EXCLUSIVE: ‘TSB lays out its stall’ – Jason Wilkinson Brown, TSB in ‘The Paytech Magazine’

The first of the UK’s high street banks to launch an API-driven marketplace for customers, TSB is leveraging its Cloud-based platform to reap the rewards of open banking, says Jason Wilkinson Brown

Back in 2018, TSB must have thought the sky had fallen in after a move, heralded as the start of a brave new world, ended up nothing short of an IT, customer service and PR disaster.

The UK bank’s migration of its five million customers and their 1.3 billion records from a banking platform it was renting from former owner Lloyds Banking Group, to its new state-of-the-art platform developed by its Spanish parent company Sabadell, left nearly two million customers unable to access their accounts. As a result, TSB made a thumping year-on-year loss.

At the time, it said that the ordeal would make it stronger. Fast-forward three years and the evidence very much points to that being the case. TSB is now widely acknowledged as having one of the most technically-advanced (and resilient) platforms of any of the UK’s high street banks. A jewel in its offering is the new TSB marketplace – a conduit for customers to access a number of third party-provided products and services, designed to make personal and business customers feel more confident about their money.

TSB was the first of the mainstream banks to launch such a service, but the concept was one that was very familiar to its head of digital propositions, partnerships and open banking, Jason Wilkinson Brown. He’d previously spent time with the UK’s Starling bank, which made the marketplace concept central to its challenger model.

“In essence, we have a one-stop shop, where the approved partners we work with can help customers improve their financial wellbeing and have better money confidence, outside of traditional banking products and services,” explains Wilkinson Brown. “Giving customers greater choice and freedoms ‘points to us recognising that the smartest ideas aren’t always inside TSB’, he adds.

“By having a marketplace, we can bring best-in-class propositions to our customers, both retail and small business.”

TSB had originally introduced a lending marketplace in partnership with Funding Options, just for its small business customers, in 2018. This year, it teamed up with ApTap to help personal customers save money on their bills; Wealthify to help them invest, and Legal & General to offer them life protection, while also giving businesses access through its app to Square card payment services and Enterprise Nation support.

The timeliness of TSB’s marketplace can be seen in the context of changing customer needs, prompted by the coronavirus pandemic. That proved to be the ‘rocket fuel’ propelling TSB’s work with partners, according to Wilkinson Brown. ONS figures, released in April, showed that there have been distinct winners and losers in the UK population as a result of the uneven economic impact of the COVID-19 crisis. Many have suffered financially through changes in job circumstance, while others have been able to save money (through reduced spending) and are, on the face of it, better off.

The first providers to appear this summer in the personal banking TSB marketplace, says Wilkinson Brown, were selected to address both these changes of circumstance and they are already delivering results for customers.

“We’ve seen the pandemic widen the social divide in the UK over the last 18 months. Unfortunately, due to the pandemic, a number of customers had lost their jobs or had been furloughed and were financially finding life tougher. At TSB, we needed to help them find opportunities to save money, and therefore we stood up the subscription management partnership with ApTap, where they could connect their accounts using open banking, get that really quick understanding of their money and where they were spending, and identify opportunities to save. So, those forgotten gym memberships, or Spotify or Netflix subscriptions, could be picked up, but also, crucially, they could compare their broadband, gas and energy providers, and look to save some money there, too. Through that subscription management partnership, we’ve seen, on average, customers save £170 on their bills, and one customer saved as much as £400.

“Then you have those customers who were lucky enough not to be put on furlough and carried on working. These people also had changing needs because they were saving more, so our partnership with Wealthify helped them put that extra money into, say, an investment or junior ISA. And we’ve a partnership with Legal & General around life insurance because it’s important we help customers not just for today, but also for the long term.”

“We’ve more partnerships in the pipeline in the personal banking space. There’s an exciting number of things we want to do.”

For business customers operating in the new economy, post-COVID, Square offers not just secure mobile and contactless payments, online and in-store, with automated admin, but following its acquisition of buy now, pay later leader Afterpay, a way for them to keep pace with customer expectations for greater buying options. Small businesses can also join Enterprise Nation’s community of fellow owners and industry pioneers who share their knowledge and support.

The marketplace is a win-win for all concerned, then – customers get added-value services, the providers get top slot on a mainstream banking platform with all the credibility that accrues, and a route to five million potential new customers, while TSB gets to strengthen its relationship with account holders by providing them with a one-stop shop. But for the bank, there are also existential market forces propelling this stage of its evolution.

The pandemic served to consolidate the hierarchical position of the UK’s big four banks – latest full-year earnings reported by HSBC, Barclays, Lloyds and NatWest revealed that their domestic customers deposited £221billion of extra cash. That will not be lost on Tier 2 institutions like TSB. Open banking, upon which the marketplace concept rests, was driven by regulators precisely to prise market supremacy away from those behemoths. And Wilkinson Brown points to another, broader trend that might also influence strategy – that of non-financial organisations morphing into quasi and even fully-fledged financial services companies.

“We all have to be increasingly customer-focussed operations,” he says. “Southeast Asia and the Far East are really good examples of where financial services is heading. Look at Grab – they initially started off as a ride sharing firm and now they have a super app that covers financial services, groceries and taxis. It’s a reflection that you always have to be mindful of how things change, and how customer’s needs are evolving.”

TSB’s commitment to change and innovation is evidenced by its willingness to work with partners, large or small, and the fact that it has signed the Fintech Pledge, the government-backed framework for partnership working between bigger banks and small technology suppliers. Wilkinson Brown is sympathetic to fintechs who’ve had a poor experience of working with much larger companies.

“The amount of times we speak to fintechs who have gone into a company really excited, do a pitch, and the company says ‘yeah, that’s great, let’s do something’, but they never hear back. So, they go on this perennial first-dates cycle. We don’t work like that. If we like what we see, then we will take the fintech through our partnership curation framework. If it’s a very young startup, we’ll put it onto our TSB Labs programme and give it access to people inside the organisation, to shape its growth, get insights and give it an idea of what working with a bank is like. We did that with four companies last year and one has progressed to a full customer launch.

“In that process, we reduce the risk by doing a staff pilot followed by a small customer pilot – and throughout we stop, measure and learn.”

So what more can customers – and indeed fintechs – expect of the marketplace?

“The good news is that TSB’s target is to deliver a number of partnerships per quarter, so we can guarantee the marketplace will be growing,” says Wilkinson Brown. “I think it reflects that we’re really pushing forward, as an organisation, to be innovative.”

That’s not to say that TSB has forgotten its roots as a community bank. While, in September 2020, it announced it was closing 164 branches, it pledged to increase investment in the remaining 290.

“There will be some customers for whom the digital marketplace isn’t appropriate, so it’s important we’re multi-channel,” says Wilkinson Brown.

For them, TSB is planning a pilot, using open banking data to trigger money confidence conversations in-branch.Self-serve or assisted, Wilkinson Brown is confident that customer choice will increase rapidly as the marketplace expands.

“We’re on a really strong transformation platform. We stood up a Cloud-based data store, we stood up our open banking APIs, which means it’s easy for us now to introduce premium, private and public APIs to integrate with partners. Open banking is the best way to quickly introduce functionality with customers – that’s what it was designed for.”

This article was published in The Paytech Magazine, Page 76-77