A new wave of technology transformation – [FULL INTERVIEW]

In this full interview with Wayne Brown from Alvarez & Marsal, Wayne talks about some of the key transformational trends he is seeing within Financial Services.

A fascinating insight on digitalization, the use of data to reduce customer friction, embedded finance (BNPL), even the metaverse and what this could actually mean for us… beyond the hype.

Find out more about Alvarez & Marsal-> Here.

Interview Transcript

Hi, everyone, I’m here with Wayne Brown today. He’s a Senior Director of Financial Services at Alvarez and Marcel Wayne, thanks very much for joining me today. I really appreciate it. How are you? Welcome. It’s great to be here. We’ve known each other a few years. And we, Chris, so it’s good that we can have an opportunity. I’ve really enjoyed watching the other interviews. So great to be here. I wanted to start off initially just talking about about digital. So a lot of the conversations I’ve been having digital seems to be digital transformation seems to be picking up pace, I think through the pandemic. And I suppose I wanted to ask, you know, from your point of view, I mean, do you think that sort of is using the business has fundamentally changed as a result of the pandemic? And how’s that sort of, like, you know, developing in terms of your clients and what you’re seeing? It’s a great question about the fundamental changes that are that are taking place in the pandemic, I think that is shifting a lot of consumer behaviour. So there’s some interesting research that suggests that brand loyalty is considerably eroded. And that means that we’ll we’re bound to see some movement in where customers are, of course, we’ve seen a considerable change in the way that customers are interacting with services, and perhaps not necessarily in the UK, which already had quite a large online presence, but in but in some countries, huge swings towards online services that didn’t exist before. And then link to all that, that the whole sort of hybrid working. So all those things are digital in one way, both that the way that employees are engaged and the way that customers are engaged. So think through all of those things, I think the genies out of the bottle, I think that I don’t think that we’re going to go back to where we are, whether we’ve seen right now a radical change, that’s a different question. But whether that will unravel over the coming years, I really do believe that that will be happening. I you know, for example, from an employee perspective, I can’t see how white collar professional services, particularly in financial services, kind of where I operate in that, that that that can ever go back to full time office working. Same Same with customers, I can’t imagine that customers will ever really want to go back to full time sort of entry into branches. So I do see that there will be

eradicable changes, but whether they are they’ve taken place, and they’re never going back now, or whether we’ll see that unravel over the next couple of years, I think we can only watch and see really ought to all the about the customer, right. So so it would be what what makes the what makes it better for the customer? What? What reduces the use of digital phrase of friction in the customer journey, how does it how did it make the customer’s life easier, but digital is not always about that, you know, there are elements of the sharpened digital, which definitely are about making things more efficient for our business. So it when we think about the journey, but we could also think about optimising the operations as well. So where’s the motivation? I think it’s going to be a mixture of those motivations, depending on the industry that’s at play, depending on the maturity of that organisation in terms of their their digitalization. And what’s at play? I think there’s a, it’s it’s really contextual as to where the where the drivers coming from? I think that, as I said earlier, though, the I think there are some fundamentals. And I think that the one thing that the pandemic has done is it’s just forced the change upon people. So I think a lot of businesses were considering a switch to, to to, you know, delivering their services online, there, were considering a switch to more hybrid models, or perhaps using teams and things like this that were on. And they were sort of pondering it, and what the pandemic did was push everybody into a live experiment. So it’s, it’s, it’s sped that development curve up in a way that

without it, we would probably still be thinking about it rather than doing it because one of the things we’ve definitely seen over the last year or so has been

digital processes and digital payment payment platforms and buy now pay later is probably one of the ones that’s really sort of grown over the last over the last six months year, I would say and even even now they’re talking about it sort of ramping up into like pre Christmas spend. What what what do you think that the legacy is for buy now pay later over the longer term? It seems like there’s been, you know, regulatory clouds sort of around it potentially more regulations coming through, I mean, what’s your, what’s your kind of your lens and like, where that where the industry goes from here?

That is a very big answer coming up here. So I’ll try I’ll try my best to articulate it properly. But by no Pelita is part of a wider phenomenon of embedded finance. So embedded finance, you know, placing

banking products or financial services products into existing customer journeys in a seamless way.

so that

not that customers don’t realise, but that it’s just easier for a customer. I mean, you may remember a certainly, I remember my, my, my dad, you know, buying a second car back in, I don’t know, when it would have been a couple of decades ago. And you know, we’d go get the car, and then he’d have to go to the bank, and the bank manager would say yes, and then he’d go the next day, and he’d get given a brown envelope with the cash in it, and then he’d go get the car. And it was ridiculous. And, and, you know, embedded finance, places, that whole

financial decision making within the journey of purchase, and buy now pay later is very much the sort of thin end of the wedge there. It’s a great example of, I have this existing journey.

Whatever it might be for, let’s kind of use clothes, because it’s a really good example, I’m buying this, this item of clothing, and I get to the checkout, and I choose to buy a pair later, a couple of clicks. And it’s an it’s done. So that is

really, really interesting for so many reasons. And there’s plenty of evidence to suggest that younger demographics are not not so interested in revolving credit.

Like older demographics. So there’s, there’s, there’s a credit angle there, there’s a brand angle there. Some of these binary pay later brands are our destination brands in themselves. So you know, what, what bank has a as a head of fashion, but I now pay later providers do so there’s, there’s a whole other angle there. So buy now pay later, I think, you know, one way or another,

it will exist. I think that that we’ve seen huge growth in this market. And we’re bound to see some consolidation in this market into the coming years. And we’re also bound to see some regulation. And come to the second part of the question. So earlier this year, the government had

a paper on this, there was a wall art review, and then an exploratory paper around it. And really the key takeaways in the UK are that there needs to be a better affordability assessment, something that you and I obviously know from working in credit operations. Banks are very good at that almost like to the enth degree. And by now palliated hasn’t really had that because it uses a soft check at the point of sale. And, and moreover, it doesn’t really

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look at the multiple relationships that are buying up LA to customer may have.

The other thing is the review asked

about outcomes. So it really is asking the FCA to look again, at whether its current regulations are delivering on what it want that I mean, this point about the the kind of like the multiple Buy now pay later products is a good example. So it’s outcome based do do we really know how many biner Pelita products somebody has. And then the last thing is about good database, which I’ve seen banks, I’m not saying banks are exemplar, but I’ve seen them becoming increasingly better at this and and taking much more care over their customers with with debt advice, particularly ones that are vulnerable. And it’s, it’s, it’s evident that some of these organisations right now have relatively immature credit operations and care in that regard that need to need to get better. I’m not not decrying them, but I think that even they would kind of have to hold their hand up and say that they’re not at the level of maturity of any of the established banks. So we talked a bit about frictionless journeys, just then. So there’s some conversations interesting conversations around when do you need to introduce friction. And you could even say the, the affordability process is the need to introduce friction, because you want to make sure that people can really afford it. Like, and that comes into almost like a bit of a conversation around when do you need to have friction? Or when do you need to have human interaction, which is, which is the type of friction if you seen that sort of like starting to come up into the light rather than just being as smooth as possible? I mean, should it just be as smooth as possible? Or should you actually have areas where you need to have design friction in as well? Yeah, plan for friction. I can’t say myself, I’m, I’m keen on it, but I do recognise the need for

the need for pause for thought around credit. I mean, you know, sensible, sensible lending is very, very important and that people should understand and know, that they’re in a credit agreement is is is really, really important. So if, if the lack of friction means that customers don’t realise they’re borrowing money, then clearly there’s a problem. Right? So so, you know, I get that but as a sort of a digital purist, you know, I I like the idea of

frictionless journeys.


is the multiple ways that friction can be put in a journey or so say exists in a journey. One is people so that

people might be

serving in that journey or that people themselves might make mistakes, when they’re in that journey. They’re out there is the process itself. And how cumbersome that process is there? Is

it from a financial services perspective, the nature of money. So how do we actually change and there is paper in traditional in traditional processes, and then there is also premises in traditional processes and all of those things that I’ve said, you’ll notice that

traditional banks are are encumbered by.

So there. Yeah. And so

on this point of adding friction, for reason, I think where it’s legitimate, and there there is pause for thought, I think that’s fair. And your second party question was, am I seeing it?

On the whole now, on the whole, I’m not seeing it, I hear the call for it. But I, but I, I, the, the clients that I work with, on the whole, are wanting to eliminate friction as best as possible in a, you know, in an ethical way, but want to eliminate that as much as possible. Because the consumers experiences is increasingly like that outside financial services, you use Netflix or Uber or you know, any really slick digital experience, what degree of friction Do you have, they’re very, very minimal. So

as as customers get used to using

get used to are using digital services.

Increasingly, financial services is set in that context and judged against them. So we’re increasingly seeing that people just want frictionless digital financial journeys to what do you think there’s a need for human interaction? Or where would you put that? Or where do you plan for that? If you’re doing a digital transformation kind of programme? I mean, is there a need for it at all? Or how would you think about when that’s needed? Yes, great question. I mean, I challenge the question by saying, like, what is human?

So what is human and what is digital? So you and I are having this conversation? We’re hundreds of miles apart. But it’s human, right? So at the same time, I could be sitting next to somebody who could even put their hand on my shoulder that close, but it could be a terrible interaction, and there could be no presence whatsoever. So the the, you know, what is human and what is digital, and as we move towards more immersive technologies, you may have heard this term of Metaverse and web three may want to talk about that, that what is human, and what is digital is, is going to become, you know, ever more increasingly difficult to distinguish. So and

so that’s the first point. I think the second point is research that I’ve done previously, suggests that there’s there tends to be a point for most people, when they might want some human interaction. So if you’re a digital native, it might be scarcely ever. But it but if you’re somebody that’s come to digital ad, it might be quite high frequency in very readily that you require it. And in a financial services journey.

It might that’s mapped on in a different way. Because there’s not only how digitally savvy you are, there’s how financially savvy you Bicol see the two by two matrix, and therefore you know, how often you might need interaction, and what the interaction might be, might differ. So I might want, at certain point in the journey, to have a chatbot. Or it might be that I need to speak to you on a on a video call. Or it might be that I just want to abandon it, and go and see somebody. I mean, the key thing about digital processes is that if I, whatever I choose, let’s say I choose to stop my journey and I, I need to speak to somebody, but I can stop that journey. And I go into the branch and I meet somebody and they pick up that journey at precisely the same time. And they have all that context. That’s the power that digital can bring you. But ultimately, everybody has a point I think, particularly in complex financial journeys, so let’s say a very complicated pension arrangement or you know, a high end mortgage that you it’s just such a significant part of your

what you’re working towards that you need that assurance of some human interaction some way.

Now, I suppose some of it comes down towards like the design as well. Right. So how did this

sign up for the digital journey. So for example, I mean, it can be quite an one end, maybe it’s sort of bookmark by, you know, a design that is very sort of linear, it can be sort of like it’s, you know, very sort of engineering, very logical. But that might not be literally how but the client kind of works. There’s so much over all of those like that human centred design comes into my eye great digital experiences, and can that stop, then the requirement for the human interaction? Yeah, I think that I think there’s something here.

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From, from a gaming experience, actually, as so many multiplayer games that are sort of open ended, and the design open ended rather than linearly, when, when we were kids, perhaps, computer games were? Well, after right, you could play Donkey Kong, you had to go up, you became an end. But now, you know, get gaming is done, where you can do multiple things in multiple orders in all different times. And so that design of those, and the open ended design of us really seeping out into the digital experiences and other other digital processes. So increasingly, I’m seeing, you know, an open ended thought process to the way that consumers engage digitally. And to your point that has to be human centred, it has to begin with, where is this person? What is their life? Like? What are their needs? How does financial services sit in within their needs? How does financial services sit within all over services that they need to acquire? And what’s their thought process when they need it? And how do they interact with it? And then once they’ve purchased it, how do they want to to continue that? And that’s not linear. That’s anything but linear? That is, you know, completely open ended?

You mentioned earlier or we chatted earlier a little bit about metre metre verse, I suppose. And, you know, I suppose, that was like this, this this, this virtual kind of kind of world has been sort of talked about it’s been trailed quite a lot in the press. I mean, what’s what’s your kind of view on, on that into, like, how that will then start to kind of flow through? We’ve talked quite a bit about AI and AI before and I suppose this is almost like on a, on a different level. And what’s what’s your interpretation of, of the noise that’s kind of going on with that, and whether whether that will sort of like play out? This, there is a heck of a lot of noise. You’re right. And I think that I think really the mainstream that that was kicked off by Facebook changing its name, that’s kind of what brought it to the attention of most people. But the metaverse has,

has been on the horizon for digital aficionados for for quite some time.

First of all, let’s just sort of be clear what it is. And the the the the metaverse is,

is what we’re building it right. And we’re building it we don’t require it can’t quite see what it is. So it’s a little bit primordial, at this point, I think has to be said, but it’s incredibly exciting. So is the convergence of, of the digital and the physical it is the Grand Union of immersive experience it is if you can imagine an internet that that that you can be inside. And that is a really exciting

point of development of the Internet, in the first iteration of the internet, connected us to information, we even kind of invented a word for it, and we the information superhighway which he hadn’t yet heard for decades. And then the next thing that happened was we connect to people, we connect to people through social media. But the next iteration of the internet is going to connect, it’s going to connect people, it’s going to connect places, it’s going to connect things. And and we’re going to be we’re going to be part of it that it strikes me that

that that such a fundamental change.

Where people can actually earn a living in a virtual world. If they wanted to, they could live there.

It would be a pretty bad thing to do, I guess. But you know, they can spend a lot of their time there, they could certainly earn a living there. And over time, it will will develop its own economy.

That financial services that will we’ll have to respond to that and the nature of of banking, the nature of insurance, the nature of wealth management, the nature of all financial services could be could be fundamentally different to the way that we comprehend it today because it has to respond to that. And if you think about the starting point of that, I mean there we have the opportunity to you have the opportunity to buy virtual real estate and people spending considerable amount of money buying land. In virtual real estate people are buying NF T’s non fungible tokens of what they might be collectible cards or pieces.

have art so and then why are they doing that? Well, they’re doing it because that’s where they want to spend their time. They’re buying virtual sneakers and all sorts of things. So

is in such a world in such a different place to where we are now?

I can’t articulate how banking will be different. But what you can say, You know what, yeah, it’s going to have to respond to that. It’s going to have to be a new kind of financial services. If in maybe not next year, but 1020 30 years from now, people are spending their time there. They’re working there. They’re spending a fundamental time part of their life in that the banking and financial services, we’ll have to respond to that. And what about, what about remote working in what have you seen in terms of that? And what do you think the future is, in terms of remote working, or hybrid models, or going back to the office, I mean, we’ve sort of felt like we’re gradually starting to move back into the office. So in the UK over the last, the last little while, with Amy cron coming through it feels like that’s sort of like stalled, and where we’re now sort of feeling like we’re increasingly going back into working remotely again. I mean, what’s what’s, what’s your view on the future of that? And what does it mean? I mean, are we ever going to land on wall? Is it always going to be sort of moving around? It’s a really great question, because it’s tied up with

the, you’ve got businesses reaction and what business wants to do, but then you have this groundswell of well, what are people want to do? And it’s has a name, doesn’t it, the great resignation, and people are changing what they want to do, as well. And so the future what will happen will be the convergence of those, those those two things. So on the one hand, you see people

saying, they’ve invested a lot of money in a degree and they have, they have a professional job. And then they look across and say, well hang on a minute, the people that Amazon warehouse are any more than me? Or why am I doing this, I’m going to give it I’m going to quit, and I’m going to go do that. So you’ve got that you have people, perhaps late in their career that got caught in the pandemic, which I think you I don’t want to go back now. I’ve thought about it. I’ve enjoyed myself

being at home, and I’m not going to go back or equally you have people in retirement that perhaps have built up assets and think well, I can start to share them with my, with my family and stuff. So you’ve got kind of all these cultural things that are happening as well as the business stuff now on the business. So how does that play itself out? Well, recruitment is really hot right now. I mean, it certainly in in skilled jobs.

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It’s it’s crazy hot and in semi skilled jobs, vacancies are a sovereign.

What how would people normally react when people the employees would normally put their wages up? Well, what will happen in in low skilled work? If people put wages or prices will go up? Well, will people be prepared to pay? Two or three quid for a Greg sausage roll out? I don’t think so. So what will what will happen? Well, it will, it will, we’re bound to see much more automation and digitization deployed into those.

Those businesses. I’m not saying Greg, you’re gonna replace probably the robot don’t write in. I’m not saying that. But what I am saying is that shrewd businesses are going to digitise and automate processes with technology as much as possible to keep themselves to keep themselves competitive. And well, and, and we’ll see people move into different kinds of work, you know, more service, businesses, teaching personal fitness, or doing yoga or teaching language or all these different things which didn’t even exist, really, it’s somewhat some of that stuff over because it’s delivered over social media, even a few years ago.

So how business is going to respond, they’re gonna have to be kind of really comprehensive. And I said, right at the beginning, I think the genies out of the bottle, I just don’t think that businesses can go back to to how they were. And, and certainly, in professional lines of work, we will hybrid models here to stay, whether that will be 100%, sorry, 90% 80%, or whether it’ll be 10%. I don’t know. But that that hybrid model is here to say, but that has a lot of implications.

I think from a in Fs, the one thing that I think is the major implication is security during the pandemic, I think regulators were very,

but I turned a blind eye to some of this to some degree to some of the security implications that exist.

And now that needs to be put under the microscope again. So you know, if you have you have dispersed technologies and contact centres, etc, where customer details are popping up. That’s a very, very important thing to get hold of and understand. So I think from a from an FS perspective, that’s key, I think from a business’s themselves.


how HR have a massive role. I mean, they have a huge role to ensure that there is a supportive and, and positive employee experience. And that’s going to be

around around health and safety, it’s going to be around, you know, a large part around mental health and making sure people are right. trainings going to be deployed, virtually in a much more dynamic way, maybe that’ll be delivered with with with on demand content.

And I think HR related to digitise a lot of their processes as well. So they can respond very quickly. So it might not be that you always have to speak to the

HR manager, there might be some sort of digital assistant and Chatbot. So I think

HR is a function within businesses, both has to think about transforming itself. And also think about the way that it helps the business transform into this world as well. When the pandemic means almost like he threw everything up in the air. And it’s almost like the longer everything’s up in the air, the more likely it’s going to change. And it’s been up in the air for having even even with the changes now, right? It’s going up in the air a little bit again,

the longer it’s going to be fundamental. And this is almost like almost like feels like Is this like a fundamental turning point where we move into something new. And and if you move into something new, I certainly knew personally or you’d make businesses as well. It’s like, we want to try and find islands of stability when everything’s changing. And what is that. So my island of stability might have been being back in the office. But if I can’t do that, I need to find new one. And it’s hybrid working the new island of stability, like it’s going to be flexible. But it’s going to be stable, if you sort of mean, and I just wonder if that’s, that’s it’s that search for stability is sort of what’s going to be kind of on as you were talking, I was thinking I was thinking that, you know, we try to find areas where we can a model that can be stable as a business, but it’s going to be flexible to take up take and be able to adapt really other changes that might be thrown at us. Yeah, it’s a great, it’s a great point and what what you’re making me think is like, what will stable be in Yeah, in the future, because

the speed of changes is, is increasing all the time. And this might be stable, where we are now, I mean, this might be this, this, this might be stability, but it’s just that we’re not quite used to it, or some of us are not quite used to it. So the there is a I think there’s a with the speed of technological change.

What is stability is that is a really important point, just on the question of hybrid, and just so we capture it, I do think that businesses do have a responsibility to, to employees, where it’s just not appropriate for them. So let’s say

that you’re you’re just joining the workforce. So So you are, you know, a school leaver or your graduate, you need some degree of,

of human interaction to to learn what, how business works. Now, when I first started work, you know, how does this work? How does that work? Oh, you know, go and ask Jean, she’s worked here for 20 years, and you just stumble across people in a way. And whereas if you have to formalise every conversation that you have, you have to book it in, you don’t get those, those learnings that you will, you also don’t understand the brand of an organisation. So just pointing it a logo doesn’t give you a sense of the culture. And we’re going to have to learn new ways of helping people get to terms, that doesn’t necessarily mean that they they have to be in the office to understand what that means. But you’re gonna have to be much more demonstrative about how we deliver that. Because previously, what Brandman internally was, was almost imbued by it wasn’t it wasn’t done, done deliberately. And then the other point is that some people may be in a vulnerable position, you know, then they may be subjected to domestic violence at home, or they may just not have the, the facility to work from home in an appropriate way. And

businesses or certainly large scale businesses that have the capacity to do so really should feel that they have a duty of care to provide the appropriate place for people to to do their work if working from home is not right for them. Well, Wayne, thank you very much for your time. I really, really appreciate it super interesting, as all of our chats always are so so I really appreciate it. That was That was fantastic. So thanks very much. It’s been a lot of fun, Chris, really appreciate the conversation. Thanks a lot.

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