With digital banking set to become an increasingly important competition point across the world, banks in the Netherlands show no sign of lagging. Isabella Grotto reports on the state of digital banking in the Netherlands

With a landscape heavily dominated by a few major players, the Netherlands presents a somewhat exceptional banking reality.

Among the biggest retail banks in the country are ING, Rabobank and ABN Amro, though just one of these players wields considerable power on the international banking scene.

With revenue in excess of $150bn in 2012, ING topped the Fortune Global 500 list as world’s largest banking, financial services and insurance conglomerate by revenue.

Serving 48m customers in 40 countries, the bank maintains a strong presence both in the Netherlands and internationally.

The domestic competition is fierce however; Rabobank Group remains the largest financial services provider in the Netherlands, its cooperative structure reflecting its roots as a collection of small agricultural cooperatives in the nineteenth century.

Meanwhile, ABN Amro bank has remained a giant in the local Netherlands’ banking market, maintaining a foothold in 5m households in 2012 despite the troubles it experienced arising from the disastrous Royal Bank of Scotland deal in 2008.

And with an expanding customer base and retail offering, banks in the Netherlands are following global trends by increasing their focus on digital banking.

When asked what percentage of their retail banking customers regularly uses ING’s internet platform, bank spokesman Jeroen Baardemans tells RBI that "around 64%" of the bank’s customers have digital access to their bank account.

He also revealed a further 20% uses the bank’s mobile banking app.

As far as call and contact centres are concerned, according to ING there has been a perceivable decrease in the volume of inbound calls, although Baardemans reveales the figures have showed signs of stabilising over the last couple of years.

"Obviously, traffic is increasingly shifting to our internet banking and our mobile banking app in particular," he says.

"However, we do not expect a further decrease in our call volume, as a result of more outbound calling and the use of new media and use of our call centre, for example by means of ‘proactive chat’".

Commenting on the importance of call-centres for ING’s relationship with its customers, Baardemans concludes that they retain "crucial importance", as they remain capable of "fulfilling our customers’ needs by providing personal advice."

As far as feedback regarding ING’s digital banking presence, Baardemans explains the bank has received a lot of response from its customers: "We received a lot of feedback, which we really appreciate and we keep encouraging our costumers to provide us with feedback.

"We listen to our customers and their feedback. When we started two years ago our customers requested features that other banks had and they wanted more possibilities to do their daily banking activities," he adds.

"What we see now is that we get a lot of compliments regarding to the features that we release nowadays and that our customers appreciate the speed of our updates".

He adds that overall, ING also sees "a difference between the platforms in feedback."

A banking environment like no other: cooperation for competition

Arjan Bol, director of payments at ING Netherlands, says banks in the Netherlands have a history of cooperation in the implementation of standards and technology.

Despite being in competition, he says: "We work together on the efficiency, and safety, of the Dutch and other European payment systems. We are competitors for the clients, but we believe that it’s better for the Dutch payment system to cooperate"

Piet Mallekoote, chief executive officer of the Dutch Payments Association (the Betaalvereniging Nederland) and of Currence, a banking association that regulates the payment system in the Netherlands, agrees that cooperation remains a staple of the Netherlands’ banking landscape.

He says: "In the Netherlands there is a history of cooperation between banks, but also between banks and stakeholders, I mean retail organisations, or consumer organisations, or in this case web organisations".

"Of course they [the banks] have different interests, but the opinio on standards and on security, is that it is good to work together especially for the banks," he adds, conculding: "So banks should not compete with each other on security, but cooperate".

"The idea is you cooperate on standards and collective items so as to increase the potential for yourself. Through working together you create a lot of mass, and the mass is then divided by competition. This means that cooperation and competition are more or less on parallel," he explains.

This sentiment he says was reflected in the establishment of electronic and online payments in the Netherlands: "I think this is quite different from other countries, that a couple of years ago the banks had the opinion that a good solution for e-payments would be useful to stimulate e-commerce.

He concludes: "In our view cooperation is broader than technical standards."

NFC and the bank-led payments revolution in the Netherlands

A big topic of discussion in banking circles around the globe is near-field-communication and the Netherlands is no exception.

Jeroen Baardemans believes the technology is set to become increasingly popular in the country.
He says: "I think the future of NFC lies in both debit cards and phones.

"I truly believe that in the future more and more people will pay with their mobile phones, but I believe it will not happen overnight, and that over the coming years debit cards will also play an important role."

Overall, he expects a time-frame of five years for transformation in the Netherlands’ payments system to take place: "I believe for the coming five years mobile will be very important, and I believe both contactless cards and contactless mobile phone payments are also very important."

Online payments have become a central focus of banking strategy in the country, exemplefied by the establishment of iDEAL, an online payments method, by the Dutch banking community.

The system allows users to make payments via their existing online banking system, and is the sole method which allows for payment transactions to be carried out between bank accounts in the participating banks, including ABN AMRO, ASN Bank, Friesland Bank, ING, Knab, Rabobank, RegioBank, SNS Bank, Triodos Bank and Van Lanschot Bankiers.

The payment method has gained in popularity with over 50% of online shoppers in the Netherlands using it.

The system saw a cooperation between the country’s main banks to create a cohesive and secure electronic payments environment for consumers.

Mallekoote explains: "Dutch banks came to the conclusion that in this dialogue it was a good idea to create a payments option for e-payments, so the system iDEAL was created."

He explains the platform has had quite an impact on the country’s payment and banking environment:
"iDEAL is specifically used in e-commerce payments. This was a big shock because the system is just based on internet payments, and is equivalent to an internet credit transfer which you do on your own bank account."

However, thanks to the existing prevalence of internet banking in the Netherlands, he says: "Consumers liked the system because it gave the same level of trust and security, as it was done in their own banking environment."

The security of the system, he maintains, also added to its popularity: "there is no storage or exchange of personal data in the payment flow, which is quite secure.

"And this is a big technology difference compared to other countries," he adds.

In their relationship to banking customers, banks in the Netherlands have displayed the same cooperative spirit which has animated the country-wide reforms of the epayments and digital banking system.

As of 2014, new rules surrounding online banking security will be brought into effect following an agreement struck between the Dutch Banking Association, the NVB, and the Consumers Union at the end of the previous year.

According to the new regulation, customers who are victims of card fraud will be required to meet five security conditions in order to receive compensation from their bank.

Among these are: keeping the software on the device used to access the banking service updated, not lending one’s bank card to others, and keeping security codes protected and secret.

Users must also prove they check their statements regularly, and report any incidents as soon as they occur.

"If consumers comply with these rules, they can be assured that they the money that is withdrawn from their account without their permission, will be reimbursed," explains a NVB spokesperson.

"The regulation enables banks and financial institutions to communicate the online security regulation to their customers in a consistent and transparent way."

With mobile banking penetration in the Netherlands forecast to remain among the highest in Europe, innovations such as these are a perfect illustration of cooperation within the Netherlands’ banking system, as well as pointing to the growing importance of digital banking in the country.

In an interview with RBI, Naomi Bisschop, director Marketing & Services Rabobank discusses the bank’s digital strategy.

RBI: Can you summarise your online banking strategy?
Naomi Bisschop (NB): We have a cross channel banking strategy. And actually it is a Omni channel strategy.
In the retail market online is the primary channel for transactions, service and buying.
Advisors are the primary channel for complex advise, such as mortgages. Even in that advice process online is the main channel for customers to inform themselves, use advice tools and upload documents to prepare themselves for the advice meeting with the specialised advisor.
That advisor is more and more multichannel and accessible via telephone, email, chat and face2face contact.
We believe that people want to do their banking themselves. With advisors nearby via proactive chat and telephone we help them with their self-service.
The combination of branches nearby with high qualified staff and the personal self-service online is a strong combination. That is our strategy.

RBI: What percentage of your retail banking customers regularly uses the bank’s internet platform?
NB: This depends on the age of the customers; 90% of the 20 year old and 50% at 65 year old customers. Next to online banking 0.5m of elderly people use IVR banking.

RBI: Have you recently upgraded your online platform or are you planning to make any important changes to your internet banking service?
NB: We have planned to make a radical change of our online platform in the end of 2014 in order of our strategy.

RBI: As regards your branch network: How many branches do you currently operate in the Netherlands?
NB: Around 740 branches. We are the number 3 retailer measured in branches: ranked first is Kruidvat (drugstore) and ranked two is Albert Heijn (supermarket).

RBI: Has this number changed over the past 2 to 3 years?
NB: This number has declined by 15% in the past two years.

RBI: Is there scope or are there plans to reduce the size of your branch network as more and more customers increase their use of digital channels?
NB: The number has declined rapidly and will decrease to around 500 in the next five years.
We follow the behaviour of our customers. When the visits are too scarce we close the branches down. We don’t force our customers to use the digital channel.

RBI: How has changing customer behaviour affected the kind of tasks your branch staff performs? Is there for example, a move towards branch staff spending more time offering advisory services?
NB: The staff is multichannel. The staff working in the local contact center has increased. They help the customers to do banking online, like services and buying. And of course also sell via telephone directly.

RBI: As regards your call centres/contact centres: are you witnessing a trend in which customers are reducing their use of the call centres as more customer behaviour moves towards use of the digital channels?
NB: Yes, mainly because of straight through processing whereby the customers have direct feedback, more insight and thereby more control.
Although we see also more call centre contact for omnichannel help when the customer has any questions and of course the shift from face to face to call center contact.

RBI: As regards mobile banking: how would you summarise your mobile banking strategy?
NB: The mobile is the primary device for daily banking for transaction services. The PC is the primary device for complex tasks for specific users like corporate customers.
We believe in multi device banking , the customer chooses which device suits the best for internet banking.

RBI: What percentage of your customers is using the bank’s mobile banking service?
NB: Around 30% on average and 50-60% in the target group 20-30 year old.

RBI: How has usage changed in the past year?
Since 2003 Rabobank has offered mobile banking. Since January 2010, Rabobank has provided its banking app and ever since there is a strong growth of new users.

RBI: What mobile banking services do you currently offer?
NB: Balance inquiry, transfers, payments (in Euro within the Sepa countries), stock exchange, travel insurance and services such as disable your stolen card.

RBI: What mobile platforms are you currently operating on, for example, iPhone, Android, Blackberry?
NB:Apple (iPod, iPhone, iPad), Android (phone, tab), Windows8 (phone, tab, pc), Blackberry 10 and also via a web browser.

RBI: Lastly, as regards tablets: Is the bank currently offering a tablet banking service for iPads, Android devices?
NB: Yes

RBI: Are you planning any major changes/investment as regards your mobile banking service?
NB: In 2014 the developments are focussed on increase the functionality for daily banking, more service processes, buying and contact (secure email).

RBI: Is your digital banking success something you are proud of?
NB: Yes. Rabobank has always been a leader in digital banking and community banking.
Positive although mobile banking growth is, it is not innovative anymore. Customers expect more functionality and each month updates and new functionality.

RBI: Do you have any forecasts you can share with us regarding digital channels/banking/usage for your bank and for the Netherlands?
NB: Mainly eldery people will start with internet banking while the majority of all the other customers already use it. The shift to mobile and tablet will continue.
The most important development will be the usage of the digital channel for service and buying.
On commerce a lot of changes are already take place.
Pay with your mobile at the cash register. Pay in the store on the mobile screen. One process (and app) for ordering, loyalty and payment etcetera.