www.retailbankerinternational.com Issue 758 / febuary 2019 THROUGH THE ROOF MIDDLE EAST BANK SHARES SCORE WORLD-LEADING GROWTH INNOVATION DISTRIBUTION FEATURE How Yapı Kredi is 86 400 will soon give US regional bank BB&T has revamping the Turkish Australians an alternative the potential to weather an banking industry to the dominant Big Four economic downturn RBI 758 February 2019.indd 1 14/01/2019 14:48:21 contents this month COVER STORY NEWS 06 05 / EDITOR’S LETTER 18 / DIGEST • Italy issues decree to stabilise struggling Banca Carige • RBS acquires 25% stake in millennial- focused fintech Loot • Linedata acquires French fintech Loansquare • BMO Financial Crimes Unit announced • Starling looks to France and Germany • ProBank austin launches financial compliance training • Ghana completes banking industry consolidation • ConnectOne completes Greater Hudson Bank merger • China reduces reserve requirement ratio • National Bank of Kuwait launches SWIFT gpi services THE MIDDLE EAST 19 Editor: Group Editorial Director: Head of Subscriptions: Douglas Blakey Ana Gyorkos Alex Aubrey +44 (0)20 7406 6523 +44 (0)20 7406 6707 +44 (0)20 3096 2603 [email protected] [email protected] [email protected] Senior Reporter: Sub-editor: Director of Events: Patrick Brusnahan Nick Midgley Ray Giddings +44 (0)20 7406 6526 +44 (0)161 359 5829 +44 (0)20 3096 2585 [email protected] [email protected] [email protected] Junior Reporter: Publishing Assistant: Briony Richter Mishelle Thurai +44 (0)20 7406 6701 +44 (0)20 7406 8633 [email protected] [email protected] Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected] Financial News Publishing, 2012. 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London Office: John Carpenter House, John Carpenter Street, London, EC4Y 0AN Asia Office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: [email protected] follow RBI on twitter @retailbanker 2 | February 2019 | Retail Banker International RBI 758 February 2019.indd 2 14/01/2019 14:48:32 contents february 2019 10 ANALYSIS INNOVATION FEATURE 06 / THE MIDDLE EAST 12 / YAPI KREDİ 14 / BB&T 2018 was an excellent year for the share The Turkish banking sector has strong growth US regional bank BB&T has the potential to price performances of Middle East banks. As potential, and has overcome upheavals. Briony weather any imminent economic downturns Douglas Blakey reports, more than one half Richter speaks to Yakup Doğan, assistant due to its stable management team, a of the region’s largest banks by market cap general manager at Yapı Kredi, about how the diversified business mix and a strong customer posted double-digit price rises bank is revamping the industry base. Robin Arnfield reports 17 / OPEN BANKING 16 / BELGAZPROMBANK It has been a year since Open Banking Belgazprombank has implemented a system 12 launched; however, the movement has to screen transactions and customers to help been fairly quiet since its much-advertised prevent crime. But which security issues need introduction, and banks have not been addressing? And how will working with FICO impressed. Patrick Brusnahan writes resolve them? Patrick Brusnahan investigates DISTRIBUTION 08 08 / 86 400 With the launch of digital challenger 86 400, Australians will soon have an alternative to the dominant Big Four. Travis Tyler details the bank’s journey to date, and what to expect in 2019. Briony Richter reports 10 / BANCO POPULAR INDUSTRY INSIGHT DOMINICANO 22 / WIPRO DIGITAL Banco Popular Dominicano has launched Too many senior bank executives fail to a wholly digital branch in the Dominican appreciate the importance of their business’s Republic’s capital, Santo Domingo. Is it culture in the drive to digitise operations, enough to bring consumers back to branches? argues Alexander Kalinovsky, director of Patrick Brusnahan writes engineering at Wipro Digital www.retailbankerinternational.com | 3 RBI 758 February 2019.indd 3 14/01/2019 14:48:39 Retail Banking London 2019 24th April 2019 l London SHAPE THE FUTURE OF RETAIL BANKING Retail Banking London 2019 brings together high-street banks, new market entrants, financial professionals and industry disruptors in an active discussion of the key issues facing the industry: new regulation, digitalisation and tech innovations that are shaping the future of retail banking. Key Issues l Open Banking and the main results of the first stage implementation l How Millennials are shaping the future of payments l Artificial intelligence and machine learning, Innovation in branch transformation l Digital security and cyber crime l RegTech - Leveraging technology innovation to comply with regulation l Optimising customer experience in today’s competitive environment l Technophiles v Technophobes - meeting the needs of different customers Headline Sponsor Silver Sponsors For more details please contact Hannah Leigh on [email protected] or call +44 (0) 20 7936 6689 1118Timetric_RBI_Ad.indd 1 26/11/2018 10:17 editor’s letter happy birthday, Open Banking Douglas Blakey, Editor s RBI goes to print, Open Banking in the UK ad campaign across London’s public transport system. If ever celebrates its first birthday on 13 January. there was a case of what is essentially a prepaid card product A Before looking forward, let us look back very offering more hype than substance, this is it. And if it persists briefly to the launch of Open Banking. There was a lot of with its expensive fee structure, it is hard to see it gaining hype surrounding the launch, and many industry observers significant customer numbers. who ought to know better spoke a lot of nonsense about how Far from viewing Open Banking as a new revenue quickly Open Banking would transform the industry. opportunity, the impression given by many incumbents is that It was, we were told, a game-changer. Open Banking would this is more of a regulatory-compliance requirement. Off-the- disrupt the incumbents. It would help to accelerate switching record comments from senior UK bankers suggest that many rates. There would be innovation on a scale not previously have only developed a limited Open Banking strategy to date – witnessed. The end result would be considerable benefits to and privately, many admit that they are not satisfied with their consumers, who would gladly share their personal data with progress. third parties. A degree of rational, calm, realistic reflection is more appropriate at this stage, rather than the hype of the Big ambitions evangelists or the negativity of those eager to write off Open Many evangelists went even further and claimed that Open Banking prematurely. Data-breach embarrassments such as the Banking represented a new revenue-generating opportunity for Cambridge Analytica scandal do little to encourage a sceptical the incumbents. The Open Banking revolution would be such a public to share data. Data sharing is, after all, core to the success in the UK that markets outside Europe would be keen potential success of Open Banking. to accelerate their plans for similar plans. It would, however, be wrong to argue that such scandals We heard similar arguments and ridiculously optimistic mean Open Banking is doomed to fail to catch on. Nor do I forecasts around the time the UK rolled out seven-day accept the argument, advanced by some, that the requirements switching. The ludicrous claims by some that seven-day of the Strong Customer Authentication initiative have the switching would bring about 6% or even 10% switching rates potential to make the consumer experience worse, and in turn were always a nonsense – and that is borne out by the figures: kill off Open Banking’s prospects. as previously noted in RBI, switching rates remain stuck at around 2% per year. Yolt – one of many early successes Open Banking supporters’ ambitions were undoubtedly It was always going to be a slow – or slowish – process, and ambitious, but it is not objectionable to promote innovation, talk of quick, seismic and transformational changes was always encourage customer choice or empower customers. The unrealistic. Equally unrealistic are those forecasting now that fact that it is an opt-in system, and the safeguarding of data 2019 will be the year that Open Banking really takes off, is at the heart of the system, is to be applauded. It is also whatever that means. It was always going to take time. The unarguable that for certain types of transaction, such as established banks are still working out where to develop in- international payments and travel, the likes of TransferWise house or work with external consultancies and tech providers. and Revolut are helping to lower costs for a growing number of But on a positive note, account-aggregation services are now customers. readily available – and for free – on the app stores. To give one example, Yolt – the first TTP to connect to all CMA9 banks Nationwide – Open Banking for Good using the Open Banking APIs in September 2018 – surpassed There are also examples of how Open Banking may boost 0.5 million registered users last year. financial inclusion. Nationwide’s Open Banking for Good As the Open Banking Implementation Entity reports, there initiative, focusing on boosting products that encourage are now 100 regulated providers, of which 17 Third Party financial inclusion, is deservedly attractive favourable Providers are now using Open Banking in the UK.