Fintech Insider Podcast by 11:FS – Episode 1012

Insights: How Lloyds, Santander and NatWest are Shaping the Future of Banking Innovation
Date: November 6, 2025
Host: 11:FS (Ross Gallagher, with Tim Hurd)
Guests:

• David Grunwald (NatWest, Group Director of Innovation & Partnerships)
• Kamlajit Ahir (Santander, Senior Innovation Partner)
• Sarah Farrington (Lloyds Banking Group, Head of Digital Strategy & Innovation)

Episode Overview

This episode—the third in a series about reviving the UK’s fintech leadership—explores how established banking giants approach meaningful innovation. Host Ross Gallagher and co-host Tim Hurd lead a candid discussion with innovation leaders from Lloyds, Santander, and NatWest, probing the realities, challenges, and successes of innovating at scale within legacy institutions. The conversation covers defining innovation success, embedding a culture of change, balancing risk, practical governance, and the human side of making innovation happen in banking.

Key Discussion Points & Insights

1. What Does Success in Banking Innovation Really Mean?

[07:59] – [12:02]

• Sarah Farrington: Success is "solving an unmet customer need with something relevant and sustainable"—which may or may not be technological—and scaling it across a sizable customer base.

  • "It's maintaining that relevance when you've got a huge swathe of the UK customers to deal with and maybe not just a niche set of smaller customers." (E) [08:24]

• Kamlajit Ahir: Three pillars: whether the idea addresses customer pain points, leverages appropriate technology, and is financially scalable.

  • "If it can do all of those three things, then I think that is a successful innovation." (D) [09:36]

• David Grunwald: Banks have moved beyond the "theatre" of innovation (e.g., accelerator programs) to focus on “concrete, technology-oriented products to a wide swathe of customers.” Emphasizes “open innovation”—partnering with the fintech ecosystem and learning from startups.

  • "We like to really focus on the principles of open innovation. It is recognizing there are things we don't know that the ecosystem can provide." (C) [10:31]

• Tim Hurd: Success also has value in shifting organizational culture, not just KPIs. Sometimes, “success” means enabling faster, future innovation.

  • "Is it a bit fluffier to say it's anything that moves the organisation forward? ... It could be something that changes the culture in such a way that it enables future ideas to percolate and deliver much more quickly." (B) [11:33]

2. Balancing Short-Term Delivery and Long-Term Strategic Innovation

[12:26] – [17:04]

• Sarah: Balancing short-term “quick wins” with longer-term customer behavior shifts. Emphasizes a dedicated role to ensure alignment across initiatives.

  • “Otherwise, I think it’s really easy to be pulled in many, many different directions and actually undermine your customer experience as a result.” (E) [13:42]

• Cam: Innovation must be present throughout the organization (incremental improvements) and in specialist teams focused on “horizon two and three” (adjacent and disruptive innovation).

  • "It's making sure that that vision is clear as well. Where do we want to play as an organisation but making sure that that incremental innovation is also happening." (D) [16:43]

3. Culture: The Core of Scalable Innovation

[14:36] – [17:04]

• Sarah: Cross-functional teams (business & technology) embedded in daily delivery foster ongoing innovation, not just isolated initiatives.
• Cam: Everyone should contribute to incremental improvement, but more disruptive work often sits in specialized groups. It’s essential to know where the bank wants to innovate and staff/organize accordingly.

4. “Bringing the Outside In” – Customer and Ecosystem Engagement

[17:55] – [22:35]

• David: NatWest has internal “future product” innovation teams who conduct customer research and experiments but also scout trends externally, especially from US and Asia.

  • “You don’t necessarily ask [customers] exactly the product... but through that process of structured experimentation we try to get to good answers.” (C) [18:39]

• Tim: Banks must overcome “resource allocation gap” caused by innovative projects arising outside typical budget cycles. Funding flexibility for proofs-of-concept is necessary.

  • Notable: NatWest funds innovation projects via a “contingent funding process” for in-year support, not just pre-planned multi-year projects. (C) [19:52]

• Sarah: Post-pandemic, banks are more focused on the financials, and smaller everyday innovations are more celebrated; major investments are scrutinized more closely.

  • "There's just that little bit more kind of financial focus." (E) [22:52]

5. Purpose, Mission, and Internal Signals for Impactful Innovation

[27:52] – [32:29]

• Ross: Asks for indicators—beyond “cosmetic” updates—that truly drive impact.

• Sarah: Data is central—analytics showing customer use, complaints, journey analytics; keeping an “enriched analytics suite” accessible at all levels.

  • "That's how they are going to interact with what you're delivering at the end of the day." (E) [29:36]

• Cam: Looks for insights from frontline staff, complaints, payment outflows, and competitor performance for innovation gaps.

• David: Pairs internal metrics with “macro signals” from global fintech activity; this shapes “Horizon Two” priorities.

  • “Signals from what entrepreneurs are doing in this space are super important to us as we orientate for action as well.” (C) [31:13]

• Tim: Speed matters—examines “idea to launch” time compared to fin-techs; banks must improve delivery pace, not just idea quality.

  • Notable Quote: "I don't actually think traditional banks are bad at innovation, certainly not at product development, they're just very slow." (B) [32:10]

6. Practical Challenges: Governance, Models, and Risk

[33:27] – [40:31]

• Cam:

  • Lacks of dedicated/integrated resources and “ring-fenced” innovation teams slow progress.
  • Rigid, BAU governance processes stifle experimental agility.
  • "When you don't have that ring fence set up and that right skill set, it's very difficult to drive that innovation forward." (D) [34:50]

• Tim: Old “risk vs innovation” antagonism is unhelpful; proper innovation embeds risk & control into the process and governance.

  • “I think the other part of that is culture as we've touched on before. ... The organization wasn't ready to receive the ideas that they'd created.” (B) [36:42]
  • “Risk and innovation... actually adds to the value proposition of the bank from a customer perspective.” (B) [39:22]

• Sarah & David:

  • Risk and control must be collaborative partners, not blockers.
  • Culture change comes from role-modeling cross-line collaboration and incentivizing it.

• David: "Our risk and controls people are our closest friends and allies in the bank. ... We had to work really hard to, you know, explain to them why this was important, explain to them the importance of proportionality and the need for us to move quickly in a safe way.” (C) [39:27]

7. Incentives & Rewards for True Innovation

[41:36] – [43:41]

• Sarah: Moving away from individual “superstar” innovator model to rewarding collaborative, customer-focused outcomes; key to scale.
  • "The most direct way to do that is to tie it to people's bonuses and say you will be rewarded if you work in a certain way and you deliver these outcomes that are customer focused as opposed to always being directly in your line." (E) [42:03]

8. Practical Steps for Managing Risk and Building Buy-In

[43:41] – [47:30]

• Cam: Get clarity on what the real “new” risks are—often, what’s “new” to the bank already exists elsewhere.
• Minimize risk through debranding, no live integrations, and proof-of-concept experiments.
• Build trust and evidence before scaling.
• David: Accept certain types of failure (“failing in the right way”) as part of hypothesis-driven innovation; narrative and storytelling are essential to influence internal support.
• Look for “left brain/right brain” hires—people who can marry technical, strategic, and diplomatic skills.

9. Talent & Leadership: Who Thrives in Innovation?

[48:08] – [53:18]

• Tim: Not everyone is suited to intrapreneurship—maybe only 10% want and are able to drive innovation inside an organization. It requires ambiguity tolerance, sales skills, and 'gray space' navigation.

  • “You are, in many ways, that entrepreneur. You just didn't want to, you know, quit your job and live in your mum's basement for two years, right, in ramen noodles. ... But all the other things are largely the same, right?” (B) [49:29]

• Cam: Ambiguity comfort, self-direction, progression clarity, and the ability to “move the idea forward” without a set process are key.

• Sarah: Leaders must both protect their teams from organizational “noise” and ensure high performers aren’t overwhelmed by onboarding or excessive demands.

  • "If you get the reputation for being a great team, all of a sudden you're like a work magnet, right? It all starts flowing your way." (E) [51:44]

• David: The key ambiguity is "how far ahead of the bank do we go"; too incremental and you’ll be defunded, too radical and it won’t stick.

  • "If we go too close to what the business units are already doing ... you're going to be defunded after a year or two years of incremental improvement. If you play too far out ... you're not going to generate results because it's just too ambitious at this point." (C) [52:23]

10. Closing Reflections and Hope for UK Banking Innovation

[54:52] – [56:13]

• Tim: Progress in big banks is key to driving UK fintech forward. Incremental pivots in large incumbents, not just startups, can have massive societal impact. The challenge: “getting that balance between risk and innovation right.”
  • "If all things that we've discussed today can be applied and getting that balance between risk and innovation right, then, you know, fundamentally that's how we can improve the lives of millions of people across the country and that's a really exciting thing." (B) [55:35]
  • "If you go too far the other way and you become too controlled as an organization and you don't have any innovation, then you're just the company from Deliverance. And we don't want that." (B/C, laughter) [56:10]

Notable Quotes & Memorable Moments

• On Scaling Innovation:

  “Success for me is being able to launch that and scale that across your customer base.” – Sarah (E) [08:27]

• On Cultural Change:

  “You can ideate outside the box, but that loses the fact that you have to deliver through it.” – Tim (B) [25:19]

• On Getting Buy-In:

  “You have to have this ability to take an idea and filter it through the delivery mechanism, which is the organisation that you're housed in.” – Tim (B) [25:25]

• On Failure:

  “Certain types of failure are desirable. They're okay if they're done safely and if you're learning the right lessons.” – David (C) [46:07]

• On Talent:

  “Inherently, innovation ... is actually a very heavy sales exercise inside a company.” – Tim (B) [49:29]

Timestamps for Key Segments

• [07:59] Defining innovation and success
• [12:26] Balancing short vs long-term innovation goals
• [14:36] Embedding innovation in daily culture
• [17:55] External partnerships and ecosystem engagement
• [22:35] Internal investment changes post-pandemic
• [28:55] Data-driven innovation
• [33:27] Operating model and governance challenges
• [35:55] Risk and innovation as partners
• [41:36] Incentives and rewards for innovation
• [43:41] Managing risk, selling ideas internally
• [48:08] What makes a successful innovator?
• [54:52] Final reflections & optimism for UK fintech

Final Thoughts

This episode offered a masterclass in the realities of banking innovation at scale. The recurring message: true innovation in large banks depends on organizational culture, cross-functional collaboration, a balanced approach to risk, and practical frameworks that allow ideas to move from inception to impact. Technology matters, but purpose, mission clarity, and the right people matter more.

Connect with the panelists:

• All guests are on LinkedIn (as joked in the episode)
• NatWest: “Disruption Watch” series
• Lloyds: “Launch” program (LinkedIn) & lloydsbankinggroup.com
• Santander: santander.co.uk (including innovation section)

For more:
Listen to prior episodes in this trilogy for regulator and fintech perspectives on how the UK can regain its standout fintech edge.