by Edward Qualtrough

Lloyd’s Banking Group CIO Morteza Mahjour on end-to-end transformation and creating a startup culture

Nov 17, 2016
Financial Services IndustryIT Strategy

Lloyd’s Banking GroupCIO Morteza Mahjour believes it is imperative to drive a cultural change across the 320-year-old institution in order to create a more agile operating model and secure the bank’s future.

The former CIO and Chief Operating Officer at the Royal Bank of Canada was discussing the end-to-end transformation of Lloyds at the 2017 Gartner Symposium in Barcelona last week.

“If we don’t change then we won’t be in business,” Morteza said. “The old way of addressing changing customer expectations with two and a half years from having an idea to it going live doesn’t work anymore. You end up with an irrelevant solution to a relevant problem. How much change will there be if it takes that long to release a product?

“How do we go from an idea to a product in 30 days, iterating and not waiting for perfect solutions? Whether in banking or not, if you are not operating with that sort of agility your lunch will be eaten.”

Formed by the acquisition of HBOS by Lloyds TSB in 2009, Lloyds Banking Group has a history which goes back to 1695 when Bank of Scotland was founded. The Halifax brand is also part of Lloyds Banking Group, which is still 10% owned by the Treasury.

End-to-end transformation

Morteza said that change in a centuries-old organisations was difficult, but that Lloyds was making progress in creating a new agile mindset and the programme had some serious buy-in from CEO António Horta Osório.

“It’s really hard for institutions like us to change, the way we are wired with silos – it’s very complicated,” Mahjour said. “We have gone from thinking about scope, time and cost to quality, productivity and value. It is a huge shift in mindset if you are wired the old way.

“But we are starting a change in culture across the organisation. Agile is a mindset, not a technology. Rather than fixed destinations, we needed to think differently about a continuous journey.

“And it always helps when this is the nearest, dearest thing to the CEO’s heart.”

The Global Chief Information Officer, whose reports include the bank’s business unit CIOs, said that Lloyds had made a conscious decision not to use the term ‘digital transformation’ when describing the transformation programme.

“Did not want to the use the term end-to-end digital transformation. I was concerned if we used the term digital people might have thought we were just talking about the front end,” he explained. “But it wasn’t just because the front end wasn’t pretty, we were exposing all of the back-end complexity to the customer.”

Startup culture and VC pitching

Making the organisation and its small multi-disciplinary teams think more like an enterprise startup has been one of the significant cultural changes at Lloyds which the CIO has been trying to promote.

“You need to organise yourself like an enterprise startup,” Mahjour said. “Our ambition is to act and behave like an enterprise startup. We have empowered each team with autonomy, but once a week they get to meet someone one level below the CEO.

“We have gone from business-led to customer-led, from top-down governance to fast delegated decision making. Don’t only release something when it is perfect, get there fast and release something that gives the customer value. Don’t build a business case, use a VC-style funding allocation. It’s a huge cultural change to work like this.”

‘CIOs have got to stick their necks out’

Indeed, Mahjour said that the organisation had become so accustomed to every project having to have a bulletproof business case that it was moving too slowly. Instead they looked at the approach of venture capitalists and how employees come in and pitch an idea to secure a funding allocation.

While there had been some “scars and learnings”, Mahjour said that all of these changes were necessary to create an organisation fit for business in the digital age.

“You have to stick your neck out and give it a try,” he said. “Watch the turtle, he only moves forward by sticking his neck out.

“People need to realise how our back’s up against the wall. I say stick your neck out but I’m not sure it’s much of an option or we will all be gone.”