Lloyds Bank of London and the Future

Lloyds Banking: Innovations and Opportunities

Even before the current pandemic, more and more of everyday banking practices were shifting online. It is critical to give consumers the value they want and need to ensure they retain loyal customers in a very competitive environment. Lloyds Banking Group is currently the largest provider of savings, loans, credit cards, and mortgages in the United Kingdom (“How Lloyds are Embracing the Digital Age,” 2018). It was an early first mover into the realm of digital banking and this remains part of its current approach. However, as a legacy bank, it is hyper-concerned that new institutions and innovations are seeking out ways to gain a foothold in the industry. As a result, 2018 kicked of a three-year $2.7 billion-dollar transformational approach to create new ways for employees to communicate well with one another, to serve the customers digitally, and seek out new ways to reach digitally reluctant customers (Fawthrop, 2019)

Innovation and Opportunities

Lloyds is aware that embrace of online banking is not universal, and 9% of the UK population still prefers not to bank online (“How Lloyds are Embracing the Digital Age,” 2018). This is not simply the elderly and technophobes, but small businesses and charities which are reluctant to make the investment of time and training in going online: an estimated 38% of small businesses and 49% of charities lack basic digital banking skills, despite the fact that online options for payment are associated with more commerce and more donations (“How Lloyds are Embracing the Digital Age,” 2018). Lloyds is seeking to communicate this and reduce the intimidation factor to leverage this opportunity and increase its customer base, resulting in greater loyalty by late-movers to online banking. (“How Lloyds are Embracing the Digital Age,” 2018). Rather than cater to the digitally phobic, Lloyds wishes to bring even the most reluctant consumers into the world of online banking.

Offering a more service-focused focus in banking is equally critical. Although pandemic restrictions have resulted in difficulty for online branches, Lloyds has continued to leverage branch managers and face-to-face services when it can to help customers make the best choices for themselves regarding their banking needs (“How Lloyds are Embracing the Digital Age,” 2018). For customers with lower levels of digital comfort, online banking can lose some of its intimidation factor when explained by a person face-to-face.

Local branches can also help navigate issues such as cybersecurity and making decisions about loans and mortgages that even the most digitally savvy consumers may need assistance with (“How Lloyds are Embracing the Digital Age,” 2018). Branches can solicit feedback from customers about the online experience. In one survey, an estimated 61% of consumers said they would change banks if they were dissatisfied with the mobile platform and insufficient opportunities to use money management skills (Meola, 2021). The industry overall is using more artificial intelligence (AI) tools in routine banking, and as consumer confidence in AI grows, will likely to do so more in the future (Meola, 2021).

Innovation Management Process

Lloyd’s is so hyper-concerned about orienting digital technology, it has embraced it when educating employees as well as its customers, based upon the philosophy that customers cannot feel comfortable with digital communication when banking if employees are not. This has resulted in a training program that is digitally specific for employees who specifically want to build their careers in the online sector (“How Lloyds are Embracing the Digital Age,” 2018). Lloyds also engages in frequent in-house training overall, with Ted talks, so-called hackathons, and the use of competitions and outside media to drive innovation, discussion, and self-criticism within the organization (“How Lloyds are Embracing the Digital Age,” 2018).

One potential disruption to Lloyds careful training and focus on service, however, is the focus on AI in the banking sector as a replacement to such personalized investment advice service, which may be used to offer advice based upon algorithms and big data analysis of the demographics of the bank customer and his or her financial profile and stated goals (Meola, 2021). Even while Lloyds strives to bring certain individuals into the new world of tech, technology continues to innovate and encourage an expansive use of available tools once relegated to in-person interactions.

Yet while the use of such innovative forms of technology is important, more than anything else, Lloyds is concerned about training employees and fostering an innovation culture among employees, more than to incorporate a single new platform of differentiated technology to enable it to stand out against its competitors. As a legacy bank, it has the luxury of time, given its customer base, to more slowly roll out changes. Lloyds’ head of innovation culture and community noted that quite often even the best employees experience a flight or fight response when confronted with change, and communicating confidently to employees about change is a first, critical step in making customers similarly confident (Fawthrop, 2019).

Problems and Solutions

One problem Lloyds’ innovation program for its workforce identified was the reluctance to confront other employees directly as part of its culture of communication. An initiative known as Work Out Loud specifically encouraged people to engage in greater collaboration (Fawthrop, 2019). The organization has also stressed that it is encouraging employees to feel less fear of failure, and to take more risks when making suggestions. However, while these are important and noble goals, and parallel the type of open mind the organization is likewise demanding of customers, it can be counterbalanced by the numerically driven approach to financially measured successes and failures epidemic in the banking industry. It is not enough to simply create a new initiative with a new name, but rather change how employees are evaluated and valued within the organization.

One option is to change the way benchmarking is conducted about employee success. On the other hand, this problematic, given that Lloyds must still be accountable to regulators and remain competitive relative to its other commercial challengers. Size and complexity are another obstacle Lloyds is facing. On one hand, this size permits the type of one-on-one personal attention that has enabled its customers to feel as if their needs are taken under consideration. But this can make it difficult to manage the estimated 75,000 Lloyds employees fully participating in a new, forward-thinking innovative culture (Fawthrop, 2019). The decision-making behind consistency of service versus innovation and risk-taking is not an easy one, because while people may come to Lloyds expecting the latter, a failure to engage in the former will mean falling behind.