Transactional to Transformational - Christer Holloman

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would only be successful if the banks were successful in launching and scaling this new proposition. The quicker the better. In addition to the clients of Divido, from which I have had the opportunity to learn best practices first hand, I have met with 100+ banks over the years and whenever I got the chance I would ask, ‘How do you innovate? What has worked, what has not, and why?’ What began as a quest to set my own business up for success has evolved into a repeatable blueprint that has been shared, used and validated by a diverse set of banks: big and small, long established and brand new, from the west and the east. It was when I was discussing these insights at a workshop with a bank last year that their CEO suggested I should write a book about how banks innovate.

      Banks, like any business, need to defend and grow their market share. That can only happen through innovation, which for a lot of banks means moving away from being a processor of transactions. That said, just because a bank once did something innovative, it does not mean they are an innovative bank. Just because they churn out press releases announcing innovations, it does not mean the innovation was any good or that they are good at innovating. Several of the banks I have worked with to launch ‘Buy Now, Pay Later’ told me that it was their first new product at this scale in over 10 years. It is hard to get good at something when you do not do it very often. All the more reason to make sure you do your homework and prepare to make sure you get it right the first time when you do decide to innovate. For some bank executives, delivering an innovation can make or break their career. Even those who innovate more often say that everything tends to take longer than they like, costs more than they had budgeted for and the end result does not transform the bank or excite the end‐users. In conclusion, there seems to be room for improvement all around.

      Through a series of case studies you are invited to meet and learn first‐hand from the people and teams that have delivered a number of very different innovations successfully across a diverse group of banks. Banks featured include: Bank of America, BBVA, Citi, Crédit Agricole, Danske Bank, Deutsche Bank, ING, J.P. Morgan, Lloyds Bank, Metro Bank, N26, National Australia Bank, Royal Bank of Canada, Santander, Standard Chartered and Swedbank.

      Whilst a lot of care has been taken to ensure consistency in detail across all chapters, you will notice slight variations because different banks were comfortable sharing different information. I have done my best to tease out the learnings for you, but in cases where it is not as obvious, I challenge you to read between the lines. If you want to dig deeper into any specific case, there are over 100 hours of additional interview material that I could not fit in the book, so register on www.howbanksinnovate.com to access more material from the banks featured, with full‐length interviews and videos.

      If you have a successful innovation case you think we should profile on our website and share with our community, get in touch via www.howbanksinnovate.com.

      Christer Holloman

Part I Buy

      Case: Thought Machine

      They recognised that in order to realise this opportunity they would need to develop the Group's partnering capabilities; for example, creating a shared approach to pipeline development, getting the right tooling in place and building a group‐wide narrative around it. A particular critical part was determining the correct partnership structure for each opportunity.

      To deliver their ambition they mobilised innovation working groups in each major part of the Group alongside a central fintech team. Together, these groups adopted a shared language and approach for pipeline management. Whilst this went some way to mobilising their pipeline, this consistent view also allowed them to identify common bottlenecks, which they needed to address to make the aggregate pipeline more robust.

      Lloyds also used key pathfinder opportunities, such as their partnership with Thought Machine, to develop, surface and agree some important principles at more advanced stages of their pipeline. This included their equity investment rationale. Here they established two main principles: firstly, to only make investments where they expected to sustain a strategic relationship with a fintech; secondly, they required a clear articulation of the necessary strategic benefits of investment relative to what could be achieved through a commercial contract alone.

      Whilst the bank acknowledges that it has more to learn and develop with regards to how to best invest in fintechs, the early results have been positive. Their capabilities in emerging technologies have been significantly advanced through this approach and several new customer services have been launched.

Photograph of Juan Gomez Reino.

       Juan Gomez Reino, Group Chief Technology Officer

      Juan has been the Chief Technology Officer for LBG since 2019. Juan joined LBG in November 2014, initially as the COO for Consumer Finance before moving into the Insurance division in May 2016 as Transformation Director. Prior to joining the Group, Juan held a number of senior roles at Santander UK and Banco Santander, latterly reporting to the CRO and COO with responsibility for balance sheet management, liquidity, funds transfer pricing and asset‐backed funding. Juan graduated from the International School of Economics Rotterdam in 1994 (BA in Economics and Business Administration), has an MSc in Finance from Universidad Autónoma de Madrid and a BSc in Mathematics from UNED. He is also an alumnus of Stanford University's Graduate School of Business.

Photograph of Carla Antunes da Silva.

       Carla Antunes da Silva, Group Strategy Director

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