Gemma Livermore: Welcome to this Seismic Sessions. Today, we are here to discuss the evolution of product strategy in FS and the impact AI will have on it in the future. Joining me today, I have my co-host Rachael here.
Hello, Rachael.
Rachael Rowe: Hi Gemma, lovely to be here again.
Gemma Livermore: And we are also joined by Conrad Ford, Chief Product and Strategy Officer at Allica Bank. Hi Conrad.
Conrad Ford: Hi, everyone. Nice to meet you.
Gemma Livermore: And finally, but not leastly, we are also joined by Kerry Ryan, Senior Director of FS product marketing at Seismic. Hi, Kerry.
Kerry Ryan: Hi, Gemma. Hi, Rachael. Hi, Conrad. Glad to be here.
Gemma Livermore: Awesome. I think this is going to be a really good discussion with everybody that we have here today. So I can’t wait to get this one started. What we do at the beginning of every podcast, as our regular listeners will know, is that we ask each of our guests what enabling financial services means to them.
So Kerry, if we can go to you first, what does enabling financial services mean to you?
Kerry Ryan: When I think about enablement in financial services, it’s first and foremost, really around the relationship with the client, right?
Be it a financial advisor, be it a banker, an agent, institutional salesperson, really equipping, that individual with all of the capabilities that they need to foster meaningful relationships, right? At the end of the day, while there is selling that goes on in financial services, it’s built on a bedrock of a strong relationship and trust, right? So making sure that anyone who’s really sitting in front of that client and having those relationships is equipped with all the tools that they need to support them in terms of sourcing content, sharing content, getting skilled and be really effective learners as well. And I think it’s at its highest level and highest value, I think enablement plays a really powerful role of really stitching together organisations. Sales and marketing are suddenly on the same page, right? They’re thinking about the same things together and really how they can best support that client. Certainly I think it’s a really a force multiplier for the industry.
Gemma Livermore: Love the idea of stitching the different departments together as well. I think that’s beautiful. And Conrad yourself, what do you see as enabling financial services?
Conrad Ford: Yeah, at a sort of profound level, financial services, done well, happens in the background. People don’t buy a mortgage, they go home and the mortgage is a necessary evil. So I think the really exciting opportunity we’re having ahead of us, as a result of digital as an enabling technology, in particular, is that we can do that more effortlessly, and more in the background and more intuitively as well.
And in other words, be the right solutions at the right time, in a way that simply hasn’t been possible before the emergence of digital. So for me, financial services done well, it’s something that works effortlessly in the background and is there when you need it. And I think we’re moving to a new phase of financial services as a result.
Gemma Livermore: Yeah, completely agree.
Rachael Rowe: Excellent. I love that effortless, framing of that. That’s very elegant, So just to give some structure to our conversation today, as our regular listeners know, in each of our podcasts, we split out our discussion using our Seismic terminology. So we look first of all at the tremors. where the movements started, as you’ve referred to the shift that’s taking place, Conrad, I’m sure that will come through in our further conversation.
The epicentre, in terms of where we are now, and then we make our predictions for the future. What will be the aftershocks? For our discussion today, if we start with the tremors, and if we look back at how product strategy has evolved over the years, and what have been the main innovations and disruptions in this space to get it where it is today?
So it’s a question for both, you folks, Kerry and Conrad, and I’ll start with you, Conrad. I’m curious to hear, how did the world of product look when you began your career as opposed to how it looks now?
Conrad Ford: Interestingly in, in a lot of the incumbents, it hasn’t changed much at all. if you have products in your title, let’s say in a big bank, then more likely than not your primary responsibilities is to move stuff like the interest rates, the pricing, the term of, financial services products.
Now, to be clear, that’s a very big job because a balance sheet of a large finance institution is tens of billions, and in some cases, hundreds of billions or trillions. Moving a few basis points on the interest rate is extremely consequential. And the people doing that, if they get it wrong, as we’ve seen in America recently, it can go very wrong indeed.
But it’s a fundamentally different concept of products as it would be, or products as a specialism, as it would be understood in, a modern technology firm, the kind of Spotify type model, sort of cross functional teams focused on an outcome with an end to end responsibility. So I think the financial services world is actually in, at most, it’s in the start of a transition, and actually I, I spend quite a lot of time with, , talking to people in the incumbents and very often they’re beginning to adopt the sort of terminology of how someone at Spotify would think about products as a discipline. But it doesn’t necessarily come through that they’re really doing it.
They’re they’re saying, you’re no longer a project manager, you’re a product manager. I think in financial services, it’s certainly an incumbent industry, which, let’s be clear, remains utterly dominant, despite the impact of fintech. I think we’re actually at the start of a transition to a different world.
Now, at the other end of the spectrum, you’ve had the emergence of lots of fintech companies around the world. London, where I am, has been at the forefront of that, alongside Silicon Valley, but it’s a global phenomenon. And you tend to find that the product is this one is it much looks and feels a lot more as it is like you expect to find in a technology company.
And actually when you get to the raw bones of it, the art of fintech is balancing the fin and the tech. As we saw when the interest rate environment changed very rapidly. The fastest interest rate rise in decades. It turned out that quite a few of the fintechs didn’t understand enough about the fin.
So it’s a balanced view to be clear, right? It’s, it’s not as if, modern, modern fintech company is great, incumbents bad. The reality is, the art of fintech is balancing the fin and the tech. And one of the things I spend a lot of time thinking about, I’m sure we’ll get into this, is how you fit modern product thinking, to a traditional sector and indeed the largest and one of the most, longest term sectors in the world.
That’s the epicentre of how we move this.
Rachael Rowe: That’s really interesting. And that’s that old adage really, isn’t it, that, eventually all banks will become software organisations, but to your point, at the end of the day, they’re still in financial services ultimately. So I’d be interested, Kerry, does that reflect your experience?
Kerry Ryan: Yeah, absolutely. Conrad said it so well with that balance of FinTech being a balance of fin and technology. I think certainly we’re ushering in a really exciting era when we start thinking about products and services, stuff financial institutions are delivering to their customers, right? I think technology is going to play such a fascinating role.
Clients are looking for more personalisation and everything that they’re having from the experiences that they’re having with whatever institution they’re working with, right? Like to Conrad’s point, they’re not buying a mortgage or a car loan. They’re actually buying an experience, right? They’re buying that new home, they’re buying the new car, right? So the firms that are thinking intentionally on that make striking that right balance of the financial services side and the technology side, I think that we’re ushering into a really exciting opportunity with personalisation really at the core. Certainly it’s been something that’s been discussed for a long time, personalisation, right?
But it’s easier said than done. So I think that’s one facet of, certainly what I’m seeing. And when I think about pure technology product, right? You think over the last like 25, 30 years, with technology being brought to the market, both from a business and a consumer perspective, is a lot of times it was, oh, let’s just introduce a new piece of technology.
We’re not exactly sure like how it’s going to be used. We have a hypothesis that it could help with something. And I think what we’re finding now is that we’re getting a lot more mature, between businesses working with technology firms, understanding, okay, these are the outcomes I’m looking to drive.
These are the business problems I’m looking to solve. Here are the pain points. And that’s playing, I think, a greater role in terms of new product that’s being introduced into the marketplace, right? And we’re seeing it a lot with AI, right? This big meaty term, but for AI to be really successful, you have to tie to a specific set of use cases.
So I think that on the technology side of product is where it’s all headed. Yeah.
Gemma Livermore: I think that’s really interesting sector to look at of how that’s going to go forward. I was going to ask actually, Conrad, if we look back, we can’t really look back with Allica Bank only having got its banking license in September 2019, without looking pre Allica Bank, if you like, and something I’m interested in here is what was missing from the industry that Allica Bank filled in terms of your offerings?
Conrad Ford: Yeah. I think what’s notable about Allica Bank is focus. So we are extremely focused on what we consider to be an underserved and unfortunately, large financial service opportunity. So what is that opportunity? Our customers are what we internally call established SMEs, or if you’re in America, established SMBs.
So they’re not the millions of micro businesses. they’re not the large corporates. They’re the bit in the middle. So in the UK, it’s about half a million of them. So if you want to think who are those businesses, when you go to a town you’ve never been to before and you have to do a U turn in industrial estate, you’ve taken the wrong turn, and it’s the little factories, warehouses, it’s family run hotels.
So these businesses in the UK, they represent about a third of the economy. But the big banks really struggle with them. Okay. Now, the reason the big banks struggle is because they’ve got two major revenue centres. They’ve got consumer, us ordinary people. We’re high volume, homogenous, simple to serve. And you’ve got corporates, the very large companies, the Vodafones or the American equivalents, which are extremely complex, but very valuable.
And the big banks will throw lots of high quality people at them. So micro businesses, really small businesses, they’re very much like consumers. And indeed, so one example is the most popular form of financing for a microbusiness is a personal credit card. So they act like consumers in all but name. Our customers are really awkward for big banks.
They’re too low value for corporate banking. and they’re too complex for consumer banking. So they get structurally underserved. So we pursued. I’m a great fan of the book, Blue Ocean Strategy. So if you’re into strategy, I’m a great believer in it. This is for me, the consummate Blue Ocean Strategy, because, for those that don’t know, a red ocean, and most markets are red oceans, is a feeding frenzy, okay?
You’ve got lots of competitors with similar propositions going after the same customers. And in the end, you’ve got two levies. You can either price down or reduce your service. and your margins will be hit accordingly. Occasionally you find a blue ocean, and when you find a blue ocean, guess the rest, you go and grow.
And, we have found a blue ocean. And for those that don’t know, we are the fastest growing fintech in history in the UK.
Gemma Livermore: Wow.
Conrad Ford: That’s official by the way, it’s a Deloitte number. So the UK has, of course, produced some stellar fintechs, the likes of Revolute, Wise, but we have actually outperformed them all.
We’ve thrown up the highest revenue growth in history. And at the heart of that, I think, is that strategy point. In other words, product only gets you so far, but in the end, if the strategy is not right in the first place, and I think the alignment of product and strategy is an understated topic.
so we’ve stayed laser focused on that segment. So what’s important to that segment is, and it’s that focus that allows us to serve those customers much better. So we can both be profitable as well as actually getting the economics right. And, going around to foundational points around product, that left us with one single problem we had to be brilliant at solving. And that problem is if the big banks find those customers too complex for consumer banking and too low value for corporate banking, we’re going to need an entirely new operating model and infrastructure that allows us to cost effectively deal with that complexity.
Okay? So in other words, we had to learn to love complexity. And make it our problem, not our customers. So we went to it down to a really foundational level. We’re going to have to build our infrastructure and operating model from scratch, focus on that segment. And that’s allowed us not just to be very high growth, but also profitable from a very early stage as well.
So, yeah, for me, it’s focus is our special power. And making a macro comment about financial services, I’m going to make a prediction. The thing that’s going to kill the big banks, or at least bring them to their knees, is not fintech challenges. It’s their own branches. Now, why do I think that?
Because we have what’s the sort of dominant form of banking, in my lifetime, anywhere in the West, by the way, anywhere in the West, been universal banks. A universal bank that serves every type of customer from the poorest student to the largest corporate. And they do every stage of the value chain. They do the manufacturing, the raw materials, which for a bank is cash, the manufacturing, creating products and the distribution. Now, the reason they’re universal bank is because obviously the downside of being a universal bank is you can’t be great at everything. You’re jack of all trades, as we say in the UK, and master of none. But the reason you’re a universal bank is because branches are extremely expensive. So you put as much of the value chain through and as much of the types of customers over that huge overhead.
Okay, now the problem they now have is people stopped going to branches and it’s a very acute thing in the UK, less so in the US, by the way, but the number of people regularly going to branches is very small in the UK now. And suddenly the entire rationale of being a universal bank kind of goes away.
And it’s exposed the fact that they now have a very high cost thing, but what they don’t have is the ability to be focused and really be brilliant at serving a particular segment. So that’s what’s different between us and the incumbents. We’re very focused.
Gemma Livermore: I love what you said there where you say you make your customers problem your problem. And I think that’s how you create great product and strategy, is to give them exactly what they need to fill their problem or to solve their problem rather than trying to give them a square peg for a round hole and hope that it fits somehow.
I really like that point that you made there.
Rachael Rowe: Yeah, absolutely. And I guess just building on, there were so many things that you covered off there. It’s unpacking it a little bit. When you talk about your superpower being focus, as we’re entering this, or we are already in this world of AI, which is promising to disrupt things, beyond recognition in some ways.
So we’ve got a backdrop of continuous change, and rapid change at that. What lessons have you taken from the past in terms of staying an innovative and ahead of the curve with regard to the product? And how do you see that panning out as we enter this golden age of AI?
Conrad Ford: Yeah, I think it was Bill Gates who said a comment along the lines of, people overestimate how much they change. There’ll be one year and underestimate how much there’ll be in 10 years. And I think AI is very much in that category. When I venture onto LinkedIn, I’m bombarded with people telling me if I don’t respond to AI tomorrow, I’m going to be out of business by Wednesday.
And clearly that’s not the case, let’s be blunt. But at the same time, I am reading a book right now called the growing, The Coming Wave, which is by one of the founders of DeepMind. Wow, God, yeah, I’m only, halfway through it, but yeah, TLDR, we’re all going to die, and it’s happening extremely fast, right?
When you hear it from a practitioner of how quickly that the capabilities of AI are developing, it’s quite extraordinary. And by the way, very credible as there’s no hubris in there. It’s fact, so I, I think that kind of one year and 10 year thing is going to play out.
I don’t have to drop everything. and respond to this, but at the same time, if I don’t, if we don’t start carving out time and resources to think about this stuff and begin to experiment, then we probably will be in trouble. How has that panned out for us? A lot of the activities that we do it’s quite offline, not because we’re not digitally capable, because the market we operate in is not very digitally capable.
So a real example there is we fund a lot of premises for businesses, so factories, shops, warehouses, and the market of how you do that, the solicitors involved, the lawyers involved, except for the agents, are very paper based. We would love everything to be APIs, but we can’t make the world, what it’s not.
So we are beginning to experiment internally, for example, PDFs are very common in our world. So the world has moved from, sending people posts to PDFs. So there has been some modernisation. So we are beginning to experiment with how we can actually automate in that and actually, with some successful experiments as well.
So at the moment, it’s like, how can we use this technology to marginally begin to drive down our costs? Costs to serve and quicken and improve our service to customers. But I’d say at the moment, we’re in pilot phase and the bubble is running in parallel. So we certainly haven’t got to the point of saying, let’s let the robots take over.
So that’s how we’re approaching this. We’re being measured. We’re lucky enough, we happen to be on the Microsoft stack, Azure stack, which means that we, I think we can have a lot more confidence when we’re told by our provider, data. that you put in this, this, variant is going to stay in a walled garden.
We can be confident about that, which is great because it’s a super important point to make, right? In financial services, we need to be extremely careful with the data we hold. And actually here in Europe, the, data protection laws are extremely severe. And of course, people don’t like banks sharing their information anyway.
So you have to be very cautious and particularly so in financial services, I think is the state of play. So we’re beginning to experiment, but at the moment we’re not letting off the leash.
Rachael Rowe: Yeah. And it’s interesting, it’s the currency of trust, I think, that Kerry referred to a little bit earlier on. It’s so critical. I’d be really interested to get your thoughts on this, Kerry, because I know it’s something that you’ve been assessing quite a lot in terms of AI and how to stay innovative against the backdrop of this change that we’re all experiencing.
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Kerry Ryan: I think from my perspective, obviously, I think all the smart institutions are really thinking intentionally and setting up, kind of centres where within their centres, depending on their size to really look at intentionally. And I think about, JP Morgan and their last earnings talking about they’ve identified 400 use cases of across the bank.
So I think having leaders who are thinking intentionally around, let’s go underneath the hood and really understand the practical use cases. Really speaking what I was talking about earlier, not just thinking about AI for AI sake, but saying, okay, let’s look at all of the business processes front, middle and back office and really think intentionally, what is the role AI’s playing, because it is a wide universe.
And I think it tends to get thought of as like this monolith. And then when you get underneath the covers of AI, it’s, there’s just such an amazing opportunity to really think about, is it using it for fraud detection? Is it using for risk management? Is it using to support customer service and sales, right?
And really thinking intentionally, how do you have a team looking at AI, but looking at it specific to the use cases that are near and dear to their business units. I think that’s where you’re going to get like real success in driving value this incredible capability and really riding the wave of where it’s headed.
Because I do think as the kind of the crank of AI continues to turn, it’s going to be less of like in the past was okay, this is like centralised AI kind of think tank in these organisations. I think what you’re going to start seeing is that’s going to be like centralised for everyone and everyone’s going to have to get really sharp on the utility of centralised specific to what they’re doing day in and day out.
Gemma Livermore: Yeah, I completely agree. And that brings us really nicely into the epicentre part of our podcast of where we are now. And I think at this stage, not only will we discuss that innovation that AI is bringing, but also, we can’t ignore the fact that we’re all living in a very different world post pandemic and how we can fit that into our hybrid way of working nowadays.
So with all of the epicentre in mind, Conrad, I’d like to turn to you and ask you about personalising customer experience. I know that you’ve already spoken a little bit about it so far, but I’d really like to understand how you’re harnessing technology to deliver superior customer experiences in this hybrid world that we live. And in particular, when you say, the branches are disappearing, how do we replace that in branch experience online?
Conrad Ford: Yeah. so a starting point for those that don’t know, Allica is, Unaunashamedlye believe that human beings are an important part of the banking relationship. So we haven’t tried to be entirely digital, so we don’t say there’s an app and that’s it. Our customers have complex needs, and indeed they very often want to speak to a human being. So the challenge that we have to manage, and in the end it’s as much a cost challenge as it is a service challenge, is how can we give the human relationship aspect, make it work for us as much as it works for the customer. and to be clear, one of the reasons the incumbent banks have rolled back from the segment is because they couldn’t make that work.
If you want to picture what’s the high level vision of Allica from day one, it’s that, what about if you want to go and speak to your bank relationship manager about whether you should buy your premises, for example, you don’t have to put on that ill feeling suit that you only wear to weddings and go and see the bank manager in a branch.
Why can’t they come to you and talk through your cash flow on an iPad? So the vision was effectively, I think it’s fashionably called high tech, high touch. So unashamedly, human beings plus technology, and using technology to enable that human relationship. So what does that mean in practice? It means that you very quickly get to the questions about omni channel.
And actually, I was listening to a podcast the other day, and somebody said they prefer the term opti channel. I like that, I’m going to take that, opti channel. So it’s omni channel is a bit weird. Opti channel, what’s the channel that’s best for the customer and best for you? So how do we think about this?
How do we make it work for the customer as well as work for us? We believe, and I think we’re seeing this now in our customer data as well, so very high conviction now. If you build effortless digital services, then the day to day banking and financial service activity, customers would generally choose to self serve.
So you know, why would you pick up the phone to make a payment when you can go and do it digitally on your phone or at the desktop? So customers will choose to self serve on the day to day stuff. Okay. as long as you actually get the technology right. But there are certain moments of truth when they want to be able to speak to somebody.
and I’d say those two moments of truth are polar opposites. One is a really exciting and positive one. for example, they’ve got a really consequential decision. Should I buy my premises? I’ve now got an opportunity to buy my premises, but it’s a really consequential thing. It’s a life or death decision for a business.
It could work out very well, it could work out really badly. want to speak to somebody who actually knows what they’re talking about. At the other extreme is when we drop the ball, we’re not perfect any more than the incumbents are, when your bankers drop the ball, you want to be able to speak to somebody and that person to own the problem from start to finish.
And what they currently get, by the way, is being bounced around a call centre explaining the problem five times over. it’s not with us, by the way, with incumbents. so yeah, so those moments of truth. We want to be really open to the customer and we try, promote, I’m also responsible for marketing and we try and really drive it through in terms of how we show ourselves to the customer.
And I want to tell a little story actually. When I started hiring up our team of relationship managers, so this is the people that face off to our small business customers. they got really excited because I started, we started building a profile page for each of them on our website. And I thought, my God, these people are really egotistical, right?
The idea was you have a picture of them and they talk about their dog and they like to play golf at the weekend. In other words, just bring our relationship managers to life. But actually it turned out it wasn’t egotistical. They found it revolutionary that we were putting their contact details on our website.
Because what they’ve been used to in the traditional banks where they’ve come from was basically the customer was forced through the chatbot pretending to be a human being and then a call centre, and then only if you’d gone through ten different levels, like some computer game, did you actually get to speak to your relationship manager.
Whereas our relationship managers, your email’s right there on the website. So we want to send a really clear message. If you want to talk to your relationship manager, they’re right there for you. And so that’s our kind of model, and we have to get the digital right and the channel strategy right to make that work for us.
Because, if our customers chose to speak to their relationship managers every day about every transaction they do, it’s not going to work. So that’s how we think about it. add one more thing, by the way, when Allica was envisioned, it was before COVID. We always assumed that face to face was super important to our customers.
And it turns out to be quite important, but COVID has definitely made a difference. So we’re finding a lot of our customers are very happy to do a video call. And indeed some of them seem to prefer it. And by the way, I can get the preferred bit by the way, because I used to be a startup founder.
I founded and scaled a startup before my current role. I’ve been an owner manager of a business. A and guess what? I didn’t like to have face to face meetings because if it turned out the meeting was going nowhere in 10 minutes, You’ve got awkward 10 minutes of getting a coffee together at the start. You’ve got awkward 20 minutes of listening to them anyway and shuffling them out of the room. Us British are very terrible at that kind of stuff, so half an hour to get somebody out of the room because you’re too polite. Whereas a Teams call, if it’s not going anywhere, you can shut it off pretty quickly because they haven’t traveled halfway across the country to see you.
So yeah, so we do actually find that customers are much more engaging with video conferencing than we’d imagined, which of course potentially gives us a real, a real weapon in our armory to drive forward that kind of model that works for us
Rachael Rowe: That’s fabulous. I think that’s so true. And I wanted to go back to, you started to talk about COVID and the impact that it had. And I want to lift the lid a little bit on what happens behind the scenes to make these strategies a reality. So I’m going to come to you, Kerry, with this one, just to understand a little bit about what impact hybrid workings had on your role.
And I guess not, just in terms of how you manage teams, but also how you strategize, product marketing.
Kerry Ryan: Yeah, certainly, I think all of us have gone through just a huge change over the last few years, right? And really trying to be intentional around what’s that hybrid working model look like, certainly, and in some cases, a fully distributed work model. I certainly work as part of a team and we’re located, really across the United States and in pockets of, outside the U. S. So we are, we get very intentional around. how do we think about time we need to spend together on, our virtual calls. We also, are been using, obviously we use a lot of, collaboration software like Slack to really make sure that we’re staying in touch with each other kind of in real time to surface up, conversations.
I think, look, takes a lot of focus to think intentionally around how you make the model work. What meeting cadences make sense? How do people like to get communicated with? Just in terms of because it can easily get into a lot of meetings. It can get easily into too many means with too many people in it.
Yeah. which I think in some cases can hinder, progress, right? So I think finding opportunities to really, meet people, I think, taking a page of what you were saying earlier, Conrad, that concept of Opti channel, right? knowing that, like what I’m working Gemma or Rachael, knowing like how they want to interact with me, right?
Is it us just getting and having a quick phone call or is it us scheduling like a phone call a zoom or, a team’s chat where we’re see each other, quote, unquote, face to face. And I think the smart firms are also finding, pockets of opportunity where they can bring people together, in person, even if it’s just once a year, because there’s nothing like that human connection to really, I think anchor the relationships that everyone has virtually.
So I think it’s all about being highly customized and intentional around how people like to work.
Gemma Livermore: Yeah, and I think intentional is a big part of that as well. I think the next part that we need to move on to, because we can’t look at where we are now without mentioning the FCA and consumer duty, which is changing the way UK are serving their clients. Sorry to leave you out slightly on this one, Kerry, but I know you do have views on it as well from a global stance.
But Conrad, I’d really like to understand what’s Allika’s strategy on complying with consumer duty? Yeah.
Conrad Ford: Firstly, if you take the letter, of consumer duty, it doesn’t actually apply to much of our revenues. Because I’ve talked about before we’re focused on established SMEs or SMBs and they are incorporated businesses but we chose from the start that we would act as if consumer duty applied to all of our customers. Now I don’t want to pretend that’s true taking some big moral high ground that nobody else would do.
I think most banks, I haven’t, I don’t know for sure, but I think most banks in the UK took that decision,. could we really turn around to our regulators and say, you don’t get to touch that bit of our customer base. I don’t think that’s how things work. So we’ve chosen to apply consumer duty. And certainly in terms of the principles, obviously you can’t take every single letter and apply it to a different segment, so we’ve chosen to apply it. Honestly, our view, I will now get on my moral high horse, honestly my view is that, if you’re customer focused in an organisation, it really shouldn’t lead to that much change. And you can actually, you want to be a polemical, you can actually go further if you’re a customer obsessed, like Amazon, right? There was, I actually looked into this at one point, right? There is no correlation as far as I can tell between being regulated and customer outcomes when you look across sectors, by the way.
A customer obsessed business can emerge from anywhere. I think what it’s actually exposed, bluntly, is that some areas of the incumbents have basically been, taking advantage of customers. or customer behaviours is probably a better way of putting it. So for example, customer apathy.
One of the kind of challenges that comes from consumer duty, and I don’t claim to have an authoritative answer on this, by the way, but a challenge is, why is it that a new customer gets better pricing than an existing customer? I don’t know how, I’m not a regulatory lawyer, but that is a question I’ve heard asked a lot.
For example, we’ve had rapid rise in interest rates, and somehow the incumbents are extremely good at passing that on to their lending customers, but somehow they operationally find it very difficult to pass it on to their savings customers. Hence, we get a huge increase in profits amongst the banks.
So I think, if you’re customer obsessed, or have, built with a sort of customer focused mindset. It shouldn’t lead to that much change because in the end you’re trying to build a sustainable business through customers wanting to stay with you and choosing to do business with you and share more of the financial life with you At the moment we are in that kind of transition from being a product You know a business where customers have a product to a business where customers bank with us, which is a much more deeper relationship So I personally think that it’s exposing some difficult questions for some of the incumbents, particularly around how they treat existing customers.
We’ve been lobbying quite hard on this, by the way. So one stat is that, SMEs in the UK are losing out on about seven and a half billion pounds a year of interest, and that’s money that’s sitting in current accounts where the banks have chosen not to tell the customer they might be able to get some interest, or also the fact that there’s a bit of a penalty because they pay more interest to larger corporates than they do to SMEs.
We’ve been lobbying quite hard on this, but that kind of stuff shouldn’t happen in a world where you’re focused on customer outcomes, but it’s a huge impact to the industry. And I’ve sat on some senior management roundtables in the industry, and I have to say, I’ve heard some examples that they’re concerned about that kind of feel like it might actually have some advert, some unexpected consequences.
So for example, customers that are at the margin in terms of affordability, customers that are historically underserved may actually get more underserved. I hope the regulator is very eagle eyed for any adverse consequences that it didn’t or unintended consequences, but it’s a big, deal.
I’ll tell you that if it comes into your market, be warned.
Rachael Rowe: You raised some really good points there. I think the FCA are acutely aware of the need for the customer obsession piece. They talk quite a lot about the fact that it’s not one and done and that it would require cultural change. So . to your point, we are going to see some quite wide ranging, shifts within financial services, over the next year or so as this comes to, comes in.
It’s already into being, but I think the response and, the consequences of it are felt more keenly.
Gemma Livermore: Yeah, Kerry, I’d I’d love to come to you at this point and just ask you, how have you seen the banking industry leverage tech to navigate around consumer duty? Yeah.
I
Kerry Ryan: think about consumer duty and I think of similar regulations that are happening around the globe, really all centreed around the best interest of the client, right? Like, how are these institutions really thinking intentionally, right? Because financial products are so important and so vital, right?
Inclusion of those options across different wealth bands is so vital and important. So I think, certainly is the role of technology. I think what we’re seeing a lot more is the need for leadership to really have a greater amount of oversight on in front of, the bankers or the advisors who work as part of a bank structure.
We’re seeing a lot more focus on really having a better understanding of what’s happening with those relationships. And certainly you saw, a couple months ago, the new head of city global, wealth, really, an organisation that has a great footprint around the world, coming in and saying, they want to have more call reports coming out of, with the private bankers, right?
They really want to get underneath the hood to understand like what’s happening with those relationships. and really having the traceability to understand it at a leadership and a managerial level. Like, how are these relationships being supported? What kind of conversations are being had on what products and services are being offered to make sure that those specific set of needs are being met, and then certainly that’s on the high end of the wealth spectrum, but certainly a lot of customers are coming to us at Seismic and saying, we want to apply that kind of philosophy really across our customer base, because we want to make sure that we’re really acting in good faith.
For our client base, regardless of if they’re a business, customer, they’re an individual of a variety of different kind of wealth tiers, if you will. So I think that’s going to be vitally important. I think the role of technology, and I think certainly we’re thinking a lot here at Seismic of like, how do we make that process just simple and easy, knowing that can, introduce a lot of complexity into the walls of a financial services institution, right?
How do we think about, not only like checking a box in terms of satisfying a regulatory requirement, but how can we think about technology that checks the box on that, but also is giving a great experience for the banker. And for the client, right? In terms of those, conversations that are happening regularly.
Rachael Rowe: Yeah, and, this takes us quite neatly actually to the aftershocks section of our conversation. If we look forward and we talk about where we see the future of product strategy in financial services and think a little bit about how we can improve the current status, but also how AI, in particular will impact on this.
If I start with you, Kerry, we’ve already talked a little bit about how AI is revolutionising the financial services industry. Can you expand a little bit on how you see this play out, where you see this going?
Kerry Ryan: Yeah, I think I’m going to again speak really from a, an enablement perspective, right? Thinking of throwing back to my earlier comment, there’s just such a wide variety of ways that I can be leveraged. but certainly when I think about, the role of AI, from an enablement perspective, there’s a lot there that can be done first and foremost to support the needs of, that those client facing teams, the banker, right? And thinking about, certainly the role they’re playing. We’ve talked a lot about the need for that, that human element in the relationship and what’s needed for that banker when they’re having that, conversation, right? Knowing that, providing value, providing resources and content and education is so vitally important as part of that relationship and providing meaningful updates so that banker is well positioned to support that client, be it a business client or an individual client.
So certainly we’re thinking about how can I be used to really reduce the admin time that a banker is spending right in terms of preparing for meetings, delivering meetings and following up in those meetings. And when we think about the preparation, it’s okay. What kind of content needs to be prepared?
Is it easy for me to source it and find it? And I plays a really fantastic role in making sure that you’re sourcing content in the walls of your organisation that is on brand. It’s compliant and it’s really, certainly helping with that. we’re also, certainly thinking about, I think chatbots is, definitely a big part of kind of the A. I. Landscape just in terms of, I think everyone has thought about chatbots in the realm of supporting the client relationship, and that’s certainly valuable and important. But it does play a vital role in terms of how a, head office can, support the needs their sales organisation, their bankers, And making sure that they have an ability to ask questions and not always have to be calling around the head office for that, the answer to that question, they’re getting that answer in that moment of need cause look, a customer could be on the phone with them and they really make need to be timely in their receipts.
I think also, certainly, beyond that, too, is, really thinking about content creation, right? And I think that’s going to be a really exciting area. And I think, all of us are just really scratching the surface on what that could look like just in terms of giving more prompts in terms of how, content can be created without that, goal of ultimate personalisation on a one to one basis. So I think that’s gonna be certainly, another area that we’re seeing and really, in closing, as I think about, that, that meetings, prep delivery, and follow up, I think I can play a credibly valuable role in that follow up, right?
And really being able to say, okay, we’re recording the meeting and it’s not just a static recording. I’m getting really fantastic insights powered by AI. So I know explicitly what I need to do. So I’ve had a conversation with any of you here today and I know I can do a very fast and pointed and personalised follow up based on all the insights that the AI engine is telling me.
That I need to act on and having that, I think, when I think about a, I get really excited because it’s another powerful set of data and you think about the power of integration and bringing that all together, that means that like your client data is going to be infinitely more valuable.
Gemma Livermore: Yeah, it’s really exciting where you can see where this is leading us and how it’s going to enable us all in our jobs. And it goes back to that piece at the beginning of, where we mentioned that you’re stitching together the different parts of an organisation. And I think this AI capability is really going to take us into that role much more.
And Kerry, I’d be really interested to hear your thoughts as a leader. It’s one thing to take on all these new technologies and innovations, but how would you talk to leaders who want to encourage adoption of new technologies within the industry?
Kerry Ryan: Yeah, I think that’s a great point. Gemma. I think, look, we’re talking about all this technology, but it can seem a little overwhelming. And I think also in financial services, there’s plenty of pockets where people haven’t really jumped in all in on, on using the technology because they’ve been so successful doing what they’re doing, right?
Knowing that, as I talked about earlier, at the core of financial services, it is a relationship management business. So those individuals who are really effective from that perspective are always, regardless of the technology they’re using, they’re going to be really successful in what they do. So I think you really have to go in when you’re thinking about a digital transformation initiative or any kind of change management, like knowing that, right? It’s all about how do really uplift all of that really acknowledge everyone’s success and just saying, Technology is going to be a force multiplier.
It’s going to make you more productive. It’s going to put you in a better position to really modernize everything that you’re doing. And so that you’re actually being able to spend more time on the things that you really like to do. And that is really around like. Spending time with the clients and really be able to support them at every turn and as well as being really proactive and really looking at their, the relationship and thinking about like ways you can add value beyond kind of what’s been discussed. So I think that’s, certainly, I think going in from that perspective, adding onto that, I think the firms that have been really successful with driving technology adoption are really thinking intentionally, what’s in it for the banker? Like a lot of, initiatives have gotten, I think in the past were rolled out, like this is going to help the institution in X, Y, Z ways, or this is going to help the client in this way.
And certainly it’s important for the, institution to get benefit. It’s of course, hugely important for the client to have a valuable experience at every turn, but you can’t miss out that like third, that critical third leg of the stool. What’s the value for the banker, right? And I think that’s really important. And I think the firms that think about their bankers with the same rigor and focus as they do for their clients, they’re seeing greater success out of their change management and their digital transformation initiatives. I also think a layer on top of that, and that’s something certainly worth thinking about a lot here at Seismic and really pouring that into our technology offering is really this concept of peer to peer learning and sharing, right?
Knowing how vital and important that is, right? And building a community of advocates, right? Knowing that If you have a peer who’s quote unquote, carrying the bag, doing the same thing you’re doing every day. And they’re getting some success on using a particular piece of technology. Like you really want to evangelise that more and more, right?
Because it’s just going to add more heft and credibility to your initiative. So I think that’s from my perspective. And I also think, carefully around the sequencing, right? Cause I think a lot of times Big digital transformation initiatives will happen in particular large institutions, and they’re almost putting too much change into the organisation at once, as opposed to really taking a page of what technology companies do and thinking more agile, less about these like big bang moments of here’s 20 new pieces of technology. They’re going to help your practice in like infinite amount of ways. You’re probably the best position to break it apart a bit and say, Here are a few pieces and we’re going to be rolling out more, in the coming weeks, in the coming months. And I think having that, that agile rolling approach is going to really set you up for success.
Gemma Livermore: completely agree. Conrad, how do you tackle adoption of products once you’ve created them? started strategising how to create them. how do you then start to encourage people
to adopt the use of them?
Conrad Ford: Yeah, I’m, a great believer in a concept that they, I think it was popularized by Amazon. I don’t know if they invented it, but they talk about one way doors and two way doors. most
decisions and most launches are two way doors. In other words, if you do the launch correctly, you can go through the door.
And if it doesn’t work well, you can go back through the door. And occasionally you, go through a one way door, where in other words, it’s very hard to go back. and I find, coming out to the point that was just being made about big Bang, by the way, incumbents, large incumbents very often create one way doors for themselves by making everything a Big Bang. and if the Big Bang goes wrong, it’s extremely hard because they’ve put everything, going live at once. So we tried desperately hard to make most of our moves forward to be two way doors. And the art of that is, small incremental releases and small incremental improvements and there is a real compounding factor, right? If your operational capabilities, your product development moves forward a bit every two weeks, and then before you know it, it’s moved forward a lot. so to answer your question, when we try and release things into the wild, we actually try and do it in quite a constrained and limited way. In other words, we’re not trying to push, mass market adoption on day one. So it has a much, much higher chances of, poor consequences. typical things we will have, release switches that allow us to, expose features to a small number of customers, for example. it’s obviously A B testing is another strategy, particularly in terms of content and brochureware design. So, fundamentally, we try and make things in small releases, as small as possible. we have friends and family testing, it’s phase one for anything, that involves real money, to be clear.
Friends and family testing, so I’ll open a savings account. and see if it works before we release it to real customers. Although technically, I’m a real customer in that case. and penny testing is very popular in financial services. And you can guess what that is, whichever side of the Atlantic you want.
So we try desperately hard to make our releases small and manageable and above all else, reversible and avoid the big bang. In other words, we only actually really put the foot down when we’re confident that it’s ready for the big time. So it’s the other way around. We don’t try and drive huge success overnight.
We think that’s high risk. So let me give an example. So we launched our business current account, which is our sort of key to our building a banking franchise. That’ll be a business checking account if you’re in America. So we initially released that to a small number of our existing customers. And then we released it to the open market, but acquiring customers in that space is extremely hard to do. So it was quite easy for us to control the customer numbers simply because unless you try extremely hard, you’re not going to get many customers. and actually just, as we went into 2024, the current year, we really, turned on the taps and started building out a lot of channels.
And a lot of channel experiments that we can actually do as much as we can because we’re confident it’s ready for the big time. So we’re going to try and take that approach. and, I, find it extraordinary actually institutions that don’t, I don’t see any other way. and interestingly, actually, our regulator, the financial conduct authority did an analysis of this and they concluded that agile, ways of doing things is lower risk, but somehow still lots of incumbents have these enormous, transformation programs and they try and drop everything, after four years, they try and drop everything at once, and just because they’ve had a governance meeting, they think everything’s going to be okay but actually Agile has even been advocated for by our regulator now, because they’ve looked at the data, they’ve looked at millions of transformation events, and it turns out that it’s the best way of doing things.
Rachael Rowe: So We’re now going wrap up our conversation and it’s been a fascinating discussion. I think we’ve touched on so many areas that actually could become a conversation, in their own right. but I’m going to ask everybody to, give me one word, a key takeaway from what we’ve talked about today, maybe a sentence explaining why you’ve chosen word.
Kerry Ryan: Okay. That’s a great question, Rachael. I love it. let’s see if I had to think of like the one word I think it’s like customer centricity, right? And I think thinking about the brand of a customer through a variety of different lenses, as I just talked about earlier, it is certainly the end client, right? It’s the end relationship. That’s the most important, but also thinking about the individuals, the bankers in this case that are in front of those clients, And thinking that with them is the same rigor. And discipline as you would for your end client.
I think they’re carrying the baton in many ways of driving the client relationship and the client
experience and the reputation of the institution. So I think the firms that are thinking with a customer centric mindset, applying it perhaps a little bit more broadly are the ones that are really going to be successful in terms of bringing new products and services to the market. Really driving, new ways to leverage technology and really, growing their businesses, in a way that aligns to a very complicated, regulatory landscape.
Rachael Rowe: Excellent. Thank you, Kerry and Conrad. You’ve had a little bit of thinking time. I’ll pass the baton over to you.
Conrad Ford: Yeah, my overriding message would be get on with it. so let me just unpick that a bit. what I see in incumbents, and I came from big banks by the way, so I’ve seen this on the inside and it’s now, and now I’ve gone through the journey of founding a startup, being, just me in my bedroom at the weekend. to in the end, fairly consequential business. there are a hundred reasons not to move something forward. And I think there’s a tendency in large centres to, think that you’re progressing things if you’re writing PowerPoint slides or you’re writing Word documents. The reality is Anything related to software, the only thing that moves you forward is software code.
Rather than focus on almost the kind of ready aim, culture of like just endlessly analysing and just building up more and more pressure of things that need to happen. And then when they happen, things go wrong. Just get on with it and actually focus your resources on trying to de risk real life activity.
So in other words, one of the things I always encourage my teams to do is basically governance really matters in a bank. It doesn’t matter whether you’re a small one or a big one, it really matters. But in the end, we can’t go to prison for thinking about things. in the end, why don’t we engage, for example, our governance functions like compliance early at a high level, and then just get on with it up until the point we think we’re ready to launch, then go and say, okay, we need detailed review.
And this is how we’re going to manage the risks and make sure that we can actually come back and go back through the door if things go wrong. So rather than focus on endlessly analysing and writing PowerPoint and Word documents, focus on ways to get into the market quickly at the lowest risk.
Rachael Rowe: Brilliant. Thank you. Thanks so much. And Gemma, over to you for your word.
Gemma Livermore: I will go with empathy because I would say my takeaway from today is the point that Conrad made earlier, which is understand the problem that you’re trying to solve, take it on as your own problem, and then you’ll solve it in the way that’s needed.
Rachael Rowe: Great. Thank you. And my word. So I’m, going to go, I was quite taken by Conrad’s word, Optichannel.
So I’m going to go with that because I think it brings together also that customer obsession idea and really meeting your customers where they are in the way they want to be engaged with value in each conversation that you have.
So that, that would be my takeaway. I’ve learned a new word. So that’s always, a good thing to be able to go away with a learning, But I would really like to thank you both, Kerry, Conrad. It’s been a fantastic conversation. Gemma and I’ve really enjoyed talking to you today. And, thank you very much for your time.
