← Fintech Insider Podcast by 11:FS
Fintech Insider Podcast by 11:FS
1012. Insights: How Lloyds, Santander and NatWest are shaping the future of banking innovation
01:01:46
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- [00:15]
A
London was the fintech capital. Not by chance. By design, smart rules, talented people bone capital. For a while, it worked. We led the world. But things have shifted. This is part three of our series on how the UK can regain its fintech edge. We've looked at regulators, we've explored the startup fire. Now it's time to look at the banks, the big ones with scale customers and a mandate to innovate. The challenge is clear. How do you move fast when your systems are built to be careful? What does meaningful innovation look like inside a legacy giant? Today, we speak to people on the inside to ask the hard questions and maybe chart a path forward. Joining me to help navigate this, a panel of insightful guests. But first up, my co host, Tim Hurd, Head of client success at 11Fs. Tim, welcome back to the show. It's great to have you on. Maybe you can just tell our listeners a little bit more about your role at 11Fs and specifically why you're interested in the topic of today's episode.
- [01:19]
B
Thank you, Ross. I'm really excited to be here with these amazing guests and yourself. This is a topic that I will apologize in advance that I will nerd out about massively. And that's because I can come at this from two perspectives. So as the head of client success at 11Fs, I manage our key client accounts around the world. Many of them are the world's biggest banks and I've seen the challenges to drive innovation through those organizations over the years. We've created some amazing ideas that have amazing business cases, amazing desirability, but are really hard to actually deliver through organizations and take either a long time or never get to market at all Sometimes before I joined 11Fs and another life, I was actually at Barclays for 10 years. So I've seen what it's like to innovate from within a big bank. So I can also approach this topic from that perspective. So I've seen both sides and I'm excited to delve into it more.
- [02:13]
A
Excellent. Well, I'm now excited as well after that, thriving off your enthusiasm. Awesome. Thanks, Tim. Next we have David Grunwald, Group Director of Innovation and partnerships at NatWest. David, welcome to the show. It's great to have you on. Maybe you can just tell us a little bit more about your role at NatWest.
- [02:32]
C
Yeah, absolutely. So our job is to help the bank thrive in a disruptive, very fast evolving landscape. And we do that by learning about what's going on, by helping the bank to orientate a response. And we do that with, with experimentation, with strategic investments, with some venture building, growing amounts of community engagement. And our goal is to really understand what matters for customers and our colleagues in the business by aligning that external disruption with what the bank chooses to do internally. So we partner very closely with the business, we operate externally to identify what's going on, to prioritize, to hopefully deliver on the highest impact opportunities. And one of the bits I love about the job is that sort of looking ahead, looking at the trends, looking at disruptions, but trying to make it real and trying to build fundamental things for our customers. And in my previous life I've founded startups, I've worked in accelerators, so I'm also sort of coming at this from a bunch of different angles and I'm really looking forward to the conversation.
- [03:34]
A
I love that. Yeah, I'm really looking forward to getting into some of the things that you mentioned in a bit more detail as we go through and bringing all of your different perspectives. David. So thanks for joining us. Next up we have another FinTech Insider debut for Kamlajit Ahir, Senior Innovation Partner at Santander Bank. Cam, likewise. Really great to have you on the show again. Maybe you can just tell us a little bit more about yourself and your role.
- [04:00]
D
Yeah, sure. So thank you firstly for having me today. Really excited to be here today. So I'm Cam. I've been in the financial services sector now for many, many, many years, mainly spanning development, new product development and innovation. And my role currently is really about delivering innovation strategies into the bank to really help transform customer experience. Really think about how we collaborate with Fintech, how we collaborate with new partners. And similar to David, really looking at, you know, how do we bring the outside world into, into the bank, how do we really think about those market trends, those insights? And this is really quite instrumental in how we then embed Innov frameworks inside the organization. So I've spent a lot of time working with various teams around how do we set up in an innovation function, what are the right skill sets needed, how do we do that with success, how do you build a pipeline, what are the right opportunities to focus in on? So a lot of focus on that early discovery, ideation, experimentation, learning quick in a lean way at pace, which is not always easy in a bank. But yes, that's primarily my role and what I've been focusing on.
- [05:15]
A
I love that Cam. Yeah, really looking forward to deep diving into some of those things again as, as we go through. So thanks, thanks again for coming on and sharing your perspectives and then completing Our sort of run of debuts. We also have Sarah Farrington, head of digital strategy and innovation at Lloyd Banking Group. Sarah, look. Likewise. I mean, welcome. It's great to have you on again. Maybe you can just introduce yourself and a little bit of background for our listeners.
- [05:43]
E
Sure. Thank you for having me. I've recently celebrated a decade at Lawyers Banking Group, and across that time worked across various parts of the bank, including serving customers in the branch, in the chief operating office. But the majority of my time has been in what we call our digital division. And I've seen that grow from the fringes of a bunch of people doing some things that maybe not the whole bank knew about to really being a core part of our service and how we serve our customers. The time in digital, it's been split between what I'd call a tech role. So I led product together alongside design and technology disciplines to develop the customer experience and deliver kind of new technology as well. And that really gives me a product and design lens to my thinking, which I think pairs pretty well with my more recent strategy roles. So the challenge there is balancing keeping up with the pace of technology and increasing customer expectation, which is kind of the innovation bit of my role with leading digital strategy, ensuring that really our channel remains relevant and delivers the value that both our customers and our shareholders would expect as well. So I think that blend of experience hopefully makes me good at my job. Some people think so. And fundamentally really kind of tying those different perspectives from across the bank, hopefully pulling them together in a similar strategic direction.
- [07:00]
A
Yeah, super interesting. I mean, congrats on celebrating a decade. That's no. That's no small fees. And again, look. Yeah, I mean, everything that you mentioned, I'm super interested to get into it in a bit more detail. So, again, thank you for coming on and joining this really interesting panel. So that is our panel. So I suppose without further ado, let's. Let's dive on into the show. I think it'd be good maybe just to orientate ourselves a little bit. Maybe we just start by going around the room and just asking for your perspectives on how you define success in innovation today. Maybe, Sarah, I'll start with you because I think a point that you made in your intro that was really interesting was seeing innovation go from something that maybe was happening in isolation in a dark corner of the bank, and actually then seeing it sort of proliferate throughout the entire organization. Yeah, I'm interested just in your perspective of maybe how. How you define success and how that's maybe changed.
- [08:00]
E
Yeah, interesting question. So I think in terms of how I define innovation, to start with, it's kind of solving an unmet customer need with something that's relevant and sustainable, that might be technology or might not be, and ideally, as a little bonus, with a kind of beautifully simple design on top. So I think in terms of success with innovation, you can do that in isolation. I think you were alluding to that, Ross. But success for me is being able to launch that and scale that across your customer base. And really, I suppose that's what I was talking about earlier with relevance. 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. I'll let the other panelists pick that up.
- [08:44]
A
Completely agree. I mean, yeah, doing this at scale obviously is the real litmus test, isn't it? Cam, what are your reflections in terms of, I guess how you guys think about innovation and what success looks like?
- [08:57]
D
Yeah, I mean, I always think about it in terms of three things, really. So I think firstly, innovation is all about new ideas that will have a positive impact on customers. So it is about that unmet need and what are some of those day to day pain points that customers face? How does the idea solve for that? And then I think secondly, it's about the right technology. So what's the right technology to help solve that pain point or that problem or that need? And then the third is really about the business model. Right. So how will that idea be monetized? How does it become scalable for the organization and what are the revenue opportunities with it as well? So I think if it can do all of those three things, then I think that is a successful innovation.
- [09:43]
A
Yeah, I completely agree, David. I know you sort of mentioned that in a previous slide. You sort of been involved with startups at early stage and then obviously now doing it at a bank. It'd be interesting to get your perspectives, I suppose, in terms of what this looks like in both contexts. Right. And maybe where some of the differences or some of the tension points are.
- [10:08]
C
Yeah. So I think with a bit of a long view of the word innovation, the focus is now on everything we've just heard from the panel. It's on getting, I think tangible product out to a wide swathe of a customer base. And perhaps in years gone by, it was more about theater. There was a time, I think, where you could launch an accelerator program and put points on a share price just from an announcement. And I think it is about getting concrete technology oriented products to a wide swath of customers. And I think from a, from a bank perspective, 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 and building pathways to that customer value by engaging with startups. And that I think is the discipline that's really matured over the past 10 to 15 years.
- [11:03]
B
I think defining what success means through the lens of innovation is part of the challenge. Certainly when I was trying to make sense of what I did when I was leading innovation through various schemes at Barclay is most of my conversations were trying to almost legitimize my existence and explain what success looked like. And I think historically that was really focused on actually delivering something to the bottom line. But I've come a bit more, I don't know, it's a bit, is it a bit fluffier to say it's anything that moves the organization forward. It doesn't necessarily have to be a product that launches. It could be something that changes the culture in such a way that it enables future ideas to percolate and deliver much more quickly. So I think there's a real cultural component to organizational dynamics that is a real component of the delivery and success of innovation teams inside banks. That said, I do think you need to be adding stuff to the bottom line to then go back to people and make sense of your own existence. So I don't even know if that gives a circular answer, Ross, but that's my two pence on it.
- [12:03]
A
No, it's interesting. And look, I suppose in terms of how you determined success, I suppose success looks different over different time horizons. Sarah, how do you sort of balance maybe some of those sort of like shorter term priorities with some of those, I suppose, longer term or maybe more strategic innovation goals?
- [12:27]
E
Yeah, I think it's a good question because most of my job, I think is trying to balance the short term and long term priorities in the digital experience. And as an example, most of the short term things will be, I don't know, like a new, new product that a team from across the bank has developed or it might be a difference in how we start talking to customers to better engage them or make them aware of something that's important. I think the longer term things are your slower burners. Maybe you need to change customer behavior, for example, lead them to discover more of what you do as a business line or, you know, in a company where the pace of delivery is increasing. How do you keep the experience simple when there's more on Offer and those are the kind of longer term problems. I think that innovation fits in both because to me it's just a different way of solving a problem. So yes, I think the short term things can maybe seem like they're all running at you at the same time, but innovation just has the same place to play in that as the longer term bigger burn things or partnering with new tech, for example. I think what is important is in a complex organization is having someone whose job it is to actually step back and check that the whole thing fits together and that those running at the longer term problems are also cognizant of the shorter term ones. And that really the whole thing is solving customer problems and delivering on commercial expectations. Otherwise, I think it's really easy to be pulled in many, many different directions and actually undermine your customer experience as a result.
- [13:56]
A
Yeah, completely. And Sarah, another thing that Tim mentioned was culture. And I think it's hard to talk about innovation and not touch on culture, I guess. How much do you see? I think that sort of that because it is a mindset, isn't it really about really sort of challenging yourself every day to be thinking innovatively and all of those things and what that actually means. And I guess, you know, my sense would be that you're seeing more of that in terms of how you embed that in teams across the entire organization rather than sort of someone sitting over there in isolation and thinking about innovation, quote, unquote.
- [14:36]
E
Yeah, absolutely. And I think one of the key things to that is where we've been over the past probably five, maybe as long as eight years in pulling kind of business disciplines together with technology disciplines and having those in cross functional teams. I think that really helps with driving innovation in your day to day delivery as opposed to having it as a big project that sits somewhere else. There's certain reasons why you might do that and there's examples of that that work. But I think in trying to drive it as a day to day thing that goes live for customers, it's really great to have those cross functional teams with that permission to test things out and try things.
- [15:14]
A
Cam, does that line up with your experience in terms of how innovation is sort of integrated into these, these, these big organizations?
- [15:23]
D
Yeah, absolutely, absolutely. And I think, you know, we tend to think about innovation sitting with one team in the bank, but actually based on the type of innovation and similar to kind of what you were saying, Tim actually should run through every team across the organization. And just to give an example of what I mean by that is that there will be day to day incremental innovation that, that we're trying to do.
- [15:48]
A
Right.
- [15:48]
D
Which may be improvements to an existing product or service. Right. So those may be those smaller changes. Everybody should be doing those. That's all about how you're maintaining and defending your core business and everybody should be thinking about that every day. How do we make sure we're maintaining our core business and doing all the things we need to do. But then you may have specialized innovation functions that focus more on your Horizon two and your Horizon three, which is a bit more disruptive, a bit more longer term. You're not going to see the return on investment maybe for another two to three years. And those are more futuristic looking out and maybe you have a team that's focused more on those. So I think what's really important and from my time in innovation is that I think it's really important for banks to know also where they want to play in that horizon. Not everybody wants to play in Horizon 3 because it's very disruptive and you need the investment, you need the right skill set, the right talent. Do we want to play there? Do we want to just play in Horizon 2, which is more around innovating but adjacent to your core business as opposed to, you know, going completely crazy into other sectors. So I think it's making sure that that vision is clear as well. Where do we want to play as an organization but making sure that that incremental innovation is also happening and it doesn't need to happen with that core team. It can happen across every team across the bank.
- [17:05]
A
I think that's a really helpful way to think about it. There's almost like the, the, the sort of like the day to day innovation that is like almost table stakes, like you know, if you stand still, you go backwards kind of thing. And like you said, that's just, that's just sort of keeping up with the market and making sure that you're staying competitive. And then there's maybe that more, that more sort of future facing stuff that is you know, potentially sort of like bigger bang, bigger impact, but you got to do both at the same time. David, one of the things that you mentioned in your, you sort of intro in terms of your description of your role was bringing the outside in and that sort of customer perspective. That's something I'm really interested in understanding in terms of how you guys, I suppose bake that into everything that you're doing at NatWest.
- [17:56]
C
Yeah. So I mean a little bit like what we heard before, we have almost an internal Partnering function that really gets close to our go to market units, what we call the franchises at Natwest and that helps us to really understand the strategies around the group. We also have a full stack team of future product people within the innovation function and we can put resources towards customer research, towards design to help to really drive very customer oriented ideas, products, experiments, which is really the unit of trade that we work in as a team. And I think they asking the question of what our customers want is a really fundamental one and it's something we do, as I said, in close partnership. The aim here is to try to get tangible outcomes into their hands. You don't necessarily ask them exactly the product. It's the old quote about faster horses and Henry Ford. But really through that process of structured experimentation we try to get to good answers.
- [19:06]
B
I think there's a really interesting point in there because one of the things that I used to talk about wearing my previous hat was that there's this resource allocation gap when it comes to resourcing innovative ideas, largely because they surface out of traditional financial cycles. So rather than being planned on an MTP basis where you've got a developer, where you know what that developer's resource profile and capacity and workload is going to be and what they're going to be working on for the next two years, by definition an innovative project will come out of that cycle and will appear. But because it's come out of the financial cycle, outside the planning cycle, it's almost impossible to then attribute resource to that, to that idea. Right. So breaking that a little bit is, well, not breaking it, fixing it is super impressive.
- [19:52]
C
Absolutely. In our approach there is. We have a very small standing team and we're roughly one of the thousand people in the bank. In my central team of innovation and partnerships and that we have a team we call Future Product whose job it is to do that. It means we don't have to beg, steal and borrow already heavily resourced engineering talent, product talent from around the bank to draw conviction in ideas and concepts before they go wider. We also have a funding model for projects that allows us to apply in year funding. So it's sort of a contingent funding process. It's quite structured, but we can fund proofs of concepts and bigger experiments into pilot without needing to have, you know, to answer the question which I have been asked, what are your next two years worth of projects going to be? Because I think we'd all agree that the technology world is moving incredibly quickly. Customer expectations are moving incredibly quickly as well. So you're Absolutely right.
- [20:46]
A
It's such an interesting consideration because I know we're sort of all, yeah, the budget cycles, Tim, that you mentioned and then the sort of KPIs I suppose that support and feed into that and thinking about actually maybe do we need to rethink some of those away from sort of in year return towards maybe, you know, sort of customer engagement and all of that sort of stuff. I think again is a really, a really interesting lens sticking on that sort of theme, David, of like return on investment. And I know that I hate to bring up the pandemic because I think we're probably all, you know, tired of talking about it, but how has, how has the, the sort of post pandemic landscape maybe shifted how you guys think about innovation or hazard?
- [21:31]
C
Look, I think pre pandemic big companies were all, not all, but a lot of them were running large workspaces for startups and hoping, I think that the process of exchange between entrepreneurs and big businesses would happen by osmosis and I think it's probably more targeted now for me the ecosystem in London in particular, but UK wide has recovered quite substantially. There's a lot of activity now, there are lots of meetups, there's sort of two a week, sorry, two a night at the moment with fintechs which is great, but we are being more discerning about the top of the funnel and where we find startups to work with. I think what remains true is that if enough clever, intelligent people give up careers to set up companies as entrepreneurs to chase an idea in fintech, there are signals, macro signals worth chasing after. But we're probably being more deliberate about the scale of structured program we run. So we ran a program with five startups rather than potentially one that might have had 10 to 15 in pre pandemic.
- [22:35]
A
Sarah, is that something a sort of trend that you're seeing as well? I mean I know there was so much momentum previously with innovation labs and accelerators and all of that sort of stuff. I guess have we narrowed our focus? Are we being a little bit more selective now in terms of what's going to make the grade and what isn't?
- [22:52]
E
Yeah, it's an interesting question, David. I think you covered the partnership piece really well. I think to give a slightly different lens from internal investment and those yearly cycles. I think since the pandemic there's been a commercial shift across every bank's margins being squeezed, decade of low interest rates ending really abruptly and fundamentals of really the scale of how money comes into a bank has changed. So I think that gives more focus on how the financials of all transformation, but especially innovation projects stack up. So that would be across anything you're doing, there's just that little bit more kind of financial focus. So then I think if you're in that yearly cycle of drawing down investment and you're trying to figure out how to innovate within that, I think there's a couple of ways to look at it. The first one I'd suggest is actually celebrating those smaller everyday innovations. So it's difficult to stack up investment to do the big things every single sprint. But if you're giving a team maybe access to great data, putting those business and tech teams together and then give them permission to spend a couple of sprints solving something different, I think that's doable within your kind of your yearly cycle. And then of course, there are the bigger innovations that still have a place to be set up separately. And I think AI is definitely a space at the moment where that's probably happening across many businesses. Getting the right people in the squad is important and the culture we talked about earlier, giving them some focus and thinking space. But I do believe, and I think you guys might agree with me, it can't be an island of ideas. It's not a perfect formula for this. Right. It'll be specific to the problem, but it needs to be close enough to the main business to maintain that organizational relevance, support stakeholders and ultimately the investment keep coming in so you can launch and scale it to customers. But it also needs to be far enough away that it isn't subsumed into the also really important work the rest of the bank are doing. And I think that takes real strong leadership and kind of proof that the problem you're trying to solve is worth it. But the hardest thing, I think is not coming up with the idea or building and shipping the product. It's actually having enough evidence to build a compelling business case to get that permission to try.
- [25:09]
B
I love that. I think there's. I have a bit of a bugbear about people saying, you know, in terms of innovation, you just need to think outside the box.
- [25:19]
A
Right?
- [25:19]
B
Yeah, I think you can ideate outside the box, but that loses the fact that you have to deliver through it. So you have to have this ability to take an idea and filter it through the delivery mechanism, which is the organization that you're housed in. And, you know, you can think of the most crazy ideas, but you're never going to be able to deliver them unless you are cognizant of the actual reality of the organization you're in. So to your point, it's about balancing, delivering customer outcomes, delivering innovation, but having that, that is in a way that's feasible to deliver, but almost bringing that forward into the ideation process and making sure that that's, that's something that is considered and understood by the wider organization.
- [25:59]
C
Look, we always say we don't want to be a skunk works. We can't be doing stuff on our own in the garage without reference to the wider business. Nor do we want to be an ivory tower and just thinking and dreaming. And it has to be that connectivity that Sarah just described to make things stick.
- [26:13]
D
I think that's why it's really, really key to get that early sponsorship at the EXCO level on just what are the opportunities we want to focus on as an organization? Because as I say, it goes back a little bit to what I was saying earlier about the horizons. If there's no appetite to operate in Horizon 3, let's just not go there. But I think also it's about picking the right opportunities that fit with the broader goals of the organization and the broader strategies of the organization and engaging those teams so that you could almost help them understand how is your innovation going to drive some of their success in terms of what they're trying to achieve. You know, so just as an example, lots being going on and with the ESG kind of strategies over the years with many banks, you know, environmental, social, governance, some of the innovation we've been doing there, how does it help push the social agenda in the bank? How does it help pull the sustainability agenda in the bank? So it's almost like joining it up with the priorities of the broader bank rather than, as we said, trying to do something that's completely separate, isolated and doesn't really fit. And then there's all the complexities around. You know, you'll be working with other countries and other markets and group strategies. So all of that plays in as well. So that's kind of how we tend to think about it anyway, within the bank that I'm in and just trying to get those stakeholders on board early on so that they're supportive of those ideas. That's going to help you, you know, get more success with those ideas working their way through the funnel, I think.
- [27:52]
A
I think that's such a critical point. And actually now I'm sort of sitting here and I'm kind of like, it's taken us a little while to get to this, but I'm really glad we have, you know, I think when we, when big organizations tend to think about a sort of innovation agenda or strategy around innovation and what the next few years look like, I think we often sort of upweight, you know, the sort of technology and what that can enable and maybe some of the ways of working and those types of things. But actually we almost underestimate the value of a really clear purpose and mission. And I think that's often where this stuff falls down because you just don't have that clear sort of steer or direction to follow. I wonder if maybe we can wrap this section sort of, I suppose in a similar vein as to how we started it and just sort of ask each of you what are the sort of signals or the data points you guys are looking at that sort of help you identify areas where innovation can make that real impact and not just cosmetic one. Sarah, shall we start with you again on this one?
- [28:55]
E
Yeah, I think data is really important. I think I alluded to it earlier. It's kind of the feed in to finding those brilliant pockets of ideas. But specifically on helpful data points, I think listen to what customers are telling you, what are they contacting you about being able to see how many customers are using which features, when, in what order and then who are your customers, what products do they have? So I'd probably describe it as a bit of an enriched analytics suite that you can carve out at multiple layers. So it's relevant at XCO and Board. But equally you can start to cut that through journeys end to end to see that whole experience. I think that links back to my point I made earlier on having that holistic view over the end to end for your customers because that's how they are going to interact with what you're delivering at the end of the day. So yeah, I think a few of those would be good. Love that.
- [29:48]
A
What do you think Cam?
- [29:50]
D
Yeah, fully agree. I had very, very similar points. I think talking to the frontline staff is always super helpful because they are interacting with customers day in, day out and just looking at some of those insights from them and just looking at things like your complaints data, like what are the things customers are complaining about?
- [30:08]
E
Right.
- [30:08]
D
How do you solve for those? There's things like if you're losing significant market share in particular segments or products, just you know, looking at some of the data around the payment outflows, like where are customers moving their money to and why are they doing that? And there's also the external data points around competitor data. So how are competitors growing share? What are they doing and how does that help identify gaps that you may have in your business model? So those are just some additional elements.
- [30:41]
A
Over to you, David, what do you think?
- [30:43]
C
You know, I fully agree with that. I think they're all very valid internal signals. We also look sort of quite widely outside the bank. So we undertake primary research into some of the tech trends in the markets. We've got people in the US and in Asia who are feeding on what they see from the technology world and the startup and fintech ecosystems there. And we also, as I said earlier, we, you know, this principle of the macro signals from what entrepreneurs are doing in this space are super important to us as we orientate for action as well. So I think I would pair up the external potentially with more of a Horizon 2 implication with all the things that we've already talked about internally.
- [31:32]
A
Love that. What are your reflections, Tim? I think lots of good discussion.
- [31:36]
B
Yeah, no, 100%. I think someone said to me that innovation is not an outcome, it's a process. And I think when you're looking at data, it's how you then judge the success of the process rather than just saying, hey, look, we have innovation now because we have some people under the age of the 30 not wearing a suit. And then when you look at innovation as a process, you can start to look at certain KPIs around. There's this idea of idea to launch times, which is how long would it take a randomly selected idea in the organization to deliver to market? And the reason that's interesting is that I don't actually think traditional banks are bad at innovation, certainly not at product development. They're just very slow. And it's certainly when you compare it to fintechs, but then as I'm sure we'll talk about in the next section, that then comes back to how you balance risk and innovation, which is the heart of any innovation process.
- [32:29]
A
Love that you're doing my job for me. You've already teed up my segue into the next section, so that's great. Yeah, look, we talked about what innovation should look like. I think now we want to really start to focus on actually how do you make it happen, particularly inside big banks. Do stick with us, don't go anywhere. Because after the break we'll be diving into the challenges of executing innovation at pace, building the right teams and driving real change. All right, welcome back to the show. In this section, we'll be diving into some of the challenges, particularly in large organizations and trying to deliver innovation at pace and at scale. Cam, maybe if we start with you, I guess what are some of the biggest challenges you've seen internally when it comes to trying to drive that meaningful innovation and deliver it at scale?
- [33:27]
D
Yeah, sure. So I think probably two or three big ones. I think firstly not having the right operating model is really difficult. So with that what I mean is having ring fenced tech, having ring fenced ux, having ring fenced research labs, all of this is really important when you're trying to do innovation because you're trying to learn quickly, you're trying to move fast, you're trying to be agile, you want to get through as many ideas as you possibly can in your pipeline because you want to understand quite quickly if there's a business opportunity there or not, not having the right processes in place to really bring part in at speed. And when you don't have that right operating model, what it means is that you're essentially fighting with the same pool of resources across the bank who are trying to deliver all of the BAU as well as the innovation. And that just does not work. And that's definitely a challenge we've had at the bank I'm at whereby, you know, we're a lean organization, we're kind of a challenger bank really. I suppose we're not as big as the big banks, but we're not as small as some of the Neo banks. We're kind of in the middle but we're trying to do the big innovation as well as all of the BAU with the same resource pool. So that's definitely a challenge that you know, I've faced. And one whereby if you don't have that ring fence set up and that right skill set, it's very difficult to drive that innovation forward and then linked to that, I suppose it's around the governance frameworks again because of the nature of what you're trying to do, you almost need a lighter governance process, you almost need that kind of, you know, quick sign off approval, you know, and often what we find is that you're again, you're taking your initiatives through the same bank wide BAU governance. So whether somebody's trying to launch a completely new product to millions of customers, the governance is no different to whether you're trying to run a pilot with 10 customers.
- [35:29]
E
Right.
- [35:30]
D
So that really slows things down and what it's meant is that you're testing ideas which take six to eight months for you to get any real outcome, maybe even longer at times and you can only really get through two of those a year. At the most. And that is not moving at pace and trying to learn quickly. So those are just some of the challenges that I've come across in, in my experience of innovation.
- [35:56]
B
It's really interesting because, and I can make this admission now that I'm on the fintech side of things rather than a traditional bank. The balance between risk and innovation is something that I personally probably got wrong when I was trying to drive innovation. And that was because I saw the two halves as almost antagonistic, which was like I want to innovate. The risk and control functions are stopping me from doing that. I think effective innovation is about establishing that equilibrium between the two and it's process that drives that. And to your point Cam, that's all about the governance model and getting the risk and control functions not just as an approval point, but actively embedded invol and sharing ownership for the process itself. You know, I've seen some banks that will bring a risky control function into the innovation department and then they have some form of light touch or expediated new product approval mechanism but they have active headcount that is designed to speak to the risk and control functions. I think the other part of that is culture as we've touched on before. I used to, when I was running an entrepreneurship program, I used to train very excited employees on how to be an entrepreneur inside an organization. I was like go forth and go forth and innovate and I was very surprised when nothing ever happened because no one, you know, there was a lot of effort. But the problem was that the not that these individuals weren't very talented, it was the fact that the organization wasn't ready to receive the ideas that they'd created or certainly not in a way that wasn't in a defined new product approval mechanism. Right. So I had to spend a lot of time working with the organization on culture as the precursor to actually building an effective governance model rather than actually hoping that it would appear downstream.
- [37:38]
E
So I was just going to jump on that actually because I think that piece about culture for me it's trying to build a culture where proactively teams are willing to work across the traditional product lines. And we all work in banks. So you think of a bank as like current accounts and savings accounts and credit cards and loans. And then you go and talk to other technology companies and they think of products like experiential, customer focused. And I think a shift in that of aside from how you build something or whose products product it is to focus on what you're looking to solve for the customer. And with risk and control in that boat, as Tim was saying, I think like actually making active moves to say our leaders need to role model this behavior. We celebrate teams who work together. We reward working together. And collaborating across those different lines is where you really start to see that culture shift happen. And then it's easier for people to maybe reach into areas that weren't so close before.
- [38:34]
B
I think that's really interesting because.
- [38:38]
E
You.
- [38:38]
B
Know, innovation by definition introduces risk into an organization because you're doing something new. It's a core part of it. It's about working with the risk and control functions to understand what level of risk they are comfortable with and almost pre agreeing that and having that managed on an ongoing basis to ensure that, you know, they're comfortable, the process is fine and that makes everything easier for you in the, in the long run. I mean, fundamentally, when you look at traditional banks, risk adversity and security is part of the value proposition. So actually what I learned over time is that I had to be very, very back to my point earlier about it being a partnership. Risk and innovation. The risk functions are doing something that actually adds to the value proposition of the bank from a customer perspective and have to be very, very appreciative of that all the way through the innovation process.
- [39:28]
C
I'd say that our risk and controls people are our closest friends and allies in the bank. And it wasn't always us. 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. So we have, you know, diverse platforms, we have things that are air gapped from the bank, we use pseudo data or you know, or you know, we are not in the game of really experimenting with live customers and that's approved. I think that the trick thereafter is to take those learnings into the live domains, which relies on a bunch of the things we spoke about before. I'd also say, I mean, I think Tim, you put it really well. Culture is the enabler here. And it is the sort of day to day job of everyone on my team to evangelize how quickly technology is moving on the outside, what the new entrants into the market are doing really well and just build a sense of urgency which really helps us on that proportional risk management side.
- [40:31]
B
I love that concept of proportionality. That's such a good word for it.
- [40:35]
A
I think what you captured, David, for me really well is the sort of shift or the evolution. Right. Because everyone's on a journey here. And when you think about what you're trying to do around ways of working and embedding the right culture and the right mindset like we talked about earlier, we have to remember that that's also true for our risk and control colleagues. Right. This is a new way of working and actually they need to be brought on the journey and they need to understand why maybe a lighter touch governance model applies in this context where it doesn't otherwise. Sarah, one thing that you mentioned as well I think is really worth double clicking on was the idea of incentives and rewarding the right types of behavior. And I think again that probably is slightly different in this sort of like innovation context than maybe it was previously. I'd love to get a little bit more of your thoughts around that as well and how you can set up this success.
- [41:37]
E
Yeah, I suppose it's probably an extension of my earlier thought on you can't keep things completely separate. So maybe in earlier innovation teams there was this idea of being the superstar individual contributor who has the brilliant idea, can build it if they just get a few engineers around them and a few designers and then deliver it straight to the customer. I think maybe it's unfair to say that, but I think some of the problems that those superstars solve were quite low hanging fruit and they are not then scalable across the kind of complexity that we're working with today in a world where our grandparents are online getting their online shopping delivered. Post the pandemic right. Everybody is digital and you're serving such a broad set of needs. So therefore your kind of setup of your business and your organization needs to reflect that in the way that you reward people. And it seems a little bit obvious, but 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. Now what I will caveat that wiz, because we are a commercial organization is it can't all just be customer experience metrics. And earlier we talked about data and insights. I think that conversation we had around business cases and being able to articulate the financial value of what you do is just as important as also the collaboration and the customer angle.
- [43:04]
A
Yeah. So striking that right balance between knowing we're hitting the right points for customers and being able to see that feed through into engagement and everything else. But obviously we're also hitting the right the right point for the business and proving that Actually, this can be successful. Cam, I guess what are some of the, maybe the techniques or some of the practical steps that, you know, help you navigate some of these maybe points of friction internally to make sure that actually you are sort of setting up for success.
- [43:42]
D
Yeah, sure. So I think, firstly, I think it's just being really clear on just what is the risk. I know there was some comments earlier around. There is always risk when you're bringing in innovation into the organization, but actually a lot of the time the innovation already exists in the market and it's not new new innovation, it's just new to the bank. So actually what are the real risks?
- [44:08]
E
Right.
- [44:08]
D
And just really understanding and just being really clear about where maybe other teams or stakeholders see those risks to be and then actually just being really clear on how can those risks be mitigated. Right. And I think a lot of the time when you're looking to validate ideas and you're trying to prove the business opportunity, there's things that you can do to really minimize the risk. For example, there's no tech integration with this. We're just trying to learn and test and see if this concept actually has, you know, any longevity to it. So actually we won't put our brand on this pilot or, you know, we don't need to, you know, kind of do any API integration type work. So actually, what are all the things you can do to really minimize that risk and still get all of the learnings you're trying to get? And then once, you know, stakeholders are comfortable, you can start to think about what the next stage might look like after that. So those are just some thoughts on, on just some of the practical steps, I suppose, in terms of being able to get people comfortable with what you're trying to move forward.
- [45:18]
A
I really love that point about being really clear around maybe the hypothesis that you want to test or sort of the outcome that you want to get to and then figuring out, all right, well, almost what's the path of least resistance that gets you there and gets you to the sort of conclusion that you're looking for, but also is sort of, you know, acceptable to all of those internal stakeholders. David, I saw you sort of nodding along as Cam was making some of those points. Do you want to come in on that?
- [45:45]
C
Yeah, I firmly agree with everything that's just been said. I think in a bank we can't move fast and break things because trust is at the heart of what we all do. It's really the fundamental thing. But there are some things that we can Deploy that. I think the tech industry has done well and that is recognizing that failing in the right way is part of the advancement process. And you do that through hypothesis development, through experimentation, through learning lessons for things that don't pass muster and then feeding them forwards into new ideas. So I've really tried to instill on my team and on the wider institution that certain types of failure are desirable. They're okay if they're done safely and if you're learning the right lessons. I also think there's something here about, we talked about the cultural overlay, but if you're setting the scene in the right way and have the right narrative as an innovation function and can tell the story of technology disruption and why customers need this or want it or why it's desirable, that really helps to have the conversations with risk and control colleagues or others, maybe the finance team, about why this is super important. And there's one final point to make, which is I try to find people for innovation teams that are very much left brain and right brain. You have to have an understanding of the technology, but you also have to make the right case in the right way to the right people. And it's the concept of that smart creative, which was sort of an Eric Schmidt Google term used for people with an MBA and a PhD and that ideal may not be achievable in every institution, in every bank, but really someone that understands the business context and the technology and can work with stakeholders are going to go furthest and drive the most impact.
- [47:30]
A
I think a couple of things that stand out for me, Tim, from that one I think is storytelling. That I think is such an interesting point. Being able to land these things in the right way, particularly with internal stakeholders, but then the other one around hiring the right type of people again and going back to your experience around entrepreneurship and all of that sort of stuff, stuff I'm sure you've, you've seen what are some of those characteristics that sort of maybe make people a better fit in this sort of like fast paced innovation space and maybe others feel a little bit out of their comfort zone.
- [48:09]
B
I think a mistake that I used to make was thinking that everyone was capable of or everyone wanted to drive innovation inside a company. Well, actually I think there's research that shows certainly when it comes to intrapreneurship, so people that are able to become entrepreneurial inside a company, it's probably 9 to 10% max of your employee base that have the capabilities and want to do it. Because actually you're taking something on, on top of your job in many cases. And some people don't want to do that. It's also about dealing with ambiguity and then actually being able to occupy those sort of gray spaces, that discretionary organizational space which is between the lines, which has some weird dynamics that you have to be comfortable with. As an aside, that makes it a really good leadership development strategy because you put people into these stress scenarios and you can see how they perform. The other thing I'd say is that inherently, innovation, to all the points that we've discussed, is actually a very heavy sales exercise inside a company. So you are going and you've got an idea that you are selling. You're selling to get resources, you're selling to get finances given to it. And ultimately you're essentially pitching that idea through an organization in the same way that an entrepreneur would be pitching for, like, series A seed round and all that. So 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. For two years, right, in ramen noodles. So. But all the other things are largely the same, right? You need to be able to pitch and deliver and drive things forward and mobilize a team. And so that makes it actually quite a rare skill set inside an organization for people that can do it, and then people actually want to do it because it is really hard.
- [49:49]
D
I think the ambiguity point is really key, actually, because you do have to be really comfortable with that, right? Because often you're starting with a blank sheet of paper and it's just an idea and it's just working through what are all the steps that you're going to take now to move this idea into something that you can actually deliver and get some learnings off the back of and do some experimentation with. And how do you kind of move across those stages? And I suppose that takes us back to, like, the innovation frameworks and how do you embed those into the organization so there is some structure to how you move ideas forward, even though the idea itself is. It could be quite ambiguous. So being really comfortable with that and being able to work in that way, I think is such an important skill set. And I've had examples where, you know, people have come into these innovation roles and they struggle with that because some people naturally, like, process. They like to be told what's the next stage. And this is not that type of role. Right. You kind of need to figure out yourself, like, what you think is the right thing to do next and what decisions need to be made where. So yeah, I think I've definitely resonate with some of those points.
- [50:55]
E
I totally agree. And I think it's an unseen skill set actually. When people talk about what's the future of banking, what's the future of tech roles, you often hear about data scientists and being the kind of, you know, a lot of the more what I would call technical disciplines growing. But that kind of ability to be nuanced and shift in the organization is exactly as you've described. The only thing I'd add is probably as a leader, it's really important to protect the team from a lot of the noise when they need to focus and actually get stuff done. Because 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. You've high throughput, people want to have all of your team working on all of the projects, all of the ideas. And I think there's kind of that balance between being able to negotiate around the business and around the organization, but also being able to protect the team when it's needed and then probably more specifically in team leadership, just ensuring that you're not stifling excellence. So for example, I can sometimes see it across teams where the strongest performer is expected to somehow hold up an underperforming team or somehow by osmosis, get all the new starters upskilled on what they do. But they're also the person who's delivering the brilliance in the team. So I think there's just that understanding of people dynamics again, which doesn't really come out on job specs or job ads in the same way.
- [52:23]
C
Just to add to that, Sarah, I think absolutely spot on. And I think it just talks to this need for people in innovation roles to have that left brain and the right brain together. The ambiguity I think is quite pronounced is where to play. It is how far ahead of the bank do we go. It's that sort of horizon, 1.5 to 3 range. And if we go too close to what the business units our franchises are already doing, people are going to ask why the team exists. I mean, you're going to be defunded after a year or two years of incremental improvement. If you play too far out and working on brain computer interfaces and their implications for banking, you're not going to generate results because it's just too ambitious at this point. That's maybe six or seven, maybe 10 years out. So the ambiguity of how far ahead of where the institution is and where to pitch projects, because finite resources are a case in every, every institution, I think is really important to the sustainability of what we do as innovation teams and also to the delivery and the.
- [53:19]
A
Outcomes and resources are finite, but you're not necessarily, it's not necessarily the same resources that you want that are sort of already running bau. And actually, Sarah, I think the point that you made that was so nice is that you can't just read a CV and go, yes, that's the person that's going to thrive in this context. It's not that straightforward forward. And I think it comes back on to the point that you made because there is so much uncertainty and you just aren't going to know who's comfortable working with that until they're sort of in there and already doing it. And I honestly think this segment could go on forever. But unfortunately we are at time, I think we've touched on, I mean, so many of the sort of, I suppose the, the key things around like governance frameworks and talent and mission and purpose and incentives and all of these sorts of things that I think really, I suppose paint a picture of the complexities of trying to do this in a large organization, I guess. Tim, look, maybe final word to you, what sort of stood out for you over the course of, of this discussion and I suppose how optimistic are you around the fate of innovation in the uk? Without wanting to sound too grand and sort of moving forward from here.
- [54:52]
B
I think when we conceived of this episode, having done one episode on the FCA saying that they wanted the UK finance sector to innovate more, and then another episode on from the fintech perspective saying we'd like to innovate a bit more. The thought was to bring the banks in for this third part of the trilogy, because to my mind, if you can get this right, if you can crack this inside the biggest banks in the uk, this is how you drive the UK forward. This is the fastest. Well, maybe not the fastest, but this is the most effective way to do things at scale because the scale is already there, there. And if you can change these monoliths to a degree, these huge organizations, and pivot them a little bit, the 1% from the inside, then the ripples that. That has, you know, it's that classic oil tanker versus speedboat analogy, right? But I think if all the 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. And the last thing that I'd say is 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.
- [56:10]
C
So.
- [56:12]
B
And we don't want that.
- [56:13]
A
Love that. Yeah, look, super, super interesting discussion. I'm so grateful to you all for coming on and sharing your, your perspectives and your insights. And that does wrap us up in terms of today's discussion. Thanks again to our panelists for coming on, for breaking down this really interesting, this really important topic. Maybe if we just do a quick round the room, go one by one and you can just tell us a little bit more in terms of where people can find out a little bit more about you. Maybe where they can connect, a little bit more about where they can find you. Organizations as well, if they don't already know consideration through how big you guys are. Tim, let's start with you.
- [56:54]
B
I'm on that. It's a small known platform called LinkedIn, so I'm on that. Sometimes you might not have heard of it, but I'm there.
- [57:02]
A
Excellent. Well, if people can find their way there, you might just find. Tim. David, how about you?
- [57:07]
C
Yeah, Likewise, I mean LinkedIn, we have a very active NatWest group innovation oriented publication called Disruption Watch which we publish every couple of weeks which talks about some of the themes and we advertise our programs on LinkedIn. So there'll be another fintech growth program like the one we ran earlier this year coming soon. And I'm also on LinkedIn personally as well. It won't be a surprise.
- [57:33]
A
Amazing, right? Thank you, David. Sarah, how about you?
- [57:36]
E
I also use that niche work media platform called LinkedIn so you can find me there. We also have a launch program at Lloyds Banking Group which is covered on LinkedIn if you just give that a search. And then if you're interested in some of the more strategic direction, I'd recommend lloydsbankinggroup.com that's our kind of investor and strategic industry focused website. There's loads to read on there about where we're going next.
- [58:00]
A
Love it. This LinkedIn platform is so niche and yet we all seem to be on it. Early adopters maybe. Cam, how about you?
- [58:07]
D
And guess what, I'm also on LinkedIn so you can find me there for sure. But yes, and Also on our Santander.co.uk website there's a ton of information on there about innovation and investor relations and lots of articles there as well which might be interesting to have a look at.
- [58:26]
A
Amazing. All right. And you can find me also on LinkedIn, this little known platform. Yes. And look, thank you for listening. If you like what you've heard, then please do follow our podcasts. Don't forget to leave us a review because it really does help us to make the show better and it also helps other people to find the show as well. As always, please do feel free to join in the conversation. Find us on social media, just search for 11fs or finish tech Insider or email our wonderful production team@podcastless.com thank you very much.