Catherine McGrath, Managing Director, Transactional Products and Payments for Barclays UK, tells us how data is fast changing banks’ relationships with their customers – and why Barclays is so well placed to embrace this transformation.
“We’re at an inflection point in banking,” says Catherine McGrath, “our moment of transformation is coming up pretty soon.” McGrath is considering the shape of things to come in retail banking, and new notions of how banks deal with data and serve customers.
McGrath continues: “We at Barclays recognise that there’s a significant transition and the way we’ve done things for the last 300 years might not be the way we do things for the next 10. Part of the transformation means recognising that as a customer you’ll be able to get all your information about your finances from somewhere other than a bank, so banks have a couple of choices.
“We can either become that place and use your information in a way that’s insightful and can make a difference for you, or we can become a faceless entity at the back. I think Barclays is at a fantastic place to do really well through this transition, and develop even stronger, more trusted relationships with our customers.”
As a Managing Director in Retail Products and Segments, McGrath looks after current accounts, insurance, foreign exchange and mobile payments for Barclays UK. This puts her at a fine vantage point to examine changing customer expectations and relationships with their high-street or online bank. “The way I look at it,” she says, “is that in the past, we trusted banks with looking after our money. As we go forward, in addition to our money, our data becomes something that’s incredibly valuable and important and can be used for our customers’ benefit or harm. All the skillsets and characteristics that banks have in looking after money can allow a customer to trust them with their data as well.”
With the acceleration of technology, McGrath says that she tells her team: “I’ve had about 20 years in financial services and I’ve always known, broadly, what the future looked like. I sit here today and say that what we describe as banking in a couple of years’ time could be incredibly different. And you either look at that as terrifying or amazing.
"I think I’m sitting in the right company, in the right country, at the right time to help shape what banking will be in the future."
Digital and personal
The thought that banks can become “trusted stores of data as well as of money” puts more traditional companies in competition with newer fintech specialists, but McGrath sees Barclays’ size as a key factor in this contest: “We are this large-scale organisation with thousands of colleagues who talk to customers daily. If you take that alongside digital data and information, and different processes we’re building around that, I think we can serve and support customers in ways we’ve never been able to before. And with that extra personal interface, we can do it better than any of the fintechs do.”
People’s perceptions about their data and security could provide a hurdle, but McGrath points out that “you’re likely to trust a highly regulated, established, listed company with big security firewalls more than you do a new company.” She adds: “Banks haven’t been thinking of themselves as being custodians of data as much as money, but as we move into an age where data is more and more important and consumers become aware that data is precious, there’s a role for the bank to help the consumer protect that and make better decisions about what they want to share, and how frequently.”
As consumers increasingly use smart phones, many have got used to not reading terms and conditions. When asked to upgrade an operating system or app, McGrath says: “You hit accept and have no idea what you’ve accepted”. She thinks “it’s an interesting prospect: the bank becomes a trusted place where you can make choices about where and with whom you share data. It means that we’ll be playing a bigger, more trusted role in our customers’ lives than we do today.”
We are this large-scale organisation with thousands of colleagues who talk to customers daily. If you take that alongside digital data and information, and different processes we’re building around that, I think we can serve and support customers in ways we’ve never been able to before.
The European Union’s Payment Services Directive 2 (PSD2) becomes active in 2018, with the aim of increasing competition and innovation in payments and payment accounts. “In layman’s terms,” says McGrath, “it’s the ability to share and move your sensitive transactional data from the bank to somewhere else, and it’s also the ability for payments to happen in a different way than they do today.”
Barclays is in the thick of planning for the directive. “There’s a lot of thought about ensuring your data is protected when you choose to send that data out. It could be going to someone who is brilliant and legitimate, or who might not be. How do we ensure we facilitate the competition – which is a big driver of the legislation – but also don’t end up with customers asking why we let them do something they shouldn’t have, because there have been negative consequences?”
“But the regulations present significant opportunities for banks if we choose to embrace them. With the opportunities that both tech and the regulations present, Barclays has to ask itself what role it chooses to play in that and how that changes what we can offer customers.”
Despite previously characterising the hypothetical bank of the year 2022 as unknowable, McGrath does have one prediction, and the customer – not technology – is at the heart of it: “For Barclays, I think because of the information we have now, and will hold in the future, we can use that in a way that adds real value for the customer, and helps them achieve what they want to in their life, in ways that we can’t even begin to imagine today.”