Rise of the Dutch Platforms – An insight into the transformation and integration of Dutch retail sector and payment industry

A little history on shopping online

The process of buying goods and services is steadily changing; how we buy our groceries and electronics, or book our holidays is a lot different from, let’s say, 15 years ago. For the Dutch market this change started with a company familiar to many of you —
In 1995, Wehkamp was the first consumer goods retailer with an online store on the, very recently introduced, internet. And as we know now, many were to follow. Back then, Wehkamp online was a “just” a digital copy of their bricks and mortar stores. What is really interesting, is the evolution towards platforms that followed.

An example of a company that truly embodies the platform transition is BOL.com, an organization that went from selling books to allowing others to run their own product/business on their (highly optimized) infrastructure. This allows smaller business access to a multitude of market exposure and at the same time ensures clients receive the high service standards that BOL.com offers their own clients such as the return policy, ease of payment and the packaging and delivery conditions.

This growth in web shops inevitably meant the growth of another online service; payments. Imagine sending your cash by regular mail! The increase of online sales in the Dutch market can be measured by looking at the growth of online payments. Yearly growth percentages of 30% to 40% are common, not even taking the impact of Covid-19 into account, encouraging us to shop from the comfort of our homes.

While our traditional banks initially had a hard time keeping up with this new type of demand, new payment companies such as the Netherlands based Mollie and Adyen seized the opportunity of providing the much-needed infrastructure to process an online payment. The easier it becomes for a customer to initiate a payment online, the higher conversion rates are for platforms and their shops. This is something well understood by many web shops. It became a spiraling and exponentially fast development, with clients expecting increasingly faster responses and seamless integration of the entire process.

Where the supply chain meets financial services

With the technical innovations, our consumer behavior changed just as drastically. And with platforms maturing, this change continues and is on the verge of some major breakthroughs. The core enabler? Combining a sophisticated supply chain with integrated financial services and endless technological possibilities.

Until recently traditional banks had a near monopoly on consumer payment data related to their purchasing activities online. Where the web shop would only know this for their offered products, a bank would have insight in all the payment data of a specific customer, simply because it was holding the account used for the transfer of funds.

With the introduction of the 2nd Payment Service Directive (PSD2) by the European parliament, making it possible for third parties to access consumer payment data and process payments on their behalf (with their consent!), this monopoly came to an end. This means, having the applicable license of course, an online retailer or platform sells you something, processes your payment, and has insights into your product movement from A to Z. Potentially allowing them to play an increasingly bigger role in our personal financial forecasting and wellbeing than banks did up until now. Other forms of payments, such as converting money, or the monetary value, into specific platform credits.

What does this mean for traditional banks?

Don’t be fooled by the word traditional. Giants in the Dutch market such as ABNAMRO closely monitor the developments and have different innovation strategies, constantly re-evaluating their role and potential in this movement of “platformication”. Take Tikkie for example, an application developed by ABNAMRO enabling consumers to quickly create direct payment links and send them through social media. Splitting the restaurant bill was never this easy. The main game changer of this app was making its functionality available for all customers, not just those with an ABNAMRO bank account, giving the bank access to much more payment data. The bank then leveraged this data by using the Fintech called Tink, offering clients financial insights across the different banks. Determining their role in this process (are you an innovator, early adopter or lagging behind?) is a main item in the strategy of banks nowadays.

ING’s strategy

ING has a strategy of its own – not unlike that of a fintech or retail platform such as BOL.com. As part of this strategy, ING very recently announced the introduction of DealWise, a Romanian ING startup that aims to bring consumers and retailers together based on analyzing financial data..

I was lucky enough to get introduced to Katharina Herrmann the Global head of Platforms and Beyond Banking and was able to ask her some questions about their platform thinking and where ING stands at the moment. She told me that ‘beyond banking’ has much to do with ING’s purpose; empower people to stay ahead in life and business, for which making good financial decisions is crucial. This purpose, as Katharina explains, cannot be achieved by solely focusing on INGs own products and services. Broaden the scope and enter the idea of a platform where products and services can be offered that have a beneficial impact on financial decision making of individuals. In all the countries that ING operates in they see the same trend: consumers trying to get on top of their financial health and decision making but lacking true insight while at the same time overwhelmed by the sheer number of possibilities and products.

Financial health goes beyond pure financial products such as mortgages and investments and is about day-to-day spending. What do I actually spend my money on, what does my shopping behavior look like? And this is where it gets interesting for ING, as not only individuals are struggling with getting financial forecasting and insight into financial data right.