Banking’s Digital Transformation – A Reflection by Ashok Vaswani

Our team loves to go to the University of the West of England’s annual lecture series — Bristol Distinguished Address — which brings top-level business leaders to Bristol. The first speaker this year was Ashok Vaswani, CEO of Barclays Bank UK, who shared his insight on the financial sector’s digital transformation over the past 10 years. Vaswani focused on three factors that have affected the industry. Here are some of the highlights:

Regulators and regulation

Before the 2008 financial crisis, the banking system had a non-intrusive regulatory environment with one regulator, the Financial Services Authority (FSA). Post-2008 this changed to a twin peaks model with the FSA focusing on financial institutions’ conduct and its impact on customers, while the newly established Prudential Regulation Authority (PRA) took charge of ensuring these institutions hold sufficient capital and have adequate risk controls in place.

The PRA decided that the best way to safeguard customers and the economy was to create separate legal entities. For example, in the UK, banks had to separate their retail banking from investment banking. At the same time, the FSA began writing a code of conduct that resulted in banks becoming much more customer-centric. They began to focus on customer journeys as a way of differentiating themselves, as the risk of actually differentiating on products was too high.

Technology today

Today’s technology landscape is all about mobile first. For Vaswani, technology falls into one of three camps – the good, the bad or the ugly. Some of technology’s good outcomes are new and flexible ways of working, higher productivity levels (arguably not), and connectivity. The ‘baddies’ are hackers and fraudsters who have increased our need for better cybersecurity. And finally, the ugly is the uncertainty that future technology holds for humanity. What do technological developments mean for the future of work, which is central to how we define ourselves? What are the ethical implications of AI and how do we come to trust it? Since most of us don’t even understand it, do we even know what the right questions to ask about AI are?

Ashok speaking at the UWE lecture
Ashok speaking at the UWE lecture

Changing customer habits

The final major factor that has contributed to the digital transformation of banking is changing customer habits. The consumer is racing ahead and living in a world of instant gratification. Consumer behaviours have changed – the expectation is for everything to be at our fingertips 24/7. When there’s a failure, it’s broadcasted on Twitter for the world to see. There is now no room for business failure.

With the introduction of mobile banking, the number of customer interactions noted by Barclays each month has risen. In 2012 before the launch of their mobile banking app, they saw 1 million customer interactions every month across branches, website and phone. By 2018, after the launch of the mobile app, this rose to 151 million customer interactions a month. This can be attributed to the 6.5 million customers using their mobile banking app in 2018. This trend can be seen across the industry, with 22 million people in the UK now using mobile banking apps to manage their current accounts. As a result, branch visits have fallen to five a year on average. Customers are happy to use technology for mundane tasks if it makes their lives easier; but when it comes to those bigger decisions, they still want the reassurance of talking to an actual person.

Giving Back

Within his lecture, Vaswani talked about how every company should have a societal purpose integrated into their business model. If society is just broken down into those who are customers, and those who you want as customers, then solving a societal problem is essentially solving a customer problem. He believes it is not about CSR or financial gain – but that one will ultimately lead to the other.

Do we as a society need to be looking to the future and reviewing how we currently learn? Vaswani believes it is no longer enough for us to go through the education system, and then go into work and no longer have to learn. We, therefore, need to be in a continuous learning cycle in order to keep pace with technological change.

The lecture in full is available on the UWE Bristol SoundCloud.

Junior Account Executive Hannah Innes

Hannah Innes

October 30, 2018

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