TSB: Money confidence. For everyone. Every day.
TSB has announced that it plans to roll out a rapid digital transformation across the company, with a target of completing the process by 2022.
TSB Bank has been a household name since the 80s across England, Scotland and Wales, but in the last decade it has arguably lost out to bigger banks and more recently, the influx of digital banks. With the addition of its recent migration failure in 2018, it is perhaps no surprise that it has announced its plans to launch a rapid digital transformation of the company, focussing on improving customer focus, efficiency and operational capabilities.
It’s strategy focuses on the following financial targets:
It has agreed a £120mn investment plan to transform its digital channels over the next three years, with a goal of c.5% net lending growth per annum.
By 2022, the company plans to achieve the target of £130-£140mn per annum.
Improvement to efficiencies, notably with a 15% improvement in cost to income ratio.
£100mn in net cost savings by 2022.
Closure of 82 stores in response to the change in customer behavior.
Part of this transformation includes a revamp in the company ethos, which moving forward will be “Money Confidence. For everyone. Every day.” Under this new value TSB will invest £120mn in digital technology.
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Mark Aldred, banking specialist at Auriga, comments on the transformation: "TSB's investment into digital transformation is a welcome and much needed one. It is right to capitalise on modern technologies and automation as this will enable it to cut costs, optimise branches and deliver superior customer service. However, the bank must not lose sight of the importance of the human touch. Whether it's a first time buyer seeking confidence from a real person in the mortgage application process or a retiree needing help with a self-service machine, there will always be a role for human beings in banking.
Furthermore the bank must be sure to maintain access to financial services as much as possible for when things don't go to plan. Case in point, during its IT failure last week, TSB directed customers needing emergency cash to its branch network."
About the CEO Debbie Crosby
Debbie Crosby has been the head of TSB bank since May 2019. Having been a senior figure at Clydesdale and Yorkshire Bank owner CYBG, she has taken on the task of driving this digital transformation. On the transformation, she said: "Our new strategy positions TSB to succeed in a challenging external environment at a time when we know customers want something different and better from their bank.
“With a trusted brand, modern platform, and national presence, TSB is well placed to deliver – but we need to make changes to enable us to compete.
“The plan we’re sharing today involves some difficult decisions, but it sets TSB up to succeed in the future. Taken together, these changes will help us to serve more customers, better, for the long-term.”
Zafin: Banking is now in the era of the tech ecosystem
The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?
John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.
Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:
Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?
It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started.
While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk.
Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand.
I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.
When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic.
Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?
I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.
Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.
The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC.
I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives.
Q. Are there any other bank tech trends you'd like to discuss?
Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement.
Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.