Bank innovation through collaboration – interview with Banco BNI Europa

What is Banco BNI Europa for our readers who have not been introduced to the bank yet?

Banco BNI Europa is a Portugal-based digital-only bank whose mission is to offer customers a modern digital low-cost banking platform and innovative banking products, tailored to their needs, instead of complex products that few understand and require even less.

Banco BNI Europa is strategically changing the landscape of traditional banking by collaborating with fintech businesses to launch new products using the latest technology in risk analysis, time-to-market and customer service.

As a result of its modern digital platform and low-cost processes with innovative products, in 2018 Banco BNI Europa received numerous awards in digital banking. Some of these include the “Consumer Choice Award” by Consumer Trends, the Five Stars Award by the Five Star Committee, “Bank of the Year in Portugal” and “Most Innovative Bank of the Year in Portugal” by The European, “Best Digital Bank in Portugal” by Global Banking & Finance News magazine, as well as “Most Innovative Digital Bank In Portugal” in the Corporate Excellence Awards 2018.

How did it all start and what was the core mission at the basis of the institution? What niche markets do you focus on and what is the spectrum of offerings?

In 2016, Banco BNI Europa positioned itself as challenger bank, with a discrete strategy of open architecture and differentiation. Banco BNI Europa is also specialist in providing alternative solutions to fund loans, having already established partnerships with several European Fintechs and acting in several European jurisdictions, including Germany, UK, Netherlands, Austria, France, and Belgium. These credit products include consumer credit, student loans, SME lending, factoring and real estate lending.

When it comes to partnerships, what is their focus and results?

We can distinguish three most common types of partnerships, each of them with different aspects. With the first type, we typically support the origination of loans from fintechs, and, obviously, there we need to monitor the quality of the credit risk that each platform has.

Secondly, we partner with fintechs to acquire better technology in order to update our procedures and processes and keep ahead of the competition. We have several partnerships with fintechs, mostly related to technology that allows us to grow faster and to improve user experience for our clients.
The third type of partnership relates to increasing the spread of products. We can make a partnership work when we don’t have to develop everything in-house to provide a certain financial product: if someone provides factoring, for instance, we’re able to partner with them, taking care of the origination and underwriting while they do the servicing and credit analysis.

In recent news, Banco BNI Europa became a strategic customer of NDGIT, provider of the first API platform for banking and insurance in Europe. Could you please elaborate on the partnership?

On March 14th, the implementation of the Payment Service Directive (PSD2) will enter the next phase when banks must provide a test environment including documentation for their account information and payment initiation service being a small bank. Thus, we searched actively for a partner with a software solution following the Berlin Group RTS standard in order to comply with all PSD2 requirements fast and efficient.

We found NDGIT, a provider of the first API platform for banking and insurance in Europe, and in a business where time is money, the implementation of PSD2 Ready, NDGIT’s smart standardized software solution in just 60 business days brings us far ahead.

This cooperation is a milestone for the future development of Open Banking in Europe and for BNI Europa the next logical step in our companys development. The functionality for PSD2 respecting RTS regulation is included, from third-party management to PSD2 reports. The software can be flexibly configured for all requirements of complex banking IT adapting to the various options of API standards and authorization. NDGIT implements updates and extensions centrally without having to adapt individual bank interfaces.

Its important to remember that PSD2 not only means new obligations for Banco BNI Europa, but also great potential and development opportunities for the future. What many haven’t realized is that, like third-party providers (TPPs), banks can also use the data of other banks for innovative product offers - if they have implemented the digital infrastructure.

Looking forward, what do you see as the most important changes in banking?

The banking world is changing rapidly, and that brings constant changes in customer expectations. Customer expectations have become more demanding. With more and more companies specializing in certain segments, there’s more competition and the existing model of universal banking is becoming obsolete.

Banking as our fathers knew it is a thing of the past. Nowadays, banks with big branches do not exist and in a few years they will be a fairy tale only seen on screen. To survive, banks need to embrace the fintech ecosystem and adjust to the new world through collaboration. Banks with no physical branches and bank-as-a-service are the future. And the future is just around the corner.

Over the past few years, challenger banks have risen as competitors to the large established lenders, providing a digital current account and money management services. With digital-only banks promising lower fees, better customer service, and snazzy user interfaces, they have long been threatening to replace the traditional high street giants.

The incumbent banks now have to catch up, to think about what they are really good at and focus on that area. I think the new challenger banks, like us at BNI Europa, who started with no legacy and already focus on specific niches, obviously have a head start because that’s going to be the future.

What are BNI Europa’s plans for 2019 in terms of new offerings and expansion, both in matters of geography and of industry developments?

We will certainly be looking at more opportunities in the future to expand our spectrum of offerings, especially in areas where the clients are not necessarily happy with their current encumberments offer. In particular, Banco BNI Europa’s focus is on finding technologies that will give the bank an edge over the rest of the market.

We are not at the stage to start buying fintechs, we don’t have the resources that the large incumbent banks have, but we also believe it is easier to start with collaboration, not necessarily through capital investment but through partnerships, and leave them independent.

With a host of partnerships already in the bag, Banco BNI Europa is eyeing more collaborations in future, as it looks at tackling the segments of the market that have been traditionally ignored. However, it’s important to find the right partner, as some platforms may have difficulties becoming more profitable and trying to prove their model going forward.

We are looking for players in different markets to help us to access these markets and diversify, whether that is SME lending, consumer lending, discount lending, or student lending.

One area of particular interest to Banco BNI Europa is the advancements in Regulatory Technology (RegTech). With the financial services industry facing unprecedented levels of regulation this year, RegTech has promised to ease the burden on compliance officers.

About Pedro Nuno Munhão Pinto Coelho

Innovative, agile and multi-award winning banking leader with over 25 years international financial services experience with leading blue-chip institutions across three continents in progressive leadership roles, both executive and NED, in Investment Banking, Wealth Management, general management, business development, strategy and latterly in FinTech. His value proposition is centred around enabling challenger banks to establish strategic partnerships with FinTechs to create profitable financial products using an open architecture model. Expert in driving digital banking transformations both in terms of creating best in class digital customer experiences, and transforming key internal support functions to fully align with the overall digital transformation programs of financial institutions

About Banco BNI Europa

Banco BNI Europa is a Portuguese digital-only Bank that aims to challenge the traditional banking sector through strategic partnerships with fast-moving fintech businesses to launch new products allowing the use of the most advanced technology in terms of risk analysis, consumer experience and rapid entry into the market. This strategic orientation allows the Bank to affirm itself as a Challenger Bank, based on the logic of open architecture and differentiation, and to stand out as a benchmark in the new generation Fintech of European Banks.