IBS Journal November 2016
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the rest will be by card or contactless.
IBS Journal: So do you think mobile payment systems like Apple Pay and Android Pay have stolen a march on banks? Should banks really be the ones to push this technology?
JV: I think it should be on the banks, though it’s quite hard to get there. Although in the Netherlands, ING has already launched a system where you can pay with your Android phone using our infrastructure. I think that’s the annoying thing about Apple – we haven’t got access to their infrastructure to provide our customers with an experience the way we would like it. In the end, I think banks should take the challenge to stay the preferred trusted party for payments over technology firms.
IBS Journal: Do you think it’s a marketability problem? People don’t see banks as innovative in the way they see Apple and
Android?
JV: Yes. On the other hand, I think payments are moving to the background – it’s more the buying experience like the one you get with Uber that counts. You get into a cab, you get out of a cab and in the meantime you get an invoice saying your payment is done. From a customer perspective it’s also important to know who you grant access to your current account – this is why we see something like PSD2 as important. If you look over the horizon to the Internet of Things then perhaps we will see machines on behalf of the customer making payments to solve problems, whether it’s the car needing new insurance or the fridge ordering more milk. I see banks having a consent role, helping to facilitate the customer knowing which parties they are giving access to their account.
IBS Journal: What’s your opinion on the increased emphasis on fluidity of payments and automation that’s occurring in the
industry?
JV: If you look in the Netherlands, people don’t visit their branches. I haven’t been to a branch yet this year. Still I’m able to manage all my banking business whether it’s creating a loan or opening a deposit through digital. There should be less branches as digitisation goes forward. People will have access to their banking business anytime, anywhere no matter what channel they use – that’s an ING strategy. In the end, if it can’t be avoided people will have to go to branches, but we want to be digital-first.
IBS Journal: The big buzzword at the moment is blockchain, what can you tell me about ING’s progress in that area?
JV: We’re doing a lot of things, mainly experiments right now. We have to solve the issues of identity in the blockchain, as that is something that regulators are pushing. Everyone is anonymous and everyone can do as they like. I could sell you a Kalashnikov and you can pay me in Bitcoins and people won’t know that you’re paying for that gun. That’s an issue we’re working on with the R3 guys but also the banks in the Netherlands. I think that’s one of the main requirements that regulators push us to work on. The other thing is real money on the blockchain. There will be a huge amount of business cases applying to blockchain if we are able to provide real money on the blockchain. We’ve been working on some sort of distributed clearing and settlement system with R3 eliminating the man in the middle but also working with real central bank money.
We’re looking at KYC and the most important thing we already proved was in regards to trade finance and how it can be improved from its current state of being heavily reliant on incumbent technology. We think blockchain could be one of the game changers although it’s a very complex ecosystem we’re trying to innovate here. You need traction on a global scale not just in the financial system but in suppliers and trade companies. A letter of credit can be executed with smart contracts on the blockchain and correspondent banking can also be operated that way, via the Ethereum blockchain. We’re looking to get heavily involved in learning about the technology, its structure and what is necessary to perform on it. Let’s be clear though, not everything works on the blockchain – some people come to me and ask why don’t they use a blockchain for this and for that and I have to tell them that another solution already exists and is better.
IBS Journal: Is blockchain now emerging from its association with Bitcoin?
JV: I think it’s a little bit of pragmatism and a little bit of politics. DLT is something different to blockchain – which focuses on currencies. I think the political answer is that the term blockchain has a bad connotation while DLT is a more fashionable term for what we’re doing right now in the financial industry which is linked more to the technology than to the blockchain itself. Yes, there’s definitely a difference but it’s also wise to rephrase that we’re working on DLT.
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