Santander UK: Creating a Digital Version of Corporate and Commercial Banking
‘Bank of Choice’ Santander UK has a simple aim: to simplify and digitise the business for improved efficiency and returns for its people and businesses.
During the past five years the bank has turned to technology partners to achieve this goal in its corporate and commercial business in the UK - leaving them to focus on what they do best - the customer experience of banking.
Driving the digital transformation at Santander UK is Jonathan Holman, Head of Digital - Santander Corporate & Commercial Banking, who is taking relationship management to the next level for their banking customers as they look to the future following the challenges of the COVID-19 pandemic.
“We are creating a new architecture that allows us to move much faster,” said Holman. “We're buying into the roadmaps of our partners - they're improving the technology that enables us to improve our business. We haven't sought to be a technology company, we've let tech companies be great tech companies and we are concentrating on being a great bank,” he said.
Santander UK’s corporate and commercial banking teams offer financial services products to corporates and SMEs from £250k to £500 million turnover.
As Santander UK accelerates its digital journey it has invested £332 million for the transformation of services to make life easier for its 14.3 million active customers which includes 6.3 million digital customers and 1,600 new active mobile users per day.
Digitising the bank
‘Digitise the bank for improved efficiency and returns’ is identified as one of Santander’s four strategic priorities for its Corporate and Commercial business which include:
- Continue simplifying, digitising and automating the bank
- Radically improve technology and operations through innovation and optimisation
- Ensure capital discipline and Risk-Weighted Asset management
- Maintain prudent approach to risk
Holman outlined the first part of the digital transformation which has included digitising the building blocks for all of their products and services such as, onboarding customers, assessing credit risk and focusing on financial crime. This has enabled teams to become more agile by removing duplication and increasing automation.
One example of how the digital transformation is working for customers is the fact it used to take an average of 12 days to open a new corporate banking account - now it can take just two days. The process is 100 per cent digital, facing the customer, as they have gone from using 39 different pdf forms to one dynamic online form.
“We've been working on this process for four years and it helped to shape the principles in the corporate commercial bank that we’ve used as guidelines with which to execute our digital transformation, and that's coincided with the advent of new technological possibilities,” said Holman.
“We have almost completed the first phase of digitising all core processes and we are now looking at how we can leverage data and digital technologies to better anticipate customer needs,” he said.
Laying the digital foundations
Reflecting on the first phase Holman said they had prioritised what technology to invest in and in what order those major horizontal processes of the bank should be digitised as he believes it’s about ‘improving individual use cases whilst laying the right foundations and moving away from a difficult to manipulate stack’.
Santander’s principles of digital strategy includes:
- Cloud hosted platforms
- SaaS solutions which are configurable
- APIs to create continuity of data
“Crucially, whenever we bought a piece of SaaS, we've made sure that it's configurable and we've done that to put technology as close to the business as possible. My team is a hybrid mix of business subject-matter experts and those with technical expertise – configurers / developers on each respective platform that supports a particular activity in what we call domains in the team.”
“Those domains support the main, big ticket operational items and the horizontal processes of the bank. These are processes that apply across all products and services, we always have to do things like onboarding, financial crime, credit risk, legal and contracting, fulfillment activities, servicing and sales.
Holman pointed out the digital workflow of these universal activities is supported by an ecosystem of configurable SaaS solutions which include the following technology partners:
- DocuSign - used in fulfillment and legal contracting
- nCino - as workflow for onboarding and for credit risk
- Salesforce - in sales activity, pipeline management and servicing activity
- Tamr - for data continuity and a single customer view
By leveraging the nCino Bank Operating System, which is built on Salesforce and enabled to utilise the Salesforce AppExchange, Santander can now ensure data continuity at every stage of the lending approval cycle - from the opportunity being logged in Sales Cloud through to the loan facility letter being digitally signed by the customer.
Holman said this ecosystem will be critical to delivering the next stage in the bank’s digital roadmap. “It has also helped us to streamline and scale up our corporate and commercial lending processes.”
“We've got tools that are doing specialist activities plugged into tools like nCino, which are broad workflows,” said Holman who pointed out all those component parts are now integratable and able to be run simultaneously with their specialists in any one particular activity.
“APIs and cloud mean that we can move more flexibly with those integrations, creating that continuity of data and natural efficiency. We’ve then got that historic data, a single view of a customer and processes to enable the customer all of which exist in one large system on the Salesforce ecosystem. That's how it manifests itself to our colleagues.”
“As a result of that duplication, some automation and continuity of data that's achieved by those technological components, we're able to offer a better service to the customer,” he said.
“That's really what the first phase of our digitisation journey has been about. It's been about creating efficiencies. It's been about doing what we do already. I don't think bankers have got the first principles of banking wrong. We do commercial and corporate banking well, and we've done it broadly right as an industry for a long time.
“I wrote my master's dissertation on credit risk management techniques using scale social data and Machine Learning to improve them. But the main ratios we still analyse are the same ones identified in 1906 in the first ever article written about credit risk analysis - the basic techniques haven't changed - but how we do it has changed.”
“The technology we employ has just changed expectations in the business about what's possible. It's brought technology closer to the businesses, involving all departments far more in the configuration of that technology,” he said.
Holman commented that legacy core banking systems, with their dependencies and integrations makes change potentially more expensive and slower and involves huge amounts of regression testing.
“Banks are subject to change freezes when there are other priorities in the business that people are using these platforms for - such as big events like Christmas and Black Friday - where one doesn’t want to compromise your core systems, but we were able to extract ourselves from such dynamics by moving to the cloud and to SaaS.”
“We took analysis of our customer experiences, as well as our relationship managers, director and our main sales staff. We were able to look at where they were spending most time and what would have the biggest impact to the customer and colleagues and what tech would lay the right foundations to support our progression,” said Holman.
He commented that progression started with Salesforce and digitising sales and servicing and then moved into onboarding and subsequently moved into credit risk and fulfillment.
“It’s really important to see the biggest impacts on customer and colleague experience first, as well as laying the right foundations to build upon so we can create a new architecture that allows us to move so much faster. We had to balance this with disruption and change capacity” he said.
Power of tech to re-imagine the future
Holman reinforced the message that Santander UK’s technology partners provide them the time and focus to enhance the customer experience.
“Steve Jobs is famous for quoting that when a business moves from the period where a product-minded person is in charge to where a sales-minded person in charge, that is when they've stopped innovating and only want to sell as much as possible in an established market”
“I think he speaks to the idea in that quote that businesses should serve a purpose and the purpose is manifesting the product and via their products is how they deliver the business's purpose for its customers.
“Practitioners in technical areas have to bring that sort of experience of how to execute something well in a domain. In digital, you need to have that technical understanding of what's possible with technology and which platforms suit which use case, particularly banking is now moving into data and data science. I think first-hand experience can't be beaten.”
“However, the digitalisation of any one industry vertical is more difficult in its idiosyncrasies than perhaps the digitalisation of a generic task. So if you take a platform like Salesforce which digitises CRM in servicing and marketing activities as a configurable tool helps every company complete those tasks.”
“But then it takes an nCino or a financial services cloud from Salesforce itself to begin to build that vertical specific capability. That concept, existing in technology, is that it has to get verticalised in order to continue to have traction and continue to improve how an industry functions; that speaks to the idea that industry knowledge is crucial.”
“In digital we have to marry someone who is a banker with someone who is aware and capable within technology. It's only when you bring those two together that you can truly make change rather than saying, ‘we've got some systems now let's try and solve the problems of those systems.”
“Henry Ford classified that with the faster horse quote, ‘If I had asked people what they wanted, they would have said faster horses,’ but, it's far more important if you're going to reinvent something to say like Steve Jobs did, you didn't know you want an iPad, until I showed you one. Sometimes, transformation is that radical - people can't even imagine it if they don't know what's possible with technology or how something could be re-imagined from a first principle.”
Looking ahead, Holman said he is excited about the next digital phase which is focused on listening to feedback from colleagues, customers and creating operational elegance.
“We have to continue to listen to stakeholders like every major business does from Netflix and Apple or Amazon. They're constantly iterating their software, listening to feedback and adding new features,” he said.
You can always seek to do better, do things faster and make things easier. We try to listen to our customers and colleagues and make sure that we continue to use the power of the new platforms to get that right.”
“Our pipeline is very busy so we've got to make sure we prioritise in this next phase and pick off the smaller processes in the right order. But we've also got more complicated things going on as we move into the realm of Artificial Intelligence or thinking about tokenisation of loans and securitising them on the blockchain. These are concepts that are less intuitive than making a document e-sign and they take more explanation.”
Education in open banking
Holman said the speed of digitalisation within open banking both in the UK and around the world calls for education within the sector to smooth the transition for their consumers.
“We are undergoing the biggest ever change via open banking, so I think the banking sector and even the government have an education responsibility. It was launched by the industry three years ago, powered by technology and APIs, but there was no collective mass communication.”
“Despite this, a huge number of people have adopted it because it creates an interesting and more competitive banking environment and lots of technical possibilities,” said Holman.
Santander UK is going to launch a number of open banking propositions that will include helping customers permission data to them, as well as helping businesses collect payments from their customers by a smart invoice or via QR code payments.
“Those are the big innovations that we've seen take off in other markets, particularly China, but also increasingly in Europe, so we're hoping to bring those benefits to the UK. Finally, we're looking at AI and more end-to-end automation with our digital platforms and will continue to shape every customer experience to be the best version of itself that it can be,” he said.
Key differentials of Santander UK
Relationship bankers are just one of the key differentials which sets Santander UK apart from other banks.
“Our relationship bankers continue to achieve very high scores in various surveys that the industry conducts about the quality and the experience which customers have from that relationship management.
“We're here, in digital, to augment that relationship team by improving their experience, which enables them to serve the customers more efficiently as well as direct customer touch points that we can improve.”
Holman pointed out their international proposition is also a key factor which gives them the competitive edge “We support high growth and international businesses and we can help businesses manage interest rate risks or foreign exchange risks.
“We've tried to create the idea that the digital and the customer experience can also be a differentiator. In the short term, we can create better experiences as a result of digitalisation and in the longer term the technologies and partners we have chosen will allow us a more nuances and targeted approach. Digitisation unlocks all those opportunities, which maybe wasn't previously possible in processes and systems.”
Technology can underpin First Principles in banking
First Principles Thinking is an idea recently popularised by entrepreneur Elon Musk - although it dates back to the philosopher Aristotle who defined it as ‘the first basis from which a thing is known’.
Musk describes First Principles Thinking as “you kind of boil things down to the most fundamental truths… then reason up from there.” This is what inspired his quest to send the first rocket to Mars - an idea that would become the aerospace company SpaceX.
Holman says it is important to think about the First Principles of banking when it comes to applying new technology.
“The basic banking system and intermediate takes those in the economy who have got money and lends it to someone who needs money. For example if someone is selling produce at a market they can get a loan to buy a bike and then they can carry and sell more produce, pay off their loan, and buy a car. The intermediation that enabled that lending, helps them to scale very quickly.”
“I don’t think we should forget how fundamental and important banking is to our economies and our job is to do that task as well as we possibly can. Creating the money supply is a powerful and significant responsibility. Technology can make that task possible in a way that's better than it's ever been performed.”
“If we choose to stick to the First Principles of effective banking, understand them and then choose the right technology to help us do them efficiently and quickly, with customer understanding, with context, with the right risk appetite and the right level of profit that is sustainable for our industry and the economy, I believe banking can do some powerful and amazing things and technology can help underpin that.”
How Santander UK has become the ‘Bank of Choice’
Since its entry into the UK market in November 2004, Santander UK has transformed from its heritage of three former building societies to a full-service retail and commercial bank with focus on its digital future.
Santander UK is a wholly-owned subsidiary of the major global bank Banco Santander.
Milestone moments include:
- 2004 - Acquisition of Abbey National
- 2008 - Acquisition of Bradford & Bingley
- 2009 - Acquisition of Alliance & Leicester
- 2011 - Breakthrough programme launched bringing funding, expertise and business support to high-growth SMEs reinforcing its commitment as the ‘Bank of Choice’
- 2012 -1|2|3 World suite of products was launched - embodying our vision of Simple, Personal and Fair banking for all
- 2014 - Santander UK Group Holdings plc established to create a 'single point of entry' in case of resolution
- 2015 - Launch of the kitti and spendlytics apps
- 2016 - Launch of investment Hub, a digital end-to-end mortgage application process, the kabbage online loan platform
- 2017 - Roll out NeoCRM a customer relationship management tool