Building a revolutionary bank in record time
In a time of turmoil among new e-banks, a newcomer burst on to the market. After its first full year of business, this bank had won STG£5.3 (US$9.6) billion of mortgage lending, a full 9% of the UK mortgage market.
By the beginning of 2004, this same bank had amassed assets of STG£15.5 (US$28.1) billion and customer accounts had reached 820,000, up 35% on the previous year.
The Intelligent Finance story is about a new approach to banking, built around customers. Also, it is about how the new bank was built by VISION within a seemingly impossible timescale.
Jim Spowart, one of Britain’s most innovative telephone bankers, wanted to create a new type of bank. It would connect mortgages, savings, credit card, loans and current accounts so customers would only have to pay interest on the balance of the money they really owed.
It was a radical proposition for a deeply conservative industry. When he invited a lone VISION director to a meeting in October 1999, Spowart produced a sheet of paper with all five accounts laid out conceptually in a single bank statement.
Spowart had the notion of creating inter-linked accounts, which he called “jam jars”. These jars would allow customers to see how the money in their debit and credit balances measured up. He envisaged an offsetting function across all products so customers, if they so chose, could only pay interest on the money they actually owed the bank.
For example, they could qualify for a 0% credit card if they had more money on deposit than their credit card balance. For a mortgage holder, there was the prospect of substantial savings over the term of a flexible mortgage.
Spowart had resigned as chief executive of Standard Life Bank to implement his radical plan. Intelligent Finance was supported by a STG£120 (US$218) million investment by its parent, Halifax plc, the UK’s largest mortgage lender.
The options for Spowart’s bank were seemingly unlimited. “Can you build the engine for this” he asked. “Yes”, was the VISION reply.
So began a major initiative that would transform a greenfield site in Edinburgh into one of the UK’s fastest growing telephone and internet banks, employing a staff of nearly 2,000 by the end of its first year of operation.
VISION had worked for Spowart at Standard Life Bank and he was impressed by its work in the retail banking sector.
VISION was commissioned to produce a detailed plan for the programme, called a Design in Action (DIA). Completed within eight weeks, it detailed the sheer scale of the project.
The DIA addressed five key challenges:
- The customer proposition for turning the ‘jam jar’ dream into a reality while enabling consumers and professional advisers to access the bank 24×365, across multiple channels
- The design of what was required to support and deliver that proposition
- Technical architecture of a wholly innovative nature
- A delivery programme that included mobilisation plans, training and systems infrastructure
- The delivery of a business which, at that stage, was still operating out of temporary offices
What was needed was complex solution architecture to process up to 250 core service requests with re-routing subject to any of the myriad of options exercised by the customer. The Customer Service Consultants’ (CSCs) desktops were Web-based for all aspects of account management.
During the DIA, 23 vertical project streams were identified from solution design through to technical design and technical architecture.
Casting the net
With people, processes and technology so tightly interwoven, in January 2000, VISION was tasked with overall management of the programme. The company mobilised 500 consultants, project managers and developers in three months.
VISION had overall responsibility for integration and implementation. It took 300 people to develop the software over the course of ten weeks. The recruitment net was cast as wide as Chile, California, India and South Africa.
In parallel, CSCs and administration teams commenced training with teams of VISION ‘resolvers’ fielding breakdowns and passing lessons back to designers.
The telephone bank went live in September followed by the website in November 2000.
Sophisticated mortgage customers
Strategically, Intelligent Finance had to attract in significant numbers the highly coveted, sophisticated mortgage customers who would purchase two or more other products and generally maintain higher than average balances. Intelligent Finance met or exceeded its strategic objectives, as is evident from these figures:
In the first year, Intelligent Finance attracted 70,000 checking accounts with average balances of STG£4,500 (US$8,180), well over the industry average. It now manages over 500,000 accounts.
By the end of the first year, Intelligent Finance had 260,000 customers with an average of well over two products per customer.
The average mortgage value of an Intelligent Finance borrower was STG£100,000 (US$181,000) compared with the industry average of STG£72,000 (US$131,000), and the average loan to value ratio was 63%, compared with the industry average of 70%.
The bank won a number of awards including ‘Best Large Organisation’ in the National Business Awards of Scotland, ‘5 Star Mortgage Provider’ by Financial Adviser and ‘Mortgage Provider of the Year’ by Bankhall while the site’s functionality came first in the ‘ease of use’ for online credit cards in a survey conducted by Gomez.
“The development of the IT for this project was peerless and a huge task. The bank’s success was undoubtedly dependent on its successful implementation. Industry experts have predicted that it would have taken any other bank up to five years to launch a similar type of operation.”
“We have a world-class system in a seemingly impossible timescale. The fact that we received it in under a year is a reinforcement of the scale of the work undertaken by VISION. Nobody has ever attempted to integrate five products in that timescale before.”
George Scarlett, Intelligent Finance, IT Director