New RBS CEO talks fintech disruption and the need for cultural change

Two weeks into the job the new CEO of RBS, Alison Rose laid out her vision for the banking group, which hinges or creating a curious mindset and partnering with fintech startups

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Scott Carey

The new CEO of RBS says it is "a really interesting time to be taking over as the CEO of a big bank", as she looks to cultivate a risk taking culture that increasingly looks to partner with innovative fintech startups to meet rapidly changing customer expectations.

A 27-year veteran at the banking group, Rose is the first woman to lead one of the UK's big four banks, having taken over the role earlier this month when she replaced Ross McEwan, stepping up from her position as CEO of the commercial and private banking department.

During a panel discussion at McKinsey's Blink conference in London today, where she sat alongside Laurel Powers-Freeling, the chair for Uber in the UK and Tunde Olanrewaju, senior partner at McKinsey, Rose opened by talking about the disruption she is seeing in the banking industry today.

"What you are seeing is disruption happening across a number of fronts," she said. "One is huge change in customer behaviour and I think that is a really important thing, because that's an anchor for a lot of the change that is happening. Then you've got a massive shift in technology and the use of technology and digital and AI forces coming through that can literally hollow out the industry."

Creating a curious mindset

Rose talked a lot about how to prepare RBS for this disruption as an organisation by upskilling staff and "creating a curious mindset".

For example, Rose told the audience about how she recently took her executive team on a coding course. "That's not because I want them all to go off and code stuff, that would be a disaster," she explained, "but I need them to learn and understand."

"I think investing in people's skills, investing in capabilities and creating a learning organisation helps prepare your own organisation, but also those individuals for whatever future roles may come as well, and that is where you have to manage and take responsibility as an employer for the disruption that is happening."

Talking about the growing impact AI and automation technology is having on workforces globally, Rose added that she recognises a "real requirement as an employer to help my colleagues learn and adapt and have the different skills they need for today and the future".

Rose, like any leader, is keen to talk about changing mindsets at her organisation, but also realises it may be easier said than done.

"You have to get an agile mindset and an entrepreneurial mindset," she said. "Bringing that into an organisation that has traditionally thought in silos is very different. You have to get people to think in a very different way and be prepared to try and fail at things. That's really difficult for people to do. We talk about that a lot in terms of failing fast and agile thinking and they are really easy to say, but the behavioural change you have to create in an organisation to do that, the whole organisation has to embrace it."

Pivot to partnerships

Another primary driver for this disruption, and the changing expectations of customers when it comes to their digital banking capabilities here in the UK, has been the rise of fintech startups like Monzo, Tide, Revolut and TransferWise.

"You have the rise of really entrepreneurial fintech businesses coming through," Rose said. "So when I look at our industry we are facing disruption through behaviour, big tech and new startups attacking that. It is a really rapidly changing environment with huge competition on every front."

Rose's vision for RBS hinges on being more open to partnering with innovative third parties, rather than trying to do everything themselves.

"For me increasingly having a partnership model, being prepared to launch new ventures into the market to disrupt myself I think is really important," Rose added. "Getting out of the mindset that I think large corporations tend to do that we can do it ourselves is wrong, so I don't need to do it myself: find a really smart partner and work with them."

Rose, like many of her peers at other big banks, is starting to shift from a traditionally closed mindset to one that is more welcoming of partners to help drive forward its own digital capabilities.

Read next: How Megan Caywood wants to bring a fintech mindset to Barclays

"You have to be prepared to disrupt yourself and for me the answer is increasingly partnering," she said. "We have a ventures team that partners with fintechs and they have great new tech, different ways of working, different ways of serving customers, we have customers, let's work together."

RBS has been working on its own internal fintech projects, including the recently launched Mettle, which is aimed at small business customers, and the digital banking proposition Bó, which is run by Mark Bailie and is currently in the beta phase. So it will be interesting to see what Rose's approach in this space will look like.

Just last year Bó had invested £3 million in the London-based startup Loot – which had built a student-focused money management app – only to see that company fold earlier this year after running out of cash, as reported by TechCrunch.

Curiously, since then the Loot founder Ollie Purdue has joined Bó as chief product officer, alongside 17 of his colleagues that were snapped up by the incumbent, in what is a fairly unusual approach to acqui-hiring.

Rose went on to discuss what she looks for in a partner for the bank, specifically its ability to meet a customer need and a long-term ability to become profitable.

"I run a different investment model for my partnerships and the fintech startups I am looking at, and the ones that we start up, aren't going to make money to start with," she said. "If you talk to any VC, at some point you have to be able to scale and make it economic."

"I think a lot of these new startups have got scale very quickly but they need to work out what their economic model is to work," she said, in what is possibly a dig at the likes of Monzo, as those challenge banks have struggled to convert their customers into a profitable business model as of yet.

"But I wouldn't underestimate them and in that competitive market you would be naive to say they are not a threat because I think they have fundamentally changed the paradigm of what service is," she added, quickly.

Copyright © 2019 IDG Communications, Inc.

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