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CIO interview: Kevin Hanley, head of innovation, Royal Bank of Scotland

Royal Bank of Scotland's head of innovation talks to Computer Weekly about creating and supporting change, bringing different technologies together, and how 2018 could be the year blockchain innovation comes to fruition

This article can also be found in the Premium Editorial Download: Computer Weekly: The bumpy ride to digital transformation

There is a significant amount of debate about which executive should be responsible for enterprise innovation.

The underlying role of technology at almost all businesses means the CIO often looms large in these debates. But at Royal Bank of Scotland (RBS), the answer to who runs innovation is Kevin Hanley – a former consultant with a deep understanding on the role of creative thinking in modern business processes. 

“The scale of change in this new, open world is huge,” he says, referring to the digital transformation taking place in financial services. “It’s not just a minor tweak – the change is fundamental. To be disruptive, you must produce something new and creative. We’re looking for things that can be delivered into the hands of our customers at scale. That’s our goal.”  

As head of innovation at RBS, Hanley works across the various business units of the group to find creative solutions to the key challenges the bank and its customers face. 

Leading innovation 

Hanley joined Accenture after graduating from Cambridge University, and eventually headed up the firm’s capital markets strategy practice in the UK. He spent time in the US and was seconded into a range of organisations where he consulted in a space that he defines as somewhere between business and technology. This exposure led him to formulate and then answer many questions about the future of the IT industry

“While I liked working in that way, I decided to go and do something about the change I could see,” says Hanley. “Instead of producing a nice PowerPoint, I wanted to transform things with my knowledge.” This effort became manifest through another role at Accenture, as Hanley ran the firm’s global client work with ABN Amro, a firm he subsequently joined full-time when the opportunity arose. 

After four years at ABN Amro, Hanley joined RBS as chief architect in 2009. He assumed his current position as head of innovation in May 2016. Hanley says the role has two key elements. The first is to create the climate for change and a sense of urgency within the organisation. That process involves engaging with the senior management team, particularly business stakeholders and board members. 

“The aim is to get people to understand what might happen in the future,” he says. “So, the first part of my job is about creating the kind of environment where the questions that people ask are focused on the changing world of finance.”

The second part of Hanley’s role is to find answers to the questions he provokes around the business. “I’m tasked with doing something about the challenges that people find – and that’s very exciting,” he says. 

Bringing smart ideas to life 

Hanley says the hard part of innovation lies not in the “what” but in the “how”. Four or five years ago, his focus was on the up-and-coming technologies and companies that could help the business move in a fresh direction. However, he now realises that the sifting process is not the hard part of innovation. 

“We see thousands of companies and, at some level of abstraction, I could probably do something with every one of those businesses,” says Hanley. 

“They’ve all got a sparkly version of something I already have. You learn quite quickly that the identification of the shiny element is not the hard part of innovation – what matters is how you do something with that technology or company internally.” 

The key to success, says Hanley, is to encourage the business to think in a more creative and ambitious manner. He says it is a pattern that should be repeated across all major corporate organisations, yet it is a way of working that is often missed. 

“Success comes from curation, choreography and getting things done, rather than the identification of smart ideas,” says Hanley. “I think loads of people miss that focus. My job isn’t to be smarter than others and to come up with ideas that other people can’t. My role is to make the smart ideas happen.” 

Creating and supporting change 

Hanley says there are two best practice tips for other business leaders who are keen to make the most of creative sparks within their own organisations. First, executives must make sure that any innovative ideas are generated across organisations’ teams and hierarchies. Rather than being the sole focus of the technology department or a single line of business, innovation is a team sport.

“You learn quite quickly that the identification of the shiny element is not the hard part of innovation – what matters is how you do something with that technology or company internally”

Kevin Hanley, RBS

“You must create a mixture of people, where you work really hard to put the opportunity, the business problem or the customer concern at the centre of the activity you’re undertaking,” he says. “Start with an open mind. Put the problem at the centre of the table and then assemble the right group of people to help solve the challenge you face. In all instances, that group will include both internal and external expertise.” 

Second, executives must ensure the right kind of supporting governance is in place. People who work collaboratively must have the work environment and financial support to enact change. “If you have air cover, sponsorship and funding to let you go and experiment, then you’ll be in a good spot,” says Hanley, before explaining how the process works in RBS. 

“It’s a real privilege to work in an organisation where, every month, I run an innovation forum where I get half a day to spend with the five or six most senior people in the bank. If you added up that commitment financially, it would be significant. But these senior people recognise the importance of innovation and understand that the potential impact of spending time on our creative ideas is even more significant. It’s great that our senior management team understand that balance.”

Engaging across the business 

Hanley reports to RBS group chief administrative officer (CAO) Simon McNamara, who is responsible for operations, change and technology. However, Hanley also fulfils a group-wide role, where he engages across functions. This sense of autonomy is important as it prevents the art of creativity from becoming pigeon-holed. 

“If innovation sits within technology or an individual line of business, then it becomes slightly compromised,” he says. “Whilst organisationally I report to the CAO, in effect I’m told to operate pan-bank. And when we have our monthly innovation forum, I facilitate that session and my boss is another contributor around the table.”

“My job isn’t to be smarter than others and to come up with ideas that other people can’t. My role is to make the smart ideas happen”
Kevin Hanley, RBS

Hanley says this flexible arrangement also demonstrates the worthlessness of wider debates about whether the CIO is responsible for innovation. “It just can’t be the IT leader’s role in isolation – it absolutely can’t be. If you looked at the 40 projects in our current innovation portfolio, about 75% of those ideas started with a business conversation,” he says. 

“There will be some projects that will start out with an initial chat about an exciting piece of technology. But the opportunity always comes back to, and must be centred on, a business context. In the case of biometric security, for example, that context was about new ways to keep our customers safer.” 

Converging technologies

When it comes to priority projects, Hanley says several core themes are currently important. He manages a technology trends dashboard, where key innovations are tracked and big ideas are presented to the board.

“What you’re beginning to see now is the convergence of what might previously have been discrete technologies,” says Hanley. “The use cases around this convergence, particularly in terms of what it means for the customer, are creating new business opportunities.” 

He refers to the convergence of data analytics, artificial intelligence and voice, suggesting this coming together presents new opportunities for the development of user interfaces. “I think this form of convergence is fundamentally changing what technology can do and how organisations and people interface with systems and services,” says Hanley. 

“I think you’ll see a move away from an app-based form of development to one based on voice and then we’ll move on to some kind of human and digital interface. If that is the trend, then we need to think about what that means for the way in which our customers might interact with our bank in the future.”     

Measuring success

Hanley also points to other areas of likely development. He says innovation around blockchain and the distributed ledger has been a long time in the making but is likely to come to fruition through many more use cases in financial services during 2018.  

“Success is about the things you do – doing a few key things at scale that make a difference has to be the goal of any innovation function”
Kevin Hanley, RBS

Security remains another priority area for innovation. Hanley says the increasing move towards a wider value chain in banking, as customers work with a wider range of partners, creates a new level of complexity. He says finance executives must continue to source technological solutions to potential customer security challenges. More generally, Hanley continues to look for new opportunities and suggests success is measurable.

“We think about our achievements in a structural manner,” he says. “Our definition of innovation has three key elements: new ideas, delivered to our customers, with impact. Doing something niche for 10 customers is nice, but it isn’t going to move the dial forwards in a significant way.” 

Each of those elements can be measured. New ideas can be analysed through the creation of research or whitepapers; delivery can be observed by the amount of ideas that progress to production; impact can be seen by the number of customers who benefit and the improvements to client interaction.

“I ultimately get measured by the things we put into our customers’ hands and the difference that makes to the services we provide as a bank,” says Hanley. “Success is about the things you do – doing a few key things at scale that make a difference has to be the goal of any innovation function.”

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Hanley, a person who really doesn't have this type of background.  Good at ducking and surviving, whilst not really producing anything, Hanley is an interesting character.
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