Could Kate snatch Europe’s super-app crown?

Bank-assurance KBC Group is pinning its digital-first strategy on its proprietary AI – and it isn’t limiting its sights to financial services. Tom De Witte, CIO International Markets at KBC Group, and Non-executive Director of KBC Bank Ireland, explains how it’s navigating the technology choices to achieve its aims

With core markets in Belgium, Czech Republic, Hungary, Bulgaria, Slovakia, and Ireland, it could never be said that bank-assurance KBC Group doesn’t have reach. And with KBC Mobile recently named the world’s top banking app – chosen from 135 banking apps in 17 countries – it’s not short of stature, either.

But could it be the first of Europe’s ‘old guard’ banks to become a super app?

The award from independent research agency Sia Partners that put KBC at the top of the banking app pile, noted the large number of third-party services, simulation tools and full online capabilities available for many types of financial transaction and life admin via KBC Mobile. Of course, the all-important ‘delightful UX’ was present, too. become core to what the bank does and which are delivered via APIs.

KBC Group’s intention is clear: to park its big tanks on the lawns of those lifestyle tech and telco companies who otherwise might be tempted to muscle into the financial services space.

In 2018, KBC was the first financial institution to also offer non-financial services to its mobile banking customers. That summer, customers could use their app directly to start and end a car parking session. Today, KBC offers about 15 different third-party services incorporated in the KBC Mobile app. They range from parking sessions, buying public transport tickets, uploading phone or data volume on mobile phones, buying gasoline and access to digital vaults. The services can be used by non-customers, too – indeed, KBC was the first bank in the Benelux region to open up its mobile services to customers of others.

The bank has seen exponential growth in app usage since its launch. For example, out of three million transactions, about 850,000 tickets for public transport were sold in the first nine months of 2021 and more than 770,000 parking sessions.

There have been a constant stream of partnerships and integrations over the past three years. Most notable, KBC Bank co-established with other banks Itsme, the ID and verification platform that aspires to being the European digital ID platform in the wake of COVID. It’s also recently teamed up with Personetics, a provider of financial-data-driven

In addition, the award noted the broad connectivity and integration with the bank’s other physical and digital distribution channels. And it fan-fared the central role that the princess of banking apps, KBC’s digital personal assistant, Kate, plays in all of this.

Kate is the not-so-secret AI weapon that’s helping to move the bank beyond banking and, according to the Group’s strategy update in 2020, all product and process development and updates will, ultimately, be driven by ‘her’.

KBC Mobile has, as the award noted, ‘undergone a dramatic transition, changing from an app for performing basic transactions and checking account information to a fully-fledged, customer-centric ecosystem that proactively meets increasingly more of the customer’s needs’. And those needs go well beyond banking, insurance and investment. They also include mobility, leisure and health services.

It’s what KBC has dubbed the ‘bankinsurance +’ model, under which it will rely on its own digital solutions for providing financial services (albeit many worked up with partners), but then mostly on third parties for tools that ‘make life easier’ – the leitmotif that’s

personalisation and customer engagement solutions. The companies will deliver multi-lingual, data-driven solutions to increase customer engagement on KBC’s mobile application, says the bank.

Then there’s Yippay, another multi-bank offer, but this time a payment solution being developed as a joint venture with Bank of Ireland, AIB and Permanent TSB, to counter the erosion of traditional bank transaction revenues by challengers.

Last year, KBC also spun out its Everyoneinvested wealthtech business, the principle objective being to encourage a wider pool of retail investors, who can be offered individually customised wealth management with AI. That’s being offered to financial institutions and asset managers via partnership agreements with distributors. Everyoneinvested has been described by KBC Group’s chief executive Johan Thijs, as ‘more than a startup; it is a strategy, a full-grown vision of how we want to elaborate our asset-management activities, taking into account the trends that we observe in the world.’

APIs opening doors

Signalling its intention to make the most of the opportunities presented by PSD2, KBC unveiled its Differently – The Next Level strategy in 2020, which acknowledges that it will have to shift up a gear in response to rapidly evolving consumer behaviour to get to where it wants to be.

The man looking after core banking and IT in KBC’s international business unit, who has to advise on the right technology calls to execute this plan, is Tom De Witte, former CIO and COO at KBC Bank Ireland where he still serves as a non-executive director.

He says the bank couldn’t even contemplate the necessary gear change without APIs, which have allowed it to make full use of third-party services, and integrate them with its own architectures to bring much faster new functionality to customers. The days of nightmarish integrations, requiring a significant amount of interfacing to be developed, are – thankfully – a distant memory. "We can’t do without APIs," says De Witte emphatically. “It’s enabling us easy access to world-class service providers (as well as offering) true standardisation, and reusability.”

In fact, the bank has spun that around to become a third-party provider itself in developing Itsme.

“Like other banks, we were struggling to facilitate customer authentication,” says De Witte. “In today’s AML and KYC environment these aren’t easy things to tackle, so we developed Itsme as a fintech to provide easy ID verification and authentication for all Belgian citizens. And it’s also now expanding beyond the Belgian market.”

PSD2 unlocked the technology dam for KBC, says De Witte. “And we found ourselves on the leading edge – some competitors have started doing exactly what we were doing – seeing the strategic advantage of it for their own customers, bringing new solutions to the market.”

But he cautions IT departments not to get distracted by the huge array of technology choice.

“Because the market has been flooded with new fintech, new solutions, and with APIs rolling out on a monthly or quarterly basis – if not faster – you’ll very soon be persuaded to set up your IT department in one or other direction, just to keep up with everything that’s coming in,” he says.

“As far as IT departments are concerned, there is one thing that stands out for me: stay in control. By that I mean it requires good and capable leadership to decide on which avenues, which routes to pursue.

As far as IT departments are concerned, there is one thing that stands out for me: stay in control. It requires good and capable leadership to decide on which avenues, which routes to pursue

“At times, what I see from some of our competitors is IT departments tending to get carried away by all the new technology that pops up. Then you’re at risk of no longer looking at the core of what you need to do, which is serve your business.

“So make sure you ask yourself ‘what is our view on our IT architecture? How flexible or open can we position it? What type of choices and selection of tooling on APIs do we make?’ For instance, in the case of customer authentication or identification, there are a massive amount of fintechs that provide solutions, but you need to make up your mind, go for one, maybe two, but certainly not a dozen.”

Restraint is necessary, but he’s not denying that with choice – particularly of Cloud-hosted services – comes flexibility and better budget control.

“Instead of going through a tough and long journey to try to develop all of this ourselves, you simply reach out to the market, find a good and decent SaaS solution, do the sandboxing, or whatever it is you want to do to test it out, make your choice, and then go all the way,” continues de Witte.

“You’ll get far better time to market, better flexibility, scalability, and sometimes, surprisingly, at a far better cost, as well.”

As a former CTO, he knows how important it is for executives and board members to be of one mind when it comes to business-reorientating transformation projects such as these: the latter open to the opportunities that technology offers to change the business model, the former focussed on how each piece of technology fits with the ultimate goal.

While the bank had already digitalised a number of internal/underlying (often complex or manual) processes to ensure simple, high-quality products can be provided to customers quickly and easily, the emphasis now is designing with ‘digital first’ in mind. What this means at the coalface is making customer interaction even more future-proof and smarter, reinforced by AI, but with a network of staff and branches still available to customers.

That model of customer service can already be seen in its private and corporate banking divisions, where relationships are personalised via KBC relationship managers, supported by AI.

While it will always be the customer determining which distribution channel is used to contact KBC, digital will form the bedrock for those relationships, though. Eventually, all relevant solutions for their financial needs and beyond will be offered via mobile apps. Kate will play an important role both behind the scenes in driving processes and in terms of providing proactive, timely, personalised and relevant solutions in digital sales and advice.

“The big winner in all of this is the customer, ultimately,” says De Witte, “because new functionality is being provided in a much faster and more convenient way, which is exactly what we need to do as a financial industry – in all of our markets.”