodate teller services and self-serve options such the location’s past with a large mural of the the growing needs of the local customer base. as ATMs, while help-and-advice centres North Arm Fraser River and the Canadian It can add more rooms for customers to meet primarily focus on providing financial advice White Pine Company Mill, circa 1946. with financial experts, or additional teller to personal and business customers. Although “The River District Crossing location is a space to reduce waiting. these centres lack traditional teller services, full-service branch and is designed with all the TD says the branch has an inviting, open- customers have other options to conduct above principles in mind,” says Ferreira. “In concept feel to encourage collaboration and transactions, such as ATMs and iPads. addition, the branch was designed to fit into conversation between staff and customers. Micro-convenience centres are located the architectural style of the new community, The customer lounge offers a space to gather near full-service branches and offer self-serve and incorporates West Coast design style.” or wait for appointments, with access to options such as TD’s Green ATMs. Vancouver’s distinctive West Coast a beverage station and free Wi-Fi. Digital modernism architectural style involves wood, displays offer customers access to current DESIGN PRINCIPLES glass and aluminium, and reflects the natural information and advice on managing their environment. finances while waiting to see customer service “TD is committed to helping people live According to the Canadian architect, the representatives. their lives with greater financial confidence,” style reflects the concept that “architecture is “The TD design ticks all the boxes in terms says Ferreira. “We translate this commitment rooted in its place by form and materiality, of the latest style of branch,” says international into three design principles: comfort, responsive to its climate and other natural

12 | November 2018 | Retail Banker International

RBI 755 November 2018.indd 12 05/11/2018 16:37:57 feature | td bank

forces, and enriched by the integration of can assist and educate customers on personal “With the rise of digital banking, there artistic influences”. banking with smartphones or iPads. is less need for people to visit branches In addition to TD’s design principles for “The digital bar focuses on providing an for routine transactions, so a focus on and traditional full-service branches, the River assisted self-service experience,” explains involvement with the local community is District location has different types of office Ferreira. “Financial service officers have iPads important,” Cavell continues. space to meet the needs of local customer to help customers with transactions, and “Banks need to find ways to bring people demographics and preferences. there are interactive terminals that provide into their branches.” “We’ve introduced collaborative offices step-by-step instructions on how to do digital Ferreira says TD’s Green ATMs are standard where advisors sit side by side with our banking.” across its network, and provide an option of customers, and family offices that comfortably “Digital bars are increasingly becoming various Canadian banknote denominations. accommodate larger families or businesses,” a standard feature in new branches,” notes “What’s different with newer locations is says Ferreira. Cavell. “The concept has been around for a that ATMs are located physically inside the few years.” branch,” she says. DIGITAL TECHNOLOGY The digital screens in TD locations contain “This allows for better customer information for customers on products and interactions and provides an opportunity The River District branch, which is open services, details on the advisors at the branch, to help customers needing assistance with seven days a week, will soon include a digital and information about TD’s community transactions. After hours, ATMs will still be ‘bar’ where financial service representatives involvement, says Ferreira. accessible to our customers.” <

www.retailbankerinternational.com | 13

RBI 755 November 2018.indd 13 05/11/2018 16:38:04 feature | barclays

barclays: a vision for open banking

Open Banking has the power to transform the way customers and banks engage and manage their finances. Luke Ryder, director of external engagement for Open Banking, and Zena El Farra, vice-president of customer innovation at Barclays, detail the journey and the bank’s vision for an ever-more-connected ecosystem. Briony Richter reports

he crux of the matter is that Open “A lot of our customers have current Ryder believes Open Banking gives Banking is a whole new level for the accounts elsewhere, and they are telling us that customers back control and, through Barclays, Tfinancial sector. And for it to work, they really value seeing all their balances and raises levels of awareness. it needs a completely new way of thinking. transactions in one place. That functionality is “The key thing that we try to emphasis Both banks and fintechs will need to something we just launched a few weeks ago. around our proposition is that customers are ensure agility and be better equipped to adapt It feels really simple, but our customers are at the centre and are absolutely in control,” he with rapid changes, as the system demands telling us that they really need that ease and notes. “In the same way with your financials, continuous innovation. The new strategy simplicity of managing their finances. Logging you expect to be able to use your card when overturns the way traditional financial services into other apps to see separate balances and and wherever you want; we give the customer have operated, but brings a host of valuable transactions is now a thing of the past. We all that functionality. opportunities. were actually the first big high street bank to “We do the same with Open Banking, Open Banking hit the UK in January do that.” so you go through the API and on the app 2018. Since then, both incumbent banks and In contrast to HSBC, which decided to you are able to see who you are sharing your fintechs have been exploring how to harness launch a new standalone app, initially as data with. In just one click you can turn it its capabilities and present customers with the a beta then as the Connected Money app, on and off. With screen-scraping you don’t best offerings. Barclays has opted to integrate Open Banking have control or transparency, and that’s why Discussing what Barclays has been up to through its mobile banking app. Customers it hasn’t had the take-off, but Open Banking since the launch, El Farra says: “There are using the app’s latest version can enjoy does have that potential.” two angles to Open Banking, and Barclays is the multiple account views as a feature. It This can be tricky to explain to consumers: playing a role in both. There’s the regulatory allows customers to view their balances and as an industry-first it is both new to banks agenda – so our obligation for our APIs out transactions for other current accounts – both and the public. Consumers remain largely in on the shelf for others to come and get. If you personal and business – with other high street the dark, and the bulk of those who are aware are a Barclays customer and you want to use banks, including Lloyds, RBS, NatWest, of what is on offer fear a potential abuse of the old app, or any other app, you will have Nationwide or Santander, once integrated data. On the eve of Open Banking going live, the ability – with your permission – to pour through the APIs. NatWest reported cybersecurity risks; then the your current account information to those Facebook-Cambridge Analytica scandal blew apps. We met that obligation right at the THE RIGHT DIRECTION up on 20 March 2018. Those events further start of the year, but since then we have gone heightened public concern about entrusting way beyond that in thinking about how our Technology is crucial for Open Banking. For personal data to banks and tech companies. customers can get the very best of what Open incumbents, it means actively working with El Farra says: “When you describe Banking can do in our own channels, and in a developers and listening to consumers to something like Open Banking to a customer way that they have asked for. ensure all the relevant information has been in technical terms, it can sound really “We have spoken to customers up and gathered to delve into the new features. frightening. What is an API? Why do I need down the country, asking them what they However, while awareness of Open Banking to know about it? We learned that lesson very want out of this. They told us that if we build in the UK remains low, Barclays’ decision to quickly. What we found was that if you flip something in the main app that it is built in roll out its Open Banking feature ahead of the opportunity on its head and talk about a secure way and makes them feel in control, the other high street banks is a step in the what it enables for the customer – describe that they can switch on and off when they right direction, and could potentially boost the scenarios and use cases – the customer gets want, then that is something they would use. awareness of what it can do for customers. more on board.”

14 | November 2018 | Retail Banker International

RBI 755 November 2018.indd 14 05/11/2018 16:38:06 feature | barclays

It is often assumed that tech-savvy millennials are the ones rushing to their apps to use the new features, but Barclays disagrees with that stereotype, and has seen adoption across all demographics. “What we are seeing is that the more mature customer base is actually a lot more multi-banked – they have a lot more current accounts. They have this really fragmented and fractured landscape that they are managing, so they actually have the greatest need for a use case like this. On the other hand, millennials are really keen to try new things and they love the Barclays app, but they are not as multi- banked,” El Farra notes. “Another angle is that if you are already using the Barclays mobile banking app, you are probably our most engaged customer and the type of customer that has already benefited Luke Ryder, Barclays Zena El Farra, Barclays from things like cashback. Therefore, you She continues: “They then ask how to do are much more open and willing to try new “Five years ago, there were a lot of things it in a way that is safe. That’s where Barclays things, like aggregators.” you could not do through the app, and came in. It’s possible to now engage with Over six million customers log in to the customers told us that they wanted to engage that opportunity without having to do what Barclays mobile banking app every day, and it at the time and place of their choosing; they you’ve been asked to do in the past, which is is a trend that is making headway worldwide. wanted to be able to do more things through to give away your username and password to the Barclays mobile banking app. We also an application you may never heard of. We make sure that, when there is the odd occasion know that has frightened customers in the where the customer has to go to a branch, past. What we at Barclays have done is given they have the ability and support to do so. customers the ability to get all that value “It’s something that we will continue to without ever having to hand over sensitive the more mature look at, depending on how our customers information by securely connecting the high want to engage with us; we keep that under street bank to another or another app that customer base is review. It’s all about customer need.” they chose to use.” Branches are set to evolve to serve a Both add that the initial responses actually a lot more different purpose, and Barclays is going to have been positive, and that at this stage evolve them in line with customer needs. in the process, the engagement level of multi-banked Asked about hurdles in the Open Banking Barclays customers has surpassed the team’s integration process, Ryder notes: “This will expectations. As a completely new way of only work if it has customers’ trust. Customers banking, Barclays and all other participating think about their data the same way they banks had very little to predict from, but it think about their money, in that they expect is clear that Barclays has been very pleasantly The impact in the UK, at least, has been a whoever is looking after it to protect it and surprised by the response. decline in branch numbers. In 2017, one in ensure that no harm can come to them as a Through its control centre, Barclays aims eight UK branches closed: 1,169 in total. result. Therefore, we need to be absolutely to drive home the message that it is the RBS NatWest was responsible for the largest clear about the best way they can share their customers that control who they want to closure programme in 2017, shuttering 517 data, and make sure that we are consistently engage with and how that interaction occurs, branches. As of August 2018, it had just 89 helping our customers along that journey.” and that it can be stopped at any time. branches in Scotland, and 118 in England and She adds: “We know from our research Wales. that the thing that worries the customer is DIGITAL VERSUS PHYSICAL However, while some high street branches the prospect of having to hand over their are closing, hundreds across the country are username and password, and having someone Consumer desire for digital technology as being refurbished – underlining how banks else store them on their site; however, that is a tool to manage money on the move is believe the branch will continue to play a the old technology. When we talk about the showing no signs of abating, with banking pivotal role in modern banking. same use case – linking accounts together apps now the principal means by which many On this subject, Ryder highlights: “We still in one place – we frame it in the new world consumers access their accounts day to day. have the largest branch network on the UK of Open Banking where the customer is no There are now also a variety of tools available high street, but our customers tell us that the longer expected to hand over those details. to customers to help them bank the way that network should depend on how and why they Suddenly, customers can really see the value suits them best. want to engage with us. and it makes them feel secure.” <

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RBI 755 November 2018.indd 15 05/11/2018 16:38:08 industry insight | i-am

when combined with some form of physical experience, and it is in this area where I am welcome to a new anticipating some activity from banks in the coming years. Frankly, most bank branches I see are so boring. The challenge to improve these is not world of super- inconsiderable, and many attempts until now have failed. Banks are not places customers go for a cup of coffee, yet they expect a cup of coffee. personalisation Banks are not places people go to use iPads, but they expect to be able to use the internet. Generally, banks are places people have to go, Branches tend to be places people have to go, not not places they want to go. places they want to go. There is a huge challenge for Again, as leading banks have set about – and resolved – the digital challenges, they banks to ensure that they can craft meaningful physical will need to apply themselves to solving the environments, argues I-AM’s Nicholas Griffin relationship between the physical and digital channels. Banks, why not set yourselves the or the last five years, banks have challenge: how do I get my customers to bring been battling with their ‘legacy’ their friends to my branch? Ftechnologies and fighting to keep pace with the needs of modern consumers. Let’s get phygital In many cases, it is true that they have A friend of mine who works for Accenture been doing what they can to keep pace with coined the phrase ‘phygital’. Although it is the likes of Apple, Uber, Netflix and Amazon an awkward word, the term describes the etc., which set the benchmark for customer future of retail banking: the need for physical experience excellence. and digital channels to work together. Yet, This is not just the case with the front-end somehow, banks are not achieving this and customer-facing experiences, but also in balance. Digital has delivered adaptability, the way their back-end technologies inform Nicholas Griffin, I-AM personalisation, convenience and simplicity. their decision making and insight, driving By continuing to evolve those experiences For banks to create meaningful physical better and better experiences as a result. through informed decision making, speaking environments, they need to apply the same It is normal with any dramatic change in personally to customers’ individual tastes as philosophy as was previously so successful distribution for organisations to race toward they evolve and change, smart banks have in the digital world to the physical spaces the new, perhaps forgetting that human created brilliant solutions and begun to they create. How do you make spaces behaviour should be the starting point for any redefine what the term ‘bank’ means in the that are whatever people want them? That customer experience. In doing so, mistakes minds of customers. This is especially the case are convenient, smart and adaptive? That have been made. I am reminded of gesture- with young customers. facilitate interaction, seed growth, support controlled banking in branches, phalanxes of communities and deliver business results – iPads, huge touchscreens and other expensive Liv: a brilliant solution and, most importantly, have a meaningful wastes of money that have been deployed in I am a big fan of EmiratesNBD’s Liv digital purpose? bank branches recently. bank, a brilliant solution that is seeing a Perhaps this does not mean a ‘branch’ in the massive uptake in the Middle East, especially traditional sense – or even the modern sense Some banks are getting it right among young customers and women. – at all? Perhaps the term ‘phygital’ means the As banks have struggled to redefine their In Europe, Pekao Bank is leading the way bank’s physical experience is just part of an purpose in a consumer-driven, young, with another brilliant digital banking offer, ecosystem of physical experiences that come convenience-driven, loyalty-free world where recently recognised by Accenture. In Latin together under the facilitation of a new- everyone is bombarded with messages, offers, America, Banco Original is doing wonderful world bank. Whatever the solution, it will be and digital noise, where customers are not work to create an experience that is engaging different from bank to bank. motivated by what they are told to do, but by and useful. There are exciting times ahead, where what they discover or what is recommended, With so much exciting work going on in everything we know in the physical world we have seen some banks get it right. the digital space, I am left wondering what will be turned on its head and redefined, in How have they done this? Well, it would role the physical environment has in the the same way, it has with digital. And when be a gross oversimplification to suggest they future of banking. One thing is for sure: it all these channels work together, that is when did it through design, but perhaps not so to will not be the stuffy, dental surgery-type of amazing will really happen. suggest they have achieved this through a experience we were used to until recently. PS: Forget about talking to ‘segments’; the philosophy: by creating smart, intelligent and There is a widely held belief that digital term is so old-school. Speak to individuals all adaptive experiences that customers want. banking is brilliant, but it is supercharged the time – not segments. <

16 | November 2018 | Retail Banker International

RBI 755 November 2018.indd 16 05/11/2018 16:38:09 industry insight | ccta

The CMCs are carpet-bombing lending businesses with hundreds – in some instances rate caps will not thousands – of claims at a time. The actual consumers often have no idea that claims are being made in their name. There is ample evidence of widespread abuse of GDPR and kill lenders, data-protection rules. If the lenders refuse to settle, the CMCs simply refer the claims en masse to the Financial Ombudsman Service (FOS), which claims will charges a £550 ($714) case fee for every individual claim, regardless of its validity or data legality. The Budget’s ‘assault’ on the lending industry has, in fact, been going on for years, cheered on by campaigners and claims Institutional blackmail This is a form of institutionalised blackmail, companies. It is time to wake up to the harm it is causing, and unless the FCA and FOS recognise what argues the Consumer Credit Trade Association’s Greg Stevens is happening and act to stop it, it will lead to more business closures. This might be great ll credit executives know their ‘three more likely, seek out second-best choices. news for the debt campaigners, but not for Cs’: character, capital and capacity. This particular penny has seemingly started the consumer. The regulators are overseeing AThese are the key factors a lender to drop with even the most ardent anti-credit the destruction of a regulated industry and its takes into consideration when deciding campaigners. Stella Creasy MP led the charge replacement with an unregulated one. whether to accept a request for credit. for the payday cap, and regularly insists it has The third, and most benign, C is But for many in the industry, the three Cs been a great success. But in the same breath, competition. This has the potential to pose have taken on a wholly more sinister meaning, she also acknowledges its great failure: lenders a threat but, in contrast to caps and claims, because they also neatly denote the three perils have ‘shape-shifted’ to comply with the new lenders welcome it. that pose an existential threat to the viability regulations and keep meeting consumer The credit industry has always been a of their businesses. These alternative three Cs demand – which is not affected by a cap. diverse and competitive space. It is well used are caps, claims and competition, and all three Most economists could have pointed this to new entrants and innovation. Like in any are being utilised by the government and its out, and they would also warn against the functioning market, businesses react or die. agencies to “clamp down on high-cost credit” same ‘substitution’ effect if a blanket cap were No complaints there. and “protect consumers”. to be imposed. But the UK Budget Statement in late But some Cs are more worrisome than The more threatening C is claims. The October contained measures that should others. To take each in turn: compensation claim phenomenon is a genuine give lenders something to think about. It Black Swan event that has arisen out of proposed a trial of a No Interest Loan Scheme, The alternative three Cs nowhere to pose a greater threat to the credit similar to one that has won plaudits from Caps, or rate caps, are the lender’s traditional industry than rate caps ever did. campaigners in Australia. foe: the ultimate regulatory sanction that The source of the threat is commercial As with all not-for-profit or social lending can be imposed on the industry when the claims management companies (CMCs) schemes, this new scheme will run headlong regulator has exhausted all other options. which, since the summer, have started into all the same challenges that commercial There is one in place at the moment, targeting lenders now that the end of the PPI lenders face every day: customers who only covering payday, and one in production, bonanza is in sight. Wonga was the first well- want small loans over short periods (which covering rent-to-own. Debt campaigners want publicised victim. vastly increases the unit cost compared to to see more, arguing for a blanket, industry- larger, longer-term loans), high levels of bad wide cap instead of sector-specific ones. PPI TOTAL PAYMENTS, 2011 TO DATE (£BN) debt and very high loan-servicing costs. But Caps undoubtedly have a big impact on if the government is committing to subsidise the way companies operate, but they can be 2011 2.13 the cost of the lending, it could be a different accommodated. Lenders can relatively easily 2012 6.28 story. reconfigure their businesses to bring down So, of the three rogue Cs, claims is 2013 5.26 their rates and continue lending. They might undoubtedly the biggest threat. not be able to serve the exact same customer 2014 4.39 But there is a fourth C, about which the base, but they will stay in business. government needs to think very closely, and 2015 4.48 The main outcome of a cap, therefore, that is choice. And if lenders exit the market, is not necessarily cheaper lending, it is the 2016 3.62 there will be less of it. removal of access and choice for certain 2017 3.36 This will be welcomed by a handful of groups of previously served customers – vociferous campaigners, but not by millions notably the most risky. These people will 2018 (January - August) 2.65 of consumers who rely on it to keep their either stop looking for credit altogether or, Source: FCA finances afloat. <

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RBI 755 November 2018.indd 17 05/11/2018 16:38:10 News | Digest

november news

Santander Q3: solid results boosted by Brazil, Spain profits rise Santander’s third-quarter results are ahead of forecasts with a net profit of €1.99bn ($2.27), up 36% year on year. For the nine months to end-September, Santander’s net profits are €5.7bn, up 13% year-on-year. For the year to date, Santander has performed particularly strongly in the US, Brazil and Spain. Net profits are up by 24% and 18% in Brazil and Spain respectively. Santander’s formerly troubled US arm reports net profit up by 46.5% year on year. The main highlights of the business’s third-quarter results are: • Market share gains in Brazil are helping to grow revenue strongly. Gross income is up Profits are, however, down by 38% for in a 5.2% drop in its net interest margin. 12.2% for the year to date; the year to date in Argentina. Profits are also Santander executive chair Ana Botín said: • In Spain, the bank is enjoying lending down in the UK, with a net profit of €1.08bn, “We have again delivered a strong set of market share gains with new lending up a 9.2% drop. Santander says the UK economy results, with attributable profit 13% higher in 11% year on year; remains relatively stable, although uncertain- the first nine months of the year. Importantly, • Santander recorded a 24% increase in ties remain. Santander’s UK cost-income ratio this has been achieved in a responsible and digital banking customers year on year to of 55.2% for the year to date is six percentage sustainable way. 29.9 million, and points higher than the year-ago period. “We are growing loyal and digital customers • Successful cost-control results led to a com- Santander ended the third quarter with 5.4 by investing in our digital transformation, petitive cost-income ratio of 46.9% for the million digital customers in the UK, up 8% and achieving a top-three ranking in customer year to date. year on year. UK pressures, however, resulted satisfaction in the majority of our markets.” < SME open banking goes live with iwoca-Lloyds partnership Small business lender iwoca is releasing and collaborating with other third-party “We worked closely with the Open Open Banking for all new customers with providers. Banking Implementation Entity and Lloyds a account, the first such SME “Its successful connection to Lloyds Bank to deliver this integration. We aim Open Banking partnership to go live. Bank is another milestone in the to launch future integrations with iwoca is the first SME lender to connect Open Banking era. Moreover, Barclays, HSBC, RBS, Santand- with any of the nine largest banks under it will help revolutionise the er and others within the the Open Banking initiative. way small businesses access coming weeks.” By securely linking their Lloyds Bank financial services. I’m excited Rieche continued: “Real- data, business owners can now provide to see iwoca’s work continue ising the great potential of iwoca up to five years of transaction histo- as it opens up Open Banking Open Banking depends on ry. According to iwoca, this accelerates the integrations with other provid- the co-operation of each bank, application process for customers to less ers in the future.” and on small business owners than 60 seconds. iwoca CEO and co-founder Chris- trusting and understanding the Open Imran Gulamhuseinwala, implementation toph Rieche said: “Open Banking means Banking process. Therefore, it’s critical for trustee at the Open Banking Implemen- high street banks no longer have a monop- banks and the government to do all they tation Entity, said: “Products and services oly on transaction data. As a result, it’s now can to enable and encourage Open Bank- powered by Open Banking will, in time, easier for small businesses to shop around ing. This will create greater competition transform the way people and businesses and find the best financial service to meet in small business lending and, as a result, access financial services in the UK. their needs, without worrying about the better, fairer services for small business “iwoca has seen and seized the oppor- brunt of loan application processes. With owners. tunities that Open Banking can bring. It Open Banking, getting approved with iwo- iwoca provides loans of up to £200,000 has been a key player within the ecosys- ca is as fast as it is to drink your morning to small and micro-businesses in the UK, tem from the start – engaging with banks cup of coffee.” Germany and Poland. <

18 | November 2018 | Retail Banker International

RBI 755 November 2018.indd 18 05/11/2018 16:38:18 News | digest

Monzo joins the ranks of the unicorns UK challenger bank Monzo has joined the double that figure over the next 12 months. ranks of the UK’s ‘unicorn’ banks after The challenger will also put the cash raising £85m ($108m). towards strategic product development to One of the fastest-growing UK start-ups, ensure that customers get the best services Monzo is now worth £1bn ($1.2bn), just available. three years after launching. The funding At the beginning of 2018, the bank asked round was led by General Catalyst, along- everyone to upgrade to the full Monzo side Accels. Passion Capital, Goodwater, current account, with nearly 95% of its Thrive Capital, Orange Digital Ventures, users following the call. Since then, it has and Stripe also participated. The challenger continued to roll out new features such as also plans to launch a large crowdfunding accounts for 16-year-olds, joint accounts round later this year. and bill-splitting functionality. Monzo’s unicorn status brings it into the A Monzo blog entry stated: “Alongside elite group that welcomed Revolut in April Tom Blomfield, Monzo this, we’re seeing incredible levels of 2018. There are currently over 250 unicorn customer engagement, with our Net Pro- firms worldwide, including Uber, Klarna work that’s gone into building the company moter Score at around 80, monthly active and Stripe. The term ‘unicorn’ refers to any over the last three and a half years. customer numbers of nearly 800,000, and tech startup that reaches a $1bn market “While we’ve come a long way, we feel more than 35,000 people on our commu- value, as determined by private or public we’re still very much at the start of the nity forum. investment. journey. I’m really excited to be working “Our community of customers is part Monzo co-founder and CEO Tom Blom- with two new world-class investors to help of everything we do, and we want to give field said: “We started Monzo because we bring Monzo to millions more people.” them a chance to take a stake in the bank wanted to make a positive difference to Monzo stated that the money raised will they’re helping to build. So we’re going to people’s financial lives. It’s incredible that go towards building a bigger workforce in crowdfund again as part of this round!” more than one million people are now the UK. Monzo currently employs around Monzo reached one million customers in using Monzo. It’s testament to all the hard 450 people, but the challenger is aiming to September 2018. < Credit Agricole Italia instant payments go live Crédit Agricole Italia instant payments are which is expected to launch by the end of now available to the bank’s retail and small 2018. business customers, enabling customers to “Since we are a proximity bank and, make and receive instant payments from at the same time, a group with an ever- PCs, smartphones and tablets. increasing digital vocation, we believe that Customers can transfer up to €15,000 the relationship with our customers is ($17,100) per individual transaction, 24 based on the development of innovative hours a day, 365 days a year. The limits products and services that are easy to are in line with the European Payments use even when on the move”, commented Council’s SEPA Instant Credit Transfer Filippo Corsaro, head of product and scheme. customer marketing at Crédit Agricole Italia The Crédit Agricole Italia instant Banking Group. payments service is managed via SIA’s “We are pleased to contribute actively EasyWay platform, which enables secure, to the spread of this new payment method, real-time transaction exchanges within both nationally and internationally. We EBA Clearing’s RT1 pan-European instant are among the first banking groups to payments infrastructure. offer instant payments to its customers. SIA EasyWay was created with the aim With the launch of the service we have of accelerating the adoption of instant completed another piece of our strategic main European banking groups in the field payments. It also aims to minimise plan: 100% human and 100% digital.” of advanced payment services. investment and simplify the operative Roberta Gobbi, director of SIA’s “Italy confirms its place among the management process. financial institutions division, added: “The most dynamic countries in the adoption The SIA platform is also ready to manage development of the collaboration with of instant payments. This is currently instant payments on TIPS, the new Crédit Agricole Italia represents a further made available by over 1,000 payment Eurosystem service covering the ECB and step forward in SIA’s positioning as the service providers present in 12 eurozone national central banks in the eurozone, technological partner of reference for the countries”. <

www.retailbankerinternational.com | 19

RBI 755 November 2018.indd 19 05/11/2018 16:38:22 News | Digest

Goldman Sachs to Tinkoff mortgage app goes live launch Marcus in Japan Tinkoff is rolling out an Android-based anywhere.” mortgage app to simplify the application He added: “All documents are issued Goldman Sachs is to debut its online retail process and improve the customer online. The customer must visit our partner bank, Marcus, in Japan to offer banking ser- experience. bank just once to sign the contract and vices to tech-savvy consumers in the country. Tinkoff clients are able to apply close the deal.” Goldman Sachs Japan president Masanori for a mortgage directly, while Tinkoff Mortgage enables Mochida told Nikkei Asian Review: “We’re partners such as estate customers to compare considering expanding our Marcus consumer agents, brokers and property reduced mortgage rates business into Japan. The digitalisation taking developers can submit offered by partner banks, place in the finance sector is good for us,” applications on behalf of select the best offer adding that relatively low “legacy costs” – customers via the app. and submit all required such as bank branches – give it an advantage. Users are able to sign into mortgage documents online. Goldman Sachs plans to start negotiations the Tinkoff mortgage app The bank claims that 50% with Japan’s Financial Services Agency to with a fingerprint. Passports of mortgage applications are secure the necessary licence. and other documents can be approved within an hour, and the The latest move follows the departure of photographed via a smartphone camera maximum approval period is two days. several retail banking rivals from Japan. Citi- and uploaded to the user account. The Moreover, the average time required to group quit the country’s retail banking market mobile account then automatically syncs close a deal, from application to contract, is in 2015, and HSBC and Standard Chartered with the Tinkoff Mortgage website. between four and seven days. closed their Japanese consumer banking An Apple iOS version of the app is Tinkoff Mortgage currently partners operations in 2012. scheduled for release by the end of 2018. with 11 banks, and since launching in early Goldman Sachs entered the retail banking Alexander Emeshev, vice-president – 2016, customer numbers have grown to space in 2016 through online consumer bank new products development at Tinkoff almost 200,000. The bank has around 3.5 Marcus in the US, as low interest rates affect- Bank, said: “Launching the Tinkoff million current account customers. ed earnings from its mainstay operations. Mortgage mobile application is the next In June, Tinkoff Bank CEO Oliver Named after original Goldman Sachs logical step. The Tinkoff Mortgage platform Hughes told RBI: “We are opening over founder Marcus Goldman, Marcus made its has about one million users and nearly 400,000 accounts per month across all UK debut in September. The online unit pro- 28,000 partners. Now, you can have your products. In consumer current accounts, vides loans and savings accounts; it currently mortgage application approved not only we are opening 120,000 new accounts per serves around two million customers and has when sitting at your computer, but virtually month.” < $30bn in deposits. < Metro Bank Q3 profits double as customer numbers hit 1.5 million Metro Bank’s cost of deposits fell below Metro Bank opened its 60th store in the the base rate for the first time, up by only third quarter, and Hill reaffirmed that the two basis points to 61bps in the third bank’s 2020 targets remain on track. quarter. Its underlying profit before tax was Comparative store deposit growth – £15.1m ($19.6m) – more than double the deposit numbers from branches that have figure for the same period last year. been operating for more than a full year – For the nine months to end-September, was 33% as at end-September. underlying profit before tax grew 197% Metro Bank’s customer service ethos year on year to £39.2m. Statutory profit was reflected in the inaugural Competition after tax of £25.1m grew by 222% and Markets Authority’s service quality compared to £7.8m for the nine months to rankings. Metro ranked first for store and 30 September 2017. overdraft services among the largest 16 UK Other highlights included: bank brands. Moreover, Metro was the only • Deposit growth of 38% year on year, or provider to be ranked in the top five for all Metro Bank’s third-quarter results have £4.1bn to £14.8bn; qualifying retail and business services. shown another quarter of outstanding • Net deposit growth per store of £6.2bn, In a note to clients, Investec analyst growth as the bank reaffirms its 2020 representing annualised deposit growth Ian Gordon commented: “Metro really targets. Accelerating loan growth continues per store of £75.6m; seems to be the stock that UK investors to drive improving operational leverage, • Record lending growth of 52% year on love to hate. The facts continue to sit while deposit growth continues to gather year, or £4.5bn to £13.1bn; uncomfortably with the bears’ narrative.” pace. • Net customer growth of 102,000, taking Metro Bank’s share price is down by Chair and founder Vernon Hill told RBI: total customers to over 1.5 million, and around 30% for the year to date. However, “Metro Bank continues to have the lowest • Customer net interest margin reached Gordon added: “The outlook remains cost of money in the UK.” 2.21%, up from 2.2% the prior quarter. robust.” <

20 | November 2018 | Retail Banker International

RBI 755 November 2018.indd 20 05/11/2018 16:38:25 News | digest

MoneeMint secures assistance to build ethical bank MoneeMint, a UK digital bank scheduled for It previously operated under the Ummah ship they face, and changing it fundamentally launch in the first quarter of next year, has Finance name, catering to the UK’s Muslim from the ground up – giving our customers received funding from private investment firm population, before being rebranded in Sep- the freshest banking experience.” Ground One Ventures. tember 2018. Ground One Ventures CEO Gerry Mc- The bank plans to use the capital to speed The bank has appointed a new board, Gowan said: “We are very excited to partner up delivery of technology and time to market. including Raheel Iqbal, representing Ground with MoneeMint and to drive this initiative The investment details were not revealed. One Ventures. Alpesh Doshi, CEO of fintech through our technology investment and exec- MoneeMint will prioritise financial services consultancy Fintricity, will also have a seat. utive advisory support. that are ethical and cost-effective. It also be- MoneeMint co-founder Hassan Waqar said: “At Ground One, we are partnering up with lieves in a collaborative approach with fintech “We are going back to the drawing board, startups across the Europe, GCC and ASEAN and banks, and will target underserved banka- looking at each and every aspect of the cus- regions, and helping passionate entrepreneurs ble communities in the UK and Europe. tomer’s current banking journey and the hard- build disruptive businesses.” < DBS introduces startup matchmaking platform DBS Bank has launched a new programme, Startup Xchange, which will match the bank’s corporate and SME clients with start-ups suited to their needs. The new programme is a redevelopment of the bank’s accelerator programme, DBS HotSpot, and forms part of its S$10m ($7.28m) investment to facilitate the development of start-ups. Launched in Singapore and Hong Kong, the new programme will focus on artificial intelligence, data science, immersive data and the Internet of Things. The programme will enable start-ups to co-create solutions with the bank, and name the bank as an anchor client during fundraising initiatives. Startup Xchange has already matched 21 start-ups with DBS units and the bank’s SME clients, leading to the development of 10 technology solutions. These include virtual bank recruiter JIM, which was developed with the participation of Head of DBS’s innovation group, and continuous funding. Startup Xchange is impress.ai, a Singaporean start-up and DBS Bidyut Dumra, commented: “Start-ups great, as it helps the ecosystem of startups, SME client. An additional 10 solutions are sometimes have the brightest minds to DBS and its customers to commercialise expected to be rolled out in the next 12 develop the most cutting-edge technology emerging technology solutions to quickly months. solutions, but they lack an anchor client achieve shared business goals.” < Canada’s Central 1 unveils forge digital banking platform Central 1, a Canada-based banking and mobile, public website and online banking. Alterna Bank, a subsidiary of Alterna payments provider for credit unions and Central 1 president and CEO Mark Savings and Credit Union, and FirstOntario other financial institutions, has rolled out Blucher said: “We promised our clients Credit Union are the first financial its new digital banking platform, Forge. something exceptional, and in nine short institutions in Canada to implement Forge. Using developed by digital banking months we have delivered a platform Complete client implementation of Forge specialist Backbase, Forge is marketed as that will enable our clients to create is expected over three years, with the offering flexibility and control, allowing personalised, customised banking objective to have clients fully transitioned clients to design their own digital branch. experiences for their consumers. Forge is by 2021. According to the company, Forge a clear demonstration of our commitment Central 1 serves approximately features modern design, streamlined front- to deliver leading, responsive products in a 300 credit unions and other financial end features, performance and speed for time of innovation and disruption.” institutions in Canada. <

www.retailbankerinternational.com | 21

RBI 755 November 2018.indd 21 05/11/2018 16:38:31 industry insight | Envestnet | Yodlee

between the fintech applications they use and the aggregator where the breach took place. open banking: This blind spot is a key link in the audit chain that is unlikely to fill consumers with confidence, particularly when they are already being asked to take a leap of faith when it we must look comes to willingly sharing information with third parties, as banks turn the tide on years of messaging when it comes to data sharing and privacy. behind the scenes From a fintech and innovation perspective, this not only reintroduces, but imposes a reliance on, the very bilateral agreements that If Open Banking is to succeed, consumers need to feel safe PSD2 and the Open Banking reforms were in embracing the opportunities it offers. For that to happen, created to eliminate. argues Envestnet | Yodlee’s Matt Cockayne, the regulatory One of the primary goals of PSD2 was to define common standards across the framework needs to be right for every entity in the chain EU – to encourage interoperability – yet we are seeing a wide range of implementations he financial services world is regulated by the Financial Conduct Authority across Europe, as each country takes its own buzzing with the promise of Open (FCA), data aggregators that power these approach. TBanking. innovative applications by supplying them The lack of direct regulation for aggregators The fundamental shake-up of the with data are, surprisingly, not regulated. also has an impact on the rate of innovation ecosystem, assumed business models and This is despite the vast amount of consumer- that we can expect to see when it comes to the value chains promises to drive greater permissioned information they handle quantity, quality and variety of consumer apps consumer choice and financial and have access to behind the on offer. empowerment. scenes. The UK’s Open Banking Implementation The potential impact This has come about Entity only allows companies registered with of this major reform due to the FCA’s chosen the relevant regulatory authority – the FCA is clear among definition of an in the UK – to directly access Open Banking traditional banking Account Information APIs in the long term. institutions and Service Provider – Without this direct access, third- fintech firms alike, which is narrower than party providers (TPPs) must register which are quickly definitions set out both their supporting data aggregators as their plotting strategies to by the EU institutions ‘outsource’ provider, to gain indirect access to take advantage of – and under PSD1, and also APIs. remain competitive in – Matt Cockayne, by HM Treasury in the This decision and process have surprised Envestnet | Yodlee this new world of open data. Payment Services Regulations many within this TPP group, who generally Of course, any new technology 2017. Notably, it is also at odds with expected that the aggregators would be subject brings a natural level of uncertainty, and the definition used across other EU member to regulatory oversight themselves. perhaps even mistrust, particularly when states and other countries implementing Open The rationale given for this lack of finances are at stake. The data sharing that Banking, such as Australia. regulation is that only around five data- will enable this change brings a new layer of Curiously, the FCA has declined to address aggregator businesses are affected, although confusion. the issue, although it has been made aware of this fails to take into consideration the Accenture’s research highlights this concern: it numerous times. large number of end consumers that these 85% of people it surveyed say fear of fraud companies interact with. would put them off sharing data. This is a LIABILITY QUESTION MARKS This problem has arisen unintentionally, troubling picture: Open Banking will only be but brings a major – and, so far, ignored – a success and achieve its end goal if consumers From a consumer perspective, the lack of consumer threat. feel safe and secure to engage with it. direct regulation for aggregators brings a If Open Banking is to be a success, it Regulation is a key way in which consumers major question mark over liability in the event is my firm view that every entity involved can be reassured – of stability and security of a data breach. in the chain should be properly regulated, – in the financial services arena. Regulation, In short, although Open Banking is meant and with the appropriate dispute-resolution therefore, has a central role to play in Open to ensure that consumers are protected mechanisms. Banking, particularly as this initiative brings regardless of what provider they choose, they This is non-negotiable, from both a more businesses into the financial landscape. may not be able to hold an aggregator liable. consumer trust and an innovation standpoint, But, startlingly, the current regulatory Instead, their ability to be ‘made whole’ if the UK’s version of Open Banking is to be a framework contains a significant oversight: would be entirely dependent on any liability success, and stand up as a leading example on although consumer-facing third parties are provisions included in the bilateral agreement a global stage. <

22 | November 2018 | Retail Banker International

RBI 755 November 2018.indd 22 05/11/2018 16:38:32 HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE SHAPE THE FUTURE OF RETAIL BANKING Retail Banking: Europe 2018 28th November 2018 ∤ Hesperia Hotel, Madrid

Retail Banking: Europe 2018 is moving to Madrid for a day of discussion between traditional and challenger banks along with selected solution providers about the key issues of today in the European retail banking sector. Key issues:

∤ The digital transformation ∤ Enhancing customer experience of European banking in the digital age ∤ How to make the most of Open Banking ∤ The role of branches in the 21st century ∤ How can traditional banks benefit ∤ Adapting for the millennial customer from open APIs? ∤ Are mobile-only banks the future? ∤ PSD2 and fraud: What new trends are developing? ∤ The opportunities for blockchain and cryptocurrencies ∤ GDPR: The early experiences following implementation

Silver Partner: Bronze Partner: Panel Host: In Association with:

For more details please contact:

Page 1 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580 HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE LEASING LIFE CONFERENCE & AWARDS 2018 15th November 2018 ∤ Tallinn, Estonia

For its 14th edition Leasing Life Conference and Awards 2018 moves to the Baltic Region to bring together asset finance professionals and industry disruptors in an active discussion of the key issues facing the leasing industry. This year’s Leasing Life conference explores how Europe’s leasing industry is responding to the value chain opportunity - the operational, and strategic, implications of the paradigm shift, and the role that technology must play in transforming the industry so that it thrives in the digital age. . Event highlights:

∤ Re-defining asset ownership for a digital generation · The Baltic Approach: Regulatory arbitrage in the digital era · GDPR and its implications for reporting, asset management and marketing · Funding strategies for a lean world · Re-defining sales and distribution channels for the digital era · Harnessing the power of agile: Assessing the transformative potential of digital · Embracing the circular value chain approach to lease delivery & design · Taking the right risks for the rewards: Strategic implications of the era of asset ownership · Using data and analytics to drive performance, deliver value

Headline Partner: Gold Partner: Silver Partners:

Exhibitors: Badge and Lanyard Drinks Reception Table Hosts: Panel Hosts: Lunch Documentation Regional In Association with: Partner: Partner: Partner: Partner: Partner:

For more details please contact:

Page 1 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580