Responding to the Fintech Challenge

Digitalisation is taking the banking sector by storm. We talk to Rudi Deruytter, CEO of CKV Spaarbank, about how his small, niche bank is meeting the challenge.

A white paper by CSI revealed that one-third of banking customers in the US preferred to do their banking online. The transformation of how people like to conduct their financial transactions has been driven by the growth of the smartphone – and currently 60% of the US population own one.

These patterns are reflected in Europe. According to industry expert Alan McIntyre of Accenture, much of this change has been driven by the crisis in banking and the growth of disruptive innovators in the fintech sector. “There is certainly a real danger,” he says, “that traditional banks become marginalised if they don’t respond to a changing environment. Industrial history is littered with storied names that failed to grasp the significance of innovation and ended up ceding dominant positions to firms that were started in garages.”

McIntyre believes that traditional banks will rise to the challenge: “While a variety of reports indicate that anywhere from 20 percent to 80 percent of the industry’s revenue could be at risk from new entrants, what most of these reports don’t focus on is the likely response of the incumbents.

“While their short-term performance issues may have dulled their reflexes a little, I think you are beginning to see leading players in the industry wake up to the threat and be a lot more active in their responses.”

One traditional bank that is busy adapting to the new challenges is CKV Spaarbank, an independent, Belgian Savings Bank that has been active throughout Belgium since 1956. We spoke to Rudi Deruytter, CEO of CKV, about its operations and how the bank is looking to a digital future.

Can you tell me more about CKV Spaarbank?

CKV has existed for more than 62 years and is a family-owned bank, located in France and Belgium.  We specialise in retail banking and we mainly working with private individuals.

We don’t work in a conventional way. Our approach is to be person-centred, working to suit the individual. While as with a traditional bank you can opt for standard savings products, we also have a number of tailor-made solutions for mortgaged loans, for private and professional purposes.
CKV Spaarbank has a wide distribution network of savings bank agents and independent credit providers.

We have a clear set of goals that we stick to, which include trust, social responsibility and compliance with law and regulation.

You’ve said you are developing digital banking. Why is it important, what have you achieved so far and what are your plans moving forward?

We need to change to digitalisation because customer behaviour is changing and we need to be more efficient. Digitalisation is the future and we believe we can offer a system which is reliable. We are also interested because, though technology, increase productivity while not significantly expanding our employee base.

CKV Bank wants to innovate with technology today to define banking for tomorrow.

The financial industry is undergoing significant transformation. Regulatory requirements and the accelerating digitalisation have put pressure on banks. The banking market is increasingly more competitive and the rapid technological development creates new customer expectations. It is essential for the banks to embrace and adapt these changes.

But it also creates new opportunities.

Where are we with our plans?  At the moment, we are working within an ecosystem.  We are working on an onboarding system, and we are talking about digital signatures as well as developing some apps to make our clients’ lives easier.

To achieve this goal, we employed a DLT Officer and we are looking to work with fintech companies and with other companies like Salesforce. By 2022, we hope to become a more modern bank and a more efficient bank than we are today.  And we need to do that to remain profitable and to retain our position in the banking world.

Can you tell me about an innovative product you are developing right now?

Our latest new product is the Golden Bullet, which we developed for the France region.

We have a lot of clients who are solvent, who have a lot of assets, but they don’t have enough liquidity. So if you have assets, we can take a mortgage loan and we are able to make a new product –  a Golden Bullet, where you don’t need to pay interest or capital for a certain period of time.  This can be between one and ten years.

Of course, their interest is capitalised, and at the end of the Golden Bullet product, you need to repay.  The repayment is often linked more to the selling of property or to the receivables programme of some insurance policy that some people have in place.

What is it about CKV that makes you so forward thinking? 

CKV is thinking in a new way because I’m convinced that in the coming years, the banking environment will change dramatically and profitability will be under pressure.

You can retain your profitability if you have good soft skills, if you have very happy people working for you, and if you have a retention of good profiles in your organisation.

Therefore, we are working hard to keep the people together and to take pleasure in their work.

I’m a strong believer that good soft skills will lead to good results.

To appeal to the next generation, the bank needs to digitalise and lead on developing a new forward-thinking banking strategy.

I come from the traditional banking sector, and I’m convinced that that’s the way we should go forward with our small, niche bank, which is what we are.  But unlike many of our competitors, who use digitalisation to take out customer service from actual people, we will retain this close person-to- person service. We can do this because we are small and flexible.

We are very much looking forward to seeing our plans evolve over the next ten years.