And BNP went mobile
How a physical bank took the plunge and became a digital platform
Source: Het Financieele Dagblad (21/01/2017); Authors: Steve Muylle and Willem Standaert, with the collaboration of Gwen van Loon
Case study: digital obstacles
In February 2015, the case study “Hello bank! The Birth of a Mobile Bank” by BNP Paribas Fortis won a Case Centre award, also known as the Business School Oscars. According to Steve Muylle, professor of Marketing & Digital Strategy at Vlerick Business School, the main author of the case, it was not only the speed at which the mobile bank was launched that made an impression. The case also describes the obstacles encountered along the way, such as the bugs that needed to be removed from the technical systems and the energy it took to maintain momentum. As well as the Hello bank! case study, Steve Muylle also wrote the “James: High-tech, High-touch Portfolio Advice at BNP Paribas Fortis” case, co-authored by Dr Willem Standaert. This Vlerick case will be published by Ivey Publishing in the near future.
The introduction of Hello bank! in May 2013 was not without its setbacks, recalls Michael Anseeuw, the head of retail banking at the Belgian bank BNP Paribas Fortis and CEO of Hello bank! Belgium. “During guest lectures for MBA students, I ask them whether they have read the Hello bank! case study. Well then, I say, forget everything you have read and let me tell you how everything changed very quickly in practice.”
Hello bank! was introduced in Belgium and Germany in May 2013, in France one month later and in Italy in the autumn of 2013. Not as part of BNP Paribas, but as a separate, mobile bank. The bank was intended to be independent of the parent company. In Belgium, this was BNP Paribas Fortis and BNP Paribas Group in the other three countries. In Belgium, BNP has a market share of between 20 and 25%.
Two developments in the financial world led to the launch of the digital bank, says Anseeuw. “Since 2000, consumers’ digital behaviour has been increasing and payment transactions were seen more and more often as a product which ought to be free. We were already serving our clients using the web and an app. All the same, in 2012 we decided to develop a separate brand that would only be accessible with an app. This would allow us to offer basic banking services — just a debit card and the ability to view your account — free of charge.”
For the app, we chose the name Hello bank! “There was a lot of discussion about that. Should we include the word ‘bank’ in the name? After all, it was clear from the start that we wanted to expand the channel into a platform which went far beyond banking alone. Opponents of the idea said: we want to be different, so let’s not do it. Advocates, on the other hand, felt that the word ‘bank’ would create confidence and so it would be necessary.” In addition, all four countries were given the opportunity to launch extra services via the platform. “The idea was that we would be able to exchange lessons learned and thus keep development costs down.”
BNP Paribas Fortis revised its initial plan to keep the two banks strictly separate shortly after the launch. “We observed the behaviour of our clients and quickly reached the conclusion that people could be clients of both brands, as BNP Paribas Fortis offered a broader package of banking services. In order to encourage cross-pollination, it therefore seemed inappropriate to maintain such strict separation between the two banks.” For this reason, Anseeuw also became the CEO of Hello bank! Belgium.
Hello bank! is extremely data-driven. “If you are starting from scratch, you have the advantage of being able to use data in everything you do.” The mobile bank has three aims: to attract new, young clients, to encourage clients to purchase banking and non-banking services and to serve as a lab for digital innovations. This knowledge can then be used for all the channels of the two brands.
It quickly became apparent that clients not only wanted to bank via an app, they also needed to be able to manage their bank affairs online on their computer. And whereas Hello bank! first thought it would attract adults up to the age of 45, the initial interest has come mainly from young clients between the ages of 18 and 28. “At the end of 2013, our Hello bank! was very different to the way we had imagined it on the drawing board. We were constantly adjusting our course in response to the behaviour of our clients”, says Anseeuw.
A bank with 475,000 members
Hello bank! is a separate, mobile bank which does not require its members (clients) to pay basic costs for banking services. Clients pay a unit fee for each credit card, but prepaid cards – you transfer a balance to them in advance – are free. These cards are very popular among young people. When the balance reaches zero, no more money can be spent.
Hello bank! Belgium now has around 475,000 clients. BNP Paribas Fortis is the largest consumer bank in Belgium, with 3.1 million clients. The bank plans to invest up to 1 billion euros in digitalisation and technology by 2020. The bank is not willing to reveal how much of this goes to the Hello bank! platform, nor will it say whether Hello bank! is making a profit.
Right from the start, as well as being a mobile bank, Hello bank! has also been a lab where BNP Paribas can experiment. Belgium has now also introduced Hello crowd! (for which investors receive a non-financial reward for their investment), Hello home! (for mortgages) and Blue Room (a community platform, accessible to both members and non-members).
50 people work for Hello bank!, including 20 in the Hello service team.
Other “old-school” bureaucratic obstacles have also been tackled. “Our advertising slogan was ‘Hello bank! Mobile, just like you’. However, to satisfy all the legal requirements, new clients had to sign a contract and send it to us by post. We quickly changed this. Now you can choose to register on paper, using the app or internet, or you can arrange for a banker to visit you: at home, at the office or wherever you like. These are our ‘flying bankers’, who can also go through things like mortgage applications with the client.”
The services now extend beyond mere banking, and this also generates income. “We intend to keep responding to changes in behaviour. For example, we recently launched Hello home! in Belgium, which works in close collaboration with Immovlan, the Belgian Funda. Members can sort out their mortgage entirely online and gamification gives you a clear picture of how you can influence your mortgage.”
In Germany, Hello bank! offers online investment products as a result of integration with the online broker Cortal Consors. “The target group there tend to be older: between 38 and 42 on average.” In Belgium, Hello crowd! was launched in October 2015 together with the Ulule crowdfunders. Unlike other crowdfunding campaigns, the funders receive a non-financial reward (such as a prototype of a new product) for their contribution.
“To keep up with what is going on, we constantly monitor what tech starters are doing, and not just fintech companies,” says Anseeuw. “Interesting partnerships can develop as a result. We see ourselves in the long term becoming more of a platform than a banking channel. We will achieve this through co-creation in multidisciplinary teams which also include professionals without a background in banking, such as designers and anthropologists. Of course, all this creativity sometimes leads to conflicts. So you have to accept that after three steps forward, you might sometimes be forced to take one step back.”
Did all the changes that were required so soon after the launch demand a lot of extra investments? “Of course these things cost money, but right from the start we were aware that we would need to change course more frequently than the physical bank does. For example, we were quick to change our online forms. It was unclear to clients where they were in the application process, and they sometimes dropped out as a result. However, digital changes are cheaper than physical changes. So if you want to change things, it’s cheaper than it would have been, say, 15 years ago.”
All the same, Anseeuw acknowledges that the launch wasn't easy. “We had a lot of internal discussions to win over people who saw obstacles. We could only build credibility if we were given the chance to really dress up the mobile bank. After all, testing in a digital environment isn't the same as testing in the physical world of bank branches.”
As a result of the experience with Hello bank!, changes have now also been made to the traditional bank. In Ghent and Brussels, BNP Paribas Fortis has opened two flagship stores which are experimenting with new forms of services. “In these stores, we are testing modules that we would like to use in local bank branches. These include ‘Book and Work’, which allows both clients and non-clients to use small meeting rooms, and the provision of walk-in advice without the need to make a formal appointment. This reduces the time it takes to sort out banking matters, an advantage which people can also experience online, for example.”
Since as early as 2009, BNP Paribas Fortis’ investment clients with assets of over €85,000 have been able to choose whether they want to be assisted by James – a remote digital banker – or their own account manager. “At the moment, investors can also opt for a combination of the two. Initially, we contacted 20,000 clients who already used digital tools for their other banking matters. We now have 100,000 clients who also use James. They now get more contact and advice and their satisfaction levels have increased.”
All the same, Anseeuw does not think that the physical bank will ever disappear. “It was a conscious decision to keep certain products exclusive to the BNP Paribas Fortis brand: i.e. to only offer them at local branches. After all, some products just need more explanation and support. If you adopt a bird's eye view of what we are doing, I always say that we are making digital things more human and branches more digital. In this hybrid environment, everyone can decide for themselves how they prefer to do business with us.”
The challenge for BNP Paribas Fortis, therefore, does not only lie in developing and rolling out the strategy. “We must also be able to take rapid action. This requires a major cultural shift at a time when ‘digital’ means different things to different people. Our children do not talk about ‘digitalisation’: for them, the digital world is simply a fact.”
Transformers: FD and Vlerick
In June 2017, the Financieele Dagblad and Vlerick Business School published the Transformers 200: a ranking of the most successful Dutch companies in the digital transition. Digitalisation is a process of trial and error. Anyone who fails to master the transformation will lose out to young competitors. Together the FD and Vlerick are taking a look inside the engine rooms of 200 large Dutch companies.
The central focus of the study is the Exconomy model. This model revolves around various new “realities” of the modern economy, such as : (1) the digital experience forms part of the value of a product, (2) clients are moving targets, (3) value is co-created using digital platforms.
Transformers 200 consists of a magazine with sub-rankings for different sectors, skills and case studies and an interactive ranking. From now until June, FD Morgen will be publishing a series of articles on this topic.