Κεντρική Ομιλία: Mark Buitenhek, Global Head of Transaction Services, ING, Netherlands Τίτλος Ομιλίας: “The evolution of payments – adapt or …….”

1. The evolution of payments
Mark Buitenhek, Global Head Transaction Services
- Adapt or ……. -
Athens, 21 March 2018

2. ING’s shared beliefs about the future
People’s time is precious
They don’t want to spend it on finance
We need to empower people to focus on the important
things in life and business
Products have become commoditised
The only way to differentiate is through experience
Instant. Personal. Frictionless. Relevant.
Digitalisation is erasing borders
Customer needs and expectations are converging across
borders
Data determines relevance
We need to leverage internal and external data to provide
new client solutions and remain relevant in a new world
We need to be where the customers are
Frequency of contact will define the depth of customer
relationships
Capital requirements will drive down returns
We need to find new ways to serve customers
without putting everything on our balance sheet
Ability to leverage new technologies will define future
competitive advantage
Blockchain and Artificial Intelligence will structurally
improve efficiency for those able to harness its potential
2

3. Usage of non-cash payments instruments, 2016
number of transactions per capita
Share of cash transactions at point of sale, 2016
% of total number of transactions
3
The Greek payments market is currently dominated by cash
Cash payments more common than non-cash Usage of non-cash instruments low compared to
Eurozone
Spain
86%
Austria
Italy
81%
France
Portugal
86%
64%
Slovakia
79%
Germany
78%
Ireland
80%
45%
63%
54%
Luxembourg
Netherlands
Belgium
Finland
Cyprus
87%
86%
88%
Greece 88%
Malta 92%
Source: ECB report “the use of cash by households in the euro area”; ECB statistical data warehouse
Euro zone average 79%
97
23256
124
60
68
28
27
2
19
2
0
Netherlands
60
232
424
EurozoneGreece
Other (cheques, e-money)
Direct debit
Credit transfer
Cards

4. Regulation
Technology and Regulation will significantly change the banking
landscape in the coming years
Customer expectations
Technology
PAYER PAYEE
CLEARINGPayment process
ChannelChannel
Bank
account
Bank
account
4
Block chain
NFC
Internet
of Things
Interchange
Fee
Payments Services Directive I & II
Payments Account
Directive
Artificial Intelligence
….
….
24/7 availability
Instant service & delivery
Anywhere
….One click
Big Data
Machine Learning
Instant Payments …

5. Even traditional in store payments are becoming invisible…
5
Moving the online model to the off-line world
Enter store & check in Select products Just walk out store Receive receipt
Check into the store
with (existing) Amazon
Prime account
Combination of
cameras, scales and
beacons registers
what each customer
takes (and puts back)
When customer leaves
store (s)he is charged
for the products taken
Receipt is sent to the
phone and Amazon
account (using credit
card on file or prepaid)
is debited
Actual payment is
invisible
Converged commerce
Online payment method
used on-site

6. Seller’s
Card schemes
TPPs & intermediate schemes
New players are stepping into the value chain
6
SellerBuyer
SCT Instant SCT SDD
Bank Bank
Buyer’s

7. Already offer
payments
• Consumer payments
• E-commerce & Retail
Control the
user interface
• Hardware devices
• Communication &
messaging
Offer value
added services
• Artificial intelligence
• Digital media &
entertainment
With the Internet & Tech Giants offering payments and other
(beyond) banking services
7

8. • Online Payment method that enables consumer to
pay directly from their bank account
• Scheme developed and owned by Dutch banks
• Launched in 2005
• More than 1.5 bln transactions since launch
• Supported by over 100.000 webshops
• 60% of Dutch consumers used iDEAL for their last
online purchase
8
However, through collaboration banks can keep competitors at
bay e.g. iDEAL in the Netherlands
E-commerce share per payment method, 2016
% of total e-comm value
63%
29%
20% 16% 12%
7%
25%
17% 25%
21%
31%
25%
14%
25%
47%
47%
53% 40%
54%
6%
9%
7%
8% 8%
7%
9%
10% 12% 9% 6%
12% 7%
10% 5%
4%
ItalyBelgiumNL FranceSpain UKGermany
Cash on Delivery eWallet3
Credit transferOther1 Card2
1. Prepay, postpay, eInvoice, direct debit
2. Credit, debit, charge and deferred debit cards
3. PayPal, AliPay, etc
Source: Worldpay Global Payments report, 2017

9. 9
How iDEAL works (1/3):
Pay using your ING bank app with 5 digit PIN or fingerprint
1. Chose iDEAL and ING as bank 2. Select to pay with app
Automatic redirection
to mobile app

10. 10
How iDEAL works (2/3):
Pay using your ING bank app with 5 digit PIN or fingerprint
3. Login to the ING mobile app 4. Review the payment
Using a 5 digit PIN
or fingerprint
5. Approve the payment
Payment automatically
Appears in the mobile app
Using the 5 digit PIN
or fingerprint

11. 11
How iDEAL works (3/3):
Pay using your ING bank app with 5 digit PIN or fingerprint
6. Receive confirmation 7. Confirmation by merchant
Automatic redirection
to merchant website

12. 12
Payments Services Directive 2 (PSD2) ‘access to account’ will
make it even easier for third parties to offer banking services
Customers
Bank accounts
Customers
Online and mobile
Bank accounts
Bank domain
Third parties
Before PSD2 access to account After PSD2
Online and mobile

13. PSD2 payments initition for in store and online bank payments
– for example Payconiq
13
Surprisingly simple mobile payments
• Pay in stores
• Pay online
• Pay your friends
Directly from your bank account
With embedded loyalty point system
Available in
Initiated by .
now owned by multiple banks
… and more
to follow
Belgium Luxembourg Netherlands Germany

14. 14
Movie Payconic

15. PSD2 account aggregation
– for example YOLT
15
One app that provides you with an overview of all your expenses – including all your bank accounts and cards
Unthink Money
Live in
More countries to follow
Powered by

16. Movie Yolt
16

17. PSD2 in combination with instant payments will make bank
payments ready for the new world
17
24/7 availability
Availability of funds in <10s
 Instant service /delivery
Easy payments initiation
 “one-click”
PSD2
(SCT)
Anywhere
Instant Payments
(SCT INT)




+

18. PSD2 will be a mayor driver towards open banking
18
Customers
ING on platforms
of 3rd parties
3rd parties on
ING platforms
new platforms
across ecosystems

19. • (continue to) develop a bank-
based credit transfer scheme
for Retail payments – online, in
store, mobile,… – like iDEAL
or join ….
• Work with other (European)
banks to develop and
implement standards for
• Instant payments
• Alias and eID services
• PSD2 APIs
• ….
The ING way
19
Cooperate with other banks Cooperate with Fintechs Prepare for open banking
• Work together with and/or
invest in FinTechs to
• develop new services
• Improve existing services
• Develop in-house FinTechs to
drive creativity
• Work with partners on your
own platform to become the
go-to platform for financial
services
• Develop an API portal –
leveraging PSD2 – so other
platforms can offer your
services on their platform

20. Q & A
Contact details:
mark.buitenhek@ing.com