INNOVATION INSIDER, WITH CHRISTOPHE BANIOL ON OPEN BANKING WITHIN SOCIETE GENERALE’S FRENCH RETAIL BANK

How do open banking and the use of platforms create value for our clients and employees? What are the use cases within the Group and what is the concrete contribution of this new business model?

Christophe, could you tell us about some of the challenges of open banking for retail banks?

First of all, the incredible development of digital technology use cases these past few years has offered retail banks a dual opportunity—increasing the quality of customer service by improving customer journeys and reducing the cost to serve for the products and services offered online. Now that it has reached maturity, the digital technology fostered by increasingly strict regulations offers us new opportunities. We have to open up to the world, integrating the banking business into an ecosystem much larger than its traditional universe, while remaining consistent with our corporate purpose.

Open banking also exposes us to threats we must be aware of: by making our data accessible to all (currently limited to payment information, but in the future this will probably not be the case), we risk being cut out of the equation.

In this context, what are the open banking strategies adopted by Societe Generale’s French retail banks? What are the major challenges you rise to meet on a daily basis?

Societe Generale retail banking is firmly committed to the open banking dynamic.

The open banking system we are building is based on two components:

• The first is Banking-as-a-Platform (BaaP), which enables us to expand our traditional offering to include other players. One example of this is the Next Generation Savings offering, which enables us to offer our clients funds from seven best-in-class asset management companies starting on 8 February.
• The second is expanding our offering to related services. This is happening through initiatives like Societe Generale's Boost platform for young adults, or the Societe Generale Cash Back programme, which officially opens us up to hundreds of retail brands. Things are also happening on the professional client market, as the acquisition of Shine enables us to market a dedicated offering to individual business owners, whether they are clients of Societe Generale or not. The adventure is only beginning because other BaaP initiatives will be launching in 2021.

Banking-as-a-Service (BaaS) enables us to make IT service packages and processes available to other players (thereby making them profitable). That is the role of two fintechs acquired by the Group: Treezor in the area of accounts and payments, and Fiduceo in the area of account aggregators and documents.

This open banking system offers enjoyable, seamless journeys on a daily basis for an increasingly demanding clientele. At a time when general and specialised marketplaces are thriving more and more, this open banking system we are building is the best way to prevent disintermediation.

You launched Boost (a service platform for young adults) in partnership with the start-up Wizbii. Can you explain this offering?

Boost aims to win over and earn the loyalty of clients aged 18-24. With Boost, we are focusing our youth strategy on useful, sensible services that make a difference when it comes to building a life and securing one’s future. We are creating a platform to do just that, with a grouping of eight services we know clients can really use. Boost is a grouping of services offered to clients aged 18 to 24 for one year when they opt for a new Sobrio package (our essential banking services). It is accessible via a white-label platform operated by our partner Wizbii—a digital start-up dedicated to today's youth.

The strategic benefit of winning over young clients is self-evident both in terms of future potential and reputation. This demographic is particularly well-connected and makes recommendations often. They also have a strong influence over their parents’ generation. This initiative also enables us to assess our clients’ appetite for non-banking services offered by their bank.

What are the keys to a successful open banking approach?

There are two things.

In terms of technology, open banking requires an information system that can easily communicate with third parties. This is what we refer to as the ‘APIsation’ of the information system (IS). In practical terms, it involves developing interfaces at our IS terminals based on standardised communications protocols that foster a fluid dialogue with any third-party IS.

As for the business, the right verticals have to be chosen to develop platforms that will interest our clients (those that will generate traffic). They will be the ones in which we feel like we truly excel. That's how we want to get ahead in areas such as retirement, for example. At the same time in terms of BaaS, we have to identify our top services and manage to market them so that other players want to use them. These will either be small players who can't afford these investments or newcomers looking to minimise their execution risk.

In your opinion, where will we be in five years with regard to open banking in France?

In five years, there will be major competition for every single link in a value chain which is still fairly integrated today. That's the centrifugal force of open banking. It naturally benefits the newcomers.

Some banks will not adopt an open banking model like we did. But they will be phased out of the equation little by little with considerable revenue losses. Then, as attachment to the traditional banking product that protected them dissipates, they will see their customer turnover skyrocket.

However, the dominant banks will operate in open banking. They will have managed to:

• retain clients in spite of shortcomings in their core range through the development of relevant platforms for verticals in which they excel.
• develop and market strategic services (IT or even processes and processing) which will capture part of the value of traditional banking competitors or newcomers, whether small (fintechs) or large (GAFA).

More specifically with regard to platforms, any retail banks that comes out of the open banking revolution on top will have won the wager of creating a strong digital brand that will dominate online just as their branch networks dominated the finest real estate in every town 50 years ago. To achieve this, it will have managed to get ahead on real social issues within a stone's throw of its traditional groups of needs. Examples of these issues would be retirement or succession planning for Savings, well-being and security for Insurance, cash back for payments or personal data protection for a trusted third party as recognised as the bank. This open bank will have added partner services to its knowledge because no one bank can offer the level of expertise which clients will increasingly come to expect. For certain product universes, it will make its platforms available for public use in addition to use by its own clients or as a white-label platform.

3 key words to describe yourself? Caring, athletic and a foodie.