Ashok is the Global Head of Consumer Banking and Payments at Barclays. Prior to this, he was the CEO for Barclays Bank UK, covering Retail Banking, Wealth, Business Banking and Barclaycard UK. Before joining Barclays in 2010, he had an eminent banking career as a partner with a JP Morgan Chase funded private equity firm Brysam Global Partners and his last position at Citigroup was as CEO, Asia Pacific. His success can be credited to his demonstration of passion for building and managing businesses across the globe and this event is your chance to hear him talk about his journey. Olivia Dickson conducted the 'fireside chat' with an opportunity by the audience to ask questions and network.
Olivia Dickson is a senior banker, previously worked as the non-executive director at Investec PLC, Virgin Money PLC, Canada Life Limited and Travers Smith LLP. She has just been appointed as non-executive director at Royal London Group.
Barclays UK | 1 Churchill Pl, Canary Wharf, London E14 5HP 12th February 2020 6:30-6:45 PM: Arrival and Networking 6:45-7:30 PM: Fireside Chat with Ashok Vaswani 7:30-8:00 PM: Question and Answer 8:00-8:30 PM: Refreshments and Networking
The following is an edited transcript of the Fireside Chat event.
CONSUMER BANKING & TECHNOLOGICAL DEVELOPMENTS
What are your views on the role of AI in all its many forms as a disruptor in consumer banking?
In what ways do you think the regulatory environment will change after Brexit - will removing ourselves from EU regulations help or hinder digital banking?
There's been much talk about central banks issuing digital currencies, and crypto-currencies, claiming that this will make payments more democratic and efficient – will this happen and is it a threat or an opportunity for Barclays?
Given its scale, Barclays has an enviable position in understanding the banking and payments landscape and using big data and machine learning to glean insights into consumer behaviour. What are some unique observations you've had about how UK consumer behaviour has evolved - are there pain points that nimble start-ups could focus on that Barclays cannot?
On Consumer Behaviour
We're seeing much more staycations, holidays to Europe and in the UK; mainly as a function of the Pound at 1.26-1.27 level, and the sun. We are seeing the marginal customer under a lot of stress – the consumer debt is at the same level as Pre-Crisis but interest rates are much lower, so affordability is much higher. We have seen a lot of mortgage refinancing. The regulators have taken a very aggressive stance against unsecured credit. The UK consumer generally is fine and small businesses should be able to compete. The government hasn’t really changed the interest rates, with Carney moving on and Andrew Bailey kind of taking over, but they do have the ammunition cut interest rates by 25-50bps.
On Nimble Start-ups
Consumer / retail banking is very product lived and they don’t take a holistic view of the customer. If I was to do a start-up, I would think about what is the customer pain point that I am trying to solve, irrespective of product. The other thing is opportunity. The biggest challenge is scaling. It does not mean how many customers you can get. Scaling has many elements to it - more interest from the FCA, capital, regulation, technology stack to be consistent with that scale, cyber security. You have to get ahead of it. Eagle Labs by Barclays with over 400-500 portfolio companies and 26 (Eagle) labs across the country, focuses on incubation, rapid prototyping and innovation.
Questions from IPF Members and Guests
On Open Banking
What kind of opportunities does open banking create here in the UK infrastructure and any comparisons you could draw to open banking here in Europe and the UK to what’s happening in India with UPI and Digilocker?
India has built an infrastructure that is, by far, the best in the world with Biometric Adhar card, UPI, Google Tej, PayTM. This is not replicable outside as those capabilities don’t exist in other kind of cases, which is kind of unfortunate. Europe and UK are ahead of the US. All the innovation in Europe and the UK is driven by the regulators and in the US is being driven by competition. The traditional economic theory suggests that competition takes you further, but currently Europe and the UK are ahead. UK has decided to go even further than Europe.
When we first heard about open banking, we thought this was going to be great new for us as we sitting with a lot of customers and data, and didn’t know what do with it. Later I created 2 teams – one team was set to check how open banking can be used to get specifics right from what functionality you are going to land, policy and lobbying efforts and the second team to say what can we do to protect ourselves from this. There are some very interesting things that evolved out of this – one of those was mere aggregation is not sufficient.
The take-up of open banking is much more in small businesses as they are integrating with the software houses. That’s where the battle is, is the front portal going to accounting software or banking software. The way we think about that and handle that is where the challenge lies.
Will technology companies take over some of the banking functions?
This goes back to the regulatory arbitrage. We can’t allow the regulators to arbitrage the regulation. What they are doing very smartly with the currency, cash, and resources and because they are a lot of customer focussed than any other financial services institution, they are starting to own the front end and push us in the plumbing. We have to be savvy enough to say, what is it that we own to take to the table or is there a different model to be adopted.
One has to be adaptable to be able to change the hat from being in a defender, who is in a strong position, to that of being a challenger and to be able to change the strategy.
Do you think there will be a time when Apple takes over RBS?
I doubt that apple will ever take over RBS as Apple doesn’t want to get in the regulated space. Their primary goal is to sell more iPhone and create a good ecosystem to facilitate that, which they have successfully done.
ESG / SUSTAINABILITY / ENVIRONMENTAL & SOCIAL IMPACT
What demands do you see the most from consumers when it comes to addressing environmental, social or governance factors and how do you see big multinationals responding to them?
We have to pay a lot of attention to and up our game. Our generation has to spend more time and energy on it. We cannot leave our planet depleted and impoverished. We all have to collectively do out bit, it’s not going to be sufficient meet the Paris Accord.
We still need to work out the details of what needs to be done and how we do it. Davos Summit this year had Climate Change as the main area of focus. We do affect very large segments of the economy, so if we do decide to goa after something, like digital skills, we will have a massive impact. We are spending a lot of time thinking internally about where do we make a start, what do we really do and how to make an impact; not just for Barclays but through our customers, vendors, suppliers. This is watch-the-space kind of question.
Microsoft recently announced plans to become carbon negative, not just carbon neutral. What plans do Barclays have to address sustainability and help their customers to do the same?
We have also put out some goals on carbon neutrality, not positive, by a certain year. But I don’t think even that will be sufficient. We will have to up our game and we will have to carry the ecosystem with us, including our customers and clients. We have taken all the obvious steps about not funding the fossil fuels but I suspect that we will have to do more. So I guess, this is also just watch the space.
Diversity at the board and executive leadership levels at FTSE100 companies has had mixed results - with women representation rising to 30% but ethnic diversity actually falling. Looking across the pond, we see prominent NRIs occupy leadership positions across finance and technology. What do you think holds back NRIs in the UK?
I am not sure if anything is holding NRIs back. In this room, everyone is at a very senior position or running a pretty significant business. I think the Indian community in the UK has done an incredible job. Just look at the Indian diaspora – it has done exceptionally well. When Modi came and David Cameron got up to introduce Modi, it received such a warm welcome. The NRI community in the UK is in a very strong position. NRIs in the US have done exceptionally well, more in the tech world. Two weeks ago, Arvind Krishna got appointed as the CEO of IBM, yet one more Indian that has scaled it. Of course we have Sunder Pichai, Shantanu Narayen at Adobe, Ajay Bagga at MasterCard, Satya Nadella at Microsoft. The financial services in the US does not have at least at the top level, be it JPM, Citi, Wells Fargo; the banking community has fewer CEOs. I am sure the management committee has many Indians. But Diversity is much bigger issue. We first need to understand why Diversity is important. And to my mind diversity is important not because it is “nice-to-do”, it is important because your management, your colleague workforce has to be a replication of your customer base, otherwise you are not going to understand your customer. Is your colleague base a mirror of your customer base? The most important thing is the diversity of thought.
Questions from IPF Members and Guests
On Financial Inclusion
What do you see as the opportunity of the remaining other 4mm, the people who need financial inclusion and who don’t have it - in terms of payment, lending, particularly those who are considered to be at the low-tech end and those who don’t have smart phones, which is a large population?
Important from the customer’s and government’s point of view. The efforts taken by the Indian and African governments, of offering accounts for the part of the society which is financially excluded is very admirable. The UK has basic bank account, which has no fees or charges, is provided by every high street bank. In fact about 25% of the Barclays’ customer base are on that basic bank account. Lending is a little bit more complicated as it is linked to affordability. You don’t want people who don’t understand it or afford it to get into debt spiral. The regulators in the UK have been very focussed on this point, some of the examples are pay day loans, or what happened to Wonga. The bad side is that if you shut the official channels, they go to the unofficial channels. So there is a balance to be had there. Financial inclusion requires financial education and without that it is very hard to achieve.
ESG investing from banking standpoint, there are a lot of pension funds that need to maintain an ESG score. Is it just a tick box exercise or is it actually in spirit?
Much more work needs to be done. We have not taken this issue as seriously as we should, we need to step up our game.
ADVICE TO IPF MEMBERS
What are the key skills and attributes you would expect a young professional to have that will help them succeed and stand out? What skills / knowledge might be particularly valuable in say 5-10 year’s time? And what qualities will always be in demand?
There will always be some jobs which require “rocket scientists” but for the most part, what we do is not rocket science.
For a young professional who is entering professional life, the single most important attribute to have is Attitude. If you have the right attitude and if you are willing to learn and if you are willing to give your best shot, there is absolutely no way you can wrong.
Linked to attitude is doing what you really like, so following one’s passion. If you are not working on what you are passionate about, there is no way you can excel. If what you are doing today is not exciting you, then you should change what you are working on as life is short.
As early on in your career, the more experiences you take on, the better, as expenses are relatively cheap, later on the expenses are very expensive.
Education is big deal, the model that you can study for the first 25 years and expect that to keep you going for the next 50 years is now dead. In the future, there will have to cases where education is not going to be about content, education has to be about learning how to learn, how do you find what you want to learn and how to you actually do it. We all have to be prepared to say that at various stages of our life, irrespective of our age, we will have to go back and take formal or informal learning. If every day you are not learning, not reading, not adding to your knowledge, there is no doubt that not only are you not becoming stagnant, but also you are falling back.
Questions from IPF Members and Guests
Globally, education is all about doing well and landing in good jobs. What are your thoughts on teaching children, that is one option and creating jobs, that’s the other option?
Some people have risk taking ability and some don’t or don’t have the capability to do that. The world is changing so fast and you have to tell people to take advantage of that opportunity.
What keeps you awake at night?
Honestly, when I come home, I am quite exhausted and do sleep quite well.
We recruit candidates on the basis of their merit and they get sacked for their behaviour. Can you speak about experiences?
You have to look at the ‘What’ and the ‘How’. You have to look at ‘what’ they are doing, but the ‘how’ is even more important and demonstrating that in some instances the ‘how’ will take precedence over the ‘what’. This is what will prevent bigger mistakes being done and help set the culture of the organisation.
What advice do you wish you had been given when you were a young professional? What advice would you give to younger generations today who are just starting their career?
Over the years, as I have gained more exposure and met a lot of people, I think opening up the mind and allowing other perceptions, to know that there is no black and white – everything is a series of grey, is really important. Parents also have a big impact. Children must be taught to question everything for themselves. This is because everyone has their own biases and prejudices, therefore, it is important that they come to their own conclusions. This is also what I tell my daughter. We should allow people to broaden their horizon and even if they make small mistakes, that’s fine, because you rather make that small mistake and learn from it than impose a certain way, which later becomes a big issue.