Financial Services and Digital Transformation with Ron van Kemenade, CIO, ING Bank

Dion Hinchcliffe:

(00:00) Welcome to CXOTalk, it’s Tuesday June 6. We have a very special guest for you. My name is Dion Hinchcliffe and I will be hosting a second CXOTalk on Tuesdays at this time every other week going forward so I hope you can join us. It’s my great pleasure to introduce a very special guest, a CIO of a major financial institution, ING Bank, Ron Van Kemenade is joining us. Welcome Ron.

Ron Van Kemenade:

(00:30) Welcome and thanks for that, I’m really excited to be here.

Dion Hinchcliffe:

(00:35) Excellent so first, let’s get things kicked off. Let's talk a little bit about a little bit about ING Bank. I’m familiar with it but not everybody is, although it is a very large company and then tell us a little bit about your background and your history.

Ron Van Kemenade:

(00:50) Yeah I’m pleased to do so. And may be Dion before we actually start people might wonder why sometimes I’m not looking straight into the camera, it’s because I have a visual handicap. I do feel comfortable with it, so I hope the audience actually stops wandering and feels comfortable as well.

(01:10) Having said that Dion, ING Bank is a financial institution. It’s primarily located in Europe, though also our wholesale bank operates globally, and it’s present in around 40 countries. And in Europe we actually operate retail banks ranging from universal banks and direct banks in about 16 countries. Globally, we have around 50,000 employees, around 34 million customers and the top line is around €20 million so that would be like $23 - 24 million.

(01:52) So that’s a bit of the company profile. A bit about myself. I’ve been the CIO for this company over three years, and before that I actually was the CIO ING Netherlands. And I joined ING in 2003 when I became the Head of internet banking for ING Netherlands, so I made a bit of a move from the more digital channels into actually the real technology and hardcore domain.

Dion Hinchcliffe:

(02:17) Great and was that a challenge for you to come from a place where it was a kind of a digital native organization to a kind of a more traditional more financial services institution and try to do new things.

Ron Van Kemenade:

(02:31) Actually ING has quite a tradition I would say in digital disruption. As you may remember we launched actually ING Direct over in 1999 I think it was and even two years earlier in Canada and we were one of the first large scale direct banks. At the same time we were quite early to the market in terms of mobile banking. So this is a bit of a native to the ING organization as a group I would say.

Dion Hinchcliffe:

(03:03) So do you think ING views itself as a relatively competent business institution, so it wasn’t much of a transition for you. 

Ron Van Kemenade:

(03:11) No of course it is always a challenge and while you progress and while you mature and improve your proposition you’re always running to new things. And you discover that customer behaviour – yeah, always to a certain extent has surprises in it with you. And people of course adjust their expectations while they start using mobile apps like whatever, Airbnb, Uber or Facebook that actually sets their expectations, and they translate that into expectations to their bank. So we learn every day and while we do, we basically have to invest in new things, new propositions and again learn.

Dion Hinchcliffe:

(03:55) I love that phrase ‘we learn every day’. I think that’s got to be the mantra for us who are trying to lead the technology with the business. So you’ve been in your role for three years, d that’s getting on for the average CIO and usually there’s the challenge of the day. So you’ve probably been through a few successions in terms of challenges. What’s your current mandate and role there now, and what is the organization really looking at you to lead them through.

Ron Van Kemenade:

(04:29) One of the really thrilling aspects for being the CIO for ING is that basically all technology resides in my domain. So I have a full global mandate for all technologies supporting the business.

(04:45) Where maybe in some other let’s say industries, the CIO is typically the person responsible for workplace services and HR and finance systems where the core technology resides with somebody else. That could be the head of Production. And basically the core IT payment transactions or banking, currency trading, or whatever all technology basically resides in the CIO domain which really gives me the unique perspective on all of the industries in all of the segments we’re in. Basically all trends and all challenges in the end, end up at the same table, basically my global team.

(05:29) So that’s really a unique position I would say to be in. and from that position we’re actually not just supporting the business, I would actually dare say we’re leading and driving the business as well. I feel as much as responsible for let’s say our customer satisfaction, and by customer satisfaction I really mean people that come to the bank and put money at the bank or they apply for a loan process internal users.

Dion Hinchcliffe:

(06:00) That makes sense to me given that financial services are amongst the highest users of information of technology. They have IT budgets that are many times larger than other types of organizations. Yet in your opening introduction you talked about how other more nimble companies like Uber and Airbnb are setting the bar for digital experience. So what are your thoughts on where to traditional financial services organizations that are very large and constantly harder to change, where is the future of digital experience in banking? How are they going to compete with those nimble businesses and try and apply those concepts to your world?

Ron Van Kemenade:

(06:43) Yeah there is quite some things we could discuss about this, but let me start by a bit of a mantra. We truly believe that banking should be as easy as downloading an app. Signing up with a bank, opening an account should simply be as simple as you download the app. You register your profile and there you go. And I would actually say that even within ING today this is simply not the case. I think many financial institutions are working on this, but we are actually working on this vision and will appear somewhere soon. But actually you basically download the app and thee you go.

(07:26) And it should be as easy as that, and I think the big inspiration comes from these what I would call digitally born or web-born companies that’s simply large and scale globally. And where I say you scale globally, that’s basically the second challenge I would say for any financial institution that is a bit incumbent.

(07:50) Traditionally we go to a country, we buy a bank or we launch a bank by doing a greenfield, but in the end you end up with a very diverse landscape of products and propositions, and processes and even your technology. And I think what we can really learn from looking at these companies that I refer to, and there is many other examples. These guys simply go out there and put a product in front of the market, you call it the minimum viable product. They learn from the customer behavior and they improve. But while they improve they address basically all of the potential customers on this planet. While many incumbent banks are in many cases stuck within the wrong markets they operate in.

Dion Hinchcliffe:

(08:37) So this is a challenge and think this is the legacy baggage that traditional organizations have is holding them back. And those things what we call those gazelle organizations those nimble startups, they are going to put out new concepts that they can’t fully realise on in a very complicated global environment. And there are organizations such as yourself might be able to tackle better, would you agree with that?

Ron Van Kemenade:

(09:06) Absolutely, sometimes I’m very jealous of let’s say the sheer size of the technology organization of these typical let’s say unicorns, where they are extremely successful but sometimes less than 100 engineers.

(09:24) And you refer to financial institutions as being the biggest consumers of information technology, I would actually say that’s rather a curse than a blessing. Being the largest consumer of technology puts you in a position that you’re the favorites stop for the CEO of a technology company visiting Europe. Well I would actually prefer to be one of the smaller users and learning from the big guys in technology.

(09:55) The same within this company, if it works for Facebook for their sale, it might actually work for ING as well, versus a situation where technology companies they simply visit me and say Ron you’re so big, you qualify for the enterprise calls of our technology. That’s a scary situation to be in.

(10:14) So I more sympathize with what I can learn from these nimble, very agile companies and we mirror ourselves and we learn, but actually I would prefer a great number two position in the whole technology domain and the digital domain than being the number one basically for the technology for banking.

Dion Hinchcliffe:

(10:37) I think that’s the right place. So the transformation plans for ING, what can you share with us about how a large bank and I know that you guys are truly global and can you tell us how long you’ve been planning them? Are they in execution phases that we were talking earlier that you have done somethings all ready? And what is the timeline because people love to know how organizations are doing digital transformation.

Ron Van Kemenade:

(11:02) Maybe the most straightforward answer is that there is actually no timeline and you may even be surprised to know there is no program called digitization or even a program called the next generation digital bank.

(11:18) It’s I would rather say it’s more ambition and a permanent role than it is per se defining the boundaries of the budget or the allocation resources. The real important thing here is we basically learn everything every day basically from our customers. We learn from the customer behavior, and of course you need to have your data analytics capabilities ready for that. So it’s more a permanent transformation I would say than per se a program that is limited in time, objective, and resources.

Dion Hinchcliffe:

(11:54) Well I mean this is a conversation that the industry has been having you know, is digital transformation a project, that you do it and you’re done or is it a program level construct. You know not to get into too much detail, but there is another point of view that technology is changing and the marketplace is changing virtually continuously. So that you have digital transformation is kind of a journey that you are always on, as you said always listening. What’s your point of view? Is that how you’re framing it?

Ron Van Kemenade:

(12:26) Yeah definitely so, and maybe to elaborate a bit there it’s way more than say a pure technology driven transformation. It’s about culture and behavior as well. It’s about a way of working. How do you create an agile organization that is actually able to learn from customer behavior, to be responsive to that, to have the fail-fast mentality and invest into a MVP – a minimum viable product? Go out there, launch it, and speed is market share. And if you’re not successful try and improve it. And if entirely failure, pull back, and then retry. And that’s a mentality thing. It has nothing to do basically with technology.

(13:08) Another aspect that I eluded to earlier is while you have more digital contacts and more digital touchpoints with your customer, you basically collect way more data than previously, and it’s having that data there a simple thing, that you could throw some technology at that. But learning from it and improving algorithms, and basically translating that back into new propositions for your customers. Again, making your decision-making processes, and your market analysis, and your design process based on data and change your decision making. Those are the kinds of transformations that to be honest, to me are more relevant than me taking up technology or the next feature for a mobile app.

Dion Hinchcliffe:

(14:07) You said two really important things there and if we can take one after the other, and the first one was this word, culture. And in IT as a technical technology discipline, we haven’t really spent too much time talking about culture. But now that we see that this is one of the biggest impediments to successful digital transformation is being able to change our mindset and thinking. You know how are leaders like yourself, how are you enabling that cultural change inside the organization? And are these the kinds of soft human leadership skills that CIOs have really been developing properly to be able to tackle these challenges.

Ron Van Kemenade:

(14:43) Yeah, it is like you say. It really is a mentality and a mentality that is a mindset and behavior. And I think a a leader in this company it is really about your own behavior. If I would basically comment in a negative way that fails, I basically don’t encourage my people.

(15:09) You could say okay, if you have invested like 2,000 man years into a large program, and after two years you finally go to market and you have a failure on your hands. Obviously yo feel totally embarrassed.

(15:22) But if you would say, people simply grab the best technology available, see how it would actually work. See whether you can support this vision of whatever a digital marketeer there is. And you build it in a couple of sprints, you launch it after three months and you fail, now what is the big deal?

(15:41) You fail to like you invested maybe one or two teams for three months, so you’re cost of regret go down. If you really allow to go across the market and again learn from customer behaviour, and this combination of your way of working we could call DevOps and to the really agile thinking behind it, and the willingness to learn from customer-based behavior. If you allow for that I think you’ve made a huge transition and maybe the most important one in terms of digital transformation.

(16:19) But it really requires people like myself to be tolerant to failure, and allow people to experiment. I’ll give you one example. Traditionally the CIO is typically the person who sets the standards in technology, and I can actually tell you I don’t. It’s the engineers who basically define the standards and if they, or a particular technology and they have proven that can be successful; to me that’s a new standard. And that new standard might actually live for a year or three years, but it might actually mean that it lives for six months as well, and then the next group comes along and proves there is even a better technology to support the business.

(17:03) Turning this basically the decision making pyramid totally flip it over and say it’s actually the engineers who have the standards. And I basically help through a bit of governance to enforce it instead of me setting the standard and engineers trying to serve that, that again is a total different kind of behavior I think.

Dion Hinchcliffe:

(17:25) It’s very true, and I think there’s an interesting challenge I think with CIOs in that there’s too much technology change. you know you have to delegate authority more than we did in the past, where we had to have strict controls so that everything would work together and everything would integrate. But you still had the challenge of the one size fits all vendors. You know the large companies that come in and they want to bring all these different systems that already fit together. So it kind of requires you to set some kind of consistence that are a very high level in the technology organization. How are you dealing with that kind of challenge of top level and bottom level of constraints?

Ron Van Kemenade:

(18:10) It’s really a challenge. I mean adopting new technologies is in itself a challenge but we already discussed that a bit, but actually getting out of your legacy environments and doing all the technology migrations. And basically unlocking all these propositions from whatever let’s technologies could be main frame, could be any other technology, and transforming batch days to digital and to fully real-time.

(18:39) It sounds easy and in the end there is no lot of time involved, but it does mean a lot of work and then having the vendors coming in and basically they see their revenue stream going down. Know I don’t need to tell you Dion how many tricks the incumbent technology companies have to force you to stay into that technology.

(19:04) So it is a battle; I wouldn’t call it a war because there ist many technology partners that are actually very much supporting us on this transformation. But it is a battle every time and again you need to roll out your information.

Dion Hinchcliffe:

(19:21) I’m very encourage to what you’re saying and we do see this more tolerant leadership behavior where we’re more motivators and conductors, and we just hire in very smart people and get out of their way, and that sounds like what you’re saying and it’s great to hear.

(19:39) You said culture was the first thing and then you said something else that was very important and that is we now have all this data that we never had before. We actually know how our customers think. We know how our customers behave, and the challenge of course is being able to do something with that. And what I’ve seen in most organizations is that they don’t have sufficient capacity. They can very quickly generate enough consumer insight that they have work to do for years and then they stop listening. How do you deal with challenges like that? How are we going to get past that?

Ron Van Kemenade:

(20:09) I think there is this saying of ‘One stupid person can ask more questions than one smart person can answer’, and this applies a bit to the whole domain of big data. There is only so many qualified highly skilled data analyst. And as an industry I think we’re still quite far away where the average product manager or marketers simply pulls up his spreadsheet and immediately fires a thousand questions and the group cluster, and the answers were more or less immediately pop-up; that’s a dream but it’s simply not a reality today. So you need to focus attention on the parts that really make a difference.

(20:51) And I’ll give you one example, a very simple example and it may be extremely obvious, but if you think about it it’s quite a game changer. So most of our customers check their balance basically three times a day, and on the mobile it even goes up to like 12 times a day. And you may actually wonder why they do this.

(21:11) Of course there is this bit of balance fetishism, but that aside these people want to know how much money they will be able to spend safely. And telling them their balance is basically not getting the right answer, because the only answer we give them is what that balance was one second ago or whatever, 300 milliseconds ago.

(21:36) And it’s not the answer that their looking for. They basically don’t want to know in between now and pay-in day what their regular spending pattern will be. And the honest answer is we do know as a financial institution because we know how many times you do your groceries. We know how often you fill up your tank of your car. We know when your insurance payments are due. We know when your mortgage payment is due. So we can actually predict your balance quite specifically per day even per hour.

(22:11) And that’s the part where we become relevant in the sense that we can actually now tell people how much they can comfortably spend over the next 10 days before they receive the next salary payment when the pay check is coming in, instead of being just in the rear mirror of this business and telling them what their balance was.

Dion Hinchcliffe:

(22:30) That’s a really great example of what you might be able to do, so it sounds like although we can unleash a lot of reactions to the data. It sounds like you’re advocating to be able to use it intelligently under these services that we offer. And trying to say where is the highest value opportunities for us to give our customers the information that they would like to have that they haven’t had before, is that a fair statement?

Ron Van Kemenade:

(22:55) Yeah, absolutely and I think beyond that there is a second element to the equation, and of course again that’s the customer. Because we can do many things with what is basically their data, but we can do many scary things as well. It’s not like people by simply used to the fact that we are playing Big Brother and we know everything about them, and all of a sudden start putting all kinds of interesting propositions and kind of ‘this is what we know about you.’ People need to adjust to that, the fact that a bank can actually do this as well.

(23:33) So there is a permanent interaction play here, where we try out simple things, and while we get the response of behavior of our customers, we actually learn how tolerant they are versus this more analytical analytics-based propositions we put in front of them. Because there is adoption of digital propositions on the customer side as well.

Dion Hinchcliffe:

(23:58) There is only so many things they can accept, depending on how far along the kind of digital maturity curve that they are so I think that’s a good point. Moving on to our next subject, one of the things that struck me when we looked at your profile was that you’re a significant component of agile methods and something called DevOps, which for those who aren’t familiar with that, that’s combining development and operations so you have this kind of continuous delivery and continuous feedback loop from the field. A very exciting topic, DevOps in particular, agile has been around for a while, but DevOps is new. Why is this so important to you as a technology leader, and why is it important to ING?

Ron Van Kemenade:

(24:47) You could even argue that DevOps is simply an IT way of organising things. It’s indeed combining the development cycle as well is the responsibility to operate what is out there as a technology running in the bank. It is for a purpose. It is to shorten the feedback cycle, again in between people who develop things and people who run things. Because developers are not supposed to throw things across the fence and hope that IT Ops basically captures them and is able to run it. So I do want to have a short feedback cycle between people running things and developing things. And we even have things where developers basically are the person on duty for a week if there is an incident, they need to solve it themselves, which is to many developers quite new.

(25:45) But I can actually tell you that we have taken this beyond purely the IT domain. So now my DevOps teams include business people as well. So a typical DevOps team, BizDevOps team we call them today within ING now and consist of around eight people. Around three people from the business could be marketeers or project managers, but leading people who act on behalf of the customer who have a role, and like four or five engineers that make things happen that marketer’s dream of.

(26:20) And this combination again shortens the feedback side go from people who learn from customers, telling developers want to develop, and people running this and again generating the data that help be marketeers better understand. So this whole learning cycle is now organized basically into our organization through the creation of DevOps; BizDevOps teams.

Dion Hinchcliffe:

(26:46) So I like that phrase’ BizDevOps and that is you are kind of adding the end customer to that so you are getting feedback from them as well, is that correct?

Ron Van Kemenade:

(26:55) Certainly, it’s basically giving the customer a real voice in teams. And I’m by no means saying that engineers are not able to learn from customers. In some cases they have a better insight than customers behaviour than some marketers do, but what is important, it’s in the end marketeers or product managers responsibility and mandate to make changes to the proposition. It’s their responsibility, and I had this idea, and it’s not limited to ING. Other companies like Spotify do this as well.

(27:34) We wanted again to shorten the whole cycle of feedback and takeaway handovers. And I think everybody in the audience still will remember, or still will experience every day that you have somebody that comes with a customer insight. And then you have an marketeer figuring out the proposition, and then you hand it over to a project manager who will turn this into processes and into a typical kind of product. That is handed over to the business analyst, that hand over to the information analyst, their hands it over to the developer, the tester. Then you have somebody to…

Dion Hinchcliffe:

(20:08)…yeah, that whole linear waterfall process. But what I think was really interesting in what you are saying, if I heard you correctly. It sounds like you have these very tightly nit teams; you know eight people. I think I hurt you said that have representation across the whole value chain. So from the person like the marketer all the way out to the customer, including developers, testers, and so on. And this is a kind of a model that we’ve seen quite a bit emerging lately as this very lightweight agile pods and powered by DevOps. But this seems to be the way to unleash a kind of a startup culture inside the organisation. A kind of lean startup model, where you say we are going to fail fast, fail cheap, and we are going to do it very lightweight. And we are going to make sure it is data driven, based on what the customer needs. Is this your plan in kind of to have this model drive innovation in ING or is this one of many strategies?

Ron Van Kemenade:

(29:07) It definitely does drive innovation and maybe even beyond innovation, and basically drives the responsiveness to our customers. You need to do something more I think than just implement DevOps and then wait for innovation to happen. It’s not that people per se become creative by being organized in DevOps, but they do have more responsibility for the actual proposition of product. It’s like a small family gathering around the table and basically decide what trip you’re taking tomorrow.

(29:46) And we call it the two pizza principle; you’re not allowed to have more people in a team that can eat those two pizzas. But it’s not sufficient to drive innovation. You need to push people forward in their thinking as well. So next that we organize frequent hackathons, where people are basically encouraged to for 24 hours simply unleash every restriction they perceive, that’s fully let’s say taken away all priority setting, all corporate policies. And people really have the opportunity to think open and create anything that is crazy. I encourage them to create cool but useless things. Simply to encourage them to go beyond the next barrier. To go beyond the thing they day-to-day basically are responsible for.

(30:48) So there is more needed to encourage innovation and to have this kind of start-up culture. Then I would say just having DevOps. DevOps is an important element. It’s a necessary one, but is definitely not sufficient.

Dion Hinchcliffe:

(31:01) So I’m about to put a question to you, and it may sound strange but I think it’s the natural endgame, if we really talk about you know focus on our customers, do you think that the IT department is ultimately responsible for customer happiness today, when it comes to engagement with the company?

Ron Van Kemenade:

(31:22) At least all of my engineers to have that target in their KPI’s. Of course, we are corporate, so nobody goes in and out without KPI’s. But customer satisfaction and the agility to the responsiveness to that customer behavior is basically the most important KPI that they do have. And they share it with the colleagues from marketing and products. That may be to say because you might actually say, hey, is there really an inability of an engineer to influence customer behavior? And my answer would be a fool, yes.

(31:57) And I had this time only thing where there was members of these DevOps teams and a marketer basically raised the question, why are the engineers basically suffering from, what are marketers are doing in a market? And my response was, what do you think has the biggest impact. Whether the mobile app is up and running or the back ends are down, or your next marketing campaign.

(32:24) And I think there you have the best evidence that there is a direct influence increasingly in companies that are operating fully digital in the interaction with the customers. They are the direct influence of an engineer of what a customer experiences in their interaction with the company. That is increasingly so in digital companies and banks or any other industry.

Dion Hinchcliffe:

(32:52) I think that make sense. Michael Krigsman and I recently had a chat with the the new millennial CIO of SAP. You know, one of the first millennial CIO’s of the fortune 500, and he was saying that a customer satisfaction was a competitive advantage. But he was also talking about customer satisfaction with internal IT users, because you have a very big constituency Ron, you’ve been out in that large world out there and you have a lot of internal IT customers that you have to make happy as well. How do you balance that and who comes first?

Ron Van Kemenade:

(33:30) It’s basically the flipside of being a digital organization. You can only live your promise through your customers, if you’re actually making the same promise and live up to that promise internally. So joining ING as a new employee should be as frictionless as joining ING has a customer. And the mobile apps that our real customers are using shouldn’t be better than the iPad enabled internal applications that we offer to our users. So that should be a full similarity there. And to be honest, that is not always the case and sometimes my internal users of course hammer me for lack of this frictionless experience and they are rightfully doing so. So yeah, it’s a permanent balancing act because yeah, who do we priorities. Is it your internal users is your external customers. Obviously I’m not the only one who is making that judgement call, but I am a strong believer that you can only lead up to your promise if you make the same promise and the same delivery internally.

Dion Hinchcliffe:

(34:43) That makes a lot of sense, but it’s a real challenge with things like shadow IT, which compliant environment or regular environment but still that’s great to hear. In terms of digital transformation and innovation, do you think banking is right on the train tracks right now and about to be hit by all of these financial stin-tech startups as they call them or are they creating in entirely new places and not really going to threaten traditional banking organizations like yourselves, what’s your views on that?

Ron Van Kemenade:

(35:31) Actually I think it’s not the matter of whether it will happen but more actually of how it will happen. This is a bit of my personal opinion or per se INGs corporate statement but I don’t think there is a single company or a single proposition that will actually all of a sudden kill all banks in the world. Like all of a sudden all of the dinosaurs disappeared. It will be more let’s say a death by a thousand cuts. There is many agile, globally scalable, web-born stin techs out there that simply try out new business models and take a piece of the pie every time.

(36:11) And there whether that’s in brokerage, or currency trading, or lending mobile payments, whatever,. So what is important for more incumbent banks and we are still one of them though maybe more digital; still we’re an incumbent bank there is two things that are important. One is we need to create this global scalability as well because then we have the same kind of ability for time and volume, and the second par tis we need to specialize as well. We can’t be players in every single market in every segment for every product, because you basically take on too much competition which in the future will simply not be affordable anymore.

Dion Hinchcliffe:

(37:00) The challenge is tech changes on exponential curve right. And so new products and services come out and we need new models to get there. so one thing I read about you is that you’re also passionate about creating one collaborative community, instead of IT instead of having a command and control structure. We talked a little bit about this; you’re empowering some of your deputy’s to make important technology decisions. But rally I was wondering if you can crystalize that vision for us, what do you mean by collaborative community inside of IT and how do you achieve that? What mechanisms do you use and where will it take you?

Ron Van Kemenade:

(37:42) Yeah that’s interesting you picked that up actually. Basically every CIO or CTO in a company struggles a bit with the question, do I organize these centrally, close to the market or do I fully centralize and create this very efficient factory of development.

(38:06) And I actually wonder that whether there was something in between, and I think we came up with this concept of one IT. Not meaning there is just one central organization or delivery center. And then in the process of centralization basically lose a lot of talent, and in the process of eventually losing the contact with the business.

(38:32) So what we try to accomplish and have been working on over the past two years is say, okay, there is really a position for engineers close to market, and they should interact frequently through these DevOp teams with marketers, but the true value is not the fact that they create something for tier local markets. They should take on the responsibility for creating something that scales globally. That is applicable to basically all markets we are operating in and every market that we would like to make use of that proposition should be able to use it fast.

(39:12) So I basically gave the responsibility to the decentral teams to contribute to this global scalability problem of ING. And maybe I should replace the word probably by challenge but I think you know what I mean. And that was actually quite encouraging for them because this centralization effort will always encounter a lot of resistance which is simply human behavior.

Dion Hinchcliffe:

(39:38) Although you would think you get some enthusiasm to right, you get people say, well now I can get a little bit of autonomy. I can fix my part of the business the way that it needs to be fixed with technology because I’m free now from 100% of constraints. But I think you’ll get both. We have a question from Twitter from the DevOps European Summit and they’re bringing it back to that question of the small financial services startups. And they’re challenging us again, you know are they really if you look longer term at the larger financial companies out of business in the same way that we’re seeing the Airbnb and Uber, and we’ve seen the proof in other industries, and when this really starts to happen and gets under way are we going to see new Blockbuster videos but in financial services.

Ron Van Kemenade:

(40:34) Coming back to my original answer, my answer was actually it’s not a matter of whether the financial industries will be disrupted it’s more a matter of how. But I added to that, that banks in itself need to adopt, need to specialize, need to find their niche where they want to play. That could be a large niche globally, it could be a very specialized one.

(41:01) Basically encouraging and I think this is what our CEO Ralph Hamers is basically telling to the market all the time, if we stay the same we die. So we need to adopt, again learn from these nimble startups, learn from our customers, learn from tier behavior and adopt our business model. Adopt our way of working, and that’s what we’re trying to accomplish within ING. We don’t want to stay the same. It’s actually in the four propositions we have made the central point of our strategy and the fourth one says, we keep on improving every day step-by-step.

Dion Hinchcliffe:

(41:40) It sounds like if I may that you’re not going to go the way of the Hilton’s or the taxi industry. Your radar is up. You’re scanning the opportunity space, you’re not going to give one side, is that a fair statement.

Ron Van Kemenade:

(41:56) Yeah, I think that is a very very pure statement. So we don’t discuss whether, and I’m just using a couple of names, whether Google will disrupt or whether it will be Facebook. we basically say we should simply assume that disruption is out there. we may not know the name of the next one who will actually take the next billion out of our revenue topline, but it’s a matter of how we are prepared to deal with that, and how we find the new opportunities as well. if there are companies out there that can play an important role, why not be the disrupter ourselves and enter into market where traditionally we haven’t played a big role.

Dion Hinchcliffe:

(42:43) So we’re down to about  three minutes and we would remiss if we didn’t talk about one of the most important topics in technology and financial services, and that would be blockchain. The global distributive ledger that’s brining a whole new sensibility to financial transactions, record keeping, an potential to restore transparency and trust in our financial system and all sorts of other things. What is you sign of thinking about this and what is your view?

Ron Van Kemenade:

(43:16) ING is definitely endorsing blockchain, as many of your audience may have noticed we have joined the R3 consortium last year so we’re an active participant and not just by partnering and on this platform, but actually implementing blockchain technology within certain of of value chains.

(43:42) Whether blockchain in the future will live up to its promise of being the largest disrupter in terms of think tank technology that remains to be seen, and there is a lot of promise in there. And there is even if you look at the underlying technology thee is clear reasons why like you said establishing trust through basically a collaborative community and using the same ledger, there’s a lot of promise in that.

(44:16) The real disruption obviously would be if we find the next pocket of one thousand billion of new revenues; that’s really disruptive. That remains to be seen whether that’s the case. The number of transactions globally and the urgency to make a payment, or the urgency to need to have a letter of credit in itself doesn’t change through blockchain. So that’s a qualification I should bring to the table as well.

Dion Hinchcliffe:

(44:44) It sounds like you’re saying blockchain is the big thing. The big question is how significant, how large is the market and obviously that remains to be seen. So Ron I would really like to thank you for joining us. This was a great episode. It’s terrific to have CIOs like yourself who have a lot of experience in technology and been in financial services and give us this kind of perspective. So thank you again. And don’t forget we have the next episode of CXOTalk coming this Friday at 3P.M, and Michael Krigsman will be hosting that show with the Uber analyst Josh Bernioff who will be on the show, and thanks for joining us.

Companies mentioned in today’s show:

ING                  www.ing.com

Google             www.google.com

Airbnb             www.airbnb.com

Uber                www.uber.com

Facebook         www.facebook.com

Twitter            www.twitter.com

Spotify             www.spotify.com

Ron Van Kemenade:

LinkedIn           https://www.linkedin.com/in/ronvankemenade