Banks have an interesting position in the debate on European digital sovereignty. They are important consumers of IT services, which are now mainly in the hands of large American players. But banks can shape the IT landscape at the same time as their loans and investments: a major order from a major European bank can give a European IT company that push towards maturity.
Alexander Zwart, head of IT and innovation within the main board of Rabobank, is very aware of that role. He is therefore involved intensively, not only behind the scenes but also in public, in the sovereignty debate being conducted in Europe, which is quite unusual for a banker. He also stands up for American Big Tech. “We cannot afford more polarization in the world.”
This Wednesday, the European Commission presented a comprehensive package of bills aimed at strengthening the European ICT sector and making it less dependent on the United States. In a conversation with NRC The Rabo director is visibly looking for balance about that package. “It is about continuity and resilience, not about ideology and countries,” he says.
Payment traffic is essential for the functioning of society, but it is also vulnerable, says Zwart. And yes, it is necessary to make it less dependent on a handful of non-European companies. But completely turning away from everything that comes from outside Europe? That’s not an option. “We must keep that payment transaction as safe as possible. So we not only have to think about a foreign government that could press a red button. But also about cyber security. Because AI is now used to discover security vulnerabilities, the bar is now being raised further.”
And especially when it comes to cyber security, a bank like Rabobank cannot do without large American companies such as Amazon and Microsoft. “Because we work with sensitive customer information and payments are so important, we as banks cannot make any concessions. In IT security we work with an onion model: there are all kinds of layers that you have to get through in order to penetrate a network. Those American parties are very good at that.”
We require a different level of service than just filling out a form and then running a website somewhere.
Boosting European demand
How does a bank like Rabobank weigh the risks of dependence on American cloud companies and software suppliers? And what will bankers do specifically to keep payment transactions independent and secure?
Zwart’s hope is based on stimulating demand for European services. And he is trying to contribute to this with Rabobank by conducting tests with European companies and investing in them. In the hope that in five to ten years there will be European companies that can serve large customers such as banks and governments. “Because there are currently no companies in Europe that can handle our scale.”
The level of service is a major problem for the European alternatives, Zwart points out. “I see a lot of good initiatives. We always contact a new party directly to understand what they can and do. But organizations like ours – not just banks, but also energy companies and governments – ask a lot from such a party. We make many demands and legally have to.
“So we ask for a different level of service than just filling out a form and then being able to run a website somewhere.” As an example, Zwart says that many European cloud service providers do not have a telephone number on their website. A cloud service provider is a company that rents servers, computing power and digital services online. “If you can call or email such a European party, no one will answer who even knows how big we are as Rabobank. We employ 11,000 people in IT, almost a quarter of our workforce. Especially American cloud players such as AWS [Amazon Web Services] and Microsoft are very good at serving large companies.”
“Another example: in the cloud work is not just putting some data on a server. It is also about the applications on top of it, to make it easy to search, save and control access rights. And you see that European cloud parties often outsource this service. To the Americans.”
Boosting European demand
Last year, Zwart contacted the IT directors of the other major Dutch banks to exchange experiences with European cloud companies. This is not about contract information, he emphasizes, because that is against competition rules. “But we are allowed to exchange information about our tests and experiences.” The idea behind this is that it helps European companies grow if they know exactly what customers need.
Rabobank has invested in an Italian company, Domyn. This is developing a service that helps organize the use of AI in a company, he explains. Communicating about this can help stimulate demand. It may convince other companies. “We are consciously very open about what we are doing. That can have a flywheel effect.”
The Dutch government and, among others, De Nederlandsche Bank also do this. They recently announced that they were joining forces with the German cloud company Stackit, from the parent company of Lidl. Zwart: “The fact that the government is doing that sends a very good signal to the market.” Zwart hopes that this market will do its job, so that bigger and better European IT players will emerge. So that legal obligations, such as ‘Buy European’, are not necessary.
At the same time, Zwart would like more opportunities to collaborate with other banks and governments to keep payments safe, because their social importance is so great. “Paying is like water and electricity.” If payment transactions come to a standstill, the UWV can no longer pay out benefits, he gives as a concrete example. “Then people simply don’t have money for groceries.”
Should there also be room to work together with governments and possibly even competitors to gain a stronger position against oligopolistic tech suppliers? That is up to politics, he emphasizes. “If you look at the size of European companies versus the large tech companies, they are simply countries in themselves. It is up to politicians to answer the question of whether normal market forces work.”