September 28, 2020

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Exclusive: ABN AMRO Staying Ahead of the Game

Digital Developments in ABN AMRO

The financial sector has seen a massive digital transformation in its services and processes. In fact, e-commerce and digital banks are by-products of this movement.

Technology and innovation efforts are changing the world as we know it. What was once relevant has become obsolete.

Banks, with their many legacy systems, now need to adopt new practices to keep up with ongoing transformations. So how are they adapting?

Guilhem Vincens
Guilhem Vincens

OpenGov had the opportunity to speak with Guilhem Vincens, Head of Change Management & Innovation at ABN AMRO, a leading Dutch financial institution with a long and rich history in banking, to understand how his organisation is staying relevant and of the efforts under their wing.

Guilhem is a seasoned executive with 7 years in fintech and a further decade in banking.

A passionate digital evangelist, his role within the bank is to challenge the status quo, foster innovation, execute digital strategy and develop partnerships with the fintech ecosystem.

He genuinely believes innovation can make life better for everyone.

He has extensive knowledge in lean transformation, core banking, and product & process digitalisation.

He started his career in Europe focused on project management. More recently, he relocated to Singapore in 2015 now focused on change management and innovation.

Three Notable Trends in Banking

The financial services sector is continuously innovating and taking on the latest technologies, as it responds to client expectations and advances from existing and new competitors. Banks are moving beyond proof-of-concept projects to scaling fully digital native initiatives for production and launch.

For an international bank like ABN AMRO with a longstanding Corporate & Institutional Banking business in Asia Pacific, their initial emphasis was on digitising core business processes and adapting organisational structures, to ensure the organisation remains agile enough and prepared for the future of banking.

In keeping with the digital developments in banking, ABN AMRO is pursuing innovation on multiple fronts and a large portion of the work is now on ensuring these initiatives can be scaled up and provide the full benefits to clients by interlinking directly into their value chains. Not surprisingly, they are working on several blockchain initiatives aimed at significantly improving efficiency, security, and faster turnaround time in trade finance.

Particularly for ABN AMRO with their focus in sustainability, the combination of the latest digital technologies is providing a new way to pursue innovation and change that some have termed ‘tech for good’. Since many companies are increasingly asking for sustainable finance to be part of the financing mix, the bank is eager to demonstrate its green leadership.

“Our purpose, after all, is ‘Banking for better, for generations to come.‘”

This is done by developing innovative structuring as part of their loan covenants. For instance, they tailor-made a loan structure for a commodities client with interest margins tied to their emission targets of sulphur dioxide, nitrogen oxide, and dust particulate, which incentivises the client to continuously improve their environmental standards.

Guilhem shared that as ABN AMRO is one of the frontrunners, they are also continually assessing the latest technologies and innovations, particularly in data monitoring systems, that could be used to reduce their environmental impacts.

Feasibility studies are also being done to understand how real-time satellite imaging can be used to prevent deforestation and improper or unsafe mining practices.

The Role of Cybersecurity in a Digital Bank

With banks being fully digital and dependent on technology, a whole new set of challenges growing from increased cyberattacks are seen. The banking industry is a trust-based business and safeguarding customers’ trust is therefore paramount.

Accordingly, banks are continuously investing in people and security solutions to keep a few steps ahead of cybercriminals.

Improving Customers’ Overall Experience with Technology and Innovation

Guilhem stressed that innovation has to be a top priority to be able to compete and grow even when margins are slim in the face of intense competition, changing regulations and transformational technology.

ABN AMRO’s digital transformation is creating the impetus for them to re-examine all processes and requirements from the ground-up. Their goals are to improve their operating efficiency, drive further transparency and speed, simplify the client experience, and reduce risk.

One of the ways in which this is tangible is their work in enabling paperless trade processing. This will have a wide impact across ship lending and trade commodity finance or OTD (Origination to Distribution).

Another example is identifying the right channels to augment customer experience, streamline processes, and increase cross-selling opportunities.

Now that client data is abundant, easily accessible and financially viable to deploy, ABN AMRO is looking to go beyond just knowing their customers – they want to anticipate their needs and proactively provide advisory.

Know-Your-Customer (KYC) – Predicting customer behaviour

“It is a long journey to become a data-driven organisation.”

In his organisation, teams regularly assess what data is needed and how business intelligence can be seamlessly fit into the business culture.

Technology cannot be fully optimised without better data management, data governance, quality data and insights, and making a cultural shift in how work is done.

ABN AMRO continuously looks into enhancing its KYC/AML capabilities. Lately, it has implemented a solution that delivers even better compliance protection. It combines deep datasets, risk analytics, human expertise, and AI technology.

With this solution, they are able to stay ahead of accelerated sanction regulations to determine a more precise level of risk for politically exposed persons. They can also quickly uncover hidden risks from adverse media.

It is unmistakable that the significant reduction of false positives is only feasible through technology which is mainly originated from fintech. As part of the recent Singapore Fintech Festival week, ABN AMRO brought together Dutch and Singapore participants to investigate Digital Ledger Technology (DLT) under the motto of ‘Blockchain for good’. In the realm of detecting financial crime, banks are not competitors and there are real synergies in being partners to develop KYC and transaction monitoring as a shared utility.

Banks have always been keen to embrace new technologies and succeed within the stringent rules of the banking risk and regulatory framework.

They have to contend with extremely high volumes, zero tolerance for errors and instantaneous processing requirements, while also managing their client’s expectations with digital needs.

Treat or Threat? Will the Rise of Fintech Affect Banking?

It is undeniable that fintech start-ups and even big tech companies are eyeing for a slice of the banking pie. Banks are not standing still and are continuously modernising their processes and systems, independent of this new competition arising from the tech sector.

Guilhem believes that there is no fintech today that can replace corporate banks, nor significantly disrupt them.

He validated his position with the following observations:

  1. Banks are regulated – outsiders tend to underestimate this entry barrier
  2. Corporate Banking excels as a relationship-based service rather than a commoditised product set
  3. Banks possess the inherent complexity and expertise in offering corporate banking products as compared to retail banking

These reasons, according to Guilhem, also explain why the digitisation of corporate banking moves at a slower pace.

Guilhem does acknowledged that there are a number of fintech businesses bringing value to banks. In Singapore, fintech players such as DLTLedgers and PERLIN are trying to address the industry’s pain points through blockchain technology.

This trend is unambiguously moving towards a new paradigm in standardisation not just at a national level, but internationally as well.

He added that business-friendly organisations such as Enterprise Singapore and the International Chamber of Commerce (ICC) are not only supportive but are proactively involved in digitisation initiatives.

Likewise, it is essential for ABN AMRO to be engaged in relevant ecosystems and partner with fintech start-ups that are dynamic, agile and offer value propositions that are complementary to their business model.

The Power of Mindset

Innovation is transforming people. Innovation is a necessity. This is the mindset that should be adopted.

“I will never stop repeating this mantra: mindset is central for change and innovation,” enforced Guilhem.

Quoting Jerome Thil, Vice President of Digital Innovation at Singapore Airlines who asked him, “When is the last time you transformed yourself for good?”, which sparked a thought within him.

Guilhem firmly believes that transformation occurs through experience which all staff of ABN AMRO are a part of. They are empowered to co-challenge the status quo and experiment.

Making a Successful Digital Ecosystem

This starts with a bottom-up approach. Listening to the ground staff is essential, as they have the insights.

The right culture is important for sparking creative ideas. “People innovate, not companies,” said Guilhem.

ABN AMRO has moved towards a culture where help is readily given when asked.  A successful digital ecosystem is about a network that connects the dots to match the right experts. Most companies lack an innovation ecosystem – not referring to a fancy innovation lab – but a clear repeatable process for turning new ideas into profitable business models.

ABN AMRO has had a more direct and smooth process in this journey. Guilhem pointed out that their open and direct Dutch culture helps to eliminate doubts surrounding individual and team motives. This allows for a whole-of-organisation approach for inculcating an open and innovative mindset.

They, therefore, continuously highlight the viewpoints of various stakeholders and encourage mutually beneficial engagement, allowing for a healthy ecosystem.

ABN AMRO’s Future

Change is the only constant. This is the mindset ABN AMRO embraces.

Being one of the world’s oldest banks that is still in continuous operation, they possess a rich banking legacy in Asia Pacific dating almost 200 years. For them, they recognise that change must be embodied for progress.

“If we have survived and thrived for over two centuries, then this digital transition is one we are definitely ready for,” he concluded.