The whole financial services ecosystem is opening up: we are witnessing a rise of all-encompassing platforms and vast multi-service marketplaces, with Super-apps like WeChat building beyond their core capability as a messaging service and extending their reach across payments, e-commerce and search.

These tides of change pose a significant threat for incumbent players, who no longer have to compete solely with traditional FS rivals and now go head-to-head with everyone from small, nimble Fintechs to the global titans of tech. But while this explosion of new entrants means a stack load of new competition, it also creates a wealth of new collaborative opportunities.

Success in this new open ecosystem will be predicated by partnerships and mass integration. Customers don’t care who owns which piece of what platform, they just want seamless access to services in the most simplistic way possible. The organisations that will succeed in this new environment will be those that are most open and pervasive, facilitating access to the full suite of services in the most user-friendly fashion.

For large incumbent financial institutions this has necessitated a significant shift in tack. These once closed shops now have to re-envisage their position in the value-chain and partner with the very organisations that are disrupting the environment around them. They too must open up and transition to a platform-based model, so they can harness these new technologies, services and partnerships to improve their own customer offering.

This is the over-riding ambition which Patrick Eltridge, CIO at Royal Bank of Scotland, says is foremost in his mind. But far from feeling threatened by the new wave of challenge and competition, he sees it as catalyst for his own organisation to innovate – and he firmly believes that they have the people, the partnerships, the culture and the ability to thrive in this new era of finance.

“I’m not worried, I’m excited – we have come a long way and we’re far faster, far stronger and far more efficient. We are in a very good place and we’re determined to be at the forefront of market innovation.

Big changes are coming from the so called GAFA crowd, your Google, Amazon, Facebook and Apple. Not to mention Alibaba, Tencent and Paypal, so it’s a crowded space out there. And we are seeing the opening up of the industry through regulation like PSD2 and Open Banking as well. This has been a deliberate shift to lower the barriers to competition and accelerate the delivery of new digital solutions for customers. But while it has changed the competitive landscape, it has created a great environment for innovation.

There are so many opportunities for partnership and co-development between the new organisations and traditional financial service players. And we’re super mindful of ensuring that we are unfolding our own capabilities in that platform direction, using APIs to offer our products and services through new ecosystems and marketplaces, while integrating other platforms and services into our own ecosystem as well.

We don’t see this as a period of regulatory challenge, it is an opportunity for us to give customers the best experience that we can in this space, and we are running hard against that agenda. We already have the country’s market leading app, with our NatWest mobile app winning the British Bank Award two years running. We aim not just to maintain that superiority by focussing on the customer experience, but also to extend that further by bringing through a lot of complimentary services to market as well.”

Partner of choice

Lowering the barriers to entry has paved the way for a host of new start-ups to enter the fray. Royal Bank of Scotland wants to position itself as the preferred partner for these new innovators, and with their large customer numbers, rich data sets and extensive resources, Eltridge believes the bank makes a powerful ally.

“We are taking very significant steps to try and ensure that we are a primary partner of choice for Fintech organisations and the start-up ecosystem. We have a very large number of very loyal customers and a lot of insight into their needs and values, so it’s a fantastic opportunity for them.

These partnerships also present an ideal opportunity for mutual learning and experimentation, helping both sides to evolve and transform. But most critically the customer benefits from new innovative offerings that can be integrated into our services.

We have put a lot of thought into these partnerships and have established a very well-developed global scouting network for Fintech and start-ups. We have a permanent presence in Silicon Valley through our San Francisco office and we also continue to partner with Entrepreneurial Spark, Rocket Space and Dogpatch Labs across the UK and Ireland as well.

So it’s a really broad front, we’ve partnered with dozens of companies to date and explored opportunities with many more.  Most initiatives we have taken through to live proof of concept developments with customers, and now we’re scaling and industrialising many of these as well.”

Culture clash?

While the experience and resources of a large financial institution undoubtedly presents a lot of opportunity for fledgling entrepreneurs, partnerships with a big bank can pose a significant risk to start-ups, an issue of which Eltridge is highly aware.

“It can be very difficult for a small start up to do business with a big company, specifically a big bank – they can be very slow to move. So, we’ve got to be easy to do business with for these small companies, and we’re seeking to evolve our organisations to be much faster in execution to make it fit for purpose as a partner in this new space.

Part of this is our API development for Open Banking, but more fundamentally we are becoming a company that’s organised front-to-back around scaled agile and DevOps. And we’re doing that in a very deliberate and sustained way throughout the organisation, from frontline business to technology and operations.”

Just because you are big doesn’t mean you have to be slow

It’s easy to see the distinctions between start-ups and corporates and the potential conflicts which may hamper any partnership. The whole set-up is different, from structure and scale to leadership, culture and governance. Not to mention compliance – banks are risk averse for a reason, they operate in a highly regulated space and are a big target for criminal elements, meaning security is imperative. But when it comes to addressing these challenges, Eltridge thinks it all just comes down to priorities.

“We’ve just decided that it’s important, we’ve identified the issues and we’ve fixed it. Whether it’s the contractual agreements, the due-diligence and security reviews, or the delivery time in actually getting something to market. We’ve been focussing on all these fronts to make sure we are really good at this because it’s going to be so crucially important going forward.

We’ve had a lot of great feedback from our innovation partners around the skills, the culture and the mind-set changes that we are pursuing. Last year we met a New Zealand start-up called Soul Machines, the team that do the digital human avatar on top of an AI platform. We first spoke to them in July, we had a working prototype developed by October and then we were live in market by December.

They said they had been working with large companies for years and they had never met anyone who can move as fast as us, and that’s great feedback to be getting. So just because you are big doesn’t mean you have to be slow.

It’s not just start-up partnerships we’ve been focussed on either, we partnered with Facebook on their early Beta for Facebook at Work. We were the only bank in the world that they were prepared to work with during that initial experimental phase, and we were certainly the largest company that they worked with while developing the workplace product.”

Implementing agile at scale

For many tech start-ups, being fast and agile is hardwired within their DNA. But with larger organisations contending with huge teams and complex legacy infrastructure, this isn’t usually the case. When asked about the main challenge of implementing agile in large companies, Eltridge explains that there is a much greater propensity for internal resistance. This, he says, makes leadership support and end-to-end organisational buy-in crucial.

“I’ve seen agile implemented in small companies as a grassroots exercise, with a bunch of developers who know it’s a better way of working so they start doing it almost instinctively. Whereas in a larger organisation that organic change runs into blockers and barriers within the business, so it does require senior leadership support to succeed.

But I don’t even see the size as an issue here because the whole organisation is so ready for it. Right from the board and the executive committee, down to the frontline franchises, everyone is moving down this path in a very aligned and integrated way.

We are going through a period of rebuilding this organisation after the prior challenges and its going extremely well. We have achieved significant improvements in stability and resilience; internal processes have been significantly simplified, we’re far more efficient and far stronger than we used to be.”

Innovation and impact

Eltridge is clear that he sees the implementation of agile and DevOps very much as the foundations for effective delivery; facilitating the integration of the constant stream of new tools and technologies that are emerging, while staying in-tune with customers. He explains that the organisation is investing heavily in improving and simplifying process, specifically targeting areas which were slow or previously posed a pain point in the user experience.

“We are focussing on DevOps right across the bank so we can be much better at delivering for the customer – much faster, much lower waste and much more insightful. It allows us the opportunity to learn from customers on a more regular basis and incorporate that into the products and services we are bringing through.

We’re investing in new capability very significantly, digitalising the customer journeys, making it easier for customers to replace their cards or apply for new lending. We’re investing right across the spectrum for better mobile solutions, for everything from car loans to business lending.

We’re doing a lot of work with AI to power customer support and advice capabilities. We’ve already got the web-based version of that in market now for our online banking, called Cora.

There’s also a lot being done to help business customers as well. ClearSpend, our mobile app provides spending analysis, and then we do visual receipts in partnership with a Canadian company called Sensibill. We’ve also got a fully automated business lending platform for low volume loans in the £5k-£150k range, that’s been in market now for six months and provides almost real-time lending decisions.”

I want to make a real dent in it

Eltridge highlights that this isn’t about bringing through novelty gimmicks or cosmetic technology. For this to have any value it must equate to a direct improvement in customer experience, and this isn’t about small, marginal gains for him, he wants the technology to have a real impact.

“We recently brought the UK’s first paperless mortgage to market. This wasn’t just about the process being paperless, but reducing the end-to-end time spent and improving the experience. We immediately gained a massive uplift in our Net Promoter Score, and there’s now daylight between us and the competition in the mortgage market. We’ve done similar work with our credit decisioning process on quite a number of our lending products.

And we aren’t focussing on improving these things by 10%; these are about ten times multiple improvements. I don’t want to take a mortgage process from 20 days to 19; I want to make a real dent in it.”

IT as an enabler

Fundamentally, Eltridge sees IT as a pivotal enabler of improvement right across the business, helping to empower the wider team to perform their role as efficiently and effectively as possible. For this to happen the very function of IT has had to evolve, and in doing so become much more integrated within the organisation.

“We are an enabler of innovation for the bank and are deeply embedded and aligned with our internal and frontline functions. So we don’t sit in a centre like some monolithic IT department, we are organised in a way that keeps us permanently out there and integrated into the rest of the business.

You walk into rooms here and you will have no idea who is from technology and who isn’t, because we work in close collaboration and multi-function cells. We’ve pursued that organisationally for a few years and are now supercharging that with our DevOps strategy. That collaborative instinct has always been here, we’re just reshaping the organisation to really support that collaboration rather than just allow it.

The most successful teams I see are the ones that are most collaborative. That’s internally collaborative within the IT team, then across the business and the wider team as a whole, extending out to partners and other business relationships as well. It’s having the mind-set that you don’t have the monopoly on smart people or good ideas, and being willing to work openly and trust each other.”

Collaborative partnerships 

Eltridge thinks these collaborative partnerships are a vital part of the evolution of the business. But beyond this, he sees it as key to solving some of the wider challenges faced by the sector, such as the skills shortage and the gender imbalance.

“Technology is a great career path, and as an industry we’ve got to work together to promote that. We are doing a lot across the wider community to try and encourage kids into a career in tech. A lot of the team volunteer their time in code clubs, and we run a lot of public hackathons all around the world to encourage young people to learn and experiment and get a chance to work with technology.

We also have a collaboration with Fujitsu and PwC that we run for graduates, where we split the group into mixed teams over a period of three months and let them develop solutions to tackle some real world financial service challenges. And then we judge the proposals and see if we can take any of the ideas forward.

One of the main concepts behind this is to impress that it is normal to be working collaboratively with people from other companies because we’ve got to create that mind-set as a core part of their experience with us.

We’re also working to attract more women into tech because they are still significantly under-represented within the IT field, both at college and university, then also in the job market. I think that’s a huge wasted opportunity for the industry and we’re driving as hard as we can to address that, and we’ve made big strides in doing so.”

Positive impact

For Eltridge, this is simply indicative of the ambition to have a positive impact, for customers, for colleagues and for the wider ecosystem as well. By its own admission, Royal Bank of Scotland has a lot of ground to make up in restoring the trust of their customers and rebuilding their reputation, while the taxpayer bailout means they are subject to more intense scrutiny than any other organisation in the sector.

But rather than wear their history as a weight around their neck, Eltridge says the vision that the leadership team brought in to turn the business around has genuinely inspired a culture of continuous improvement and ambition. Something he says attracted him to the role in the first instance.

“I had heard about RBS’s post-crisis journey and the turnaround that Ross McEwan and the leadership team were pursuing, and I found the whole story and the passion to be really compelling – and I just wanted to be a part of it.

In the time I’ve been here I’ve found it a really great place to work. Everyone is really lined-up behind the central goals; they are determined to be the best bank in the UK for customer service, trust and advocacy. And this isn’t lip-service, they mean that very literally and they are putting everything behind it to ensure it happens.

And it’s working as well, it’s alright to say all that stuff but to actually see the organisation succeeding is much more satisfying.”

You ain’t seen nothing yet

While he is proud of the progress that has been made and confident of the bank’s current position, Eltridge knows that you cannot stand still in the face of rapid technological disruption. But he is adamant that there is no complacency about the pace of change and says the organisation is constantly moving forward, continually investing, innovating and improving.

“We are an organisation that is continually learning and determined to stay technically current. We need to be ruthless in bringing new emerging technologies in and learning how to exploit them properly.  We’re also doing a lot of work to re-platform toward Cloud technologies, alongside our work to develop our API ecosystem, and we’re investing in tooling and automation environments.

And I say we’re in a pretty good place when it comes to product delivery, but you ain’t seen nothing yet. We’re alert, we’re confident, and we’re really well positioned to take on the future.”