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Interviews

Interview with Raiffeisen Bank International on open banking, fintech and innovation strategies

Wednesday 29 May 2019 | 08:22 AM CET

Raiffeisen Bank International (RBI) has launched the “Elevator Lab”, a fintech partnership program that searches for innovative solutions in payments and banking

The Paypers took this opportunity to learn more about the initiative and the innovation projects Raiffeisen is involved in. Today we speak with Hannes Cizek, Head of Group Strategy & Innovation of Raiffeisen Bank International.

In the light of open banking discussions around the traditional players vs. challenger banks, how does Raiffeisen Bank International position itself?

RBI is one of the largest financial institutions in Central and Eastern Europe (CEE), covering 13 markets and serving more than 16 million customers across the region. Our markets have not been impacted by new entrants as much as, for example, the UK or other Western countries yet.

Nonetheless, we see some digital-only banks appearing also in our markets, especially in Russia and Ukraine. Other than that, there is quite some activity to observe from new entrants in terms of remittance services which isn’t surprising when you think about the east-west migration of millions of people in the region. Considering all of that you can say that the fintech ecosystem is slowly evolving also in CEE and we think that many opportunities are arising from this development for all sides.

Our strengths as a reliable financial institution with extensive local and international know-how and a strong customer base will surely also be valuable in a more digital future. Despite – or maybe even because of – the new competition, we are in a very good position to further providing our customers with the best possible banking experience.

Achieving a high level of innovation and digitalisation requires a fundamental shift in culture and leadership approach. Could this pose a problem for traditional banks?

As a bank, we have certainly noticed fundamental and irreversible change on all levels, especially due to the complexity of our organisational structure. There are many challenges that an increasing amount of digitalisation and innovation introduce, especially in the banking world, starting with things like regulatory shifts, legal changes and digital developments. During this time, it is essential to focus on customer centricity and with that, question the work processes that are behind this.

The first step is to ensure that we have the right people in the right places. We have made it a priority to train, educate and develop people in all areas of the bank, especially those in leadership positions. We strongly believe in investing in the right people to lead our company. In this digital day and age, our focus is increasingly on leadership skills, instead of the more traditional management and administration skills, and we need our colleagues to actively demonstrate these.

Furthermore, we have already set up many agile teams across the bank and seen a significant positive shift to a culture that is actively oriented towards customer centricity, decreasing our time to market, optimising our understanding of collaboration and improving our overall flexibility.

At the end of April RBI launched the third round of “Elevator Lab”, a fintech partnership program that supports local fintechs in the CEE region. Can you tell us more about the fintech ecosystem in this region at this moment?

CEE is a very heterogeneous region, as are the fintech ecosystems in those countries. Some countries already have very well developed fintech ecosystems whereas others are still in the starting blocks. In addition to our Elevator Lab, the largest fintech partnership program in the CEE region, the local Elevator Lab initiatives organised by our subsidiary banks play an important role in fostering these ecosystems. What we see is that the CEE region has caught up enormously and has a well-educated, digitally sophisticated workforce. Looking at the fintech ecosystem, from circa 1,100 fintechs headquartered in CEE, only about 20% have successfully closed an equity funding round. The top three fintech hubs with the highest cumulative equity funding are Russia, the Czech Republic and Poland, confirming their leading position as innovators in CEE. Bulgaria is one of the fastest growing fintech destinations in the CEE region. From a topic perspective, we see strong emphasis on blockchain technology, artificial intelligence and data analysis fintechs in Russia. This is just to name a few countries, you can read more about all of this in our recently published CEE Fintech Atlas.

As Raiffeisen is looking for fintechs to develop innovative solutions in payment transactions, could you please give some examples of open banking implementations within RBI?

Open Banking brought new perspectives to the financial industry and at the same time new models of collaboration with third party providers, including fintechs. The implementation within the RBI Group ranges from making basic features available via open APIs such as ATM and branch locators or currency rates to exposing application processes for debit cards, credit cards and loans in Russia, for example. At the same time, our network banks operating within the European Union are currently implementing PSD2, where we already exposed APIs in Sandbox environments. RBI’s sandbox is dynamic, enabling third party providers to simulate the payment process, including the effect on the balance and transaction history of the debtor account, and offers more types of payments. This approach brings us even closer to fintechs, startups and all potential future innovators which is ultimately one of our main goals.

Looking into the crystal ball: how will open APIs reshape the banking industry in the next 5 years?

Open APIs, and the PSD2 in parallel, have the potential to be one of the biggest transformations the banking sector has ever experienced. The possibility to open up towards third party providers, and at the same time to consume new types of data to enrich existing products and services. This will lead to competition for the best customer experience, and it is therefore clear that the customer will ultimately benefit from that. If banks like RBI can proactively manage this openness and combine it with their traditional strengths such as trust and customer orientation, they will improve their business models and profit from this development.

About Hannes Cizek

Hannes Cizek is Head of Group Strategy & Innovation of Raiffeisen Bank International. Before that he was responsible for Digital Banking and Innovation Management at Raiffeisen Zentralbank Österreich AG, Executive Assistent to the CEO of Raiffeisen Bank International AG and held various functions in retail and commercial banking of Raiffeisen since 2009.

 

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