Customers are not the only group of people that need to adapt once their bank adopts technology. Employees are also need to work with new processes and structures, which can add a lot of pressure. How is UK banking behemoth Lloyds coping? Patrick Brusnahan writes
Retail banking, to the surprise of nobody, is heavily invested in technology. With constant pressure on margins and results, anything that aid with that is held in high regard. Technology, particularly in automation, comes into play here. Does that mean employees are left behind?
Go deeper with GlobalData
According to António Horta-Osório, group chief executive of Lloyds Banking Group, “the most important thing about technology is people. Without people, we have nothing”.
Lloyds’ strategy
Lloyds Banking Group had 64,928 full-time employees at the end of 2018, over 35,000 of which worked in the retail banking sector. That’s a lot of people to keep happy in the workplace, especially with technology involved.
Workers have cause for worry. Analysis firm Oxford Economics predicts 20 million manufacturing jobs around the world could be replaced by robots by 2030.
On the other hand, Amazon’s chief technologist Tye Brady stated that robotics and AI replacing humans was a “myth”.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAt Sibos 2019, Horta-Osório suggests that technology and humans could complement each other.
He says: “At Lloyds, we believe machines shouldn’t be ordinary to enable people to do the extraordinary.
“We used to believe our people are the ultimate competitive advantage, which is why we have people at the heart of our current strategy.
“And we believe that the current climate, one of perpetual change and uncertainty, requires us to take action now to proactively prepare our people for the workplace, of the future.”
The banking group is in the middle of a three year strategic plan to transform the group for success in a digital world. The crucial pillar in all of this is a focus on people.
Previous strategies had been “primarily focused on investment in new platforms and processes”, but now investing in people is this priority.
On Lloyds’ staff, Horta-Osório claims “they are our greatest sustainable competitive advantage and the force that will ensure our success in the digital world”.
Period of change
When Horta-Osório joined Lloyds in 2011, it was, in his words, “on its knees”. It was close to running out of money with £200bn ($252bn) of toxic assets on the balance sheet. Furthermore, the UK Government was its largest shareholder and the chief executive felt he had “a duty to repay the country and the taxpayers”.
Between then and now, things look much brighter. Its cost income ratio went from 55% to 49% in 2018.
In addition, it expanded its multi-brand and multi-channel strategy to become a huge digital bank. In mobile customers alone, it leads with 9.8 million users, a 48% rise since 2015. This is part of its huge digital transformation programme which increased investment in technology by 24%.
Importantly, it repaid more than £21bn to the UK taxpayer and returned to private ownership. So what came next? People.
Horta-Osório explains: “The technological transformation to create an organisation that could succeed in the digital world was entirely dependent on the people who would be carrying it out.
“So we made our people one of the founding pillars of our strategy, sitting alongside our three other pillars; digitising the group, maximising our existing capabilities, and providing a leading customer experience. Our fourth pillar, transforming our ways of working, is all about investing in our people to help them adapt.
“We are equipping them to be the drivers of these transitions across our organisation, rather than embarking on fast, technological change, while we’ve left the people behind. This is the core principle behind our strategy.”
“Clearly, this strategy has been introduced at a time of tremendous change and uncertainty,” he continues. “The global economy has been rapidly evolving for many years and society faces some of the most dramatic changes since the Industrial Revolution.
“As leaders of the organisations that drive our economies, it is our responsibility to take action and proactively prepare our people for the future.”
Investing in people
“New technologies, political uncertainty and changing customer behaviours, are all creating powerful impetus for people to make change in organisations across the UK,” Horta-Osório says.
“Our latest strategy recognises this context, by placing emphasis on digitising and embracing technological change, while helping your colleagues to manage and thrive under the scale of change needed to transform our organisation.
“One of the greatest challenges of a leader is to articulate the vision for the future that defines the strategic direction of your organisation for years to come, while also giving direction and meaning to the day to day role of an employee in a call centre, branch or head office.
“That is why the changes we have made at Lloyds have been based on how we want colleagues to feel and an extensive consultation with people across our organisation. Among other things, we want our people to feel invested in, empowered, supported.”
This has led to a £17m programme since 2018. Part of this is increasing the training hour per employee by 50%. The bank wants to deliver 4.4 million hours of training by 2020. Currently, the total is over 2.1 million hours.
Horta-Osório adds: “Lloyd’s has been, in its various forms. a main part of the nation for almost 325 years. And this is this all about ensuring we are here for at least the next 325 years.
“Clearly, a big part of this transformation is the difficult message that the colleagues need to be willing to allow their ways of working to keep set within one of the, one working environments. And in order to also achieve our long term objectives, such as maintaining a market leading efficiency position, and continuing to be a leading digital financial services provider. We have to make difficult choices about how we transform our organisation.
“We have chosen to focus on boosting our in house strategic capabilities, backed by a rigorous analysis of the skills available to our organisation, rather than bringing resource insights from the outside.
“This has ensured that our colleagues feeling invested in, and part of the strategy, allowing them to react to the changes, and uncertain environment around.”
He continues: “We have introduced robotics and machine learning for everyday tasks. This is the multi point technology to do the ordinary while colleagues do the extraordinary. Our business model, and our people-centred strategy, is based on human relationships, and the belief that people are the engines that drive technological change.
“You cannot have one without the other.
“We have introduced technology that empowers our clients. For example, around 800,000 customer conversations have taken place through our virtual assistants, giving customers personalised natural self service platform through a range of channels from WhatsApp to the mobile app.
“We have introduced AI to improve our transaction growth detection capabilities, as well as applying to customer-focused tasks, such as scanning customer letters. By introducing smart technology to support smart people, we are improving the proposition we are offering customers, while enabling our organisation to thrive in a digital world.
“This people-centric transformation makes our colleagues the drivers of digitisation rather than seeing one as a replacement for the other, because in order to embrace the technology that is revolutionising our industry, we need to empower the people that will be using it.”
The chief executive concludes: “These changes bring us one step closer to becoming an organisation that will succeed in a digital world. Because preparing our organisations for the future starts with equipping our people to face it.”
