Podcast
Advice Architects Ep. 4 with Dr. Leda Glyptis, 10x Banking
Choices that Matter: Beating Innovation Blockers in Banking
October 31, 2022
Choices that Matter: Beating Innovation Blockers in Banking
Many financial institutions and advisory firms today face the challenge of deciding how and when they want to make technological changes to enhance their customer experience. Of course, no bank or wealth management firm wants to fall behind, but technological change and transformation is often met with deep resistance for a myriad of reasons.
Dr. Leda Glyptis is a seasoned expert when it comes to managing tech transformation in large financial businesses. In this episode, we explore the many obstacles financial institutions face when going through a digital transformation and how to overcome this resistance and challenges surrounding the process.
Innovation in financial services today, says Dr. Glyptis, is not merely about understanding the latest technology that’s available, but more about how that technology is changing the business model of banking and advice delivery as a whole.
Listen to the full episode here or on Apple or Spotify.
For more information about Dr. Leda Glyptis, Chief Client Officer of 10x Banking, you can find her on LinkedIn, or check her out on Twitter.
For more information on Responsive AI’s solutions for advice providers, contact us.
Day:
Okay. Welcome to Advice Architects. This is Day from Responsive and today we are very lucky to speak with Chief Client Officer at 10X banking, a cloud native and incredibly forward thinking banking platform, Leda Glyptis. She's a resident at FinTech Futures. And every time she writes something, whether it's about innovation or organizational culture or just life itself, I'm always fascinated. Welcome to Advice Architects and good afternoon, Leda.
Leda:
Thank you so much for having me. I'm so excited to be here.
Day:
So at the beginning of the show we do an Advice Architect's questionnaire. It's kind of like a Proust Questionnaire where we ask a couple questions to get to know you. So starting off, what's your job title and what do you actually do?
Leda:
So my job title is Chief Client Officer and I am accountable for three buckets of work, so to speak. I am responsible for the teams that do all of our pre-sales and sales activities, so marketing, business development up until we land those partnerships and client relationships. Then I run delivery. So the teams that take those client contracts and turn them into a living breathing system in a bank live running on our systems. Those wonderful people, the client solution architecture teams, the delivery folks work in my world. And then the third piece is client regulatory affairs because although our company is not in itself regulated, our clients are. So we are part of the estate that is regulated, but we're regulated where our clients are regulated. So in a variety of geographies and it's a sort of client-first mindset. So you could say that I look after the world around our platform and all our partnerships, relationships, geographies, and prospects.
Day:
Awesome. And how long have you been doing this for or involved in FinTech?
Leda:
So I've been involved in FinTech in one way or another since before it was famous. I actually worked in a startup before we called them that. We didn't realize how cool we were back then. We just thought we were a very small technology company trying to sell into banks. So I'd say I've been in this space for ... God. Just 15, 16 years. I have been in the core banking space for the last four.
Day:
Okay. And where were you happiest in your FinTech experiences?
Leda:
Oh, what a question is that? I'd say there have been two moments. The first one was I was working in a bank, in a traditional bank. Having being in a small company that was bought by a bank, we didn't still have that notion of the that vibrant FinTech ecosystem that didn't quite exist. And I remember sitting in said big bank that had bought our entity. A few years into these new ideas appearing into our lives, peer to peer lending all of a sudden became a thing. And I remember where I sat, I remember what I was wearing, I remember who I was speaking to when I had an epiphany of the world is about to change and I'm here for it. And it was particularly exciting because now I grew up in Greece very few things that shake the world happen in Greece. Having moved to the UK and moved into finance, it was a little bit of an accidental move. I never had that dream of changing financial services, but I remember that moment in the office where I thought, "This matters. This is huge. These are its very early stages and I'm part of it." And what followed was an extremely happy, at times, very frustrating, but extremely happy period of growth and learning for everyone in the industry.
I'd say the second happiest time is now because I can look at the 10X platform, I can look at the clients, I can look at real volumes, real value, real serious numbers of users across a multitude of geographies consuming banking services on a fully digital stack. And if you had asked me 10 years ago, I would've told you, "I don't know if I'm going to live to see that." And it's nice to be part of that change in a really meaningful way. It's amazing to go shopping and buy for my shopping with a card that is powered by 10X. It's just the most incredible feeling.
Day:
That's amazing. To sort of be there when it's being imagined and then be there when it's actually being used by users is a great feeling of accomplishment. Why do you care about wealth tech or financial advice in the context of FinTech?
Leda:
For many, many, many reasons. One, [] because it's next in so many ways, we have toyed around automating the wealth tech space. There have been some very interesting applications, some very interesting solutions, but that full digitization and the unlocking of the art of the possible hasn't quite come yet. The thing I find absolutely fascinating about it is that when done properly, it can really unlock the opportunity space for an individual, their family, and their community. And historically even accessing advice has been a cultural class thing. You do it because you had seen your parents do it. There were a lot of people that even as they came up the curve and started making better money, they didn't even know how to access a traditional advisor. So I think as we start deploying technology, as we start using intelligent services to get people on that curve of thinking about their money proactively and getting to the place where they can invest, they can save meaningfully, I think there is a massive social mobility and inclusion component.
As someone who is a product of social mobility themselves, I feel very, very strongly about the good we can do by creating accessible tooling that is understandable, that is leveling, that is actually fairly cheap to run. Because technology that is cloud native and fit for purposes is cheaper to run, which means that we can make our services more financially accessible. We have such an opportunity to bring more people into the fold and let them use the things that we know our expertise deliver digitally to actually get on with their lives and generate value for their families.
Day:
This is a story that's very, very near and dear to our hearts at Responsive. So glad to hear it reflected. Okay. Onto the heart of the inquiry, today we're talking about choices that matter. Many firms face the challenge of if, why, and when to make strategic technology decisions around customer experience. Nobody wants to fall behind and yet sometimes people don't want to rock the boat either. And sometimes a quick win for the next couple of quarters can limit long-term planning and success. Let's start by defining the problem. When it comes to choices, what are some of the symptoms or anti-choice patterns we're seeing that are standing in the way of success?
Leda:
Oh, how long have we got? I have so much to tell you. I'll give you a two-part answer. And the first holds true, but with a massive caveat. If you had asked me this question 15 years ago, I would've told you that the biggest thing that stands in the way of decisions is understanding, is information, is a way of getting from here to there in terms of digital capabilities. And some of it is understanding what the technology can do, some of it is understanding how wide and how deep you need to go to get certain outcomes. I remember having to explain to a client once that you can't have an API-first strategy without a data strategy and you could see them getting deflated because that was another battle internally. So for a long time I genuinely believed that it was learning, that understanding. In almost 20 years of doing transformation work inside banks in 15 years of doing digital in one way or another, I'd say there is active resistance and it's hard and those two things work badly together because there is natural resistance because it's hard, but it's also there is natural resistance and it's hard. And what has happened is the context in which we need to make decisions, the technologies we need to understand, the art of the possible we need to understand has gotten, for want of a better word, bigger.
Every passing year brings us more use cases, more technologies, more maturity in the economy around us. So the stuff that we need to interact with and understand and use and change as financial services professionals gets complicated by the minute. And the learning curve that we've been on hasn't been as steep as it needed to be because, to get back to your question, I think for a very long time we believed we had control of the timings. So if you asked a banker 10, 15 years ago, they'd tell you, "This might disintermediate me, so I'm not even going to look at it. This undercuts my value proposition, so I'm not even going to look at it." Not necessarily losing sleep at the time over someone else using it. I think the realization that the economy is digitizing with or without us has definitely sunk in. So that has gone away.
The second piece is that this is hard and it doesn't suffice to understand how the technology works. You need to understand how it changes your business model, how it changes how you interact with the customer, how it changes what value you add where in their life, how you're going to price that, which is completely different to the way we used to price anything we did in finance. The way you used to price advice 15 years ago was very different to the way you will price advice if you have a widget sitting on top of your client's phone and gives them investment ideas on the base of what they're reading on their Bloomberg Terminal for instance. It's not just the fact that you are there in a different moment in their life, it's that it's a different price point. So there's a lot to understand. But I would say that the biggest challenge is people trying to hold onto the familiar and getting in their own way, trying to postpone the decisions, trying to hold onto what they know for a little bit longer and years have passed and meanwhile there's more stuff, so it got harder.
Day:
What are some of the things that people do instead of making a choice? What are some of the behaviors you're seeing that would sort of illustrate to you that an organization is maybe experiencing trouble with choices that matter?
Leda:
There are a few telltale signs. One is doing endless proofs of concept and announcing those proofs of concept but never actually going live with anything. And we do see this a lot and I see it on all sides of the divide. So experimenting with ideas saying if you give me a proof of concept or a proof of value, I'm going to do it. But the proof points come in and it never sees the light of day because it wasn't about the proof points. You definitely see that. The second piece you see is people getting distracted a lot or moving to the next shiny thing. I upset a friend recently who's very, very emotionally invested in the metaverse saying that, "For me, I don't doubt that it will be a big part of how we do business in the future. But for me, when I see big institutions, big banks, big traditional fund managers talking about having a branch in the metaverse, it's mostly displacement activity. It's mostly something that is shiny, and fresh, and new and doesn't come with all the complexities of delivering your digital strategy in the here and now."
So I think that shiny thing, distraction is definitely there. And then the third thing I would say is a sort of lower level resistance. So you'll decide you need to have a digital strategy, you will decide on what that looks like, you'll decide on the architecture, you will decide on who needs to do what. And then when you start implementing, you're going to start to trying to measure it by your old businesses success metrics or trying to risk manage it on the base of your old businesses risk metrics. And we see that happening so often and getting in the way of the intent sometimes because we're human and we default to type, we have some bad habits and sometimes because it's nerve-wracking and people don't want to be caught not having ticked every box.
Day:
To get inside to get inside people's heads here, what are the emotional and organizational roots of these kinds of activities and anti-choice patterns?
Leda:
Funnily enough, I have a book coming out early next year on exactly that. So you've gotten me on my favorite topic. I would say I'd home it in on three things. One is I have had a lot of CEOs ask me in my time, do I have to learn this before I retire? And that's human. There's so much stuff. And you're looking at it and going, "I have deliverables, I have regulatory constraints, I have that thing that broke yesterday and I need to fix it, I have clients who are demanding things here and now, I have competitors that are closing in on me and you are talking to me about things that will have a building curve of say five, six years, that's the next guy's problem." And I do see that a lot. And that short-termism is not their fault. If you have to report quarterly results, which you do, you're going to have to always balance the two. So that's one for sure. The second one I see a lot of is the willingness I call it I want my bling where I can see it. So people want to invest their effort and money on digital assets that are visible.
So I worked with an entity a few years back. We were trying to do a pilot for high-net-worth individuals. This was like VVIPs. I lived in the Middle East for a while right so you can imagine we're talking VVIPs and we're doing a pilot using IBM Watson to look at patterns that might make not just the products that they would be interested in, but also the ways that they prefer to be interacted with. And we were doing the pilot as a learning exercise. We did not expect it would unlock a particular part of ... It didn't have economic proof points. It was genuinely, this will probably be a very, very interesting thing. It will be a cool thing and our clients will actually like to hear about it. So it's win, win, win. But while we were doing it, while we're doing this piece of work, we had a bunch of clients asking why don't we have pepper robots in the office and in the branches? And their view was like, "Well, but that other entity has them."
And I've had this in ways that are less hilarious. Y ou'll see companies, advisors, retail banks, but also corporate banks investing in, say, a beautiful app that has a really cool and slick interface, but they don't necessarily want to invest on the core banking system underneath it to make sure that all of your interactions are real time. So you have these really jarring experiences where you try to do something on the app and it doesn't settle, it doesn't go through in real time necessarily and gives you a holding message. And all of that is lacking of investment in the pieces that are less visible. So I would say the second behavior is that I want my bling where I can see it, which again is understandable, but to have a fully digital experience, you need to capture the invisible stuff.
And then I would say the third thing that we see a lot is that there's a lot of sunk cost in existing technology. And the reality in standing up a new stack is that you will have to run the two in parallel for a while, which means that it will get a little more expensive, and you will have to make a very conscious risk acceptance decision about when to migrate and switch the old system off and then you'll have your amazing digital system, which will be lower to run. Your benefits are at the far end of a process that will see your costs go up, which a lot of CEOs are having trouble imagine. And in fact, we as an industry, we as a FinTech industry, have gotten much, much better at getting the business to value first that can actually close that gap. So do something that will generate value, that will close that gap. Don't wait for the end, but then you have to make that risk acceptance decision of switching the old system off, doing the migration and switching the old system off. And that is a difficult decision on a human level. That is a difficult decision. There are ways of mitigating those risks, there are ways of front loading the value, there are ways of making it easier. But on a fundamental level, some human being will have to sit at their desk as the most senior decision maker and say, "I'm doing this and I will defend it to the shareholders."
Day:
It's a patient on the table, open heart surgery kind of situation.
Leda:
Yeah.
Day:
Right? It's scary.
Leda:
It's scary. And with every passing year, it gets scarier because of exactly what we were saying earlier. There is more stuff.
Day:
So how do customers and clients lose without choices and how might they win with some choices?
Leda:
That's a very, very good question. So customers and clients increasingly have choices that are easier to access. So I will give you an answer in two parts. I would say that as we see the digital curve come up, there is always ... the easier stuff gets choices first. So you had more choices in current accounts first and then you had more choices in FX. That was one of the first things that we saw innovation in, but not for exotic currency. So you had to be in one of the sort main transactional hubs to benefit from it. So if you were sitting on a you want to transact high, but it didn't come for five, six years. So there's always a wave. And if you are in a space that is highly, highly, highly serviced, you always have options. So I would say that for particularly in the advice space, we're seeing quite a lot of nuanced products coming from both challengers and some of the incumbents in some geographies. So for people in places that have digital activity, choices are beginning to proliferate, but if you are the traditional provider, the choice might not be with you. So I think that that is a wake up call that we're all becoming more aware of.
I'm working with a client at the moment who is operating in a geography that doesn't have digital native banking capabilities yet, but they're making that journey. Their regulator is encouraging that journey. So we're working with them. And one of the things they are super mindful of is that it won't take very long for the customer to have options, but those options might not be with you. And as we are in an increasingly technically savvy industry, what would've been potentially a hard choice to make 10 years ago where you might not have put your savings and investments in a startup, you might not have used a robot advisor, you might not have used a cash platform managed by a startup. Now consumers are becoming a lot savvyer about what's safe, what's good service. So I think there is that tipping point where you start being in a part of the pond where the consumer has choices that may not be with you. Until that happens, what the consumer misses out on is both opportunity and information because there is so much we can do for people that might not know they're eligible for it, and that's the other thing that we're seeing, particularly in the advice space. Those new entrants do really well.
I remember when Nutmeg first launched in the UK, they took adverts out on the tube and they had really human language. They were talking 10 years ago when this was really, really new. The language was the way you would talk to your friend, not the way your bank talked to you. And it presented you with statements that felt accessible. It made it very clear that you didn't need to be high net worth to leverage the opportunity and it made it also very clear that there was risk, but also there was an opportunity to start building towards a better future. The minute that language appeared in the mix and that accessibility, it started a snowball effect in the market because they had the customers had seen something that hadn't heithered to existed and the minute you can imagine it, you start wanting it. And I do think that we have increasing digital maturity in our consumers and they're becoming very, very demanding consumers of digital services.
Day:
So I'm an incumbent and I'm seeing there's a bunch of choices that aren't in my service anymore for clients and customers. There's all these things out there. How do I start to make choices and do the right thing for my client?
Leda:
There are a few things that are universal to all of us, irrespective of your size, and there are a few things that are not. So let me start with the universal stuff. One is observe what your competition is doing because they're doing a lot. We're not in a space where this is in its infancy. This space is quite mature. There's a lot of interesting companies. Look at what they're doing. Look outside your geography because there are some really, really cool ideas out there. Look at what your competition is doing and whether they're investing their money because there is that fast follower mindset that means that what was a distinguishing and differentiating feature for a first entrant becomes a hygiene factor very quickly. So Nutmeg was the first for the sort of UK retail consumer. I've lost count of how many Nutmeg similar entities exist with a slightly different angle, with a focus on ethical investment, with a focus on motif investments, with a focus on Islamic finances. There's just so much out there. So I would say, look left, look right, look what the others are doing.
The second thing is that you can only start from where you are. And I know this sounds like a truism, but the best time to have planted a tree was 20 years ago. If you didn't plant it, the next best time is now. But you can't leapfrog. You need to look at the bets you've made, the commitments you've made, the clients you have. So you need to start from where you are to go to the future you want and think about the accelerants and be very honest with yourself and your business about what might hold you back. You know that exercise we used to do with consulting firms, the sales and anchors. If your business is a boat, what are the things that are the anchors that hold you back, what are the things that are the sales that push you forward? Every business has those. Not every business is very good at being realistic about what these are. You need to start from where you are. It sounds basic, but it's so true.
And then I would say depending on your size and cash position, if you see something out there that is awesome, buy it. We see a lot of acquisition activity in this space and there is a reason for it. If you are a traditional advisor business, if you're a traditional wealth manager and you see someone out there who's solving exactly the sort of problem you believe your clients have or exactly the sort of problem that the demographic that you want to move into has and they do it well with good technology, with good traction, you can afford it, buy them. If you can't afford it, copy them. It's the most sincere form of flattery.
Day:
Okay. So does the category of financial advice present an opportunity for financial services to start making choices in a new way for their clients? And particularly my interest is when we're looking at institutions that have multiple lines of business that have products and services, is an advice a story here that can help us start making good choices?
Leda:
I think there's so many layers to this and the short answer is yes. So the first thing to say is that historically I grew up in those big universal banks where even though quite a few of the banks I worked in had an advisory business, the rest of the bank around it had to always start with a disclaimer of I can't give you advice. So only the advisor can give advice, legally and from a regulator perspective and that's absolutely right. But if you start in investing in your digital capabilities, you can have a less jarring experience for the customer where you can give them advice and they can consume your products in a way that doesn't compromise what the regulator is trying to protect, but doesn't create overhead for the client because they do want you to give them advice and you need to do it in a way that is regulated, but with digital capabilities that keep those Chinese walls in a way that is meaningful but not jarring for the client is super important. Just think about every conversation you've ever had, either as an advisor or as a consumer or as a banker where that wall had to be pointed out to the client. Whereas if you have a well designed digital service, that wall is there, but the client doesn't have to be hitting themselves against it.
The next thing that I sort of hinted at before, but I think is super important is that digital capabilities allow us to use data and visuals in a way that is so well integrated. And we're talking about consumers that are quite savvy with their phones now, which means that people can wrap their head around what it means to consume financial products in a way that isn't embarrassing or overwhelming. And that accessibility of both the language but also your sliding bars, the visualization of if you do this, this could happen. If you do that, that could happen. I spoke to my financial advisor as part of my traditional bank not so long ago. You can get me out of the office, but you don't get the work out of my head. And I was going through the conversation with them and they took me through a risk questionnaire that was stuck in 1980 that even for me with 20 years in financial services, the language was wooden and scary. The options they were presenting me with were designed to suit their risk appetites and not to give me a sense of what it is I was risking, risk reward. And it was all paper-based.
So I think there is a massive opportunity to use that softness of that combination of language and visual cues to be much more informative, to be much more enriching to the lives of our customers without being rigid or without just thinking about ourselves as institutions. And then the third piece that I really, really feel strongly about is that digital technology, once you've switched off the legacy, as I was saying earlier, actually reduces your costs to serve. The total cost of ownership of a 10X platform is a fraction of what the legacy is. And there's reasons for that that I won't get into, but that lower cost to serve creates some really, really interesting options for access to financial products through the path of advice for people that wouldn't have qualified otherwise because of cutoffs for remuneration. You can actually feed that gain that uplift back into the pricing of your products, creating products and services, advisory products and services that are accessible to people that would be probably below a cutoff point as some of the challengers have been doing. You create wealth, you create prosperity, you create value. It's good for society as well as the individuals and it's good business. You create that narrative of arising tide lifts or boats.
I think our industry, across the board, we need to feel the need we contribute to society. We really do. And it's been a long cynical couple of decades and I really do think that using this technology, using that uplift, using that softer way of communicating with a client opens the advice world to people that can benefit from it and generate value through it, but would historically not even go anywhere near it.
Day:
Okay. I've got kind of like in the weeds question here.
Leda:
Go for it.
Day:
It's more of a technology integrations. Kind of all that stuff. Folks are looking at all in one platforms FinTech app stores, Lego blocks that fit in modularity. What are some of the things you're seeing when it comes to making these choices around platform, versus app store, versus point solution, and how can these organizations think about these questions?
Leda:
A very, very good question. So what I'm seeing is that a lot of organizations, you're right, face into that question, but they don't always make the choice for the right reasons. So for instance, excuse me, you see sometimes that a set of decision makers look at a few options that are strategically quite different, but one has a price point and a way of payment that fits with their budgetary cycle quite nicely and they don't need to go all the way up the food chain to advertise a massive departure from strategy. So it makes it easier to get to yes, but medium term, it might not be the right solution. And again, it goes back to what I was saying about habits. It is absolutely understandable that you will try to navigate your organization. We get in our own way sometimes inside those big FIs. But very often those big decisions are made for reasons other than what's my strategy and what's the best way to serve it? Budget cutoffs, integrations with existing legacy estates, any investments that have been made in the past and people don't want to write them off always come into the mix. I would say that FinTechs like us have gotten better at helping with that conversation, but it's definitely it changes the conversation of what's right for you and skews it towards the wrong metrics.
The other thing I would say is that because this is ... it's complicated and there's a lot of it, a lot of folks are struggling to imagine the complexity that might come in two, three, four years time. I would advise that people who are in entities that have gone through this journey are surprisingly willing to take a confidential call and share their experiences or speak at conferences and share that experiences. Talk to them. Because one of the things, for instance that I find organizations don't always look at, say, talent. So as you say, there's options and the options are both strategically different but also operationally different. So do you want a fully managed service, for instance, where all you need to do on top of it is do what you are good at or do you go for a component that requires you and your team to continue building on it and maintaining it? The component might actually be easier to get past the sign of process because your company has bought components before, but now four years on, you're sitting in Sweden and you're finding that the engineering pool of Swedish speaking banking engineers is not big enough for your ambition. And all of a sudden you have a problem you hadn't thought about.
Now, you can't think about those problems if you're doing something for the first time. But because we've been on this journey of transformation for a good 15 years now, someone will have gone through this process. So it's counterintuitive, but ask for advice. Go to industry leaders, to peers, to startups and sort of shop around for those medium term implications to those choices because choosing what's right for you has to be about your strategy. It often is about the sort of constraining factors that you have to negotiate. And although that's understandable, it might create more problems in the future.
Day:
Okay. We've come near the end now. It's time for our deep question. What is the most important choice an organization can make?
Leda:
Your questions are amazing. The most important choice is the things they will not do. And that is hard for two reasons. It's hard because first of all, it has to be intentional because if you look at most traditional FIs, they mostly don't do stuff. So actually it's like, "Well, that's not hard." If you look at the whole universe of FinTech activity, the vast majority of FIs don't do most of it, but it's not intentional. It's stuff that they haven't gotten round to yet, that they may get to, that they've thought about, that they've played with. We are talking about transformation that is quite profound and will affect the business model. So being intentional about the things that you won't do and you won't touch and you won't spend time and money on is extremely important. And then within the verticals that you will do something about, in those verticals, deciding the pieces of the puzzle you won't build yourself because they're not key to the competence that makes your customers come back to you. And choosing partners and choosing vendors that will make it faster, cheaper, and easier for you to achieve your end game.
So it's two layers of deciding what you won't do. One is in terms of looking at the entire horizon. You know how many companies pay for horizon scanning? And it's like all their things and it's like, "No. You don't care about all the things. You care about the things that are in your wheelhouse that you have brand permission for, that you believe you can add value in." That means like 90% of the things you won't do. You need to be intentional. And then in your vertical, being brutal and intentional about the things you're not going to try to build so that you can focus your time, your money, your energy, and your creativity on the things you're good at. And then use people who've done the same with their competence to become the Lego bricks of whatever it is you're doing as vendors, as partners, it doesn't matter, to accelerate that journey.
Day:
This is very good advice. It's so good. I think I'm going to take it and think about it on a long hike this weekend. Thank you so much, Leda.
Leda:
Oh, amazing.
Day:
This was a great episode. I wish we had three more hours. Thanks so much.
Leda:
It's been such a pleasure. Thank you for having me.
Day:
All right
