Episode Eleven: The Golden Age of Change

Driving Fundamental Change Through Emerging Technology

Richard Lumb, Board Member at Finastra, shared his perspective on the unprecedented change across the financial services industry in this episode. He spoke about his experiences at Accenture and the level of investment across the sector in data, analytics and digital technology.

Listen or click on 'subscribe' below for links to subscribe directly via your favourite podcast platform, including Apple, Google and Spotify.

Read full transcript

The Power of Data Podcast

Episode 11: The Golden Age of Change

Guest: Richard Lumb, Board Member, Finastra
Interviewer: Sam Tidswell-Norrish, International CMO Dun & Bradstreet

Sam 00:00
Welcome back to the power of data podcast and welcome to Richard Lumb. Hi, Richard.

Richard 00:05
Hi. Thank you very much delighted to be here with you, Sam.

Sam 00:07
So, Richard, you've had a very distinguished career, you spent nearly I think 35 years at Accenture, your final and defining role as the Group Chief Executive for Financial Services. And you're also a board member at financial technology firm, Finastra. Can you tell our listeners a little bit about your Accenture journey?

Richard 00:25
Yeah, so you're right. 35 years with Accenture, man and boy, so to speak, but the last year running the Global Financial Services business, obviously an exciting time to be in financial services during that period, with the dramatic changes gone on not only driven by the financial crisis, but technology as well. And of course, in Accenture, we very much operated at the intersect of business and technology, really helping our clients make the most of technology and to drive fundamental change into their business through these new technologies, which are you know, emerging every day now.

Sam 01:01
How does Accenture differ from, say, the consulting practices of a ‘Big Four’ company? What was different about Accenture’s approach?

Richard 01:08
I think a few things. Probably the most notable thing though, was the changes we made in the last five years or so, with a real focus on the rotation to digital and new technologies and the impact that those technologies were having on our clients. So massive investments went into Accenture Interactive, and the impact of digital marketing on our clients and the changes going on in that industry. Massive investments went into cloud and data and analytics. We were deploying $1.5 to $2 billion a year in buying new companies really to develop new services for our clients. So we probably rotated more rapidly than any other consulting firm towards new technologies. Secondly, we're a global firm, I had responsibility for financial services globally. That was how we structured the P&L, which meant that we could serve clients very easily on a global basis. So, you know, my largest clients in that job were all the big global institutions, because we could seamlessly support them around the world with one service model.

Sam 02:15
You and I crossed paths recently, I think literally, you are on the way out through the revolving door and I was on the way in at Finastra’s office, we were both doing Podcasts there. Tell us a little bit about Finastra. So Finastra is obviously owned by Vista, a firm we have a huge amount of respect for, and its pioneering in the financial technology space. What are some of the core products?

Richard 02:35
Yeah, I mean, Finastra is probably one of the top three software institutions in financial services, you know, very much operating throughout the whole world with its products. And with a focus on banking and capital markets. These two companies have been brought together: D+H, which was very much focused on the North American market, with Misys which was focused on the European and International markets. So great synergies from those and, you know, operating really throughout the whole of the banking industry today. So I joined them back in 2017 as one of the board directors. And you know, it's a great company to be working with.

Sam 03:12
Richard, throughout your career, you've been seen as a thought leader, and you've written about a number of different areas of the industry, and you often speak about them. Blockchain and distributed ledger technologies has been one of them, and you talk about the right to be forgotten in enterprise systems. Do you think cryptocurrencies are going to continue to grow? Or do you think the examples of faces challenges with Libra are demonstrative of the limitations of digital currencies?

Richard 03:38
I mean, let me come into that from sort of two angles, actually. Yeah. First of all, on blockchain, I mean, my focus within Accenture, and when I wrote that article, was very much around the applications within the industry, outside of the world of cryptocurrency, actually. In particular, I think we were focused on where we thought there’d be the most opportunity for blockchain, where there are natural networks of participants and around the stock exchange industry. And you know, perhaps blockchain has evolved a little bit more slowly than we expected in terms of its application. But I truly believe that in the long term, we'll see a number of industry applications using digital ledger technology. As regards cryptocurrencies. I mean, I think the issue that Facebook ran into with Libra is clearly one of regulation. And I think there's going to be continued to be a high bench set in terms of regulation. You know, there's going to be no shortcuts for any company that is pushing forward cryptocurrency.

Sam 04:39
You know, talking about innovative technologies, A lot of these new technologies are underpinned by – in fact most of them – by data. You know, data being the petrol of the industry and a lot of the solutions that are being built out there with billions of dollars of venture capital being the cars, that need to consume the petrol, what sort of stuff did you focus on at Accenture and how you seeing financial institutions leveraging data and analytics to perform better, to make better decisions and ultimately to serve their customers better?

Richard 05:10
I’d wrap together a few technologies actually, I’d wrap together sort of data and AI and cloud. I mean, I think most of our clients within financial services industry were coming to realize that cloud’s about innovation. It is not about more MIPS, and more storage. Within the cloud, AI will come for free from the big cloud providers. And cloud will be where data resides across the whole institution. And with the data and the AI tools, institutions can innovate and differentiate.
So we were certainly focused on it in Accenture in terms of solutions that we can build. And solutions came in in many guises. But, you know, for example, we worked with a bank in the ASEAN region, which was all about driving up unsecured lending through access to big data; identifying new customers, as well as existing customers, and understanding the propensity to actually require loans for different events in their life, maybe a wedding, maybe it's a house purchase or a kitchen purchase, but by understanding what they were doing in their everyday life, to be able to actually predict their need for loan, and to give them the opportunity to get that loan almost before they even realized that they needed the loan.
And that's, you know, a way of using data which is widely available today to actually just drive up revenue within the industry. And I think we're just going to see more and more of that. Now. I think the issue with data is, some of the services that can be provided today can be seen as downright creepy, you know, do you know too much about me? And therefore the product or the service that you're offering to me can be kind of seen as creepy sort of an invasion of my space and invasion where I live, but I think that definition of creepy will continue to sort of move to the right, if you understand me, in the sense that people get comfortable with the offerings that have been put forward to them. And as they get comfortable and feel that the insights they’re gaining from the data they've given away, is beneficial to them. You get into a virtuous circle where consumers and customers will give away more data and more information to make the products or even better to them.
So today, I think it depends where you are on the world as to where this border is, in terms of being creepy. You know, some countries, Germany is much more conservative. But for example, in Southeast Asia, far less conservative, far more willing to take the services they provide by giving away their data.

Sam 07:44
Your geographic examples are pretty apt. I think that's the difference between social surveillance versus efficient innovations. And how can you create innovations that improve your customers lives rather than box them in?

Richard 07:59
Yeah, I mean, I truly believe in virtuous circle here, that as consumers find the products that being offered are helping them in their lives, they will be willing to give up more data to get better products, and obviously with more insight, the company is going to be able to even target them better, and offer, you know, much more targeted services.

Sam 08:21
As a British business leader, Richard, you've been known for championing the UK as an innovation hub. But you've also been known for saying that the US is better at commercializing innovation. Now a large part of that, I think, is a cultural thing. I think in the UK, we don't celebrate failure enough. I think we are risk averse. And I think the US has got this incredible kind of formula, I guess, of celebrating innovation through their university and further education system. What is it you think that the UK could do better to commercialize?

Richard 08:56
You know, I think actually, things could be changing, though. I mean, this point of commercialization. I mean, historically, you know, we've said that within the UK, you know, we don't get the unicorn software company. Entrepreneurs sell out before they get there and typically sell out to US companies. But you know, one space that that's changing actually is FinTech. The UK has attracted more than 50% of all investment in FinTech every year for as many years as I can remember. I was even surprised that, you know, post the Brexit decision of 2016, the UK continued to attract more than 50% of all investment in FinTech. Yeah, so I'm very sort of positive about FinTech and in particular, the world of open banking, I think the UK could be a world leader in open banking and open banking technology. And we're already starting to see obviously, some unicorn institutions coming out of the UK in this space as well. So I'm more positive now in terms of where the UK could go in the future in terms of commercialization, but also being a powerhouse in terms of the export of open banking technology around the world.

Sam 10:04
Yeah, it's really, really good point, actually. I mean, you think about in the last 18 months with fundraisers from firms like OakNorth, or Greensill, Revolut, these guys have raised more capital than any other firm in their category on the planet. And your point on open banking is also really good. And we're starting to see other nations around the world adopt different versions of open banking. So we have open banking in a slight variation in Australia, coming into play, for example. In Hong Kong, in Singapore, and I think it's great, you know, we've shown people that there's a blueprint to do things differently, and to continue to create that sort of ‘right touch’ regulatory environment. The US, however, is a bit different. And I don't know, and we're sat here in New York, so I can't be too rude about this, this great city, but I'm not convinced that the US has the rights ecosystem to implement something like open banking and effectively with federal and state systems, and an enormously fragmented ecosystem, what are your thoughts?

Richard 11:06
I agree with you, you know, the US is very different. The US is very different in terms of the number of institutions versus most European countries. But it's also different in terms of the adoption of technology within banking, it has been much slower. And if you look today, the large institutions, a handful of institutions in the US, are still capturing the majority of lending and the majority of deposits. I do think in the US, though, we'll see some shifts in community and regional banks, we're about to see consolidation. I mean, the big guys have been capturing the deposits and the lending, because actually, they're the ones that have invested in digital technologies. And the community banks and the smaller regional banks have not invested and therefore those consumers are actually leaving those institutions, or not joining those institutions, because they want a digital banking service. So I think there's a trend there, which is the flow of customers towards more digitized banks, which will drive consolidation in the US and hopefully drive more innovation, more innovation, which is consumer driven. So there could be, at a point in time, the opportunity to export, you know, the technologies which are emerging in other countries. But I completely agree with you that regulation is going to be a barrier here too, as well.

Sam 12:25
Okay. We're going to end on some lighter questions. And I've just looked down at the piece of paper that was kindly prepped for us beforehand. And there's a question now you’ve stepped down from Accenture, do you have more spare time? Let's ask that differently. Now, you’ve stepped down from Accenture, what are you going to do next?

Richard 12:40
You know, I am going to continue to work, perhaps not the same number of hours as I worked in Accenture, but there's no way I'm retiring at this point in my career. I mean, I'm fascinated by what's happening in the financial services industry. I'm fascinated with what's happening with technology. As I said in my opening remarks, I think we're in a Golden Age of change. Within this industry, we've never seen, I've never seen such rapid change in my 35-year career. And I think the speed of change, the pace of change is only accelerating with all the exponential new technologies hitting the marketplace. So I think the future for me will be around investing in the industry, hence my relationship with Motive. And I think there's fantastic opportunities for entrepreneurs and investors in the marketplace today.

Sam 13:28
I couldn't agree more. And I think, you know, working with specialists to identify the really exciting opportunities, it sounds like a good way to spend that spare time. You've had an incredible career, and I'm a huge admirer of what you've achieved, but I suspect that it was a big learning curve as well, who have been some of your business mentors through your career?

Richard 13:49
You know, it was obviously a few people in Accenture when you look back on your career, you probably you know, identify three, four or five people max. Wou identify some major points which were key sort of positions in your career. I mean, the former Chairman and Chief Executive Pierre Nanterme, who sadly passed away earlier this year, was a big mentor of mine. Pierre and I worked together in financial services from the mid-1990s onwards, and I hugely respected him and worked very closely with him. And I think, you know, what he did with Accenture in the last five-six years where the stock price pretty much quadrupled was amazing for the company. But clients along the way as well, I mean, you know, probably one of my most formative relationships, was working with RSA in the early 2000s, as Andy Haste moved from AXA to be the chief executive of RSA. I was a big fan of Andy's I love working with him, and very much enjoyed that period, as well as we kind of rescued RSA from what it was a really declining position.

Sam 14:54
Well, Richard, I'm going let you get back to the action and I won't keep you any longer but thank you very much indeed. It was a real pleasure and a privilege have a Podcast with you. And we look forward to seeing you soon. Thanks very much.

Richard 15:22
No thank you Sam, I really enjoyed it and great to be here.