Incumbent banks are far from over
After my last article, I must be clear that I worked for Lloyds Bank some 30 years ago and I loved pretty much all of my time there. However, that does not mean I “know them” today, and hence should not mean I am biased.
It’s easy to get carried away with focusing on just agility and change/innovation
I recently recorded a podcast with Suresh Balaji, Group Marketing Director at Lloyds Banking Group, and Gemma Daley, the group’s Director of Consumer Experience Design. From this conversation, I understood three things that still seem to be similar within the bank since my tenure there. And I must point out that these are my own views, and not those of Suresh or Gemma explicitly.
Culture eats strategy for breakfast
Lloyds was my first job out of school (I never went to university), and I felt hugely privileged to have worked there. It was clear from speaking to Suresh that the bank’s focus on nurturing and retaining talent is still a key factor as to why it is such a strong player today. It was also clear from the passion that Gemma spoke with that she really enjoys working there as much if not more than I did.
Goals not silos
As I’ve written before, one of the biggest challenges incumbent banks face today is an operating model that has been built on silos, which inevitably drive “fiefdoms”. I was lucky enough to be at the bank in the days of business process re-engineering. In these projects, we created multi-disciplinary teams (business, technology, compliance, HR, and so on) to focus on key business processes – essentially teams working across silos. Convinced that this had been forgotten, I asked Suresh how the bank addressed the silo structures that often hindered incumbent banks. He reassured me that when faced with opportunities or challenges that require people from different areas, the focus is on goals and not reporting structures, similar to my own experience.
Design and data
When the bank first rolled out Windows 2.11 applications, I was again fortunate to experience the usability labs we had created to test our apps. Fast forward 30 years and the design team at the bank is over 350 people strong – I suspect that is more designers than the sum of all the designers at UK neobanks. That is a huge commitment to an era that is competing on customer experience.
Similarly, the bank’s focus on data today goes back to around 1990, when we looked at how data could be used beyond credit risk assessment. One of the projects I was involved with even gave branch managers laptops with apps to understand data about their most profitable customers better. At the time, the bank’s analysis highlighted that 80% of its profits were coming from 5% of its customers, so retaining them was critical. Following this, I created a “single customer view” demo showing how a consolidated view of a customer would benefit the bank staff more broadly. Since then, I know the bank has invested heavily in data.
There’s much more I could say on this, but the key point I want to make is that if just these three things are still true since my time at the bank some 30 years ago, I’m pretty confident they will be true in the next 30 years, if not beyond.
This week, I’m just saying it’s easy to get carried away with focusing on just agility and change/innovation. But there are some things that need to stay consistent, and doing that over decades with the transitioning of senior staff is not easy and remains a key test for today’s neobanks. Many tech-led companies have faltered once their enigmatic leaders have left, and I don’t wish failure on anyone. However, it does highlight that while many of us are impressed with innovation and change led by these new players, there is still merit and wisdom we can learn from incumbents like Lloyds Banking Group.
About the author
Dharmesh Mistry has been in banking for more than 30 years both in senior positions at Tier 1 banks and as a serial entrepreneur. He has been at the forefront of banking technology and innovation, from the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).
He has been on both sides of the fence and he’s not afraid to share his opinions. All opinions are his own – feel free to debate and comment below!
He founded proptech start-up AskHomey (sold to a private investor in spring 2023) and is an investor and mentor in proptech and fintech. He also co-hosts the Demystify Podcast.
Follow Dharmesh on X @dharmeshmistry and LinkedIn.
Read all his “I’m just saying” musings here.
