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Inside the Digital Transformation at Lloyds Bank

This is the 8th episode of HackerRank Radio, a podcast for engineering leaders interested in solving developers’ toughest problems today: Hiring the right developers. Hosted by Vivek Ravisankar (CEO & Co-founder, HackerRank). You can subscribe to us on iTunes and Google Play.

Over the past few years, technology has transformed financial services – creating new opportunities through advances like artificial intelligence and cryptocurrency. Now, financial institutions of every size across the globe are working to adapt to these new changes. 

We sat down with James McLeod, software engineering lead at Lloyds Bank, to learn more about how one of the largest banks in the UK is handling digital disruption in the finance industry. James has been a developer for almost twenty years and has spoken at places like GitHub Conference and DevOps Enterprise Summit.

HackerRank’s CEO Vivek Ravisankar and James cover:

  • What’s triggering the digital transformation in finance
  • How Lloyds Bank is adapting to new customer needs in the digital age
  • How technology has changed the finance industry’s culture
  • Why developers are interested in working in the finance industry
  • Changes Lloyds Bank has had to make to their tech hiring process

Listen to the episode, or scroll below to skim the transcript.

Jump ahead:

VivekSo, welcome James to Hacker Rank radio. I think our listeners will love to know a bit of a background about you.

JamesYeah, absolutely. So, my name’s James McLeod. I’m the software engineering lead at Lloyds Banking Group. I’ve been with the company now for about two years. I was actually introduced to Lloyds Banking Group through a consultancy called SapientRazorfish. We were invited into Lloyds maybe about two years ago now in order to help with digital transformation of the organization. And just the challenge of changing the way that the organization works in terms of engineering and in terms of agile and how we work together and how we kind of form new ideas. When I was introduced to it, it sounded interesting. But when I actually joined it was just phenomenal. And it just so happened that at that time I was after kind of a big challenge within my life around my career. And I thought to myself how could I actually make the greatest impact here? And whilst I was kind of working within the organization as a consultant I knew that by moving into Lloyds and becoming a permanent person within the engineering leadership team that would have the greatest impact. Because ultimately you can do some magnificent things as a consultant but you are a little bit kind of detached from the organization.

And so, I made the leap. It was a bit of a leap of faith. I decided to join the ranks and I haven’t looked back to be quite honest with you. And so, now I’m kind of looking after how we’re transforming in terms of engineering communities, skills, shifting into a non-hierarchal organization, forming chapters. And really demonstrating engineering across the whole horizontal width of the organization.

Vivek:   And so, you’re LinkedIn, one of the things that you mentioned in your title is that you’re engineering the bank of the future. We are starting to see this trend happening, every companies becoming a software company. There’s nothing called a non-tech company these days. Everybody’s hiring developers. And I would say what was previously called financial services is now changing to FinTech. And now eventually it’s like a tech company. Maybe I’d love to know more broadly about what do you think triggered this transformation? I mean, obviously I’m biased because we started HackerRank five to six years back and we’re starting to see a tremendous amount of demand of hiring engineers from all of these companies. That’s one lens to have. It seems like it’s more than my bias. Like there’s some external shift that has happened that’s causing this transformation. Would love to have you give specific examples or things that you do differently than at Lloyds or the general financial industry.

James:  Absolutely. So for me, the thing that’s actually triggered this is the technology shift that you have through applications and the way that people are engaging with products online. The customer – and funny enough, I was actually speaking to somebody about this yesterday at The GitHub Conference – customers have a more physical relationship with businesses now, right? So, when I started within my career, not to put a number on it, the physical relationship an organization would have with a customer was a lot more detached. So, you would create a product, you would ship it, and it would be out there. If customers knew how to use it, then that was great. If they didn’t know how to use it or for whatever reason whether it was accessibility or anything else, it was then the customer’s challenge to either get in contact with you or figure it out.

But what we have now, so if we advance ourselves to where we are now, we’ve got a different culture of engineering now. Which is centered around cycle times and feedback loops and agility and automation. And also, the types of engineers that we have right now are a lot more curious about the impact that their software is actually having out in the marketplace. And so, engineers are a lot more like focused on business outputs and business impact. And what that means with all of that together, you’re able to ship quick. And actually see how customers are engaging with your applications. And if people are having difficulty, people are a lot more kind of like emotionally attached to their applications now that they will take it back round through the feedback loop.

The thing that is actually triggering the transformation is that within finance we’ve now got challenger banks. In the same way as over here in San Fran, you’ve got Uber who are challenging how people take cabs. So, it’s almost like you own that relationship through your mobile to a cab driver and you don’t need to extend your arm in order to hail. You don’t need to go to a specific place in order to get their service. You touch a button. And then somebody comes and collects you. The only other kind of like analog way that you could extend a previous relationship that you had with a taxi would be to grow longer arms. Or jump higher or shout louder. The technology is putting you in contact with that cabbie whether you know who it is or not.

And within financial services, we’ve now got challenger banks who are actually really small. In comparison to Lloyds who has many thousands of engineers, we’re actually finding that you’ve got lean companies, specifically in London, and London’s actually really great for this. San Francisco is really innovative. And you see new products everywhere. In London around finance we’ve now got all of these disruptive banks, kind of like appearing in offices. And with a very small team or a collection of individuals they’re able to create new products which also have that real close relationship with their customers. And they’re able to get feedback from them and engage with them personally. Seeing this kind of like trend as how challenger banks are putting customers at the center of the experience, retail banks like us, like Lloyds, or HSBC, or Barkley’s, or RDS or whoever, are also thinking, ‘Wait a minute, our products, where people have been relying on banks in order to get a mortgage, or to get a loan, or paying towards a savings account, that kind of like draw now isn’t enough.’ Customers want a relationship. They want to feel physically kind of attached to the bank through their digital connection to that. No matter what kind of connection it is. It can be mobile. It can be Alexa. It can be anything.

VivekWhat do you think they were doing previously? Like when you talk about the digital connection.

JamesSo, I think we have-and this isn’t just a finance thing. I think banks and other large enterprises have products that people have been relying on. So, you need a bank in order to go to work. You need something there in order to have your salary paid into. You need to use a bank in order to get a mortgage. You need to go to a bank in order to get a loan, in order to buy a car. And so, I think it equals individual needs around finance as kind of what brought people into there. And so, products have been selling kind of like the relationship. So, you would sell the relationship through low-interest rates. Or the overdraft facility on your account. And so, I think the draw into banks has been a magnetism because you need it to survive in life.

But now anybody-I’m not saying anybody could be a bank. But we’re now seeing Amazon or Apple or Google or people who you really wouldn’t relate to finance providing services around provisional loans. And if they wanted to they could also provision other types of financial services because they’ve got deep pockets. And so, the attraction for banks now is how can we actually provide a service to our customers and put customers at the center. Whereas before the products were at the center because actually you couldn’t go to Google in order to get a loan. And finance was a lot more centralized. Whereas now it’s very decentralized. You’ve got startups which are providing account facilities. And maybe there’s only 100 people as part of that organization. Whereas Lloyds is built on many thousands of people providing these services.

So, to answer your question directly, people came to us because they needed us. But actually there’s a lot more opportunity for people to go elsewhere and engage differently with finance.

VivekAnd can you give me like a specific example of what was an interaction with Lloyds Bank, for example like ten years back from a customer perspective. And how has it changed right now? And maybe after this I’d love to hear what are all of the other areas that you plan to change in the future?

JamesYeah, I mean that’s really great, right? I mean you and I, we’ve been living in the digital age now for many years. I mean, this is my career and I’ve been in my career for a while.

VivekAlmost twenty years?

JamesYeah. You’re right, so let’s expose that elephant. For twenty years now I’ve been playing with stuff digitally. And so, that’s not new to me. I’ve always been experimental with applied technology problems. But when it comes to banking, people, people in society, have always been used to a bank having the physical presence somewhere. So, within the U.K., about ten years back, people would go to their local post office. You know, it’s a post office, right? You buy stamps there. You exchange currencies there. You send parcels. But the post office was a real social gathering grounds. Whereas now we have like online communities. We’re always attached to like Slack, and Facebook, and Instagram, and elsewhere.

So, the post office and also your bank was where people met. For many people that would be how they actually had physical one-to-one relationships with people. Banks had that like tactile relationships with people. So, you might know the cash assistant because it’s a neighbor of yours. Or you go in there daily because you own a business and paying all of the money that you earned.

Fast forward like ten years and a lot of transactions that are actually being made aren’t that physical anymore. So, we call them checks. I’m pretty sure they’re also called checks in the U.S. But like physically written exchanges of currency where you get your checkbook out and you kind of like write a check and you give it to somebody to pay into your account. All of that stuff is being phased out now. People are actually exchanging currency from bank account to bank account online. The need of people to go into branches now isn’t really there. It’s not about removing the social ground for people. It’s not about punishing society. It’s just that society is shifting. People aren’t actually going into branches now because there are easier ways of engaging with delivery services. And now, within banking we’ve got lots of different technologies that allow you to exchange currency without even needing to leave your desk.

So, for me it is that removal of the bank from the High Street. But not necessarily the removal of the branch. The brand is shifting. It’s coming into your kitchen through Alexa or Okay, Google. It’s kind of like in your pocket as e-wallets if you’re into that kind of stuff. It’s like the removal of banking from the physical and transitioning it into the digital.

VivekInteresting, interesting. How do you categorize the progress that you made at Lloyds Bank so far?

JamesThe progress is amazing. Just even within the last couple of years the amount of change that we’ve been able to do has been outstanding. We’re actually moving from what I’d actually call a hierarchal organization. Specifically, within engineering to something which is a lot more non-hierarchal and a lot more community feeling. And it’s really interesting because there’s like a real healthy tension between the two. So, when you work for a hierarchal organization, the leadership says that you’ve got to make a change, right? And then that cascades through the hierarchy of the organization and people do it, right? When you’re actually shifting or turning into an organization which is digitally transforming. It’s not just a movement of digital. It’s not just about how you apply technology. It’s also like a mindset. It’s delegating authority to people so they can actually fix things for themselves. Teaching people how to communicate across borders so we can shift knowledge around. But you can’t do that in a hierarchal sense. You can only do it by demonstrating what needs to be done and bringing people on that journey.

So, two years ago there was belief that we were transforming. People didn’t know really what that meant. They heard that we needed to do it. Fast forward two years and people are engaging in it. They’re partaking in it. People’s confidence is growing. I’m coming out to San Fran to speak at GitHub Universe. That type of thing just didn’t happen then. Going to IBM Think, speaking at the DevOps Enterprise Summit, speaking on podcasts about it wasn’t really something that was part of our advertised list. But now it is. Where now we’re understanding that knowledge needs to be shared and people need to work together. And actually I’m not the only one doing this now. People are actually seeing what we’re doing in this room, talking. And I’m pretty sure that there will be other people doing the same. The movement is actually starting now and it’s really gaining momentum within the organization.

VivekSo, Lloyds announced earlier this year that they’re going to invest about three billion pounds on business transformation. A big portion specifically dedicated to digital transformation. Now, that’s a pretty big check. I’m assuming they’re using Lloyds Bank for that. Can you walk me through what triggered this? What is the goal for this kind of investment?

JamesRight. So, the interesting thing about that, that whole investment in the transformation isn’t something that’s happening behind the scenes. It’s not like where Lloyds used to be where engineering or IT was something that you needed. It was almost like a means to an end of creating products. And you needed an IT team in order to do that. With this three billion pounds actually being invested. It’s almost like an open declaration that engineering is of importance. It demonstrates that we’re now an engineering organization as well as a bank. Which for me is actually really important. It opens up the doors to people to recognize that actually we are a technology company now. And that three billion isn’t for the guys who are working in the back room out of sight. It’s like an open declaration by the organization from the people who are leading the bank. The actual CEO’s and the people who are making these decisions. It’s almost a recognition that engineering and technology is fundamentally important for the future state of banking. And we’re going to invest a huge amount of money in transforming that and also enabling the people who come with it. Because Lloyds could invest three billion pounds and not actually announce it at all.

That declaration of we need to transform, we know that there’s other competing businesses out there outside of banking, it’s a real clear signal to people within the bank and also people outside of banking that technology is important. And it’s not just an interface to your account. It’s actually a physical engagement. If anything, knowing that engineering is important and three billion pounds is a substantial amount of money is one thing. But that actual physical announcement that we’re transforming ourselves and engineering is at the forefront of that is just amazing.

It almost takes Lloyds out of banking and into an area of technology like Google, or Facebook, or Amazon or places like that. And to be quite honest, it’s that kind of message that will make it really interesting for engineers to join. Because what with open banking and various different API’s that are being created around Europe for engaging with banking, it means that the whole technology engagement around that is actually a really fun kind of like a thing to experiment with. And with some of the other product that challenges are creating they’re experimental as well. I mean they’re all kind of really creative in the way that problems are being solved. And to know that not only do we have the investment we have around that, we have the size. And we see ourselves as engineers capable of creating great things like the guys at Facebook are doing. It just seems like it’s incubating a really exciting time for us right now.

VivekAwesome, got it. And did you have to meet any fundamental changes in your hiring process?

James:  Yeah, and we’re doing that right now actually to be quite honest with you. And that is a really interesting line of conversation that I love. So, what have we noticed? There’s not enough engineers out there. But that doesn’t dictate whether people are smart or not. Even education doesn’t dictate whether people are smart or not. It’s something that allows you to qualify what you’ve done, how you’ve got to a certain point. But it doesn’t mean that we’re lacking intellect within a society. And I’ve also worked and spoken to people who work in charities within the U.K. who go out into neighborhoods where education hasn’t been possible due to either wealth or personal circumstances or family commitments or anything like that. And they’re finding people who have like real interest in FinTech, or blockchain, or cryptocurrencies, who haven’t been through the education system.

And so for me, the way that hiring is actually shifting is going out into communities, visiting meetups, creating meetups, inviting people to join and to speak, and to demonstrate what they’re doing. Rather then I think agencies have their place. But that’s not the only point of contact. It’s not about a SEO and skimming CV’s for the best possible keywords anymore. It’s about having that kind of physical connection as an engineer to society. And letting people know that they can share ideas. They can show us what they’re doing. How they’re actually applying technology. And the qualification that they have won’t be the first killer question that will stop you from having an interview or having a conversation.

VivekWell, one of the questions that we ask all of our guests is what was your biggest bug in the production environment?

JamesWow, that is a really interesting question.

VivekThis is supposed to be an embarrassing one just so you know.

JamesYeah, I can tell you something that I’ve done. But I don’t know if it was a production bug. When I was first starting out, so I literally just graduated from university. And I was really lucky. We’re talking about Silicon Valley here in the U.S. where we’re sat right now. Over in the U.K. we have a similar thing. It’s called the M4 Corridor. It’s like our Silicon Valley. We get all of the various tech companies, Oracle, and Microsoft

And when I graduated I joined a startup. And so, there was literally about 50 of us. And I remember during that high-paced grace they actually put me in charge of kind of like all of their DNS for their site, for their email, anything that was online. That was mine to own. We were going through a migration of our servers. From one-it wasn’t a cloud provider. I mean, they provided us servers. That’s the way it worked back then. And we needed to change our DNS from one provider to another. Relatively straight-forward, nothing too big.

But what I did was redirect everybody’s corporate email onto somebody’s server somewhere in the States. And we came in one morning and people were like, ‘It’s really quiet in the office. What’s going on out there?’ And it was only because some server guy in the form of service was saying, ‘Do you realize that all of your corporate email is actually hitting our servers? And it’s actually starting to kind of like aggregate itself in our mailboxes.’ And I was like, ‘Oh, crikey. What have I done here?’

VivekYeah, that might be the best hack for increasing productivity in an organization to have that. Well, maybe we can conclude with that. Thank you so much James. It was great talking to you and hearing your views on the digital transformation. Thank you for being a part of our podcast.

JamesYeah, thank you. It’s been an absolute pleasure. Thank you very much.

Vivek:  Thank you so much for the listeners. If you have any specific questions or topics, tweet to @HackerRank. Thank you so much.

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