Until recently Nationwide’s digital offeringhas lagged far behind the UK’s major retail banks. More recently however, the building society hasbeen pushing towards a new digital age. Head of group digital development Daryl Wilkinson talks to Hannah Smithies about the bank’s digital strategy for 2014 and beyond
The first half of the financial year, to 30 September 2013, was one of Nationwide’s most successful in its 26 year history of offering current accounts. This period saw the opening of 214,000 new current accounts, a 16% increase on last year.
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Along with the 7 day switch, this success was due in part to Nationwide’s increasingly attractive digital offering, which is proving popularwith total digital sign-ins growing at a rate of 40% year-on-year, mainly driven by mobile app sign-ons which last year grew by 200%.
In recent months the building society haslaunched a new website, released several new apps, rolled out video link remote expert services and become the first high street provider to launch both the V.me digital wallet and 24/7 customer service via social media.
This innovation is set to continue though Nationwide’s partnership with Zapp andthe launch of Paym in early 2015.
Theambitious new digital strategy has been implemented over the last 16 months and spearheaded by head of group digital development, Daryl Wilkinson.
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By GlobalDataTasked with creating and implementing a single strategy for Nationwide’s internet banking, website, mobile, tablets, and social media channelsfor both employees and customers, Wilkinson admits that the jobwas, in his own words, "a big ask".
As well as fitting in with its ‘no-shareholders’ customer-centric ethos that differentiates Nationwide from banks, digital strategy had to adhere to two central conditions. The first concerned the building on and incorporation of Nationwide’s previous success, particularlyin terms of their strong record in customer service, as recognised by the independent FRS survey.
The second concerned achieving longevity by looking at the capabilities of the group as a whole in order to try to ensure ambitions could be met and sustained over the long term.
"The thinking was that if the world is going digital then we need to have a digital presence and a digital service that allows us to continue our leadership in that new world…we won’t throw out an application with a great technology headline but little else,"says Wilkinson.
"We’re changing the veryfabric of who we are culturally and architecturally with our processes and systems."
Nationwide has seemed to have fewer problems than larger competitors in dealing with legacy IT systems. Wilkinson suggested that Nationwide has managed to minimise issues through phasing-in improvements for its core IT systems that amounted to a cost of £1bn ($1.68bn) over a five year period.
"Our competitors were later to improve their core banking by, for example, the modernisation of core infrastructures, which improved the resilience and capacity of our data centres through improvement of servers.They are still going through that process, not to mention the regulatory change some are having imposed upon them."
According to Wilkinson thisstrategy’future-proofed’ the system and allowedNationwide to create more innovative products.He explained that core banking replacement, streamlined processes and reduced end-to-end timelines, are all fundamental requirements that must be in place in order to deliver what customers want, such as the latest apps or payment methods.
"We are able respond to customer demand because we aren’t tied down with large complex internal change projects."
A strong core system has allowed Nationwide to launch their new digital access based FlexDirect and FlexPlus current accountsas well as supporting initiatives such as the Homebuyer Companion app.
The FlexDirect account offers customers 5% interest for the first 12 months, the highest current account interestrate in the UK.
Nationwide’s Homebuyer Companion app was crowdsourced through a scheme called ‘Nationwide Connect’.The app was made in response tocustomer’ssuggestions, it comprises a simple tool that illustrates the entire house buying process, complete with jargon busting pages and mortgage calculators.
"There are no gimmicks" says Wilkinson,"the only other thing that we’ve put in there was the opportunity to easily set up a mortgageappointment in your branch."
Those bank appointments can now also be conducted digitally, withNationwide’s new mortgage service, which allows customers to talk to a mortgage consultant through a high definition video link. It is currently available in over 60 branches across the country, allowing customers better access to the service.
The Homebuyer Companion app certainly isn’t unique (Halifax and Barclay’s both have their own versions), Nationwide have yet to roll out contactless cards and they have announced they don’t plan to launch Paym until next year, behind all the UK major banks, yet Wilkinson seems unconcerned: "Our goal isn’t to always be first, it’s to be the best. Being the best means we’re making every effort to help customers and to fulfil our promises. That’s what the homebuyer app is about."
Whilst online continues to dominate as the major digital channel, additional offerings such as the Homebuyers Companion app mean that Nationwide is seeing rapid growth in mobile.
"Uptake of mobile banking has been absolutely fantastic.We’re also taking a serious to look at the uptake of apps on tablets."
Offerings differ between channels according to what is possible on the screen size and how people use the different devices.
Wilkinson explains that the tablet experience is different to the mobile one: "We look at the mobile phone as a transactional device for doing little jobs throughout the day. When you’re on a tablet you’re researching, thinking and making decisions. So we’ll absolutely be delivering to those needs."
Ultimately Nationwide has an omni-channel approach and Wilkinson hints that they might introduce a function for mobile that redirects customers into an alternative for online based off a desktop or laptop.
The next year will see Wilkinson’s team making a big push in developing digital payments services. In November, Nationwide became the first UK bank to launch V.me, Visa’s digital wallet whichgives customers an alternative to using a verified by Visa or Paypal option at checkout online and on mobile.
Contactless cards are to be rolled out later this year and laterNationwide is planningto launch mobile payments. They are working to provide Paym, which will enable bank customers to send money using just a mobile phone number, and are one of the first backers of Zapp, which lets customers pay using just their mobile phone and existing bank account.
"We’ve announced already that we will participate in the Zapp payment process and we’re working with them over 2014/15. The Paym solution will launch in early 2015."
Care to participate seems to be something of a policy, even when there are crossovers in function between products. Wilkinson is determined to continue to work with V.me when Zapp launches.
"It’s about customer choice rather than channelling investment down one channel or another, which is why we work with lots of different partners today and probably we will work with more in the future."
Whilst the potential for digital banking innovation seemsboundless, Wilkinson points out Nationwide’s limiting factors: "The big piece of work is customer education and awareness. When we talk about contactless cards, Paym or Zapp, there needs to be awareness about what it is. A lot of customers are still confused by that.
"Also when you’re owned by your members, you really need to be careful about how much money you spend. We look before we leap."
In order to control costs Wilkinson’s team uses ‘intuitive design work’, starting with the prototyping that becomes the end product in order to minimise throw away cost.
"I certainly don’t subscribe to’fail fast and move on’.It’s nonsense. Be smart and deliver it right first time."
Wilkinson looks to Asia for inspiration about what Nationwide might look like in the future.
"We also look to the US. We have open conversations with foreign banks, asking questions like ‘what did you see in the market?’or ‘how have you gotten around not having a branch network?’ and’do you think it’s important to have one?’"
"By asking these questions we’re prepared for a high level of technological disruption."
Nationwide has certainly stepped up their offering in their bid to become the UK’s number one choice for financial services.
Whilst their digital offering has improved to a point where it looks far more attractive, Nationwide is not, and has no ambition to be, at the cutting edge of digital bankinginnovation.
Whilst their customer-centric ethos is appealing at a time when bank are suffering from poor reputations, in a seemingly ever more tech-centric sector only time will tell whether customers will accept this compromise in order to use a banking alternative.
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Nationwide scores hit with FICO’s advanced decision management tools
Nationwide Building Society has built a Strategic Risk Infrastructure (SRI) using advanced decision management technology.
The initial deployment covers Personal Loans, which went live in June 2013, and Specialist Lending (Mortgages) Originations, which went live in September 2013.
At the core of the SRI is an advanced decision management system, FICO Blaze Advisor, providing a single decision engine for Nationwide’s risk decisions.
The goals of this project were to:
- Increase speed to market with new offers and pricing strategies;
- Eliminate a sole-supplier dependency;
- Improve use of internal customer data, using a single view of the customer;
- Create gains through efficiency, and
- Streamline the sales process
Increase speed to market
According to Nationwide, FICO Blaze Advisor has enabled its business users to adjust strategies without waiting in an IT queue.
This has enabled Nationwide to incorporate changes in regulation rapidly, as well as seize new competitive opportunities.
For example, changes in pricing strategy that used to take 10 days to deploy can now be made effectively the same day.
SRI has also made it possible for Nationwide to rapidly incorporate new data sources into decision making by allowing new data sources to be instantly pulled into decisions without IT involvement.
When originating loans, Nationwide previously used bureau data from one supplier. This presented problems in cases where the consumer did not have a record at that bureau, or when the system was down for maintenance, including a nightly shutdown between 11pm and 6am. SRI uses data from Equifax, Call Credit and Experian, giving Nationwide true 24/7 capability.
Since launch on 22 June, Nationwide issued thousands of loans worth millions of pounds from applications made at night, when bureau data was previously unavailable.
Improve use of internal customer data, using single view of the customer.
By improving data matching on customers, Nationwide is reducing operational risk. It will also use the SRI to pre-assess customers for products using business rules applied to their internal data. By encouraging customers to apply for products for which they are already risk-appropriate, Nationwide will improve customer service.
If a customer applies for a loan that is a marginal affordability decline, the system can review the affordability over a longer term, and if appropriate automatically present that option to the applicant.
Nationwide estimates this functionality will help issue tens of millions pounds worth of additional loans per year.
Create gains through efficiency
The multi-bureau solution bypasses a delay in processing consumer loans, resulting in greater lending. By leveraging internal data and batch credit bureau data, Nationwide can avoid purchasing multiple credit bureau reports when customers who respond to these offers apply for credit.
This saves money, as previously each request by a customer for a "soft quote" would trigger another purchase of bureau data.
Nationwide expects to save more than £2m over five years. It also enhances the customer experience, because Nationwide now needs less data from applicants who have been pre-assessed.
Streamline the sales process
The SRI has reduced the number of questions asked during the application process by focusing on those questions with the greatest relationship to an applicant’s creditworthiness. This has reduced the consumer abandonment rate during the application process by around 17%.
Jackson, head of Unsecured Credit risk at Nationwide Building Society, told RBI: "To serve our members with the most competitive prices, our team needs to be able to adjust to the market faster.
"With our new Strategic Risk Infrastructure capability, we are able to continuously update our policies and offers, while keeping our risk strategies within appetite. It is a truly best-in-class solution that will be the envy of other lenders in the industry."
