Megan Caywood, the thirty-something head of global digital strategy at Barclays, has been tasked with fundamentally rethinking digital at the historic bank, including how to shift its culture from being all things to all people, to more of a trusted financial hub for customers.
It’s a shift which requires her job to be as much an evangelist as anything else, as she preaches a move towards serving customers in a post-open banking world, where fintechs and challenger banks like Starling and Monzo are quickly hoovering up market share, and moving the goalposts of user expectations seemingly every day.
“When Barclays approached me, my thought was very much that banking is at an inflection point,” she said, speaking on stage at the Amazon Web Services Financial Services Cloud Symposium in London earlier this week. “It very much felt like the right time to help influence a change that we’re seeing in the ecosystem.”
The US-born high flyer studied cognitive science at Pepperdine University in California, with a year spent at Stanford and a healthy stint navigating Silicon Valley, before she moved to the UK to work as the chief platform officer at the challenger bank Starling, where her CEO Anne Boden quickly designated her as “irreplaceable”.
It was there that she became a fixture on the fintech conference circuit, and a respected voice on all things product and platform, before being snapped up by Barclays as global head of digital strategy in January.
What Caywood, and much of the industry was seeing, was an opportunity post-financial crisis for fintechs to drastically change the way people engage with their finances, and a need for the incumbents to keep pace.
With that in mind, why did she leave a challenger for an incumbent? “It was a really hard decision to be honest, because I love Starling, I love the team there and everything that we were working on,” she said.
“It just so happened that at Starling one of our main goals was really to be a thought leader in the industry, we really woke up believing in this ethos that if we could really transform financial services, showing the power of being mobile-only, cloud-based and focusing on the consumer experience and working back from that, rather than being P&L focused in a way that banks often are today.”
Open banking opportunities
The whole banking sector is still coming to terms with the new open banking rules, which came into force in January 2018 and force UK banks to open up their data to verified third parties via a set of secure application programming interfaces (APIs).
Another factor in Caywood joining Barclays is a shared philosophy around the opportunities inherent in the introduction of open banking rules here in the UK.
“They really understand the vision of open banking,” she said. “A lot of banks’ knee-jerk reactions to it, to start with, was as a compliance exercise, and it was a really onerous one … for Barclays, we very much see it as an entire change in the ecosystem.”
That change she is seeing is the eroding loyalty UK consumers have with their bank, as regulations make it easier for them to switch and fintechs continue to build propositions that tempt them away.
“It might be that you have 15 to 20 different products and services that you’re using: a mortgage here, a credit card, your current account here, and it can actually get quite complex,” she said. “So when we put on this hat of thinking ‘how do we best serve customers’, we have to shift from being closed and only offering customers access to our products and increasingly understand where consumers are in their journey.
“It’s this kind of hub and spoke model, where what you’re really focusing on is the consumer experience, really knowing your customer, making things really as easy as possible to access. How do we increasingly become intelligent about our users, and help them through these processes? Reduce the friction, whether that’s our own products or externally.”
That shift is a fundamental one for a legacy bank like Barclays, which is accustomed to owning customers for life and upselling them on credit cards, ISAs and mortgages, so how did senior leaders feel about this radical thinking when Caywood arrived?
“I think the reality is they hired me because they already believed in the idea,” she told Computerworld. Just before she joined, Barclays became one of the first big banks to allow customers to link all of their accounts, regardless of who it is held with, inside of their Barclays mobile banking app.
The reason she joined was to go further than that though.
“If you look at JPMorgan Chase, they get into this targeted ads zone where you have offers in the bank,” she explained. “One of my key things that’s quite different, I think, is that if you do something like targeted offers, that doesn’t have a natural, intelligent, seamless integration behind it, you’re just saving someone like three percent. That’s interesting, but not really a platform concept.”
What does success look like in this new world? “Really changing that mindset and business model from upselling to saying actually: ‘we understand you and your life experience and we will help you find the best product in the market to meet your needs’. Really changing that and seeing the opportunity and having the connected kind of hub and spoke model, is something I think will be pivotal for us to continue to be successful,” she said
However, “from a platform perspective,” she admits that “it is still quite difficult for incumbents to say: ‘we’re going to actually introduce all these third parties that compete with our current business’. I think that’s a bit of a harder sell.”
Big structural change
This ambitious change of philosophy naturally comes with a unique set of challenges, many of which the bank itself was acutely aware of before hiring Caywood.
“When I was interviewing, it was this really funny process because they kept trying to show me all the reasons why I should join, but also giving me various forewarnings like: ‘we’re really slow’,” she said. “My immediate response was: that’s fine … I’m aware that that’s a challenge in larger organisations.”
Caywood soon realised that it’s not necessarily the technology that slows things down at an organisation like Barclays – although that is a factor – but also “everything around processes, clients, organisational design, the incentive structures”.
On incentive structures, Caywood is getting to the very heart of how incumbent banks do business today. “Banks have a very different type of compensation package where you have bonuses alongside your salary,” she explained. “If you’re incentivising people to achieve goals around financial performance, then that’s a whole different challenge for shifting the mindset of the organisation to actually say: don’t look at solving for the bank in terms of reducing costs and increasing our own revenue, but look at it from a consumers perspective, what are their problems and work back from that.”
That is a seriously entrenched mindset to change.
“In terms of being fast, there’s the technology side of it, that we’re very much leaning into, but in order to really power that the bigger challenge is the organisational structure: how we change the mindset, the culture, and empower teams and individuals to innovate at pace and always keep pace with our own technology,” she said.
Caywood has a habit of preaching modern IT practices – devops, continuous delivery, cloud native – without using any of the Silicon Valley buzzwords she would have grown up with during her career.
For example, she speaks about shifting the way they deliver digital products to “create these small, high-performing, cross-functional teams, and empowering people to own it”.
She calls this part of her job ‘organisational design’, and this dovetails with her strategic approach to financial services: “Shifting the focus to solving for customers and their pain points first, versus solving for our own.”
Top of her to-do list, then, is to move the bank away from a traditional ‘waterfall’ development process towards a more modern design approach, involving cross-functional teams.
“Tech needs an equal seat at the table with the business, from inception to launch, not just when it comes to building,” she said. “If you’re only looping in your development team at the point where you actually need them to develop it, it’s too late.”
She offers the example of the bank building a – theoretical for now – mobile-based joint account. Having a risk and compliance person at the table from inception allows this team to ask what the regulatory requirements are upfront, working with developers to design around those requirements instead of putting up barriers further down the line.
“Being able to really empower people to make decisions to do that in small teams, and to do it quickly is the shift you have to make, because if we keep the old school ways of working, where it can take months, just to sign off on doing something, before you even start developing it, just doesn’t work in this new way: where we want to stay closer to customers, get feedback earlier, launch smaller, more frequent releases,” she said.
“So you’re very much shifting the kind of ways that we delegate authority throughout the bank and empower people to do things quickly.”