Exclusive: ‘And now for the recovery’ – Andrea Melville, Lloyds Bank in “The Fintech Magazine”

Andrea Melville, MD of Commercialisation and Propositions in Lloyds Bank’s Global Transaction Banking Team, believes adopting an API-first approach, and working ever-closer with fintechs, will help build a path out of the crisis for business

With more than £9billion in government-backed lending, 33,000 capital repayment holidays and 20,000 fee-free overdrafts arranged during the first few months of the pandemic, the UK’s biggest bank by customer numbers kept calm and carried on.

Under the hood at Lloyds Bank, an innovation policy best described as ‘relentless incrementalism’ – an approach to digital transformation designed to avoid the cardiac arrest inflicted on organisations by ‘big bang’ migrations – was proving its mettle, particularly when it came to business banking.

Around £2.4billion of a £3billion digital transformation plan had been spent by then on technology innovation, and changes to working practices across the organisation, since 2018.

“A lot of that technology investment has gone into things like robotics, including around the loan process, where we’ve improved the time of getting approval to customers. So, with the Government’s COVID-19 Bounce Back Loans, for example, the majority of customers received their funds within 24 hours,” says Andrea Melville, managing director of commercialisation and propositions in Lloyds Bank’s Global Transaction Banking Team. Now, as UK businesses face the long, painful haul back to a hoped-for recovery, she is conscious that the sum of all the parts the bank has been incrementally improving over the past two-and-a-half years, must add up to so much more if it’s to help businesses weather this storm.

According to the most recent Lloyds Bank UK Recovery Tracker, which has taken the pulse of the stuttering economy over the summer, 13 of the 14 sectors it monitors saw stronger growth than their global sector equivalents in August. The caveat is that they were almost all hit harder than their international peers, so they have further and faster to go.

Melville, who is responsible for a number of strategic initiatives across the transaction banking product suite, covering application programming interfaces (APIs), data and blockchain, believes the bank’s APIs, many developed with client input in the Lloyds Bank lab, will be critical to helping that recovery.

“Lloyds Bank has a strong cultural curiosity, which results in lots of proof of concepts, lots of pilots, research and listening. We focus on understanding clients’ needs and wants, constantly trying to reduce friction, and openly evaluating whether to buy, build, or partner to deliver what we need,” says Melville.

That’s resulted in a cascade of application programming interface (API)-supported business tools being developed over the past year, including a payables API using the UK’s Faster Payments rail, which has now handled £1billion in transactions; a new asset finance API for brokers and a trade tracker API that provides visibility of deals in the supply chain, all of which can help in the immediate aftermath of the crisis.

“What we’re seeing is that trends that were already there in the market before the pandemic, are accelerating on the back of it,” says Melville. “There is a lot we could do to help chief finance officers and chief information officers around leveraging APIs – automating key treasury activities such as balance sheets, statement retrievals, sweeping and foreign exchange (FX) hedging.

“On the data side, it’s about bringing it all to a single spot – it could be banking data and accounting data – which will create a much more holistic view to help with working capital.

“When it comes to cash management and payments, in addition to the payables API, we have a new platform called Gem, which has market-leading capabilities, designed for our bigger clients. It offers a lot of internal analytics and is designed to be a real aid to decision-making.”

The bank’s existing International Trade Portal gives customers background market knowledge and practical resources to equip them for international trade, and, given the impact not just of the pandemic, but Brexit too, it’s a tool that she’s keen to promote.

“This is a time in the market when there’s a lot of potential disruption to supply chains, so it’s really important that people understand more around what their options might be for international partnering,” says Melville.

“We need to make sure we’ve got the right insight, both for the bank’s own internal decisions and to help businesses. To help them manage cash flow, but also to understand this external market which is constantly evolving.”

As well as providing products that improve the customer experience, Lloyds Bank’s strategy has been to simplify its IT architecture and use its own data more efficiently; to create a scalable and resilient infrastructure and enhance Lloyd’s multi-channel customer engagement.

“We can’t only look at one side of the coin; we need to make sure that we’re looking at the frontend, but also the systems that sit behind it,” says Melville. “Customers need great digital onboarding, they need great UX, but they also need end-to-end processing and automation.”

At the heart of its internal transformation is creating agile workflows.

“Around a third of all of our change programmes are delivered through agile methodology and we’re on target for that moving up to about 50 per cent by the year-end,” says Melville.

“But we have to balance providing new propositions and services, with maintaining relationships with the customers we already have.”

Partnering with fintechs is a vital part of that, according to Melville. “It adds a huge amount to the equation. They can help us leapfrog to new technologies, they can also help us with a test-and-learn approach, one aim of that being to reduce our cost of change, both in terms of time and financial expenditure.” Like many legacy institutions Lloyds Bank traditionally adopted a ‘castle and moat’ approach to innovation; working internally on solutions without much engagement with fintechs outside the bank’s walls.

Now it’s recognised that fintechs can help it bring propositions to customers much faster than it could on its own. An example of that is accounting software provider OneUp, with which Lloyds Bank is conducting a live pilot.

“Cash flow management and really understanding what’s happening in your data is so important right now,” says Melville. “Businesses really need to be looking to use data as a driver of their strategy and decision-making.” She credits the bank’s design team with having a ‘strong cultural curiosity’.

“It results in lots of proof of concepts, lots of pilots, lots of research and lots of listening.” Lloyds Bank is currently working with fintech Validis, for example, on how it can import data from its customers in a standardised manner.

“We’re looking at fintechs that do things around synthetic data, data matching and graph technology,”  says Melville. “It helps us better understand the benefit for our customers, the use cases, the risks and the mitigants.

“Banking has a sourcing model that really needs to be faced into,” she observes. “There are lots of governance and security standards, ISO (International Organization for Standardisation) certificates, penetration tests – all things we need to make sure we’re delivering to.

“When we look at how to make partnering more fintech-friendly, it’s about creating the right rails. But fintechs can really help with this too, by making sure that they’re more partner-ready, by understanding the industry standards held by banks, particularly around security.”

Tech to the rescue

In common with many others, Lloyds Bank has taken a big hit from the pandemic-related crash – it reported a second-quarter loss of £676million for the three months to June – while, at the same time, coming under pressure to respond to extraordinary demand from government to support businesses and individuals also reeling from COVID’s impact. Banks were already trying to reduce costs; now they are trying to deliver new services quicker and reduce costs. But signs are that they are not taking their foot off the technology pedal.

The Lloyds Bank Financial Institutions Sentiment Survey, released in September, showed almost nine in 10 senior leaders saw tech investment as a strategic priority for the next 12 months; almost two-thirds plan to increase investment in their own technology and core systems and roughly a third will focus on fintech offerings.

“Since the pandemic, we’ve done things like upgrading the business banking online lending tool to enable faster decision-making, but also free up relationship managers’ time, to  really be there to help customers,” says Melville. “We’ve also had to redeploy a significant number of colleagues across the operational teams to make sure we can meet demand and strengthen critical processes. Now, for us, the next stage is helping Britain recover.”

This article was published in The Fintech Magazine: Issue #18, Page 83-84