CIO interview: Simon McNamara, chief administrative officer, RBS Group

Brought in after a catastrophic IT failure that affected 6.5 million customers, the IT chief at Royal Bank of Scotland Group says the bank is now a leader in innovation

This article can also be found in the Premium Editorial Download: Computer Weekly: From IT disaster to digital innovation at RBS

Simon McNamara, chief administrative officer (CAO) at Royal Bank of Scotland (RBS) Group, is the definition of a modern digital leader. A former CIO, McNamara has assumed a much broader role at the financial services giant and his responsibilities stretch far beyond IT.

“Chief administrative officer is obviously a fancy title, but I actually look after the technology, some operations, payments, the innovation agenda, data and analytics, property, supply chain – basically, that’s what I do for the bank, and I’ve been here for six years now,” he says.

McNamara was brought into the organisation in the wake of an IT crisis. Technical issues caused by a software update in June 2012 led to a high-profile IT failure that affected more than 6.5 million UK customers for several weeks. The organisation was eventually fined £42m by the Financial Conduct Authority.

In September 2013, McNamara was appointed to his role, with the executive team at RBS believing he was the person to fix the firm’s systems and to create resilience. Six years on and McNamara has completed many of his operational aims, yet he continues to relish the CAO role, which is more all-encompassing than some of his previous CIO positions. 

“I came here because there was a job that needed doing and I thought it was worthwhile,” he says.

“I started my career here in the UK, but I’d been overseas for the best part of 20 years. I’d been working in Australia, Singapore and in the US. And I thought I could do something to contribute – and, actually, there was a job that needed doing.”

The challenge of constant disruption

McNamara prefaced his role at RBS Group with three decades of CIO positions at some of the world’s largest financial services organisations, including BNP Paribas, Deutsche Bank and Westpac Banking Corporation. His last CIO role was with the consumer operation of Standard Chartered Bank, which he held for five years between 2008 and 2013.

“I came [to RBS] because there was a job that needed doing and I thought it was worthwhile”
Simon McNamara, RBS Group

When he first spoke with the board and other members of the executive at RBS Group, which includes Royal Bank of Scotland, NatWest, Ulster Bank and Coutts, McNamara says he realised the scale of the transformation opportunity and the significant role that digital systems and services would play in that change programme.

“I was left in no doubt that they understood the significance of the role that technology played in the delivery of services today, but also its role in the creation of services for the future. And that was more than just words. I’ve met people in the past who’ve told me technology is important, and then I follow that up with a second question, and there’s nothing there,” he says.

While McNamara might have been brought in originally to fix problematic IT systems, he hasn’t focused on legacy systems alone. He is more aware than most that financial services – more than any other industry, perhaps – is a sector that is heavily affected by digital disruption and the rise of startups.

As high street branches continue to close, new fleet-of-foot operators are eating into the market share of incumbent finance firms. Gartner estimates as many as 80% of traditional banks will go out of business by 2030. The analyst says established financial services providers will have to move faster by building digital platforms or finding niche products.

The IT problems that RBS Group faced in 2012 might have been the burning platform for change, but McNamara and his executive peers were aware that the potential for digital disruption meant change would be a continual process. It has been McNamara’s role to develop a proactive approach to transformation and to help the firm avoid the pitfalls of a reactive response to digital change that is common to big-name banks.

“I was joining a firm that had these challenges with its IT platform and I think that crystallised in everybody’s mind here about the criticality of technology,” he says. “And, therefore, we’ve been able to drive our innovation agenda with the full support of the board and the business, which isn’t always the case.”

The four key areas of transformation

Computer Weekly spoke with McNamara at NatWest’s Open Experience innovation centre in Islington, London, which is home to an inventive bunch of individuals who are using digital technology to develop fresh services for the bank’s customers and an appropriate venue for McNamara to look back on the creative changes he has helped to engender at RBS Group.

“The reason I’m here is because somebody thought I might be able to help technology. And we’ve made material progress on that in general”

Simon McNamara, RBS Group

When the firm made its first results announcement after his appointment in February 2014, executives talked about an intended transformation programme. McNamara said this initiative would focus on four key areas: resilience, simplification, efficiency and innovation.

“We were going to focus on resilience, which was a very obvious statement to make at the time, because we’d had to switch off our computers in 2012. The reason I’m here is because somebody thought I might be able to help technology. And we’ve made material progress on that in general,” he says.

McNamara alludes to several points that demonstrate progress in the second area of focus – simplification. “That work includes not only our platforms and technology, but also includes our property portfolio, supply chain, and various other bits and pieces as well,” he says.

When it comes to efficiency, McNamara says he and his colleagues have taken a “massive amount” out of the cost base of the organisation over the past six years. At the same time, the level of investment being made by the firm has increased.

“We haven’t achieved efficiency by stopping investment, we’ve done it by taking the cost down,” he says.

Much of this investment relates to McNamara’s fourth area of focus: innovation. He says some senior people at the bank were reticent when he joined about his ability to focus on creativity. Technology at RBS Group needed fixing in 2013 and that responsibility was seen by some as a big enough challenge in itself.

Yet six years on, McNamara is pushing a broad innovation agenda at the firm which he believes is “second to none” when it comes to traditional UK finance institutions. These changes encompass a range of developments, from mobile banking to artificial intelligence, and on to human-digital interfaces.

Using business change to generate new opportunities

Looking back on the changes he’s made across his four priority areas, what does McNamara believe has been his biggest achievement? Rather than one specific accomplishment, he refers to a range of improvements.

“We’ve now got a markedly different performance in terms of the availability of the service. I’m proud of the fact that we’ve reduced the cost in areas that aren’t yielding great benefit for either the shareholders, or the customers,” he says.

“And I’m proud of the fact that we’ve also maintained the levels of investment during that time and we’ve increased the volume of change. So, like I said before, we haven’t reduced costs by reducing the volume of change – the rate has actually increased.”

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McNamara is also proud that the focus on business change has helped generate some interesting projects for staff. When it comes to these initiatives, he focuses on developments at NatWest, which includes the creation of Mettle, its digital bank for small businesses.

Mobile banking is another key area of innovation, including NatWest’s personal finance app Mimo, which uses open banking application programming interfaces (APIs), artificial intelligence and data analytics to create a social feed that helps customers manage their money. Mimo is being beta tested with 5,500 customers. NatWest aims to extend the roll-out later this year.

“These kinds of projects mean the people that work here feel much better about themselves than they did at the outset,” he says.

“I like the fact that our mobile platform is held in high regard by customers, because I see that feedback all the time. And it also irritates me that there are other services we provide that they don’t seem to hold in the same regard. So, that’s an opportunity for us, but also a challenge.”

Establishing objectives for future developments

McNamara says his time at the bank thus far has been about building a stable platform for change. “And I think where we’ve got to now, which is a profitable organisation with a foundation that’s actually solid, will mean we’ll do some things that our customers can really benefit from,” he says.

McNamara says Mimo provides a good example of these kinds of customer-focused initiatives. But other developments are in the offing, too. NatWest has built a digital human called Cora using technology provided by New Zealand-based company Soul Machines. The text-based chatbot answers customers’ questions on the bank’s online help pages.

Cora can already answer 200 basic banking queries and has 100,000 conversations a month. The bank is now honing these developments as part of its human-digital experiments. A new Cora prototype has been built using artificial intelligence. This avatar allows customers to have a two-way verbal conversation with Cora via their devices.

McNamara says partnerships with companies such as Soul Machines will help RBS Group to continue to find creative solutions to its customers’ banking challenges. While digital disruption is a constant threat to established banking practices, the direction of technology-enabled change is far from certain. McNamara says reaching out beyond the enterprise firewall and embracing change is now crucial for all banking CIOs.

“The technology is predictable in terms of its path, but how it’s used in the business is not predictable – the pace of the adoption, how others come into the market and so on,” he says.

“The only way you’re going to survive is by being in the mix and trying things. My advice to other finance CIOs is to be in the mix, try some stuff and work with other partnerships.”

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