How did you get into the payment space and what you really love about the industry?
I joined the payments industry in 2002, when I joined BACS as their CEO. Prior to that I had a 14-year career at Reuters, in the global financial transaction market. I got the bug straightaway! I spent nine years moving BACS to Voca and then to VocaLink. During that time I launched FasterPay, one of the first interbank real time payment systems here in the UK. I moved to MasterCard and then to NatWest, where I am today.
I love the industry because the word payments doesn't really describe the scope and scale of what we do. Every person on the planet makes transactions every day, and they fuel worldwide economies. Making sure they’re effective, safe and easy to use is a huge responsibility.
In 1994, Bill Gates said that banking is necessary, but banks themselves are not. How true is this becoming? Where do you see the future of banking heading?
When you consider that's nearly 30 years ago, Bill Gates was clearly on to something. What we're seeing is the drive for digital technology. As we look at digital currencies, I think there's going to be radical change. Rather than put labels on banks, non-banks, FinTechs and Challenger banks, every organisation will need a suite of deep focuses to ensure their future. If banks allow complacency to take hold, will they all survive? Probably not. Will there be different new and fresh partnerships happening? Absolutely. I think he was right, in many ways.
Payments must be safe and ethical. The ESG (Environmental, Social, and Governance) agenda is important – in particular, the G. We must work within a framework to make sure that payments are safe, ubiquitous, efficient, and easy to use, but that they do the job that they're required to do.
Banks also need to consider technical debt and complexity. That’s a problem with traditional banks. The big shock to the system came in 2008: you can't just remove them and expect payments to flow in the way that they should. Banks have a social responsibility; they’re part of an ecosystem that may change as digital and open technologies take hold. It's how they treat those flows that’ll predict their future.
You touched on the distinction between banks and FinTechs. From the traditional high street banking perspective, how would you like to see banks and FinTechs working together over the next 10 years?
Partnerships. Banks have great customer bases, which is a privilege, and FinTechs have great technology, new business models and fresh thinking. As we evolve from 2008 and regulators pushed hard for more competition and openness – open banking can be a catalyst too – partnerships are the right thing to do. Whether a partnership, acquisition, or merger, they’re going to be important moving forward.
What is the right balance to strike between self-service and human service? How do you see those customer expectations shifting in the next 10 years?
There’ll always be a need for both because they're not the same. As a trustee on the board of the MS Society, I recognise how critical in-person communication remains for those who live with illness, or have less capacity or financial means. Clearly we're going to see a shift as digital capabilities become more common and there’s less footfall in branches, but surely we can find more creative ways of delivering both.
Where do you see biometrics going in terms of payments? And how scary do you think it could become?
It’s funny because 20 years ago you'd feel comfortable writing a cheque with your details and handing it to someone – to me, that's scary! But how we've changed. Online commerce has increased as people build trust and understanding. Clearly biometrics are here to stay – they’re a huge piece of that jigsaw puzzle to shutting out fraud and identity theft. Used sensibly in conjunction with other means of identity, supported by technology, they can bring great social freedom.
When I was with MasterCard, they worked in South Africa to enable women to have more control over their finances by using their biometrics, rather than drawing cash that could be stolen. Secure customer authentication must be built into everything we do. We're not on top of it as a financial services industry, but biometrics is key to changing that.
70 challenger banks launched in 2020, bringing the global total to circa 250. The largest 20 have around 130 million customers – still relatively small compared to big traditional banks. Are challenger banks a lot of hype without much traction, or something more?
I don't think it's hype. There’s traction, but it takes time. We're seeing the balances in banks like Starling, Monzo, Revolut go up. When challengers first arrived, the mindset was: ‘I'll put my salary into my main bank, and I'll use this challenger bank because I like the app’ or ‘I like the way they present customer service and I'll move the money across’. That's starting to shift.
We're also starting to see challenger banks bite into market share. The likes of Metro Bank, Tesco Bank and Marks & Spencers are disrupting what customers should expect and receive from their bank. They’re here to stay, and I think their success will grow as they provide customers something different.
The rate of change will depend upon how traditional banks respond and what they can offer their customers. Will they move away from these daft things like unreasonable fees for certain transactions, and towards using technology? We must be realistic because traditional banks have many customers, and it takes time to fix things. It’ll start to shift, and then start to accelerate.
Regulation aside, what would you'd like to see as part of your ideal bank of the future?
‘Trust’ is the biggest word to work and focus on. Not just safe and secure payments and data, but a strong, ethical social governance structure – a bank that does the right thing for the environment and supports communities, families, and businesses.
Personally, I want to bank with an organisation that embraces the new, has different partnerships and does different things, but always within a safe framework. One that doesn't view geographical boundaries as the limit of their capability. Why is it so difficult to move money overseas? I want that bank, whether large or small, to be forward looking and working with others to provide continually improved service.
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