ING – bank or fintech?

What are the key trends you’re seeing in terms of how you’re advising treasurers?

We have a sector-by-sector approach to how we advise our clients and manage client relationships. There is a difference if you’re in the healthcare industry where companies predominantly have a very harmonised ERP landscape, are very sophisticated in their treasury set up, or if you’re on the general industry side where you still do a lot of acquisitions, have scattered ERP systems, decentralised set up, or are not even willing to think about shared service centres or in-house banks.

While there is a difference, the main trends we see are real-time payments, especially from a US perspective. This impacts on reconciliation processes, on day to day staffing, on simple things like centralisation ambitions that companies have, how to establish a shared service centre, where to establish it and ESD2.

For bigtechs like Facebook, Google and Amazon that used to have a few collection accounts in Ireland but are now burdened with presence legislation in the European Union, they will now have to open accounts in the name of local entities in France and Italy.

Then they are burdened with the opposite trends for decentralisation by regulators, so how do you address that if you still want to reduce the number of accounts, get all the scattered cash into one place? Some of the very sophisticated companies are now forced with decentralising, while other companies still have the ambition to centralise their set up.

The same trend is happening with most global banks, who are investing a lot of money to make the day to day life of their customers easier with virtual cash management or with centralised acquiring solutions, or with straight-through processing.

On the other hand, regulators are also making it more complex with onboarding issues – how do you deal with the KYC process? If you say KYC most bankers would start twitching their eye because it’s a nightmare.

Is it therefore more important than ever before that treasury has a great relationship with its banking partners?

When I started in this line of work, treasury was a cost centre. And it wasn’t the sexiest part of a business. Now, if I look at most treasurers and their teams, they’re not only a cost centre but they are burdened with fraud prevention, KYC, reducing bank fees, harmonising processes…it’s much more involved.

As a bank, if you have a good relationship with your clients you can really be part of their treasury team. They don’t have to invite me to their yearly events but I do feel flattered if they consider me really as part of the team, if they give me a call and say, ‘we’re facing new identification legislation in Germany which was implemented last week and has an impact on how clients go into their online banking platforms’.

The Germans tweaked their legislation meaning there had to be a two-step ID verification before you go into banking software, which has a day to day impact, ‘how do we work with that, how do we work with that if we have an SAP SWIFT host-to-host set up,’ and obviously we have to be proactive and warn them before it happens.

What role does technology play in assisting this, or is it still very much a human endeavour?

In all honesty I think technology is helpful for most industries, but especially for banking transaction services. In fact, the role is growing day by day because the goal is to automate. Our clients want to automate, they don’t want to be burdened with the mundane, so the real question is how do banks keep up with the latest technology developments?

When our new CEO was appointed four and a half years ago, a lot of the feedback he received was that banks are always developing products thinking they know what the demand in the market is, which isn’t really the demand in the market. A lot of banks were struggling with how we see transaction services. It’s expensive, it has a high cost/income ratio, it is a lot of regulation. Yet, ING’s board of directors sees this as a cornerstone of our offer and that’s why we’ve developed a two-way approach; either we look at a proven solution in the market, that’s our preferred option, team up with a fintech, buy a fintech and integrate it.

Our logic is Lego; you have to have a platform and build the modules on that suit the needs of clients, and if that solution isn’t available in the market, develop it yourself, in close collaboration with your customers. Develop something with a few relevant customers and tweak the product until you have something that’s not already in the market. In some cases, integrating a solution that is already out there has saved us five to seven years of development.

At the other end we identified the need to look at virtual cash management, reducing the KYC burden and reducing the number of accounts needed. We looked in the market and there wasn’t anything out there, so we started to develop a solution that we now think is the leader. It’s not just a reconciliation tool but one that really supports local tax refunds in Poland, or wherever you are, reducing the number of accounts to one per currency.

Given all that you’ve said here, what comes first for ING – banking or technology?

I read an article once from one of our board members and it said we are an IT company with a banking licence. That’s perhaps a bit too far; we’re a bank, but what we love is we’re a variant of a bank and we have a big budget to look at alternative solutions. We have three innovation centres in the world where they try to look in the market at what’s out there, what is relevant for companies.

We have Singapore, New York, and London. Some of them are more focussed on retail and operative solutions, other ones are offering an operative solution but there is a very close link that if it works in the retail world why can’t you use it in the wholesale world?

My first AFP was 11 years ago in Miami, when it was predominantly banks exhibiting. I think now half of the stands are fintech and IT solutions, but that also shows there’s a demand for it. It’s important for a bank to know what’s out there, what the demands are, and not be afraid to team up with them – if you can’t beat them join them!

We hear a lot from treasurers now, especially the millennials coming into the workforce, demanding technology that leaves most business B2B solutions in the dark ages. Is this a problem you hope to solve?

That’s the role of our team: they have to help treasurers find ways and the solutions in the market. They also have to make it easy for treasurers because they’re busy and want to have, with one push of a button, an overview of their liquidity positions worldwide, they want to centralise cash. If their CEO calls them and tells them they’re going to do an acquisition and they need 100 million, they don’t want to spend two days on the phone to banks wiring money from A to B, they want to do it with one push of a button because they have to do more with less time.

I think that’s the story of all modern millennials – they want to steer a multibillion dollar company with their iPhone. There are some regulatory restrictions and compliance restrictions but obviously you have to get them as close to that ultimate goal as possible.