photo by Frank Poppelaars
Ross Republic recently contributed to the report we released covering the Dutch
banking innovation landscape. To shed some light on typically underrepresented innovation
drivers, the focal points of Ross Republic’s contribution are organisation, product portfolio and
As part of our research process, we interviewed some of the leading Dutch banks in order to
get direct insights about how they are performing along these dimensions. This spin-off article
covers our interview with NIBC, who is very active in the European fintech scene through
partnerships with e.g. OakNorth and Finleap. Hence, we sat down with Duncan de Vries (VP
of Innovation, NIBC innovation lab) to discuss how he sets up NIBC for future success.
From its offices in The Hague, Amsterdam, Frankfurt, London and Brussels, NIBC serves around 600
mid-market businesses and more than 400,000 retail clients through a portfolio of client-focused
products and services.
Creating innovation capabilities from scratch
Dealing with innovation is next to regulation and compliance a key topic for banks right now.
Especially in Europe many banks face a tough business environment due to a long-term low interest
rate environment, new regulations (e.g. PSD2/GDPR) coupled with heavy fines and costs,
technological disruptions from fintechs and big tech companies and changing customer expectations,
just to name a few of the current challenges. It’s a very interesting time for banking innovation,
however every bank is unique and innovation can have very different meanings. Hence, how does
NIBC approach innovation and what does the role of VP Innovation actually involve?
Innovation efforts at NIBC were structured in the NIBC Innovation Lab about three-and-a-half years
ago. The main objective was to increase awareness about new possibilities and technologies in
banking: “Some of the questions when we started were: Do we create a small group of people to
innovate? Do we want to do it alone? What do we actually want to achieve? We concluded that
everyone should have an open-mind, hence to start with a cultural impact. This could be achieved via
different ways”, says Duncan.
Fast way forward, Duncan took over the role of VP Innovation, steering the innovation activities at
the Dutch lender: “We facilitate, pilot projects and inspire people working at NIBC to become
even more innovative. That’s in a nutshell what we try to achieve with the NIBC innovation lab”.
Nudging the internal culture towards embracing innovation is not an easy task, as banks inherently
have a risk-averse mind-set. So, in order to kickstart this cultural change, he started from the outside
in through inspiration sessions, meetings with interesting external companies, as well as experiments and pilots, which all have made a really positive impact on the culture of the bank, according to
Duncan. He further clarifies: “From that perspective the idea was not to set up a separate unit for
innovation, so that we could drive the change from within. As many employees as possible should be
involved in some way or another”.
Concerning his personal tasks, he outlines that his biggest goal is to facilitate: “In the organisation
everyone works directly on the business, e.g. advising clients or doing administrative tasks, so what
you don’t want is that someone has an idea and then needs to read all required information about
compliancy and IT first. I try to get these things out of the way as much as possible, so that they can
start working on the ideas and get to do experiments and pilots instead of on the ‘paperwork’”.
He goes on to explain that not only providing the innovation facilitation, but also the inspiration
about what’s possible today in the first place is one of his key goals: ”The people within the core
business have deep expert knowledge. What is logically less on top of their agenda is the awareness
about emerging opportunities to make their work easier. So, there’s a disconnect about what’s
possible and what they think is possible. What we try to achieve with the inspiration sessions and
workshops is that we make opportunities and technologies visible and enable to connect with other
Even though NIBC is a relatively small player in the banking ecosystem with less than 700 people,
the bank has to deal with the same challenges as the larger ones. Duncan sees flexibility and a
mentality that everyone thinks in terms of opportunities as key competitive advantages for such
smaller players: “Seeing what is the potential now and in the coming years, there are so many
opportunities for the bank. We are a smaller party that can fully benefit from fast decision making
and being attractive for third parties even though we face at least equal challenges compared to the
bigger banks. We are always looking at opportunities to solve these challenges by cooperating with
third parties, including fintechs”.
Seizing market opportunities: be a fast-follower by joining forces with external parties
Banks are usually very product-centric and not exactly known for innovation. Thus, if banks now
want to prepare for the future, they need to start from within: changing the organisation towards
customer-centricity, agility, and utilising new technologies. Therefore, we further discussed about how
NIBC developed its innovation process and strategy.
First of all, Duncan outlined that NIBC approaches innovation a bit different compared to most
other banks. The starting point for an innovation project at NIBC is a challenge that directly affects
the core business. This means that either an employee has a new idea or an external (e.g. fintech)
company approaches them, which the business and Duncan then assesses in terms of relevancy for
their current core business challenges. “I would say 80% of our innovation activities are in direct
connection with the core business of the bank. There needs to be a business case and at least learn something from the opportunity. The fact is that you learn the most by doing. The other 20% is
about experimenting to know what is possible in the future. For example, the bank did a pilot with
blockchain technology last year even though we’re not heavily investing or experimenting with that
technology. We’re rather watching closely what happens in the market and try to be a fast-follower”.
The key advantage: a small innovation team with strong connections to the core business
As Duncan has been working at NIBC for 15 years, he knows the organisation inside out and has his
finger on the pulse of the bank. When asked about the strengths of their innovation setup, he stressed
speed and the ability to filter out important market opportunities:
“One of our strengths is that we can start pilots or experiments relatively fast within NIBC. We
learned over the last 3 years how to implement fast launches, to develop sandbox environments or
how to create a fast track for new projects, which helps a lot. We also have quite short
communication lines, helped by the size of the bank. Second, the selection of the right ideas is always
a challenge, but we’re quite good at having a more selective and focused approach to decide in which
direction to move in the first place”.
Due to the strong internal network, everyone at NIBC is empowered to implement new ideas: “It’s
not like you step into a lab and say: ‘This is where we have to be creative’, and in the other part of
the office you need to be a regular banker”.
A clear focus on horizon one innovation initiatives
When asked about where he focuses along the three standard innovation horizons, Duncan outlines
that due to limited resources, the key for him is to focus on the innovations that can make a direct
impact on the core business:
“If you look at horizon three, which means more risk and effort, it’s per definition more challenging
for smaller organisations like ours. It doesn’t mean that you don’t have to be involved in these
activities, but in my opinion the starting point should be to focus on a direct business impact, on
horizon one or two. There you can realize direct impact for clients and the bank”.
In the retail segment, NIBC offers savings products and mortgage loans and in the corporate segment
it offers advice and debt, mezzanine and equity financing solutions. These areas are naturally also the
focus for the innovation lab. However, Duncan mentions: ”If you look at other departments like risk
or operations there are also opportunities to make the business more efficient. We actually focus on
both sides of innovation, back-end efficiencies and new offerings”. Chatbots, robotic process
automation (RPA) or the recent partnership with OakNorth would be examples for increasing
efficiencies within the bank. As a customer-facing innovation he cited their partnership with Beequip,
a fintech that focuses on the financing of equipment for SMEs.
Making a business case for innovation
One obvious challenge of being tightly connected to the core business is that upcoming innovation
activities need to be backed up by a convincing business case. So how does Duncan ensure that innovation activities still have enough autonomy and that the ROI-driven thinking doesn’t work
against being innovative in the first place? For him, it’s a simple matter of budgeting. Duncan can e.g.
stretch the ROI period by sponsoring promising projects, which makes it easier for individual
departments to commit and spend time on it. He further elaborates:
“Convincing other people is always a challenge for innovation projects. Most people are risk-averse
or are under time pressure, while innovation brings uncertainty by definition. If you sponsor with
some external budget, get the support from management, show the opportunities and focus more on
things that affect their business directly, that helps to get a go. That’s for example on of the reasons
why horizon 3 innovation is not a core focus for us”.
Raising awareness for innovation within the bank
During the first phase after launching the NIBC innovation lab, Duncan focused on internal
brainstorming sessions and workshops about relevant areas such as chatbots, AI, or coding in
general. After that, he initiated workshops that actively teach the implementation of new
technologies, so that interested participants within the bank can immerse themselves and learn about
new possibilities of technology. The next step involved pilots with external companies, with the aim
to get new ideas to the market. For Duncan, all these initiatives represent different layers to motivate
people within NIBC and to inspire them with new opportunities:
“By inviting external companies and speakers, people get new ideas. And even if the effects are not
immediately visible, they are in the coming months or years. It’s all about building knowledge and get
people think outside the box”.
Building a future-ready, competitive product portfolio
After covering high-level organisational innovation, we switched to something very tangible: the
product portfolio. A typical bank offers ca. 150 products, whereas most customers only use on
average around five. Streamlining legacy product portfolios, developing new offerings and value
propositions, finding new revenue streams is therefore quite an important topic for most banks.
That’s why we discussed about how NIBC keeps its portfolio competitive. Typically, banks divide
their innovation activities in build, partner, invest or buy. NIBC is active in the former three areas.
For instance, the bank developed its successful originate-to-manage (OTM) mortgage or buy-to-let
proposition mostly in-house. Regarding investing activities, Duncan mentioned that NIBC takes
equity stakes in fintech companies. Examples would be Finleap, OakNorth, iwoca or Beequip. He
also asserted that they’re currently looking into establishing partnerships with fintechs as well: “We
prefer to work with other companies. We don’t think that we can reinvent the wheel ourselves and
there are many fintechs which can help us out, also with putting new propositions in the markets,
and we’re fully open to that”.
When asked about how to ensure productive cooperation’s with fintechs, he mentioned Beequip as a
best case example: “They started actually in this environment and worked across our office for about a year, now in Rotterdam. They’re mostly independent, and that works perfect”.
As many banks actually struggle to develop effective innovation capabilities that generate sustainable
new revenue sources, we wanted to know if any of the new propositions generated a return on
investment for NIBC. Duncan mentioned the new OTM mortgage mandate as an example, which
increased to €3.5 billion in 2018 with a drawn portfolio at €2.4 billion, leading to €11 million OTM
related fee income in 2018, an increase of 175%.
Duncan also mentioned that online channels are not a key focus for him personally right now:
“Related to the bank’s business, the corporate side is largely driven by direct relationships and
advisory. On the retail side, we offer mortgage loans, where a lot of developments are happening in
the market. We are digitizing the product, but so far we provide the loans through intermediaries. In
my view, digitizing products doesn’t generate ROI or client satisfaction per se. You also need to
digitize knowledge to keep the relation with clients strong”. Beyond that, NIBCs savings portal is
already fully run as an online-only proposition. “The retail business at NIBC is very efficient. Within
retail banking we have small portion of the bank’s workforce, with a book of €10 billion, which is
quite efficient and we’re able to scale it even further. Although obviously interesting, there are several
ways to serve your clients and be successful”.
Differentiating a bank in the digital world
For the last part of the interview we covered a topic that is often overlooked when analysing
innovation in banking: internal innovation culture and the concept of brand permission. As many
financial services are transferred to the digital world and clients get more transparency about the best
offers, how do banks ensure brand loyalty and client retention?
Concerning internal awareness about the bank’s future, according to Duncan, there are always
discussions about the next steps: “If you don’t know the current opportunities, you cannot start a
discussion about the next phase. So, you need to start discussions and show what’s possible
nowadays. Also things like sandboxes, pilots, using Python or working with fintechs in general, few
thought that was possible about four years ago. Now it’s totally normal”.
For smaller lenders like NIBC, the key differentiator is the excellent service quality and expertise that
NIBC offers in its niche segments: “Our strength at the moment is that we offer tailor-made solutions
to corporate clients, which makes is more difficult to achieve efficiency gains compared to the
payment, SME and consumer lending businesses”.
Even though the threat of fintechs and big tech companies to banks are often discussed in the press,
Duncan beliefs that in the long-term, the key competition will still be from other banking institutions
who cooperate tightly with fintech players: “I think it will be mainly the banks, but in cooperation with the best fintechs and other third parties for their clients. So for all banks there is an urgency to
to cooperate and experiment with fintechs in order to become the winners of the future”.
We’d like to thank Duncan De Vries for taking the time to discuss the future of banking with us. If
you’re a fintech that is active in one of the NIBC focus areas and seek a cooperation with an
experienced bank, make sure to contact Duncan.