How Yorkshire Building Society is laying innovative foundations for its digital transformation

How Yorkshire Building Society is laying innovative foundations for its digital transformation

COO and Executive Director Stephen White and the team at YBS discuss how the 154-year-old organisation continues to serve customers and communities thro...

“YBS has been around for over 150 years, and I want to make sure it’s around for the next 150 years,” says Stephen White, COO of Yorkshire Building Society. “Therefore, we have to evolve.”

That’s exactly what YBS has done – described by Director of Transformation Paul Howley as a “goldilocks organisation”, one large enough to invest in new tech and initiatives to best serve customers, but small enough to experiment, collaborate and innovate. YBS has transformed over the past few years to focus on the areas where it excels and to achieve operational excellence. “We have a very clear business strategy to be a mortgage and savings provider – we know the products and we know the customer demographic,” says Portfolio Delivery Manager Ben Sampson.

A few years ago, YBS was chasing the tail of ‘big banks’, but CIO Kevin Hunter says priorities have changed. “There was a realisation that we’re a building society and we’re very good at mortgages and savings.” Now, YBS operates with the clear aim of being a leading mortgages and savings provider, with every new initiative from automation to agile methodology put in place with the customer in mind.

A traditional fintech?

‘Building society’ may sound like a musty, traditional term, but Head of Innovation Delivery Natalie Juryta argues the institutions are innovative by their very nature. “We talk about crowdfunding today,” she begins. “Building societies were stated by individuals who pooled money together until each owned their own home. That was innovation – it’s at the heart of who we are.” In addition, a key part of modern fintech is to cater for financially underserved customers, and YBS supports people who might be turned away by bigger providers (such as the self employed) to get on the property ladder.

“We are carrying on that purpose 154 years after we started,” says Howley, and indeed YBS still views itself as a community focused building society, no matter how much growth and innovation it undergoes. For example, YBS has partnered with End Youth Homelessness (EYH), raising £424,000 in 18 months to support over 107 young people into their own home.

Its member-led community focus also makes YBS more thoughtful with its spending. “Every pound we spend is a pound of our members’ money,” Howley comments. “We strive to have real respect for our members, which means getting the best value out of any investment. It drives a culture of responsibility throughout the organisation.”

A changing landscape

With its refreshed focus, YBS has looked to evolve within a changing financial landscape while still keeping what’s important in mind. Digital disruption is “only just starting” in the mortgage and savings market, says Director of Digital & Innovation Ant Warrington, and YBS is keenly aware of the long journey ahead. “For years, fintech challengers and innovations have been focused on current accounts and payments. Now, we’re seeing mortgages become essentially a digital business,” he comments.

Across the board, consumer expectations are on the up – and as Juryta stresses, competition isn’t just coming from other banks or building societies. “We are consumers of products and services, and the things that used to mark those out don’t exist anymore,” she explains. “Organisations like Apple and Google are blurring the lines, and we’re thinking about finance in a different way.”

Industry leading awards

To adapt, survive and thrive, YBS has already made leaps and bounds toward a digitally driven financial future. Having been awarded Best Mortgage Lender for its Accord brand last month at the Mortgage Strategy Awards, with the Accord broker residential mortgages NPS having grown from -11 in July 2015 to +84 in February 2019 – a truly industry leading transformation.  Other awards include ‘Most Innovative Approach to Driving Cultural Change’ at the Global Process Excellence Awards 2019.  The last three years have been really successful in laying the foundations, delivering cost reduction, improving NPS and enhancing the service we deliver,” says White, speaking in an office littered with trophies and awards at every bank of desks.

“We’re not finished on that journey yet. We’re through part one. Part two will take us into 2020, when we’ll complete our new mortgage platform and introduce a new digital platform. We’ll also add digital support into our branches to create a blend of branch and digital, as well as reducing our cost base while continuing to deliver more options and better service for our customers.”

An agile transformation

To continue its legacy of supporting communities as well as being proactive in competing and innovating across a new market, it’s important YBS puts the proper foundations in place. White has led a significant restructure to streamline operations and foster a culture of innovation and teamwork. “It was about ensuring we had the right structure to take the organisation forward in an agile way,” he explains.  White has taken his learnings from five years in Asia and Australia earlier in his career and used this experience of innovation to lead the culture transformation of YBS.

White is joined at the Leeds office by a cardboard cut-out called James. James is YBS’ ‘customer in the room’, present in meetings ensure teams remain conscious of the impact their ideas and decisions will have on the customer. Even for a C-level exec, it’s an important reminder. “We’ve done all this change – branch closures, brand closures, system migrations, investments – while still maintaining or improving customer  satisfaction,” he says. “That’s why we’re here: to have a genuinely positive impact on our customers’ lives.”

“Structurally a lot has changed,” adds Hunter. “At my level, we went from 45 down to 15. That’s significant: if you talk about an agile way of working, 45 people at director level trying to make a decision is very difficult.” Throughout the organisation, silos have been turned into ‘tribes’ and Kanban boards keep everyone on task. “For a business to become agile, we need a culture that is transparent, challenging and empowers people to take ownership,” says Sampson. “We don’t want too much structure or hierarchy: we need people to feel they can be innovative and that it’s OK to try something and fail on a small scale.”

“We’ve also started to implement a new ‘culture journey’,” says Juryta. “We create cultural ambassadors to help nudge the culture in the right direction. Regulation has driven a tightly controlled organisation which stifled creativity, but we have helped people feel they have a voice and it’s OK to speak out. Our CEO Mike Regnier encourages people to ask for forgiveness rather than permission – that’s a very powerful statement.”

The innovation centre

This philosophy comes in physical form too, with YBS’ glass-walled innovation centre located at the front of its office, open to colleagues and the public. “We were conscious for it not to just be seen as an IT initiative,” says Newbould. Created over seven weeks, the centre is a testament to the creative, agile nature of YBS colleagues. “We had 40-odd events there last year, and only a handful were solely IT,” says Hunter. “Having a place to go which isn’t anyone’s patch – a common ground – is really important. I’m not a technologist – I’ve got a business process background. I say to people if they can think it out in their heads, it’s technically feasible, so focus on the problem that needs to be solved and go from there –we’ll fit the technology around it.”

“Lots of teams use the innovation centre to solve problems,” adds White. “We haven’t given them objectives or a template: we’ve given them the environment, technology, equipment and space to think differently. You have to create a culture where people feel they can win fast and fail fast. Leaders need to learn to let go,” he adds. “If you create the framework and culture, you can step back and let people create that leadership, which develops agility and better governance.”

In addition to the innovation centre, YBS organises regular ‘hackathons’. “We’ve created a methodology and then smaller hacks happen in different business areas,” Juryta explains. She adds that White as COO has been a true ‘catalyst’ for innovation at YBS, and that communicating end goals to each member of the organisation is key to moving forward. ‘Our Story’ at YBS introduces staff to the society’s ‘five to thrive’ priorities, and each department and individual thinks about where their role fits to align with these objectives, forming what Hunter describes as a ‘golden thread’ throughout the organisation. “If the guys running the IT desk can’t see themselves in that ‘five’, we haven’t moved forward,” he explains.

Moving to digital

The right culture must be enabled by the right technology tools, which are leveraged at YBS internally and externally. White is keen to stress, however, that digital won’t replace the human touch. “It’s about offering flexibility of choice. We believe in our migration to digital, but it’s not about ‘either/or’, it’s about ‘and’. We’ve streamlined branches and added technology but we still believe in having our members served by people and we believe in our colleagues.”

With a world of tech at its fingertips, YBS might be tempted by shiny new objects like RPA, AI or IoT, but the organisation takes a business and solution led view. “We do a lot of proof of concept pilots,” says Sampson. “We start small, and get to something that either proves a business case or doesn’t. If it’s going to fail, we want it to fail fast.”

Automation and robotics have been used to optimise processes. “We have a number of robots deployed to improve speed and accuracy or processing,” says Head of Technology Operations Darren Newbould. “That drives direct business benefit into some tasks which were originally done manually, taking agents a number of hours. We’re building on that capability as we speak,” he adds. Juryta also believes artificial intelligence will be vital moving forward. “AI can help increase efficiency and accuracy of oversight so we can make sure we’re delivering on the front line in the best interest of our customers,” she explains.

“In the last five years, we’ve invested in lots of new capabilities, a lot of infrastructure work and tackling legacy IT issues,” says Howley. “The next five years is about springboarding on the great work that has been done – not with heavy infrastructure projects but more nimble, digital, paperless, self-service… looking at the efficiency of the organisation and really transforming a lot of the services our members want.”

New technology YBS puts in place is added to a reliable existing system which has seen no unplanned downtime in over a decade. “We’re replatforming our applications – our core banking and all the subsidiary applications that support that – from HP US to Red Hat Linux,” says Hunter. “That will enable us to use cloud technology – our new technology platform will be cloud based. This is important for us in reducing the cost of IT and change going forward, as well as improving operational resilience. It’s an important foundation to build a digital business on top of.”

Collaboration across a changing landscape

“Change will not be successful if we don’t bring the right parties on board,” says Howley. “We very much take the view that we’re looking for partners, not just suppliers. A partner is a specialist in their field who we want to collaborate with to understand the best way of delivering business outcomes. We work with some great international players as well as an ecosystem of partners based in Yorkshire. We have a mutual respect and culture because we don’t just dictate what we want – we ask for support and help. Our colleagues join us in our societal purpose and so do our partners.”

Notably, YBS partners with technology giant Cisco, Mitel and Olive for cloud and communications, GEP for procurement and supply chain software, IT consultancy giant TCS, and business process outsourcing advisory WNS. “I believe strongly in the view of the ecosystem,” says White. “When we choose partners now, we go through a very strict procurement exercise to ensure they’re right for us and can show us appropriate case studies, so it’s tried and tested.”

For Newbould, communication is key. “We work best where we’re open with our agenda, our digital transformation and our technology journey,” he comments. “The second point is to recognise we don’t have all the answers. All the experts aren’t necessarily within our own organisation and we need support and strategic direction from outside the business. We’re now working much more closely with partners to drive solutions, but also to challenge our own thinking.”

In order to keep thriving for the next 154 years, Yorkshire Building Society must remain nimble, agile and innovative while not forgetting its roots. YBS is there to improve people’s lives, and each member of the organisation is passionate about serving the community. As fintech challengers emerge and innovations are developed to keep up with growing consumer expectations, YBS’ societal commitment is a solid foundation that will not be swayed.

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