How Lloyds Banking Group is really doing with tech adoption
Technology adoption is a determinant of sustainability and future profitability, however, the rate of spending on technology — an indicator of adoption — is different between countries and industries.
According to the Lloyds Banking Group’s most recent annual report, spending on technology averages about 17 percent of operating costs in North America, at 15 percent in the UK, and at 14 percent in Europe.
In comparison, the bank’s spending pushes the 19 percent of operating costs mark, indicative of its aggressive strategy to pursue digital. Of that amount, more than 75 percent is spent on creating new capabilities and enhancing existing ones.
The organization’s view is that new technologies help increase efficiencies in the financial services sector and deliver meaningful improvements to the customer experience.
Obviously, the bank’s investments are yielding great returns. For example, since launch in 2018 up until the end of last year, robotics helped the bank save one million hours for staff who were encouraged to spend it on delivering a better experience to customers.
What’s really refreshing, however, is the strong emphasis on cybersecurity and data protection, with the objective of retaining customer trust for the foreseeable future.
“We also continue to invest in the resilience and security of our systems, ensuring that customer data remains safe despite the significant pace of change in technological trends,” all stakeholders were informed by the annual report.
The bank’s focus on digital is a result of its own observation in the behavior of customer trends. It compared data about customer activity over five years starting 2014 and found that in 2019, demand via digital channels soared — almost tripling for things like new bank account openings, and doubling for home insurance and loan applications.
Digital transformation requires a good understanding of the market
A quick glance through the Lloyds Banking Group’s annual report will reveal that the company has extensively studied the market and keeps a close lookout for competitors, be it from amongst its peer group or a new-age entity born in the digital age, such as a challenger bank, a new bank, a fintech company, or even just a global technology giant.
“In response to changes to the competitive environment from the ongoing shift in digital usage and new entrants, our multi-channel and multi-brand offering enables us to continue to effectively meet the varying needs of our diverse customer base,” pointed out the annual report.
The bank claims that its digital channel is now its most prominent, with 75 percent of products originating digitally, allowing the organization to claim the title for the ‘largest digital bank’ in the UK with 16.4 million customers of which 10.7 million also use their mobile app.
Given its understanding of the changing needs of customers and the evolving competition, the organization has chosen four strategic priorities for digital success:
- Leading customer experience through best-in-class products and services
- Digitizing the group with new technologies that boost efficiency and simplify access and transactions
- Maximizing group capabilities to deepen customer relationships and achieve growth in target segments
- Transforming work by enhancing skills and processes and investing in agile practices
Technology adoption can offer next-gen experiences
New-age technologies help provide next-gen experiences. The Lloyds Banking Group understands that.
Their aggressive journey of transformative technology adoption has helped the organization harness the power of even complex technologies such as machine learning — to deliver significant operational benefits as well as customer outcomes.
The annual report highlighted that the organization’s ability to scale its use of machine learning has allowed them to deploy virtual assistants that managed up to 5,000 customer conversations daily in 2019. Customer satisfaction increased by more than 10 points as a result.
A key ingredient of investing in technology and adapting to it is training staff on using it well.
The company has recently decided to provide nearly five million hours of training to help staff develop key skills and prepare to leverage technologies that help the bank become a leader in data analytics and provide a better experience to users.
At the end of the day, the bank seems to be making all the right investments when it comes to turbocharging its race to digital — which has already made it the UK’s largest digital bank and could potentially help it capture a larger market while ensuring the loyalty of existing customers.
After all, you can’t go wrong when you’re focused on providing better experiences to customers in the digital world.
6 June 2023