My theme was innovation, disruption and trust building.
Thank you David, for your kind introduction and to the Forum for inviting me to speak here tonight.
The Financial Services Forum has always held a place in my heart since I remember joining in the early years of my career whilst at Deutsche Bank and, of course, I was humbled to win the Marketer of the Year Award in 2008.
I remember being very nervous that night and thinking that I would never win. The chat on my table was excited especially when one of the team came back from a loo break and said that they had overheard someone saying that they had voted for me! Then another person came back from a quick ciggie and she said that she too had found people who had voted for me. So my advice is if you are up for an award tonight, and want to know your chances then I’d hangout in the loo or go for a fag!
Anyone nominated for an award tonight – I wish you the very best of luck.
Tonight I earn my dinner by taking a few minutes of your time to talk about technology and financial services. Finance has been an early adopter of new technology – from the abacus to the mainframe computer and as an industry it has always been critical to our economy. We are blessed that the UK consumer is very open to trying new things. ClearScore, my company, has taken an approach to empowering people with their credit data and we have seen fast adoption, now our product is used by nearly 5.4m users in the UK and 250,000 in South Africa. We have delivered our fair share of disruption. But as I have built my career and operated in our industry I ask myself the question:
What are financial services really for?
Obviously at some level it’s about capital. Looking after money and assets, growing them, making them flow, managing risk. But I also think that at a very deep level, especially in the capitalist democracies in which we live and that are so under fire at the moment, finance is about managing and growing a very different form of capital and that’s social capital or to put it another way trust. In the delicate eco-system that is our economy and our industry, especially in the UK and Europe, trust is in danger of continuing to diminish.
This year’s Edelman Trust Barometer survey showed that still less than half of people trusted our industry. Financial services are the least trusted of all the business sectors and that is as true today as it was in 2007 before the financial crisis. You’ll be pleased to hear that in another survey from 2015 58% of people said all of us working in financial services were at best unprofessional and at worst dishonest.
The good news is it’s not just us. Almost every profession from politician, to journalist, to doctor, have seen decreases in trust over the past 20 years. The media is no longer respected, replaced with news of the royal wedding and Trump’s constant tweeting.
This collapse in trust is very significantly problematic for our economy. Every economy that has thrived has had embedded within it a complex mesh of bonds of trust that help to lower transaction costs. Whether it is the stock markets in the UK or US, or chaebol based families in South Korea, or the local SME business groups that are prevalent across Germany, all of these myriad structures help to make capital flow by creating trust between people.
Almost all change in financial services requires our system to work together at very many levels. We need to operate in an environment where the consumer, the regulator and the industry trusts each other. Now, of course, this mustn’t be blind trust but it also must assume a baseline of trustworthiness otherwise the barriers that we put up to working together, and winning the trust of the consumer, will become insurmountable.
Technology can help build both financial and social capital and it can do it fast. Look no further than Bitcoin. Just this week this new currency broke the $10,000 mark for the first time. The learnings from Bitcoin are numerous. The technology is opensource and transparent. The currency solves several major transaction issues for users in major industries. The system relies on multiple entities working together, competing to create coins but collaborating to innovate around use cases. I’m sure there will be lots of debate over your main course about the outlook for cryptocurrencies but what opensource distributed ledger technology has been able to do is build significant amounts of trust in a very short amount of time and captured increasing amounts of financial capital.
In the UK, for many reasons from Brexit to increasing inequality, I believe we are at a turning point for our economy. Historically we have enjoyed a particularly strong base of trust. From social norms, to our class structure and enduring entities from the Bank of England, to our courts, to the local pub, that have served us very well. And banking has contributed significantly to this system.
The profession of banker was always traditionally seen as solid and dependable. Banks were full of people who were part of our communities, working from buildings on every high street, who were known and were trustworthy and trusted. Products and decisions were simpler, and more transparent.
This reputation for trust across financial services didn’t happen by accident – it was hard won over centuries. We gather here today in the Guildhall at the heart of the City of London Corporation. The corporation is the oldest continuous democratic commune in the world – having existed for over 2000 years. From the Roman’s, to William the Conqueror, to the Stuart’s, the City has survived as a bulwark for the advantages of democracy and free trade, thriving through the rule of law and lots of social ties fostered through Freemen, and Councils, Courts, Halls and organisations like the Financial Services Forum, and of course, the very many bars and pubs that we enjoy to this very day.
But despite this history, our reputation has severely compromised. However, I strongly believe that we can use our collective will, our capital, our ingenuity and technology to redress the balance.
Today the Prime Minister, the Newspaper editor, the CEO are rarely very trusted. Much of the collapse in our reputation is connected with this lack of trust in authority. These authority figures have been replaced by “people like me”. Witness the power of TrustPilot or Glassdoor.
Technology can help bridge the divide between all of us and our customers. The social web, chatbots, artificial intelligence and machine learning fused with real conversations facilitated through video for example allow cost-efficient interactions with a more human feel. Experiences like Cleo which uses AI to chats to me on Facebook about my money every morning, or ClearScore’s financial education chatbots used by more than a million people – these interactions are involving, warm and funny. This can help bring back the human whilst leveraging the efficiency and convenience of a technology enabled bank in your pocket which has often removed human warmth and connection from financial services.
There is no doubt that much of our mind space whether we work for established institutions or small start-ups is dominated by the idea of disruption and disrupters. At one level this is a good thing. The regulator wants more competition, there are still very many under-served consumers, large institutions struggle with new technology, data is opening up all the time, and in many cases markets needs to be made more efficient.
But at another level disruption seem oppositional and aggressive – it creates tension – thoughts of the winners and the losers – it creates sides. And whilst we need to compete fiercely in the market for the good of the customer, dedicating ourselves to delivering better services, at lower cost, more efficiently. We also, if we are to re-establish trust in our industry and rebuild our collective reputation, need to actively support each other and collaborate more.
When I see disrupters attacking banks for over-charging on a foreign exchange transaction, or scandal after scandal from the investment banks, or the government using the regulator through PPI to redistribute money back into an ailing economy, or major financial institutions being reluctant to embrace open banking I wonder whether we are not putting short term commercial gain above longer-term maintenance of the trust that is fundamental to our success. We may win the individual battles, but lose the collective war.
What we create when we attack each other, either through our messaging or our business models, is a confused and untrusting consumer. That consumer is increasingly frustrated with the services with which they are being provided without any real understanding of why they feel this way. All they are left with is a vague sense that they are being ripped off by a system that they don’t understand and is full of bad people doing bad things.
Now whilst there are those in our industry who do the wrong things, most people I know who work for financial services companies are talented, committed people, like you and me, trying to do good things for our customers whilst operating in this sea of mistrust and confusion. Certainly the 160 people who work for ClearScore are some of the most committed and trustworthy people I have the pleasure to know – your teams will be the same.
So, we must continue to execute the obvious functions of our industry well – manage capital, be prudent with risk, help our customers make good financial decisions, create fair and balanced products. But our mission must be to work together to build back the social capital in our industry and our economy.
Tomorrow when we are back at our desks, as we think about our business and brand strategies, or develop our propositions, talk with colleagues and customers, or invent our next new innovation; whether we work for the largest of banks, or the smallest of start-ups, whether we are the disrupted or the disrupters we should take a moment to think back to this evening, to this wonderful room, and the history it represents. We should dream big about the application of technology to solve real customer problems. But above all everyone of us should dedicate ourselves to continuing to win back the trust of our nation through hard work and our ingenuity collaborating to build a better, more trusted, more trustworthy financial services industry. To achieve this would be a true contribution of which we all can be rightly proud.