ING is exploring whether to partner with a fintech to boost its role in securitization markets, starting in Europe.
Olivier Guillaumond, global head of fintech in Amsterdam, says the bank wants to be on platforms where buy-side customers manage funds and lend to companies. “We could be a partner, an investor, an advisory, or a manager” of such a platform, he said, adding that if a fintech is going to disrupt capital markets, the bank would rather be part of that.
ING’s treasury department and debt-capital markets business are active issuers and packagers of securitized loans in Europe. Unlike in the U.S., the market still operates via advisory. “It’s relatively high margin and not fully transparent to all market participants, so it could be prone to disruption,” he told DigFin.
He believes there’s an opportunity for a European bank to enter the space – in some form or other – with disruptors before big American banks win a dominant market share. And if that works, such a platform would likely look to Asia, too.
There are already peer-to-peer securitization platforms in Europe looking to match issuers with arrangers and investors, but their volumes are low and they tend to be limited to a single country. ING is keen to use such platforms to take its own fragmented European operations and scale them at a continental, or global, level.
One path to growth is using digital platforms to extend its business to new segments, such as smaller companies. “We want to say ‘yes’ to more clients,” he said, including those of smaller size and different credit and risk profiles.
ING already has a stake in Funding Options, an SME P2P lending platform in the U.K., and in the European business of Kabbage, a similar type of business based in the U.S.
Vive ING Direct
Guillaumond looks after fintech partnerships and due diligence for the bank’s corporate venture arm. He reports to Benoit Legrand, the bank’s global head of innovation. Gauillaumond’s remit includes all aspects of the business. Although he’s looking specifically for capital-markets solutions, the consumer side is also active.
He also wants to recreate ING’s direct-to-consumer business, formerly known as ING Direct.
ING Direct is an early fintech, a neo- or digital bank before the trend took hold. Following the 2008 global financial crisis, ING sold some of its ING Direct operations, such to Barclays in the U.K. and Capital One in the U.S. It kept the direct business in Europe and Australia—it has 9 million customers in Germany, for example.
A direct bank is in our DNA
“A direct bank is in our DNA,” Gauillaumond said. “We believe this model still has a lot of growth potential. For example, the company is reviewing a current joint venture with Bank of Beijing to determine whether to introduce direct banking in China.
In Europe, the bank is working to scale its business across diverse markets, and once that “replatforming” is completed, it will be in a position to be more aggressive with fintech partnerships.