Banking innovation: incumbents hit back at challengers

By David Beach | 20 September 2018

Speaking at the Global Digital Banking Conference, Ruchir Rodrigues, managing director of digital banking at Barclays, took to the stage to deliver a presentation that the agenda described as ‘Digital Banking: Imagination to Execution’.

“At Barclays the whole bank is digital,” he began, “you could say we’re the biggest digital bank in the UK.”

In the battleground of the UK’s financial services - now accustomed to the challenger versus incumbent narrative - it is a claim that counters the usual challenger principle of being newer, smaller and digitally agile.

The three pronged attack of legislation, technological Moore’s law and disruptive business models is putting pressure on incumbent banks to improve.

“Technology is going at a tremendous pace,” said Rodrigues. “I’ll tell you now that 2018 will the slowest year in the next decade. Technology is being adopted so quickly by consumers that very quickly technologists can be left behind.”

“You need a change of mindset,” he added. “You need to re-examine your execution model and deliver breakthrough solutions.”

For Rodrigues, it is a people problem and one that informs the Barclays approach to changing to a proactive digital mindset - the ‘digital eagles’ project.

Launched in 2016, the project sees 18,000 Barclays staff undergo mandated digital education. But more than that the project pairs the “going digital” staff with “born digital” staff, as Rodrigues puts it.

“You need to mix it up. We experimented with the mortgage space to test new digital projects. You need a mix of colleagues for innovation to happen in the space. The question is, are we able to fail fast, test and learn with quick experiments?

“We’re not trying to be a digital bank. We are a digital bank,” said Rodrigues.

“Barclays took their mobile banking and gave it a digital makeover,” said Neal Cross, chief innovation officer at DBS, on the sidelines of the conference.

“It’s not just what the thing looks like but you’ve got to design for no operations, to reduce total cost of ownership and tie it into your financial return,” he said.

DBS is doing things slightly differently, said Cross. “At DBS it’s a vastly different scale of things. We have 14,000 staff working across 350 innovation projects. There’s no company in the world with that level of engagement. It can’t simply be a PR thing, every managing director has a KPI to reinvent their business at DBS.”

When asked if Barclays were doing enough for the sake of innovation, Cross said the Rise programme was “admirable”. However, there is work to be done for many of the established banks.

“A lot of these older, European banks are struggling and are very far behind the banks in Asia, apart from BBVA and a few others,” said Cross.

But measuring the success of innovation within the industry is problematic, he said.

“It’s hard to measure what the best is - do you measure in innovation, on cultural change, on financial return? You’ve got the top tier: DBS, Ping An Bank - amazing ecosystem innovation, Capital One - amazing data innovation, and BBVA - amazing product innovation. Then you have the tier twos: CommBank, Westpac and CIMB. Barclays are tier three and after that, it’s the American banks.”

While measuring success is difficult, Cross was able to pinpoint the exact problem within the industry when it comes to innovation: “The problem coming into this industry is so ginormous and so life threatening that I don’t see the ambition level and the money and the people and the programmes, should make wholesale revolutions inside the organisation which is what it needs.”

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