Agility in finance: How is digital changing the face of banking?

Despite Brexit, London is still a highly desirable place to live and work, and its financial services companies are leading the way in cutting edge implementation of digital and HR innovation.

Marianne Curphey

29 June 2018

Ten years since the banking crisis, a new type of bank is emerging – one which is digitally advanced, agile and innovative. The changes are partly due to customer demand – if Amazon can dispatch and deliver goods within a matter of hours, why can’t banks do the same with a replacement debit card?It’s also, in part, due to new regulations, and growing competition from retail and technology giants such as Google and Apple.

Open banking is a game-changer

In the UK, Open Banking is being promoted by the UK’s Competition and Markets Authority (CMA). This will require banking data, with the customer’s permission, to be readily accessible to third parties.Already, a host of lean fintech companies are developing software and apps designed to provide a concierge service for all your financial information and needs. The skills needed for these specialist start-ups mean that many fintech companies are looking to recruit from Asia and Silicon Valley in the US.The UK fintech sector has 76,500 employees and last year attracted $1.8 billion of venture capital invested across 224 deals, according to a recent survey by WPI Economics.The major retail banks know fintech companies can provide strategic new alliances – although the culture has to fit. Sigridur Sigurdardottir, chief customer and innovation officer of Santander UK, says the bank has invested in 21 start-ups so far via its innovations division. Moray McDonald, head of personal and business banking products at the Royal Bank of Scotland, says, “We talked to 1,000 fintechs last year. We have people in Silicon Valley who talk to them all the time.”At the same time, the second Payment Services Directive (PSD2), a European directive designed to boost competition and the variety of products in the banking, credit cards, and payments space, is putting pressure on traditional retail banking business models.

Competition is global

“Think of the world’s most valuable companies – Google, Facebook, eBay, Amazon and Apple – none of them existed 20 years ago,” says Eileen Burbidge, OBE, fintech special envoy to the HM Treasury.“Twitter is only 10 years old. Think about how we used to navigate using A to Z books when we wanted to find our way. The world has changed rapidly in that time. The real competition is outside the UK – big companies like Walmart, Tencent, and Apple.”Inward investment is important, and banks, which have always been innovators, have the infrastructure on which many fintech companies base their apps.“London is the largest financial hub in the world and I hope that will continue to be the case post-Brexit,” she says. “Now, 300 of the world’s banks have their headquarters in London, and there are more US banks which have headquarters in London than in the US.”

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Inbound immigration on healthy curve

Yash Dubal, director and senior immigration caseworker at A Y & J Solicitors, says although net migration from EU countries is falling, this doesn’t mean that demand for skilled labour has fallen.“What we’re seeing is higher inbound immigration from outside the EU,” he says. “Companies in the UK still want to fill positions, they are just having to look further afield as fewer EU nationals are looking to work here. We’re also seeing more EU nationals leaving the country, creating more vacancies.”Inbound immigration by businesses is holding steady, with no significant changes evident at this time. Many corporations are postponing major decisions until the future is more certain.Nevertheless, uncertainty about Brexit has had a significant impact. Companies and individuals are trying to secure their positions without knowing exactly what will happen.“Most analysts agree that Brexit is deterring large companies from moving into the UK, or expanding their operations within the UK. But the businesses that are already here still require skilled foreign workers,” says Mr Dubal.Even though Brexit has dampened some areas of immigration, the UK is still a highly desirable place to live and work. The UK continues to need products, services, and foreign workers, and this keeps demand for immigration services that help to meet these needs.“Small and medium-sized firms (SMEs) that require highly trained skilled workers are facing the biggest challenges, as they really struggle to operate or grow without a foreign workforce. These are primarily fintech and technology companies,” he says.

A centre for innovation and agility

The financial services industry in general, and banking in particular, may have something of an old-fashioned image. The triple pressures of competition, globalisation and the need to attract a new millennial workforce are all creating rapid change.“Digital is taking over as the key driver in retail banking and for some banks it is heralding a dramatic transformation,” says Dr Linda Holbeche, an international consultant, developer, researcher and author in the fields of HR, leadership, strategy and change. “People’s roles in those conventional banks are going through quite a transformation.”She cites as an example ING Bank, which has borrowed working models from software companies and those operating in software areas like Spotify.ING has reconfigured the way it uses staff skills. Instead of businesses operating in separate geographical or customer groups, teams are focussed much more on customer segments.“If you want speed and innovation then you don’t need big teams,” she explains. “ING uses squads – units of 9 people – which tend to operate semi-independently and without a formal hierarchy or boss. Leadership is rotational, depending on the nature of the project, and squads can be wound up if a project is completed, with staff redeployed elsewhere in the company as part of career development.“This does make people valuable in their market,” she says. “The challenge for these agile organisations is to retain their staff because they are valuable and other companies want them for the skills and the mindset that they will bring.”

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Empowering staff – and customers

Another example is a building society in the UK which saw that younger customers didn’t expect or want to have a savings book stamped at a bank branch. Instead, it trained up cashiers to be consultants who were better able to provide great advice on house purchase and not just on mortgages or savings.Meanwhile, Helen Page, group innovation and marketing director at CYBG, cites the launch of the bank’s digital-only brand “B” as an example of a carefully researched and agile company aimed at younger customers.“We built B with 10,000 customers and 250 colleagues,” she says. “We spoke directly to customers to build a picture of their needs, and one of their questions was, ‘Why does my bank have to be so dull?’“They wouldn’t come to a branch, didn’t want face-to-face interactions, and so we set out to change how customers interact with their money and found ways to help them use their data to manage their money better.”B is a current account, savings account, and a credit card provider which offers touch ID, face ID, cheque photo pay in, Applepay, Google pay, and is Open Banking ready.“B doesn’t act like a bank,” she says. “We are building a brand that will attract future customers. Customers don’t really want a relationship with a bank, they want a relationship with their money, and our communication had to change.”This included a new approach to physical spaces, including changing some of the outlay and uses of branches. It also involved an interview process for call centre staff which, unconventionally, encouraged candidates to get up on stage and tell a joke, rather than the traditional interview process.“We asked them to tell a joke, dance or sing,” Helen Page says. “We wanted their personality to shine through, not their financial credentials. We were looking for a different type of employee.”

Amazon sets the bar high for businesses

“Customer expectations are no longer being driven by other banks,” says Steve Smith, managing director of customer development and innovation at Lloyds Banking.“If I want to book an appointment, I don’t think what do other banks offer, I look to other retailers. If Amazon can get an item to me in four hours if it really matters, why can’t a bank do the same if I lose my debit card?”This “relentless rise in customer expectations” means financial services companies are having to rethink their entire business models.“Digital is breaking down the silo thinking,” he says. “Financial services companies need to be a bit paranoid and think outside the industry.”New regulations governing the way organisations can collect and use data, known as GDPR, will also affect banks. “It is making customers think – who do I trust with my data?” he says. “Historically you were pretty much trapped but an open data world will force us to think hard about what customers want us to do with their data.”Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory _{©2018. This article first appeared in the Summer 2018 edition of Relocate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.}