Automatic for the people

Lloyds TSB is an institution gunning on organic growth. FST sat down with Jayne Opperman, CIO of its Central Technology Functions, to discover how the bank is using technology to drive forward.

Despite being founded in 1765, Lloyds TSB is not a bank stuck in the past. Based in London, but with operations spanning Europe, the US, the Middle East and Asia, it has traditionally been one of the largest and most successful of the UK banks. With such pedigree its slogan ‘for the journey’ is perhaps appropriate; Lloyds TSB and its black horse logo certainly has the air of an institution that will be around in another 250 years time.

In recent years though the journey has not necessarily been preceding at the gallop that the bank might have hoped. In 1995 when Lloyds merged with the TSB it became the largest bank in the UK and Europe. Though it has continued to grow it has not held that position, seeing institutions like RBS and HBOS come up on the rails to overtake it – today it is in fifth place in the UK banking size stakes.

It is perhaps no wonder then that Lloyds has been recently really focused on driving its market position and its service and efficiency forward. The results have been seen in a glut of industry awards – last summer for example Euromoney announced it as winner of its prestigious Award for Excellence. Citing Lloyds TSB’s growing market share in the mortgage business as well as maintaining good asset quality vis a vis its major competitors, Euromoney noted that “in a sea of unspectacular results Lloyds TSB’s performance deserves much credit”.

It is with some anticipation then that we prepare to speak with Jayne Opperman, CIO of Lloyds’ Central Functions. With responsibility for the technological support behind all of the banks back office operations, as well as more usual suspects such as payments, finance, risk, security and HR, Opperman is at the heart of the bank’s technology operations, and is well set to explain how it is using technology to drive excellence forward.

Customer focus
We begin by discussing the focus Lloyds TSB has been putting on better servicing its customers. There is clearly a culture running through the bank that is pushing this agenda forward, so how important a role does the technology piece play in this focus?

Opperman, open and articulate throughout our conversation, wastes no time in impressing the pivotal role that technology plays in the bank’s strategic focus. “It’s absolutely key,” she states. Speaking in November, Opperman has just attended the Financial Services Innovation Awards and she is rightfully proud that the bank has won another hatful of gongs (five on the night). Rather than idle boasting though, she brings these awards up to give an example of how individual technologies are really pushing the customer offer forward.

“One of the awards we won was for the use of front end IVR for telephone banking. We’ve implemented some voice recognition software at the front end of a call, so that customers don’t need to go through quite the lengthy verification process that they’ve had to in the past.”

Based on voice recognition technology, Opperman explains how the system allows callers to simply say their name and account number, and this is enough to access their accounts and make transactions, thus avoiding the traditional ‘mother’s maiden name’ type question that can be both annoying for customers, and more pertinently a security risk for the bank.

The bank took advantage of a recent telephony refresh to integrate the software in the bank’s process, and as Opperman explains this has been a “real hit” with customers. It is indicative of the approach that the bank takes towards technology. “One of our aims really is to make sure from a process point of view in IT that it is all focused on the quality of the customer experience,” she explains. “And I think the voice recognition software plays to that really well.”

Another example of how technology can make customer’s lives easier in small ways is the work Central Functions has been doing around updating the change of address process.

“We’re doing a lot of automation work and one areas of this is that we automated the change of address procedure.” As Opperman admits this doesn’t necessarily “sound an awful lot” but, as any technologist whose bank offers a range of siloed products across discrete legacy platforms will know, it’s easier said than done. And what’s more updating current account records, but not the same customer’s credit card records, is one of those things that is guaranteed to annoy that customer.

“It’s a real bugbear for customers, ”Opperman admits. “Before we had to ask themto fill in a form, and it could take several days. Now it’s automated, so the teller in the branch can update all the customer’s records straight through. We know that some of these seem like fairly standard processes, but they are a source of real frustration to customers if they don’t work.”

Automation hurdles
This simple piece of functionality has been a challenge from the technology point of view. But it is clear that Opperman thrives on these challenges as we move on to discuss the bank’s online platform. In common with many of its competitors, when the Lloyds website was set up it may have looked smooth from the customer’s point of view, but behind the scenes the process was a lot more complicated, as a 21st century technology was essentially layered on top of banking processes that were considerably older. How far has Lloyds TSB got with integrating the front end of the website to the back office?

“When it was originally conceived, the website was great from a customer point of view but quite awful from the back end,” Opperman admits. “This resulted in things either being faxed off, with data being pushed down to a service centre.”

But, in recent years Lloyds has grasped the nettle and automated a lot of those processes, though there is still work to be done. The focus now is on really integrating the customer’s product portfolio. “What we are now seeking to do is to ensure that a customer who has several different products over several different businesses can get the full breadth of our services online – so they can get the same functionality online that they can by going into a branch or telephony.”

So how does this affect the overall strategy? “There is a lot of rationalisation and simplification going on, but there’s a strategic sequence and programme of events that we’re looking to tackle. “What this means in practice is that there are things that the technology team will have to “join up temporarily”, but the strategic focus from a “change the bank point of view” is on “significant change or uplift” rather than tactical work-a-rounds.

Opperman stresses throughout that the key to this strategic work is that change is driven by the customer point of view “There is a big push on automation and joining up the front and the back offices – taking the opportunity to do as many things as we can straight through,” she says. “But one of the things that we’re really focusing on is automating processes that will enable us to make good customer experience better.”

As Opperman points out, it’s easy to automate individual processes to make IT's life easier, ultimately though she is clear that if it doesn’t deliver value to the customer then it’s a missed opportunity. “From our chief executive [Eric Daniels], who very much puts himself in the shoes of the customers, we’re looking to deliver streamlined and joined up services for the customer.”

Innovation
An area where joining up internal systems and developing straight through processing can really pay dividends is in a bank’s ability to innovate and offer new and improved services to customers. We move on to the impact of SEPA, which by definition is causing activity across the European industry. What kind of impact had this seismic change had on Lloyds TSB?

“We have in recent years refreshed our payment platform completely on the domestic side so that almost everything goes straight-through,” Opperman remarks. This has put it in a good position to react to the new payments landscape, and one area where this can be seen is in the launch of new ‘faster payments’ for UK banking customers. This is a technology that is going to allow near real-time payments for customers who wish to avoid the three-day turn clearing times they currently face.

“The previous investment in our platform really enabled us to deliver faster payments at a far more effective cost than some of our peers, which was great. That’s not to belittle the investment we’ve had to make, which has been sizeable, but the previous investment has definitely helped the process.”

And for Opperman, as the industry goes forward, the demands of customers for things like faster payments are simply going to intensify. “The customer across Europe wants to be able to have a choice of payment methods, to make the payment straight through within five minutes, or in a day, or three days,” she argues. “The customer wants that choice, whereas I think previously the banks have made those decisions for them.”

And these demands from the market obviously present an opportunity for smart banks. “I think it’s fair to say that we’re looking for other opportunities to offer different payment services and products through some of the industry or regulatory challenges that we’ve had,” she says. New technology will be at the forefront of these opportunities; Opperman points to some of the contactless and mobile payment trials that have been going on as evidence of this. “If you look at the rate those trials are moving, it’s very much driven by more technology savvy customers – and all the banks are looking to be a part of that.”

The agile business
Away from the customer facing aspect of the technology Opperman is responsible for, we move onto to discuss some of the more internal aspects of her role. In common with most of its competitors, Lloyds TSB has been very much focused on driving down its cost ratio and operating in a leaner, more productive fashion. The focus on productivity hasn’t just fallen on IT, but throughout the business. How has the technology team been affected by the pressure on budgets?

Though “it’s still fairly early in the journey” Opperman suggests IT has embraced the programme. “As a group, we’ve initially developed our thoughts around lean and sigma through our operations in our service centres, but IT is embracing some of the concepts in terms of ‘one best way of doing things’ and ‘right first time’, and there are some areas where we’re making use of agile techniques.”

And is this a technology driven programme – in terms of new solutions – or is it more of a people and process driven approach? According to Opperman it’s largely the latter. “A lot of it is about having a single best way of doing things. For example we’ll try to ‘lean’ our processes so that anything that a customer wouldn’t pay for is taken out.” The result, she says, has been some significant benefits in terms of efficiency and effectiveness just from looking at the way things are done. “I think people assume that because its IT that will mean we have to build new tools, but quite often if we look at the various different ways we have of doing things we can get a lot of benefit just by choosing the optimal path – it’s not all about the tools.”

A particular area of focus for the bank has been shifting the ratio of front to back end staff. Examining internal activities, and finding the operational or administrative activities that can be automated, or at least taken away from front-end sales staff has been the bank’s approach. Opperman explains that where technology solutions have been needed is in the area of streamlining the front-end staff’s activity.

“A big part of the technology aspect has also been to provide a platform for the branch network that support sales. It’s been a huge success – we’ve really been able to support sales staff as they’re sitting therewith the customers and make that conversation a lot more streamlined. We’ve had some great feedback from that.”

A changing world
As we draw towards the end of our time, the conversation moves to a discussion of the role of IT within business, and how this has changed over the years. As CIO, for example, does Opperman feel that she is a technologist in a business role, or now a businessperson heading up technology?

“I’m not a deep technologist at all at this point in my career,” Opperman ponders. “I think as a CIO it’s really important to be able to demonstrate that you understand the business and the pressures they’re under, and that you can align technology to where it’s going to make the most difference. I think long gone are the days when it’s just all about building something sexy from an IT point of view.”

One obvious sign of how the world is changing for the better is in that Opperman herself represents a new generation of women technologists, who are more and more starting to make their presence felt in what has been a male dominated world. How important has this shift been?

“I do think it’s hugely important,” she reflects. “If we’re really serious about innovating in a way that allows us to be a lot more effective then we need to take diversity seriously.” Opperman recalls her own studies for an IT degree when there were probably less than 10 percent women on the course. “At Lloyds TSB we’re at nearly 30 percent women in IT now – it’s not where we would like it to be but we are gradually shifting the needle.”

And regardless of gender it is clear to Opperman that today’s IT professional needs to be a businessperson first and foremost. “We’ve gone as far as organizing IT to be as business aligned as we can. So all of our project managers, business analysts, PMO staff are aligned and sit along side the business.” Even the developers and technical staff, who aren’t quite as close to the business, are very definitely not a pool of labour. “Our developers are staff with specialist skills around a particular business platform. I think it’s hugely important otherwise we’re not building things with the business benefit in mind.”

Our final question is to look to 2008 and ask what the biggest opportunities for Lloyds TSB technology team to apply this business focus to drive the bank forward? It very much appears that the automation agenda will remain the focus. “What we’ve got planned is around making the whole of central functions more efficient,” Opperman outlines. “There are various levers we can pull to do that in terms of building more shared platforms and single – or at least fewer – sources of data.”

But the other area she identifies is the core question of making IT delivery more efficient from the customer point of view. “I think it’s very easy to lose sight of the fact that we’re here to serve the customers. So I think the real opportunity for us is to use technology in a way that will allow us to create a much better customer experience. If we keep the focus on that then I think there are huge opportunities for technology.”