In sixth episode of SME Banking Club Podcast Series, we speak on open banking and API-first approach with Natasha Kyprianides, Group Head of Digital Banking & Innovation at Hellenic Bank in Cyprus.

Olena Gryniuk: Natasha, my first question is what is your everyday job looks like? What are the main things you are involved in at the moment?

Natasha Kyprianides: As the Head of Digital Banking & Innovation at Hellenic Bank my everyday job is quite exciting and involves several impactful products, building actually several impactful products, aiming to disrupt the industry. Examples of these products and what our roadmap looks like and I actually joined a Bank two and a half years ago and we kicked off with a mobile first approach so that first product we released was a mobile banking app. That was ground breaking product and it was built in six months. From there onwards we built an Innovation Lab in the short period of time of eight months. And then the most impactful product that we have out there at the moment is our Open Banking project – and we can discuss that a little later. And in the pipeline, we have few revamps such as our public website revamp. The public website is being revamped to take a different strategic purpose and be a sales platform, central sales platform for the Bank and the foundation of the digital bank. And then another impactful project that we have in the pipeline is the web banking revamp. And we started with the business web banking revamp.

OG: How in general innovative ecosystem looks like inside the Bank? You said you had an Innovation Lab inside the Bank. How people are motivated to do the innovations? How does it look like inside the Bank?

NK: It all starts with placing emphasis on the customer experience. So, we have an outside-in approach on everything that we do, and the customer is in the center of everything that we do, and this is the culture that we are trying to embed across the board. And that’s why we have built an Innovation Lab that aims to promote collaboration, co-creation and also this is where the digital team sits and works, this is where digital team lives, in other words, and builds the real products for the marketplace. We also use the Innovation Lab to promote the Bank’s new culture and so the design of this Lab that has a lot of motivational quotes spread across all the walls, and it has an inspiring design to it, and this helps us promote the culture that we are trying to get across but it also acts as the space through which we collaborate with stakeholders across the organization and also start-ups and other partners outside the organization that we are trying to work with.

OG: How long did it take you to build the innovation culture inside the Bank? How people are motivated? Do they have KPIs? How does it work?

NK: We haven’t built an innovation culture; it’s not something that’s finished, it’s something that we’ve started. So, we have started to build an innovation culture across the Bank and this started before the Innovation Lab was completed, it’s not the Innovation Lab that builds the culture, it’s the mindset. And it’s the approach towards how we do things. We started doing this about two and a half years ago when I joined, but I’m not the one who started it, this is top down initiative starts all the way from the Board and is communicated across the Bank. And what we’re trying to promote is the design thinking approach to doing things, so, to re-engineer processes and simplify products and build new channels, improve the customer experience. The outside-in approach that I mentioned earlier is really a design thinking approach.

OG: What is your digital transformation roadmap for business customers? You said you started with the development of mobile application. Are you mobile first or online first? What are the main areas in digitalization for SME customers?

NK: Well, the strategy is to become mobile first. But we are still actually branch first, not even online first. The first preference, unfortunately, of our customers is the branch, then is online banking and third comes mobile banking. But mobile banking is a new channel, which we introduced, as I mentioned, early in 2016 and it’s been very successful in migrating customers. Half of our online banking customers are actively engaged and using the mobile app, and that shows the trend. The mobile app was built basically to attract millennial customers to the Bank. And our statistics prove that we’ve been successful in achieving this, in starting to achieve this, cause it’s an ongoing effort. The mobile app is basically targeted towards consumer customers, individuals as a first release. But as we keep releasing more features and we had thirteen additional releases to the app in just a year, the next releases will also include features to address our business customers.

OG: I’ve read a lot lately on Hellenic’s API-first approach. So, you are opening your API to the customers as well, not saying about fintechs or other third parties.

NK: I’ll give you a small description how it will start to work as it is not live yet, the live environment is not launched yet, it will be launched soon. We had put out there in April, the first increment of open banking project that involves the API developers’ portal, and that developers’ portal includes the sandbox, comprehensive documentation, and six open APIs. And these six open APIs comply to the PSD2 directive. Namely, they are transactional APIs: we have one on mass payments, so it helps customers perform mass payments; we have another one for single payments of all types so that you can transfer funds within the Bank or to any bank in the world. Of course, we have the authentication API and something that we call account reporting, and that’s the data of the customer that would flow into a third-party platform app or any other system or service. So, that’s what we have put out there. Now, as to the partnerships – we have a strategy around that, and we’re just finalizing actually so that we can launch the live environment with the governance process. So, this governance process is going to be very similar to how you would submit an app, let’s say, to a store, a new your app that you have built as a developer to a store such as Google Play Store or iTune Store, and that app would have to undergo an approval process review and approval process, so we’ll be doing the same. We have put together an Open Banking Committee as well that will be reviewing these products by third parties so that they will be going through filter basically, not any one can just submit something, and we can guarantee it would be launched or be made available. And then there are a couple of approaches, we’ve also put together a marketplace so that marketplace will be integrated, at the first stage, into business web banking channel so that we can cross sell these third-party products to our existing customers. But that would be in addition to taking something live by the third party. So, one step will be to approve and take something live by the third party and then the third party would be able to promote it any way they wish. And the second approval step is also to make it available through the marketplace of the Bank and that would help the third party gain direct access to our customers and us helping the third-party cross sell these products. So, everything goes through a filter, and it’s cherry-picked.

OG: When are you going to go live with the API-first approach?

NK: I cannot reveal the date at the moment, but very soon. It’s this year’s target.

OG: Tell us more on the marketplace you are launching. Which Bank’s products will be available at the marketplace and how many third parties do you have integrated already?

NK: First, you need to have a strategy. We have put together a strategy as to why we need this service and why this is an opportunity for the Bank. It’s two strategic approaches. One approach is about accelerating the transformation of the Bank, so the third party would either have to help us, the Bank, with what they have produced, accelerate the transformation and therefore you’d have to be mapped against our digital strategy. And the other objective is growth. So, the Bank is trying to grow. And growth for us is achieved in two ways: by customer acquisition, and hopefully cheaper customer acquisition, and new revenue streams. So, if what the third party or partners meet any of these criteria, then they are on a good track to make it to the marketplace as well. The marketplace, as I also described earlier, is currently being built into our business web banking channel. And the reason why we are building and integrating it first into the business web banking channel, because then we will also build it into the other channels, even the mobile channel, into the mobile app, so we started with business, because the first use case that we are implementing is a B2B use case, more specifically, it’s an ERP use case. What that essentially means is that business customers by opting to use the API banking channel will be able to have a seamless integration with a Bank and transmit payments in real time from within their ERP platform (Enterprise Resource Planning system, which is essentially an accounting system). So, the business that is using an ERP system would be able to remain in that environment and not have to export files as traditionally this has been the method and then import them into a Bank’s web banking system and those files usually have to conform to certain types of specs and that takes a lot of effort and it’s not very efficient process. So, they will be able to transmit payments in real time to the Bank and also be able to track the status of those payments so then the Bank would, in other words, be able to respond back, so through this synchronous API call there will be a response by the API and it will provide the customer with the status of the transaction. And on top of that the customer also will be able to have an auto-reconciliation at their end of their transactions, so this saves them additional time from exporting other files in the form of statements from the bank and importing them into ERP system. And all this means that banking becomes hassle free for the business and eliminates all these additional steps by just integrating directly with the bank, so this is what the customer will get as a benefit. And this is happening today by some banks to some extent, APIs are not a new thing, open banking is a new thing, so instead of creating custom APIs, as this is another way to do this, for each customer by enabling the third party (in other words – the ERP vendor) to integrate with these APIs and the Bank basically to partner with some top ERP vendors that are the most commonly used by our customers, then it eliminates this need from the customer’s end to need to deal with integrators and the technical side of things, they would just be able to login to the business web banking, navigate to the marketplace and activate the platform that they are using and just login.

OG: The marketplace is not launched yet, is it?

NK: This is not launched yet, but again it will be launched very soon. At the moment we are working and building all of this to be launched in, I wouldn’t even say months. So that helps you to understand how soon it’s gonna happen.

OG: What will be the triggers for the success of that project? How will you measure it?

NK: We would need to have an ecosystem built. So, we feel that by investing in building an ecosystem of partners that will help our customers to have all these options, so that they can start to use the third-party solutions, apps, platforms and that would start to help us make it a commercial opportunity. So, our main aim as a Bank is to turn open banking into a true commercial opportunity in the API economy. And that would mark the success. Of course, we have several KPIs set already measuring, at the moment, developers, things that developers have built, monetary transactions that indicate volumes and values and the potential. At the later stage when everything will be live the real numbers will be able to help us measure success.

OG: Are among these third-party solutions which will be integrated into the marketplace are there be something like online lenders, online factoring, leasing or something like these solutions?

NK: No, at the moment we are mainly focused on ERP partners, so we are focused on building the ecosystem with ERP vendors first, but we’re having conversations and, in fact, a lot of other developers, that are building another apps, they are not essentially addressing the business customer, these are products for everyone, and this is our other strategic goal. The marketplace is to deliver true lifestyle banking to customers, so it shouldn’t even be maintained in the constraints of the banking facilities, products and whatever else. Just because you are using a bank channel to perform some transaction or to use self-service facilities, it doesn’t mean that that channel should just offer you banking products. So there might be other products from other industries made available as well.

OG: Traditionally my last question is about inspiration. What is your source of inspiration to do a better job? Do you look outside the banking sector? Which country or maybe some particular companies you see as an example to follow?

NK: My answer would be – constraints. So, my biggest source of inspiration are the constraints, cause the constraints force you to start thinking in other direction, so you are not comfortable anymore, and by being constrained you’re forced to start thinking more creatively and trying to solve complex problems and that helps you bring about all these innovative solutions in the end. And therefore what you perceive as a limitation can help you moving to other direction so that you can come up with ideas that you wouldn’t normally come up with. And then I’m very driven and passionate about leaving my mark and making an impact, so that also helps draw inspiration and to deliver the wow factor at the end of the day. My inspiration can come from anywhere and anything. Definitely, it doesn’t come from the banking sector. For me, I can’t say I’m inspired by the banking sector. Currently, I can say I’m inspired by business models of social networks and the platform economy, and it would be a great challenge to be able to innovate at scale.

OG: Natasha, thank you very much for that conversation!