Open Banking Review 2018. Part II.: Our Dark Magic :)

The year 2018 is behind us… What are the contributions to the collection of ideas, prototypes and events in the innovation team of the biggest Czech bank? If you are curious, don’t stop reading…

For who we are and what our building blocks are for innovations in the Open Banking ecosystem of Česká spořitelna, you can read in the previous part. In short, the new kids on the block are Erste API Hub Portal and Erste FintechCloud.

So, let’s focus on the retail customer’s side (red) in this part of the series… It may be a more “colorful” topic than the previous one…🙂🙃

Poketka — Direct Access to Early Adopters

The fact that it is good to try new things and prototypes, probably no one doubts. So, we have built our own mobile platform (Android only). Its name is Poketka and it is primarily used as a mobile wallet, or in other words NFC payments application. The secondary purpose: it is a prototyping platform where we can release our experiments directly to our clients (via our Marketplace) and test them.

K.J. on Twitter

Od včera je venku hodně cool appka od @Ceskasporitelna Saifu! https://t.co/NG2KOS3DLJ Skvělá práce!

Android app for NFC payments — if only it were as simple as it seems… Unfortunately it took four years from an idea to success in our corporation, i. e. before we delivered Poketka to our customers. So now, we want to treat them and we gradually deliver new functions, such as splitting payments, mega discounts, loyalty cards or the aforementioned marketplace.

Ok, we have prepared the whole heart and the magic can begin!

ČS Crypto — Base for Blockchain Revolution

During the spring, Česká spořitelna, as the first of the big banks, will allow purchase and sale of Bitcoin for selected pilot users. And clients will love it because of its lower exchange fee. As a new plugin it will be located just within the app Poketka.

And that’s just the beginning. For now, this is the first touch with the bank and blockchain. Over time, more functions and technologies will be added.

Pavel Michalík on Twitter

Great! team finishing implementation of possibility to exchange #cryptocurrency as a plug-in into Poketka from @Ceskasporitelna Available soon in pilot! #bitcoin #czk @csas_devs

Poketka Lite — Little Sis of Poketka

Finally, something for the iOS lovers, because they also want to pay by phone!😏 So, we have created the kid sister of Poketka which is diligently used (in the meantime) for testing purposes.

And what can the lightweight version of Poketka do? You have an opportunity to pay for a cup of coffee (or any other goods) with your iPhone via NFC sticker, QR code or iBeacon (Bluetooth).

Jakub Dubrovsky on Twitter

ApplePay v nedohlednu a závist Androiďákům? iOS SaifuPay, plaťte pomocí NFC, QR, beacon. Přehled prodeje v PowerBI a IoT Anemone (zatím jen interně pro kávovary)

Aperio aka the Security of the Future

The Aperio activity is our pride and joy for several reasons:

1. The idea was invented on our soil and we believe in it.
2. We have proven an ultra agile format One Week Hackathon which we have improved almost to perfection.
3. When the creative crisis came, we did not give up.
4. I dare to say that we do it for joy and not for duty.

What am I talking about? Aperio uses info from your mobile about how you behave (esp. how you walk). The app learns your behavior and if needed (for example, signing a transaction), it evaluates whether it is you or someone else.

WebAPI Developers on Twitter

Aperio - invisible authorisation method inspired by magic spell from Harry Potter. #lavly

And one last note on the topic: we are looking for passionate lovers of new technologies (pilots). If you are interested, please visit our website: www.getaperio.com. THX! ❤

Chatbots — A.I. on the Way

Okay, chatbot technology is not exactly an innovation... In the last year we have gone a long way and so, from the technological side we consider it to be solved. We have created over 20 chatbots, co-organized several conferences and thanks to that we are appreciated by the Czech developer community.

WebAPI Developers on Twitter

Our chatbot guru @JakubDubrovsky shared milestones of our chatbot effort today at @Microsoft_CZ

What is our challenge for now? We are improving the understanding of text, experimenting with voice chatbots, but what we are interested in really is Human Brain Interface…🤓

Past Great Events

What else has happened over the last year?

Startupweekend in Prague

I can say it was such an interesting fail for our “dream team”. We found out that nobody wants our final product. We gave up in the middle of the hackathon and learnt “Fail fast!”.

WebAPI Developers on Twitter

Matadors of Open Banking at @SWPrague

50 Shades of Agile in Česká spořitelna

Česká spořitelna opened an agile transformation at the conference 50 Shades of Agile!

WebAPI Developers on Twitter

It will be the more than month when our hearts burned for agile more than usually. We designed brand new event - 50 Shades of Agile conference, aiming to help @Ceskasporitelna transforming bank into agile company. Orbis-video-pictus below https://t.co/nydfkJmnNj

Bankathon in Frankfurt

Bankathon in the sign of “It is not important to win, but to participate!” 🙂

WebAPI Developers on Twitter

Hacker's night at #bankathon 🤓

Future Port in Prague

We presented what we are proud of at the Future Port…

Petr Biskup on Twitter

Love it :-) @Ceskasporitelna @FuturePortPRG @CloudFintech #conferences #future #Banking

APInauts in Česká spořitelna

Another conference under our leadership. The third year of APInauts with 100 posts with hashtag #apinauts2018. 👏

Tomáš Žďára on Twitter

APInauts - srdce na pravém místě https://t.co/VNg5mOiAKq

At the end a pearl of wisdom: “Nothing would be without an excellent team!” So, thanks to all of us for great cooperation and see ya next year!

In the third part of the series you can look forward to an annual report on the UX domain…

At the time of the startup boom maybe it is generally known as the four-year-rule. That from an idea to growing business it takes four years of hard work. From the perspective of human life, four years is not a short period. It follows that anyone who wants to succeed must be very patient. How patient is the innovation team from the biggest Czech bank? Let’s check this in our annual report in the following three-part story…

The first time I heard this rule was also in connection with the world-famous conference 4YFN (Four Years From Now) focused on connecting the world startup and corporate scene. The name caught my attention and I started searching what it means and why.

Oliver Brown from 4YFN answered me: “We have worked with many startups over the years and still to this day, 4 years stands out as a year that a business can really start to take off after hard work and learning from their previous mistakes.” How much truth is in this? Let’s check it out… 🔎👀

As mentioned we are the innovation team from Česká spořitelna and we are dealing with research and development (R&D). So, the year 2018 was for us the proof that the rule works. It follows that 2018 was characterised by the preparation of harvesting crops which were planted four years ago. I am talking about Open Banking and everything connected with…

Planting Roses 🌹

In September 2014 (four years ago), Head of innovation team of Česká Spořitelna, Honza Sechovec, mentioned in his speech at WebExpo Conference an idea about “WebAPIs for everybody”. He painted a picture of a world in which all developers and startups will be happy. Happy because they can easily integrate their applications with bank(s) and use services such as payments (of course not only). And what about the bank? It also feels happy! Because their clients are satisfied and the degree of loyalty increases. And during the year 2018 the dream has started becoming true..

Ok, I will stop being utopian. Just give a chance to the background of this story and let’s start to summarize results of the year 2018…

Launch of Erste API Hub

Erste API Hub represents a developer portal where you can, in 2 minutes, start developing apps using bank APIs. Since March there has been a self-explanatory option to choose a bank (among banks of Erste Group) and try its APIs in the sandbox.

WebAPI Developers on Twitter

We have launched the best portal for developers in #banking in CEE: https://t.co/cPOZCdxNwY. Come and create great apps using our enhanced APIs!! #fintech #PSD2 #MoreThanPSD2

Focus on developers experience (DX) was the key goal of the portal, therefore, it was passed by huge user tests by our UX designers whose belong to our team (more details about our user experience for 2018 you can find in the third and last part of this series).

So, the fact that we are trying to make the developers happy has been confirmed and our work paid off — at the end of the year we became finalists of the international competition Developer Portal Awards 2018 in the category “Best new DX innovation”. If you are curious how the one of the best DX portals of the world looks alike, there is the link. 🤓

FintechCloud — Happy Developer, Happy Life

In case of that you want to enforce a completely new idea in a bank, you have three options in general:

1. Push it by force 💪— by regulation of management board
2. Punk style 🤟— ask forgiveness rather than permission
3. Stakeholder management 🤝— to educate stakeholders and compromise to make it beneficial for all parties

Yeah, we have learned from several previous mistakes and chosen the third option. If you have experience from a big-sized corporation, you can probably imagine what a long and hard way we have come during this year.

Tomáš Žďára on Twitter

Talk is cheap, show me some platform! Introducing https://t.co/CfIqxiSkSG #CloudFintech #openbanking

For those who have not yet heard about Erste FintechCloud — it is “an extension” of Erste API Hub. In the short explanation video (1 min) you can register the proclamation “Security is our top priority!”, therefore, FintechCloud offers a secure environment where you can transform your ideas into a plugin using prepared licencies, components, SDKs, libraries etc. and consume almost all the bank’s data in the simplest way possible.

Maybe it sounds like a turning point in cooperation with banks and third parties. For developers and startups it means very big progress and useful help. For clients it does not represent any big change. Why not? Yes, they will see from their perspective in bank apps a lot of extensions. But no further installation is needed.

In December we are introducing to our pilot clients our first story, Paystory, the Czech startup which we found in a hackathon less than four years ago. A new plugin will be located within the Android app Poketka (more details in next episode of this article — part II.) and can enrich your transaction history with a lot of interesting information.

Česká spořitelna on Twitter

Plníme sliby! #FintechCloud doručil první fintech apku do #Poketka a zanedlouho tak klienti uvidí díky #PayStory u svých plateb v Poketce nejen kompletní nákupní seznamy, ale třeba také faktury. Petr Biskup, #FintechCloud leader ČS #apinauts2018

The next gentlemen for shaving (= next prepared plugins) will be for example parking in Czech cities, tickets to public transport or cryptocurrency ČS Crypto (more details in the next episode as well).

Two Fundamental Building Blocks of Opening of Banks — PSD2 and APIs

If you have read this Open Banking article up to here, you probably understand the issue PSD2 very well. If not, in brief: the PSD2 is an EU regulation just about opening of banks though APIs.

We are really proud of our solution to PSD2 which is an example of how well it is possible to transform a legal requirement into a meaningful result. As proof and appreciation of this is that Czech Open Banking Standard (driven by us) is accredited by the European Bank Association (EBA) as one of seven standardization initiatives in the EU (ie. indicates the direction).

Petr Michalik on Twitter

Czech Open Banking Standard for #PSD2 doc on #GitHub. Any issues? #czechba https://t.co/0O2BFuIRSz

The directive was approved by the European Parliament in October 2015. The first PSD2 payment was realized in January 2018 and the first third party (the app Richee by Creditas) was connected to us in September 2018. Nowadays the law is in force but the technical standard (and practically the whole PSD2) will enter into force in September 2019. So, those magical four years from approval into force.

The second building block is our Web API layer… The bank is usually not a software house. In spite of this we upgrade our own Web API technology to the new (fifth) version in spring of this year. Nowadays we are on the same level as other professional solutions and it is one of the most important systems in the bank. Interesting to watch how much the world is changing, isn’t it?

WebAPI Developers on Twitter

Oh child you make me crazy! Happy 4th B-day our WebAPI. The Great team 2gether #openbanking #ceskasporitelna

“George. Have you met before?”

If you are living Central Europe, you can not avoid getting to know George. But for sure, George is the new internet banking system for retail clients of Česká spořitelna released in several waves during this year. Worth mentioning that I have received a lot of positive feedback and you may notice it is a big step forward.

All of George, of course, is not the work of just our team. But it is notable that the first analytical meeting was in May 2013, just four years ago. Exactly in the same time as the Web API layer was born. On the basis of this interesting finding, there is one thing for sure. George couldn’t run without our precious APIs…

Digital Identity AKA Bank ID

Two years ago our agile team inspired by Scandinavian countries started proofing of the idea and technology of digital identity.

Proof of technology brought us successful results but there was another challenge ahead of us — to explain and then enforce the business concept which took 95 % of the time and energy of the whole PoC.

By some miracle (or thanks to the good idea) several months later the representatives of Czech banks (including ours) and the State Office met together, agreed on cooperation and created a working group dealing with this topic.

Back to the four-year-rule: on this basis at the end of 2020 we can look forward to finished solutions that allow us, via bank identity, access to government systems. 😌

KYC — Do You Know Our Customers?

In the last post it is also worth noting KYC (Know Your Customer) API, business that uses (not abuses) trust in the bank. Our client (with his permission, of course) will verify his identity and we will forward information to a third party that it is him. Purely online business models can now leverage from verified identity.

As we mentioned in the tweet below, it is a huge step towards Open Banking This activity educates our bank in selling non-financial services as well. In other words, it is a starting point for thinking about what business we can make more easily than just loans or mortgages.

WebAPI Developers on Twitter

So here it is. Another step towards OpenBanking considered done. @Ceskasporitelna and @SAZKAcz have just launched first implementation of KYC API. Join us and save your customers time visiting branches visiting branches. #morethanpsd2

I suppose that you are asking when did it all begin with KYC ? The first meeting with Sazka, our pilot partner, started in May 2017 — two years before rollout. I have an idea — what if we shorten “Four Years From Now” to “Two Years or Less…”? 🤓

Summary

You have read the first part of the series about the successes, failures and patience of the innovation department in Česká spořitelna which was preceded by a thorough search. On this basis, I found that there was something about the four-year-rule. And not only in our environment… There are several examples across the world:

• YouTube, iPod or the Internet itself reached 50 million users after four years (Angry Birds Space after 35 days 🤷🏼‍). [Source 1, 2]
• In 1997, Steve Jobs returned to Apple and began making profit again after a small bankruptcy. In 2001, the first Mac OS X was released. [Source]
• Writing the script of the famous Czech movie Pelíšky also lasted four long years. [Source]
• American aircraft manufacturer Aero Zun will construct by 2022 a hundred aircraft with hybrid drive, primarily driven by an electric battery. The goal is to reduce emissions, noise and long times for airport check-in. [Source]
• “It took me four years to paint like Raphael, but a lifetime to paint like a child.” ― Pablo Picasso. [Source]
• Beer motorcycle 1000cc Yamaha engine was built in four years. [Source]

And the last note — as Wil Schroter says in his article about how long it will take to have a successful startup:

“Year four and beyond — where the magic happens.”

And what about you? Did you find similar “magic” examples in your world?

In the second article of the series you can look forward to an annual report on prototyping and innovations. I promise that it will not be so positive... 😇

Who are we? This question was already answered by Jarda Machaň in his article about a challenging journey to innovate in the biggest Czech bank. Just like in any corporation, there are many smart people bored by routine work and realization of almost any ideas is like a long distance run. It was an impulse to reward us at the end of the year and try another way of agile working. Our motivation was:

• Expand a new idea with interesting potentiality
• Try new technologies
• Try a new way of working than Scrum (God forbid Waterfall:))
• Relax and fun

Everything Starts with an Idea

We have been flirting with an idea of using smartwatch for advanced authorization of bank payments (I do not want to dive into the details about the solution because the article mainly concentrates on how we achieved that).

However, if you come up with such kind of idea, you should usually confirm that your idea is not a waste of time. And that is how our project started. We made a team where four members were originally developers or solution architects, one was a scrum master / analyst and one was a product manager. The methodology chosen for research of the idea was Value Proposition Design (VPD) by Strategyzer and we organized a mid-day workshop which was fruitful for many reasons:

• We arranged everyone’s thoughts and became aware of the topic
• We became buddies:)
• And above all, we determined a target group and hypotheses of our idea

One Week Hackathon vs. Design Sprint

Inspired by hackathons we wanted to try for the short-term project popular Design sprint framework (DS, known also as Google sprint). However, VPD workshop pointed out it could be foolish. The reason is that the DS is business-oriented framework and it is focused on extending the existing solution, whereas we wanted to code and develop a prototype of our new idea. So we elected One Week Hackathon which, in contrast with DS, is more flexible and reminds of a speed Scrum.

Warning: the following text contains customized framework designed for our company. Our inspiration and the only source that we found was an experience from hotel search company Trivago.

Fortune Favors the Prepared

So, we had the idea, team, chosen methodology of working and many hypotheses. The first thing what you need to do in a corporate is to clear out you calendar and find a fancy place for a week. Eventually, you just need to get the obvious but important working tools such as flipchart or whiteboard, hardware (in our case smartwatch), sticky notes, markers and LET’S GET THE PARTY STARTED!

Monday — Setting up the Rules

The following topics were on the agenda of the first hackathon day:

Team & Roles

• 1 Product Owner
• 1 Backend Dev Lead
• 1 Frontend Dev Lead
• 2 Developers, Analysts
• 0 “One Week Hackathon Masters”

… this is how team role were defined.

Retrospectively, it was a bit useless to assign any roles to our project team members because, as we went along, the roles were divided by themselves: product owner, developers by platform, documentarist / organization support. Lead roles (including OWH master) were unnecessary because the cornerstone of the team were seniors.

Sprint Rules and Schedule

Every day (except Monday) there was one little sprint inspired by Scrum:

• 10:00 Stand-up (Daily Meeting) + setting up a day (sprint) goal
• 12:00 Lunch
• 15:30 Sprint Review + Planning Meeting — used to summarize the day and plan tasks from backlog for the next day. On Friday there was longer Retrospective Meeting instead.
• 17:00 End of the day (sprint)

The week after were arranged a demo presentation for our colleagues from Ceska sporitelna.

Tools

We used physical Kanban board for task management: rows for people, columns for days. We worked closely together, so we did not distinguish states “to do” and “in progress”. Backlog and done issues were placed separately.

Other tools: Slack for communication, Google Drive for documentation, GitHub and Azure for development as such, and Spotify for Christmas background.

Project Vision & Success Criteria

Brainstorming parts are coming — we determined three main visions that we wanted to achieve. We divided them into smaller goals and defined their success criteria.

E.g.: Vision 1: We are sure the solution makes sense

• Goal 1: Customers are interested in the product, SC: Based on VPD we successfully confirmed our hypothesis
• Goal 2: The product is cost-effective, SC: We have estimated revenues and costs
• Goal 3: The product is reliable, SC: Result of reliability test is more more than 80 %
• …

Expectations

Write down on sticky notes: “What am I most looking forward to during this week?”. It was evaluated at the end of the week as well as project visions and goals.

Examples:

• Work with sensors
• A new perspective on project organization
• I develop something to be proud of
• Mulled wine (= spend an evening with the whole team and mulled wine)
• Data analysis
• …

Product Backlog and Basic Architecture

We defined tasks which should be done during the week. Number of sticky notes was about 40, so we decided there is no need for a hierarchy. Grooming (Backlog Refinement) was a part of the meeting. You can read more about backlog definition and other preparation in the text below.

Name of the Product

A cool product needs a cool name! (And we needed to know how to entitle repositories…)

During the Week

On Tuesday we met up on stand-up, assigned own tasks and got to work. Subsequently, the rest of the whole week went just according to the plan as we set out to at the beginning of the run (as I mentioned in the previous chapter).

Friday Retrospective

Although we worked in sprints, we did not have formal retrospectives for each of them. The official “retro” part was arranged at the end of hackathon and consisted of these “games”:

Expectations Evaluation

Expectations, that we defined the first day, everyone classified into four lines (4 — delivered the goods, 1 — did not meet expectations) and gave constructive feedback. As you can see in the picture the biggest problem was that we did not go on Christmas mulled wine together.

What Happened and Why

Five-dimension star contained the following corners:

• Learnings — takeaways which I carry to the future
• Teamwork — how individual members fit together
• Communication — communication of individuals, honesty, open mind, keeping promises
• Organization — planning and prioritization of tasks, sprint alignment, backlog settings
• Result — how we are satisfied with the result

We followed the motto: “Let’s be strict on ourselves!” Everybody rated step by step the whole star on the scale 1–10 (1 — low score, 10 — high score) by giving feedback. We connected the lowest points and highlighted our success. The biggest mess was organization which we discussed deeper.

Visions and Goals Evaluation

The time has come to evaluate our initial visions. We compared the specified success criteria and up-to-date results. There is a possibility to measure the overall percentage of our success.

Summary

During and after the one of our best working week in the year, we caught several pieces of knowledge:

• Warning #2: the following information is very revolutionary: “Everything is about people.” However, only a great team can product great things and senior team members = there is no need for having lead roles or other role classification (except for a product owner). We have also confirmed that it is beneficial to engage somebody from business department in an IT project.
• 100% members time allocation is necessary.
• Physical board is absolutely sufficient.
• The optimal length of hackathon — one week.
• It is useful to have Stand-up, Sprint Review and Planning meeting every day. Retrospective meeting at the end of the hackathon event was well-timed because we were still focused on the project.
• Do not forget about business background of the product. During the week we e. g. interviewed many potential clients and investigated our hypothesis gained from VPD. It generated several other ideas and kept the team motivated during the whole week.
• Do not underestimate preparation. In our case we had these gaps and we could prepare more thoroughly in advance: scope definition, choice of technology, preparation of development environment (GitHub, cloud) or better choice of particular gadgets.
• Next things that are also not good to underestimate are vision and goals. Good goals and success criteria aim you through the whole project. Next time we will define them before the project kick-off.
• Backlog was a bit tough, too. Retrospective meetings showed us that we could plan more effectively because our expectations sometimes did not meet with the reality. So the lessons learned are deeper grooming and classification of task on Monday. And very important thing: do not forget to prioritize a backlog! E. g. using Pareto principle 20:80.
• Demo presentation was a significant part of the whole project.
• Our ending of hackathon missed a definition of next steps for the future continuation.

I hope you have well noticed from the text above how positive I feel about this experience. Within a week we did the work that would take months if not years in the standard corporate environment. We eliminated weekly status meetings and approval processes and thanks to this approach we minimized the project costs. The One Week Hackathon is a great shade of popular Agile methodologies and perfectly fits to confirmation of new ideas. Probably it could be useful for startups. In addition it is an excellent extension of the common work day.

One Week Hackathon — Another Shade of Agile?! was originally published in WebAPI Developers on Medium, where people are continuing the conversation by highlighting and responding to this story.