Bonus Interview with Richard Davies TSB Design Competition

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RG:  Welcome to Fintech Insider Interviews. I'm Ross Gallagher from 11FS, and today I have the pleasure of speaking with Richard Davies, the Commercial Banking Director at TSB. Richard, welcome to the show, how are you doing?

RD:  Great to be here, very good.

RG:  Great, so, look, let's-, let's dive right in. We are here to discuss the upcoming design competition you're launching. Do you want to give us a little bit about the-, the background, the, sort of, wider business banking context, and just, I guess, generally tell us a little bit more about it?

RD:  Sure. So, I joined TSB three months ago, and, really passionate about trying to bring more competition, and actually more innovative tools, that really help small businesses right across the country to thrive. For me, there is a bit of a gap currently, with the, sort of, fintech bubble, where there's some amazing work being done in a number of, sort of, key urban tech hubs, London, but also Edinburgh, Manchester, Birmingham, but there was kind of this gap, to a lot of the-, the wider parts of the country. And I guess, what I'd love to do with TSB, which has a, sort of, 200-year-old brand that's pretty well-known, 550 branches around the country, is sort of, almost, try and be the best of both worlds. Help reach people, via some of that physical capability, and brand we've got, but be very, very collaborative, and open, with the fintech ecosystem, and try and help bring some of the best of that to, yeah, small business owners right across the country.

RG:  I love that, and that-, that sounds terrific. I suppose the reality is that, sort of, small business, kind of, market segment, I suppose, has traditionally been somewhat underserved. TSB, I suppose, is recognised as a, sort of, champion of SMEs, so I guess, you know, you guys are in a-, a unique position to-, to help tackle this problem.

RD:  Yeah, listen, I-, I definitely hope so. I think you're right, I think it's very underserved. I think, sadly, the big five banks don't pay enough attention to it, or haven't done, historically, particularly below the, sort of, I don't know, ten employees, £2 million turnover-,

RG:  Yes.

RD:  Type level, where, perhaps, the-, the revenue they get per customer is a bit lower.

RG:  Yes.

RD:  And I think, also, there are some pretty bad practices out there, sadly, around charging, clearly quite a number of scandals that have been in the industry, which sort of damages the whole, sort of, confidence people have in getting services. And I think, beyond that, there's a real need to help people be more productive, to help them thrive, when you, sort of, think beyond just traditional banking, I guess. I don't think anyone actually running a business gets out of bed and, sort of, really wants to do banking, day to day, but nor do they want to do a whole bunch of other, sort of, tasks they have to do. If you're-, if you're running a, sort of, five-person business, you're suddenly the-, the Jack-of-all-trades, that's doing accounting, finance, legal, and I guess-, I think there's just a role for people to collaborate, to help those business owners do more.

RG:  Yeah, and-, and it-, it's a lofty ambition, and a worthy one, because, of course, you know, these businesses, I suppose, are the lifeblood of the UK economy. So, it's interesting what you say about, you know, I guess, getting the banks, sort of, out of the way, which, you know, certainly there is an argument to be made there, that some of the big incumbents are, at the moment, and, you know, it's something that we're starting to see stirring. So, you know, Tide rebranded this week, and, you know, their, sort of, pledge, essentially, was to, sort of, liberate customers from what they said was banking admin, and everything else that these guys don't want to be doing when they're running their business. So, there is an opportunity out there, I guess we've seen OakNorth, the first UK fintech to turn a profit, and it's only its second full year, so there is an opportunity there. So, I guess, do you want to tell us a little bit about, you know, what's-, what's, I suppose, the problem-, the customer problem that you guys are trying to solve, and, you know, what's your unique positioning to-, to go out and do that?

RD:  Yeah, so-, and listen, I think I've got to say, first of all, so, congratulations to, kind of, the success of people like Tide, and OakNorth. I was actually kind of involved at OakNorth at the start, as the first CEO there, so, amazing to see, kind of, some of those guys have success. The-, what are we trying to do here? What's our-, where do we think we can help? I think it is that point of reach, right across the UK, in to that, sort of, core microenterprise, and small business segment, that is millions of businesses, and spread in every town, village and city of the UK. So, we-, we have good reach to that, with-, with brand, with branch. We are doing a lot of work on our own technology, we are about to separate from Lloyds's core systems, with our own brand-new core banking, and we are being very-, trying to be very collaborative with-, with a bunch of fintechs out there. So, it-, the thing for me is how, with those, sort of, distribution, customer reach, can you really bring the best of, sort of, human and trust, combined with the best of some of the new digital tools out there?

RG:  And it's-, it's so exciting, and obviously, you mentioned the-, I guess that migration out from-, from the old Lloyds systems, and, you know, I guess you guys are going to become the-, the, sort of, first major high street bank, with a, sort of, modern core banking platform, so that obviously gives you guys some unique positioning there, and a bit of competitive advantage, combined with the, sort of, high street branch network.

RD:  Yeah, I mean, that's-, that's huge for us. I think we've been, sort of, captive on the Lloyds system since we separated in 2014, and-,

RG:  I like that word, "captive".

RD:  Yeah, I mean, it's-, they charge us quite a lot of money for that-,

RG:  Yes.

RD:  We're going to halve that, by moving to our new core banking platform, which is amazing, but, even more importantly than that, the ability to-, to do new things, will be massively increased. I'll give you an example, our, sort of-, we've just developed a new capability, and it's been at a fraction of the cost, about a fifth of the cost, of what we've done previously, with Lloyds. So, there's kind of a speed/cost of change advantage there, as well, so, that is the big thing for us, I think. I'm really glad to join at the end of that, because I know it's been some backbreaking work for the last two and a half years, and my hat goes off to all the team involved, it's a-, not something to do lightly, and I know a lot of the team are looking forward to getting that done, in the second quarter of this year.

RG:  These things are just always a slog, aren't they? Hard, hard going. So, can we talk about, briefly, the, sort of, online/offline, offline/online, O2O hybrid that you guys are, sort of, promoting or championing in this space?

RD:  Yes. Definitely. So, I-,

RG:  Let's talk about it.

RD:  I kind of got this-, got the-, kind of, hooked on this concept, when I travelled to China, a few times. I think China really majors on the O2O concept. And, you kind of look at people like Alibaba, and Ant, it's very much about connecting up the online and offline. You know, the best example, the most obvious, is the mobile payments are connected in to physical payments, via QR codes-,

RG:  Yes.

RD:  Accepted everywhere-,

RG:  And you-, you look at Alipay, now the world's largest mobile payments platform, in the world.

RD:  Amazing, and it's kind of that hybrid of making the physical and the digital worlds come together, and I guess that's, sort of, the theme that really interests me, and I don't think anyone does it really well today. I think there is this, sort of, siloed, channel mentality that everyone adopts, and what I'd love to do with TSB, and some of those, kind of, physical assets I talked about earlier, as well as some of the-, the technical assets we're creating now, is, sort of, try and-, how do we create that really great online/offline, offline/online solution, that reaches those, kind of, bulk of UK businesses that aren't particularly digital? I mean-,

RG:  Yes.

RD:  The stat I, kind of, always quote, is that half of UK businesses don't have a website. So we are talking, kind of, some fairly basic steps here-,

RG:  Which is-,

RD:  To get people going.

RG:  Really incredible, when you think about it, right? No one would-, no one would think that half of British businesses don't have a website.

RD:  Agreed. I think more have a Facebook page, so there is-,

RG:  Sure. Sure, sure, sure.

RD:  There are other ways of marketing-,

RG:  Some digital presence.

RD:  But there is, kind of, a whole thing about, be it websites, or be it Amazon ecommerce, or be it accounting software, how do we help more small businesses adopt these tools that we know make them successful?

RG:  Yeah, you're right, and, you know, I guess there is-, you know, as a segment, there will be a demand for a branch network. But even with the, sort of, I guess, the-, the branch side of it, I think, what I understand, it's about helping people become digitally enabled.

RD:  Yeah, very much. I think it's not about pureplay, traditional branch service, it's about how do you enable those branches to really help people connect in to that digital world? Be that banking, be that other tools? And this is really where we get on to the design competition. I guess we have some ideas we're working up, but I sort of thought, "Hey, why don't we go and try and crowdsource a bunch more ideas?" because I don't think, frankly, any bankers have got the pure answer today. So, like, how do we get out there, and get in with some of the best, sort of, leading thinkers in the market, to try and get some better ideas?


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RG:  And a nice segue back to the design-, the design competition, so, let's talk about it. Who can take part?

RD:  So, we are looking very much to work with two groups here. Some of the leading universities, that have fintech and design departments, and the students at those universities, and then fintech freelancers. Probably not ideal, if you're currently working for one of the big five banks. I mean, hey, if you want to come and give us some ideas, great, but it may, kind of, break your terms of contract. But if you are, kind of, freelancing, you've got some, kind of, great design ideas, you are a designer, we'd love to, kind of, hear from that group, as well, given they've got, I guess, a bit more seasoned industry expertise, which may or may not be a good thing, against, kind of, the more, kind of, pureplay ideas from the students.

RG:  But the point goes back to what you said about crowdsourcing, isn't it? You know, it's about pulling in those ideas from lots of different places, and, obviously, I guess, sort of, running with the best of them. So, can you, sort of, roughly, I guess, outline the brief for us?

RD:  Yeah. So, we are-, with a very select group, we are doing quite a detailed brief, which is confidential, because it's got some of our, kind of, existing plans in. We are then doing a public, more open competition, to the groups I mentioned before, where, very much, the brief is, sort of, what I've been talking about so far. So, with what people know about, I guess, banks today, how do you, sort of, transform some of that physical reach, some of that physical capabilities, for helping businesses in local communities, right across the UK? So, I-, I almost don't want to be too specific-,

RG:  Yeah.

RD:  Because if I, kind of, really start to spell it out, probably I get to being, sort of- sounding like an old school banker, kind of, trying to-,

RG:  Yes.

RD:  Constrain things. So, almost, it's that point of, if you kind of had a blank canvas, how would you help business owners with a, sort of, physical (ph 11.54) set of points to reach those business owners, embedded right across the country, but with an aim, very much, to help those guys get the best out of digital?

RG:  And that's very much what I love about it, right? There is no, sort of, firm or rigid structure. It's about, you know, taking inspiration from what people would naturally do in-, in that context, which is great. Just picking up on the, sort of, university point, so, how important is it to target, sort of, university candidates, in particular? I guess, you know, what I'm driving at is, you know, is this competition also interested in, sort of, nurturing new and emerging talent, as well as gathering ideas for new branches?

RD:  Yeah, that would be a pretty nice side-product [laughter], personally, I mean, we are actually currently building a design team for SME, so I just literally came from interviewing someone to come and do this, and, like, that whole thing of design thinking, kind of, through that spectrum of, sort of, service design, interaction design, visual design, and building that capability, is really important, and hence, kind of, why this competition's important. So, if there was a few people, on the back of this, wanted to come and work for us, that would be amazing, but I think there's that, sort of, mix of thinking we're after, where you've got, sort of, the, perhaps established people, who've worked in banking/fintech for, I don't know, 15 years, and got some great ideas, and some really, sort of, fresh thinking, that perhaps haven't got any preconceived notions. Because, I guess, if you look at China, that's really how they've created some of the future. It wasn't built on what had been done in the west. It was kind of a-, leaping a generation, and, who knows, maybe we'll get some amazing ideas like tat out of this.

RG:  Yeah, I love that. It's almost-, it's almost taking a, sort of, "jobs to be done" approach, nearly. It's kind of-, it's not about technology first, and, in a way, it's not about user first. It's just about understanding what businesses need to do, and what they need to do to run their business, and how you guys can support that.

RD:  Yeah, I mean, ultimately, it's human-centred design, right?

RG:  Yeah.

RD:  This is about helping people, and helping people is not just about digital, um, nor is it just about traditional ways of doing things. It's, "Hey, what a-, what's a business owner trying to get done? What's-, what's that hassle they-, that's niggling them each week?" or, "What's that thing keeping them awake at night?"

RG:  Yeah.

RD:  And how can you help that, via, I guess, digital and human, I guess-, getting close to the title of Chris Skinner's book, aren't I-,

RG:  Yeah-,

RD:  With that-,

RG:  Yeah, yeah, yeah, you are.

RD:  Um-,

RG:  Plug.

[Laughter]

RG:  But it's, um-,

RD:  Chris can pay me later [laughter].

RG:  Yeah, yeah, yeah. No, it's-, it's terrific. And then, so, I guess with that in mind, can you tell us a little bit about the-, the sort of universities you're going to be working with? I think I'm particularly interested in the-, the various departments that you guys are going to be working in, and-, and I guess, you know, what are you looking for, in terms of a skillset there?

RD:  Yes, so, I mean, actually, we're working with you guys on this, to try and, kind of, get your expertise around tapping in to some of these areas, and super pleased to be doing that. So-,

RG:  So are we.

RD:  I think we have up to 12 universities we are targeting, that are kind of ranging across that design expertise, that-, that fintech specialities. I think we may even have an international one in the mix, as well, I'm right in saying that. So, I think we've got a pretty-, pretty good range there, of universities. I won't-, I won't name specific ones-,

RG:  Sure.

RD:  Because I think we're still finalising the exact people we're going out to, but I-, I'm really excited by the people we're going to there.

RG:  Awesome. And, um, prizes?

RD:  Mm.

RG:  Let's get people interested.

RD:  Yeah, definitely. So, we are setting aside a prize fund of £9,000 here, to be divvied up amongst those two populations of people I mentioned earlier. So, the students, and then the-, the fintech freelancer community, so, we'll be offering-, listen, this isn't about huge amounts of money. We're hoping this, kind of, just excites people. As mentioned, like, if people want to do something beyond that, then I'd love to talk to them about that-,

RG:  Absolutely.

RD:  But, very much, that, sort of, point of having a couple of prizes for each group, that can give some sort of reward for people's effort here. And hopefully it's just a, kind of, exciting theme to, sort of, think about how do we, in the west, do something a little bit than just, sort of, faster horses and changing things decade by decade, which is, sort of, the current rate of progress.

RG:  And so, Richard, just to wrap up, tell us, where can people find out more about you, and, I guess, about TSB?

RD:  Sure. So, I am fairly active, a bit less so than when I was on gardening leave, but still trying to be active on Twitter and LinkedIn. So, at-,

RG:  When you're not playing the drums, right?

RD:  Yeah, well, occasionally. So, I occasionally find time. So, @RHB_Davies on Twitter, and Richard Davies on LinkedIn. And we'll be posting, kind of, details about the competition on, kind of, social media channels.

RG:  Awesome. Richard, it's been great to chat, thank you so much for coming on the show.

RD:  Thank you for having me.

RG:  Thank you for listening. You can find us on Twitter @FintechInsiders or @11FSTeam. Or, find us on Facebook, YouTube and Instagram, or drop us a line, podcasts@11FS.com. Don't forget to subscribe to the show, so you never miss an episode, and if you really love us, leave us a review on iTunes. Thanks for listening. Goodbye.


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