Rabobank’s René Steenvoorden tells Future Banking about the Netherlands banking group’s embrace of new technology, which he believes can help restore public trust in banks while also improving the customer experience.
For René Steenvoorden, senior executive vice-president and chief information officer at Netherlands giant Rabobank, there is no doubt: this is a great era of banking technology.
"It's an extremely interesting time to be in banking and in technology," he says. "While banks have always been very much driven by technology, having started basically as support, we have grown in stature. And in every process, there is a large element of IT involved, and a number of new challenges for C-level executives. For example, we are currently investing in large-scale systems renewal, a project that is very much focused on customer experience."
Improving customer experience is a topic that comes up often when speaking to the CIO. The challenge is clear: how can technology evolve from its traditional compliance and technical competencies into a genuine, value-adding function in support of innovation and customer experience?
And not only that; Steenvoorden also has to deliver this value in a marketplace currently under pressure from two significant directions: a more onerous consumer protection regime to address security and privacy concerns; and the entrance into the banking industry of new players from outside the sector - Google and PayPal, to name just two.
So the need for digital innovation cannot be ignored. However, Steenvoorden admits that the scope and nature of that innovation - a crucial tool in differentiating Rabobank's offering in a crowded marketplace - is limited by the regulatory regime that, in the wake of the banking crisis, is only set to become more stringent.
"I think, in general, legislation is positive in that it creates an equal playing field, structure and stability, and clearly it's what the financial sector needs," he says. "However, it also makes implementation and innovation more difficult. That is certainly true when you're up against pure retail online players. And don't forget that legislation in Europe is becoming much more complex than it is in Asia or the US, for instance. So it is especially challenging for European banks, even more so because the legislation between the European countries themselves is not consistent."
Steenvoorden points to privacy debates in the European Commission concerning the rights of customers as presenting a thorny problem. "Of course, we support those rights. But there's a huge difference in the way our competitors in the US and Asia can use data, and the way in which European banks can use data. That's a big economic element that puts us behind the competition. And that is just between banks. If you compare that with the differences between banks and non-banks, then regulation is even more complex."
The role of big data
Negotiating these tricky waters is made even more complicated by the emergence of big data. For Steenvoorden, the challenge is not necessarily in gathering or harnessing data, but in understanding and using it. "I think the most interesting part of big data is that most banks that I know of, indeed most customer-facing companies, are sitting on a wealth of information but are not really using it.
"For me, big data is not so much about data or analytics, but about using the huge amount of data we already have from customers in order to serve them better - always with their approval of course, and within the limitations of the legislation. We believe that analytics will be the biggest driver for the next five years."
It's a comment that one could well imagine a Google or Amazon executive making. Without doubt, the work that those tech companies have put into customer management is causing a lot of discussion around the board tables of established banks across the world. Add the user engagement and brand loyalty inspired by the likes of Facebook, Google and Twitter to their interest in entering the banking and payments arena and you can see why CIOs such as Steenvoorden are getting nervous.
While it's true that Google and PayPal will have a significant way to go in order to meet the compliance obligations that Rabobank and its banking peers have long been used to, there's no doubt that new entrants into the industry will force traditional players to up their game. Steenvoorden, for one, believes this new challenge offers a great opportunity for the IT function.
It's a chance Rabobank's IT team has grabbed - especially when it comes to developing the ability to design, test and rework products quickly. For example, earlier this year, Rabobank launched its new mortgage process, driven by Dutch consumer legislation changes in the way in which banks can structure their charges. Whereas before, the costs could be rolled up as part of the offered mortgage rate, banks now have to provide a separate bill for services rendered, combined with a lower rate of interest: something that proved confusing for customers unsure if they were paying more or less for their mortgage.
"So we changed our whole process and we created an online storefront for mortgage products in which customers could fill in most of the steps themselves and get feedback throughout the process," Steenvoorden says. "They can use their documents for certification, for instance, and if they do so they get a discount because they help us become more streamlined. A clear win-win situation for both the customer and the bank. That kind of innovation gathered a lot of positive comments here."
And it doesn't end there: the process is constantly refined and improved, with each iteration rapidly building on the improvements of the last.
Steenvoorden is rightly proud of the bank's embrace of new technology culture, both internally and on the customer side. It's something that the CIO believes will go a long way towards improving the way in which financial services in general and banks in particular are perceived in the wake of the financial crisis and various mis-selling episodes. In his view, Rabobank needs to focus not only on better technical infrastructure, but also on delivery and communication.
However, the CIO is clear that Rabobank can't meet that challenge alone. "You have to build an ecosystem of third parties that help you drive innovation," he says. "It's something we can learn from the tech sector, and I welcome developments like APIs [application programming interfaces] and sharing knowledge. I welcome third parties that build new innovations together with us. It's a great lesson to learn from the tech sector, which does this extremely well."
With that inspiration in mind, under Steenvoorden, Rabobank's IT function has taken a greater role in product development and strategy. "We said, right, now we're doing multicycles and it always means that you have to be very closely aligned, so we have mixed teams with technologists alongside user-experience specialists, and also involve the maintenance side or the operators as part of those teams. It creates a lot of excitement when you're all working for the same goal. And they see the results of their work within a month, which in the banking sector is quite unique."
But these changes are only worth so much without considering their impact on the end user. "All these processes and technologies have to be very much involved with customer experience," Steenvoorden says. "I spend a lot of time with customer panels, which we hold in order to get touchpoints with the end user - the real customer - because that's very much part of my job."
A refreshing view from a CIO with his finger on the pulse.