Four ways ING consolidates its position as a global leader
2019 was a great yea...
FinTech Magazine takes a closer look at how ING has consolidated its position as a global financial service leader in 2020 so far.
2019 was a great year for ING and this is evidenced by its FY2019 results. The bank’s customer base rose by 830,000 to a total of 38.8 million.
"Looking back at 2019, we see a year of solid commercial performance despite the challenging rate environment, geopolitical uncertainties and an increasingly complex and demanding regulatory environment," said Ralph Hamers, CEO of ING Group. "I'm proud of our commercial performance as pricing discipline and growth helped counter the pressure of negative interest rates. We recorded a 4.5% rise in underlying expenses for 2019, which includes a marked increase in regulatory costs, as well as costs related to our KYC enhancement programme.”
As we get into the swing of 2020, ING is gaining momentum with a number of new strategies that will continue to consolidate it as a leading bank.
1. Driving financial technology
ING recently announced that its advanced analytics tool, Katana, is going to become a standalone company called Katana Labs that will be based in London. This will make analytics more accessible to other companies looking to adopt the technology.
“A growing number of clients are discovering the advantages of using advanced analytics in decision-making. It enables them to work faster and more efficiently,” said Santiago Braje, CEO of Katana and former head of Credit Trading at ING.
2. Strategic partnerships
ING has a number of strategic partnerships and the most recent addition to its portfolio is Tradeteq. Under the partnership, Tradeteq will distribute ING's commodity trade finance exposures to non-bank institutional investors. The platform has already facilitated a transaction between ING and American institutional investor giant, Federated Hermes. The partnership signifies the bank’s understanding of the shifting landscape of finance and the value of adopting technology.
Christoph Gugelmann, CEO of Tradeteq, comments: “ING and Federated Hermes’ use of Tradeteq provides a clear example of how the trade finance market is being transformed. Tradeteq is opening up the trade finance market to institutional investors and offering access to an alternative asset class with high levels of transparency and yield opportunities. At the same time, the platform enables banks to reduce their risk exposures and tackle the US$1.5 trillion trade finance gap. Any new marketplace needs both originators and investors; as this transaction shows, Tradeteq is attracting both market makers and market takers to the platform.”
3. A commitment to sustainability
[image: ING's Cedar office]
Last month the bank opened a new office in Amsterdam. The new building has been awarded the highest sustainability rating by BREEAM-NL, marking the bank’s commitment to sustainability.
“This new building embodies all we aspire to,” said Hamers. “It’s open and transparent, as nearly all walls are made of glass, and it creates an atmosphere that encourages collaboration. The building will play a central role within Cumulus Park, inspiring new ways to innovate. And, with Cedar we reduced the consumption of natural resources as much as possible.’
4. Refreshing brand strategy
ING has launched a new brand strategy with the tagline “do your thing” which aims to inspire customers to work hard and progress with whatever drives them most. In the age of “side hustles” and social media influence, the new tagline is resonant with that of Nike’s “just do it,” with a Millenial and Gen-Z slant, showing that the bank is willing to alter its branding to connect with younger generations.
[image: Ralph Hamers]
"As I look ahead to a new year and new decade, I’m excited to have started 2020 in our new office at the heart of the Cumulus Park innovation district in Amsterdam and with the launch of our new global brand strategy: do your thing. It represents our promise to make banking frictionless, allowing people to be free to do more of what moves them or their business," concludes Hamers.
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Basel Committee urges recognition and management of crypto
Experts have welcomed the news that the Basel Committee on Banking Supervision has proposed splitting cryptocurrency assets into two categories and managing them according to their current stability.
The regulatory body has recommended that crypto should be assessed on its operational risks to the bank, its credit, and its market liquidity. Well-established currencies, such as Bitcoin, will be managed in line with a “new conservative prudential treatment” the committee said.
Currently, the leading global standard-setter for the prudential regulation of banks, the Basel Committee on Banking Supervision (BCBS) is based in Switzerland and comprises 45 members from bank supervisors and central banks in 28 jurisdictions.
The recommendations have come as a welcomed move by banking leaders and crypto cynics alike, and experts say the move now needs to be followed by a global policy that makes crypto assets safer for both banks and customers. This is despite the potential pitfalls due to crypto being associated with criminal activities and terrorism.
Cryptocurrency regulations welcomed
Although currently, banks have limited exposure to cryptocurrency, the popularity of Bitcoin, Etherium, and others is increasing rapidly among consumer and business transactions.
Recently, El Salvador became the first country in the world to adopt Bitcoin as legal tender.
According to reports, 62 out of 84 congressional votes saw the move approved following President Nayib Bukele's proposal to embrace the cryptocurrency. This occurred despite concern about the potential impact on El Salvador's programme with the International Monetary Fund.
Fintech giants such as PayPal are also loosening their grip on cryptocurrency. The California-based online payments leader recently announced at the Coindesk Consensus 2021 conference, that it would allow customers to move cryptocurrency holdings off its platform via third-party wallets.
PayPal has also enabled users to buy and sell digital currencies through its platform since October 2020.
In an official statement released by the BCSC, the committee’s members said, “Continued growth and innovation in crypto-assets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment.”
An opinion report in the Financial Times also backed the move, saying that the popularity of cryptocurrencies shows no signs of slowing down and therefore, its volatility, which puts retailers and lenders at risk, must be made a safer asset.
Data shows that the value of Bitcoin makes up 50% of the cryptocurrency market, which is currently worth an estimated US$2trn. The BCBS announcement also boosted the value of the market because regulation classes cryptocurrency officially as an asset and is a significant recognition of maturation.
However, volatility remains an issue following Bitcoin’s turbulent year, which has seen it rise from $30,00 to more than $60,00 and then back down to $37,000 in under 12 months.
Crypto cynics not happy
But not everyone is pleased about the move. The director of the CPB Netherlands Bureau for Economic Policy Analysis, Pieter Hasekamp, published an article entitled ‘The Netherlands must ban Bitcoin” in response to the news for daily newspaper Het Financieele Dagblad
Hasekamp has predicted that cryptocurrency is a bubble that will ultimately collapse. He also urged the Netherlands government to ban bitcoin and other cryptocurrencies with immediate effect.
He said, “Cryptocurrencies are unsuitable as a unit of account and means of payment outside the criminal circuit; its use as a store of value is based on the hope that cryptocurrencies will one day replace real money. But that’s not going to happen.”
He continued, “Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a contagious narrative: a contagious story in which people believe because other people believe in it. Gresham’s law is replaced by Newton’s law: what goes up, must come down.”
Image credit: Getty