Leading businesses know connecting with customers is more than delivering products, services, and technology. It’s about nurturing and growing relationships by consistently delivering experiences that meet or exceed customer expectations. Tune in for this episode of The Main Scoop™ to hear from Iain McCorquodale, Global Head of Core Solutions at NatWest, as he joins Daniel Newman and Greg Lotko to discuss how NatWest approaches relationship banking to increase customer loyalty and create a competitive advantage.
It was a great conversation and one you don’t want to miss. Like what you’ve heard? Check out all our past episodes here, and be sure to subscribe so you never miss an episode of The Main Scoop™ series.
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Transcript:
Greg Lotko: Hey folks, welcome to the next episode of The Main Scoop. With me is my co-host, Daniel Newman.
Daniel Newman: Hey, Greg. How are you? It’s good to be back.
Greg Lotko: Good. Yeah. We’re going to have a good conversation today and it’s going to be all about relationships. We’ve developed a bond doing this. We talk about technology, we talk about business, we talk about impact on the world, and the reality is business is way more than just technology or the particular product or service that you’re delivering, there’s an element or a component that’s about relationship, and I believe this is pervasive across all industries.
Daniel Newman: It absolutely is. And in some industries more than others, I think we are discovering the importance of companies being able to put their focus on relationships first, in an era where we no longer always have the face-to-face time that we have with our audience, with each other, we end up having to find new ways, digital experiences on our devices, which I’m sure isn’t far away from you right now, whether it’s on your PC, in your pocket. But yeah, we are in the era of experience, and this isn’t really a new thing, but given that we’ve been talking about it for so long, it does amaze me at times, Greg, that we still haven’t solved it.
Greg Lotko: And when you do it right, it makes a huge difference. If I think about the travel industry, I had an experience where I had a really tight connection and I was stressing out. I was switched, I was going with a different carrier than I had been for a while, but I was flying internationally, I was making a connection. I had less than an hour connection and I’m thinking, “Oh my God, how am I going to make it?” So I get off the plane and right when you get off, you’ve got that area with the door where they bring up luggage and everything, there’s somebody standing there with a tablet and it’s got my name on it and I’m thinking, “Oh my God, what did I do wrong? Did they cancel my flight?”
Daniel Newman: You knew.
Greg Lotko: I didn’t. And they’re like, “Hey,” I pointed, I’m like, “Yeah, that’s me, I’m Lotko,” they literally took me down that side door, didn’t even have to go up the bridge, down at the bottom as a brand new Porsche Cayenne, they load my luggage in, and they drove me to the next gate. Brought me right to the plane, I went up the stairs, got on my plane, and I was like, “Oh my God, this is a fabulous experience.” And I got to tell you, that’s my primary carrier now. That experience, that relationship really drove a difference in how I thought about conducting business going forward.
Daniel Newman: And there’s some really interesting stats out there about how a good experience drives a buying decision and loyalty over time. There’s also some really interesting data about bad experiences and it’s like a four to one. Now again, you say a lot of stats are made up on the spot, I don’t have the exact number, so I want to be clear about that, but it’s something like a bad experience gets shared about four times more.
Greg Lotko: I’ve heard as much as 10, so I would easily agree with four.
Daniel Newman: So we can go with that.
Greg Lotko: It makes you wonder, if something that simple is getting messed up, are they going to lose pennies, dollars?
Daniel Newman: These are big companies. They should know what they’re doing.
Greg Lotko: So shifting to banking and thinking about this, let me pull in our guest. We have with us Iain McCorquodale. He is the global head of core banking at NatWest, and I’m sure you folks have an opinion, I know you’re focused on this. Tell us a little bit about what you do at NatWest and what your thoughts are on relationship banking.
Daniel Newman: They could get me my mail, right?
Greg Lotko: Probably.
Iain McCorquodale: So thank you for having me along. So a little bit of context then firstly, for NatWest. So NatWest is a UK bank, it’s the number one business bank in the UK. Just for scale and context, we have about 20 million customers. In terms of those moments that matter and the opportunity to mess up those moments that matter, we transact about 200 million inquiries, 50 million payments a day, and on a daily basis we move about a trillion dollars a day in sheer capital. So by definition, that’s a lot of opportunities to either do a fantastic job or a terrible job as a bank and then scale that across the industry. The bank’s strategy is driven around being a relationship bank for a digital world, and then we expand out from there. But clearly it’s about a recognition that, to your point, relationships are at the heart of everything in those moments that matter. And it’s about being with their customers through their whole life.
Greg Lotko: There’s that start, there’s that opening, that first account as a kid where you’re saving pennies to buy a toy or something, then there’s saving for university, there’s going off to school, there’s buying a house, getting married, whatever, saving for your own kids education, right?
Iain McCorquodale: No, you’re absolutely spot on. The key thing has been there for an entire lifetime of banking, not just the day you open a bank account. So it’s interesting, Daniel-
Greg Lotko: That’s a partner, that’s a relationship.
Iain McCorquodale: It is. And Daniel talked about his willingness or desire to maybe move bank based on an experience, which ironically should been an easy to fix experience. But traditionally, people of my generation, and I say that carefully, tend not to move bank, they tend to be sticky. Once you’re there, you’re there, and then I think historically it’s been easy to take that for granted. But as you say, it’s now about being there where people need us to be as a banking industry. So if you’re a student, how do we support a student lifestyle? But we assume a customer is a customer all the way through, or have traditionally done that. But clearly a four-year-old child knows nothing about banking. And if you take back a few generations, we all learned banking because we watched our parents bank, we understood how they operated. Clearly now there’s a lesser flow of knowledge, so we’ve got an accountability to teach to show people things. So that’s how we build relationships. Take a youth account, which will become maybe a student account, which may become a family account, which may become an all the way through to the lifestyle of I’ll eventually retire and then I can relax and it’s all good.
Greg Lotko: It’s interesting when I think about that because I hadn’t thought about, we watch our parents bank and that’s how we learn, and if you think about what a lot of our primary interfaces with the bank now is our cell phone or our mobile device, it’s usually our kids that understand how to use the latest and greatest mobile devices better than we do. So interesting challenge, but we think about this and we see it going on across all industries. What consumers expect is a quick, tailored, targeted service totally personalized to them and to have it available wherever, whenever at any hour, and it’s the world we’re living in now.
Iain McCorquodale: Yeah, and I think personalization is a huge aspect of that relationship banking. In fact, relationship, full stop, doesn’t have to be about banking. And if I look at my own personal preference, and I was talking to somebody about this yesterday, my ideal aim of a relationship with my bank is to never see a human, never deal with a human. In an ideal world, it’d all be on my phone, I just don’t need to deal with a human.
Daniel Newman: For banking or everything?
Iain McCorquodale: Eh, let’s go with everything, if possible. But then-
Greg Lotko: Thanks for being here today.
Iain McCorquodale: I’ve actually come out in public, it’s quite scary. But then the counter to that is we have loads of customers who actually, the trip to a branch is such an experience because it engages with people, so people who live alone. One of the, you talk about the benefits of relationship banking, it’s not always about the banking experience. The fact that we understand how people bank and how they move their money around and how they interact, it also allows us to do things like protect vulnerable customers, because there are a large percentage of vulnerable customers who clearly, that might be their only daily interaction, going to a branch. And it’s interesting, I was observing, because we’re here in the US, you have a much bigger branch-based culture. I think you pass loads of branches in the street, the UK is pulling back from branches, because people aren’t actually visiting them, so it’s a Catch 22 around just genuine-
Greg Lotko: Some of it in the US, and I think it’s this way in some other countries, has to do with the transactions and the movements from certain accounts. Of course in the US you want to leave any cash you have in a bank that you’re not investing, you would prefer to have it in a savings account so you can get interest. But there’s federal guidelines of you’re only allowed to do so many online transactions out of or into that account during the month, which forces you to go into the branch. And I got to say, I know this makes me a little old school, I do a lot of it on the phone, but probably once a month I do stop into my local branch and I appreciate that when I go there, they know me. For me, that is part of the relationship.
Iain McCorquodale: And the key thing is that personalization, the experience you’re looking for is different from the experience I want from a bank.
Daniel Newman: And I can actually tell you, I’ve banked, this is not the investment, this is just the business banking I do, and there’s a branch in my town in Austin and I’ve gotten to know the GM and the personal banker. Sometimes I just stop in and do my transaction because I actually really enjoy these people.
Iain McCorquodale: But something you’ve both touched on is multiple bank accounts, multiple relationships. I think it’s absolutely, so I’m assuming the US is exactly same as the UK, one of the parts that NatWest is very strong on is an open banking culture. So exposing everything through APIs. We don’t want to drive all of our customers to only bank uniquely with us. What we want to do is go, if you bank with us and three, four other banks, how can we create a single pane of glass? How can we get in to industry-
Greg Lotko: So you want to know the whole customer and incorporate not only across different accounts in your institution, but help them look at their whole portfolio?
Iain McCorquodale: Well, it’s the reality of the industry.
Greg Lotko: That’s great.
Iain McCorquodale: Most people now have multiple banks. I should be very clear, what you can’t do is walk into our branch and see competitor balances for example. What you can do is we expose access to our accounts if you sign up to and do all the credentials, so that you can aggregate your position.
Daniel Newman: Acquiring in between the accounts and stuff like that.
Iain McCorquodale: It’s absolutely important that customers get to do-
Daniel Newman: I know we’re hyper-focused on banking for good reason, but one of the most interesting things probably in CX and in these experiences in building relationships though, is how much things not in banking, not in finance, not in your industry, you’re actually impacting. For instance, whether it’s how I drink my coffee. All a lot of people here in the States, the coffee may not be the best at that Starbucks company. You can disagree or agree with me on that, but for instance, but the app has created-
Greg Lotko: I don’t drink coffee, but I know where you’re going. Go. Sorry.
Daniel Newman: You don’t drink coffee?
Greg Lotko: I don’t at all. Sorry.
Daniel Newman: But the app itself has created in this experience that people have become very pre-order and it knows what you like, you’ve got these reward programs. And my point is, in anywhere you go, you can get this really amazing experience. You can move money in, you move money out, you can gift people cards, you can buy someone… And what I’m saying is, I started to look at these other industries have started to create a standard where you’re going, can the banking industry compete with this, for instance?
Greg Lotko: But you have tons of data.
Iain McCorquodale: Yeah, I think you’ve hit the nail on head. We don’t have tons, it’s very, very well managed. Thank you. The critical thing is what we do have is we have insights. And traditionally the banking industry, and I will treat it as a generic banking industry, traditionally has underutilized that data. And I think probably for fear of interfering in people’s lives, as opposed to now there’s a greater desire for, give me insight, support me. As you say, give me an experience that’s tailored to where I’m at. If I’m about to buy a car, then you should be able to interject in that conversation, say, “How can we help with that transaction?” Because we understand, through the data, where you’re at, and I think that’s another part of that personalization journey. Definitely.
Greg Lotko: And so the business strategy and the technology dovetails here, and we know that mainframes are huge in the financial sector. If you think about the volumes of data, the speed that it can be processed over, the scale, the security availability, the trick is to capitalize on that investment and drive and derive the insights from it, to drive that relationship and the business value.
Iain McCorquodale: And to your point, I think, Daniel, maybe you said we’ve got lots of legacy as an industry, so we do. So the key-
Greg Lotko: What’s of value?
Iain McCorquodale: Well, effectively, we don’t have legacy, what we have is heritage. We have stuff that’s very mature, has been matured over years, therefore is very resilient, very high performant, et cetera. So we know a lot of information. And to your point, the critical thing here is how you can take that fast, rapid channel development and expose the value of the data at the backend. So our strategy, loads of other banks are the same, is about taking our core services, so I have in the core of the bank about 95% of our customers’ data and our customers’ knowledge, and we use that to expose it through APIs and we refactor that as much as possible into microservice architecture, event-based architecture, share the knowledge we have so that those channels can access that readily. It’s not about replacing one with the other, it’s about making sure you have a seamless flow from rapidly developed channels that can react to trends or needs, but expose the value of that long invested in core of the bank.
Daniel Newman: It is interesting, I said technical debt, but maybe we should say technical assets.
Greg Lotko: It is.
Daniel Newman: We’re going to stay in the financial parallels, right?
Greg Lotko: It’s value and assets that needs to be harvested, reinvested, derived the insight from it, to drive greater value.
Daniel Newman: I like that you said that, but I also want to turn to something that I think we really can’t ignore here, and that’s artificial intelligence, that’s AI, right? With the advent, and not just generative. Look, AI has been around a while, and companies have been doing things to, whether it’s been machine learning and business intelligence, whether it’s been recommendation engines and filtering systems. AI is not new, but I think in the last year you would agree it has come on at a incredible pace, and it puts pressure and creates opportunity in your space. Talk a little bit about how you see, now taking all this data and implementing AI and really driving the next wave of relationship banking in a digital world.
Iain McCorquodale: So it’s usually, it’s ironic because it’s accelerating so fast. It’s still early days in generative AI, for example, and yet it feels like we’re years into it, because it’s just moving so fast. I think there’s lots of different perspectives. So from an infrastructure point of view, so I primarily look after the core of the bank, AI is going to accelerate how we do resilience monitoring and availability and alerting, everything else that says how we make sure we have a resilient service to protect our customers and our customers’ data.
Greg Lotko: Which that has value in of itself, the relationship with the customer. When you go to do banking and it’s not available, that hurts the relationship. So even though the customer isn’t thinking about it, oh, I care about resiliency and availability, when it’s not available, they care.
Iain McCorquodale: Well, so step one in any banking relationship is trust. Do I absolutely have, will it be there when I need it to be there? When I walk in the room and flick the light switch, will the lights come on? So step one, AI is very visible in that, but not in the, as you say, the generative AI way. However, we’re starting to see natural language queries so we can start to look through log analysis, et cetera. You then lift up a level. Across the US, I think there’s about 2 trillion of losses across financial crime in the US alone last year. When you look at that, what’s that developing across fraud in financial crime industry? In terms of monitoring, and it’s an evolution of previous machine learning. To your point around asset or threat, clearly there’s risks in there in terms of decisions that are made. How can you authenticate and audit the decision was made and it was valid and made in the right context.
So we definitely see an AI being more and more and more prevalent in that. And then all the way through to our channels, so if you look at NatWest, we arrive very heavily on, we’ve got a natural language chatbot interface and that will continue to grow and does continue to grow. And I think the principle thing about taking all the way back to that, what is relationship banking to us question, it’s absolutely critical that we are wherever our customers are. So if our customers are on social media, then the bank needs to be somehow in that flow, not expect them to break out with social media then go to a website and do something separate. So I guess AI will play a more and more inclusive part in that conversation through that conversational interface.
Greg Lotko: So I appreciate AI in the fraud detection and all that kind of stuff, but what I find frustrating, and it impacts me with my own financial institution relative to the relationship, if I’m sending a wire and they have this process that, “Hey, if you get the wire out by 3:00 PM, the funds will be transferred the same day.” So I do it at 10:00 AM. What I find frustrating isn’t that they flag it for fraud, it’s when sometimes they don’t call me or send me a message until 2:30, or 3:00, and I’m like, “Oh, man. If you had just flagged it and interacted with me right away, this would still go same day.” So I think there’s great opportunities and value that can be delivered through these technologies, but then how you would administer it and how timely you are and all that is part of the overall relationship.
Iain McCorquodale: But I think you’re right, it’s an opportunity, because I think historically fraud… So ironically it happens to me in the US, if I go to a gas station in the US, that’s where my credit card stops, because we don’t expect you to be in the US, somebody’s clearly stolen all your details.
Greg Lotko: Well, no. And that’s clearly how they would steal from you, by buying gas.
Iain McCorquodale: Yes. Well, that’s usually what I say on the phone.
Greg Lotko: Tells you something about the price of gas in the UK, because people would come to the US, buy a ton of gas and then fly it back to the UK.
Iain McCorquodale: Oh, your hand luggage. So clearly, but you try really hard as, I guess an informed customer, because I know what’s happening behind the scenes, they go, you’re actually protecting me, and as much as it’s frustrating, you’re protecting me. But to your point, the opportunity now is we can be sharper-
Greg Lotko: resolve it.
Iain McCorquodale: Well, we shouldn’t need to do that because if AI wasn’t interjecting that conversation, it would know that the month before I bought an airline ticket to the US. So you get to that point where the knowledge starts to create a better customer experience.
Daniel Newman: There’s little modes of improvement that could be implemented. Actually, right over here in the Uber, I got a call from my banker asking me to confirm a wire because I’ve set guidelines for how much my team… And so they call, “Well, this is above that threshold,” and by the way, it was going to Greece, and they’re like, “Are you sure?” The point was, I am glad, I’m glad they called. At the same time, I think with something like AI you could start to see traditional behavior, and maybe that could be as simple as a text where I could just hit one instead of having to take a call. Because when your bank calls, you’re like, why are you calling me?I want to pivot to something, because we only have a few minutes left, but I want to talk about culture for a minute, because we’re talking a lot about the external experience and we are talking a lot about ourselves.
But I also want to think about as you’re building NatWest, as you’re building a company and the industry is building, AI both an opportunity and a threat. Technology as a whole, by the way, automation, it’s not just AI. But in order to stay modern, to deliver these great customer experiences, you need the people within your team, within the organization, to buy in. How are you framing those conversations with you within your leadership to really get them to buy into things that, to some extent, may completely change their jobs, and in some cases may create risk of displacing jobs, and of course we will create them too. And I know that’s always important point, but how are you driving those conversations?
Iain McCorquodale: So I think you’re absolutely right, there’s always the counter to any opportunity, there’s always that threat. And part of it is so, from the top down, from a business strategy point of view, we are very, very consistent around the part that we are a relationship bank, trying to build a digital economy, trying to digitize everything we do, and it’s about building those deep relationships. We spend a lot of time pushing partner relationships because it’s an ecosystem, and we talk a lot about innovation. So there’s the excitement of you’re not playing with the thing you were playing with last week, now you’re getting to play with the new thing. You get to evolve, you get to experiment. There’s a huge culture of experimentation. That in itself is always a challenge with the feel free to fail multiple times because one of those failures is going to be the one that moves the bank materially forward. So that’s been a journey, trying to get people to accept, “I’ll try and I’ll fail,” but we’re getting there.
In terms of, I guess the evolution of jobs and roles in the bank, AI has been a great example, because if you hold the town hall and you ask people what their opinion is, there’s a series of people going, “It’s my job getting replaced by a robot, and we’re trying hard to avoid SkyNet,” because that’s the extreme of the conversation. But there’s others who quite happily go, “This is going to augment my job, it’s going to take away the boring elements of my job.” Exactly. I think it’s fair to say that there’s all stats around when you start college, four years later, the jobs won’t be the same jobs as you started college with. I think that just means it’s compressed now. It’ll be 12 months, it’ll be nine months.
Greg Lotko: So it’s about having a clear strategy, making sure that there’s awareness across the whole team so that everybody can be aligned, and then you’ve got to get those that don’t see the positives to become aware of them and hopefully the others who get it, it gets infectious across the team.
Iain McCorquodale: If all you can do is spark curiosity, that’s a cultural switch.
Greg Lotko: Agreed.
Iain McCorquodale: Because people are curious around where it can go, and a lot of where it can go hasn’t been discovered yet because it’s the power of it hasn’t yet been untapped. So we’re looking at AI across things like legal contracts and can you take away some of the risk as you assess legal contracts? That in itself is probably not the most valuable part of our role from a legal team point of view, so let’s use the AI to take away the bits that devalue roles, and give them access to the stuff that really lets them take their education, the knowledge, experience, and use it in a more valuable way.
Greg Lotko: Fabulous conversation. It’s been a pleasure having you here, Iain. I really enjoyed it. We covered a lot of ground. Why don’t you take us home, Daniel?
Daniel Newman: Yeah, there is a ton of pace and the trajectory in your industry and is very, very exciting. And from both myself and Greg from The Main Scoop, I think it’d be fun to bring you back. I’d like to talk to you again in about a year.
Greg Lotko: Absolutely.
Daniel Newman: Because I want to understand, like I said, both this cultural shift, and then of course I genuinely believe this industry is going to see a very significant shift with things like NLP, an gen AI being built into every interaction we have. So thanks for joining us on The Main Scoop.
Iain McCorquodale: Thanks very much.
Daniel Newman: So we covered a lot of ground here today, as we mentioned, and of course the innovation customer experience both inside with your employees and outside with us, the consumers, is very important. I think highly regulated industries, Greg, always are indicative of where the rest of the market can go. Sometimes industries like retail can drive faster innovation because there’s less restrictions, but at the same time with the-
Greg Lotko: They don’t have to color within the lines.
Daniel Newman: But with the era of PII and you seeing the world around security, around safety, around getting companies to feel safe and secure to be able to deliver value to both shareholders and stakeholders, it’s going to be really important to get this gen AI thing right. And in the end, it’s only one AI. It’s just one thing is AI, and overall though, it’s about getting the infrastructure right, it’s about getting your systems right, getting your software right.
Greg Lotko: It’s about having the right business strategy, about being aligned on the value that you’re trying to drive to your customer or as a business model, and then putting the right technology in place to do that.
Daniel Newman: And there’s a lot to be learned here on The Main Scoop from all these great guests we have, and hopefully-
Greg Lotko: Absolutely.
Daniel Newman: Everybody there will keep joining us here on The Main Scoop, tune in all the episodes, because Greg and I have more great guests planned and we hope you will stick with us. But for this episode, it’s time to say goodbye.
Greg Lotko: See you next time.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
